Transcripts For CNBC Squawk On The Street 20150220

Deere earnings beat but outlook weak. Quote, sluggish conditions in the global farm sector. The stock is moving lower. And after walmart hikes pay for 500,000 employees the downgrade for the stock, nordstrom earnings out as well. First up nasdaq in the mid of its best winning streak in a year aiming for an eighth straight day of gains. Closed yesterday at a 15year high within 76 points of 5,000. Facebook among the nasdaq stocks in the spotlight after a note assigning 33 billion valuation to Facebooks Instagram unit saying it sees users more than doubling by 2020. They say, jim, according to their surveys, it has most pentup ad demand. Facebook at 91. A big part of the business. I think it can happen. My Charitable Trust owns. 11 employees, one of the great follies of zuckerberg, what was he thinking . And of course it turned out to be amazing. I think whatsachlts pp will bring in a couple billion new people on facebook. This is a man people underestimate. A lot of people saying short squeeze. Im saying the stock should have been up because the quarter was great. These valuations are not wrong. Remember we also have Venture Capital valuations yesterday pinterest, no. Facebooks a profitable company. Do not confuse lack of profit with profit. Facebook is not expensive when talking about 2017. And thats the way they do it. Front business page of times snapchat and the valuation, race continues. The word unicorn a household term. You read these, people say its overvalued people wish they had notten in. Look there are prominent people who are from old tech saying could there be a bubble . I think the answer is when you look at all of the valuations for ubers and pinterest and snapchat, they do not equal one Large Company going into 2000 in 1999 2000 they dont. Add them altogether equals a quarter of ciscos tap capitalization during that period. Get enormal otherwise valuations only to flame out. A handful of companies hung around and some thrived. But most of them flamed out. These are not info space. No, theyre not at all. The first trillion dollar company, if you recall. I think i remember that. Yeah. Commerce one was also headed there. You know, we used to say the web van. Yes. It was early. Early. Always early. As it has been for zynga. No no. This is a no briones overvalued versus zynga. Numbers are staggering when you look at uber at 40 billion or snapchat at 19 based on their most recent raising of funds and ability to continue to raise money in private markets at large amounts as we saw with facebook push off that go public. Sometimes you push it off so much the growth curve changes dramatically. Right. As it did for facebook after the ipo before they successfully transitioned to mobile and began a new phase. Remarkable transformation. Happened almost in no time. Uber i struggle with as someone who loves uber and has the app, i understand uber is a game changer, whether it be in boston, my executive producer for mad money uses uber. What comes . A ford heavy duty 350 pickup truck. So these guys got horse sense, tough to bet against. Reuters looks at whether the nasdaq is overvalued. Reuters overvalued. Argument is that valuations on a trailing p e basis are 1 8 of what they were at the peak of the dot. Com bubble at 5132. Ive done analysis of the top 25 of that period they could not be more wrong. I dont know what kind of empirical analysis theyre doing. Companies valued at 80 times earnings valued at 17 18 times earnings. Multiple compression going on for years among intel and microsoft, among cisco. Youre just not seeing anything that is like what you would expect during that period. Yes, if workday were your sole judge if thats what you were basing everything on cornerstone, if youre doing it on that if youre deciding that tablo data youre going break out the software as a service if you back out Major Companies and decide to use celgenes 2017 18 numbers or regeneron, 25 30 numbers these are the big cap stocks gilead. What does gilead sell at . Eight times. Tech names had higher top line growth rates in 90s than now. Even though the numbers, the multiples have contracted dramatically the earnings are helped by what has been a wave of cost cutting that we know has been the way its gone to a certain extent so much of corporate america. If you look at estimates, look at the index, Many Companies are deeply involved in the worldwide digitalization this is the internet of all things, which sounds like its just like the internet 2. 0, got to call allison. 1,000 points of light. Sounds like something somebody made up. France made a deal to digitize with john chambers. France is digitizing. Spain is. Korea. These require a huge number of chips and a huge amount of software software. I think if you say Risky Network shouldnt be up three, four, five competing against cisco but these are internet of things and five to ten times the data we saw in 1993 to 1998. Am i a bull . In you think nasdaqs overvalued tell me how you can have apple at 14 times earnings and call that stock overvalued how . Right. This is before before walter robb tells me apple pay is perhaps the singlemost loved institution already at whole foods. He said that. They demand it. The customer is demanding apple pay. Really. Tell friends the walmart they ought to wake up and smell the apple pay. Its great they decided to pay people more. But you know the idea that a greeter would have apple pay i dont know if im seeing that at your Walmart Super store. Sounds like its not off the table which i assumed it was going in. Walmarts got to go in and say to apple, listen what does it take . We need younger people. The demographic of the shopper what youre describing is giver power to apple as opposed to walmart which sees more customers than any business in this country. I mean my point is you believe they already have the leverage at this point and apple, apple, when it comes to payment, they can turn everybody . Im saying which case it will become quite a business. I think Charlie Scharf mr. Visa is more important than Doug Mcmillon, mr. Walmart. Visa and mastercard, not unfortunately American Express, holy cow not a good week. What will happen to American Express thats bad today . I mean, will i one more day in the week right. Another how many shoes have fallen . Imelda marcos shoe collection. Mastercard and visa particularly visa, companies that are openminded, they are saying any way you want it and im tell you apple pays real. They get that Blood Pressure thing in the apple watch youll spend 500 6,000 people die every year of a heart attack youll buy the watch more than fossil. Your fossil watch, youll trade. A swiss army watch. Remember those. Youre all about that Blood Pressure thing. You cant wait. No, no i am trying to prevent heart attacks. Heart attacks per share, number of or strokes. Very smart. Strokes. Absolutely. Walmart, downgraded by barclays to equal weight from overweight in the wake of the wage hike announcement. Walmarts unlikely to see nearterm benefits that offset higher expenses. Analyst will join us later. Nordstrom with a miss issuing full year guide below expectations. It expects to boost Capital Spending this year. Last year jim, 751 million, going to 1. 2 billion. People said it sounded like walmart. Well be spending more and we cant tell you when its going to pay off. The stock initially goes down numbers arent that good people said the spends going to be bad. As the Conference Call went on the stock live gates. One point goes from 78. What happens . Each data point you see it go up, theyre saying 2015 is the peek peak peak of technology spending. Will we have accelerated Earnings Growth in 2016 . The stock peaked because they threw cold water on that. Reason its not down, spend is almost over over. Most of the spend is manhattan and some canada. Theyre done almost with tech. 2016 will be the will start going down and thats why nordstroms not down today. And will go higher. Interesting. Online now, up 19 . Online another echo of walmart, online continues to be the thrust of the spending and its a big part of the revenue. Look, heres the big problem you know nordstrom brothers, like the pep manny, mo. Who has the best Customer Service . Amazon. Have to outspend amazon. Rack strategy is brilliant. I happen to like rack very much. A Million People coming in returning their product at stores this is the idea you need brick and mortar to compete. A person that returns a product at nordstrom tends to buy something at nordstrom. Nordstrom, i think going to be the one that you want to be in for the end of the year. By the way, they had a great christmas. Stocks up 30 in a year. These guys are real operators and they are trying they are the Service Oriented player online offline. I also like by the way, you know they made you know theyre monetizing theyre very smart guys frequently counted out because theyre viewed as being slow. Like instead of opening 130 stores in canada one day, they open the want spending too much money on manhattan what everyone tells me. If im macys i should be wore whiched about nordstrom. Blue mercury could be blue smoke. The dsw upgrade as well. Once i count that Discount Shoe warehouse they were in look a rocket. I happened to buy a couple of nice pairs at rock ports union square. Good for you. More selfhelp oriented than you like. Go to the racks, right . What size shoe . That done come up. Youve got to know your shoe size. Quickly, on the walmart front, we asked Doug Mcmillon yesterday, down in ben tonightville, what was the metric that he saw that would prove whether these wage hikes were going to work. Take a listen. Whats the metric thats going to lead you to that. Comp store sales. Not retention necessarily . It will play through retention, ability to hire the talent that we need to hire. Im confident those things will work their way through because were investing to make them happen. We want associates here excited to take care of customers, thanking them for shopping with us, thats got to show up in sales. Barclays takes their target down from 85 from 90. Not offsetting it with more cost cuts or buybacks or anything like that. Got to start somewhere. I appreciate what this guys trying to do. A huge battleship. Its not a destroyer. But remember jim senegal taught us, keep employees and deed it with making it so you have the best health care did it by the average wage, even after the upgrade, 60 more at costco. Thats who theyre real dpe competition is. Got to start somewhere. So fresh face so with it, to count this guy out 2016 numbers arent as good i mean is that a mistake. We threw a bunch of stuff at him, wages dollars, ports one viewer said does his resting heart rate get above 40 . Even after one year hes managed to be able to field some balls. Hes out of college, right . Hes 49. Hes a very young looking 49. Very young looking. Very calm. Holy cow. I had a similar experience with him years ago when he ran international. Hes he keeps it right here. I felt like calling him sonny. Sonny. Comp store sales. But its going to take a while to see that. I liked it. To even make judgment whether it worked or what you need to do more in terms of thats your metric. Seems forward looking and unflappable and perhaps this is the beginning of walmart not feeling like going into a hospital to do shopping. They dont make changes easily at walmart. Only had four there Marissa Mayer and Kevin Systrom on the board, that is going to change . I dont know. Alibaba. The cowan analyst assigning 33 billion valuation to instagram. Brad myth, maker of turbotax overcoming the fallout. Premarket, nasdaqs going for eight days up it would be the first such streak in a year but nowhere near 19 in a row we had in 1979 if you believe that. That was my my memories. Keep your eye on nat gas, up 3 , as much of the nation grapples with record cold temperatures. Maria larosa with more on the arctic blast. Good morning. Reporter good morning, carl. Yeah, its another brutal start to the day here in nashville, temperatures close to single dij thes. Tied a record low yesterday. You have to talk about the Business Aspect in a city like nashville, tourism, music city. And it has been put on ice. Take a look at this. Im on top of the rock bottom brewery here right on iconic broadway. This isnt going anywhere. Still encased in ice. We talked to a Business Owner earlier and they were talking about how they had to shut down monday and tuesday, close early on wednesday, many were just starting to get deliveries that couldnt get out earlier in the week yesterday. And now with word of another ice storm on tap there, theyre worried about more power outages. We have the ice storm warning in effect for this afternoon. Its going to start as snow maybe as much as an inch of snowfall, before that period of freezing rain, maybe as much as half an inch of Ice Accumulation which, once again, could set off another round of power outages. The same Business Owner we spoke with also mentioned if there was a Silver Lining at all, first storm happened on a monday and tuesday, relatively slow Business Days even in a bustling city like nashville. Unfortunately, it looks like friday night and maybe into saturday another round of the nasty weather could keep customers at home and could keep businesses suffering a little bit longer unfortunately. The good news is temperatures will be above freezing by tomorrow. Carl talking into the low 40s but with extra rain also isolated flooding could be an issue here in music city. Back to you. Thank you for that. Quickly, jim i mean is this going to come back to bite us on flights, Housing Construction Rail Transport trucks anything like that . Hard to read. Not as bad as last year. Obviously, tough to pour concrete. Theres been a very big resurgence according to the st. Louis fed numbers and also individual banks i talked to for nonresidential construction. It could hurt there. I want to caution the idea natural gas is going up. Three import facilities in new england and they can also use oil and natural gas has proved to be a huge flop. Thats part of what happened at eog yesterday. People recognize, write off natural gasp it aint going up. Its not going up. This is like the moment spike. The amount of natural gas being flared is more than natural gas being used in the country. Its an extraordinary moment. You have to use propane, too, which is through the floor. Look, these guys cant give the stuff away. Natural gas liquids cannot be given away. We dont export oil. Running refineries 24 7 cant do that thats how refineries catch fire. We are just flooded with nat gas. That and coffee apparently. How do you like that . 1. 55 for coffee. How right was schultz . 2 not sustainable, correctly didnt hedge. Guys from airline whose hedged incorrectly, the big reason we dropped. Good piece in the Washington Post how oil humbled Pickens Buffett and smart guys. Cramers mad dash, count down to the opening bell. One more look at the premarket. The road. It can bring out the worst in people. But the mclass scans for danger. Corrects for lane drifting. 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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. All right. Time for mad dash on this friday. Companies have gotten creative with names. Yes. Two good ones here. Start with rocket fuel. Rocket fuel symbol fuel a Conference Call that was just miserable. Talked about listen we have one quarters visibility. Talking about how ad agencies intermediate. Reminded me of companies, dotcom era, bring them in to help advertising and thought they knew how to do it. But its obviateing. Ad buying using algorithms and guys sitting at trading desks but agencies brought it in. The agencies are saying you dont need rocket fuel. When you listen to the call limited visibility one quarter, you can tell the air oxygen going out of the room liquid oxygen. Down 80 for the year. Insiders selling. Yeah wow. Okay now on to noodles. Another one. Listen, we had bjs restaurant we had that do great. Dennys, a grand slam david. Saw amazing numbers. Feeiesta restaurant group. Suddenly you have noodles. And its a wet noodle. This was one of the more disappointing Conference Calls. I question the concept. But they 1. 3 increase in Comp Store Sales youve got to go to walmart to find that kind of bad number. They didnt promote enough. Now, david, ill tell you something, they do more than noodles. What is the concept . Hybrid good Food Quick Service with a smile. But you know ramen is the hottest concept in restaurants. Theyve got theyve got a hot concept, noodles, they had a hot idea to have the kind of higher end quick serve. Poorly they blame theyre promoting less. Huhuh. Im saying this is another charlie tuna thing. We dont want tuna with good taste, right . We want goodtasting tuna. They seem to not have food people want. Noodles is the outlier restaurant chain, other than mcdonalds in terms of not delivering. Not often two in the mad dash down over 25 . Yes the group. Thats all right. Im not saying these are huge movers. These are both in both cases i know ceos and very good guys but it seems like theyve got the wrong product for the wrong time. It does seem like that. All right. Well look for companies that perhaps have the right product for the right time. Well do that after the bell. Why not . I like that. Thats what well do. After this. First impressions are important. Youve got to make every second count. Banking designed for the way you live your life. So you can welcome your family home. For the first time. Chase. So you can. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. Opening bell in 45 seconds. Stocks going for their Third Straight streak of gains. Nice seven week stretch, came out of the ebola scare into december, but people at these levels talking about valuation. But we have this rotating move. Regeneron leading biotechs yesterday. We have had a couple of social media moves. Mark cuban saying twitters a gold mine. Social media, vow uaw have biotech, semi. Thats healthy, not unhealthy. Keep our eye on the greek issue. In the meantime lets get a look at s p at the top of the screen. The opening bell at the exchange. Down here Fleetcor Technologies provider of fuel cards and workforce payment products. Over at the nasdaqng new York Fashion Week Rebecca Minkoff designer of apparel, handbags and accessories. Sound from the greek finance minister varoufakis confronted by reporters. Lets listen to that. Hope that theres an agreement and i trust that were going to have one. The greek government has gone not the extra mile the extra ten miles and expecting our partners to meet us not halfway but 1 5 of the way. I trust that we are going to have a deal essentially. Well its too early. Theyre not going to have one. Germans are intransigent right now. That man that you saw, jasonce stathem the germans will give in. Friend rchen stathem the germans will give in. Friend rchench are pressuring germans. There will be a stretch out of payments. Varoufakis will win this. Youll get the hollywood rights to this . To him taking on the ecb. Lock stock and barrel. There you go. Spiegel headline ecb officials preparing for greece exit. Yeah. They keep doing that. The other day saying weve got belgium, finlands with is. I mean no you cant just continue to grow off the precipe here germany, starting to see turn in other countries. I think greece will get a deal that saves face for germany and makes it so the administration comes back and says we did what we said. But not yet. Got to go over the edge. Got to be like you have to have instant of default. This is too early. Right. Too early. Not enough brinksmanship yet. Want to hit on something that hit my radar late yesterday, youve been following it cisco, not with the c, the few dis distribution company, syy, deal to acquire u. S. Foods held up. Vote 32 in favor of suing them essentially. Theres a Conference Call at noon, i think theyre holding with their various lawyers and whatnot. Theyre not rolling over sysco, theyre saying were going to fight. Theyll explain why the facts are on their side why the deal would not be anticompetitive. Also one of the ftc commissioners went to twitter never seen this started tweeting why he thought it was silly to stop the deal. I rarely seen twitter the day we live in. Dick costolo, please harness this thing. On twitter. I dont think we should have done this makes no sense, its not anticompetitive. It is so anticompetitive. The reason ive been recommending cisco, both reason ive been recommending it two biggest guys getting together have a balance of powership against different customers, it would be good. But the idea that it would be not anticompetitive, i mean well, its nice that they take trains instead of airlines thats fine. Maybe google delivers food. Got to worry about that. Never know that is facetious. Never know what business theyll go into. A Great Company if they get the deal done. They can do a great job. They can raise price. Isnt that what you want . Theyll have a monopoly. Conference call at noon. See what their lawyers have to say. Being in baltic. Always past baltic or mediterranean. A hotel on pennsylvania or boardwalk versus a house or mortgage on connecticut. It does put the spotlight on another deal out there thats got major antitrust question marks. I noticed office depot down. Is ftc saying no thank you. You have to watch here. They cant raise price. This, you think is different. Are they going to raise prices for legal pads . I mean you go to amazon you can eviscerate those guys. But amazons not going to start shipping food to local restaurant. Its really important costcos in that business. Yes, they are. Ive got to tell you, ftc, stick by your guns here i think cisco goes to 50 if you get that deal done. We havent mentioned apple yet. A bunch of headlines as usual. Reports rushing r d team to start production of the car by 2020, a few years after teslas model x goes on sale. Tesla, they will indeed be the World Largest jim cramer on twitter, unlike john legere and unlike our rfdc friend presenting the other side of tesla. People love tesla. They dont want to hear anything. Really . I think on twitter shorts are vocal as well. Well they feel emboldened. Ive emboldened them. No, i will tell you do not sell tesla because of apple. Thats a far 20 20 geez thats not a reason to sell tesla. Sell tesla because everybody else is coming in that space in a very aggressive way. When you see bmw come in, other people using that battery, if toyota were to come in with panasonic battery, toyotas powerful. We dont talk enough about the japanese companies. Have you watched toyota . I have not watched toyota. A huge tailwind i mean huge. Look at that in they are back. If they decided they want to thats about the yen, isnt it as much as anything . Thats all its about. Quality of the car is fine. Dumping. What do you have to say . Why not, it is. Lexus fallen from the sky, dumping. Japans a wild card in the world economy. Maybe japans turning. Japanese Car Companies are turning. I dont want to go against them. They can be great competitors. Freddie mac, a name i have not brought up for some time of course. And you know the stock is not really a stock in a sense. And theres a preferred there. But it is worth mentioning that of the duo, freddie mac, fannie mae reported Fourth Quarter numbers. They had a hedge on an Interest Rate hedge that went against them, actually for the year and Fourth Quarter. That was a derivative loss of 3. 4 billion. Net Interest Income of 3. 6 billion for the Fourth Quarter. But theyll deliver another 900 million to the treasury in march, bring in their total cumulative cash dividends paid to treasury at freddie mac to 91. 8 billion. Well above the 72. 3 billion that they got. This goes back to the lawsuit, you may recall the judge tossed out from perry, still trying fight this fight as well about the third amendment that said well take all of those well take all of the profits from gses and sweep into treasury. Interesting story from the times about the correspondence and emails kept private, raising the question did it have anything to do with the budget standoff and the fact they wanted as much revenue coming in as they possibly could get . I wanted to mention freddie mac. Guys involved in treasury very savvy about this and do recognize that this Fannie Mae Freddie mac windfall could end. It may end but it doesnt appear to be ending anytime soon. The companies remember when peter lynch loved fannie mae . They decided under the range administration, take huge housing risk at the wrong time. Always a profitable feebased business. Yeah, i still think if you read i think those profits belong enormous risk. Nobodys gone to jail. Jim stewart. In the times. Winners for the week on the nasdaq 100, regeneron, celgene, biogen. But facebook in the top four. Yeah. Facebook, facebook basically, you know people reval waiting, its a rerating of the company. Regeneron had headtohead competition that they won. Celgene had expanded use of the multiple dont forget biogen the alzheimers product which i think will take the world by storm. The big four copming on strong. Bob pisani, see whats move on the floor. Mixed morning. Mixed morning in europe. Flash pmi data either side of positive or negative. France better than expected. Take a look at europe. Again, still not a lot of big movements. Im sure you saw the greek finance minister on the air, seems confident theyll get a sectionmonth extension. I agree with jim, the deal is muddled through, debt extented into infinity but its not removed or erased. No haircut. Austerity relaxed and everybody makes a deal. Alternative, we do not know how much contagion there might be to the eurozone as a whole and the european Banking System if greek defaults or leaves the euro. Jims right will b. That. Chinas closed for new year. U. S. , low volume low volatility sideways all week. Look what the u. S. Markets have done. Russells up fractionally, s p flat, dow industrials down 0. 2 . We have seen individual moves. Interest rates sensitive sectors, again having problems. Remember earlier in the month, utilities hit, telecoms got hit. Now the reits are getting hit. This week rotating in Interest Rate sensitive sectors. The major etf for reits, its been down this week down notably yesterday. Not a lot of news out there. But i think theyre getting concerned about the higher rates and rotating taking profits there. On deere you mentioned deere, jim, this is three things simple, they did lower 2015 sales guidance. Now its down 15 . Number one, currency effects. A third of the sales outside the united states. They mentioned currency thats one. Two, the declining crop prices thats creating falling demand for farm equipment. And finally, youve got the federal tax incentives out there for equipment purchases. Theyre being cut as well. So given all of that deeres performed remarkably well. Look at that stock chart for the year. Baltic dry index, more emails from people, 30year lows in the baltic dry index, an old story. Measure of the cost of shipping dry freight goods not oil, but coal, manufactured goodsing steel. Bottom line this is too many shipping vessels in the world. When china 10 growth they all ramped up in the late 2000s and created enormous shipping vessels and theres a glut. Thats what the baltic dry index is largely representing too many vessels out there. Yes, of course commodities are down. I dont think the useleness of the index is as great as it used to be. Stocks and Academy Awards. We asked our partner, anything move in the Entertainment Industry after the Academy Awards . Interesting correlations. Lionsgate up 80 of the time in the last ten years. Average return 3 . S p always flat in three day after the Academy Awards. Regale entertainment, movie business, up 60 of the time average return 2. 4 . Walt disney and sony positive correlations. David, im rooting for boyhood. Astonishing movie, following one boy for 12 years. See if that makes best picture. Im with you. What . Beautiful movie. Lovely. All right, move on to potential m a news nearing in fact. What i can tell you right now, close to the situation. Valeant is nearing a deal to acquire salex. While the deal has not been signed and things obviously can change as you often know sources familiar with the situation indicate to me that the hope is they could have a deal signed as early as early next week. We shall see. No shortage of reporting from other news organizations about the fact that salix is for sale. Could be up ten by the time you finish the report. Or valeant has been one of the companies certainly looking closely at it. Again, what i can tell you at this point it does appear a deal under way valeant would buy salix is near. I cannot give you at this point a specific on the price or composition of said deal. I would point out, you can see it right there, well bring it up for you. Valeant stock price, jim and i have pointed out, has been nothing but a rocket ship since its deal to acquire aller gan, or attempts to acquire allergan unsuccessful. If it were to be used as currency in a deal would be helpful at this point no shortage of potential operational synergies but valeant does not have a big presence i dont believe, in g. I. Related drugs, gastrointestinal franchise that salix has but talking 38 tax rate that could go down dramatically not to mention operational synergies conceivably. People have been speaking to it expect that you get a deal north of 160. What you will not get is a deal anywhere near 205 a share. Why do i mention that number . Well because it was late it was last year that ive confirmed from multiple sources, allergan was days away from acquiring salix for 205 a share. Pyott going to buy salix to stop actavis . Deal days away 205 a share, would have kept allergan independent, would have potentially upset allergans shareholders, but they could have done it without a shareholder vote, because it would have been a cash deal. Stopped, of course because of during Due Diligence discovered inventory issue. Stock went down big on the 25th anniversary of the network. November 6th, 7th, around there, salix reported inventory, which they had been guiding to around ten weeks was nine months. Subsequent to that as jim said salixs stock price cratered cfo fired. Subsequent to that ceo left the company. Basically without a ceo, but a strong product portfolio. Always. This inventory issue has been coming back coming back largely because its been for sale. Oftentimes you will put a company up for sale while doing a ceo search to make sure youve got both going at the sam time. In this time salix is going to be sold and it does appear valeant is the leading bidder. Valeant think cephalon and allergan there it was as much about strategy, i would argue teaming with ackman a lot of different execution issues in their ability to actually acquire allergan that doomed them. Barb barb and loom. The last large deal. Theyd need a shareholder vote to do and size could be a problem. But whats also interesting, as well, is that all of the potential acquirers of salix are companies that have inverted already. Companies that have low tax rates and, therefore, only ones in a position to buy this company because were you to not be inverted and compete, you wouldnt be able to pay as high a price as those companies able to take a tax rate from 38 down to wherever it may be 15 lets say. And i think that is interesting. Companies that were able to invert before those change as the treasury are companies that are going to keep acquiring and ones that havent will get the true inversion, meaning theyre going to get bought. I want to urge other Media Outlets watching not take credit for this david, a huge story. Second, ten points to salix now. Third, valeant should up much more, what people have been looking for. They need to keep buying. A big story. They need to keep buying. Well see whether we get the deal, perhaps, as soon as i said early next week. Again, to your point, others have reported valeants interests, salix has been out there for some time. Recredit themselves. It done matesnt matter. The deal is getting close. I thought 205 number needed to be thrown out. It would have been i didnt know allergan was going to buy them. Whats interesting, of course they were going to use salix to avoid valeant and valeant will buy salix. David pyott will do whatever hell do. Do charity work like his brother. David fi pooi yachtpyott will spend the rest of his life doing great work. Rick santelli. Good morning, david. If you look at just rates benchmarked against last night and yesterdays close, as you see on 24hour ten, down four basis points. But whats interesting is, lets look on the week. 5s closed at 154 last week. Theyre at 59. Tens closed at 205, now at 2. 07. 30s closed at 2. 65 now 2. 69. So we are down from yesterday, not only rates up on the week theyre up in a steepening sense, meaning long rates are up more than short rates. Something to pay close attention to. Flattening curve a trade for a long time. Yeartodate of 10s, the stopper in the marketplace was the resistance of where rates were at the end of last year. Lets switch gears to bunds. Bunds moved lower off of their 40 basis points showing this trend down at. 35. The winner the chart popular today, fiveyear out of the eurozone, its now very close to minus ten basis points. The biggest negative yield it had which goes hat in hand with the notion maybe what Central Banks are doing is breeding their own negative yields and lower price structure. They should kick the tires on that plan. Canada canada released december retail sales. The worst biggest month over month lowest month over month change theyve had since april of 2010. Not a good number. Look what it did to dollar canada, the dollar shooting up. Euro versus dollar its under 1. 13. We continue to monitor, its breaking below its zone established after the ecb meeting on the 22nd. Back to you. When we return walmart hit with a downgrade following wage hike announcement. Well talk to the analyst making that call. Meantime dow almost down 100 points. Were back in a minute. 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. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . This might have something to do with the dows tripledigit loss. Oil lost modest gains. Hanging on to 50 a barrel. Stop trading with jim in a moment. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Time for cramer and stop trading. People got too excited about dee when they saw buffett upped his position by 10 million shares. They shouldnt have. Why . Theyre saying that this equipment equipments down 17 . Agco on mad money, talking about 12 , 14 . I dont know i think deeres a very good company but the stock up two, three bucks off of buffett. Going to give that up, i think, back to 88 and then take a hard look. Dont jump on it now. Was up 9 for the month. They threw water on the story. I think deeres better than agco. Deere, obviously, agco would disagree. People got too enthusiastic because of buffett. Loves your tweet, you bought buffett . Whats your next call going to be . Whats on mad tonight. Hampton creek, you know how much i love white wave this is i think the next white wave han. News will break on the show. Enjoy the weekend. Im working this weekend. You are . Yeah going back over the quarters. Nordstrom quarter extraordinary. People have to focus on. Tonight mad money 6 00 p. M. The barclays analyst who downgraded walmart. Before larry instantly transferred money from his bank of america savings account to his merrill edge retirement account. Before he opened his first hot chocolate stand calling winter an underserved season. And before he quit his friends leafraking business for not offering a 401k. Larry knew the importance of preparing for retirement. 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Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Sometimes the present looked bright. Sometimes romantic. There were tears in my eyes. And tears in my eyes. And so many Little Things that we learned were really the biggest things. Through it all, we saved and had a retirement plan. And someone who listened and helped us along the way. Because we always knew that someday the future would be the present. Every someday needs a plan. Talk with us about your retirement today. Good friday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, simon hobbs, david faber, at the new york stock exchange. Dows down 100. Drama between the germans and greeks. Downgrade of walmart. Oils not helping matters down 1 mrs. Lets get to the road map. Wall street not liking wage hikes at walmart. Barclays downgrading the stock. The Justice Department says its willing to prosecute people if they broke the law contributing to the 2008 financial crisis. Jim stewart of the New York Times will be here with a message, dont hold your breath. He joins us live . For the First Time Ever we are showing you how the nasdaq looks for and catches trading fraud. Speaking of the nasdaq index closing in on its dotcom era record aiming now for its seven straight day of gains if it can turn around and move in the other direction, despite being in the red at the moment. Is the nasdaq overvalued or time for invest to jump . Joining us Wells Fargo Investment Institute president. Good morning. Jump into the nasdaq thats kind of like i mean lets talk about technology in general. Jump into technology. Jump into apple which is the major contributor to where we are now. We actually still like technology. Were overweight technology. Tech is the own sector in the s p that has more cash on Balance Sheets than debt. They have the most international exposure. We think that plays well. Theres a big divergence in tech. You want to own the core tech right . The baseline tech. What is that . Tech that pays dividends . I think so. Not companies trade agent 40 50, 60 multiples and highend user internettype structures. Its the Core Infrastructure technology that goes into systems. Youre standout now is the u. S. Consumer. Buy consumer discretionaryies the message, why . U. S. Is accelerating. Consumer in as healthy of shape as its been in eight years better employment numbers, housing numbers Better Business and consumer sentiment, lower mortgages. All lines up to maybe not goldie goldilocks but tailwind. If you look at consumer discretionary, it diz outperform as we saw gas prices come down. All wall street analysts said middle class will spend money on items that come under consumer discretionary. Coming into the year its lost its leadership and its materials and health care that are now leading. I wonder if perhaps we had gone through that and the rotations moving somewhere else. I would say if you looked at it broad somewhere said cyclicals versus defensive, absolutely. Since october of last year draw a baseline, sick kacyclicals have led out. Interest rates down 53 basis point on the ten year in month of january, back up 50 basis points now and starting to zerotation out of utilities, interestbearing stuff. Thats not what im asking you. Im asking you whether the leadership has changed. I think it has. Whether its health care and materials rather than consumer discretion discretionary. Cyclicals and consumer discretionary. We like consumer discretionary, tech. If youre an american investor and focused on the American Consumer you see what happens going on overseas in greece. Is this like what weve seen before wit the debt ceiling, political posturing until the end and they make a deal because theres too much at stake . I think sara the markets would tell you, yes, right. The german dax, the cac setting record highs. European banks are at fivemonth highs. The peripheral bond spreads are not widened out materially. Markets dont believe. They believe its political posturing. The issue is if greece takes it to far, if the greek banks run out of money, and to us Inflection Point is if you have to put capital controls in place, if capital controls come in to place in Greece Greece may inadvertently exit the eurozone they they didnt want to do so. Which is of course risky and we dont know what that looks like. As an american investor how do you hedge yourself for that kind of risk . I dont know that you can necessarily hedge yourself for greece because its an unknowable outcome, right . Its a political outcome, per se. We think there will be a deal. Its a lot of political posturing at this point. We actually also believe the fundamentals are improving in continental europe. Weve been overweight europe in portfolios since actually since about august or september of last year. We got into a good time twoebt overweight. The dollar translations taken some of that away. Some might argue if we get a deal, markets going to sell off on that news youd agree, short term . I dont know that id say it sells off, because we didnt price it in per se. Youll see the most reaction in the per riffiphery bond spreads. I wrote an article you have 57 of most of the european continent that trade with negative yields which is over a third of all of the developed market debt in the world x u. S. Thats a game changer in how were looking at debt structure and how its getting priced in places like europe and japan. What does that mean here . It means that what it means is that our Interest Rate structure, while albeit ridiculously low, right, on historic standards, is still the highest in the developed market world. So it means capital flow is coming our direction, which means a stronger dollar. We think the dollars going to appreciate. It probably means we stay lower for longer on the infrastructure rate structure. Youre not worried, if they were to Start Talking about United Nations june rate rise . I think to carls point, thats largely priced. We get into the back and forth tennis match is it june is it september. The real is the feds given us no indications theyre not going to lift off in 2015. I think june septembers largely semantic semantics. Weve got breaking news at this hour on sothebys. Kate kelly has details. Thanks so much. Another activist move on the historic Auction Company sothebys and this time from marcatto. In a sharply worded letter to sothebys lead independent director this morning, marcato founder, nick mcguire a sizable shareholder, argues fort immediate purchase of 500 million of shares and argues for more possibly down the road as well as the installment of a new cfo. He also has choice words for the board and its executives accusing them among other things of willful neglect and misguided policies motivated at times by tactical considerations to avoid a proxy contest rather than thoughtful Balance Sheet management in marcatos view. A spokesperson declined to comment. Mcguires push is notable, regarded as a friendlier activist notably dan lobe known for harsh rhetoric. Lobe led a proxy might last year to which mcguire eludes here and is now on the board and made peace with management. But even with that mcguires saying, hes disappointed in the companys leadership. Today mcguire cites embarrassing em mail ex email exchanges that came to light last year in with sothebys ceo and director describe mb gir ascguire needing validation. Interestinglying mcguire notes offered a board seat but turned it down because sothebys refused to meet his Capital Allocation targets. Interesting stuff. David . I mean kate whats most interesting here is youve got activist versus activist which you dont often see. Still looking for a ceo at sothebys the paramount issue for the board of directors to be dealing with. They dont want to launch a cfo search as well. The current cf to Goldman Sachs adviser advising them on their strategy when the activism first came to light. Its very interesting, dan loeb and mcguire seeing as complimentary players. Loeb aggressive whereas marcato, i think regarded as more collaborative. Obviously upping the ante here. While they dont take aim at loeb personally, but one of the recipients of the letter because it went to the board, theres a subtle point, perhaps loeb fold too early, joined the board and was supportive of the folks he was serving with. Kate thank you for that. Thank you. Wall street giving the walmart wage hike a thumbs down. Barclays downgrading walmart to equal weight. As you know we sat down with walmart ceo Doug Mcmillon exclusively yesterday. Heres some of what he told us you talked a lot about the experience of shopping at walmart. Survey just this past week 8700 americans, Retail Experience satisfaction is gown adown across the board, americans less happy shopping at stores in general. Walmart comes in last comes in behind sears, comes in behind family dollar. Is that being fixed . Do you believe those types of surveys. We, as you know have a lot of stores and some are better than others. That breaks my heart. Thats not what we want. We want every customer to have a great experience. With our announcement today, i think what you can see were serious about getting that right and supporting associates so they can win, whether the Department Manager increase wage change, those are aim at creating a Great Customer experience. Well get to barclays managing director in a moment. Breaking news regarding the port dispute. Jane wells has more. Good morning. Carl the journal of xlers is reporting that sources are telling it that a tentative deal has been reached between management and the dock workers. We have reached out to both sides to see if this is in fact true. But according to the journal of commerce, word spreading friday morning that they reached an agreement around 9 00 thursday night on a fiveyear deal that ends nine months of negotiations. According to the journal of commerce, one major corridor friday, infrastructure, the shipping line was reporting the news internally based on several trusted sources that said the agreement had been reached. No details were released. And neither the Pacific Maritime association, management nor the longshoremens union, which represents the labor obviously, have made any statement yet. If this is in fact accurate that would be a huge and muchneeded breakthrough as labor secretary tom perez reportedly warn both sides if they did not reach a deal by today, a. P. Saying they was going force them both to go to washington not that he could actually force them to do that at this point. We are calling to see if this is in fact true and well stay on it for you. Well wait for both sides to weigh in and see if we can call this a done deal. Were seeing walmart tick up a bit intraday at 83. 66. Lets bring in Meredith Adler from barclays who made the downgrade. How are you . Good. Your point im not sure if the downgrade is related to ports, wages, dollar sales guidance. Whats the thrust . It comes down to the fact that they are making a lot of investments. It is not clear when the benefits will come how big the benefits will be. And then when you really dig into the numbers in terms of the wage increases, they dont seem for most employees that spectacular. And what the Company Needs to do is improve morale and its just not clear this is going to do that. You could also make the argument that they need to be increasing labor hours which is not really whats in here. And you know theres probably minimum wage increase coming and this is just get out in front of it, possible. A lot of people thinking that. Why arent they doing anything like returning cash to shareholders, cutting costs, shareholder friendly moves to offset what youre predicting a hit to earnings on investment . I dont think theres an topgs cut costs. Thats what they did over the last couple of years by cutting labor and its backfired. Theyre an Efficient Company in many ways. Not that much to cut. And returning cash to shareholders, they are sit on a lot of cash over 9 billion, thats not clear unless they believe the stock is overvalued. You point out if you have a longer time horizon and willing to wait until the investment cycle is done and see if comps are sustainable after that maybe its worthwhile. Impressed with u. S. Comps. A bit of improvement. It does seem fairly clear that gas money is not all going to aplace like walmart. Restaurants are doing bet, people are saving or paying down debt. Was a little bit better but im not a believer that the low income consumer is really doing all that well at this point in time. So if you had patience and you got minimum wage increases and the job market picked up for low income people maybe youd say walmart is attractive. Meredith the note is an interesting read how you break down the wage rises and as the wall street journal points out they did change the rules of parttime workers, so 30,000 of them, 5 of the workforce, no longer receiving health care to the point you made about morale. The journal raises the question whether its enlightened or cynical selfinterest move depending on what peoples point of view is already coming to the table. Wonder of the two you would say is more accurate whether enlightened or selfinterest. Are those really separate for companies . You know i think they need they know they need to do things that survey that you guys talked about, they have a problem and they know it. Its very expensive to fix that problem completely. And you know wages are probably going up across the board but they needed to do something. We did see shares of Companies Like kroger and target down. People were i guess assuming that they were going to have to match these wage hikes. Would you expect that broadly, and what stocks would you prefer to walmart then . Well krogers unionizes. So their wages are already higher. And their wages only go up when they regauche yit anegotiate a contract, so that doesnt make sense. I dont think target has the same issues. I believe theyre playing catch up. Theres not going to be that much pressure on anybody else. And the Work Experience at walmart is a tough one, tougher probably than elsewhere. Its a pretty critical take. Do you expect comps in the u. S. That have been improving for two months to go negative again . No thats unlikely. Okay. I did think it was interesting, carl, Doug Mcmillon plays down the rise talking about external factors. He said i dont want to underplay the external factors like cheap gas that impacts the quarter in abetter way. Wondering if theyre going to turn lower. Guidance for the First Quarter is 1 to 2 , and that implies they believe it could be 1, which would be lower than where they were in the Fourth Quarter there one last question. Mushier, and more long term but if they are truly open to apple pay, and they are at least acknowledging the fix in the poor experience of the stores and paying people more and Marisa Meyers on the board, sensing a character change to the board long term . I mean i think everything that Doug Mcmillon has said is spot on. I think he understands the issues. The question is can they execute and what does it cost them to execute . Meredith thanks for your time. Good discussion. Breaking news out on obamacare. Another chance to enroll. Simon, a big part of obamacare not just signing up and attesting to the fact you have coverage but reconciling it on your taxes. Treasury estimates 6 Million People could discover they owe a penalty for not having signed up the Obama Administration is going to do a tax time special Enrollment Period it will start march 15th and run through april 30th, to give those people another bite at the an toll sign up for 2015. The penalty for not having had coverage last year minimum of 95 but up to 1 for next year than doubles. And it will be up to 2 of your annual salary. They are also sending out new tax forms to people who already did gain coverage on healthcare. Gov, a glitch in some calculations, the 1095 a, they are sending out new ones so those people will have the correct filing. Taxes and obamacare, they go together. Corrections and delays. Thanks very much. Up next attorney general eric holder says that the Justice Department will not hess tate to prosecute anyone that broke the law and contributed to the 2008 financial crisis. Jim stewart joins us live with his take and new call on post 9 when squawk on the street comes right back. Who do you work for . Your boss . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Weve never hesitated to investigate and prosecute any individual, institution, or organization that attempted to exploit our markets and take advantage of the american people. Well that was attorney general eric holder earlier this month, reiterating the Justice Department will continue to pursue anyone that violated the law and contributed to the financial crisis of 2008. But as jim stewart writes hes not holding his breath for any more indictments. Jim stewart, the one and only joins us here at post 9 to explain. Clearly, youre skeptical . This groundhog day or something . Have we all heard this before . Were now six, seven years out of some of these events statute of limitations is starting to run on some things. Yes the Justice Department has prosecuted a lot of people theyve got the numbers but can the average person name one of these . I dont think so. Do you think this selfimposed threemonth deadline was trying to make a political statement to save his face before Loretta Lynch replaces him . End of term kind of gesture. I dont want to be too cynical about it. I do think he makes the point, look, weve really tried and to some extent they have tried. But theres trying and theres trying. Some of the cases, to me i refer to as sort of slam dunk cases and i just dont understand why we is that point to their motive, their enthusiasm to prosecutor execution . You know, theyre related. I mean the enthusiasm translates into the resources and the resources translate into the investigations and investigations translate into actual cases. And i have to say, i think it goes right to the top of the administration. I think from day one the president has said things like well, we dont want to look backwards or this is water under the bridge, focus on making things better. Theres a curious ambivalence or not a strong interest in delving into some institutions. It goes back to the too big to fail things, banks banks were weak. Were not just talking about banks, were talking about foreign bribery cases, antitrust cases and a real test will be coming up. There are big cases that to me look like big cases, libor price fixing, and some things go up the ranks. Its another issue, they go for lowlevel people. Where are people making the big money, making decisions who arent getting charged . You point out in your column corporations are structured to protect the individuals. True in they will do that no the nth degree, particularly if theyre senior. Anybody at the top of the organizations has the might of the organization and its resources to protect them in court. I mean the more serious charge that youre making is there arent resources available. Im not sure if that really lands at the white house or whether that is something thats more symptomatic coming from congress and the way which congress is funded or individuals in congress are funded and a desire to hit the type of people who put very big donations on the table. They both have to take some responsibility for that. That goes to the s. E. C. Budget as well which i think it also used more resources if people cared about this. The cases are difficult to get against individuals and we cant always assume because a corporation pleads guilty well get individuals. I mean especially when there are many actors. We know something bad, we know a crime happened the Company Takes responsibility for it. But then go in corporate structures and trying to pin not only the blame but the state of mind, criminal intent and thats when it does become very difficult to move up the ladder because many people are involved, general councils are there, chief executive is always shielded from ultimate knowledge, even if theyve tacitly encouraged sentiment, reaping profits from it all, yes, it can be very difficult. Can we make the assumption theyve tried and havent been able to find enough evidence of the case because they cannot prove to a jury its beyond a reasonable doubt . We have to cut them some slack and understanding. On the other hand i mean no ones ever taken me up on the challenge, i wish they would invite me and maybe other investigative reporters in there for lets say ill take the 90day deal and see what can we come up with here . Then, you know that would be the proof in the pudding. I havent had that experience and by the way i respect the fact you cant just bring charges because they look good and lose the case that isnt fair. Its a horrible ordeal to go through criminal charges. I wrote about the tyson bribery the highest ranking corporate official took early requirement. He got a Million Dollar cash payment, a Million Dollar consult deal and Country Club Dues paid and use of corporate debt. You mentioned im not going to get that when i leave, i assure you. You suggest americans cant point to an orange jumpsuit from this era but they remember a skilling or kozlowski. Something about that era where prosecution was better or more effective . Well, look we had a different kind of crime, more selfcontained, and the people that were accused were not sort of embedded in the broader Financial System at a time when the Financial System was very exweak. I think it was a different environment. Yes, that era looks look a golden age of criminal prosecution in which people really were held accountable. And chief executives were held accountable. Does seem striking that we havent seen that since. Something against the Obama Administration, then . I think ultimately the Obama Administration has to take the responsibility for this and step up to it. I just have never had the feeling its a highranking priority. I think a lot of people would argue theyre seen as the Financial Systems nemesis, what do they have to lose by being truf. Behind 150 billion of fines. Substantial fines that have been extracted. We used to talk about a war on jpmorgan, remember not so long ago . Yes. Who pays the fines . The shareholders who arguably the most Innocent Group of people in all of this thing. Again i think theres a place for corporate fines, i dont want to make light but its not the ultimate test of whether justice has been done. Jim stewart, good to see you, of the New York Times and cnbc contributor. Coming up nordstrom trading higher today after its results. Well discuss what to do with the stock when we come back. [ female announcer ] who are we . We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into Business Owners. And were here to help start yours. Welcome back to squawk on the street. Shares of California Resources up 9 in early trading. The oil and Natural Gas Company plans to cut Capital Spending by 80 , compared to last year. Part of an effort to trim down spending in response to Lower Crude Oil prices. It still plans to pump the same amount of oil and gasp back over to you. Heard it from so Many Companies. Straight ahead, nordstrom seeing sales rise at its established stores but profit disappointed. The stock is higher today. More on that in a few minutes. Before we go to break, Bill Griffeth with a cnbc news update. Thank you. A lot of action in europe, European Finance ministers meeting in brussels in hopes of hammering out an agreement with greece. In paris, german chancellor merkel met with french president alland and says greece belongs in the eurozone. Both said more work needs to be done to close the gap. In geneva, another round of talks over Irans Nuclear program. The talks are set to last two days before secretary of state john kerry and his iranian counterpart join those discussions, hoping to clinch an agreement by the end of next month. Back here in the states Paul Macaulay stepped down at chief chiefist at pimco. He accepted that position in may to work side by side with gill bilbrey gross. Of course gross has left. More on cnbc. Com. Warren buffett on the acquisition trail. Berkshire hathaway buying german motorcycle for 400 Million Euros. A way to get his foot in the door in the european market. Thats your cnbc news update. Squawk on the street will be back after this quick break. Stay tuned. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Euro dont finance mainsters assembled in brussels to try do a deal with greece. What the greek finance minister said on the way in. Hope that is going to be an agreement and i trust we are going to have one. The greek government has gone not the extra mile the extra ten miles and now expecting partners to meet us not halfway but 1 5 of the way. Equally, as bill was mentioning before the break, french and german leaders meeting in paris. Merkel suggested the greeks have significant moves to make despite the fact she spoke for 50 minutes with the greek Prime Minister and there was a suspicion the germans softened their stance going into this. They have another week until the current deal expires. It not close enough to the wire. Thats not the wisdom. They may sent it through. Suggesting there might have to be another summit. Weve been here before we know this, whatever deal they do theyve got to get it through Certain National governments and ratified before you have the whole thing collapse. Interesting thing, as people keep mentioning, whats happening with the greek banks, there was a report from reuters from a local banker theyre hemorrhaging 500 Million Euros per day as people within greece fear that they may have to leave the eurozone and go to the greek drat ma. You dont want them devalued like pensions and everything else. It may than that ultimately is the big stick that drives them towards something, what the feeling is on the ground because a lot of this is about National Perception and trying to look like a different Prime Minister. The euro continues to fall as we go into negotiations. Nordstrom shares out yesterday, missing analysts expectations, rise in expenses putting a dent in the profits. The stock is in the green, though. Its up almost 3 despite the miss, up almost 30 in the laugh 12 months. Lets bring in the managing director at piper jaffray. Youre a fan of nordstrom, 87 price target on the stock. Are you encouraged to see the miss was due to the fact theyre spending and cleaning out inventories . Looks like wall streets okay with it. We are okay. Nordstrom is emerging as the most customerfriendly frictionless Shopping Experience and the top line result that we any investors are reacting to this morning. A solid top line number. What about all of the spending . The fact theyre increasing Capital Expenditure number by 60 this year. What is that going to be on . On the new stores like in canada and new york . Its across the board. Its canada its new rack stores also for their Human Capital around their internet sites as well. What we like about this theyre focused on returns on investment. We think were going to see improve as they make these investments. A lot of discussion about canada especially with target coming out, walmart and nordstrom investing going in. A lot of incremental sales to be had there . We think 10 of the overall company, once fully rolled out over in canada. And keep in mind their headquarters up near seattle, washington, theyve seen a great deal of traffic from vancouver for many many years. They might have a closer beat on the Canadian Consumer than people might realize. Tell us about the trunk club acquisition. How should investors in nordstrom think about that . What will they do about the supply chain . How quickly can they turn it into profit . We hope sooner rather than later, right, because thats good for investors. Whats critical about trunk club its emblematic that this Company Cares about Customer Service. Wins Customer Service in mens apparel, takes it the highest level down to buy via skype. This is service for guys. Nordstrom buying trunk club having mutual admiration we think one plus one will be greater than two. You like what you heard on the call. Put nordstrom in context of other big retailers and some of the competitors like macys which has been one of the wall streets favorite when it comes to Retail Department stores. You bet. So i think what we are more differentiated at piper is we view nordstrom so much more than just a department store. I mean with nordstrom you can actually shop online offline full price, offprice, on your phone, on your desktop, now through skype. No other retailer in our entire coverage list can do what nordstrom does. We think they stand out above the crowd. All right. Neely thanks for coming on and sharing. Managing director at piper jaffray. Lets go to Michelle Carusocabrera with breaking news on the meeting over greece. Talking about it a few minutes ago. To update team in brussels tells us the start time has been delayed again to 11 00 est, new york time. Its my understanding, whats happening behind the scenes are smaller, bilateral dealings going on perhaps as an effort to try to get people to come together before they sit down for the big meeting in a half hour. Once again, talking about the big meeting in brussels with all of the finance ministers about what to do about greeces petition for an extension of their bailout program. So a delay as they try to make progress behind the scenes. A lot of moving parts. Coming up hightech facility where the nasdaq monitors Global Trading for fraud. No one has ever been let inside until now. How they caught one suspicious transaction, when squawk on the street comes right back, heading into the weekend. Aflac what are you guys looking for . Claims legend has it these hills are full of em. It can take months for an Insurance Claim to surface. Claimin takes patience. Aflac paid my claim in one day. They got some newfangled kinda one day payin machine . Hehehehe yea, i got aflac at work. Aflac. In just one day, we approve and pay. One day pay, only from aflac. Aflac. What does it mean to have an unlimited Mileage Warranty on a certified preowned mercedesbenz . What does it mean to drive as far as you want. For up to three years. And be covered . It means your odometer. Is there to record. The memories. During the mercedesbenz certified preowned sales event now through march 2nd, youll get complimentary prepaid maintenance and receive your first two months payments on us. Only at your authorized mercedesbenz dealer. Never let anyone see their hightech facility where they monitor trading for fraud until now. Inside the secure market surveillance facility with a look how they camp suspicious transactions. So have you been blindfolded to a secret location, or are you at the Nasdaq Market site of times square. Here in rockville, maryland i can tell you that much. Its a secure facility they have a lot of security here a lot of locks on the door. They wont let us give out the exact address on the air. This is the market watch site where analysts are looking for fraud in the markets in realtime looking for everything from Old Fashioned insider trader to High Frequency trading manipulations, all done by analysts here. A couple of statistics. They talk about receiving 4 billion messages a day at the facility and processing those with algorithms looking at 35,000 different parameters looking for that fraud and specific activity. The alerts come within two seconds of the trades executed on the nasdaq and they say last year they saw 766 incidents suspicious enough in they referred them along to federal and industry investigators, all of that then taken for followup investigation, ultimately could lead to fines and criminal and Service Charges down the pipeline im asked ed knight a question im getting from people talking to me about this how can nasdaq police its own customers . Nasdaq wants to ta a. Track people to trade here then have an independent board, its separate from the rest of the business. Take a listen. We are subject to independent oversight by that independent board and we are not subject to the same business pressures that the rest of the business is subject to. Thats very important in terms of setting our budget compensation and the rest. Now, simon, one of the things that i learned here this morning, which was fascinating to me, one of the inputs going into the computers, not just market trading but twitter. Looking how news breaks online to see whether or not tweets are moving the news when the news breaks and comparing that to when the trading happened and they can reverse engineer all of that and see who executed those trades. If anybodys trading ahead of the news. When they find something, have they been able to prevent anything big . When they find it what theyre doing they cant prevent it the trades have been executed by the time they see it and theyre monitoring trades in realtime. When they find it they refer to s. E. C. , theyve been able to refer cases here that have led to actual charges being filed, fines resulting from that and the people are feeling the consequences of what theyre seeing here but not able to stop it in progress. Looking for it after the fact and rewinding the tape and going back and looking at trades around those news events. Also doing something interesting, which is doing background collects on backgrounds of ceos and executives at publicly traded companies and looking for anybody that those people know involved in fraud or any kind of incident. Wouldnt you like to see that . Eamon javers thanks for bringing us inside the secret nasdaq surveillance room. Over to chicago, cme group. Rick santelli with the santelli exchange. Good morning. Good morning. Maybe sara you are one of the close to 6 Million People who have seen the following youtube animation. Lets run the clip. Did you hear about the fed . No. What about the fed . They announced another round of the quantitative easing. What does it mean. It means they are going to print a ton of money. Well id like to bring the man who made that animation along with several others former futures trader i should call him the omed. Thanks for taking time. Thank you for having me rick. Lets start quickly with the notion qe is now over and that animation was made several years ago. Your thoughts on the end of qe as europe embarks on qe. When i made that cartoon four years ago it was obviously skep tal of skep tal of qe2. If qe2 worked we would not have needed all of the other programs afterwards. Move to present times. You wrote an easy to understand oped, maybe those that have lot of letters after their name might from frowned. Why alarms about a slight rate hike . I went back and looked and for the 55 years before the recent zero rate policy the average overnight fed funds rate was 5. 5 . During which the economy did just fine. So i thought it was interesting that all of the people are so scared of what is historically an insignificant quarter point rate increase. Now, why do you think theres so much inertia to normalization even in such infinitesimal amounts . Well i think that everys starting to realize certain parts of our economy are becoming increasingly depentd lyly independent on permanent liquidity to become viable. Thats a dangerous thing to nip in the bud sooner as opposed to later. You brought up another point in the oped, owhow much things have improved. We can debate whether they improved enough based on historic standards postrecession. Maybe finish off in the last 40 seconds to all of the things that improve that argue your case that we should normalize. When the fed first took rates to zero in 2008 gdp would soon print minus 8 the Unemployment Rate would go above 10 , and the dow would soon above 10 and dow bottom below 7,000. Today gdp growing multiple quarters unemployment below 6 and dow at a high of 18,000. To me the policy that made sense at one extreme cannot make sense at the other. The i thank you. I have to tell you, my mom doesnt really understand quantitative easing or the fed but after watching your videos we had a deeper discussion and for that i thank you. Lets go back to carl. Thank you. Thanks a lot, rick. Rick santelli in chicago. When we come back how the port congestion on the west coast is to blame for those bare shelves at ikea. Jane wells with the dow down 12 points. We live in a pick and choose world. Choose choose choose. But at bedtime . Why settle for this . Enter sleep number. And the ultimate sleep number event going on now. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow now we can all choose amazing sleep, only at a sleep number store. Right now save 50 on the ultimate limited edition bed. Know better sleep with sleep number. [ 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. Welcome back to squak on the street. Shares of mohawk understrys one of the best performers in the s p sch after it reported earnings that beat analyst estimates on sales relatively in line with expectations and said Gross Margins were better than the same time last year. Mohawk believes they will benefit from better Consumer Confidence due to lower gas prices Interest Rates and improving job market. Back over to you. Thank you, dom. The port congestion on the west coast has been a problem for u. S. Retailer one of ikeas suppliers has certainly been hit hard. Jane wells has more on that. Im assumeing theyre not in sweden, the suppliers. No. Its amazing, something made in america sent to sweden. First, simon, early this hour we told you the reports from the journal of commerce a deal had been reached between shipping operators and dock workers. My understanding is that is not true. We have heard so many times of both sides being close to be told not really and that appears to be the case again. Heres the continuing story. Even if a deal has been reached, it will take weeks, months to get things back to normal. At the port in portland, for example, master craft mourn fewer manufactured upholstered furniture for ikea has seen delays for Raw Materials and that is a problem that will continue to ripple through the business. This is the production line most impacted by the port slow down. Reporter thats ceo marty olson who says they diverted some containers to the east coast and put them on railcars which added a threeweek delay and deal or no deal the damage to his employees has been done. We lost business starting right in january. We ran out of Raw Materials and master craft had to lay 180 people off for two and a half weeks in january. The fact is that we are working probably three days a week, which has put a crimp in the paycheck. We work paycheck to paycheck. And he has no sympathy for dock workers. Again, the journal of commerce reported sources say a deal has been reached. My understanding is that is not true. And the mayor of oakland told the ap last night labor secretary tom perez, still up there, says both sides will have to go to washington monday if no deal is reached today. Sara, im not sure he can make them go although if the labor secretary tells you you have to go do you say no . In washington thats where deals get done right . Right, yes. Thanks very much for the latest update and clarifying some of the reports. To jon fortt with a look at whats coming up on squawk alley. Its valuation friday. Instagram said to be worth 33 billion, boy did facebook get a deal well dive into that. Also got intuit ceo and exclusive day after earnings and all the troubles during the quarter apparently they were able to overcome a lot of that and the billion dollar startup club, there are a lot of them. A look at why coming up on squawk alley. 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. Good morning. 8 00 a. M. At instagram headquarters in menlo park, california 11 00 a. M. On wall street and squawk alley is live. There must be some way out of here said the jumper to the thief happy friday. Joining us kara swisher coexecutive editor at re code. Good morning. Kayla out today. Jon fortt at post nine. Busy session the dow erased almost all losses as walmart has gone positive. Lets talk facebook first. First up Mark Zuckerberg looking smart today. A new note by cohen valuing instagram at 33 billion. Remember facebook bought the company for a billion back in 201. The analyst says instagram is a valuable asset for facebook and pegs the company as one of its top picks in 2015. They see maus going to 680 by 2020. Yeah. Are we getting over enthusiastic . We are. I mean 2020. I