Transcripts For CNBC Squawk Box 20150323

Situation. This is private industry that is out there. This is private industry drilling or fracking that helped that. There are some people saying that probably two months from now well see an even more supply that is coming online at that point well be filled up in terms of the storage we have and that excess capacity would go straight to the open market. Some people predicting that could put extreme pressure on prices. Did we roll over the contract . It was down at 42. Youre right. Thats a may contract. Expiring may 15. Thats down about 2. 5 percent. I like the idea. Were a cartel. Weve been, you know pillaging and plundering the world for 25 years but now were out of control. Will you other nonoutput guys come with us . Thats their way of saying its never going to happen. They know the United States is its not fair. Its not fair if the nonopec members arent cut uing. United states is a bigger producer than saudi arabia at this point. I love seeing them. Pay back big time. Hopefully it gets even more. Is this you . As for stocks if youre waking up this morning, here is how things stand as far as the futures are looking after the great day we had on what a crazy week. Up down. We dont know what to think. Going to get a little bit back and see whether we improve between now and 9 30. When we start down like that it seems like somehow it gets to triple for awhile. Yeah. Triple digits all though triple digits isnt much. Its a little different than what weve been used to. In the last six months or so weve seen a lot of triple digits. Lets figure it out. Less than a percent. Right. Yeah. All right and youll tell us about one of our frequent guests . One of our frequent guests is the st. Louis fed president jim bullard. He has a warning for investors today. He said markets are facing a mismatch with the future of u. S. Monetary policy and have the potential for major volatility. Remember the tamper tantrum of may of 2013 . Bullard said we could see another one pointing out in his words we have some potential for that today because the fed fund future path the market based one is a lot lower and shallow than the feds summary of Economic Projections. Bullard knows last week fed statement could have if youre reading between the lines on this. This is from someone in the room at the time maybe they will go ahead and hike in june. Theyre telling us just because theyre patient doesnt mean theyre inpatient but maybe it doesnt take a june rate hike off the table. I dont know at this point. I dont think they know. When they say data dependent. I think they mean that. We talked about the potential for another tantrum last week. Because the marvegts actsing like it. When you rise more than 200 points on idea you think its going to be locker off. And down 300 points. Right. Anyway. Here are the big stories other than that that were watching. Fed vice chair will give a speech to the Economic Club of new york this afternoon. Its set to begin a bit after 12 00 p. M. Eastern. And then it is titled Monetary Policy lessons in the way ahead. Wow. Im sorry im going to miss that. February existing home sales will be released at 10 00 a. M. Eastern. Polled forecasters are looking for sales to rise by 1. 7 . And in political news this was out all weekend. Ted cruz officially is going to seek his partys nomination for the white house. The freshman senator from texas tweeting just after midnight are im running for president and i hope to earn your support. Cruz plans to deliver formal markets from liberty university. Someone told me liberty is a pretty hard core in terms of just being a little bit further right. I think its virginia right. How the main stream media will contractharacterize liberty university. Take a look at europe which isnt responding to the session we had on friday. Its looking like everybody is seeing a little bit under the weather. Greece down 750 now. I thought there was some interesting comments going on in that saga. It is like a saga. They will run out of money by the end of money if theyre not given some of the the headline in the ft. Yeah i saw it before the ft. Its impossible. Theres no way we can do this. Im sorry by the end of april. Not by the end of may. This is truly a greek tragedy were watching what plays out. Well see what happens. Every week its different. Here is what is happening in asia. This is the best action weve seen in a really smart Market Strategies coming up i think, is pretty bullish on japan. Looking over at my right now. Weve been bullish on japan. We dont know who you are yet. What was oh you wanted to tease it out. Was that tv show what is my line . You didnt know who it was. Thats right. Who is directing . You cant follow along . Was that that difficult when i said i thought you were going to him, too. I dont know who you are, meaning please show us so you know you need to give them a heads up. Hit the button hit the button now. Go ahead. No. Theres the tenyear right now. 1. 1. 92. What is going on there . Rates are going up. Unless youre talking to mark grant who said theyre going down to 5 1. 5 and maybe negative. I should have taken off last week or the week before because now it seems expensive over there. 119 on the yen and then gold at 1180. It had a intermediauate term selloff and it bottomed. The dow and the s p ended three consecutive weeks of losses on a turbulent friday. The nasdaq did close before 5,000. Jason, you think that the consensus is europe does well. But not necessarily that japan does well. Is that why you like japan . I think thats exactly right. Most of our Clients International institutional clients are bold up on europe for the obvious reasons, which is the fact that the ecb is very much in the game. I think japan the problem with japan is people have gotten burned over the last 25 years, that people are like listen im going to make some other mistake. Im not going to make that mistake again. Having said that i think abe is doing a lot of things that are different. The japan 400 that is based on return on equity. Youre seeing corporate actions, corporate activism having some impact. They start to bring independent investors on to boards. Theres so much opportunity in japan. And, listen im not blind to the fact that its different. Its not going to be u. S. Style capitalism. The companies are cash rich. Theres a lot of potential. Especially if youre looking for yield anywhere you can get it. Japanese stocks are just seem to be almost a gymive me. They are longterm structure changes. You think youll see the payoff in just like the idea of getting women back into the work force. Thats not something you snap your fingers and it happens. I would say the same is europe. And japan has one advantage over europe to the extent youre dealing with one culture. You can try to move the ball in one direction. Europe, as we know you have at a minimum 17 Different Countries and a multitude of different ethnicities. And its not if it doesnt make people uncomfortable because its based on weakening the currency. Im cognizant of the fact its not the best reason to buy the stocks, but i think compared to the u. S. Japan and europe are cheaper, and theyre now, u. S. Is at the point where it may start tightening a little bit. Where as those countries are going to be easy for Monetary Policy point of view. Did you watch friday . I did. We had him on our conference on thursday. Yeah. I think my question about it he basically, i mean, some people say either they love the fed or hate the fed. No one or at least no one gives the fed as much credit as he does in terms of bernanke. Calls them heros. They saved us from a liquidity trap. Now my question was is that true . From qe they did that or 25 years ago or 20 years ago if either yellen or bernanke had been there, could someone have saved japan from 20 years . No. I think if i have a criticism, for all due respect who am i to criticize bernanke and yellen . The biggest problem i have you have given policy makers a free pass. At least drogmario dragi i would like to see a little bit more of that from chairman bernanke. As a result it put europe behind the curve. Its true but now youre getting all the countries. Lets say eurozone japan. They desperately need structure changes, and in some ways i view i think chairman bernanke was exactly the right chairman at the right time by the same token, there are limits to what Monetary Policy. I know a little bit about your political what would you have wanted policy makers to do . Number one the country elected president obama twice and also elected the congress that put the two die metically opposed to everything. Would you wanted to two policy makers to act on the president s solutions. Would you want the congress to do anything more than its done . It blocked at a minimum maybe maybe i have the biggest problem with the president himself. One thing that hasnt been tried globally is a supply side solution. Which is to say, listen the problem is youre not doing things to create Capital Formation. Youre not doing things here. Supply creates its own demand. If i do things that are good for right. Everyone benefits here. No one wants to try. And to me that would be a much better okay. Thats what when people say policy makers there can be your solution im talking about yeah but the fiscal policy that when people listen to you they might think you want infrastructure and, you know some of those. I dont know. All the other stuff. But if you look at the other you have very easy Monetary Policy. You have a regulatory policy that couldnt be any tighter. You have a situation where from one industry to the next and decide. Yeah. You have access reserves in the Monetary System at an all time high. The velocity of money continues to go down. Youre feeding the heck out of it. Trying to clean that up. Its not theres something in congress between adding tons to the Monetary System and then bringing jamie diamond down to washington every two or three weeks and wondering why theres no bank lending. Those two things dont go together. I wish a lot of politicians would stop trying to get scalps from something that happened six or seven years ago. We have to look forward. Thats the politicians. Its regulators as well. Listen. And the nature of regulations, you know its to fry to diffuse a bomb that has gone off. Theres going to be something. I guarantee us that the thing that gets us next is something that is not going to be focussed on by doddfrank. It will be a new modernization theyre not focussed on. Its the nature of the way regulatory systems. We call it a way around the world. Right. Its an adaptation if you will. But take your pick. Doddfrank, health care regulations, energy regulations. I know, the left would say, really, are things so bad and the president took another victory lap on the Huffington Post i think, the dire Economic Projections that people were warning back then didnt happen. Were like free and clear about worrying about entitlement. Weve had the most tepid recovery in history. Both sides argue counter factual. One side said were the best in the world. One side said were below plan. The wage growth is below zero. Were not flush right now. It could be doing much better. That would be my point to the other side. Im right of center. Its an alltime low. Its true that weve net the economy is doing okay. The irony is that the policies helped the wrong people. They have not helped the people they were designed to help. Which is murphys law and its ironic that the policies have helped the people that right. We talk about middle class economic s economics. And probably the stuff left would characterize as a payout to the rich tax cuts Corporate Tax reform probably would finally help the people that they were designed to help. But the other stuff that doesnt really help. Even, you know, paul m maccaulay is a friend of mine. Hes of the view its a trickle down approach but through Financial Assets saying for you create enough wealth in the system that all of that benefit will wind up into the hands of the people who are in the middle class. Right. And i would rather have trickle down through Capital Formation than financial asset reflags would be my approach. Im just humble businessman here in new york but thats the way i would look at it. Right. Jason, thank you. Thank you for having me in. I appreciate it. Next time well play the quiz show. Okay. Whats my line . I love that. I used to like that too. That was bold. That was old. I have to admit i dont know. It was good. They had three people and you didnt know who it was. I thought that was the dating game. Bachelor number one. The millennials think that i love that price is right. Drew carey has been the guy. Bob barber. Who . If you dont know bob barker you have missed out a lot. He certainly did. On that note. When we come back this morning a live report from washington on ted cruz and his official campaign for the presidency. Plus starbucks ends the race together campaign but said that the effort is not over. We will tell you what howard shumgts is saying to his employees today. Here is a look at this day back in history. E financial noise financial noise financial noise financial noise welcome back to squaksquawk box. Starbucks employees are no longer being encouraged to write race together on the cups. The companys efrts to promote Race Relations is in his words, far from over it set off a ton of criticism on social media. Starbucks said the part of the program that involved messages on the drinks cup was scheduled to end yesterday. Its going how they wanted. It was quoted in the New York Post saying someone brings up race to me before i had my morning coffee, my head is going to explode. I dont know what to tell howard at this point. I feel bad for him. You know what i mean . I think theyre slowly backing away from this one. Well see. Were going say we have more to say at a later date. Lets talk about hollywood news from over the weekend. Insurgent winning the Weekend Box Office with 54 million in ticket sales. The opening is short of the first film from a year ago. I think its the second of three in the series. And todays top political story Ted Cruz Making it official declareing himself a candidate for the white house. Richard jordan joins us from washington. Good morning, richard. Good morning. Ted cruz is the first to make it official. Many others are expected to join soon. For now its a oneman race. The president has effectively admitted reporter senator ted cruz is ready to run. Posted a video on twitter overnight and a message saying im running for president and i hope to earn your support. Today the texas republican is expected to say the words in what will be his first president ial Campaign Rally appealing to his conservative base. Cruz announces his bid in lynch burg, virginia at an evangelical christian school. Cruz a senator for just over two years is a tea party favorite. He is a valued member of the Senate Armed Services committee, he and i are friendly and i think hes a very viable candidate. This weekend california governor jerry brown went after cruz for dismissing the threat of Global Warming suggesting hes on the wrong side of that debate. Its shocking and i think that man has rendered himself unfit to be running for office. Reporter in a nbc news 40 of republican primary voters said they could see themselves supporting cruz as the partys nominee. Cruz is often a target for democrats saying hes too far to the right. If elected he would be the first hispanic president. His father was born in cuba. Great. Thank you. Coming up march madness a busy weekend of basketball in my house. All though, you know thursday night xavier plays arizona like 1050. You stayed up . Are you staying up . No way i cant. Unless i call in sick. Well have the winners and losers next. And then first, a look at last weeks s p 500 winners and losers. trader vo watching. Waiting. For that moment, when right place meets right time. And when i find it, i go for it. announcer vo at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps. And now, get up to a twothousanddollar cash bonus when you roll over your 401k or ira accounts. Details at scottrade. Com retire. Hey mom, you want to live by the lake, right . Yeah. Theres here. Did you just share a listing with me . Look at this one. Its got a great view of the lake. Its really nice mom. Your dad wouldve loved this place. Youre not just looking for a house. Youre looking for a place for your life to happen. Zillow its more than a network. Its how you stay connected. With centurylink as your trusted Technology Partner you get an industry leading Broadband Network and cloud and hosting services. Centurylink. Your link to whats next. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . I love my mileageplus® explorer card. Were saving our united miles. For a trip to hawaii. We love free checked bags. Ive saved 75 in checked bag fees. No foreign transaction fees means real savings. We can go to any country and spend money the way we would in the u. S. One of the best things about priority boarding is you can just get on the plane and relax. I put everything on the explorer card. I really want my united miles. Yeah. Some spring fixtures. Yeah i know. It was 22 when i came. Some people, you know, were business now. We talk sports once awhile. Theres no way you can divorce the Business Aspect of march madness, though away from sports. For so many different reasons. I was reading something in variety about the new way that were all going to, you know buy 20 cable channels we want. The ten most freebtquently watched. The article im talking about the guy said look if i didnt have true tv it was absolute must see true tv. And points out 360 days of the year he doesnt watch it and he had to look up. And i was thinking i mentioned lars night and i said these commercials that im seeing now, the all state ones and for the at t. Ive seen some of the commercials 30 to 40 times. You can recite them. No but i could. The reason i could because im watching live. I havent taped a single game to watch. Its no good. I know my phone gives me a cbs alert. If theres an upset bound to happen. I know, about it already. I have to watch all live. And ive seen more commercials than ive watched in the last ten years. So it works. Its event driven. Its almost you have to be there. It is a business story. It is a huge business story. Lots of money involved. Gets bigger every year. The first night, i think, was 25 or the highest ratest in 25 years. Sports content is still i thought you were talking the business perspective, the business story on it the loss productivity. Thats true. And the front page of the papers. Becky took, you know you have stuff you have to do but you took the easy way out. You did not pick. You pressed the thing on the bracket. I logged into the website at 11 57 and one thing i could do was pick the top ranked seeds. I used nates i did everything. I looked all over. You spent days. And its just figures. Now were tied right now. Out of 58 people in the pool were 11th. I was sixth and i had Northern Iowa last night over louisville. I would be in third place now, if they had been put out. But the thing you cant get i cant believe were tied. We have 45 points. Okay. Which is pretty good. Its not bad. Just to let you know the espn 2 Million People are in it and 14 people have all. Still have them . Thats still 14 people you know how impossible it is. Nobody is going to get it all the way through. Im excited theres that many in. In. You cant judge when the teams start picking. Michigan state suddenly theyre no. I picked the wrong states. I picked iowa state. They lost immediately. My daughter still has Wichita State and Michigan State. I love that. Go blake shes beating you. And big game thursday. Notre dame. You know too much about this joe. Thats my point all along. Thats the other thing i was glad when i picked the top seeds. I could be the control subject. You spend hours and days and you watch every single thing and you study every team. I clicked a button and were tied. I know. And i love kansas and i used to hang out in lawrence because it was halfway between my school and when i drove. The notion they wont play their cross state rival, Wichita State, which just got their butts handed to them. Its one of the most storied college historically the kansas jay hawks are phenomenal. They almost feel like they for whatever reason. For whatever reason they dont think, you know, they dont think theyre up to the same level or dont want to recruit in the same area. To be fair its only the third time that Wichita State has upset them like this. They dont play. They wont play. But kansas wont schedule a game with them during the year. Maybe theyll change their mind. Now they just look small and the best kids in kansas never played each other. That coach really if you heard the announcers yesterday talking about it it was embarrassing. The governor was there, right . Right. I think he got booed at one point. He had Wichita State and the jayhawks but they got tough to choose. Anyway. I want to talk quickly about a story on the front of usa todays money section. New york city, it says may start to the cabbies here are seeking a rod block for uber not surprising that cabbies wouldnt want to compete with uber. There are more uber drivers in new york city than there are actually licensed cabby drivers. Theres 14,088 cars with uber. 13,478 yellow cabs. Instead of saying its not fair. Theyre saying we dont know how its impacting traffic conditions in the city congestion and smog. Its not being studied. We want to make sure theres a limit on this. Theyre drafting the legislation. They are drafting their proposal. They want to make sure theres a limit on the cars until the city studies it. Thats code for capping it eventually and let it sit there forever. Its a smarter way of going tat from the cab drivers. One question ive had is legislation certainly hasnt caught up with this. Theres too much regulation. Why dont you cut down the regulation for the cabbies. A medallion is worth 100,000. I think even more than that. I dont know whether its i dont know how they do it as taxi union or something . I think you buy them. You have to but who decides theres a limited supply . Taxi limousine commission. Its a regulatory industry. To keep prices up. I understand as a cab driver being frustrated the very loosely regulated competition comes in. I can understand being frustrated. A lot of people like to drive can cabs cant get a medallion. Why dont you loosen up the regulation on the taxi. Thats what i mean. Its the supply will meet the demand and prices will stay low. Its a market. It doesnt make any sense. Why you cant get a stupid cab. There it will be interesting to see how it plays out here. Uber has a strong foothold in new york city. Do you ever take the train from jersey to Madison Square garden . No. I went downtown to hoboken. Go outside and try to get a cab. The line is probably 100 or 150 especially if its raining. Why . Theres not people who dont want to be cabbyies . Our train line runs down south. And the training is so rigorous and you have to be such a great driver and such a nice hygienic person to be a cab driver. The levels are so high to exceed that. Not many people can pass the requirement. Really . Am i getting in rigorous territory. You are a little. When we come back this morning a tech startup wants to help you keep your local government leaders accountable. Well have the details. Later a great trio of market talkers. At 7 00 a. M. Eastern a global perspective. At 8 00 today private equity power player of thl partners. And peter fisher. Stay tuned. Squawk box will be right back. Will you help us find a house for you and your brother . Woooooah youre not just looking for a house. Youre looking for a place for your life to happen. Zillow now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back. U. S. Equity futures have been indicating a lower open throughout the morning. Now down 41 which is not as bad as it was. Down 41 on the dow down about 4. 5 or so on the s p 500. Nasdaq down about 3. 5. Indexes were pretty good on friday. A little bit of a pullback today maybe expected. Making headlines toyota is reportedly finalizing plans for the first Passenger Car Assembly Plant in mexico. The plant could be approved by the board as early as next month. Reuters suggest the plant would make the corp. Roll will compact sedan. Open govern is bringing state and local governments into the 21st cinch i are. The company is transforming the way clouds transfer data by putting it in the cloud. Open govern currently serves more than 275 governments across 36 states. And recently took on an invitation from the white house to create a data visualzation of the nations first ever open source budget. Joining us now is zach bookman, the cofounder and ceo of open opengov. You say open source and in the cloud and analyzing all the stuff. It sounds pretty complicated. Lets make it schismimple. You take the information and you put it together and show people exactly how governments are collecting money, where the money is being spent. Yeah. The problem is the tens of thousands of governments ins United States use old line legacy systems on premise and if youre running a government its really hard to analyze share, compare your Financial Data. This allows you to do it. You can compare it to other governments as well. Lets say we spent x abilitymount on firemen spending versus a town that spent x or y. It can save you a ton of time creating a report but allowing you to share it with the elected official, citizens and see other governments. If youre going to show me where im spending the money, how much does it cost . The beauty of a software of a Service Platform is its affordable. Especially compared to what Technology Used to cost. Even small governments can get on board for sometimes as little as 5,000 or 10,000 a year. What does that mean exactly . 5,000 thats a fee im going pay every year and dont get it. Correct. Its easy to get started that you dont need your i. T. Staff to help. How does work . A government will sign on with open gov. Send the contents of the accounting center. They can send it in any form it currently exists. They dont have to do data input. They can print it out and send it. They send it online but yes. So, again, it sounds like a pretty good idea but at the same time any time youre talking about committing spending that type of money people must have some questions. How do you convince the early guys to sign up . The early folks have already signed on, basically. As soon as a Government Official sees the beauty speed, and flexibility of the Software Many are exclaiming wow, ive been waiting 20 years for this type of software. What is something you might be able to look at . Lets say youre a citizens of new haven, connecticut. You want to know how much the city has been spending on snow removal. You can see historical actual Financial Data and see how much the city spent for five years. You put five or ten years data. Its not just comparing it against nothing . Correct. The city of miami, for instance you could drill through and see Field Services spending for the Police Department and look at overtime. I saw some numbers in the notes that suggested youve had 500 increase in the number of governments signed up. They doesnt tell me a lot. If you used to have one government and now have five thats 500 increase. What can you tell us with revenue and how the company is progressing. Sure. Theres a now government signing on every couple of days. Sometimes two a day. I think Government Officials around the country are getting excited. Theyre working hard every day on behalf of their communities and their struggling with old technology. Were super focussed on building cuttingedge software and delivering it to every government who wants to take advantage. What does it mean in terms of revenue. Our revenue grew 10 x last year. We have almost 300 customers in 37 states. And theyre all paying customers. The early guys werent like come on every one is a paying customer . Correct. It was interesting we started by giving away the software to get beta relationships and a lot of governments didnt understand that. They said what is wrong with it . I said its amazing. But all of those beta guys have signed on and are paying customers . Yes. Those are 270 some paying customers. So where does that get you . What do you expect youll have two years from now, five years from now, what is your end game . We think that every government in the country should be taking van of this software, or some Software Like it. It can save them money and improve their productivity. Theres a secular trend toward financial transparency. We want to make it available to the country and the world. We have big ambition. Is your plan to eventually take it public . Depends on how things go. We just want to build Great Software for every government in the country. And your competitors out there . Who are you competing against . The biggest competitor is the status quo. Some governments are trying to build the technology themselves. Some of the sales process is educating on the benefits of the cloud and how quickly and easily they can get started. Okay. Zac, i want to thank you for joining us today. Thank you for having me today. Bookman, really . Bookman . Bookman . Lieutenant bookman. Ill be all over you like a pitbull on a poodle. Do you remember . What is it . The library cop. Its the best. Philip baker hall classman. Bookman. He was a library cop. His name was bookman. Its like having an ice cream guy named cone. Bookman from the library. I think there was a i think theres a seinfeld bookman, too . Yeah. Thats what im talking about, yeah. Lieutenant bookman. Yeah. Anyway. Coming up, you know perfect. Im getting the same response. Facebook all time highs and analysts say a big event this week could push the stock higher. Details coming up next. 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You, my friend, recognize when a trend has reached critical mass. Yes, when others focus on one thing you see whats coming next. You see opportunity. Thats what a type e does. And so it begins. With e trades investing insights center, you can spot trends before they become trendy. E trade. Opportunity is everywhere. Welcome back to squawk box, everybody. The s. E. C. Says walmarts shareholders will be able to vote on an inzpent shareholder for the retailer. Facebook gearing up for its big developer conference this morning and the timing couldnt be better with the stock near an alltime high. Gene munster joins us now. He just raised his price target to 92 over the weekend. Gene, ive seen you on various, like websites and webcasts and ive gotten mail that says guess who we have coming on. The expert in all things internet. Have you seen that . The way they sell you . You are the Second Coming when you appear. Do you know that . Wow. Im honored. I havent seen it but im honored. You are big. Yeah its a big week. Thank you. Well you have a lot to explain to me here. Number one, i see why the stock is trading up i guess. That would be between friends. If you wanted to like send money to your kid at college or something, that would eventually be a big market. I guess if you have 1. 4 billion users, you think it could be big. How do you make money from it . Well on the payment side is that its just about engagement. They announced last week about being able to most of it will be sending must be to friends. Im sure a lot of college kids would love if their parents sent them money. But the core case is youre at dinner and sharing a tab. So thats the use case for it. They dont charge for that. And so really what they want to do is build engagement. I think thats one of the big themes thats going to emerge this week is a shift in facebook from being a platform of 1. 4 billion users that can do a lot of things like payments to a platform where they can find different ways to monetize. Initially on the payment side theyre not going to make a ton of money. But over time theyll monetize the broader platform which we can talk more about. Its at an alltime high. Im afraid to look another the market cap. Once again, you said they might find a way to monetize. 235 billion . Uhhuh. Theyve got to monetize a lot of stuff, dont they . They have a lot of information that could eventually be mined, i guess, for something. Obviously its going to help. But that seems like a reasonable valuation to you . It does. I mean if you look at the growth rate 55 . This year the streets looking for them to grow around 30 . That number is probably low. The reason the market cap can be so big is this story has huge catalysts. This year its pricing thats worked to their advantage. Now instagram. Theyre not going to monetize instagram this year. Thats really 2016. Whats app is after that. And then this ocuous thing. Its going to be a big deal. Part of the valuation what you can do ok can. Theres also changes to the way messaging is done or something. Thats going to somehow yield a lot of information for someone and youre going to monetize that some day theoretically. That may be sooner than later. And thats probably going to be one of the big takeaways from this epic conference this week. Essentially what theyre doing is taking their messenger platform which is similar to twitter or senate chat but open it up to build applications whether its games or enriched media or other Premium Services around that. What does that mean for you . Real techies, its similar to what wechat does is china. Theres going to be more things you can do within facebook messener. The way they make money on that that builds impressions. They do a good job of selling ads. Im lost. But ill take your word for it eventually they can some day i dont have much in terms of personal experience here since i dont go on it and dont have one. But my wife did tell me something. Whenever she searches for information on something, within 24 hours theres something on facebook thats totally related to what she searched. See how naive i am . So thats what were talking about. Data mining knowing peoples interests. And a customized advertising, i guess. Thats ultimately how they make money in the way that whats going to happen this week is allow platform to build new experiences. That means games on top of more games on facebook. See, i thought it was a coincidence. Wow. Imagine that. Magic. I think about going to budapest suddenly im marketed stuff from there. I thought it was like esp or something. So its not. They knew this . Yeah. I think that they they have a good idea who you are even if you dont spend a lot of time on facebook. Theyve got a clever way of taking that and serving that to advertisers who are willing to pay for your impressions. I feel violated gene. That doesnt make me want to buy the mind your own business. I guess i shouldnt might need to button things up. Look at the bright side. You give up something on that front but you gain access to a Global Network of 1. 4 billion people. So youve got to give a Little Something to get a Little Something. One of these days youre right. You get 1. 4 billion and those are big numbers. I dont know the 235 billion. Well see. You think this could be a 500 billion company eventually . Were not that aggressive. Our price target is 15 to 20 higher than the stock is today. Ultimately if you think back ask any student, ask anybody kind of below 20 about instagram. Thats another catalyst too. Instagram i know. I do see that. My kids. In fact people dont do twitter anymore, a lot of them. They do instagram now. Which i dont understand. Anyway, you need to come back and explain these things to me. If youre as good as all these people say when i get advertisements about i had no idea who we were dealing with. Well im honored to hear that. Thank you. Ill send you one next time i get one. When we come back we will have more of this mornings top stories including another big drop in oil prices. Plus well welcome bob hor mats and talk the global market, the dollar and more. Ogy solutions. Including cloud and hosting services all from a trusted it partner. Centurylink. Your link to whats next. Theres nothing more romantic than a spontaneous moment. So why pause to take a pill . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. 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Visit your canam dealer and test drive the spyder f3 today. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back, aerve. Ted cruz makes it official. Announcing on twitter he will run for president. Global hot spots impacting the markets. From european elections to the latest word from saudi arabia on oil prices. Former state Department Undersecretary bob hormats is our guest host for the hour. And just 16 teams remain after a wild weekend in College Basketball. Dave briggs is here we the buzzer beaters and viral moments in college hoops. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. The dude would be happy with our music selection. Im joe kernen along with becky quick. Andrew ross sorkin is off today. Were watching crude prices this morning. The Saudi Arabian oil minister said yesterday the market defines prices and that the kingdom would not unilaterally cut its output to defend those prices. It said saudi arabia would only consider output cut ifs it was in operation with non. Opec producers. Lets look at equity futures after friday with volatile sessions in the past couple of weeks. Down 38. That has improved where it was a little while ago. The s p down about 4. 5 points. The nasdaq indicated to open down about 9. Ted cruz is running for president. The texas senator making the announcement with a video posted on twitter. More than a dozen potential candidates are raising money but arent expected to formally interthe race until april. Independent candidates have a fund raising advantage under finance laws. Cruz wont be allowed now to ask donors for more than 5400. And in hollywood news, insurgent from lions gate winning the Weekend Box Office with 54 million in weekend sales. Its shorter than the first in the series called divergent. But when you get a sequel, its gold for the studios. And it was a rough start for sean penns new movie the gunman. It debuted in fourth place with just 5 million. Disappointing for the pennster. Pepsi announcing that former dallas fed president Richard Fisher frequent guest here on squawk box, has been elected to the beverage giants board. Fisher just retired from the fed last week. Thursday was his last day. Monday already getting into his new life. And we see that he is elected to pepsis board. Our guest host for the next hour has his finger on the pulse of many of the worlds political hot spots. Bob hormats is chairman of Kissinger Associates and former state Department Undersecretary for Economic Growth and the environment. Great to have you. Great to b back here. Its hard to know where to start. Lets start with learning the guy who built singapore what it is today passed away at the age of 91. He built this country out of nothing focusing primarily on education. We dont have any natural resources, he said we need to focus on our people. We was a hawk on avoiding corruption and prosecuting people who were guilty of it. He also wanted to make sure it was a multiracial society. And hes done that very effectively. And really understood the United States. Theres always one quote i remember about lee kuan yew. He said i will tell you what makes me think america is in delinede decline decline. Thats if you stopped opening your doors to the best and brightest from around the world. That was about ten years ago. It was right at the beginning of the financial crisis. He said when you impose restrictions on people coming into your country that want to be part of the american dream, thats the point at which you will turn from a growing country, the model of the world, to an inward looking country. Although there are people that argue we are doing that right now. That was one of the things that worried him. That we would fail to realize our history is based on getting the best and the brighters from the beginnings of our country until now. And i think it began to worry him. I saw him in his older years several years after that and he said he was beginning to be concerned about that. But he saw that is as americas straent strength. Welcoming and enabling people to stay here and contribute to the american system society. What he did was phenomenal. Turning singapore into what it is today. He ruled with an iron fist. Not just making sure he was cutting out corruption. Things like chewing gum and some of the Corporal Punishment that was levied on people along the way. He did some tough things in freedom of speech. Press, right. And of the press in particular. But if you look at the success of singapore, a Little Island this mud flap off the coast of malaysia and look what its become. A world financial center. Educational opportunities for people from all around the world. A model for china. Many chinese look to singapore as the kind of model they wanted that had openness and opportunity but still had a substantial amount of government control. They thought that was about the right balance to aim for. Not currently, of course but down the road. And he advised a number of chinese on how to reform and he was a strong supporter of the United States. He said the United States has to be engaged in asia long before the pivot to asia. He was saying if you want to be part of the 21st century, you have to have closer trait relations. Bob, what do you think when you look at all the issues facing the globe right now . You look at whats happened between iss reel and the United States. Some very difficult relations at a time when the middle east is in absolute turmoil. Yes i think i mean we focused on israel because of the israeli elections. But the Israeli Palestinian issue is israel and iran this comes back from point to point. Which side are we on on this . Exactly. And ironically we have all these issues with iran on the Nuclear Problem and the negotiations that are taking place. But in a curious way, iran is supporting the effort to deal with isis in iraq for instance. And hezbollah which the United States brands as a terrorist organization is actually fighting isis as well. So there are curious areas where were not an ally of iran by any means, but some of the military forces that iran supports are also trying to fight isis. The United States is trying to fight isis. Its the same issues we faced again and again with different sects. Exactly. You can be at odds with a country and opposed to their policies in one area but in another way youre curiously working in parallel with them to do Something Else in that region. And it presents a problem for the United States. We cant be inconsistent. And the iranians the Supreme Leader said we want to work and find a solution on the nuclear side. But were not cooperating with the americans on regional issues. Although ironically theyre doing things in parallel to deal with isis but over the weekend longterm iran is a much bigger threat to isis. Im surprised to mentioned that comment. Are you going to mention death to america . Yes, death to america. Oh its hardly an example of so chanted death to america and he said yes still death to america. Hes still very strongly antiamerican, distrusts the United States. Theyre supporting groups in yemen that are opposed to the United States. Theyre supporting hezbollah which is opposed to and you wonder about this. Yes. Hezbollah is antiisrael and antiamerican. Theyre supporting the leaders in syria that we dont obviously like and want to get rid of. I mean theyre playing a role throughout the region which supports these revolutionary forces that are opposed to america. And he has very strong antiamerican feelings. So this is an area where on the other hand were negotiating with them on the Nuclear Proliferation issue. So its a curious mix of a regime that dislikes us intensely on many fronts and is working with us. Theyre only working in their own selfinterest. Totally working in their own selfinterest. Everything they do is their own selfinterest. The fact is, can we find an agreement which meets our concerns and theirs . And theyre very longterm negotiators. And theyre drawing this out. And i do think iran is emerging as drawing it out as they continue to as the most powerful country in the region. The average iranian tends to be supportive of the United States. American who is go there find a good reception. The government is strongly antiamerican. So we have to figure out how to deal with this. But in the long run, they are the major power of the region. They have a strong army. Theyre going to be in a nuclear role in some capacity or another. Their neighbors are not. So weve got to figure out a way of dealing with them. On the other hand weve got to realize that theyre quite dangerous to our interests and weve got to be vigilant. You work with them on one side and hope to reach an agreement. A lot are skeptical, but the negotiations are underway. On the other side be careful youve been in washington a long time. Im hearing now that well you know israel the threat from iran is greater to them than us. It used to be we stood sidebyside with them at all times. Its weird to be in a position you must look at them and say ive stepped into the alice in wonderland hole. Where am i right now now . Theyre a threat to israel bigger to israel than us. Ive never heard that point made before. Theyre certainly a bigger and much more direct and immediate threat to israel than the United States. It used to be that that would by definition be the same threat to us because that was our key ally. We have the israeli concerns but theres a broader set of concerns and that is broader Nuclear Proliferation. They do get a bomb what other countries are going to do will have an effect on us. So weve been trying for decades to avoid proliferation of nuclear weapons. If iran gets the bomb or the capacity to build a bomb in a short period of time, egypt, saudi arabia many other countries in the region will move there. When you get nuclear abilities proliferation elsewhere. People steal nuclear secrets. Uranium is diverted somewhere else. There are a lot of radical groups around the region. People build the bombs or plutonium or enriched uranium, it could leak into hands in libya and other parts of the world. Were not even going to use our veto power, theoretically, if anyway. So mike how do you buy stocks now . No. This is not something that youre necessarily thats on the front burner for you. What is on the front burner . Its interesting. Geopolitics always matter. Its not just whats happening in iran, but the ongoing drama in greece. Russia remains a player in the world stage. But i would argue were seeing now the shift is starting to make were starting to see a shift of emphasis from last week was all about policy with regard to the fed. Markets have had the ability to reset on that. Now what were focusing on is the macroEconomic Data. Were going to look at q1 earnings and theres going to be lots of concerns about the head wunds were going to see from a stronger dollar. Yeah. Were seeing them definitely already with the strong dollar. Were now at 1. 08. Have we overplayed the strong dollar yet . The market knows this. Weve seen a price over 25 . I think what weve seen is the markets gotten comfortable with the notion this dollar will be a transient effect on earnings. Not a permanent effect. I think thats why theyve not taken seriously the rise in the dollar. We do see the dollar strengthening a bit further in the shortterm. But actually our 6 and 12month forecast for the dollar euro is for the euro to begin to gain strength. Okay. Were going to be here in a year in this studio. Youre going to be here again, im sure. And the 10year note in a year will be what . Itll be higher than it is today. You sure . Well, nothing is certain. Look. I do think whats a bit different now is we are seeing the fed beginning the process of normalizing rates. Its not going to happen in june as some people expect it. We expect it to happen some time this year. The correlation between the fed funds rate and market rates is significant enough that as the fed begins a process, you are going to see some reset in market. Its not just a national market, its an international market. As the fed is raising rates and every other is keeping rates lower, why wouldnt money come rushing in seeking higher relative yield . And driving rates down. This is one of the reasons why we still think we think its going to be limited. If you think of bunds acting as a sea anchor. Youre not going to see rates rise as sharply as they would have in prior tightening cycles. One, the pace will be slow. Second, because the returns are meager. Think of it now. Ironically were talking about a low yield. All right. Okay, mike thanks. Bob will be with us. Bob, i dont have your email. Do you have a personal email . What do you you were at the state department. Do you have the same personal email you used to use at the state department . Did you have a state Department Email then . How did you handle things . I had a state Department Email. You did. What year were you there . I was there as you well know for about four and a half years. Yes. And you used a state Department Email. That was the way people did things or you were exceedingly rigorous in following the rules . What was your reasoning . My reasoning was i was given a state Department Blackberry and used it. Okay. Dont give it to me now, but well talk about that. So you used a state you nut. You used a state Department Email just in case someone needed it for the act. I was given one and i used it. Thats as far as i will go. So you didnt want any convenience. It was very convenient to me too. Its convenient to other people, too, the way they handle things. I was just wondering. I want to thank you for coming on the show. So that was the state same state department. It was. All right. Ivegiven all the other issues weve got, i think that will be short lived. Focus on the real issues were talking about here. Sure. Fortunately bob is our guest host for the rest of the hour. We do have a lot more to talk about with him. When we come back this morning, a squawk platinum portfolio update. Craig hodges joins us with his small cap. And the ceo of wpx energy weighs in on the face of falling oil prices. And the best moments from this weekends College Basketball games. Plus dave briggs who has the best shot of winning the tournament tournament. Stick around. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. The squawk platinum portfolio is back. Joining us owith his picks is craig hodges. What are you thinking overall . Weve seen a lot of market moves recently, more volatility coming back in. Does that look like a Good Opportunity for you . We viewed the volatility as being opportunistic. We dont feel like stocks are necessarily overvalued. Theres not a lot of alternatives to invest in. And so at hodges capital, all we really do is follow companies. Were not trying to predict Interest Rates and all those things. Were just looking for superior companies we feel like have some real opportunities going forward. When it comes to small caps do you think theyre better off when it comes to the stronger dollar . Absolutely. The fact that most are domestic and dont have to deal with the currency issues and a lot of the larger companies. Thats why i guess the russell has outperformed this year. But theres a lot of fall Smaller Companies that do well. They dont get a lot of press that you see, but theres opportunities you see. Lets talk about one of the companies that you like. Trinity industries. Theres a couple companies that and one thing we see being able to take advantage of are some of these companies that are perceived as Energy Companies. Trinitys one. Eagle materials is the other. But those stocks have been hammered. Trinity has a small part of their business that is energy related. But the stocks come from 50 down to 25. Its 35 now. But we see that stock doing well from here. In may theres going to be some new standards for rail car that we think will be very a very good situation. Because of all the oil being transported . Yes. We think theyll start a new cycle for trinity. Its got a great management team. And we see, you know sustained earnings of 4 to 5 a share. So at 35 the stock looks inexpensive. You mentioned eagle materials. Yeah. The stock was 110 now its under 80. They started a trackfrac sand unit. And the fact theyre related to energy has hammered the stock. We see potential earnings of 10 to 12 a share. Below 85 80 we feel thats a deep value. Finally lets talk about Swift Transportation company. Its a Trucking Company. People see the trucks all the time. Why this Trucking Company . Weve identified theres some real operational improvements that are seeing Pricing Power for the first time in ten years. And the fact gas prices are so low, youre going see some good numbers out of swift for quite a while. Your price target on any of these . You know i think trinity could i think it could double over the next couple of years from here. Eagle, it could go up 50 . And swift has been kind of behind the curve, but they do think its a 30 to 50 type of a move. Craig, thank you very much for coming in today. Thanks for having us on. A reminder, go to cnbc. Com to track the picks of all our managers realtime plus read their exclusive analysis as well. Red dragon where ed norton had blond hair. That was the remake. I never saw it. First it was with the when he was a skin head. Yeah. He was jacked up. Bulked up. Dont do that. And the hulk too . He was bulked up. Thats what i said. But you look like the cop in the prequel to silence of the lambs. I wish i could act like him. You do. You sold those stocks like you believed in them. So were buying that. Yeah well you know we pick our areas. Coming up special delivery for the pope. The viral video of an ambitious pizza delivery guy coming up. And then stanfords lahnee chen is here. Well talk Economic Growth feds timeline and ted cruzs president ial announcement. Hey, girl. Is it crazy that your soccer trophy is talking to you right now . It kinda is. Its as crazy as you not rolling over your old 401k. Cue the horns. Just harness the confidence it took you to win me and call td ameritrades rollover consultants. Theyll help with the hassle by guiding you through the whole process step by step. And theyll even call your old provider. Its easy. Even she could do it. Whatever, janet. For all the confidence you need td ameritrade. You got this. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. 40 of the streetlights in detroit, at one point, did not work. You had some blocks and you had major thoroughfares and corridors that were just totally pitch black. Those things had to change. We wanted to restore our lighting system in the city. You can have the greatest dreams in the world, but unless you can finance those dreams, it doesnt happen. At the time that the bankruptcy filing was done, the Public Lighting Authority had a hard time of finding a bank. Citi did not run away from the table like some other bankers did. Citi had the strength to help us go to the credit markets and raise the money. Its a brighter day in detroit. People can see better when theyre out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. And folks are making investments and the community is moving forward. 40 of the lights were out, but theyre not out for long. Theyre coming back. Welcome back. Pope francis got a special surprise when he visited naples over the weekend. A man delivered a pizza to the pope as the pope mobile passed by. The moment was caught on amateur video. The special pie made by pizzeria don ernesto were in the color of the vatican. Why do you think they put napoli in there for me . Have we do we now call it napoli . What do you mean . In the prompter it was in naples, right . Did conteno write this and think everyone says that now . I changed it to naples. I did not see that. I dont know. Who knows. The beginning of pizzas in napoli. Its called naples right . Maybe it was a line from italy. It was a nice gesture. Im ready for anything. When we come back this morning, how u. S. Drillers are reacting to low oil prices. We will talk to Rick Muncrief. As we head to break right now, take a look at the price of crude. It is down again today. As joe pointed out earlier, its a different contract. In fact i dont think its january. I think its the may 15 contract. Not january. Its 45. 64. It expires in may of 2015. It is down 93 cents. Thats a decline of 2 today. Stick around. Squawk box will be right back. Can it make a dentist appointment when my teeth are ready . 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With e trades investing insights center, you can spot trends before they become trendy. E trade. Opportunity is everywhere. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back everybody. Among the stories front and center radio shacks bankruptcy auction kicks off today. One Hedge Fund Wants to keep half of the stain stores open. Others want to liquidate. Lockheed martin says its working to resolve a gps glitch with satellites. It was disclosed by the air force yesterday. And ocwen is rebutting allegations that it was responsible for poor Mortgage Servicing practices. Crude oil prices have tumbled some 50 over the last year hitting lows not seen since 2009. This is happening as Energy Companies are scrambling to cope. Theyre also slashing capx budgets as a result of for more on this Rick Muncrief the president and ceo of wpx energy joins us now from a convention in new orleans. Thanks for being here today. Thank you for having me. I know this is an industry youve been involved in for 35 years. Youre watching what happens. When prices fall like this what do you think the next step is . And is this different because of all the production in the u. S. This time around . I think it is different. This Energy Renaissance weve been enjoying here in this country, both natural gas and crude oil, is phenomenal. What weve done is done a nice job in adjusting. Youve seen as you mentioned a few moments ago cutting capx. Companies are i think being very prudent and slowing the capital spend down. Our company, for instance, we have plans to enter the year with plans of 1. 7 billion. We have new capital projects. Peeled that back to 725 million. So a pretty drastic cut. But with our company, it was really a Good Opportunity for us to get some things right structurally and to address capital allocation. And thats exactly what were doing. You know, rick we have heard from a lot of Companies Like the exxonmobils, like harold hamm and Continental Resources saying theyre doing the same thing. Cutting their capx spending. However, we also hear the country is likely to see additional supply thats coming on over the next couple of months. Probably two months from now well see a peak. Thats about the time we will also see stores completely filled in the United States. Meaning that anything pumps at that point has to go into the open market. There are some people saying you could see a much bigger drop in the next couple of months as that comes up. Do you buy into that theory . Well i think prices will be under pressure for the next several months. You have the storage. You have some of the new productions still coming on. However, i think a lot of companies are deferring their completions until later in the year. Maybe even the first part of 2016. So well see how it all plays out. Refinery maintenance. Were entering that season. Second half of the year i think, looks a little more robust on the pricing front. But near term i think were going to see some pressure. Boone pickens joined us last week. He said 70 he thinks wti will be back at this year. Does that sound right in your estimation . I dont know that that could be too far off. Im a little more bullish, quite honestly, than what the current strip is. I do think that we do need to get the export capabilities. We have a lot of refineries here worldwide that we need to be able to get our crude oil to. I think that would help american consumers. Certainly helps the middle class here in the u. S. A lot of these jobs that have been lost are middle class type jobs. You know my dad was is the prime example. Its the kind of work he did. And so its personal. You want to take care of these families and keep this industry alive and keep the u. S. Economy strong. But i think we have a lot of things to challenge with near term. But i am much more optimistic second half of the year and on into 16 and 17. Weve seen substantial declines in oil and gas, what kind of compression is going to be required to get prices up . How much more of a reduction is going to be needed and when does the impact of that kick in . Well i think you may see rig counts still be under pressure some, but i dont think its going to be another 20 or 30 . Weve seen a dramatic and quick response. People have decided to do the minimum level of Capital Spending or at least focus in their core areas and keep their operating teams in place. Because we all know things can theyll tend to act in a cycle. We want to make sure that were able to respond accordingly when demand picks back up. So i think you will see some go ahead. Please continue. Yeah i think that you will see some additional rig count reductions, but i think were pretty close to a bottom. How do you convince people in this country that we have plenty of oil and gas so that we ought to be able to increase our export capability and avoid some of these impediments that are now preventing these exports for taking place . We have this super abundance and increasing abundance down the road if this is all utilized in a responsible way. Right. Well, i think the big thing first thing we have to do is continue to educate and educate congress, educate the public. I know we spent a couple of days the week before last up in d. C. With a group were involved with. Were actually involved with three separate initiatives to educate congress. And i think its a big win. Both sides of the aisle i think see the potential. And its just a matter of getting people comfortable that the supply is truly there. All right. Rick, thank you for joining us today. Its been great to talk to you. Okay. Thank you very much. Have a great day. I dont know what hes doing with his personal company, just saying something on the air for whatever reason. And hes a savvy crafty guy. Who knows what he meant. I dont think he misleads us. What these guys have seen is when production drops off, they look at the lag on how long it takes for prices to build back up. The 10year note is yielding 2 . If oil goes from 45 to 70, thats a 55 move between now and december. Possible. It moved the 50 before. And in hindsight we say it did. How many people made 50 on that . Nobody. Right now were struggling. Were hoping in the stock market we get 7 8 9 . So this is a slam dunk 55 . Nobody can make a call thats a slam dunk 55 or im going to mortgage everything and not only that but in the futures markets, youd make even more than that. Is that what it is really right now . Already moved up a dollar . All right. Anyway im saying talk is cheap. Well see whether it goes to 70. Thats a big move. It would take a huge adjustment by the end of the year boone said other things in the past too. Hes the first with that but got into it with the wind and natural gas is lower. Hell say so becky it didnt hit 70. Maybe i was aggressive. Anyway joining us now lahnee chen from stanford university. Lets start with the fed, lahnee. You point out that too much of a tantrum, they might not do it in june. Its possible. I think theyre leaving themselves some space. Its so funny how its become this political issue, right . Youve got people on the right now talking about audit the fed. And that may be a Campaign Issue as we get into 2016 get into that cycle. The fed is going to be the focus of attention. Yeah. There are people that just think theyre too big a part o our lives. People want to get rid of the fed. Theyre on the far right, ron paul or whatever. I dont know what rand paul thinks at this point. But even auditing it thats more congressional oversight. Thats like out of the frying pan into the fire. Its pick the devil you know. Fed is bad enough. We Want Congress involved with these guys . Im not sure thats what we want. People are frustrated that Monetary Policy is so opaque. Thats what this is about. Its about how to get more control over Monetary Policy. We want an independent central bank. While its going to be a political issue, i dont know it should be. With you, what was your title with the Romney Campaign . I was policy director. Policy director. And you will probably have a role this time around too. Who do you think the candidate who are the three most likely candidates here . A lot of strong candidates. I like scott walker marco rubio, and jeb bush. Was one would expect i think those are the three performs well early on. Cant rule out chris christie. Hes got a tremendous ability to connect with people at the end of the day. Then youve got rand paul and ted cruz in that segment of the party. I like scott walker. I like rubio and jeb. They all have forwardlooking ideas. One of the things that really bothered me about the Romney Campaign you were in a Decision Making position then . Yeah. Soy tried and tried and tried to get the romney camp to bring their candidate on here to talk about private equity talk about wealth, talk about all the things that he could have addressed that hurt the campaign. Were you the one not allowing him . I mean i had major problems with gail getting people on. It was the Worst Campaign ive ever seen run in terms of how did i mean youre telling me these other three guys are using the same people romney used . We lost so we could have done things better. No question about that. One of the things for governor romney at least is its a shame that people didnt get to see him for who he really was. I know. He could not defend private equity . He couldnt find a way to show that is capitalism and its something that saves more companies than it destroys . Even hormats would agree with that, probably wouldnt you . Im a believer in capitalism. Get money to the market. The market puts it to work and we have more growth. It works well. He got beat by amateurs in terms of defending capitalism. Republicans will have to do better to beat Hillary Clinton, i think, in 2016. That being said i think shes beatable. She may be pulled to the left. You saw the editorial over the weekend. And omalley is getting Standing Ovations in iowa . I dont think people could pick Martin Omalley out of a lineup. Could you . I could. The boston globe oped now is saying it. They need someone to step up. Because her without a primary i think is going to be damaging to her prospects in the election. I think her with a primary becomes damaging too. Because youre forced to move. This is what jeb bush says. Id lose the primary if i can win the general election. Going to the primary pushes you too far right or left. Do you think these guys will beat each other up . When you have a narrow turf of land youre fighting over distinctions become very fine and things become quite nasty. Thats why primaries are difficult. Youre fighting over such a narrow piece of turf and the ideological differences are limited. I hope they dont beat each other up too much but its certainly possible. Youve seen the demo calculations done. This one is different than four years ago which is different than four years ago. You could not win demographically, bush would not win now, kerry would have won. Its a totally different landscape right now. And i dont know. I know moderates have lost three or four straight elections for republicans. But this does not seem like the time to be alienating the center. Thats right. The demographic challenge is significant for the republican party. Thats something theyve been working on since 12. The 14 cycle was promising. That was a midterm cycle though. When we get to 16, republicans to have make that outreach to communities that dont typically support republicans. Jeb said you have to lose the primary to win the general. Hes not going to engage in a lot of mud throwing. You figure there will be mud slung at him. Once youre into the campaign season, its hard. If youre attacked how do you not fight back . Thats going to be a challenge for both governor bush and for Hillary Clinton on both sides. Becky made a central point. Primarying pull you to the right or the left. Wed have a better general election if we didnt have primary that pulled people dramatically to one side or the other to pick up a few fringe votes on each end. I think it would be a better outcome for the country if we didnt have that process. Our friends are here again, did you see this . Yeah we saw this group last week. This is a Running Group that comes by. Makes you feel good in the morning. Very energetic. Lahnee, thank you. All right, lahnee. Pick some new people. See what happens. Will do it. Thanks, joe. When we come back this morning, a pair of two seeds eliminated from the ncaa tournament yesterday as Michigan State knocked off virginia and Wichita State beat kansas. Dave briggs is here to talk about the games including the now crying villanova pick lowcalo player. I saw that. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back. Lets talk thats how the conversation went during the break. Lets talk college hoops. Two seeds had their dreams shattered over the weekend. Villanova, thanks. Kansas and virginia are out. And our producer told me virginias battle tested. Really . Joining us now is dave briggs with nbc sports. What i like best about your notes is youre saying five best teams is still in there. Who knows what you said before. You know what i say . The 16 teams that i picked are still in there. I would have said a week ago the five best teams in the tournament are kentucky duke wisconsin, arizona gonzaga. Theyre still in there. You shouldnt no one should be stunned villanova is out. Somehow you are. Nate silver told me yeah. His probability was terrible in this tournament. I dont know. Liked at too many things. He called the election we did not call this. Also the you never asked the a single thing. I said do not take villanova and virginia. You have 11 teams. I have 10 out of 16. You were shooting for mediocrity. You were shooting not to lose so youre doing all right. I pitched iowa state. I should have picked Wichita State and North Carolina state. How many teams do i have left in it . I didnt look. Sorkin is almost in last place. The stunner i think is actually ucla. We have a guy who picked ucla. This is a team nobody thought should be in the tournament let alone the sweet 16. This is a team when they played kentucky earlier this year they lost by 39. They were down 417 at halftime. This is one of the worst defeats in College Basketball history. And here they are. Some amazing things. Wichita state people think its sindcinderella, maybe not so much. You can call them the pretty woman. That came out 25 years ago today. This is a top 20 team. Can they beat kentucky if they need to . Look i dont think anyone should beat kentucky. Can they . They do have arguably the best back court in the country and are good big guys. So theyve got a shot at it. You know what someone said yesterday about kansas . Those are young kids playing against men. Can we put the piccolo girl back snup she was the hero of the weekend. She heroically fought back the tears and played the piccolo through the pain of villanova losing. I was crying watching that. The piccolo girl is the tough girl of the tournament. I was so upset about that. North carolina state looked great. North carolina state looked very athletic. These teams peak later. You cant know that before the tournament. You cant bet against tom izzo. Hes been to the sweet 16 seven out of the last eight years. That sun believable. Thats why i have them in the final four. Tom izzo is outstanding. How about xavier . Theyve looked good. As good a Tournament Team weve seen over the last 10 15 years. Xavier produces every year. So notre dame Wichita State. Who we got . I thought notre dame was this one team in that region to knock off. I think notre dame wins that game, but kentucky still looks far and above a better than everybody else cincinnati played them tough for 16 minutes. Theyve played an outstanding game. They played their best game and kentucky shot 37 and still got outrebounded and won by 13. Kentucky will bore you to death. Theyre that phenomenal. Wisconsin, can they go . Wisconsin will go to the final four and can beat kentucky. Again, i dont think anybody will. I took duke to beat them in the final. Arizona didnt look good when they started out the date. And they were strong. Shawn miller produces in the sweet 16. Another team that could win the national title. But its going to be kentucky cutting down the nets unless my dukys can get it done. Thanks for talking me out of kentucky. Villanova, joe . Jay wright cant coach in a tournament. Threepoint shooting teams never do well in the ncaa tournament. You read too much. You learned too much. Well be right back. These days, the most important person in your business could be a software developer. So, hows the app coming . Weve got to make something great. Hows the app coming . Weve got to do it fast. Lets do this on bluemix. You can build apps with analytics, big data, even ibm watson. That could give us the edge. Lets do this on bluemix. It can provide code for you. We could be first to market. Because being best is priority one. Being first is priority one. Theres a new way to work and its made with ibm. [ male announcer ] your love for trading never stops. So if you get a trade idea about, say organic food stocks schwab can help. With a trading specialist just a tap away. Whats on your mind lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move wherever you are. And start working on your next big idea. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Our guest host today is bob hormats. A quick thought maybe on russia. Yes, i think russia weve talked about isis. Isis is very serious. Russia is also trying to push out its area of influence in eastern and central europe. Theyre convening support from a lot of fringe right wing and left wing parties in western europe. Their goal is not to just divide and weaken ukraine. Its to divide western europe. They have to stiffen their act, Work Together on energy and a whole range of things. This is a serious middle term and longterm threat. Thank you so much for being here today, bob. Really appreciate it. Good to be with you. When we come back we have stocks so watch. Also Scott Spurling is a member of the Madison Square garden board. Hell join us next on the economy. Plus squawk market master peter fisher. Stick around. Squawk box will be right back. Edith piaf no regrets plays throughout 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. The art of the deal. Scott sperling is here to talk the state of business and where he sees areas of opportunities. This investing ideas are ahead. The stock has been soaring up nearly 70 in a year. Well talk biotech success and sector valuation with the companys ceo. And inside the lives of the superrich. The names bond. James bond. The collector loves the cars of 007. Robert frank goes on the secret mission. Squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick with joe kernen. Andrew is off today. Joining us now for the remainder of the show is scott sperling. Great to see you. Thank you. We have lots and lots of talk about because we havent seen you in quite a while. Before we get to that, lets look at the futures this morning. At this point, things have turned around for the dow. It was down by about 55 points at the low levels this morning. The s p futures are relatively flat and the nasdaq is too. This is coming after some ups and downs last week but ending things on a strong note on friday. In europe right now in some of the early trading, you can see theres still weakness when it comes to the cac in france. The dax in germany down 1 . And in greece that market up by just over 2 . Heres whats happening right now. Goldman sachs sees no bubble trouble for risky assets like stocks. At least not yet. But the firms chief Global Equity strategist says the chance is there because rates near zero have pushed many investors up the risk curve. In energy news saudi arabia said it will not unilaterally cut output to defend prices. The minister pledging the kingdom would only consider with nonopec producers. But guess what. Thats never happening. United states is the biggest producer at this point and that is not a statecontrolled entity. This is something where Companies Make their own decisions. Oil prices right now, you can see wti is down by about 40 cents. The contract flipped. It is now may of 2015. And starbucks ceo Howard Shultz say employees are no longer to write race together on drinks. But the coffee chains Campaign Last week set off a ton of criticism. It involved messages on the drink cups and was always scheduled to end yesterday, they said. Few stocks on the move this morning. Staples upgraded to buy from neutral by ubs. Lululemons price target was cut by 3 to 55 at canaccord. A weak start to the year will lead to cautious orders. And biogen was downgraded by nicklas. It had been at buy, now hold. Citing a number of factors including valuation and ongoing concerns with possible patent issues. And the Market Indices are sitting at near alltime highs. Cnbcs dom chu with a look at how we got here and where were headed. I just got hammered for having villanova. Thanks dom. Didnt you win a couple of years ago in. I did. And i believe i was at a competing network at the time and i beat you. You were in second place back in 2011. I had picked uconn that year. If it makes you feel better i picked villanova in my bracket as well. And its been you know i dont even want to talk about it. Between iowa state and i pick sod many wrong ones. Me too. I know. Anyway, weve beaten this to death. But i fall you and pick villanova. Thats what i get. I wish i could have Something Better to say about that. At this point im hoping kentucky just loses. I like kentucky but theyre the only shot i have of doing anything is if everybody else gets taken out. I want North Carolina state or Michigan State or xavier to win. I would do. Anyway, lets talk about this. Becky had mentioned this idea that the dow has turned around right now which means we could have the possibility of testing that record territory again. So lets take a look at this market record trifecta. Between the dow, s p, nasdaq were just a stones throw away from the intraday levels. Were less than 1 away from its record intraday level. So not too far away. A good market day and we could see that happen. The s p 500 also just a half percent away from its record level of 2,119. We closed at 2,108 on friday. And the nasdaq is 2 away from the record intraday 5,132 that we havent seen thins the dotcom bubble. Now take a look at some of the stocks that have been powering things over the past week. At the dow, the best performs stock for the past week has been nike shares up 5. 5 . Big story there. Earnings related news on that front. Also if you look at the s p 500, biogen you mentioned the downgrade they just got. And well finish off here again with whats happening with the nasdaq. The large cap stocks overall. These three stocks biogen rementioned before. But also regeneron and American Airlines group all up between 8 and 11 . Those three stocks have been driving the nasdaq. Theyre some of the largest market Cap Companies there. Becky, if you look at whats happening overall with the market some large cap stocks especially headache have been driving things forward in the s p over the last week month, and year to date. Health care stocks have been the standout. Thank you. Again, dom chu. Dallas Federal Reserve fed president Richard Fisher had tough words for Market Participants last week. What worries me however, is how lazy investors have gotten. Totally dependent on the Federal Reserve. I find this to be a precarious situation. But all im saying is right now in terms of the real economy, we are growing, others are not growing as well as we are. Were still innovateing and inventing. Lets get one of our squawk market masters to weigh in on this as well. Peter fisher is also a senior fellow at the tucks school of business. Those are tough words. Investors are lazy at this point. Would you agree with that . No i dont quite agree with it. I see what hes getting at. I think the feds been targeting asset levels for half a decade now. I think investors have gotten habituated to that. I think some things make sense, some things dont make sense. What makes sense is the fed moved closer to being able to raise rates. It also made sense that the fed lowered its path for the funds rate. Their path was too high given how low inflation is. But zeros the wrong number. What doesnt make sense and i guess i part agree with president fisher the market chose to rally on that. Now, unfortunately i think the chairman also encouraged them. The chair yellen is still trying to create an immaculate tightening in which theyre going to raise rates. But no ones expectations are going to be changed, nothing will happen in the world. I think the fed is trying too hard for that. So i think id split the difference with president fisher. I think the feds still talking asset prices and the market will have to have an opinion of its own soon. What did you call that . Immaculate . Immaculate tightening. The fed wants to tighten Monetary Policy but not have anybodys expectations change. Meaning not having market shake up and go through it. So youre saying rip the bandaid off or whatever it may be at this point and let it rip and rates rise . One or two moves i dont think is going to tank this economy or this market. I think the economy is doing pretty well. I think there are a lot of Good Businesses out there. I think scott will talk about that later. Thats why zero is the wrong number. But the path the fed put in much too high a path on their little dot charts when they first started publishing those. They wanted to show how tough they were when they were doing qe. Now theyve got to walk themselves back from that too high path. What do you think . I think peter is exactly right. My sense is that the fed doesnt want to manage this so that theyre never accused of doing anything that could potentially tank the market. Some of that is a reflection i think of what fisher is saying which is the market seems to move with these announcements of potential fed tightenings. I think the reality will be that theres nothing to fear from these fed tightenings. Theres an enormous amount of capital coming into this country looking for a place that is safer and actually has higher growth than that available in the rest of the developing world and many advantages. I dont think if the fed says im going to start to put my foot on the accelerator, that its going to have a major negative impact on our stock markets as some people might think. You think long rates arent going up regardless of what the fed does. But you still want them to raise sooner rather than later because you say zero is the wrong fed funds rate to have with where the discount rate is . Can you explain that . I think were still in a deflationary world. But the u. S. Is in a different place. The economy is doing pretty well here. Look at business profits, Foreign Exchange translation, the unemployment rate. Theres a lot going right here. So zero is the wrong number for the riskfree rates. Shortterm Interest Rates shouldnt be at zero. I dont think the long end is going to back up that much unless the data changes, unless the economy accelerates from here. I dont think the fed really wants to slow the economy down. I get that. But a zero riskfree rate is just the wrong number. We should you know we had 2 inflation, a pretty good trade in the late 1990s but we did not have a 0 fed funds rate. I dont think a 6 fed funds rate is the right number. But zero is not. Is there a risk to being at zero or are you just saying its the wrong rate . If theres no risk who cares. Lets stay at zero. No, there are lots of perverse things that take place with zero. First, i dont think its enough incentive to save. I dont think we need a lot more debt. Id like to see more Equity Financing in this economy. I dont think we need more debt. We should still be working that down. Zero is just the wrong number. Its the wrong signal to our financial sector. I agree. Peter, its great talking to you. Love to see you in studio soon. I look forward to seeing your new digs some time soon. Thank you. Confusing though. Peter Fisher Stanley fisher Richard Fisher. Confusing. Weve been talking about fisher all morning long. One fisher or another, yeah. You guys are good at making news. We appreciate it. Coming up, theres a lot of sperlings too. Scott sperling talks investing and the fed risks. And later biomarin stock you got it now. Just sixes ago. The companys ceo joins us in just a bit. Mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and deba te invtment opportunitie s. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Its more than the cloud. Its security and flexibility. Its where great ideas and vital data are stored. With centurylink you get advanced Technology Solutions from a trusted it partner. Including cloud and hosting services all backed by an industry leading Broadband Network and people committed to helping you grow your business. You get a company thats more than just the sum of its parts. Centurylink. Your link to whats next. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back to squawk box, everybody. Weve been watching the futures this morning. And things did turn around pretty drastically. Youre looking at a gain of about now close to 60 points for the dow future over the course of the morning. Right now relatively flat but theres a lot happening, a lot of things still moving around. Well see where we get as we move close tore the opening bell. Our guest host is at the helm of one of the nations oldest estest private equity firms. Hes invested in more than a hundred Different Companies with a aggregate value in the billions. Weve got a bit of a beginning of thinking of some of the stuff that youre you belief in at this point, scott. But one of the first things you bring up in the preinterview is some of the geopolitical risks around the world. Do you think about those . I think we have to think about macro issues. Really . The things we cant control are macro issues. Now, most of what we do are how it affects specific industries. Because its hard to change industry structures. But its hard to change industry. Its hard to change the overall macro. Now, i think we live in a world where there are lots of good things going on. Particularly on the micro level. And i would say specifically in the United States. But we have this overlay of more geopolitical risks than i think ive seen in 35 years of being in business. Interestingly as well is that we become a little bit desensitized to it. So things that would have really royaled the market i think 15 or 20 years ago, we just kind of accept and we just keep on going. Some of that is because the things were seeing in areas like the mideast, the ukraine, are so difficult to know what to do about that you just basically say im going to put it over here. But the fact remains there are risks that can affect our trading partners in other ways. You know we think weve got everything licked at this point. You know what i mean . We dont think hes going to go into poland. That would be but then you have guys like isis where they cut peoples heads off. Things we dont have licked. Just because its the 21st century doesnt mean that crazy Global Pandemic Something Like that. I was at a great event last night that had lot of people involved in Diplomatic Community in boston who were there. And the theme is the normal theme of freedom. And we listened to a holocaust survivor talk about the horrific nature of what this individual went through 70 years ago. And then we listened to a woman whose armenian christian who went through the same things today. Its hard for us to understand the nature of whats going on. But when you think about it so much of the world is now being subjected to these horrors. And, again, as you point out were not really making a lot of progress in that regard. So you really have to say toif put that aside to some extent. Those are things i want to deal with. I want to make it better. But yes. At a risk we cant control unfortunately. Pakistan has a nuclear bomb. North korea has one. We are never going to prevent iran. Ill put that aside. Our capability to understand the intelligence that goes into being able to predict whether somebodys really going to pop up with a bomb is not all that great. Do you think mutated bird flu or something . So lets come back to why actually im scared. We can be scared but were americans so we shouldnt be scared. Okay. We should move forward. Keep talking. When you move forward, you look at things going on that i think are pretty good. Like what . The United States has become more competitive as we know. A lot of it driven by the fact we have Energy Prices and stock prices that are making us much more competitive from a Cost Management perspective. Weve seen data on where United States is relative to china and other parts of the developing and developed world. And were in as good of shape weve been in in 30 years. Thats encouraging. I think the consumer here is in as good of shape as the consumer has been in a very long time. If you look at Balance Sheets theyve been recently deleveraged. And if you look at their ability to continue to participate as consumers for the companies that serve consumers, i think that exists. If you look at our Financial System, we have delevered the Financial System in very dramatic ways. The major banks probably have half or less of the leverage they had back in 2007. That helps protect them and helps protect the overall system. Does it make it a good investment though . Lets put that aside because thats a different that is a very interesting question about whether they can generate the r. O. E. S. They clearly cant in they way they did but they still may be reasonable investments relative to other things. But the other piece of it is if you look at other parts of the world, i would argue the european Financial Institutions not so much. Theyre Still Holding leverage levels much higher than our banks. And that assumes all their assets are worth par. And i think most of us would suggest thats not the case. So there is vulnerability. I think the United States increases its competitive advantage in lots of ways over the developed world and over much of the developing world. China still good growth. But more vulnerabilities, perhaps, than wed like to see. Brazil has been a bit of a mess. Russia is a bit of a mess. India has lots of great fundamentals but also great challenges. So when you look at the brick countries that were the great hope for growth its really a bit of a mixed bag. I think the United States has been a great place to be from a very fundamental perspective. Then youre looking, not looking to sell. Were not looking to sell. Then youre looking for things. Youre not looking to sell things. Well we do both. Were always we are what we are. Which is were transient owners. Were looking at both. You can do interesting things and create value. Then its time for realization. This is a good market for realizations given where the price levels are. But its not crazy high prices. And i think there are segments that you can argue have gotten a little bit frothy or maybe even more than a little bit frothy. Some of the things on the Technology Side theyre clearly some Great Companies there. But a lot are getting the sound alike benefit they shouldnt. Scott again is our guest host this hour who will join us for more as we get a little later into the hour as well. When we come back this morning, taylor swift trying to stay one step ahead of the porn industry. We will explain after the break. Here are the futures of this hour. It looks like things have turned around relatively flat. Dow futures down by 3. 5. S p futures off less than a point. Squawk box will be right back. So whats going on today . News alert message email calendar update most of us admit to being overwhelmed by information at work. Thats why ibm created verse. It uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. It continuously learns how you work. And helps you prioritize the people and projects you need to focus on. Theres a new way to work and its made with ibm. Hello. I am here to offer sophisticated investing strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com theres a difference when you trade with fidelity. One you wont find anywhere else. Onesecond trade execution. Guaranteed. Did you see it . In one second, he made a trade we looked for the best price and the trade went through. Do the other guys guarantee that . Didnt think so. Open an account and find more of the expertise you need to be a better investor. This is smart and giving me ideas. Taylor swift is staying one step ahead of the porn peddlers. Thoept they want to use her name on the web. She bought domains like taylor swift. Porn tailor swift. Adult. Sucks is another one. Its in the prompter folks. Really . Yeah. It becomes available to the public. Sucks . Yeah. I dont want joe kernen. Sucks is out there. Well give you money, but we want the rights to any of your porn enterprises. That would be yeah. I just want royalties. Who knows how much money that could make right . You, taylor swift in porn. Yeah. Very similar. Its a tossup. Sucks. This is news to me. Im buying that one. Im buying that one. For me. When we come back is there a biotech bubble brewing . The ceo of biomarin will join us to talk about his companys stock success, the future of medicine, and whats driving in the space. Take a look at oil. Its down but not by as much as it had been. Down to 45. 93. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. Welcome back to squawk box, everyone. The futures this morning look like they are relatively flat. Thats an improvement over what we saw earlier this morning when they were down about 55 points. Among the stocks to watch today, Railroad Operator kc southern is warning their Quarter Results will miss estimates. Theyre blaming sluggishness amongst energy customers. Biogen dropping idec from its name. It comes 12 years after the companies merged. Its been 12 years . Wow. Shares trading lower this morning on a downgrade close to 2 . Janet yellen may not be the best stock picker. July of 2014 she said valuation metrics in some sectors do appear substantially stretched. Particularly those in the social media and biotech industries. Since that call the nasdaq biotech index, up over 40 . Yep. And in taking a look further back, the sectors been up over 300 over the past five years. That beats most of the averages. Biomarin pharmaceutical is no exception. It continues to hit new highs. Up 60 over the past year. Up 450 over the past five years. Joining us now with what they have in the pipe line how theyve achieved this success is the ceo of biomarin. Welcome. Its good to see you. Thank you. Great to be here. You i tried to figure out if there was anything that ties all of your pipeline products together. And its hard for know see what it is. Theyre significant and important, but some of them seem more niche diseases. Duchene mousseuscular dystrophy, for example. You cant argue with your strategy because of what the stock has done. The Company Actually as you said has been always in the past since its inception the past 20 years, focusing on diseases where theres a huge a need. A small population but very serious debill dating sometimes lethal disorders. And, you know, weve been able to get products on the market. Today are the only markets approved. There is no competition for us. Debilitate de i can see where chairwoman yellen got into a little bit of trouble trying to gauge things. Youre almost a 20 billion Market Cap Company now. And if you were to use that valuation based against your annual run rate for revenues, it doesnt make sense. So there must be something bigger at work here. Yeah, i think its related to the fact that in addition to the five products we have on the market including the most recent one which is on a very nice launch trajectory and which is likely to propel a Company Beyond a billion dollars in revenue in the next two years, we have the largest pipeline of any Biotech Company focusing on a rare and ultra rare disorder. And the most advanced is this product you mentioned for muscular dystrophy. We have a rolling nda going on. We should complete the end of next month. It is a very severe debilitating lethal disorder. And our product is only the only product that has breakthrough therapy designation in that space with the fda. That was from an acquisition too. Its a technology where you almost make the its a way that i guess you almost express the whole protein and its enough to where its not the whole protein, but it gets the job done much better than what the duchene people normally have . Thats correct. There is a variant of duchene muscular dystrophy where the mutation is not as severe and leave close to normal life expectancy. What were trying to do with our product is transform it into something more like becker. Thanks to our technology. And we have over 300 patients that are being treated in our Clinical Trial which is the largest data set in muscular dystrophy. Were excited about this product. You are in a buying mode though, too, right . If youre in the business for niche drugs, you must be constantly looking for ways to add to your portfolio. Not necessarily through your own research. That is correct. Although we have a pretty powerful research and discovery organization, but we constantly looked at other products potentially that could fit within our strategy. Over 6,000 Rare Disorders in the world. So theres plenty of opportunity to discover new products where the biology of the disease is well understood. And i think that the state of big pharma in terms of being able to identify niche treatments i dont know. They dont seem interested and i dont know their whole rnd, im not sure of that approach. Biotech. Its hard to imagine that it is overvalued given the potential with where we are in molecular biology. Were on the cusp of so many things. Big pharmas not going to do it its going to be you and guys like you. Youre correct. I think its related to the fact that the valuations today are the reflection of decades of Scientific Research in the biotechnology area which are coming to fruition today. I think thats what investors are realizing. And for our company specifically, our dew you guys might want to talk, i think. I agree with the construct and as i mentioned to you i think the medical Research Going on right now is really phenomenal enabled by a set of tools in terms of genetic sequencing and the use of big data that didnt exist. That is allowing the development of breakthrough drugs in so many different areas. And i was only semijoking when i said if you look for the next ten years, youll make it beyond that. I really do see the pace of drug creation to deal with many of the diseases that over the last 30 or 40 years we found very difficult to deal with is huge opportunities. Cancer diabetes. Yeah. The breakthroughs were finding to stimulate the immune system to deal with cancers and other sorts of disease is really pretty amazing. The ability to do very high speed gene sequencing technology, that will have Clinical Applications nap will give the ability for patients to walk in and have the disease itself whether its bacteria or virus sequenced. Then you can have much better targeted treatment for those sorts of things. I want 30. Dont try to sell me 30. I want to live 30 more. Its 30 plus 10. 10 and then 30 . 40s good but if i make it 40 i might go 500 from the singular singularity singularity. Theres no reason. Coming out of google its good. Yeah. I would have put google in the dow. Anyway, next his name is frank, robert frank. I know two first names. We dont trust people like that. And hes our special agent investigating the lives of the superrich. And this next character loves the cars of james bond. Check out this collection next. The lightest or nothing. The smartest or nothing. The quietest or nothing. The sleekest. Sexiest. Baddest. Safest,. Tightest,. Quickest,. Harshest. Or nothing. At mercedesbenz we do things one way or we dont do them at all. The 2015 cclass. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Take a deeeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim before i knew it. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] bond, james bond. The latest season of secret lives of the superrich premieres tomorrow at 10 00 p. M. Eastern. It includes one topsecret car collection. And frank, robert frank has more. Good morning, joe. Thats right. Its a ageold debate. What is the greatest james bond car of all too him . When youre super rich, you dont b have to choose. Buy them all. Secret lives went inside the garage of Miami Real Estate tycoon gill deezer. Heres what we saw. This is the largest collection of james bond vehicles anywhere in the world. This place is cooler than qs laboratory at m. I. 6. Its called the vanquish. We call it the vanish. Theres the disappearing car from die another day. And part of what makes this car cool is it had the machine guns on here. He also owns the green one that the villains were driving. This is the halle berry car here. We have the original rollsroyce rollsroyce. But his favorite is the classic db5. This is the classic from gold goldfinger. Everybody remembers the ejector seat. This looks like a sunroof. But in reality, it would pop open. If you look inside theres a lot of switches and things you probably dont want to touch. Its a fun drive. It gets a lot of great looks. Its the largest collection in the world. Hes got the back to the future car, the flintstones. Does that seat really work . I dont think so. But this garage its incredible. We just showed you the bond piece. Hes got over 1,200 cars. Fake machine guns. Look its kul. The db5 another one used in goldfinger sold for 4. 6 million. Just the bond collection this guy has alone is probably worth at least 40 million. Hes got 1,200 cars. No one has heard of this guy. You see the richest people youve never heard of. Does he have herbie . He does. He has herbie. Every movie car you could ever think of is in that place. Mad max. Hes got everything. But not kit because ive seen kit. There are a lot of kits. They used a lot for the tv series. They did . They sell them once in awhile. There were a lot of them. The bat,mobile is famous. He didnt have that original. That sold over 20 million a few years ago. Thats one he does not have. Just about everything else. They made their money in real estate. We have guys who made their money from car dealerships, beanie babies handbags. So part of the show is the stories behind how people got there and what they do with it. How many are you doing this year . This is season four. This is six episodes. But this time this is whats exciting. Were actually putting backtoback episodes. So its a full hour of secret lives. Do you own those shows . Youve got nothing, do you . I got the greatest job in the world. Thats not nothing. But they really do well. They do. This season though is amazing. You have an agent . Let me give you here. Your secret email . Thank you. Looks great. Thanks. When we come back this morning, Cramer Jim Cramer will be joining us from downtown new york. A big week ahead for the markets. Were on earnings warnings watch and Economic Data well get this week too. All of that on his radar list. Well speak to him after the break. Its more than a network and the cloud. Its reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions, including an industry leading Broadband Network, and cloud and hosting services all with dedicated responsive support. With centurylink as your trusted Technology Partner youre free to focus on growing your business. Centurylink. Your link to whats next. 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. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Get down to the new york stock exchange. Jim cramer joins us now. Jim, its like the uncertainty. Its impossible to try to pick. And, you know we shouldnt be surprised when things happen. We go how did that happen . Because we have no idea. We have no idea. You introduced me to Wichita State last year. So i was thinking about you during that game which was one of the great games. If only because, you know there you have a team that comes out of left field and is so exciting. You say to yourself who can game this stuff . Its all about emotion. Its all about onetime only. Nova was a huge disappointment for me. For the whole school. Wow. I know. Im stupid. I thought if you cant get inside then you can shoot three pointers you can beat anyone. Unless you cant shoot three pointers when it matters which is what happened. But isnt it amazing how it still got such resonance that youre just glued to the games . Everybody wants to do something this weekend. It comes down to let me see how this game finishes. Thats what i was saying about commercials. If you want to advertise and get your name out there, ive seen some of those commercials from the big companies, 30, 40 50 times and i sat through them. You know, thats a way to reach people still, right . Yes. Because you also dont know how long the break is. Sometimes you think i have a minute and a half. Then the game is back on. Wow, that was one of the 20second ones. These guys are brilliant in programming. Right. And i read the piece on you know tru tv you would think would fall by the wayside when we unbundle until march. You cant miss these games. For all you know one of the games in your bracket is there and you have to watch that game opposed to the game everyone else is watching. Man, it really highest ratings in 25 years too. I just think its just really neat. Its deserving. The Michigan State game. Where the heck did they come from . The answer is they come from march. They are just a team that appears in march. Doesnt matter what they do. You cant bet against them. Then you feel crumby that you forgot. Poignant too. You saw you saw the coach at Georgia State with his son. The press conference. I know. Awesome. Whats going on businesswise . I thought your interview was fantastic. It is the future. It is amazing that that company has got a huge market cap because they are developing things that the big caps cant. I keep listening to biotech. I know the group is overheated, but what do you do . You come back to this group when it comes down because these companies are developing things. Sperling was saying the same thing. When it comes in youve got to buy. Is it the r d people at the big pharma firms, are they just trying to develop for too big a mark . They dont focus on orphan drugs or smaller diseases. You can learn a lot from the smaller disease toossdiseases, too. You had j j, there goes abvi buys the other half which is completely unlike abvi to do something that some would say is desperate. But they cant make up for the patent. Just great stuff when you had jj. Jjs so good. Hes an mba, too. But you dont need to necessarily thats what i say. Even the Pharma Companies youve just got to look at the people that are doing it and bring those into the fold and then you can do it i think. You need to be an entrepreneur. If you took it to tech these are the entrepreneurs and the old Line Companies need entrepreneurs or else they just become ibm or hewlettpackard, which obviously need more entrepreneurs. All right jim. See you guys. Does xavier got a chance against arizona . I hope so. How about notre dame or Wichita State . I need that so bad. Notre dame is key to my other bracket. You take notre dame all the way . Yes. Thats what i thought. I thought you had villanova. I did two. The notre dame one i didnt want to be kentucky. Everyone was kentucky. Now im going to regret that. I know. Kentucky looked awesome. Anyway when we return guest host and msg board member scott sperling. Check out the futures. Which are back down in the negative again. Only 14 points so far on the dow. Help join a continent with nearly 3 million rugged square miles with a single broadband connection. When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. A Left Wing Group called hedge clippers targeting a protest in front of dan lobes building at 15 Central Park West this weekend. Among other things group says it is upset about the efforts in the new York State Senate to block higher taxes on the wealthy and to privatize public schools. Charter school is something hes been very involved with. Hes so involved. You know puts fill lan tlop ss so much money into trying to help people one way or another. Its annoying. Madison square garden making waves as the companys ceo took the helm. Reports also circulating about potentially costly fees being passed on to customers from msgs expected split. Lets get insight from scott sperling, and msg board member. You went on the board last fall . Just recently yes. I guess it was announced last fall when we first heard about it. Part of that was because there was an activist investor that had filed and became let it be known that it was going activist back in august of that year. Capital jt capital . So youre there. Nelson peltz is there. Is this a way of kind of trying to make sure that the board is thinking about what an activist would want and trying to be an activist from the inside . Again, the nice thing about having insiders be such large shareholders is i think theyre very concerned about shareholder value and shareholder rights. Its a good group and i think nelson and i bring some additional perspective in terms of representing shareholders to bear. But i think its just consistent with what the companys been trying to do for a long time. The idea of splitting msg. Obviously this has been something that was already spun off from cable vision. The idea of splitting it would be why . What are the advantages . Its hard to talk about it because of the public violence that were making but the argument is that the value of some of the assets are enhanced by separating certain ones from other ones. And as youve seen with a number of other situations in the corporate world over the last couple of years, the potential to have the two pieces trade to shareholders who more value that type of entity whether its from a growth or a asset value perspective, well both trade at higher prices. Thats the theory behind these sorts of spins. Its a phenomenal asset collection. I think the company has been run extremely well. And i suspect that the two pieces will continue to have strong management and again, you have insiders who own a lot of stock that are highly focused on making sure that value continues to rise. You take your tickets . Knicks tickets. Theres always next year. You can get floor seats. You dont have to answer that. That look like a nod . We couldnt accept those anyway. You sure . No. One of the things weve talked about is live sports and how that is really the key to mustsee television. That you cant dvr. Right. Live sports clearly has been propelling the value of Cable Network assets the Regional Sports networks. Live entertainment continues to be very powerful. As you say, you cant really dvr it as effectively. You can dvr it but people find out what happened. Businesses. So they dont like to do that. So its the one area that you know that youll attract a Live Audience and can have some influence. Its an area that has had significant increases in rights fees, and again, thats propelled the value of Cable Networks of sports teams, and of other live entertainment. Let me ask this. If msg gets smaller and smaller, but does it then make it a potential target makeover . I know the doans add Something Like 60 of the Voting Rights but if theres a deal put on the table yes you have pieces that are more homogeneous, so by definition who knows what might happen, but its hard to address. Okay. Scott, we want to thank you so much for being here. Its always a pleasure having you on the show. Youre very welcome. Youre not down here that much, are you . If the tickets are going to go to waste, i think we could probably. I just dont want empty seats. Thats not good for anybody. Exactly. Thanks scott. Theres a Good Business reason for you to have them. Squawk on the street is next. You know that is a great question. Are you going to go our way . Good morning and welcome to squawk on the street, everybody. I am Brian Sullivan with jim cramer live from the new york stock exchange. Both carl and david are off. Stock futures are bouncing out a bit. Weve got a big economic day as well. Existing home sales, 10 00 a. M. Youve got the Federal Reserve, Stanley Fisher speaking at noon. Oil down across the board. Again, saudi output rising