Transcripts For CNBC Squawk Box 20150218

Higher. Heres the big stories you need to know about this morning. Greece topping your headlines. Athens widely expected to ask for an extension of a loan deal with the euro zone. Well talk about the implications of that. The bank of japan leaving it unchanged. The worlds third biggest economy is on the lend. By the way, the nikkei 225 is up 4 this year. Here at home a number of economic reports are set to role out this morning beginning at 8 30 eastern when we get the january Producer Price index. Housing starts as well as Building Permits. Later on in the morning we get Industrial Production figures and breaking at 2 00 p. M. Eastern time we get the minutes from the last months fed meeting. Thats at the top of the power lunch which im told is a fine program. I saw that in the prompter. Did you write that into the prompter . I script everything. Lets tell you whats going on. Fossil with weaker than expected earnings revenue and offering a less than rosie outlook. The company cites a decline in leather and watch sales. Who is wearing a watch these days anyway. I usually do but i take it off. You look at your phone. You do. You have a watch on your wrist. Then theres the apple watch. Rackspace warning Current Quarter revenues will miss wall street expectation. The main reason a strong dollar and Quarterly Results from jackinthebox. Boosted by strong sales. Now lets get into what is referred to as whale watching. The filings from the worlds most powerful investors. Warren buffets firm unloading its 41 million shares of exxon mobil in the latest quarter. It only held that investment since the Third Quarter of 2013. Berkshire also selling a smaller stake in conoco phillips. As for what they have been buying, they purchased 15. 6 million shares of deere and added 6. 5 million shares of ibm to its holdings. That brings it to 77 million shares. Thats been the huge question we have been asking. With ibms shares struggling warren buffet said he would be buying. Turns out he was. Thats amazing to me. Yeah were going to get the chance to talk to him on monday of next week. Monday of next week. Well be in omaha sitting down with him going over the annual shareholders letter. But i want to hear about ibm in particular. Well see what he thinks is interesting. Its more than 300,000 employees. All of these different business units. This is going to sound like a broad question. Im sure somebody from ibm is watching. What is ibm . What does that mean . What do they do . You tell with a lot of companies how they make their money but for me its hard to tell what they are doing. Theyre in the middle of a major overhaul. Hardware is all but gone. Warren buffet has been the one people were wondering would he continue to stay in there and have faith. If you talk to people in it part of the problem is you used to have on site it people and you still do but theres a movement now to change and everything is done on the cloud and remote. So you wonder are they evolving or leading, or lagging . I dont know. The change in how i. T. Is being done. Theyre moving the cloud but the cloud doesnt have the moet. When it was in your office you couldnt get rid of it. Thats what i mean. If you had 50 ibm consultants on site they were engrained. But the business is a faster growing higher margin business if they can get there. What surprised me they sat down last year sometimes in the last six or seven months and he said what big players in cloud are us amazon and he named a third and it wasnt ibm. It was not ibm which surprised me too. Something we half joked about last year and id like to get our viewers thoughts on this. I called with the doing away of the term Cloud Computing. Cloud is just a return to the way things used to be where you have a centralized server. Hotmail is effectively Cloud Computing. If youre not in the clouds then what are you . Your dial up. Warren wrote a 20 11 letter and said he hoped the shares would lag so he would buy i dont think he necessarily hoped that the operational business would suffer the way it has but nonetheless the fact that hes buying shows some level of confidence. Guys i was off. I said more than 300,000 employees. Do you know how many they have . 431,000 employees and by the way, wall street not optimistic. There are 26 analysts that cover ibm. The average rating is a hold and the average price target is 161. 80. The stock is at 161. So the majority of wall street sees basically no upside. So i wonder what warren buffet sees that wall street doesnt. Well get a chance to ask him on monday morning. Just a few days from now. Cool. In a meantime lets think about notable moves going on. Soros eliminated stakes in the following, apple out aig out, google out. He is cutting his take in teva and upping his position in herba life. Carl icahn raised his stake in ebay to bring the holding to 46. 3 million. Lets get a check on your markets this morning. Lets take a look at the s p and dow futures here. Nasdaq may be the one to watch because theyre marching back toward the 5,000 mark. We are seeing a mixed open implied for the s p and dow down but really a couple of points folks. Theyre up exactly 1 . We talked about greece being the big story. Europe is a big story. Greece is up about 1. 5 right now. The german dax, ftse 100 all up as well. Overnight in asia they rose shanghai hang seng in hong kong up. Japan keeping its Monetary Policy as loose as it can go. Add libing oils. Wti crude down 1. 2 . I was in texas last week. Goldman with a report saying we dont think theres a supply demand balance coming any time soon. Big fight over oil. Brent, wti, natural gas all down today. Lets look at the ten year. The big story in the markets yesterday was the move higher in the ten year yield and that continues today. Were at 2. 15 . Historically still very very low. The fact we were at 1. 64 on january 30th. This is one of the steepest increases in the ten year yield that we have seen in years and by the way, mortgage rates, are posting their biggest shortterm jump in six years because of that move. Yeah but 2. 02 is the sticking point. We rallied toward that level and havent been able to break through it. Seeing it today that question where is the new levels are were talking about. Yeah a 30 move in yield and people say stocks move that much all the time. Bonds dont. Bonds are the super tanker that take a long time to move. Especially if theyre stuck off the port of los angeles. How is that for a segway. I was going to say well get to what this means for thouzinge Housing Market too. Lets check your currentcy markets here. Gold got whacked yesterday. Is there support at 1200 . We may find out. The price of gold is at 1204. Thats a level to watch. I mesdssed up. I said it was this monday. Its the following monday. March 2nd. Its the first week the first weekend in march. Sorry i got into new york late last night. Im a little confused on my days. Its 6 09 in the morning. I woke up in the middle of the night thinking i have to plan and pack for this weekend to leave. Its not this weekend. Its next weekend. Sorry. Breaking overnight we should tell you sonys ceo outlining his strategy for the Consumer Electronics giant. Great to see you. Tell us about the news today. Well its a long time becky since we heard any kind of offensive strategy for sony but this is the start of first kind of series of offensive measures that sony is about to outline because the last couple of years have all been about restructuring but as we saw in the latest quarterly numbers some of that is starting to pay off. This is a new three year blueprint that the ceo of sony outlined today. Some of the numerical targets are ambitious. Hes looking at 4. 2 billion. Thats four times larger than where theyre at right now. Also an roe target of 10 . But the details and the overall gist of the Business Strategy is going to be vindication from the analyst that said over the last two weeks that sony is ready to move on the offensive. Theyll focus on things theyre good at which is the image sensors. The stuff that goes into the smartphones and might be going into the Driverless Cars somewhere down the line. Playstation franchise, pictures music, all of that is working well but then theyre going to spin off some of the subsidiaries to give them more autonomy which means more responsibility should they not be profitable over the next coming quarters and there is the problem for sony. Theyre having problems in two areas. Particularly mobile immune kags communications and Television Operations which have not been profitable. Theyre on the high end from couples like apple and samsung. In the Television Operations the margins are thin there. Analysts have been wondering whether or not they can push these tuitions into the black out a sale and the ceo of the company said at this press conference that anything is possible including a sale or any other exit strategy. So you talked about the equity market being up at 8 year highs, one of the topper formers over the past year. Sonys stock is up 8 . Guys. Thank you for that. Well continue this conversation. Joining us now is lance, the editor at large. I guess the question is is this the moment we have been waiting for . Theres been lots of moments we thought were supposed to happen with sony. We thought they would break up and get their act together but they dont. Its been such a stuff year for sony and so much bad news. They really they have really gotten smacked around in areas. We remember a couple of years ago they shed the computer business. They used to be a leader. They used to be a leader in tvs. Now theyre getting kicked around by samsung and vizio. I remember when it was like that little l fwrksg, it wasnt a quality brand but its right there. Percentage points behind sony because the company didnt know how to innovate or market to the u. S. Market anymore. Its fallen behind. From my perspective i look at sony theyre a Great Technology company. Tremendous innovation. Like great smart home stuff but they have theyre not commercialized. Well often you dont see stuff commercialized or you dont see it marketed properly. They have built they built great tvs but they havent done much to market them lately. I know that they recently showed us a pair of smart glasses but this is classic sony right now where the glasses were interesting but they have a separate box and control system for battery life. Its the only way they could do it so they werent even at the same level as google but they were saying this is our future. Im going to editorialize but from a consumer. Not as a journalist or host or whatever it is. To me sony started to make their mistakes as a consumer when they started doing what i call the microsoft mistake which is where they started to try to make their own things. For example, everybody started going to traditional flash memory. They went to the memory stick. So they had their own technology i own a computer with one of those. They were more expensive and frustrating. Microsoft went with the zune and did the points to try to buy music. They didnt copy they tried to do their own thing. Apple had that mojo and i think sony might have felt like they were apple in a way and tried to do everything with their own standard which failed. In the late 90s thats who we often compared sony too was apple. There were similar yarities. At the precise moment that apple took off like a rocket sony just started to stall but it is interesting that this focus on come poenlts and all the stuff inside because thats a Good Business. Theres going to be a lot of business for sensor technology. Artificial intelligence, selfdriving car, thats a Good Business to get into. What about the hacking scandal. What does that do . I dont think it does anything. I know everybody is really focused on it. It was embarrassing. It was embarrassing for the company and their i. T. Department. No Business Impact . No. I cant imagine that it does. First of all, these hollywood types. Theyre used to it. They dont care. What they care about is howell does the show do or howell does your movie do at box office. Thats all they care about. Do they have to get rid of paschall. Was that the right move . It was a nod to this is embarrassing. But it wasnt a major thickng. The spider man picture, shes still involved with it. So its not like they showed her the door. They just had her step to a different level. Three years from now what will sony look like . Theyre going to sell off some stuff. Theyre not win ongning on the mobile side. Is it palatable inside japan to make these moves . They always had one hand behind their back. More than it used to be. I think they will accept it. They want this company theres a tremendous pride in these companies that are, you know part of these National Companies like sony but they dont want to see it go away. They want this guy to do whatever he needs to. We know it hasnt gone well but hes still in there fighting so this year he will make some of these really big moves. Given the fact that it hasnt worked over the past two years is he the right guy . Considering where he started, i think so. Is there another guy in the wings that we should know about. Not that i used to work for a Japanese Company years ago in another life far, far away. It was a legend in japan. Its more about hanging on. Its not its just surviving and slightly thriving and then you move up. It was the disrupter if you will. Viewed as the hero and savior. If he cant do it an due im not sure who else is out there. He was there six or seven years and didnt get there either. Often times if companies are based in japan and after a lot of business in america theres a huge culture problem. These companies that dont quite seem to know its almost like they didnt make the transition into the 21st century. The other possibility for sony would be a purchase for somebody like soft bank that seems to pour money into everything. Okay. Well look for that. Thank you for coming in. Its a pleasure. When we come back this morning, well get more on todays National Weather forecast. A freeze over the south as resident there is prep for potentially record setting cold. Plus why is the euro zone being so tough on greece . Michelle caught up with the man thats one of the reasons. He is a 36yearold professor that could be the next leader of spain. Why other European Finance ministers want to send him a message. First heres a look at this date back in history. Financial noise financial noise financial noise financial noise ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. 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. Start building your confident retirement today. A fresh half an inch to inch and a half fell this morning across nashville to residents here are waking up to the fresh snow covering ice that did not go away yesterday. The city Police Responded to more than 100 crashes just on tuesday and of the four fatalities reported since the storm on monday in tennessee, all were vehicle related. So stepping outside today unfortunately the music city is going to be dealing with a fresh bit of snow and the ice on the roadways but as you mentioned that record told potential three below zero is the forecast low tomorrow that would shatter the record of five. Not to mention a record cold High Temperature just into the teens for tomorrow. So the brutal cold air is the next big story. As you mentioned too schools are closed through the end of the week. Back to you. Thank you. Lets get back to the markets. Were waiting to see if theres progress on the Greece Bailout negotiations in europe. Michelle joins us with more on that and another up and comer in spain likely influencing these negotiations. Two things to watch for today. Were waiting for the greek government to get a loan extension request because they do not want to do a bailout extension request. These words are important to them. So this is to service the home constituent sy constituentcy. Its unlikely europe is going to accept this. Well see how it plays out and were waiting to see what the European Central bank will do. They meet every other wednesday to decide on things like should greece, should they keep giving breathing room to greeces banks. Theyre likely going to agree to continue to do so today. The question is how much. They could throw us a surprise which would be devastating. Second thing to watch for, lets get to now what we put in the tease which is one of the reasons why the euro zone is being so tough on greece. Because they fear if they give into demands to be looser with greece on the requirements for the bailout, that will start to give even more power to other similar types of movements in Different Countries including spain which brings me to a 36yearold professor who is leading in the polls in spain to be the next leader of the country. You see him there ponytail. Hes been in new york. He is leaving today. He was at columbia on monday. He came down to the new york stock exchange. We spoke for about 20 minutes. We did most of the interview in spanish. He is an extremely smart individual. He did some of it in english. Well play the english part of it for you so you can get a sense of who he is. If you you could say anything to an american audience, a again rally capitalist audience who would you say. We do things better. Such as . I think we have governments that work for people and not for the banks. Do you think youre going to be the next leader of spain. I will work for that. Youre only 36 years old. Would you be ready for that. Its a difficult question. I think that we need young people doing things. I think we have much old people with very old ideas. I think we need new ideas and new people ruling the government. So you can see passable english. In spanish incredibly articulate. He says new ideas but he is a selfdescribed man of the left. He wants to lower the retirement age. He wants to raise the minimum wage and restructure the countrys debts. Its a classic leftist position. He also represents a population there, lets say young men under 40 having a very difficult time when it comes to the unemployment picture. Youth unemployment is huge there. One thing he has really been able to capitalize on and here in the United States we could understand this really well spain similar to the United States their problem was a real estate bubble. A huge real estate bubble and what is different about spain, here in the u. S. If you dont pay your mortgage you can have a Million Dollars in the bank but the bank cannot go after all of your other assets you mail in the keys and you go live in a rental right . In spain they can kick you out of the house and you still be paying the mortgage. Its a recourse loan. So i have not interviewed people like this but read stories. They work for the bank for the rest of their life. Imagine every morning you get up and you dont save, instead youre still paying a mortgage for a house you don live in. He has been able to tap into that anger. They can go after all of your other assets. Youre the asset. Youre putting yourself on the line. Thats true in most of the world. The United States is unique in that way. In terps of having nonrecourse loans for real estate. So he was born in 1974. He is 40 years old. Now you have this 36yearold. I think theres a natural inclination. I have been to greece as well. Youve been there and you saw the anger. Theyre frustrated with the old ideas. The old men in ties that havent done anything for them. But none of these ideas by the way are new. Youll see more countries that candidates such as this younger, more leftist because theyre saying to the young people listen its not your fault. We know you want to succeed. So to the effect the wrur negotiations. We may see a much tougher line. Im not convinced at this point and theres another critical thing to remember here alexis when he chose his Coalition Partner in greece he chose a right wing party. A party with whom he agrees on nothing except no to the bailout, one. And two, this party if for some reason he decided he wanted them to vote on leaving the euro he picked the only party that would support them, right . When you call them right wing. Its not like the u. S. Right wing. This is effectively a Neonazi Party and they have admitted this is them saying this. So its not a right wing like go this is a far right antiimmigration, hard line. Noneconomic policies. Yesterday morning you thought that yesterday you thought there was going to be a deal. Now you think hold on. Lets go back. Last wednesday when they negotiated for seven hours source in the room told me they had come to an agreement of principal. They had a statement and they were sitting around waiting for athens and then they walked out at the very last second after they thought people were leaving the building thinking it was possible. Theyre still fighting about words. Today theyre fighting about words but they have to ultimately decide is whether or not theyre actually going to do the reforms that the rest of europe wants. If they would do the reforms, i think germany would give them almost any money they wanted but they dont want to do any of the reforms. They cant. Thats how they got elected. But they also got elected promising they were never going to leave the euro zone so theyre in a tough position. The question is who has more leverage. Does greece have any leverage at all . Were learning every single day that we dont see italian and spanish yields rise sharply for fear that if greece leaves everybody else leaves. The rest of the euro zone has more and more leverage. That was my impression. Because the market doesnt care because the debt has been socialized. Meaning the ecb owns the debt. Nobody is going to get injured. So it doesnt matter. We had a conversation about whether or not the market cared or not. The market doesnt care because the market doesnt own the debt anymore. Right. Exactly. Lets talk about thank you when we come back why some hospitals are releasing medicare patients. It doesnt appear to have much to do with improved health conditions. A lot to talk about there. Plus politics. New insights on a private meeting between Hilary Clinton and elizabeth warren. Take a look at yesterdays s p 500 winners and losers. Were back in a moment. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . 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Tdd 18003452550 or visit schwab. Com trading. Tdd 18003452550 schwab trading services. Tdd 18003452550 your goto for trading knowhow. Tdd 18003452550 hi, welcome back. How you doing . Time for a segment where we go through interesting stories of the day. This is a deep investigative piece by the wall street journal which is that according to deep Research Done by the journal they found in many cases hospitals are discharging medicare patients in specific windows of time that would maximize the medicare reimbursement. In other words between 20 days and like 25 days it maximizes your medicare reimbursement. Before that you get less and after that a certain point you may get nothing. The rates of people being discharged in that window couple of day window depending on whatever it is that they even alien from is factors higher than other types. They put to some specific cases where it had nothing to do with improvement in the Patients Health or anything else along those lines. It was done on this time frame. They couldnt point to any improvement or change or plateau. They focused on sepsis patients. Something 300 or 400 or whatever it was, much higher were all released in a two to three day window that would have maximized the medicare reimbursement rate. Do you think theres a business person at the hospital that tells the doctor what is do do . Do you think they think about this subconsciously . Do you think they have written it into the prosee tourcedure . I think theres a Standard Operating Procedures probably not written into the rules. Hospitals are trying to make sure that they are maximizing and the other side of this is the hospitals have gotten squeezed on these things too. When the Affordable Care act came in it squeezed the hospitals on the other early things. It set new standards to say you could only get paid in you were in the top percentile in terms of improvement along the lines. Theyre trying to figure out how to make a buck on this too. What is concerning is what this means for the Patients Health. Are you going to be kept in the hospital longer than you need to or get kicked out before youve shown improvement. Time to go. I dont feel good. Another story that caught me eye today because brian was looking at this story i started taking a look at cbs story that was out there. The pharmacy benefit manager its the second largest pharmacy benefits manager in the United States is raising concerns about a new class of cholesterol drugs. These treatments are called pcsk9 inhibitors. Theyre saying right now its only a small number of people expected to be using this but could increase to 15 million patients overtime. They expect it will cost about 150 billion a year. Theyre raising a red flag about what it is going to cost and its interesting because of express script fighting back and trying to wage a campaign against the new hepatitis c drug. The pharmacy benefits managers coming in and acting as the new medicare and setting costs and deciding what they will and wont pay for concerns me for the same reason. Im not convinced that the science is necessarily there to back it up. But isnt the whole cholesterol market shaky in the sense that the amount considered healthy and unhealthy continues to come down over the years . Every time you lower the acceptable amount of cholesterol level you capture another 5 Million People that have high can cholesterol and the doctors on the board are all on the payrolls of the companies that make the cholesterol medications. So why dont we just say one point cholesterol is now high. These inhibitors in particular are only going to be helping 620,000 people in the beginning. These are more people genetically predisposed. Not necessarily what theyre eating or anything else going on with it but its for patients that cant handle lipitor. Theyre warning about the expanding number of these patients. Elizabeth warren Hilary Clinton had a secret meeting in washington in december where apparently Hilary Clinton was seeking advice from elizabeth warren. Didnt ask her to endorse her out right but clearly trying to bring her under the tent. Always a question of whether this is theres always the question in the party right now whether Hilary Clinton is going to end up having to move more left to match some of the rhetoric from elizabeth warren. Or whether warren herself will run. Whether this was an attempt to bring her in the family and keep her there. When he was originally nominated one of the things you get from staffers was she was frustrated nobody came to consult her. You havent come to kiss the ring and find out how i feel about this first. So a little bit of this might be im coming to show a little bit of respect. What did senator warren say . Unclear. The report did not get perhaps the central idea. It doesnt surprise me at all that Hilary Clinton would seek her advice and check her out. What did she say . What did she walk away with . We dont know yet but we will find out. Eventually we will. Thus ends chairs. Coming up the labor secretary joining talks at the west coast ports dispute. But is there any real hope of a deal any time soon . The man representing the nations manufactures will tell us why its critical that something gets done. Were back after this. When the moments spontaneous, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. The oceans off of Southern California look like a parking lot for super ships. The back up caused businesses billions if not billions. Some manufacturers are forced to cut hours for thousands of employees because of it. Yea is joining us now. Have you talked to anybody close to the negotiations . Are we closer to getting a real resolution . Well, you know it doesnt look like theres been much progress. Were pleased that the president asked the labor secretary to help mediate but theres a lot at stake here and we need progress really soon. What do you think is going to be the fall out each day further that we do not have a deal . You know were already starting to feel it throughout. Theres ripple effects throughout our economy. If we have a total shutdown of the ports, the last shutdown was about ten days. If that occurs again its going to be about 2 billion a day. Thats an impact to our economy. We work very closely with the retailers and the president there. Were already seeing a slow down for wages in this country. Many of our manufacturers are overtime and eliminate it all together. Our markets are turning away orders already made because theyre worried about our manufacturers being able to fulfill their obligations. This happened before you referenced that in mid september. 13 years later jay to get us around any of these. We had it in 2002. Why havent we changed it . Well you know every one of these disputes has a different look and has different issues that arise. The issues that are occurring right now clearly, this has been a dispute going on for several months. This is something we have been warn warning about the Economic Impact of it and were starting to see the officials in the economy right now. I mention the manufacturers, kitchen appliance manufacturers that have lost orders. We have Food Processors or food manufacturers that are literally having their products rot at the ports right now. We have importers who have who still have items from halloween sitting out in the water and they cant use those products anymore. So this is having a really detrimental impact on the economy and ultimately its not only lost wages, its lost jobs here in this country and we need to see a resolution pretty quickly. What should that resolution be . Well the resolution is they just simply need to settle this. So they need a new contract. They need to get that contract signed. If secretary perez can help with that, thats great. Our understanding and, you know ive read what youve read our understanding is theres a dispute about how to settle few you tour future disputes. Lets deal with this one and get it off the table and make sure that american manufacturers reason further hampered or losing their jobs because of the disputes going on in the 29 ports on the west coast. Jay it was a pleasure. Thank you for coming on the show. Especially so early. See you again. Thanks. Okay coming up alisters from the world of fashion, hollywood, music and business teaming up in the name of education. That story after the break. But first as we head to the break check out todays squawk planner. Heres whats happening at 7 00 a. M. Eastern time. Mortgage application and at 8 30 eastern january ppi housing stat starts and minutes from the last fed meeting. That as squawk box returns. 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. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Barbara just bought a bike. She wrote a tweet about it. You cant learn much from that. But take data from millions of tweets combine that with your companys supply chain and sales data. 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The celebs reimagine learning. John legend and ariana grande. Joining us the woman behind this ambitious project. Melissa kirsch. Shes the ceo of venture new project. Thank you for being here. Tell us about the fund. Well, the fund is going to be focused on investing in great social innovators trying to change the world in education. Reimagining how we think about an education today. What does that mean specifically . Well we have all right started investing this money in great social entrepreneurs like eye to eye. That is bringing together dyslexic kids who are mentors to mentor young kids in schools. And were working with the Multimedia Lab which is creating really Cool Technologies that in this day and age, we should be using technology more in schools. So they are bringing Cool Technologies that are making learning fun in the classroom. Where specifically do you folk us . Aside from things like eye to eye . Are you looking at in the Public School systems just ways to go through . Yeshg the schools that i went to 30 years ago, they still look the same. And we have so much new technology. And the neuroscience tells us a lot of how the brain works that we havent really applied to the classroom. So w doing using the power of entrepreneurship to invent new schools for students and classrooms and teachers. Really this is focused on getting to the teachers and also to parents. Because a lot of parents dont know how their kids learn. And dont know what they can be doing at home to inspire their kids. Can i wade into a controversial topic . Yes. Most Venture Capitalists and head fudges are antischool, and antiunion where do you stand . Well i think thats old debate. I really do when we think about education today, we have to bring everybody to the table. We have to bring the private sector into schools. We have to bring the Nonprofit Sector together with the private sector with Public Policy leaders to really reimagine how schools are. Really, what was so exciting about last night was i think were bringing trying to change the dialogue. Because the dialogue i think, has gotten old. And its time to really think differently. So to have the Creative Energy at fashion week to have john legend to have the people from entertainment industry, together with the social entrepreneurs to say schools not working for all of our kids. We have 1 in 5 kids has a learning disability. Were not release their potential. 1 in 5 . Yeah. What would be a type . Learning dyslexia ahdh actually 1 in 5 ceos is dyslexic dyslexic. Theres amazing people who have learned differently. And school wasnt the perfect thing for them. All of a sudden, you know they faded. And were trying to bring their technicolor life back. Whats your biggest challenge right now . Who doesnt accept what youre doing . The goal of this ive been working in education reform for 15 years. And really we are working to try to build a coalition that is not debatable sounds like youre consciously stepping away from the debate. Yes, to slow this down. And our country needs to be competitive. And we need the best education. An one of the things that americas great at is innovation. And we should be teaching kids to be creative and innovative in schools. Can we get all of these people in the same room as andrew mentioned, it has become a very contentious debate. You know i think partnering with the entertainment world has leveled the Playing Field in a way. Nobody is against john legend. Everybody loves him. And he has been he and the folks at wme and other places have really sort of said whats find out what we all believe in together. And its really about letting every childs light shine. We want to thank you for joining us. Thanks a lot. And coming up the mornings top stories including the latest on debt talk information greece. Will a deal get done . Plus were going whale watching and talking about the worlds most powerful investors are buying and selling. State tsai tuned, squawk box will be right back. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Earnings alert. Inside actavis. Ceo Brent Saunders will be here to dig through the report and show the latest for the deal. And College Costs holding back entrepreneurs. How student debt is a drag on it. And it may be gets better soon. The second hour of squawk box begins now. Start me up announcer live from the most powerful city in the world new york. This is squawk box. Welcome back to squawk box here on cnbc. First in business worldwide. Im becky quick along with Andrew Ross Sorkin and brian sullivan. Joes off today but he will be back. Weve been watching the u. S. Equity futures and so far, it looks like things are barely changed. Right now, the dow futures down 3 pat 5 points s p down less than a point. Nasdaq up by 1. 5. Nasdaq is approaching levels that we havent seen since the height of the big bubble. One of the biggest, apple. That stock trading at an allpoint high. The bank of japan leaving its ultra loose monetary stance unchanged. B. O. J. Says the world is on the mend. Back here at home on. Agenda. 8 30 eastern time january Producer Price index. Housing starts and Building Permits later in the morning. Industrial production figures. Then breaking at 2 00 p. M. Eastern time. Well get the minutes from the last months fed meeting. Brian sullivan and the power lunch crew at 2 00. Also regular tore followings revealing the latest news from Warren Buffetts berkshire hathaway. 40 million shares of exxonmobil. Selling a smaller stake in contra phil lins. Buying 6. 6 million shares of deere. Andarding to the ibm hold and do wore wail watch whatting. We were talking about ibm in the previous house. January 2011 math is our friend. The dow, since the beginning of 2011 is up about 55 . Ibm is up about 8 . Thats being generous. Its been a laggard for now for a number of years. The worst performing dow for two years running. Well now, its American Express. We do have interesting news that is just out from drugmaker actavis, when it completes the acquisition of allergyan as its name. With the consensus Earnings Report with ceo Brent Saunders coming up later in the hour. Greeces government confirming that it will request an extension to its eurozone agreement. Michelle is back with us. Joining us back now just joining us for those in the news in chicago or whatever waking up, how close do you think we really are . Impossible to say. Just to clarify what you just read there, theyre going to see an extension of the loan agreement. And theyve got this little hash tag that they put up on tv where we put loan in quotation marks. Why is loan in quotation marks . Because the euro wants them to fight for a bailout extension and fighting about the words and what they mean. And whats underneath all of that is conditionality. The greeks would like the zone extended and they could negotiate what the termses of loan will be. The euro says no no no youre going to commit to the conditions which we impose which would be a bailout agreement which doesnt stitt well with the constittent wants in greece. The European Central bank the governing Council Meeting every other wednesday. They consider a request for whats called ela, emergency liquidity assistance. Banks are using ela which is a more expensive form of funding to fund the banks. The ecb could cut them off. That would be unlikely. Or the ecb could say no more youve maxed out. Or agree to give them more. If all of this is gobbledly gook to you, you can make that out, they could have roles starting in greece meaning you cant take that much money out through your atm. You cant move money around. Do you think they recognize that . Im certain that the greekfinance minister recognizes that. Average greek citizens . Absolutely. Because theyre drawing money like crazy which starts to feed on itself because it mean that the greek banks need more assistance. And no country in europe have defaulted as much as greece has. There are countries in south america, but greece a number of time. Five time. Yes, id say why would the market necessarily have a historical validation. The Unemployment Rate is among 25 year olds is Something Like 40 . Theyre angry. In theory both sides have a consensus to come to a deal. They hate messiness. The greeks in theory still need more money because theyre back to the same position they were many years ago, right . Every single day the greek government spends more money than it brings in in tax revenue. If the money gets cut off, what happens . You have to decide do i pay the military . Do i pay for pensions . Do i pay for medicine . What do i use the cash pile for for the revenue that comes in. So theyre in a tough position. They could very well get squeezed with the capital controls and see how far they go. As long as italian yields dont rise sharply greece doesnt have a whole lot of leverage. Greece has said my leverage is italy. If you let us go theyre going to start pricing in the italian debt. And then they say wait a minute the ecb is going to start buying debt soon, right . Is the timing coincidence . Think about it ecb has a lot of power. Europe has a lot of power. Italian yield arent going to rise because were not going to let them. Michelle, thank you. Joining us now for more on the markets creation to the greece tox we have hanz olson, global head of strategy for investment at barclays. And j. J. Cunningham who is chief strategic at td ameritrade. Gentlemen, what michelle just laid out we watched the new highs and were brushing off the concerns does that last. What do you think, hans . I think what youre seeing right now is classic debt negotiation. They should get a deal done because this is hurting greece. You know prior to this happening, this round of negotiation, greece was set last year to break a string of five consecutive years of economic contractions. Theyre going to grow last year this year. Their debt from gdp went from 60 in 2009 down to 1 right now. Theyve done the work. Theyve done the heavy lifting. Theyve bent the cross curve, right . So to have people lining up pulling money out of the economy, trying to exit the Banking System right now is uniquely illtimed. They should cut a deal get it on and move on. You have just said though they have done the reforms. Michelle, i think we talked in the past theres still a lot more that the eurozone wants to see from them. Theyve done a lot of budget cutting. But when it comes to things to making the economy grow recommendations from the oecb, and restructuring. Restructuring have not been done. And the two that have been done were talking about reversing like today. Internal you cut your costs, employment levels and the like. Theyve done all of that right . You look at the labor cost. The cost curve is bent. Throw in cheaper currency. But this discussion, we talk about greece and greece is really guys tell me if im wrong, just a proxy for broader europe. Because if greece gets some sweet deal cut, thats the fear the bigger countries, the spains the world, and your valuation, theyre going to say wheres our new deal. So isnt greece important on its own . Or is it literally just a vessel as to what the broader part of what europe may or may not do . I think you bring up a good point. 29 states have a bigger gdp than greece. And their debt is 175 of their gdp in greece. Which as bad as some states are, and i live in illinois which is one of the worst, were not to that level yet. That all said i think greece say bit of a proxy because why wouldnt other countries try that. The second thing, when you look at how it affects the u. S. Markets it keeps the u. S. Dollar stronger for a long time. We just got done with the earnings where theyre telling us the strength of the dollar is hurting them going forward. And thats one of the bigger fears going forward. Like retail traders, what does it mean to me . What i think it means this continues to be a drag on future earnings on companies that do business internationally. Thats different than saying if greece has its euro, its cataclysmic. If you think about greece 60 the euro how could that not be messy . But is it a reason not to buy stocks . No. The thing is you have to remember that the greece the eurozone of 2015 very different than the eurozone of 2009 right . You have a central Bank Actually acting like a central bank right . You have a Banking System that is much healthier than it was then. And a better growth than you have then. And you have the potential for spontaneous economic combustion, i. E. In good form that actually happens. Would you be telling people to buy european stocks . The one of the things weve been talking about for a while and its playing out like they we thought you start to cheapen the currency. Who are you buying from . Multinationals you wouldnt go any lower . I dont think you have to. What about if youre an american and buying the them in euro youve got to hedge them . Yes. What do you think, were looking at nasdaq stocks picking up, Technology Stocks. Do you think that january was the anomaly, or was this . I think the combined is what were going to see for the rest of the year. Volatility, vix trading under 60 . Volatility up near 20 when we look back. But i also believe its going to be us continuing to go higher. The fact is were going higher in spurts. Thats an argument for not buying stocks right now for holding off. Well what i would say is this, to try to be a perfect timer is very difficult. I think most people make the mistake as retail trader they try to be all in at the perfect time. If you do want to buy stock, think a little bit now. If they sell off, you can buy a little later. Its getting in and out at average prices. Its so funny, so basic, that people miss out on that all the time. Its hard to predict when this is going to be. Its been moving very quickly to the upside and downside the reason i think we continue higher is nobody ever believes. If you think about the last three or four years every time we go up we go like this is definitely the top, this is definitely the top. Jim is right. If you look across Asset Classes right now, volatility is rising to all the Asset Classes that weve borrowed. Its probably not a coincidence as central bank qe recedes in the u. S. Is that involved tilt is rising. The only this is crude oil. Theyre down to 80 right now. Although what is it 10 in the last few trading sessions again . Yeah. Whats interesting, one nice point, we hit alltime highs. The most interesting thing in yesterdays trade, the vix was up 7 yesterday. Something to keep in mind. J. J. Hines jnchtsj. J. Hans thank you for coming in. When we come back the complicated relationship between student debt and starting a business. And the ceo actavis and the allergan acquisition. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. Off the street, no normore snow. Welcome back to squawk box. Lets talk entrepreneurships. On the link between student debt and startups. Good morning. The relationship is complicated. First theres the rate of entrepreneurship among Young Americans ages 21 to 24. It fell from 23 in 2003 to 23 a decade later meaning millennials opened approximately 19,000 fewer businesses per month. Thats krg to the coffman corporation. The debt outstanding fell between 2004 and 2013. Of course theres a catch. Those with debt have more of it. About 28,000 on average. Now, some researchers say that debt may be the reason why fewer young people are deciding to become their own bosses. But 12,000 in Student Loans doesnt stop zachary from starts his own Market Research company. He says that debt actually pushes him. Having something there just acts as more motivation and fuel to the fire so to speak, knowing regard its weve got to figure out a way to make money so we can draw income from a very Early Stage Company and be able to pay some of the responsibilities and take care of the responsibilities that i had and certainly other people who have joined us have. But theres a Silver Lining in all of this. Entrepreneurship actually peaks for those in their late 30s and early 40s which debt rates go down. With the youngest millennials actually entering the market theres hope that more new businesses will be created than ever before. Thank you for map though im thinking of peter thiel, and peter thiel used to say he would not invest in a company in an entrepreneur over the age of 35. Ages. He may be in ages no but part of his theory was that ultimately you that you cant early on in your life you can take crazy risks. Jury hungrier when youre younger. Even with the dead, later on you have a kid, you have a mortgage. You have all of these things and you cant do these things. Theres a lot of people saying im going to make money, pay off my debt. Do all of this stuff. And then im going to go out and do my entrain newer nick goodman, the ceo of go gopro gave himself a time line. Nick woodman is from a fairly well off family. I dont think hes carrying a lot of debt. There was money that his parents invested in the First Business that went under so he was gun shy the second time around. Not what hes done. His parents had money to give him. But the point im making and andrew, you make a great point which is how different, though and i hear your story, how different is Student Loan Debt from mortgage debt . You have Student Loan Debt. But when youre 35 you may have mortgage debt. Is there a point in your life where you dont have debt. Well that may explain the reason why there are fewer entrepreneurs under age 30. Those are from 2013 and its a hard pill to swallow especially considering all of the press and Venture Capital money pouring into the entrepreneurs. This is hope that the millennials when they do get that that age bracket they start nur businesses. Late 30s and early 40s . Thats when coffman and the experts say youre more successful. I wrote about this about a year ago. Bill gates was 20 years old. Steve jobs was 21. Warren buffett on this show was 26 when he started that company. Ralph lauren was 28 estee lauder was 29. You go try to find the people who are over 35 and 40 a much tougher story. Youre saying if i wanted to build my hyper loop im too old . Too late. You havent started . No. Im 43. Im thinking of resuscitateing roller blasd and lightdes and light bull. Bbulbs. Thats my plan. In the late 30s. Been doing it. If the hyper loop works he can go backwards. Now 43 years ago old thank you for coming in. Thank you. When we come back this morning, actavis ceo Brent Saunders will join us on the set to go through the companys Earnings Report. But first, taco bell goes asian, well talk about a new men youre item. Time for the aflac trivia quiz. When did trading at the nasdaq begin. The answer when squawk box continues. They got some newfangled kinda one day payin machine . Hehehehe yea, i got aflac at work. Aflac. In just one day, we approve and pay. One day pay, only from aflac. Aflac. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Announcer now the answer to todays aflac trivia question. When did trading at the nasdaq begin . The answer, february 1971. All right. Lets take a look at some of the stocks that you need to watch on this wednesday morning. Hilton earnings falling a penny short of estimates. Now revenue did stop the streets few. But its current outlook looks light and pressures on hilton shares. Angies list posting better than expected revenues. A mixed report for garmon sales and earnings investments falling a bit short. That stock trading on its outlook a fouryear below garmon. Fashion Retailer Fossil Group could be the disaster du jour. The company citing a decline in weather and watch sales in north america. And meantime rackspace warning its quarter revenues will miss wall streets expectation. The reason a strong dollar. Earnings at jack in the box, boosted by sales in qdoba mexican grill. I went through the facts on the commercial break and did quick number counting. 100plus companies in the s p 500, up more than 10 this past month. January was stinky. Yeah but this has been quite a comeback. More than 20 of companies up 10 . But its the january indicator that doesnt make sense as january goes as january goes the rest of the year. Thats not the case this year. The first days. The first days the first week and then they extend it to the first month. Rain, if you get pooped on by a piggen is good luck. You know when who says that people who get pooped on by a pigeon say that. I didnt just randomly pull that up. Weve got another fun story you that could connect but i wont. Listen up fast food fans taco bell is testing a sriracha menu in kansas city. Its apparently a hit. It will launch i dont know how to pronounce this. Sriracha quesoita. Its just the latest change to embrace sriracha others like subway. There. You go. Coming up the ceo is it acta actavi actavis. The ceo of the company will join us. Interesting institution out of the company. But first making a run at the white house, former governor bob ehrlich will join the field, apparently. Hell join us to talk about why or why not. Were back after this. Announcer this cnbc program was sponsored by payton rygel offering global solutions. There and back safely. For tomorrow is another fight. The 2015 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. E financial noise financial noise financial noise financial noise welcome back to squawk box, everybody. Weve got headlines for you. Chesapeake energy is accusing its former ceo Aubrey Mcclendon of stealing the Sensitive Data including data and maps. Theyre claiming he used them to start a company. He denies those allegations. And snapchat could value the company up to 19 million. And best in show. The beagle taking home best honors from the Westminster Club show. On the second time that a beagle has taken home top honors. A tough break for applicants to Carnegie Mellons science program. The program accidentally emailed acceptance notices to 850 people who had been rejected admissions. A sad story. Correction notices then went out seven hours later. The school apologized for the mistake. And asked the recipients that they received the rejections. I wouldnt do that. Id show up first day for class. Horrible. Its a great school. Hard to get into. What do you do if they say they cant accept them after you know what you do. Just coming with this just now, you refund their acceptance you refund their admissions. What is it 100 bucks to apply to schools. I know its a small comfort, but do something. Just not a sweatshirt. Right. According to the new nbc news maris poll the republican field for 2016 remains wide open especially the states of New Hampshire, iowa and south carolina. And the list of conandidates continues to grow joining us live former governor bob ehrlich. Wait a second im still back on the Carnegie Mellon story. But youre hopeful. Im listening, running around New Hampshire, listening, talking to Small Business people. For some people you would be a president ial hopeful. I believe thats probably accurate. We do not lie to the media. I tell people as a republican governor of maryland hostile does not intimidate me. Im kind of used to that. Listen as a virginia boy, you dont have to worry about that governor ill say youre frenemies, neighbors to the north, as we say. Warner and i actually say we made history when he was governor of virginia and i was governor of maryland. We actually liked each other. Youre a man who is aware of the presidency of the United States and may or may not be interested in that job. Lets move on. You wrote an oped, governor talking about the Oregon Governor who just left. Youre sort of knocks the general progress indicator. 26 metrics. Whats your beef. People made phonyies these days. It covers the measures of economic development. In a very cynical age when people are tired of all of this i think contributes to all this. The genesis here quite frankly, is this sort of phony progressive think tank produced alternative to gdp. Well you know i guess i could see it both ways governor in a sense some of these other metrics, the official ones that maybe youre not in the gpi, if you will i dont want to say it can be manipulated. Sure. But when you say theres no inflation, go talk to the good folks in maryland who say well my Health Care Costs are up my College Tuition for my kids is up. My mortgage is up. So youre going to tell me theres no inflation . How objective it is really thats my issue. The softer you get, the more prone you get to politics to the spin. Look at the states obviously, the more liberal states that have looked into this alternative metric. I just think in this time of great cynicism it covers up pretty poor performance from antibusiness governors an antibusiness state legislatures. Do you believe that the u. S. Economy overall is in recovery . You talk about running around New Hampshire and running around different states. I see a profound sense of nervousness with middle class american. I think the Foreign Policy aspect to it. But despite the metrics. Despite the macro numbers. The stock market being up. Middle class america is not very happy with this spotty recovery. And you see it in your discussions with people. Your facetoface meetings as you run around giving speeches as im doing now. Yeah but do some politicians contribute to that governor. Of course. All youre hearing from both sides of the aisle, theyre play to get middle class which apparently belongs to nerve at 1 not improv rischimproverished. I love your point. I know people are struggling throughout. However the average size home is up 40 over the last four years. The average car. There are people doing okay. I know its not pretty kay correct to suggest that. It would help if the president of the United States would stop beating up the joe plumbers of the world that you didnt build that mantra. Thats what we get from a progressive administration. Its you didnt do this on your own. You see this in a legislative regime. Its antibusiness. Small business is tired of this administration. Theyre not happy with it. This president does not identify with Small Business people with entrepreneurs and you see it in the rhetoric. But ill blame the gop, too, maybe not not as deep into it as the democrats but the gop has done a lousy job of making us feel good about government. And the reality is if were not there, governor ive seen it on cnbc i tend to ignore what happens inside the beltway, right . Just go on with your life because whats going on in that weird ring of 95 increasingly has less and less to do with how the 99 of everybody else who doesnt live in the beltway goes about their life. The government is disattached and disinterested and theres nothing and both parties have nothing im a former governor of maryland so i do not go around i didnt do this to state legislature with congress as governor. I dont go around beating up governor. The United States marine corps is government by the way. The fbi is government. So i think youre right, to the extend in my party, we have this habit of beating up on big government. I meant elected officials. If i didnt make my point clear i meant elected officials. Well no your point is well taken. Sometimes, we go overboard we cross the line. We become the antigovernment. Theres excellence in government but also things that government should not be doing. Were also the Federalism Party and obviously those lines get run over in this town regularly. The last and most important question, will the university of Maryland Football Team ever again wear those hideous semly flag helmets again . Can i just say this kevin boyd, i love under armour if the school board reflects the terps ahead, who care what is they look like. I love maryland. And the capital city. Its a fantastic state. Thank you. Under republican control now. Thank you, governor. Appreciate that. Take cares. Coming up Specialty Pharma Company actavis out with earnings. The companys ceo is going to join us next to dig through the quarterly number and talk about the acquisition of botox maker allergan. And ebola. The update on the deadly outbreak. Were back in a moment. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts mean your peace of mind. Now you can get the works, a multipoint inspection with a Synthetic Blend Oil change tire rotation, Brake Inspection and more. 29. 95 or less. So whats going on today . News alert message email calendar update most of us admit to being overwhelmed by information at work. Thats why ibm created verse. It uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. It continuously learns how you work. And helps you prioritize the people and projects you need to focus on. Theres a new way to work and its made with ibm. Tigers, both of you. Tigers . Dont be modest. I see how youve been investing. Setting long term goals. Diversifying. Dip you got our attention. We did . Of course. Youre type e well, i have been researching retirement strategies. Well thats what type e s do. Welcome home. Taking control of your retirement . E trade gives you the tools and resources to get it right. Are you type e . In my world, wall isnt a street. Return on investment 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. Start investing with as little as fifty dollars. Welcome backs to squawk box this morning. Drugmaker actavis beating estimates on both the top and bottom line in the latest quarteral raising its earnings forecast for the next four years and announcing it will change its name to allergan when that acquisition is complete. Joining suss Brent Saunders the ceo. And on the cover im hoping its going to republish that. And you never my mother didnt want to raise a drug dealer. I just want to mention this for a sexcond, why . We had two actavis, even though, brian, you mispronounced it what is it on the record here . Actavis. And allergan have a 60year history. And actavis has a relatively new name. Allergan stood for innovation. It stood for customer focus. You and that really describes, i think, the new company that we are today, better than actavis. Well keep act actavis from certain geographies and customer lines but allergan was the better of the two as a company. So this deal closes soon . Really soon. I think were on track to close end of this quarter or early next quarter. You beat on the top and bottom lines . People did not expect that this had morning . I know wee keep surprising people. Heres the question were the analysts wrong or did you guide them properly . Well i think we did guide them properly. We beat by 10 to 15 . We beat by roughly 13 . So in that range. I think in fairness we have a lot going on with innovations, the deals, people worried that we cant or people can stay focused on the business. And we just keep proving quarter after quarter, thats not true. People are energized. Theyre excited. Theyre focused on their customers. Getting their jobs done. New drugs are coming out. The business is working. I need ask you this something happened in the news this week. You confirmed a temporary injunction related to the generic drug . How important of that is a deal for you . Thats a temporary injunction and the court will rule whether or not it can stay in place or not. Its usually an indication that the court is not necessarily going to side with you . Well not in this case because, remember it was the Appeals Court that said okay you can go ahead and launch your product. And then yesterday, astrazeneca went in court and said wed like to maintain the status quo. Not sure we were fully informed that the status quo was we were out with the generic version. We are to get out and have the lawyers talk to the judge and see if we can go forward. Can we go back to the cover of forbes. They talked about five years, three companies, 100 billion in m a which i think youve done in just the last year. And then zero inventions. What is the future of allergan . What is this company like . A company that makes acquisitions or from here on out the zero inventions our company has invented and launched new drugs in fact we talked off the air about antibiotics we expect to launch any day. And we have lots of new medicines coming out. We have a great new in fact today, were highlighting the portfolio in new york. We have potential by 6. 5 billion of new drugs in latestage development. In new areas like diabetics and i sd to a new drug for schizophrenia. Were committed to r and b. And allergan has always been and were going to keep that. And the deal may be opportunistic and strategic. Its not what we do. We were not trying to buy allergan, remember. We were just running our business. And it was put in play through a hostile situation with valiant and we were a white knight. People look at valiant. And people see that as buying things. You youre saying thats not your future . That is not our strategy. When we model out five years or ten years we dont put m a into the strategic plan. We dont put making deals into our strategics. Were focused only growth. To the extent we do that organically, thats the first purpose. But if we can supplement that, well do that. What percentage will you devote to allergan . I think thats a horrible metric. I think thats got be big pharma in big trouble. Trying to tie. R d to a percentage. What does one have to do with the other . What we say sets as you part. If there are good opportunities, lets be transparent about the good opportunities. Lets have the return on investment against risk in this r d. And you should do it. If you spend it as a percentage of 57 knew what happens . Jury going to put junk in that pipeline to get up to the number or you have great products that you dont want to go over that number. You would know over the years what the average should be. Do you think look do you think theres any type of metric that we should focus on . Besides the success rate. I think you should look at the number of products coming out and the productivity of that spent. If you look at the actavis and the legacy of actavis, allergan or forest dobbs, youre seeing tremendous productivity coming out. Next year well spend 1. 7 billion on r and b. And if next year if its a billion five because we have to kill a few projects that dont meet the threshold or risk thats fine, too. Let me ask you one other piece of this. If you condition the investor to believe that the number effectively could be zero it makes it much harder to spend when you actually do think you have a chance. So we dont condition zero first of all. What i would like to say, i prefer to spend more that mean we have been disciplined. We have great opportunities. We believe in the projects that were spending against and were going to get them done. Or a High Percentage of them done. Thats the base. The reality is you never get to zero because we have an infrastructure we have to maintain. I would say roughly 3,000 people in the r d people of actavis. So you could never get back to zero. Congratulations on your earnings. Thank you. Love have you back when you do close it. Terrific, thanks. Coming up the son of donald trump and the philanthropist that has raised millions. Eric trump coming up. At does it mean to drive as far as you want. For up to three years. And be covered . It means your odometer. Is there to record. The memories. During the mercedesbenz certified preowned sales event now through march 2nd, youll get complimentary prepaid maintenance and receive your first two months payments on us. Only at your authorized mercedesbenz dealer. When the moments spontaneous, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Welcome back everybody. The change the world series returns with another announcement. The Eric Trump Foundation donating an additional 20 million to st. Judes Research Hospital to open a state of the art surgery and icu facility. The foundation has donated over 10 million to the cause. Joining us now is eric trump the president of acquisition, at the trump conversation. Eric, thank you for being here. Thank you for having me. Tell us about this donation and st. Jude. We grew up with our health. A warm house and a great family. You see so many kids struggling with the most terminal lifethreatening illnesses. St. Judes is filled with Health Care Workers that work 24 7 to fight pediatric cancer. How did you get involved . I went all around the world to the Research Hospitals. When i walked in it wasnt a plain jane vanilla hospitals. For profit hospital. They raise a lot of money through guys like us the trump foundation, and they put that money to work as we talked about in the green room. The problem with childhood cancer, Big Pharmaceutical Companies dont want to fund it. You might have 300 cases of some subset of cancer. Theres no money in that. And research its difficult to do things with the research. Thats right, it costs a lot of money. And its much more possible for these guys because they dont focus on the kids. And they are so special. When you give money, how do you make sure that its used the right way . Or let me say, heres the money, its your business youre the hospital, do you get involved in that . Well first of all, you have to go to the best. Little shops arent solving the problems with cancer. You need the biggest computers and tools in the world. Youre not going to succeed. You go to the best who have the best infrastructure. And have the smartest. You talk to some of these doctors at st. Judes their iqs are the highest. Do they say eric this is what we woe like to do with the money . What do you think . Or eric this is what we did with the money. Well with st. Judes a surgical suite, people will go in to have brain tumors taken out. Long recoveries. So were building the most sophisticated icu. That money was pegged specifically for that project. Lets talk about your day job, too. You were are closely involved with the real estate that the Trump Organization is putting together. Where do you see real estate right now . I know youre watching with Properties Around the globe. We really are around the globe. Great hotel in washington, d. C. Miami, 550 million in project rebuilding. 800 acres. And an exciting project. Thornbury in scotland. Iconic resort. We bought properties in ireland. Literally all around the world. Manila. And turkey the list goes on and on vancouver, toronto, et cetera, et cetera. Were all over. Real estate is hot right now. New yorks hot. Theres a lot of formed investment coming into the city. People feel comfort about parking their money here. And the lack of russian funds coming in. I think well see a little bit of that. But people feel safe in new york. Buying up building left and right. You see penthouse apartments going online for 150 million. And the sony building happens to be next to trump tower. But named a lot of places outside of new york. Sure. There are better opportunities inside or outside right now . You know weve been very optimistic, we went to ireland when ireland was half away dead. We grabbed a classic. An we went to miami when miami was almost dead. Weve been optimistic. We go to markets that we find incredible assets that are the best and make great deals. Were expanding and we believe in the global profile. But i think new york has been very, very solid. Theres other markets in the country very solid. Do you worry about the strong dollar in terms of its impact on the American Real estate market especially in new york . Its interesting, were on both sides of the equation right. Were doing projects in europe where were investing u. S. Dollars into europe. And were doing projects there where were bringing money back. In a certain way its almost a natural hedge. Where you go to local. Eric thank you very much. Coming up when we return the rally on the nasdaq alltime highs approaching levels not seen since the height of the dot kom comlevel. Were back. [ male announcer ] your love for trading never stops. So open an account with schwab. And when a market move affects, say a Cloud Computing stock youre holding, we can help you decide what to do. With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. 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. The march back to 5,000. Investors pushing techs to alltime highs does it mean another bubble is brewing. Well find out from kevin landis. Economic jail and bob schiller joins us with reaction from the housing start and producer index. And the tributes to the garage. From bands to garage. What is it that drives businessy were going to find out as squawk box continues right now. Announcer live from the most powerful city in the world, new york. This is squawk box. Welcome back to squawk box here on cnbc. First in business world, im becky quick along with Andrew Ross Sorkin and brian sullivan. Were less than 90 minutes away from the opening bell on wall street. Weve been watching the futures this morning and its a little unclear where the future is headed. Dow futures down by 15 pat 5 point. Sapp off by 2, nasdaq down by 1. Lets look at the markets in europe right now, youll see right now, at least in france the cac is up 0. 8 . Ftse is relatively flat. In greece 1. 7 . Mortgage applications plunging more than 17 in latest week. This as rates rose to the high efl levels. And global levels greece likely to ask for an extension on the jury row zone. Oil prices falling no catalyst here other than analysts saying that its overblown the Inventory Data later today. Brian over to you. Thank you, andrew. A number of 13f filings to tell you about those are hedge funds that investors have to file with the ftc to tell you what they own. The data is as of six weeks. Warren buffett bying more of gm and ibm and the new one, deere, 20th century fox and burger brand. And meantime george soros is betting on energy. Investor taking new positions in devin energy and transitions offshore. Like buffett, hes increased his position in gm dumping some Technology Companies including, get this google intel and apple. And carl icahn bidding up ebay. The activist bidded up shares 30 million. That puts it at 36 million or 2. 6 billion in shares andrew. We are just about to the peak of the internet bubble. So does that mean were back in bubble territory or not . Dom chu joins us and hes got data for us. Dom. Andrew, there are similarities 15 now and then. Valuationwise, numberswise, maybe perhaps. Then we saw lets take a look at companies that were iconic back then and see how they exist today and see how they stack up then and now. Heres our presentation of looking at stocks. S p 500 Technology Stocks back then traded at 67 sometimes earnings. Today its more like 17. So valuations are already a little bit different. Now, take a look at mike vo of the back then the poster child for Large Technology back then it was worth 526 billion. Even more as inflation adjusted. Today, of course a more mature company, its now worth about 350 billion and trades out 18 earnings just in trend with the market. Perhaps a little different there. If you look at another company, this one we talk about all the time Cisco Systems was worth 467 billion. It traded at 223 earnings. Builtin expectations. Today, a more mature company, 150 billion and trades at 18 earnings. Again in line with the mark. One of the ones thats interesting here is yahoo . Everybody knew yahoo as the anything portable back then. At 94 billion and traded at nearly 1800 times growth. And look at it today. That big stake in alibaba that is going to spin off at 6 . Yes, similarities between the market then and valuations then and now. Its hard to make an apples to apples comparison guys. Because we dont know if yesterdays yahoo is the same as todays maybe gopro or something else. But we do know that these companies no longer trade at the same multiples that they did back in the internet bubble. Dom, interesting. Thank you very much. Our squawk portfolio members are capitalizing on the techs wild wide. Kevin landis is leading the pack with 19 gains. Apple, netflix to his top picks. Apple was the fifth performing stop stock and the s p 500. And netflix, of course takes the top spot. Kevin, congrats. Youre doing great. Netflix and apple paid off. So are you trimming any of those positions . No were not. We tend not to be very active traders we like to buy and hold our best positions. But lets just say its earlier in the year. Things can still go horribly wrong. Yeah but this is a better start than the opposite right . Isnt that true . Youd rather be up 19 than down 19 . Right. What do you attribute it to . Apple we understand. Netflix is one of those names, people loved, they hated. They loved it again, they hated again. Why do you love it . Every time i see bad news coming out about cord cutting and i think about the really really terrible condition that Cable Companies are in sorry about that i think whos on the right side of this disruption and who is it that growing and profitable on the right side of this disruption . Its a pretty short list. Netflix is kind of first, second and third on it. Would there be anybody else who would be a quote, zrumgs or cordcutting play for you . Amazon is moveing in that direction. With fire tv . Right. And amazon is doing something fairly smart, right . Theyre going after awardwinning shows, right, with transparent. Again, netflix is the fewer play on that thesis. And that works really well. You know it was interesting, when dom did his comparison earlier he was talking about Companies Market caps. Netflix looks like a pretty expensive stock. But when you take a look at its market cap and the industry its disrupting youll feel better about it. Is there anything ill put you on the spot and you can tell me to take it somewhere if you dont like this question is there one company you that follow, own or wont buy that you think is simply the most misunderstood in a good way or bad way stock out there . Well i hope every stock we buy is misunderstood. If youre an active money man no unless people love it and it turns out to be a fraud. Well sure you dont want to get caught owning that. Thats why you dont own most stocks. Really, when you look in our portfolio, as long as youre going back to the 90s. Everyone was buying cisco back then. Suppliers to cisco because we thought those were undiscovered right . Today, whos really misunderstood . You know in some ways i would have said netflix, but i think people are starting to come around to that story. So thats a great thing. But today, most tech stocks are a little bit misunderstood just because its kind of hard to wrap your head around when somebody is doing something really new and interesting. To your point, thats why you dont own most stocks you made the case to the trimle or quadruple ets. Are they overthought of . Are they overloved . If youre an active money manager, the quad q is basically a competitor who is asleep at the wheel. You should like that. Just remember this though anytime youre index investing thats a list of stocks therefore a portfolio stock. Somebody picked them. You might want to ask them who picked them and why. Kevin, youre doing, up 19 . Thank you for joining us. Appreciate it. Thank you. We will talk to you about a few stocks johnson johnson, 600 million to settle is a longstanding lawsuit to the boston acquisition of guiden. And a sandwich chain potbelly earning more than expected in sales. Coming up curing ebola. How prepare said the country to stop an outbreak . What drugs have shown potential benefits but are we close to finding a real solution . How might they be readily available when they do . Thats next. And then a whos who in media. Attending the code Media Conference. Well get the buzz there and the economic data. Youve got the producer Housing Starts and Building Permit out in 20 minutes time. And if that wasnt enough why the garage has been a great place to start a business. Think apple. Think hp. Think many others why the garage rules. Stick around. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. 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. Start building your confident retirement today. E financial noise financial noise financial noise financial noise have you heard of the new dialing procedure for for the 415 and 628 area codes . No what is it . Starting february 21, 2015 if you have a 415 or 628 number youll need to dial. 1 plus the area code plus the phone number for all calls. Okay, but what if i have a 415 number, and im calling a 415 number . Youll still need to dial. 1 plus the area code plus the phone number. So when in doubt, dial it out welcome back to squawk box, everybody. Weve been watching the futures this morning, after yesterday, touching new highs for the trading day that you can see this morning. There are red arrows. Were talking moderate delays. S p future down 3 points. Nasdaq down by 2. The numbers of the outbreak of ebola have dropped significantly. Joining us with his take on the current ebola issue and lessons learned. Ron, thank you for joining us. Give us the state of play. Not necessarily the u. S. I want to get to that in a second. Where are we in africa in terms of combatting this . Yeah weve made tremendous progress in the last few months thanks to president obamas leadership. There were 1 Million Deaths in from ebola and that number came down to 90,000. And from 1,000 cases to 200. So weve made progress. Ebola is like a forest fire. Even though one ember is still warm, the whole thing could ignite. Today, were down to zero cases of ebola, we have to stay vigilant and fight it to the end here. Lets talk about our preparedness in the u. S. Give us a grade. Where are we . Weve gone from a c to probably about an aminus. Were so much more prepared with 50 ebola treatment centers. 50 labs. Protective gear, good standards and a screening system. Much more prepared than we were when this thing broke out to identify it. We will come back from fighting the disease in west africa with the disease, were going to get that person quickly identified and quickly isolated. And treated. Weve treated ten ebola patients in the United States. Eight of them we got to quickly, all recovered, home healthy. So weve shown we can in america, identify ice late and treat and were much more able to treat. How much money have we spent on this so far . The u. S. Has spent about 2 billion so far. 5 million in west africa. Congress approved a bipartisan basis, president obamas emergency funding request to finish the job in west africa and really get our system prepared for whatever comes in the future for ebola. More importantly for that next one, that scary pandemic around the corner. We needed to be prepared from that one. We need to take the lessons from ebola and really get ready for the much more dangerous thing out there. Ron, that was my question. Part of what you did is making sure u. S. Hospitals were prepared. The thing that surprised me the most with ebola is that the cdc wasnt doing what i thought the cdc did. I thought it was what you saw with the movie outbreak that the cdc would come in and clean everything up. I was amazed how they really didnt have the power that i assumed they had. I know of part of what you did is get hospitals prepared for ebola. How prepared do you think we are for the next thing . Well again, i think were a lot more prepared than we were. We have a lot more work left to dough. Thats why implementing the emergency funding request from congress is so important. You know ebola as scary as it was, it was scary, and as dangerous as it is and it is dangerous. Its still a relatively hard think to predict and has clear symptoms. It never had gotten to the mega cities where it could have spread like crazy. Pandemic flu, where it spreads thats where we need to make sure the money is spent. And well deployed to help the readiness for that. Ron, i want to turn our attention to a different disease, measle. Pleasemeasles. Do were need a measles czar . I dont think we do. Cdc has a gunfire response to this. Look, ebola was super, difficult involved making new policies, doing a lot of things doing a lot of innovation. Measles is very simple and straightforward. The science, the experts give us a clear view on this already. Its a vaccine thats safe and effective. When parents were using it on nearly a universal basis we almost wiped this disease out. We need to vaccinate kids. We know what works on measles. It isnt a complicated problem its just one that the American People need to step up and take care of. Do we need a federal law requiring it . I personally believe that a federal law would be a good thing. I dont think we need it. The laws are in place. The question is people are using the exemptions to get out of complying. People are just dodging the law. We need people to understand this vaccine is safe. Its effective. It protects your kids and it protects other kids. The things people need to appreciate theyre not just making decisions about their own children but when they fail to vaccinate, theyre making decisions about other children. I think its important for people to step up get their individual vaccinated and get this under control. Thank you, ron, for all the good work youve done. Appreciate it. When we come back this morning, Julia Boorstin brings us from the ricos code Media Conference in california. Its the virtual whos who in media technology. Well be hearing about it. And later, starting a garagebased business. Some of the businessest names in Corporate America have done it. So what is it about the garage that gets people motivated to pursue their dream . Well find out in just a bit. Squawk box will be right back. What does it mean to have an unlimited Mileage Warranty on a certified preowned mercedesbenz . What does it mean to drive as far as you want. For up to three years. And be covered . It means your odometer. Is there to record. The memories. During the mercedesbenz certified preowned sales event now through march 2nd, youll get complimentary prepaid maintenance and receive your first two months payments on us. Only at your authorized mercedesbenz dealer. We live in a pick and choose world. Choose choose choose. But at bedtime . Why settle for this . Enter sleep number. And the ultimate sleep number event going on now. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow now we can all choose amazing sleep, only at a sleep number store. Right now save 50 on the ultimate limited edition bed. Know better sleep with sleep number. Sometimes the present looked bright. Sometimes romantic. There were tears in my eyes. And tears in my eyes. And so many Little Things that we learned were really the biggest things. Through it all, we saved and had a retirement plan. And someone who listened and helped us along the way. Because we always knew that someday the future would be the present. Every someday needs a plan. Talk with us about your retirement today. Welcome back everybody. The cove media conversation kicked off last night with big names across the media landscape from facebook to buzzfeed to the New York Times company all talking about how its changing the way we consume content. Julia boorstin is there. She joins us good morning. Good morning becky. The biggest question here last night is what is the future of news and will it be subsumed into facebooks news feed . Facebook has been talking to publishers about facebooks hosting content but says we dont want to devour the internet. But cox does want to shake things up with the acquisition of oculus cox is working on apps so everyone can create Virtual Realty and experiences to share in the news feed. When youre using facebook youre just sending along little bits of experience. Youre just sending a photo, a video, a piece of text. I think the version of the world where youre ending you know a fuller and more safe picture of what youre doing. Do you think people will create that experience . Youll be able to make virtual reality. Youll do it, beyonce will do it. And they said its important that they Work Together to grow readership. Not to grow revenue. The New York Times is posting ads that we like content. It ran 40 native ads last year a controversial move for the gray lady. We called them posts. Winning awards very heavy enjoyed by timers leaders. That feels like a storm that never happened and creating a business which is growing very strongly. Tom told me hes been building the companys investment and video and ad tools. And digital revenue to compensate for paper losses. Becky. Julia, thank you. Right on deck. Breaking economic news. Weve got your producer index. Weve got your Housing Starts. All breaking in minutes. Well give you the number us and full reactions but ahead of that the futures mixed. Across the board, s p, dow jones and nasdaq all indicating a decline at the open. Not by much but a drop nonetheless. Were back with the data, reaction and analysis. Stick around. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Welcome back to squawk box this morning. Making headlines, snapchat is raising Venture Capital. And roars say the latest round if you can possibly believe this is valuing the company up to 19 billion. That doesnt seem like thats anytime soon just yet. The bank of japan leading the monetary stance on change. The bank of japan saying the worlds third biggest economy is on the mend. The nikkei up 13 . Plunking more than 13 in the latest week. This rose to the highest levels of the year. Quick point. Were comparing nasdaq 5,000, right were on our way back then. Back then Companies Got criticized for no real revenue. And wall street with all the eyeballs, remember that . Yep. All of these nonor the of gap metrics. Snapchat, 19 billion. Id like to hear what our viewers think as well. Is it the sign of irrational exuberance . Funny you should mention the term irrational exuberance. Standing off waiting to be with us it Robert Shiller coming up in a bit. The indian Prime Minister modi is selling the mon 0o monogrammed suit. The suit has modis full name stitched in gold pinstripes. Its estimated to cost 16,000 to tailor. Modi has taken flak for his expensive taste in the clothing. Who pays for the tailoring . I dont know. Does president obama have to pay for his own clothes . I doubt it. I would think he would but i dont know. Thats a good question. Im guessing modis suit was paid for by the generous people of india. Of india . Yeah. Not by him. Here are the markets this wednesday, were seeing a drop in futures. Not much folks. The dow indicating a drop at the opener of just about 27 points. Over in europe a different story. In fact, greece did well. You know should how much of a head line greece is because now its a permit resident of the europe even market board. Greeces athex up 14 . And ftse down. The asia bigger story. Up 1. 2 . And the loose money policy is going to be here for a long time. Tenyear treasury note. This has been an interesting story. Theres oil. Crude oil is done one buck. To the futures market. And by the way the tenyear treasury note rising 30 . Apparently the president does pay for his own clothes, by the way. Just wanted to let you know. Were seconded away from Housing Starts. And ppi data. Rick is standing by. January starts. 1. 065 million seasonally adjusted annualized unit. Thats down 7 from last year. Permits they were also down not quite as much. 1. 53 looking for something higher at 1. 7ish. Last month, 1. 03 up to 1. 06. Its down 7 cents taking that into account. Lets look at january ppi. Were looking for a number down 0. 4. But its much more, down 0. 8. So theres your energy presence. Strip that out, though its still down 0. 1. Thats cooler than we were looking for. Year over year one1. Excuse me 1. 6 exfood energy. And we see whats going on with energy. Just what went on with my generation with calculators, your generation with computers. The hc isnt negative for the average retail citizen. 212, boiling point after touchen an intraday high of 216. Why is that important . Thats what we set on last year. Can you imagine having a tenyear note or bond actually in the red. That hasnt happened for a while. Remember high yields were established last year in january and this year in january. More to come Treasury International capital flows and well be there to bring it all out to you. Back to the guys at the desk. Rick, thank you. In the meantime, lets get more on the numbers. The broader Housing Market and the economy from one of over very own aqua laureates. Joining is Robert Shiller, economic professor at yale university. And also the author of the New York Times bestseller irrational exuberance. Professor, its great to see you today. My pleasure. The numbers that we just got, declining Housing Starts 2 what does that tell you . Well, Housing Starts theyre still very low by historical standards and theyve been improving, im not this is a little wiggle in the index. Im not totally surprised. We saw some weakness in the nahd Housing Market as well. So it looks like a little i tend to want to look at the long history. We have had a downtrend in Housing Starts since this data began in 1959. American americans longed housing. Well they also loved making babies a lot more than that. You look at long term. You have to look at the Nuclear Family so to speak is 2. 3 people. Right. In my house, under 3. Congratulations. Im trying to do my part. Nuclear family is expanding because young people dont move out when they grow up. Theres a distinct uptrend in what they call boomerang kids. They might go out for a while, they reach 25 and theyre back. So thats not creating demand for new housing. Theres all this research that suggests that maybe the millennials are about to start buying houses. Do you believe that . Do you think whats been holding them back to this point is that a turning point . Well thats the way it is in economics. Theres a new new york fed study that just came out that showed evidence that its student debt that is say major Factor Holding young people back from that. I think its this American Dream thing that weve kind of got be out of sync with that. Its not so important anymore. Can i correct something you just said because i keep hearing this, that student debt is holding kids back. I dont believe that. Why not . Its the cost of college. Cause College Costs have doubled in 15 years. Youre making me feel guilty. Its not an individual thing. It has nothing to do with yale. But you get my point. You went to a great state school. I went to a great state school. So did i, by the way. Where did you go . Michigan. Thats average im just teasing my parents could never have afforded to pay cash like they did for my education. Its not debt. Its cost. Im just saying about debt. If it wasnt for the cost well its because weve seen Technological Improvement in every other sector. But im still at the blackboard. I have a slate blackboard and im writing with chalk. So things havent changed. But maybe we dont want it to change. Were building new dormitories, colleges at yale. They look like theyre from the 19th century. People love the old dormitories. But its outpaced the pace of inflation overall. That cant continue. Well i think it may be a long trend, as long as what people get in a College Education is relationships to people they get keep classes small. They get to know the professor. That is not if thats what they want technology is not advancing. Do you think were going to get to a point where you are going to teach a class, its going to be videotaped and you in college or other colleges throughout the country are going to watch you . No. I have 200,000 enrollees. You do . Most of them dropped out. Why did they drop out . I had 8,000 completed the course. Out of home . Out of 200,000. There you go. This is it right . Its hard to well, its not its like having a gym in your house. This is just me versus paying a personal trainer. The difference is the commitment. Right . Right. Youve committed to something. If you get accepted to a yale, youre committed. Youre going to go to class. Just watching somebody online for 300, a couple hundred bucks theres for equity in that education. We digress, though. Lets get back to what we wanted to Start Talking about whats happening with housing. I know youre looking at longer trends. Its back above 2 . Rick pointed out were now seeing the new levels for the tenyear yield. All of this in turn ends up impact wlauging what you see, what you get for mortgage rates. How do you see that . The big turn in the Housing Market was 2012. Thats where qe3 was started. The 30year was down to 3. 35 . I think that had a huge psychological impact on the market. People thought this is a nobrainer. I should buy now. And that mood has passed. This uptick weve seen in housing prices since 2012 may be contrary. I think home prices are not theyre at about the right level, based on history. So, maybe they dont wont go anywhere in the near future. In the near future. I wish i knew better what the future was. Im now thinking weve seen a big increase in home prices since 2012. But i wouldnt bet on that continuing. You know, lets talk a little bit about the markets overall. You coined the term irrational exuberance. Well Alan Greenspan it goes back 100 years. Is this a time of irrational exuberance. Were getting back to the nasdaq 500. Alltime highs. Does it make sense for these prices to be here . The thing is striking, maybe not today, the lowterm Interest Rates. Its stunning how low theyve gotten. The recent year 30year was half a percent. Thats incredible for 30 years. And its pushing the stock market up. Its not the kind of euphoria we saw in 2000. What percentage do you have . Its about half. Half. Have you changed recently . Will you change it . Im thinking of getting out of the United States somewhat. Why . Europe is so much cheaper. And youd buy big multinationals based in europe . Youd buy Smaller Companies in europe . What would you do . Well what i have done ive invested in italy indexes. Spain index. Are you hedging currency . No im not. Is this time something you said really stuck to me a moment ago. Im thinking about phrasing it which this snapchat 19 billion because of this and were old and maybe we dont understand. Maybe thats true. One thing that has stood the test of time doesnt matter whether its tulips gold or the internet is greed, right . Right. And dont Interest Rates drive us into risk risktaking decisions . Right. And reaching for yield. Right now, it seems like there ought to be something that i can do that would make a lot of money. Well there is for some people maybe. But for most of us you look at the major Asset Classes. They tend to be pricey. So what do you do . In my new book irrational exuberance, i conclude the book with saying you have to save more. But unless you some have special idea realistically, youre just not going to get the same returns that you and yet, i dont think people have reached that state of mind yet. That retirement will be difficult if you dont save more. Professor schiller we want to thank you as always its a pleasure talking to you. We hope to see you again soon. My pleasure too. When we come back well talk more about the good old garage. Its got tools, bikes, cars its use, endless especially when it comes to starting a business. Steve jobs jeff bezos and lori page are just a few people that have begun their careers in what consider an irworkable space. Well find out how some of the most successful have started their Humble Beginnings and what to do about a garage that makes starting a business there so easy. Right now, take a look at the best garage rock bands on rocker. Com. These are voted on by users. In my world, wall isnt a street. Return on investment 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. Start investing with as little as fifty dollars. These days, the most important person in your business could be a software developer. So, hows the app coming . Weve got to make something great. Hows the app coming . Weve got to do it fast. Lets do this on bluemix. You can build apps with analytics, big data, even ibm watson. That could give us the edge. Lets do this on bluemix. It can provide code for you. We could be first to market. Because being best is priority one. Being first is priority one. Theres a new way to work and its made with ibm. Say nothin welcome back tokck to squawk box. Were playing garage band music for a reason. Some of the latest started in the garage. And the startup origin stories from fortune. The first humble headquarters for some of the biggest consumers in technology brands. Thanks for coming in. Thanks for having me. Heres the question we always have this idea that it starts in a garage. First of all, we were talk about Housing Starts. Theres not any young people in their own garages these day. Does that have something to do with this . Thats true. There have also been startups obviously in dorm rooms with a famous example, and also dell back in the 80s. I guess what im trying to get at is there something about the garage or something about the dorm room that is somehow different . Are we just catching these kids the ate certain age, at a certain time when they dont have their own places. Exactly. And this is where they live and this is where theyre going to do it. I think its that the garage has always been a place for projects whether its when dad is tinkering on something on his workbench or garage bands are getting their start. But its just this open space that comes with a home and maybe these young people are still living at home. Or they have their first, you know, starter home. And theres just this open space that maybe not even being used for cars. So why not take advantage of that, rather than spending the money on rent. And early on in the show we were talking about age, ageism with peter thiel. A lot of people we were talking about started very early in their teens and 20s. Right. Do you think theres something about age and entrepreneurship . I do. And the whole garage phenomenon actually is a long tradition that stretches back to the late 30s in the dawn of the silicon valley. And they didnt want to prevent brain drain. And graduates there, cant you just start up cant you just do something around here . Here palo alto, it was all agricultural. So it wasnt what we know today. But hewlettpackard decided to go for it. Well packard rents an apartment with his wife. And they must have had a cool land lady. Because it sounds like hewlett was squatting on the property. And a freestanding garage which they also up and used and took advantage of it and started tinkering away. Is there any great example of a company that doesnt start small . And maybe just got funding and went off and got a real office and then it actually worked out . Well one of the examples that i found was of an unusual origin was john paul mitchell. Paul mitchell and jeanpaul were already established as heir care professionals. They had done their thing and wanted to regroup and do something different. Right. Had to start from you sort of scratch . Yeah. Not totally scratch. I got it. Thanks for coming in this morning. Its a great story. Check it out in fortune. Squawk box moving to a shed. News at 11 00. A shed . Garage. Jim cramer at the new york stock exchange. We have a room called garage. Its reopened with the economic data, the eurozone whatever jim wants to talk about, well do. And American Express, jim has said that the company has lost all credibility. A lot more on amex. Jim cramer its all coming up stick around. T. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Jim cramer joins us now. Want to ask you about two dow components, one, American Express the worst performing dow component, one, ibm, the worst performing dow component for the last two years. American express, what do you think . American express express, frankly, the future of a lot of their growth came from wherever costco goes. We didnt understand that interrelation. On the previous Conference Call management talked about the possibility the deal couldnt work out. Gave you no insight how this was perhaps their biggest generator of cards, and kind of were i think, believing 2 to 4 of their revenues could be heard. Its much more than that. I think its the shock that came from the idea that wow, we didnt know that costco was the principal driver. And you know what . The company should have shared that with us and the company should have given us more insight how material this was, why i question the companys credibility. Ibm, if Warren Buffett werent there, i think it would be lower. They have a big analyst meeting. Maybe they can talk about 73 of the company we dont want to hear about instead of the 27 we do want to hear about and make the other part relevant to what we like about tech because right now ibm doesnt have growth that we want. Were you surprised by Warren Buffetts additional shares that he bought . I think Warren Buffett is a guy who believes i think they believes in the buyback, and the companys says were going to give the existing shareholders exactly what they want. Ive said to the company, no those guys are cadre, theyll be with you thick and thin. You want to bring more people into, to do that you need growth. Maybe they will come up with that. But right now, theyre only pleasing the cadre, not pleasing the people they need to find. Thank you. Well see more of you in a few minutes. American express declined by investors. The stock, the worst performing dow component so far this year down more than 17 . Its trading at levels not seen since october 2013. The company ending its partnership with costco. What gives . Well ask an analyst after the break. The smartest or nothing. The quietest or nothing. The sleekest. Sexiest. Baddest. Safest,. Tightest,. Quickest. Harshest. Or nothing. At mercedesbenz, we do things one way or we dont do them at all. The 2015 cclass. See your authorized Mercedes Benz dealer for exceptional offers through mercedesbenz financial services. 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. Daughter do you and mom still have money with that broker . Dad yeah, 20 something years now. Thinking about what you want to do with your money . Daughter looking at options. What do you guys pay in fees . Dad i dont know exactly. Daughter if youre not happy do they have to pay you back . Dad it doesnt really work that way. Daughter you sure . Vo are you asking enough questions about the way your wealth is managed . Wealth management at charles schwab. Boeing shares keep moving higher, up 15 this year clay claiming tight ol of the years best performing dow stock. Today the years worst performer so far, which is amex American Express. Down almost 20 yeartodate. Joining us on set, analyst and at do guggenheim partners. Not so hot now. Whats changed in just a matter of months . I think the biggest change, which isnt necessarily the costco relationship, but exposed by the costco relationship, is the fact that this companys done a great job of growing its earnings faster than its revenues. But with the loss loss of costco it has to recapture share do you blame amex or was it a costco thing . They disputed over fees. Which suggests amex valued the best could have kept it. Everythings available at a price, right. Its a question how much do you want to erode your returns. Is that accretive over time. Jim cramers point they were misleading on the Conference Call, didnt fess up to admit now much this is going to cost future potential earnings. Yeah, i think i take a slightly different perspective on than i dont think they dissuaded the market from an incorrect view how big the relationship was. You think its not that big of a relationship . No in other words, historically, they seemed to imply it wasnt as big as it turned out to be. So to a certain extent i agree with the management how much focus on growing market share and at what expense is that going to be to the margin . Thats the big question. Yeah. I think its a significant challenge, right . So earnings year not looking at Earnings Growth from the 14 level until maybe 2017. You know what were not talking about. Apple pay. People wanted to talk about amex and apple pay. Were not mentioning it. Whats happened . Is it chugging along . Is it a success, a flop . Its chugging along. I tried it it was neat, didnt serve me any value. You swiped the card. Didnt save any time. That highlights challenge with the new technologies which is that its up to consumer adoption. It has nothing to do with apple or amex. Apple pay so what do you do with this . If you think it takes until 2017 to actually get back to growth again on those numbers what do you do with stock now . I dont think theres much to do here. In the short term i think theres negative revision risk. I dont think all of the risk is out of 16 numbers. Its moving sideways. When you think of them relative to mastercard, if you had a dollar to put into which one do you put the dollar into . So were recommending visa mastercard, not amex. I would say that mastercard has been more on a roll here. So maybe thats the better option. Because theyre doing what, though . They seem to be winning relationships. Now, of course, part has to do with Bank Partners rather than as a network. They get the benefit. A viewer has a question. Im going to ask you the question, we know the exclusive deal with costco and amex is over. But can you no longer use an amex card now . Is it only visa or mastercard or still use it its just not exclusive . Did costco totally boot them. For the next year the relationship remains in place. After that we dont know because costco hasnt announced who their new partner is and what network theyll be using. Thats a question that has to be answered. Weve got to run. Does amex have jetblue in i saw a tweet pop by that says they may not have them too, is that right . I think jetblue announced theyre going with barclays a lesser impact. All of the airlines they wrote. Thank you for coming in. Squawk on the street begins right now. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with Jim Cramer David Faber at the new york stock exchange. The dow is six points shy of a record close this morning, as we prep for fed minutes this afternoon. A bunch of Earnings Reports that greece will ask for that loan extension tomorrow. Oils giving back still comfortably above 50 at 52. 307 the tenyear 2. 12 thats just about the high for the year. Road map