Good morning. Todays top story, what else its official, the bulls are back, the dow soaring to an alltime record close. Global stocks, well, they had to follow suit overnight. Its wednesday, march 6, 2013. Squawk box begins right now. Good morning, everyone, welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Welcome back, andrew, back this time. To celebrate . How long with we going to celebrate for, though . I dont know, another three hours. Three hours. When the market opens every day that we close higher. The new alltime high. Wondered if we would break it a new, fresh alltime high. And none of them are rotten. Theyve never been hit before. I wonder if we could keep this going every time. We will. Oh, we will. If we get one point, thats another it is another fresh, alltime, new high. Thats the generation that hasnt seen that. There is. Did you also see, though, theres a story in the wall street journal well talk about that in a minute. The dow jumping more than 125 point yesterday, setting an alltime interday high and closing at a new record. Volume historians, you might realize today is the history of the 12year intraday low set in march of 2009. Strange kicoincidence. The major asian markets traded higher. The nikkei up 2. 1 . Another 248 points. The hang seng and shanghai up. In europe, stocks also trading higher. Germanys got the best gains, though. Dax up. 9 . The u. S. Equity futures are indicated higher. Joe, are you correct. We are set to close at another alltime record today. 1 3 of the dow components closed at multiyear or alltime highs yesterday. Those that set alltime highs are disney, home depot, Johnson Johnson, 3m, and travelers. The best dow performer since the indexs previous close in october of 2007 are home deparkway, ibm, and mcdonalds. And the worst outperformers during the president are alcoa, bank of america, and hewlettpackard. Our guest host this hour, Rebecca Patterson of bessemer trust. And yahoo s mike santoli. And we have expert standing by to share their insights including s ps David Blitzer. Omega advisadvisers chairman a see, leo cooperman. Head of equity strategy, barry knapp, black rocks chief strategist ross, strates, and howard ward of growth equities. For february, you have the adp report sit to hit the tape at 8 15 eastern time. First, andrews has the top headlines. Venezuelan president chavez has died after a battle with cancer. Little reaction in the oil market. Chavez oversaw a decline in Oil Production during his 14 years as the leader of venezuela. Analysts dont expect that trend to change immediately. Michelle Caruso Cabrera is going to be joining us in the next halfhour to talk about all this and what it means. In corporate news, e. U. Regulators set to hit microsoft with a hefty fine today. The antitrust chief in europe will be saying that the company broke a promise to offer consumers using its windows system a choice of rival internet browsers. Didnt that debate end a long time ago . I feel like this is so backward looking. Anyway, google has also begun testing a sameday delivery service. Its called google shopping express. The setup helps local Retail Stores sell products on line and have the items delivered to shoppers the same day. The service is googles latest move into amazons ecommerce world. Well see all about that. Weve talked about stocks and record highs. Lets look at the broader markets. Quickly look at the ten year, 1. 9 , you expect maybe yields back up a little. A look at the dollar. Well talk to rebecca about obviously. And then gold which, not sure what gold should do when the vix goes to 14. To the lows there. My most one thing im looking for and santoli will appreciate this, you like to see confirmations of new highs with the important averages. Another one im not looking for that. Im looking for g. E. To confirm this with a new high of sits ow. Well double today . Might be a while. 60 its at 23 which is telling. Right . Each bull market has a different bweather. It couldnt bellwether. It couldnt go much higher. Maybe now its free to go back to the high 20s, low 30s. Was trading at 50 times earning obviously. Sure. In the late 90s. The ultimate growth stock. Always hit on its numbers. And who knows what happened. It happened to coke, walmart, happened to all the nifty, the new nifty 50. Whats interesting, though, is that g. E. Unlike what you would consider its peers, those guys are closer to the alltime highs. Some are. Some are, but not g. E. How much it was and how much it had in terms of g. E. Capital during the financial crisis. Which was a little bit of a setback. You havent followed it quite as long probably. G. E. Was the original i heard about it. Called the mother ship. Heres my question still bitter. No. Im not. Its a Great Company that at one point it got overloved. Look whats happening to apple. What do they say with rca . Yeah. What do you say with westinghouse . Yeah. I guess im bitter about being sold. Not about trying to not take that you love the new, but yes. It was i think you were with to make the point before, its the story on the front page of the wall street journal, the idea that sorry o inflationadjusted basis, were not not this. You got to go to see 2000 to feel good about it where things are. Weve got another 8 or so to hit inflationadjusted highs. But everyones going to slice and dice this a million different ways to justify where were too high or why were not high enough. And at the end of the day, im going keep an eye on flows. If we still have a lot of people in cash, our own firm, we added stocks in january. Not because we had too much cash, we felt we had too much high yield debt. And it was getting too rich. If you get people switching out of cash, out of some other instruments that maybe have more yield and dont have it today, you know, as long as the fundamentals dont deteriorate rapidly rapidly or we have a shock, that will get us going. You saw stan the man on yesterday. And you cant you dont want to see its all fed, but you cant say that the fed has not been helpful. And if youre creating that money, doesnt it flow downhill and it finds its way into its just i see other people calling it a steroidfueled stock market. I think where i argue is that its any different than it ever was. Its only different in degree. Dont fight the feds decades old saying. In the early 90s we said the same thing. Oh, theyre keeping the rights this way to nurse the banks back to health. Everything i think its a matter of degree. The way i view it is, its like the ancient greeks thinking atlas held up the world. Didnt hurt you that. If you went with the assumption, you didnt get proven wrong though you couldnt disprove it. Thats what the fed is with this market. We think its there. Therefore the worlds not going to tumble right. The flat world or holding up presumably, yeah. Holding up a big floor. The ground world, yes. Its the bank of japan. It might be the ecb this week. If they werent doing it, id feel bad that we were. Id feel like we were but valuing. Everyone is. Its a party. And it also isnt just that the point was the bigger the more you drink, the bigger the hangover. Right. That money has not just flowed in the markets, its flowed into a better economy. Its floweded into an improving housing sector. So the fundamental that the fed is a chicken egg thing again. Kelly evans is like, these guys, god, im standing here. I have to go to the bathroom, i got other stuff i got to do. Time now for the Global Markets report. Thank you for ever pushing us along. Kelly evans standing by in london where finally she has a report. Kelly . Yes, joe, theres an element of truth to what you just said. Nevertheless, im happy to stand by, jump in now, and give you a sense of whats happening over here in europe. Actually in a week when were reminded again by all the Central Bank Meetings especially today and tomorrow, the bank of japan, bank of england, the European Central bank, europe has been on a stable if not tightening basis lately. That hasnt necessarily interrupted the rallynd equities. This morning, were led by vodafone up 6. 5 . Thats a u. K. Listing, of course, on potential talk about further tieup with verizon. Thats one corporate piece of news. For the rest of the story, though, its actually banks that i want to briefly draw your attention to. Down here on the stock 600, losing about. 2 prcht. In particular, its rbc that may be the focus. If youre in stamford, connecticut, you may want to listen. Mervyn king speaking before a Parliamentary Committee on banking standards said he thinks rbc needs to be split into rbs needs to be split into banks. Its still about 80 owned by the government. Weve had a series of people on the program talking about how they dont see how the government can ever exit its stake. Mefb inking thinks one way of doing this is to isolate the healthy assets, move forward that way and privatize them. At this point in the game, pretty late, he thinks a decisive restructuring like that could be done in a year. Can you imagine the changes that would involve . And can you find another example where thats happened . Thats what hes laid out. He said hes been talking to george osborne, chancellor, about it ongoing. Cope an eye out for potential reaction throughout the banking sector. A quick look at other equity market here across the continent. There generally is, as joe serksd you look for confirmation. Remember it was a strong day across europe yesterday. Same general story with the exception of italy, down by. 3 . The xetera dax adding. 8 . The cac coran in paris is higher, the ftse 100 adding. 2 as well. Its multiyear highs around the world and not just in the u. S. For a lot of equity indices. Japan, australia overnight at 4, 4. 5year highs. Is some of it nominal because weve seen currency weakness, yes. Its certainly not the case that its only the u. S. Rallying. People will remind you the dow jones is hardly a u. S. Only index. Talking about 30 , 40 of sales globally anyway. Back to you. Thats a great point. We should focus more on that, too. We look at whats happening in the u. S. Economy. Its obviously a picture of whats happening around the world. Thank you. And well release you for the moment. I know what its like after sitting there for a couple of hours. Okay, enough. Thank you very much. Thank you. See you again tomorrow morning. As kelly mentioned, the dow closing at an alltime high. The s p ending at a nearly 5. 5year high. The nasdaq closing at its best level in 12 years. Our guest host this morning, mike santoli and Rebecca Patterson. And guys, the real question is what happens next. Do we continue, or was this, we hit the number and dropped back down . Rebecca . I mean, since november, weve gone up almost 14 now. So to have some sort of pullback, at least on a tactical basis wouldnt shock me at all. This fridays payroll report will be the next catalyst to watch. Ive been surprised, ill admit it. Happily surprised that even with payroll tax increases, political noise around the world, including at home in the u. S. , that the data are holding in. If were looking at housing data, if were looking at weekly jobless claims, confidence data, confidence datas improving despite this stuff. So you cant ignore that. The fundamentals are getting better. If you look at stocks and say theyre not not justified, look at weekly jobless claims in the u. S. Stock market. Theyve correlated nicely the last five years. There is a fundamental story here. As one last thing id mention, we worry about Rising Interest Rates stopping the rally. Interest rate have been rising. If you look since november, weve seen the tenyear yield go from 1. 6 to 1. 9, not a big move. Is this a situation where its the trend that matters or the absolute value, though . I think its the trend and the speed, right . If the ten years rising but its gradual and backed by improving data, then the stock market can go up, too. I mean, thats news to me. 1. 6 to 1. 9, i dont care do we worry about the consumer and war at thes going to flag . I think there was a note, ben white had it, on a less encouraging note, the march tip on line index of consumers outlook on the economy plunged, 38. 8 the highest nonmanufacturing number yesterday. And what that means. Yeah. Were seeing new orders in the service, ism pick up. Were seeing employment hold in. So i dont think theres enough data to say that the consumers rolling over. I was worried about gasoline price thats had a run up at the beginning of the year. Theyve rolled recently, not much, 1. 5 down from the peak. Brents come down a lot. If that can stay down, gasoline should stabilize at a minimum. That at the margin might help the consumer keep going. Mike, we have the adp report today which could give an indication of the jobs report on friday. Is that the most important one of the economic yeah. Its happening at a light data week. I think theres at least a quiet suspicion that maybe we have one of these blowout weekly monthly job numbers. Way better than expected . Yeah. I wouldnt be im not saying im betting or estimating it, but i think thats kind of that would have to be the next act i think. In order to push us. Weve reached an escape velocity with regard to labor market. I mean, my view on the dow is, yes, up 14 or so from midnovember. But up less than 5 since midseptember. I mean, we basically in six months have gone up 5 . So i dont know how to actually calculate how excited people seem to be relative to that. A good point. Its not like uncharted territory despite the nominal new high. Tactically i thought weve should have had more than that step down 2 . Its following along the path the last couple of years. You had that you know, refused to buckle until april. And maybe you found a reason to shop around. I guess rebeccas right in terms of looking at the flows that are coming out. As long as you have people who are still willing to jump in and pull money from the sidelines or from other assets. I mean, and companies themselves are kind of doing this arbitrage on their own capital strait of juan de fuca, buying stock because its so cheap to borry. I dont need to see aggressive retail inflows. You have to say, look, if i look at the texas trum, high yield spectrum, high yield. Theres nothing consistent with the alltime high if thats where high yield will be. And market cap as a percentage of u. S. Economy, not out of the range. So its kind of just all in the zone of whats going on globally. As kelly mentioned, its also whats happening globally with the economies overseas. Weve watched china, we were watching japan closely. And there have been some questions about europe, particularly with italy. And the latest round of elections there. We have seen European Equity markets underperforming in the last couple of months. Now part of that is because they had their big rally last year, outperforming in the u. S. Now theyve gone in the back seat a little bit. But the the italian elections were a reminder that things are not normal there by any stretch. You know, there are some bargains to be had in europe and in japan. There are great Multinational Companies with Good Governance and valuations. But you have to do your research. I wouldnt just buy a European Index and call it a day. But you are seeing china. I thought it was really interesting this week that the government in its National Peoples congress say theyre going to increase their fiscal deficit this year. Right. They also expect growth of at least 7. 5 . And they have never underperformed their target. We could argue the numbers are meaningless. But if you get growth in china, 8 , and they are trying to manage the Housing Price but keep growth going, thats good for the Global Economy. What japans doing, maybe its not sustainable. For now, its good for the Global Economy. If europe can keep things quiet. Thats good for the Global Economy. I you know, im cautious because i still see all the headwinds, fiscal tightening around the world, the politics. And gosh, it tells you what low bar there is. There was a piece yesterday on the wires. So a half a dozen senator got a call from president obama over the last week or so and said this is leadership. I thought, really . Republican senators. Right. Republican senators. Your phone rings and suddenly everythings good. Is that all it takes . Ill call you. What so, you know, theres a lot of headwinds out. There the Global Economy is important. And i think it is one of the reasons markets can go hire. Okay. Rebecca and mike will be with us leaving message, is your refrigerator running . Coming up, oh, you better catch it. Do you have Prince Albert in a can . [ laughter ] better let him out. Can i speak to hugh jazz, please . Is there a hugh jazz here . Ivana you like the simpsons, dont you . Yes. And hugh jazz is there. He says, hi, this is hugh jazz, looks like an accountant. Time to slip in a quick break. Ill tell you they werent just making a prank call. They seemed terribly excited to get the calls. Listen it woued to the song crazy for the past week on the airplane. You finally heard passion pit . This was number one a year ago. They have a new number one. Yeah. Our market conversation is just getting started. Stocks breaking records left and right this week. Up top and bottom, left, right, everywhere. Up next, well talk volatility with elevations tim freeman, were afraid of him. He is not afraid of us. First, a look at yesterdays winners and losers. This is america. We dont let frequent heartburn come between us and what we love. So if youre one of them people who gets heartburn and then treats day after day. Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morning. 24 hours. Zero heartburn. Welcome back, everybody. Take a look at the kwetd futures. Dow futures up by 35 even after yesterdays close at a new alltime high. In our headlines apple has reportedly held talks with beats electronics, Audio Technology firm cofounded by hiphop producer dr. Dre. Reuters says theyre talking about a potential Partnership Involving beats streaming service. Mixed news for retailer staples. The company earning 46 cents a share for the Fourth Quarter excluding certain items. That was one cent better than the street was expecting. The Fourth Quarter revenue below consensus. So is its fullyear forecast. Lets get to the National Weather forecast from eric fisher. Theres a major winter storm moving from the midwest to the east coast today. Good morning. Good morning. Hello, everybody. We had a record snowfall in chicago yesterday, over nine inches of snow. Biggest storm in a couple of years there. Today the focus in and around washington, d. C. You see the snow spinning in. Theres the rain snow line through the big cities. Philadelphia into washington, into richmond. Eventually later today, up toward new york. Youll be right on the snow line, as well. Its really coming down, northern virginia, western maryland, southwestern parts of pennsylvania. D. C. Itself, in the capital, seeing a mix of rain and snow. Just to the east, all rain. Just to the west, very heavy snow. It will depend on where you live for this particular storm. Look at the temperatures. 35 in d. C. 39 in philly. Just to the west, down toward the freezing mark with 32 in charlottesville. 20s in the mountains of west virginia. Theyll stay all snow. A tough forecast for the main areas. I think the roads will be in decent shape this morning. Theyll go downhill later this afternoon. There you see the snowfall totals, eight to 12 inches, the line is right in the district. West of there you get the snow. East of this, more toward five to eight. By the chesapeake. An inch or two, maybe three at the most. In new york, we go from rain to snow. Five to eight inches possible, especially northern jersey and toward westchester. Then as we head toward tomorrow and into friday, all this moves into new england. Boston in on the action, especially west of town. We could see over a foot. Back to you guys. Okay. The hard working you cant wear a jacket. Hes like finding stuff out. Its snowing. Im burning up in here, man. Ive got my head to the grindstone. Im here for you. That is the reason our guys dont wear jackets either. 50 states. 50 states, is that 50 how many states do we have . 57 50 states, then puerto rico and guam and, you know, territories. Exactly. Anyway, where you know, we have David Blitzer, and you have wolf reynolds. Reynolds wolf. Its confusing. Where is he today . Have you seen him . Reynolds . He is actually in the snow. Hes down toward here somewhere. Hes somewhere in western virginia. Well see him later. Bad for his 3,000 suits. Thanks, eric. The dow topping its 2007 record, the vix below 14. The key read on the fear that is the president in the marketplace. We have principal at el vagz. Heres what i want you to tell us, how much watch the numbers that will let us know the stages that investors are going to be going through. I know what its going to be. Its going to be, i cant buy now, at a new high. Then it gets higher, oh, its still going, i cant buy now. Finally they say, well, the trains leaving, now i got to get in. What does below 14 on the vix good that theres no fear, or is it bad that people are complacent . I think the vix will indicate low volumes which is we dont need low volumes at a new high, do we . The really rally was one of the biggest indicators, positive indicators was an implied in the s p 500. I saw that. Yeah. Tell me what was that again . Its another risk economy tlak we look at that we look at in terms of how does the market assess how stocks will move going forward. Again, another implied volatility . Implied correlation. The expectation of how thing will move over a period of time. Sounds stupid. Another forward looking pricing mechanism which is why i like it so much. And the thing we noticed was the it dropped almost ten points yesterday. So a perfect correlation is one. Perfectly negatively correlated, negative one. So normal correlations, historically to go back 10, 20 years, might be in the ballpark of 45 . Right . You know, very normal. We went from 64 down to 55 in almost a day. So when we if you were to go back and look at how the market will trade, more importantly after we see a drop of that magnitude, right, so quickly, usually for about three days youll see returns of poz positive returns of. 8 foster almost 2 . Wow. So the good thing is if you missed the rally yesterday, i still think we have more to go. I certainly think 1,550 will be a number the market will talk about testing. Seems to be, we still have a lot of money thats trying to find a home. And as great. As Corporate Bond spread tighten, high field tightens, as high yield tightens, as people search for yield, people are investors, and their money has to earn the best return possible that it can at that time. And right now, that continues to be equities. Sure s. There any pattern beyond three days . What happens right. Well take the short term. Thats great. After three days, you see the peak in returns after three days. Sometimes its two, three how long though, weeks . You peak for weeks. Their is incredibly short term. Youre saying it doesnt tell you much. Exactly. Its incredibly short term. Baugh say three months from now but you cant say three months from now. Correct. This is good whats happening. What we do is is we use all the animals our toolbox. One the tools in our toolbox. One tool is looking at the lends of a derivative specialist. How much money is out there and where can it go. Ultimately, where will it wind up. The fact of the matter is whether we like it or not, the fed is pushing us into equities. And whether weve caught the rally so far or will continue to catch it, this market will continue to do what its doing now, absent europe, you know, absent europe having issues. I think one group that will love what youre saying if correlations comes down and theres dispersion in how stocks trade, active managers who were beaten down have a chance to do better. Thats good news for the group. Incredible metric. An asset manager, really across any asset class, right, you need correlations to come in. As soon as they go to one, everybody reduces their portfolio, reduces their risque and sits and watch risk and sits and watches it. Thanks. Appreciate your analysis. Youre welcome. Well see you again soon. Sounds good. Hows the son son is a football star in my shocking. Im surprised. I dont know where he get that. A big turmoil is removing were moving to the next town over. Its been good they have a better team . No. Theres a being recruited. Can you my wife has followed a house for 17 years. Can you look at rebecca i pulled my chair up. You have something in your neck. I want to make sure im not on her lap. Titanium. Thank you. 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It wasnt like it needed 38 and we thought, okay, its up 40, up 30, up 40, is it going do it it opened over 100 and traded over 100 all day long. It was an interday high, as well. And a new closing record in an interesting koinkydink i like that word. Good word. You like that . The dows 12year intraday low, if you go back 12 years, that was set in march, 2009. All right. As we head to the market to take a look at them, we should point out that we have breaking news. The e. U. , antitrust regulators are officially fining microsoft for breaking a promise they say to offer european consumers a choice of web browser. The fine is 569 million euros, 731 million. This is a pledge that microsoft had made back in 2009 when they set up they settled an antitrust investigation in europe. They said that at that point they promised that theyd be offering european consumers a choice of rival browsers in the previous version of its Window Operating system. But the e. C. , which acts as the competition regulator across the e. U. , says that the company broke that undertaking between may of 2011 and july of 2012. I get the need to enforce this stuff, but this is like an issue from ten years ago that probably doesnt matter anymore. Yeah. It not really what you dont think that europe can use the money . Europe more than microsoft can. Both can use the money. Im betting on microsoft. Im saying the debate over microsoft and which browser is going to win the contest is an irrelevant issue. I hope they do something good with the money. You know, give it to spain or something. All right . What do you what do you want them to do . Spains doing better than italy now. Yeah. One of our guests last week, wilb wilbur, right, said he thought greece was better than italy at this point. Wow. Okay. Lets continue our conversation with the markets this morning. Will the dows recordbreaking close boost the mood of skitt investors . Thats the question. Here to put it in perspective, David Blitzer, managing director and chairman of the Index Committee at S P Dow Jones indices. Good morning. Good morning. A pleasure to be here. Whats your take . How long is this going to last . I think its got a while to run. For traditionalist who still believe in dow theory and that thing and technical analyses, we had the transport highs hit a new high yesterday. Im not an expert, but im told that means it confirmed the industrials and thats a very positive sign. On top of that, p. E. Ratios are lower than their average over the last 25, 30 years. And as you mentioned a few minutes ago, vix is very volatile, at about 14. Give us a History Lesson here. There is a momentum play. But what do we need to see in terms of actual underlying numbers there is some disconnect. You dont think theres so much of a disconnect, but there is an arguable disconnect between whats happening in the markets and happening in the economy. How quickly does the economy have to catch up to keep this train rolling . I think the economy has to show continuing improvement. The unemployment has to continue to come down. It would be nice to have the Unemployment Rate plummet. But thats thats probably not in the cards. What youve got now is drawing more and more people into the market. This is a big boost to confidence. And it probably draws a lot of people in in the short term, but if you want to keep it going, youve got to keep drawing them in. One big plus for the equity side of the market is that Interest Rates are incredibly low. You dont make much buying bonds, and on top of that, the risk in bond because if rate go up the prices will come down sharply. The risk in bonds is substantial. Whats your sense on the psychology of the market . We talk about those who havent seen it go up theres a comment in the New York Times saying, look, weve done well, but we may not continue to go higher. Well, you could say that any day. I mean, you could have said that back on the 1st of november, 2009, when you were creeping along the bottom or Something Like that. But i would guess back then more people said we wont go higher than will tell you that this morning. Its largely a question of confidence, getting team come in, getting more money. For people whose memory of the market is the last dozen years, from 2000, from when tech stocks collapsed, theyre probably going to be scared for another 10, 12 years. I dont think you do for people whose memory of the market starts in august of 1982, when things hit the bottom of the bottom and Interest Rates were about 14, 15 , theyre still euphoric this morning. Right. Look, i feel like nobodys repealed greed, okay. I think its there eventually. What i am nervous about, i would look at a comment written in october, 2007. We were wait beinging waiting for the little guy to come back and it never happened. Conditions prevented it. You didnt have the cracks and credit the way you did in 07. You didnt have the excesses built up. Maybe it happens. I dont really think first of all, i dont think its decise 95 terms of where the market sdiefive in terms of where the market goes. Weve dealt a hand in it. You think retail, now we think retails going to come back . Potentially. I think potentially and not in as aggressive a way as they did 15 years ago. By the way, real quick, so if retail comes in, are institutions going take advantage and take profit and get out . The market is different today than it was in 2007. Its certainly different than it was pre2000. Retail now buys efts, they etfs, they still feed stocks. Its a very different gain than it was five or six years ago. On top of that, back in 2007, everybody believed dont buy stock. Youll lose your shirt in technology. Buy your house. Highses on houses never go down, quote prices on houses never go down, quote unquote, thats what theyre saying. I dont think anybodys saying that. They say if its only down 1 3 in the last few years, youre in great shape. People are still looking for a place to invest. Theyll look at etfs, theyll look at being more diversified because of etfs. Theyll look for income. Everybody seems to love dividends at this point. Its a continuing different market. But this has got to get more confident than its got to get anxiety. Few people say were at the top. Most will look for momentum. Right. David blitzer, thank you for your perspective, appreciate it. Thank you. Guess we should have had an idea. This were prikdss about what the sequester was prediction business what the sequester was going to. Do the president was talking no, this wasnt one of them, was it, that the market would hit it was on the negative side of thats right. We had people who came around the table before the election who said the market would tank when he won. The dow and then that what is this . Balancing. Yeah. Anyway, the journal has a good piece on it today. It may be one of the things the market is responding to. The notion that we are able to cut such a miniscule amount. 2. 3 . And the world doesnt end. And that maybe the republicans now have the what i cant use the word anymore. The cajones word or any maybe its a positive that they have the nerve to stand up to not allowing druckenmillers writing things and take a turn for the worse he said this will go for years. Were you watching yesterday . I was watching. I was here listening. You heard the whole sgluf. Not the whole interview interview . Not the whole interview. He said it would go for a while. Hugo chavez has died. What does that mean for the Global Market and i missed you. During the election they said it would go down as a corollary you are reading the editorial from the journal. We cover wall street and wall street is at a new high. Geez. [ male announcer ] when you wear dentures you may not know that your mouth is under attack, from food particles and bacteria. Try fixodent. It helps create a food seal defense for a clean mouth and kills bacteria for fresh breath. Fixodent, and forget it. [ laughter ] [ female announcer ] each one of us is our own boss. And no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. Welcome back, everyone. After a long battle can w cancer, venezuelan president hugo chavez has died. Our International Correspondent has more on what the death means for the oil seattle pi. We found out yesterday oil supply. We found out yesterday after the announcement on televisitelevision National State television. Hugo chavez what happens next in venezuela is anyones guess. People have been asking that for years. But now we are certainly going find out. As the president of venezuela since 1999, hugo chavez led a country with the worlds second largest oil reserves. The biggest exporter of oil in the western hemisphere. High used the platform and the economic power it brought with it to be a flamboyant player on the world stage and thorn in the side of the United States. His most notorious moment, a 2006 speech at the united nations. When referring to u. S. President george w. Bush, he said yesterday, the devil came here. And it smells of sulfur still today. Chavez was a career military man. A former paratrooper who first tried to take over the country in an attempted coup in 1992. Pardoned after serving two years in prison, chavez founded a new socialist party. Upon winning the election and taking office in 1999, chavez began seizing private property and nationalizing hundreds of businesses, often with little or no compensation for the owners. He became a close friend of the socialist dictator of cuba, fidel castro, giving the island nation 100,000 barrels of free oil per day. To pay for social programs such as Free Health Clinics and governmentrun supermarkets with subsidized food, chavez turned the countrys worldrenowned oil company into his personal piggy bank. In protest of the deep Government Intervention into the company, workers went on strike in 2002. Chavez fired nearly all of them, 18,000 in total. That along with lower investment in the countrys oil fields has led to falling production levels for the last ten years. Chavez was a darling of hollywood, appearing at the Venice Film Festival with director oliver stone. Danny glover was by his side at the last election, sean penn flew down in december to voice his support. He is one of the most important forces weve had on this planet. Early 2011, chavez revealed he was fighting cancer and would seek treatment in cuba. Hugo chavez was 58 years old. Venezuela, big supplier of oil to the world. If you take a look at the chart that weve built for you, over the years has become less and less of a plier supplies a supplier to the United States. As i pointed out, they started giving away a lot of oil to other countries, socialist countries that hugo chavez is friends with. Now its only 8 of imports to the u. S. The question, is will there be more. Its also become less relevant because we are producing a lot more. Take a look at the chart weve built. The blue lines on the left are reserves. Venezuela way on the left, the u. S. In the middle. Venezuela has a lot more reserves than the United States, piles and piles more. However, sprukz what you see in green. Venezuela is not producing anywhere near the u. S. Oil equivalent that the u. S. Is, particularly because weve had so much production over the last ten years. You saw what happened to venezuelan production after chavez came in and what thats done to the standard of living for the entire country. Which is why the sean penn does he look at all into the situation . Does he look at any of the actual heres what he sees youll have your chance in a minute. Does he look at any of the actual numbers themselves . No. Heres what he sees he sees a lot more new homes. Sorry, apartment complexes that have been built for the poor, subsidized supermarkets, et cetera. What he doesnt acknowledge is that inflation is horrendous, and if you want to be you want to kill the poor, inflation is the way to do it. Scarcity is not the problem. Theres so few dollars because he robbed the central bank of reserves how much did Oil Production go down . About 25 . I thought it was worse than that. They should be producing by now, could have been producing six Million Barrels of oil per day. Doing 2. 8, if youre going to give them credit for everything, a lot of people say its only 2. 2. When he came into power, it was roughly 3. 2. He was 12 years in power. Yes. So the next election weve got 30 days for the next election . We think so. I mean, everybody assumes theyll call elections because thats what the constitution calls for. But im not convinced that thats necessarily going to happen if the if maduro doesnt try and stay in power. Well have to see. Well push back on this youre not going keep it fair . Did you meet sean penn at any of your parties in hollywood . Yes, i have met him over the years. In the meantime, well excuse me. Coming up, the check is in the mail. Supposedly. Well see the u. S. Postmaster, hell join us to talk about budget problems, saturday delivery and much more. Stay tuned. Our fastest way to return your car. Just note your mileage and zap youre outta there well email your receipt in a flash, too. Its just another way youll be traveling at the speed of hertz. Investor. Yeah, ibut im a busy guy. Or it used to be easier but now there are more choices than ever. I want to know exactly what i am investing in. I want to know exactly how much im paying. I want to use the same stuff the big guys use. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. 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. 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 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. Your Financial Advisor should focus on your longterm goals, not their shortterm agenda. [ male announcer ] join the nearly 7 million investors who think like you do. Face time and think time make a difference. At edward jones, its how we make sense of investing. On wall street, Dow Jones Industrials closing at an all time record high. It passed its previous record high in october of 07. The dow has never been higher at any moment than right now. When the stock market guys push chips out, they also pull them back. Theres no shortage of opinions where we do from here. U. S. Postal Service Recently announced plans to phase out saturday mail delivery. Now, the postmaster general is urging prompt action from congress. Joining us from d. C. Good morning. Good morning. Heres the question. It will say this plan for saturday delivery should work, 2 billion annually. Is that enough . You have a much bigger hole at work here and i wonder whether this plan goes far enough. Its not enough at all. What weve done is put together a plan that will be enough. Its based on a number of things. Revenue increases but mainly cost reductions. The biggest cost driver we have is health care. This year, if we were able to pay for it all, which we cant because we dont have the cash, it would cost us 13 billion in health care. Thats 20 of our operating revenues. What our proposal is to congress to pass legislation that allows us to move way from the federal government, to take on our own health care plan. That will resolve a substantial amount of prefunding were required to do by law now plus Ongoing Health care costs. You combine that plus the infrastructure changes were making and we will be back on financial footing. Is there an argument, a number of Industries Come out and said, look, this will hurt business, this will hurt the economy and hurt delivery by not having it on saturday. Have you heard any compelling argume argument . We make this move. As part of that, we heard a lot from customers. The main thing we heard was this. Deliver my packages on saturday. People want medicine, they want what they buy from ebay and amazon and their packages. Were proposing keep the post offices open, mailbox, put po box, youll get your mail. Well deliver packages and our network will run. Anything in the system will run. What well eliminate is delivery. It will save us 2 billion and customers have said were fine with that. We had sur swra veys done after 80 said were fine for that. And when the choice is cut saturday delivery or ask for a tax bailout, it goes up to 90 . Is there anything in washington to help you raise revenue in other ways zwlmpgts theres talk you can take your trucks and make them the equivalent of google trucks, filming or sell wine or beer or do other things you havent been able to do historically or get into the banking business like other post offices in other countries have done. Theres a lot of talk about that. From the history from the United States perspective we already provide those services through the private sector. I think if we got into banking, jpmorgan, bank of america probably would not be happy with that. The same with cell phones. We think we have excellent core products, need to get our finances balanced taking out excess costs. We have already take an lot out. We have reduced in the last 13 years, 300,000 people out of our organization. We have been very aggressive. Focus on packages, direct mail, still a lot of money in that. You can compete effectively with fedex and u. P. S. On those items . We compete now on areas that make sense to us. Smaller packages delivered to the home, we do very well. Fedex is our fourth largest customer. We deliver a substantial amount of their business to the home. U. P. S. Is our 10th largest customer. We work very well with them as well as compete with them. Youre a customer of theirs as well. Patrick, thank you for joining us this morning. Thank you. Thanks. We want to thank your guest host this hour, Rebecca Patterson and mike. We hope to see you bolte again soon. When we come back with the dow soaring to record levels. And u. S. Futures are indicated higher. 45 points above fair value even after closing at record levels yesterday. Squawk will be right back. Music plays thank you orville and wilbur. Amelia. Neil and buzz for proving theres nowhere we cant go. But, at some point. Giant leaps gave way to baby steps. And with all due respect, youre history. If you taught us anything, its that you cant cling to the past. If you want to create the future. Thats why, instead of looking behind. Delta is looking beyond. Pushing u. S. Aviation to new heights. All 80 thousand of us. Busy investing billions in the industrys boldest moves. Its biggest advances in technology. Bringing our passengers the best, the most spacious fleet in the sky. And earning more awards than any other airline. To show for it. So rather than simply saluting history. Were out there making it. Sales event has begun. Featuring a stunning work of technology the lexus es. This is a reason to look twice. Get great values on your favorite lexus models during the command performance sales event. This is the pursuit of perfection. The bulls are on parade. A closer look at the dows record setting day and where the market could be headed next. Guest host and market guru leon cooperman joins us for a special event. Plus, whats really driving this market higher. Margaret strategi market strategists give us names to make you money. And inflight video to make your experience more comfortable. Are you telling us exactly everything . Not exactly. Were also out of coffee. Ceo of aerospace talks about accommodations and the companys spot doubling in three years. Hot markets and hot stocks and one hot show. The second hour starts right no now. Good morning, everybody. Welcome back to squawk box on cnbc. Im becky quick with joe kernen and andrew ross sorkin. The futures are higher once again. Dow up 45 points after fair value and record high yesterday. Lets get to some headlines on this wednesday morning. Whether the dow can extend that record run will be determined in a little over an hour. Were getting the february edp report at 8 15 a. M. Eastern time. Looking for 187,000 new jobs next month. Microsoft has officially been fined 165,0 165,000 to giv Windows Users a choice of internet browsers. The pledge came back to 2009 after an antitrust investigation. 521 million. And the first time toyota ever appoints a board member outside japan. And jim lentz will now be in charge of all of north america. Thanks. News just in from nasdaq, starting a marketplace to buy and sell shares. The operation will be called the nasdaq private market. Original name. With nasdaq holding a majority stake, it will be launching later this year pending regulatory approval. The dow came off a record close, the first one it hit since october of 2007. Join us now whether the market rally will continue. The market strategist, head of u. S. Portfolio strategy at barkleys and our guest host for the next hour, hedge fund leon cooperman. I have to start with, neither one of you guys, i dont think of the word legend but with leon, he is. Sorry, not to love you guys, jeff and barry. Lee, what do you make . More to go or less . I would say more to go. I would come across as a simpleton by saying i think things have been reasonably classical, in a sense if you look back at most bear markets recede recessions. The average bear market lasts a year, down 25 . 09 went down 57 , lasted about a year and a half. Lo and behold the average recession had a decline of 2 in gdp, lasts about a year. This past recession was an 18 month affair, down 4. 7. In a sense, twice as severe bear market and twice as severe Economic Contraction giving rise to all the traditional response, fiscal, monetary. Bernanke told us almost everyday since 2009 he wants higher inflation, more Economic Growth and lower unemployment and higher stock prices to create wealthy and consumption. Two questions you have to ask yourself as a money manager, has he gotten the market into a zone of overvaluation through this zero Interest Rate policy. Secondly, whose ox will be gored when they start dealing with this budget deficit. Have you asked yourself that question . Yes. An 800 billion deficit in the fourth year of a Business Recovery and zero Interest Rates. Whats normal . I say normal is a year government 4 to 5 to 6 , not 180 and s p multiple 15 and something around 100. Means the market is fairly valued around 1500. Were about 1540. Hes gotten the market into a zone of fair valuation. Every market ends at ov overvaluation and every bear market under valuation so the market is still okay. Its not a bargain anymore. I see all this excitement and say to myself, the last time i saw excitement am was 700 and facebook was 38. The market is okay. You will need a recession to bring it down or some sort of upset in the middle east. The market is okay, not cheap but okay. I dont know how long youve been negative. The last time i know you were negative on the show very much so. Now . Bout talking about a range. Is one of the behind this movie called great and powerful. If you look behind the curtain, wave gotten here on different names, no citigroup, no gm, a different set of horses. Whats unique and different this time we have an index that february milestone in and gone a little bit higher. The same thing happened last year, we crossed 13,000 in february, crossed 12,000 in february the year before and then we stayed there the rest of the entire year, 5 up and 5 down. Camp i think he were in a volatile range round year and the market should be focused on not only the direction but the volatility. How much of this have you missed or your clients missed . Last time you on you definitely were negative . Years or months . We pulled we began to pull back in early february as we hit that 14,000 milestone. So were waiting for these dips. We actually bought the Home Builders. You only missed you only turned negative you missed 200 points . Thats pretty good then. Usually see 10 plus or minus swings. You get better entry points. Market is not othver yet. There are lots of ups and downs balanced between positives and negatives. Barry, how are you feeling . Funny, when i started thinking about october of 2007, i couldnt really get particularly nostalgic about that period. That was one of im actually standing on one of our fixed income trading floors, one of the occasions all my fixed income counterparties were calling me saying are you guys insane . Why is the dow at a new high . I get the fed just started easing. The credit markets were coming to an end. The fact were exceeding that high is not surprising and i agree, valuation is fair and the market didnt protect us then but were not on the verge of a recession. The risks to growth are still on the down side. Theres been plenty of evidence this payroll tax is biting. Theres parts of the market working really well that have driven us to new highs. Staples and health care being the two best performers this year. That is the stock market in the sweet spot of fed policy, high dividend payers where the money flows are going and that will continue to work even through a growth related pullback as we get into the second quarter. Parts of the market related to cap spending look okay, the parts related to the domestic economy look really elrated. I say you stick with the high dividend payers and they will work in the pullback and up trend. That make sense to you . Some of the elements of what he has to say. The way i approach it, every recession sews the seed of the next Business Recovery and the next Business Recovery sews the seeds to the next recession. I think the theme is its not over yet nor is the market a bargain. Youve written public letters to the white house. One. It was a good one. A lot of things happened in spite of what goes on in washington. Do you still think we need policymakers to come together on some type of grand bargain . Absolutely. Is it holding us back . Youve had a brilliant fellow on this show i have enormously hard regard for, ken, and stan Rucker Miller talks about generational theft and a guy you ought to listen to, a bright individual. We cant continue on policies like were having. The most negative part of the sequester is not impact on the economy, another evidence of inability of government to get together and fiscal boys to work things out. Thats why the entire burden of dealing with this recession fell on bernanke and basically bernankes created an environment the saver is being destroyed. Tell me a guy or family saved lucky enough to have 2 million that can retire on that. Its wrong. Interest rates dont belong where its at. Bernanke is carrying the entire low. Its disfunctional government. Sad. Were heading to big problems. High tax states versus low tax states. Maybe he didnt say it in the right way, i dont think he said anything wrong, phil mickelson, youre a big golfer. He said for every 18 holes i play i dont want to give 11 to the government and keep 7 to myself. 62 tax rate, all in. We have to come down and come to some understanding what are appropriate tax policies. Plenty of people in the past argue gridlock is good. I know what youre saying. If we have a functioning government we have two approaches to how we what we want the government to do. One approach with a functioning government takes us right down the entitlement pathway. If we are all on the same page, if the house turns in two years and were all on the same page for that, is that better than disfunctional . No. The reason were getting away with the disfunctional government, theres no pain associated with their policies. Because of the fed. Basically, i said this before, one of the most distinguished Goldman Sachs partners was henry fowler who left the department of treasury to become a partner with Goldman Sachs and partner with Pete Peterson of blackstone and they took ads in the journal and New York Times alerting the public to the evils of the budget and deficit of congress. That was 1972. The United States has the lowest borrowing costs in history. Pete peterson, another distinguished gentleman wrote running on empty four or five or six years ago. Whats the consequence . Were living too comfortablebly with policies and when things change we will have a crisis on our hands. We either have intelligent leadership to head off the crisis or respond the crisis. Im not a big short seller and dont think Financial Assets discount crisis. Its potential for instability. We dont know if that hits a year from now, 18 months from now, two years from now. Were heading down the wrong path and were staying on that wrong path because theres no consequence to the policies. The public is telling the government, heres my money for nothing, take my money. T bills are 10 basis points, 8 basis points, 10 year money is 180. You would think intelligent fiscal management, we should be issuing 100 year bonds now as a country. Jeff, the stock market is attractive compared to these other things. Thats a very important point. I said on this show three years ago, equities are the best house in the financial asset neighborhood. We dont know whether its a good neighborhood or bad neighborhood. Think about alternatives in Financial Assets, not talking real estate or oil and gas, put your money in cash, that is zero, bernanke says it will stay in zero another year or two. Put it in financial bonds, and you have very bright people on this show with the exception of myself, jeff is in bonds. Buying u. S. Government bonds today are like walking in front of a steamroller and picking up a dime. Not a good policy. It belongs at 4, 5 or 6. High yield in 08, bloomberg high yield index was 25 . The s p was 900, s p multiple was 13. 9. And high yield was 6 down from 13. 5 and youre left with common stocks. The average is 14 1 2 yielding 2 . You can find a lot of things better than average yielding much more than government bonds growin growing. There is you are one of our very favorites to have on to listen to. Sorry, barry. Youre very kind. There is a cost to this. We go back and look at the last time the fed did this in cap rates. Our debt had gone to 100 of gdp in 40s and 50s and conference was single digit pes and inflationary spikes. The way we got out of that debt we got out of world war ii and stopped the military spending. Theres no easy solution to get out of the debt this go around because its all about entitlements. The i inevitable cost of this i of ation, just a question timing. Is it you talk range bound. What causes the upper end of this range right now for you . What causes it . You have a lot of positives in housing, rebound in business on. Ding going still have the dont fight the federally. Whats the negative . What causes you to put the high end of the range . Put a top endu to close to where we are. There are many potential gasoline prices are of reasons we are vulnerable. Does the fed stop our slow qe and pot tbottom line, europe the italian election, the economic crisis in europe trading a fiscal or economic one. France and germany. This will come back. Same policies in europe. We know all those things. Thats the weird thing. We still had a spring slide last year related to europe and the year before as well. It wasnt a new issue. We cant do four in a row. Would that be four in a row for the spring slide. It would. We cant do four in a row, i dont think. I think there are a lot of couple of e last years, fiscally, monetarily whats going on in the rest of the world. Housings healed. Finally, finally we will get something out of this. Unemployment will come down. Corporate profits are flush. Come on, jeff. Flush, theyre going at 1 yearoveryear on the first quarter. Dont worry about that quarte quarter. Okay. How about the Fourth Quarter . Third quarter of last year . One. Ext looking at an environment slow revenue growth. Lot of profit off that. Im not saying stocks are overvalued, theyre not, fairly valued. Been 115 days since we saw a 10 pullback. Were close to one. He is negative. Tactically negative. Home builders, industrials, thats where you want to buy. For a lot of investors a lot of people have been waiting for dips to come and come, thats the thing. They have back in february 25th, a big pull back, down 9 , a great opportunity to buy. We did. Industrials the same thing. Opportunities to pick up some stocks that have great long term stories. Housing, Home Builders a great story for that. Long term story but you get these opportunities to buy into them. Gentlemen, thank you. None of you guys are counting the table bullets, i dont know what that means. That is bullish. That thats what i mean, all right. Coming up, the dow hitting a record high for the first time in nearly 5 1 2 years, weve been talking a lot about it. We will continue our conversation with our guest host, leon cooperman. Where is the market headed and more importantly, how is he making money now . The Company Looking to improve inflight experience. Be aerospace in town to talk to investors. Why this company is expecting growth at nearly 22 this year. 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. Welcome back, everybody. Were taking a look at the futures and they are closing higher after record levels. Up by 45 points. The retailer is to watch is staples. One penny better than the street was expecting. Revenue came in below. The full year forecast falls short of the street expectations and up by a penny. We will have an update on travel and the forecast and then after that, the man behind the Worlds Largest Money Management firms. Record highs and where youre putting your money. We will be talking to the chief investment strategist of blackrock when we return. Which was the first japanese branded car to have been built in the u. S. . The answer when cnbc squawk box continues. What do you see . Um, i see a duck. Be more specific. I see the aflac duck. I see the aflac duck out of work and not making any money. I see him moving in with his parents and selling bootleg dvds out of the back of a van. Dude, thats your life. Remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. I see lunch. [ monitor beeping ] lets move on. [ male announcer ] find out what a hospital stay could really cost you at aflac. Com. At a Hertz Expressrent kiosk, you can rent a car without a reservation. And without a line. Now thats a fast car. Its just another way youll be traveling at the speed of hertz. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. Its just common sense. But that doesnt mean i dont want to make money. Stor. I love making money. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Now the answer to todays aflac trivia question. Which was the first japanese branded car to have been build in the u. S. . The answer, the honda accord. Welcome back, everybody. Our guest host today is Lee Cooperman. You were just talking offcamera a little bit about how you have been following what people have been doing back to march of 2000. You look at returns investors have made, you kcan understand why people get skeptical and see these levels and get turned off. In the last 15 years there have been two significant market peeks, march of 2000, and steve and i were musing about this, my vicechairman, a terrific guy, about this. From march of 2000 to march 4th of 2013, the annualized return of s p has been 1. 9 . 1. 9. Its a less exciting life, if you took your money and rolled it over in tbills you would have earned 2. 1 . If you inflate the return for inflation, the return since the last peak of march of 2,000 has been negative 1 2 . The second market, october of 1565. From 1565 to yesterdays close you made 1. 7 a year, some better than the 0. 4 of tbills but not terribly startling and the real return is negative. 3 of 1 . You could look at it two ways, say its not a particularly good place. Still have this view equities are the best place. Are there a couple equities you love now . We have 90 in our portfolio. I wont pound any individual stolk. People want income, kk are financial, 7. 4 yield, 5 a year. A Company Called kimero, has a little hair on it because of Financial Issues we think will be resolved this year. 11. 7 return. Atlas pipeline yielding 7 growing, lint energy, 7. 7 yield, growing. Transocean, 4. 2 yield. You have the very intelligent carl icahn in the background, we think the assets are worth 70, trading in the market for 52. You want growth, buy cal cocom, google, no shortage of excellent ideas. Almost half the s p 500 yield more than bonds and theyre growin growing. Stay where you are. We will continue this conversation. If you have anything you want to share, shoot us an email. We will talk about where markets stand after the break. Its a phoenix with 4 wheels. Its a hawk with night vision goggles. Its marching to the beat of a different drum. And where beauty meets brains. Its big ideas with smaller footprints. And knowing theres always more in the world to see. Its the allnew lincoln mkz. Welcome back, everybody. This is squawk box. In ourhead line headlines, wer5 minutes away from the economic report. We will have no, sir numbers and instant reaction at 8 15 eastern time. Another key event is at 2 00 p. M. Eastern time. The feds region by region assessment of the u. S. Economy. Mortgages jumping last week. Both new applications and refinancing surged as the Mortgage Rates jumped seven basis points to 3. 7 . We are tracking the latest winter storm, named after a car. Planets. Forgot about that. More recently a car. And a god, saturn was. Roman. Yeah. The weather channel, speaking of weather gods, eric fisher, a lot of the ladies write in the weather god, eric. Oh, boy. Yeah. I think the weather channel, were sister networks, i dont know about the name in america. I guess its okay. We talk about it like its something. I was confused because no one alerted me it was saturn. I didnt know what we were talking about . What is saturn . As long as youre talking about it, thats the idea. You know there is a storm and has a name. The effects on the ground, snow and rain. The question is in the big cities, do we see rain or snow . The answer is most of the snow is going to stay just west of the big cities. The line is right through bat e baltimore and d. C. Out to the west. Its been coming down, the rain, in parts of baltimore and west virginia. In dulles, snow all morning long. To the capitol, right on the mall, its been raining, a little bit of drizzle. It will make a tremendous difference. Temperaturines are borderline, march storm. That plays into it. 812 inches, most west of d. C. , 58 in the city itself. Should see 35 in philly, higher totals more likely in northern jersey and northern suburbs, more terrain north of new york. Then this area, just west of boston, we can see over a foot of snowfall coming down. Seriously impacts there. Air travel, about 1,000 Flights Canceled in washington and d. C. Today. Power outages, because theres a heavy wet snowfall, gusty winds, likely here in the midatlantic and more toward tomorrow and friday and eastern long island where you should prepare for a chance for long power outages. This is not going anywhere. Slow moving system. The High Pressure to the north boxes it in. For the next couple of days, it sits here. Strong winds, cape cod, boston, you could have two days straight of 3050 miles an hour winds. Another ugly storm for coastline communities. Youre lucky. Is this the first year for all of these . It is, right . First time we named them. Other years we had storms, you guys would be like, were on a still, ready. It was so quiet last year, we how quiet was it . How quiet was it . It was quieter than the family reunions i go to and try to tell jokes. We had six storms i trade ied t name last year. You could be drizzling and have to name names. What is t, do you know at this point . T is try titan. You is not uranis. Don donti iouse that one. If youre going through the planets, skip that one. Im not c 9 or 10 one of our girls, when we went to one of their prek plays got to be uranus. You cant say that word without laughing. Im uranus. We were laughing in the audience, everybody else was more mature. Becky quick. Of course. Omega advisor chairman ceo also member of Institutional Investors delivering alpha conference. We were talking off the air. You think this dell buyout is Insider Trading at its worst. What do you mean by that . Its a moral argument im making but i think the right argument. Generally speaking, not just dell. I dont own shares of dell so i have no ax in this fight. Generally speaking leverage buyout is Insider Trading by management against shareholders. Theyre not taking out private to lose money, theyre taking it private to make money. One year after the ceo took metromedia trift he made 5 billion on the play. That was Insider Trading. Shareholders know more about value. In the last decade, dell stock is down 50 . S p up 80 . Computer hardware index is up 2 . He allowed his shareholders to ride this down with him. Why does he not try to work on behalf of the public and allow them to come back. On eight occasions, teldine made offers to public shareholders to buy back their stock. Bought back 90 of their stock. These were voluntary offers. He offered you a price and you had the right to take that price or pass. He leveraged up the company. If you want to stay with a leveraged vehicle, stick with us. If you want your money to get off the train, get off the train. Thats a great model. I will give you an antidotal story that makes my point. In november of 1983, dating myself, the two Senior Partners of Goldman Sachs said this guy you talk about Henry Singleton nobody at the firm knows screams unattractively about the teledine model. Could you give him a cal . I called him and to make it a long story short he had no interest in talking to us november of 1983. On may 6th if memory serves me right, may of 84, the stock 115 156 3 4 ill pay you 200 million in cash for the shares and he took it all and reduced the cap by 43 . He paid you a nice premium. If you were happy with that premium, you took your money, left the party. If you had confidence in his and his knowledge and ability to do a good zbrosh you jrk for you, the company. He didnt force anybody out. I say to michael dell, do it for the shareholders. Give them a premium. You have to give them less a premium to stay public than to take the whole thing private and do that, thats the more ethical way of going. Theres a flip side argument to be made theres a huge risk for this company the public doesnt have the stomach. Do what i said, give them an offer and they can get off the train. If theyre willing to take the risk of a leveraged vehicle and think michael dell and silver lake are smart, give them an opportunity to stay with them. Five years from now we have a story michael dell made 10 billion taking it private, the shareholders will think theyre screwed. You think the shareholders supposed to approve this are phony . Theyre not phony. Im making a more ral argument. Hes saying i dont want to run a more leveraged vehicle in the public eye. Im willing to run a leveraged vehicle private. Im saying let the public make the decision. If south management is happy, they can take the stock and leave the party. Herbalife herbalife are very smart guys. You dont own the position. I dont own the stock. Why talk about it if you dont own it . You asked me about it. The others all these guys are manipulating you guys. Scott saying i dont want to talk about what you want to talk about, i want to talk about what you want to talk about. Basically manipulate your view. I respect carl icahn and dan, theyre smart guys, didnt get where they are by falling off a turnip truck. I would be reluctant if i was bi ackerman by selling 20 to the public. Now does he have a responsibility to the public, stood in front of people for three hours trashing his company. He may be right or wrong but if he was to change his position, would an intelligent lawyer say since you have canada tondition public and made these stateme statements the law doesnt require that, does he . I think he has taken on a bailment and has a responsibility to the public. There was a bunch of fellows in the early 80s short sellers running high, the fishback family, i know well not making a negative comment. Nobody got rich temporarily. Its not a wise thing to publicize your short position. What about David Einhorn who came out i was careful saying nobody ever got rich publicizing their short position. Forget being rich, is there a Public Service argument to be made when you could argue David Einhorn raised some important issues potentially to the extent you think akman is right and im not arguing he is or isnt, you could argue hes raising a public element at the same time, theyre doing it as well. I have nothing against short selling. It does add certain discipline to the market. Not the point im making. The point im making is it wise to bring the public into this the way hes done it. Does he have a responsibility that limits his trading. Goldman sachs would not bring its aarbitrage trading to the public and they didnt have a responsibility to inform them before they did what they did. Akman may have a responsibility to the public. Lets turn it around. If you are a big bull to a company and make a presentation in favor of it, are you bound in reverse of that to let people know youre getting out of the stock. I dont know. Im not a lawyer. Maybe that should be your next guest and ask the question. Bill akman spent three hours trashing this company. He may be right or wrong. He does very thorough research. That doesnt mean he cant be wrong, right. Im asking rhetorically does he have a responsibility to the public. I think he does. But im not a lawyer. You tell us you like google. But i didnt spend three hours with 400 slides telling you why i like google. I go to a survey we make of things that are attractive. Go back to facebook, i was there before the ipo of facebook, and said facebook is like a beautiful woman without a blemish and the moment the blemish comes up, facebook is down and google is up. Youre still in it . Yes. Its a philosophical question. I dont have any emnity. I like them and respect them. If i see what theyre doing, i would look further. I havent looked at herbal life, not my thing. I dont know whether its herbal life or herbal life. I dont know which it is. These are philosophical issues. I think he has responsibility. Now, he was unified and sold 10 million shares of jc penney. Thats why theyve gotten rid of they havent gotten rid of him. He was a terrific guy. Paid 100 million to get him. Gave him 100 million deal to leave. And steve is a terrific guy. I dont know the inside there. Like turning you on and letting you go. I dont mean turning you on, which i probably do, too, i like switching you this moment has been brought to you by i like switching you on and you just go. An hour is really not long enough. We are having some technical difficulties, saying with blackro blackrock no will hear from lee. Just joking, russ. Technical difficulties. Saturn has come to the east coast. Shoot me. Making your inside experience a little more comfortable. Aerospa aerospace, and were going to talk about a recent consolidation weve seen and also the sequester and more. Tomorrow on squawk box, we are live from the economic summit in new york. Andrew will be joined by some of the most influential names in business including jeremy segal, ken molis and Michael Steinhardt and guest host guru, ken chanos. Starts here on squawk box. Profit from it. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. music throughout why turbo . Trust us. Its just better to be in front. The sonata turbo. From hyundai. Carfirmation. Only hertz gives you a carfirmation. Hey, this is challenger. Ill be waiting for you in stall 5. It confirms your reservation and the location your car is in, the moment you land. Its just another way youll be traveling at the speed of hertz. Be aerospace continues to fly high above its competition. Stock up 6 in the last year. Joining us now, great to have you here. You couldnt do 700 . We did our best, joe. Hows business right now . Business is, thank goodness really good. Boeing and airbus are building as many airplanes as they can. They have record backlogs. Were a major supplier for those airplanes. Our company has Growth Drivers and doing well and the outlook is pretty good the next few years. People will i dont see any end in sight to the number of airliners the planet will need. Its exciting and not going back. There are people that want to go back and become less global. Theres structural growth in emerging companies of the world and people are entering middle class in record areas of the world. What do you do when you become middle class . They will fly for the first time. Last year we had a 5 1 2 growth rate in air travel and 4 in capacity, squeezing more and more people into airplanes, ticket prices are going higher, airlines are making money. Things are okay. I love the dreamliner, said its a great plane. You said, you do, too. People have no idea about sophistication designing and building an airliner. It is a magnificent aircraft. The engineering talent and technical competence at boeing and airbus is awesome. I think folks dont really understand how complicated it is to build and airplane. You try building one and flying it. The team out there is outstanding. Were a major supplier of equipment for all those aircraft. I have a lot of respect for the capability of those folks. Im sure the dreamliner issue will be resolved. How does the concentration affect you . More customers . More buying leverage . We sell our equipment to pretty much every airline in the world. It is really a matter of the people traveling regardless which airline theyre traveling in. As the u. S. Has consolidated, the number of airlines in the world has actually grown because of the growth in asia and pac rim and middle east. You supply the military aircraft. Will the sequester affect you at all . The military business is about 10 of our total business. As i think about the sequester, it is such a tiny thing in the context of the real issues which this country has. The sequester is an 85 billion kind of a thing. Our problem is an 85 trillion problem due to unfunded liabilities. Its 1,000 times greater than the sequester. If we cant handle a little 2. 3 or 2. 4 reduction in spending. If we find out we can handle it, we might actually try to cut instead of raising taxes. It sets a bad precedent seeing that we cant handle it, bad. There are only two ways out. Thats a bad precedent. We dont want to cut anything, just want to raise revenue. We need growth and can only grow our way out of this or inflate our way out or both. I think what bernanke is doing is the right thing. Print as much as you can, inflate as much as you can, we have to grow. The more regulation that gets in the way of Business Growth and the higher the taxes get in this way of growth the worse its going to be. Quick selfish question, which airline has the best Business Class seats since you make them all . Best first class seats is emirates. You make them . Of course. I went to abu dhabi, the emirates, it was like the bathroom in my home. Dining for two, full bed, tv, accent lighting, a little refrigerator, place to hang your coat, like a train compartment. My wife and i went on a trip to greece. I was going business first, a 9 degree angle in lift time. The difference between flatbed and first class and business first, im a cheap guy, was 12,000 a ticket a person to go first class. And now going completely flat. Im going in september. Hope theyre flat by september. United upgrades are beautiful. Awesome. Absolutely awesome. When i passed by could you make the coach seats a little better. United is a great airline. Coach seats better . Well talk about it next time. Thank you. We appreciate your time. Take a look at the markets. After closing at a record high. Dow futures up higher by 49 points. Squawk box will be right back. 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. We want to thank Lee Cooperman for spending the last hour with us. Next time, could we have you for two hours . We could except my back cant handle sitting still. One thing i want to get out there pleading with the politicians, we have to get together and figure out what is the proper maximum tax laws on wealthy people. Wealthy people pay 70 to 80 of taxes to the government, as it should be. I believe in an progressive income tax structure. At the end of the day we have to have an income yield. I asked that question of paul krugman. He said 70 marginal tax rate. I dont think thats the right answer. I think warren buffet, said you make a million, 35. I have no problem. Phil mickelson says hes 62 already in california. We have to sit down, figure this out, do it together as a team. We are going to head to a crisis. We have 16 16. 5 trillion of deb in the United States. The average is four years, 165 billion, they cant get together on 10 or 20 billion. Lee, thank you. Next time, two hours. Well let you walk in between. Thank you. When we come back, well talk more about whats happening with the markets. We have bob doll joining us and howard ward of gamco. The dow closing at an all time high. Wee will economic headwinds and political uncenter affect the rally . Thataboy. And bob waward and doll. And chief of staff jpmorgan executive, bill daley, will join us on the markets, economy and Political Uncertainty. Breaking jobs status. Payroll numbers hitting the tape at 8 13 eastern. The third hour of squawk box starts right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. We were watching the equity features and looks like they will extend yesterdays day. Yesterday, dow closed at an all time 30 week high and broader s p 500 reached a fiveyear high and a record close and nice for that. We talked about the dow transports matched the high in the industrials. The transports have been hitting new highs and now its good to have the industrials on track, if youre believing in that. That was the one that hadnt. We will talk to howard ward and nuveen Asset Management, bob doll in a moment. Do we need to talk about dell . In the meantime, hugo chavez has died. There has been little reaction. It saw a decline during his 14 years but analysts dont expect that to change immediately. And the European Commission announcing it will be fining microsoft 561 million euros, 733 million for breaking an earlier agreement. In 2009, the company promised to give Windows Users the option of choosing another browser rather than having Internet Explorer automatically installed. But moicrosoft failed to stick o the deal. The company acknowledged the failure and said it was a mistake. Nasdaq announce iing buying operator shares post. The operation will be called the nasdaq private market. Kind of original or not so original name with nasdaq holding a majority stake, it will be launching later this year pending regulatory approval. Its very weird, becky this is coming out now. Lee cooperman just talked about dell and Dell Special Committee issues a statement and says we tried really hard to get the best share fdeal for shareh. He has a problem with leveraged buyouts in general because he thinks shareholders get ripped off. The owners know whats going on. They know whats going on and know whats cheap and if they make billions of dollars, me on the shareholders would have made if they stayed public. There is a special committee out of dells board of directors defending their decision. They said they spent five months look at every opportunity and negotiated aggressively to make sure stockholders received the best value and agreed to the 13 price and the average premium 90 days before rumors of the transaction surfaced and they go on to say the share is not held by mr. Dell or members of the management. They insisted the holders of the share not held by dell. This has been, in the past week, theres been an argument going on. Its gotten more and more vocal. Lee, i think, in a way, articulated the issues in a really good way. One of the things they all say we have a go shop. We will do a deal, give you 45 days to find a better deal. The idea you can find somebody in 45 days after you know this is michael dells deal. The one thing to give him credit for, michael dell, as you just said, is not voting on the transaction. That is a good thing. There are previous transactions they havent done that. There is a situation where majority shareholders without mr. Dell and people on the board have to be the ones voting majority. They get to decide their own fate with this. If the majority of shareholders dont want it they can walk away from it. A lot of people think this stock is a dog and the company is a dog and will never turn it around. There are two sides to this story. Michael dell thinks the opposite. If youre dell, you have a hard time taking the other side of the argument. No, this is fair because the stock is a dog. Please, let me do this, please let me do this. I dont know. Management buyouts. Hardware but theyre not just hardware anymore. If you were going to bet on the dell of old, you would say, what are you crazy . Its all about the cloud now. I will tell you, they did talk to other private equity firms and i talked to some first amendments, they didnt want to touch it. To some of the private equity firms and they didnt want to touch. I they thought it was a dog. Were watching new highs. For more on the move yesterday, bob doll, Portfolio Manager at an Asset Management company and h howard, welcome to both of you. What do you think has happened . Have you been surprised with the new highs and can the market continue . Yes. Not really surprised with the new highs and i think it can continue. If were expecting earnings on s p this year around 110. If you put a reasonable average multiple on that of 15 times, you get 1650 on the s p 500. I think thats a reasonable target for yearend, which still also gives you close to a double digit return on the dividend on the s p between now and then. Do you have to rush into stocks right now, if you missed the 130 move that happened over the last four years . No, you dont. You might get a better entry point but you wont make any money in bonds, my opinion and wont be making money in cash. Stocks are going to provide the best returns. Youre going to need to fund your retirement if youre a baby boomer, if youre one of the 10,000 people retiring for the next 17 years everyday, then youre going to be putting money in stocks. I think stocks will win. Bob, we have seen pretty rapid ascents with the stock market. Will you be buying stock today . I think trading stocks make sense. You can trim back things that have worked well and buy laggers if you like them fundamentally. I agree with what howard said, the path of least resistance is up for positive and least resistance reasons. The market is up shouldnt be a surprise maybe the pace is surpris surprise. We will be watching numbers coming up, the jobs report. What are you thinking . People are not expecting gang busters on this. What do you think we will see friday . I agree, job growth has been okay. Like every Economic Indicator practically, okay, no better than that. If we get one better, we get one worse. Thats part of this ideal world we live in. Growth but not so strong inflation comes back and the fed keeping the pedal to the metal and stocks love it and keeping this market up. How much is dont fight the fed move and how much this is an improving economy and things getting better. Its a little bit of both. Over the last four years, this fabulous movement we had in the market took place despite the fact individuals were taking money out of equities. Now, what we discovered in the first 2 1 2 months of this year, those individuals are starting to come back to stocks. It took a new high to get them to do it, which is unfortunate, but they are beginning to do it now. That has some reason part of that is why we had the increase in the markets of late. Now, all of a sudden, instead of individuals taking money out, theyre starting to put money back in. From a psychological perspective you see the dow is at an all time high, maybe that brings people back . It always does and i think it will again. As far as the fed goes, a real question mark the fed policy. Where would Interest Rates be if the fed was not buying a trillion dollars of bonds every year . We dont know the answer to that. How would be financing our defic deficit if not for the fed. Certainly rates would be higher, im pretty confident of that. Bob, what are sectors and individual names you like best once weve gotten to these areas. You said youd trim some areas. Where might you trim and add . In this environment with the market up so much, id buy things that have lagged, cheaper valuations, question marks. Some defense stock isnt that bad despite headlines from washington, whether raytheon or boeing. I still think the health care area, lilies, dickinson, those names have a little defense if youre nervous the markets run too far. I would not ignore cyclicals. I have voller row and an tech in my portfolio. Thank you for joining us this morning. Howard will be with us the rest of the hour and, bob, well see you again soon. Were just minutes away from the adp private numbers. Finally they decided to release the Employment Data for february this week. I dont know. You know what that means. You know whos here. Leisman, our chief economist. We will bring you the data and Market Reaction and former white house chief of staff, bill daley. We will ask him about the markets and Political Uncertainty, another if special edition of squawk box lineup tomorrow. Jeremy siegel. Hedge fund manager jim chanos. Ken moelis and alex gorsky and legendary investor, Michael Steinhardt. The dow crossing at an alltime high. What are you doing with your money. For market news and analysis that will impact your portfolio, watch squawk box. Make smarter investment decisions. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Were less than 30 seconds away from the unemployment look for february. Well see how things are setting up, we have green arrows that could change in 10 seconds. Dow could open up four points higher. Steve has the number. You got it. 198,000. The total private payroll will rise by 198,000. January was revised by 215,000. Now, we can see i cant see the thing. Goods were 34,000. Services 164, nonfarm payrolls estimated 160. In the new world, im not sure if that 160 for total private and government is a lot below the 198 for the private sector. In the world of the sequester we dont know what Government Employment will be anymore. I think you could probably think of the trajectory of Government Employment being negative it already was and more negative in the future. I dont have to have these answers. We have mark zandi joining us, from moodys analytics. A decent number, 198. If it was a normal world of government spending, wed be probably adding government workers. Instead, were subtracting. What do you think this means in the world of the sequester for total employment . In the last six, nine months, government has been lays off 5,000 reducing payrolls by about 5,000 per month. I dont think that changed in the month of february, reduce it 5, 10k. You buy into the 198 from the adp puts it about 190 for total employment. Going forward, as the sequester is implemented, i would expect more government layoffs. That will show up in the data. One quick caveat. A lot of the reduction will be done through furloughs. It probably wont show up as a lost job but show up as lost hour hours. Were looking at sector by sector breakdown. Construction did well, manufacturing okay, really across the board in terms of sectors. Does it tell you have an economy, i hate to use this phrase because its never turned out to be true since the recovery has begun, is it firing on all cylinders . I wouldnt say all cylinders. It would be 250, 300 k per month. It will eventually once the Housing Market kicks into full swing. Its very broadbased. You look at the fusion index, percentage of industries in the bls survey that are adding to payrolls, its now actually higher than it was at the best of the last economic expansion in 20052006. So its shallow. Were not getting a lot of job growth in all the industries. Its broad now. Increasingly, were seeing job growth at smaller establishments. Lets look at that and then we have to come back to the government question. Small business leading the way. I didnt have a chance to check. I dont remember seeing that. 77,000 for Small Business and large business, 57k. This contradicts the nfib survey. I always love contradicting bill. I do think Small Businesses are kicking into gear. They are more closely tied to the Housing Construction cycle, if you look at the mix of industries. Thats one reason why a key reason why Small Business sector was lagging the economy throughout the recovery. With housing kicking into gear, Small Businesses should do a lot better. Hopefully they will. The sequester from the job loss, Something Like 700,000 jobs, i guess jobs not created or call it what you will. Thats Something Like 60 a month if you do that. Whats going to happen now with job growth if you have this sequest sequester . Do those jobs really end up being subtracted from the total . Good question. My estimate isnt 750, closer to 500,000 because of the furlough effect. I dont know that the cbo really fully accounted for that, where that number comes from. If they do 500 over ten months, thats still 50 a month. A lot of jobs. I think what that suggests as we move to the summer months, jobs numbers will weaken. Underlying job growth, distracting from ups and downs in the data probably 175 to 200 k will downshift. We might be at 225, 150 in july. And tax increases and other spending cuts are at their apex. The fiscal drag, all the tax increases and spending cuts will have its biggest impact on the economy sometime in qe3 moving into q4. Its a false slide, not a spring slide. Thats right. Let me wrap this up. This number, 198, given the projection for the effects of the sequester, what happens to the Unemployment Rate over the course of the year . I dont think it goes very far. I think it might notch. This coming month, probably decline to 78 and then higher and i think we end the year 7 1 2 to 8 , i dont think we make a lot of progress. And next year and after when housing is bringing in a boat load of jobs when we see a change. And the gdp outlook for the rest of the year . No more than 2 . Its early but tracking 2 1 2. For the year, no more than 2. I cant see it doing better than that. Thanks. Looks like you are doing better than the previous methodology. I did a little work on this and the last four months your error rate has been below. Good to hear. Working out okay. Keep it that way. Ill do my best. Working closer with the government. The bls. If you had the opportunity to tell them what the numbers should be, then its easy. I never out thought of that. Coming up, dow closing at an all time high but will Political Uncertainty derail the rally . If you were shocked about sundays 60 minutes piece about ghost cities in china, you will not want to miss squawk box tomorrow, jim will be our guest host warning us about chinas real estate bubble since 2010. The lines, and the paperwork. Zap. Its our fastest and easiest way to get you into your car. Its just another way youll be traveling at the speed of hertz. Welcome back to squawk box, everyone. The market hitting a key milestone yesterday and will the market continue and what sectors are poised for gains . Our jackie deangel lis joins us for more, something everybody is trying to figure it out. Heres tips, if you look at the large cap center before the peak, you see 4 of 10 are higher. We have consumer discretionaries and staples both up 37 . Health care showing a gain of 20 and technology up more than 13 . There are six sectors showing negative performance since the peak. Even though financials have been outperforming lately, they are doing worse as a group down nearly 50 since 2007 and telco down and materials and energy are all showing single digit loss. Whats the take away here . Analysts are saying this is the time to lighten up on better performers and more room to run in some underperformers. Several analysts like industrials, a stock like ge still down more than 40 since the peak. They even like financials saying theyre positioned for a good year. Last night, jim cramer said smaller insurers are good names to watch. And stocks like keycorp and region financials and bank of america a good place to keep. And Newmont Mining down more than 15 . Professionals think its not too late to get into this market. Jackie, thank you very much. When we come back, well get you ready for the trading day ahead. Also, former white house chief of staff and jpmorgan executive, bill daley. He will be joining us to talk about everything happening in washington and wall street. Back after a quick break. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. 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Among the stocks were watching, dell says a special committee has determined a sale of the company is to be expect ed in te best alternative or interest of shareholders and follows a rigorous evaluation that took more than five months. Several major shareholders sas s a buyout undervalues dell and we heard from cooperman earlier that suggested management buyouts specifically dell may be ripping off shareholders and heard from us and others. This is a response to that. American eagle is reporting a profit of 55 cents a share, one cent below estimates. Revenues were essentially in line and forecast is below street estimates with the retailer citing a weak economy and bad weather. Retailer big lots earned 92 Cents Per Share 11 cents above estimates with revenues beat in forecasts. The closeout retailer was helped by a sizable improvement in canadian operations. Have you been to big lots . I have never been to a big lot. Neither have i. I dont think ive been to a costco. Have you . Yeah. Do you need a membership . I have a costco membership. Good deal. Futures are extending the gain from yesterday and adp report didnt hurt. Above expectations. The dow closed at an all time high. Can it continue . Our guest host continues with howard ward. Will the economy, its always nine month, we know that, the rule of thumb, the market is nine months ahead. Will the economy reflect what the stock market is reflecting right now . I think so. A lot of forces are quite positive right now. Wealthy effect is up. Household wealthy is up. Theyll spend some of that, usually 3 to 5 cents on the dollar. Thats a lot of money in terms of housing wealthy. The Employment Situation is improving, incomes improving, despite that payroll tax hike. All that put together means Consumer Spending up. And housing will accelerate as we go through the year. Then you have the energy boom. Im here at a conference in houston. Everybody talking about the energy boom. Everybody optimistic. A lot of good stuff happening in the u. S. Do you think gas prices have come down a little. Maybe that eases up a little. Lets talk about the payroll tax, all of that is over. People still talk about that. You have sequester supposedly hasnt really kicked in yet. Not until march or something. Do you think the market at this point or the economy is finished worrying about washington a little while . If the republicans forever we move it out to september 15th, we dont have anything going on until september, do you think the economy is fine not attacking entitlements or not attacking Corporate Tax reform . Well just go along and ignore washington for a while . I think thats whats going to happen. I agree with you, this is a huge missed opportunity in terms of entitlement reform or tax reform. In terms of hurting the economy, the pain will be there and very localized but fairly small and a few tenths up on gdp at most if we go all the way through the year in terms of sequester. I think the market is saying, yeah, sure, fine, big deal and i think thats what youre seeing on the market today and yesterday. Is that where you are . Yes. The good news is the economy has more momentum right now as we enter into this sequester face than most people expected. We are getting strength in housing and autos and energy and aerospace and Consumer Spending up. The ism data pointing towards gains. The economy will have more momentum going into this headwind of cutbacks. All in, i think were still going to be looking to an economy going gdp 2 plus. I think the surprise could be to the upside nine months from now. The stock will be very focused on 2014 earnings, discounting a number for 2014. If that number is 115, 120 on the s p, that number i gave you earlier of 1650 on the s p year end target will be low. Where are you this year and next year for gdp . Well start off around that 2 kind of range. I think by the end of the year, we have a good shot at 3 . Certainly going into 2014 i wouldnt be surprised, 3, 3 1 2 . That momentum will build as the year progresses, even with the sequester. The news will steadily get better as the year progresses. Were i dont know how many years away from all the stress the economy suffered and now were finally getting back to where there may not be the new normal. Do we get down to 6 1 2 unemployment . I think we have a very good shot at that by the end of 2014. I dont see why not. Were not that far away from it when you think of the whole scheme of things. Its come down quite a bit the Unemployment Rate and have another 2 1 2 to go. We can get there in under two years. When the fed stops being so free and easy, we can get through that, too, looking at the bright side of what it means . That will be a good problem to have. Growth strong, inflation probably still not a problem. Then the fed can really start to think about that exit. Thats a good problem to have, as i said. Youre not a stock guy so you wont say we will keep getting a series of higher highs. It wouldnt surprise you if that were to happen . Thats correct. If you get the growth we think we will get. Top line growth will be good and earnings picture should be decent. It wont be gang busters but it will be decent. 16, 17,000, can we see numbers like that in the next couple of years on the dow . 20,000 . 20,000 sounds aggressive to me. I dont think we need to go there. 16,000, i think thats very doable. If we went from 800 to 10,000, but people cant see even a 30 or 40 move from here over the next few years, they get uncomfortable because of the law of large numbers, i think. Remember, japan went to i shouldnt bring up japan, japan was at 40,000 at one point. These numbers are doable at some point . The individual household has 34 in stocks. The allocations are too low to fund retirements going forward. Yeah. Stocks will be the asset class of choice, i think, for quite some period of time. There will be corrections along the way. When we get to stan druckerman of yesterday and were all getting older and their expenses to take care of all of us and for all of us to retire. That is looming at some point, right . The future does have serious challenges . No question. It comes back to that entitlement reform were talking about earlier, we have to deal with medicare and medicaid. These are ticking time bombs. The guys on washington punted on all of that. Were not done with this. The good news is in terms of getting the deficit and debt levels down, we are making progress but not dealing with longer term structural issues. All right, gentlemen, thank you. Say goodbye. Howard will be with us the rest of the show. Coming up, a veteran of the public and private sector will be talking about the economy and debt crisis, bill daley, president obamas former chief of staff and chif at Jpmorgan Chase and secretary of commerce secretary will join us after the break. We have a lot to talk about. The dow closing at an all time high. Can investors sustain the rally or will Political Uncertainty trigger a pullback . Keep watching squawk box for up to the minute market news and analysis. 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 . [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. How lincoln financial can help you take charge of your future. Investor. Yeah, ibut im a busy guy. Or it used to be easier but now there are more choices than ever. I want to know exactly what i am investing in. I want to know exactly how much im paying. I want to use the same stuff the big guys use. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Welcome back to squawk box, everyone. The futures this morning are indicated higher. Dow future up 52 points after it closed at a record level yesterday. Watching this very closely after the adp numbers havent budged much but we get big jobs numbers on friday. Lets get perspective from a budget analyst and white house insider and a public and private view. Bill daley with us, former secretary of commerce under president clinton and chief of white house staff under president obama. And now with jpmorgan. Hows the snow . Great. You could have come out. I could have come out. Question for you. I dont know if you read the wall stre wall street journal editorial page, they question some of the rhetoric that came out of the white house during the conversation about the sequester, about where were ultimately going to go. Did the Obama Administration overplay its hands . I think there is in our Politics Today a lot of overplaying positives or negatives, seems to be part of washington. No question, there will be pain out of this sequester cut. It will take a while. Make no mistake, this is not going to be just ignored by people. There is going to be some pain of this. Is it going to obviously the market isnt reacting to it at all, theyre reacting in a very positive way about the fundamentals whats going on long term. But there will be pain, whether underplayed or overplayed, but it will take a while before people see this. We just had this go in effect last week. Snow i tried to get an answer knowing there is going to be pain, when the republicans offer to give the president more discretion about where to put the cuts, i was trying to figure out why the president said he was going to veto that, whether it was he didnt really believe it would be possible to do it or whether he almost wanted the pain to be there to show we cant cut. If you could really cut and you wouldnt see pain, it would mean that maybe we can cut more and we dont need to always raise revenues. It almost looks like he didnt want to say yes to the republicans because it would mean, yeah, 2. 3 will not hurt if you cut it. Why wouldnt he want the discretion to lessen the pain . My sense my sense, joe, is that he probably is trying to keep the pressure on the republicans and on the system. That could backfire. There have been signs theres a lot of discussions going on and maybe to paraphrase leon from earlier this morning, maybe the seeds of some progress have been planted over the debacle of the last couple of months with our politics or last couple of years, to be frank, with our politics regarding the economy. Maybe with this sequester, which i was there at the time the congress and the president were all for this, because no one thought in their right mind congress would do such a thing, let this happen. Theres no question we have to address the long term entitlement problem. These cuts everybody talks about they say will have no pain, there will be pain but its the wrong way to cut. Were addressing short term cuts, cuts rather immediate, when we really should be addressing the long term problems. Youre right. I would say if we said we didnt want to do the blunt instrument, we wanted them to be more targeted, i thought they were offering to give the president a more targeted way to do it. Youre right. Its in the discretionary side, not where the money is. Its ridiculous. Were cutting in things that are important right now to not only our economy, to people. Not addressing, yes, there will be pain if we address entitlement reform. But its done over a long period. Weve just got to get to this. This is madness doing these cuts now. We cut a trillion dollars two years ago over 10 years obviously and now weve cut again with the sequester. Thats immediate over the next seven months and beyond. But its absolute foolishness to keep doing this and not addressing the real problem affecting the economy that can be solved less painfully over a longer period. Wave had folks including Brian Moynihan and jamie dimon said if we could get a grand bargain not only does the underlying economy take off and markets go higher. A, do you agree with that and, b, do you think we will ever get to a grand bargain . I am an optimist and think there is no way to avoid a grand bargain if we are going to solve this long term problem. Again, i think the seeds may be have been planted, again, to paraphrase leon. I think everyone in washington and the public, first of all, are pretty disgusted with whats going on in our system. At some point, we will pay the price for this political madness thats gone on the last two years. I think people know it. The signs that you read in the papers today in the last couple of days, the president and number of Senate Republicans are talking about a bigger deal. I know when i was there two years ago, the president wanted a big deal. We came very close with john boehner getting a big deal. For lots of reasons, everybodys fault, everybody to blame, blah blah blah, we didnt get there. Its a shame we didnt get there and we came a lot closer than people think. Is your sense that the Business Community has the wrong impression about the president and his view towards business . I ask it because when you read about frankly your departure from the administration, there was a view that you were frustrated with the way they were approaching things. Is that accurate . Well, any who serves in washington is frustrated. You cant go there and not be frustrated with the way the system is. Theres no question there is a misunderstanding and has been from the very beginning with the Business Community and this president. He is not antibusiness. He didnt have long term relationships with a lot of Business People bill clinton had or president bush or president clinton and president bush had and others. I think theres been a misunderstanding both ways about the motives of the Business Community and on the other hand, the motives of this president. He sees a real need to address some of the fundamental problems that have happened to the American People and their loss of wages and other things as we celebrate the enormous success of the Business Community. You guys have talked all day today and yesterday about the stock market going up and the highest its ever been and we celebrate that. On the other hand, to the average person out there, this is a discussion thats nice but they dont feel it. They dont feel that which we celebrate today and those whose stocks have gone up, 401 k s will go up and, yes, Pension Funds will do better because of the market but the average person out there still feels the pain of not only the economic collapse of the last the collapse of five years ago but over the last 30 years the stagnation in their income raan their opportunities and disruption based upon technology that have gone on and will continue and the pays of that by companies being more effective and productive, people with suffer in some ways because of that. Thats the flip side because of the technology explosion. Thats a fair point. But if you look at efforts to try and alleviate that now democrats are expected bringing a bill expected this week to try to bring minimum wage above 10, more than president obama laid out in the state state of the address. Do you think thats the right way to do it . Raising the minimum wage is always a good political thing for democrats. Everybody says you raise it and the sky will fall and the economy will collapse. We go through this every couple of years. I think its somewhere between what some democrats may want and where the president may be. It probably is time for an increase, whether its as much as what some people want or a little less. I dont think that will crater the economy. I think historically, you look at the increases in minimum wage, some of the predictions of some people as to the dire consequences of that have not occurred. On the other hand, its a balance. Weve got to be very we are not out of this by any stretch, any who watches your show everyday and listens to the experts you have on understands were a long way from being out of this economic problem of ours. So theyve got a balance, trying to help people who are down at the minimum wage and at the same time not stifle those businesses that are struggling to keep workers and try to make a profit at that bottom end. It doesnt affect most of the companies that come across the ticker under you but affects that small diner or dry cleaner or whatever. Bill, before we let you go, theres been some speculation you may want to run for governor of illinois. True . Theres been a lot of speculation about that. Thats kind of, joe, like taking captain smiths job after it hit the iceberg in the titanic. Youd be a tax cutter, wouldnt you, bill . You would be a tax cutter. I can feel it. I can read your mind. I think, look, no question getting the balance rig righteverybody wants to cut taxes, thats thesecy way to go. We need to cut taxes and stimulate growth. Right. Stimulate our economy in illinois is in pretty difficult shape, as you know. We have to get it right basically because of our pensions eating into all the other things we have to do for young people especially. Bill daley, thank you for joining us. Ill come out and hopefully we wont have a storm. Thanks very. Thank you. Might send him some money. I might. Coming up, jim cramer standing by at the new york stock exchange. Were going to ask him about the dows record close and the stocks to watch in todays trading. Im kidding. I cant send money. Tomorrow on squawk box, we have a huge lineup in the economic summit in new york. Squawk market master jeremy seagal, jim chenos, wall street dealmaker ken bolis, Johnson Johnson ceo alex gorsky, and legendary investor michael steinhart. A special edition of squawk box starts tomorrow morning. 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 en you open an account. Welcome back to squawk box. Lets get down to the new york stock exchange. Jim cramer joins us now. Jim, i always need to give you time frames for how excited to be, or what to think. But weve waited a long time. You know the expression, please let there be another real estate boon, because i spent all the money from the last time. Its like, please let this happen again in the stock market so people can know what its like to see a bull market, from 82 on, jim. Can it happen . Thats whats going on, joe. I think were slaying the bear market. I dont think this is a bull market. Were finally coming to an end. What you and i have seen for years, which is the market has been treacherous and terrible. Weve got a lot of groups up by i was thinking last night about the late mark canes. We finally have it. Its not phoney. Thats what im saying, its not phony. And also, i still hear the uncertainty and the skepticism in a lot of peoples voices. I said, so what we can do, 15 or 16,000 in the next few years, maybe eventually 20,000, theyre like, oh, no, not 20. That is a long way off. Five years from now . Thats what we used to see. We used to see, you know, gains where 20,000 would be doable at some point in the future. So right. How many people come on and say, look, down 5 , i like it. If we go up 1,000 points theyre going to hate it. Exactly. Weve seen it so many times, jim, i dont know how many theres seven stages, whatever, denial, anger, finally acceptance. But were now at well, im not going to get it now. Im not an idiot u im not going to buy at a high. The next one is, well, its still going. Its leaving the station. You can just see it all happening. It plays out before and well see it on usa today on the cover every day. Ive got to admit about the idea that its rational exuberance, i think thats a good term. Cooperman has a lot of things to say. Ill have to get up at 6 00 a. M. Tomorrow, because the people there are going to be total battleground whether this market is terrible or good. You have a battleground where somebody actually says its terrible, makes it so exciting to me. Its not like the old days where guys are wearing the hats and cheering on this market. Theres no cheering, none. Im not expecting a spring swoon either. Sell in may. Remember that . It always worked 50 of the time. But youre going to hear fun. Jim cramer, well be watching. Our guest host this hour has been howard ward. Well give him the last word on the markets. Squawk will be right back. At optionsxpress were all about options trading. We create easy to use, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius strategies, chains, positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . 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