Transcripts For CNBC Squawk Box 20150224

Watching this morning. Crude oil prices falling. This is all coming as traders question reports that opec might meet for the meeting in june. Some people questioning those sources but its been something the oil market has been watching closely. In other global news positive developments on the on going greek saga. Athens sending economic reform plans to the euro zone overnight. The proposals include measures to crack down on tax evasion and corruption. And back here a packed agenda of economic and corporate news. Well be getting the the home price index. February Consumer Confidence and the richmond fed survey. Home depot and comcast and macys. We have earnings that are just out from dow component home depot you saw across the screen while becky was talking. Earning 1 per share. Beating estimates of 89 cents. Home depot also announced 26 increase in its quarterly dividend. Now up to 59 Cents Per Share as well as an 18 billion Share Repurchase program. The company did say the strong u. S. Dollar would shave 6 krenlts per share off a full year profit. Comparable same store sales growth should be up a little over a percent in the premarket right now. Heres other stocks to match this morning. Profits jumping better than expected 78 . The Company Selling more homes at higher prices and then topping expectations despite a 31 drop in first half earning prices for all of the main products. They fell sharply. The company said it will continue to kuscut costs and then disclosing a 5. 9 stake in computer sciences. They plan to continue talks with the it Services Company about strategic alternatives. Well see if theres a shake up there and first solar and sunpower are in advanced talks to form a joint venture to sold some of their solar power assets. The company is planning to file for an ipo in the socalled yield yield. The Justice Department and cftc are reportedly investigating ten major banks for possible rigging of Precious Metals markets. The doj prosecutors are taking a close look at the price setting process for gold silver platinum in london. The cftc is said to have opened a civil investigation in these matters. Jp morgan is meeting with investigators today. Theyre to start changing big client deposit fees. The main reason behind the new move are new rules that make Holding Money for clients too costly. Retail customers wont be impacted and well talk more about banking in the next half hour with analysts thats a complicated one. Im focused on apple. How does the bank call you the customer your the corporate client and say were going to trade you a lot of money to keep it here. If every bank is doing that youre not going to get a cheaper rate somewhere else. Only if every bank is doing it and then if every bank is doing it talking about antitrust issues and other things. Its a reaction to regulatory. But are they all going to do it . Isnt there going to be one bank that says i prefer to take your deposit and maybe have some problems with that and lose money on it and have other issues but i can create business from it in another way. Banks have been doing it for too long. Apple is now at 775. 775 billion. For market cap of. 775 billion is the market cap. So to get to a trillion, i think are there about 5 billion shares outstanding. 25 increase. So it has to go from 133 to 160 or 170 and it will be a trillion dollar company. The old expression is that no tree grows to the sky but this has been a tree someone has to do it. Sooner or later well have a trillion dollar company. Is this the one . Might be. Is apple worth twice what exxon is worth . We used to do these comparisons to get to the size of aol. We know where they are now. How many years ago was that . You will have a trade. I didnt think it would be a gadget maker. How big is apple pay going to be . How much money are they going to make . Are they going to buy a car company . Is the watch going to be any good . How many more small, medium sized and gold covered ipads can they sell . How many people own iphones in the world now . Whats the penetration . What is the penetration of apple sorkin . Is it overvalued yet . Would you sell half your position . I dont have a position. Downward facing dog position. Im not sure. Its oddly an undervalued Company Based on what it currently does. 41. 4 . On a relative basis to other companies its actually an undervalued company. Thats the crazy part. But they have been saying that since 300 billion. Its still been the case. 41. 4 of the Smartphone Market share in the United States. Go around the world its smaller and growing. Still not in the dow but its like the entire s p 500. Wouldnt you be worry first degree they did put it in the dow suddenly. That will be it. Then im thinking about me millennials again. We have our Senior Personal finance correspondent coming in here. Sharon epperson who normally if its not the today show shes not interested. She is usually on the today show but now i think if these millennials are going to sit in their stupid 0 savings accounts, all of the baby boomers arent going to need to support them because the baby boomers at least still have some stocks. Theyll be kids living at home. Maybe well have more of them watching if you stop calling them stupid. Yeah. They need to buy apple. Because of 2008 theyre still shell shocked. They are saving more money though. But you have to try you cant save money at 0 . If you put money at 0 for 10 years. Do you know what you get at the end of 10 years . Yeah, i dont think it goes up. Whats 72 divided by 0. It takes a long time. All right well talk more about the me linealsillennials. Well talk about impressive savings rates. Lets take a look at the markets. Mixed day for the markets. You saw the dow and s p close lower. Nasdaq added another five points to end at a 15 year high and janet yellen is going to be moving markets one direction or the other. Thats what were anticipating ahead of that. If you want to check out whats been happening in europe this morning youll see that right now in the early trade things have barely budged there as well. Unless you look at greece in which case the market is up by more than 7 on the idea that maybe theyre going to reach some resolution with whatever that partnership is now being referred to. If you take a look at what happened overnight in asia youll see that the nikkei closed up by about three quarters of a percent. The hang seng was down by about. 3 . Oil prices have been very interesting. Yesterday jumped for prices for a very brief amount of time as there were reports about a potential emergency opec meeting. Reports were questioned. Crude oil ended upseteling down by about 3 back below 50 this morning. Its still there. To 49. 27 for wti. Check out the ten year note. Its yielding 2. 084 . And youll see the dollar is up across the board. Dollar yen is at 119 history to hit 52. Gold prices were back at 1200 dollars again. You can see this morning theyre down another 3. 10. I think its a catch 22. What is . With millennials. By the time they realize they need to be watching us and investing theyre out of the demo. Now theyre watching like look at that guy and theyre watching like robot chicken and family guy. Theyre watching all of this useless spongebob. All of this useless stuff. Theyre going to live forever. Theyre smoking cigarettes and immortal and they dont have to save any money. Weve all been through these years. But we dont get serious and start investing. Until its too late. So maybe we just need to face the facts, right . Im fine with the facts. Well youre a millennial though. Im not. Im so not a millennial. What are you . Generation xxx. Im x or y . Single x. Okay. Markets in a bit of a holded pattern ahead of Janet Yellens testimony today. Here now with us is darryl cronk. President of the wells fargo investment institute. Really. Really. Theres such a thing . There is. Is it nonprofit. No. It certainly sounds nonprofit. It sounds high and mighty. Also chief Investment Officer of wells fargos retirement division. Currently 1. 6 trillion. Wow, mark. You have some work to do. He is chief investment strategist. You have 70 billion. Roughly speaking. Both of you guys have a lot of responsibility. I dont envy you. Hows the market setting up for you. Bullish. Were bullish equities, bullish the dollar. Bullish volatility. Bullish volatility. So 10 to 20 down or not . Thats probably a little aggressive. Unless the fundamentals rollover which we dont see. As a matter of fact as we talked about a lot the consumers as good of shape as its been in 8 years. You have Rising Consumer sentiment and well get some confidence numbers later today. Housing prices will be out today and the world is good for them at this point. Its not leslie gonecessarily goldilocks. If youre not worried about greece. I dont know if i should be worried about greece. Its so far away and small. A couple of islands. If youre not worried about that, look at home depot. Consumers strong inflation is low, oil is 50. Whats not to like. I do think its a fwrksgoldilocks environment. Were 5. 5 years deep into this expansion. Growth in the first quarter. So well go toward six. The possibilities of a recession are remote and if investors are worried about greece they would have showed up in euro stocks. Its up 11 year to date. Its an environment that risk assets continue to be favored. Certainly over cash. Theyre getting mad at me again. And at the end of the day while i dont think u. S. Equities are going to provide the returns that nonu. S. Equities are going to provide and i have seen that to be true year to date it will be an environment in which investors will not want to be idoled in cash where the opportunity cost is exceedingly high. Im a millennial and im not watching it this morning . Are you sure . You might be watching a different one. One of you guys likes financials. Is that you . Theres a lot of pressure on net interest margins but ultimately whether it happens in june or september were bog to see a bump in Interest Rates and as a consequence of improving domestic conditions commercial and industrial loan production is growing rapidly. Were starting to see loosening of credit markets for Residential Loan activity and continuing to recover the Housing Market thats a 12 punch that should be favorable for financial which is are priced among other things in the marketplace relatively cheap and relative being the operative word there andrew. Institutions becky. Institutions. I couldnt remember the new word. Have you written greece off and figured dont worry about it . Things will be resolved . The markets have. Spreads are not, to marks point, the french cac, the german dax, everything is setting record highs at this point. Theyll get a deal done. Were pretty confident. Who sees froth . You dont see any . 5,000 it was frothing the first time but the earnings tripled basically and its at the same level. When you look at the markets we see fair valuations. I got done writing a report yesterday about this. The market spends very little time in fair valuations. Its either cheap to expensive or expensive to cheap. Were probably still moving from cheap to maybe expensive at some point but were not there yet. Froth anywhere . Were long apple. Thats where i would be more worried. Bio tech. Selling at six times sales. 100 billion company. Exactly. Many of which are barely profitable. So theres pockets of frothe within the marketplace but in the aggregate we think valuations are full. And therefore we see the upside. Thank you. You missed a button. Where. Right there. Oh thanks. It was hidden by the tie. Why are you outing my button on the show. Its not like your barn door is open and youre letting a bunch of air in there. Thats good. Just your button. Ill wait next time. You didnt give a shout out to brennan clark. He said he no that was the guy i said. I didnt say his name. Okay. Give him credit. We should and were going to continue to do that. But did you see theres another guy that says this millennial is up watching the show. I suggest you use alternative ways to describe our generation instead of smokers. But i already answered that tweet with a tweet and i said im just stirring things up. Ill try anything. Right. Get reaction. To get a reaction. You know a lot of them in the bar theyre all like now theyre vaping. Exactly. Which is even more bizarre. Its bizarre but its not the same as cigarette smoke. I guess not. I guess not. But you know what i mean. Theyre all going to live forever. They dont need to invest. They can blow all of their money on their apps. Were having tumblr on. What is that . Huge business. Its going to be a good interview. Thank you for joining us today. When we come back the street reacts to home depots better than expected results. The retailer prepping for its critical spring selling season but at least one thing has home depot worried. Thats the dollar. Right now as we head to a break, take a look at this date back in history. Some scary moments in dallas last night. An American Airlines plane taxiing slid off the taxi way and got stuck in the grass. They snapped the pictures of the plane. The faa says the front nose gear slipped off as it turned the corner and became stuck in the grass. No injuries have been reported. No cause for the accident just yet but up to an inch of sleet fell overnight. Monday covering much of the area in ice. Do you watch nightly last night . I did. Did you see it down in dallas . Midday. Downtown, midday. Not a car. They have never seen this before. But you know why this is happening. Thank god they changed it right . Think if it was still warming. Thank god they thought that. Anyway, now to todays National Forecast keith carson what youre joining us from cincinnati where it was like how many below . It was like going to be like 10 below or something and were not talking wind right . Yeah yeah the actual temperature is 7 below, good morning and the record by the way was 1 below. Usually when you break low temperature records you do by a degree or two at the most. Its a sign of the cold air we talked about yesterday. If they have snow here about five independence from lands on the ground officially. Places like boston are struggling over and over with the snow and where to put it. They played a role and how cold it got during the overnight hours. Whether or not its present is a factor. Allows it to get colder overnight. The other factor is it is totally clear here in cincinnati. Thats something we called radiational cooling. Normally the clouds will insulate and heat you up in the daytime but it escapes into the atmosphere and allows your coolest temperatures. The saving grace today is that it is calm. You talk about wind chills and thats the stat we give people as far as how cold it is. The wind chill the same as the temperature. Wind chill only about 1 or 2 miles per hour. By the way, the coldest cincinnati has ever been 25 degrees below zero. A lot of their top ten records actually have them in a row there in 1977. If people have lived here long enough this isnt all that bad. I didnt get to wear my suit but i did find a way to wear a fashion statement for you and i want to disappoint you. Underneath that theres a great shirttie combo. Are you in Fountain Square . I cant tell where you are . Are you in Fountain Square in cincinnati. Yeah, this is Fountain Square right here. Good there is a skyline not opiate i dont think. Skyline. Yeah as long as youre there or you get some ribs or something, youre very lucky to be assigned there. You might not think so but youre very lucky to be assigned to the queen city. You know what i actually had never been here admittedly and i was telling the camera crews and guys i went to a great restaurant last night. Where did you go . Over the rhine or over to kentucky. Oh gosh orchards its some sort of it was fancier than i wanted it to be. Why was it fancier im here by myself. Youre in cincinnati and you found a fancy restaurant. How could that be . New york centric attitudes. He says its fancier than i usually go by myself. He wouldnt go by himself. Hes on an expense account he can do it. Do you know how old the cincinnati ballet is while youre trashing cincinnati. He is not trashing cincinnati. He was saying nice things. Do you know how easy it is to go to a reds game. Were making him stand outside in minus 7. Its not cold out here guys dont worry about it. Is it normally overflowing with water. It does in the summer. Its the center of cincinnati. Let us continue our conversation but maybe we should let him go inside. Go inside and get warm. The png dolly parton building is if you look east why do they call it that its has two big they really do call it that. Im serious. They do. Anyway thanks keith. See you later. Get warm. In the meantime well talk how do you go from there to there well talk about home depot, on the bottom and the top lines. Number one Home Improvement chain reported a 36 jump in quarterly profit giving us reaction right now. Brian is on the phone. Hes the senior retail analyst. Good morning. Walk us through the headline to you. Theres a couple of things going on here. Theres dividend and Stock Repurchase Program. This is a very good report from home depot. The numbers people will be focused on is what you mentioned, very easily beats an 89 cent estimate and you had in the United States almost a 9 top which tops most of the forecast i heard out there. A very solid Fourth Quarter report from home depot. If you look at the initial guidance for 2015 it may be a little bit light but thats typical home depot style. Theyre usually conservative here. And then was the dividend to surprise you . Was the Stock Repurchase Program a surprise to you . Its nice to see those. Both of those factors in this report but its been very consistent with home depots Capital Allocation plan for awhile. This is a company thats been aggressive for several years returning excess capital to shareholders for buy backs and dividends. Take a step back for a second and tell us more broadly. Is this home depot a great operator or is this home depot a barometer of the economy and consumer. Its both. Well hear from lowes tomorrow. Another solid report as well. Home depot is a great operator. They have been operating well for the last several years but behind that as you eluded to the Home Improvement mark in the United States is like this at this point. Whats your price target on this company. We have 115 right now. The stock is quickly approaching that. Are you going to change it . Well see. Does that mean today youre going to change it . Im sorry, whats that . Does that mean today youre going to change it. We always look at price targets as an on going strategy for us. Well leave it there. Thank you for joining us this morning. Thank you. Coming up scientists find something strange inside an ancient buddha statue. But first as we head to break a look at yesterdays s p 500 winners and losers. Welcome back everybody. Were checking out a few of the stories that caught our attention. I dont know if you saw this story yesterday. A thousand year old mummy that was found inside of a statue. Heres a picture of it. It revealed a mummy and i thought that was weird enough it caught my attention yesterday. What i didnt realize on a first glimpse of this is they think this was done through selfmummification. Its a process that involved being buried alive inside a chamber while meditating. The object is a rarity. He was mummified and probably kept in a monetary for 200 years before he made a statue. Originally it was discovered in china but it can be seen at the Natural History museum in budapest. Thats going a long way to get, you know im not doing that. You would eventually not breathe i think which would be not a great way to go. Mummy, it was one of the answers to jeopardy last night. There was a whole category. Every word had three ms. Mammal mummy. Its hard your on the spot. Minnesota mining and conferring. Its just every question. Millennials dont watch. I think they do. They dont was of alex. Its a generational you dont watch either. No its pretty clear you dont. Yeah anyway thanks. A lot of knowledge. I could learn if i just watched the show. What did you learn in the near post today . I havent picked a piece. Ill tell you about a story in the New York Times. Sean penn got in a lot of trouble. What did he do . Hes trying to be funny. Hes an idiot. About the director saying where did he get his green card about the gentleman that won three oscars. They gave him the job of introducing the most important, you know oscar and just off the cuff he said that beforehand. It was really inappropriate and really stupid. You would never say that about someone from britain would you . It was really stupid. Do you have any comment on that or are you just afraid im not going to go there. Story from the New York Times, sec not your column. Not my column. Were not going to talk about my column today. We could if you want. You should all read it. Or not. This is about the sec and i did write a column about this two years ago warning that this could happen but they went out and did the reporting to figure out what happened which is that Mary Jo White was a lawyer. Her husband is a lawyer. And there was always a worry that she would have to recuse herself of lots of cases and that could become a problem. Well it has become a problem in dozes of cases where she cant participate in either a vote or sometimes theres a five person panel that has to vote on what to do something about and its deadlocked and she wants to more more bigger financial penalties and things like this and people are using this to their advantage. Theres even a reference to this idea if youre a Financial Institution that might be process prosecuted you should have her so she would have to rekuz herself. It does a great job of all the different answers of what those problems represent. Not my column but theres a great column in the New York Times today. John legend is millennial. He seems older. Maybe but he watches. He does . Yes, hes a good guy. How do you know . Because i was with him and he watches. He is a former consultant at bcg. Yeah. Went to penn. I dont think hes a millennial though. Maybe not. But to me hes a millennial. Hes 36. Is that a millennial. No im 38. Were not. Well i think of you as one. Youre ancient. I know. Me and john voyt think youre a millennial. You guys are watching jeopardy. I dont know what to do. Youre not watching jeopardy . No. Well youre watching wheel afterwards, arent you . No. What no. I dont even. I cant. You watch jeopardy. I will. You might learn something. Dont do it. Anyway when we come back this morning, marijuana becomes lee fwal legal in another state today. The wild details after this. Plus the story behind a massive jump in profits at the nations largest luxury home builder and a warning from a financial analyst. Why they fear another financial crisis is just around the corner. 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Adults 21 and older will be able to possess marijuana and grow up to 6 plants at home but dont go on the streets with that stuff. The home builder Toll Brothers well above what the street was expecting. The estimate was for 30 cents. Toll sold more homes at higher prices. Joining us right now is an analyst with citi. Thank you for coming in today. Thank you for having me. So the numbers were a little better than the street was expected. They were better than you expected too. What happened. Closings came in better. So did selling prices overall. Toll had good cost controls. Relatively solid and in terms of their net contract activities we get into the early Second Quarter for them. Its been pretty solid. You had a neutral rating on this before am i right . Are you considering changes that based on the results . The deviation was not large where i would think there would be a big move. One of the issues i have is theyre trading at mid cycle multiples. With midcap builders you see it trading closer to the books. You have enough where you might be able to recover the valuation gap caused by trading liquidity. What names do you like . Theyre trading about one times book. Descent 3 dividend yield. Mta is just right behind it. A little bit more risk because of the exposure. We talked a lot about the housing industry and some of the weak numbers we have seen recently in the national numbers. Have people trying to figure out why millennials arent buying homes as quickly. Whats your thesis . A delay in life. People typically have children about ten years later than they had 20 years ago and thats a key driver highly correlated to when People Choose to move and go into homes. In addition if you look at Home Ownership it increased by 3 per Percentage Points but its a long healing process. Thats also what it comes down to. We talked about Student Loans and how much more debt people are carrying once they get out of college or even once they have not finished college. Does that in anyway you think add to the slower purchases of homes . I mean theres been a lot of analysis there. Thats interesting because typically those homes generally have higher incomes to cover the burdens. It takes a longer period of time because the average person now has a four year degree where as if you go 10 or 20 years back they had a 2 year degree if not just high school. So how would you judge or grade the home industry right now . I mean its been tough. Weve had about ill call it a million household formations over the past years on average. A lot is more rental stocks. You had some of the Single Family shift in general. So its been tough. Its about 15 tighter than even in the 90s. So its been more difficult to form households. Job growth has been great. Janet yellen is speaking today. If the fed raises rates in the next 3 to 6 months what does that do to the Housing Market . It depends on the increase. If it happens rapidly we could see another event like we saw in may of 2013 where housing froze for a bit or paused if you will. Obviously that would be a negative and historically its not been good for the builder stocks when you have a 50 basis point move or better. If its slowing gradual and you have job growth that comes with it historically based on precedent it shouldnt be a big deal. Thank you for joining us. Thanks for having me. All right. Up next is another mortgage melttown onmelt meltdown on the horizon . Is it going to be caused by the new rules put in place to keep the system safe . That would make sense. That disturbing story after the break. But first check out todays squawk planner. At 9 00 eastern the home price index is out. At 10 00 janet yellen will head to capitol hill to testify on Monetary Policy. 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[piano background music begins] we are one, we are essentially the same regardless of where we come from. Um, there are definitely things that are different about us culturally and Everything Else but at the end of the day we are the same and we really need to start seeing the world as a place that was gifted to us. [thunder and rain] [thunder and rain] [thunder and rain] welcome back everybody. Lets tell you about a stock to watch today. The fda giving novartis the okay to treat patients that relapsed after aggressive blood cancer. Big question this morning is another housing crash on the horizon . Our next guest believes a perfect storm is brewing that could spark another mortgage melt down. She Capital Markets Equity Research analyst and joins us to layout his reasons for this forecast. We read this. You put out this report. Whats happening . Well basically if you think about the last seven years you realize that the bank versus paid you know maybe 100 billion in fines and other penalties related to mortgages. They were put loans were put back to them in the tens of billions. It was something called the qualified mortgage rule that was created that requires people to put down 20 to buy a home and also they cant have more than 45 of all their debt payments as a percentage of their total changes in the way the banks have to have capital against certain mortgages. There have been changes in the secure rules. In essence you find the Banking Industry is reluctant to make mortgage changes as they were in the past. Many banks have admitted to me they simply cant make money on mortgages. So the net effect is what the industry wants is to make mortgages which they can sell to fannie mae and freddie mac. But they want them out of business by 2017 2018. If were talking about 30year fixed Rate Mortgages which yield less than 4 . Whos going to be crazy enough to for a long time we talked about whether the 30year fixed mortgage makes sense. In a private market it probably doesnt. Then therefore the question becomes, does a market emerge far 5year 15year and what does that do to the Mortgage Market and real estate prices. But you think thats coming. I think if you think that the 30year fixed Rate Mortgage doesnt make sense, you think housing crisis in the United States dont make sense, right . Because if you think about how people buy houses they pay houses based upon what they have to put down and what their Monthly Payment is. If you make the decision that they cant have 30year fixed Rate Mortgages any longer then theyre going to have 10 or 15year available Rate Mortgages, it will raise their payment substantially. If you raise the payment substantially, youre going to lower the prices of housing. And nothing just lower do you think theres a market for 30year fixed . Do you think that could exist . Or do you think its crazy to offer Something Like that without a government guarantee . I dont think theres a private market for 30year fixed rates. I think thats the issue. What happened . Canada . Canada went to three to fiveyear term mortgages which in a sense variable rate in nature. There was only one other country in the world, i think denmark, that issues 30year fixed Rate Mortgages. The issue is not whether theyre good or bad. The issue is you have them. The issue is that most the large portion of people in the United States who own houses own them as a result of a 30year fixed Rate Mortgage. So you say, okay fine. These things dont make sense. Its a ridiculous product. The only people who will buy it will be the United States government. So lets get rid of the people who buy them. Lets get rid of them. What happens to housing prices if you get rid of them . Is the United States ready to take a shot to housing prices because were getting rid of 30year fixed Rate Mortgages. If we want to go to the canadian experience, we can do so. The average mortgage in canada has a threeyear maturity. All right . We can do that. But what happens to housing prices when you go from here to there . Have you thought about that . I havent thought about it enough. Youre scaring me a little bit. My other question though is right now what percentage of mortgages that originated are 30year fixed relative to all the other products . I cant tell you the answer to that but i think its about a third. I dont know exactly. So i cant answer the question the way you would like. But what i will tell you is that virtually 100 of them are sold to fannie mae and freddie mac. Is there any chance that they stay around longer than we think meaning we recapitalize . At the present time no. I mean basically were in schizophrenia concerning fannie mae and freddie mac. Take a look at the statistic. They borrowed from the United States government. In return for that they paid back 225 billion in cash. They have issued a series they preferred which is worth 190 billion. And they have warrants which the u. S. Government owns which i think are worth 20 billion. So in essence, fannie and freddie are sitting there with somewhere between 425 billion and 450 billion which theyve given back to the United States. Thats a lot of money. Its a lot of money, but whats kind of interesting is the United States government wants to eliminate the 190 billion series a preferred and the warrants without giving the taxpayer anything for them. Dick before you go ive got to get you on one other topic which is jpmorgan. They have their investor day today. Theres also an article in the wall street journal today saying theyll be telling certain clients you have to pay us to keep your money. Effectively they dont want to keep the money. Hows that conversation going to go and whats that going to do to their business . Its probably not going to affect the business too badly in any fashion. If youre sitting in europe and youre a corporation and have a lot of money deposited in europe, youre paying money to the bank to hold that deposit for you. So what youre going is taking that money and putting it in the United States. And the banks in the United States are losing money on it. So essentially theyre back to new york who has been doing this some time. Theyre going to charge you a fee if you want to put that money, park that money in the United States until the europeans get rid of negative Interest Rates. I think its a good move on the part of jpmorgan because, you know, you cant take this cash. You know, the banks in the United States have been nationalized on a de facto basis. And the fact is they have no control over their balance sheets. At the present time theyre being forced to take money in at high costs in the longterm market. And lend it to the Federal Reserve so the Federal Reserve can buy bonds with it. You know weve completely restructured the Financial System in the United States in a fashion which is unbelievably harmful to the american consumer. On that note dick bove thanks for joining us this morning. Coming up, Quarterly Results from our Parent Company comcast. Media news next. Plus will apple become the first trilliondollar company . Dominic chu has the stats you need to see to believe. Plus, youve heard the promises. Selfdriving cars. Thats the future. But how far away is that technology from the masses . Our auto reporter phil lebeau was pounding on the window a couple moments ago, but he will be on set with us. Seemed like some crazed maniac out there. Which is not that far from the truth. Hell be with us on squawk box when we come back. Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. 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. The lightest or nothing. 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. E financial noise financial noise financial noise financial noise [ 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. Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Key phrases to listen for when janet yellen testifies on the hill today. Patience midyear inflation too low, and labor market strong. Well tell you how they expect the market to react. Comcast and dominos set to report this hour. Well bring you the numbers and the Market Reaction. And we asked millennials watching squawk box to respond on twitter and it was a ground swell. Well tell you where millennials are investing and outline the challenges unique to their generation as the second hour of squawk box begins right now. Live from the beating heart of business new york city, this is squawk box. Good morning, again, everybody. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. Weve been watching the futures and after a mixed day yesterday, it looks like things may be slightly positive at least for the dow and s p 500 futures. Right now dow futures up 14 points. The s p up by less than half a point. Nasdaq lower by 3 points. All right. Looking at some numbers that are hitting the wires from our Parent Company comcast. Cant tell where the stock is going to trade right now. The spread is fairly wide. You can see its down about 99 cents. The company just in terms of results is a penny shy of expectations. Adjusted net was 77 cents. That was 17 above the Fourth Quarter of 2013 but the estimate was 78 cents. There are, though some below line items including larger depreciation and i dont think the street would have any visibility about that number. So i dont know whether you would say thats a penny below or not based on larger depreciation. For the year the number was 3. 20 and that was 25 above the 2. 56 reported in the prior year. We should point out that the dividend is being increased 11 to 1 a share annually. Thats the seventh consecutive annual increase. Also announcing an increase in our buyback to 10 billion and the Company Plans to buy back so its okay with comcast . Youre on board . Im on board. If youre massively profitable enterprise and your revenue numbers arent going down sure. All right. Go for it. Okay. Should probably point out operating cash flow and Free Cash Flow that those are metrics its 4. 25 billion theyre going to reoperate. Up 5. 9 billion. It grew 6. 9 to 22. 9 billion. Free cash flow up 18 to the quarter. It was down by 3. 8 for the year. Company says it was investing in its business. Cable, it looks like had increases. But advertising is still its distribution. Im talking Cable Company itself. Added in the Fourth Quarter. Third too imin the last five theyve added subscribers. Then you look at Cable Network revenue was basically flat i think. In 2014 it was up 3. 9 driven by an 8. 2 distribution revenue. But a 1. 2 decrease in advertising revenue. All these numbers have to deal with sochi. Tough go back to a year ago. Olympics were going on. So if you see a drop, its probably not as big as it would have been. Theme parks, revenue up 29. 9 in the Fourth Quarter. Operating cash flow up 37. 6 to 352 million largely because of the Wizarding World of harry potter. Remember when they first bought the company, they didnt even want the theme parks. I know. And you could like market to market based on a blackstone sale and it was like ten times soo another this point of what it was. They got a good deal. I mean it was really good. Yeah. A. Some progress in the greek saga. Athens taking its plans to the eurozone overnight. Reuters reporting a pledge not to rollback and a promise to ensure that state spending doesnt hurt its budget. Also we should tell you the Justice Department are reportedly now investigating at least ten major banks for possible rigging of Precious Metals markets. The wall street journal reporting that the d. O. J. Prosecutors are looking at the price setting process for gold, silver, platinum and palladium. And then opec might call an emergency meeting before the next scheduled meeting in june. Then a drop as traders questioned those reports. Prices rebounding slightly in early trading. Youre looking at wti crude right now at 49. 80. The nasdaq is up nicely year to date so far, but where is that upward movement actually coming from . Dom chu joins us now with more. You look at the nasdaq composite, a big influence there. If you look at year to date over the past year up over 15 . Theyre up about the same amount. Just about 4. 5 5 year to date as well. Theyre mirroring each other. The reason why is theres a handful of stocks that are accounting for every single gain. Now for the nasdaq 100 index, the biggest stocks in the composite, the index is up 215, 218 points so far year in date. All of those points are accounted for by five stocks. Just five. And here they are. Netflix shars, we know theyre one of the best performers in the s p and in the nasdaq so far. Theyre up 38 year to date. Its adding ten points to that 218 point advance. Tack on now on next one, gilead sciences. Up 11 year to date. Thats another 15 points. 25 points just those two stocks. Then big influences here. Biogen idec. Up 20 . One more here amazon. Com up 22 . Thats 35 points of the 218. And then you add it all together and the one you mentioned before apple. Up 20 because of its sheer size of the 218 points the nasdaq 100 is up just year to date 140 of those points are just apple. So you total all of these together and then you have about 218 points. That accounts for all and a little bit more of the entire gain in the nasdaq 100. So 95 stocks up and down pretty much flat. These guys account for all the gains, joe. Back over to you. We will need a party if it hits a trillion dom. You know what i mean . It will be balloons and confetti all over the place. Weve thrown parties for a lot less. We put on hats for dow 18,000. We did. Well figure something out. Im not convinced. I dont know. Well see. Well see. Its stunning to see that though. Five stocks make up the bulk of the gains. You better hope those five stocks do well if youre investing in the index. Supposed to be the reason you invest in an index is youre not tying yourself to any few companies. Amazon as apples valuation is reasonable amazons is unreasonable. Building a hell of a company. The numbers dont make sense. Theyve never made sense. No. If you build it they will come. And anybody thats bet against him has if only we had a sound track of him laughing because hes laughing all the way to the bank. [ laughter ] ask and you shall receive. Anybody whos shorted the stock know what hes doing. [ laughter ] jeff what about baron . [ laughter ] i mean again, again again. [ laughter ] he doesnt come on anyway. You know jeff . You dont come on were going to keep playing it. Fine. Suit yourself. [ crickets ] joining us now with more on the markets and his fed expectations is paul ebner. Thanks for coming in today. Thanks for having me on. Let me get this straight. You think valuations when you look at the markets overall are starting to look a little rich. We found that the Global Equity markets have looked stretched for some time now. Now, in many cases that stretched valuation can be supported by Risk Appetite. What worries us is that Risk Appetite has started to wane in the last several months. We manage a long short portfolio. We view right now more attractive opportunities from our stock selection, our industry and country positioning than from just owning the net market. Were now flat to the market. Which countries do you like . Which stocks do you like . Which jump out at you . Starting the year we were long europe. We continue to like pockets of europe. The recent run over the last few weeks have brought europe closer in line to where the u. S. Has been. We continue to like germany. Parts of spain. Weve been underweight or short france and the uk and italy as well. When you say that there are stocks, can you tell us about some of those stocks or the sectors that are better positioned as well . Sure. On a global basis, weve liked companies that are more on the cyclical side. We think the economy is still growing. We like materials. We also like within the materials we like packaging. We like the diversified metals. The china slowdown in overplayed and theres good value there. We also are short right now consumeroriented stocks like retailers. Theres been a lot of pe expansion in those names since midoctober on expectations that lower gas prices are going to sort of further more consumption. We havent seen signs that consumption is actually happening. Ive talked in the past about the Internet Activity we track. Those leading indicators havent shown consumption and also actual numbers that came out. Lets say retail sales in december and january have been disappointing. Jim cramers been pretty high on some of these retailers. I think with some good reason too. You talk to a retailer like Terry Lundgren and he will tell you he was slowly starting to see people spend again. But that it takes some time. When youre saving 10 to 20 a week, it will take time before you feel more flush. Theyre hoping they can get more of that. You dont think thats ever going to materialize . Its not that we dont think there wont be higher consumption, thats already priced into the stocks at this point. So the pe on the retailers and s p have expanded from 20 to 25. Over that period the s p has gone from 18 to 18. 6. Why dont you believe the China Consumption concern story . Its not that we dont think china isnt slowing down. Its that we think that the fears around that slowdown are overpriced into the stocks. So we own some diversified metals, we own some steel. We own other Materials Companies that are tied to the broader global economy. You said you were market neutral. Does that mean you were short neutrals . Right now within the u. S. Were short the consumer stocks that i mentioned. Retailers in particular. Were short net short french uk italian stocks as well. There are pockets within those countries. So within europe even within france, we still like the exporters. So the european the euro being weak has helped the exporters with their sales. We like the domestic parts of those economies. Within uk within france stocks more tailored to domestic consumption. All right. We want to thank you for joining us today. Thank you for having me. Nice to see you. Coming up when we return why Driverless Cars pose a concern to auto brands. Phil lebeau will join us next. Then former fcc chairman Michael Powell will weigh in on Net Neutrality. And then we reached out to millennials millennials. They tell us they are watching and investing. Well tell you where theyre putting their money to work when squawk box returns in just a minute. E financial noise financial noise financial noise i love my shows, but i cant just sit around all day. Thats why i have xfinity. Their cloud based dvr lets me take everything i recorded, anywhere i go. Which is perfect for me, [whispering] because i have responsibilities. I mean thats really interesting, then how do you explain these photos . [people gasping] objection your honor. Sustained. With the x1 dvr library you could take anywhere, xfinity is perfect for people on the go. Welcome back to squawk box this morning. Take a look at futures see how the market is etting itself up this morning. A dow would open up higher about 7 points. The s p 500 unchanged for now. Joe . Yes andrew . Whats going on . Oh. Its your turn. Tag, youre it. Im so i mean its just odd. Why did you do that . You scared us over at the window. Youre telling me im the first crazy man who beat on the windows . No. But the thing seemed like it was going to come in on us. You know if someone did it hard enough. Anyway let me introduce you in the fashion to which youre entitled, you deserve. Thank you. The move towards driverless vehicles could be the end of the road for some legendary auto brands. I worry about a lot of reasons why detroit, the future 20 30 years from now it just makes me wonder. Its not just detroit. Its the mass Market Brands. If you look at this new study that was done, ive talked with them about this. His belief is you go out to 2030 and thats when mass market vehicles take off. If you truly believe that people are going to use autonomous drive vehicles on the mass market, theyre going to want their other vehicle to be a premium brand or their Autonomous Vehicle to be a premium brand or a tech brand. Like a google or an apple. So it would be an uber Autonomous Vehicle. Yes. Theyre taking over the world. You call a car and it comes. It would be like a ride at an amusement park. In theory thats it. And the idea being if that happens, your mass Market Brands, youre talking about your chevys your fords, your hondas, your toyotas. Any of those that are serving the masses right now, people will sit there and say, well i dont want something that im going to buy on the lower end since im just using whatever autonomous drive vehicle is going around. Therefore, there are going to be fewer sales for those brands. And one or a couple of those brands im not saying those specifically but the mass Market Brands will struggle. So thats the idea. Thats the concern. When do you think this happens . I think 2030 is probably a decent guesstimate at this point. I dont think we see Autonomous Vehicles until well past 2020. The technology will be there. I dont think the regulators are ready for it. Youre looking at something around 2022. I dont think so you see it really getting to the point where you may be calling from your house saying i need this vehicle to pick me up here. It drops you off, it finds a parking space. That doesnt happen until 2030. That actually happens in 2030 . I think people think it could. Is that the end of uber then . That sounds like a threat to the ubers and taxis. I think uber and other services are going to have more competitors by then. I know uber is the name everyone is grabbing onto now. But there are other names that will come into the markets. Names were probably not thinking of right now. You may even have auto makers who say if were going to compete here maybe we go in that direction. One of our brands becomes an ubertype competitor. I mean that is a possibility at some point. Allselfdriving boats by 2030. As the tidal waves from the warming come up. Right . I mean, on this coast. No doubt. Are you on the third floor . How high up are you . Im high enough for the water. I hear one of you might be in the market for a new minivan. No i have one. Youre set . Youre okay . Im told these things. That was a good segue. Can i do my job, though please . Im sorry. Watch this. Youre like a professional. Phil also one to get your take on the rise of the 55,000 minivan. Let me try that. Phil also want to get your take on the rise of the 50,000 minivan. Well its not here yet. But were moving that direction. Its close. You can go to the high 40s right now if you trick out a minivan. And you look at the new town country, the reason they got rid of the Dodge Caravan is that its the mass market. And it starts down around 21,000. Sergio doesnt want that. Sergio wants the high end. And thats why chrysler said why are we having these two compete with each other. Go to the higher end. Youre talking about a 50,000 minivan. Does d. O. Some of the Luxury Brands ever make them . If toyota does it with lexus, would they create one . Or bmw . I dont think so. I dont think the Luxury Brands will ever create a minivan in part because its such a limited market. And what they would have to make to crack that market when you have toyota and honda dominating it. But you have families you cant get a low end minivan. You cant get a cheap one to go anywhere. No. Those days are gone. You dont even want a minivan. And if you do get one, you pay a fortune. There are those that will pay 70,000 for a minivan. You can do that in europe. Those are bigger vans. Not necessarily minivans. There was a part in get shorty. Someone convinced danny niny devito it was a luxury minivan. It doesnt work phil. Its like dont even try. Thats impossible. Im past the minivan days. Im sorry. I have one. I do. I know you do. I drove it yesterday. You have said you dont want to live if you had to drive one. I used to have one. I loved it. Maybe that was me that said that. Probably was. Kill me. You want to show me how its done taking it to break . But beckys going to do that. Dont pound on our window anymore. It is lovely to have you here in person. When we come back this morning, forget what youve been told about children and peanut allergies. App Surprising New recommendation. Then Michael Powell will be here to talk Net Neutrality and media consolidation. Stick around. Squawk box will be right back. No. You . No. Aflac what are you guys looking for . Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. 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. Major heres our new trainer ensure active heart health. Heart i maximize good stuff like my potassium and phytosterols which may help lower cholesterol. New ensure active heart Health Supports your heart and body so you stay active and strong. Ensure, take life in. I really admire my mother. Despite what people said she bought me a sewing machine and she let me play with dolls and that was something that was kind of growing up culturally, it was quite unacceptable and she really dared to let me be different. [thunder and rain] [thunder and rain] [thunder and rain] a new study says that many peanut allergies can be prevented by feeding infants peanut products. The number of peanut allergies has quadrupled since 1997. The study which was published by the new england journal of medicine says the results are so compelling that guidelines for feeding infants should be resurprised soon. For years doctors have been telling you not to feed your children any peanut products until after they turn 2 years old. Coming up well have a rundown of this mornings big stock movers. Plus former fcc chairman Michael Powell going to weigh in on the Net Neutrality vote coming this week. Seems to me like its coming to a head. Theres a lot of talk about whether this is going to happen the way they say its going to happen. Well see. As we head to break, take a look at u. S. Equity futures. E financial noise financial noise financial noise financial noise you just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions and a thousand other things. So you call pwc. The right people to get the extraordinary done. 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. Welcome back to squawk box, everyone. A California Agency will vote today on reducing the states gas tax by nearly 8 cents. But even if the change passes suppliers are not required to pass the savings along to consumers. A new jersey judge striking down Chris Christies plan from the pension system. He proposed the cuts to plug a revenue shortfall. Sounds like he will appeal that ruling. And dont fear the tax man. The number of irs audits of individuals fell more than 21 over the last five years. And two pedestrians in seoul, south korea, disappeared into a sinkhole. All caught on tape. Captured the moment. And tried to cross the street. Both the man and the woman suffered minor injuries and were eventually rescued by firefighters. Officials are still investigating the cause of the sinkhole. When you said it if it was like to never be seen again, that would be, you know . Walking along one minute and the next minute youre just yeah. This one caught on video. Its like a trap door in the ground. Who was pointing the camera right at those two people. It looks like it was a standard camera monitoring things. Theyre everywhere. I think they should be everywhere. In europe even more so. Video everywhere. Were comfortable with cameras. They could be everywhere and i wouldnt care. Maybe not the bathroom. Or not. Yeah a little tmi. Lets talk about where all the cameras are going, where the video is going, what it means for Net Neutrality. Gearing up for a key vote on Net Neutrality this week. If it happens, telecom trade groups are likely to sue. Randall stevenson. Joining us now is former fcc chairman Michael Powell. He is currently the president of the telecommunications association. In full disclosure ncta who represents universal and comcast which of course is the Parent Company of cnbc. Good morning, michael. Good morning. So are your lawyers staying up all night already preparing to file suit . Whats going on. Well i do think unfortunately the next phase of this long tortured net neutrally event will likely be litigation. So were going to wait to see what the fcc order actually says and does. But we think its likely that there will be an appeal. So one of the things weve all talked about is what an appeal looks like and how long it takes and what that does to investment in during that period. We heard from the ceo of at t who says he plans to pull back. Can you speak to that broadly from all of your constituents youve been talking to . Sure. I think to put it briefly, litigation with fcc appeals is a pretty long drawn out process. I would predict that its at least two and up the five years before the rules are fully and finally settled. The original classification decision went all the way to the Supreme Court and took a good 3 1 2, 4 years. If you look at the current in 2010, its 2015 and we dont have a new set and this debate a hz gone on for a decade. Its one of the reasons we believe this issues right for congress to fix which would moot all the litigation. And of course from an investment standpoint companies have to understand what the settled nature of the law is. Theyve understood that the theyve understood the law for 15 years and suddenly thats going to be radically transformed to a new style of regulation which is going to prompt a whole myriad of questions that are going to weight answers. I think thats going to have an impact on investment choices. Although michael, Congress Seems to have no appetite in terms of picking this up. Interestingly enough to my great surprise and pleasure i mean the republicans in congress have put forward working drafts that would go a long way to protecting strong Net Neutrality just as the fcc has said it wants to do. Its working to find democratic support. I think everyone is waiting to see what the order actually does. I think when congress realizes that the order goes far beyond protecting Net Neutrality and in fact introduces a new Regulatory Regime for the internet there may be growing interest in trying to find a solution. Michael, as you have sat back and watched this. Was there ever a time where you said holy camoly where you said i cannot believe this is actually to me im watching it i cant believe that this may actually happen. 1934, the whole nine yards. Is it did it was it shocking to you that this happened like this . I think its fair to say we are shocked. When you look around the table with our ceos they ask what did they ever do to deserve this kind of regulatory intervention. Theyve never blocked content. Theyve never done any of the things that they are protecting. For three decades. Weve been retreating from this regulatory model in virtually every space of communication. Theyre going to now apply that regime to the most dynamic, innovative, free in history. When does wheeler get hit with some of this . Right now its got to be sinking in to him. He might think okay ill buckle to the president on this. I got these 4 million covered from people. But when the adults finally speak up in the room and he sees the actual you know what the end result is going to be wont he say maybe i need to rethink this . Is it too late for that or were going headlong into this . I think theyre locked and loaded. Theyre going to vote on thursday. When you talk about the moments of shock i think watching the president of the United States come on a Youtube Video and direct the fcc to adopt a specific regulatory result, i think that was shocking. I think it put the commission in an unattenable position to do anything other than does wheeler say privately that hes in an unattenable situation . Is he going to look at this when history looks back at this is he going to say he was proud of this decision . Or is he going to say he was forced into this decision . Well i dont want to speak to how hell interpret it. He says its in line with his thinking. But we multiple times saw the chairman was moving in a different direction. It was external for us that it ended up punching them back toward this direction. Whether it be john oliver in the comedy skit that led to 4 million comments or the president s own intervention. It has been a sad example of i think, unreasoned decision making. Is there any chance that the legislation is not as tough as we think it will be . The regulation. Meaning well see it on thursday and somehow we can be surprised. I dont think we will but im curious if you think thats even a possibility. I think legislation can be strong if were all focused on the original task which is do we want to protect those four core Net Neutrality principles. I think thats an easy deal to achieve. But if what people are really quietly asking for in a bait and switch way is lets move from a light Regulatory Environment to a Regulatory Environment over the internet thats a bigger nastier question. And i dont think youre going to get any consensus with republicans or business around that direction which is the one the fcc is taking. Congress will have to be protecting strongly which we would foully support. Yet not impose a backward looking regulatory model on the dynamic internet. Just in terms of the Economic Impact for all the companies you represent, how do you see them sort of trying to get through this . What does it look like . What i like to say is, look, these companies arent going to try to stop serving consumers and stop investing in total, but the regulatory overhang will pull back the more dynamic innovative offerings. And does the profit margin come down too . Well thats to be seen. I mean i think it has a lot to do with whether they retain full flexibility around pricing. But the fcc is even though its saying its not regulating rates, its creating the Regulatory Foundation that allows them to regulate rates should they want to. If theres a federal Regulatory Oversight of race in any way, it could affect profits and margins over time. Sfl Michael Powell thank you for joining us this morning. Thank you. Come on back after thursday to see what they say. Well figure out what to do. Will do. When we you know we elect president s but then we always have divided government a lot of the times too. So you see checks and balances. Liberals always talk about Supreme Court appointments. How important those are. In fact, theyre trying to railroad poor Justice Ginsburg out so obama can put in another. I dont think she should but theres a lot of pressure on her to do it. Who would have thought that the appointment of fcc commissioners would have this unbelievably influential impact on our lives . So we have to think about that even though we have divided edd government. What would have happened to wheeler if he just said no . Thats what i expected. I expected he would have to prove that the agency was independent. I expected he would have pushed back even harder. Gone the other direction. Theyre looking at us like what are these people doing. The editorials in the New York Times think this is just the greatest thing that ever happened. Finally doing the right thing for Net Neutrality. Bizarre. Theres cat people and theres dog people in the world, right . Well see where everything lands. We should tell everybody wier going to talk more about Net Neutrality rules and new rules in the next hour with david karp. Hes the ceo of tumblr. Also coming up, squawk box fans from the millennial generation sounding off on twitter. Well take a closer look at their spending patterns and how to profit from them. Stick around. 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. 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. 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 . Oh do you believe that . I said it and there it is. Millennial squawk box viewers sounding off in the last 24 hours. Were taking a closer look. Are young people active investors are is wall street in danger of a lost generation . Sharon epperson joins us now with more. We started this yesterday, sharon, because i i dont know where they went in terms of tv in general and cable in general. And all of media. They went to their ipads. Which is hard to measure. But i was worried that they because of 2008 theyre just shell shocked and theyre sitting in savings accounts and theyre going to miss the boat on what could be a good stock market. They already missed the boat. Five years. Thats the only way to say. Let me tell you what the studies are saying. Were talking about millennials between 18 and 34 years old. Theyre likely going to manage a lot of money in the years ahead. Theyll control 9 trillion in assets by 2018. Their habits are being studied closely. Commissioned by the Consumer Federation of america and a few other organizations found almost half of millennials have a savings plan. More than half of them are saving at least 5 of their income and nearly 2 3 have an emergency income. But are they investing . The sans not so much. According to a recent study, millennials are mostly sitting in cash. Thats where more than half of their money is. Less than a third of their assets are in stocks. And retirement is certainly a top financial priority for many millennials. Thats what they say. But they have a bigger burden than a lot of other americans right now. Due to student loan and credit card debt. Theyre more focused on paying down debt right now. And theyre also not as focused on stock market gains. They dont care about that because theyre worried about the here and now. How different is this generation from other generations . Im assuming people from 20 to 30 were never putting money in the market. Exactly. Youre thinking about what your immediate needs are right now. I remember actually being in this building when i was in my 20s when i worked for time magazine, i wasnt really worried about my 401 k . I didnt know about it until someone who was older told me about it. Everybody coming out of the school was going to wall street back then. Now theyre going to silicon valley. I knew about stocks when i was 22 years old. I think you were a 2008 made it different. Im telling you. The whole buy and hold strategy was questioned. Something else making it different. When you look at studies looking at people who are in their 20s in a 401 k plan they are in equities. They are mostly in equities. 85 in equities. But theyre in a plan that has a target date fund. Theyre kind of exposed to the market in a different way. So when theyre trying to figure it out on their own either working parttime, consulting on their own, freelancing, making ends meet that way, they have to figure out other types of ways to invest. That may be more challenging. A way to fix this is to make a mandatory contribution. I was saying the same thing in any 20s. It was automatic and that was great. So many people are starting their own businesses. So if they dont know about a solo 401 k or dont know about a roth ira or different options available to entrepreneurs, then theyre not going to automatically enroll in Something Like that and theyll be behind. Can i call b. S. On the whole idea that millennials are not putting money in the market . I imagine kids today are smarter when they get out of school. They go to work at places that have 401 k programs and other things that are totally different than when you got out of college. What do you mean . I dont believe it. If i got out of college in the 1960s that somehow those kids were more sharon just told you its more in cash. She told you the numbers. When you look at the numbers, they are more in cash overall as an age group. So what im saying is is that relative to what it was in 1950 or 60 . Thats the question. Im just saying i dont those people are dead. God almighty. You watch key peelle . Say this guys name. Patrick Patrick Patrick oshag hennessey. I hear that a lot. Patrick oshaughnessy is Portfolio Manager where they have 8 billion under management. More like seven. You . Not me personally. Its a 40person firm. Its called oshaughnessy. There another one there . Yeah my father. Who youve met manyatimes. Exactly. Will you settle this . Hes stubborn. Didnt 2008 have a Chilling Effect on everybodys idea of course it did. Im saying relative to the last 30, 40 years. When you look at the psychology know the expression once burned twice shy. Thats true. All weve seen is stock market crashes, stock market crashes, terrible job market. I think we are especially skeptical more so than prior generations. More akin to a depression baby from the 1930s. But i do think theres some element of young people doing the same things young people have done always. So its a bit of a mixed message message. I do think theyre more conservative than they should be. I think thats a result of what theyve seen and witnessed with their parents accounts maybe their own accounts in 2008. When you look at how much money is in index funds, in target date funds, and these are just you put it on autopilot and theyre going to get more as you get older, definitely there are more people in the market. Definitely than there were right. Access to the market in the 1970s it was tougher to buy stocks. Exactly. But the issue is how many overall in the age groups are accessing those types of funds . If youre not in a 401 k program. And if you are in a 401 k program and are mostly in equities, is that a great idea . You do have other expenses that come up. You have student loan debt. Are you then going to cash out of that 401 k that is the worst thing you can do . No doubt the best thing young people can do is put a majority of their money in the stock market. Theres no comparison. The stock market always wins over the kind of time horizon that we enjoy. 40, 50 years in some cases. So i think that is a no brainer. Rule of 72. Its not what people are doing. Further when millennials are investing in individual stocks theyre doing it the wrong way like a lot of young people tend to do. Theyre buying the glamour stocks. Buying what you know is a bad idea if you dont pay attention. But just like the lottery, we call these lottery stocks. Some people win the lottery, but most people dont. Theres always going to be an apple or a google but as a category, those fwla mor stocks do badly. Patrick oshaughnessy. And you, you, you are not on the today show. Youre here with us. Im here on squawk box. I love it. Thank you for coming on here. Im happy to be here. Beautiful set. This is a oneshot deal . Youll be on again . No. When shes over there she can come over here. Thank you. When we come back this morning, earnings alert. We will tell you about the stocks that are moving this morning after quarterly reports. Thats right after this. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. 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. In our house, we do just about everything online. And our old internet just wasnt cutting it. So i switched us from uverse to xfinity. They have the fastest, most reliable internet. Which is perfect for me, because i think everything should just work. Works . Works. Works works . Works. Works. Welcome back everybody, lets take a look at stocks to watch this morning. Home depot posting better than expected earnings and revenue. The company also raising its dividend and announcing a repurchasing program. Also Toll Brothers beating the street as well. Sold more houses at higher prices. That beat was significant. The stock up about 4 . A mixed quarter for comcast. Revenue topped forecasts. Comcast is also raising its annual dividend by 11 and increasing Share Buyback authorization to 10 billion. Coming up when we return a read on housing from an economist who advises architects and a contractor turned tv host. Were going to talk renovations next. And the founder and ceo of tumblr is here. Back in a moment. 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. Home depot beats but warns of currency head winds. Were going to take a closer look at the spring Home Improvement season to find out if momentum in the sector will continue into the warm weather months. The future of the internet at stake. The ceo of tumblr takes a stand for Net Neutrality. And america on ice. Another cold blast slamming the plains, midwest, and northeast. Some areas grinding to a halt literally. Were going to break the ice and get business moving again as the final hour of squawk box begins right now. 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 joe kernen and andrew ross sorkin. We are less than 90 minutes away from the opening bell on wall street. Futures this morning look where does that money go . In what way . All of the money they will charge to get off their balance sheet. What bank will bank them . It depends on where they can get a more favorable rate. They are to the seen as sticky under the regulation. You see the assets in cash. The second the market moves in cash and they are taking a position, these are not viewed as deposits by the feds that will be really tried and true and sticking around. I wonder the longterm implications. Who picks that money up . Is there a fee involved . Who is the winner and loser . It becomes more expensive for the firms to hold the money. That is the end result. A lot of banks Jpmorgan Chase is one of the first. I imagine the others will be in the same treatment. Thank you. He remodelling spending is increasing as homeowners make renovations and gas prices in the recovering economy. We see the trend continue. Home depot reporting this morning that results topped estimates. Earlier this monday said it planned to hire 80,000 positions ahead of the busiest season. Stock up 44 in the year. Last week, one of the supplies, Mohawk Industries which makes carpet and Floor Coverings reported better than expected earnings. The Company Stock sitting above 180. Cabmaker woodmark hit a 52week high. Lets get a Home Improvement outlook from kermit baker and scott mcgillavary is a host on hgtv. We had zero Interest Rates forever. How does it get better than this . Well it gets better than this because house prices continue to move back up. When house prices are rising, people are comfortable investing in their home. They have more equity to tap into coupled with the fact we had a pretty tough winter. I think a lot of homes need fixing up coming out of the winter. It will be a really strong spring. Scott, how long have you been doing this and how do you characterize the current environment . It is like the best of worlds. What is that . The best and worst. The best of times. I dont get it. It should be the best. It should be the best. I have been investing in really estate for 15 years. We have seen ups and downs. What we are seeing right now with housing prices going up and some optimism there, people are starting to feel confident about their homes. Confident their home is an investment and willing to put money back into it. As it goes up in equity to make the improvements improvements. There will be a bump because of the loss in years. People did not want to invest. They deferred maintenance. When we see the Housing Market recover, people get confident and tackle renovations they want to and they address the maintenance. I guess it all sort of makes sense. You can almost draw a diagram. We have a financial crisis people are worried about their jobs and losing jobs and they dont do things with homes. Home prices collapse. We are just talking about millennials being gun shy with the stock market. Every aspect of our life is reacting to the shock in 2007 and 2008 scott . I agree completely. I, myself, am what i call a leading edge millennial. Im at the front cusp of it. As most of my peers and those younger than me enter the Real Estate Market or purchasing stage of their lives, we saw a different picture of real estate than the generation in front of us. The generation in front of us saw optimism and investment and opportunity. We came in and saw a mess. So i think millennials are skeptical about real estate being the best investment. They are moving back in with their parents and renting longer or also the trend of condo living in urban centers. People are downsizing. They want to be in an urban center in a small place within my budget. What about that . We hear about people saying it is all back to the bohemian lifestyle in every city. I would not write off an acre and a nice house out in the suburbs yet. I would not write it off, yet, either joe. Millennials are slow in getting started. The tough market and gun shy after the financial crisis. We see the millennials slower in forming households. We see those who form households are lower in getting married and having children. The homeownership rate is the lowest in three decades. It is slow getting out of the gate. Once they do we will see a big surge in spending. That will happen inevitably. The more you talk i think they all got their head on some stupid ipad. These millennials are different. Is that what you are doing, scott . You have all of the stupid applications . You all playing angry birds . Life is happening around you. Form a household and have some kids. Get out of your basement and off the internet. He has two kids. You have two . I have two kids. Its not your fault. Its not my fault. I believe in really estate. I made most of my wealth investing in real estate. It is early to producer counting on a lot of the measurables we have for millennials. Most have not entered the purchasing stage of their lives. It is hard to say this is representative of what all millennials will do. I think this group is entering a market at the time that the only thing they know is depreciating values of homes. They are not excited to throw the little savings they have at it. I think they are waiting and just like anything else i think there will be a bit of a sling shot effect being that everybody is holding back. As soon as we start to see confidence in the market and millennials can see the real estate is a good investment over the long term we will see a huge rush into the market and bounce forward. Kermit finish for me. There i go again. If i do something to a home add a bedroom or fix up a bathroom . What should i do to enhance value . What could you design . Absolutely great question. The architects tell us kitchens and baths are the projects that generate the most return. You know i think we are getting more to sort of fashion of projects. Were out of sort of the roofing, siding window replacement projects that we saw during the downturn for Energy Efficiency reasons. And now were more back to the style projects. Projects that you want to undertake to make your home feel better, to accommodate your changing lifestyle. And those are the ones i think were going to see the most surge in moving forward. All right. Thanks, kermit. Thank you, scott. Youre welcome. Maybe im wrong. The expression is wasted on the young. I have this view of millennials. I think every generation goes through this. The hipster beards and stupid applications on the phones. Maybe its the tattoos ink. You do sound crank y i. I do. Ive turned into this generation guy. I dont know. And youre the closest person to it. And i think thats why you take the brunt of a lot of this. Thank you. Ill apologize. You want to do it right now . Coming up next were going to open up the squawk box platinum portfolio and find out why he says it should be in your portfolio. His picks after the break. And later, stifel buying stern agee. Plus the ceo tumblr on the internet. And then jim cramer. All that when we return. 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 . Welcome back to squawk box this morning. Check out shares of macys. Retailer posting better than expected earnings revenue. Macys is giving a conservative view of the full year and its a bit lack of consensus. The squawk platinum portfolio is back. Now you can go online to cnbc pro on cnbc. Com to track the managers picks realtime and check their analysis. Joining us now to share his top picks a oscar schaffer. Its great to see you. Morning. I know you are somebody who is a Value Investor whos looking for bargains out there. Is it harder or easier to find bargains these days . We run a fairly tight, conservative portfolio. If you only own 12 to 15 stocks the answer is no. You can find them at any point in time. Exactly. Lets talk about your favorite picks. Cojenf communications. It is a data provider and this is a company run by David Schaffer no relationship that has literally lowered prices to its customers 95 over the last seven or eight years. Recently its been weak because theres a whole controversy about peering. And peering is where netflix is pressuring excuse me comcast, verizon, and the other providers are pressuring netflix to charge more for their services and therefore when you have a netflix account, when it comes into your house via cogent, it slows down. And thats because cogent it gets out of the mix. Recently the fcc announced that goes away. We think the company is going to grow very rapidly again. In other words, you think this overhang is something that is putting a little too much pressure on the stock. Has put pressure on it but hopefully now if the proposal goes through it it will not. What if wheelers proposal doesnt go through . Its only 5 of the business to begin with. And second of all, we think it will go through. Okay. Lets talk also about a Company Based in israel. Nice system. It grows 15 a year selling on revenue earnings. In addition to which as a new ceo it has an underleveraged balance sheet. Its got an overbloated overhead. With the new ceo who came in last april, we think that the company will decrease cost and increase leverage. If you only have 12 to 15 stocks that youre invested in at any point, you must have a very high threshold in terms of you really you have big convictions on these companies. Thats the great thing about it. Ive been ifn the business nearly 50 years. It used to be every idea sounded kind of interesting. Now with 12 or 15 stocks the bar has to be very high to fit. Surprisingly enough people think if you only have 12 or 15 stocks you have a lot of volatility. But the fund doesnt have Commodity Exposure doesnt have a lot of variability such that the variability month to month, week to week has been very narrow. And theres no intercorrelation between the stocks. So yes, high bar. But the key is to get to know the managements well. To Pick Companies that undergo change. Either misunderstood in the industry. A new management. Change in the whole industry structure. So, yes, we have fairly rigid criteria that makes the job easier. How often do you buy a new stock or sell an old one . We hold stocks two or three years. If i would guess, we own two or three new stocks a year. As a consequence, we get to know the companies very well. Its a very high bar. We hold the stocks two or three years. And theres little volatility. Lets talk about your third pick. Thats interzion. Its difficult the way its spelled and pronounced. Its called interaction. Interxion. I have done that before. We hold the stocks for two or three years, joe. If you had me on again, probably ill be talking about much the same stocks. But in any case this stock just went through what i think is about to go through a transformative merger with another company. The company they merged with is intel city. Theyre going to own in an allstock transaction. And theres going to be 40 Million Pounds or 60 million worth of synergies. One of the things it does by merging the two companies is the customers get bigger and bigger. Now that you have two companies together with great size to serve worldwide customers. I think its got 50 here. Does that mean the names going away or its keeping interxion. I should know that. Oscar thanks for coming in today. Thanks. By the way, a reminder for you, folks. Go online to cnbc pro to track their picks in real time plus read exclusive analysis. Coming up stocks moving the markets this morning. Plus keeping commerce moving on the river. Bitter cold temps in the new york area making shipping on the hudson a problem. Were going to go aboard a coast guard cutter showing you how theyre keeping business afloat next. And also tumblr ceo saying they need to Keep Companies from slowing down the internet. 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Announcing a new 18 billion share repurchasing program. And a bit of a mixed quarter for comcast. Comcast is raising its annual dividend by 11 . And increasing buyback share by 10 billion. Nearly 70 of the northeast oil and gas supplies float up the hudson river and with subdegrees freezing temps, and lots of ice that is an issue. Dylan dreyer is aboard the coast guard cutter willow that cuts so the barges can keep sailing. We are here on the coast guard cutter willow. That sound you hear is us literally cutting through ice. If we were to keep going north wed end up in albany. South wed end up in west point. We are right in the middle of kingston, new york. This is where the river tends to freeze. It is crucial to break up all of this ice which at time can be 13 inches thick because there are barges that use this waterway to transport about 70 of the Home Heating Oil for the northeast. Obviously with the winter were having, that is very very important. I was told by the coast guard crew that if the barges cant get up and down this waterway the folks in the northeast will last about three days with the heating oil they have and then theres no way to get more heating oil. Thats why it is so important to break up this ice. This vessel is specifically designed with a steel hull that breaks through that ice. But the crews say this is one of the worst winters theyve seen since 2004. Its already the coldest february on record for so many in the northeast. We broke record low temperatures yesterday morning. We broke record lows again this morning. Unfortunately the cold isnt going to let up any time soon. Back to you. Absolutely right. Its cold because its warm. Thank you, dylan. Still to come, fed chair janet yellen set to face a grilling over the hill over the policy and transparency. Plus 150 million reason why stifel financial wants to buy stern agee. Hes not the coach of dukes Basketball Team but sounds like it. And then tumblr taking a stand on Net Neutrality. One of the first to do so. In fact ceo david karp joins us in just a bit. Squawk box will be right back. I already feel like were the most connected but i think this solo date will seal the deal. Sure i offer multicar, safe driver, and so many other discounts that people think im a big deal. And boy, are they right. Ladies, i can share hundreds in savings with all of you justrogressive. Com today. But right now, its choosing time. Ooh we have a winner. All what . [chuckles] hes supposed to pick one of us. This is a joke, right . That was the whole point of us being here. Welcome back to squawk box this morning. Heres whats making headlines at this hour. Greece has reportedly submitted its list to lenders. That now needs approval before greeces bailout extension is final. Were less than 30 minutes away from the data on home prices. The report due out at the top of the hour. And then Consumer Confidence expected to be a slight drop from a month ago. In 90 minutes janet yellen will face questions from lawmakers on capitol hill on timing on Interest Rate hikes. So far the market seems to be awaiting those words. Steve leisman joins us with a look at whats to come. Good morning. There down fireworks today as fed chair janet yellen makes her first appearance before the newly republican controlled Banking Committee and its new chairman Richard Shelby who directly opposed yellens nomination last year. In light of dr. Yellens weak touch as a Bank Regulator and her strong inclination to print more and more money, i firmly oppose her nomination. Shelby also opposed yellens 2010 nomination to be vice chair. Now the question is how much Senate Banking under republicans pushes to reform the doddfrank reform bill and taking measures in the house that would force the fed to adhere to rules in making Monetary Policy and bills to audit. Shelby will be a guest tomorrow on squawk box. Yellen also can expect a tough time from the left especially from massachusetts democratic senator Elizabeth Warren who excoriating the chair over the feds failure to comment on living wills. Thats a mandatory blueprint for how a bank can be broken up in a crisis. What we need to do is to give them a road map for where we see obstacles to orderly have resolution under the bank code and to give them an opportunity to address those obstacles. I appreciate that youre doing that but the statute it seems to me is pretty clear here. That its mandatory that these plans be submitted each year and that each year you determine whether or not the plans are credible. So as we talked about yesterday, were listening for hints on the Monetary Policy but also to how much the fed is in play politically this year. The central bank doesnt seem to have too many friends at the moment on either the right or the left. Becky . All right. This is going to be something people are going to be watching pretty closely today. Most pundits expect hell be able to walk a fine line and make her way through it. I think she was blind sided by the politics last side especially from warren. The idea that u they werent ready for the resolutions. And warren made them go back and comment on them and call them unsatisfactory after that dustup in the Committee Hearing there. So theres just two ways to listen to this. And theres two ways the fed is in play. Obviously a lot of talk about Monetary Policy, but the other is the politics and how much shelby really wants to give yellen a hard time is going to be critical. You think they she hints at anything about patience or any of those wordings . I think thats what Financial Markets are really waiting to hear. I think thats going to be a big part of it. Thats what Financial Markets do want to hear. They want to hear whether the outlook for Monetary Policy, i think shell probably use that word patience again. Shell talk about inflation being too low but expected to go back to the 2 target of the Federal Reserve. But whether or not shes really asked a lot about Monetary Policy is a question. Because what we dont know is how much politicians in washington right now see the ability to score political points by essentially bashing the fed. Lets talk about the unemployment rate. Right now within. 1 of 1 where the fed was last time it started raising rates. Thats going to be tough to write off as a nothing. But what theyre going to do and what i hear happening when i talk to fed officials is this idea of changing what ethe right level of unemployment is that should trigger a rate hike. We talked to John Williams about this quite a bit that the place where unemployment would fall to a point where it starts creating inflation may be quite a bit lower than where the fed is. It may be actually below 5 . Okay. Steve, thank you. My pleasure. Stifel financial looking to acquire agee expanding by 35 . This acquisition would another advisers and representatives. Here to walk us through the deal is stifels chairman and ceo ron kruszewski. Good morning. Good morning. This is the latest in a string of acquisitions youve understood taken for several months. Whats the point . Whats the end goal . Its actually over the last several years the end goal has been the same its been for a number of years. And the financial crisis created tremendous opportunity for firms like ours. Were simply taking advantage of it. Is it important to be big . You know not big for bigs sake at all. I always say about being more relevant. Relevant in the markets and relevant to clients. And were becoming more relevant. So its a great deal. Im very excited about it. You sure you dont already own stern agee ron . I might. I was sure that what was that other one you bought . The one out in florin park. Kbw. Miller buck buyer. Thomas wiesel. Big rollout. Yeah. Its not a rollup. You cant rollup people. Its andrew i know. Hey, joe they ruined my morning this morning. Someone said i had a picture in the wall street journal, i kind of look like you. So it ruined my day. Thats funny. If your effing dreams my man. What are you hearing from clients right now . How excited are they about the markets . I think the people the markets, you know have some challenges here. Pe is expanding to offset that. But, you know i think a lot of people are going to be looking at what happens with the fed and what happens with Monetary Policy. You know, weve had a real tightening with the dollar rising. I think earnings will be hurt by that. And i think this is a critical testimony thats happening today. And what happens in the future i think, is going to have some impact. What if janet yellen suggests that higher Interest Rates could come sooner rather than later. Lets say as early as june. How does the market react to that . I dont think the market today is expecting that. But i personally believe that the risk of raising Interest Rates too fast is almost asymmetrical. I think this economy has to improve and inflation has to get back to the 2 target. Im not as focused on the unemployment as a trigger as i am with the fact that inflation worldwide, not just in the u. S. Has to show weve got to get inflation. I cant believe im actually saying that compared to what we went through in the 70s. But today inflation would be welcome. And its nowhere in sight. So youd like to see the fed hold off for as long as possible. Again, i think the risks of raising too soon offset the whatever the view of the risk is of not raising. Thats my personal opinion. Also you look around the globe and look at how strong the dollar is right now and how other Central Banks are trying to ease at this point. I guess that complicates the equation too. When you think about a rising dollar, a strong dollar is effectively a significant tightening here in the u. S. Weve already tightened when you think about the fact that a rising dollar the deflationary. And when were trying to get inflation going. So, you know, look. But i will tell you theres always a lot of angst in the winter and i believe in what was that movie, joe, in the 80s in spring there will be growth . Yep. Being there. That does kind of look like that is the best picture that has ever been taken of you. It does kind of look like me. Joe, some of i cant believe you would complain about this picture. Joe, i am not complaining about the picture. Im complaining that someone called me and said it looked like you. I think its a good picture of me. I just dont want the comparison. You cant look like me ron. You can try and try. Stifel is the one in florin park. Beautiful office in florin park right, ron . We do. I mean look back to the stern agee deal its going to help our fixed income business. Its a good firm. Its a good acquisition for you. Its a great firm with great people. And i couldnt be more excited about that. And, look no matter what anyone says from my perspective here we see growth. You know maybe a little challenge in the next couple months. But over the next few years the economy and b the markets are going to be a lot better than they are today. I think ron looks great in this picture. I dont know who mistaked you for joe. Haha. You look so young in this picture. Thats true too. Youre a man on the move. But you spell your name all wrong. You and coach k have to work on your spelling. Krzyzewski. Youre kruszewski arent you . Theres ks and rs and none are pronounced. I want to buy a vowel. All right. Thank you. Thanks, everyone. All right. I think he was kidding. He got you. Does look good though. Up next its more than just microblogging. The ceo of tumblr joins us to talk Net Neutrality and much more. And dont fesht later this morning, this young gentleman has been on before from tumblr. Hes so young. And also were going to be talking about janet yellen. Well carry her testimony as it happens. A live look Market Reaction all morning long. How many millennials will be watching the fed chairwoman testify . 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. We live in a pick and choose world. Choose choose choose. But at bedtime . Why settle for this . Enter sleep number. Dont miss the final days of the ultimate sleep number event. 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. Hurry, ends sunday know better sleep, with sleep number. The next phase of this long tortured Net Neutrality event will be likely litigation. I would predict that its at least two and up to five years before the rules are fully and finally settled. Okay. That was former fcc chairman Michael Powell commenting on Net Neutrality rules earlier on squawk box this morning. Tumblr is a new way to consume media. Its not new anymore, but new to some people. And the company is sounding the alarm on the need to quote, save the internet. Its a call to arms for users to contact government officials to influence Net Neutrality policy prior to the fccs vote on thursday. David karp is founder and ceo of tumblr and hes here with us now. Thank you for having me. Weve had a rousing debate around this table for a long time about what to do about Net Neutrality. And weve had a number of ceos come on who either traditionally own pipes for the most part who say you know what . These rules, which i think go farther than what they even expected originally the title two stuff. Ultimately are going to really slow down the internet. Its going to slow down innovation. Do you believe that . I really dont. I think the way we see the most innovation is by sort of separating the layers of the stack. So making sure that theres a competitive market for carriers where theyre competing to deliver us the fastest, best internet that question get access to with modern technology. Then on top of that you have a free, open market place of services that can count on their point is if you talk to someone like at t Randall Stevenson, he will say right now they have more capital expenditures. They have invested heavily to build their network and if you turn it into a utility, it will not be profitable to continue investing like that and as a result it will slow down. Its just not true. Its been disproven. How . By the tech end of it too theres a lot of artificial throttling going on. They have the band width to deliver this. And if we could move further in breaking down the nearmonopoly situation we have right now, we would hopefully see more competition. You have monopoly because its expensive to build the pipes. You dont have people to build multiple pipes to the door. I contest, not my area of expertise. In general the industry had a light touch in terms of government had a light touch in terms of regulation. Would you say that thats been beneficial in the past that theres been a light touch . In general, you think heavy handed government regulation is a good thing or bad thing for an industry . I think a bright line rule that spells out the rules we believe in. I think the bill of rights is a good thing. Even without getting into the weeds. The First Amendment that says this is a truth we believe. So let me ask you a question. I dont see how thats an answer at all comparing this to the bill of i understand the bill of rights but has it been a problem up to this point where you feel that people that Net Neutrality has been violated and people have been harmed . There has. Weve had instances of comcast, for example, to block whole protocols and shut off access to innovative parts of the internet. When that happened recently in 2010, the fcc stepped in to try and intervene. Weve had laws. Weve had weak laws. Things like the telco act that these carriers have kind of been following. They broke it down in the courts last year where the courts flatout said look. This bad behavior under the current laws isnt legal unless were so if Randall Stevenson has said point blank, im not going to build out certain things i was going to build out. Im going to finish the stuff for directv but then im going to mexico. If he how has that been disproven . How can you tell him hes been disproven that hes not going to do that . Thats just the word you used. Its just been disproven they wont build it out. The at t ceo has come here and said im not going to use the money i was before. Theres a huge number of consumers already paying out the nose for access to the internet. How has it been disproven that hes not going to actually pull in on his buildout of more infrastructure . Consumers are demanding faster internet. So hes actually going to spend money building it out. Hes just lying. They are. They have been. Let me ask you. Because hes putting pressure on on politicians to make a case for own the complete stack. So hes going to do it anyway. If he cant recoup hes going to do it anyway . Absolutely. Doesnt mean someone will pay for it if theyre losing money as a result. Somebody else is going to come along and figure out how to deliver. I thought it was a monopoly . I confess, i dont entirely understand the circumstances of that monopoly at least in a city like new york. Im an advocate of Net Neutrality. However, ive become a little more nervous once i realized that we were talking about going back to a title two world. Because that to me meant that there was going to be sort of an extra level of regulation that i hadnt really pondered. And by the way, i dont think many people in the industry had. Weve had people like barry diller who have come on this show and been strong advocates for Net Neutrality yet when it comes to title two, they get a little bit more nervous. A little bit more nervous . Hes totally against it. He wants it tied in the courts. Does the title two thing change the dynamic for you . When you talk about Net Neutrality, is title two and Net Neutrality one in the same to you . Or do you separate them . I do. Is that an issue . I get the kind of just wanting to stay wanting to preserve what we have right now. Weve started to move in a bad direction. So this was the internet founded and established and has generally grown to a good place in the last few years. The carriers have tried to kind of take it off the rails. They tried to do the prioritization. They tried to do the blocking. I dont even know thats true. Where have they been throttling . Where has that been happening . Comcast blocking traffic completely in 2010. If you look at netflix traffic, sometimes it is 80 of a networks nighttime low. The consumer is paying for it. Im not a netflix user. It ticks me off i have to subsidize everybody that is doing that. Why do i have to pay for that . Heres whats going to happen. Netflix can thrive. Can thrive but with deals that we established with carriers. What that means carriers are going to bless a handful of partners that either they founded or are cutting them in on the economics of it and the opportunity for the next emerging innovative platform the next tumblr the next netflix that has a promise for consumers isnt going to get that blessing. Comcast said it wasnt going to do that. It went before congress and said they wont do those things. Theyve started to do those things. Where . Theyve blocked protocols. There are examples. Just to just if you go back in 2010 a number of examples, both comcast, at t but a number of the Telecom Providers have throttled traffic. Thats not in dispute. They havent, not a tremendous there have been people who have made that allegation level 3 has made that allegations and others. Last question on its yahoo question now that youre part of yahoo for what 2 1 2 years . Uhhuh. About two years in. One of the things that Marissa Mayer said she was going to keep her hands off the company. Kara swisher wrote an article late january suggesting that the advertising side might get merged. It is getting merged. It is getting merged. Does that worry . It does. This is an exciting moment for the company. Weve been hard at work building the business last two years, advertising business scaled our sales teal to nearly 100 people. All running out of our organization, our office in new york. Its gotten to a point where weve established those ad products in the marketplace and were ready to take those out there with yahoo and sell those products, those networks together an opportunity to hopefully do more bigger business and offer more bigger platforms to those marketers and brands. Im excited about that this year. Thank you for coming. Thank you for having me. Ill be more informed next time. Appreciate it. Brian roberts on line one. Youll be back. When we come back jim cramers going to break down earnings of the morning. Stick around. Squawk box will be right back. Theres something happening right here in this country. Its the sound of america. Working with american materials. In american factories. At weathertech all we do is create the highest quality Automotive Accessories including laser measured custom fit floor liners. Order yours today at weathertech. Com or call 1800carmats weathertech floor liners. Proudly made in america. Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Let get down to the new york stock exchange. Jim cramer joins us now. I think can i sum it up . Tesla, you any, might be getting a little bit like story stock but apple at 775 is still in terms of most metric not frothy, right . Again, stuck with this pricetoearnings multiple way to value stocks done that versus what happened in 2000 you get a 15 multiple for apple and its hard to justify that given the capital redeployment where theyre able to return a lot from shareholders from buybacks and dividends and they have two huge new product, the wristwatch and apple pay, jpmorgan highlighting that this morning im see a lot to like versus tesla where its awful cold outside. See how those batteries do. Ive been attaching tesla motors website for people who own the cars and theres grousing. At the same time i recognize that its a cold situation and people who come out against tesla are really coming out against thomas al va edison and tesla. You have to be careful if you come out against this thing. See you later. Diane diane swank. I want those two to get together. Why not . Its like. Diane swank a fellow negative on retail. Im looking at home depail Cracker Barrel nordstrom, dillard, other than walmart i dont have a lot im worried about. Walmart would have gone higher if it werent for the fact theyre paying more people. Retail and restaurants unbelievable. Against them, its painful. Love to hear a retailer id love to put a short on because i know it aint home depot. Squawk box will be right back. It can bring out the worst in people. But the mclass scans for danger. Corrects for lane drifting. And if necessary, it will even brake all by itself. It is a luxury suv engineered to get you there and back safely. For tomorrow is another fight. The 2015 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. That does it for us today. Join us tomorrow. Right now its time for squawk on the street. Two, one good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with Jim Cramer David Faber at the new york stock exchange. The latest s p caseshiller home price index is out. The up ins going to be on the screen in a moment. A big day setting up ahead of Janet Yellens testimony and big earnings from home depot, comcast, macys. Futures are timid. Oils got a bounce still below 50, though. The tenyear remains right in the tight range around 2. 7. Road map begins