and wendy's. all of them reporting before the bell. after the bell, we get gap, monster beverage, salesforce.com, splunk, and deckers. let's get over to andrew with more of today's top stories. and andrew, good morning. >> good morning, becky. we're watching shares of jcpenney. the stock spiking after-hours. the trouble retailer reported a loss of 68 cents per share for the fourth quarter. that was smaller than expected. revenue also missing, but here's the good news. the retailer is upping its same-store sales and gross profit margin forecast for the year and you'll want to keep your eyes on that. jcp shares are down more than 30% so far this year. we'll be talking more about jcpenney with dana telsey at 7:30 eastern time. tesla raising cash to expand into the future. the company will be rolling out plans to build a factory and develop what it's calling its gen-3 mass market vehicle. it plans to build its giga-factory in arizona or texas. the company expects the company to run at about full capacity in 2020, employing 65 hukz people and producing about 500,000 cars. shares of tesla flying high topping about $55 a share. and another security breach to talk about. verizon said to be investigating two possible security breaches. "the wall street journal" reporting that two unnamed retailers appear to be the victim of similar intrusions suffered by other retailers. late last year, now the retailer involved in these newly discovered breaches has yet to disclose them publicly. so we don't know who they are. joe, over to you. >> and andrew, the giga is in quotation marks. >> "giga." >> it's that big factory for -- >> i know what it is, but why do they call it a "giga" factory. it has nothing to do with -- >> that's a good question. >> just because it sounds -- it doesn't really mean there's anything giga bites going on there. >> but the fascinating part, some analysts talking about how tesla is potentially turning itself from a car company into a battery company. >> well, you know -- >> given the capacity -- >> remember boeing? >> he weighed in with boeing when he had those problems with -- >> for electric cars, that is the issue. that's 99% of the problems you need to surmount. and once you do solve them and get that done, then it works. charge it fast, hold a charge, make it go longer, all of those -- >> i think it's a tieback -- >> -- make it not start on fire. >> batteries for them, too. >> we've got to talk about china. did you read this story? >> which story, the china? >> yeah. >> they've got to manipulate it now because they're thinking about not manipulating it. so they've got to lower -- they're going to widen the band, so before they widen the band with these reforms to let it float, they've got to drive it down on purpose to get it to a level where they can then -- >> same story, though. oh, what a tangled web we weave -- >> yeah, they're not currency manipulators. you read this, and i just wonder if the person writing it for the journal, it didn't occur to them how absurd this sounds. they need to do all this hard-core manipulation to then allow it to be more like the dollar, where it floats on its own. because they want it to be -- very strange. >> well, i think that we're currency manipulators. >> because of the fed. >> but like so many things, the east and the west, it's inscrutable. it's -- i don't understand it. and i need to, you know, i need -- you can teach me to meditate? >> i can try, yeah. i'd be happy to. >> i need a word, though. >> i'll get you a word. >> i think i'm going to do, andrew. >> like that? >> just say it repeatedly. >> andrew. >> it's a calming force. >> it is! that felt good right now! andrew. it's a very good name for that, for -- what's it called? >> a good mantra name. >> do you have one? >> i can't -- >> supposedly you're not supposed to say. >> i can't use it now because i told people what it is. >> because it's just your special -- >> it's my special mantra. i don't know. it's been assigned to me. >> you don't get to pick it. no, you don't pick it, they give it to you. >> is yours kernan. >> among the stocks we're going to be watching in today's trading -- >> i feel so much more relaxed now. >> restaurant chain noodles and company. let me start this again. there's a restaurant chain called noodles and company and it reported fourth quarter profit of 11 cents a share, missing estimates by a penny. is it a pasta place? >> i guess. >> revenue also fell -- >> you don't know about it either? >> must be a west coast thing or something? >> revenue also fell below consensus, despite a 17% increase over a year earlier. the company was founded just in 1995. it just went public, though in june of last year. >> not know it. >> it's probably not an east coast company or around here. >> what is it? >> an asian noodle place. >> cool. all right. warren buffett has increased his holding in davida. he added about 1.1 million shares, bringing his total to $37.6 million. that represents the take of about 17.7. >> i have heard him talk about that company. >> it might actually be him. i have heard him talk about that company. >> yeah? >> yeah. >> to add more to it. >> he didn't say he was adding more, i've just heard him mention it, that it was one of the ones he's watching. >> and that governor in arizona, she's republican, she vetoed the bill that set off that national debate over gay rights, religion, and discrimination. >> after weighing all of the arguments, i have vetoed senate bill 1062 moments ago. to the supporters of this legislation, i want you to know that i understand that long-held norms about marriage and family are being challenged as never before. our society is undergoing many dramatic changes. however, i sincerely believe that senate bill 1062 has the potential to create more problems than it purports to solve. >> and you know, it's kind of a -- >> it's not really a defense -- >> no, the decision was met with cheers outside the capitol building. she was met with major corporations and -- the thing i don't like about twitter. to me, maybe i didn't know every nuance and detail about it, but just the idea that a lunch counter that someone would say, no, you're not being served here, somebody -- that was enough for me. i didn't realize how many different situations twitter people could come up with to show me that there was some time when this might make sense. it's like, i don't want to know all your splitting hair opinions about why personal freedom, it's like, okay, let's say you're a florist. someone comes in. they want you to do this at this. you don't like the way -- you know, all these different things about, if it's junior business, why can't you decide whether or not this is somewhere where you're going to -- >> you tie it right back to civil rights. the immediate reaction is, we don't serve your kind here. you can't say that. we decided that 50, 60 years ago. you can't do that. >> but i was like reading these -- where these convoluted situations that these people come up, where i start to wonder, well, maybe i didn't read it closely. >> why do i have to be forced to be a part of a religious ceremony that i find offensive? that's what people were writing in about these things. but you're right, these are small examples -- >> we said that long ago when eric was in here, cantor talking about, you know, you need to be tolerant. and i said, no one's asking you to get married to a man, eric. what, you've got to enforce, you've got to go outside yourself to put your morality on other people. that's the thing -- i don't know of any religion that says, you need to make sure other people are -- >> actually, that's a part of a lot of religions was converting others. >> converting others, but it's not a good idea to sit in judgment. >> but there are some religions that advocate for that. >> the only one i thought was interesting was someone who said a priest could -- >> here you go. you're going with one of the minute -- >> said a priest could tell a jewish couple he can't marry them, and i thought, of course -- >> but that's -- >> i think a priest could marry a jewish couple -- >> but a priest absolutely can say no, and they say they're not going to marry a man and woman -- >> i'm on the other side of this, anyway, but i was reading -- >> but a priest isn't a business. again, a priest is situation where you are protected by religion. you can choose who you marry in your church. you can't as a business say, i serve you, but not you. >> i was doing all of this disparage twitter again, because i don't care about all of your opinions. >> yet you read them all. >> you know what they say about opinions, don't you? everyone's got one and they're all shiny. >> all the cos yesterday, mark bennyoff and others from sales salesforce went on twitter and said, we're pulling all our business if twitter if that happens. all these hotels that would be in trouble. very interesting to see how it erupted online. >> and governor, her defense was not exactly a strident one it was more apologetic -- >> she's in a very red state and she's a republican and she did it, at least, and then she just sort of -- >> but there was real business to be lost by that decision. had they not decided that. >> agreed. let's talk about the markets. we did see the markets close a little bit higher yesterday. joe, you were looking for that s&p 500 crossing that level. >> we're not going -- we're going to make it to march. >> closed yesterday at 1845. >> it was above 1850 for most of the day. >> closed below a new high for the s&p 500, but within a striking distance. you could get there today, potentially. right now, why don't we take a look at where the futures are this morning. again, yesterday, we saw the s&p down slightly. the ten-year yield fell below 6.7% yesterday to a three-week low. futures aren't looking strong today. you saw that number. gold snapped a three-day winning streak after falling 1.1%. that was the worst day this month. right now it's time for the global markets report. ross westgate is standing by in london. good morning. >> good morning, you join us at the low point for the session here in european trade, nearly 9-to-1, decline is outpacing advances at the moment on the dow jones stock 600, and certainly worries in ukraine not helping sentiment this morning either as we see russian things put on full alert and events south of the ukraine. it was guinn over to the ukraine in the 1950s, having proven to be a big russian contingent there. just those issues just rambling around this morning, just weighing on sentiment in the emerging markets and while there might be some systemic spillover as a result. we're 1.5% for the xetra dax. inflation might be a little bit weaker than expected. under pressure because of deflationary fears. the cac 40 down, the ftse down 1%. quite a few stocks we're looking at. we'll start off with rbs, it did up its bonus pool, but the stock off 8.6% today. the ceo says restructure will mean it's more difficult, it will have to make more difficult choices on jobs in the years ahead. they're also saying, we're going to have to off-load systems. some of that may be coming through ipo, but systems, the u.s. business, will be going. wpp, down 5% today. sales were up in the last quarter of 2013, but investors aren't impressed by warning or margins. the ceo saying he should have done a lot more to get businesses out of emerging markets. and alliac, the owner of pimco today, roughing meeting expectations dividends, but they had a strong performance from the property division, life and health insurance missed forecast, and they're blaming pimco for the weaker expectations for 2014 as well. props with pimco weighing on allia allianz. ahold up 4%. the dutch retailer has a big retail presence. the fourth quarter numbers came in a notch above market expectations. that's highlights of some of where we're trading, but sentiment down a little. >> thank you, ross. we'll get over to capetown now, one of my favorite cities and to bronwa nielson. she tells us about her exclusive with the president of south africa, jacob zuma and joins us now with more. >> reporter: emerging markets are out of favor and their currencies are underappreciated across the board. south africa has one of the most volatile currencies in the emerging markets space, fallen some 17% against the u.s. dollar since 2013. many economists here at home say corruption allegations against the ruling party and the mining sector are further fueling this weakness. in a cnbc africa exclusive win sat down with president jacob zuma and asked him what he thought was behind the fall. >> once the dollar is in problems, many currencies are in problems. so it's difficult to say we cannot move this direction or that one. you know for a fact that you have the economy down because of the dollar. >> reporter: that was president jacob zuma of south africa, in a cnbc africa exclusive, talking about what he thinks is behind the weakness. back to you. >> very good, bronwyn. we appreciate that. coming up, do companies that lobby the u.s. government perform better than the s&p 500? and we have some stats that you have to see to believe. and boeing makes jets and rockets, but now it's into some james bond stuff. how about a spy phone? that's coming up in today's executive edge. es es 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, everybody. right now it's time for the executive edge. american airlines has ended its policy of extended special fares to passengers who have to book a last-minute flight because of a relative's death. it's called a bereavement fare, traditionally. but this move bringing americans in line with the policy at merger partner us airways, which has not been offering bereavement fares. walkup prices the tend to be the highest on any airline, putting family members in a real bind, if they have a relative who dies far away. american didn't have a specific discount for bereavement travel, but did have a different fare class that could produce a lower price than the traveler might otherwise find. guys, i'm not a huge fan of this. if you're stuck in a situation like that, the airlines in the past, you would always be able to call and explain, as long as you could give the hospital, the doctor, and make sure they understood it. this is going to put a lot of people -- >> i love doug parker, i think he's done a great job for his company but they can't be making this much money on this and the goodwill you get -- >> my guess is they would say people abuse it. but if that's the case, get better with your controls. make sure you're only allowing people with a legitimate excuse. it sounds like a lousy pr move. >> the sky miles move from delta was even worse. >> and the sad part is all of these guys who come on our show and say when they were going to do these mergers, it was going to be better for consumers. and here we are. >> but, yeah, still, it's been 40 years where we're lucky to have anything left of the airline industry, because it was so cutthroat, and we always had gordon on saying, we're only as good as our stupidest competitor. so the writings are on the wall. you've got to charge for peanuts. >> charged $6 million in excess fees last year. >> so maybe it's viable. >> if you're talking about something like getting rid of bereavement fares. >> it's not that much money. i don't understand what the -- >> but i also don't know what the other airlines do. >> it shouldn't come as a surprise, given how they're watching every penny. >> what does united do? what does jetblue do? >> i don't know if they're matching other people or if it's new. you have to buy a sandwich now in coach. >> i just did it the other week. i had to buy -- i bought a sandwich and bought peanuts. >> are you in coach? >> yes. >> it was a short flight with no first class. >> no, he was traveling for himself, not for work. >> i flew by myself and i sat -- i call it poor man's first class, because i got an exit row. i did pay the $49 extra for the seats -- >> joe, i flew coach last week too, coming back from florida. >> from florida, there's no first class. >> we're not all flying in the front of the plane. >> from florida, there's no first class. >> there was first class, i was not sitting in it. >> was it sold out? >> i fly coach all the time with family. >> you know, like the story about the bereavement, there's more to this thing with sorkin i know. i guarantee you there's some extenuating circumstances here. >> there was a problem with net jets that day, and i was waiting on the tarmac, it didn't work out. i had to get on the united. >> now, that -- >> it was the only seat left on the plane. >> last seen left on the plane. let me tell you about another story. investors spend boat loads of money to try to beat the s&p 500. one way you may not have heard of is tracking what we call the lobbying index. this is a proprietary index based on research by extstrateg. the three biggest are 3m, act censure, and alexion. it's gained more than 80%, crushing the s&p. >> the more you spend in washington, the better your stock does. that's your lesson. >> you know, i've seen a lot of different things. obviously, crony capitalism doesn't help anybody. it makes it worse, it's as bad as the stuff they complain about. but then again, lobbying is the right of -- it is like covered by free speech. you're allowed to do this. and the competitors are going to do it as well. and could you look at it, that the company is smart enough to do this, so that it must be well-managed in other areas. >> what's disappointing is the amount of influence that they have over lawmakers. and the reason we have such a complicated tax code, for instance, is because of these lobbying organizations. if you really wanted to get a fair tax code -- >> how do you offset the influence that unions have and left-wing organizations that soros have? >> why is it only big unions or big organizations that have a say in these things? >> no one is pooling their money together to -- >> i want to raise a question about, at some level, of the voracity of the index. at some level, there's shadow lobbying going on. and not even total lobbying numbers have come down. but you can clearly tell there's the official lobbying that we can all track, that they're tracking, but then all this stuff on the side. >> what if you hire a congressman and bring him under your wing. i thought the same thing too. it was interesting that two tobacco companies made the top of the list. >> you take this to its worst level of lobbying and how does that compare to ukraine with theically other countries, where it's pure out and out bribery. >> there's not a reason to not constantly try to be vigilant to make it a better system. >> there's no golf course at the white house, but i'll bet you, there's -- i bet he's played more rounds than yanukovych than the last couple of years. pro-russian forces, these are militia in krimea took over a building, raised the russian flag over some of those government buildings there. >> the closer you are to russia, it's like the country's half and half, it seems like, to some extent. but we said that was a good thing, because we need to -- >> the problem is, you now have militia who are roaming the streets and taking over business. you're not doing some deal with the parliament that is divideded. you are now talking about a lot of splintered groups. and i don't know how you kind of put things back together. they were arguing for crimea to be part of russia or its own separate entity. this is far from over. let's talk about one more story this morning. boeing unveiling a smartphone that comes straight out of james bond or "mission: impossible." in addition to encrypting calls, any attempt to try to open the casing of the boeing black smartphone deletes all data and renders the device inoperable. boeing's tamper-proof phone is aimed at government agencies and contractors who need to keep information secure. it's made in the united states. this phone runs on google's android operating system. it's slightly larger than an iphone. pit uses dual sim cards to allow it to access multiple cell networks instead of a single network like a normal cell phone. and due to the phone's security features, boeing is releasing few details about the wireless network operators or manufacturer that it is working with. it hasn't provided a price or a date by which the phone would be widely available, but it has said that it's begun offering this phone to potential customers. >> so they're in this business. that's what we -- >> i didn't realize -- >> it sounded interesting if they just decided -- >> this tape will self-destruct in five seconds. >> in fact, i've heard from a board member of a defense contractor, not boeing, who had talked a little bit about how security was a massive issue. they've all got these areas on their headquarters, where you can go into like those black boxes, if you need to have discussions. all kinds of stuff that they can't tell, because if they're working ahead on government projects, they can't -- they have to make sure that none of that information gets out. >> the thing that i thought was so interesting is the idea that it runs not on ios or anything, but on android. not blackberry or microsoft -- >> what does that mean? >> that's happening, isn't it? >> it is happening. it is happening in a big way. it is happening in a big way but people have had questions about it, because it's as open as it is, how secure it could be. but, clearly, if they're using it -- >> people explain why apple always sells at such a reasonable multiple and they explain it, because of android. >> look, i know people who have -- i'm on an iphone. but there are a lot of people on android. >> maybe a lot of android stuff. >> there's more -- today, there's many more android. >> that's what i mean. which is why something sells for eight times earnings. >> but they get nothing for it. they give android away for free. >> but it's a big competitive, a really viable alternative for apple taking over the world, is it not. >> it is true. >> you don't have one yet? >> i've played with one, but i haven't -- >> we've talked about that before. we'll get that for the year-end reel. he's played with one, becky, but, anyway. >> coming up, after the break, china, ukraine, and venezuela, we'll be covering it with steven roche. and a little later today, we'll be talking to one company that's been directly affected by obamacare. how hospitals are handling all the changes. as we head the to a break right now, take a look at yesterday's winners and losers in the stock market. 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? 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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ visit today for exceptional offers. 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. good morning. and welcome back to squawk box here on cnbc. i'm joe kernan along with becky quick and andrew ross sorkin. janet yellen will make an appearance before the federal reserve. investors will be listening for any comments about how the severe winter that caused her to cancel last time, how it's affecting the overall economy and how that impact could affect tapering of the fed's bond buying program, and you know, it's jobs friday in a week, march 7th. we've had two lousy numbers, we're going to see, and with the weather -- >> i was going to say, i know you get a better number because of the weather, it has not improved. >> but at least we'll have that excuse. and today's a busy day for economic numbers. the two key reports out at 8:30, get a look at the jobs situation, with the weekly report on initial jobless claims, and then another pretty important one, the january report on durable goods will be out. claims are expected to remain near last week's levels while durable goods orders are expected to show a 2% drop. we'll be looking at that pretty closely. that could be weather-relate to do. a slightly better than expected quarter for retailer sears. the company requested fourth quarter, it was a loss of 96 cents a chair, but that was about half of what people were looking for. a loss of $1.82 revenues were also slightly better than expected, and they only dropped -- same-store sales only dropped 6.4%. believe it or not, that was a smaller drop than people -- >> but at some point. >> how many times can you post lower and lower and lower sales. >> i don't know. >> sears has got its story name. >> and things finally started to turn a bit, they were up against comps, doing so lousy. >> who would you have a better turnaround? sears or jcpenney. >> i would probably take jcpenney for a turnaround. because if you look at sears and walk into the sears or the kmarts, they have underinvested in those stores. they really need to invest in the stores. >> it was a real estate play that seemed to work out well. >> let's take a look at the broader markets this morning. the futures are indicated a little bit lower. you'll see right now that those dow futures are actually down 60 points below fair value. the s&p futures are down by just over 8 points. yesterday the markets ended slightly higher. dow was up about 18 points. the s&p was barely, barely, barely up by a percentage of a point, even. we were looking at 18.45, so still below. didn't manage to close over 1850, which was the high of last year. in europe, things are also looking a little bit lighter. in fact, germany is down by 1.5%. that's the biggest decliner of the major markets. in asia overnight, you did see some -- a little bit of decline for the nikkei. the nikkei was down by about a third of a percent, but the hangsen was up by 1.75%. oil markets show the wti crude oil is down by about 22 cents. the ten-year note yesterday fell to -- the yield fell back below 2.7%. that was its lowest yield in about three weeks. this morning, it's yielding 2.644%. and the dollar right now looks like it is down against the yen, 101.81. it's up against the euro. euro is trading at 136.51. gold prices snapped a three-day winning streak after falling 1.1%. that was the worst day its month, but this morning they're back up by another $4. countries like venezuela and ukraine facing political turmoil, investors may be quick to lump all emerging markets into the existing category. but the next guest argues the that china is changing and changing for the better. with us now, steven roche, a senior fellow at the yale school of management, former chairman of morgan stanley asia, now also the author, you have it onset here, of a new bob, "unbalanced: the co-dependency of america and china." and most importantly, of all of the things on your resume, "squawk box" master of the market, right? our market master. >> just in the interest of full disclosure, i tried to title a book, "china: too big to fail," but they told me the name was already taken. >> my question is ton the bio in the flap, do you have that you're a squawk market master? >> i did, they took it out. it was a space issue. >> it was a space -- thank you for that. >> it's on the extended website, of course. >> let's just talk about the premise, which is this idea that you believe that the relationship between china and the u.s. is unbalanced, but you suggest that the u.s. is clearly in your mind on the decline and china is going the opposite direction. why do you believe that? >> this is a co-dependent relationship, which comes from, you know, years i've spent in psychological therapy. the unhealthy reliance of two people and each other often ends in disharmony, frictions, and the ultimate breakup. and china depends on the u.s. for exports, to support its export-led growth, for the dollar, we depend on them to make cheap goods safe for american consumers. >> your premise is this all has to switch around. we all have to become much more of a manufacturing production country, and they have to become much more of a consumption country. am i misstating the premise? >> not at all. they are figuring out that they've got to be independent on their own, to break out of this co-dependence. and they're going to become a more balanced, consumer-led economy. what are we doing? we want to do the same thing. we want to consume, but we don't have enough import to fund our consumption or enough saving to support our deficit. what are we going to do if china changes and we don't. >> but i gather that you think they're on the ascendency and we are clearly on the decline. that is the -- i will say, that was my takeaway. >> they are rebalancing their model to keep the growth and development story going and that will certainly take them to a larger scale of their economy than ours, at some point in the next five to ten years. >> gdp. >> their per capta gdp, joe, is going to be increasing, but at a much slower pace. for a long time. >> multiplied out and that's why it's bigger. >> for a long time. are we on the decline? that's the big debate in america. we continue to undersave, underinvest in people, infrastructure, and capacity. and if we don't get that together, then their ascendency will coincide with our decline. >> we've had periods like this before. >> yeah. >> i mean, you're optimistic we get it together or do you think we're the roman empire? >> no, look, i hope we get it together. what i don't see is a debate on the strategy -- >> how many people have been -- you do look at the past 3,000, 4,000 years, and how long do a leading civilization, they have a couple of hundred of years. >> we've had a good century. >> we've been there for a couple of hundred already. >> but the people that write about the rise and fall of great powers, they often look to nations that outstrip their capacity to save. they extend themselves militarily or economically. and then, ultimately, it just becomes hard to sustain. >> china was on top for a while, too. >> china, in a mid-19th century was the largest economy in the world, for sure. and they went through a very difficult and long period of time. >> they've got a lot of people. they have a big -- they're a force to be reckoned with. >> you need more a lot of people, though. you really do. >> the internet is make it -- people want the same things in this world. and eventually, they're going to decide, they want these things. and they don't visit now. >> and china's got the largest internet community in the world. so now the people are in the know of what's going on all over china, as well as in the rest of the world, and that will be a challenge for the government as well. >> front page, joe was talking about this earlier, the front page of the wall street, will gladly have you here to help die jest what this means. very quickly, china intervenes to lower the yuan. so they apparently have been manipulating the manipulated currency in order to eventually get to the point where they can open it up and let it float against the dollar. >> becky, it's been a one-way bet for about eight years. the speculators know the currency is going higher, it's up over 35% against the dollar since 2008. a lot of big inflows of foreign capital coming in, which inject too much liquidity into the chinese system, make it tough to manage. so nothing happens by accident in china. they're sending a signal, this is more of a two-way -- >> not so fast, guys. >> let's just slow down the speculative inflows that make it easier to manage the economy. >> put it another side to the trade, so it's not a slam dunk. >> exactly. >> i almost can appreciate that, i guess. >> why do you think markets in china have performed as terribly as they have? what's the explanation for that, given the remarkable growth story? >> rapid growth, lousy markets, poor governance, lack of transparency, dubious long-term earnings expectations, andrew, given the way that the state is moving from an administered state-directed economy to more of a market-based economy, rising labor costs, rising currency. all of those -- >> did the ruling class over there, if we were to go into, you know, the 10 or 20 top leaders over there, do they have a golf course and a zoo and, you know, an old pirate ship restaurant? is it the same type of -- these tyrants always live pretty well versus the people that they're -- >> i spent a lot of time in china. i have yet to see -- >> you weren't in there, though. they didn't let you. >> i have yet to see that the zoo and the leadership. >> they're worth billions of dollars, a couple of those guys, right? >> "the new york times," and your newspaper does report that there's a lot of wealth that's been accumulated in leadership circles in china. >> how much more -- okay, to the extent that people -- we were talking about lobbying in washington and people think that represents cronyism or corruption, how do you compare what goes on here to there? given all this other stuff. >> look, i think power structures, whether they're in a one-party state or in a multi-party state, you know, there's a lot of forces that come to try and influence the outcome of power. one of the biggest issues in china, and this has been stated very clearly by the new president, is to try to deal with these power blocks. he's taken down 15 leaders that have been associated with some of these corrupt -- >> by the way, as a former morgan stanley man, can you think to the princelings issue. was that something you saw under a sort of daily basis, in terms of how people were thinking about how do i attract a client? >> morgan stanley has not been involved in this for good reasons. you know, we did not have any of these -- >> did you see your competitor -- but did you see this as an issue? with was this something that was readily apparent to everybody? >> i think, you know, the investigations have shown that obviously some firms indulged in this was it really decisive, though, in shaping the flow of deals? >> i would argue, it may very well not be. just, you spent as much time as you did over there. >> it was not something that was just readily apparent each and every day. but as some of these practices come out, that some firms were really went over the line in doing it, then they're being held accountable by u.s. authorities. >> absolute power. you know who said that first? i just found out? lord acton, he said that in a letter to a historian, power tends to corrupt, and absolute power corrupts absolutely. great men are almost always bad men. >> i was going to call him a great man, but now i won't do that. >> no, don't do that. >> congratulations on the book. it's called "unbalanced." go out and grab it from amazon today. >> i don't know how you avoid that? right? >> no, no. >> look at these guys, they're just drunk. >> get it, get it. steven, thank you. when we come back, much more on the situation in ukraine. gunmen taking control of government offices, russia saber rattling, and u.s. trying to figure out how to handle everything that's happening there. we'll be right back. 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. it's time for your "squawk box" planner this morning. in earnings central, best buy will be one stock to watch this morning. the retailer expected to report during the next hour of "squawk box." of course, we'll bring that news to you as it comes. among the economic report slated for this morning, jobless claims and the january durable goods reports, that's released at 8:30 a.m. eastern time. and fed chair janet yellin testifying before the senate banking committee, that comes at 10:00 eastern time. this is testimony that was postponed due to that snow earlier this morning. and that is your "squawk box" market planner. joe, over the you. andrew, coming up, we'll talk to one company that's been directly impacted by obamacare. we'll hear what the ceo of medassets are handling all the changes and what changes we can expect. ameriprise asked people a simple question: can you keep your lifestyle in retirement? 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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; 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. here to talk about the impact obamacare is having on the industry is john bartist. john, there's obamacare and then there's just the idea that it's 20% of the economy, it was rising at much higher rates than inflation, and cost containment was always going to be something that we were dealing, obamacare or not. and your company tries to help whoever is providing health care with reigning it in, right? >> that's right, joe. you're absolutely correct. the united states spends about $9 million per capita on health care and the next closest nation is about $54 million. that gap is about $1.1 trillion. so it's substantial. and on top of that, we spend, to your point, about 18% of gdp. that growth rate has slowed over the last couple of years, but it's yet unclear as to what went to that, including coming out of the recession. >> great new technology is expensive, and then you've got, you know, we own hospitals, see what's going on. or maybe used to be that way. not anymore. but drunken sailors spend money le less. doctors, i don't know if you're still allowed to own places that do tests. there's so many things going on that are responsible for this. there are a lot of places you can play. where do you primarily play? there will be other places other than hospitals that people can get care that they used to get at hospitals that you're trying to help, too. >> we're a performance improvement company that has a primary focus of helping providers. we work in 1.5 trillion of the $3 trillion health care economy. we do business with four out of five hospital systems in the united states. you're absolutely right. patients are now migrating, due to incentives and health systems incentive changes, to less expensive environments that include clinics and home care. we're in the midst of a big transition overall. >> what is it that your company does exactly when you go in and try and streamline things? >> we're a performance improvement company that focuses on cost, in other words, how you procure all products. we have a $5 billion procurement business that helps hospitals buy what they buy, more importantly, how they use the products. there's a best practice out there but it's not used across the country. we take the process to what we know as best practices. >> you're trying to get people paid quicker, right? i mean, there's a million places to attack. are there too many -- what are your two or three primary ways of doing it? you can get bogged down being all things to all people. >> hospitals aline are over a trillion dollars vertically integrated in 5,000 locations, all very complex and all very different. we focus on cost reduction, clinical integration and payment and price integration so that what's being paid for the services rendered are, one, consistent with payer contracts and two, continue to drive value according to the incentives and the agreement. as you can imagine with 5,000 different locations and 5,000 cost infrastructures bringing best practice ask a big and complex task but it's in high demand. >> there's been positive incentives from obamacare but there's been negative things going on as well. would you design -- would you would have tackled this entire thing differently or we're stuck with what we have and we need to work around the edges and try and deal with it? >> i think you're right. the affordable care act is here. the sooner that the country legislators and business folks own that, the better we're going to be in moving forward. the other reality is that, yes, there's been glitches and naturally there's going to be. it's very hard to project the trajectory of a policy that literally affects every one of 320 million americans. but having said that, the early glitches with the website and so forth slowed the progress of signup down. which also slowed the progress of what we knew about those who were signing up. what we're learning today with the 4 million that are signed, joe, is that the majority of them have already had insurance. we haven't really attacked the issue yet. >> we haven't covered anyone yet. it's bizarre. i don't know what to do. maybe it's some kind of hybrid. who knows that the powers that be in washington could change before this is fully implemented. it may be a bizarre hybrid thing that we end up with. we appreciate your time. i know you'll be there trying to work your niches and make a lot of money. we'll watch mdas as well. >> thank you, joe, thanks, becky. coming up next, jcpenney's turnaround plan and numbers from best buy. the futures are under pressure this morning. market watchers, ready to jump into the action. you can see the red arrows across the board. we'll be right back with a lot more. icto help our membersnored 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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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ what else will the markets want to hear this morning. jcpenney's turnaround story is the plan to pull the retailer out of its nose dive working? dana telsey gives us her report. and ukraine in crisis. how will the u.s. deal with kiev's fragile government and its powerful neighbor? "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. after posting modest gains yesterday, the futures are giving back some this morning. those dow futures are down by close to 50 points. s&p futures are off by just over 6.5 points. the ten-year note yesterday saw the lowest yield it's seen in three weeks. this morning, it's yielding 2.651%. janet yellen appears before congress to testify before the senate banking committee. they'll be listening for what she thinks about what's happening with the weather and the economy to this point. the ceo of shutdown bitcoin exchange mt. gox says he is working very hard to find a solution to the problems that have taken it offline. the comments from the gentleman who appeared first on the mt. gox website, we'll be hearing month are about that as well. arizona governor jan brewer has vetoed the controversial bill that would have allowed businesses to turn away customers believed on religious beliefs. the veto brought cheers from the crowd stationed outside the capital building. as we heard in her defense yesterday she was not incredibly strident in her defense of gay rights this is probably a difficult situation. that's the vote. that's how it went. best buy is reporting, i'm told, i haven't had the chance to look at it yet. we'll rush it out here as quickly as we can. waiting on the numbers to come up here. let me see where the stock is trading. i have a blank screen. >> many he, too. >> that sounds much better than expected although it says fourth quarter continuing ops was 88 cents for best buy. adjusted earnings, they've got $1.24. on revenue of $14.47 billion. they have more than a few numbers. they have a net number of 83 cents. a continuing operations number of 88 cents. and an adjusted number of $1.24. even though same-store sales in the fourth quarter well 1.2%. the stock is called sharply higher, though. initially i have -- i have a 27 bid right now on this right now. 27 bid and 27.89 ask. that would be up 1.20 or so. domestic comparable online sales up 26%, 25.8%. >> there were huge questions about this, because the holiday season when we first -- >> wasn't so hot. >> remember, they said they were going to be chasing things and cutting prices to keep up with the competition. walmart had come out and said that it was in a position of really dropping prices that competitors hadn't expected. so best buy as a result also said it would be slashing prices. it took a big beating when it talked about doing that, because that would have been unplanned discounts. it's a lot harder to make up on the margin if these are discount you're making up after the fact. as we said in our holiday sales release, the frshg prshg was an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather. there's a strategy that resulted in market share gains. they won market share. >> 1.01? estimate is 1.01. they beat it by 23 cents? >> how much of this was in-store versus online? >> yes. >> that's the other piece. >> the growth is online. >> the reason i sa i that, given how hard hit retailers have been over the past couple of months, because of the weather, if they're actually producing real numbers, that would argue to me it's almost the amazon effect of you sitting at home in the snow and you have nothing better to do -- not nothing better to do but if you're going to buy from best buy, you're going to buy online as opposed to walking to the store. >> it's sharply higher this morning. world markets, there's a lot going on. continuing to focus on the rising tension in ukraine this morning. ousted president viktor yanukovych is in russia, still claiming to be president of the ukraine. the more volatile situation is in ukraine's crimea region. it's calling on russia not to take any action that would create tension or misunderstanding. we'll be talking about the u.s. response to the ukraine crisis in a couple of moments. back to you. >> we've had a choppy session. janet yellen testifies to the senate later today. the s&p 500 still failing to hold above its records of yesterday. joining us now, chris retzler, needham growth capital. joe, really trying to get a feeling for what's been happening we keep pushing against 1850 on the s&p, can't break through it. why? >> markets are looking for a bit of direction. we've seen decent profits. fourth quarter right now we're estimating about 8% or 9% in terms of earnings growth, year-over-year earnings growth. looking at the economic data recently it's a bit difficult to separate the loss of momentum that we saw heading into december and the end of the year from what's going on with the weather. i think it will take time to fully read through that. >> what does your gut tell you? >> i think my gut tells me we did lose a little bit of steam towards the end of the year. the back half of the year, economic momentum was picking up. we had high pmi numbers and manufacturing looked quite good. >> a lot of inventory build had gone into that. >> that had an impact on economic growth in the third quarter number. right now it looks like the weather is having an impact on economic growth but we continue to remind our clients, all this does is creates pent-up demand. while we are looking at possibly soft first quarter and fourth quarter numbers, you'll see this accelerate. >> is this weather given or have we seen an economic slowdown. >> it's a known that we've had bad weather and it impacted it. the negativity got very much on one side. we've had news this morning, things are popping. yesterday we had retail numbers. stocks were oversold and shorted and there's short covering out there. we do see a better second half in technology. i think companies would like to see more certainty in their end markets before they spend money, do some cap ex spending. >> is that why we're treading water? we're not going to see the dip people were talking about but we won't see new highs either. >> the question is are they beginning it change or taper? rebalance whether it's treasuries and mortgages that they're going to cut back on. there hasn't been a significant slowdown out there that we've seen. and we had a great year last year. stocks need to give back a little bit. >> if the fed is doing what it's been doing for the last several months, basically slowing things down, 10 billion a month that it's been taking away, what does that mean? is that an effective form of becoming less accommodative or not? >> it's a moderated pace. it's not like it all of a sudden ends, the accommodation was slowed very quickly as we've seen before. this process is being monitored. they're looking at the numbers as to how they'll be managing unemployment figures. they'll look at all that and that's going to provide probably a slower tapering which i think the markets can understand better. >> the markets understand and say that this is -- that's why we've seen the markets reaction to this point which has been a relatively smooth transition. >> yes, if cfos can plan they'll spend and invest. if they can understood the road map going forward, it's been a tough bunch of years with the administration that's been in there. it's not been business friendly. i think, you know, the more certainly they have, they're willing to spended. >> joe, where would you be telling people to focus right now? >> well -- >> not you. the other joe. >> risk assets we continue to have more conviction in the developed world. of course, the impact of tapering isn't only affecting us here in the u.s. but of course it's having an impact on the emerging markets. unfor the thatly we're seeing investors throw out the baby with the bath watt per at some point there will be an opportunity to get into the emerging markets. i continue to think the u.s. looks attractive, although you need to temper expectations. you won't have another 2013. let's be clear, europe has issues and they remain unresolved. having said that, you are seeing growth moderately pick up. it's a story of operational leverage. >> it's crazy if you've watched what's happened with gold, oil, with a lot of the commodities. there have been big runups. is that because you think the money is getting pushed out of some of the stock markets? bonds don't look like it's a place to be. money trying to find somewhere to go? what do you think? >> there's been a push of money into certain asset classes. we see a top 20 equity names that are at valuations that we don't understand. we don't invest in it. or value investors. >> things have gotten expensive when you look at stocks. >> there's a bulk of internet names and software companies that are trading at multiples that don't make sense to a rationale investor. it's not where we invest. we see money that's pushed into other asset classes like oil and some commodities. >> what will be the tipping point on some of the tech name -- digital names you're talking about? >> i think right now, i think you have a rotation out of fixed income. i don't think you want to be long the yield curve right now. people are pulling money out, going into funds where those names are a big percentage of, so they buy them. there will be a point at which it corrects. i don't know when. i don't want to be in those names when it does. >> chris, joe, thank you for coming in. and not you. >> very nice to see you. >> it's john sundik's 100th birthd birthday. >> i've been trying to read that stuff. >> that's the second one. that's a picture of the monterey on there. the second scene. the first one is grapes of wrath. it's all on google. grapes of wrath is a perfect book for you, andrew, it really is. because it's people being tread upon by the 1% and they had to leave and there's a dust bowl. global warming. unions. can we believe that the turnaround of jcpenney is working? we'll have one of the best analysts in retail coming up at 7:30 a.m. eastern time. how is the u.s. government handling the power shift in ukraine? that's next on "squawk box." if you've been watching our coverage of the unrest in ukraine this week, you may have noticed that haunting music in the back ground of some of michelle caruso-cabrera's reports. michelle's on a plane right now but she tells us that the sound in the background was from orthodox clerics singing to mourn those slain in last week's violence. she shot this video of the clerics singing as photos of the dead were projected on a screen. >> we noted that. it was almost hauntingly there. >> we have more developments out of kiev this morning. the lawyer that was tied to ousted president viktor yanukovych is cooperating with international authorities to freeze his assets which god knows, i'm sure it's in the bs. as we mentioned earlier, men carrying guns and wearing masks raided government buildings in the capital of the disputed region of crimea today. they raised the russian flag, heightening tension. putin is doing some military exercises and amid all the chaos, what economic role could the u.s. play in helping ukraine? steve liesman is also a russian expert. he has details on that right now. not many people lived in moscow that i know for seven years. >> went to ukraine a bunch of times. >> you did? >> yes. my first trip there, you go to the finance ministry of a current where the currency is 100,000 to 1 and the finance ministry has bmws. >> the u.s. currency is 6-1. >> the crivenitz. the western aid effort is moving slowly, secretary of state john kerry warned russia against military action saying it would be a, quote, grave mistake. kerry saying yesterday the u.s. could offer a billion dollars of loan guarantees but the state department maybe wants some of that back later, issuing a statement that the u.s. is considering, quote, a range of options, including loan guarantees. they left the number out and noted as kerry did, that the decision has not been made. u.s. officials have said several pieces have to fall into place before any aid can be given. you have to have a government. there's not much the u.s. can do. that government has to signal intentions for reform along the lines that the imf was sort of laid out. those reforms include exchange rate flexibility. michelle broke that story the other day that they are moving towards that. fiscal consolidation getting its budget under control. the imf will take the lead and the u.s. and the west has to balance all of this in i way that doesn't unnecessarily antagonize russia. >> forget about it. how do you do that? especially since you have militia all over crimea. >> you can't come in with the aid until there's a government to sign the documents on the other side. >> it struck me this morning, steve, hearing about what happened in crimea, this is way more complicated than we've been thinking all week. you don't know if the parties around the table will even speak for the people. you don't know who's in charge. and the idea of getting any of the complicated factors -- we've been giving this is a pass all week. the markets have said, great, we figured this out quickly. >> i talked to smart but naive fastball folks. there's all this geopolitical stuff around it. both sides have an interest in a healthy ukraine. >> we need to work together. >> there's no cold war. we need to work together on this. >> wouldn't russia have an interest in this? the protesters in crimea, the militia taking over these buildings have said they want to be part of russia or they want a separate crimea. why wouldn't that be in russia's interest to allow stuff like that to lament? it seems to me that is in their interest. they get something out of the deal. >> that is true, becky, except that russian nationalists taking over crimea would destabilize ukraine more broadly. an unstable ukraine is not in russia's interest. there were helpful comments made by russian officials at the g-20. that gave some u.s. officials some hope that maybe the russians in the west could work together on economic aid. but i think when the officials said this stuff, he understood the naivety of it. >> it's in pencil, typically, these lines. is there another red lien here? >> grave mistake. >> there will be repercussions? putin is like, oh, no. >> go write another op-ed. >> there's a history of the u.s. trying to help in this area of very, very mixed results. on the one hand that's potentially helpful. there's a lot of mistakes in the background here that maybe they can avoid in trying to come in. for example, a lot of the stuff on this list is stuff that undermines the politics. exchange rate flexibility hurts people. removing fuel subsidies and all that would undermine a new government that the west would be trying to support. >> meanwhile, the olympics went off without a hitch. are there persons over there? wouldn't you imagine it was a bad time to be a dissident. >>? it was amusing to me to read the western journalists. >> welcome to russia, right? >> there were a lot of people trying to do something that putin just -- he is pretty -- >> pretty powerful. >> an iron fist. i wonder if the prisons are overcrowded at this point. >> thank you, steve. >> my pleasure. when we come back, exclusive results showing what a horrible impact this winter has had on our economy. best buy earnings out. it's been the worst performing stock in the s&p 500 year to date. that stock up is better than 8% today. and tomorrow, an exclusive interview with sam zell stick around, "squawk box" will be right back. ... 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. 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. 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. we have the results of the latest quarterly survey of the cnbc global council. 67% saying that the economy is improving, that is down from 82% in december. still, less than 6% say the economy is in decline. the council is mixed on the winter's long-term impact. 33% say the weather will have an impact on their company's 2014 earnings. we asked the council to weigh in on the minimum wage. that's an even split. one-third of the cfos say they support the raise. another one-third are opposed to higher wages and one-third are in the middle. guess they don't really care. for more on our cfo council, go to cfocouncil.cnbc.com. jcpenney getting a steady bump after it announced last night. best buy earnings are out there has that turnaround failed? that's one one analyst is asking. we'll have him on the show coming up right after the break. predicting the future is a pretty difficult thing to do. but, manufacturing in the united states 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" on cnbc. shares of best buy reacting positively to the company's latest earnings report. they earned $1.24 a share, excluding certain items. that's well above the expect of 1.01. that stock right now up by 5%. off its highest levels of the morning. fed chair janet yellen will testify before the senate banking committee at 10:00 eastern time. this appearance was postponed because of weather earlier this month. the markets will be waiting to see how much yell en uses weather, whether it has slowed growth. our society is undergoing many dramatic changes, however, i sincerity believe that senate bill 10 2 has the potential to create more problems than it purports to solve. >> that decision was met with cheers outside the capital building. brewer was under pressure from major corporations as well as from leaders from both parties to veto this bill. we're watching shares of jcpenney this day. they posted a smaller quarterly profit than expected. there's an expectation that things are getting better. dana telsey is ceo and chief economic adviser at telsey group. is the ceo of that company turning it around here, dana? >> it's getting sequentially better. there's still a lot to go. the game plan of taking markdowns sooner, having a different marketing event every week, they're working to bring the customer back to the store. >> how far are we from -- how much running room is there to get back to where we were maybe even two years ago, which by the way, nobody was thrilled with then either. >> right. exactly. if you look at where you were now, getting back to two years ago would be a positive sign. the fact that the comps would continue to improve, they are getting to be positive, the home business overall is coming back into the mix by the end of march, that the sg & a dollars were down 17%, they're managing. the turnaround is continuing. i'd say the fourth quarter, it's a sign of better progress than i think what we could have expected even last year at this time. >> is there a ceiling on the progress that this company can make? >> i don't think there's a ceiling. i do think there's a ceiling -- you're not going to get back the revenues you had but can you get back the gross margin? is getting the private brands back in the store going to bring back the traditional jcpenney customer. >> what do you think the stock is really worth? >> it all depends where you can get the operating margin to. if you get to a 4.5% operating margin, the stock will be $12, $15. liquidity is key. managing that liquidity is key. you have to get to 8 and 9 before double digits. >> the subject we talk about ab virtually every day is the weather. how much does d thid that impac jcpenney in the last quarter. >> i think it impacted it a lot. february is no great shakes, either, since valentine's day, we've seen a pickup in retail. >> when you put -- if you look at all the retailers out there right now, sort of rank jcpenney in terms of what you would be buying. >> i think when you're looking at turnaround stories, abercrombie perhaps is further along in the turnaround than what you have at jcpenney. jc when penny, i think is good >> if i had a buck to invest in any of the retailers, order me. in what order am i buying these guys? is jcpenney on the list. >> i'd buy gap first. i think there's more momentum at gap coming up down the road both with operating margins and sales improvement. macy's on my list. i think there's more market share to gain. when i look at the accessories world, love kate spade and i continue to like what michael kors is doing. >> any chance this company gets taken over now that it seems like it at least has a shot of getting into a better place? >> not seeing that happen or hearing that happen. >> dana, thank you for that. appreciate it. >> thank you. let's talk about best buy. it was also out with quarterly results earlier this hour. joining us now is anthony chakumba. anthony, in number was better than people had been expecting what do you think happened? >> i think that's right. the consensus was well ahead. not nearly as bad as people expected, this quarter. when management reduced guidance they brought it down to a number they knew they could hit. they didn't want to have to reduce guidance and miss that number. the cost cutting was not as bad as expected. >> you see the cliff that it fell off back when they first warned about this, they went from being a $40 stock to trading around $27. what do you think happens from here? >> i think that what we're going to see is continued cost cutting, so the company, they originally had a cost cutting goal of 725 million. they've now raised that to a billion. i think a billion is still too low. they've made a lot of progress online. their online sales were up 26% in the fourth quarter. but at the end of the day, turnarounds are not -- they're bumpy. that's what we're seeing here. they made a lot of progress in 2013. i think they'll continue to make progress, maybe not at the pace we originally thought. >> how long have you had a buy rating on this stock? >> we went to a buy rating in late january of last year when the stock was less than $16. it's been a real nice stock for us. we still like it here. >> you like it here. did you like it at 42, though? do you think it pushes back to those levels? >> our price target is $39. we think the stock probably got ahead of itself at 42. if you can continue to see progress on the turnaround, there's no reason that this stock cannot get into the mid-to-high 30s. >> how does weather impact this company or does it? >> it definitely does. at the end of the day, best buy sells discretionary merchandise. they're not selling eggs and milk. if the weather is bad, maybe you don't need to go to the store and buy a tv. the company at this point is not blamed weather but there's no question in my mind that weather played an impact in their fourth quarter results. >> andrew brought up the point, maybe that's when you sit around and buy it from amazon instead of best buy. >> best buy has significantly improved their e-commerce operations. they did a 26% sales growth in e-commerce in the fourth quarter. they're becoming much more competitive with amazon in terms of pricing and functional of the website. >> thank you so much for joining us. >> thanks for having me. >> do you have a thermometer in your car? >> 8 degrees this morning. 8 degrees. >> i keep reading the colder it gets, the more it indicates there's warming going on. you just have to accept that. >> hold on, hold on. >> it's hard to come back. >> i'm going somewhere with this. don't interrupt me, please. the green peace co-founder, he was testifying two days ago before the u.s. senate environment and public works committee. i'm just going to read you his quote. the earth's geological history contradi contradicts. you have ice age -- because the climate is so difficult to figure out what's going into the variability of the climates. >> can i ask a question related to this? but i'm not a scientist so i don't know. i'm told january 2014 was earth's fourth warmest on record globally. on average for the whole globe that it was much warmer. >> right. going back how far? >> if you really -- >> it's 130 years, andrew. the plan set $4 billiet is 4 bi old. the warmer month was in the 90s. why would there be a warmer month when the co2 was an issue. 130 years, all of us looking at this, it's almost like -- in the middle ages it was witchcraft. you would attribute adverse weather events to witchcraft. now we have co2 at this point. >> i'm just suggesting that even though we live in this very cold environment right now or it feels cold on a relative basis, it supposedlien is as cold. >> but when it's a warm year it is because of global warming. when it's a cold year, ignore it. >> it's not a cold year. it's a warm year. >> when it is a warm year here -- like it was cold in russia a couple years ago. when we come back -- you guys okay? can i? okay. when we come back, what will the political landscape look like over the next 25 years? a special cnbc 25 is right after this. coming up at the top of the next hour, senator rob portman on the state of the nation's fiscal health. 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[ car alarm chirps ] hurry in to the mercedes-benz certified pre-owned sales event. visit today for exceptional offers. ♪ i barely recognize this guy. the next 25 years will turn members of minority groups into the majority of americans. big implications for the nation's economy and culture. here with more is our chief washington correspondent who goes by the name of john harwood. where have you been? have you been on sabbatical? >> no love. we haven't seen you in way too long. >> no love from "squawk box." >> i've been covering the nonaction in washington. >> do you follow the duke blue devils around? they're like five or six now. >> it's a young team. we're in the process of learning -- >> we? we? >> we could go deep in the tournament. >> you might. >> we're getting good at the right time. >> i'm told you have a package you need to introduce. i was just trying to rub you all over -- having you here it's nice, because you're a sight for sore eyes. >> i appreciate that. >> it's nice, isn't it? >> that's very kind. we're peering into the future, now that we're into the 25-year anniversary of cnbc we're looking ahead 25 years. the one thing everybody is washington recognizes is that no politician targets voters any better than corporate america targets consumers. >> for the future of american communities look to coca-cola. ♪ to cheerios. >> you know how our family has daddy and mommy. >> and me. >> reporter: and to chevrolet. >> while what it means to be a family hasn't changed, what a family looks like has. >> reporter: that's right. by 2039 the census bureau tells us america will be very close to the day where whites are no longer a majority of the country's population. the term for that, majority minority nation. >> hispanic population, latino population is growing in the united states. what you're going to see over the next 25 years, it's going to grow in southern southwestern united states, western united states and then it's going to grow in urban areas around the country. they are diversifying. this is where the populations are moving. this is where the jobs are. >> the communities will change. 21st century america will see cities and suburbs grow together in giant metropolitan areas. if that changes the face of americans, it may change the nature of america less than some now fear. >> as the generations go by, populations become americanized. the generational polling so far, among hispanics doesn't seem like it's that different actually. once you get a couple generations in, a lot of the ties to the homeland weaken, the language tie weakens. it becomes much more about being american. >> as much as the face of america changes, still to quote an early ad, it will be about mom, apple pie and chevrolet. >> we've been watching this change for a long time. i remember when they changed the face of betty crocker, gave her that makeover for the whole thing. we've been watching this play out for a while. >> the culture is going to be transformed by the nature of the population. and changes in the demography of the country. there's something about the melting pot process that has stood the test of time and i think it will again. >> thank you so much. great to see you. >> thank you. also we have a programming note this morning. cnbc's tyler mathisen sat down with cnbc first 25 contender magic johnson. >> we had a list of 200. you were on it. >> oh, wow. >> we just cut it to the final 100. you are on it. >> man. >> david stern got cut. what do you think? >> wow. >> is that a good call? >> well, i love what david did for the nba, he turned the league around. i wouldn't say it was a good cut. i love david. >> you can see more of his comments also on the arizona anti-gay rights bill and what it means to be on the cnbc list of most influential people of the last 25 years. that will air on "power lunch. you want to miss it. >> just to put his experience into context, he did a lot for what calpers and the movement, shareholder rights. >> and brought it back after the crisis, i think assets were down to 100 and some. i forget what it was. much less. >> he was a squawk market master, too. >> just yesterday. >> sad news. >> that's a shocker. 62. >> sad news. >> yes. >> wow. when we come back today, tesla paving the road with debt to fund its next electric car. is this a smart move or are investors in for a shock in phil lebeau will join us to talk about it. and at the top of the hour, senator rob portman on the state of the economy. and from beirut to jerusalem, thomas freiedman is our guest. stick around. 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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. tesla planning to build a new factory for its next generation car. it's being called a giga factory. >> this is a huge project from tesla, one that the street is watching closely, especially investors given the fact that tesla is offering about 1.6 billion in convertible notes to fund some of this project. let's tell you what the gigafactory is and how many jobs with till bring to the location where it's finally placed. 6,500 jobs by 2020. capacity, 500,000 lithium-ion batteries. full production by 2020. the gigafactory will provide tesla with lithium-ion batteries as they expand their lineup. you have the model x and the model s on the way. they need the cost of batteries to be lower. tesla putting up $2 billion towards the gigafactory. it will cost 5 billion when all is said and done. 1.6 billion will be coming by way of convertible notes. the company expects to sell 35,000 model s sedans this year. model s capacity has been limited by the battery supply. and the location is what's most interesting here. four states have been mentioned by tesla as possibilities. arizona, new mexico, nevada and texas. don't forget, guys, this is not only for the development and production of lithium-ion battery packs but also the development of electric storage politics. a lot of possibilities here with a very huge project. >> phil, those states, were those all right to work states? is there any relationship to that do you think? it just sound like right to work states. >> they're also located in the western united states relatively close to the fremont factory where they build the tesla. the most interesting one of those states, texas, joe. texas has banned direct sales of automobiles, which means if you want a tesla in texas you have to buy it from the company but you don't go to a tesla location for delivery. a third party delivers it to you. and this is -- >> what. >> conceivably hurt their sales in texas quite a bit. they've lobbied hard to change that law. you know how this works. the auto dealers in texas, very powerful. they spend a lot of money lobbying. you have the intriguing possibility that somebody says we're going to bring 6,500 jobs and a manufacturing plant to your state. do you change the law. >> you think tesla would be like -- i don't know -- google doing something evil or something. not that they don't now. that's one of their big things. that's one of their big -- they hang their hat on that, there's no dealers, you can buy right from us. they will never go to a dealer network. >> elan musk says he doesn't see it happening anytime soon. is it possible they may change their tune? anything's possible, joe. that's not in the cards right now. what they're proposing is close to go back to the days of henry ford where you took the raw iron ore, made the steel for the model t. they want to take the lithium and make it into lithium-ion battery cells, then into the battery pack, then into the car. >> this may be an automobile company that could turn themselves into a battery company. >> adam jonas has been talking about this. they'll be having so much energy production and the possibility for electric energy storage possibilities in terms of either mobility, taking that and putting it somewhere or taking some of the energy that they're developing and then sending that to the grid. i mean, a lot of possibilities there, andrew. >> okay. phil, thanks for that. tesla story, every week there's a new tesla story, apple. fascinating. fascinating. >> 0 to 60 in how many seconds on that thing? it is incredible, right? >> yes. >> how fast? >> joe, when you buy -- i don't know the exact number. 0 to 60 is well under 3.5 seconds. that's because you get the instant torque, joe. >> i drove the smaller one. you couldn't fit into it. >> what are you talking about? >> the really small one. that little two seater. >> the model s. >> the two seater. >> you're 6'6". >> joe, you're mixing up. the model s, if you're a tall person you can fit into the model s. >> what's the sedan we see all the time? >> that's the model s. >> the roadster which is not around anymore. they don't build the roadster anymore. >> no sound, really fast. you'll show that picture of mr. incredible when he wedges himself into the car. >> i don't know if we have that quickly. do i think about that. >> when are they going to have a car for me, phil? >> 2017. >> okay. you know, just sort of more like a little -- what are those little things, mini coopers or something? >> phil, thank you. when we come back, senator rob portman will be laying out an economic growth plan for america. that happens later this morning. before he does that, he'll be speaking to "squawk box." tom friedman, there's nothing he can't talk about it, geopolitical concerns, job, tech and politics, we'll be back with all that. 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. 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? 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. \s what's the best performing industry in the s&p 500 in the answer and the investment returns will surprise you as the final hour of "squawk box" begins right now. welcome back to "squawk box," cnbc, first in business worldwide. i'm becky quick. >> no, you're not. >> can i be right now? >> if you'd like. >> i'm becky quick along with joe kernen and andrew ross sorkin. >> i can be myself. i'm going to be myself. >> be yourself. >> i'm going to try. sometimes it's hard to be myself. >> you be joe, i'll be you, you be me. >> there's a song like that. ♪ i'll be you for a while and you be me ♪ maybe we can get that. futures right now, you know what, s&p, you keep teasing me, getting above 1850. >> they're going back below 1840 today. >> we're still below. we're going to get through two months. >> as of month of january and february goes -- >> i was hoping. it may be march. >> as the first quarter goes. >> that's a good one. let's try that. >> okay. we have headlines to get to this morning. three retailers have seen hard times recently. they're now all seeing their stocks advance this morning. we start with best buy. take a look at this. which beat estimates by 23 cents with first quarter profit of $1.24 a share. the electronics retailer was hurt by extensive discounts but benefitted from cost cutting. and sears, doing less worse is apparently doing it for sears. shares this morning at least for today as they rise in premarket trading. then there is one of our -- i don't know if it's our favorite. jcpenney reported a smaller than expected loss for the fourth quarter and increased its comparable sales and gross margin profit forecast for the year. with the president's 2015 budget being released next week, it is time to talk about the state of the nation's fiscal health and senator rob portman joins us now. you in d.c., senator? >> i'm in d.c., joe. >> i see you are. you're having the skyline flown in or something. >> i'll be back in your hometown tomorrow. >> you will be? >> yes. i'll kiss the ground when i land. >> the low today was 2 degrees in cincinnati, which frightening. i also have a problem with the bearcats going from number seven to number 14. with a one-point loss to louisville in the last two seconds. i have a problem with that. >> ohio state is back in the top 25. that's good. >> how about camp? a lot of people say 25 plus 10 is 35. your top rate you're going to fight all these battles and lose all this political capital and all this blood to get a top rate of 35%, it's just -- what was he thinking? >> no. that's not the top rate. it's 10% and then it's 25%. there's a surcharge above that for a nonproduction income. those folks who see a tax cut compared to what they're currently paying because it's targeted at folks that don't use a lot of preferences. it's a draft and there's obviously concerns that people will raise it, including me. i think it's an important step forward that we actually have somebody willing to put out a tax reform proposal, revenue neutral. it shows you can lower the rate substantially which will be pro-growth. he does interesting stuff in terms of capital gains, in terms of dividends to lower the tax on investment which will help in terms of economic growth. there's some really good parts to it. and the corporate side is, you know, we have to get this corporate rate down to 25% and change the way we deal internationally where we will continue to see the hemorrhaging of jobs and investment overseas. i think it's important he has it out there. it will start the debate. >> to start a debate, to have it out there, have some type of blue print you know you're not going to do it with this president in office. so maybe you're thinking about doing it in 201 or something. but how about maybe widen, maybe that's something to consider. didn't he actually acknowledge that some type of growth policy might generate the higher revenue that the president is insisting on every time he talks about any type of -- maybe republicans can get together with that group of the democratic party to show that, you know, if the economy grows more quickly, tax revenues go up. >> absolutely. >> you don't have to raise tax rates to get more revenue. >> what also is good about the camp draft is that it's been scored on the basis of a macro economic model which used to be calling dynamic scoring. but it says people's behavior will change, there will be more growth and, therefore, more revenue. that is positive. ron widen is somebody we can work with on this. there's a possibility you can see a change in the majority by the end of this year, really. you're looking at in 2015 having the possibility of having republicans in charge of the house and having the ability in the senate to set the agenda. i didn't know the president wouldn't work with us in that siecenario scenario. let's hope he would. pro-growth tax reform is one of the things we have to do. >> are you -- do you hear every day what's going on in the battle ground states for the senate? where are we right now? can you give us insight into that? >> there are 12 states in play around the country that are currently democrat-held seats which could switch to the republican side. it's still early. they start by the way just next week. we'll know better. in every one of those 12 states there's one candidate that the republicans seem to be coalescing around. it's a different sort of a scenario that it's been in 2010 or 2012, republicans seem to be more united around some really good candidates. >> how can you guys, if you do snatch defeat from the jaws of victory this time, how will you do it? >> that was the last two times. that won't happen this time i don't think. it starts with good candidates. >> you have the president with the minimum wage thing. you'll say no to that probably. immigration is not going anywhere. i guess it helps to have proposals rather than just not being against things, right? i mean -- >> absolutely. absolutely. you'll see -- we'll roll out in the senate, a jobs plan soon that's going to have seven elements to it, including things like pro-growth tax reform, regulatory relief, getting the trade agenda going again so we can expand exports and dealing with energy so we can get more public lands and get this revolution going even faster to create more jobs. we do have the ideas and we are a party of ideas and reform. that's something we need to get out there. in terms of what's going to happen on the budget coming next week, you have a president who in the face of the congressional budget office saying things are getting worse, not better in terms of the debt and defendant sit saying i'm going to back off on doing anything about it. this is discouraging but in a political year it's to be expected. >> yes. any piece of legislation that is going to happen between now and the elections? >> yes, i do think there's a possibility of doing some things. i've got as you know, an energy efficiency bill. we hope to get to the floor. gene shaheen and i have that bill. use our domestic resources, but also use less of it and use it more efficiently. i hope we can move forward on regulatory ideas. we have to do better on permitting, we have to do better on cost benefiting analysis. there's some things we can do, even in an election year. in the past with president clinton, a lot was done during election years, things like welfare reform, balanced budgets and things like that. i think we can. >> do you have a favorite for the nominee for 2016? would you consider it? >> among the democrats or among the republicans. >> who do you like in the democrats? >> look, i don't know what they're going to end up with. i don't think it's going necessarily going to be hillary clinton. >> really? >> yes. i think there's a populous element in the party that's going to likely give her a run for her money in a primary should she run. our side it's going to be wide open. we have a lot of great candidates who have talked about running. i want to get through 2014 first. that's my focus. getting the majority in the united states senate i think changes the dynamic in this town. it enables us to get work done. i believe it will get the president to come to the table and work with us on some of these pro-growth policies we talked about that are desperately needed. it creates momentum for 2016 for republicans. >> is it wide open, is that different than it was before? chris christie, where does he rank among the people who have thrown their hat in the ring potentially? >> becky, i think he's still very much in the game. he won with 65% of the vote in new jersey, democrat state. i think he did it through the way you're going to win a general election at the national level, which is reaching out to groups that maybe aren't traditionally republican, getting independent voters to understand republicans have a better message on how to create jobs and get this economy moving. i think he's still going to be a player. >> great. senator, thanks. we appreciate it. >> thanks, guys. >> safe travels tomorrow. >> take care, joe. >> spring training, joe, first reds game was yesterday. they won. >> oh, good. i'm still getting over last year, the pirates. god almighty. >> starting strong. when we return, tom friedman will join us. we'll talk politics, the economy, ukraine and much, much more. that will take to us the data points of the morning, durable goods and jobless claims will be our focus or investors. this morning, the numbers and market reaction, that's also just ahead. we're coming right back. as we head to the break, check out the "squawk box" market indicator. in my world, wall isn't a street... ...return on investment 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. for what reality teaches you firsthand. in the face of danger, and under the most demanding circumstances. experience builds character. experience builds confidence. and experience... has built this. introducing the 2014 glk. the engineering and the experience of mercedes-benz. see your authorized dealer for exceptional offers through mercedes-benz financial services. through mercedes-benz some brokerage firms are but way too many aren't. why? because selling their funds makes them more money. which makes you wonder. isn't that a conflict? search "proprietary mutual funds". yikes!! then go to e*trade. we've got over 8,000 mutual funds and not one of them has our name on it. we're in the business of finding the right investments for you. e*trade. less for us, more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses and other important information and should be read and considered carefully before investing. for a current prospectus visit www.etrade.com/mutualfunds. welcome back to "squawk box." the dow looks like it would open down 33 points. nasdaq down 4 points. take a look at shares of wh wendy's. they did beat by 2 cents with fourth quarter profit of 11 cents per share. sales, well short of estimates. author and columnist, our next guest has covered just about every topic out there. to tom friedman. he'sed avieding the u.s., don't just do something. sit there. that was in yesterday's paper. great to have you here today. what do you mean when you tell us, don't just do something. sit there. >> i was speaking specifically, becky, about the situation in syria, which i think is enormously complicated, enormously tragic. spilled out all these refugees. there's been a call to do something, to jump in there. and my point is, look, if somebody comes up with a plan that can fix the problem in a way the american people will find economically affordable, i'm all for it. i haven't saline that plan yet. i'm troubled by the fact that a lot of them wanted to jump in there and none of them could name the leader of the syrian opposition. none of them could name the plan of the syrian opposition. i think you have to be very, very careful about that. i think sort of dumping on president obama saying he has to lead, you know, and trashing him for leading from behind, i never quite understood that. if we can get other people to do our bidding in our interest and we do it from behind, that sounds like a good deal for "squawk box" to me. >> what a lot of people have pointed to with the situation with syria, the president drawing red lines and stepping away from those red lines. that has implications not just with syria but the rest of the world. >> that's a very good point. he shouldn't have spoken out the way he did, as did he. at the same time, obviously we have a deal there in chemical weapons. that's dew going to denude syria of its chemical capability over time. >> things got worse in crimea in ukraine. things look like they have the potential to get quite a bit uglier. >> yes, i think they do. russia will play a long game and serious game here. their warm water fleet in the black sea is in eastern southern part of ukraine. and they're not going to let this go without a fight. i don't think they'll let it go, period. >> what's happening? you think russia is pulling the strings behind the curdin? >> yes, i mean, i don't know specifically but this is a strategic interest for them. you know, this is a very imperfection analogy. if half of cuba came out and decided they wanted to join nafta and it was the part of cuba where guantanamo bay was locked, we'd take a great interest in that. >> right. that's what i don't understand. we have all these thoughts that this would be an easy fix, that we dodged a bullet. to me, it seems like this is just the beginning. you have huge russian interests in crimea. why would russia come to the table and agree to help out the western powers to say, yes, we'll come up with a solution and maybe even throw money behind it? >> this is really strategic for them. their ability to project themselves as a global super power without ukraine would be much diminished. look, my sympathies with the ukraine people who want to join the european union who see their future in building prosperity, not just state power. so i wish them well and i think we should do what we can, where we can to help them. but our core interest in ukraine are limited. >> the other question, we've been kicking this around the table, too, this is not just a situation where you have the awful human toll that's taken place. you have a country facing a huge fiscal crisis, too. in order to get the manien from the imf, from the eu, from potentially the united states, they would have to agree to some pretty stringent conditions that would certainly hurt the people there economically, too. i don't know how you find a stable political ground from people who would then have to be negotiating to take away some of the positions that they hold for their people at that point. things will get worse before they get better. >> it's a really good point, becky. it applies not just to ukraine. one of the things in this post cold war age when you win a country like ukraine, you win a bill. you don't win some great geopolitical advantage. but there's a real parallel between ukraine, egypt now. i could point to several other of these post cold war powers. countries that are hugely important. they have enormous economic problems and challenges ahead of them. there was a quote in our story yesterday from the ukraine where ukrainian political leader was saying, look, we have to form a new government, we have to be responsible. we have to deal with the imf. it's political suicide. >> right. i guess i just wondered, do you think things have gotten more or less stable around the global, let's say, in the last three years. >> i was in israel since i saw you last. the most interesting number i came across in israel is the number of ugandaens an others in israel. the number was 55,000. one of them left eritrea, walked to either thiopia, and eventual walked to israel. they wanted to keep african refugees out. what you're seeing is the big divide in the world today is between a world of order and a world of disorder. you have all these states and ukraine may be one of them, where the combination of population, environment, economic stresses, that the cold war masked and we prop them up, and those props are no longer there. they are literally blowing up. >> so i would take it you think the order is continuing to win at this point? but that the fight is getting more difficult? >> yes, it is. because we basically ended a period, becky, this applies to the west, too. to be a president, a mayor, a governor, a college president on balance in most of these countries was to give things away to people. i think we're entering an era, i hope it's short. to be a president, a governor, a mayor, a college president on balance is to take things away from people. the politics of taking things away from people, especially in a country like egypt or ukraine where they missed 50 years, there's a headline i want to write over and over again when i write about these in my column. the headline is who will tell the people? >> i like how you tie the themes together and find the overarching theme. if you had to pick one place that gives you the most concern, one area, reason or country, where would it be? >> it's china. that's simply because -- i don't like to use the world china. i like to use the term one-sixth of humanity. how one-sixth of humanity meets its challenges going forward economically, environmentally, geostrategically, if they don't do it in a stable way, that will affect everything from the cost of the shoes on your feet to the value of your 401(k). that is truly the big story in the world. >> tom, that is a great tease. we'll talk a lot more about china. tom will be with us in the next half hour to thin this discussion. in the meantime, new changes coming to food labels. will it help fight obesity? that story is right after this ♪ just eat it just eat it 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. in a 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. welcome back to "squawk box." big changes may be coming to food labels. the fda wants packaged foods to display calorie counts more prominently including the amount of added sugar. the proposal would ensure the amount of calories per serving reflects the portions that people typically eat. first lady michelle obama is has used her white house position to launch the let's move campaign to fight childhood obesity announced the proposal for the fda. you can see the calories. but sometimes they don't explain the servings. especially those drinks that you think you drink one bottle of. >> they usually say on it it's two or three servings. >> you have to look at the number of servings. >> you remember what happened with cigarettes. it started with these will hurt you, these will do this, these will do that. it ended up with the entire labeling, people who have a hole. a body tag on a toe. >> i remember that. >> it's like are we that stupid that we can't figure this out? >> i do appreciate on restaurant menus having the calories. it's not always what you would think. >> no. >> i was out the other night. the fried zucchini was 310 calories and the grilled asparagus was 550. >> the grilled ed ed asparagus more than the zucchini? >> it had lump crab meat on it. >> get the oriental chicken salad at cheesecake factory because you're on a diet. >> anything at the cheese cake factory -- >> is great. >> once every six months. >> is great. everything in moderation. when we come back, we have jobless claims and durable goods. plus, we'll wrap things up with tom friedman and hear what he has to say about china, why he thinks that is the biggest concern we should be focusing on. dow futures down 33 points below fair value. 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(vo) so do we, business pro. so do we. go national. go like a pro. welcome back to "squawk box." january durable goods down 1%. it's not terrific but it's better than expectations. however, that 1%, down 1% in a way it's bigger, because last month it was down 4.3 in december and stands down at 5.3. let's go through the internals, taking out transportation. we're left with a positive 1.1. this is better than our last look. last look when you took out transportation you were down 1.9. we're 1.7 on the number that many like to look at. that's capital goods orders. nondefense ex-aircraft, a proxy for business spending, capital spending. if we look at the shipments versus the orders, not nearly as good on the new side. this has been a trend of late. 348,000 on jobless claims, that's up 1.4, up 14,000 from a slightly downwardly revised 334. originally put worth at 336. continuing claims hovering a bit over 2.96 million. not much changed from a last look. we are now hovering in the mid260s with a ten-year note yield. keep in mind the high water mark continues to be the last trading day of 2013 at 3.03. and the debate goes on. our treasuries smarter about weather? or is it a generalized slowing in the economy? we'll have to see over time how that spread trades. but at this point, we're going to continue to look at things like supply. today's the last day. 29 billion, seven years, joe and the gang, back to you. >> rick, thank you. let's bring in steve liesman. what do you think about some of the numbers. >> i like the business investment number of up 1.7. that's the one good thing. i think we end up the second half of last year with around 3% average growth over the two quarters but the fourth quarter certainly showed weakness. the debate goes on over whether or not it's a weather issue or whether or not there's something else going on. i think it's more than just the weather. >> why do you think it's more than just the weather? >> not every data point should be affected as it is by the weather. for example, the housing data. some of the california data suggested that it wasn't all weather. >> people can point to that and say it was higher mortgage prices. prices that have increased. >> i also think the magnitude of the declines is too much to be a weather-related event. i think part of it is coming off of some of the strength we've had in the second half of last year normally. i'm just hoping there's not a third element to it beyond the weather. >> you think yellen will blame it all on the weather when she talks later today to the senate or do you think she'll be cagier. >> i think she'll take a step back and say we're watching it, trying to figure you don't how much was the weather. they want to know how many people experienced -- >> what. >> population adjusted. >> north dakota, nobody would notice. >> not anybody cares. one of the things we'll be listening for today is yellen is the fed needs a new measure of slack in the labor market. the unemployment rate doesn't do it. right? it's come down. everybody talks about the participation rate. here's one thing that doesn't work perfectly but might work a little better. this is the unemployment rate versus -- if you have a chart here. see how the blue line goes flat there? versus people working part time for economic reasons who want full-time work. notice how that stayed high. that's about 2.5 million americans right now. you can see that's more than a million from where it normally should be. >> you have that ready to go. >> i just said it. they're so good in the back, they just brought it up. >> he talked yesterday about -- by the way, being patient to see what the weather situation is. but also how does the fed communicate this? they're down at 6.5%, they're not ready to raise rates. do they take that out? do they point us to a new method? >> june they will pause on the taper. >> who said that. >> i don't know. >> that's your thing? >> no, not me. i read it. >> if the data -- we'll know enough then. >> people know enough to know the fed will pause in june? >> these are pessimistic people that think that the economy is not as solid. >> it will take that long before we can say it's not just weather. >> she'll be able to do it without getting a bunch of grief. >> i know you have to go back to tom friedman. there is a distance that's actually true. >> what do you think, june, rick? he's gone. we're in the roach motel and we never can get out. >> never can get out. let's ask tom about that. >> we'll have more with "new york times" columnist tom friedman now. you were just beginning to say -- a little bit about your anxiety about china. i wanted to let now quinnish that before we moved on. >> you know, there are really two views of china today. those who think it's a screaming short. because of banking state on industry, real estate bubble. and those who say what if -- what if china is just getting started? what if we're about to see the payoff for 30 years of investment in infrastructure and education. i don't know. i'm glad i don't have to make that bet. xi jinping is the first chinese emperor as it were, andrew, will have to make more political reform in a two-way conversation with the chinese people more than any other leader in chinese history. china's ability to talk back to their leader, have a two-way conversation, that will be pay per view. >> i want to go to the west coast with you for a minute. you had a column called "how to get a job at google." what fascinated me about the piece, it wasn't clear to me that the lesson in all of this was that you needed to have a great education. that might be part of it but there were all of these other elements that parents, i'm a parent, have to think about in a very different way. >> yes. a lot of parents seem to have sent that column to their kids. and i was intrigued by it. it was an interview with the head of human resources for goog google. the guy in charge of hiring for one of the most important countries in american. who points out google doesn't put a lot of stock in gpas, even in college degrees now, up to 14% of some of their teams are made up of people who have never gone to college. his point isn't that gpa doesn't matter. what matters is did you learn the stuff. google doesn't care what you know. the google machine knows everything now. all it cares is what you can do with what you know. >> they made a movie about this. >> yes. >> with vince vaughn and owen wilson called "the internship." is that where you got your idea? does y did you see the movie? >> i actually saw the movie. i got the idea from something lazlo said earlier. >> you couldn't have done it if you got the idea from owen wilson. >> is google representative of where you think employers in the future will think about how they are hiring? >> well -- >> or are they an outlier. >> i don't think they're an outlier. lazlo is not saying don't get an education. what he's saying is your college degree is no longer a proxy for your ability to get hired here or anywhere else. we want to know what you know and what you can do with what you know and your ability to keep learning and relearning. that's the real message. that's going to be the value add. >> what's your take on the minimum wage debate in the context of what we heard from the cbo last week? >> you know, i see the studies, andrew. and some say this is going to be helpful. some say it will be detrimental. honestly, i don't know what to think. that's beyond my skill set, i'm sorry. >> it's not thinking big about our problems, tom, for what we need to do. we'll debate this for the next year instead of pro-growth stuff, you know. >> for me, joe, the really two big issues, i wrote about this recently, we discovered oil and gold in our country in the last five years. we've had this huge advance in frac'ing, horizontal drilling, can really enable us to pull a huge amount of manufacturing back here and make us an enormous ly leading platform. one of the two things you'd want? what is the nba league minimum you would want to take most advantage of that oil and gold? you'd want to expand foreign trade with the tpp agreement in asia and the eu free trade agreement and you'd want to get an immigration bill that allows us to bring into this country the most talented people to exploit that data mountain. what are the two things that republicans and democrats have told us in the last month they are not going to do in the next year? they're not going to take up trade and they're not going to take up immigration. they are not going to meet the nba league minimum, just the minimum, we need from you guys to exploit these two enormously pro-growth advantages we have. >> all right. >> okay. >> tom making some very good points there. >> instead of asking a minimum wage question to every guest, let's ask why we're not doing that. it's not going to help us. we need to do -- >> i hear you. >> tom, right on, buddy. >> they're all big issues but he's talking about the biggest ones. tom friedman, thank you for that. hope to see you again soon. coming up after the break, money management veteran don marron will join us live for a victory lap in just a moment. and to talk retirement investing when we return. still to come, if you don't have a money manager, get ready to work the rest of your life. we talk pension woes and wealth management with light year capital founder don marron. welcome back to "squawk box," everybody. we've been watching the futures. they've been under pressure but things have just turned around. this is a pretty big reversal. dow futures were down by as much as 60 points below fair value. now they're up by five points. still, that's a reversal of 65 points. s&p 500 futures are still down by one point below fair value. we have a lot of things coming up today including yellen speaking before the senate and that could have a big impact on how the trading day goes. good news for pepsico. it will be the beverage supplier for shanghai disney resort, the first disney resort in main line china when it opens next year. it's especially significant with disney's long history of serving coca-cola products in its theme parks. this is the first time in 25 years that pepsico has won a contract for disney. our next guest made his money in money management with the sale of painewebber, to ubs. he was in charge for a long time there. that was a deal worth $11 billion back in 2000. he's now more bullish than ever on money management. he another huge deal under his belt. don marron joins us. that was your successor firm, light year capital. >> that's right. >> this is a transformative deal you're doing now? >> it's a good deal. we're selling to a public company. we can't talk about it right now yet. it's a successful deal. what's going on in the world -- i have to tell you one of the things first, i watched you guys earlier talking about tesla. i went down and tried out a tesla to see if a 6'6" guy could fit. barely. the salesman was so good. i said what did you do before this? he said i was in wealth management. >> he has some clients he can call. >> one of your points is, this is not going to become less important as we switch from defined ben pit to defined contribution, you need people to know how to grow your money so where you can retire someday. >> there's 21 trillion in retirement assets, a third of all the assets of individuals. the big difference is, a growing portion of 8 trillion or 9 trillion is in their own hands and they're not qualified to manage it. we're creating a nation of pension fund managers. people are starting to realize what the frailty of that kind of system is. you have some people doing well, some people doing badly but there's no safety net. that's the heart of the issue. you're in an industry where the average mutual fund performs below average. so it's a challenge. >> is it tough to get a safety net in a zero interest rate environment, too. i don't think as a wealth management individual, wouldn't you be de-emphasizing fixed income by definition? >> i don't see how you can invest in fixed income. the history of money management over 40 years is you could go to safety and get paid. wait a few years and you'd get 3% or 4%. now you get nothing. absolutely nothing. you can't do that which means you have to take risks and most people, most money management firms aren't really familiar with those kinds of risks. new kinds of products, higher yields, et cetera. >> isn't that an argument for index funds? going back to jack vogel on what he's done, if you'd just put it in an index fund. >> unless the market goes down. >> track stocks over 20, 30, 40 years, put it in something like that that has an incredibly low expense ratio. >> i guess. i never thought aiming to be average was a very good strategy for anybody. i don't think that's true if you're young. if you're young you should take risks, take opportunities. take what you learn. the young are out in the market using the products that turn into these hot companies you're talking about. >> hasn't it been the index is maybe average but in an odd way have outperformed justin everybody else who has been shooting it with ining for the >> i'm saying it with a smile that's because that's exactly right. it exposed money managers as not being as good as we thought, pla particularly in the hedge fund space. there's a lot of big hedge fund who have underperformed and are out of sync with what's going on in the markets. if a pro can't do it in the bull market climate, what shot does an individual have? >> when it's done you'll come back and tell us the results, what you couldn't tell us here. >> i'll come back and tell you that. >> tell people how to plan for their retirement. >> it sounds lake a boring topic. we're all going to get there eventually. and you will have a pot of money and you'll have no pension fund, no corporation behind you. it isn't going to be enough money. people will first blame their company and then the government. you'll have tens of millions of people saying, in the end, that means i have to work five more years, which is going to keep the young people out of the market. so you've got -- this is a hard time. >> yes, but it's important. >> the country is in good shape, ceos have learned how to manage companies more efficiently. the trouble is, it's just in time hiring. that's another problem. >> we'll talk about that maybe next time. >> good to see you. we head to the new york stock exchange, catch up with jim cramer, "squawk box" will be right back. 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. ...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. let's get down to the new york stock exchange where jim cramer joins us now. a lot to talk about. tesla today given what they announced yesterday and whether you think this is huge news or we're overplaying it. >> no. you can't overplay it in part because people just think he revolutionized the auto business and now he'll revolutionize the electronic grid. doing a convertible bond and normally you'd see pressure as people would buy the bond and short the common against it. you are not seeing that kind of pressure. it's a charmed stock. i call it a cult stock, no one wants to hear it, jim, do you buy it or sell it? some stocks really elude you. if you think he'll smash the trillion dollar electric grid, the stock's worth a lot more. if you think he can't, the stock's overvalued. >> do you put it in the amazonian category? amazon has unbelievable revenues. they are both run by brilliant people. amazon revolutionized the way we do retail worldwide. if you can blow up the grid and have partners and not need as much money, 5 billion the company can raise, i think it's an option on something major. >> would you take the option, though? >> mo, i wouldn't. because there are too many fabulous companies doing really well that are dramatically lower in price and aren't as based on hope, you know, this is a press release company right now. >> i remember asking you about syria and you were, like, when that was happening, but then i charge the guys in charge flying by the seat of their pants and now nobody knows and now i'm thinking ukraine, is it out of the question that tanks move in there like hungary? do we know for sure that something like that -- what would that do to the market? >> the russian navy is located within the country, i mean, so i don't think it's so wrong. i don't think it's going to be the crimean war, britain is not involved. a year ago we would be coming in and talking about it every day and now we say, yeah, yeah, that's ukraine. is it keyve? keyve. and the russian navy at a certain point is going to say we're not supposed to be here we need to find our way back to where we're supposed to be and i don't think that will go that well. >> i still wonder if russia is still capable, have we given them the opening where they could say, look, we want the ukraine, i'm sorry? putin is a strong man, isn't he? it would be kind of a black swan but i don't know if we can just categorically dismiss it. >> i've been surprised that we have focused less on that than we did turkey and argentina and venezuela, but maybe we just kind of feel like no matter what this thing works out because they're a westernized country and the imf giving them money. a year ago this is all we'd talk about. >> all right, okay. thank you, jim. we'll see you guys in just a couple minutes on "squawk on the street." when we come back, whoobs the t what's the top performing s&p industry so far? 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