Transcripts For CNBC Squawk Box 20140227

And wendys. All of them reporting before the bell. After the bell, we get gap, monster beverage, salesforce. Com, splunk, and deckers. Lets get over to andrew with more of todays top stories. And andrew, good morning. Good morning, becky. Were watching shares of jcpenney. The stock spiking afterhours. The trouble retailer reported a loss of 68 Cents Per Share for the Fourth Quarter. That was smaller than expected. Revenue also missing, but heres the good news. The retailer is upping its samestore sales and Gross Profit Margin forecast for the year and youll want to keep your eyes on that. Jcp shares are down more than 30 so far this year. Well be talking more about jcpenney with dana telsey at 7 30 eastern time. Tesla raising cash to expand into the future. The company will be rolling out plans to build a factory and develop what its calling its gen3 mass market vehicle. It plans to build its gigafactory in arizona or texas. The Company Expects the company to run at about full capacity in 2020, employing 65 hukz people and producing about 500,000 cars. Shares of tesla flying high topping about 55 a share. And another Security Breach to talk about. Verizon said to be investigating two possible Security Breaches. The wall street journal reporting that two unnamed retailers appear to be the victim of similar intrusions suffered by other retailers. Late last year, now the retailer involved in these newly discovered breaches has yet to disclose them publicly. So we dont know who they are. Joe, over to you. And andrew, the giga is in quotation marks. Giga. Its that big factory for i know what it is, but why do they call it a giga factory. It has nothing to do with thats a good question. Just because it sounds it doesnt really mean theres anything giga bites going on there. But the fascinating part, some analysts talking about how tesla is potentially turning itself from a car company into a battery company. Well, you know given the capacity remember boeing . He weighed in with boeing when he had those problems with for electric cars, that is the issue. Thats 99 of the problems you need to surmount. And once you do solve them and get that done, then it works. Charge it fast, hold a charge, make it go longer, all of those i think its a tieback make it not start on fire. Batteries for them, too. Weve got to talk about china. Did you read this story . Which story, the china . Yeah. Theyve got to manipulate it now because theyre thinking about not manipulating it. So theyve got to lower theyre going to widen the band, so before they widen the band with these reforms to let it float, theyve got to drive it down on purpose to get it to a level where they can then same story, though. Oh, what a tangled web we weave yeah, theyre not currency manipulators. You read this, and i just wonder if the person writing it for the journal, it didnt occur to them how absurd this sounds. They need to do all this hardcore manipulation to then allow it to be more like the dollar, where it floats on its own. Because they want it to be very strange. Well, i think that were currency manipulators. Because of the fed. But like so many things, the east and the west, its inscrutable. Its i dont understand it. And i need to, you know, i need you can teach me to meditate . I can try, yeah. Id be happy to. I need a word, though. Ill get you a word. I think im going to do, andrew. Like that . Just say it repeatedly. Andrew. Its a calming force. It is that felt good right now andrew. Its a very good name for that, for whats it called . A good mantra name. Do you have one . I cant supposedly youre not supposed to say. I cant use it now because i told people what it is. Because its just your special its my special mantra. I dont know. Its been assigned to me. You dont get to pick it. No, you dont pick it, they give it to you. Is yours kernan. Among the stocks were going to be watching in todays trading i feel so much more relaxed now. Restaurant chain noodles and company. Let me start this again. Theres a restaurant chain called noodles and company and it reported Fourth Quarter profit of 11 cents a share, missing estimates by a penny. Is it a pasta place . I guess. Revenue also fell you dont know about it either . Must be a west coast thing or something . Revenue also fell below consensus, despite a 17 increase over a year earlier. The company was founded just in 1995. It just went public, though in june of last year. Not know it. Its probably not an east Coast Company or around here. What is it . An asian noodle place. Cool. All right. Warren buffett has increased his holding in davida. He added about 1. 1 million shares, bringing his total to 37. 6 million. That represents the take of about 17. 7. I have heard him talk about that company. It might actually be him. I have heard him talk about that company. Yeah . Yeah. To add more to it. He didnt say he was adding more, ive just heard him mention it, that it was one of the ones hes watching. And that governor in arizona, shes republican, she vetoed the bill that set off that National Debate over gay rights, religion, and discrimination. After weighing all of the arguments, i have vetoed senate bill 1062 moments ago. To the supporters of this legislation, i want you to know that i understand that longheld norms about marriage and family are being challenged as never before. Our society is undergoing many dramatic changes. However, i sincerely believe that senate bill 1062 has the potential to create more problems than it purports to solve. And you know, its kind of a its not really a defense no, the decision was met with cheers outside the capitol building. She was met with major corporations and the thing i dont like about twitter. To me, maybe i didnt know every nuance and detail about it, but just the idea that a lunch counter that someone would say, no, youre not being served here, somebody that was enough for me. I didnt realize how many different situations twitter people could come up with to show me that there was some time when this might make sense. Its like, i dont want to know all your splitting hair opinions about why personal freedom, its like, okay, lets say youre a florist. Someone comes in. They want you to do this at this. You dont like the way you know, all these Different Things about, if its junior business, why cant you decide whether or not this is somewhere where youre going to you tie it right back to civil rights. The Immediate Reaction is, we dont serve your kind here. You cant say that. We decided that 50, 60 years ago. You cant do that. But i was like reading these where these convoluted situations that these people come up, where i start to wonder, well, maybe i didnt read it closely. Why do i have to be forced to be a part of a religious ceremony that i find offensive . Thats what people were writing in about these things. But youre right, these are small examples we said that long ago when eric was in here, cantor talking about, you know, you need to be tolerant. And i said, no ones asking you to get married to a man, eric. What, youve got to enforce, youve got to go outside yourself to put your morality on other people. Thats the thing i dont know of any religion that says, you need to make sure other people are actually, thats a part of a lot of religions was converting others. Converting others, but its not a good idea to sit in judgment. But there are some religions that advocate for that. The only one i thought was interesting was someone who said a priest could here you go. Youre going with one of the minute said a priest could tell a jewish couple he cant marry them, and i thought, of course but thats i think a priest could marry a jewish couple but a priest absolutely can say no, and they say theyre not going to marry a man and woman im on the other side of this, anyway, but i was reading but a priest isnt a business. Again, a priest is situation where you are protected by religion. You can choose who you marry in your church. You cant as a business say, i serve you, but not you. I was doing all of this disparage twitter again, because i dont care about all of your opinions. Yet you read them all. You know what they say about opinions, dont you . Everyones got one and theyre all shiny. All the cos yesterday, mark bennyoff and others from sales salesforce went on twitter and said, were pulling all our business if twitter if that happens. All these hotels that would be in trouble. Very interesting to see how it erupted online. And governor, her defense was not exactly a strident one it was more apologetic shes in a very red state and shes a republican and she did it, at least, and then she just sort of but there was real business to be lost by that decision. Had they not decided that. Agreed. Lets talk about the markets. We did see the markets close a little bit higher yesterday. Joe, you were looking for that s p 500 crossing that level. Were not going were going to make it to march. Closed yesterday at 1845. It was above 1850 for most of the day. Closed below a new high for the s p 500, but within a striking distance. You could get there today, potentially. Right now, why dont we take a look at where the futures are this morning. Again, yesterday, we saw the s p down slightly. The tenyear yield fell below 6. 7 yesterday to a threeweek low. Futures arent looking strong today. You saw that number. Gold snapped a threeday winning streak after falling 1. 1 . That was the worst day this month. Right now its time for the Global Markets report. Ross westgate is standing by in london. Good morning. Good morning, you join us at the low point for the session here in european trade, nearly 9to1, decline is outpacing advances at the moment on the Dow Jones Stock 600, and certainly worries in ukraine not helping sentiment this morning either as we see russian things put on full alert and events south of the ukraine. It was guinn over to the ukraine in the 1950s, having proven to be a big russian contingent there. Just those issues just rambling around this morning, just weighing on sentiment in the emerging markets and while there might be some systemic spillover as a result. Were 1. 5 for the xetra dax. Inflation might be a little bit weaker than expected. Under pressure because of deflationary fears. The cac 40 down, the ftse down 1 . Quite a few stocks were looking at. Well start off with rbs, it did up its bonus pool, but the stock off 8. 6 today. The ceo says restructure will mean its more difficult, it will have to make more difficult choices on jobs in the years ahead. Theyre also saying, were going to have to offload systems. Some of that may be coming through ipo, but systems, the u. S. Business, will be going. Wpp, down 5 today. Sales were up in the last quarter of 2013, but investors arent impressed by warning or margins. The ceo saying he should have done a lot more to get businesses out of emerging markets. And alliac, the owner of pimco today, roughing meeting expectations dividends, but they had a Strong Performance from the property division, life and Health Insurance missed forecast, and theyre blaming pimco for the weaker expectations for 2014 as well. Props with pimco weighing on allia allianz. Ahold up 4 . The dutch retailer has a big retail presence. The Fourth Quarter numbers came in a notch above market expectations. Thats highlights of some of where were trading, but sentiment down a little. Thank you, ross. Well get over to capetown now, one of my favorite cities and to bronwa nielson. She tells us about her exclusive with the president of south africa, jacob zuma and joins us now with more. Reporter emerging markets are out of favor and their currencies are underappreciated across the board. South africa has one of the most volatile currencies in the emerging markets space, fallen some 17 against the u. S. Dollar since 2013. Many economists here at home say corruption allegations against the ruling party and the Mining Sector are further fueling this weakness. In a cnbc africa exclusive win sat down with president jacob zuma and asked him what he thought was behind the fall. Once the dollar is in problems, many currencies are in problems. So its difficult to say we cannot move this direction or that one. You know for a fact that you have the economy down because of the dollar. Reporter that was president jacob zuma of south africa, in a cnbc africa exclusive, talking about what he thinks is behind the weakness. Back to you. Very good, bronwyn. We appreciate that. Coming up, do companies that lobby the u. S. Government perform better than the s p 500 . And we have some stats that you have to see to believe. And boeing makes jets and rockets, but now its into some james bond stuff. How about a spy phone . Thats coming up in todays executive edge. Es es 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. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. Welcome back, everybody. Right now its time for the executive edge. American airlines has ended its policy of extended special fares to passengers who have to book a lastminute flight because of a relatives death. Its called a bereavement fare, traditionally. But this move bringing americans in line with the policy at merger partner us airways, which has not been offering bereavement fares. Walkup prices the tend to be the highest on any airline, putting family members in a real bind, if they have a relative who dies far away. American didnt have a specific discount for bereavement travel, but did have a different fare class that could produce a lower price than the traveler might otherwise find. Guys, im not a huge fan of this. If youre stuck in a situation like that, the airlines in the past, you would always be able to call and explain, as long as you could give the hospital, the doctor, and make sure they understood it. This is going to put a lot of people i love doug parker, i think hes done a great job for his company but they cant be making this much money on this and the goodwill you get my guess is they would say people abuse it. But if thats the case, get better with your controls. Make sure youre only allowing people with a legitimate excuse. It sounds like a lousy pr move. The sky miles move from delta was even worse. And the sad part is all of these guys who come on our show and say when they were going to do these mergers, it was going to be better for consumers. And here we are. But, yeah, still, its been 40 years where were lucky to have anything left of the airline industry, because it was so cutthroat, and we always had gordon on saying, were only as good as our stupidest competitor. So the writings are on the wall. Youve got to charge for peanuts. Charged 6 million in excess fees last year. So maybe its viable. If youre talking about Something Like getting rid of bereavement fares. Its not that much money. I dont understand what the but i also dont know what the other airlines do. It shouldnt come as a surprise, given how theyre watching every penny. What does united do . What does jetblue do . I dont know if theyre matching other people or if its new. You have to buy a sandwich now in coach. I just did it the other week. I had to buy i bought a sandwich and bought peanuts. Are you in coach . Yes. It was a short flight with no first class. No, he was traveling for himself, not for work. I flew by myself and i sat i call it poor mans first class, because i got an exit row. I did pay the 49 extra for the seats joe, i flew coach last week too, coming back from florida. From florida, theres no first class. Were not all flying in the front of the plane. From florida, theres no first class. There was first class, i was not sitting in it. Was it sold out . I fly coach all the time with family. You know, like the story about the bereavement, theres more to this thing with sorkin i know. I guarantee you theres some extenuating circumstances here. There was a problem with net jets that day, and i was waiting on the tarmac, it didnt work out. I had to get on the united. Now, that it was the only seat left on the plane. Last seen left on the plane. Let me tell you about another story. Investors spend boat loads of money to try to beat the s p 500. One way you may not have heard of is tracking what we call the lobbying index. This is a proprietary index based on research by extstrateg. The three biggest are 3m, act censure, and alexion. Its gained more than 80 , crushing the s p. The more you spend in washington, the better your stock does. Thats your lesson. You know, ive seen a lot of Different Things. Obviously, crony capitalism doesnt help anybody. It makes it worse, its as bad as the stuff they complain about. But then again, lobbying is the right of it is like covered by free speech. Youre allowed to do this. And the competitors are going to do it as well. And could you look at it, that the company is smart enough to do this, so that it must be wellmanaged in other areas. Whats disappointing is the amount of influence that they have over lawmakers. And the reason we have such a complicated tax code, for instance, is because of these lobbying organizations. If you really wanted to get a fair tax code how do you offset the influence that unions have and leftwing organizations that soros have . Why is it only big unions or big organizations that have a say in these things . No one is pooling their money together to i want to raise a question about, at some level, of the voracity of the index. At some level, theres shadow lobbying going on. And not even total lobbying numbers have come down. But you can clearly tell theres the official lobbying that we can all track, that theyre tracking, but then all this stuff on the side. What if you hire a congressman and bring him under your wing. I thought the same thing too. It was interesting that two Tobacco Companies made the top of the list. You take this to its worst level of lobbying and how does that compare to ukraine with theically other countries, where its pure out and out bribery. Theres not a reason to not constantly try to be vigilant to make it a better system. Theres no golf course at the white house, but ill bet you, theres i bet hes played more rounds than yanukovych than the last couple of years. Prorussian forces, these are militia in krimea took over a building, raised the russian flag over some of those government buildings there. The closer you are to russia, its like the countrys half and half, it seems like, to some extent. But we said that was a good thing, because we need to the problem is, you now have militia who are roaming the streets and taking over business. Youre not doing some deal with the parliament that is divideded. You are now talking about a lot of splintered groups. And i dont know how you kind of put things back together. They were arguing for crimea to be part of russia or its own separate entity. This is far from over. Lets talk about one more story this morning. Boeing unveiling a smartphone that comes straight out of james bond or mission impossible. In addition to encrypting calls, any attempt to try to open the casing of the boeing black smartphone deletes all data and renders the device inoperable. Boeings tamperproof phone is aimed at Government Agencies and contractors who need to keep information secure. Its made in the United States. This phone runs on googles android operating system. Its slightly larger than an iphone. Pit uses dual sim cards to allow it to access multiple Cell Networks instead of a Single Network like a normal cell phone. And due to the phones security features, boeing is releasing few details about the Wireless Network operators or manufacturer that it is working with. It hasnt provided a price or a date by which the phone would be widely available, but it has said that its begun offering this phone to potential customers. So theyre in this business. Thats what we i didnt realize it sounded interesting if they just decided this tape will selfdestruct in five seconds. In fact, ive heard from a board member of a defense contractor, not boeing, who had talked a little bit about how security was a massive issue. Theyve all got these areas on their headquarters, where you can go into like those black boxes, if you need to have discussions. All kinds of stuff that they cant tell, because if theyre working ahead on government projects, they cant they have to make sure that none of that information gets out. The thing that i thought was so interesting is the idea that it runs not on ios or anything, but on android. Not blackberry or microsoft what does that mean . Thats happening, isnt it . It is happening. It is happening in a big way. It is happening in a big way but people have had questions about it, because its as open as it is, how secure it could be. But, clearly, if theyre using it people explain why apple always sells at such a reasonable multiple and they explain it, because of android. Look, i know people who have im on an iphone. But there are a lot of people on android. Maybe a lot of android stuff. Theres more today, theres many more android. Thats what i mean. Which is why something sells for eight times earnings. But they get nothing for it. They give android away for free. But its a big competitive, a really viable alternative for apple taking over the world, is it not. It is true. You dont have one yet . Ive played with one, but i havent weve talked about that before. Well get that for the yearend reel. Hes played with one, becky, but, anyway. Coming up, after the break, china, ukraine, and venezuela, well be covering it with steven roche. And a little later today, well be talking to one company thats been directly affected by obamacare. How hospitals are handling all the changes. As we head the to a break right now, take a look at yesterdays winners and losers in the stock market. Pay my bill. Phone your account is already paid in full. Oh, well in that case, back to vacation mode. Boots and pants and boots and pants and boots and pants and boots and pants and boots and pants. Voiceenabled bill pay. Just a tap away on the geico app. Huh, 15 minutes could save you 15 or more on car insurance. Yup, Everybody Knows that. Well, did you know that some owls arent that wise. Dont forget about im having brunch with meagan tomorrow. Who . Seriously, you met her like three times. Who . Geico. Anbe a name and not a number . Tor scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. 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Investors will be listening for any comments about how the severe winter that caused her to cancel last time, how its affecting the overall economy and how that impact could affect tapering of the feds bond buying program, and you know, its jobs friday in a week, march 7th. Weve had two lousy numbers, were going to see, and with the weather i was going to say, i know you get a better number because of the weather, it has not improved. But at least well have that excuse. And todays a busy day for economic numbers. The two key reports out at 8 30, get a look at the jobs situation, with the weekly report on initial jobless claims, and then another pretty important one, the january report on durable goods will be out. Claims are expected to remain near last weeks levels while durable goods orders are expected to show a 2 drop. Well be looking at that pretty closely. That could be weatherrelate to do. A slightly better than expected quarter for retailer sears. The company requested Fourth Quarter, it was a loss of 96 cents a chair, but that was about half of what people were looking for. A loss of 1. 82 revenues were also slightly better than expected, and they only dropped samestore sales only dropped 6. 4 . Believe it or not, that was a smaller drop than people but at some point. How many times can you post lower and lower and lower sales. I dont know. Sears has got its story name. And things finally started to turn a bit, they were up against comps, doing so lousy. Who would you have a better turnaround . Sears or jcpenney. I would probably take jcpenney for a turnaround. Because if you look at sears and walk into the sears or the kmarts, they have underinvested in those stores. They really need to invest in the stores. It was a real estate play that seemed to work out well. Lets take a look at the broader markets this morning. The futures are indicated a little bit lower. Youll see right now that those dow futures are actually down 60 points below fair value. The s p futures are down by just over 8 points. Yesterday the markets ended slightly higher. Dow was up about 18 points. The s p was barely, barely, barely up by a percentage of a point, even. We were looking at 18. 45, so still below. Didnt manage to close over 1850, which was the high of last year. In europe, things are also looking a little bit lighter. In fact, germany is down by 1. 5 . Thats the biggest decliner of the major markets. In asia overnight, you did see some a little bit of decline for the nikkei. The nikkei was down by about a third of a percent, but the hangsen was up by 1. 75 . Oil markets show the Wti Crude Oil is down by about 22 cents. The tenyear note yesterday fell to the yield fell back below 2. 7 . That was its lowest yield in about three weeks. This morning, its yielding 2. 644 . And the dollar right now looks like it is down against the yen, 101. 81. Its up against the euro. Euro is trading at 136. 51. Gold prices snapped a threeday winning streak after falling 1. 1 . That was the worst day its month, but this morning theyre back up by another 4. Countries like venezuela and ukraine facing political turmoil, investors may be quick to lump all emerging markets into the existing category. But the next guest argues the that china is changing and changing for the better. With us now, steven roche, a senior fellow at the yale school of management, former chairman of Morgan Stanley asia, now also the author, you have it onset here, of a new bob, unbalanced the codependency of america and china. And most importantly, of all of the things on your resume, squawk box master of the market, right . Our market master. Just in the interest of full disclosure, i tried to title a book, china too big to fail, but they told me the name was already taken. My question is ton the bio in the flap, do you have that youre a squawk market master . I did, they took it out. It was a space issue. It was a space thank you for that. Its on the extended website, of course. Lets just talk about the premise, which is this idea that you believe that the relationship between china and the u. S. Is unbalanced, but you suggest that the u. S. Is clearly in your mind on the decline and china is going the opposite direction. Why do you believe that . This is a codependent relationship, which comes from, you know, years ive spent in psychological therapy. The unhealthy reliance of two people and each other often ends in disharmony, frictions, and the ultimate breakup. And china depends on the u. S. For exports, to support its exportled growth, for the dollar, we depend on them to make cheap goods safe for american consumers. Your premise is this all has to switch around. We all have to become much more of a manufacturing production country, and they have to become much more of a consumption country. Am i misstating the premise . Not at all. They are figuring out that theyve got to be independent on their own, to break out of this codependence. And theyre going to become a more balanced, consumerled economy. What are we doing . We want to do the same thing. We want to consume, but we dont have enough import to fund our consumption or enough saving to support our deficit. What are we going to do if china changes and we dont. But i gather that you think theyre on the ascendency and we are clearly on the decline. That is the i will say, that was my takeaway. They are rebalancing their model to keep the growth and Development Story going and that will certainly take them to a larger scale of their economy than ours, at some point in the next five to ten years. Gdp. Their per capta gdp, joe, is going to be increasing, but at a much slower pace. For a long time. Multiplied out and thats why its bigger. For a long time. Are we on the decline . Thats the big debate in america. We continue to undersave, underinvest in people, infrastructure, and capacity. And if we dont get that together, then their ascendency will coincide with our decline. Weve had periods like this before. Yeah. I mean, youre optimistic we get it together or do you think were the roman empire . No, look, i hope we get it together. What i dont see is a debate on the strategy how many people have been you do look at the past 3,000, 4,000 years, and how long do a leading civilization, they have a couple of hundred of years. Weve had a good century. Weve been there for a couple of hundred already. But the people that write about the rise and fall of great powers, they often look to nations that outstrip their capacity to save. They extend themselves militarily or economically. And then, ultimately, it just becomes hard to sustain. China was on top for a while, too. China, in a mid19th century was the largest economy in the world, for sure. And they went through a very difficult and long period of time. Theyve got a lot of people. They have a big theyre a force to be reckoned with. You need more a lot of people, though. You really do. The internet is make it people want the same things in this world. And eventually, theyre going to decide, they want these things. And they dont visit now. And chinas got the largest Internet Community in the world. So now the people are in the know of whats going on all over china, as well as in the rest of the world, and that will be a challenge for the government as well. Front page, joe was talking about this earlier, the front page of the wall street, will gladly have you here to help die jest what this means. Very quickly, china intervenes to lower the yuan. So they apparently have been manipulating the manipulated currency in order to eventually get to the point where they can open it up and let it float against the dollar. Becky, its been a oneway bet for about eight years. The speculators know the currency is going higher, its up over 35 against the dollar since 2008. A lot of big inflows of foreign capital coming in, which inject too much liquidity into the chinese system, make it tough to manage. So nothing happens by accident in china. Theyre sending a signal, this is more of a twoway not so fast, guys. Lets just slow down the speculative inflows that make it easier to manage the economy. Put it another side to the trade, so its not a slam dunk. Exactly. I almost can appreciate that, i guess. Why do you think markets in china have performed as terribly as they have . Whats the explanation for that, given the Remarkable Growth story . Rapid growth, lousy markets, poor governance, lack of transparency, dubious longterm earnings expectations, andrew, given the way that the state is moving from an administered statedirected economy to more of a marketbased economy, rising labor costs, rising currency. All of those did the ruling class over there, if we were to go into, you know, the 10 or 20 top leaders over there, do they have a golf course and a zoo and, you know, an old pirate ship restaurant . Is it the same type of these tyrants always live pretty well versus the people that theyre i spent a lot of time in china. I have yet to see you werent in there, though. They didnt let you. I have yet to see that the zoo and the leadership. Theyre worth billions of dollars, a couple of those guys, right . The New York Times, and your newspaper does report that theres a lot of wealth thats been accumulated in leadership circles in china. How much more okay, to the extent that people we were talking about lobbying in washington and people think that represents cronyism or corruption, how do you compare what goes on here to there . Given all this other stuff. Look, i think power structures, whether theyre in a oneparty state or in a multiparty state, you know, theres a lot of forces that come to try and influence the outcome of power. One of the biggest issues in china, and this has been stated very clearly by the new president , is to try to deal with these power blocks. Hes taken down 15 leaders that have been associated with some of these corrupt by the way, as a former Morgan Stanley man, can you think to the princelings issue. Was that something you saw under a sort of daily basis, in terms of how people were thinking about how do i attract a client . Morgan stanley has not been involved in this for good reasons. You know, we did not have any of these did you see your competitor but did you see this as an issue . With was this something that was readily apparent to everybody . I think, you know, the investigations have shown that obviously some firms indulged in this was it really decisive, though, in shaping the flow of deals . I would argue, it may very well not be. Just, you spent as much time as you did over there. It was not something that was just readily apparent each and every day. But as some of these practices come out, that some firms were really went over the line in doing it, then theyre being held accountable by u. S. Authorities. Absolute power. You know who said that first . I just found out . Lord acton, he said that in a letter to a historian, power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men. I was going to call him a great man, but now i wont do that. No, dont do that. Congratulations on the book. Its called unbalanced. Go out and grab it from amazon today. I dont know how you avoid that . Right . No, no. Look at these guys, theyre just drunk. Get it, get it. Steven, thank you. When we come back, much more on the situation in ukraine. Gunmen taking control of government offices, russia saber rattling, and u. S. Trying to figure out how to handle everything thats happening there. Well be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back. Its time for your squawk box planner this morning. In earnings central, best buy will be one stock to watch this morning. The retailer expected to report during the next hour of squawk box. Of course, well bring that news to you as it comes. Among the economic report slated for this morning, jobless claims and the january durable goods reports, thats released at 8 30 a. M. Eastern time. And fed chair janet yellin testifying before the Senate Banking committee, that comes at 10 00 eastern time. This is testimony that was postponed due to that snow earlier this morning. And that is your squawk box market planner. Joe, over the you. Andrew, coming up, well talk to one company thats been directly impacted by obamacare. Well hear what the ceo of medassets are handling all the changes and what changes we can expect. Ameriprise asked people a simple question can you keep your lifestyle in retirement . 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. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. At a special site for tv viewers; predibut, manufacturings a prettin the United States do. Means advanced technology. We learned that Technology Allows us to be craft oriented. No 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. Here to talk about the impact obamacare is having on the industry is john bartist. John, theres obamacare and then theres just the idea that its 20 of the economy, it was rising at much higher rates than inflation, and Cost Containment was always going to be something that we were dealing, obamacare or not. And your company tries to help whoever is providing health care with reigning it in, right . Thats right, joe. Youre absolutely correct. The United States spends about 9 million per capita on health care and the next closest nation is about 54 million. That gap is about 1. 1 trillion. So its substantial. And on top of that, we spend, to your point, about 18 of gdp. That growth rate has slowed over the last couple of years, but its yet unclear as to what went to that, including coming out of the recession. Great new technology is expensive, and then youve got, you know, we own hospitals, see whats going on. Or maybe used to be that way. Not anymore. But drunken sailors spend money le less. Doctors, i dont know if youre still allowed to own places that do tests. Theres so many things going on that are responsible for this. There are a lot of places you can play. Where do you primarily play . There will be other places other than hospitals that people can get care that they used to get at hospitals that youre trying to help, too. Were a Performance Improvement company that has a primary focus of helping providers. We work in 1. 5 trillion of the 3 trillion health care economy. We do business with four out of five Hospital Systems in the United States. Youre absolutely right. Patients are now migrating, due to incentives and Health Systems incentive changes, to less expensive environments that include clinics and home care. Were in the midst of a big transition overall. What is it that your company does exactly when you go in and try and streamline things . Were a Performance Improvement company that focuses on cost, in other words, how you procure all products. We have a 5 billion procurement business that helps hospitals buy what they buy, more importantly, how they use the products. Theres a best practice out there but its not used across the country. We take the process to what we know as best practices. Youre trying to get people paid quicker, right . I mean, theres a million places to attack. Are there too many what are your two or three primary ways of doing it . You can get bogged down being all things to all people. Hospitals aline are over a trillion dollars vertically integrated in 5,000 locations, all very complex and all very different. We focus on cost reduction, clinical integration and payment and price integration so that whats being paid for the Services Rendered are, one, consistent with payer contracts and two, continue to drive value according to the incentives and the agreement. As you can imagine with 5,000 different locations and 5,000 cost infrastructures bringing best practice ask a big and complex task but its in high demand. Theres been positive incentives from obamacare but theres been negative things going on as well. Would you design would you would have tackled this entire thing differently or were stuck with what we have and we need to work around the edges and try and deal with it . I think youre right. The Affordable Care act is here. The sooner that the country legislators and business folks own that, the better were going to be in moving forward. The other reality is that, yes, theres been glitches and naturally theres going to be. Its very hard to project the trajectory of a policy that literally affects every one of 320 million americans. But having said that, the early glitches with the website and so forth slowed the progress of signup down. Which also slowed the progress of what we knew about those who were signing up. What were learning today with the 4 million that are signed, joe, is that the majority of them have already had insurance. We havent really attacked the issue yet. We havent covered anyone yet. Its bizarre. I dont know what to do. Maybe its some kind of hybrid. Who knows that the powers that be in washington could change before this is fully implemented. It may be a bizarre hybrid thing that we end up with. We appreciate your time. I know youll be there trying to work your niches and make a lot of money. Well watch mdas as well. Thank you, joe, thanks, becky. Coming up next, jcpenneys turnaround plan and numbers from best buy. The futures are under pressure this morning. Market watchers, ready to jump into the action. You can see the red arrows across the board. Well be right back with a lot more. Icto help our membersnored with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. [ 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. What else will the markets want to hear this morning. Jcpenneys turnaround story is the plan to pull the retailer out of its nose dive working . Dana telsey gives us her report. And ukraine in crisis. How will the u. S. Deal with kievs fragile government and its powerful neighbor . Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. After posting modest gains yesterday, the futures are giving back some this morning. Those dow futures are down by close to 50 points. S p futures are off by just over 6. 5 points. The tenyear note yesterday saw the lowest yield its seen in three weeks. This morning, its yielding 2. 651 . Janet yellen appears before congress to testify before the Senate Banking committee. Theyll be listening for what she thinks about whats happening with the weather and the economy to this point. The ceo of shutdown Bitcoin Exchange mt. Gox says he is working very hard to find a solution to the problems that have taken it offline. The comments from the gentleman who appeared first on the mt. Gox website, well be hearing month are about that as well. Arizona governor jan brewer has vetoed the controversial bill that would have allowed businesses to turn away customers believed on religious beliefs. The veto brought cheers from the crowd stationed outside the capital building. As we heard in her defense yesterday she was not incredibly strident in her defense of gay rights this is probably a difficult situation. Thats the vote. Thats how it went. Best buy is reporting, im told, i havent had the chance to look at it yet. Well rush it out here as quickly as we can. Waiting on the numbers to come up here. Let me see where the stock is trading. I have a blank screen. Many he, too. That sounds much better than expected although it says Fourth Quarter continuing ops was 88 cents for best buy. Adjusted earnings, theyve got 1. 24. On revenue of 14. 47 billion. They have more than a few numbers. They have a net number of 83 cents. A continuing operations number of 88 cents. And an adjusted number of 1. 24. Even though samestore sales in the Fourth Quarter well 1. 2 . The stock is called sharply higher, though. Initially i have i have a 27 bid right now on this right now. 27 bid and 27. 89 ask. That would be up 1. 20 or so. Domestic comparable online sales up 26 , 25. 8 . There were huge questions about this, because the Holiday Season when we first wasnt so hot. Remember, they said they were going to be chasing things and cutting prices to keep up with the competition. Walmart had come out and said that it was in a position of really dropping prices that competitors hadnt expected. So best buy as a result also said it would be slashing prices. It took a big beating when it talked about doing that, because that would have been unplanned discounts. Its a lot harder to make up on the margin if these are discount youre making up after the fact. As we said in our holiday sales release, the frshg prshg was an environment of declining retail traffic, intense promotion, fewer Holiday Shopping days and severe weather. Theres a strategy that resulted in market share gains. They won market share. 1. 01 . Estimate is 1. 01. They beat it by 23 cents . How much of this was instore versus online . Yes. Thats the other piece. The growth is online. The reason i sa i that, given how hard hit retailers have been over the past couple of months, because of the weather, if theyre actually producing real numbers, that would argue to me its almost the Amazon Effect of you sitting at home in the snow and you have Nothing Better to do not Nothing Better to do but if youre going to buy from best buy, youre going to buy online as opposed to walking to the store. Its sharply higher this morning. World markets, theres a lot going on. Continuing to focus on the rising tension in ukraine this morning. Ousted president Viktor Yanukovych is in russia, still claiming to be president of the ukraine. The more volatile situation is in ukraines crimea region. Its calling on russia not to take any action that would create tension or misunderstanding. Well be talking about the u. S. Response to the ukraine crisis in a couple of moments. Back to you. Weve had a choppy session. Janet yellen testifies to the senate later today. The s p 500 still failing to hold above its records of yesterday. Joining us now, chris retzler, needham growth capital. Joe, really trying to get a feeling for whats been happening we keep pushing against 1850 on the s p, cant break through it. Why . Markets are looking for a bit of direction. Weve seen decent profits. Fourth quarter right now were estimating about 8 or 9 in terms of earnings growth, yearoveryear earnings growth. Looking at the Economic Data recently its a bit difficult to separate the loss of momentum that we saw heading into december and the end of the year from whats going on with the weather. I think it will take time to fully read through that. What does your gut tell you . I think my gut tells me we did lose a little bit of steam towards the end of the year. The back half of the year, economic momentum was picking up. We had high pmi numbers and manufacturing looked quite good. A lot of inventory build had gone into that. That had an impact on Economic Growth in the Third Quarter number. Right now it looks like the weather is having an impact on Economic Growth but we continue to remind our clients, all this does is creates pentup demand. While we are looking at possibly soft First Quarter and Fourth Quarter numbers, youll see this accelerate. Is this weather given or have we seen an economic slowdown. Its a known that weve had bad weather and it impacted it. The negativity got very much on one side. Weve had news this morning, things are popping. Yesterday we had retail numbers. Stocks were oversold and shorted and theres Short Covering out there. We do see a better second half in technology. I think companies would like to see more certainty in their end markets before they spend money, do some cap ex spending. Is that why were treading water . Were not going to see the dip people were talking about but we wont see new highs either. The question is are they beginning it change or taper . Rebalance whether its treasuries and mortgages that theyre going to cut back on. There hasnt been a significant slowdown out there that weve seen. And we had a great year last year. Stocks need to give back a little bit. If the fed is doing what its been doing for the last several months, basically slowing things down, 10 billion a month that its been taking away, what does that mean . Is that an effective form of becoming less accommodative or not . Its a moderated pace. Its not like it all of a sudden ends, the accommodation was slowed very quickly as weve seen before. This process is being monitored. Theyre looking at the numbers as to how theyll be managing unemployment figures. Theyll look at all that and thats going to provide probably a slower tapering which i think the markets can understand better. The markets understand and say that this is thats why weve seen the markets reaction to this point which has been a relatively smooth transition. Yes, if cfos can plan theyll spend and invest. If they can understood the road map Going Forward, its been a tough bunch of years with the administration thats been in there. Its not been business friendly. I think, you know, the more certainly they have, theyre willing to spended. Joe, where would you be telling people to focus right now . Well not you. The other joe. Risk assets we continue to have more conviction in the developed world. Of course, the impact of tapering isnt only affecting us here in the u. S. But of course its having an impact on the emerging markets. Unfor the thatly were seeing investors throw out the baby with the bath watt per at some point there will be an opportunity to get into the emerging markets. I continue to think the u. S. Looks attractive, although you need to temper expectations. You wont have another 2013. Lets be clear, europe has issues and they remain unresolved. Having said that, you are seeing growth moderately pick up. Its a story of operational leverage. Its crazy if youve watched whats happened with gold, oil, with a lot of the commodities. There have been big runups. Is that because you think the money is getting pushed out of some of the stock markets . Bonds dont look like its a place to be. Money trying to find somewhere to go . What do you think . Theres been a push of money into certain Asset Classes. We see a top 20 equity names that are at valuations that we dont understand. We dont invest in it. Or value investors. Things have gotten expensive when you look at stocks. Theres a bulk of internet names and Software Companies that are trading at multiples that dont make sense to a rationale investor. Its not where we invest. We see money thats pushed into other Asset Classes like oil and some commodities. What will be the Tipping Point on some of the tech name digital names youre talking about . I think right now, i think you have a rotation out of fixed income. I dont think you want to be long the yield curve right now. People are pulling money out, going into funds where those names are a big percentage of, so they buy them. There will be a point at which it corrects. I dont know when. I dont want to be in those names when it does. Chris, joe, thank you for coming in. And not you. Very nice to see you. Its john sundiks 100th birthd birthday. Ive been trying to read that stuff. Thats the second one. Thats a picture of the monterey on there. The second scene. The first one is grapes of wrath. Its all on google. Grapes of wrath is a perfect book for you, andrew, it really is. Because its people being tread upon by the 1 and they had to leave and theres a dust bowl. Global warming. Unions. Can we believe that the turnaround of jcpenney is working . Well have one of the best analysts in retail coming up at 7 30 a. M. Eastern time. How is the u. S. Government handling the power shift in ukraine . Thats next on squawk box. If youve been watching our coverage of the unrest in ukraine this week, you may have noticed that haunting music in the back ground of some of michelle carusocabreras reports. Michelles on a plane right now but she tells us that the sound in the background was from orthodox clerics singing to mourn those slain in last weeks violence. She shot this video of the clerics singing as photos of the dead were projected on a screen. We noted that. It was almost hauntingly there. We have more developments out of kiev this morning. The lawyer that was tied to ousted president Viktor Yanukovych is cooperating with International Authorities to freeze his assets which god knows, im sure its in the bs. As we mentioned earlier, men carrying guns and Wearing Masks raided government buildings in the capital of the disputed region of crimea today. They raised the russian flag, heightening tension. Putin is doing some military exercises and amid all the chaos, what economic role could the u. S. Play in helping ukraine . Steve liesman is also a russian expert. He has details on that right now. Not many people lived in moscow that i know for seven years. Went to ukraine a bunch of times. You did . Yes. My first trip there, you go to the finance ministry of a current where the currency is 100,000 to 1 and the finance ministry has bmws. The u. S. Currency is 61. The crivenitz. The western aid effort is moving slowly, secretary of state john kerry warned russia against military action saying it would be a, quote, grave mistake. Kerry saying yesterday the u. S. Could offer a billion dollars of loan guarantees but the state department maybe wants some of that back later, issuing a statement that the u. S. Is considering, quote, a range of options, including loan guarantees. They left the number out and noted as kerry did, that the decision has not been made. U. S. Officials have said several pieces have to fall into place before any aid can be given. You have to have a government. Theres not much the u. S. Can do. That government has to signal intentions for reform along the lines that the imf was sort of laid out. Those reforms include Exchange Rate flexibility. Michelle broke that story the other day that they are moving towards that. Fiscal consolidation getting its budget under control. The imf will take the lead and the u. S. And the west has to balance all of this in i way that doesnt unnecessarily antagonize russia. Forget about it. How do you do that . Especially since you have militia all over crimea. You cant come in with the aid until theres a government to sign the documents on the other side. It struck me this morning, steve, hearing about what happened in crimea, this is way more complicated than weve been thinking all week. You dont know if the parties around the table will even speak for the people. You dont know whos in charge. And the idea of getting any of the complicated factors weve been giving this is a pass all week. The markets have said, great, we figured this out quickly. I talked to smart but naive fastball folks. Theres all this geopolitical stuff around it. Both sides have an interest in a healthy ukraine. We need to Work Together. Theres no cold war. We need to Work Together on this. Wouldnt russia have an interest in this . The protesters in crimea, the militia taking over these buildings have said they want to be part of russia or they want a separate crimea. Why wouldnt that be in russias interest to allow stuff like that to lament . It seems to me that is in their interest. They get something out of the deal. That is true, becky, except that russian nationalists taking over crimea would destabilize ukraine more broadly. An unstable ukraine is not in russias interest. There were helpful comments made by russian officials at the g20. That gave some u. S. Officials some hope that maybe the russians in the west could Work Together on economic aid. But i think when the officials said this stuff, he understood the naivety of it. Its in pencil, typically, these lines. Is there another red lien here . Grave mistake. There will be repercussions . Putin is like, oh, no. Go write another oped. Theres a history of the u. S. Trying to help in this area of very, very mixed results. On the one hand thats potentially helpful. Theres a lot of mistakes in the background here that maybe they can avoid in trying to come in. For example, a lot of the stuff on this list is stuff that undermines the politics. Exchange rate flexibility hurts people. Removing fuel subsidies and all that would undermine a new government that the west would be trying to support. Meanwhile, the olympics went off without a hitch. Are there persons over there . Wouldnt you imagine it was a bad time to be a dissident. . It was amusing to me to read the western journalists. Welcome to russia, right . There were a lot of people trying to do something that putin just he is pretty pretty powerful. An iron fist. I wonder if the prisons are overcrowded at this point. Thank you, steve. My pleasure. When we come back, exclusive results showing what a horrible impact this winter has had on our economy. Best buy earnings out. Its been the worst performing stock in the s p 500 year to date. That stock up is better than 8 today. And tomorrow, an exclusive interview with sam zell stick around, squawk box will be right back. Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. With the mobile trader app. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Save you fifteen percent or more on car insurance. D Everybody Knows that. Well, did you know pinocchio was a bad motivational speaker . I look around this room and i see nothing but untapped potential. You have potential. You have. Oh boy. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. We have the results of the latest Quarterly Survey of the cnbc global council. 67 saying that the economy is improving, that is down from 82 in december. Still, less than 6 say the economy is in decline. The council is mixed on the winters longterm impact. 33 say the weather will have an impact on their companys 2014 earnings. We asked the council to weigh in on the minimum wage. Thats an even split. Onethird of the cfos say they support the raise. Another onethird are opposed to higher wages and onethird are in the middle. Guess they dont really care. For more on our cfo council, go to cfocouncil. Cnbc. Com. Jcpenney getting a steady bump after it announced last night. Best buy earnings are out there has that turnaround failed . Thats one one analyst is asking. Well have him on the show coming up right after the break. Predicting the future is a pretty difficult thing to do. But, manufacturing in the United States means advanced technology. We learned that Technology Allows us to be craft oriented. No 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. Welcome back to squawk box on cnbc. Shares of best buy reacting positively to the companys latest earnings report. They earned 1. 24 a share, excluding certain items. Thats well above the expect of 1. 01. That stock right now up by 5 . Off its highest levels of the morning. Fed chair janet yellen will testify before the Senate Banking committee at 10 00 eastern time. This appearance was postponed because of weather earlier this month. The markets will be waiting to see how much yell en uses weather, whether it has slowed growth. Our society is undergoing many dramatic changes, however, i sincerity believe that senate bill 10 2 has the potential to create more problems than it purports to solve. That decision was met with cheers outside the capital building. Brewer was under pressure from major corporations as well as from leaders from both parties to veto this bill. Were watching shares of jcpenney this day. They posted a smaller quarterly profit than expected. Theres an expectation that things are getting better. Dana telsey is ceo and chief economic adviser at telsey group. Is the ceo of that Company Turning it around here, dana . Its getting sequentially better. Theres still a lot to go. The game plan of taking markdowns sooner, having a different marketing event every week, theyre working to bring the customer back to the store. How far are we from how much running room is there to get back to where we were maybe even two years ago, which by the way, nobody was thrilled with then either. Right. Exactly. If you look at where you were now, getting back to two years ago would be a positive sign. The fact that the comps would continue to improve, they are getting to be positive, the Home Business overall is coming back into the mix by the end of march, that the sg a dollars were down 17 , theyre managing. The turnaround is continuing. Id say the Fourth Quarter, its a sign of better progress than i think what we could have expected even last year at this time. Is there a ceiling on the progress that this company can make . I dont think theres a ceiling. I do think theres a ceiling youre not going to get back the revenues you had but can you get back the gross margin . Is getting the private brands back in the store going to bring back the traditional jcpenney customer. What do you think the stock is really worth . It all depends where you can get the operating margin to. If you get to a 4. 5 operating margin, the stock will be 12, 15. Liquidity is key. Managing that liquidity is key. You have to get to 8 and 9 before double digits. The subject we talk about ab virtually every day is the weather. How much does d thid that impac jcpenney in the last quarter. I think it impacted it a lot. February is no great shakes, either, since valentines day, weve seen a pickup in retail. When you put if you look at all the retailers out there right now, sort of rank jcpenney in terms of what you would be buying. I think when youre looking at turnaround stories, abercrombie perhaps is further along in the turnaround than what you have at jcpenney. Jc when penny, i think is good if i had a buck to invest in any of the retailers, order me. In what order am i buying these guys . Is jcpenney on the list. Id buy gap first. I think theres more momentum at gap coming up down the road both with operating margins and sales improvement. Macys on my list. I think theres more market share to gain. When i look at the accessories world, love kate spade and i continue to like what michael kors is doing. Any chance this company gets taken over now that it seems like it at least has a shot of getting into a better place . Not seeing that happen or hearing that happen. Dana, thank you for that. Appreciate it. Thank you. Lets talk about best buy. It was also out with Quarterly Results earlier this hour. Joining us now is anthony chakumba. Anthony, in number was better than people had been expecting what do you think happened . I think thats right. The consensus was well ahead. Not nearly as bad as people expected, this quarter. When management reduced guidance they brought it down to a number they knew they could hit. They didnt want to have to reduce guidance and miss that number. The cost cutting was not as bad as expected. You see the cliff that it fell off back when they first warned about this, they went from being a 40 stock to trading around 27. What do you think happens from here . I think that what were going to see is continued cost cutting, so the company, they originally had a cost cutting goal of 725 million. Theyve now raised that to a billion. I think a billion is still too low. Theyve made a lot of progress online. Their online sales were up 26 in the Fourth Quarter. But at the end of the day, turnarounds are not theyre bumpy. Thats what were seeing here. They made a lot of progress in 2013. I think theyll continue to make progress, maybe not at the pace we originally thought. How long have you had a buy rating on this stock . We went to a buy rating in late january of last year when the stock was less than 16. Its been a real nice stock for us. We still like it here. You like it here. Did you like it at 42, though . Do you think it pushes back to those levels . Our price target is 39. We think the stock probably got ahead of itself at 42. If you can continue to see progress on the turnaround, theres no reason that this stock cannot get into the midtohigh 30s. How does weather impact this company or does it . It definitely does. At the end of the day, best buy sells discretionary merchandise. Theyre not selling eggs and milk. If the weather is bad, maybe you dont need to go to the store and buy a tv. The company at this point is not blamed weather but theres no question in my mind that weather played an impact in their Fourth Quarter results. Andrew brought up the point, maybe thats when you sit around and buy it from amazon instead of best buy. Best buy has significantly improved their ecommerce operations. They did a 26 sales growth in ecommerce in the Fourth Quarter. Theyre becoming much more competitive with amazon in terms of pricing and functional of the website. Thank you so much for joining us. Thanks for having me. Do you have a thermometer in your car . 8 degrees this morning. 8 degrees. I keep reading the colder it gets, the more it indicates theres warming going on. You just have to accept that. Hold on, hold on. Its hard to come back. Im going somewhere with this. Dont interrupt me, please. The green peace cofounder, he was testifying two days ago before the u. S. Senate environment and public works committee. Im just going to read you his quote. The earths geological history contradi contradicts. You have ice age because the climate is so difficult to figure out whats going into the variability of the climates. Can i ask a question related to this . But im not a scientist so i dont know. Im told january 2014 was earths fourth warmest on record globally. On average for the whole globe that it was much warmer. Right. Going back how far . If you really its 130 years, andrew. The plan set 4 billiet is 4 bi old. The warmer month was in the 90s. Why would there be a warmer month when the co2 was an issue. 130 years, all of us looking at this, its almost like in the middle ages it was witchcraft. You would attribute adverse weather events to witchcraft. Now we have co2 at this point. Im just suggesting that even though we live in this very cold environment right now or it feels cold on a relative basis, it supposedlien is as cold. But when its a warm year it is because of global warming. When its a cold year, ignore it. Its not a cold year. Its a warm year. When it is a warm year here like it was cold in russia a couple years ago. When we come back you guys okay . Can i . Okay. When we come back, what will the Political Landscape look like over the next 25 years . A special cnbc 25 is right after this. Coming up at the top of the next hour, senator rob portman on the state of the nations Fiscal Health. Squawk box will be right back. 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. [ 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. I barely recognize this guy. The next 25 years will turn members of minority groups into the majority of americans. Big implications for the nations economy and culture. Here with more is our chief washington correspondent who goes by the name of john harwood. Where have you been . Have you been on sabbatical . No love. We havent seen you in way too long. No love from squawk box. Ive been covering the nonaction in washington. Do you follow the duke blue devils around . Theyre like five or six now. Its a young team. Were in the process of learning we . We . We could go deep in the tournament. You might. Were getting good at the right time. Im told you have a package you need to introduce. I was just trying to rub you all over having you here its nice, because youre a sight for sore eyes. I appreciate that. Its nice, isnt it . Thats very kind. Were peering into the future, now that were into the 25year anniversary of cnbc were looking ahead 25 years. The one thing everybody is washington recognizes is that no politician targets voters any better than Corporate America targets consumers. For the future of American Communities look to cocacola. To cheerios. You know how our family has daddy and mommy. And me. Reporter and to chevrolet. While what it means to be a family hasnt changed, what a family looks like has. Reporter thats right. By 2039 the Census Bureau tells us america will be very close to the day where whites are no longer a majority of the countrys population. The term for that, majority minority nation. Hispanic population, latino population is growing in the United States. What youre going to see over the next 25 years, its going to grow in southern southwestern United States, western United States and then its going to grow in urban areas around the country. They are diversifying. This is where the populations are moving. This is where the jobs are. The communities will change. 21st Century America will see cities and suburbs Grow Together in giant metropolitan areas. If that changes the face of americans, it may change the nature of america less than some now fear. As the generations go by, populations become americanized. The generational polling so far, among hispanics doesnt seem like its that different actually. Once you get a couple generations in, a lot of the ties to the homeland weaken, the language tie weakens. It becomes much more about being american. As much as the face of america changes, still to quote an early ad, it will be about mom, apple pie and chevrolet. Weve been watching this change for a long time. I remember when they changed the face of betty crocker, gave her that makeover for the whole thing. Weve been watching this play out for a while. The culture is going to be transformed by the nature of the population. And changes in the demography of the country. Theres something about the melting pot process that has stood the test of time and i think it will again. Thank you so much. Great to see you. Thank you. Also we have a programming note this morning. Cnbcs Tyler Mathisen sat down with cnbc first 25 contender magic johnson. We had a list of 200. You were on it. Oh, wow. We just cut it to the final 100. You are on it. Man. David stern got cut. What do you think . Wow. Is that a good call . Well, i love what david did for the nba, he turned the league around. I wouldnt say it was a good cut. I love david. You can see more of his comments also on the arizona antigay rights bill and what it means to be on the cnbc list of most influential people of the last 25 years. That will air on power lunch. You want to miss it. Just to put his experience into context, he did a lot for what calpers and the movement, shareholder rights. And brought it back after the crisis, i think assets were down to 100 and some. I forget what it was. Much less. He was a squawk market master, too. Just yesterday. Sad news. Thats a shocker. 62. Sad news. Yes. Wow. When we come back today, tesla paving the road with debt to fund its next electric car. Is this a smart move or are investors in for a shock in phil lebeau will join us to talk about it. And at the top of the hour, senator rob portman on the state of the economy. And from beirut to jerusalem, thomas freiedman is our guest. Stick around. Squawk box will be right back. [ male announcer ] these days, a Small Business can save by sharing. 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. Tesla planning to build a new factory for its next generation car. Its being called a giga factory. This is a huge project from tesla, one that the street is watching closely, especially investors given the fact that tesla is offering about 1. 6 billion in convertible notes to fund some of this project. Lets tell you what the gigafactory is and how many jobs with till bring to the location where its finally placed. 6,500 jobs by 2020. Capacity, 500,000 lithiumion batteries. Full production by 2020. The gigafactory will provide tesla with lithiumion batteries as they expand their lineup. You have the model x and the model s on the way. They need the cost of batteries to be lower. Tesla putting up 2 billion towards the gigafactory. It will cost 5 billion when all is said and done. 1. 6 billion will be coming by way of convertible notes. The Company Expects to sell 35,000 model s sedans this year. Model s capacity has been limited by the battery supply. And the location is whats most interesting here. Four states have been mentioned by tesla as possibilities. Arizona, new mexico, nevada and texas. Dont forget, guys, this is not only for the development and production of lithiumion battery packs but also the development of electric storage politics. A lot of possibilities here with a very huge project. Phil, those states, were those all right to work states . Is there any relationship to that do you think . It just sound like right to work states. Theyre also located in the western United States relatively close to the fremont factory where they build the tesla. The most interesting one of those states, texas, joe. Texas has banned direct sales of automobiles, which means if you want a tesla in texas you have to buy it from the company but you dont go to a tesla location for delivery. A third party delivers it to you. And this is what. Conceivably hurt their sales in texas quite a bit. Theyve lobbied hard to change that law. You know how this works. The auto dealers in texas, very powerful. They spend a lot of money lobbying. You have the intriguing possibility that somebody says were going to bring 6,500 jobs and a manufacturing plant to your state. Do you change the law. You think tesla would be like i dont know google doing something evil or something. Not that they dont now. Thats one of their big things. Thats one of their big they hang their hat on that, theres no dealers, you can buy right from us. They will never go to a dealer network. Elan musk says he doesnt see it happening anytime soon. Is it possible they may change their tune . Anythings possible, joe. Thats not in the cards right now. What theyre proposing is close to go back to the days of henry ford where you took the raw iron ore, made the steel for the model t. They want to take the lithium and make it into lithiumion battery cells, then into the battery pack, then into the car. This may be an Automobile Company that could turn themselves into a battery company. Adam jonas has been talking about this. Theyll be having so much Energy Production and the possibility for electric Energy Storage possibilities in terms of either mobility, taking that and putting it somewhere or taking some of the energy that theyre developing and then sending that to the grid. I mean, a lot of possibilities there, andrew. Okay. Phil, thanks for that. Tesla story, every week theres a new tesla story, apple. Fascinating. Fascinating. 0 to 60 in how many seconds on that thing . It is incredible, right . Yes. How fast . Joe, when you buy i dont know the exact number. 0 to 60 is well under 3. 5 seconds. Thats because you get the instant torque, joe. I drove the smaller one. You couldnt fit into it. What are you talking about . The really small one. That little two seater. The model s. The two seater. Youre 66. Joe, youre mixing up. The model s, if youre a tall person you can fit into the model s. Whats the sedan we see all the time . Thats the model s. The roadster which is not around anymore. They dont build the roadster anymore. No sound, really fast. Youll show that picture of mr. Incredible when he wedges himself into the car. I dont know if we have that quickly. Do i think about that. When are they going to have a car for me, phil . 2017. Okay. You know, just sort of more like a little what are those little things, mini coopers or something . Phil, thank you. When we come back, senator rob portman will be laying out an Economic Growth plan for america. That happens later this morning. Before he does that, hell be speaking to squawk box. Tom friedman, theres nothing he cant talk about it, geopolitical concerns, job, tech and politics, well be back with all that. Tdd 18886282419 our live online workshops tdd 18886282419 like identifying market trends. Tdd 18886282419 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. 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And ask an Insurance Expert about all our benefits today, like our 24 7 support and service, because at Liberty Mutual insurance, we believe our customers do their best out there in the world, so we do everything we can to be there for them when they need us. Plus, you could save hundreds when you switch up to 423. Call. Today. Liberty mutual insurance. Responsibility. Whats your policy . Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. \s whats the best performing industry in the s p 500 in the answer and the investment returns will surprise you as the final hour of squawk box begins right now. Welcome back to squawk box, cnbc, first in business worldwide. Im becky quick. No, youre not. Can i be right now . If youd like. Im becky quick along with joe kernen and andrew ross sorkin. I can be myself. Im going to be myself. Be yourself. Im going to try. Sometimes its hard to be myself. You be joe, ill be you, you be me. Theres a song like that. Ill be you for a while and you be me maybe we can get that. Futures right now, you know what, s p, you keep teasing me, getting above 1850. Theyre going back below 1840 today. Were still below. Were going to get through two months. As of month of january and february goes i was hoping. It may be march. As the First Quarter goes. Thats a good one. Lets try that. Okay. We have headlines to get to this morning. Three retailers have seen hard times recently. Theyre now all seeing their stocks advance this morning. We start with best buy. Take a look at this. Which Beat Estimates by 23 cents with First Quarter profit of 1. 24 a share. The Electronics Retailer was hurt by extensive discounts but benefitted from cost cutting. And sears, doing less worse is apparently doing it for sears. Shares this morning at least for today as they rise in premarket trading. Then there is one of our i dont know if its our favorite. Jcpenney reported a smaller than expected loss for the Fourth Quarter and increased its comparable sales and gross margin profit forecast for the year. With the president s 2015 budget being released next week, it is time to talk about the state of the nations Fiscal Health and senator rob portman joins us now. You in d. C. , senator . Im in d. C. , joe. I see you are. Youre having the skyline flown in or something. Ill be back in your hometown tomorrow. You will be . Yes. Ill kiss the ground when i land. The low today was 2 degrees in cincinnati, which frightening. I also have a problem with the bearcats going from number seven to number 14. With a onepoint loss to louisville in the last two seconds. I have a problem with that. Ohio state is back in the top 25. Thats good. How about camp . A lot of people say 25 plus 10 is 35. Your top rate youre going to fight all these battles and lose all this Political Capital and all this blood to get a top rate of 35 , its just what was he thinking . No. Thats not the top rate. Its 10 and then its 25 . Theres a surcharge above that for a nonproduction income. Those folks who see a tax cut compared to what theyre currently paying because its targeted at folks that dont use a lot of preferences. Its a draft and theres obviously concerns that people will raise it, including me. I think its an important step forward that we actually have somebody willing to put out a tax reform proposal, revenue neutral. It shows you can lower the rate substantially which will be progrowth. He does interesting stuff in terms of capital gains, in terms of dividends to lower the tax on investment which will help in terms of Economic Growth. Theres some really good parts to it. And the corporate side is, you know, we have to get this corporate rate down to 25 and change the way we deal internationally where we will continue to see the hemorrhaging of jobs and investment overseas. I think its important he has it out there. It will start the debate. To start a debate, to have it out there, have some type of blue print you know youre not going to do it with this president in office. So maybe youre thinking about doing it in 201 or something. But how about maybe widen, maybe thats something to consider. Didnt he actually acknowledge that some type of growth policy might generate the higher revenue that the president is insisting on every time he talks about any type of maybe republicans can get together with that group of the Democratic Party to show that, you know, if the economy grows more quickly, tax revenues go up. Absolutely. You dont have to raise tax rates to get more revenue. What also is good about the camp draft is that its been scored on the basis of a Macro Economic model which used to be calling dynamic scoring. But it says peoples behavior will change, there will be more growth and, therefore, more revenue. That is positive. Ron widen is somebody we can work with on this. Theres a possibility you can see a change in the majority by the end of this year, really. Youre looking at in 2015 having the possibility of having republicans in charge of the house and having the ability in the senate to set the agenda. I didnt know the president wouldnt work with us in that siecenario scenario. Lets hope he would. Progrowth tax reform is one of the things we have to do. Are you do you hear every day whats going on in the Battle Ground states for the senate . Where are we right now . Can you give us insight into that . There are 12 states in play around the country that are currently democratheld seats which could switch to the republican side. Its still early. They start by the way just next week. Well know better. In every one of those 12 states theres one candidate that the republicans seem to be coalescing around. Its a different sort of a scenario that its been in 2010 or 2012, republicans seem to be more united around some really good candidates. How can you guys, if you do snatch defeat from the jaws of victory this time, how will you do it . That was the last two times. That wont happen this time i dont think. It starts with good candidates. You have the president with the minimum wage thing. Youll say no to that probably. Immigration is not going anywhere. I guess it helps to have proposals rather than just not being against things, right . I mean absolutely. Absolutely. Youll see well roll out in the senate, a jobs plan soon thats going to have seven elements to it, including things like progrowth tax reform, regulatory relief, getting the trade agenda going again so we can expand exports and dealing with energy so we can get more public lands and get this revolution going even faster to create more jobs. We do have the ideas and we are a party of ideas and reform. Thats something we need to get out there. In terms of whats going to happen on the budget coming next week, you have a president who in the face of the Congressional Budget Office saying things are getting worse, not better in terms of the debt and defendant sit saying im going to back off on doing anything about it. This is discouraging but in a Political Year its to be expected. Yes. Any piece of legislation that is going to happen between now and the elections . Yes, i do think theres a possibility of doing some things. Ive got as you know, an Energy Efficiency bill. We hope to get to the floor. Gene shaheen and i have that bill. Use our domestic resources, but also use less of it and use it more efficiently. I hope we can move forward on regulatory ideas. We have to do better on permitting, we have to do better on cost benefiting analysis. Theres some things we can do, even in an election year. In the past with president clinton, a lot was done during election years, things like welfare reform, balanced budgets and things like that. I think we can. Do you have a favorite for the nominee for 2016 . Would you consider it . Among the democrats or among the republicans. Who do you like in the democrats . Look, i dont know what theyre going to end up with. I dont think its going necessarily going to be hillary clinton. Really . Yes. I think theres a populous element in the party thats going to likely give her a run for her money in a primary should she run. Our side its going to be wide open. We have a lot of great candidates who have talked about running. I want to get through 2014 first. Thats my focus. Getting the majority in the United States senate i think changes the dynamic in this town. It enables us to get work done. I believe it will get the president to come to the table and work with us on some of these progrowth policies we talked about that are desperately needed. It creates momentum for 2016 for republicans. Is it wide open, is that different than it was before . Chris christie, where does he rank among the people who have thrown their hat in the ring potentially . Becky, i think hes still very much in the game. He won with 65 of the vote in new jersey, democrat state. I think he did it through the way youre going to win a general election at the national level, which is reaching out to groups that maybe arent traditionally republican, getting independent voters to understand republicans have a better message on how to create jobs and get this economy moving. I think hes still going to be a player. Great. Senator, thanks. We appreciate it. Thanks, guys. Safe travels tomorrow. Take care, joe. Spring training, joe, first reds game was yesterday. They won. Oh, good. Im still getting over last year, the pirates. God almighty. Starting strong. When we return, tom friedman will join us. Well talk politics, the economy, ukraine and much, much more. That will take to us the data points of the morning, durable goods and jobless claims will be our focus or investors. This morning, the numbers and market reaction, thats also just ahead. Were coming right back. As we head to the break, check out the squawk box market indicator. In my world, wall isnt a street. 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Weve got over 8,000 mutual funds and not one of them has our name on it. Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. Welcome back to squawk box. The dow looks like it would open down 33 points. Nasdaq down 4 points. Take a look at shares of wh wendys. They did beat by 2 cents with Fourth Quarter profit of 11 Cents Per Share. Sales, well short of estimates. Author and columnist, our next guest has covered just about every topic out there. To tom friedman. Hesed avieding the u. S. , dont just do something. Sit there. That was in yesterdays paper. Great to have you here today. What do you mean when you tell us, dont just do something. Sit there. I was speaking specifically, becky, about the situation in syria, which i think is enormously complicated, enormously tragic. Spilled out all these refugees. Theres been a call to do something, to jump in there. And my point is, look, if somebody comes up with a plan that can fix the problem in a way the American People will find economically affordable, im all for it. I havent saline that plan yet. Im troubled by the fact that a lot of them wanted to jump in there and none of them could name the leader of the syrian opposition. None of them could name the plan of the syrian opposition. I think you have to be very, very careful about that. I think sort of dumping on president obama saying he has to lead, you know, and trashing him for leading from behind, i never quite understood that. If we can get other people to do our bidding in our interest and we do it from behind, that sounds like a good deal for squawk box to me. What a lot of people have pointed to with the situation with syria, the president drawing red lines and stepping away from those red lines. That has implications not just with syria but the rest of the world. Thats a very good point. He shouldnt have spoken out the way he did, as did he. At the same time, obviously we have a deal there in chemical weapons. Thats dew going to denude syria of its chemical capability over time. Things got worse in crimea in ukraine. Things look like they have the potential to get quite a bit uglier. Yes, i think they do. Russia will play a long game and serious game here. Their warm water fleet in the black sea is in eastern southern part of ukraine. And theyre not going to let this go without a fight. I dont think theyll let it go, period. Whats happening . You think russia is pulling the strings behind the curdin . Yes, i mean, i dont know specifically but this is a strategic interest for them. You know, this is a very imperfection analogy. If half of cuba came out and decided they wanted to join nafta and it was the part of cuba where Guantanamo Bay was locked, wed take a great interest in that. Right. Thats what i dont understand. We have all these thoughts that this would be an easy fix, that we dodged a bullet. To me, it seems like this is just the beginning. You have huge russian interests in crimea. Why would russia come to the table and agree to help out the western powers to say, yes, well come up with a solution and maybe even throw money behind it . This is really strategic for them. Their ability to project themselves as a global super power without ukraine would be much diminished. Look, my sympathies with the ukraine people who want to join the European Union who see their future in building prosperity, not just state power. So i wish them well and i think we should do what we can, where we can to help them. But our core interest in ukraine are limited. The other question, weve been kicking this around the table, too, this is not just a situation where you have the awful human toll thats taken place. You have a country facing a huge fiscal crisis, too. In order to get the manien from the imf, from the eu, from potentially the United States, they would have to agree to some pretty stringent conditions that would certainly hurt the people there economically, too. I dont know how you find a stable political ground from people who would then have to be negotiating to take away some of the positions that they hold for their people at that point. Things will get worse before they get better. Its a really good point, becky. It applies not just to ukraine. One of the things in this post cold war age when you win a country like ukraine, you win a bill. You dont win some great geopolitical advantage. But theres a real parallel between ukraine, egypt now. I could point to several other of these post cold war powers. Countries that are hugely important. They have Enormous Economic problems and challenges ahead of them. There was a quote in our story yesterday from the ukraine where ukrainian political leader was saying, look, we have to form a new government, we have to be responsible. We have to deal with the imf. Its political suicide. Right. I guess i just wondered, do you think things have gotten more or less stable around the global, lets say, in the last three years. I was in israel since i saw you last. The most interesting number i came across in israel is the number of ugandaens an others in israel. The number was 55,000. One of them left eritrea, walked to either thiopia, and eventual walked to israel. They wanted to keep african refugees out. What youre seeing is the big divide in the world today is between a world of order and a world of disorder. You have all these states and ukraine may be one of them, where the combination of population, environment, economic stresses, that the cold war masked and we prop them up, and those props are no longer there. They are literally blowing up. So i would take it you think the order is continuing to win at this point . But that the fight is getting more difficult . Yes, it is. Because we basically ended a period, becky, this applies to the west, too. To be a president , a mayor, a governor, a College President on balance in most of these countries was to give things away to people. I think were entering an era, i hope its short. To be a president , a governor, a mayor, a College President on balance is to take things away from people. The politics of taking things away from people, especially in a country like egypt or ukraine where they missed 50 years, theres a headline i want to write over and over again when i write about these in my column. The headline is who will tell the people . I like how you tie the themes together and find the overarching theme. If you had to pick one place that gives you the most concern, one area, reason or country, where would it be . Its china. Thats simply because i dont like to use the world china. I like to use the term onesixth of humanity. How onesixth of humanity meets its challenges Going Forward economically, environmentally, geostrategically, if they dont do it in a stable way, that will affect everything from the cost of the shoes on your feet to the value of your 401 k . That is truly the big story in the world. Tom, that is a great tease. Well talk a lot more about china. Tom will be with us in the next half hour to thin this discussion. In the meantime, new changes coming to food labels. Will it help fight obesity . That story is right after this just eat it just eat it ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that 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. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box. Big changes may be coming to food labels. The fda wants packaged foods to display calorie counts more prominently including the amount of added sugar. The proposal would ensure the amount of calories per serving reflects the portions that people typically eat. First Lady Michelle obama is has used her White House Position to launch the lets move campaign to fight Childhood Obesity announced the proposal for the fda. You can see the calories. But sometimes they dont explain the servings. Especially those drinks that you think you drink one bottle of. They usually say on it its two or three servings. You have to look at the number of servings. You remember what happened with cigarettes. It started with these will hurt you, these will do this, these will do that. It ended up with the entire labeling, people who have a hole. A body tag on a toe. I remember that. Its like are we that stupid that we cant figure this out . I do appreciate on restaurant menus having the calories. Its not always what you would think. No. I was out the other night. The fried zucchini was 310 calories and the grilled asparagus was 550. The grilled ed ed asparagus more than the zucchini . It had lump crab meat on it. Get the oriental Chicken Salad at Cheesecake Factory because youre on a diet. Anything at the cheese cake factory is great. Once every six months. Is great. Everything in moderation. When we come back, we have jobless claims and durable goods. Plus, well wrap things up with tom friedman and hear what he has to say about china, why he thinks that is the biggest concern we should be focusing on. Dow futures down 33 points below fair value. Squawk box will be right back. 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. voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Welcome back to squawk box. January durable goods down 1 . Its not terrific but its better than expectations. However, that 1 , down 1 in a way its bigger, because last month it was down 4. 3 in december and stands down at 5. 3. Lets go through the internals, taking out transportation. Were left with a positive 1. 1. This is better than our last look. Last look when you took out transportation you were down 1. 9. Were 1. 7 on the number that many like to look at. Thats capital goods orders. Nondefense exaircraft, a proxy for business spending, capital spending. If we look at the shipments versus the orders, not nearly as good on the new side. This has been a trend of late. 348,000 on jobless claims, thats up 1. 4, up 14,000 from a slightly downwardly revised 334. Originally put worth at 336. Continuing claims hovering a bit over 2. 96 million. Not much changed from a last look. We are now hovering in the mid260s with a tenyear note yield. Keep in mind the High Water Mark continues to be the last trading day of 2013 at 3. 03. And the debate goes on. Our treasuries smarter about weather . Or is it a generalized slowing in the economy . Well have to see over time how that spread trades. But at this point, were going to continue to look at things like supply. Todays the last day. 29 billion, seven years, joe and the gang, back to you. Rick, thank you. Lets bring in steve liesman. What do you think about some of the numbers. I like the Business Investment number of up 1. 7. Thats the one good thing. I think we end up the second half of last year with around 3 average growth over the two quarters but the Fourth Quarter certainly showed weakness. The debate goes on over whether or not its a weather issue or whether or not theres Something Else going on. I think its more than just the weather. Why do you think its more than just the weather . Not every data point should be affected as it is by the weather. For example, the housing data. Some of the california data suggested that it wasnt all weather. People can point to that and say it was higher mortgage prices. Prices that have increased. I also think the magnitude of the declines is too much to be a weatherrelated event. I think part of it is coming off of some of the strength weve had in the second half of last year normally. Im just hoping theres not a third element to it beyond the weather. You think yellen will blame it all on the weather when she talks later today to the senate or do you think shell be cagier. I think shell take a step back and say were watching it, trying to figure you dont how much was the weather. They want to know how many people experienced what. Population adjusted. North dakota, nobody would notice. Not anybody cares. One of the things well be listening for today is yellen is the fed needs a new measure of slack in the labor market. The Unemployment Rate doesnt do it. Right . Its come down. Everybody talks about the participation rate. Heres one thing that doesnt work perfectly but might work a little better. This is the Unemployment Rate versus if you have a chart here. See how the blue line goes flat there . Versus people working part time for economic reasons who want fulltime work. Notice how that stayed high. Thats about 2. 5 million americans right now. You can see thats more than a million from where it normally should be. You have that ready to go. I just said it. Theyre so good in the back, they just brought it up. He talked yesterday about by the way, being patient to see what the weather situation is. But also how does the fed communicate this . Theyre down at 6. 5 , theyre not ready to raise rates. Do they take that out . Do they point us to a new method . June they will pause on the taper. Who said that. I dont know. Thats your thing . No, not me. I read it. If the data well know enough then. People know enough to know the fed will pause in june . These are pessimistic people that think that the economy is not as solid. It will take that long before we can say its not just weather. Shell be able to do it without getting a bunch of grief. I know you have to go back to tom friedman. There is a distance thats actually true. What do you think, june, rick . Hes gone. Were in the roach motel and we never can get out. Never can get out. Lets ask tom about that. Well have more with New York Times columnist tom friedman now. You were just beginning to say a little bit about your anxiety about china. I wanted to let now quinnish that before we moved on. You know, there are really two views of china today. Those who think its a screaming short. Because of banking state on industry, real estate bubble. And those who say what if what if china is just Getting Started . What if were about to see the payoff for 30 years of investment in infrastructure and education. I dont know. Im glad i dont have to make that bet. Xi jinping is the First Chinese emperor as it were, andrew, will have to make more political reform in a twoway conversation with the Chinese People more than any other leader in chinese history. Chinas ability to talk back to their leader, have a twoway conversation, that will be pay per view. I want to go to the west coast with you for a minute. You had a column called how to get a job at google. What fascinated me about the piece, it wasnt clear to me that the lesson in all of this was that you needed to have a great education. That might be part of it but there were all of these other elements that parents, im a parent, have to think about in a very different way. Yes. A lot of parents seem to have sent that column to their kids. And i was intrigued by it. It was an interview with the head of Human Resources for goog google. The guy in charge of hiring for one of the most important countries in american. Who points out google doesnt put a lot of stock in gpas, even in College Degrees now, up to 14 of some of their teams are made up of people who have never gone to college. His point isnt that gpa doesnt matter. What matters is did you learn the stuff. Google doesnt care what you know. The google machine knows everything now. All it cares is what you can do with what you know. They made a movie about this. Yes. With vince vaughn and owen wilson called the internship. Is that where you got your idea . Does y did you see the movie . I actually saw the movie. I got the idea from something lazlo said earlier. You couldnt have done it if you got the idea from owen wilson. Is google representative of where you think employers in the future will think about how they are hiring . Well or are they an outlier. I dont think theyre an outlier. Lazlo is not saying dont get an education. What hes saying is your College Degree is no longer a proxy for your ability to get hired here or anywhere else. We want to know what you know and what you can do with what you know and your ability to keep learning and relearning. Thats the real message. Thats going to be the value add. Whats your take on the minimum wage debate in the context of what we heard from the cbo last week . You know, i see the studies, andrew. And some say this is going to be helpful. Some say it will be detrimental. Honestly, i dont know what to think. Thats beyond my skill set, im sorry. Its not thinking big about our problems, tom, for what we need to do. Well debate this for the next year instead of progrowth stuff, you know. For me, joe, the really two big issues, i wrote about this recently, we discovered oil and gold in our country in the last five years. Weve had this huge advance in fracing, horizontal drilling, can really enable us to pull a huge amount of manufacturing back here and make us an enormous ly leading platform. One of the two things youd want . What is the nba League Minimum you would want to take most advantage of that oil and gold . Youd want to expand Foreign Trade with the tpp agreement in asia and the eu Free Trade Agreement and youd want to get an immigration bill that allows us to bring into this country the most talented people to exploit that data mountain. What are the two things that republicans and democrats have told us in the last month they are not going to do in the next year . Theyre not going to take up trade and theyre not going to take up immigration. They are not going to meet the nba League Minimum, just the minimum, we need from you guys to exploit these two enormously progrowth advantages we have. All right. Okay. Tom making some very good points there. Instead of asking a minimum wage question to every guest, lets ask why were not doing that. Its not going to help us. We need to do i hear you. Tom, right on, buddy. Theyre all big issues but hes talking about the biggest ones. Tom friedman, thank you for that. Hope to see you again soon. Coming up after the break, Money Management veteran don marron will join us live for a victory lap in just a moment. And to talk retirement investing when we return. Still to come, if you dont have a money manager, get ready to work the rest of your life. We talk pension woes and Wealth Management with light year capital founder don marron. Welcome back to squawk box, everybody. Weve been watching the futures. Theyve been under pressure but things have just turned around. This is a pretty big reversal. Dow futures were down by as much as 60 points below fair value. Now theyre up by five points. Still, thats a reversal of 65 points. S p 500 futures are still down by one point below fair value. We have a lot of things coming up today including yellen speaking before the senate and that could have a big impact on how the trading day goes. Good news for pepsico. It will be the beverage supplier for Shanghai Disney resort, the first Disney Resort in main line china when it opens next year. Its especially significant with disneys long history of serving cocacola products in its theme parks. This is the first time in 25 years that pepsico has won a contract for disney. Our next guest made his money in Money Management with the sale of painewebber, to ubs. He was in charge for a long time there. That was a deal worth 11 billion back in 2000. Hes now more bullish than ever on Money Management. He another huge deal under his belt. Don marron joins us. That was your successor firm, light year capital. Thats right. This is a transformative deal youre doing now . Its a good deal. Were selling to a public company. We cant talk about it right now yet. Its a successful deal. Whats going on in the world i have to tell you one of the things first, i watched you guys earlier talking about tesla. I went down and tried out a tesla to see if a 66 guy could fit. Barely. The salesman was so good. I said what did you do before this . He said i was in Wealth Management. He has some clients he can call. One of your points is, this is not going to become less important as we switch from defined ben pit to defined contribution, you need people to know how to grow your money so where you can retire someday. Theres 21 trillion in retirement assets, a third of all the assets of individuals. The big difference is, a growing portion of 8 trillion or 9 trillion is in their own hands and theyre not qualified to manage it. Were creating a nation of pension fund managers. People are starting to realize what the frailty of that kind of system is. You have some people doing well, some people doing badly but theres no safety net. Thats the heart of the issue. Youre in an industry where the average mutual Fund Performs below average. So its a challenge. Is it tough to get a safety net in a zero Interest Rate environment, too. I dont think as a Wealth Management individual, wouldnt you be deemphasizing fixed income by definition . I dont see how you can invest in fixed income. The history of Money Management over 40 years is you could go to safety and get paid. Wait a few years and youd get 3 or 4 . Now you get nothing. Absolutely nothing. You cant do that which means you have to take risks and most people, most Money Management firms arent really familiar with those kinds of risks. New kinds of products, higher yields, et cetera. Isnt that an argument for index funds . Going back to jack vogel on what hes done, if youd just put it in an index fund. Unless the market goes down. Track stocks over 20, 30, 40 years, put it in Something Like that that has an incredibly low expense ratio. I guess. I never thought aiming to be average was a very good strategy for anybody. I dont think thats true if youre young. If youre young you should take risks, take opportunities. Take what you learn. The young are out in the market using the products that turn into these hot companies youre talking about. Hasnt it been the index is maybe average but in an odd way have outperformed justin everybody else who has been shooting it with ining for the im saying it with a smile thats because thats exactly right. It exposed Money Managers as not being as good as we thought, pla particularly in the hedge fund space. Theres a lot of Big Hedge Fund who have underperformed and are out of sync with whats going on in the markets. If a pro cant do it in the bull market climate, what shot does an individual have . When its done youll come back and tell us the results, what you couldnt tell us here. Ill come back and tell you that. Tell people how to plan for their retirement. It sounds lake a boring topic. Were all going to get there eventually. And you will have a pot of money and youll have no pension fund, no corporation behind you. It isnt going to be enough money. People will first blame their company and then the government. Youll have tens of millions of people saying, in the end, that means i have to work five more years, which is going to keep the young people out of the market. So youve got this is a hard time. Yes, but its important. The country is in good shape, ceos have learned how to manage companies more efficiently. The trouble is, its just in time hiring. Thats another problem. Well talk about that maybe next time. Good to see you. We head to the New York Stock Exchange, catch up with jim cramer, squawk box will be right back. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Return on investment wall 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. Lets get down to the New York Stock Exchange where jim cramer joins us now. A lot to talk about. Tesla today given what they announced yesterday and whether you think this is huge news or were overplaying it. No. You cant overplay it in part because people just think he revolutionized the auto business and now hell revolutionize the electronic grid. Doing a convertible bond and normally youd see pressure as people would buy the bond and short the common against it. You are not seeing that kind of pressure. Its a charmed stock. I call it a cult stock, no one wants to hear it, jim, do you buy it or sell it . Some stocks really elude you. If you think hell smash the trillion dollar electric grid, the stocks worth a lot more. If you think he cant, the stocks overvalued. Do you put it in the amazonian category . Amazon has unbelievable revenues. They are both run by brilliant people. Amazon revolutionized the way we do retail worldwide. If you can blow up the grid and have partners and not need as much money, 5 billion the company can raise, i think its an option on something major. Would you take the option, though . Mo, i wouldnt. Because there are too many Fabulous Companies doing really well that are dramatically lower in price and arent as based on hope, you know, this is a press release company right now. I remember asking you about syria and you were, like, when that was happening, but then i charge the guys in charge flying by the seat of their pants and now nobody knows and now im thinking ukraine, is it out of the question that tanks move in there like hungary . Do we know for sure that Something Like that what would that do to the market . The russian navy is located within the country, i mean, so i dont think its so wrong. I dont think its going to be the crimean war, britain is not involved. A year ago we would be coming in and talking about it every day and now we say, yeah, yeah, thats ukraine. Is it keyve . Keyve. And the russian navy at a certain point is going to say were not supposed to be here we need to find our way back to where were supposed to be and i dont think that will go that well. I still wonder if russia is still capable, have we given them the opening where they could say, look, we want the ukraine, im sorry . Putin is a strong man, isnt he . It would be kind of a black swan but i dont know if we can just categorically dismiss it. Ive been surprised that we have focused less on that than we did turkey and argentina and venezuela, but maybe we just kind of feel like no matter what this thing works out because theyre a westernized country and the imf giving them money. A year ago this is all wed talk about. All right, okay. Thank you, jim. Well see you guys in just a couple minutes on squawk on the street. When we come back, whoobs the t whats the Top Performing s p industry so far . Can you start tomorrow . Yes sir. Alright. Lets share the news tomorrow. 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We like delta. We like american as well. I tell you what, 18 months ago or so when i first bought these stocks it was the First Time Ever i was able to get every client calls us saying what are you doing buying these stocks . But back then they were cheaper than the market and right now they are still cheaper than the market and the four cs going on, consolidation in the industry and capacity discipline and charges that they are putting on you and me as customers for baggage and Everything Else and clean financials, the companies are pouring out cash. The industries have changed a lot. The companies have. They cleaned up their Balance Sheet delta in particular best operated company in the industry. Delta is not investing in any new aircraft. Does that concern you . I know its a good thing in the short term, but long term . Well, you know, eventually theyre obviously going to be able to theyre going to have to replace planes. Delta has been very good at taking old planes and running them very efficiently. It buys them for a steal and they bought 717s from others and buys them at a steal. It shows the discipline. It used to be when airlines made a lot of money they would spend it on new planes. It shows they are much more professional now. I got a quick consumer question for you, there was an issue with American Airlines and bereavement fares, they will no longer have them. Do all the airlines do that . Some of them do, some dont. The policy varies, its one of the things the reality is the seats are full i would think you could lose goodwill for what cant be a lot of money. You know, its just one of those things that used to be airlines are beavering ruthless. The planes are so full they will kind of maximize everything they can. They dont want to give the seats away they are about making money on each flight. It means you are not giving seats away, its a lastminute flight, if the seats are full, you dont get one. But a lot of times the flights are refull, a lot of flights are overbooked. Theres not the room on the planes that three used to be to give away the seat. Thank you very much for the help sorting through the airlines. We appreciate it. Well talk to you soon. Okay. All right, that does it for us today. Make sure you join us tomorrow. Right now its time for squawk on the street. It all happened right here everything from twitters ceo kicking off their ipo to Mickey Drexler talking retail, howard schultz, jamie dimon, mariano rivera. Theyve all joined us at our set post nine which is two years old today. It is where we keep bringing you the big moments every day and stick around to who see is bringing us a surprise Birthday Gift this morning. Good morning, welcome to squawk on the street, im carl quinnty naia, with jim cramer and david faber at the