Transcripts For CNBC Squawk Box 20130228

Todays top story, theres only one. The dow rallied more than 300 points in the last two sez sessions. The blue chip index is now within 89 points of its alltime record rose. Europe is seeing a lot of green in early action, as well, on thursday. February 28th, 2013, squawk box begins right now. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and Andrew Ross Sorkin. Our guest host this hour is sentinel president and ceo christian swake. Good morning. Thank you for being here and joining us. As you said, it is a good day to here be here. Weve been watching the u. S. Equity futures because of all the actions yesterday. This morning, you did see a few green arrows, but no massive move at this point. The magic number is 14,164. 53. That is the record closing high for the dow. It was reached back on october of 2007. The bulls a number of catalysts for mondays sharp sell down. Some are calling this the bernanke bounce. The stocks soared after the twoday testimony on capitol hill. The evidence thus far is that the Housing Market is hit the bottom and is recovering. Weve seen rising prices over the last year or so. Were seeing some significant increases in starts. And sales. Foreclosures are still too high, but theyre coming down. The number of people under water on their mortgages is coming down. So were still far from where we would like to be. But the evidence is that the Housing Market is strengthening and that low Mortgage Rates are one reason for that strengthening. Although a long period of low rates could encourage successful risk taking and continued attention, the developments is certainly warranted. To they point, we do not see the potential costs and some risk taking is outweighing the benefits of a stronger growing economy and more rapid job creation. We are seeing positive reaction in europe and asia today. The nikkei was up by 2. 7 , a gain of over 300 points. The hang seng was up by almost 2 22 . In europe, youre continuing to see that strend with modest gains there. Right now, germany, the dax is up 0. 5 . Less than 0. 25 for both the ftse and the cac. Were going to talk more about the situation in europe with a special squawk newsmaker in the next hour. Ecb member nuwall nnowotny. The sequester will go into effect at midnight unless Congress Takes action. It looks as though there will be no effort to stop the automatic cuts before they kick in. Our squawk newsmaker on this topic this morning is house budget chairman paul ryan. Hes going to be joining us in a cnbc exclusive at 8 00 eastern time. And this is the first time well be talking to him since the president ial election. Maybe we can have a sequester every week and the markets will be at 30,000. Markets, ooh, theyre really worried about this. Dont do it, dont do it. And you cant say this time that theyre expecting a deal. To happen at the last minute. Thats not what it is. Theyve been invited to the white house but not even until tomorrow. Theres no expectations. The next big issue unless you believe that the markets believe that in the next two or three weeks things get worked out and the real deadline is not tomorrow but in three weeks time. But this is a slow im a little bit miffed now because i looked at the journal and it has a piece today, the reason this was done is both parties put off spending cuts. We will cut spending. We promise. We will do it. And they both agreed to do this. Now it was a obama is not asking to do targeted spending cuts. Hes asking to do a deficit reduction package. It has moved. It has moved. And the u. S. We talked clearly about it and and you ask the people in the u. S. , what about sequester . I just want to see that we can cut spending. The reason we its symbolic at this point. It is. Its only 44 billion by tend of the year. I would agree. I would think that if you hadnt looked at what you had done over the last couple of months where it had been partisan politics and where republicans feel like they got the short end of the stick, you might be able to do a better deal right now. But every time one side feels like its lost, it has to come back and make up ground. Government has grown 20 over the last four years. Were trying to cut it marginally. But you know as well as i do, its Discretionary Spending thats the big problem. But theres still hundreds of billions of dollars in Discretionary Spending. But theres 200 billion in Discretionary Spending you could still cut. When you start hearing about what theyre threatening, the department of agriculture will no longer be making meat inspectors available. Thats what the white house says because he has a choice of what he can put in. They have to go across the board on all of these things evenly. Lisa kept saying, will i accept a 3 cut in my hair . Yes. You dont have to pick sides or the front. 0. 03 of an inch . You cant even tell. And if i was a republican, they would still say, oh, the grand bargain, we still want to do it. Its not happening. If you give the deductions, you get rid of carried interest, you give them all that, then thats what youre finally negotiated on if thats what they could do if they hadnt given everything on the higher revenue. This was supposed to be spending cuts. This was supposed to be agreeing now, if he had said i want to do this surgically, i dont want to do it across the board, but hes not saying that. Hes saying i want to raise taxes again and but its a deficit reduction package. And you say, well, the public is for it. They dont i think its crooked. I think its dishonest and im like woodward. That is washington. Well, no, its yeah, it is. That is washington right now. Woodward said this is the biggest madness. A very senior white house aide said to woodward, youre going to regret this. If you remember when we ask him about what woodward said, ive known him for 20 years and hes never been more wrong. I should just come to you for the behind the i shouldnt say i dont know who it is. I should say, andrew, who was it . You know. In fact, ann was telling us. Ackman is really smart, but if he gives me any investment tips, were going to its almost like his very first big, you know this, too, was a retail deal. And it keeps coming back to retail. Target barnes noble, borders, they make things people dont use any more. Well talk about that one in a minute, including that vanity fair piece. Theres a great piece. The next battle . Theres some delicious quotes in there. Lets talk beyond the markets and the sequester for a moment. A few other headlines in the news this morning. The wall street journal, this is a big one, reporting that boeing and its lithium ion batterymaker at odds about what should be included in a fix for the 787 dreamliner. The boeing commercial airplane ceo is now telling reporters in tokyo that there was no dispute between the company and the batterymaker. Boeing proposed its dreamliner fix to the faa last friday. In other news, and this one is kind of crazy, investigator ves widened a probe of potential Insider Trading ahead of a buyout in heinz options a day before the deal was announced first attracted some suspicion. The New York Times reported that regulators are focusing now on a complex derivative debt rooted through london built on a recent regulatory action mounted towards a Goldman Sachs account in switzerland. The product in question is now known as a contract for difference. It allows investors to simply bet on changes in the price of a stock without owning the shares and its not an option, either. Such contracts are not apparently regulated in the u. S. , but they are popular in br britain. And Goldman Sachs knows who put this trade forward in switzerland. And wont tell, right . And will not tell because the swiss laws say that Goldman Sachs is not allowed to even tell regulators in the u. S. Who actually put the trade through. Thats crazy. Theyll fold on that. If the s. E. C. Or the u. S. Regulators come hard on the swiss, theyre ka partnership ewe late. The swiss will . Yeah. Theyve been under the gun so much in the last five or ten years, banking secretessy has loosened up. But its not going to be pressure on goldman. Its going to be pressure on the swiss. It will come through the s. E. C. And if they need to push hard enough, theyll find out from the origin of that. Apparently Goldman Sachs has hired lawyers to defend itself, to effectively defend the anonymous they have to. Theyre in a bad situation. Why would you allow yourself to get that that position where youre making trades that but ultimately the company is going to prevail over an individual. It is official, the senate has confirmed jack lew as the new treasury secretary. Senators backed the former white house chief of staff by a vote of 7126. All 53 democrats voted in favor and thats probably not much of a surprise. Also, sears quart ily results crossing wires just a few minutes ago. The retailer reported adjusted earnings of 1. 12. Revenue is expect than expected. That stock is up by 4. 5 . We talked about stocks at the top of the show, but lets look at the broader markets. Oil was down fractionally this morning, down the 3 cents. The tenyear, smoothing at 1. 8837 well take a look at the dollar. I dont know what the italians talked about yesterday. The day before they were saying some funny things. The dollar was up across the board yesterday. The guys making the coalition or trying to make the government were disparaging one another and can saying youre never going to be in this government. And we didnt have that before, but lets check out gold finally which gave back a lot of the gains that it and getting a little more volatile on what has been happening with it, down about nine points or so today. Right now, its time for the Global Markets report. Kelly evans is standing by in london. Kelly, good morning. Becky, good morning. Just to pick up on joes point, today was actually the germans who were doing some name calling about the italian election. In fact, it was policymaker steinbrueck who suggested that clowns were Silvio Berlusconi and beppe grillo. As a result, the italian president canceled his meeting last flight and is now meeting today with angela merkel. This is one election reverb rating and causing problems for policymakers. More broadly, take a look at the italian markets. It is the red spot. Down 0. 4 . This has been key to trade both with the euro and generally with u. S. Features futures this morning. So down about 0. 4 . It was down about 0. 6 . At those levels, you started to see u. S. Futures turn negative. It looks like were going to be able to hold up here. German unEmployment Data only that and can cpi data, the main releases this morning. German unemployment adjusted at 6. 9 held steady in january. The cpi fell on the month but was up 2 year on year. Its spurring talks about a rate cut. Quick look at the bond space next, this is where where he watch for policy cues. Were seeing a rally. Were seeing yields slightly lower. No real signs of concern emanating from here this morning. Turn quickly to forex and the euro dollar which was trying to continue to hold its ree bound, thats not the euro dollar. We are at 1. 5186 for sterling dollar. Sorry. Were over here at 1. 3109. Giving up about 0. 2 this morning. The nikkei, if you want to talk about where the outperformance was in the overnight session, nikkei in japan up almost 3 on a day when the yen didnt weaken that much. Its strengthening. Go figure that one out. Back to you. That may take me a little bit. Thank you very much and we will see you again tomorrow. We have two other household losers. Jcpenney reported a much larger loss than expected in the Fourth Quarter. In fact, that company los lost 500 billion over the quarter. The street was only looking for a 17 cent loss. Revenue missed the mark and this could be the biggest concern. Samestore sales fell about 32 during the quarter. Analysts were looking for a drop of a minor 28 . The biggest sales drop that weve seen since the ceo ron johnson announced the grand Transformation Plan 13 months ago and, guys, you thought these lessons would get smaller and smaller just out of the fact that youre dealing with a lower base. Right. These companies have sales down 32 is going out of business. And to see saelts down like that four quarters in a row. Yeah. He said the last quarter when the earnings were so miserable that they cleared out everything, that thats the whole point of what was happening is they were clearing out of inventory, clearing out all of the old stuff to bring in the new stuff. This is the same argument theyre making saying now we have cleared out the stuff. The problem is, theyve cleared tout shoppers. I want to go back to the pin. Yeah. The christmas pins. Yeah. The promotional pens. We had a box and said this is going to do it. You said buttons are going to be you see, when the make the buttons, the buttons never we dont have the tape to spin off into the ether but we still have those buttons and we could be wearing those buttons today. Here were the jcpenney buttons. This is what you posited as ron johnons genius. I still have them. We could have them like flares. Get ner is going to be on. The economist with suspenders. Tgi friday flares. Dont you wish we had some of those buttons . We dont. The crazy thing is, i saw an ad for jcpenney yesterday. Their ads are good. The ads are great but i dont even know where theres a jcpenney around me. But im not a crazy shopper. Ive been in a walmart this week and a sears in the last week and a half. Do we automatically do a stock quote of macys after this . We showed the two charts. But isnt it some of the 32 , arent they going, well jv just move those shares to target . Groupon was down in after hours trading. At one point they were down by almost 30 . That company losing a quarter of its market value as it posted a loss of once in a share. Analysts were looking for a small profit, i think 3 cents a share. The Company Revealed that it began to take a smaller cut of revenue on daily deals before the holidays, saying that it sacrificed revenues and profits to track and keep the ones they have. Groupon offered the street a disappointing First Quarter revenue outlook. Coming up, can we call a twoday market rally a bernanke bounce . How many times can you rally on the fed . I mean, we have done it dozens. This is the reversal of the f on omc minutes. Weve been rallying. Yeah, but weve reversed on those already last week. We came back last week when andrew was the first who said at first dins meet. But bernanke calling this week . I guess so. But sooner or later, the fed could print money and buy s p the. No, they cant do that. They can. They cant. Legally they cant. Japan is coming close. But well, we had to discuss you have the coins. They can only buy treasuries and mds. But they can put money in the bank. Theyre actually printing money. Their money supply didnt change at all. Its money thats out there already. Weve got them doing it until at least the end of the year. Yeah. But certainly Asset Classes have gone up. In japan, theyre buying all kinds of different stuff. Not yet theyre not. Reits . Not in any great youre ruining our whole discussion from yesterday with the guy that was on. Back. I was going to tri of your retailer over there that might be getting the same whats the one where you have tea . Harris. Were going to have mark vitner. Hes going to be on and were going to talk more with christian. Warren buffett is going to join us live on squawk monday morning. We are fielding questions for the oracle of omaha. Email and ask cnbc. Com or tweet. I think were going up because of the sequester, not bernanke. That starts at 6 00 a. M. Eastern. [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. But feel alive. The new cclass is no exception. Its a mercedesbenz through and through. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Through mercedesbenz announcer at scottrade, our cexactly how they want. T with scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. Welcome back to squawk. Lets get the National Forecast from the weather channels reynolds wolf. Hey, guys. Were looking at a bulls eye in parts of the northeast. Scattered showers in the northeast. Thats going to end by mid day. Some of the heavy snowfall will be in up state maine. We could see up to 3, 4, maybe 5 inches of snowfall before all is said and done. The center of the u. S. , it is cricket city. 37 in kansas city with clouds. 31 in minneapolis. And back out west we go, rain in seattle. And it, look like partly cloudy skies for much of central and southern california. Now, what about travel . What can you expect today as you head out to the airways . At a couple of the airports, you could see some delays. Minor delays delays expected in new york. The mix of travels. A mix of rain and is snow in spots lot of cleveland. There you go, guys. Lets send it back to you in new york. Reynolds, we were just talking about sorkin on the best dressed list and you may not be on it, but this is the guy that might replace it. Loot him. Thank you so much. You know what . I think he knew he was going to be back on squawk today. Its been a while and you said im going to be back on squawk box. Got the pocket square going. Representing. And the hair is high. Tight today, too, right . When was that done, yesterday . High and tight. My dad, god rest his soul, was a high and tight man. Do you miss us on the days on every day. A day without squawk box is a day that is not worth living. How about that as a commercial . Oh, wait, now hes laughing. Yeah, he is. Thats sarcasm. Thanks. And we cant repeat often enough this morning, the dow is less than a hundred points from an alltime record close which is back in 07. What happened in 08 . I dont anyway, joining us to discuss is mark vitner and guest host christian thwaits. And id like to get this id like you guys to fight, i think. On break, christian looked me straight in the face and said bernanke has been the greatest central banker in the history of the world in the last 50 years. Then i asked him, i said, youre british, right . Yeah. I said do you think gordon brown was a great because im trying to figure out where hes coming from. Do you think you have good food over there, too . Coming from where we are in the depth of 08 and march of 09 and is a central bank that what about the economy and this is the guy who said housing was probably contained. He said the Housing Market is contained, its not going to get out of hand. We dont need to do anything. You, on the other hand im starting an argument between you two. Dont argue with me. And you said this is the first reactive fed guy would i have had that hasnt tried to preempt certain problems. Monetary policy worked with a long invariable lag. It takes 12 to 18 months for Monetary Policy to impact the economy. The Unemployment Rate and inflation rate are lagging economic indicators. So if youre going to wait until the Unemployment Rate falls below 6 , im hoping he misspoke. 6 is probably full employment. That may never happen again. When do you think we get there at 6 on todays policies . I can we could get there late 2014. I dont think its 2016. I think thats optimistic, though. I would hope we get there. We are fairly optimistic. And i would say per about unanimousky has faced the most challenge economic environment that any fed chairman has faced. The man who saved the world. I would agree with these guys. Volcker has a massive task. Bernanke, paulson and geithner together on the cover of the magazine . I think what we faced back in the late 70s and early 80s is just as challenging. And the policy is working to some degree in that it has helped reignite the Housing Market. Increasingly, its leading to increased speculation. It went all in. And with greenspan, we thought he was the greatest ever. The prices have increased. It could tighten up on inflation. Whats your thought on how quickly they could raise Interest Rates . They could raise Interest Rates fairly quickly. They have neutral federal funds rate and employment. Its probably around 6 . 2 to 2. 5 and theyre in zero. They would probably go a quarter at a time. The next Economic Disaster are so in the early stages of recovery. So the problems were going to face in the next recession are going to come out on the policy mistakes that were making now. Theyll be long gone by the time were dealing with the exit strategy for all these moves. I agree. The difference is the real economy is under duress. All the real economy stuff is chugging along at 1. 5 to 2 growth rate. Theyre coming back. In the Fourth Quarter, were going to get the revised number this morning. The demand grew and the private sector is growing. Youve got all these private investors going out and buying houses now. All these private equity funds. Theyre buying brand new construction, newly built homes from Home Builders. This is we are seeing the types of increase in speculative activity that in the past would have triggered a response from the fed. I understand your point. I just dont think the price ves moved that much. The house affordability is still very, very reasonable. But what should nonfarm payroll numbers should we be looking for to get to 6. 5 . Well, you know, the revisions to the Employment Data that we had, we had thought that we added 150,000 jobs a month in both 2011 and 2012. The revisions took it to 180. Then we add 650,000 more jobs in 2011 and 2012. If you add the higher run rates, the 180 a month instead of the 150 that we thought we were a adding, thats more by 2015 which was that arbitrary date that we put out there. Combined, thats more job growth likely to occur between now and the middle of 2015 than it was when they first came one that date. So to me, that means you move that date. If they felt like thats when we were going to get back to full employment, you knew that day was mid 2014. And you look at the extraordinary things that theyve done and this is all we get . I mean, arent there better ways to get Economic Growth . Its been said again and again and again. Just keeping rates at zero is not a pansea and it doesnt cause demand. No, its not. But the central bank is but its not vary effective use of with the contraction of fiscal policy, the government has been contributing about a negative 1 growth to gdp. And theyre about to do it again with the sequester for another 0. 6 . In the absence of any meaningful fiscal policy, Monetary Policy is the only tool and Interest Rates have a major tool. And theres a private sector that we watch. Watch work. We used to watch it work. We didnt have the fed there every minute holdsing our hand. Declining Interest Rates helps the corporate sector a lot. You cant go below zero. Its not just that its contractionary. Its so uncertain. Its hard for businesses to plan. And if we were to raise taxes to fix the sequester, everybody that gets their tax rates knowing theyll come back for more because the sequester doesnt fit the budget problem. Its the uncertainty that takes a toll on the private sector. If we could have a better understood plan to reduce the deficit, and can deal with entitlements, the increase in certainty would help those private sector growth. How about fiscal policy fix it all in january. These new tax rates were made permanent. Its appreciation made permanent. Youre really going to have a grand bargain. You cant do it piecemeal, right . And i dont think either side has come up with a plan. No, i agree with that. The solution would probably be to replace the sequester as a threat. I use this oh, kicking the can again. No. Replace the sequester. The sequester is something we cant do and it doesnt do the job, anyway. If we cant come up with a better plan by september 0th, then well enact simpson. But here is the problem. Youre seeing when this sequest we shall as much as you might think theres a scalpel in boltsimpson, theres a lot of things that people dont like. Youll see the same headlines that youre seeing now about some group thats going be affected, some group thats going to be laid off. We have the guy from the Home Builders association on yesterday and said no way, the mortgage deduction that is something that Bowles Simpson lays out, too. A lot of people have built homes and maybe its the grandfather or something. You know the training wheels are kind of fun. You cant turn and go fast. With the training wheels there, its not riding a bike. Or its like a patient who has had a heart attack. You cant even leave the hospital, really. We need the private sector on its own here. Can you imagine . What if you never could get what if you had a bike with permanent training wheels. You could never take them off. How bored you wouldnt even ride a bike any more. I would say keep it. Ill roller skate or Something Else. Are you leaving . Am i leaving . No. Stay. I need help with him. Ill stay here as long as you want. Phil might keep you. Bring me a bloody mary. Mark, thank you for coming in. We really appreciate it. A lot of fun. When we come back, the clock is ticking till midnight. Well head to washington and ask john harwood about the latest negotiations right after this. Later this morning, a cnbc exclusive house chairman paul ryan will be joining us live at 8 00 eastern time. Its the first time well be talking to him since the election. 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The dow rallying 300 points over the last few days. The blue chip index now within 89 points of its alltime record close. The dow is indicated higher by about 17 points. Our question this morning is what is the driver behind the rally . Could it be the sequester . Chief washington correspondent john harwood joins us from d. C. And, john, this is really different from the Market Reaction weve seen to other deadlines weve been facing the last couple of years. Interesting the way the market is discounting the effect of this. Maybe they know something that those of us covering washington dont. It looks as if were in a state where the two parties are unable to at the moment come together, bad stuff is going to happen to the government. But either wall street completely discounts the lasting nature of whats about to happen or they see it as a positive development on the longterm attempt to wrestle our deficits to the ground. Thats an interesting question. Weve been kicking that around this morning. Par part of it may be that this has been described as a slow leak and could change at any point. I dont know what it is, either. So much stuff with housing, so many other things seem to be getting a little better, you know, john . And the market. And it is we are talking about by the end of the year what is 45 billion or something. Its not even 85 weve been saying. Well, and the key phrase that you just said, joe, was so many good things happening in the economy. Thats the good news is that if, in fact, were in a Virtuous Cycle economically, maybe the headwind thats ben bernanke was talking about in his testimony the other day wont be that sequential. Yes, it may have an impact and youre saying, you know, aggregate demand out of the economy and theres some people who are going to have less money. But if weve got a whole lot of other positive stuff going on, that may offset and overcome that. Hey, john, whats your expectation that actually what the market is betting on is that the something does happen, not in the next 24 hours, but in the next three weeks. Thats what i expect. I think something is going to happen. But what does that look like . Sorry . What does it solution look like . Its the two parties coming together around the march 27th deadline for government funding. Youve also got the debt limit coming up in may. And people decide, you know what . We really didnt want these cuts affecting defense and affecting domestic programs. Lets come up with a deal. Lets commit to tax reform. And by the way, maybe well get a little revenue out of tax reform. Those are the words the white house wants to hear and the Administration Says and were in on those entitlement cuts that we put out in our budget. Maybe well go beyond that. Thats the formula. All of that revenue was on the table for the grand deal. Here is what i got miffed about. Both sides agreed that this would be about cutting after they got the tax deal that raised revenue. This is going to be about, okay, we promised we will cut eventually and well put the sequester in just to hold us to the bargain that we will cut. So then when it comes up to where its going to be done, instead of would it have killed the Obama Administration to say, okay, im going to do this more targeted . Its going be all cuts. Its going to be 3 or 85 billion. Its going to be all cuts, but let me figure out where to do it. Did they have to replace it with a deficit deal that raise aed taxes . Couldnt they have stuck to the original bargain . Let met do it in a surgery way but im going to do all cuts. Then come back and use the tax loopholes and use the carries interest, use that in the big grand bargain dodd a simpsonbowles. He doesnt give anything, john. They both agreed to cut. There is no talk about a deficit reduction replacing the cuts with the deficit reduction package or introducing a new element to it. No, no, youre wrong about that. The administration said from the moment they struck that deal in the summer of 2011 that their intention was, a, for it not to go into effect. That was also republicans attention. But the administration always said the president ran around the country for a year xaping for reelection saying he wanted revenue. And when he struck the revenue deal in late december january 1st with republicans, he said at that time i tell was not enough revenue and he wanted more revenue. This is not a surprise from somebody. The Strategic Point from the white house is do they make a mistake by accepting so little with so little revenue that they didnt achieve their goals and now theyre coming back to get so the sequester cant created, it would be spending cuts . But is woodward wrong then . No. Joe, joe, the sequester itself was spending cuts. That is correct. But the administrations intention and republicans intention was that the sequester would not take effect. I know, i know. That it would be in the place of Something Else. But it was we promise well cut eventually. Well even put the sequester in here. And then when it comes around, here we are again. I think woodward is absolutely right. No, hes not right. And he better watch himself is all im telling you. What would they do . Audit him . Hold on a second. Im surprised that no, no, guys quick last word. We have to go. This is one of the stupidest controversies ever. Joe, stop. I wonder what theyre going to find on it. He was not no. Its ridiculous. I love him. Here he is. He brought down neckon and now the left hates him. And they have and theyre embracing a president that has nixonlike qualities. This is crazy talk. Thats what he was saying about the white house. Anyway, john, we will see you very soon. Hasnt seen this madness since king george. Well talk to you tomorrow when we go over that cliff. Our conversation on the sequester and the u. S. Economy just Getting Started this morning at 8 00 eastern time. House budget chairman paul ryan back on squawk. Weve missed paul ryan. Hes going to be back here with a squawk exclusive. First, were going to get a ceo perspective. Thomas watson is going to join us on set when squawk box returns. [ male announcer ] heres a word you should keep in mind. Unbiased. Some Brokerage Firms are. But way too many arent. Why . Because selling their funds makes them more money. Which makes you wonder isnt that a conflict . Search proprietary mutual funds. Yikes then go to etrade. Weve got over 8,000 mutual funds, and not one of them has our name on it. Were in the business of finding the right investments for you. Etrade. Less for us. More for you. The funds prospectus contains its investment objectives, risks, charges, expenses, and other Important Information and should be read and considered carefully before investing. For a current prospectus, visit etrade. Com mutualfunds. [ male announcer ] it was designed to escape the ordinary. It feels like it can escape gravity. The 2013 cclass coupe. Starting at 37,800. Starting at 37,800. No two people have the same financial goals. Pnc works with you to understand yours and help plan for your retirement. Visit a branch or call now for your personal retirement review. Welcome back, everybody. Union finished 2012 on a high note with strong results from its core business. Will the company follow the same path in 2013 or will european headwinds put up some economic road block . Joining us right now is thomas watson. He is the president and ce of of unice. Its great to be here. We know youve been focusing on the u. S. Market. Its an underserved market . We continue to feel that way, actually. Many consumers live paycheck to payche paycheck. They dont have a safety net to fall back on. And frankly, as we know the federal programs are very inadequate right now and under a lot of pressure. So theres a lot of desperate need for the things we do. A desperate need for it but it is something that may be a stretch for people when theyre living paycheck to paycheck. It is. And its always been a historic problem for our industry. Roughly 70 of americans dont have Disability Insurance. I can go through each of those categories and talk about the fact that its a very independent market. I think some of our products were too complicated, some of the price points were too high. Weve worked very hard to simplify the things that were doing as well as we have a big business in the uk, as well. The same issues exist there. We have found demand for the product despite these soft economic conditions. That need is very much there regardless of the economic environment. Where would you put the economic climate sthp. We actually market our business primarily in the workplace to workers in the workplace. So we have an interesting window in terms of how employers are thinking. And things like wage inflation, things like extending benefits, increasing employment as we know its a very slow process right now. Can you buy Disability Insurance without an employer . You can. Not from us directly. Its hard to find, though, isnt it . It is. Weve limited ourselves to working primarily in the work lace. If youre selfemployed, its a very difficult thing. Its very difficult. And back to the penetration in the marketplace, you find some of the greatest under penetration issues exist with the small employer. So not just with the individual employer, but get down to a Small Business owner. Those are places where its very difficult to seek coverage in place. Do you seek to look at the benefits for these places . Are they more willing to pend more on packages swals giving employees more . Its a little mixed ride now. The trend before we began this economic crisis, as employers, were beginning to shift the cost of those benefits to their employees. That trend is continuing regardless of whats happening in the economy or politically. Thats a thing we in the industry have had to react to. Many of our protects have the ability to pay whatever the employer is not paying. That is existing in our business, as well. To the extent we have a good product to communicate the benefits clearly and the price point res low enough, youll find individuals are going to pay for it themselves. This is a necessary benefit to protect yourself and your family especially if youre in the lower and through payroll deducting in the workplace. So they can get things in the work place that they frankly couldnt g have you back to talk about low Interest Rates. I know thats made it difficult for people in your industry, too. It is. Its a necessary evil, unfortunately. If you think back, again as a piece of background we have about a 50 billion fixed income portfolio. We primarily invest in high grade corporates, high yield, commercial mortgages, private placements, things like that. Were not an equity purchaser and Interest Rates are a big issue as we think about managing a business. Even though, again, i think this is not a bad environment for us to grow our business, the clearest and biggest headwind is Interest Rates. They put a lot of pressure on it. Still to come. Thanks, tom. Complete coverage of the dows march to close to an alltime record high. Our guest host at the top of the power, Michael Novagratz of fortress plus. Please ecb member ewal nowatny. I had both of them just now. You would have been you would have said the one guy works for this place and we got some other guy whos at this place. House Budget Committee chairman paul ryan, also oh, no wait a minute, paul ryan. Stay tuned. There. I said it. They dont have pictures of my kids. They dont have my yoga mat. And still, i feel at home. Could it be the flat screen tv . The not so mini fridge . The different free dinner almost every weeknight . Or maybe, its all of the above. And all the rest. Am i home . Nope. But it almost feels that way. Homewood suites by hilton. Be at home. All right, everybody, welcome back. Email us your questions for Warren Buffett. This is askwarren cnbc. Com. Or you can tweet askwarren and youll hear his answers live on monday morning. That starts at 6 00 eastern time. Lets get a final word from our guest host for the hour. We were just talking about just how cool the white power is over, and then you immediately brought up the torture team yes. Yes. Where the ravens are. About the tower of london, which is probably the oldest prison in the world, and thats everyone was sent for treason, locked away and eventually executed, so toe the line. Are you saying we have become he wants come on in the waters fine over here in europe, and were resisting. And would you argue no, in the u. S. , its still very its still very unpleasant multinational in the u. S. Its very unpleasant to be unemployed. So you know, make no mistake it is not a thing like germany where you can go many, many, many years with 100 full income replacement. These things expire after 75 weeks. They were shortened as of january 1st. And of the 12. 5 Million People unemployed do you know how many people actually receive Unemployment Insurance benefits . How many . 3 . 3. 5. So this is not a country 3. 5 million. 3. 5 million. So about a quarter of people who are unemployed get the benefit. So this is not a country where you can sit on the couch the reason that were worried connect the dots in italy why were now worried. The labor reforms that were going to happen based on having a stable government are not going to happen now and youre going to be stuck with no growth for 20 years. We dont want a labor situation italy had no growth for 15 years and everyone thought berlusconi was we dont want any of that. Because, you can never you cant hire anyone because you can never fire we are nowhere near to having french, german, spanish, whatever, you know, in the United States. Its a very business friendly labor laws that we have here. Christian, thank you very much. When we come back on squawk, stocks soaring. The dow now fewer than 100 points from the alltime record close. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . You name it. Ive hooked it. But theres one. One thats always eluded me. Thought i had it in the blizzard of 93. Ha never even came close. Sometimes, i actually think its mocking me. [ engine revs ] what . quattro the bernanke rally. We want to keep evaluating until we see, in fact, we are getting benefits from the policy. The dow now within 89 points of an alltime high. The fed, affirming their stimulus policy, and strong Economic Data pushing markets higher ahead of tomorrows spending cut deadline. Todays guest hosts will tell us if investors can hold onto these gains, where the market could be headed next, Fortress Investment Group President Mike Novogratz and economist Constance Hunter are here for the hour. Inside the eurozone debt crisis. The head of the Austrian National bank and ec policymaker Ewald Nowotny joins us. Its a first on cnbc interview that you cant afford to miss. And the sequester now just one day away. A special look at how federal workers are feeling about cuts that may be coming their way as the second hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box on cnbc. Im becky quick along with joe kernen and Andrew Ross Sorkin, and the futures after yesterdays rally are indicated higher once again. Dow futures up by about 17 points. The dow, in fact, is on the cusp of reaching its alltime high that was set back in october of 2007. The bulls can cite a number of reasons for the rebound from mondays sharp selloff including upbeat earnings and economic reports. Some are calling this the bernanke bounce as stocks soared after the twoday testimony on capitol hill. Well hear more about this from our guest host in just a moment. In the meantime some of your other Morning Headlines it is official. The senate has confirmed jack lew as the new treasury secretary. Senators backed the former white house chief of staff 7126. All 53 democrats voted in favor. Jcpenney reporting a much larger loss than expected in the Fourth Quarter. Actually losing over half a billion dollars. Revenue also missing the mark. Samestore sales fell by about 32 during the quarter. That is the biggest sales drop since ceo ron johnson announced the companys brand Transformation Plan. And investigators widening the probe of potential trading ahead of the heinz buyout. There was an unusual spike in Trading Volume in heinz options a day before the deal was announced. It first attracted suspicion. Now the New York Times is reporting regulators are focusing on a complex derivative bid that was routed through london. 9 product in question is a derivative that allows investors to bet on changes in the price of stocks without owning these shares. Contracts like this arent regulated in the United States but they are popular in britain. And the wall street journal reporting boeing and the wall street firm that makes lithiumion batteries disagree about what should be included in a package of measures aimed at getting the airliner back to the air. But boeing commercial airlines ceo ray conner tells reporters in tokyo that there is no dispute about the proposed solution. Boeing proposed its fix to the faa last friday. The previous day the batterymaker told the faa that its Laboratory Test indicated a power surge outside the battery or other external problems actually started the failures on two batteries. Boeings solution included a stronger containment box, a battery with greater fluid capacity and some other changes as well. Another day, another retailer reporting earnings. Today its sears. Their just reported adjusted earnings of 1. 12. 14 cents above estimates. Revenues also better than expected. Chairman and ceo of sears saying, our focus continues to be on our core customers, our members, and finding ways to provide them value and convenience through integrated retail and our top your way membership platform. Im not sure if that membership platform well its actually working. Better than people had expected. What can you say . Kohls also reporting results just minutes ago. Earnings of 1. 66 a share. Beating the street by three cents. Revenues just a little bit short. Current quarter guidance, brackets, the street consensus. So, good, bad, well thats going to be down a little bit in premarket. Good . I heard brackets. March madness . Another huge night last night. I have no confidence in anything anymore. Penn state had not won a game in its conference and they beat michigan. Thats why my way of doing it is the right way. Who has the better uniform. Thats right. Arizona looked unbeatable and i dont even know if s. C. Played a lot of weird things are happening. Its fun to watch. So is the fed. Fed chairman segues for 100. Strange segues. Exactly. You dont and you say if i say cockshire and pigeon hole. Joe kernen said cocksure and ruffled pigeon feathers. Its a walk in the cake for me. When i do things like that. Fed chairman ben bernanke reaffirming his support of the Central Bank Stimulus policy yesterday in front of the Senate Banking committee. His comments and some Solid Earnings helped to drive what were calling the bernanke rally, which i dont agree with. Steve liesman is here with more and weve been the guy can convince you. Weve been talking for so long, steve. Remember when i said hes got to say really, really, really, really long time. How many times can you go back to the well and say were going to do this for a long time . Imagine if the market thought there were only two reallies there and he added about seven. Over two days the fed chairman ended up changing the markets mind for the outlook for quantitative easing not only this year but beyond. Here are three things that happened. He said qe benefits outweigh the cost. That had an affect of really reorienting the markets expectations for this year. Then he said 6 unemployment doesnt happen 2016. Then he did what im calling a stealth easing. And that stealth easing are comments from the fed chief that the central bank needs to reconsider its exit strategy. The strategy, which they put out in june 2011 called for selling assets it had bought over a three to fiveyear period after hiking rates. Bernanke says one strategy may be not selling the assets at all. I want to show you the results of the last cnbc fed survey we did in january. 45 expect asset sales in 2014. 74 if you had 2014 and 15. For three quarters of the market what bernanke said is essentially a stealth easing for 2014 and 15, were holding onto the Balance Sheet. Were not letting it go. Buy anything else but after we get done, right. And we get done hiking rates we may be able to pursue a strategy of not selling assets. Theres one other important comment. Again i dont know if im convincing joe here. But theres one other comment that bernanke made that could be a game changer for stocks and the economy. My sense at this point, and its very early, is that we are getting some traction in the Housing Market, which has shown some strength there the last few days. The data most recently. In automobiles and other durable goods, to some extent in investment. To some extent perhaps in commercial real estate. Weve seen some signs of improvement. But we want to keep evaluating and seeing if, in fact, we are getting ben fits from this policy. It has been the distinguishing feature of this recovery that it has occurred with Monetary Policy spinning like wheels on ice. If we are now seeing the massive amount of stimulus the fed has put in place to begin to have traction, things could begin to move more quickly than probably anyone has anticipated. Theyve been out there. Theyve been lowering rates. Theyve been qe this and that, and theres like this kind of impact in the economy. Relative to how the economy would have reacted previously, because of whats happened in housing. Because of whats happening in the credit markets and the deleveraging minimal effect. If you have a situation of Monetary Policy, bernankes 6 unemployment could be wrong. A whole lot of things could be wrong. With the the asterisk would be, whatever happens to federal spending, which ends up being a drag on all that, some way, some how. But it would be a really interesting change in the dynamic. Again, thats the snapback that everybodys worried about out there. That all of a sudden, things could begin much more rapidly than anybodys its just if you tie the coincidence of these much better, you know, economic numbers that weve seen for the past month, if you decide, okay, thats the lag effect of all this fed policy, finally catching, is what youre saying, then maybe i would give credit to but they said it but its happened. I dont know what the cause is. Sooner or later the economy is going to heal. We have but i will say just real quickly, the changes he has been noting are interestrate sensitive sectors. I know. But weve heard you just cant keep rates at zero and no one wants to borrow anyway. What if it does happen. But can we not call up the sequester rally . I can switch anything lets lets open the conversation and make some proper introductions for a second. He runs one of the Worlds Largest publicly traded alternative investment firms spanning hedge funds to private equity. Joining us now on the net, Michael Novogratz is the president and director of 53 billion Fortress Investment group also a onetime wrestler. Well talk about that in a little bit. Also joined by Constance Hunter who is the head of economics at International Solutions network and consulting. So, either can take it. Should mr. Bernanke be proud of himself . I think he should. I think i think hes getting traction. And it is an interestrate sensitive sectors. And this is the transition mechanism. But i dont discount the sequester issue. I think that thats part of it. The recent rally. But if you look at whats happening in the economy, this is having an impact. And youre starting to see the impact of what happened in housing in 2012 now reverberate through. Youre seeing lumber mills coming back on line that had been shuttered for five years. Youre seeing jobs getting created. And housing, which we all have to remember is normally a leading indicator in a recovery and this one has been a lagging indicator, is starting to create some jobs and that Multiplier Effect no but thats a twostep upgrade you just gave the sequester, from hurting the market to not hurting the market to actually helping the market. Youre actually raising it to an actual positive for the market . I think its like what happened at the end of the year, when everybody felt we were going to go over the fiscal cliff, we had a patch so you think theres going to be a patch . I think theres going to be something but a patch you dont think the sequester in itself is good for the market . I think that the look it would show that we can cut. We need to cut spending and it may not be as disastrouses aeverybody hopes or thinking. Because, if you talk to people in washington, theyve already been preparing for this. Theyve already been cutting for the past three or four months, right . Compared to what its such a drop in a bucket. What i think of the rally. First of all you mess up by thinking anyones important at the fed other than bernanke, yellen, and when you read the minutes you hear this debate, people worried about exit, is the growth of the Balance Sheet problematic. Those three dont think so. And so, what always happens is you get comments from other fed members, people get nervous that the feds about to change, and then the chairman and or his two acolytes bring things right back do you hit that in your investments . When you see the market beginning to stray from that focus, i think theres theres money to be made on that. If you have a Clear Investment concept that three people matter, and unless those three people change their tune, im going to be a buyer on these dips . Thats 100 the right mindset. When you talk to those guys, you read those guys, they believe were at low rates for a long, long time. They think if theyre wrong, and the economy does accelerate and we get credit growth, they can raise the interest they charge in excess reserves and they dont even need to sell all the assets they have on their Balance Sheet. Constance do you agree with me its a stealth easing when he says we may not have to sell any assets in our exit strategy . I do agree with you. I mean, i think its an important shift, because and it comes down to whats going to cost less in the end, right . For selling assets theyre going to have to report losses to the trernry. Versus paying interest on reserves obviously is going to be a cost. But when you look at the end of the day, i think that thats probably whats going to cost less. Its also more effective. It becomes selfeasing. Make, youve got 53 billion, what are you doing . You dont fight the fed. You want to stay long risk. Did you double down this week . Theres you know, i run the macro fund there so we try to be very agile. But weve been buying into any weakness. You know, weve had big bets in japan, as well, so thats been the bigger focus the boj. What are you doing in europe right now . Considering whats going on in italy and all the worries over there . I think the italian thing was worrisome. It created a decent selloff, and its probably being bought into, in that youre going to have no real change in government now for six to nine months. So no positive progress, but no real negative progress, right . Italys got a selfregulating mechanism on the deficit. Their real problem wasnt fiscal. It was reform. So the reform agenda has gotten put off for at least a year. So thats not a positive. But its not a huge negative. All right. So, again, theres so much liquidity in the world. People are stretching for yield. We continue to hear this idea of the great rotation. Add a fixed income and into equities. We havent seen any indication people are leaving the bond funds. You know, when i started does that mean theres no equity bubble . I think the equity bubble is going to go. But it, you know, when i think about this, when we youre calling it a bubble . Not yet. When we started our hedge fund in 2002 the cover of barrons was the housing bubble. Five years later the housing bubble popped. This idea were in a credit bubble, we dont see great value in credit but i think credit will be rich and stay rich for a long time and thats going to drive money into equities. By the way, you dont care about the sequester . Maybe you do. In the short run, certainly. I do think fiscal is going to be a boogeyman this year. Were going to worry about it, were not really going to have to. When i think about the big picture, the grand bargain was 4 trillion. If we could get to 4 trillion. That was going to bend the curve and we were going to be okay. Were going to get to 2. 5 to 2. 7 trillion. Growth was a little better than expected. If you look at the tenyear forecast which everyone talks about, you know, debttogdp stays around 80 and doesnt get any worse. In a world with reserve currency, thats fine. The dirty secret is looking at year 11 to 20, when the lock ki stick goes straight up. No one talks about that. The markets dont look that far ahead. Listen in the short run, i think the republicans are going to finally, you know, trump obama. You do . I do. I think were going to push through the sequester, theyre going to be tough, and theyre not going youre a huge obama guy, too . You know, i was an obama guy. I really believed that see, was is the operative word. Joe, you said you wanted to haircut somebody out. I said a flowbee. Heres mary. Take 0. 3 of an inch. 0. 03 of an inch. Hes willing to take 3 off. Why dont we just give it to you and you take it over there and cut it and then bring it back here. Randomly, mary. Thats the idea. Its a random 3 cut that hes willing to do. Its across the board. 3 . Its not considered, right . Its just you are like the pope giving sex advice. You have no idea about what people do with hair. Listen to me. Do you know what a flowbee is . I dont. A flowbee is that vacuum cleaner wheres barry . Come on in there. Where you put it on and it pulls your hair up and cuts an exact amount everywhere. I dont have any knowledge of that. I know you dont. For 1950s they talk about baldness like its a sickness, like youve got a cure. That was how i showed because you have no feel for any of this. Thats why i was talking about you could do 0. 03 everywhere with the flowbee. Mary is going to do a random 3 acrosstheboard cut. Number three or number two and get the flowbee going. You did this . I did this, yes. What have we told you in the past . Dont try to be funny. Dont try to be funny. Everybodys laughing. And theyre laughing because its not funny. Which is the new kind of humor. You know, theres theres theres laughing at and laughing with. It doesnt matter to me, joe. Make him laugh, make him cry, do something. Comments, questions about anything you see here. Is this funny . Is it not . Shoot us an ema email squawkcnbc. Com. Still to come, federal workers are preparing for budget cuts. Were going to live to washington and one of the busiest commuter stations there. For more and a special interview with one of the more influential policymakers in the eurozone. Weve got a good one for you. Ewald nowotny, hes going to join us to discuss the euro debt crisis and the ecb stance on the recovery. Monday on squawk box, the oracle of omaha, live for three hours. Answering your questions, markets, the economy, and where Warren Buffett is putting money to work for investors. Email your questions to askwarren cnbc. Com. Or you can tweet us squawkcnbc is our handle. Make sure to include the askwarren. Always an event and never disappointed. Its our annual ask warren show. And it all starts monday at 6 00 a. M. Eastern. [ male announcer ] if you think youve seen all that the cadillac xts has to offer. Look again. The 2013 cadillac xts its a truly luxurious place to be. Take advantage of this exceptional offer on this 2013 cadillac xts standard collection, with premium Care Maintenance included. [ babies crying ] surprise your house was built on an ancient burial ground. [ ghosts moaning ] surprise your car needs a new transmission. [ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools you need without any surprise fees. Its not rocket science. Its just common sense. From td ameritrade. Welcome back, everybody. Thousands of federal workers pour in and out of the southwest federal metro stop in washington every day so we wondered what do they think of the sequester, our eamon javers is there and he brings us some of their thoughts and the impact it might have on them. Eamon . Good morning, becky. Theres a whole lot of uncertainty and anxiety here on the part of federal workers, no region really will be hit as hard by the sequester as washington, d. C. In fact, one local Business Group estimates that about 400,000 jobs just in this area alone could be at stake. The metro system here is expecting about 12 Million Dollars a year in annual revenue losses if those riders dont show up anymore. With all the furloughs and layoffs they think that ridership on the metro system itself is going to decrease. So we stood here yesterday, talked to a lot of these federal workers and asked them, whats on their mind. Take a listen. Personally, its tightening my budget, and its thinking about where i spend money, where i dont spend money. It simply means that we do more, tighten the belt, and were all in this together. Well, i still have a little bit of money, so i can survive maybe two weeks, not more than that. Ive got to pay my car payment, and my insurance. Because i got my contractor i have my own insurance so i have to pay for that. And the governments my source of income. Joe, a lot of those workers told us theyve been giving kind of conflicting or confusing instructions from their bosses. They say they dont have a whole lot of idea what to expect but theyre all expecting theyre going to have to tighten their belts over the coming months. Back to you. All right. Eamon, we appreciate it. Thank you, like the couldnt tell where he was, necessarily. But that was d. C. Right outside the metro. All right, coming up, enjoy Free Internet music while it lasts. Were going to talk about you said he was the novo crusher . He was a professional . You were a wrestler . You were a hulk hogan. No, the novo crusher. He was a college wrestler. Princeton. Okay, he wasnt doing the tag team stuff where you got to run the rock. Scissors. He was jumping off the top row. And then ecb Council Member Ewald Nowotny on the state of the eurozone. Italys election gridlock and the fate of the euro dollar. At the top of the next hour, a very special interview with, yep, paul ryan. Budget Committee Chairman, former Vice President ial candidate, well talk the sequester, the economy, all kinds of stuff right here on squawk box all morning long. Keep it here. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well that would make you. The creators of the 2013 mercedesbenz eclass. Quite possibly the most advanced luxury sedan ever. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Now, the answer to todays after flak trivia question. Welcome back. Weve got a little bit of bad news if you listen to radio over pandora. Internet Service Pandora is copping free radio listening at 40 hours a month. The change, which begins in march, and will affect about 4 of the 66 million listeners, so maybe not that many, the company said that the average listener spends about 20 hours listening across all devices in any given month. The company said that listeners who reach that 40 hour on their mobile listening device, they can now pay 99 cents for unlimited listening for the remainder of that month. Or they can listen for free you can listen for free for as many hours as you want on a laptop or desk top. Take a look at the markets this morning. The futures have been indicated slightly higher, even after the gains weve seen the last couple of sessions. Right now dow futures up by about 14 points. Overseas at this hour, europe is showing similar gains. In fact, germany, the dax there is the best performer of the reports were looking at right now. Up by 0. 6 . Squawk will be right back. Coming up, inside the european debt crisis. Governor and ecb Council Member Ewald Nowotny on the challenges facing europe, and the worlds Central Banks. From the italian elections to the fate of the euro. We cover it all. Right here on squawk box. Profit from it. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. Welcome back to squawk box this morning. Making headlines, rare earths metal minor molly corp wont be filing its annual report on time with the s. E. C. Theyre going to be delaying releasing last quarters results. The company says it still needs to calculate exactly how sub San Francisco q4 writedown is going to be. Sector delays are not taken well by investors. Realty track reports nearly 1 Million Properties which were bank owned or in some sort of foreclosure were sold last year, a decrease of 6 from the year before and a decrease of 11 from 2010. And were waiting for weekly jobless claims and a revegs to q4 gdp at 8 30 a. M. Eastern. Forecasters are looking for the data to show the economy shifted to growth from contraction for the Fourth Quarter. Becky, over to you. Andrew, thank you. The euro crisis has entered a new phase. And the European Central bank has been proactive in promoting growth and assuring the survival of the euro. But there are some tough decisions that still remain. Ewald nowotny is governor of the austrian central bank. Hes also a member of the governing council of the European Central bank, and he joins us this morning. And governor, thank you very much for being here. Good morning. Thank you. We have been trying to get a feel for it ourselves, but where do you think things stand right now in terms of the European Crisis . Well, i have been with you a year ago, and there is improvement in the economic situation. I think both the governments, and also the central bank have done their homework. So from a financial side, we are clearly in a much more positive situation. Where we do have a problem, the real economy, the growth rates are not adequate, still. Also, one has to see that there is quite a great amount of differentiation. There are some countries like my own country, austria, germany, outside the euro, poland, sweden, that have positive growth rates. But the southern countries, many of them, most of them, are still in negative growth. We hope that this will improve in 2014. But i think this is the main challenge. But the emergence in growth and we have to overcome this. Growth in 2014 there are a lot of people who think that that is a real stretch for some of those southern countries, in particular, and that while the ecb may have bought time, none of the underlying real problems in some of those countries have been addressed. Do you get frustrated with that . Well, i wouldnt see this in such a kind of negative way. There have been a number of there has been a number of progress done. For instance, you could look at the current account situation. This imbalances have narrowed quite substantially. You see, this is, of course, a number of structural changes. They take, it needs time so that they really show the effect. But, i do see progress. But, as i said, it will take some time. But the italian elections this week were proof that some of those changes could get thrown into into the side very easily. Do you grow concerned i mean the market was concerned when it looked at italy this week. Do you grow concerned by that, as well . Of course, everybodys a bit nervous, i have to admit about that. I would say one should keep things in perspective. So, i do not they that there will be fundamental change in the politics in italy because there are just economic necessities that you have to follow. If you look at the bond auction yesterday, it went quite well. So i think one shouldnt overdo it. Of all the countries that you watch, where do you think the biggest concerns lie . Would it be in some of those southern countries where theyre going to be facing more austerity, or is it in some of the northern countries, where your constituents are doing very well, as you said, theres growth there. Maybe they get tired of pulling some of these southern countries along. Well, we know, and this is something we have learned, and we learn id the hard way, that we all have to stick together at the euro. So, there have been last year discussions about a breakup of the eurozone. This is not relevant anymore. So i think there is quite clear, in order for the constituencies, that this is something that is staying to the. So therefore, its not the problem so much, lets say of my country, and the other northern countries, of course, one has to be, to admit that this reform process for some of the southern countries is a very difficult one. Means high unemployment for a period of time, so that i think that some of the growth elements have to be given priority. I think this is something that we have seen, not only from the political side, but also from the economic side. But i guess i go back to the idea that the people who are in charge may understand that and may understand the necessity of staying to the very well. Do all of the voters, the constituencies, necessarily think the same thing, particularly in a country like germany . In germany, as you know, there will be elections this fall. And in the Election Campaign that is kind of starting, there is nobody who is really oppos g opposing, lets say, the policy of being part of the european union, or being part of the european monetary union. There may be some kind of but basically they stick to this. No, i dont see any kind of fatigue on the northern side. But the real challenge is on the southern side. Sure. And there, especially what worries me and all of us is the high rate of unemployment. And i think this is something that some kind of special actions, for instance, or giving special Job Opportunities for and the Eu Commission is already discussing this i think this is something that has to be added, and that, i hope, will also increase the understanding of the population of these countries. What do you think about what the bank of japan is doing right now with its policies, really pressuring the yen, that adds pressure, in turn, to the euro, which has pushed higher, versus the yen on these things, the u. S. Watches that very closely. What do you think of their policy . Yes, of course, we do watch it. But i think its much overblown to speak of the currency war, Something Like that. What we observe is that the Japanese Central bank, the japanese government, wants to avoid the deflationary development, which i think makes a lot of sense. So im not too much concerned about that. So its not a beggar thy neighbor policy at this point with the Central Banks around the globe . No. If it really leads to higher growth, that is the intention to have, then its not beggar thy neighbor, then its something that is helpful for all of us. And with regard to the relationship of the dollar to the euro, this is in the historical range. So there we dont see any need for intervention, or even not much need of nervousness. What point does that range start to concern you . Well would give us a special point. Of course we have to observe it. And you may have seen that for instance one european country, switzerland, intervenes, when there was the idea that it would be too much. But this is not a model that suggest in the foreseeable future for the European Central bank. Governor nowotny, want to thank you very much for joining us today. Its a pleasure having you inhouse and we really appreciate your views. Thank you very much. Thank you. Thank you. Coming up, something near and dear to guest host Michael Novogratzs heart, the fight to keep wrestling in the olympics. Have we got everything set up for you two to we got the ring set up . You going to do a do a guillotine sleeper hold on you . Im going to do macho man savages slim jim on him. Oh, you are . Well were going to see that. And then at the top of the hour, the interview of the morning. Former Vice President ial candidate and Budget Committee chairman paul ryan is here. Squawk box will be right back. 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Lets get back to our special guest host, Michael Novogratz. President and director of the 53 billion Fortress Investment group. Hes also chairman of the board of beat the streets, a Nonprofit Organization which builds wrestling programs in new york city public schools, and also joining us are cnbc Sports Reporter brian shactman. You didnt wrestle, did you, bri . No, i got beat up by a lot of wrestlers in school, though. They were better than people who try to throw punches. Because you cant throw punches when youre all not that you would get in a fight. But you dont want to get inside with a wrestler in a fight because youre done. Youve got to stay clear, use the jab, right, michael . Listen we want to talk about wrestling in the olympics. I dont know if you knew they got voted out by an a oc wrestling committee. Michael wrestled at princeton. Youre the spokesperson for the committee charged with getting it back. Indeed i am. I think a lot of people think of marathon and wrestling is what the olympics are all about. What the heck happened . The ioc is a political organization. Theres a 15member executive committee. Its Northern European based. You know, they started the olympics with us, a lot of europeans want american and they, five, six years ago started a process where they told all the sports hey had to resell themselves to the olympic games. The guy that ran the wrestling federation did a really miserable job of selling wrestling to this committee. They didnt like him. He didnt take it seriously. And you know, they got a bee in their bonnet about it and so they dissed wrestling why . Because its a political organization. And each person on that ioc has their own sport that they care about. There were no americans on the executive committee. There were no representatives that came from countries with big wrestling contingents. You know. And so hes being diplomatic other than the u. S. What are the countries with big wrestling contingents . Wrestling is one of the most widely done sports. Were in 155 Different Countries in our federation. We had 79 countries participate in the olympic games. 29 countries won medals. No other sport had that kind of people olympic sports . Its the single biggest sport in the muslim world. Iran is a huge wrestling country. There are 300,000 wrestlers in iran. Its their number one sport. Russia, georgia, turkey, azerbaijan, and so, in a weird way, like the olympics is trying to make this more grown, and it was a big slap in the face to the entire muslim world. And i dont think this was all necessarily thought out. Two of the three potential host cities for 2020, japan and istanbul, tokyo and istanbul, you know, 70 of japans gold medals were in wrestling. Wow. And turkey, wrestling in turkey go hand in hand and it is an ageold tradition. They kept the pentathlon because basically there was a member of the 15person committee that likes the pentathlon. But there were many countries participating in the pentathlon as there were Different Countries and Medal Winners in wrestling. Since title ix wrestling has had a little bit of a profile shift in this country. I think the key is we have more wrestlers in new york city, we just started five years ago, than there are modern pentathletes in the country. Why are we trying to shrink the number of sports . Thats one of the things were talking to the Olympic Committee about. Whats the big deal of going from 25 to 26 . What is the big deal . They originally is there a cost issue . Tv ratings. Its money. If its not a sport that people watch that generate revenue, they have a formula. They wont tell you what the numbers were, the results, but thats what they say. Like when we carried the olympics, we got eight channels to run it on. I mean, people are addicted to curling. Curling which is supposedly really great if you watch it. It is great. Lets you can curl, you can wrestle, cant you . What about wrestling curling . People watch wrestling in general. I mean we were talking at the break about all the, you know, wrestling events that occur. I would think that wrestling would be a well watched sport. Wrestling is the fifth biggest sport in high school in america. You know, were not a minor sport. Were a major sport. Weve got huge youth programs. Were growing our programs in division ii and division iii colleges. The kr tournament sells out every year. And so theres a big following certainly in america. It is bigger than russia. It is bigger than iran. And so globally, you know, the decision doesnt make a whole lot of sense. Im 100 confident, not even 90, that they will overturn the decision. You know, part of this was a political process that the wrestling community screwed up. Weve now bounced the guy that used to run fila. Hes out. Theres new guys in. One of the new Board Members is alexander carolyn. If you ever want to see what the olympics looks like, you just look at a picture of this guy. He is hercules. He was the russian superheavyweight who won three gold medals, and thats what people think of when they think of the olympics. So i cant imagine an ioc member on the other side of the table telling that guy no. It wasnt about the ears. Your ears get messed up, dont they . You wear those things and your neck. You have no neck. You know, its especially the foreign wrest lurs. Having the bad ears is really a mark of honor. They look like cauliflowers. Its called cauliflower ears. It is a real fraternity. Yours are okay. I had Plastic Surgery on this ear. Did you really . I used to have hair like you. I was a pretty boy. And so im going to take that in a good way, i think. Yeah. You think this might not being reversed very much in the past the reactions been so furious that theres no doubt in your mind . You know, on the social media, its 991, people saying what the heck . And so im pretty positive that well get this reversed. Thanks, brian. Thank you. Thank you. The overcrusher. Coming up final thoughts from our guest hosts. The crusher, and Constance Hunter. Weve got to come up with something no, thats not going to work for constance. As we look to you know, it was. It was. Good god help us. Cloning former Vice President ial candidate, and Budget Committee chairman paul ryan. Joins us for a special interview. From the sequester, to the state of the nation, theres nothing this young gun wont talk about. A special interview with paul ryan, and its only right here on squawk box. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. But at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Debating i took pretty boy very positively, and my immediate thing was tom brady is a pretty boy, isnt he . He is a finelooking man. Tom brady loved and hated. Thats okay. I dont want someone to be right in the middle with me. Love me, hate me, call my pretty boy, whatever. Pretty boy called extra. This is a stocks to watch segment. Sears holdings pretty stocks to watch . Sears reported a higher than expected quarterly profit boosted by lower costs. It was 1. 12 versus 98 cent estimate on better than expected revenue, as well. Kohls topping its already dour Fourth Quarter Earnings Guidance to it wasnt that great. It already cut the guidance. The retailer is projecting little if any samestore sales growth for this quarter. Jcpenney ugly stocks to watch. This is not pretty. Fourth quarter loss 1. 95 versus an estimate of 18 cents. The analysts dont look it only gets worse. Groupon reports Fourth Quarter losses of a nickel, and the estimate is supposed to be three cents. Revenue was basically in line, but the guidance for revenue was below expectations. I will need a secretary if you you usually have that. But ive got to put it into the machine, andrew. 3. 9 billion. But thats before todays move. Like a 10 billion Market Cap Company . Its going to lose a quarter of its value. Its going to be about 3 billion when it opens today. What was the high on it . What happens to that company . I dont even know what it does. It tells you he theres a sale on a massage or something, right . Yes. Ive neverive season things come in on the computer at home. Mike you guys have never bought any groupon, have you . No. Not a macro call. I remember when google wanted to buy groupon and they decided not to sell. It was five or six billion dollars. Im thinking to myself, just sell. Its a brandnow company. Its coupons. Intuitively felt like, hit the bid. And if you think about it you have the google theyd own google stock right now. You could have been mark cuban. Mark cuban. Lets get some final thoughts from our guest hosts. Weve already been getting some. You can tell them who you are db the novo crusher. Member of cnbcs delivering alpha advisory board. Bigger title. Constance hunter is the head of Economics International Solutions Network and consulting. We were talking during the commercial break, dissect i would actually like to dissect the interview with the governor while he was here so you guys could have battled it out. If you say the governor anyone that watches the walking dead thinks youre talking about the governor. Youre talking about the european European Central bank when you say the governor Ewald Nowotny is who were talking about. Apparently you disagree. You didnt have the courage to tell them that . I didnt feel that interrupting him was good form. Youre going to talk behind his back afterwards. Its an open forum. Its not behind his back. Its in front of his face. I think, look, hes right in the sense that ecb will continue doing what it takes. Theyre going to cut, again, theyre going to do everything thats in their tool box. But they dont have a big tool box. Right . This is central bank. They only have a few tools. And this is going to be decided in the voting booths in dusseldorf, and look, this italian election says that people want there to be a focus on growth. And the austerity has been important. Theres been structural forums that need to take place. But we need to focus on growth now. Youre seeing this in italy. Theyre in a growth quagmire. Are you buying anything from europe . Yeah, im buying italian and spanish bonds every time they sell off. The ecb the day before the olympics started, came out and said were going to buy these bonds as they sell off so they gave you a put to the market, so every time they sell off they seem to be a pretty easy place to put capital to work. And as those rally, spanish banks, italian banks, european banks are going to rally. And so im bullish on a you have a bullish call . Its not because i see absolutely. If youre running money, thats right. From the real economy perspective, its going to be a long road. Real economy versus the traders. Everyone worries about were going to have social unrest and social upheaval. In greece the single worst place, the point of the spear, you never had looting. A few protests. A couple molotov cocktails but no real destruction of property. I was just in spain, it doesnt feel like its a country on the verge of okay on that positive note were going to say thank you for being here. Constance, thank you. Thank you guys. When we come back, we have a very special squawk newsmaker. Budget Committee Chair and former Vice President ial candidate paul ryan. Were going to find out what is keeping him up at night and what he wants washington to do about it. Squawk will be right back. [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. But feel alive. The new cclass is no exception. Its a mercedesbenz through and through. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. The oughtic sequester cuts are all but certain to kick in tomorrow. Washington cant get its act together on a plan to reduce the deficit. Budget Committee Chairman paul ryan will join us to talk debt, the economy, and the impact of spending cuts. Plus, breaking data on employment and Economic Growth. Weekly jobless claims in the Fourth Quarter gdp numbers hit the tape at 8 30 a. M. Eastern. The third hour of squawk box starts right now. Welcome back to squawk box here on cnbc first in business worldwide im Andrew Ross Sorkin along with joe kernen and becky quick. Ahead this hour, Budget Committee chairman paul ryan on the economy and the looming sequester cuts. And then at 8 30 a. M. Eastern weve got breaking Economic Data. The closely watched weekly jobless claims and the second read on the gdp in the Fourth Quarter. Forecasters are looking for the data to show the economy shifted from growth to contraction in the Fourth Quarter. Then at the bottom of the hour, the star of the new cnbc prime reality series treasury detectives. Theyre going to be joining us on the set. But first, beckys got your Morning Headlines. Andrew, thank you. Why dont we start with the Global Markets . That is the big story after the dow rallying more than 300 points over the last two days. The blue chip index is now within 89 points of its alltime record close. U. S. Equity futures at this hour are indicated slightly higher. Those dow futures up by about 35. 5 points above fair value. So were sitting right on the cusp right now. Overnight in asia you did see some massive gains. The nikkei was up 2. 7 . The shanghai composite up 2. 25 . And in europe this morning, they are following the same trends that weve been watching through the course of the morning, with some modest gains. In fact, if you take a look right now the biggest gain comes in germany where the dax is up by just over half a percent. Joe . Great, beck, thanks. With no deficit compromise in sight, the automatic spending cuts known as the sequester almost certain to kick in tomorrow. What will it take for washington to come together and tackle the debt crisis. Joining us for his first cnbc interview since the election, representative paul ryan. Also chairman of the Budget Committee. Welcome back. Its great to see you, mr. Chairman. Hey, becky, joe, and and drew. Thanks for letting me back on your show. I appreciate it. Weve had a standing invite. Its great that youre finally with us again. I guess the first question to ask you, it looks like its going to happen but we dont know a lot of the stuff that goes on behind the scenes that the people dont talk about. Do you are you aware of anything going on right now behind the scenes, that could possibly avert this or not . As you know the sequester was designed to force action to deal with the deficit and debt. We passed a bill 300 days ago dealing with this. As recently as december. Senate still hasnt done anything. So i do expect the sequester to take effect because the senate hasnt acted. The president s around the country campaigning instead of governing here in washington. So what i think well see happen next week is we will pass an appropriations measure that gives the administration more flexibility. Wed already negotiated spending bills with respect to veterans affairs, military and that will be part of this, because those spending levels have been negotiated. So i think youll see more flexibility for the military and National Security and more flexibility for spending so they can go over inefficiency as the sequester takes place. Can you put to rest about whether the deal was actually changed . I was under the impression that both sides at one point had agreed that this would be about actually finding having some spending cuts kick in. To then change it to a deficit reduction zeal that includes higher taxes and revenues instead of what it was intended, was that changing the rules or alls fair in washington . No, i mean, we obviously believe the president moved the goalpost. I think bob woodward has mapped this out pretty effectively. Dont forget, joe, the president got the largest tax increase in American History eight weeks ago. Now hes trying to move the goalpost and say instead of spending cuts which is what the sequester is i need a bunch of tax increases for this as well to fuel more spending. If you take these tax loopholes youre killing tax reform. That kills our chance for Economic Growth and job creation. More to the point, more to the point, even with the sequester taking effect, spending will have gone up 18 since the president took office. So spending is the problem. The deficits a huge problem. Were going to tackle this. We dont think the sequester is the right way to do it but its going to happen and we will map out a budget that shows you the right way to grow the economy and prevent a debt crisis in this country. That budget will include not only discretionary budget spending but also the full entitlement part of it . Thats right. You have to reform entitlements to save these programs from bankruptcy, to save the country from a debt crisis. Were the adults in the room, weve been proposing this for years. The president is around the country campaigning. And not coming to the table with equal 3r0e7als to deal with this. Unfortunately thats the stalemate we have today. Was there a time when you could have gotten together with the president and said, and i guess maybe the blunt nature of the sequester is a bad thing. Maybe there was a way to do it surgically, with waste or whatever, but if he had come to you and said, look, i just dont like the way that were doing it without being, you know, without being effective in where were looking to cut things, i want to cut where i want to cut. Will you let me do that, would you have let him do that if he hadnt said wed have to raise revenue . Were going to give him the flexibility to actually cut. As long as its cutting thats right. So joe ive thought about what you just asked quite a bit and i really dont think the president was ever interested in a grand bargain or big budget deal to deal with these entitlements. Hes unwilling to put out ideas to save these entitlements from bankruptcy and hes been more focused on campaigning against republicans on these issues, and the net result is nothing gets done up here. So thats obviously our side from the republican perspective. All right. But the point is weve got a spending problem we have to deal with. Were being responsible about it, because the goal here is growth. A healthy economy. Job creation. And the debt is really hurting that but, paul, is that a nonstarter, your plan to say to the president , go ahead, well give you the discretion to put 10 any way you want it . I mean is that something 10 im sorry. 10 in the Discretionary Spending area, 3 overall . Well, yeah, its about 5 on domestic discretionary. Weve already agreedse spending with democrats, then the sequester will hit. But it already has the flexibility, and so yes, do we believe that the government which spends 3. 5 trillion this year can do with 85 billion less . Yes. Do we believe that a government that spends more than 100 billion a year in what we call improper payments, money that shouldnt even be spent, could go over waste and inefficiency without raising taxes . Yes, we believe that. Well give the president the pool to do that. Whether he chooses to do that or not is his choice. Unfortunately, when it keeps campaigning it makes governing that much more difficult. And solutions harder. Weve offered solutions. Were going to continue offering solutions. Hopefully at the end of the day well actually start solving some problems around here. Paul, the republicans reserve the hr1 designation for a tax bill. Thats right. Do you expect in this environment given what weve just lived through with the sequester, any form of real tax reform to take place in the next lets say 8 to 12 months . I dont know, andrew. I really dont. The way we look at it, im on the ways and means committee, dave camp and i have been working on this, its not going to be for our lack of trying. We have the highest Corporate Tax rate. We now tax our sixful Small Businesses a tax rate of about 40 . In wisconsin we compete against canada. Theyre taxing businesses at 15 . We need for Economic Growth for International Competitiveness to reform our tax system. Were going to do this in the ways and means committee. Were going to do this in the house. We hope that our Senate Counterparts will follow suit. There are a lot of moderate democrats who agree with us on this. Bowlessimpson, you name the group, they think tax reform lower rates broader base is the way to go. So were going to move this. The president well see if the president , you know, follows suit, but its not going to be for our lack of trying rights rates are already higher. Let me just add to this one thing, paul, the we wanted the grand bargain of 4 trillion. We had a guy on earlier that said weve already done 2. 6 or 2. 7. Then i got something from someone who knows, im not going to out this guy, but someone who is involved with all this, he tells me actually out of the 4 trillion, even if the sequester goes through, were only at 1. 2 trillion that weve culley cut because you cant count the obama care trillion dollars because its not going to pay for those taxes arent going to pay for obama care. So that at best, with the sequester were at 1. 2. So were nowhere near the 4 trillion. Thats right. Are those the right numbers . Those are the you guys have horrible pr. Heres the deal. Thats what i want to tell you. Look the 2. 6 trillion dollar number is a gross number. It ignores all the deficit spending and increases that occurred under the president s stimulus payroll tax cuts. Increase in domestic Discretionary Spending. So theyre giving you gross, not net deficit reduction. And so yes, were not even close to fixing this problem. But thats what really concerns me, joe, when you hear the president at the state of the union and around the Campaign Rallies saying the job of deficit reduction is nearly complete. Thats really worrisome to me because it tells me hes in complete denial and weve got to got ahead of this problem. Thats why were going to continue to offer solutions. Paul i want to go back if i could to the tax issue because we have so many ceos and other Business People who come on this show and want tax reform both in the corporate sphere and on the personal side and given what seems to be a rather large divide in washington, over how to do this and whether theres an ability to raise revenue, my question for you is, is their ability to effectively lower the top tax rates, but as youve talked about, once you remove the loopholes to at least either keep revenues level, or maybe keep the average effective tax rate higher or the same and is that something youd be in favor of or do you think that rates and effective tax rates ultimately have to become lower . I think rates and fengtive tax rates ought to converge in tax reform. Thats the whole point of base broadening and rate lowering. We want to have tax rates that are internationally competitive. That means theyve got to be 20 something. And that look weve run a lot of numbers around here. If you give away more loopholes for spending which is what the president s calling for youre making that an impossible job to accomplish. You already have a higher tax base, so that base broadening is gone. We believe with the current revenues we have, we believe with the current revenues we have we can have what you just described, lower rates with a broader base, without losing revenue. And having an internationally competitive tax system. If you keep giving away those loopholes to fuel more spending youll never get that. Were pretty much on that bubble there and that is why were saying lets do tax reform, and hold loopholes to pay for tax reform. Meanwhile, spending is the problem. And lets focus on spending. If we stop campaigning and start governing i think we can fix this problem. Unfortunately we control onethird of the power arrangement here. Were in the minority. We have nothing to pass on the other side. We have no other solutions being offered and thats hard to get things done that way. Chairman ryan, we watch a lot of polls and try and get a feel for whats public would like to see here. And a lot of it seems the way you ask the question youll get a different answer on this. Its still unclear to me thats because of the ben bernanke hearings these days. Its still unclear to me what the public feels about this. It seems most people are in agreement that they would like to see some sort of spending cuts. A lot of them say they would still like to see some cooperation between both sides. I think it really depends on how you ask those questions. But, next week, once the sequester kicks in, once you start to see things like longer delays at the airlines, once you see the threat of inspectors, meat inspectors from the Agriculture Department coming out and that meaning a lot of people getting laid off along those lines, do you expect to have massive pressure from many of your districts to go back to the table and renegotiate, and will the republicans change their stance at that point . So, this reminds me of when your local school board is saying we need this new tax increase and if we dont get it, were going to cut the High School Band and the Football Team first. We call it the Washington Monument effect here. We are going to give the administration the flexibility they need to not do those things you just said. To go after the waste, the fraud, the abuse, low priority spending. If they choose not to do that, then the president will have made the choice to do the things you just described, for political benefit. We think thats wrong. Well see if he does that. But the fact is, becky, we cant keep spending money we just dont have. We have got to get this deficit and debt under control. Not because we just like numbers adding up, its because thats necessary for growth for a healthy me, for job creation. For prosperity. And then were going to show how you balance the budget to create jobs. Well show that in a few weeks. This, to me, is what matters most. And so, we will give the administration the flexibility, but no, were not going to walk away from the only chance of getting spending under control around here, when push comes to shove, well see if the administration uses the flexibility or not, and if they choose not to do so, then i would just basically say the president s still out there campaigning, trying to maximize political benefit for his ends, instead of coming here, getting solutions. I was going to ask you do you know what big ten team had the best record in february. Compared to their peers. Im wondering. Woof got indiana Michigan State michigan. Wisconsin is a real sleeper now. Were not only a sleeper were on fire. You didnt go there. Ive seen you do this before. You like all the teams there. Even though im a big wisconsin guy. Even the rivals. Gurg the campaign i said nice things about ohio state. Yes, you do. Were watching you guys. Im not sure what you guys need to do for pr. I guess you got to do the rope a dope for the first year of the new term while hes so popular but then i dont know. Lay in the weeds, and you got a message dont you . I i believe good policy ends up being good politics. Im tired of the idea that were in this Permanent Campaign mode. Some of us like getting things done. We like governing. We actually like solving problems. Never happens. Especially with this Permanent Campaign. Thats the situation we have right now. All right, mr. Chairman, thank you. We appreciate you coming on squawk this morning. Great to see you again. All right. Thank you, dont be a stranger. Come on back. I wont. Am coulding up the dow just 90 points away from closing at an alltime high. Take a look at u. S. Equity futures at this hour. We do have green arrows across the board. Dow looks like it will open up 5. 5 points higher. Next the futures pits in chicago for whats more for what traders are looking at this important and in the next half hour, check this out were going to talk to the stars of the new cnbc prime reality series treasure detectives. Curtis dowelling investigates arts and antiques to determine if theyre trash or treasure. Hes going to join us on the set. Monday, a squawk box fan favorite, back by popular demand. Its your chance to ask Warren Buffett questions about his investments, and the broader markets. Three hours with the oracle of omaha. Starting at 6 00 a. M. Eastern. [ male announcer ] at his current pace, bob will retire when hes 153, which would be fine if bob were a vampire. But hes not. Hes an architect with two kids and a mortgage. Luckily, he found someone who gave him a fresh perspective on his portfolio. And with some planning and effort, hopefully bob can retire at a more appropriate age. Its not rocket science. Its just common sense. From td ameritrade. Welcome back, v. Some retail earnings to talk to you about this morning. Kohls is reporting earnings of 1. 66 a share. That beat the street by 3 cents. But these were lowered expectations that they were hurdling over. Revenue did come in a little bit short and the Current Quarter guidance bracket the streets consensus. That stock has traded down on this news by almost 3. 5 . Also sears reporting adjusted earnings of 1. 12. That was 14 cents ahead of estimates. This is a positive story in the Retail Sector that stock is up by about 2. 6 . Jcpenney well this would be in the disaster category. Much larger loss than expected in the Fourth Quarter. Over half a billion dollars that were lost. The per share loss was 1. 95 a share versus a loss of expected loss of 17 cents a share. Revenue missing the mark, and heres the biggie, samestore sales falling about 32 during the quarter. Analysts were looking for a drop of about 28 . But again, these are continuing drops in samestore sales. You cant continue this at this pace forever. This was the biggest sales drop since the ceo ron johnson announced his grand Transformation Plan 13 months ago. At least samestore sales didnt drop by a third. I mean yeah they missed that by 1 . 32 . I mean. 33333 . So they didnt drop by a third, right . Am i lying by saying that . Youre not. You could average unbelievable though. 32. Got to get ron johnson on the show to talk about this one. The dow just 90 points from its closing at its alltime high. Jim euro joins us from the cme in chicago. Hes a cnbc contributor. Good morning to you, jim. Good morning to you, andrew. What do you make of all this. Is there a chance we get to the alltime high . Well, i think wed better. If we dont its going to be considered a failure and the market is finally going to have the correction that about 100 of us predicted. I know the market doesnt give a darn about the sequester. Im not sure that they think its only the 2 or its the fact that if something bad happens to the sequester economically bernankes there with his awesome set of tools to reinflate things which, i mean, i think hes tried to put the market at ease on tuesday. Either way the market seems okay. Now if we cant take out those highs. I think weve got about two days to do it. Thats when i think the correction comes. Heres my question on the sequester. Everybody doesnt seem to care what happens in the next couple days. What happens in the next couple weeks . Does that matter to you . Yes, i think its significant and will get more significant as we get closer. Remember the market has been here before. They were here at the fiscal cliff and if they feel at the end of the day most of this is just posturing. There was a time a brief time where when the president came out and talked about the doom and gloom, air traffic controllers, teachers, puppies and babies all were going to be affected the most that the market cared a tiny bit. Every time he comes out and says that i think the market thinks weve been pushed up against this wall, we cant spend time worrying about these things that politicians are doing. At the end of the day theyll do the quasiright thing, which is probably to kick the can down the road. In the Bigger Picture i know that thats not the right thing but from a market perspective it is. Jim iuorio thank you for the market perspective this morning. Thank you. Coming up breaking Economic Data. Were going to get initial jobless claims and gdp numbers at 8 30 a. M. Eastern. And if you were looking forward to the jobs number tomorrow, its not coming. Even though its march 1st. Because they got all these discusses and caveats, and blah blah blah. When is it next week . Yep, next friday. We were looking forward to it. Were going to explain it actually. And Fourth Quarter gdp is going to be a rise up to 0. 5 after initial decline. Thats whats expected. That should be interesting to look at that. Well have the number next. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Welcome back, everybody, tomorrow is the first day of march. But it is not jobs friday. The reason is a little complicated. Weve been pondering that ourselves here. But the employment report typically is released on the third friday after the conclusion of the reference week, the reference week is the week that includes the 12th of the month. The late survey period combined with the short month of february means that the first of march is only the second friday after the reference week blah, blah, blah, blah, blah, blah, blah. Long story short it just means were not getting the february jobs report tomorrow. It will come a week from tomorrow and you can all set your clocks on that. Okay. Been waiting for that. Get it . I do get it. So its not the bottom line its not the first friday of the month. Its the third friday after the reference week with the short month. You know you dont short all right. When we come back we have some breaking Economic News for you today. Were just a few minutes away from the closely watched weekly jobless claims. The second read on the Fourth Quarter gdp also coming. Right now as we head to break, take a look at the u. S. Equity futures. Yeah, theyre mixed at this point. Barely budged across the board. [ indistinct conversations ] [ male announcer ] when you wear dentures you may not know it, but your mouth is under attack. Food particles infiltrate and bacteria proliferate. Protect your mouth, with fixodent. The adhesive helps create a food seal defense for a clean mouth and kills bacteria for fresh breath. Fixodent, and forget it. 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 scottrade proud to be ranked best overall client experience. Welcome back, everybody. Were just a few seconds away from weekly jobless claims and the Second Quarter the second read on the Fourth Quarter gdp ahead of that weve been watching the u. S. Equity futures. At this point theyre basically unmoved. But if youve been watching what happened you saw the dow industrials closing at a fiveyear high. At this point they are within 100 points of an alltime closing high. This came after erasing some steep losses from monday over the past two days on tuesday and wednesday you did see some big bring back shares from the from the after those losses. This came because of bernanke and the speech that hed been talking about. Rick santelli is standing by at the cme in chicago. Steve liesman is in the studio. Also economist drew matous joins us from stanford, connecticut. Rick, go ahead and take it away. Our second look at Fourth Quarter gdp, it rose in the positive territory by the absolute minimum amount. Its up 0. 1 . This is second look first look was down 0. 1 . And it fell short i think the calculations for various exports and inventories just didnt prove fruitful. We didnt get the half a percent. If we look at all the internals, the consumption, the personal consumption, moved up just or excuse me down a bit from 2. 2 our last look to 2. 1, couple shy of new estimates. The price index, hotter than expected by 0. 3 at 0. 9 and the personal Consumption Expenditure quarter over quarter core is also up 0. 9. Jobless claims dropped 22,000. Dropped 22,000 from a upwardly revised 366 between last week reported at 362 now stands at 344,000. Weve had a wild response in the marketplace. Dow futures went from unchanged to down four. You know i guess theyre somewhat impervious to the fundamentals and anybody who doesnt think were going to click off new highs obviously havent been reading the game plan of the Federal Reserve. Rick, stay right there. For more information on this lets get to Steve Liesman and drew matous who is the senior u. S. Economist at ubs. You know, i think i can give you the numbers or i could do the sort of broader story which is i dont think the story from what happened in q4 really changes at all. I think the story was that the private sector side of the economy was pretty good. You actually had a upgrade to Business Investment from 84 to 9. 7. Consumer spending hung in there basicsly 2. 1 versus 2. 2. No change there. Okay not terrific but okay on the private sector side and then you had inventories are revised down even worse than we thought so 12 billion gain as opposed to 20 billion gain. And government took off a big chunk. Its 14. 8 versus 15. It was a story of a big deline in Government Spending that may have been episodic in that it was just the Fourth Quarter but perhaps a sign of things to come depending on how washington figures out the deficit problem. And the private sector hummed along at the 2 rate its been. I dont think theres much more to this story right now. People are getting more optimistic about the First Quarter. Some as high as 3 for the First Quarter. Thats where we are. Drew, thats, Fourth Quarter is Fourth Quarter. We knew it stunk. I think were getting better. I think the claims numbers point to that. Thats actually the story of the day. The gdp number went up but the details got worse. I would rather have it stay negative and have the old details i have before. Which details are worse . The consumption numbers revised lower. People were expecting it to go higher. We actually hit this right on the head or i should say my analyst did because im not smart enough to forecast gdp but youre smart enough to hire the analyst. Everyones got to have a skill set. On claims we expected claims to actually return into the mid 340s. We think thats the trend. We think thats where its going. Its probably going to go lower from there a bit. And thats because were finally seeing a sustained pickup in hiring. What does 340 mean a week from friday folks, its not march 1st, its going to be march 8th. What does it mean right now would you say for employment . I mean i think you know, the trend has been where weve been at the last couple of months and you have to be thinking a little above trend. I hate to duck the question but we havent actually finalized our numbers yet. But it does seem like they should be a little better than people had been expecting. The trend is 150, 160. And then you have to add you know theres obviously a whole bunch of variations and you know, the timing of the weeks matter, so you know, for anyone out there who is doing all the math and trying to figure out why its the 8th, sometimes that can have an actual effect on the numbers. So drew, i figured out a way that rick could be right, in his concern about the economy. And bernanke may have given it to us. Im concerned. Youre going in the direction here it is. Bernanke yesterday talked about traction on Monetary Policy which i think we can agree weve not had for a long time. But if the Interest Rate sensitive sectors begin to get traction and Monetary Policy begins to get traction, things can happen and unfold much more quickly than anybodys anticipating. Is that a possibility. Do you hear that from the chairman yesterday, and does that concern you . Hes told the title of one of our last weeklies, its absolutely the case. One of the things you have to remember when youre up this high in ferms of Unemployment Rate it can move around by percentage point in two or three months. Weve already seen that. People forget, what weve really seen the Unemployment Rate is it went from 10 to 9 and then went from 9 to 8 and has been sticking around 8. Its entirely possible for it to drop to 7 more quickly than anyone is expecting and that will leave the fed in a quandary and you and i might disagree but the exit strategy is a lot harder than theyre making it out to be. Its going to be a lot more difficult to do it without derailing what theyve already achieved and i really think theyre giving short shrift to the idea theyre going to have problems exiting. Thats not to their benefit. Thats going to be a hindrance to them as they try to affect the exit in the near future. But in the future. Im calling what bernanke did yesterday a stealth easing. If he says were not going to sell assets as per the strategy, the exit strat they put out in june 2011, they said we can let the Balance Sheet naturally run off as these coupons expire, or term out, that means that 14 and 15 are going to be a whole lot easier than the bond markets think. I think anybody who tries to extrapolate the very packed parking lot of treasury traders in addition to the huge positions owned by the Federal Reserve i think thats crazy. Anybody who gets diverted from the minutes and who actually thinks that the internal debate will affect the outcome i think woe be to them as well. In the end i dont see any percentage in ben bernanke ever retracting very much liquidity, i think its you know, you cover your but mentality. All right, find me a logical argument how he would be better off in the grand scheme of things should anything go wrong. Doesnt make sense to me but i think hes covering himself. Politicians thats reprehensible. They would get to work if there were better signals from the Interest Rate. I think thats to ricks point. But my point is not so much whether or not its good or bad i think thats a good discussion. But my point is what is the market expectation, and what is what is bernanke now saying . My point is now that its an ease its a comment that the fed is easier longer if its not selling assets from what our you is va show the market anticipates. Steve do you have a Favorite Baseball Team . I do, yeah. All right. Now if your Favorite Baseball Team is mines better than yours. And you know that the other teams going to win do you city bet on your team or not . I dont bet on my team thats stupid. See, and thats the way traders see the market. Just because traders have positions to draw conclusions about those market statements about what the market expects is kind of crazy. In reality, they understand what the plan is of the Federal Reserve and they want to make some bucks. Drawing these conclusions is a mugs game. Gentlemen. Thank you all. Well see you all again soon. Thank you. Are you a mets fan . Yankees. Okay. Coming up, check this out. He is the star of cnbc prime new series treasure detectives. Curtis dowling and his team of investigators, they help art and antique collectors determine if theyre holding trash or treasure. Also do a little bit of investing too. Curtis is making his way to the squawk set. Good morning, i want to know well figure out whats real and whats not after the break. Cant catch squawk box on television . Well, were just a few key strokes away. Find the show online and on mobile. Our twitter handle squawkcnbc. Like us on facebook, and visit our show page squawk. Cnbc. Com. [ construction sounds ] [ watch ticking ] [ engine revs ] come in. Got the coffee. That was fast. Were outta here. [ engine revs ] welcome back to squawk box this morning. This coming tuesday, march 5th, cnbc prime is launching its first reality series, treasure detectives at 9 00 p. M. Eastern time and pacific and Curtis Dowling and his team dig into the history of potentially counterfeit items using hightech science. Their mission help collectors discover if they have trash or real treasure. Curtis and his longtime assistant andy are investigating whether a liechtenstein print is an original or fake. I have the negative. Marvelous. I had andy make a meggive transparency of a real liekten stein student to be able to match up with ours. This should give us the answer were looking for. I need to be 100 convinced that this hasnt been produced by a master forger. So what i need to do now is compare the wood grain fingerprint from our liechtenstein with the liechtenstein that we know to be genuine. Joining us now is Curtis Dowling. Thank you for being here. Morning. Good. So tell us your history hop did how what did you start doing before you started doing this program . This program is really just the cameras turning on what i do on a daily basis. You do this every single day . Yeah, pretty much. So the question we were talking about off air, mr. Kernens hair, can you what can you do . He tells me its real. I think its fantastic. You have looked at other things and youve been shocked to find out things. I think you were more shocked when i claimed that this is not dyed, its not fake, its not a system, theres no plugs, and you looked at me you were totally incredulous that it could be this good and not be tampered with. Well its a strong provenance, isnt it . But then i finally showed you how it goes gray here, right . So you can see that its theres no dye job and no so you i want you to do this. I want you to clon youd for yourself that its real and see if youre really any good. If you conclude that this is fake then im not going to believe what you find out on primetime. Ive not spent 27 years looking at hair. What was the hardest thing you ever had to had to determine the truth about . The next one. Probably. Because they all have their own challenges dont they . Because these things are all so different. On this show weve had some crazy things. You know, weve had weve had Neil Armstrongs cuff links. Weve had james browns cape. Thats crazy. How do you make sure that those things are real . Everyone comes with a different set of challenges. Okay. How about the cuff links . How did you verify that theres only three things you can ever use when youre doing this job at all. That goes for whether its hair, liblgten stein prints or cuff links. Provenance, the story, the story make sure it matches up, right . You can break stories so easily. The second one is testing. These days you can almost technically test anything. Be careful. And the third thing is obviously connoisseurship. Expert opinion. Now i dont like using the word expert, because anyone that calls themself an expert probably shouldnt be calling themselves an expert. You know, you just learn as much as you can, and at some point, you know, youll have sufficient knowledge have you ever found out more about something later, meaning you looked at something one year, you thought you knew the answer, and then five years later something changed in the story . Yeah, its happened in the past. But, say these days because we use technology an awful lot, technology doesnt lie. Is that what you were doing with the liechtenstein . The fingerprint. So the challenges of something being right or wrong are going to come up when you start using that level i would think if you go back and youre trying to look at a renaissance painting, number one, you can see the brushstrokes i cant look at a rothko and tell that its any good so i couldnt tell if it was a fake or whether it was real. And also it wouldnt be nearly as old. So you cant make sure it was real by carbon dating. Do you use carbon dating you would for certain things. Dont forget also these tests cost an awful lot of money. So if youre the average man on the street, you know, first of all, youve got to know where to go. If youre painting a campbells soup can, how do you know if its a war hole or not . Theres ways. There are. Do you know the forgers . I do know a lot of them. You do . Yeah. What have they taught you . Everything. Do you actually meet them and theyll show you how this is all done . Yes, the metropolitan police once said theyd be delighted to get hold of my address book. Yeah, because if you want to learn about anything, do it. Its like this, isnt it . People probably watch this program and say id love to do that. Go and have a go and see if i really enjoy it or not. Because they might hate it. Its the same with learning about forgery and art. You cant be two dimensional. You cant learn this from a book. Youve got to touch and feel and smell and taste and all those things. And the only way youre going to be able to tell whether this is real real or fake is make it. I bet if you start making this within an hour youd be able to spot ones that arent made could you make a fake liechtenstein . Yeah, yeah. Youll see on the show as well. I make a few fakes. Have you ever what what has been have you ever been sued for saying something was real and it wasnt real . No. No . Have you ever made a big mistake. Everyone makes mistakes. Everybody. You thought it was real but it wasnt or you said it wasnt real and it was . Well, its probably a long time ago now, because, say the methods you now use are so watertight, its almost impossible to be wrong. Yeah. But dont be fooled. Because the best fakers havent been caught yet. Yeah. Thats what you have to remember. Every time you read a story about, you know, one of the big auction houses having to give money back because its a fake. Would you do wine . I would avoid it thats a huge scam, too. Oh they sell 10,000 bottles of wine and who the hell knows. If theres money involved, somebodys you brought up an interesting point off camera how its almost in vogue to have a knockoff of something these days. People walk around i guess its a point of pride. Like you were talking about a prada bag. I paid 20 bucks for this and people think thats its a strange world we now live in. None of us want to be ripped off. Right. But if we are knowingly sold something thats a fake, we take pride. Right. Youre sitting with your girlfriends in manhattan and you paid 4,000 for yours. Look at mine, 20. Theres there comes a point where you have to really think about what youre doing there. Because your, i guess depends how crazy you get. Its counterfeiting. It is counterfeiting. And you know, i mean prada bags, i hope you havent really got a fake one. No, i dont. One of our anchors has a folk rolex. And do you know how theyre made or what time its on in the afternoon. How to make late midafternoon. Theyre made by children because their fingers are small enough to get into the things. Thats terrible. So what percentage of people who come to you with their item actually have the real item, or have the fake . Thomas hoefing at the metropolitan museum of art once said 40 of all collections are fake, he just wished he knew which 40 it was. Oh, my gosh. Its probably 30 , 40 of everything you see is wrong. But do they really want to know after youve already paid for it . Do you really want to know at that point . Yeah, they do want to know. For lots of reasons. Its selfselecting if youre going to him you must have a suspicion that maybe its not real, right . Not necessarily. You might be it for insurance purposes. I have a lot of questions. This is interesting. You know, if youve got a liechtenstein on the wall thats worth 2 million and you find out its worth 50 it cuts your insurance. Point one. Secondly, you better start thinking about investing in Something Else pretty sharp. Right. So a lot of it is by investment. Why wouldnt you want to know. I guess you get the money back from the auction house if you bought it at an auction house. Or wherever you got it from. A lot of these things people have inherited. Ever done anything like alive like a purebred 5,000 dog, 10,000 dog . No. But nothing has ever been alive . Afraid not. Thats a strange question. Ive never been asked that one in 27 years. Curtis dowling. I have what i think is a real Michael Jordan rookie card. Baseball do you do cards, no . Yeah. Yeah. Okay. We had a honus wagner on the show. Coins. All that stuff. Well, dont miss the show. You can catch the premiere of treasure detectives tuesday, march 5th at 9 00 p. M. Eastern and pacific. And cnbc is launching the cart chasers at 10 p. M. Eastern and pacific. I came over on the mayflower, my family was a mayflower. Curtis, we are excited about this. We will be watching with the premiere. That watch real . Of course its real. His share real. When we come back, we will check in with jim crimer are. Stick around. Squawk will be right back. W dr car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back, everybody. Lets get down to the new york stock exchange. Jim cramer is standing by. Jim, we have seen a couple of spectacular blowups over the last 12 hours or so. Jc penney and groupon. You want to weigh in . Michael eckstein, stuff i love. Laugh out loud line, after reporting another beyond worse case scenario, down 31 comps. How does ron johnson keep his job . It is incredible to me. This company is being run into the ground as we speak. My question, too how much patience and how much time does ekman have on this . Admit things arent going right before you start thinking maybe something has to change. Speaking of that, thats groupon. If you read the Group Opinion comment buys andrew mason, he would think would you think this company is doing incredibly. We have two never two peter pan situations here. Everybody at these companies seems like ron johnson, jc penney, the turn is here. Groupon, mason, this was a fabulous quarter. How stupid do they think we really are . Pretty stupid, i guess. Jc penny, i have to say, jim, i thought two quarters ago, they couldnt keep up if they didnt get the comps improved, particularly when working off a lower base to begin with, couldnt improve your comps after that i thought it was game over. What changes . Game over, man. I have never seen a company in this kind of tailspin pull out of it. I have to tell you i dont think jc penny will be in it. Yep. What else do you have coming up this morning . Look, i think that we have to talk about the fact that the market doesnt seem to want to quit, that it doesnt seem to care about whats happening in washington, that its really focused on earnings, profitability, retail sales strong, groupon and jc penney the outlier. Sure we got to touch on apple and the patience thats required for apple shareholders. You know, the bond vin lanty russ gone. I wonder, jim, would you ever attribute something, a positive move, to austerity, that we come to grips with it in this country . Would you ever attribute that . Doesnt happen with traders, does it . They want what they want now . A southwester is not being taken positively, is it . No, but at the same time it is really hard to figure out how that impacts home depot after home depot told you things are really fabulous. The facts just keep getting in the way of the negative story. A lot of macropeople come on our air and make me feel like i should slit my wrists or hang myself by my time. The fundamentals seem pretty good. Thanks, jim. See you in a couple of minutes. Coming up, more of our top stories in the stock of the day when squawk box returns. [ male announcer ] from the way the bristles move to the way they clean, once you try an oralb deep sweep power brush, youll never go back to a regular manual brush. Its three cleaning zones with dynamic power bristles reach between teeth with more brush movements to remove up to 100 more plaque than a regular manual brush. And even 76 more plaque than Sonicare Flexcare in hard to reach areas. Oralb deep sweep 5000 power brush. Life opens up when you do