>> it was before i went out on maternity leave. >> this is real old school. you were -- >> he was here last week but -- and he was in last week when you were out. >> incredible. no school like the old school. i quote pixar movies. some quote shakespeare. i quote pixar. >> which is why we love you. >> and lorax. >> did you like that? >> i have not. >> the girls liked it. they have seen it. >> is it universal offering? >> they are excited about anything dr. seuss. they'll see that. >> we did dr. seuss down -- a whole section in universal studios all dr. seuss. all seuss all the time. welcome. it is monday morning, and in our headlines today eurozone finance

ministers meeting today. they are expected to announce they will pay their part of a 130 billion euro bailout to greece. the imf will finalize its contribution but the debt swap does not preclude a messier default or even a euro exit further down the line. after greece's debt deal officials say attention in athens is shifting to politics and on how to kick start the troubled economy. the finance minister tells cnbc greece has been given a new starting point to try and restore its struggling economy. now greece is facing a new election in late april or in may and the two biggest parties are struggling in the polls. michelle caruso cabrera will be joining us with more on this story. yes, she will be. i have brackets i have to do. >> march madness? >> they start tomorrow. >> i have to do mine, too. >> number one they should have won that acc tournament.

>> that's right. >> florida state took that one. >> what is that mask? >> that just shows you how difficult -- looks like friday the 13th. >> yeah, yeah, yeah. >> what is that is this it's not hockey, right? >> but it's just like -- i don't know. silence of the lambs. yeah, yeah, yeah. >> beat duke badly last night. >> yes. >> see, that's why it's so hard. ohio state, they lost to hish mish. >> how about kentucky/vanderbilt? >> i saw that. and it's what college basketball -- >> xavier, the bopies bonnies. i watched so much basketball. i was watching xavier. they came in and switched the channel in this public place. he said i want to watch the knicks. the knicks? college basketball? i didn't get it. in other global news the people's bank of china said it's

dollar/yuan midpoint the second biggest day fall on record. this is the latest signal china is willing to let its currency move on a wider range. last week the pb 0 oc governor said conditions are now ripe for the yuan exchange rate but they don't know which way it will go at this point. >> you see the numbers that came out on saturday, too, the trade deficit way, way wider than anybody expected. >> and it will be a tough move to a consumer society from an export society and we had -- who was it,s another smart guy in said the guys who think there's never a day of reckoning. >> and the point is we keep saying everything is riding on the u.s. and the u.s. is going great but that's assuming china continues the growth spurt that we've seen. we're taking that as a given when we talk about those assumptio

assumptions. >> did you see all the romer stuff? interesting stuff about unemployment. how she missed on the way up because she thought it wouldn't go above eight and it went to ten. that's because people were so shocked by the financial crisis that they panicked and fired more people than they needed to. now you're seeing a snap back that she is trying to explain why 2% growth -- people have been ratcheting down their growth numbers from 3%. why is the unemployment rate dropping so quickly if growth is so anemic is this her point is this is the initial snapback from the overshooting on the financial end. >> it makes a lot of sense. >> if we don't get quicker gdp growth you're going to stall at higher levels of unemployment. >> and we talked about that on friday with productivity. productivity was skyrocketing because people -- companies were getting by with the fewest number of people they possibly could. >> the employment, the thing i found most amazing, i don't know if you saw the data, financial services actually grew, head count, in 2011. so overall financial services, wall street, as they say, wall

street industry -- remember, a lot of experts were out there saying a lot in 2010 given the way the bank stocks were, prices, that that's what numbers as high as 30% head count reduction. the industry actually grew in terms of human capital last year. >> calendar and others said layoffs have slowed but the actual additions have not. part of the reason things were better is because they are not losing as many although there's not that many net additions. people aren't making any money in financials. they're only making -- what, it's down 20% or something. >> yes. yes, but, i mean to say -- those that are saying, yes, we're not making money, cry a tear for you. >> you didn't see the weekend "wall street journal," did you? a fascinating piece by this really forward looking physicist about what we're going to have by 2030, like synthetic, and i

quickly did -- how many years is that? 18 years. 74 is when i might need some new organs. i'm not going to mention which ones but the chips are going to cost a penny, on your retina you'll have access to the intern internet and have the internet -- there's a reason. >> close your eyes to go to google? >> you can go to google. and they have some things that are already happening that way for this. i'll figure out why i was going to talk about it because i've lost my economic train of thinking. >> let's talk more about the economy. on that front gasoline prices, obviously, if you've been watching this it at the pump, you know they keep rising. the national average jumping 12 cents to $3.81 a gallon for regular. but the lundberg survey suggests that the increases are slowing. or at least we hope. >> i remember. when you are born a child, you

are born a scientist. and a lot of people end up becoming scientists but we're not doing it anymore because of the pull of financial certificaservices. all our smartest people go into financial services where they don't create wealth, they massage wealth and take a cut as they're massaging it. that's the term he used. so massaging all this wealth and making a lot of money but not creating anything. there is that criticism of financial services. you really haven't done anything to really help the world. you're just sort of taking your cut as you're moving this money around. >> although "the new york times" had a great story not too long ago about the importance of the financial sector and when you think you can do without the banks, look at the changes -- >> to fund the good idea. >> and to make sure that you bring the rest of the world along. >> the best counter argument if one wants to counter argue that, then you look at the high yield market, go back to the earl '80s. many of the companies that went to the junk market and got financed would not without social services have had access

to capital. if you want to counter argue, they went on to hire hundreds of thousands of people, grew businesses. if you look at the s&p 500, i mean, something like 100 of those companies wouldn't have existed if they could not have accessed the capital markets. >> and some are biotech companies and other companies -- >> they pointed out that a lot of the great societies, like great britain, saw them get fat and happy and now a lot of ph.d.s, i think more than half of the companies being started by ph.d.s, they are foreign born. more than half so we are lacking. they are not staying here. we have a brain drain. this is what i've been getting to. >> hold on. the cancer researcher from m.i.t. rick santorum wants to ban --

>> during my tenure, during my career, as you know -- >> you massaged money. you massaged money, took your cut, and now you're on television. >> we created a billion dollars of incremental wealth -- >> spreading it around. didn't create it, you spread it around. >> a lot of that money was then re redeployed into businesses and to the economy. >> there are people on the losing side. your clients made money but other clients lost money because your clients made all that money. >> well, i'm sorry. sorry about that. i did spend the last week when my son was in college can -- i have a son in college. i will tell you that the people that are graduating from the top und undergraduate business schools -- >> they're not trying to go to wall street. >> they're not interested at all. they're trying to get into something -- i don't want to say social media but anything to do with technology and some aspects of social media. that's where the smartest people are trying to go now. which is probably, again, a

reflection of our society and what we value. >> you do not hear anybody, joe, as was the case 15, 20 years ago, saying i want to go to wall street. i want to be a banker. i want to be a trader. just not happening. >> i don't even get someone -- a personal guy sent in it, says the physics of the future, the guy's big, huge half page article in the weekend "wall street journal," and, i mean, this guy is the greatest future -- if you read this piece, what we're looking at near term the word tumor will disappear. the reason is every time you go to the bathroom, your urine will be tested in your toilet and if there's any precancer is cells from any organ in your body it will see what will happen 20 years from now, it will see there's one little defect in one of your genes, missing nucloetide. >> i hope that is the case but since nixon we've been saying -- i hope that is the case. >> and if some scientist in some

lab comes up with some kind of theory here, they're going to eventually have is to go to wall street, get an ipo, raise the capital. >> okay. >> and basically commercialize. >> by 2100 we will be greek gods. >> synthetic organs. but, see, the brain is the one i'm worried about. that's the one that goes. k kidneys, other things you figure you could get synthetic stuff. i think we're going to go 0 -- we're going to the global market report. it's not ross. it's karen tso standing by in l london. karen? good morning, joe. thank you very much. we have had some trading market action in the morning. we're in the green. we did open up in negleative territory. we had a strong rally on the markets lately. we got the psi deal out on friday so that there's good news in the markets. u.s. nonfarm payrolls creating.

this is the typical european story. we get you one event. we start focusing on the next so that neither concerns about spain or portugal, in the backdrop we had the euro group meeting in brussels. we're expecting to hear the go-ahead for the greek second bailout. we'll wait for news on that. you can see how the sentiment is playing out. the ftse here in london slightly weaker in the red. one of the strongest performing indices in europe this year so far. the cac heading north. the ftse bouncing up 0.4%. let's take a look at bond markets. i want to focus in particular on what's happening in italy. we had some news out today showing us the latest picture on q4 growth that came out as the market had expected, a contraction of 0.7% on the quarter. this is the same as the preliminary reading and it tells us that really for the end of the year we did see a contraction in growth so two negative quarters of decline. the prices are coming down on

the ten year which means the yield is going higher. 4.85%. compare this, though, to spain. you can see yielding just over 5%. this is telling us the market is more concerned about spanish debt than it is about italy. this has been a swap. prices up, yields coming down a little bit and this is where the market was focusing its attention on the back of those c cds trying nerd greece. guys, back to you. >> karen, thank you very much. back here in the united states after a weekend win for mitt romney in wyoming and rick santorum in kansas, the g op presidential hopefuls are preparing for con sess in alabama and mississippi tomorrow. john harwood is our chief washington correspondent and he joins us right now with more. and, john, these races are shaping up to be a little closer than we might have expected, correct? >> reporter: yes, they are. mitt romney is doing pretty well. by the way, you have your own massage they are miss on the set there this morning? >> we wish. >> totally different than you're thinking, harwood, with your mind, where that is half the

time. we're talking about massaging money. >> reporter: just remember, he always takes a cut. >> he? yeah, he does. there's no happy endings in this massage. i know where you're heading. and you know what, what happened to duke? >> yeah, yeah. >> his some is a tar heel. >> the same thing that happened to carolina. we got beat by a very good florida team, experienced, they're tough, they're good. >> you're not picking duke, are you, john? >> i always pick duke in the final four because i, you know, of the -- you're talking about organs there, i go with this one right here. i pick from the heart. >> we'll let him have it. john, i'm sure you know the history of duke being seeded number two in the tournament is not very good going back the last 20 years. i don't think they've made it in the round of 16 as a number two seed. be careful of that bracket. >> i like our team.

look, becky, mitt rommie is doing better than anybody had expected in the deep south states. it's the heart of conservatism, the heart of the republican party. it's why rick santorum has entered these contests thinking that he has a chance really to step up and elevate himself into that one-on-one contest but newt gingrich is there and is polling pretty well and mitt romney is polling surprisingly well which shows some of the ways the southern electorate has changed but in both cases we have the three bunched up at the top and if newt gingrich can hang on, win one of the two, he has some gas to keep going to illinois and beyond. santorum is hoping to knock newt out of the race and get the one-on-one and if somehow mitt romney could win down there, win one state, i think that will help strengthen his credentials as the front-runner. >> it's going to be march, john,

and we have time. >> march? >> it's march madness. we should know -- and he could win both. he's running surprisingly strong. gingrich and santorum are splitting. if they were united -- >> right. >> did you see some of newt's comments like the reason i ran was -- not the reason i'm running. he's been saying some things that sort of indicate that he's sort of, i think, knows that it's not going to go that much longer. don't you think? >> his spokesman, joe, said he has to win in alabama and mississippi. >> that could be it. >> newt stepped away from that. yesterday he was on one of the sunday shows going all the way to tampa but there are various ways to go to tampa. the question is how actively, how aggressively you are pursuing a campaign and i do think that if he gets skunked tomorrow it will be very tough for him with a straight face to carry on and say i've got the support behind me to make this race. >> is it really romney's

birthday today, harwood? do you know? >> i didn't realize that. >> it is. >> gary has that little nugget. i don't know whether it's true or not. if it is, happy birthday. >> i believe it is and he's 65. >> 65. >> you think he gets a card from gail collins? >> oh, god. >> with a dog on it? >> and i read all the "new york times" pieces there. and i've said this a few times, mitt romney is not just running against president obama, "the new york times" and the liberal med media. it's tough. it's tough to take on all of those entities, but that's what he's going to have to do. frank rooney -- >> did you see -- >> charles. it's one after another. >> romney is getting most of the newspaper endorsements. didn't you notice that? >> no, i haven't. in some of the individual states he has. >> yeah. >> i think even this the south they're starting to think, you know, instead maybe they like

someone more conservative but want someone electable and that's coming to the fore. it's the electability thing, really. do you think obama is going to endorse gay marriage, john? >> i do not. >> because he feels he already has that constituency with don't ask/don't tell. >> why not? why if you don't have to? >> it's 49% and he represents that 49%. >> he's looking at the campaign which is why he is also taking pac money. >> and now i find out he's been the biggest promoter of fracking and drilling. he's been a huge promoter of domestic drilling. i didn't realize that. >> you read the fact sheet yesterday. >> i did. i love those facts. >> when you were out, i think it was last monday, you were out last monday. i know you mentioned this last week because i called you from utah, one of the major

fund-raisers for the democratic party didn't say it on camera but we did have a conversation. you remember off the set where there was definitely very strong opinion that a lot of people don't like the idea, john, that obama, who was very much against taking any kind of pac money is now in favor of it. and that whole argument about, well, you have to do it because -- >> it was a democrat who said that, too. >> and it was really interesting, joe, they don't want to go on camera and say it, right? >> yeah. >> but those that have been major, major fund-raisers for the party are really wishing that they could get out there and say we're taking absolutely no pac money. >> that was the word from the ski slopes out there? >> no, no -- >> it was here on set. >> that was actually here, over there, off camera. >> like sorkin would be. go for it. you have to do it.

politics is war. >> let me ask you about something that could get really interesting. if it is romney who is the nominee and we get a little closer into it and in just a couple of weeks the supreme court is going to start hearing arguments for the health care bill and whether or not that is a constitutional issue, the decision could come out in june and you almost wonder if it is going to motivate the base of whatever party gets the losing end of that stick in the supreme court. if the supreme court decides that it is constitutional, does the republican candidate get a huge boost from the people on their side who want to see it go their way and vice versa. if it gets knocked down or parts of it are seen as unconstitutional does that motivate obama's base to come back out and say we need to come back out? >> yes. and the losing side will get the greatest amount of energy from it because that's just the way these things work. if you feel egrieved by the

supreme court you mobilize and say we'll have a supreme court more to our liking. the white house is reasonably confident that the court will uphold the mandate which, if that's true, that might -- could help the republicans a little bit. but i do think that as rick santorum and newt gingrich have been saying on the stump because of mitt romney's own record on health care, you can't make health care a central rallying issue for the republican party. it may be -- they may get a little bump from whatever happens in the court, but given what happened in massachusetts, it's going to be really, really hard for him to lead a ticket that is riding a wave of anti-obama care. it's just too easy for the democrats to come back and deflate that a bit as romney. >> "the times" has a huge piece. decisions like this come around only once a century or so and this will define justice roberts tenure and he's only 57. he'll be there 20 more years, they say, but this will be the

defining case and he's cautious and you wonder does incremental things, whether he should strike down the -- whether you want the court to strike it down instead of maybe the electorate electing a republican and repealing it. that could happen as well. that would be better plebiscite. >> those defining cases are kind of like those momentous elections, the biggest of our lifetime, biggest in the century, blah, blah, blah, blah, blah. >> every one is the biggest one. this is the biggest march madness ever, though. >> yeah. >> that is the one thing -- i have no idea how to pick either. >> this is the biggest -- this is the biggest half hour of this show. >> because of ka mminsky, becau of you. started with massages. thanks, john. >> before we go, you said you weren't getting e-mails. we did get one in. becky's hair looks beautiful

today. and, joe, your hair looks great as well. >> really? >> it says yours does, too. can't leave you out. >> you got that one. brian from chicago. >> i need to talk to you about -- you tried stuff to help, right? >> that was so long ago. >> but -- i have a problem right here. >> yeah. >> i have a little combover, and i'm wondering, do you rub it in there? remember when george rubbed it in there in "seinfeld" it had that horrible smell and everyone says, does it smell? >> you know, i don't even know. it was some kind of spray or something. honestly, it was so long ago and i was like, it's not even worth it. brian in chicago thinks your hair looks spectacular. >> seriously, were there side effects? >> no. >> you know what i'm talking about? >> no, no side effects. no side effects. >> okay. all right. thanks. coming up -- >> goodness. >> we're going to head to the futures pits in chicago and prepare for the trading week ahead. john brady tells us -- you're in

my shot. >> i'm sorry. >> whether the bulls or bears are going to be in charge. [ artis brown ] america is facing some tough challenges right now. two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy.

welcome back to welcome back to ""squawk"." let's turn to the markets.

john, good morning. traders tell me over the weekend the big event will be the bank stress test. once again the bank stress test. is that something you think is going to have a major impact on trading this week? >> i'm not quite sure, gary. i take a different tack. i think as we roll in this morning there is some good news in global markets in the fact there hasn't been a tremendous negative effect or fallout from the trade deficit data from china over the course of the weekend. it looked as if chinese exports really fell off a cliff last month because of the problems. the markets shrug it off. that's great news. later on this week quantity tafive easing perhaps between now and july but will they sterilize that activity which simply means will they remove

money from the short end of the curve and perhaps see a slight bump up in interest rates? nothing nefarious at all but at least keep the policy directive in place where the central bank will stand by the markets in case we get in trouble. >> let's talk about what happened last week and what it may -- what the effect may be this week. you had the credit event many people short s&ps were looking for happening in greece. is it factored in? if you were short the market because you thought that would have an impact do you cover this week? >> no, absolutely not. i think you saw that on friday, g gary. the greece story is well played in. there will be an auction as you know next week for about $3.5 billion worth of assets. the greek story is well out there, we'll established. the next risk with greece will be the election cycle end of april and the beginning part of may which will coincide with the election cycle in france. greece is very much well built in here.

the key now will be what happens with spanish ten-year yields. last week, tuesday/wednesday, we saw spanish ten-year yields pop up above italian ten-year note yields. this whole idea of achieving economic growth through austerity is something the markets are still not yet quite comfortable with. >> you know, joe, i haven't been with you on air, i think, since the great call. you had a most spectacular call on the s&p of anybody. forget the wall street -- >> which ones? 30%? >> it's 28% from the october lows right now. >> basically you went out and you made that call, i don't forget it. most of the wall street analysts, the strategists were cautious. john, is joe's 30% for 2012 s&p, do you feel comfortable with that number? >> joe is going to need a little bit of luck. he's had a great run here, a guy hot at the tables, but i think he's going to need a little bit of luck here and i don't know which way it's going to break. the key is going to be this, and

i think -- i think it's becoming a topic of discussion within the media regarding this whole theory and that is that the employment numbers taken by themselves in isolation were very good. it's the accelerating effect within the economy that will be the key. will consumer spending accelerate? will inflation be maintained? will we see assets move out of savings accounts into the equities? so you hate to say, joe, he's right thus far. the next 5% to the upside will be tough. >> all right, john. thank you very much. have a good week. >> you saw that piece in "the journal" today, too, talking about christina romer? you already were talking about that. >> joe, here's the thing with the whole theory, fed officials now there's a developing theory that perhaps this relationship between gdp growth and employment has broken down a little bit, for some skeptics in the market i would suggest we go back to the early part of this sent isry, maybe the 1990s.

there was this big argument about productivity and growth being as strong as it was. there was also a credit binge which made the product growth greater than it should have been. i think we see the ramifications today ever since the credit bubble burst. >> what was the high for unemployment? 10-3 and 8-3 and barely above 2% gdp, you're not supposed to be able to add -- to bring down the rate with gdp growth. >> the shrinking of the labor force. you have more and more people whose benefits have expired and they're kind of figuring out the next step, so to say. the numbers have shifted. there's been solid nonfarm payroll growth the last six months. >> all right.

>> john, good to see you. >> thanks, becky. thanks, joe. >> and gary. when we come back we have a monday morning deal. plus, could good news be bad news for apple? we're going to talk all about that in a moment. first right now as we head to a break let's take a look at last week's winners and losers. let's -- let's start over from the beginning. we were just driving along, comin' back from the lake, and all of a sudden, ka-plam. it blindsided us. what is it? our college savings account. how do you think it happened? not sure. i think something we bought a while ago turned out to be something else, annnnnd, i remember a lot of other stuff in there had the word "aggressive" in it. is everyone okay? well, now, yeah.

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it's nice to know that what you're building is gonna do something for the world. when people think of ge, they typically don't think about beer. a lot of people may not realize that the power needed to keep their budweiser cold and even to make their beer comes from turbines made right here. wait, so you guys make the beer? no, we make the power that makes the beer. so without you there'd be no bud? that's right. well, we like you. [ laughter ] ♪ everybody.e back,

welcome back, everybody. in our head lanes on this monday morning, japan's asashi is paying $2.2 billion for zoll. people will have to wait longer to get their ipads. the new version is set to hit store shelves on friday but the company's website says those devices that were preordered online won't ship to buyers until the following monday which is march 19th. also, the $25 billion settlement between five major banks accused of abusive practices is expected to be filed in federal court today. that was first unveiled last month. it's expected to result in payments and other mortgage relief for about 1 million borrowers but first has to be approved by a judge. if you have comments or questions about anything you see here on "squawk" e-mail us. when we come back, washington and wall street collide. two men who know both worlds very well are going to be

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we've we've been talking china and joining us is the business editor for the economist and author of the new book "need, speed and greed." thank you very much for joining us on set. >> great to be with you. >> we've been taking a look at some of the numbers that have been coming in on china and on saturday the trade deficit for february was a much bigger number than people had been expecting. it has a lot of people wondering if the slowdown is going to be a

little harsher than expected especially harsher than the government there expected. what do you think? >> i would say you have to take the numbers into a little bit of perspective if you look that the chinese new year came early, the january and february numbers together. and even then it is a fall that's not as big as if there were numbers so, yes, there's some rein for concern. what does this mean? i think there's a short term and a long term answer. the short term answer is that, yeah, we're seeing basically the customers of china stuff they made, mostly europe, are not doing very well. that's the reason this is happening. but this is going to lead to domestic reaction as well. we're going to see more stimulus than we might have thought. the bigger term reason i argue, we're beginning to see the end of cheap china and their stuff is less competitive. >> is that because wages are going to start increasing and people there are going to start demanding more? >> it's exactly right. it's been happening. if you look along the coast al provinces which is the workshop

to the world, double digit increases in salaries and benefits the last five years. in addition, regulations. people there -- we have several hundred million people in the middle class that are getting tired of toxic sludge being dumped on their children and are demanding and getting environmental regulations. this is a burden on business, of course. and so what you're having is much higher costs along with traditional coastal provinces. the interior, some people say it's going to move inland. the low jgistics are so terribl and more expensive the investment is not for export, by and large. it's to serve the tier 2 and tier 3 cities. it's not going to save the toy manufacturers or the big manufacturers on the coast. >> vijay, when we've seen things like this happen in the past when wages creep higher, the regulations are tougher, what you've seen is manufacturing just moves on. is there a next country? >> both the myth that vietnam is a mini china, indonesia.

here is why. china's scale, its supply chain is so sophisticated, so huge, its labor market so flexible, there is no substitute for china. >> but if it's not vietnam and it's not indonesia, what about the fact a number of companies have said we're going to move manufacturing out of china, going to move it to mexico, is that another myth? >> show me the money when you look at numbers. there's an uptick. some people even claim it's going to leave china. when you actually look at and have for a piece in "the economist" the new issue what you find is companies that went and looked and sniffed around or did a china plus one strategy, there was a bit of dabbling because the costs are higher. you find the supply chain isn't going to move with you. you're finding labor productivity is still very, very good. in vietnam, you go to bangladesh. you know what, if you are labor intensive, low capital intensive like t-shirts and cheap sthek e sneakers, they are gone.

they're looking iafrica, at ha. if you look at manufacturing where you have not only sophisticated supply chains built up. the only country that could really rival china because it has the labor and it has the potential market that could be huge but it has so many troubles that it will take it a decade to get there. >> so does that mean that in the united states consumers better start getting used to paying higher prices? >> there's bad news and good news. if it you are use d to incrediby cheap stuff at walmart, guess what, you will have to pay a nickel more for it. the good news is this gives american manufacturing a shot in the arm. this makes it much more attractive for big companies like the ges of the world not to move their factories to the u.s. let's not get crazy with this. the next factory looks more attractive to do it in the u.s. >> vijay, thank you for joining us. and coming up, we'll check

on the markets as we prepare for the new trading week. plus jared bernstein and douglas holtz-eakin make the connection between stocks and politics. ♪ [ male announcer ] aggressive new styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the new c-class with over 2,000 refinements.

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hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too.

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holtz-eakin, former domestic and economic policy director for the mccain presidential campaign, former cbo director. let's talk what happened on friday. we haven't spoken to either one of you gentlemen about that. jerrod, you're -- obviously we're all pleased with it being over 200,000 for three or four months in a row but you're not ready to say that we're just clear sailing to 5% anytime soon either, right? >> definitely not. the trend is clearly your friend here. about 245,000 payroll jobs average over the past three months on a monthly basis. you saw the tick-up in the labor force participation rate. that's a good thing, people coming into the labor market, getting some jobs. but, of course, that puts upward pressure on the jobless rate. look, oil is out there. you guys have talked about that. europe -- the risks of fiscal stimulus fading. so, you know, there are still down side risks but, again, a

solid trend in the job market, and that's been the big, missing piece from this economic recovery. >> i'm going to return to jared in a second. doug, what are your thoughts quickly is this. >> well, i think he had it about right. wondering how much this is due to the seasonals and the weather and how the index fell. we had focus on temporary jobs but overall a step in the right direction, a long way to go and some real risks in the future. >> here is where i'm going to make it more interesting where you can maybe disagree. i saw a piece over the weekend about the difference between north dakota and california. both have rich natural resources. one is finding people to work and another, environmental concer

concerns, is not doing nearly as well. i'm talking about california. i've seen lately now given that gas prices are high, the obama administration suddenly is touting and sort of highlight ing its domestic production, that it's gone up every year under the president. that there have been big fractures and they've been behind all of this. can you have it both ways.ways? i thought they were reticent to add to hydrocarbon infrastructure because of constituent. is he a big hydrocarbon developer that expanded drilling and tried to help domestic reserves or not, is he trying to save the planet? which are you? tell me? >> i heard you this morning earlier on the discussion. you have an interesting point. you may not love this answer but it really is both. i think the president's view on this is that in order to pursue his clean energy agenda, he's got to have street credibility on domestic production, and you know, look, the numbers do speak for themselves. you may not like those fact

sheets and i get your point, that they're touting stuff that has been happening but it has been happening, if you look at our share of crude imports, they were 55% or something in 2008, now they're 45, if you look at domestic production up year over year and especially natural gas, so he does have the facts right on this, and i do believe that his view is that helps pave the way for the clean energy agenda. >> is he comfortable being known as the oil and gas president? >> i think you got some deficit base tensions there but yeah, i think so. >> what do you think, doug? >> i think that's a pretty gracious reading of the record. we did a piece in politico, the difference between what we've seen under the president and what could have happened with an aggressive exploration in drilling strategy and the difference is a lot of resources, it's a lot of money, a lot of jobs and if you want to turn it into today's metric, it's about $2 a gallon of gas. so that's income we've foregone.

everyone thinks of the gas of what you have to pay. if you own the gas station, high gas prices are great, so we've given up the opportunity to make a lot of money on natural resources. this president really has not been aggressive in pursuing them, and you know we know the cost of the regulatory burden coming out of the epa. i don't think you can be that generous to the see, i'm not -- you have listening once in a while on this show, you know, the environistas, you are going to say the president is a great oil and gas president? >> first of all here is a point of disagreement between doug and myself and i actually think that the majority of kind of objective viewers would agree with what i'm about to say. there's really nothing the president can do in the short term to alter the price of gasoline. we simply can't get away from the fact that we sit on 2% of global oil reserves. we produce 10% of global oil

production. >> jerge jared that's not the p. the point is -- >> newt gingrich gets up and says or michele bachmann, i can make gas $2 or $2.50 a gallon, they can't and they shouldn't. the president i think he has a good record on clean energy development that environmentalists can look to and say at least it's pretty good but at the same time, he does have an all of the above strategy and he's pretty much front about that. >> jared, i've seen you talk about -- you're uncomfortable defending the keystone decision, too. >> true. >> if i can summarize what you said, he felt boxed into a corner because it was in the budget bill. he really does want to do it but he -- >> right. >> -- he was unable to because he was boxed into a corner and going to do a better plan. >> i don't know about a better plan. >> i can see you're uncomfortable trying to explain. >> i think the keystone oil is

coming out of the ground and going somewhere, it might as well go through cushing to the southern coast. the president ought to say i accept a conditional plan that you get this together so the aquifers are okay and then we'll have the pipeline. >> what do you think, doug? >> he should have done keystone. this is riddled with a lot of waste. this is not a sensible way to go about things. solyndra we don't get our money out of that approach. gas prices are what they are in world markets but if you got more income, if you got more jobs you can afford them and he's missed the opportunity to do that. >> we do have more jobs. >> yeah but jared -- >> we don't have near enough jobs. >> that's true. >> whether he caused it or not, production is up, so under his watch it's up but then the gas prices being up under his watch that's not sort of -- you get to

pick both sides, things he gets credit for and doesn't. >> every president takes a hit for gas prices on their watch. when they're going down they get credit for it and they never have that much to do with it. >> thank you, gentlemen. both are professional arguers, don't you think? >> yes, as opposed to the rest of us. >> thanks, guys. did you see that romney said you can't put a windmill on a car? >> yes, i know. >> i beg to differ, because you come in every morning with whoo, whoo. >> takes for showing them. i make it here every day. >> a mini van. >> with a huge windmill on the back. when we come back, dr. love, mario gabelli, his takes on stocks, steelmaking and the neverending quest to make money. for their clients' futures. helping millions of americans retire on their terms.

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it's time for dr. love. mario gabelli tells us where the next big investment plays could be. >> could higher gas prices jack knife the trucking industry. >> you want to go to work on the price of oil and eventually get gasoline prices down, you have to attack transportation fuel. >> former kansas governor, trucking chief bill graves talks about speed bumps and how they can hit your wallet. >> a check on the economy. the second hour of "squawk box" begins right now. ♪ they call me dr. love, they call me dr. love ♪ ♪ they call me dr. love

♪ i got the cure you're thinking of ♪ ♪ they call me dr. love >> good morning, welcome to "squawk box" on cnbc. i'm becky quick with long with joe kernen and goary kominski. the federal deficit amounted to $35.5 billion, a much id woulder definite than expected for china. exports increased by 18% over a year earlier but imports were up by nearly 40%. gasoline prices here in the united states rose more than 12 cents over the last two weeks. the laters lundberg survey puts the average price of regular gas at more than $3.81 a gallon. an analyst says there is reason to think gas prices are near a peak. if you order apple's new ipad online you may be in for a little bit of a wait. the website now puts the wait at two to three weeks, coming after a surge of preorders after the product was announced last week. anyone who ordered those early

is going to get them on time. those are set to ship and that's a clarification of an earlier story. apple is also saying the new ipad will be available in stores friday. the futures are indicated higher, up 11 points, s&p up by less than half a point. gary? >> greece has breathing room with the newly exchanged bonds trading but the country is far from out of the financial woods. michelle caruso-cabrera joins us on set back from athens. how many times have you been to athens? >> five or six. >> and so do we have the relief? do we get the credit event, the exchange that everybody wanted? >> so everything that we covered so extensively thursday and friday was debt exchange exactly that. if you had greek debt, handed it in, new greek debt. the new greek debt started trading today and right now it's yielding between 14% and 19%.

if you had an old bond, what you got were 20 new bonds spread out over roughly 30 years. the first one doesn't mature for another 11 years. here is the good news. those yields sound horrendous, 14% to 19%. >> figured they were in default again. >> the good news is that's better than what they were doing friday so there's improvement. the yield curve is inverted. if you look at the 2023 bond, due 11 years from now, it's trading with the yield of 19%, and the one due in 2042 is yielding 14% so an inverted yield curve which is always a bad sign. to becky's point about the numbers, look at what's happening with portuguese debt, greece is trading above portugal if you look at the ten-year, closer we get to the 11-year, less than 14%, just barely. why would we see an inverted yield curve? look at the horrendous greek data. youth unemployment is 51%, overall unemployment is 21% and the gdp is down roughly 20%

since 2008, so they need to get this economy growing again. >> that's before you get even more austerity measures that are put in place for this? >> right, well so now is the time where the world shifts in theory, europe shifts from talking about austerity measures to reform measures, stop raising taxes and cutting salaries and instead really liberalizing the economy, which means forcing the oligarchy that runs the pharmacies, you can't do that anymore, can't control the number of pharmacies. there will be unlimited competition. people don't want to hear that. they go crazy. if that happens you have more job creation, things will get better but they have to fight that through in the next couple of months. they passed the laws. they have to implement them now. >> do we have any sense on the exchange for those that exchange the bonds, are they now holding the new bonds? are they trading those new bonds? are they buying credit protection on the new bonds? >> i have no idea. they've been trading only for four or five hours. >> can you buy credit protection

if you are purchasing these new bonds? >> i would assume if somebody was willing to write you that protection, absolutely. i could try to get a new cds quote on these but i hadn't done that. 6:30 in the morning yet. >> interesting to see those that participated in the exchange credit whether or not they did so because they had already in a sense hedged themselves out for the new bonds. >> i guess who would be the buyer though? are you drawing new investors in? >> everything at a price. already the yields are telling you if you're going to buy cds on this, it's going to be expensive. >> absolutely. >> but after what we saw on friday maybe the decision by isda reinvigorates the belief that it works because they originally said this was going to be voluntary, people got nervous the credit default swaps weren't going to work. >> i didn't realize portuguese debt is trading at 10%. >> there's a lot of risk that portugal goes the same way as greece. i think, this is just me opining

but i'm not sure it's necessarily the huge event. greece has shown us what happens, right? >> here is the blueprint. >> we're all still here and what is the dow doing? right? is it possible that greece absolutely defaults, it is. their numbers aren't bad as greece but it's a possibility but at the same time is it going to matter as much? i don't know. i feel a lot of it is priced in. people have seen what the movie looks like and we're sitting here doing just fine. so. >> michelle, thank you. >> all right, let's get mario is here, mario gabelli, get some thoughts, joining us now, gamco chief investment officer, always interests theses about a lot of different subjects. we don't revisit a lot of the stuff you talk about sometimes, and do you remember the last time you were on? >> okay. >> do you remember some of your main themes then? >> no, give me them. >> i don't know. >> you looked them up. >> no, i haven't.

you always like fortune brands. >> in terms of where -- >> some of your individual, you have great stories for individual -- >> stocks, yeah, but what we do is not complicated, and that is what's the world going to look like over the next ten years and then we do stock analysis covering sectors globally so if it's something you drink we follow it anywhere in the world and go in and look at each company. for example how big is the beer industry globally, how big is the booze big deployablely and carbonated soft drink and water and so on and look at each individual company so when we look at companies we then look at a graham and dodd approach, gather the data, raid the data, project the data, interpret it, look at evaluation and catalyst. as an example i started following american brands probably 30, 40 years ago and became -- it was american brands so they have a legacy of spinning off companies,

splitting them up. fast forward we're looking at spinning off the companies, spin-off company a, beam, bourbon, $300 billion business, distilled spirits, booze, and $8 billion approximately, more or less is bourbon and who would want to own bourbon in their portfolio and they spun off fortune brands home and hardware. we said housing is at the bottom. the company is doing well at the bottom of a cycle. what can it do as the cycle improves? we bought both pieces. bean is 56 and fortune brands is 21. 56 plus 21 is 76. it's a living. over the next five years, over the next five years what is going to happen to both of the businesses? financial engineering -- joe, go back. in the 1960s, the mantra ofcong. you had the economic cycle every four years, buy companies that are lagers and leaders in the cycle, put them together.

>> smooths it out. >> in the '80s it was energize lazy assets doing leveraged buyouts, in the '90s, dot-comand whatever it was. today how do you take a company and take its capital and move it to its highest rate of return and splitups are an example. we look at finding the company that spun off and saying is this attractive? as an example, joe, pediatric nutrition, better known as baby food, infamil, bristol-myers says it doesn't belong in our portfolio, did an ipo at $24 and shrink at $39.40. >> we're a similac family. >> switch. >> no, my kids are 12 and 9 now. >> start again. >> mario, when you give me that scenario on the meade on the beam, you said you start by making a top-down call and do the company analysis.

>> that is correct. >> when you look at something like beverages or you look at consumption, what is the top-down called? >> gary, the top-down call was that in november of 1989, the berlin wall came down. that signaled the allocation of capital that the best of all ways was capitalism versus karl marx, versus adam smith. so as a result of that, we said over time you'll have more consumers coming into the global marketplace and the consumers in this particular case we hadn't focused on brazil but primarily china and india and having been in china in early 1981, henry kissinger's brother doing a trip, they had a habit of doing two things, drinking. went to hong kong or happy valley they knew they could do gambling so we were biased and didn't want to say everyone does that. we knew you'd have a growth in the marketplace and then you had this aspirational value so what was the top brand and what

didn't you have that americans had? we do have that, but that meant that we had an analyst that goes out and visits the companies. guy in shanghai our beverage analyst in the united states, living there for the last five years. if you take tea he follows the tea companies. that's how it works. now a lot of those -- that was one example. beam is $56. is there a margin of safety in the stock, do we still want to own it? yes. will it be brought as part of someone else? yeah, i think it's got a neat, little market capital relative to some of the other companies, and they want to have bourbon in their portfolio. >> okay, how about -- >> that's just one example. sara lee i came here before with single serve coffee. >> you did, that's right. >> if you want to revisit old stories, sara lee, brenda barnes started selling off businesses, started buying back stock, shrunk their capitalization from like, i'm cupping numbers, 800 million to 592 million shares

and announced she had to retire and splitting up the company. coffee co in europe and a business everybody would like to have in the united states, ball hotdog, jimmy dean for bacon for breakfast. now a company that is $21.40, who is going to want to buy those pieces? let's go back, gary, you remember it&t, jenin, a great conglomerate. so recently they just spun off three companies, one of them being xylem, one of them is it&t and another one is xcel. xylem is run by a terrific team and i try to buy that for the right place. >> you had all of your fracing stuff, safe ways to do fracing. >> the achilles heel of the natural gas and unconventional

drilling is the control of water, because if one entity makes a mistake, deliberately or otherwise, the press, there will be certain groups that will jump on this and say wow and there was a little earthquake in ohio that was caused by water coming in. we as a country have to, you know the story, i don't want to get into it. >> that was one of your things, you're looking all across the spectrum of small companies that deal with the water issues for fracing, right? >> we have one very basic need. we have to reduce our debt. we have to cut down on our import bill. we cannot transfer our wealth to the chinese. they have of the $15 trillion of wealth they control $1.3 billion or 25% of the external bonds that are held. who knows what's going to happen? there's a new ceo coming into that country just like we're having elections in a lot of parts of the world. >> 11? >> 12, november. >> xi? i pronounce his name eleven

because it's xi. >> looking at that, in any event, water is for agriculture. water is needed to be where it has to go in terms of the delivery of quality of water, sewage, waste water disposal, how do we participate in the next ten years? we've been anying about this for ten years. aside from becky, everyone else in the world is aging so you have this aging population and when you age, joe, you need a new hip, a new knee. for example today japanese company announced they're buying zoe medical and you're going to see a lot of -- >> will you give us water names? >> you want water? >> you're talking about all this stuff and haven't told me anything i can buy. >> xyl over the next ten years i have no idea. >> xyl? >> the symbol of xylem, market cap of about $3 billion. there are companies that will go

into a fracing location. when you frac you put a platform on, there could be three or four holes, wells drilled out of that platform. when do you that, you need 3 million to 5 million gallons of water to do its thing and 1.5 million to 2 million come back and after the well is produced a continuous flow of water. you bring it to the site, retrieve it, put it back into the system and that requires intensity and gorman rupp makes pieces of equipment under fracing, it's $29 stock, a great company. the bears are shorting these because of the drop in natural gas prices. >> right. >> and so we have one that takes

tanks -- >> you love this stuff, don't you? >> it's great. listen as opposed to these guys that are strategists, making calls. stock pick, you know what the best spin-out -- >> cautiously optimistic. >> joe what was my favorite spin-out of all time? >> sun core was a spin-out? >> sun core was a spin-out. >> i forgot. >> it came out of the original sunoco oil company. >> cablevision, a company we've been identified with, we voted against them, they spun off madison square garden and spun off amc. >> here is a piece of paper, write down a bunch of symbols. we'll come back to you. >> symbols? of course you have to go. >> more water, more stuff we can talk about. >> and spin-outs that have not happened yet. he has a lot of companies the values are hidden and the spin-outs are yet to be annou e

announc announced. >> we'll do it later. >> there is a tease for you. we have mario throughout the show. >> we won't talk about comcast. >> anyway if you have comments or questions, e-mail us at squawk@cnbc.com or follow us on twitter @squawkcnbc is our handle. next how the truckers handling the higher fuel prices? we'll talk to the ceo of the american trucking association right after this. so uh this is my friend frank and his, uh, retirement plan. one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face. [ gasps ]

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welcome back. if fuel prices jack up to $5 a gallon the trucking business could slow welcome back. if fuel prices jack up to $5 a gallon the trucking business could slow to a snail's pace. bill grace is the former governor of kansas, governor, good morning. >> good morning. >> let's talk about fuel prices. put in perspective what is the fuel cost as it relates to the overall operating margin within the trucking industry. >> well, it is usually the number two expense for our industry behind labor.

when it trends over $4 a gallon it starts to become the number one expense of the industry and if projections hold true, which would be in 2012 that diesel and gasoline were to average roughly 30 cents more than it did in 2011, we consume 50 plus billion gallons of diesel and gasoline each other. in terms of the hit on our companies and the cost we pass through to consumers, that would be $15 billion of additional cost just to move product. >> and that $15 billion, you said you pass on some of that to the ultimate consumer. how much of that would get absorbed by the trucking companies, if, in fact that $15 billion is there? >> well, as i often say, we're not recreational drivers. we're going to try to pass through all of it, and in fact, you know, everybody's familiar now, anybody that is shipping product understands fuel surcharges and they've just

become sort of a common practice in our business and so quite frankly, we're going to pass through all those costs eventually. there may be some who lag initially getting shippers to agree to that but what we've seen coming out of the downturn in the economy is a real contraction within our industry, the capacity that was there at the end of 2008 is long gone. the people that have survived have a lot more pricing power and control over products, loads they accept and the prices they'll move product for so it's all going to get passed through eventually and it all ends up costing consumers more when they buy stuff off the store shelves. >> governor, looking out at that, a lot of dynamics that can occur, one of which is the panama canal and what that does to the shift in transportation. we all understand inland waterway is much more efficient than rail. rail is historically more efficient at moving big tonnage. what can happen as a technological breakthrough in

the trucking industry? navistar announced they're working on natural gas engines. what do we need to accomplish that goal of taking what we have in this country in terms of natural gas and applying it to transportation, particularly in the class "a" trucks? >> i was really fascinated with you the previous session in mario's comments about fracing. probably the largest growing segment of the trucking industry today is the companies that are servicing drilling sites and moving water and all the materials necessary to produce natural gas. there's going to be a vote tomorrow i believe in the senate to add what's commonly referred to as the net gas act, the surface transportation bill, that's essentially the concept boone pickens has been promoting to help us take some sting out of the added cost of buying natural gas powered vehicles

that delta, the difference between the traditional class 8 diesel powered truck and natural gas powered truck is $35,000, $40,000 per unit. so something like that would help. the president spoke to that last week, that would make a difference, but i can tell you, i'm seeing a lot of my members, a lot of people in the trucking industry are taking a hard look on buying natural gas powered vehicles. they're really starting that transition already because they're looking to are that cost savings that is there in the different energy content being equal, if they can save the money that apparently they can save on natural gas they're looking to do that. >> governor, thanks very much, american trucking association's bill graves. thank you for joining us. still to come this morning, we'll get a check on the markets, plus some stocks our guest host mario gabelli should be on your radar screen this summer. also how economists are feeling about economic growth

after friday's jobs numbers. steve liesman has the latest revisions to gdp forecasts. there are revisions based on the numbers. stick around. we've got more "squawk" in two minutes. in the next hour of "squawk box," former imf deputy managing director john lipsky joins us, greece, markets and the global economy. "squawk box" will be right back. we're cracking down on medicare fraud.

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up up next we talk bonds, jobs and gdp. steve liesman has the latest revisions of predictions for economic growth. >> and later we hit the complain trail with former presidential candidate tim pawlenty, who is now backing mitt romney. "squawk box" will be right back. americans are always ready to work hard for a better future.

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welcome welcome back to "squawk box." i'm joe kernen along with becky quick and gary komiski. pepsico named brian cornell as ceo of its america's food division. john compton who had held the job has been named pepsico president. cornell had been seen as a possible ceo candidate at walmart and reportedly approached about the ceo opening at avon and they're trying to figure out what to do in the

event andrew nui would be succeeded at some point which everyone is and pepsi is setting up a management structure and stock is higher on the news. volkswagen reports an annual profit of $20.1 billion for 2011, its most ever. general motors earned about $8 billion on last year but vw does say that technology development costs may limit its profits for 2012. universal's "the lorax" topped the box office, earned $39.1 million in north american sikt sales. "john carter" was second, the sci-fi flick at $30.6 million and strong job growth report last friday, economists were busy over the weekend lowering growth forecast. steve liesman joins us live from common fund forum in orlando, florida, with more on the growing conflict between the jobs and growth numbers, and

steve, you know i felt really geeky earlier today. >> i heard it. i heard it. i loved it. >> i was channeling you. i never knew we'd be talking about oki. who is this guy from like stein beck? >> ochin's law. >> okay, not oki. sounds like "grapes of wrath." >> do people know how much grief you give me for being wonky on this on camera but it's two-fold off camera. >> i find you're not wonky, you're just ahead of the curve. we think it's wonky and i end up talking about it when everybody's talking about it. >> now were we talking about it last week, i want to get this, i looked at the numbers that economists were looking at over the weekend, lowering their growth forecast, mostly because of the trade numbers that came out higher than expected but it really highlights this growing job growth disparity that's out there. john riley just writing me before i came on, i asked him over the weekend, he says it's like a 4% jobs economy, but a 2%

economy when you look at everything else. so either jobs are going to be revised down or growth issing go to be revised up. i now want to get a little wonkier than maybe you care for. full screen, hours worked suggests, that's if you add up all the hours worked in the economy, according to mark zandy suggests we're doing 4% gdp growth so if we're no more efficient, we do 4%. if we're 1% more efficient we do 5%. hours worked plus productivity equals gdp. the production measures, spending and government and trade means we're like in a 1.5% to 2% gdp growth. it means productivity has to be falling at a 2.5% annual rate if we don't revise one of the numbers. take a look at what some of the guys are saying. morgan saying the combination of strong growth relative to gdp growth can continue for some time before essentially it works itself out and one wins over the other.

goldman agreeing with the concept the healthy job report in a few months seems superficially at odds with the data on economic growth. next chart, gdp -- sorry, productivity could be the this inging that squares this circle. this is like during the '0-'09 recession, john just e-mailing me "i have very little respect for the early gdp print." so that's an important thing. i tell you go is it's an important investment question. which economy do you invest on, the 2% economy from output or the 4% economy from jobs? >> it's an excellent question, and steve, why don't you stay here. we have another guest to talk about the state of economic growth. david greenlaw is morgan stanley's chief economist. where do you come down on the arlgme argument? >> we're right smack in the middle of it. q1 gdp tracking at 1% after the

trade balance data so we're lower than some of the folks. we started at 2.2 a few weeks ago at q1 and weak durable report and weak construction numbers, a consumption revision that took us lower and friday's trade report pushed us down more. after friday's trade number we're down to 1%. >> what about friday's jobs number? >> that gave us a tenth or so, but the reconciliation factor as steve mentioned looked like productivity is shaping up to be very weak in the first quarter. and economists have a little bit of a joke, its it's a very geeky joke about the ochin relationship, ochin lived in a time of rising participation rates. [ laughter ] >> oh, stop, top! >> what? >> what? >> we're getting a declining

participation rate now, causing the disconnect, part of the disconnect. >> you guys. wow. killed me. they kill me. >> david, wait a second. you don't believe that this is going to be a long-term strong jobs market. you think this is just a temporary thing until we catch up with some of the people who have been laid up and let go? >> there's a lot of different ways it could be reconciled, with consistently weak productivity growth, or we can side with strong gdp numbers. there was a reference in the hills and wrath piece that joe mentioned it was working in the downturn in 2008, when there was much sharper rise in the unemployment rate than the output figures would suggest. since that time we've had some revisions that bring the numbers into better alignment. the recession was revised to show even weaker gdp growth so maybe we'll get some corresponding upward revision. >> i love a new controversy. there's always something, isn't there, steve? it's amazing.

>> chairman bernanke talked about it last week at humphrey hawkins testimony, the numbers are doing better but for whatever reason this hasn't translated into higher output growth. >> joe i want to point out it is possible for the payroll numbers to be revised but they do not exist in a vacuum. they've had claims numbers come down, some of the components of the isms showing you job numbers should be strong. you can make an argument payrolls have been lagging relative to some other indicators for a long time. for example the level of claims suggest that payrolls should have been higher for a long time. i'm not sure which way this gets revised and i also tell thaw some of the confidence numbers which have shown average americans are experiencing a better time when they go into the job market, when they look at the job market, that's real information. people go out and know the situation in their industry. when that comes back positive it's also positive. >> steve in that scenario that

you had painted out. >> gary, when you start stevie, i know i need to be a little careful here. go ahead. >> come on, you're down in orlando, you look very relaxed. the productivity, if you pie into that productivity thesis, you were throwing out a couple weeks back about profit margins. there has to be correlation if you see productivity decrease. >> right. >> is the next correlation there that profit margins have to come down? >> i think so. i think that's absolutely right, gary and an excellent point. if you are going to have productivity be crashing at this rate, the economy overall is less efficient. i want to throw out one other idea which is interesting. you guys noticed the adp report shows this surge in small business hiring? not to offend apple pie, but small business is simply less productive than large business. if you're adding more small business workers it could mean overall it's bringing down the productivity rate of the economy. >> steve, you had the key question earlier, what does this

do to the investing environment. mario, we'll talk about that in a minute. do you have a quick answer? >> no, i'm looking at what moves the economy to the takeoff stage and how do you figure out what the next accelerant is. is it exports? is it housing? where do we see next. >> exports look like they could add a little bit to growth in 2011 but now after the numbers we're getting, looks like trade will be a subtraction to gdp growth in the first quarter certainly and probably for the year, given the slow global growth environment. >> david, we want to thank you very much for coming in and joining us today. it's been a pleasure talking to you. >> you got any other, come on, no? geeky jokes. >> why did god create economists? to make weathermen look good. >> i know some economists -- all right, very good, thank you. >> we're going to check in with steve in a little bit. mario will be with us of course for the rest of the program.

>> a rise in participation rate, is that it? >> that's it. >> i got a good one. >> when we go to break i got a good one. >> better than that? better than that one? >> a good economist one, just -- >> all right. up next stock picks -- the hits just keep op. coming, from march goe gabelli, find out what he's buying and why. "squawk box" will be right back. tomorrow, it's "trump tuesday." donald trump joins us for his weekly appearance. the fun starts at 7:30 eastern right here on "squawk box." here's a chance to create jobs in america. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone. from the canadian border, through the mid west, to the gulf coast. benefiting hundreds of thousands of families throughout the country.

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♪ a bit of ♪ a bit of breaking news on the mets. sny and stevie kohn are the only bidders on the $20 million limited partnership units the company is trying to sell after the deal collapsed. i've spoken with a banker close to the situation who tells me that in fact they have not been able to find additional outside capital to buy the limited partnership interests. mario, for $20 million, you theoretically get to take the elevator up to the suites with the owners, get a business cards

that says you're an owner of the mets and i guess you get to take pictures with mr. met but if in fact they're not able to close this $200 million limited partnership interest financing in terms of paying back the money and this construction, there's got to be enough to find three more buyers of the partnership interests. >> gary, i don't know what's in the mix but the crowned jewel is the broadcast rights obviously and a company like cablevision could use a baseball package as part of their program. they've got hockey, basketball, and you know, the ideal world would have been the yankees but that was spun off already. >> the ownership group is not going to, if cablevision came in, said we'll take the remaining $60 million, three limited partnership interests, buy them and hopefully sit down at the table and get some sort of arrangement for broadcasting some of the -- >> gary the russians have to come, the guy that bought the

basketball team moving into brooklyn should buy the mets. >> why are they having a hard time selling the $20 million vanity limited partnership interests? >> i'm not a broker, i'm not selling it. i have no idea. >> why would you want to buy it? >> when the deal collapsed and i think it was almost six months ago they thought they could go out and sell these. in fact it's been more of an inside deal. you've got your broadcast partners buying, you've got the two owners buying. >> i've never understood. >> it's a sad situation and -- >> buy a minority interest where you're not an owner, just giving them money. >> not on attractive terms. >> the mets can only do better. >> better on the field? >> better on the field and better financially. look at the dynamics that occurred the second half of last year. you got to go back to basics. you have tribal passion in dealing with sports. i grew up in the bronx, you know, kind of a die-hard yankee fan, and so if you are a mets fan, how do you get a piece of that? look what green bay is able to

do. they sell you a piece of paper with nothing as wallpaper which is fabulous. >> that doesn't cost $20 million. >> that may be the next, if they can't close this transaction, maybe they go out and sell $1,000 limited partnership interests, if they could do something with some public spot. the same situation. >> gary would you buy a psl at whatever the name of the stadium is out there, citi field? >> i have a psl for the jets. that's a decent team to watch although it's been a frustrating time there as well. >> dr. love, let's talk about some of the things you promised. >> i didn't promise anything. >> yes you did. >> i'll promise you something off camera but that we can't talk about. >> the top of the show you talked about the hidden gems potentially out there, potential breakups down the road. >> one looks at a question mark as to how to surface values. if you're the ceo, you grow basically the underlying businesses. if it's not appreciated by the

market, what do you do? do you do spin-offs? for example, one of our huntsman conference call the other day spent 10, 15 minutes saying wall street does not appreciate the underlying values of my company. therefore, i'm going to do something. earlier today we had pepsi-cola on bringing in a former individual that worked at the company, and they put him in charge of the frito-lay business. the snack business on a global basis is a terrific business. irene rosenfelt is splitting up the business. >> you'd like to see the same sort of thing? >> no, no, no, no, no. i'm saying if i own pepsi at $63, i either am going to, indra, a young person at 56, can continue to run the business, reallocate resources, focus on the domestic beverage business but if it doesn't work and she can't get started the fallback position, i've got two ceos who

can run the separate companies. pepsi has a history of spin-offs. they've done it before. >> she's said many times she want to run the business, looked at the business and makes sense to keep it under the umbrella. how does the mind-set change? >> it doesn't have to. they're refocusing the advertising budget, putting more than $600 million into brands and driving that and gaining share. if that works you have a stock that's 20 points higher anyway. >> so basically you could run the businesses internally as a separate company and try to get some of those -- >> they're doing that now. >> it hasn't worked to this point. >> they had, they made a large acquisition in russia, got themselves positioned in india, going into the non-u.s. markets and in the united states. the red bulls and the monsters of the world have taken a piece of the beverage market which they're not as big in. they have wonderful brands and if she does that you don't need

to have a spin-off. if it doesn't work and the stock sells 63, the fallback position is, she declares victory, okay we have two great businesses. >> split apart. >> the board has seen that before in the history of pepsi-cola. >> what was another one you mentioned? >> another way to make money is to buy into minority ownership of companies, but i was thinking what you were asking me, which is what else out there is a loaded laggard for example in buffalo, new york, natural fuel and gas. 100 years ago they were the gas company in buffalo, like brooklyn union and gas in new york or whatever it's called today. they have about 750,000 customers, still in that business but they bought 1 million acres of land in the marc marcellus area and acreage in utica, below marcellus vertically down and they have a

mid stream business and that mid stream business pipelines that connect the gas and connects them to the major areas, that business could be monetized at some point by having that create an mop and putting a higher cap rate on the company. the stock is about $50 a share. they missed a window to partner up with someone. today for example chevron is in the paper saying hey we bought atlas and want to do more in frac and gain the knowledge of this area and they're going to make those investments. how do you move the gas to the user? >> for disclosure purposes -- >> i own all of them. we're buying pepsi today. i was at the meeting that indra had at yankee stadium, i was at the one in january or february and i think she's got -- >> just on the national fuel you mentioned the mlp do you know if they are actively -- >> gary i say what would gary do if he were running the company. what's so obvious when the stock

is down 25%, because they were not willing to seize an opportunity, carpe diem, all of the companies knocking on a door. we as a country know we have to do natural gas and oil. >> mario will be with us for the rest of the show. we'll get more from him including a few other things he's been watching. when we come back, muhammad el ariane with his laterest on the market. in the next hour, former imf deputy managing director john lipsky joins us. greece, markets and the global economy. "squawk box" will be right back. a a

all right, let's all right, let's take a look at some of the stocks to watch. this morning that are on the list and one that mario just mentioned, zoll medical equipment being bought, 24% premium friday, these are defibrillators, external? >> but more fundamentally is that the yen is very strong, the japanese companies have low cost to capital, they want to diversify and grow and you're seeing that with companies in other parts of the world coming in and doing strategic acquisitions for growth. >> great. also on the list today, we've got sealy, mattress-maker's

second largest shareholders hp partner management blaming poor performance on its largest shareholder kkr, shares down 90% since kkr took the company public in 2006. general mills was downgraded by goldman sachs to neutral from a conviction buy citing disappointing packaged fool volumes. disney time warner, janney is upgrading disney to buy from neutral, downgrading time warner to neutral from buy, feeling disney is less vulnerable and time warner more vulnerable to risks posed by the growth of internet protocol, ip tv. coming up we'll add another market master to the mix this morning, pimco's mohammed el-erian joins us in a bit. and former imf managing director john lipsky on the global economy, the greek debt deal.

"squawk box" will be right back. [ horn honks ]

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duelling squawk masters of the market, mohammed el-erian will join mario gabelli to find the smartest investments forever your portfolio. >> former imf chief john lipsky on the greek debt crisis. >> and tim pawlenty will break down the fight for the gop nomination. the third hour of "squawk box" begins right now. ♪ >> don't move. >> did you no he what this was? you don't like sting. >> you got the overbite and no rhythm. >> this is good stuff. this is a good tune. >> do the sprinkler. ♪ >> ugh. welcome back to "squawk box,"

first in business worldwide. i miss andrew ross sorkin suddenly. >> you do? >> yes, we all do. love andrew, who apparently -- >> oh, this is funny. ♪ >> flew coach. >> that's not the funny part. the funny part is he flew coach and he had someone walk up to him and say joe said you only flew private. >> people believe he takes a helicopter here and flies around on private jets and he's a man of the people. >> there's also great, if you are missing sorkin a great piece in "new york" magazine about what he ate last week and kind of goes through on monday everything that he ate and he threw in there that his wife made a great chicken and he had leftover chicken, after he had lunch at michael's. >> after he stole from your desk. >> i was hoping he'd have nathan's hotdogs. >> no mention. >> mario plugging all the time. you own that one, too?

>> of course. >> to get to the point where people want to know what you eat. gwyneth paltrow, with he know about her bms apparently on her twitter stuff, when she has a good one or whatever. [ toilet flushing ining ] but you need to reach a certain level of "a" list for people want to know what you eat and sorkin is there. i guess it's a health thing. guest is mario gabelli of gamco investors. that smile is a billion-dollar smile. >> because you're tickling my leg here. >> checking out u.s. equity futures, you know, can you keep anything to yourself? >> sorry, joe, i knew we were going to do full disclosure about everything. you asked me what i owned. >> never an unspoken thought. your life is richer because you know it's 0.7 or 0.07? it just confuses all of us, it's

not up very much. >> you're right, in fact it's completely flat if you're looking at the s&p. >> you can say unchanged. >> if you order apple's new ipad online today listen in, you may be in for a little bit of a wait. a notice on the website puts that wait at two to three weeks, comes after a surge in preorders after the product was announced last week. if you ordered last week, you should still get yours on time and apple says it plans to have the new ipad available in its stores on friday. as oil prices rise, president obama is mounting an election year defense of his record on energy. the white house releasing a report that highlights the administration's progress on reducing oil imports, increasing energy efficiency and investing in clean technologies and alternative fuels. white house officials say that the president understands the impact that high gas prices have on middle class families. by the way according to the most recent lundberg survey the national gas price average jumped 12 cents to $3.81 a gallon for regular.

the survey does suggest that price increases are slowing. in our european headlines today, eurozone finance ministers are expecting to announce they will pay their part of a $130 billion euro bailout to greece. nice dancing, joe. >> no, the music. that's the ross music, isn't it? >> it's bad. >> it is, lame. >> the imf will finalize its contribution later in the week. last week's debt swap does not include a messier default or euro exit further down the line. after greece's debt deal officials say the tension in athens is shifting to politics on how to kick-start the troubled economy. there is the great music again. ♪ european equities at this hour are looking like our futures, pretty much flat across the board with. >> liesman is at the common fund forum for institutional investors in orlando, florida, and he has a special guest, i'd like to, when did you get down there, steve?

we'll get the skinny. what day did you arrive? >> saturday night, joe. >> did you go anywhere yesterday? >> no, i was moderating a couple panels. >> oh, geez. >> so you didn't go to harry potter land or didn't do anything? >> no, you know, joe, i don't do any of that fun stuff. if i can -- it was raining so you know. >> all right, take it away. >> by the way common fund is the largest investment adviser for non-profits, they have about $25 billion under management and there's a lot of people that give some of their money to common fund, they invest some else where, about a quarter trillion dollars at this forum. joining us is john lipsky, former first deputy managing director of the imf. >> currently -- >> at john hopkins school of advanced international studies and this is your first interview since leaving the imf. >> it is. >> last week they had the greek debt swap. was that the best possible outcome for greece and for the european economy? >> well, one thing that bothered

me from the outset of this crisis has been the focus on fiscal austerity, at least in the reporting, fiscal austerity and the financing details. greece's problem's fundamentally are the loss of competitiveness within a single currency unit and the most important thing for greece is structural reforms to make that economy more productive and effective. if that doesn't happen the issues of financing details, et cetera, are just that, a detail. now this debt swap and the new program for greece and most importantly the new program, the economic program holds out the hope of real improvement in the long-term performance of the greek economy. if that is successful, then the other financing details are worth it, but the competitiveness and structural reforms as is the underlying issue. >> nobody is talking about it. what do they need to do, if you can keep it short, other than "everything."

>> simply, the greek economy needs to become more effectively integrated into the european single market. >> right. >> their involvement in external trade, despite being a very small economy, has been hardly larger than in the united states, with i is a huge economy, and that tells you that they have not really become integrated into the eurozone. >> the debt swap is supposed to put them on track to having like 120% debt-to-gdp. does that look like where they're headed or is this one oo the things where it's fudged in the numbers? >> no, of course, those ten-year projections are subject to a lot of uncertainty, but when you're making plans, you've got to finally decide what you think is the most likely plan and that's how they came up with those numbers. >> what are we expecting from the imf later this week? >> well on thursday they will be meeting to discuss the greek program. >> right. i saw a lot of warnings from analysts over the weekend, a

third bailout is possible for greece. is that something on the radar? >> there is a program that has been discussed and is on the, is up for agreement and approval. this is the program that they're discussing. >> what about this broader issue that was out there, while you were in office, and then after you left, of a big sort of rescue fund from the imf? is that something you think is going to come together? we've heard different things, the germany fighting with the imf, christine lagarde against merkel. what do you make against that? >> seems to me there's a tendency to conflate various propos proposals. there's an issue within the eurozone for funding the so-called esm-er. this is a strict tour european issue. there is separately an effort under way to find additional funding for the imf from the imf's broad global membership.

>> do you think europe will enter a recession this year and if so, how severe? >> well, the consensus estimates are to are essentially flat or to a small minor recession in europe. the important thing is the current base case, consensus forecast suggests that by the end of 2013, european gdp will be barely higher than it was in 2007, so there's a lot of work to be done to improve the performance of the european economy. >> i would think you would say it's a competitiveness issue, throughout the economy, not just in greece. >> partly competitiveness, partly fiscal balance, partly economic balance but underneath it all is a need for improved productivity performance of the european economy. >> john, somebody's going to write a book about this one of these years, right? we had two different models, one that looked like it was a european model of austerity and one was a u.s. model of higher deficits in the face of the recession. is it too early to say which side won? >> well, at the end of the day,

it's going to be efficiency effectiveness productivity that is going to determine economic outcomes. >> but i mean it seems to me that when europe focused on austerity, now they're looking at minus 0.5 to plus 0.3, and the euro is looking at 1.5 to 2% growth. >> for the third time underlying productivity is going to be central for coming out of this recession and the global downturn and restoring strong growth. >> john, take a step back and look at the broader global economy. there's talk of china slowing down, some of the emerging markets not posting the bigger numbers. what's your outlook? >> looks like using for example the imf's current forecast that the period from 2008-2013 growth is going to average globally just over 3%. 20-year average is 3.5%. so this has not been a period or does not look like a period of

adequate growth. there needs to be better performance. the advanced economies are still now four years after the big downturn, are still operating barely or below a trend pace, need to step it up. >> is there a lack of global leadership? is it an absence of the u.s. say leading? we had a speech last night from ian bremer, i'm sure you know, talking about the g zero, saying nobody is in charge. >> but there is a g-20 formed at the leaders level in response to the crisis. they did create a framework for strong, sustainable and balanced growth and a mutual assessment process to implement a set of coherent international policies. >> yes. >> there is a leader summit in june in mexico in los cabos. >> how effective has the g-20 been? >> remember back to london in 2009, the london summit, it was very effective. >> okay. >> there has been a lot of work going on behind the scenes by

the technical officials to produce a set of policies that will help to carry the work forward. now the leaders have got to show leadership. >> john, thanks for joining us this morning. >> thank you. >> back to you guys and maybe i'll get out to one of those theme parks this afternoon. >> universal. >> joe has a recommendation for you. >> not one of those theme parks. universal! just say it a few times, say it a few times. universal studios! >> universal studios. >> thank you. can i connect some dots for you? nbc? >> he's an economist, you heard what the guy said, you can't -- >> harry potter, mention a few things, "the lorax" harry potter, universal, universal. >> i'll hitchhike that, go to the palms, go to the palms, go to the palms, sounds like gaylord taking over. >> steve, thank you very much. >> there's two universals, the

harry potter one, but the pass is good for either one. they're right next to each other. spider-man is real. >> i haven't been down there. we're going to go. we are. when we come back we'll talk about the race for the white house. former minnesota governor tim pawlenty will tell us why he thinks mitt romney will win the gop nomination. and in the next half hour another squawk master of the market, pimco's mohammed el-erian will join us to talk about jobs, the markets and the economy and mario has a few questions for him about the stall for the economy. "squawk box" will be right back.

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towelcome back >> welcome back to "squawk box." as expected snt snt won the kansas caucus saturday by a large margin. can santorum continue to gain momentum in alabama and mississip mississippi? joining us is former governor tim pawlenty, a campaign surrogate for mitt romney now. governor pawlenty welcome. great to see you. >> good to be with you, becky, good morning. >> good morning. we've been watching how this plays out and it has taken quite a bit longer than some people with anticipated to see where we're going to get down to in the finals. how do you think it plays out in the end? >> i think for numerical reasons

and in terms of the politics and leadership that mitt offers he's going to win the states coming up, alabama and mississippi are states that are more challenging for him but he's got a shot at overperforming expectations in those states and the delegate math is this, he's got more than twice as many delegates as his next closest competitor, rick santorum. he could win less delegates and still get the nomination. he's on the trajectory to win the nomination. you can't take anything for granted he has to earn the vote but it's highly likely that mitt romney will be the republican nominee for president in 2012. >> governor, the politico has a story we started talking about last week, it looks like it's mathematically impossible for any other candidates to get the 1,144 you need. the three of them together could prevent mitt romney from getting 1,144 by the time the convention comes around. what do you think the odds are of that happening? >> not very high, becky.

i think this is fanciful thinking. mitt romney will accumulate the requisite number of delegates. could you imagine a convention there's a back room deal and effort to try to bring in somebody from the establishment or some sort of brokered back room deal? i don't think that would go over well with the activists and folks who put their heart and soul going through the process, attending the process and having the process trying to yield a fair and open result. i don't think we want a brokered back room deal yielding the noom noment know for the republican convention. i think it's fanciful thinking by pundits. >> one thing amazing is watching all of these other candidates who have had well their time in the sun, where we were surprised and we thought mitt romney would be an easy nominee, not the case at all and the three candidates still in it have had their time where they've gotten really much more attention than some of the establishment had expected.

do you ever wish that maybe you had stayed in this race a little longer? >> i had my fair shot at it and didn't get it done. i don't have any regrets. i do regret some of the tactical decisions we made in my campaign but the bottom line is we didn't get it done and i'm honored and pleased to be supporting mitt romney for candidate for president. he's a great candidate. he's going to be a great president, the most knowledgeable and most capable and i think the most electable candidate in the field by far. >> governor, do you detect any media spin on some of that? i don't know about you but i do. down in ohio, double digit, comes back and wins. super tuesday, wins more delegates, more states. every single time the day after it was ooh, ooh, man, this was not a good day for romney. even after super tuesday, every

single story, what if santorum does this or that. you're not just fighting other candidates. you're fighting a lot of media bias. >> well, look, the media has an interest in keeping it alive i suppose. >> that might be it. maybe it's not as conspirtoryial. there's always got to be some controversy. >> there's numbers to look at beyond the spin, who does the best against. aboutment? a recent gallonon poll had mitt romney defeating barack obama by four points. no other republican candidate comes close. the notion he somehow isn't doing well when he has more than double the number of delegates, at worst tied with barack obama in the national polls. he's doing really well. he's tied or beating an indumb went president and winning by more than a factor of two in the

delegate count. >> there could be a method to the madness. he hasn't had to tack so far right so he alienates the middle. he's doing enough to stay electable if you will and hasn't had to move too far right. you could actually say it's working out the way it should be working out. >> well the other thing i think it reveals, joe, there's a resiliency in mitt romney. look at the fact he's been on the ropes and has come back and had a couple of experiences in states for growth. he came back in double digit deficit in florida to beat gng gk, came back from a double deficit digit in ohio to beat santorum and other examples as well so there's a resiliency in his campaign which is showing strength that people didn't perceive and was always there in my view. >> governor pawlenty, always a pleasure to have you on the

program. we appreciate your time this morning, sir. >> good to be with you. thanks for having me. toyota's prius c debuts in dealerships today. phil lebeau will join us next. still ahead pimco's mohammed el-erian will join us. next half hour of "squawk box" coming right back. ur money. ttd#: 1-800-345-2550 at charles schwab, we believe your money should be available ttd#: 1-800-345-2550 to you whenever and wherever you want. ttd#: 1-800-345-2550 which is why we rebate every atm fee worldwide. ttd#: 1-800-345-2550 and why our mobile app lets you transfer funds, ttd#: 1-800-345-2550 execute trades, even deposit checks just by ttd#: 1-800-345-2550 taking a picture, right from your phone. ttd#: 1-800-345-2550 so talk to chuck and put those barriers behind you. ttd#: 1-800-345-2550 without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world. they go into power plants

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welcome back to "squawk box," everyone. sales of toyota's prius boosted last month as gas prices climbed higher. the new prius c goes on sale today and phil lebeau joins us with more. >> this is part of toyota expanding the prius line-up and given the fact that gas prices are moving up it should do well. you look at the hybrids, prius dominates that market. look at how its percentage of market share within hybrids steadily increased every year, one out of two basically being a prius. the new c model, c standing for city, is a small car coming just under $19,000, gets 53 on the road and the city, 46 on the highway. as it goes into showrooms toyota is counting on the expanded line-up to help them gain market share. last year because of the supply constraints in japan market share fell to 12.9% but here is the rub on this. right now, prius and all hybrids are finding it tougher to be sold.

this would go against the grain. you see the market share in terms of overall hybrids, sales dropping every year, even as gas prices have moved up. so with that in mind, we'll see if this new prius does as well as many are forecasting as you look at shares of toyota, like all the auto stocks it's come back strong over the last three months. i also want to throw up a chart of volkswagen, having the annual meeting in wolfsberg, germany. volkswag volkswagen's 2011 profit, $20.1 billion, auto profit mark share or profit share, profit margin he said, 17.7%. joe, that's staggering, 17.7% profit margin on $20.1 billion annual profit last year. for comparison, gm made $7.6 billion. >> yeah, i know. so phil, was your report so well received last week on our show that they wanted you on nightly? how did that happen? you were the second lead on

"nightly" with that great report with the bounty being paid. did you go to cincinnati or you just went to washington for that report? >> just went to washington. you know if it was up to me i would have gone to cincinnati. >> you would have gone to cincinnati, it was florence, kentucky, just outside. >> just across the border. >> great job, phil, great today. >> thanks, joe. >> we should do a poll, what would you feel worse driving a mini van or a prius? >> i drive a mini van. you no he know that. >> you're not embarrassed in mini van? >> no, i'm a mom. i embrace it. >> i don't drive a mini van. [ male announcer ] we know you don't wait

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welcome back to "squawk box," everyone. among the stories we're fooling today, mbi's ceo joseph brown jr. is said to be accused of insider trading. "the new york times" deal book reporting the charge was levelled in court by the four banks that remain in litigation with mbia over the company's restructuring. a lawyer for mbia dismisses this idea in a statement. carlos slim is financing an

internet television network, which will feature on demand content. slim by the way is the main provider of pay television in latin america and he also owns a stake in "the new york times." so larry king -- >> he's back. >> you should follow this. it's got that going for it, would have been an appropriate place for that. who knows. >> larry king gives us all hope. he's almost 80, right? he left cnn, i got new things in the works. to us, that sounds, doesn't that sound good, still getting it done? >> makes sense to me. >> andy rooney, mike wallace, a lot of them. sad to have to, that i have to -- >> sorry that, puts a new meaning on the walking dead. >> it's a big week for -- [ laughter ] big week for economic data. joining on set with more -- have you been on the set with mario, with dr. love?

>> i have been but it is an experience. >> welcome. >> thank you. >> march. >> we have a lot of focus on the squeeze i guess you could call it, questions on how much oil prices will squeeze consumers, and the squeeze on corporate profit profit margins. if you watch when we get the inflation data out the thing to keep an eye on, thursday the ppi, and friday the cpi index. ppi has been hotter than cpi for a couple years now. the latest ppi is about 4% year on year, cpi 3%. if you think about it, it's kind of a gauge for the profit margin squeeze, companies having to pay higher input costs especially oil not able to pass it along to consumers. if you strip out oil from the consumer price index it's lower. it's a sign to some degree that we could see more of this

pressure going forward. >> kelly, two big stories that jump out, the fed meeting tomorrow, a one-day meeting, not a two-day meeting but whether or not they'll have any room to talk about any additional quantitative easing? >> after the press conference at the last two-day meeting and bernanke will be speaking on wednesday so tuesday's meeting i wouldn't expect there to be a whole lot of information, probably it will be pretty simple, perhaps the tweaking of the language in the statement. they'll have to acknowledge that the economy picked up a little bit but again i don't think we'll find out anything other than what we've learned from them recently and if bernanke wanted to push back against the sterilized quantitative easing he could have the opportunity to do that on wednesday. they typically like to use speeches and that kind of commentary, the newspapers, to put stuff out there before they come out and with any surprises. >> the market is not expecting any more talk about quantitative ease so long there's not a disappointment factor? >> there's a question when you

talk to investors and people on wall street ultimately they think another round of qe is coming. some pushed that back to later in the year but they think it's certainly not out of the question that the federal reserve will respond if the economy weakens. that's the one thing we know is clear from everything we've learned about this federal reserve. for now that time line may be pushed off a little bit. they may try to do something to "sterilize" the next round of easing. it seems like that still is an option on the table. if they totally rule it out there's room or disappointment. >> i buy into that namely if the economy slows because of the oil picking money out of the consumers aftertax dollars and you have other dynamics that it's the pistol in the back pocket of bernanke. >> earlier you were talking about the top-down thematic investing before you did the companies and picked the stocks. >> a tenured time frame. >> do you factor in, think further quantitative easing is priced into the market? do you have a viewpoint? >> we look at the following, what is the intrinsic value of a

company over the next five years and present value and interest rates coming down,ence hanss the value, everything constant. what does the market do as we get into may and as we start looking at the ugly earnings that are going to be forecast because of the euro and both the currency and business dynamics and then worrying about the consumer again so the market could have an air pocket and you want to be prepared to figure out where mr. market gives you an opportunity to buy things cheap per >> sounds with the scenario interest rates affecting the private value of companies you don't see the interest rates shooting up at any time? >> no, but within the context of the way i look at the world, if i'm using a ten-year bond i'm using 5%. if the bond market is 2%, i have flexibility. that means inflation is going up and earnings power in nominal terms goes up. >> remember if anything it's low yields that are hurting companies. over the weekend more stories about prudential or the

insurance companies not offering policies in some cases because they're getting to a point where such low long-term interest rates are killing them. >> the variable annuity business. >> people keep saying it's a matter of time before rates rise and we go back toward normalcy. it doesn't appear that's happening. >> kelly, that's correct with regard to the earnings dynamics but the multiple as a function of interest rates and psychology, the present value, if you put cash into pension plans the discount rate comes down, it's sucking up cash flow unnecessarily, they should do a normalized rate with regards to the discount rate on pension plans. if i'm an analyst and the growth rate i've got to elevate that with interest rates where they are. >> speaking of discounted private values, give a little tease, mario gave me a half hour ago a great idea company he invested in, where the private market value disconnect is pretty severe to the public markets. we'll share that a little bit later. >> only one. >> well the one i was turned on -- >> that's because you're a big wheel. >> this one sounded kind of intriguing. >> it is. >> interesting story.

>> always. >> joe? >> thanks, john. i'm not going to mention -- do you want to talk? do you want to talk? >> kelly, joe has this thing -- >> no, that's not my thing. it's you. >> new yoo it's you. when you talk about cpi and -- >> producer price. and you said "pp" four times. >> i can't be on the first person on here talked about. ppi. >> do you do do that, i just said do do. another high level of discourse here. >> i'll feel you in on some more of this later. when we come back, words of wisdom from pimco's mohammed el-erian joining us. "squawk box" will be right back. are you suffering from market fatigue? do you feel confused and out of touch with today's markets? you may be suffering from a serious condition known as information deficit disorder.

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welcome back to "squawk box." this morning we've been watching the futures and so far, it's been sitting right around the flat line right now. the dow futures are down by about ten points. we've seen them up by 10 or 15 points. hanging right around that level right now. >> hmm. um-hum. our next guest is a squawk master of the market, joining us from newport beach is mohammed el-eri el-erian, pimco's ceo and kro-cio and we'll always approach you, mohammed with some of the things we've been talking about. we know you're up to speed on some of our conversations. we were talking about if you can believe it, ochin's law and trying to figure out why number one the unemployment rate went up so much, even though it was a bad recession, obviously, a horrible financial break but it went up more than people predicted and it's come down quicker with slower economic

growth. is this more of the new normal? >> yes, joe and in fascinating it's great to hear you speak about the ochin law. it's better than pp by the way. >> you said it. why do do you do that? do do. >> a lot depends on when you start the story. if you look at the last few months, yes, employment has been growing consistent with a 4% gdp print whereas the underlying gdp print didn't make it to 2% but if you go back further and start at the time of the great recession, that story doesn't hold any more, and the reason why is you've seen the economy as a whole do what the financial sector used to do, which is at the first sign of a slowdown, you manage very aggressively your cost side, and then coming out, you realize that you're too lean and you manage it the other way around, so i think what you're seeing is simply the economy as a whole getting an

economic term more efficient but we get much more unemployment swings than we used to before. >> mohammed, if i'm an investor and i buy a ten-year corporate bond today, and i'm not interested in looking at the price of that bond for the next ten years, i understand it's going to be volatile. what do you tell clients the purchasing power for the principal that i buy that ten-year bond will be worth in terms of current dollars in ten years right now? >> we tell them that whether we like it or not, and we don't like it, we are all living in what's called financial repression, whereby the fed is keeping interest rates artificially low in order to bolster debtors and it is creditors paying the cost for that. that's the policy being approached, that is what's being done in order to deal with the debt overhang, and at the same time try to promote growth. so that's the reality. that's what's happening in the neighborhood. within that, every investor has

to optimize, and you have to optimize with the view to two things. one is how much current income can you get and on the other hand, how safe is your principle? that's the discussion we have. it's not really just about corporate bonds. critically it's about overall asset allocation. you want equities and commodities and foreign exchange and you solve for the whole thing. >> i wasn't using the corporate bond as -- i was using the same could apply to a municipal bond or treasury. if i buy a $100,000 corporate or municipal bond and i'm not concerned about the fluctuation of interest rates between now and maturity, will that principle, will that purchasing power, given the new normal that you see, will that be above where it is today, below or basically at the same price in terms of my capital? >> what the market is telling you, if you look at where break even inflation rates are, and other indicators, is that right now, that corporate bond will keep you just above water in real purchasing time.

you are likely to see quite a bit of volatility in the value of that bond, as interest rates follow different sttrajectories. critically what every investor has to do is maintain on the upside, protecting against the downside. you want to be exposed to growth, absolutely, growth is a key issue, and look for growth in different segments in the united states and around the world. but secondly, as importantly, you want a solid balance sheet. we are still going to go through many years of delevering and you have to have the balance sheet to act as defense. so you want offense on one side and you want the defense and when you combine them both in quite a few companies both here and around the world. >> mohammed, i see we both got the same memo what we are wearing so it's m&m day. rebalancing portfolios, we were

saying going into alternative investments and emerging markets and downplay the united states. the u.s. is an underinvested area, and equities in the u.s. are under invested. do you see that money flowing back in from rebalancing to have a cushion on stocks? >> so mario, since we're wearing the same thing, let me use an analogy -- >> we sing the same song. >> let me use an analogy bill used. if you look at the advanced economies the u.s. is the cleanest dirty shirt. 'not purely clean but it is cleaner than what you see in europe, than what you see in japan. so yes you're going to see the reallocation going on as people realize. the other thing you have is quite a few u.s. companies that have very strong balance sheets that operate in a place where there aren't many questions about the rule of law but that are exposed to the parts of the world that are growing heavily and i think investors are starting to realize that that is a good way also of getting

exposures to emerging markets. >> we are singing the same song as always on what kind of companies like the classic example is coca-cola, headquartered in atlanta, and 80% of the earnings and cash flow and that's a terrific company and run by a terrific management. let's go to the next question. when is the market going to look at the fiscal cliff in 2013 that you've talked about in the past? >> that's important. the fiscal cliff comes from two areas. one is that if we do nothing, there's going to be incredibly contractionary headwinds from revenue and expenditure and second the composition is not efficient. it's what they could agree on but they could agree on when they couldn't agree on anything else that was better. so three possibilities. the worst, the best and the likely. the worst is we let this fiscal cliff happen and the economy is simply not strong enough to

overcome it. there's no other component of aggregate demand that's strong enough and the next thing the u.s. risks recession. we don't want that. the best is that our politicians get ahead of that and actually agree on something that is efficient, not likely with the elections coming up. so the most likely is they're going to find a way to push it back, kick the can down the road again and hopefully during that period, the technocrats will agree on a common analysis. the part of the problem and you see this on "squawk" every day, there is no common analysis. we disagree on the efficient way to combined short term stimulus with long-term fiscal reform and we need that common analysis. >> you're going to fill out a bracket, mohammed, or no? the winner of the harvard/vanderbilt game is going to be the winner of the bracket this year. that's like assigning a 90% probability to the first of the three alternatives you gave me for and namely those in washington will agree on something.

maybe 99% probability. >> yeah, well i'm going to leave the basketball to you. >> oh, you are? >> joe, i'm just happy they signed sanchez for another three years. >> you're happy about that? >> that's weird. >> a lot of jets fans, so i'm not sure why. >> because they want the long-term franchise. >> you have to stay with that. oh, man. >> what happens if the other guy gets hurt again? >> vandy was not a good -- i felt bad for harvard when i saw that, after what happened with kentucky. anyway, thanks, mohammed. >> thank you. >> the basketball score will be as high as their iqs then. >> if you add it up. maybe not. there's been some low scoring games. that su game was -- anyway. when we come back the latest buzz from wall street. we'll be heading down to the to new york stock exchange after this. holy cow it's already 8:50? "squawk" will be right back. [ leanne ] appliance park has been here since the early 50s.

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welcome back to "squawk." carl, jim, and david join us now. jim, i don't know if you heard that last conversation about the upcoming harvard/vanderbilt game. any predictions? >> after that upset this weekend

with vanderbilt, anything can happen. after lin rationality surfaced -- >> is that what it's called now? >> lin rationality, right? >> i was calling him a has-lin. >> i'm thinking the harvard team is not as big feeders as used to be. >> guys, anything you watch particularly in the market today? trying to find something that -- mario has been giving us a bunch of stock stories but not much happening with the overall equity market there today. anything on your radar? >> well, obviously the china deficit -- trade deficit numbers, pretty bad. that set the tone for shanghai. one reason europe is soft today. big school of thought that nothing big on the calendar in europe for the next couple of weeks that's going to allow us to focus back at home. fed policy, fundamentals. that's why we've got a corporate source names between apple, disney, and pepsi. >> disney is amazing. i don't know anyone who didn't see that trail their just said, wow, that one's not happening. >> referring to john carter. >> yeah, john carter. i don't really know john carter,

but i don't know anyone who knows him, either. >> i have not seen that movie, nor do i anticipate that it will be in my viewing future. >> what about "lor raax" i hear him auk talking about remembering the theme parks. "lorax". >> yes, "lorax" is two straight weeks. if we were in orlando and i only know of one -- i know of two theme parks there, both called universa universal. that's all i'm going to say. >> because of the crowds, i was not able to get on the harry potter ride. >> you're kidding. >> no. i got of tell you, this is -- did you have any butter beer? >> i did. i was there recently, too, joe. and the crowds are incredible. >> on that side. on the other side, did you go to the old universal, too, david? >> didn't have time. i had been there previously. i went to the dr. seuss park, talking about the "lorax" but that's transformed the parks, though, harry potter.

>> jim, who is that at those parks? is that the 99%? the beer is $11.50 and it's not alcoholic and there were lines that went around the corner. there were so many people. >> it's the 1% of argentina and the 99% of our country. >> that's right. >> what will the john carter bride look like at disney, joe? >> what would right? >> when hey do the john carter ride, you know -- >> they funnel barrels of money into a pit and it goes away forever. >> right. >> guys, we've got to go. >> it was just getting good, too. >> call. call. >> top team. >> call them. i'm getting -- i'm getting the call. we got to go. see you in a few minutes. all right. coming up, final thoughts from our guest host of "squawk." master in the market, mario. "squawk" coming right back.

welcome back to "squawk." guest host has been chairman ceo and cio, a lot of titles entertaining mario. earlier in the program we talked about catalyst, private market value, you pointed out one equity, one stock who you thought sort of lined up in terms of discount, private value, and catalyst for marking this value. tell us. >> well, there's lots of companies like that. the one we were chatting about deals with the automotive industry, oe production is rising sharply. superior located in southern california. the founder died recently, steve bark has been running it for several years. he may have other things on his plate fo going or ward. $200 million in cash. there's a shortage of capacity at the company to do wheels. so when you think of wholes on cars and car production, what should they do? i think one of the things they'll do is be bought by a private equity group or -- >> your firm owns 4 1/2% right now. you say you've been buying more?