Tenyears popped to a little past 183 after the big of the sell off selloff for bonds oil up 19 in the last four days. Ahead of the jobs report friday. Adp, lighter than estimates. It is official staples buying office depot, 6. 3 billion. An Office Supply giant created but questions on antitrust. Earnings from gm disney chipotle stocks making big moves in the premark. Futures falling, the morning after the rally which the dow jumped 305. S p nearly wiped out all of last months prices. Oil prices pulling back following surge. Wti crude above 53. Ahead of the jobs numbers friday. Adp said private sector added 213,000 jobs in january, below forecast although december payrolls were revised higher just another macro data point that failed to impress, at least, markedly to the upside. Eurozone retail numbers Third Straight best in seven years chinese stimulus program, very real. Im absolutely convinced, once again, the reason weve been having this rally is because of overseas. Can oil pull back . It should pull back. The last bit short squeezed. Rich kinder on last night, the real demand is 65. 70. As it comes in start thinking well, oil is probably not going to go back to the low 40s. He does point out that theres actual worldwide demand has gotten a little bit firmer. Theres more demand for it. Its the demand side that everybody should be focused on not supply. Theres 1. 5 Million Barrels oversupply. Fair to say kinder all of those trying to call the bottom in oil yesterday, hes not far off from that . Look he had an after lit meeting january 28th. Take a look at trading where oil was, hit 43 44. He said in the analysts meeting, look this isnt right, it should be 65 70. At that point, it was 43 going to 35 right . He just says its a its kind of done. And i think that this is where you buy. Now a guy who called it at 44 who had not been positive on oil from 100, i think hes got some game. Of course followed up with buying the pipeline from bachen in which the property his got are profitable at 40. This a man that puts 3 billion of money where his mouth is. As oil comes back people will say there is a bottom here. One of did the stocks never took out december 15th low, theyre too high. Look at the one, im not going into, the company you go to get drilling equipment, bookedtobill was 42. No one ordered a rig this month. No one. No. Thats not a surprise. Right. But what does that say about 2016 . If you stop drilling and stop buying. First quarter, still a lot of production, theres a lot of help by production contracts, people have to drill. If you get if you started off with eurozone up in china up if china comes back with 750,000 more barrels and if europe comes back for 750,000 more barrels youll say, wow. Some of the concern had been not just about the supply and the excess supply but really demand question. Yeah. You seem to be arguing, dont worry about the demand it will be there. Right. That is a reflection of the worldwide economy, a positive sign. Right. Were seeing this eurozone number to me more spending. Spain, up 26 . Italy up teens, midteens in terms of labor. Eurozone retail sales up 2. 8 yearoveryear. When you said maybe a week or two ago, seeing green chutes in europe, we kind of snickered at you. I had to take a break at jim cramer on twitter the hatred was so thick, dont worry, tomorrow twitter reports. Might be back in. What a day. I do think, yes, its happening. Too many Good Companies saying its happening. And, by the way, remember boone pickens, who has been around even longer than i have which is extraordinary. Thats saying something. Saying something. The demand side. The demand side comes back. The big drop by the way, the strategist at jpmorgan pointed out, the big drop did come in large part because the airlines took off their hedges. Thats where youve got that was that was a whoosh. Remember selling puts at the same time buying calls help doesnt directly reference it, 50 pages of analysis in oil. You look at the whoosh down it was when they had to take their hedges off. And they all did it at once they all have the same strategy. Thats where you good the now were take the other side of green chutes. Id like to be. Youre a collegial guy. The debates on twitter are like listen you you not so collegiate. Jack just came out and used the word that actually is typical. Yes. But its more of a class blank than is it we get it. It not deserved. I love it because its been on philadelphia for heaven sake. I did throw snowballs at him. He had it coming. You know who im talking about. Santa claus. Right. Bad loss. I cant hit him. I dont have a good arm. Theres a whole ad campaign youre not allowed to say that kind of arm. Jobs day friday. Can you nail the number . Tweet us your predicts for nonfarm january payrolls. Use ask squawk street. Lucky member receives cnbc ear muffs. Well hand them to david to sign. Heres a sharpie. Viewers in warm weather climates said, what about us . Guys in florida, texas. We will not be wearing these at the mets home opener. Loving that youre coming along here on the mets bandwagon. Im on the bandwagon. The new lefty who will be kovax. Youll have until one minute before the jobs number friday to tweet us predictions. Adp, of course up 213, estimate was 220. The lowest since september although december was revised up. All right . Look you know who tells the truth on this . I would show but i cant because i have a i would show my socks, my socks now are the key to the market. I bought my socks at kohls and kohls guided up for the first time i think since they talk over the retail store, just a suburban one, and the kohls guide up looking disney guides up but disney is the greatest company in the world. Macys as well. Thats down but did run yesterday. Same as koscostco. Its the kohls 404 going to 422. Kohls, people are shopping people are shopping. Not shopping highend. Ralph lauren is not affecting when you pay when you pay 202 for gasoline it doesnt make you buy a diamond ring at tiffanys. No did. It does not make you buy that exspecialance ex expensive it gets us to the big deal announced this morning, staples agreeing to acquire office depot, 6. 3 billion worth of cash and stock. The deal valuing office depot at 11. 41 a share at beginning of trading. Staples going to down it looks like. So that will come down a bit. Expects to close the transaction by the end of the year. A lot of Different Things here over 1 billion in synergies but the billion dollar number, lower than some anticipated about why not be conservative on that front . They are willing to divest 1. 25 billion worth of revenues storeproducing revenue in order to meet antitrust approval. More on that in a moment. And you get mr. Sergeant running the combine company. There had been some anticipation or hope that the ceo would be Rolland Smith who had synergy promised in the office depot office max. They started talking back in secretary. Thats a way to it tell the activists, you had nothing to do with this. Thats not clear. If they started talking they would have gotten something done quickly it wouldnt have taken that them that long to get something done. When they got serious about it they got done quickly. Economics, not bad. The question will come back to of course, antitrust. While they are relying on the decision from the ftc in office depot office max, allows numbers two and three to get together and stated for the record for example, that nonOffice Supply super stores such as walmart, target, with club stores have expanded Office SupplyProduct Offering and now compete with other Office Supply super stores and they also went on to say, the internet retailers, most prominently amazon grown quickly and significantly, thats what theyre relying on here. Hopefully the same definition of the socalled market. Otherwise talking number one and number two d. O. A. So dollar tree says theyre just theyre going to shed a few more dollar trees. Saying their 300 target of store divestitures to get the deal done may be low. Will this be the same . When we have when we have Office Depots next to staples, i get that. Will there be a number they just cant take in some other company can buy them . I dont know the answer. I dont think they do either. Youve got to be willing to take a shot one would expect given the potential synergies. I agree. Bezos talking about bricks and mortar investment. Well play sound on that in a few moments. And thats the question. Will they continue to view the market in that way so that amazon is included in that definition . By who knows . Listen, Dollar General never expected to face what it did when it come to family dollar. You bring up dollar tree finding that it may have to divest more stores. Its uncertain by its nature at the ftc approach here. Well have to wait and see. They are giving them cover 1. 25 billion revenue willing to divest that 250 million breakup fee and synergy numbers are conservative. If it goes through, nobody argues it aint going to be a good thing. No, a chart of dollar tree. You can see a period people said, its a good deal. You realize its a great deal. Maybe this pause its going to be a good deal okay enough and then this takes off. This company is worth this is two plus two equals five it really is. When that is the case you want the antitrust authorities to look closely, ala airlines. You mentioned disney. Well talk about disney and chipotle after the break. Shares of gm and chipotle in opposite directions. Busy day for earnings. Also talk with Lending Club Founder and ceo renaud laplanche, alliance with alibaba. Premarket, recovered 70 of losses for the dow in january. 80 of the s ps losses from last month. A lot more squawk on the street from post 9 in a moment. I am never getting married. Never. Psssssh. Guaranteed. You picked a beautiful ring. Thank you. Were never having kids. Mmmmmm. Breathe. I love it here. We are never moving to the suburbs. We are never getting one of those. We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life state farm is there. Demand for products related to frozen helped disney post better than expected results. Ceo bob iger addressed the meesele situation last night on closing bell. We have not been able to discern any impact if at all from that. If you look at disneyland the quarter that were currently in were up from where we were last year in attendance and in bookings or reservations. So we just havent seen an impact. In fact park revenue up nine Media Networks up 11. Studios down, two but if it hpt hadnt been for frozen it would have been worse. Disneys proctor during the heyday. 11 1 billion fran dhizs. This is the way proctor was when proctor was the Great AmericanGrowth Company before it lost its growth. Everybody has to own disney everyone. You said that for a while. This what is you give your kids. For get things like hasboro how many got that barbie. I see people arent giving barbie anymore. Those still giving barbie youve got a chance buy a share at disney. Remarkable quarter. Nitpickers, e schltspn pushing shanghai park back to 2016. We have star wars to take care of First Quarter 2016. We department want the park to open we want that pushback so we have that tempo, yes, seven minute frozen good a lot of pixar things coming up. Wow, visa, Charlie Hebdo scharf, look at chart 2005. Scharf on the visa call a great executive, said look heres the deal. The nice one guy and another 1995 to 2005 when the episodic period when eisner ran it if you had a scharf call from visa the strong dollars hurting tourism from brazil from europe. You had really smart Hedge Fund Guys put out a began begangigantic short on disney totally wrong. One of the great shorts spoiled ever. Only area questions on espn. We know the cost of sports rights and what thats meant. Iger did point out in the Conference Call there havent been a lot of new automotive launches, new cars. Didnt see a lot of car ads on the super bowl as well. He does seem to be augering for that coming back and added in the mix, and espn as well. People watched 123 million views of star wars trailer. People have a lot of time on their hands. Only two minutes. Watch it over and over . Yes. Thats true. I saw will ferrell do aly. Ssnnc of of let it go. Love him. Really funny. Very funny. Gm operating profit of 1. 19, above after gm announcing to raise the dividend after the board meets. Cfo Chuck Stevens earlier on squawk box. That caps a strong 2014 from a performance perspective, really led by two most important markets, north america and china. Weve got auto sales yesterday. You mentioned forex. Toyota is looking for operating net thats more than ford gm kris ter combined. Like the old days. Another part of the green chutes sewny, too. Toyotas great. Japans coming back. Get japan online china online stop smirking. Japan coming back . Theyve driven their currency down to zero. Why dont you put an asterisk there, 154game season come on. It was done with steroids . Theres no hall of fame here. This is not like barry bonds. Thats true. Thats true. Theres no bonds. Theres no stocks. Its just no pete rose in the hall of fame. Not even in the hall. You wouldnt call this gambling with the future . That is what japan is doing, arent they . Gambling with future. Im talking about gambling talking about buying stock, not gambling. I understand what youre talking about. Eventually indianapolis gots going to end badly. Very bad. You better call saul. Auto sales 54 , suvs and trucks, ford today adding 1500 jobs to bill f150. These guys fields, like the old days. Like boeing airbus. Both guys have game. Old days old days proctor gamble, old days. Are you feeling long in the tooth. Bob iger and i both have a birthday february 10. Mine is more than a milestone. He talked about his grandkids on the interview. Put that one off. You dont have any of those. Cramers mad dash dash count down to the opening bell one more look at premarket after the biggest volume day for stocks since december 19th. Back in a moment. 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And then you hear theyre going to discount 42 on the hep c. People saying there are biotech price wars. Going take down celgene, regeneron, biogen. Stop panicking. This is problematic but a good dividend, good buyback. It had a big run. Numbers are staggering when you add in the the new one. 12. 4 billion in sales last year. Generating a lot of cash. Instituted a dividend. Let it come in and then did 0 buying. I like regeneron and celgene on the weakness. Celgene has a better product profile in terms of patents. Competing with the pharmacy benefits. Today my Charitable Trust owns abbvie. The price cut was a shocker. Came out on the call this year things will be more competitive than last year. Holy cow. Companies that you say, they dont have competition. Well, they do. Speaking of competition, shake shack, in terms of food with integrity, chipotle. Now, this is what you need to know about chipotle. This is not the first time this has happened. Do you know every one has been a buy . Every one of these pull backs, no different. There was a pork issue, remember, they had humane treatment read the Conference Call, what they were doing to pigs is horrendous. Understand what company chipotle is. Chipotle is about putting the Customer First by having food with integrity. It hurt them this quarter. You know what . If they have a pork shortage or beef shortage, they have to raise prices more as a result of trying to source what they are looking for. They said theyre not going to take price. People say its over it cant be that good. You see articles that say its over. Its never over for highquality companies that are wellrun that do great things. Chipotle let it come in then buy. Thats the theme of tonights show. These guys els, montgomery, are you going to decide theyve lost it . Danny meyer told me to buy the stock at 50. Wow. He should know. 300 million on his shake shack position alone. Hes going to talk to his financial adviser. Weve got the opening bell coming up after this. A lot more squawk on the street. Bulldog whats this . Mattress discounters president s day sale ending . But mattress discounters has the Largest Selection of memory Foam Mattresses under one roof comforpedic. Icomfort. Posturepedic hybrid. And wow get up to four years interestfree financing on the entire tempurpedic cloud collection and, get a queen size serta mattress and box spring set for just 397. The president s day sale is ending soon mattress discounters female announcer save up to 300 on beautyrest and posturepedic. Even get three years interestfree financing on tempurpedic. Keep more president s in your wallet. Sleep trains president s day sale is on now your ticket to a better nights sleep youre wafingtching cnbcs squawk on the street. Opening bell in 90 seconds on a day where the greeks getting to work talking about a potential debt swap with the imf, retail sales in eurozone up 208, best month in eight years, as jim was pointing out. After the reversal on oil, which sounds like you think had some weight to it. I think its moved up too much. We have a wednesday number thats going to show i think, pretty big inventory builds but i think weve seen a bottom. That trip down to 43 i think people who are shorting oil have come cover. I think the demand coming back does matter tremendously. I believe that greek finance minister when he said trichet was the worst central banker ever raised rates twice, go into a depression that guys got game man. Considered very savvy, especially on social media and the like. You know people thought people thought oh another bum kin . No hes going to run rings around Herbert Hoover over there. Starting to win hearts of the brits and italians. The guys a delight. Hey saying youre going after tax evaders, win some people over, see if that happens. Hes my guy. S p. And a look at the s p at the top of the screen. Big board this morning, xenia hotels and resorts celebrating its ipo. Lam research. What a stock thats been a horse ever since they bought novellus. Great move. Very nice. Mentioning the dividend over at gilead. Of course gm and news of potential dividend phil lebeau points out, 20 would take that yield to 4. 3. Yeah. Competitive with ford. Reminds me have you much of the late 80s when ford and gm competed with ear to have high dividend. We forget how companies generate a lot. Dividends clearly very important and in the case for many stocks. I think of at t at a 5. 5 yield now. Downgraded. Downgraded to bbb plus at s p. Talked about Free Cash Flow percent used up in paying dividend and fact acquiring and not to mention how much at t spent on the auction but what did dish do . If dish has done nothing but go up, since i met you, seeing price targets that are insane. Since i met you . Known each other 18 years. Was there even a dish then . Yeah going up since we started talking about, its been going up. Its not done. Still dont know the answer on dish. Many many people speculating the strategy. As much spectrum as tmobile. Not a wireless company. I know. Smucker, we have not mentioned yet. Almost a 6 billion offer for big heart pet brands, maker of names you probably know. Third biggest domestic m a deal of the year. With a name like that. Take you back to 2013 the highest level for smuckers since that time. I think pet food well up 7. It shows that smuckers actually stands competitive. I think that people ought to look at a company, fresh pet, 500 million, i think that people want fresh food for their pets and that may be a target. Fresh pet. The animal business at merck, one of the few things they had some plus items in the revenue column. Remember, you know this is Animal Health whether it be the zoetis guys are good. People want to treat their pets better than ever. If there was any food that i could have given tequila the name of my cat before i changed the name you could buy natural and organic food for your cat i would do it. Whats the name. Now its it was don juan tequila. I changed the name because it encouraged underage drinking. You encourage people to drink tequila. Shapes of staples down sharply, over 8 the effect of lowering the price overall of the deal because youre getting. 2188 of staples in addition to 7. 25 in cash for each share you own of office depot. Why . Well antitrust concerns new york doubt about that. Price paid perhaps, though that was in the range of what many anticipated. And also the fact the current ceo of staples is going to be running the combined company. There had been some expectation, perhaps, hed move up to chairman. Get smith in as ceo, Office Depot Shareholders happeny with his performances he integrated office max. So it kind of stole the thunder. Watch amazon. Jeff baz doughezos to promote transparent was won a golden globe. Responding to charlie rose about the balance of investing and profitability. We have so many i call it insurmountable opportunity so many things that we can do because of the time that we started and the change thats happening because of the internet all of that opportunity. So we keep finding new things to invest in. But we have great franchises that we built overtime ecommerce ecommerce, amazon prime kindle and amazon web services, and then also always investing and looking for the next. Investing heavily in video. Wont make profits because well always find better investments. I dont know about always thats a long time. Always is a long time. A long time. Well jack mas longing at 011 00 100. They grill him. He puts himself so willing to put himself out there. Like russert and dan rather when dan rather was attacking nixon. Exactly. Reminds you of that. How great are you . Pretty great. Youre a genius. With all of that edward bernstein. We dont hear from him a lot. When we do hear from him, take look, the stocks coming back. So is netflix. Very good quarter. Waiting for someone to say oil going up buy tesla. Vegas, continues to be an issue. Metrics going the wrong direction. Wynn down 3 last night. 1. 20 misses 1. 43. What do you do here . I dont know. The party doesnt seem to want gambling. Chinese out of nowhere communists . What are they doing there. Crack down on corruption. They dont like people drinking. A lawless society, some would argue. And now saying no more were going to get lawful again. I remember when the capitalist came in now i want to hear from steve. Steves a genius. I think mgm is the way to hedge it. Firm gm. How the video game makers have done well taketwo quarter good beats above 1. 52. On tonight, thats a buy. Youre coming into youre coming into evolve. Evolve, my gamer friends tell me evolve going to be monstrous. This shows you how the catalog valued the taketwo. Mba fantastic. Sell. Guys who have holds hated it all the way up. You you sell the stock when those clowns sorry i didnt mean that i meant mr. Clowns upgrade the stock im want to own taketwo. Digital numbers fabulous. Jim, we did gilead and in the mad dash. Its down 10 . Is that overtonight. I think you have downgrades. When you see down ten, one of the things that happened in the market, stock down ten first day, sellers arent finished, come back the next day. You cant go in goldman, i want to sell you 10 million in gilead, well buy a million and come back tomorrow. When netflix goes. Goes up three straight days. A followup down day after a down ten. The prince alwaleed on the show last week taking his stake in news corp. From 6. 6 long time holding. What can i say . Guys a good investor. Media stocks have been pretty good. Used to talk lifetime never sell. I remember citi group, never sell. What he told me. Guys made a lot of good moves. Look i dont like following even the best. You dont know what he knows, why he did it whats going on. But news corp. Has been a winner, not a loser. Time warner better. Maybe swapped in time warner. News corp. s interesting. Wonder about the consolidation to potentially come in the old Media Business i use that term you went through the long view. Im going to say when murdoch turns 135 really. 135 years old . Whats mandatory retirement 150. No, thats viacom. Confusing sumner redstone. Great to be an october ta again nairian. Youre going to be good. Bob pisani on the floor. A long way to go, jim. And so do the rest of us. Thankfully. A little bhit weak today but coming back. Weak innocence two Sectors Health care and Energy Earnings in the health care area. Take a look at gilead. Thats weighing on things. Abbvie, celgene, regeneron, big guys in biotech. Energy, after a terrific rally in the last few days showing signs of weakness, oil down here. Big guys noble, chesapeake halliburton, the most volatile high beta names, also moving a bit. I dont think it should take away from the rally weve been seeing. Talking about four stresses in the market. And how they have sort of changed in the last few days. How theres been bottoming going on in oil, in base metals in bond yields. And as europe as well. Some going on for a while. Oil hovering in the mid40s. But theres a powerful rally in the last couple of days, partly on greece possibly making a deal possibly oil deal. Look at s p 500. Weve rallied 70 points from the high to the low this week. That is a huge move. 70 points in the s p. So used to it in last six weeks we dont notice it. If you look back compared to what it was doing last year this is an enormous twoday move to the upside. I dont know if its a bottom or not. I see technical commentary. Lowrys, reading these guys for 20 years, the oldest Technical Analysis service in the United States their note markets reached an important low january 30th. Now embarked on a rally that should at least test the late december bull market highs for the major price indices. Thats lowry. What i like downward earnings revisions for the quarter stopped and started going up. Q 4 up 2. 3 32. 3 2. 3 . Q 1 still coming down my biggest source of worry, thats what i care about. But its getting easier. Retailers are going to be reporting. Weve got early good signs. Kohls great numbers 3. 7 the first positive comp since Second Quarter of last year. Theyve got that loyalty program. Yes to you, seems to working, positive comments. Macys had good numbers, but moving to the downside. Quick comment on staples and office depot. Ill tell you the we i look at this, theyre going to declining industry and less capacity is a lot better. 3,000 stores. There was talk of closing 600. I dont know how many theyre going to close now but certainly the synergies probably another 400, 500, thats working out. Key banks, 750 million in synergies, thats about 5 of total sales. Thats the story there. Dows down 15 points. Thanks a lot. Over to the bond pits this morning and check in with Rick Santelli on this wednesday. Rick . Hey, the mini selloff continues in treasuries and granted it isnt huge but significant. Technicians were all over it. Some of the long maturities climbed above significant levels either established midoctober on the frenzied day or middle of january this year. Twoday chart of tens. Yes up a couple of basis points. Another day of parallel shifts on the curve. Somebody is offside, readjustment to price structure. 5s, 10s, 30s, each up a couple of basis points. Yeartodate of tens. You can see weve climbed above the 20month low, january 15 2. 71 significant. Bund yields theyve crept. But more significant, look at the september of last year chart of the separation, the distance between the spread between tenyear and bund rates. Weve talked many times 1. 50 the magic number. If youre looking to regain 150 you had it right. Separation means our rates have to go higher. Lets go back a minute. Lets look at the euro versus dollar yeartodate. Look at that pattern. Now it should nobody surprise, Interest Rate differentials fed, Central Banks of europe. Same chart for bund yields, yes virtually on top of each other. Is the euro turning . I dont know. But its stabilized thats for sure. Another currency dollar versus the chinese yuan. This chart as i showed they injected. We see that the value of the currency moved up the dollar moved down a anybody on right side of the chart. All in all, we are still flirting with levels should we climb just a bit more on that dollar side against that currency to be at the challenging levels of what we last saw in the fall of 2012. Back to you. All right. Rick, thank you. Meantime, oil up 19 in about 3 days. Lets get to jackie at the nymex. Good morning to you, carl. Downside pressure on oil today, not surprising after the kind of wild upside moves that weve seen over the last three days. Right now down 2. 30 on wti, trading at 50. 74. Traders telling me when we went over 54 yesterday, thats where we saw resistance. Not surprising when you see technical move like to see a push back down. The perfect storm to go lower today. Rising dollar, thats one of the issues. But also waiting for the department of energy to release its crude inventory report at 10 307 got the api report last night, bearish. We saw 6 million barrel build. People in the marketplace saying we could see u. S. Production go down, say, in the second half of the year at least right now it doesnt appear to be the case. So thats a little bit of a reality setting in. The talk on the floor from trader is is 40 oil still possible. Last time we went down we didnt necessarily go down in a straight, steep line. So these kind of moves are expected. Back to you. Thank you. When we come back former staples ceo, tom stem berg his take on the company to buy office depot. You know jason lee, now on the amazon original series cocked, joining us live. Dow down 19 points. Squawksquawk on the street back in a minute. Key Court Hearing about to get under way involving nearly 8 million allegedly defective remington rifles the subject of a cnbc documentary. This morning a landmark Class Action Settlement on shaky ground. Scott cohen live in Kansas City Missouri good morning, scott. Reporter good morning, carl. Expert for the plaintiffs has now pulled out of the case saying that the settlement is a bad deal. The judge has a lot of questions of his own. So theres now a lot of uncertainty for millions of gun owners as well as for sercerberus which owns remington. This case involves the remington 700 rifle and other rifles with similar designs. It is the most popular bolt action rifle ever made popular with hunters and military and Police Snipers for its accuracy. Critics say it has a propensity to fire without the trigger being pulled. Our documentary remington under fire explored alleges that remington covers up the alleged defect for decades. Remington denied that for years, fought lawsuit but was allegations that dozens of deaths and injuries linked to this. In december the company and class action plaintiffs agreed tentatively to the landmark settlement. It involves nearly 8 million rifles. They will most of them get a new trigger or potentially a product voucher for remington foods, recommending fonmington will deny the defect but gets move past this with the settlement. Almost immediately the judge in the case a clinton appointee, raised questions about this. And today hes asking the parties for some basic answers. Including is there adequate compensation given to the people here the claimants, some will get 12 product vouchers while the class action plaintiff lawyers are collecting 12. 5 million in fees. Is remington doing enough to publicize the settlement . What about a dlaus lets clause that lets remington walk away. The concern with the replacement trigger, the materials in the trigger are unreliable. He wants to block the deal. What im seeing in the field is that were trying to replace a defect in design with a defect in material. Well both remington and the plaintiffs say, belk isnt qualified to talk about materials. Nonetheless, a lot of questions in a hearing about to get under way here in kansas city. Well tell you how it goes. Important story, thanks to you. Well get stop trading with jim in a moment. Dows up 12. Disney adding 35 points by itself. Pack back in a moment. When the moments spontaneous, why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Time for cramer and stop trading. Nutty day. Apple going up. Who else makes product at 50 a move. How about whirlpool . Great quarter. Electrolux. Whirlpool got ge got out of appliances. So you have a duopoly other than the koreans and ge bought alston considered to be energy company. You see the kind of out of ge into whirlpool trade. People say thats simplistic. I think people think, wow, duopoly, whether it be dollar tree whether it be staples, anytime you can get combinations and get away with it whirlpool is also maytag when you go to any appliance store, almost everythings made by the two companies. The point earlier, households whom gas prices coming down mean something. You might not go to tiffany, you might go to dollar tree and buy a washer. And home depot. Scharf says visa 60 more per month. At the end of the year you buy a washer dryer more Energy Efficient that matters people care about things like that going no the chipotle call see what people care been younger people, whirlpool goes higher. Not higher but much higher. Mad tonight . People buy boats, taketwo buy video games. Remember its grand theft auto which some people dont like politically biggest opening for any entertainment tight until history, right . Right. A theme park built around grand theft auto no bad idea. Its a bad idea. That would be lines go around the block for that. All play evolve in another few weeks. Let me ask you, if you think good things are happening, Better Things are happening in europe. Right. Youre okay on japan. You think income effect on lower gas is going to work here . China 2 trillion stimulus. Markets looking up . I think were chewing through things. Nice profit taking in oil, that makes sense. Come back buy those. Gileads causing that Biotech Group to come apart. Old tech is cominging back industrials, eato in remarkable quarter. 3m. End with Bob Iger Disney i want to go to i store and be i want to buy prepaid share and give to my kids on their birthdays. My hope i get them to let me buy prepaid share. See you tonight, jim. Ism services after the break. Know that chasing performance can mean lower returns and fewer choices in retirement. Know that proper allocation could help increase returns so you can enjoy that second home sooner. Know the right Financial Planning can help you save for college and retirement. Know where you stand with pnc total insight. A new investing and Banking Experience with personalized guidance and online tools. Visit a branch, call or go online today. Being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Good wednesday morning. Welcome back to squawk on the street im Carl Quintanilla with sara eisen, david faber. Simon hobbs is off this week. The markets, dows tepid act of seven or eight point mz february has gotten off to a pretty good start, best start to any month since december 2010. Due to the reverse until oil yesterday, which is giving back some. Still above 50. 10 00 a. M. Here. Rick santelli in chicago. Breaking news, ism nonmanufacturing. Yes, nonmanufacturing. The Service Sector biggest swath of the u. S. Economy. Our last 3 at 56. 2 wasnt bad. The best level going back to 05. And here we go. 56. 7. 56. 7. Thats few times better than expecting. Last month at 56. 2, up graded to 56. 5. 56. 7 not as good as novembers 58. 8. You can see where it slips in. Considering that we had a weak adp, weaker than expected adp, and friday dls coming out. The employment index, moved from 55. 7 down to 51. 6. Might as well look at new orders. Moved from 59. 2 to 59. 5. Well call that a push. We moved up just a smidge to 182, hovering at twoweek high yields should we close here. Equities liked it to up 24. Back to you. Thanks so much. Lets dig deeper into the data. Steve liesman join us from lq. This plays a roll in than first, theres sigh of relief. Weve had soft data. The ism manufacturing on monday did not come in at expectations. The factory orders were below expectations. This is nice coming in around expectations. New orders number at 59. 5. Concern this could have been weatherrelated. No sign of that here. Havent had a chance to read comments yet but i will. This is not from this but the auto data yesterday which was strong. Theres 2. 9 a pretty good number. Coming off the Fourth Quarter 2. 6. One piece of data so far, tracking estimate is 2. 8 to 3 range. It would be a good number if it holds up given the data yet to come. Adp number a touch below expectations. Were looking for 235 comes in at 213. December revised higher. Goods 31,000 services 183. Nonfarm payroll estimate. Everything im hearing whatever this adp was, no besbodys going to change that number. I dont know if you had a chance to hear jack welch, we asked him this morning about the fed, given whats going on in the economy. I think the fed would be crazy to raise rates at this point where the dollar where it is. It would be insane. The sentence to raise rates right now. Carl you know jack. Not a man who minces words too much. There he is insane to raise rates. Liked hearing about over at clayton, listen to Business Plan briefings over past few weeks, has his ear to the ground as always. Thanks, steve. A check on the equity markets here. The dow is positive up 40. But other major indices in the red. Disney, of course, helping the dow, adding about 30 points after a beating the treatstreet. Oil retreating from its highs. Wti crude trading below 4 on concerns oversupply. It is still above that 50 a barrel level. Barclays chief u. S. Economist and an Energy Analyst at raymond jamess. Pavel, start with oil and the markets because thats the big theme now. Usa today leads with head lean, oil back above 50, take stock with. Is that sustainable . Cramer cramers talking about seeing oil in bottom. Have we seen it . Certainly in the process of bottoming. Whether 43 bucks, you know is the alltime bottom you know doesnt really patter in the grand scheme of things. I think the key point is that we are seeing companies slashing drilling spending across the board. This is austerity on steroids for the oil industry and its happening across the globe. Just last friday the biggest rig count drop u. S. Rig count drop since records were kept. That was really the trigger for this oil rally. You know clearly there are down days like today generally speaking, you know we think oil is unsustainably low, as it stands, even above 50. Its unsustainably low. Expect prices to be higher a year from now than today and higher in two years than in one year. Before we get to the data pavel, quickly, how do you play that . You like some of the oil services names. Well we want to be selective right now, is the short answer right . You know theres a period of choppiness, again, seeing that today. We Want Companies that can that have the financial flexibility, the sustainable kind of Balance Sheet strength to you know, survive this period of very depressed prices. So, for example, Occidental Petroleum among producers marathon oil mro, some of the companies that have the ability to protect the dividend protect their Capital Spending and then get on the other side of this meltdown ultimately as a stronger business. Michael, i want to ask about the fed and jobs. We are expected to get more improvement in the jobs market on friday. 5. 6 Unemployment Rate may dip to 5. 5 looking pretty good. But do you agree with jack welch, the fed would be insane to raise Interest Rates because of the dollar, which by the way echoed by the ceo of caterpillar. Well he may think the feds insane but the feds ready to move around midyear. It may slip a little bit from that. But what the fed is saying on the domestic side of the economy, the ism, nonmanufacturing survey confirms this domestic activity quite strong consumption fairly solid. Labor markets are healthier, and the feds making a decision not about how its used the data today but how its used the economy 12 to 18 months from now. So the economy now may not be as firm or solid as they want it but dont see zero as right rate on the federal funds rate. Further progress should mean mid2015 remains the right guidance. Does that mean youre not concerned about the misses that weve seen lately . I think Rick Santelli named a few, factory orders, ism manufacturing, not to mention Fourth Quarter gdp which came in light. Those disappointments dont get you concerned the momentum is fading on the u. S. Economy . No. Certainly the Fourth Quarter gdp number, strength in the ism nonmanufacturing relative to the softening and the ism manufacturing, highlight what were calling the tugofwar between strength and the domestic economy and a weaker global backdrop. The composition of growth may be a bit problematic but everything still pointed to fairly solid domestic activity in the u. S. That were still largely a closed economy. That strength continues, it should overtime outweigh global softness and thats i think, what the fed is looking at. Gentlemen, well keep an eye on oil and the big jobs report on friday. Thanks for joining us. A new high on disney today, one of big movers. Frozen still huge boosting Home Entertainment and toy sales. Bob iger sat down with Julia Boorstin and she joins us with more on that. Julia . Carl bob iger says that now a full year after frozenesss release boosting all of its divisions, driving more than 1 billion in annual retail sales. Driving Consumer Products division to its best quarter ever. I think it is a great testament to a strategy to focus on franchises and our great brands parks and resorts obviously benefit from that but Operational Excellence and clear demand around the holiday period. You know just about anywhere you look at it the company had a great quarter. I think, again, it says a lot about the properties assets that this company now has. Disney shares up today on the better than expected results, up over 7 . As well as on igers confidence the companys growth will continue with expansion of the theme parks and next installment of star wars which iger is excited about coming in december. Iger noted that the parks are off to a great start to the year with attendance and bookings up so far, even at disney land in california where measles cases traced fook viz to visitors at the park. Asked about the current state of the consumer. Generally better. Generally better. I think in our case weve got a strong product cycle that clearly helps. But what were seeing from the consumer, in terms of the signs of spending and making earlier decisions in terms of booking vacations, is definitely improvement. Coming up in squawk alley, more with iger including thoughts on cord cutting and potential and over the top services that cut out middleman and take disney content direct to consumers. What a quarter. Thanks Julia Boorstin. Staples buying office depot, 6. 3 billion. If the deals approved it would unite two big providers of Office Supplies what happen does it mean for the future of staples . The companys cofounder and former ceo tom stemberg will join us live. The dow up 21 close to session highs after ism comes in okay. Back in a minute. Welcome back to squawk on the street. Watches shares of ralph lauren moving lowing to 13 after the Company Reported weaker than expected Third Quarter result mz net income fell 9 as it spent more on Opening Stores and marketing campaign. It also trimmed its 2014 or 2015, rather, Sales Forecast but raising Quarterly Dividend 11 cents to 50 cents per share. As a result shares down 13 . Call it the megamarriage between Office Supply giants, staples agreeing to acquire office depot for 6. 3 billion in skashcash and stock. Joining us staples cofounder tom stemberg focuses on retail and consumer focuses companies. Good morning. Great to be here. Took 18 years but better late that never. In june fighting the ftc, telling us what walmart would be the internet becoming a factor in the industry. They created one of biggest Legal Precedents in their history in their favor from antitrust perspective. Whats curious to see if they can walk away from the precedent by approving the deal, or try to figure out a way to fight it. What do you think the answer is . I dont know. Im not a lawyer. My fatherinlaw is an an try trust lawyer and talks about what a significant precedent this is. Theyll have to fight. Theyll jury rig the market. To try to block this. There will be a potentially long and nasty legal skirmish. Tom, those who point to the ftcs approval of the Office Max Office Depot dmeel 20deal in 2013. Acknowledging nonOffice Supply super stores walmart, amazon all competitors. Many proponents of the deal including managements of both companies, taking that at its face value as a reason why they think theyre safe to move. Thats the hope. Obviously, this great for shareholders, if it happens. The staples Management Team is very talented at merging companies, cutting costs. I think theyll create over time a very efficient enterprise still challenged and find a way to grow. Do you see the synergy numbers, a billion dollars, something conservative. Does that number make sense, given your knowledge of both companies . Well, actually, im not sure. But let me tell you what i mean. If you think about this historically, the big synergies one vendor synergies. Im not sure theres that much to squeeze out of vendors. Two, saving overhead and advertising, thats a given, theyll definitely do than the tricky one is, when you have lets say two staples a Staples Store and Office Depot Store across the street each doing 5 million. You close one of the two one store doing 8 million. That store makes more money than the other two stores would put together. Assuming you can sublet the space. The tricky issues are, in this retail environment where theres not a lot of category kills are growing 20 square foot boxes will we be able to sublet the space . Synergies are quicker. Smart to be conservative. Tom curious what you said about the long term. Say the ftc does give its blessing lets the deal go through, good for nearterm shareholder value and cost cutting. Whats the prognosis for the industry and for a combined unit would they be able to successfully compete with the like of big box retailers and amazon . I think the answer is lower the prices to get back competitive with amazon and costco and the others. I think thats a tough call when talking about hundreds of millions of dollars. If they did that i think they could be a really meaningful factor. They dont, best buy has prove than in the electronics space. Willing to take sacrifice to gain market share, you can be a player. This management teachs got a lot of talent. I think they can execute against that. Tom 44 premium to the close on february 2nd. Does the price feel rich to you . You know i think starboard set this thing up absolutely brilliantly. I think you to congratulate them. You know i cant really judge that. But my guess is you know youre paying for some of the synergies and there are real synergies in terms of overhead and advertising. Switching to politics, tom, we had you a lot on the program during the election big backer of mitt romney of course. Now that hes out, who is your horse . I think i met governor bush back when trying to get people to pass this main street fairness act with the job creators have been trying to get past for years and years, get amazon to collect sales tax as they should in every state. Governor bush was brilliant. He said you know im in favor of this and that told my brother, president bush that im strongly in faber of this but what im going to do with this pass, im not going to take extra tax revenues, im going to lower the sales tax in the state of florida no other politician thought of that. I think hes a forwardthinking clever guy, i think hed be a great president. You know romney well. Would it surprise you if romney took a post in the cabinet, for instance . I think mitt is committed to helping america. They thought theres a way to help america in a meaningful way, hed always step up to the challenge. Interesting. Tom, thank for the insight, politically and on the staples deal. Tom stemberg today in vancouver . When we come back chipotle adding 129 restaurants last year, has over 4 billion in revenue but none of that impressed investors disappointed in the sales number. Down sharply 7 . More on what you should be doing if you own the shares, after the break. I been called a control freak. I like to think of myself as more of a control. Enthusiast. Mmm, a perfect 177degrees. And thats why this road warrior rents from national. I can bypass the counter and go straight to my car. And i dont have to talk to any humans, unless i want to. And i dont. And national lets me choose any car in the aisle. Control. Its so, whats the word . Sexy. Go national. Go like a pro. 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With tools that help you see how market activity is affecting your positions. So when the time comes to decide whether to scale in or scale out. You can make your move wherever you are. And start working on your next big idea. Shares of chipotle struggling today after reported sales growth slowed in the Fourth Quarter. It did Beat Estimates but continue to face challenges. How can chipotle rebound . Joining us now, Nicole Miller reagan analyst at piper jaffray. Good morning. Thanks for having me. Weve been down this road before, right . The comps look pretty good but talk about a much sharper than we thought deceleration. Next thing you know back to 700. Is this time different . It is not. I mean its just down maybe on different reasons. I think investors wonder about commodity inflation and how they may offset with price. Menu price. And it is you know like you said, 16 comp is nothing to be disappointed in. Ashamed of, absolutely. About the price increases, everyone was impressed with how well the previous increases stuck. Are you sensing they have a lot more in their pocket . I think so. And i think that was the real debate last night. Albeit the company absolutely needs to do right whats right for investors and customers. I think the investing community is saying test the boundaries of what the Pricing Power is. Not that you have to execute against it but know how much Pricing Power you have. So the cfo warned a bit that in 2015 it will be very hard to measure up to the tough comps that theyve had as a Public Company sense they were so strong last year. What do you think he was referring to . Still going to see 16 doubledigit increases through the year . I think were going to see double digit in the beginning of the year. Jack does a great job of guiding and typically beating. I think his commentary needs toing taken serious and theres a reality to. But the fact is comps are still, we believe, double digit, as they enter the new year. You mentioned among the risks in your note today. Product integrity, right, production, and distribution all of the things that led to the pork shortfall a few weeks ago. We had this discussion with shake shack the other day. I mean you can grow but if youre going to promise this highquality ingredient your supply complain will be tested at times. Is this going to happen again . There thats absolutely right. In all fairness were not putting it below the line in terms of the charge that will be taking on inventory of the rolling pork blackout. The fact of the matter is though they dont push to the customer. Theres no advertising around sustain ability or natural. Thats just who they are. I think they are getting credit for pulling the pork that didnt meet the standards. When will the mcdonalds ceo changed over last week that announcement came through, headlines mentioned chipotle one of then. Mcdonalds ceo out as consumers flee to chipotle. Is that true . Is it gaining share against the big guys like mcdonalds . Theres no doubt they are gaining share from legacy qsr, no doubt about. What legacy qsr should do in our opinion, is not be what these new fast casual chipotles are but really embrace their core dna of what they were and return back to that. Target remains 750, i think you took it up ten bucks, 44 times 2015. When does it get truly expensive to you . We modeled out fiscal 16 and its projecting 1 billion of ebitda in fiscal 16, if not sooner. I guess were going to ride you know what we think is a great growth story until we hit that mark. And is there, you know with shake shack and we talked about burgers a lot last week, and sort of the heightened competition within that segment, if chipotle has a true pepsi to its coke who is it . Thats a great question. In legacy burger second place can still win. We often say burger king done need mcdonalds to fail in order for the stock to work. I dont know that they have a close second. Certainly not by cuisine type necessarily. I think its a great question. Great stock so far. Fun to watch. Nicole thanks again. Joining us piper . Outlook quote deteriorating. Coming on to join us talking russia, greece eurozone and the strong dollar when squawk on the street returns. Its been a couple of years actually 4 1 2, since the month started out as well as february has started with most of the losses for january recovered on the s p and the dow. Markets flat for now. But we are about to get our oil inventoryies in 15 seconds. Peck expecting a big build. How equities react the big question for the rest of the morning and afternoon. A market flash. Flat for the overall market. Clorox shares the stocks moving higher to the tune of 3. 5 after the Company Reported better than expected Second Quarter routs. As a result it also boosted outlook for the full year on earnings and sales. Shares up by 3. 25 , up 30 over the past year. So one of the Consumer Product companies thats done very well over the past year. Back over to you. Also dealing well with the stronger dollar. Now to Jackie Deangelis breaking news on crude oil. Good morning. Thats right, the eia weekly status report just out weep did get a big build. Plus 6. 3 million bares on crude and oil and plus 2. 3 million on gasoline. This is bearish for prices. Trading around 51 on wti. Now down 2. 50 at 50. 50. Perfect storm to go down not only because of the build, but because of the stronger dollar that youve been talking about. Weak data out of china as well. When we move so far so fast on technical bounces to the upside its natural to get selling pressure here. A lot of folks watching that supply data. From the oil route to europes woes and currency swings Major Economies under the microscope. Russia downgraded to near junk greeces debt deal in question. Joining us in a cnbc exclusive, James MccormackSuper National ratings at fitch. Not enough to talk about. Lets start with russia. You are at the lowest possible investment grade. Competitor Standard Poors put it to junk for russia. What would it take to get you there . We have a negative outlook, i suggest migrating there sooner rather than later, i guess, kind of outlook is a year at 24 months. I think things were looking at is the private sector in russia is out of the Capital Markets and out of International Capital entirely. That is migrating towards sovereign Balance Sheet. That sovereign Balance Sheet has been a strength in russia that is diminishing over time. The speed will determine how the rating unfolds. Central bank doing everything it can to fight the 50 plunge in the ruble but also shore up banks, now an inflation problem. After five Interest Rate increases, it surprises everyone and cuts rates. Do they have a handle on the situation . To be fair to the central bank, theyve done things quite well. I mean theyve had a rather orthodox response to an unorthodox set of issues in cutting Interest Rates, i guess, trying to address the economic side of things Economic Growth side of things. We think the economy will contract this year probably 4 . Thats a pretty serious decline in activity. So trying to balance, you know pressures that theyre seeing on the external side with that lack of growth. Obviously, high inflation as well. Its a tricky balance for the central bank in terms of monetary policy. What would it take to deteriorate further, another drop in oil price . Oil prices maybe have levelled out i guess, you know. Falling again today. I think its more a question of whats going to happen to sanctions Going Forward . That really is very much an open question. If sanctions continue to get ratcheted up i guess, in russia, then its conceivable we see further capital flight further pressure on the currency, and that external Balance Sheet, russias fundamental strength starts to deteriorate further. On greece narratives written the new government are more nimble political players than people thought theyd be. Its been a surprising week actually, because i think were a little bit closer to having a solution on greece than at the start of the week. Remember at the start, going over the cliff with the government, were talking about haircuts. Now we have ingredients of a solution. We dont have a solution yet weep still got some time to get there but talking about right things talking about fiscal balance, how much austerity is greece going to engage in and the debt stock. Not talking haircuts talking about something more subtle, something that europeans broadly can probably live with if we get to the right kind of arrangements. Germans included . I think so. Theres a rk in addition something needs to be tonight to greece not reduction in the debt stock but some kind of assistance provided to them. And i think that what were talking about so far is a couple of proposals for debt swaps maybe thats not the right solution, but at least talking about the right things and its not haircuts. Is the time fray okay . Merkel talking about how it could take months yet this current bailout expires by the end of the month. Wouldnt that force you to take a ratings. Timing is of the essence here. The new government will put forward its legislative agenda february 9th. Leaders meet in the middle of the month, talking about it from their side. Program ends end of february. Heavy payments due middle of the year. They really need to get this expedited. Good for them to getting out and addressing it but time is working against them. Would you have to downgrade if they cant come to a deal . Its a single b credit with negative outlook. Weve warned investors this is a weak credit and potential for it to get weaker Going Forward. Hows your relationship with the european governments . Angry with the ratings company. Theyve been angry. When you downgrade countries theyre never happy about it. Ratings levelled out. Very good dialogue with all of the governments in europe its in their interest, in our interest, to keep that dialogue open and were doing that. Didnt get to spain but well ask you about that next time. James mackccormack. Amazon ceo Jeffrey Bezos on cbs this morning to promote transparent, which won a golden globe for best tv series. Responding to the report that amazon is interests in buying some of those radioshack storefronts. Reading the same article that youre reading on than but, yeah, i cant comment. You can comment on the idea of getting into brick and mortar . Were starting in little bits and pieces. Weve done popup stores during holidays weve weve Just Launched college bookstores. So were starting to do that. Did what they could. Trying to get something out of bezos. Former director joins us live to weigh in on the president s budget. The dow has come down a touch, after crude inventors came in double what was expected. Back in a minute. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The xc60 crossover. From volvo. Lease the wellequipped volvo xc60 today. Visit your local volvo showroom for details. [ male announcer ] at northrop grumman, weve always been at the forefront of advanced electronics. Providing technology to get more detail. Detect hidden threats. See the whole picture. Process critical information and put it in the hands of our defenders. Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. S p lower, but take a look at Consumer Discretionary sector, trading higher. Staples number one discretionary number two. Good dayer to the discretion flare stocks. Disney leading the way higher no surprise there. Its a record high for dirz shares, after strong earning. Whirlpool alltime high better than expected quarterly results. Kohls higher after boosting Earnings Guidance for the year. Gm boosted dividend on the back of better than expected results you can see again in the sector. Good day for consumer discretion flare stock discretionary stocks. Sara interviews the whirlpool ceo. Lets get over to the cme group, Rick Santelli and the Sandisk Santelli exchange. Good morning to dr. Douglas holtz aiken. Good morning, sir. Good morning. All right. You know at a time where the budget was presented by the president , which is normal operating procedure that we did get away from that for a few years, theres been a lot of debate. Now probably not going to pass in its current form but my area of contention is on the cbo and how they score various aspects, whether its tax policy or the like. The notion of dynamic versus static maybe you can explain what each is and why the cbo seems to reticent to move towards a more dynamic modeling which of course takes into consideration the biggest issue, human behavior. Doctor . The cbo and the jont committee on taxation score bills, try to figure out what happens to revenues spending and when they do that they attempt to put into it reactions to how much people work how they shift their portfolios a bunch of behavioral responses. What they dont do typically is incorporate impact on Economic Growth. Does the economy get bigger does it get smaller . If it gets bigger well spend less, definite better. If smaller, the reverse. Its bringing into the federal budget process the full impact of all of the proposals that come through. I will point out, rick the president s budget that just came out is dynamically scored. If you read it it says this assumes that we implement all of the president s proposals. If you do that its a failure on its own merits. The fastest we can grow is 3 in the next decade. Its important to note the president s given up on growth what the budget say. To the exact topic, an oped i enjoyed, democrats and the cbo dont get, i want to read from that. What the cbo did after 2010, when the stimulus zero Interest Rate policy in effect. In the three budget reports after the stimulus bills passed projects average gdp growth for 2011, 12, 4. 3 3. 8, and 3. 4, instead, growth averaged 2 . Why dont we actknowledge that growth is better way to grow a pizza than slice in smaller slices and collected record tax revenues on the last fiscal year. I 100 agree with you. I will say that we began doing dynamic scores of the president s budget beginning 2003 when i was cbo direct, its continued to this day. When you find out there arent a lot of things that are so disciplined and so progrowth that you get to move the needle very much. Instead, theres some growth stuff in there but theres a bunch of things that make no sense, just handouts and hurt the growth performance. You need both better scoring. All for dynamic scoring but better policy too. What were get now is a policy thats given up on growth its all about redistribution. Looking forward to seeing what the cbo says when they dynamically score this president s budget. In our last 30 seconds, doctor, i like what youre saying. And in the end, i think its going to be more difficult than ever to really try to target growth if youre taking in windfall amounts via taxation, but the clock is ticking. Your final thought there, sir . I think the tax battles important but get control of the spending. Once you spend it, youre going to have to pay for it somehow. You want progrowth policies get the budge net order, stop the explosive spending, thats the key. Thank you very much doctor. Very enlightening. Id like to have you back at some point when we digest more of what the real budget will look like when it starts to go through and wind through both houses. Sara, back to you. Thank you for that primer on budget economics. Buying a ticket to cuba got easier. Kayak. Com ceo and founder on that and the cost of air fare when we come back. The House Foreign Affairs committee is holding a hearing on u. S. Cuba policy. While the u. S. Embargo remains in place, traveling to cuba is getting easier. Havanabound flights and hotels searchable at kayak. Com. Joining us here now at post 9 to discuss that and more on flying kayaks cofound somewhere ceo. We should mention that kayak is owned by priceline. Good to see you. You cant book flights to havana or cuba on kayak but learn about them. Thats right. Thanks to changes in government policy, kayak can show you flight and Hotel Information but booking is still clunky. How do you do that . Right now youve got two options, contact the airline or the Hotel Directly or go through about 100 licensed offline travel agencies to book your travel. As i understand you have had information on hotels and on airlines about a week or so. How is the demand . What interest are you seeing . Right. No prohibition on us showing that before but there wasnt sufficient consumer interest. We have the interest, the information, weve solved of the problem from getting here to cuba. For new york for example, no new york theres no direct flights travel through canada or mexico or the bahamas or the kaman islands and we show that information. How expensive is it . Still quite expensive. I was looking for a flight from jfk. If you connect through cancun its about 1100. So high. A lot of inquiries coming in about cuba travel . Were not seeing bookings because we dont provide the booking capability but the consumer interest is there. How big, compared to another market, how big could it be . Auto could it be as big as show nice mexico . Its hard to say, carl. Theres about 300 hotels in havana and as many hotels in orlando. Could cuba be the size of an Orlando Travel market, perhaps . It has great historical residence. You can do a Beach Vacation and havana, so many sights to see there. Its definitely an interesting travel destination. I havent been there personally but on my list of to dos. On the price, 1100, it sounds high, prices are high across the board. Do you expect they are going to stay high even though the airlines are saving big . Well airfare prices are driven by consumer demand and airline supply. Where you see jet fuel prices go down doesnt do much to the airfare prices themselves but what it does is enhance the bottom line. I would expect the airlines to show a good firstquarter profits. As they have in a lot of cases for q4. I was going to ask you what needs to happen before the market is sustainable . Sounds like youre saying from a hotel standpoint theyre there. Thats right. Not like they need a lot of infrastructure from that standpoint. A fivestar hotel in cuba wouldnt be what we expect in new york to be. What you need is direct scheduled flights from the u. S. To cuba and that will take time for the government to work out before the airlines start. I mean layman would argue thats american territory to begin with. Would they have first strike advantage do you think . I dont think the cubans would believe its american territory but definitely theres a lot of consumer demand in the u. S. To go to cuba. I would hope that the governments would figure out the open skies agreement and the u. S. Airlines will begin providing service. What are you seeing in terms of Trends International travelers coming to the United States . Is that cooling off a bit . A lot of companies are worried about that. Thanks to the strengthening of the u. S. Dollar and euro weakening not seeing as much demand from europeans coming to the u. S. But we are seeing more americans willing to travel to europe and that for our business is a good thing. Particularlies u. S. europe where you see the big changes . Thats right. What do you see for prices this year . Do you continue to see higher airline and hotel prices which are hiking . Yeah. How demand is is strong so prices are starting to creep up. On the airfare side i dont see changes in prices. How about the other way, europeans coming here, weve seen tiffany say their Flagship Stores in the u. S. Not performing as well as we thought, maybe because not as many germans and brits coming to the states to buy jewelry . Its about 20 more expensive for the europeans for the currency changes. Cheaper for a german to vacation in greece than to miami. I always want to ask myself when i book flights whats the best time to get the best price in advance on an Airline Ticket . Is it still the farther out. I heard 50 days. Somebody said that the other day. We released a study on kayak website that tells you when the best times to fly are. For days of the week leaving on a friday coming back on a monday, but if you have time to book in advance, greater than 45 days out. Thanks for the. Tip. Well keep an eye on the cuba options now that you can research them. The ceo and founder of kayak. To jon with a look at whats coming up on squawk alley. We have the lending clubs ceo to talk about the partnership with alibaba. Postipo and a lot more. Weve got a look at Satya Nadellas first year as ceo of microsoft. Its already been a year. And jason lead of my name is earl with a new amazon prime show. Well talk what that is what its like acting with Brian Dennehy and more coming up on squawk alley. Your business could be a software developer. So, hows the app coming . Weve got to make something great. Hows the app coming . Weve got to do it fast. Lets do this on bluemix. You can build apps with analytics, big data, even ibm watson. That could give us the edge. Lets do this on bluemix. It can provide code for you. We could be first to market. Because being best is priority one. Being first is priority one. Theres a new way to work and its made with ibm. 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. Your moms got your back. Your friends have your back. Your dogs definitely got your back. But whos got your back when you need legal help . We do. Were legalzoom, and over the last 10 years, weve helped millions of people protect their families and run their businesses. We have the right people onhand to answer your questions backed by a trusted network of attorneys. So visit us today for legal help you can count on. Legalzoom. Legal help is here. Welcome back. As Energy Prices fall after a surge this week two industries heading in the opposite direction. First you see big oil moving lower. Exxon mobil, chevron, bp the majors again moving to the downside, but airlines are rising. Delta, southwest, the Arca Airlines index moving to the upside. The relationship lower oil higher Airline Stocks and vice versa continues in todays trade. Back to you. Thanks dom. We will talk a about another relationship that investors are focused on the strong dollar and company earnings. Dollar out weve been talking a about near 11year highs, beginning to squeeze profits. Starting a series at looking at different ways hurting or helping special fx. Weve seen the strong dollar drag down earnings from google to caterpillar to pfizer so we took a look at the different sectors to see who is at risk by percentage of international sales, right. They get their sales from abroad that hurts when they transfer the money into dollars. Information technology, thanks to citigroup putting together the numbers. Energy, number two, materials, also tied to commodities as well and Consumer Discretionary an staples. Good to keep in mind as we hear from the heavyweights cocacolas and pepsis of the world. Look at this we checked out which sectors are hardest hit to the stock market on a strengthening dollar. Not all of them are on that list. Materials get hit the hardest as well as energy. They were negative correlation to when the dollar strengthening over the past 20 years. Consumer services and if food and beverages also. Seeing the technology not a part of that despite the fact that so Many Technology companies well see derive 50 of the revenues from overseas hence we are going to continue to see that pressure. I can think of hewlettpackard when it reports and many others we will see that continued pressure on earnings not just bring it back in translation but also from the concern that they have a harder time competing in some of the domestic markets against the domestic competitors who are advantaged. Which is a problem for the automakers. One reason they dont get punished as much in the stock market a lot of costs and factories are in asia, over in europe and especially with Companies Like apple hiring foxconn, they get helped actually when it comes to the cost side perhaps one reason were not seeing it. We heard from clorox citing the impact still, clorox managed well. Another one is yum brands after the bell today. Huge International Exposure there. The good thing for yum is most of it is actually in china. China. Which manages its currency. But well see. Theyve been expanding all over asia and they have a european presence. Im glad you got your new thing. Whats it called again . Special fx. Isnt that a good name. Stories throughout the week and into next week as well because this is shaping up to be one of the biggest headaches. Without a doubt. Important overhang on the market. As you point out perhaps not as much as people might think in certain sectors. Send it over to you carl for squawk alley. See you soon. Thanks, david. Good morning, 8 00 a. M. At disney headquarters in burbank, 11 00 a. M. On wall street and squawk alley is live