cnbc. i'm becky quick along with john kerr nen and andrew ross sorkin. the company posting better earnings after the close but revenue fell short as posted sales declines in three of the key units, personal computers and enterprise equipment. the computer maker forecasting some current profits that are below the street's expectations. on the conference call the ceo meg whitman pled with investors for a little patience. she'll be joining ""squawk" on the street" live at 9:00 a.m. eastern speaking with david faber. >> so is that an hp problem? does that mean that dell's problem was an aberration? is that an operational thing? >> with personal computers and personal spending. >> is this a serious macro issue? >> people are starting to wonder that. >> talking about dell most people thought this was a dell issue not necessarily a larger issue. hp has had its problems.

>> adele at the awards -- >> adele did. >> do you think that's pertinent? i think hp is -- >> you think -- >> it's been two and a half years. he was going to spin off pcs. my whole question, does meg whitman know how to run hewlett-packard? ebay doesn't seem any closer to knowing what to do. >> he was a manufacturing guy. i wouldn't know how to run it. i wouldn't know where to start. i don't know whether she has the vision for what hp is going to be down the road. you see what her initiatives are. sounds like mark hurd again. >> i think you need to join faber for that? >> i never did a documentary on ebay. that's getting a lot of mileage out of that documentary that was done about ten years ago, but

he's got -- >> it's a good interview. >> my favorite story is the china story. >> this morning in the journal. >> i love this. >> the world bank? >> yeah. and it's from em in china, too, that this new group of young leaders coming along, they're going to need to reboot the way things work there. my favorite line was the government, and they're talking about the chinese government, needs to decide whether it wants state led capitalism or free market entrepreneurialship and i said, wait a minute, is that our election that we're having in november trying to decide whether there's state led capitalism or free market? and then i realized they were talking china. even china is deciding, you know, this state run stuff, this big government, it doesn't work as well as we had -- it's funny almost every country, europe's coming back. they're doing market reforms. they're doing structural

reforms. everybody else is doing it. we hurtle head long in what got them in the struggle. >> to me capitalism is very different, though. >> state capitalism? >> state run capitalism. the debate is over. >> picking winners and losers like yesterday with the tax plan you're picking manufacturing. hardware manufacturers get 25% but software manufacturers don't so oil and gas companies do not get any tax break. >> i would argue and someone like ian bremer -- >> predicted gains in the house for democrats in 2010. who predicted big gains for the house. >> say that state run capitalism has been a huge boom for china. >> yeah, but the problem is once you get people of the middle income, it doesn't work anymore. you have to get away from that. >> a huge boom here. >> a different form of

capitalism. >> but the free market entrepreneurialism is free market either there or here and this guy when he gets in here he's going to -- xi jinping. >> stephen roach will be here. >> in the meantime, let's talk about the place that doesn't have too much capitalism. greece, lawmakers on emergency legislation on the debt write-down deal. massive bond swap would shave $142 billion off athens privately held debt. they control a strong majority to easily pass the law. and we'll get the jobless claims numbers at 8:30 eastern hosted by reuters, looking for 355,000 filings, up from the great number, also on the calendar the government index and the kansas city fed survey

and speaking of the central bank will be our exclusive guest. and a number of retailers among the mixed targets, can kohl's and sears. analysts are looking for target to close on $1.40 a share on revenue. $21.2 billion. sounds like a lot. saudi arabia, meantime, says its main concern is to try to keep the global oil market well supplied. the deputy oil minister talking to reporters but refusing to give a prediction on the direction of prices. obviously people are very concerned watching where oil prices are over the last several weeks. saudi arabia is the only oil producer can significant spare capacity to try and replace a fallen supply from iran if things drop overall from iran.

up 14 cents but look at the dollar figure. that has people so concerned. we'll see what prices go to the pump. a check on the broader markets this morning, yesterday we saw the dow pull back slightly down by about 27 points after it's been flirting with the psychologically important 13,000 level the day earlier crossing over it. the futures are indicated higher up by 21 points. if you take a look at the percentage changes, the implied gain at the open for the s&p 500 would be up and up for the dow futures by 0.15 percent. the ten-year note, you'll see the ten year is yielding 0.20%. take a look at where the yen stands. the dollar is down april cross the board. the euro is at 1.3301.

gold prices this morning are up by about $6.40 t. >> we haven't talked taxes yet. the japanese government has not yet made a decision on contributing to the imf. reuters quoting a senior government official who denies media reports of a fwrant to help counter europe's debt crisis. the imf wants to more than double its firepower by raising an extra $600 billion to help countries deal with the crisis. time for the global markets report with ross westgate. mr. westgate standing by in london with, well, there we see some logos and some red. more red than green. not a good way to start the morning, my friend. >> we had a bit of a turnaround, andrew, today. we were certainly up particularly after we had the ifo business climate index. we saw pmi weak.

a key sentiment indicator for germany came in better than expected so that took stocks up clawing back most of yesterday's losses and helped to take brent up to $124 a barrel, well over a dollar on the day and the high, a fresh nine-month high. since then what we saw, if you take a look at the chart and you see we then started to turn a little bit and helping us loyer with the fresh release from the eu commission. our forecasting is that the eurozone will contract this year. the rest will be flat and also sharply lower forecast as well for italy, 1.3% in 2012 and they also upped for italy and, of course, they were forecasting a fairly positive next year as well. so all of these things are combined. the ftse mib is the worst loser. the xetra dax down about a third. the ftse 100 is the only out.

autos have been a big decliner here this morning. we saw euro dollar off the ifo, went back to the highs for the year. about 1.3340. still multimonth lows and three-year highs. coming back from the high in july. sterling trying to claw back losses that it gained off the minutes yesterday. 1.57 sterling/dollar. bond yields and btps hit around 5.35%. we're now yield iing back over 5.5%. so we have these concerns about the impact, of course, on the higher oil prices but also with that down grade on growth. germany still going to absolutely outperform. the question, of course, german economy maintains its strength. is that good or bad for renegotiating fiscal compacts? that's what spain wants to do.

they want to get permission to raise their deficit targets in the short term to give them some breathing room. but if germany is going strong, they are more or less likely to agree. less likely, the better they are doing versus the rest. that's where we stand now. back to you guys. >> all right, ross, thanks. in kormt news nothing gets like the general media more excited than a diet drug, a new one. i saw this on "nightly news" last night. in the makeup room this morning, the morning shows -- >> it's been 13 years since we've seen it. phen-fen was the last one. >> backing a previously rejected obesity pill from vivus. we used to call it vivus and butt-head. and they had for a while an ed drug. and it wasn't an hour, it didn't take an hour, it was like, bing, five minutes. this one, you can it -- yeah. think about that. yeah. it's like, wow.

but the drug is called qnexa. it's been plagued by side effects since it was first submitted to the agency in 2010. but the majority ultimately backed the drug due to its impressive weight loss results. most patients can lose 10% of the body weight and keep it off foo years. >> how does it work? >> i don't know the exact mechanism. i think you feel full but i'm not sure how it works. i would look like -- i would look like a balloon you look the air out of. >> are you excited? >> to look like a ba loop that you've let the air out of it? >> no, but do you really think that? >> when i lose weight, all the wrinkles, you just kind of go -- yeah, i worry. you lose it here but you get real drawn looking. have you seen shep smith? never mind. it's on this network called fox. >> i've heard of it.

>> shep smith looks like skelatore. >> i have seen. >> he admitted that he has overdone it. but nothing gets -- and obesity is -- put that with diabetes and alzheimer's and it's the biggest thing facing society right now so i understand it. i get it. >> is it a pill that would only be prescribed to people who are grossly obese or is it something that i feel like losing 20 pounds i want to take it. >> if it was only prescribed for people who are obese that doesn't narrow it down that much. >> accord iing to the weight charts and where we stand as americans right now. what is it like 70% or something? >> everybody is obese. >> and it just suppresses appetite? >> i don't know what it does. >> or do you think it revs your metabolism? >> what happened with phen-fen? i forget. >> some of the side effects are heart related.

>> that's why i think it -- >> talking to you about a diet drug is -- i mean, you need like weight on. >> weight on. >> where you actually -- >> so there are protein shakes. i know about these. >> you are -- you don't even need to ever at this point -- i saw something last night on brian which wiilliams about boy have -- anorexia is a girl, there's a horrible story last night about these poor young men, but they're straight "a" students, they're overachievers in athletics and they want six-pack abs. >> i'm reading about this right now. qnexa is a combination of appetite suppressant -- is that the phen-fen? >> one of them. >> the phen. >> but nothing gets the general news media in a tizzy like a new

diet drug. >> because this is the type of thing everybody would want it and go after it. it's the same thing with the e.d. drugs. everybody thought this was going to be -- it's not just something you need because you're sick, it's a lifestyle change. >> she went to e.d. >> the what? >> the e.d. drugs. >> how is it similar? >> because it's a lifestyle trug and people -- >> are you speaking from -- >> from my use of it? no. but i remember -- no, the reason i know this is because with the phen-fen stuff -- >> i'm uncomfortable. >> -- it's because i worked at "the journal" when these came out and sat next to the reporters who did all the e.d. drug stuff. >> i thought you said all the e.d. drugs. >> i would constantly hear them talking about the -- okay, so tell me what happened next after you took it, this is what i listened to. >> the five-minute one -- >> forever to hear about this but it was so crazy because it was a lifestyle drug and people decided they wanted it. >> was and is. it was the biggest drug introduction and very few people

that had a real problem. it's not a drug but you remember elestra? >> and i remember what happened. >> you've taken us to a worse place. >> leakage was a problem. >> why did you have to go there? >> you brought it up. that was -- >> we had the sound effect. >> the only good thing is you e-mail us, you just -- she is the one who said leakage. it was not me. i did not go -- >> that's why it was not a lifestyle drug. >> i've never eaten one of those chips. i read the back of that, these things could taste like nectar and i'm not chancing the possibility of -- >> think if you just woke up and turned this on. >> i know that. i know that. i'm going to talk about nissan now. >> go for it. >> because it's recalling about 250,000 -- i didn't even know they made it, infiniti m -- i

don't know what any of them -- infiniti i do. they need to fix a mechanical fix in the fuel rail of the direct injection engines that could lead to a fuel leak in extreme cases. no accidents or injuries reported yet due to that fault. >> you always get me in trouble. >> you went from a diet to e.d. to that. >> you stirred it up. >> i just said the word. i did not take it to one other step. >> you got to read the poem and i got in trouble. >> apple is holding a shareholder meeting. analysts say they are watching to see if there is any talk about a much speculated possible dividend. it would be the first such payout from the cash rich company. shares of apple, well, as you know, above $500. $514, up another 96 cents in the premarket. how much do they have in cash? how many about billions?

>> that's what i think about. >> when i think of hp or dell. they were technology companies and they were all in the same business trying to do the same thing and someone had a vision of how to do it and where the whole industry was heading or some people think that apple actually created the future. they don't adapt. they create their own demand. >> yes. >> they create their own demand. they haven't done that at hp or dell really. there was a debate last night. >> i watched part of it. >> no, you didn't. did you? >> dvr'd it. >> it was on at 8:00. >> still, 8:00 is too late. mitt romney and rick santorum clashing on a bunch of issues. the showdown came as those two battle for some key compositions in those two upcoming primaries, michigan and arizona. >> i didn't like how they were

sitting. very uncomfortable. >> they debated health care reform, earmark spend iing and e bailouts of the auto and financial industries. >> but this is -- the whole reason this issue is alive is because of the bill that you drafted in has mass, romney care, which was the who had l for obama care and the government takeover of health care. >> wait a second -- wait a second -- wait a second -- >> the study that came out -- >> santorum was booed a couple of times. romney is now ahead. >> romney got a lot of surprise. in the other debates it seemed like gingrich or santorum or ron paul was getting the applause. >> governor romney has an op-ed talking about his tax plan. he writes, in part, my plan is conservative in a way that stands out not only from president obama's failed approach of higher taxes and runaway deficit spending but also from the say anything to get elected fiscal recklessness of some of my republican rivals

offering gimmicky proposals that we lie on implausible levels of economic growth and blow huge holes in the budget is easy. fixing our very serious problems is not. >> i love that. i love that. >> i do, too. i knew immediately when i read the proposals we would have a discussion with andrew and these cuts in marginal rates and leaving dividends and capital gains where they are, in your mind, i'm sure you think this would blow a huge hole in the deficit because he acknowledges that only $1 out of $3 would be recouped from the growth you would imply. you will lose $2 interest everything that you cut. the thing is at 25% you just -- we just have to cut. so they're talking about not raising as much but bringing government spending down to where it matches up. >> my vat view.

if you have -- if you want to lower the revenue base and you lower the cost space so they actually match, fine. >> that's what you have to do. >> but you have to be willing to do that. >> and what you're hoping for is to reignite growth. >> right. but the suggestion is if you're going to 0 lower revenue, whatever your revenue is, you have to meet the revenue. >> you have to come down from 25%. we have to get down to 20% at the most. >> i think, unfortunately, historically when rates come down, and we brought in less revenue we haven't spent less. how do you match those numbers? most americans would feel comfortable if you can could match the number. how do you match those numbers and who is going to be hurt by taking some of the costs down and what does that mean? we recognize that has to happen. >> but think about this. instead of we're at 35, going back to 39 on the top margin, if it was only temp rather,

gimmicky the way bush did it because it wasn't permanent, he wants to go not back to 39%. he wants to go 28% permanent. >> he wants to kill the estate tax. completely. and i can see -- the amt i can see. the state tax, to me, is a revenue generator and that's one of those places when you take that off the table. now certain people have a view about fairness and what that represents. >> the opposite of your fairness where -- >> people say i've been taxed once. >> i'm going to be taxed again, exactly. >> i don't know if i would stick the estate tax in there just to have such a lightning bolt. it makes people so angry on both sides. you could make some real changes on the tax structure and leave that off the table. >> leave it off the table in terms of -- >> just don't change it right now. if you can make some serious things that get changed without putting in some of the third

rails, if you want to say -- >> you may think i'm crazy. i live in a building in new york city, a co-op, and we just had to vote on whether we want to flip tax the building. it is like an estate tax. every time -- and every time the apartment gets sold 1% or 2% of the proceeds has to go to the building. it's like an estate tax. you've already paid -- >> you've already bought it. >> you've already bought it and ultimately it makes the apartment cost more every time you sell it so it's bad for the seller. but it's good for the building and the revenue generated for the building. the estate tax -- >> it's for the greater good. >> the argument is it's for the greater good. >> you don't want -- >> there's a transfer of wealth issue, creating these dynasties. >> to escape futilism and lords

that have had money for hundreds and hundreds of years and the last ten generations did nothing. >> if you are against the estate tax and you are against the futile -- >> i don't know how i feel about the estate tax. >> i don't understand mixing it up, if if you're going to make serious changes and get some things on the table, i wouldn't put it out there as a lightning rod. >> no one wants to create idiot sons and fourth generation, and carrying the tennis racket. never did a thing -- what do they -- how do they benefit society? you know who you are. >> geeves used to work for muffy. coming up, dow 13,000. of course the story of the week, will today's economic data help the bulls case? we're going to bring you that. but first, a programming note. monday, this is big. warren buffett is ready to

answer your questions live on ""squawk"." becky will be there. so e-mail them to us. askwarren@cnbc.com or tweet your ask #askwarren. three hours of him responding to your questions starting on monday at 6:00 a.m. eastern. becky is going out to omaha this weekend. now as we head to a break check out the global market headlines. [ nadine ] buzzzz, bzzzz, bzzzz, bzzzz, you know, typical alarm clock. i am so glad to get rid of it. just to be able to wake up in the morning on your own.

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we're back on this thursday morning counting down to the government's latest jobless claims report due out at 8:30 a.m. eastern time. joining us now the senior u.s. economist at bank of america, merrill lynch, and ira harris, partner, and it's good to have you on the set. ira, i'll get to you in just half a second. ahead of these numbers, your expectation is -- what is it? >> we're pretty on consensus and think claims will inch higher to 350 5 5,000 but even with the small gain the four-week moving

average is certainly heading lower and that's a positive sign. it shows it has become clear firing is on decline. how quickly will hiring pick up? and that's why there's been a disconnect between jobless claims and the unemployment r e rate. we should be seeing a much lower rate. >> i was reading your latest report and it focused on what seemed a conundrum meaning more foreclosures but harder to get a loan. is that the concept in what that means? >> yeah, it has a lot of inventory. a the lot of it is stress and that will pick up. foreclosures are likely to accelerate. it's hard to clear that inventory because demand remains weak. a lot of distressed inventory is being botched by investors and that's not a bad thing because those investors are buying the properties, renovating them, supports the construction

industry and then renting them out which means you are creating rental demand which prevents a further rise in rent prices. >> when i read it, it seemed negative but you have now turned it into a positive. ira, what are you looking at this morning? >> we'll see the unemployment -- the jobless claims and those have been fairly well bea hafd and well contained. the markets now are just pinned to february 29th and what that l it tro program is going to be and how big is it going to be and will draghi step into the level -- >> into the breach? >> yeah, into the breach and create as much liquidity and possible and seize the moment to finally get ahead. the first question i get up and i ask myself, does anybody really miss jean-claude triche it t? and the answer is absolutely not. but we've built in a big number

for next week so let's see whether or not he's going to disappoint or not because the markets will hang on this. >> ira, real quick, this 13,000, you can be a technical guy sometimes. does it matter? is it overblown? irrelevant? any support for it? >> totally irrelevant. totally a median number. it's a meaningless number at this point in time. it will be important to test all those bear stearns numbers so, again, that makes that ltro program that much more important because if we remember what happened march 17th and 18th of 2008, the fed disappointed as the market was looking for a bigger cut from the fed in that march 18th meeting and we didn't get it. ltro becomes important in that regard. michelle, ira, thank you very much. can we still get to 15,000? you want 16,000, right? >> i have to go back to october when i made the call.

there will be 30%. i want 30% calendar year. i'm going to do this tiger slam first and then claim that i was right and then if it continues i'm going to crow. >> i see what you're saying part of the way. >> all right. coming up, the street's reaction -- >> going to get tougher and tougher. if you get your 30% -- >> that's all right. i'll take 30%. >> i'm already victory lapping. i'd better. you know how quickly things change. hp's quarterly results and later richard fisher, the president of the dallas fed, he's just the start. tomorrow jim bullard on set for an hour and treasury secretary tim geithner in an exclusive interview. "squawk" is the only place for this. it is. don't miss a minute.

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one thing i did see, jason, even though it was down 44%, it was a little bit above and some people are saying that it's in the rear-view mirror, a lot of the problems, a lot of the troubles, and that should have been the trough quarter are or half we have been through. is that your view? >> well, about everything that could go wrong has gone wrong. revenue was light. again, gross margin was light. they managed costs. they're seeing major challenges across all of their key businesses right now. >> so we were talking earlier about meg whitman's plan and that is it sounded a little bit to me almost revisiting what mark hurd did and that is trying to streamline operations and cutting costs once again, making things more efficient. a mention of the cloud, i guess, but do you see the "v" word in there, the vision word in there

and where hp should be two or three years from now? >> there's more plans for investment in r&d with meg than mark. there's a chance mark under invested in r&d and meg wants to streamline some of the sales and marketing and put those in r&d. one of the things we hear from hp buyers and sellers is hp has product specialists and sales specialists lined up by-product division so there will be five or ten different people calling on a buyer when really there should be one person representing the whole of hp that can talk about product bundles and strategy. they can streamline things still. >> remind me what you were just talking about. i remember it was about four or five years ago, do you remember hp went big into gadgets and things like that and i think dell did to some extent, too, and that was the point we made that apple, hp and dell ten years ago all were looking into the future and trying to decide

what to do and only one company really seemed to seize the dade and run with it. is that fair to say that and how -- was it all steve jobs and his vision? >> well, i think it is pretty much fair to say and 25% of hp is consumer and hp seeing real secular head winds in the consumer business in print and in pc. they haven't had a lot of innovation and consumer and apple is the one there and h p is probably losing right now to oracle, to ibm. they've lost some share to dell. they haven't caught up with cisco in switching so they've got a lot of work to do. is. >> is meg whitman the right person? >> they are background is consumer and growth and hp is an enterprise company in need of restructuring. she is a silicon valley ceo star but not the most obvious choice. >> so you don't know.

that's a nice way of saying no. >> i don't know. i don't know who the obvious choice would be. i don't think mark hurd was the obvious choice either but he had a five or six year good run. meg can get it done but she needs to learn to get her arms around the enterprise portfolio that is hp. >> do you have a buy? >> i'm neutral. i think the stock will be range bound for the foreseeable future. >> jason, thanks. a quick programming note, the aforementioned meg whitman will join the "squawk" on the street gang at 9:10 a.m. eastern time. >> still ahead on "squawk," life is a journey for samsonite. some pretty amazing growth in the united states. of course expansion means innovation for tim parker. he'll join us next.

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slippy, slappy, swanson? >> maybe it's on the briefcase. >> oh, yeah. it's right here. samsonite. i was way off. >> that's dumb and dumber. obviously you know samsonite is

the world famous brand expanding here in the united states and the globe. joining us for today's ceo call, boss tim parker. mr. parker, thank you for joining us this morning. >> thank you. >> you know, we wanted to talk to you this morning because samsonite has seen phenomenal growth, growth of 50% in the sales in asia just in the first half of 2011. better than 30% here in north america and i'm wondering if you could tell us what has been spurring that growth or spark ing that growth? >> well, i think the first thing is that the markets are recovering pretty strongly and people are still traveling and if we look at asia the market in asia is growing in double digits. if we look at our own business, we have substantially reinvigorated our product range so we have lots of wonderful, beautiful, light, strong products and they are actually being a real hit with our

consumers. >> i'm still amazed, though, those kinds of sales, when you talk about innovation with luggage, what can you possibly do to make luggage so exciting that you increase sales by better than 30%? >> well, you can do lots of things. first of all, you actual ly hav to make sure that you've got products which are competitive. but we actually have one or two revolutionary technologies we've introduced. our famous technology we just made our millionth curve suitcase. it's revolutionary. it's a kind of plastic lamb gnat which is super light, super strong. you can drive a car into it and it resumes its original shape. and when you put these beautiful products across to people, you market them well, you advertise them ashround the world, people come in and buy them. they're looking for better solutions to traveling. if you've ever traveled around an airport and find your case is

heavy, you've seen guys in raincoats. carrying all those heavy bags. >> i have bought a lot of new suitcases recently and i think it's because the tsa has gotten so rough, they've broken a lot of them. and i'm not saying they are samsonite but i have literally bought probably six or seven new suitcases in the last two years because they've been ripped apart by the tsa. >> yeah, i don't know whether i should be thanking the tsa. i guess not. but we do see, funny enough, not just an issue with locks but of course airlines are getting more and more fussy about the dimensions of luggage that you can carry on. if you get on a plane you'll be familiar with the scrum when everybody tries to put their bags in the overheadlocker. airlines are beginning to realize they do need to control the dimensions of carry-on baggage and that's helping with the buying. there are a lot more low cost

carriers around now who are also beginning to charge for stuff that you put in the hold. so people are becoming a lot more accepts tiff about how much their luggage weighs and i think, also, people care about what their luggage looks like. if you think about it, you carry a bag around, it's an essential part of your business portfolio as your computer. >> mr. parker, i want to thank you for joining us today. >> it it's a blepleasure. >> mr. parker is the ceo of samsonite. we appreciate it. >> i mean, you remember what the name samsonite comes from. sampson. who if he cut his hair, he lost all of his strength and became -- so you would not -- right? >> that's a good explanation. >> we are getting a lot about the estate tax thing, and everybody is calling me you and they're mad at me.

>> really? >> yes. i'm a whiny, liberal loser. you know what they're saying, though? >> i consider that a backhanded comment. >> people who make a lot of money don't pay a lot of money because they know how to handle it. the people who don't are small business who is cannot afford to keep the business in the family's hands and need to sell the business to pay the estate tax. this is a huge, hot button issue. i just don't know what -- >> trying to figure out the right way to come down on it. >> how much money does it bring in? >> i don't know. >> i'll try to find out what that is but 50% is huge. >> i already have another thing at them. they're looking at my taxes again from 2009. >> they go where the money is. >> no. >> i can't believe they're coming at me after the tax rate i pay. coming up, speaking of filthy rich --

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we're back. the u.s. government is trying to seize some of the riches of the minister of forestry of -- how do i say it?

equatorial guinea. the cnbc is tonight. scott is here with a preview of the filthy rich. >> where is it? in west africa. >> i was going to say. >> it's a tiny country but they have oil. and they have a lot of poor people as well in that country, but the ruling family does very, very well. particularly the ministry of forestry, the son of the president. you think malibu, california, movie stars, charlie sheen. well, the most expensive home is owned by teadoran spaobiyang. >> is that an oval? >> it has its own golf course. $38 million gulf stream jet. he bought michael jackson memorabilia including the glove from the "bad" tour and from the

government salary he makes $96,000 a year. in a country where two-thirds of the people live in poverty. people are moving dirty money into this country with lots of help from americans. so we are financing corruption. we wanted to speak with him but he declined. i spoke with the ambassador about how the president's son became filthy rich. there is no dispute the revenue received would have generated income well above and beyond his official government salary and made him a wealthy man. it was essentially given to him. if the people own the resources of equatorial guinea, how is that prop snr. >> it is an economic free country. >> the president gave his son 88,000 acres of the people's forest land, free of charge, to do what he pleases with. how is your country not a

kleptocracy where the ruling family steals from the people? >> nothing says in our law that because somebody is the son of the president cannot be owner of a concession. >> the obama administration is trying to seize $70 million worth of his wealth in the u.s. as part of the initiative launched that picked up speed after arab speed but the process of sniffing them out involves the u.s. filing suit against the property which takes a very long time. it's in court. the family and the government there is disputing it. it's part of our documentary tonight. >> does he get to keep the michael jackson glove? >> not if the u.s. gets its way. i guess we get it if they sell it off. >> do they have to go after each individual -- >> it's one big case generally against all of the property. the issue here is not just what

he has, but how he got it and how people like this get around the patriot act which is supposed to prevent the flow of these funds in the u.s. >> is he the worst example? >> one of the most blatant. we have others as well. we look at the war on terrorism. there is a lot of oil, a big pipeline. we went to azarbajan to look at the wealth of the family where the youngest son owns nine mansions in dubai. there is head-spinning wealth. >> bring that up again. filthy rich, corruption, oil and dirty money. >> we thought it was about you. >> i thought it was on the coke brothers. i thought it was a hit job. >> we could do a sequel. what time? >> 9:00. >> make sure you tune in. when we come back, steven roach.

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money talks. we get the big picture uh outlook on the global economy, stocks and the race for the white house. squawk market master stefan roach is our guest host for two hours. >> pain in the gas. >> why didn't you pump any? >> they're all out. they only got diesel. >> prices surging at the pump with no relief in sight. the leading advocate for small gas retailers tells us how long it could last. >> while i was fighting to save the olympics you were fighting to save the bridge to nowhere. >> kelly ann conway has an update on the gop fight. plus former dnc chairman howard dean with the president's

strategy to keep the white house as the second hour of "squawk box" begins now. good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick. let's get to some of the morning's headlines. hewlett-packard shares are in the headlines. the company beating es expectations but the receive new came in on the light side. so did the current quarter guidance. there was weakness in the p.c. and printer markets putting pressure on the bottom line. vivishare is doubling in the after hours trading. a panel approved the diet drug qnexa making it likely the drug will become the first new prescription weight loss drug on the market in over a decade. google and other internet

companies reversed a prior view and are agrees to support a do not track button in web browsers. several popular browsers have a button like this but many users were being tracked because internet firms hadn't agreed to honor it. all the kick up in the privacy issues has them rethinking things. in the futures it looks like we are in the green. dow futures up 14 points. s&p up by less than half pint. joe? >> thanks. it says our guest host for the next two hours is considered a sage on wall street. >> just say it. >> he's really not. he's considered one. no. he is a sage. >> i'm a squawk master of the market. >> and you are a sage. not considered a sage. you are considered one because you are one. >> that's kind, joe. >> yale university senior fellow. stephen roach is here. just retired from morgan stanley after the three decades. great to have you. there are two important things

to get your latest thinking on. number one is whether the u.s. economy is doing better than you would have predicted. there was a time when you were in double dip camp or were worried -- >> i'm still not prepared to give the u.s. a green light. the biggest sector of the economy, the consumer is still on ice. growth rate for consumption over the past 16 quarter,s, 0.5%. hard to get the economy going with that. >> another market master side y bifurcated. >> we stick together. >> saying the high end consumer may be doing better. >> that's a fair point but the point i make is a lot of damage was done during the build up to the crisis. excess borrowing, insufficient

saving, consumers cutting back spending while they do repair. that's hobbling demand expectations which drive hiring by american businesses. the consumer is really the fulcrum for economic recovery going forward. >> oil 1.06. gasoline prices as we head into summer. they are nowhere near where they would normally be at 1.06. it's strange the way they have been held down. they're not making money, the refiners, but eventually we get to $4. i have seen $5 gas in the headlines. >> the bottom line is discretionary income growth for the american consumer is still weak. when you get shocks, whether it's gasoline or some other issue that comes out of the blue to hit the consumer, the cushion isn't there. that's the theory of the double dip. to avoid a relapse in the economy and we have had two growth scares in three years so the odds suggest we could have

another one. >> the gdp number we had was not great. >> no. >> given the employment numbers that we have had for four or five months, it would look like the gdp numbers are lagging what employment is telling us and that should be moving higher. >> you're right on that. >> will unemployment go back up or will gdp catch up with the employment picture? >> one thing that's surprised me is the fact that the unemployment rate has fallen further than the gdp recovery would suggest. so there is a bit of a disconnect there. one of two things could be wrong here. the labor market could be giving a false signal or the gdp could pick up because of the jobs and income associated with that. >> and the participation rate and everybody is getting older. people leaving the work force. i'm fascinated by this gallup stuff. they say they already know this report in march is going to give back some of the recent --

>> 9% to the unemployment rate. >> a lot of economists feel that way. >> they do the same bls survey as the government does. they have let out what they're thinking. >> do they really do the same survey? gallup is a great polling organization. >> i think gallup does an actual survey. the government may be less -- >> i have been tracking the bls establishment surveys for longer than i care to remember. i have never heard of a gallup monthly survey. >> you haven't seen how they do it? >> not the gallup. i'm very familiar with the bls. it's not perfect. >> how many thousand people do they talk to? 30,000? >> they do five times as much. >> how long have they been doing the labor market survey? >> i don't know the answer to that. >> two fridays ago? >> oh, more the last -- three, i think. >> did that ring right to uh you?

>> it surprised me. every month in the last four we have gotten upside surprises on jobs and downside surprises on unemployment. you look for the next month to give you a little bit of a payback to show you that was a little bit of an overstatement and you haven't gotten it. you put three, four months together in a row of upside surprises and that indicates a trend you have to pay attention to. i'm certainly watching it closely. >> but the mood of the consumer and the mood on main street has certainly improved as we have seen the numbers come in. >> do you really think so? >> i do feel like people think things are turning and i think it shows up not only in how consumers respond to questionnaires but also just in the polling results. you have seen the president pull away because it looks like he has a better economy that he's riding on. you have seen the dpe ba-- deba

of the political fight change as a result of the better numbers. >> i would agree with the direction of your comments, but i would probably take out a few of the adjectives. i think the turn has been glacial. the improvement has been minimal. it's better than it has been but we are a far cry away from a standard, vigorous recovery. >> i agree. i think the momentum has gone in the direction of improvement. >> it's a self-fulfilling pr prophe prophecy. people see the numbers, feel better. >> how quickly would it turn if we had a bad number? >> it's fragile. debt is high. savings is low. >> it says americans -- >> i was focused on the billy crystal line. >> americans are feeling better about the economy but not about politics. we have seen better things happening but they hate congress and they are not enthralled with president obama. >> we like to blame people. >> it's not our fault.

i'll let you see it. i printed this out. so you can study this. >> wow, great. is there a test at the end? >> they pretend they talk to the same people for the same numbers that may not be identical, but the same methodology. we'll see. >> okay. >> there are two arguments. one is what the actual approval -- it's tough to win re-election below 50. >> in the approval ratings. >> a lot of polls -- nbc -- because we were a little bit concerned when the numbers were down apparently. that's what chuck said. but that's back to above 50. why are you laughing? >> just smiling. >> i'll never be on there anyway. some of the other numbers are at 45. >> you can also say an incumbent has never won when it's 8% or higher. is it direction or threshold? >> we have had people to argue

both sides who said this is the same thing the first president bush faced all over again. others say that was much later in the cycle when the turn came, much closer to the election. >> and it wasn't 8%. >> all right. we'll see. >> more from stephen roach throughout the next two hours. >> going to talk china. >> those are the things we want to talk about. i was more interested in -- i said to stephen i read which government are we talking about? the government needs to decide if it wants more state capitalism or more entrepreneurialship. there is an election in november or -- >> well, will china please stand up. >> the real china, exactly. we'll come up with the answer by the end of the show. if you have comments, questions about what you see, shoot us an e-mail at squawkcnbc. up next, phil lebeau with data on car loans. and then could consumers hit a speed bump when it comes to

filling up the car? the national association of convenience scores sounds off on the rise in prices. "squawk box" is coming back with that and more. >> announcer: "squawk box" entered the twittersphere. follow the show and our anchors. be sure to add andrew and becky to the list of must follows. andrew is andrewrsorkin and beckyquickcnbc. breaking news, updates and highlights all morning long. "squawk box" on cnbc. and on twitter.

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call now. call liberty medical at the number on your screen. some new signs of improvement in the auto loan department. phil lebeau joins us with the data of the state of the auto industry. phil, i apologize. >> off camera. >> he's cracking me up. >> life is about apologizing when you're with joe. i understand. >> thank you, phil. >> just so people understand experian which has been tracking auto loans for years has the new data for fourth quarter. it shows a healthy improvement in terms of what people are doing when it comes to new and used car loans. look at the data points. new model interest rates. probably the lowest we have seen

in five years at 4.5%. deep subprime borrowing has increased 13.8%. here's an important point. 30 and 60-di delinquencies have dropped. the auto loan average credit score also dropped in the fourth quarter. they are expanding the pool in terms of the number of people eligible to buy a car. the new car loan, the average has gone up $630. that's how much people are financing. new car monthly auto payment up $4 to $468. here's something really interesting. take a look at the growth in seven-year auto loans. a lot of people will say, are you nuts? it's all about the low monthly payment. they went up 47.6% in the fourth quarter. this is a data point that's good news for the new car and used car auto dealers. the stocks have had a nice run. expect it to continue because

this churning of the market when you open it up to the deep subprime and the subprime market, you start to get people coming in not only to buy but then getting the market turnover with used vehicles coming in. the market is so tight right now. it's good news for the auto dealers. >> thanks, phil. >> you bet. >> gasoline prices continue to climb as tensions in iran build. that's presenting difficulties for consumers and gasoline sellers as well. here with more, john eichenburger, director of motor fuels at the national association of convenience stores. the members sell three-quarters of the gas sold in the u.s. good morning, john. >> good morning. >> the price now at the pump about $3.57 is the average. >> yeah, somewhere around there. we started the year around $3.30. >> your expectation into me may recall day and the summer is what number? >> i cannot make any predictions

on what the price is going to be. i represent 80% of the market. this time of year over the past ten years we have seen an uptick in prices as the market switches from winter grade to summer grade gasoline. so cleaner burning, better for the environment. costs more to produce. at the same time con sujts and demand increases as the days get longer. the two compete to cause an increase in market pressure. >> two questions i have about margin. i assume there will be margin compression on the gasoline it but worse than that will be the compression of margins on the retail goods you sell. when i go in and get a coca-cola and a snack bar, the price is not going to come down. maybe it will or i'm not going to buy it? what's going to happen. >> typically what happens when prices at the pump go up is retailers try to keep prices down as long as they can. that does compress margins at

the pump. there is a direct correlation between the amount of goods we sell inside and the number of gallons we sell. that means a retailer will watch the competition closely to ensure they have the most competitive price at the pump. the goal is to sell as much inside the store as you can while not losing as much money as possible at the pump. >> you make more money on a margin basis in the store than you do at the pump. or am i wrong is? >> you're absolutely correct. it's interesting. our business, about 70% of our overall sales in motor fuel but 70% of the profit is inside the store. our goal is to get as many customers to come to the store who come buy gas, get them inside the store. that's where we make our money. >> i know the stores have a good idea about what's happening with the american economy in terms of the jobs outlook. when people have jobs they stop for coffee on the way to work in

the morning. have you seen changes in the employment based on what you see in the stores? >> when the economy is healthy our business does better. we are fairly recession resistant. consumers need to buy food, gas, our products but we see an increase in gasoline sold when the market improves. people on the move spend money to come inside more often. that's a good thing. it's a good indicator of what the economy is doing. >> what are you seeing right now? >> every time i see an indication the economy is improving we see an increase in sales. as we get into the spring season we always see an uptick in demand. overall gallons sold over the past several years is down. but we do see a seasonal transition. we'll know more closer to memorial day what type of uptick we are getting in the spring. >> this may sound like an odd

question, but i'm curious. this is a personal curiosity of mine. what percentage of drivers actually fill up the tank to the brim and what percentage say, you know, i'm putting $20 in or $30 in. that's the way i'm thinking of it? >> it's interesting. i don't have specific examples or statistics on that. we talk to consumers and they often buy a certain dollar amount. but they still have to drive the same number of miles. while they may only buy a certain dollar amount on a given purchase they are coming back more frequently. if you drive 150 miles a week, you're driving it whether you buy five gallons at a time or 15. >> is it an indication of them living paycheck to paycheck or having to wait to put gas in the tank? >> a lot of it is they are watching the volatility in the price. some hedge their bets. we talked to some consumers who

will buy more today because they think the price will go up. other customers say the price may go down so i'm buying a couple dpal lons today. maybe it will be cheaper later. the volatility is only a couple cents a gallon, but for the kmr it's emotional. not necessarily a logical purchase. they go to extraordinary pressures. we found 40% of customer wills buy five miles out of the way to save as little as three cents a gallon. and they feel good about it. >> you said the more gallons they purchase, the more stuff they purchase at retail. i assume it's more important for them to fill up and come less frequently than it is to come more frequently. or am i wrong? >> no. from the retailer perspective when we say gallons to in-store sales that's overall visits. if you buy five gallons today, five thursday, five saturday, you're at the store three times.

that's three additional opportunities we have to get you inside the store. if you buy 15 gallons on day one you may not come back for a week. the more gallons we sell is an indicator of more customer visits. that helps drive market sales inside the store. >> got it. thanks for joining us. >> thank you, guys. >> i learned a lot. you give me a hard time because i don't drive. i know how to drive. i do drive. >> does this make you want to drive? >> i like the helicopter in the morning. much easier. >> you don't know how to drive a stick? >> i know how. i just don't. >> i didn't think you knew how. >> i do it poorly. >> you know there is a clutch and a stick. >> i know. >> but you can't do it. >> i don't do it with enough frequency to make it a great experience. >> that's true with a lot of things for you. >> wow. >> only 7:22 in the morning. >> i know.

coming up, former presidential candidate howard dean talks about the race for the white house and richard fisher, dallas fed president and ceo now. the futures are indicated up a little bit. about 18 points. really would rather have a percentage idea. "squawk box" will be back. >> announcer: monday, february 27, the oracle of omaha answers your e-mails. it's buffett's first interview after his annual letter to shareholders. send your questions or comments to askwarren@cnbc.com or tweet it and include # askwarren. business news and warren buffett on "squawk box" monday morning beginning at 6:00 a.m. eastern. came to louisiana...so many peoe they came to see us in florida... make that alabama... make that mississippi. the best part of the gulf is wherever you choose... and now is a great time to discover it.

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still to come this morning, mitt romney spars with rick santorum ahead of crucial presidential primaries. the latest on the gop presidential contest right after this. and we are counting down to a special interview in the next hour of "squawk box" as well.

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welcome back to "squawk box." among the stories we are following, watching shares of retailer kohl's. fourth quarter profit of 1.81 per share beat estimates but the current guidance is below estimates with weaker than expected sales growth for being the key factor. a judge says bp is liable for civil penalties under the clean water act for damage from the gulf oil spill in 2010. ana darko can be held liable as well. transocean which owned the rig may be liable but the judge hasn't made a final determination. and the reading on the labor market will be out in an hour. jobless benefits could toe that will $355,000 for the week up from $348,000 the prior week. becky?

>> thank you. mitt romney and rick santorum clashing on a host of issues during last night's republican presidential debate. meantime president obama's re-election campaign is stepping up its game. joining us now former presidential candidate howard dean and kelly ann conway, president of the polling company and a senior adviser to the newt gingrich campaign. governor dean, let's start with you. look at this from a neutral perspective. >> sort of. >> or somebody who doesn't have a horse in the race necessarily. who do you think -- somebody who doesn't -- >> is that joe laughing? >> he doesn't have a horse in the race. i want to ask who he thought won the debate last night. >> i would say probably santorum. that's what most of the debate coach people said. here's the problem. romney needs to win michigan, period. this is a neck and neck race. i think he'll throw everything but the kitchen sink at santorum. if santorum wins it goes on a

long, long, long time. we'll see. romney has the resources, the organization. basically santorum has the republican base. that's a problem for mitt romney. >> romney has the tax plan at this point. he's out with an editorial today in the wall street journal after unveiling his new tax proposal. as he points out in the tax proposal he says this is not only something to differentiate him from president obama but from his republican contenders, the other republicans out there who he says have come up with ideas that are not practical and gimmicky. >> i hate to say it but people do not vote on issues. they vote on whether they like you and trust you or not. the base doesn't think romney is conservative enough. tax plans are for editorial writers, not voters. >> tax plans have gotten a lot of coverage in this environment and this year. >> people do not vote on tax

plans. they vote on whether they trust you and whether kro they like you. 's what the battle is about. >> in the primaries. >> even in the general. there is a great book called the political brain by drew weston a neuropsychologist from emery. you ought to read it. the republicans figured this out before we did which is why they used to clobber us. the tax plans are great for cnbc where smart people are watching and editorial readers and so forth. the average voter cares about two things -- do you care about people like them and do they like and trust you? those are the thing thas care about. that's what mitt romney's problem is. the conservative base of the republican party doesn't trust him. >> governor, steve roach here. don't they care about the 8% unemployment rate? >> absolutely. but the unemployment rate is going to be what it is. that's going to have an effect on whether they like and trust you. the numbers for obama are

extraordinary in that capacity. 70% of americans think romney cares about rich people only. that number is 30% for the president. >> the president's polling numbers are above 50% in terms of those who trust him. we have pollsters who said his numbers have run below 50% and if they are below 50% that's very, very difficult way to be re-elected. it hasn't happened historically. >> that's true. although i have to say that most pollsters do national polls which aren't helpful. for example, here's a way for the president to win. sproez texas goes for the republican candidate by 10% and obama wins a bunch of other states by 1%. the polls will show he's behind. the electoral college will show he's ahead. the polls are interesting but they don't show much at all right now. there will be a republican nominee. they are beating the daylights

out of each other. when they get a nominee the nominee will be on more solid ground and it will be a tough race in the fall. >> kelly, i think we had technical difficulties getting you checked in. i hope you can hear now. >> absolutely. how are you? >> great. your candidate, newt gingrich, is in a difficult position because romney has been seen as the front runner until you see the momentum for santorum. what's gingrich's plan from here and what happened last night? >> last night you saw romney and santorum as two chihuahuas and newt gingrich off to the side like churchill. he was statesman like. the answers are very concise. i think for the football fans if you looked at time of possession, romney seems like he has to cram everything somebody told him into every answer. it's never concise or crisp.

often looking at notes to complete the thought. that can be distracting. i was right there. it can be unconvincing. i thought senator santorum, he's a great guy. he had some stumbles last night. the heat and the light of the front-runner status and the full body cavity search of being the front-runner that's happened to seven or eight of them. you saw that last night. in the gingrich campaign we never looked at any one state, debate, donor, tweet as make or break. newt is a historian more than a candidate. he takes a long view of things. he kept me up late last night but we had a great strategy session after the debate. we were there with governor perry planning texas april 3. 155 delegates. the idea that newt should drop out is not even discussed. >> let's put the debate aside. in terms of how the race plays out, what does he need to do to

be seen as a viable candidate? >> he needs wins. the way you show you can win is by winning. he needs additional wins and a few surprises. we're working on it. the other thing is, back to the governor's important points for years i have noted voters ask two questions. one, do i like you. that's the living room test. people like al gore, john kerry, bob dole, john mccain, hillary clinton failed that. but the second one is really important. it's not do i like you. it's are you like me? it's the connective tissue. newt talking about $2.50 gasoline in the first year of presidency shows people, i understand what's going in your wallet. i understand the pain at the pump. that combined with the president's decision to reject the pipeline recently, the fact that energy dependence hurts us and is a national security issue, that kind of pedestrian

populist. if herman cain was 999, newt's number is 2.50. that's the thing that makes people understand i'm like you. romney will never own that space. they were asked a good question by john king. use one word to describe yourself and romney said "resolute." i love the word. i know what it means. it plays into the idea that he's not like people you know. the 20% flat tax. welcome aboard. we have been waiting for you to have a bold tax plan but it still leaves behind 894,000 small business owners caught in the $200,000 threshold for cap gains reductions. he treats people who make $200,000 with himself who makes $2 million a year. very odd. >> it's probably romney the white house looks at as the threat. >> i think that's likely.

most likely mitt romney will win the nomination. i have been surprised by this primary. there hasn't been as messy a republican primary since 1964. these guys are usually disciplined. they look like us now. >> this is a long season and we have a long way to go. thank you. when we come back, michelle caruso-cabrera live from israel. >> reporter: that's syria, that's lebanon. 15 minutes that way an israeli company publically traded on the nasdaq. their story coming up on cnbc. >> announcer: coming up tomorrow on "squawk box," a cnbc exclusive. treasury secretary timothy geithner sits down with steve liesman to talk about the budget, the economy, corporate tax reform, europe and more. that's live from washington tomorrow at 8:30 a.m. eastern.

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futures now up 17. nissan motors recalling almost 250,000 vehicles worldwide over

a loose sensor that could cause fuel leaks. the models affecteded are the juke, patrol, infinity m and the infinity qx. 93,000 of the 250,000 vehicles recalled were sold in japan. >> as the world watches the escalating tension involving iran's nuclear ambitions the israel business community is dealing with uncertainty and comes with spex litigation about a potential military action. michelle caruso-cabrera is in jerusalem this morning with more. >> reporter: the israeli business community's presence is significant in the world. consider this. there are 90 israeli companies listed at the nasdaq. that puts it in the top three along with the u.s. and china. of course there are 1.4 billion people in china, 7.5 million in israel. they have a great over indexing capacity when it comes to

accessing the most important capital market in the world but it got us to thinking how do you run a publically traded company when you have 35,000 missiles pointed at you? we drove to the israeli/syrian border to find out. this is on track innovations. the motto is science nonfiction. they are, woing on making parking easier with small meters where the money comes right out of your bank. gas tanks where it comes out of an account. they are also making the i.d. system of the future. this equipment, for example, uses both fingerprints and facial recognition. >> reporter: the real focus is mobile payment. chips in a phone, in a watch, anything to help you pay on the go. but this nasdaq traded company is in the danger zone, literally. 15 miles from the syrian and lebanese borders. >> as a company we are worried about the weather in thailand

more than any security issue here. >> reporter: they were hit by the situation in thailand and the flooding there. he made it clear that no matter what happened the business would keep running. nearly every ceo said they would conduct business as usual. they try to put on a good face but pension funds have been diversifying away from israel mostly to the united states in light of the rising tensions. >> broadly speaking, the israeli economy given what's happening in europe? >> reporter: you know, pretty amazing performance considering all the things you mentioned. in the last couple of years, only one quarter of negative growth so a shallow recession. it's the only western economy to have been upgraded by the ratings agencies in the last couple of years. so pretty good considering the situation. >> michelle caruso-cabrera in israel, thank you. >> let's bring in nbc's ar

ari aruzi. can you tell us what's happening in tehran, what the situation is today? >> reporter: well, the pressure is piling on here. a senior delegation of iaea inspectors left iran without a result. they went back saying iran wasn't cooperating which will cast a dark shadow over future talks planned in turkey which may not happen with the report. iran is being defiant saying it cut off gas to britain and france and said it will cut off gas to other european countries. long-term contracts with iran without any get out clauses. yesterday the supreme leader said iran will carry on with the nuclear course despite sanctions and despite a nuclear scientist being assassinated. there is enormous pressure on iran but iran is defiant. we heard today from e.u. diplomats on condition of anonymity that the brussels financial clearinghouse may

blacklist iran in the coming weeks which could cripple iran's banking system. they couldn't talk to banks across the world. iran's economy is crumbling already. if the banking system was going to be blacklisted from swiss it would be disaster here. we have to see how iran reacts to that pressure as well. back to you. >> ali, what's the difference between the information you can fine out within that country and what you have to find out externally or get from outside the country? is there a huge information gap? >> reporter: the media is tightly controlled here. information trickles out in iran. you have to read between the lines and assess what's happening. everything is politicized. being in country you get a good idea of what's going on here and what the mood is. most people -- i can tell you sanctions are hurting the ordinary people.

this is not something they want to broadcast to the world. iran said we tolerated sanctions before and we'll deal with them again. this time it is hurting. i have been bureau chief here for six and a half years and i have never seen the financial situation this bad. the dollar has gone up 50% to 60% against the real. things are tough. food costs are up. everyday household costs have gone up. things are very difficult. it's not something the government wants to portray to the world. >> you gave us the example yesterday of i believe something like $400 a month is the average salary for an iranian. >> reporter: that's right. >> go ahead. >> reporter: sorry. roughly, the average salary is $400 per month for an average iranian. a kilo of meat costs between $20 and $25 here. that's a huge chunk of your

monthly salary if you want to eat meat once a month. gas has gone up. iran has been -- over lower income bracket. they will remove subsidies for 3 million people now. that's a huge thing. a lot of the working class have been relying on subsidies. now they want to cut those as well. it shows that they are under a great deal of pressure here. the government is under financial pressure. they are cutting subsidies basically to the poor. >> ali, thank you for your time. ali arouzi from tehran. when we come back we have stocks to watch including an up beat quarter for target and an optimistic outlook for the year. >> announcer: today at 8:30 a.m. eastern our exclusive interview with dallas fed president richard fisher. interest rates, the economy and jobs in america. everything is on the table. keep watching "squawk box."

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take a look at stocks to watch. target is probably going to be a nice gainer today after reporting $1.49 which is above $1.40 as far as expectation. i saw it up more than this earlier. i want to make sure we are looking at the right thing. yeah, that's all.

$53.18 is the bid now on it. also 97 cents to $1.07 next quarter which is above the consensus. over comes negative factors like restrained consumer spending if you are referencing steve's comment and heavy promotional activity. kohl's earned a penny above expectations. the guidance is below the 77 cents the street was looking for. darden restaurants is raising estimates. 1.23 to 1.25 from 1.19 citing solid sales momentum across the brands and then vivu srs of viv and butthead up today. an fda panel backing their weight loss drug qnexa.

could be the first new prescription weight loss drug in a decade. it's had some set-backs. people are still people remember the fen-phen issue but people can lose 10% of their body weight quickly and keep it off. andrew, you don't have 10% to give up. enjoy it. you're 30. >> he will. >> you have done well, by the way. >> you should see what i eat though. >> how's scarsdale? >> it's atkins now. i'm living in the past. i melt cheese on pork rinds. >> how is that -- >> it's terrible! >> i will be skinny when i die. i take steak and you can't use sauce or ketchup and i put it in egg yolks on my fried eggs. >> egg yolks? what about cholesterol? >> everything he eats is loaded

with cholesterol. >> i have to have that checked. >> you can have bacon all day. >> yeah. bacon with pork rinds. that's a bacon sandwich. >> with mayo. >> announcer: you're fat. >> no, i'm not that fat. i'm unhealthy. hewlett-packard is reporting profits of 92 cents a share. five cents above. i remember the simpsons where homer or barney, you see the heart go like this and it would pass. the thing would move through the vein. hopefully. >> that can't be good for you. >> i'm not doing it forever. barney -- my heart just stopped! oh, there it goes. >> you can't have pizza, sauces. but you can have as much meat and cheese -- like cheese on

pork rinds is fine. >> the plan is just to make you so sick of everything you eat nothing. >> scars dale was worse. >> bread is key. i love bread. when i had to lose weight, i took the bread out. >> you've got to take it out. >> now i'm back to crust. >> for energy you don't have the carbs there. it has to digest the fat. >> that it does. >> like i said, you don't have 10% to give. >> not true. there is always a little bit to give. up next, dallas fed president richard fisher, he doesn't have much to give. he'll have his economic outlook. it's an interview you can't afford to miss. plus we'll get to the meat of mitt romney's tax plan with the ceo of carl's jr. this is not on your diet. >> it could be. >> with the meat. why he thinks the romney plan is right for business.

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[ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. a "squawk box" exclusive. richard fisher joins us for a special extended interview. >> and the ceo of cke

restaurants. when he's not hiring supermodels to sell burgers, he's talking taxes and politics. >> breaking economic news. we'll get the jobless claims at 8:30 a.m. eastern time. the third hour of "squawk box" begins now. welcome back to "squawk box" here on cnbc. one gram of carb in bread. our guest host is stephen roach. senior fellow at yale university. he was at morgan stanley nearly 30 years. the u.s. economy and we'll get china in a second after the huge piece in the wall street journal which was fascinating. the first part of fixing a

problem is knowing you have a problem and china has a problem. >> maybe. it's the world bank. >> china knows. >> in conjunction with the leaders in china. these are the people that will be running the place. >> it's xi. >> 11, right? >> do you say hey, 11? >> only his friends call him 11. >> u.s. equity futures indicated up. it's been up between 15 and 20. now it's down actually a point or so. that's weird. so the implied open. i'm confused now. >> it's the percent change at the open. >> the future change -- but the fair value is down. >> no, the first number. i have been doing it wrong. you have messed it up. i used to do it with simple

math. people can't do simple addition and subtraction. >> can you come with me to new haven? we'll fix it for you. we can do it. >> i'll come back a member of the socialist party. i'm not going to yale. >> you'll have fun, joe. >> i can't. >> great restaurants in new haven. >> great pizza. >> i don't think i can drive by new haven. >> we've noticed. >> let's talk about the retailers. target likely to be a winner today. the fourth quarter earnings per share beat the street's expectations. revenue on the light side but the current guidance was better than the street had been expecting. you can see now the stock is indicated higher. 5 p.08 to 53.10 after closing at 52.97. sears out with numbers. several moves to boost liquidity and the company talking about earning 53 cents a share for the fourth quarter well below

expectations. also a sale of 11 stores to general dprout properties for $270 million. it will be spinning off 1,250 hometown and outlet stores to shareholders. we'll watch shares of hewlett-packard. the company with better than expected earnings after the close. hp posted declines in three of the units. personal computers, printers and enterprise commitment. the computer maker forecasted profits well below the street's expectations, too. well, it was below. you can see the stock is down by 3.3%. meg whitman pleaded with investors for patience on the call. she'll join us live at 9:10 eastern with david faber. >> and apple is having a shareholder meeting today. analysts say they are watching to see if there is talk about a much speculated possible dividend. we have been talking about it for a while. it would be the first such

payout from the cash rich company. check out shares of apple as we speak over that $500. # 514.70. unbelievable. i'm looking for hints about an apple tv or the new ipad which is supposed to come out i believe march 7. we'll keep an eye on that. mitt romney and rick santorum clashing on a host of issues during the republican presidential debate. the show down came as the two battle for top positions ascii primaries in arizona and michigan approach on tuesday. they debated health care reform, earmarked spending and the bailouts of the auto and financial industries. >> the whole reason this issue is a lie is because of the bill you drafted in massachusetts, romneycare which was the model for obama care and the take over of health care. [ booing ] [ applause ] >> wait a second.

arlan specter, the pro-choice person you supported voted for obamacare. if you had not supported him. if we had said no to him we would not have obamacare. don't look at me. take a look in the mirror. >> for more on the e debate and mitt romney's tax plan we are joined by the ceo of cke restaurants and a mitt romney supporter. whoa, whoa. didn't you just sign kate upton to an advertising deal? >> you went quickly from mitt to kate. i can understand that. >> i'm not one to bury the lead here. tax plans and politics notwithstanding she signed on, right? >> we signed her up about three weeks before anybody knew she'd be on the cover of sports illustrated. we timed it well. >> you sly dog. there is no carl's, jr., here. you still have the western bacon cheeseburger, don't you? >> and hardee's.

>> what's the problem? >> i'd love to franchise in the northeast. it's something we'd like to do. we haven't found the right group up there. if you know anybody, have them call me. if anybody wants to, we'd love to have you up there. >> how did you get involved with the romney campaign and why? >> i have known the governor for five or six years. we are at a critical time for the country. he's the leader with the private sector experience who could lead the country in the right direction economically, lead us to job creation, smaller government. anybody who knows mitt is supportive. he's a true leader. really a wonderful guy and i think would make a great president. >> when i lived in l.a., how many jobs did carl create? what a great entrepreneur. >> he started with a hot dog cart. he's about 70,000 people in 42 states and 25 foreign countries. that's a great story. carl is a great guy. >> he doesn't work with carl.

he stayed down to earth. >> he did. he was good frinds with richard nixon, ronald reagan, both of whom were from california and supportive of them. he was involved in orange county politics. just a real decent guy. >> do you think the latest romney tax plan, did he get it right this time? there is criticism that the last one was not too hot, not too cold. didn't satisfy anyone. the left didn't like it, but the right didn't either. >> the right and the left didn't like it because there wasn't a lot of specificity. the governor added specificity, talked about creating jobs, reduce the size of government, cut spending. he's really put together a more specific package now. it's great. his cutting the marginal tax rates 20% will be a real incentive, not only for individuals to spend more, to invest more but also for small businesses. pass-through entities like llcs,

sub chapter s corporations which don't pay corporate tax. he's talked about reducing the corporate tax. they pay the individual tax rates. reducing marginal rates and the corporate rate will have a very positive impact on job creation in this country. >> that's something that we didn't talk about yesterday during our discussion of the 28% proposal by the obama administration. andrew, it doesn't apply to sub chapter s or pass-through entities, does it? they're stuck. >> actually, the president's proposal would raise taxes on the pass through entities. they pay at the individual rates. that's small business. these are the individuals that create half the business income in the country. it's not good. you shouldn't hurt the big corporations and not help the small businesses. you should help both. that's how we grow business and jobs in this country. >> i appreciate your points.

my question comes down to revenue and potential revenue raised. clearly this plan doesn't necessarily raise the revenue. as you know the government seems to have a hard time ultimately cutting costs even when they want to. >> i think there is a three-pronged approach to this. the first is when you generate -- every across the board marginal tax cut reduction we have had since the 1920s has generated economic growth. when you generate economic growth you create jobs. when you create jobs people have incomes on which they pay income taxes. you have more corporate taxes being paid at a lower rate because you have more business and income. you can raise revenues that way. the governor has emphasized this and in november put out a detailed plan for how he was going to cut spending. we have to cut spending. everybody keeps saying it. i will repeat it. we don't have a revenue problem. we have a spending problem. we need to keep revenues up by creating more jobs and economic growth. get the spending down by cutting

spending. then there is the -- if it needs to be tweaked. if congress won't cut spending sufficiently so that we can reduce the deficit, eliminate the deficit and reduce the debt we have to do something with how we allocate deductions. i think the governor has held it in reserve not saying what deductions he may limit or reduce. but we do have something where we can adjust. clearly there is a recognition. as i said, mitt was in the private sector. he knows what it means to budget and balance a budget. he's aware of that. he has a good approach that will be positive for the country. >> do you hire because of tax policy or because of expectations of demand? aren't these policies really aiming at the wrong thing? >> what we do is at the end of the year when you have profits.

you paid on your debt and the rest of the money is rna vested. the more money after taxes the more you can rna vest in your company. then you create jobs. people that don't have jobs or are under employed don't do the spending we need to revitalize the economy. businesses have to start investing in growth. the more money we have after tax, the more we can invest, the more jobs we create. i think the governor's plan feeds into that. right now with overregulation and the fear that taxes will go up you really have american free enterprise suppressed. you have an incredible energy being held down. whether it's democrats or republicans and i think mitt's plan does it well. if we can release the energy i think we'll see economic prosperity, increased tax revenue and job creation. >> a fear that tax wills go up, not necessarily taxes going up.

if taxes went up slightly and we had certainty would that release some of the energy? >> i think you're right. the fear that taxes will go up dampens almost as much as taxes actually going up. you have to have positive certainty. we have to know where we are going. >> you combine bush tax cuts and the taxes with obamacare and everything else and they are going up. it's not just a fear. you know, carl's, jr. it's not carl junior's. he had a restaurant called a junior of a bigger one. >> right. >> i was confused. you have never been to a carl's, jr. >> i have. >> fried zucchini. >> you should go more often. >> there are none here. this is not our fault! >> this is not carl's, jr., country. >> you didn't realize there was ap east coast? i don't understand it.

>> it's part historical. i took over and the company was troubled. there were no restaurants in the northeast. we are looking there and over seas. i think this will be the first year. >> you should sell the franchise to carl q. >> yeah. carl's carl's, jr. >> that's a plan. >> thanks for your time uh today. >> thanks, everybody. >> see you later. >> when we come back, our interview with dallas fed president richard fisher. first we talk china with stephen roach. we'll be right back. we'll be 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. ♪

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welcome back. china this week confirming the commitment to work with the e.u. and the i.m.f. in solving the debt crisis even as the nation prepares for economic head winds. john hut ledge is here from rutledge capital. also with us our guest host stephen roach from yale university. john, welcome to the conversation. >> thanks. nice to be here. steve, how are you? >> great, john. good to see you. >> good to see you. >> we have been trying to get a

feel for what's happening in china, john. can you describe what you have seen? >> the slow down is really not a dramatic slow down but it's a real thing. exports in china are tied heavily to europe. europe is the place in the world circling around the toilet bowl. if there is going to be a big event happening of a negative nature they are already in recession with the bank shrinking. exports in manufacturing are hurt. chinese manufacturers also hurt by supply chain issues like we have seen happen in japan and the floods in thailand. so there are issues there. the truth is, china is still growing faster than anywhere else in the world. >> there are changes that may need to be made. the lead story of the wall street journal today we have been talking about is a world bank report due out next week. it looks at the structural changes facing the nation as uh they get into the slower growth cycles.

are they moving away from the state-run economy. what do you think the answer is? is this something the new leaders will embrace? >> the new leaders are very gradual guys. i'm sure steve knows better than i do. this is a consensus way of making decisions. the chinese economy, the state owned companies are large. the state-owned sector of the u.s. is large, too. in china, the state owned sector is why they were able to get stimulus into the economy. that's why they have trouble. i think the most interesting question is they are now being pushed to invest outside china. it's called the going out program. it is billions and billions of dollars. it's heavily concentrated at the e.u. because that's where the bargains are. that's where they need to reinvest foreign reserves out of

the currency. you will see huge m & a activity in europe and in the u.s. as well. >> doesn't the story and this report really miss the mark on the big challenge for china as growth slows because of exports to europe as you indicate, the real story in china is it needs a more balanced source of growth from internal private consumption. my take on the government, especially the recent 12th five-year plan enacted a year ago is that the big push is to get demand inside of china growing more rapidly rather than focusing on this dramatic reform proposal of the state-owned enterprises. what do you think of that? >> i totally agree, steve. what people may not know is last quarter, net exports were a negative contributor to chinese gdp. the current numbers are not being dragged along by exports. but the capital spending is way

too big a share of the economy to be stable long-term. the changes in structure where you are trying to increase consumer spending, decrease capital spending and exports, that kind of change is difficult to make. it takes decades to get it done. >> we talked about the u.s. consumer is 71% of the u.s. gdp and china, the chinese consumer is 33% of gdp. >> how quickly is that growing? >> maybe a sustainable structure somewhere in between for both countries. >> absolutely. >> it's growing rapidly, becky. but not as rapidly as the other -- >> i'm confused. john, you're a china person that understands things better. is it a world bank study or is it in conjunction with government officials and an influential think tank. when i read it they will look at

what hu jintao did and they will question the way it was done by him. is this inside the chinese government? are these people that have to listen to the world bank or are they in partnership with the world bank on this report? >> no report is going to be released inside china with the name of a chinese think tank like the drc. that's not been already accepted as a message by the chinese government. isn't it significant. i think what you are seeing here is this is a way the government gets the message of the change out to the local government officials in the field. this says our government is serious about the changes, but the new guys coming in and who and when going out did not have a different take on the issue. >> who and when going out. but is it a message to the local governments or is it a message to the rest of the world that we are moving things along and maybe you should back off and

stop attacking us as the currency manipulators? >> like all official messages, it's aimed 90% inside their own borders to tell their people and especially local government officials where corruption, pollution. those are the real problems china faces and what makes the transition difficult. they have a couple silver bullets here. tax revenues in china are actually rising as a share of gdp. so the cash flow you need to make some of the changes is being generated. second is that rural incomes are growing faster than city incomes because of the food prices that have increased in the last couple years which means farmers are in a little bit better position. that's where you would normally expect to see disturbances in the villages. but they have a little bit of time to make changes. but these changes they are talking about making are very difficult, take a long time to do. >> apple, all the pressure put

on. that's obviously going to squeeze margin. will that have a broader impact? >> they have been focused on boosting wages since 2004. province by province they raised minimum wages for migrant workers by double digit rates. >> does that mean product cost for us will go up or margin for them goes down? >> mainly the latter. you have to keep in mind even with the sharp increases it is still huge. chinese productivity growth is rising a lot. they can offset a lot of wage gains by improved efficiency of the work force. the days of low cost chinese labor aren't over.

>> it's always great talking to you. >> thank you. >> coming up, more of the top stories. still ahead, weekly jobless claims due out in six and a half minu minutemes minutes. we'll be right back. >> announcer: today at 8:30 a.m. eastern our exclusive interview with dallas fed president richard fisher. interest rates, the economy and jobs in america. here's one you may not have thought of: fidelity. now you don't have to go to a bank to get the things you want from a bank. like no-fee atms -- all over the world. free checkwriting and mobile deposits. now, depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity. you walk into a conventional mattress store, it's really not about you. they say, "well, if you want a firm bed you can lie on one of those, if you want a soft bed you

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we're seconds away from weekly jobless claims. rick santelli in chicago. the numbers please. >> here we go. survey says jobless claims are unchanged from a slightly revised 348 up to 351. that's where it stands this week. 351,000. if you look at continuing claims, slightly different picture. last week's number ramped up from 3.42 to 3.44 million. now it drops to 3.392. so a whisker under 3.4. i guess the news that we really want to look at, this isn't having a huge effect. interest rates, you know, friday, tuesday were above 2%. yesterday, we are flirting with the 2% level as we moved into the last hours of trade were

slightly higher than that. equity is doing better. one of the risk days because the dollar is now down instead of up. that's at least proven to be a positive for stocks. the correlation between the euro and equities intact. we have a house price index yet to come. for the most part it will be continuing to digest the various news of the day whether it's the pmi in the euro zone yesterday or, of course, four or five days post details on greece. markets, according to several analysts seem to be tired. but nonetheless here we are close to 13 k. back to you. >> thanks, rick. for more on the data we get to the other professor at the table, steve liesman. >> the faux professor. considering. sitting next to a man who spent so much time helping me understand economics. >> don't blame me, steve. >> it's your fault. i want to read from high frequency economics.

this is the third week in a row we go into the claims number with economists expecting higher numbers and they seem to be surprising on the upside which means the down side when it comes to claims. if the trend continues -- this is before the number came out -- he expected 325 by the middle of the year and 275 by the end of the year. that's a big drop. that would be consistent with payroll gains around 325,000. i know there are skeptics out there. i don't disagree with those reasons for skepticism. we have been burned before by getting on this bandwagon. it just strikes me that week after week claims have been surprising to the upside here and the payroll numbers, i will tell you that drew madis at ubs lowered the forecast for the year. he sees 7.8% by the fourth quarter of the year. he basically says the fed has it wrong.

he said most of wall street had it wrong and it's time to get on the train. i don't know from an investment standpoint when the time is to get on the train. it may be that the train left the station already. >> if the train is right the whole political story is a different story. >> if you are below 7% and i heard stephen roach talking about the question. is it the level or the trend? or the threshold number. i don't know the answer to that question either. i will tell you there are people -- >> we have had several false starts. everybody jumps on the train just when the train leaves the tracks. you have to be wary about it. there is a time when the train is gone down the tracks. >> i believe ronald reagan was at 7.2 in 1984. >> it was going the right way. >> we can always make health care. there aren't many data points. >> thank you, rick. steve stays with us and he has a special guest. >> a terrific person to ask is

all of these questions to. joining us now from the great state of texas, dallas fed president richard fisher. we are delighted to have president fisher with us. good morning. >> good morning. i'm glad you visited the state and you now understand it is a great state. thanks for the plug. >> i'm sorry i couldn't be down there this time. i owe you a trip to texas. you are kind to join us on a remote camera. are you one of the people who believes in the trend that's been happening in the jobs market here, the lower unemployment rate and the lower claims numbers? >> first, steve, we were reading through old green books. you know the internal forecasting books of the fed. just to show you how much fun we have in what i do for a living last night. december, 1996 green book had a disclaimer to the forecast which said not to be used externally and harmful if swallowed. that describes the difficulty of the economic forecasting.

i think one has to be careful. i can only tell you what i feel on the ground. not just here but in my discussions. i survey ceos around the country before the meeting and the tone is better. it's not brilliant. we don't have enough new hiring taking place. definitely moving in the right direction. this is my view only. i cannot speak for the committee. things are better than the numbers might suggest or at least moving in the right direction. so there is a better tone out there, steve. i think we need to take note of that. >> can you help us understand why the federal reserve and the statement that's been out and i guess the chairman, i know you don't want to speak for the chairman. >> well, i can't. >> has not incorporated any of the better data? they seem to be downbeat. is the federal reserve as a committee in your opinion really behind the curve when it comes to gauging what's happening in

the economy? >> i wouldn't condemn the committee. we have differences of views. that's why you have 17 people or 19 on the committee is to try to come to an understanding with a divergence of views. speaking for myself, at the last meeting i warned that i thought the statement was talking down the economy. particularly the first paragraph which describes what we see going on. that's our perspective here. it's my perspective. we can see a lot through the lens of texas. we are the biggest exporting state. our exports have been picking up surprisingly given what people would expect. in terms of our own research and surveying of our manufacturing sector, you know our manufacturing index has the highest kor radiation with the ism of all the fed indices. that's shown a nice pickup in activity. an intent to not only hire more but to hire for longer hours. our service sector survey, we have a big enough chunk of the economy here. it's something of a leading

indicator. these things are never perfect. but, again, i just want to repeat i think the tone is better. i do my best or try my level best to report it to the committee. but you have to remember where we are coming from. we don't want a false impression. we have had false starts, as you mentioned in the introduction before. i think our job at the federal reserve, the whole committee is just to be cautious and to make sure we do the right thing. that's what everybody is trying to do, steve. we have different viewpoints. >> i get it. one of the things you said, president fisher, you called qe-3 a wall street fantasy. >> mm-hmm. >> i guess we can make jokes about that. maybe more importantly is to understand what you mean by that. do you mean wall street has imagined this and it's just not coming in your opinion or the committee's not going to deliver it? explain what a wall street fantasy meaps for qe-3. >> every reserve bank president speaks for themselves.

you could look at the minutes which i would urge the viewers to do. they come out three weeks after the meeting as well as listen carefully to what chairman bernanke says. my own personal view and it's my view as the federal reserve bank president is given the improvement in the data we have seen, things are getting better, not worse. i don't see a need personally for a qe-3 here. when i say it ooh 's a fancy iss like they hope something will push them along and we are supposed to give gifts to the street. our job is driven by a dual mandate. price stability which we now have a long-term target to 2%. it's a flexible target. and then do our best give the fact that nonmonetary factors are at work like fiscal policy to bring employment to full status. we are working on the real economy. our job isn't to prop up the

street. that's what i mean by the constant discussion. more qe2 and 3. in my terms having been in the business and having run portfolios i'm the only member of the group that has. i remember the mindset. it's fantasy may be too strong. wishful thinking, wantful thinking -- if that's a word. i would focus on the real economy. that's our duty. >> it's great to have you back on the show. we can always go back. it's almost like a continuing drama. these aren't individual shows we have. we remember all the stuff you said last time. i want to go back and i don't want to put words in your mouth. >> was it correct? did i say the right things? >> i want to hear about qe2. you weren't necessarily a huge fan but you described a positive outcome and i wouldn't say there is a cause and effect necessarily. but you look at the stock market. it's not just the stock market now. the overall economy is starting

to justify the moves we have seen in the market. are you friendlier now in hindsight to qe2 and do you feel it worked and there weren't negative effects? then i look at $106 oil and i wonder if we are seeing negative effects. >> i don't think you can look at any single indicator as to judge whether it was effective or not. i was against it. i don't think it was necessary. i still don't think it was necessary. i was in the minority jew and t -- in the minority view. they have done better despite the strife we see on capitol hill. there was little improvement there. they can't come to a settlement on a budget. we haven't had a federal budget for three years, joe. there is a dynamic that takes place in the private sector. i believe ours is the most

efficient in the world. they have cut costs to the bone. they are hyper productive they are still sitting on a pile of cash. we know there is cash on the sidelines. i think what happened is our businesses have adjusted which is what american businesses do better than anybody else, whether they are chinese, european or any other country. it's important that we have bullets in the hollister in case things go haywire. we'll use those tool ifs necessary. >> if there was no qe2 where do you think we would be now? >> that's a silly game. i love you, but -- >> that was andrew, not me. >> oh, andrew, that's a silly question. who knows? it doesn't matter. there was a qe2. we are where we are. >> you're making an important point. that is that qe, whether it's 1, 2, maybe 3, operation twist,

these are emergency policies because the fed has no basis points on the target interest rate. if the emergency is over, maybe it's time to wean the patient from life support and get back to a point where you can use your normal policy tools which is the federal funds rate. you haven't said that explicitly but that's what i take from your comments here. >> well, it's a really good point. it has to be a collective decision of the committee. i like to put it this way. personally, i will be pleased when we reach the point and execute an exit strategy. are we there yet? that's to be determined by the committee. i think the main thing to note here is that it appears that the economy is doing much better. the numbers have improved. we still have too many people out of work, too many people out of work for too long. we do seem to have price

stability achieved closer. to me it's the best indicator of what's happening with price inflation. we'll see how other prices are impacted. we have stated a long term strategy which i hope reassures the market. that's a lot of progress right there. here's the point. the economy didn't slip into the double dip recession. i was on the show many times. that's all we talked about. kept saying it wasn't going to happen. part of it is fed policy. part of it is the dine mimpl of the private sector in this country which is unique. bottom line answer is i will be happy when we reach the point where we have to figure out how to get out of it. it has to be a collective decision of the committee. >> i want to plug the trim mean down there. >> thank you. >> it throws out whatever is volatile that month. it doesn't make an seclusiexclur

nr energy and food. >> i like that. >> i think -- >> becky, let me give you my favorite example. we have 170 items in the index. it's what people actually use. hair cuts, shoe repair, et cetera. my favorite was in one month we had extreme movement down in the price of guns and ammunition. and extreme price movement up in funerals. we trimmed both of those out. >> that makes sense. i get it. >> you are the only member of the fmoc to have been in the business. if you were sitting in the trader's seat how would you understand the fed's statement about 2014? is it a commitment? is it a forecast? if it's not either one of those words would you give me the word that it is? >> well, i have had an inside view in what i do now.

i used to view it from the outside. you're asking me to go back to the way i used to view things which is hard for the human mind to do. there is always a contingency in the statement. depending on economic conditions and developments. that's in essence what it says. i want to underscore, put in bold, italics, et cetera, the whole committee is doing its best to do what's right given its mandate. i would view it as a statement that rates will stay low for as long as it is practicable. not saying it will necessarily occur until late or mid or whatever the date is in 2014. but the intention is to keep things as they are until we see improvement in the economy. that's the way i would interpret it if i had my old hat on. >> doesn't it worry you? i have been on the show with you. the lags of fed policy. >> yeah. >> the policies you are making

now don't impact the now of the u.s. economy. they have an impact on whatever it is -- nine, 12, 15 months down the road. >> yeah. >> you have to be forward-look. are you doing that? >> well, we are always trying to be forward-looking. no one knows exactly what the time lag is. again, everybody in the world knows i was against having a specific time. i wasn't alone. there were other discenters on the issue. i will let them speak for themselves. we had 2013 and pushed it to 2014. being time contingent makes me uncomfortable. the real issue is having something we call state contingent which depends on the conditions of the economy. saying that's easy, doing it is hard. you have to lay out the conditions. so i have never been comfortable with either 2013, 2014. but, again, i want to stress the point, the intention as i view it of the committee. is to make sure that we adjust

to the real economy. and as new data comes in, more anecdotal evidence on top of that is confirming what the data says. then we will adjust. the question is when. each of us has our own views. i happen to be a little bit more optimistic about economic movement here. that's just my personal view. >> to clarify that though, do you worry that the market has the wrong interpretation or that average americans get the wrong interpretations of this and if they get into some adjustable rate mortgage, let's say based on the idea that mortgages will be staying low because the rates are low do you worry that average americans maybe get the wrong idea? >> i give the market more credit than i think you do. they look at us and so many other things as well. i don't think they should count on the fed. they should be sensible in how we might adjust to economic

conditions. in the end a good investor, at least the way i used to do business, you buy into the value of a company and what kind of returns it will give you in the long term. that's a function of the real economy. it's a function of how good the company is or whatever entity you are trying to buy and invest in. i think it is reasonable to assume that we are not going to buy mortgage backed securities forever and ever. we'll have an exit strategy. we won't execute the strategy until we feel it is the right time to do so. any investor will have to discount the fact that if all goes well, the economy continues to improve then of course usually rates go up at that point. >> right. that's an excellent point. >> they won't be at this rate forever. i assume they will make their own discounting, adjustments and they have their own forecasts. they can see from what they i vest in. that's what a true investor would do.

that's the way i invest my money. >> if you will stay with us, we'll slip in a quick commercial break and be back with more of this exclusive interview. stick around "squawk" will be back. >> announcer: monday, february 27, the oracle of omaha answers your e-mails. it's buffett's first interview after the release of his annual letter to shareholders. send your questions or comments to askwarren@cnbc.com or tweet it. be sure to include # askwarren. business news and warren buffett only on "squawk box" monday m n morning beginning at 6:00 a.m. eastern.

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welcome back to "squawk." take a look at the futures now. dow would open 25 points higher, nasdaq would open up eight points higher. there you can see on our newton collide percentage open, nicely -- nice green arrows. check out the morning pop in the shares of sears. this comes despite a big earnings miss for the retailer as it announces plans to sell 11 sears stores and spin off 1,250 of its hometown and outlet stores. that sears story never seems to go away.

mr. eddie lampart. back to richard fisher. i want to shift gears quickly and harken back to one of our other times we spent together, richard. that was when you did call it the great state of texas. i see that all the time. you are an unabashed cheerleader for the way things have worked down there. i told you it was because you have all the energy producing assets and businesses, and you -- you wanted to really make a clear difference in why texas has been flourishing so well. i just wonder, is there any single thing down there that texas has done that we could do on a national level? what's the most important thing, you know, to get this tepid economy moving a little bit better? what can we learn from texas? >> i think the one difference is, you see it in the movement of businesses here, movement of people here, we had almost 7,000 people move to our state last year. why do they come? why do businesses relocate here? the way the government is set up

it meets first of all for 142 days every year. some wish it was two days every 140 years. that's not going to work. it's set up so businesses are incented. the way the tax structure and regulatory structure is, the whole mindset here is to lead to greater business formation, greater job formation. i think that mindset is important for the rest of the country. you're beginning to see other states who are in trouble. begin to change their tax regimes, be more regulatory friendly. you know, we have to consider what creates the most jobs and therefore the greatest prosperity for the american people. that's the mentality here and that's the way government operates under both democratic governors -- excuse me. we used to have a republic. we used to call them presidents. democrats and republicans. you go back to 1990, the state of texas has outgrown all the other areas of the united states. if you go federal reserve district by federal reserve district in the entire united states in terms of job growth.

going back to '90 by a factor of 2-1. and has create ed more jobs in e rate of job growth if you plot us against australia, eu, other developed countries. that's quite a strong statement. yes, we have a lot of problems here. at the same time, something is being done right. and let me just make a last point. with the same monetary policy that affects the rest of the united states. oil prices are a net benefit to the state of texas. there's no question about that. but only 8% of our workforce -- excuse me. of our product here, about 8% to 10% and 2% of our workforce is employed in energy. this is a high-tech manufacturing service-oriented, health care driven economy. we're just like everybody else. agriculture is huge here. 1% of our employment. oil, gas and mining and support

services, 2% of our employment. but 8% to 10% of our equivalent gdp. i like to discard that stereo type we're just a bunch of oil and gas people. we do benefit from oil and gas, no question. instead of oil we say oil. other than that, we're just like the rest of the economy. >> one of the distinguishing things in texas you did not have the housing boom or bust. that was because you had a regulation there that didn't allow people to borrow, what, more than 80% of the price of their home. i want to link that back to the question about mortgage-backed securities. there is an argument among some members of the fomc that the fed could do -- help the economy out by buying additional mortgage-backed securities, driving down mortgage rates even more than they are already and helping the housing market recovery recover, which would help the broader economy recover. what's wrong with that line of thinking? >> well, again, these are things that are being put on the table by various people.

they're worthy of consideration. we're seeing the housing market regain its footing. you've seen it in the recent data. what is the issue here? is it the issue of the cost of a mortgage or are there other factors at play? for example, the need to clear off the inventory that is, in a sense, it's an ugly word but constipated by the foreclosure mess that's in place. would it be helpful? how much can we do? where do we start, get to a point where we've done enough and if we decide to exit could create problems. so, again, personally i'm not a big supporter of the concept. it's an argument worth listening to. but the rates are the lowest they've been -- you're half my age, steve. but in my lifetime these are the lowest that mortgage rates have been. the question is, is that really the troodriving factor here? there are other dynamics at play. would it add or would it

subtra subtract? that needs to be debated. >> you've talked about ending too big to fail and breaking up the biggest banks. i'm curious, if you were going to break up the five biggest banks, how would you do it? >> well, the first command that we have under dodd/frank is to work on the issue of capital structure. we have a very strong governor in dan terillo who's focused like a laser on this issue. as you know, we've been an active player in all the basel and other discussions. my minority view has been that that rarely works. it is a natural dynamic to want to grow and get bigger and bigger and bigger. this is the way humans work. and the way institutions are. so i'm a big, strong supporter, i should say, up front of the volcker rule. i do think that in essence, the five largest banks have a

competitive advantage over the 6,000-plus other banks in the country and the cost of funding. i think it's not fair competition. and i think it would be best to downsize them. is my proposal likely to prevail? i doubt it. but i do think it would be a healthy thing to do. i think the one thing that might be useful is to bear in mind that taxpayer deposits anchor the confidence in banks in terms of their commercial traditional activity. >> right. >> and the issue is how you split off their nontraditional activity from the rest. >> thank you. great spending time with you. >> too long an answer. i apologize. >> that's okay. we got your window. we've got -- 9:00, another show. tha thanks very much, great to have you on. dallas fed president richard fisher. >> he's a friend of "squawk," you know. >> tomorrow we've got another -- we have st. louis fed president james bullard will be our guest