post. a lot of the center, middle of the road -- what, did liesman read the journal today? >> we're not quoting the journal. we're quoting steve liesman, who also has a story. >> it's like where you take one of those tests where you read the article and you have to go and answer all the questions. i read it, too. but steve really has the details? >> yeah. it is at the top of the page. it is a big deal, though. >> it is. >> and we talked to bob corker last week and we knew they were getting somewhere. >> like buffett said, we need to be able to wind down things that are -- that was the problem with aig. it wasn't a bank so there was no authority for anyone to do anything other than bail it out, right? you couldn't wind it down. you couldn't break it up. that resolution authority is something that i think -- i guess that's why both sides at least can agree on that much. but they wanted a separate -- the left wanted a separate consumer protection agency?

>> outside of the fed. and then the white house later dropped their insistence on it being an outside agency. and you krad crudeman yesterday said why would you want the fed being the eyes and ears for the consumer when obviously they've endured a lot of criticism. >> geithner, they're mad at everything, right? >> yeah. >> i would read crudeman every day. but that's just me. i read crudeman while i'm watching rachel mada, and tivoing it and watching it again and again and again. president obama's economic adviser speaking out on the relationship between wall street and washington. karen finerman asked him if a lack of ceos or anyone with even a scintilla of business experience in the president's cabinet fueled the perception that the administration was anti-business. >> if you look at the president's schedule, if you look at the speech he gave at

the business round table, if you look at the half a dozen dinners, lunches, other meetings he's had with groups of business leaders, i'd be surprised if there has been any other administration that has spent as much time with business, cooperating with business on issues. and i think much more important than the backgrounds people have, which they ought to check at the door before they come into government, is the approach that an administration takes. >> do you hear that whole thing snep he would be surprised if there was any administration in the history of the country that has cooperated as much with business as the obama administration. >> i think you can tell every time we hear of jamie dimon meeting with the president or seeing other -- >> so you bought it? you take that at face value.

we were just talking before the show started about that book, "game change," right? when you read about stuff purportingly happening, do we believe it? some people have doubts. >> but you read behind the scenes what's going on and you remember what the players were saying to the cameras and is there any -- is it ever, you know, reality? it never has any bearing on reality. >> but you can -- after this, you've got to watch the complete interview with larry summers. you can see it on cnbc.com. just watch it regardless of how you -- >> you also gave an interview yesterday where he started to build expectations for data later in the week. jobs on friday, saying that it's going to be affected by weather, which was, i think, the lead on drudge for a couple hours yesterday. >> yeah. >> making excuses or something like that. >> exactly. they don't know yet.

nobody knows about friday. >> probably thursday. >> but they're just -- i guess they're assuming that maybe some people think we go back up 9.7%, go back to 9.9% or maybe 10% as people come back into the workforce. and that headline number is -- nobody likes that near 10%. >> some corporate news this morning, the head of intel's core products group is taking several months of medical leave after suffering a stroke. sean maloney has been a public face for the world's largest chipmaker. he's expected to resume his medical duties and the prognosis for his full recovery is excellent. futures, we began the month of march pretty well here, joe. did you see that yesterday? >> i saw that the lead story in the journal was that we're -- or on the 10 point, we're 25 points away from being in the black for the year. >> on the dow. but the s&p and nas are already there for the year.

>> i need a really good march. >> you said 1250 by the end of the quarter. >> yes, obviously. futures are looking pretty good here. australia did raise interest rates and the pound continues to get hammered. there's a look at the dollar. up 2 cents on the april contract. 10-year note is yielding 3.621%. it's the dollar story and the euro story. people are talking about 1.30 pounds and in the worst case, 1.30 pound. >> i like the idea that you have all these countries doing their own fiscal stuff, but under the blanket monetary policy. and that's like a flawed -- and sooner or later, it was going to have -- did you see growth that some of the sovereign debt would be no better than corporate debt at some point in the future. oh, yeah, the dollar rallied in the last month as oil rallied. that's good. finally, if you're going to have

a rebound in economic activity, you figure that that disconnect between where oil only goes up when the dollar goes down, sooner or later one hope some of these weird things -- >> it's been hard to break $80, though. >> yeah wibt has. i don't know whether you noticed, whether your driver told you -- >> gene. >> yeah. they have scanners now in super markets. >> gold is not doing much. christine tan is in singapore. first, though, let's go to london and check in with anna edwards. >> good to see you, carl. we're following the story of the british pound and what's happening there. again, we're seeing more weakness in the currencies today. the issue, as we look at an election, the first half of this year, may 6th is the date that people are assuming the election is going to take place. but we don't know that for sure. as we look towards that election, there's a lot of fear that we could see a hung parliament.

so no overall majority for any party. at least some analysts believe we wouldn't see such precise deficit on that uk is currently running. the mining sector is doing fairly well. a mexican miner that is listed in london beat expectations, higher still for prices and higher output. that as rio tinto's boss talked about the possibility of a "w" shaped recession and a double dip. so mixed reflects on the mining seconder. we're following the gm story with regard to opel. gm has decided to increase the amount of money that it's going to put into its troubled european opel arm. that's gone up from 600 million euros to 1.9 million euros. we continue to watch that one. now to christine tan in singapore with the latest there. >> hey, thanks for that, anna. a mixed session here in asia. the reserve bank of australia hiked interest rates by 25 points as expected.

it's the fourth rate increase and it coincides with data that showed today. now, despite the tightening buyer, the aussie dollar slipping just a little bit as investors questioned how soon before the next rate hike. on the equity front, this is how the picture is looking. ought trailan stocks rose 0.3%. but the rate hike limited any upside. over in japan, the nikkei rose 0.5%. the tech sector getting a lift from upbeat comments. that helped offset numbers from astella pharmaceuticals. the long kang fell 0.7% after a fall in disappointing earnings yesterday. the shanghai lower today. that's the action here in asia. joe, i'm sending it back to you. >> christine, thank you. let's get to the u.s. trading day ahead joining us for today's

discussion is tim freeman, head of u.s. equity derivatives at capstone equity markets. tim, is english your first language? i've been reading your notes. >> believe it or not. > >> you're a derivatives guy. you're spreading the spread as opened to long-term puts. >> i would go with the butterflies on that. >> butterflies are another good fly. >> brokers like the crocodile spreads because they eat away all the commission. we've also got rich steinberg. we'll return to you in a second, tim, after we get some back drop from rich. rich, you're bullish if the greece issue can be rectified, which it looks like that might be in the process. and if it doesn't spread to a more important place, like spain, then we could have a rally. >> i do. the greek situation has to work out, joe. because the french and german banks are so deep in explodier

that they're going to have to make it work. so i would expect on friday, even though there will be a tough decision between the heads of state of greece and germany, we will get a resolution. as long as we don't get a contajan to speculators and focusing on spain, i think we're setting ourselves up for a decent rally. rif money is coming back into the market. we've had a sell-off in both commodities and emerging markets. if you start to get a rally again in the euro, back above the 1.35, 1.40 level, we could set ourselves up for a accident equity rally. we'll have to see how the fed continues to talk about interest rates. the canadians will probably raise soon and the australians just did. >> is this just a bump in the road for that whole system over there? we were talking about it with

someone, you know, when you've got each country handling it own fiscal affairs, but the overall union with the monetary, is that a flawed system now? we're starting to see that there can be some problems here. >> you and i have talked about this the whole time. the whole euro zone concept is flawed. the english don't trust the french. the germans don't like the french. not many people like the french. but you end up with a situation, with really, where everybody is trying to do their own thing under the guise that it should all work together, until the system is stressed. so i think over time, unless they fix some of these issues where people are really focusing nationally and treating themselves as euro citizens, unless it gets resolved over the next couple of years, we could see the unwinding of the system. >> we love paris, right? it's full of french, though. we love the fries. all right. now, let me get to tim.

okay. so with what i said earlier, we all know about the vix. we've -- the viewers know about the vix. we got comfortable with that. in layman's terms, can you talk about where we are right now in terms of volatility? and you're a derivatives guy, an option guy, but what can our viewers get out of this? >> sure. i think we are setting up for a bull market rally here, as long as we get good employment numbers out of the end of the week. but it has been the calm before the storm. volumes have been incredibly light. so to discern any sort of trend out of the market right now, it's next to impossible. last week when we traded off abruptly, down to ta 1086 let me, you can see the outrights come back in and put it right back in to the short spaces. >> the outrights along? >> the long only accounts. >> came right back about we got down -- >> on the s&ps, yes. and started buying the market. so from a volatility

perspective, lower volatility, lower front end volatility. near term, you mean? >> near term volatility. options are expiring over the next month or two months. that volatility is expected to come in. the entire curve, we can look at it just like we look at in interest rate curves. and that entire structure, the option prices in implied volatility terms has moved lower and lower. we are expecting resolution from greece. we are expecting better economic numbers going forward and the market is much more comfortable. that being said, the vix may stay elevated at times because it takes into account the pricing of deep out of the money put options. and even though a more at the money option may lower the price may go lower in volatility terms, those deep out of the money put options may stay very expensive. in dollar terms, they're actually very cheep, but in terms of the model and what it will tell you in terms of volatility, those numbers will stay relatively high.

levels may stay a bit more elevated than what we'll see in the s&p. >> although 19 on the vix is not elevated. right? >> it's low, exactly. and if you look at front dated at the moment s&p options, they went out at like 15.75%. so much, much lower. and the reason the vix is so much higher, that 19 level, it takes into account the implied volatilities these deep out of the money options. and because in dollar terms they're so cheap, people will bid them up. they can be a 50 cent option. >> so summarize that, there's a wait and see, almost what rich said, a wait and see and what happens with some of the sovereign debt before we get knit resolution from this trading range. >> absolutely. and investors are really in trouble here in that assets are very highly correlated, meaning if they're in a sector or if they're trying to make betts across different sectors in single stocks, more of the risk

is involved in the sector, not necessarily in the single stocks. so it's hard to pick stocks right here. so if i manage a utilities fund, for example, most of my risk really comes from the sector itself, not from me picking stocks. so for a long/short manager on the hedge fund community, per se, it's hard for him to pick a long and a short that will perform over a long period of time. so he'll lose money, lose money and make it difficult to continue. >> that's rich's job. so rich, if we do finally get what you're looking for in terms of a better market, where would you be, which sectors? >> i think you're going to continue to focus back to technology because the cycle has been so delayed in reinvestment. energy, especially, you were talking about the decoupling of the dollar and oil, we think that oil could stay strong because economies are getting better. and if we can get some political resolution in washington, i think we're setting ourselves up for some decent money to be made in health care, specifically in

biotech and maybe companies like well point and genzime, which we own. >> so resolution how? either way, a scaled back bill, maybe now, pelosi is talking about a smaller bill. do you expect something to happen, rich, or do you think the whole thing can -- go ahead. >> i think we will end up with something, but it's going to be so minimal, that it will be good for the sector. >> yeah. >> the other thing, joe, that we saw recently that you could talk to your next guest about is i bumped into a real estate turn around guy for one of the biggest home builders and they're starting to do some buying. for the last three years, he's been depressed. he says things are starting to tick up a little bit. there's no financing. but i'd be interested to find out what your next guest has to say about the housing cycle because that's an interesting data point for us. >> you mean at seven, lefrak? >> yeah. >> the market has been depressed or he himself has been depressed? they both have been? sometimes it goes hand in hand.

>> let me just point out this. some of the work that we did with sectors that are not so correlated and where we're seeing more single stock price risk are health care, consumer discretionary, consumer staples. so if i were to pick stocks, i would pick those areas. >> thank you to tim and richard, both part of our discussion this morning on the market. >> that's what that was just now? >> that was a discussion about -- it wasn't a task force. >> okay. you're not going to do the task force? you don't do the task force. >> i don't do it. that was a discussion that we had. >> you're going rogue. >> how many copies now on that? >> i'm not sure. when we come back this morning, we'll go to athens, the latest attempt by greece to convince the eu and others that it has a debt crisis management plan.

welcome back. equity futures this morning, u.s. markets looking pretty good. in miktsed markets around the world. but the big story overnight was the reserve bank of australia raising rates and offering clues

that more rate hikes could be to come. gm recalling 1.3 million vehicles over steering problems. the company says the issue has been linked to 14 crashes and one injury. the recall covers certain chevy and pontiac cars in north america. drivers may find it difficult to steer the vehicles under 15 miles per hour. jay leno officially returning to the "tonight show" last night. he compared his last nieven month to dorothy's wild dream in the "wizard of oz." i'm jay leno, your host at least for a while. i was to admit, i'm a little nervous. not because it's my first night back, because because dave .oprah are watching. like an old comfortable shoe, wasn't it? isn't it? i tivo'ed it. when is the last time you tee row'ed the "tonight show."

>> i generally watch it live. >> i watched the hockey game the other day. >> and 17% of the viewing public. illustrate was the most watched game in 30 years. >> and i'm tivo'ing leno. so weird things are happening. >> the lineup he's got this week is incredible. palin i think tonight and then, of course, a host of olympians all through the week. >> i have two words for you. >> what's that? >> new coke. >> can you explain that? >> yeah. they tried it, it doesn't work. go back to old coke. we'll see what happens. >> we will. >> we'll see how dave feels about this in about two months, when it kms becomes clear again that he's losing to leno. maybe that will happen. >> we'll see. >> from my lips. go ahead. >> let's get our national weather forecast this morning. scott williams is over at the weather channel. good morning, scott. >> good morning to you there. certainly we are finding march

coming in like a lion for parts of the southeast. take a look at the radar here. we have rain and snow showing up in pink, even a threat for severe weather as we move into the sunshine state later on today. we'll zoom in first, watching for advisories, for some snow around atlanta, charlotte into raleigh. the higher elevations of the carolinas and north georgia will see more in the way of that snowfall. but certainly, we are seeing that change over right now in metro atlanta and throughout the day we'll watch that snowfall lift farther to the north and the east including the charlotte area, also raleigh. so here is a look at the radar right now. you can see some of that rainfall moving in. the national forecast showing atlanta, 38 degrees for the high temperature. rain mix, snow. south florida, 81 degrees. you'll see showers and thunderstorms. but then as we move into the northeast, philadelphia, 45 degrees for your high temperature today. cloud cover on the increase for new york city, as well. boston, 43 degrees. but this same system in the southeast moves into the northeast by tonight, bringing

more snow back in the forecast for places like philadelphia, new york city and even into the boston area. so a bit of a break today in the northeast. but we're tracking this moisture and snow as it moves to the north and the east later tonight. back to you. >> scott, thanks for that. scott williams over at the weather channel, it's a big week for greece. the country is trying to convince the european union and market that it's being thrifty. guy johnson is reporting live from a athens. guy, the eyes in the financial world, at least are all on you. >> they very much are. let's show you what's happening as we speak. if we come around, we can see what is happening. taxi drivers striking in athens today. they've been gathering outside the finance ministry in the last couple of minutes. so public opinion is very much part of the story here at the moment in athens. later on today, we've got a meeting, of very senior figures

within the ruling party to discuss further os tearty measures designed to appease european markets. that package is likely to be announced tomorrow. we have a televised address by papaconstantinou, the prime minister, coming up this evening. we're hearing that there is going to be a big public sector story. the key question for the markets, though, is when does greece go to the market for a bond auction? there's a real case of brinkmanship happening here. the greeks are saying, we don't have to go any time soon. the market is saying, you have to go by may. and i expect the germans would like them to see them go to the markets and see if they can auction any of those bonds away. but i suspect greece would like to see the guarantees first so the auctions can go at a higher

rate. i suspect this story will be present for the next couple of days, as well. >> a lot of traders are watching closely. thanks for the update. when we come -- what's that? >> recently, you've improved your look on tv, much cleaner and an easier read. what is the name of the new basic font you are now using? great job. thanks. do you know? >> we asked when we got our tutorial from graphics and i've forgotten the name of the font. >> this man from bocca, tafd, really likes it. >> claviva. >> i like the earthy, orange "squawk box." >> and i like the italics. sometimes it looks like mission impossible. i feel more -- >> younger, more happening. i do. i do. >> you're not. >> okay. thank you. when we come back, the nation's automakers, set to report monthly sales today. will the domestic players drive away with all the that toyota market share?

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along can carl quintanilla. becky is on assignment.

she was no omaha yesterday. did you see how many flashes he got yesterday on the wires? >> he was all over to the wires. >> i think he said he liked curling. didn't they run with that? anyway, she'll be back tomorrow making headlines today. new signs today that there's a recovery in global trade. the ft citing data from a dutch research institute, the numbers show that the volume of goods traded worldwide rose 4.8% in december. that's the fastest december increase in the 19-year history of the statistics. a three-month maeshl of goods trade i rose by a record. my favorite ft article today, carl, i don't know whether you saw it is right at the top -- no. rogue republicans, the poisonous legacy of the ronald reagan m h myth. this sa mainstream normal guy. >> gideon and rockman.

i recognize the byline. >> this is the ft here. >> how reagan ruined consev consevenism. >> thank you, gideon. how is it going over there with gordon brown? ing. beautiful. >> there's a battle breaking out between cablevision and wald didny's abc. abc is starting to run on-air messages to cable subscriberers last night warning new york viewers they may no longer have access to wabc on monday. some of these retransmission rights are getting really, really spicy. you remember the fight that time warner and murdock had no too long ago. >> yes. cohosted this year. >> steve martin and alec

baldwin. do you think that's going to be good? >> i don't know. could it ever be good? >> are you part of the office pool? >> what did chris rock say about that when he hosted it? >> i can't recall. >> i'll tell you off camera. >> okay. >> let's tell you what traders are saying this morning. good morning to you, kevin. >> good morning, carl. >> i guess you probably don't want to talk oscars. what's the top of your mind? >> i didn't see it. >> we've got australia, we've got the pound, we've got greece, maybe they're all inner linked in some way. >> right. okay. here is what i would say. there's a growing distortion in the market between the confusing the difference between money and debt. and i think that you've seen that two weeks ago when sovereign debt started to get high on everyone's radar screens. we said beware of people that tell you they are experts in it. and i think you can see the u.s. equity market has been on a fairly significant uptrend since then. so starting to watch that a

little bit. i think that you're coming to a point where people in countries are going to have to make that distinction between those two. and in europe, obviously, the trick is to make that line very distinct. it's much harder for them. so put it simply, textbook, everyone always used to believe that when in times of trouble, countries would be able to competitively devalue their currencies. what they're finding out in today's world is that is not an option. the market moves those currencies down aggressively in front of that. and so i think that certainly the united states has -- in the short-term has been the benefit of that relation. >> what do you think -- assuming we and who knows if it's going to be this week or not, but assuming we get some kind of sustained job growth, that coincides with some kind of sovereign debt, maybe it is a crisis, which ones out? would equities rise? would the enthusiasm over jobs

outweigh the concerns over debt? >> i would have to say yes. and especially here in the states, again, the key there is, carl, that you have to vault it in terms of the rate market, not just from the fed, but for many rates. here is the problem. when central banks get into lowering rates and compressing credit spreads, they become one way betts against them moving back out. and so the problem here is not that spreads are tight or rates are low, it's that if the economy begins to turn back towards the news that it had in december, the only way for those spreads to go and rates to go is out. and so as some buffer in the system, some ability to let the system run somewhere other than zero, i think, would be key and that's probably what i think the main concern of the federal reserve. >> right. and then switching a little bit to go more d.c. sent rick, obviously, the top story on all the papers is the financial reform rules, which we think are

close to being done. >> right. >> do you get the sense the street will be happier with these than some of the other proposals that were floated? >> correct. i think the key is there to get it done. it's hard to see which departments you're going to push forward, when the earnings growth are going to come from when you don't know what the earnings are going to be. i think here as opposed to the general view which is confusion in washington is good for the market when you talk about financial reform to get the bill done and get it in front of people i think is much better for the markets and to put it behind us. >> gridlock is good to a point. but we might be done with it for a while. kevin, thanks. it's good to talk to you. see you later. >> okay. >> kevin ferry. u.s. automakers release february sales figures today. analysts will be watching for spillover effects from both toyota's recalls and bad weather in the northeast. joining us now with more, john

giamalvo, industry analyst at edmunds.com. who is going to do the best, do you think? >> it looks clearly that hyundai is the biggest winner here. they started from -- this is a growing company and is now this was an opportunity for them to garner market share and they cleared have. we see on the site they're up about 33% in purchase and it's going to show on the auto sales. >> some cars that drive by you don't even know are hyundais. which ones are selling? >> they're selling across the board. >> the suvs and everything? >> exactly. they just came out with their new tucson. >> kia is included? >> they're up, we see them next to ford and nissan as far as the increase. these will be interesting to see when the exact numbers come out. there's a chance they might surpass chrysler. >> so who is doing better, ford or gm? >> they're both doing a little bit better, but ford clearly has a better footing. >> is the taurus out? >> the taurus is out. >> the fusion continues to be

one of their hottest models. and the ford with the echo boost engine, they're a bit of a supply issue, but ford has clearly been in good shape. >> and gm was greatly exaggerated. you saw barons, i guess. >> you didn't actually see the barons report. >> the cover piece had a -- what was that, a lacrosse that was on the cover. they had a camaro in there, they've got some other models. one of the worries is they could be at a point where they run out of inventory. >> well, we have had -- >> like any good company joining the recall. from what i know, tweeted -- you see, the problem with that company is it lacks originality. >> exactly. but the steering affecting -- what would be better, under 10 to 15 miles per hour or you don't lose the steering except over 80, right? >> only if it's under 15. >> exactly. >> but they did join and toyota just added to their mini series

by adding another recall. they're calling it a maintenance issue, not a recall, that they have with the leaky oil hose that they need to be replacing. so they're going to tell people just start bringing those cars in. >> all right. >> how would you structure incentives to maximize whatever good will consumers are going to give back to toyota? >> right now, they're coming out with a zero percent financing and they're coming out with kind of a maintenance prom for two years. so they're going head on. there are going to be cash incentives of up to $3,000 on vehicles, also. so they're going very, very strong to get their customers back and try to re-establish some of that good will that they've had. clearly, it's been damaged. we're seeing purchase intent. still, snethey've come back to levels that they've had in the past, but still down about 10% across the board. >> we shouldn't leave out chrysler. jeep is still a great name, great brand, right? >> chrysler announced lately that they're going to ramp up these redesigns and they need to. toyota will be down about 10%

we're forecasting, but chrysler is down about 20%. they're still really digging deep. >> can we multiply this month by 12 to get a run ray for the year? >> this month, i don't think, is fair to look at the run rate. you're going to look at it about 10.6 million for the year. but i'd say the true number is probably more in the area of about 11.5 million. because between the snow, as we just discussed, some of the supply demands not being able to supply the vehicles and, you know, the toyota thing is pretty much probably helped pent back some of that demand just to wait and see what happens. >> and the five-year average from here on, could it be 12, 13 million? i mean, there's a upgrade cycle that's been delayed, no? >> yeah. i was at nada down in orlando recently, and they seem to indicate that that is where they expect -- >> but we're ready. we're leveraged. we've got some of the labor

control costs coming out of bankruptcy. >> we hope so. and it looks like we're seeing -- we saw a couple of announcements than auto credit has started to loosen up, too. so it can work out that way. >> very good. john, thank you. we appreciate it. what time do they come out? >> after 10:00, right? >> yes. >> throughout the course of the day. >> i kind of just reached the conversation. comments, questions about anything you see here on squawk, the new clavivca font that we're using, quick break now. >> justin timberlake. >> news inside and outside the world of business when we come right back.

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would i be. time now for a check on the news outside the world of business. monica novotny is here with a roundup of the headlines. >> we'll start in chile. after initially declining to request foreign assistance, the country's president has now officially asked for help from the u.n. and the death toll now stands at 723 there. former tennessee congressman harold ford jr. tells the "new york times" he will not be launching a u.s. senate campaign in new york. the democrat says while he feels he could have won, he did not want to risk damaging the party's chances in the general elections by launching a contentious battle. take a look at this video. a police officer in ohio

survived after being hit by that car. he had stopped to help a strand motorist. the person in that first car slid on that ice. so the forehelped that person. manages to push the first driver out of the way. he has multiple fractures, but they say overall he's doing already. >> wow, that's good. he was moving the right direction. yeah, he was heading out of the -- anden kind of was headed that way, at least. that's good, though. >> impressive how he -- did you see how he throws that arm out just as he sees the car is coming? >> heroic. >> absolutely. thanks, monica. >> take care. come up, should water be a regular part of your daily investment diet? investment diet, go a little slower because i love this song, i love it. i love it. no one does this song any better. >> sounds like benny hill.

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quench their thirst for water. it will pour over opportunities at the water conference. we're boiling down those things with dean dray, industrial analyst, joining us from new york. good to talk to you. >> good morning, carl. >> you talk about water being one of those -- you call it a mega trend catalyst. it's one of those things, unlike oil for which there is no substitute, right? >> exactly. there's no question that water has hit all the industrial, geopolitical, humanitarian agendas because of worsening supply demand issues. >> how do you play it? there are all these big companies you cover, although you begin to wonder if they're so diversified they don't give you the focus on water that you want. >> one of the ideas in our investment thesis on water is that investors should first be focused on the high end of water technology. we're, frankly, not that interested in pumps, valves and pipes. instead, focus on businesses that address the high end of water technology, things like decell nation, filtration,

ultrafiltration, water tests and then start focusing on which companies are best in breed. among the companies we follow in the multiindustry side, as you say, carl, water is a smaller percentage, we like danaher, 11% of their business is in water test. a razor and razor blade business, be if one in that sector. >> you also like paul corp which you think might be next in line for consolidation. and calgon carbon, which is a ccc. this is mostly about filtration, yes, as opposed to pumping in. >> yes. again, we focus on the high end of water technology. and the two names you identified, both pall and calgon carbon are on the water and filtration treatment side which we think command the highest valuation, the highest technology, good barriers to entry. you saw milipore get taken out. we think consolidation continues. >> what do you make of people say, yeah, great sector, but

it's being driven if large part by government stimuluses, government policies, and those things end and start very difficult, difficult to get your finger on it. >> yes, there's certainly a government influence. there's certainly a stimulus effect that's sort of a catch-up. the idea is if you look in the u.s. alone, water infrastructure needs to be upgraded. and the idea that there is going to be a certain amount of investment today, next year, five years from now. so, the idea for water is it's defensive growth. you're not going to see huge peaks and valleys, but 4% to 6% defensive growth. again, focus on the high end of the technology spectrum and you'll see higher technology in that. >> it sounds like a play on emerging markets or underdeveloped countries. you look at some reports. we obviously have water problems of our own in this country, too. >> carl, that's a really good point. the idea on the emerging markets, they're growing faster because, frankly, they are still putting if infrastructure for the first time.

china is still frantically building out drinking water and wastewater systems. and also to address their water shortages, they're building big decell nation systems. >> interesting, we don't talk about it a lot, but i have a feeling we'll be talking about it a lot more in the months and years to come. dean, thanks for your time. >> thank you. coming up, we have this morning's top stories. also, one of the best known names in the auto industry, mercedes benz and the ceo, dieter zetsche. the monopoly guy or the planter's peanut guy? >> definitely monopoly. >> we hope he'll still join us straight ahead. ♪ freak out >> real estate mogul richard lefrak dances onto the "squawk" set. we're cutting the rug with today's guest host.

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stocks come roaring into march. warren buffett striking some positive notes. >> we got past pearl harbor, but we will win the war, and it's going slightly our way at the present time. >> now the markets will look to build on the momentum. daimler's new dream. >> my class is learning about the environment. what are you doing to help? >> the oldest carmaker teaming up with one of the youngest to build electric cars, dr. z, dieter zetsche joins us to explain. the buffett beverage battle. warren is a coca-cola fan and

the company's largest shareholder. >> coca-cola with $5 billion. >> but pepsi ceo indra disagrees. >> pepsi is about culture. >> we give the "squawk" taste test and find out which is best for your portfolio. the second hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc. i'm joe kernen along with carl quintanilla. becky quick will be back tomorrow on the set. the remainder of the show is our frequent guest host, who's -- i don't know, we made him -- richard lefrak. >> and he keeps coming back. >> he keeps coming back. but you were just a multigazillionair with real estate. you own most of new york, but now you judge miss usa

pageants -- >> miss universe, joe, please. >> i've gone huge. >> not miss multiverse -- >> miss galaxy. >> and on the trump show, "the apprentice". >> i did one segment. >> you were a judge. >> i was a judge. >> did you sit in the chair and they take a picture of you with the donald next to you, did you do like a snake, you're fired. >> is that what that's called? >> yes, we definitely had that experience. and i guess that show was about ready to get started on -- >> it is. >> on nbc. >> a huge star at nbc. >> we'll see how -- >> all he needed, as big as he already was, and then become -- >> no, he's quite gifted. >> unstoppable. >> yeah. >> at that particular discipline. >> in just 15 minutes mercedes benz ceo dieter zetsche will join us from the geneva auto show. then an outlook from the real

estate spector. we'll talk to richard about all this stuff and whether he's made another billion dollars. are you going to do it? you don't know what you're going to do? >> we'll talk about it? >> we'll work on it. >> it's not a secret. >> if you missed the interaction between pepsi ceo indra nooyi and warren buffett, we'll have a street taste test to see which is a better buy, not coke or pepsi the soft drink, but the stock. first a look at this morning's top headlines brought to you today by carl quintanilla. >> the pepsi stock is a little saltier. >> it is. >> we'll talk about that. futures this morning looking pretty good. we've had some decent improvement in the indices in europe in the past few hours. futures close to session highs. key senators said close to be close to a deal to overhaul banking regulation. steve liesman said it would create a consumer protection division within the fed, would operate with a separate budget, write and enforce rules, allow

government to break up large, failing financial firms. fors bob corker and chris dodd said to be selling the idea around to fellow senators. steve will join us with more on that. you think he's only read the front page of the journal? >> no, i don't -- this is his own thing. is there any -- is there one even slight difference between what's in the journal and -- >> we'll find out. he might have special stuff. >> he always does. he never disappoints. meantime, the comptroller john duggan says u.s. bank regulators monitoring so rin debt risk, those have increased. he didn't competent on any specific institutions but says his agency is monitoring the wags. gm recalling 1.3 million cars. this time its power steering. the company says it's been linked to 14 crashes, one injury, no deaths. recall covers certain chevy and pontiac cars in north america. basically drivers may find it hard to steer vehicles when they're going less than 15 miles

an hour. which we've decided is not as critical as an accelerator problem with you're doing 80. >> a lot of trial lawyers out there. they heard you say 1.3 million and they went like that and then you said only one injury and no deaths and they went. like that, right? >> i'm sorry to disappoint. >> lanier was taking notes and -- >> honey, come here. meantime the february rally continues into march. the s&p and nasdaq wiping out their losses for the year. dow within 25 points of doing the same thing. bob doll is chief analyst for blackrock and our guest host, richard lefrak. good morning. >> good morning. >> where were we? last week it was about how miserable the data was here at home. and today it's all about what greece may or may not do tomorrow or this week. where's your attention? >> i think the thing that we need to see is formation of some jobs.

we're going to be trading back and forth. we've got a manufacturing sector doing pretty well, consumer spending money on soft goods, housing depressed, the banking system's still weak, inflation contained. we need to see some job growth. that would be the next normal phase in the economic recovery. and i think we'll get them. >> the administration will not just -- not just the administration but economists as well saying, look, it snowed a lot in the past four or five weeks. are we going to blame the snow for too much? to what degree will it distort the data? >> when you think about how many storms we had in populated areas in the u.s., it will distort the data in february. my hope had been february would show job growth, but i really think it's fair to say that the snow, et cetera, will put a damper on that. we'll have to wait one more month. >> you think the consumer confidence number last week might have been one off, given the nfib numbers have looked -- relatively speaking, looked a lot better, right?

>> in context of all the other numbers your assertion is correct. i expect we'll get a rebound, carl. >> are you impressed that oil seems to be rising, even as the dollar's been healthier as well? >> yes, i think it's a sign of global economic recovery. look, the dollar and oil, we know how they've been kissing cousins for some time here. i think now moving if the other direction tells us economic recovery is for real. including, and maybe especially at the moment, in the u.s. >> hey, bob. i know noticed with interest a comment your colleague made yesterday in the wall street journal about the expected investment returns for the california employees' pension system, in which he said, six, maybe five if you're lucky. does that give us some indication of how you guys are feeling about the stock market, or that's his suggestion about a total return for that particular institution? >> i think that's a total return for a balanced set of assets with a, quote, formal asset mix.

we're in a low inflation world with low interest rates, and so total rates of returns on portfolios will struggle to get to high single digits, let alone double dijz. we can still have a stock market up 6%, 8% over the next bunch of years, and i think that's a reasonable target. >> to some degree, that may be driven by m&a. have you been impressed with the level of purchases in the past few days? >> i have. i think there's a bunch more to come. think about what we have in store? we have an economic roecovery that is subpar. we have corporations with strong balance sheet, good cash flow on the income statement. they'll be frustrated to grow. they have strength. they'll turn to their financial statements. i think they'll use them and m&a will be alive and well for the balance of the year. >> we've seen a couple in energy, obviously. aig, do you think they'll be focused in any one area? >> i think it will be pretty much across the board. within industry kinds of transactions. and i think it will spread lots of different places. i think once we get some settlement in the health care

business in washington, we might see some health care transactions. we already saw one with the milipore issue yesterday. >> with a nice premium. when you looked at last week, you looked at durables which could be characterized weak in some respects, confidence, housing, jobless claims have been stubborn, did you begin to think maybe your thesis of a bumpy but steady recovery might be at risk? >> not really. i think that, look, we need a few pore weeks of soggy numbers to start questioning it. bumpy, by definition, recovery you'll have some bumps in the wrong direction. last week was a bump in the wrong direction. i think we'll see continued mixed data, but leaning to the positive side. >> and you still think fed's going to raise rates by the end of the year? >> that's my personal feeling. i think zero is a very low starting point. the emergency has passed. by the end of the year they will have done something. >> some of the skeptics have pointed out, bank credit down seven weeks in a row.

wondering how in the world the economy is growing, as that's happening and whether or not thinking about a fed hike makes sense in that context. >> well, december's a long way from march, as you know. and i think we will have to see a reversal in those bank numbers. we will have to see some job growth. if those things don't happen, then the fed won't do anything this year. i'm betting that we will see improvement in both those areas, carl. >> how about -- i mean, i know we turn to you to look at stocks, but you have to talk about the euro and pound right now. what occurs when you look at what's happening -- speckically to the pound down six days today. >> yeah. i believe that see weakness in the pound and the euro not necessarily strength in the dollar, which i know is semantics, but we've got a lot of problems there. my view has been that european growth will be slow. they never brought interest rates down fast enough. maybe not far enough. still banking issues. then you put the greece sovereign credit and europe's got some bunching to do to get out of the mess. >> richard, at least on the u.s.

economy, i don't think you are effervesce ent -- or optimistic as bob, right? >> right. because the part of the economy i see, the real estate part, is wounded right now. you know, it's not great b bouyance. i'm hearing suggestions all the time about how many things can go wrong in the economy and how few things can go right in the economy, mixed up also with this political quagmire we're in where there's no direction. i think in general most of the people i speak to, you know, if you said on balance if they're positive or negative, they're a little more negative and a little more cautious than they they should. i was interested in bob's comments about risk taking and that there's some capital out there for risk taking and wonder if he's still here, would he comment on that. >> got any phone numbers? >> right. >> no question, you're absolutely right.

the mood is reasonably dour and sour. as a result of that, i think we're climbing that wall of worry. we need some economic news that's good to get there, some earnings news like we saw in the last couple of quarters. but if that happens, i think it's a slow, steady progress and a subpar economic recovery. it might go in the history books as the slowest recovery on record, but nevertheless, a recovery. >> but there is a mountain of money on the sidelines? >> without question. as you know, cash is not far from a zero return. and lots of money has moved into bonds. if interest rates stop going down and start going up, other risk assets like equities may get some more. >> bob, it sounds like to you, though, getting -- circling back to the first topic, jobs are key. at what point do you think it is getting too late to start building job growth? i mean, how many months are you willing to give these numbers? >> well, i think it needs to happen certainly in the first half of this year. again, i'm dismissing february because of weather. we won't know the march data

until april. if we don't see in the second quarter some positive news, i think those of us looking for three-plus percent real growth in the u.s. will have to go back to the drawing boards. >> and recompute. all right. we'll see what is in the months to come, starting this friday. good to talk to you. bob doll. send us your comment, if you want, or not. you know, questions about anything you see here on "squawk" e-mail us here at "squawk" at squawk@cnbc.com. i know, got a haircut. >> is that why? is that why you're not -- >> too close to the kippers. got a new toupee, a new dye job. up next, the auto industry facing a tough road ahead. we'll see how the high end of the market is weathering the slow economy. then mercedes ceo dieter zetsche joins us next from the geneva auto show. later coke or pepsi, coke's largest shareholder warren buffett and pepsi ceo indra nooyi squaring off on "squawk." which will add pop to your portfolio?

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now the answer to today's aflac trivia question.

what prolific children's author, born on this day in 1904, is credited with coining the word nerd? the answer, dr. seuss. joe, we both got that answer, dr. seuss. >> i said, you'll be totally familiar with the total body -- horton hatches an egg. >> some great ones lesser known. >> kids go crazy for that. >> it's not just, you know, green eggs and ham or cat in the hat. >> there's one with fish. >> one fish, two fish. >> yeah. >> red fish, blue fish. >> fantastic. you know what, they're real easy to read the words and there's pictures. so right up my alley. >> which is good for you. futures this morning looking pretty good as well. easy to read, up 46 points, or 44 points.

42? on the dow jones futures, pretty close to session highs. europe faring pretty well. busy day in auto industry. we'll get number numbers. t one company benefitting from toyota's problems, hyundai, february sales jumped 23% from a year ago. we know when people shop for toyotas, they often cross-match with that brand. they'll be benefiting to some degree as well. we talked about real estate with bob doll. >> right. >> but can you be specific about the concerns you're seeing right now? >> in the industry? >> yeah. >> well, the expression i use is we've gone from the intensive care unit to assisted living. the worst is over because the capital markets have, to a certain extent, created the ability to get that again. and the actual bottom of the market has occurred. i mean, commercial real estate

prices have adjusted anywhere between 30% and 50%. we all know that's happened. what's missing is the interrim gap which is how is this product that's in the system, that's highly leveraged, that's basically has negative equity in it, how is this going to go through the system and reemerge with different ownership? and what techniques are going to be used to accomplish that? and that's very difficult and tricky question. made more difficult by the fact that in the event -- in the case of the cmbs, that the legal constructs that were created are so complex and have never been tested in court, that nobody knows how all this is going to go in an orderly fashion. one thing we do know, we talked about it a little bit off the air, is that there's going to be a lawyers' party here and there's going to be a big party with respect to fees that are also generated by the special

servicers who have been given the authority to deal with these problems once they get into the assisted living center. >> right. the active community, active retirement community. >> right. assisted living. you know, we've been -- and so we're kind of in a state of limbo right now in the industry. because we know that there's a lot of product that's kind of in between, and yet a lot of that product has still not emerged into this system to get re-he can equityized. >> so the worst is with us? >> we've just waded into the water. the expression i saw was that that was the biggest piece of jingle mail, right, because essentially the ownership mailed the keys in. so, i mean, there are -- it looks like the metrics are there's something in the neighborhood of $700 billion worth of cmbs coming through the system now.

and if you assume 30% is going to get if trouble, 35%, which are numbers you hear a lot, maybe a little more, you're talking about $200 to $300 billion that has to be worked out. it's quite a lot of money. can the banks absorb it and how is that going to get through the system? >> we have some breaking news now. and it must be important because faber's awake and joining us on the phone. a deal in the works? >> something i've been following for a long time is the battle in the fertilizer area, you're well aware of. i wanted to alert our viewers that should be announced shortly this morning, namely cf industries have been fighting to buy tarrif for over a year, got outbid by yarro and now cf is coming back $47.40 a bid, $4.5 billion for terra industries

trying to top that bid. terra had been rebuffed -- cf was rebuffed all the way through. they placed three directors on terra's board only to have them say no to the last bid. this time they've come back with a bid substantially above, a deal agreed to with norway's yara which needs approval of two-third of its shareholders, of some of the norwegian parliament. cf will press the time advantage saying it will commence a tender that can close in 30 days. so we've got yet another -- another story here developing in this fertilizer battle. remember, cf is already in the sights of agrium. wanted to share that with our viewers. that announcement should be coming soon. >> yarra terra is an appealing name for the combined companies, but, i mean, this is -- it is kind of interesting in the world

we're in now, you almost see agriculture almost as oil, the oil of the future. fertilize fertilizers, a lot of people long term positioning themselves for -- i mean, we're going to need to feed a lot of people. the more fertilizer, the easier it is and less acreage you need. >> it's true, no doubt. as you know, this battle's been going on. yarra came if. the question is, if they have any interest in entering a bidding war. it doesn't appear on reading the proxy and things of that nature, the background, that they have any interest in doing that but now they'll be tested and having to do just that to beat out cf, which has been there for quite some time. of course, interestingly, you saw those deals yesterday, it's all foreign acquirers. here as well, yarra, another foreign acquirer, one that may not ultimately succeed given given that cf has come back. >> you weren't being smart when you said i deal a lot about fertilizer, i know a lot about fertilizer, right? >> no.

>> didn't think so. thank you for being up and bringing that -- >> you're waist deep in it right now. >> i know that's what he's talking about. >> farthdaimler announcing at t geneva auto show -- i don't know why we're showing you, richard. you must be very interested in this. they're going to be partnering for an electric car in china? >> are you talking about mercedes? >> i am. >> i'm an owner of several of their cars. >> i'm not surprised. >> you're not surprised? >> no, i'm not. >> you know, one thing i was going to inquire of dr. z is whether or not he was planning some innovation. >> let's get to it. because phil lebeau is partnering up with byd, build your dream, from geneva, dieter zetsche, ceo of mercedes benz. on the right you can see cnbc's automotive reporter phil lebeau.

take it away, phil. >> dr. zetsche, thanks for joining us. let's start off with the joint partnership with byt in terms of developing electric vehicles. a lot of attention is being paid to the chinese market but the broader question is, where are we in the continuum of electric vehicles and where your company sees these vehicles hitting the mass markets? >> well, i think in particular for the chinese market, there is no question that they have to go for electric car. there are just too many chinese people who want to own a car, that you could fulfill that with traditional, conventional combustion engine, but there's just not enough petroleum. so the market will develop, it will be supported by the government. and the strongest company in china to lead that development is byd. we consider daimler as being at the head of the technology curve

development on a worldwide basis. this combination thereby is kind of a dream team for the chinese markets. >> reporter: clearly it makes sense in china. the broader question is going to be, when do you look at the electric vehicle market really starting to take hold, say, in north america or in europe? i'm talking about more than just a few models that we're going to see later this year or already starting to see. i'm talking about to the point where people will give it some thought when they go out to buy a new vehicle. >> on the one hand, certainly, we still have obstacles of a range, which is not really satisfying. we're having the high cost of batteries. but on the other hand, there's no choice but finding ways to ultimately zero emission vehicles, and this means electric vehicles. so we have to push forward to overcome the constraints, which we are still seeing. so there are issues. on that basis, i am very confident that latest in five

years we will see single-digit percentages of electric sales being on sale and then like in ten years, where you could come up to like 10% of total sales being electric cars. >> reporter: dr. z, your company canceled dividend for a time being. you posted a loss, the most recent earnings report. you guys haven't been terribly optimistic about the auto market in north america and around the world. what's your outlook when you look at all of 2010 in north america? where do you see the sales rate coming in at? are you still a little questioning whether or not we're going to see the rebound everybody hopes for? >> well, we do expect there will be growth for the north american market, or something like 10% plus, so 11.5 or a million would be a reasonable guess. which obviously comes from a lower level, this growth. but we're confident this will be sustainable. and certainly that the green

sector could even grow faster. i know that basis where the strong momentum mercedes has in the u.s. market, we are very optimistic about our success in the u.s. >> reporter: last question, mr. zetsche. with the troubles toyota's experiencing, how much is that churning the market for the good of the competitors and how much is it simply making people stand back and say, i thought about getting in, maybe i was going to buy a lexus or a toyota in the past and maybe i'm going to hold back now? when you look at what it's doing to the market right now, what do you see? >> well, i only could guess your question because the transmission is very bad. when i talk ale all together for the outlook on a global basis we'll see some growth but this will be driven by asia, by the u.s. in europe it will be very poor. we will continue to see conventional technologies dominate this positive development. but as i said before, we have to invest heavily into new

technologies to be sure that we are ahead in the future. >> reporter: dr. dieter zetsche, thank you for joining us. carl, this relationship between daimler and byd is one of those that's going to get a lot of attention in china. a lot of people might sit there and say, that's kind that. fact of the matter is, this is the cutting edge of what we're seeing in the industry and it's an interesting partnership. >> interesting to see the world go electric. phil lebeau joining us with dr. z. when we come back, citi's global head of real estate reacting to warren buffett's comments on housing supply. he'll give us his outlook for the coming year. if you had to choose one as an investment, would it be coke or pepsi? we'll put the challenge to wall street in a bit. "s" stands for straightforward. as in up-front, honest... total transparency.

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welcome back. a check on the market for a tuesday morning, second day of march. futures looking pretty good after the dow gained more than 70 point to kick off the month yesterday. a story cnbc's david faber broke a few minutes ago, cf industries will bid $47.40 in cash and stock for terra. terra already has an agreement in place to be bought by yarra international for $41.10 a share. joe is already dreaming about -- >> unfortunately. >> -- yarra terra. >> yeah, cf terra doesn't do it for me. >> that's the first thing that occurred to you. >> yeah. i've been doing this a long time, 20 years. hyundai benefitting from toyota's trouble, having a 23% increase in february sales compared to a year ago. u.s. automakers scheduled to release figures for last month later today. gm, speaking of cars, recalling about 977,000 chevy cobalt models and about 74,000

pontiac gs cars. gm is fixing a potential problem with power steering which can cause difficulty steering at slow speeds, under 15 miles an hour. greece trying to convince european union they're being thrifty in dealing with their debt crisis. guy johnson is reporting live from athens where we're watching not just for announcements regardings regarding a regarding au is sterity and what is on the street. >> reporter: i'm standing in a taxi rink because the taxi drivers are striking. it's instructive as to why greece is in the trouble it's in, because what it tells us is why the tax base has a big issue. the taxi drivers are striking because the government wants them to issue receipts. why does the government want them to issue receipts? so they can track the income of the taxi drivers, because as

with many economies on the periphery of europe, it's very, very difficult to get a true idea of what the income story is. a lot of people manage to avoid paying tax. therefore, you don't get the tax revenues flowing into the finance ministry they need. the government is trying to ratchet that story a lot tighter. in terms of the news flow today, we have senior party figures meeting to decide on an osterity plan which will probably be announced by the government tomorrow. a full cabinet meeting taking place tomorrow. the real question s does the greek government go to the debt markets? at that point or does if wait for the germans to give a green light as to some sort of aguarantee for that debt program? if the germans give the guarantee then the cost of the debt will be a lot lower. the germans want to see if the greeks will go to the market and whether the market will take that debt, first of all. it's a real game of cat and mouse taking place between athens and berlin, which will ultimately be resolved on friday, which george pappen

dratravels to per lynn to visit angela merkel. it's a neat bookend, but a real game of cat and mouse taking place here in europe. back over to you. >> okay, guy, we appreciate it. thank you. they strike a lot over there, at the drop of the hat. france -- >> do you think it means fuel plates -- >> that's an idea. you know, cutting back on broken plates? >> like my big fat greek wedding, right? >> one plate per guest or something. >> they certainly let a lot of their most famous landmarks deteriora deteriorate. half of those things don't have roof, they're just columns and -- >> richard knows it's tough to maintain a building -- >> when you're a slum lord -- i'm sorry, i'm sorry. >> hey, buddy. >> let's talk commercial real estate, one of the big worries that this year's citigroup global property owner

conference, global head of real estate at citigroup. we've already been talking about cmbs and that market with richard lefrak, president of the lefrak organization. good morning, tom. we saw bernanke talk a lot about cmbs and commercial real estate in his testimony. this is the last really -- the last shoe to drop in a lot of the worries for the fed. and is that justified? is it going to be something we all need to worry about? >> i think it's absolutely justified. i think washington is finally focused on what they perceive to be a very serious threat to the recovery. something, if not addressed, could actually precipitate, you know, if not a double dip, certainly a much more difficult and slower recovery. bernanke put that forward last week in his testimony on the heels of a report that the congressional oversight panel, under elizabeth warren two weeks

ago, where, you know, they projected that in the small to medium-sized banking industry itself, we could see losses of $200 to $300 billion related to commercial real estate, so it's a big problem. >> that's a lot of numbers. a lot of these mortgages were written when asset values. at their peak and they come to, when, this year, next year, the year after? >> well, i would say they come due over the next eight to ten years. roughly a trillion and a half over the next four years, which is a significant pipeline of maturities into a market that doesn't have the capacity to refinance them. >> you know, and what do we need to -- was it the shadow banking committee? where -- where did it used to get done? what do we need to do to have that pool of liquidity available to refinance or it's not going to be for years? >> well, it used to come -- securitization was a very major

component of credit securitization and commercial real estate up until 2008, for the last several years, it was running at about a quarter of a trillion dollars a year. last year, new securitizations were under -- under $10 billion. we don't expect them to be materially more than that this year. there's a real funding gap from the securitization world. you know, many of the buyers of securitization were cdo managers and sivs. i don't think anybody expects those structural formats to come back any time soon. and the banking system, particularly, you know, when you get away from the larger money center banks, they are very seriously tilted towards commercial real estate now. so they don't have the capacity to deal with new credit creation. >> so, tom, you know, there's a mountain of equity money on the sidelines waiting to get into real estate. reprices are pretty full right

for you. how would you suggest private investor to get if and access the real estate market now? >> well, rich, you're going to hate for me to say this, but i think the number one way the private capital can get into the real estate sector is to lower their return requirements. because i think that there is a significant mismatch between what much of this capacity, which is opportunistic and high return oriented, is seeking in terms of return on investment relative to what the owners of mortgages or properties are willing to sell their positions at. so, you know, i can tell you just anecdotally that, you know, i -- a bank could have a perfectly good performing loan that's due in three years, that is not under or overleveraged because maybe it was originated seven or eight years ago, but if i wanted to try to sell that today, you know, this capital is

requiring the 12% to 15% annual total return, which means i'd are to sell a perfectly good loan at a pretty significant discount. >> well, that -- >> so it's really a function of distressed sellers instead of distressed assets. >> the thing that i see you say could happen, here's the answer, you can extend the loan, restructure the loan, foreclose on the loan or sell the loan to a distressed buyer. if you hold it, if you're able to hold it long enough or restructure it a little bit or extend it, you could see five years from now a loan could be back to full value. but are you -- are these people going to be in a position to do that or are they going to have to sell to people that want 12% to 15%? >> well, i think -- i think that it depends -- it's going to be bank by bank or owner by owner. i think a lot of it is going to be a function of, you know, whether or not a particular bank has made proper reserves against that loan.

whether it's a liquidity reserve or credit impairment reseven, that gives it more flexibility -- >> to ride it out, right? >> -- to right it out ten if they haven't. it's also goking to be a functin of the regulatory system in general to continue to delever at the same time asking the banking system to extend credit. so, it's a real fine line. >> it is. >> bank by bank. >> we don't want to be japan either. we don't want to leave everything there. >> the system is constipated, since we're on the fertilizer analogy today, it is constipated. >> but does it make sense for the fed to get -- regulators to get even tougher or should we let -- do you want to take care of them now or -- you would rather come in and buy things -- >> i said there's money available right now. >> for 12% or 15%? >> even less -- >> 11.9%? >> well, let's say -- >> i know you. >> there's money available. it's a question of who's going

to recognize the loss. i banks don't want to recognize it, so you want to hang onto it. >> that's why there's price discovery in a bid/ask, right? >> that's exactly right. but a bank, if rich requires a 15% return, a bank may have to recognize a loss. if rich requires an 8% or 9% return, the bank might not have to require a loss. and it's not -- it's not related necessarily to the asset quality or the performance expectation. it's a liquidity discount that is, you know, unfortunate but not unusual in a market that's capital constrained. >> richard, you should be nicer. it's a liquidity thing. why are you -- >> i will get -- >> be nicer. >> i will be nice. i'm going to be nice. >> i know him. i know -- >> i'm ready to take this. >> i know the way things work, tom. asking him to say -- i don't know. you get what you get, right? we appreciate your time this morning. thank you. >> thank you. >> a little envious. palm beach looks nice.

>> and he's really high up. he must be on the 100th floor with that shot. when we come back, some prefer the taste of coke, others like pepsi. when it comes to making money, which will add fizz to your portfolio? ♪ well, look who's here. it's ellen. hey, mayor white. how you doing? great. come on in. would you like to see our new police department? yeah, all right. this way. and here it is. completely networked. so, anything happening, suz? she's all good. oh, my gosh. is that my car? [ whirring ] [ female announcer ] the new community. see it. live it. share it. on the human network. cisco.

(announcer) we're in the energy business. but we're also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron.

pepsi, it's a wonderful company. and particularly, frito-lay is a fabulous business. i would love to own it. i eat fritos, i eat cheetos, and i even eat munchos, which are hard to find, but i always drink coca-cola with them. >> you know, warren, i read your book, the biography on you, and it said that you started life drinking pepsi. those were the most joyful moments in your life. i loved that. i think that's what keeps you so youthful because pepsi is about youthful cultures. >> where else could a conversation like that take place but on this program? that was yesterday on "squawk." pepsi ceo indra nooyi took on coke's biggest fan and largest investor, warren buffett. we wanted to get wall street's take on thewar.

part of this is determining, if you could only buy one stock, which would you go with, but the other is, which company is better positioned to leverage the deal that they basically have made together with their respective bottlers? >> well, actually, pepsi's distribution of its snacks is done separately, so, you know, on the face of it it seems that companies are on a level playing field in terms of leverage -- leveraging those deals. >> right. i guess part of it may be, if you wanted to really own the cola wars, right, i mean, that is the pure cola business in north america, maybe you could go with coke because the salty snack, in a way, they sort of are asymmetrical stocks, right? >> absolutely. i would point out, though, that the cola war isn't the -- isn't where the bottlers of the future will be full. it will be in the noncarbonated

drinks. all sparkling drinks have been in decline over the last ten years or so, but actually cola is falling at a faster rate. so, i would recommend that investors look for the company with the strongest portfolio of brands. not just the flag ship cola brand, actually. >> which do you think -- i mean, if companies are going to make this deal with their bottlers, get a stronger hold on their distribution systems, which company is better positioned to do that? people talk a lot about pepsi's relationship with their retailers, they're very close-knit and that allows pepsi to change their packaging, change their formulas, change their sizes very quickly, adapting, depending on what consumers appear to want. >> that's absolutely key to why both of these firms have done these deals.

and i think coke won exactly that same advantage. they just didn't want pepsi to be able to gain a competitive advantage in their route to market. that's -- that's why they've done this. >> so, bottom line, you got $100, do you buy the share of pepsi or do you buy ko? >> i would go for pepsi because what we've seen over the last year or so is that the snacks portfolio has really been quite countercyclical. with consumers reining in their spending, they've eaten more at home and that often means buying a big bag of chips to take home. that's really provided pepsi with some protection during the downturn. >> interesting to hear that story, that perhaps herman lay, initially, joe -- >> yeah. >> -- went to coke. >> but he was majority owner. >> would have had more shares and went pepsi's way which changed the course of history.

phillip, it got our juices flowing yesterday. appreciate your insight today. phillip gorham with morningstar. hopefully we'll be at the pepsi testing lab some day in the future. >> yeah. if you -- like chili fritos? i mean, they are -- they're all over the place. the worst -- >> really? >> as i've said about so many things, the worst fritos is great, i don't know. scoop fritos for -- >> the worst thing you've had? >> the worst thing ending in tos, tostitos. >> yes. when we come back, the house financial committee member ranking member spencer bachus, we'll get his views on too big to fail and the volcker rule. so don't go away. does your portfolio have what it takes to win the race? tired of watching your assets slide? feel like you're knee-deep in

[ bleep ]? fear not, "stocks to watch" is next and we'll help you make it to the opening bell.

lefrak is here. we have more, right? >> i'm a fan. >> you're a fan of carl?

>> no, it's not that. you have to give him a latitude. he has two little kids running around, keeping him up at night. >> actually, it's fiser. "stocks to watch," cf industries confirming a counterbid for terra industries, now bidding $47.40 and that beats yara's most recently agreement and cf had withdrawn prior bid in mid-january and said it sold all it's terra shares. here it comes again. look at what's going to happen to cf today on the notion that maybe this is -- i don't know -- either too expensive or the beginning of a bidding war. dell upgraded to buy at ubs, target remain at 16. saying the recent pullback in stock. staples reporting 30 cents a share. revenue was above. first quarter was guided to 25 to 27 versus an estimate of 27.

auto zone, second quarter, $2.46, better than expected revenue. and i don't see an outlook for au au autozone, tough to sell where that will trade in the session with theed by spread between the bid and ask. qualcomm, after the bell the company increased quarterly dividend 12% to 19 cents. never was a big yielder, dividend stock, but it is yielding. it's going to be yielding over 2%. kimberly-clark down graded to sell and target cut to $60 from $63. and then finally, the hsbc has some comments on at&t. i don't have any details, but hsbc downgraded telephone to neutral from overweight, but it still carries a $27 price target

on at&t, which at this level, if you want to talk about a yield, that last one wasn't a yield, 6.7%. 6.7%. on at&t. that's -- >> yeah. >> pretty good deal you. >> like the dividend. and then in the -- as bad as things got in the last year or so, i think 21, 22 was the low on at&t. you were glad you were in the financial stock in the last 18-month period. you love that wireless business. >> yes. >> the money coming in every month. >> that's right. when we come back are, a busy show, jack vogel will tell us if the bulls will dominate in march. consequenceman spencer bachus, we have to talk about this new plan from the senate to put a consumer protection unit inside the federal reserve and see what may be happening as that plan comes together when "squawk" continues.

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these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron.

charging up the bulls. the dow close to going positive for the year ahead of some

critical economic data. mutual fund pioneer jack vogel will tell us if march will come in like a lion for investors. a breakthrough in financial regulation reform. senate lawmakers may have a plan to create a new consumer protection united inside the fed. we get reaction from the ranking member of the house financial services committee, congressman spencer bachus as "squawk box" begins right for you. ♪ i'm just a bill ♪ i'm only a bill ♪ and i'm sitting here on capitol hill ♪ ♪ well it's a long long journey to the capital city ♪ ♪ it's a long, long wait while i'm sitting in committee ♪ >> a week while i'm sitting in committee. it's a long journey. >> is reconciliation in that song? >> i don't think they put it in that song. welcome back to "squawk box" on cnbc, first in business worldwide. sitting in committee for a week.

it's been a year, hasn't it? >> up or down vote. >> up or down vote. simple majority. this 17% of the -- the taxes, the tax cuts affected 100% of the economy, carl. i'm joe kernen -- isn't that a great, ridiculous species argument they make? . >> well, we'll get -- we'll talk more about that. >> i'm here with carl quintanilla who will disagree with me and becky quick is on assignment. our guest host is richard lefrak, president of the lefrak organization. i just like saying it, lefrak. >> i like hearing it. >> is it french? some time -- at some point it was? >> it moved around somewhere in eastern europe. i morphed over there at some point. >> let's take a quick look at the markets. the dow now about 25 points from going into positive territory for the year. the futures are indicating up about -- what is that? it's up, what, about 49 points or so, which isn't bad. that would put us positive for

the year after an abysmal january and a really good february. march is, what do we say, coming in like a lion. >> beware of the ides of march. that doesn't happen until the 15th. >> we don't every month has an s the 15th. >> and st. paddy's day is coming up too. >> you like that one. be careful. >> headlines this morning, key senators said to be close to this deal to overhaul banking regular laying. our steve liesman says the agreement would create a consumer protection agency within the fed, have the ability to write and enforce rules, and also allows the government to break ul large, failing financial firms. bob corker and chris dodd said to be selling the idea to fellow party members last night. we'll get more on that in half an hour's time. gm recalling 1.3 million cars over potential steering problems. it's been linked to 14 crashes,

one injury, covers certain pontiac and chevy cars in north america. drivers may find it difficult to steer vehicles when you're going less than 15 miles an hour. we're watching global currencies this morning. sterling steadying a bit. but that's not saying a lot after suffering it's worse drop in months, down six days in a row. traders worried about upcoming uk elections and ongoing fears about britain's fiscal problem. look who's here, joe? ross westgate. >> where's he been? >> he usually works but he took time from his regular job to help make sense of what's going on with -- it's getting crazy here, ross. >> yeah, and you caught it right on the pound. it was yesterday the biggest one-day fall for the pound against the dollar. in one year. so why all of a sudden do we see that -- the sterling fall? right now we're traiting at 14961 yesterday we got down. rightly so, a little stability.

last week the bank of england said we still might have quantititive easing, so that put a little pressure on the sterling. two things happened over the weekend we got this poll out in the uk, conservatives were meeting which suggested there was only two points difference between the conservatives and labor party. everybody thought, hung parliament. if you're going to get a hung parliament you won't get any meaningful action on cutting the deficit. that's a big no-no for sterling investors. it coincided with the news that prudential is about to buy $25 billion, exchange them for pounds, to buy out the aig operations in asia. put those two stories together, you get a big collapse in the price of sterling, technical and sentimental. here's what's going on. we've had another poll out this morning, which suggests that actually maybe the poll isn't down two point. the latest poll is up seven point. the trend is clear, and that is, it's going to be a much closer call on the election, which bricks us back to, how do we

deal with the budget deficit? are we going to get any meaningful cut out? that potentially puts the credit rating at risk. you take a look at the gilt market. they say the way gilts are trading, they've priced in britain losing the aaa credit rating, it may already be in the price the way it's trading but we added a good third-year auction today. different complexes going on here. what about stocks? they don't care. ftse 100 is not interested in this story. ftse 100 stocks are driven into the global growth story, influenced by the global market, up half a percent, closed up a percent yesterday. that's what's going on right now in the uk. >> ross, i mean, we know of your affinity and passion for forex markets. a lot of people say this is pre-election angst and maybe that's what the ftse's telling us today, but others say in a worst, worst case scenario, they could be looking at a pound of

$1.05. how much would have to go wrong for us to get to those levels? sdwlu never say never with the currency markets. one thing i learned, most people can't predict what's going to happen over a medium term. we're sufficienting similar kind of recession, similar problem with debt as in the '80s. we may get a chart that comes out and cuts deficits aggressively. i think you have to lose the aaa rating. there's got to have no progress, hung parliament and nobody being able to take control and dealing with the deficits. the other side of the equation, it's not just about cutting spending, it's about putting in policies to stimulate growth. you have to have a big jam. also probably have the greek and euro zone situation sorted out as well. if that is sorted out, then all the speculators will put all their eyes on the pound. that is also part of the story. >> yeah, you'd almost have to replace greece as the problem

child and then some to get down to those levels. it's interesting to watch, ross, although joe and i may be making a trip to london soon, maybe we could go -- we could go suit shopping or something. >> there's always upside, right? there's always upside to every story. >> this is definitely -- yeah, this is definitely upside, because we've been -- we haven't gone anywhere abroad recently. >> we should go to london -- >> i've been -- joe, i've been planning for to you come over for, what, five, six years? >> we keep talking about the bangers and -- >> the splash. >> the pig. >> things like that and what is -- >> all of those things? >> intestinal? i'm looking forward to it. mutual fund ledge and jack vogel joining us now, the founder and former ceo of the vanguard group. jack, good morning. >> good morning, everybody. >> nice to be back. only 25 points away from going positive this year after what

was a great rebound since march of last year, jack. i mean, at least -- i know you're not a market timer, but even in an index fund, anything above 10,000 is better than 6,000. >> it's certainly a lot better for the sellers, whether it's better for the buyers is a wholly different matter. >> only time will tell. only time will tell, i guess. with all the stuff that you're seeing as the -- sort of the conscious of the industry, are we headed the right way with financial regulatory changes? >> i think we're trying, but as ross said, something about a hung parliament, we pretty much had a hung congress because the democrats don't have much discipline in the house, enough to enforce their will. and in the senate, that 60 votes has become 59. that stymies everything. we go to the lowest common denominator, time after time without taking the real steps, the big steps that are ultimately going to are to be taken. whether it takes another crisis to make us do that, i don't

know. but it's -- i like the idea of a consumer protection agency. always have. and i, for one, am indifferent whether it's under the fed or independent unit under the fed or independent unit on it's own. either way it's pretty much the same thing. we do need the consumer protection, no question. >> all right. that seems to be moving forward. what are the two or three other things that are so necessary that you say they're unable to come to -- >> well, i mean, i personally applaud the volcker plan, as far as it went. i don't think it went far enough. and i would be cheering for the return of the glass steagall act. actually, i wrote about that in my 2005 book "the battle for the soul of capitalism" and i have a section in there, this is now five years ago, called bring back glass steagall. i wish we would have done it then, but it's not too late to do it now. i think it's just pretty much common sense that if you're in the business of taking public deposits, you shouldn't be speculating on your balance sheet. and that's what -- that's what

the end of glass steagall had allowed banks and investment banks to do. >> banks say whenever they -- just in the formal course of doing business, that there are times when it just becomes semantics, whether it's principle or agency transactions. just lending money, there's a time when they do bridge loans where they're actually at risk. you would have to write it in a way that you would specify exactly what type of proprietary trading you wouldn't allow and leave room for the normal course of doing business? >> i probably wouldn't allow any trading for a bank. these are deposit-taking institutions. >> right. you heard what i said about the -- sometimes in the course of giving a loan, doing what banks do, putting assets where they -- capital -- getting it allocated where it needs to go, where they're actually at risk at that point. they can't even do that? it sounds like it might be difficult for capitalism, no? >> well, i mean, i think the banks and, you know, don't think the government -- it's very difficult for the government to

regulate things because, you know, it's like water going around a rock. it finds its way around sooner or later. the water is the financial system and the rock is the regulation. but i think there has to be much higher capital requirements for banks to take care of part of the issue you raised. also, much greater stringency on the assets you hold in the balance sheets. >> less leverage, 30 to 1 will get you -- actually having some skin in the game might solve a lot of our problems, too, right? >> well, certainly. when you think about the old, if you will, investment banking business, these were partnerships with unlimited liability where the partners had their own money on the line. believe me, they wouldn't have been doing what they went through in the last three or four years at all. it's always fun to play with other people's money. >> yeah. even more fun if you're going to get -- you know, the main problem, if you know you've got an implied put from the federal government if things go wrong it's a head's i win, tails, you loose. we have to address that at some

point. >> and too big to fail is a big issue. yet what's happened in the last two years is the concentration of bank assets has gotten bigger than it's ever been in the history of the united states. much bigger than it was two years ago with all these mergers. so, we're going kind of in the wrong direction. so, it takes powerful political force to take the steps that are necessary. and i don't see anybody, any congress in a position to do it. i think the president would do it, but he, too, is bound. he can't pass a law by himself. >> yeah, exactly. we're getting somewhere, jack. we'll take what we can get. we appreciate your time this morning. thank you. see you again soon. >> good to be with you. still to come, fors dodd and corker get willing a deal together to create the consumer protection unit within the fed. we'll go to the house floor and talk to ranking member of the financial committee services committee, senator bachus. because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account,

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one of the big stories this morning, congress considering the future structure of the home mortgage industry. the house financial services committee taking that issue up later this month, but also, of course, tease potential

financial regulation reform rules in the making. congressman spencer bachus, involved in almost all of. congressman, good morning. >> good morning to you. >> let's talk about what appears to be coming together between dodd and corker and the senate. is it your sense they can sell this? >> well, you know, that's in committee. i think when it gets on the floor, senator shelby and others are going to have a lot -- lots more input. so, what happens in the committee is not often what happens on the floor. or when it goes to conference between the house and the sfat. >> bspecifically, the placing o this consumer -- we know it's been the sticking point for a while, nobody's clear how committed the white house is to having a separate agency. there's obviously long-time criticism of the fed and whether or not they could handle that responsibility. which would be easier to put into place? >> you know, carl, i really -- whether it was the fed, the treasury or even the fdic, what

we republicans in the house propose is a counsel of all of those. and have a systematic risk counsel that would review all consumer regulations. now, within that you could have the cfpa. and i think the real -- the real important issue is not whether it's within the treasury, within the fed, but what it's powers and structures are. you know, senator dodd has proposed they have to consult with the safety and soundness regulators, but they can -- they can adopt and enforce rules without the consent of the safety and soundness regulators. i think when you separate safety and soundness from consumer protection, you run into a big problem. >> congressman, i'm on the board of an institution that was an fdic -- took over after the fdic failure. i had to produce as a director,

even though i'm a significant shareholder in the bank, reams of paper about my qualifications to act as director of the bank. and i think everything that we've done at the banks since we've taken it over is all directed to the soundness of the institution. and, you know, having gone through the period that we've gone through with all this uncertainty, isn't that really the primary thing that the feds should be concerned about? that these institutions are not subject to another round of failing? >> oh, absolutely. and, you know, the consumer's hurt worse by a system that's unsound. that may be a system that loans money when it shouldn't. and if you have an independent agency that says you have to loan money or the cfpa actually, under what senator dodd and corker have proposed, would actually -- they would enforce the deceptive and unfair

practices act, which allows them to set fees and prohibit practices that they think may be unfair. now, it may be unfair for one customer, it may be what another customer wants. so, it's really quite a change in the customerary way we've done business. there's military maxim that would prepare and fight the next war. the fed and treasury, occ, your state regulators have put a lot of tough, new consumer protection laws on the books. we in congress have passed a tough credit card bill. and subprime lending bill. so, most of the consumer protection, the violations, have been addressed with regulations. >> all that said, the progressives are going to be howling. for some reason they've fixated on the idea of a stand-alone

agency and already the overnight agency on "the huffington post" was "not again" in their view a health care bill that got watered down, as they put it. are you expecting that kind of response from the left? >> well, i think so, because what they wanted and dr. elizabeth warren, what they want is an independent agency, which she would probably head, that would have to consult but wouldn't really -- wouldn't have to have the approval of safety and soundness regulators. they could just adopt a rule or they could actually, under udap, they could actually set fees. there were some discussion. they kept exempts certain people. the small banks said, please don't put us under this. they acted as if they didn't but, as a matter of fact, they have enforcement over all banks and they can broaden that out to

anybody with financial services or their corporation. there's a lot of discretion. it's like with anybody like the epa or any federal agency, they never get smaller. they always grow. >> right. and i -- your point's well taken about the difference between things that happen in committee and the way things end up on the floor, but sensing what is coming your way from the senate side, does it seem to you like -- are you and chairman frank, do you think, will you be able to accept what comes from across the hill? >> well, chairman frank and i obviously have different views on a lot of subjects. yeah, one thing he's endorsed is the too big to fail rule, the too big to fail by the taxi administration wants to put on anyone in case one of these too big to fail institutions fails. i don't believe in too big to fail. i think too big to fail is unfair. it implies too small to save. it implies that 99% of your institutions don't matter.

and it gives sort of an implicit guarantee and an advantage to the large firms. and what happens is they get bigger and bigger. they get in trouble and they merge. what we've seen over the past two or three years is really the growth of these, quote, too big to fail institutions. it's time to put them if a structured bankruptcy. i think they should have done that with aig. >> well, your point -- the big piece in the journal yesterday arguing resolution authority -- if i'm going to do business with a bank and i know the government may come in with resolution authority as opposed to bankruptcy court, i'm more than likely going to get paid back. if a way, resolution authority accelerates moral hazard rather than trims it back. >> absolutely, carl, you wouldn't have this problem where banks fail and the ceos and the board of directors stayed on and actually made more money after the failure. and the shareholders and the customers were the ones that suffered. and the rest of us as taxpayers.

this idea that the taxpayers have got to come in and pay for failure is ludicrous. that's why people are so mad about these big salaries. and, you know, salaries are not linked to performance. i read an article recently saying that ceos are, you know, they're going out and touting their loss but ledging their losses. you know, make them invest in the stock and hold it long term. and, i mean, the congress shouldn't have to do that. shareholders and directors ought to demand that. when a company fails because it was overleveraged or did what aig did or even some of your larger banks, the ceo ought to go. >> yeah. or if you share buffett's view, penalize them to the point where their own personal wealth is wiped out and there's no recourse for them. >> absolutely. they structured -- they win if they do well, they win if they don't. >> right. we will be watching closely what

happens on both sides of congress. congressman, thank you for your time. >> thank you, carl. i just meant every month had an ides but only four are -- only four are on the 15th. march, may, july, october. the others are on the 13th. >> really? snap, wow. >> okay, sorry. coming up, "squawk box" -- i just meant have month. >> that will learn you. we'll go international. a five-star fund manager, carl, looks beyond wall street for some investing ideas.

coming up next, a fed field trip for steve liesman. we'll find out why he's in kansas city. it's a good one.

welcome back to "squawk" for a tuesday here on cnbc. first in business worldwide. we're an hour away from the opening bell on wall street. our guest host today, richard lefrak, president of lefrak organization, walking us through some intrakacys of real estate and the economy. steve liesman will tell us about his fed field trip. rick santelli will tell us about the buzz on the floor and a five-star fund manager will tell us where to shop outside of the u.s. as we march to the friday jobs mb, will the bulls pull back ahead of the number? art cashin will get us ready for that. joe, they keep talking about how the jobs number might be disappointing because of the snow. >> wouldn't you try to -- i would try to dampen expectations. >> really?

>> yeah. you remember it was a month ago where we heard, wow, we've been talking about health care a lot. we really need to reset with jobs. the last month we spent talking about health care again. so if we have another bad jobs number, you're going to hear it again. let's get going. let's only focus on that. so, if it's going to come out and people say, oh, my gosh, it's 10% or 9.9%, i would lower -- i would say it's the snow. it's the climate change, which i'm reading about right now. >> they don't want the public to be frustrated because it's so hard just to get the jobs market moving. it's just a difficult thing to do. >> it is. >> you can't rub your hand and say, here's jobs. >> the government can create jobs but they're not real jobs. >> it doesn't create economic activity generally by investing in that particular -- >> yeah. i've got a friend -- >> you definitely have -- >> i can see that. >> the government, they're kind of like this, trying to start some kindling, get the wood going, get -- >> have you ever actually rubbed two sticks together to start a

fire? >> tom hanks, "castaway." the air got to it! >> thank you, wilson. >> i think they're trying to rub taxes together and create jobs. >> i'm outnumbered today. >> you are. >> becky, come back. let's get to some top stories. u.s. automakers release their sales figures for february today. starting with gm in about 90 minute. analysts will be watching to see just who benefitted from toyota's recall problems and how badly toyota sales will hurt. we'll watch shares of terra industries as it becomes the object of a bidding war. cf industries is offering $47.40 a share, and terra had a deal in place to be bought by yara. let's check the markets. 25 points away from being positive for the year. the futures right now are giving us that and more. we're up about 46 points. joining us at his -- that is premarket. joining us from the cme group in chicago, rick santelli. also scott nations of nations

shares, and steve liesman is in kansas city this morning. i've got to get to him first, steve, because it's all over the place. and you got it, obviously, on your own. what are the most salient and important things to know about where we are with the regulation now? >> a couple thing going on, joe. it is -- they are talking about putting it back inside the fed, which is ironic for a couple stand points. the first is that it's already there. that is -- was seen during the bubble as unsatisfactory that the fed failed on the job during the bubble, especially when it came to subprime. i think there's wide acknowledgment they've done a much better job sense. going to hold focus groups when it comes to things like disclosure and the fed has been more aggressive on the consumer protection front. but the idea would be you put it back inside the federal reserve, or leave it right there. how they would make it independent body, one that would satisfy the lip ral wing of the

democratic party which wants a very strong consumer protection agency. you've heard elizabeth warren on our air talk about this, in fact, on "squawk box." that remains to be seen. i will tell you, i've also seen talk, joe, of another idea, which is that they create a vice chairman of bank supervision at the fed. there's just talk about maybe the senate is considering this as well. that would address the criticism of, you know, who is responsible at the federal reserve when it comes to banking regulation? that's another idea that's out there. you know, they've got to get all this done and then they've got to get all of the senate to agree on it. dodd may come out with a bill later this week, but i think it's still, you know, a week or more away from what i'm hearing on banking -- getting this banking reform done inside the senate before they go to the house, where obviously there will be opposition if the consumer protection's not strong enough, joe. >> you were also hearing something about a possibly cone -- i think the canses are very slim it's going to be bob weir.

i know that's what you're hearing. >> i like the fact you found every opportunity to bring up bob weir. we'll have that enter rue tomorrow. christine romer would be a very experienced person. one of the prerequisites, you've spent some time in the white house and she's spent her time. that's one idea that's floated out. >> that's interesting. >> also mentioned austin. >> has austin been mentioned as well? >> let me get -- rick, do have you a suggestion? if you had your brutte druthersn or christine romer? >> which devil do you put in charge of foreign relations? i don't know. take your choice. >> you know, you never send me a check for teeing things up for you. you do appreciate it, though, right? >> appreciate what, joe? >> that i tee -- i get the great -- i don't know.

i think i can effectively, you know, when you're ready to just talk about libor, i get good stuff out of you. what else are you watching? i'm a pretty simple guy. i like to watch the markets. all of the other issues, consumer protection, whatnot, you know, if the population really needs to have every metric yard of flattulence regulated, maybe we ought to concentrate on education. markets aren't paying attention to this. i think i'll continue to watch sovereign debt. you can watch all the programs to monitor the crayons with the public. >> rick, we're now hearing, scott nations you can talk about this after rick, when an administration comes out and talks about snow, how that might effect t affect the numbers on friday, should we think they're not going to be great? scott nation. >> i think you have to be prepared for that. but look at it this way, with

auto sales coming out later today, we'll discount those in large part because of the snow, i think. there's so much going on. as far as the markets are concerned, it looks like the dow will open higher on the year, but isn't this where we would have been yesterday if the dollar had been lower, given how strong tech was, the m&a action. we talked about the 50-day moving average, which has been important over the last month or so. we got convincingly through that level yesterday, which it's all good news. and if the pound bottoms out at $1.47, then the stock market is definitely going to go higher. >> rick -- hold on. i'll get back with you. rick, you're not a stock guy but you have made your intuition well known that the day of reckoning, given the other back drops, are you surprised we may turn positive for the year if the stock market again? >> oh, no, absolutely not. just to get the record straight,

starting in april of last year, i fully suspected that the equity markets can do better. i think they can hold in, they could even -- the 20,000 doesn't mean you'll see unemployment under 8.5%. you know, you have to pick which positives you want to concentrate on. you know, i think the dynamic of the googles of the world, adding lots of gdp, doesn't mean they're ever going to add lots of employees. that's the new world we live in. >> that's an interesting -- >> go ahead, steve. >> i was just going to say, it was private sector economists, more than a couple weeks ago, who first started talking about the idea that weather was going to affect first jobless claims and then the payroll data. they started marking it down long before the administration came forward to do that. it may be in their interest to talk it down so they're covered either way it goes. just for the record, i don't think they have the data until thursday evening. so, just -- people shouldn't think if they talk about something they know about -- >> we already said it wasn't until thursday, but it doesn't

take a -- you know, i mean, you could start lowering expectations just -- >> right, right. >> -- no matter what the number is, you might want to make it look better when it finally hits. >> right, you win either way that way. i just want people to understand they're not talking from an actual book. >> thank you, steve liesman and scott nations, also rick sean santelli. next we'll go jet-setting for some investment ideas, a five-star fund manager with an international flare will tell us where in the world we can find the best opportunities right now. and then bulls, bears and lions, second trading day of march about to get you should way. what should we expect with the jobs number coming down the road?

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welcome back to "squawk." futures are, in slow and steady fashion, been improving throughout the course of the morning. we started out, i think, maybe 20-some odd points above fair value. now close to 50 as webehaving w equities. >> u.s. stocks have chalked up substantial gains, obviously, since last march, but even since february 1st. our next guest says there are plenty of opportunity outside u.s. boreders. joining us is james moffit, portfolio manager and also makes sense, james, to not just -- for diversification to not stay local. even though things are starting

to get a little better here in terms of our economy, vis-a-vis the rest of the world, but what are your favorite spots? >> well, we like in general some of the fishing in the questionable waters at this point. looking at greece, although our greek play is really pretty indirect. even at chile or japan, all those are kind of out of favor. and we think that there's some -- there's good value in those areas. >> maybe that makes sense after a 75% move in the u.s. stock market. that would have been a great time to buy, obviously, last march. maybe you're getting a march-type environment in some of these other places. how would you play greece? what were you talking about? >> what we're playing is eastern europe as a whole. hellinic bottling has been the best stock on the exchange for their mess. they sell coke from europe to mosc

moscow. we think that's a good way to play exposure to pa part of the world. >> you're not assuming coke coal buys in that asset, or would that be possible, too? from what we heard yesterday, it makes sense domestically but where it's still growing quickly, they may leave that model? >> right. that's my understanding, is they're buying domestic assets. this will leave hellenic as the largest coke bottler in total. what they'll do with it in the long run, who knows. they own half now and they stand behind it. in a sense, that takes the credit risk out of the greek equation. >> that's interesting. so they don't have to buy it in for this to work. that's bigger than femsa, huh? >> right. >> i saw a couple of other picks there. can you give us the rationale for both of those? >> well, sqm, chilean fertilizer manufacturing is growing in fertilizer protection, also the world's largest producer of

lithium and iodine. lithium is growing for battery demands in particular. they're increasing protection of pot ash. they look like a growth vehicle within the fertilizer business. and, you know, it's a cyclical business, prices are down a little bit. we think tear going to recover and it should be an attractive situation. >> that's probably going to be up today, right, just based on this nutrition david faber brought us about terra and cf, right? >> right. but they're probably -- pot ash owns, i can't remember the number, 30% or 40% of them. unless they decide to buy the rest, they're not -- they don't look like a take out. but anything's possible. >> but take out or not, things get marked up just on, you know, the acquiring companies are noticing something in the fundamentals. >> that's right. >> and what was the final one, the third one? >> and the third one was nydek, a japanese company making what i call baby motors. they make the motors in hard disk drives.

automated shutters for cameras, little motors that go in your cars. i mean, 30 or 40 different motors that do everything from move your seats, wiggle the mirrors, to control the fuel in the fuel pumps and the transmission. i mean, just 40 or 50 little motors in every car. so, you know, we think that they've got a great record and they'll continue growing. they're not -- they're not particularly cheap, but -- >> heck of a run we saw on the charts. we appreciate it. thanks for sharing those with us. >> thank you. happy to be here. the dow getting awfully close to turning positive for the year. if the futures are an indication tshg might do that at the open. so will march come in like a lion for the markets? we'll put that question to our man on the floor, art cashin. first a check on the dollar this morning, doing fairly well. i guess slightly down against a basket of currencies but up against the euro and the pound.

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we gost past pearl harbor, but we will win the war, and it's going slightly our way at the present time, but the spillover from the financial panic into the real economy was huge. and i would say that, if anything, it's getting better, but at a very, very slow rate. very, very slow rate. >> warren buffett on "squawk" just about 24 hours ago. art cashin, director of floor operations at ubs financial services. maybe it was his optimistic one-liners yesterday, but regardless, you say the bulls did take control of the ball yesterday. >> they certainly did. they seemed to at least take the day off in that relationship with the dollar that had been holding true for weeks now. so we'll see if they can continue to separate out. they're very close. they got above the 50-day moving average. they've got some momentum going for them. if we can put in another good

day or two we might get this little reaction past us and see if we can resume the rally for march. >> 11:15 s&p. you say we get five more points there, maybe we're talking january highs. >> yeah. if you can close above 1120, particularly if we can get a little volume, which is the real missing ingredient, you may be getting ready to retest those highs. >> what do you think is leading to the renewed optimism? is it a monthly calendar issue? is it thoughts about greece? what? >> well, i think it is the fact that no real damage was done. we went down about 8% and it regrouped and i think you're seeing some frustrated buying, a little bit short-covering. you're not seeing any new money going into mutual funds which is a little bit of a problem. mutual funds have used up their cash on hand. we'll need more fuel somewhere but i think it's more inertia than news-driven. >> we've got so many shorts

obviously against the euro. if something -- if something passable does come out of greece, does that mean a whole new -- renewed wave of risk taking across the board? >> well, i think it could well. but it's very, very difficult to see something that will be acceptable in the streets of athens, and at the same time acceptable in the streets of bu berlin. i'm not ready to go there. you guys were discussing it earlier, everybody's keep their eye on the british pound. that's getting to be a very sticky situation, too. >> all based on these political polls. it is incredible. >> absolutely. >> thanks, art. when we come back, we'll have stocks to watch this morning. couple of names already on the move ahead of the opening bell. plus parting shots from our guest host who's -- you've had a lot of fun here. we're not quite done yet. check out gold on our way out. not doing a whole lot today with a slightly weaker dollar, up $5 to $1,023.

tomorrow on "squawk," former head of goldman and new jersey governor, jon corzine starting at 7:00 a.m. eastern time. i think this is his first

appearance, at least on "squawk" since the election. >> is that true? >> might be. >> that's probably correct although he has been on somewhere else. >> really? >> oh, he was on one time, then i think we were out. that's right. that's what happened. let's take a look at couple of stocks to watch, dow chemical announcing the sale of its styron division, $1.63 billion. i guess that was quite a buy at the depths of the fear. do you remember? $6? >> on dow? during -- when the drama, kuwait -- >> everything. anyway, speaking of things hitting the air conditioner, cf. >> cf confirms its counterbid

for terra, $41.40. there is already an agreement for terra at $41.10. that beat cf industries' prior bid that came back in january. that's improved a little bit. the price was down to 97 earlier. ubs, target is $16 a share. we're going to talk with our guy, richard, a hedge fund, an apartment complex is suing to take control. it is a situation that you've been following closely. you haven't -- you have any vested interest in this point? nothing yet, right? >> nothing other than some time. >> you put some time -- >> yeah. analyzing the property. >> what is going to happen? how do you expect to proceed? what needs to happen? >> well, i think that right now there's going to be a kind of intramural war between all the

creditors because the deal when it was originally brought to the public, the financing deal, had so many complications that they have to sort out amongst themselves who's got any equity in their debt position right now and i think this last little outburst from one of the creditors about the special servicer and what he should be doing is -- that's what the intent of that was, was to try to exercise some influence over behavior of the special servicer. >> why is it attractive to you? what do you like about it? >> well, i tell you, what i like about it is kind of plays into what we talk about originally. there's going to be a need for income-producing property for a lot of institutional investors, pension funds, endowments and so forth who don't want to take the volatility of the markets.

if this thing is done correctly, bought at the right price, managed appropriately, it will be a very good, steady earner. okay? it's not going to make 12%, 15%. that's not where it's at. but it could be a very good steady earner and rental amounts are not very volatile generally. and it's a lot of real estate and with the first time they purchased it, maybe they were a little too aggressive in their assumptions. the financing market was a little too robust. but today it is coming back to reality. when it gets back to reality that's where my interests lies. >> you can fix it up but you wouldn't try and make it some kind of luxury. >> it isn't a luxury. can't be. >> they were try to make it -- >> you can't take a two-bedroom, one bathroom apartment and call it luxurious. even in manhattan. >> because of its size could it become a huge engine of the lefrak organization? >> it would fit nicely in my

portfolio of assets. it would not be a major part of what we own but it would be interesting to loan it. i'm just -- it's a good piece of real estate. i'd like to own it. i'd like to own it with the right people who want to hold it for the long term and i want to protect the tenants. they have rights and that's what they're entitled to. >> richard, thanks so much. we'll see you soon. >> always a blast up here. loved it. great job in the olympics. >> thank you. >> they were a fantastic time. make sure you join us tomorrow. from the financial capital of the world, "squawk on the street." "squawk," good morning, everyone. i'm mark haines. >> i'm in for erin burnett. front and center, problems with the british pound. those pesky brits