Stocks coming off their worst losses this year. Its february 5th, 2013 and squawk begins right now. Good morning, everybody. Ike becky quick along with Andrew Ross Sorkin. Joe kernen is off today so we are again joined by Steve Liesman. Also at the table with us this morning, our guest host is andy surel. Andrew just talked about the markets. Stocks ending at session lows yesterday. In fact, all ten s p sectors closed lower. Yet the bulls betting this is nothing more than a bull pac. But we will have a number of powerful investors for their thoughts throughout yao the morning. Jim oneill will join us in just a few minutes. Then in the next half hour, the man charged with making sdigs for how blackrock invests more than 1 trillion, the firms chief investment strategist, russ koesterich. Nouriel roubini will be joining us and were going to ask him for his current view of the world. In the following hour, buy and hold is the name of his game, barons capital ceo ron baron will be our special guess. Hes been talking to us about how great of an opportunity stocks have been. Well see if hes still feeling that optimistic now that stocks have reached 14,000 or close to it. How majority leader eric cantor is set to address a major policy issue today. The goal here is trying to rebrand the gop. Moving on, before he makes his speech at aee, he will join squawk with a preview. And in squawk sports news, the super bowl champion ravens will get a heros welcome today with a parade in their hometown of baltimore. Everyone is still talking about the power outage of the superdome during the game. This morning, we will talk to a moon who was in the stands on sunday when the lights went out. He also happens to be the ceo of nntergy. Obviously, a lot to talk about today. But before we do get started, lets head over to Steve Liesman. He has the mornings top stories. Hey, steve. If i could get your ticket standing in the cold there. A deal to take dell private could come as soon as today. The computermaker moving close the a buyout with price negotiations narrowing to 13. 50 to 13. 75 a share. It would be the biggest leveraged buyout since the financial crisis. The u. S. Government launching a civil lawsuit against Standard Poors and mcgrawhill over mortgage ratings. This is the First Federal enforcement action against a Credit Rating agencies over alleged behavior tied more to the crisis. Well talk more about the story and the implications with Jacob Frankel as 6 30 eastern. And theres more news for boeing. The company has asked the faa for permission to do test flights. This suggests boeing has Found Solutions that led to the grounding of the entire fleet last month. The Transportation Agency says its unclear whether battery, chemistry or an electrical issue caused a main battery on a plane owned by Nippon Airlines last month. Investigators said today they may widen their probe on other components on the aircraft. Thank you, mr. Professor. Yum brands is warning it is expecting 2013 warnings to shrink as it struggled to manage a food safety scare in china. Remember i made that joke about cats. Well leave that alone. Also, toyota now raising its annual Profit Guidance banking on stronger sales in the u. S. Market and a boochtd from a weaker yen. But the automaker says it will not build any new factories in three years despite product. Why dont we take a look at markets this morning. Yesterday, the markets had their worst performance in 2013. The dow was down by about 129 points. That is less than 1 . S p was off about 1 is. 1 . And the nasdaq was off by about 1. 5 . This morning, we do see some green arrows indicating that at least at the open, if things continue at the pace they are at right now, you will see some gains for the stock market, a bounceback after the dow fell back below 14,000 yesterday. Take a look at oil price these morning. Right now, youll see that wti crude is up by about 47 cents. Thats about 0. 5 . 96. 64. The tenyear note, which kwled yesterday was once again yielding around 2 , at this point, the yield is back at 1 of 989 , sitting right at that cusp of the level where people start to sit up and Pay Attention to see which way rates are actually headed. Take a look at the dollar this morning. Youll see right now that the euro is actually down. This was get something attention a few hours ago, earlier in the morning when it was under more pressure. 1. 354 is where it stands right now. The big story is whats been happening with the yen. The dollar is up against the yen at 92. 96. You did see some bigger losses for the yen and for the euro a little earlier this morning. Well keep track of that. Meantime, gold prices are up by about 2. 1,678. 1,678. 40 an ounce. Kelly evans is standing by in london. Kelly. Steve, good morning. Weve had a lot of talk, a lot of earnings out this morning across europe. The market tone is better than yesterday, as you might expect. I cant say weve fully recouped our losses. Markets are up about 0. 6 . We can take a look at some of the major indexes. For the most part, its green. The xetra dax down 1. 6 . We saw declines in the range of 3 or more for some of these indexes yesterday. A lot of guests weve been speaking to on our program say they feel yesterday was more than of a pause than a start. A lot of people talking about taking profits in these markets. Thats the conversation thats happening on both sides of the atlantic. On that note, i also want to show you whats going on nor the swiss market. Ubs reported earnings today, ftse 100 adding about the same bp shares the last time we checked were trading to the up side after reporting earnings. Lets take a look at whats happening with bp and ubs. Still up 1. 5 . Well start off by giving you a sense of what bps ceo bob dudley had to say. She asked him about troubles related to the Oil Explosion in the deep water horizon a couple of years ago. There were some problems and underlying sign webs but this sounds like an issue theyre still trying to get behind them. Take a listen. Weve moved a lot of this behind us and i think weve met our commitments and were going to keep meeting our commitments. But well see how long this takes. The Group Reported a net underlying profit of about 3. 9 billion. Interesting, own on our analysts pointed out, look, a lot of their improvement had to do with a much lower tax rate related to some of these charges. While there are positive signs in the business that in evestor do like, theres a lot of impact. Different story at ubs. Interesting to see people try and suck out what this company is reporting when it comes to this quarter. The Market Reaction was positive than negative. Were looking now down about 0. 76 weighing on the swiss market. We had carolin roth since dow with the ceo of armani. If you want to talk about the commonalities between these two kms, its the number of legal and restructuring issues occurring. Ubs is trying to transfer from its Investment Banking to more of a Wealth Management model. Margins in that business were weaker, weighing somewhat on investor prospects. But when it came to libor in particular, here is how the ceo responded to how they see their ability to put that issue behind them in 2013. I think that we made very Good Progress on addressing many of those issues during 2012. You are always going to have problems, but i think many of those problems will be more. More industrywide problems. Yes. So saying theyre basically sure its an industry were dealing with. But guess what . So is everyone. And thats certainly the case as the libor pros continue to widen. So a couple of ceo interviews to bring you there. Wanted to play them out on air for us guys in case you didnt catch them in the wee hours of cnbc world. Back your way. Kelly, thank you. Jim oneill is the chairman of the Goldman SachsAsset Management. Jim, by the way, is on the Advisory Board for the cnbc delivering investor alpha conference. This years gathering will be held on july 17th. Jim, weve been watching the markets climb and climb and climb, even after yesterdays decline, youre looking at gains of almost 5 for the year. Youve started asking, are things really that good . What do you think . Good day, becky. How are you . Great. Good to see you. Good day to you all. Good day, jim. You know, as always, i tend to be in the cheerier camp of life. But the scale of the the rallies weve seen in january means that youve got to ask those kind of questions because nothing ever goes in a straight line, as we found out yesterday. So whether this is the start of a big correction or not, to be quite honest with you, i dont have a strong view on that today. But theres one or two warning signs. But against that, there is clear evidence of things doing better economically around the world. The reason were getting a bounce in europe this morning is the Service Sector pmi for january has just come through and its stronger again. And germany in particular is really strong. Were getting more. More evidence of many parts of the world doing better and as you touched on with the toyota report, youve got a lot of aggressive policies going on in japan. So i think the underlying momentum is for the year very favorable, but could we correct further . Quite easily. You know, jim, the other people here around the table for us this morning, Steve Liesman and andy is here, too. We always appreciate having you here to talk us through these things. I know youre asking the question a lot of us have been trying to figure out yourself. Hearing you be uncertain, that makes me nervous because youre somebody who usually has a strong feeling for where you think things are headed. Weve heard that from a lot of big ceos, including the ceo of caterpillar. And i guess that gets us back to the question, do you worry about a spring swim again, particularly if some of the ceos of the world are starting to worry about that and are not allocating capital at this point and getting out ahead of things . Well, i think there are part of the reason why the phrase that you referred to in the way that you said is its not like all the big issues have disappeared completely. For ceos, i guess in europe and the u. S. , there are still underlying policy issues around that it doesnt take a great deal to start getting those worrying people. You know, weve got the sequestration coming in at the end of the quarter im ser, the you say of the month in the u. S. And that looks to me as though its going to happen. And what twists and turns will come from that and where there will end up being new taxes on the table. Something that really worries ceos would be any guess in the u. S. And youve got suddenly quite a bit of uncertainty about politics in both spain and italy again. Against that, china looks pretty clear in any opinion and its obviously the increasingly marginal place for the world, so thats a big positive. And japan is flirting with doing things that we havent seen in over 20 years, which is another big positive. You have to put all that in the mix and thats what each ceo that looks at global businesses have to deal with. Jim, Steve Liesman. Is there a risk out there that is probably the hardest for these americans to understand, its what its europe. And im just wondering, your concern at this point . Weve had a little bit of an increase in yields for some of the more volatile countries out there. Do you think this is an issue that can explode on to the front pages on the minds of investors and create the kind of risk that we had last year . Well, i think because of the underpinning from super mario at the ecb, i think the scale of dilemma we were looking at through the first half of last year is not going to be the same. But against that, in each of spain and italy, youve got two new issues on the table. The thing that really upset the markets yesterday was initially with the spanish, the whole government is embroiled in this strange fundamentaling story and widespread relief of corruption. And this is at a time where spanish people are suffering enormous pain. And so its not easy for them to put that to bed without some fundamental reform. That is not just noise, its news and its not good news. And quite inkref credibly in italy, youve got the vague possibility that a certain personal that we thought might be be back in the force of italian politics could be. And everything that goes with that. Even buying football was out of the uk to boost its popularity in milan, which is certainly very clever. But, jim, none of those things is the equivalent of the possibility of bankruptcy or a default by spain or portugal. All those things you mentioned seem to be a different order of magnitude. Well, the i deed, thats the context i think one should currently look at them. But in the case of the spanish in particular, you have a government providing over youth unemployment in excess of 50 and despite that, seemingly bought into the austerity program. And if it tran expireses that the whole release of spain is riddled with corruption, you know, that is the sort of thing that could explode out of nowhere and cause problems. I think what youve said, steve, is right, but we have to watch illustrate caref it carefully because this is a new development. I wanted to follow up, jim, on that comment you made about china. Theres a lot on of talk. China is back and were seeing the managed triumph of an economy. Is that your take . Pretty clear to me. Through wrought the whole concerns about china, which, of course, went on and off all the way through until the late autumn, i was very skeptical about that and i thought we were managing things pretty well. So i was and i remain very relaxed and well get the next sets of chinese data in the next week or so. And im pretty sure it will show further evidence of china bouncing a bit. More importantly, that china is slowly adjusting to an economy not so dependent on exports or government investment. And thats what they need and thats what we all want from them. And that is pretty important. Jim, is it your thought that people should at this point just kind of hold off and pull back and wait and see what happens over the next several months instead of sell in may and go away, is this sell in february and go away . I prefer the sell in may and go away. It has a remarkable rhythm to it. And the fact that a couple of other things successfully passed in january, its the first five days for the s p and the element echo tells me about the 80 liability since 1950 and the month as a whole was up and that has a similar success rate. So i think rushing to sell is if youre a medium term player is probably not a smart move. But if youve made it, all the gains weve had in january to take some off the table isnt a crazy idea, either. What i would also add, and an underlying theme of mine, really, since november, i think on a global basis, the leadership is changing. And i think its interesting this morning, despite the correction in the u. S. That china had another up day and china in, after having a bad year last year, has had a fantastic run since november. I think were up 20 of the floor and it looks to me as though the Chinese Market is developing serious positive momentum. And, of course, japan is on its own mission, as well. So i dont think they necessarily depend on whats going on in the u. S. Market where things could be a bit choppy for a while. Okay. Well, jim, as always, we appreciate your time and we look forward to talking to you again soon. Again, jim oneill. Good day. Have a good day. Coming up, the u. S. Government filing civil charges against the s p. Its all tied to bond ratings and the financial crisis. Jacob frankel is going to tell us what to think about this since the break. Whats the one thing that surprises you about this story . The department of justice is the lead agent filing this lawsuit and not the s. E. C. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Wouk, everybody. After the markets worst performance of the year yesterday, you see there are green arrows this morning. In fact, those dow futures are indicated higher by about 70 points. S p futures up by 8 points. Leads you to wonder if that was a item rather pullback and this is the march straight ahead. In our headlines this morning, Knight Capital will lay off 5 of its global workforce. The Company Recently agreed to be bought for 1. 4 billion. The offering are part of a restructure to the automated trading firm. The Justice Department filed a civil charges against Standard Poors. The government accuses the firm of inflating ratings and Mortgage Investments and setting them up for a crash when the financial crisis hit. Joining us, jacob frenkel. He is now a partner at shulman rogers. Good morning, jacob. Steve, good morning. Lets talk about the thing you talked about just before. Whats significant about the Justice Department, not the s. E. C. , bringing this case . Typically when we see a doj case, wear looking at a criminal case. I think everybody has been expecting and looking for in the public particularly after the leven report on congress, 300 plus pages, berating the role of the credit agencies and the market collapse that there should be some criminal case. Mindful that its the s. E. C. That has Civil Enforcement jurisdiction involving conduct in the capital markets. Here, its the department of justice bringing a civil case and the s. E. C. Not bringing a case as part of this mix of cases. And thats really somewhat surprising. Also somewhat interesting is almost the midnight