Transcripts For CNBC Squawk Box 20140321 : vimarsana.com

News coming in. It was the philly fed that looked like things were turning around. Yeah. Higher in western europe, becky, but an entirely different story in russia. Lets get to that. Russian deputy finance minister saying he expects no big Immediate Impact from western sanctions on russias financial sector. And he argued that the countrys creditworthiness has not worsened. U. S. Imposed a second wave of sanctions on moscow yesterday, and the European Union is expected to announce measures over russias moves to the next crimea region of ukraine. Russian officials criticized the downgrade of russias trading outlook. Saying there was no basis for the move. The s p and fitch provides their longterm assets on russias debt from negative to stable. So far, the russian markets are feeling the pinch. The russian rtx down almost another 3 right now. While the broader miex micex i. Their version of the down is down over 21 over three months. It is down 24 over the past 12 months. Nothing short of an unmitigated disaster for russian equities. And it hasnt stopped putin nonetheless. Hes getting Standing Ovations when hes talking about taking back crimea. Well, listen, the russian rtx, while week weak recently, has had about a 400 gain in the last 15 years. And theres speculation that putin probably owns small if not larger than small stakes in many of these companies because, remember, when the wall game down, they gave certificate toes all these people. Fits now affirming the u. S. Credit rating at the top notch aaa level. It removes the danger that it might downgrade the Worlds Largest economy. A lot of questions about that. Put on negative watch back in october over the debt ceilings to date. I put this in the good news category for wall street this morning. The latest results are that the Bank Stress Tests are in in 29 out of 30 u. S. Banks, net capital requirements. The results show continued improvement since the 2008 crisis. The fed will announce next week whether it will approve some of the banks to increase dividends or buy their own stock. The s p 500 financial index was up nearly 2 ahead of that news. The bank that failed the annual test was utah based Zion Bank Corp which has said it will resubmit its capital plan to the fed. Some people are worried that these stress tests are whitewashes. But i actually think i dont know. I think some of these stress tests are tough. I like it. I think theyre good. I think the u. S. Stress tests banks have significantly fixed their balance sheets, their capital structure. I think you do more. Its ironic that zion bancorp was up 10 today. So the market is up, punish them one single bit. Even greenspan will tell you, the banks arguably could have even more capital than they do. On a relative they would say if you look at the banks in europe and you look at our competitors on a relative basis, we are in a much better place than every other bank. Does that mean we couldnt do slightly better yet . Wouldnt you say if you were to push higher capital standards even yet on the banks, that it would slow down the country and the economy . Because its people who look at the loans its a total double edged southward. Gary cohen from Goldman Sachs as an oped out and made some comments this morning in australia. I think hes on vacation now, right . I dont know. But he made comments about how he thinks there is another potential crisis in the works. He talked about shadow banking and all sort of other on things. Ultimately, when you think about every financial crisis, its a function of debt, its a function of leverage. Where does he think the problems for the next crisis is coming from . People who arent being regulated . For obvious reasons, given that he is highly regulated, the comments he made this morning were really about shadow banks. But i would argue that part of the yes, theres the shadow Banking System, but you need the banks to loan some of the shadow banks, if you will, some of that money to actually get so youre talking about regulating not banks further, but regulates those who are skating around the regulations at this point. That, too. Thats a separate issue. I think you have to look to see where the next bubble is building. If there are areas not being regulated versus areas that are being heavily regulated, that led us to the problems in the past. Lets talk about some other Corporate News this morning. General motors ceo mary bara will be testifying in front of congress about faulty switches. Gm released a statement saying something went wrong with our process and terrible things happened. 12 deaths have been linked to the defect that led to the recall of 1. 6 million vehicles last month. If you take a look at whats been happening to shares of gm, you can see how this has been pressured. The question is how long these investigations last. The General Motors is trading just above 35. And a shake up at the top of symantec. Ceo steve bennet has been fired. The company says the decision to let go of bennet was, quote, the result of an ongoing deliberative process and not printed by any event or impropriety. That stock is down by about 9 right now, down 1. 90 to 19. Nike shares taking a hit this morning. They reported fiscal Third Quarter profit of 76 cents per shares. That did Beat Estimates by 4 cents and it said sales were surging ahead of this summers world cup soccer tournament in brazil. That gave an initial boost to the shares. The company reversed shares after the companys ceo cautioned currency headwinds would for this quarter. In the last week or so, weve had a number of Companies Come out. Talk about currency head winds. Weve heard venezuela and currency trend ratio there mentioned a number of times. Companies such as General Mills and others. So watch we always talk about currencies and people say, why do i care about the dollar . I dont trade it or whatever. This is why you care. And overall, its been a hit of about 5 from the global corporations. Just raised prices. Yeah. Weve got another in us new story this morning. In the cable world and our world is making a lot of headlines. Netflix Ceo Reed Hastings calling for stronger rules to control internet traffic weeks after announcing a deal with comcast to provide faster connections to its subscribers. Hastings is firing back at Internet Service providers, accusing them of compromising Internet Freedom and disagreesing consumers. He says some big isps are extracting a toll because they can. They effectively control access so millions of consumers and are willing to sacrifice the interests of their own customers to press netflix and others to pay. Hastings wrote though they have the scale and power to do this, they should realize it is in their longterm interest to back strong net knew translate and we should give you the replay from comcast, of course, the Parent Company of this network and nbc. The open internet rules never were designed to deal with peering and internet interconnection. Well talk about that in a second, guys. Providers like netflix have always paid for their interconnection to the internet and have always had ample options to ensure their customers receive an Optimal Performance through all isps at a fair price. We are happy that comcast and netflix were able to reach an amicable marketbased solution to our interconnection issues and believe that our agreement demonstrates the effectiveness of the market as a mechanism to deal with these matters. The reason it is so important is given the time warner transaction with comcast. It seems this is a huge bait and switch by read hastings to say, okay, ill sign this deal, but then im going to turn around and say look what youre doing to me. But there were some people that lets set it up for people. There was the time warner deal with comcast. A week later, there was a question about net knew translate. All of a sudden they sign this deal with comcast. Net neutrality is getting knocked down. Yes. Comcast has scored some deal with net flex and netflix is not going to say anything and the time warper deal as a result because youre not going to see some of the big complainers. However, hastings is now back to the table to say not just that, and i think youre going to see him and it seemed like, i would argue, if hes coming out, you will see other content providers. Cost cam is the only and, of course, theyre our Parent Company. But theyre the only large isp that is going to be abiding by the net knneutrality rules for e next couple of years. Agreeing well push it out a few more years. Down the road, it will be mentioned. Right now, were not subject to but this basic question about whether or not you should have to pay if you are using more of the freeway is the question that comes up. Now, ive read through Reed Hastings pushback, the idea that they shouldnt have to pay, isps connecting to each other, its a different scenario. But to me, it still comes down to the idea that at t, which spends more Capital Expenditure than any other country in the entire country on building out its networks, the idea that they shouldve to pay that alone and people who use as much of the ramps and freeways that they want dont have to pay still is a bit shocking to me. Reed hastings at times is responsible for 30 of the network traffic. And the idea that he shouldnt have to pay for any of the but the flip side is here is what he would say. He would say, all of these isps, including comcast and others, they have been able to sell for more and more money every year higher broadband speeds because customers say i want to be able to get this content. Which comcast and others dont pay for. Ultimately, the consumer is going to pay for this one way or the other. The consumer is going to pay for it. If you pay comcast for how much they pay the monthly. I dont have netflix. I dont particularly care to subsidize all the people using 30 of the bandwidth. Easy now, i watched an episode of season three of magnum p. I. And terrible idea. One way or the other. O pay for if you believe and the argument goes back even a step further, which is are isps to the home, google, whatever it is, are they Public Utilities . There are those who argue they are. Is it i40, where i guess theres still roads free in america. Or is it the garden state parkway which is privately built and funded by the users . Again, i where is your macro debate sflp. I have netflix. As a result, i dont feel like i should have to pay for all the traffic that comes across. You recognize your cable bill is subsidizing every other channel that you dont want . I know. And i dont want to subsidize more. My point is, there should be a limit to how much i am forced to pay for if i want cable, if i want basic access to the internet, if i want basic access to the internet, i shouldnt be forced to pay what the premium customer is paying. You should argue netflix customers or premium customers now, i used to be a netflix customer. Eventually, i can see myself doing that. But in the meantime, for people who are just looking for the basic prices for getting hold on, let me ask you a question. There are different pricing schemes for different seeds of broadband access, right . Right. So i pay more, Time Warner Cable currently because i pay more to verizon fios currently. I pay for the fastest package that no, no, no. Hold on. Hold up, my friend. Should my netflix buffer even though im paying let me tell you why your argument is largely moot, okay . Okay. Do you access netflix or anything via wifi in your home . Sometimes. It depends. So the speed you pay here is the irony. The higher speed you pay is coming through the pipe. Correct. Youre going to be slowed down to the max speed your wifi router allows you to go, anyway. Here is the irony. Were all talking about faster speeds. If you plug that ethernet cable directly into your computer, you will benefit from the faster speed. The minute goes over the wifi, you are limited by the max speed of your wifi router. Literally, youre buying a ferrari and putting a governor on the engine through the wifi, so i dont understand the in our house, we actually have the fastest wifi speeds that you could possibly have. Yes, but that is not anywhere near hard wired speeds. Its slightly slower. Our tvs are jacked right into the internet. Physically plugged in . Physically plugged in. Thats a different story. My point is people accessing everything virtually wifi if im going to pay the maximum amount, i want everything i dont want anything to buffer, right . But people complain about the speed of their internet. They know i work for a Comcast Company and complain to me. I go to their house, theyre using some 7yearold 8011. B wireless router. Im like theres your problem. Youre flying a southwest camel. Youve got the runway. Will you come to my house. Im a tech nerd, so i i need a little help with my house. I have been thinking about putting netflix back on the television. I use the tv box. I do use comcast. They give you nice discounts. If you get it, get it. I have verizon. And ive hard wired one of the apple tvs so i get the full thing. But you are subject to your wifi a lot of people forget that. If its slow, its ten rooms away or through a concrete wall or a lead wall. Thats true. That doesnt change the larger issue. It doesnt matter how fast the pipe is. At any point, it is going to get interesting. Lets talk about stocks again, rebounding by the end of the trading day yesterday. In fact, rallying in the financial sector. Joining us right now in the markets is jason pride. He is director of strategy at glennmead. With us right now to talk about the economy is steven whiting, global chief strategist at citi private bank. Why dont we start with you, steven. Okay. Yesterday it was economic numbers that turned things around. What is going on . Is the economy stronger . Are we getting out of that weather period when we start to see real numbers . Absolutely. And theres probably a number somewhere in the april or may reporting time, close to 300,000 on nonfarm payrolls on one of them. Down 130 on payrolls per month for december through february. We did close to 200,000 last year. So i think were going to get out of this frostbite period for the u. S. Economy. I think markets largely look through it. So how much further they have to go. But weve seen a trend where every time for the last five quarters we get into any kind of macro worries. Ukraine or other issues. We get unusually small depths and very large readouts. Although in terms of the economy, you mean . In terms of that, in terms of the market. Okay. With the ukraine this time around, though, jason, we really havent seen that much market concerns. Its surprising to me. Well, you know, i think the interesting thing is it really is and serves as a stark reminder for investors that at this valuations, equities are not necessarily cheap, theyre not necessarily expensive, but theyre maybe a little bit above average. But these sort of valuations, investors need to be careful not to be too far over their equity allocations. What they want to be is they want to be positioned to benefit from the longterm growth and outperformance of equities. So they need to be not so far away that when these dips occur, because were going to have risks that we run into, whether its ukraine, russia, whats going on in china, what may occur in europe, maybe the fed, you know, going through tapering a little bit too fast, investors need to be prepared to react to that because those are going to be opportunities to actually add to your equities. And if youre too far over on your equities, you know, reality is you take a 5 dip in the markets and youre not going to be comfortable to add to your equities. You wont allow yourself that breathing room. And i think thats whats provided and i think some of whats going on is there are a lot of investors that arent too far over. And when these events come about, theyre coming in buying because they still need some more equity positions. Are you suggesting that people will keep a larger than usual cash position so that they can jump in with extra cash . Are you suggesting they have more in bonds and then they switch out of bonds into stock when that happens . Neither, neither. Were actually still suggesting that investors carry an overweight equity. But maybe theyre not sitting at their extreme. Because if youre a little bit overweight, then, you know, when a dip comes around, its not exactly what you wanted, but its not exactly horrendously painful, right . But if youre well over your regular kind of normal equity level, youre not mentally prepared. Youre not going to be there and be capable of equities basically because you sustained so much damage in what is a fairley shallow drop. I think its increasingly, again, a safe haven. Weve had this massive rise in Energy Related investment. Four times faster than gdp in the past ten years. If you look at the correlation between crude oil and equities, its showing a general updrift. And if you think about what could happen under worst Case Scenarios in the case of russia, ukraine and Energy Supply revenues around the world, the u. S. , at least from the perspective of natural gas, is not going to be interrupted by that. Weve seen increases in inflation and difficult periods where savings inflows have been difficult to attract in some emerging markets that are now deficit countries again. And the u. S. Dollar spends most of the last decade falling. So were seeing the resumption of strength in the u. S. Dollar. Jim cramer was just on an offshore oil rig a couple of weeks ago. And he and i talked. If you look at an oil rig, theres probably 100 different companies, public and private, that are somehow involved in that rig through the physical construction, the piping, the extraction, the refining, whatever it might be. So youre saying the energy boom is directly contributing. Oh, yeah. To the gdp and the economy and jobs. Its been an important catalyst. It is a small industry, but its growing rapidly. Its changing the composition of American Economic growth. I think housing is up, but its been a little over rated in terms of builder sentiment, things like that. But the Immediate Impact<\/a> from western sanctions on russias financial sector. And he argued that the countrys creditworthiness has not worsened. U. S. Imposed a second wave of sanctions on moscow yesterday, and the European Union<\/a> is expected to announce measures over russias moves to the next crimea region of ukraine. Russian officials criticized the downgrade of russias trading outlook. Saying there was no basis for the move. The s p and fitch provides their longterm assets on russias debt from negative to stable. So far, the russian markets are feeling the pinch. The russian rtx down almost another 3 right now. While the broader miex micex i. Their version of the down is down over 21 over three months. It is down 24 over the past 12 months. Nothing short of an unmitigated disaster for russian equities. And it hasnt stopped putin nonetheless. Hes getting Standing Ovations<\/a> when hes talking about taking back crimea. Well, listen, the russian rtx, while week weak recently, has had about a 400 gain in the last 15 years. And theres speculation that putin probably owns small if not larger than small stakes in many of these companies because, remember, when the wall game down, they gave certificate toes all these people. Fits now affirming the u. S. Credit rating at the top notch aaa level. It removes the danger that it might downgrade the Worlds Largest<\/a> economy. A lot of questions about that. Put on negative watch back in october over the debt ceilings to date. I put this in the good news category for wall street this morning. The latest results are that the Bank Stress Tests<\/a> are in in 29 out of 30 u. S. Banks, net capital requirements. The results show continued improvement since the 2008 crisis. The fed will announce next week whether it will approve some of the banks to increase dividends or buy their own stock. The s p 500 financial index was up nearly 2 ahead of that news. The bank that failed the annual test was utah based Zion Bank Corp<\/a> which has said it will resubmit its capital plan to the fed. Some people are worried that these stress tests are whitewashes. But i actually think i dont know. I think some of these stress tests are tough. I like it. I think theyre good. I think the u. S. Stress tests banks have significantly fixed their balance sheets, their capital structure. I think you do more. Its ironic that zion bancorp was up 10 today. So the market is up, punish them one single bit. Even greenspan will tell you, the banks arguably could have even more capital than they do. On a relative they would say if you look at the banks in europe and you look at our competitors on a relative basis, we are in a much better place than every other bank. Does that mean we couldnt do slightly better yet . Wouldnt you say if you were to push higher capital standards even yet on the banks, that it would slow down the country and the economy . Because its people who look at the loans its a total double edged southward. Gary cohen from Goldman Sachs<\/a> as an oped out and made some comments this morning in australia. I think hes on vacation now, right . I dont know. But he made comments about how he thinks there is another potential crisis in the works. He talked about shadow banking and all sort of other on things. Ultimately, when you think about every financial crisis, its a function of debt, its a function of leverage. Where does he think the problems for the next crisis is coming from . People who arent being regulated . For obvious reasons, given that he is highly regulated, the comments he made this morning were really about shadow banks. But i would argue that part of the yes, theres the shadow Banking System<\/a>, but you need the banks to loan some of the shadow banks, if you will, some of that money to actually get so youre talking about regulating not banks further, but regulates those who are skating around the regulations at this point. That, too. Thats a separate issue. I think you have to look to see where the next bubble is building. If there are areas not being regulated versus areas that are being heavily regulated, that led us to the problems in the past. Lets talk about some other Corporate News<\/a> this morning. General motors ceo mary bara will be testifying in front of congress about faulty switches. Gm released a statement saying something went wrong with our process and terrible things happened. 12 deaths have been linked to the defect that led to the recall of 1. 6 million vehicles last month. If you take a look at whats been happening to shares of gm, you can see how this has been pressured. The question is how long these investigations last. The General Motors<\/a> is trading just above 35. And a shake up at the top of symantec. Ceo steve bennet has been fired. The company says the decision to let go of bennet was, quote, the result of an ongoing deliberative process and not printed by any event or impropriety. That stock is down by about 9 right now, down 1. 90 to 19. Nike shares taking a hit this morning. They reported fiscal Third Quarter<\/a> profit of 76 cents per shares. That did Beat Estimates<\/a> by 4 cents and it said sales were surging ahead of this summers world cup soccer tournament in brazil. That gave an initial boost to the shares. The company reversed shares after the companys ceo cautioned currency headwinds would for this quarter. In the last week or so, weve had a number of Companies Come<\/a> out. Talk about currency head winds. Weve heard venezuela and currency trend ratio there mentioned a number of times. Companies such as General Mills<\/a> and others. So watch we always talk about currencies and people say, why do i care about the dollar . I dont trade it or whatever. This is why you care. And overall, its been a hit of about 5 from the global corporations. Just raised prices. Yeah. Weve got another in us new story this morning. In the cable world and our world is making a lot of headlines. Netflix Ceo Reed Hastings<\/a> calling for stronger rules to control internet traffic weeks after announcing a deal with comcast to provide faster connections to its subscribers. Hastings is firing back at Internet Service<\/a> providers, accusing them of compromising Internet Freedom<\/a> and disagreesing consumers. He says some big isps are extracting a toll because they can. They effectively control access so millions of consumers and are willing to sacrifice the interests of their own customers to press netflix and others to pay. Hastings wrote though they have the scale and power to do this, they should realize it is in their longterm interest to back strong net knew translate and we should give you the replay from comcast, of course, the Parent Company<\/a> of this network and nbc. The open internet rules never were designed to deal with peering and internet interconnection. Well talk about that in a second, guys. Providers like netflix have always paid for their interconnection to the internet and have always had ample options to ensure their customers receive an Optimal Performance<\/a> through all isps at a fair price. We are happy that comcast and netflix were able to reach an amicable marketbased solution to our interconnection issues and believe that our agreement demonstrates the effectiveness of the market as a mechanism to deal with these matters. The reason it is so important is given the time warner transaction with comcast. It seems this is a huge bait and switch by read hastings to say, okay, ill sign this deal, but then im going to turn around and say look what youre doing to me. But there were some people that lets set it up for people. There was the time warner deal with comcast. A week later, there was a question about net knew translate. All of a sudden they sign this deal with comcast. Net neutrality is getting knocked down. Yes. Comcast has scored some deal with net flex and netflix is not going to say anything and the time warper deal as a result because youre not going to see some of the big complainers. However, hastings is now back to the table to say not just that, and i think youre going to see him and it seemed like, i would argue, if hes coming out, you will see other content providers. Cost cam is the only and, of course, theyre our Parent Company<\/a>. But theyre the only large isp that is going to be abiding by the net knneutrality rules for e next couple of years. Agreeing well push it out a few more years. Down the road, it will be mentioned. Right now, were not subject to but this basic question about whether or not you should have to pay if you are using more of the freeway is the question that comes up. Now, ive read through Reed Hastings<\/a> pushback, the idea that they shouldnt have to pay, isps connecting to each other, its a different scenario. But to me, it still comes down to the idea that at t, which spends more Capital Expenditure<\/a> than any other country in the entire country on building out its networks, the idea that they shouldve to pay that alone and people who use as much of the ramps and freeways that they want dont have to pay still is a bit shocking to me. Reed hastings at times is responsible for 30 of the network traffic. And the idea that he shouldnt have to pay for any of the but the flip side is here is what he would say. He would say, all of these isps, including comcast and others, they have been able to sell for more and more money every year higher broadband speeds because customers say i want to be able to get this content. Which comcast and others dont pay for. Ultimately, the consumer is going to pay for this one way or the other. The consumer is going to pay for it. If you pay comcast for how much they pay the monthly. I dont have netflix. I dont particularly care to subsidize all the people using 30 of the bandwidth. Easy now, i watched an episode of season three of magnum p. I. And terrible idea. One way or the other. O pay for if you believe and the argument goes back even a step further, which is are isps to the home, google, whatever it is, are they Public Utilities<\/a> . There are those who argue they are. Is it i40, where i guess theres still roads free in america. Or is it the garden state parkway which is privately built and funded by the users . Again, i where is your macro debate sflp. I have netflix. As a result, i dont feel like i should have to pay for all the traffic that comes across. You recognize your cable bill is subsidizing every other channel that you dont want . I know. And i dont want to subsidize more. My point is, there should be a limit to how much i am forced to pay for if i want cable, if i want basic access to the internet, if i want basic access to the internet, i shouldnt be forced to pay what the premium customer is paying. You should argue netflix customers or premium customers now, i used to be a netflix customer. Eventually, i can see myself doing that. But in the meantime, for people who are just looking for the basic prices for getting hold on, let me ask you a question. There are different pricing schemes for different seeds of broadband access, right . Right. So i pay more, Time Warner Cable<\/a> currently because i pay more to verizon fios currently. I pay for the fastest package that no, no, no. Hold on. Hold up, my friend. Should my netflix buffer even though im paying let me tell you why your argument is largely moot, okay . Okay. Do you access netflix or anything via wifi in your home . Sometimes. It depends. So the speed you pay here is the irony. The higher speed you pay is coming through the pipe. Correct. Youre going to be slowed down to the max speed your wifi router allows you to go, anyway. Here is the irony. Were all talking about faster speeds. If you plug that ethernet cable directly into your computer, you will benefit from the faster speed. The minute goes over the wifi, you are limited by the max speed of your wifi router. Literally, youre buying a ferrari and putting a governor on the engine through the wifi, so i dont understand the in our house, we actually have the fastest wifi speeds that you could possibly have. Yes, but that is not anywhere near hard wired speeds. Its slightly slower. Our tvs are jacked right into the internet. Physically plugged in . Physically plugged in. Thats a different story. My point is people accessing everything virtually wifi if im going to pay the maximum amount, i want everything i dont want anything to buffer, right . But people complain about the speed of their internet. They know i work for a Comcast Company<\/a> and complain to me. I go to their house, theyre using some 7yearold 8011. B wireless router. Im like theres your problem. Youre flying a southwest camel. Youve got the runway. Will you come to my house. Im a tech nerd, so i i need a little help with my house. I have been thinking about putting netflix back on the television. I use the tv box. I do use comcast. They give you nice discounts. If you get it, get it. I have verizon. And ive hard wired one of the apple tvs so i get the full thing. But you are subject to your wifi a lot of people forget that. If its slow, its ten rooms away or through a concrete wall or a lead wall. Thats true. That doesnt change the larger issue. It doesnt matter how fast the pipe is. At any point, it is going to get interesting. Lets talk about stocks again, rebounding by the end of the trading day yesterday. In fact, rallying in the financial sector. Joining us right now in the markets is jason pride. He is director of strategy at glennmead. With us right now to talk about the economy is steven whiting, global chief strategist at citi private bank. Why dont we start with you, steven. Okay. Yesterday it was economic numbers that turned things around. What is going on . Is the economy stronger . Are we getting out of that weather period when we start to see real numbers . Absolutely. And theres probably a number somewhere in the april or may reporting time, close to 300,000 on nonfarm payrolls on one of them. Down 130 on payrolls per month for december through february. We did close to 200,000 last year. So i think were going to get out of this frostbite period for the u. S. Economy. I think markets largely look through it. So how much further they have to go. But weve seen a trend where every time for the last five quarters we get into any kind of macro worries. Ukraine or other issues. We get unusually small depths and very large readouts. Although in terms of the economy, you mean . In terms of that, in terms of the market. Okay. With the ukraine this time around, though, jason, we really havent seen that much market concerns. Its surprising to me. Well, you know, i think the interesting thing is it really is and serves as a stark reminder for investors that at this valuations, equities are not necessarily cheap, theyre not necessarily expensive, but theyre maybe a little bit above average. But these sort of valuations, investors need to be careful not to be too far over their equity allocations. What they want to be is they want to be positioned to benefit from the longterm growth and outperformance of equities. So they need to be not so far away that when these dips occur, because were going to have risks that we run into, whether its ukraine, russia, whats going on in china, what may occur in europe, maybe the fed, you know, going through tapering a little bit too fast, investors need to be prepared to react to that because those are going to be opportunities to actually add to your equities. And if youre too far over on your equities, you know, reality is you take a 5 dip in the markets and youre not going to be comfortable to add to your equities. You wont allow yourself that breathing room. And i think thats whats provided and i think some of whats going on is there are a lot of investors that arent too far over. And when these events come about, theyre coming in buying because they still need some more equity positions. Are you suggesting that people will keep a larger than usual cash position so that they can jump in with extra cash . Are you suggesting they have more in bonds and then they switch out of bonds into stock when that happens . Neither, neither. Were actually still suggesting that investors carry an overweight equity. But maybe theyre not sitting at their extreme. Because if youre a little bit overweight, then, you know, when a dip comes around, its not exactly what you wanted, but its not exactly horrendously painful, right . But if youre well over your regular kind of normal equity level, youre not mentally prepared. Youre not going to be there and be capable of equities basically because you sustained so much damage in what is a fairley shallow drop. I think its increasingly, again, a safe haven. Weve had this massive rise in Energy Related<\/a> investment. Four times faster than gdp in the past ten years. If you look at the correlation between crude oil and equities, its showing a general updrift. And if you think about what could happen under worst Case Scenarios<\/a> in the case of russia, ukraine and Energy Supply<\/a> revenues around the world, the u. S. , at least from the perspective of natural gas, is not going to be interrupted by that. Weve seen increases in inflation and difficult periods where savings inflows have been difficult to attract in some emerging markets that are now deficit countries again. And the u. S. Dollar spends most of the last decade falling. So were seeing the resumption of strength in the u. S. Dollar. Jim cramer was just on an offshore oil rig a couple of weeks ago. And he and i talked. If you look at an oil rig, theres probably 100 different companies, public and private, that are somehow involved in that rig through the physical construction, the piping, the extraction, the refining, whatever it might be. So youre saying the energy boom is directly contributing. Oh, yeah. To the gdp and the economy and jobs. Its been an important catalyst. It is a small industry, but its growing rapidly. Its changing the composition of American Economic<\/a> growth. I think housing is up, but its been a little over rated in terms of builder sentiment, things like that. But the Energy Sector<\/a> is really strong. It is having dramatic effects on the composition of American Economic<\/a> growth. It means more production. We are going through our first economic recovery since the 1970s, for which the savings rate has been plunging and the trade deficit is exploding. Now, we might import other things rather than energy, but its helping. It really is now. Steven, thank you so much for coming in today. Jason, its great talking to you. Thanks for having me. This is why this time of year is the best for sports. Lets just be honest. No, all my dreams were crushed yesterday. Your dreams were destroyed, you and pretty much everybody else. Folks, it took one game, the first game in march madness to bust millions of brackets across the nation. Number six ohio state losing to number 11, dayton, crushing the flyers of hopes of millions trying to get that perfect bracket. Four of our five pick up players were knocked out. Those players didnt necessarily play the quicken loans bracket challenge which was insured by warren buffett. Warren buffett is licking his lips while this is happen. Its safe to say the fluctuation between the two would be minor. 75 to 90 of people got knocked out. Not only that, but harvard won. Are you kidding me . I got totally wiped out. In my news bracket, i did not pick harvard. But in another bracket you picked harvard . Which may or may not involve money. In multiple brackets . You have no loyalty . No. I did a couple, too. I did the newser one and i did the Million Dollar<\/a> one. And you went different ways snch. No. There are people that make five or sixty brackets. You got two, here is the stupidity of me. The two brackets are relatively similar, right . They have maybe one team winning the final and another team not but theyre pretty dog gone close up to that. So its really dumb. If youre going to do multiple brackets, make them completely different. I just want to get the higher seeds, maybe one with a lower seed. But remember, buffett was here and talking about how a number 16 seed has never beaten a number one seed. So i figure, fine, ill take it how about the lottery. Your odds of winning the Mega Millions<\/a> are greater than your odds of winning this perfect bracket. Apractice pro of our previous conversation about the internet, how much people are going to be watching these games on cbs streaming while youve got multiple things going on at the same time. Last night, i was watching st. Johns uconn on my computer sitting in the bet bed in my paja pajamas. Youve been eating the Early Bird Special<\/a> this week, right . We know it well. When we return, the first tweet was unleashed on the world eight years ago today. The rest they say is history. How twitter changed the world of social media and business. Executiveedge. We have that story and a lot more when squawk returns. Announcer before you hit the road, here is your travelers check. After renting a car, eating a decent meal, San Francisco<\/a> is the most expensive u. S. City for business trips according to Business Travel<\/a> news. Just how much does one day in the golden city cost . Find out next. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction<\/a> by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Announcer how much sditd cost per day for a business trip in San Francisco<\/a> . Nearly 445, according to Business Travel<\/a> news. Time now for the executive edge. The white house now taking smartphones and samsung according to the wall street journal. This is one of the last and most high profile strong holds of blackberry besides becky who gave it up and is now on the iphone. They have been testing the internal communications team. The tests are in the early stages. No indication that mr. Obama himself is switching from the blackberry. Guys, the white house using a Samsung Phone<\/a> . Not a u. S. Phone . How does everybody feel . Well, the blackberry is not a u. S. Phone, either. Thats true. Is any phone a u. S. Phone . Apple . It could have been an apple phone. It could have been an apple phone. Im a little surprised maybe it wasnt. Im told that one of the reasons that they liked the Samsung Phone<\/a> is because samsung owns the whole stack. Theyre not using multiple providers of hardware. Therefore, they can control the security of the whole phone and that may be one of the reasons that samsung could be getting the contract. If i was a White House Level<\/a> officials id be like the godfather, im going to tell this guy in person who can whisper it in that guys here. Use a pay phone on the corner. Thats your best option. Yeah. At this point, everything comes out. Today, we should say the anniversary of the first tweet on twitter. Now, eight years ago today, jack dorsey published the first tweet ever. Here is what he said. He said just setting up my twitter. Eight years from now, will there be twitter, guys . I have to say, im a heavy twitter user. I use it when im looking to see whats happening in the news. I find out on twitter if youre not near a television or the radio, like the boston bombing, thats something i found out on twitter because thats what i had handy. So i do use it heavily. That may be a result of what we do in our line of business, though. I use it, too. Its an excellent news feed. You carefully get involved in back and forth, but i think in our line of business, its a tool. With the valuation where it is, who knows, im not a stock analyst. Thats a great segment. When we return, we have a leading market analyst. Usually we see him from the west coast. Will the internet stock get some price Pricing Power<\/a> this year . Do you have an answer . Yes, i do, yes. The answer is yes . Well have more details on that in a bit. As we head to a break, take a look at yesterdays winners and losers. Back in a moment. It was wonderful. Bravo. I loved that. It was pretty good. It wasnt bad. It could have been a lot better. I didnt really like it. It was terrible. It was bad. It was awful. It was awful. These days, everything your business does it was awful. Is done on the internet. And tomorrow youll deveno more. Thats what comcast business was built for. Slow dsl from the phone company was built for stuff like this. Sign up for internet and voice and find out how to get four weeks of tomorrow ready internet for free. And youll be ready for tomorrow too. Comcast business. Built for business. Anbe a name and not a number . Tor scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction<\/a> with selfdirected services by j. D. Power and associates. Improving everything from booking to baggage claim. Were raising the bar on flying and tomorrow well raise it yet again. I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. 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Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Welcome back, everybody. Happy friday. In our headlines this morning, General Motors<\/a> ceo mary about a rra has a date with congress on april 1st. Shell be testifying before the house energy and Commerce Committee<\/a> which is looking into gms handling of its recall involving defective ignition stwichs. The problems have been linked to 12 deaths and gm has faced a storm of criticism over this issue. Nike taking a hit in premarket trading. The company Beat Estimates<\/a> on both the top and bottom lines and said it was getting a beast ahead of this world world cup tournament in brazil. But theyre warned of head winds in this quarter and the fiscal year ahead. The earnings calendar issi relatively light. Well be getting quarterly numbers from tiffany as well as darden restaurants, which is the parent of olive garden and red lobster. Darden reported earlier this month that it could be affected by severe winter weather. Pandora fees are making consumers redo their monthly budget. Netflix said it would offset prices this year. Is Pricing Power<\/a> the new name of the game for Internet Companies<\/a> in 2014 . With us now on set, mark mahaney, lead market analyst at Rbc Capital Markets<\/a> and a rare east coast appearance. Mark, thanks for getting up at the crack of dark for us. This is easier for him because normally he gets up at the real crack of dark. He comes on our program at i dont know what time. First amazon. Happy to be here. I thought even as a prime customer, i dont want to pay more, but i thought if you were an investor in amazon, i love to see it because to me it said amazon is maybe growing up, but theyre thinking about making money. Does the 99 move change anything in your view about amazon. Com . Brian, to your point, i think its very interesting. This is a sector thats usually bricking down prices, especially amazon over the years. Now we have three companies raising fees that are doing this out of desperation or their Value Proposition<\/a> is established enough that they have the power to do this. We think its the latter. So we think its a bullish indicator for a couple of these companies. Does it signal a fee change for amazon, which has always followed the field adage ill lose money on everything i sell, but ill make it up in volume . No. But at the margin, we think were coming out as an investment cycle. They doubled their distribution capacity over the years. The as a margin, this will help reduce the margins. Lets go to twitter. Can i go back to amazon for one second . Im serious about this. Did you ever think of amazon as a Media Company<\/a> . We talk about netflix a lot. Do you think people are going to really use prime connected to their tv and well ever have the same type of penetration that netflix does . No, i dont think so. But they will be a dramatically large retailer. Theyre one of the largest sellers of all the media sellers. This point about amazons profitability, this is a low margin business. Its a mid single digit margin business. On top of that, like media sales and you roll in things like amazon webb services, margins will go higher. Fine. I would agree with that, too. However, if youre going they are a retailer, why are they not valued anywhere close to a retailer . Because theyve got extraordinarily high growth versus retail companies. What is this Company Growing<\/a> units by . 25 year over year . Thats 10x. Thats why. And theyve got much higher return on invested capital. The cap ex requirements of this company are dramatically lower. Retail costs are going up. Thats the om zon bid. Talk to talk about turkey. The amazon Prime Minister<\/a> saying hes going to wipe out twitter. The guy has always been a basher. Lets forget about twitter, the value of it for becky and for andrew and for you and myself as a platform for what we do. Lets talk about twitter as a company, as an operating vehicle, the balance sheet. Right now, and as a user and pressure of the platform, right now, twitter is nothing more than a money borrower. S g costs are high. Why the optimism . Why the valuations. The advantage, the Business Model<\/a> has been proven. We have this thing called cash flow margins, 60 . Twitter has a similar Business Model<\/a>. What youre doing is youre looking at twitter as it was was facebook five other six years ago. So you buy this already with the Business Model<\/a> proven. How long it takes to build up, you dont know. But the margins have been proven. I dont think facebook and twitter are anything alike. In terms of how they monetize usa usage, in terms of putting in native ads or putting an advertisement between news feeds or posts. You have a deal, why wouldnt you be willing to do that with twitter . The Management Team<\/a> right now is more proven valuation is a little easier. Its aggressive, but its easier. Eight years from now on twitter, given the eightyear anniversary, will twitter exist in eight years . Unless turkey takes them out, yes. Could it be owned by somebody else . Thats possible. Theres two or three companies that could potentially take it out. But one that would be the obvious player will be going. But i think twitter will be an independent company in years. What are the other companies . Companies like microsoft, apple, potentially. Facebook would just say lets get rid of these guys. Possibly. I think the natural play would be google, but i think thats highly unlikely. Thanks for coming on. Great to see you. Great to see you, too. When we come back, David Rubenstein<\/a> will be our guest host starting at 7 00 a. M. Eastern time. But first, the first lady traveling to china. Well have a live report on her trip from beijing right after this. As we head to break, take a quick check off whats happening in markets right now. I see green arrows there. About 0. 5 gain in germany and france. Stick around. Squawk box will be right back. Well, did you know the ancient pyramids were actually a mistake . Uhoh. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back, everybody. The u. S. Equity futures after yesterdays big gains are looking to open higher once again. Youll see right now those dow futures are indicated higher by about 50 points. S p futures are 6. 5 points above fair value. Well see what happens as we get closer to the opening bell. The first lady of the United States<\/a> traveling in china today. Eunice yoon has more details of they are trip live from beijing. Hi, eunice. Hey, well, Michelle Obama<\/a> is getting a lot of attention. I dont know if you guys can see these newspapers, but she is all over the press. And the people here are calling her the first lady with the most firsts. And thats really the way people are viewing this trip. They are saying that both of these women are really viewed hold on. Im getting a bit of an audio kickback. But both of these first ladies are viewed similarly in their own country that, you know, both of them are seen as fashion icons, theyre seen as hip and cool and cooler than their predecessors. They have their own pet causes. So what people are talking about is whether or not these two first ladies are going to be able to repair what many here have been viewing as a very strange relationship between the United States<\/a> and china. Thats one of the hopes here. Now, in terms of her overall trip, she is going to be going from here throughout the country for the next seven days. Shes going to be hitting some big tourist spots. She kicked off the tour today by going to a school because shes stressing the importance of education, both in the United States<\/a> and in china. She was doing a little bit of calligraphy with the first lady of china. She was playing some pingpong. Another thing people were talking about was how she was enjoying herself in beijing and would move forward to visit the great wall here in outside of beijing as well as moving along to xian and onward to a big panda base. Now, basically, overall, the view of her here has been that shes very charming, shes fashionable, and some people have been talking about her fashion choices, which have been so far chinese labels. And in terms of what else theyre talking about is basically that they see her as a very warm personality. Now, most of the commentary hasnt been on her as much as it has been on chinas first lady. Theres been this upswell of National Pride<\/a> around you her because theyre saying that she really is a woman who now is able to go head to head with the first lady of the United States<\/a>. Okay. Thank you for that report. Pretty interesting stuff with the first ladies are doing. Coming up, has Global Warming<\/a> reached its heyday . Weve got the question on the table. Our next guest says the green wave is coming to an end. Were going to talk to him after the break about that and his new book. In honor of his first tweet anniversary today, check out brian sullivans first tweet. He wrote this on july 5th, 2009, just back from the midwest. Ninehour flight delay on way out. Two canceled flights. The Airline Business<\/a> needs a reboot. Wow. Thats what twitter is for. Im so ashamed. I didnt realize my first tweet was an epic one. Was an epic one. Can can are you flo . Yes. Is this the thing you gave my husband . Well, yeah, yes. The name your price tool. You tell us the price you want to pay, and we give you a range of options to choose from. Careful, though that kind of power can go to your head. That explains a lot. Yo, buddy i got this. Gimme one, gimme one, gimme one the power of the name your price tool. Only from progressive. Just how safe is the ar you drive and whos watching the automakers . Are they asleep at the wheel . You can catch on the money 6 30 p. M. Eastern time on sunday. Check your local listings. Squawk box is not coming right back. Were right here. If you do nothing else, watch becky quick on on the money. 7 30 sunday night. Theres other shows on but we switch off some of those other shows just to go to miss quick. My biggest booster. Thank you, andrew. The next guest says the age of Global Warming<\/a> hysteria has come to an end. He has an oped that said green politics made europe vulnerable to putin. Had joe been here, you could hold hands together on this maybe you know joe. But he has views that i think may be similar to yours. Your view is that this whole Global Warming<\/a> thing is a big hoax. No, thats not quite my view. In terms of the politics of Global Warming<\/a>, if they really came to the fore in 1988 when james hanson did his Senate Testimony<\/a> and when the ipcc, the u. N. Panel in Climate Change<\/a> was established. And i think the age of Global Warming<\/a> ended with the collapse of Lehman Brothers<\/a> in september 2008. After that, the world had more important things to focus on like fixing the financial system. Is Global Warming<\/a> real or not in your mind . Well, what ive tried to do in the book, andrew right. Is tell the story. I want the reader to make up their mind. It doesnt matter. I think so many books on Global Warming<\/a>, trying to tell you what to think and do about it, i tried to tell a story and let the reader make up their own mind. Talk about the economic implications. You make an argument about putin and whats happened in europe. It is the case that green policies in europe and particularly germany have pushed the German Economy<\/a> into the hands of putin. Because if you switch from fossil fuel par generation to wind and solar, you depend on the weather. Because youre depending on the weather, it means you need other sources of fuel. Theyre pushed into the hands of gas prompt, the russian gas company. And youve seen gas shipments from russia rise by about 30 in 15 years, which is a big amount. Rupert, i understand your point completely. Youre right, germany and the rest of europe have been ham strong by this reliance on someone who is not very friendly at this point. Do you think Climate Change<\/a> is not real . Do you think Climate Change<\/a> is not linked to Human Behavior<\/a> . Or do you think it just doesnt rank high enough on the problems we should be addressing . 1992, a cnbs poll, 67 of respondents say Environmental Standards<\/a> should be set irregardless of the cost. If you look at polls today, they put economic environment and Global Warming<\/a> at the bottom. Theres been a shift in public opinion. People are warn out by the hysteria, the predictions of catastrophe. The other thing is weve had 15 years, according to the ipcc, of basically flat lining global temperature. Is it that statistic which gives you comfort in suggesting we should put it on the back burner or not . By the way, i dont know the science. Theres the kind of geophysical question but then theres the policy question. Whats unquestionably the case is the big emerging economies say no, we are not going to cap our emissions. Unless china and india and brazil and those economies say we are going to join in and cap our emissions, theres absolutely no point in u. S. And europe going alone. The thing that people kind of forget is its Global Warming<\/a>, its not u. S. Warming. I guess from an Economic Perspective<\/a> if you go to the county where my parents live in rural virginia, its a pretty poor county. We can have this discussion. I can fly Business Class<\/a> to San Francisco<\/a> to go to a conference about Global Warming<\/a> and talk about action. When you talk about the person in my parents county who are commuting 30 miles to their job which pays 9 or 10 bucks an hour, the price of gasoline impacts them dramatically. These people mostly are looking for the cheapest hydrocarbon. I dont care where it comes from. It could come from solar, wind, i dont care. Most people in the world are just trying to eat every day. Correct. And get to work and not go broke on their gas bills. The proponents of Global Warming<\/a> forget, its that the big developing economies have been against anything that fetters their growth and raising their people out of poverty. This goes back to before Global Warming<\/a> started as politics in france. Back in 1972, they told the west we are not going to buy into your Environmental Standards<\/a> if it hurts our economies. We should live as smartly as we can, we should all recycle. Its worth the read. When we return, changing the world with private equity. David rubenstein is our special guest host. Does he see opportunities in russia . Is he worried about china . Well find out more, right after this. Disney started in a garage. Amazon started in a garage. The ramones started in a garage. My point . Some of the most innovative things in the world come out of american garages. Introducing the lighter, faster cadillac cts. 2014 motor trend car of the year. Aint garages great . U. S. Markets on a roll. We have a private equity master guess host today. David rubenstein, cofounder of Carlyle Group<\/a>, his plans for russia and china. Plus, opportunities for the next big deal. No water, no beer. How the drought in the west could threaten the entire industry. Squawk box begins right now. A long time ago way back in history when all there was to drink was nothing but cups of tea good morning, everybody. Back to squawk box here on cnbc. Its still st. Patricks week. Im becky quick with andrew ross sorkin. Joe is of all week. The fews have been indicated higher this morning even after the gains we saw in yesterdays markets. The dow futures are indicated to open up about 50 points above where they closed yesterday. S p futures are up by 6. 5 points above fair value. The nasdaq is up by over 16 points. The tenyear note has pushed higher since we heard from the fed on wednesday. You can see right now the tenyear note issieling 2. 772 . In our headlines today, 29 out of 30 u. S. Banks have passed the Federal Reserve<\/a>s annual stress test. Those banks have enough capital to withstand a severe downturn in the u. S. Economy. The only bank that didnt pass was zions bancorp. More on the stress defendant in just a few minutes. Australia now at the forefront in the search for the missing Malaysia Airlines<\/a> jet. Prime minister tony abbott said the search is focusing on debris spotted in the southern indian ocean by satellite imagery. That area is extremely remote. But if there is anything there, he says they will find it. Fitch and Standard Poors<\/a> put russias outlook down. Mary barr will be testifying on april 1st. Before the house energy and Commerce Committee<\/a>. The Panel Investigating<\/a> the automakers recall of faulty ignition switches earlier this week released a video statement of barra declaring something went wrong with our process and terrible things happened. 12 deaths have been linked to ta defect linked to the recall of 1. 6 million vehicles. Ative niz earned ee ee ee ees missed estimates about i anickel. Revenue slightly below estimates. It guided the current fiscal year below wall street forecasts. Despite the miss, the company said it was prout of its performance over the past year. Sales in earnings rising to record levels. Nike taking a hit in the premarket. The Company Reported<\/a> fiscal Third Quarter<\/a> profit of 76 cents a share. That did top estimates by 4 cents. Sales were surging ahead of this summers world cup soccer tournament in brazil. That initially gave the stock a boost. They reversed after the companys cfo cautioned currency head winds would cut Earnings Growth<\/a> for this quarter and all of fiscal 2015. Becky . Lets welcome our guest host who is supremely qualified to talk about the busy m a and ipo markets. His private equity and Corporate Culture<\/a> strategies are featured in opportunity knocking. Good morning. My pleasure to be here. Im not orubenstein. Happy to be here nonetheless. Sell braiticelebrating with. Where do you think we stand from an Economic Perspective<\/a> . The economy is recently in good shape. People wish the congress and president would get along better and we could pass more legislation that would be helpful to the economy. That said, i think the economy is doing reasonably well. I think 3 growth is not unrealistic this year. It could be within a couple tenths of a point either way. Ear optimi were optimistic. Were looking at some things seriously in the emerging markets. We think europe has come back. Prices are pretty attractive for people like us. Were reasonably optimistic about the global economy. Though there are weak spot in some places. Jack welch says this is the first time in the last six or seven years they sound truly optimistic because based on the order flow were seeing we could push through to a higher level. Does that echo what youve seen. Yes, i did try to recruit jack. Hes been a very good job. Their business is more europe and the United States<\/a> and probably the emerging markets. I think their european and u. S. Portfolios have done pretty well. Those companies are doing quite well, for example, home depot supply. We are quite pleased with our reactions with them and our relationship with them. I think jack is right. We do see some growth and we see more growth today than we probably saw a year ago at this time. You tried to recruit jack, you said . I did. To come to carlisle . I did. He came over to my house in nantucket. All of a sudden tiger woods was playing in a tournament. He wanted to watch it. It went on so long, he said we cant finish it today. Before we had a chance to talk again, he decided to go to slitten. You. Youre kidding me. I think hes done okay. Hes not struggling. I have a headline question for you. We were talking about air b b. Yes. Your company is worth 1. 64 billion right now . No, no, no, closer to 11 billion. Carlyle. Yes. Carlyle is worth how much now . 11 billion. Really . Yes. What are you trying to do . The shares are going down as youre talking. I shouldnt say that. Im looking at google right now. They have the wrong market cap for you. I shouldnt be looking at this. No. Market value is much higher than that. At davos this year where you all were, bill gates and i hosted a giving pledge, kind of recruiting session. Bill said id like to have a young man come whos not yet ready for philanthropy but he might be. Brian chesky. He described his company. Ive never heard of it. Its air b b. Hes 32 years old. His company may go public at some point at a higher market value than mine. After three years his Company Might<\/a> be worth more than mine after 27 years. A little disconcerting. Is that indicating something is going on . 19 billion for a company with no revenue . It was surprising but if it can work on facebooks platform, it may be worth it. You wont know whether these things are worth it for a couple years down the road. People get against facebook. I bet against facebook early on. If i remember correctly you had an opportunity when literally marks with in school. He was in college. Eventually my soninlaw, the person to be my soninlaw introduced me to him. He had been his classmate at phillips exeter. Describe the company. I dont think thats going anywhere. I dont think i want to meet him. The initial 10 million was worth 9 billion on the ipo. When you say you bet against him i didnt bet against him, i just didnt take advantage. Air b b, they may turn out to be a great company. I dont know. Everybody i talked to say i didnt know the company. Everybody i mention it to seems to know the company. Im not the first dopter on technology things. We talked about on our show street signs, 2 00 eastern. Thank you. Silicon valley in San Francisco<\/a> is the new wall street. Doesnt matter if theyre in jeans and aend tshirt or a Brooks Brothers<\/a> suit. Will that ultimately be the best opportunity in a variety of ways for the next decade . Is new york city over in some ways . Hardly. If you try to find apartments there, at low prices youll find its not over. New york is doing quite well. New york is the Financial Capital<\/a> of the world. I think its more so than even london. But theres no doubt that one aspect of the financial world is Venture Capital<\/a>. And Venture Capital<\/a> is really headquartered in silicon valley. Its a feeding frenzy. It will have some mistakes made by some people. In the end, technology is driving the economy around the world. We dont really have competitors around the world with this kind of technology. China, europe, latin america, theyre not doing the kind of things being done in silicon valley. It really is unique. There may be bubbles in Certain Companies<\/a> but in the end its a great thing for the country. Do you have a venture arm. We dont have Venture Capital<\/a>. We do Growth Capital<\/a> in europe and the United States<\/a>, somewhat in the United States<\/a>. Have you ever thought about it. We did it early on. I dont think we were that good at it. Large Global Investment<\/a> firms are that the great with Venture Capital<\/a>. Venture capital, you have to be used to losing money. In our kind of businesses, our deals work out reasonably well and in Venture Capital<\/a>, nine out of ten deals might not work. That isnt a ratio that private equity people are comfortable with. The great venture firms are doing well right now. Over the last ten years, very few firms are doing well in Venture Capital<\/a>. What kind of buying are you doing right now . The last year or two, there was selling, ipos. Not as much buying as you might imagine. Last year we invested less than we had the previous year. We expect to invest more this year than last year. Last year it was difficult to find buyouts. Companies were at high prices they had a lot of cash. They had no incentive to sell. Were seeing a pickup in europe and other opportunities. I suspect we will invest more this year than last year. In terms of size of transaction, are we ever going back to the 20062007 days . I would never say never. Pure buyout firms, 10 billion, are more likely than the 10 billion, 20 billion. Buyout firms tend to want to do smaller deals. They dont want to put that much equity in a deal. Right. Okay. Well continue this conversation, David Rubenstein<\/a> is with us as our guest host for the rest of the program. Coming up next, though, Just One Bank<\/a> failed the feds latest round of stress test. Heres a hint. It rhymes with lion. And check out Andrew Ross Sorkins<\/a> sorkins first tweet. Well, here it goes, ellipses, my first tweet ever. Better than my whining about the airplane. It feels like the very first time no two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor<\/a> today. Take a look at the futures. You can see there how we have green arrows. Dow looks like it would open up 52 points higher. Brian . The results are in, the of 30 banks that participated in the latest round of the Federal Reserve<\/a> stress test one bank, zions bank failed to meet capital requirements. Zion up 10 this year. Well have to wait and see what it does today. Joining us now to talk about the results is governor frank keating. Are you pleased by the results . One failed out of 30 which means 29 passed. On the stress test, stressful enough . I need to take a patriotic moment. David rubenstein is on your set. Hes a major funder to keep George Washingtons<\/a> there and the library. Im on the board of the National Archives<\/a> foundation, a duplicate original of the magna carta hanhang s there because of him. And the Washington Monument<\/a> is being rebuilt because of him. Thank goodness for David Rubenstein<\/a>. Thank you very much. Youre very kind to say that but your own contributions to our country are quite considerable as well. Thank you for what youve done. Let me thank you, david. Brian, let me answer your question this way. Remember, this is the first time the fed put an extreme stress test on 30 institutions, regional banks as well as the largest banks. 29 of the 30 made the grade in their view. The reality is, they were extreme. Its like if you set your treadmill at 70 , incline of 70 . This was an extreme, half of the stock market gone. And 29 of the 30 did well. One has some work to do. But zions is an excellent bank. Its very well run. Im sure theyll address whatever it is they need to address. Its good news for american banks and borrowers and customers. We looked pretty strong in industry. Heres the balance we have, governor, which is this. Zion has had a capital ratio of 3. 5 . You need to be at 5 . Theyre not that far off. Theyll have to elevate the capital ratio. We want our banks to be safe. That said, you can argue if theyre too busy accumulating capital they wont be able to lend anything out. Theyll be playing it too safe. Is there a level at which is there a perfect spot basically for a safe bank that has enough excess capital and money to be able to lend and help the economy grow . Were talking about Tier One Capital<\/a> here. The ratios that the stress test finally identified after that 70 treadmill exercise, i think is fine. The regulators are going to say, this is what we want you to have. At a ratio of 101 for every dollar you put in capital, arguably you have 10, those dollars are not len the into the economy at large. You can have too much capital. I think theres a balancing act. We want to be strong and safe. If the last five years weve doubled the capital levels of the american banks. I think were very safe. You always have to look at do we have too much and do we need to focus more on lending than security. Frank, are we looking in the wrong direction . Part of me wonders whether these stress tests are a distraction to what may, if we have another financial crisis, it probably wont happen from the banks but it might happen from the shadow banks where so much of the risk is actually taking place. Are we focusing or applauding . I dont want to not applaud for what the banks have done. When you think of the risks for the system, are they at the banks or elsewhere . People avoid paying before they embrace pleasure. The reality is, if the banks are too difficult to access for capital of lending because of regulatory overkill if you will, theres just, for example, on the housing side, 43 debttoincome, basically fence line lending, no character loans anymore. If you go into the shadow Banking System<\/a>, to make those loans you do volcano an opportunity and a concern, obviously that youre going to do things that can blow up and be very dangerous for the economy at large. I think what we have to do is have, as were trying to do, a strong, well capitalized Banking System<\/a> that is willing and able alone and let them lend money. Not every loan will be a good loan. By definition if we borrow money, i may not be able to pay it back. Thats what business is all about. I think we have to find that balance. Do you want further regulation on what is considered the shadow Banking System<\/a> or do you say leave it alone . No, i think you have to have regulation. The Consumer Financial<\/a> Protection Bureau<\/a> under don frank is looking at that, the nonbank banks. Why should the lending kmuchbt the United States<\/a> be so highly and heavily regulated and other people are lending money. Theres not a sole that knocks on their door. Thats not fair to the banks. How do you regard the american banks relative to the european banks or chinese banks in terms of their strings. The american banks, you know what they have and dont have. Theres some countries that is clearly the case. We are better capitalized. Theres is a very different system. What concerns me, david, over the course of the last, lets say, seven years, weve lost six years, weve lost one Community Bank<\/a> a day in this one five days a week. How much of that is natural, how much of that is just Competitive Pressures<\/a> . The economy . And how much of it is overregulation for an essential part of the Banking System<\/a> . Europeans dont have the community Banking System<\/a> we have. I think its a precious asset. Smallest towns and cities in america simply will not be served if there arent Community Bank<\/a>s to serve them. Is it more stressful being governor or representing bankers. I think since the collapse of 08 its pretty stress representative bankers. Anytime youre in the public eye, the tallest tree always takes the wind. You know that, david. Thank you. Thank you. Appreciate it, governor keating. Okay. Coming up, brackets busted we were talking about this earlier. Only one game end millions of quests for the perfect bracket. As we head to a break, check out beckys first tweet back on march 3rd of 2010. All right. Thats stupid. Enough. Wow, brave new world out there. Im late to the party. Rapidly trying to catch up with twitter nation. At least mine was complaining properly which is what twitter is for. You embraced twitter. I went right at it, airlines stink. Ok, heres the way the system works. Lets say you pay your guy around 2 percent to manage your money. Thats not much, you think except its 2 percent every year. Does that make a difference . Search cost of Financial Advisor<\/a>s ouch over time it really adds up. Then go to e trade and find out how much our advice costs. Spoiler alert. Its low. Really . Yes, really. E trade offers Investment Advice<\/a> and guidance from dedicated professional financial consultants. Its guidance on your terms not ours thats how our system works. E trade. Less for us, more for you. Are you still sleeping . Just wanted to check and make sure that we were on schedule. The First Technology<\/a> of its kind. Mom and dad, i have great news. Is now providing answers families need. Siemens. Answers. Welcome back, everybody. It is that most wonderful time of the year for sports fans, march madness. It took one game into march madness to break millions and millions of brackets. Number 6 ohio state losing to number 11 dayton. Four out of five yahoo tournament pick em players were knocked out. All those players didnt necessarily play the quicken loans billion dollar perfect bracket challenge thats insured by Warren Buffetts<\/a> baerkshire hathaway. Youre talking about 80 knocked out by that game. Later in the day, harvard won, too, which surprised a lot of people. Yes. Its probably safe to say its better than 90 , maybe even 95 that have gotten knocked out of the perfect bracket challenge for winning a billion dollars. Did vegas do well or poorly . Thats a good question. Vegas always does well because they make their money off the middle. They take the cut. They want everybody to be perfectly balanced. They want the bets to be perfectly hedged. Today is a new day. We asked david earlier did he have a bracket . He said no. Im the chairman of the board at duke. I would favor duke. I think well get to the final four. Harvard has a duke player at its coach, i will point out. There are very good duke players playing for mike krzyzewski. You have duke going to the final four. Yes. My wife asked me to fill out a bracket for her. Ill do it. Shes tied for third. I should have gone with the heart instead of the head. One missed pick. Shell win the money and ill i think picking out the winner will be warren buffett. The amount of publicity hes t gotten has been tremendous. Nobody has had a perfect bracket. Ever . I dont think so. Theres urban rumors. How players like the Carlyle Group<\/a> changed the corporate world by turning companies around. No two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor<\/a> today. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Welcome back to squawk box, everybody. Lets take a look at stocks. Tiffany out with quarterly numbers a short while ago. The company missed on both top and bottom lines. However, analysts point out that the company did end the year on an uptrend and samestore sales are on the rise. All of tiffanys regions around the globe. The stock bun by 3. 5 , trading at 88. Darden restaurants met estimates with its latest earnings. We could point out, though, those estimates were scaled down after the company warned of an earnings shortfall a few weeks ago. They are the Parent Company<\/a> of red lobster and olive garden. It cited the impact of severe weatherer it weather. That stock is down by only by 10 cents. Were watching shares of dow component boeing. Goldman sachs downbraiding boeing. That stock is down by 1 today, too. Thats worth pointing out because it is a dow component. Last time we spoke to dave rubenstein, joe criticized him for not explaining and defending what private equity firms actually do. You remember that. Here to give us an inside look, David Rubenstein<\/a>, our guest host, cofounder and ceo of the Carlyle Group<\/a>. Tom, is an operating executive at carlyle. Carlyle exited that deal in 2005 when udi was acquired by bea systems. Carlyle made 7. 5 times its original investment. Congratulations to you as well. Thank you. No time left for the actual interview after that intro. Thank you all for coming, have a nice weekend. Heres the real question. The real question is these companies you had were publicly traded companies. Why cant you do in the Public Markets<\/a> what you can do in the private markets . For the public shareholder and the people out there who trade in stocks and want to own investments, they say why are you able to make those type of returns privately and you cant do it publicly . Andrew, id say its a matter of focus. In the case of by business it was a business that had been for sale for five years. Talent gets drawn out of it. Its not going to get the Capital Resources<\/a> and tension. It doesnt have the allstar team of management and drive it in new and creative directions. At the end of the day, the focus is not there. When we take over the business, were focused and well drive it in new and better ways. Its all about business intensity and speed of execution. We deal with orphaned businesses. Theyve been starved of capital, often times theyve been starved of interest in the business. On occasion, theyre starved of management talent. We come in, give them a shot of adrenaline, we get a passion in there, increase the energy and enthusiasm for the business. And lo and behold, it does very well. Let me just add, when the press often focus on private equity firms they have the picture pictures in the newspaper of the founders of these firms. The people who do the work are the upward executives. After they run companies for us theyve stayed involved with us as operating executives. They sit on boards and help us in other ways. These are the starters of private equity, not me. The thing i was impressed about by reading about both of you, it created so many jobs. Your company was able to provide twice as many jobs going into private equity. Talk a little bit about why you were able to double the number of people working there. We look at that business and we had a distressed asset, a business that lost its swagger, a business that was starving for investment. When i came in, the first thing i had to do was change the culture. We had to raise the bar in terms of expectation, in terms of talent and key leadership. Once you do that, youre able to go in and do innovative things, attack new markets, go after new customers. We were able to double our employment. We went from 500 to 1,000 employees. 500 to 1,000 employees. We have two different private equity investors. First one, 70 x return on cash and carlo had return on cash as well. Lets be honest around this table. There are private equity firms, maybe carlyle is not one of them, there are a lot of private equity firms out there. There are some that starve their own companies of capital, that deserve the criticism. Is private equity still a bit of a wild west . The whole industry can be dragged down, like a lot of things, by a few bad players. I dont think its so much a wild west. You ought to take a look at each of the individual investments that are made. Ill give you a good example. You talked about increasing employment. Theres a refinery right outside philadelphia that was struggling and it was recently put up for sale. Carlyle looked at that. This is one delta bought . No were carlyle did. You actually bought it. Yes. You can look at the situation and say theres too much risk there. Carlyle with their Analytical Capabilities<\/a> and indepth knowledge of energy identified a very key ceo to bring in with a lot of imagination. They took an innovative approach to that risk with be they saved 20,000 jobs. And for all of us in the northeast, they probably helped put a cap on the Energy Prices<\/a> during this tough winter. I mean, it was a great approach. There are 5,000 private equity firms in the world. I cant say every one of them i didnt know there were that many, david. There are 5,000 around the world. Some are small, some are larger. Every one isnt perfect. If you take a look at what private equity about 30, 40 years ago, sometimes there were s excesses. Today, you have professionals running these companies. My buddy is trying to get him to road trip with him up to buffalo. If i go to buffalo with this guy bad mistake. If i go to a bar in a working class area of buffalo, i say private equity. These guys will get angry. Do you care about changing their perception . If you do, how would you . Everybody wafshts to be well liked. Nobody wants to have people hate them. If people dont like us, were not happy. We dont have the best image all the time everywhere. People recognize we are doing a better job than many people thought years ago. The people in that bar would say, if theyre smart, if theyre government workers or have pensions that are investing in private equity would be happy. Most of the people that invest in private equity are private Pension Funds<\/a>. New York State Common Fund<\/a> is a giant investor in public equity. Real quick. Public shareholders. You are a Public Private<\/a> guy. You have a public company. Arguably you take companies private because you think theres a better opportunity. Are public shareholders a help or hindrance to creating a great business . Carlyle is a public company. We think were better as a private company. Very often we take a company that is Public Private<\/a> and realign compensation, get better focus. Sounds like when the goings good, public shareholders are just fine. When the goings bad, public shareholders are a nuisance. At certain times public equity isnt going to be the best for you. Compensation cant be properly aligned and you have to worry about quarterly earnings. Eventually you want to go public again typically. Thank you for coming in. Appreciate it. Pleasure. David will be sticking around. Well continue this conversation. The battle for Net Neutrality<\/a> battles. Reed hastings blasting Internet Service<\/a> providers saying his company is being forced to pay for access to customers. Well dive into the topic, next. Media analyst rich greenfield. 7 38 here in the east. Predicting the future is a pretty difficult thing to do. But, manufacturing in the United States<\/a> means advanced technology. We learned that Technology Allows<\/a> us to be craft oriented. No ones losing their job. Theres 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. In a we believe outshining the competition tomorrow quires challenging your Business Inside<\/a> and out today. At cognizant, we help forwardlooking Companies Run<\/a> better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Three weeks ago next flinch struck a deal with comcast. Netflix Ceo Reed Hastings<\/a> saying thats exactly the kind of deal he shouldnt have to sign. Hes making the call for stronger Net Neutrality<\/a>. Joining us with green is rich greenfield, Telecommunications Analyst<\/a> at bgit. This was a big surprise, i thought, rich, given they just struck this deal. I thought that meant netflix was not going to be saying anything about the potential netflix time warner deal. Hastings said some big isps are extracting a toll because they can. They effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press netflix and others to pay more. They should realize its in their longterm interest to back strong Net Neutrality<\/a>. Were you surprised, rich. Its unusual to see somebody sign a deal and then complain about it to the government. Its a strange strategy. I think the real difficulty, i think when your viewers are thinking about what is the difference between Net Neutrality<\/a> and peering and interconnection. Reed hastings conflates them all together. The reality is fcc chairman tom wheeler recently talked about these issues and very specifically said that Net Neutrality<\/a> and peering intersection, these are different and distinct issues. Maybe cousins but distinct issues. I think if you want to simplify it for your viewers today, think of it this way, you have lots of doors you have a door to your house. Lots of people want to get in, theyre all trying to bring you things. Think of the internet trying to bring you lots of things through that door. The question is when someone gets really, really big, were not talking about discrimina discriminating, the door isnt big enough. Who should pay to make that door bigger or add more doors, is it the housing owner, comcast, or the person trying to get in, netflix. These are complex issues with no easy answer. Just help me understand this. Was this an opening salvo in terms of what this means for the comcast time warner transaction. Are we going to see Reed Hastings<\/a> and other content Companies Say<\/a> you have to block this deal or is this Something Else<\/a> entirely . I dont think this is about blocking the deal. Whats interesting, if you would have asked me yesterday morning what was the importance or significance of hastings getting a deal done with brian roberts, i would have assumed part of that agreement was now weve taken a potential critic of the deal out of the potential filers criticizing the deal or criticizing or asking for a specific term. Obviously thats not the case. Were seeing what happened last night. What i think, though, this is not about blocking the comcast time warner deal. This is probably about getting some form of Consent Decree<\/a> where comcast has probably agreed to certain terms and using the review process to for netflixs longterm gain in terms of how Net Neutrality<\/a> and this peering interconnection are handled by the government. You mean using this to get concessions along the way. Absolutely. There is a goal of this that plays into that review process, not to block it but get something. They want something out of this process. Let me just add for those who havent obsessed over these rules, Net Neutrality<\/a> rules, when they did that, the courts ultimately ruled against the fccs position. Theres a regulatory uncertainly because the courts have said what the fcc did is not legal. Therefore, were in a land of uncertainty right now. Thats why nobody really knows what the rules are. If i can go back to telecom law, theyre trying to make it a public utility which is defined legally, i believe, as having an essential public service. Is the internet a public utility in the legal sense of the word . I think regulating is title 2, regulating this the way a Telecom Provider<\/a> would be regulated, is a very dangerous step. I think the fcc held it out there saying were not going to give up on that potential of reclassifying. The risk, though, is you really are going to limit innovation and change the future of america if you do that. My guess is thats not the path they want to go down. Theyll hold it out there. If theres really bad behavior, they always have that option. I think the real question is, becky mentioned this earlier, you know, comcast is was certainly, so was at t and verizon, you are seeing these companies not upgrade their interconnections, not upgrade their ports and end up resulting in their customers getting worse netflix service. The question is, of course they want to get paid. Of course they want to make money off of this from netflix. Reed is correct. They were absolutely hurting the service they were providing of the most important Video Services<\/a> to their customers, which is a strange business practice. Going back to it, i agree with what you said, the doorway is not big enough. Who will pay for it . I think ultimately consumers will pay for it, either to comcast or netflix. My question is should all customers be subsidizing netflix customers . I think thats a great question. The reamount is its netflix today. I think youll see many other very heavy bandwidth politics over the course of the next four or five years. Netflix may be the first in terms of massive size and scale. Do you talk about 30 of primetime traffic . Youtube is becoming a significant percentage as well. Pick it. Whos right, though . From your perspective, you studied this longer than anybody else at this table. We have to separate Net Neutrality<\/a>. Theres no doubt discrimination, if occurring, is a bad practice and should be regulated by the government. These issues have been going on since the very first day of the internet. People have been paid back and forth for years. These have always been business negotiations. This seems like at the end of the day netflix is looking for the government to regulate those business negotiations. I think that sounds like a real challenge. That being said, you know, i think there is this question of, you know, the internet is not living up to where it is overseas. You heard massa speaking in front of representatives of the u. S. Talking about how we were number 15 out of 16 versus other countries. When you think about, you know, slowing down bandwidth or not not slowing down but not upgrading fast enough, it does make you think whether there is a government goal. We have heard from at t repeatedly. Theyve spent more on Capital Expenditure<\/a> than any other company in the entire United States<\/a>. Why are things so much slower here if you have these companies that are here spending more money than anybody else to upgrade networks. I live in manhattan. Time warner just upgraded the highest speeds in new york from 50 to 100 megs downstream and theyre going to 300 this summer. These problems are getting adirecti adirecti addre addressed. The speed issue may become less of an issue as competition bulls. This may be something where the government doesnt need to regular. You put those connections on a wifi router as i said earlier today and slow everything way back down. Rich, i dont understand netflix point of view. Wouldnt they want to make these deals and have a barrier of entry to another competitor . They can afford to pay. Why not pay for the access, make it fast and useful for your viewer and make it harder for a competitor to come in . It sets a precedent. Re trans used to be a small payment. I think its a slippery slope. Thats probably part of the equation. I think netflix is trying to buy time. You think of house of cards and orange is the new black, both good shows that many of you may watch and like. The reality is, there isnt enough content yet, original, premium content if netflix wasnt valuable or really bad quality, im not sure it is enough to make you switch broadband carriers. The Technology Changes<\/a> so quickly that the regulators cant keep up with it. Thats for sure. When netflix started they werent doing this over the internet. They were mailing things out on fedex. The technology changed. Now they dont have to use fedex anymore. The technology is likely to change before the regulators figure out what to do. Thank you, rich. Thank you. Comcast, the Parent Company<\/a> of cnbc and nbc universal. If people want to push for internet as a public utility, maybe it is be, maybe it isnt, i dont know, whatever. Once you get the government involved they can regulate content as well. David rubenstein is staying with us. I dont usually quote Ronald Reagan<\/a> but his favorite line is, im here from the federal government, im here to help you. Usually thats a problem, when the federal government is going to figure out how to regulate things and make our lives better. Its not that easy, though. More from David Rubenstein<\/a> as guest host of the program. Up next, imagine a World Without<\/a> beer. In honor of world water day, which is tomorrow, we are taking a look at an industry whose livelihood relies on h2o. Check out the first tweet from our own squawk box show account squawkcnbc follow us while youre at it. Stick around. Well be back in two. No two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor<\/a> today. Save you fifteen percent or more on car insurance. D Everybody Knows<\/a> 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 oh suzy q i like this song. My sister is suzy. Coming up, shopping should know no borders. Borderfree on going public and the companys push to connect every customer with their favorite store no matter where they are in the world. A lot more coming up in the 8 00 hour. Were back in just a moment, right here on squawk box. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets<\/a> and drive forward with broader possibilities. Cme group how the world advances. Ohoh, oh, oh, la, lala, lala, lala nanana, nanananana some things just go together, like auto and home insurance. Bundle them together at progressive, and you save big on both. Oh, ohoh, oh, oh hey, its me [ whistles ] and theres my dog [gasps] theres my steps i should stop talking. Perfectly paired savings. Now, thats progressive. David rubenstein sharing his private equity prowess. Spring is here. Retailers rushing to move extra inventory and cancelling shipments after a har be winter. Find out why your spring goods could be put on the back burner retail detail just ahead. A World Without<\/a> beer . Im letting go. Youre letting go. Im letting go. Okay, fine. He broke your beer its hard to imagine. But it could happen. What the Beer Industry<\/a> is doing to make sure you get your suddens as the final hour of squawk box begins on a friday, right now. Ill say i think ill have myself a beer welcome back to squawk box, right here on cnbc, first in business worldwide. Im andrew ross sorkin, along with becky quick. Brian sullivan is in for joe whos back next week. I saw him tweeting about his ski trip. Take a look at the futures this morning, see how things are setting themselves up. Green arrows across the board. The s p 500 a little over six points higher and the nasdaq looking like it could open 16 1 2 points higher as well. Its a quadruple witching friday. That means volume and volatility could be higher. Thank you for the sound effects. I think that was just me laughing. Oh, that was you . Yes. I see, i see. All right. When i said thank god for joes return, its not because i dont enjoy being with you fine people. These 3 00 a. M. Wakeups its rough. Its hard. Or im just getting old. Strike around for street signs 2 00 eastern. In the headlines, russian stocks taking a hit following the imposition of additional sanctions on russia by america. Vladimir putin nonetheless, though, pressing forward. Hes annexing crimea into the ukrainian region now of russia. Well get more from Nbcs Richard Engel<\/a> on that in just a moment. Tiffanys shares under pressure. Tiffany nonetheless optimisting say its proud of its recent performance. Also falling in premarket trading, shares of Athletic Apparel<\/a> and footwear maker nike. Dow component did beat street estimates with latest earnings. It warned of currency headwinds for the Current Quarter<\/a> as well as for the coming year. Russia is reacting to the latest u. S. Sanctions firing back, banning u. S. Officials and lawmakers from entering russia. Nbc chief Foreign Correspondent<\/a> richard andle joins us now from ukraine with more on this story. There are a lot of questions here. One of them is how effective any of these measures might be. Well, as you mention, theres already pressure on the russian stock market. Theres pressure on the russian currency. The ruble as well. Although today Vladimir Putin<\/a> signed officially the deal to annex crimea and make it part of russia, he said there wont be further punitive sanctions. It seems that the first round of sanctions that have come out yesterday from washington were a little bit harder than russia had been anticipating. There are threats coming from washington that these sanctions could be quite a bit more significant. What the sanctions on the table are now are mostly against individuals. Several dozen key individuals, including people very close to Vladimir Putin<\/a> have been declared pdeclare ed persona non grata. The bigger threat from washington would be to impose sanctions on entire sectors of the russian economy, entire industrial sectors, including mining and oil and gas. It seems that washington is holding back on implementing these draconian sanctions to see if russia actually invades this country and takes the south and eastern parts after crimea as well. Thats on the russian side but there are also developments on the Ukrainian Government<\/a> side. Today the government in kiev signed an Association Agreement<\/a> with europe. And this commits it to closer economic ties, closer political coordination and puts it on track to be much more of a european partner. That Association Agreement<\/a> was the deal that put ukraine in crisis four months ago. Four months ago to the day in fact when the previous, not ousted, ukrainian president , viktor yanukovych, refused to sign that Association Agreement<\/a> with europe. That caused the street protests and ultimately his ouster. Richard, some of the people who are put on russias list of who they were sanctioning, banning, included names like harry reid and john mccain from the senate. It also included mary landrieu. Shes a senator whos been pushing very hard to allow americans to adopt russian orphans. I just wonder if that has brought her political implications, too. If we should look for things to come along that line. If they cant hurt us financially necessarily, if they look like other matters like that. Of course. It is very personal for Vladimir Putin<\/a>. They want to target individuals who are involved with russia and send a message that they know whos pushing buttons in washington, who has the russia portfolio, so to speak. For Vladimir Putin<\/a>, all of this has a domestic factor. Vladimir putins Approval Ratings<\/a> according to recent polls are about 72 in favor of his actions in crimea. This is not being presented as a takeover of crimea. To the russian people. This has been being portrayed as the return of a historic homeland for russia. The return of crimea to the motherland. A lot of people in the country welcome that. They dont want to they want to also punish the United States<\/a>. Punish those who are trying to keep russia down, punish those who are trying to insult moscow in this period. Yes, i think in the selection of the names of the individuals, theyre also these domestic concerns. If you ask a followup question ill have to dial you right back on the ip because ive lost you. Weve lost richard. Thank you, richard engel. If you can or cannot hear us, we appreciate it. Lets get back to David Rubenstein<\/a>, cofounder and ceo of the Carlyle Group<\/a>. It occurred to me in 2004 you started a russian unit moscow. I think you shut it down. Have you thought about going back and would you . For private equity russia is a tiny market. There are only a few firms that have been successful able to navigate private equity. Its not an area that were likely to go back into. Its just not an area where you can buy very much. The oligarchs seem to get most of the good deals and other deals arent available to people like us. Are there other markets you wont touch right now . Russia is the largest of the bricks we wont go into. We dont find it appealing for a lot of reasons. Most of the other emerging markets were looking at are is russia a market in a sense, where rule of law stands. Can you do business in russia without having to slip some, you know its complicated there. In other words, we have to worry about the foreign corrupt practices act. We have to do this without doing things that may not be legal. Its possible for people to do things there but generally smaller deals, anything of size would probably be more complicated. David, i want to go back to washington for a second. Sure. The political environment. You saw the camp came out with a new tax proposal and one of those pieces of it was the carried interest component which we talked about for the last few years. I had a bet you would ask that question. I knew you would ask that. Youre the only person that asks me about carry interest acts. I want to know if its back on the table in a meaningful way, whats going to happen and if youve changed your position. I havent changed my position. For those of you who havent followed this, the congressman, the chair of the ways and Means Committee<\/a> who ill with be term limited off that by the end of this congress came out with a proposal. Among his proposals was to tax carried interest but not for the real estate interest. Energy was hived off. It was private equity. I think it picks up roughly 3 billion over ten years. So its a diminimous amount of money. Treat everybody the same, look at everything. Everybody thats being taxed in terms of carried interest one way should be taxed the same way in the future, venture, private equity, do it the same. I agree. This has been in president Barack Obamas<\/a> budget many times. It has been. Republicans have been defending against it for this whole point. Very few republicans have endorsed what congressman camp proposed. Lets have a comprehensive look at everything. Youre a democrat. Im a capitalist as well. Thats because im a democrat, doesnt mean i dont support certain things. A lot of democrats dont support the changing in the carried interest rules. We dominate the world in operate equity. Lets not tinker in it without making sure we know what were doing. 55 of the carried interest taxation is paid by the real estate industry. Thats where the real money is. Private equity pays a modest amount of that. I think we should include them, too. Everybody should be treated equally. Lets look at it comprehensively. I have not changed my position. Im glad i can help you win that bet. I dont know if you get a billion dollars like the brackets. Did i win that bet. Coming up, in honor of world water day, which apparently is today, we are taking a look at an industry whose livelihood relies on water, not just human existence. But beer. And then are pensions under pressure thanks to janet yellen . Well find out. Big bracket busters yesterday. Which games will be worth watching today as the first round of the ncaa tournament winds down. My own bracket, lets go cornhuskers. We need nebraska with an upset of baylor today. Were back after this. To a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Welcome back to squawk box. A big media deal this morning. Media general is buying lin media. 49. 5 million shares of the stock. The approximate per share value 27. 82. The combined company will own 74 tv stations in 46 different markets. Attention beer drinkers, this next story is for you. The drought across the western part of america is having a disturbing ripple impact. Guess what . You cant make beer without water. Somebody that knows something about beer, sara eisen. She joins us now with that story. I have a light one for you, brian. Im not a beer drinker but i was surprised to find out 09 of beer is actually water. By mass, everything from the crop to the can. The Beer Industry<\/a> is realizing it cannot afford to ignore this problem of water scarcity. Millercoors has been way out in front of this. 3. 9 barrels of water for every one barrel of beer. It sounds like a lot. Its way less than the industry average. This is 51. Millercoors increasingly focused on the barley farmers. They work with 850 barley farmers. We went out and we visited actually the growers meeting in the st. Lou in san luis valley. They were hearing from millercoors people, water experiments. We met jamie hart, a farmer than been suffering recently because the surrounding mountains around him havent received as much snowfall, which means less water trickling down into the rio grande water. Which is the main source of his water basin. Have a listen. Water is getting to be more precious every day. We have to be able to conserve that to keep the livelihood we know going. Millercoors hired eight eegronomists. Theyre looking at irrigation system systems, even testing ways to breed barley that would be droughtresistant. We changed out sprayer nozzles. We were able to save over 400 million gallons of water in three years. That woman is in charge of sustainability at millercoors. This company is not alone. The entire industry is facing this, working at this. They say theyve reduced water in the brewing process by 19 in 2009. Its just not the Beer Industry<\/a>. Increasingly industries around the globe, even soda companies, are realizing that theyre going to have to start conserving water because its the life blood of this industry and its going to be kreincreasingly becoming an interest. Doing a live shot from her kitchen. Unbelievable. Theres a pretty nice beer selection. Im not a big beer drinker but would you hold up for me some 16 ounce what is that. A chose a light version for you. Not a silver bullet. Coors light. Good company, not my style. Probably not your favorite. Humans are also apparently 90 water. How is the feds tapering impacting the nations pension plan . Steve, welcome. Thank you. David rubenstein probably loves some of the changes going on. Whats happening with all the craziness, you need to have the money for your retirees, period. Are the things that are happening driving you into more longer term investing like operate equity in Carlyle Group<\/a> . Let me explain me. I did spend five years with the teachers retirement system of texas helping them manage the pension plan for the teachers. As david has talked about, were a great client and customer of davids and supportive, when i was at trs, its very important. Pension plans in general are moving away from the standard 60 40 equities bonds. Theyve also shortened their duration. Its probably four, maybe five years. Where the barclays ag is 5. 7. Theyre short duration, trying to find that yield. They moved into emerging market debt and highyield bonds. I see the overall plan is that theyre moving away from the standard 60 40 more into alternatives, private equity and real estate. The 06 40 being 60 stocks, 40 bonds. Theyre moving into 5, 10, 15 private equity where they can get paid for a longer duration, a longer time horizon, a Value Creation<\/a> and the fixed income, 40 , a lot is moving into real estate. Does that come with higher risk and are you worried about the pension plan system in general . Just down the road where you get back to things, maybe its not quite the same growth youve seen to this point. Are you worried about Pension Plans<\/a> that will wind up in trouble . I think there will be but most Pension Plans<\/a> are underrisk. They done have the enough risk. They dont need liquidity this year, next month, next year. They need liquidity over a long period of time. If they dont move into more risky assets, theyll never make their 8 actuarial. Thats how much they figure they have to gain each other to pay out what they owe . Yes. The Fee Structure<\/a> is much higher than what you get elsewhere. You put some pressure on some of that Fee Structure<\/a> when you were at texas. Do you see it changing materially . I will go back and say i didnt put pressure on the Fee Structure<\/a>. I put pressure on transparency, governance and alliance of interest. Carlyle is the leader in one of the companies that embrace this. About transparent subgovernance and alignment of interests. The market fee should be the market fee. In an age of walmart, in the alternative space its one the few that has not really been touched in a meaningful way . You may push back. I dont know. There has been some change in the Fee Structure<\/a> somewhat. There are preferred returns that are very high today. That would be you could say a a very favorable thing for limited partners. If you want a higher rate of return, you generally pay for it. You want a better suit, youll pay for it. In private equity you get good returns and pay for it. The biggest problem is this, the Pension Funds<\/a> in the United States<\/a> are roughly 3 trillion underfunded. Were not going to be able to honor all the commitments that have been made to teachers, firemen and policemen unless we get higher rates of return. They are trying to get higher rates of return to honor their commitme commitments. Some states have alternatives as highs a25 . If we were to tax people more we wouldnt have to do this. Some states both republicans and democrats have been doing this for years. Thats correct. They havent been putting in the money theyre supposed to along the way. We are getting the pensioneer s how do you feel about the Pension Funds<\/a> in canada that have effectively tried to go into the business of equity and alternatives and bypass so some degree the traditional firms like carlyle . Its a fabulous idea. And now im on davids side with cap Ridge Partners<\/a> we are on a mission to take the private pension, the public Pension Plans<\/a> capital, put it in fiduciary investments, help them meet the payroll and obligations for the Pension Plans<\/a>. I was just at preia. Preia is the Pension Plans<\/a> real estate association. All the Pension Plans<\/a> in the world investing in real estate. One of the cios of a major plan said they paid out 400 million a year in Asset Management<\/a> fee. Their total salary of star is 4 million a year. Thats a very important point. In canada, like the canadian Pension Plans<\/a> their Senior Executives<\/a> paid a couple millions a year. You can only pay College Football<\/a> coaches that much, david. Youre exactly right. You cant pay the people in charge of saving peoples retirement. You have to pay the College Football<\/a> coach. Dont steal the money for the football team, david. They are very talented but in the end they have to support their families. They tend to leave because theyre not getting paid enough. There are many people that have tens of balls of dollars at their disposal and theyre being paid 100,000, 200,000. The head of private equity for teachers system is leaving to go to harvard. The head of real estate, eric lang, will take over both private equity and real estate. Both are fabulous people. The state of texas is so lucky to have both of them working for them but the market is the market. Rich is a wonderful man. Hes very talented. Thats a big loss for texas teachers. Its a big gain for harvard. Youll see that happen more and more. Thank you for being here. Thank you. Retailers may be late for spring a glut of inventory st l stillistill exists. Some are cancelling their orders. Gunderman group is a go. Yes not just a start up. An upstart. Gotta get going. Gotta be good. Good . Good. Growth is the goal. How do we do that . I talked to ups. Theyll help us out. New technology. Smart advice. We focus on the business and they take care of the logistics. Ups . Good going. We get good. Thats great. Great. Great. Great. Great. Great. Great. Great. Great. all great i love logistics. Theyre playing basketball welcome back to squawk box, everybody. You were so confident in your bracket, hoping to win the office pool and maybe even get lucky and take down that 1 billion prize. One game in and most of us are out of the running. Way to go, dayton. The flyers beating ohio state in a nail biter. Four seconds left. Ohio state had a chance to win only to see the ball bounce off the rim. Dayton wins 6059. Good job, guys. If you were watching the president s bracket picks you could have taken the harvard crimson along with them. Harvard moves on to play saturday and will be facing the winner between number four Michigan State<\/a> and number 13 delaware. Here are games to watch. Duke gets things started against mercer at 12 15 today. David rubenstein will be watch that closely. Creighton takes on ul lafayette and tonight it is undefeated Wichita State<\/a> taking on cal poly. U. S. Retailers cancelling a ton of spring orders from factories in china. That story, next. As we head to a break, take a look at equity futures with those green arrows. Well back in just a bit. 2 aleve for. Ol in s. All day relief. Hmm. [bell ring] roll sound action [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim from td ameritrade. This is mike. His long race day starts with back pain. And a choice. Take 4 advil in a day which is 2 aleve. For all day relief. Start your engines welcome back to squawk box this morning. Lets check out the futures ahead of fridays session on wall street. The dow, nasdaq and s p all on track for their biggest weekly gain in five weeks. Earlier this hour we told you about a media deal, media general buying lin media in a cash and stock deal worth almost 28 a share. That boosted that stook of lin media and others in the tv space. Shares sa s of semantic has fir their ceo, dave bennett. The move was not precipitated by any event or impropriety but thats a company thats gone through two ceos in two years. Thats right. Lets talk about the retailers. Retailers are slashing prices, trying to unload built up inventory and make room for spring products. Apparently factories in asia are seeing massive order cancellations for spring goods as well. Joining us now is jan niffon. You emailed me yesterday and talked about what you were seeing yesterday. I was under the impression, we got through the winter season, if you want just unload that stuff. But if they are seeing order cancellations for the spring season, thats another story altogether. They dont want to wait till easter which is coming late this year to figure out theyre wrong. Easter was, like now, last year we were starting to sell already for easter because it was so early. Theyre up against that. They dont really know what happened in january and february. They think the weather was a problem. But in order to be sure that theyre not backed up on inventory, they started cancelling spring goods, not fall goods. Theyre confident about the back half. I have a friend in asia that does what i do over there. Hes surveyed a bunch of the factories, about 80 factories and he said cancellations are the highest theyve been since 05. Ooh. That surprised me. Thats not theres a thousand factories in asia making apparel. These are apparel factories. It will be a good thing if you want to buy special orders, if youre tjx, ross, burlington coat, steinmart. Pricing will look like the off price channel than the fullprice channel. Were seeing that. We saw averages of about 55 off for president s day. Were back there now at 45 off of regular price. Weve seen aggressive discounting already for spring. Whos cancelling, the Big Department<\/a> stores . We dont actually know whos cancelling because they wont tell you that sort of information. Thats really all there is to cancel, the Big Department<\/a> stores would cancel. Maybe a gap. Inline guys that are big enough, can do that. When it says 45 or 55 off, off of what . Are they losing money. If they can sell it at 30 off, they make full gross margin. Any time theyre deeper on 30 off, it doesnt mean theyre losing money. But theyre not making what they anticipate. Normal margin is 40. 6 . They started this year, gross margin, this year and last year. If youre in the Specialty Store<\/a> business you need to be at least 55 gross margin. So you know, it varies among the various players. If youre costco you can make a living on 7 gross margin. Its a totally different model. If youre looking at the people that sell apparel all the time lake macys, penniipenneys or k. If i see macys 40 off sale because they have to dump all this stuff, you have to presume they are still making some money on what theyre saelling. Absolutely. This whole game when youre investing in retail is expectations. Are they going to do as well as you thought they would do. It will be a tough first quarter. Where do you shop to get bargains . Where do i shop to get the bargains . Im a macys shopper because i worked for them and i get the discount. Whats your discount . 25 . Can i ask you a quick j. Crew question . Absolutely. Someone was in talks to buy them. Thats no longer on the table. Fast retailing has loved j. Crew for at least 15 years. They think that j. Crew does it all right. Theyre huge fans of mickey drexler. I wasnt at all surprised they wanted to buy them. I was a little surprised that j. Crew might want to sell to fast retailing. But i think it would be a great merger. Fast retailing is a big powerhouse, worldwide powerhouse. Theyd like to have a big strong presence in the u. S. Unicloe has been big for them but i know theyd like to own j. Crew. We were talking about walmart offering deep discount, much like youd see on black friday. Is walmart going to crush the competition in the spring once again and force all of these guys down to bring their prices down to match . Ive competed with walmart my whole life. We always said walmart takes out the bottom. When walmart takes out the bottom, compression happens all down through the chain and everybody has to price more aggressively. Remember, walmarts biggest competitor is not really target. Its not really the dollar stores. Its really amazon. Amazon runs at zero gross margin for all practical purposes. They have to be aggressive on price. Do you think jcpenney could be a private equity target . Nothing would paek make it impossible. Its a big company and would take a lot of equity and debt to do it. I dont know if anybodys working on it but i wouldnt say its impossible. We have a bet on street signs that the stock will hit 10 by the end of the year. Im giving you a chance on National Television<\/a> to back out of your bet. We made that bet 5. Now its at 8. 50. Im feeling about about my bet. Cocky. If you were an investor in retail stocks, which youre not, what would you buy . I really like, if youre looking for best in class over time retailers, i lost costco. I think theyre the best retailer in the world. Macys owns their space now. Theyre a great retailer. I love gap because theyre going to the omni channel world. Theyre the only one inside the mall i feel great about. Except for footlocker who turned in great numbers, therefore nike turned in great numbers. Its a destination. You cant go wrong with foot locker. I like people who i think are winning the game who own the space, Dicks Sporting Goods<\/a> owns the space. I love dicks. The biggest threat is online. I think they can win that game online. You dont buy over the internet that much . Im a huge Amazon Shopper<\/a> and i believe that amazon is the greatest threat to retailing. Number one, investors dont require them to make money which is a gift. On the other hand, i think walmarts the greatest threat to amazon because walmart is moving into omni channel retailing. Theyll distribute out of 3,000 stores, theyre closer to the customer than amazon is and they dont mind fighting on price. Thanks for joining us. Great talking to you. Thank you. Paving the way for Global Expansion<\/a> of u. S. Retailers. Border free helps some of the nations Biggest Companies<\/a> with logistics and ecommerce. Theyre going public today. The ceo joins us right after this. Geico motorcycle. See how much you could save. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets<\/a> and drive forward with broader possibilities. Cme group how the world advances. Is. Welcome back to squawk box, everybody. We have news just in on blackberry. The company has struck a deal to sell the majority of its real estate hold innings canada. This deal involves more than 3 million square feet of space as well as vacant land. It will be leasing back a portion of that space once the deal is completed. Blackberry did not say who the buyer is or the deals terms but says it will do so. Give us more details, once certain conditions are met. Border free, the company that allows u. S. Retailers to Reach International<\/a> customers priced its ipo at 16 a share. The Company Begins<\/a> trading today under the brer. Joining us now to talk about the ipo and the growth of International Ecommerce<\/a> market is michael de ssimon. Border free works with leading retailers to extend their ecommerce business into 105 territories around the world. We do everything from localization at the currency level, helping to manage payments and statutory things like export compliance, import compliance, transportation, the payment, all the heavy lifting necessary to help retailers. What kind of retailers do you work with . We work with macys, j. Crew, newman marcus, guilt group. You can pretty much name a retailer and more than likely were working with them. Do any of the retailers do this on their own long term . Is that a threat to their business . I think the key to the business is scale and operating at scale, really i think gives major cost advantages in terms of how we work with retailers. We offer them really good lri, maybe just as important or maybe more importantly, focus on that brand. Who do you compete with . I think my biggest competent it igs is probabl competitio yourself. Increasingly we had retailers who have chosen that path move to our platform. Interestingly, we compete with not selling internationally. Most internet retailers in the u. S. Still dont sell internationally. Right. In terms of this ipo, what are you going to do with the cash . Invest in growing our business. We think its a great time to be expanding. We think this opportunity extend beyond u. S. Retail outbound and starting to talk to International Retailers<\/a> and we want to be able to use the cash to accelerate that. Did you take advantage of the new s. E. C. Laws in terms of going public and the disclosure process . You mean the jobs act . Yes, absolutely we did. Weve been at this for a while. You dont go public overnight. We took advantage of it. We think its terrific for businesses like ours, smaller market caps that really helps you get through the s. E. C. Process. In a way, when you actually publicly file, youre ready to do so. Do you think prior to the jobs act you couldnt have done this . I think we would have taken a different approach. You had leading Venture Capital<\/a>ists invest. How are they doing on the ipo . Down the road i think theyll be happy with the followon in terms of return on their investment. Theyve been with us a long time. In terms of looking at valuation, what do you make of whats going on in the marketplace . Repeat that question. I was just curious, what your take was on terms of valuations in the market . I assume your decision to go public now, given those valuations and the ipo window. That figures into the timing. You dont do this overnight. Weve been at it for over a year. Its something you plan and of course the Market Conditions<\/a> are helpful. Were doing this because its the right thing for our business and customers. Are you getting emails yet from our High School Classmates<\/a> telling you they always knew you were brilliant and going to be successful. Ive got a lot of emails within the past 24 hours. We wish you luck. Thank you. We get down to jim cramer at the New York Stock Exchange<\/a> as we get ready to wrap up another week of trading. So far its been a good week. Squawk box coming right back after this. [ cellphones beeping ] [ cellphone rings ] hello . [ male announcer ] over 12,000 Financial Advisor<\/a>s. Good, good. Good. Over 700 billion dollars in assets under care. Let me just put this away. [ male announcer ] how did edward jones get so big . Could you teach our kids that trick . [ male announcer ] by not acting that way. Ok, last quarter. [ male announcer ] its how edward jones makes sense of investing. Welcome back to squawk box, everybody. Weve been watching the futures this morning. After the big gains we saw yesterday, after better than expected numbers from the philly fed, youre seeing green arrows this morning. Dow futures are up by 36, s p indicated to open up about 6 points, nasdaq higher by close to 17 points. Lets get down to the New York Stock Exchange<\/a> where our good friend, jim cramer joins us now. Good morning to you, jim. Good morning, andrew. We can go about 100 directions this morning. Weve had a couple different numbers come out from a number of companies. We had the banks yesterday with the stress test. You can take it from wherever you want to go with it. Lets start with border free, where you just talked to the ceo. Theres an incredible thing going on at border free, amber road, paylocity. People think, i havent missed these stocks, i can buy them wherever i want. At the same time, you have tiffany, nike, they actually report these numbers arent that bad at all. These stocks are selling off. You have unproven stuff thats going higher. The proven stuff going down. People say you know what, i missed nike, im or lets just sell it and the banks have done nothing at all and suddenly they get that the yield curve is going to change and theyll make a lot of money. This a reversion to craziness i think, frankly, not for the banks ipos is coming public and youll find that most of the companies you just cant of what was that, what was the amber road or border free. I asked about the jobs act and whether they could have come public otherwise and they suggested they could have but do you think its been a good thing or a bad thing for capitalism for Capital Formation<\/a> for the ipo market, how did you think about it . I think reet now were in this window if i said something bad about capitalism and the jobs act, people would say its heresy, oh, my god, how can you not be in amber road or paylocity. Look at salesforce, look at workday and concur, these are really Great Companies<\/a> that are growing really fast and they are being thrown away. In return theyre buying these companies. Look at the big biotech companies, theyre being thrown away and in turn they are buying biotechs that have one product. And its pure froth with the ipos and youll regret it. I dont know if ill put him on the spot. What do you think of private equity firms right now, carlisle, blackstone, as stocks . Well, you know, look i was a former Hedge Fund Manager<\/a> and all i can say is they make a lot of money but im not going to say whether they are good or bad for society because to me good for society is a company that creates a lot of jobs im sure carlisle say they create a lot of jobs but i spent the week nordstroms and zillow and Seattle Genetics<\/a> and they create been joes and are very creative and when you knock private equity they come at you why they are great, they help Pension Funds<\/a> they dont really you know, theyre all good theyre i mean, they are everything other than Mother Teresa<\/a> and im not going to criticize because im done taking heat that saying private equity may not be as good as real equity. There i said it, okay, you know, i im a throwback. I look for companies where a guy like Howard Schultz<\/a> he starts with a little coffee shop and he does an incredible thing and hes got 200,000 people who work at the company and its remarkable and i wish private equity would start a lot of Companies Rather<\/a> than reinvent them but you are not allowed to say anything bad about private equity or carried interest and people attack you for it. Ive been attacked a lot this week. Private equity includes buyouts but includes Venture Capital<\/a> and Venture Capital<\/a> has started a lot of Great Companies<\/a> and they get taxed on the same way as private equity people that do buyouts. Well, okay, fine. Im not fighting. Im not fighting. And you were in hedge funds i didnt take the carried interest. Hedge funds often use the carried interest model as well. I didnt like it and i didnt take it. Youre a great american. No, im not a great american. Im just a guy like everybody else. Because its my last day on the show, you know, for probably ever by the way, with my performance this week, but i got to ask you about something thats even more controversial take the raging cajuns, thats the most controversial thing i have. Baylor and nebraska. Im going baylor for final four. What . Without taking yes, i am. Sometimes you have to have a long shot. This is fine to talk about. The other stuff is too hot. Too hot. Ipos are too hot. The private equity is too hot. What about your harvard boys with the victory yesterday . I said dont go with emotion and that was a mistake i should have gone with emotion. By the way, north dakota state i had them two years ago to go all the way and then yesterday i forgot about them that was a mistake, too. Jim, we will see you in a few minutes on squawk on the street. Too hot. Knowing jim for many years he was one of the first people that put me on tv for larry kudlow and i would say that both of you are great americans. I will leave it there. Youre even nicer than i am today. Its true. Im trying to go out on not a so level. I love jim, smart guy. I cant go baylor final four. Baylors going to lose to nebraska so how are they going to make it to the final four. Zing coming up more market thoughts with our special guest David Rubenstein<\/a> of the carlisle group. And the ceo of lane bryant will join post nine to talk about the cancellation of orders because nobody could get to the doggone store. And be sure to join becky for on the money. How safe is the car you drive . Whether or nots watching the automakers . Are they asleep at the wheel . Catch on the money this sunday 7 30 p. M. On cnbc or check your local listings. Squawk box back right after this. R this. No two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor<\/a> today. Welcome back, everybody. Lets get back to David Rubenstein<\/a> from the Carlyle Group<\/a>. Jim cramer laid out an argument for why he thinks private equity isnt the greatest place. That would certainly seem to me to be the populist argument weve heard over the campaign. Its probably a difficult time to be a private equity guy. What do you say back because there are large segments of the bess population that have kind have been hammered out private equities and the banks are places that probably havent been all that fun to be. Venture capital is a form of private equity and Venture Capital<\/a>ists are well regarded and theyve started many Good Companies<\/a> in the United States<\/a>. Private equity tend to buy companies that have trouble and try to save them from going under. We create a lot of money for our investors often who are public Pension Funds<\/a> so i think the industry doesnt really need to be defended unduly. Its done a good job for people and employs a lot of people, i wish we were better at getting our message across. But private equity is a great industry for the United States<\/a> and people around the rest of the world they want our expertise, when i go to china and other Foreign Countries<\/a> they want to learn what theyve done in the United States<\/a> because they want to make their country more efficient and i think were dominant in the private equity world. You used a lot of your money for philanthropy namely in rebuilding the Washington Monument<\/a> and buying the magna carta. What is next on your list of documents . And then traditionally giving them back to places like the smithsonian and others. There are rare copies of the declaration of independence and i own a few and i might buy more and i own a few copies of the emancipation proclamation one in the oval office and theres a few other documents that lincoln signed and i might look in to them again. Do you have people scouting . I get calls when things are available but im not obsessive compulsive about it but if something good comes along i might buy it. Thank you very much for joining us today. Its been a pleasure talking to you. My pleasure, thank you for inviting me. Brian, happy to have you here, too. I lovedving about it except for the hours. We loved having you. 2 00 eastern street signs with mandy drury and some other guy. Thats you. Thank you, again, for beefing here. Becky, well see you on monday. Watch on the money over the weekend, everybody. David thank you for being here again. And squawk on the street starts right now. Good morning and welcome to squawk on the street. Im scott wapner with jim cramer live from the New York Stock Exchange<\/a> today. Carl and david are off. Lets take a look at the futures and how we are shaping up on this friday. Theres a look at how the dow will open up 42, implied. The s p and the nasdaq look to continue gains of the last couple of days. Take a look at the ten year. Thats the thing that really hasnt budged much since the fed. That being the yield. 278 is where the tenyear yield currently sits","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia601308.us.archive.org\/7\/items\/CNBC_20140321_100000_Squawk_Box\/CNBC_20140321_100000_Squawk_Box.thumbs\/CNBC_20140321_100000_Squawk_Box_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240620T12:35:10+00:00"}