Transcripts For CNBC Squawk Box 20140226

Well be hearing from Tjx Companies and after the closing Bell Jcpenney will be reporting its numbers. Its been a stock to watch for the past year down near 5 a share as of yesterdays close. Lets get to andrew with some of todays top corporate stories. Hey becky. The big one bank of america saying that federal investigators are looking into whether the bank violated certain requirements of a Government Housing program. The probe centers around compliance with the rules of the federal housing administrations direct Endorsement Program this coming according to a 10k filing by the banking giant. Also this morning, Credit Suisse under a lot of pressure in europe, it already is under pressure in europe this morning but going to come under pressure more so today because a Senate Subcommittee is now alleging new misdeeds by the swiss bank and accuse the Justice Department of dragging its feet. The doj probing 14 swiss banks after admitting to helping u. S. Taxpayers hide money from the irs. The panel is chaired by senator carl levin. You know when he gets going what can happen saying Credit Suisse held more than 22,000 accounts for u. S. Customers with assets aparentally valued between 10 billion and 12 aboutle. The majority of the accounts werent reported for tax purposes to the irs. And the fed wants more information from troubled Bitcoin Exchange mt. Gox, the wall street journal saying mt. Gox received a subpoena from federal prosecutors in new york last month to preserve certain documents once the worlds biggest Bitcoin Exchange mt. Dpox has gone offline. The business is at a turning point, theres a lot of worry the entire business may be bankrupt and gone forever. The controversy surrounding mt. Gox putting a lot of pressure on bitcoin prices, 597. 75 is where things are trading now. That was a stock, almost like a stock, its not a real currency sorry to say, joe. Now you tell us. Now. Now you tell us. I am not a bitcoin fan. I believe electronic currency of some sort may flourish in some way. I dont know if bitcoin is the way. I thought you were a bitcoin advocate. If now your saying im fascinated by the conversation around bitcoin. You know im needling you because you have talked about it a lot. I hope no one mistook what you were saying for like an endorsement. My enthusiasm fort deba the. In hindsight thats a good way to characterize your coverage of bitcoin. Yesterday, andrew, the mt. Gox, which unfortunately rimes with squawk box, i hope no one, theres no confusion. I understand. It was down to like 100 bucks on mt. Gox and it only was down 1 the currency itself. Thats what andrew was pointing out look at the trade between the two. If you looked at the spread between. They lost 400 million. Its in the couch, between the cushions of the couch. Somebody else pointed out later mf global, the clients supposedly got their money back. I dont know if that will happen with mt. Gox. Andrew youre supposed to say now its the ecosystem, its a developing thing, bad actors need to be weeded out and its early on, growing pains and some things are going to its the early days of this. Thats how youre supposed to youve heard this before. Scary. Its really scary and im glad i dont do we definitely know its not madoff . They dont even know who designed it. Thats the whole point. Who developed and designed this. Andrew who do you go to if you lose, is it backed by the full faith and credit of . If you lose your bitcoin . Yes. I call up joe kernen. Thats the point. Theres nobody to call. I call the guy at the New York Times who has written the comments. Are you backing this . I wrote a column in the times. I didnt read it. I should. The column was critical. Very critical of bitcoin at the time. When i looked for your column in the New York Times i end up going past the editorial page and i get bogged down there and i get so frustrated that i cant make it to the business side. Lets do lowes. I think lowes is below, belowes. 29 cents versus expectations of 31 cents. Something with the crazy macys report yesterday if we need to back something out it would be different with you for next year theyre saying they backed 2. 60 and the estimate is 2. 64, buying back 5 billion worth of stock it says what was the estimate . Machine is not up. Total sales up 5 and announcing a 5 billion Share Repurchase plan, 11. 7 billion is above estimates for revenues so its supposed to be 11. 64. Two cents you need to add back in. Samestore sales up 4 so a twocent charge so that would be in line with expectations. Asset impairments reduced, its 32 million which works out to two cents. All right. You know, they told me lowes is coming, lowes is coming. Okay. But its not like, well mention it. Extreme Winter Weather arrives late in the quarter our Distribution Network responded quickly and efficiently to move product where it was most needed. This is the home depot situation. Maybe it makes a lot of sense. You have shovels and the rock ice and the winter ice melt stuff and snow blowers, those are the type of things that sell well. Lets look at some other stocks that well be watching this morning. Anheuserbusch inbev earned 1. 46 a share for Fourth Quarter beating estimates of 1. 32 and the Company Expected brazil and mexico beer markets to return to growth this year because of improved economies as well as the world cup tournament and all the free advertising that anheuserbusch has got because facebook bought whats app, and we played that commercial like a thousand times which hasnt been played in a while. Whats app yes. I actually went back and showed kids the commercials . Yes, because they wondered why we were talking about the whats app what it does and they go whats wrong with you . Whats app they dont understand the commercial either. I still dont understand the commercial, but theres something about doing it on the phone to your friends thats still funny. Whats app whats app thats what i would say if i got 19 billion, say it over and over and over again. For 19 billion. Tre Dreamworks Animation reported Fourth Quarter profits up 20 cents a share missing estimates by 12 cents despite a drop in expenses for the movie studio and thats not going to be a pretty thing to watch today, down three points or 9 . Aeropostale is raising capital through a stakes sale at private equity firms and weighing the sale of convertible debt or preferred stock and thats fallen on some rough times recently. We get over to barcelona, because the mobile World Congress is going strong over there, and jon fortt is there with some highlights. Mr. Fortt . Reporter hey. Yes, were expecting ibms c ceo ginni roamtti today. Overall it will be a big data day. We had John Chambers here, joe tucci from emc, lots of the big tech players from the data center behind the scenes trying to make their pitches, to carriers and to others about exactly what they have to offer in the mobile economy. I expect the ibm keynote to deliver much of the same. I was talking to citrixs general manager of cloud about what some of the opportunities are here. Take a listen to what he had to say. Big data analyzing mining that and figuring out how to monetize that, is really top of the agenda for most telcos these days and in particular the mobile Network Operators. Reporter and particular the mobile Network Operators in emerging markets and the average revenue that they get per user is down in the Single Digits because people dont have that much money to spend these days thats being crunched by sms revenue getting taken away by whats app, as you were just talking about, so these big data players want to sell their services to those carriers enticing them if you invest in this youll get more money out of your customers down the line. Well see if that works out and i will be covering roamttis keynote this afternoon around noontime. Tune in, guys. Back to you. Jon, thank you. In the meantime we were talking about lowes out with Fourth Quarter results. Looks like the company came in, in line with expectations with an adjusted number of 31 cents a share. Calling in on the newsline is brian nagel with oppenheimer and company. Is there anything that jumps out to you . I think the thing that jumps out and ive said it a lot on your show is that when the market looks at lowes, they always look at lowes relative to home depot so they did a 3. 9 comp. Here in the Fourth Quarter, that was only one percentage point less than what home depot did yesterday, thats the narrowest spread weve seen in quite some time. Thats going to be a positive is the markets review in the lowes results. Thats going to be a positive, still below what home depot was. If you had to buy one stock what would it be . Home depot is the better positioned chain. Time and again with weather home depot is a more Nimble Company and better position to capitalize and stay upon the improving housing environment in the u. S. As you pointed out closing the sales gap, if you had two stocks to buy youd buy both of them . I think by the way i position it, both companies are in the right position to benefit from housi housing. Home depot is better positioned. Gross margin 44. 6 , is that a number in line with what you were the examining in. Thats a good number just like with home depot, a lot of disruption with the weather but in both cases the Gross Margins held up well despite what could have been a negative makeshift in margin products. The at the end of the day you look at the weather situation, this is a company that probably helped out by the weather because they were able to respond quickly . Probably. The way i think about it, it was probably some weather benefit, a lot of snow removal type products but the real key is going to be as temperatures warm, as the spring finally comes there will be a lot of pent of demand and repair spending at lowes and home depot and that will be positive for the First Quarter results. Thank you for calling in. Take a look at the futures right now, if you were watching yesterday you did see the markets sell off slightly. This morning there are some positive signs, the dow futures are up by about 57 points above fair value, the s p futures up by just over 7. Major averages pushing back and forth in Different Directions choppy trading. The s p 500 and the nasdaq alternated between gains and losses over each of the last six sessions. The s p 500 was short of a record straight close yesterday. Look at crude prices first up 37 cents, crude oil prices well above 100 at 102. 19. Next up lets look at the tenyear note which is yielding 2. 719 . The dollar this morning at least at this point looks like it is up against the euro, 1. 3737, also upper ha er havthe dollar higher. It was unchanged whatever it was. It was unchanged. If youre looking at gold prices, gold prices yesterday were up for about the 12th time out of the last 14 sessions. Settled yesterday at a fourmonth high and down just slightly by about 2. 60, 1,340. 10 an ounce. You want to talk about pot . You know i think the kids call it weed, thats what i read the other day. Okay. Goes by a lot of different names. It is time for some marijuana in america, only 6 13 in the morning. Southern Colorado County with two recreational marria aal mar stores has become the first in the state to announce tax totals from the new industry. The finance authorities announced monday its two shops had about 1 million in total sales in january, producing about 56,000 in local sales tax. Were going to talk more with harry smith later this morning. Why, is he a big pot smoker . He is not. He is cnbcs new documentary, done it for us, thrilled to have him on board. Marijuana in america colorado pot rush which airs tonight, everybody, and you can watch that at 10 00 p. M. Eastern time. Coming up, we will talk about maybe some more pot, i dont know, but the Business Community putting pressure on arizonas governor to veto a controversial bill. Well jump on that hot topic next. Plus back to him opimcos b gross, firing back on yesterdays wall street journal article. Back in a moment. Businesses continued to get better and i think it will continue to get better. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Welcome back everybody. Time for the executive edge. A big story buzzing across the country, apple, delta and marriott are putting pressure on arizonas governor to veto a controversial bill that would allow businesses to deny services to customers citing religious beliefs. This bill sparked a National Debate over religious and gay rights and how theyre clashing up against each other. Senator john mccain the former president ial candidate mitt romney and the nfl are call on governor jan brewer to veto the legislation which would allow a company or a business to deny a Customer Service because they are gay because they say it would conflict with their religious beliefs. Some people say religious beliefs, the other side says hold on a second you cant put up a sign that says we dont serve your kind. Where is this state . Its one of the 57 states, is it really in the United States . There are even republican state senators who have backed in bill who are now saying wait a second we take it back. Of course. You know where i stand. Gee, andrew, its nice to know, this a tough one. Howd you come down on that side . Attaboy. You think it might be wrong. No kidding what possible merit does who introduced this thing . Seriously, are we back in is it 1960 . Are we saying here is your counter at a restaurant versus for gay seriously . the thing thats so crazy about it. No, its staggering. The idiots denying customers in the if, place. You can do whatever you want with your religion. You dont want to marry a man dont marry a man but dont put your hangups, whatever it is you have, you cant put it on other people. Even jan brewer theres no way shell not veto this thing. Is certainly looks like shell veto it. I want to see the guys that wrote this bill. Where are they from . Where have they been hiding . Hold on. I would not paint an entire party with the same brush at all because its totally, theyre totally separate. Where are you going with this now . You know where im going with it. With the only people happy about the mixed race commercial were republicans . No. If you look at the party plank the same points you pointed out to eric cantor, wait a second, why dont you recognize samesex marriage. The far right, theyre trying to just like obama cobbled together a coalition of different interests the far right is afraid to go against the deeply religious whatever. And democrats were in the same position until the president came out and said that he had changed his mind about it. This is a recent biden did it first. Our buddy joe did it first. That has been a recent movement. That was for gay marriage. No, no, that of for marriage equality, not for serving someone in a restaurant. Exactly but thats just it. They are behind with it. The politicians in general are behind with this because the Public Opinion has to come first. Changed so rapidly. Im just glad that you are, glad that you dont think its right to deny someone service because of their thank you. Thats good. How long were you think being that one . I didnt have to think that long. The other big talker, pimcos bill gross firing back at the wall street journal article yesterday on the showdown with former ceo mow head el erian. He called in to street signs to defend himself. A month or two months before he resigned he told the executive committee he thought it was a good plan, an excellent plan but he wasnt the man to carry it forward. So all of this discourse about from my standpoint conflict between mohammed and myself is overblown. Gross also said it was unfair to characterize him as a disengaged boss. It may not be the disengaged part but maybe some of the things about autocracy that really were the things that were floating around the most yesterday. Im a huge fan of bill gross. Its almost impossible to believe there wasnt a conflict or even an overblown conflict with mohammed, simply because if there wasnt such a big conflict he would still probably be working there. Its very possible he could endorse a strategy or suggest im okay with that or thats but i dont want to run it because i dont want to work with you. The two quotes and i assume you dont make up maybe i guess some people could make up quotes but when the one where it said hey, pal, ive got 41 years of stellar results, what do you have, that one got me and another one in there that said i would put all 2 trillion, let myself run all 2 trillion because im secretariat and im the best horse to bet on. Both of those, he has been great and worth 1 billion but absolute power and 1 billion corrupts absolutely i think and hed be tough to work for although for 100 million a year, i might be able to listen to some of his flack. Are you available . No, i like where they are in Fashion Island in newport. You dont want to put your hand the average person was making, senior guys making 20 million but putting up with that stuff, you see the one guy didnt stand up. A client came in. Some big client was in. And then they told him he had to give 10,000 to a charity. That guy defended the action. He said bill demands the best of people. I know bill as just an acquaintance and like you said i always liked him and i respect him. He was a vietnam vet and everything else, but i think hed be hard to work for probably but it is good sometimes. A lot of Major Business leaders might be difficult to work for. Mohammed is not a shrinking violet and when you read about that one interchange and mohammed is probably like i dont need this, at some point. This was happening when the fund was losing more money, it lost 41 billion, people pull out. Its a difficult time trying to defend yourself things that might be okay in the past, you can see clashes in high stress situations. The biggest exodus ever of any fund. Still the Largest Bond Fund in the world even after the exodus. So yes. Okay. Anyway when we come back well talk more about the crisis in the ukraine, former president victorian coovics palace open to the public. Michelle carusocabrera showed us some yesterday. The treasury is on the lookout for suspicious transfers by theouted leader. Kevin oleary will be our guest host at 7 00 a. M. Eastern time. Find out why he is not pressing the like button on the whats app deal. As we head to a break look at yesterdays winners and losers. I am familiar with the fact you are going to ignore this particular problem until it swims up and bites you on the save you fifteen percent or more on car insurance. Ould yep, Everybody Knows that. Well, did you know the ancient pyramids were actually a mistake . Uhoh. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Are we still on for tomorrow . Tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Csx. How tomorrow moves. What a day. Cant wait til tomorrow. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. To manage your money. R guy around 2 percent thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. In the headlines Home Improvement retailer lowes earned 31 cents a share, that was in line with expectations, samestore sales rose 3. 9 and, and the company, and the company added 5 billion to its stock repurchase program. Oppenheimer analyst brian nagel told us lowes appears to be making progress in closing the sales gap with rival home depot. Four Credit Suisse executive also testify before a senate panel as the lawmakers investigate the issue of tax dodging through swiss bank accounts. The panel issued a study saying Credit Suisse opened accounts for more than 22,000 u. S. Customers with assets as much as 12 billion. Get your sevensecond delay because carl levin is running that. He did something the last time there was something around where he came down with a reasonable position. I cant remember what it was. And i just remember i was surprised. I remember you talking about it. Because he said something that was not that backed something that you were in favor of. I was in shock. He was reasonable about something. He said some of his colleagues the true looney left were actually in an intractable position. You know today hes taking these people to task. This is going to be some form of theater. Yes, he likes that. And im not sure the banks did the right thing. Exactly. You start out on the wrong side of things. Its been a while since weve been worried about bankers, right . Yes and swiss bankers. You need to keep up and watch them obviously. Swiss bankers though, where are you going to go . Your bitcoin is screwed. Where are you going to hide this money . Theres that island i told you, not in the caymans, a new island. Just that you know about this. Because i read. The things that stick with you are just i think telling. Anyway, delta is the latest airline to revamp its frequent flyer program. Delta sky Miles Program will give out points based on the price of a ticket rather than the number of miles flown. I see. The change will be effective next january 15th. Delta says the revamp will make it easier to earn free seats and that it rewards frequent business travelers as well as leisure customers who purchase premium fares. If we need a Virtual Currency this should be the virtual instead of bitcoin. No one knew how valuable sky miles were. They can do anything they want with them, take them away at any point. Thats the problem but the value of those has done nothing but go up. Cant use them certain days. I switched credit cards. The value of your miles has gone down. But from when they first introduced who needs those. It became something near and dear. I use them all the time. Didnt you get the new credit card for you nighted . I dont. You didnt . Thats where i put all mine on. Its hard to get on to use the miles. Thats the problem. Ive always been frustrated by it. But the good part about this cant you use updagrades . Its challenging to use miles. I get frustrated. Finally the airlines actually going to give you the miles based on how much you pay which makes sense because people would go on a coach flight the cheapest human price trying to go from new york to japan, get a million miles and the guy not actually a million miles to japan. Didnt someone tell you . No. How many miles . How far is it . We have a frequent flyer. How many miles do you think it is . 7,000 . 6,000, 7,000 and if you arrive the front of the bus they give you double miles. And caesar never lived in caesars palace. Hold on the one in vegas he had nothing to do with that . Let as go, we have to go to our International Im learning. Michelle carusocabrera, the ukraines central bank is trying to keep the country from going off the financial tracks. Michelle is there in kiev. Reporter hey there, becky. We have confirmation from an executive from the central bank of ukraine thathas been a change in policy here. They have abandoned peg of the hirivnia to the dollar and youll see one month thats whats been happening over the last several days for a long time they managed a peg of eight hryvnia to the dollar. Today its at ten. What we didnt know for the last several days as we saw it weaken was this a thought out policy response they were doing on purpose or was this the result of the chaos going on because of the change in government, the ousting of the Previous Central Bank head, et cetera, et cetera. Today we have confirmation from sergei krulich, director of International Affairs at the central bank. I started by asking him why is the currency weakening. Because first crisis, second panic of the people, third we agreed policy of the Flexible Exchange rate, so it should be flexible, and it will be balanced somewhere when the market will establish it. So thats different, you were trying to hold to eight up until last week, right, now its closer to ten. So we changed our policy. So we transfer from the fixed socalled manageable Exchange Rate to the Flexible Exchange rate. So its not the most traditional way to announce a policy change but thats exactly what he said. Let me be clear hes not the head of the central bank and also not a governor of the central bank. Were trying to reach those folks and reconfirm the situation. You can see it from the chart. It was getting tough to defend the currency anyways. The way you defended currency, people bring their hryvnia and say we want the euro or the dollar. You defend it and say well buy that from you and give you dollars and euros but the problem was they burned through more than 2. 5 billion worth of Foreign Exchange in the last month and theyre down to 15 billion. Thats really not enough, less than two months worth of paying for exports. They have to pay for natural gas from russia, et cetera, so they had to start making choices so in some ways theyll be pushed into this regardless, additionally if theyre going to get money from the imf, this is going to be one of the preconditions, the imf wants their currency eventually to float and think the currency is too strong for this economy. As a result of what were seeing, the Interest Rates are starting to rise because people are getting nervous theyll be able to pay back their debt. It gets harder to pay back dlor den dollar denominated debt. Lady and gents back to you. Thank you, michelle. Well see you again in the next hour. We have a diplomatic expert here to shed more light on whats going on over there, the widespread Global Social unrest going on with us. Now bob hormatz, vice chairman of Kissinger Associates and former vice chairman at Goldman Sachs and do we say most importantly, state Department Undersecretary for Economic Growth, energy and the environment. Is that thats about right. The beginning of the conversation about to happen. Play out the situation in the ukraine for a moment. Well the situation they have a governance crisis and they are going to have an economic crisis if these withdrawals continue. They have about 18 billion in reserves, 27 billion, 28 billion in debt. They owe the imf about 3. 7 billion, they owe creditors over the course of the next 12 months or so maybe 1. 72 billion, in interest, and then theres always the rollover question, people really lost a lot of confidence in their economies. But handicap it for us. What is going to happen . What is the role that russia is going to play . Where is the how does this all end . Its very hard to figure out. Theres no way of knowing how its going to end. Theyve had a lot more violence than they ever anticipated for the russians or the ukrainians themselves, these revolutions in Eastern Europe really havent been deadly. Now a lot of people have been killed and theres a risk there will be more. I suspect whats going to happen is that the russians and the europeans and the americans are going to try to get together and figure out some way of stabilizing it politically. Were going to get together with the russians in truth . I think were going to have to, because there are so many contending parties there and the russians have an interest, they have 17 of the population of the country is russian, and a lot more are russo philes and some in the west proeuropean. Does that suggest a split of the country . I dont think the russians want to bring troops in or split the country either but my worry is they have to find some consensus. Ukrainians have to do it but other countries can be helpful. Economically they have a big problem. Theyre a big exporter of grain and other things including Aerospace Industries but the economy is just deteriorating badly and whats going to happen is theyre not going to get money from the imf unless they allow the currency to fluctuate and take off the Energy Subsidies. The big 15 billion thing they want from the fund or money from the u. S. Or money is not happening. What should we advise the government . You might be secretly advising the government . Im not advising, ours or theirs. The ukrainians have to figure out a solution among themselves. Foreigners are not able to do it. They can exacerbate or help the problem. We have to split the costs of this. The cold war is over. Right . We deal with russia, with them on different situations. They dont have to, it doesnt have to be a satellite state of russia for putin. They need to deal with the west and the east. Absolutely thats the only answer. We should be able to do that. Politically and economically. I totally agree with that. Same with the lunch counters deciding. After blood shed its time to get two sides to come together to find a compromise. Russia is not going to prop up the guy with the mansion and the golf course. They dont want to either. And the eu shouldnt have to come one 50 billion. First of all no ones going to come up with it. Theyre going to need help from both sides. But the fact is, unless they get their economic policies in order, that money is just going to be frittered away. They need a new currency name, there are too many consonants in that thing. Take on the bitcoin. Someone needs to back that up. The hryvnia. No one there is going to run for office. Too many consonants. Saying theyre going to do austerity, theyre going to cut back on Energy Subsidies. Not going to be popular and very painful. If you want the money it will be very painful. What you may have to do to improve political stability, get a few leaders in there who can govern, will probably work against the kind of Economic Solutions because the people who want to become political leaders are not going to advocate eliminating or reducing Energy Subsidies or having the currency deteriorate which it has to do to become more competitive. We havent talked about venezuela, a brewing situation for quite a while. How bad are things there . Its very hard to say. Theyre certainly not getting any better. The government has really undertaken some ludicrous economic policies and the Energy Sector accounts for 95 of budget revenues in the country, they neglected the Energy Sector, its going very badly. Theres some russian and Chinese Companies that are still in there but a lot of companies, petro vietnam is leaving, one of the big Russian Companies is leaving, gas prom is pulling out, not gasprom but lukoil is pulling out, gasprom is still there. Number of other companies from Eastern Europe and china that are part of it but even they are beginning to feel uncomfortable because of the policy environment, they have currency controls, they have a lot of other things. So theyre going to get support from china and from russia, but their Energy Sector is in such disrepair and the politics are falling apart. Bob, thank you for coming in this morning. Bring henry with you next time. Maybe hell come. Strange bedfellows. You know he was a republican, right . Yes, i worked for the republican administration. I know you did. Including nixon, ford and reagan. Youve steadily moved. Im a pragmatist. Im a promarket pragmatist. I just read something the president had a chance to consult with kissinger on something and didnt. Why would you not talk to Henry Kissinger about important global issues . Hes still at 90 the wisest guy i know on foreign policy. If you knew everything you wouldnt need to kissinger. I suppose if you thought that way you probably wouldnt. That was the point. Thanks, bob. Thanks for having me. Up next it has been 155 years since the California Gold rush of 1849 but a couple in Northern California has struck it rich. Finding some buried treasure. This is for real. The new guy is loaded with protein ill believe it when i [ both ] oooooh. [ female announcer ] as you get older, protein is an important part of staying active and strong. Ensure high protein. Fifty percent of your daily value of protein. Low fat and five grams of sugars. [ major nutrition ] ensure. Nutrition in charge like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Oh, its great. Yeah. [ male announcer ] the best thing to share . A data plan. New at t mobile share value plans for business. Our best value plans ever. For example, you can get 10 gigs of data to share. And 5 lines would be 175 a month. Plus you can add a line anytime for 15 a month. Sharings never been better for business. Welcome back everybody. U. S. Equity futures this morning are indicated higher after the markets closed down yesterday. The dow futures at this point are up by 61 points above fair value. S p futures up by. 5. A Northern California couple out walking their dog on their property stumbled across a modern day buried treasure. 10e million in rare gold coins. Nearly all of it of the more than 1,400 coins dated back from 1847 to 1894, in mint condition although the face value of the gold pieces only adds up to about 27,000. Some of them are so rare the coin experts say they could fetch nearly 1 million apiece. I think its a lot more than 10 million. You think its been sitting there since 1894 with the latest its just been sitting there for over 100 years. Not just the gold. I kept coins in those Little Things when i was a kid, and you get the ones uncirculated in mint condition and so neat and these are all never been touched or rubbed or smeared. I wear gloves. I want those. Coming up next, ace hardwares business is booming, salt sales up more than 200 this winter. People just wanted salty snacks apparently. Talk to the ceo, in cold weather, how much the money is coming from, oh, i see. Salt of the road, caused all the potholes making it impossible for me to get to work with the polar vortex and later kevin oleary accepts in our shark tank. The star of the cnbc prime time show will join us at the top of the hour, get an entrepreneurial free markets treatise from him. I love him. Stay tuned. Predicting the future is a pretty difficult thing to do. But, manufacturing in the United States means advanced technology. We learned that Technology Allows us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. 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Of course, you want to make sure the trigger switch is not locked in the on position. Any idiot knows that, al. Ace hardware is making a killing this winter. Sales of its top 20 winterrelated products are up 135 year to date. Thats for things like salt and snowblowers and shovels and heaters. Plus for the first time, the company outperformed its operating plan last year. So will 2014 be even better . Its been a good start to winter. Now, john, i know its louie s oosthazen. Not even close, but appreciate the effort. I cant even pronounce it, so dont worry about it. You cant even pronounce your name. Say it for us, john. Good morning. How should we say it . Good morning. Thanks for having us. John venhuizen. Youre welcome to do it however you want. And ive prepared some hardhitting questions for you, too. I want to start off with is ace still the place for the helpful hardware man . That is the toughest question ive had in a long time. Let me tell you this. I carry 5 gift cards around in my briefcase because every time i get on a plane with an ace shirt, somebody sings me the song. They fire up the jingle, they get 5 bucks. I thought it was so damn original, and now you just said every time so he carries things around for shmucks. Like you. No, no. We dont call you shmucks. Youre loyalists. Loyalists. I love hardware stores, by the way. I dont know what any of the stuff does, really, but i see the guys that come in that use the stuff. Anyway. How much salt 235 , up in terms of salt. Is that material to your earnings . It probably is, isnt it, almost . You know, its a fraction of our business, quite frankly. You know, our stores sell about 12 billion to the consumer. So its a fraction of our business. But in this time of year, its a really big deal. Not so much for the revenue. Were not making a lot of money on salt. Its a commodity, but when theres a crisis, usually a weather crisis, theres just no one who goes after it harder than the local ace store. These are all locally owned and operated stores. And they live in the same communities and neighborhoods as their customers. Being out of stock on salt when its polar vortex is not acceptable to these guys. So we go after it pretty hard. Theyre not making a lot of money on salt, but the halo effect of serving their neighbors, which is what they want to do, is a very big deal longer term. Should we view how well youre doing as a business is it akin to a home depot or a lowes . I imagine theres some competition there with those places, but also, you probably sell stuff that you use with the lumber that you buy at those places, you can use ace hardware to do the job of whatever youre doing, right . Yeah. You know, listen, those two companies are great companies, and youll never catch me saying anything bad about them. We could learn a lot about them, but in the consumers mind, were very different. Home depot and lowes in the consumers mind would be a lot about home renovation, major projects, redoing your whole kitchen, marble countertops. Ace is more known for home preservation. Paint, lawn and garden, fix, repair, replace. And thats been a very good spot for us to be lately. Yeah, we compete. But theyre highly respected retailers in our view, and we can learn a lot from them. Were fortunate enough to be about service, convenience and quality. You could do better in a badweather year with home preservation than with home renovation, i would think. Because every one of your winter categories is up. Youve more than doubled on every single thing that you do for Winter Weather, right . Thats exactly it. Listen, as a customer or person that lives in the states, where polar vortex have been hit, i hate it, too, but it has been very good for our business. And again, our stores really do think of their customers not as customers but as neighbors, and its just not acceptable not to have what they need. So they go after it hard where some of the bigger boxes, just kind of their operational plan, they get out of that stuff a little earlier. The consumer, have you seen it have you seen has she i guess with you, we have to call the consumer a he, sort of. Not necessarily. Yeah. Maybe more than if youre going to call the macys customers she, but not necessarily. How do you rank the consumer . Six or a seven in terms of how they feel . This is the way we think about it. Very humbly stating this. We just want our seventh j. D. Powers award out of seven years for best Customer Service against all of the Home Improvement retailers. But yet in that very year we launched a Global Initiative called helpful 101 which is all about all of us getting back to the basics of serving our neighbors. And thats what were about. Service, convenience and quality. And if were not winning the hearts and minds of our consumers but out serving competitors, were falling short, frankly. Yeah. The consumers a pretty big deal. When thats not just somebody you dont know, but the guy youre sitting next to in church, right . Yep. Youre not acme, but ace is in the yellow pages, and dont get rid of that slogan. Why would you do that after all these years . Its like got milk is getting rid of got milk. Theyve got some other thing. I dont know if its going to work. I think you stick with that slogan. We actually do. We relaunched it and were going to stick with it as long as ive got anything to do with it. Im going to sing that as we go to break. Maybe. Please dont butcher it. All right. I wont. Send me my gift certificate. Ace is the place the helpful hardware send me my gift certificate. We both just butchered it. Ill give you 5 bucks not to butcher it. Thank you, john. When we come back, kevin oleary gets into the squawk tank. Hes got issues with Mark Zuckerbergs decision. And the future landscape after comcast a big deal with netflix. More squawk after this. Hey, kevin. I have low testosterone. There, i said it. See, i knew testosterone could affect sex drive, but not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. In a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Get the blood tests. Change your number. Turn it up. Can you start tomorrow . Tomorrow were booked solid. We close on the house tomorrow. Tomorrow we go live. Its a day full of promise. And often, that day arrives by train. Big day today . Even bigger one tomorrow. Csx. How tomorrow moves. Welcome to squawk box. Counting down to targets quarterly results. How much did the december breach impact the bottom line . The numbers and the instant reaction are on the way. Shark tank tuesday leads to shark tank wednesday. Kevin oleary gets fired up to guest host. Hes seeing whats up with Mark Zuckerberg and facebooks deal for whatsapp. Plus, marijuana in america. The colorado pot rush. Harry smith goes inside this industry that is leaps and bounds. Squawk box begins right now. Rocky mountain way couldnt get much higher good morning, everybody. Welcome back to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. After yesterdays slight decline, you do see green arrows up. The dow up. S p futures up by about 7 points. Also, in our headlines today, take a look at whats been happening first with the tenyear note. Yield at this point is 2. 71 . Were also watching for earnings from retailer target today. Those numbers are expected in just about 30 minutes. Analysts are looking for Fourth Quarter profit of 79 cents a share, revenue of 21. 5 billion. Investors also closely on the lookout for any comments about the massive data breach and how much its costing the company and if customers are coming back. Theres going to be confusion here because we know the weather has impacted just about every retailer. So its going to be hard to try and figure out what was weather related and what was data breach related here, but we will be getting those numbers in just about half an hour. Home improvement retailer lowes already out with its numbers. It matched estimates for the Fourth Quarter of earnings of 31 cents a share on an adjusted basis. Revenue also in line. Lowes added 5 billion in its stock buyback program. You see that stock is up by almost 5 . Housing is in focus today with the loan Government Economic report. The government has the janou home sales report coming out at 10 00 eastern time. Its expected to show a drop of 3. 1 to an annual rate of 401,000 units. That comes on top of a 7 drop in december. If you missed shark tank tuesday on cnbc last night, fear not. Weve got mr. Wonderful right here for the next two hours. Joining us now is kevin oleary, chairman of oleary funds and cohost of shark tank. He is also author of the new book cold hard truth on men, women and money. To me, the entrepreneurial spirit and the way that markets work and the opportunity to start small and end up big, i dont want to lose that in america. And just kudos to making it mainstream because it doesnt seem like its mainstream. Everybodys sitting around saying you cant go neathere no mobility and i cant make it and theres no opportunity. And i hate hearing that because its depressing. And its not that way. You can still do it. The American Dream is alive, joe. All over america. Theres 24 million Small Businesses. You capsulate their desires because they want to make it and they work very hard. And obviously, whats gone awry is that the environment that they work in has changed over the last decade. And if you talk to these people, because now i get a chance to speak to them every day. I have investments in every sector in multiple states. And their message is not heard. Its not heard by politicians. I think last year alone, we hit them with 2,800 new federal regulations. You can imagine that there are many Small Business owners that actually dont know if theyre compliant or not. They have no idea. Thats before you get into the municipal laws and state laws, too. Sure. So a business that, you know, one that im dealing with in california right now has hired two lawyers, one interimly full time and another externally. Just to fill out forms and comply. Theyre estimating that cost is about 90,000 a year. Thats something they didnt have to do ten years ago. Now, you can debate the merits of forcing that amount of regulation on top of a business. But it cant help create jobs. So i ask everybody when they talk about whats good for america to simply ask, if we implement that policy, if we put that procedure in place, if we put that regulation in, does that create the incremental job or not . That should be the only test. Right. Kevin, right now, not only are all those regulations in place, but it seems like were always getting ready for another election. Okay. So now 2014 is coming up. So the wedge issue that president obama and the democrats have decided to drive between the voting population is minimum wage. Now, youre talking about these Small Businesses. What would be better . Doubling the number of Small Businesses that you have right now and how many people they employ, or going up whatever it is, 1 or 2 on the minimum wage, making it harder for some of these businesses to exist. But instead of looking long term at how to make it easier for entrepreneurs to start things and to flourish, this is purely being done, i think, to drive a wedge and to try and help with the 2014 these politicians do not do things. Theyre not. Let me speak on behalf of Small Business now because i feel like a conduit to them. If you talk about the minimum wage, lets be pragmatic. Its a populist idea. It gets folks we know exactly what theyre doing. Okay. Lets take a business that has seven employees currently. A real one right now, a real business. An actual business. A real business. They want to hire three more people. This is a business im dealing with actually in massachusetts. They cant do that until they know with certainty whether theyre paying them 10 or 14 an hour. So by just keeping this debate alive, we are actually compressing job growth. We are forcing people would it make a difference if it was 14 . First of all, 14s insane. Thats a 39 increase that you put on your already existing base of employees, so that changes your Business Model in perpetuity. Then it retards you from the incremental new job. I dont know why people are debating this issue. This is sheer insanity. Its sheer insanity. There is no metric that makes sense in this. Let me ask you and by the way, i dont disagree that the uncertainty this conversation has created is probably preventing businesses from hiring right now. I dont disagree with that. I wonder whether there is a larger question, though, maybe its a philosophical one, a moral one, i dont know, about what you know, whether its worth having not more people employed, if you believe the 500,000 number the cbo had, or not, but is there some baseline at which you say, you know what . If people are going to work in this day and age, they should be able to work and not be in poverty. Whatever that means. I know its a loaded question. No, its a fair question. Let me push back this way. Lets say we had never implemented a minimum wage ever. And we started we reboot america 2. 0 with no minimum wage. Do you think a company like apple, which is a phenomenal success by market cap by every measure, which has about 10,000 jobs in america, give or take a few thousand, and 2 million abroad, how many of those 2 million jobs that left america would have stayed here had we let the market decide what the wage should have been to manufacture their product . Maybe . Yeah, but heres the issue. A lot of those at least a portion of those 2 million jobs are workers who are literally working, i dont know, 12, 14, 16 hours, and theyre living in these, you know, bunk beds where they go for, you know, six months at a shot to go to these factories. I dont want to make a judgment about that except to suggest there are people except there are americans at home without a job, with no income which basically comes into your basket where we have to support them through basically a social net. Instead of them employed at all. Yeah, but kevin, there are jobs here that some americans wont take. There are a lot of Service Sector jobs. Becky, let the market decide. In other words, if a Company Wants to move its workers offshore because theres a more competitive opportunity versus what the minimum wage should or never would have been in america, the market would have jobs left not because of minimum wage. Those are jobs that left because they were in union areas where they were paying Something Like 40 an hour with a lot of benefits. They werent paying minimum wage. Youre not willing to contemplate my definition of the universe without look, im happy to participate in the thought experiment. I agree with you in many respects. Im just saying we have decided in this country, for better or worse, that there should be a sort of minimum standard of living. I dont know if you the question, i guess, is do you agree with that use of it or not . Because what were doing here is different than what, for example, is going on in some of these other countries. Youre creating a whole army of 18 to 25yearold people that are unemployed and cant get employed because employers dont want to pay them 14 an hour. Maybe theyd be willing to pay them 8 or 7 or 6. I dont know. The market cant tell me because we have this false bottom. Weve basically forced employers to say, if you want an incremental employee, youve got to do it at maybe 14. You know the test we should do is simply take a state and remove minimum wage for 12 months and see what happens. Why cant we do that . What would be wrong with that . Youre going to end up on the Huffington Post today. What would be wrong with that . Im not willing to connect the dots about what would be right. I just know that empathy, i cannot agree to letting you do that. Im telling you i feel for people. Because this is not my opinion. They dont connect dots. Im voicing for you the thought of thousands of Small Business owners good luck. Whats your email . Whats your twitter address . You got a twitter address . Yes. Its kevinolearytv, and i will defend this thought. Dont do it. I am ready to fight this thing till the cows come home. Kevin oleary. I dont know why we understand, wow, we saw nixon with wage price controls. We know exactly how it dislocates the market and it doesnt work. But then we make exceptions. Here we can do it, and it wont matter. We will continue this conversation. Coming up after the break, blackrocks chief investment strategist is going to join us. Russ will give us his forecast for the bulls right after that break. And then later, well be talking about the business of pot. Actually Family Business of pot. Youll meet one family that sits around the Kitchen Table rolling doobies together and selling them. Doobies, yes. In the prompter . Were coming back in a moment. A little bit of weed. When you order the works you want everything. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Welcome back, everybody. Weve been watching the futures this morning. And after a down day yesterday, the futures have picked up this morning. The dow futures are up by about 55 points above fair value. S p futures up by close to 7 points. And the nasdaq is up by just over 15 points. With three days of trading left in the month, major averages remain on track for solid february gains. Joining us with his outlook on the markets, russ costrich who is the global chief investment strategist at blackrock. How do you feel about things now that weve been testing new highs . I think the market has recovered on the fact that, you know, a lot of what we had back in january was about emerging markets. Thankfully, things have calmed down there. And youve seen enough evidence that the weak Economic Data weve been dealing with since the start of the year is mostly attributable to weather. Thats given investors more confidence that the u. S. Economy is not slipping back so much. You just had this very unusual winter. And thats really hurting a lot of economic activity. So your thought is if you missed this last opportunity to buy, youre not necessarily going to get another one any time soon . Well, no, i think the market is going to be volatile this year. And again, not necessarily were not talking 2008 volatility, but i think whats important this year is that were going back into an environment where Monetary Policy is not going to repress volatility. The way it was in 2012 and 2013. Is it going to create volatility . When you talk about the taper . Well, i dont know if its going to create it, but whats happening is youre going back to a more normal environment. You know, seeing the vix at 20 or 21 the way it was back earlier in the month, thats normal. Thats the way things typically are. And thats the environment i think were going back to. Okay. So russ, you think were going back to that environment. If we have shaken off concerns about the economy at this point, what is the next thing that causes pressure . Is it something internally in the United States . Or you think its external pressures like those emerging markets . I think a couple things. Emerging markets are one issue. I think there, while its going to occasionally scare investors, were not that worried about a transition from emerging markets to developed markets in terms of actual economics. I think the bigger issue is going to be what happens to u. S. Rates. If we remain in an environment in which the backup in rates is be benign, which is our assumption, i think that the growth were going to see this year will help u. S. Stocks move higher by the end of the year. How come you think oil prices are so high at this point . This is venezuela, its whats happening in ukraine, even though theyre not Oil Producers. No, i think its Something Else. This is a really good point. People focus on the surge in u. S. Production. And thats a real story. Its a great story. What gets left out is all of the production thats come offline in the middle east and north africa. You think about places like nigeria, libya, south sudan, these are all large Oil Producers that have seen hundreds of thousands of barrels of production come off over the last 12 to 18 months. So even though production is surging in north america, this is a global market. And to the extent production comes offline in the middle east and north africa, theres more of a supply demand balance than people assumed. What the heck is going on with natural gas . Those prices are down 17 just in two days. Natural gas obviously has been very weather driven over the last several months. And its probably going to continue to be weather driven. Obviously, the good, longerterm story is the u. S. Is very well supplied with natural gas. So i dont think this is a problem. But the volt tiatility is clear function of weather. The volatility on prices for so long has been keeping investors from doing more. I mean, russ, what happens . When do you actually see these prices come back . Youve got guys like Boone Pickens say theyve expected higher prices for a while. In terms of natural gas . Yeah. I think natural gas is still at a level where it is productive to be cultivating, you know, the various shale formations that weve seen happen over the last five years. So i dont think the pullback is going to hurt production. You think about where nat gas is today versus where it was 18 to 24 months ago, this has still been a very big move to the up side. Russ, you know, we hit 18 i call it 18. 50. That was the high in 2013. This entire year weve been below that. On the s p. Maybe, i dont know, its going to be march soon. If we dont do it in march, that would be a whole quarter where were just sort of churning around. We did the 5. 8 pullback, and now were just sort of treading water. But no ones been able to buy anything cheaper. And that just makes me think it might be bullish, not bearish. I think maybe we get through today, becky, because weve been testing 18. 50 a couple times, and maybe today is when we go up. So it would help to get above that december 31st high to where you can really start making an advance again. And people have gotten sort of bored with the market again. It only took two months for people to start getting bored with the market again. Well, that might have been a function of unrealistic expectations. We spoke about this back a month ago. You know, the reality is you had a big move last year. That move was largely driven by multiple expansion. The pe on the s p 500 last year was up 22 . That was the biggest advance since 1998. The fact that weve had two months where the markets digested those gains and the worst thats sahappened is a 5 pullback, to me thats not that bad. Are you working with a bunch of egomaniacs at blackrock . Is larry fink whats it like there . Are you making 100 million a year . Which questions do you want to answer . Its a little below that, joe. Just a bit. Is it crazy there . Are people with whips . No. No . There are no whips. Yesterday they were at a party. I have yet to see a whip in my nine years with the firm. Your personal life might be a different kidding. Coming up, targets First Quarterly results since the massive security breach. How much did it impact the bottom line . Well find out at 7 30 a. M. Eastern. First, though, michelle is in kiev. Have you tried the chicken yet, michelle . I had chicken kiev for dinner last night, yes, in fact. And i liked it. It was good. So listen. Goldman sachs has very few investments in ukraine, but we found one of them. The ceo of that company up next and the latest from ukraine. See you after the break. [ intercom ] drivers, to your marks. Go [ male announcer ] its chaos out there. But the mclass sees in your blind spot. Pulls you back into your lane. Even brakes all by itself. Its almost like it couldnt crash. Even if it tried. The 2014 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Mayo . Corn dogs . You are so outta here aah [ female announcer ] the complete balanced nutrition of greattasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. [ bottle ] ensure®. Nutrition in charge™. [ bottle ] ensure®. To manage your money. R guy around 2 percent thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Welcome back. Ukraine struggling to build its government. How about rebuilding Investor Confidence . Were going to go over and see Michelle Carusocabrera who joins us now from kiev, after talking about her chicken before. Joe was asking about the chicken. Michelle. Reporter hey there, guys. Good morning. Standing here next to me is thomas fiala, the ceo of dragon capital. First i want to highlight the news we broke last hour, that an executive from the central bank of ukraine has confirmed theres been a change in policy here. Take a listen to sergei kruglich. So we changed our policy. So we transfer from the fixed socalled manageable Exchange Rate to the Flexible Exchange rate. Reporter he is the director of International Affairs. Hes not the central bankhe hea hes not a governor. We have seen the currency weakening. Here with me, good to have you here. Hello. Reporter are you supportive of this move by the central bank to allow the currency to weaken . Its been long overdue. Most of our neighbors have done it, and the ukraine currency has remained overvalued despite an account deficit. Reporter the debt of the country has been falling, though, as a result, yields have been rising. Theyre not worried youre not going to be able to reservice it. Are you worried about a restructuring . We are not worried, but ukraine needs external help for the next year or two. I think with sensible economic policies and with International Support from the imf, u. S. And the eu, we can return to the market back within six months, maximum. Reporter if you listen to a discussion about ukraine and the United States, its all about this is the eu or russia, a forced choice, some kind of big monumental decision for ukraine. Do you see it so divided, choosing between eu and russia . Ukrainians would not want to make it look like this. It wants help from all of its neighbors including russia and on the other side, but the majority of the population definitely supports european standards of business, democracy, free market economy. Reporter thanks so much for joining us, mr. Fiala. We really appreciate it. Tomas fiala, ceo of dragon capital. Back to you. Thank you very much. Again, Michelle Carusocabrera. We have been talking around the table about the minimum wage. Weve been talking about it since you first joined us, kevin. Weve been talking about it off camera a little bit since then. No Death Threats . I simply asked a question. Does increasing the minimum wage actually help someone get a job in america . And the answer is no. The answer is no. The question is, its the quality of life. Do we believe in the minimum wage so that people can get by on a more Sustainable Way . Looking at the quality of life youre looking for the total youre looking for the total quality of life. I dont understand that question. I think were asking the wrong question because youre telling me that the dna of a business in america is to solve social problems, or is it to return capital to shareholders . What about henry ford who said he wanted to pay his workers a higher level because he wanted to make people buy cars. And he has the right to do that, and his competitors may have decided that was a good or a bad idea. Can i suggest to you weve got to go, but when we come back, i want to continue this conversation. All right. Squawk box will be back. Were waiting on targets results. Stick around. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Coach calls her a team player. Shes kind of special. She makes the whole team better. Hes the kind of player that puts the puck, horsehide, bullet. Right where it needs to be. Coach calls it logistics. Hes a great passer. Dependable. A winning team has to have one. Somebody you can count on. Somebody like my dad. This is my dad. Somebody like my mom. My grandfather. Im very pround of him. Her. Them. Welcome back to squawk box this morning on cnbc, first in business worldwide. Weve got a couple of corporate headlines were following. The big one, bank of america says that federal investigators are now looking into whether the bank violated certain requirements of a Government Housing program. The probe centers around compliance with the rules of federal housing administrations direct Endorsement Program. This according to a 10k filing by the banking giant. I think weve got earnings on target, right . We do. Lets talk about some of these target numbers that are just coming out. There are a lot of moving pieces here. Remember, weve been waiting for this number 1. 30, but then youve got to look. That is the we usually use adjusted. We usually use adjusted. Whats the estimate . 79 cents is the estimate. There are a lot of moving pieces in this one. 81 cents is probably where youre going to get at. They Beat Estimates no matter how you cut it. It probably is an 81 to 79 cent beat. Revenue did beat the consensus. Theres a lot of information weve been waiting for. And some of this is regarding comments and costs related to the recent data breach we saw back in december. The company talked a little bit about this. It said it shaved 2 cents off the quarter. It said it is not able to estimate expenses related to the brae breach, but target incurred 61 million in total expenses, but they were offset by 44 million in insurance receivable. At this time, they say they cant estimate what the future is going to be. In the release theyre warning on First Quarter, i think, 60 to 65 versus estimates of 85. Thats probably not good. And they did say results softened meaningfully after news of the breach. But prior to the breach, they were doing better. They were doing above expectations until, i think, december 18th. They told us before that it softened meaningfully. They say in the last few weeks, things have been a little bit better. When you look at the First Quarter, it reflects operating results not only in the u. S. , also in the canadian segment. I think the key is going to be just how much better theyve been doing in recent weeks, whether the consumer has really been coming back in force. And its going to be hard to figure out if that was weather related how much was weather related and how much was data breach related. Remember even macys yesterday said they have been struggling for january and february. They expect that the trend from the consumer will pick back up in the spring, but theyve been surprised by the bad weather. Samestore sales saw 2. 5 , but samestore transactions fell 5. 5 . But the average amount per transaction rose 3. 2 . Thats weird. Say that again . Samestore sales fell 2. 5 , but the transaction, samestore transactions fell 5. 5 , but the average amount that people spent during the transaction rose 3. 2 . Rose. Which i would have thought it would have been the opposite. Some people the people that stayed spent more. Spent more. Maybe it was people stealing people that had their credit cards. They also said that red card let me see that they talked about the red card numbers. And red card was a big part of the question. The Fourth Quarter penetration was 20. 9 . That was actually up 5. 4 Percentage Points from a year ago. Analysts have been looking at that because thats a key number for them, too. They say the rate of increase slowed down after the data breach. But yearoveryear penetration continued to grow hundreds of basis points throughout the end of the quarter. That was a big question analysts had, about whether people would stick around with the red cards and continue to use them. But the u. S. Segment ebit down 22. 4 . In the Fourth Quarter in the u. S. Segment. I do think youll hear more from the company on their Conference Call just about how much trends have improved in recent weeks. And youre probably right, its the guidance. The stocks down. Down 1. 79 at this point, but again, says this is the early read. This is going to take some time to go through the whole thing. Well see what happens as they talk a little bit later and as people get a chance to really digest this. Okay. Speaking of data breaches, what an unbelievable segue we have here. Speaking of data breaches, the u. S. May be one step closer to credit cards with the security chips in them. First data is announcing a new partnership with visa. And first here on cnbc, have you been here since you left the other firm that will remain nameless . Who are you . One of the greats. I wanted you to say the name. Yes, ive known him for a while. How are you . Im well, thank you. Have you been on the show . I have been on squawk box. Tell us about this partnership. This is a great partnership. I think it shows the collaboration that we want to work in the industry on. And coming together with visa, alstar network, which is a debit network, both being durbin compliant, a very Good Partnership what does the Partnership Look like in practice . The Partnership Looks like that both that under the durbin amendment, you need to have two networks on a card. And these two networks, the star network and the visa network on the debit card, will be collaborative. We work together. And it allows the client to be able to have an emv, a chip in the p. I. N. Thats pretty important. Which is very, very important. So every card will have a chip that runs on your through this partnership . Every card, yeah. As the new cards are issued. We did something in july with a Company Called oberthur. This gets back to us being a grand collaborator. Its an interesting company, one that really has 6. 2 million merchants, 700 millionplus credit cards. We sit at the nexus of all networks and 4,000 financial institutions. So for us, its very important to be a collaborator. So we did a deal with a Company Called oberthur, which is the chipmaker. And we are partners with the ability to put the chip on the card to secure it. On the other side, we have, on the pos side right, for the retailer. Transarmor, which is a product that will encrypt and secure the data. The big question with this, there has been a huge push for the chip cards because of what happened with target and Neiman Marcus and other retailers over the holidays. The question is when will the retailers actually be ready to use these . Because theyre the ones that will have to spend the money to put the new point of service thats one of the things why we become so integral in the process. Not only do we have a debit network, but we do have globally 6. 2 million merchants at the point of sale. Can i ask a question as a user . I have credit cards in europe, canada and here in the states. The europeans and the canadians seem to be well advanced. They all have these p. I. N. S and chips and i have to put a code in every time i use the card. However, when i want to use it stateside, right here in new york for dinner last night, i cant use my european or canadian card anymore. It just goes error. We dont have a system here that reads this. So im losing some flexibility, am i not . As an International Investor and traveler . I think this is a pinnacle move towards changing that. But are the retailers going to invest money . Restaurants . I think they will and were prepared to invest money as first data enabling them. What is the cost for the retailer . Well, the cost for the retailer is to be able to get their systems no, so each point of sale . How much is it . Each point of sale machine, if im a Small Business that has to have a Cash Register that has to accept these new cards, whats it cost me . Say we have a new point of sale solution called clover. 5,000 of them out in the market. Its a tabletlike product. And that product will be, say, in the 1,000plus price range for the merchant. Why would i pay you as a merchant . Why dont you eat it . Youre getting a fee off me every time i do a transaction. But you as a consumer get to use your card there. Is it more secure or not . Thats the question. I think thats a great question. And i think it gets to the heart of security is everyones responsibility. Security is, in our belief, in the systems belief, the responsibility of the merchant, the responsibility of the processor, the responsibility of the issuer, and the responsibility of the network. But hes hitting the exact heart of the question. Who pays what percentage on it . Does the retailer pay 100 of the point of Service Machine . None of my businesses are. Youre going to eat it. If you want to come in and change my pos, youre going to eat it for sure. You dont have any money left because of the minimum wage increase. Im just saying a Business Owner should not have to pay for the system that he is paying a tithe on between 1. 5 and 2 . The target situation might argue opposite. That theyre going to step this up if i were target with the buying power i have of pos systems, you would be eating it also. Well, i think you really have to look at what the system brings and why they need it. It reduces fraud so the Credit Card Companies costs go down. The card company is actually extracting the tithe, the financial click charge, should pay. Its that simple. What is a pos . A point of sale. Oh, oh. Point of sale. Now i know. Never mind. Piece of yeah. I know where youre going with this. Thank you. Spend 100 million on card technology. Target itself is stepping up. Why are they doing that . Because they lost business. They said themselves. Youre just mad at him. When you say its 1,000 for this tablet system, is that for a Small Business that would use that . If i go to target, how much do you think each point of sale system i think targets point of sale system will be their own point of sale system. Right . They will they will use their internal system, right . What we will do will be a processor. We can Bring Technology but everyones going to have to swap out whatever their reader is, right . And in the future when i go to a restaurant, instead of handing over the credit card, theyre going to come to me with this little thing, and im going to do my you can also you also can buy an encryption product, right . So i think at the heart of the discussion, that you have taken a very strong point on, which i appreciate. I appreciate it. I like it. Im a shareholder in all the Credit Card Companies because i love their Business Model. Do governments subsidize it or something . How do they this is embarrassing with the way they conduct business over there. The Credit Card Companies in the canadian European Market sent their users a chip card. Everybody switched over. They said you pay for my pos. And now the cost of fraud is reduced by, like, 80 . So it all came through the system. How much does it cost visa, real quick . Do you know . I dont know. Per card . I dont know. For the bank. Its not that expensive. Its not material. Its not material if it reduces fraud. All the card issuance piece will be done by the issuance. Thats not passed on to the consumer. The card is not expensive. Thank you. Fantastic. Come on back. Thank you. We should do this more often. Shrinkage or leakage . Theft. Theft is shrinkage. When we come back, street reaction to target earnings and what was said about the companys security breach. First, the colorado pot rush. Nearly 19 million in america used pot in the last month. A new documentary will air tonight on cnbc. Well get a preview and talk pot profits when squawk comes right back. Are you stumped by todays markets . Want to hear from a billionaire before you put your money to work . Well, heres your chance. Monday is ask warren day on squawk box. Send your questions for Warren Buffett to askwarren cnbc. Com. Or tweet them with th the askwarren. Then tune in on monday at 6 00 a. M. Eastern. Well bring you three hours with the oracle of omaha. Dont miss it. [ park sounds, sound of spray paint ] we asked people a question, how much money do you think youll need when you retire . 500,000. Maybe halfmillion. Say a million dollars. [ dan ] then we gave each person a ribbon to show how many years that amount might last. I was trying to like pull it a little further. You know, i was trying to stretch it a little bit more. [ woman ] got me to 70 years old. Im going to have to rethink this thing. [ man ] i looked around at everybody else and i was like, are you kidding me . [ dan ] its just human nature to focus on the here and now. So its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. [ car alarm chirps ] [ male announcer ] we dont just certify our preowned vehicles. We inspect, analyze, and recondition each one, until its nothing short of a genuine certified preowned mercedesbenz for the next new owner. [ car alarm chirps ] hurry in to the mercedesbenz certified preowned sales event. Visit today for exceptional offers. Im down to see no one is down to see the stems again, i dont think. Lets talk pot, two weed shops in pueblo. Pueblo. Colorado. Thank you. Youre welcome. Thank you. Brought it. Peeblo. Brought in about 1 million in total sales just in january. Those sales produced about 56,000 in local sales taxes. And nbc news correspondent harry smith just filed a documentary on the pot business. It airs tonight at 10 00 p. M. Eastern on cnbc. Harry, we went after you to bring you over to nbc, and suddenly youre doing all these pot i mean, was there did we go after you just for this beat or something . Coincidence, isnt it . I mean, you dont know a lot about this. No coincidence whatsoever. This is my power alley. This is your sweet spot, more or less, i think. Listen, we spent five days out there shooting in january, and ive got to say, every single day we went out to shoot, it was an eyepopping experience. Just take a look at this. Reporter for this part of colorado, is garden city sort of potopia . Yeah, i guess you could say that. Garden city is known for its vices. Reporter with 45 workers, rotherham is garden citys largest employer. Its a family enterprise. Where mom, dad, aunt judy and uncle elmer all gather to trim bud. Welcome to the heartland. Ten years ago if somebody had said youre going to be in the marijuana business, what would you have told them . I wouldnt have believed them. Its really surprising to hear your mother say, boy, we have really nice buds today. Reporter and now these guys who are on the ground floor of this business feel like theyve won the lottery. And ive got to tell you, the guys who have some business acumen, they are making a killing. The old stoners, theyre going to be left by the side of the road. Youve got to be youve got to be a businessperson and know what youre doing. Harry, do you know i mean, i have a lot of questions here. I kind of agree with the president , not on a lot of things, but when he said alcohol and pot, you know, alcohols not great. And we have a prohibition already. You know, you drive faster. People that smoke pot are you know, they may get hit going 15 eating a twinkie or something, right . Thats their problem. But then i think about your lungs. And we just know that smoking in the lungs, thats what worries me. Can you eat joe, heres the thing. Were these provincial people who live back east. Were not around the medical marijuana, which is de facto legalization anyway. We dont know anything about it. We go out there, what we find out is 40 of the pot thats sold comes from edibles. Comes from things like vape pens, ecigarettes that are filled with hash oil. Thats 40 of the business. The smoke is getting smaller and smaller. Its the alternative products that are growing like wildfire. Thats very interesting. Your point about you need to be a businessperson to be in this is a great one. But our guest host today is kevin oleary from shark tank. And hes looked at some of these deals. And you have some concerns, right, kevin . First of all, i would say for me as an investor, this is like getting an opportunity to get into alcohol after the prohibition just ended. This is going to be a massive multibilliondollar business, regulated and taxed by the government. I would very much like to invest in it. My lawyers tell me a different story right now because we dont have a federal mandate to legalize marijuana yet. We have state initiatives. So if i were to invest, as i have been looking at two deals in colorado right now, i could run into jurisdictional problems as an investor in another state where its illegal. I would never make an investment that would breach my right to be free. In other words, i could be indicted, or i could be thrown in jail. I need to be told by the government federally that its okay to support this industry. And i really like the margins in this business. It is phenomenal. Yeah. One of the guys we talked to, talking about these margins, his business is literally expanding exponentially. And i said, so where do you go for money . Where do you go you know, is there who do you call to get cash to help you groh he this business . He says, we dont need to call anyone. Theyre making so much money, they just plow it back in the business, and they doubled the number of employees in a single year. But you make a very good point. A lot of these businesses, what they do, if they have a proprietary process, for instance, they license it state to state to state. Because until these federal regulations roll along, which could be years and years and years in the making, the way that thats the way to play it. Youve got to be able to play with somebody whos smart enough that they can sell, license out their deals state to state because its going to be years before this is theres any kind of national regulation. Think about the funding opportunity for state governments that are desperate for cash. All right, stop. Before you do that, though, think back to prohibition which joe was talking about. Prohibition ends, and as a people, we say, part of our social contract is were going to accept the cost of alcoholism, alcohol abuse, people who become aggressive because of their behavior, driving while drunk. We said were going to accept that as part of this social contract back in 1933. Now what we dont know, with the legalization in colorado, what the governor there calls this great social experiment, is whats the down side . We dont know. We dont really understand what the other half of that contract is yet. But you said earlier, these people were smoking it anyways. Whats the difference . Now were just taxing it. And now theyre smoking it like crazy. Thats the thing is the blankets come off. And people from all walks of life are walking into these places and saying, im going to smoke now. Im going to put im thinking here, like kevin, im going to put together a Business Plan for you where you eat some pot, right . And then you get the munchies. And then you have pot in the twinkies that youre craving. And then that makes you want more. And then, i mean, youll never stop. They would have never went bankrupt. Ding dongs, reeses Peanut Butter cups. One of the other cultural advantages for the pot industry out there is zloo cook cookies. When theyre bringing in new employees, they dont have to drug test. Youre absolutely right. Harry, thanks for doing this special you obviously it is very compelling and interesting. And you can tell that youre into it. Were going to watch tonight. At 10 00 p. M. Harry, thank you. When we come back, Small Business and the state of the economy. Shark tank host kevin oleary sounds off. Right now as we head to a break, take a look at futures. Youll see the dow futures up 58 points. S p futures up by almost 7 points. Squawk box will be right back. Still to come, Budget Committee chairman congressman paul ryan. We talk politics, the economy and a possible run for the white house in 2016. 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This is where we bring together the Fastest Internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system, only from xfinity. Tv and internet together like never before. Stocks backing off a record close. And then what are you looking at . Never saw a guy named oshaughnessy. Congressman paul ryan has been on the road raising money and sharing his message on how to get the economy going. Paul ryan will join us. Squawk box returns right after this. Low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or Breast Cancer. 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[ car alarm chirps ] hurry in to the mercedesbenz certified preowned sales event. Visit today for exceptional offers. Visit today for exceptional offers. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. From washington to wall street, a squawk news making interview with congressman paul ryan from his plan on getting the economy going to possible president ial run in 2016. Investors focus on target. The company reporting in the last hour and making comments about the massive data breach we will get wall street reaction. Plus kevin oleary host of shark tank here to tell us when it is safe to get back into investing waters. You are going to need a bigger boat. As the final hour of squawk box begins right now. Come sail away with me. Welcome back to squawk box. The future at this hour are higher. I have my moneys on today might be the day. I want the s p to close at a new high for 2014 because it hasnt been above december 31. So we have been below this entire you know how they say the first week of january and so goes the year. I think january and february is okay. And march. However long it takes. I dont think any of these things are set in stone. Unless it is in your way. I want prosperity to rise. Im sorry. I have a big morning on squawk box. We will talk budget, the economy and jobs with him. Budget Committee Chairman congressman paul ryan keeping his options open as he has told us for 2016. First andrew has this mornings headline. Earnings taking center stage. This morning target earned 81 Cents Per Share for the Fourth Quarter. The december data breach costing the company two cents pper share but says it cannot estimate how much going forward. The nongap earnings came in at 1. 30 per share. We will be speaking to a target analyst in the next half hour. We are also talking about lowes which matched estimates with profit up 31 Cents Per Share. Investors are encouraged by improved sales growth. We will get new home Sales Numbers for january coming at 10 00 a. M. Eastern time. Economists expecting a 3 drop. That decline would be on top of a 7 drop in december. The bit coin currency expected to show more volatility today. The exchange abruptly stopped trading yesterday and the website with disappeared for the little while. The ceo said the business was at a turning point. There are rumors that someone stole the coins from them. It is like 400 million. I dont know how this works. But then, you know, the futur t futurests and people that love bit coin say it is an ecosystem that needs to find its legs. It is going to be something that is here to stay. The question i have now i have been lookingt at this as an investor for about a year. As an investor in bit coin or using the currency at some of the the i was starting to think of it as a virtual goal. The new question that i have that will stop me from taking a position in it is if they breach the ability to code and hack and create coins outside of the system which i dont know the answer to that yet. Mark andrews yesterday compared it to the Global Situation where you had a bro r brokerage that somehow did bad things with the client. I get that. Brokerages go under all the time. What i understand the debate occurring now amongest constituents is there may be a situation where you can hack and create your own coin. Which we have been told as investors cant happen. Apparently, it might have happened. We dont know why this company is bankrupt. You have to answer that question to me. If i thought for one nanosecond that a hacker could create a coin i would never invest in this platform. Sound advice. Stocks losing a little ground tuesday still on track for solid gains for the month. With us is james oshaughnessy, chairman and chief executive officer of oshaughnessy investment management. Lets talk about what joe was just saying. With the s p getting back to a level where it maybe finally pushes through the high that it ended the year last year with. Does it make you nervous . Do you like it . I think that u. S. Stocks over the next five to ten years are going to rehamain the asset cla of choice. I think getting there is going to be a little more interesting had it been in march of 09. I think there is going to be a lot of bumps in the road. When we compare them to the alternatives with the exception of International Stocks which we find a 50 cheaper on the schiller p. E. Ratio, there is a lot of value in europe right now and a lot of u. S. Investors have very little exposure there. We think follow the cheap stocks with high dividend yields, good financial strength, et cetera. Right now they are leading to europe. Are there certain countries within europe that you think are better positioned . We have a diverse portfolio so we tend to be in virtually all european countries. Uk has excellent candidates. Dividend yield exceeding 4 . Very, very cheap, cheaper than 90 of the stocks in our universe. Same can be said for canon in japan and for china mobile which is actually 95 cheaper than the stocks that we are looking at. So cheapness married to good fundamentals, good dividend yields or good momentum seems to work very, very well in europe, even better, actually, than it does here in the United States. Can i ask you a question as an account investor . Does it bother you at all that the ten year bond right here doesnt have a three handle in front of it . I have been investing for decades this is troubling me now. Its huge. Kevin, we published a paper in august saying that this was a generational selling opportunity for the long u. S. Bond. We think that long bonds have enjoyed a 35year bull market. When i was 21 in 1981 they hit their highs on terms of Interest Rates. If it werent for what the fed was doing my expectitation would be that it would certainly be at a three handle and probably more. How can you have an advance from here . We are back from december highs and have the bond stay where it is . It would be very trouble to have the disconnect continue and makes me think about f. This is a condition that has persisted for the last little while. And i think that really the fed is attempting to push all of us risk investors into the riskiest asset class. I think that is why you have seen the expansion that you have seen in u. S. Accounts. Granted, in march of 09 u. S. Accounts cheaper than they had been since 1982. We were wildly bullish on u. S. Accounts there. Now we think they are not going to go into another bear market in our expectation but you are not going to see the kind of double digitt returns that you have seen over the previous three years. Thats why we are pounding the table a bit on equities outside of north america, specifically advanced international markets. Thank you for joining us. When we come back we will get reaction to the targets quarterly result. The Company Making comments about the holiday breach. We get reaction from an analyst who covers the stock. Check out the squawk box market indicator. Up next, congressman paul ryan on the state of the nations economy. What washington needs to do to keep america growing and where he thinks lawmakers will come down on next years budget. Squawk box is back after a quick break. Hats next. 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Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. President obama is set to deliver his 2015 budget request to Congress Next week. Congressman paul ryan chairman of the Budget Committee joins us with more. So much to talk about. We are going to call you chairman. I dont know what you might be in the future. You are never willing to tell us what your plans are. Lets do chairman today. I actually prefer paul. How does that sound . Then my journalistic integrity would be like we are friends. You are just now beginning to worry about that. Exactly. Chairman ryan, dave camp, something i want to talk about. In a Perfect World no way that happens with the current president. He will go down from 39. 6 to 25. Why introduce that . Why do it . Because we should offer ideas. Just because we have a progressive president and senate doesnt mean we should do nothing. By the way, good morning becky and andrew, as well. Good morning. We should be Offering Solutions to create Economic Growth and create jobs. Just because we have this little president that we dont think will do anything constructive doesnt mean we shouldnt offer ideas. We are the party of ideas. We want to bring solutions. We have an analysis from the joint committee on taxation that shows this creates nearly 2 million new jobs, faster Economic Growth, more take home pay and higher wages. That is what we need to do in this country. And, yes, lowering tax rates, making it clear, simpler, fairer is clearly one of the best things we can do to create growth and jobs in this economy. Just because we have a president that we dont think will be warm to this idea doesnt mean we shouldnt be proposing these ideas. The other thing that was out yesterday was the journal i think was false hope. Saying since one democrat now thinks maybe you can grow revenues from doing business friendly things instead of just raising tax rates, if you make it easier for business to operate, revenue might go up. Now this is like Something Like a seed that could make its way to president obama. Thats never happening. When he says revenue he means raise taxes. He will never agree to that type of proposal. Do you agree with that . I think ron widen is one of the best democrats in the senate. He does acknowledge reality which is when you lower tax rates you produce more Economic Growth. Just because we have this kind of a president that does what you say, and i agree with that, doesnt mean we shouldnt be offering these ideas. We are trying to put ideas on the table and get Economic Growth and job creation. This is a slow growing anemic economy. We just lost 1. 2 trillion in deficit reduction from last years baseline to this years baseline because of Slower Growth projections. We need to start getting people back to work. This tax reform, lowering tax rates one of the best ideas. Just because we have a president that believes in tax redistribution and class warfare doesnt mean we shouldnt say what we think is the right way to go. Let me ask you as an investor and capitalist and entrepreneur in this country about an idea that i think your party floated that i am really concerned about. You want to tax me 10 surcharge on my income over 450,000 and apply common Income Taxation to Capital Gains. That i can ensure you is a bad idea. I speak on behalf of everybody that puts capital in harms way to create businesses. Bad idea. I hope you are not going to push that forward. I dont want to do things like this but when we are dealing with the code we have and trying to replace it with revenue neutral code we have to do broadening. We are talking about lowering rates across the board. I think you are talking about private equity. The key is we are bringing the rates on ordinary income down to 25 and a few down to 35 . Effective top tax rate on individual income is 44. 6 . Corporations are paying 35 . Pass throughs as high as 45. 6 . We are trying to find a way of getting all tax rates down across the board and trying to get a tax on capital down across the board. If you look at how Capital Gains is treated for the vast majority of americans lower Capital Gains taxes. Let me just say something. You cant make it perfect when you are dealing with the kind of perimeters we are dealing with right now. Punishing me for achieving success and wanting to put capital in harms way and build jobs in america. I feel like im getting punished. Thats the last thing we want to do. Thats how i feel. We had eric cantor on. I said because we dont usually do social issues. I said is the Republican Party always behind the curve with marriage equality. Now we have this arizona thing. Are you willing to say that who wrote this bill . I dont know all of the details. Where you can turn someone have a different counter in a restaurant if someone was gay. You cant just dismiss this and tell us right here that i havent read the bill. I have been a little busy right now. Let me describe it to you. If a Restaurant Owner doesnt want to serve someone because they might look gay to them they dont have to serve them. That sounds ridiculous. You would denounce that . What you said . That businesses could discriminate based on Sexual Orientation you would denounce that. I voited for the employment nondiscrimination act. This one, paul, obviously, you may not have read the bill. Just in terms of whether you are protecting religious rights for people who say this goes against it and i dont want to be someone doing flowers for a gay wedding versus someone saying you are a business. Im not going to comment on a bill i dont know the details on. How about this next one . We have been talking about minimum wage here. I dont know whether you have seen but the president s Approval Rating was i think down into the low 40s. It bounced. It was back up to 46 almost as if this minimum wage and income disparity is having traction. How do you say as a republican that the minimum wage, that raising it is a bad idea and not expect that to hurt you politicly . If we think something that can cost us hundreds of thousands of jobs, if we think that is going to cost us jobs why would we want to do that . Point two, we want to make it easier for people to enter the workforce. We have 35year low Labor Force Participation rates. I started off at a minimum wage job at mcdonalds. It was the beginning of my life and not the end of my career. We want to get people into these jobs to work their way up. We it is not enough to say we dont like the slow growth ideas. We are offering pro Growth Solutions to create jobs and opportunity. We need Economic Growth. How about stream lining Regulatory Environment . That can be useful. Debt reduction, tax reform, energy, all of these things are growth things we need to do. On the minimum wage issue, do you have concern that ewe are living in an environment where there are people working full time where it is not a ladder to the next place and yet are still in poverty . I am going to be saying a lot about this later on this year. I think we need to have education reform and challenge the political monopolies preventing parents from choosing schools for children. We need to have the act which stream lines job training reforms. To the extent that there are people who are going to workt at mcdonalds for all of their life we dont want them we want them to go where they want to go with their lives and we want an economy where we have upper mobility restored. That means raising minimum wage and getting people in an economy to get better jobs and better skills. That is a faster growing economy with more wages and better job growth. That is better education so people can get skills and life long learning. That is not things that we think will hurt job creation like minimum wage. You saw the president said im not doing anything on chain cpi now. I have offered these olive branches and compromises to the republicans and havent taken any of them so im going to do it on my own now. Should we be optimistict that anything gets done between now in 2014 through 2016 . I dont anticipate new budget agreement. We have one in place right thou. I think the president is moving farther to the left. Look what he did to the defense department. John kerry seems like he is preparing a way to say no. You can argue that both ways. I cant imagine that he will say eno. Even the study that they put out paves the way for keystone. My guess is yes to keystone and come out with regulations on existing power plants later in the year. If you want to look at the most politicly expedient answer. Chairman sorry i missed you last week, i got snowed in. We hope to see you again soon. Who knows what we will be calling you in the future. Paul. Coming up its 1849 all over again. Why gold prospectors are dancing. We have details after the break. Check out gold prices right now. Squawk box coming right back after this short break. I love gold coming up, the investors bulls eye on target. We speak to an analyst for reaction to the numbers and the company comments. Squawk box on cnbc, profit from it. On your own. Or with a Fidelity Investment professional, helping you find new ways to plan for retirement and save on taxes where you can so you can invest in the life that you want today. Tap into the full power of your fidelity green line. Call or come in today for a free oneonone review. Welcome back to squawk box. Gold prospectors in Southern California have been heading to the hills. The severe drought exposing gold in the little creek area. Water levels have dropped so much that it has left gold exposed and easy to find. Only a handful have gotten rich. A couple in Northern California stumbled upon decaying cans under a tree in their yard. In those cans they found more than 10 million in gold coins from the late 1880s. The gold rush back in Southern California is about to end. Two major storms expected to bring the most rainfall since the spring of 2011. That will cover up the gold again. Hurry up and get out there. Up next reaction from target. Is earned with sweat,r sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. You want everything. Orkss right in your Trading Platform an expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Welcome back to squawk box. Retailers dominating stocks. Check out target. It Beat Estimates for the Fourth Quarter although the data breach did shave 2 per share in profits. Future quarters in net a meaningful drop in sales in weeks right after. Lowes matching estimates with Fourth Quarter profit. It add aed 5 billion to the stock buyback program. Oppenheimer analyst said he is encouraged by the progress. Also, discount retailer dollar tree missed estimates by three cents. The guidance for 2014 falling below wall street forecast. Abercrombie and fitch reported 1. 34 per share Beat Estimates of 1. 03. Also announcing acceleration of its stock buyback program. Lets get more information on the target earnings. We dig into the earnings with chris korvers from jp morgan. I think you have to dig into the numbers. On the face of it it is not that shocking. The minus 2. 5 comp. There are scary things in there. They reported a 4 gross margin in canada, lost a billion dollars in canada for the year. Originally expected to lose about a third of that. What we dont know as you look forward is they guided to the street. It is very back half weighted guidance. They guided by about 10 . Mathematically that suggests they are banking on a big rebound next year in the Fourth Quarter. They didnt tell us how much they expect to lose in canada. I think that is an important data point on the Conference Call that we need to get and how they think about the u. S. Business currently. Clearly as you know most retailers weather has been very bad and a slow start to the year. You could have negative catalysts hanging out for the Conference Call. From your perspective the stock comes under pressure you think more because of what has been happening with the Canadian Stores versus what happened with the data breach . You think they pushed past the data breach or waiting to hear more information from them . They baked in some estimates into their numbers for the year. What they dont know is any potential fraud related to Third Party Credit card processors. They did bake in a number. I think if you look at it prior to the data breach traffic had missed same store sales driven by missing traffic for the past four quarters. I think the data breach makes it tougher because you have to rebuild the confidence. You have to rebuild the brand. Just as they are starting to make traffic in canada everyone in toronto is reading about the head lines about what happened in the u. S. They dug the hole deeper. It is going to take some time. Nis sounds like a stock you would steer clear of at this point . Yeah. I think you have to stay away from it. You have back half weighted guidance which creates risk predicated on a rebound in the Fourth Quarter. It has an attractive dividend yield of around 3 which should form down side protection in the stock. But the reality is the brand doesnt turn on a dime after what was a series of misses to sales in the data breach which is undermining confidence in the brand in the consumer. Regarding canadian situation shouldnt that be part of an upside potential story. This company basically got the product mix wrong in regions like quebec and ontario. In the next year why couldnt they fix that . Instead of losing a billion maybe make a billion in canada . Why isnt that a potential story for these guys . If you think about what happened in canada, their expectations werent grounded very well. They expected the consumer to come in and shop the discretionary side of the store. They did. They under estimated the consumable side of the store. They didnt execute the plan very well there. They made it supply chain difficulties and Information Technology difficulties. You didnt get it right out of the gate. You are going back to try to rebuild the infrastructure and then rebuild the price and competitive and brand position in the mind of the consumer. So i think over the long term something happens, either they figure it out, maybe they back track on it. Maybe there are management change. It is unclear how it plays out in the near term. Thank you very much. Great talking to you. Thank you. Up next we jump into the shark tank with our guest host kevin oleery. Everybody has enough to cause everybody else a problem. I think the pecking order is different cuban has the most money. Im talking about our guy on the profit. More money than you . I dont know. How much you got . I never say. That is just inviting another audit. And you are canadian. And irish. My son is born in boston and has three pass ports, irish, canadian and american. Find out what kevin has been investing in and how some past investments have erred. Martin sass, his pick last time he was on is up 50 on the investment. We have new names for investors to look at. Squawk box will be right back. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. [ chainsaw whirring ] humans sometimes life trips us up. Sometimes we trip ourselves up. And although the mistakes may seem to just keep coming at you, so do the solutions. Like multipolicy discounts from Liberty Mutual insurance. Save up to 10 just for combining your auto and home insurance. Call Liberty Mutual insurance at. [ thump ] to speak with an Insurance Expert and ask about all the personalized savings available for when you get married, move into a new house, or add a car to your policy. Personalized coverage and savings. All the things humans need to make our world a little less imperfect. Call. And ask about all the ways you could save. Liberty mutual insurance. Responsibility. Whats your policy . Welcome back to squawk box. Take a look at futures. You can see what is going on on the screen there. Dow looks like it will open up about 56 points higher. S p looking higher, as well. Nasdaq up close to 18 points. In the meantime lets get more thoughts from kevin oleary, chairman of oleary funds and cohost of shark tank. We are talking about taxes and canada in this case. Taxes in canada are lower than here . Im an investor so i care about the businesses i buy. I own businesses in canada, europe and United States. And the trend in europe, even joe loves to talkt about france. I dont invest in anything in france. In the Canadian Market particularly in provinces like alberta they have been steadily reducing Corporate Taxes. It is one of the lowest in north america today. If you set up a company in alberta you are doing better than the majority of the u. S. States. I have a personal tax issue for you. How do you feel about carried business . You feel it is fair to be taxed at a lower rate based on the moneyt that you make than somebody else . I have an income. I have a salary. Youre not in this case. But its not your money. Your decision is you can make it personal or for the whole market. Do you want me to take my wealth and reinvest it in america. It is not your wealth. I made it. It is mine. Capital gains. I have a private equity firm created with my own money. If you invest your own money you should get Capital Gains treatment on that. Thank you. My question is whether you should get Capital Gains treatment on other peoples money which is effectively what carried interest is. The trouble is you are not making the commencert risk adjustment. When i put my money to work i am taking risks. Other peoples money. I am leveraging mine. Are you suggesting taking less risk than i am . We are all taking risks. You are taking risks with your money. Im saying with your money take Capital Gains. On my money the only reason you are giving me money is because you think i can give you a return. Why are you not willing to pay me for that . Why is your risk different than any Real Estate Broker who calls you for the next three years and takes the risk of trying to be your friend and working with you and doesnt sell and get the commission . Nobody is giving them anything special for the risk they took to work with you on selling a home or investment banker who does it. Jobs where people take some form of a risk but it is their job. Do you think i do an important thing in this economy to take broken companies, invest them and create jobs. Teachers do important things in our economy. When i invest my capital as a private equity firm, why do you want to punish me for that . Why do you want to make it harder for me to do that . How does it help america create jobs when you make it more difficult for me to raise more capital . I dont want to punish you. You said you want to raise my taxes and pick on me. All i think is that you might want them all to be commenc commencerate. Let me tell you what would work for all of us. How about no Corporate Taxes . The amount of capital that would come into this country to start new companies and create jobs and then tax people who work there with user fees. Then i could personally decide do i want to buy that car and use that service and pay the vat tax on top of that. We are not getting lower taxes. If we had zero Corporate Tax we had tremendous capital here. Then people like me and you can choose what you want to buy. We would pay taxes and pay vat on top of that. Everyone has a vat tax and it works. It is a vat on top of two and three and other taxes. Lower if you dont like that at least lower the bar in Corporate Taxes down to 20 . By the way, i dont take an issue with that at all. Im just trying to level the Playing Field. This theme of lets pick on rich people because they are successful i dont like it. I dont like it either. I dont want to argue to you that it is about hurting rich people or poor people. All im saying is when people look at the landscape and think does the system feel rigged or are we on a level Playing Field it doesnt always feel that way. Lets make everybody pay 25 regardless of income. Done it here. Terrific. We should probably have a progressive tax code. I favor that. I pay 39. 6 . Why do you want to punish people for success . A progressive tax code makes sense to me. I think it is fine to have a tax code. I think progressive makes sense to me. Right now the average tax i pay 39. 6 . 8. 9 to new jersey and 0. 9 for added medicare tax. I understand about paying taxes. I think taxes should come down. I understand the progressive tax code would have me paying more. Im okay with that. I want to see why am i paying almost 40 in the 1 and middle class only playing 12 . Why am i taking the burden and paying it myself . I think these are good problems to have. Not bad. It would be much better if we levelled the Playing Field so that many people not in the 1 can get there. I clawed my way up, too. I get it. There are people who need to be helped from the bottom up. I dont have a problem with progressive tax code. I think taxes should be lowered. A progressive tax code i dont have problems with. I was born in an orphanage. There. Jim cramer on walmart earnings. Shares of actavis. Up. Find out what martin sass is looking at now when he joins us in a little bit. I was 12 when i finally left the fortunage. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Oh, its great. Yeah. [ male announcer ] the best thing to share . A data plan. New at t mobile share value plans for business. Our best value plans ever. For example, you can get 10 gigs of data to share. And 5 lines would be 175 a month. Plus you can add a line anytime for 15 a month. Sharings never been better for business. Lets take a look at shares at retailer tjx, the Parent Company of tj max. The earnings forecast also falling below consensus. The company did announce a 3 cent increase. Lets get to the new york stock exchange. Jim cramer joins us. We will have marty sass on. Do you follow how great that firm has done . They bought value and made a lot of money with it. It is kind of like the old days. I dont know how much tesla they have down here. That has not been their style. He is going to be on after us. Quickly, i can say to you 300 for the shockers. First team since the running rebels in 1990. I took such heat by win it all. Lets just call them the favorite these days. Honestly, i said something that was literally, syracuse duke, its the shockers and they are not shocking anymore, they are unshocking. I didnt watch the second half of florida. Florida. That one guy is amazing. Patrick whatever his name is, hes incredible. Anyway, what else . So, you saw lowes and you saw target, anything jump out at you . Well, i think that target expectations were low and they did expectations. Its a funny world when minus 0. 25 is supposed to be good when you are supposed to do minus 2. 5. Were giving everybody a pass. Lowes was good and it was up yesterday, and it goes up again today. Im not sure whether thats great but i do know that people feel the Retail Stocks are way behind the market and are playing catchup. I want the day to be 1850 or above on the s p, jim, because weve been waiting, you know, weve consolidated and went down a little bit, we consolidated. Its time to move on here and not be stuck in 2013 with the high. Were going to need the financials to go higher. I think theyve been a big problem. Got the highest Growth Stocks doing their thing, but do you know what if we dont start seeing some of this tech that is just kind of just not doing that much and we dont start seeing the banks go up, i looked at jpmorgan, i was thrilled with what they said. I felt i was the only person who was thrilled. Thrilled with jpmorgan. All right, what do you got going . A lot of stuff today, i know, i saw in the rundown. Its awesome, right . Well, look, you know, weve got to go every single weve got to go over why is it that a dollar tree does badly when the economy is not so good and weve got a company, you know, weve got Abercrombie Fitch going up when that quarter was terrible . I got to make some sense of this stuff, and i got to tell you its not coming through yet. What comes up is linkedin up, tesla up, why isnt netflix up . They didnt do anything, why isnt net up . Well see you at 8 59 59. Exactly. Coming up why stock pickers reign supreme in this market. Marty sass will give us his best ideas in health, airlines and broadcasting. You dont want to miss it because hes making a lot of the audience money. And check out what is coming up on st. , noelle pikuspace is coming up and tim boyle, all coming up on squawk on the street. I want it all i want it all a lot of people are saying, you know, we had the easy games and now its going to be a mark of you need to know what you are doing and betting on the right companies thats what our next guest has been doing his whole career, marty sass, he also is m. D. Sass and you are more than a Portfolio Manager at that company. Last time you were on, i remember it, activus and its up 50 , so we still own it . Or can we sell it and buy Something Else . I would still own it, joe. Activus announced since i was on your program, in fact, just last week they announced another deal which i think will be another leap forward for the company. They announced the acquisition for roughly 25 billion of forest laboratories. Yep. Which should be very accretive to earnings. I think sinnynergies are going far exceed managements estimates theyve always been conservative in their forecasts and i think theyll Beat Estimates from the street. If you look at activus even though the stock is up 50 since we spoke last, the earnings are exploding. Were looking for about 16 in earnings for 14, about 18. 80 for 15. This company which organically is growing in double digits is still selling at a discount to the market multiple, so i think its still attractive. You also like mckesson and cvs you told us that last time. For airlines i remember you likeded, you were with delta and united and you have a third one that is not just a commercial airline. Air cap. My favorites are american and delta. American and delta. All right. With american my number one, delta number two. And the new name as you said is air cap which most people havent heard of, but theyre going to hear about it. Air cap symbol aer is acquiring the ilfc division of aig which quadruples its fleet and will make it the largest Aircraft Company in the world, slightly ahead of ge in that business. So, its a transformative acquisition in an industry as you know that i like very much. All right. We see there on your on our disclosure that Sinclair Broadcasting and cbs were both things that you like. Are those new or have you talked about it before . I talked about broadcasting and sinclair before but i havent talked about cbs, that is a newer holding. As you know, joe, the broadcasting industry is consolidating. The retransmission fees are going to grow tremendously. Les moonves just last week on an Earnings Call said their transmission retransmission fees are going to go up to 2 billion at cbs by 2020. Thats up from what we estimate to be less than 500 million now, so it shows you the tremendous surge, the value of content is increasing. The whole broadcasting industry i think is undervalued. Sinclair is trading at a 15 Free Cash Flow yield. Marty, thanks. Going to get some final comments from our guest host but we appreciate having you on. Well see you again soon for a little bit longer segment and we can talk about these in more detail. Thanks. Great, joe, thank you. I want to thank kevin, we could get some thoughts from him but also thank him for being here and the real debate going on here. Its real important and we should all be having it in america regardless of what side you are on. We started this and maybe the segue to sum it up the real decision weve got to make as a country is do we burden our companies, our private sector, the creation of wealth since the beginning of this country with social responsibilities now to pay for those as you suggested were less fortunate. Do you make a companys ceo decide that hes going to spend a portion of his earnings to take care of social issues and contort what the dna of the business was originally to make money for shareholders. I think thats the real debate americas having. You will be on Huffington Post because he should be saying this. If we change that model, were going into darkness, we dont know what will happen and im very much against that. Thank you for being here. Come on back. Shark tank is the show on cnbc. Were thrilled to have you. Make sure you join us. Squawk on the street begins a little early, right now. Work hard play hard work hard play hard good wednesday morning welcome to squawk on the street im Carl Quintanilla with jim cramer and david faber at the new york stock exchange. Take a look at futures on a very big day for retail. Weve already got at least half a dozen earnings out including target. Were going to walk you through all of it. Bonds may react to new home sales when those hit the tape in about an hour, in the meantime, heres a look at the tenyear yield, europe is struggling and asia the yuan continues its losing stree