Good morning. Bulls coming off on a historic week. The dow above 14,000 has all the major averages. A rally 2 in the last five trading day. Mixed Economic Data from china is weighing on sentiment and a slow start to the session in europe. Investors there reacting to italys Credit Rating downgrade. It is monday, march 11th, 2013. Its 6 00 a. M. Though et feels like 5 00 a. M. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with Andrew Ross Sorkin and steve liesman. Steve is here in for joe today who is enjoying some time off. Were going to start with the markets. The bulls are hoping to pick up where last week left off. The dow has closed higher on every friday of 2013. Thats 10 friday necessary a row so far. Its notable that the blue chip index rose on each of the five days in the last week. That is the first time thats happened since september 2011. All ten s p sectors finished higher for the week led by financials and consumer discretionary. Mondays have been rougher. Most of the mondays have closed lower. Last week was the exception. U. S. Equity futures are indicated lower today. Dow futures down by about 15 points. Were going to head overseas and check in with kelly evans at the moment. Also eunice eune who is in beijing. But first to some of the other mornings headlines out of the United States. All the clocks in my house are still off kilter. 5 00 a. M. Is what my cars clock says right now, too, so i had a little bit of an issue. Years ago, my older son wrote us a note and said, dad, is it 11 00, 12 00 or 1 00 . I feel his pain. We had issues. I have i was two hours off monday morning waking up with the kids and couldnt figure out where we were supposed to be. Goldman sachs has a note from investor investors. Gasoline falling nearly 6 cents in the last two weeks. The lundberg survey puts the National Average for a gallon of regular at 3. 73. The reason for the decline, refiners cutting wholesale prices following weeks of increases. Industry watchers predict prices will fall another 10 to 12 cents in the coming weeks. Amazons smartphone release may be delayed. The digit time reports the company will not be able to release its phone in q2 due to delays in production. Progress at the companys partner, foxconn. Becky. Thank you. And other news, Berkshire Hathaway is nominating Investment Management miryl witmer to the board. Sonys ceo plans to retire in june. And German Hedge Fund manager floria homm has been arrested on charges in the United States of fraud. Hes accused of orchestrating a market manipulation scheme to the improves the performance of his fund. The alleged fraud led to at least 200 million in loss for investors. He has been on the run in five years. And the paper trace reportedly going cold in the s p. The s p tried to clamp down loose talk on emails and other note taking as early as 2005. This may make the case harder as signs of distress began appearing in the Mortgage Securities market. S p executives are is said to have begun advising analysts responsible for rating mortgage bonds to put the phrase privileged and confidential on emails to one another. Does that matter . If you put confidential like you cant have it now . Gotcha. I cant imagine that does it. I think basically you stop sending stuff out . At Goldman Sachs they used to write ldl. And that means lets discuss live which meant lets never put this in email. Do you remember the phrase somebody said to me once where i think we had it on air one time, it was never write when oh wsh barney frank. Barney frank. Do you remember it . Never write when you can talk, never talk when you can nod, never nod when you can wink. Good. Words to live by. S p analysts were discouraged from doodling and official documents during meetings to discuss pending deals and existing ratings. But it turns out the employees didnt fully heed the warning g warningings. Thats always the problem. The governments civil lawsuit relies heavily on emails. But legal experts say the u. S. Case needs witnesses to bolster those emails. So the reasons the United States went after moodys first wasnt because of the downgrade s p first not moody peps. Or after s p and not moodys first was because of the downgrade. But theyre going to have trouble with this or not . Weve seen emails that worked in the past. Im not sure why this case in this case, the s p emails that are identity there are not they sound difficult, but theyre very broad. Its just were screwing this whole thing up as opposed to in this particular call its nefarious because were doing xyz and its showing one thing or another. And theres an argument which they could go after that they may not have to problem. Andrew, as you were writing your book, were you saying to yourself, theres going to be prosecutions . Are you surprised at this point that the failure of the Banking System has not resulted in very many prosecutions at all . When i started the book, i thought there would be. The farther i got into the process, the more surprised i was that when it comes to criminal intent and having covered a number of these white collar cases, knowing you need the intent, i felt they didnt know enough. The book was almost titled failure of imagination was the other title. I realized by the end that there were people would failed to see it. Rather than being a crimin criminal it wasnt so much that they right. I believe at the lower levels there were some real problems in terms of the mortgage lending. But im not sure it ever reached the top. Is that incompetent, then . Call it incompetent. But everybody says they want to say a scalp or this or that. But theres all these prosecutors who would love to make a name for themselves. Frankly, there are authors who wrote all of the devilses are here. And Bethany Mcclain and all sorts of people that love to write books. The unprosecuted criminal acts. They discovered something that would have led to something. But ultimately, im not sure that the although chaino has made the argument in the past, that look, you could have done you could have gone after them. You could have prgd some of them based on the existing laws that were on the books. Sarbangs oxley. Saying you signed off on this as ceo. Even if you claim you didnt know it, that is enough to catch you. You should have known it. So its not necessarily that would have been a civil case and not criminal. But they didnt come after him on a civil case. But it was all about marking. It was about how you marked the books and that is still an art and not a science and thats part of the problem. Thats why Charlie Munger says that is the way they need to crack down on people is looking at accounting because you shouldnt be able to make it up and say, oh, this is what its worth today. Did anybody see the randall for sight in the barons this weekend . Yes. He quotes eric holder saying that there are banks who are to jail. Yes. In fact, i am working on something. Are you working on a column for this . Potentially. Let me recap the bidding on this, which is that he was asked by i forget whom in congress where there havent been prosecution and holder apparently saying, well, were concerned about the impact of criminal prosecutions of these banks on the financial system. And this is an interesting idea that companies or banks are not being prosecuted not because they havent done anything criminally wrong, but because of the effects on the financial system. Which created all kinds of problems saying this is not the consistent view from the administration. I did an interview with paul advocator last wednesday and thats online. He was great. He was really sharp. He said you cannot break up these banks enough to make them not too big to fail. If you think about what is the jpmorgan Balance Sheet, like 2 trillion . At least. So apparently in continental terms of the bank that was bailed out in 1983, in todays dollars, its 300 billion. So do the math to see how many and that was too big to fail. It would have been 300 billion, their Balance Sheet . In todays dollars. So youd have to make what is that, six jpmorgan eps . But go look at the concentration of banks, though, in canada and australia. Theyre even more concentrated. More concentrated. And i covered the savings and loan crisis and that was problem with small banks. So make them smaller doesnt solve the problem. Anyway, time for the Global Markets report. Kelly evans is standing by in london. Kelly. Steve, trading volumes are light today. Here is a sense of why. Take a look. At the weather, outside of you window here in the studios, these are live pictures. And london was supposed to get maybe a centimeter of snow today. Yeah. Its going to be a little more than a centimeter. I know it doesnt quite stack up to the kind of levels that youve seen over there in new york, but nevertheless, keep that in mind when you start to look at some of the activity weve seen. There will be trouble for people getting into work today. Knowing the way the city is, there could be trouble for the rest of the week, as well. In terms of trading, lets give you a quick sense of whats happening in markets. Across asia, we did see a generally weaker tone after china came out with weaker than expected sales. China unveiling its biggest overall in like 15 years. That will give people something to chew over when it comes to investing in asia and china specifically. We turn our attention to the european session, the ftse 1 00 has been struggling to stay in the green, but regardless, everybody else is basically pointed lower this week taking a pause after the kind of rallies weve seen in europe that hasekcooed largely the trading patterns weve seen in the u. S. The ftse mib is weaker, down 0. 8 . Reaction thats not too inconsistent with the behavior weve seen for that index. And if you look at the bond space, were weaker on italy, but not cart mat cannily so. Watch the spread between spain and italy. This is now narrowed to within 10 is basis points, putting pressure on the euro overnight. The dollar is stronger against the yen, so the Dollar Strength continues. Weve seen as a result crude oil and some of the other commodities taking that on the chin. On that note and from a chilly london its actually warmer in the studio for once than it is outside ill send it back over to you guys. Its been warmer here, kelly. Were warming up for spring and gearing up for it. Thank you, kelly. In Washington News this week, paul ryan is going to be unveiling his Budget Proposal tomorrow. John harwood joins us from washington. We think we should balance the budget. John harwood joins us from washington to talk it over with us. Good morning. Good morning. What should we expect this week . Everybody is saying this is the week. This is the week that were going to see a lot of on movement or not. Well, i think its a week where we begin the effort to try to get some movement, and i would say, you know, in tune with kellys report, weve got about a centimeter of hope, maybe two sent meters that something can get done. Interesting, paul ryans appearance on fox yesterday. He talked about his budget and there was some very daunting from a democratic perspective aspects of that. The budget assumes the repeal of obama care, for example, which is not going to happen. But paul ryan also said there are things that we can do that dont offend the fundamental philosophy of either party and i think thats where the you try to thread the needle between the president s position and paul ryan and the republicans position, find some ways to deal with medicare in the tenyear budgets window, which is when paul ryan says he wants to balance the budget and its look, you can easily sketch out a potential deal that the two sides could make, but whether you can overcome the hurdles that have knocked over all the recent attempts, we dont know. John, lets sketch it out, then. Where do we believe the middle ground is . Where do we think there actually is agreement . When paul ryan says there is overlap, what is the overlap so everybody understands where the discussion can at least start . Fundamentally, one of the lines that republicans have drawn, republicans have said were not going to replace the sequester with tax increases, for example. Democrats have said, were not going to reform medicare with vouchers. The president ran against that in the last election. So here is a way you could do it. You could take the sequester cuts, replace them with entitlement cuts. What entitlement cuts would those be . Eric cantor gave a speech about a month ago in which he said he talked about a reform that would combine two different components of the medicare program, have a single deductible for beneficiaries in a way that would deter some use of medical care and raise money for the program. That is a reform that republicans are interested in that within Simpson Bowles that some liberal democrats say, not a bad idea. The white house is not ruling out that idea. It saves over 100 billion over ten years. Thats one place they could go for entitlement cuts. But theyre not going to cut the federal theyre not going to cut federal costs for medicaid and thats is second component of that. You wrote about it with Dick Stephenson over the weekend. Cut federal costs for medicare or medicaid . For medicaid. I apologize. The democrats have pulled back from some of the pedestrian cade cuts that they previously advocated because of the effects of the Court Rulings that has called into question the expansion of medicaid. But i dont think thats an insurmountable hurdle. The second part of the formula that i was mentioning was you could have a second tax reform process that does overhaul the code, reduces some loopholes, maybe reduces rates a little bit, but raises money on net. Republicans, when you hear them talk and pars their words closely, some of them are not saying no revenue in any circumstance. What theyre saying is no revenue to replace the sequester. Now, again, it is its possibly in theory to thread the needle. Like as we sit here and talk about it. But can they do it in the real world of practical politics . I dont know, but thats why the president is going to capitol hill. Hes going to meet with the entire Republican Caucus on thursday. Senate republican kaup caucus. Hes going to meet with House Republicans as well as democrats in both chambers, as well. John, were going to leave it there. Thanks for joining thus morning. Well talk to you then. Thanks. When we come back, china releasing mixed numbers and issuing a plan to try and stream line the government. Well have the details and why the Global Markets are taking notice right after this. And in entertainment news, just Justin Timberlake is going to begin his week long work with jimmy fallon. Its a 2020 experience. Here we are, me and you on the road and we know that it goes on and on [ female announcer ] youre the boss of your life. In charge of making memories and keeping promises. Ask your financial professional how lincoln financial can help you take charge of your future. Oh, oh, all the way oh, oh welcome back to squawk box. Eunice eune joins us from beijing this morning. Eunice, the numbers leave anything but a clear picture in terms of whats happening in chinas economy. Well, thats right. The data really isnt selling us that the recovery is uneven and fragile. On the one hand, we have the Industrial Production numbers and the retail Sales Numbers which ticked lower. On the other hand, we have the Inflation Numbers which ticked higher. The january to february figures tend to be distorted because of the Lunar New Year holiday. But its clear, based on the comments that weve been hearing out of the government from last week from the premier wen jiabao that the government is lowering its target to 3. 5 . The authorities here are concerned about rising prices, especially in the property sector. Now, another big factor that we were watching today was the fact that the government had announced a restructuring. The government is streamlining the bureaucracy. Theyre cutting out all the fat with the basic end goal of taking the Government Role out of the business. Now, a good example of this was with the ministry of railways. The ministry of railways responsibilities were basically split. So you had the administrative work was being put into a government agency. Were going to see the commercial functions put into a company. So there again, you see an example of a government and the business being split. Now, one of the other comments that people were focused on today was the fact that the Railway Minister had made some comments that as a part of this process, the government would open up the Railway System to foreign investments. Thats leaving people to think the authorities were opening up competition here. Eunice, stay with us. Were going to bring in another guest to talk more about this. Weve been tracking asian equity market and theyre rebounded from their lows. For more on that, lets bring in patrick ilvanick. Hes an associate professor at sing Wah University of Investment Management. Thanks for coming in the the today. Thank you. What were focused on is whats been happening with the recovery there. And recovery that looked like it was starting to kick in in october of last year. There were a lot of questions about that today. How secure do you feel with it . A lot of what drove that rebound was the fact that the chinese were pumping in more money again. What was driving that was investment and china really still faced the fundamental dilemma that caused the downturn last year, which is that theyre too dependent on investment. They need to shift to more consumption driven growth. And the more th