is what i'm talking about. it's been a bad february and this is the first trading day of the month already here kelly, so it's not getting off to a great start with the dow down almost 2% following a 2% slide in the nikkei overnight. >> and, bill just so people can get some context around what we're seeing this looks like the worst start to a month in terms of percentage losses for the dow, for the s&p since 1982 and for the nasdaq potentially ever at least going back to 1972 as our data does. >> let's talk about this. i mean it's clear that this market is struggling in 2014. what does it mean for you as an investor? with us today, gina sanchez from chantico global. michael gued anthony chan from chase. and our own rick santelli. >> michael, we have been talking for months about the need for a 10% correction in this market that did so well in 2013. it would appear it's under way. >> it certainly would appear, and i think it's actually perfect opportunity for investors to reposition portfolios. going into this, bill our position has been, yeah you're invested but you're in the conservative names the names that really don't lose as much now beta is getting killed a lot of leaders getting killed. this is an opportunity to reposition and not to panic, bill. people are going to want to panic about this. every 10% down is not a time to panic. it's not 2008. it's an opportunity to repo reposition reposition. >> anthony, i want to ask you whether this is an event driven by liquidity or an event driven by deteriorating fundamentals like the ism report in the u.s. that dropped five points over the month which is a pretty big drop and an extremely unusual one. >> what we're seeing is still the economy is expanding. you even see that in china and i agree with michael that if you look at the declines in the equity market, you got to take it with a grain of salt. if you look at all the january declines going back to 1927 we have about 31 of them. and about 14 times in the other 11 months the market has dropped -- the s&p has dropped about 13.4% and the other 17 times it has risen by 14.4% on average. so on average the market is actually up almost 1.9% in those other 11 months since when the market is down in january. no need to panic. >> don't you think these numbers really default, we're such a manufactured economy right now with the federal reserve a lot of these past statistics kind of don't mean as much anymore, right? >> if i take you at your word that means i'm a little more bullish now because now we actually have more support than we had before. so my cautious optimism should be greater optimism. >> michael -- >> i'll let you go in. >> i feel left out today. >> i know bill you need to get over here. it's crazy outside. >> i'll get my dogs and my sled tomorrow and make it down there. michael, you maintain this is the kind everof sell-off the fed wants to see. >> yes, the fed wants to get out of qe. here we are after i don't know how many billions per month have been pumped in. ism is weak payroll data is weak. old risk off behavior started on that weak payroll report. the crisis is reflation. now, you talk about panic. if the market is starting to realize there are no inflation expectations, that qe did not force replationflation into the system how can we not be concerned we could see a round trip in equities. a lot of people are blaming this on the weather. excuse me, weather today has nothing to do with treasury bonds 30 years out. this all started two weeks after the start of january. deflation started beating. let's just be very clear here. if everyone is talking about a crisis in emerging markets, the crisis either already happened or is not going to. the thing to focus on is u.s. small caps which are more high beta and -- >> and i'm going to take that a step further. if you see rates, for example, potentially on the horizon rising in the u.s. you will have to see them rising ine m. the question is does that make em growth stumble and does that make global growth stumble? that's the big question that's making the markets really nervous right now. i agree that probably it doesn't stumble. i think that most ems have the capacity it takes to deal with all of these issues in terms of defending currency, et cetera et cetera. they're in a much different position than they were ten years ago. so i'm not expecting a crisis and i think this is potentially a buying opportunity. >> rick santelli, what a way to greet janet yellen at the federal reserve today. >> well you know think back. traders talk about this a lot. alan greenspan comes on board for mr. volcker, boom you have the '87 crash. mr. bernanke takes the reins from mr. greenspan, you're at the epicenter of subprime to develop about 15 months later. it seems even though there hasn't been a lot of fed chairmen, they always seem to come into office and the market gives them an unusual greeting. i like looking at the ten-year. it's down in yield sharply today but i also note you make all the excuses about weather you want i think the ism and the real data in addition to all the other global pieces moving means it's a multifront issue with regard to the marketplace. and, and if you look at 2s to 10s on the yield curve, it continues to flatten. it tells me whatever is making all these pieces move the way they are, they may continue to do so, especially because of the next chart which is dollar/yen intraday. a big swoon on the dollar and, of course we're hovering at the same benchmark as the ten-year note. lowest since october 31st so i guess it's happy halloween. >> and that lower dollar has pushed the gold price higher today as well. rick, what do you think about michael's contention that this is the kind of sell-off the fed would welcome right now because, you know, there was talk last year as the markets continued to power higher that maybe there was a bubble being created in risk assets and if that was the case the air is definitely coming out of that bubble right now. do you agree? >> well if that really is true and i would never speak for the fed, it seems a little strange to me that they put all the ammunition to make risk assets go up especially the stock market, only to what? to get happy now. they're not in the business at least past chairmens of busting bubbles. i think this is an issue for the fed, but i think that it's an unintended consequence they're going to have to address sooner rather than later, and i still don't expect it will in any way affect the time line they have to remove quantitative easing. >> and very quickly to add to that the fed wants this risk off period so the market replaces them in the treasury landscape. that's why yields are falling. that's why they continue their tapering. the only way to do it is if the market replaces the federal reserve. >> we've been here before. we've been here twice before at the end of the first round of quantitative easing and then the second. this was the catalyst for them to get back involved. >> we're forgetting -- we're just talking about taper here. we're talking about everything going away. everything is not going away. >> remember it isn't just the u.s. central bank. it's a lot of central banks. >> what's that rick? >> there's a lot of central banks involved. you know when we were looking at the first qe or -- >> exactly. look at japan. >> we now have japan going wild and ecb most likely going to add in. i think this is a bigger issue. i think the markets are seeing past that you can't fix everything through artificial means and the economies must -- >> the great last bubble. >> -- stand on their own. >> we're talking about the why, but but, gina sanchez, there are people going what do i do about this? is this the time to step in? is this the correction we've all been waiting for to get back into the market or do you think there's more to come? >> there is certainly a lot of risk that there's more to come. the risk is to the downside there. if there's any change in the pace of tapering right now, they would boetth be seen as bad. a quickening would be seen as bad and a slowing would be seen as bad. a quickening would say there's more taken out of the market and a slowing down would mean that the market isn't strong enough and maybe our global growth concerns are bad. i think there are downside but i agree this is a time to reposition, and when the markets settle, i think you really need to get back into equities. >> remember what repositioning means. it doesn't take your entire portfolio strategy and dump it into the market. if you have cash you start buying selectively. you have high beta assets you take that profit. should have taken the profit three or four weeks ago. take that profit -- >> would have should have have could have. >> of course. >> what gives you the confidence, for example, that the rest of the year isn't going to play out the first five weeks did? what happens if that period continues -- >> we don't want to go back to 2013. >> in terms of equity performance, the yen is weakening. >> 2013 is not going to happen again, but there is still too much liquidity in the system. it's an artificial economy. look what's happening in japan. look at the stock market returns in japan. all of a sudden now japan, some of the air is coming out, instead of 50%, it's only up 42%. so i think we're in a situation where there's enough liquidity for a long enough period of time that that's going to drive market. and my view the concern is later on when we're $40 billion or $50 billion down the road of taper and then the patient really has to start behaving in a way where they have none of this stimulus. they have none of the adrenaline. that's where the real danger is. >> anthony chan the presumption has long been when the fed began the tapering process, they would do it at a time when the economy could withstand it and hold up on its own without the easy money, but lately the economic data has been coming in pretty soft. what do you make about that? >> part of it is weather. people get very upset. i heard a comment that the ten-year or 30-year has nothing to do with weather, but guess what? even when you get a soft gdp report those rates do react. that's just the way it is. they react minute to minute. the truth of the matter is real gdp will accelerate in 2014. we're looking at 2.8% at the bare minimum for growth. the fum fundamentals are improving into 2014. >> just in a herky-jerky fashion. we're having too much fun. we're going to stop this for a moment but ask everybody to come back because we're heading toward the close with about 50 minutes left in the trading session and if you're just tuning in, we're at the lows of the session right here. we're starting off the month of february with a huge bang to the downside here. >> yeah bill. one of the weakest starts we've seen in many years. in fact, another major sell-off on wall street putting the dow less than 4% way from true crest territory. coming up, would a correction be so bad in 10% is a lot but a lot of people are saying long term this could be the best thing for your money. if you have moderate to severe rheumatoid arthritis, like me, and you're talking to your rheumatologist about trying or adding a biologic. this is humira, adalimumab. this is humira working to help relieve my pain. this is humira helping me through the twists and turns. this is humira helping to protect my joints from further damage. doctors have been prescribing humira for over ten years. humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. for many adults, humira is proven to help relieve pain and stop further joint damage. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma or other types of cancer have happened. blood, liver and nervous system problems, serious allergic reactions and new or worsening heart failure have occurred. before starting humira , your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b are prone to infections, or have symptoms such as fever fatigue, cough, or sores. you should not start humira if you have any kind of infection. ask your doctor if humira can work for you. this is humira at work. let's say you pay your guy around 2 percent to manage your money. that's not much, you think except it's 2 percent every year. go to e*trade and find out how much our advice and guidance costs. spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. welcome back to "the closing bell." we continue our special coverage of this pretty severe market sell-off today. we got our market pros all staying with us at the new york stock exchange. we're joining now by steve liesman. you have got a nugget here on what might get investors' attention. let's remember, this is a day that janet yellen becomes chair of the federal reserve. you think she's paying close attention to this market? >> i think she's paying close attention to the market. i would suggest she's paying closer attention to the economic news. i think the disappointing iism number creates three economic reports that have disappointed. the employment number for december, the durable goods number and the ism in january. i would suggest that if the employment report disappoints again on friday that yellen at testimony next week remember she goes before congress to give the old humphrey hawkins testimony february 11th and 13th i think she might suggest a pause to the taper, and that would be for the following reason, that it might be in order to kind of see how much the weather may be affecting the data. i don't remember when we last talked about a polar vortex in this country. the weather could be having a profound impact on the data or there could be true economic weakness out there. the fed did this back in september. they paused to get clarification from the data and when the data in your opinion clarified they went ahead and began to taper. i think they would not lose too much credibility -- >> but steve, it's almost the issue, you know this as well as anyone if janet yellen raises this, even raises, even obliquely refers to it the market will price it in immediately and then they'll be in a bind. >> she would do so in order to probably create such an event. i mean that's why she would do it. >> rick do you think -- >> i have to say that you're right, it's a little early given that the meeting, kelly, is in march. it might be a little early, but it may be an option out there worth thinking about. >> what do you think, rick? >> let's play some pepper. bill, do you think we're going to be in a recession anytime soon? >> i guess not, no. >> okay. do you think we're in an emergency here? is the market melting down in a fashion that seems like it's an emergency to you? >> not yet, no. >> okay. well i don't know. i think that based on what i hear, it's very disturbing should the fed halt the taper because what it tells me is that markets aren't markets anymore. they look at a market like stocks. they don't like the way it's trading, they want to alter it. i understand they're in crisis, they have to put liquidity in but this is well beyond that. and i think it really calls into question what a central bank's main purpose is and this discussion will not only be in different pits on this floor but the market might not be enamored with the notion. >> it's a sad state of affairs that the fed is day tradingq e. that's what we're discussing. >> i want to be clear that my remarks have less to do with the market than the da economic data. the market -- i wouldn't say the fed would do this based on the 300 point decline but it's a possibility if the employment report comes out disappointing again, probably sub 100,000. >> don't you think it would take more than just one or two employment reports. it would take a series over months? if all of a sudden the next employment report is back and she immediately takes the buzzer and says i can't take the pain anymore i'm going to flood, that's going to really impact her credibility. won't it take a period of time -- >> you guys say that you have had situation where is that's been said of bernanke when he reversed course and it ended up being the right course to reverse at the time. people say they'll lose credibility. when the numbers out the way they come out, then it ends up being the right call. >> anthony, you're the one that's got the economist on your business card among this group here. you're more constructive on the economy though here, right? >> i am and i would prefer to see the federal reserve continue on its pattern of tapering but at some point when you have a new fed chairperson coming in right when they get to bat, they don't want to strike out on the first time at-bat. if she's going to err, she's going to err on the side of caution, not on the side of being aggressive. >> so you think it's possible -- >> let's not forget we have zero interest rate policy. we have qe but zero interest rate policy. we still have much going on with regard to what the fed's involvement still would be in the economy without any qe whatsoever. >> but then -- >> that's why i would prefer for the federal reserve to keep going. remember, if they just pause, that's a big difference from flooding the market. that's just saying taking a step taking a little breath and then -- >> but -- >> gina what were you going to say? >> but pausing would tell the market that in fact their fears that this might be a slower -- >> that's exactly what would happen. >> -- would be terrible. the market would take it horribly. >> but -- >> hold on because the fed would not be telling the market anything it doesn't already know, right? it would simply be reacting to the data that the fed sees and the data the market sees. i don't think there would be an added signal of worry there and -- >> but you're implying the fed would fight it. >> the tool is not working. >> michael, you have to believe that once the morphine drip starts to slow down the market it's are going to go through a period of thed dts, don't you think, and isn't that what we're going through? >> dts, yes. >> it's a reminder that risk still matters in markets. after last year i think every single retail investor came a little too late. the new bulls came in too late and believe that you'd see a continuation of the stock rally, and this idea you'd have no volatility. we live in a volatile world. everything is interconnected and moves faster. we keep talking about qe and tapering. the issue is not qe. the issue is is it working to begin with. this was the only iteration that did not juice inflation expectations. >> you could blame the fed or you could just say that a broader environment has changed. we look at what's happening in so much of a vacuum that's u.s. centric, but frankly, the rest of the world is shifting into a phase where instead of contributing to a massive commodity price boom we're coming off the other side of it. it's a different landscape than last time. people are exporting deflation left and right and the fed to some extent being the biggest player in the house is responding to this global impulse. you can like it or not, but there is a broader context. >> if you look at the rolling average of the returns, the rolling average the returns over the last 12 months how are they doing? >> they're doing fine. that's why this sell-off -- we're all jazzed up and talking about what horrible thing is happening. look at the rolling 12 months. the market is still up double digits. if the economy is stumbling forward, we're panicked we can't have as much free money -- >> if this year is down 15% and last year was up 30%, averages outside it's up 15%, why can't the fed live with that? >> we've been talking about this idea of double digit returns. retail stock have been falling off a cliff. where is the wealth effect? >> one point that hasn't been mentioned is more than 90% of the incremental amount of quantitative easing doesn't get circulated. it's stuck in the form of excess reserves. you can take two approaches. say i give up it's not working, or even throw more if you though that 10% of it is actually going up. i don't want the federal reserve to do that. i want them to continue along the pattern, but that's still another option. >> anthony, do you want them to do that anthony, do you want them to do that in the face of weaker economic data? how do you -- that's really the question. >> i want the federal reserve to continue -- >> even if we start printing sub 100,000 employment numbers. >> i want the federal reserve to stay on that pattern, but i am also saying this janet yellen may not take that approach. >> don't you think she has the intestinal fortitude to allow the markets and economy to settle down without all the easy money, steve? >> i do. i do and i think that's what she wants to happen and i think she may first, by the way, want to rely and see if she can get any juice out of additional forward guidance if it's possible. but i guess my point is that she also has the intestinal fortitude to take what you said or what was said earlier this, notion she would hurt her credibility, i think she has the fortitude to do the right thing if she feels it's necessary, and she might feel in the case of persistent economic weakness to stopping the taper might be the necessary response. >> steve, define the right thing. what is the right thing for the fed to do -- >> it's a great question. >> if the stock market is moving lower -- >> i'm not talking about the stock market. i'm not talking about the stock market, rick. >> we could couch this anyway you want. >> i am going to couch it the way i want to couch it if you don't mind. the way i want to couch it is -- >> would we be having this conversation if the dow was up 300 with the same data. >> that's an interesting question. that's a great question. that's a great question. i would say that the falling stock market does create an economic reality which is tighter financial conditions that the federal reserve would be concerned about. >> it shouldn't. >> the reason why we have this conversation about quantitative easing is you've hit the zero lower interest rate down. you've hit the zero. you can't do anything more. even though the economy may demand more stimulus and the question is what is the right interest rate for the economy? >> the economy demands certain reforms. >> that's the whole point -- just trying to provide the answer here and the answer is if you hit zero and the economy provides more stimulus, you provide quantitative easing as a way of providing additional -- >> if my house is cold i can shovel all the coal into my furnace i want but it's a gas furnace, won't make a difference. >> thanks, guys. we have to leave it there. >> i don't know how that's relevant, but okay. >> steve, appreciate it. edding towards the close. if you're just joining us we have a sell-off sto start the month off with the 35 minutes left in the trading session here. the dow is down about 2% but i would point out the nasdaq has been the most volatile recently. it is down 2.6%. so technology in the aggregate getting clobbered today, kelly. >> that's right, bill. you can look across a wide range of gauges. the volatility index is jumping. we have small caps in more or less official correction territory down 10% from their peaks. >> that vix now at 20 is at the level it achieved last october, the last time a minor bottom was put in by this market. i'm just pointing it out. not trying to predict anything here. >> or we have just turned back time. the dow quickly approaching correction territory. so what is an investor to do? 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back pain? try bayer back and body. it's bayer aspirin plus a special pain relief booster, to relieve sore backs and soothe aching muscles fast. get moving again with bayer back and body. welcome back. a monster sell-off on wall street as the dow takes another step toward what could be considered correction territory, bob pisani. the dow down 7-plus percent year-to-date. >> i'm calling it the great rotation in reverse. we'll show you why. take a look at the spdr. when we had the opening at 10:00 on the is m numbers when we dropped even further, and i don't know how much weather is accounting for this. they cited it frequently in the ism report but the bad weather blues affected the autos as well. maybe the consumer is weaker than expected and it's not just the weather related event. we've had heavy volume in big etfs today. look at the russell and the midcap which is iwr. we have had roughly twice normal volume. big ones in the spdr too but not as big there. a lot of people are lightening up on their exposure using etfs. they're going into bonds. we are getting titanic volume in etfs in the barkley's 1 to 3. short-term treasuries. intermediate term treasuries, the 3 to 7, huge numbers here. 30 times normal in the ie i and even on the corporate bond we're getting roughly twice the normal volume. so the money is going out of stocks and you can see where it's going here because you can see the flow in these etfs. put up the full screen and i'm calling it the great rotation in reverse. vanguard is down 5% on the year and the total bond market bnd, corporates as well as treasuries and it's up 1.6%. you know the consensus was out of bonds and into stocks and stay away from all the bond market in general. it's interesting how the consensus is always confounded. bill, back to you. >> yes, you have to be careful with that consensus. thanks, bob. heading toward the close. 30 minutes left on this big sell-off day. the dow down 1.8%. and the s&p is down a like amount but it's the nasdaq that's really getting clobbered, down 2.5% just today. >> and bill i'm thinking about the game last night. the super bowl game. if you want to talk about consensus, every time people think they know the outcome, it will be the narrowest game we've had and look what happened. you come into february and people think -- or 2014 and people think it will be more of the same and not so much. speaking of things that have taken people by surprise. japan's stock market falling into correction territory. will the dow soon follow? and if so is that a buying opportunity? that's coming up next. also could plunging stock prices and sinking bond yields force new fed chair janet yellen to abandon tapering? something we talked about and we will talk about it some more. it's important to keep an eye on this and we will do that when we come back on "the closing bell." we asked people a question, how much money do you think you'll need when you retire? $500,000. maybe half-million. say a million dollars. [ dan ] then we gave each person a ribbon to show how many years that amount might last. ♪ ♪ i was trying to like pull it a little further. you know, i was trying to stretch it a little bit more. [ woman ] got me to 70 years old. i'm going to have to rethink this thing. [ man ] i looked around at everybody else and i was like, "are you kidding me?" [ dan ] it's just human nature to focus on the here and now. so it's hard to imagine how much we'll need for a retirement that could last 30 years or more. so maybe we need to approach things differently, if we want to be ready for a longer retirement. ♪ ♪ ♪ ♪ japan's stock market the nikkei back in correction territory with last night's sell-off of almost 2%. let's just all remember though it was up 36% last year and it is now down 10% for the new year. but now look at the dow. down more than 6% from its high. we classify a correction as being down 10%. so i guess we're wondering whether we're to follow here, kelly. >> exactly. the question, bill is whether long-term investors should fear a correction as well or embrace it, and there's no one better to ask than gem ma godfrey and michael farr from farr miller and washington. gem ma i want to kick off with you. why is it whatever happens in japan, we seem to follow suit? >> it's been one of the best performing markets last year. if we broaden out to what's been going on in markets, obviously it's been very consensus driven. that's why investors are focusing on that market and it's a very crowded trade. investors are heavily invested in japan and in tech which is why a lot of the market sell-off has also been driven by these different markets. the way we're looking at it anyway is we're going to be focusing on pullbacks as a buying opportunity. so, for example, in japan, we'd actually be looking at small caps because the interesting thing about the japanese market is the small cap market, they are one of the only small cap markets to have underperformed large cap. it's about being more specific and smarter in the way we're investing. >> michael, are we to follow and have our own 10% correction and would that be a bad thing necessarily? >> yes and no. thanks so much for having me. >> take care michael. >> thank you, bill. >> back to naples with you. >> you know we've been due for a 10% correction. we haven't had one in over two years. our stock market went up 32% last year. so no question we're due. i think that people that panic really haven't been paying attention for very long. this creates a certain opportunity for buying. i'm not pollyanna-ish. i'm always cautious, but if you're going to try to position yourself or when i see this trade that's going on now to the short-term bond market that bob pisani was talking about earlier, i think people are saying, well if it's going to fall another 5%, i'll sell now and go to the sidelines. my experience says you can't do it. if you're going to stay invested for the long term do that and take advantage in terms of buying in bits and pieces when these opportunities present themselves. this could go further but i don't think it's panic time at all. >> well, that's to some extent what i think people need to be aware of is the lack of panic. i'm seeing every single note m my inbox saying i am buying this dip, i got my shopping list out. i'm so grateful for the pull back. >> it means we're going down 15% or 20%, doesn't it? >> is it a smart money play or is it complacency? you know gemma, you were making a joke about this being a hokeypokey market. >> exactly. >> i have always learned you invest for a particular reason and until the reason you invested changes, you continue to invest. so have the fundamentals changed that much to cause this correction here or do you just take it in stride? >> and also you pointed out something very interesting before the break in terms of where volatility is now but let's look at where volatility has been. at the beginning of the year volatility was a seven-year low. this was always going to be a more challenging year. my comment in terms of it being a hokeypokey trade, it's about getting into long term quality names that will provide very good buying opportunities and entry points to. it's going to be, you know -- it's getting out of where potentially the market has run a little too far and a lot of low quality names have been kind of pushed up alongside in this type of rally and shake it all about is about getting smarter within that within sectors. it's about being more specific. something we have seen in emerging markets something that's highlighting is you have got to be specific. you can't trade all of emerging markets exactly the same. country by country they're very different. and so what we're seeing right now is everything moving together and over the longer term as obviously the news flow carries on and the fundamentals show through there's going to be a polarization of returns, and the likes of ukraine, turkey, et cetera low quality names in the u.s. et cetera, all the tech stocks that aren't able to deliver on their promises and they need to in terms of growth because of where valuations are now they're going to be the ones to suffer whereas those multinational steady, stable good strong management, much stronger fiscal situation, they're going to be the ones that will continue to do well and that's where we're more confident and we see these entry points. >> two of the smartest people we know and we like you, too. >> thank you guys. >> i really agree with your point, bill. you have to figure out why you're investing and stay there for the long term. that's great wisdom. >> thank you, michael. take care. >> he is a wise one, that mr. bill griffeth. although the bad weather seems to be following him around the country. >> you noticed that did you? >> yeah yeah. not appreciative of that nor the fact that take a look at markets at this juncture. it is an ugly start for the second straight month here. the dow is giving up more than 300 points at the lows of the session. one of the weakest starts for the s&p and the big blue chips, bill in terms of percent since 1982. all right. still to come maybe this horrible market can help young brands if people are eating comfort food like chicken wings and nachos and pizza. that could help companies' body line. we'll have them after the bell. also going to have more on today's dramatic sell-off and where markets are heading next when that final bell rings in 20 minutes. keep it right here. you're watching cnbc, first in business worldwide. in a world that's changing we'll have them after the bell. ining the competition tomorrow requires challenging your business inside and out today. at cognizant we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through we say: let's get to work. because the future belongs to those who challenge the present. with all the opinions about stocks out there how do you know which ones to follow? 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[ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex. welcome back. for those of you at home keeping score, historically february ranks as the second worst performing month of the year for both the dow and the s&p. >> yeah and history appears to be on its way to repeating itself with the sell-off today. the dow falling below its 200 day moving arveg forverage. here to break down today's moves sheila dharmarajan. >> we have a lot of movers but herbalife kicking it off. the stock had opened to the upside this morning after the company forecast q4 profit and sales above street expectations but now in the red. verizon and at&t leading the do you lower after at&t plans to cut prices on its shared data plans by 20%. in retail land joseph a. bank and men's warehouse continuing their squabble. the former rejected the rival's latest takeover offer. on the plus side we have a winner, one of the few today, that is pfizer. climbing on news it's experiment experimental breast cancer drug succeeded in midstage trial. we begin with yum brands. street calling for an 80 cent gain and hartford expected to make a 90 cent profit on sales of $5 billion. we'll have results of both in the next half hour on "the closing bell." >> yes we do sheila. thanks very much. we'll also talk to the hartford group. >> we can solve the joseph a. banks/men's warehouse fiasco. why don't you buy one share you get seven shares free? >> if we have a lot more days like today -- >> just like their commercials. >> well we're down 306 points on the jourdow jones industrial average. the s&p 500 1742 having breached the november lows. a lot of people looking perhaps for further downside off 40 points today with the nasdaq sitting below the 4,000 mark. >> and the weather continues to pound the new york stock exchange outside. the sell-off pounding the new york stock exchange inside. coming up we'll see how the big automakers are faring with the bad weather and the tumbleing stock market. stay tuned. she loves a lot of the same things you do. it's what you love about her. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help for an erection lasting more than 4 hours. if you have any sudden decrease or loss in hearing or vision or if you have any allergic reactions such as rash, hives, swelling of the lips tongue or throat or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial. 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(announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. the sell-off continues now. each of the major averages down more than 2% at this hour with the dow down 330 points. that's about the low for the session right there. the nasdaq back below 4,000 for the first time in a little while and the s&p down 2.3% as well. joining kelly and me to talk about this john manly from wells fargo and mike mcqueen from hightower. i know you have seen your share of market pullbacks on wall street. does this one make your palms back? >> yes it's a very good sign. i have seen more than my share. we've been through it we'll get through it again. >> and, mike what do you make of this? to bill's point, does this even register when you go through the experience of past sell-offs, whether it was in 2013 or in years prior? >> actually our clients are giving us the right message which is what happened in the past is something we should sit through. none of these have been permanent. they're willing to sit through it. no one is panicking. i think it's a natural cause of what's going on in the last couple years. >> why isn't that complacency, mike? i get what they're saying but when does it become complacency? >> i think the investors out there, individual investors, may have gotten some perspective from 2008 and 2009 and are beginning to act a little more like institutional investors if you can believe it. they have perspective and they understand the market cycle and the value of liquidity in the stock market compared to where their home values are for example. >> because john, it has to be said we're off almost 350 points today. and it's almost like people are going that's all right. >> that's actually rather unsettling. i wish -- i'm getting a little scared. i wish we'd all get a little scared. the trick in a bulg marketl market is to get as squared in a 5% to 7% correction as you would with a 20% to 30% fall in a bear market. even though there doesn't seem to be a good reason for it, it's down, things happen for a reason. >> but, john every time we've had you on not picking on you, but there have been plenty of people like you who come through here saying we need a 10% correction. we need some kind of a pullback to weed out, you know, the weakness in this market. isn't that what's going on? >> it could be. when i go through the fundamentals as i do when i'm scared because i have terrible instincts for stocks when i go through the fundamentals the fed will still be accommodative even if quantitative easing ends, the earnings are still coming through. valuations on forward earnings aren't bad. as long as that holds, it should be okay. i think that's exactly what you're satisfying but it goes down and i don't know exactly why and when i don't know something it makes me uncertain. >> mike we have a big jobs report coming up on friday with a lot of people citing the weak jobs report last time as part of the reason why we've had this sell-off. i guess the stakes are high for that one. we don't have the fed really at its next meeting until march although we'll hear from yellen next week. how does this unfold? >> if we don't have a good jobs number and if we try to ascribe it to weather, we could further be a catalyst for this correction. i would use it as an opportunity to begin to scale in though because i think we do have strong fundamentals. we do have job growth we do have rising home values and we have low energy prices. >> is there anything to this first day of the month indicator where we argued about this in january. does it mean anything? it did last week. does it this month? >> i'm not going to pay attention to it. we have to have a longer perspective. >> do you feel the same way john? >> better than sunspots and super bowls. >> this isn't much better than the super bowl. >> i'm glad -- i'm proud of us we haven't brought up that silly super bowl indicator. john, would you nibble here? would you step in and buy some of your favorite stocks if they've come back here some degree? >> sure. it's hard to do. it's hard to buy into this kind of weakness but this is the sort of thing -- i think they're starting to get to us. i think we're starting to pay attention. that's part of the process. the fumsndamentals are still good. at the end of the day you have to use your brain and not let yourself be ruled by emotion. that's what i'm trying to do at this minute. >> for people who are tuning in right now saying wait a minute the market is off 300 some points for the dow. why? what is your explanation. >> marketthe market needed an excuse. it's really just an excuse. the market goes down because it's been going down for a long time and occasionally it goes down. >> john, what do you say? >> i like the way this man thinks and i think that's what happened. as i said though i would feel a lot more happy if i weren't as complacent as i am. i'd like to see us get a little scared. this kind of day scares people so we're getting there. >> you look at the yield on the ten-year. kelly, you would know this number. >> we went below 2.6% and we started at 3%. we've compressed 40 basis points in a month. >> we're at 2.58% today. and yet it's happening at a time when the fed is pulling back on its easy money policy. it's not buying as many treasuries or it's not going to as it has. you would think, john that the bond market would be pushing yields higher not lower. what do you make of that? >> well i'm not so sure what the fed will do. i was a little surprised they continued the tapering. i think the fed is -- i always felt the chairman of the federal reserve is at least as smart as i am and she has to be seeing the same things we're seeing. tapering is not carved in stone. >> this is precisely steve liesman raised the issue, we'll ask people about it in the next hour about the fed response. not as rick santelli is saying they're responding to the 300 point sell-off or maybe they are, but that they're going to wait to see some real material economic weakness before they would do anything like reversing the taper, would they not? >> janet yellen is seven hours into her tenure. i think she's going to have a bigger view of the situation than what's going on right now. >> what do you think her excuse is? i could picture her sitting in her office now saying well this is weather related. some of the latest economic data we've gotten in the last week or so has been pretty weak and disappointing. can we just lay it all to the polar vortex? >> yeah i think that you will see people laying it off on weather, but at the end of the day, the last thing she wants is to get a reputation as being a reactionary. i don't think she will factor current events in like we think she should perhaps. >> john what about you? >> i think she'll do what she thinks she should do. just because her being brand new as chairman of the fed isn't a reason to do or not to do anything. she'll do what she thinks she should do. we all try and feel our way forward. she doesn't have to increase the taper. >> and i think the guys over at mkm writing a little bit about this and whether to -- how you know when it's gone from a sell-off to something more severe, they said look, we'd need to see not just one month but sustained weakness in the manufacturing gauges like we saw today. we'd need to see plunging consumer confidence. we saw an increase. we'd need to see significant tightening in financial conditions and we're not seeing that. does that sound about right? >> that sounds reasonable. i see nothing wrong with reactive. if i don't get it right the first time i'd rather react than let it go and let it fester. i think the fed will do what they have to do. >> the other indicator that we've talked about in the last hour that i'm watching the vix, the volatility index, the fear indicator, whatever you want to call it, continues to move higher, and we're above 20 now, which historically has sort of been yellow flag territory, and it has sometimes as it did last october signal a short-term bottom in this market. you know this is the fear indicator, mike mcqueen. there's obviously some fear among traders as they continue to buy the volatility here. >> right. and john really made the good point. if there wasn't fear we should be scared. i'd like to see the fear level a little higher. at the end of the day not a single one of these corrections has ever been permanent if we look back across all our careers. so why should this be any different. >> thank you. we want to bring in bob pisani and the great art cashin. art -- >> and i'm going to sneak away back to the set. >> we'll see you at the top of the hour kelly. >> art, what do you make of how the market is responding as we head toward the close? >> i think the key indicator i'm looking at is the yield on the ten year and that's telling me that this is more than weather related. that there are deeper portions to what's disturbing the market and i think it may be things like continuing in the emerging markets and the fact that maybe some of the temporary weakness is not whether reeather related. i'm going to keep following that yield. >> in addition to concerns about emerging market that ism number notabley weaker than expected haas raised concerns about whether the u.s. economy might be weaker maybe perhaps including the consumer. we saw ford's numbers. they don't seem very worried. the ford executives said we don't think this is a big issue. we think it's probably weather related. obviously the market is not entirely buying that argument. >> i think the market is divided into three influences. one, the weak economic data that you got on the ism. second, the internal technicals. when we broke 1770 we began to spiral downward. so that's important. and again finally, harking back that yield on the ten-year is not behaving as though everything is copacetic. it looks like there may be something out there that maybe we don't even see quite yet. >> but, arthur we've talked i will bring this up to you as i have done in the past hour to our past guests. we've talked ad nauseam for the last several months about the lack of a 10% correction or pullback in this market that was maybe need eded to weed out the weak hands. now we're getting it but wrere're wringing it our hands at the same time. >> reason i'm wringing my hands or at least wrenching my brain is that a good broker is a good detective. you look at all the various things and see if they match. should gold be doing what it's doing if this? should the yield on the ten-year be doing that if this? that tells me there's something slightly untoward out there or at least it appears to be. so i'm going to keep my eye open. happy to take the correction but i'm not washing my hands of it. >> in other words, they're running for cover too much in the bond market for your taste. >> they're telling me there's something here not weather related and perhaps more serious. >> you were talking about complacency. i see a lot of concern here. the volumes in the big etfs were titanic today. obviously some people are concerned. the vix over 21 that's the highest level since june. i don't think that's a sign of necessarily complacency. i think there's some signs of growing concern. >> and you have high volume in equities today. another distribution day. >> north of 4 billion shares. a big volume day. >> thank you both. >> okay. >> see you later. so we close out a big sell-off day to start the month of february after a pretty tough month of january. the dow now down more than 7% for 2014 and the nasdaq is back below 4,000. stay tuned now for the second hour of "the closing bell" with kelly evans. i'll see you tomorrow, kelly. >> bill, i hope so. welcome to "the closing bell." i'm kelly he wasevans. it is february. maybe it was because the groundhog saw his shadow. maybe because the mayor dropped him. here is a look at what happened with the major indexes. the dow off 323 points. 15 15,735. the nasdaq off 2.6%. it will close below 4,000. the s&p 500 giving up 40 points to 1742. i want to get to it with the "the closing bell" panel. dominic chu, kate kelly, dan greenhouse and "fast money" contributor tim see more. >> you will read a talk about how we haven't had a 10% correction in "x" number of days and this is the first 5% correction since "y" number of days. most of our clients' view is the fundamental underpinnings really haven't changed. yes, the fed is buying a few less bonds. yes, the economic data hasn't been perfect but ultimately earnings are coming in fine and that's what drives stock prices higher. >> here is a slightly contrarian point of view. i hung up with a hedge fund manager and he said to me it was 2013 that was the aberration. i found 2013 to be less ex applicable than 2008 which had more fundamental explanation for what was going on. people were so overzealous last year. 98% of the people that gave me a long stock idea were right and that never happens. now we're seeing what could be a very healthy corrections in the markets. he was predicting a turnaround between 5% and 15%. he said today is the first day of real pain we're going to see. other hedge funds say they're seeing liquidations of some stock names. people are getting out of the nikkei as well. obviously they're nervous about emerging markets. so i think we're going to see perhaps short term sell-off continue here. >> here is something interesting, too, as well. i was talking to patty don, and one thing she brought up that was very interesting was the ten-year yield. it's now below 2.6%. it's a big move and the reason why it's important was because the taper really doesn't matter anymore. all the bonds they didn't buy that they tapered have now been erased. people are flooding in and buying those treasury bonds, the safety of everything else and that's the reason why you're seeing a lot of this move. this might be this risk aversion trade. and the ten-year yield is where you're seeing the battle lines being brawn. >> remember in 2013 where traders would come on and say i have no reason to sell. the situation has changed. emerging market volatility, weak economic data, concerns about the fed tapering as well as the dow breaking its 200-day moving average, those factors combined are giving investors a reason to hit the sell button. >> and it seems like we're going to see a focus on data right? this is a good question for tim, too. ism today obviously set a certain tone. now we're going to have jobs on friday that would be crucial. there might be a fed-like focus on where we're at from a research perspective. >> is the next move for the u.s. federal reserve -- what is the channel? what is the link here between emerging markets and between what's happening in the u.s.? >> i think the fed basically told emerging central banks last week they really are going to let them fend for themselves right now. i don't think the fed until we see an appreciable impact on the u.s. economy from emerging market weakness which as much as i'm a guy that sits in the middle of emerging markets every day and see this is volatility as being something that's warranted, i don't think this will slow down at least the g3. i think if you look at the data that's coming out, ism to me was a linchpin of sorts because the u.s. economy is what we have to worry about. consumer confidence last week consumer spending, when you look at where we are in the u.s. so far, and even the german said you're right near 2011 highs. >> that's what makes the fed response so interesting. steve liesman just last hour on the program saying look he could see a world in which janet yellen decides maybe next week to dangle a lit bit of something out there in front of congress perhaps saying if conditions were to materially worsen we could do "x." do you think anything like this is possible? >> sure. and are be it for me to disagree with anything steve liesman says. but the fed has always said we can dial down the amount of purchases and dial back up the level of purchases if the economy doesn't react well. but to be crystal clear for viewers that are going to hear a lot about the monthly employment report and the ism, weather is really a bad excuse. companies use it all the time. economists use it all the time. the fact is december was cold and so was january. and nobody shops or buys a house or does a lot of things when there's a polar vortex gripping half the country. it's possible -- >> i'm surprised you're in the weather camp dan. >> for the first time ever i might be. but to be clear, if friday's number comes in weaker than expected instantaneously people like myself will come out and say, well it was pretty cold we have to wait another month. >> we also know and this is one of the useful things about a survey like the jobs report it's very easy to tell if there's a weather effect and there was to your point in december. >> there absolutely was. >> if we see it again in january, then what is the real tell? >> how can you not see it in january? it's been so cold and so precipitous on the east coast alone. even today it's like are we done with had yet? this has to be affecting businesses and certainly consumer spending. >> that's absolutely correct. to be clear consumer confidence in the midst of this ticked up. i think what's important for investors to realize when they're picking specific stocks is a lot of this sends to be transitory transitory. when you look at specific companies you can pick them for yourselves. you don't need my advice on it. when you look at specific companies, the question is how do you not over the next day or three or six but the next six months or year. this will prove to be exactly that. transitory. >> exactly. because if you go back to 2009 march of 2009 those intraday lows, we have seen a number of 5% corrections. forget about the bigger ones the 10% to 17% ones. that happened the last time in 2011. every single time the markets have been bought by investors. a lot of -- >> or by companies. >> fair enough. share buybacks but the thing that's interesting is the fed has always been talked about as the backstop of what's been happening here and now that they're starting to taper back a little bit maybe if they insert themselves back into the picture, do you have that same kind of yellen put effect that you had with -- >> i just want to -- so people can get a sense real quick of what kind of sell-off we have just had with a hat tip to gina francola. it looks like out of the s&p 500 nine companies closed in positive territory. carmax, pfizer, time warner apple interestingly enough edison and o'reilly automotive. tim, what do you make of that? >> look earnings have been very good. you have to pick stocks. we had extreme positioning. 38% of the companies have beat. they're being more rewarded for beating on the bottom line which is a little strange because people have wanted to see 2014 guidance better. that's really the place where people have to be clear. the equities that i see in the markets i'm following are not trading on macro data. they're tradingen extreme positioning and valuations. look at the transports. look at kansas city southern a name down 20% almost overnight when they say 2014 is going to be difficult. these stocks became -- people weren't looking at their businesses. they can only grow so much. this is a place where you have to take a step back make your shopping list. which on "fast money" tonight we're going to have -- everybody will give their shopping list. it's a great time to be licking your chops. >> i want to go to peter costa who is joining us just after the close of trade on the floor. peter, talk to us about volume. i just cited one of the breadth indicators. we only had a handful of stocks in the s&p 500 closing higher. what is the significance of today's sell-off to you? >> there's a couple things i want to bring up. number one everybody in the country and everybody who has been on tv for the last two weeks has been saying this is a buying opportunity. so you know what? i'm going to say -- i'm going to go out there and say we've bail hit the 200 day moving average, went through it. i think tomorrow is a very very important day because if we continue on the downside with significant volume which you can look at 920 million on the mis e and say that's significant volume but it really isn't. if we do see significant volume tomorrow on the downside we could definitely be in that corrective phase you've been talking about. >> let me let dom in here. >> it's interesting because, peter, we talked about the nine companies in the s&p 500 that actually made these new highs, closed up and whatnot. what's interesting is a lot of them have this common thread that they're very domestically u.s. focused. time warner cable is one of them, southern company, o'reilly automotive. the auto parts retailer is one of them. do you see a theme here developing where people really want to go after domestic u.s. focused companies to avoid the emerging market bloodbath that may be happening? >> absolutely. and i think that you're going to continue to see that this week and i think we'll probably -- i have been reading online in a couple different blogs where they think the emerging market situation might go on for over a month or two months. so i think people are starting to put their money in what they feel is the safest -- i'm sorry -- the safest haven right now and that is u.s. -- >> a little mood music here. smooth jazz for these volatile markets. seema, what were you going to say? >> thomas leo at jpmorgan sees the emerging market volatile as an opportunity. he's recommending clients to find companies that have high exposure to emerging markets. there's one contrarian in the mick of this that says this might be a buying opportunity. >> i have a quick question for dom. in terms of the fed having been very involved at the $85 billion a month purchasing rate and now maybe they'll step on the gas again. it's 65 a month quite a high rate as well. they're still highly involved, aren't they? >> there's no doubt they're still highly involved. but it was something bob pisani made during his bold predictions early on. he said he wouldn't be surprised maybe if the fed decided to reaccelerate bond purchases because it does demonstrate they're data dependant. if the data goes the wrong way, maybe they go back and say, hey, we stop the taper, halt the taper a little bit, and maybe even put -- like you said put the pedal to the metal a little more. >> one quick point. let me go on record as saying i don't see a way that the fed increases asset purchase going forward. we have to remember something really important here and that's the fed wants to get away from buying bonds. they don't think it's as effective anymore as they once thought it might be or was. they're done with it. they're relying on forward guidance. i think it would send a terrible signal to markets if -- >> go ahead, tim. didn't you just say they're very data dependent? what do they do? and, in fact yellen fed needs to show there's continuity and continuity says they are truly listening to the macro. >> listen i think they could do one of two things off the top of my head. the first is they could pause. i don't think that necessarily meets the criteria i just outlined and secondly they could rely on forward guidance and reinforce the idea that rates are going to be low for a long time. they could lower the unemployment rate threshold. they could suggest they're -- >> they should just talk about inflation. >> talk about the fact that inflation may not be as high at this current time. someone is coming up who will discuss that very topic. quickly while i have you tim, let me ask you a quick question about the em situation. if i had asked you four months ago to name three or four top emerging markets that might be hit if there was volatility would not turkey the ukraine, argentina be at or near the top of the list? >> they have been on that list for 18 months dan. so this is the thing that's a little surprising and if you look at companies, we're about to hear from yum brands who have priced in a lot of emerging markets headwinds. i think you have to be very careful about shorting into the hole if that's where you're looking at some of these names. i agree with what you're saying. for people that are waking up and saying there's problems in venezuela, where have you been for the last decade and if you look at the economic impact of venezuela on this country w a handful of corporates you hear them talk cmh, pay attention to that but it's not taking down the world. >> that's exactly right. >> tim, thank you for joining us on this day. you can be sure to stick around and catch more of tim coming up on "fast money" at 5:00 p.m. they will all have their shopping list as he mentioned. much more ahead on today's sell-off. two of wall street's top market pros weigh in on what's really happening here. is it a healthy correction? is it something worse? how worried should you be? we'll get a reality check from two folks who have been through this plenty of times before. plus yum brands and hartford financial earnings are on deck. hartford's ceo speaks to me about obamacare, the economy, and more. keep it right here. you're watching cnbc, first in business worldwide. tdd# 1-888-628-2419 searching for trade ideas that spark your curiosity tdd# 1-888-628-2419 can take you in many directions. tdd# 1-888-628-2419 you read this. watch that. tdd# 1-888-628-2419 you look for what's next. tdd# 1-888-628-2419 at schwab, we can help turn inspiration into action tdd# 1-888-628-2419 boost your trading iq with the help of tdd# 1-888-628-2419 our live online workshops tdd# 1-888-628-2419 like identifying market trends. tdd# 1-888-628-2419 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to schwab.com/trading to learn how. tdd# 1-888-628-2419 sharpen your instincts with market insight from schwab tdd# 1-888-628-2419 experts like liz ann sonders and randy frederick. tdd# 1-888-628-2419 get support and talk through your ideas with our tdd# 1-888-628-2419 trading specialists. tdd# 1-888-628-2419 all with no trade minimum. and only $8.95 a trade. tdd# 1-888-628-2419 open an account and earn 300 commission-free online trades. call 1-888-628-2419 to learn more. tdd# 1-888-628-2419 so you can take charge of your trading. welcome back. a rocking start to kick off the week and the month. sheila dharmarajan, running through the stocks feeling the most pain. >> what a rocking day indeed. let's start off with herbalife which had a roller coaster of the day. opening strongly after it said else sales would come in higher than street forecasts. but then it dipped and then ended in the green. we have a big loser in fire eye after the anti-cyber hacking company fired a $700 million secondary offering. twitter was a winner today gaining ground. rbc capital and web bush both said they were optimistic about the outlook for the company's fourth quarter and 2014 performance. ford and general motors losing ground after they reported a 7.5% and 12% decline in january sales respectively. blaming in part of course the bad weather. and finally we do have aol moving higher after the price target was raised to $57 a share from $46 a share citing the company's strategic momentum -- excuse me, citing the company's strategic momentum. >> thank you. for more on today's sell-off, let's bring in the former ceo of wells fargo and daniel alpert managing partner at westwood capital. great to see you both. dan, you're right here. i want to know what you make of the markets today? >> all of this is a reaction to the ism and pmi data but that was signaled at the end of the q4. china was beginning to soften already and the problem with that is that you only have a world here of limited aggregate demand. when china softens, it's signaling. when we get to a situation where china's inflation rate starts to come in that's very bad for the united states. >> how bad is it going to get here? >> in my opinion, bonds and equities are adjusting to a post-qe world. everybody thought that when qe ended we would see interest rates go sky high or at least higher. >> right. >> that is proving not to be the case. there seems to be ample demand for high quality sovereign debt. that's not just in the united states but uk japan, et cetera. and that demand is out there no longer facing the falling knife of tapering. everybody sees tapering is happening and, oh, my doshgosh -- >> how much lower could interest rates go? >> i think 2% 2.5% on the ten year. >> i don't think that's going to happen. i think the opposite will happen. but i think what's happening today is very rational. i think the market is very fairly valued. i have been saying that for quite some time and i think that when the fed says the reason they go qe 1, 2, and 3 is to help risk assets when they taper, you would think the opposite would happen. so we're simply seeing a rational reaction to say the fed is tapering therefore, they're not going to support the market as much. but that's healthy. i think if we get a 10% correction, i think the market will be higher at the end of the year than if we don't get a 10% correction and we keep the market going to levels that cannot be sustained. >> what do you think, dan? >> well i think right now we're looking at all financial assets including housing in the united states having been rallied enormously by an easy money policy that's been going on for five years. but i just go by the past. after they announced qe1 was going to end and qe2 was going to end, bonds slumped and interest rates rose and then the market rationalized. >> the same thing that happened now happened then. >> and the same thing is happening right now. >> this is what i wonder. so you can see a situation in which the u.s. economy is improving and we work through a little bit of a sell-off and we come out the other side having felt as though we've moved on. but what happens if we're trapped in the past or trapped in the situation like we have seen in the past where those weaker financial conditions that you mention make the fed feel like it's got to step up? >> well i think the fed has finally realized qe 1, 2, and 3 didn't work and i think they want to get out of the bond market. we're seeing also that i think the reason that the ten-year has improved is the flight to quality. you know the currency situation in developing markets again caused by the fed is disruptive. where are you going to invest? the stock market is fully valued. so it's very natural that it goes to the high quality bonds. i think that's just temporary. i think it's not good for the u.s. economy because the weakened currencies in developing markets is going to cause our exports to be reduced, and that's going to slow the economy. all of this is caused by an inappropriate fed policy and anyone who believes that more bond purchases helps to grow this u.s. economy doesn't understand the u.s. economy in my opinion. >> what is the right response dick? >> to keep tapering. the best response is if we could taper faster but they won't do that. >> i think -- >> i think $10 billion a month until it gets done. >> i think there dick and i completely agree. i would end the qe tomorrow. the price dislocations that have resulted are horrible. >> i totally agree. >> what you need to do is watch the inflation statistics. the bond market is not going to slump if inflation is sub par, continues to be sub par, and if you look at the things that drove inflation even to its very meager 1.5% 1.7% levels of last year those were expansions in housing and rents and other areas that right now we don't see -- at least from our perspective, we don't see a good chance of that continuing. >> you're writing about the age of supply that's your book -- >> oversupply. >> what did i say? >> supply. >> oversupply. i'm sorry. oversupply. this is an important part of it. you're talking about oversupply super low inflation, and yet saying the fed shouldn't respond. >> well the fed has responded, and what it's concluded in the last round is that it has diminishing returns. they did pump up assets. dick is absolutely right. they pumped up financial assets housing, et cetera and the problem is that has only had a limited impact a very limited impact on the real economy and what's happening right now is people are scratching their heads and saying if that was all we got in the real economy, what is the world going to be like without it? >> dick last word to you. >> and i think we should worry about something else. we're seeing a reaction just from the tapering. there's $4 trillion on the fed's balance sheet. ten times more than than there's ever been. think what's going to happen to the bond market when you have to start getting rid of some of that. so, you know all the things the fed has done other than get the markets back to normal in 2009 in my opinion has been a mistake. >> all right. well that's m.y.r.a. comes in. the retail public can buy them. >> thank you. really appreciate it. then there's the fed. it is janet yellen's first day on the job officially today and she's greeted with this kind of sell-off. is she paying attention and what does the fed do now? 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>> i doubt it. it will be much more dependent on the economic data. for instance, if we get a strong jobs report friday that reverses that bad one we got in december and if the revisions are to the upside, that would weigh much more on her decision making than a few more days of corrections in the market. i think she said in her confirmation hearing she didn't think stocks were in bubble territory but clearly is aware they ran up a great deal last year and we're seeing some of the froth come off and sell-offs in stocks. if we were to see down days of 3% day after day, that would be a different story, about you a couple more d a a couple hundred points off the dow and s&p will not weigh on her decision to taper. particularly if that economic data turns a little bit and starts coming in stronger and we do think a lot of it was weather related, then i think they stay on course. >> ben it's kate kelly. how are you? >> i'm great. how are you? >> good. one of the thoughts people seem to think about yellen is she would be staying the course bernanke set as chairman. this is a job with quite a bit of latitude and right now she has potentially added latitude because if the data changes, she has a very reasonable explanation for why she may want to change the taper plans as they're unfolding right now. oshd on the other hand, she has indicated she would stay the course charted and she could write off one set of economic data as a one off, weather related, so she's got quite a suite of options here and probably a grace period right, to kind of make her first few moves without an overreaction. >> i think that's probably true and obviously she's got a pretty long run of data to draw from when she faces the press on march 19th. we're talking about bad data now, but there could be a lot between now and then that changes. that's why it makes next week sort of interesting when she's on the hill right after the stock market sell-offs and with this bad economic data. my guess is she doesn't make a whole lot of news she continues to say the economy underlying some of this volatility is doing pretty well, doesn't get too freaked out about the stock prices, and indicates that the fed will stay on course which itself could lead so more turmoil in the markets but it will take a lot more bad data to get her off the plan of tapering. you had previously guests who said the fed is very desirous by the end of this year getting back to more normal policy. they want to get on the sidelines and they think the underlying economy is strong enough to let them do that. >> but what if what if janet yellen -- what would the market perception be if yellen would taper the taper? that's my question. would she be conceived as weak perhaps for her to come in her first fed meeting and to then already change the plan in action? >> no. i think the reverse would probably be case. she'd be viewed as taking bold action in the face of difficult data to pause and just following through on what the fed has said that there's no preset course and they could change direction. no matter what she does she'll come out fine. >> could be remember volcker moment. ben, thank you very much. baptism by fire to be sure. we'll have more on the sell-off today. wall street's red arrows companied by a harsh snowstorm too boot. a heads up on when the next round will hit. there's another storm on its way across the country heading to the northeast. plus the big three automakers or at least two of them skidding because of snow and cold. coming up just what has been the impact of weather on auto sales? we'll be right back. let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable professional. would you trust me as your financial advisor? 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[ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro you just don't know. find a certified financial planner professional who's thoroughly vetted at letsmakeaplan.org. cfp -- work with the highest standard. welcome back. it was bad inside the stock market and outside today as well. mother nature has been wreaking havoc yet again this winter and it could get worse this week. nbc's jen maxfield has the latest out of morris town new jersey. i cannot believe it's still snowing. how much accumulation is there? >> reporter: kelly, it has been snowing for more than 12 hours now. we have a little more than six inches here in morris town but as opposed to the last storm where the weather was so cold what we are dealing with today in morris town is much thicker, it's wet, and heavy. you can see what it's doing to the branches and the lefers onaves on the tree behind me. that's caused a most of problems. police are reporting many utility lines down throughout the state of new jersey. there are power outages, especially in bergen county and that again because of the weight of the snow on the utility lines. i do happen to have a ruler here with me. i'm not promising this is a scientific measurement but we're going to put it into the snow that's accumulated on this fencepost here and we see about seven inches in morris town. it's one of the larger snow totals in the state of new jersey, but, again, this snow really a challenge for people who are trying to dig it out of their driveways. a snowplow just went past here on farragut street just about two minutes ago so you can see the street here is clear and that's pretty good especially considering this is a dead end, so probably one of the last streets to get plowed but this is just round one for this week. this is storm maximus. early wednesday morning we're looking at winter storm nika and then again on sunday potential for more snow. the people we've been talking to today say they have absolutely had it and it's only early february. so, again, a snowy week expected in new jersey. kelly, back to you. >> and a near miss for the super bowl. thanks very much. it's something walmart talked about in its fourth quarter, about the impact of eight named storms on its results, and today ford and general motors both down with the rest of the market, this on word that mother nature hit auto sales hard in january. phil lebeau assessing the damage for us. hey, phil. >> ugly numbers, kelly. anyway you look at it ugly numbers for the month of january for the auto industry. when you look at the sales pace compare where we came in in january versus the annual sales pace. 15.24 million for the month of january, and there you can see many people saying, well listen, we should have been closer to 15.6 15.7. fell well short of that. sales on the eastern half of the united states were below expectations. on the eastern half of the u.s. and in central u.s. they were down 10% according to ford. that was for the industry. the automakers say the problem is there simply weren't people coming into the show rooms. traffic was down. picked up a little in the middedle month when the storms went away but then it got bad towards the end of the month again. they're not changing guidance when it comes to sales for february or for the first quarter. take a look at these number. i said they were bad. all below expectations. chrysler, even though it was up 8% that was below expectations. stocks, this he took it on the chin today, especially gm and ford. selling off probably with the rest of the market but these numbers did not help. if there's any good news here, kelly, it's the fact that i have talked with a few dealers and all of them have said the same thing. they believe the weather kept people out of showrooms and they do believe people will return weather permitting this month. >> wow. phil, stale with us if you will. at this point i want to bring in auto expert lauren fix, known as the car coach. lauren, welcome, and is this weakness really all just about the weather? >> thank you. well, part of it is the weather and the other thing is a lot of consumers have just seen the l.a. and detroit auto shows with a lot of new product. if you want to buy the new kia k-900 or the new mini cooper you have to wait for it to get into show rooms and everybody is saying spring. justs a jeep had a really good month up 38%, the reason for that is new product is finally getting into dealerships. they had some manufacturing delays. that's part of it. but then on the other side you have to look at all the incentives out there. you can only milk this market so much and the average price of a car being sold at gross number is down 1.2% bringing the average price of cars down to about $29,800 a vehicle. consumers can only be -- with the economy, you have tax returns and the weather, i think all three together sort of hit their own polar vortex. >> well and, phil what i wonder and i'm sure it's important for all the auto stocks is whether auto sales in terms of the new auto sales is praek peaked. 2013 was such a strong year. is that as good as it gets? >> no. if we have two or three months where we come in at 15.2 or 15.4 million as the sales rate then we'll see people adjust their expectations lower, but right now, kelly, the expectation is that overall sales for the industry will be about 16.3 million for this year. compare that with 16.4 million for last year. >> lauren what about you? >> i think we're looking at somewhere between 16.1 and 16.4. it's really hard to tell because it's not just the weather. it has to do with the product, has to do with the economy. remember, people are still waiting for that tax bill to come and that's going to be impacted by our current on again/off again economy. we had a dip in the stock market and also we've got obamacare which could impact individuals to the point where they don't buy that new car and hold off on that purchase. these are all factors that are very difficult to predict. >> you know phil i want to ask to that point, there's been more suggestion lately given the broad based weakness we have seen across some major retailers that maybe it is the health care premiums related to obamacare that's taking more of a bite out here than people had expected. anything anecdotally you're picking up on that? >> i asked that question about five minutes ago to an auto dealer in kansas city. he laughed and said i have never heard that suggested yet. i brought this up to others in the i industry nobody thinks increased premiums might be keeping people from going into the showroom. when you look at the leasing rates and interest rates, if you want a car for $170 a month, you can get one. >> i know. >> it's never been cheaper. so that suggestion has been floated out there. i have not heard that from anybody in the industry. >> got to leave it there. lauren, great to see you. thanks for all the detail and pushl if especially if it was that part of the country where we saw weather, you can understand some of the weakness. appreciate it. also hartford financial out with results just moments ago. the insurance giant ceo speaks to me exclusively next. we'll talk earnings. we will talk obamacare and the economy a lot more. keep it right here. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. 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>> hi, kelly. it's nice to be with you again. it was an outstanding fourth quarter. it was a milestone for us in transformation and turnaround of the firm. and a lot of good things coalesced in the fourth quarter. our go forward businesses had very good year over year earnings growth. we significantly reduced the size and risk of our legacy variable annuity blocks particularly in japan. and we made progress in the effectiveness and efficiency of the firm. because of our financial strength and now significant capital flexibility, we were very pleased to announce a two-year cap management plan with $2 billion of equity repurchases and about $656 million in debt repayment in 2014 and '15. overall, a very gratifying quarter and year. >> sure. and i want to ask you about a couple specific parts of your business. and apologize for the syncing issues we have. i can hear you fine. tell us about autos. we got weak auto sales numbers today. there was news out of the obama administration that they may be encouraging cars to talk to one another down the line. what are you seeing in terms of the auto insurance business? >> actually that business performed pretty well for us. i listened carefully to your segment with phil lebeau. and i would agree that east coast and eastern u.s. weather had an impact on economic activity, as we've experienced here in new england. telematics is an emerging theme in aweuto insurance, where you can adjust premiums based on the safe driving habits of the insured. and there's technologies coming down the road where cars will become smarter. that's not a near-term thing but it's something we're thinking about and preparing for. >> what about claims for things like workers comp? we heard about the weakness from u.s. consumers, when food stamps run out, unemployment benefits run out. can you tell us about trends in that important part of the business? >> well both in our workers comp business and our disability business claims have really flattened out. loss cause trends have flattened out and are actually beginning to get better. that's one of the reasons you've seen improvement in profitability in workers comp for us. as well as a significant improvement in improvement in profitability and life businesses. >> quick, because today's market action was so severe we've seen stocks sell-off. but we've seen longer-term interest rates really come down this year. how much of a headwind for you guys? >> well certainly, lower rates make investing new money, getting an acceptable yield with the appropriate risk/reward more challenging. but i'd remind you, kelly, that we have a large general account. but only a small percentage of that is up for reinvestment on an annual basis. it's a headwind. but it's manageable. >> liam thank you so much for joining us this afternoon. really appreciate it. liam mcgee as the hartford group turns in earnings. the snowstorm, meanwhile, turning wall street white. allen wastler joins us now with "the host list." >> it was all about the market today. look at the traffic spike we got just after lunchtime when things started heating up. look at that bad boy. just a nice little poke up there. there's already over 40,000 people have read our market story for the day. and they're still piling in. i checked just a couple minutes ago. 5,000 people every minute reading the story, all the way through. now, when everybody's worried about the market they want to hear what the wiseman has to say. art cashin in an exclusive video, talking about the two key factors he's looking at. he had some interesting thought about weather and the jobs number. sort of like traders can use the weather as a get out of jail free card. anyway our final thing on the "hot list" today, we did an explainer on market corrections. what does that mean? well it's 10% below. there's a lot of nuance involved in a correction. and there's a lot of difference between that and a bear market capitulation, all the other things. we lay it all out there. if it's confusing you, go to the website and check it out. those are my three burners. >> i think it's fascinating. i often think about it as 10%. but it's not the case actually. >> it's not exactly 10%. it's not like the market says we hit the 10% level. markets get sloppy sometimes, right? >> and so does the website. thank you, allen. great to see you this afternoon. here's what i wonder. is it almost like the old reagan line about a recession and a depression, like a -- how would you describe a correction? >> i've had this fight with a number of our clients. and i get angry with people on tv who say we haven't had a 10% correction in however long. there were concerns about greece in 2012. the s&p sold off 9.94%. is that not sufficient to meet the level of a correction? i don't agree with that and i don't think many other people would. >> that would suggest that markets aren't as vulnerable to -- in other words, the climb hasn't been as aggressively upward without pause, as people have been characterizing. >> whether we had a correction of 10% or not, or the summer of 2011, or not, is whether you're susceptible to a correction today. each depreciation is separate from the last. but these are interesting talking points that people use. but to the point of the cnbc story, there's no firm definition if we have a correction or not. >> dom, it is pretty clear. you want to talk bear market, 20%, right? lopping off a fifth of the market value. >> you need a point of reference. that's what investors are looking for. they're looking for a reason a methodology, a data point to make a decision on whether they want to buy or sell a stock. in this case a correction maybe the technical term for a lot of traders is 10%. some people say a 5% decline or a discount in price, is still a quote/unquote correction. but what it boils down to is if you believe that correction is something that's going to exacerbate or one you can buy on. that's why people focus on the number 10. >> on the fundamental side, it's weak academic data. we see the sell-off pressure continue, we're seeing market technicians looking at the 50 100 and 150 day moving averages. >> these are the levels we'll watch tomorrow. 1730s on the s&p 500 in some cases. we have a lot lower to go. 14930, that's the 10% correction ground for the dow. thank you so much. coming up on "fast money," correction protection. traders revealing their shopping list. what you should be buying after today's sell-off. i always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count headache, diarrhea, vomiting and increase in psa. ask your doctor about axiron. 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about 15,700 to be in the green for the week. we are well in that territory right now with this 140-point gain. >> and why are stocks higher with another anemic jobs report? is the street discounting the number due to the bad weather we've had? is it betting janet yellen will taper the taper because the economy isn't where it needs to be? we'll get a team of top minds making sense of all this including former chair of the white house council of economic advise errs cris errs christina. >> and smash burger expanding across the ghuntcountry in a bi. why they have confidence to grow and create more jobs when others are seeing red flags. >> let's recap where we stand as we head into the final hour of trade. the dow up 140 points at 15,771. that leaves it in positive territory for the week. take a look at the nasdaq, up 60 points to 4117. and finally the s&p 500, pretty strong rally adding 20 points. it's now 1,793. >> so here we go. final hour of trading in what has been a very volatile week. joining us in today's "closing bell" exchange. eric, ken, paul, and, of course, our own rick santelli. patti edwards, you're a savvy trader. what is the message of the markets today? why is it able to mount a rally on such seemingly anemic jobs numbers today? what's it telling us? >> you know, i think what people are finally coming down to is the fact that the market actually trades on earnings, and earnings have not been that bad. they have not been phenomenal and we have had some serious missteps, but earnings in general have been pretty good. >> we're all talking about jobs and the market is thinking about earnings today? >> you know, the jobs actually do make a difference, but if you look at the underlying numbers in there, manufacturing was up twice what was expected, maybe even a little more than that. and the disappointments were not in areas that you would have expected to see them. so you would have expected that retail would be weak. you would expect that the government would be weak. you would expect that construction would be strong. we saw all that. >> you know, ken, a lot of people now looking at the action yesterday surprised that we're still holding up okay today, that it wasn't more of a high bar disappointment kind of story. what do you think is really going on here? >> i think the market kind of likes the numbers in a weird way that maybe tapering gets pushed off. i recall being on this set the second tradesing ding day of th and i remember how giddy investors were and how quickly it seemed. the sentiment changed from euphoria to worry. >> to be clear. you're saying the positive reaction is sort of a bad news phenomena, that it's weak and the fed will have to do more. that's a pretty strong view. >> at this point they're kind of discounting a lot going forward. in the end i agree with the other guests that earnings will eke out and that's where people should focus. >> is the economy good enough for not good enough? >> it's right back to that kind of not too hot, not too cold, that kind of goldilocks where we're running around that 2.5% gdp. maybe with taper it will slow down a tad. it's in that goldilocks environment. >> eric, the russell 2000 was near the 10% correction level earlier this week. now we get this rally. is the correction over? is this it for now do you think? >> well, i think you have to understand the market coming into this year was a lot more optimistic about the economic environment. i think you'll see a lot of volatility based on economic data that comes in and disappoints. i don't know if the correction is over, but i suspect that the market tendency is up because of the strong economy that we're seeing in the u.s. none of the economic data we have seen globally is pushing us off of a 3% growth rate in the u.s., 3.5% globally. >> does that mean the correction has run its course. >> no way. i think we'll have a lot more volatility. from a global perspective some countries are actually tapering like the u.s. and brazil, and then you've got japan that's actually loosening. you have got that and then you've got earnings. and earnings actually have been really good to patti's point, but historically profit margins are 70% higher than they've ever been before. that's not really sustainable over the long term. so i think we're going to see a little bit of a churn over the rest of the course of the first half. but that doesn't mean that we can't come out very well from a corporate perspective. but good news is bad news and bad news is good news, so it's really -- you got to kind of flip it on its head. >> dani, i am going to pick on you because you're on camera right now. if earnings are that good, then why aren't corporations doing more hiring? >> for a couple reasons. what's their incentive. the government and legislation has not been there to push it to corporations to invecentivize tm to hire. there's a lot of reasons why corporations have become more efficient and are holding onto that cash and not hiring like they used to. >> want to get paul into this conversation as well. paul, so what is the verdict from markets today? are we in a bad news is good news period or not? because, frankly, it seems like the benefit of the doubt here is what investors are giving this jobs report, giving this market, saying, you know what? maybe it's good enough and not necessarily expecting anything more from the fed. what do you think? >> i think you have to make a distinction. the economy is doing well. corporate fundamentals are actually doing well but we have a jobless recovery, and you have to look at three trends. the first trend in joblessness is that as the unemployment rate has gone down over the last six months as much because of labor participation, people dropping out of the market, as we are growing jobs. and that's going to continue because we have 3% of the population retiring as baby boomers and we only have 1% population growth. the second thing is that we basically have higher productivity. according to thomson reuters, we have 9.2% earnings growth for the fourth quarter that beats most analysts' estimates. so companies are doing really well with fewer workers. and the third trend is we have a government that is putting up barriers to job creation and not giving incentives for job creation. so i think we're going to see a continued slow jobless recovery while at the same time the underlying economy is going to do well -- >> so what do you do as an investor, paul? where do you put your money then? >> i put my money in the stock market. i think we still got a little bit more to go on our correction, but i think this correction was needed and long overdo, and i think there are some real opportunities out there right now. >> meanwhile, the dow is up 154 at the high. rick santelli, have we set it up for you on this one. is the treasury market the only investment class that actually paid attention to that jobs report this morning? >> i think so, but i think our panelists gave us a lot of clues as to the problem. the first, the last gentleman said a jobless recovery. he's right. and then dani hughes said, well, the government doesn't make it easy to hire, but yet they're both bullish stocks. here is the problem is that i can understand a jobless recovery and i can understand a globalization process, but we don't need to hire people and still have some companies doing better. but in the end the government is the issue. the government can't deal with all this joblessness and their corrective measures will end up eating through all the dynamics that make it possible to be bullish the stock market under that scenario. the second issue is we have an eye issue, it's called blinking. the supreme court in germany blinked today, the chinese blinked, and many think the fed is going to blink. that empowers them to continue to think that the punch bowl will not only stay but it might refill. one last thing that doesn't really have anything to do with it but it's important, if we look what happened to moody's today, two notches lower on puerto rico. following s&p on the 4th, one notch, both in junk territory. if you look at the etf for munis, it hardly noticed. if you look at a one-year chart, it's hardly noticed, but i think this is going to be an issue to pay attention to, and especially for the distressed security guys that are going to be jumping into this to see if they can find some straw to turn into gold. >> crazy. >> they might be, packtti, but what should investors do about the puerto rico issue? >> i think if you've been in puerto rico you have not been paying attention to the headlines. puerto rico is unto itself. there are still some we think fantastic bargains in moounicip bonds but know the municipalities had you're buying. don't just buy the etf. you want to own the individual bonds. >> every following indicator is like the january barometer, the super bowl indicator, the afc team won. i'm going to go with the groundhog. he didn't see its shadow, six more weeks of a correction. >> groundhog didn't see his shadow -- >> because he were dropped. >> because he couldn't get out of his hole. there was too much snow on the ground. thank you. have a great weekend. everybody watch the olympics. how are you, partner. what a day this has been, huh? >> bill, i miss you. you got to get down here. >> i will get back there. we've got 50 minutes left in the trading session and look at this. if you just tuned in, you missed the jobs report this morning, and the market is, too. it's up 154 points right now. >> good point. investors are shrugging off a disappointing payrolls figure anyhow. when will bad economic news go back to being bad news for the market? what is going on here? we'll talk about that coming up. >> also, we'll look at whether the market is betting two straight months of weak jobs data will force the fed to taper the taper or blink as rick was suggesting or if the wave of snowstorms across the country is the culprit in making the labor market look worse than it really is. and we want to know how much you think the weather has affected the jobs report. that's your assignment today. tweet us with your thoughts coming up. >> yes. @cnbcclosingbell, that's how it reach us. and next we'll hear from a company that's hiring a bunch of workers. the ceo of smash burger tells us about what's behind his company's rapid expansion. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. well, if our next guest is concerned about the economy, he's got a funny way of showing it. the fast casual burger joint sm smash burger is planning to open more locations this year. wi >> with us now is the ceo, scott crane. >> thanks for having me. >> can you explain at a time when people say there's no middle class, no middle market in this country, who is your customer and why do they keep coming to smashburger, paying up for your products when they're potentially under so much pressure? >> sure. i think the fast casual segment as a whole is growing as part of the economy. certainly in the restaurant industry. you see nar ra, we're the young, better burger category. >> where do you stand on pay? there's a movement in the ku country and mcdonald's is taking a lot of heat. some folks who are making $8 plus an hour at mcdonald's want $15 an hour and mcdonald's is blanching at that kind of number. where do you stand? should you be paying a living wage? >> i'll let the government decide what the living wage should be. but at smashburger we index ourselves against our competitors and we pay well above minimum wage. >> one of the issues this week that's been getting a lot of attention is how much the cost of obamacare is affecting companies. i understand you guys have a good bit of a portion of what you do as a franchise model. talk us through 2014. what kind of increases are you facing if increases at all, and do you have to do things to offset that cost elsewhere? >> 2014 very minimal, if any, cost increases. we are looking at obviously every business should, what the effects are ongoing and certainly in the next -- the few outyears. but we look at whether it's the offerings we have, we're still hiring the right number of employees at every restaurant, and then what can we do with our vendors. the one thing we have an advantage over a lot of companies right now is our growth rate. so each year we get bigger and bigger economies of scale as we're adding 70 to 80 restaurants this year. that will certainly help. >> costs are going up. we're throwing all these problems at you. it's nothing new to you i'm sure. raw material costs are going up. commodities are going up. do you have to pass it on to the customer? how do you deal with that right now ? >> we've kept the same base burger price for seven years. we're seeing such buying power increase exponentially over the years. >> you're able to buy at a lower cost because of the amount you're buying right now. >> absolutely correct. >> who is your typical customer? >> very broad. you know, we see the age demography from the teenagers all the way to retired age. we see -- we have about 50% men and women. lots and lots of children with -- children with their families. so it's really a broad segment. burgers being $100 billion category, we're only $250 million of that. we've got a whole lot of white space. we have a huge opportunity in the next several years to get to 500-plus. >> i was just going to say as you do that, i'm curious, whether the nature of a job as it's changing while you're expanding, do you think of hiring in terms of number of employees or do you think of hiring in terms of how do we cover this number of hours and, you know, those might be a lot of part-time positions? >> sure. so both. we find the right employee and if that employee is a part-time employee, we have to find more part-time employees. we like fook for the right peop the right positions. we have a great story to tell our employees once we get on board that we're adding 2500 jobs in '14, 200 to 500 management jobs and that's a great story to tell and a great development path for our team. >> we've spent all this time, we haven't even had you sell your burger yet. why smashburger. there are those out west who want to go to in and out burgers, the five guys are doing so hot. why smashburger. >> fat, never frozen, smash cooked to order. artisan buns. five cheeses. we serve chicken and salad, hand spun haagen-dazs shakes. casual dining in a quicker atmosphere. we serve beer and wine in most locations. the consumers are really telling the industry as a whole midteen digit growth last year in the fast casual segment. they're talking with their wallets. >> we're sorry about the super bowl. >> yeah, thanks. that was painful. >> at least you can tell a better story for denver right now. >> yes. >> thank you very much. good to see you this afternoon. >> thank you. i appreciate it. >> there's one company that is hiring. and, bill, we have 40 minutes to go to the close with the dow staging 145-point rally building on the gains, about 180 points, that we saw yesterday. >> wiping out the losses from monday's 300-point drubbing. that is just incredible over the last five days. will the real economy please stand up? you'd think this weak jobs report would spark a market sell-off. instead, we are rallying. what is going on with the market. steve liesman will try to make sense of it coming up here. also bitcoin prices, a big drop today. they plunged earlier in the day. now making a reversal. what has sparked the comeback? we'll talk about the volatile moves later on "the closing bell." body pain? back pain? try bayer back and body. it's bayer aspirin plus a special pain relief booster, to relieve sore backs and soothe aching muscles fast. get moving again, with bayer back and body. to manage your money.r guy around 2 percent that's not much, you think except it's 2 percent every year. go to e*trade and find out how much our advice and guidance costs. spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at letsmakeaplan.org. cfp -- work with the highest standard. so which is the real economy? please, stand up, somebody. yet another jobs report skewed by historically severe winter weather or was it? is the u.s. economy on the right track or not right now? >> with us to try to answer that all-important question, jeff kay from bassman sanford rose associates. dean baker from the center for economic policy -- economic and policy research and our own steve liesman. it's great to see all of you. jeff, first to you. how does this report square with what you're seeing firsthand? >> i think it's probably a tale of three cities, if you will, or three job markets. if you're a professional, college degree, you're loving this. cozy and warm, it's 3% unemployment and really full employment for you. on the other hand, if you're not college educated, not even high school educated, you're closer to 10% unemployment, very different circumstance, and if you're part of this economic -- long-term structural unemployed, you have been in the cold so long you're kind of numb -- >> all those figures did get a little better. >> it did and shrank that number. >> is this one of those reports where the headline really doesn't tell the whole story? >> i think that's right. and i think there is a little bit of weather in this report and there's a little bit of weakness in this report. and i think both of those things are true. you did have strong growth in the third and fourth quarters of last year. that seems to be pretty clear, and it's not unusual to have a little bit of a fall off in that as you work off high inventories. on the other hand, there are a couple areas where you might see some -- you might be seeing some weather effects. for example, maybe in some of the education workers, some of the furniture retail workers, and also there's a big drop in sporting goods and hobby stores, almost 22,000 down in that retail category. so perhaps that was a little weather related. unfortunately, bill, the answer is it this or is it that, i have to offer a third answer, it was both. >> is it this or is it that, the answer is yes. >> it's interesting to look at the report which saw the unemployment rate dropping for the quote, unquote, right reason. there was an increase in the labor force and yet it still came down. does this give you more confidence in the health of the labor market? >> we've been getting strange numbers. we had a big falloff last month. what happens with the numbers, the household survey is very erratic. i think it's noise, in other words, i did want to correct that earlier comment about full employment for people with a college degree. i'm old enough to remember before the recession it was 1.8% unemployment. so they still are seeing a big percentage increase in their own unemployment. still much better off than people without a college degree but that's far from full employment. >> wait, are you saying that for people with a college degree, 3%, 3.5% is not full employment? >> that's right. if you look back to before the recession or if you want to go back as far as the late '90s, we were down around 1.6%, 1.7%. they have always had much lower unemployment rates. we had 4% overall unemployment as a year round average in 2000. >> you know, kelly, there was a paper presented in philly if i can get an economic wonk hat on -- >> bring it on. >> there's been a decline in innovation which means there hasn't been as much need for brains -- >> how do you know there's been a decline in innovation? >> because there's been a huge decline in the spending on innovation. there are some wow products out there, but overall the innovation pace is pretty stagnant and the result of that is college degree people are taking jobs that used to be held by people without college degrees and that's pushed them out of the workforce. it's a movement down. >> that's interesting. >> i have had three people tell me just today, a business owner, an economist, and a market trader, all of them said essentially the same thing. that this is the kind of job growth we need to get used to. this is the new normal, jeff. >> we shouldn't get used to it. it's an unacceptable rate of job growth. i would say this is bad policy. we need something to boost the economy. it could be stimulus if that's out of style which could be on the net export side. we have to boost the economy. the idea we've had bad economic policy and say, okay, nothing we can do about that, that shouldn't be acceptable. >> jeff? >> i think it really depends on the industry you're in. i do think the new normal is it's been gradual unemployment rebound which who knows, maybe it's better than niethese gigan swings we're used to. i use a quick example. apple has 45,000 employees. 30,000 of them are in retail. they got tanked today because of online and the cold. that leaves 15,000. fox con in china, 3 million. 300,000 just make the iphone 5s. if you're one of the 300,000 in that world, sales, marketing, communications, and all the industry that is support that, construction, energy, even financial services and health care despite some of the regulations, and by the way, recruiting firms and professional services firms, had ep them with those challenges. i think it really depends on what section of the economy you're speaking to and that really dictates it. >> it kind of gets back to your point which is to this point because there hasn't been pretty much anything happening with fiscal policy or there's been austerity or whatever for the last couple years, it's been up to the blunt instrument of monetary policy. are we at a point now where that needs to be shifted into something more targeted towards the industries or the class of people who are suffering most? >> i have an answer for that. i think you get to a point where, you know, monetary policy is helpful but should definitely not be the main tool, especially when you talk about the long-term unemployed who have a real proclivity for dropping out of the workforce and especially now that we've gotten rid of the unemployment benefits which makes them now more likely to drop out of the workforce. these are serious fiscal policy issues i'm betting if you went and told the fed we're going to do something to help the long-term unemployed, they'd stand up and say thank you for taking this job away because we've been the only ones concentrating on it. >> that's exactly right. that's what we need. unfortunately, in washington, it's not likely we'll get it. that is what we need. i'd love to see something on the trade side which means getting the dollar down to boost net exports. we have a very bad number this week, two days ago, but that's really what we have to look to to get back to -- >> if you look at the japanese yen which has been hammered and that hasn't made that much of a difference in terms of export volumes over the past 5, 10, 15 years. >> i can't speak that well for japan's economy. i think in general you will find that, the relationship, but i certainly could speak for the u.s. economy. if you look at our nonoil trade deficit against the value of the dollar lag two years you will find a solid relationship you can beat it up anyway you want. >> gentlemen, got to go at this point. thank you all for your insights today. appreciate it very much. >> appreciate it. >> see you. 30 minutes to go. the dow hanging on to some gains here i think. >> yes, it is. up 150 points. >> thank you. i'm not down there. >> and the s&p up 22. the nasdaq adding 64 at this hour. pretty broad based rally. stocks may be higher today, but the dow is still down 5% so far this year. so are individual investors finding buying opportunities after this pull back? we'll hear from a top td ameritrade check tiff executive. >> investors are pulled more out of emerging markets in january and february than they did in all of 2013. is there any end in sight to this emerging market meltdown? coming up. ow auctioneers make bad grocery store clerks? that'll be $23.50. now .75, 23.75, hold 'em. hey now do i hear 23.75? 24! hey 24 dollar, 24 and a quarter, quarter, now half, 24 and a half and .75! 25! now a quarter, hey 26 and a quarter, do you wanna pay now, you wanna do it, 25 and a quarter - sold to the man in the khaki jacket! geico. fifteen minutes could save you... well, you know. welcome back. so as noted, stocks are in rally mode today despite the weak payrolls report for january. >> courtney reagan, which stocks are leading this market higher? >> it's actually been a pretty good friday. let's begin though with athena health. the health care software provider reporting better than expected fourth quarter earnings and revenue. you can see shares sharply higher there. expedia hit a record high on the heels of strong quarterly earnings. other online travel agencies rose in sympathy as you might understand. trip adviser, price lyline and orbitz all up nicely. twitter rebounding. up more than 7%, almost 8% at this point. if you recall, investors were spooked by the fact that user growth had slowed, but that was yesterday's concern, not today. we've moved on. linkedin plum nettimeting news s quarter projections were lower than expectations. and bit coyne cicoin cited -- r it looks like down slightly here for the day. kelly? >> all right. court, thanks very much. we're heading into the final stretch here. bill, 25 minutes left to go. 155 points higher on the dow, and some pretty good signs across the indexes. >> if it closed right here, we'd be up 86 points for the dow this week. even with that 300-point sell-off on monday. >> who would have thought on monday? >> why is this market rallying today? do investors think the weak jobs data will force the fed to taper the taper? or are they betting that weather really did hurt the employment data and that the labor market is in better shape than these numbers suggest? >> we want to know how much of an impact do you think the weather had on the jobs report based on your oks, whatbservati what's happening in your neck of the world? out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 tdd#: 1-888-648-6021 or go to schwab.com/trading to learn how. tdd#: 1-888-648-6021 our trading specialists can tdd#: 1-888-648-6021 help you set up your platform. tdd#: 1-888-648-6021 because when your tools look the way you want tdd#: 1-888-648-6021 and work the way you think, you can trade at your best. tdd#: 1-888-648-6021 get it all with no trade minimum. tdd#: 1-888-648-6021 and only $8.95 a trade. tdd#: 1-888-648-6021 open an account and earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 to learn more. tdd#: 1-888-648-6021 so you can take charge tdd#: 1-888-648-6021 of your trading. and it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. in clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. ask your gastroenterologist about humira today. remission is possible. so if you're just joining us, we had a mixed jobs report this morning, 113,000 new nonfarm payroll jobs. the market though moving higher on the news. some market mavens say investors may be betting on the fed tapering the taper. others say that maybe they're dismissing it as an outlier, another one. can you have two outliers in a row? >> no, then it's just a liar or something. >> exactly. >> joining us with their take, david rosenberg and jim bianco. also joining us, cnbc's very own dominic chu. great to see all of you. david, you have been notably more bullish on the u.s. economy of late. do you change your mind after a couple weak job reports? >> the answer, kelly, is no. the other question is which report do you want to pay attention to? because there are actually two reports that came out today. there was the nonfarm payroll report report, the plus 113,000, but also the household survey which for the second month in a row was a blowout number. that was up 638,000. although the f-- >> jim, do you agree? we had that horrible number in december. we thought the january number is going to help clear things up for us and it just clouded the picture. if you're just looking at the payroll number. >> yeah, the payroll number was not good. on top of that, if you look at the report, they also have this thing called persons not working because of bad weather. 262,000. and the average for all of january is 415,000. that was below average right now. so you sum it up and the payroll number is not a good number. i'll disagree with david a little bit in that the household number was good but that diverges all the time from the payroll number. i think this is more about the market maybe hoping that the fed might reconsider on its taper and why not? the fed had restarted after qe1, restarted after qe2. they're in the business of caving when it comes to tapering. the market is about to ask the fed for more. >> dom, this slight disagreement between the two of them, whether it's a strong number or not, depending which part of the report you're talking about, seems to be exactly what the market is struggling with today. >> but you can say struggle because, yes, there is that kind of debate about whether or not the economic fundamentals justify the market, but the market has been moving higher. it's positive on the week. it's gotten back everything it lost on that steep drop for the dow and s&p on monday. john over at marine equity says the bias is to the upside. could you have had a very, very big downside shock if investors chose to follow through with it. they chose not to. the bulls came right back in. it's a market cliche but the jur jury, the market, says it believes the market should still be headed higher. >> david, how do you explain the bond market, the treasury market's response? treasuries moved higher, so it brought the yields down today which would suggest that they saw weakness in the jobs report. >> okay. so in like three seconds after the numbers are out, treasury yields rally six, seven basis points and then very quickly they gave up that rally. so we're down a couple basis points on the day but reality is from the lowest yield activity on the day, we're actually up from there. and, you know,bianco and i are good friends and i respect what he has to say about the number -- >> i hear a however. >> there is a however. the however is basically this, even when you go into the nonfarm payroll number, the goods producing segment, the meat and potatoes, was up 76,000. doesn't sound like a lot. that's the goods producing part of the economy. that was the best goods produ producing number we've had in seven years. the real shortfall in the nonfarm payroll number was in services and the service number was completely out of line with what we saw with the ism nonmanufacturi nonmanufacturing component. when you look at what drives what, the service producing part of the economy follows the goods producers. the services service the goods. the goods don't goods the services. so i think the markets are realizing that the service sector is going to follow goods producing. look at the data. you will find when you look at the meat and potatoes part of that nonfarm payroll number, it was not that bad at all. >> how do you answer your good friend there, jim? >> david, come on now. we know if we look at a monthly report, we could find good things and we could find bad things. what we have now is we have a huge stock market rally. we have a bond market rally. we have a gold rally, and we don't have the dollar doing much of anything. that's not consistent with a risk on environment that, oh, the economy is getting better, let's reverse what we've done over the last five weeks. we have the stock market reversing. we don't have the rest of the markets reversing. so it is an inconclusive report. it is up in the air right now. it's kind of a rorschach test. everyone can see into it what they want for the moment and the stock market sees bullishness but the bond market does not. >> jim, if i could weigh in, the market did not start to go down in mid-january because of the fed. the taper was in the market towards the last several weeks of 2013. this was really mostly about the nervousness over emerging markets, maybe some nervousness over the vers aacity of the u.s economy. i know you can focus on the nonfarm payroll number but it's the whole report. it's not just one report, it's two reports, and it's not conclusive that the labor market is really losing steam here. there's lots of good news beneath the surface of that 113 headline nonfarm number. >> i will say, guys, newly minted fed chairman janet yellen has one more big jobs report left before she has that first big rate decision come march. so, i mean -- there's another data point. >> she testifies before congress next week. i'm sure somebody will ask her about it. >> i want an encore. thanks very much. it's an important debate. >> gets down to the heart of it right there. we're 15 minutes away from the close. the dow industrials, everybody is rallying today. the industrial average up 163 points right now. >> well, she used to be front and center for the white house on past job reports. coming up, we'll get christina romer's take on today's unemployment figures and what it means for the economy. don't go anywhere. re consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm 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. afghanistan, in 2009. orbiting the moon in 1971. 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>> bill, i think, and kelly, you had a snap back in the japanese stock market. this tuesday it fell 4%. people got very nervous, very upset. you have had a very nice calming down in china and in the emerging markets, okay? turkey, all of these have had a little bit of a bounce. that was one of the things driving the nervousness -- >> we were just oversold. we were badly oversold -- >> way oversold. this has been a phenomenal reaction to what could have been inpterpreted as bad news. you can parse it whichever way you wish. however, you want to wash two things. they both start with the letter "y," yellen and yen, okay? and the yen is basically an indicator of japan's continued attempts to cheapen their currency. can they succeed in that? the consensus is for the inflation, bill and kelly, to be 2% over there this year. the last few years it's been negative 0.1%. it's been in deflation, if they can achieve that, that's a major vactory. you want to watch that. also, the banks. the banks have been outperforming the market. the market is off 3%, 4% now. the banks are only off a couple percent. in both europe and the united states. keep your eye on yellen, the yen, the banks, profits. profits have been coming through pretty good. the revenues not so good. third quarter was up 2.9%. fourth quarter thus far is up only 0.8%. so you want to watch how the banks do. but our bear market checklist is the economy slowing? no. is the fed tightening? no. are valuations stretched? no. is investor euphoria present? are banks underperforming? they're outperforming. and finally are the spreads widening? no, they're hanging in there. >> if people are finally buying this dip, art cashin just said we have something like $1 billion of buy orders on the close. >> holy cow. >> there's money potentially coming into the market. is the correction over? >> you want to be careful. this could be -- we've had a series of mild colds. nobody has caught the flu. you got to go all the way back to the fall of 2011, which was just after the standard & poor's lowered the debt rating of the united states from aaa to aa plus, and the market fell about 10% from peak to trough in that sell-off. we have not had a correction that deep. >> and we still haven't. the dow was down 7% whenever that was. >> this has been a mild correction. could we get a more serious correction? of course we could. but things seem to have calmed down. finally, europe. the bond yields of greece are now below 8%. they're 7.75%. spain and italy are 3.75%, and even the japanese ten-year bond yield is at 0.62%. i would like to see that one actually a little higher indicating their economy and the inflation is picking up there. so this is basically a period of calm, calm. a bird would sit on the waters to lay its eggs during the six to ten days and these are halcyon days. >> will that be on the midterm, professor? >> i want to wish our u.s. olympic team at the winter olympics, jamie anderson is this slope style skier, keep an eye on jamie and all of her teammates and may they bring home plenty of gold. we wish them well. >> indeed. we like to import more gold in this country. >> finally, all the men watching the show, if she says don't get me a valentine, she does not mean it, gentlemen. >> are you talking about jamie? >> everybody. all women he's talking about. have a good weekend, david. >> thank you. >> we're coming back with a closing countdown for this friday. >> and are retail investors buying back into this market after a rough start to the year? the president of td ameritrade's retail business will be joining us on "the closing bell." keep it right here. you're watching cnbc, first in business worldwide. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about axiron. cozy or cool "meow" or "woof"? exactly the way you want it ... until boom! your mattress a battleground of thwarted desire. enter the sleep number bed. an innovative design that lets couples sleep together in individualized comfort. he's the softy: his sleep number setting is 35. you're the rock, at 60. as your needs change, you can adjust your sleep number bed, so you can sleep better together. the ultimate sleep number event is on now only at a sleep number store. with queen mattresses as low as $599.99 know better sleep with sleep number. about 3:30 left in the trading session, so what a week. the beginning of the week we thought here we go, we're heading to the downside. they were thinking maybe we were heading to a 10% correction in the market was that 300-point decline, and then things turned around. a weekly chart of the dow shows where we finished, and we will finish positive for the week after all is said and done. the rallies of the latter part of the week putting us back into the green for that. as for the ten-year treasury for the week, we will be down. today we're yielding 2.68%. just about where we started the week as a matter of fact. so it looks like it will be about unchanged there. with us our friend warren myers. you're watching the constant ebb and flow of this market. what is this market telling us about -- is it even a comment on the jobs report this morning or not? >> i'll tell you, i think everyone was anticipating the number and waiting for it to decide what to do and at the end of the day i don't think it meant all that much. i think this market reaction we saw on the sell-off the last week or so and then that buyback the last few days have been very technical. i think that's what really has been driving this market. >> stand by, warren. i have breaking news from the treasury department. eamon javers has that. >> we're seeing a variety of reports that the treasury secretary has sent some communication to capitol hill saying the debt ceiling -- the deadline for that was today but now they're extending into these emergency measures and the question is how long can that last? reports are now that the treasury secretary is saying those measures can last to february 27th. not a whole lot of time here. that's largely because the treasury department doesn't have access to the kind of revenue because they're paying out tax refunds at this time of year. so when the debt ceiling falls at this time of year, they've got a little less running room than they traditionally have had in the past with the so-called extraordinary measures. >> thank you. warren myers, that's the kind of news -- that debt ceiling issue again has spooked the market in the past. it's not this time. what's going on there? >> i think after the way the republicans finally handled things last time, i think people are finally realizing that partisan politics is not going to be the running course in d.c. and people are going to want to get this thing done, and i think the anticipation and expectation is both sides will come together and resolve this before it gets pushed out too far. >> is this market telling us that the correction is over for now again? >> i believe if you look at it technically, i think it's telling you that. everything i'm looking at and reading tells me we might be on the precipice of a huge push up, maybe an overextension on the upside and if that happens, that's when you really have to watch out because that might lead into that big correction. >> so we could be getting close to a blowoff at some point you're talking about. >> yeah, we very well could be. the way the market acted this week when we sold off, hit the technical levels and had a strong bounce is a strong indication we might pop up to some new highs and that's when you have to be careful. >> something to think about. warren, thanks. have a good weekend. >> thank you. >> what a week we're closing out with. art cashin mentioning we had $1 billion to buy. a very strong market on the close. what to make of it? let's do that now. the second hour of "the closing bell" with kelly evans and company. have a good weekend, kelly. i'll see you monday. >> thank you, bill. and welcome to the second hour of "the closing bell" on this friday afternoon as we close out a week that started with a massive sell-off and now has a nice rally despite a weak payrolls report this morning. yes, monday's sell-off looking like ancient history following the biggest two-day gain on wall street since october. that's what we're just finishing up here. the dow adding 161 points after adding points yesterday. the s&p 500 up 23. so we've got rallies of better than 1% again across all three. let's get straight to it with today's panel. joining me now to talk about the big rally, the debt ceiling, our very own morgan brennan and robert frank, private investor evan newmark and from "fast money" is tim seymour. welcome to all of you. and, look, evan, we talked -- to your credit, from the beginning -- >> you're giving me some kelly. you did not love the market. >> did not. >> do you like it better here? >> not really. basically since we were on a couple weeks ago, not much has happened, although the world did not end with the turkish lira like you claimed it would. >> i did not -- it's important people understand the risks. >> i still see the market basically reacting to no news as far as i can tell, the economy is still growing pretty slowly. i don't see why the market should be up so big today, but maybe the market knows something i don't. >> car difficudiffcardiff, i th encouraged by the payroll report and we are getting maybe a rally in response to that. >> it's possible. i think it was a confusing report but if anything it might have given at least some relief that the december jobs report was something of a fluke. that being said, it's tough to know what to make of it. household and establishment surveys going in opposite directions again. if you put it in context with all the other economic indicators, we came into the year with a lot of enthusiasm. the conditions were in place for better growth. since then we've had disappointing vehicle sales, durable sales, construction spending, trade, ism. it takes a long time to discern bigger swings in economic momentum. i don't think this report helped that much. that said, nobody really expected it to. so in that sense i guess it did meet expectations. >> i'm a little surprised people are willing to be so long this market going into janet yellen's first testimony as fed chair next week. perhaps guessing if anything she's more likely to be reassuring about the fed's involvement as opposed to hawkish. >> yeah. and i am so the flashbacks today to last year when we had some relatively weak news in the job market being good for the stock market so we were in that kind of bad news is good news territory again where i just start to wonder is the fed still really driving this market? and also if that was the only correction we're going to get, which was the end of last week, beginning of this week, a correction is a terrible thing to waste. and we might need more to really get it paus past it. we haven't really weaned ourselves off the fed. yellen will be critical. >> tim, by the way, we're talking about a 7% i think pink to trough drop in markets. was that it? was that the bottom? has the correction run its course and how relevant is the fed here and the turkish lira by the way? >> i think it's all relevant when you look at some technical factors. emerging market currencies had blowoff tops. you saw a lot of things settle back in. i think the fed is very relevant. as robert talked about, i'm disappointed dbad news isn't ba news for the stock market. i think this was very healthy. look at the shake out in a lot of risk flows and look at the fund flows. when i look at a lot of things that i think people are looking at on this program, look at the bounce at nike at 70. look at procter & gamble. i got to a place where extreme positioning was really what the market was reacting to. today's labor report not great, but, again, who said that this data wasn't going to be choppy? >> yeah, and morgan, there's plenty we can read into it. can't ignore that earnings season is also happening at the same time. the earnings side of things look okay. if you look at the thomson reuters figures, we're talking about the best quarter in some time. yeah, the revenue figure isn't great, but, you know, i guess it goes almost back to the jobs report. you can make of it what you will, but it certainly hasn't derailed the market today. >> that's right. jobs report wasn't as good as analysts were hoping for, but it also wasn't nearly as bad as it was in december. december was only revised up 1,000. that's not great. going back to the household survey, the fact we saw labor participation increase even though ever so slightly and that unemployment rate decrease, i think that's extremely promising. the other thing i think that's extremely promising is the fact that we saw a slight decrease in the number of long-term unemployed. i think those are both very hopeful numbers in a very murky report. >> i don't see -- has there been any economic data over the last few weeks, kelly, that suggests some robust 3.5% gdp growth per annum recovery? >> there was a lot in the months leading into the year, so you can't just take a single month -- >> i'm not but i'm -- >> i think if you were to say have we learned anything in the last couple weeks, i think we started out the year thinking it's morning in america again and we came off the strongest two-quarter period in the recovery and then wait a minute, maybe it's not. we've worked through it to a maybe it is again? is that a fair characterization? >> you don't hear from anybody that things are going really well anywhere. >> right. >> so it's a lot of more of the same. >> isn't that good for the stock market? >> i think it might be good for the stock market, but to me and why i'm a little cautious is, you know what? so twitter lost 20% day, but it still has a $24 billion market cap. people are still paying up for growth. >> but the market was trading in the fourth quarter as if it would be a 3.5% or better year this year and we've now realized it's probably going to be a 3% year. and i think that's the adjustment that everyone has made. certainly going to be better than last year, but 3% as opp e opposed to 3.5%. >> i think it's also still really early to take a look because let's not forget, we had two snowstorms here on the east coast alone this week. i was following weather and its economic impacts all week in places like iowa and i think it's really putting a crimp into the data we are getting out. that's another thing that investors are not necessarily making big jumps because they're waiting to see how much of this is weather. >> a little trickier to tell. tim talk to us about the market action in the last couple days. massive outflows from emerging markets. do you think people are deciding that maybe the u.s. does look like a better place to invest when the rest of the world looks a little more uncertain? >> i think people are reacting stock by stock, too. look at the earnings numbers and so people want to say, again, i agree that the market in the fourth quarter was trading and things might have been better, but it was stock by stock, sector by sector. a lot of high flying tech names have been destroyed also. it's been on both sides. for every expedia there's a twitter. people are reacting stock by stock. that's very healthy because the positioning was extreme. >> tim -- >> in the last couple days i think some normalcy has come back into the sensationalism that was in people's attitude. >> you said these tech stocks have been destroyed. linkedin was down 5%? is that getting destroyed? >> i'm talking about amazon -- what i'm saying is people are judging stock by stock. i would say on the whole they've all behaved quite while. the chinese internet stocks have come back but you can't tell me people didn't punish amazon with that valuation. they didn't punish twitter with that valuation. there's some other stocks that are more expensive. a pandora, yelp, these are names people rewarded. >> i think google surpassed exxon to be the second most valuable company. google is a different story, a more mature company with levers. so your argument so long as some of these tech names are trading on incredibly high priced pes -- >> it just looks expensive. you don't get big sell-offs of either individual stocks or the market overall on the basis purely of valuation but it's hard for me to look and go there's been a correction because linkedin is down 6% or because twitter is down -- it's still over -- >> your problem is you can't figure out who is buying today, right? is that your issue? >> i want to know who is buying twitter at 54 bucks. >> show yourselves. >> what a bargain. >> yeah, what a bargain it is here. >> but people want growth in a world where back to the point we were saying earlier, the recovery is intact. we're constantly reassured about that but we're not necessarily looking around and seeing a lot of top line expansion. >> that's true and that will be a problem if it persists. we still have the prospect of less fiscal drag this year. it looks like the deleveraging cycle is still over. the housing market is very much likely to be stronger this year than last year. there's still some good news out there. to pretend we know what the economy is going to do this year after a single month of economic indicators i think is crazy. it's still very early. policy could evolve in a certain way -- >> i was going to ask about the debt ceiling in particular. i love how everyone is saying it's going to be fine. >> they can't be that stupid, right? we're saying it again. >> the debt ceiling was suspended for quite some time with regard to one of the latest deals that resolved the government shutdown. it's now been reinstated. what jack lew is doing is giving us an update on how long the treasury has until it hits the new level until it catches up to the inflation adjusted rate from last time around. i think i made that crystal clear. >> it's true that the complacency is the biggest threat. the last time we went through it, the market didn't detectably price in any big catastrophe. the most it priced in was a short term selective default. otherwise, i mean, there was no noticeable pricing in which means there was no spur to action. if we get closer to the end date again, there's a possibility of an accident but i still think it's unlikely. >> talking about accidents, tim, a lot of people were reluctant to go into the weekend long when they were worried about big currency moves that could come back and hurt markets here. what has changed, especially when you have something like puerto rico getting another downgrade. people reminded a little bit about contagion risk that may be underpriced. >> i can't hear anything. >> i think we lost tim. >> i think we lost tim. >> is he still talking? well, we'll have plenty more of tim coming up in the next hour. does anyone want to comment on this real quick? >> i think the contagion thing is a red herring. i think largely a red herring. >> would you have said that in 1996? 1997? >> were you born in 1997? >> he was in russia in 1997. and by the way, that's what caused the crisis. we know that now. >> i think the bigger issue is a question of global growth. and the impact that has on earnings and that's what i would focus on much rather than be distracted by puerto rico. >> and china is really, you know, the $600 million question here as most all the other things which are a distraction. the china growth story, the shadow banking, whether it's a hard landing, that's the issue. >> our thanks to tim. you can stick around and catch him coming up on "fast money" at 5:00 p.m. and in the meantime, has wall street's roller coaster week left investors with a bad case of vertigo? the head of td ameritrade retail giving us the pulse of retail investors. and whether bad news about the economy is good news for stocks or yes or no. christina romer speaking with me exclusively in a little bit. we'll talk about the employment figures and whether mother nature is masking an economic comeback or a slowdown. you are watching cnbc, first in business worldwide. [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com. bulldog: mattress discounters bulldog: presidents day sale ending? get a queen-size sealy gel memory foam mattress for just $497! and get four years interest-free financing on the entire tempur-pedic cloud collection. ♪ mattress discounters welcome back. a yo-yo week for stocks. dominic chu recapping the ups an downs for us. >> let's talk about this because i have been talking to a number of traders. it's a cliche. buy the dips. we had a massive sell-off on monday but we have managed to on the week get all of those losses back and more and that means that for the year the dow is down about 5%. the nasdaq is down about 1%. the s&p is down about 3%. so we're climbing back towards that at least positive territory on the year. now, overall, you take a look at some of the real movers in this particular week, check out some of the home builder and materials related stocks, namely usg. also vulcan materials. both having pretty good earnings numbers. also want to point out here some of the big ones in terms of the leaders in retail financials, housing, airlines. also on that retail theme, there were some really, really good reports in terms of the overall picture for retail. check out the shares this week of companies like michael kors, gap stores and tiffany. overall, off market that seems like it wants to rally, and that seems to be the path of least resistanr resistan resistance. you're going to have hiccups, but overall a nice week recovering for stocks. >> never is a straight line, dom. thank you so much. with such a volatile week, we want to know if investors are pulling money out of the market. who better to ask than the president of retail distribution at td ameritrade, tom bradley. >> nice to be here. >> what can you tell us about how the retail investor has reacted to this market? >> kelly, i think we're seeing investors act in a very calm fashion. they're acting intelligently, and we haven't seen any hint whatsoever of any kind of a panic. so it's completely different from how you might have seen investors react 10, 15 years ago. >> we noted this actually on monday when we were down 350 points. everyone was calm around here. we spoke to some brokers saying our phones aren't ringing at all. is this just specific to this market or has something changed with the way that retail guys are investing? >> i think investors today are much more intelligent than they have been in the past, the distant past, and there are good reasons for that. number one, there is so much more educational materials out there for investors today. and, for example, on our website, we have hundreds of hours of education material that's available to investors for free and they're taking advantage of that. they're also -- there's also plenty of technology so investors can very easily access market information, their accounts, and place trades. 12% of our trades today are done on mobile devices. >> are they really? i want to bring the panel in with a couple questions as well. >> i want to know is the best indication that the retail investor finally gets it the fact that so much money has gone into passive funds over the past couple years and isn't that basically the best proxy for what retail investors are doing nowadays? >> well, i think that's an excellent point and a significant amount of dollars have gone into passive funds, but we're also seeing individual investors buy stocks. we're also seeing individual investors utilize options. 34% of our transactions now are options -- >> are they really? >> yes. and individuals are writing cover calls and doing more sophisticated strategies. some spreads. some are getting into iron condors and butterfly spreads. >> tom, it's robert frank. i cover high net worth investors and there's a curious thing happening now where they're accumulating a lot of cash, and if they are investing it, they're putting a large amount into hard assets, collectibles, we're talking about cars, fine art, basically hard things that are tangible and that are not going to be so volatile in price because they just had enough of this market. do you see any equivalent with the sort of retail mass investor where they want more tangible assets that are going to be less volatile in these markets? >> well, we haven't really seen any change amongst the extremely wealthy investors. in fact, wealthy investors will always pull money out to put funds into real estate and to invest in their businesses. however, we still see wealthy investors invest in stocks. regarding cash though, in our retail business roughly 20% of our retail assets are in cash. >> 20? >> and it's been in the low 20s for quite some time. still some money on the sidelines. >> what's normal? what used to be normal during the go go days of the market for cash? >> well, the teens would have been quote, unquote, normal if you go back a ways. but the 20% levels, we've been seeing that for the last five to ten years. >> wow. >> i have a question. out of curiosity, what is the typical profiler of a retail investor? what does that look like and has that changed? >> yeah. it's a great question. typically the retail investors that we're dealing with are the mass affluent. our average account would be in the $75,000 to $100,000 range. of course, we have high net worth investors and a lot of smaller accounts, typically younger investors that are just getting into the market and beginning to save. >> tom, i have got a question because i'm curious to know how you would reconcile what you'd say about retail sophistication and the huge raimoves into etfs particular. last summer many were following the retail data, and if they were they got an exaggerated, distorted sense of how bad the sell-off was in emerging markets. that may be happening again now, but it suggests retail investors suggest a lot differently than institutional investors and i'm curious to know how you would square that. >> i think we have a very interesting retail client base. it's a mix of long-term investors and traders. so you do see a lot of activity as market volatility increases from our trader base, and it's very typical to see the traders buying on the dips and selling on the rebounds. so it's very common. >> well, tom, thank you so much for coming and shedding some light on this situation. it sounds like time will still tell as to whether the retail investor gets more involved finally with this market. >> i hope so. >> appreciate it. >> thanks, kelly. >> how much of a speed bump is today's jobs report. christina romer, the former council of economic advisers chair weighs in next. we'll hear what she thinks about the weather's impact on the economy. plus, she'll weigh on on whether the fed should taper the taper. stake with us. we'll be right back. we'll be right back. ha ha. made-est thou look. so end-eth the trick. hey.... yes.... geico. fifteen minutes could save you... well, you know. how did edward jones get so big? 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[ squirrel ] it's pepto to-go. tgif. it's been another head spinning week for stocks. courty reagan rounds up the movers. >> we begin with google which became the second biggest company. netflix hit a record high that dates back to its ipo in may of 2002. merck moved higher on news it will pay $100 million to resolve all u.s. product liability lawsuits involving its contraceptive device. and a strong day for lululemon. upgraded to upperform saying the worst is over for the retailer. on the flip side fairway holdings group, the fresh food retailer, reported weaker than expected third quarter results. it announced changes in management. shares down almost 29%. >> a big move lower. thanks. my next guest was chair of the president's council of economic advisers during president obama's first term. in response to today's jobs report, she says the fed should be thinking about how it can be more helpful. joining us now in an exclusive interview is christina romer, professor of economics at the university of california. > berkeley. >> it's wonderful to be with you. >> what do you make of this jobs report? i don't think there's a clear take as to whether the economy is getting better or force? >> i think you're exactly right, and i think that's kind of inherent. it's a complicated report and it didn't give us any clear message. one of the things that is true in this country, as we measure the health of the labor force by two surveys, usually they give us a similar answer. this month they gave us very different answers. the household survey showed some real strength, but the payroll or the establishment survey, the survey of businesses, was a much more muted report, and i think most economists and certainly most forecasters think the establishment survey is more accurate, and so that certainly gives me a sense of caution about today's report. >> well, i love that as well because it is the unemployment rate that the fed is targeting, and put the 6.5% number out there, now we're so close to that threshold. what do they do, and by they i specifically mean janet yellen, who you vocally supported for this position as chair of the fed. what does she do now? >> the first thing to say is certainly that the unemployment rate is sort of today kind of a uniquely bad indicator of the health the labor market. we know we've had sort of lots of drops in the labor force, not this month but certainly in the previous couple of years, and so it's just a very sort of poor and noisy indicator of what's going on in the labor market and probably gives more of a sense of health than is really there. so what does the fed do? i think the big picture is unemployment even with this pretty questionable measure is still well above what anyone thinks is healthy. inflation is certainly coming down much lower than the fed has said is its target. it's closer to 1% than their target of 2%. i think in that sort of, you know -- with those two facts, that very much says the fed should be thinking about how do we help the economy, not how do we take back some of the help that's been there. >> do you put the onus on the fed because your experience in washington tells you fiscal policy is not going to be an option here? >> i mean, that is implicitly what i keep thinking. so, of course, we could do a much better fiscal policy. if we did a fis coloncal policy had long-term reduction but more for the economy, maybe an infrastructure program, that would clearly be helpful, that would clearly be smart for the economy. it would be good for groelt in the long run. it would put people back to work now and like everybody, i don't think that's going to happen. >> and that does leave the federal reserve. >> they're the only game in town, unfortunately. they've embarked on this path of tapering and given they're down that path, it probably would cause a fair amount of consternation if they were to stop or reverse themselves, but that's why i keep saying they need to be thinking about, well, if not that, what else? so do they, for example, change their forward guidance? you mentioned they have this, we'll start thinking about raising the funds rate when we get to 6.5% unemployment. well, maybe that number should be lowered to something much more plausible like 6% or even below that. i think that would be a very sensible move. i don't know what's going to happen. we'll get a read from chair yellen when she testifies this week. it will be interesting -- >> what advice do you have for her? >> well, i'm sure she has many people advising her. you know, i think just sitting where i'm sitting is to just keep that big picture in your mind, that the economy is failing sort of on both the directions that the fed, you know, cares about, unemployment and inflation, in the direction that says do more. so my main advice would be, be creative. if the fed has decided they don't want to keep with qe3, think of something else. look at what is going on in the uk. could you do that in the united states? could more aggressive forward guidance be helpful? i hope somebody is thinking even bigger picture. do we need a nominal gdp target, some other way of formulating monetary policy. the fed should be thinking big, not little, not conservative. >> you know, professor roam mer but you sound as though you think the taper has been a big mistake. >> i think it's unfortunate. certainly i think the big mistake was made back in june when they started talking about it the first time. i think once you do that, you know, this all sort of played out as it has. but it certainly was premature at the time. >> all right. and i'd love to know when you talk think big, what kind of ideas we're talking about. we'll have to pick up the discussion another time and leave it there for now as professor christina romer, really appreciate your time this afternoon. >> nice to be with you. >> a different message than we're getting from a lot of people certainly here on all street. a shocking statistic or maybe not given the state of things lately. emerging market equity fund outflows have already surpassed last year's and we're still in february. two market pros up next on whether the selling is overdone. don't go anywhere. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and grows more businesses... we're open to it. start a tax-free business at startup-ny.com. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. afghanistan, in 2009. orbiting the moon in 1971. 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[yawns] the presidents day sale is ending soon. ♪ mattress discounters welcome back. investors rushing for the exits in emerging markets. see mahmoma mody has the story. >> we're only five weeks in the year and outflows out of emerging market equity funds have surpassed outflows in all of 2013. $18.6 billion versus $15.2 billion according to epfr. the biggest had outflows this week. the reason, continued emerging market volatility. the potential rise in u.s. interest rates makes u.s. yields relatively more attractive. now, the emerging markets continue to underperform u.s. equities in 2014 and experts say even with calmer trading today, this trend could continue, especially if the fed ramps up its tapering plan. josh brown says that could result in a larger exodus out of emerging markets. paul christopher also sees further downside risk for emerging markets. that's why he's recommending clients to reduce exposure to emerging markets as he sees better prospects for u.s. equities. >> seema, thanks very much. let's talk about these prospects. joining us chris and daniel rosen, principle at the rhodium group. great to have you with me along with the panel. daniel, first to you. china is -- you know more about this than anyone. it's been closed celebrating the lunar new year. when markets reopen, what kind of concern do you expect them to reflect about how strong and fundamentally strong that economy is? >> the first thing people are concerned about is that china could get sort of carried away in the general emerging market anxiety right away. lot of reasons to be worried about emerging markets. china's slowdown has nothing to do with it. the fact that things are slowing there is actually pretty good news beyond the very short term. >> that's because you think china needs structural reform, correct, and this is effectively the only way to push that? >> everybody knows china needs structural reform. they bought a lot of growth in the past through policies which aren't working the same way today that they were before. the new leadership has made a very clear commitment they're going to try to change business as usual. they're making down payments on that. we're already starting to see a turn up in terms of stronger service sector activity and other little bits of light on the horizon that are going to turn into a much more positive story as the year goes on. >> krishna, that's a much more encouraging take than we tend to hear from people opining china is on the verge of complete collapse. it's extremely important for the u.s., for emerging markets. how precarious is the situation for some ever these smaller economies that depend on china's growth? >> look, i am long term bullish on emerging markets but i think in general there is reason to be concerned that there could be further weakness in the weeks ahead. why? there's essentially three things going on that all add up in my view to a derating of these emerging markets. first, as the other guest rightly pointed out, china is altering both its growth level and its growth mix. that is long-term good, short-term creates risks for the other economies that are related to it. secondly, we're discovering that many of these economies essentially squandered the last few years of easy money globally, just expanded local credit, didn't get the hard work of structural reforms done. that leaves them more vulnerable in a tighter financial environment. thirdly, the fed is moving towards policy normalization, albeit at a very gradual pace. it's not just the level of rates that obviously over time will move higher. it's also the fed's risk umbrella. that's coming in just a little bit. >> risk umbrella. >> yes. >> which is an interesting way to think about it, guys. >> one question i have for daniel, one of the most amazing and startling things i'm looking a in the china right now is the leakage of wealth out of that country. more than a half trillion dollars last year by chinese wealthy overseas. 60% of chinese millionaires have either moved overseas or planned to move overseas. that's a lot of capital leaving that country that may not come back. does that concern you? >> a lot of people are talking about that. we're doing a ton of work looking at china's outbound investment. if you said 60% of wealthy new yorkers had some assets overseas from the bbi, nobody would be surpri surprised. >> but they're moving. >> they're choosing to start spreading it around a bit. it makes pretty good sense from a portfolio diversification perspective and the bulk of that is by companies setting up productive assets in countries like the united states. they're not so worrisome as some people would think. >> is there any reason why retail investors should be that concerned or focused on anything but china? i mean, we looked at those emerging market outflows, $18 billion. it's a lot of money, but in the scheme, apple bought back $1.5 billion worth of shares in a couple weeks. in the scheme of the overall capital markets and outside of china, should we really be losing any sleep over turkey or some of the other countries? >> krishna? >> fundamentally i think we have to remember an economy like turkey is not a particularly large part of the global economy. we also must remember that this time around the emerging markets almost all have floating exchange rates. that means they can sort of ride out, use the currency as a bit of a shock absorber. it makes it less likely we get this domino effect we've seen in systemic crises in the past. one word of caution, a number of countries corporates have been borrowing aggressively overseas in foreign exchange, in dollar terms -- >> such as? >> this is a case in turkey, a lot of their corporates have currency debt, india, also a lot of corporates have foreign currency debt, sometimes associated with acquisitions, productive assets. >> and that was what did thailand in is that so many of the corporates in and companies in thailand were borrowing in dollars which is fine when they had a peg. when the peg broke, it all fell apart. so it is similar, isn't it? >> it's a currency mismatch. it works differently when you have a more continue with us exchange rate movement rather than a peg that holds, holds, holds and then breaks but it's still something we need to watch. >> more of a problem for some of these markets than potentially for here. guys, thanks very much. important views on this story as we head into the weekend. >> huge pleasure. thank you. >> and this year's tough winter could be putting job growth on ice. we want to know what you think about this. tweet us @cnbcclosingbell with your thoughts about the labor market, how is the weather affecting jobs. that's coming up on the air at the end of the show. up next, david gregory, moderator of "meet the press" chiming in on the latest flap sparked by a congressional budget office report. the cbo saying the equivalent of 2.4 million jobs could disappear because of obamacare. tdd# 1-888-628-2419 at schwab, we can help turn inspiration into action tdd# 1-888-628-2419 boost your trading iq with the help of tdd# 1-888-628-2419 our live online workshops tdd# 1-888-628-2419 like identifying market trends. tdd# 1-888-628-2419 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to schwab.com/trading to learn how. tdd# 1-888-628-2419 sharpen your instincts with market insight from schwab tdd# 1-888-628-2419 experts like liz ann sonders and randy frederick. tdd# 1-888-628-2419 get support and talk through your ideas with our tdd# 1-888-628-2419 trading specialists. tdd# 1-888-628-2419 all with no trade minimum. and only $8.95 a trade. tdd# 1-888-628-2419 open an account and earn 300 commission-free online trades. call 1-888-628-2419 to learn more. tdd# 1-888-628-2419 so you can take charge of your trading. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. 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"meet the press" moderator david gregory tracking the political storm and he joins us now from washington. david, this has been ammunition for the gop giving them perhaps even more momentum in a year they think they can make some big gains in the midterm elections. >> i think one of the things that struck me watching the politics this week in washington is how any glimmer of hope around the state of the union and some cooperation has fallen away and we've gotten right back to election year politics. you see it playing out with conservatives on capitol hill and congress. they don't want to talk about immigration even though there may be room to get something done. they're likely to back off a debt ceiling fight. they want to talk about health care. and the cbo number talking about the impact when it comes to the labor market, even though there is different interpretations of what the cbo was saying, there's no question there is an impact on the labor market, and while it can be spun different ways, the impact is there. >> it's so interesting because this was in a report from the cbo, nonpartisan, et cetera, that was otherwise providing an update on how much better the budget sways has gotten which has been one of the strongest selling points of the gop over the last couple years. but that was completely overshadowed by this update on how much weaker economic growth will be, bigger the deficit will be because of the equivalent in terms of hours worked, 2.5 million jobs over the next decade. why would the cbo be this specific with regard to the impact when they didn't even really cite any reason why their rationale had changed so dramatically? >> they would tell you they call it as they see it as they begin the analysis on the impact of obamacare. to me it underscores a real problem with obamacare politically. i'm talking about the politics here. republicans and democrats, neither one really understand the impact on the marketplace, what it's going to mean for companies, for employees, and for the economy overall, and on the labor force. now, look, we know what the facts are about the impact on the 2 million jobs. there could be people who stay in a job just to get the health care, they don't have to do that anymore, as well as those who are out of a job who can get health care and that's a big selling point of obama care. but we know the other side of it, too. more part-time workers, less -- fewer companies hiring full-time employees. maybe they want to push people into the exchanges in their states or maybe they're just changing the structure of their health plans in a way that makes it more difficult for consumers or employees. all of these things are happening and having a real impact. >> and, you know, david, it happens today as the debt ceiling is reinstated, and people up here have been saying, you know what, washington? we're hearing happy talk. it sounds like they're going to resolve it, it's going to be okay, but obamacare and perhaps keystone could play in to gop demands relating to raising that ceiling, could they not? >> they could. i've been talking to white house advisers who say the president is still not going to deal. that's the official position and that's likely to stay. that doesn't mean there aren't some measures that they could put in that he's willing to talk about. i don't think keystone is one of them. i don't think he wants to have his hand forced on this just yet. not abundantly clear why that's the case after the state department gave a green light in their report, but i think that's still the case. look, i don't think republicans want to go to the brink, which we understand will be about february 27th on the debt ceiling from treasury. after the impact that they have felt from shutting down the government and all the blowback over obamacare. i don't think it's going to come to that. it doesn't mean there won't be pressure to try to negotiate. >> right. and continued discussions about obamacare the more we get reports like this. david, it's great to see you. thank you for your time. >> appreciate it. >> catch senators chuck schumer and rob portman on "meet the press" this sunday. you can check your local listings for the show time. now, what's clicking on our website as we ride into the weekend? "the hot list" is coming up next. we've been asking what impact do you think weather has on the economy and specifically last month's jobs report. tweet us @cnbcclosingbell. your thoughts on air in just a bit. metimes life trips us up. sometimes we trip ourselves up. and although the mistakes may seem to just keep coming at you, so do the solutions. like multi-policy discounts from liberty mutual insurance. save up to 10% just for combining your auto and home insurance. call liberty mutual insurance at... [ thump ] to speak with an insurance expert and ask about all the personalized savings available for when you get married, move into a new house, or add a car to your policy. personalized coverage and savings. all the things humans need to make our world a little less imperfect. call... and ask about all the ways you could save. liberty mutual insurance. responsibility. what's your policy? olet's say you pay your tguy around 2 percent to manage your money. that's not much, you think except it's 2 percent every year. does that make a difference? search "cost of financial advisors" ouch! over time it really adds up. then go to e*trade and find out how much our advice costs. spoiler alert. it's low. really? yes, really. e*trade offers investment advice and guidance from dedicated professional financial consultants. it's guidance on your terms not ours that's how our system works. e*trade. less for us, more for you. welcome back. when all is said and done it looks like the up and down week is ending up on an up note, but let's get what's lighting up the hot list. ben berkowitz joins us from headquarters. >> great to see you. nothing like breaking news on a friday afternoon to stir people up that's what we have today. we have jack lew warning congress in afternoon that the debt ceiling is approaching much more quickly than we expected. he's been saying february some time. we don't know when. now he's telling congress february 27th is the day. that's when the money runs out. >> all right. >> tremendous interest in that this afternoon. 170 something tweets already. really big poll. people are worried about this one. >> what else? >> beyond that, we tried to explain what went wrong or right in the market today. the market was still up 150 points. >> i love how people are what's the matter, what happened? >> good news, bad news, i don't know. our explanation is more people are working, discouraged workers are getting back into the work force. it's not all bad. the other big one from today, it's a really interesting story. katie little has done a nice piece on the subway. there was a story yesterday about the yoga ruggbber ingredit in their bread and it turns out mcdonald's, arby's, chick-fil-a, a bunch of fast food chains are using that exact same ingredient in the bread. >> what have the others said about what they are or aren't doing in continuing to use the product? >> some are saying they're phasing it out. some of them are saying nothing, frankly. >> yeah. well, they always try to get by doing nothing. ben, thank you very much. have a great weekend. >> thanks. >> i want to ask the panel. this is that you'd expect, if this ingredient which is banned in europe and other parts of the country is being used in subway, it is probably being used throughout the food industry. >> first we had pink slime and now we have yoga rubber in our buns. >> is in an overreaction? >> but seriously, people don't realize this ingredient is in all these breads that people make. just weird. >> i think this is indicative of a much larger trend we are seeing with consumers and this he's -- there's the part you're starting to see the nastier, uglier ingredients in our food. this comes on the heels of cheerios phasing out -- >> think how heavily regulated the fast food industry is. okay. i don't know anything about the -- what is it called yoga rubber? >> yeah. >> not the sicientific. >> i can assure you if we were going to drop dead from it, we would. >> didn't jared lose 100 pounds on that tight? >> because of that. >> the new yoga rubber diet. just eat the yoga rubber. >> yeah. >> all right. get the tweets in. we asked how much you think bad weather impacted the jobs report. your thoughts are coming up next. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. 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really make it happen. but quarter after quarter the company has been able to deliver with a surprise when it came to sales for pcs which we know are in decline but perhaps not quite as much decline as we'd anticipated particularly on the commercial side on notebooks where they choed real strength. that did help the quarter and on the revenue side, printing went fairly well. they did come ahead on revenues and on profit. >> one of my favorite notes morgan stanley saying they are achieving the impossible keeping expectations low while increasing revenue and cutting costs and investing and so forth and cash as well. we'll talk a lot about that with meg in a minute. the futures are up a touch which means the s&p could post its first three-week win streak in three months. meantime, we're keeping our eye on the ten-year yield and overnight in asia the nikkei was almost up 3% as the markets liked the manufacturing data out of the u.s. yesterday. first up, though, ukraine's government said a tentative resolution has been reached to the crisis that has brought days of violence to that country's capital. nbc news correspondent jim maceda is in moscow with the latest. jim, good morning. >> reporter: hi, carl, well, that's right, i got to see a hard copy of that draft deal, and it does include early elections in december of this year, a return to the 2004 constitution. that's the one that has some decent checks and balances, if you will, until yanukovych gutted it in his direction, the formation of a coalition government in ten days as well. but there's clearly tension between the opposition leadership and the -- what they call the representative council of the protesters actually on independence square. they were not happy at all with this draft because it keeps yanukovych in power for at least ten more months. his resignation you recall is what they called non-negotiable demand, certainly of many of the frontline protesters, especially now, they say, after what's happened in the past 48 hours, the dozens of deaths, hundreds of wounded at the hands of riot police. but, still, after hours of intense lobbying by two -- three at one point eu ministers to close the deal, it's now about to be signed. still, the eu ministers point out that this is just a draft deal. it's an initial thing, not a full-blown signing, and they call it a starting point, if it is, it will have a long, bumpy road ahead. and to just to make that point, carl, almost immediately the extreme nationalist group called right sector who have been doing much of the hardcore fighting of late, they came out, rejected the deal, saying that, quote, the national revolution will go on. back to you. >> okay. jim, thank you very much. jim maceda there, live from moscow. let's just have a look at some of the other big tech earnings that we have this morning. priceline reporting fourth quarter operating profit of $8.85 a share. that beats wall street's forecast by a good 53 cents. the travel website helped by stronger bookings and higher profit margins. meanwhile, groupon down sharply in the premarket despite having better-than-expected results for its fourth quarter, the daily deal's website forecasting a surprise loss for the current quarter as it increases its marketing spending in order it hopes to grow its customer base. and we'll have a live interview with groupon ceo eric lefkofsky later on "squawk on the street." just pick up on priceline today because that continues to be very interesting stock. higher despite the fact that its outlooks slightly soft. able to maintain the momentum on the international side which, of course, where it's basically coming from and also taking bookings.com from amsterdam to here, successfully picking up market share, albeit with a very heavy advertising spend. jeffries, evercore, a lot of people raising their targets this morning on priceline. >> and we'll talk to the ceo later on this morning. but surprise loss they see for the current quarter. a lot of discussion about groupon goods as they move into basically an entirely new business. and ongoing worries about their distribution chain, long delivery times, their infrastructure, stocks going to open down this morning, but what a story that has been. >> yeah. >> ever since the ipo. >> ever since the ipo. of course, there has been a burgeoning story that they are in a significant turnaround that will be met with success, but this morning as you point down, the stock down over 10% there, 12%. >> and the volume yesterday, monster volume on groupon. >> mark mahaney was suggesting they are trying to be a jack of all trades here and it's unwise to invest so broadly, they need to find what they do, what the message is, what the vision is, stick to it and double down on it. to the point you made earlier, is not what they are doing. >> right. when we come back live and exclusive interview as we head with hewlett-packard's meg whitman. 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[ male announcer ] don't wait. call today to request your free decision guide and find the aarp medicare supplement plan to go the distance with you. go long. hewlett-packard shares as you can see are trading a bit higher this morning in the premarket, that after the company showed its second consecutive quarter of profit growth when it reported earnings after the close yesterday. that was helped by its pc business. meg whitman is the ceo of hewlett-packard, she also, by the way, one of cnbc's 200 contenders and we're always glad to have her after each quarterly earnings report. good morning, meg. >> good morning, david. >> let's start with pcs. in your comments on the conference call that followed your earnings report yesterday, i think you used the words the contraction is slowing. you also saw signs of strength in commercial. are we at the end of these dire predictions that the pc market is going to continue to contract at a rapid rate? >> well, it definitely is -- the market is definitely getting better. and i think it's a couple of reasons. there is the windows xp refresh which we capitalized on well. and also i think business is understanding and employees are understanding they may want a tablet, but they also need some of the more traditional compute devices to get their work done that is going to be required in this world of big data and analytics. so, you know, i do think that we're going to see a little bit more brightness in the pc market, although ibc and others do forecast a continuing decline in the continuing pc market, so our job is how do we have great devices that employees and consumers want and, you know, try to gain share in a very tough market. >> right. would you think this bifurcation will continue where you may see more signs of strength in commercial versus consumer? >> we do think. commercial is our place that we can -- we have a right to win, david, we've got an incredible distribution. we can help cios solve security, manageability, containerization, so we have a real value proposition at the consumer level. we'll play i mean, i at the commercial level, we'll play in consumer, but commercial is where we have a right to win. >> in your comments on the conference call and your cfo, both of you mentioned price competition, not just enduring in many of the businesses in which you compete but perhaps intensifying. how is the company adjusting to that, and can we ever expect given that that you're going to be able to post a gross margin or net margin that's higher than what we're seeing right now? >> so, it is a very competitive market particularly in our hardware businesses but actually across the board, so what we have to do is what we've done in the past couple of years we have to be fit for purpose. we've got to make sure that we are -- have an optimal cost structure to compete in this new world order, that we've got our supply chain optimized and our logistics optimized and we're transforming value right up front to make sure we can compete in the future. this is going to be a very competitive market for the foreseeable future and we can do that so we just have to keep on the productivity efforts and how we organize ourselves to compete. >> you know, i do wonder, though, how much cost is there left to take out of the business, meg? >> do you know what great companies do they figure out how to get more productive and efficient every year, they got to build that mentality into the dna of the company and that's what we're doing. so it's not just a onetime event anymore, every couple of years we take out costs. this has to be year after year and we got to look at it and say how do we get better and build productivity into the dna of the company. we're on the journey there, we're not through, but we're on the journey. >> one of the key areas that you focused on some time ago was reducing head count to a certain extent. i believe you are 29,000 announced cuts that amount to 34,000 jobs overall at the company. are there going to be additional cuts beyond that in 2014? >> so, we've got to make sure that we are as efficient as we can possibly be in every market in which we compete and in every business in which we can compete. we'll get through the current restructuring and then, as i said, we'll have to build the notion of productivity into the dna of the company, otherwise we'll be outrun by our competitors and we're not going to let that happen. >> a number of analysts who follow the company quite supportive this morning. but you do have the nonbelievers out there, when i have you on, i prefer that you respond to those as opposed to those who are purely cheerleading. here's a note from iss, while management may trade off between revenue and gross margins from quarter to quarter, we believe gross profits is the best indicator of technology relevance by this measure, the picture remains bleak as many customers migrate to alternate or commodity solutions. how do you respond to a criticism like that? >> so, i think the headline for this quarter is we've made progress and we got a lot more work to do because we have to -- this company will ultimately come back on the backs of innovation. great innovative products, services and solutions, and our innovation engine is alive and well, but we've got more opportunity there. you can look at sop of the products that we introduced in the quarter, cloud system 8, our converged infrastructure, sdn, a number of our other products are very innovative and we've got to stay ahead of the curve because if we don't innovate, we will be commoditized and that's not the heritage of hewlett-packard. this company is all about innovation and i think over the last two years we've done a good job of bringing that core strength back to the company. >> so, to those who would say, listen, we agree with u you bute don't see efforts are capable of revitalizing your revenue streams, how do you respond? >> i say the innovation engine is at work. some people will tell you we have the best product services and software offerings that we've had in many years that are getting real traction in the marketplace that are uniquely suited to the new style of i.t., everything about technology is changing and we're pivoting the company to these trends. and it takes time because we've got big, important legacy businesses. but, boy, when you look at our cloud offerings or our big data offering and haven, our security product ute, arc site, tipping point, fortify, three-part storage, these are perfect products for this new style of i.t. that go right to where the market's moving and we have -- we have to do that and we have to be willing to cannibalize ourselves, because if we don't, someone else will, so we have to manage this transition from our big legacy products to where the market's going and i think we're doing a good job there. >> you do. again, one of these -- another note this morning from cantor fitzgerald on this very subject of i.t. spending growth, they claim they did not hear evidence from the company on the call last night that you are repositioned for this next wave of i.t. spending growth. i assume you would dispute that notion, and i'll give you a chance to do that. >> well, remember, hp's a big company. we've got a lot of legacy businesses. and so this transition takes time, so i think we've made progress. we've got a lot more work to do, and the financial architecture over the next three years has to reflect the ability to generate real revenues very rapidly in these new businesses, manage the legacy profit pools, and make sure that we start with what our customer needs and work back. so, we're on a journey. there's no question about it. i would not declare victory. i think we were clear about that yesterday. a lot of progress. more work to do. >> no. as you have been throughout the two-plus years, of course, you've been at the helm. on this idea of the commoditization of a lot of your product lines, lenovo which is typically very aggressive on price, closing up the acquisition of ibm's low-end server business. i don't think they've closed it yet, but they will be in the market. is that a concern to you? >> listen, i worry about every competitor and lenovo has done a good job and so what we need to do is take advantage of the uncertainty in the marketplace. what i know personally is when there's uncertainty, there's an opportunity. and we look like the paragon of stability at this juncture relative to what's happening at ibm and lenovo is biting off two big acquisitions so in the short term we need to capitalize on that. in the long term they'll be a tough come pet interwe need to be ready to compete and we've seen the movie before, so i think we can be better positioned than we were last time around. >> when you say that, what do you mean you've seen the movie before? >> on the pc space, lenovo came into the market and has done a good job and we need to make sure that we are fit for purpose. and also i would say that servers are different than pcs. we have a long tradition in this business. i think we've got some of the best server engineers in the world and so we'll compete and we'll compete hard. >> give me a sense as to what you're seeing in the marketplace right now. we talk every morning here it seems about the bad weather. i wouldn't necessarily think that impacts you, but i might be wrong. you know, you always give us a good view as well of the world, europe i know has stabilized, but just take me around the world in terms of right now which the hp is seeing to the extent you can share? >> yeah. well, i'd say the bright spot are the developed countries in western europe, you know, france, italy, germany, the uk. the emerging countries in europe are a little bit weaker, but we see europe coming back. in the united states, brazil's very challenging, the u.s. continues to move along, i'd say on the margin getting a bit better, but still hard to predict from quarter to quarter. in asia, our business in china was flat relative to our competitors' that was a good result, so we're quite happy with what -- how we see things unfolding in china. japan, tough, because of the currency situation. south pac tough, but bright spots in some of the smaller markets in asia. and india was a bright spot for us. >> right. >> so, it's a very mixed bag. >> is that one reason why -- i know you raised the low end of your guidance for the year in terms of non-g.a.a.p. earnings, why didn't you given the last two quarters have been fairly strong certainly versus expectations, why didn't you go even higher in terms of guidance? >> well, effectively we did raise the guidance, the midpoint is now 2.5 cents higher, but we are taking some of that overperformance and investing back into the business in terms of systems and tools to make sure that we are positioned in the in the company for the long haul. i think i've been really clear from the begin that we're trying to set hp up for the next 75 years and build the foundation, make the foundation very strong, so as we begin to bring the company back, there's a strong foundation and that's going to require investments in some of the overperformance back into the business to make us stronger. >> right. and i think you -- i think i remember from our many interview, meg, you have indicated that next year certainly, and i don't want to put words in your mouth, will be potentially a year for growth. i mean, this quarter there was on a constant currency basis for the first time since the second quarter of 2011, 0.3 percent growth, but it was revenue growth. are you setting up for what will be consistent revenue growth and profit growth for next year? >> it's a little too early to give you a guidance for next fiscal year. but our objective over the long haul is to return hp to growth. that has to be part of our overall strategy. and as i said, as we pivot to the new style of i.t. these are going to be growth businesses for us that have to be balanced against some of the older legacy businesses, but in the end we have to grow hewlett-packard. >> a couple of other housekeeping notes here. autonomy, we've yet to hear very much about that. it's well over a year ago that you first shared with us your concerns about the accounting there to say the least. where is that investigation? and many two have expected would have advanced by this late date. >> so, the wheels of justice do turn very slowly. the doj, the s.e.c. are looking at the case, as is the serious fraud office in the uk and we're cooperating with the authorities. so, these things take time, but we're, you know, doing everything we can to help the authorities and are confident in their ability to understand the situation. >> do you think that there will be charges brought against autonomy's foreign management? >> you know, it's hard to predict, but, listen, what we know is that there were very significant strategic misrepresentation. hardware was accounted for incorrectly. there were deals with value-added resellers that were not genuine sales, and i think that the authorities are going to see what really happened here. and it's a shame really because autono autonomy's a great company, with tremendous products, but previous management made shortcuts that, you know, undermined the -- or tried to mask what was really going on with the financials as opposed to work to build the great company and that's what we're doing. this is a great business. we just released idol ten which is the next generation of their unstructured data search, and we just introduced data protector 8.1, so we're investing in the business and we're seeing good results. >> you know, it's almost a year, not quite, but in a few months since ray lane left as chairman, and as an interim chairman coming up on a year, i would assume you'll have a new chairman soon? >> ralph's doing a great job for us and stepped in at a difficult time for the company. and, you know, we like working with ralph. we'll see what happens over the next year. you know, ralph, this is not ralph's profession. >> yeah, right. >> he takes on different companies as projects over time and he's been a real value add to hp. >> all right, so doesn't sound like there may be anything new there. whatsapp, i just have to ask you, you're a veteran of silicon valley, of course, you were instrumental in the growth of ebay, one of the darlings that we watched so closely back in the 1990s. what is your take on a company that sells for $19 billion? only a third of the value of hp, as i figure it out, that you have 6,000-fold the number of employees. how does that go over there? >> well, listen, i think facebook has proven that they have a great business model, mark zuckerberg has proven to be a good chief executive and he is betting on mobile. and this company i think he thinks furthers his mobile platform. i can't comment on the economics of the deal. obviously not really privy to how they came to that valuation, but i think mark's done a good job and he deserves the benefit of the doubt. >> you believe the bet on mobile is the right bet, i would assume. >> absolutely. the world has been and is going mobile. we're making a pivot towards mobility not only in our devices but in other parts of our company. and so it's -- it's the right bet. there's no question about that. >> all right, meg, listen -- meg whitman, you are one of our 200, of course, that we're trying to figure out for the top 25 business leaders over the last 25 years. i think you are competing, though, against pierre omidyar, do you think pierre should get the vote over you? >> he was the founder of ebay, he created a fantastic company, if i had to pick between me and pierre, i'd pick pierre. >> all right, very well done. meg, as always appreciate your time, and your giving us that time today. thank you. all right. the ceo parade will roll on, later on thing groupon co-founder eric lefkofsky, one more look at futures. nbc reporting, by the way, the two sides in ukraine have signed the compromise deal and the government forces will start pulling back from the front lines. we'll see if that affects trading in europe and here when "squawk on the street" comes back. i want you to know stuff i want you to be kind. i want you to be smart. super smart. i want one thing in a doctor. to speak my language. i don't want you to look at the chart before you say hi...david. quiero que me hagas sentir segura. i want you to be awesome. that's the doctor i want. at kaiser permanente, we want you to choose the doctor that's right for you. find your perfect match at kp.org and thrive. you want everything.orks an expert ford technician knows your car's health depends on a full, complete checkup. the works. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. get our multi-point inspection with a a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup. only at your ford dealer. ♪ ♪ ♪ [ tires screech ] chewley's 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. you are watching cnbc "squawk on the street" live from the financial capital of the world on a friday, the opening bell set to ring in 3 1/2 minutes. interesting dynamics setting up, a lot of corporate news but we are keeping our eye on kiev, ukraine. the news breaking that the president and the opposition have, in fact, signed the compromise deal you probably read about earlier this morning. a presidential adviser saying that the government will start pulling back from the front lines. they will be calling for armed people to be taken off of the streets. but still a lot of skepticism about whether anything will change unless yanukovych leaves. there have been reports of people chanting in the streets that he still must leave. subpoena, by the way, continues to see a default in their rating, report today and the state department has authorized the departure of family members of the foreign service, workers at the embassy. so, hard to tell whether or not this story is over by any stretch of the imagination. >> i guess it really is in the hands of the opposition, the degree to which the elections may be called. >> yeah, also some discussion about to what degree is putin standing by him suggesting some sort of deal with the west. is he leaving yanukovych out to dry so to speak? >> or whether putin would like to have the ukraine has part of a greater russia? maybe he will speak more freely on it once the winter olympics are over. >> but clearly with 75 dead, some of the worst fighting we've seen in that country literally since world war ii. a couple minutes before the bell, just to recap david's interview with meg whitman a couple minutes ago. headlines, europe coming back? >> yeah, europe's stronger as we know or at least stabilized. listen, meg sounding many of the same themes that she has in her many appearances over the last two years that we've had her sort of regularly come on with us, in terms of we're not there yet, we're not done, we got to keep focused on cost, we've got to keep focused on innovating. but there are a lot of doubters out there, i will tell you. it's interesting. but they've been doubting as the stock is up 100%. >> up 44% since leaving the dow. my question on twitter this morning what has been mr. painful ackman on herbalife? it has not been something to short. >> no, it has not. and there's a feeling that they are at an inflection point, okay, are they really going to show the growth that will bring in new investors who will then say it is cheap at seven times because they actually have some real growth. or are they not really innovating enough. can they not compete in these commoditizing businesses where it's all about cutting costs. >> it was very interesting that she came to the interview wanting to talk about cost reductions embedding it right into the company how it would invigorate and you led her to innovation almost as a secondary thought, where if you are in that space innovation should be your primary thought. >> certainly they've been stressing it. but it's a different construct to the end customer particularly on the business side in terms of what they want from you. they're not about speed any longer, they want a whole software solution to their -- to their business problem so to speak on technology. >> all right. a few minutes until the opening bell here. as we said earlier s&p is on track for three weeks up in a row, something we've not done in about three months. there's the opening bell. and a look at the s&p at the top of your screen. down here at the big board, nrg yield ringing the ringing the bell and nasdaq, national general holdings celebrating their new listing. we'll keep an eye on that. speaking of energy, the energy concern on the cover of "the journal" today, david, bad calls made in the nat gas business years ago coming back to haunt them. >> i tell you, man, when you see the record set on the largest lbo of all-time you typically want to walk away, unfortunately for kkr, they've been part of both of them, the nabisco deal which was not a bankruptcy by any means but certainly did not end up being a home run. and the old txu which you point out coming closer and closer to filing. $8 billion in equity from kkr and it was tpg. i remember that story. i think i broke that story. coming right at the height of the boom. of course, their expectation was that natural gas prices would rise. somebody may not have informed them fully about fracking. >> right. >> little early. >> and it's gone far off plan to say the least. >> they wrote off the equity long ago to a zero but it's still extremely important, not to mention the energy market in texas. >> retail continues to be a story. nordstrom one of the worst performers on the s&p. $1.37 does beat by four cents. the full-line comps, though, down 33 and a full quarter in a row they've been unable to post positive comps. they had silver linings. online sales up 30% and more of their cap-x, 30% of their cap-x will go to technology over the next five years up 20% historically but that will be a loser today as retail's in the news whether it's nordstrom or amazon for that matter. >> yeah, amazon is very interesting. a couple of reports we have out today one that it's going to come through with this new set top box to enable people to more easily migrate between internet offerings and regular television to counter the likes of rocu and they'll take big retail brands and you'll be able to access the likes of nieman marcus through their site. obviously very attractive for the retailers, 240 million customers on amazon and i guess they'll take some sort of revenue share from that. >> right. >> it's not clear how many will take the opportunity. it's a deal with the devil, you get access to an enormous customer base, the platform which is completely unrivaled. they are not third party merchants, they would simply be sending you to their website, nonetheless, amazon and it's incredible what it can do in big data will get all the information on the behavior of its customer base and time and again amazon figures out a way to compete whether it's with its third party merchants or there. it will be interesting to see what the choices are, because it is a great opportunity, but there's also cost that comes along. >> somebody like "the journal" mentions ralph lauren which has some prestige to maintain, it's not cool to be selling in costco or amazon, but that's where the comps have been and it will be interesting to see how many of these retailers look at their own comps and say you got to go where the money is to quote willie sutton, right? >> and the eyeballs, exactly. >> and actually in fairness, if you are already on amazon, to go to ralph lauren is going to be a step up. it's not like you are taking ralph lauren customers and pushing them to an amazon website, is it? they don't have to go through the portal. it doesn't necessarily damage the brand if you are on amazon, it will take you to ralph lauren. >> that's -- somebody might make an argument that it dilutes exclusivity, who knows, i'm not in retail. >> amazon starts saying, oh, look, everybody's buying ralph lauren, let's do a ralph lauren knockoff and put it in the buy box. it could happen. i did want to note juniper networks which after the close i believe it was yesterday announced a series of steps that contributed to a rise in jnpr stock price this morning not that significant a rise, but nonetheless a rise. j juniper calls its integrated operating plan and returning a minimum of $3 billion of capital to holders in the next three years, more than $2 billion in share repurchases through 2015 and the dividend will start in the third quarter of this year, streamlining its operations. a lot of this, by the way, was proposed by elliott, they were an activist with the shares. the stock has been up and is up yet again. they seem to have adopted much of that plan. >> whole foods, well, more than half of a percent. 52.69, oppenheimer initiates with an outperform arguing they are in the best position to gain market share in what we all know is a growing business for organic food. stock still below the 50-day and the 200-day, it tumbled a while ago after earnings and some expectations about comps came back in. and keep in mind under armour, kevin plank with scott wapner on sqoks boston red sox renewing their deal with u.s. speed skating until 2022 saying the cover on "usa today" that the brand has been dragged through the mud. the stock's held up. >> so clever to get ahead of the them coming back, to actually have extended the deal so when they come back and bemoaning the fact they didn't do better and arguably blaming under armour, people say the deal has been renewed. very clever pr. >> a day after the whatsapp deal facebook shares which were up yesterday after being down in the early part of the session, are, let's call it, flat. plenty of people still talking about that incredible deal, of course, $16 billion perhaps $19 billion if and when they pay that restricted stock over time to the 50-plus employees that are going to join facebook and a lot of interesting stories about the founders of whatsapp. always interesting to hear some of those stories in terms of immigrants to this country and what they've been able to do, you know, i mentioned pierre earlier, another immigrant. it is truly remarkable and amazing that we have no immigration bill, by the way, i would add but that's probably a story for another day. >> it really is. the interview today with satya nadella in "the new york times" talking about the lessens he learned from steve ballmer and bill gates, right? you are talking about diversity at a very rarefied level, immigrants, running our biggest countries. >> it's what this country does very well, renews itself unlike others don't. can i mention express scripts, the big pharmacy benefits manager came through with earnings, by the fact that united health, of course, was lost as a customer and also the big deal they are betting down there at the medco health solutions also weighing on the profit. express scripts falls i believe today, carl. >> we are going to get some data out of 10:00 and the conversation will continue i believe whether or not the weather is masking true improvement in the economy. we've had some pretty good data this week. the market flash, delinquencies are down, foreclosures are coming in and credit is being created among u.s. households, but if it warms up in some of these and businesses don't improve, it will change the conversation. >> for what it's worth i did two interviews in two areas of lodging where they've actually got good figures at the moment, marriott's ceo was commenting on how the bad weather had actually been good for them as did choice hotels with those 7,000 franchises around the country later in the day, so some always benefit, of course. home depot may benefit. it's not a one-way street. >> with all that, dow's down ten points. let's get to bob pisani. >> the dow is down but the s&p is fractionally to the upside and we could have three weeks of that in a row depending on how we end and some people are wondering why given the sort of mediocre economic data, and the russell 2000 have been leading as opposed to the big cap groups like the s&p 500. bottom line is this nobody wants to sell on up days and buying a fairly restricted on the down days. we'll see how long that lasts. meantime, i want to comment on the ipo situation. we've had a big spate of medical and biotech ipos in the last few days. we had another one overnight. similar scientific does blood flow measurements in office, it was priced below expectations. we had six ipos, medical, biotech ipos last week and here you could see a very mixed reception. three of -- there's six of them, because only five of them up here, but there's six of them actually out there. almost all of them were to the down side. only two were to the upside. i think at the moment the flood of biotech ipos is waning and instead we'll see a lot more tech ipos in the next couple of months and certainly what happened with facebook and whatsapp is going to give an impetus to anybody out there especially in the social media space to try to get their stock out there and maybe get a higher valuation. there are buyers in the market, that's what that whole deal with facebook told everybody. in the meantime, let's walk through some of the earnings situations. we had four companies with disappointing guidance for 2014 or at least for the first quarter. nordstrom below expectations. that's trading to the downside. i'm talking about their guidance for 2014. same with mohawk, of course, the home furnishing company, disappointing first quarter guidance and they talked about the harsh winter as well. grouponbeat, but they are talking about a loss rather than a gain. that's a bit of a disappointment even though the revenue guidance was a little bit stronger than expect expected. that is correct down 15% for groupon. and priceline is very interesting, they also guided below expectations for 2014, but a lot of the analysts are saying the guidance is typically conservative. this is how you work it on the positive side. bottom line is they did have a great profit growth for the last quarter here. finally i just want to close and give a little bit of kudos to warren buffett and the management team at businesswire. this is a company that he owns. "the wall street journal," some other publications are reporting that businesswire is going to stop giving high-frequency traders direct access to corporate earnings. you know, many companies use businesswire to report their earnings. businesswire then turns around and sells it to the media companies, to the dow jones of the world. the problem is, direct access through businesswire gives you a microsecond advantage before you go to the other media outlets and, of course, high-frequency traders and others pay for that, they decided to discontinue it. i think it's the right response. i don't have any particular problems with high-frequency traders, i do have problems with people getting access to information before other people and certainly generally, david, i'm sure you'll agree, if there are any abusive practices going on independently of all of this in high-frequency trading land, they should be investigated. back to you. >> yep, no doubt and you've are covering that so closely for years now, bob. thank you. did want to point out this morning that the biggest deal that we've seen the last year, in fact, of many years has closed this morning. that is verizon's purchase of 45% of verizon wireless that it didn't own from its longtime partner vodafone. verizon saying as they have before and reminding us that the deal is going to be accretive to its earnings by about 10%. that's excludeing in nonoperational adjustments to refer, again, or remind you, they're issuing 1.2747 billion shares to shareholders of vodafone. that's the stock portion of the consideration, obviously a large cash portion of that as well. you remember they did that giant bond offering. also borrowed $6.6 billion under credit agreements to fund the cash portion of the deal. it has closed. shares are being delivered to vodafone shareholders. there had been some concern about throwback issues, in other words, you are delivering all these shares to accounts that don't really want to hold verizon shares although a lot of that pressure has played out over time. i do want to add here that we're going to have the chairman and ceo of verizon as our guest right here at "squawk on the street" on monday morning to talk about, of course, verizon after the deal. and, man, a lot of other things involving this company including price competition that it sees from t-mobile, streaming questions about netflix, so many different things to talk to lowell about, so happy he's joining us on monday. in the meantime, $23 billion of cash that vodafone will be distributing immediately. >> right. >> so that hits the market and rebalanced, today or monday? >> it's all -- all of it's happening. it's going to -- >> $23 billion of cash. >> that they're distributing to -- that they're putting out, right. right. it will come in. it doesn't necessarily have to be reinvested immediately. >> a lot of money. >> and, of course, we've talked to -- we talked about the future for vodafone which is also going to be very interesting as it continues to focus on the quad play to a certain extent and buy broadband providers, deutscheland being the key acquisition it has made or will it become prey to the likes of an at&t or even to a liberty global? those are some of the questions out there for vodafone. this was a historic deal. long in the making to say the least. >> yeah. and a busy day today. charter today i think if we haven't gotten it already, we will get it, right? and then dish or directv coming out talking about the comcast deal. >> yeah, dtv yesterday in its conference call made no secret of its opposition against it, i guess you would have to say, to the deal. mike white. yeah, directv shares were up yesterday. dish is up today. comcast is flat again. it has been down. we haven't heard from charter in terms of what their plans. can't really share much at this point. they haven't withdrawn their slate, by the way, all the nominees they put up for time warner's board who they are paying $75,000 each regardless of what happens. obviously the expectation is they're not going to come back to try to compete. talking about ceos, we're going to have on, of course, we had meg whitman on this morning after hp reported better-than-expected profits last quarter and the stock is up slightly this morning. $30 a share. one of the key bright spots somewhat unexpected and that was sales of personal computers. i asked meg about what she's seeing in that part of the business. >> the market is definitely getting better. and i think it's a couple of reasons. there is the windows xp refresh which we capitalized on well. and also i think business is understanding and they may want a tablet but they also need some of the more traditional compute devices on get their work done that is going to be required in this world of big data and analytics. >> to those who wonder are they taking share programs from dell, that does not appear to be the case. of course, we don't hear from dell as much any longer it being a private company. but does have public debt. >> dell is more able to sacrifice its margin to compete and gain market share, does it not, if it's in the private sector, along with lenovo. >> it's unclear how it will all play out and how they'll be able to innovate in not just pcs but other parts of the business, innovation and you can keep cutting costs but eventually that kind of runs out. >> do you get the impression she's stepping back from the language around autonomy? >> no, i thought she was pretty strong there. >> okay. >> when she leveled the charges she did, when i asked her about -- when i asked meg whitman about whether she thinks they will get charged. >> do you think she'll be harmed if it is inconclusive, if they don't get charged? she was on board. she wrote it down. >> right. i think there could be some question if nothing comes of it. it has been a long time but the wheels -- >> she said these things take time which, by the way, is a title of a smith song. it all comesmorrissey. >> it does. thank god. >> let's get to rick santelli at the cme. >> good morning, carl, it's an great week for the equities and whether it's weather or not, whether it's continued lack of sustainability on getting traction in the economy, despite all the tale winds of help it's getting from a variety of areas, here we sit at 276 and a two-day chart would reveal we're staircasing a bit. but on a closing perspective, we're not. look at the chart year to date. okay? and look at the right side. i'll give uf some intereyou som statistics, we're trading at 276 and settled at 275 yesterday and we settled at 274 last week. if you look at the last eight trading days for tens, based on closes, which is really all that matters if you're a true technician, we've settled between 271 and 276. while the stock market is really kind of gone straight up for the most part. ponder that. and if you consider what's kept you on the right side of the trade in treasuries, look no further than the dollar/yen. you saw those charts on the tens. look at a two-day chart on the dollar/yen and the intraday chart of the dollar/yen, they are pretty much on top of each other. and, you know, the dollar i was reading something talking about how great the dollar's been. you know, i guess it's to everybody's own taste, but if you look at a year-to-date chart on the dollar index, we are just bouncing off of unchanged on the year. but maybe more important, look back 20 years and let's think about this. in 2002 we were at 120. in '08 we were at 71. we're currently at 80. so, even forgetting the drop in that short period down to 71, we're still 33% off the highs. think about the purchasing power there, and it's only the dollar index. but it goes a long way to explain why there's so many different feels when it comes to trying to handicap things like inflation, carl, back to you. >> all right, rick, thanks a lot. when we come back, hear what under armour ceo had to say about his company's new deal with u.s. speed skating in light of the criticism his company has been facing in sochi and around the world. and groupon taking a hit after the company forecasted the current quarter loss, will more spending on marketing really pay off? 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[ male announcer ] prilosec otc is the number one doctor recommended frequent heartburn medicine for 8 straight years. one pill each morning. 24 hours. zero heartburn. all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. under armour has reached a deal to extend its partnership with u.s. speed skating following the controversy at the winter olympics whether this year's speed skating uniforms had slowed u.s. athletes down. our scott wapner spoke with the under armour ceo earlier this morning and has more. hey, scott. >> hey, carl, thanks so much. it's been a rough week for under a under armour and kevin plank, some blame the company for the fact that the u.s. speed skaters did not live up to expectations and he's speaking out to cnbc and signing the new eight-year deal with u.s. speed skating. plank hoping it sends a big message. >> we doubled down literally our deal because what i didn't want it to come down was a negotiation, so we said our current deal we're going to put so much money, this will be a no-brainer for you. >> well, plank has certainly likened what's gone on the last week to a witch hunt over the brand. he insists that this new deal is not in any way a pr move. you have to wonder, though, whether there is any lasting damage to the brand. >> not at all. you know, this -- as a brand, as a company, you know, you're never i think weak enough to put everything on one thing, so this is a piece of it. this is important. the olympics are a global stage. we've had a lot of success and so, you know, this is -- this is one part of the story, but this is certainly not the story. >> the story lately has been under armour's earnings. just a few weeks ago blowing the doors off wall street. the stock, by the way, carl, is up more than 20% year to date. that's the story that kevin plank wishes today that he was talking about. the real question is how long this controversy is going to swirl around his company. >> and i liked your question, too, scott, about international sales, i mean, this was a coming-out party. they're trying to get those sales to, what, 12% in the next couple of years? >> the great part of revenues for under armour, carl, come from the united states. the olympics in sochi expected to be the big jumping-off platform if you will for the wave of international expansion. have to wonder how all of that now is impacted by an olympics in an international market. a speed skating controversy for an international sport and how it all develops from here? so, scott, when he says to you, look, we doubled down, is he basically admitting that they're throwing cash and resources at the problem to neutralize it? that's effectively what he's doing, isn't it? >> i think they wanted to get the story off the front page, simon, as soon as possible. there are no terms of the deal released, but i think it's fair to say the timing of this deal would certainly speak to that fact and also he, himself, saying that they threw so much money at the problem that speed skating was not going to be able to say no. it's clear they want this to go away. they also, on the other hand, want to renew their commitment to speed skating and make the situation right down the road in time for the next wenter games in south korea. >> it was a great interview. thank you, scott, we'll see you later. scott wapner back at hq. ahead on the show groupon's ceo eric lefkofsky has given guidance that's weighing on the company's stock. we'll find out now what the strategy is. through sunday, save up to $500 on beautyrest and posturepedic. get a sealy queen set for just $399. even get 3 years interest-free financing on tempur-pedic. but hurry, sleep train's presidents' day sale ends sunday. all right. market's doing okay but not groupon, open down 13%, it's gotten worse in the course of the session after forecasting a surprise loss for the current quarter. stay tuned, a live interview with the ceo's coming up, plus existing home sales when we come right back. 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[ male announcer ] truth is that won't relieve all your symptoms. new alka seltzer plus-d relieves more symptoms than any other behind the counter liquid gel. oh what a relief it is. usic♪ than any other behind the counter liquid gel. tony stewart: in my career, i've learned a thing or two about having the right equipment and a great crew. i've also learned how great it is to do the things you love. that's why i'm happy to be part of the bass pro family. because a name you can trust, people who stand behind you, and equipment you can count on (engine starts) mean everything to me. bass pro shops. where commitment, passion and the great outdoors all come together. save you fifteen percent or more on car insurance.ould yep, everybody knows that. well, did you know the ancient pyramids were actually a mistake? uh-oh. geico. fifteen minutes could save you fifteen percent or more on car insurance. welcome back to "squawk on the street." i'm diana olick live at the national association of realtors, the seasonally adjusted rate of 6.2 million units. that's a miss. this is now a 15% correction from the high of last summer. sales are also down 5.1% year over year and before you go blaming all of this on the weather. the chi economist for the national association of realtors himself says this is only partially due to the weather. he is citing affordability issues. he is citing tight credit. he's even citing flood insurance problem. he points specifically to the west where sales are down 7.3% month to month. we've been talking about this all week on cnbc. sales in the northeast are only down 3.1%, that's the lowest drop in sales across the nation. median existing home rice, $188,900 up 10.7% year over year, but remember, this is a mix of home issue in the median sales price so you are seeing a lot fewer homes selling on the low end, a lot more selling on the middle to high-end range. why is that? because investors are moving out of the market. they are still one-fifth of all home sales, but first-time buyers, first-timers, very important cohort to existing home sales, are now at their lowest level on record since the realtors started tracking this in 2008, just 26% of the market. they should be up around 40%. there is your affordability and your tight credit issue right there. the only bright spot to this january report is the inventory. 1.9 million units now for sale. that's up 7.3% year over year. you are looking at a 4.9-month supply and the realtors are now seeing the worst of the inventory issues may be over, although if you look region to region we are still seeing annual drops in a lot of local markets on the inventory. again, though, they are pointing to tight credit, weaker affordability for this drop. this is the slowest sales pace in 18 months. back to you guys. >> all right, thanks very much, diana. earlier today we spoke with thee of hewlett-packard meg whitman, the company reporting earnings after the bell yesterday that were better than expected from the analysts that at least follow the company, 90 cents a share in non-gaap earnings. both above expectations and the company raised its guidance for the full year by five cents at the lower end, in other words, it took the lower end of its guidance up and midpoint goes up 2 1/2 cents. if you really want to look for it you can find 0.3 percent of revenue growth if you "x" out currency for the company which would be its first quarter of actual revenue growth if you want to call that revenue growth since the second quarter of 2011. but, still, many questions about the future for the company, including many analysts who come out, for example, at isi this morning saying they continue to face secular challenges in printing, pc, services, networking, servers. in our view organic r&d efforts not capable of revitalizing the revenue streams in the medium terms say the analysts at isi, i asked meg whitman are you going to get back to consistent levels of real growth. >> it's a little too early to give you a guidance for next fiscal year. but our objective over the long haul is to return hp to growth. that has to be part of our overall strategy, and as i said as we pivot to the new style of i.t these will be growth businesses for us that have to be balanced against some of the older legacy businesses, but in the end we have to grow hewlett-packard. >> and, of course, whitman has been talking about that as a challenge, but, of course, as a goal since she took over the company in the fall of 2011, we're now almost halfway into the hoped-for turnaround at this company and many would say it is at least going according to plan. certainly costs have come down, revenues seem to be stabilizing in certain parts of the business although thought in all of them. pcs, though, was a bright spot for this quarter with actual revenue growth, particularly in the commercial sector. they did sell a lot of notebooks. in pcs they compete against the likes of lenovo and dell. lenovo certainly the leader and the price leader in many ways. that company also getting into the low-end server business in the not-too-distant future in the purchase of ibm's server business. i asked whitman whether that will also pose a challenge to hp. >> when there's uncertainty, there's an opportunity. and we look like the paragon of stability at this juncture relative to what's happening at ibm and lenovo is biting off two big acquisitions, so in the short term we need to capitalize on that. in the long term, lenovo will be a very tough competitor. >> of course, pcs, again, was a bright spot. you can see the stock, though, is now down after trading up after hours and up in the early part of this morning's session. carl? >> meantime, overall the market is shrugging off the existing home sales numbers which diana said were no good. slowest pace in a year and a half. thanks, david. a wild ride for group-on, the daily deal company said yesterday that earnings and revenue topped expectations, that sent shares higher after hours, but the stock is sinking today thanks to a weak outlook for the first quarter. our julia boorstin joins us now to break it all down with groupan's ceo, hey, julia. >> thanks so much, carl. and eric lefkofsky, ceo of groupon, thanks so much for joining us today. your fourth quarter was strong, eric, but the first quarter that outlook for earnings really is concerning to investors, how can you explain to investors why this makes sense to lower outlook so significantly? >> actually, i think the guidance for the first quarter's actually fairly strong in terms of revenue. i think we guided a $710 million to $760 million which is pretty aggressive. it's 22% at the midpoint. and we're fortunate to be able to guide to growth, you know, 2013 was all about building a solid foundation. and 2014 is about growth. to get some of that growth you have to invest in marketing and so we told the market that we're going to be investing about $45 million in marketing to drive that growth. but the growth is pretty dramatic. and we also told the world that our 2014 ebita would be slightly at or above 2013 levels, so to have a company our size growing in the mid-20s that's still delivering, you know, $300 million of ebita is pretty strong and we actually view it as a sign of strength that we're able to make that investment. >> just to clarify, it was the earnings outlook for the first quarter, not the revenue outlook that seemed to disappoint wall street. but there seems to be a lot of concern and we heard it yesterday our earnings call that you're going to have to continue to make those kinds of investments to drive consumer demand and to perhaps reverse an inequality between supply and demand. is there a demand issue from consumers? >> i think demand was never higher. i mean, we sold 56 million groupons in q-1, it was record in billings and revenue, revenue was up 20%. so, demand has never been strong. we're shifting from a daily deal e-mail business to a largely mobile marketplace. and you have to make some investments to create -- you know, to get awareness and so that's where that additional marketing investment is going and we think in the long term it's the prudent thing to do. >> and as you shift businesses, you are going up against a whole bunch of new competitors, now effectively you are going against the gild groups of the world that are flash sale businesses as you shift away from the daily deal business. what is it going to take to reeducate consumers about what groupon is now? >> yeah, i don't think really think we are going up against gild, we did acquire ideally which is a small acquisition for us which is in the flash sales space. but we're the leader in local commerce by far and we really view mobile and local as connected and we're trying to become the starting point of mobile commerce, that's how we're ultimately going to win as people consider groupon to be a shopping mall in their pocket. they pull it out when they are out and about and we curate the world around them with amazing deals. in that space we're fortunate to be the leader. our mobile adoption worldwide is 50% which is staggering for a company our size. we had 9 million app downloads last quarter and we are at 70 million downloads to date, so we're very focused on mobile. we're very focused on building that marketplace of deals and we're leader in that space and we're just trying to forge new territory. >> eric, i understand that you're focusing on the platform and i know mobile is everything. but content and product is also very important and you're going into two areas that are already dominated by people that do what they do very well, goods with amazon and ebay and travel with the likes of priceline and we've seen this staggering growth overnight from priceline and expedia again. a lot of people would say you shouldn't be in these areas. this is -- this is not your knitting. you've got to find something else that you specialize in and do that really well, otherwise why would people buy travel license from you or travel deals when it's so much deeper and so much more vertical in other places? >> yeah, i mean, look, sorl those companies are great companies, but we're very focused on the local elements of those. we're not trying to compete with amazon, for example, and build, you know, millions of skews that you can come to and buy anything you want. we're very focused on curating certain items and having unbeatable deals and we're very focused on the local element of those, right? i give this example all the time of you are walking down the street, we want you checking groupon first, opening up your phone, let's say it's raining and you want to buy an umbrella, i'll offer you five amazing umbrellas and you can click buy and have those umbrellas either delivered to your door or find a local retailer a block down the street and pick it up. that's the space that we have to win to become relevant. we're not trying to build warehouses and compete with amazon or offer every hotel in the world to compete with priceline, we want to control the local commerce experience. >> eric, in is kayla at the stock exchange. you and another executives have noted that a change in gmail at the end of last year whereby the organization of the in-box put some of the promotional e-mails at the back of the in-box leading people to delete them easier would hurt business. did you see that actually making dent in the amount of consumers that were actually clicking through to some of the e-mails which were a huge part of your marketing before? >> yeah, we've been shifting away from e-mail no question and the gmail change did have some impact, we called it out in q-3 it was obviously there q-4 we didn't call it out because it's an ongoing effect. we're very focused on building up a search for us now, seo and sem which are the two primary drivers of search represent iina low double digit for us which is up virtually from zero a year ago and we've made huge progress there and we are focused on the areas we can win and e-mail while it's a great business for us, clearly we need to shift to getting traffic from other places. >> eric, it's david faber at the nyse and i'd love to get your take on the blockbuster facebook/whatsapp deal, you are somebody who chose to take a company public as a founder and chose not to perhaps take the big money from a google or facebook or any other suitors you had out there. what does that deal say to you and what do you think about it? >> you know, i mean, i wish i could provide some great perspective. i don't use the product, so, you know, typically when you comment on somebody else's technology, you should use the product a lot and i don't use whatsapp although it obviously is used all over the world because they have a huge user base. but, you know, we decided not to sell because we believe that the opportunity especially the opportunity to really build the true local commerce platform was just too big to not try to go at and build. and i don't -- the decision to sell or to stay independent is always a tough one. and, you know, you got to commend them. it was a great sale. >> eric, i want to get back to this mobile question. you keep on talking about mobile and it seems like groupon is at a mobile tipping point with nearly half of your transactions coming from mobile. what does this mean for your strategy coming forward? do you see groupon shifting even more solidly into mobile and away from the desktop and the e-mails that kayla was referencing? >> no question. our emphasis is mobile. you know, we believe -- we're already in rare air, right? i think more of our business is mobile than virtually any e-commerce company certainly in north america and we want to continue that migration. we believe we can achieve levels that have never before been achieved in mobile. and that's where consumption's occurring. people are more and more and more, you know, pulling their phone out when they are out and about and making purchases and that's where groupon has to win. >> just a quick final question about china. you said yesterday that you were not going to be investing as heavily in china. pulling back there. why is that? >> i mean, we're in 48 countries and you have to at some point decide which are the markets you want to win. we're in a lot of geography and we doubled down in korea with an acquisition that we're excited about and we looked at china and said we really don't think we can win there without a dedicated partner and a dedicated strategy and so we decided to exit that market and being focused, one of the things it's allowed us to make the forward investments that we're now making to drive growth in 2014 is that the management team has gotten very focused. and i think that's one of the things we've done well in the past year and exiting china is part of that. >> interesting strategically. eric lefkofsky, thanks so much for joining us today. guys, back over to you. >> julia, thanks very much. groupon, of course, still down 15%. up next on the program, shares of hp also in the red this morning even though its pc business grew for the first time in seven quarters. hp ceo meg whitman thinks the turnaround is working, but should you be buying the stock now? more in a moment. ♪ announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom. we have some breaking nubs on the federal reserve. steve liesman live in washington with some details. >> carl, thanks very much, the federal reserve beginning to release the transcripts from the critical year of 2008 probably one of the most calamitous years in american financial history since the great depression. we just got the september transcripts. you remember what happened that year, carl, there was bear stearns, there was lehman brother, fannie may have, aeg, the t.a.r.p. came out, the fed brought the fed funds rate down to zero, these are the transcripts with the individual statements by the members, bernanke was there, janet yellen was there, tim geithner was there and, of course, the hawks were all there as well as the doves and we're going to be reading these transcripts throughout the morning and bringing you some of the nuggets from arguably one of the most historical financial years in u.s. history, carl. >> obviously it's on the fed website, steve, and september 16th, 2008, good morning, everybody, sorry for the late beginning. you don't need to dig very far for some nuggets to give you a sense of what we all remember was the mood back then. >> no, i think that's right. and just how worried the federal reserve was. remember they brought the interest rates down at the beginning of the year of january when there was some concern about recession by 1.5 basis points including two emergency metings that month alone. but it was down 3%. and remember they paused again in june, so there were times when the fed felt a little more sure about the outlook and a little less sure obviously when september rolled around and just how concerned they were will be something and what some of the key policymakers thought during that time is something we'll be following very carefully. >> steve, correct me if i'm wrong, this is a usual release, this is a five-year release, it isn't anything special, it's kind of the automotive process. does the fed still feel there are questions over the way in which it acted? is it still on the defensive to some extent in your view? >> you know, i think i -- i think what bernanke believes, simon, who, you know, just left office, is that over time these decisions they made have been seen to be correct. and i -- the way it looks in the market right now is qe-1 was much less controversial than 2 which was less controversial than 3. and i think he thinks that over time as these things -- history plays out, they'll have seen to be effective. yeah, they think it's controversial and they know that. and they also -- the way these things work, simon, is you need time, not just in the transcripts but from the data to know how things worked out and there's a lot of research going on right now about the efficacy of the quantitative easing programs. >> steve, it's interesting, i'm reading through it as well right now, of course, september 16th, you and i know it very well, i think we were that night before sitting with each other at headquarters there. but this was before aeg went down, after lehman went down. i'm just looking through it. you know, talking about the intensified pressure on morgan stanley and goldman sachs and that morgan stanley is starting to see some not insignificant pulling back of their counterparties that eat into their liquidity buffer by a measurable degree. there is still a lot of drama here. and also mentioning dollar liquidity for foreign banks being a very serious stress in the marketplace. >> yeah, i mean, we go back and we understand this stuff in hindsight, david, but you remember that you and i along with the federal reserve were figuring out these things in real time. there wasn't a whole lot of knowledge of the underbelly of the financial system at the time. and we were learning about things like auction rate securities and essentially the vast extent which we know was underestimated of the shadow banking system. and that was a daily thing where we'd come in and you and i would talk and figure out, well, there's this cloo and cbo and some new three-letter abbreviation that was all of a sudden bringing down the capitalist global financial system. >> yeah, he goes -- it's just interesting to look at some of the broader concerns that we all knew were there but as you say, in real time, it's very different when you look back on it in terms of the money funds and, of course, aeg which was only really creeping into their consciousness hour by hour as perhaps the biggest threat to the financial system. >> that was the biggest slap that i remember. we had just gone through lehman and then all of a sudden it was, what, several days later that we learned that there was this massive problem in an insurance company that, of course, we knew and we covered as a company, but not as a major cog in the shadow banking system that had a major liability across -- that had to do with real estate. i don't think anybody knew it at the time. but then you sort of get a as a matter of fact call in a few minutes we're going to be releasing, what was it, an $85 billion bailout is my recollection is the first go-round with aeg. >> yeah. >> and then, what it was $150 billion or something like that on the second go-around and that's to mention the takeover of fannie may have ae and fredd earlier that month. which if that was all it was, it would have been an incredible year. >> a fair amount of laughter in these transcripts, jokes about how they had not had anything to eat other than what's in the vending machine. china cuts their main policy rate 27 basis points, chairman bernanke said three's a lucky number in china, don kohn was going to tell you that three cubed is 27. these are human bealings dealing with a high stress situations and it's interesting to get the human element out of it, too. >> it's definitely something i'll be looking for, carl, because these guys were having the emergency meetings. a lot of them were on the weekends and there's a funny place where the fed has these videoconference calls that looks a little bit like mission control in houston where they do this stuff, and it's very -- these were times when the fed would tell you essentially how hard they were working. and i don't know, a lot of people don't necessarily shed a tear for them in that regard, but these were interesting times where everybody was -- and you can imagine a little punchiness might creep into some of the trimts. >> by the way, anybody who wants to read it can go to federalreserve.gov and, steve, we'll let you get to work. thanks. >> yeah, be back soon. >> steve liesman. up next we're live in sochi for the latest on what's happening in the winter games. 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>> speechless. because this team it's about our team this whole time so it's weird to think -- i don't know, i wasn't even thinking about this, i'm just going to bumble along. >> something, get ready for the flag. >> i don't even know what to say but what an honor. >> reporter: yeah, genuine, spontaneous emotion, very heartwarming to be part of that maggie moment, wins the gold medal in the women's ski half pipe, the first time in olympic history this sport has been in the olympics, soaring by the rails, looking like a helicopter. she's 20 years old, she was by here earlier today just beaming as you might imagine from a gold medal win and that brings america's metal 's medals to 25 of the netherlands 22 medals have come in speed skating, two more events left and a chance for the u.s. to get on the board in speed skating. but you know, in our business so often what you deliver and you just referenced 2008, bad news, there are rare moments in this industry where you get to genuinely deliver good news on a semipersonal level and be a part of somebody's raw emotions and that's what it was like to give that news to julie chu and they kind of almost teared up a little bit. my lower litch was quivering a little bit, just a great scene and a real honor for julie chu to carry that flag and i think a spectacular move by the u.s. olympic committee for the closing ceremonies after what was certainly a heartbreaking defeat silver or no. >> a lot of raw emotion in that segment and certainly a moment that she and programs you will remember for a very long time. thanks for bringing that to us. >> sure. meanwhile, elsewhere in the u.s. this winter has been so cold that the great lakes are literally freezing over. in fact, the freezing is the worst we've seen in two decades. scott cohn has more and he's live on a ship in the st. clair river in michigan, scott? >> reporter: i'm scott cohn aboard the u.s. coast guard cutter "holly hock." and take a look the great lakes are clogged with ice. it's the worst season in more than 20 years. the economic impact potentially huge. and so is the effort to clear the ice. we're going to show you coming up. the frozenomics of the great lakes. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. 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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ about an hour into trading some of the stories we're squawking about. shares of priceline seeing a nice gain after fourth quarter earnings did beat estimates. the travel site was helped by stronger bookings and higher profit margins during the quarter. and according to the "journal" amazon is talking to major retailers about offering direct links to their own websites. amazon reportedly targeting retailers that have largely ignored its online marketplace like abercrombie and nieman marcus. and steve jobs spurred sales of a lot of things over the years and now that list could include postage. the u.s. postal service has approved a commemorative stamp honoring the apple co-pounder which goes into circulation starting in 2015. everyone from the northeast to the midwest knows this has been an incredibly cold winter. in fact, it's so cold that 90% of the great lakes are completely frozen. and all that ice is taking a big toll on shipping. scott cohn explains. he's live with his electric blanket aboard a ship in the st. clair river in michigan, scott? >> reporter: good morning, kayla, and there's the problem dead ahead here. you can see this is the ice that's clogging up some of the key parts of the great lakes. as you said, 88% of the lakes give or take frozen over and particularly choke points like this. and as you can see, the ice is a little bit kind of broken up here. that's the product of the work here on the coast guard cutter "holly hock." the problem is that that refreezes and when it refreezes, it's thicker than it was before. basically about two feet thick and so they have to keep on going back and forth and essentially plowing out this path. let's give you a sense of what our mission is today. so, we started out about 8:00 this morning from port huron in michigan, about the southern tip of lake huron, we're heading down the st. clair river to lake st. clair and basically continuing to clear out this path ultimately this pathway leads into lake erie. lake st. clair, the detroit river and then lake erie, a very key passageway. and as far as ice goes in wintertime, it really doesn't get a whole lot worse than this. >> this is my third winter up there. there is by far the worst i've seen talking to some of the locals, this is the worst winter they've seen in their lifetime. beyond that, i don't know the numbers, but from our perspective as well, our mission, it has, you know -- it has placed a, you know, we're working longer hours, using our ships a lot more, the amount of ice, you know, it's more than i've ever seen in my career. >> reporter: they're working considerably more hours and so are all the companies that are still trying to ship things through the great lakes in the wintertime. it's taking about seven days to make what would normally be a one-day trip because they have to get through the ice. they're actually generally escorted by a cutter like this one. come back to me live, and you can see sort of the pathway that we have here and what we're looking at. it sort of looks like slush, but it's a lot more than that. a lot tougher than that, and actually getting through it is a feat of engineering of this vessel which actually sort of is designed to come up on top of the ice and push it down and use about 2,000 tons of pressure to get us through. we're going to continue to keep you posted on our progress here. coming up on "power lunch." a look behind the scenes of this massive effort. back to you guys. >> wow, that is what they call a live shot, scott. nice stuff. and an important story. our scott cohn in the midwest. after a rough start to the month, auto dealers are starting to see buyers return to the showroom. our phil lebeau joins us with the early read on sales for the full month of february. hey, phil. >> hey, carl. this is new data from jd power and it's encouraging data when it comes to the strength of the american consumer, remember, auto sales really took a hit in january and early february. now according to jd power and lmc automotive they are starting to improve at least in the second week of february they did. jd power expects february auto sales to be at a pace of 15.7 million compared to january which was 19.2 million. so, hoarse how the month has gone. during the first week, sales were down 5% according to jd power. the second week improved so that the first half of the month down just 1%. and the full month estimate is now for sales to increase 5%. and the other piece of encouraging news coming from jd power february transaction prices, they're up about $400 year over year and that means the transaction price for the month of february, and it still needs to play out over the next two weeks, but it's likely to be north of 29,000. take a look at the auto dealer stocks. year to date these guys for the most part have had a rough sledding because of the weather and because of business being lower and frankly because they had a nice run for the first half of last year and a lot of investors said, do you know what, we're talking money off the table, autonation the only one in positive territory. guys, the bottom line is this, we are seeing some improvement in terms of as the weather is clearing, people are starting to come back into the showroom. >> okay, phil, thank you very much, phil lebeau live from chicago. let's get an update on the situation in the ukraine this morning. the government there says it's reeff reached a tentative deal with protesters that will hopefully end the violence that we've witnessed in the capital city of kiev. jim maceda is monitoring events in moscow, jim. >> reporter: hello there, well, the draft agreement on ukraine was signed by the besieged president victor yanukovych and three opposition leaders and witnessed by two eu officials and a kremlin representative. it includes early elections in december of this year, a return to the 2004 constitution, the one that had some decent checks and balances until yanukovych gutted it, and the forming of a coalition government in ten days. but there's still clearly tension between the opposition leadership and representatives of the protesters, those on the -- on independence square. they're just not happy at all with this draft deal because it keeps yanukovych in power for at least ten more months. his resignation, you remember, was a non-negotiable demand of many of the frontline protesters especially now they eight after the last 72 hours dozens of deaths and hundreds of wounded at the hands of riot police. but after hours of intense lobbying by a couple of eu ministers and towns to close the deal, it's now a done deal. still, the eu ministers are managing expectations. they're pointing out that this is just the initialling of a draft accord, just the starting point on a long, probably bumpy road ahead. and as to make that point, even before the signing, the extremist nationalist group called right sector who have been doing much of the hardcore fighting of late, on the square, rejected the deal outright, pledging the, quote, national revolution will continue. back to you. >> nbc's jim maceda. take a look at shares of intuit, rallying as it raises its forecast for its online tax preparation software, turbotax this season. we're going to talk to the ceo of intuit brad smith, next on cnbc. ♪ ♪ where you think you're gonna go ♪ ♪ when your time's all gone? 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uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. nice 5% move for intuit, an all-time high, let's bring in jon fortt who is bringing in a special guest. jon? >> thanks. take a look at those shares up quite nicely. the small business software company reiterated its full-year earnings forecast due to a strong start first couple weeks for online tax preparation software, turbotax, with tax season under way, what could this mean for your portfolio? brad smith is the president and ceo of intuit joins us now. hey, brad, good to see you. >> good morning, jon, good to see you as well. >> so, you generated i think more than 90% of annual earnings just during this quarter we're in right now, the tax quarter, the april quarter. it sounds like your start to tax season was stronger than the market, but at the same time a few people evercore is convinced based on surveys that taxes are just getting so hard people are going to be driven to accountants. is that something that you're worried about? is that why you are ramping up marketing spending to convince people your software is really good enough for them to do their taxes themselves? >> first of all, our marketing spending is down year over year and we have a bold ask clear message but if you look at the results over the last ten years, the digital tax category has been growing by 5% and the assisted tax preparation is growing 1%. so far this season the numbers are even more contrasted. right now digital is up 6 1/2 percent and the assisted category is down about 5% and that's as reported by the irs so we don't see that trend happening at all. >> i keep telling myself every year that my taxes are getting too complicated and i will stop using turbotax but i give it a try and i end up doing my own taxes which makes a lot of people scratch their heads using turbotax. but you are moving into the strong cloud quickly. quickbooks had more subscribers in the quarter and that's why your stock is up so strongly. what is the potential if you are really are able to continue the momentum and up-sell toer on other small businesses? >> we see the potential of small businesses to be unlimited, there are 29 million small businesses in the u.s. today and we serve 5 million and there's another 600 million around the globe that we are starting to reach. when you look at the cloud-based version of our product the ability to buy additional services is so much easier than if you bought a desktop software version so we see the lifetime value 40% higher, the business is growing north of 30% in terms of subscribers and outside the u.s. is growing over 90%. >> brad, this is kayla at the stock exchange. it's no secret that small business faced a lot of headwinds last year, sentiment bounced back toward the end of last year, but what is the state of small business from your perspective on the macro scale? >> you know, it's still tough sledding. if you look at their hiring rates and we pay about one in 12 americans with our payroll service it's modestly up and for the last two months it started to trend in positive direction but still nowhere near where it needs to be but overall small businesses are resilient, adapt to the environment and they find ways to persevere and that's what we're here to do is try to help them succeed. >> one of the things that caught my attention on the earnings call i believe you said that thus far, it's early in the season, but you're seeing three times more people start their taxes on a smartphone or a tablet than you did last year and i believe you said last year you saw about 5 million people do that. how big could this get and do those numbers surprise you? >> jon, we continue to be amazed at how the mobile platform has schiffed the entire landscape in our industry and all industries. we now have out of 45 million customers, we serve around the globe over 10 million use a mobile platform to either do their small business accounting or to do their taxes. and, yes, it's amazing to see a 3x improvement year over year in terms of people doing their taxes from a tablet or a phone. >> when you see facebook paying $16 billion to $19 billion for whatsapp and you're looking at international expansion, you are looking at strong mobile growth in your own business, what do you do as a ceo to react to that? do you have to do something with tax preparation through messaging? >> well, we've been working with messaging and mobile platforms for several years. we've made some strategic acquisitions ourselves and for us it's capitalizing on the trend and making sure we have the easiest application to use on a mobile device so we can actually outpace the competition. >> when you look at some of the changes to taxes that we're seeing with the health care law, is that good for you? is that bad for you? how are you seeing your customers reacting to that? >> well, this has been a two-sided coin. there were some people who felt that with the affordable care act people will be driven to go to a tax pro to help them. we actually have not seen that at all as evidenced by some of the numbers i shared earlier. in fact, the research suggests that less than 1% are actually going to switch their method because of affordable care. now, with that being said, we have a free web-based tool that helps the consumer under what does the actual affordable care act mean for them, do they qualify for a subsidy or penalty and we help them get insurance if they need it. we've had over 3 million people visit the site so far, 600,000 who were not with insurance and we've been able to direct them to the right avenue so they could make the purchase of insurance. >> brad smith, thanks for joining us on cnbc. good luck with those taxes, buddy. >> thank you, jon. meanwhile, intuit still up sharply. we have a lot of other movers in the market. let's send it over to dom chu for a quick market flash. >> check out a couple of assisted service providers, brookdale is buying emeritus for $1.4 billion in stock, $21.48 a share, a 32% premium to emeritus thursday close and upon completion of this dale brookdale will have a facility within ten miles of 6.5 million people age 80 or older. investors like the deal. both stocks are higher, simon, back over to you. >> okay,dom, thank you. like it or not we seem to be entering a new era for virtual currency, the first bitcoin atm in this country officially launched in austin, texas, and the question on the mind of some who probably should know better how exactly does a bitcoin atm work. we'll talk to the owner of that machine in a few minutes. we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. could save you fifteen percent or more on car insurance.s everybody knows that. well, did you know that when a tree falls in the forest and no one's around, it does make a sound? ohhh...ugh. geico. little help here. i need>>that's my geico digital insurance id card - gots all my pertinents on it and such. works for me. turn to the camera. >>ah, actually i think my eyes might ha... next! digital insurance id cards. just a tap away on the geico app. welcome back. let's send it to the cme group and happy friday to rick santelli. >> thank you. exactly how happy of a friday is it is what we may be discussing on the exchange today. you know, let's throw something on the screen. you know, on february 6th, and i'll read along. the "wall street journal" reported on february 6th that business wire was selling direct access to news releases to high speed trading firms. such direct access isn't illegal. well, our own eamon jafers have been doing a boatload of work in this area for many months now and actually i'm kind of shocked by the whole thing. you know, you talk about a bottom of the food chain issue. you talk about the notion that we have prosecutial discretion with regard to the department of justice. they look at certain things maybe different than others. i think there's also a regulatory discretion that seems to be going on. in my mind, and this is just my opinion, but just because something is not illegal and just because technology allows something to happen doesn't mean we should allow it to happen. i think in many ways this high frequency trade, this putting your server right next to, you know, sources like business wire is kind of like the market's version of the nsa issues that the country's grappling with. very similar. but let me weigh in very simply. i know many high frequency traders and firms, not bad people, but, boy, when you have that many quarters in a row wind up without losses, you really have to question yourself. i guess i was also amazed at how nice and sit-down all of this happened. you know, regulators sitting down. the story talks about attorney general's office being involved. i don't know how it's going to turn out but from where i sit, if you don't have losses, you don't have risk, and if you don't take risks, i don't think it's kosher. now, let's switch gears a bit. let me write a number here and see if you guys and girls can decide what this is. and i'm just roughly doing what the last debt clock said. 36912. okay. 36912. this is, of course, 17 trillion and change. 17 1/3 trillion. that's what the debt clock is running at now. quickly, the president on a budget. the president will focus on pumping new cash in job training, early childhood education. who could disagree with that. as einstein said, trying the same thing over and over. my school district spends boatloads per pupil. if you charted the output it keeps going down. we have the kind of debt. we need to try something new. political perception is not reality. and i think maybe we should incentivize the private sector through things like apprentice programs and try something that may work versus just sound good and, of course, nobody can possibly disagree with. back to you. >> rick, thank you very much. rick santelli on the santelli exchange. up next, it looks like news corp's chairman and ceo will be able to celebrate his 83rd birthday in what may be manhattan's ultimate bachelor pad. now on his new quad drink plex which spans 10,000 square feet. . 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. 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1-888-628-2419 to learn more. tdd# 1-888-628-2419 so you can take charge of your trading. we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments where we can say, "i did it!" ♪ we are entrepreneurs who started it all... with a signature. legalzoom has helped start over 1 million businesses, turning dreamers into business owners. and we're here to help start yours. rupert murdoch is buying a new bachelor pad for the very reasonable price of $57 million. just a few months after his divorce, murdoch is buying the top four floors of one madison. the residential tower in downtown manhattan. his latest purchase believed to be the highest paid ever for an apartment downtown. real estate broker to the super rich closed the deal on the 10,000 square feet of raw space. spanning floors 57 through 60 of the building. sources tell cnbc he's planning to spend millions more to turn the space into a residence. murdoch recently divorced his third wife, wendy murdoch, who kept the couple's fifth avenue penthouse, purchased for $44 million in 2005. >> it's clearly unlivable the way it is now. i think you need to do some work. >> fixer upper. i'm sure he's going to make it very nice. >> always reminds me we're in the wrong business. dolly lenz, 3%? 3% of $57 million? a commission of $1.7 million? >> sometimes you can negotiate it down a little bit, just a little bit of price. >> dolly? >> i'm not sure, either. i know. we helped her show it. look at that. we added on. >> maybe rupert murdoch was watching cnbc and saw the footage and said, i'll buy it. >> he's going to rock out downtown. 83-year-old can do a lot of damage downtown. >> surprising. previously, $52.5 million, howard marks on park avenue. >> good weekend. >> good weekend, david. see you in a little bit. if you're just joining us this morning, here's what you missed early on. >> welcome to "squawk on the street." here's what's happened so far. >> still have a great shot at hitting the podium. regardless, we want to make sure that our message is there. that this isn't just a one and done. i think there's speculation of how to react to it. i want people to be clear that we will stand up and come back and that is nothing more american than that story. you may have pushed us a little bit but what do your see us in 2018 in south korea. >> on going worries about their distribution chain, long dlufrly times, their infr fra structure, stock is going to open down this morning. what a story that has been. >> i think the headline for this quarter is we've made progress and we got a lot more work to do. because we have to, this company will ultimately come back on the backs of innovation. great innovate i products, services, and solutions. >> there's the opening bell. >> existing home sales in january down. 5.1% month to month to a seasonally adjusted annual rate of 4.62 million units. that is a miss. >> we're shifting from a daily deal e-mail business to a largely mobile marketplace. you have to make some investm t investments to get awareness. that's where that additional marketing investment is going and we think in the long it's the prubt thident thing to do. >> the federal reserve beginning to release the transcripts from that critical year of 2008. ♪ good friday morning. live here at post 9 of the new york stock exchange with a check on the markets. take a look at the dow. we've been holding on to some gains even though some of the data has been disappointing. existing home sales, worse in 18 months. microsoft and mcdonald's leading the dow higher. price line hitting all new-time highs on the travel website's better than expected earnings. helped by stronger bookings. the daily deal's website falling after forecasting a loss for the quarter. highlights from our exclusive interview with groupon ceo is coming up. hewlett-packard down 1 1/2% after opening to the upside. one of the big stories this morning after the company's better than expected earnings report. david faber spoke with ceo meg whitman. wide ranging conversation about growth, competitive tletsz and autonomy and the status of that investigation there. >> we've been trying to follow up on that. it has been well over a year, in fact, since we first heard of what essentially was alleged fraud on the part of autonomy, alleged by hp. they sent that case, so to speak, to the us s.e.c. and counterpart in the uk. it has been a long time seasons we actually heard something and some wondering did hp in some way perhaps use it to its advantage, if you can call it that, by taking some write-downs and the like on autonomy. i asked the company's ceo as to where that stood and whether she believes at this late stage already charges will finally be filed. >> what we know is that there were very significant strategic representation. hardware was accounted for incorrectly. there were deals with value added resellers that were not genuine sales and i think the authorities are going to see what really happened here. >> we're going to be watching that, of course, as it continues to perhaps evolve as a story. overall, of course, hp reported better than expected revenues and earnings. though its stock is actually down. continued questions about whether this turn around which has been in place now for over two years and still has at least two more years to go, according to wittman, is going to take root in things like real revenue and profit growth, innovation, or indeed that is going to result in product advances. those are, i think, some of the questions at least being asked. and perhaps one reason why the stock has stalled here after what has been an extraordinary run over the last, let's call it, 18 months. >> did offer some barbs to her competitives. ibm and lenovo. >> we can listen to meg on that. lenovo is not just buying motorola it's buying ibm's low-end server business and has typically been a very strong price competitor for a company being hp seeing price competition throughout many of the business lines. i asked meg how is lenovo going to take to it hp or will we stand more price competition perhaps at the lower end of the service business. >> jon fortt joins us here at post 9. microsoft the highest almost since thanksgiving. >> it's a little bit of both. the commercial pc trend is something you can't get too excited about because you've got windows hp getting ready to reach the end of support in just a couple of months. we heard a lot from microsoft and from others about commercial businesses doing some buying and anticipation of that and since hp said they got some benefit from that you don't know how much to weigh in. also, printing has gotten some benefit from the yen. and you just have to feel overall like printing trends, not going to be the growth driver that really takes hp forward. it's been stable. there have been profits there. you look at the services margins. those are still bad at 1%. you look at software despite the autonomy stuff. we don't know which way that's going to go. the business still needs to grow one way or the other. it missed analyst targets. yes, overall top line better than people expected. wittman doing a great job managing on the bottom line. there's only so far you can cut though which she acknowledged in her conversation with david. and you have to wonder where that growth is going to come from. >> she's doing a lot of different things, david, managing expectations as we said. cutting costs, trying to invest for growth, getting the cash cycle back. what kind of grade would you give her at this point? >> i would say at least a b plus if not more than that. i mean, given that she took over, let's not forget when it was, october 2011, the company in disarray in many ways. there are lots of tackling and nuts and bolts things that i think whitman has done successfully. whether you can engineer a return and the kind of r&d and product innovation is a larger question. i think that is still being asked. in terms of delivering according to your point, getting cash conversion rates down to 16 day, for example, managing it to actually get cash flow again in a company that exit this quarter 1.7 billion net cash they had a great deal of debt when she took over. those are positive things. it's almost like you're coming through what has been not the easy part but the lockheed has gone very well. now you can see if you can run down the open field. >> the hp we see now structurally was a scale case, was a share of wallet. the idea if we get compact, if we get all these other things and become this massive machine we'll get more enterprise spending, we'll be able to drive costs down. now that fundamental case has been challenge by some that's happened in the cloud. we see cisco talking about point competitors, f 5s and others, pm is in that same boat. how do you grow faster than some of the scaled businesses are shrinking? >> tough challenge. i'm glad we don't have to come up with that answer. >> we just get to talk about it. >> jon, thanks. david, thanks. earlier this morning groupon ceo appeared on "squawk on the street" on the heels of that disappointing earnings guidance despite efforts to reposition the cohn company. take a listen. >> really think we're going up against, acquired a company called ideally that's in the flash deal space. >> john steinberg is the president and ceo of buzzfeed and cnbc contributor. john, good morning to you. whatsapp one day, groupon the next day. where do you make of where they're trying to go versus where they have been? >> i think the whatsapp comparison, it's a radically simple business. right? actually brian sent a note to the founder and said no ads, no games, no gimmicks. that is the success story of watts ap whatsapp. when i was listening to him it's so complicated. you can't figure out what this business is anymore and how you structure and operate your business is how you present your business to customers in the world. i think that's really a big issue for groupon right now. >> one of the issues brought up on the call is that e-commerce on average people buy two items from their shopping cart. groupon is barely one. and they're trying to give that up. groupon is a business where people go to buy multiple things at one time? >> that is the point. me hanie has a great article on this. it's excessively ambitious for them to be the starting point for mobile commerce. i agree. they're trying to beat amazon. they have doubled the shipping costs of all the peers. the margins are killing them. the margins have gone down so dramatically as they transitioned to now an e-commerce business. they're becoming an over sto stock now. >> is there a comparison to be drawn with foursquare, too, reverse of this starting with the maps and the mobile marketplace and moving backwards into deals. but arguably they have a better map software. >> i think any time that you go into an e-commerce business, especially late, and you're going up against amazon which is all about efficiency, you have to have some very unique offering which they ultimately don't have right now. this is going to be the ongoing challenge for groupon. when people say to me -- sometimes a tough picnic is better than trying to find a new picnic spot. when people say is buzzfeed going to go into e-commerce? no, we're going to stick to our ni knitting. if you keep it simple and on point, you build a whatsapp and not where you don't know what is what? >> what about the bona fide that the backers have. why would he be going along with the strategy if he didn't believe in it? >> i don't know which strategy it is. when you go through the transcript or you look at the reports right now they've got the local business pap they've got the travel business. they've got the direct business. they've got the goods business. i think they're just trying to figure out right now which direction to go. and i don't really know what the backers think right now. >> we're not really done with the whatsapp port mortem quet. there's a story on re/code saying that google is trying to leap frog the offer but the founders rejected it in favor of facebook. what do you think is the mindset? >> i heard the re/code story as well. i think the board seat is a brilliant offering. when you're a founder like this team who has so fiercely wanted to be independent and build their vision, it's an iconic vision. 50 people in often marked office in mountain view, no ads. zuckerberg saying i want to be partners with you on mobile, i want to make maps and give you 10 pors of the company for you and your qulemployees, come joi the board. larry page never had a passion for this business. it was all about blocking facebook. if you're looking to start a business, that's not a compelling offer. >> thanks. that takes us to the update on the situation in the ukraine. the government says it has reached a tentative deal with the protesters that would hopefully end violence in the capital city of kiev. nbc is live in moscow with more. jim, are we seeing any signs of that violence is evading? >> so far it's remaining relatively quiet on independent square in kiev. obviously we're monitoring through video streaming here, watching it very carefully from our perch in moscow. carl, after a lot of 2:00 a.m. moments when nobody really thought it was going to come off, the draft agreement was signed. the draft agreement on ukraine signed by that unhappy looking president victor yanukovich and instrumental in keeping the pressure on yanyukovich. his name had a space on the page but it wasn't signed. not quite sure what that will mean in the days and weeks ahead. but it does include this deal early elections and december of this year a return to that 2004 constitution. one that has some pretty decent checks and balances before yanukovich gutted it up. the key demand as well by the protesters in ten days' time. but there's still clearly tension on the ground, certainly between the opposition leadership and protesters on independence square and who were not at all happy that this draft keeps yanukovich in power for ten more months. it's a compromise. like every compromise, no one gets 100%. let's just hope it's not, again, just words on paper. >> well said, jim, thank you. in moscow watching the situation in ukraine. detroit's emergency manager has filed a plan detailing the city's eventual exit from bankruptcy. the plan makes cuts to pensions and creditors and was filed a few moments ago in federal bankruptcy court. it's just a plan. many of these aspects are still being negotiate with stakeholders. the deadline, kayla, was actually march 1. they're a little early on this. trying to bring that $18 billion in debt down. we'll see how it's received by the court. >> as always, a lot of negotiation goes into this. so always a good thing to have that earlier rather than later. coming up, a different kind of link-up with amazon. we'll look at the company's move to turn retail rivals into partner. also, rick santelli in the windy city. rick? >> we had existing home sales today. what did we learn? one thing that jumped out at me that diana olick hard, first time home buyers represent 26% versus a 40% historic average. wow. so we're going to discuss the buy side of housing. not the buy side like you're thinking. the bifurcation of housing. what's going on to create really two different housing markets. who are we going to talk about this with? vince. you want to make sure you see this one bottom of the hour, weather versus statistics. 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 that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity 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rounding out the top five you've got con eddisoedison, ex. yes, the biggest gainers but it's more of a range-bound market, carl. the fed earlier releasing transcripts from 2008 shedding some light on details of the financial crisis. our steve liesman is live in washington. he's been combing through those. he has some details. >> flashback, carl. it's quite amazing. concentrated on the september meeting right after lehman. and what i find is this amazing debate from the federal reserve. should it address the banking crisis with monetary policy. i just want to give you some of the comments that came from this. fed chairman ben bernanke talking about the swap lines create with foreign countries says he wants an unlimited squawk mine to have my own ba ba sook a. there was laughter in the room because he was quoting paulson. the kansas city fed chairman back then arguing against policy changing saying we have an inflation issues throughout these minutes, what you see the hawks arguing about inflation and concern about it. jeff lacker comes in and says, what we did with lehman i obviously think is good. this is several days after lehman declared bankruptcy and he's among those who say it was a good development with lehman because of the moral hazard issue. eric rosen graham comes through and says, i don't know. too soon to know. and, quote, i hope we get through this week, is what rosengren said. richard fisher, most the most rhetorically flamboyant quotes bob dillon, money doesn't talk, it swears. i want to play for you where fed chairman ben bernanke summarizes the remarks says, hey, guys, we don't have rules here. we have found ourselves in this accept sewed in a situation this which events are happening quickly and we don't have a set of criteria. we don't have a fiscal backstop, and we don't have clear congressional intent spop in each event, in each instance, even though there is this sort of unavoidable add hock character to it we are trying to make a judgment about the costs. that's how ben bernanke ends it. the fed leaves interest rates unchanged at 2%. they would come back three weeks later and cut by 50 basis points. eventually bringing it down from 2% to 0% within several months. carl? >> steve, i'll take it from there. quick follow up though that i had, reading this it reminds you how much money was needed to keep the system going right after that meeting these banks were borrowing close to $100 billion per week from the primary dealer credit facility. that is an unbelievable amount of money. when we debate these bank capital levels now, when you compare what they're actually having to hold to what they needed from the fed they're pretty much on par. >> i think that's right, kayla. there's a lot of talk about the tri-party repo system. a lot of lack of knowledge about how the whole system works. and it's interesting to hear the fed really groping around in the dark is probably the best way to put it. they come in. bernanke comes into this september meeting says, guys, we have a lot to do here. i want everybody to be short. tell me what your economic forecast is and tell me what you want to do with policy straight up here because we don't have a lot of time. they take a coffee break. bernanke has a lot of calls to make. in this september meeting t.a.r.p. has several weeks later but bernanke is hinting to the possibility of fiscal intervention at that time. it will happen several weeks later that they will come in with the $700 billion chart figure. already issue on the table in the middle of september. >> hesitant to put a limit on what they were going to let some of those institutions take. steve, thank you for bringing us that flashback there. i want to move on to modern day, amazon, and a report in re/code jon fortt they could be gearing up to take on apple and roku again, a streaming tv box. >> that's peter's report at re/code and there were rumors at a holiday season launch for this product. didn't happen. now it looks like perhaps march, interesting because overall in the tv market we've seen the tv makers are trying to come out. they're throwing everything out there. 3d didn't really work and now trying to curve the screens. low led. larger sizes are capturing people's attention. traditionally in technology when we see that it's a chance for an innovator to come in with a solution, pc market, kind of stagnated before apple came in with some innovations. so the question is, i think, where does amazon price this and how does prime work with it? as we know, there have been rumors about them potentially raising the price of prime. carl sniffed that outcoming a bit in advance. but if they do that, it potentially makes their video offering a little less compelling because you've got to be a prime member to see this stuff. so it will be really interesting to see how they do that, when at the same time they're trying to maneuver themselves into a better position on the retail side and the apparel side with some of the deals. >> how tough of a conversation is that going to be? how much polling do they have to do with the likes of a neiman or ralph lauren? >> it's a tough conversation because they give up the front end of the customer experience once they go with amazon. i really doubt you're going to feel like you're buying from abercrombie or buying from ralph lauren if you're coming in through amazon and really this is supposed to be ebay's area and shop runner. so if amazon gets in here it's dangerous for those retailers but especially bad for ebay. you've got to bet john donahoe is picking up the phone trying to stop this from happening. >> so many shifting winds right now, jon. unbelievab unbelievable. when we come back, taste tests involving one particular toothpaste brand. you might find the flavors to be somewhat outrageous. but first up, we'll go to the winter games going to the home stretch. i'm beth... and i'm michelle. and we own the paper cottage. it's a stationery 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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ usic♪ visit today for exceptional offers. tony stewart: in my career, i've learned a thing or two about having the right equipment and a great crew. i've also learned how great it is to do the things you love. that's why i'm happy to be part of the bass pro family. because a name you can trust, people who stand behind you, and equipment you can count on (engine starts) mean everything to me. bass pro shops. where commitment, passion and the great outdoors all come together. what a winter games it has been in sochi. our brian sullivan and michelle caruso-cabrera is live in olympic park with more to set up not just this afternoon, guys, and a big hockey game was obviously the weekend ahead. how are you doing? >> we're going all right. michelle, you've been doing some excellent reporting and i think russia might have gotten the better of your larynx. >> you're going to do most of the talking. >> i usually do anyway. it's fine. michelle did reporting consistently for a couple of weeks here. over the shoulder, medal ceremony. huge turnout. maggie bowman getting a gold medal in the ski halfpipe. that brings the medal count to 25 to the united states, russia closing in a bit with 24. there's your count. canada, 23. norway and the netherlands. and we're just about 30 minutes away from the beginning of that usa/canada semifinal in hockey. there's a lot of electricity in the park around that. there's been a lot of great athletic achievements but there's been some great and maybe not so medal-winning moments on our side of the camera, as well. >> thank you. from the slopes above sochi. with all of these -- whoa! [ bleep ]. >> oh, boy. >> i told you that was heavy. >> you are so narrow minded. you've raised a lot of good talent in sport. >> i brought you guys -- these are cavier flavored, these are crab. >> and where are these from? >> i'm guessing russia. >> hollywood, health care. >> yes. >> so different. >> yeah, you spend enough time in hollywood you need some serious health care. >> anyone that can make health care sexy it's this man right here. >> is this the olympic snuggie? >> get a shot of vodka next to you just in case. >> carl, you did the "today" show taste test. you did it again. >> it's really well. >> go team usa. >> no, i am not holding -- >> you already had your say. you already had your say. you already had your say. >> you're just envious of our medals. that's what you do. >> joe, you got -- you're getting the bronze in this. >> you're an idiot. >> you're getting a bronze. >> that's good. >> super cute. >> anything to wash away, carl, right, the taste of those cavier and crab flavored chips. >> i have a feeling that russia is going to say thank goodness cnbc is gone. >> for sure. >> not the vodka industry apparently. they wish you would come back, carl. although i have to say that the fact that you're from colorado, okay, and did that on that slope you're taking home the lead. quintanilla does not medal. >> it's a giant shame that you can bring upon me that i don't already feel. >> i'm sure you've heard it from friends and family in colorado, right? >> yes, yes, embarrassing. >> carl -- >> i would argue, though, even though -- >> did you get these gloves? >> guys, i mean, the interviews, i'm just thinking of the dutch coach, michelle, i'm thinking of al michaels. the voices we heard from sochi have been, i think, some of the most memorable things we've done. >> i thought the interviews were a lot of fun this time if dutch speed skating coach -- speed skating coach was, i thought, so funny when he sat down and the first thing he said to joe kernan was, you can't believe you lost. you must be an american. i thought that was a bit of a compliment. but you know, it's funny you talk about the voices here, my lack of voice, dominantly russian olympics, i thought, carl, and brian, you tell me, all the other olympics i've been to were multi-ling galual and h it felt less olympic to me. >> we will find out if we can snooek into the hockey game tonight before "street signs." i thought the hosts here have been welcoming. everywhere we went people were warm. they were smiley. they were friendly. and they were apparently very ven generous with the vodka. >> they were. you summed it up this morning, brian, two weeks ago people had much different conversations about these games. we were always on alert for the story to change quickly depending on the news. had some minor scares regarding airplanes landing in different parts of the world. but that didn't happen. and we hope you guys get a chance to see at least closing this weekend. great, great work, brian and michelle. we'll talk to you later on. >> thank you. big weekend up ahead for them. meanwhile, coming up, virtual breakthrough. meet the ceo of the company behind the nation's first bitcoin atm. that story on "squawk on the street" after this. so ally bank has a raise your rate cd that won't trap me in a rate. that's correct. cause i'm really nervous about getting trapped. why's that? uh, mark? go get help! i have my reasons. look, you don't 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. don't feel trapped with the ally raise your rate cd. ally bank. your money needs an ally. you want everything.orks an expert ford technician knows your car's health depends on a full, complete checkup. the works. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. get our multi-point inspection with a a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup. only at your ford dealer. europe is about to close here. it's mostly been a green session. >> we've drifted higher through that session. the markets are wait for $23 billion of cash distributed by vodafone as a result of the verizon deal. that may come on the market maybe tomorrow. maybe monday. maybe earlier next week. retail sales were poor in the uk today as a result of all the flooding. for the week, european equities overall are up about a quarter of 1%. standout stocks today, the french automotive sector which makes wipers and headlights, doing particularly well in the united states and china. it's lifted the rest of that french sector as you can see. on the downside today, sales of gucci are decelerating. slowing down for the almost to a stand still for the first time in years. and that's whatted on the parent kering. restructuring charge there as well. disappointed on the session. we're watching rbs. it's widely reported that next thursday rbs, the bank, which is 81% owned by the british taxpayer, will announce it's axing 30,000 jobs potentially here in the united states and internationally as it goes back and retreats back to be a more domestically focused banks. we'll wait for the announcement next thursday from the new ceo. still waiting in rome for the man who will be italy's new prime minister to announce his cabinet. mr. renzi was due at 10:00 new york time. we will get details throughout the day. optimism of what he can deliver in terms of reform, taxes, or whether he will be basically stuck in his tracks as the two previous prime minister were from the two institutional drag there. italy's bonds in the meantime continue to rally and the yields fall as you can see now at 3.6% on the ten-year. guys, have a great weekend. back to you. >> thank you. let's bring in bob pisani with a look at what's moving on the floor. slugging off existing home sales. >> we've been talking about how the markets don't react to negative news and we saw it again today. we've been trying to figure out the effects on weather on things. put up the existing home sales numbers by region. i don't normally cover by region but the west was down 7%. now, there is no polar vortex that was occurring in the west. the older numbers were disappointing but that's a real telltale sign that it's not just weather that's getting involved here. now, you would think that this would be a little bit of a disappointment. it's not weather. other things may be going on. maybe they can't have access to enough credit, something like that. but homebuilders are nicely up today. in fact, they're among the market leaders. many big names up 2%. this is what we're talking about. no going down. market not going down. generally bad economic news. some traders have been calling it the great disconnect. i've been hearing it all week. we've got poor economic data. china contraction now for a couple of months. the fed is keeping taper. political risk abroad and venezuela and kiev and in other parts of the world. and the stock market is essentially sitting right near new high. i'll show you the reverse head and shoulders. it's a d bottom. put up the s&p 500. you don't get a better v-shape than art cashin standing to the left of me here. that's a reverse head and shoulders. if we can close above 1848, the old closing high, that's why i keep emphasize that. that will be a breakout in that reverse head and shoulders. they will go crazy if we hit closing highs. 1848. pay attention to that. finally, guys, the group that never declines. every day they keep on giving. this time pharmacyclics. every day, regeneron. look at the main biotech etf, the xbi, 27%, carl, up since january first. that's on huge gains in 2013. back to you. >> unbelievable. golden age of sorts, bob. bob pisani. if you haven't heard, existing home sales fell sharply in january. at their lowst level on record. more on housing there's rick santelli in chicago. hey, rick. >> yeah, i know, always a near and dear part of what i do is housing. it was the straw that broke the camel's back about five years ago. after all the bailouts and then to think that we're going to have principle reduction. it's been 5 1/2 years, my guest, vince. 5 1/2 years since the conservativeship of the gses. the fed gives them time to figure out how to finance so the middle class can have home ownership because renting doesn't do it. you become part of pottersville when you rent that wrong. what have they done to change the renter's finance in 5 1/2 years with 0 interest rates. >> not a lot. >> you heard carl. 20% versus 40% historic average of first-time home buyers. i think this is terrible. >> i would agree with you. hen you really look at it, as i'd said, the last time i was here, rick, it was a bifurcated market. it continues to be. what you've got is professional investors and affluent homeowners and buyers. then you've got joe every man. joe every man is 26%, should be 40%. should be a 40% of that market. but he's not. if you listen to diana olick yesterday, the average cost on a monthly basis goes from low 700s to mid 800s. that's a car payment for somebody. we've got to work on that. and the reason that you've got prices up so high, you don't have a lot of foreclosures. foreclosures are sitting down and staying low and they're staying low because of government intervention. not that investors wouldn't help anybody who needs a hand. but i'll tell you what, you got to get this foreclosure backlog moving or you're not going to get the supplies to get the housing prices down a bit. >> whether it's if president talking about we need more job training programs in the government. like we need any more. wasn't it a year ago the vice president was trying to trim them back, spend more money on education? the correlation between input and output doesn't seem to be there. the fed talking about 0 interest rates to help housing. it was really to help main street and the middle class. the top of the pyramid keeps getting higher and higher. what about weather? i hear all this about weather and i know it has an effect. but this home ownership first time, isn't really effective by weather, is it? >> no. if you look at the west again following up what pisani just said. 7% down. there's no snowstorms in los angeles last time i checked. okay. no 30% -- 30-degree weather. more importantly, talking agent the government. they haven't even reupped the tax forgiveness bill on home forgiveness modifications. if joe every day gets $50,000 forbearance or forgiveness or a mortgage, he now has a $50,000 tax bill. >> between students loans, renting instead of owning, if the middle class makes this country powerful i certainly wish they do something about it because if wishes were horses, beggars would be riders. it junt just didn't working out the correct way. vince, you're the man. thank you for being my mortgage guy. carl and the gang, back to you. >> rick, always compelling stuff. thanks for bringing it to us. coming up, atms are not just for cash anymore. the first bitcoin atm in the u.s. is now open in the city of austin, texas. how exactly does the bitcoin atm work? we'll talk to the man who owns it. 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>> thank you, scott. appreciate it much. the u.s. just got its first bitcoin atm in austin, texas. robo coin dispatched the machines close to where south by southwest will be held. they launched the first bitcoin atm ever in vancouver. the virtual currency has been vause tell. right now looking at a value of $561 on the coin-based exchange. we want to talk about the atm and bitcoin in general with jordan kelly, ceo of robo coin which oins the atm. thank you for joining us. obviously no coincidence you're putting this atm in a hotbed where some 60,000 tech experts are going to be descending over a matter of days. how much activity can this thing handle and what are you expecting? >> oh, it has maximum capacity we have a knew more atms delivered in the next week to handle that demand and put it into awesome spot for everyone to enjoy it. >> i know the vancouver atm processes roughly 60 transactions per day. are you expecting that in austin, possibly more? >> oh, i think you can. i think we're going to be doing a lot more than that. >> when you think about the fact that bitcoin itself has been so volatile. we just showed the coin base exchange roughly $561. elsewhere it's trading for under $100. when people want to celibate coins back through your atm, how do you calculate the value and what are some of the risks there? >> yes, we use the bit stamp price and the exchange rate has been really volatile just based on the fact that they're going away at this point. i think it's going to stabilize and continue to -- we're probably going to see a surge in growth in the very near term. >> jordan, what do you expect that people will actually use this for longer term? i mean, it seems to be kind of a novelty at this point. and could you also address, is this mostly people taking cash out from bitcoins or putting cash in and getting bitcoins? >> i'll go b to a. right now it's actually 50/50. when we started in vancouver it was 80/20. people are starting to see how convenient the sell and accessibility it is and it's super easy. to jump into your next question. i think that once people -- once more accessibility to the currency, i think people are going to understand better. really i think it's the best store of wealth right now. i think it's a really exciting way to store people's wealth. and that's why i think it actually stands, you know, across the globe and is going to be understood and well received. >> jordan, to use this atm you have to have your palm read. there's facial recognition technology. but you also need a government issued id. that's a lot more information than a four-digit pin. can users be sure that's secure? what are you doing? >> we tried to apply banking's best practices to enrollment process. also make it even easier for the customer so we care about speed and ease. so all the customer needs to enroll in our machine is their phone, their id, their face, and their hand. all very, very easy things, things that people carry with them everywhere. >> very interesting stuff. jordan, one quick take away though is that potentially if someone is using a fake id do you notify the government? >> we actually run all ids through our proprietary technology making sure that it's not counterfeit, that the customer is not indeed not who they say they are. however, if a customer does do that, they are bio metically tied to that fake id putting them at identity fraud risk. we believe the machine deters people from that and does a good job of protecting our operators from anti-money laundering and making sure they adhere to all their customer compliance. >> jordan kelly ceo of robocoin. good luck. >> thanks so much. got some breaks news. to that, eamon jaffers in washington. >> the scc is announcing at this hour that it is entered an agreement with credit suisse to settle for $96 million and admitting wrong doing for providing unregistered services to u.s. clients. credit suisse provided cross border services to thousands of u.s. clients and collecting fees totalling approximately $82 million withouted ed adhering t regulations of the federal securities laws. this stands in contrast to the settlement from ubs back in 2009. that was a $780 million settlement. this one $196 million from credit suisse. we're expecting a big hearing in the senate on swiss banks next week. a lot of attention in washington on this issue, guys. >> eamon jaffers in washington. almost lunchtime on the east coast. how did some ice cream sound? maybe a nice cool mojito? you can have both and all you have to do try some toothpaste. our jane wells explains. jane? >> um, chocolate, vanilla, lime, a party? no. this crest goes after the millennials. we do a taste test after the break. understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. let's face it, not everybody really enjoys brushing their teeth. but toothpaste brand crest is trying to change that. jane wells, what are they doing? >> carl, a warning. you're going to see people spit. procter & gamble is going edgy with crest. colgate is number one. hoping to gain market share with nu new flavors targeting, quote, daredevils. all right. we have lime, spearment zest, mint chocolate trek, vanilla mint spark. what do you want to start with? >> vanilla mint spark. >> we assaulted students for a taste test. would snazzy flavors change that? we also went to usc's school of dentistry where most students agree this is a great idea if it gets people to brush more, if they like the flavors. of the three the overall winner it was mint chocolate trek. >> that's good. >> i would lie the chocolate one. >> it's really good. >> it tastes really good. i wouldn't mind doing it, like brushing more than twice a day. >> it's almost like dessert but like healthy for your teeth. >> oh, yeah, this is like ice cream. yeah. the most controversial, the lime spearmint zest which was supposed to take kind of like a mojito. >> some people said it's like a mojito. >> no. >> no. >> no. that's enough of that one. >> a little too pepperminty for me, i think. >> it kind of tastes like that mojito gum that doesn't taik taste like mojito either. maybe the person who thinks it tastes like mojito had that mojito and has never had a mojito in real life. >> what does it remind you of? >> limeade. >> no, no, no, no, no, uh-uh. that was gross. >> that's delicious. >> is it? >> that is delicious. >> you like it? >> i do. >> see? not everyone is a hater. the only downside the dental students said little kids might want to eat the toothpaste from fluoride in the stomach is not a good idea. >> never man at the sink interviews, jane. that was great stuff. jane wells still rinsing apparently in los angeles. former s.e.c. target mark cuban crashed a speech by mary joe white. he's tweeting about it. we'll tell you what he said in just a moment. i'm beth... and i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. ink from chase. so you can. here in philadelphia you can access a philly cheesesteak anytime, day or night. just like you can access geico anytime, day or night. there is only one way to celebrate this unique similarity. witness the cheesesteak shuffle. ♪ cheesesteak, cheesesteak ♪ ♪ it's the cheesesteak shuffle! huh! ♪ ♪ every day, all day, cheesesteak, cheesesteak! ♪ ♪ every night, all night cheesesteak, cheesesteak! ♪ ♪ 9 a.m. cheesesteak! ♪ 2 p.m. cheesesteak! ♪ 4 a.m. cheesesteak! ♪ any time (ruh!) >>geico. fifteen minutes could save you fifteen percent or more on car insurance. billionaire, former target of the s.e.c. mark cuban crashed a speech being given by agency chair mary jo white and tweetding about it. eamon jaffers has more on that. >> unexpected celebrity guest here at mary jo white's speech this morning on the s.e.c. talking about the variety of issues including the need for the s.e.c. to have more funding. cuban live tweeted the event as he sat there in the audience. look at mark cuban watching the speech. i'll give you the tweets he was wheating out in realtime. he said i'm impressed by sec chairwoman's confidence and salesmanship. unfortunately when it comes to her comments on enforcement she showed a lack of self awareness. but to her credit she's selling hard. he mentioned she had mentioned funding so many times i'm feel like i'm being pitched at a fund-raiser. you get a realtime sense of what mark cuban thinks about the s.e.c. today. of course he's had recent tussles with the s.e.c. i e-mailed him after the event to ask him what he was doing there, he said he was in d.c. anyway for another event and decided to stick around for the chair's speech. >> outspoken critic of the agency and market structure in general. eamon, and certainly not afraid to let his opinions be known. eamon jaffers. if he were on "shark tank" he would say, i'm out. >> exactly. for people following him on twitter they got a play by play of that meeting. scott wapner has the "halftime" coming up. >> thanks. another weak number regarding the economy and yet the stock market proves resilient once again. it's up and there are a number of good stories. under armour, groupon. you have talked about all of them. >> and that under armour we owe to you. good stuff playing today. >> appreciate it. have a great weekend. welcome to the "halftime" report. following the biggest stories of the day. under siege. under armour ceo talks to us about his new speed skating deal and the damage that's been done to his brand. clipped, groupon shares plunging on the company's weak outlook. is the social media stock a bargain now or a bust? short
we will tell you about that. and jim cramer warning of a top for stocks possible. last night he did it on "mad money." we will hear the sound that could shape the markets. you'll find out what others are saying as well. first let's check in with sue at the nyse. sue? >> we have a modest market gain but we have a big stock, individual stock, on the move right now. seema mody joins us with the news. >> that's right, check out riverbed technology. elliott management has increased its offer to acquire the company for $21 a share. it had previously offered $19 a share. elliott has about a 10.5% stake in riverbed. the stock up better than 5%. sue? >> thank you very much. we will keep an eye on that. we are also keeping an eye on shares of tesla, up 16% on a bullish call from morgan stanley. consumer reports also loves the company and so does wall street, as you can see it's up better than 600% in a one year period. you heard me right, 600%. phil lebeau with more on consumer reports' top cars list and a first on cnbc interview with consumer reports. phil, over to you. >> reporter: thank you, sue. this is an important report because it really is the benchmark thisat a lot of peopl use. four major story lines coming out of the latest annual auto report from consumer reports. the big one, tesla model s is the best overall, top overall pick of all cars in the survey. ford falling to second to last among auto brands and chrysler has a big win. for the first time in 16 years, it has a brand that is a top pick. the ram 1500 is the number one pickup in the eyes of consumer reports and non-japanese brands have surged in the latest survey by consumer reports. let's bring in john linkoff from consumer reports. a lot of important stories here. tell us first why you gave a rating of 99 out of 100 for the tesla model s. >> well, the tesla just really impressed us significantly in all aspects of testing, driving. look, it gets 225 miles on a single charge so that's head and shoulders above any electric car out there in comparison. yes, it costs probably twice as much as other electric cars but you actually are getting performance for your dollar. also, it's about 84 miles per gallon equivalent so that's very impressive number. it gives you porsche handling. it gives you the quietness people come to expect from a lexus or another luxury car. it can hold seven people with the jump seats in the back. it really does everything and it should at that price but also because it's a single line in the manufacturer, they can focus on making that car perfect. >> reporter: on the other end of the spectrum, you've got ford rated as the second worst auto brand. what's the problem at ford? >> ford's really been hurt by reliability. we have seen the release this week that they are going to move away from the microsoft system for their my ford touch system and go towards blackberry system that's used by audi. it's probably a good move because that my ford touch system really hurt a lot of their reliability in our survey as well as outside surveys. it's been kind of pushed down that it's user error but it's not. it's not a user error when the system freezes or when it's slow to update or when updates have to keep coming and coming. that's really hurting ford a lot in our reliability survey and it's hurt it in its score in our test because that's going to knock down the test score of the vehicle in our testing process. >> reporter: one last question. this is the poorest rating you have ever given ford under the leadership of mulally. they made improving reliability a big push and they did for awhile. where does this say about where ford is right now? have they taken their eyes off the ball when it comes to reliability? >> they have had such a wide model range. they have taken a lot of cars that when alan was starting are kind of long-running models they did really well and cleaned up the reliability there but introduce a number of new models on top of this universal system, the my ford touch universal system being thrown out through all its vehicles, that's a recipe for disaster. >> reporter: john, there you have it. the latest report from consumer reports when it comes to autos and reliability. back to you. >> we will talk more about that as we continue on "power lunch." more breaking news now in the bond market. two-year notes up for auction. rick santelli, how did we do? >> reporter: well, a-minus. not bad for the beginning of $96 billion in supply, $32 billion two-year notes today. let's go through the internals. yielded .34 which was the offer side so tight on pricing. 3.60, 3.60 of investor dough chasing every dollar security available known as bid to cover well through the auction average of 3.30. we had the best indirect since june at 34.3 and 19.3% was just a wee bit off the auction on direct but a very solid, we are grading demand at 1:00 eastern. tomorrow's five years and back to you. >> thanks, ricky, very much. we were just talking and phil was just talking about ford. the stock is down about a tenth of a percent right now. david wisten from morningstar is on the line with us. i know you know that ford came in very poorly in this latest consumer reports survey. would you buy the stock right now? what's your rating on it and are you worried about the reliability factor that he mentioned? >> good afternoon. we have a five star rating on ford. i think it's worth $26 a share is our fair value estimate. consumer reports say it is very important but an investing point of view it really hasn't nailed the stock a whole lot. what's been hurting the stock lately has been the guidance they gave in late december about profit coming down year over year for '14 versus '13 because they have so many launches this year, especially in north america. if you look at the data for 2013, ford had a great year despite the negative headlines they have had from consumer reports. they gained 40 bits of share in the u.s., largest of any automaker. over the long term, i think 2014 will be a bit of a -- not a rebuilding year but getting the company set up for more success in 2015, where they can get a lot of the economies to scale and recoup the losses occurring in 2014. north of 250 a share in a few years is not unrealistic. >> thank you so much, dave. appreciate it. ty? marcus lemonis is the profit. the debut season is tonight. marcus used to be a car dealer, among many other things. what a polymath kind of guy you are. auto nation was his brand. let's talk a little about ford and tesla, compare, contrast. we have been telling you about what tesla has been doing right and ford wrong. what do you think tesla is doing wrong and maybe ford right? >> first and foremost, the tesla product is fantastic. i want to get that off the table. the technology is amazing. what i don't like is their lack of belief in the dealer body system, i'm a strong believer, i was brought up in an auto dealer family and they are abandoning that concept. >> they have basically boutiques or you order online? what? >> they have company-owned boutiques popping up around the country but auto dealers ultimately support the product with the consumer. who is going to support the product at the end of the day? who is going to provide the value and the retention of the value? >> where and how will you get it serviced or when you don't know how to work the technology. >> who will put the trade values on it when you go to trade it in? >> best advice you could give to ford in light of what is certainly a disappointing consumer reliability rating? >> one of the best ceos in america, i would put my money on him. stick to the basics. fix the technology problems that you have. but don't waver. they are a strong company. >> thanks very much. we'll be back with you several more times this hour. we will put you to work. first, down to sue. you know, jim cramer last night ringing a bit of a warning bell on "mad money." here's his case for the bears. >> which is why my trust is scaling out from what we bought at the lows. not piling in now. finally the biggest worry of all. we have had two straight months of bad employment numbers. that cannot be dismissed. the market is banking on these numbers being understated because of the weather. bulls should hope so. i don't like retail at all. plus, anything that touches china can't catch a break at all. >> all right. so is jim right? ben willis is with us, bob pisani is with us. ben, what do you think? >> the bears are in the polar vortex freeze. the market rose yesterday. i truly believe it was because of lack of selling. the same thing today. we have had economic data that should have pushed this market down several times. earlier last week, probably down 500 points on the dow. nothing happened. the sellers are frozen out of this market right now. they are giving -- the economic data is being given a waiver because of the polar vortex, the weather, and i think that's the idea. the correction we had in january was not significant enough and i still think it's yet to come. >> the sellers are frozen out because we are the best market in an overall weak global economy. the u.s. and europe are holding up fairly well and jim's right, china is not doing very well. china is down 5% in the last three days, because of some of the concerns about weak economic growth. >> pulled back today for the first time in 14 days. >> right, but look what's going on today. we have gold up, bonds up, and the stock market up. >> somebody's got to be wrong. >> something's got to give here. >> one market out there that's not right. right now, what would you do on weakness? would you add to positions on weakness? >> at this level right now, no. normally i think that's a great trade for particularly long term investors but i haven't seen significant enough weakness. we started to see it. we only got down about 5.5% before we started this ascent back up. it's been very difficult. if you tried to short into this run, expecting the bears to come out, you have been hurt pretty good. >> very badly. >> the groupons, teslas, linkedins, those are the ones really getting the market going. >> thanks, guys. appreciate it very much. ty? these are the palace grounds in ukraine. the people now inside the palace touring the property where ukraine's deposed leader lived in opulence. ukraine's currency hitting record lows. while the world waits to see whether the country will get loans, if so, how much and who will provide them. at the same time, ukraine still has no functioning government. michelle caruso-cabrera got into the palace today and is live for us in kiev. michelle? >> reporter: hey, tyler, as thousands of ukrainians crawl all over that estate looking at it for the very first time, dozens of journalists are also looking at documents that they found dumped in the river behind the palace. i got a look inside that palace. you can't believe what i found. the volunteer guards tell us that this is the most grand room in the palace. look at the intricate inlaid wood floor, the furniture with gold gilding and then this white baby grand piano. a steinway. after dinner, you can imagine he brought guests in here to play billiards on this gilded table. then interesting, it looks like clearly they were in a rush to get out and guards say there's evidence that he was burning something or somebody was burning something in the sink. this is the balcony of the president's former palace. take a look at the floor. granite and marble. then look over the bannister. many, many tourists have come to see how viktor yanukovych lived and they can't believe it. they can't believe the immense amount of wealth on display here in a country so poor. then from the balcony, you can see the river where he tried to dump more than 100 binders of documents before he fled. >> on saturday, we found over 157 folders with wet papers that was thrown in the river, and since that time, 24 hours a day, volunteers and reporters are working to preserve these documents. this morning we started to publish a document we already copied online. we expect a lot of investigative reporters will start their investigation based on these documents. >> reporter: when these were found, what did you think? as a journalist, did your heart pound? >> yeah. actually, a lot of my colleagues were trying to do investigations on the issue because it was well known that something strange is happening and after we found these documents, a lot of them were destroyed, actually burned, and we felt that now we have something that will work with -- this was used by the guests of the family. the floor is hot. >> reporter: in this room. >> not only in this room, but in other rooms. >> reporter: you're right. it's a heated floor. okay. >> we were lucky that we were here looking over the documents. they are drying in like 30 minutes if you put -- >> reporter: on the floor. >> yeah. these are the originals of the documents. this means that we have the original proofs, proven effects that can reveal the truth. >> reporter: keep in mind the gdp per capita of ukraine is less than $4,000. all of those documents are going to be posted on a new website called yanukovychleaks.org. sue? >> fantastic footage. thank you so much. appreciate it. an 11-minute audio tape has surfaced on the internet and on it is believed to be the voice of turkey's prime minister telling his son where to hide large amounts of money. today, turkey's prime minister erdogan accused his rivals of intercepting communications. the opposition leader said he should quote, flee the country, take your helicopter or resign, end quote. the lira fell hard against the u.s. dollar today. you can see that move. better than almost 3.5% move to the down side. and the etf that tracks turkey, tur is the symbol, is down 32% in a year. some pretty dramatic moves on those markets today. >> that is certainly true. also true, the polar vortex making a comeback this week. the northeast, midwest, button up, folks. here's the weather channel's tom niziol. >> cold winter weather is relentless for the eastern u.s. as we have another blast of arctic air coming down out of canada. let's take a look and see how this works through the week. that cold air coming down with another blast here and it's not just the northeastern u.s. making it all the way down to the gulf coast through the end of the week. if we take a look at the temperatures, take a look at tomorrow night going into thursday night. temperatures well below freezing as far south as atlanta, georgia. and up across the great lakes region, several areas with temperatures well below zero for this time of year. in addition to that, we are going to see a little bit of snow shower activity. these snow showers are not going to amount to any significant accumulations, probably one to two inches across the northeastern united states, and that is going in through the tomorrow afternoon time frame. we take a look at new york, that cold weather, average temperatures for this time of year are 44 degrees. we are running 10 to 15 degrees below normal. by the way, i don't need to remind you that saturday is the 1st of march. that's a wrapup on the cold weather. back to you. >> tom, thank you very much. how do you keep moving along and progressing when your office is a battleground? we have some survival lessons for you coming up next. and speaking of tough environments, how would you like to get caught between pimco's bill gross and mohammed olarian in a huge shouting match? the rs of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm 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. like carpools... polly wants to know if we can pick her up. yeah, we can make room. yeah. 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[ female announcer ] watch live tv anywhere. the x1 entertainment operating system, only from xfinity. welcome back to "power lunch." i'm seema mody. check out shares of intermune, soaring on news its experimental lung disease drug had positive results in trials. a programming note, in a cnbc exclusive, brian sullivan will talk live with its ceo, dan welch, in "street signs" beginning at 2:00 p.m. eastern right here on cnbc. sue? well, the profit, marcus lemonis is back tonight with an all new season. we are so excited. the big show is on at 10:00 p.m. tonight but here's a peek at the drama on the lot. >> i don't really have authority over any of the parts. what i mean by that is pete wants his finger on every single thing in the store. he micromanages. i have known him ever since he was 5, 6 years old. he's a very proud guy and he's a good guy. we just don't agree on a lot of things. even the buying of the cars. when we would sit down and say okay, we have x amount of money to spend, he wants to spend money on a $100,000 porsche and i'm like it doesn't make any sense, if you had $10 million, you go ahead and buy the $100,000 porsche but when you have $100,000 to spend it makes more sense to buy $10,000, $15,000 cars that the average working class is looking for. and he says i'm writing the checks, i'm writing the money, this is what we're going to buy. that's what he does. >> look what's outside, no cars. you're not selling anything. >> and we come to work every single day hoping that something will change. the relationship is very strained. >> i think that might be an understatement. "the profit" debuts tonight. it really seems like an understatement. there's an awful lot of tension there. how did you handle it? >> at the end of the day, unfortunately, the gentleman you saw ended up quitting and what has to happen in an environment like that is the manager really has to be put in check. too often in this country we are finding that managers are putting employees in the middle of things and it's creating a problem in the work force. the end product and the consumer really suffer. >> you gave me the perfect segue, as you always do. we want to get your take on another situation. basically the "wall street journal" is reporting today the co-founder of pimco, bill gross, argued openly with the ceo mohammed el-erian as investors started pulling billions of money from the firm last summer. marc andreessen says this exact same behavior pattern is often found in the best performing companies in any space and in the worst performing in that space. do you agree with that? >> in no case will anybody advocate for that sort of behavior but when the results are bad or things are not going well, emotions take over. in a situation like this, at pimco, obviously emotions got the best of them. what you don't want to do is stick the employees in the middle of this dog fight. it makes everybody uncomfortable and no one knows who to pick. you pick the wrong side, you will end up outside. >> i can jump in here. in the video clip we just showed, there was the owner, the founder of the business who says i'm the smart guy here, i'm the founder of the business. bill gross was the founder of pimco. it's very tough when you're an employee, a hired hand, to take on that founder, isn't it? and how can a founder be smart about listening to the opposition or the dispute of an employee? >> bill gross is a genius, no question about it. but he didn't get there by himself. i think that's important to remember. the people around you is what got you there. what we want in a situation like that is for us not to be attacking and not to be hostile. that just doesn't work. the results, being poor is what usually drives that. people fleeing the market, pulling their money out, we're not selling the cars, we get irrational. >> let's turn to the sports world. there's the story out today with new details on the pervasive atmosphere of bullying. a young lineman for the miami dolphins. there's a couple questions that we're posing. as an employee, how do you manage in a tough workplace and as an employer, when it happens under your watch, basically, how do you deal with it. or do you think this is specific to sports, to the competitive nature of a locker room? >> you know, unfortunately, a lot of youth deaths are a function of bullying. we don't want to have any tolerance for it. as an employee, you can't allow it. obviously if you have to pay your bills and pay your mortgage, you can't just leave, but there are ways to kind of deal with it. as an employer, it's ultimately in the case of the miami dolphins up to the owner of that organization to deal with it swiftly and sternly and have a zero tolerance policy. in my opinion, i think the policy was a little more liberal than it should have been. it's a big problem for me, especially as a dolphin fan. >> a contentious workplace with some creative tension is fine. but when it lapses over into either bullying or into a hostile environment where people are uncomfortable, then you've got a really corrosive situation. >> we never want to be in an environment where people don't feel like they can argue or have healthy debate. that kills entrepreneurial spirit. but in the case where people are demoralized or minimized, it just doesn't work. >> marcus, they are determined to keep us apart. one of these times we will end up on the same set together. good luck in the premiere tonight, 10:00 p.m. eastern time. "the profit" only on cnbc. >> they are afraid you would eviscerate him. that's what they're afraid of. coming up, we talk about fixing america's student debt crisis. it's a very serious topic we have been covering here on "power lunch." the ceo of sallie mae is here. plus the severe drought in the west. snow and freezing temperatures almost every place else. should we worry about food prices? jane wells has the answer to that one for us. hi, jane. >> reporter: stop bullying me, sue. as if you could ever be mean to anyone. depends what you like to eat. we will go through this food group by food group after the break, including surprising news about the most important food of all. french fries. ew new york, we don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing 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. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com afghanistan, in 2009. orbiting the moon in 1971. 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[ dance music plays ] woman: [laughs] no way! that really is you? if they're not a cfp pro, you just don't know. cfp -- work with the highest standard. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom. we know we're not the center of your life, but we'll do our best to help you connect to what is. so what impact is the extreme drought in the west and the freezing weather virtually everywhere else in the u.s. having on agriculture? jane wells with new data on what it may do to food prices. hi, jane. >> reporter: hi, tyler. the cost of buying groceries overall is expected to rise 2.5% to 3.5% this year. that's pretty normal inflation. the usda says that's based on normal weather. quote, the ongoing drought in california could potentially have large and lasting effects on fruit, vegetable, dairy and egg prices. we are expecting rain in california later this week. california is the largest dairy state. cows need to eat hay which is costing more and you can see there ain't a lot of it out there. the usda says milk prices are up due to strong international demand as well. look at this, fish prices up 6% from a year ago. the usda is going to monitor to see if this indicates a longer term rise in prices in seafood. beef prices are at or near record and they could rise at the retail level as much as 4% this year. from a wholesale perspective, beef prices rose 5% in january compared to a year ago due to cold weather which impacts growth. and pork at the producer level is now expected to rise between 5.5% and 6.5% this year. look at that chart. bacon prices are up 18% year over year to over 5.50 a pound. my favorite tidbit, the biggest jump in fresh vegetable prices in january, has nothing to do with california. potatoes, up nearly 6% in january due to seasonality. finally, sue, get this number. the usda reports americans wasted 31% of our food supply in 2010. >> that makes me crazy. that makes me absolutely crazy. i'm always telling my kids you can't waste food. so many people around the world don't have it. >> clean your plate. >> something along those lines. starting to sound like my mother. thanks. appreciate it. let's take a look at the gold market right now. metals prices are closing and right now, comex gold is up about $4.40, a fractional percentage move to the upside. little bit of downside pressure on the silver market, the copper market and the platinum market as well. let's head uptown to the nasdaq. sheila dharmarajan is following the big movers there. >> reporter: well, the nasdaq basically holding at flat levels today after that big rally yesterday. taking a look at the movers, got to talk about tesla. that stock is surging today after that very bullish morgan stanley note. also, very positive rating from consumer reports. take a look at priceline as well. that stock is popping after a strong earnings report. also lifting up other names like trip advisor in that e-travel space. on the losing side, we have expediters international, the freight company, after an earnings miss. the company did cite weak ocean freight prices as part of the reason. also, facebook, apple are down today which is of course dragging down the overall index as well. back to you. >> thanks very much. to the bond market. we had an a-minus in the auction earlier but we have more to go this week. rick santelli is tracking the action at the cme. >> this is a big day in treasuries. treasuries have avoided the upside of equities but all of a sudden we're seeing the down side of yields and the upside of treasuries. look at a one and two day of tens. more important, go back to the 11. we have had 11 trading days since the 11th in a tight closing yield range from 2.71 to 2.76. we briefly traded 2.69, the lowest yield close for under that 2.71 since the 10th of february. and holding major retracements at 2.75, look at the five year chart, holding 1.55. could be a big technical day for the treasury market. back to you. >> we will keep an eye on it. thank you very much. sallie mae has a new loan service arm name, the first step in splitting into two traded companies later this spring. navient will have $300 billion in student loans for 12 million customers. the consumer banking side will retain the sallie mae name when the split takes effect later this year. let's take a look at shares of sallie mae, down to 23.63. the ceo jack romandi is with us on "power lunch." we want to talk about the split in just a bit but first talk about the $1 trillion student debt problem. it's a staggering number. more than triple in the past decade. more credit card debt now. more than credit card debt and mortgages combined. give me your perspective on whether or not americans can ever dig out of this. >> well, college -- a college education still represents one of the best investments a student can make in themselves. students who graduate from college have lower levels of unemployment and substantially higher levels of income. i think the key and the most important part is students need to graduate, certainly borrowing money and not graduating is a problem, and to have to keep their debt balances in relationship to their potential starting income. >> what impact on the overall economy, though, do you think that's having? we've heard that sometimes student loan debt influences whether or not people get a job, whether or not people, because of that debt ratio you just mentioned, whether or not people can buy homes. it seems to be having a much greater impact more recently on the overall economy than it has in the past. >> well, certainly the number of americans student loan debt has been increasing. there are about 45 million people with student loans but as i said, students who go to school, graduate and borrow reasonable amounts are in fact managing their student loan payments very successfully. at sallie mae, our students have lower levels of delinquency than the national average and in fact, our charge-offs are 30% lower than the national average. >> are you hopeful that at some point, a college education, a university education, will not be as expensive as it currently is, which obviously would impact your business certainly, but would lighten the debt load as well? >> there are a number of tools that students and families can take to lower their costs. one of the most important features that we have launched in the last couple years is encouraging students and families to pay the interest on their loans while in school. the typical student and family who chooses that option cuts the total finance charges on that loan in half, so for someone who borrows $10,000, that can represent almost $7,000 in total savings over the life of the loan. a significant savings over the typical deferring of payments until graduation. >> let me just quickly ask you now about the split. why are you doing the split and how does it affect consumers that may have a loan with you or are thinking of taking a loan with you? >> sure. so sallie mae has a long history of really remaking itself to fit the different environments that we operate in. in 2010, the federal loan programs which used to be our main business was nationalized as part of the health care bill, and as a result of that, our business really started to separate into two distinct directions, a servicing operations business and a consumer lending franchise. navient, the name we are launching today, will run the loan servicing operations and as you said, servicing loans for about 14 million customers and $300 billion worth of student loan debt. sallie mae will continue to offer family education loans, non-government guaranteed loans, to students and families to help bridge the gap between federal aid and the total cost of education. >> best of luck with that. nice to have you with us. thanks for joining us. >> thank you. i appreciate it. seema mody has a market flash. >> good day for macy's. the retailer posting solid quarterly profits and gross margins. the stock currently trading higher. macy's results helping to push other department store stocks higher as well. take a look at nordstrom, jc penney and sears among others trading in positive territory. tyler? cnbc's first 25. the top leaders, icons and rebels who changed business the most over the past quarter century. the list of contenders has been cut in half to 100, including some write-in candidates from you, our viewers. find out who made the cut next. ♪ [ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. with the mobile trader app. if ...hey breathing's hard... know the feeling? copd includes emphysema and chronic bronchitis. spiriva is a once-daily inhaled copd maintenance treatment that helps open my obstructed airways for a full 24 hours. spiriva helps me breathe easier. spiriva handihaler tiotropium bromide inhalation powder does not replace fast-acting inhalers for sudden symptoms. tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. these may worsen with spiriva. discuss all medicines you take, even eye drops. stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine. other side effects include dry mouth and constipation. nothing can reverse copd. spiriva helps me breathe better. does breathing with copd weigh you down? don't wait to ask your doctor about spiriva. which will cause me to miss the end of the game. the x1 entertainment operating system lets your watch live tv anywhere. can i watch it in butterfly valley? sure. can i watch it in glimmering lake? yep. here, too. what about the dark castle? you call that defense?! come on! [ female announcer ] watch live tv anywhere. the x1 entertainment operating system, only from xfinity. the rush is on to launch a new class of drugs and it could mean some big profits for drug makers. and also for investors. morgan brennan has been investigating and is here to explain. >> that's right, we are talking about hepatitis c. the liver damaging virus that infects an estimated four million americans. until now, treating hepc was a long harsh process involving injections and bad side effects for up to a year. but now drug makers are developing oral pills that do away with interfuron and cut treatment time down two, maybe three months and have a much higher cure rate. we have a number of companies focusing on this. bristol-myers squibb just scored an expedited approval process for its new therapy. this treatment could hit the market this year. others with treatments in the pipeline, merck and two smaller biotechs. of course, gilead sciences. you cannot forget gilead. it received approval for its drug in december with another treatment combo expected in q-3. i spoke with several analysts and projected first year sales are anywhere from $3 billion to over $5 billion. if that happens, this would be the most successful new drug launch ever. not bad for a market that until now has averaged around $5 billion annually in total. tyler, back to you. >> thank you very much. this is the 25th anniversary of cnbc and we have narrowed our list of the 200 most influential business leaders, icons and rebels of the past quarter century. we have narrowed it down to 100. we also listened to you, the viewers, by the way, because we asked you to tell us on our list of 200 who did we get right, who did we get wrong, who did we leave out. let's look at the seven whom we added to our final 100 based on your viewer votes. the veteran of the worldwide web. the richest man in africa, built a fortune on commodities. wayne huizenga, founded three fortune 500 companies. the first billionaire of fracing, george mitchell. howard stern, king of all media. lynn tilton, self-made billionaire. and robert wright, former nbc universal chairman and memorably, the founder of autism speaks where he changed the way autism has been thought about in this country. let's bear down on wayne huizenga and get your thoughts. you used to work for him. three fortune 500 companies. kind of a serial entrepreneur. what does he do better than anybody else? >> he hires the best people and lets them do their job. >> like you? >> well, he hires the best people and lets them do their job. what wayne has done that impresses me the most, he's proven that consolidation works. in a lot of cases it doesn't work but auto nation is an example of a consolidation gone right, not wrong. >> george mitchell, the other guy i want to focus on here, i believe that's who we will bring up, sort of one of the fathers of fracing. he is an interesting guy. not that he invented fracing, but what he did to bring it public, to sell his initial company for something like $30 billion, this is a transformative technology, right? >> it is. what i like about all these people on this list, we were talking about it earlier, is the slow and steady pace in which they build their wealth, in which they build their companies. there's no get rich people on this. >> no, i was looking at the list. phil knight, '76. john malone, '72. rupert murdoch, '83. hank greenberg, '88. who did we leave off the list that we should have put on, who did we put on that we should have kicked off? >> you kicked him off already but i'm not sure why donald trump made the list. the reason i say -- >> made the first list. >> the reason i say that, when i compare him to people like huizenga or george mitchell or phil knight, phil knight revolutionized sports marketing forever. changed the way we do endorsements, changed sports marketing, the way we advertise athletic gear. there are just people on here that have really set the trend for many years to come. quite frankly, the list is made up of a lot of pioneers. >> sue? >> i think that goes to what i was thinking, most of the people that you have just highlighted, wayne, bob, george mitchell, they think ahead of everyone else. i like to say that they can see around corners, if you will. they anticipate what's coming next and they don't let anybody tell them that you can't do it differently. they just do it. >> well, i tell you, working for wayne for me was by far the best experience and being part of his company was great, but what he did well is he molded his people, gave them a lot of rope and gave them a lot of resources. if you succeeded, you were rewarded. if you failed, it didn't work out so well. >> you will be hearing from donald trump, i guarantee you. that's a good thing, let me tell you. watch marcus' show, is it 9:00? >> 10:00. >> 10:00. i don't have it in front of me. >> 10:00. >> 10:00. all right. you, the viewer, can continue to vote online for the people you think should make our final 25, cnbc.com/25 to cast your vote. we are listening. we want to hear from you. you have a voice in who the 25 most influential business people of the past quarter century are. 10:00 tonight. >> 10:00. >> seema mody, market flash. >> check out kimberly clark, the stock coming off its lows after announcing it was raising its quarterly dividend to 84 cents a share. it's the 42nd straight year the company raised its dividend. that is nothing to sneeze at. >> no, it is not. thank you very much. that person behind those goldman sachs elevator tweets is unmasked. plus, the drama inside bond giant pimco and the battle over breakfast is heating up. you know it's the power rundown, next. tdd#: 1-888-648-6021 there are trading opportunities tdd#: 1-888-648-6021 just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 tdd#: 1-888-648-6021 or go to schwab.com/trading to learn how. tdd#: 1-888-648-6021 our trading specialists can tdd#: 1-888-648-6021 help you set up your platform. tdd#: 1-888-648-6021 because when your tools look the way you want tdd#: 1-888-648-6021 and work the way you think, you can trade at your best. tdd#: 1-888-648-6021 get it all with no trade minimum. tdd#: 1-888-648-6021 and only $8.95 a trade. tdd#: 1-888-648-6021 open an account and earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 to learn more. tdd#: 1-888-648-6021 so you can take charge tdd#: 1-888-648-6021 of your trading. i've got a big date, but my sinuses are acting up. it's time for advil cold and sinus. 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he's a 34-year-old guy named john lafevre. he's never worked for goldman sachs. maybe he's worked for "duck dynasty." what do we think of this, bob? >> well, look, it's fine if the guy wants to create witty sayings around things that might have been said in a goldman sachs elevator. but that wasn't the way it was presented. it was presented like he was there. interestingly, his publisher doesn't seem to have a lot of problems with this. i've got an even bigger problem with his publisher not disavowing him, particularly since the clear location the guy worked there. >> i have been following him for a long time, not because i really thought he was quoting the things said in the elevator. he was funny. the nsa is the only branch in government that actually listens to people. come on, people at goldman are not that clever. by the way, he's only following three people, 600,000 following him, he's following carl icahn, who is following him back, somebody called hope plumbing and he's also following kate upton, who is not following him back. that would make a funny goldman conversation right there. >> i thought the whole thing was hysterical. goldman had an intensive internal investigation. they took it very seriously. >> come on. it was too clever to be real. >> too clever to be goldman, says jane wells. a new "wall street journal" article -- >> goldman might have an investigation of that statement. >> they might. i know pretty clever people there. new "wall street journal" article exposes the showdown at pimco between bill gross and mohammed el-erian. it apparently got very spirited out there, jane. >> yeah. this is l.a. down in the o.c. you're supposed to be all laid back. >> you're supposed to be chill. >> this is like the wall street version of charles and diana breaking up. i'm telling you, charles is not looking good right here. i say you could take it two ways. if bill gross really is as big a jerk as this article makes him out to believe, he's always been a very nice man to me but i don't work for him, either you want to take your money away from him or you think that's exactly the guy i want fighting for my money. could go either way. >> you have two alpha males butting heads. you have a very strong founder who is not ready to leave and not ready to really share power with a very powerful call him protege but now essentially has become his rival. this is the guy who coined a number of very famous phrases including phrases we all know and love these days. bottom line is this was almost ichb ta inevitable. >> the new normal is the phrase? >> thank you. >> now let's move on to something deeply important. taco bell for breakfast. why not? the restaurant chain is rolling out menu items like the waffle taco and the a.m. crunch wrap and mcdonald's is thinking about extending its breakfast hours. i think that's a good idea. i always seem to get there just in time to miss breakfast at mcdonald's. thoughts? >> i'm sorry, does that look like table scraps to you there? seriously. look, i like taco bell. i have been there. i think it's a great company. but a warm waffle with bacon scrambled eggs, syrup and cheese -- syrup? >> golly. >> i'm in heaven. >> that's a tough one for me. >> jane, you were talking earlier about the price of bacon going up. there's some nice bacon for you. >> yeah. i just want to look at that for a little while longer. you guys keep talking. >> it will come to no one's surprise that i never met a bad piece of bacon. guys, thank you very much. sue? it reminds me of the bacon shake we had, remember the bacon milkshake we had jane covering? >> not good. that was not good. that was the one bacon thing that wasn't good because it wasn't real bacon. >> there you go. all right, guys. what's the one stock jim cramer says could beat amazon at its own game? we'll tell you in a minute. pay my bill. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled 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 aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. i'm actually a dj. [ dance music plays ] woman: [laughs] no way! that really is you? if they're not a cfp pro, you just don't know. cfp -- work with the highest standard. mixed results for home depot. beating on the bottom line but revenues miss. the company announcing a 21% increase in its quarterly dividend. stock is up 2.75%. tractor supply increasing its stock buy-back program by $1 billion to a total of $2 billion. the stock is up almost 3.25%. zoo lily's results beating estimates. the company went public in november and jim cramer said it is finally a company that could beat amazon at its own game. check out the blog post on cnbc.com. that stock is up 39%. we have three of the biggest winners, next. 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. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. ♪ we asked people a question, how much money do you think you'll need when you retire? $500,000. maybe half-million. say a million dollars. [ dan ] then we gave each person a ribbon to show how many years that amount might last. ♪ i was trying to like pull it a little further. you know, i was trying to stretch it a little bit more. [ woman ] got me to 70 years old. i'm going to have to rethink this thing. [ man ] i looked around at everybody else and i was like, "are you kidding me?" [ dan ] it's just human nature to focus on the here and now. so it's hard to imagine how much we'll need for a retirement that could last 30 years or more. so maybe we need to approach things differently, if we want to be ready for a longer retirement. ♪ ♪ before we turn it over to "street signs" let's get you up to date on the market. dow jones industrial average is up 14, s&p is up just under a point. nasdaq's turned negative, down just a fraction, 1 3/4 points. frontier communications up on the day. blackberry up almost 8%. gamestop up better than 7%. >> blackberry in double digits once again. how about that. that does it for "power lunch" for a tuesday. >> "street signs" begins now. companies with no revenue selling for billions. the nasdaq up nearly 40% in a year. and earnings growth coming mostly from cuts. does that sound familiar? today, we will dig into whether this is a top or whether it really is different this time. hi, everybody. mandy is out. sara eisen is in. coming up on your big show today, if housing has peaked because banks are pulling back on loans, what just one fe
that. but bias for the last half hour or so has been to the downside slightly, but that could change as we go into the hour. >> and also our own jim cramer is worried. he will join us here in a couple minutes to tell us why he doesn't like some of the patterns he's seeing across the stock market, and it is changing how he's investing. find out to see what he's doing and why. also, in arizona this new law that would allow businesses to deny service to gay people may never be signed by the governor because big companies are now speaking out against this law. sending letters to governor brewer. one of those companies is pushing back against the law and will join us on "the closing bell" today. let's take stock of markets here. we are seeing small declines across all the major indexes. the dow off 20 points. the nasdaq off 5. the s&p 500 off 1. as mentioned yesterday at this hour, it looked like we'd be closing at new highs. we'll see how the final hour of trade pans out right now. >> all right. let's bring in our guests for our closing bell explain. danny hughes, rex macy, drew in order -- nor dlike and rick santelli. everybody joining us today, rick aside, is cautiously optimistic. danny, the caution. what is the caution about? what are you concerned about even as this market does try to power higher? >> so much caution actually and we've kind of had our foot a little on the break for a while but you still had to participate in the markets like we've talked about. you know, the fed and the government have really incentivized corporate cash hoarding over the past few years, and corporations have found better roi in delivering buybacks and dividends, and, you know, at some point that's got to come to an end. so that's a big worry i think going forward in the market. how do you invite investors into your stock? so new investors. and how do you keep the guys invested in your stock that would traditionally be in fixed income products if it weren't for the fed? >> so are you -- let me put this this way. you're investing but holding your breath. is that it? >> well, not holding our breath exactly. we still have to remain active. there's still interesting investments to be made out there, but it's the going forward issue, bill. >> there's always a bull market somewhere. >> where do we go from here? >> i think jim cramer could tell us about that in a little bit. rex, it's interesting to look at the dispersion of what people think is going on in the economy. i have people telling me you have to look at how much more sluggishly the u.s. economy is going to grow over time and here are all the reasons why globally we're in a deleveraging phase and interest rates are headed lower. at the same time people are passing around this narrative about 1996 and saying after we had a miss in january on weather, we had a strong february payroll number, and then the ten-year was rallying. in other words, people don't really seem to know right now what the paradigm is. what's your read? >> well, you know, that should give you a lot of confidence and comfort. that is -- what you have just described is a balance in the market. you have got, if you will, buyers and sellers on both sides people making good cases for it to move higher and for it to move lower. it's not a one-sided market which is when you get extremes either on the down side or up side. it makes me feel more comfortable. i'm comfortable with the equity market. i would be short on the bond market but we see the economy getting better slowly. all the data you're pointing to really gets to the fact that we're going to have three yards and a cloud of dust. >> three yards and a cloud of dust? what was that reference? >> three yards and a cloud of dust. it's an old football reference. >> okay. >> back before there was a lot of passing. the idea is we're going to grind and make first downs, but it's going to be slow growing in 2014 after a stupendous year in '13. >> super bowl did set the tone. >> ier in hea er inever heard t. drew, you would look at fixed income, is that for safety reasons or do you think there's growth in fixed income? >> from our point of view we would suggest maintaining your active diversification. there are niches we are actively investing. we think investors should maintain their broad based diversification. what we look at is we think the economy and the stock market are two separate animals on the same sa vanna. the federal reserve has been pumping liquidity into the market. with the equity market, what we see is the federal reserve is tapering, but with their $10 billion program over the next several meetings, it's still going to take to the end of the year for them to be done with that program. that's $315 billion of new liquidity being injected into the market and an expansion of the balance sheet. what we found statistically is going back to 2009 when qe started, for every $100 billion of qe that's entered the marketplace, the s&p has moved higher by 42 points. so that translates to a 1976 target on the s&p which is another 7% from here. so as long as the federal reserve is still in the marketplace and regardless of tapering, they're still printing money, the balance sheet is still expanding, we would be active investors in equities. we think there are challenges in the economy and challenges with this quarter but it is going -- we think it ak selling rates. >> i'm chuckling because there seems to be a lot of couching going on, a lot of fancy ways of saying we're not sure what's happening. and to rex's point, that's fine. that's what makes a market. i want to know what some of the high conviction trades are right here. drew, any thoughts? dani? >> sorry, did you say dani? >> dani, go ahead. >> sure. you know, kelly, i think there's a lot of things that you can look at out there, particularly companies that are actually investing in their future. so cap ex increases. there's an awful lot of companies that are actually investing in the future in 2014. big increases in cap ex. >> you want to invest in those names. >> in those names and in names that also -- they could also have buybacks and dividends as well. they're not mutually exclusive. i think that, you know, u.p.s. is a big one. $2.5 billion in 2014. t-mobile. energy is a big space as well. >> goldman's whole note focuses on the picks and shovels plays that might support a cap ex boom. >> rick, if there is a conviction buy right now, gold would be one of them, wouldn't it? what does that say about the market? >> you know, i think gold could easily go up. i thought it would make a bottom earlier this year, but i guess i'm still thinking about those yards of dust because when i think of going yard, i think of a home run, and i think the fed has allowed corporate profits to go three yards. we're talking 900 foot home runs. so corporate profits are going great. dani is worried today. i have been worried for two years. but being worried in this environment doesn't mean you necessarily short the market. but as i look up at the fixed income and i have been harping on this, here we are, we've seen a 2.69% yield in tens while the s&p is flirting with all-time highs. i know you have jim coming up, and that's great, but i think i have the best soothsayer in the world. just looking at these interest rates that failed to follow the stock market up tell me that it's all not good in investment land, but picking tops and picking bottoms is always a dicey endeavor. >> yes, it is. and, look, that's what it comes down to. going back to this question as well, so, dani raised an interest point, pick the companies that are doing a lot of investment, a lot of capital expenditure. rex, what about you? what's your winning strategy here? >> well, i think in the big picture you want to keep some powder try because i think there will be more opportunities in the months to come. >> so cash is your answer? >> no, no. i would be more at my normal -- closer to our normal asset allocation. we're a little heavier on stocks than bonds just because at a 2.70% ten-year we're not too fond of the bond market. >> where i come from, dry powder is cash. >> well, you can look -- >> keep the powder dry. >> where i came from it was dry powder, too, but when you don't get anything on your cash, i'm not sure it's good dry powder. >> that's exactly the point i think we're talking about here is the fed is wanting to force everybody into the risk assets because you're not getting anything to hold cash right now even though so many companies are. drew, your conviction if there is one. >> that's the key issue. you're bringing up the exact point i think everybody on the panel is trying to suggest is we are in an environment where the fed is one of the biggest players, the federal government and new legislation is a big player. the economy itself has not found very sure footing. we're not in the 1990s where we're seeing 5%, 6%, 7% gdp growth rates. you have to advise looking at multiple different opportunities, diversification, risk reduction, not piling into a single trade because the reality -- >> you try a little bit of everything. >> nobody knows the exact future. >> say it again. say it again. the reality is nobody knows the future. exactly. >> we're in an environment of higher risk and higher volatility. that's the reality. when you have a player that has introduced $4 trillion into the marketplace, you know, asset prices get skewed and you have to invest based upon what are the knowns, and we know the fed is there. we know they're going to be there through the end of the year. i know our panelist, rick santelli has harped on that before, but that's the facts, they're there. we need to advise and invest based upon that. >> there you go. thank you all, folks. >> thanks. >> thanks for your thoughts today. i wonder if anybody would consider bitcoin a conviction buy right now. >> yeah. part of a diversified portfolio? >> we'll get to that coming up. heading to the close, we've got 50 minutes left in the trading session. if anything, we're slowly moving south. the dow is down 27 points. the s&p is down 2 points. we're about 3 points away from an all-time closing high. keep an eye on that for you. >> losing altitude again, second day in a row this week as we head into the close. the s&p even so may be flirting with another record high, but "mad money's" jim kramer is getting a little worried about this market. changing the way he's investing. should you follow his lead? jim will join us. also, disney, they're the second best dow performer this year. they're raising their theme park prices and debuting a digital movie app. is this all news a dream come true for shareholders or is it still overvalued? we'll have a stock brawl. and who wouldn't want investment advice from warren but fet right on their phone personalized? now you can get it sort of. coming up, we'll hear from the ceo of a company behind quote, unquote, warren, a service that can give you instant answers to your financial services. think siri for investors or financial anchors. you're watching cnbc, first in business worldwide. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. well, disney had some magical news, if you will, for investors. a new digital movie service and a price increase at its parks. that's magical. joule. >> boorstin has details. >> disney is teaming up with apple to make buys its movies more attractive announcing a cloud based digital movie service. it allows consumers to stream for download 420 disney, pixar, and marvel movies and watch them on any apple device. it's launching with itunes just as hit frozen goes on sale for $20 a download. disney's tapping into a growing business. industry wide digital film sales grew 50% to $1 billion last year. though it's launching just with apple, disney is in negotiation to add access through other platforms the likes of amazon, microsoft, xbox. the magic kingdom park at disney world orlando just raised prices by $4. it now costs $99 for one day ticket. disney's investment in new parks attractions does seem to be paying off despite raising parks prices a year ago. revenue at its resorts division grew 6% last quarter from a year earlier. bill and kelly? >> all right, julia, thank you very much. so is it a good time to buy more of disney's magic right now? let's hash it out. where an investment in the mouse house could be heading. you're not exactly bearish on this stock. you have a hold on it right now, right? >> yes, could not get behind the story but not saying anything is wrong. >> why wouldn't you buy the shares right now? >> well, i think in order to buy in this market after what media stocks did last year, last two years is you either need to look at the upside to estimates, which is extremely hard for disney. first of all, because there are a lot of moving parts, and then there is you need $30 million in ebitda to move it a penny. or you need a catalyst for expansion which i do not see. the relative pe is the highest very near the three-year high so that's where i stand. >> just expensive right now. >> barton, basically this is a stock that almost the entire analyst community loves, that people have called a bulls dream quarter after their last earnings report. why do you think if we just heard it takes another $30 billion in additional profit to move the estimates higher from where they are today, would is that achievable? why do you like the shares here? >> disney i think is actually not expensive at these prices. the growinge eps i think midteens. our $80 price target is very beatable. these guys are in a cycle where they're putting out new franchises and it's hard for people to understand the power of this. "frozen" is a movie that will do $1 billion box office. it will drive close to $500 million in profit over its life. there will be a sequel, licensed merchandise, theme park rides. they've got "star wars" coming out in a couple years. each one of those movies could drive money to the bottom line. it will be a sequel every other year. i could see the stock being easily a double digit performer from here. we've got a price target that's up close to that, and i think there's upside to our price target. i think this company, you know, i think is driving good earnings leverage off the parts of their business that are hard for people to understand. so i think there's upside to estimates. >> vassili, i see you have a price target of $74. is that when you would step back in to buy. >> yeah, i would like that. but if i may, i would like to comment what barton was saying. i don't disagree "frozen" is a big franchise but the benefit you need to know before the movie comes out it's going to be a $900 million plus and that's extremely hard to judge. also about "star wars," i don't have anything "star wars," but we're talking about a film that hasn't been written yet. so that's where i find it challenging to get behind the disney story. >> barton, by the way, disney had the weather potentially working in their favor. it sounds like driving people south out of the cold in the northeast is one of the reasons they've done is well lately. >> you have got someone who is benefiting from the weather. >> exactly. last word, barton? >> there's a lot more to this than the weather. i mean, people are going to disney parks because they're putting in hundreds of millions of dollars into new attractions. they're going because people love the content. underneath it all is espn which is just an unshakeable franchise giving you good, steady profit growth year after year. i think disney is a stock that's been great and i think it's got more good days ahead of it. >> we've got to go. thank you, guys. >> thank you, gentlemen. >> thank you. >> about 40 minutes left to go into the close, and as mentioned, stocks are losing momentum. not even momentum, bill, because we're negative. they're sinking a little more. dow is off 37 points at this hour, and the s&p 500 giving up about 3. the nasdaq is off 10. >> when we come back, bitcoin may have fallen off the digital currency mountain, but despite the implosion overnight, second market ceo barry silvers is with us, and he's launching a u.s.-based bitcoin exchange. we'll find out what he thinks he knows about bitcoin that others do not. and the man behind the goldman sachs elevator gossip has been uncovered and it turns out he's never worked for goldman. how damaging was it? your best tweets on that subject coming up. we'll be right back. ...return on investment wall isn't a street... isn't the only return i'm 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 the man behind the 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 that's weighted based on how accurate they've been in the past. i'm 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. like carpools... polly wants to know if we can pick her up. yeah, we can make room. yeah. 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[ male announcer ] the best thing to share? a data plan. ♪ new at&t mobile share value plans for business. our best value plans ever. for example, you can get 10 gigs of data to share. and 5 lines would be $175 a month. plus you can add a line anytime for $15 a month. sharing's never been better for business. ♪ welcome back. so here is a look at bitcoin where prices plunged after it went offline, closed all transactions and mary thompson joins us. >> after going dark last night, they say they're just taking a break in light of a rash of negative reports about the exchange. in a statement it said a decision was taken to close all transactions for the time being in order to protect the site and our users. we will be closely monitoring the situation and will react accordingly. now, no word from the exchange on the hundreds of thousands of bitcoins reportedly locked up in mt. gox accounts. clients haven't been able to access those accounts for several weeks now. as a result, the mt. gox debacle, the latest in a series of troubles for the digital coin. still believers have lost a lot of money lately. bitcoin is down 54% from its december peak, and that volatility is another issue plaguing bitcoin and is likely to slow its adoption by a broader segment of the. lati population. >> let's bring in second market founder barry silver, you're still a believer in bitcoin. off vested interest. you're in the process of trying to put together an exchange to replace mt. gox. what do you hear about them? are they folding? they're being pretty coy. >> certainly never a dull day in bitcoin land. i don't want to speculate on the rumors but i think it highlights the need for a well-run, regulated u.s. exchange and that's really what we're focused on right now. >> mary, i want to bring you into this conversation as well. i mean, look, how much do you think this will draw more attention from regulators who up to this point have been pretty laissez-faire about the growth of bitcoin. >> we spoke to ben and he maintains that laissez-faire attitude. we had a regulator in alabama saying he's issuing a consumer alert. barry, what was your reaction that you heard from some of the regulators and lawmakers you say you have been talking to in trying to set up the exchange? when they heard about mt. gox, what's the reaction? did they say we don't want to get involved in this or not? >> actually i think quite the opposite. the regulators and ep the banks are saying digital currency is not going away and it's important to have a safe, secure exchange. if you believe that digital currency is here to stay, and i really do think that is the general consensus right now, there's a lot of support that we're seeing down in d.c. from the regulators as well as wall street. >> so, barry, you want to start an exchange which you say will provide price stability to bitcoin as well as transaction transparency essentially. the problem though with bitcoin continues to be safety. there are people hacking into digital wallets. there is malware out there that is stealing bitcoin. you have problems -- we really don't even know what happened with mt. gox, but there are technical problems. you might set up an exchange but that doesn't eliminate what seems to be the real problem here is that either the krip toe currency or the infrastructure around it isn't secure. >> well, i think the protocol itself is absolutely secure. this has really nothing to do with bitcoin itself. it's the infrastructure the companies are built on top of it. and you just have to remember that bitcoin is very early. this is like the early internet days. there's going to be early players that don't necessarily take the right precautions, run businesses effectively. now we're seeing real money coming from venture capital industry, marc andreessen invested $25 million in a company coiled coin base, fred wilson in union square investing in the same company. you have the who's who of venture money building the next group of companies that will make it easy to buy -- >> to some extent, barry, these guys, they have nothing to lose. they have their money to lose, but what i mean is there's an investment here, an opportunity, and these currencies have proven if you get in early, you might capture more of that benefit as they're built out. that's a different thing than saying this is something that's safe for the general public. >> you have to separate bitcoin the digital currency from bitcoin the technology. there really is no debate that bitcoin as this protocol, as this technology, it has the potential to radically transform the way people send money, the way merchant's accept payments and that's where all the money is being invested. i don't think you can separate the currency from the in fact because you need the monetary base and quite frankly the exchange to make it possible. >> let me pursue mary's question in a different way. isn't it possible that bitcoin as a digital currency is damaged goods? it's beyond repair? you have the problems with mt. gox, and they're missing 744,000 bitcoins, somewhere missing around this world. the use that bitcoin has been put into use for, for drug running or whatever it has been, money running. digital currencies may have a future but does it have to be bitcoin? >> it doesn't have to be -- i believe it is bitcoin. if you look at the price performance of bitcoin today, major, major hit of mt. gox and the rumors, but it is still a $6 billion monitor base of digital currency. the supporters, both early and more recent adopters, our confidence has not been shaken at all. >> i have to ask you though, you were trying to set up a structure that basically will involve certain costs and certain legal costs especially. it might mean a lack of -- i should say a withdrawal of some of the features some people are attracted because of bitcoin whether it's anonymity or a faster way, a cheaper way to change money. when you set up this legal structure, how do you make sure you maintain all the characters of the digital currency that its biggest advocates want to keep? >> well, our structure that we envision is actually a collaboration among the global banks, the bit counsel companies, and the regulators. we have had a number of very in-depth conversations with all the key players. there's a lot of interest in coming together to build an exchange and also actually a central clearing business. so the idea is to create an exchange, clearing, as well as an sro or self-regulatory organization that will provide the gorer nance and oversight. >> who are the global banks you're speaking with? in speaking with a lot of them, certainly they're starting to do some research on it, they're looking at it with some interest. i haven't heard anything from any of the ones i have spoken to who say this is the future, we want to invest in it. so tell us who you have been speaking with and who on wall street are the ones behind this willing to back your venture. >> so i'm not going to name names. there's been half a dozen bankses we're in conversations with right now and i would just say stay tuned. >> that's a tease. thank you, barry. >> thanks, barry. >> thanks for having me. >> mary, appreciate it. >> yeah, good job. heading toward the close. 30 minutes left in the trading session. the market drifting south. the dow down 39 points. it's the s&p we're watching to see if it can close at a new high. we're five points below a new all-time high right now. in the meantime, samsung unveiling its latest smart watch. yes, we have another wearable device. the question is whether this one will be a game changer in the wearable space. will it struggle like the original version? 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alka seltzer plus severe sinus fights your tough sinus symptoms plus your runny nose. oh what a relief it is here is a look at shares of jpmorgan. down almost 2%. kayla tausche joins us. we know they've had the investor day. what can you tell us? >> dimon and his deputies all day have sounded a positive tone about the future for jpmorgan chase while acknowledging some near-term headwinds for the bank, namely capital. dimon just wrapping up his comments moments ago and acknowledging they have $900 billion in safe assets sitting at the federal reserve. that will continue to be a headwind because they can't lend a lot of that money out because they're keeping it for their liquidity ratio. it will also keep them from significantly increasing the amount of money that they'll give back to shareholders. dimon saying their c-car submission, which is how the fed will determine what they can give back to the shareholders is not fundamentally different than the $6 billion in buybacks they got approved for last year. he did make a comment about the weather. he said a drop in fixed income trading revenue we saw toward the end of last year was just weather and could continue into the beginning of this year. we didn't get an especially optimistic tone about the investment bank which is still having a hard time keeping that return on equity target going, but he did seem very optimistic about the u.s. economy. he said taper will be volatile, but the market will be able to absorb it. he said fiscal policy has been a surprise strong point in the economy and he feels good about where the economy is in its recovery process. >> kayla, thanks. notice he also was talking about how apple and maybe google i think it was trying to eat jpmorgan's lunch. the space, bill, between tech, payments, banking is all becoming very hazy. samsung has introduced some fun gadgets. our next guest has brought a couple for us to see. >> yes. mark spoonhauer is editor in chef of laptop mag.com and they're both watches. we're all going to be wearing tech watches eventually. >> i guess we're going feature retro to a certain degree. what i love about this one in particular is this is the gear fit. >> so you do have the fit one. >> this is the first -- >> how about i do this. tell us about it and i'll hold it. >> it has a curved display. it's the first device of its kind with a curved color display and it sort of looks like the future. this looks like the future of wearable devices -- >> would you wear this, kelly? >> let me have a look. let's see. now, the interesting thing about some of these devices, i'm never -- i don't wear a fit bit but many of my friends do. >> it's very similar. >> they're a little worried about some of the recalls lately with the products and some of the wearable tech devices, want to make sure they're safe but do you put it on the wrist or more of an arm band? >> you put it on the wrist. there's a heart rate monitor on the under side. >> when you're out running, you can monitor your heart rate and tweet at the same time. >> terrifying thought. >> similar to a smart watch, you can get notifications on this device and control femedia play back. this is more full featured. >> this i recognize. >> this is the gear two. it has some of the features of the original like the built-in camera. you can control your tv with it. this is going to be the more expensive of the two. >> what's interesting is of the two, there's been a lot more buzz about the fit bit -- i keep calling it the fit bit. >> because that's where the market is going. the whole wearables market is going to be about $30 billion by 2018, and i think the ones that focus on fitness will be the ones leading the charge because that's what people really care about. so this one will track your steps, your heart rate and really just your progress in general and it will sync with a phone like this. they're doing a good job of rounding out the ecosystem. >> put differently, while it does srng with your phone it has to sync with your phone so there are a lot of people saying is this really that feasible? are people going to have -- if they're using a bluetooth would have to have their phone right there. does that inhibit a lot of the adoption? >> not necessarily. these are designed to be more standalone devices. that goes a step further because it has built in four gigs of memory. you can take your miusic play list to go. >> i have my laptop, i have my ipad, my blackberry, why do i need one of those guys? what does that add to my tech life? >> i don't think it's going to be -- replace anything. i think at the beginning it will be more about complementing devices. this is sort of like the hub and everything else acts around it, but the pc as we know is suffering. this is going to be the new hub and all the other gadgets will act around it. >> have we put to rest concerns about wearing all this technology on your body, especially some of the blue trut bluetooth, the is it you have that's more powerful. >> this is low power bluetooth so it's less radiation. they don't act as standalone phones. they communicate with other device that is have the radio inside. >> price point? >> not yet. if i had a guess, this was around $299 when it came out. i wouldn't be surprised if this was slightly under it, maybe $199 change but we'll have to see. >> $199 for the orange one -- >> i'm guessing. >> and the black one was about $299. >> exactly. >> yeah. >> good to see you. >> okay. >> this could finally be the year of the wearable device. we'll see. mark, thank you. >> we will see. i would much rather wear it here than i would here. >> i could see you doing that watch. >> that's me all right. where were we? >> the dow is only off 22 points at this hour. although we are still negative across all major indexes. sure only by a little bit but it looks like, bill, at this hour we will once again approach perhaps test, if you will, but in the reclaim new highs. >> still have three points to go there to the upside. how is the market going to close? jim cramer wouldn't be surprised if the answer is not well. he's cautious. he's worried. is he bearish? we'll tell us coming up in a moment. and after the bell, pimco's bill gross long hail as the bond king is being presented as a monarch who rules with fear and an iron hand if you read "the wall street journal." but is it true that a lot of people who are successful later get accused of being a bad boss? 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>> i think here is the problem. if you're facebook, you're looking at a think like whatsapp and say if that would come public it would probably be valued $30 billion compared to twitter, compared to yelp, compared to linkedin. maybe all the comparisons are false. that's what we saw. $19 billion looks like a bargain versus what it might go in the ipo market but if they don't monetize it correctly, bill, then it's a mistake. if they monetize it correctly, yes, it will be terrific. >> jim, i love hearing from people who have been in and out of the market for so many years, how they view today in terms of historical parallels. so to you is this a market like the late '90s? is it the mid '90s? is it even useful to make that kind of comparison? >> it is useful to say if a few more things happen, then we need to be more than concerned. for instance, if there are a lot of companies that write checks to other companies for numbers we don't know, netflix writing a check to the parent company of this network comcast and it drives the stock up 10%, i don't want to see that. if we see a lot more ipos based on vapor, i don't want to see that. we have a stock today, it is a great company, zulily, okay, i even said this morning on "squawk on the street," this should be up a couple box today, maybe even more. 16 bucks? i mean, i need that to happen over 16 weeks, not over 16 minutes. >> wow, jim, we're showing that right now. 36% higher today? >> it's a technology company. it can be a rifval to amazon. that's great. that doesn't mean it should go up 15 points. starbucks worried about coffee prices, that goes down a little. disney has been rallying every day since the quarter. takes a little breather. i don't want anyone to ever lose money in the market, but we need some good, meaning stocks not going up every day on nothing. but we have this other track and i'm talking tonight about tesla and i have to tell you, yes, it's absolutely true, if they can -- if he has a battery technology that's disruptive to the trillion dollar grid of electricity in this country, my hat off to him. otherwise that price target puts it above gm and ford. ford is going to make more cars per hour than they make per year. it's a concern. >> exactly. >> i'm skeptical. >> you're skeptical. what does that mean then -- what's the takeaway for the individual investor watching us right now. what is jim cramer telling them to do here then? >> i think if you own some netflix, which i have liked at $100, i liked at $400, take some of the cash off the darn thing. you can play with the house's money at this point. if you really like tesla, well, terrific, you just made enough you can take out some of that money. and maybe reapply it to a company that's selling at 14, 15 times earnings that maybe actually could be undervalued. look, this is not a blanket assault. google is not an expensive stock when it comes to 2016, '17. that's the time frame people use. i'm saying when i see stocks go up and i hear those price targets, when i hear the double the price target, i am thinking, okay, nasdaq, we're going back to the composite, we're going to that week in march where it goes to 5,000. we're 14 years later. we're still not that close to it. i don't want the attack of the price targets. >> yeah. that would take us back to the '90s then. >> yes. >> thanks, jim. looking forward to the show tonight. >> thank you. >> thank you. >> you have the interview with phil fernandez. >> and i have domino's. they're not an expensive stock. i'm okay with that one. >> they're delivering the pizzas, jim. >> and a technology company as well. >> that's what dunkin' donuts told us. >> you can see him tonight at 6:00 p.m. eastern time on cnbc. art cashin just told me $1 billion for sale as we head to the close. we might get more selling pressure as we head to the bell with 12 minutes left. the industrial average is down about 40 points right now. >> now, and this is fascinating, is tax reform back on the table? a new gop plan has emerged that promises to cut rates and also tax the super rich. so what's the catch? and is it really going to happen? that's all coming up next. i always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about axiron. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom. about eight minutes left in the trading session here. art cashin telling us there was $1 billion for sale. a lot of supply coming to the market at close, could push stock prices lower. the dow down 35 points. the s&p down 3.75, 4.5 points away from an all-time high. larry cantor, managing director at barclay's is with me. i know you're more the long-term perspective guy, baugh lateut ls market is acting like it's walking into a stiff wind. >> i don't really see that. i think after the 30% gain last year, we were down before, now we're kind of flat, that's pretty good with the fed tapering and the economy looking like it's slowing. if anything coming into this year, bill, i thought the biggest risk was the economy would grow too fast and people thought once the fed stopped tapering, they would start hiking rates. now with inflation coming in and growth on the soft side, everybody is believing the fed that tapering doesn't mean tightening. that's pretty good market -- thing for the markets. you have seen the fixed income market pretty stable as well. >> you take comfort -- maybe comfort isn't the right word, but you believe the slowdown we're seeing in like housing and some of the manufacturing reports we've been getting lately are not all that great. you think that's okay. you wouldn't panic about that right now. >> right. i think it's okay for the markets. i think the markets have very little to worry about. there's no big fight going on in washington. i don't think anybody is worried about a recession. it's just that we're not getting the kind of growth bounce everybody expected. now, admittedly, we've had terrible weather and it's hard to parse out how much of this is weather but we saw in the second ha of last year growth in excess of 3%. we saw a big rise in inventories and now you're paying the price. i think house something going to be fine. >> what about jim cramer's point he made, the teslas and netflixs and some of the high flyers getting out of hand. does that concern you? >> a little bit for those stocks. you have to worry about anything that's just zooming up and has only one direction. but the overall market does not look crazy, and, you know, again, the economic environment here is pretty good. i think it's easy to believe the fed. you're not going to see any tight. ing this year. remember, even though they're tapering, they're still pumping in a lot of money into the market for the rest of this year. >> i got it. larry, good to see you. >> thanks, bill. >> larry cantor joining us. we're going to take a break and come back with the closing countdown for this tuesday. after the bell, the 20th century regarded as the american century for its explosive growth, but coming up a new book says the best is yet to come, and we are on the brink of an economic renaissance in the 21st century here in the united states. how likely is that? we'll find out. stay with us. peace of mind is important when you're running a successful business. so we provide it services you can rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. [ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. coming up on the two-minute mark with the dow down 36. first, let's go to seema mody with some breaking news. >> the u.s. department of transportation says oil by rail shipments must move under stricter haaser douse material classification. they must test oil samples before shipment. bill, that's the latest. >> that recent spill several months ago, that was a big problem there and they are trying to find safer ways to transport energy products around the country here. quickly, the s&p down 3.5. doesn't look like we will get an all-time high. you would need to be at 1,848 and change. we're at 1,844 right now. there were a couple bright spots this morning. macy's and home depot did turn in earnings. both are trading appreciably higher. home depot up 4% with macy's up 6%, bob pisani. >> these are the two strong ones. >> they were the outliers. >> that's right. i'll tell you what you want to watch for, tjx, ross stores, they will be reporting this week. they haven't said too much, and they were big darlings. i think they'll be more interesting. because we knew these guys were going to be strong. they were in the market area everybody liked. >> at some point traders are going to throw in the towel and say if we can't get a new all-time high, it's going to be $poi -- >> the slope down in the last hour is not as dramatic but we just drift lower. we haven't been able to close at a new high two days in a row. technically now this gets a little more iffy. they start talking about this a little bit more. but overall i would note a lot of market laggards like energy are starts to move up. it's not like -- it's turning around a little bit. it just can't hit new highs. >> by the way, happy birthday yesterday. >> thank you. >> thank you, bob. see you later. we'll close out this trading day. again, disappointment for the bulls. no all-time high for the s&p 500. the dow down 28. stay tuned for hour two of "the closing bell" now with kelly evans and company. i'll see you tomorrow, kelly. >> thank you, bill. yes, wee just hit the closing bell and let's see what's happening. i'm kelly evans and stocks have given back their earlier gains. here is how we're finishing up the day. the dow will give up 26 points. not the worst of the session but not the positive we were looking for. the s&p 500, the nasdaq giving up about 1/10 of a percent. 1,845, that closing level is not going to do it. let's get right to it with today's panel and it's a goods one. joining me marcus lemonis, sharon epperson, josh brown, and shark tank investor, author of "the cold, hard truth on men, women, and money," kevin o'leary. josh brown, you had a piece today where you effectively called this out as a frothy market. it echoes some of the concerns jim cramer was telling us he had in the tech space. how worried should people be -- granted we were a little down today -- but generally speaking about the market? >> tech space -- let's talk about the biotech space which would make the tech space blush right now. this is a sector that's up 70%, seven zero, over the last year. that's the entire industry's worth of stocks. 122 of the biotechs in the russell 1000 are not even profitable, and i think what we really want to focus on here is that this can continue for a long time. so just saying it's frothy in and of itself is not indicative of a market top. i think if you think about, look, the nasdaq in 1999 in january was at 90 times earnings, you would have said that's frothy, and then the nasdaq went on to go up another 130% from there. so i think that's what the hot money is focused on right now. >> mr. wonderful, i want to know if this is a mr. wonderful stock market still because you've liked it generally here. do you think for people who might have been on the sidelines, it's still safe to get in the water? >> the only concern i have other than josh is a negative nelly on this thing is this. i don't see confirmation in the bond market. i would love to see a three handle on the ten-year telling me that all these great earnings we're seeing confirmed by the bond market. that's why you should be -- >> sharon, what about the signals coming from your space? it's like just as soon as we had a january, a february rally in some of the metals and industries, now we're starting to look a little softer and china concerns are socoming to e fore. >> look at natural gas. we've seen the biggest two day slight in natural gas prices that we've seen in six years. we had gotten pretty high in natural gas prices and it was driven by some fundamentals but a lot of speculative buying driving prices up. that's something we're seeing in terms of the pull back in nat gas. you mentioned china as a factor and perhaps what we're seeing in the oil market with a little bit of pressure on those prices, but also looking at what the supply situation is going to look like. so that also may keep a little bit of a lid on oil but oil seems to be on pretty much of an upward momentum. >> we've been having this discussion on the show about what's happening with profits in this economy. frankly, the s&p 500 for whatever the fed's role has been has pretty much tracked the increase in profits from the lows during the recession. there could be no more appropriate time to bring "the profit q profit" back this evening. >> i'm excited about the retail numbers. i'm feeling good about the pent up demand we'll see in the spring. >> you're a believer in the pent up story? >> i am. >> are you seeing any evidence of this in camping world? >> i see it in my own business. and a lot of businesses i'm invested in. those companies who have their inventories in good shape and have good margin disciplines are going to be just fine. >> there's been an energy hit of $20 billion because of higher bills. we've seen consumer confidence sagging a little bit. what gives you the confidence, especially whether it's in your business or across in these others that if you buy that inventory right now, that consumer is going to show up in march, show up in april, show up in may? >> sunshine and warm weather is what gives me the confidence. nobody wants to go outside right now, so the minute we get a little sunshine, and we've seen it over the last week, we had a couple breaks in warm weather in retail sales went through the roof. >> i want to get "fast money" contributor steve grasso into this conversation as well. he's just off the floor, and, steve, here is my question. i don't love to play the charts, but if you talk about the chatter around here, it's been whether the s&p can test and recapture that 1848 level. it didn't do it again today. how significant is that? >> well, here is the thing, when technicals work, once you keep pounding against a certain resistance or beating down against a support level, the more you do it, the more it weakens it. right now we're in no man's land, right? if we break through, there's no other resistance. so we kind of just float from there. having said that, this is a great time to be taking profits because no one knows where this market is going. nobody on that panel, no one here. >> kelly, i want to bring two other charts, i don't know if we'll get them up there in time, but this is what a lot of guys are fixated on right now. what led us down this year were retailers. they got smoked coming into january. here is something you should be aware of though. the xrt is now leadership once again. it's up 8.9% off the lows from february 3rd. >> wow. >> that is just scorching hot right now. the other thing is the all country world index, this is a chart a lot of people are pointing to. it's just taken out the may of 2008 highs. this is 44 countries from around the world, 85% of the investable markets. this is a very significant breakout, and if you look into the internals, almost everything is working within. >> go ahead, steve. >> it's also people betting on the fact that this weather issue is going to be a kitchen sink event, but also with the debt ceiling agreement, you wind up getting those tax returns back out, those checks back in the mail, so people have more discretionary spending. but tough look at nat gas prices. they're up tremendous year-over-year. that could hit the wall. >> this is what's so interesting. it comes back to what we were talking about. if everything seems to be lining up for maybe clear sailing ahead, then why is it that the ten-year interest rate is trading at 2.7% and it's actually come down this year and there are plenty of guys on the street who think it could go to 2.5%? >> here is an upside scenario that could happen over the next four months. gdp growth which is the tide that rises everything would probably -- right now we're in an anemic situation, 1% gsmq1. if we could see a 4% gdp, then you would see the handle on the ten-year cross over to 3.00%. that's the upside scenario. if we don't get, that i think we're going to go flat to down in q2. >> it's mixed signals, sharon, is it not? it's no man's land, i love that phrase. it feels like we're in a little bit of no man's land and everyone is trying to sort it out. >> i think some individual investors will take the refund checks and they will hoard them and see how this plays out. the idea as soon as they get those checks they're going to then invest or go out and buy something right away, i'm not so sure. a lot of people are very concerned about their client's money and very concerned about where to put it right now, and they're saying the individual investors, the clients that they have are saying they want to keep it on the sidelines until they see a clear path ahead. >> steve, go ahead. >> sharon knows this better than anybody. i spoke about it yesterday on closing bell. the average price of nat gas was $2, now it's four spot 88. that's a huge increase. people start catching up on their bills, that's costing them to heat their homes. >> what should people who are getting that refund check do with the refund check this year? i know it's going to change a little bit but let's boil it down. >> you log on to mt. gox.com, put the bar mitzvah money in it with the refund check. >> i'm laughing but it's a serious issue. there are a lot of people who are trying to get money out of mt. gox and can't and others who are saying it's just growing pains. >> i'm going to agree with kevin. if we can get a little growth in the gdp, i don't think 3.5% to 4% is real stick but if we can be north of 2.5% touching 3%, we'll be in good shape. the credit market for consumers is still pretty good. if you get the refund checks, depends how liberal the credit market is going to be in lending to -- >> you are talking very positive. we need a good corporate tax restructuring. we need good corporate tax reform. then you get your gdp numbers. i think everyone on that panel can agree on that. >> i will say, the proposal that the republican congressman is likely to put forward as we understand it would involve some mix of a surcharge on the wea h wealthy and would maybe do something with the mortgage deduction/exemption, but more importantly this would bring the corporate tax rate down to let's call it -- income tax rate to 25% from a high of almost 40%. the jct, the joint center of taxation, says it could add a percentage to gdp growth each year. >> it sounds like s&p 2,000 at that point. >> guys, last thoughts here before we have to jump. just want to circle back to this sell-off we saw a little bit today and, josh, is there anything about the fact that we just couldn't make it happen today that has you a little bit more worried? >> i guess i don't buy into no man's land. i think we're less than 1% off of all-time highs. this market obviously deserves the benefit of the doubt. every time it's had a pull back, you have had people put their pinkie to the corner of their mouth and a change in character? no, not yet. it hasn't happened yet. in the meantime, the trend is still in force. all of the internals are backing up this move and i don't think it will be a long time before we see us punch through, and when we do, maybe that will be accompanied by something taxwise or the weather gets better or whatever. >> and the ten-year would confirm. >> it could happen tomorrow. who knows. >> guys, thanks. you can catch steve coming up on "fast money" at 5:00 p.m. in just under an hour's time. forget all the talk about a sluggish economy, the u.s. is on the brink of a dramatic growth face. author joel kurtzman is making that argument in his latest book. find out which sectors he thinks will solidify's america's position as the dominant economic power of this century. also ahead firestorm in arizona. apple, national football league, and pets mart, just a few names that have taken a stand against controversial legislation that would allow businesses to deny service to gay and lesbian customers. keep it right here. you're watching cnbc, first in business worldwide. 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 you're 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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[ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-330-3137 now. optionsxpress by charles schwab. welcome back. another near miss today for the s&p as it tried to recapture its all-time high. the dow also in the red but hardly big losses. let's get more from seema mody. >> let's start with some of the big after the bell movers. first solar shares tanking. revenue and earnings came in way la low estimates. guidance also short of expectations. and then there's dreamworks animation also lower on earnings of 20 cents, missing street estimates of 32 cents. fourth quarter earnings results included an impairment charge of $13.5 million or a loss of 12 cents per share on its turbo film. in terms of today's big winners, tesla on fire. the best performing stock on the s&p 500. two big reasons here, morgan stanley putting out a bullish note writing tesla has the opportunity to not only disrupt the car industry but the electric utility industry by customersizing battery packs and the tesla model s named "consumer reports" top auto pick for 2014. blackberry shares on the move after rolling out a new phone for the indonesian market. ceo john chen talked to cnbc about bbm, it's blackberry messaging service and how that presents a big opportunity. cisco marking the biggest bond sale of the year. the book was oversubscribed. some are wondering where they're not using the $47 billion of cash on its books. most of its cash is overseas and they would rather borrow at low rates. and river bed tech. back to you, kelly. >> seema, thank you. despite the recent weak employment report, our next guest cites four key reasons why america is on the brink of an enormous economic growth spurt. which us a joel kurtzman. he's the author of "unleashing the second american century." joel, great to see you. >> great to see you. thank you. >> it's interesting to watch the way that publishing trends change because a couple years ago every book on the newsstand it seemed was about how there was never going to be growth in this country again, the great stagnation, that whole theme. what makes you so confident now that just a couple years into the recovery things have dramatically changed or have you always felt this way? >> well, no, i did not start out optimistic. it took me a long time in studying a lot of facts before i changed my mind. and what i have seen is that we have enormous amounts of creativity that people are not taking into account, and they're not sufficiently taking into account the energy revolution. those are transformational. >> and i want to bring the panel in on this as well. there's four tenets you're talking about. you mentioned creativity in energy. gigantic amounts of capital and unrivaled manufacturing depths. how many of these are truly specific to america? are these four things resources that other countries don't posse possess? >> absolutely in terms of the changing energy landscape. i mean, i think joel is right. the reason why it's changing and why he's changed his opinion is five years ago you couldn't say that we are where we are today in terms of the reserves we have, in terms of the production that we have, and in terms of the way that that is happening and the way that's going to be transported as well and perhaps exported as well. so that has changed dramatically and that's a very north american centric development. >> joel, what do you think? >> yeah, it's only happening here. the technology that we've developed, we're a decade at least ahead of the rest of the world. we have more deposits now that are addressable than any other country in the world. this is transformational. take the industrial might of the united states and put saudi arabia on top, and that's our future. >> and, marcus, you see this firsthand, kind of the incubation level, you have experienced this. is it the factors he cites or is it something else and these are just symptoms of some kind of, you know, american human capital? >> if you visit businesses like kevin and i do and you're dealing with people that are on the front lines and in the factories and in the warehouses working, the american spirit is not beatable. the work ethic i think that's starting to come back that may have faded in the mid '90s where people felt entitled, starting to really go away. the generation that's really leading the pack i think are the kids that have been out of college for 10 or 12 years who are willing to do whatever it takes to make a living and whatever it takes to make that business successful. >> kevin, what's your perspective on this? >> i think there's something missing on joel's shopping list of upside. i want to ask you about it. you don't talk about the regulatory environment, particularly for small business in america, which represents 23 million businesses. it's also 54% of the sales in our economy. and definitely there's been a sea change of negativity on the regulatory environment that holds them back from hiring. why aren't you discussing that in this study? >> well, that's a big issue. the regulatory framework, whether we're talking about financial regulation or whether we're talking about business, and the tax structure as well. but i think that these regulatory issues can hold us back, but they can't stop us. the forces forward are just too strong. >> joel, if you're right, what does that mean for growth in this country, for inflation, for productivity? just yesterday we were having a discussion with marshall auerback who says the growth rate is much lower and that was echoed by the cb o when they were looking at the impact of obamacare. >> i don't agree with that at all. i think that our long-term prognosis for the next ten years is extremely strong. i don't think that you can have the energy bonanza that we have and not see an effect across the entire economy. so people who say that our growth is going to be slow are not taking that fully into account. >> and so bottom line, what kind of growth are you talking about? are you saying we're going to have another late '90s moment here in this country just as everyone was writing it off? >> yes, i think so, and i think it will be longer. >> all right. thank you so much for joining us. this is going to be fascinating. i think we're all hoping that there is some sort of animal spirits element here so we'll watch it. thank you, joel. >> you're welcome. now, meanwhile, the meet is on in arizona, speaking of unique things in the states. governor jan brewer facing pressure from the likes of apple and petsmart to veto is controversial bill that would allow businesses to deny services to gays and lesbians. one of the companies speaking out joins us next. understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. 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[ male announcer ] you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and virtually no referrals needed. see why millions of people have already enrolled in the only medicare supplement insurance plans endorsed by aarp. don't wait. call now. welcome back. arizona's governor is feeling the economic heat. they say money talks, and it's talking loud and clear as some big names are urging the governor to veto legislation that would allow businesses asserting religious beliefs to deny confservices to gays and lesbians. >> backers of the bill say it protects business owners' religious freedom. gays and lesbians say it gives businesses a right to discriminate. marriott, apple, and american airlines along those urging governor jan brewer to veto the bill. intel has just weighed in against it. so has the organizing committee for next year's super bowl as well as other business groups. >> we've had four companies call us to tell us that we'll be dropped from their list as a potential investment location unless governor brewer very toes the bill. >> the business groups say the law and all its controversy would hurt the state competitively, but the libertarian cato institute thinks that concern may be overblown. >> it is not an invitation to discrimina discriminate. it's a way of reinforcing that religious liberty is an important value just like equality under the law is an important value. >> nbc news citing people familiar with governor brewer's thinking says she's leaning toward vetoing the bill, but she has until the end of friday to decide. officially, she says she hasn't decided yet. >> scott, the clock is ticking. thank you so much. with us now is david lenhart, the ceo of pets mart which is headquartered in phoenix, arizona. david, it's great to see you. what would you like to see the governor do here? >> great to see you, kelly, and thanks. this is an important topic. we absolutely would like to see the governor veto this bill. we think it's bad for arizona business. we think it's bad for the people of arizona. >> david, do you think arizona more broadly is becoming toxic to business? >> you know, we're a hometown company here in arizona. we've been here for the last 26 years. arizona is good for business, but this bill is not, and it undermines that, and that's why we are urging the governor to veto this bill. >> are you urging this from a personal point of view? is this something you're hearing from employees? what is your main concern as a business? >> yeah, we are hearing this both from our associates and our customers. at petsmart diversity and inclusion is a key piece of who we are, a key piece of our culture. we fundamentally believe our communities, our customers, and our associates all deserve equal respect, and this bill does not do that, and that's why we are absolutely opposed to it and urging the governor to veto it. >> as i understand, if she doesn't veto it, it does become law after this weekend. what do you do in that case come monday morning? >> yeah. first of all, i hope that does not happen. that's one of the reasons i'm here today. but if it does happen, we will continue to work with our legislators, continue to work with the governor to minimize its impact. >> you would leave the state? >> we're a hometown company, kelly, as i said. we've been here 26 years. arizona is good for business, and we would continue to work with our legislators and the governor to, you know, minimize the impact. >> i assume you have raised these concerns with the legislature and the governor's office directly? >> yes, we have. we've actually attached our name to a coalition led by the arizona technology council. it is many small and large businesses across the state that are all, again, in support of the governor vetoing this bill. >> and can you tell our viewers in this country or across the world who may be watching why it is that this bill has already become legislation? is it something about the belief system that arizona has? no one paid much attention to it and suddenly it was an issue? how have events transpired to this point? >> yeah, kelly, i don't pretend to be an expert on arizona politics, but what i can tell you is fundamentally as a corporation and as petsmart, we fundamentally believe in diversity and inclusion, and this bill undermines that concept, and that's, again, why we are very strongly urging the governor to veto it. >> so we're not overstating it here by saying this bill, if it stands, would allow businesses to turn away gay and lesbians if they didn't believe -- if that wasn't in accordance with their belief system? >> we believe that that absolutely could be the case, and, again, that goes against who we are as a company, which is why we're speaking out so strongly against this. >> david, thank you so much for joining us. again, appreciate it. david is the ceo of petsmart headquartered in phoenix, arizona. >> thank you, kelly. public shouting matches, a man at the top running amok. "the wall street journal" painting an unflattering portrait of pimco co-founder bill gross. he just denied it here on cnbc this afternoon. after the break, we'll discuss if a certain amount of aggression comes with the territory of building a mega business. we'll be right back. ameriprise asked people a simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today. welcome back. former pimco ceo mohammed el-erian left the firm in january leaving the financial word to speculate as to why. and today "the wall street journal" reporting that personal clashes with founder bill gross drove el-erian away. the article painted an unflattering picture of the culture and bill pimco himself. earlier gross said the story was overblown and down played the report. it's not the first time someone who is mega successful has been accused of being a jerk. steve jobs, in fact, comes to mind in in case. here to weigh in with more, jeff cox, finance eder to of cnbc.com. he want to get thoughts from our financial, but, jeff, first your take. is this the flip side of the success coin? >> well, kelly, i think it was harry truman who said if you want a friend, get a dog. i think that that's very true in politics. it's also very true in business. when you get into the high finance world, a lot of ceos have a reputation for being tough managers. to me managing is always about three words. it's about setting the tone. and how you act as a manager is going to set the tone. now, the other part of that is what are your results. for a long time for a guy like bill gross the results were there, so you couldn't hear about those kind of stories. now the results aren't there is much. pimco had a tough year, they're having a mediocrier the ieyear year. >> there's a staying institutions are the shadows of men. when it comes to some of the banks in particular, we've seen a lot of focus on corporate culture and whether it was fostering bad behavior, for example. but in this case, and i really -- i want to hear what kevin has to say about this, in particular kevin, does success excuse bad behavior? does success -- is bad behavior necessarily a part of success? how do you disentangle these issues? >> i look at it as an investor. i'm not investing to make friends. i'm investing to make money. i don't care if the manager is difficult to work with. all i care about is execution of the business plan and results. >> you don't care how the sausage gets made, right, kevin? >> i don't care, but gross is in a different situation because it's very easy to measure his metric every day, and there he is sitting on billions of dollars of ten-year government debt which i think right now is a land mine, a toxic waste because when rates move up, you are going to lose a lot of money in that portfolio. it was easy to make money in his strategy for decades as rates went down. not so easy now. that poor guy is in a pressure cooker. i don't blame him. >> it absolutely is a pressure cooker. it's a tough business. josh, you know a little bit about that. >> we're not just talking generically about business. this is the investment business. it's very different. you can do everything right as kevin said, you can execute. i do this, i do that, and it works. and on wall street, that's not the way things go down. sometimes you can be perfect, but the results don't do your way. when it happens for a prolonged period, which is what we're seeing with some of the major funds at pimco which is not billions but trillions, there's a lot of pressure. there's ego on the line -- >> let's -- >> you could see two guys who respect each other kind of -- i have been on trading desks where the market has gone against us. i can tell you this is not that rare. >> marcus? >> let's get back to the focus which is what's the behavior like and is success an excuse for having bad behavior? the answer is no. so i invest to make money, too, but i expect people to behave in a way that's consistent -- >> wait a minute, some people would say you're guilty of bad behavior because you're mean to the people involved in trying to shore -- >> that's kevin. i'm not mean to the people. i get them focused on the basic principles of making sure their place doesn't close, but i always do it with respect and i always do it with a sense of discipline. and what i want people to do is not say, if he has success, he has a license to be a jerk. >> right. >> you don't have a license to be a jerk. under any circumstance. >> people say that steve jobs to some extent had a license to be a jerk. in fact, if you look at the narrative surrounding him, it justifies over time his behavior through what he achieved and that's true with a lot of people whether they're artists, certainly musicians. >> i think it's fascinating to focus on the personalities of these ceos. i was a sociology major, i love that. as an investor, what matters is are they making money for you and do they have a plan in place to continue to do so. and i think what we're learning now with the situation that they have at pimco is now they have six deputy chief investment officers. they're trying to set a secession plan in place, trying to set up people who will be contrarian to bill gross as mohammed perhaps was. you do need that -- >> to a large extent. >> you need that in order to continue to make money. that's what investors should be caring about and as long as the returns on their pimco -- >> but that's quite a statement. >> kelly -- >> pimco total return fund could not have possibly had a good year last year. >> it had a bad year. >> it's $242 billion in bonds. it's not going anywhere. they don't have license to ride the s&p. so i think if you look at all bond funds, you didn't have this much turmoil at the top let's say where dan fuss is running the shop or a doubleline. this is a pretty specific personality clash. >> if i could circle back on my original point here, this really comes down to, like i said, when bill gross was doing very well and as kevin said when it was a convenient environment aroundizy for him to do well, you didn't hear about bill gross' behavior. now, when the results aren't there, you're going to hear about these things, and you're going to see what kind of a tone is bill gross setting, and when things go bad, can he keep his head and can he steer pimco back to the place where it was before. >> let's be honest, i don't care if bill gross gets his employees hosed down with water and hits them with an electric cattle prod, i want to know -- >> that's the point i'm making. he's got to deliver and he's not delivering now. >> if he can beat the index, that's all i care about. >> he's not beating -- >> that's the question though, right? >> he's even with the index this year. >> if you only invest with people because they're nice, you're probably going to go broke. i think there's a balance between being tough but being respectful. >> i would like to see a motif built around companies that are held by nice, quote, unquote, ceos. >> they don't really exist. >> that's exactly the point. who can think of an example -- >> in sports they talk about somebody being a players' coach. usually synonymous with being a loser. >> can you think of a ceo who is lauded for being a good guy? >> let's sing kumbaya. all i care about is returns. >> is it possible you can be both? does being successful -- >> yes. >> you can be a good guy and be successful, but on the street we all have a thick skin and there's a reason for it. the guys that get results are the guys that are really tough on the people that work for them but there's a line that you don't have to cross either. >> all right. guys, thank you. lower -- thank you, jeff. you can read more about his piece online, cnbc.com. lower tax rates but a new surtax on the rich. house republicans are proposing a sirchly fid code that would slash the tax rate but there are a few catches. up next, how would you like to have warren buffett give you investment advice on your computer? 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with us now the co-founder and ceo daniel nadler. welcome, first of all. >> thank you. >> are you here trying to destroy what's built around us by giving everyone a little individual warren buffett in their phone? >> we're trying to augment the tools people have. a lot of the tools you have see are 20 or 30 years old. financial technology has not kept up. you can ask your iphone very complex questions like what's the fastest way to get to whole foods and it has to do some intensive computations, if you want to ask a computer system what happens to u.s. defense stocks, there's no system you can that using natural language. >> you're confident you can build that kind of system? >> you're trying to get people further along the line of data. trying to surface data as quickly as you can. the engineering challenge is building a natural language interface you can ask financial questions of. we're already there at answer your question. in terms of the data you surf. >> is it all about building a framework and a system whereby it's about recognizing that i may be asking, you know, should i put -- should i invest in apple? is it about identifying my personal information to see whether that's a good idea for me or is it about analyzing the market and macroconditions and apple itself and then being able to deliver a response? >> it's more the latter. more about analyzing the market. more about creating a statistical an notation of the world. if you watch a sports game and lebron james is at the three-point line, it will tell you his shooting percentage. events happen in the macroenvironment. there's no statistical an notation of the world. there's no real time annotation. >> if this works as you envision, give us one example how that might work for a given query. >> a real example was july 3rd of 2013 when oil prices topped $100 a barrel. there was the morsi coup in egypt. a lot of traders were wondering what happens under these conditions, when oil is trading above $100. we've created a system you can ask in natural language how do energy stocks trade in the 24 hours following civil unrest in the middle east or/and oil prices trading above $100 a barrel. that's an example. >> you're letting the phone take my job. that's fine. i will find something else to do. >> hopefully the phone will augment your job. >> and a i can invest better as a result. daniel, thank you for being here. lower tax rates, new surtax on the so-called rich. wait until you hear if that surtax applies to you. we'll be right back. lities becoe reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. we still run into problems. that's why liberty mutual insurance offers accident forgiveness if you qualify, and new car replacement, standard with our auto policies. so call liberty mutual at... today. and if you switch, you could save up to $423. liberty mutual insurance. responsibility. what's your policy? welcome back. with some breaking news on sac capital, kate kelly joins us now. >> thanks so much. we've been waiting for some details about the reorganization of sac capital into a family office, and we know as of today they're going to reorganize into four different units, long/short, macro, quad, and steve's personal investments. their new name which they're in the process of finalizing will be announced sometime in april. the new structure takes affect may 1st. a couple interesting tidbits, the staff has shrunked to 850 employees. there will be the appointment of a chief surveillance officer or cfo, someone who will ward off the type of activity that got them in trouble, insider trading convictions of former employees and so on. >> wow. some big structural news, kate, for one of the biggest firms out there. thank you so much. >> thank you. >> i should also mention, kelly, they've returned almost all of their public money which is something they were going to try to do. >> that still leaves them with how many billions of steve's own money? >> i heard they would have $9 billion in total. still a pretty impressive amount of money overall for a firm that once managed up to 16, then more recently 14 and now 9. >> and a series of insider trading scandals. thank you. republicans putting out a simplified tax proposal calling for an income tax rate cut but also a surtax on high earners. john harwood joining us with the latest details. is there any chance of this moving forward and democrats signing on? >> no. and there's not very good chance of republicans sign on either in terms of the entire party. just a little reality check on this. mitch mcconnell, the senate republican leader, came out from a party before losing that chairmanship. here's what's in that draft. first of all, just like the reagan tax reform in the 1980s, it collapses to two rates and they're lower than reagan's. they're 10 and 25 rather than the 15 and 28 that ronald regan had. there is a 10% surtax on income over $250,000 -- over $450,000, rather, the plan is expected to have the tax rates at 10 or 25 for 99% of taxpayers. 40% of capital gains tax would be excluded from taxation. there's also a bank tax, this gives you one of the reasons why, kelly, this will be controversial among republicans as well. in order to get those rates down to 25%, you've got to do an awful lot in terms of raising revenue elsewhere. so there's going to be a version of the financial crisis responsibility fee that obama proposed a couple of years ago. so-called bank tax. there's all sorts of deductions that are likely to be trimmed in this proposal and that's why they're not talking about those today. that's why republicans don't want to move it, because if you limit the exclusion for health care premiums that employers pay, that can be called a tax on health care. if you exclude the charitable exemption or reduce the exemption for charitable giving, that is going to generate opposition. the same on local and state tax deductio deductions, mortgages. it's a big mine field. >> a big mine field is the best way to put it. john, thank you so much. i want to open up the discussion now to the panel and look at what's kind of ironic about this, it reminds me of the immigration infrastructure thing. this is what people want to do and why it will never happen. >> you might as well talk about a marshall invasion. this will never get through the senate. it's almost like an opening to a conversation rather than anything in its completion. >> if we pretend that it could politically get done, do you find any reason why there are problems with what's being proposed? >> yeah, because they'll roll back the surtax. they won't be revenue neutral. all you'll get is the tax cut. at the end of the day those earning 450 and up is the cutoff, there's no way that's happening. >> why? >> it's politically unpalatable. >> it seems like now is the environment for it to be politically -- >> i would like to see us tackle repatriation of all of this capital that they're holding overseas because they're deathly afraid of paying taxes on it. i would rather see that come in country and be unleashed, something like that. i don't see why mortgage interest deductions or something like that should go. >> what do you think? >> i'm having a hard time with those ideas. that's a manifesto of really bad ideas. any time that you dissuade people to invest capital or punish success in america. >> we would be lowering the income tax. we would be exempting 10some of it. >> over 450 of capital gains. why would i do that if i was being charged a surcharge for success? >> what would you do? >> the only modern economy in the world that doesn't have a user tax. i would drop tax rates to corporations to zero and i'd put the personal income tax to 25% and then tax everything that you want to use on your own discretion. user taxes are everywhere. they're ubiquitous. they work. you can decide what you want to work. >> sharon? >> i don't think this has any chance of going anywhere, and when you talk to folks about what is being proposed here, no one thinks it's going to get, as john mentioned, any traction, even among republicans broadly. so i think we're just talking about kind of semantics here, but one of the things that may perhaps be more palatable to some on the democratic side would be seeing at least some continued taxation on these higher income levels. i don't know if the surtax -- >> that's the investment income. what the super wealthy are most interested in protecting. >> that's the bulk of their income. >> we have to go to markets. quick last thought here. marcus. >> i haven't seen the math on all of this. i don't know what it will add up to or subtract to. it seems like what sharon said, pie in the sky. >> we need a template. we need to get the discussion going. if nothing else, a follow-up for that reason. get the final tweets in. what's less damaging to goldman sachs. it never actually worked there. turns out he worked for citi. you can tweet us your thoughts at cnbc "closing bell." we'll get to that after this. 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. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ welcome back. in case you haven't heard today, the @gselevator has been revealed. the guy doesn't work at goldman sachs. is this less damaging? there have been much more damaging lies told in elevators. >> i think it's more damaging that goldman was looking for the guy inside the company when he wasn't even there. are you surprised at this one? >> i think we should start pimpoelevator. love that handle. >> you guys were having a tee bait about the minimum wage during one of the last breaks and have you resolved anything on this issue? washington and fix it? >> there's no debate. it's a really bad idea. >> great idea. >> fantastic idea. >> the reason it's a bad idea is some incremental job is not being created because a vendor or business operator, will it's take massachusetts, there are 17 employees, they will not hire another one until they find out if they're paying $4 more for the existing ones. the market should decide not some government officials. >> raising the minimum wage is a good idea for a couple of reasons. number one, people can't live off of $8.50. >> they'll be living off of zero because they don't have a job. >> people spend money on advertising, travel, nonsense. it's better to pay them. >> i guess we didn't resolve something. thank you all for being here this afternoon. really appreciate it. by the way, be sure you can catch kevin o'leary on the "shark tank" marathon. it is "shark tank tuesday" after all. and "the profit" is on at 10:00 p.m. marcus, any teasers? >> no, i'm trying to be like kevin. >> mr. wonderful. >> like him. >> aren't we all. "fast money" is coming up in a few seconds. melis melissa, lee, what's on tap? >> hey, kel, it's crazy here. the brouhaha, the implosion of bitcoin. we have the guy who's been out since valentine's day protesting. he is still there and he is going to phone into the show. you will not believe what he says about bitcoin now. >> all right. >> oh, by the way, kelly, did you know that it's the reformed broker's birthday today. >> it's your birthday? >> it is. >> it's karen finerman's birthday. >> tonight we have a very special surprise. a series of surprises, actually. >> i can't believe you didn't tell me. i'm not wishing you happy birthday. your present was hanging out with all of us. over to you, melissa. >> thanks, kel. we're playing all of karen's favorite songs throughout the hour. "fast money" starts right now. in new york city's times square. we have tim see more, steve bros so he, karen
government calling for a execute session. armed men have now seized two airports after taking a parliament building hours earlier. russia denies its forces were involved. the region is home to russia's black sea fleet. jim maceda is in moscow. jim, there have been a lot of stories circulating around about whether or not russia was involved. >> that's right. russia does deny it, as you say. but it didn't have to be their military. because it was dozens of russian-speaking gunmen who stormed those two airports today. the main airport in crimea's capital as well as a smaller military airport. now, it looks like a repeat of yesterday's incident, when those armed commandos seized crimea's government buildings. again, they were not russian, per se. they were ethnic russians living crimea in ukraine. at the commercial airport today, eyewitnesss said the gunmen were looking for ukrainian guards, but where they couldn't find any, they simply left. however, a few vigilantes were left behind patrolling the airport perimeter, which they're doing at this hour, but not disrupting flights. meanwhile, at the balbec military airport, it's really a standoff and that's continuing with russian-speaking gunmen outside the terminal, ukrainian military inside. the government in kiev has called two emergency sessions. one amongst their own security people and one at the u.n. security council to try to deal with this matter. now, becky, there's another source of tension because russia is harboring the ukraine's fugitive ex president viktor yanukovy yanukovych. who has been charged with mass murder. he is now in russia. in fact, he's going to be speaking at a press conference in less than a couple of hours, and clearly he is no under pressure protection. and that also, if you will, embarrasses the government in kiev. back to you. >> jim, it sure seems like putin is sending out some mixed signals. what do you make of that? >> true. it's a confusing and often contradictory situation with vladimir putin. on the one hand, you see the ratcheting up of tensions in an area that he's so influential in. the provocations in crimea, the war games going on. it's something out of an old soe soviet play book. but then you hear from the other putin, sounding quite consill story ordering his government to cooperate with the foreign and ukrainian partners, who develop trade and market relations. that's been the problem for the west. i've heard it many times from the former ambassador here. he would say that there are, in fact, two putins, the cold warrior, the modern statesman. you just never know which one would show up. hopefully for ukraine, ultimately it will be the latter. but that's not a given. becky. >> jim, thank you very much. again, jim maceda joining us from moscow. as he mentioned, victor yanukovych is expected to speak later this morning. he's claiming that he is still the country's legitimate head of state even though he's not there any more. we'll have more on this with where william taylor in a few moments. >> is he at an undisclosed location? do we know who he is? i would go to russia. >> he's in russia. i don't know where. >> that is going to be a struggle. >> he woulve public zoo probably at this point. so he's either going to come back as a legitimate leader or be on trial for mass murder. >> and we need to be cooperating with the europeans and american and ukrainian leaders or he's harboring the guy who they're calling a mass murderer. >> hopefully it's not 1960 or whenever that was where they decided we're going to take this into our own hands. that would be the black swan. the s&p 500, finally -- and we've been saying, you know, just as long as it's by february. january and february so goes the market. >> get a gain of four points for the year. >> one thing we can do, though, forever, we will know the 2014 can be based off of 1850 on the s&p. so we're either above for the year or below. i don't think -- i'm not that disheartened by this because we had a huge gain in 2013. that 5.8% pullback that we saw, people were like, i'm looking for 10, i'm waiting. i'm looking for 10. should we? now we're doing four, then we're going down eight. >> i know is i was so mad, i didn't -- >> so did anyone get a 6% discount on these stocks? >> you're such an optimist. i love it. >> well, we weren't expecting it because the futures are down. it's now positive. made it before match. stocks rising as the fed chair janet yellen blamed the weather for some of the economic weakness. the dow added nearly 75 point is and the nasdaq closed at a 14-year high, adding about 27 points to close at 4318. and the futures right now this morning, we'll take a quick look. now, today, between your apartment, your incredible apartment and your incredible, like, stretch limo, whatever it is that you're in now, did you feel the chill in the air this morning? >> oh, yeah. >> ten years -- i mean, it was 10 degrees. b but 49 out of like 50 states are freezing. so i have some data. i have a chart now that explains a lot of how this works. >> i should have known. >> if you read this on the left, there's some cooling there. that is just whether you idiot denier. then there was some warmer. that's climate change. then it went down a little and that's just whether you idiot denier. and then it goes back up which is attributed to climate change. then it goes down and it cools a little which is just weather you idiot denier. then it goes up and that's climate change. andrew, you posited the west of the world could be warm and it could be cold here. there's another side that schans this vor tess is what we can pekt. >> identify heard that, too? >> is it the weather, is it -- >> i'm not a scientist, though. >> the answer is c, it's both. >> you think it's both? >> yes. it's weather and it's caused -- and the polar vortex is caused by -- >> there are people who are much smarter than i am who i know you disagree with that we have climate change and the trend line suggests, i thought -- >> but not for 17 years. even your paper has written about the -- >> right. on a yearly basis -- >> no, for 17 years, there's been no average rise in global terms. but there are a lot of ways to sdmran th explain that. there's deep sea heating, no one postulates that maybe we overstated the sensitivity to 1 part and 10,000 parts co2. >> for me, this is a losing argument because i am not -- >> for me it is because you know how long it's going to take before anything is he are solved? at least five years. and right now, you've got everything going your way. it's climate change. every single thing that happens is due to this. i'm going to be called an anti-science denier for five years. >> well within well, i think the democratic is accurate. >> it's funny, the twitter accounts, they call me all these names and the next one is idiot gop, these bastards. then they go on and talk about isa is next, then they say something about michelle o'donnell or whatever. every single one, they're all the same people. it's so weird. >> this is a longer conversation and we have to get to some news. but it's actually interesting because i don't know why it was bam politically divisive issue. but it does feel like it's come down from a political decide as opposed to -- >> the huff post readers know a lot about invoking scientist, but they have a low level of -- it's frightening. i go it's just golfing 0.2% and atmospheric at p 3%. >> i never joined rocks for jocks. >> geology class. >> let's talk about some corporate news this morning. >> if it goes down -- >> do you want to show it again? >> maybe you worked for -- who is now a big climate guy. >> we do have some corporate news. pepsi is not splitting up. is it coke or pepsi? >> i saw it just down the line. >> well, you know, there's others. the beverage and snack food giant has now officially rejected the latest proposal from activist investor, nelson peltz. the board saying it's now in complete alignment rejecting his proposal. he sent a letter last week urging the company to spin off beverages and focus on salty snacks. makes it easier to say talk to the hand when your stock is trading where it is. he has toukd folks that he is not trying to professionals will -- >> i have seen some other shareholders here in support of pepsi. >> i think right now, arguably, from what i want, i talked to some people yesterday who were involved in this that the math would suggest that nelson is on the losing side in this situation. >> i like nelson, but you know me. >> you think the synergy is wild. >> i like anything that ends in tos. if i reached for the free tfrits and reach for a pepsi, fritos, doritos, everything ends in t-o-s. fritos, tostillos. those aren't the same, though. >> the problem is it's a counterfactall argument. >> it's an uphill battle. >> do you get more shelf space if you have drinks there or -- >> in certain parts of the world, you do. what nelson has argued repeatedly is there are certain parts of the world where pepsi has effectively created licensing and deals with others such that the stuff doesn't go on the same truk today. they have more information. anyway, we were fog to talk about clowing, be -- arm blen have ceased two airports in crimea. russia is denying involvement. mr. ambassador, thank you for being here today. >> thank you. >> putin is sending out mixed signals about this. do you think russia is involved with what's been happening in crimea right now? >> russia can't help be involved one way or the other. but the signal we've gotten from mr. putin today is a part of one. he's instructing his government to interact with the new government and the interactive communicate as they put together a package that will do what ukraine needs to do? >> at the same time, identifying president -- >> i think that tells us nothing. viktor yanukovych has been impeached. >> he's wanted by current leaders in ukraine as a mass murder and putin is sheltering him. >> he is apparently in russia, that the. the important thing, though, is to get things stabilized. >> so this is something that you think ultimately we should let pass, don't worry about what yanukovych is doing, worry about the future of the country? >> absolutely. absolutely. yanukovych is the past. he is history. what his future is this new government that's establishing itself in kiev. that is something that could be serious and the new government needs to be careful about that. we need to be careful about that. but they need to keep their eye on the ball of how to serve the people, awl people of russia, both east and west. >> mr. ambassador, that certainly sounds like the calm, cool and collected way of going about things. but you can understand how now that blood has been shed, now that there are people taking over buildings the, taking over airports in crimerai. you can understand how looking at it on paper is one thing. they they get it is another. >> you are absolutely right. there was blood spilled in the change to the runnup of the new government. but with the new government, as far as i can tell there's been no spillouts. these takeovers are probably independent. they've had a difficult time with russians and pro russians. you're right about the economic are 230r78 of government. >> what did the best case scenario sdmp. >> the new government reform, today's incidencation from mr. putin is that he would be a part of that economic package. over the next six months, that can then stabilize the government. the government can establish itself, provide services to the people of ukraine all over, that is the people who voted for mr. yanukovych and people who voted with his party. they need to be part of the solution, as well. and they will be part of the government. but that is what the next six months ought to look like. >> mr. ambassador, thank you very much for your time today. >> thank you. coming up, finding a place for your bitcoins, that's not so easy these days. how about your -- that's next in today's executive edge. before you hit the road, 40% of u.s. workers left paid vacation time unused last year. if they had used those days, it could have been given the economy a $160 billion boost. so how many vacation days did americans not use in 2014? find out, next. 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(vo) so do we, business pro. so do we. go national. go like a pro. back now with today's traveler's check, how many paid vacation days went unused in the u.s. in 2013? 429 million. >> welcome back. tracking the weather forecast for you, the national forecast, we head to the west coast because we have a pretty potent system that's about to move in, moving in right now bringing in steady rain along the west coast. we need this rain, but it's coming in ram yidly and heavily. that could lead to issues b here for us for the day. across southern california, some of those burned areas with the wildfires, wildfires, 3 to 5 inches of rain possible. in the mountains, big time snow. some spots here in the sierra, getting around two feet or more on. when this all marches away into the middle of the country, we'll see snow showers through the plains. as we head into sunday, a bit of a wintry mix and icing concerns will be in place in these spots. the northeast gets in on it, as well. sunday we'll start to notice some of the snow showers. and then on monday, really getting going. pittsburgh, new york, you could be in that sweet spot. there could be some significant accumulation in some of these locations. >> i'm not listening, alex. thank you very much. alex wallace, we'll talk to him again soon. right now, it is time for the executive edge. mt. gox, one the world's largest bitcoin exchange has reportedly filed for bankruptcy protection in tokyo. it has raised questions about the safety of the virtual currency. every virtual wallet used to hold bitcoins has a unique number. if you record that on paper, on a thumb drive, it keeps it out of reach for criminals. the currency touted to one day produce cash could be stored money in a safe or under your mattress. this story confuses me even more. there is no such thing as a real bitcoin, right? it's these numbers that come on the virtual wallet? >> that's my understanding of what this is. basically, you have to print it all out and keep your numbers. >> crazy. >> i thought about this recently because i just got a -- one of these things that said they were no longer going to send me statements any more for my account. >> what do you mean, send you paper statements? >> no more paper statements. i can ohm get electronic statements and if i wanted paper statements, i'd have to write them and request paper statements. >> i worry about that, too. >> what if one day the whole thing falls apart? >> i'm like a weirdo like you, too. >> what was my coin that we had if we were -- >> oh, the kernen-cy? >> the kernen-cy. i don't understand bitcoin. but one thing i do understand that looks like it's going to be bankrupt is quizno's. this is the one that -- have you been to a quizno's? this is -- i don't understand how you can -- how can you go bankrupt? >> when was the last time you had quizno's? >> i haven't had -- i'm kidding. >> about six months. i love quizno's. >> and it's too much debt, right? >> apparently. that's what happens. >> i leave that up to you. but this i'm going to delve into. >> i'm still stuck on the bitcoin. >> am i crazy enough to say this could be the future for everything, though? >> it's all going to be like that. >> but this is where we're going. and the question is bitcoin -- is bitcoin that much worse than all these others? i don't know. ichg it's an early stage thing. >> i will admit, when you start hearing about the idea of a cyber attacker taking down the system, bringing down electric grids, messing with bank accounts, it does make me nervous. >> if your e-mail went down, what would happen? >> i guess i'd get over the e-mail thing. i'd be more concern about my bank account. >> but i feel like so much -- so much of my life is now online. i hear you. all those jet setters and executives on the go listen up to this. first class perks have nothing to do with e-mails, drinks or seats. global airlines are increasingly rewarding wealthy flyers with something more intangible. physical distance between them and everyone else. the idea is to try and provide an exclusive experience. inaccessible and ip invisible to those in coach. so privacy. >> i want to know how it works, though. >> do you leave a big, empty space? >> i have tried to use the bathroom in first class before. >> and got kicked out? >> and people like you look at me like i'm going to do something in there. are coach people dirtier or smellier than andrew? >> i don't know. i -- >> you come through that curtain and people turn around and it's like -- >> i didn't know that were curtains. >> have you really tried to bust in? >> i don't know what you're talking about. >> you interloper. get back in that line. all right. that's a weird -- the way we phrase that story, i moon, i can understand how someone would -- but the way we phrased it where basically we're saying the people that want to sit there think they're much better than -- >> don't look at me. >> it was the lady from knots landing, the blond lady. she had glasses on in first class. she was like, i wouldn't know you if you were -- i don't care who you are. you're in a prime time soap opera. >> when "squawk box" returns, we're going to check out the markets. the s&p 500 turning 306 for the year. how much will be economy corporate? and later in the program, james bullard will be our guest host. we'll get reaction to yellen's testimony. we'll be right back. is built for business. built for your company. your customers. your... sales department built from the ground up. for fast downloads. fast uploads. for a... built for tablets. for laptops. for... this. built for saving money. built for saving time. built for architects. built for... sign up for internet and voice and find out how to get four weeks of internet for free. comcast business. built for business. humans -- we are beautifully imperfect creatures, living in an imperfect world. that's why liberty mutual insurance has your back, offering exclusive products like optional better car replacement, where, if your car is totaled, we give you the money to buy one a model year newer. call... and ask an insurance expert about all our benefits today, like our 24/7 support and service, because at liberty mutual insurance, we believe our customers do their best out there in the world, so we do everything we can to be there for them when they need us. plus, you could save hundreds when you switch -- up to $423. call... today. liberty mutual insurance. responsibility. what's your policy? to manage your money.r guy around 2 percent that's not much, you think except it's 2 percent every year. go to e*trade and find out how much our advice and guidance costs. spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. welcome back to "squawk box" this morning. the s&p 500 closing at a record high on thursday following fed chair janet yellen's congressional appearance. richard steinburg, of steinburg global asset management. he's in florida. look at that. it's so -- hold on. >> no, that river is frozen. >> but it's very -- is that a picture behind you there? or is that real? >> no, this is a picture because i don't want joe talking about my yacht in the background again. it's just a picture. >> how many yachts can you ski behind, steinberg? how many do you need? >> thank you, joe. >> also on the fed here, steven rushido. thank you both for being here. are we too high on the s&p? is this going to last? >> i don't think we're too high, but i think that investors yesterday took from yellen that it's steady as she goes and let's the data continue to drive their decision. so i think, you know, we're sticking with our 1930 target, but our portfolio managers are starting to take profits as certain stocks start to reach their target. and we're creating a little bit of a cushion for ourselves so that if the data starts to weaken or weather creates opportunities for the us on the short-term for certain companies, we'll be able to do some buying. >> did you get caught out in january? >> no. actually, we put some money to work at the 1750 level with some cash. and now we're just deciding whether or not we have to put a hedge back on for part of the portfolio. or just -- we tend to be target driven, like i said. so as things get close to our targets, we manage greed and take some money off the table on the way up. >> steve, what's your target right now? >> we're looking for about a 7% to 10% rise in the s&p 500 for this year. >> and we're already 6% in? >> correct. i think the problem with the market this year is the reality that expectations have gotten ahead of what the economy can actually accomplish. last year was an incredible gain, it was a big multiple expansion. the question is whether you can get additional multiple excha e expansion this year. probably a little bit. but that's still a good year. the problem is we've gotten our expectations too high. >> so if we only have 4% to go, how do you play that, effectively? >> well, it's hard. it's going to be a significant trading range environment. the market will correct back on a repeating basis. we'll get a period where the market doesn't accomplish a heck of a lot. that's all you should expect. >> you watched janet yellen yesterday. did he provide the confidence that you would have wanted? and the reason i ask is because historically, if you just do the math, every time we get a new chair in this role, we usually have some form of a correction within six months. and the question that i keep wondering is whether we have that correction or it's still to come. >> i think, you know, investors tend to react to the unexpected, not the expected. and yesterday, the messaging was steady as she goes. so i think for now, we're in good shape. the march meeting, unless data falls off the cliff, investors will expect and will treat another $10 billion in tapering to occur. so i think we hand off from bernanke to yellen in this case may be a little different. because she was pretty much on tune with the dovishness of the fed and there hasn't been a fumble to that football. >> steve, where does the ten-year-end? >> 2014, probably right around where it is right now in the 2.75% area. we have a dip down towards 350 to 2.25. and then we reverse back up. the economy just doesn't have the inflation potential. look what happened in europe last use it. does japan get out of inflation? there's no reason for inflation expectations to rise. in fact, the reason for disinflationary pressures continue to share through and pull yields down. >> is there someplace else in which you think is better? >> i wish there was. the economy is doing the exact same thing the u.s. economy is doing. it's underperforming expectations. that's why you're seeing these pockets. it's going to continue to happen throughout the year. there aren't many safe places to go. what you wind up with is getting yourself into areas where you can expect expectations to give you a relatively low return. >> the only thing i would add to that is if you end up having some dividend income to your other guests, 4% return, you get to a 6% or 7% total return number from here. so i think as we get closer to kind of an okay year in the market, generation of income from dividends can really add another 50% to the price appreciation there. again, it's not a crazy great year, but certainly a solid year, especially for people spending our endowments, spending 4% to 5% of their principal. >> okay. we'll leave the conversation there. steve and rich, that picture behind you -- i really -- i don't want to hang out there. >> i don't know why everybody is worried about weather. the weather is okay here. >> thank you for coming in. >> the ice boats aren't -- the ice cutters aren't there. >> they are today. that's a fake picture. >> no, they're not. >> do you think "frozen" did as well as it did in the theaters because of the -- >> that came out before. >> they were ahead of their time. >> i like the original frozen where the people are stuck in the chair lift. >> oh, i never saw that. did you actually see that? >> yeah. one guy finally gives up -- >> there's a movie called "frozen"? >> they get abandon up there for the weekend and one guy finally takes it in his own hands and jump us, breaks both his legs because he's so high up and then the wolves come. there's like six of them. .it's just -- >> that would be a bad way to go. >> happy that we're inside. >> there's a liam nielsen movie with wolves. >> "the gray." up next, another fall for china's currency. we have a live report from beijing because this is a quick fall. monday, warren buffett will be answering your questions. that starts at 6:00 a.m. eastern time. 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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ welcome back, everybody. we've been watching u.s. account futures today. they are down just slightly after the dow and the s&p 500 closed at a new high yesterday. nasdaq closed at a 14-year high. the futures are down by about 14 points below fair value. s&p is off by 1 points. we saw a weekly loss for china's yuan. let's get to eunice yoon live in beijing. >> hey, twice. china capped off a very tough week for the chinese yuan. today, the yuan actually declined by its biggest drop than we've seen since 2005 and the currency deval ewe onation when it pegged against the u.s. dollar. it was down by nearly 1%. most people at this stage believe that the government is really pushing to send a signal to the market ta the yuan will be trading in a wider trading ban. the currency is very highly controlled. right now, it could rise and fall by about 1%. people are saying that we could see an announcement that the trading ban would be widened by 2% sometime next week when china has its own version of the state of the union address. currently people are saying anywhere between march and june. >> eunice, thank you. coming up, finding opportunity in turmoil. wilbur ross tells us where he's looking for investments rights now. and later, "squawk box" exclusive billionaire sam zell tells us about his latest activist campaign. tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 tdd#: 1-888-648-6021 or go to schwab.com/trading to learn how. tdd#: 1-888-648-6021 our trading specialists can tdd#: 1-888-648-6021 help you set up your platform. tdd#: 1-888-648-6021 because when your tools look the way you want tdd#: 1-888-648-6021 and work the way you think, you can trade at your best. tdd#: 1-888-648-6021 get it all with no trade minimum. tdd#: 1-888-648-6021 and only $8.95 a trade. tdd#: 1-888-648-6021 open an account and earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021 to learn more. tdd#: 1-888-648-6021 so you can take charge tdd#: 1-888-648-6021 of your trading. ...return on investment wall isn't a street... isn't the only return i'm 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. and it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. in clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. ask your gastroenterologist about humira today. remission is possible. the economies in the european union are improving. eu gdp had an growing for the past three quarters and transportation might be the next big growth opportunity in the region. joining us is wilbur ross, chairman and ceo of w.l. ross and company. just got back from ireland. is that -- like here, wilbur, a lot of times transports lead everything else. is there something you're seeing in that sector that makes you think europe is improving faster than people think? >> i spoke at a conference in hamburg the day before yesterday. and a lot of transportation people there, ocean shipping people, rail transport, all the logistics. they all say that they feel the european economy is getting better. to me, that's a very fundamental kind of currency indicator of the economy. >> plus, interest rates don't act the way they're -- they're not allowed to -- they're not able to raise money at these levels because bond market is pretty savvy and those have been much better behaved than a couple of years ago, too, right? it all seems to be indicating things are better. >> soon to be. and then yesterday i was in dublin, of course, we had a bank board meeting and it was very clear that the irish and british economies are getting stronger, as well. as i said, pretty good about europe this trip. >> so is this where you would be focusing right now? because we're also too far down the road in this country, that the opportunities are there now? >> well, i think europe is going through some of the structural readjustment that it needs to make itself more viable. needs more labor market flexibility, the needs a little better control of the fiscal situation in the various countries. so i think there's a lot of change at the moment. in terms of the u.s., i share some of the pes nimp of the congressional budget office. i think the structural issue of so many people dropping out of the -- something like 37% age population neither has a job nor is seeking one. that's a very heavy burden to lug along when you're seeking economic growth. >> okay. very good. we do have -- we have sam zell coming on a little bit later. he's talked about the 1%er. i don't want you to say anything about the 1% getting picked on. you're another billionaire. you're going to say something about the people, the have notes sucking it up and working harder and look like a rich fat cat taking a shot at the have nots. i'm not going to ask you about that. unless you want to volunteer yourself. i'll move on to something else. there's a guy we had him on. i don't know what you do at that secret meeting you have. i think you know what i'm talking about. apparently you're all dressed up in terrible costumes. you are the steven wright of comedi comedians. you tell a joke and people will be in the aisles no matter what with your dead pan delivery. what goes on at these secret meetings of your fastly 1 percenters. >> it's a misnomer to call it a secret meeting. it's a private organization and it was having a private party. seemingly, what some of the people from outside were complaining about was the theory that this was all people who had been vebailed out by the government and now they were making fun. i certainly didn't get bailout money. chris williams, my predecessor as head of the organization who runs one of the larger minority investment firms in the country, he didn't get a bailout. my successors, the harriss, they didn't get a bailout. so i think there's been a little bit of hyperbole introduced into the equation. it is true that there were a couple of hundred members there. it is true they were spoofing each other for a couple of hours. and when you have that kind of environment, unfortunately, some people say some things that they probably wish they hadn't said. >> yes. >> i wonder how many people have never said anything that they'd like to retract. i think very few. >> yes. this guy's sensibilities, kevin, he said it was absolutely awful. i actually -- we don't have the music. i was going to play some "eyes wide shut." i don't know what went on during this super secret meeting that you had. there were no masks? there were no people in -- there was no devil worship, was there? >> no, nothing of that sort. clearly nothing of that sort. >> what are you trying to do? he's your buddy, right? yes. >> kevin had work at the time? >> at the time. this music was not -- okay. all right. i'm wrong then. i was trying to think of a joke for you to tell wilbur. his delivery, you've got to admit. >> he's done very well. >> he has. >> i'm giving him a lot of credit right now. >> in terms of this country, wilbur, 3% this year, we had a little weather issue or is there some slowdown? can any of your assets here, can you tell whether there's something more to this than just weather? >> certainly weather was a big factor in the recent period. and that in turn led to some other kind of multiplier effects. i do think obamacare and its meaning that people don't need work in order to get health care is going to have a negative influence on the economy. you can't have more and more people making the decision not to work and expect the economy to keep growing. that i think is a very serious structural problem. and frankly, i don't regard it as a legitimate choice for an able-bodied adult to say, you know what, i prefer it not to work. so the rest of you should support me for the rest of my life. i have total sympathy for people who have disabilities for one thing or another. >> right. >> but for someone who is able bodied and just chooses not to work, i don't think that's something that our society should foster. >> it's not -- you know, it's no way to live either. there have been studies done about where happiness really comes from. it's not necessarily making a lot of money. it's earning success, feeling good, being up and being productive. i don't think anyone wants to sit home and watch soap operas. >> i think people need a purpose to life, a focus. i think it's sad if they do not. >> i agree. for the record, there was no human sacrifice at that meeting that night that you're aware of? >> no. >> you didn't serve blood, no one was drinking blood? absolutely not. >> we have a rule against vampires. >> let me talk -- will you e-mail your buddy and tell him. he categorically denies human sacrifice. >> i'll let him know. >> will you let him know. >> thank you, wilbur. >> absolutely. "squawk" taking fed matters into its own hands. we have a special guest host, st. louis president james bullard is here. we'll talk to him about whether he thinks the weather is to blame for the slowing economy. stick around. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. i'll believe it when i -- [ both ] oooooh... [ female announcer ] as you get older, protein is an important part of staying active and strong. ensure high protein... fifty percent of your daily value of protein. low fat and five grams of sugars. [ major nutrition ] ensure. nutrition in charge! low fat and five grams of sugars. save you fifteen percent or more on car insurance.ould yep, everybody knows that. well, did you know the ancient pyramids were actually a mistake? uh-oh. geico. fifteen minutes could save you fifteen percent or more on car insurance. welcome to "squawk box." there is a special "squawk" newsmaker guest hosting today, st. louis fed president james bullard. on the agenda, will the economy survive the winter? fed chair janet yellen's vision of monetary policy. and creating jobs in america. crisis in ukraine. an uncertain future for a government in transition. should investors avoid investing in the region right now? all that, plus apple opens up to shareholders. the second hour of "squawk box" begins right now. >> good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host, st. louis fed president jim bullard. >> thanks for having me. >> first let's take a quick look at the futures. yesterday, the s&p pushed through the highs that it closed last year. 1854 is where it closed yesterday, pushing past 1850 for the first time this year. dow futures down by 5.5 points, s&p futures off by just 1.5. the ten-year note, the yield continues to hover around 2.67%. that is still near a three-week low for the yield on that. and tension remains high in ukraine. especially in the crimea region where armed men have taken control of two airports. ukraine's government is describing it as an invasion and occupation by russian forces. u.s. defense secretary hagel warned russia to respect ukraine's sovereignty and avoid provocative action. russia denied involvement in the airport seizures. this situation continues to be ugly and confusing. men's apparel retailer jos. a. banks says it's talking to talk about a higher bid. that's the first time any of these folks said they wanted to talk to each other at all. men's warehouse raising from 57.50 earlier this week and added it would consider increasing that offer to $65 if it was allowed to conduct limited due diligence. hanging in the balance of all of this is eddie bauer which was maybe being played like a fiddle in trying to bring both of these guys back to the table. we always knew they wanted to do a deal of some sort. >> this merger makes sense. >> i would argue this makes more sense. >> these two companies should get together. if you're in your car you won't let them drive past the street where either one of these are located, right? you wouldn't wear a men's warehouse sock. there's no way. >> you know what i think i'm going to do next week? i'm going to dress head to toe in men's warehouse and the next day i'm going to do jos. a. banks. then i'm going to mix and match, considering the possibility of a merger. >> who came in here who was wearing a tom ford suit. you knew immediately it was a $4,000 suit. >> rancic came on this with beautiful suit. >> the second estimate of gdp growth in the fourth quarter comes out at 8:30. sorry, steve. >> bald jokes. there was no call for that. >> there wasn't. >> i didn't say anything. >> they don't even know you're here. >> they don't even know i'm here and you're making bald jokes. >> gratuitous nastiness. 8:30 eastern, economist think the numbers will be revised down to 2.4. >> we have the perfect person to ask. jim bullard, we also introduced him. this is the question. is this the weather that's impacting the economy or is there something here that things have slowed down? >> well, i think weather is a factor and jerry allen said yesterday as much. it is hard to disentangle, that's for sure. i think that's because, even though we use seasonalized data, it's very hard to get a sense of exactly where the weather is hitting. how much is that affecting retail? you think of something like this event in atlanta where it got all iced up, all these problems. you know. if you just use temperature data or something like that and try to take the weather out of the data, you're not going to see all that damage that was done to the economy in atlanta over that 24, 48 or 72-hour period. so i think it is hard to disentangle. i do think that weather has been a factor here. i'll say something else. let's suppose it's not weather. let's suppose we get this evision down to 2.4 this morning. we'll see. and we get kind of a first quarter in the 2% range or something like that. i'm not sure i'd be less optimistic about the rest of the year. i think i'd still be optimistic about 2014 even if all that happened and even if you prove to me that it had nothing to do with the weather. i think the outlook would still be pretty good for 2014 and i think i would still project that 2014 would have stronger gdp growth than 2013 did. and i would still project inflation would come back to target and other things i've got. i don't think this spate of soft data, the way i'm thinking about it right now, is going to be enough for me to revise my forecast. we haven't done it yet. i reserve the right to do it. we'll see. >> some of the troubling things that pop up, if you look at some of the numbers, the housing numbers in california, that's where weather wasn't playing into things. how do you explain what's been happening there? >> people have been talking about housing, you know, the prices have changed. they're not as low as they used to be. some of the prices in california are up quite a bit in some parts. but i still think, you know, interest rates are quite low. housing overall is still in much better shape than it was. i think, you know, i think we'll still have a good year for the housing sector. it won't be probably as good as last year. but i think it will still be good. >> jim, yesterday, janet yellen was speaking and the market seemed to at least interpret her remarks as saying if things slowed down precipitously from an economic standpoint, and it tornadoes out it's not just weather, the fed could be in a position of slowing down the tapering for us. maybe stopping, maybe even reversing. that seems to be why the market really pushed through to higher levels yesterday than we've seen all year. is that the correct interpretation and is that your understanding? >> only janet speaks for the committee. she said that the committee has protected its right to change the pace of tapering in either direction. it could speed it up. we could slow it down. i'll say this. if you look at what happened last summer, the june meeting we surprised markets on the hawkish side. we got a big reaction and the september meeting we surprised markets on the other side. we got a big reaction. that shows you, you've got to be careful. if you're going to make a decision like that, which we can do and we might do if the data pushed us in that direction. you have to be real sure you want to make that kind of a move. i think that's what she was reiterating at the hearing yesterday. >> it sounds like what you're saying, though, if it turns out to be not weather, that it doesn't change your outlook on growth, which would mean you're not really going to change outlook on policy. >> yes. >> for this issue i'm saying, suppose down the line during the spring, you know, it becomes apparent that, okay, jim was wrong. really is the economy is much worse than we thought. the committee has reserved the right to say, we're going to, you know, change pause on the pace of tapering or even go in the other direction. >> but what you said earlier -- >> but for right now, assessing the current gdp data and this weather issue, i just wanted to throw this on the table. it's not clear to me that i would become less optimistic about 2014 because we got weaker gdp numbers in the first quarter than the fourth quarter. one thing people have been saying is that there's been an inventory runup during the fall an some of that would have could come back out in the first quarter. >> are you grading the current stated unemployment rate? are you ragrading that on curve do you take that as the number? >> i take that as a signal of strength in the u.s. economy. >> is it really 7.5? >> it's 6.6. >> okay. you're not adjusting it for any of the weird things? >> i gave a speech on labor force participation. and i reviewed a lot of the literature, it's called the rise and fall of labor force participation in the usa. i came away thinking, look, this labor force participation is i trend phenomenon. it does not have a big cyclical component. if you look at the postwar era, in the '50s and '60s it was low, 59%. peaked up, because of women coming into the labor force peaked at 67.3% in 2000. it's got this hump shape. it's been coming down. >> you could raise fund rate a week from friday? >> we're at 63% now. what you've got is a big trend. we have demographic models that do a good job of explaining that trend. >> if we get to 6.5 next friday -- >> those guys are not going to come off the sidelines, i don't think. as the economy continues to improve. >> that's a good tactic. >> so what that means is you can take the signal from unemployment as a good signal. that means the economy has been getting stronger. i think it will continue to climb and we'll be under 6% by the end of the year. >> you could raise rates. >> we'll see if this all involves the way i'm saying. by the way, st. louis won the unemployment forecasting contest at the fomc. there is actually no contest but if there was, we got it. >> what numbers do -- they actually -- do they really talk about the number or is it -- >> we look at a brad variety of lab economic data. hours worked, long-time unemployment as the chair emphasized in her testimony. all kinds of labor market indicators. >> when ben has talked about 6.5% and 6% or did -- >> he's gone. >> i know he's gone. >> who? >> i have to switch back on this. economists see low wages, all these people working part time for economic reasons and they see very little signs of tightness which under your formula suggests we should be, as joe's suggesting -- >> 6.6 is still high. >> what's the right rate? what's the long-term rate do you think? >> the committee puts a central tendency on that. which is in the 5 range. i'm on the high end of that. i'm at 6. >> you're at 6. >> i'll give you my logic on that. median unemployment in the united states over the past five years is 5.8%. i don't think the labor market is as good as a lot of the labor markets that have been around in the u.s. over that 50-year period. damage has been done by the financial crisis. there are other structural problems like the ones you're talking about. i think the natural rate is a bit higher than the median rate over the last 50 years. i put it at 6%. we're still above that. if we come down below 6%, that would be sort of overshooting of the natural rate. >> you have to think then that fed policy is close to being overly accommodative. in that you're half a point from your long run rate and -- >> according to what i told you, we're closer on unemployment than we are on inflation. inflation is running low, 1.1% or so. so we're 0.9 away from target on that and 0.6 away from the higher natural rate right now. if you look at the summary of economic projections, most of the members are lower, 5.5, 5.25 on unemployment. i don't believe it. because of the reason i just told you. >> when do you peg the first rate rise? >> well -- >> next friday. >> i actually have -- as of my december forecast i actually have it still in 2014. >> you do? >> yes. i was one of two, i think. i'm going to have to resit that and see if i want to keep it in 2014. why did i have that? it's because i have a faster pace of unemployment decline than most people on the committee. i have a natural higher rate than most people on the committee. i'm somewhat more optimistic that inflation will come back to target. maybe other people might have a slower trajectory -- >> does everybody that walks in have a model like you do? >> sure. >> everybody sits there and debates the actual models themselves? >> that would be an overstatement. we have the transcripts. you can see what gets said. one thing is, we have our own staff. we push the staff pretty hard to tell us what to say and what to think. i think that's a great part of the fed. you get independent views across the system. >> i think this is pretty important. you were one of two people looking for interest rates to potentially rise in 2014. >> as of december. >> as of december. >> right now you think you probably need to revisit that based on the economy. >> when we were talking about it in december. >> should we put it in the first quarter of 2015 or 2014? now when we review that in march -- >> the journal wrote a piece about two people. were you one of the two. >> yes, i was one of the two. >> i would have never thought it. >> i have to look this up. >> the summary of economic projections it gives that 2014, 2015, 2016. the quarter of 2014 is not that different than the first quarter of 2015. >> you said it wasn't real and you didn't mean it anyway. that piece was stupid. >> which piece? >> the piece about how they're going to raise -- two people say we're going to raise near term -- >> the market throws it out. >> you threw me out. >> st. louis got the unemployment forecast right in 2013. >> you lost to the red sox in four games or something. >> six games. >> you're hanging your hat on -- what did you win in st. louis? >> contest. >> imaginary contest. >> instead of the world series, you're hanging your hat on this? >> the world series is past. >> i heard him say, st. louis? st. louis won what? they have a good basketball team, st. louis. >> basketball? >> yes. >> all right. you'll be with us for the rest of the program. >> if you say. we have a lot to talk about. coming up, what is am going to tell shareholders today? we have a preview of today's big meeting. and later, exclusive interview with billionaire and investor sam zell. check out the futures this morning. red arrows seem to be the case. back in a moment. let's say you pay your guy around 2 percent to manage your money. that's not much, you think except it's 2 percent every year. go to e*trade and find out how much our advice and guidance costs. spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. legendary investor warren buffett will be joining us live for three hours. tweet us using the #askwarren. two have been brought in to take over some of the investing for berkshire's portfolio. by the way, joe, that was ted that came up with devita. >> the three of them sitting down together, a rare appearance. >> i don't think he's talked ever. >> the three of them have never been on tv together. they haven't wanted to talk. there's been curiosity around them. by the way, tweet questions for those threes as well. all of this starts monday at 6:00 a.m. eastern time. >> you get to go to nebraska for this. >> i do. >> your job is -- >> i'm a little worried about the weather. i'm looking at the snow on the way out and on the way back. >> monday. it is. >> snow sunday getting out there, snow monday getting back. >> this weird weather, i'm telling you. coming up next, today is apple's big meeting with shareholders. there he is, tim cook. we'll tell you what investors want to hear from investor tim cook. could the iphone 6 be coming sooner than first thought? that could be interesting. so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. 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is it forte managing investor? the word to have a skill is actually forte. >> you have a forte. >> you have a forte. forte is a musical thing. >> there's going to be an iphone 6 announcement, tom? >> well, i don't anticipate a new product announcement to that extent but i do anticipate tim cook will reiterate his prior comments that calendar 2014 will be a year of new products which we extrapolate to mean a watch and a television. >> a watch and a television. i saw a watch that i would i think use, not the samsung but it would do all different stuff. it wasn't bad looking. i saw it. you think there will be an apple watch this year, tom? >> i do. >> is that the one to wait for? >> if you look at the market right now, no one's exactly killing it. i do think that's created an toon for apple to come in with a unique product and differentiate and take advantage. >> will it be stylish? will they partner up with a regular watchmaker that can charge a lot. >> if they partner up, i would say it's more likely on an accessory front. find a way to accessorize your iwatch. >> you think the bigger opportunity is tv, i'm assuming or the watch itself? >> the tv is definitely a bigger opportunity. especially 23 you look at a price point. the watch right now in the market you're seeing around $199. apple came in at 299 or 249. you're looking for an opportunity to win the living room. that battle is still wide open. >> all right. they should make watches, tvs and teslas. >> what do you think about tesla? >> tesla is fantastic but it's hard to imagine a company that has historically hasn't made an acquisition greater than $1 billion would pay what it would take to acquire tesla. >> the merrill lynch guy yesterday reiterated his $85 price target. that's good, isn't it? >> we'll see what happens. >> yes, but -- he's been a little off. >> he's been out there. coming up after the break, former ceo of. lord john brown will join us to talk about the future of energy when we return in just a moment. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. predibut, manufacturings a prettin the united states do. means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources to get the job done. welcome back to "squawk box," everybody. i'm becky quick. we have your morning headlines today. mt. gox filed for bankruptcy protection. that announcement came at a tokyo news conference at which mt. gox ceo apologized for the bitcoin exchange's problems. he said mt. gox may have lost nearly $500 million because of bitcoins because of a hacking into their system. wow. >> you pulled a sorkin. >> i know. i saw you catch me. >> is that what it's going to be called, a sorkin. >> skip the name. >> skip the name. say ceo. what difference does it make? why are we hurting ourselves? >> right. nobody out there knows who he is. >> investors have been unable to withdraw bitcoins for several weeks from mt. gox. they handled more than 80% of trades in the virtual currency. that's why you've seen such a huge amount of concern and have seen bitcoin's valuation drop substantially. u.s. automakers are extending their discount lure through march. ford is offering $8,000 and more on the f-150 while the chevy silverado is discounteded at about $9,000. and jos. a. banks called the men's warehouse takeover offer inadequate. men's warehouse raised its cash tender offer to jos. a. banks shareholders to 63.50 from $57.50. it added it could increase the offer to $65 if it was allowed to conduct limited due diligence. jos. a. banks said on thursday it was prepared to provide men's warehouse with a limited amount of due diligence information under certain conditions. let's get back it our guest host st. louis fed president jim bullard. you watched once in a while. it would be too much to ask that you would have seen jim grant. you've seen some of his mewesings in the past. he's a purist. but he's smart and he's a purist. he makes the point that we still aren't out of the woods in terms of the fed extricating itself from all the action, because whenever you basically set prices artificially, wages or prices, there's going to be dislocation somewhere and unbenounbe nons -- unbeknownst to you. europe got so ineffective at managing their own economy that there's no inflation. the rest of the world allowed you to do all this. >> i think that's a good theory about what happened. we went into qe 3. i was expecting inflation, inflation expectations to go up. it didn't really happen. i think it was partly because europe went into recession. >> it was very -- >> i'm not going to use fortuitous. >> it was serendipitous that it coincided and happened at that time. right? look at the ten-year. you are tapering and it's below where it was. >> i think that's fair. you were intimating that we were pulling back. >> you are pulling back. depends on the date. >> we're still buying a lot of bonds. you have the promise about low interest rates in the future. it's no the that we stopped buying the bonds. we've only tapered. >> your promise is about when you're raising rates depends on the dates either. you just admitted. >> it depends on the economy. >> yes. >> it depends on the economy and the outlook for the economy fluctuates. >> if we were -- if it's not weather and there is something worse going on or something happening, it's always hard to find cause and effect. but i can't think of anything in the world other than china that would have us worry. we should be happy right now. europe's better. we have a budget. there's no wrangling, it's quieted down. what would cause us to slow down. >> all the things that we've been worried about and complaining about over the last couple of years have dissipated. you have household deleveraging that's more or less run its course. you have wealth in the u.s. because equities are up, you know, 30%, much closer to normal. >> thank you for that, too. >> housing values are coming back closer to normal. they're not up at those peak values they were in 2007. you have gdp growing in the second half of last year, 3.5%. we'll see what the revision says today. but right now, it's 3.5% for the second half of last year. i mean, these things look good. we worried about fiscal brinkmannship. >> yes. >> that seems to be on a truce for at least this year. and europe, we've been worried about europe being in recession. europe is out of recession, spain growing some, one of the worst cases in europe. so i think you've got a lot of things you can point to that look good. i think the deck has been cle cleared for u.s. growth. even if the gdp comes in weaker or the first quarter gdp comes in weaker, i'd stay optimistic for 2014. >> the other thing is, like the bond market, a lot of money, big money, terminal pricing, if you had -- if it was that artificial where the ten-year was because of all the qe or because of where you put interest rates, you would figure -- it seems to be at 2.6 on its own. it doesn't seem like what you did had that big an effect on where it would normally be, does it? >> well, like i was saying earlier, i think those events from last sum der semer did see show certainly the markets care about qe. it does seem to affect rates a lot. >> when we had the taper tantrum last summer, that was worth, you know, 100 basis points on the ten-year. that's a big move. so i think it is important. let me get back to jim grant who i love. talking about the artificiality of pricing and stuff. i want to push back against that a little bit. you know, anytime you have some kind of policy, the government lays down a policy. here's the policy. the policy is interacting with markets. guys in the markets are finding the prices, knowing what the policy is. even if you had a gold standard or some other way to do monetary poli policy, that policy would inform how you go find your prices and get the right prices given that policy. it's all interrelated. you can't ever get away from that unless you'll have no government at all, which is probably too much even for jim grant. so i think you always have to think, what are the tax arrangements, what are the future taxes? what does that look like? what is the monetary arrangement? what does that look like? once i know what that apology is, i can go, jim cramer and others can go and say here's what the prices are. >> that's interesting. >> i know it's been talk around wall street that this is artificial pricing and stuff. it's inhaernt becauerent. >> as free as the market ever gets, still takes into account some -- >> you can have crappy policies and you can have good policies. that's certainly true and fair to argue. you're never going to get away from the idea that the policies are affecting the prices. >> more from fed president, st. louis fed president jim bullard still to come. let's take a check on energy prices. oil prices have been climbing over the past month and nat gas has been on a tear this winter. joining us now is lord john brown, former ceo of. bp. welcome to the broadcast, "seven elements that changed the world" is the name of the book. we thank you for being here. >> pleasure. >> lord brown, the question i have more than any, we talk about climate change, we debate climate change on this set. i know that you had -- i don't know if it was an epiphany or transformation at some point during your career when you were at bp, what was it after 25 years of being at bp that made you switch gears but not really? >> it happened about 20 years ago, i guess. it was all about the information and the projections for the future. looked like there was a risk, a risk that we needed to take care of and the question was could we do it economically, practically and sensibly? and to my mind, the answer was yes, you could start doing it and carry on step by step. >> you have been a proponent of frac'ing. you say you want to do it responsibly. can it be done responsibly in your mind given your concerns about climate? >> absolutely. and actually that's the point about energy mix. we've got to get it lighter in carbon. we don't have to get rid of all carbon. we have to get it lighter. >> lord brown, do you mean carbon or carbon dioxide? if you mean carbon dioxide, carbon is an element. it's black and it's sooty. are you talking about the gas carbon dioxide or carbon, just so i know? >> mostly about carbon dioxide. >> thank you. you're not talking about an elemental carbon. then why not call it carbon dioxide? >> you can indeed. it's just shorthand, if you would. it seems to me that we've got to get carbon dioxide emissions down and we can do it by changing the mix of energies. after all, gas is lighter than oil than it lighter than coal. and gas is very good in the energy mix. i'm a great proponent of frac'ing because i believe it can be done safely under the right regulations and policy. >> here's a question for you. i'm not a sicientisscientist. i don't know enough except what i read. do you have any skepticism that climate change is real? >> what i have is, we'll never know for sure until it's too late. we're dealing with probabilities. they're very difficult things to explain to everybody. my view is, take insurance out and try and push the technologies that we use to create energy, renewables, for example, to get them low cost, get them yubiquitous and get th energy mix changing at the time. i think that's very important. >> lord brown, the only problem is you'll have certain people take it to maybe a little bit too far. one of the reasons that the opponents of keystone bring up is that all that up in canada that we're going to bring down, that should stay in the ground. it's hydrocarbons. we should leave it there. because if we develop it, what's in the ground now will end up as co2 in the atmosphere. you have total groups of people that don't want to build any hydrocarbon infrastructure whatsoever, even if it's, as you say, light co2. if you go logically all the way we don't want any co2 going up there. we only added one particle of co2 for 10,000 parts of the atmosphere. that's been the total addition we've had. >> as a practical matter we are going to generate carbon diox e dioxide. the question is how much carbon dioxide do we generate for every unit of activity we undertake. >> true. >> we need to leave some -- exactly. it's better to produce gas, better to produce oil than it is to burn coal. that's a fact. getting that in people's heads, i think is very important indeed. >> where do you stand on a carbon tax? >> i think, again, we don't understand where our carbon cap should be. if it were a carbon cap for everybody, then it would be a very good thing. we need, i think, to have a balance so there's an incentive which is implied to everybody for carbon reduction. if it's carbon cap for one and not another, it's not going to do much for us. >> if we were to take out the insurance and even though there's some -- the 17-year pause has even climatologists scratching their head and they're trying to explain it in different ways because co2 emissions have increased. let's say we cut off developing economies, our even our growth here in the u.s. is slower than we'd like it to be. we have a jobs problem. we have a jobless problem globally. what if it's chasing a phantom? i understand what you're saying, it would already be too late. to take real action that will hurt developer economies, actually hurt people, based on this. >> you're absolutely right. it means we need to invest in technologies that produce us energy at the right price and also reduce carbon dioxide. that is something which is happening, for example, around the world total renewable energy, electricity from renewables now exceeds that coming out of nuclear. and that hasn't happened by accident. it's happened by technologies improving over time. there are plenty of things we can do. >> everybody wants clean air and clean water and china has a terrible pollution problem but to conflate it with an extra 100 parts per million of co2, rather than the real issue in china is particulate pollution. it's a horrible, disgusting pollution. we've gone from 0.3 atmosphere to 0.4 and every single adverse weather event is attributed to this. there's no scientist that would agree with that. yet you see what's done. >> i agree. china has a very big low-level pollution problem. it needs to sort out traffic patterns. it's the way it generates electricity, burning coal close to cities is not a good idea. so all of those things need to be sorted out. it's both got a carbon dioxide and a carbon and particulate problem that's very big. >> lord brown, the book, "seven elements that change the world." thank you for joining us this morning. >> thank you very much. >> up next, we'll bring you the latest on ukraine and talk to one man who has been investing millions of dollars in the country for the past 20 years. 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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ welcome back, everybody. investing in ukraine was risky before the recent unrest. ukraine is considered a frontier market. michael, thanks for being here today. >> my pleasure. thank you. what do you do now, double down, pull your money out, sit and wait? >> watch very closely. it's very tense. it's exciting. things that happened over the last three months, which is independence and people fight for freedom has been going on today as day 99. it's almost 100 days. but over the last two weeks, i think they have a significant success achieved. the country now is on the track to a much better future than the cabinet ministers was appointed yesterday. the new prime minister is a very promising man. i like him a lot. i know him. he is very well qualified. he used to be the head of the central bank of ukraine, he's an economist, as well as a lawyer by training. he was the speaker of the house. he was the foreign minister. he's got a resume that is very, very impressive. and i think he's going to take the country in the right direction. it's european integration, signing the free trade agreement, more importantly. which is ukraine badly needs. the ukrainian economy is in shambles. they need help from the west. in a week to six months they held from the west, this help will be a tug of war for ukraine. >> if it comes through the imf, it will come with big tags athat many along with it. they'll have to put more pressure on their citizens and probably hurt the economy in the short term to reach the longer term prosperity. what happens to the markets and investments in the meantime? >> you are exactly right. there are some unpopular moves the new prime minister has announced he'll be making. yes, of course, there is significant conditionality. i do believe ukraine badly needs that. they need this economic reform. we've been investing in the country for a long time. we have a significant amount of investment on the ground. we are excited about the prospects of ukrainian agricultural. the global food security crisis is a big issue for the next several decades. ukraine is a possible solution, significant contributor to that. ukraine has 30 million hectares of land. they're in frac'ing. there are so many areas where ukraine could do extremely well but they need financial support to get some macro economical situations in order. after that, investments in ukraine are still very promising. i'm optimistic, even after 20 years of fairly tough investment environment in ukraine. we've done pretty well. certainly the opportunity is much greater. >> you say you have a few hundred million dollars in ukraine right now. >> correct. >> where are those investments. >> in agriculture and we also invest in the cable sector, the largest cable company in ukraine. we invested in retail pharma. we invested in chocolate production. we invested in software development. there are a number of areas in ukraine that are quite interesting you need to keep in mind ukraine is expert oriented country. it's very open economy. experts are 50% of ukrainian gdp. agriculture certainly is the third largest exporter of agricultural products in the world. it has the potential to become the largest exporter of wheat in the world over the next decade or so. that's an opportunity, to realize that and gain significant returns. when we come back, more from our guest host, st. louis federal reserve bank president and ceo jim bullard. in the next hour, an interview with sam zell. he'll be joining us at the top of the hour. "squawk box" will be right back. checking the futures right now. we do have red arrows, the dow looking like it would open slightly down. the nasdaq would open about a 1.5 points off. we'll be watching shares of pier 1 importers. ceo alex smith says the situation is frustrating, disappointing but expects to return to more typical results when the weather improves. we also have a quick alert, alert, alert, alert. the latest edition of the talking squawk blog is out, go to squawk.cnbc.com and see inside ukraine's presidential palace and a lot more. coming up next, an exclusive 30-minute interview with sam zell, chairman. we'll cover it all right after the break. e craft oriented. e craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources to get the job done. i'm spending too much time hiring and not enough time in my kitchen. 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>> no. we were in an ioc family hotel, international olympic hotel. >> how about in ukraine? >> ukraine we were in a soviet era hotel. it showed but the water was clean and the bed was fine. >> are you beginning to venezuela? what's next? >> we discussed the issue but venezuela, it's tough to get a journalist to venezuela. when i first started going there ten years ago there was no such thing as a journalist visa. it's a long way to get to. >> you're an international correspondent. >> i know. i know. i've been away for five weeks. >> more than a month. >> you're great. let's get through some of the headlines this morning. apple's annual shareholder meeting taking place at the company's headquarters. among the proposals on the table, carl icahn's push for the company to increase its share buyback program. apple is asking share holders to vote against all of those measures. it's a busy day for economic numbers on the final day of trading for february. investors take a look at the first revision of the fourth quarter gdp at 8:30 eastern time. they are looking for 2.4%, down from 3.2%. we'll also be getting the university of michigan consumer sentiment numbers at 9:55 eastern. and we're keeping an eye on shares of deckers outdoor, the maker of the ugg boots and shoes. investors are focusing on the report coming out today. >> you're reminding me of my idol, richard engel. >> i sat next to him in russia at sochi. we were in the same hotel in ukraine. >> wow. really. >> yes. nothing happened. >> i could not guarantee nothing would happen. >> between you and him. you have such a man crush on him. >> he's so dashing. >> you were at that palace? >> yes, i went to the palace. >> you saw -- >> all of it. it was amazing. >> you saw the zoo -- >> i didn't -- okay, i did not see the zoo or the ship in person because the estate is so huge to have walked to it, they don't allow you to drive a car. i had to get back to do the live shot. we got up, ran to the palace, shot as much as we could and brought back the video we could. >> you're the only person i know that's been to that place, though. >> it's cool. >> i want to touch you before you leave. >> viktor yanukovych, supposedly he's holding a news conference that will begin. we may see headlines before we see him visually. for some reason they are doing tape delay of ten minutes out of russia. >> what? >> this is video of him last week. viktor yanukovych who believes he's still the rightful president and legal president of ukraine will hold this news conference in russia. we want to hear what he has to say. in the meantime, there are three european states that have frozen assets of him and his family accounts. we have lichtenstein friesen bank accounts at the request of the new government. in crimea, armed men have seized two airports in crimea. russia denies involvement. the ukrainian interior ministry says russians are are in control. the u.s. has appealed to russia not to intervene. we have regional parliament that has been taken over by forces. financially speaking, the country has started limiting dollar withdrawals, foreign currency withdrawals to maintain their pile of cash. here's the new cabinet. the new prime minister and the secretary on the left. that's improved the currency because if you don't worry about people sucking every dollar they can out of the system that will stabilize the situation. we are monitoring, waiting to see what yanukovych does and says when 'pears. as soon as he does, we'll bring it to you. >> thank you, michelle. >> thanks, michelle. >> all right. >> touch my finger. >> pull my finger. >> no, please don't. >> that's what richard says. real estate titan sam zell backing developer related and hedge fund core of ex-capital in an activist campaign. they want to unseat the board and management of commonwealth, an investment trust that owns more than 300 office buildings in the u.s. if successful, zell will take over as chairman of commonwealth. joining us from sun valley. nice. in an exclusive interview, sam zell, investment groups chairman. i'm trying to figure out where you were and whether you're going to the pioneer tonight, have steak and lobster or something? sun valley, great place, sam. i'm envious. >> yes, for sure. >> what's your plan here and we defer to you on all things real estate, you buy low, sell high. what do you see here that's being mismanaged or that's attractive? >> first of all, this particular situation, the commonwealth situation, is a situation where a structural impediment results in shareholders having almost no voice. by virtue of an externally managed structure of which there are very few equity reits. all of the rest of them are self-managed and avoid conflicts that exist when an outside manager manages assets he doesn't own. and as far as our backing is concerned, this started badly a year ago. they felt strongly that this was both an undervalued situation and a situation where shareholders were being deprived of their right to vote and be represented. they came to me and said our interests are economic. we want to build out of this a great new company. are you interested? i said, if you are successful, we would be prepared to take over the company and set up management operation very similar to what we did with the lp. >> so looking back at the last ten years or whatever, sam, you sold -- you didn't know why you were selling. it just seemed like a good time because of what people were offering you. we've had you on since then and things have come back down to where they are attractive again in your view. where are we right now with an improving economy? you're interested in this deal. is there inherent value in real estate everywhere? the stuff that you sold, is it back to where it was when you sold it at this point? >> no. i don't think that the office market is even close to where it was in '07. in this particular situation, i believe that you have roughly a $7 billion collection of assets. that have been misaligned or misstrategically run, because effectively, the incentive to the manager was keep buying assets because you get paid on number of assets under your control, not on the performance. all you have to do is look at the chart of eqr, eop and, over the last 15 years, they're in a serious uptrend. commonwealth is dead as a dead man's ekg. something's wrong. >> you sold your commonwealth shares before you agreed to be part of this related slate. >> yes. >> and as part of this you're also going to receive $17 million of in the money options. that's right? >> that's correct. >> so does this not imply that you don't see additional upside in the stock? i mean, why wouldn't you hold your shares or take the stock at market price? >> well, number one, we initially thought it was an interesting situation. we thought maybe we could build a position. we quickly found out that the liquidity of the stock in terms of its availability to build a position didn't seem likely at all. and consequently, rather than hold a minor share and have the filing requirements that go with that, we just eliminated the position. it was a very minor position. as far as the in the money options are concerned, the first thing i tell you is that, this stock a year ago was 15. as a result of the work done by corvex and related, the price has gone up to 26 or 27 on the anticipation that they might win. having an option to buy stock the 22 something is hardly a serious economic incentive to me. for taking on this kind of responsibility. we're long-term holders. the 17 million is interesting but that's only relevant if we sell. and our history is we're not sellers, we're owners and buildings. >> one other related question to this, no pun intended on the related piece. you sit on about seven boards right no you, two of which are reits. do you have time to actually be on this board? >> number one, i'm not sure that i am on seven boards. i believe i am only on one, two, three, maybe three public companies. i would remind you that the number of companies i'm responsible for today is no different than the number of companies i was responsible for when we were running eop. this is -- we have a wonderful and strong alumni deal with eop and opr, many people have contacted us and said we'd like to come try and build another company again. >> okay. real quick, the company commonwealth came out with earnings just yesterday or the day before. and did beat estimates. seemed like it was an improving situation. did you think it was an improving situation and how much more would it improve under the other -- i don't want to say ownership but control effectively? >> i think the question is very simple. if you own stock in a public company, you should have a right to vote. you should have a right to change. you should have all of the rights, the fiduciary responsibility to management should be the case. that has not been the case in this situation. almost every anti-takeover, anti-anything you can imagine was put into this company by the external manager to protect his position. >> right. >> all i want is for the shareholders to have a clear vote as to the future of their capital. it's their capital. it's not the manager's capital. >> i don't disagree with that. we'll get on some other subjects after we take a quick break. so stick with us and we'll be right back. of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm 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. so our business can be on at&t's network for $175 a month? yup. all 5 of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're 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. let's close! new at&t mobile share value plans our best value plans ever for business. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. let's get back to our special guest. we are joined once again from sun valley in an exclusive interview by sam zell. he is equity group investments chairman. our guest host is st. louis fed president jim bullard. sam, we've been talking an awful lot about the economy this morning trying to get president bullard's thoughts on this. where do you see the economy right now? >> benign. i don't see any animal aspirations. i think we have accepted a level of growth that over the long term is a real problem. and i think we have to refocus our efforts on growth. i don't know whether fed member bullard agrees with me, but i find it very difficult to believe that you can have wealth redistribution and growth at the same time. and i think that our taking the eye off the ball on growth is being reflected in the performance of the country. >> president bullard? >> i'd certainly like to see better growth in the u.s. economy. it has been weak since the financial crisis. a lot of people have attributed that to the reinhart-rogoth hypothesis that countries grow slower after a financial crisis. emphasizing growth, absolutely. and what kinds of policies would do that, you need more innovation, technology. that technology has to defuse through the whole economy. you need better capital. i'm for all of those things but monetary policy doesn't directly affect those things. >> sam? >> i'm not sure i agree that monetary policy doesn't affect those things. i think if you took all of the issues you just mentioned, and they all kind of wrap together in levels of uncertainty. to the extent we create levels of untenty within our society, people are less willing to take risk. that's really what growth is all about. >> no. absolutely true. if i'm not mistaken, ben bernanke's dissertation was uncertainty in investment and he was investigating exactly that. i'm a big advocate that we need to have stable policies that keep uncertainty to a minimum. above all, tax policy has to be stable and smooth so you can plan into the future but also government spending policies and also monetary policy. that's why we talk in terms of monetary policy rules. it has not been as good a time for stable monetary policy in the last five years as i would like it to be. hopefully we can get back to something more ordinary, more predictable in the next five years compared to where we've been after the financial crisis. we just had to come in with so many improvizations in the last five years, especially around the time of the financial crisis. that has upset the equilibrium in the u.s. economy. >> sam, where do you place the blame for where we stand right now? it seems like you think this is a much longer term structural problem, in the a cyclical problem we're dealing with. >> i think that the current situation, i completely agree with mr. bullard. but you know, in a way, in 2015 saying what happened in 2007 and '08 and '09 is still impacting us is a little bit like blaming bush for everybody that happened after he left office. so i guess all i'd say to you is that, consistency, transparency, predictability, that's what the future is all about. that's what makes great countries function. i think the current environment has a massive amount of uncertainties that are making it very difficult for people who have the responsibility to take risk to take that risk and feel confident. >> well, sam, i agree with you completely. i really do think it's important to get to these stable policies. just let me stress, i think everyone that's involved in monetary policy would really, really, really like to get back to a more normal monetary policy like the ones that we enjoyed in this country during the '80s and '90s and parts of the 2000s. and those in some way served us very well. if we could get back to that sort of environment, which was a more predictable environment, i do think we'd get better investment and ultimately better growth in the u.s. economy. in that sense, i agree with your hypothesis, that monetary policy can feedback to growth in that sense. >> but at the point you're referring to, the cost of capital was, quote, unquote, above the inflation rate. so we weren't, quote, unquote, subsidizing capital below the inflation rate. that's the part of this scenario i have a great deal of difficulty understanding. because i think it destroys the animal instincts. >> right. >> there's a guy, jim grant who wrote an article about the shot clock in basketball. i think zero interest rates are like not having a shot clock in basketball. >> sam, i wanted to change -- >> you certainly have investors saying, i've had a lot of ceos saying, wow, they're in no hurry, they have a big investment they're thinking about making. they're saying i don't have to be in any hurry, rates will be low for a long time, i'll wait a year to make the investment. as the economy normalizes we'll get some of the people coming off the sidelines, maybe you included. >> sam, real quickly -- >> well -- >> i just want to change topics. we don'tly have a couple minutes with you left. a couple weeks back you made a couple comments related to tom perkins and the 1%. you were criticized as this seems to be the populous backlash against some of the comments he made and you made in support of him. what do you make of those people and what they were saying? >> you know, all i can tell you is what i said was that the definition of mortal sin is envy. creating and perpetuating an environment of class conflict is neither part of american history, nor positive for our country. i think what mr. perkins was saying was that this enormous emphasis on, quote, unquote, the disparity in incomes and the, quote, envy question had elements to it that were very negative. and i couldn't agree more. >> and you know, if you just want to be absolutely honest, sam, with what we need to do for jobs in this country, the single minded focus on the minimum wage by the administration, it's clearly another wedge issue that -- a populous wedge issue that doesn't really scratch the surface of the steps that we need to take to address unemployment and yet it's done for the precise reason that you're talking about right now. so perkins says one thing, well, on the other side, they're manipulating the entire argument to their own advantage. it's just a frustrating environment to be in right now. >> what's new about that? that's been going on for six years now. >> five years. >> five and a half years. >> i know. but at this point, would you say in the past where regulation and uncertainty caused you to think that, you know, that the country was going to be stuck in neutral, do you think that at least now with a budget and with congress not wrangling and with europe doing a little better, america finds a way to work through a lot of head winds. are we doing that right now in spite of the efforts of d.c.? >> well, i think the environment is obviously a lot better today than it was a few months ago. or a few years ago for that matter. but there's still a great deal of uncertainty out there. look at your headlines this morning. venezuela, syria, ukraine. what does that all mean? how do i make a bet on the future if there's going to be a cold war confrontation? or, you know, a country like venezuela will come apart? i don't know the answers to those questions. but when you look around the world at all of the, quote, unquote, hot spots, it makes -- it generates caution. now, maybe as somebody once said, you know, the united states is the best-looking broad in the brothel, but that doesn't necessarily translate into a vibrant economy. we need to encourage risk. we need to generate certainty. we need to focus our country and the people in this country on making progress for the whole country. and not the divisive nature of what has been going on for the last five years. >> broad is a word i haven't heard on cnbc in a while, sam. it took you to -- >> would you like the translation? >> no, no, no, no. we have to go. anyway, thanks. thanks, sam. see you later. >> great to see you. >> my pleasure. i want to correct something we said earlier this morning about 20 minutes ago about apple. apple we said was going to be shareholders would be considering carl icahn's proposal. that's not true. he pulled that proposal weeks ago. we talked about that earlier and mistakenly spoke a few minutes ago. heard from tim cook who's watching at home who pointed out he withdrew that proposal. >> still no christmas card, tim, if you're watching. >> it's in the mail. >> you two got your nice -- >> no that you're bitter. >> bitter party of one. up next, update on viktor yanukovych, his news conference taking place in southern russia. then it's gdp and market reaction. we'll be right back. ...return on investment wall isn't a street... isn't the only return i'm 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. a steel cage: death match of midsize sedans. the volkswagen passat against all comers. turbocharged engines against...engines. best in class rear legroom against other-class legroom. but then we realized. consumers already did that. twice. huh. maybe that's why nobody else showed up. how does one get out of a death cage? 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[ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. welcome back to "squawk box." we are seconds away from the first revision of gdp. rick santelli standing by. we have steve liesman right over here. let's take a quick look at the futures. it's been sort of back and forth all morning. the dow looks like it will open up two points higher. i call all of this virtually unflat. we are five seconds away. rick? the numbers, please. >> five seconds away. our second look at fourth quarter gdp. let's see if there's any sam zell animal spirits here. 2.4. i guess there isn't. >> right on. >> we were originally looking at 3.2. the third quarter settled out at 4.1. 2.4, our second look would be the weakest since first quarter of last year, 1.1. it really does underscore one issue. it's called sustainability. anybody can buy a vowel. it's how long the word goes on that really matters. you look at con summing, 2.6. that's light. you look at the price index, 1.6. that's actually 0.3 heavy. the price index, moving in a way that might be counterintuitive to all the disinflation people, especially the ones screaming across europe. if you look at quarter over quarter, pce core, that's 1.3. that's also a couple of tenths hotter. we have more data to come today. interest rates seem to be settling in the mid-260 area, basically the lowest level since early february. the dollar getting its clock cleaned this morning. the euro is up a handle. the pound is up a handle. the yen is doing better. all things considered it's hard for me to buy into the only reason interest rates are down is any kind of european or geopolitical flight to safety. back to you. >> thank you, rick, for that. i'll head over to steve here. >> i'm going to zero in on the one good number which people have been waiting for. interest investment revised up from 3.8 to 7.3. >> that's big. >> that's okay. that's a pretty big number. the biggest jump was in quipt, up 10.6%. i'm going to get to jim bullard in just a second. rick is right, inflation was revised higher but it's still pretty low. your core market based index is 1. pce 0.8. the price index overall is 1 from 0.7. it's nice to have a whole number there. it's still pretty low. we'll get jim's take on that in just a second. the other thing which i find incredible, if i can get on my soap box for one time time here. >> please. >> government purchases revised down, 5.6% to the negative side. rick, that's not my issue here. you know we disagree on the issue of -- >> you agree. that's a good thing. >> that's not my issue. why can't the government couldn't the what the government is doing? >> why is there ever a revision? >> why do we get revised government jobs numbers? it's one thing if you tell me state and local. if the federal government can't count what the federal government is doing -- they were talking about all this stuff, about using big data for the government data. just get right what you do. call the guy on the phone from the other agency. >> steve -- >> as i understand it, china never revises its gdp. >> that's the other way to do it. i want to get on my soap box on this issue here. let's do one thing right, the government should be able to count the government. it's 20% of the economy. jim, your thoughts on gdp today. does it make you feel worse about the economy revised down friday initial 3.2 to 2.4. >> this still leaves the second half over 3%. >> it does. >> that's, you know, fairly good for this economy, which has not grown at that pace. like i was saying earlier in the day, i'm not sure this would make me any less optimistic about 2014. we've got a good situation ahead of us for this year. there's every reason to think the economy will grow rapidly in 2014, whether the fourth quarter was 2.3 or 2.4. this is a moderately large revision. that's interesting. the investment number is interesting there. a lot of times a mix of this number is important. i didn't catch the inventory adjustment there. >> i'll get to that in a second. >> and also the inflation number, did i get it? year-over-year core inflation ticked up. >> year-over-year core, core pce was 1.3 versus 1.1. >> you didn't have these numbers? >> come on. >> i'll say something like this. >> business inventory was revised down. >> if core inflation moved up some, that's something that the committee has been predicting and been looking for. that's been bottomed out for about nine months. that has ticked up a little bit. that would be consistent with people that have been saying, well, we think inflation will come back toward target. there's a lot to digest here. but that's my off the cuff reaction. >> what about rick's idea, which i like, which is this notion that you can't get sustainability here. you do a good quarter. there's every reason to believe, given how slow the economy is running, that you'd have a couple sustained quarters in a row. you did a nice 4.1, you can only follow it up with a 2.4. >> somebody said about that 4.1, that there was an inventory component to it. i'm not sure how that played out in this revision. we'd like faster growth, obviously, like faster growth, in the late '90s we'd have 4 had the -- 4.1 quarters one right after the other. it's been a long road to recovery in this -- since the financial crisis. >> segue to policy real quickly. we haven't had a chance to talk about one particular issue. 6.5%. that's the threshold for thinking about raising rates. >> yes. >> you're at 6.6. >> yes. >> what do you do with that language at the next meeting? >> that's a great question. we knew when we set up these thresholds that at some point we would pass through one of the thresholds and probably the unemployment one. and that's exactly what's happening. now we'll have to revisit the language. i don't know where the chair is going to come down. >> rick wanted to get in and ask some questions. this is the whole discussion. >> i don't know where the chair will come down. it will be discussed and we'll see what she says. we're looking at it. >> you know that's what i was talking about before. >> when i said you'll have to raise rates next friday because we'll be at 6.5. >> my question is what are you going to do -- >> my question was different. >> really? >> it was about changing the language and getting to a new place. >> obviously they're not going to raise rates next friday. if they get to 6.5 -- >> i love we can have this conversation in front of mr. bullard. >> that's what i was saying earlier. >> it's not the same question. >> oh, god. >> thank you, steve, for being here. thank you. becky? let's get to michelle caruso-cabrera. she's been monitoring outed ukrainian president viktor yanukovych's press conference. >> he's calm but defiant. at one point, a reporter asks him are you ashamed of anything. he said, yes, i am ashamed. i am ashamed i could not maintain stability in ukraine. no reference to any of the stuff that we have seen over the last several days about the amount of wealth he's amassed or where he lived. when i say he's defiant, he says nationalists and fascists have seized power, power has been taken over by radicals. he want the country to return to the terms of the february 21st agreement. that was the agreement that kept him in power. he says he intends to continue to struggle for the future of ukraine. he says he didn't flee. he was forced to leave because of security measures because at one point he was shot at, he says. he says the crisis in ukraine has to do with irresponsible western policy that indulged the protesters, indulge is his word. he says the current parliament is not legitimate. he also just said that he has spoken with vladimir putin by phone since 'riffed in russia and that there is going to be a meeting with him at some date in the future. it hasn't been set. remember, he's in southern russia. in a city two hours east of the ukrainian border in the southern part of russia. he's conducted this news conference entirely in russian as well. he continues to field questions. once again, very calm and yet very defiant. he's also said he has not asked russia for any military intervention on his behalf in ukraine. guys, back to you. >> all right. thanks, michelle. when we return, we go global with mark mobius. 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(vo) so do we, business pro. so do we. go national. go like a pro. mark mobius here to talk about emerging markets. there you can see -- how far back are we going there? only a couple months. there was weakness. we might even call it a rout in the emerging markets. the index has recovered some ground since the big drop mid-january. brazil was a big piece of that puzzle. it's hosting the world cup for soccer, the summer olympics in 2016, brought to you by nbc. could those events pay off in the end? joining us now from rio, squawk master mark mobius from templeton emerging markets group. you're in rio. >> i love brazil. i love the other part of the world as well. >> brazil, that's why you're there. and how should -- how would a normal person play brazil in why would a normal person want to go into brazil and what parts of the economy are most attractive? >> well, first of all, brazil is the largest country in latin america. it's one of the largest countries in the world in terms of population area, in terms of exports, imports, et cetera. you've got to be here. of course you've got to pick where you want to be. of course now with the world cup and the olympics coming along, you want to be in consumer oriented stocks. so the obvious candidates would be companies like ambev, the largest beer producer of soft drinks here in brazil. there are other companies here that are very attractionist for the consumer. so i would say now with the correction we've seen, it's a good time to be in brazil. >> and connect it up, why the consumer? i would figure they have to build a lot of stuff, too, down there for the olympics, don't they? >> yes. but the unemployment rate is very low here. we're looking at unemployment 5% or 6%. of course there's a lot of unhappiness about inflation, but at the same time, there's more and more money in the hands of consumers. then of course with the influx of visitors coming into the world cup and the olympics, that will also boost consumption. they'll be a lot of holidays and that, of course, tends to increase consumption. >> i don't think -- i don't think we got to talk enough about china last time you were on. i think there was more for you to say. when you talk about china, you're almost talking about that entire area of the world because so many other emerging markets are dependent on china. can you give us a future blueprint of what you expect to happen and whether it will be positive or negative for emerging markets? >> well, i think we'll see a lot of bad news coming out of china in terms of companies. some companies going bankrupt, some being merged. the whole trend in china is towards a more market-oriented economy. that means that you'll see failures along the way. the government is very intent on merging and acquisitions in the state-controlled area. of course, there are some companies that just won't make it. i'm not talking about state companies but private companies. but on the other side, we want to be in these private companies because that's where the profits are. the growth in earnings in these nonstate companies is much greater than the state area. >> okay. the overall economy in china is -- i mean, it's steady as she goes? you don't see any major disruptions to the growth story that is a secular one? >> no. i don't see any major problems. they are still going to achieve 7%, maybe if we're pessimistic 6%. but 6%, an economy of that size, second largest economy in the world is tremendous. in dollar terms, it's much greater than the growth they had when they were doing double digit growth rates. >> because of the size now. mark, we have breaking news on citigroup. we're going to try and have you on again as soon as possible. we'll assume that that's positive, the china stuff, for other emerging markets. have fun. don't party too hard. i know what you're like. take it easy. >> thank you. citigroup is adjusting lower its results for fourth quarter and full-year 2013 financial results that it reported back on january 16th, lowering them by an estimated $235 million after tax, $360 million pre-tax as a result of fraud they found in a subsidiary in mexico. let's go to michelle on this. >> it's bantamax at some point they extended 585 million worth of short-term credits to a mexican oil services company. and then they have since discovered that the mexican oil company isn't giving them any more contracts. they've been working with pemex, the mexican oil company. and figuring out what's been happening here. they have receivables outstanding to this company that apparently looks like they may not get paid, hence why they are bringing down the earnings. a re-adjustment of the earnings stated, 235 million. going from 13.9 billion in net income to 13.7 billion in net income for you believe that frd is exclusive to this one account, and michael korbat the ceo says that they have been responding with law enforcement to diskcovery of the misappropriated funds. >> i am going through the math, but i don't think it is a penny a share. >> it is not huge for sure. >> but it is a $150 billion company and 3 billion shares outstanding. >> well, it may ask a broader question which is can mexico get the act together on certain things reference walmart and other controlled companies. >> and he is clearly upset about it, because he said, and this is corbat, there is going to be punishment for these who had this despicable crime, and oo either through the circumvention of the code or the misconduct, and it is going to be a punishment that sends a crystal clear action. >> and he said that about $3 billion in? this is -- imagine a whale. this is a plankton. >> and the receivables, and that is horrendous. >> and jpmorgan has $300 billion for the regulatory. >> but it is always good to be fraud. >> and becky, thank you for the news. >> also as we go to the break, men's warehouse has sent its own letter to joseph a. bank's invitation to conduct due diligence, and we will get to that and citigroup and a lot more when we return. are you stumped by to the today's markets and you want to hear from a billionaire before you put your money to work? well, here's your chance. monday is "ask warren" day. and send your questions to askwarren@cnbc.com. or tweet to #askwarren and we will give you three hours of squawk box with the oracle of omaha. don't miss it. 0 that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and virtually no referrals needed. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp... and provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. to the new york stock exchange with the freshest news, jim, from citigroup, and it is a kun are tri down -- country dow there in south america and there is fraud and do we blame the internal controls at citi or who do we we blame? >> well, they have historically been a troubled company there, and when i looked at the news, i knew that something was wrong because the banks had frozen the credit line, and this is a company because it sounds substantial, because it is involved in the oil industry with pamex and it is not the historical record of credit, and they should have known better. >> are you surprised that corbat has come out as strongly as he has and is this following the jamie dimon and the whale? >> well, it is relevant, and when i used to meet with citigroup, we met and talked about the idea that they should do the annual meeting in mexico city, because it is a huge part of the emerging market, and this is a terrible story, a and maybe they should have known in 2008 that the company went belly up, and these are 12% loans and it is not loan shark, because mexico has a different loan system, but you should have known better corbat. >> well, maybe puerto vallarta. >> well, it is a big company. >> and thank you, jim. we will see you soon. and coming up soon, more from st. louis ceo of the federal reserve, and the ceo of annie's. to a fidelity ira. it gives you a wide range of investment options... and the free help you need to make sure your investments fit your goals -- and what you're really investing for. tap into the full power of your fidelity green line. call today and we'll make it easy to move that old 401(k) to a fidelity rollover ira. i'm spending too much time hiring and not enough time in my kitchen. 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[ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2. at a special site for tv viewers; anbe a name and not a number?tor scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. ...return on investment wall isn't a street... isn't the only return i'm 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. back to our guest host kansas city fed chairman fred bullard. and now after the transcripts of the 2008 meetings came out, was it fair? >> well, no, i don't believe it was. you have to read the minutes and it is longer than tolstoy, but the crisis had been going on for a year and the fed had eased earlier in the year, and those two things in particular. >> thank you, jim. that does it for us and it is time for "squawk on the street." good friday morning and welcome to "squawk on the street. " ""i'm david quintanilla with jim jameser and david faber. and s&p 500 has cracked the all-time high, and the revised gdp came in lower on the science of creeping inflation, and more signs on the way, and in europe, the standoff in crimea is intens
listen up. if you are someone who has one of these cars, you can get these benefits. you do have to ask. gm recalled 1.6 million cars for faulty ignitions. 12 deaths have been linked to the defect. the company is facing investigations from the justice department and two congressional committees. if you take a look at the stock, the reaction came earlier this week when the news first started getting out and the news about the investigations really ramped up. you can see that stock at this point is at 35.05. we'll have more on this story throughout the show, including updates from phil lebeau. what has been interesting is some of the stories that have risen on usa today and some of the people that profiled these accidents. >> who bought a saturn ion? >> it was a long time ago, but there were a lot of them sold. >> 1.6 million ions? >> 1.6 million cars being recalled. >> i don't know how you can say don't put a heavy key ring on your ring with a straight face. seriously, that's your answer to this? >> no. they're recalling and exchanging, but in the meantime. >> and this is 2014. >> yes. 15 years. >> don't use a heavy key ring. that's pretty crazy. >> the idea that a technician knew about this and saw this happening and -- >> really? if your key ving heavy, it can turn the car off and the wheel can lock? that's -- you know, that's an issue that i would have liked to have known about before 2014. another twist in the herbalife saga. the federal trade commission has started a civil investigation into the personal supplements into herbalife, but didn't reveal the nature of the investigation. but that news did hit the stock hard might tell mid day, down as much as 15% after being temporarily halted. it's very strange to -- if it's 68, it goes to 60. this is after all the stories about ackman trying to get the word out and then it just -- it just seems like more than a coincidence, suddenly regulators do decide to look into it, it's bizarre. the cover ended the day just down 7%. a source familiar with the investigation tells cnbc that herbalife was surprised by the investigation, but thought it was the best way to combat allegations about the company's business model and accuses video of bill ackman, the activist investor of $1 billion. they laid out several presentations, accusing herbalife of being a pyramid scheme. so far, ackman has declined to comment about the ftc investigation. he and carl icahn have gone head to head over herbalife when ackman first made his claims, the stock soared. a lot has been going on since then. it was kind of -- we had carl icahn on last week when we were in the city. but it hasn't gone away. i would think that it's just weird. we saw how many different avenues that ackman had taken to get the word out with -- >> even going to china. >> you know, and now here we are. >> although you can imagine that that probably put additional pressure on the agencies to look into this. it doesn't mean necessarily they'll find anything, but the idea is that some of the allegations that have been raised -- >> they say we know exactly what you're trying to do, but you got eight points out of it yesterday. >> it is a big day of economic data. we have a lot on tap to get started at 8:30 a.m. eastern time. jobless claims are out today. they're expectinged to come in at 330,000. retail sales for february are expected to rise by 0.2%. we have import prices out expected to rise by 0.4%. and at 10:00 a.m. eastern time, we get january business inventories. those are expected to rise by 0.3%. also take a look at the markets this morning. yesterday's mixed market, things barely budged. the dow was down by about 1 1 points. s&p was up by just under a point and the nasdaq was up by about 16 points. nasdaq finally snapped a four-day losing streak, but the dow industrials posted their first three-day losing streak since late january. you can see this morning, futures are indicated higher. dow futures up about by 33 points above fair value. s&p futures up by just over 4 points. and oil prices yesterday fell below $98 for the first time since early february. this morning, they've picked up, but only by 5 cents. 98.04 for wti. if you were taking a look at what's been happening with the ten-year note, at noint, it's yielding 2.73%. we get those jobless numbers today that the markets will be watching closely. and the dollar right now is down across the board. dollar/euro, the euro is at 1.3956. the yen is at 102.52. gold prices yesterday settled at a six-month high. it was just over 13.70 for that. right now, it's up to 1,372.5 an ounce. up yesterday about 2% just on the day. china's premier meeting the media last night after the national people's congress session wraps up. eunice yoon has the headlines for it. good day. i'm going to go with good day whenever i have to go as far away as you are. i'm not going even going to attempt to determine -- good day. >> hi. joe, it was a really interesting day at the press conference, the premier basically acknowledged the very tough environment that china is facing saying that the economy is facing severe challenges in 2014. he said that last year the leadership's biggest challenge was the downward pressure that they faced on the economy. and he said that he believed that this year could become even more complicated. he said that the -- at least he hinted that the leadership would be willing to tolerate a slower level of growth. and this is what he told us about the target earlier today. >> many investors believe that china's growth rate this year could be slower and lower than the official rate of 7.5%. what is the slowest rate of growth that you would find acceptable without stimulating the economy? >> translator: there's no denying that we may encounter a more complex situation this year. we set the gdp growth target for this year at about 7.5%. this quote/unquote about shows there is a level of flexible here. you asked me what's the lowest possible gdp growth we can live with thp the this gdp growth needs to support full employment and support people's incomes. we want gdp growth that brings real benefit to our people, helps raise the quality of our efficiency and economic development and helps environmental protection. >> and the chinese premier reaffirmed that one of the major reform areas would be in financial services. he actually said that the country was willing to see some individual defaults and that they were unavoidable. though he did, of course, come in and say that the regulators would be monitoring any potential impact that those defaults could have on the system. now, one other area that he said was going to be important and you'd see a lot of competition would be in the health care industry as well as the old age or nursing home industry. basically, industries that are really important to improve the lives of the people here. one more note that was pretty interesting was that he said that the war on pollution, which he declared at this national people's congress was a war on the -- what he called the inefficient and sustainable growth model and way of life that china has been living. >> all right, eunice. keep us updated on that. every day we're talking about -- and for how long has that been? every day for years. china has -- i don't know, we're all counting on china for the global economy. and, you know, we don't want to put too much pressure on that country. >> your question was the right one. what growth can you live with and it's not just for china. what growth can the rest of the world live with, too. ukraine's prime minister is going to be addressing the united nations general assembly today. he visited president obama at the white house yesterday. the president says the u.s. will stand behind the country's defense of its sovereignty. mean wile, the relations committee voted 14-3 to pass a bill addressing the monetary fund and sanctions on russians and ukrainians as well as aid and loan guarantees for the new government in kiev. the problem is, it has to go to the full vote. even after that, it has to be reconciled with the bill in the house at this point. committee member senator bob corker expects the full senate to take up this issue when they return from recess on march 24th. it's an interesting situation. yes, we stand behind you, but at this point we're going on vacation for a week. we'll talk to the senator coming up at 7:30 a.m. and coming up, the spring head stake, a dip back into the 20s. windy .is for the east coast supposedly snow, although i haven't seen any yet. i am in denial. >> me, too. >> about snow. >> i could hear the wind this morning. >> i know. you know what? i'm just dish worry about the trees. but there's no leaves on them. so anyway, we'll get the national forecast next. and could a small scale attack on the power grid cause a blackout nationally that would last? scary. one of the stories that we're buzzing about in today's executive edge. dan gilbert knows a thing or two about basketball. he also knows a thing or two about business. and he knows a thing or two about warren buffett. the founder of quicken and owner of the cleveland cavaliers joins us tomorrow to talk about his billion dollar bracket offer. and his breakfasting busting bill heir friend will be with him, warren buffett. "squawk box" tips off at 6:00 a.m. eastern time. a.m. eastern . right now, it's time for the executive edge. "the wall street journal" has a story outlining the risks of a national blackout from small scale attacks. the u.s. could suffer a coast to coast blackout if saab tors knocked out just nine of the country's 55,000 electric transmission substations on a scorching summer day. that's ard cording to a previously unreported federal analysis. a study by the federal energy regulatory commission concluded that coordinated attacks on each of the neigh's three separate electric systems could cause the entire power network to collapse. it could mean darkness for weeks if not for months. no federal rules require utility toes provide substations except those at nuclear power stations right now. >> this was the kind of story i wish we wouldn't even run it. >> i thought about that, too. >> it takes a year or so. >> the one in germany they said it took to build and ship here. >>ist took just a week to move it so it could be put in. >> and they still have to talk to people that pulled this off in northern california with guns, they got in, they got out, they tried to close it down. you know, it's just -- i'm not a survivalist. i don't have any water in the basement or anything. but this idea that this orderly society that we live in, it got a little bit shaken after sandy because it took three weeks for power to come back. and not having lights -- you don't have heat, either. so if it was the winter and the hotel rooms go, you go to the super market, there's no batteries left. you already see people hoarding stuff. and this is after two or three weeks. so we have this idea that, you know, we got this society, this crude shelter and clothing. we've got it licked and we don't have to worry about it. i don't know what might happen. >> i thought the same thing, oh, my gosh, why are we publishing this, why are we talking about this? but it's out there. >> do you think they know which -- they'd have to know which nine. >> it may not be that tough to figure out. i mean, they'd have to know which nine, but it might be ones that don't have redundancies or the ones that must move massive amounts of power that you don't have a backup for and don't have a redundancy. >> yeah, well -- >> you said on a scorching summer day because that would be the peak energy used when people are running air-conditioners at full tilt, too. maybe it would have to be perfect conditions. it doesn't make you feel exactly comfortable. >> i don't think -- like my kids, if they tried to recharge their phone and nothing came out of the plug on the wall, they would be like, what's happening here? but no, what's happening? how is this possible? because it's ubiquitous. electricity, we just assume it's cheap, it's abundant and it's always there. but, you know, we take a lot for granted. >> yes, we do. >> get ready. what else? tuna? >> canned goods. beans. >> but what about your electric can opener? >> i don't have an electric can opener. do people have electric can openers any more? >> of course. we have a really crappy one that's so old, a magnet that's supposed to be on the lid, that's no there so the lid falls in and you -- no. >> i have a hand screw one. >> we don't do a whole lot of stuff out of the can. a lot of cans now open by themselves, tomato soup, green beans. >> that's true. another story for you this morning, the big banks may be moving out of the big cities. over the next decade, wall street banks will be cut in half in terms of the proportion of the sports desk that they have in pricey cities like new york and london. they will be shifting those workers to less expensive cities in the developing world. this is according to a projection by consulting firm johnson associates. today about half of the employees who handle back office functions and operations at investment banks work at high cost locates. by the year 2024, 20% of those workers will remain in expensive cities. some firms are started this process. goldman sachs has been adding staff to operations in salt lake city and dallas moving to less pricey cities here in the united states, not just in developing worlds. morgan stanley has a large facility in baltimore and part of this is, as the banks have faced pressures on costs and trying to find ways to come up with cost savings, look, if you're moving to the developing world, it's where the businesses and where the futures are going to be -- >> i mean, there's a lot of -- the environment we're in right now, i'm starting to understand that there's this perception that because companies have done well, that they're not sharing it with workers so we need the government to come in and do this. that's obama's idea here. we're going to make sure they can't horde. we're going to -- and, you know, on face value, there are probably people that say it's a good idea, probably to get a majority of people, so it's an issue that you can use in an election. but it's -- it's really not econ 101. it doesn't make a lot of sense. my idea, and i'm going to propose it to welch when he's here and i'm going send a letter to the president, i've got an idea for full employment that someone sent me yesterday. oh, i know what this is. >> what? >> i heard you laugh when you saw it yesterday. >> lightning boats. >> right. >> i think we need to do this. i do. i think this administration might think, you know what? that's a hell of an idea. do the minimum wage combined with the viking boats. because everybody has got -- you see those boats? >> uh-huh. >> there's rows and rows and rows. and i think we could be at zero unemployment, probably. it just seems to make sense to me that might be something -- >> all right. enough with that. >> you know what? given these idea that's i'm reading on the front page of the "new york times," this is not out of the question for where we are right now. viking boats. malaysian officials, meanwhile -- i don't -- you know, let's see whether sri has heard this. "the wall street journal" is the one reporting this, right? but isn't it six days now? so many weird things are coming out days after the event. what did they know? when did they know it? >> i understand why rolls-royce may not have been running to the press with this information. this is the idea that rolls-royce, this is a crazy story that rolls-royce was still getting updates because it had its engines sending reports back to rolls-royce to tell them a little bit about it. and as a result, it realizes that that flight may have been in the air much longer than originally suspected. maybe four ours longer. >> sri has more details now from kuala lumpur. sri, you give conspiracy people an idea that the tran responder was deliberately turned off and it flew for another four hours. and i don't know, you can have -- i mean, you can put together any type of narrative that you want after that point. and people are immediately going to say -- i think sri, we're having problems with the shot. but i don't know whether you heard that, sri, but you put together someone turning off the tr transponder and flying for an additional four hours, in my mind, find an air strip. i don't know what you do with the people. and then you use the plane for some horrific use later? you give the conspiracy theorists something to chew on and they're going to come up with all kinds of stuff. >> look, joe, that is one of the theories and let's face it, theories have been in abundance across this tragedy and across this crisis now as the way that i would describe it, the missing flight mh-370. but what we got earlier today, earlier this morning was some compelling leads. we had china release some satellite images of what could be floating objects in the south china sea. now, malaysia and vietnam did scramble some planes to go and verify whether that was the case. now we are hearing from the transport minister that those reports were released, those images were released in error. which is absolutely astonishing. and it begs the question, what is going on here in terms of the cooperation between all the -- all the parties and the stakeholders involved here. and then on top of that, we had these reports also, as you quite rightly mentioned, that the plane was still airborne four or five hours after it disappeared off the radar. transport minister said those reports were inaccurate. so we're really back to square one. once between, we have this situation where we almost have a deadly occurrence of leads of information or theories only for them to be refuted. and you could imagine the frustration here was absolutely palpable amongst the press corp.. you can imagine how the families of those passengers are feeling at the moment. if there is anything positive to take out of this, it's that the transport minister said, look, nls until we find any lost vestiges or anything resembling wreckage, we're going to keep looking and we're going to keep expanding the search area. remember, this is one of the biggest challenges, the search area already is huge. this is a monumentally challenging task. from what i gather, just one of the search areas is the size of spain. so you can imagine the effort that has to be put into this. let me tell you this, no effort is being spared. there's now a multi national coalition of navys looking for this plane, including some major super powers, the u.s., japan, china, for example. and yet nothing. despite all the 21st century technology. it really is quite staggering. >> just back up a minute because you're right, it's been so confusing. reports get put out there almost immediately shot down. but just to back this up a little bit, what you just heard from this press conference is those images the chinese satellite images were put out mistakenly by who and i guess does that mean it's definitely not the case that they suspect that that was wreckage? and second of all, this story about rolls-royce, the malaysian government is saying it was not in the air for hours, does that mean the story about rolls-royce is completely untrue? >> well, that's what he said pretty much on the record of the release of the china satellite imagery, yes. it was official. it was released by the -- what i believe to be the equivalent of nasa in china. now, it did quite clearly show what could have been large pieces of wreckage floating objects, between 21 and 24 meters. conceivably, they could have come from a plane. nothing was found. later on today, they did say that those images were released in error. what they were, exactly, wasn't really disclosed. we don't know that. so that's another mystery. but it really calls into question the examinesy of a l s competency of this government and a lot of people are saying look, this has turned out to away botched job. >> do we believe the malaysian authorities at this point? do we believe these reports? >> last night, the gentleman that were the experts said that very unlikely because there would be a huge field of debris and that it was so tightly packed, he basically said there's no way. >> the idea, though, that the story -- >> okay. let me say this. let me say this. to be fair, the closest analogy and parallel that a lot of aviation experts that we've been speaking to is air france that went down over the atlantic in 2009. now, it took up to a week to find the small debris field and it took almost two years to find the main debris field, which included the main body of the aircraft which incidentally had sunk to very deep water levels. now, if that is the case, then our -- it could be a very similar situation. but the flip side to all of this is that the south china sea, the malacca strait, is not the atlantic ocean. it's a smaller mass of water. it's less deep. so bear that in mind. having said that, as i said, these are large expansive tracts of water. >> but the final word, and i'm asking again just to make sure that we should stop repeating this. the final word is that the rolls-royce was receiving updates from the engines of that plane for an additional four hours, the malaysian authorities are saying that is incorrect? >> that's correct. this is what we had on the record from the ceo. >> obviously, there's a lot of difficulties trying to get these shots back. it's changing constantly. but they're saying yes, that is not the case. this is a story that was widely circulated yesterday and rumored this morning. it's in the "wall street journal" that rolls-royce was receiving updates on this. but as we just heard center sri who is in kuala lumpur, malaysian authorities saying no, that is not the case. and i'm not sure he was starting to say the ceo. i don't know if that was the ceo of malaysian airlines. but again, coming from a press conference that broke off in the last ten minutes, the authorities there in malaysia saying that is not the case. we will continue with updates. it seems like this story seems to change almost hourly. also, when we come back, a big morning for economic data, but will those numbers play the markets? and the other chess match that's being played between ukraine and russia. michelle caruso cabrera tells us about moscow's sweetheart debt deal. deal. about business internet? 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>> actually, i'm lower than 3%. i'm looking for more of the same as the economy is stuck in this 2%, 2.5% range throughout all of 2014 carrying into 2015. so even a little more pessimistic than some of those economists looking for 3% growth. >> yeah. because we decided that that was -- that the market has 3% built into its expectations. so you think it would be disappointing if you're right that most people are above you, aren't they? >> i think i am one of the more pessimistic on the street. but given the fact that the fundamentals really haven't changed, it's hard to justify it above 2%, 2.5% gdp forecasts and it would be much easier to talk about 3% or 4% gdp. but given the fact that the consumer is still so constrained and it still counts for the vast majority of our economy, again, it's very hard to justify an above trend gdp forecast. >> what is constraining a consumer? housing has improved. the jobs picture has improved so people are less worried about losing their jobs, probably. there's a lot of things that these people are more optimistic. they do point to things that have changed. why don't you think things have changed? >> well, when you see the employment picture has improved, we have been seeing positive job creation for years now. that is a net deposit for the economy, but the quality of the jobs that we're creating is very minimal. what i mean by that is 40% of the jobs created have been b in the low wage sectors. so we're not seeing that impetus for wage growth right now. and, again, although we have been seeing positive employment, it hasn't been enough. when we've been losing momentum down from a pace of near 200,000 from the start of last year, down to about 175 now, so despite the t fact that we're 12 months further into this proefr, employers recovering at a slower pace than last year. if we want to look at the economy through the glass half full or glass half empty, but i'm seeing a loss of momentum in nearly every sector of the economy. still positive, but it's that second derivative decline or that loss of momentum. >> david, we have heard from many of the people that come on that it's a one off from the weather. they don't really -- most of them don't say what -- don't have lindsay's day on things. what about you? >> well, i agree that it's most likely been the weather and, however, i also agree that at least the hard data hasn't shown the data. i expect we'll get to a 3% growth rate. but we haven't seen it yet. i think the only thing we can point to is that the jobs report is better than expected. once we get into april and we see march data that's not weather impacted, it better be good because this market is priced for a 3% growth rate. >> so is the market, if we get three, then the market is not overpriced? >> no, i don't think so. we need to get it. valuations are more evaluated, credit spreads are exceptionally tight. you're seeing activity in the ipo market that suggests that there was some smart sellers out there rather than buyers. sentiment is rising. so this market needs what's covered. and take it higher if it's going to go higher. i think it is at least in the interim. >> what would you do to address your concerns that these are low wage jobs? would you do the minimum wage? would you do executive action to make certain overtime mandatory for people that aren't getting it now? is that the the way you'd approach it? >> no, actually, i would approach it from the exact opposite way, remove from that regulation and owners restrictions on the private market. i've been talking to a lot of small businesses and right now they say if they are poised to invest grow in terms of taking on that new office space, taking on new employees, but they're hesitate right now because they're not sure of the rules of the game, in terms of taxes, regulation, minimum wage, health care costs, all of which is really restraining that credit cycle from taking hold and growing the employment base. >> we have the white house and one house of congress that the things that they're actually most interested in are probably dill tierus to companies being able to operate better. it's very weird to me right now that all the things -- whether it's the epa, whether it's staying up all night about ways of -- for climate -- whatever it is, it looks like these are things that are actually hurting the possibility of job creation. am i wrong on that, lindsay? >> no. i would certainly agree. we've heard benefits come out and point to washington saying look, we're doing everything we can in terms of monetary policy. we now need fiscal policy to come and get the economy back on track. >> what's that shot behind you? where are you? >> i'm actually over in texas today. >> okay. well, you're in texas. you might have a better grasp of things. anyway, thanks, lindsay. david joy, thank you. we'll see you. >> thanks very much. still to come this morning, ksh -- >> viking boats. >> viking boats. >> have you ever seen how many -- >> a lot of people. >> a lot of people.. >> a lot of work. >> yeah, but they're working. we could get to zero -- that made a lot of sense to me. if obama hears this, seriously. president obama. sorry. when we come back, the eye popping odds of you actually winning the quicken loans billion dollar bracket challenge. we have a mathematics professor to break it all down for us in the next hour. and ukraine and russia fight the war of words, but moscow could be rapping all the way to the bank. the bank. announcer: where can an investor be a name and not a number? 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[ female announcer ] some questions take more than a bank. they take a banker. make a my financial priorities appointment today. because when people talk, great things happen. welcome back, everyone. we have a busy squawk planner for this thursday. jobless claims retail sales and import prices all on the economic calendar. the markets get those reports out at 8:30 a.m. eastern time. on the earnings front, discount retailer dollar general before the opening bell. and ukraine's prime minister is expected to speak to the u.n. general assembly later today. that's your squawk plan her. joe, i'll send it back over to you. >> thanks, becky. turning to the crisis in ukraine, ukraine's prime minister was at the white house meeting with president obama. but we have a story you may not have heard yet about ukraine and russia. a debt deal worth $3 billion. michelle caruso cabrera is here with the details. >> this is about the potential transfer of u.s. and european taxpayer money directly to russia if we give ukraine a bailout. back in december, russia gave a loan to ukraine of $3 billion. this is supposed to be part of a larger package of $15 billion. this was to thank them for turning their back on the eu and instead of aligning themselves with russia. this is back when yanukovych was still in power. here with the deals of the first installment of that loan. it was $3 billion. it was issued in dollars. it was issued on december 24th. the coupon was 5%. that was generous financing. maturity was 2015 and these bonds were governed by the uk law and the uk court. here is the thing. in this particular bond, there's a covenant or a clause that you rarely see. take a look. it says if ukraine's debt to gdp during the duration of this loan rises above 60%, then russia has the right to call the loan and be repaid immediately. so the implications are this. if ukraine gets a loan or a bailout from the west, and it will, there will be lots of hemming and howing and white knuckles, but when all is said and done, we're going to give them the money. $2 billion can theoretically go directly to the russian government. so that's take away number one, which is pretty incredible. and they were pretty incredible to put the clause in. >> and uk law? >> those are my next two points, right? russia issues a u.s. dollar bond in a uk court. why do you issue a bond either in a new york court or in a uk court? >> because you want it upheld. >> exactly, because you want to get paid back, exactly. we see this over and over again. you know this whooper of a debt deal that puerto rico just did? >> yes. >> all this debt had been done under puerto rico law. but this new deal was done under new york law. >> i think rand paul brought this up yesterday because his question on the senate committee that was talking about whether they should go ahead and do this, his question was would anyone in this room actually bayou cranan debt at this point? because it's rated ccc. so if you didn't use your money to do it, why would you be using u.s. taxpayer dollars to do it? >> this is what the loan structure is right now. if they pay it back, the u.s. taxpayers are on the -- >> they go for it. >> it still made it out of that committee with a 14-3 vote in favor of doing it. the question is do you leave them there hanging there otherwise. >> they'll turn to russia. >> right. >> thanks. >> the obesity problem, everybody would be in shape. >> oh, right, right. >> what about the painting parts a different color every day. >> that doesn't have to do with obesity. but where would people sit? it would be wet all the time. >> just thinking of ways to get to zero up employment. >> i'm sure they'll appreciate your suggestions. >> painting park benches different colors. it would be nice. parks are beautiful. when we come back, carl icahn, bill ackman and dan loeb. but one name you may not know, teresa barger. thooel thooel she'll be with us right after this break. later, jack welch joins us for two hours on squawk. you don't want to miss this. nt . ameriprise asked people a simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't 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. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. welcome back, everybody. it is a classic david and goliath story and it's playing out in the largest bank deal in latin america since 2008. cartica is challenging corpbanca. joining us is teresa barger, co-founder and senior managing director of cartica capital. thank you for being here today. >> thank you for having me. i appreciate it. >> tell us about what you first spotted here and why you think this deal is unfair. >> in any business combination there's an opportunity for self-dealing. in this case, the board of corpbanca voted for a sweetheart deal. >> your raising this issue, has it changed things? do you have other shareholders on your side? what has the company done to respond. >> the company has done very little to respond. we like to work behind the scenes collaboratively with our portfolio companies that's what we do. we generally don't go welcome public. when this deal was announced on january 29th in a 6k where we had one page of information about a deal that gave a slew of private benefits to alverio seyah. then of course we had to go to the board of directors because they were the ones with the fiduciary duty to all shareholders just as in the united states. they have a fiduciary duty. the facts would show that something must have gone wrong, to give such a sweetheart deal to alvaro and his family. >> activist investors have had a good run over the last several years. they seemed to gain traction. how does that happen in latin america? >> really all over the emerging markets we think of activism very differently. in our strategy itself, we -- there's a reason we work cooperatively behind the scenes. that is that in the emerging markets 85% of all listed companies are controlled by either a founder or a family or by a state-owned enterprise. only 15% of the shares are widely held. control is not in the market. in addition, the legal systems aren't so great. so why would we get in these bulldog fights like you see in the u.s. or you're seeing in herbalife today? it doesn't make sense for us. we would rather have incentives aligned with the controlling shareholders and work with them so that we can, together, create more value in our company. >> what's the next step with corpbanca? >> for corpbanca, what we'd like is for the board of directors to reconsider this deal or start the process again and reconsider a deal with any of the other three suitors they had as proposed merger partners. >> how likely do you think that is at this point? >> there are a lot of shareholders that we talked to, other minority shareholders that are concerned about the deal. i think it's harder for them to speak out because alvaro does own three newspapers in chile. we need to know we're willing to go all the way. they have to believe that so that it gives them comfort as well. but we think that ultimately the board will realize it needs to do the right thing because it has legal fiduciary duties. >> teresa, thank you very much for joining us. appreciate talking to you today. >> thank you very much. i really appreciate being on. >> good luck. >> thanks. >> when we return, jack welch will be our special guest host, everything from taxes, minimum wage, to disrupting the world of higher education. 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[ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab. call 1-888-280-0149 now. ...return on investment wall isn't a street... isn't the only return i'm 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. gm's recall reaction, the automaker reveals new details of the ignition problem urging drivers to use lighter key rings. we'll have a live report from phil lebeau. the changing housing landscape. bob corker talks to us about the future of the nation's mortgage finance system. >> and jack welch is back. he'll be our special guest host today. "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew's off today. we've been watching the futures this morning. you can see the futures are indicated slightly higher this morning. dow futures are up by about 23 points. we've seen three days in a row of declines for the dow. the nasdaq broke that four-day losing streak, up slightly. this morning it's indicated to open up about nine points above fair value. right now, the s&p futures are up three points. the ten-year note is yielding 2.735%. we have jobless numbers coming in today. as the search continues for missing malaysia airlines flight 370, u.s. investigators are reportedly saying that the flight may have flown on for four hours after reaching its last confirmed location. that's based on data that's automatically sent to rolls-royce who made the engines. the asian authorities are denying the reports saying no engine data was received off the flight went off the radar. again, conflicting stories depending on who you're listening to. both initial jobless claims and retail sales hit at 8:30 eastern time. jobless claims are seen rising from 330,000 from last week where we saw 323,000. economists kmekt retail sale km jcpenney is relaunching its home goods section today. that move reverses what had been the center piece of ousted ceo ron johnson's strategy. the retailer is bringing back more lower priced, no frills brands that johnson ditched in an effort to go upscale. the stock up by 22 cents. it has climbed up over the last month. >> and gm has some recall details. let's get to phil lebeau in chicago. hey, phil. >> this came out last night. here it is. about ten pages long, an amended time line of events from general motors regarding the ignition key recall and the headline is that general motors got its first indication there may be a problem with the ignition keys installing of certain vehicles back in 2001. that was with the preproduction ion model. the dealer technician report in 2003 is noticed in here. that's earlier than 2004 which was the previous date that general motors said they first started to notice stalls in a number of vehicles ultimately leading to the recall of 1.6 million vehicles. in 2003, it's also the first time general motors says there is some suggestion that perhaps the keys and the key chain were too heavy for the ignition which would result in the vehicle stalling. this is the saturn ion in question here. gm's report, it changes the time line for when the company started getting information about the possibility of a problem with ignitions. this coming about a month before a senate committee is expected to investigate or will be investigating exactly what general motors knew and when it knew it. yesterday senator claire mccaskill said we need to find out who dropped the ball and put millions of americans at risk we also need to make sure that general motors and federal regulators are doing everything they can to prevent more tragedies like this, now and in the future. gm is estimating that the cost or analysts are estimating that the cost for general motors once it's all said and done to deal with all of the repairs, the recall, everything, it will go between 100 and 150 million. we should point out these estimates are all over the map. general motors sent out recall notices to owners earlier this week, saying we'll be giving you a recall of the part within the next month. in the meantime, only use the one key that comes with the car, not a heavy key chain. yesterday, transportation secretary anthony fox was on capitol hill and he was asked about what nhtsa is doing as it tries to get more information from general motors. here's what he had to say. >> the outcome, we're doing a review here to see if there was a time -- once we know that, we'll go from there. >> the transportation secretary talking to us yesterday after a budget hearing on capitol hill. take a look at shares of general motors, guys. boy, this has been a rough week, especially if you look at the end of that chart. we're looking at the stock over the last month. the last week has been rough for investors at general motors as we try to figure out exactly how deep does this go in terms of information that gm still needs to provide to the federal government. guys, back to you. >> busy this week, phil. we didn't get to talk enough about the new jersey tesla thing either. we had a big discussion yesterday on that. >> what did you talk about? >> i did see on some of the blog sites, people on the left and right, everybody's mad about it. then i hear just how powerful in some states the dealers are. >> that shouldn't be a surprise. in every single state, think about this, every representative in congress and state legislatures have auto dealers in their district. those are jobs. those auto dealers spend a lot of money in campaigns as well as in lobbying. they're usually the largest lobbying group in every state legislature. >> really? >> among them, yes. >> no kidding. that's amazing. >> we'll probably get on the subject with jack at some point, phil. stay tune. our guest host is jack welch. to intro you, i have to talk about so many things, ge, you're executive chairman of jack welch management. what was the other one. >> winning. winning. >> before he said it. you've had tiger blood for years before -- i don't know any other similarities with charlie sheen. when you come in, i never know what has really got you going. can i just start with your knowledge from clayton and other places about the economy. yesterday we had someone say he was looking for 4% by the end of the year. today we had an economist, she says 2% to 2.5%. nothing's changed. everybody is wondering is it just the weather? have we had data points that show we're doing much better? do you think we're 3% this year. >> i just reviewed six businesses in the last 48 hours, three a day on tuesday and wednesday. and i would say that as of now, this economy hasn't changed in the last 12 months. we have a 2% economy. that little blip in inventory in the third quarter of last year didn't change it. however, there's a lot of optimism. there's a lot of optimism that the commercial and industrial business which has been on its back will come back the rest of the year. mcgraw-hill has a forecast of 4% on commercial and industrial. if that happens, we'll have a 3% to 3.5% economy. right now, in the first quarter, nothing counts. 15 to 17 days have been lost in weather. so you can't tell much from the first quarter. i would say nothing's changed up to this point. a lot of hope. we've had hope before in first quarter and it never came. >> can optimism be self-fulfilling and the ceos do things they haven't been doing? maybe optimism could -- do we need to see it in the underlying economy actually? >> the toughest part you have here now is everyone is on to doing more with less. capacity is being found everywhere. so you don't need p & e. the uncertainty about whether it be wages or this or that, people are reluctant to add people with obamacare. you can have a lot of uncertainty about people doing things. they do think, though, no question, every forecast we had in the last 48 hours in our businesses call for a pickup in the last half of the hour. they all believe it's going to be there. they're seeing new orders, bookings aren't bad. it hasn't changed yet, i'll tell you that. this is a 2% economy. >> what's driving the optimism? is it just that, they're seeing good future bookings? >> for example, we have a buildings business where we erect ready to go warehouses and stuff like that. that business's bookings are up significantly. they're not deliveri ining much to the weather in that type of business but orders are up. this has been the most optimi optimistic second half forecast i've seen in the last four years. this is all happy talk up to now. >> in the past they weren't happy and nothing happened. so that is a difference, so maybe it does mean something. >> and i -- one way or the other, i do think we'll have -- we're more likely to do 3 than 1.5. >> in addition to these people being optimistic without any evidence, some people say the stock market has also reflected that optimism already. so that if it doesn't happen, that it's already ahead of itself. >> the stock market is based on, where else do you go? you are trapped. every individual you know is finally saying i've got to get in. i missed it. i have to get in. >> tapering started and ten-year is down from where it started. >> tapering is a word that's used. it's still expensive, 65 billion. >> fed is still there. >> yes, the fed is still there. when you say taper, they're not there as much but they're still there. taper is a funny word. >> two things have surprised me. that is that the ten-year, even though a lot of times it doesn't matter, it's the rate of -- it doesn't matter the rate of change. they have shifted, the feds. they think it goes to terminal pricing. the other thing is the way you want. i assume it should be much more valuable. that assumption is -- some of these things move to where they should go based on underlying economic. i wonder the ten-year is where it is because things aren't that much better. i worry the yuan has gone down because china isn't where experts thought. >> every expert you have on every morning is saying that. we've seen it also. china is going through a, is this guy going to deal with that $24 trillion bubble. is he going to do it. >> two things i thought were manipulated. now i'm not so sure. >> that's going to change the game there. the impact of china is the one big uncertainty on this whole global economy, whether it's commodities or whatever. >> excuse me, becky. >> i'm sorry. can they make that transition with maybe some rough sledding at the beginning? but eventually over the next year or two or three years? >> they have a better chance than a free market does. i mean, they can at least try to manage it. and this guy seems like he's on a tear to clean this thing up, to do it right. i'm kind of -- i think things aren't bad, though. let's not get off on the wrong track here. we have a 2% economy that we have had in the last 18 months. we had a blip in the third quarter with inventory build. but i'm completely convinced that we haven't changed at all. and happy talks with going on at the end of the year in the fourth quarter and nothing was happening, i'll guarantee you. orders were not coming in. and now we have forecasts that -- >> you're admitting they could be right about the optimism? >> i'm saying there's a chance this could be, 60% at 3% economy and 40% at 1.8 to 2. >> how much would you like to take a billion dollars off of buffe buffett? >> what a great promotion. that was awesome. >> rutgers didn't win yesterday. >> they could win the big -- the next four days are great, too, before the tournament even starts. great stuff happening. >> great stuff the last weekend. >> do you think florida? florida is awesome. >> they're so awesome, the way they handled kentucky last weekend was unbelievable. >> how about that patrick young dude guy? i could move him out of the way easily if i wanted to drive the lane. i'd go right through him? why? because i'd go underneath his legs, between his legs. >> we had boone on. oklahoma state, they're a different team with this guy. did you see them last night? >> no, i didn't see them. >> i have to see if they won. i only watched the first half. they were up 20 or something. more from jack throughout the show. when we come back, tim sloan, cfo of wells fargo will join us live. we'll talk about the plan he has about fannie mae and fraed did i mack. mortgage rates have been inching higher as the fed keeps its current pace of tapering intact. where do they go from here and what's driving loan demand right now? joining us now is tim saloloan, cnbc global council member and cfo of wells fargo. >> i want to talk about what jacks with just discussing. >> sure. >> he's been looking at this economy for the last 18 months or longer and says it's been 2% from everything he's seen in the business he watches. what do you see? where do you think the economy stands right now. >> overall, i think jack's right. the economy is growing at about a 2% rate. if you bifurcate that, it was the government sector that tended to hold things down because of the sequester and tax changes and the like. like jack said, we're optimistic. job growth has been inching up, two years ago it was 174,000 jobs a month. last year it was 186 -- two years ago it was 186 and last year it was 194. you're seeing the wealth effect. if you look at the net worth of u.s. families it's back to where it was in 2007. we need to do surveys of customers with gallup and without. our small business survey is up, the retirement investor survey is up from the fourth quarter. we're optimistic. as jack said, we expect the economy to continue to grow over the year. >> you expect it to be closer to 3% growth economy this year. >> yes, we do. >> seeing the same thing, which is interesting, too. let's talk about mortgages. there's been a lot of concern not just because of weather but also because of areas like california. there's been shakier, too. what have you seen? >> overall home prices continue to rise. year over year they were up 12%, 13%. we think that will moderate a little bit and it will be in the midsingle digits to high single digits. the affordability index tens to be very attractive. we originated $50 billion with the mortgages in the fourth quarter. our expectations are slower this quarter. >> jack, did you want in? >> i'm in total agreement. one of the things we've seen is that retail space isn't growing at all. i mean, warehouses are growing as online stuff is occurring but if you drive up and down streets in florida, mall after mall is closed down. there was a huge excess of retail square footage. >> sure. >> and when you talk to frank blake yesterday, he's not building new stores. >> that's really interesting. >> stores aren't coming in. that whole building sector, this is really a segment by segment economy. if you're in oil and you're serving the bargain, you can't get your stuff up there fast enough. if you're surveying a warehousing business, you're doing pretty well, too. if you're doing retail building, and a lot of stuff happening. >> that is an excellent point. i find myself, i don't go to the malls anymore. i buy online, too. >> getting squeezed. >> when you have dual income families, everybody's working you don't have time to get there either. >> i love jack, where can i cash in my optimism for money? you can't, can you? >> you can buy stocks. >> that's it. >> market is up year over year. it's been an attractive place to have your money. >> wells fargo has been a place to have your money, too. >> we've been up 36% year over year. >> the stock has done incredibly well. you've raised your dividends. was it up by 31%? >> this year you have to ask permission from regulators to raise again. what are your plans? >> we want to increase the dividend again. we're in the process now where we're waiting for the fed to respond to the capital plans that we submitted in january. we're optimistic that our plan will not be objected to. we've been very public in saying that we want to increase the dividend and we want to continue to repurchase more shares. when you look at total capital return, dividend plus share repurchase, we returned $11.4 billion to our shareholders last year, the industry was up about 33% year-over-year. we want to do more this year. >> if you would look at happen with sanctions to ukraine, european banks, could that do anything negative to the overall economy? is that something you worry about? >> i think it's something we should worry about. it's one of the reasons the ten-year has rallied in the last several weeks. >> you think we'd do that, freeze the oligarch's money that's not in russia. >> i hope it doesn't come to that. i'm hopeful they'll work something out. if they do, that will clearly have an impact on european banks and the banking system in general. >> how much exposure do you have with russia and ukraine? >> our international business which is growing and is exciting for us is only about 5% of the total exposure. of large banks in the u.s. we would have the least amount of exposure to nonu.s. companies. the most exposure we'd have would be in the uk and canada. >> what about this new fannie and freddie bill? what would that do to the housing market. >> it's unclear. the specifics aren't out yet. i think we're going in the right direction. we clearly have to change the way mortgages are ultimately held and financed in the u.s. it doesn't make sense long term that we're so dependent on fannie and freddie. >> to have the u.s. backing it? >> the right doesn't like it because it would still have the federal guarantees. it's going nowhere on either side. >> maybe that's the way forward. i think a couple senators had done a good job in trying to fashion something that appeals to both right and left but doesn't make both happy. clearly we've got to make progress. it's now six years since the crash. we're still dependent onfannie and freddie. it will be a combination of a change in fannie and freddie, restarting the securitization market and continuing to allow institutions to hold mortgages on their balance sheet. >> you're in san francisco, right? >> correct. >> do you think pac-12, can they hang with these guys? >> i went to michigan. i'm partial to wolverines. >> and san francisco, i mean, does it seem fair one team has more points than the other? and then wins and rubs it in -- >> i think competition is a good thing, joe. it's good in banking and also in basketball. >> need to look at this. i don't know about pac-12. can't tell. >> thank you for coming in. >> thank you. coming up, bob corker on overhauling the nation's housing finance system. plus, upping the ante. i love having a business excuse to talk about this. we have a mathematics professor breaking down the odds on winning. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. when we come back, senator bob corker talks to us about overhauling the nation's mortgage finance system. more "squawk" right after this. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? 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[ female announcer ] watch live tv anywhere. the x1 entertainment operating system, only from xfinity. welcome back to "squawk box" on cnbc, i'm becky quick along with joe kernen and our guest host today, jack welch. jcpenney relaunching its home goods section. the company is trying to rebuild its own businesses by offering more lower priced items. more in-house brands and more floor space for towels and comforters. the company saw sales of plummet to $1.3 billion from $4.2 billion seven years earlier. initial reaction has been positive. citigroup upgraded the stock on tuesday because it expects the new home section will lift sales. pen they are still 55% below a yearly high that was hit last may. >> who took all of that business? macy's or specialty places. >> a lot of it went to macy's. it wasn't a zero sum game. >> 4 billion to 1 billion. what was it, home -- comforters and stuff. >> towels. >> bed, bath & beyond? >> linens. >> a lot of those things. alibaba is 95% certain to choose new york as a list venue for its public offering. they are no longer considering a listing in hong kong. the company expects to complete the ipo sometime later this year. it's part of a planned exit from the business to be completed in 2015. jack? >> i always liked it. >> he always liked that business. >> shares of fannie mae and freddie mac taking a beating over the past two days all because of the senate banking committee's proposed legislation to wind down mortgage lenders. it builds on a plan set out by senator bob corker from tennessee, who joins us now. you still have circles under your eyes from that pajama party on climate change. did you get pizza? what did you do that night? you did actually tell ghost stories, didn't you? were you there? >> are you kidding me? i've got a day job here i try to do. >> i know you do. >> like passing fannie and freddie reform. >> i asked someone earlier about this, the cfo from wells fargo. the left doesn't like it because they want to keep fran ni and freddie. the right doesn't like it because there's still too much government involvement in the mortgage industry. nobody is happy. he said maybe that's a good thing. maybe it could go somewhere. from what i read, it's probably not going to be done anytime imminently, is it, senator? >> you have to be kidding me. it's the goldilocks deal. it's just about right. i really do think we'll have a banking committee markup, the early part of april. i do think we'll pass this bill out of the senate. i know jeb hens eehenserling ha looking at this, too. we're finally at that point where i think something is going to happen, i really do. i think this may be the biggest thing congress does this year that actually matters. i'm pretty upbeat about it. >> i guess the issue is for a while, people said fannie and freddie are the only game in town and the housing market would just be -- it's so vital to the economy, that if you mess around with it and do the wrong thing -- so there still has to be some type of assistance, people think, which means the government is still a too big to fail type thing. >> not really. >> how do you get out without really not getting out? >> we're in a too big to fail situation with the duelopoly with them having the securitization platform within their institutions. what this bill does is move to a much more modular dynamic system where there has to be 10% private capital in advance of any kind of government guarantee. it's a big step away from where we are. today with $5 trillion in mortgages at these two entities, that would have to be $500 billion in capital. look, i really believe this is going to happen or at least we have a very good chance of making this policy happen. i think it's great for america. certainly moves us away from this private gain, public loss scenario. a lot of the preppies is out there saying this is taking. it's not our job to try to solve a legal issue. they can go to the courts. it's our job to put in place public policy that moves us away from a system that everybody in america knows is inappropriate. i think this is a great day, been a great week, both on ukraine and here. i'm looking forward to getting back from recess and diving into this. >> well, speaking of great weeks, what is your take on the nlib and where do you think they'll come out on this volkswagen problem? >> i don't know, jack. by the way, i should bow. i'm sorry. how are you, sir? >> fine. how are you? >> very good. i don't know what's going to happen. obviously there are two entities that have asked to intervene. it has southern momentum which represented many folks there on the ground, in the plan the that didn't want to be represented. and then national right to work. i'm feel good about it. obviously this is going to drag out for a while. the decision about what ultimately happens relative to expanding at the plant is sort of muddled up, if you will, until things settle out. i think it was a great victory for our community, our state, our citizens and i was very glad to be a big part of that. >> congratulations on speaking out. it was a terrific win. >> yes, sir. >> okay. you know what i want to just ask you quickly about, senator. i want to go back to the slumber party just for a second. you know, secretary kerry is now involved with the ukraine and he was also involved with syria. he's called -- you've got this 30 guys sleeping over while we have like jobs problems. i'm looking at a gallup poll. they ask about 15 things, economy, federal spending. climate change came in 14 out of 15. race relations was the only thing below. we're proposing the higher minimum wages, which would potentially be negative for job creation, some people say. the overtime, we're focusing on this, the epa's meeting to make sure that that doesn't make it easy for some businesses to work. does it seem -- is someone not getting the message for what we need to do, it's an election year or what? >> a lot of the folks who were there at the slumber party are friends, i want to work with them on fanny and freddie, on ukraine legislation and other things. the fact is, if this was a serious issue, harry reid has a majority. he can -- rule 14, they can bring a vote to the floor as soon as we get back. you know, my guess is that the democratic party is very divided on this issue. and there were a group of people who wanted to express themselves. they did it while many of us were sleeping and that's great, but you know, i don't think we're going to see any action on climate change between now and november. >> senator, very quickly, back to ukraine, you brought up the situation there. >> yes. >> that referendum take place on sunday. are you concerned about the senate and the house being in recess for a week before you can really pick back up and run with that legislation? >> i met with prime minister last night for an hour. what we've done over in the senate, becky, as you know, is much, much stronger than the house bill, we appreciate, provided a billion dollars in economic aid and through loan guarantees. but the senate bill has important sanctions, sanctions for the first time for economic extortion, sanctions for corruption. we've never done that before. it also has the imf reforms that i think are very, very important. if we ever needed to focus on the imf, ukraine is the poster child for that. and in addition, it does have those economic assurances. i know somebody -- you all were talking earlier about whether we should be doing that. i think that's sort of a bizarre argument in that we have a country whose economy is cratering. and you know, we want to say, well, we're not going to give them economic aid because one of their creditors is russia. i think we've done the right thing. when we get back, becky, we'll be able to pass something that is very robust. the prime minister last night, knows we are with him. they know they have to sign this imf agreement before anything actually occurs anyway. so i think it's better to do something that's solid and strong than just do something that send a message. >> boehner has said he won't go ahead with the imf reforms. do you think that can make it through committee? >> we'll see. i think it's going to make it out of the senate. we'll see. things can change over the next ten days. i hope they will. thank you. i hear the music. go ahead. >> wait a minute. what are the chances republicans take the senate and if they did and kept the house, would anything really change when you have a president that has veto power? >> absolutely it would change. first of all, the senate would function in an appropriate way which is now does not. no question, i mean -- >> what are the chances -- >> we would be putting forth a very pro-growth agenda. i'll do everything i can to make that happen. i believe it will. we'll just stay on message here. >> all right, senator, thank you. >> appreciate it. thank you. >> if you're thinking of jumping into the quicken loans billion dollar bracket challenge, listen to this next guy. the odds aren't very good if you don't know anything about basketball. but if you do, the odds can be better. you have a better chance of winning powerball. we'll have the mathematician who runs the numbers in just a bit. and a little basketball news as we get ready for march madness. american university punching their ticket to the big dance by beating boston university last night in the patriot league chapship. final school, american 55, boston -- we have other ones we should have done. rutgers is moving on. in their chance for the big east. we'll be right back. ? 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[ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ nfl free agency kicking off with major signings yesterday. the new york jets have agreed to terms with former denver wide receiver eric decker, considered by many of the top free agent in his position. decker set career highs last season with the denver broncos. the four-year veteran has reportedly agreed to a five-year deal worth $36 million. darrelle revis and the new england patriots reaching a one-year agreement worth $12 million. the denver broncos beefed up their defense by signing demarcus ware. he recorded 117 sacks with the cowboys in nine seasons with the team. let's get back to our guest host today, jack welch. executive chairman of the jack welch management institute at strayier university. we had senator corker on, the last thoughts he was talking about is what happens if the republicans take more seats in the senate. do you think that's a likely possibility. >> if you want this economy to take off, you want that the to happen. the republicans have got to just get their act together, have one mission. stop talking about 16 candidates and all this other stuff. the mission is, win the senate. get harry reid's butt out of there. and they've got -- run against harry reid. everybody who casts a vote is casting a vote to get harry reid out thereof. look, there are this many bills that have passed the house that are sitting with the senate for job growth. >> how many, what is that? >> 40. >> 40 of them. >> yes. >> if you look at that, it looks like the republicans are obstructionists. that is what's being sold all the time. if you win 14, why joe said will it make a difference, it will make a huge difference. these bills will now go to the president and the president will have to veto. now we'll see who the real obstructionist to job growth, middle income recoveries, et cetera. we'll see all that clearly. you'll have a chance in '16 then. otherwise you'll be -- >> the stuff with the nlrb, stuff with the overtime, he doesn't need anyone to do the overtime pay. >> look, don't get -- >> he can continue to do all that. >> let him do it. but you get in there and you'll show who's doing what to jobs. right now it's screened. the public doesn't know that harry reid sits on everything. they don't know that. republicans are obstructionists. >> when you say republican -- >> one mission. >> who are you talking about, ted cruz and rand paul or chris christie and -- >> i want to win the senate. i don't want to go there, joe. you're getting trapped. you're getting trapped. you're going with '16. >> that's how they'll play it. >> don't go there. go to alaska and north carolina, go to mark pryor in arkansas. go to each one of those places and win those elections. you have to win six. you have to hold kentucky and you have to hold georgia. you do that, game over. and then '16 is a real battle. but you have to have a clear mission. >> what were you going to say to me that i wouldn't like? >> i'd throw in the minimum wage. >> that's what i have talked about, too. you have obamacare has been the issue for the republicans which has given them their best shot at this. you just saw the florida election this time around, even states like colorado, where he looked like he had a strong chance of being re-elected. now he's facing a challenge from a republican congressman on this issue. >> a good one. >> if you look at what is happening with minimum wage, 58% of americans think minimum wage should happen. when the republicans stand up against it -- >> if you have a mission and your mission is to win the senate, and you clearly -- then everything has to filter through that mission. minimum wage, throw it in. it's an argument anyway, whether it's more jobs or less jobs or whether it helps wages or not. >> right, the cbo says it's a loss of 500,000, a million or zero. >> so throw it in. don't get them get these phony issues. if you have a clear mission, i must win the senate, you don't have ted cruz versus rand paul, versus xyz. >> that's what they're going to use. >> i don't want to play that game. >> another side will have something to say about this. you know the stuff they're going to say. >> sure they are. did you read about the florida election anywhere? i mean, you couldn't find it. the night before the election, cnn, msnbc, your sister network, all they talked about was this potential win. it never came on. >> i don't think they said it. >> they didn't say a word. >> you're in the aac now? why didn't you tell me that? >> i want you to stay on this. win the senate. >> i can't do that. all i can do is report. >> i report, you decide. >> sounds vaguely familiar. >> it's such a clear thing. becky, to your point, throw in those little -- >> don't let her have everything she wants. >> she deserves it. >> okay. >> thank you, jack. jack will be with us for the rest of the show. up next, we'll talk about march madness and bracketology. which has the better odds of happening, a perfect bracket or becoming president? we'll find out right after this. ♪ 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. which will cause me to miss the end of the game. the x1 entertainment operating system lets your watch live tv anywhere. can i watch it in butterfly valley? 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[ female announcer ] watch live tv anywhere. the x1 entertainment operating system, only from xfinity. 262,000 pounds of shocker mania rolled into wichita earlier this week. the kansas and omaha railroad dedicated one of their engines to the wichita state basketball team's historic season. they had a historic last season, too. the engine dubbed wushox made its debut to a crowd of fans. i don't know how far to take these guys this year. they got a lot of guys back from last year, clay anthony and the other guy. rob -- what's his name? ron? >> you've liked shockers for a long time. >> i have. let's talk about this bracket. you have to lead it, though. >> $1 billion. >> andrew is not here. >> $1 billion, that's how much quicken loans and warren buffett is offering to anyone who can guess the perfect march madness bracket. what are your odds? our next guest, jeff bergen, professor of mathematics at depaul university, figured this out. lay this out. how do you figure out the odds for someone picking a perfect bracket. >> the important thing no notice, the numbers kind of astound and intimidate, the mathematics is fairly easy and can be done at any high school in the country. you have to pick 63 games correctly. that's sort of like the odds of flipping a coin and getting heads 63 times in a row. for that you would multiply 63 copies of 2 and that gives you 9.2 quinntillion. if you're just guessing, your chances are 1 in 9.2 quintillion. >> if you know something about basketball. >> right. if you start taking these things into consideration, to me that shrinks it down to about 1 in 128 billion. other people can have number in that ballpark because there is no exact number. i'd say the 1 in 128 billion is probably a pretty good ballpark figure. >> your chance of being struck by lightning is 1 in 30,000. your chance of being elected president is 1 in 10 million. the odds of having identical quadruplets is 1 in 15 million. the chances of buying the mega millions is 1 in 176 million. >> some really horrible things are in there, too, that i don't want to talk about. >> you said you never want to be somebody. >> i never wants to be someone who gets a horrific disease that's 1 in 10 million or something. i'd rather not even try, jeff. >> what's interesting to note about this is, in this 128 billion number, if this quicken loans contest really does get 15 million entries and the people entering really do know something about basketball, there's a 1 in 17,000 chance of an individual getting a perfect bracket after the first round which means if there aren't many upsets in the first round you can expect there to be hundreds and hundreds of perfect brackets after the first round. you can imagine how the media will run with that on saturday morning. they are going to go, hundreds and hundreds of people are perfect after the first round, more than halfway there. if you have a perfect bracket after the first round you still only have a 1 in 1.75 million chance of winning. don't be surprised if there are hundreds of perfect brackets after the first round. no reason not to have fun with it. >> if there is 15 million entrants, what are the odds that quicken loans and berkshire hathaway, i think yahoo! is involved, too, that they'll have to pay out? >> clearly buffett has had people run these numbers, too. the worst case is 1 in 8,500 chance of him having to pay out. to look at it another way, there's a 99.99% chance that we won't have to pay out. since i'm sure he's getting a pretty good dollar to insure against the billion dollars, i think this is a wise investment for him. not surprising. >> depaul is in the big east and you actually did win. >> yes, i woke up this morning and saw they beat georgetown. that was a pleasant surprise. >> good job. we have to go. you don't know what to use. away game record and -- anyway, we have to go. thank you. >> okay. thank you. coming up, what is coming up? a special higher learning interview with the dean of jack welch management institute. at 8:30, jobless claims. tdd# 1-888-628-2419 searching for trade ideas that spark your curiosity tdd# 1-888-628-2419 n take you in many directions. d# 1-888-628-2419 you read this. watch that. tdd# 1-888-628-2419 you look for what's next. tdd# 1-888-628-2419 at schwab, we can help turn inspiration into action tdd# 1-888-628-2419 boost your trading iq with the help of tdd# 1-888-628-2419 our live online workshops tdd# 1-888-628-2419 like identifying market trends. tdd# 1-888-628-2419 now, earn 300 commission-free online trades. call 1-888-628-2419 or go to schwab.com/trading to learn how. tdd# 1-888-628-2419 sharpen your instincts with market insight from schwab tdd# 1-888-628-2419 experts like liz ann sonders and randy frederick. tdd# 1-888-628-2419 get support and talk through your ideas with our tdd# 1-888-628-2419 trading specialists. tdd# 1-888-628-2419 all with no trade minimum. and only $8.95 a trade. d# 1-888-628-2419 open an account and earn 300 commission-free online trades. call 1-888-628-2419 to learn more. tdd# 1-888-628-2419 so you can take charge of your trading. could save you fifteen percent or more on car insurance.s everybody knows that. well, did you know that when a tree falls in the forest and no one's around, it does make a sound? ohhh...ugh. geico. little help here. i need>>that's my geico digital insurance id card - gots all my pertinents on it and such. works for me. turn to the camera. >>ah, actually i think my eyes might ha... next! digital insurance id cards. just a tap away on the geico app. jack's back. >> this economy hasn't changed in the last 12 months, however, there's a lot of optimism. >> jack welch is here, and he's brought some friends. >> lighten your key chain. a new warning from gm as the investigation into a major recall continues. phil lebeau will have the details. plus, we introduce you to the founder of execute to win. as the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. andrew is off today. you don't think that's a coincidence, you said? because you're here. >> jack did not say that. >> i did not say that. >> what did you say? >> i wish he were here so i could talk about the mayor of new york with him. >> he did. >> i did say that. >> you don't think he's ducking you? >> no, i don't think so. i think he's perfectly capable of handling me. >> the futures at this hour are -- the futures at this hour are up 23 points, up 3.35. in studio, sharing some of his thoughts, jack welch, executive chairman -- >> he did not say that. >> we know he's not really ducking you. jack welch management institute at strayier university, we'll hear more from jack in a bit. first, becky has the headlines. the search for the missing malaysia airlines jet is now into its sixth day. the flight may have flown on for as many as four hours going off of radar, based on data transmitted from the jet's engines. apparently rolls-royce had something where data was constantly transmitted back. they made the engines. malaysian officials are saying those reports are not true. we're a half hour away from the latest data on retail sales and jobless claims on what will be a busy morning for economic numbers. we'll get import and export prices as well as business inventories this morning. discount retailer dollar general matched estimates by earning $1.01 a share for the fourth quarter. revenue came in shy of consensus. also shy of forecast, current quarter and earnings guidance. general dollar says the weather has continued into the current quarter and is affecting its bottom line. general motors telling owners they should avoid weighing down their key ring with anything more than the key and the remote. phil lebeau joins us now with more. hello again, phil. >> hey, joe, the significance of the new information from general motors which by the way, a ten-page document filed with the national highway traffic safety administration yesterday, the significance is that general motors may have known about problems with faulty ignitions before 2004. here's the time line according to the new information. in 2001, a service technician for general motors noticed a preproduction saturn ion that had stalling. that was the first indication there may have been a problem. then in 2003, a technician at an unnamed dealership witnessed a stall with a saturn ion. all of this information comes as general motors faces multiple investigations about recalls. the d.o.j. is investigating. you have two congressional hearings, nhtsa, these recalls could end up costing general motors from $100 million to $150 million, a number of estimates out there on wall street. one of the significant costs will be replacing the ignition switches. that's supposed to start next month. the estimated cost will be $2 to $5 per vehicle. you add that up, you'll get somewhere in the range of $8 million to $9 million total cost. delphi is the supplier of the switches under investigation. there will be a slight impact on delphi, not a huge one. take a look at shares of general motors over the last week. analysts say the impact could be up to $150 million. what's interesting, guy, bark clays w -- barclays saying it's not clear what it will take to get this stock moving again. they do not see a catalyst on the horizon for some time. which brings up the question, is this basically the dead money. theoretically gm gets past the doj investigation. you see that stock trading under $35. barclay's saying there's no catalyst out there. >> our guest host is jack welch, executive chairman of the jack welch management institute at strayier university. did you hear what phil just said? a dealer, a guy at one of the dealers noticed the problem. >> noticed it 13 years ago. didn't get run up the flal pole. >> what about new jersey and tesla? i was kidding her yesterday, since dealers provide so many jobs, for so many people, that we need to keep the dealerships around. that was sort of a false narrative that i put up. the way we're trying to handle -- >> that's a model t argument. >> it is. we really shouldn't have -- there should still be record stores instead of -- we should still have photomats. because there were jobs we lost. why would new jersey do this? pure corporate cronyism, is that what you would call it? >> corporate cronyism or -- >> political. >> political cronyism. >> there was a large, successful lobby. >> you should allow tesla to sell direct to people? >> absolutely. he's got a model that's exciting and new and innovative and more efficient. potentially. not that haggling that goes on out there with all that other nonsense. >> that's a sad commentary on the political system then is what you're saying. >> joe, not the first time. >> i know. i likened it to, i guess, ethanol, that lobby or farm bill. i even likened it to some extent the teachers unions. we can't do anything about teachers unions. they're very powerful. >> look what they're doing in these cities. look at new york. imagine shutting down the charters. i mean, come on. it's crazy. these are powerful people. we talked about the coke brothers in all of these speeches. the coke brothers can't touch financially what the teachers union puts in there. >> why should we be optimistic about when you see the -- >> win the senate. >> win the senate? >> win the senate. get off all these other stuff. win the senate. if i can get you focused on that. >> you think i'm a thought leader or something? you think what i say matters? >> you are. >> really? >> all right, jack, i think that's nice of him to put me in that position. if you at this point were trying to start a business in this country -- >> i have. the jack welch management institute. we'll be talking about it. >> let's talk about that. >> we've created jobs. >> you've created jobs. >> it's working. >> do you think once we get our higher education and even k through 12, once we get that in a better place, is the american dream still alive? can it still be possible to come back or are we going to be automated out of the existence. >> no, we're not going to be automated out of existence. the american dream is still alive. you see it on every corner. you'll have a guy on here at 8:30, lee benson who built a company out of nothing in the aircraft maintenance business and has created a software program, playing in the cloud, that will change the way companies evaluate people and tie people to the mission. >> if andrew were here, he might say -- i have read at least 50% of the jobs we have will be, within ten years, robots doing them. >> wall street, not only that, we have the story that the wall street jobs will get moved offshore over the next ten years. they're facing pricing pressures and it doesn't have to pay those jobs in big, expensive cities like in new york. >> i think there's something to that. we had that on the farm 150 years ago. i mean, constant invention is part of our society. it's what makes us great. that's why we have to win the senate. >> do you think they could put together a tax reform bill and send something to the president that he wouldn't veto if it did involve lowering corporate taxes or bringing back some of the money that's offshore? do you think you could do that if the senate and the house passed it? what do you think would happen? >> bringing the money back and getting some tax revenue from it. get 5% or 10%. you can put that towards -- >> we should do it now but we're not. >> tonight. >> but on the other hand, that's not going to change. there's plenty more money around to build. that's not going to change the job situation. the idea that the company is getting money back will all of a sudden have buildings going on. >> what should both houses do then if they were republican? what would be the first three months, what should they try to do if they win. >> put all kinds of jobs bills up. >> the president has jobs bills he wants to put up. you know what they involve. >> we have to put those in front of -- >> infrastructure bills or things that get rid of regulations? >> you could take some money from bringing the money back. tax it at 5%, 8%, whatever, and put that money towards infrastructure and not creating any deficit issue. more from that. you can create jobs right from that, bringing that back at a modest tax bill. and you might get more building. but i don't think you will. >> yes. >> but you can take the tax revenue that you'll get, that you're not getting now. there's no plan to get and put it towards jobs. >> you are just blatantly partisan about the republicans winning the senate. i need to say that right here. you're blatantly partisan. >> i am. >> we are going to have much more with jack throughout the show. as we head to break right now, check out shares of amazon.com. the company has raised the price of its amazon prime program to $99 from $79. amazon said it was previously considering a price increase. yesterday we were talking about $139. when we come back, ridding the world of bad managers. it is one of the challenges that the dean of the jack welch management institute at strayier university is dealing with. we'll speak to her right after this. [ bagpipes play ] make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. 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. ♪ online mba programs are gaining traction and paying off. here's one example. 70% of the students getting their mba at the jack welch management institute have been promoted and/or received a raise. joining us right now, andria backman, dean of the program at strayer. thank you for being here. >> thank you. >> you have a unique mission to rid the world of bad managers. >> yes. >> how do you do that? >> for our students, the most important thing we teach them, learn on monday, apply on tuesday and bring it back on friday. if they're not seeing change immediately inside of their own workplace, the investment isn't worth it for them. the 70% of people you mentioned who are experiencing promotions right away are doing just that. that's why it's happening for them. >> let's talk about the program itself. it's growing rapidly right now. how big is it. >> we have 650 students, expect to have over 800 by the end of the year. >> the online programs i have been amazed. i was a skeptic just a few years ago. i have been amazed by what they can do and why they are so important to people. probably the biggest reason you can have people who are still working who find time to do these programs at night or in between whenever they can get together and do these things. they can do things you'd never be able to do before. >> for our students, one of the things we are experiencing and really expect to have happen is that they're changing the careers they're currently in. they take the learning and apply it in their current careers. most of our students want to have career advancement. they can build networks of other students who are working professionals. our students are 37 for the most part, that's the average age. they're bringing really rich ideas and experiences into the classroom with them. >> one of the challenges, though, with online programs is how do you actually have that personal touch with students? how do you develop the personal program for that. >> it's a really good question. icy challenge for sure. it's a challenge for all of us in this space. we have -- our faculty cares so deeply about our students. on the way in, if you just want to be an expert, there's plenty of places to go and work. the expert end coach. the faculty have a big role in ensuring that students feel like they're a part of a community. the other piece is, jack, nobody else can say they have jack, right? inside their program. but jack does quarterly q & as with our students. i do video conferences, our faculty do video conferences with the students. it is as real as it can be being an online program. >> jack, what kind of questions do you get from the students? >> a lot of them about careers. i'm stuck in this situation, my boss is this and that. what can i do about that situation? i'm not getting enough resources in my area. how would you take this project that i have that's so good and take it forward? all kinds of practical stuff where they need to generate their careers. most of my q & as end up being their careers. mine is career oriented. >> it's not theoretical stuff. it's stuff they're trying to figure out every day. >> the biggest thing andria said is the faculty's job is to please the students. these students are 37 years old on average. they're spending their money and they're mature adults. if these teachers aren't delivering -- i'll let you tell them. >> one of the things i hear jack talk about is differentiation. one of the things we pride ourselves on, if we are going to teach it, we have to practice it. we have a high performing faculty but that didn't come easy. >> when you say you differentiate, how do you do that? >> we have metrics that measure how they're doing in the classroom. >> we pitch them out. a professor has to please -- tell them about the nbs scores. >> this is one of the differentiators for juror for jwmi. we are right now, our student satisfactions scores are in line with companies like amazon and southwest. that is unbelievable. we ask for their feedback and the entire jwmi team comes up with an action plan to change the experience for students every term, all the time. >> higher education is a place where you've not seen change. it's probably one of the last places you'll see change that has come through. it seems like we're reaching a tipping point. you look at undergraduate education, where it's 25,000, sometimes 50,000 or more for a private institution, a year. that's unsustainable. that kind of tuition. that's where i think you see a push back. >> agreed. >> the online component is part of that. i know those massive online courses, that's all part of it. >> i'd like to make a comment about mooks. >> they're the massive online courses. you have a professor who teaches it. you may have 20,000 people who sign up and take the course. >> it is a great experiment that's under way. we're learning a lot from it. the reality is people sign up and never login or never complete. what they intended to do. at the jack welch management institute, our goal is to make sure everybody who wants to complete the program. >> mooks, i don't know what they've really done to move the needle for educating the masses. >> you don't get a grade. employers don't look at them as a real -- something that you've actually completed at the end of it. you're not going to get credit in the real work force. until you get that, it's a problem to lean on these things. >> one thing that fancy mba schools provide is they provide a dignified way for a tune to the go back and get an mb apt and change jobs. we don't want that. we want our employees, they're all employed. our goal is to educate them on how to do their job better and grow in their existing company. that's what's happening. they're getting promoted, getting raises. andrea, you can tell it better than i can. it's an incredible story of, we are not a transition zone, harvard, stanford, et cetera. you never go back to your old job. you get a dignified way to move to another company. >> yes. is there anything that's done in these -- like at a harvard mba where you're with all your student -- with your peers working on a project and interacting in a social way which gives you management skills to handle people. is there anything you can't do like that? >> our students do it using technology instead of face to face. those are provided to them. >> remember carl's piece. i don't have an mba. it seems to me you could impart management principles, especially from you, and it wouldn't have to be in a discreet location. i don't understand that. right? >> it has been a truism that you go to a bar after class and sit around and talk about the case. >> right. >> well, we have working adults with children and everything else. they're going back to their job and practicing it. you might tell them about the blackboards on friday. monday, tuesday, friday. >> we do actually collect from our students, not just lip service but collect the stories. it's called lessons from the field about how they're applying the learning and what they're realizing in their workplaces. we're getting tons of stories from our students. this is affecting me immediately, that's really different in this space. >> that's great. >> andrea, thank you for joining us today. >> thank you very much. >> thanks for coming in. >> you can drunk at home. you don't have to drive. thank you. >> thank you. coming up, jobless claims data. later, a cloud based company disrupting the world of business management. meet the ceo of execute to win. find out if it can help your business. 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headline, february up 0.3, a little better than expect. if you take out autos, still up 0.3. that's good news. take out autos and gas up 0.3. let's mush it all together, the big group, that's up 0.3. 3s are wild. let's quickly look at january revisions. here's where it gets a little sticky. wasn't a good number, dunn 0.4. do you it's down 0.6 are. ex-autos on change, down 0.3. that smushed it all together number which was down 0.3 last month, doubled to down 0.6. you have to balance these two out. jobless claims, dropped from 324,000, 9,000 less at 315,000. that's a slight revision originally released. continuing claims, a different time frame, 2.85 million as expected. import prices for february, they were up 0.9. almost double expectations. if you look at a year-over-year versus that month-over-month, they were down 1.1. up close to 1% month-over-month. take a wider view, down 1.1. here's the kicker. we expected that year-over-year view to be minus but we expected it to be down close to 2%. so the numbers really need to be looked at through the context of revision and by the way, prices month-over-month last month were revised up higher from up 0.1 to 0.4. i'll be interested to hear what steve says. retail sales is a good number, rate of change working in our favor. if you average two month s together, it leaves you a little flat. japanese interest rates supposedly had some action today. amazing what a couple of basis points over there gets people excited. >> rick, stick around. steve, your thoughts. >> you like this revision down with the 324 and then the 315. the yes out there has been we know there's been less firing going on. we don't know how much hiring is going on. maybe it's been muted because of what's been happening with the weather, january and february. the retail sales, rick is exactly right about how to look at it. i would take the two months ago and say i have really no idea what's going on. there was a downward revision in january that was long. we expected a bounce back in february. minus 0.9, plus 0.4 in some of these categories, they come back. it will be until march we can know, it is amazing we forecast the weather much better than we forecast the weather's affect on the economy. there are basic pieces of data about weather that we didn't have and just don't exist. we're trying to figure out, like, if it falls -- if the snow falls we don't know the effect of snow on different populations and demographics and things like that and what kind of thing to effect. ubs see a point increase on sales, an increase in payrolls. ian shepard also said, yes, it's the weather. there it is. the severe weather likely accounts for a good part of the recent weakness but it's not the only factor. the boost from lower energy spending, that was in the summer, is over and that is what ian thought accounted for a decent falcon -- fall consumer spending. economists are throwing that out. i think we're okay here. i think 2% is right. we're probably did, jack, 3.5 in the second half of last year. a little bit of pay back from that plus the weather means we're down to a 1.4, maybe 1.5 in the first quarter. again, like you have been talking about all morning, people are looking for that 3% in the second quarter. i think, joe, you're right. we better get it or the market might react in a negative way. >> the markets have been -- everyone that comes in have been, except for a few people, are still at 2. >> the thinking is some of the head winds have gone away. i know you were questioning a guest earlier, can ukraine be a head wind? i hate to say it like this, it seems so intencenssensitivinsen. it's a flight to quality in the ten-year. the economy might be helping the fed taper with less tumult in the markets. >> the euro just now, 140. 13. just under 140. >> every year i get to spend a little time with a bunch of central bankers in a room. it's a private thing where a couple journalists get to go. we're mostly sworn to secrecy. i think it's not out of bounds for me to say that almost every central banker in this room, a year ago and two years ago, thought either one of two things was going to happen. the euro would fall to parody with the dollar and/or draghi would be forced to bring the euro down to parody the dollar. all of these bright minds have been dead wrong about the euro and why it's strengthening and why it's good for to to be strengthening. >> hey, steve. >> yes, rick. >> i love that story. i don't mean to give you a hard time. >> it's okay. >> about the room. i want you to think about it this way, okay. now, if they were that far off on foreign exchange -- >> right. >> how could they possibly get the little bolts and ball bearings in a machine called the global economy that is just a humongous mouse trap and think they could get any closer on that? come within on steve, you have to acknowledge that. >> i don't disagree, rick. the question becomes whether or not -- >> why do you always seem to be on the side -- i'm not trying to be insulting. but it always seems like when we have these debates you're defending the their activity and i'm trying to kick the tires on the fact that, you know, if they were a laser beam, they couldn't hit the moon from the earth. >> rick, rick, i consider myself a reasonably open-mind person. if you came up with an alternative to the brightest -- >> wait, wait, wait, wait. you're changing it. >> i'm not. >> i'm a reporter. okay? we elect people and they put people in central banks to accomplish the mission. okay? but just because i say and you say that all the things we look at, say they're missing the boat, the argument is who cares, you need a reason to do it better. i don't know that that flies. >> no, rick, i'm not disagreeing with you, that the system is flawed and it's not perfect. >> it's not flawed. the system is fine. the people are flawed. >> no, the people are flawed and humans are flawed. >> as all humans are. >> we haven't found a way to repeal that. >> yes, we have. it's called market aggregate personality dynamics. >> i get that. >> you let a bunch of people come up with the answer. >> right, right. okay. >> why don't we do it more? >> what you're talking about gets down to the old debate that we've had for a very long time, rick, which is how do you get interest rates? let the market set it or do you let some group of guys and women in a building in washington set it? if you let the market set it, what you have to do is find the way. you find a peg and it's gold or some commodity basket and what we found, rick, is that that leads to much worse human outcomes than if we somehow get together and try to shape it based upon forecasts of some of the brighter minds out there, rick. if you had an alternative, rick, if you could find me a peg for the interest rate and cost of money i'd be happy -- >> we have to go gentlemen, rick, steve, thank you. good-bye. >> bye. up next, managing from the cloud. the disrupter who has created a tool that connects employees to culture and management strategy. the founder of execute to win joins us after the break. as we head to that break, check out the future which is have improved. they were up under 20. they're up over 30 on the dow. "squawk box" will be right back. , she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. 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gr granularity a granularity. our next guest created an operating system that aims to re-invent the way we do business. joining us now, lee benson, founder and ceo of etw which stands for execute to win and our guest host, jack welch who is a major investor in the company. when i said that i'm an expert on the cloud and i'm going to grill you and -- that was not true. >> really, i was looking forward to it. being grilled on that. >> in fact, it will be good for me to be here. can you explain to me how this works and then everybody will understand. >> at execute to win, the primary issue we're addressing is this annual ritual of a painful performance evaluation process. almost everybody hates going through that. and along the way a few companies have tried to solve the problem and essentially in solving the problem, all they've done, it would be companies like workday and success factors, is automate what's already a broken process. now companies are spending millions of dollars every single year just throwing that money away on this broken process. >> who are the supervisors that have to write the performance or is it the people that have to go through it? >> what we hear all the time from employees is they think they're knocking it out of the park, achieving what they should be achieving and they find out during the review they've completely missed the mark. that's really the issue. >> is the problem they're just finding out during the review once a year instead of finding out through the course of the year. >> they're just finding out once a year, not having a continuous conversation. what we do at execute to win, we link every single employee right to the strategy of the organization and the desired behaviors in a way that they always know exactly what's expected, exactly where they stand 100% of the time. there's no surprises. in fact, when it's time for the performance appraisal, they know their score before walking in the room. it absolutely works. >> what does technology have to do with that? what does the cloud have to do with that? >> it's ease of access, very easy to deploy, easy to use and interact with it. one of the ways we actually use it, i have a couple different businesses. i've designed this operating system originally to get better results in our existing companies. we have unhads of employees. a way that the employees would interact is they're getting in here on a daily, weekly basis and describing what they're doing to make us measurably better than we were the day before. in the past year we set this goal of uncovering capacity about 25% at one of the businesses and they uncovered, the employees collectively, 200,000 hours of capacity. >> wow. >> this was 100 people we didn't have to hire to handle the additional work coming in because of all the growth. we gave 16% of the pre-tax net profit back to the nonsupervisory employees proportionate to their income for achieving these results. >> how much time do i as an employee have to spend every day as part of analysis? is that a huge workload for them to have to do it every day? >> most of this stuff everybody is doing anyway but they're doing it in a very inefficient fashion. so with this -- >> we're complaining around the water cooler instead of telling you? >> complaining around the water cooler. if you go to front line employees they're spending less than 15 minutes a weak interacting with it. for me, for example, i get a stream i read through and interact with probably 20 minutes a day. ten years ago i couldn't have got that much information in an entire day if i wanted to. >> it sounds almost like twitter for an internal work feed. >> in a way it really is. one example, i used to get thousands of e-mails that i'd sort through. i get less than 1% or 2% of those e-mails because everybody is nested in the right spot within the organization. no more examples, send an e-mail out, copy eight people. all of that is gone. >> i was going to say, we hear about our performance constantly, from twitter or e-mail. in fact, as it comes out of my mouth -- >> we are reading it to constantly see the feedback. it's almost like an online comment box. >> this fits in really well with our last conversation. it's like a corollary so what you're trying to do with nba. you immediately get accountability. >> you know where you stand and you know what you have to do to go forward. it's totally interesting. andrea sends out leadership to companies through skill soft. skill soft distributes those as part of jwmi, lee then takes that, puts that into the system. the hr system is no longer some boring thing. you know the cash flow of cnbc from the ratings you're getting. you'll see all that. and if cnbc is making a ton of dollars -- >> they would never let us know that. i know it's good. it's like under lock and key. >> in an easy revenue system everyone will know the productivity, the cash flow, the everything. >> you must remember, "squawk box" is like almost the "today" show. do you remember how much, just for our next contract? >> highly profitable. >> it's highly profitable, isn't it? can we talk -- let's go to break. see, i was right. this is similar to what you could do at strayer. i do understand this business pretty well. >> i think you do. >> isn't accountability always something? if that's missing, nothing works. >> he's linking a system to the strategy. so that the hr system isn't an annual event. >> you know what's expected of you beforehand. >> exactly, joe. >> it's also important you gave back a lot to the employees who are helping define this, so there's an incentive. >> the compensation has to drive the desire, performance, behaviors, everything we're looking for. >> lee, thank you. >> thank you. thanks for having us. >> what are you, you're backing this a little bit? >> no, no, no. i'm a friend that works with him. >> okay. all right. when we come back, jim cramer live from the new york stock exchange. plus, much more from our guest host, jack welch. "squawk box" will be right back. stock of the day, amazon.com rising in premarket trading after raising the yearly cost of its amazon prime program from $79 to $99. they chickened out. you said you wouldn't do it for $139. >> $99 from $79 seems like a reasonable bump up. $139 didn't especially if you are not using the other things they are offering like streaming video. we have more from our guest host jack welch and the ceo of petsmart talks about man's best friend, the state of the consumer and much more. and muc. . ♪ 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. here in philadelphia you can access a philly cheesesteak anytime, day or night. just like you can access geico anytime, day or night. there is only one way to celebrate this unique similarity. witness the cheesesteak shuffle. ♪ cheesesteak, cheesesteak ♪ ♪ it's the cheesesteak shuffle! huh! ♪ ♪ every day, all day, cheesesteak, cheesesteak! ♪ ♪ every night, all night cheesesteak, cheesesteak! ♪ ♪ 9 a.m. cheesesteak! ♪ 2 p.m. cheesesteak! ♪ 4 a.m. cheesesteak! ♪ any time (ruh!) >>geico. fifteen minutes could save you fifteen percent or more on car insurance. let's get back to our guest host jack welch who started off talking about whether we're really in a 3% economy, whether we have ratcheted up a little bit which everybody's expecting and the market seems to be anticipating. and your view that there's optimism but you haven't seen it on the ground yet at this point. >> not yet, joe. you know, it shows you, though, despite all the regulation that's been layered on this economy whether it be bills from the epa on coal, whether it be the aca or any of these things, this economy is resilient. i mean, we've got a steady growing two plus percent economy. that has the chance. now, in segments it's very strong. oil. autos are good. housing's going to get better. and so we've got -- so if we get the construction industry going in the construction industrial business, we will see some real growth. >> maybe the question isn't why are people optimistic, the question is why isn't it actually working? europe is more under control. but it's more under control than it was. >> clearly. >> suddenly we're not -- >> abe has done something. >> i don't know about china but they're still growing at a pretty good rate. >> we always get 7 1/2. >> right. we also get, you know, the worry about the debt ceiling and that type of gridlock is kind of on the back burner. so, there are some things -- i think there is a reason that people -- the housing market's gotten better. all this accommodation from the fed. there were reasons to be optimistic, so i would look at it and say aren't we doing even better and you highlighted a lot of the reasons why we're not. we're resilient but we're still being held back by self-inflicted wounds. >> most of the policies are just negative for growth. and so if you clear that out of the way, this resilient economy is poised to take off. >> and you think you clear it out of the way in 2014, in november, by -- with the senate. >> i don't want to discuss 2016 and i don't want to be talking about mrs. clinton or i don't want to be talking about ted cruz or rand paul. i want to talk about individual senate races one by one and then i want to make decisions on policies like -- like the minimum wage which we talked about. the minimum wage is not a clear-cut -- >> go ahead and do it. don't let them use it as a wedge issue. >> don't let it be a wedge issue. and then you clear away the brush and you get a real growing economy, the potential for a three plus percent economy and that's going to solve a lot of other problems. excuse me, becky. >> while we have you here, nobody knows management better than you do. gm is in a terrible situation right now. watching what happened what now looks like the last 13 years. a new manager's who's in with the new ceo mary barra, what would you do in that scenario knowing what you know right now? >> she's in the ultimate wonderful position of being clean. come clean with everything. make sure that everything's on the tabl. bring the people in the company together. rally them around one more. i think what ceos have to do out there today is say, we're a growth company. we're going to be a growth company and just keep talking about growing so that everybody that walks into the meeting has an idea how can i grow this company. and she can do this. she's got a fresh slate. the government's sleend it up. i understand that gm -- the new gm may not even be liable for this issue. she's got to clear the brush and say it's a new day. it's a new gm, it's a new day. we're a growth company. they've done a nice job in the brands. they've got new designs. >> i had a little discussion yesterday about greed versus maximizing profit for a corporation. i said they're not the same thing, that you should never be driven by greed. but you should always try to maximize profit. this person came back to me and said that's what gm did trying to maximize profits by not doing the recall earlier, and my point to him was, no, the right thing that they should have done to maximize profit was not get into this situation. not have this mess. are there cases where maximizing -- are there cases where you should not try to maximize profit as a corporation? >> well, you are always trying to do the right thing, so doing the right thing profit is an outcome of doing the right thing. profit's not -- >> and vice versa, probably. >> absolutely. >> and short term versus long-term issues so you always -- >> you have to balance short and long. >> short and long. >> eat while you dream. >> but profits allow you to innovate which allows you to compete which allows you to hire more people and you hire more people and more people have jobs. >> sure. i've seen lots of companies -- i've been hundreds of them in the last four years. the 2009, 2008 recession sucked the fun out of business. >> yeah. >> we've got to get the fun back in business. we got to get the -- a growth mindset. i'm telling you a ceo today who goes to work and doesn't have a growth mindset and isn't talking about growth and reinforcing all that stuff is just missing the boat. >> it's been great having you here today, jack. >> good having you, jack, we'll see you again soon. >> i look forward to it. >> make sure you join us tomorrow. "squawk on the street" is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with simon hobbs, david faber at the new york stock exchange. cramer is off today. not a bad morning taking shape. futures rebounding after a couple of rough days. retail sales came in with a beat. jobless claims a three-month low is the weak winter data starting to thaw. ten-year yield would suggest still some reason to doubt that around 274. stan fisher on the hill today for his vice chair confirmation hearing and europe is relatively mixed today. the roadmap begins with amazon, new prime
billion-dollar bracket offer a little bit later. >> are you playing in this? are we allowed to play? >> yeah, we are allowed to play, i think. >> because i signed up. >> i'm in, baby. >> you're in? >> you can sign up until the 20th. >> if i win the billion, i'm buying a massive evaluation. i'll pay you 100 times. >> i know some people and we can work something out. >> you and me. we'll buy county carrie. i like that. the people of crimea vote to secede from ukraine and join russia. the u.s. warns of sanctions and the markets move higher. the futures this morning at least here right now are indicated up by almost 100 points. s&p futures are indicated up by better than 10 points above fair value. the major european averages at least in the early trading are also indicated higher. the biggest gains in france where the cac is up by .70%. in russia, the benchmark index there is also trading higher up by 2.5%. that may surprise people who have been expecting at least the moscow stocks to sell off. and certainly the ruble to drop a little bit, too. we'll get more right now from the region, ian williams is joining us from crimea. ian? >> reporter: good morning to you. well, the crimean parliament voted a short while ago. in the wake of that vote to formally request moscow to join the russian federation. and that request could be heard as early as this coming friday. so really moscow is likely to fast-track the annexation of this peninsula. now the vote was overwhelming according to the vote committee here, 97% voting in favor of joining russia. we visited some polling stations yesterday where there was a loot of enthusiasm and big crowds, but also a significant minority here did largely boycott the poll being very worried about what the union with russia could bring in villages where they dominate and the polling stations were empty. but here, the news of the vote and the overwhelming vote in favor of russia triggered massive celebrations last night in the central lennon square with big concerts, people driving around waving russian flags. now, of course, the action moves to moscow to see how quickly vladimir putin will respond to this. and, of course, the western capitals, which must now consider whether to impose sanctions as they have threatened. back to you. >> ian, thank you very much. ian williams. we'll get a check on the markets this morning. you saw the dow futures are a tick higher by triple digits at this point. if you look at what's been happening with the ten-year note, 2.671%. you are still looking at a yield below 2.7%. that's where a lot of the panic has played out where you saw yields dropping as bond prices rose on some of these things. gold was much higher last week. the russian stocks today up by better than 2.5% we just saw, but they were down 4% last week. maybe that's part of what's happening. the ruble is a little weaker this morning down about 0.3% against the dollar. we'll look at oil prices quickly, there's the ruble, yeah, okay. so the dollar/ruble is showing a bit of a gain. that's a drop of about .30% for the ruble. take a look at what's been happening with the dollar overall, here's wti crude which is sitting down 22 cents to 98.67. the next that we'll look at is the dollar, i believe. currencies are showing that the dollar is up across the board. euros trading at 138.91. the pound showing the dollar stronger and the dollar/yen at 101.76. and gold prices we talked about yesterday, which we talked about earlier this morning, if you were looking at gold prices last week, there was a steady climb as some concerns around the globe, you can see things barely budging this morning, 1,379.10 and ounce. >> i did forget that i brought in gifts. the traditional st. patrick's day gift, russian rubles. >> let me see. >> so here you go. these are from you. that's 100 ruble. 30 to 1, $3. >> i have some swiss franks, i'll trade you. >> i would rather have the franks. >> i'll give you swiss franks. >> i would rather have baltimore franks. i'm hungry. >> this is $3 and change. >> thank you. >> give it to your kids to show them russian money. >> i have $5 in bitcoin, actually, in my e-mail. i'm very excited. >> have you noticed the worst currencies in the world are still better looking than our money. we have the ugliest money. there you go. my gift to you. >> thank you. i do like the new $100 bills, though. >> go shopping. >> thank you, brian. >> we have some corporate news this morning. this deal was not transacted in either bitcoin nor in rubles. vodafone reaching a deal to buy ono for $10 billion. that deal will boost the british tell con giant. take a look at vodafone shares. this company has a lot of cash on hand now after that transaction earlier this year when it sold half of verizon wireless that it did not own. it is now trying to get some of that money back with some big deals. and chinese ecommerce giant alibaba picks wall street for its ipo ending months of speculation about where the company would go public. the win by new york seen as a loss for other markets, specifically hong kong. alibaba is now in discussion with six banks to underwrite the deal that could be valued at $15 billion. get this, analysts have put a staggering $140 billion valuation on alibaba. and this deal is huge for yahoo! because they own 24% and japan's softbank which controls 37%. >> can we just do a little thing, can we put up shares of yahoo! for a second? if you look at the market capital of yahoo! it is now $37 billion. the valuation we are talking about is $140 billion. most analysts i have seen now close to $153 billion. that means that basically yahoo! was only valued, take alibaba out, it adds a couple billion bucks. i don't understand. >> yahoo! japan and now alibaba. so if you buy yahoo! you're buying asia. you're buying japan and now you're buying the stake in alibaba. >> correct. >> which our viewers probably don't know what alibaba is. i call it the amazon of china but that's incorrect. i want to buy 18 chainsaws made from a chinese manufacturer, whatever it is i met the founder years ago at tavern on the green when that existed in central park. he's like, oh, i have this new company alibaba. i said, this is never going to work. never been more wrong about anything. >> we saw him two weeks ago in new york. and he, well, anyway, the point that i was just going to make is that -- >> you have to imagine that everyone is courting him at this point to try to get a part of the ipo. >> there's six potential underwriters trying to do this crazy thing. they are not claiming anyone is the lead underwriter. we'll see if that happens in truth, but i think the larger question is what this means for yahoo! in that do they sell their shares, how do you actually value yahoo!. and if the price actually makes sense right now, it's an indictment of yahoo! itself. >> a yes for you, what are the investment banking capabilities of the chinese national banks? china construction, i have no idea. >> they can't -- look, the thing -- >> could they do it? >> well now they really can't do it because they are not doing it in china. >> no, but if you were going to underwrite, you want to be a partner in the asian markets. i don't know what their capabilities are. >> i don't know, but part of the issue is, now that hong kong is out of the game, but hong kong took itself out of the game eight months ago when we had this whole conversation. >> but they didn't -- they said they weren't going to do it the way they wanted, so they -- >> alibaba wanted to control the company once it is public. hong kong said no. and that's the end of that. >> if you are going to ask a girl out and you know she's going to say no, what do you tell your friends? i would never go out with her. because you don't want to face the rejection. and part of me wonders that's what china's game is. hong kong, right, oh, we're kind of taking ourselves out. if you got indication you are not going to win anyway, just act like you don't want it. >> no, these guys were going on a date. no, this was like the guy wanted the girl and the girl didn't want the guy. that's what happened here. i'm just telling you what happened here. >> that's not the only china-related story. social media company weibo is offering its shares also in the united states. now weibo often called the twitter of china launched four years ago by a parent company as a microblogging service like twitter. remember, twitter has been blocked in china since 2009. >> and the china news continues this morning. twitter's ceo dick costello is taking a strip to china and described as a personal tour to learn more about china's thriving technology sector. they have 600 million internet users but they banned twitter in 2009. they are not expected to ask chinese authorities to lift the twitter ban. twitter flatly rejected the possibility of opening an office in china any time soon. shares, though, of twitter are on a wild ride over the past year. now 52.84. still above the ipo, but down significantly from that high plus the $75 a share. in other corporate news this morning, honda is recalling nearly 900,000 odyssey minivan that is could catch fire. the automaker says from 2005 to 2010 the odysseys that were built in alabama have a fuel pump part that could crack and cause a fuel leak increasing the risk of fire. the company says it has no reports of fires or injuries related to this problem at this point. honda says the proper repair parts won't be available until the summer because they have so many that they are recalling. in the meantime, it will provide interim parts to customers who will be notified beginning in april. it is not just me. >> it happens, we can have fires in other places, too. >> no fire is related to this, but part of it is if you take it into the car wash, some of the chemicals could be acidic enough to create things, but no problem with me. i never go into the car wash. >> did you see the musk statement from new jersey? they put out one of the great lette letters of all time. >> they feel like they were lied to under false pretenses so they feel like it was a bait and switch. >> this is not new jersey or other states against tesla. tesla is the bad guy. if you are a gm dealer and you look at tesla selling cars like that, you are thinking, why am i buying 150 cars, carrying the inventory risk putting them on my lot, i will just do the tesla model. create a showroom, you order it and test drive it. if you like it n a week it will be drivered to you. i think dealers are terrified, probably rightly so, that the tesla model may work but then what happens to the entire dealer model? it goes away. >> why are we protecting the dealer model exactly? >> i don't want that we are protecting the dealer model. >> and the government is -- >> the states are going along with it in new jersey, texas, arizona. >> new york maybe. why are we protecting the dealers? i'm sure every dealer is -- >> who is protecting the dealers? this is somebody against tesla. nobody is against tesla but the model they are trying to create. >> but the states have to offer licenses to have a dealership. you need to have a license. >> geographic protection. >> right. so the state is essentially protecting the dealership model. >> i understand what you're saying. it is not targeted at tesla but tesla is the only company -- >> people view tesla as the bad guy for selling the electric car. >> meaning that actually selling it directly is the better way, in this case there's going to be some real issues. >> the dealerships happen to have -- >> they imploy thousands and thousands of people. >> but they happen to be major donors to political members in the states. >> i'm saying you understand why the dealer's groups are coming out swinging against tesla. >> so now in new jersey, they are going to have showrooms. you talked about this last week. >> galleries. >> where you can't buy the car. >> and you can't ask on pricing, i believe. >> but can they have an ipad in the corner to go buy it there or do you have to go out of the building like a physical presence? >> you do it like a price is right. you give a number and they say higher or lower and you have to do it within 30 seconds. >> yeah, i think they are taking it out, but there are some questions whether they will keep it. >> this is the alamo for tesla. new jersey is the alamo. if they feel on the legal challenge, every other state is going to come out to be emboldened by the new jersey decision. this is a huge deal in new jersey for tesla. >> i have not seen the entire statement put out, i saw snip-its with it. is it a long let her? >> it is a brilliant letter. if you didn't love ian before this letter, you will realize him after. you realize the politics and realize why there were politics to begin with. the idea of protecting all of these dealerships originally was because there was a view that the big manufacturers were going to come in and try to cut them out. that's what this was all about. so there was actually -- >> he was concerned when they did gm and restructured the entire thing. they went through this and decided which dealers have to stay. >> we had this fight, people forget, with sad you weturn, ac. there was a bit of a debate. >> in any event, it's a story continuing. we'll keep you up-to-date on the latest. in the meantime, it's a big week for janet yellen. she will give her first conference after the two-day fed meeting that kicks off tomorrow. the fed is expected to stay on course for the taper plan. tomorrow the consumer price index will be released. on thursday jobless claims and existing home sales. but the big deal is going to be tuesday and then wednesday when we actually get that fed decision. >> okay. >> that happens on your show. >> yeah, it should be an interesting day on "street signs," 2:00 eastern time. i'm catching flak for not wearing green. >> it's only 6:15. you are going to start flaking now? >> well, i don't get paid extra to come in on "squawk box" so my only pay is to tease "street signs" two or three times. we talked to the director of russian studies at the american enterprise, good morning to you. what a mess it appears to me that we have made, help us just play out what you think is going to happen right now in terms of what putin's next steps are to the extent that he has some, and where do you think we are from the u.s. perspective, do something or not about all of this? >> well, i think putin has kind of two columns of numbers in his head constantly updating, the debit side and the credit side. let me start with the credit side. i think he is trying to restore this influence inside the country because he defined the ukrainian revolution as the conflict between the west and russia only. that was his definition. so when the revolution seceded, he felt that he needed to recover to restore, he felt like he needed to respond. there are three actors he's aiming at, ukraine, of course, which he tries to contain and destabilize. the west, that he tries to prevent from proposing sanctions and intimidate, but most importantly the russian political base that he's bay playing to. so if he feels that crimea is enough, that he's done enough to recover the initiative to staunch the wound to narrow the damage, i think he may pause, at least. if he feels he needs to go further, i think they will start, you know, impercenting into ukraine in the mainland. >> so, if you're obama at this point, i mean, i shouldn't be editorializing, but i feel like we are in a box and i don't know how you get out of the box, do you have a way out of the box? >> well, i think the administration sensibly offers a two-track policy. on the one hand, i think they are going to impose sanctions in conjunction with the eu as early as a few hours from today. but at the same time they constantly offer russia a way out trying to say, okay, this is the sanctions we could impose more severe sanctions, but that the point this is where we'll stop, please let's negotiate. and more importantly, mr. putin, please negotiate with the new government in kiev and see where that takes you. >> is this a real election or do you think the whole thing was a -- >> it's completely invalid. the opposition was not given any voice in the public media. people were intimidated. they had, like, i think seven or eight days to put the referendum together. it's totally bogus. >> totally bogus. and when putin runs around saying this is like kosovo, you say what? >> well, there are all kinds of complicated issues here, but essentially it's under the guns of those unmarked black mask troops, that's a travesty. >> you came back in six months, what would the conversation be? >> the conversation will be that the russian ruble is down, that the russian economy in the stock market is severely down, but putin is holding firm buzz that's the only thing working for him and his regime right now inside the country. >> we'll leave the conversation there. doctor, thank you for joining us this morning. appreciate your perspective. when we come back, march mad sps here. time to fill out the brackets l. any work get done once the games start later this week? brian already filling out the brackets waiting for a billion bucks. i'm hoping he wins. also, guinness making a very controversial decision a day before today's big st. patrick's day celebration. we'll tell you all about it and what they are not doing when "squawk box" returns. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. welcome back. time for the executive edge. big companies have appeared to hand out smaller increases in compensation to their executives in 2013 than in 2012. that's because of grant stock options according to an annual review of regulatory filings. based on the information from 46 company that is filed annual compensation reports by march 11th, the medium increase for a ceo was 1% to 8.64 million. that's right, 1% small increase, but to 8.64 million. that was a slower rate of increase than this group of 46 received for 2012 when the media ceo pay raise rose to 8.53 million. the media compensation for ceos and fortune 500 companies received more in 2012. >> when was the last time you heard a ceo that had to negotiate with his board for his income? >> well, i imagine that's sort of off-the-record type stuff, right? >> it doesn't happen, though. >> the compensation committee, right? >> the compensation committee just sets it. what gets me about this, and maybe i'm happy or sad, i don't know how to feel about this, but when i think of ceo compensation, and we talked about this before, the thing that always gets me in most up stances, take the ceo out, if you are going to hire somebody, there's a conversation about what is the least i can possibly pay you for you to work for me and be incentiveized to stay and do a great job. that's not the conversation you have when you talk about these numbers. >> i think the ceo pay has gone off the charts, kind of like baseball players. robinson cano's best year was babe ruth's 22-year lifetime average, okay? and now every other player says, look at this guy making this, that's what ceos are doing. this guy is making this and i have to make this. it's stupid. >> the market players, there's another team that wants the player, so they are battling for the player. that makes sense to me. >> you create that demand, right? i'm getting lured, you can always find somebody with perceived interest. >> you can. but oftentimes, look at the people who go from being the coo to being the ceo, do you think they were going to get the job with the other company so quickly? i just lost a lot of ceos who watch the show. becky? let's talk about a little controversy on this st. patrick's day. guinness is withdrawing its sponsorship of the parade after two other beer makers did the same because of the parade's refusal to allow gay and lesbians to march. in a statement from the company, guinness has a strong history of supporting diversity and being an advocate for equal for all. we were hopeful that the policy exclusion would be reversed for this year's parade as this is not coming to pass, guinness has withdrawn its participation. we'll continue to work with community leaders to ensure future parades have an inclusionary policy. on friday heineken said it would not participant in the upcoming st. patrick's day parade celebration. gentlemen, this happened as bars started pulling some of the brands from their shelves. >> i want to know, who is running this parade? who decided that the gays and lesbians can't march? or are they asking you to march separate in this? >> irish catholicism runs deeply and that is counter to the church's teachings. i'm sure that's where the push-back lies. obviously, this is an issue that -- >> but does the church run the parade? >> no, but i think it's very heavily catholic organizations that are involved with running it. maybe you can look that up, andrew. >> i think she just asked you to look it up. >> i think she did. >> this is what happens when you ask a question, you have to do work during the commercial break. beg guinness can do what it wants. >> many americans think you have the right to marry no matter who you love and what sex, but it is something contingencies are having trouble catching up with. >> this country has no place for discrimination. guinness wants to do it, i commend them for making the move. if people don't want to buy guinness, that's their choice now. that's their corporate right, good for them. >> i think that was the issue. you're doing this as a way of advertising to get your brand out there when all of a sudden it is hurting your brand and bar openers are pulling you off the shelves, maybe you say, forget it, i don't want to be involved anymore. >> guinness is the face of irish beer. so you look at the stonewall inn in new york, they said we are pulling guinness off the shelf and guinness rightfully so wants to distance them. we are irish-based but we are a beer for everybody. i mean, it's a corporate move, it's a no-brainer. >> not just a corporate move. i do appreciate this. thank you, becky, for suggesting that i do the work because the mayor of boston, not going to participate in the parade. bill de blasio not going to participant in the parade. it appears a lot more people are suggesting they will not be there. >> all right. so, yeah, not surprised to see this because of the feelings in the country. again, a majority of americans feel that you absolutely have to give equal rights. and that's something to push back on all the other organizations. let's talk about the brackets. we mentioned, they have been revealed and it's time to start making your picks. florida, arizona, wichita state and virginia, they are getting the top seeds. those are the number one teams. last year's national champ louisville seeded fourth in the midwest bracket even though a lot of people considered them a possible number one seed. they have played very well with a tough schedule. and one of warren buffett's favorites, creighton getting a three seed in the west region. this could be a trickier time because there are so many people who were surprised by the seedings. and people who thought, look, there's never been a time when you go to pick your brackets, there's never been a time when a 16 beat a number 1 team, but the closer the teams are in terms of how well they play and equally matched they are, the tougher it is to try to pick the brackets. >> what's the odds, like 1 in 6 million to get it totally right? i made my picks. >> i think you're being kind, it is worse than that. >> it is basically impossible. i remember a guy who won a million dollar challenge because he confused george mason with george washington. george mason went to the final four. he picked them thinking they were george washington and he was a truck driver. he still won. florida, florida, right, beats duke in the final. florida is your national champion. >> wow. okay. guys, when we come back, doing business in ireland. it is time for a second look at the emerald isle. first, we'll look at the market reaction to the vote in crimea. believe it or not, stocks are up in moscow. u.s. futures are sharply higher. you are looking at gains close to triple digits from the last time we took a look. heading to break, look at yesterday's winners or losers. this would be friday's. about business internet? ok, how about thirty seconds? at comcast business our internet is fast. up to 5x faster than slow dsl from the phone company. and our phone's better too. sign up for internet and voice and find out how to get four weeks of internet for free. time to make the call. 800-501-6000 comcast business. built for business. they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. gundyes!n group is a go. not just a start up. an upstart. gotta get going. gotta be good. good? 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[ male announcer ] get to a better state. 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. ♪ the people of cry meimea vo to secede from ukraine and i am a little surprised by the reaction. >> i think it's probably like this. buy on the rumor, sell on the news. those people sold on the rumor and are buying on the news. we'll bring up the one week and the one month. they both cover the stocks except the mcx is in rubles and the other is in dollars. here's the micex, a bit of recovery, but i want you to see the six-month that as we see a climb in stocks today, it doesn't make up for the brutal losses for both the micex and the rts. a decline of 4% in the last month. the talk out of russia is that supposedly the reason besides the selling on the news is that the sanctions are unlikely to be very severe as a result, so a little bit of a relief rally there. ruble is slightly weaker. so that would be more intuitive to what we would understand, but generally the whole fear of capital flight we have talked about so much doesn't seem to be as strong today. we are looking for -- the rhetoric has risen dramatically out of russia. we'll try to find the video, i don't know if you heard about the tv anchor who said russia is still the one country that can blow the united states to smithereens. russian television in russian, we have a producer who has seen it but also "the new york times" has the story. all the wire services have stories about it. so the rhetoric is getting quite interesting. still, though, russian markets and the u.s. markets and the gold markets seem pretty relaxed at this point. i think we have to wait to see what putin does next. >> so the idea that there could be a reaction still based on -- >> what i think we don't know yet is does he want to try to take the eastern half of ukraine? will he use the same rational, oh, we need to protect the russians living there in the eastern ukraine. will he go even further? i'm not sure he's decided yet. remember, the way he always acts is he waits. and then he says one thing and does something completely different three days later. i'm not going to an next crimea but then he acted like he was going to annex crimecrimea. don't forget his opinion polls have gone through the roof in russia. huge! >> he's got better ratings than he's had in years at this point. and that's, in part, because the media there is doing things like having this russian reporter in front of the cloud. >> and you talk to russians and people familiar with russian culture, they very much like stability and power. remember, there was so much chaos after the fall of the soviet union, starvation, things were crazy under yeltsin and e theizatithe privatization that happened. they suffered so much instability for so long. >> but his back is against the wall because he can say no to crimea joining russia and look weak or he can agree to annex crimea and tick off the western world. >> i don't know if he sees -- i think he thinks his back is against the wall with many options and choices to use as leverage. >> it seems like two, accept crimea or not. >> we have sanctions. they talk about all the individuals they are going to sanction, but nobody talks about sanctioning putin. so at this point, are we going to sanction all the people involved in the takeover of crimea? there's one guy. >> are we putting a tariff on russian imports? of what, exactly. >> right. and if you go after dollar-linked assets, you really is to get western europe to go along as well. >> you have to imagine all the baltic states are in a frenzy about what happens next. >> right. does he go further? does nato get involved? these are all questions we'll watch play out. >> did you hear john mccain's comments this weekend? masquerading as a country. >> it was an op-ed he wrote in "the new york times" on saturday. he was interviewed by steve sedgwick. >> michelle, thank you. when we come back, is it time to put money to work in ireland? the ceo is responsible for foreign investment on an island. coming up, a check on the european market. green arrows there as michelle pointed out. not a lot of reaction to what happened in crimea over the weekend. if you have moderate to severe rheumatoid arthritis, like me, and you're talking to your rheumatologist about a biologic... this is humira. this is humira helping to relieve my pain. this is humira helping me lay the groundwork. this is humira helping to protect my joints from further damage. doctors have been prescribing humira for ten years. humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. humira is proven to help relieve pain and stop further joint damage in many adults. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. take the next step. talk to your doctor. this is humira at work. ♪ it is safe to say foreign investors are still seeing green in ireland these days, especially after a successful bailout from the eu last year. joining us onset is bailey oleddi. barry, it seems like every time i fill in on the show you are here, and that's fantastic. the irish economy has recovered in an amazing way. in fact, the irish stock market, your dow is up 8% this year, 27% over the past 12 months. how solid is the irish recover in this? >> i think if you go back three years ago when borrowing rates were about 15% last week. we have growth in the economy again, so the story is moving in the right direction. the budget deficits will be met by 2015. but of course like anything, this still has a few hurdles to go and we are trying to make sure that we grow the environment. >> how do you make sure you don't make the same mistakes twice overleveraged, bad lending and credit? >> well, first of all, the banking system has been totally reformed in the cop text of that, so i don't see that happening again, but i do think if you get the proportions right and the economy, 22% of the irish economy was construction. today it is 5% to 6%. in all the economies, 11% to 12%, so there's a huge focus on getting that right. >> and 100% of the irish company was house flippers, with all due respect. >> at that time, but now when you look at it, it's the export economy that's driving economic growth in ireland. and that's driven very much by multinationals. and in particular, u.s. multi-nationals. >> i want to talk to you briefly about taxes. every time you come on we talk about taxes. the quote/unquote race to the bottom, what some people think is going on. are you expecting any kind of reform here in the u.s.? because i assume you have to mop or the what's happening here in the u.s. all the time and then sort of think how you want to calibrate your own taxes. >> so you think back to five, six years ago when we had the same conversation. the various proposals, it takes a long time to get reform, but of course taxes are global for the oecd and the report, et cetera, but regardless of what happens in the global tax environment, tax will remain an area of come pettive advantage because countries must choose like do you lower energy costs, do you have material and low labor costs? your tax is divided up because the sales income tax and corporation tax, countries need to have the flexibility to be able to make that choice. >> sir, what do you think about the u.s. corporate tax? there's been so much talk here and so much push to rye to reform taxes here, is it an advantage to set up taxes the way they are in the united states? >> going back to how you slice up the tax, some of your income tax rates are low by international standards. your corporation tax is high. other countries have taken a different path, but yours seems particularly high from a corporation tax point of view. >> when you see companies like apple, apple famously known for the double irish, what is it called, the double irish, do you know what i'm talking about? the double irish tax, right? it's this way of moving the money around through ireland. how do you feel about that? >> well, i think it's very important, you know, for company that is are in ireland, that they pay tax on the activities and the profits in ireland. of course, companies global structure involved, different locations, and going into a 21 company, in particular, the u.s. has a choice to make moves in global taxation market as well and they have chosen not to do so. >> hmm. >> what's your take on -- i know this is out of left field on russia, crimea, obviously everybody, western europe is watching this as well as we are. there's got to be an irish take on this, because if there's a threat in ukraine, if russia and the u.s. and rern europe sort of continue to butt heads, there's an economic risk to western europe as well? >> so the biggest stat from the irish perspective or the dark cloud could be a flat or decline in the european market. most of them come to service the european market. anything that the russians might do or anybody that might affect the free flow of trade, that could be problematic. but of course you have to look at somebody like germany getting all their energy, a lot of russian money in the u.k., make sure they understand that the markets are up this morning. >> shockingly so, russia is up 2%, although down 20% so far this year. >> sure, but from the overnight results, et cetera, it has grown, nonetheless. >> real pleasure. thank you so much, barry, for joining us. happy st. patrick's day. >> to you and to all your listeners and viewers as well. >> cheers. >> there's also the dutch sandwich, which is another thing that goes on in netherlands, a different tax deal. thank you for being here. an opportunity knocking employers and employees looking for an edge. we'll have that discussion when we come back. and heading to this break, check out the futures this morning. we have green arrows on st. paddy's day. they are color coordinated with the dow opening up 100 points. we are back in a moment. g forwa. 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. 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[ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ welcome back, everybody. the u.s. equity futures are up this morning. this all comes after the vote from crimea to secede. a little bit of a surprising reaction, even the stocks in moscow are up. as michelle caruso-cabrera pointed out earlier this morning, that's largely because there has been such a sell-off over the last week and the last month. we'll see what happens. still waiting for putin's next step. in today's jobs environment, both employers and employees are looking for an edge to obtain success. this morning, "squawk's" very own is here. she does a lot of behind the scenes, bringing us greatest guests. her latest book is out, "opportunity knocking." she calls this the opportunity pyramid. thanks for coming in today. >> thanks for having me. >> we're excited about this book. we want to hear more about it. why did you write it. >> i found over the course of my career at cnbc and the local news, no matter what industry people are successful in, they use the exact seven strategies. we use it every day as well. i thought i'd break it down. >> what is the seven strategies. >> know yourself. you need to know your weaknesses and strengths because if an opportunity comes your way you need to know if you can do it or not. then you want to fortify your knowledge. harold hamm, billionaire, high school education. he actually learned from mentors and took selective courses. then you go to the next level which is looking at the execution and the details. and then you have your passion. because passion really gets you through the highs and lows. so i talked to steve case about that. as we all know, he had the apex of success, went back down, and he's back up. then you're looking at staying the course, because during this time, you really need to keep your focus on the details. finally you have execution. where you really have to fine tune, make sure you stick with your strategy and that's where i talked to david rubenstein from carlisle about. finally, world domination. which i know is a heavy word but we all want to be the best -- >> that's your last one? >> and by the way, the last thing, destroy everybody. >> exactly. >> use the other six. >> exactly. be the best that you can be. and if you are achieving the success and create something, why would you want to pass the baton off to somebody else so they become more successful based on what you created. >> you made atonight opportunity pyramid, not a rectangle, indicating things at one point will be more difficult than others. >> exactly. >> do you see leaders, no matter how great he or she may be fall off with every step? it gets harder and harder and harder. >> the basis of it, there are two key things. honesty. you can't kid yourself. you have to have that culture. all good leaders have corporate culture where it fosters the innovation, they support people, give folks the ownership they need in order to be successful. a lot of times when we see the failures, the culture crumbles and it comes from the top. >> what do you think drives all the people on your list? they have to be introspective. i wouldn't argue everybody is so introspective. what do you think it is that's propelling all of this? the passion piece of it? >> it's the compelling vision. they really truly believe in what they're doing. like when you look at alan mulally of ford, he took over ford when it was horrendous. he had this epiphany when he saw an ad from 1927 saying "opening the highways to all mankind." every decision they make at ford goes back to that ad. i think it's because they truly believe in what they're doing. it's that passion that enables them to get through the highs and the lows. >> the book is called opportunity knock, lesson from business leaders. on the wall, you see a lot of people who are featured leaders in that book. we'll be talking about the book this week. >> thanks a lot. >> i don't know when she finds time to write. you get up at half past dark. >> she's been writing books for years. >> coming up, the u.s. markets are indicated higher today. have the bulls put the crisis in ukraine on the back burner? plus, looking ahead to the fed. janet yellen's first news conference. much more with gary ckaminsky ad his irish green tie. >> and doughnuts. optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year 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 peace of mind is important when so we provide it services you bucan rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next. 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. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin. joe is off today. brian sullivan is joining us for the morning. gary kominsky is here with us this morning. >> do you want one? can we hand them around. >> i already had a couple. this is tradition. when i come to visit "squawk box" which is 20 years plus, i always get the hot, early morning -- >> you go all green. which one did you have? >> the mint oreo one which we have in the make-up room. >> my guess is you'll try all of them before we're done, andrew. >> go for it. he said he wouldn't be tempted. come on. >> i have to have something green today. >> wee have a lot to talk about. markets will be interesting as the investors are following the situation in ukraine and crimea. futures have been indicated sharply higher this morning. right now the dow futures up are 85 points above fair value, s&p is up over 9 points. these levels are off the highs of the morning. at one point we were looking at the dow futures up 99 points above fair value. in the meantime, take a look at what's been happening with the ten-year note. yield at 2.674%. in our headlines this morning, the number of countries involved in the search for that missing malaysia airlines flight has expanded. malaysian officials say there are 26 countries involved. part of that is because the flight could have gone over 11 other countries that we just learned about this weekend. all of those countries now involved as well. in the meantime, china is calling on malaysia to do more to find that jet that disappeared over a week ago with 239 people on board. about two-thirds of the passengers on the flight were from china. investors will have several economic reports to consider today as the new trading week begins. at 9:15 eastern time, the federal reserve will issue february reports on industrial production and capacitation utilization. government offices will be closed today because of 6 inches of snow overnight in washington, d.c. that's right. 6 inches of snow. the last few times this happened, scheduled economic reports did come out but later than expected. and at 10:00 eastern time we'll be getting the latest reading on home building sentiment from the national association of home builders. one stock we'll be watching is the internet giant cena. its twitter-like service has filed for an initial public offering seeking to raise $500 million. it has another company try ing to take that. alibaba owns a stake in weibo. let's go now to steve sedgwick who joins us from kiev, ukraine, with a special guest. steve? >> reporter: thank you very much, indeed. we're joined by, potentially the next president of the ukraine. thank you very much indeed for joining us. one of your other names, people call you the ceo of the revolution from the events as well. what happens next in this crisis? >> first of all, thank you very much, steve, for inviting me here. today one of the most crucial, one of the most important days in our history. just yesterday the russia finished so-called referendum which is really the smoke screen for the russian aggression of crimea. now we are expecting quite busy days with the russian diplomatic activity trying to settle the fact of aggression. we're waiting in a very few hours the first initiative and russia proposed that we take into account this referendum and start a negotiation. the process for limited of our territorial integrity and sovereignty of my country, which is not acceptable. >> even mr. kerry said in his press conference after the lavrov talks on friday, russia has legitimate interest in crime kra. is crimea lost to the ukraine? >> absolutely, no. i think we have quite a big mistake of russia. because of that, russia can be in the complete isolation in the world. because no one country in the world can accept the results of this false referendum, this fake. no one country in the world can cooperate with the future crimea in the frail work. crimea is ukrainian territory. ukraine will fight for the territorial integrity. we do our best to return crimea back. >> a whole host of senior u.s. senators over the weekend, they promised bipartisan support for the ukraine as well. but what does that mean meaningfully? are you expecting military support from the united states and other allies. >> very good question, steven. first of all, we are peacekeepers. we try to do our best to undertake the diplomatic efforts to settle this conflict. we have at our disposal, lots of instruments, starting from the personal sanction, their efforts, the economic embargo and different others. but you know ukraine today declared the mobilization of the ukrainian army and national guard. we are -- i think if the operation of russian forces go further and if it goes by the outside of the crimea, the danger of the real war is very high. >> very briefly, you are ahead in the poll which is are predicting the next presidency of this country on may 25th. just want to confirm, you are running and you think you will be the next president of the country. >> that will be public within the next week. what i want to stress once again, this is very important, we have an election on the 25th of may. this is crucially important. because the only democratic way to solve all the problem is the election, to give the people the right to elect their own leaders. and that, i think we do our best and the position of the united states, position of european union, position of ukrainian people is to have the selection. and probably the democratic -- will present one single candidate, probably it ill with be me. >> than you very much indeed for joining us live on u.s. "squawk box." this is potentially the next president of the ukraine. guys, i hand it back to you. >> steve sedgwick, thank you very much. we'll continue talking about this. joining us is paul sheared. and our guest host, gary kaminski. welcome to the table. >> becky. >> i'd like to start off talking about what you think the market's reaction is indicating. i i was surprised to see such a positive reaction. i guess we knew part of this was going to happen. but still, surprised to see the markets. >> i guess, becky, as i've spent now, we were saying before i came on air, a year back in the business, so to speak. and with investors, with clients. you know, you start to appreciate the lesson of the last 13 or 14 years has been for better or worse, that these events do have an impact on the short term, day to day, maybe week to week. i'm not that surprised to see the referendum take place and that the s&p hasn't bounced back because a lot of this stuff is just factored in in terms of the longer term thinking. there's always going to be these type of situations. and so i'm not that surprised. that probably has to do with the fact that i am much more of a longer term thinker than i was, say, in the past. >> we could also look at this and say, as michelle caruso-cabrera pointed out earlier this morning, we did see a big sell-off last week and even over the last month in russian stocks in particular, we could see a reaction when we wait for putin's next move. >> the second thing is that people that are smarter than i am, that pay very close attention to the fed -- >> there are a lot of people smarter than you. >> thank you, andrew. >> there's a belief that anything happens to the state to create lack of stability in the geopolitics around the world gives yellen an additional ability to continue easy money policy. you may not like it. >> interesting. >> it may not smell good but there's a huge belief out there that anything that's bad is good for the u.s. capital markets because the easy money policy stays around longer. yes, brian, i see you snickering over there. >> i'm not snickering. i'm wondering if the fed, the ecb, the bank of japan, if the pboc in china have the economic firepower to counter what could be a serious problem in ukraine and russia. do they? because we've talked for years about how the fed's influence with everyone new program has waned. >> the fed has shown the ability since 2008 to be able to counter anything with easy money. what you're saying is, what if we get into some full-fledge d hostile war-like situation. will the fed be able to counting that? i certainly don't have the answer to it. investors believe that the fed is there, the most powerful institution in the world right now, still. more powerful than anything else. and, therefore, this gives them a pass, a card to have the ability. >> let me frame is more bluntly. >> yes. >> does mario draghi have the ability to counter the economic effect of some or all of russian natural gas, going through ukraine on the soyuz or brotherhood pipelines being cut off? >> i have no idea. i cannot answer that question. >> that's what the market seems to be discounting. >> what do you think? >> i think asking monetary policy to deal with a major economic fallout from geopolitical risk would be perhaps a bridge too far. central banks and emergency situations can pump liquidity into the system. we saw that back in 2008. there are limits to what monetary policy could do. >> what's the downside risk you see right now if that's the case? >> i think obviously, you know, it's a very hot geopolitical situation in the crimea, in the ukraine. if that went in an ugly direction, that would trigger downside risk to economic activity. >> you don't expect yellen to weigh in on this on wednesday? you think she's going to basically say stay the course? >> i think the fed would really steer clear of this issue. if you look at the way the fed thinks about policy, it's very dough mystically focused. they'll take note of it out of their field of vision but i don't think this will be a driving factor. >> the better jobs report we got, does that give janet yellen cover to say we're continuing to draw down? what do you think she does in terms of the taper? >> another 10 billion in the taper, i think that's very much in the cards. i think it would take a lot to knock of fed off that course in a moment. this is a very historic meeting. janet yellen takes over as fed chair. we haven't seen this kind of continuity before. i think the big focus willing on the forward guidance. >> right. >> the fed signaled she clearly what they put in in that september meeting, that the unemployment rate went below 6.5%. it's clearly a place marker. they indicated they wanted to do something there. that's going to be the focus. it does give this first meeting with janet yellen a chance to put her initial stamp on the fed. >> i think she'll feel victorious. if you think about the end of qe 1 and qe 2 and the s&p reaction to the ultimate qe 3 as it's been called, the fact that the s&p up until a couple of days ago was back trading at all-time highs and capital markets are flowing absolutely spectacularly around this country, i think she'll feel victorious that the taper message was not interpreted the way it was interpreted last summer by many this time around. >> you know, we haven't talked about inflation at all. i know you had a boring topic, right? monday morning, st. patrick's day. oh, gosh, inflation. coffee is up 80% year to date, wheat, sugar, meat, milk, you name it, it's higher. the fed wants a little inflation. are they going to get more than they wished for? >> i don't think so. you're right to point out that inflation, you know, is kind of the wild card here. we've seen lower readings all around the world. i think a little bit of inflation, pushing up the headline numbers back up to the mid-1s or closer to 2% would be welcome under the current conditions. >> paul, thank you very much for joining us today. >> pleasure. >> great seeing you. gary will be with us for the rest of the program. coming up, the minimum wage debate, the housing reform and u.s./russia relations. and what better way to st. paddy's day than with irish whiskey from bushmills. i always drink it on the show. that's later, right here on "squawk box." welcome back to "squawk box," everyone. the futures have been indicated higher. the dow futures are up 83, s&p up by 9 and the nasdaq up by 23. >> let's talk politics. political pundits weighing in on the possible outcome of the midterm election. what happens if the senate does in fact fall to the republicans. joining us now is harold ford jr., managing director at morgan stanley. good morning to you. >> andrew, good morning. >> i want to read to you, if i could, maureen dowd over the weekend, i don't quote her often but in this case i'm going to. she says hill democrats are sieging at obama. obama's approval ratings will shape the midterms and some hill observers compare the crumpling numbers to an illness. the president didn't do the basic things to take care of himself, now he's gone terminal and contagious. do you agree with that? >> i think probably that comment is an overreaction a bit. i see at the core of it, the basis of it, you have a special election that took place where the obamacare act was essential. republicans in the past have overreached ted cruz where they called for a repeal of the shutdown. others talked about ways to fix it and talked about jobs in the economy. the president has created his own political organization. that political organization is not benefiting house democrats and democrats on the front line in senate races. i think you'll see a shift, the president will have to get more involved in raising money for democrats. i also happen to believe, i'm a contrarian here. >> you think he's going to help them raise money. is that a good thing in this environment? >> i think any democrat, any politician would take money from even folks they think may hurt them politically. they would take resources from the president to defend his obamacare, to defend other things. the primary thing the democrats will be looking for if i were them, would be to find ways to fix, substantively fix parts of the obamacare plan that aren't working. obamacare will be central, will be key to this midterm election as well as the jobs and for that matter economy picture. >> harold, good morning. it's gary. >> good to see you, sir. >> do you sit next to each other. >> becky asked me when i worked in the building, do i miss being here? of course i do. the best thing about the last year working at morgan stanley is to travel the country and the world with this man. i will tell you, without getting too sentimental, if all politicians thought the way harold did about making compromise and making things happen, this country would be in a hell of a lot better place. >> you're very kind, sir. >> the one of the things our clients have told me in the last couple weeks, elections and politics has not focused on investing for the last 12 to 14 months. that's been a good thing, that we volcano had the to worry about washington. there's a bit of a concern we may have to start to worry about that again as we get closer to november. is that something you should start to put on the front of the radar, concerns about nice market environments we've had here? >> the fact that the certainty out of washington has been that they've not done anything has probably been a big positive. i've learned more from you listening and watching clients around the globe as well as anyone at morgan stanley. i would add this caveat to it. i think election years give an opportunity for something meaningful to be done. if democrats feel increased pressure to fix parts of the obamacare plan to make it easier for small and medium size businesses to plan for the future, i would have to think that would be helpful to the market. if they feel pressure to give in to democrats on either the minimum wage in exchange for a clear policy and more definitive policy around energy policy, i would have to think all of that would be additive in many ways for the economy and the markets. it's too early to make the predictions. >> in september, you had a good call on this. are you optimistic that's going to happen. >> i'm more optimistic today that the president will feel pressure around the health care plan and we'll have to find ways to offer material fixes, particularly for those senate democrats. increasingly we'll see colorado and michigan emerging as races as well. whenever politics and politicians feel pressure to negotiate, to compromise, find consensus, i think the markets and every day consumers win. we're getting closer to that kind of moment. >> we have a good conversation, so much to talk about. i'd love to have you back to continue this conversation. >> i didn't get a chance to say good morning to brian either. >> when's our dinner? we keep start talking about. i know you have a relatively new baby. >> she's 12 weeks. when she says i can go out, i'll go out. >> see you in three years. a controversial commercial airing on russian television. you'll want to see this. more "squawk," coming up. 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. ♪ how much money do you think you'll need when you retire? then we gave each person a ribbon to show how many years that amount might last. i was trying to, like, pull it a little further. [ woman ] got me to 70 years old. i'm going to have to rethink this thing. it's hard to imagine how much we'll need for a retirement that could last 30 years or more. so maybe we need to approach things differently, if we want to be ready for a longer retirement. ♪ if we want to be ready for a longer retirement. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. they're the days to take care of business.. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. welcome back, everybody. michelle caruso-cabrera is back with controversial video that aired in russia earlier today. >> let's show it to everybody right now. it's been sent down, the feeds coming from russia. this is from russian state television, russian one. the show is called "news of the week." look behind him. that is a mushroom cloud. he is quoted as saying russia is the only country in the world, that, quote, is really able to turn the usa into radioactive ashes. he's known for his vitriolic die tribe s -- diatribes against united states. >> the question is, this nut job who's out there on television or is this kind of piping into something that is more main line than we realize among the russians. >> i think he's gotten the okay to ferment nationalistic fervor. remember, putin's ratings have gone up dramatically in russia as a result of what he's done in ukraine. >> who would you compare him to in the united states? >> he would have the power of some very famous people at 8:00 at night. >> let's leave it right there. >> different side of the -- you know. >> he has a following. >> yes. what he says is condoned. you listen to it for clues. >> as to what the kremlin is thinking. >> exactly. >> the russian media is generally state sponsored. are we able to say he's not condoned by the kremlin. just being on the air doesn't that make him condoned by the kremlin? >> they can say he's not sanctioned but he is operating at their discretion. >> i don't think everybody said he wasn't sanctioned. >> he's maybe not a mouth piece but he's certainly -- he's not being pulled off tv today because of that. >> right. >> there you go. >> that's my whole point, yes. >> wow. >> that's concerning. what does the u.s. do to respond and how do we do this? >> we won't be running mushroom clouds on cnbc. >> when "squawk box" returns, a report on the missing malaysia airlines flight that gets more mysterious by the day. and the fallout from the gm recall. why is could get worse before it gets better. more "squawk" right after this. ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. honda recalled nearly 900,000 odyssey mini vans. cars affected are from the 2005 to 2010 model years. they have a fuel pump that could crack and cause a fuel leak. honda says there have been no reports of fires or injuries related to the issue. also the board of retailers, sears approving the spinoff of the company's land's end clothing business. the separation will occur on april 4th. land's end will use the ticker symbol le. and mr. peabody and sherman top the weekend box office. 300 rise of an empire dropped to second place after debuting at number one the prior week. >> actually i just started reading prior to the malaysian airlines thing sort of weird sa serendipity, a book called "the skies belong to us." they focused on this one american couple who was angry about things. >> the first airline i flew from l.a. to san diego, long trip. they hijacked it. it talks about the evolution of airport security. the airlines fought security so hard back in the early '70s. they thought nobody would want to have a security check. there were days you'd have multiple planes hijacked the same day. >> in the united states? >> in the united states. there was something like 130 -- it's an excellent book "the skies belong to us." 137 planes hijacked within a two-year period in the united states. most people wanted to go to cuba because they assumed they'd get asylum, not knowing castro would take the plane, sell it back to america and force them into a sugar camp. they were living effectively in prison. it talks about the evolution of airline security. the one thing we focus so much on this malaysian jet and what's happened to it, you wonder when all is said and done at the end of this, will there be another leg to airline security? will it be another step up? at what point is there a turning point for passenger tolerance? >> that will be totally a function, if there is ever an ultimate conclusion as to what happened here. >> there will be, whether it's next week or 50 years from now. >> all the satellite companies that transmit data, i have to imagine over the next decade the black box will start streaming, right? that will be a major thing that does happen. the cost airlines say is prohibiti prohibitive. when you think of the cost of going to fly this plane. the french airline, that cost $50 million. the government pays for that, though. the airlines don't. >> which s&p 500 company invented the black box? >> i don't know. >> general mills. >> i was going to say general electric. >> why? >> the food company. >> because they used to build submarines for the navy. >> what color is the black box? >> orange. >> bingo. general motors continues to fall under heavy criticism for its handling of an ignition switch recall. joining us now is paul ingrassia. this is a situation that gets stranger by the day. we hear about a lot more in depth about how this problem was bigger and older than we expected initially. where does this take us? >> well, sort of a three-ring circus right now. you have the legal proceedings, regulatory proceedings and investigation. and you also have the public relations issue. and there's so much of this -- so many different things going on, this is going to be in the headlines for a while. just over the weekend, you know, we carried a story about some people who had driven these cars. one poor young woman had been the driver in an accident that killed two young friends. she blamed herself. she had no idea the car was defective until a couple weeks ago until all this broke. she's been living with this anguish guilt. more and more stories like this will come out. >> we heard general motors might not be liable in some situations because of the bankruptcy, the restructuring. this is something that gm lives with no matter what the legal links may be. correct? >> well, absolutely. i think general motors to its credit has said we'll do the right thing. it's not been specific but if gm basically says, you know, look, we're a different legal entity post bankruptcy than we were prebankruptcy and we're not going to do anything for customers on this from a legal standpoint, that will be a very bad mistake. i can't imagine the company will do that. honestly. >> what does -- go ahead. >> my apologies. you've been doing this a lot time. did you remember the grimshah case, the ford pinto case of the 1970s? >> yes. >> when you look at the legal possibilities for gm and go back to the pinto case in the 1970s, similar assumptions may have been made about cost benefit analysis. is there anything analogous about the two? >> the thing that's most strikingly analogous is this, in the ford pinto case which involved rear-end collision in which basically three young women were sadly, tragedy burned to death in their pinto, what happened was ford is a company and several ford executives were subject to criminal indictments. it was a criminal trial in a small county courthouse in indiana. the individuals were acquitted but ford itself was held criminally liable. the fines they paid were minimal but it was a black mark on the company for a long, long time. so now there's a criminal probe going on this case, on the ignition switch case. it's unclear whether there will be individuals indicted or the company or neither or both. so the criminal aspect of this is pretty sobering. >> hey, paul, can i switch topics for one second? >> sure. >> i'm curious what you think of what's beginning on in new jersey with tesla in terms of a -- bypassing the dealership and going direct to consumers and what they may or may not mean for the dealership world and the rest of the nation? >> well, it's remarkable, actually. tesla basically has a different model. they don't go through dealers. they sell cars directly to consumers. whether that's wise or not is sort of their issue. but the car dealer groups in america are very much against this. they see this as a threat to their existence. they are mounting a legal regulatory and political campaign. they're a very influential group. car dealers are in every congressle and state legislative district in the country. they have a lot of clout. >> so what do you think should happen? >> well, you know, i think it should be up to tesla, frankly. i know that will be a controversial move with the dealers. you know, companies should have the right to decide do we want to establish the dealer franchise system or not. tesla might change its mind on this. >> what happens if gm looks at what tesla is doing and says, we're going to buy them out or set up next door. that's what some of the laws were originally men to the protect against. >> that's the dealer's argument. i understand that. general motors has a long established franchise system. tesla doesn't. that's a big difference. >> paul, i describe -- >> they're not hurting anybody now. they're not hurting anybody now by selling directly to customers. >> to your point about dealers. we talked about that in the 6:00 a.m. hour of "squawk box." i described this as tesla's alamo, this is where they make their stand in the courts. would you go so far as to call it that and what happens if they win or lose? >> i think this litigation will probably go on for a while. as far as the -- i think if tesla wins this case, you know, they'll just continue to sell their cars, they're a very small company, obviously but a high-profile company. if they lose this, i think this probably would go all the way to the supreme court to be honest with you. it cuts to the heart of a bunch of fundamental issues on how companies control their own distribution. >> it's great talking to you. thank you for joining us today. >> have i agreat day. >> you, too. >> paul ingrassia. more than a week has passed since the malaysian airline jet disappeared with 239 people on board. the focus of the investigation turning now to the pilot and co-pilot. phil lebeau, this gets murkier by the day. >> it does, brian. unfortunately, there are no new answers coming out. there's very little information we have, concrete information. it's speculation more than anything else. the fact that malaysia airways came out and the country came out, malaysia's prime minister came out and said, we'll be looking at two arcs. one to the north that goes up into asia and one goes south into the indian ocean, that's where the focus of the search, if you will, is concentrated right now. you've got countries as far up as kazakhstan now saying they're going to be involved in terms of seeing if there might be a possibility that flight 370 went up into that country. you mention that the investigators are looking into the background of the flight crew. that included over the weekend investigators raiding both of their homes, or actually searching both of the homes of the pilots. they did look at one -- the chief pilot, he has a flight simulator that he's built in his home. so they're looking at that, seeing if there's clues there. did he give any kind of indication from looking at the flight simulator that perhaps he was planning on flying into a specific location. and also, over the weekend, the prime minister made the announcement that the satellite communications system was turned off before the final contact between the pilot and air traffic control. that final message from the pilot was all right, good night. that's significant in itself. typically when you leave one air space, one country's air space and you go into another, it's not all right, good night. you tend to read back exactly where you're going to be, what transresponded, et cetera. that did not happen. when you look at where the search is today, three things are going on. you have the p-8 poseidon flying search missions. the countries that are involved here in terms of the arcs are reviewing satellite records and the u.s. is assisting, looking if there's anything in the past week and a half that shows anything. finally, they're reviewing the manifest of passengers. though we said at the top, the focus is on the flight crew. think about this, if you were going to steal a 777, let's say the intent here was to steal this and take it somewhere, you need more than just this idea in your head. you're going to need assistance from other people. that's what investigators are looking into. >> phil, it's gary. i heard early this morning there was some -- the airline apparently said these pilots did not request to fly on this flight together. i don't have any idea how scheduling goes together in malaysia airlines. the fact they did not know that they would be flying on this specific flight together, what does that mean to you in terms of somebody who follows this industry so closely? >> to me it means if there was a big conspiracy out there, we've all heard these. you don't have to go far to see the conspiracies on the internet, in terms of, well, they've taken it, it's parked somewhere, they'll load it up with explosives and fly it somewhere. the fact that they did not coordinate ahead of time or nor is there any indication that this flight crew was in coordination with anybody else, the ground crew at the airport, or someone somewhere else. that indicates the likelihood that you're looking at this aircraft being stolen and landing somewhere and hide it, i think that's unlikely. having said that, everything we've said so far, two days later we've come, well, you're not going to believe this but these what's going on. >> there's been speculation about the black box on this flight and all flights which is that they only record about two hours worth of audio in the cockpit. >> right. >> the longer you fly, it rerecords. is there any rationale in keeping the plane in the air for an extra two hours or longer to avoid people finding out what happened prior? >> i guess you could think that the pilot -- let's take the summing that the pilot stole this plane for pilot suicide or they're hiding it somewhere. i suspect that is a possibility, although you would have to think, if your intent is suicide, are you worried about what people are beginning to hear on that black box? or if you're stealing the plane, are you concerned about the black box? your concern is taking it to where you want to take it to. i think we'll see proposals from government agencies to change the electronics within aircraft as well as the detection of aircraft. i think -- we'll probably see that in relatively short order. >> i know we have to go. my understanding the government currently, traditionally pays for the search and rescue missions. are the airlines on the hook for any of this? that does change the economics of all of this. >> to my knowledge, the airlines are not. and you're right. that would change the dynamics dra mtically. >> right. okay. >> phil lebeau, a real pleasure. >> see you all day. coming up, will warren buffett do something his company has not done since 1967? that story is next. 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(all) great! i love logistics. all right. let's check the futures now on this monday morning. st. patrick's day by the way. good morning, everybody. we are seeing actually surprising amount of strength in stocks. you would think everything that's gone on, especially the vote in ukraine for crimea to join russia maybe as early as the end of this week would have pressure on the u.s. markets. it is not. s&p, dow and nasdaq indicating a higher open on this monday. meantime, one berkshire hathaway shareholder has an idea. what warren buffett should do with all of that cash, pay a dividend. shareholder david wit plans to propose what he calls a meaningful dividend at the annual meeting on may 3rd. what are the chances that will happen? something warren buffett has said he'll probably never do again. berkshire hasn't paid a dividend since 1967. he has said many times investors will get a better return if the profit is re-invested rather than paid out in dividends. do you see any chance of this occurring? >> not a chance. he doesn't pay out a dividend. charlie monger doesn't either because they figure the company has done much better by them reinvifting that money, buying stocks or re-investing it in the company or making acquisitions and shareholders are a lot richer for that. >> this is one of the topics i happen to be somewhat obsessed about in terms of the five things you can do if you generate cash. ironically, the statistics say, the long-term return of the stock market, two-thirds of the stock market return. however, most companies that do m & a generate cash and build it up or buy back stock don't actually have the significant outperformance. buffett has been able to do this while most other companies have not. the better solution, the majority of the time is dividends and distributions. >> except in his case potentially. >> in his case, he looks at this, having the insurance companies, they create the float, the cash. >> it's free cash. >> if you're an investor you're looking for free cash flow. >> most companies can't buy other companies and culturally make it work. >> right. it's been interesting. the guy that's bringing the shareholder suit has about $8,000 in shares. if you want the dividend, find it in another company. these guys have said forever that they weren't going to do it. it should make the shareholder meeting more interesting. and bushmills talks the business of booze, right after this, on this st. patrick's day. welcome back to "squawk box." there's no better way to celebrate st. patrick's day than with the world's oldest distiller of cocktails. we are starting early this morning, the celebration here. we want to talk about the business of all this in a second. what do we have here on the table. >> we mixed up a couple cocktails with guinness and bushmills. we wanted to put the two brands together and show you how to drink cocktails in a more modern combination. >> is this like a mimosa? >> we call this the black velvet. it's a beginning of guinness and champagne. >> the three doughnuts that he had earlier today, this is great for absorbing those doughnuts. >> very good. what is he drinking here? >> this is a mojito essentially. we call this the gentleman's mojito. >> this is fantastic. >> if it's irish, you should have the '0 at the end. >> this is delicious. >> it's phenomenal to see the growth and the amount of distilleries that are opening back home. i think we're in a great position. we're been doing this for over 400 years at bushmills. >> is whiskey broadly becoming more popular. >> without a doubt. we've seen great growth in canadian whiskey. >> i'm told -- i'm told that clear drinks like vodka, much better for the day after than the brown drink. is that true? >> i think that's possibly a myth. i think the only true thing is to make sure you drink responsibly and that will ensure a clear day the next day. >> why do you think irish whiskey has taken off so strongly. >> i think the consumer is more educated. i think you saw a growth in wine and craft beers popping up. now the consumer wants to know they're drinking something more mature, something with a lot of craft. >> do you think mad men plays a part in all of this. >> modern pop culture certainly does. >> there's no such thing as a bartender anymore. it's a mixologist, right? >> that's helped us immensely, the way mixology has taken off across the globe. >> you're really skilled. you're amazingly skilled. picasso is still a painter. >> i don't think any of these guys and girls are for getting hospitality. when you walk into a bar, you want to be comfortable and enjoy yourself. that will get you to return and have a good time. >> what do you think the appropriate tip is, you go to the bar. the appropriate tip for a drunk if a mixologist. let's say the drink goes anywhere from 8 bucks to some of the really expensive stuff is 15, 20 bucks. i'm always wondering if i'm being cheap. if i'm spending too much. gary is looking at me like i'm crazy. >> you go to these fancy bars and get a $20 drink. we'll ask you the question. what do you tip for a $20 drink. >> i would put down $2 and sometimes $3. should i be putting more. >> i would put that down for an $8 drink. if it's an $8 drink i give them 10 bucks. >> i disagree. first off, the sullivan rule of labor, number one. everybody in america should be a waiter or bartender at some point in their life. tip the same no matter what the price of the drink. you tip for the service, not the drink. >> if i buy a $5 beer, i put down a buck. >> you're not tipping for the food. you're tipping for the service. >> what's the answer? >> i think i'll follow your side of the fence. you're tipping the service. you're not tipping the drink. if you had a good time -- >> i don't think i've had a $20 drink. >> i don't think i've had a $20 drink either. >> we have to go, andrew. when we come back, the people of crimea voting. we'll talk about that. "squawk" will return right after this. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. [ crunching, rumbling ] ...it were possible... [ low-pitched scraping, thud ] to capture... [ trilling ] the precision... [ sloshing ] passion... [ low-pitched 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. ♪ are you flo? yes. is this the thing you gave my husband? well, yeah, yes. the "name your price" tool. you tell us the price you want to pay, and we give you a range of options to choose from. careful, though -- that kind of power can go to your head. that explains a lot. yo, buddy! i got this. gimme one, gimme one, gimme one! the power of the "name your price" tool. only from progressive. 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. ♪ krikia moves to join russia. market pros barry knapp and ed keon will tell you where to put your money to work during these volatile times. a big week for janet yellen. with a two-day fed meeting on the agenda, the fed chair sits down for her first news conference. a preview of what she'll say is just ahead. and a bitcoin battle with buffett. >> it's a mirage basically. >> should you be a buyer of the electronic currency the ceo of coin setter defends bitcoin as the final hour of "squawk box" begins right now. \s welcome back to "squawk box." i'm andrew ross sorkin along with kbekky quick and andrew sullivan. we have green matching the holiday season. dow looks like it would open up 93 points higher, the nasdaq 23 points higher. wall street may be open for business as the new week begins. take a look at the weather. federal offices will be closed after more than 6 inches of snow fell in washington overnight. this could impact the release of today's economic numbers. the federal reserve is scheduled to release february data on industrial production. however, the last few times the weather closed government offices, economic data was delayed. one report that should come out on time is the latest look at home builder sentiment from the national association of home bullers. that is due at 10:00 a.m. one stock to watch in today's trading, hertz global. that stock is jumping in the premarket. it could be worth as much as $4.5 billion. >> such an amazing story. the whole thing looked like it would go bankrupt. >> have you rented a car lately. >> i have. >> it's expensive. >> it is expensive. becky, everything now depends on what vladimir putin does and does in many ways. one, does he get his duma, his parliament in russia to accept that call for annexation for the call of the crimean parliament. there's provocation on the mainland which means putin could move forces to justify. what does he do in reaction too sanctions, of course? the eu and the u.s. moving quickly we understand to move on sanctions. i spoke to a whole host of u.s. senators who are down on the ground in kiev over the weekend. john mccain was hawkish. he was saying it's time to realize vladimir putin is an ex-kgb colonel and we must treat him as such. three u presidents have failed to cooperate and they have failed. dick durbin, assist and the majority leader saying to me the trump card that putin had was energy. and it was time to help european colleagues by allowing more u.s. gas out of the country, lng, of course. john hovan of north dakota, a state that has a lot at stake in terms of energy, he was saying we can move fairly quickly on this. why is this a big issue? as much as the europeans may want to have big sanctions against the russians they can't because they get a third of their oil and gas from russia. as such they are slightly beh d behelden. the next big agenda date i would suggest could be this friday coming up for a whole host of regions. that is when the russian duma is set to vote on bringing crimea into the federation. back to you. >> we'll be watching we're waiting for the next move by putin as well. that is steve sedgwick keeping us up to date on everything that's happening in ukraine. we've been watching the futures for data and janet yellen. joining us from new york is barry knapp, barclays head of u.s. strategy portfolio. gary kaminski is our guest host today. barry, ed, let's start off talking about what the reaction has been. barry, were you surprised by the lack of a reaction really in the markets to this vote from crimea? or was it just so expected that this is what people were already expecting? >> yes, it ebbs and flows with these things. we had a considerable amount of risk priced into the market and things like volatility market, the vix had a good run late last week. it's not shocking that we get to monday morning and you get a relief rally. i'm not sure why the market should be all that sanguin about the market. but still that's how the market tends to move on this thing, it ebbs and flows. >> ed, how about you? >> i think it's worth drawing a distinction between risk and uncertainty. the market is used to dealing with risk when you know the possible outcome and can assign reasonable probability to those outcomes. when you have a situation like what we're facing in ukraine and to a substantial degree in china, the market doesn't know exactly what could happen, never mind assign what probabilities are to various things. >> do they ignore it altogether. >> you'll get swings because of little bits of information. it's not over yet. >> right. i agree with ed on that. he makes an excellent point. if you think about the risk reward from a tactical perspective right now, near term, let's say we have an ebb in the concerns about crimea or china, if nothing else, we don't get another round of chinese data for a month, then the data is likely to get better in the u.s. the fed is going to go from quantitative to qualitative guidance. the bond market could sell off sharply and the stock market will struggle with that. if we don't get it and we get that uncertainty related to these other exoginous events, then so be it. >> let me ask you the following question. i always respected the technicals. i never invested based on technicals. somebody i have tremendous respect for was on this air at cnbc on friday, lawrence altman. says technically he thinks the s&p could hit 1575 that we are severely overboard and that the way the market has acted for the last several weeks we tend to believe we could finally get this direction. i don't see that based on what i see fundamentally. but is that something that you would say is a possibility here? >> i always left the technicals to my old friend ralph eckenpora. >> do we have to pay attention to the technical, those that are good at the technicals. >> think about it, you should think about anything in the market. i think the fundamentals are pretty good here and we will eventually get a decent year, around a 10% gain for the s&p. >> all right. >> let's talk about this. you think a pretty decent return, barry, do you think similar return is possible this year? >> not quite as high as 10%. but not that far short of that. i mean, our perspective on this is when the fed starts normalizing policy, just stops easing, we've looked at every business cycle since world war ii, you get a period of adjustment that lasts a minimum of two quarters where the market struggles to make that transition. we've had a big runup in multiples, anticipation of stronger growth and the mark set digesting that. that's how the markets played out so far. but the back half of the year, i would guess that the uptrend would probably resume. that's typically what's happened in these cycles in the past. >> you use the word normalcy. if the fed gets back to normal policy and we start to see if and when -- >> what is normal? >> normal policy. doesn't the stock market normally go up when interest rates are going up? >> you make a good point. which is there's been three occasions in the last 70 years where the p/e went from 15, which is roughly to median to 20. but every one of those oaks, the back half of the 50s, the middle of the 80s and back half of the 90s happened with positive real monetary policy rates. yes, bond market was typically -- rates were going up through that period but you need to get to that normalized policy first. we're some ways away from that, right? >> ed? >> i think where i'm different from the consensus, i think economic growth in the united states will be much morrow bust than most people think. we'll get off to a slow start because of the weather. but i think you'll see one of the last three quarters of the year will print to 5% gdp. >> really. >> wow. >> over 3, maybe as high as 5. >> 5% gdp growth? i hope you are right, sir. >> that's the first i've heard that. >> you're going to see several things happening. the fiscal drag which has been quite substantial for the last several years at the state and local as well as the federal, that ill with be substantially less this year. investment spending is finally starting to pick up. i think it will be much morrow bust than most people think and the consumer is in pretty good shape. combine that with better krcred availability. >> a growth of what. >> 8% or so of earnings. p/es will stay the same. throw the 2% dividend yield, that's how i get my 10. >> if ed's right on the growth outlook, you'll pull forward monetary policy tightening. we're seeing wages going up. you saw it in the payroll report, the small business nfib survey last week. the market would struggle with that. >> pull it to late 2014? >> the fourth quarter of this year, i think you'll see a lot of guests talk about the fed being behind the curve. that will be the next challenge for the market, getting through the transition to a more normal policy. >> i realize we talked about it last hour. i don't think people are talking enough about inflation. okay? i was screaming on "street signs," 2:00 eastern time by the way. >> you're up to three. >> there you go. thank you, everybody. >> i was screaming on "street signs" about heating bills. everybody i talked to, their heating bill is soaring. coffee is up, propane, corn. every major commodity we eat, consume in some way. >> they strip out food and energy, none of it will matter. >> exactly. >> in the harry potter inflation world, the only thing that matters is the price of quiddich balls. you get my point. >> look at the u.s.'s history, the labor market drives inflation. you don't get inflation without a rapid rise in wages. we just barely started to see wages go up at the rate of inflation. >> those are the last thing to move. >> we're a long way from that, i think. >> if you decompose u.s. inflation into a domestically conservative inflation, its at target prices. you stabilize global goods prices, you will have inflation at the fed's target much quicker than most people expect. brian's on to something. i don't know about coffee. >> on that note i better cut you off. barry, ed, thank you. >> because he said i was on to something. >> sullivan is on to something. >> the harry potter world is like the new alice in wonderland? >> i don't know. my kid is in the harry potter phase now. i've suddenly become immersed in it. universal movie, fantastic company universal. >> lovely. wonderful company and movie. >> i need the bushmills like ed. coming up next woob we'll ride the rails for a closer look at the economy. could the boom in shale oil be a bust for other commodities? we'll pose the question and talk about the railroad economic indicator as we head to a break. check out the "squawk box" market indicator. we're back in a moment. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. salegets up to 795 highwayeal's the passamiles per tank.sel salesperson #2: actually, we're throwing in a $1,000 fuel reward card. we've never done that. that's why there's never been a better time to buy a passat tdi clean diesel. husband: so it's like two deals in one? avo: during the salesperson #2: first ever exactly. volkswagen tdi clean diesel event, get a great deal on a passat tdi, that gets up to 795 highway miles per tank. and get a $1000 dollar fuel reward card. it's like two deals in one. hurry in and get a $1,000 fuel reward card and 0.9% apr for 60 months on tdi models. that is a live look at new york city's times square. i predict, this is a long shot guess by me, in a few hours there will be many people wearing green weaving side to side -- >> as they dodge the pigeons or weaving because -- >> st. patrick's day. >> maybe. >> as we call it, amateur hour, my people. i do not wear green by the way, just out of respect for the folks back in the homeland. >> that's not why. >> it's potato color. good news and bad news for the railroads. look what they did. >> thank you. >> there you go. >> thank you, everybody. i appreciate that. there we go. we have the green shirt on, lads. >> first the good news. there's been a surge in oil shipments by railways since the u.s. energy boom began. here, though, is potentially the bad news. reports that the rise in crude oil shipments may be slowing down transportation of other needed commodities. "the wall street journal" had an article saying that a backlog at bnsf of coal, sugar, grain and others is causing delays for shippers. warren buffett himself addressed this issue on "squawk box" friday. >> traffic is not flowing well this year. i wouldn't say it's overwhelming because of the -- the weather had a lot to do with it. crude oil is less than 4% of what we carry, at burlington northern. we carry quite a bit compared to others. it's added volume, important volume but it's still 4%. we carry 200,000 cars a week. we'll have less than 8,000 of that will be crude oil. grain has gotten piled up some. and that's because of difficulties on moving goods generally which may be exacerbated by the crude oil, even though it's not a huge part. >> joining us now is tony hatch from abh consulting. 20 years experience covering the railroad industry. so bnsf, buffett's company carries 4% of its load as oil. that's more than any other railroad. i don't understand why the story was written. are they making too much of a big deal about it? >> i think they are. what you have going on in places like north dakota is growth in the four areas. cyclical clothe, the econo cyclical growth, the industry is of monthing. you have taking trucks off highways, the oil business, which is new. on top of it you have weather as mr. buffett pointed out. i think it's an unusual set of circumstances, not just that 4% move. it's only 2% or so from the industry. >> having been to willistfon, north dakota, they can't get enough oil and gas out of there to the rest of the country. they actually have to dispose some of it. if the railroads make a push to permian or eagle ford in texas, would that be good news for the trucking segment which has to pick up the extra loads? >> the rail business still hasn't fully recovered from the great recession. the car loads are still below the 2006 peak. there's certainly capacity in the railroads. this industry has pivoted away from coal, towards new products like crude pretty quickly for an industry this old and this tied to the ground. i don't think you'd see a lot of business shift to trucks if that were to happen. what you say may come true. >> so when we look at the railroad industry then, how do we gauge it? do we look at it as a toll industry, a car industry? what are railroads today? or are they all different. >> they really are, based on the region. the growth month ed is coming out of intermodal, which is direct partnership and -- >> fancy word for the boxes on ships that get cupulleded off t ship by a crane. >> truly a truck off the highway. >>fy was an investor in railroads, union pacific, they're up in the last 12 months. >> kansas city. >> if i was looking at this industry and saying "a" they're up big the last year or so, "b," i'm essentially making a proxy bet on coal, which is under attack, i wouldn't want to invest in it. >> i'll turn to tony because he's the expert and ask the question, the railroad stocks used to have a much higher -- or higher correlation with gdp. we just had a guest on here that says he thinks we could print 5% gdp later this year. if he's right, what does that mean for the railroad stocks? that ultimately is the most correlated factor. >> that would be terrific for the rail stocks. they are tightly correlated to the economy. what i think is really great about them, they have aspects of growth within that market share like this highway move that i've been talking about. brand new business moving into the crude business. they'll handle a lot of the chemicals that will come when that gas does flow into the chemical industry over the next several years. they'll grow with the economy and more and they have pricing power. give me 5%. you have a great industry to invest in. >> does that include amtrak, tony? can you explain to me why bad weather slows down rail transportation in the northeast? i know it's a new technology. they're working out the kinks. please kill my sarcasm. >> i ride it all the time. that's how i get to washington. >> good man. tony, thank you very much. >> bitter ex-new jersey transit commuter. i bear the scars of the delays at penn station. nightmares of my youth. by youth i mean two years ago. tomorrow we'll have the new ceo of bnfs on, carl ice. he'll be here on "squawk box." his first tv interview since he took over for matt rose in january, guys. janet yellen prepares for her first news conference. we'll preview the fed meeting and talk about the economy after the break. and then, buffett's bitcoin smackdown. yes, we said smackdown. the billionaire investor telling investors to stay away from the electronic currency. is he right? we have somebody who wants to say that he is wrong. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. welcome back to "squawk box" this morning. it was a successful weekend for the world's most famous time traveling dog. mr. peabody and sherman topped the weekend box office with $21.2 million in northern american ticket sales. the dreamworks movie debuted in second place the prior week. it pushed "300 rise of an empire" into the number two slot. still to come this morning, we have buffett's call on bitcoin. the billionaire investor warning other investors to stay away from the electronic currency, calling it a mirage. is he right? the ceo and co-founder of bitcoin exchange coin center, well, as you might imagine, he has a different point of view. he'll join us on set in just a few minutes. as we head to break, take a look at the equity futures. you're looking at strong moves to upside. dow up 83 points, nasdaq up by 21, s&p up by 8 points. this is all despite what we saw with the vote in ukraine. there were foregone conclusions about what happened in crimea. green arrows across the board. we'll be right back. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ good monday morning. 8:28 on the east, 5:28 on the west coast. thanks for joining us on "squawk box." keurig green mountain will replace wpx in the s&p 500. index fund managers will have to add green mountain to their holdings. watch for that stock to move today. meantime, the board of sears approved a planned spinoff of land's end. it will begin trading on the nasdaq in early april. the ticker will be le. we're also watching shares of lorillard, goldman sachs upgrading from buy to neutral, saying the company is entering a period of more limited bids. janet yellen takes center stage this week as she is set to run her first meeting and hold her first press conference. steve liesman jone joins us wi fed preview. this is a biggie. >> she promised continuity but circumstances are dictating otherwise. yellen will continue her predecessor's policy of reducing the tapering by $10 billion at this meeting and signal further tapering ahead. she faces a difficult task of changing the fed's guidance on when it will hike ate rarates. it will be appropriate at least as long as the unemployment remains above 6.5%. we're at 6.7% already. inflation between one and two years ahead is projected to be no more than half a percentage point above the committee's 2% longer run. choices are lower the number for which there is some but not overwhelming support on the fomc or go to some form of qualitative guidance. the fed could say something like we'll keep rates low as long as the preponderance of data proposes slack in the labor market. the problem is, just no good measure that brings together all the different aspects of slack. and few analogues, you know people are leaving the labor force in part because they are tiring but also millions are discouraged and have been unemployed for more than 27 weeks. 7 million americans, this is something yellen brought up several time, working part time for economic reasons. what the fed doesn't know is how many millions could come back into the work force or work part time. the fed's rate outlook. this is where the fed is protecting itself. its average is where rates will be. 2016 is 2%, 2015 just above 1% and the longer run, these numbers are the ones that could come down. i just want to show you some of the breakdown. if you look at the next chart, 12 members are under 1% for 2015 and then ten members, if you do the green bars for 15 -- sorry, for 16 are below 2%. those could actually come down. the longer run is up near 4%. that's what we're looking for, tweaking in those charts, when the projections came out and tweaking in the language -- >> tweaking meaning the rates will rise slower? >> more slowly. >> that is really interesting because we just had -- we'll talk about it in just a moment. >> you heard barry knapp saying -- >> i don't agree with barry knapp. >> do you agree with ed keon who said you could get a quarter where you're seeing better than 5% growth? >> yes. i think it's going to be -- yellyel yellen will have to explain, this will be one of the questions she'll be asked, how far does she let it run? you have wages that have been subpar for a long time. there's scope for them to run in an uninflationary way, especially in a globalized world. >> does the fed control it, though? if you have the market looking at better than 5% gdp, at some point they're going to get to the conclusion that rates need to be higher. >> becky, you're expressing what are certainly the, i think, knee jerk fears of the market. it's going to see 5%, fed will hike. yellen will need to explain to markets, you know what, i'm chill on this, i'm good letting inflation run hotter. which is why you have that 2.5% goal in there. and letting growth run a little bit hotter because we have catch up to do. >> let's bring in a couple other voices. former federal reserve governor larry meyer, co-founder of macro economic advisers and gary kaminski, he's with morgan stanley wealth management. i don't know. tack this will idea. set me up here, larry. do you think we could see growth that fast? do you think yellen would be able to control rates if that were the case? >> we have a lot of transitory developments going on in the economy. the economy is doing better than the data suggests now. we're likely to have a pay back in the second quarter and see strong growth. we're at 4. i wouldn't get blown away by 5. put that in context. the broad contours of the forecast as the fed is likely to see it remain the same, 3.33, declining unemployment rate, inflation moving up gradually. >> gary? >> late 2011, the fed would have forecast that the fed funds rate today based on their forecast in late 2011 we'd have 1.5%, maybe 2% fed funds rate. >> i'd have to go back and look. >> we have to remember that. >> it's been more optimistic about the outlook for economy, growth, unemployment. >> that was sort of where they were. >> yes. >> going back to the 5% number that ed had thrown out -- >> yes. >> you know more about this than i do. could we have a 5% gdp growth on the reported inflation and/or reported jobs numbers? >> i mean, i would think you could get there, 5% on a real basis would be astonishing. that means you'd be doing 6 or 7 nominal. it's something you could potentially do. it's been done before. it's not unheard of. but i don't think anybody would mistake a 7% number for the trend. if i could ask larry a question, larry, how does the fed communicate slack here? yellen has talked a lot about part-time for economic reasons, 7 million americans, that makes sense but the trouble is, in this world, if you're not using the unemployment rate, what do you use? >> that's the key thing. i think we'll see no mention of the unemployment statement at all. we'll see inflation many times, maybe five in the policy paragraphs. it's all about inflation now. the labor market by a variety of indicators is improving. by the middle of next year, the labor market will not be the issue. it's all about inflation, how many it's increased and what the trend is. right now that's the case but there's a lot of disagreement about just how tight labor markets are. there are certainly upside risk to inflation. >> i know you think the focus will be an inflation over the job market. ed luzier has a piece called the hidden rot in the jobs numbers. he'd argue the numbers got worse. he looks at the number average hours worked per week. he says that's going down. that should suggest we have a greater challenge on our hands. i'm sorry. he says an employer who replaces 14 100 40-hour per week workers. >> we may be looking at the wrong measure of slack. there's a lot of debate about that. there's a lot of work that suggests that long-term unemployment, that's the unique feature of this expansion, the record levels, they have little or no effect on inflation. the only effect on inflation comes from the short-term unemployed and the back to normal level. so this is totally unsettled at this point. >> right. >> the committee hasn't really moved to a consensus. that's the big issue that they could face in coming meetings. >> okay. >> all right. >> gentlemen, thank you. larry, great talking to you. still to come, the ceo of bitcoin exchange coin setter. bitcoin is -- has been all over the map, just about any day you lack at it. right now it's trading around $623. the point, again, it's trading in u.s. dallas basis. that's one of buffett's points. we'll talk more about that then "squawk box" comes right back. gunderman group is a go. yes! not just a start up. an upstart. gotta get going. gotta be good. good? 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(all) great! i love logistics. welcome back to "squawk box." happy paddy's day, st. patrick's day. the futures, see what's going on ahead of the market this morning. we have green arrows, the dow looking like it could open 72 points higher, the s&p, 7.5 points, the nasdaq, 21 points higher. brian. coming up, jim cramer himself on the week ahead. what investors should be looking as we kick off a new week on wall street. i also want to ask jim, does he sleep? he was working at his restaurant all night saturday, signing books during the day and then working at his inn on sunday. >> he has a twin brother. >> i'm going to ask him. 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 that's weighted based on how accurate they've been in the past. i'm 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... voice-enabled 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 aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. welcome back to xsh xb. let's get down to the new york stock exchange where jim cramer joins us now. apparently working over the weekend. i heard you were doing a lot of things, working at the inn, busing tables, signing books. >> i serve breakfast at my inn, signed books at costco and served dinner saturday. we were slammed. what was i going to do? a couple of my friends came in and saw me clearing dishes and busing tables. when you have a big crowd you have to take action. >> did you see the movie the presieged with christian bail? he had an identical twin brother. it's ten years old. i can ruin it. where is tim cramer? where is your identical twin. >> i was working hard this weekend. we had to serve sunday brunch. started at 12:00. i got a new market reader that we were trying. i have a new chicken salad that's really good if you come by. we were crowded. you can't just wait and have people at the door and not seat them and not serve them water. what am i going to do. >> i have a stock question. >> sure. >> help me make sense of yahoo! in the context of alibaba. if yahoo! owns 24% of it and yahoo! is trading at a market cap of $37 billion, is that an indictment of yahoo! itself? yahoo! on its own is only a couple billion bucks, max. >> i think people feel that yahoo! is somewhat of a wasting asset. i don't feel that way. there's been a subtle backlash against yahoo! saying maybe the honeymoon is over. maybe things aren't so great. at the same time, i think that this is a nice call on what i regard as being a lot of things that are in action at yahoo!. they're not coming to fruition yet. >> yes, andrew. >> i thought you were -- >> no. unless the camera is wrong, i see that jim, like myself and wore the green tie today unlike sully. jim, glad to see we are wearing the green tie in honor of st. patrick's day. >> i had green beer last night. it tasted a lot like regular beer. >> that's actually not green. that's guacamole. >> you know how expensive guacamole is? i love that green. it is wrecking our profit margin. it's gone up triple since i started the restaurant. it is killing us. >> really? avocado inflation. >> we've been talking about inflation this morning. do you think it's a problem? >> well, it is if you run a restaurant. no, i don't, in general. i think there's no wage inflation. i can listen to the economists talk about it but in the end we're not making as much money as we used to. i think there isn't a lot of inflation other than gauc. it must be killing chipotle because it's killing me. you have russian oligarchs who are trying to pull their money out if they think there's going to be sanctions. i don't trust the futures. on a big up monday day, it's been chaotic if you go in there and buy the opening. i would not do it. >> jim, i followed some of your tweets and also you've been saying in the last couple of days, maybe i'm wrong, it seem to me you're getting more nervous. >> yes. look at this week of scheduled ipos. we have four cloud based companies. have you seen the cloud based companies? they're all going down. we have three more biotechs. can we really fit these in? we have chinese ipos. these are all bad signs. i want to avoid them, close my eyes to them but that's been a mistake. i'm not beginning there. >> cloud is interesting. one of my predictions that i made, pure cloud based industries, every company is going into the cloud. you don't install the software. the pure plays are in big trouble. many were trading at valuations which were greater than the investable opportunity. if they had ever customer in their space, they could never make enough revenue. maybe some of the companies are trading on a prayer. >> that's the wrap on viva. these are 0%, 50% revenue growers. you're right. there will be a saturation point. sales force which went from 67 to 58, no no one is talking about that. >> we saw that movie once before, a comedy called "exodus." that's how they were going to get into that market. >> would you put your clients into these ipos. >> i don't manage money anymore. i don't put clients into anything. that's the first thing. second thing, like all risk-adjusted returns, there's always going to be some portion of one's assets put into speculative names, these names or specific names. we like klein the to think about risk assets, exactly what they are, risk assets. and i think as i point out with exodus, we've seen this movie before. a lot of times these things will have a life much longer than something like myself or sn seso also managed money in a previous life. there will be plenty of people, whether they want to listen to the advice or speculate in the names. right, jim? >> amen. the perfect description. we'll say those old fogies, why did they keep me out of cast light? what were we thinking? we may look bad on 3-d printers for maybe six months but we've seen it all. i don't want to get caught up in it. i'm sorry. >> happy st. patrick's day. >> same. >> enjoy the green tie. talk to you soon. speaking of speculative investments, is bitcoin worth your dollars? warren buffett says no way. but our next guest will tell us why he thinks bitcoin is here to stay. "squawk box" will be right back. 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, and life insurance, no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ under armor a stock to watch on monday because they're splitting their stock, stockholders, april 14th, split two for one. stock's up 34%. 132% over the past 12 months. >> talk bitcoin. warren buffett bav his two cents on bitcoin. why he's less than impresseder. >> it's a mirage, basically. it's a method of transmitting money, effective way of transmitting money, you can do it anonymously. a check is a way of transmit, money, too. are check's worth a lot of money? money orders, people do it. i hope bitcoin becomes a better way of doing it, but you can replicate it different ways and it will be, and the idea it has some huge, insintrinsic value. >> a bitcoin exchange, we've got the pronunciation of your name right. only downhill from here. >> or the pronunciation. >> how many times did you practice? >> several times. >> you would like to say that warren buffett, oracle of omaha, is wrong? >> very smart guy, but i think that -- >> all you'll give him, very smart guy? >> very smart guy, successful, too, i'll give him that. i think when you talk to people about bitcoin, there are certain levels of intelligence that this conversation goes. so like, when you first introduce people, what do you say? it's a digital currency. i think why i'm excited, why other people are excited about it especially venture capitalists, there's a whole payment network underneath that works very very well and quickly. when i'm given a special on international wire transfers, the option between bitcoin or say a bank transfer for us it's bitcoin every time. >> a lot of people i know, the smartest technology people i know will say that the code for the actual bitcoin is written beautifully. the idea that will get hacked, probably off the table, at least for now. all the wallets that actually where you store the stuff, all of the exchanges, there's horrible security around all of that. why do you think that -- i mean, is that a thing that ever gets fixed? if not, how does this succeed? >> i think the answer to that is similar to the internet. the security for the internet is very horrible. and you know, we can always ask ourselves, will it ever be fixed? the answer, it's always going to be a process, a cat and mouse game. bitcoin's the same way. right now, it's early stage. a lot of high expectations for bitcoin that we as companies have had to come to terms with over a short amount of time. >> james gorman, not a bitcoin fan. your fearless leader. >> well, he's an excellent ceo, thanks for matching that andrew, great ceo. what he said is about understanding some of the mechanics and the question i still don't understand is, you mentioned it, what bitcoin does for you as opposed to a bank money transfer. i still don't understand what does bitcoin do for you that a money transfer through a wire does, doesn't do? >> bitcoin, witness you have it you can send it anywhere instantly. it's very quick. it's so convenient. you know, you basically copy and paste an address. >> i can logon to my bank account, my online banking account and i'm not tech savvy, as my kids know. >> vis-a-vis the blackberry. >> i can logon and figure out and put a wire in, yes, it's lengthy, but i can wire money directly online, and i'm not tech savvy. >> yeah. you know, i think a lot of people need to feel pain points. what -- i mean the banking sector, sending a bank transfer, that's the worst competition. that is just so poorly done these days that bitcoin is a clear winner. >> you talk about pain points. mount gox. >> you've watched companies who didn't do things right, i think fade away recently. and so we're working really hard. >> if i'm a consumer, how do i feel confident? if the brokers out there i don't know who's good and who's not, why would i trust my money with them? its the same question in the early district attorneys of the internet, people making transactions online, how can i feel comfortable make ang online payment? >> is it speed? in other words, if you're coming here, we're a private equity investor and pitching us on why to invest in bitcoin, is it ultimately speed and ease of transaction that is the selling point? >> it's price, speed. it's going to become cheaper and cheaper over time. like right now, look at bitcoin at its most expensive, and it's still way, way cheaper than any other -- >> if i use a credit card and buy something from a retailer and they send me the wrong product or it's broken, they refund my money, there's an exchange, there's a tracing of it. with bitcoin, there's no putback. they have my money, could be game over for me. >> yeah, and it's hard to say how regulation's going to play out. where things are going, bitcoin should be looked at as digital cash. you pay for something with cash, you're not getting it back if something goes wrong. >> i've got wallet on my phone, the app, go to the starbucks, scan it some other vendors here -- >> that's fast too. >> we've been told this is the new wave of mobile payments. why is -- is bitcoin a competitor to wallet or is bitcoin -- >> it's a protocol that can be built on top of. >> i can use bitcoin with it? it's the currency i choose? >> that's the cool thing, in the past you've had closed payment networks. now people can have their own app but pay through a common protoc protocol. >> knock mow toe, identified by "newsweek," is he the guy behind bitcoin? >> i think it's very likely it's him. >> really? >> hard to say. he does -- >> he just came out and said it was not him, lawyers put out a statement. >> that's what he would say. >> the guy didn't have the internet at home. the guy that created bitcoin, he lost the internet because he can't afford it. he's also fighting prostate cancer and has been or a couple of years. >> no one will ever know the answer to the question, it doesn't affect us, people starting companies in the space. but it's an interesting story. you know, he fits pretty much every characteristic that i imagine satoshi to have. >> thank you. now time for "squawk on the street". ♪ early bird special, jim. good morning, welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange. taking a look at futures, looking a little bit better than last week ended there's the dow with an implied open up 77 points. s&p, nasdaq looking like they both will be positive as well off the open today. take a look at the ten-year, the story last week and the yoeields at 2.66. that will be closely watched, as will the european markets. take a look at what's go on in europe. no red on that screen. all green across the board. that's certainly helping our market look pretty decent, at least implied, off the open. road map today starts with the markets. set to start the week on a positive note. poised to turn around their worst weekly losses since january. ali baba announcing it's selected u.s. over hong kong for listing of its initial public offering. it would be biggest ipo since facebook. and ncaa brackets
gaining back what we lost last week. >> for everyone who points to the geopolitical concern moving to the back burner, there will be someone who says you never want to take a guy like vladimir putin at his word. also, the market keeping an eye on the fed. at this hour tomorrow janet yellen will be in the midst of her first news conference. right now we're in day one of na two-day meeting. we'll lay out what investors should expect. then remember earnings? that matters -- >> i think i heard of it. >> -- as well today. we have two big ones coming tonight. two tech titans will be reporting at the top of the hour, oracle and adobe. of course, we will have the numbers, the market response, and the complete analysis coming up right here. and so on this tuesday, the dow jones industrial average up 108 points to 16,355. take a look at the nasdaq which is rallying nicely as well, up about 70 points. i'm sorry, it's up about 52 points. the s&p 500 finally adding 14 this hour. 1873 is the level there, and believe it or not, bill, i believe 1878 is the closing high. we are five points away. >> that close. joining us on the "the closing bell" exchange, kimberly foss, peter anderson is back with us, kyle harrington, mark martiac from premiere wealth first allied and our own rick santelli joins us as well. mark, are you concerned about ukraine, the situation with russia? is it enough to make you want to rethink your growth portfolio right now? >> it is on both counts, bill and kelly. thanks for having me on your show, by the way. it is in the sense we haven't seen the full effect of what sanctions are going to unfold from washington, and, in fact, with respect to ukraine and europe, one of their trading partners, europe imports 30% of its natural gas from the ukraine -- from russia. >> through the ukraine. >> we could have an issue if russia decides to cut off the supply to the ukraine of natural gas. but i do think that investors and the markets have the drama now priced into them, and i don't fear for investors as much at this point. >> kyle, i wonder if this isn't one where consumers wind up taking it on the chin. some of the soft, some of the grains in particular, is it too much to attribute that to what's happening in terms of this unrest and to say that perhaps it won't be for months from now until the effect of that is really felt? >> well, you know, i still think that the effects are here to stay and are going to be felt in the coming months. i think that the volume tilts and the increased international disarray will drive volatility up and down and in the domestic marketplace. if you're not allocated to some marketplaces outside of the united states, for example in indonesia, that over the last six or seven years has grown at 5.8% gdp, you're making a mistake. visit your portfolio with an international allocation. >> would you buy russia? >> no. i think i'm going to sit back on russia for a while. i want to see how this unfolds. i'm very cautious in that marketplace, and vladimir putin, he makes me nervous. >> peter, we're only five points away from an all-time high on the s&p, but you've done the math. you went way back. you still think this is a cheap market here. >> well, i have done the math, that's right, bill, and if you look back, what i like to do is be sell telescopic. let's look from a macroperspective and then we can deal down to the specifics a the a stock level. when do you that, everything seems to be pointing in the right direction. the lights are all green. on the macro perspective, if you look back 65 years on the s&p 500 and you look to see where the valuations are, right now at around 17 or 18 times, we are not, and i think this is going to surprise a lot of viewers, we are not really overvalued when -- >> is that if you include episodes where we saw the market trading significantly overvalued? in other words, does the average look okay because we've had times like the dotcom bubble? >> kelly, it includes everything. that's why i wanted to go back that far. some people will only go back ten years saying it's a new economy, et cetera, but 65 years i think we'd all agree is a pretty long time to look at all these stats. and so it includes everything from 65 years. if you do this it turns out to be within less than one standard deviation of that bell curve distribution that you normally see, and i computed that on a pe basis you have to be about 20% higher before i would start whispering that word bubble. so i think we have a way to go. now, that's the macro perspective. if you want, we can talk about the individual stock perspective, too, and it all points to very -- >> do you want to throw out a name or two you think is attractive here then? >> sure. veri phone, pay. it's up 34% year-to-date and that's not including the increase today of verifone. it's a company that has beat and set its earnings to be greater. and you own verifone? >> yes. >> and you're tired of hearing what? >> i'm tired of hearing all these companies that have missed and guided down. kelly, for every five of those i would say there's at least one type of stock like a verifone where things look optimistic. >> we have a positive bias as you're pointing out. do you feel like we're destined to go higher as well or would you take something off the table right now as we approach all-time highs? >> well, we're balancing as we speak today, but i really do think we are poised to go higher. we have crimea going as planned. we have yellen speaking today. the last two times she's spoken, the market has gone higher, and don't forget, guys, we have $2.678 trillion in money sitting at.001% on the sidelines. no real increase in interest rates except for maybe 2015. so despite all the fundamentals, we sill have some room in this market to go. it is going to be spotted with volatility, but i still think we've got room to grow in this market. >> rick santelli, it's not uncommon to see the market rally into the fed's meeting tomorrow. but we could be talking about significant tweaks to the language, their tashrgets, anotr taper on the way. >> you know, tweaks to the language, does that really sound as earth shattering as we want to make it out to be? i don't know. >> i think it could be. >> to me it's all the rorschach. in the end we all know what's going on here. we have janet yellen continuing quote, unquote, the taper. why they need to continue to make any purchase whatsoever after listening to our guest makes no sense to me at all. i think the salient feature tomorrow is why they don't want to pay attention to the unemployment rate tomorrow after all these years of telling us what wonderful news it was that it would move lower. it affected the political landscape, but after tomorrow it's probably not going to be as important. they'll switch gears to things like inflation, which the government measures, but yet anybody who has a hunger for three needles a day doesn't really jive with that anyway. >> they measure both of them. if you're saying we can't trust cpi, then we shouldn't trust any of the government data. >> wow, so we do agree on something, don't we? >> what do you think the market would do tomorrow if janet yellen said, okay, i'm done with tapering. no more asset purchases? >> well, gee, let me see, there might be some market volatility. oh, my god. >> really? >> it's not preannounced and everybody isn't in on the fix. i think it would be a wonderful thing for fre markets. a great stride forward. >> kyle harrington, i think you would agree. >> i think i agree 100%. the less janet yellen a involved in the free markets the process will expand and i think it will be much healthier long term for the united states economy. i would agree 100%. >> one of the things i think is pretty important to look at here is nobody has mentioned this, but this is janet yellen's first official press conference. i know we have seen her in the past, and i'm really curious to see what her communication style is going to be. i don't know if everybody on this panel has actually watched her on camera. >> rick has watched her very carefully. >> okay. well, it is rather interesting the way she has answered some of these questions, so i'm going to be looking to see regardless of whether or not she's going to be tapering, i know that's very important, but also i think the way in which she communicates this stuff can really send the market upside down, and she has to be extremely careful to continue -- >> what do you mean? are you worried from the way in which she handled the testimony? >> well, i just tuned in on some excerp excerpts, and i wanted to ask a couple more questions. of course, i wasn't there, but i think there was some things that could have been answered a little more clearly and i don't know if that's because of her academic background and she tends to think more words than we normally do. >> if you had one question for her tomorrow then, what would it be? >> i think it would be are you going to continue to give forward guidance the way your predecessor has and are you aware what kind of volatility that might cause in our markets. >> those are good questions. i would ask chairwoman yellen when she expects to lower the short-term rate. if, in fact, 2015 is still in the future to start lowering the short-term fed funds rate. >> you mean to raise. >> to raise it rather, to raise it, yes. to raise it, yes. >> that would be an interesting 2015. >> to raise it, yes. >> we've got to go. just remind everybody, janet yellen's news conference will be live here on cnbc tomorrow so you can see that starting i think around 2:30 eastern time. >> correct. thanks, guys. have a good one. >> heading toward the close. pretty good gains today. the dow is up 102 points. here we go again on top of yesterday's rally, so we're gaining back what we lost last week so far. 50 minutes left in the trading day. today's rally sparked in part by russian president vladimir putin saying he will not seize other parts of ukraine. coming up, we'll discuss why the market is putting so much faith in putin's promise. >> the market seems to believe putin. do you? tweet us. we'll reveal your best responses coming up. the handle would be -- >> @cnbcclosingbell. >> disney is the second best performing dow stock in 2014 helped by the success of "frozen." can disney continue to deliver magic for shareholders? announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ . welcome back. so stocks are building on yesterday's big gains and that includes disney. in fact, the blue chip has been the second best dow performer this year. >> you would think investors are happy. morgan brennan has been monitoring the annual shareholders meeting. are they happy? >> i think so. the meeting just ended. 10 of the 11 board members were re-elected including sheryl sandberg. blackberry ceo john chen and quar and twitter could founder jack dorsey. probably the most interesting piece of news relating to today's meeting actually came before the meeting. there had been a proposal for the largest shareholders to be able to nominate candidates for the board. that was actually taken off the table today after disney tweaked its language regarding the chairman position in its proxy statement. that language basically reaffirming that the chairman be an independent director unless it's in shareholders' interests to do otherwise. a new cars sequel is coming and a new "incredibles" film and the next "star wars" movie will take place 30 years after "return of the jedi." kelly, back to you. >> morgan, thanks very much. let's stick with disney for a moment. it's been on quite a run, up 44% other the past 12 months. >> let's talk about it. timot thinks there's more room run and abigail says the stock has gotten well ahead of itself. let's brawl it out. tim, why do you think there's more time to the upside? >> i'm the fundamental story for disney is very, very good. three factors i particularly like are think really, really strong run of films likely to come out not only this year but you mentioned "star wars," we have some "avengers" film next year. they have higher volumes and higher pricing in the parks. and we have the shanghai park opening coming in december of next year. and then finally i'm really interested by some of the streaming tv deals disney has done. you may recall a year or so ago they did a deal with netflix to do first run rights on their films, and just recently we had the deal with dish last week probably similar to the comcast deal they did a couple years ago where they're selling some tv everywhere streaming rights and that's incremental revenue for the disney tv properties. >> abigail, you look at the stock and you don't like the chart here or -- >> when i look at the chart it really does look like it's setting up for a near term pull back. when i say the stock is overdone, ahead of itself, it's up 100% over the last two years. the dow is up only 25% in that time. some investors say that outperformance is justified because of the strong story, because of the prospects. when i look at revenue growth, we're looking at just high single digit revenue growth. it seems disproportionate for me. it seems hard to believe this stock is where it should be. it appears overbought. investor sentiment is wildly bullish at this point. back to the charts, they really are pointing to a near-term pull back. we could actually be looking at just a move back on the markets moving down over the next couple weeks. >> tim, what is the stock trading at in terms of valuation here compared to the historical average? >> right. on a pe it's about 20 times. that certainly puts it at a very upper end of its direct peer group. a number of its direct peers are trading in more kind of the 17 to 19 level. so it's at the upper end of that. actually seeing any stock have this kind of a strong performance i wouldn't be surprised at all if there's some sort of a period of taking profits here. but i think the revenue environment is very strong and also the earnings environment. talking about the investments in the parks, you know, that should translate into some nice operating leverage here. they also have a product called my magic plus which should improve efficiencies at the marmar parks. we're modeling about midteens eps growth over the next couple years and i don't think we're fuelly allocating the right estimates in for the park expansion in shanghai or "star wars" or avengers. >> you sound like you wouldn't be surprise fd there was a pull back of some kind at disney. >> i'm not saying it is cheap. it's trading at 20 times. it's the upper end of the peer group and it's up 40% or so in the last year. you know, any stock that has that kind of strong performance -- and i don't necessarily see a fiscal q2 catalyst for disney necessarily. i wouldn't be surprised if there's a little period of taking profits, but my view is not short-term. my view is one year and beyond and i think there's a lot to like about disney. >> if it pulled back to what level would you buy it? >> there does appear to be some support around $70 but i wouldn't be surprised to see it go back to $40. that is extreme even in my view but it looks like there could be a negative surprise. let's not forget about this malaysian airline mystery. god forbid if it's related to terrorism. that would be a negative for this company, no doubt. you know, i don't know what the chart is pointing to exactly but it's pointing to something negative. >> you mean because of the hit to travel. >> to travel and consumer spending, confidence. >> but there's no direct -- >> no direct link, but this terms of the theme parks -- >> tourism overall. >> tourism and people spending on movies and that sort of thing. it could potentially hurt disney. >> thank you both. we're heading into the close with 40 minutes to go. the dow is still up 102 points here, bill. we'll keep a close eye on the s&p as well. >> hanging onto the gains here. russian president putin isn't the most trustworthy person in the world, so why did this market rally like this on his pledge this morning to not seize any more parts of ukraine? we're going to discuss that coming up here. also, biotech stocks, they've been red hot for the most part lately, but closely follow value investor joel greenbott thinks you should be feeling sick about buying this group. find out what stocks he's betting against. that's coming up later on "the closing bell." in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. was it truly something he said? stock future this is morning before the open rallied right after russian president vladimir putin's speech justifying his nation annexing ukraine's crimean region and this rally has continue. >> cnbc chief international correspondent michelle caruso-cabrera is joining us today to explain why the reaction has been so strong. >> vladimir putin's annexation of crimea was a pomp filled announcement in front of the russian parliament. flag bearing honor guard and entrance heralded with trumpets. an hour-long speech and signing ceremony with putin and three crimean politicians all backed by the kremlin. with that crimea was under the control of russia. take a look at the s&p 500 futures from that hour. just before 8:00 a.m. east coast time, they rose sharply. it was at that moment when putin during his speech said, don't believe those who say we want more than crimea. we don't need it. that was the answer the markets were looking for. take a look at the russian stock market, which had been in negative territory but turned decidedly positive about the same time almost 4:00 p.m. in moscow. as you can see here when it happened from this intraday chart. whether putin can be believed remains to be seen. remember, two weeks ago, here is the video, he told reporters at a news conference did he not plan to annex crimea, and yet he did so today. on one other note mikhail gorbachev said the referendum was a happy outcome. many americans remember his meeting with president reagan and when the president said mr. gorbachev tear down this wall. and putin spoke to the germans and said we supported your reunification, we hope you do the same here. he sees crimea reuniting with russias a analogous to that situation. >> michelle stay there. let's talk about this. bring in "fast money" contributor tim seymour and cnbc's jeff cox to talk about if investors should be buying into what putin is selling. i think both you guys are pretty skeptical on this. jeff, i know you are. >> yeah. i don't think there's any reason to believe what putin says. i think it was a one-day trade. if you look at what the russian stock market did, as michelle pointed out, it was basically the equivalent of over 500 dow points. i think anybody who believes that there's anything permanent here is crazy. i mean, this is just a one day thing. we know -- if anything, it makes the region less settled because we know now that putin can do what he wants and there's going to be very few recriminations behind it. >> and, tim, that being the case, what are investors to do? >> well, i don't know if it's a one-day event as jeff points out. i think you really -- what putin has won and jeff has said this, he's got crimea, and guess what? we're not even talking about crimea now. we're talking about eastern ukraine. here we suddenly have had a guy who basically now is controlling the black sea, isn't worried about nato coming to his back door and this is what he wanted. he already controlled crimea so clearly it tells you where the interest lie here. they're in eurasia, not with the g-8. from a markets perspective, i would be very careful at least of expecting this to go into the end of the week. something like spare bank, which i think is one of the great banks in emerging markets, and it's the state bank of russia, that bank has rallied 24% off the lows that we saw thursday afternoon. i was advocating buy -- >> you're saying it's over, tim. is that what you mean? >> you're in a place where you need to be tactical. i think there are companies you can own and you can own them at these levels and ride through volatility. i think there are names you can trade. >> michelle, i just want to raise this point, this executive order that obama has issued against russia, against certain individuals associated with the russian government, seems extremely broad and could potentially net u.s. companies, and i wonder even u.s. investors if that were to be the case. i'm not saying they're trying to go after them. but it basically allows the white house to sanction any individual or company providing financial support to the russian government. well, that's pretty broad. >> it is but then they were very specific about the individuals and then in the briefing call with reporters, senior administration officials said that they were very specific that they were not going to be sanctioning businesses at this point. what we're really waiting to hear, kelly, is what's the next step step? they made it sound yesterday like if he annexed crimea, there was going to be a lot more to come, but so far silence. >> and europe is not interested at all in cutting off russian gas. germany gets 30% of their gas from russia. this is a big deal and they've been very cquiet. big talk, big bluster, but right now it's putin 1, u.s., 0. >> it's a giant finger wag at putin. i think it speaks to a larger point in the market we have to be looking out for. this is a market that's really priced for perfection. it's assuming perfection. it is assuming the best possible outcomes of all of the things that are coming down the pike as far as the market goes whether it's the chinese economy or whether it's putin or whether it's the federal reserve. i mean, investors are really -- >> is it telling us though to some extent the u.s. economy is strong enough to weather some of these -- >> yeah. >> -- difficulties? >> yeah. and i think from a trade perspective, i think think people are overdoing the russia impact. russia is turning eastward. russia and china are now a much bigger ally than they were two weeks ago. from a markets perspective we have to keep this in context. volatility -- sell germany, don't sell the u.s. on this news. >> i don't know -- i think the jury is still out where the u.s. economy is. and the other thing that the market is priced in for perfection is that the slowdown in january and february was solely due to the weather. we don't know whether that's the case. we have a lot of question marks out and we don't know what's going to happen through the year as the fed continues to take its foot off the gas pedal. >> michelle, i embrace your question about what happens next? putin has spent years ingratiating himself to the economic leaders of the world and being a part of the g-8 process which was so different from the past. now all after sudden we get this different putin. it's like the throwback days. so you wonder what their role will be in the g-8 and if, in fact, they even care what the role will be down the road. >> i think the g-8 -- i have thought for a long time it's a fairly meaningless organization that doesn't get a lot done. when it comes to what does putin do next, i think that's what we wait for. what he says today is not relevant because i think he's playing a dynamic game. he doesn't have a plan. he says, okay, i'm going to do this, but see how the west reacts. what do you get so far? zero. that may incentivize him to do more. we don't know. >> and we'll have to leave it for right now. thanks very much for your perspective. appreciate it. stick around and catch tim and the rest of the "fast money" crew coming up at 5:00 p.m. in 90 minutes' time. market clearly buying into putin's promise but are you? we're asking your thoughts on what we just talked about here. send us your tweets to @cnbcclosingbell. i got it right. we'll reveal the best of your tweets coming up here on "the closing bell." >> we have 30 minutes to go before the close, and despite some of these concerns, the dow is adding 88 points. the s&p 500 is less than 10 points away from a new all-time high. this on day one, bill, of the fed's two-day policy meeting. >> then janet yellen will hold her first press conference as fed chair tomorrow. what do investors want to hear from her to keep this rally going? we'll have a preview of that news conference coming up next. also, how is gm's ceo mary barra handling the recall controversy. it's. li been linked to a dozen deaths. you don't want to miss what kevin o'leary and marcus lemonis have to see. plus some new developments out of gm. stay tuned for all of that. you can catch more of kevin o'leary on tonight's "shark tank" marathon at 8:00 p.m. eastern and catch marcus lemonis on a new episode of "the profit" at 10:00 p.m. eastern time on cnbc. stay tuned. stay tuned. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ welcome back. here is a look at what's happening in markets. the stocks are surging for a second straight day. the dow creeping closer to erasing all of last weeks' losses. >> dominic chu, what's driving this rally today? >> let's start off with microsoft. they may unveil an office of their office software suite for the ipad. that's according to reuters and other media reports. shares are up almost 4%. shares of fossil also popping on the day. the company saying it's working with google to make android technology wearables like watches, glasses possibly for the future. those shares on the upside as well. take a look at penn virginia. nothing like a little shareholder activism moving higher. george soros disclosed a 9% stake and that's always a big deal, and lastly, it was a day in the red for video game restaler gamestop. walmart introduces a new program to allow shoppers to trade in games for store credit at walmart. when the biggest retailer in the world wants a piece of your action, your shares will take a hit. >> as we know, the fed kicked off its two-day meet today, but investors are focusing on tomorrow when we get the committee's statement and we get that news conference by janet yellen. >> not only that, but fed chair janet yellen, that will be her first news conference she's delivering and you will see it right here on "the closing bell." what should we be expecting? joining us is jared bernstein and mya mcgiddes. great to see you both. mya, what do you expect here? >> well, i'm anticipating that what we're going to hear from the new chairwoman is a sense of where they're going to go with forward guidance and the sense of where we think the economy is headed. it will be very important what their projections for the economy are and how that is going to dove tail with if they're going to be changes in the level of specificity that the fed leaders put out in terms of forward guidance. as we know it's pretty likely they will be less specific but that will give a little less insight into the future policies of the fed. >> jared, our rick santelli has a dream she'll come out tomorrow and say, okay, no more tapering, we're done, no more buying of assets. qe is all done. we're not expecting anything like that, of course, but do you expect any difference, any subtle difference from ben bernanke to janet yellen? >> first of all, let me say rick santelli's dreams are probably my nightmares. let's get that straight. no, i mean, i think she's going to come out and take another ten off the monthly asset buys. we're talking about a mere $55 billion a month now in quantitative easing and as maya suggested, perhaps a shift from less quantitative to more qualitative forward guidance. we'll see about that. but i think the important point and here i disagree with rick, i think what we'll hear from chairwoman yellen is that the economy still needs some help from monetary stimulus. it is not out of the woods. output gaps remain strong. inflationary precious remain very que he is sent. i think -- that by the way has been the message of previous meetings, so i expect consistency in that regard. >> maya, the one concern we tend to hear from people when they think about a stronger u.s. economy, what happens when rates go up and we have to do something to address the longer term entitlement issues and the u.s. government perhaps is paying a little more in interest? what's your main concern about the evolution here over the next couple years of the u.s. economy? >> right. well, i think we are in a position where we have become incredibly vulnerable to any significant uptick in rates. i don't think that's on the immediate horizon, but it could be, and we're not hedged against it at all. so if rates go up, just by one percentage point for instance, it will lead to about $1.5 trillion more over a decade in interest payments. interest already the fastest growing part of the budget, even faster than health care costs and social security. it's left us vulnerable and the fed under chairman bernanke and my guess is under chairman yellen it will as well has sort of danced up to pushing policymakers to think about how to get the long-term debt under control. the fact we're so polarized in washington right now and we've been unable to take real measures we need to mean a lot of the heavy lifting has fallen on the fed instead of this being a partnership between fiscal policy and monetary policy which is ideally what you would want. >> maya, you said you wanted more clear forward guidance. i know everybody would love that, but admittedly, they're making this stuff up as they go along and it's so data depep dent they're not even sure what the data is going to say down the road. how much clearer do you want this forward guidance to be? >> let me clarify. i think they're going to talk tomorrow about forward guidance. i actually am somewhat concerned about the notion of forward guidance as one of the main fed tools because what it does is it precommits sort of policies down the road. >> exactly. >> and loy ta lot of things can change then. it's similar to what we do in fiscal policy. it may help you now, but it can lead you into tough situations later. i don't think it's the strongest tool we should be relying on. i'm curious to see what comes out of the press conference tomorrow on the topic. >> jared, just real quick because we have to go, but there are going to be plenty of people now and in the months perhaps to come who say that, you know, the talk about higher rates and what that will do to the budget has been a lot of crying wolf. that said, this point will come upon us. so to the trillion and a half dollars maya just referenced, what are responsible policymakers here to do? >> there's no question that interest rates at some point are going to crawl off the bottom and that's going to mean higher interest payments. remember, half of what we pay in interest is to ourselves, so i think that that's okay. i think the important thing to recognize is that the best way to reduce the debt to gdp ratio is to grow faster, and that would suggest if anything we don't want fiscal constraint. we don't want austerity. we need to promote growth in the near term. that will help us on the problem that maya identified. >> jared and maya, thank you both this hour. we have about 24 hours to go until that event tomorrow. in the meantime, adobe out with earnings much earlier than expected. it was supposed to be after the bell, jon fortt. what happened? >> that appears to be the case. these are numbers from a data sheet that appears to have posted to the site early. revenues are coming in at $1 billion. earnings per share nongap at 30 cents versus 25 cents expected. and creative clouds subscriptions according to this data sheet in at 1.84 million subscribers. that is a jump of around 400,000 over last quarter. that pretty much equals the strongest jump that adobe had seen to date in creative cloud subscriptions. adobe is transitioning from a more traditional software model to a subscription cloud model. that can put a damper on revenue but it's really good for evening out revenue growth, potential, and stability in the longer term and they seem to have beat on the top line and had a strong quarter for creative cloud subscriptions which is goiod across the board. have to listen to see what the projection is for the coming quarter but they appear to be on pace to hit that 3 million subscribers that the ceo expressed last quarter. >> and the stock has been trading rapidly and higher, up a percent as a result. thanks, jon. heading toward the close with about 15 minutes left and the dow starting to lose some altitude. we're up 82 points. we were up well above the 100-point mark a while ago. >> we've heard from adobe. oracle is next. they're getting set to report earnings after the bell. and a person in the cockpit reportedly rerouted the malaysia air flight 370 from its intended path using the aircraft's on-board computer. that's increasingly the scrutiny of the plane -- increasing the scrutiny of the plane's pilot. how do carriers ensure pilots can be trusted year after year? an aviation expert will be weighing in on that critical issue coming up on "the closing bell." bell." 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 that's weighted based on how accurate they've been in the past. i'm 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... voice-enabled 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 aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. all right. the fun continues. investors getting set for a big technology earnings report coming up after the bell tonight. >> josh lipton has a preview of what we might expect from oracle. josh? >> kelly, oracle reporting after the bell. the street is going to be looking for eps of 70 cents on revenue of $9.4 billion. that would represent growth of about 8% and 4% for the company. by the division there will be a lot of focus on new software licenses which tells us how much new money the company is bringing in. analysts expect sales of $2.5 billion for the quarter. oracle stock has not done much over the past year, and one reason is concern about competition from rivals such as sales force and work day which are attacking oracle from the cloud. investors will want to see big growth in bookings for its cloud-based products. kelly, back to you. >> all right, josh. thanks very much. we should only have a couple minutes to go on that one hitting right after the bell, bill. in the meantime, we have 13 minutes before that close. the dow up about -- i can't read the numbers. >> up 81 points right now. we're fading into the close. >> thank you very much. >> if you call that a fade there. despite the market rally over the past five years, you may be surprised by just how little americans have saved up for retirement or how ready they think they will be when that retirement day comes. that alarming story still to come here on "the closing bell." stay tuned. stay tuned. let me talk to you about retirement. a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. [ dance music plays ] [laughs] no way! i have no financial experience at all. that really is you? if they're not a cfp pro, you just don't know. find a certified financial planner professional who's thoroughly vetted at letsmakeaplan.org. cfp -- work with the highest standard. welcome back. the dow up 82 points now as we head towards the close with nine minutes left. jeff from fifth third bank and walter todd from greenwood capital are with me today here. do you like this rally? which market do we believe, last week's five-day sell-off or this week's two-day rally here? >> somewhere in between. not very helpful, but we think the days are getting a little tougher where we can expect to see continued strength in the market. >> the days are getting -- >> it's getting a little tougher to expect continued strength in the market. >> so you think we're getting a little toppy here, is that it? >> we've cut back on our equity allocations in our portfolios. we're playing with real money. we think it's increasingly risky in the equity market short term. we're still zwregenerally overweight. >> we have some breaking news. becky quick on apple. what do you have for us? >> there is a new book on apple that's out today. it's called haunted empire by a former "wall street journal" reporter who was on "squawk on the street" earlier today. the book has stirred up some controversy. a lot of books that look at apple do. it comes to the conclusion that apple's best days are behind it. so for that reason you are seeing a lot of people both inside and outside apple talking about this today and kind of digging things through. if you wonder what people inside apple are thinking about it, i did just go back and forth over e-mail with tim cook the ceo of apple to get his thoughts. here is what he has to say in an exclusive statement he's given to cnbc. tim cook says this nonsense belongs with some of the other books i have read about apple. it fails to capture apple, steve, or anyone else in the company. apple has over 85,000 employees that come to work each day to do their best work to create the world's best products, to put their mark on the universe and leave it better than they have found it. this has been the heart of apple from day one and it will remain at the heart for daek kouds to come. i am very confident about the future. we've always had doubters in our history. they only make us stronger. this again despite a former "wall street journal" reporter who did some exhaustive research. it has stirred up some controversy because it comes to the conclusion that apple's best days are behind it, that it's gotten tougher at apple to innovate since steve jobs' death. tim cook reporting there are 85,000 people who are coming to work every day and showing up. >> we're running out of time here, but does he simply just dispute the conclusion that apple's best days are behind it or can he point to specific things? i don't know if you got into that -- >> i don't have any specifics on it, bill, and i was not on the phone with him so it wasn't a back and forth he can change. this is a response he sent back. i talked to other people who say some of this is cherry picking but the controversy you tend to get when you take a deep dive into a company. people on the inside, people on the outside so tee things differently. >> and the word nonsense speaks volumes right there from tim cook to describe the book. i guess we know his thinking on that. >> that's right. >> thanks, becky. >> thanks, bill. >> becky quick. we're going to take a quick break. we'll get to the closing countdown and see how the market handles the close and then after the bell, go bargain hunting with joel greenblatt. we'll find out where he sees opportunities in this market. you may be surprised by some of the names he has on his list right now. you're watching cnbc, first in business worldwide. friday night, buddy. you are gonna need a wingman. and my cash back keeps the party going. but my airline miles take it worldwide. 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[ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ coming up on the two machine minute mark. a recap of the day, the putin rally continued this morning. we were up more than 100 points much of this day. starting to lose altitude in the last hour of trade. 86 points on the dow. adobe came out and beat expectations. it's up about a percent right now. oracle is what's coming out. they are expecting a profit of 70 cents. whisper.com says it could come out to 74 cents. back with jeff from fifth third and walter todd from greenwood capital. you have already established you're taking some money off the table. what about you? >> we acknowledge the market could be range bound in the short term but we think we're in the middle innings of this economic expansion. we think consumers, businesses, and government have underinvested. we think we're going to see a capital spending push here this year that's going to drive economic growth and that leads you to industrials, technology, financials, and discretionary. >> you're investing in them right now. >> correct. pick your spots, the market may be choppy but we like the economic expansion. >> you like the economy longer term you just think it's getting ahead of itself. >> we think the next top is going to shift very quickly to the fed being behind the inflation curve. we look at tighter labor than we think, tighter capacity in the economy. last year's housing rally filtering into this year's cpi numbers. all that could change the tone of this market very, very quickly. >> and bob pisani joining us here. we do have the fed meeting tomorrow. that's what everybody is going to be watching. we'll probably have a quiet morning until the immediate. >> forward guidance will likely be altered somewhat. they will stick to a $10 billion taper, that's the betting so far. look for them to make some comments on the improved economy. capacity utilization better than expected, production better than expected. today a nice revision in housing starts for january. the data is starting to heat up a little bit and it's not march. we're not getting march data. we're getting february data looking like it's heating up a little bit. >> gentlemen, thank you. appreciate it. bob, see you later. we're going out off the highs of the day but still a decent rally on the heels of yesterday's rally as well. stay tuned, the report that will set the tone for tomorrow as well, oracle's earnings coming up on the second hour of "the closing bell" with kelly he was and company. see you tomorrow, kelly. >> thank you, bill. welcome to "the closing bell." i'm kelly evans, and on this tuesday here is how we're finishing. another winning day on wall street. the dow jones industrial average after shedding in the range of 300 points last week adding another 91 today after a strong session yesterday as well. that puts it at 16,338. the nasdaq adding 52 points. the outperformer on the session at 4332. the s&p 500 up 13, 1,872 is the closing level there. again, 1,878 is pretty much the all-time high for this index. remarkably enough with everything going on in the world, we're only a few points shy of that level. now, we're also expecting earnings at any moment from oracle and when those hit, we'll bring them straight to you. with me today's "the closing bell" panel, kate kelly, kevin o'leary, author of "cold hard truth on men, women, and money." the profit's marcus lemonilemon carol roth, and guy adami. guy, do you want to talk oracle, markets more broadly? >> let's wait for oracle because it's traded great. let's talk about the markets in general. you're too young to know who ethel mermen is but everything is coming up roses. it's crazy. the market doesn't want to go down. i see the news. i think it's mixed at best. bob pisani just said the data has been good. i'd call it mixed. i don't think earnings have been fantastic, but the market wants to plow higher. you can't get in the way. i have been wrong for the last 60 s&p points. i thought the last sell-off would sort of move faster to the downside. it didn't. so it tells me the market -- it tells me we will continue to go higher. >> we saw the market slice down through on the s&p 500 that 1850 level but it has sprang back up, kate. what do you make of that and the move we've seen at the same time seen in commodities. is that a bullish sign fundamentally or will it be a problem down the road? >> real quick on the stock market, more or less the folks i talk to in hedge fund land for instance say they're constructive u.s. markets still. they like the conditions they're seeing with some limit ed qe involved. they like domestic cyclicals among other things, like the u.s. relative to europe for sure. in terms of commodities, interesting story with the drought in brazil and california as well as some ind yo sin kratic issues in the oat market. ags in general are only 15% or 16% of the composite. you have much more exposure to energy. that's why you see the overall commodities indices are only rallies a percentage or two this year. so so far the kind of macro effect has been limited. >> that's a good point. to rattle off some year-to-date numbers we're talking about, with the broader indexes unchanged -- stock markets, i mean, coffee is up 70%. hogs, 42%, cocoa 12%, sugar, wheat. marcus, are you worried about the u.s. consumer? >> i'm a little worried about the u.s. consumer. i look at transports and some manufacturing of course i'm wondering why they're driving so high. i think cash on the bl sheet is having a big impact for a lot of companies. we're not getting a lot of debt, sitting with a lot of cash, and earnings aren't bad. >> kevin, the business round table told us in their quarterly survey they're finally seeing better signs in capital expenditures, a little better with hiring and generally their outlook. >> there's another reason, too. there's no competition for equities. i'm a fixed income investor. show me a ten-year at under 3%. why would i ever buy that? when i see the commodities starting to have an inflationary tonality to them why isn't the fed looking at that and raising rates for me. i'm getting unhappy. >> carol, are you unhappy with rates? >> you're always unhappy. juneau i'm always a little contrarian but as we're talking about everything coming up roses and all the prices rising, i want to go back to mr. adami and i want to talk about the russell 2000. if you look at the small caps which we don't spend perhaps enough time talking about, those seem to be really getting a bit out of range, a really big spread here between what's going on with the russell and say the s&p. so i wanted to ask guy's opinion on if he's concerned about what he's seeing in the small caps? >> kel, i'm in your camp. you know i'm way in your camp, but at a certain point as i say all the time, price is truth. yeah, i think you have to look at the russell and you have to be somewhat concerned, but the momentum in the s&p is tremendous, and just to push back on the yields play, why would you ever buy bonds? if you had said to me, guy, the s&p is going to be within a whisper of an all-time high by march, where are ten-year yields going to bei, i would have said 3.5%. the bond market seems to be saying something that the equity market doesn't see. i think the bond market is going to wind up being right, but for now both seem to want to go higher. >> kate? >> if i can just return to this point for a second about commodities and their impact on the market. i think you're going to see a case by case involvement. jim cramer is going out to the starbucks annual meeting tomorrow. what do they have to say about the 70% spike in coffee prices? granted, coffee prices were at a real low at the end of last year and they have some room to run with, but an effect like that on sort of a raw input are going to have a huge effect on consumer companies that are so dependent on one or two materials. >> especially if you have to take a hit to profits. goldman talking about whether we've reached peak profit margins or not. they think we have a couple more quarters to go. what's interesting, kevin, is despite the fact we've seen this run-up, the global inflation indexes is running at an annualized 1.6% because emerging market growth continues to fall short of what it needs to be. the u.s., the cpi figure this is more than were still pretty soft despite some of the choppiness here and there. so i guess if you want to talk about higher rates, do you have to see both higher general inflation and higher wages. >> you're trying to tie our u.s. domestic economy to the rest of the world, and maybe it's different this time. but i look at the u.s. markets and i talk to small business every day. things are looking better. there's no question about it. but i want to go back to what guy said. if he really thinks the ten-year rate is going down, that is incredibly bad for equities because he's right, bond guys are way smarter than equities guys. >> you'd know that if you read "liars poker." >> i'm a bond guy and that's the way i look at the world. right now i'm looking at this saying to myself somebody is wrong, and if this bond doesn't go past -- the ten-year has to have more than a three handle on it. >> inflation, the one thing we all need to be thinking about especially with the fed meeting going on right now is at some point is the fed going to be caught flat-footed here? at some point is inflation going to get away and they're going to have to make a big move here? i personally think that's going to hahn and that can have a big effect on the market. >> the thing i worry about is summer and late fall earnings from some of the retailers. you're talking about all these commodities driving up. it's going to -- the finished goods products will land on shelves and the retailers will not be able to raise 3r50is prices. >> we have oracle out with earnings. josh joins us with the numbers. josh? >> kelly, oracle just reporting. let's get you the numbers. remember, the street was looking for 70 cents on $9.4 billion. oracle reports 68 cents on $9.3 billion. so a miss there on the bottom and the top. looking through the divisions, new software licenses, so new money oracle is bringing in, that was up 4% to $2.4 billion, but that does miss what the street was looking for. software updates and support up about 5% to $4.6 billion. that's in line. hardware products up 8% to $725 million. that's above what the street was looking for, but oracle reporting 68 cents on $9.3 billion. a miss on the bottom and the top. delly, back to you. >> thanks very much. >> i worry about oracle missing top line. cap ex got pulled back in the last 90 days. people started to get a little nervous. i think we may see some pent up demand in the following quarter. >> let's bring in david garrity. what jumps out to you. >> i think what we have to consider is there's been a lot of competition coming up for established it. vendors such as oracle from some of the emerging companies that have been benefitting from a strong stock market and a lot of entry capital available. companies like amongo db that costs 10% as much as oracles and you have been finding as companies have been starting to look towards big data as a means of running their business, obviously they're starting to look at vendors who are more oriented towards this new paradigm rather than companies like an oracle or an s.a.p. or ibm that are the one that is brought out the first iteration ev of database software. i think oracle will be challenged going forward from here. >> david, what's your view on the shares right now? >> currently the stock trading down about 6%, the price to earnings growth relative to where you're looking at is about 1.3, 1.4 times, not necessarily extended versus the overall market, but i would say if you're looking for growth, oracle might be a little challenged unless they step up to the plate and make an acquisition which they've not been shy about doing in the past. >> did i hear -- what did you say the multiple was, the price to earnings ratio? >> price to earnings growth is approximately about 1.35 times -- >> earnings growth, i'm sorry. >> 12 1/2 times forward earnings. >> guy, do you want to jump in here for what this means with this old -- i hate to call it old tech space. >> it guess back to what carol's question to me was. what does it mean for the large cap names and what does it mean for the russell? some of these smaller cap names are taking over. clearly, when you see a report like this out of oracle. oracle has had a huge run, probably going to be a couple days of this sell-off. what does it mean for the broader market? the market has shrugged off everything. then i look at ibm which i think has gotten way ahead of itself on the long side. i think maybe ibm is in for a similar quarter to oracle. maybe ibm is a sale here as well. but, again, if the broader market shrugs it off, it's just one more way to look at it that the market doesn't care. >> if this company, if their business is being disrupted by new players, by the innovation in the space, why should we take that as a cautionary sign? >> i don't know. i'm not saying you should. that's going to be what we should look for tomorrow though. >> well, i guess because what we're going to start to see, kate, is a lot of people saying the market is shrugging off. oracle comes out with a big miss, et cetera. how much read through should there really be? >> it's hard to say. when you read these days about what people are looking to from professional investors, it's all about sort of fundamental research and the old-fashioned stock pick something back. so you would think you would see a stronger reaction to news like this. i also notice if you look at hedge fund trends, you saw a peak in total assets under management last year, yet the largest number of closures of individual hedge funds since 2009. there's an emphasis on quality and sound strategy. it doesn't explain why the market isn't reacting more strongly today. >> this might be a case of having to listen to what the company itself says if it's talking about macro weakness, pricing pressures, et cetera, as opposed to kind of things specific to the execution of their business plan. >> yeah, they can come back and say that geographically things were weak for them over in europe, but i would say from a bigger picture standpoint, you are seeing a rotation, new tech versus old tech. obviously you can look at some names like a facebook paying up $19 billion to buy whatsapp and the stock is up. from that standpoint investors are looking for companies that are making bold moves and for companies that are basically setting themselves up around new paradigms in terms of computing. >> yep. we'll leave it there for the time being. david, thanks for your time. guy, really appreciate it as well. thanks to josh lipton for breaking the numbers. the panel sticks around with me and be sure to stick around and catch guy and the rest of the "fast money" crew coming up at 5:00 p.m. now, taking charge, that's what gm chief mary barra is attempting to do in the wake of the recall mess of the company she now heads. she's issued an apology, installed a new safety czar and wi we'll look at her moves next. and i'll talk with joel greenblatt, the man behind the book, "you can be a stock market genius." some names he's buying and some he's avoiding. you're watching cnbc, first in business worldwide. siness world. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. welcome back. general motors ceo mary barra speaking out about the recent recalls plaguing the automaker. she's announcing the creation of a new post to deal with safety issues. phil lebeau joins us with the details. >> this is really the beginning of gm trying to get in front of this story because they've been beaten up so much over the last couple weeks. today mary barra held a rount table with some print reporters answering questions about the recall crisis for the first time since this all blew up a month ago. she avoided talking about specifics in terms of what went wrong over the last ten years identifying the ignition switches and what went wrong there. she says they will not sacrifice accuracy in their own investigation for the sake of speed, and she says that investigation may take up to a couple of months. she said, i ask for your patience. i know you want to know what happens. so do i. so does mark. she's talking about mark royce, the head of global product development. this is the subject of our internal investigation as well as some inquiries. there may be time that i am limited in what i say, but i do commit to you that as we have results along the way, we will share what is appropriate and more importantly we will take action. she says that if she is asked to testify on capitol hill because there are a couple of congressional hearings that are going to be coming up in the next month, she will testify. so far she has not turned over any documents to the department of justice, hasn't been asked to turn over any documents. she says that she's sorry for the loss of life and that it was one of the first points she made. that's the first time we've heard that, kelly, as general motors and mary barra are trying to take those steps at least a little bit to say to the public, we understand the severity of the situation and we grasp how serious this is and what needs to be changed here at general motors. >> and, phil, stay right there, if you will. i want to ask the panel about this. marc marcus, to you in particular, you go in and fix businesses, not necessarily that gm is a flawed business here again, but obviously there are issue that is led to this crisis, some of them predating the new gm. is mary barra now doing the new thing. >> she is and that's why i like her as a female ceo. she's taking responsibility, acknowledging the mistake. she's saying clearly, this will get resolved, heads are going to roll, i'm in charge, it's going to get fixed. >> as a female ceo or as a ceo in general? >> we had a discussion last week about whether a man or a woman would handle this differently and i think in this particular case the fact that she's showing compassion, she's being a great listener, i'm not sure a lot of men could do the same to be honest. >> you raise an interesting point. i was listening to phil's report and also his earlier reports and wondering what kind of grade would company watchers give barra for communication? i think it's interesting -- >> she gets a pass for sure. >> no ceo wants to inherent this. >> here is the question. in the incremental buyer, are they going to buy a gm car? are you going to say i'm going to wait until she figures it out, i'm going to buy something else? >> i don't think it impacts current sales primarily because when you compare this with toyota, toyota impacted vehicles that were on the lot and it made people say, hmm, should i buy this? we're talking about a recall situation for vehicles that were built between '03 and '07. not to diminish the seriousness of that situation. it simply says the people out there looking at a gm vehicle right now are not thinking about this recall in terms of is it in the current vehicles. >> at the same time doesn't it raise the question of what else might they have overlooked from 2007 on? >> absolutely. absolutely, kate. but if you go back and look at the history of recalls in the auto industry, almost every time there's been a terrible one, you have bun dits out there saying that's it, these guys are dead in the water. you look at the pinto, look at the explorer, toyota, every time auto sales tend -- >> it's also -- it's an umbrella brand. you're talking about gm. people don't buy gm. they buy cadillac or buying a certain subbrand, and so the average sun koconsumer may not even though it's at the parent level, they may not e quit the issue with the brand they're buying. >> this is why having a dealer body that can represent a brand in a community and be very strong with the consumer and instill confidence -- >> you had to sneak that in there. >> this is why having a dealer body is important. they're communicating on behalf of the manufacturer and their -- >> but tesla -- >> it raises the old scepter that in north america, not just gm, we built crappy cars, and does this bring us back into that concern because that's when the germans and everybody else got market share here. >> exactly. >> they can point at this and say, look, here is evidence that along the way we've gone back to our old ways of building crappy cars. >> and another thing -- >> let me put it this way, there are more people who will be read being it and it's gotten picked u up, and just as maybe people were starting to trust new car companies, in the back of their mind do they think maybe it's just the old thing in new clothing? >> there's no doubt. that is an easy theme for anybody to pick up on the web. i get e-mails all the time from people, both pro and anti-gm and the anti- ones, they're all the same. they're terrible. they build hunks of steel that drive down the street and fall apart. on the other hand, i also hear from people who say they will buy them. >> but speaking of this damaging narrative, fim and everybody else, too, not only is it something that contributes to the perception that's negative about u.s. manufacturers, but this is what happened before the government bailed out the big three automakers. >> it speaks to a bigger issue here about accountability, and i heard mary barra say she's going to take action. narrowing it down to the people who knew and action against them and getting them out of their jobs and i think if she does that, that will give me and i think a lot of investors a lot of respect towards her. maybe she's done a great -- >> carol, you're assuming there's still somebody who is at the company who was there in 2014 and that they put their name on a document. if we're looking for a smoking gun document, you're not going to find it. i think this is more a case of generally speaking middle management incompetence, people let thing go. were not as diligent as they should have been. >> no market share loss in the next two quarters. is that what you're saying? >> i wouldn't talk about that because -- i wouldn't predict that and here is why. you're dealing with the pickup truck market and the problems that they've had getting their current full-size pickups to be as readily acceptable or as accepted in the market as they were in the past. that's a wildcard in there. there's no way of knowing for sure. >> would you say generally no share loss, phil, over the next couple years? is that -- >> my guess is that if you look back at general motors in two years, they're generally going to be about where they are now. 17.8% is the market share. i wouldn't be surprised if they're around 17.8% or 17.9% two years from now. >> kevin, are you taking the under? >> i don't think i'd short the stock yet, but this is -- if this happens again in the next few quarters, this will not be good. >> what about tesla? >> toyota survived it. >> they did and, carol, tesla, that's a whole other segment. phil, thanks very much. >> you bet. >> appreciate it. up next, how to be a stock market genius. joel greenblatt, author of a book with that very same title, tems us where he thinks markets are headed and whether you should go along with them. and the reaction to vladimir putin's comments indicating they believe him when he says he'll stop by taking crimea. what do you think? tweet us your thoughts @cnbcclosingbell is the way to reach us. your best ones later on the program. we'll be right back. 'll be righ. 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welcome back. let's get back out to cnbc headquarters and get a check on some of today's big movers. >> let's get you up to speed. a few big names to focus on. oracle shares are taking a hit after an earnings miss. earnings and sales both came in worse than analysts expected. new software sales and internet based subscriptions rose by 4% this past quarter over the same time last year. that growth rate was on the lower end of oracle's previously given forecast. let's move on to jor tech company, adobe systems which prematurely released their earnings. profits and sales beat analysts' estimates. those results were aided by stroer stronger demand for their -- 405,000 more subscriptions. solar city, the shares are all over the map on heavier than expected volume. this as the company posts a fourth quarter loss that was smaller than wall street was expecting but current quarter forecasts are for a bigger than expected loss than wall street was looking for. so those shares again moving all over the map positive to negative. big action. back over to you guys. >> thanks very much. so where should investors be looking for value in in market. joining me to help answer that question, one of the most distinguished value investors out there, joel greenblatt of gotham funds and author of the book, "you can be a stock market genius." >> thank you. >> do you take oracle as a tell for the sector more broadly or as somebody being disrupted? >> we look in general at individual stocks and we're valuing them individually. so what we found is that most of our extra returns really come from individual stock picking, not from sector picking. in fact, we get no benefit from where we con scentrate on a particular sector. >> in the tech sector then, what of the names you like? >> well, we like the cheapest things that are coming up now are hewlett-packard, for instance, and apple. you know, they're trading at low measures of free cash flow. there are huge returns on capital businesses. most people don't like them because they're old and stodgy. i have been teaching at columbia for the last 17 years. i ask them what do you do with a company that the technology is always changing? i usually tell them to skip that one and tell them to find one they can figure out. when you buy them as a group with metrics that are so cheap as a basket, we don't just buy apple. we buy a bucket of apples. and our bucket right now is very cheap for technology companies like that. >> so for people out there trying to figure out they look at this market, it's kind of flat year-to-date and they say how do i pick the winners? what do you tell them? how can they be a stock market genius as well? >> well, you know, it comes down to valuing businesses and buying them at a discount. most people can't do that. so they should probably stay out of the way. what i can say big, big picture is this. large caps have a much better valuation right now than small caps. they're not great, but they're not terrible. we've looked back at the last few decades, and if you look at the russell 1000, which is the thousand largest companies in the u.s. which mirrors the s&p very closely, we're in the 42nd percentile towards expensive. it's been cheaper 58% of the time. 42% of the time it's been cheaper. the year forward returns for that index have been somewhere between 7% and 12% in that area, and the difference is, and i heard you speak being it before, the russell 2000. it's stock number 1001 through 3,000. that tells a different story. it's been cheaper 95% of the time over the last several decades and when it's been this expensive in the past, the year forward returns are negative, negative around 3% or so. so not great. >> no. so i imagine you're steering clear of the russell then and of specific names as well snp what do you think about a sector like biotech? >> most biotechs have had an incredible run, so i don't have -- i can't opine on the sector. i would say there are many biotechs that are very expensive. people are very hopeful. many of them don't have anything in earnings so it's very hard to value them. you're valuing them on hope of their new products and when people are hopeful, they will bid those things up. there was a huge run last year a huge run in january. so we're finding a lot of things to short in the biotech sector. hasn't been particularly great for us to find some of those, but now you have an extreme small cap environment and you have an extreme biotech environment, so i think going forward good opportunities on the short side there. >> if you then were to say to people the value is mostly in the larger cap stocks, it looks like retail in particular there are a couple names there you guys like, correct me if i'm wrong, coach. any others? >> well, what's coming up cheap now are stocks like kohl's and, you know, not super high end companies. i think people are still worried about the midlevel consumer, and in general just worried about the economy. so, you know, particularly the consumer. so those coming up cheap right now. pretty much everything we buy, people don't like for some reason. that's why we're getting it cheap. it's just that what tends to happen is that people are short-term oriented, and whether is professional manager has a long-term horizon or not, it's pretty clear their clients don't. some of the stocks the next year or two don't look as good as the recent past so that's not the happy hunting ground for making money in the next year or two. we take advantage of that in general. >> if you had to leave our viewers with some topics to hold onto for that medium term, what else looks attractive? >> like i said, the super large caps, you know, are relatively cheap. so the microsofts of the world, hewlett and apple and, you know, pretty much the top 20 names in the s&p 500 are a little over 30% of the index. it's weighted so heavily towards those, and most of those names are reasonably priced. even google. >> you can still make money in this market? >> yeah. like i said, it's still above average as far as expensive but they're still positive returns available. you don't have to -- the average has been 8% to 10%. >> joel, thank you so much for being here. joel greenblatt of gotham funds. another new twist in the missing malaysian airliner and the twist that pointing again at the pilots. do you know how much airlines monitor their pilots in the years after they hire them? we didn't but we did get the answers, and we'll tell you when we come right back. come right . 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. ♪ i don't have to leave my desk and get up and go to the post office anymore. 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[ male announcer ] get a 4 week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. including postage and a digital scale. so our business can be on at&t's network for $175 a month? yup. all 5 of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're 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. let's close! new at&t mobile share value plans our best value plans ever for business. welcome back. new information on the missing plane intensifying the focus on the pilot. ker simmons joins us with the latest. >> the mystery deepens every day here. authorities here now saying that they believe there was no one else on board flight 370 who could have flown 777 and that some of the maneuvers it made as it disappeared would have been preprogrammed onto the computer. inexplicable to people, much of this, as investigators study the pilots' flight simulator confiscated from his house to see what that may reveal about what he might have been doing request that. at the same time, friends and family of both the pilot and the co-pilot defending both men. so we stim don't know after all of this time simple questions. who was flying the plane? where was it being flown to? where is it now? and why was it flown in the way that it was? back to you. >> keir simmons the latest. this story reminds us of the enormous power the pilots have once they enter the cockpits. everyone's lives completely in their hands. after an airlines hires a person, what kind of procedures are in place to monitor their mental status throughout the ensuing years in joining us for more, greg feith, former ntsb investigator. greg, it's good to see you again as we follow this saga and as the focus shifts to the pilots. what do we need to know about the controls in place here? >> kelly, when an airline hires a pilot, especially here in the united states, they do the background checks, they do some psychological profiling of that pilot to make sure that they are pilot material for that particular airline. every year the pilot will go back for recurrent training. they also must meet a medical standard yearly in order to perform the duties as a commercial airline pilot and exercise the privileges of their certificates. there is no specific psychological monitoring or profiling every year after their initial hire. >> and, greg, are those standards in the u.s. generally toughest? what about the international standards for countries like malaysia as well? >> a lot of the standards are dictated by the airline, especially with the hiring standards and the criteria by which they hire a pilot. a pilot that's hired here may not get hired overseas and vice versa just because the standards are different, hourly requirements are different, experience, and that kind of thing. >> just curious thinking through this, i'd love to know what the panel thinks, kevin, if you think about the requirements we have for people to get licensed as a pilot, should there now be more scrutiny on their physical and mental condition throughout all of those years they are a pilot? >> i don't think so because 99.999% of the time, and i think of this when i get on a plane every day. works out. i land after having my drink and i feel pretty good. i want to ask greg a question i think is going to be raised and i like millions of others are fascinated with this story. at what point do we stop looking for this plane? because it must be a huge cost to countries and private companies that are looking for it. in a month, in two months, in three months, is there a point at which we just stop? >> kevin, absolutely. you have to start looking at it on the return on investment. when i did value jet, we were down there pulling records for four to five months. there comes a point where you have to really evaluate the assets that you have expended, the monetary assets that you've expended, and determine what your return on investment is to see if it's going to proffer any additional information that you don't already have. and the malaysians will have a tough call here shortly. the united states has scaled back their operation. they're down to two aircraft -- >> although they argue they're not necessarily scaling back the scope of their involvement. >> no, they're going to stay involved. they're just going to move their sea assets out of there. >> right. >> quick question on one of the new opera at this theories which is there was some sort of fire on board and the pilots intentionally shut off the transponders in order to contain a potential fire and eventually smoke or fire rendered them unable to operate the 345eplane it crashed. would that explain why the plane may be lost somewhere in the indian ocean? >> there's been this theory, especially about wire fires. new generation airplanes have certified wire that will not burn. it's basically self-extinguishing. if there was a wire fire of any kind, and typically wire fires are slow burning, so, yes, they will create some smoke, but you'd have to take out a lot of the wires in that airplane to be able to knock out all the communications. pilots would be able to get a mayday call off even if they had smoke developing in the cockpit, they would at least declare mayday, we have smoke in the cockpit and try to tell them what their intentions are. you'd have to have a big fire to take out all of the wiring that would affect those communication radios. >> we have to go. marcus, you looked upset a second ago. >> i don't want to hear about return on investment when you're looking for my family. >> of course. >> malaysian needs to look until they find something. at some point it becomes cost prohibitive. it's been a couple weeks, not a couple months. >> that's where the issue of looking in the wrong body of water because we didn't get proper information out of malaysia was particularly undersetting. what a waste of time and resources but also people's feelings. >> something to keep in mind when we talk about the cost of these radar systems is the cost of these search and rescue efforts. got to leave it there. as mentioned, it's probably not the last we'll see of you as we follow all of this. thanks very much. we're getting details in the meantime on why adobe released its earnings so early. jon fortt joins us. >> it looks like a mistake. i have gotten this statement from adobe. we've determined an internal error caused the investor relations data sheet to be accessible from our website prior to scheduled publication. just got that statement. i'll note the revenue and earnings both came in above expectations as did creative cloud subscriptions. numbers spiked when the numbers leaks. but it's trading down a little after hours. >> thanks very much. straight ahead, the golden years for americans may be tarnished. a new study from the employee benefits research institute gauging how confident americans are about retiring and it's not looking good. also today russia's vladimir putin says he has no other design on the rest of ukraine and the stock market seems to believe him. what do you think? your thoughts coming up. s comin, i've learned that when you ask someone in texas if they want "big" savings on car insurance, it's a bit like asking if they want a big hat... ...'scuse me... ...or a big steak... ...or big hair... a new study from the employee your thoughts coming up. houghts. geico. fifteen minutes could save you fifteen percent or more on car insurance. welcome back. russia and the markets, retirement, disney, did any of these stories make the hot list. let's check in with alan wastler. >> you bet they did. first of all, right out of the gate, the news that microsoft is finally going to make office available on ipad according to a reuters report, that's been on fire all day long. people have even been more interested in the pop microsoft stock got right from that news. so we've got a sum up of all the stock action on it today. that's been our number one for the last hour. number two, barclay's initiated coverage of the domestic luxury sector. so we titled it up as basically kate spade is in, michael kors is out because they put all their stock picks right out there. people have eaten that up on the site. and finally, sharon epperson's retirement piece looking at the latest numbers out, it's sort of a good news/bad news thing. the good news is, hey, wow, people are feeling more confident, at least some of them. 18%. up from 13%. unfortunately, that's still a pretty low percentage right there. >> exactly. >> you know, not great, but anyway, retirement stories always do well on the website. that's what's burning it up right now. >> it's such be a important issue. we're going to talk about it with sharon epperson just ahead. thanks very much for now. >> take care. >> see you tomorrow. the clock is ticking, the retirement clock. the reality of that clock is counting down on 9/everyone in this country. up next, sharon epperson will join us. she has the latest report on the state of retirement. it's news you need to know even if it's not very good news. we'll be right back. what if a small companyigh. became big business overnight? 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[ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow. so let's see what we can do about that... remodel. motorcycle. [ female announcer ] some questions take more than a bank. they take a banker. make a my financial priorities appointment today. because when people talk, great things happen. we still run into problems. that's why liberty mutual insurance offers accident forgiveness if you qualify, and new car replacement, standard with our auto policies. so call liberty mutual at... today. and if you switch, you could save up to $423. liberty mutual insurance. responsibility. what's your policy? welcome back. the employee benefits research institute living up institute, living up to its name. it's put together the most comprehensive study on retirement. sharon epperson broke some of the study down for us. >> most americans aren't close to being financially prepared to retire. more than one-third of americans have less than $1,000 in savings and investments, according to this new survey. 60% have saved less than $25,000. and they're not taking action. fewer than half have done a come collation to find out how much they should be saving. at the same time, workers overall, confidence in their ability to retire comfortably, has increased for the first time in seven years. 18% say they're very confident, from 1% last year. but that increase in confidence is almost exclusively with those with higher incomes and participating in retirement plans. one-third of workers with incomes of $75,000 or more, will have enough to retire comfortably. and they're twice as likely as those who don't to be very confident. but financial advisers say it's a false sense of confidence, tied to the stock market gains, not to improved savings habits. a second survey finds most americans spend more time buying a flat-screen tv or choosing a restaurant for dinner than they do on planning investment in an i.r.a. that's an investment many will need to rely on for decades. kelly? >> sharon, stay with us. such an important topic. carol? >> i wanted to ask sharon a question about how much these people should be saving. because there's one thing to be confident and there's another thing to be in reality. i've heard anywhere from 25-times to 40-times your yearly anticipated annual spending. is that a correct range? >> you would be really well-set if you had that much saved. there's others who say depending on your age, if you're in your mid-40s or so, you should have three-times your salary. and by the time you retire at 65, 67, you want to have at least eight-times your salary saved. so, those are some smaller rules of thumb. they're a little less than what you were mentioning. but for many people, they say even that is just unattainable for them at this point. >> i was talking about your annual anticipated spend, not your salary. >> okay. yeah. >> statistics like this make you want to ask, should we not be forcing people to take a portion of their posttax income and force it into savings? look -- >> you sound like senator warren. >> if these stats are true, everybody's going to end up paying for these people. >> exactly. >> we don't want people on streets of america not being able to buy food. if you have $1,000 in the bank and you're 65 years old, that's exactly what's going to happen. >> i raise this. this goes back to a suggestion we raised in january. you can have the private sector do this. there's a ton of cash and earnings and profits. why not incentivize companies or get them to put them into profit-sharing or savings accounts more aggressively? >> one of the things that the obama administration has tried to do with my r.a. is encourage people who don't have a retirement plan set up, don't have access to a retirement plan at work or have not accessed the retirement plan at work, to at least start saving. and the other thing, now that it's tax season, that a lot of folks who are lower income workers don't realize is that there's a saver's credit they can qualify for. there's a tax incentive there for so many americans that could use it don't take advantage of. >> i thought the plan was an interesting one. you would think that a lot of people out there see, i can only put $20, $50 in a retirement account. what's the point? or i don't work for a large company. it's a nice potential solution. >> that's idea is falling off a cliff already. >> already? >> we have the structure. i'm in the mutual fund industry. let me manage the money. send it to me. >> kevin, is it not better to get people investing in stock, investing in corporate america? >> i'm saying corporately, when you sign up for a job, it becomes law that 10% of your paycheck goes into an account that forces you to save it. >> that seems like -- >> it's your money. >> kevin as finance minister just resigned. >> i just saw that. >> many of the people who should get advice, who should work with professional managers, even when they do that, they don't listen to what they're told to do. >> exactly my point. >> i think social security was supposed to be like that. >> that's the government managing the money. >> you want to force people to save. >> i want the private sector to manage your money. coming up next, your tweets. vladimir putin said he had no other designs on ukraine, after annexing crimea today. markets took him at his word. should they? 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"fast money" coming up in seconds. melissa lee, what's on tap? >> i got three words for you. kareem abdul-jabbar. >> is he on the show? >> yes. he's going to be our guest. he thinks that college athletes should be paid. he also has a new business he's starting up with amazon.com. we'll hear all of the details about it. concerns sports memorabilia that has evidence of the players actually owned it. dna evidence. >> i love it. i want his bracket picks, too, melissa. >> we'll try, kelly. >> over to you guys. "fast money" starts right now. live from the market site in new york city's times square. weaker than expected earnings report. that conference call starting right now. we'll get the details throughout the hour. but the rest of old tech breaking out. microsoft, hitting its highest level since july of 2000, on reports it will unveil microsoft office for the ipad. cisco is hhe
investments. welcome. welcome. are you stretching the definition of what a cup cake is, given that it is in a jar? the fomc is expected to stay on >> should a cup cake be a its current path. handheld -- >> not if you want to ship it and janet yellen's first news nationwide and keep it fresh. conference as fed chair begins >> good stuff in a jar. at 2:00 p.m. eastern time. she will likely field questions >> it is good stuff. on everything from the impact of >> a jar. >> cup cakes in a glass jar, the weather to the economy, political unrest in ukraine. where did you get this idea? i'm sure some bozo is going to >> when we started our business, we knew that they wouldn't stay ask about being the first woman fresh and they wouldn't arrive on the job. looking very nice. so my husband saw a show on canning. and he said, why don't you put the cup cakes in mason jars. and my daughter and i thought that was the dumbest idea ever. but it turned out to be a very good idea. >> du apologize to him? >> yes, many times. >> do you think that's a bozo question? >> that could happen. >> how much would we have to pay >> the tsa, are they letting him? >> who knows. all right. them go through now or not? >> do it, anyway. >> actually, in boston they are as for the markets right going through now, yes. now, futures are suggesting we'll have a positive open, but >> but there was a problem at not by much. one point. call it flat for the s&p 500 and >> they were deemed a national security threat and not your the nasdaq. normal cup cake. the dow is up by 7 points. there was no better advertising. the ftse is lower by 15 points, >> this is exactly what i'm talking about. i'm an advocate for small cac in paris is lower by 10 and business. the german dax is higher by 21 i think we need more government points. regulation to stop them from growing. isn't that ridiculous? >> we'll talk about that in a little bit. wicked good -- the minute i saw >> go ahead, brian. >> the justice department is the name, i thought you're in expected to announce a settlement with toyota as early boston, right? >> boston, yes. as today that could cost the >> that is so new england. company over $1 billion. the deal to end a criminal probe i grew up in new england, so -- into the automaker's handling of complaints tied to unintended acceleration. so a capital four-year >> how many did you sell? investigation and would be one of the biggest fines ever imposed on an automaker. >> last year, we sold 175,000 the deal is expected to include a deferred prosecution deal cup cake jars. >> how much? which would allow toyota to >> 70 5 to 7.45. avoid criminal charges provided it meets conditions imposed by >> $7 for a cup cake. the court. this leads us to general motors, unbelievable. >> there are two in here. which is also facing a justice >> who is your biggest retailer? department investigation that >> we are. we sell online. could take years to wrap up. nbc news now reports that gm knew about a defect in its ignition switches eight years ago. and changed the design of an >> i can buy them at the airport internal part, but never told in washington, d.c. >> no, that's not us. federal regulators for the drivers of its cars. >> we have a copycat. that's according to evidence >> this is a great example of from a recent lawsuit filed on behalf of a georgia woman who what the shark tank platform is. anybody can make a cup cake. died in a 2010 gm car crash. this business was doing maybe 15,000, 20,000 a month. in february, the automaker recalled 1.6 million vehicles >> in 2012, we sold 26,000 jars. saying the switches could be >> what are you doing a month now? turn from run to the stop position while the car is being driven. what would that do? it would shut down the car's i know what you're doing, power brakes, power steering and 300,000 a month. >> this is a shark tank factor. its air bag. gm shares not moving much now after hours. the platform itself let's however, guys, down big so far everybody in america know what the product is. and you on your own know -- year-to-date and i have a feeling that that $1 billion number that toyota just settled >> it's celebrating. for might be a precursors to gm -- >> and we're going to have bob >> above all, small business. nardelli on the show. and, you know, this is -- i want i want to hear what he has today. mary barra, the new ceo, says tracy to come on here and talk about the challenges. she only learned about this in andrew, i know you want to text january. do you believe that? me for and i love that. >> i think i probably do. 12 confirmed deaths. but let's take my money and give >> i want to know if steve it to the government or should i give it to the tracys of the world who can actually deploy it ratner knew about this. and build more businesses i maybe we'll have her, if he knew anything about this. >> we can send steve an e-mail right now. >> this harkens back to the think we should create the department of cup cakes. grimshaw case, better known as the ford pinto studies where >> i think it's a learning experience. ford does a cost analysis if you want to do private equity suggesting it will cost us x to and investment -- fix the fuel tanks, it will cost >> i know they call you mr. wonderful, but you are the biggest hammer. us y to pay out claims to those you killed those guys last night who die in flames. with the swimsuits. they were found guilty and paid >> you know, i just speak about the truth. a huge fine. what i like about the truth is i if something similar comes out don't have to remember what i with general motors, we could said. see record -- last year, a month ago, >> if you're gm, why are you announcing that you're starting tomorrow, i don't have to do a trust right this moment? that. >> he's got a great pr guy. you're announcing the amount of money, you go big, you go home >> do you spend any money on and forget about all the lawsuits? advertising for the cup cakes? that's what i'd be doing. and the second piece, of course, >> no, right now, none. >> because of the shark tank is whether it rose to the level factor. >> yes. of mary barra orr whether the >> we've created how many new jobs? at least 12. >> how do you hold off board knew about it. competition? washington, d.c., there is right >> that was there before the bankruptcy. at the shuttle area, you can the bankruptcy cleaned out, right? buy -- >> i can tell you how. wagner forced out by the government. >> hunting down the executive this is an incredibly difficult levels do i think it went? business to scale. and my hat will be off to anyone it's a huge organization. who can do it better than us. >> why is it so hard to scale? >> you think there were people trying to protect the mess that >> because you have a product they made? >> there's a lot of people still that's home made stay fresh. there who knew. you have to not only bake it, >> the part was $1 to replace, but now you pass it. you then have to get it ready $1. >> and you're suggesting that -- for shipping. and then we have to have -- >> not me suggesting. that's from reports that they u.p.s. is our biggest third party vendor. decided not to recall the vehicles. and you have to -- there's much that goes into it. >> you know, there's so much logic here that i think that's it is not easy. overly simplistic. is it helpful? there has to be more than that. >> amazingly helpful. if it's only $1, why would you let people die? i'm sitting here today, right? there's something more here. >> branding, advertising? >> maybe they didn't realize they were dying. >> building our logistics, this i don't know. j. crew. was the first company on shark do you wear j. crew? tank where after it aired, the >> i have tons of j. crew. website didn't blow up and every single order that was received >> do you -- you can't? got shipped. that's never happened -- >> too tall, too wide, >> because of you? unfortunately. because you helped them in i can wear the old j. crew, but advance? >> it was my money that helped the new ones are made for guys that start because we needed a commercial kitchen. that have single slingbacks, but the team, talk about execution, this was a riding -- daughter .mother team that >> i am a j. crew guy. created a business that's scaled here's the news. up to three million. retail takeover deal settled object scene profits, thank you. between discussions between and -- >> and i'm thrilled for that. japan's fast retailing and j. my question, do you ever want to crew. get in -- they have broken down. >> andrew. >> do you want to get into the fast retailing walked away with retail business? would you actually open stores? discussions with j. crew management and private equity crumbs is out there. owners. >> there's a number of stores. tpg seen after "the wall street >> above 49 employees. journal" and others report the talks after late january. >> no, some companies spread some people said the fact that they become public was part of it. i have to imagine that i themselves out way too fast. can't -- i could never imagine i guarantee that within probably the next year, we will be selling more online than them. mickey directirexler, who ran t, >> did you get a buyout option ever working for anyone else when you signed up with kevin? again. that starts and stops the conversation for me. >> this deal created a huge unless fast retailing is going department online and on air to pay some absolutely about revenue based financing ridiculously outside price which versus selling equity. would be almost embarrassing for >> yeah. thank you. that was fun. >> that was great. them pp >> this is called national security velvet, red velvet. them -- >> so he could start a second retailer. >> well, no, saying you would work with us for three to five >> and i like the karat cake one. years. does he want to do that? >> thank you. coming up, we've got two how old is mickey now? cnbc first 25 contenders. >> he's in spin class all the first up, black stoestone's ste time. >> your spin class? >> yes. >> which spin class is that? >> mickey drexel is in your spin schwarzman is our special guest. class? with the candles and everything? >> yeah. then lynn tilton, founder of >> i don't know. i don't do -- >> i've got madonna in my patriarch partners. then harold hamm will join us from continent resources. tinent. jazzersize class. >> used to be a lot more polished. >> the guy dresses good. i do want to say that. actually, i wear occasionally on our show -- not this, but occasionally i wear ties from j. crew. >> they put out the same skirt every year in different colors and i can buy it online with the same size. i don't have to try it on. >> green or orange. >> exactly. markets in china are dropping after the country's central bank denied that it was in talks with another company facing bankruptcy. eunice yoon joins us now from beijing with the story. yet another topping to default, eunice. holy smokes. >> yeah. and that's what a lot of investors thought. that's one of the reasons why we saw the markets rattle. because of a property developer. let me give you guys the details about it. the property developer is a small one. it's from a city in eastern china. the company borrowed about $400 million from banks and borrowed more money from individual investors. now it's saying it can't pay the money back. now, in a different time, different place, probably this situation wouldn't get a lot of attention. but because of the fears about where china is going, the health of the financial sector, the fact that china saw its first ever corporate default, there is a lot of focus on this company. the difference between the one that defaulted before and this case is that this is in the real estate market. and the real estate sector here is so important to the overall economy. so there are a lot of questions about whether or not we, as the no two people have the same financial goals. government starts to reign in more of its credit, as the pnc investments works with you to understand yours housing prices start to soften and helps plan for your retirement. as they already have been, what talk to a pnc investments financial advisor today. kind of impact is that going to have on the property sectors ♪ here? will we see more default and will we see a greater impact on the overall economy? in a we believe outshining the competition tomorrow so these questions are being raised right now and one of the requires challenging your business inside and out today. reasons why we saw a lot of attention on this case. now, the peoples bank of china, at cognizant, we help forward-looking companies run better the central bank, has come out and run different - and said that they are not in emergency talks for a bailout. to give your customers every reason to keep looking for you. even though there were reports so if you're ready to see opportunities before that they were involved. and see them through, so we're going to see how that we say: let's get to work. all plays out, but that would because the future belongs to those who challenge the present. raise a lot of questions about moral hazard. which you guys have been talking about that for quite some time. >> it's super important stuff, eunice, but we all wait to see how the ripple effect is going to impact that market and the global markets. europe for china. thank you. as the world is still buzzing about russia president vladimir putin reclaiming crimea, putin took the opportunity to shock the united states. a group of soldiers, in addition to this, opened fire while storming a ukrainian military sight near ukraine's capital killing a ukrainian soldier. in washington, the white house is handing out investment advice when it comes to russia. in a rare move, the white house suggested investors avoided white house stocks. >> i wouldn't if i were you invest in russian equities right welcome back to "squawk now. box." i think the -- unless you're i'm andrew ross sorkin along going short. with michelle caruso cabrera. >> unless you're going short. that's the white house pretty see how the market is setting secretary. you itself up. >> knew peter lynch, right. the dow is up about 22 points straight from the white house. >> do you think anybody in the higher. the nasdaq up 4 points higher room actually understood what an equity was? and the s&p close to 2 points higher. brian. >> i know. i'm swallowing the cup cake. it was delicious. oh, my gosh. >> i don't think they should be doing this. >> no. fedex shares under pressure. i think it's a screaming bond this is not delicious. the company reporting fiscal third quarter profit of a buck signal. >> russian markets have done well the last couple of days and 23 a share. folks, that was 22 cents below jay carney should know, anybody estimates. should snknow, that your loss i revenue also shy of consensus. more importantly, the full year on the short thyme side of potentially unmrimted. forecast was cut. fedex citing, what else? the impact of severe weather winter. we're watching automaker toyota, >> the question is, is that is in the unlimited sanction the justice department expected category. to announce a settlement of more than $1 billion with the company one of you were on the show this related to those unintended week because we were talking about it -- acceleration cases from a few >> that would be me. years ago. toyota is expected to avoid >> that would be you. >> might have left a mark. criminal prosecution as part of >> i think you might have left the deal. and jp morgan chase will this mark. we were talking about the issue announce the sale of its of what happened prior to the physical commodities unit later financial crisis. >> the default. on this morning. kate kelly reports the sale to i don't know if you saw this, swiss trading firm mark kuria michelle, hank paulson will be worth $3 the.5 billion. apparently in a bbc documentary guys, marcuria was founded by edit that never made it to a piece of a documentary came out two commodities traders from and said, oh, by the way, when i was treasury secretary, a senior goldman sachs. they do hundreds of millions dollars in revenue. official said russia had called this is one of those glencore up china and basically said, like swiss-based super secret but incredibly powerful and hey, let's get together and wealthy trading firms. short fannie mae and freddie i love that. super secret incredibly power mac. >> that was in paulson's book. trading firms. >> that would really help >> and because of new regulations, they have to unload destroy the u.s. economy. this things because of all of >> was that in paulson's book or the -- >> yeah. apparently masters who formerly ran that division will not be in your -- >> it was later in paulson's going with them. >> this is a dodd frank -- no, a book. volcker rule option, right? >> so here, to be on tv, on the >> exactly. record saying this makes no unloading their be group, sense. >> and he also risks looking everything. >> by the way, quickly on that, silly and dumb because, to me, not to change topics, a buddy of that's a screaming buy signal mine works for a big bank, that jay carney is telling you whatever, prime brokers not to buy the russian market. division, saying that because of some of the new rules of that market is down. volcker, one of the unintended >> but what does it say to consequences might be stocks middle america, the folks who continue to go up. are not investors? why? because divisions may have a does it say anything? >> no. harder time shorting equities >> no. >> something like one in five because prime brokerage americans can't identify their own state on a map unless the divisions are going to get squeezed, makes it harder to borrow shares, thus the cost of name is on the map? borrow goes up. so i'm not sure crimea will be thus the unintended consequence of the volcker rule maybe to see stock prices go up. >> just as a reaction to the high on the gheography desk stock price of what could board. ultimately happen. >> i'm not sure economic >> is it harder to short sanctions will be that painful to them. something than -- it's just like a red line to >> and i can tell you again, make these threats about the small companies like mine russian stock market and what's accelerate. some of the others that had going to happen. >> do you think most of america checking accounts and so forth cares about what's going on in with these large banks also were -- got a letter, crimea? >> no. not at all. termination, you've got to move. because they can't -- >> too small. >> well, we can't have any involvement. we don't want to be associated with investments and things that we don't have disability to. so boom, you had -- you know, you just had to start all over again, 30-day notice. >> okay. i want to direct us to take a quick look at apple shares this morning. >> remember sting had a hit song the former "wall street journal" tech reporter has a new book out called "i hope the russians love on apple. their children, too." apple after steve jobs, a book, they don't believe it, but -- >> your point is well taken. and right after that, our own the reality, too, is what do becky quick got an exclusive they call it on the street? statement from tim cook responding to the book. flexing. he told her, quote, this they want to show they're still relevant. nonsense belongs in some of the their economy is in shambles. other books i've read about i was in sochi. apple. it fails to capture apple, steve when i left my hotel in sochi, it was raining and the woman or anyone else in the company. apple has over 85,000 employees behind the counter looked at me. that come to work each day to do we were chatting. their best work to create the and i said thank you very much world's best products, to put for your hospitality, it was their mark in the universe and leave it better than when they very nice. found it. this has been the heart of apple and she said, maybe putin will make it stop raining. from day one and will remain at and i'm thinking, she is being the heart of apple. i'm confident about our future. we've always had many doubters sarcastic but there's more than in our history that only make us that. he is the only one that runs stroker. in the meantime, our next guest that country. you can get the nationalistic is a private equity power feel. >> one of the services reported player. joining us now is steve on monday that behind closed doors, one of the senior schwarzman of blackstone group. government officials involved he is a conturned of the cnbc's with the economy say they are potentially on the verge of first 25 leaders, icons and crisis because of the capital hike that they've been saying rebels. jeff sonnenfeld is joining us, and an economy that is so dependent on oil. as well. do you want to be a rebel, >> let's not forget, russia has steve, or are you an icon? defaulted on its debt how should we refer to you? >> appeared rue, that is more obligations in our looimt. former wall street tech your characterizations. i'm out there day-to-day trying to help build a really good reporter, a new book on apple is company and do well for our called "haunted empire, apple investors. >> i'm going to stick with after steve jobs" and it was rebel, then. let's talk about housing. released today. blackstone has been one of the our very own becky quick got a biggest buyers of housing in recent years. but recently, jonathan greg, who statement responding to the book. he told her, quote, this works with you as the head of nonsense belongs with some of the real estate group has the other books i've read about suggested you guys are going to start slowing down your apple. it fails to capture apple, steve purchases. and i wanted to understand how that came to be and where you think the housing market is as a or anybody else in the company. people come to work each day to result. >> well, the housing market has do their best way, to create done really well, as you know. we've bought somewhere between 7 their best products, to put their markets in the universe and leave it better than they found it. and $8 billion worth of houses. this will be the heart of apple this is on a house by house from day one. i'm very confident about our basis without really buying big future. we've always had many doubters packages of them. in our history. and we've experienced very big it will only make us stronger which leads me to wonders what increases in value of the in the world is he talking houses. we caught the bottom, if you will. and our objective of doing this about? >> the story gave me me no idea. process is really to make money for our investors and we think a lot of the big pop in housing has gone out, for example, in what i don't understand and i the markets where we purchased, will say this to tim, why did he houses went up over 20% in one provide it? >> by providing the statement, year. tim, most people who were never we think that the returns are probably going to read this book are now going to run out and buy more likely to be somewhere this book. between 5% and 10%. i'm not clear what is in this closer to 5%, probably. book that would -- and that's just great. >> that's my point. i don't understand why you come but it doesn't justify us buying out with that gigantic harshly worded statement. at the same rate. and besides, for us an exposure now i want to read the book. in the seven-day billion dollar i have no clue -- i didn't even know this book existed. range is big enough. >> but now it's on my radar screen. >> steve, there's been an argument made, and i don't know where you stand on it, but so now you're interested. because of firms like blackstone but apple has always done a and others that really went, you pretty good job of pr. >> there is nobody in the trunk know, right into the housing of my car. market perhaps at the bottom, why would you say that? but as a result that you have coming up, a special edition ended up -- i don't want to say of the executive edge this artificially keeping prices morning. higher, but prices have gone yale idea's jeff sonnenfeld, higher in part because of the interest from firms like yours. if you take your foot off the pedal, what do you think happens to those prices? stanley's ceo and any impact? >> i think it has virtually no impact. firms like ours, in the scale of huntington-engles. we'll talk about how they view the housing market, are, i think, less than 1%. the economy from the semesteras and it may be even lower than that. lines to the consumer. ♪ so we really have had no real impact on the market, may have had a minor impact on individual local market, but very, very small. and so we're in effect a bit player in a massive, massive market. and i think the laws of supply and demand really drive housing. in effect, for five or six [ male announcer ] how could switchgrass in argentina, years, we've way underbuilt the change engineering in dubai, amount of houses that are needed in the united states. aluminum production in south africa, our population keeps growing. and you're going to have and the aerospace industry in the u.s.? increases in house building and at t. rowe price, we understand the connections you're also going to have a of a complex, global economy. continued increase in house prices, even if interest rates it's just one reason over 75% of our mutual funds go up a little bit. beat their 10-year lipper average. one interesting fact, andrew, is t. rowe price. invest with confidence. request a prospectus or summary prospectus we've studied historically in with investment information, risks, fees and expenses that i guess it's 25 of the last to read and consider carefully before investing. 26 times interest rates have gone up. housing prices have gone up that same year, as well. which is a little counter intuitive. but it just shows that when interest rates go up, it's usually because an economy is stronger and when an economy is stronger, assets like houses tend to go up very strongly. >> let's talk a little deal making. there's been news this morning that you're planning on raising your bid and then i want to talk a little bit more about the deal market. how high will you go? >> well, we can't really talk about gates. it's one of those things, you always ask these questions of can you please tell me inside information. >> i know. but we're on the air. >> when you say anything on cnbc, by the way, it totally fulfills regulation and full disclosure, so go for it. >> we always obey the laws and as much as i'd like to share with you what we're doing, apparently this is not the moment. >> okay. well, i thought i'd try. in toerchls being a buyer, you recently bought a security company called actiban. i don't know if you would say you were a net seller, but there was a lot of selling going on broadly in private equity. there hasn't been the huge types of transactions that i think people expected. what does 2014 look like to you? >> 2014 has been surprisingly active. you know, our number of deals we're looking at is way up. and part of that is because prices are higher so there's some inherent caution that needs to go when you all of a sudden have more people wanting to sell things. on our company purchase of welcome back to "squawk box." we've got yale university hosted acuvan, this is a company that their sixth annual yale theo will be accelerating the growth caucus in washington, d.c. this week. in terms of the cyber security. we've got a special round table with us this morning to share one thing that is absolutely stunning, i'm down here in washington for two purposes, one some of the key take aways. the seo summit and the business tell us what hot topic they have round table. been buzzing about. the senior associate dean for at the business round table, executive programs at yale and a which is a group of the largest cnbc contributor, john lundgren. companies in the country, we had a briefing by one of the mike header is the president and government agencies on cyber security. ceo of huntington-engles. and i was on a smaller group good morning to you twice. >> good morning. talking about this. >> jeff, why don't we start with you, if we can, to sort of set virtually every major company in the scene. i've been to many of your ceo the united states has been summits, all of which are penetrated from a cyber security traditionally off the record. perspective. if you can help us tease a little bit out of what came out of the dinner in terms of what the buzz is without necessarily some of the large companies that giving away the whole store. >> well, you know, it's do credit cards has a specialty have over 100,000 attempted interesting that particularly penetrations a day. with the guys we have with us this morning, andrew, is that if this is a frightening concept. we were doing this discussion on "squawk box" a dozen years ago, and most of the people are not we would be all sort of aware except when it pops out on fascinated by the new, new some type of retail purchasing thing. we would be talking about lycos, geocitys, taking a look at snap, etoys, whatever, they're all going. problem. this is one of the major issues. netscape. we have with us companies, one i talked with the head of a of them are 128 years old, company the other day who told another one is 170 years old. me they are spending enormous amounts of money and time. with these proud legacies, being in this industry focusing they're able to dust themselves off and reformulate themselves. as we'll talk about, we have a on these problems at a chance a little bit later. reasonable price, a little higher than we normally do, but some interesting time frame the growth in this industry is issues and looking at the government people, we don't see going to be substantial. things quite the same way. we're looking at how we have to deal with building a business >> jeff, you're in washington for a longer term future in the and the big issue is what midst of a lot of the volatility regulations are going to both in the global markets, but ultimately look like, just based also in congress right across the street from us. on some of the stuff that you sent over and some of the so there's a lot of optimism. a shocking amount of optimism as conversations we had earlier in the morning, it sounds like the issues in washington are taking there's a sense that the budget less of a -- you know, an import process is going better this in all of this. year. we had sylvia matthews bur well, what becomes, then, the big issue if it's not washington? who is the new head of omb. >> well, yeah, a lot of the we have the secretary of transportation with us. history between either both sides of the i'll or business the ceos and the congressional leaders have a surprising amount, the sense that we're not government issue is a going to see any budget, any partnership, especially at local government shutdowns any more, levels. some of the great concerns had we're not going to be sending to do with the uncertainty and, troops into the ukraine. sorry, michelle, if you're steve, you wanted to comment on worried about that one happening. but there's a good sense that this. with the ukraine situation, we the company is on a track. were surprised at the number of >> what were the other big ceos that were saying that they are disinvesting or staying away issues? i'm curious, traditionally, i've from the cis nations and a attend over the years and one of number are just backing off of the big issues that always comes emerging markets. i know, steve, you've had a up is activism. is that something that's been banner year, of course, at black raised this year? >> do you want me to take that, andrew? >> sure. stone. i'm sure the chinese investors >> actually, it didn't come up at all. it's certainly the topic du jour are thrilled. yet still there were some implications for the ukraine situation and just now every company in the room had it. of most companies. but in the past 3 1/2 hours, it's something that wasn't but even on the lng issue, i mentioned. it's something we're aware of don't know if you want to and it isn't always necessarily comment on how it would affect bad. black stone at all, the but honest answer, it didn't come up. >> which is kind of surprising, opportunities, because we can't andrew. it's a good question to raise. if you're with us in june, i'll sell oil. >> blackstone, we are the assure you of a mix that's largest owner of the only lng there, these companies, perhaps, exporter in the united states. because of strong performance, and is he building out that but also just a particular facility with our partners at chemistry or frankly the issues, the headlines right now are so sheneer. in terms of a brooder issue, the concerning in the ukraine. emerging markets haven't performed well over the that's taken our attention away from some of your friends in the neighborhood up there in new relatively near term. currencies have gotten weaker. york. >> i know what you guys are and stock markets have gotten talking about, the malaysian plane. that's the only thing everything is talking about. down. >> good morning, everybody. >> would you invest in russia? brian sullivan. >> well, i think russia has been how much conversation is there an area that is very around russia? we were just discussing around this table whether or not this interesting. there are certain companies that is on the typical american's have done very well. >> but would you, considering the situation and the issues of radar. >> everybody in the room had implications for this. transparency and governance and we had the head of the everything else there, is that where you want bother to focus trans-canada pipeline. attention? >> we've looked periodically at the big implications there. investing in russia. we were looking at what we can it's been a pretty hard place do to encourage and raise for private equity firms. exports of l&g. we're not legally allowed to the bearings people have done sell our oil. very well, bearing captain. there's a widespread issue about ppg has had a good success with we should be looking into that. one of the retailers. but whether or not there is -- some of the people are quite worried about doing business in the cis nations, not to name we've looked, but haven't found some names, but some big and anything at this point for prominent people were saying we reasons that have to do with won't do business. foreign corrupt practices act, >> mike, obviously, you build which is a law that we're some of the most spectacular and subject to and, you know, are large warships in the world. very mindful of. >> so you do have issues with do you think -- there's really a the governsance? defense contractor in many ways >> and, michelle, a lot of as well as a manufacturer. do you feel like this is a reignition of the cold war? >> well, i'm not sure that you companies didn't want to do business with the same level of would go so far as to say this starts the cold war again. intensity with russia and especially with the cis nations. but i think what was interesting >> from russia to china, how about the discussion last night was we had two discussions. about the issue with china? one was about building a better >> steve, it's brian sullivan. bridge with the government, the u.s. government, and then we had i wanted to ask you about china. this discussion about international relations. we wanted to talk about your and i kind of walked away from investments, the university in that thinking that both of china. you're doing good work. those -- in both of those cases, we've forgotten how to play the long game. how concerned are you right now the budget process is kind of an about china? >> china is a fascinating place. annual process with a lot of drama around it. but we build platforms in our this is the second largest business that take the -- you know, eight to ten years the economy in the world. design and eight years to build and i was reading the insurance and they last for 50 years. in the paper this morning about and we find ourselves with the concern one company has crises overseas without ships or defaulted and perhaps there would be a regional real estate without capability to respond to it partly because maybe we developer that might default or didn't play the long game probably should default. diplomatically as well. but when these crises happen, you have to go with what you've got. we don't have eight years to think about how this would be build a ship to respond. nonnews anyplace else in the world. and i think it's normal to expect a certain legal of so i kind of walked out of there default or failure in an economy last night thinking that the nation needs to try to figure of that size. out how to play the long game again, whether it's inside of when president xi took over his our own government or position in the government over diplomatically in foreign a year ago, you announced that policy. >> so their case in point, since he thought growth would go down a bit and that that wasn't a we're just here among friends, we don't name names, we had a tragedy. chance to kind of update a little bit right. what was your message, grover norquist? >> it was a beautiful take away. >> the discussion is about sequestration. and the point that i wanted to make was that -- and dr. ash >> i don't think a default of one company represents -- >> i know but that's not the spirit of my question. carter was there, as well. the spirit of my question is >> the secretary of defense, they are finally changing the way they do things, it's yeah. >> you have to think your way different, there will be implications and how worried are through that. you can't air drop that in and you about them? in i'm not enormously worried say, beginning today, we're about that. these are people who have been going to build 90% of the next pretty good at managing their ship. that is a long -- economy. they don't have a convertible >> nobody really believes that currency. so they're bound to be excesses would happen. as the money that's in the i think that violates what -- country goes into different investment classes. >> no, but he said they lost $1 billion on a given project and there will be dislocation. because they've got unfunded in the middle of it. for us as investors at it's a real issue. that's a bad day. you lose $11 billion on a blackstone, we're now putting commitment. money into chinese real estate, particularly in cities like >> the whole issue is not about shanghai, which are growing at 16% a year. whether the funding level is appropriate or not, but the mechanism for setting and developers throughout the priorities. and that's the expectation, that country are being put under real pressure, much the way you say, it was arbitrary. michelle. >> jeff, real quick, any and, you know, what do they say? conversation about privacy one person's tragedy is another person's comedy. concerns sort of in an edward snowden deal? and so i think that was shakespeare. "the washington post" reported that the government is now able so we're seeing people under to record all conversations for 30 days, almost like a wayback real financial pressure right machine where they can go back and listen physically to the now where we think we can add money to that company and help recordings for up to 30 days of foreign conversationes. it or we can buy that asset at a much different valuation and have a very safe investment and prospects. >> well, actually, we did come >> steve schwarzman, that you up with -- mark lautenberg said can for joining us. i have a million more questions for you. i hope we get to talk soon again on the show. in this case, the issue is track jeff, you'll be sticking around. we will come back to you soon. our planes, not our people. coming up, self-made billionaire lynn tilton, always but another person and the outspoken. coming up on "squawk box." current second secretary are stick around. aflac. complaining, we still have a terrible air control and avio c avionics system out there. >> and it's disrupted by -- who know everything else. >> we have to leave the conversation here. jeff, john, mike, thank you for this. jeff is returning at 6:50 a.m. eastern time. he also has the ceo of cardinal health care with him. when we come back here on "squawk box," the focus will be squarely on the federal reserve. will janet yellen lock the vote during her first news conference as fed chair? which by the way starts at 2:00 eastern time. we're going to kick off that discussion on "squawk box," coming up next. our guest will be bob nardelli. we'll get his thoughts on the consumer and much more. before we head to break, yesterday's winners & losers. we're back after this. ♪ aflac, aflac, aflac! ♪ [ both sigh ] ♪ ugh! ♪ you told me he was good, dude. yeah he stinks at golf. but he was great at getting my claim paid fast. how fast? these days, everything your business does mine got paid in 4 days. wow. that's awesome. is that legal? big fat no. is done on the internet. [ male announcer ] find out how fast aflac can pay you at aflac.com. and tomorrow you'll deveno more. that's what comcast business was built for. slow dsl from the phone company was built for stuff like this. sign up for internet and voice and find out how to get four weeks of tomorrow ready internet for free. and you'll be ready for tomorrow too. comcast business. built for business. welcome back, everybody, and good morning. coming up here on "squawk box," lynn tilton, self-made billionaire and cnbc's first 25 contentant will join us. then we have harold hamm, he'll talk about oil production, keystone pipeline and whatever else. "squawk box" will be right back. . no two people have the same financial goals. no two people have the same financial goals. pnc investments works with you to understand yours pnc investments works with you to understand yours and helps plan for your retirement. and helps plan for your retirement. talk to a pnc investments financial advisor today. talk to a pnc investments financial advisor today. ♪ ♪ became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. good morning. andrew ross sorkin along with michelle caruso cabrera and brian sullivan. toyota is expected to announce a $1 billion settlement with the justice department today. the automaker expects to avoid prosecution. also, janet yellen and the federal reserve in the spotlight today. the fed concluded yellen's first meig as fed chair with a policy statement coming at 2:00 p.m. eastern. brian will be on the air. that will be followed by yellen's news conference a half hour later. the fed expected to cut its monthly bond buying by another $10 billion. and while investors await that fed statement, they have a few economic reports to consider, as well. we're going to be getting a weekly look at mortgage applications from the mortgage bankers associations. the commerce department, they're out with a four quarter current account deficit coming at 8:30 eastern time. and at 10:30 eastern, we've got the energy department issuing its weekly assessment of oil and gasoline inventories. let's get a check on the markets this morning. the futures right now are our next guest is a private suggesting a flat open. dow jones industry would open equity mogul among few of the higher by roughly 17 points billionaires in the country. joining us now is lynn tilton, higher. across europe, russia is higher today. and still with us is jeff the ftse 100 is lower by 3 sonnenfeld from the yale school of management. lady and gentleman, good to see points. cac is flat and germany's dax is you. lynn, always great to have you higher by 33 points. back. >> thank you. >> tell us about the private in asia, nikkei higher by 51 equity landscape at this point. there's so much competition out points. there. are you finding you're able to hang seng lower by 15 and get deals done at a price you're willing to do? >> well, you know, i'm doing shanghai lower by 3.5 points. more building than buying these wti is at $99.55 per barrel. days. you happen, with 75 companies, brent is at $106.12. i'm spending most of my time just trying to build value and let's show you what's going on put things back out into the with the ten-year yield, 2.669%, world so at 70 i can retire. just below 2.7%. >> and how is that going at this and the dollar across the board point? is this economy helping you out is mixed. or hurting you? 1.66 for the pound. the euro is going to cost 1.39 health care reform, is that and you'll get 101 yen for every making things more difficult? >> i'll tell you, health care reform has made things a lot dollar. >> and investors are focused on more expensive. and you know i buy companies when they're left for dead and the fed statement today. have to rebuild them. so every penny counts. and, you know, across the board, joining us -- there you go. thank you. i like the "squawk box" team. health care has gone up for you guys are so good to us. every company and that's a big issue for me. joining us now on set here are some squawkers. i also think that there's still michelle gerard and dan vuru, the populous of the permanently unemployed. we have so many people who really aren't working and i chief investment officer. think you're seeing that in guys, thank you so much for retail sales. so i think the economy itself is getting up with us. michelle, you're looking spry. actually facing head whippeds. do you expect any changes from janet yellen today? >> well, i'll tell you, we've a that is difficult for us. for me, everything is about been talking about it. the surprise would be in the reinvention. sense of exactly what they do in everybody wants products that are sexy and wow and it's really terms of changing forward about changing everything we do. guidance. we know they're going to make some changes or we certainly technology is the lead and you have to bring it in to expect they're going to make some changes. but what exactly do they do? everything you do. for me, it's all about building whether or not they take out the value across companies. >> a big part of your story is how you've reinvented every one 6.5% unemployment rate, at 6.7%, of those businesses. it's becoming irrelevant. from the new technologies you do they take it out or do what have in the helicopter that was left for dead or taper mills the bank of england did, leave it in but talk about other that are creating jet fuel or indicators they'll be watching. whatever else you dedesign, so these kinds of changes will every one of them from stem to stern. i think your automotive be important for the fed now business, they were losing 30 moving to the next step. million and year and you're up 150 a year now? now what guidance do they give? >> yeah. it's been a big turn. that's what the markets will be a lot of that has been the looking for. >> i think that's right. automotive industry has helped. i think one thing about yellen but there, too, every product and her predecessor, they're needs to change. really, we're no longer a going to keep the stimulus in mechanical parts company but a mega tronnic parts company which place for much longer than the market thinks they are. is the infusion of software and because i think the fear is taking it away too quickly. i mean, these guys are electronics into every mechanical part. i think when you buy companies historians from the depression that are left for dead, it's and the echo depression that back baus they lack innovation and the only way to re-ignite is occurred in the late 30s. i think keeping the stimulus in through innovation. for me, everything is a constant place for longer and given the amount of slack in the labor scramble of trying to bring market, despite what the unemployment rate might look technology and design into every like, we all know that there's a product, every process. lot more slack. >> so do you believe this rally >> michelle, there's more than is fed induced? 250,000 jobs in the u.s. that if that's good for stocks? wouldn't be there if not for you should i read that? and you're bringing in a couple more. >> we love job creators. >> i didn't say it was fed induced. i think you're at the very early bob nardelli has a question for portion of the economy becoming you. >> congratulation owes all your success. you talked about the economy and self-absorbing. jeff has talked about the year-to-date, the russlity 2000 plethora of businesses that you're in from rand mcnally maps continues to lead. to cosmetics. >> so a fed that is dovish we talked earlier about apple relative to either you innovate sounds even better for stocks? >> those are indicative of or evaporate. it's one of the toughest things domestic demand improving. to install into the culture of a that's the story that doesn't company. how do you do it? get told enough, i don't think. what do you do to make innovation a cornerstone of success? >> well, i think, you know, it starts by bringing -- you know, getting people excited and >> we've had a tremendous rally. seeing the success. there's more to come? so a lot of times you have to -- >> i think so. to an organization. i think the weather needs to not but we built like this major be a factor. i think the economy should stand technology platform where we go on these -- to all our chief technology >> where do you think -- officers working together. and i think it's when you see that taste of success, then you can drive everybody forward. weather, weather. >> we got a little bit of a but it's very hard .sometimes you have to change out the people. preview when she testified you know, you start the before congress. inspiration and aspiration. i think they'll acknowledge that and certain people jump on the there's been some slowing in the economy, but it's not clear how bandwagon and others will try to hold back. much weather has played into the and sometimes, unfortunately, you've got to change the culture factor. >> do we hear anything about and change the people. russia, ukraine, china, but it really is survival of the adapter now, not survival of the anything? >> i don't think. fittest any more. >> if she gets a question, how if you don't change, you will does she hans? die. especially my company. if we do not innovate, if we do >> i think she'll suggest the not change our product, we have fed is monitoring all no chance to the future. and for me, so many of my conditions, but that's not -- companies are over 100 years old. it would be sad to lose that what i care about is i want how american history. so we're really running on a long how she communicates. treadmill. >> didn't you sell some -- to chrysler? >> well, and with global bernanke, a little more clear automotive systems, yes. >> what would you like to negotiate with, bob? >> she was tough. she drives a hard bargain, but we enjoyed working with her, for than fregreenspan. sure. >> it's great to see you. >> she's mid transparency. >> she headed up the committee on communications and i think >> she's the only one in the that she -- >> that's not saying much. room that scared them, right? >> that's true, but the fed has >> hey, that was great. come a long ways in terms of thank you, lynn. it was great having you on. being transparent and trying to >> thanks, guys. be clear. coming up, a very big day chairman bernanke moved us in for janet yellen as she gets that direction and i think she's ready to face questions about going to continue along those lines. >> do we have -- and i talked to fed policy. what will the fed chair have to some twice. i had a drink with some guys who say today to surprise you? we'll discuss it. we'll discuss . (announcer) scottrade knows our clients trade discussed the idea of maybe the fed being too transparent. why are they overcommunicating? >> we are saying, it would be better if the fed said less rather than more. and invest their own way. they're moving into a position where fed is moving. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. >> if they paint themselves in a corner, what they do is quite their quick trade bar lets my account follow me online so i can react in real-time. dynamic. plus, my local scottrade office is there to help. >> the bigger issue long-term, because they know i don't trade like everybody. we've been basically a 30-year i trade like me. rally in bonds, okay? i'm with scottrade. when i came into the business in (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. 1983, the ten-year was at double digits. >> the single piece of advice i've gotten from everybody, who says whatever you do, don't buy the -- take 6%, take 5%, take 4%. >> that's right. here is the point. there's a whole generation of investors who have never experienced a bear market in bonds. sustainable bear market in bonds. a lot of folks have had a lot of pain in the stock market. there's a lot of warts on people's backs from a lot of volatility there. i wonder what happens when we go through that period of interest rates like five or six years? >> i'll tell you what, i know nobody else seems to be hitting on it. inflation has literally not been a subject of conversation for years. coffee is up 80%. wheat, soybeans, hogs, cattle, everything in your grocery store is up in price. oil is still at $100 a barrel. owner's equivalent, all your flat tv prices have come down. but -- >> on the food front, steve liesman was on two years ago and he said it's a function of. if you're janet yellen, you can't make it rain. >> you can't make it rain. who cares? what i'm saying is could the fed get behind the eight ball on inflation? if inflation starts to pick up this rapidly -- >> to your point, it's wage inflation. i just don't see that -- there is slack everywhere. . think about the super cycle of commodities that's likely over. that's been a headwind for many companies that use those products and hopefully that is going to become a tailwind. >> you say i'm wrong nicer than anybody and i appreciate that. >> anything to make you look good. >> ladies and gentlemen, thanks for joining us. welcome back to "squawk when we return, disney giving pixar and star wars fans box." oracle missed estimates by two cents. a few big pieces of information results are sparking some investor concerns about during the shareholder meetings, increasing competition and that's next. slower tech spending. and as we head to break, a travel website operator quick check on the european markets, right now. orbitz world would have been has markets, rig. been down fwraded to sell from neutral. selling at a premium. pacific sun wear reported smaller than expected fourth quarter loss. same-store sales would be up 1% opportunities aren't always obvious. to 4%. it recovers from what it is now sometimes they just drop in. markets, rig. calling a challenging holiday cme group can help you navigate risks and capture opportunities. season. we are mow counow counting we enable you to reach global markets janet yellen's conference. and drive forward with broader possibilities. cme group: how the world advances. steve liesman joins us now. >> the excitement is palpable, brian. >> i can see it from here. >> it's building up to the 2:00 statement and the 2:30 press conference. i have christian with me. he was the former senior policy adviser for bill dudley. thanks for joining us. >> great pleasure, steve. >> we know was going to happen. but you think there's a lot of interesting things on the table for yellen to decide. she wants to have continuity. she may not have that luxury. >> that's right. the main emphasis today, we know even though the fed is approaching its 6.5% threshold for rates, they're going to emphasize the broader assessment of labor markets plus weak inflation means no early rises in the fed funds rate. >> but they've done a good job of keeping the markets lid on rates in the future. but they have not told us what happens once they start to raise rates. our fed survey showed for 2014 a lot of questions about 15. >> so i think, steve, that's right on the nail. the really interesting question for this meeting is did they go beyond just giving more information about the conditions for the first increase in the funds rate and talk to us more about the path going forward. >> you know both yellen and you knew bernanke. how is yellen going to run a committee that's different? how is her personality going to be different in terms of making policy? >> well, look, in a big picture, there's a lot of continuity in personality, as well, with ben and janet. the differences between them and the imperial fed chairs, volcker and greenspan who went before, janet is mild mannedered, she has good personal relationships with the rest of the committee. she has a spine of steel. she will be tough when she needs to be. >> there's a lot of talk right now. saying you know what? the fed will have to move faster. how much pressure is yellen going to get from the hawkish wing of the fed and what is the possibility that she has to bend to them? >> i think another present, she's okay because the inflation data we had, you know, very, very mild. inflation is mia right now. but as we look forward, short-term unemployment down, unemployment in general starting to converge towards your estimate of the neru, there is going to be more and more pressure for, you know, the idea that we might need to move sooner. >> what's your base forecast? what is the first rate hike? how high does it go .how quickly? >> so my view is they won't go late. they'll go mid possibly late 2015. but when they go, they're going to go faster than they think right now. >> how fast, how far? >> my view is that, you know, right now, they're talking about raising rates every other meeting in 2016. that sounds implausible to me if the economy basehaves the way ty think it will. however, i also think that this rate tightening cycle is going to end sooner than most people welcome back, everybody. good morning. think. let's take a look at u.s. equity i don't think the long range fed futures. they are mildly higher, indicating a slightly higher rate is going to be higher than open for the nasdaq. 3.5 points. >> is yellen just a dove? the market has done well this month, creeping towards all-time people come up and say what does that mean? highs again. does that means she's going to but the smaller midcap stocks look at 2% inflation or rising have done better. wages and say you know what? i'm not hiking rates. meantime, disney letting out a few movie announcements. >> i think we have to be careful. dove and hawk, these things only incredibles 2 is in the works make sense in a specific and is a follow-up to the hit context. i think when yellen assesses the situation today, what she'll see is that both sides of the deal ten years ago. and for all you "star wars" fans mandate, the inflation side and the employment side are still out there, episode vii will be calling for substantial set 30 years after the return of accommodative policy. i think she also believes that the inflation target is the jedi. symmetrical. it's not a ceiling of 2% it will be released sometime in the year 2015. inflation. you want to hit 2% inflation on >> can't way. average over time. in the current circumstances, yay! >> do you think it will be that still allows you to run a better than the previous three? >> they're the best. >> my name is hayden christian stimulative policy. >> thank you for joining us today, vice chairman of isi. brian, back to you. it will be a great day. sen and i am very happy right i look forward to seeing you at now. >> my mom took me out of school the top of the 2:00. >> what time does that decision early so i could see all those. >> the problem they had with the come down sflp. 2:00, brian. >> what show is on cnbc at that time? prequels, because the technology >> i think it's called street of movie making is so much signs. better -- i believe mandy drury is the >> the old ones look lousy. host. >> mandy drury and -- >> also because the technology >> and this guy sullivan shows itself, it looks like they had up every now and then when he's more advanced technology three not driving a race car with a years prosecute. >> don't make me destroy you. stupid helmet on. >> the helmet has saved my noggin many times, my friend. but we will see you all day >> that's signal for us to wrap. long. janet yellen, steve liesman. coming up, the geocall going to cardinal health's chief thank you very much. >> by the way, one stock to look coming up next. and later, private equity giant at, a midcap, let's bring it up steve swartzman, co-founder of if we can here. usually when a company buys another company, the stock goes down because they have to spend blackstone is coming up at 8:00 money. eastern time. horizon pharma is up above the more "squawk box" after this quick break. quick break. market cap. they're doing a reverse merger with another biotech for $660 million to combine arthritis drugs. what's interesting is that horizon is up 500% plus. we've highlighted these buy yoes tech. these names are up 100%, 200%, 300%. it's mind blowing how much stocks have gone up. >> wow. >> if they don't get that one particular drug down -- >> it's like a binary outcome. the drug is going to either succeed, be purchased or you're going to go under. coming up, next is a very big interview. billionaire howard hamm is going to join us right after the break. he has a lot to say about the crisis in crimea and what it means for the u.s. nat gat exports. we'll talk to him about that and much more in a moment. ♪ 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. ♪ are you still sleeping? 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[ train whistle blows ] she makes trains that are friends with trees. our clients need a lot of attention. there's unlimited talk and text. ♪ we're working deals all day. my mom works at ge. you get 10 gigabytes of data to share. ♪ what about expansion potential? add a line, anytime, for $15 a month. low dues, great terms. let's close! new at&t mobile share value plans our best value plans ever for business. welcome back to "squawk box." jp morgan chased a sale of its commodities unit. it is now official as kate kelly reported earlier this morning. the banks will be selling that unit to murcurio energy. that deal expectsed to close during the third quarter. the bank says the transaction won't have a material impact on its earnings. part of this, a result of dodd frank. part of this a result of just the fortune 500 company, the political pressure that's been put on some of these joining us now is george barrett institutions around that commodities business and even questions about whether -- >> regulatory pressure. you can't do this any more. of cardinal health. guys, good to see you. >> leave it there. >> the crisis in crimea has mr. barrett, let me start with you. highlighted just how much europe depends on russia for natural can we call obamacare a complete failure at this point or do we gas. have to wait a little longer or 80% of natural gas -- go to is that just me? ukraine. >> it's very early. 15% of the natural gas from i think at this stage, we expected -- this is a very europe flows through ukraine. complex piece of legislation. addressing some very vexing meanwhi meanwhile, joining us with more challenges, it's not completely is howard hamm. surprising to us that it would roll out with some challenges. he is featured in the new book as we thought about this piece "opportunity knocking" by "squawk box" producer lori an of legislation rolling out, we loraco. expected to see some lumps and good morning, howard. good to have you here. bumps and, in fact, as we >> good morning. it's good to be with you. modelled it, we did not expect, >> this is really the situation. thanks for help lori ann with in our short-term models, to see her book. additional patients in the the situation in ukraine has system, recognizing that there would be some evolutions that given you guys a lot of political pressure to help you would take place in order for out when it comes to natural this to roll out. gas. >> how long before you -- in the is it finally going to work, do you think? >> well, yes, it should. system? >> it's hard to answer that question. i think we know that patient res absolutely. you know, we have had a great coming in. thing going on with this american energy conference going some of those patient res new on today. and i say american because it into the system, some are not. only happened here in america. but at this stage, short-term, so it gave us a huge supply of we're not at the modeling additional patients in the system. what we do expect to see, and natural gas and certainly we ought to be aggressively exporting that to our european this may be as profound as any allies. right now, they're booel being change in the legislature is held hostage and we could help them out a great deal. additional demographics. >> so some extent, they're their we've got aging population, own worst enemies, right? 10,000 people a day reaching the they're not doing a lot of this activity due to regulatory issues, not my backyard, et sell age of medicare eligibility. >> but what you're saying is ra, etcetera, right? it's not a failure of the >> that's right. we have a great opportunity here system. >> i really do think it's too early to say that. to do that and they have several i think certainly at the early gas, as well, but we have a stages, we would probably great opportunity to export acknowledge, i think, as an natural gas and we ought to be administration that the rollout has been somewhat slow. doing that. >> there is a report out that noted that in terms of shale drilling these days, independent we would not see anything differently. i think we're seeing some of the producers are spending about patients that are coming into $1.50 in drilling costs for the system are patients that every dollar that they're able have already had insurance. to get back. how long do you think that will be the case and make the mk and so i think it will take time economics of this such a challenge? to see how this rolls out. >> well, you know, a lot of us >> we did try yesterday, overspend a little bit. michelle, with the head of omb they overspend cash flow and that's a historical -- you know, to try to -- >> the office of management and there's been a time developed budget. >> who is a great problem today and a lot of land solver, probably one of the finest people in public service schedule. today, we were trying to set him especially for oil and gas. up on that exact battle. and certainly we're bringing on he turned basically to lord a lot of new suppliers, natural north's line, the only vacation gas and food oil in this i need is a different set of country. problems, is that this changes well, crude oil exports, too, the rules a little bit. in terms of the -- what the it's in the mix. anybody that is thankful about ground for competition is. but, in fact, they were just saying they were adjusting very well to the affordable care act, exporting inin inin ining petr. as much as i wanted to start that fight, they said things are refined products are going working here. across the water and it's just a -- you know, it's one of those situations, who gets the money? the independents? >> nardelli here. i want to congratulate you and the cvs deal is basically going the entire industry to get us to to be the largest generic where we are with relative distribution system in the world. savings will come from that. energy independence. without you guidys driving the >> we do expect to see additional patients in the system. timing that is extremely train, we wouldn't be where we are. what could we do back here at difficult and we've modelled cautiously. but going forward, we expect home? what are the biggest consumption certain forces are inescapable. areas you see converting coal to one, we have this huge natural gas, power plants, cng population reaching medicare and autos? eligibility age. lng, cng, long haul trucks? today we have 11 million people likely to double over the next decade. what are you guys focused on in terms of getting consumption up here in the united states? >> well, one thing that's happened, you know, i think is we know we have a system that this light, tight sweet curve that's being brought on requiring different today with horizontal drilling, formulations. >> george, hi. it's brian sullivan. i want to ask you a quick basically it's given us what we question based on a "new york need and that is premium grade times" article from march 11th. this caught my time. of sweet, low sulfur crude that here is what i'm going to read. makes a diesel, all those things insurers say roughly one in five people who signed up for that we wasn't getting from the coverage failed to pay january power stands. so it's a very clean energy. premiums. next paragraph, 83% qualified that's what a lot of the for financial assistance to help pay their premiums. conservation is going into. i noticed some overlap, it's not >> do you think we'll see a lot of the long haul trucks, fedex, a pure 100%. but i guess my question is, u.p.s., converting to lng in the george, who is paying? near future? >> you know, i don't. the cost of conversion is so >> well, i think at this point, if -- much, you know, the cost comes >> if one in five aren't paying premiums and four of five are down at the pump about 20% on getting some sort of subsidy, diesel. so, you know, it never pays. and it's all about economics. i'm left to wonder where is the >> and at what point does that bill being paid? >> at this point, better change? >> when does it change? answered by one of our health >> does it have to change in order for this to really take insurance partner us because off? that's hard for me to answer. >> well, for natural gas maybe, you know, as far as crude oil supplies, we're bringing on a lot of crude oil for a very long time. >> we've got two self-made oil >> regardless of how this rolls out,scapable that we're billionaires. there's another guy by the name of boone pickens, harold, i'm going to have a system that can not sure you ever heard of him. he told me he used to tell navigate people and turn in different ways. harold hamm i'm smarter than he part of that involved trading people with the right setting is. but do you think you guys can get this taken care of, with the right caregiver in the right sequence. that's not something we've done honestly? do you have the support of congress? >> yeah, i think so. historically. we know we're going to have a system that pays for outcomes in it's about the thing to do. america can't be an energy some form rather than paying for leader in this century if we're a steeper service model in which going to hide behind a crude oil we pay for every different activity. so we try to build our business ban or won't fit for natural gas model with those things very fraud. let's face it. much in sight rather than being >> harold, sorry to bankrupt. completely obsessed by what's happening with the mechanics of do you think congress wants to the legislation. be an energy leader? solar is great. we know there are inescapable alternative energy is great. forces that we have to build a business model around. but all we tend to hear about in >> thank you. it was great to talk to you this washington is so-called alternative energy, not a lot of morning. political questions that we -- talk except for maybe sort of >> you said innovation on local knocking natural gas. >> well, i think that was true levels, too. >> thank you, guys. before, you know, everybody george barrett, chairman and ceo realized what we had and what we of cardinal health. we'll get more from jeff later have for today and certainly in the show. when we return, the man that with the supplies that we have makes the big decisions for and the fact that we are going to be energy independent. blackrock's investment assets. so i think that's changing quickly. then bob nardelli will join us >> harold, a personal question for you this morning. on set. plenty to talk about including his opinions on the gm recall. i'm going to go there. "squawk box" comes back with you've been involved in this very big two hours this morning. ♪ divorce and there was a big question about who was going to control the company. the judge has ruled in your favorite. so you're going to remain in control. now that that's a defenive, is it going to change anything about the company, the things that you've been putting off or waiting to do that you now might consider? >> no. we've been going ahead, you know, just like we always have. change is nothing. it was a nice thing to have behind us, but, you know, it doesn't change a thing here. >> you gave an exclusive to forbes earlier when the decision was made by the judge and, again, more personal qualities. you were asked if you would ever marry again and you said definitely not, that's not ever going to happen. the justice system when it comes to divorce, it's pretty tough. i have been through one. i can't imagine how damaging or difficult it must have been. [ banker ] sydney needed some financial guidance so she could take her dream to the next level. >> well, yeah, it takes your so we talked about her options. her valuable assets were staying. thoughts somewhere else for a little bit. we have not changed what we do and selling her car wouldn't fly. here at the company and moving we helped sydney manage her debt and prioritize her goals, ahead and these are the things so she could really turn up the volume on her dreams coming into mode. so we're glad to see it. >> good to have you on, mr. today...and tomorrow. so let's see what we can do about that... hamm. remodel. motorcycle. think about marriage. some day down the road, you [ female announcer ] some questions take more than a bank. they take a banker. might reconsider. make a my financial priorities appointment today. >> boone just got married again. >> yeah. because when people talk, great things happen. >> i used to feel the same way. i'll never get married again. >> al, thank you for joining us. >> all right. coming up, jim cramer joins us from the west coast. he'll be at the starbucks shareholder meeting in seattle. we're going to catch up with him next. "squawk box" will be right back. >> announcer: tomorrow on "squawk box," the cnbc global cfo council is in session. the chief financial officers of at&t and adp are here to talk business conditions, markets and what they are hearing from their customers. that's tomorrow on "squawk box," starting at 6:00 a.m. eastern. y. how may i help you? oh hey, neill, how are you? how was the trip? [ male announcer ] with nearly 7 million investors... [ shirley ] he's right here. hold on one sec. [ male announcer ] ...you'd expect us to have a highly skilled call center. kevin, neill holley's on line one. ok, great. [ male announcer ] and we do. it's how edward jones makes sense of investing. ♪ good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with michelle ka rueco sa brar ra and brian sullivan today. joe and becky are out. our guest host, robert nardelli, he is also, k, the former chairman and ceo of chrysler and home depot. we are going to get to bob in a moment. we have to talk about gm and a lot of other things. before we do that, let's take a quick check on the markets. the futures right now looking up at, at least marginally. nasdaq up a little over 3 points and the s&p 500 almost up just a welcome back to "squawk box." let's get down to the new york bit. then the ten-year looking right stock exchange. we'll go to seattle, that's now 2.67% is the number to where he is this morning. >> did you get a tease? >> yeah. watch. we also have some morning >> jim cramer. headlines for you. >> i know, i know. the government expected to jim cramer is awake at -- what announce a settlement today of time is it there, jim? >> oh, my gosh, it's, like -- more than $1 billion in toyota over the widely publicized >> coming up on 6:00? unintended acceleration cases. >> yeah. >> you are in seattle? what did you think of the fedex the automaker is expected to numbers today? >> first of all, you can't get a avoid prosecution as part of cup of coffee here to save your that agreement. we're an hour away from dow life. just kidding, it's the starbucks annual meeting. component fedex reporting. we're in up mode so we're giving fedex a pass on the weather. we're in pass of weather moment expected to report revenue of where people say i know the $11.4 billion. those are the numbers to beat. weather is not a good excuse but and jpmorgan will be selling its we're taking it and people are believing it. >> give us a little preview of physical commodities business to what's to come today. you had howard schultz on the swiss firm mercuria. show about, what, 9:30? >> yes. remember howard has really been talking about the digital assets of starbucks perhaps they may be worth a substantial part of the it's not yet clear what the company because they have mobile and they have digital down well ahead of almost every other terms of that deal would be. company i follow but in terms of in the meantime, let's take a being retailing, they are the quick look at shares of apple best. i've gotten nordstroms speaking this morning. of the best of retail but is bringing becky into the that enough? conversation in just a minute. it's brick and mortar. look at the seattle genetics it's in keeping with what you've been talking about the small $532.55 for apple. a former "wall street journal" biotech companies. reporter has a new book out on that will be on the agenda and zillow is the company dominant apple called "haunted empire, in real estate online but does that matter given the fact that apple after steve jobs." competitor trulia is spending in we are bringing becky quick in an arms race making that whole segment very crowded. >> i think starbucks is ahead of right now with an exclusive some banks when it comes to statement from tim cook. processing transactions, et >> hi, andrew. sorry i'm not there today. cetera. they are so far ahead, i get a i'm still a little under the daily e-mail from one of the weather. but i did want to talk about debit lobby groups and they this book called "haunted always talked about starbucks far and away advanced compared empire." to every other retailer, every it's from a former "wall street journal" reporter named yukari other bank. >> i'll posit to howard schultz if they spun off the digital kane. she went around and interviewed people and came about with a would it not give a multiple of conclusion. at the end of the conclusion of maybe even visa, mastercard, this book she's saying basically certainly ahead of discover. apple's best days are behind it honestly, i've been saying that in large part because steve jobs howard should merge his business with verifone and therefore get the register all the way to the people who come near. is no longer there. they have an algorithm, this is she says cook is more of a delegator versus steve jobs who what we're hearing, how near the is more of a micromanager and store you are so it can be piping hot when you get there. got deep into the woods on anything that interested him on many different levers for this. it's an interesting perspective. starbucks to come in and all it's one tease been out there in anybody cares about is the spike the market for a while, but it's of coffee because it spiked and one that is a controversial one they are hedged for 2014, too. for people inside apple now >> it's a renaissance for particularly for tim cook who is the head of am right now. seattle. and my kid looked at the tv and i e-mailed him just to find out what he thought about this book. said i know that guy, i know here is the response that he that guy, hello from my sent back. daughter. he says this nonsense belongs seattle, starbucks soaring and with some of the other books microsoft 14-year high and i've read about apple. it fails to capture apple, steve amazon $300 above what it was five years ago. or anybody else in the company. you mentioned other companies. apple has over 85,000 employees seattle kind of tucked up there in the middle, the northwest that come to work each day to do corner of the united states. they are rocking. their best, to create their best >> yeah, they're in the 12th man products, to put their mark on in terms of technology, they're the universe and leave it better the first man. a lot of different companies the than the day they found it. this will remain at the heart of are doing quite well. don't forget to throw in costco, apple for decades to come. let's go buy costco here. i am very confident about our future. but there's an incubator here. we've always had many doubters we're out here something's really brewing. in our history. i know that silicon valley is he only make us stronger. the hotbed of most of technology but if you want to see where there have been a lot of points it's applied, come here. when people have doubted apple. >> jim, bob nardelli here. this has been a narrative that's i understand starbucks is been out there since steve jobs working with a small start-up passed away, that the company that will allow you to bypass can't run the same without him, the charges you get from that it can't innovate without mastercard, visa, american express, so, you know, as an old retailer that's 2%, 2.5% and the him. that is one that has been out new mechanism will allow you to go to ach and avoid all of the transfer fees, is that something you are -- >> you are anticipating my first there. question to howard. >> i'm thrilled tim watches the you're absolutely right. >> good. >> and by the way, they want to show. i don't think anyone even knew own the mobile space. this book existed before he put not for starbucks but for all of out this statement. retail. and ilthink that's really why did he -- >> i have to commit, i hadn't important because remember, that's a much bigger total read this book. i was sick yesterday so i wasn't on top of my game. adjustable market than just selling coffee, selling bread, i will admit that she what was selling consumer packaged goods. on, yukari kane was on that's what i want to drill down on, that's why howard moved over yesterday. when i looked at amazon to find to the digital side. out where the book was, it was it may be worth more in the company. nowhere near in the top couple >> yeah, jim, thank you. by the way, ask howard, i'd be hundred books being sold. i've been trying to log on right curious what he thinks about the now. my ipad isn't making the ebay/paypal situation, starbucks connection fast enough to see has argued it wants to be in writ stands right now. maybe you can do it faster, electronic. do you need to be combined or andrew, just to say where this separate? for another day. >> another good idea. was. i didn't know about this book >> we'll look forward to the ahead of time. program. this is something that was a little bit of a surprise to me, >> remember, also, they are more square oriented than i think too. they are paypal. >> becky, first off, feel best. square is the one to watch. >> what do you got there? secondly, you need comcast >> to jim's point i have square, you know, on my phone it's infinity. >> i can't get comcast here. mostly mom-and-pop retailers and i've tried to. >> andrew, from the book, the starbucks. starbucks is the biggest retailer everywhere you go on writer calls apple, quote, a the mobile payment app. all right, coming up we'll get our closing thoughts from cult build around a dead man. mr. bob nardelli here. and be sure to keep it here it's not a lot that apple responds to. they don't tend to care about because "squawk on the street" with jim in seattle will be criticisms. but when you take shots like coming up and ron paul is coming that, that might be something up on "squawk on the street." that would actually get that's interesting. somebody -- get some ire, that fed decision at 2:00. big day. you're watching cnbc. re watchin. actually forces a response for something like that. how do you know which ones to follow? >> basically, according to -- the equity summary score consolidates the ratings and, again, i haven't read the of up to 10 independent research providers books. >> i've read interviews about into a single score that's weighted it, synopsises. based on how accurate they've been in the past. >> to your point, it basically i'm howard spielberg of fidelity investments. paints apple as a company in the equity summary score is one more innovative reason decline. the problem isn't apple, guys, serious investors are choosing fidelity. more of a ford model, right? call or click to open your fidelity account today. henry ford started the company and built it up. every subsequent ceo inherited a i just ah woke up today large company who is coming out and i said i need something sportier. of a growth of an entirely annnd done. ok maxwell, just need to ah contact nation industry. >> here is my assessment on your insurance company with the vin number. that. you've got -- you know, apple is oh, i just did it. with my geico app. a great company. vin # is up to the loaded. microsoft, great company. but what i've seen in business ok well then jerry here will take you over the years is success breeds through all of the features then. why don't weeeeeeeeeeee complacency. and it's one of the toughest go out to the car. things for a ceo to fight. and in today's world, you either ok, i'll just be outside... ok, yeah. innovate or you evaporate. so you can't live off your his dad is my boss. yeah. vin scanning to add a car. legacy. just a tap away on the geico app. i mooean, they both have tremendous runs. >> how long does it honeymoon [ crunching, rumbling ] ...it were possible... last? meaning people are waiting for [ low-pitched scraping, thud ] to capture... tim cook to come out. [ trilling ] the precision... some people say it's apple tv, [ sloshing ] passion... it's supposed to be a launch, nobody knows. [ low-pitched scraping, thud ] how much time do you give them [ whoosh ] ...and beauty... in a post steve jobs world to that goes into what you do? reinvent the business? >> it's not so much how much time we give them. [ camera shutter clicks ] look at the competition. you look at samsung, everybody ♪ is really nipping at the heels a better web starts with your website. here. and they're coming out with new create yours at squarespace. gadgets, wearable gadgets. ♪ it is the emerging trend, right, andrew? and so i think it's not what you say, it's what you do. and apple has to come out with some new innovative products very soon. >> becky, real quick, the answer to your question, the book is ranking at about 2,000 in hard cover on amazon, about 1,000 on kindle. it only has about 1 1/2 stars, which is not very good. >> yeah. and what i'll also tell you, bob hit on some points, but when the author has been asked this point, what do you think about create yours at squarespace. this big company? the thing it still has going for so our business can be on at&t's network for $175 a month? it, it's still got the revenue yup. all 5 of you for $175. coming in, it still has the massive sales, it still has our clients need a lot of attention. there's unlimited talk and text. products that are hot on these we're working deals all day. issues. and i guess the question is, is you get 10 gigabytes of data to share. there something else to ten in what about expansion potential? behind that? is that is the question the add a line, anytime, for $15 a month. market is focusing on so low dues, great terms. closely. >> becky, please feel better. let's close! >> thanks, guys. >> bye, everybody. >> bye. new at&t mobile share value plans >> it's hard to feel bad for a our best value plans ever for business. ceo, especially one that is exceptionally wealthy in his or her lifetime. i feel bad for tim cook who is basically coming in doing another album after beggar's billions for the stones. there's no way you can replicate what was done. >> they cast a big shadow. janet yellen will hold her let's get back to our guest first news conference today as host bob nardelli. closing thoughts on anything you want, bob. >> thanks. head of the fed. first of all, it's been great to jeff rosenberg says the real be with all three of you, brian, challenge for the fed comes after the meeting. michelle, andrew. i hope you make it the rest of the week. you're the lone soldier here. >> i am the lone soldier. >> dropping like flies. why? >> being squeezed out, you know. >> the big focus is maintaining expectations. >> i think today's show just what's happening in 2014, you reinforce change is the only think about this, this is a constant, you know, we've got transition year. yellen that will put something the credibility that the fed has out there. has been from a large part michelle, you're over dealing with some of the political supported by weak economic activity. issues, potential fallout. and yet this year is really i'm glad the market kind of supposed to be about and shook that off for now. obviously we had this whole >> ukraine. weather effect so we're not >> ukraine. we have all of these issues clear about it. the expectation is this is the dealing with the auto industry. i don't think it's a mistake year where the economy starts to do better. this is the year where inflation where steve schwartzman talked stops going down and starts to about pulling back from housing when you saw the number of go up. and in that kind of economic permits go down, so i think they're using a lot of environment, today would be the fed day. indicators. today would be the day where today facts are friendly and on they get the benefit of the be successful you got to have doubt. >> does she have a tim cook your antenna up and listening to issue? she has to follow bernanke here a variety of different venues and everybody is going to coming in to make those compare them? >> in a sense. decisions both geopolitical and but it's not so much about the financial, et cetera. >> a lot of people out there people, it's about the policy. bernanke was about the policy of watch the show that are small business owners and maybe quantitative easing. that's a lot of power. wannabe entrepreneurs. you're printing money, you're you've made it. you've made the upper echelon of buying bonds. janet yellen is about promises. corporate america. give some advice. how do you do it? >> certainly lori ann in her book "opportunity knocks" the promises is a lot harder of a pyramid of factors that are very policy. promises requires a lot of other important. i liked her comment the other things to go right. >> she's promising things are day about world dominance i'm going to get better? not sure that's a legal term to >> she's promising to keep and be able to use. we tend to stay away from that. rates low for longer. and the market has given her the >> tongue in cheek. benefit on the doubt. >> i think it's perseverance and but the challenge this year is i think it's integrity, listen, going to be how does the market learn, before you leap. respond when the economic data >> what do you think drives it? starts so strengthen, when >> i think you have to have a inflation starts to go up? they're talking about zero passion. you know, you have to be interest rates for another two completely dedicated and years. >> jeff, your phone is going to absorbed in what you're doing. you have to take all facets of ring off the hook. what do you tell your investors the business when i was running home depot hooking at today? >> what we're telling our megatrends, listening to your investors is we look at where people. certainly customer focused, you are you worried about rising know, market backed kind of is interest rates? most people are worried about what really drives you, andrew. rising interest rates in their >> i'm always trying to figure longest duration area of their out what it is that's actually portfolio. propelling the, you know -- what are the big outflows last >> i think you're born with it. year? people fled out of traditional >> steve jobs used to say it was fixed income. but you look at the shape of the about insecurity. yield curve, the biggest risk of >> fear of failure. >> fear of failure. rising interest rates is where people feel they're the safest. >> that drives everybody. >> thank you, bb. make sure you join us tomorrow, "squawk on the street" she's in the front end of the begins right now. >> you just defined everybody on tv. ♪ yield curve. the 30-year is at 360 basis points. so where is the risk in the market? the risk in the market is in the front end of the yield. good wednesday morning. >> so the yields are good, but welcome to "squawk on the the principal starts to street." carl and david are off. collapse. >> well, the practice starts to i'm scott wapner with kelly collapse. the issue is the yield curve is evans live from the new york very steep, so the bigger area stock exchange today. jim cramer is at the site of starbucks annual shareholder of risk for rising interest meeting out in seattle, where he'll have a live interview with rates is the -- chairman and ceo howard schultz >> just hold to maturity. later this hour. >> well, yeah, but holding to sleepless in seattle, jim, because you flew out there and maturity is difficult when you're pumped up with caffeine you're all the way out in 30 years. and ready to go today. >> yeah, absolutely. just getting started. this is a 36-hour marathon, i don't intend to sleep >> the issue is when you're in the two to five-year curve. that's a lot longer than people are worried about. >> and people are expecting no losses in that part of the yield curve. that's the risk. >> the chinese government is letting corporate bonds go bust. are you scared? >> there's a long standing fear of the credit bubble in china. and when you start to see defaults show up in the chinese corporate market and the credit markets, that's something to pay attention to. >> it's problematic, it's systematic. there's a real issue, a long standing issue. >> expect your advice to your clients. >> absolutely. china and china growth expectations determine a lot more than just what happens in the chinese economy. it's what happens in the global economy. so the issue here is china's growth rate expectation, the rate goes down, which is not bad for bonds, but it changes your outlook in growth expectations and all the asset prices predicated on there. >> another big drawdown? >> another big drawdown in risky assets. at some point, yes, when you're looking at a bigger systemic issue. it's not clear that this is it. that these corporate default rates are that signal. >> you have this long standing risk. it's certainly something you have to keep on your radar. >> bob nardelli will be with us for the rest of the show. don't move. still to come, cup cakes in the shark tank. i am so excited about this. kevin o'leary putting his money behind the cup cake in a jar. we'll meet the entrepreneur that has hooked up with mr. wonderful and has seen a huge jump. i'm hoping to eat some of these cup cakes. then at 8:00 a.m. eastern time, blackstone's founder steve schwarzman will join us. an will. welcome back to "squawk box." dow looks like it will open about .points higher, the s&p 500 up marginally. quick update on the story we mentioned a few moments ago, jp morgan chase sale of its commodity unit will be announced later this morning. the deal will be worth about $3.5 billion. we're not expected to hear any details today about the future of why masters is the head of that unit. kay, thank you for bringing us that news. brian. >> when we return on "squawk box," we're going to get behind the wheel. is general motors making the right moves in its recall? the stock continues to move high they are morning. also, can tesla win a dealership war with new jersey? your guest host, bob nardelli, rand chrysler will join us next. . no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ welcome back, everybody. two big stories dominating your headlines over the past week. number one, the gm recall fallout. number two, tesla's fight to sell its vehicles directly to consumers. joining us now, bob nardelli. gosh, where should we start. let's start with gm, okay? >> okay. >> another recall announced monday which brings it to 3.3 million cars recalled. we referenced the ford pinto in the 70s. how much financial damage could this do to gm? >> first of all, i think mary is handling it as best she can. bless her heart, stepping into this position and being handed this problem is -- >> she's been at general motors as a high level executive. the question, was she literally handed this or was she involved some way? >> she's going to have to distance herself because she's been there, what, 30 some years. it's hard to believe an executive wouldn't be aware of these types of problems. >> do you believe that this was somehow in some corner of gm that nobody knew about and that the small working team didn't want anyone else to know about it or do you think it would have risen to the level of minimum senior management if not the board? michelle raised the question during the bailout, you know, whether somebody like even a steve ratner or somebody from government would have -- >> so let's look at it. there were three ceos. the government, ratner bloom, it's hard to believe that something of this magnitude wouldn't have surfaced itself, wouldn't have been presented at a board meeting. we had those discussions at chrysler all the time. it's hard for me to believe this was cordoned off in a closet somewhere, andrew. >> it's hard to believe, the part only cost $1 and they didn't implement the change. it doesn't seem logical to me to make that decision. >> again, you would -- gm still has to pay for the labor, right? >> i get that. but the question is the cost for the piece. >> look at what's happening to target, look to their issue and the drop to customer count. so it's a lot about image, a lot about recall. >> your point, reserve, what, 300 million? you see today, toyota is going to pay a billion. i think that's the bar on this type of issue. now they're going to go through gm, through -- >> listen, i believe in the first case you read about is grimshaw. that was a couple hundred million. >> inflation that number up. >> how much of that would be insured? i'm trying to get the financial impact of the company or would they have plenty of insurers who would spread that out? >> a couple things. their insurance coverage, i'm not aware of that. but you look at the vendor that provided the ignition, the switch, and they're going to have some liability here. that means they'll have to replace the part and have some additional liability. or, you know, engineering design in flaws and failures. >> if you were married, would you announce that the trust is setting up a trust immediately for the 12 slikt ims or do you wait to go through the course. >> i think she's probably being advised by counsel not to do that right now. and the marketing team right now is saying trust immediately because they have a different venue. i think she's coming out, she's being very transparent, extending sympathies, setting up at least every day. but it's tough. >> is there liability for some of the previous -- of that company and other members of management? >> i'm not a lawyer, but i -- it depends on where justice goes with this and what else comes out as a result of the investigations. >> let's move on to tesla. the state is now saying you cannot sell directly to. do you think they should be able to or thelt be able y will be a? >> the dealer network from my experience is very strong, very tenured and they have tremendous state party. >> they sounds like union mess. >> sounds like. >> it will be hard to break that, particularly in new jersey. >> i think there's certainly a proposition there where you would like to be able to go direct. i've had that in a number of different positions where you're dealers or your distributors say we don't want you to go online, but they're online. it is where the world is going. >> so you think 20 years from now we'll have deeperships? >> no, i think you're going to have dealerships because you still have to service these dealers. >> that's a body shop. >> that's the first defense to throw up. well, if you sell brekt, who is going to service them? >> mechanic. >> a mechanic. >> there's plenty of small, family-owned mom and pop shops. do they the expertise and the equipment and will they make the investigate to do that. if they lose this new jersey kick, they'll fight it, and lose it to your expectation, every other state will feel emboldened. do you think this is a breaking point? >> i think it is a pivotal point. >> do they still just manufacture in california california, even if every state outlawed the way they sell, can they still manufacture a car and get it to me? >> if you go to the showroom, you're go to go to the whole thing and that's probably true, too. when "squawk box" returns, we're going to tap into the cnbc global cfo council because we have the cfo of cisco joining us. he's going to give us a look at the silicone valley economy. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's 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 they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind. into welcome back to "squawk box," first in business worldwide. the justice department expected to announce a settlement with toyota. earlier today, they could offer more than $1 billion. it will end a criminal probe into the handling of a consumer complaint tied to unintended accelerations. that would be the largest fine ever imposed on an auto maerg. discussions between fast retailing and j. crew breaking down. while it isn't clear exactly why the talks broke down, some say part of the reason was because it h become public. and blackstone is now working on a higher offer for global. blackstone nitd its partnership with gpg capital is in negotiation, but raising its bid could clench that deal for the auto parts productmaker. looking forward to talking to steve swartzman very soon. earnings just hitting the wire. very short of the expectations, so we're not sure if that's apples to apples yet. $1.23 versus an estimate of $1.45. this is a pretty big miss. revenues came in at 11.3 billion. the expectation was for $11.43 the 5 billion. i'm looking at the samt here to see if we have any other -- >> weather. no, seriously, they say the fourth quarter hurt by unusually severe winter storms. i hate it when companies use weather as an excuse, but this year in the south especially was such an anomaly. their guidance is interesting. 6.55 to 6.80. >> that's way below expect ig as of 6.89. >> not only that, but a pretty big guidance fwap. no visibility or -- here is my question. i thought given the weather situation, retailers would get hit, the but everybody would start ordering everything online and companies like u.p.s. and fed ix would be the big winners because that's how you get it home. >> they ordered it, but they couldn't deliver it. >> the others, costco is up given the weather. i assume there is incredible costs given the weather. >> think of it this way. i want to send you a package overnight. everything goes through memphis. memphis is snowed in. you can't get the package. they need to refund me that money because they didn't get you the tie for three days. they're going to have to kick me back or give me a credit. my guess is -- >> then there's the cost, too. >> $25 million in operating income hit because of the weather. >> what kind of tie? >> you can have this one. >> andrew, what you have to do is they end up leasing vehicles to put drivers in to get them -- i've experienced this. we had that quarter inch of snow in atlanta and it shut us down for three or four days. >> on a refund, is that counting pass top line or the bottom line? if they're having to rebate money, are we looking at both the misses on the top and bottom? how does that get impacted? >> i think accounting -- well, we've got the expert here with us. but it seems to me you have to back it out of both places. >> we have the cfo of cisco right here. but please jump in if you could. it basically is an offset to the revenue. and there are power costs and it's one of the -- probably a type of bottom line. >> let's move to frank, who is here. cisco systems is proving itself in the cloud computing based system. how is it dealing with cyber security concerns right now? frank is joining us, he's the chief financial officer at cisco. "the washington post" said that the government is now recording up to 30 days all foreign telephone calls and they're actually able to use this as a time machine to go back and look at this. how is everything that's happening with the nsa impacting your business and your ability to sell products internationally right now? >> well, currently, we sell into that, we sell products. one of the things that as columbus up in every topic at nsa is what does cisco do related to that? we don't monetize products for any government. basically, the products we sell to all of our customers. i think the government plays a role as far as traffic that goes through. >> so when it goes away, there's a good thing. they're recording all of this audio -- >> broadband. >> again, the other side of the poison has to are -- suffer used the network? that moves to drive markets. >> where is the u.s. government come in terms of your client? >> we're a global company. we sell a big piece to the u.s. and to government, we sell to enterprise and u.s. commercial. >> are you going to see a top five customer? >> it's more of an alleged environment tooicht. . i think it always comes up. again, for us, we try to stay independent and stay out of the space in that sector. we sell our products to public sector companies around the world. we sell our products to private companies around the world, as well. >> yeah, but you didn't answer my question. >> here is a question i'd like to ask. this subject right now is increasing volume. so you're doing a lot more storage. and big data i think everybody is enamored with. let's get a ton of information. it serves you well. what do you provide to be able to provide intelligent direction for companies to be able to use this massive amount of data? because that is the big challenge. >> recording is one thing. extracting it i think is another. >> so whuj about data. i think they're trying to -- it allows you to mine information so you have readily available information to make those decisions. another thing we're doing for our customer sess basically helping you do that. the network and how important that is with the security, as well. making sure you get that data so you can protect that data, whether it's your own data as a company or whether it's data from customers that you're providing and making sure that you have the agreement to a customer. >> i knew you guys sponsored it. in talking to my friends over there, to figure out how to take that massive data and provide intelligent direction for it. >> we had about 15 cfos just last week talking about the big gain and what's important in their company and the investments they're making to do it effectively. >> a cisco question for you. you guys are now at $9 billion returning to shareholders, 900 million in dividends. and to me, one of two things that suggests, either you don't see a great opportunity in m&a. earlier this week, warren buffett, there was a shareholder that wants a dividend and warren said, i don't want to give a dividend because i think i can take that and -- >> first of all, we have $47 billion in cash. so we're very fortunate to have that amount of cash. so then you go down the path and what do you do with that? the first thing we do is we invest in a business. we see there's opportunity growth in the future. and the last 18 months, we've done 15 acquisitions, small and medium size, all in the software, security and also from the standpoint of looking at different applications as it relates. those are the investments we've made from an acquisition. and then you look at what extra cash you have and these investors are looking for not only invest in your business, but return that cash. >> real quick, what do you think of prices in the valley? >> i think it -- they're from an acquisition standpoint. >> we've argued on street signs silicone valley is the new wall street. it's where all the money is, all the power is. 1.6 million was just paid for a teardown home. where does a policemen live? where does a teacher live? how do your employees live in the valley? >> the affordability in the valley has always been a challenge. it has its ups and downs in the stock market. you look at strategies. but i think if you look back at ad acquisitions, you'll get peaks and valleys. we look at acquisitions. we also look at what kind of return you're going to get. and the one that we've done in the last 18 months, i think we've paid a good price for that. >> frank, when you look at that, are you looking at cash on cash? and what kind of target do you have? is it a one-year payback, a two of had year payback? we usually look at about three to five years. coming up, some not so good news for porsche, considering its 911gd model. coming up, crimea has been all but lost to russia. what is next? cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. ford says it's going to replace the engines in all the current 911 gt3 sports cars. and it told owners to stop driving the car because it could catch fire. they've investigated two engine fears where a loosen ed caused the engines to leak. bob nardelli is shaking his head. >> here we go. >> it's just amazing. it's a very -- when you can of the number of parts in suppliers, tier one and tier two, tier three that go into assembling a vehicle, it's amazing. this is another example of something as insidious as a connecter, springing oil on a hot engine is going to catch on fire. >> $130,000 car to start. you can easily take the gt3, go up two handles, you should not have any problems. >> you should not. regardless of the price, you should not have a problem. >> yeah, but these cars are built -- >> by hand. by hand. coming up, we're going to jump into the shark tank, talk to a successful contestant. kevin o'leary, next. y, next. so our business can be on at&t's network for $175 a month? 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