Transcripts For CNBC Squawk On The Street 20140314 : compare

the crimean referendum, of course, is this weekend. the roadmap begins with continuing global concerns led by china and ukraine. have the markets looking at a modestly higher open this after the major averages logged their worst day since february 3 period. general motors is firing back that air bag failure in recalled vehicles resulted in more than 300 deaths. target admitting it did not take immediate action after security software originally alerted the company to malicious activity after the data breach. and mark zuckerberg calls president obama to complain about the government's surveillance programs. first up, though, thursday, the 13, was bad luck for the bulls as worries about a slowdown in china and rising tension between ukraine and russia helped spark a market selloff. all 30 components finishing in the red. and the s&p has fallen to negative territory for the year and the nasdaq posting a decline for the fifth time in six sessions. the s&p has only had a year-to-date gain nine days this entire year. and we're in the red once again. >> well, we're taking our cue, i saw when i got up early it looked like europe was stabilizing, you know, our futures were up and things looked fine and then europe flips as the redder it gets worse and the next thing you know you have markets down 2%. germany is down 0.6 when i last looked and germany should be down the most but we also keep hearing if russia market keeps going down, that putin will rethink because he's a capitalist after all. he's not acting very capitalistic and that's partly of what we're worried about. >> so, ukraine continues to be a concern or even more so programs the primary concern for the market? >> well, i think nothing happened in china last night. i think that china is just this ongoing deceleration theme, how they're spending their money, they're not obviously not buying a lot of stuff because we watch copper and copper's bad. i always come back to what happened in '39. in 1939. well, that's because the europeans even when everyone thought the euro was going to break up. they heard about peace. they never want to go back to there's a plebiscite, they never want to go back to the free city of danzig. they regard what russia is doing is very similar to what hitler did. not to analogize to hitler -- >> although hillary clinton basically said the same thing from last week. >> these people are not going to stand by, but what are they going to do? what did they do in 1938? they said, okay, listen, czechoslovakia is all yours and then danzig, no, they stood up to that. >> the russian army is not going to roll through western europe. >> that's my point, maybe we are overdoing it to a certain point the russian army is not going to roll through europe. >> amassing russian troops ahead of this weekend is trying to demonstrate how easy it would be to move into ukraine if he wanted to. >> i just don't think that this is the next site. not the crimean war either. but the europeans are uniquely worried about the 1932 to 1939 period. and how fascism came about and you'll hear putin's a fascist. >> and a much bigger trading partner with china than certainly we are. they are getting on both sides to some degree. >> listen to warren buffett and he had more to say other than creighton is going to go all the way. he said, look, you have to stay the course and sometimes i find when i listen to him and he says stay the course, and you just kind of say, stay the course. i don't like arguing with him? maybe the ibm buy wasn't so good, but this arguing with warren buffett thing, it's just never gotten you anywhere. >> buffett was asked, by the way, whether he sold any assets because of the ukraine and chinese concerns. here's what he said on "squawk" -- >> not warranted in terms of the market. i didn't sell my farm yesterday. i didn't sell my property down there at nyu, so why should i sell my businesses? >> the most he said was getting out of catastrophic insurance because the rates are so low. >> right. i know that's been the cat insurance. you have to do it in bonds. he's talking about wells fargo. let's use wells fargo as an example. the interest rates have done down. a lot of people are worried about mortgage originaloriginor. he's taking a longer-term view and we can't do that, but maybe we can. hedge funds want to sell, they're worried. maybe there is action because of the plebiscite, and you immediately think about the plebiscite that was supposed to happen and then there was vienna. and i only point this out because you don't want to be that historical when it comes to the stock markets. europeans. >> right. >> it's always september 1st of 1939 over there. >> i suppose. although back then nobody actually had a nuclear weapon. >> no. >> now france does. the uk does. >> and remember how chamberlin said i'll go over there. they don't want to deal with putin. the hedge funds figure why don't we get sure. the worse that happens is nothing happens this weekend and i'll cover on monday. it's an easy s&p trade. was there any s&p stock up yesterday? >> there was the worst breadth sense the february 3rd low. >> do we think that every company is really deeply hurt by what is happening? no. someone was tweeting me, how about rite aid, do i buy rite aid? you don't sit there and say this is the time for rite aid but we might look back and say why didn't cramer say it isn't the time with rite aid? >> you are praying in the church of buffett this morning. >> i'm just saying that everybody else is praying in the other church so maybe it's time to go across the street. >> makes sense for me. he hasn't sold his farm and the property by nyu. he likes to talk about them. >> march madness, win the bracket? >> it's exciting. >> would you take the lump sum or the 25 -- what is it $25 million? >> let me tell you the way i feel about it. when nova went down to seton hall and they were going to be first seed, my world turned upside down. and now se ba-- >> they should do $2 million it's so hard to pick this year. >> before we move on to gm and i want to. we talked a lot of geopolitics here. it's not our area of expertise necessarily. let's assume the rush een army not going to roll through anything but if there's higher hostilities for a longer period of time, it would be a negative. >> the peace dividend and winding down our operations and, of course, the generals are saying that we're the weakest since 1939 completely untrue. but i just think that, look, this is not an environment where you want to stick your neck out and say i want to be long international stocks that have a lot of business in europe and china. but is that cvs, for instance? is that cbs? you could mention lots of stocks and say is that dominion. do you buy southern? kinda. yeah, buy aep. it's fine. by southern. >> right. >> those are really what you buy when uf think that there could be a march on kiev. but i think there's a lot more stocks to like than dislike but no one wants to hear that because the world is coming to an end. >> it only takes eight shuts on the electricity grid to wipe out the whole thing. >> tesla hasn't reinvented -- wait until they can reinvent the grid. wait until they can sell cars in new york. let's get to general motors, it is battling claims that the air bag failure in recalled vehicles resulted in 303 deaths. it was part of the ignition switch recall and gm said it was based on raw data from safety regulators without what they call rigorous analysis. the company is under heavy criticism for dragging its feet on taking action on the defective switches which it has apparently known about for upwards of ten years. >> yeah. >> stock's been getting hit. >> at a certain point. >> clearly. >> my charitable trust owns it and i sit there and say is there a level, how about 4%. the headlines are so bad. and you got the mt. everest chart, holy cow, head and shoulders. >> the government made a really good sale here. >> government looking good. tim masset, nice sale. >> you think he was talking to -- maybe the department of transportation? >> department of transportation might be short the stock. >> kind of like the fdic knew about fannie and freddie. >> and it might affect the restructuring to begin with. it could get very messy. >> one thing is for certain when you have a headline every day like this, a lot of people just say get me out of it. that's been a mistake. but think how long it took for bp to get back to the gulf. today four years. >> four years later. >> and bp was at $70 and then it was at $60 and then $50 and how bad could it be and then $39 and the answer is the dividend's in trouble. i understand. i don't think the dividend is in trouble at gm. >> remember merck? >> $27 with vioxx. >> right. by the way -- >> the ceo's wife was taking vioxx, if it was so bad why was she taking it. >> they fought through it extremely well, it took a while. >> it took a while. i don't know if you've ever taken vioxx. you ever taken it? >> no. >> what a fabulous drug. better than celebrex. >> celebrex is in the news. >> yeah, celebrex. geez. i don't know. speaking companies that have a legal trouble ahead, retailer target has acknowledged that its security software did warn it of potentially malicious activity during the december data breach but decided not to take action at that time. earlier reports said the type of alert received by target is often received and may have been tough to single out as being particularly harmful. big piece in "business week" last night. basically said fireeye did their job beautifully. but target for whatever reason did not react. they got the initial notice, i'm trying to see here, on november 30. and then justice came along on december 12th and said, hey, you got a problem. >> fireeye is really good. i was thinking that, well, did -- the question was did they have -- what did they know, when did they know it. obviously this is going to be the big sea change. reading the verifone conference call. and they're talking about, look, we need to get a whole new generation. but it seems like all you really needed to do was bring in someone who understood and had to realize the threat assessment was the issue, the target's threat assessment of what fireeye said. but it is nice to know that there's someone who was able to at least read this. >> yes. >> fireeye's been on telling you, we can read this stuff. >> we've been talking for some time now how general breaches whether they be data breaches of this type, designed to steal credit card numbers for profit or the chinese engaging in significant espionage to gain corporate secrets essentially, this is a board-level problem now. no doubt about it, throughout the s&p. >> right. >> and has to be a board-level issue at all times where when you're in there, they've got to be saying to the ceo, where are we on all this stuff. how confident are you? what are the systems? what are the checks? where are you? how are you going to know? how quickly can we get on top of something when we do learn about it? >> i was at a board meeting yesterday for the street. which i found a long time ago. someone set up a bogus hr department online and pretended to be the hr department of the street. we nailed them in time. but you are thinking this happened to be a small company. but can you imagine -- why did they target the street? they are probably targeting a lot of people. setting up a bogus hr department. >> what are they doing? >> this money -- >> get your resume to somebody. >> still one more i can't -- that's a good scam. they were skyping with people claiming it was the street. i'm thinking holy cow. it was a board-level discussion. the bad guys are brilliant. and they just never stop. >> and to a large degree they are just getting started. >> i know. >> because technology is coming their way. >> yes, it is. you're right, it's a board-level discussion and everyone will have to have one, palo alto net has been my -- >> and mark zuckerberg sounded off about the nsa spy program and vents about it on facebook. we'll tell you what he wrote coming up. and we'll take the pulse of the consumer with staples ceo tom stem berg, stronger online sales have been a blessing and a curse for the office supply chain. one more look at futures having trouble getting out of the red here. a lot more "squawk on the street" live from post nine in just a moment. tall the building is, or how ornate the halls are. it doesn't matter if there are granite statues, or big mahogany desks. when working with an investment firm, what's really important is whether the people behind the desks actually stand behind what they say. introducing the schwab accountability guarantee. if you're not happy with one of our participating investment advisory services, we'll refund your program fee from the previous quarter. it's no guarantee against loss and other fees and expenses may still apply. chuck vo: standing by your word, that's what matters the most. ♪ ♪ feeling right got to shake it ♪ facebook ceo mark zuckerberg said he phoned the president to complain about the nsa spy program, its effect on the internet and the damage the government is creating for all of our future. in a facebook post yesterday he wrote, i've been so confused and frustrated by the repeated reports of the behavior of the u.s. government. when our engineers work tirelessly to improve security, we imagine we're protecting you against criminals, not our own government. strong words. a lot of discussion about just calling up the president. how you get that number and how you get the nerve to make the call. and then others saying, you know, facebook on privacy is kind of the kettle calling the -- the pot calling the kettle black to some degree. >> i would weigh in on that as well. i think often about -- i did a documentary many years ago called "big brother big business" for our network. that was in the infancy of the surveillance age if you will. and yet even there with facial recognition and a number of different things there were real questions about it and the data brokers such as axiom. now, i mean, you're privacy, forget about it. we talked about it a number of times. i quoted scott mcneeley a few weeks ago on this very subject. but facebook knows, i mean, the amount of information that they have or amazon has or google has you go on and on for these and the ability to manipulate that information in a way that was not available to them even a few years ago we're talking big data, we're talking what they can do with it, is extraordinary. and so, sure, the nsa is worthy of criticism, but, man, you should be worried about what they all know about you, too. >> that's an expectation of privacy, and i went to law school, the one thing i really studied. there's an expectation of privacy for the country. that's obviously out the window. we used to be, well, even crooks have privacy and now nobody does. everything you e-mail you should expect to see on the front page of "the new york times." every time you give your credit card you should expect that someone can compromise you and i just find myself saying, okay, listen, this is now the new normal. you got to respect the fact that someone has -- there are people out there and companies out there and governments out there that know far more about us unless you want to be in a cash society. >> facebook can figure out if you're a man or woman based on your cell phone. >> every time you order something, i looked at salesforce.com coming mark benioff and i called salesforce i just basically called the salesperson, say i'm interested. every time i look i got a salesforce.com ad comes up everywhere. you know they know more about me than i know about me. >> it will help them deliver ads to you that you'll click on. >> do we have anything to hide. i know that's not the issue either. nixon often thought this was the right thing and now nixon would have the tools to really go to town. >> oh, yeah. when we come back, we'll get cramer's "mad dash" as we get closer to the opening bell. one more look at the premarket on this friday morning. we're back in a minute. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ ♪ ♪ story about a man a simple man ♪ ♪ a man with a dream to do the world some good ♪ we have eight minutes before the opening bell here on a friday. of course, not a great week for the market thus far. >> no. >> if you are long at least stocks. what do we got for the "mad dash"? >> the key to the market is facetious something david and i used to talk about, alta salons, herb green is marveling here's a company that guided down somewhat substantially and you would expect any guidedown to continue this decline. no. why? because they said comp store sales could be 5% to 7% up. when anybody sees aam could. store that is above five they love the stock. so, this is this new world where we just are focused only on comp store sales. aeropostale, i all that aero post stale. down 50%. what happens? the universe is saying if we can find retail growth we'll buy it. williams-sonoma -- >> but it broke down toward the end of the year. >> i know. because they guided. it was 20%. this was a soft 20% and they guided to 15% and people are happy for 15%. >> it's regained its mantle. >> people will gravitate toward domestic retailers with a five plus comp because they have nothing to do with the ukraine and they have nothing to do with -- i'm sorry, ukraine. get rid of the "the." and you are looking to see there's going to be a bristol meyers cohort that is going to bottom here today i believe and might test bottom again on monday and they're going to start coming to the domestic retailers with a good numbers because they can isolate them from china and the ukraine. watch that action happen late this afternoon maybe again on monday if there's nothing more than sanctions put on china, sanctions meaning typically meaningless. >> yep. >> that's what people are gravitating toward. you want to see what will bounce. domestic retail with good numbers and drug stocks. >> we'll keep an eye on activism, pepsi, ebay, sothebies. the fights keep going on. >> nasty, they're not nice anymore, david. keep your decorum activists. and kyle bass will join us to talk about a mortgage servicing company that he loves a lot. opening bell coming up after this. is. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers. lemme just get this out of here. to go. unlike some places, we don't just change your oil. our oil offer comes with a four-tire rotation and a 27-point inspection. and everything looked great. actually, could you leave those in? sure. want me to run him through the car wash for you, too? no, no, i can't. and right now get acdelco professional durastop brake pads installed for only $99.95 or less per axle. chevy certified service. became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. i'm jim cramer and welcome to my world. we call my world "mad money." >> jim cramer's first "mad money" show nine years ago today. still going strong. >> thank you. >> did you ever age, man? >> i was about 195 pounds then. >> no kidding. >> now you are what, 196? >> no. i dropped about 17 1/2 pounds. >> and oit muscle, too. >> yes. >> six-pack. i mean, it's corona. >> all we need is a guy to stretch us for two hours at our age. >> get up at 3:00 and stretch for two hours and you'll feel better. that's great. that's what happens when you get older. i have a 50-year-old nearby. faber's hair is better than cramer's shirt, i'll tell you that much. >> congratulations on nine years. >> thank you very much. >> do you remember the first show, do you remember the environment? >> it was a period of euphoria and small cap stocks that would look good. that period has not returned. the skepticism is back to where it was post-2001. 2005 was really this kind of period where people said, hey, go buy toll brothers and lennar and buy everything, la-z-boy, oit come back. interesting cheap stock. >> really? >> yep. >> did not know that. >> this will be about the nine. >> make a big deal at ten. >> we'll have a cake that will be fattening and i won't be able to eat until sunday but i'm signing books at costco on saturday at east hanover and i'm not having any samples. >> good. >> there it is, "get rich carefully." in the time we've got left before the opening bell, a lot of activity and activism. sotheby's has two people for its board that it nominates to go up against dan loeb, wants three board seats. nelson peltz brigwrites a very letter to pepsi and its board of directors. >> executive session without injury. >> i want to understand where your real expenses are. i want to understand your excessive overhead costs, i want to understand your advertising declines. be transparent and tell us what's going on and then, of course, continuing battle between carl icahn and john donahoe over at ebay. this is the season but -- >> isn't this unusual? this like teldar. >> these are fights. these are fights whereas in activism as we've often pointed out you sometimes have conversations that then lead to amicable resolution. these are fights. >> yes. these are big-name people really going at it and saying, you know, at wone point in peltz's letters he said cut the headquarters to two. how much money are you spending on the palaces. >> 17-page letter and they make the point we aren't normally this public about it. >> i know. >> and kind of saying that there's a little sedition going on. maybe a little breaking of the ranks and implying that the top shareholder base wants a move. executive session. it's nasty. >> it is nasty. $240 million. why was it better to spend that on the old headquarters as opposed to perhaps upgrading your bottling capacity. these are the questions being asked. the board comes back very quickly and says we've considered everything. >> right. >> everything under your plan, we know keeping everything together at pepsi is the way to go. >> there's the opening bell, by the way, and a look at the s&p at the top of your screen. the big board celebrating its ipo cast light health a cloud-based software provider that helps self-insured employers control their health care costs. we'll talk to the ceo. and the fabulist on e! celebrating on the nasdaq. >> and the big dividend boost and ken powell a lot of people feel he's a terrific executive, ceo, but a lot of people are feeling this wassio pl iyoplait. meaning it's been discouraging and yoplait is now three straight quarters of business here from a really great american company. and the supermarket segment those are not doing well. anything in the supermarket. >> you've seen the valuations on chibani $5 billion where a company whose distribution is nowhere near what yoplait is. >> you want to own general mills. if you sell into the supermarket and you are not all organic and natural you are struggling. compare general mills to white wave. white wave is the plant-based drinks and horizon milk, horizon brands, that stock doesn't give up a penny. it's the best performer of the group, why? because it's natural and organic and that's what people want. >> that's one of your big themes. >> yes, thank you. >> you're welcome. i listen. i do. i pay attention. i try. >> attention to detail. >> a steel trap. >> rigorous, baby. it goes in and never goes out. >> would you expect the distribution toward defensive names to continue today? >> it should. that's been the strategy that this day you go in and start buying the defensive names with good yield and you try to get the accidental high yielders and you stay away from higher-risk stuff. the first ones that bounce back are the names like cast light. they get hammered and then they kind of spring back to life. biotech, the high growth biotech getting hurt. and netflix is amazing, isn't it? >> netflix and amazon. amazon took almost a percent and a half. >> prime raising the price, i felt it would be the costco card, you just pay it. who cares. >> i think they are up 20 bucks. >> yes. >> they certainly know their customer base extraordinarily well and their behavior, they measure everything and amazon's ahead of everybody when it comes to big data by the way. they don't come to that price easily, but, listen, there are plenty of people who that they'll say forget it, another 20 bucks not worth it to me. >> i know we'll talk about sirius but that's another bill i pay. pay it. i don't look -- there's a lot of bills that i don't know about you guys, i kind of pay it every month and i don't even think about it and something goes up $20 and amazon after all the shipping costs it's such a bargain anyway. >> and netflix is one of those. >> another one i just pay. i wouldn't focus on how much i pay for it. i just wouldn't. >> how about hbo, do you focus what you pay for that? >> i think i pay $150 to espn or is it $280 a month. >> what are you going to do not eat? exactly. >> not eat, hey, world hunger, espn, these are things we're trying to cure, our espn bill. but i'm not being -- look, there are bills that people regard and clubs that people regard as being great value and they can sneak a price increase. whereas most people like general mills raise the price of cereal so much that they price people out, one's perceived as a bargain and one is perceived as too expensive and they go to the private label. and that's why kroger has done so well, they have the most private label of any supermarket. >> the netflix is almost the cost of a big box of cereal. >> i don't know if you use gogo when you are flying. >> viosoft you can watch netflix. jetblue did that, people want netflix, there are bargains out there people want this netflix no matter what. you got to pry netflix from my cold dead hands, david. >> okay. >> second amendment and netflix. >> i hope i don't have to do that anytime soon. >> me, too. >> and it will be hard to pry from your hands. >> there are stocks that are bouncing and i don't trust the market yet. it's too early to bounce. too much crosscurrent in europe. i can't ignore europe. we're back in that mode. >> yeah. although you made the point that people would start to look for domestically centered companies. lowe's up there. surprisingly coach is the best performing s&p component right now. >> really. take a look at kate spade. lowe's was upgraded today, smart and meaningful upgrade. i look at lowe's. and the undercurrent there has to get warmer because planting season is coming up and planting season is their holiday season, so i watch lowe's, if it gets warmer that one is going to work. coach up 85 cents. very interesting. >> macro story, producer prices which were minus one. to the core minus two. it was a little bit worse than expected. more talk about inventories being so fat right now that producers have no choice but to cut prices. >> in all the years i've been in business i've never feared lower interest rates that i fear now because lower interest rates means there's no demand at this point. warren buffett talking about how wells fargo would like to lend more money. there's not enough demand in the system. that's what the wholesale number said. >> two eight to two six in five days. >> way too quickly. and rates supposed to go higher and a lot of people were short bonds and that turned out to the be a real bad bet so far. >> so far. last year it worked out. >> worked out fine. i look at bonds and copper and say, geez, you know, this is not going the right way. we need a little demand. that number was bad. and retail hasn't really come back yet. and i don't know, i just say there's a lot of things that are not right right now. last friday we had an unemployment number that made it look right today. we had an unemployment number that made us feel better about the economy. that was five trading days ago and it's all gone. >> we bring lots of strategists on here with the 10 and the 11 and a lot come back and say we're positive, we'll get higher gdp growth in the second half and we'll start to see capital expenditures in a way we haven't in the last five years we'll finally start to see corporate america spend money on things other than buying back stock. >> united rentals are the highest level of optimism in years and huge orders for nonresidential construction which is a giant employer. that's a big employer. the crosscurrents of so hard, let it go down, i'll revisit it later. >> with that in mind dow's down eight. let's get to bob pisani who is in a very large crowd of people on the floor, bob? >> and castlight health the first indications are going up right now $25 to $27. they priced 11.1 million shares at $16 well above the price range. 13 to 15 was the price talk and that $13 to $15 was elevated from prior numbers earlier in the week. bottom line this is going to definitely open with a nice little pop. this is about helping companies analyze health care costs and they crunch massive amounts of data and they present it to the company and the individual and supposedly this helps individuals make choices about the best kind of health care and about cast options that are available to them. people are watching it carefully because todd park was one of the co-founders, he founded athena health and he's well thought of it. he's the chief technology officer for the united states a lot of attention for this company right now. we are down right now, but it was a very rough night overall, the nikkei down 3.3% and it's down 12% for the year right now the nikkei. the worst performing of any of the asian boards. and russia was down 3%. shanghai was down 3%. germany was down fractionally. the dax is down 4.1% so far for the week. close to its biggest drop in about two years right now, it's been a rough week overall in all their emerging markets are down as well. bear in mind turkey is heating up again. i know it's been on the back burner but demonstrations at turkish s isish cities for seve now. let's move on and talk about the retailers. take a look at what's going on here. another rough day, aeropostale, the guidance for the first quarter is incredible. they are talking about 75 cents loss. the consensus was a loss of 17 cents. enormous numbers for them. zumiez had good earnings but expecting a loss and there was a gain expected. this was the guidance for them for the first quarter. does anybody have anything positive? i thought ann had good earnings. and the revenue guidance is close to consensus. in this world that's actually pretty good news. mattress firm also said their 2014 guidance would be above expectations and i know, guys, i'm stretching a little bit on that one. by the way, one final point, china has ordered a halt to mobile phone payment systems and virtual credit cards. this caught everybody by surprise. nobody i knew thought this was coming. the chinese central bank said it was too risky. apparently they're trying to maybe protect their own state payment system but pay attention to some companies out there right now, china mobile, youku, lightinthebox and 500.com involved in mobile china e-commerce. trying to parse what it means. >> thanks very much, bob. let's talk about liberty, we got news late yesterday about a significant change in its approach to majority owned sirius subsidiary if you want to call it that. sirius satellite radio, 53% owned by liberty. they had made an offer to acquire the remainder of the company in -- in liberty stock. it was during a point at which if you recall both they were trying to take advantage of programs what was a lack of a discount to net asset value at liberty which they were using to try to acquire the 47% of sirius they didn't already own. they also were doing it at the time where if they brought sirius on into the overall, its cash flow into the balance sheet of liberty, it would have helped them conceivably with the opportunity before them of trying to acquire time warner. well, we know that's no longer a likely reality, but they haven't gotten rid of their slate and, in fact, they completely change things up and go a route they've often gone at liberty namely tracking stocks. yes, a favorite of john malone for many years. in fact, in this case there will be two tracking stocks that they're going to be creating at the liberty media corporation. one will track the company's so-called media assets. and there's a look at john malone. which will be comprised largely of that 53% stake in sirius that we're talking about. will also include livenation, the atlanta braves and the stakes in barnes & noble and you'll have another tracker there's a look at that that they'll call liberty broadband and will have the 27% of charter communications that liberty owns. also a small stake in time warner and then an active business true position. interesting to note the presence in both of these of what we call active traders. why is that important? well, if at some point in the future liberty wanted to -- i know this gets somewhat complex, pursue a reverse trust with its stake in sirius, in other words take its tracker and make it a hard spin, it could actually pursue a reverse trust where it would spin it into existing sirius. that's something shareholders have thought about for a long time. that is a possibility. nearer term, though, let's focus on the positives and potential negatives. one positive is you had a buyback that had been halted at sirius, it will resume. the company is considered under livered at 3.1 times and could go up as much as 4, and they'll start buying back stock rather quickly. liberty will sell into the buyback its high basis stock. so it may be selling down to closer to 50%. nonetheless, that is seen as a positive. then you've also got bulls, jim, who say, do you know what, you've got a used car market that is now being enabled for sirius. this is the bull case. don't forget this is the company that did tell us it guided below the street for this year. but the bull case said you could do 30 cents a share in free cash flow by 2016. but a 20 multiple on that 30 cents of free cash flow 16 two years out, you still get a stock that's well ahead of where we are here. and then you got the clean charter on the other side of this, which may enable them to do some other things tax efficiently. that's at least for the investors i've talked to coming in on this. >> the merrill lynch upgrade is terrific. and we also have a little better tapes so people are a little more enthusiastic and sell a lot of cars. a lot of cars have sirius. people like the service. and people felt they stole it. >> they were trying to, of course, the special committee was not going to let them when they couldn't actually and then the stocks traded off from nav, liberty, and time warner cable fell by the wayside, so this is the other route they are going back to trackers which has always, of course, been a longtime favorite of mr. malone. >> let's go to the bond commits and rick santelli at the cme group. rick? >> this is definitely the epicenter of some activity. that's the understatement of the year. the two-day chart of tens you see all you want to see. momentum continues to build to the downside. what i find fascinating is open the chart up year to date, a couple of things jump at you. here we hover at 264 and we've challenged 260 so we're hovering to the lows close since early march but really the key is february 3rd, 257. you want to pay attention to that. let's look at another area that is important. the yield curve gives you all the clues you need. we've been talking about it. many say how steep it is. but steepness isn't the issue, it's really about flattening. look at twos to tens and look at fives to tens and they are the flattest since basically early july of last year. july is the wild date right now. look at bund yields! they're at the lowest level since basically early july of last year. let's look at gilts ten year, the uk ten year. they're very close, a few basis points from being the lowest yields on a closing basis since november. all right, let's not stop there because i think especially the european sector specifically germany. bob mentioned the dax, certainly whether it's the dax, dollar, yen, all these are giving you great correlations. but look at this chart of deutsche bank. i think deutsche bank's pretty expressive of what's going on in the banking system in europe especially, quote-unquote, the better banks. this is hovering at the lowest price since august of 2013. now, dollar/yen i referenced earlier. once again it keeps you out of trouble because when you see the currencies like the euro and the dollar weakening against the yen, it's about what they borrow and what they buy. maybe equities. yes. we see that correlation is alive and well. lower yields. lower cross trades against the yen and, of course, lower yields. they're all holding hands. back to you. >> rick, thank you so much. good stuff. rick santelli in chicago. when we come back, get ready for an exclusively as we talk to kyle bass. and also ahead hitting the slopes there's a winter weather effect on vail slopes that might surprise you. the dow hanging on to a 40-point gain as we get this friday started. we're back in a moment. ♪ come to the ♪ geico motorcycle. see how much you could save. bill gates saying most people don't realize that in 20 years many jobs will be replaced by bots, tech slang for automated software. gates made those comments in a talk before the american enterprise institute. and he gave an interview to "rolling stone" said the company would have been willing to buy whatsapp but not for the $16 billion that facebook paid for it. actually some pretty chilling remarks about the future of labor in the country because of the technology and what it's going to do to folks on the lower end of the skill set as he says. that's why he's worried about the minimum wage law what that will do to employment. >> the two countries issue, i go back to louisiana and i think, listen, there's some jobs that will not be automated. a lot of the actual drilling is just on computer. people just press a button and it goes down. but natural resources are a place where they are hiring. just keep it in mind because that is fossil fuel, but fossil fuel produces a lot of jobs. biggest job generator. >> yeah, right now. dow's still up 27. when we come back "stop trading" with jim and news on university of michigan when "squawk on the street" continues. continues. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ ♪ move your feet but "stop trading" jim cramer is up with this. >> look at this piece of research saying alcoa could be broken up, sum of the parts. clause cli they are against it. the a-150 are lightweighting that and alcoa is going the lowest cost structure. it's been creeping up all year, remember it was at $7, and 8 i think alcoa can go up on aerospace which has been very good and the coke bottle which is really cool. the truck orders that have been very strong. possible is united rentals said return of nonresidential construction. i think it's a real interesting buy into this weakness. they have a big russian operation that people are concerned about. i don't want the sum of the parts but this is still one more reason it's time to buy alcoa. let's get to rick santelli in chicago for consumer sentiment. >> march preliminary read on university of michigan's sentiment survey is 79.9. we dropped a handle. obviously we were all expecting an eight handle, looking for 82, 82.5, the last read for february was 81.6. 79.9 takes you back to november of last year when you had a read of 75.1. of course, all the excessive reads have been in the 80s. i'm not sure that this is a surprise considering many of the issues that are confronting investors. but nonetheless, we do see yields dropping back down maybe potentially testing some of the lowest yields since the beginning of march. carl, back to you. >> all right, rick, thank you very much. rick santelli. jim, "mad money" tonight, you've said markets trying to make a stand here. >> yeah. it's a little early. i like the fact that aerospace is finally going up. i see some bids, you know, being underneath in the drug stocks. i think there are people who will say, i want to take profits on the short side. other people say, listen, let's step aside and only buy companies that have a good domestic story. i've got a company on tonight. a spec company. and it's had in mind big data. big data, we see this, big data, cloud, these buzzwords mean a lot to the growth managers. take a look at that. the cloud group that is publicly traded right now has not been holding up well. >> castlight indicated 29 to 31. this will be a ripper today? >> well, there's three more cloud companies next week if you miss this one. three more coming public. i know we don't like to see that kind of heavy concentration especially when the workdays have been sluggish and salesforce.com the granddaddy. have a good weekend. let's get to simon to see what's coming up. >> target is admitting that it knew about the data breach earlier than we thought. we're going to have the co-founder of staples tom stemberg on the show and no snow in tahoe. vail resorts in an exclusive interview on why they are cutting their earnings guidance because of the weather. we'll have more after this break. (music) defiance is in our bones. defiance never grows old. citracal maximum. calcium citrate plus d. highly soluble, easily absorbed. welcome back to "squawk on the street." our roadmap this morning begins with the markets. stocks trying to recover from their worst day since the beginning of february. will global concerns continue to weigh on the market. the east coast may have covered with snow but out west they are dealing with a serious drought and that means big trouble for ski resorts and we'll talk to the ceo of vail how they are dealing with warm weather. and kyle bass will join us live for an exclusive interview. we'll talk about what he's watching right now. we want to mention we're waiting on castlight to open at the nyse. originally priced 11 million shares at $16 raising about $177 million. indications went $27 to $29 and $29 to $31 and now $33 to 35 and when it does open, of course, we'll bring it to you. they do some enterprise health care cloud business trying to help employers manage their health care costs. almost perfectly positioned for the debate that we're in right now. in the meantime the big event this weekend is, of course, the crimea referendum. we have some breaking news. secretary of state john kerry meeting with his russian counterpart earlier today in london to discuss the events that we're expecting over the weekend in ukraine. secretary kerry will hold a news conference in just a few minutes. a lot of investors' eyes will be on that. for many it's about the sanctions. what does london do, what does washington do and what happens to capital flight in moscow. in the meantime ukraine's interim prime minister was in new york after meeting with the president this week addressing the u.n. security council. our chief international correspondent michelle caruso cabrera spoke with him exclusively and joins us with details. >> we're here to speak to him because the big vote in crimea begins on sunday. we ran in to him or we were waiting for him when he arrived last night at a midtown restaurant in new york city, this is what arseniy yatsenyuk said to us as we approached. what does ukraine do on monday? >> on monday? >> yeah, after the results come out. >> preserve its territorial integrity. >> how? >> in all possible means. using all leverage from the international community, from our international obligations, and pressing on russia to stop this. >> do you use your military? >> thank you. >> he obviously didn't want to answer the question about military intervention and obviously the big concern, ladies and gentlemen, is whether or not we're going to see shots fired or what's going to happen next week. simon mentioned capital flight so let's get to it because it is happening a lot. we're seeing you the micex the 15 most liquid russian stocks in rubles. i want you to look to the right of the screen to see what's going on there. the top number shows you a decline 2% but it was down as much as 5% and the one-year performance is a decline of 19%. if you bought this index in dollars, take a look at the rts because it's the same exact index in 50 stocks except it's in dollars. it's down one year 32%. so, there's been dramatic capital flight and you can see it happened literally within the last two or three weeks. let's show you the ruble one week. this is managed so we're showing you the dollars versus the ruble, so every time this rises you are seeing the dollar getting stronger and the ruble getting weaker and the day by day by day we see the weakening there. let's show you what's going on with russian bonds as well. some of their yields hitting record highs. you can see here, i don't believe it's unchanged. i think that's incorrect or it's probably reflecting the fact that that market is closed however we've seen yields rise sharply there as well as once again it appears to be that investors are saying, you want to deal -- you want to invade cry m mia, you want to want to invade eastern ukraine, it won't be on our dime. >> clearly investors are paying close attention to sunday's vote between ukraine and what's going on in china. this morning warren buffett told "squawk box" china and ukraine doesn't sway his investment decisions. he said the fears over china and ukraine are not wanted. have a listen. >> you are talking about income. i would bet a lot of money that income from a diversified group of stocks will increase significantly over the next 20 years so the headlines will not make any difference in that. stocks can go up and down. they always will go up and down, but american business is going to move forward over time. >> let's bring in mark vittner managing director and senior economist with wells fargo securities and michael jones with us as well chief investment officer and chairman with riverfront investment group. let's start there, michael, volatility is supposed to be part of the natural process here with the stock market. so, there is three reason to be concerned about the sharp swings we've seen, yesterday the 200-point swing on the dow, worst day in a month. >> the markets have had to absorb pretty big disappointments in 2014. we expected the u.s. to accelerate and we got snow. we expected europe to accelerate and we got putin and we expected china to stabilize and thus far the data has been terrible. so, when you think about the magnitude of the disappointments thus far this year, the market's actually holding up pretty well and i think that's because it expects two of those three to be resolved in the next few weeks. >> let's talk about the worst-case scenarios here just to get investors prepared in case they have to be, mark, if we did see an escalation. we're going into this vote on sunday. if we did see russian sanctions, for instance, from the west, from other nations as had been threatened, what does that mean for u.s. investors? >> well, for u.s. investors, it probably means more volatility in the very near term. for the u.s. economy, it probably doesn't mean that much of a change. domestic economic growth, u.s. economic growth is going to be stronger in 2014 than it was in 2013. even though we got off to a slower start. part of the reason we were feeling 2014 would be better is we were expecting europe to be stronger. it's still going to be stronger but this uncertainty brought on by russia is going to cut into that somewhat. >> you know, michael, as we approach the end of the first quarter, the market has not made gains and you can say actually that's quite good given what was up against it. but what is happening is the volatility in the market is obviously beginning to expand as the amount of money that the fed prints each month is gradually reduced. where does that take us moving forward? do you still think that the market -- they're now showing me a year's chart. but if you looked at the first quarter you'll see it's perhaps not quite so spectacular. where do you think we go during the course of the year, michael? >> well, obviously it critically depends on how do we resolve the crimean situation. >> really? >> oh, absolutely. >> hang on. let's be clear about the crimea situation. we're not going to get the results my information for ten days. i mean, do we really care what happens in a former soviet union? >> you mean just to the end of the quarter. just to the end of the quarter we're going to stay probably under pressure because i think you're right. the crimea situation doesn't resolve itself too terribly quickly. if you believe as i do putin is playing another masterful game of poker like he did in syria and he'll throw out a face-saving compromise at the end, then you expect the market to recover as we move into the second quarter. on the other hand, if this time he's going to overplay his hand, if this actually does become a tit for tat sanctions war, then i think we all have to reassess our long-term economic and market forecast because europe's going back into recession. >> you know, mark, i found it quite amusing yesterday to see everybody scrabble around as to pinpoint the reason why the market might have fallen and inevitably they seemed to look externally to foreign factors, truth is this is a market that some would say was overextended and might you wait for a correction whatever is happening elsewhere? >> you are absolutely right there. i think there's a lot of anxiousness across the markets, across the economy right now, and in some sense people can't believe that things have actually gotten better. is there any way on earth that we could justify the rebound in market given the little bit of improvement that we've seen in the overall economy? and i think there's actually a better case to be made. the u.s. economy's not only likely to grow at a stronger pace in 2014 than it did in 2013, but that growth is going to be much broader than we've seen in the past. single family home construction is going to improve this year. it got off to a rough start because of the snow but it's clearly going to improve this year in a way that we haven't seen so far in this recovery and that's got some legs to the rest of the economy. >> michael, quickly, when you talk about the anxiety out there, what is your litmus paper? sit the ten-year yield? is it gold? is it the japanese yen? >> i think if you see the ten-year treasury break below 250 that's a fairly important signal that they think things are getting out of control in the international environment. i think gold is probably also a good indicator of anxiety because, remember, one of the things that putin has threatened as a part of the tit for tat retr retaliation to duchl long-term treasuries. you may so gold as a better clear signal of the level of anxiety in financial markets. again, our view is, is that this is another wonderful game of poker on putin's part. he's going to get what he wants but he's going to deescalate like he did in syria. we'll see how it plays out. >> finally, mark, it's a weird day to ask given what we got out of producer prices today but people are still looking back at wage growth from last week and saying there's no way that the fed is going to let wage growth get to 2 1/2 or 3 without pulling the interest rate trigger. are you -- are you in that camp? and how would they begin making that giant reversal? >> i'm not really in that camp. one of the reasons why the average hourly earnings increased so much is that we had this bad weather. and people didn't work as many hours. but many companies continued to pay them as if they did work. and that's why average hourly earnings increased as much as they have. we'd expect that to come down. that said, i think inflation's going to surprise us a little bit to the upside this year. mainly in the second half of the year. and i don't think that that has many implications for fed policy. i think it definitely means that they're more likely to raise rates in 2015 than to put off the first rate hike into 2016 but that doesn't change anything for the markets currently believe the fed's going to move. >> well, we'll see. next week is going to be a big one. janet yellen's first press conference. mark and michael, thanks for the perspective here on this bumpy ride through the markets this week. we're waiting for castlight to open, let's get over to post five and check in with bob pisani. >> the crowd is still here. new indications $36 to 37. they are pricing 11.1 million shares. the price talk two days ago was $13 to $15 and that had been raised from previous indications, $36 to $37 what is it all about? several things going on. number one, it's a relatively small float. they are selling about 12% of the company. that's not unusual. i see many ipos where they are selling 10%. that's been the strategy and sell a small amount and if it's successful sell more later on in secondaries. number two, this is the intersection of biotech and big data as well as health care, this company crunches massive amounts of data and presents it into an easy format allowing people to make health care choices. and todd parker founded athena health a well-known company and he's the chief technology officer of the united states. it's getting closer hoo er here, $36 to $37. back to you. did target ignore warnings about the data breach? target said it did and that choice eventually led to one of the biggest data breaches ever recorded. we'll talk to retail vet and staples ceo tom stemberg. and kyle bass will join us live. and the dow holding on to a 42-point gain here. ent, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. welcome back to "squawk on the street." check out share of keurig, green mountain, the stock is moving higher after signing a new deal with starbucks. keurig and green mountain will give starbucks a wider selection of disk-cups. this does amend a five-year deal the two signed last year. for its part starbucks you can see there trading just a little bit to the upside here but nothing crazy. to the upside, simon. the retail giant target is admitting that its security software may have detected the massive data breach but the staff decided not to act essentially confirm "business week's" reports earlier. let's bring in tom stemberg the co-founder and former ceo of staples. tom, good morning to you. thank you for joining us. >> good morning, simon, how are you? >> i'm okay. i mean, the "business week" article basically said that the team in bangalore got notification from fireeye one of the security consultants that they use that there was some sort of breach. but ceos like you know that i.t. departments get hundreds of those sorts of warnings possibly every day. what is a retailer to do when they are faced with those sort of odds? and on the other side, customers will say, actually 40 million credit card details were lost and another 70 million individuals' data was lost. what does a retailer do? >> there's not many good things with dodd/frank and sarbanes/oxley, but one of the things is they force you to assess your risks as an enterprise, when you assess your risks the confidentiality of credit information is probably near the very, very top of your risk factors and therefore you have to have extremely heightened sensitivity to those areas and you have to instruct your staff, when something comes up here, we have to treat every threat as real and clearly somebody dropped the ball at target. >> are you saying, forgive me if i am put words in your mouth, are you saying that dodd/frank may drive retailers to not store details? >> it's a major nuisance in many ways but one of the big benefits you have to identify the enterprise risks that face your business and clearly address those in various board sessions or committees. and by having that kind of laser-like focus and seeing what can really, really hurt you, you then put priority on preventing risk in those areas and, therefore, every time a yellow light goes off, having to do with personal credit information, you have to overreact. >> tom, i remember we had you on right when this whole thing broke and you basically said that target has the best back office operations of any major retailer. i think it surprised you like it surprised everybody else. what's the point of getting -- bringing a fireeye kind of service online if you are going to ignore some of the warnings? >> well, obviously you shouldn't ignore the warnings particularly in something that's as important as this particular area is obviously. >> hey, tom, let me ask you whilst we got you here about the business importantly that you founded, of course, which is staples. you told us that potentially it was going to cut stores and then how do you feel last friday when you read that actually, yes, 225 stores were going to go in an attempt to save $500 million, how do you as a founder of staples feel about the need to do that and the action? >> well, it's obviously painful to see something that you built begin to shrink. and they face some tremendous headwinds, having to do with secular declines in paper and cartridges as people do more and more things on ipads. having said that, i think the real challenge here, and it's a real problem, is you're facing amazon who is pricing things on a way that's not sustainable over time. however, the prices are very low. so, if you're the ceo, you are faced with a choice of giving up your billion dollar or so cash flow and trying to fight with amazon to maintain your market share, or to relinquish market share and try to maintain profitability. it's a horrible choice to have to make and as long as amazon gets a free pass on wall street, i guess that challenge will continue. >> what does it mean for the staples and the office maxes and office depots of the world? the working environment is different? they just started stocking apple pr products and if it's too hard to compete with amazon, what is their future? >> the fact of the matter is amazon i don't think over time can continue to price things and run gross margins at 5% and 7% when it costs them more for the credit card and the shipping. the enterprise is not making material profits. they're pricing for market share and wall street's letting them keep their stock price up and i think at some point there's a day of reckoning coming. >> tom, i'm working on a large documentary on amazon, this is david faber, of course, i hear that frustration from a lot of retailers but mr. bezos has them believing, that being his shareholder base. is it naive to think that end is going to come anytime soon if you are a retailer out there trying to compete with amazon? >> i think my prediction what will happen is they're going to have a quarter where their revenue growth is 19% not 25%. at which point people will start looking and saying, wait a minute, as "the financial times" pointed out a few weeks ago, even if they grew at 25% per year and raised their operating profits to a more normal 6% to 7% level the stock is still selling for an incredible multiple. and the revenue growth slows and the things unravel very, very quickly. >> are you glad to be out of it, tom? i imagine you are, aren't you? >> i'm having a lot of fun working with small businesses. >> sure. >> and, you know, they are still growing despite all the headwinds we face as retailers and that's a lot of fun. >> hey, it's good on see you again, sir, thank you for sparing the time. tom stemberg and foe counseleder and former ceo, of course, as well of staples. have a great weekend. >> thank you. we're on ipo watch here at the new york stock exchange waiting for castlight to open. let's go down to the floor a big crowd gathering around bob pisani waiting for this one to hit the floor. hey, bob. >> we're about to order lunch. it's 10:21 here and castlight has indicated $37 to $38 which is remarkable because the price talk was $13 to $15 a day ago. why is it taking so long? we're in twitter territory. twitter was the longest it ever took to open a stock i can remember. i've been here 17 years. that was 10:47 as i recall when it opened. we're at 10:21 right now and the simple is there's a lot of orders to buy and sell and they keep changing so this is really an open outcry process. it's the beauty of it, it combines technology and human beings. the mm, the designated market maker you'll hear him cry out every once in a while new indications and nothing happens until that man and the book runner which happens to be goldman sachs here, says everything is together and paired off. they'll open the whole stock at one price and right now there's been continually new orders coming in to either buy or sell, so as the price changes some people will get in, some people will drop out. this is what happens when you get a big stock with a lot of people interested in it as well as a relatively small float. a lot of people want to get in. we'll see if we get towards twitter i'll definitely give you a shout. back to you. >> yeah, could be a big day. we'll check back with you. bob, thanks for the update. the co-founder and ceo of castlight will be joining us right here at post nine as soon as the stock opens. we'll be right back. 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it's just that i'm worried about, you know, "hidden things." ok, why's that? well uhhh... surprise!!! um... well, it's true. at ally there are no hidden fees. not one. that's nice. no hidden fees, no worries. ally bank. your money needs an ally. we are still waiting on castlight health to open. looks like it's going to open at least up 100%. bob pisani is down by post five. bob? >> we're passing around menus for lunch. i'll take your order in a minute, carl. $37 to $38 is the indications. $13 to 15 was the price talk a few days ago. again, the key point about what's happening is the float is very small here. we're talking about 11 million shares. that's only about 12% of the company. now, i don't know how many stock -- what number of stock's going to actually open, but i'll bet you it's probably not more than 2 million at the open. 2 million is probably 88 million, 89 million shares outstanding, it's a very small amount. there's a lot of demand because it's a hot stock in health care. it's got technology, it's got big data in it. it intersects a lot of hot sectors a high profile co-under founder and a small float and you have intense demand for very little stock. this strategy, carl, has been very successful for ipo companies, all the companies know don't go with the big float, go with a small float. and the stock holds up six month, eight months, ten months down the line and that's why we are getting the huge secondaries that have been coming through for almost the last year because the ipos are small. they do big follow-ons. and we're still at delev $37 to $38. and want to draw your attention to pepsico, and it was a dramatic night for nelson peltz and pepsico. peltz wants pepsi to split businesses beverages versus snacks and has been rejected multiple times by management fired back last night sending a letter to the board calling on directors to meet shareholders without management. he has more than a billion dollars in this stock. a 0.8 stake in the stock. he's questioning all sorts of things, the cost structure and innovati innovation, and the culture of pepsi, the competitiveness factor. he asked pepsi frito explain wh they spent more than $200 million renovating headquarters when they could be spending it toward innovation and trying to go up against coke. he called out the director ian cook and his response to previous peltz letters for the dismissive tone in that. pepsico was quick to respond as it has been this entire saga defending its board, defending its strategy saying here our independent presiding director and other independent board members have already met with trion without management present. the board has thoroughly reviewed the proposals and has concluded that they would not maximize shareholder value. bottom line here, guys, both sides are very much digging in their heels. nelson peltz is going to increasingly try to get shareholder support. he's going to be meeting with some of the big gies and trying to gather support for his plan which he's been studying extensively that it's a good idea to split the businesses. >> there are clues as to what shareholders actually think, right? >> interestingly enough bernstein research put out a poll, they surveyed 100 investors, slight majority in favor of splitting the businesses. 55% agree with nelson peltz, but here's the kicker, they don't believe it's actually going to happen within the next one or two years and the reason they gave is better focus when you have the frito-lay snack business on one and the beverage business in the other. the concern, of course, dissynergies, basically the costs of actually splitting the business and how much it would cost. >> another example of an activist with a relatively small stake in a megacap company trying to influence shareholder because your economic ownership is not going to be nearly enough to really make a difference. but peltz has a very strong reputation particularly in this area. it's a tough battle, though, for him and they've been firing back strongly. >> when he sends the letters and proposals out they are getting increasingly specific on what questions it needs to answer relating to its cost structure. >> we need to take a break because we need to get to david's interview with kyle bass on the show. kyle bass exclusively on cnbc. as that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ my mom works at ge. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled bill pay. just a tap away on the geico app. ♪ huh, 15 minutes could save you 15% or more on car insurance. yup, everybody knows that. well, did you know that some owls aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geic let's go to castlight. we'll come to kyle bass in just a minute. >> castlight has opened at $37.50, the indications two days ago $13.15 and early indications were in the low 20s and crept up and opening essentially right near the highs where the indications were. right now trading at $38.75. back to you. >> wow. that is quite a move there. all right, bob, we'll be watching that, of course, speaking to the ceo shortly. hayman capital has increased its stake in nation star, a mortgage services company to 5.3%. this is the mortgage servicer comes under scrutiny by new york regulator ben lawski who is concerned they grew too big to fast. joining us on the phone is hayman capital founder and managing partner kyle bass. hayman owned about 1% roughly of this company shares. why have you decided to markedly increase your stake in a roughly $3 billion market cap company? >> hi, david. you know, i think it's really important to look at what's going on in this model between the effective mortgage balances of the united states of roughly $10 trillion about $1.8 trillion has moved to the nonbank serv e servicers more of the high-touch servicers to the banks because of base lcl iii. but more importantly these companies are much more effective with the high-touch model at services these types of loans versus the banks. and when you think about how effective they are another we think they're the most effective companies out there as opposed to the banks and we think that this market opportunity will grow from $10 trillion to $11 trillion or $10 trillion over the next 5 years. and they're servicing profitability will increase annually as the number of delinquent loans drops. >> ben lawski who runs new york state's department of financial services on march 5th sent a letter to president and ceo of nation star who was on our air on cnbc, saying, listen, we've received hundreds of complaints about your company's mortgage practices, including modifications and fees and lost paperwork and he points out how quickly the company has grown, kyle, and has undertaken an investigation in terms of the explosive growth and whether it's coming at the expense of dealing with all of these modifications effectively. what's your response? >> yeah, i think it's interesting. look, their -- ben lawski while new york is important, it's one state. they're real regulators are the consumer financial protection bureau. when we think about how effective servicers are, we look at the ratio of complaints to the number of loans that are seriously delinquent. nation star is the best in the business at 1.9%. ocwen is second best. when you look at the banks, u.s. bancorp, citi, jpmorgan chase, the average is 7%. the average between nation star and ocwen is around 2.2%. the banks are almost three times worse at doing this and yet the regulatory inquiry is in the nonbank sector. i think ben lawski should focus on who the worst players are and not who the best are. but, again, more importantly when your provincial regulator is sitting in good standing. the nonbank services sit in pretty good standing with their kind of nationwide regulators as opposed to the state regulator that might have kind of political aspirations. >> but your decision for increasing significantly your stake here is also simply based on this bigger trend, i guess. what are we talking about still, mortgage servicing rights for the banks are still at 80% even though ocwen and station star split a lot of the market here? >> yes. >> how much of that is going to move over over the next couple of years? >> we think -- so today it's about $1.8 trillion of $10 trillion sits in the nonbank servicing side. when you think about ocwen and nation star together and ocwen is about $455 billion and nation star is less than $400 billion, we think another trillion moves from banks to nonbanks over the next 12 months. as basel iii gets implemented the banks will push more and more seriously delinquent and maybe the paying balances to the nonbank servicers and that's a huge opportunity. >> but can nation star handle the -- to lawski's point, can it handle this kind of growth not to mention now having to comply with all of his request for documents and everything that will entail? >> look, i mean, i hate to be cynical here, but, look, when lawski had an interview scheduled with your very tv station before he even sent a request to nation star, i mean, i think some of this has to do with his political positioning in the state of new york. and i think that when you look at how effective the nonbank servicers are when you look at the number of complaints to the number of delinquencies, they're the best in the business. the banks are the worst in the business. so, the answer's yes. they seem to have built the infrastructure to handle this. and, look, when you think about new york, you have nation star 2.3 million mortgage loans that they service of which 90,000 are in new york. of which roughly 11,000 are seriously delinquent and lawski claims in his letter that he's received hundreds of complaints. well, what he's saying is he's received 2% or 3% of the people that are seriously delinquent or complaining that someone is trying to collect on their mortgage loans. this is a business where there are always going to be complaints if people aren't paying their loans. if the numbers are in the low, low, low single digits, then that's just a fact of life. >> kyle, while we've got you, i think the last time we spoke certainly on the phone here was when you put out a thesis on your purchase of shares in gm at hayman. suffice to say it hasn't gone particularly well. i'm curious as to your response, of course, to the latest difficulties faced by gm with the significant recall and investigation. does that perhaps bring you to say, hey, maybe i got to get out of this thing? >> no. you know, again, i think there are a lot of politics behind what's going on at gm. i think it's really important to look back at what's happened with, you know, first reporting, engines shutting down in 2004. the national highway -- national highway transportation safety administration investigated accidents in 2007 and couldn't find any correlations. look, when members of congress including barney frank have previously written to the nhpsa about constituent concerns about the chevy cobalt, the national transportation safety board replied to barney frank in 2010 at this time there's insufficient evidence to warrant opening a direct safety investigation. look, when i look at this, all right, this was not a bankruptcy. it was a government takeover of gm. it may very well be the government who is going to be liable for the claims that the government's looking into. i mean, a lot of these claims were discharged in bankruptcy and the government ran the company for a while. i kind of find it silly. what's interesting, of course, is the republicans are trying to embarrass the obama administration in my opinion with regard to this investigation, so it's -- this is interesting because it has bipartisan support, both sides are throwing bombs. but in the end what really happened here is there's been a failure of the government to investigate what's gone on in the past and the government's investigating the government here so, you know -- >> although gm is also investigating itself, new ceo mary barra has undertaken an investigation to understand why exactly this was known but not acted on for quite some time. has to be a management distraction at the very least, doesn't it? >> look, it's an investment distraction for the very least. it's sold off from let's call it high 30s to low 30s. it's moved, you know, 15% on kind of the headlines. but when you look at gm's enterprise value and what they're going to earn this year, it's trading less than 2.8 times ebita. it's one of the cheapest companies in the dow and in the s&p. and as the u.s. recovers, which i think nominal gdp should grow at 3.5 this year in the u.s. and sars will be back at $16.5 million to $17 million and gm will take back some of its market shares, gm should tried in the high 40s and maybe 50 in the next 12 to 18 months. >> under three times yeah, enterprise value to ebita. appreciate your insights on nation star and general motors. kyle bass joining us from hayman capital management. >> all right. coming up on the show, castlight just opened for trading. it doubled in its opening minutes. the stock is on a tear. it is a huge day for the founder, for the ceo. he's going to be joining us. the founder and ceo of castlight giovanni colella here on "squawk on the street." we'll be right back. back. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. 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[ male announcer ] find out how fast aflac can pay you predibut, manufacturings a prettin the united states do. means advanced technology. we learned that technology allows us to be craft oriented. no one's losing their job. there's no beer robot that has suddenly chased them out. the technology is actually creating new jobs. siemens designed and built the right tools and resources to get the job done. no snow in tahoe. it may have been one of the snowiest winters here on the east coast but a distinct lack of snow on the west drove ski traffic down 27% at the three resorts operated by vail at lake tahoe. that's led to nt's ceo to cut the earning's guidance. and here for an exclusive, the chairman and ceo of vail resorts. welcome to the program again, robert. >> thank you so much. great to be here. >> so what was the deal? you got decent snow before president's day, didn't you? >> we did. but that was a pretty far into the season, so this was really a historic drought for california that effected not only the ski market but obviously so many other businesses in the state. it definitely took a little bit of a toll on us. the good news is we're still growing 6% to 8% this year despite this historic low snowfall in tahoe because of double digit growth in colorado and utah resorts. >> people should recognize you're a new york guy, a wall street guy. you've been expanding this business from private equity for 22 years. the big contribution you make now with ten resorts is the epic past. that's tep pick sale to the country to saying that skiing is not too expensive. what is the announcement this year, are we there yet? >> absolutely. i think we have a variety of passes that range from $279 to $700. it's absolutely the best deal in the entire industry. it's the greatest resorts out the lowest price. that's one of the reasons why despite the low snowfall in tahoe we were able to drive such strong growth across so many of our properties. and so it works for the consumers and works for us. >> you will be aware that court hearings are about to start on the $25 million a year deal that you have to run park city in utah, which of course is home to s sundance. do you have any sympathy for the previous lessees who said we technically didn't get the renewal of our lease out in time three years ago? >> there are so many different opportunities for us to work together with the existing folks and come up with a solution that that's terrific for skierses and the community. >> you think there might be on out of court settlement then as we go into the hearings? >> we're always looking for the right solution for the community and for skiers, for guests. but it's hard for me to know what's going to transpire. >> okay. in the meantime you've raised your dividend. doubled your dividend to an annualized yield of 2.3%. i read from the conference call the great innovation now across the group is the six-person chair lift. is that right? >> yes, because what it does is allows us many of our resorts. we have five of the top six most visited resorts in the country so we are very popular. how do we create more capacity, how do you make the guest experience better? it's by taking four-person lifts and taking the six-person lifts huge reductions in lines. that's one of the things pour guests are always asking us for. >> may it snow on your slopes, robert. robert katz, chairman and ceo of vail resorts. let's go to chicago and link in with mr. rick santelli. >> thanks, simon. you know, this little santelli exchange is going to have a title. i'm not sure what it is though. debt country's walking, debt beats, debt end? i'd like to welcome my guest for debt friday chuck biederman, biederman, biederman. thanks for taking the time today, charles. >> good to be here. >> okay. we were going to talk about debt. the bank of international settlements came out with a report. everybody jumped on it. from mid '07 to mid '13 increase of 40%, something closer to home. yesterday, every thursday late we all look for the fed e-mails to see what the balance sheet did so it moved up to $4.18 trillion. embedded in that the custodial home of foreign central bank's treasury positions dropped $104 billion a huge drop. do you want to weigh in on that? that's the watercooler topic of the day. >> well, the dollar has been down. the yen's been up. so my guess is is that somebody decided they would rather have less money t in the u.s. and more money elsewhere. it looked like it went to japan. >> now, you know, some were speculating it might have to do with the russian sanctions. others are saying it's simple, maybe china's selling. i don't know which it is but that brings the level down lowest since december 2012. charles, what happens wehen countries see this increase in a short period of time, of deb, is it something we should worry about, shouldn't worry about? is it explain to the rise in equities based on that? what do you see? >> i see the global stock markets have gone from 29d trillion at the bottom in '09 to $64 trillion today according to the worldwide federation exchanges, if that's the exact name. they track this. so we've seen 18% annualized gain in stock prices. 5% annualized gain in government debt after an economic contraction. what hasn't been happening is incomes haven't been growing. we had an economic contraction and instead of debt going down from 70 trillion to 60 trillion the debt has gone up. so we've leveraged our way out of the economic contraction instead of deleveraging our way out. and so that has limited our growth to 2% a year in incomes after inflation since '09 and we have do-gooders in charge of our government who is making it harder to get anything done in business. >> all right. charles, we only have a half a minute left so i want you to go fast. are there any other examples that you're aware of of countries that have big debt problems and still have really good equity markets? >> well, all of them. the central banks have been inflating asset prices. there's no food inflation. there's asset inflation. this is the central banks have been pumping up the debt markets to leverage up the equity markets. but the economies are not moving. there's a gap that's growing wider and wider between the two. >> charles, thank you. i hope you have a terrific weekend! and join news a couple of weeks. we'll see if we know any more about this mysterious $104 billion drop. back to carl. >> thanks, rick santelli. welcome to the top of the 11:00. here's what we've got for you. mark zuckerberg says the government is a threat to the internet, according to his facebook post. zuckerberg called president obama to express frustration over the government's surveillance program. exactly what was discussed, kara swisher of re/code helps us with that story. airbags failed to deploy. gm is dispute that claim. we'll talk to the center's executive director first here on cnbc. and southern california running dry. the drought is a big threat to the napa crop. we'll go live to wine country. castlight shares are surging after the big debut. notable names behind the company including the chief technology officer of the u.s., tom park. we just spoke to the ceo. we'll give you all the latest on that name later this hour. and actually continues to be a huge story. off of the highs of the session. the castlight priced 11.1 million shares at 16. that in itself was above the range of 13 to 15. was indicated in the high 20s. then the low 30s. 33 to 35, now 40. was actually 41 and change not long ago. the company helps employers manage their health care costs but with 13 million, not billion, million in sales last year, it's trading at some would argue ridiculous multiple. the ceo on with us just now, kayla tried to argue they're breaking into a new market we don't even understand quite yet. >> no doubt that's the growth that is more than doubling the shares today but it makes you wonder, are these markets getting frothy. we talked about this a lot but when you see people putting money to work in an asset class like ipos when the revenue is that low, it does make you wonder why investors are finding value there. >> looking for growth at any cost and then on top of that, as pisani pointed out in the last hour, the float, 12%, very small sliver. we asked the ceo if more supply would be coming online and his answer was, to quote, i don't know. so we'll have to just keep that in mind if you're thinking into getting into cslt today. kara swisher joins us today, coexecutive editor of re/code and, of course, our own jon fortt. guys, good morning to you. we'll start with the first one here. mark zuckerberg, as we said, of facebook frustrated over the u.s. government spying program. calling the president -- calling it a threat to the internet. he's taken to his facebook page to vent to president obama saying the u.s. government should be the champion for the internet, not a threat. they need to be much more transparent about what they're doing or otherwise people will believe the worse. he noted that he did call the president to express his frustration. kara, what's the thinking over there about all of this today? >> well, you know, this is just the frustration of what's happened with the government spying and the impact abroad. all these companies are global companies. i think what the problem is now a lot of european countries, asian countries are thinking do we want to use u.s. technologies given the level of government spying that keeps coming out through these documents. he's expressing a frustration a lot of companies have. it's not just them, it's google, it's amazon, apple, it's all of them. >> kara, you know, facebook is now learning that it is being used as a front for some of the spying, according to reports. think about silicon valley, huge employers, also big supporters of the president in the prior election. do you think that washington is losing a lot of support in silicon valley? >> you know, no. probably not eventually. but i think what the -- they were just having dinner with him or a meeting with him so it's this dance. it's this two-step everybody does. i think they -- a lot of people find it ironic that mark zuckerberg who collects all of this that was is complaining about the collection of information. the fact of the matter is it is impinging on their ability to grow globally once this starts going and people don't trust american companies which are in the lead of all companies around the world in technology. >> it seems like we're really kind of the new china here. u.s. tech companies. i think that's the challenge, protecting against u.s. government surveillance. and the issue, which i think is interesting that mark zuckerberg also are bringing up, it's not so much that they expect zero spying. it's the issue of transparent si and checks on exactly what's happened so at least there's a feeling that everybody -- at least knows the boundaries of what's going on. bill gates touched on this as well in the rolling stone interview. it's an important nuance that i think is coming out after the snowden appearance at south by southwest saying we're not going as far as he's going but there needs to be some clear lines here so trust gets re-established. >> to what degree, though, does all the criticism about privacy aimed at facebook dilute their credibility when they attack the administration? >> i think what facebook would say, despite the fact it's an n obvious thing to say, they are transparent about the boundaries of what they're doing. if you dig in and realize the amount of information that facebook can collect about you as you travel across the web, it might freak you out. but i think mark zuckerberg can say, but we tell you that if you stay logged into facebook, we track you, how we track you. we give you the ability to limit that if you want. >> i guess that is a key difference. it does bring us to this morning's squawk on the tweet. we want to know what mark zuckerberg had to say about how the white house handles affairs but what was obama's biggest complaint about facebook? tweet us @squawkstreet and we'll get you responses later on in the morning. we also want to talk about bill gates. he made headlines saying people don't realize many jobs will soon be replace bid software box. gates discussed that microsoft looked at whatsapp but the $19 billion price tag zuckerberg paid was, quote, higher than he would have expected. kara, when you read the "rolling stone" interview, it feels like it's a song of sorts. talks about being named technology adviser to nadella. he will help lead the company in the right direction. what do you get the sense he will be doing there? >> there's a lot of debate within microsoft about his role and how much impact he's going to have on nadella or if he can be his own man, his own ceo. i think one of the difficulties is gates is not been deeply involved in the internet space for several years. he's been very busy doing this philanthropic stuff. the question is is he up to speed at what needs to happen at microsoft and how much impact will he have on that change. i think that's really what's going on at microsoft, is where he does fit because he is bill gates and, you know, even doing this media tour is what he's doing, it's like bill is back kind of thing. it's still -- he sucks up all the oxygen in the room away from the real leader in the microsoft which is presume difficult satya nadella. >> i read something different in this interview. he put mark zuckerberg in the company of himself and steve jobs when talking about innovati innovation, saying zuckerberg is a product guy, steve was an aesthetics guy, gates put himself as an architecture guy. some people would take that as slam on steve jobs. i don't take it that way. the other thing is he implied that office and windows or has beens and it's the job of microsoft to take risks and push for new innovation. that was the slam on ballmer, he put too much wood behind the windows, bet too heavily on that. he seems to be kind of doing the blocking. he's the tight end for satya nadella here so that he can run strategically. >> except these are all the same people running microsoft before. so he was on the board, you know, ballmer was there. he approved these things. satya's been there since the early '90s. it's not the previous administration. this is the previous administration talking change which i think microsoft has to do but it is the same people who put all the wood behind windows. so it's just -- you know, you got to listen carefully about these things. >> there was the added nugget about microsoft having considered buying whatsapp. >> no, no. >> your thoughts on that, kara? if it's true. >> he didn't say that. he said he would have, we would have. it didn't mean they were in the talks. they were not in the talks in any significant way. >> i assume they did some due diligence on it? >> i guess. they would not have bought it. they have skype, by the way. they have a great underleveraged property, skype, which could be a similar property and should have been. another thing they have left fallow. skype is this very underleveraged property that was very popular globally, by the way. >> do you have any other ideas about what they might still want to buy? >> is dropbox. yes, i think probably box and dropbox would be things i would be looking at favorites of the satya nadella. even linkedin would be an interesting purchase for microsoft, if they're going to do a big one. if not they will probably do a lot of small purchases. i think the box, dropbox, linkedin would be where i would be looking. >> kara, what about that whaif already bought? you mentioned skype but the big looming question of what they would do with nokia. do you think that they need to do much more work to start integrating or do you think they can just keep rolling up a lot of new technology to try and inknow vatd the way that gates is saying they should? >> you know, i think nokia is a big problem. it's going to be a big question if they can continue to innovate in the phone space. i think a lot of people at microsoft is a morning after kind of thing, what are we going to do with this now which is classic when you buy the big purchases, is what do you do now and who is going to run them. i think they're going to have a tough time integrating nokia and getting traction in the phone business. >> are we going to get to talk to you on fridays from now on? >> yes, indeed. i'm going to come every friday and give you the news from tech. >> that's like "tuesdays with morrie," only different. of course, a reminder, nbc news group is a minority stakeholder with re/code. also coming up, another blow for gm. consumer watchdog group has tracked 303 deaths related to airbag failure. but first, we want to get over to rick santelli who has got his eye on something in the markets today. rick, what are you watching? >> it was so fas narcinatinfasc. like many, we all watched warren buffe buffett. talk about timothy geithner's book and how the government saved the world. i'm not going to debate that but i will show viewers something that predicted that mortgages would lead to big problems, very fascinating because a lot of these predictions were made before the crisis. all in about 45 minutes from right now. right now. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. ...return on investment wall isn't a street... isn't the only return i'm 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. female announcer: what will you man:with your new i'm getting a camera!? - i'm getting an espresso maker! - i'm getting a new smart phone! female announcer: during sleep train's big gift event get a $200 best buy gift card with purchase of selected beautyrest, posturepedic or tempur-pedic mattresses. or, get 24-months interest-free financing. - a new tv... - a laptop... - a game console! female announcer: what will you get during the big gift event? ♪ sleep train ♪ ♪ your ticket to a better night's sleep ♪ welcome back to "squawk on the street." check out shares of cooper tire an rubber, the nation's fourth biggest tire maker posting better than fourth quarter earnings. higher than industry norms. that stock is currently up 7% right now, carl, in trading. >> thank you so much. general motors taking another hit this morning. a consumer watchdog group tracked 303 deaths after airbags failed to deploy in vehicles recently recalled. joining us this morning, center from auto safety and our own phil lebeau. >> clarence joining us from washington. claren clarence, the letter you sent today to the "new york times" as well as to the national highway traffic safety administration, you basically say that general motors had an obligation to realize that there were these 303 deaths that were linked with airbags not deploying. what is it your actually saying here? are you saying that general motors knew about these incidents and either covered it up or ignored it? >> both general motors and the government knew about these incidents because they're in a publicly available database, maintained by the national highway traffic administration of every single fatal crash in this country. >> right. but clarence, the argument from general motors is this is raw data. if you look up the raw data for airbag deaths for any other model where airbags were not deployed, you would find airbag deaths for almost every single model out there and this is taking raw data and blowing it up essentially yelling fire in a theater when, in fact, it's not as your portraying it. >> now, what we're portraying it as evidence that there was a wide spread problem, that no one searched and what we called on the government to do is what they have done in prior investigations. go into this database, send out special investigators to look at each and every crash, and find the ones that are related to tig in addition switch. if they had done that when this database was being built in the 2003-4-5 model years, what they would have found was an increasing incidents of front seat occupant death where's the airbag didn't deploy and no one asked the question, why are these airbags not deploying. let's look at the individual crashes. if they had done that, we would have had a recall years ago and we wouldn't have the controversy we have today. >> clarence, we reached out to the national highway traffic safety administration and it says it did three separate crash investigations regarding incidents where the airbags did not deploy. the conclusions were that it was inconclusive. and as a result, their argument is, look, we've looked into this. this is not like we're ignoring the possibilities that were there. it has been investigated are you saying that nhtsa did a gloss over? >> nhtsa closed their eyes to this defect. this crash database, if it had been linked up with the reports that gm was filing with the government on deaths in cobalts and ions they would have found the airbags weren't deploying. in addition, the special crash investigations that nhtsa cited, they have all the evidence in those individual crash investigations identifying this defect and it should have been a red light to them to let's go look at database and find other incidences. the government blew it. gm is responsible for not doing a recall in 2001 to 2003. but the american public depends upon nhtsa to order a recall when the manufacturer doesn't voluntarily recall. both gm and nhtsa failed. >> clarence, obviously this is hugely sensitive. i mean, especially when you start talking about the potential for criminal charges. is it your allegation that there was some engineer at gm who knew of these troubles and executive at gm who said, we're t not going to recall them anyway? >> well, until we get the depositions of those gm officials we don't know for sure, but when we look at what we have to date, gm itself has said there were recommendations from engineers to modify this ignition switch. it wasn't done. they said it wasn't done because of cost and lead time considerations. so it's sure looks like it's a responsible executive and what we're doing is calling on the government to do a full investigation. and if they find someone is criminally liable, let's put them in jail. >> those are strong allegations, clarence. what would you say to mary barra if you were sitting across from her right now, aside from the you do the full investigation, what would you say to her? >> well, one of the things i would say to her is, look, for the individuals whose claims were wiped out by the bankruptcy, where the taxpayer bailed out general motors, pick up the lie abiliability for tho claims. in addition, what i would say is put in place an on budsman safety at general motors. someone who has the authority to look into anything, not just in the case of this investigation but all futures investigations at gm and if they see something wrong, call them out. >> clarence ditlow joining us today. carl, these are, you know, the letter from clarence ditlow, strong language, basically saying the government closed its eyes and basically saying to general motor, you've got an obligation to look into this as we mentioned there, both sgrks m and nhtsa say this is raw data and you can take raw data and twist it any way you want it. >> phil, clarence, a developing story. thank you for bringing us the latest. we want to make a turn from michigan to california which sells over $20 billion in wine a year. but this year that number might be a lot lower thanks to the weather. jane wells explains in napa valley, california. that story coming up next.t. opportunities aren't 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. on my journey across america, i've learned that when you ask someone in texas if they want "big" savings on car insurance, it's a bit like asking if they want a big hat... ...'scuse me... ...or a big steak... ...or big hair... i think we have our answer. geico. fifteen minutes could save you fifteen percent or more on car insurance. state of california produces more than half the wine sold in the u.s., but an ongoing doubt is a big threat to this year's crop. jane wells is live in napa, california, with more on that for us. jane? >> hey, kayla. these are cabernet vines behind me. while napa has had some rain it remains woefully dry. temperatures are warm. 80 today and the vines are starting to show it. >> this chardonnay is actually starting to grow. probably about ten day earlier than we would normally see it. >> napa's rainfall is still maybe only 30% of normal so growers are planning things like telling over more ground cover as usual to retain moisture and keep the grass from competing with the vines for water. fortunately this area has adequate ground t water right now, unless everyone starts ove over-pumping. >> when there's too many straw in the soda can it goes away fast. >> how are you compensating for the lack of water? are you doing anything different? >> well, we're going to church a lot, spend a little bit more time praying and that's probably the most important thing. we've put in these remote weather stations to basically monitor our conditions via web-based software throughout the county. >> paul goldberg uses technology to monitor moisture, all transmitted wirelessly to his ipad through solar powered weather stations on his ten ranches. it's a significant investment which saves water and wineries like silver oak are doing the same thing. >> the old days of farmers went out and kicked on the valve for 12 hours and woke up in the morning and turned it off. now we'll go out and do four or six-hour sets, might do that a couple of times a week, depending on the time of year. there's a lot of technology. >> now, there is a lot of change in the air. i just don't mean the climate. napa county is thinking of investing a pipeline to bring in recycled water, growers are upping their crop insurance for the vineyards. as they replace vines thinking of how to space them for future mechanized harvesting which will handle potential labor shortages. 2013 was a great year. we're t not going to run out of wine. later, guys, we're going the talk about things like, would you like your wine out of a keg, cork versus screw cap, and merlot back from the dead ten years after sideways. back to you. >> jane, don't tell that to the writers of "sideways" who did not do any favors of the merlot business. i was in napa two years ago this time of year. it rained the entire time and all the growers said don't be mad, we needed this. is this becoming the new normal out there? >> i think the new normal are more extremes. we could end up with an el nino later this year. if that happens, we'll end up with cooler, wet temperatures. so i think the new normal is not necessarily warm and dry, it's just different. it's more of a beta weather play out here. >> the intrepid jane wells reporting live from napa. jane, we'll stay tuned to your reports throughout the day. thank you. meanwhile, check out shares of castlight health. we've been watching it all morning. it surged in the big doerd debut. 142% rise. box it's been a good year for ipos. what is the floor saying about this? >> the important thing is huge demand for the product. this whole area was covered with traders earlier here. jason, the dmm, did a great job opening the stock, keeping it open. i want to put the chart back up. remember something. the price talk was $13 to $15 two days ago. it priced at $16. it opened at $37.50 and now trading $38.80. kayla's right, talking about 150% increase. why? people are asking me, what is this all about that it would open so much? number one. this is a trend, folks. smallfloat, about 12% of the company, this is very typical recently. companies have figured out, keep the float small, secondary later. it's the intersection of several hot sectors. software as a service here, cloud computing, big data, health care. it's all about haeming companies control health care costs but intersection of hot sectors. and high-profile cofounders founded athena health care and now is the chief technology officer of the united states. so let's see what ceo had to say about what his company is all about. >> independently to where we are in the market we are focused in solving the biggest problem for the american enterprise which is health care costs. we are laser focused on doing that. if we do that well, we create a ton of value for everybody. >> important thing here, 150%. i know that's a little odd but it's not unprecedented. this year, kayla, we've had three companies that have what we call moon shots. moon shots over 100% on the close. closing numbers that are dicerna pharma, ultragenyx. varonis system, big data. software is a service. those are the hot button sectors that moves ipos today. we are waiting for secretary kerry to address the media on ukraine. stocks moving lower. we have some mid-morning gains. lost those. down 39 points. s&p is down almost 5. almost are china, ukraine, and others weighing on the markets? we'll talk about that in just a couple of minutes. 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[ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-280-0154 now. optionsxpress by charles schwab. let's get over to the cme and check in with rick santelli. hey, rick. >> hi, carl. what a wild week. before i get into my main topic, as i look at the board and see a ten-year note yield hovering in the low 260s, keep in mind that if we look at the key day for all maturities, 5s, 10s, 30s, you want to be benchmarking february 3rd. what was that low yield on february 3rd, for 5s it was 144. we're at 151. so only about seven basis points away. in 10s, it was 257. we're at 263. six basis points away. for 30s, we're currently at 357. it was at 353 in the closing yield on the third. we're only four basis points away. should any of those maturities close below those levels even if this is driven in part or half these drops have been geopolitical, that will be technically significant. pay attention. all right. we are anxiously awaiting, remember when i had senator crapo on yesterday about actually seeing the text of this reform bill, the reform the gses. one thing, and i haven't read it, nobody has, the one issue that purportedly is going to be in there is some form of a government guarantee of the securities but the private sector on hook maybe for the first traunch. but it really harkens back to a book, okay, that i've been reading. it's called "economics in one lesson" by economics. the neat thing is and kind of amazing if you read it, that this book was written in 1946. he died in 1993. why is that important? because this morning warren buffett, maybe the smartest investor t in the world, was talking about reading timothy geithner's book and how the u.s. government maybe saved the world. that's a debate for another day. but could it have been avoid sd the real issue. now, in chapter six of this book there are some interesting material that mr. haz lrk et wrote. that it, being the government, will make loans to people who could not get them from private lenders. this is only another way of saying that the government lenders will take the risk with other people's money, the taxpayers, that private lender also not take with their observe money. let me think. subprime, housing, affordability, it's all there. what's even more impressive is how he goes through the issues in chapter six that will be destroyed or thrown into chaos. what it really talked about are market signals. in other words, if the government, through guarantees or out right loans -- you have to remember a lot of to analogy is spoken about farmers because it was written in 1946. what he says is if you make loans for farmers to buy either farms or mortgages, that they really can't afford, that the private sector really won't lend them, what you also do is you build signals in that are wrong. you're going to over -- >> forgive me, rick, the president making some comments here after meeting with e ireland's prime minister. >> and self-determination. and a strong message to russia that it should not violate the integrity and the sovereignty of its neighbor. we continue to hope that there's a diplomatic solution to be found, but the united states and europe stand united not only in its message about ukrainian sovereignty but also there will be consequences if, in fact, sovereignty continues to be violated. we had an opportunity to discuss the fact that ireland does tremendous work around the world on a whole range of -- >> and that is that. rick, we'll let you finish your thought. apologies. >> all right. basically finishing the thought to make it simple that all the ills when you give loans to entities that can't afford them is the signals in the marketplace. you overbilled. basically what he was talking about is you create leverage. the final thought he had thattic is so great, it's simple, all credit is debt. think about that. carl, back to you. have a good weekend. >> talk to you soon. rick santelli. as the president suggested, we are awaiting for the secretary of state john kerry to hold his news conference in london. just finished meeting with russia's foreign minister lavrov. in the meantime, our chief international correspondent michelle caruso-cabrera has the latest of what is expected after the referendum on sunday. >> as we wait for secretary of state john kerry we're already actually hearing from the russian foreign ministry via social media. their twitter account has pictures of russia's foreign minister lavrov and john kerry walking the grass of the house today including one with kerry kicking a soccer ball as he walks. the twitter -- it reads, break is over. match continues. of course, we await to see what happens on monday after the much disputed referendum occurs. our colleague at cnbc europe asked him what is going to happen on monday, the day after that referendum in the disputed peninsula of crimea? >> it's hard to see the change that can be in 24 hours. what is important on monday, though, is the reaction of international community on what is happening in crimea because that -- that actually would be the key to the further development sdpls there are increasing reports of violence in the eastern part of ukraine outside of crimea. clashes between pro-russia demonstrators and supporters of the ukrainian government left at least one person dead last night. the home city of the deposed president victor yanukovich, has seen the most consistent pro-moscow support since russian troops occupied crimea. bank branch necessary crimea are running short of cash, there are long lines at many atms and the lines started when the prime minister said it would shift to the russian ruble within the next two weeks. i just got off the phone with the first deputy governor of the ukrainian bank and told me that while at times it is difficult to deliver cash, quote, we are trying to do everything possible to supply all the branches in the country including crimea. ladies and gentlemen, back to you. >> all right, michelle, certainly a tense situation. thank you for bringing us the latest. that's not lost on the markets. the dow near session lows, down nearly 23 points. speaking of ukraine, warren buffett was on "squawk box" this morning commenting on whether the market's international worries are warranted. here's what he had to say. >> they're not warranted in terms of the market. i mean, i didn't sell my farm yesterday. i didn't sell my property down there nyu, why should i sell my businesses? >> dan greenhouse is chief global strategist at btig, cnbc contributor. buffett is not flinching. the vix is barely budgeing. how do we size up the market jitters? >> our basic view is ultimately there are two things that drive stock prices. there's some combination of valuation and earnings potential. on the earnings potential, the s&p is still going to earn 28 bucks and change in the first quarter, 29 and change in the second quarter, 8% or so for the year. valuation might come in a little bit as people get skittish here. generally speaking what's going on in t ukraine doesn't affect investors more generally. the point that warren buffett was making. >> meanwhile, you do have russia flexing its muscle. deutsche bank said the best case scenario envesters should expect is for crimea to join russia. is that the great stabilizer the market has been waiting for, at least for now? >> i'm no geopolitical strategist but richard who irans our international desk and is the second smartest person on that desk after me does bring up an important point which is that after the 2008 war between georgia, russia, and what's going on now with crimea, investors around the world obviously,er isly in the united states but more generally around the world, might see this as a series of steps of aggression, if you will. and the prospect that perhaps the u.s. will have to take a more assertive stance to defend the peninsula is something that's not being discounted right now. now, which is -- i don't want to say expert on russia but a pretty smart guy and i think that's an interesting way of viewing things. that's not necessarily my view now but something to consider. >> you know, we want to move for further afield of china, too. new growth expectations coming down there. moved the markets yesterday. that's this idea of china shadow banking sector, the ft calls it a lehman moment if it potentially defaults. what happens in that case? >> well, certainly in that case things would be terrible but i don't think that at least in terms of their clients, anybody is working assumption is that the chinese authorities, lee ka-ching is going to allow it to take place. let's be clear. it's been one corporate default. reining in loans to certain sectors. the news stories out there are concerning but i think your operative view on china right now still has to be the floor for ddp is 7% and not any longer. >>meantime, what is wrong with the strategy of starting to look at the bristol-myers and verizons of the world, stocks of companies almost exclusively domestic, that don't have exposure to china or the ukraine. why is it given the volatility right now? >> i'm attempted to pronounce bristol-myers the same way jim does. >> do it. >>ly not. there's a strategy for that or that strategy has been in place for years as people have looked at the u.s. as being -- as the saying goes, the cleanest shirt in the dirty laundry. but taking that argument one step further, it's important to remember that viewed solely through that standpoint, s&p 500 companies get almost no revenues, if any, from crimea or the ukraine more generally, certainly china is a concern but for a lot of these companies, it's developed economies that you want to focus on, it's europe, latin america to a lesser degree. again, not that china doesn't matter but to the extent that russia takes over crimea, which at this point you kind of have to assume is going to happen, i don't know that i would change the path of earnings expectations, at least it doesn't for us, for s&p 500 companies. >> dan, there's no denying that strategy has paid off. here in the u.s., though, bad consumer confidence number this morning. fed meeting next week. what smoke signals are you watching? >> for the fed meeting, everybody that we speak with, there's no concern at all that the fed is going to do anything other than reduce asset purchases by another 10 billion. that is the overwhelming consensus and appropriately so. that's something that people have dreaded for some time. there are people who thought that nearly the announcement of the taper would be the top for u.s. and global stock markets. that's proven to be inaccurate. to the extent the fed walks this back your personal views on what the fed is doing or should be doing, correct or incorrect aside, the fact is that the fed has now scaled back twice, is likely to do a third time, and it hasn't been market disruppive. >> dan greenhaus, the smartest guy at btig, thanks. when we come back, your house is getting smarter. it's not just google thermostats, why you will never be locked out of your house again. with the founder of a smart lock company when we come back. and this will be your premium right here. sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. love this guy. okay, does it bother anybody else that the mime is talking? 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[ male announcer ] get to a better state. state farm. and you'll see just how much it has to offer, especially if you're thinking of moving an old 401(k) to a fidelity ira. it gives you a wide range of investment options... and the free help you need to make sure your investments fit your goals -- and what you're really investing for. tap into the full power of your fidelity green line. call today and we'll make it easy to move that old 401(k) to a fidelity rollover ira. coming up, from china to russia, identifying the global threats to this bull run and now you can steer clear. then will the shorts be vindicated? we're going to reveal the most short eed stocks and find out i they're going to underperform. we'll find out what mark zuckerberg's call to president obama is about facebook's mojo. carl, see you in 15. >> scott, thanks. august is reimagining home security with the smart lock. using a lock that retrofits to your existing lock. they gain access through their smartphones and can give or take away access to whomever they would like to invite in. jason johnson is the cofounder and ceo joining us from out west. and jon fortt is here at post 9. good morning. >> good morning. >> jason, walk us through the news. what is it? >> so we have been developing the august smart lock, a device that allows you to use your smartphone to access your home. and issue keys to your family members, friends, maybe housekeeper or a dog walker. we're in production of the product right now. today what we're announcing is a compatibility assistant we're sending out to all of our pre-order customers to help them get ready for august. the ways this assistant works is august is designed to go on the inside of your door. just on the inside of your door. attaches to your existing dead bolt lock. what this tool does is allows you to take pictures of your existing lock on your door, spend them to our data center where our customer service ats can we view the pictures and determine whether your door is ready for the august smartlock or if there are some things that have to be adjusted to get it ready. >> interesting. jason, thermostats are one thing. it just controls how hot or cold your house gets. the lock is kind of the mother lode when it comes to home automation. people are concerned about this security of this. do you have an argument about whether this is more or less secure than a physical key? not in terms of giving it out to other people, but in terms of using it ourselves? can it be hacked? >> it's a very good question. with keys, these metal keys we've use fod for more than 150 years. last year in new york city 2 million people were locked out of their homes because they lost their key, left their keys somewhere. would you believe there's an app that allow yos tou take a picture of a key and within three days they will send you a copy of that key. that's how easy these keys are. add an electronic lock to your home you have the power of encryption technology that you can give a key to one person at a time and you define it for that person, say, for a particular day, say that plumber coming on monday between 2:00 and 4:00, they have a key that is encrypted on their phone and that you can remove at any time. and beyond the security of having an encryption with blue tooth and additional encryption layer you have the convenience to easily remove that access, say, maybe you have a relationship ending, a girlfriend or boyfriend, you have to traditionally ask for that key back, you don't know did they make a copy, awkward situation. but with the august smartlock go to the app and click delete and the key is removed and no awkward conversation or concerns. >> i'm thinking as a homeowner, jason, i mean, there's only a certain number of apps you ought to have to control all of your home. jon mentions the thermostat. adt has a security app as well. it seems like something that would eventually be rolled up into another company perhaps? is that possible? >> we're focused on developing magical experiences in the home. the august smartlock is our first product. and we're all full steam ahead developing the product and very excited to believe -- make what we believe is going to be the most intelligent and sophisticated door lock for your home. for our cars today, most new carses, keyless entry system for your car. many offices have keyless entry. we're bringing keyless entry to the home. we think it's going to be very popular. >> to me, it seems like it might be a play not so much on new home sales but to the degree homeowners want to invest in their home, we do see some renovation figures, but is there a macro demographic play that determines how much you're going to do? >> well, you know, there's roughly 100 million homes in america. most of those homes have what we call a dead bolt, it's that lock above your door handle. and we made this so it takes about ten minutes for the average person to install it. it's just going on the inside of the door. about ten minutes installation and you're issuing keys to your family members, to your friends, whoever you want to give a key to. and making it really simple we think all of those homes would benefit from the convenience and the security of having electronic door lock. >> one of the things i like about this is the ease of installation as you mention. you don't have to mess with electronic wiring. how do you think this market is going to play out? is the ease and speed of installation going to be key for whoever game share in home automation or something else? >> well, you know, you mentioned earlier that another company that makes smart thermostats. one of their successes was, in fact, making it very simple to self install. and we spent a lot of times over the past year and a half working on that installation process and making it really simple so you can walk into a retail store, you can buy august. it comes in four different colors so you can have it match your existing door hardware, your existing lock. remember, it doesn't replace your lock. it attach toes to your lock. silver one, dark gray one, champagne colored and fun red one. this is the august red. this is our company color and a little more exciting for those people who want to be more expressive and decorative. pick it up at retail. $199. when it ships later this year. and we think it's something that many consumers will be excited about using. >> jason, there's certainly something for everyone there. jason johnson, ceo of august. thanks for joining us. >> thanks for having me. meanwhile, coming up, fire eye is in the news for detecting target's massive data breach. we look at fireeye and the cyber security space next on "squawk on the street." we're awaiting secretary kerry to address the media on ukraine. the stocks are flirting with the positive. the nasdaq had been on tract for the first weak performance. the dow moved to the upside by 31. more on the markets when "squawk on the street" comes right backt ♪ [ cows moo ] [ sizzling ] more rain... 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♪ sleep train ♪ ♪ your ticket to a better night's sleep ♪ ♪ a little katy perry on this friday morning. it's a tale of two stocks in the market. it's a favorite strategy at long short funds and today we're looking at a pair trade. dom chu is at hk picking a winner and loser in cyber supreme court by. >> that's right. a pair trade, picking one stock you're going to sell short using the proceeds of cash to buy shares of another one. in a perfect world that stock would go down in value in the stock you bought would go up in value. there's a winner, winner, chicken dinner trade for a lot of people. one such trade in the tech sector. cyber security. look at fireeye versus symantec. fireeye is up 77% in 2014 despite today's drop. meanwhile, symantec shares were down 14% in 2014. so had you sold shares of symantec short, used the cash to buy fireeye at the beginning of the year, 2014, nice home run trade. how about things going forward? analysts have six buys, nine holds and one sell on the stock for fireeye. again, maybe a little bit of a hung jury there. the price target 78 bucks where it's trading right now. now, fbr cyber security says fireeye is going to continue to out perform and believes it's the only pure play next generation cyber player out there. he thinks the sophistication level of cyber threats are only getting more complex. that could lead to, get this, 40 plus percent sales growth over the next three to five years. symantec, he acknowledges the turn around story is happening but thinks it's facing stiff headwinds, the consumer antivirus is still a big part of the business agent symantec. the jury is out on the future but you can't argue with the results of this pair trade. down 14 for the other, carl. again, this one looks like it's working out well for the time being. we'll see if it goes back to mean reversion at some point. when we come back, tweet time. mark zuckerberg is frustrated over u.s. government's spying and hacking programs calling it a threat to the internet. he's taken to his facebook page to vent at president obama and that brings us to this morning's squawk on the tweet. we know what zuckerberg had to say about how the white house handles affairs but what was the president's biggest complaint about facebook?facebo ok? for tapping into a wealth of experience. ♪ for access to one of the top wealth management firms in the country. ♪ for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about axiron. anbe a name and not a number?tor scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. welcome back to "squawk on the street." gravity is taking hold of plug power this morning. know, the reason why valuation, what else, it did say fiscal 2014 still has potential for the company. right now though shares trading down about 4% on the day. the stock is up more than double on this month alone. carl, back over to you. >> thanks. let's get to squawk on the fwe tweet for friday. mark zuckerberg is frustrated over the u.s. hacking programs calling it a threat to the internet and has taken to the facebook page to vent at the president. we want to know what mark zuckerberg had to say about how the white house handles affairs but what was the president's big complaint about facebook? craig writes, president obama wanted to be able to opt out of all these mandated programs, or ads. rick writes, president obama's biggest complaint, the lack of a frememy category. and mike writes, obama's biggest complaint, too many cat photos. >> you can never have too many cat photos. >> you're a cat person. s&p, 18.50 and change, a point and half off the intraday high. 50-day moving average on the s&p, 1846. we had been waffling on both sides. referendum on crimea is expected to be a move to stabilize the market once we get a direction on that. we're still waiting for secretary kerry to speak to media in ukraine on what his next move there is. but certainly russia's flexing its muscle. >> yeah. waiting for secretary of state, as kayla says, to come to the microphone. we've heard from the russian side as they did meet in london. some reports said for not for very long. 10 or 15 minutes. technicians starting to look at of the past corrections on the s&p, how many intraday lows came on a friday. one of the of the last dozen or so suggest that the lows of the day today were probably not the lows we're going to see in the near future sglerch though the market has turned positive it is still in negative territory for the week. the dow would be down just shy of 2% on the week. we haven't seen that since january but, of course, we've had a lot of upswing this year. >> s&p began the week at 1877. that does give you a sense of how far we've come off in the past five sessions. so with all that, scott wapner is going to have material to work with for the next hour. right, scott? >> no doubt. thanks. china certainly still on every trader's mind and then the developing situation or the on g gongoing situation in ukraine. bubblelicious as castlight. get shorty after a year long wait. some of the most dissed names on the street finally ready to break down? in your face, mark zuckerberg calls out the president over the spying program. what does it say about the social media mogul's mojo? and we're going to speak to a professional d

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