they say our love won't pay the rent ♪ ♪ our money's all been spent good morning, everybody. welcome to "squawk box" here on cnbc. happy ground hog day, everybody. this is our favorite day around here. we do love this day. i'm becky quick along with joe kernen and andrew ross sorkin. i just want to let the music play for a while. >> ground hog day a lot around here. >> it is. it's a familiar thing for us. >> taking that holiday and making a movie -- >> we're just excited because bill murray will be joining us in a week and a half. there's punxsutawney, where it all happens, people have been waiting. >> it's a funny name, gobbler's knob. >> punxsutawney? >> that looks just like a scene from the movie. i see that girl that he -- >> there's the dancers. >> remember he goes back and finds who her high school

teacher was and he was in her class. >> i kind of want to be broadcasting -- >> next year. >> we're cable. >> streaming. >> you are dying to send out signals that rabbit ears pick up. you are. does broadcast make you feel like edward? don't you that think it's -- >> isn't it morrow. >> edward r. morrow. >> i have pronunciation issues. >> not only is it ground hogs day but facebook day. the ocean offering after year's of speculation facebook unveiling plans for the biggest ever internet ipo. the company could raise as much as $10 billion is expected to value up. goldm maman sachs is a lead underwri underwriter. barclay's capital. and joining us with more is

kayla. >> weren't you here yesterday? >> i was here yesterday and it was facebook day yesterday so i feel like it's ground hog's day. >> what about tomorrow? >> maybe it will be facebook day again. maybe another 200-page filing. it is on line but yesterday we got a real book and it takes a while to sift through. >> did you read the whole thing? >> should i say yes? >> did you. >> control-f also helps. for the first time ever, of course, we were expecting that boilerplate number of $5 billion they were targeting to raise. we did see that. as far as the nitty-gritty financials, i want to run through some of them. they are super interesting. revenue numbers we'll start with, they were in line with what the market was expecting, $3.7 billion in revenue. both numbers were up very sharply as you can see from that graphic, up from the years

prior. dependence on ads, something people were talking about, that's also come down. they made 98% of revenue in ads in 2009. that came down to 95% in 2010. still extremely high. you would say, okay, they're diversifying a little bit, but there's a big risk there because the dependence on zyn dwga mighe rising. it was less than 10% in 2010 and it has swelled to 12% in 2011. zynga shares were up more than 5% because they disclosed them as a risk factor saying if our relationship gets tarnished with them, that is a huge risk to our revenue here. we also saw margins coming down slightly. that was also expected because you have a high-growth company like this and margins 52%, 47% in the previous year so not too bad. still better than when google filed and engagement is up 845

million monthly active users. 483 million daily active users. >> i'm one of the 800 and however many millions they have in these but i never go online and never check it and i heard other people saying the same thing but to see the daily numbers, how many people are using it every day, that's impressive. >> i'm from the generation where we went to college with facebook and we remember it as a procrastination tool of sorts where you would sort of send your friends messages. the challenge here as daily active users go up is to sort of change the brand from something that people played around on. a lot of my friends say they give up facebook for lunch or try to get off of it because it's such a distraction and to actually create this platform where people see it as a viable communication tool to do business or to do work on it. so that engagement number for advertisers and people who are doing business on facebook like american express, procter and

fwamable, that's going to be a really important number for them. >> talk valuation for a second. to me, you talked about google, you said they were in a better place in terms of growth. i think that's what you are suggesting. yet on a p/e basis this is being valued at a much higher premium, if you will, than google even today. >> right. right. well, i think google is a little bit different. the way that they did their ipo they didn't disclose any forward looking numbers, mi sort of -- and we're not getting forward looking numbers here but we are sort of getting a sense where the company is trying to grow. google did the dutch auction and because they opened up the ipo to absolutely everybody in the entire world who is a google user, that kept them from being able to disclose a lot of things about strategy and where they saw the company going because of rules with the s.e.c. and so people were forced to put google on a valuation where they didn't know that much about the

company because they didn't do a traditional ipo. research analysts couldn't put out reports before the ipo so that hurt the valuation when they went public. >> interesting. >> and so facebook is sort of capitalizing on that and saying we're going to do this in the traditional way and we're going to have the market expect that we're going to grow at this certain trajectory for a long time and that's why we are expecting this valuation. there is a sense of sticker shock with the $100 billion and that's why you've seen that come down. >> go back to -- okay, so someone is on this all day long. they take a break for lunch. what are they doing? >> what are you saying about me? >> no, no, i need to know -- really, when you said that i realized i don't understand what you can do on this. so is it more than just texting friends or sharing photos or -- what are you doing, playing games, too, all these things? what would you do if you got on it at 8:00, took a break at lunch, got on it again at 1:00. what would you be doing? >> there's an embedded chat

featu feature. >> so all your friends could be talking at the same time? >> yeah. you can message people. you can check out their pictures, are their profiles, you can also look at business pages like american express has not only found a way to use the platform in their fan page to get people involved and informed about new american express products, they are letting people buy things through that page. they're getting people to spend more money that way. so a lot of times you can look up concert tickets from your favorite band's fan page. facebook has become a certificasearch mechanism. people favor google because they fear a little bit that their personal profile is tied to internet activity. >> i find it depressing for some reason. >> why? >> i don't know. >> because you don't use it? >> you never really have to leave your house ever again. you have to meet the friends at some point -- >> no. >> absolutely. >> you have people on your facebook page you have never met? >> absolutely. >> a low barrier to entry. you like me, sure, come on in. >> are you anthony weiner? who are you?

>> they say the average facebook user has 130 friends but if you are using the back of the envelope $100 billion valuation, if you have the 800 million users, that means that each user is worth $125 apiece. if you have 130 friends, each is worth $1. >> wow. so my friends are devaluing my friends. >> yes, you are. >> that's what you're suggesting. >> i don't want to be your friend if you let everybody. >> too many friends. >> do you know the number? >> i don't actually. there was a point at which if you tried to friend me, you'd get a notice back saying i had too many. >> trying to friend jim cramer after he said i'm friends with everybody. >> there's a limit and i forget what it is. >> 5,000. >> wow. >> before you go, it's wonderful. the most important thing in life is not money but it's friends. >> virtual.

>> they're virtual friends? do you see why i'm having trouble? is. >> mine are real friends but -- >> how do you know? how do you know? >> no judgments at the table, okay? compensation, some of the statistics i thought were fascinating. mark zuckerberg -- >> we'll get it in the 7:00 hour. >> do you want to tease us with cheryl sandberg? >> $30 million. >> zuckerberg made half a million. >> more than that when you count options. >> fuhrman said he made twice as much money than lebron james. he tweeted that. lebron james flamed out so what? >> shell will be worth, what? $300 million. >> close to that. >> we'll talk about it in a bit. she has money from google, too? >> i assume so. i don't know. >> she doesn't have to worry about it. i hope not. >> she is one of the very rich,

part of the 1%. you didn't see that yesterday? >> i did see that. >> but you didn't hear me say it. >> i did -- >> but you are moving on. >> i was already on to the news. >> i am familiar with that. go on. now to the economy this morning, a couple of key reports today at 8:30 a.m. eastern time we're going to get weekly jobless claims and fourth quarter productivity and costs. the meantime the nation's retailers will report january sales, reuters same store sales index expected to post a 2% rise. consumers hit the malls to redeem gift cards at the beginning of the month. analysts say the month was very promotional and weather is warmer than normal just like yesterday. it was unbelievably warm. costco was the first name out of the gate, posting a better than expected 8% rise in january. and fed chairman ben bernanke heads to capitol hill today. he's going to testify before the house republican committee. bernanke expected to tell members of congress the slowly

improving economy may need more help from the fed. economists say he's likely to argue that cutting the deficit too fast could backfire. truman-esque. >> i don't in what we'd do without the fed. they had just better be there every step of the way because i can't imagine a society without the fed dealing with fixing something. we've become very dependent on them. god help us if we don't have them. >> we're cynical. >> i am. back in there. you have more to do. more support. >> maybe we need ron paul. >> pooh no. i wouldn't do g that far. not every little bump in the road. we got by for years. let's check on the markets this morning which were pretty good again yesterday. we'll see. looks like we are giving back a little bit after that 83-point

gain yesterday and some things out of europe. the fever is coming down a little bit. >> cramer was tweeting this morning. before 5:00 in the morning he was tweeting the bond auctions over there had gone very well. >> his show is not until 9:00. >> that's what i said. the guy never sleeps. he's up all the time. before 5:00 a.m. >> i would like to borrow some of his sleep. >> his energy. >> no, i want some of his sleep. if he's not going to use it, like that guy who wants to buy the internet, can i have some of your internet? let's check out the oil board which i sometimes look at why gases lean prices are not the going up. i think it might have something to do with natural gas. if natural gas really does represent with a you can buy energy for, oil is way too high. >> yesterday there were more than -- crude supplies were higher than expected.

>> $96. let's look it at the ten year and we do have -- i will call it a treasury note here. 1.83% on the ten year which is maybe why the fed -- is it there because of the fed or is that a reflection of what the fed is dealing with? i don't know. chicken and egg again. would you do the chicken salad? were you here? >> he sent me a note about my clucking. >> you need to work on it? is. >> no, i thought it was -- >> he sent me a letter on stationary. >> should i could do my ernie anastos? keep plucking that chicken. keep plucking that -- see, i can do it. and there's no way -- >> i'll tell you the back story on that later. >> you dent know what i'm talking about? >> no but i love him. >> you can definitely find it on

youtube. he pronounced the pl as an f. >> i think i remember this. i can say it. i don't know how you could pluck that up. >> don't say it. >> all right, fine. what else do we have to look at? >> gold. >> let's look at it. >> plucking "a" put it up there. >> you like to live dangerously. >> i do. i can say pluck. can't you? >> i'm not going to -- >> both of you. >> i'm not going to try it. >> this squawk ward moment has been brought to you by joe kernen. >> is this me? that's not awkward. i didn't say anything. >> you're making me very nervous. going right up to the wire. >> when you go down a ski slope and see a mogul coming do you think i'm going to fall or do you think of this as an opportunity? >> you haven't seen me ski. >> on that note, time for the

global markets report. >> i saw him working out. you -- that -- when you sit here -- >> this is now a true squawk ward moment. >> it belies your actual cut-up frame. you are -- it does. you have arms and -- >> he works out every day. ross westgate, hey, ross, standing by in london. whether modesty is false or not, it's good to see you, ross. it's plucking good. >> i have so many questions about ground hog day. is this the same phil or is it like "weekend at bernie's"? is it an old film they reheat? >> it's definitely not the first one. i'll look it up for you. >> what? >> the punxsutawney phil. there's been more than one punxsutawney phil. >> oh, yeah, yeah, yeah. and also in new jersey somebody, too. >> staten island. >> yes, staten island. do you have ground hog's day

over there? >> all we have was the bill murray's film. that's our entire education about ground hog's day. maybe that's enough. i don't know. that's all i'm going on. >> that's reason enough to move here, to emigrate to the united states. it is. >> this is his 126th showing, so this is did he haefinitely not ground hog. >> we don't know how many there are, there have been. it's like leadership changes at the kremlin. >> they say there's only been one over the years. i'm on the official site. >> it's the same ground hog. >> i'm on the official site. >> okay 0, all right. whatever he's got, we need it. stocks are pretty flat when you look at the dow jones stocks 600. advancers being outpaced by declines not by much and pretty

flat. remember, 2% plus gains yesterday. all the news is really on the storks. we have a merger negotiation under way between xstrata today and glencore, of course, a commodities trader. glencore already owns 35% and now says they're in talks of having a full merger. stock up 10%. glencore up 5.4% as well. so that's given a boost to the broader market. elsewhere earnings have been fairly disappointing starting off with deutsche bank. a fourth quarter loss and really all the weakness coming from the investment bank. they talked about refining margin weakness. that's where their profits are disappointing. unilever down 4%. it wasn't so much the numbers as the outlook for the global consumer products group. it was a difficult period ahead and the thought may be declining. sony down 4.7%. they had an annual loss of 1.2 billion. they're talking about an annual

loss of $2.9 billion. everything has been thrown think company, structural problems, and when you look at supply change disruptions from tsunami, earthquakes and the like and howard stringer is stepping down in april as well. the ceo has been there for the last seven years. a quick look at bond options, spain got good auctions and saw 25% of the issuance for the year n. france $8 billion. and yeuro/dollar, premier wen speak to go angela merkel, suggested they would be interested in putting some money into the esm or the efs so the euro/dollar a spike up. we heard the talk before. whether it follows through is still a big question mark. back to you guys. >> all right, ross. we appreciate that. >> i still don't have an answer to punxsutawney phil. they claim it's the only one. obviously it's not. >> you should visit, ross,

sometime during ground hog day season. >> they get crowds as many as 30,000 people that have come. the pennsylvania governor ed rendell attended the ceremony making him the first sitting governor ever to do so. he appeared on "the oprah winfrey show" in 1995. in 1981 phil wore a yellow ribbon in honor of the hostages in iran. and during prohibition threatened to impose 60 weeks of winter on the community if he wasn't allowed a drink. >> during prohibition. goes back that far. >> 126 years. >> we're going to do a lot of this today and i think we have a lot of outtakes from the movie "ground hog day" as we build up to our pebble beach show. >> what time? >> it's going to be 5:45. california time. >> i wish he would guest host for two hours, if he would guest host for two hours. >> get that going?

>> it's early and he's defending this year. he won last year. >> if if he's going to play that day -- >> i have to play that day, too, and i'm not defending. what do pictures and coffee have in common? two household names in that space hit hard in afternoon hours trading last night. details next. up first, though, attention new york city. mayor michael bloomberg must close. what a concept. maybe we could do that on a federal level. he must close a $2 billion gap. a spokesman says it will be done without new taxes. now as we head to break check out the global market headline.

welcome back to "squawk box." u.s. equity futures at this hour on ground hog day the dow would open 0 up a little lower off about ten points. the s&p and the nasdaq off or rather up about two and a half

points. watch shares of green mountain could ha coffee roasters today. the company's first quarter earnings surging as sales of k-cup portion packs more than doubled. shares jumping in after hours trading. meanwhile, shutter fly punished in after hours trading yesterday. the company handily beating fourth quarter profit estimates but investors were not happy with the revenue forecast for the current year. we are, andrew, hearing -- apparently only one phil. and that is a fact. according to the ceo of pnc, which pnc is the old punxsutawney national. you know that. >> of course. punxsutawney national bank, i think. he says -- he is confirming that there's only been one. to our trading block. we are trading futures and the dollar. michael is from bny melon and bill lichtenstein.

you look like an idiot at 125 on the euro. remember at 130 you said it's totally oversold. now it looks like were you early. are you known as being someone who is early? >> well, it's difficult to be prognosticating. >> he especially with the mastef all prognosticators coming out today. do you remember you thought it was did he haefinitely going to >> he's right. >> you're right. but for a while were you questioning yourself at 1.25? >> not in the least. we had record shorts in the cme indicating that the euro was well oversold at 1.30 but low 1.35. the calls for parody of the euro were not only premature but just simply out of line. look, the euro is going to we weaken again over the course of

the spring until we get a deal in place with respect to the greek debt crisis. but the euro/dollar will be high higher by the end of the year and the problem is not so much on the euro side, it's really the dollar side that will be driving this, improving economic trends in the united states will lead to certainly more of a risk appetite globally speak iing bu foreign investors will be using the u.s. dollar as a funding currency for the carry trade so you'll be selling u.s. dollars and investing in overseas assets. so we see weight on the u.s. dollar particularly in the second half. 1.40 is a good target. it wouldn't surprise me if it we got up to 1.45 in the fourth quarter. >> wow. a lot of moving parts in what you just described. i thought if you were forecasting a weaker dollar you thought maybe we weren't going to have a stronger economy but you're saying it has nothing to do with that. it has to do with the dollar

become the current trade currency. >> i think it is the -- at zero interest rates -- >> the same as the yen used to be. >> and the yen still is a carry trade currency but more so for japanese-based investors. if you think the only thing that drives currency values are fundamentals and a strong economy, then here you have 15 years of experience in japan, probably the weakest, and yet the strongest currency. there's something other than gdp growth that drives currency strength. i think the answer lies in the fact that investment flow plays an important role and you have to take into consideration differentials. >> ben lichtenstein, when i was, you know, hoping and thinking maybe the equity markets

continued to do well, one of the flies in the ointment would have been a stronger dollar. i guess if we're going to 1.40, 1.45 on the euro it makes it better for stock prices to move up. >> we have been seeing relative strength in the dollar as we've been seeing the strength in the stock market the last few days. it's been certainly not the case. this dollar has been coming off -- we've been watching that rally. i think that what he just mentioned certainly 1.40 handle is in the realm of possibility at this point. the dollar has been coming off. if the past was any indication of what we're going to see in the future again with this low interest rate environment we can expect to see the dollar continue to come off. i think in addition to the other contributing factors a major part of the strength or lack thereof the individual currency is the interest rates and, again, clearly stated about a week ago, we're expected to see a low interest rate environment through 2013 right now but in

terms of stock, futures products and the strength that we've been seeing, it's really low volume environment right now and the activity up about 1,300 while we've been able to show strength and hold the levels, a lot of the bulls were looking for that level. i think we touched on it last may. end of the summer, last july area. again, now we need to exhibit some strength and volatile conviction. i think that would be associated with more down side activity on the dollar right now. >> all right, gentlemen, thank you. michael and ben lichtenstein, we appreciate it. see you later. coming up, a well-known ipo watcher will tell us if facebook has a shot at living up to its hype. but first, if you're driving in new york city anytime soon, take a detour to the west side highway. we'll get a glimpse of this billboard. it's all squawk all the time. right now as we head to a break, though, you see that? look at that, guys. >> i tried to see it on the way in this morning. >> did you almost crash?

>> no. >> you'll see it on the way home. >> there's no light on it at night. we have to talk to them. >> yeah, yeah, got to get a light on that. >> no light at night. too dark. >> that's a good one. i like it. as we head to break, yesterday's winners and losers.

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there you go. thanks. [announcer:] conocophillips. welcome back, everybody. facebook filing for its ipo after the bell yesterday. and joining us right now from l.a. is the ipo desktop.com president and editor. francis, thank you for being with us today. we've been trying to get a deal for whether facebook is worth it for the shareholder, and what's your analysis after seeing what's in that filing? >> well, what i'd like to do is share a couple of observations and i'll give you a conclusion on it. mark zuckerberg says he wants it to be a blue chip and, okay,

that's fine. sometimes he compares it to google. he wants facebook to be worth 53% of google if facebook is valued at $100 billion. but that's 10 to 12 times -- well, facebook has 1/10th the revenue of google and one-tenth the profit of google so that's a little bit of a strange and the other thing is when you look at a company you always wonder what the revenue forecast will be. that's what sets the value of the company. and last summer there was a revenue forecast floating around of $4.3 billion and i think facebook had a responsibility for damping down that. it went viral. the sales came 0 to 14% lower and then a couple months ago there was an estimated revenue would be up 60%. i don't think that will happen. >> i understand your point they would be responsible for tamping down expectations but why would they do that when they weren't even a public company?

don't you think the company behaves differently before and after the ipo? >> quite, did he haefinitely. a lot of stock sold in the secondary market. >> right. >> i'm a little surprised at that. the other thing i noticed in the filing they said it is 2 billion internet users. i don't think that's the addressable market. really it's the number of internet users that have disposable income targeted by their advertisers. i think that number is a lot lower. the other thing is that facebook likes you to think it's a technology company. i don't think it is. i think it's the consumer technology. apple is a technology company. there's always a new gadget, a new widget coming from apple and google. i don't think it's a technology company. another point that's interesting, they say they have 845 million monthly average users but of that about 425 million are mobile. well, that's well and good. they can not get advertising revenue from the mobile users.

so that's kind of odd. another thing i noticed, they want to be considered an internet advertising company basically because 85% of their revenue comes from advertising and if you look at the market projections for internet advertising for the next three, four years, it's a compound annual growth rate of 16%. that's not a high marketable market. >> that's your valuation for the whole firm then? >> it's a lot less. here is the other thing i wanted to share with you. if you look at the financials, mark zuckerberg is saying and everybody has been saying facebook is a tremendous growth company. well, i'm not really sure because i look at the sequential quarterly growth. i take out december because i think they bumped it for the ipo. the so if you look at the growth or you look at the rate of sales through the december -- june through september quarter, you'll see the net income is flat and you'll see that the --

>> revenue up 88% year over year. >> year over year doesn't count. what counts is the quarterly increase. last year was ancient history in this business. basically if you look -- i know that's a negleative way to lookt it but you need to look at all possibilities. it's a great company. its revenue was $1.1 billion, $1.2 billion. it's only 4 1/2 years old but i just don't like to see it in an ipo, a flat sequence of quart quarterly performance. >> okay. francis, we appreciate your analysis this morning. thank you for joining us. >> thank you. if you have comments -- >> we have. >> a lot of people noticed you're working out all the time, cut body, having all these friends on twitter and facebook. there's a lot -- people are saying, anthony weiner, also, was constantly in there lifting. remember all those pictures of him in front of the mirror

lifting? he had all the social network friends. this is -- people are thinking this is like a trend here. it's not, though. >> i'm hoping it's not. >> there are no pictures, right? >> there are no pictures. >> tell us now, andrew. >> anthony weiner was really a ripped guy. >> yes, you were. i saw you yesterday. coming up from one ipo to another, facebook may be dominating the headlines but our next guest is taking his company public, too. first he'll talk on "squawk" after the break. my job is to find the next big sound. they sound awesome tonight. and when i do find it, i share it with the world. you landed the u.s. tour ? done. this is fantastic ! music is my life

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ipos the talk of the town. we talked about-face book but among the mix anti-virus company, ceo j.r. smith joins us nou now. let's talk about security and this ipo. why are you going public now? >> we're going public now as the next step in the company's evolution as well as to drive additional funding for possible acquisition work and fund our future growth. >> the ipo is priced between $16 and $18, right? >> correct. >> i'm going to ask a question i may get in trouble asking, are you not in a quiet period right now? >> as long as i don't say anything out of the box or follow the story that's in the f-1 it's perfectly fine to have a conversation with you today.

>> i give you credit for this because most executives in the midst of an ipo are very hard to talk to publicly. we've talked about this before. so the fact that you've come on the air, i think, is a tremendous thing. let's talk about the ipo market broadly in terms of how you're thinking about it and how you think this is going. you've seen a number of tech deals happen in the fourth quarter. did your deal get delayed at all in terms of waiting to see what was happening with the market? >> we've been growing steadily so waiting for a good opportunity and this was a great timing for us. it's nice to see the markets are doing well and they're optimistic about tech offering. >> can you talk about the road show experience? i've always been curious the fact that you are willing to talk about the whole thing. what was it like? did you enjoy it? and when this thing prices, where are you going to be when this prices later this week? >> it's been a great experience. it's the first time for me. everyone told us that it was going to be tough and we were

going to get tired. i tell you what, it was the best experience i've had in a long time. i really enjoyed it. >> and, so this morning, you're going to be ringing the bell? >> tomorrow morning i'm going to be ringing the bell. >> tomorrow morning you're going to be ringing the bell. >> is it all new money? anyone selling anything? >> yeah. some of our shareholders are selling around 10%. not all of them, of course. and, again, to fund future growth. >> that's 16-18 imply? >> million. >> what you're selling? >> just under a billion dollars. >> j.r., congratulations. >> what's j.r. stand for? >> that's my first name, believe it or not. j.r. smith. >> see, if you don't ask, you don't find things out like that. someone named you j.r.? big "dallas" fan? >> the '60s. my mom, how do you explain it? >> i think that's cool. his name is j.r. have you ever named a person -- >> we have the music. >> if you don't ask, you don't

know. if you don't ask, don't tell. >> that's right. >> j.r., congratulations. good luck with it. i'm fascinated. >> j.r.? >> i am, yeah. >> my initials are j.r. >> jrk. >> but they're for names. they stand for names. and do you have -- do you have a regular -- >> awkward. >> do you have a regular middle name or is it just ross? >> ross is the middle name. >> you were named ross or did you take ross? >> ross is my mother's maiden name. >> but that is your middle -- >> if you want to steal my credit cards now, yes, that is true. when we come back, hotel squawk. we'll talk about the state of the lodging industry and what it tells us about the consumer. i had a print out of how many hours

i have actually put in over my career. and it's 168,000 hours. so just think, if you had an 8-hour job, i'm like a man of 100 and something years old. i've worked very hard to support my family. and i finally reached that point where i'm going to retire.

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and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today. jobs report 2012, the most telling indicator of how the economy is doing. cnbc brings you first word of the post-holiday numbers tomorrow on "squawk box." >> i think the president and the political landscape is going to hit that one hard. >> cnbc's experts take you inside the numbers all morning long. >> people think they're underlying jobs could be in the 175 area. >> the jobs report, coverage begins in "squawk box" tomorrow on cnbc. starwood hotels reporting better than expected profits for

the quart quarter. joining us fritz von passion, president of the hotels worldwide. let's start with the united states business and leisure. >> business is better than what you would expect. >> business business? >> our business. >> what about business travel? >> well i have yet to talk to a corporate customer who says they'll travel less this year than last year. it makes sense. companies are profitable, growth is outside of the u.s. so looking to go wherever growth is. >> are they saying they're going to travel more. >> a lot of them yes, absolutely, traveling more. occupancies are back to '07. even if rev par growth slows down, that is profitable growth because it's all in rate. >> how far have we come back to the rates in terms of the 2007

levels? >> in order of magnitude we were down about 25% in rev par which is rate and occupancy. we're now minus nine from peak so we're a good part of the way back. >> is it regional, is it city by city? are there certain cities where you're back or higher? >> there are stronger cities. new york started strong and softened just a bit, a lot of supplies come on, but the rest of the u.s. has had little new supply come on for about a decade and there's nothing getting built now so we're looking at a few years where occupancy will be tight. it's good for us because rates will keep going up and eventually as back lending gets back out, we start to see more construction spending that will come back but that will take a while. >> what about the rest of the world? >> the rest of the world i guess you'd have to say first of all europe, which is to put it in perspective, about 12% of our rooms, with he saw europe start to slow down q3 and definitely

into the fourth quarter, that's not a surprise. asia very strong. >> how much does that represent? >> we have more rooms now in asia than europe, africa and the middle east so about 20, 25% of our revenues and latin america was our strongest region in 2011. >> how much was down there? >> 10% of the total room count. >> and in asia where is the majority in asia? >> china is still the main engine of growth today but it's interesting, india is as big as china was seven or eight years ago so it's smaller but the growth potential is there. >> you're building over there. >> absolutely. >> you're adding. >> we still have over 100 hotels under construction in china. >> you have 100 hotels in construction. you lived there in the sum per >> for five weeks. >> it was not only the growth

you could have in china but the reverse growth in terms of people living in china or parts of india or asia that will be traveling back to the u.s. or parts of europe. >> absolutely. >> you have seen that in. >> the high end global travelers from all over the world and china is at the cusp of having a huge growth spurt and as people get to the level of income where they can get out and travel, china outbound travel is roughly equal to the u.s. and projected to double in the next four to five years so that's the big growth story for the industry. >> how is luxury for you? >> it's great. we had 108% growth in our nux of luxury rooms in our system over the last five years. between st. gregis and w., peope were asking whether luxury was dead, it's not only back but it's booming. we opened st. regis in bell

harbor and it's a spectacular hotel. >> if you doesn't stay at one of your hotels where would you stay? >> home. >> we've talked about this before, other hotels that are not necessarily part of the portfolio. >> we have some great properties and what's driving growth today is the super high end elite traveler and that group for us, 2% of our top travelers are 30% of our business and their spending has tripled over the last five years. >> these are one percenters. you're going to have protesters jo you t outside of your hotel. >> these are the george gloonys, people who are traveling all the time. entrepreneurs, artists. >> why am i being nickelled and

dimed for wifi? >> you need to be a platinum elite so we can take care of that. >> that kills me. the cheap here tells give you wifi for free. the more expensive charge you 14 bucks a day. >> not going to ask you what you're doing with the wifi in there. i don't think about that when i walk in a hotel room, where do i get my wifi? that's not the first thing i think about but i don't have 5,000 friends on facebook i need to send pictures to. >> our spg program we announced changes yesterday to get closer to the elite consumers. lifetime membership, 24 -- >> get we got to go. thank you, fritz. when we come back, our top stories and our guest host is boeb johnson, rlj's company's found enand chairman. americans are always ready to work hard for a better future.

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robert johnson gives us the temperature for the economy, our guest host for the next two hours. >> a dow chemical's ceo gives us his first take on earnings. you got to check your mirrors. sarter your eyes. >> are employers seeing their shadow and retreating like it's 2008? who is planning job cuts. >> this is one time where television fails to catch the true excitement of a large squirrel predicting the weather. >> it's groundhog dog and the second hour of "squawk box" begins right now. >> try it again without the

sarcasm. ♪ >> good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. there are three or four sticking points as the country ends talking, but says the bulk of the conclusions have been concluded. fed chairman speaks at 10:00 eastern time and costco is the first out of the gate as the nation's retail january same-store figures today. costco reporting 8% increase in the stores open over a year. the futures looking like they're having a mild pullback after some gains not only

through yesterday but most of the first month of the year. the dow futures down 13%, s&p off by half a point. berk merck is reporting 97 , 2% on sales of $12.3 billion, a little shy of the $12.53 billion that the street was looking for. i have a forecast for non-gaap full year 2012, 375 to 385, versus 383. 383 is the estimate so that is more or less in line. >> i saw dow chemical just coming across, for a moment, looks like they -- i don't want to comment yet.

>> merck is 4.3% yielder trading at 38.63. we're getting the different metrics of different drugs, animal health and different divisions of the company. i'll look at dow for you real quickly. >> i'm looking at it now today. >> i'm having a tough time with this computer. >> non-gaap? >> the estimate is 30 cents and i'm calling up the press release. there are comments from andrew livers, saying that 25 versus the 30, so it's a miss by five cents. he was talking about how the macro economic climate deteriorated. andrew liver also join us a little later this morning. >> it wonder whether input costs hurt margins. >> he was optimistic last week about the numbers. >> quarterly volume was flat if you exclude -- again, maybe some currency issues involved here as well but we'll ask andrew about

that. let's check the european markets, european shares mixed for most of just what is an early session for us here, but i know it was after a week of unexpected results from unilever and other companies. spain and france did conclude successful debt sales, yields fell from prior auctions. the euro is moving between gains and losses this morning, right now as you can see it's at back to 13 1 and are we getting facebook overload? i heard from liesman, he's finished. never gets that waywith bernanke. >> kayla is here, she's not done yet, i'm not done yet. >> instead of me talking about you gossiping. he tried to contact me on facebook to tell me but that's somewhere in -- >> are you on facebook? >> i am not, i will never.

>> are you on facebook? >> no. >> there's a fake joe kernen making a profile for you. >> i know there are on twitter. >> that's me. >> we'll get to bob in a second. what is it with us? are we late adopters or something? >> no, i think you're like me, it passed you by. >> like life sort of. okay. we're going to talk more about that. >> the big news of the morning, facebook filing to go public and social media site is making it very clear it is still going to be controlled by co-founder mark zuckerberg. kate has been following this from the beginning. >> it's a complicated share structure, class a and class b shares. mark zuckerberg has about 57% of the voting rights and that doesn't look like it's going to change. most of the power will stay with him, irrevocable and signed over to him from existing shareholders.

>> it's the most private public company in the world. >> interesting. this qualifying facebook as a "controlled" company, very creative term. "because mr. zuckerberg controls a majority of our outstanding voting power we are a controlled company so therefore we are not required to have a majority of our board of directors be independent nor are we required to have a compensation committee or an independent nominating function." so their entire board can be in-house. >> is that more controlled than for example you look at google which followed a similar sort of path? am i wrong? >> it's a little bit more specific in the language and it's interesting because they had a compensation committee before they filed the s1 and they looked at companies, you know, where minimum $4 billion in revenue, minimum $50 billion in market cap and made sure their compensation was in line with the companies but apparently they're going to do

away with that going forward. as long as the stock performs well people aren't going to be angry about this and mark zuckerberg said in s1 he'll make $1. in 2011, mark zuckerberg earned $1.49 million, coo sheryl sandberg $30.9 million, david ebersman engineering the ipo made $18.7 million and it's a tech company so the head of engineering will make more of the cfo. mike shprapford, $24 million. the most interesting thing i saw in the s1 filing is a few paragraphs talking about why mark zuckerberg there be selling some of his shares in the ipo. a lot of times that signifies a ceo needs to raise money or losing confidence. you don't like to see your ceo selling shares in the offering. it says he'll be selling some of his shares in the offering to

pay for taxes that he'll incur when he exercises some of those options so the options are costing him six cents apiece. he has six cent options for 120 million shares. it will cost him $7.2 million, and make $4.8 billion at the highest range, a return of 666%. >> bob's here, maybe can he explain this to us. i read this in the prospectus but i don't understand. he's selling the shares for tax reasons. >> right. >> if all of this is unrealized and he doesn't sell anything it's unclear what does he need to pay taxes on? >> on exercising the options. >> maybe he has to exercise the option. >> that's what i didn't understand. >> i know something about a controlled company. b.e.t. was a controlled company and in a controlled company you're taxed at ordinary income, not in capital gains so the taxes could be higher. >> if you didn't sell shares into an offering, you would not

have a tax -- >> has he cashed out at all? >> no. >> then look, i got two words for you, mark cuban, do you remember? tech companies are great but don't always work out. if you could put $4 billion in a bank before -- >> i'm thinking that makes sense but the rationale provided in the prospectus is he's selling his shares -- >> so pay the tax in on the option. i'd want my $4 billion. >> remember he's been running this. can for seven years, not to say his salary has been low. he found it in college, dropped out of college. 2004, 2005 the working capital came from his dad, a dentist in upstate new york. the prospectus said he had option for 2 million shares that expired in 2009 so they went by before the company went public and the board without mark's opining on this, the board said we'll give them back to you, so the dad's 2 million shares for funding the can. >> he's not known as living

lavishly. >> right. >> it sounds great but if you were mark zuckerberg would you think i am worth -- >> we're not telling you not. don't say i'm selling the shares to paying taxes. i'm not clear what he's paying taxes on. >> in the internet boom i knew a bunch of guys personally worth $2 billion when it was all said and done were worth zero or 58 -- they were bona fide billionaires that ended up with less than $100 million and not to say that facebook would, but the other point is when google came at 80 and i remember at the time a lot of people said this is expensive at 80 and we watched it go to 600 to 700. >> the range was higher and came down. the range was between 125 and 135 and came down. >> we saw what happened. now we think facebook, i got to get in. what if it doesn't happen like that? what if it comes and it is not cheap and what if it is not another google? >> why wouldn't it be? if you look at what the world is

turning to, seems the global advertising market has decided there are going to be three big winners in the internet spaces, twitter, google and facebook. it should be. they're listed as competitor. >> keep it low on the offering. >> as long as you can maintain the engaging relationship with that consumer base, that 850 million users, what's going to knock you off of that perch? >> it's 25 times sales, that might be one. have you ever seen something valued -- >> are you going to call your broker and try to get a piece of this? >> facebook? i don't buy anything i don't control. if i don't own, then i don't buy. no, but i think facebook has captured the engaging relationship with a global user base, and unless something comes along and breaks that connection, it will just be a generational pass-along, people who will, kids will jump into

facebook because their parents were orne fan facebook. >> with groupon maybe the valuation isn't justified. if you were given $15 billion could you recreate groupon, you probably could. if you were given $100 billion could you recreate facebook? no. >> thank you kayla for being with us. comments, questions, anything on "squawk" whether you think facebook is worth it, e-mail us at squawk@cnbc.com or a twe tweet @squawkcnbc is the handle. we can't count on the groundhog to predict the jobs market but you can count on the jobs count. the nation's largest chemical company reports quarterly reports, dow ceo andrew liveris ceo coming back after the break. it's a big week on "squawk box" all leading up to friday's big jobs number. got a jobs prediction, maybe a

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jobs report 2012, the most telling indicator of how the economy is doing. get first word of the post-holiday numbers with analysis from every sngle all analysis from every sngle all morning st office and waiting in line. i don't have to leave my desk

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and joe? >> dow chemicals fourth quarter results, company earning 25 cents, excluding certain items, below street estimates. with us with a first on cnbc interview, chairman, president and ceo of dow chemical andrew liveris. we've been talking to becky a second ago, you did have price increases that offset some of the input cost increases. is that correct? >> we did, thank you. we did see a high quarter in the united states, key raw material ethane, comes out of natural gas. the number is 58 cents a gallon so we have good feed stock cost momentum going into q1. we see q4s is a big bump in the road not just because of that but because of the big headwinds

in europe. europe got recessionary from a demand point of view in q4 and massive destocking across most of the chains. inventories went to all-time lows that we're starting to see come back. we did have price power and we have price power going into the first quarter. >> but a year ago fourth quarter, what was that, was it 90 cents then? was it less? did it go up and back down, the e-thing? >> ethane is delicate and bounting in that bracket. it was about the same number a year ago but certainly what's going to happen is excess shale gas supply will increase so we as a country will go long in feed stock which is much written about and where the big footprint in the united states,

we are, so that is a footprint for our country and also for the country we can be low cast energy and manufactured goods exporter. >> i'm looking at your dividend back to 3%. is that something you want to continue to keep raising, andrew? >> yes, of course the board makes that answer which is my qualified answer. we had a record year last year, $630 billion in revenues, increase in the bottom line of 29%. as our feedstock dynamic we just referred to, newport foal yo, we are going to be more consistent dividend payer over time so we're driven for shareholder enumeration. my whole mantra with our management team is to keep delivering the cash flow. we have $2 billion from operations in q4 so that we can keep improving and increasing

shareholder enumeration, which is an address to dividend. >> the other thing i wanted to ask about foreign currency, how much of a headwind with forex and did it happen in the fourth quarter? >> yes there was headwind in the fourth quarter as well. 25% of our revenues are in europe which speaks to what happened in q4 so we're exposed the currency situation. joe, we've never called out currency. it helps us sometimes, it hurts us sometimes, but we're not putting that into the q4 analytic, western europe, consumer sentiment, massive feed stocking and feed stock compression. except for western purp, it will be headwinds most of this year in our view, balanced by strong emerging geography performance and good performance in the

united states. >> it's andrew sorkin. in davos when we spoke you seemed much more optimistic than i was and it was good to hear and yet some of these numbers give you some sense there may be some more challenges ahead, when you came back to davos did you have a different view than when you got it? >> no absolutely not. i talked about western europe and davos was all about the sovereign debt issues and i just made that comment now. western europe before, during and after davos will be a challenge through this year. i did say good things about the u.s. and i remain optimistic about the u.s. because the low energy costs points are made which will benefit us and benefit our margins through the share and price which is what joe talked about earlier. >> andrew liveris we appreciate your time.

love to see you. >> thank you, joe, nice to see you guys. coming up, super bowl of cities, new york versus boston, which one has better overall economic health? we'll tackle that question. first we go fourth and ten on the jobs market, we'll get the pace of layoffs, when the challenger report breaks this hour. "squawk box" will be right back. >> time for today's aflac trivia question. who was the first american to walk in space? man, i'm glad aflac pays cash. aflac! ha! isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat

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now the answer, who was the first american to walk in space? the answer, edward white. >> aflac! >> welcome back, everybody. let's recap some of this morning's quarterly earnings reports. starwood hotels earni ining sei

cents, well above the street forecast of 57 cents. cigna earned $1.11 a share, eight cents worse than the street expected. it's below the street's estimates of $5.67 and that stock will be lower. 45.68 is where the stock closed yesterday. sony is reporting a bigger than expected loss for the most recent quarter and forecasting a fiscal year loss that is wider than previously expected. sony is citing losses in its television business as well as a strong yen, and by the way, howard stringer is out there, there's a new ceo tapped, kizuli harai. joe? looking for an extra dose of "squawk box," follow us on something called twitter. >> come on. we -- andrew and i both have

twitter accounts, too. he's @andrewrsorkin. >> your twitter can be on fa facebook? >> i don't think facebook can be on twitter. >> he's the father of tweeting. >> i'm still using smoke signals. i don't seen have a smart phone. i have a dumb phone. i have smart people though. >> bill saw his shadow. that means he gets scared and goes back in, six more weeks of winter, not that much of a winner. >> doesn't that make you a twit if you tweet? >> no, no, no. >> it's @squawkcnbc. which job industries are laying off workers, minutes away from the challenger report plus what's at stake on the hill, as

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welcome back, everybody. in our headlines, jeffries is buying british stockholder horgevet. and astrazeneca is cutting 7,500 jobs. patents on some of its key drugs expire and governments in europe and the united states squeeze prices. breaking news on the pace of layoffs and the news isn't so great. 60 minutes before the latest jobless claims numbers the challenger report coming out first here on cnbc and here to discuss the findings, john challenger, ceo of challenger, grey and christmas and it is not a christmas today. give us the numbers.

>> we saw over 53,000 job consultants -- cuts announced in january. over 30% more than a year ago. >> how much of this is seasonal, retail side and the financial firms that oftentimes get rid of their people at the end of the year to begin the new year fresh? >> well, those two areas did lead the way, and interestingly it was pharmaceuticals that came in third with the astrazeneca cut. those weren't due to just laying off seasonal workers. that happens year in and year out, mostly store closings, companies that decided after the holidays that it was time to start cutting back. now the financial sector seems to have seen a new round of cuts as they deal with the pressures from europe, with the new regulation that's coming up, and so we were seeing heavy cuts, in

fact in the financial sector the largest we've seen since september. >> john, i'm curious when you look at the financial sector in particular and a big number like that, is that a one-time number? do you say next month, that could be a trend? >> if it continues certainly it's a trend and we know that the financial sector has been the hardest hit sector other than government over the last two years, so it's been ongoing series of hits to the industry, as we move towards fewer banks and banks really have less potential for the kind of high profitability and correspondingly high workforce sizes they have. >> as i was looking through the numbers the government sector oddly enough saw very few job cuts. >> surprising and i'm not sure that's something we can count on yet, doesn't seem like that. two consecutive months with very light job cuts but we know that with the military and the post office and the other kinds of

government agencies that are under severe pressure because of the deficits, likely to continue. government is in a period of heavy downsides. avenue seen a two-month respite where it seems like there's been a pullback from the heavy layoffs when we been seeing. >> project out for us, john, having this conversation next month and the month after, what industries are you going to be paying most attention to? >> certainly banking is crucial. it's an ongoing area of the economy that has been seeing cuts, and we don't know where the bottom level will hit in terms of workforce size. pharmaceuticals is the number three area this year, pressure because of health care reform, so this big cut today by astrazeneca may be a harbinger of things to come. >> john, this is bob johnson. was any geographical connections to the layoffs or were the layoffs pretty much across the country? >> the midwest saw the heaviest

number of cuts this month, more significantly than others and yet it wasn't the industrial sector driving that. seemed to be particular companies driving that change, some of the retail stores that were closed. >> john, if you wanted to predict, what do you think we'll see tomorrow, friday, friday jobs numbers? >> i think we're seeing ongoing growth in the private sector, steady growth. we've been averaging almost 160,000 jobs created a month and that does drive unemployment slowly down. the question will be though, is government going to continue to see the losses to offset those? i think we're in fairly positive territory. the layoffs are up some so there will be pressurpressure. >> john, thank you for the numbers. let's turn to guest host, bob johnson of the rlj companies. have you come one a different name for what it is that do you? is it a private equity firm? >> no, it's really probably a whole -- it's not a

[ whispering ] private equity firm. it's a holding company, i run my capital alongside other people's capital to try to create a brand, build around the rlj so that's why we use the rlj name in almost every company we own or have controlling in because i want to leverage the brand and this is something that's very important for a mity-owned business because you want to have the visibility to make connections with strategic partners. all we do in our business is find talented people, match them up with strategic partners, have a vision of how to build businesses and sort of be first among equals in terms of being the most preeminent minority company in the country. >> if you were to opine on the private equity industry, it provides capital for businesses. it creates jobs and some jobs are lost? >> absolutely. we have the rlj private equity

fund in partnership with the carlisle group. we're 75, they're 25. we believe in private equity. our hotel right now, that's a publicly traded reach, started out as a real estate private equity fund from state and corporate pension sfounds we really believe in private equity. i believe in it because it's a way to take capital, put it to work, grow business, create wealth, enhance job employments and give entrepreneurs either two things, one capitol to grow or capital to exit and that's why i'm concerned about any attempt to raise taxes on private equity returns. all it does is drive down the investment capital to grow businesses. >> does it really? we got to run but i'm curious, you think it would change your outlook for how you invest the money depending on what the tax rate would be? >> it would definitely change it for my firm and the types of firms that i represent, minority firms.

in order to attract talent you have to say to the talent you're going to get a good yield. if i convince somebody to leave goldman or morgan, when i come to you am i going to make more money? because i'm going to take a little bit of a risk, i have 12 to 14 months to raise the capital and i'm paying the same taxes at goldman, they have a bigger fund, i'll stay there. it hurts minority private equity funds, absolutely it will devastate them. >> that is part of the recruiting conversation of the tax rate. >> for me it's part of the recruiting conversation is, when are we going to raise the fund, you know, how much are we going to make after we raise the fund, is the fund going to be a small fund or large fund? absolutely. i would insist that they not approach it with the idea of raising taxes on private equity, if they want to keep diversity in financial asset management in that class. >> that's interesting, not an argument i heard to this point. >> you've got to be outspoken on a lot of business issues.

i hope to talk about some of them. >> we just announced ops place that will aggregate minorities for jobs and businesses and tied it into an interesting thing the nfl is doing, an adaptation of the rooney rule which says you should interview minority candidates and minority business before you hire a new employee or sign a new contract. >> right. give it a shot. >> it's best practice and voluntary. >> opsplace is the side. the rlj rule is the philosophy behind to make sure minorities are given a fair choice across public and private sector. optional. nfl is if you're one of the 32 owners you get fined if you don't interview a coach when there's a vacancy. we're voluntary because i don't believe the government or regulations sanction. >> we have a lot more coming up with bob. we're also delivering fedex ceo fred smith, whether fedex ads will ever return to the super bowl.

next stop, missouri, what voters are looking for as the gop contenders get ready for that state's primary. we'll get from representative emanuel cleaver.

mitt romney is on his way to missouri after his victory in florida this week so what are voters in missouri looking for in a candidate, and will the former governor win them over? congressman emanuel cleaver is a democrat from missouri and representative, thank you very much for joining us this morning. >> sure. >> we're going to start off talking about this debate that is coming up or the race headed to missouri. what do you think voters would like to see? i recognize you're a democrat but among the republicans duking it out, what do you think the real answer is? >> well, missouri has historically been one of the bellwether states. you win missouri, you're likely going to win the presidency. i do think that in the republican primary, the candidates are going to have to calm down a little in terms of the attacks, because there is somewhat of a history in missouri about voters backing away, republicans as well as

democrats, when the campaigns get nasty. i'm a perfect example of that, by the fact that i had an opponent who spent millions of dollars in a race but the campaign run against me was extremely negative and i ended up winning by a landslide. saying landslide i might also say it's a difficult state and sometimes when you win by 1%, you have to consider it a landslide. >> what plays in south carolina and florida may not play so well in missouri. if you'd like to hear more about the ush the issues, we have another jobs report coming out from the government and while the employment number has been coming down and jobs been created it's been a slow pace and when you hear from your constituents, how do they feel about the economy and jobs picture in particular? >> there's a nervousness

throughout my congressional district and throughout missouri. it is because unemployment is still above 8%, the cbo says that it's very likely going to remain at above 8% for some time, and so i think one of the things that's actually missing from this race, which i really would like to see candidates talk about in missouri, how are they going to create jobs? what can they do to inspire small as well as major corporations to begin hiring? a lot of it is psychological and so if i am correct, and i believe that i am, then we've got to deal with it psychological a and instead of attacking, we need to propose. >> congressman cleaver it's bob johnson. >> good morning. >> i thank you for the support and the congressional blau cuss to focus attention on the job market for african-americans and

minority americans and particularly our launch of opsplace.com for minorities seeking jobs and professional businesses and the are, lj rule which you supported. >> absolutely. >> how do we get more attention, focus on the fact that myjority unemployment is more than double that of the general population's unemployment? >> well, you know, one of the things we've got to do is quit trying to send subliminal racial messages during the campaigns, and i think candidates are guilty of doing that, and that hurts efforts like yours, because it creates an unnecessary racial tension, a tension i think we've been bringing down in recent years, but i think that what you have proposed and what the congressional black caucus supports is extremely important, and maybe the president's jobs council should be that the

institution that would go out and promote trying to implement a program voluntary where people consider african-americans and vice president and up positions in major corporations. if we're going to become a nation where everybody really is a player, then we've got to have people of all races in all parts of every corporation in this country. >> chairman cleaver, quickly, can i just ask, you're referring to some of the subliminal messages that are being sent out there. are you referring to any candidate in particular? >> well, i think that in the last few days, both governor romney and speaker gingrich have been guilty of saying things that are not helpful to a society begging for racial inclusion, whether they are intentional or not, i'm not 100%

certain. i do know that it doesn't matter in many cases. it's just unfortunate and it tends to divide. >> do you agree with that? >> i'm familiar with some of the things newt gingrich said, the food stamp thing accused of being racial. is that what you were referring to? >> yes that and other comments in appearing before the naac. to make sure black people know they're not going to be given anything. i also think that when you say that you're not, you know, interested in the poor, that creates a problem. and look, i've spent most of my adult life trying to bring people together and it is inf infinitely easier to be inclusive than to be nasty and that's one of the reasons we're not getting anything done on capitol hill. we have a rocking chair government, a lot of motion but not going anywhere and that's because bees cannot make honey

and sting at the same time and the members of congress are preoccupied with stinging each other. therefore we don't make legislation to enhance the economic status of the american population. >> congressman cleaver, before you leave, i like your idea of asking the president to suggest that his jobs council focus on the issue of a fair chance that we're trying to create for minorities and i know the caucus supports what we've been doing with opsplace and the rlj rule. i hope we get the members to call the jobs council head and jeff immelt and tell them this is something they ought to take seriously and support. >> we spoke to that at our last meeting and that's something we are comfortable in doing. >> chairman cleaver thank you for your time today. >> good to be with you. coming up senator john mccain weighs in on the race for the white house and the obama administration's plan to help rebuild the housing market will be discussed. "squawk box" will be coming right back. >> i am on the stage of the

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the super bowl is sunday but today we're looking at the super bowl of cities. the new england patriots just outside of boston and the new york giants. mary thompson is in foxborough,

massachusetts, and brian shactman east rutherford, new jersey, outside of met life stadium. mary will make her case for boston as an economic power and brian will rebut with statistics on new york city and joe and andrew will declare the winner. >> reporter: wes welker's smaller size belies impressive strength. boston is a quarter of the size of new york but consider the 470,000 in per capita output generated by its 618,000 residents crushes that of the 135,000 roughly per capita output generated by the 8.1 million new york residents. 33 titles for 8:25 each for those four teams, compare that to the 7.4 average for the new

york city's seven professional sports teams. the unemployment 6.8%, below the national average and empire state and 2010, boston's economy grew 4.2%, the fourth fastest pace among major u.s. cities here and also here you have to keep in mind is that being superior productivity. boston's economy is almost back to pre-recession levels even though there are 100,000 fewer workers employed at the bay state. give me a p-r-o, productivity, that's the hallmark and because the workers are so productive they have the second highest median wage in the country at $19.83 an hour. what does this mean for sunday? risesmart says the superior economic situation in boston bodes well for the patriots because in the last 20 super bowls the city with the lowest unemployment rate has won the game 17 times. go pats! >> all right, listen, here we go, we'll talk a lot about per

capita. it doesn't matter. when it comes down to it, new york is an economic beast. $50 billion worth of tour achl lone, $10 billion on broadway, 50 million visitors. we have 77 of the forbes 400 richest in new york and entertainment, more than 300 films and television shows were done in new york and then there's the restaurant economy, 25,000 restaurants, we visited with one of the best, david boulee, he was born in connecticut. he even lived in massachusetts. he basically says, it's a no-brainer. >> i think when it comes to food there's no place, boston included, of course, that has the amount of ingredients and as sophisticated clientele or has the recreational curiosity to eat in restaurants like new york city has. so it's got a complete venue of

attracting chefs to do the best they can. >> reporter: just to translate there, new york has a smar smarta consumah, you understand that, boston? it is a fact that new york has a higher unemployment rate but the bottom line is the last time a city with a higher unemployment rate won the super bowl, 2008, when the giants beat the patriots. back to you. >> well played both of you. the winner is, mary almost won me over with her productivity cheer but i have to go with the home team. >> you can hang out there, mary, brady's not coming around and he's taken. >> i thought mary was very -- >> it's really sad. >> he's walked on this field. he's walked on this field. >> i think mary is convincing. she had the numbers. brian, i love you, i'm a new yorker but mary is good. >> i'm going with boston because

of the feeder stock of the universities in the route 128, high-tech and being in boston is more livable i think. >> new york ultimately is more of a defensible economy. long-term more resilient. year over year today mary wins mine. >> don't you get tired of new yorkers telling the rest of the country they're the best constantly? >> you guys went for boston? our graphic was pre-made by giants fans because it shows new york winning. >> you can -- >> i can be the referee and decide. >> the final vote has got to go to boston. >> oh! >> such a livable, beautiful city. >> why? >> because boston has a marketplace that's sort of, you know, you got all kinds of easy living style, it's wide open. it's got parks, and -- >> route 128, all the technology, all the feeder from mit and harvard. there it is. >> there it goes. >> brian we love you, but mary

you're the winner. >> and they have tom brady, woo, hoo, hoo! >> he adds points just to the -- right? >> right. absolutely. we've got weekly jobless claims coming up breaking in the next hour, the key numbers coming in 24 hours, before the monthly jobs report. plus fedex fred smith on whether the recover i have delivering sustainable numbers.

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jobs, politics and the economy, special delivery, courtesy of fedic chairman and ceo fred smith. >> this time, we will have a change you can believe in. >> senator john mccain, his plan to fix the housing sector and why he thinks mitt romney is the best candidate to take on president obama. breaking economic data, weekly jobless claims and productivity numbers out at 8:30 a.m. eastern. >> don't drive angry. >> happen i had groundhog day. the third hour of "squawk box" begins right now. >> phil connor.

♪ yeah i'm your weatherman >> welcome back to "squawk box" here on cnbc, first in business worldwide. target's out. >> 4.3% in same-store sales, the street was only looking for up 2%, they do say that the january sales were near the high end of their expected low to mid signal digits range. they say it reflects strong performance in discretionary and nondiscretionary categories. big turnaround from december because they had disappointing numbers back in december so this says that the sales, they were healthy throughout the month and across the country. this is the target ceo and chairman greg steinheifel saying that, so better than expected. >> we won't get results for, we will get results for retailer this is month because they're all on a january fiscal year. but not yet. takes longer to cook the books. what is it, february 2nd?

they have to do fanagling. >> january you see the holiday cards, bleeds through. >> and apparently kell-o-double good is good. have you had a chance to look at kellogg's? you remember that ad, andrew? 2.99 estimate, they're over it. >> affirming guidance for 2012, too. >> and it is indicated higher. that's ggg-rrr-eat! bob johnson, founder and chairman of the rlj companies. >> delighted to be here. >> great to have you in. been a while. equities future this is morning are now down a little more than

before, after one of those slow steady gains we saw yesterday of about 83 points, still not 100 points, but up 83, and february not starting off too badly after a great january. >> i don't know if you're following this on the bottom of the screen, gap also. >> down 4 versus down 4.9. >> in the meantime top stories this morning, merck reporting fourth quarter earnings of 97 cents a share, two cents ahead of estimates, revenue a bit below consensus, dow chemical missing the reports by the street by five cents. company's ceo andrew liveris was on "squawk" last hour. >> the analytic was western europe consumer sentiment, massive destocking and some feed stock compression. most of that is behind us except

for western europe. it will be headwinds balanced by strong emerging geography performance and a good recovery in the united states. >> dow sees the economic recovery gaining momentum this year. >> let's get a check on the european markets. the shares have been mixed for most of the morning after some weaker than expected results from unilever and other major companies. spain and france did both conclude successful debt sales, that was something the market had been watching closely. yields falling from some of the prior auctions. right now red arrows. nothing major, just a drop of one point on the cac 40, the ftse modest as well. you look at the euro, the euro at 135, back from some of the higher levels earlier this week. >> the facebook ipo filing, the company unveiling plans for the biggest ever ipo, could raise as much as $10 billion and expected to be valued up to $100 billion

when it goes public. julia boorstin joins us in menlo park. >> i snuck in for a little tour of the new campus, it's a pretty cool building but i did not find mark zuckerberg. he must have a sneaky separate exit in there. >> it was worth a try. you're in the parking lot now there. >> reporter: yes, it was defenda definitely worth a try. staggering numbers, 845 million monthly active users, 2.7 billion likes or comments on the service every single day and $1 billion in profits. and mark zuckerberg seems to be the benevolent dictator running the facebook kingdom. after the filing yesterday zuckerberg posted a photo of his desk which said "stay focused and keeping shipping" which refers to innovation at the company. within 20 minutes 44,000 people

"liked" the photo that zuckerberg posted and zuckerberg's facebook page is inundated with congratulations, "props to mark zuckerberg, congrats." "i can't wait to see what you do and accomplish in the next eight years." zuck, as he's called here at headquarters, is focused on running the business. he controls 57% of class b voting shares qualifying facebook as a controlled company which exempts it from rules mandating a majority of independent board members and compensation committee. the s1 acknowledges that there are risks associated with being a controlled company. this could look less attractive to certain investors or harm its trading price. on a $100 billion valuation, zuckerberg could be worth as much as $28 billion but zuckerberg is putting his money where his mouth is. he took a half a million dollars in salary in 2011 and at his request he'll get $1 in salary

in 2013. the question now is, whether investors will bet on his vision. he in s1 says that profits are secondary to products. "we don't build services to make money. we make money to build better services." zuckerberg believes connecting brands and consumers is good and also good for business, which is a new approach to advertising, facebook's bread and butter, accounting for 85% of its revenue. the ad revenue grew 69 percent to over $3 billion last year, less than half of the 145% growth the company's ad revenue saw between 2009 and 2010. now the company has to face the fact that more people are using facebook on their mobile devices where the company still does not serve ads. coming up on "squawk on the street" we'll look at the other part of facebook's business growing fast which is the payments business for stuff like virtual goods on zynga games.

over to you. >> thanks so much, julia. appreciate it. >> powered by more than 275,000 employees, $41 billion transportation and logistics company fedex revolutionized the way that american companies do business all around the globe. joining us now the fedex founder chairman and ceo is fred smith, and bob johnson continues with us. fred, it's always great to see you. staggering numbers, makes me think of "it's a wonderful life" if one man, what you can accomplish in a lifetime and still look -- you look young, you look good. the iconic fred smith, welcome. >> thank you. >> we're looking at job growth and competitiveness every day, and we've got the numbers tomorrow. how do you see the overall business climate right now in the country, based on all the input you get from fedex? >> well we're looking for gdp

number of about 2.1% for this year. that's a little bit below the blue chip consensus but the u.s. economy is growing. unfortunately, it's not growing at a rate that's high enough to absorb the growth in population, so we're not making much of a dent in the unemployment numbers. i'll be interested to see what you report on that. >> me, too. fred there's a big piece in "the journal" today that we've gone back and forth with this recession that we just went through, and the piece today sort of is i guess tries to convince you that it's not necessarily different this time, like rogoff and rhinehart say, we've had similar times in the past, goes back to 1907 where we had a sharper snap-back than we've had this time, and implying that it's not, that we weren't destined to do this, that some government policies

actually have impacted what's happened. where do you come down on this? >> well i think the country could grow much faster if we changed several policies, the most important of which is we need a tax code that incents investment. i don't know if you have it there but i sent a chart up that showed -- >> we'll look at that. shows the amount of money that a corporation puts into capital equipment and software and correlated with private employment, almost 1:1. >> correct. we're still, you know, 5% or so below the 2007 capital investment levels, and it's not a mystery as to why we've been unable to gloat faster. i think the other two elements that are very big in this regard and people forget it, last fall the price of a gallon of

gasoline in the united states was about 35% higher than it was in 2010, and that's the same effect as increasing taxes on the american public. >> you point out there's $2 trillion ready to invest and that's more than normal, isn't it, corporations are holding. why is that not being invested? we're back to the chicken or egg story. demand is down i guess but is demand down because of the repercussions of the recession or is demand down because of flawed government policies? >> well, you know, these economic questions really fall into the exact two categories that you mentioned. you've got your supply siders and got people who say you can't have investment unless you have aggregate demand increasing. my belief is the vast majority of investment comes from innovation.

look at facebook. nobody knew there was a requirement for facebook a few years ago, but there are thousands of jobs being produced not just by facebook, but in the telecommunications companies, the people that make the routers, the people that put in the high speed lines and so forth. so i believe that the fundamental problem, the reason that huge amount of money is on the sideline is the you states is not as good a place to invest as other places around the world, because of growth there, and we penalize profits made abroad from being brought back in the united states, where they can be invested and produce american job. >> it's bob johnson. i don't know if you were in memphis but i was singing your praise on a tv interview i did in memphis announcing the opsplace.com site we're building. you were one of the first subscribers to it in terms of

its effort to create more jobs for minorities, so i'd like you just to comment for our viewers as to why you feel it's imperative that companies embrace this growing minority populations to make us more competitive because we're putting everybody on the field, so to speak. >> well, we're subscriber to opsplace and it's a terrific system. it fits our efforts at diversity head-on. we've got about 43% of our management team throughout the country and the world are minorities and women, and the reality is the united states is going to have more minorities as a majority by the mid part of this century than traditional european americans. so anybody that doesn't avail themselves of the talent and the minority community is going to be left on the sideline. it's that simple. >> mr. smith, you point out that

capital spending is really something that there's money on the sidelines that would be deployed. do you have additional money you would be spending if there were different rules and regulations hooer? fedex is planning on putting a lot of money to work. >> well we did respond to an increase in investment incentives. one of the great things that the congress and the obama administration did was to nut 100% expensing, although it's now lapsed, and as a consequence of that, we increased our capital expenditures up to $4.2 billion. we bought boeing airplanes and ford trucks and couplins engines and cisco routers and dell computers and hp equipment and so forth. so i think you see the same thing throughout the economy. burlington northern rail road, mr. buffett's company announced

they increased capital investment because of expensing so people respond to investment incentives and our tax code in the united states, both the corporate rate and the punitive tax on repatriation of money abroad are big disincentives for investment in the united states. >> hey, fred, a question for you, a little off topic but the postal service in the news, we don't know what's going to happen to the future of the postal service. it's good for your business ultimately but if you were put in charge of the postal service i'm curious what you would do. >> the postal service is run by a competent gentleman. he was in memphis last week and talked to our management team and we carry priority mail on a wholesale basis and we have a partnership with them in smart post. obviously their issue is the digital diversion of their first

class mail. so they have proposed a number of things to the congress that if, were adopted, would allow them to flex their expenses down, so my strong recommendation to the congress would be to listen to what postmaster general donahoe has to say and give him authority to run his enterprise and he'll do okay. >> fred, one question on the whole economy for business competence and the political process. do you see anything from any of the candidates either on the public or democratic side that gives you some indication that business people are being heard and what's needed to sort of provide certainty and confidence that the government is going to give a greater opportunity for business to advance and grow or do you think it's in-fighting holding down the business certainty and business confidence? >> i'm fairly optimistic in that regard. i think there is basically a

consensus that the tax code that we have today, as far as business is concerned, needs to be fixed, and if you got rid of a lot of the special provisions and simplified the tax code, you could both lower the rate, and go to a territorial system, and even better, if you could do a third thing, leave investment incentives in place like expensing or the investment tax credit. so i think at some point, in the lame duck session or the new congress after the election, whether it's democrat or republican i think you'll see that addressed because everybody is understanding how punitive this issue is in relation to jobs in the u.s. >> fred smith thanks for your time today. appreciate it. hope to see you again soon. >> fred, thanks again. see new memphis again sometime. >> good, see you again, bob. when we come back, more from

our guest host robert johnson and next half hour, john mccain, why he's throwing his support behind mitt romney. by a certain date.ing to hae joorks i don't have homework today. it's what's right here is what is most important to me. it's beautiful. ♪ ♪

welcome back to "squawk box" on this thursday morning. steve liesman joins us. >> the consumer is out, wait for the animation t took a slight turn to the negative in january but hopes for the future improved and improved strong lip. the outlook survey down 0.7, high level 45.1%, a dip from the recent improvement we've had, still among the highest for the recovery but well below the previous recessionary levels which are north of 50. you can see right there before the recession in '08 we were up 50, almost near 60 and dip down to 45.1. here is what rbc finds is going on inside the head of the consumer these days. confidence, there's the down 0.7, the expectations, the assessment of the current situation down two points but expectations for the future up almost three. negative outlooks on investment, negative outlook on jobs and negative outlook, that's up

there for inflation. one of its nice things about the survey, it asks the 1,000 people respondents, do you know someone fired or you yourself experienced any, lost your job, and the percent saying yes ticked back up. you can see it was higher so that's a negative for the jobs market. also look at inflation expectations. those have also ticked up so that's part of what is behind the deteriorating assessment of consumers on the current situation, inflation and a little more concern about the job market. interesting poll special question this time around about domestic priorities, you guys can talk about it if you like, asked what the most important things are, creating jobs, paying down the debt, just really about a fifth of the population thinks that that's the most important thing and how about balancing the budget, another special question. we've seen this time and again in other surveys there's support for cutting taxes and cutting spending as well, and what proportion? that is not asked in the

question. my guest is proportion to cutting spending than raising taxes. joe? >> i think you're right about that. thanks. coming up, we have senator john mccain will tell us why he thinks mitt romney is the best candidate to take on the president and still ahead, weekly jobless claims, sort of a prelude to tomorrow's motherlode report. "squawk box" coming right back. i was downstairs making coffee, and we heard it. it just came crashing through the roof, out of nowhere. what is it? it's our ira. any idea what coulda caused this? maybe. i just sorta threw a little money here, a little money there. and i loaded up on something my dentist told me was hot. yeah. ♪

welcome back to "squawk box." shares of abercrombie & fitch under pressure. the company seeing flat same-store sales for the fourth quarter. they were hurt by markdowns. the retailer warning that fourth quarter earnings for full year 2012 are going to be missing the street's views. auto nation reporting january sales up 7% from the year before. the company is the nation's largest automotive retailer. coming up, breaking economic data, weekly jobless claims and productivity just a few minutes away. take a look at the dow futures. "squawk box" will come back right after this. in what passes for common sense. we sand expected it to grow. then the world changed... and the common sense of retirement planning

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we are just seconds away from the weekly jobless claims and productivity numbers. rick santorsn rick santelli is standing by at the cme in chicago. looking at expectations of 370,000, the number we're watching and after watching this number closely of course we are also waiting to see what we get

for the big jobs number tomorrow. rick you have about ten seconds away but this is a number the street's been watching closely, too. >> reporter: absolutely. here we go. jobless claims dropped from 379,000 to 367,000, a drop of 12,000, as we start to see this number kind of start to form its picture with all this volatility, somewhere between 3.6 or 350, 360, 400,000. 3.43 million is continuing claims, a respectable drop from 3.57. if you look at challenger, of course we saw layoffs were up a bit. unit labor costs up 1.2%, hotter than the kind of up 0.7 i was looking for and if you look at productivity that came in on market, 0.7, i think i'd rather

see those reversed of course. if you look at the revisions, this was fourth quarter productivity. if you look at some of the revisions we see that productivity took a downgrade from 2.3 to 1.9 on our last look and labor costs moved from 2.5 minus to minus 2.1. i guess if you had to synthesize all of this the best way to do that is the marketplace and they're kind of non-impressed by the whole thing to be frank. a 182 yield in the ten-year, unchanged on the preopening equities, the futures prices and i think tomorrow's number is going to be a biggie, probably for the people with calculators as well because it takes more effort to get to the truth on some of the big number days. back to you. >> rick, you're right. steve, your thoughts on note only this number but the number for tomorrow, what's really important is probably the unemployment. >> unemployment rate, quickly on the productivity number, i think this is one of the classic cases

where it makes most sense to take the two quarters together. for example, in the third quarter you had manufacturing, sorry, durable goods productivity up at 8.7% annual rate. that cannot possibly be sustained so you had a fall-off to 0.4 in the current quarter. and basically a lot of times what happens is you push your existing workers harder. you get more productivity out of it and eventually you bring more people on when things are going pretty well. the unit labor costs for example they fell 2.1% in the third quarter, up 1.2. i have no problem think being those in an average way that unit costs of labor rising around 1% and aproductivity rising 1.5%. there's no number you want to look more at the trend than productivity. that's the key and manufacturing productivity has been strong as i think we're still the biggest manufacturer in the word, believe it or not with fewer and fewer workers. i want to talk about something quick, this is not ready for

prime time but i've been working on it so long i don't know what to do with it anymore. guys if you have that chart in the back you were talking with fred smith about business investment. here is a chart that looks at business investment. the green line is the line we normally use, it's the line from the durable goods. this is something the equipment and leasing finance people have sent me and look at how the blue line disconnects from the green line and look at how much higher it is. >> that was because of tax policy. >> i don't know why it's being picked up in leasing and financing. this is from the 25 biggest equipment leasing financing companies, their data, running hotter than the official data. i quailty equipment and leasing, i called the government. i don't know why this is. at some point i have to tell what you i'm think being thing this is it. there's a possibility business and software is running better than the official data is projecting. i'm really into private datas awe know more and more. >> hey, rick, are you there in.

>> reporter: yeah, i'm here, buddy. >> challenging you this morning, it of in the 6 and reading about bernanke's testimony on capitol hill and in the teleprompter, bernanke is expected to tell members of congress the slow improving economy needs more help from the fed, and it just hit me again that the fed can ever just think it's not on their shoulders ever again. i'm not ron paul, but it's like is there any economy where they don't think that they're behind it or supporting it or greasing the -- does it ever get to the point where we go back to an economy that just goes along on its own? could that ever happen or is it always going to need the fed there to make sure everything is okay? >> reporter: we are now in a situation where the micromanaging by various forms, agencies, groups, parts of the

government, is going to be very difficult to extract. i think that's a huge negative so i think many of the young people out there, be prepared for a much different managed financial world so to speak. i don't think it's good. >> i hate to see what he thinks of macro managing. >> reporter: it's micromanaging a may crow problem and that is the problem. >> this is a politicalen seaso. one party is projecting everything is moving in the right direction and at the same time the fed is saying we have to keep the boot straps and suspenders on and keep holding up the economy. there's a contradiction in terms there. at some point you got to let the economy run free and pull back from the monetary policy of the fed saying begot to keep

propping it up. >> explain to me why on one hand the economy is moving in the right direction. it's beginning to show the growth side back to this say recovery summer to all that. >> do you think the administration is doing a whitewash of this and is not saying things how they really are or do you think the fed is politicized and has a horse in the game in. >> i think the fed is saying the truth is, there's something wrong here. the politicians are saying it's getting better but you can't have it both at the same time. >> i don't think anybody disagrees things are getting better. i want to respond to that, but they're very sick. >> thank you. senator mccain you're listening to all this, and we just mentioned politicians. i don't want to, that's not how i'm going to introduce you, i'm going do introduce you as an american icon and war hero but

comment on what we were talking about, as a politician. >> well i can tell you, back in my home state of arizona, people are still hurting very padly. we have nearly half homes underwater, very sluggish economy, and economic growth. has there been some improvement? i think obviously there has been, but at what cost? another $5 trillion added to the debt which our grandchildren are going to have to pay for and a continuing sluggish economy, so all i can say is that, in fact i was just looking at this in february of 2009, obama said "if i don't have this done in three years it there be a one-term proposition." i hope he stays to that. >> you decided to, and it was not a slam dunk that you could i guess make amends with governor romney. you guys had your issues back during the last campaign, right, senator, and i just wonder if newt gingrich could ever be in the position you're in right

now, where he would actually be saying positive things about a former rival. do you think that's ever going to be possible? >> well i hope so, because i think it's pretty obvious that mitt will be the nominee but let me point out that, yes, mitt and i had some pretty sharp exchanges. so did reagan and bush and he made bush his vice president. look, nobody campaigned harder for me than mitt romney. our families are friends. i believe that he's the best for america, and let me just mention one other thing if i could. we take people's comments out of context, mitt said "i like to fire people" that was taken out of context. i can remember when i said "the fundamentals for our economy are still strong," and i was oh! this business of plucking phrases out of people's long statements is getting a little tiresome to me, and it isn't just obviously mitt that's made those. i can remember one, when president obama said that we found out that shovel ready projects aren't shovel ready.

>> senator, it's bob johnson. how are you? >> how are you, bob. >> here's a question. why wouldn't governor romney and even the president go back to the simpson-bowles commission and say that's the platform we are to run on to move the country forward? it seems that commission has been completely discarded, and the business community is looking for some signal that that kind of leadership is coming from either party. >> well, bob, look, the simpson-bowles commission still lurks around here. those of us trying to avoid this draconian sequestration on defense keep looking back at the simpson-bowles commission. i don't know why the president didn't endorse the simpson-bowles commission since he obviously appointed them, but a lot of us think -- >> did governor romney endorse the simpson-bowles commission on the political platform? >> i don't know. i know a lot of the principles

of simpson-bowles are things he supports. frankly i'll find out for you bob and come on again, but i know that the president has refused to endorse it, and he's the with unthat created. but it is still out there, bob. a lot of us think that that is the eventual blueprint that we have to follow, and we have to do something. you know, these are crazy times. >> senator, i want to go back to something you said about taking words out of context and phrases out of context and i agree with you 100% but it seems to go both ways and i'm curious why the senior leadership in washington doesn't give a bear hug to a gingrich or to someone in the party and say you know what? we're not doing this, this time. >> well, look, primaries are tough. i think the things that one aspect that's changed since 2008 or any other time is the prominence of the debates now. we used to have debates but that was just one part of the whole political campaign. now it seems to be the defining

moments. now whether that's good or bad is hard to say but it certainly increases the volatility of the race. so in my view, and you probably heard me say this before, stop with the debates. we've had enough. the obama campaign team sits back and -- >> is it the media? what's responsible for that? >> i think it's a combination of things. you know, for example, in arizona in the exchange for not moving our primary way up we said okay give us a debate. everybody loves a debate. the networks, the cables love the debate more than anybody because it gives them their highest viewing. but it's not healthy after a while. it used to be -- listen, it used to be that we would say okay, here's how i think we should restore our economy. this is what i think we need to do about afghanistan. instead we're waiting for the shot and how the recipient of the shot responds.

that's not illuminating to the american people. >> senator, i'd like to go back to the idea of simpson-bowles still being alive and still having people who are supporting that. how big of a groundswell is there there in the senate and in the house for a plan like that, and how quickly do you think that something like that could be introduced? >> becky, the dirty little secret is that everybody comes full circle and we come back around to simpson-bowles and yet we don't have the political courage to take some of the measures that are part of simpson-bowles and that's just the reality. by the way did you enjoy yourself at the alfalfa club? now you're part of the elite. >> thank you, i'm now part of the elite. >> thank you, i'm part of the elite now, too. >> someone is going to use that clip now. >> yes. >> senator, this country is pretty war-weary probably from iraq and now afghanistan, after

a number of years and the second tear of defense says maybe it's time we can draw down u.s. troops and let the afghans take over more of the fighting and yet governor romney sort of saw this as sort of an attempt, something that would benefit the taliban but isn't it, if you look at the population attitude about this war, people want to bring the troops home. is that the right position to take? >> well, people, american people are war-weary and understandably. the iraq war was mismanaged for several years. people were war-weary about korea and harry truman said no, i'm not bringing them home because i'm not going to let the korean peninsula be under the domination of china. tough stigss are made by tough leaders. this president made a promise he'd be out of iraq, iraq is unraveling, my friend, and the violence has been dramatically up. afghanistan, ask any of our military leaders we have not

completed the job. we won't complete the job and now frantically they are searching around to see if they can't get some peace agreement with an enemy that knows we're leaving and that was just solidified that impression by what the french announced and what the secretary of defense just announced today and these cuts in defense are going to put our nation's national security at risk and i've seen this movie before. >> senator, earlier you said reagan and bush finally got together. were you canvassing for the v.p. spot? that's not what you meant, was it? wh who do you think he should pick as v.p.? >> marco rubio. the vice president has two duties, one is to cast the tie-breaking vote in case of a tied vote in the united states senate and the other is to inquire daily to the health of the president. >> i just saw the trailer to "game change" coming out in a month and i was curious if you had an opportunity to see ed harris playing you and your

views? >> it will be a cold day in arizona when i watch that movie. >> fair enough. fair enough. >> thanks. >> bob, you're going to find out about simpson-bowles to get back to bob, come in and guest host sometime if you're in the area, would you do that in. >> i'd love to do it. it would be a pleasure. >> it would be an honor for us, too. >> senator mccain i'll be calling you about tax policy. >> thanks. >> thank you. when we come back we have more of the stories we'll be watching inspect trading data head. "squawk" will be back after a quick break. optionsxpress, where you can trade your favorite products,

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welcome back to "squawk box." the futures i don't know if they've changed since the claims, they're down just two. earnings out from cruise ship operator royal caribbean, company earned 17 cents a share for the fourth quarter, two cents above estimates but the forecast for the current quarter and full year is well short of estimates, as analysts watch for the industry impact from obviously from the tragedy over in tuscany basically off the tuscan coast, owned, that owned by rival carnival. royal caribbean says it's

difficult to assess the long-term impact of the accident on its revenues but you would hope there's not a whole lot of youtube moments from that, because everybody's seen "the titanic" and the more you see it could actually -- >> have you ever been on a cruise? >> i've been on a couple of times. >> would you go again? >> i'm not excited about going not because of that. the railings, i got kids. i don't know. >> coming up -- we've got to run, i've never been on a cruise. the latest buzz from wall street. >> a lot of food. tomorrow on "squawk box" the business of the super bowl, new england patriots owner robert kraft will join us and we'll crunch the numbers for super bowl commercials with ad exec miles nodal.

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yep, there it is. that's the entire "squawk box" and squawk on the street team, watching over new york's west

side highway, i saw it this morning as i was coming in. >> you had to turn around. >> you got to get some lights on that sign, because at 5:00 in the morning, 4:00 in the morning, you can't see it. >> he's kept his eyes on the road and i kecpt my eyes on the prize. you guys are looking pretty on the big board and you guys are down there at the real big board. what are you guys looking at this morning? >> that billboard. did you see it? >> i have only seen it on "squawk box." >> just like me and your new set. >> but i knew that it was going up, joe. >> that's right, you at least were that clued in. that's true. you go on top of the fairway building, the roof, you can get a great picture view like you're actually looking. total vanity, had it up there before. >> this is old hat for you,

cramer, you have about ten up there with just you. >> all right, you know, okay. >> this is kramerika. >> quickly changings topics. >> what are you looking at this morning? >> we have had a few hours to pour over the u.s. one. mark zuckerberg has made, his current net work, $3 million a day for every day of his life. >> one of the things i think is most important about facebook is that it is igniting retail interest in the stock market. i don't know about you guys, it's not just because we're on the billboard, but how many people have stopped you on the street saying how can i get some facebook? i have had a dozen people ask me about facebook. >> a lot -- i have never seen

people stop me on the street and say, cramer, can you tell me how to get some facebook? >> the cab driver effect, the door man effect. >> that makes me nervous in some ways. >> these people are going to buy in the ft market. their not going to get any cool location at all. these are people that take it from 100 to150. it does remind me of 1999. >> guys, thanks so much, we're going to see you in just a few minutes. >> coming up, our final thoughts from bob johnson. "squawk box" coming right back.

we're back, our guest host this morning has been bob johnson and you made your name and a lot of money in the tv business. and i'm curious when you think about the state of the tv business today, where do you see it head 123headed. >> i have to think about the change that digital brought to

content and content viewing and customer interaction. i think facebook is an example of how you create this emotionally engaging connection with subscribers or users. i think that's here to stay. and i think which ever technology, whether it's cable or whether it's the digital platform are able to develop that, and monetize it -- >> when you see new investments you see all sorts of new technology, new shows, new broadcasts, who's doing it better? >> i think the trend, the way it's going, is the digital platform. you can never lead it. you've got your smart phone, you've got the cloud to store every piece of information or data content that you want. it's instant, you get to share with your friends. all of those things are so completely innovating and engaging it's hard to see nit at