Transcripts For CNBC Squawk On The Street 20140305

This morning after the dow and the s p toastposted their best gains of the year. And carl icahn said one company has the worst Corporate Governance hes ever seen and Steve Ballmer making his first address since leaving microsoft, he did not disappoint coming to you later this hour. But first up well start with the markets, stocks coming off a record session, the s p a record high and the dow and the s p having their best day since december 18th. And adp showed the economy created fewer private sector jobs in february as the cold weather restrains hiring. You said the data has been okay. The durables and the chicago pmis have been all right. We have great data out of europe pmi. How could the economy be good and stocks be good and employment be bad . The economy is not necessarily good its delivering but with the employment weaker and the macromanufacturing come out and continue to amaze and the Mortgage Application number this morning that is strong. If you get russia off the business section then you look at the data. Its not Strong Enough that the fed is against you. Speaking of the front page heres usa today. Eyes probably too simply but putin blinks stocks surge. Is that it . Is that the end of it . Geez i dont want to say yes. If we ignore putin were going to be find. Fred kaplan with a great piece this morning i was reading. There are certain people who are really experts on the these situations, and they keep saying russia is a regional power. Dont overdo it. When you dont overdo it with regional powers what do you do . You go buy bristolmyers which was up 5 . Thats the bellwether when things are okay. Im literally saying the drug stocks exploded because people say, thats a nice safe place to be and the airlines went up huge. You usually dont see this confluence unless theres buyer who say the economy is weak ill buy the drug stocks the economy is stronger and ill buy the airlines. That happened yesterday. The russell took out not just the 2013 high but the 2011 high and a lot of technicians argue if theres something thats going to go wrong in the broad market youll see it in small caps first and clearly the russell is not telling you that yet. A lot of people are saying jim, you are nuts you are not focused on what happened in 1999. Theres business thats okay in the country. Are people irrationally exuberant, lets see, if the secondaries dont do well theres too much insider selling. The big cap stock not a lot of supply. People can actually buy. The big mutual funds can buy the smaller caps stock. Theres stock for sale. I only mention that because theyre getting a lot of money in and people want to own domestic stocks thats chathwhat this russell is. Absolutely. They dont want to know what kiev is. They think this is the tolstoy sketches. They want to make it historical. They want to be on the right side of history, which means owning small caps. The s p is up for 223 Straight Days only four streaks longer than that in the past 40 years but you dont see that being a threat . I think theres still a sense that on the professionals this is not a great market. Hedge funds got short again yesterday thinking monday thinking it would be with us for a long time. We have the breakdowns. We were down 6 one time this year, that brought out a lot of shorts. Fundamentals what can i say . The numbers are still good. Activist investor carl icahn calling in to squawk saying ebay has the worst Corporate Governance hes ever seen and its a symptom of how bad the American Companies are run. Ive never seen worst Corporate Governance than ebay. Ive never seen somebody like andreessen. Im not saying hes a bad guy. I say Corporate Governance is bad and i might blame donahoe more than andreessen for letting it happen. He did save a lot of his criticism for donahoe. He said look andreessen if he can get away with it why not. This was a remarkable breathtaking interview, because icahn has seen you mentioned chesapeake. Some tremendous situations of conflicts and hes really hanging it on this. I think the squawk team said rightly theres some hyperbole here, theres an interview with donahoe in the wall street journal that makes it seem okay. There was a dispute between Andrew Ross Sorkin and carl how much conflict there was in the skype thing. But the west coast does things differently from the east coast. They are willing to have andreessen leave the room because they want his advice. Carl wants everybody to be neutral. He did compare the system of Corporate Governance to elections in our government and said that our governments far more accountable because theres real elections. I think the idea that theres real elections in corporate just doesnt happened. You talked about the way he approaches this kind of thing, helping at motorola and he seemed to be drawing, i dont know a truce with apple . We have a new cfo who will come in september who has been called more shareholder friendly. If donahoe would call carl and say come on out and make case. Theres a dispute right now to analogize, they talked about pepsico at the end of squawk are they too dismissive of nelsonnell nelson peltz, and a board like ebay would be well advised whether they like it or not to say, carl, come on. Donahoe talks about in the interview, im willing to listen to everybody but carl is not going to go away and the one reason hes not going to go way is the stock goes up. A lot of ceos say how do you deal with carl . You try to treat him as their biggest shareholder. Is that right . Hes been very right. He got involved in forest labs and the stock went from 30 to over 100. Theres a whole new wave of people who say welcome. We talk about ballmer. They welcome value act. Youve got to do this. Darden going the other way saying listen to you activists, were not paying any attention to you. If you dont Pay Attention they come on tv and basically tell you that you are not doing your job and then that scrutiny starts hitting you in the supermarket. Im sure someone in the supermarket, if he shops, maybe you use amazon fresh, you can talk about that look hey, what are you doing . Carl is big and he visibly calls in and our network is the place you go when you want to put pressure on people. He almost suggested he might be getting out of who believes this he said he might be doing less of this as he gets holder. Clearly i dont need the money. You would hate to see him hang it up for the sake of Corporate Governance in america . I would be sad if lebron after a 60point game goes. Icahn is too good. A lot of people are saying hes too old. If hes too old, why is he making so much money . He said quite frankly why am i doing this because i certainly dont need the money. I think hes having fun. We like to have him on for the clarity it brings you. And donahoe has to respond. Theyre using the journal. Andreessen using the journal. They should use here. Donahoe did it initially but andreessen come on and give it a full vet and maybe it goes away. Maybe it goes away. Theres something between reading it and hearing it. Andreessen is talking about the thousand places. Theres one place. Come on here and let it go away. With that well see if they follow that advice. When we come back honeywell ceo david cote outlining his fiveyear plan spent some quality time with andrew becky, and joe this morning and roku taking on googles chrome cast with its own streaming stick. Will it be able to compete . The founder and ceo will join us later on. Finally futures here not looking too bad. Dow needs 180 points today to close at an alltime high. Were back in a minute. With all the opinions about stocks out there how do you know which ones to follow . 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And what youll see is doubledigit Earnings Growth for the next five years in a continued slow economy or slow growth economy. 2014s on target. Yes. What did you make of the longerterm plan . I have 21 bankable ceos and cody is right at the top of it. There are many executives that have come out with fiveyear plan and have failed. His fiveyear plan he continues to exceed even as the fiveyear plan is totally stretched goals. Hes bankable. Boeing is very similar. Theres only a couple guys who really hit their fiveyear. And cody is rather remarkable because its organic growth. Hes not doing it by buying companies. He is so good. What is it about the business thats working . Is it a dynamic of being global . Global but also is it capx, what . Hes also at the central stage of trying to get your energy costs down whether it be in refining where he has the best chemicals to be able to get the most gasoline out of dirty oil, for instance, in the turbo which is what you need to be able to low your get more mileage out of each gallon. Thats a very important thing. And, of course, he does the cockpits for pretty much everybody. Hes done a remarkable job in honeywell, my Charitable Trust owns it. Its just been a gigantic winner. At one point they asked him about activism and he had a great answer when your stock goes up all the time the activists dont call. Good man. Is it your favorite industrial name . Definitely. Really . Yeah dave cody is a remarkable guy, and yes, ill admit we are nextdoor neighbors and hes also a terrific guy in person. You cant argue with what he brings to the interview and certainly with the stock as you said. Well watch that closely along with exxon also having a yes, down. In the meantime, former microsoft ceo Steve Ballmer giving a talk to graduate students at the university of oxfords school of business. In between talking about Lessons Learned at microsoft and the best thing about retirement the ability to golf wherever he wants. He talked about the future positioning of the company in the marketplace. Take a listen. Empowering technology for all that ought to be a brand proposition that if we run the company correctly can last 20 30 50 years or more. I had a bunch of guys at microsoft, you know, we were going through angst five six years ago, oh, what do we want our brand to stand for and, you know, lets face it apple has had a good run recently and apple is, quote, cool, unquote. Unquotequote, your choice. I love steve. Steves an old friend. He was a Business Manager when i was editor and chief of the harvard crimson. Theres a moment where he has this existential, okay we should have been and he goes on and on and on about how he blew it. Thats why i love him. I love him. Your sense as we make the switch to nadella, their fortunes better or worse . I think that one of the things that was great about steves swan song everybody has got to listen to it because hes so great, listen someone else we need a fresh set of eyes. Its funny that mark penn will be the strategic officer for the new guy. I did feel that balmer was abject saying listen apple just crushed us okay . We didnt see it coming and he made it sound like the next guy has a better hand. Really amazing selfeffacing, very rare to you see an executive who say, listen we blew it. And you cant get the candor until they are on their way out. The archrivals have new Cfos Amy Hood and theyll bring a new set of eyes to the street as well as product. Thank you for mentioning it. Amy hood is fabulous. The Conference Call was great. Oppenheimer is fine. But people should listen. Amy hood is a star. Not a rising star. An actual star. And ballmer put her in so i think thats a good sign. Theres a look at how the two stocks have done over the past year. Interesting. When we come back well get cramers mad dash, i think hell have a crack at exonthis analyst day today. Take one more look at futures and well get that opening bell in just a few minutes. Dont go away. Really . So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues great terms. Lets close new at t mobile share value plans our best value plans ever for business. 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. Slow ride take it easy about ten minutes before the bell, lets get jims mad dash this morning. Exxon is having an analyst day and it looks like capx has peaked for those guys. A lot of people has say its production peaks. You dont get the numbers from exxon. Contrast that with Continental Resources. Its a growth stock growing at 30 . This is a nongrowth stock. This stock moved up from here because of one thing Warren Buffett buying the stock. It cant get out of its way because it doesnt have real growth. Exxon doesnt have it. Buffett is in a box on this name . He doesnt care. He thinks its short term. Exxon by the way has a 50year plan according to a lot of my pro friends who follow the oils and exxon, look its too big to get the job done right now . Does it have to split up . What does it have to do . Exxon doesnt have growth in a market starved for growth. Liquids production up 2 . 4 over the subsequent couple of years. But capx was 42 billion last year. Right. Its going to 39. 8. And still saying Record Number of oil and gas prices and they talk about ukraine and involvement there. Exxon has what some people want at home which is a steady flow good dividends, good buyback but not mutual funds. They dont want that and hedge funds particularly dont like hedge funds. Gm mary barra taking the reins of what is turning in to be a persistent problem. Gm Charitable Trust owns it technically you look at breakout. Goldman sachs say this is it this is the time to buy. Theres a lot of talk about cash flow being very big. Heres the key thing you need to know about gm. As rates go higher okay this stock goes higher because they have a big pension obligation and it cuts back the pension obligation if they can invest with higher rates. I think General Motors is going to break out here. I think mary barea will put the recalls behind her. That means theres an opportunity. Buy gm. The run rate for the industry is nowhere near where we were last year. You could have a lot of upside. General motors has had a lot of upside in china and a lot of people are talking about a bond default in china. 20 growth for gm in china is what you want. Plus 3 yield. But both of those names are not what a lot of funds are looking for in terms of growth. No they want regeron and one that well talk about later i think when we get to, you know, a stock trading facebook. Remarkable note by jordan rohan about facebook. Basically saying whatsapp . Who cares. Go and hire. Thats what they want. You keep talking about two different markets. Two track. Two track. Theres the no growth and theres the hyper growth and the moneys being thrown at the hyper growth. Thats what were staying tuned. With all of that dont go anywhere. The opening bell is a few minutes away. Squawk on the street is coming right back. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. 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You need to see the oils break out and well not get that with exxon and you need to see the financials triumph over the yield curve that has not been forgiving for them. The s p is positive on the quarter, five straight quarters up and thats not been done since before the crisis. This is amazing because its still being done in a virtual vacuum. We saw schwab up and e trade up yesterday, those are signs that people feel that these are going to flag individuals to come back maybe a little margin debt, too, but it hasnt happened yet. Maybe it will finally happen this year. Yeah. A bunch of individual names to watch today, too, chipotle warning that the price of guacamole and some salsas could force it to eliminate them from its menu because of global warning and listing drought and weather change and a long list of Business Risks faced by the company if the cost of ingredients jumps because of weather they may choose to temporarily suspend serving item items like guacamole in the quarter which was january 30th. Comps were up. Traffic was up but offset by some of the food prices. I spoke with the cfo, im not that concerned. I think they may have toguacamole, it hits the income line. Im not kidding. It hits the bottom line. Its like a cost. 17 times tequila. I cant suspend it. I am supposed to put out ketchup . Ketchup . But it does feed a larger discussion about what commodities have done this year and especially restaurants. And also beef has been very tough. I think that people dont understand you get the bill you say, oh, hold it i got to raise price and if you raise price people stop going and they go to another company. And chipotle signed a Major League Soccer deal. They are hitting the ball out of the park with the industrial mass casual. They are doing a lot of things right and the stock had a monster move 40point swing between monday and tuesday. On cmg. On cmg. Really. 9 comps versus minus 8. 8 comps for red lobster. One is natural and organic, and the other is i dont know deadliest catch. I dont know. Even with all that pricing pressures margins were up a point in the recent quarter. For now they are able to handle it. A lot were concerned that chipotle uses so much natural and organic they just wont be enough. Jack hartung has assured us not to worry about it. Its the monster stock in the restaurant business. Speaking of storks that had momentum at one point apple. We talked about the new cfo which was announced yesterday. The iphone 6 launched late summer and others on the street are thinking its more of a summer dynamic which i dont know. One of the things i promised apple after the last quarter, the analysts that say things they dont know anything about, im not going to bless it anymore, the number being made apple is a very tightly kept secret. You got to read the Conference Call and they tell you everything. And everybody else is guessing and the guesses, stop trading on the guesses for heavens sake. You dont know anything. You dont. Apple will change things. They will do things. You cant make a model based on sticking your finger up in the air with apple and say come on we need more than that. Im sure they tried to be rigorous. Apple has not let you game them and every time you do you are so wrong. Betting on them is a losing proposition. A loser. Petsmart beats 1. 21 and sales underwhelming but traffic was positive. Look, every time you lowered expectations lowered expectations youll finally beat them and thats what i think is the petsmart story. Comps up 12 and below the target which was two five to three five. Thats an unglowing endorsement but its working. Finally Netflix Bernstein had a note yesterday arguing that infrastructure in latin america is going to limit opportunities. Competition in europe is going to limit opportunities. Well look so far theyve triumphed over all that. Who am i to bet against reed hastings, you bet against elon musk, you on the wrong side of the stock. Right side of history maybe, wrong side of the stock. Theres the bell on this wednesday and a look at the s p at the top of your screen. Down here at the big board the triple negative Breast Cancer foundation and over at the nasdaq Sparnord Bank of denmark as you look for relative stability here. Right, right. I think thats really the case. Youve got some biotechs that didnt deliver numbers. Youve got some Oil Companies that did. Theres just look had is a very checkered tape but watch honeywell which we talked about. Why . Because if you execute and youre an industrial, people are not looking to china pmi, maybe looking at europe pmi but they are looking at bottom line performance and buybacks and dividend boosts. They dont quit when you get that. You mentioned the price target. Up 1. 2 and goldman upped theirs to 78 the other day. This is all about how people the advertisers are all over facebook not just for traditional advertising but direct response advertising, when you talk to ceos who are trying to reach consumers, whether it be a domnies or buffalo wild wings, facebook is our favorite way to get ahold of consumers. Out of a year and a half this is selling at 40 times earnings and growing much faster than any other large cap stock i follow in technology so why not get a very premium multiple thats going higher we mentioned the drones yesterday, of course, minimal cost, 60 million. What do you think thats about . I dont know but i will tell you the stock underperformed yesterday and i think a lot of it when people hear drones are you kidding me . Come on give me something earnings related. Today you have the earnings related Research Notes those are driving the stock. You mentioned in terms of the Charitable Trust. We own facebook. The trust owns. Got back in when whatsapp. The only dip you get. There are the facebook is part of this cloud, social mobile connectivity. And when you see that like salesforce. Com which had this huge dip which i think is buyable, you get this kind of this is where tech is going. Versus pcs got some more negative numbers. If you listen to the ballmer rant, you know that they missed social they missed mobile they missed cloud. Very hard to catch up. Yeah. We didnt get a chance to talk with you yesterday about the disney dish deal. Yes. Or the oscar ratings or frozen making a billion dollars or the great week that iger is having. I am embarrassed to miss it but i was part of a frozen singalong, im not kidding. Welcome to the club. You dont have 4yearolds like i do. The ice castle one. Its pretty easy to sing to. Let it go . Let it go. You want to give us a taste right now . No no ooh, no. But bob iger has delivered delivered delivered delivered and they are doing many things right including frozen which is the next big franchise, they develop out of nowhere i am waiting for the ride already. I am waiting for the ice castle ride, please give it to me and i want it now. Bernstein takes their target to 95 and i assume you think its doable in the long term. Yes. I noticed the buyback is very very strong here. I think the stock can go higher. By the way, i should have mentioned microsoft did you know that ballmer mentioned they were in talks with facebook and zuckerberg wanted to go his own way. Really . Yeah. Kind of, listen we met him, we kind of liked their model. A lomb of companiesy lot of companies doing things right. Circling back to disney when you look at the release schedule schedule, star wars coming. The schlumbergers and so forth will follow the exxon lead down. Thats a mistake. They shouldnt. Because exxon is not where the action is. Im going to be going off to an offshore oil rig next week in the gulf. People are going back to places that they thought were tapped and theyre not. You need schlumbergers Incredible Technology to be able to find that oil. Schlumberger is a worldwide company, not beholden to any individual oil company and certainly the national Oil Companies are spending like crazy because the fact is oils very high. Dont read exxons capx. People are going to do it. Today will be a bad day for that group, theyll say its not going up for them. Do you know what exxon, im not saying this yesterday, but you dont trade it. How much is how much whether or not keystone happens . Transcanada are putting out polls that saying most americans are in favor of it. Warren buffett, we should have it. Union pacific, okay Union Pacific is saying we dont need pipelines and yesterday howard ham m on Continental Resources loves pipelines. They all love pipelines because its a cheaper way. But the rails are on fire here because theyre moving the oil because people feel that the president is going to stall keystone until the next president. Big piece in the Washington Post today about podesta and how hes essentially in charge of preserving the president s legacy on the environment beyond the end of this term. Its an interesting read. Fossil fuels, they dont like them. By the way, china in their new five fiveyear plan, thank you, mao, is talking about environmental cleaner. Thats instrumental. You got to be able to gauge the ability to be able to see your feet in the smog there. And i know that thats where the real issues are for global warming. Obviously they take our jobs. They do a lot of global warming. But were worried about keystone. In the meantime the trucks and the trains are going to take it all. They are terrible ways. Trains dont use that much pollution, but understand that when Warren Buffett said its better, a big pipeline cop,mpany, but Burlington Northern will be the primary beneficiary so i thought he was unconflicted and also unqualified. Very nice. Down is down 27 or 29 points lets get to bob pisani on the floor. Good morning. Good morning. We started in positive territory on the s p but we just turned negative and, of course, we were at historic highs not just there but the midcap and small cap indices. Europe sort of mixed this morning. A lot quieter than the last few days. The euro zone Pmi Services Index revised upward. That was kind of a surprise right now. Lets move on and talk about the ukraine. They were raising worries about emerging markets and weve had a tough time. The ems down 5 this year got a lot of questions about that overall. Chinas been weak and brazils been weak. But if you go outside, look at the frontier countries because there was a big debate about it should people get outside of the old eems and look at frontier companies, all of them are up rather noticeably. So far the advocates of going out and buying frontier countries over the old emergeing markets like china and brazil so far they are winning the argue. The chinese stock market down another 1 theres big concerns that a Major Chinese Solar Company may not be able to make a big payment on one of its bonds and maybe a default. It hasnt happened yet. Thats raising concerns about credit risk in china. This would actually be the first default of a mainland chinese bond if it actually happens, theres a lot of concern right now on china. Keep your eye on that one. Elsewhere i was telling you a couple days ago about commodity efts. The dba has had five times normal volume yesterday. Agricultural etfs sugar, cattle, corn soybeans. Journal had an article on this this morning drought in brazil is causing Agricultural Prices to rise. This etf up 16 so far this year. The coffee etf, yes, there is a coffee etf he said jo is the symbol there you can buy that as well. Thats up almost 70 so far in the year. Finally quick earnings smith and wesson out, sixweek high beating estimates and raising its fullyear guidance above estimates of the street. Brown and forman Beat Estimates and raised their fullyear guidance and navistar is sliding but sales did beat expectations. Guys, back to you. Thank you so much. I got to tell you, a lot of smith and wesson is very hard pop. Its really ramping here. Lets head to the bond pits and Rick Santelli at the cme group in chicago. Take it away rick. Good morning. We all know the issues regarding the ukraine seemed to come out of the market pretty quickly yesterday and we also know that there was some effect on the Interest Rate market due to the weakness in the equity market. But today is a continuation of yesterday. As you look at this intraday chart of tens a couple things should jump out at you. First of all, were above 270 but more importantly at 8 15 eastern is when we had the he yield because it was a disappointing adp report but we could see its much more risk on and much more reversing the compression regarding some of the issues regarding geopolitics and maybe weather and were off to the races so to speak. If you look at some of the clues, lets look at the twos to tens spread on the yield curve and five to tens on year to date, you see the way they are starting to turn up just a bit . Thats a clue you dont want to be too long treasuries looking for lower yields. If we continue to monitor all the other issues that give you clues, lets look at the dollar yen today. It is up. Taking out 102. 5 on a technical level. Year to date first thing you ought to see it looks just like a tenyear chart and it does. But it also like the yield curve moving into a steepening mode gives you a clue that maybe were going to see more selling in treasuries. Now, if you look at a oneyear chart of euros, you can also see unlike the dollar index flirting around with unchanged on the year the euro looks like it wants to break out. The pound is doing pretty well too. Lets summarize, if the big retracement is 275, many traders think were going to snug right up to it, just in time for the bls report on friday. And if thats weaker the big question is will treasuries pay more attention to the weather issues as stocks will or to the downright fundamentals that most likely are going to be a little spongy on the job side. Carl, back to you. All right, rick thank you very much. Lets get a check on energy and commodities with jackie at the nymex. Good morning, carl. Were seeing declines in the energy pits west texas intermediate and the crude brent across the pond as well are both lower this morning as geopolitical tensions are easing a bit. We are watching wti prices hovering around the 103 a barrel mark. We did settle above that level yesterday. We are going to get the department of energys weekly report on crude inventories and we are expecting a build in supplies of 1. 5 Million Barrels and traders will be following it closely but they are also watching the equity markets and considering this mornings adp report as well as they are Trading Crude Oil futures. I want to switch gears and talk about nat gas, because well hit a high of 37 degrees in new york today, and that feels quite warm compared to what weve seen and were seeing the futures trade lower this morning. Its been a very volatile trade, but the traders expect it to decline a little bit if the temperatures continue to warm up slowly but surely. Last but not least i want to talk about gold prices because were trading pretty much flat to down today. Traders saying their eyes are on the jobs report friday if we get a weak number we could see gold prices spike, but right now they are very tentative as they are watching the data points come out and watching the equity s ands and geopolitics before they make a big move. Guys, back to you. Thank you jackie. When we come back well go live to moscow to get the latest on the ukraine. And the dow is down now 11 points. Squawk on the street will be right back. Theres this kid. Coach calls her a team player. Shes kind of special. 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Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Getting some breaking news on target according to the ap the company is their tech chief beth jacobs is resigning today as part of a security overhaul. Target seeking a new cio as they overhaul Computer Security after, of course, that data breach that took the wind out of not just the stock, jim, but the quarter at large. Yeah. The stock did have a miraculous run because it had gone down in anticipation. Why did this just happen, you know . Why didnt it happen earlier . Target stock has come back. And i think that i was surprised that the company was able to prevail at least short term over this. But worrisome that i think they just got to they just let the guy go. I mean i might have let him go earlier. Maybe they needed to know where the bodies were buried ahead of time. But this has been a disturbing story all the way around. Because its a Great American retailer, i think theyll try to put it past them but reminds you that they really screwed up here. It will be a case study at har vad business school. I got to give the ceo credit in terms of coming out and saying listen we did screw up. Remarkable man. U. S. Secretary of state john kerry set to meet with Sergey Lavrov in paris, the crisis in ukraine moving into a contest of global diplomacy now, but will the east and the west find some Common Ground in their different end games . Lets bring in nbcs jim maceda from moscow who has the latest. Good morning, jim. Reporter hey, carl. Well, theres been a flurry of diplomacy as you say in the past 24 hours. The chances of avoiding war in ukraine getting a boost one believes from putins comments yesterday that he saw no need for the use of force in ukraine and has no desire to annex the crimean peninsula. That really has allowed the military confrontation that weve been reporting on now for ten days to take a step back. And even though crimea was tense on the ground today, there was a report of russian seizing yet another anti another ukrainian antimissile post. The perception really is that ukraine is spinning now not towards war but some kind of diplomatic solution. Secretary of state kerrys meeting with his russian counterpart expected in about three hours time Sergey Lavrov is there first face to face since the Current Crisis escalated and no doubt that theyll be talking about an exit strategy. Perhaps even more importantly the new ukrainian and russian governments for the very first time are talking at a cabinet level today and a Russian Defense official is discussing ukraine with nato members in brussels as well. So, in this swirl of diplomacy russias and the wests end games are beginning to emerge. Washington and berlin are pushing a plan that would include International Observers to replace the russian or proRussian Forces in crimea direct talks between moscow and kiev and new elections in may. Now, the russians on the other hand, want to see a return of the ousted ukrainian leader victor yanukovych, he would head a National Unity government and new elections in december. So, theres a gulf between these two sides. Clearly. And that will be whittled down perhaps over the next number of days, but at least, carl they are talking again. And, by the way, if that doesnt work, dont expect to see Russian Forces pulling back in crimea anytime soon that could become the new norm. Back to you, carl. One question, you know, you talk about the presence of the proRussian Forces. Is it the sense where you are that putin blinked as usa today puts it today or that he simply quit while he was ahead . Reporter great question. From the point of view of the Russian Media obviously, he quit while he was ahead. If he quit at all. Hes clearly perceived to be in control. I would say from a broader perspective, from an international perspective, he probably blinked first. But, you know, hes still going to be in control of the crown jewel, crimea. And even if there is a diplomatic solution and tensions come down i think its going to be some time before Vladimir Putin makes the mistake again of standing by olympics or no olympics while something as important as ukraines future is played out. From now on hes going to be very much involved in the future of that country. Back to you. Thats something the markets going to have to balance over time, jim, thank you for that jim maceda in moscow. When we come back stop trading with jim cramer. Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Really . So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues great terms. Lets close new at t mobile share value plans our best value plans ever for business. Time now for cramer and stop trading jim. Two very big dollar stocks in other words large dollar amount stocks could be on the move today. Piper says amazon fresh the next leg of growth. Ever since amazon reported the last number people felt the revenue upside had been downticking. Piper said amazon fresh will be the biggest initiative. Billions of dollars on the line here. I think amazon will take off. It will probably go back to where it was before the missed quarter if piper is right and i think piper is really out there pushing it. Who is the victim here . Is it a walmart . Is it the safeway . Is it krogers what . I think when you talk to costco a company i like very much they say everybody is the victim because amazon plays with funny money and everybody else has to deal with the reality. Amazon piper very big call. You like autozone too . Autozone people have to know cuss focus because the stock will go up, the stock has been aggressive all the time. And dont forget they shrunk the share count in half the last five years. Theres a price target boost by citi, 545 goes to 620 and baird raises. The buyback follows the stock up. People that take the stock the buyback will come after they report and its been a huge winner and a stock ive been backing for a long time because the average age of the automobile is 12 years, autozone, time to buy one of the names unlike the other companies who said the weather hurt them they argue it helped them because of the demand for replacement parts. Best management in the industry. Fabulously proshareholder and doing incredibly well. Autozone 620 price target citi will happen before people know what happens. Well follow it intra day. Were a few days away from jobs friday and, of course, that means another chance for you to nail the number and net a nice prize. Use our handle squawkstreet and and youll receive this cnbc hat signed by the entire squawk on the street team. Its been signed by everybody except for you, jim. Let me sign that hat. Thats attractive. Its good for frozen right . Its a disney trade. There you go. Did you put the ticker of one of your best ideas on it . Ill put disney on it because of the frozen thing. They cant get the songs out of their heads, its absolutely true. Youll have until one minute before the friday release at 8 30 a. M. Eastern on friday to make your guess. Theres some of the rules. Good luck to you. I think the consensus is, you know in the low 100s. Adp have been completely wrong. We talk about it for no particular reason other than the fact that it comes out. Whats coming up on mad . I like tmo, the management story here is fantastic. Marc casper fantastic and big synergies. Weve got off the tape fresh pet is probably one of the greatest growth stories because the 55 Million People that own pets want natural and organic, okay . This is the chipotle for pets. I was just reading a story earlier this week about the demand for pet Health Insurance which apparently is on a growth track given the billions people spend on their pets each year. Petsmart starting to deliver, natural and organic is here. I will not buy chinese dog food. I always hike to see the American Flag because im always concerned concerned. That doesnt mean the trade war is coming it just means i wont buy chinese dog food. Im the same way, jim. When we come back the ceo of welchs talks about the companys partnership with soda stream and what implications it holds for the beverage industry. But breaking news on the economy that could move markets and well get to that in a few moments with the dow down about ten. Back in a moment. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. 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And only 8. 95 a trade. Tdd 18886282419 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. Tdd 18886282419 so you can take charge of your trading. Take a look at the markets this morning, dow is down 28 points and s p down about two. Obviously giving a little bit back after yesterday, the best single day of the year for stocks all year long. In fact, you got to go back to december 18th. Dows about 180 points shy of an alltime high on the close. And for an alltime intraday you need about 192 points. In the meantime, s p continues to be above break even for the year at 1872. Were on track for a positive q1. That would be five straight quarters up for the s p. Something its not done since before the financial crisis and not a bad night on the nikkei overnight as well. It really makes you think when you talk about the bull market, were almost at the fiveyear anniversary from the bottom and here we go. Coming up this sunday. In the meantime were expecting nonmanufacturing ism and for that well go to Rick Santelli in cme. The yields went down a couple of basis points and the five stocks go down and the data is out a smidge early. The markets definitely if we can put up what im talking about an intraday fiveyear youll see what i mean. Lets go through the internals after the weakerthanexpected adp report, everybody wants to see the employment side. Guess what . A nonmanufacturing february ism, the Bigger Service swath for the economy, the employment number not only dipped below 50 from 56. 4 its at 47. 5. So, that is a big drop. Now, new orders behaved a little differently. They moved up from 50 point 9 to 51. 3. But by comparison the unemployment drop in that component was rather large. Last time we were at 51. Going back quite a ways. Keep going 51. 6. Im going have to go back to february of 2010 it looks to me february of 2010. So this number is surprisingly weak. And this comes at a time where you saw the manufacturing and nonmanufacturing isms in the euro zone aggregate do a bit better. Not spectacular but definitely a bit better. Carl and the gang back to you. All right, rick thank you very much for that. Rick santelli. That is a fouryear low in nonmanufacturing ism. Lets get to Steve Liesman for some analysis, steve . You want the good news carl . Yeah, i want the good news first. The good news is the Weak Services sector report here goes along with the weak adp report so ill get to that in just a second. But i went back to look at the last time we had an employment component in ism that was this low and i go back to may 2013. And in that same month we did 222,000 on jobs so a little bit hard to know how much to take from it. But its clear thats weakness in the Service Sector as a result of this number. This numbers very steady. Its the Service Sector of the economy. Manufacturing goes up and down with the weather, with demand and inven other and Service Sector is haircuts and lawyers and all sorts of stuff like that doctors appointments, its not that volatile when it goes down its something to take note of but maybe its also a weather aberration i think what were hearing. Thats what we saw this morning in the adp report according to mark zandi that puts together the report for the company, the total 139,000 against an estimate of 160,000 thats light relative to the estimate and january revised down 48,000 to 127,000. Thats three weak reports in a row with the goods sector 19. And services 120 not bad but it needs to be doing better to get better job growth in this country. Some of the commentary we got this morning, if anything data suggests Downside Risk to already below consensus 130,000 forecast. Saw a lot of that from a bunch of economists here. Another says this report has no effect our 175,000 payroll estimate for friday. Hes sticking with it. I dont know if the ism will change it and bmo is saying Mother Nature has been doing her, could be his, equivalent of Photo Bombing in the february data and likely showed up again in the jobs report. However, because of this report this weak number that zandi says is weather related, listen to what he thinks could happen to jobs in the spring. I would expect some numbers that are in the 250,000 range as we move into april, may, june that period. So i expect some pretty big numbers. Thats whats happening here simon, is that you have weak gdp, weak jobs weak manufacturing, now Weak Services and theres a general expectation i think you see in the market that this is going to be a snapback in the spring. Simon . But you were explaining to us why manufacturing could go up and down. I mean services can go up and down in a weatherrelated effect right. Because construction comes under this index, does it not . And construction employment would have been under pressure throughout february, it stands to reason because of those huge storms. I think thats a possibility, simon, the huge storms. Also just getting to work. And weve talked about this a lot. The issue is not even so much the Severe Weather in the northeast. Its Severe Weather in places like atlanta where apparently sure. All due respect to my georgian friends down there, they got a lot of trouble driving when theres a little bit of ice on the road. They dont got the equipment down there to clear the airports and the roads and all that stuff. Seasonal adjustments expect weather in the northeast in january. They do not expect Severe Weather in the south at that time. Real life. Steve, thank you. Sure. After two breathtaking days on the market we clearly are calmer this morning. Holding on broadly to yesterdays correction gains. Lets bring in jim paulson chief investment strategist with Wells Capital management also with us jeff solomon. Jeff, everybody wants to know what the underlying state of the economy is. Given the data that we have now what is your view . So my view is that were still, you know, dealing with some of the side effects of what happened in 2008. Its going to take a very long time for things to return to some sense of normal but if you look at the strong underlying growth in terms of the reindustrialization of america jobs are coming back home. People are we actually have a name for it. Recall it reshoring. Companies are really starting to relocate their businesses and manufacturing back here in the United States because of relatively cheap natural input Natural Resource inputs forgive me for interrupting you. Forgive me for interrupting you. The figures simply dont bear it out. Theres no great manufacturing renaissance across this country, it doesnt show up in the Monthly Employment report on the scale youre talking about. That simply isnt the case. Lets take a threeyear to fiveyear view. Lets take a view that shows whats happening with Capital Investment here in the United States. I take a look at things that will presage a job growth and to me private sector Capital Investment and capital flows back into the United States have been pretty strong. If you look at capital flows coming back in for capx here versus whats being spent abroad its a pretty good gap. If i take a look over the next three to five years i would expect to see manufacturing job growth be recently steady and you can see some increases. It was a projection. Jim, the one thing we have as we try to sort out the data at the moment this afternoon we have the beige report which is important because those regional feds will have got much more of a qualitative assessment of what is going on. They may have dug deeper jim, they may give us a better idea of the underlying state of the economy. Well, maybe, simon. I just think that its pretty clear that the ism nonmanufacturing number, for example, is so bad that theres thats what even makes it more likely its weather. If it was just the economy, it wouldnt be that bad. So i think that even the beige reports going to be affected by the weather. Theres so Many Companies disrupted and not being able to do business several days of the year. I think thats going to show up in the beige reports as well. But the market is clearly looking through that. I think correctly so simon. I think this economy as the year winds up is going to grow north of 3, 3. 5 . I think well find out as we get into the spring that well have much stronger numbers and a catchup from what we lost here in the first quarter. Jeff, if you look at the stock market it almost doesnt matter what the Economic Data is telling you. A bad report blame it on the weather. A good report and the market rallies. Were in this sort of bull market mentality and i mentioned the fiveyear anniversary of the bull market from when the market hit the low. How much further will it run. Whats it going to take to bring the market down . I actually think 2014 is a year where youll see stocks trade in a range. I think youll see some moves up. I think youll see some moves down. And i think this sa a year the investors can buy the dips. You cant buy yield anywhere else in the world and weve seen the emerging markets can be actually quite volatile so when you look around how you will actually deploy your capital and make your investments, the u. S. Stock market actually looks pretty good. Well have volatility around geopolitical events from time to time but weve seen two now significant pullbacks and weve had two reasonably decent rallies back to the same levels to making new highs. Those are strong technicals. Jim bust beforeefore we let you go, it says you were talking about overheating fears in the economy. Is that out the window now . No i dont think so at all, simon. I think were mixing the cocktail here of overheat. Were giving a false impression that the economy slowed when it hasnt and we could be shocked by how much it seems to speed up when it was really growing that way all along. Weve got look what were doing. We got a new fed chair thats widely perceived as a dove and we give her the most synchronized part of the recovery weve had. Resource markets are tightening up the Unemployment Rate is heading to 6 and the factory utilization rate is heading to 10 . The tightest resource markets and the commodities in the background have exploded to the upside crb index is up 12 from january lows and the Producer Price core index has gone from 1. 2 last august to 1. 7 now. If wapgs start to rise at all in the spring or summer i think we could have a little mini overheat panic. But between now and then one of the reason stocks are going up as strong and as forcefully as they are i think is because the reality is that the economy and the undertow of it is far stronger than people perceive right now. We may find that out later. I agree. It will be interesting to see if we ever get that wage rise link in any inflation. Jim, thank you very much. Jim paulson and jeff solomon, thank you for your time. A bit of fun as we head towards the employment report on friday. Your chance to nail the number. You have until 8 30 a. M. Eastern on friday to tweet us your nonfarm payroll prediction for februarys job report. You must be following us on your twitter and you must include the nailthenumber. We are including a cozy winter hat signed by the whole gang. Good luck. Lets get a check on energy and commodities with jackie at this nymex. Were watching the Energy Complex trading lower today as the geopolitical fears right now are easing. Of course, the department of energy is going to report its weekly inventories for crude stocks for the week ended february 28th in a little bit time just about 20 minutes or so, were waiting for that number. Traders are expecting a build of 1. 5 Million Barrels after the api reported it saw builds of 1. 2 Million Barrels so that is somewhat in line. Analysts are also saying they are expecting refinery run rates to drop by half a percentage point to 85. 5 , so well bring you that number. Want to switch gears and talk about nat gas. You are giving away the hat signed by the whole gang because its been so cold out but we are seeing temperatures becoming a little bit more mild and so some of the volatility has come off in the nat gas trade but i do want to highlight the fact that even though were lower today weve rebounded off last weeks fiveweek low and that is because we are seeing expecting the storage report to show a little bit more of a draw than expected in these inventories and thats a positive thing for nat gas. Last but not least, i do want to talk about gold prices. They are flat to slightly lower today. Traders are saying they are watching geopolitics careful flu but also watching fridays job report that will be key for the gold trade. Note here we are under the 1350 resistance level. Traders are saying we need to break through that and hold above it to really show that the bulls are back in control here. Sara, back to you. Gold under a little pressure thanks very much jackie. Carl icahn just took another job at ebay and its ceo john donahoe, but the reasons he gave may come as a shock. Elon musk is on the hill and talking before the senate else relations shub Committee Talk ss subcommittee and he was one of the original investors of tesla and spacex and a board member of both companies well ask Steve Jurvetson where the space industry is headed. The space between [ male announcer ] we know theyre out there. You cant always see them. But its our job to find them. The answers. The solutions. The innovations. All waiting to help us build Something Better. Something more amazing. A safer, cleaner brighter future. At boeing, thats what building Something Better is all about. Of all the ones ive been in, and ive been in a lot, ive never seen worse Corporate Governance than ebay. Ive never seen ive never seen somebody like andreessen. Im not saying hes a bad guy. I say Corporate Governance is bad and i might blame donahoe more than andreessen for letting it happen. That was carl icahn who took another swing at ebay this morning on squawk box the latest salvo between carl basically on television and andreessen or ebays founder or donahoe doing it mostly through print. But this is going back and forward and shows no signs of slowing. Its an interesting tactic for carl icahn to increasingly use television and other network. Hes prolific every time he makes a move and getting out there and telling the story. Andreessen, of course, spoke to the journal. The company has defended itself very vociferously on behalf of scott cook and marc andreessen. It comes back to the activist shareholders who want a splitup of the company so they can accurately price the individual components and its the same thing with dan loeb at sony ceos want to keep everything together they can cross subsize and hold the floor. He said even washington does a better jonathan the management at these corporations. But the question is what does it mean for the stock . Ive been going through the Analyst Reports this morning, they are agreeing with the company and the ceo that ebay should stay together. I thought it was interesting that bank of america and Merrill Lynch said the activist pressure but on my carl icahn should actually help this stock because it should lead to more shareholder friendly type of moves. Thats why he buys in and says it presumably. Including cash, for instance. Ebay has a huge cash pile 8. 3 billion internationally, 3. 2 billion domestically, they could return it more to shareholders and try to offset some of the distraction here. I was going to say on that broader point that politicians are less able to get away with stuff than carl icahn can argue ceos. Ive heard a similar story if youre a politician. Lets go to the hill elon musk has just started speaking. Okay, so elon musk is up. Giving evidence on the space program. And, carl help me out here because this is something that was a bit of a surprise to me. Oh. On the hill yes. Talking on the senate side. I think we have some audio of teslas ceo. Were not going to take it full but obviously the future of the Space Business is huge. I dont know if you saw the headlines today, the vinklevoss twins are going to space paid for by bitcoin. Out bit interesting to see these guys on the hill now that space is private business. Any headlines from musk obviously well bring them to you. All right, social network. Facebook has hired a Community Safety Police Officer for three years for the price of 200,000 a year. The officer will be on patrol in menlo park. Thats an interesting news. And by the way, i saw some local political reaction very supportive of the facebook move to get security. Brings us to the squawk on the tweet, now that facebook has hired a cop for Menlo Park Police should be on the lookout for what . Tweet us squawkstreet and well get your responses throughout the morning. Lets send it to sheila for a quick market etet flash. Good morning. I am talking about facebook that stock is moving higher after the price target was raised 282. And they went on to say that facebook continues to gain share of the overall marketing spending. You can see the stock right around 70 bucks a share. Carl . All right, thank you very much sheila. If you cant beat them join them. Thats the approach soda stream is taking. Recently teamed up with welchs to launch a line of sparkling drink concentrates. This is the answer to beating out cocacola. Welchs ceo will explain why this Partnership Works simon . And later roku is out with a new device that looks like the Google Chrome cast. Dont say that to them. How does the streaming company compare to its bigger competitor . Well talk to the roku ceo when we come back. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Really . So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues great terms. Lets close new at t mobile share value plans our best value plans ever for business. Lots of excitement and deals in the Beverage Business so far this year. Green mountain and cocacola teaming up on keurig and welchs giving soda stream a sweet twist launching a line of drink concentrates exclusively for the soda stream home beverage carbonation system here is brad irwin president and ceo of welchs. I was talking to brian kelly of Green Mountain a few weeks ago in boca about the future of this market. Is that what you see . Do you see athome doityourself carbonation as a way forward . We think it will grow and we were really pleased to be able to partner with the number one competitor in that space with welchs line of juices. Soda stream has been having a little bit of trouble recently, weve seen it in the stock price and weve seen it in some of the earnings reports. Why partner with soda stream . Again they are the number one player. We think the markets going to grow and weve got a Great Partnership with the soda stream people. Soft drink sales have been in decline for years in north america. So, why go in on this business . Why are you optimistic about it . Well for us its a licensing business. Its an opportunity to take the welchs brand and take it to more people and places. And so we see only upside for us. Is it exclusive deal or could you also partner with Green Mountain on the new keurig product . Our deal is exclusive regarding a carbonated beverage system system, however, a still beverage system we could do with other folks. Yeah with juice. You have an interesting ownership structure, coop. Kevin oleary from shark tank believes its a Good Business model. Explain how it works for welchs. Its owned by 1,000 family farmer owners. Its been around 145 years. And its particularly relevant in todays market because Consumers Want to know where their food comes from. And our family farmers grow and then we process and sell their beverages. And then 100 of the profit from our graperelated products go directly back to our family farmer owners. You just released farmers pick which is a no preservatives no artificial flavors no synthetic colors or ingredients line. Yes. Why did it take so long to get there if you are representing these 1,100 farmers . Arent they making naturally ingredients anyway . Was it merely the technology that held you back that were you overprocessing or was it that the demand wasnt there in the market that you were putting this stuff out that lives forever . Weve had our 100 concord grape juice for a long long time and that product is a terrific, terrific product. What we found is that the consumer wanted this no artificial ingredients and one of the special things about this juice is that we its unfiltered juice. And the unfiltered nature of the juice allows more of the fresh fruit flavor to come through to the product. I guess my question is why it took you so long to bring that to market . Weve had various other products that have been natural and no artificial flavors over the years. Right. But we felt this was the right time for our farmers pick from welchs. You cited modest Economic Growth in your annual report. What do you see for 2014 in terms of beverage consumption and the overall state of the consumer . The beverage consumption is broadly down a point or two. Thats true in the juice market. Weve been growing market share in that in that environment and we see that broadly staying the same as the year goes on on. Where are your farmers . Have they been affected by the drought in california badly . No. Our farmers are located in new york, pennsylvania michigan and upstate in washington state. And we do get affected by the weather. Every agricultural product gets affected by the weather, but our biggest challenge is the spring frost that comes in april and may which can affect the size of the crop. All right. Well, its an interesting business and an Interesting Partnership that you just did with sodastream thanks for joining us to talk about it, and an exclusive brad irwin is the ceo of welchs. Elon musk is on the hill talking about Space Programs in general. Well get the latest headlines for you next. And speaking of washington do you know what Ben Bernankes hourly rate is now that hes left the fed . Its a lot more than his last salary. Squawk on the street will be right back. Uidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk great things happen. Huh, fifteen minutes could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. I need proof of insurance. Thats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Last week we were talking about Mickey Arison at carnival selling selling 400 million of his stake, the controlling shareholderser are offloading half a billion dollars worth of norwegian stake, to some its a surprise because in the Conference Call the indication was that they might use cash flow to buy back those stocks at a discount but, no theyre going on the public market. More interesting genting is saying it could sell 1. 9 billion of stock during the course of the year. Weve got some breaking news at the nymex. Good morning, simon, we are waiting for the department of energys report on crude inventory stocks for the week ended february 28th. It looks like we have a build of 1. 4 Million Barrels in line with expectations and in line with what the api reported last night as well. Were watching these prices here and were seeing them decline a little bit. But, remember, theres a couple of things that are impacting oil prices right now. Consider the geopolitical environment. Traders watching that very closely. Obviously taking this number into account as well but watching this mornings adp report, too. Theyre going to be watching the jobs report as well. But traders telling me exact these prices to stay elevated thats because theres a lot of Global Demand for the refined property products and as long as thats the case well probably stay above 100 bucks a barrel, texas intermediate 102. 75. And we saw a drawdown of 1. 6 Million Barrels and the distill as ates, 1. 4 Million Barrels. And lets go to moscow and jim maceda for what we can expect there. Reporter they are meeting in a couple of hours now which will be the first face to face since ukraine crisis escalated. Its just one example of a flurry of diplomacy over the past 24 hours. The chances of avoiding war in ukraine seem to get a boost from Vladimir Putins comments yesterday. You recall he said that he saw no need to use force in ukraine and had no desire to annex the crimean peninsula. Well, there was a sigh of relief felt in the International Financial markets certainly including moscows stock market and the ruble. Both levels basically back now from historic drops on monday. And the perception today, simon, ukraine is spending now not towards war but some kinds of diplomatic solution. Nary in addition to the kerry lavrov meetings the two representatives are talking on a cabinet level today and the Russian Defense official is discussing ukraine with nato members as well in brussels. And, simon, in this swirl of diplomacy diplomacy, russia and the West End Games are beginning to emerge. Washington and berlin are pushing a plan agreed to in paris a while ago direct talks between moscow and kiev and new elections in may. The russians want to see the return of ian could haveyanukovych, and theres a big gap between the two sides but at least both sides are talking again. Back to you. Jim maceda in moscow thank you very much. Elon musk testifying in front of the Senate Relations subcommittee today about the National Security of space launch programs. Hampton pearson is in washington with headlines. It sounds like he wants to bid for business hampton. Carl you got that right. Mr. Musk goes to washington on capitol hill testifying before the Senate Appropriations subcommittee, specifically not about tesla but his private Rocket Companies spacex they are competing for government contracts in National Security launch programs. Right now United Launch Alliance a joint venture when Lockheed Martin and boeing is the solesource provider for the major satellite launch program. But the Defense Department wants to open it up to competition. Spacex which already has a 1. 6 billion contract to make a dozen robotic supply runs to the nasa space station, they want to compete in the major satellite launch program. Musk says spacex can save taxpayers money and does not need Big Government subsidies. According to congressional records in fy13 the air force paid an average of 380 million for each spacexs price is well under 100 million. Meaning a savings of almost 300 million per launch. Now, also on todays panel an official from the Government Watchdog Agency the General Accountability Office but what were really getting is a preview of what is shaping up to be a pretty big battle for the next Major Contract regarding satellite launch program. Pretty interesting here. Sara, back to you. An interesting to see him on the hill. Thanks very much for the update hampton. Well since leaving the Federal Reserve ben bernanke turns out has been doing a little bit of traveling and picking up a nice paycheck as well. According to sources he was paid at least 250,000 for his first public speaking engagement. That was in abu dhabi and it compares to the 2013 paycheck as fed chairman of a little over 1 1 199,000. Hes in johannesburg and presumably hes paid for that as well. If you do Public Service at that sort of level for so many years, theres got to be a payback. The fact that every treasury secretary. Generally how it works around here, thats right. Lets send it over to sheila and get a quick market flash here. Check out shares of target at session lows right now. Chief Information Officer beth jacob resigning as the retailer overhauls its Information Security business. This is, of course, in the wake of a massive data breach the company experienced late last year. Target says it will search for an interim cio in the meantime. Stock currently trading right around a decline of 0. 8 of 1 . Simon . Thank you. A former netflix exec started the streaming company roku and it streamed an increasingly whopping 70 last year and now its introducing a new product that will enhance your viewing experience and compete directly with google. Well talk to rokus Ceo Anthony Wood next. And google is investing 50 million in auction. Com what is the search giant up to now . Well talk to the ceo of auction. Com. You dont want to miss that. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. My sinuses are acting up and ive got this runny nose. I better take something. Truth is, sudafed pe pressure and pain wont treat all of your symptoms. Really . Alka seltzer plus severe sinus fights your tough sinus symptoms plus your runny nose. Oh what a relief it is in the new new york, we dont back down. We only know one direction up so were up early. Up late. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. Theres only one way for your business to go. Up. Find out if your business can qualify at startupny. Com the social Network Giant Facebook has hired a Community Safety Police Officer for three years for the price of 200,000 a year. The officer will be on patrol in menlo park. That brings us to this mornings squawk on the tweet, now that facebook has hired a cop for Menlo Park Police should be on the lookout for tweeters tweeters squawkstreet well air your responses throughout the morning here on cnbc. When we come back one startup whistle is making Wearable Technology yeah for dogs. It measures your pets activities streams the information right to your smartphone because, hey, you got to know how fit your dog is. Its now available in petsmart and the ceo of whistle will join us next. As we go to break, take a look at petsmart sales did disappointment and comps below their target. Were back in a minute. Shes kind of special. She makes the whole team better. Hes the kind of player that puts the puck horsehide, bullet. Right where it needs to be. Coach calls it logistics. Hes a great passer. Dependable. A winning team has to have one. Somebody you can count on. Somebody like my dad. This is my dad. Somebody like my mom. My grandfather. Im very pround of him. Her. Them. Predicting the future is a pretty difficult thing to do. But, manufacturing in the United States means advanced technology. We learned that Technology Allows us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. As streaming wars heat up and consumers increasingly watch their content a la carte, tech giants like apple and google are getting into the game. And the next guest is on a mission to make tvs smarter, roku is announcing a new device called the Roku Streaming stick and anthony wood the ceo and founder of roku joins us. Good on see you, anthony. Hi. I have to admit i have a google kromchromecast, why do i need to buy a 50 roku stick . Well weve just introduced this streaming player its the tiniest roku player ever. Its a 49 roku player. You know, its got the most content of any streaming player over 1,200 channels of content. Its the easiest to use. It gets the best reviews. And it comes with a Remote Control, so you can use your smartphone to control it like you can with the chromecast but you can also use a regular Remote Control which is a much simpler way and our Research Shows the way most people want to watch tv. It has more content and its a lot easier to use and it comes with a Remote Control. Said a few days ago that polytv pulled in a billion dollars last year. Its hard to call that a hobby. You guys are huge. I think a lot of people dont realize just how big you guys are. It looks like chromecast is number three on amazons electronics ranking. The roku 3 is number six at 99 bucks. Is it a play to expand your market share in the face of all this competition from the big guys . Yeah. So, you know, weve been competing with apple and google for six years now. Theres been multiple vergs s versions of apple tv and goog tv chromecast and weve continued to grow, last year we streamed up 70 from the year before a billion hours. Were always pushing the technology forward. There was Research Done by parks and associates that showed roku was the number one streaming device in the United States. We intend to maintain that position. The big guys attempt to rev their products and come into the market is huge. Theres a huge amount of interest in streaming and thats the way people will watch tv in the future. I see it all the time on the usa today money, pay tv moves towards a streaming future. Obviously this is the trend. Investors want a piece of this. There are some reports that you were considering an ipo as early as this year. Unfortunately i cant comment on our future financing plans. Understood. But clearly its a trend, and to this article, they talked about the Industry First of disney and dish signing up for streaming content exclusively online. What do those sort of deals mean to you at roku and your future . You know, the number of channels of content on roku doubled last year from 600 channels the Previous Year to 1,200 channels this year everything from netflix to fox now to hulu to cooking channels to food channels. So theres tons of content, but theres still some content that is not available on streaming platforms unless you authenticate which is a new trend where cable channels become available on streaming platforms like roku. You have to have a cable subscription. I think the next phase which hasnt arrived yet but some of the deals will lead to when will you be able to get a cablelike subscription on a streaming platform like roku without signing up with your local cable operator . It means more and more content will come to streaming until were at the point where everything ever made is Available Online streaming. Where does it end up . Anthony, what is the unique selling position that youre able to maintain in the market if everybody is moving into that connectivity between the content and the viewer . I mean look at a smart television, for example, that can do so much already of what you guys could do or even what tivos doing. Have you seen the cube play that they are putting out that basically sorts and stacks video clips from across the internet according to where you are tweeting and what your facebook profile is saying. Its just a very crowded area. Its not that crowded. Theres a lot of people trying to get into it but in terms of platform its actually consolidating. If you look at the market share, other used to be 20 and now its down to 5 . Theres roku and were the most popular but theres also apple tv and google with their chromecast which actually, you know, is a little bit different. It requires that you use a smartphone. Its a Platform Business where just like windows is a platform and android is a platform theres going to be a small number of platforms for tv. And it takes a tremendous amount of r d to develop these platforms. We have 250 employees, all we do is streaming, that number of employees grows every year. Its already reached the point its too much investment for almost any company by itself to maintain, so, for example, you mentioned smart tvs its an area where we think theres a huge opportunity for us to become the os for smart tvs and weve already announced that roku tv ces and those will appear on shelves later this year. It appears maybe you are saying its too late for amazon to jump in though there have been rumors for a while with them coming up with a set top box. I know theyre a partner of yours. Whats the end game here . Say, three years from now how does this landscape look . Are you continuing to have the same Business Model of taking a 30 cut from paid channels and is that continuing to be a growing business for you three years from now . Yeah our streaming business is growing. Our Service Business is growing, the amount of revenue we generate from each customer grows every year grows and, of course, the number of customers grow. Weve sold 8 million streaming players at this point. I think the way it ends up youll have roku as the predominant open platform and then apple the apple alternative which is always there on phones and laptops as well. All right, a window into the future and well stay tuned and to find out if theres new information on the ipo. Anthony wood the ceo and founder of roku. Jon, good to have you here as well. Actually wonder if you are getting the most out of your dog walker. Its a fit bit for dogs and allows to monitor them on your phone. And this week its available at petsmart which by the way, had earnings today. Ben jacobs is the cofounder and ceo of whistle. He joins us this morning from san francisco. Ben, good morning to you. Good morning to you. Thanks for having me. 130 a pop. I think we have it right here on set. I gave a shot i it a try. One of my longhaired chihuahua earlier this week. He was so inactive there was basically no data to work with ben. Whats the demand for Something Like this and how beholdened are you to consumers spending money on discretionary stuff . We see enormous demand. The pet market in the u. S. Is a very large market. Theres over 80 million dog in the u. S. Thats more dogs than children. We spend over 60 billion on our animals. Youre right in saying its somewhat discretionary spend. Certainly an emotional purchase. 60 billion, nearly 20 billion on Veterinary Care and 95 of that is uninsured. What does it monitor . It monitors your dogs activity and rest and sends that information to a smartphone so you can check in wherever you are or share that information back with your veterinarian. Calories burned steps taken, hours slept . Its the total energy the dog is exerting that translates into how you talking about your dog today. If the dog went for a period of play or you took him for a walk on a leash. Thats how we translate that information. Then we use even more refined data with our Veterinary Partners to look for more medical indicators. Epilepsy or as common oz orthopedic surgery, orthopedic recovery for a dog like a golden retriever. Do you contract it out . What kind of margins do you have . We have solid margins. We make it in china but do all of our design here in the u. S. Our belief is to build a lostlanger Consumer Electronics brand like a fit bit. You do need to control the design of the entire experience. We do all the design here in san francisco. We work with manufacturing partners in asia. Are you a Hardware Company or are you a platform . Im wondering at your ambition here. Do you see yourself more of an itunes that pulls together different data on pets or is this a point Product Solution where youre going to come out with individual pieces of hardware. Firmly the latter. The whistle is a new Data Platform for pet owners. If you look at the Great Hardware companies, hardware is simply the entry point. You have to design beautiful hardware that, for us observers want to purchase but a lot of value lies in the data. Entirely data set that owners and vets have never seen before. Ben, i dont need to tell you. Petsmart, their sales were not too impressive today. s down. Comps 12. Do you worry about the longterm health of the purchase as we said at the gwenning of the ingbeginning of the interview, something thats easily deferred . Whistle. Com products are available as well as through petsmart. Petsmart is still the number one retailer in north america. I think what you will see from them in increased integration, whether its grooming or pet hotels or veterinary. All parts of your dogs life and your life as an own their whistle can contribute to as well. Ben, does it work on small children . Would you go into that area as well . People would like to monitor what their kids are doing during the day. Its funny. We get that request. Although whistle is firmly focused on a pet brand i think youre tapping into something powerful. You see this macro movement in quantify itself and multimillion dollar market. I think it might be more powerful and quaund fied other. What we mean by that is an infant or a dog cant speak for themselves. So using hardware to effectively give a voice to those emotional parts of your life and then bringing that information to your smartphone is a powerful opportunity. Like i said, i put it on lucky oh we oh. I think we have a picture of that. He was like, what are you doing . We will watch your guys closely. There he is. Theres lucky. Airtime on squawk. Not during market hours for obvious reasons. That might be a good product for husbands too, who have trouble expressing on a leash. Thanks again. Ben jacobs of whistle. Have you been to the trifecta Film Festival . If you have chances are you bought your ticket through eventbrite. And then quoog googles big investment in housing. Yes, its investment arm put in 15 million into auction. Com. The ceo is going to join us live as we go to break, look at the s p. Another new record high today. Were off the highs of the day but we did get a new one and were back in a minute. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk great things happen. 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. Welcome back to squawk on the street. Todays edition of the santelli exchange, id like to welcome my guest, my wednesday guest, jenkins jr. Oped writer for the the journal. Thanks for taking the time. My pleasure, rick. I really loved your piece today forgive giving putin, again. Why . I think you nailed exactly why the market seems to be looking past the issue in the ukraine. Not for humanitarian standpoint we get that. But it really does all boil down to things like fracking and energy and potentially the United States getting more independent with regard to energy. Maybe you can explain. T not just the United States but the European Countries dependent on russian gas. A lot of them have fracking potential, france does poland does britain does. But they are reluctant to develop their fracking for environmental reasons but also a dirty little secret is theyre afraid of what happens if they become Energy Independent of russia and the money stops flowing to russia to prop up the putin regime. Theyre worried about what you bring up so many points. Some of the big stories of late are how germanys secondguessing its approach the climate change. Its cost in terms of energy is skyrocketing and it doesnt seem as though it is gravitating towards some of the disaster scenarios they envisioned in 2000 when they embarked on this road. With germany rethinking and what you just described, how would you describe what must be going on in putins mind know that its a mutual situation . He needs dough to be aggressive and the dough comes from the people he wants to be aggressive with. Putin and gazprom has been lobbying against fracking in all of these countries. They cut bulgaria a big deal in return for bulgaria banning fracking. Near embedded with the german utilities who depend on highcost russian gas. Youre not going to see fracking in germany any time soon. You know part of this is that when you hear putd tin talking about ukraine hes talking about russia. Legitimately elected president being over thrown he fascist hooligans. Hes telling you thats who is going to be in charge of russias nuke it is i go. All right. Now, on a side bar. It seems as though when we follow all the Energy Stories when it comes to the u. S. Do you think that congress would ever flex its muscles and at least talk about potentially exporting liquefied natural gas to aggravate putins issues on this . Its already reason an affect. Just the fact that we have the potential to export it is undercutting russias prices in europe. The trade deals we have pend that obama doesnt seem to want to proceed with they automatically grant lng export authority to countries who are members of those agreements. Its happening. Its going to happen because the economic incentives are too powerful. It does undercut putins power in europe a lot. I really like your the way you painted the picture regarding ukraine, russia and putin. Carl, back to you. All right. Rick thank you very much. It is 11 00 a. M. On the east coast, 8 00 a. M. Out west. Were covering the top story nsz tech. Facebook and google log ins no longer welcome on yahoo . The company will soon ban users from accessing service it is they use logins from facebook or gmail. Search engine robotics developer and Real Estate Company . Googles investment arm is plugging 50 billion bucks into real estate website auction. Com. That ceo is joining us in a few minutes. Plus teslas ceo elon musk is taking space on capitol hill this morning. One of the earliest investors on tesla and space x will be here later on this hour. And while were on the subject of space, we have to talk about the winkle vie. Well tell you why in just a moment. But first, well switch gears and talk about the top tech stories in the news. Joining us is Jon Steinberg and president , coo and cnbc contributor and jon fortt has moved from this chair to that chair car. Good to have you with you today. Time the dig out your yahoo id. They plan to end the ability for users to sign into its various Web Properties using facebook or google login credentials. It will require them to register with a yahoo id. Jon, is this how you drive traffic . Its an antiuser thing. People do not want to login with yahoo accounts. They want to be able to login with accounts on hand and consume video on youtube. You can lean into what the user wants or you can fight them for what you want. Ultimately yahoo wants the login user data and they are target more aggressively with advertising and starting with the sports. Theyre starting the College Fantasy sports during march madness. From there they will work their way down to less coveted media areas. Yahoo s that to do this. The question is whether their content, whether their service to the consumers is good enough that users are going to put up with this. They need the data. If they want to be a repository for information that people click on every once in a while, they have to have this rich data to know when people are locking in and what they are looking at. Without it then the question becomes do they have good enough con toent become a service layer, to become an app layer where were are going to do more and more things on yahoo s a opposed to being a front page on a news source. Wants to be a facebook. To transition people to mobile you need the login information. Shes rich in them and brought in new people like david pogg and katie couric. Richening up the content. Rebooted a lot of the interfaces. Now is the time to lock in the users and bring them back to yahoo s registered customers. Does that mean we might expect traffic not to be as robust but pricing will be and revenue will be . That is the risk. You could view this as a quasipayroll but for the content people are going to have to go and get a yahoo account. Before, you would login facebook to get your fantasy sports. Next football season you will have to have a yahoo account. What kind of user is not going to be willing to signed up for an id. Probably a poorly engaged user. So you want to make sure that what youre offering is engaging enough that people are willing to do this. Once you have that information, once you have people logging in its easier to get them engaged on a new mobile product. Its easier if you take search inhouse which yahoo is making moves to do to track them across multiple different activities on the web it. Could be a smaller, richer user base. Fascinating story. Meantime Steve Ballmer is back speaking at graduate students at the university of oxford. Ballmer spoke about retirement and the future of his former employer. Take a listen. Empowering technology for all, that ought to be a brand proposition that if we run the company correctly can last 20 30, 50 years or more. I had a bunch of guys at microsoft, you know we were going through angst five or six years ago. What do we want our brand to stand for. You know lets face it apple hassed a a good run recently and apple srk quote, cool, unquote. Unquote, quote. Your choice. I love that sound bite. Jon, a mia copa of sorts . This is clearly a guy who is not ready to retire. You can still see the energy in him. You can still see the fight morefor microsoft. He said he would do mobile differently and combine hardware and software earlier. He was against it. Really interesting the way hes talking about microsoft and what they should be if they play their cards right. Hes going to be a tough board member for him to deal with. Yeah. Its interesting. Growing up we were told microsoft smart debundle hardware and soft wear. Apple, stupid. Right . The tie basically reverse the mobile and now ballmer coming forward and saying they should have integrated hardware and software sooner in the mobile space. Hes so charismatic now. He had a great quarter. Leaves the company. More charismatic than ever. I think its too bad he left. He left at the top of husbandis game basically. He said five years ago we got to the and thought what is microsofts brand. It seems like he was identifying a cross roads for the company. What was microsofts brand in the last five years . How do you identify it . I think when you look at what nadella is looking to do now, theyre going to be the enterprise and cloud company. Trying to compete like in the cool Consumer Device phone space. They do have xbox. But i think theyre trying to pivot the brand of it now to more enterprise. Microsoft doesnt have a single brand. Larry ellison years ago poked at them for not focusing on enterprise. A this point theyve got a strong distance with xbox cloud potential, advertising potential. They cant break away from that. Theyve got to separate brand for the 18 to 34 set than they do for folks older who associate them with windows. Theyve got to figure out how to manage it. One to watch. Not just microsoft but ballmers future and see where that takes him over time. The winklenaut twins using bitcoin to book a flight or the Virgin Galactics space flight. Tickets are 250,000. My question was why would you say that on a day where an asteroid is going to come closer to the earth than the moon but clearly theyre not done making news winklevoss. Great marketing for bitcoin. The winklevosses owns a lot. Getting Virgin Galactic back in the space. They own a lot of bitcoin at a cheap price. Bitcoin is 659 according to coin desk. So the winklevoss are getting that flight cheaper than anybody. Is this a savvy investment . A month ago they said we expect bitcoin to go to 40,000. Okay . If they really believe that why wouldnt they pay for this in cash or in some other holding . Isnt this kind of like paying for your groceries and reipo google stock . This is like when executives sell a little bit of stock nor lifestyle needs. The winklevoss need to go to space, they have a lot of bitcoin. They still have a lot of bitcoin. Wanted to send the winklevosses to space. If can you think its going to be worth that much why pay in bitcoin . It puts it back in the news in a very positive way. They talk its a very long blog post talking about vasco degamma and the history of exploration. If theyre selling it for this jon, youve got to sell your asset sometimes to buy things you want. I dont know. Well see. They have an entire fund to spend. Well say if they use it for if they sit on to it go to 40,000. Quick market alert for you guys. The s p 500 hitting a new record intraday high. Its sitting at 1876. Up by just about two points. Buts that enough to do it today in a day when its crossed the flat line no fewer than four times. Lets switch gears. We want to talk about the situation in ukraine. After two volatile days of trading markets are calm today. It comes on the heels of a new 15 billion aid package from the eu. Nbcs ian williams is live in kiev. Ian, this has largely become at this point a war of words. Thats right, kay la. Its been a curious day. And diplomacy is under way in paris as we speak. John kerry secretary of state, is sitting down with other western Foreign Ministers and Sergei Lavrov the Russian Foreign minister. The question is whether theyre speaking the same language because earlier lavrov said he couldnt do anything about those soldiers that have taken control of crimea because they didnt belong to russia. They described them as a selfdefense force that was a lure unto itself. It will be interesting to see what emerges. At the same time russia is sitting down with representatives of nato in brussels. At least they are talking. As you say, that 15 billion aid package from the eu the europeans weighing in following the u. S. Offer of a billion dollars Loan Guarantee yesterday. This is all part i think, of what looks like a real scramble to stabilize the economy here,an economy thats in a terrible shape and, of course isnt being helped by russia tightening the economic screw, kayla. Of course an economy that grurp has great interest in making sure its stabilized based on the trade that they have. Thank you for sending us the latest there. Meanwhile, up next first robots, and then smart appliances and now real estate. Thats the newest venture google is pouring money into. Well talk to the ceo of auction. Com. The company just got a 50 million cash infusion from going google. I think were going to to kug on japan. Were going to focus on two differentreenmarine thats. Is it resulting in higher inflation, higher wages . Then were going to look at the end trade and how that may affect the u. S. Tenyear note yields in about ten minutes from right now. With all the opinions about stocks out there how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Where you think youre gonna go when your times all gone . [ ma le announcer ] live a full life. The new lexus ct hybrid with an epa estimated 42 mpg. The further you go the more interesting it gets. This is the pursuit of perfection. Attention to the Energy Sector on day when the s p is hitting a new train day high. Worst performing sector on the s p. Sheila is back at hq with whats behind that move. Leading the Energy Sector lower is exxonmobil holding the annual investor day today. The oil giant says it expects to spend less this year on oil and natural Gas Production. That is expected to be flat this year. The company says spending of 40 billion in 2014 compared to 42. 5 billion last year. Rounding out the Top Five Energy losers Southwestern Energy chevron, and consol. Google is putting 50 million in real estate through the Venture Capital arm auction. Com, a growing on like real estate marketplace landed the investment and the internets behemoths expertise. Auction. Coms cofounder and ceo is here. Good morning. Jeff congratulations. First question whats it like when these guys come knocking and whats the process about letting them in the dpooroor . We went knocking on their door. The pouredboard and management made a list of who would be the most Strategic Partner for auction. Com and google was at the top of the list. We never really made it to number two. We were able to really really excited to have google as part of our company. Whats in it for them . Whats the moattivation for them . You know google is obviously one of the greatest companies in the world. And they like investing late stage Internet Companies that can fundamental change the way people do business in the world. Real estate is a trillion and a half dollar industry. I think google is going to be with our board be involved with your board as well as you know, the world class product development, the world class Digital Marketing and help. Jeff, last year auction. Com cyst did 7. 5 billion in real estate sales. We do say sales because unlike zillow you do Sale Properties you dont just list them. A lot is commercial. Google said they were most interested in commercial side. Why is that . The commercial business is a b to b business and the Adoption Rate for so we sold 7 1 2 billion dollars, four of that is Single Family homes. 3. 5 billion was commercial real estate. We have a marketplace. People bidding on 50 million apartment buildings 25 million malls. And these sellers become your buyers. We have a marketplace effect. We have billions of dollars of liquidity coming to auction. Com with millions of users. You have an awful lot of data. Google says this is not going to be a product integration. Theyre t not going to be using your data. But you have daytoday sales information, home pricing information, commercial real estate information. Do you see that growing in a partnership with google . You know, our data is proprietary to us. Data is what drives the decisions we make and how we think about the market, how we think about people who buy and sale real estate in the future. Google is arguably one of the best Data Companies in the world but that is not something we would share with anybody other than auction. Com. You talk about the marketplace effect. That of course is an easy thing to do when youre selling mostly Distressed Properties. Your site was a gold mine after the fshl crisis for the banks and Holding Companies to get the Distressed Properties off of their balance sheets. What happens as the prices rise and economy rors and inventory goes down . So first of all, during the precrisis era, lets call it 2006, there are still hundreds of thousands of foreclosed homes in the country. Peaked in 2009 of a million 9 homes. A untilmillion in 20134. On that the inventory has changed from more of the from less of the nonjudicial states to more judicial states like florida, new york new jersey. But were very focussed on our commercial business which is, you know, 40 of our Business Today which is a btob business. Were selling, you know in an online marketplace, you know, its good for the owners of real estate, the sellers of real estate, the brokers of real estate. Were seeing a lot of interest. 30 of our sales in the commercial space was nondistressed last year. So do you see moving forward though when we talk about other sales sites out there, the competition being the zillows, trulias, red fins of the world, do you see yourself moving out of residential and make that a small share or do you think that people want to buy their houses off an auction site like theyre tired of the old model . Great question. First of all, Companies Like zil row and trulia are not our competition. They are online content sites. Our business starts at the transaction. Youve all bought and sold homes before. Theres a thousand things you got to do to consummate a sale of real estate and we have our 900 partners in auction. Com, you know processing lots of traditional paperwork as in the sales cycle. That said yes, i think the world is moving online. I think that people are looking for a transparent way to buy and sell real estate. We offer that to owners buyer, sellers, and a Real Estate Agents to 90 of our sales were with Real Estate Agents involved. And were just bringing a transparent process with worldwide distribution. And given the kind of platform youre getting with google do you expect any time soon to be going public . You know ipo is always an option for auction. Com. Today were going to put our head down and continue to build the best buyer and seller journey through the real estate cycle. And really focus on a product development, on mobile products and really help change the way real estate is bought and sold. Finally, you know i know this is not your job, to worry about how the synergys will work for them. Weve watch them invest in robots. Weve watched them invest in cars, in fiber. Obviously their own core business. Where do you think this dovetails down the road . Your business with Something Else they own. You know, i cant speculate on how google thinks about all of their business world. This is an investment for google capital. They like to invest in Late Stage Companies that have a way to change the way people do business. And we are thrilled at auction. Com to have google being involved. You could do worse. Yeah. I think thats said, most would agree. Congratulations congratulations, again. Thanks so much. Were still talking tech after the break. Another big name making news. Elon musk that is on capitol hill talking space this morning. We speak to an early investor in space x and tesla. Steve jurvetson is the man. Plus, social Network Facebook has hired a Community Safety Police Officer for three years for the price of 200,000 a year. The officer will now be on patrol in minlow park. That brings us to sidewalk on the tweet. Now that facebook has hired a cop for menlo park. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print Amazing Things right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. The street. And this is the spot for today for the santelli exchange. Were going to look at japan. Before we look at the internal lets just talk and while im talking lets throw up a chart. Year to date of the dollar yen cross Foreign Exchange trade in tenyear note yields. This is not new. Weve shown this chart many times. Once again, if youre trading Interest Rates you need to keep an eye on whether stocks look soft or strong. Big fundamental for tenyear, especially in 2014 just look at january. Because in the end, we could talk about deficits and debt. We could talk about data. But in the end, treasuries really when it gets nasty, when that tina the only that there is no alternative to stocks, that changes rather abruptly when stocks go down. And then tina becomes there is no alternative to being long treasuries. We want to keep cognizant of that. To the end the japanese are doing everything in their power to keep the yen weak, lets look at how all that stimulus and various ways theyre trying to goose their economy have panned out. One way theyve made good strides on. Currently the latest reads is 3. 7. Now, that is the basic lowest rates since july of 07. During that interim period between 07 and now the high was 5. 5. The message to this is is that the japanese may have issues for the last 25 years. But huge high unemployment certainly does not seem to be one of them but they made some inroads. Base wage, recent data. This is important. Base wages were only up 1 10 year over year. One of the things theyre trying to do is goose inflation. If you adjust the wages for inflation, year over year theyre losing ground at 1. 8 . Remember their inflation rates roughly the highest since the Fourth Quarter of 2008. Heres the latest gdp figures. From the current q4 of 13 at 1 . The same problem the u. S. Has. Yes, they changed the red numbers but they cant seem to get traction. This is very important to Pay Attention to. Especially if you any goose and the yen, the dollar against the yen, is the way to combat 25 years of malaise. When we come back a real treat today. Teslas ceo elon musk is talking space in a hearing on capitol hill. One of the earliest investors in tesla and space x is here to talk about the future of space age investing in just a moment. And the bells are about to sound across europe. Weve been hitting some alltime highs on the s p here. Well see if europes close changes any of that. Tdd 18886486021 there are Trading Opportunities tdd 18886486021 just waiting to be found. Tdd 18886486021 at schwab, were here to help tdd 18886486021 bring what inspires you tdd 18886486021 out there. In here. Tdd 18886486021 out there, tdd 18886486021 there are stocks on the move. 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With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Big aid package announced. Yes, but we stabilized after two big moves. Thats a market that is flat overall is weighted average. Eurozone recovery is full on track. That is the judgment from the jpmorgan today in accelerating services pmi. This is mornt because the ecb is meeting tomorrow and to a certain extent it takes the pressure off them to act. In this environment, notice that italy is doing particularly well up 1 1 2 . Looks like the new Prime Minister has done a deal that will basically change the voting rules in italy so that you get less fragmentation moving forward and stronger governments. Lets have a look at the gyrations weve had so far this week. Its sbreinteresting. Heavy losses on monday with ukraine and bounce back from europe its flat lined. Here t in the United States of course, that line that s p 500 has made considerably gains. So out performance here versus europe. Some european stocks that are exposed to ukraine and russia are still in negative territory. This is a publisher. This is a builder. They are trying to sell a subsidiary in the ukraine. Apart from that its interesting that some of the homebuilders in the uk are in negative territory today. Persimmon is up about 50 over the last 12 months. Negative comments coming through from breckers today, barclays daveys and Credit Suisse has taken that sector into negative territory. Back to you. Thank you simon hobbs. As you might have known by now, elon musk is on capitol hill today speaking in front of the Senate Appropriations subcommittee about National Security space launch programs. Our next guest was one of the original investors for both tesland space x and is a board member for both of those companies. Steve jer vet sonurvetson is a manager director. Great to have you. Good morning. Good morning. Thank you. So much to talk with you about. You go way back with a bunch of names we cover evidence. What elon is telling the hill. It sounds like hes saying the bidding process should be opened up defending space x saying subsidies are not really a factor at this point. Whats the message that you and musk want to come out of capitol hill . Well, im not a spokesperson for musk or capitol hill. Hes going to do a great job himself in that regard. But what hes generally communicating to the government is that space x is here and provides a wonderful alternative and competition globally for launch. They launch commercial satellites, they launch in the future astronauts to space, they bring cargo to space station. And having more than one option is good for competition. And for a sign of how dramatic that is theres been a threeyear stretch where the United States market share of commercial satellite launch was zero. It was entirely russians and chinese launching the satellites. Now that space x is on the scene, the u. S. Is comepetitive once again. The winklevoss twins are going, to take a virgin ga lal tick flight. When you think about the economy in space. Where are we . Yes. What are the big touchstones were going to see over the next five or ten years . Were at the beginning of a long and interesting period in new space as we call it. And you can draw an analogy to the development of the internet. First came fiber optics. Then came browsers and websites and web services over time. Right now here at the fiber optic build where space x is lowering the cost of access. Getting into space is now affordable. You have everyday low pricing on the website. Entrepreneurs for the first time can say this is what it costs to get into orbit. Its understandable. And its lower and its coming down. Once you can get to space you rethink how a satellite can be built. Companies like planet labs and others are changing the way we will observe the earth, the way we will communicate, the way we will have wifi for the whole planet. Eventually well have tour rich. Kids everywhere feeling this is going to be an exciting decade coming up for space and exploration. Its a lower price point in relative terms but tlks still comparisons that get drawn between early days of commercial air flight. It was very costly for a very elite few. I know we are in the beginning stages of commercialization. But what do you see as eventual price point where a flight into space would settle . To actually democratize space travel . Fantastic question. Back in 1969 when apollo 11 was flying arthur clark, the famous futurist said, why does it cost so much to get to space in why should it be like the airplane where you reuse the rocket like you reuse a plane. Only rich billionaires and governments would fly and that pretty much describes rocketry today. What will change is when we can reuse the rocket. Today it still costs more than an average person can play. The longterm price should be less. If you want to take seven people in a private jet around the earth that will cost more than flying the rocket around the earth. Similarly to get to mars elon musk estimates it should cost no more than 500,000 round trip. Big number but thats getting to mars. Getting to the moon and back getting to a hotel in orbit. These will be affordable for increasing numbers of people. Certainly something any entrepreneur can dream about as their lifes ambition to go to space. Its now actually a believable dream. Like being back in the late 50s again. I know youre on the board of tesla and as a result you cant talk about the quarters products. Im delinquent if i dont ask you about the giga factory and whether you have a preference anything like that. Thats hilarious question. Do i have a personal preference . No. It would be inappropriate for me if i had a personal preference. As you heard theyre announcing the intent to build a factory that would have a capacity that exceeds the entire world production of lithium ion cells today. Its a pretty breathtaking endeavor. There is an analogy to everything weve been talking about. A tesla car uses 7,000 batteries. They are the common badries used in laptops, everywhere. And elon realized you can reengineer how its built around this common battery must like a space x rocket is ten of the same engine or planet led satellite cluster has und hs of the same satellite. Completely reengineering how they can be built. In every case taking the hardware, the thing and making it somewhat of a standard off the shelf part and the beauty is in the software of the architecture the way it comes together to provide better product than we had before. Steve, i think it is an understatement to say that the tesla is the darling of the stock market. Its a true definition of a momentum stock. Its in a high growth phase. Of course, so many investors are watching it. What does a Venture Capitalist like yourself when youre sitting in a Board Meeting advise a company like that to do during this stage of its life cycle . Well, i cant obviously disclose what we describe and talk about in private conversations. What i can say is that i am just incredibly excited and enthusiastic about my opportunity to see these gamechanging Companies Take the elon musk family of companies and what they can do for america. The number of jobs created. The way in which it changes the way we drive, how we can dream about exploring space and in solar city how we frankly power our company off of solar rather than more i guess, less renewable sources of energy. For me the advice is how do you keep going . How do you fulfill your mission globally . For all of these companies its not just the u. S. Opportunity, its a global opportunity. The opportunity to make a difference on this planet and to hopefully nudge it in the right direction as steve jobs would say, to put a dent in the universe for the better. Finally. You know im sure you read all the same sale side reports we get. The other gay morganne stanley took their target on tesla to 320 on the notion that eventually tesla takes on the electric utility business. The multitrillion dollar business around the globe. Do you deny when analysts come up with big broad notions like that . I dont deny it. I accept or deny it. Thats what they do. They come up with their own forecasts and beliefs and thats great. Whats important to us as investors is whats the tenyear trend, whats the longterm arc. If you look far enough in the future all vehicles will be electric, right . We will get energy from renewable sources whether thats solar. Its inevitable. If you dont believe that look at 5,000 years. Its not possible for us to burn a fossil fuel 5,000 years from now. Its just a question of when. With that longterm perspective think about coming back to the present to say what are the capabilities we need to build to get from here to there. You need solar, storage, a lot of storage to shift daytime generation to nighttime use wherever it might be needed and to make the grid work a lot better for renewables. Well understood needs. Right now you see the confluence of the opportunity, both the electric car and distributed electricity having common components that benefits both. Thats the biggest change we see with this announcement. We need a full hour with you, steve. Im sorry. I hate to do that to you. It is great having you on the show. Sure. Please come back. Happy to. Steve jurvetson, managing partner joining us this morning. We have a keen eye on the Energy Markets after situation between russia and ukraine remains tense today. Events there being watched closely by investors and in the Energy Industry conference in houston. We find Sharon Epperson live with the latest. Sharon . Weve been talking to a number of ceos who do business in both europe and russia and they say that theyre telling me the events in russia and the ukraine really underscore their need to diversify. Keep in mind of course that about 30 of the gas thats consumed in europe goes through russia. 50 goes to the ukraine. They say now is the time to be looking elsewhere as well. I caught up with the ceo of one who hones pritt british gas. Theyre making Major Investments right here in the United States. Were a big investor in the u. S. And north america as a whole. Last year we did two significant investors. One was to increase our Gas Production in north america. Actually in western canada where we to the with partners invested over a billion dollars. Now, i also caught up with the ceo of the Italian Energy giant eni. They have two Major Projects with russias gazprom. Theyre is biggest buyer of gas from gazprom. He told me hes not worried about supply disruptions from russia. He is watching it though very closely. Im not expecting major problems. Im expecting the situation will go back to normality. But certainly the fact that its so important for europe is something to remember because even political decision in europe might be conditioned from this dependence. So where will they look if there were disruptions and where will they get supply . He says he will be looking at nigeria, libya, norway as well as enis own operations in italy and the uk. And both from italy as well as from total ceo from france said they are both very interested in looking into iran once sanctions are lifted. Well have much more about that coming up on power lunch. Back to you. Thank you for that. Lets head it over to shesheila. Carl check out shares of brownforman. Hitting a 52week high. Boasted by strons sales of flagship jack dan elseiels brand. I dont know if youre a jack daniels guy or not. Good question sheila. When we come back one very important Foreign National is on his way to Silicon Valley to sign a major deal on economic development. Were going to the you who it is when squawk on the street comes back. In a world thats changing faster than ever we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through we say lets get to work. Because the future belongs to those who challenge the present. Really . So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues great terms. Lets close new at t mobile share value plans our best value plans ever for business. Here in philadelphia you can access a philly cheesesteak anytime, day or night. Just like you can access geico anytime, day or night. There is only one way to celebrate this unique similarity. Witness the cheesesteak shuffle. Cheesesteak cheesesteak its the cheesesteak shuffle huh every day, all day, cheesesteak, cheesesteak every night, all night cheesesteak, cheesesteak 9 a. M. Cheesesteak 2 p. M. Cheesesteak 4 a. M. Cheesesteak any time ruh geico. Fifteen minutes could save you fifteen percent or more on car insurance. Coming up at the top of the hour, is this a teflon marked . Were going to find out what if anything could derail this rally. Energy stocks making swings this week. We have a Top Energy Fund manager who is going to we reveal his favorite names in that space. Right now, plus the buys you should get for a bargain. And theres a lot of buzz about the ecigarette market potential impact on big tobacco. Were going to talk to the president of one of the Worlds Largest ecigarette manufactures. Israeli Prime Minister Benjamin Netanyahu visiting Silicon Valley for a meeting with jerry brown this afternoon. Hes the latest leader to court Tech Companies in california. Josh lipton is live in san jose with more on that for us. Josh . Hey, carl yeah on any given day who comes to visit Silicon Valley . Its engineers, technologists, vcs and heads of state. The latest dig tear to arrive here is Benjamin Netanyahu, israels Prime Minister. Hes here to meet with governor jerry brown to sign a historic agreement that will boost economic culture and academic cooperation between california and israel with an emphasis on Cyber Security alternative energy, and water conservation. Netanyahu is also scheduled to meet with whatsapp founder who recently just sold his company to facebook as well as executives from linkedin and ebay. Netanyahu just the latest world leader to court Silicon Valley Tech Companies. French president made the swing here through february as have leaders from ireland, Turkey Russia the netherlands and more. Why are they all making a trip to Silicon Valley . William miller of stanford says World Leaders come because they want a firsthand look at the innovation, the entrepreneurship that the valley is so famous for. In some cases theyre also looking for ideas to get their economies moving and create more jobs at home. Its also good for their image, miller says if theyre seen meeting with world famous executives at highTech Companies. Theres few better photoopes than a quick handshake with tim cook, sheryl sandberg, or larry page. While there is some buzz here about netanyahu giving a very special relationship between Silicon Valley and israel in general, of course Silicon Valley leaders, employees. Theyre more focused on creating the next great tech product, not probably as interested in a foreign dignitary getting his or her picture taken. Guys, back to you. Thanks so much for that. Way nsz which google bought one of the top israeli Tech Companies. I think that is really set the tone for some of the products coming out of that country. Well get the latest from you as it happens today. But for the moment thanks. If only they were as amicable in washington as in Silicon Valley. Heated exchange this morning on whether the irs targeted cob serve tive groups. But it was between Committee Members after former irs official lois learner repeatedly took the fifth during 20 minutes of questioning. Darrell issa abruptly adjourned the hearing but not before being challenged by the top tomorrow democratic elijah cummings. Take a listen. I can see no point in going further. I have no expectation that ms. Learner will cop operate with this committee. Chir man, i have a statement. You just cannot do this. This is were better than that as a country. Were better than that as a committee. I have asked for a few minutes to ask now youre turning me off. Youre released. You may but first, i would like to use my time to make some brief points. Before our single document thank you. That would be clipping Cummings Mike so he could not comment. Interesting exchange. Washington provides an adventure. Up next on todays squawk breakthrough here at post 9, the Company Bills itself as a do it yourself version of ticket master. This morning its announcing a new feature that makes it easier than ever to create your own event and assign seats automatically. Plus, social Network Facebook has hired a Community Safety Police Officer for three years for the price of 200,000 a year. The officer will be on patrol in men men menlo park. Now that facebook has hired a cop from Menlo Park Police should be on the lookout for what . Feel free to be creative. We might air you response later in the hour. Startup eventbrite has been called the dyi ticket master cop petter. It sold 165 million Tickets Worldwide totaling 2 bll billion in gross ticket sales. They announced a major new feature to the platform. Kevin harts is joining us now from san francisco. Kevin, for those who dont know what eventbrite does it is a platform that allows companies and organizations to ticket their own events. Now with this new advancement you allow them to organize their seating as well. What does this do for you business . Well, kayla, it greatly expands our business. We started out as a business serving not the typically largest venue, largest stadiums or concerts but actually Everything Else besides that. And we allowed people to very quickly publish and start selling ticket registrations for any type of event. And now weve expanded that market dramatically with this new reserve seating offering. In the press release, the example thats used is the marine corps thousands of people coming. How do you choose what table do they sit at. What other instances would this come in handy . Well, its exciting because its so universal. You talk about fundraising dinners such as you mentioned. You consider you consider theaters, you consider sporting events. And then theres many of the areas that we cant even yet imagine that once you put a selfservice reserve seating product in the hands of the world, anyone can publish, anyone can use, it will be very exciting to see this happen. Our very first customer is actually an air show in vera beach, florida. Kef vib, im just looking at some of the stats on your company. You were founded in 2006. You are bound to cross the 1 billion in gross annual sales market. Seems like this company has been on a rapid growth trajectory. Im thinking back to when ticket master and livenation merged and the concern in washington was this was such a crowded space they would have a strangle hold on the industry. What percent of ticket masters market share have you been able to eat into . Well, what were focused on is a much wider, broader, global market. So we, instead of taking on old incumbent ticketing characterized by lack of innovation, lack of service, and high prices weve approached a much Broader Market and that is the socalled long tail of ticketing. Weve done that with Silicon Valley innovation, with low fees and with Great Customer service. Around we cover many different categories. So we describe ourselves as much more of a multicategory Ecommerce Company reaching different categories that range to politics, we worked on the inauguration, the swearing in of the new york mayor to classes, to conferences, to tours. A whole broad range of spectrum of live experiences. And we do this across the world. In terms of overlapping with the incumbents, weve been able to grow and achieve this 2 billion in cumulative sales without hardly even entering into incumbent markets. Its a big enough sales number kevin, that makes people wonder are you going public soon . Well, we just closed a private round of funding last year. Its a very exuberant financial market. We chose to take capital in a large amount and have a big balance sheet. So we could keep building and chose the private route at this point. We will be a Public Company some day. We have the aspirations to be a longterm stand alone business. And so one day we will. All right, kevin hartz, thanks for joining us this morning. Getting some news on chipotle this morning. They have responded to the reports of that guacamole shortage or the guacapocalypse. The warning about suspending guacamole from their menu is a routine disclosure of risk factors and theres no looming guacapocalypse. Thats hard to say. They had said during the last quarter that avocado prices were a it out of control. But people have tried to make more of this than maybe they should have. You run into this with almost every food company. Commodity costs are one of the main risks. Tweet time. Facebook, if you havent heard, has hired a Community Safety Police Officer for three years for the price of 200,000 a year. The officeler be on patrol in the city of menlo park. Brings us to this squawk on the tweet. Now that they hired a cop for the area, the police should be on the lookout for what . Tweet us at squawk street. 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Predicting the future is a pretty difficult thing to do. But, manufacturing in the United States means advanced technology. We learned that Technology Allows us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. Facebooks hired a cop to patrol menlo park. Were asking you, now that theyve hired a cop, the police should be on the lookout for what . Brian writes, with winklevoss twins. Serial pokers. Thats a lot for one cop to handle. Exactly. And steven writes yahoo of course, as we know how competitive the valley can be. Interesting session. The s p has been hitting alltime highs but without exxon the dow would be doing better. The big energy names have been taking it on the chin. With that well turn it over to wapner. Scott, a lot to work with this afternoon. Right on the point you were saying. You get a weaker avp, weaker ism nonmanufacturing. The market not really being effected greatly by that. So you start to wonder what, if anything, if it not russia what is it that can impact this market . Wait for friday. I guess. I guess thats what everybody is going to wait for and certainly the market is going to move one way or the other. Guys, have a great rest of the day. Welcome to the half time show. Teflon market with stocks hitting new highs again. Is there anything that can upset this bull run . New probe. New yorks chief banking regulator asking questions about yet another mortgage servicer. The stock is active. Department of financial