we are joined by scott wopner. we're talking basketball a little bit this morning. >> yeah. >> filling out brackets. >> it's such a crapshoot. on any given day. >> it is. >> i'm trying to do it who beats whom. everybody has beat everybody else. somebody who really beats someone, okay, that's -- but then you look at the other -- everybody has been beaten by everybody. >> last time i did a bracket i picked the name that i liked the best and it worked out pretty well. i honestly didn't though anything about it going in. this time i probably know too much because i went back and changed 50 things. by the way, this is not for money. it would be illegal. >> our results are posted. >> they say this year is probably the year the so-called elites will rise to the top. >> then i will do well. i picked too many of the top seeds. >> you may do well as a result. >> yesterday i had baylor going

far. i didn't have north carolina. i went back and changed everything this morning. not everything but i wept back and emphasized a couple of other ones. >> yeah, don't tell me. i don't want to get influenced by it. >> the guys that aren't necessarily in, they're playing games, some of them. when you make -- when you fill out the brackets and you have a reason to watch, it's like 64, so many games. some i've never heard of. trutv -- >> are they comcast? >> i don't even know what it is. we'll say something nice to them, they could be. an unbelievable channel. like the best. one of the best. >> it is. and it's march madness around here. we have more than just that happening. it's also march madness when it comes to the federal reserve, convening an fmoc meeting. policymakers are seen repeating their plan to try to keep

short-term interest rates at a record low until at least late 2014. economists are saying they will be paying particularly close attention to commentary on the job market because on friday, rather, we got that huge gain in the employment report. that's a pretty big change from the last fed meeting and so the question is going to be how does the fed reflect these changes, these positive changes we've seen in the economy and what does that mean for the potential of ever getting any more qe? >> everyone is coming down on gdp. >> yes. >> which was the whole big -- we had a discussion yesterday, scott. >> i wasn't here for that? >> we also had a joke. >> you couldn't save that for tod today? >> we should run the tape of the joke because this guy took -- he was smiling when he told us. david greenlaw was smiling. i don't know. i can't repeat the joke because i didn't understand what he said. >> it was something about -- >> i don't know. >> lowering and declining productivity.

>> where he was for gdp -- >> yeah, 1%. 1%. >> 1%. so there's a disconnect. >> morgan stanley. >> between this huge drop and the rate of unemployment and what is supposedly fueling that in gdp growth. it's not supposed to be dropping like that. 1% gdp growth, you're supposed to be losing jobs if it's below the economy's potential to grow. >> anyway -- >> how is "fast money" coming? >> excellent. it's going well. >> and all those guys, you've trained them all, they all call you judge now. >> it's just one of those things. >> because once we call you that -- >> we'll play the music. >> i was waiting. that's the only reason i brought it up. i figured there was something there. >> when you hear that, though, it just makes you feel like we're doing something important. >> doesn't it? >> it makes me feel alive when that music starts. >> me, too. i feel good. >> that's why you're here. that's why we want you in here.

we don't really like you. >> that's not true at all. >> a commercial now running, i don't know, it's my money and i want it now, you know that commercial? it's my money and i want it now and they play this theme now. >> do they really? >> you know what's terrible, i know the firm for that. why do i know that? i think that tells you how effective commercials are around here. >> big advertiser. amazing. >> let's get back to the economy. the fed will be talking about that today and we do have a few economic reports of note today as well. at 7:30 eastern time the small business survey will be out. we will get the results from bill dunkelberg. a gain of 1.1% for the headline number. at 10:00 a.m. eastern we'll get january business inventories and the labor turnover survey. employment services company manpower says the hiring outlook has improved over the last three

months in most large economies and that includes the u.s. manpower warns employers could quickly turn cautious if a crisis erupts. in corporate news this morning, yahoo! is filing a lawsuit against facebook. the company says facebook has n infringed ten of its patents. at the end of last year only 56 u.s. patents had been issued to facebook and that's a relatively small number compared with other big tech companies. pharmacy benefits manager will delay chosing their $29 billion deal. the change will give antitrust regulators more time to finish assessing the tie-up. critics argue that a merger of two of the three larger pharmaceutical benefit managers would lead to higher prices and worse service for patients. and former members of the t.a.r.p. oversight panel are blasting the treasury department for quietly granting a tax break worth billions of dollars to aig. it's not the first time. all these companies, citigroup

got one, gm. normally they would have gone bankrupt. all the tax laws get wiped out but not this time around. former oversight chair elizabeth warren and others say the tax breaks amount to a stealth bailout on top of the $182 billion that the insurer received from the government. she argues that the tax break on aig, its shareholders and executives. aren't we the shareholders? aren't we? >> we are but -- >> we are. it's hard to figure. >> i don't think you want to see aig not competing the way others do not to mention -- >> gm. >> what gm does to ford. you've got bailed out and there has to be an end to the bailouts. i' agree. there's a time you stop getting all this paper. >> for citigroup, too? >> i would. >> and gm. >> no, i would not give it to them. >> that's what i mean. >> yeah. you effectively should have gone through a bankruptcy. you shouldn't get the benefit of -- >> you are moving -- you wear

red a lot. you're a red state type now. you're moving right. >> it's a competitive issue. >> elizabeth warren is a democratic candidate for u.s. senate for massachusetts. the chair loves elizabeth warren f. that doesn't get knew scott brown's camp. now she is a democratic candidate from massachusetts and warren told reporters the tax breaks accounted for 90% of aig profit. >> it's just not fair. it's not fair competitively. >> chair. formerly known as cher. that one. >> i was like who? >> she was married to sonny bono. and then there's the other guy, the lead singer, bono. he watches sometimes. sorry, bono. >> he does? >> yeah. remember when roger was in here? >> was i out that day? >> he was watching that day because roj earp was getting texts from him. >> oh, my gosh. i wasn't here that day.

>> you weren't here that day? >> no. >> roger -- >> i know the partnership. yeah, yeah, yeah. >> i think he was only watching that day because roger was on. >> if he's at home in ireland we're on at perfect hours for him. >> he's probably never home, though. >> the perfect hours for him. >> that was quick with the music. >> they're good. let's get a check on the markets this morning. yesterday the markets did end slightly higher, the dow up by 37 points. you see the futures indicate the dow would open up by 87 points today. the s&p up by better than ten points coming as we see strength in european markets as well. there's been some strength in the banks there. deutsche bank, commerzbank leading some of the indices higher and we're moving right along. take a look at oil prices. and you're going to see that oil prices are up by 64 cents. right now wti crude at 106.98. everybody is waiting to hear what the fed has to say late they are afternoon.

that decision coming out 2:15 p.m. this afternoon. the yield now on the ten year is up above 2%, 2.042%. the dollar has been at this point showing some strength. it's up all the way across the board. the euro at 1.3141 and gold prices around $1,700. you'll see $169.99. >> and in global market news, russia's central bank leaving key interest rates unchanged today. policymakers say the current spread between lending and deposit rates is appropriate for coming months. the bank suggesting it is still concerned a record slowdown in inflyiation may be temporary. the boj loosened policy in a surprise move. during today's meeting one board member unsuccessfully proposed further easing by increasing the bank's assess buying and loan scheme by $61 billion.

in other news, china will exempt import duties on a wider list of key technical equipment. another step aimed at shifting manufacturing to import an industry such as cleaner energy and high-tech sectors. >> the united states, japan and the european union plan to bring a new trade case against china. at issue export restrictions on rare earth metals used in a have a ryety of clean energy products. this is the lead story in "the wall street journal" this morning. >> all right. european aviation bosses are urging political leaders to stop an escalating global fight about an eu carbon levee. they are warning that the tax is threatening their industry and has led to $12 billion worth of orders being suspended. all airlines using eu airports have to use an offset for carbon emissions under this new law that took effect in january. a eurozone volatility index is near an eight-month low today

that signals a sharp recovery in investor risk appetite. time for the global markets report. karen tso is standing by in london. good morning. good morning to you, becky. take a look at all the green on the charts this morning. this tells you the level of sentiment. take a look at the broader index. we are tracking up on the order of 1%. some of the stronger sectors out there, basic resources, banks, retail, all trading higher. now eurozone finance ministers have done their bit to help confidence today. we saw late on monday that the second bailout package from greece was approved. this is somewhat rear-view mirror kind of stuff. what is new is the fact this take-up for the bond was higher than the market had expected so is now instead of seeing debt to gdp fall to a target of 120% to 2020 it may be lower at 117%. and let's face it long time since we've had good news for the markets. checking the individual markets today you can see the ftse higher by 0.8%. i want to show you this spanish

market in particular because this is where we saw a lot of the fear start to creep into the market yesterday and with the ibex at 1.2% weaker by more than 1% yesterday while the rest of the markets were tracking higher and you may recall shortly after the fiscal compact was signed a couple of weeks ago it was spain that came out and said it couldn't meet its deficit targets. so instead of the 5.8% or 4.4% of gdp it was targeting it's aiming for 5.8% this year. eurozone ministers now pressuring spain, at least try for 5.3% this year. so the push back has been well received by the markets. worth looking at bonds today. the news out from the index around germany. you can see the reaction to the markets is positive. the yield a little bit higher, 1.77% on anticipation at least the german growth story might be slightly better than expected. guys, back to you. >> great. thank you.

appreciate that. >> in full disclosure i don't want any homemade granola. there's carbs. i'm not having any carbs. i'm not having any carbs. you could even say eggs -- i love your wife but i'm sorry. i'm not going to have any granola. even eggs, kind of. >> what do you mean kind of? >> i guess it did. >> yeah. >> an egg can be an unfertilized egg so it just had a mother. >> it had a parent. >> a parent. politics today, not so sure about harwood. a southern showdown, mississippi and alabama hold their presidential primaries. polls are tight. gingrich is leading but romney is within striking distance. both men along with rick santorum are trying their best to appeal to southern voters. >> looking forward to going out and hunting with you sometime. >> i feel relatively at home. this morning when i had grits i thought it was a very normal

thing to do. >> john harwood is our chief washington correspondent. i moved -- i changed all my brackets this morning and i moved duke -- i took duke long. duke is surviving longer than i had before. i think they're going to -- >> how long? is. >> huh? >> how long. >> i can't remember who i had them losing to. someone good. >> i had them out in the second round. >> i have them winning three or four games and then they finally lose. >> this is a better conversation than eggs versus granola. >> you're made because i said maybe you didn't have parents or something. do you have a yellow tie on? we are so in sync on things. but, john, do you feel the romney thing sort of happening, the inevitability? people down in the south normally it would be slam dunk santorum. the whole electability thing is starting to seep its way even into the deepest south, i think. aren't you feeling that? >> i don't think it's electability. >> what do you think it is? >> well, i think that mitt romney -- >> inevitability? >> no.

mitt romney is a serious candidate. he's a respectable candidate. he's just not all that magnetic but given his assets, given the strength of his candidacy, he's going to do reasonably well. it's just that among the most conservative voters he's got a tough time. he's got gingrich and santorum dividing the conservative vote and so that's an asset for him. look, you know, joe, that i've always said he will be the nominee. the question is, is it fast or slow? and i think if he is able tonight to break through one of these states, that sort of accelerates a little bit. that makes -- >> theoretically he could win both. >> yes, he could. the polls, we know the polls are volatile this year generally speaking. and in this republican primary race. look at the "new york times"/cbs poll that's out today. obama is down to 41%. >> i read that this morning.

i was thinking about you. and i was thinking, you know, i'm surprised you didn't just throw this out and talk to people in andrew's neighborhood because this is not the poll that you wanted. this is not the poll -- i read 41 41%/47%. >> that is what you want -- let's just talk about the poll. >> i would have thought "the new york times" would have started over. seriously. i'm not kidding about that either. i thought they would say these are flawed. >> funny, funny. >> i'm not joking. and they would have gone to a new neighborhood they could get nuls. >> if you're not joking, you don't know how polls are done. but what i'm saying is i talked last night to various obama election campaign officials about this number, and what i heard was jeff geren who his firm does "the wall street journal" poll, works for the obama super pac. he said nobody should forget that nothing is set in cement about this election. so volatility is inherent in this election and it's one of

the reasons -- we were just talking about mitt romney in the south and rick santorum and newt gingrich. why does newt gingrich want to stay in this race even though it looks like he's a no-hope candidate? because of all the voluatility n this election cycle. why does mitt romney have a chance to win these deep south states when people thought he had no shot? we have a volatile election season and nobody can predict with any confidence what will happen one week to the next. >> what's the reason for the rising disapproval rate, or the dropping approval rate, i guess i should say? >> for obama? >> yeah. >> most people are attributing it to gas prices and -- honestly, i don't know. i was very surprised by that because just a week ago we had an nbc/"wall street journal" -- i think we had him at 49. >> right, right. >> for as well as he's doing his job it makes no sense to you. >> you were surprised, too, joe. >> i'll tell you the one thing,

john, that you have not mentioned is gallup flipped in the last three or four days. gallup totally flipped on the three-day track. and they say they're always right and it's 49% approve, 43 di disapprove now. 44% disapprove, and now gallup in the last three or four days obama's approval rating has surged to 49%. disapproval 43%. it is weird. you have nbc/"new york times" -- >> i will say the gallup -- joe, the gallup track has seemed over the last couple of years to be quite volatile and i will say when they had obama on the down side, the obama people were very scornful of that poll. >> so now they like it. >> no, no, but i'm saying that that is reason to question -- if you've got a series of polls. we saw abc/"washington post" yesterday showing obama ticking down a few points. if you've got a couple of other major polls ticking down and

gallup ticking up, i go with the ones showing him ticking down. >> i will tell you, john, just to give you fair warning. if you're not doing better when there's three guys tearing themselves apart when they actually do choose one and if it were to be romney and you start focusing on him and he starts being able to just direct his fire at president obama, i would think it probably would -- this is like the best of times for the current administration. it's only going to get worse from here. but then it swings back and forth. >> but then does it make it all that much more important? this could ride on the economy riding up to the very end if this volatility continues. what day is election day? >> i'm not sure what the number is. >> i believe we get the jobs report for october on friday.

it could push things one direction or the other. most people think the mood of the electorate midsummer of the election year is what is most li likely to harden attitudes and harden voting preferences but, you're right, becky, if you get a very close election, a little breeze one way or the other can make a difference even -- it could be a news event. it could be a jobs event. remember the effect that president bush or then governor bush's disclosure about the alcohol related driving record. >> i don't think he disclosed it. >> tipped things at the end. if you talk to karl rove and his people that made a big difference. >> it did. >> election day is tuesday, november 6, which means friday is november 2nd. we could have a jobs report.

>> we have obama care with the supreme court going to happen between now and then. there's been some other numbers having people say that maybe the first couple of quarters of 2012 might be the best of the year and you could actually see a little bit of an acceleration. >> and i think -- you know, i talked to austan goolsbee the other day. he expects gdp to slow a little bit. he doesn't expect unemployment to come down much more and don't discount the effect of chaos in afghanistan. the shooting rampage over the last few days has changed the dynamics and the atmospherics to the extent people perceive chaos on an important foreign policy front.

we don't know the implications of that. >> who do you have winning it all or do you not want to disclose that? >> duke of course. >> you go with your heart. you go with your heart. >> harwood, would you ever bring yourself to pick north carolina? >> no! are you kidding me? >> never? >> no. >> you could never pick with your head? >> no. the operative organ for me is right here, baby. >> easy, easy. >> we can't see your hand. >> i'm pointing to it. >> your heart. >> i'm touching it. >> oh, my god. well, we can't see your hand. we have a ticker at the bottom. we don't know what you're doing. john, let's go. we've got to go. we don't know where you're pointing. we can't see you pointing at your -- >> right here, baby. >> got it. >> the crude oil bug is in front of you. >> oh, get that out of there. >> thank you. >> i don't want any mystery

about this. >> don't point at your organ. go ahead, scott. thanks, john. coming up, the never ending quest to make money, our next guest won't disappoint you, the top-rated fund and today he's sharing his strategy and stock picks with us. but first, the new nfl year officially commences at 4:00 p.m. today but peyton manning's team visits aren't done. the four-time mvp plans to visit with the tennessee titans following a session with miami coach joe philbin. manning, of course, played at the university of tennessee before he was taken first overall by the colts in the 1998 draft. now as we head to break, check out the global market headlines. tdd# 1-800-345-2550

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welcome back to "squawk." u.s. equity futures this hour, looks like we'll have a pretty good open. futures are at the high of the morning. british police made six more arrests in the ongoing investigation into phone hacking in the uk. nbc reports three of those arrested this morning are the former editor of rupert murdoch's news of the world, rebecca brooks, her husband charlie brooks and former news of the world managing editor.

it is time to -- >> you were on a roll. >> i was going to let you. it is time to make some money. don taylor managing the four star $6.6 billion dividend fund. thank you for coming in. >> it's my pleasure. >> weigh talk how dividends and dividend paying stocks are the best investment right now. that's something you've put into practice with your fund. why don't you tell us about your five biggest investings, they are chevron, ibm, abbott labs, procter & gamble and walmart? >> i believe those are the top five. the thing they all have in common they pay a decent dividend but, more importantly, they have a long record of growing the dividend at significantly and consistently year after year. we expect in general for them to have double digit growth. ibm is coming up in april. i'm expecting a 15% or more

increase. johnson and johnson is coming up in april as well. that actually might be my number six. procter & gamble in april. and some of the others had more recently 6%, 8%, 10% increase. >> and the reason you look to dividend pairs -- >> in this environment where interest rates are so low, no money in cash, traditional investments having very little yield, i think more and more investors have looked to the equity market as a source of yield. the quality yield. so you need companies with a strong balance sheet, consistent businesses that can grow the dividend not just maintain it. really if you're a high quality company and you want to feel confident, you need to be looking at can companies that can grow rather than just maintain it. >> do you worry about changes that could come in the tangs code at the end of the year even if we don't see a plan one way or the other, taxes are going to go up on dividend and how much does that change your strategy? >> i think there's a good chance

you'll see that. it remains to be seen how much. that, i believe, affects occasional decisions. i don't think it really affects market prices. now if you have a stock that's a high enough yield you do the math and it's going to have some impact on that. my company with the 1.5% yield growth i think only affects the valuation but it can inmruns the capital allocation decision which may over time not be positive. although i think these companies had a long record of dividend growth well before we had the tax rate. >> what do you mean, it will keep these companies from raising dividends if they do something else with the money instead? >> make a bad acquisition, buy back stock. >> it's good if you're a shareholder? >> if it's too high of a price is your point. >> these companies by and large have worked in an environment where you've had higher taxes on difficu dividends, have made good capital allegation decisions in

the past. the basic issue is one of capital allocation. >> is there a rate you think is too high that would affect your decision to actually go into some of these stocks? >> oh, i think, well, i'm not sure about affecting my decision going to these stocks but taxed at the ordinary income rate i think doesn't make a lot of sense. i think lining it up with the tax rate on whatever the capital-gains tax rate is really the most logical way to approach that. >> then there has been talk that could go to ordinary income, though. if it gets north of 30%, is that when you start to re-assess the idea of getting into some of these things? >> well, under current law, scheduled to go up to the ordinary income rate which is 39.6% maximum. look, most of these companies have 30, 40, 50 years in a row of dividend increases i've been talking about so that well predates 2003 when you had the preferential rate in the first

place. they did a good job how they make their capital allocation decision. i think you go back to that. i don't think it has for these kinds of companies. >> we want to thank you very much for coming in today. it's been a blepleasure talking you. >> it's been a pleasure. the take on what's like ly o drive today's session. first as we head to break a look at yesterday's winners and losers. in what passes for common sense. used to be we socked money away and expected it to grow. then the world changed... and the common sense of retirement planning

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welcome back. joining us from the futures pit is kevin ferry. hey, how are you? good to see you again. >> good morning, scott. great. >> i'm sorry? >> i said i'm great. >> all right, all right. obviously the fed meeting is going to dominate a lot of the conversation today. we're coming off a day in the markets yesterday where, you know, volume was incredibly light. the range was ridiculously tight. what are you looking forward to today? >> okay, kind of a cool setup when you think about it because the market is near the high. most guys have the same numbers. looking for the s&p is to go towarup. if you're in the market for real equities to hold the stocks and buy the insurance cheap because the vix trading 16 and below provides an opportunity that if there's a big pebble in the water or something brief around

the meeting and the discussion then you can be covered really cheaply there. so that's the real popular trade going on right now, scott. and away from there i think you see the yen all the way back to last year at this time and little better news out of the zew with you no additional benefit in the marketplace. i get the sense is people are cueing up to sell the market some time in the session today. >> yeah, unless perhaps, kev, you get an acknowledgement from the fed that the economy is, in fact, improving. that's been the one disconnect that you've had the job market improvement. obviously at least the numbers seem to show that, some of the data has been better but yet the fed has been slow to recognize that or at least acknowledge it publicly. >> right. they might be forced into a state of denial i guess, scott. but the market certainly in front of him. from a timing perspective post these events the market has tended to just go into

correction and then everybody goes into let's try and explain it mode. so, you know, i think -- i don't think it decimates the core kind of slow growth picture that people are buying into. but we've come a heck of a way since last fall. again, i think one thing i would point out, if the market corrects, it will be the most well advertised and participated incorrection in my career. and that's one of the reasons over the past month the market has continued to kind of hang around. >> yeah, we had the one big down day, what was it last tuesday and that was it. yep. >> right, right. >> one other quick thing -- >> yeah, quick. >> keep an eye out on this libor thing. they are looking to move into this finally. they're going to probe around. whenever they start looking around usually you find things that you didn't want to look at. so they are advancing. they will take a look and try and change the benchmark for

something that is massive amounts of derivative contracts. >> got it. thanks, we'll talk to you again soon. >> all right. when we come back, the supreme court set to scrutinize president obama's health care law at the end of the month. hampton pearson will give us an early look at a judicial decision with far reaching implications for the economy. jobs and health care companies. ♪ ♪

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welcome back, everybody. two years after president obama signed the affordable care act into law the health care reform debate is at a crossroads. we are waiting on the outcome of an important supreme court ruling this summer. as we head into the election next fall, cnbc's hampton

pearson joins us with a look at the road ahead. hi, hampton. >> good morning, becky. in two weeks the supreme court justices planned an unprecede unprecedented three days of arguments on the challenge obama care is unconstitutional. their primary target the individual mandate requiring everyone to get health insurance or pay a penalty. it is the linchpin of the affordable care act. it was the promise of 40 million additional customers, americans who are currently uninsured, that got tok tors, hospitals, the pharmaceutical industry, and health insurers to the bargaining table. but if there's no mandate, much of the market incentive for a top down federal government reform plan goes away. supreme court options include severing the individual mandate, upholding the entire law, are ruling up or down on a major medicaid expansion, or delaying a final decision until 2015. if the justices decide the individual mandate, which includes penalties is really a tax. a possible legal delay has obama

care opponents calling for immediate action. one group, restore america's freedom, has stepped up the pressure on senate minority leader mitch mcconnell to push for a repeal vote before the election. meanwhile, all 50 states are on the clock when it comes to cruiserweighti in creating health insurance exchanges. individuals and small businesses are supposed to be able to shop for the most affordable health insurance plan and get the benefit of tax subsidies. more than $831 million federal money doled out to the states so far but, as you can see, only 14 states have established exchanges. three more are getting close. 20 are studying their options, and 14 more are taking no action including arkansas and louisiana which oppose them. health care experts say the future profitability of the health insurance industry is hanging in the balance. >> insurance could find themselves with very bad risk pools basically individuals that are expensive to insure and very

tight controls on what they can charge and that will really compress their ability to earn profits. >> reporter: now the supreme court and the election outcome will set the stage for the next battleground, implementation by 2014. when it comes to the uncertainty pr for the health care industry, think of it as dodd frank, the sequel. >> hampton, thank you. we'll be watching this closely and, again, we expect this to come out some time this summer, maybe june or july? >> reporter: yeah, by the end of the current term. absolutely. >> obama care was first. i kind of think of dodd/frank as the sequel. we had to put in quicker or were trying to. a lot of laws. you see -- i mentioned this a few times, hampton, the medicare reimbursement goes from 18,000 to 140,000 under the panel

for -- we talked about this. the nine different reimbursements for being attacked by a parrot or an injury from a parrot and three different -- yeah, there's three different reimbursements for being injured by a flaming waterski. >> reporter: well, i'll defer to your scholarship on digging down into the detail of all of that. >> granular. >> reporter: number two, a lot of the taxes, if you will, that money is being collected up front ahead of the implementation which is at least a couple years away. >> and then you've got -- there's a huge piece earlier this week about john roberts and what kind of court he's running and he's not a drastic guy. that's the thing. incremental. he likes to be in the consensus so i don't know what to think. and then you think about how it affects the election, hampton. becky and i have talked about that whether -- if it doesn't -- if the supreme court upholds it, that energizes the right

probably. >> and if the supreme court knocks it down, it energizes the left. >> so there's a lot going on, hampton. >> reporter: yes, indeed. tell me about it. >> all right. thank you. >> reporter: you've got it. >> arguably america's most controversial alternative energy product -- project. both oil prices at record levels, is it more likely to become a working reality sooner rather than later? the founder and president behind cape wind, an energy management incorporated. it's good to see you. >> good to see you, joe. >> so this is the one that we've read about off of hyannis port? do you have the kennedys onboard yet? >> we've been developing this over ten years. it is fully permitted. we signed a lease with the department of intear are yor. we're moving into the financing stage. we've got two power contracts with two investment grade utilities. the reason offshore wind is exciting is because it's an

untapped resource. there's enough offshore wind off our coast to supply more than four times the energy electricity production in the united states. improve the environment, help stabilize electric costs and diversify our energy resources. >> what is the apples to apples comparison? per can kill watt hour or how would you measure it? >> cape wind will produce a billion and a half kilowatts a year. >> how is it competitive with natural gas? >> well, it's competitive because we avoid the external cost of fossil fuels -- >> which are what? >> it's deterioration of the environment. >> factor that out. let's just talk about what it costs per kilowatt hour and whether it can exist as a venture -- >> it can exist as a profitable

venture. it costs 18.5 cents. >> and what is natural gas? >> natural gas is in new england about 8 cents. but you're comparing an apple to an orange because with renewable energy the state has a renewable portfolio mandate so there's a renewable energy credit in there that's about 6 cents. we're providing a long-term hedge against volatile fossil fuel prices and offshore wind producers on peak it produces power where and when you need it. >> who are you buying the turbines from? >> siemens. >> that's the wrong answer. that's the wrong answer, jim. >> why is it the wrong answer? it's the most experienced -- >> 49% owned by general electric. >> you are? >> you didn't do your homework coming in here? you just blurted out siemens. you said, i'm not sure.

we're considering both. >> i've been in the energy business for 35 years and bought a lot of ge gas turbines. >> something wrong with them? >> no, ge really isn't in the offshore wind business yet. >> that makes sense then. >> so we picked siemens. >> you recovered all right. if they don't sell the offshore, you would have bought ge. >> well, we were talking about ge in the early days of this project but we're happy with siemens. they're a great company. >> a big competitor in a lot of areas. >> can i just ask you there was a report that said that project, cape wind, is unlikely to be finished by 2015. i know you've said that. that's from new england's power manager. do you disagree with that? >> what i'm saying -- >> you know what i'm talking about, that report, right? >> sure i do. and basically we expect to start construction in 2013 and the project will be producing power by 2015. >> i was going to say you still need a buyer for half of the output. >> no.

we just recently bought 27.5% of the power so we have so, we have enough anchors between nstar and national grid to move ahead with the project financing. and the balance of the power, 23% to sell, we fully intend to sell that balance, too, so we'll have 130 turbines producing 470 meg watts of clean, nonpolluting electricity off our coast. >> you still need to sell a quarter of the output not a half. >> is the project a success if you sell the other 23%. >> we can make the project work at 101 turbines and we're 77.5% of the power. we expect to sell the balance and it's an exciting project that has the support of labor, environmental advocates. >> are the kennedys still trying to stop it? >> well, you know, they've

spoken out about the project, i met with the late senator kennedy. he's a hell of a nice guy. and basically he was not a fan of the project but governor patrick -- governor patrick who is trying to create a clean energy hub in massachusetts and it's one of the fastest-growing job sectors in massachusetts, is supportive of the project as well as the massachusetts legislature and the congress delegation. >> are there people still trying to stop it? >> there are. and like most large projects, you're always going to have a slice of opposition, but overwhelmingly, over 81% of massachusetts citizens want the project built according to third party public opinion polls. >> how far off the shoreline do you see the turbines in projects like these? >> we're about six miles offshore. >> you can't even see it, then. >> they are a quarter of an inch, on the horizon, we're nine

miles from edgartown, so you have to get in a boat, and by the way, the ferry lines will be doing e in ing ec ing eco tours. and we think it will be one of the largest tourist attraction in new england. >> if natural gas stays at eight cents and the subsidies goes away, it makes more sense for natural gas. >> i made my fortune in natural gas fired power plants, and natural gas plants said it would be low, i sold them in 2000 six months before the enron meltdown, and gas prices went up artificially. >> i shouldn't have asked the last question, we have 15 seconds. >> thanks for coming. when we come in, jay gordon and jimmie dunn.

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billionaire real estate mogul donald trump is here and we'll share his thoughts for the best fix for your portfolio. building and growing american businesses. ♪ sidewalk market master jay jordan on jump-starting the economy, boosting growth and the hi high-stakes race for the white house. plus, "let's make a deal." top financial dealmaker jimmie dunn on where the next investment plays are as the second hour of "squawk box" begins right now. ♪

good morning, everybody, welcome to "squawk box" on cnbc. i'm becky quick along with joe kern kernen and cscott wapner. fed policymakers are set for a one-day policy meeting today. the latest statement will be issued around 2:15 p.m. eastern time. there are no significant changes expected but analysts expect the policymakers to take advantage of the improved economic data. employment services company manpower is sounding an optimistic note, it said the hiring outlook improved over the last three months in the united states and other large economies as well. but they say that employers could pull back in hiring in the event of a crisis. we see more fallout from greece's financial troubles, despite the recentlout, moody's cutting its rating for cypress to bf-1, it warns that sip press has significant risk

from the greek debt crisis because its banks have a great deal of exposure in greece. let's look at the futures this morning and they are indicating a higher open, the dow futures are up 81 points and the s&p futures up by about 9.5. a master in the house this morning, he's an expert in buying and building businesses, roughly $6 billion under management, jay gordon and chairman and managing principal of the jordan company and also you run the notre dame fund. >> i'm chairman of the investment committee. i don't run it. >> chairman of the investment committee. i have my brackets up here, i don't know if i'll out on what you told me necessarily. you have notre dame winning a few games -- >> one game. >> one game. i actually have another -- i have actually 'cuse. >> notre dame has done a great job and the coach has done an outstanding job, it's very much an overachieving team. >> the syracuse game i was cheering. but then the other ones i was

scratching my head about. all right, so the current economic environment right now given -- we've talked all week about the improving jobs picture, but how good really is growth right now in terms of -- >> we're starting to see it in some of our businesses. not necessarily job growth because we experienced great productivity gains in the downdraft and we'll not get them back, we'll try to retain high output per man-hour. we are starting to see the order rates pick up and the vendor delivery schedules lengthen out as they take more time to deliver you know that they are very busy. i don't know how permanent it is, but we're starting to see some positives. i'm not so sure it will affect job growth extensively because in my view when you consider the underemployed and, of course, the denominator, numerator of determining jobs changes all the time. you have 2 million job -- folks seeking jobs out of the market,

that looks like an improved environment but the 8.3% one of the reasons we had this stated 8.3% even though there's 200,000 some jobs created, more people are in the market. you got to clear it out. it's like the housing industry, you got to clear the overhang. you could theoretically have a 20% unemployment in this country if you talk about the underemployed and those that are in the job market, you won't see the 8.3% drift down even though there are some jobs created. >> did someone send you the abbott and costello? >> i read it yesterday. >> it was abbott and costello arguing. what is the unemployment? 8.3% are unemployed. how many are out of work? 16 million, how many are unemploye unemployed, 8.. %, and they are not employed and it went back and forth a page and a half. it's hard to figure out.

>> very hard to figure out. the other thing we noticed we've got jobs available but folks on this 99-week unemployment insurance particularly the blue collar, they are not going to go back to work if they are getting paid to do nothing. >> if it's not a lot more or less than what they were getting paid. >> even though if it's more, it generally is -- i talked to a lot of small businesses, my contemporaries and they are saying they have jobs available, some are not properly trained so they don't have the skill set. number two they can't get them to come back to work. >> they can't get them, they've offered them, and they won't come back? >> one particularly in the trucking industry, the guys are getting unemployment and they won't come back until it runs out. >> how much is this a generational or demographics problem in terms of the people not coming back into the workforce? >> let me give you my little bit, it's a good question. when i got into the business, it

was 4% structural unemployment, those that didn't want to work and couldn't work. we've got a real problem if the 4% is 6% or 7%, what will you do with that many unemployed? it's a difficult problem. i think we've entered the stage where structural full employment is 6% or 7% unemployment. some of the manufacturing jobs are coming back to the country but we don't have a trained workforce and the current administration is doing nothing about it. >> we had someone here the other day who we asked about it. joe, do you remember who it was, it was someone sitting in andrew's seat thursday or friday? >> about the participation rate? >> no, the jobs training programs and the problems with it, and the reason you don't have a better situation is they are not doing things like tax incentives to the companies who actually have the jobs to allow them to be the job trainers, you can't have the government pick. >> my view is all the problems we have particularly in the

economy and job growth and housing market, it will take a collaboration between the public sector and the private sector. the public sector, the administration has so condemned and has such contempt for business, that they got to come together and work together otherwise there's no hope. the public sector cannot solve these problems, they need the private sector. >> you come down squarely on that, so we had ken rogoff of reinhardt rogoff. 45% of the people say that demand is still weak from the severity of the financial crisis because it was different this time. >> right. >> the other 45%, 10% in the middle who just drew and had no opinion. but the other 45% think that it's government policies and uncertainty that -- you say dodd-frank, obama care, tax policy, condemning business, you say all that has something to do with it. >> let me give you one example

and it has to do with the regulatory environment and regulation in which businesses are getting squeezed. the nlrb is supposed to be a nonpartisan mediator to deal wish issues between the unions and the private sector and corporations. but they put in place this left wing unionist to run this thing. it's become highly partisan. look what they did to boeing when they tried to attack boeing for building a plant in south carolina. now, let me tell you how they don't think things through. i'm looking at this, i'm a decision maker, i decide are we going to build a plant here, our group does, or are we going to china, after what they did to boeing telling them where they had to build the facility and who they had to hire and pay. after what they did to bogue, they can do it to us, we're not building here anymore, we're going to china, where we're welcome and they would love to have us there, you multiply me

by the other thousands out there, it's a jobs problem because we're not going to put money into brick and mortar here. >> have you made a decision to actually put something overseas? >> yeah, there's one decision that would have been made, it probably cost 600 or 700 jobs and it's not a lot, but multiply it by 2,000 or 3,000, it is real jobs. that attack on boeing cost this economy maybe 2 million or 3 million jobs not today but over the next five years. >> i just read something over the weekend that said the evidence is in, those that say regulations are causing businesses not to do a thing has been completely refutiated, in sarah palin's words. maybe it was robert franklin and where they just said that people that keep carping about regulations, the data doesn't prove it. so, that's what you -- i mean,

it's amazing that you do have -- >> the data obviously -- >> the decision makers come in tell us, yeah, i've made decisions and ceos i've made decisions based on that. >> the data, it's not immediate data, some will be immediate data because we haven't had a resurgence in job growth but i'm talking over the next two, three, four, five years, the regulations and the environment put in place are -- if we were going to build a plant in the middle of ohio it will take us a few years to do it, but in the middle of ohio -- >> i wasn't saying they knew what they were talking about, i will read straight -- i've seen printed two plus two equals five, and i've seen that, and they'll have ten paragraphs about it, and that's what i read. >> joe, you can construct data and skew it to prove any point you want to prove, all i'm saying is our experience, microcosm of the economy is that this regulatory environment. give you another example, we'll

talk about cost of fuel now and gasoline which some predict will go to $5 a barrel, under this current administration it takes 9 1/2 months to get a permit to drill. there's only been one permit that's been issued in the last 12 months, the prior we have to open up the drilling. >> although drilling's gone up each year that obama has been president. that's what you hear. >> but there's the skewed data, so is the demand. >> right. >> are these traders, you know, skewing the market, sure, on the short term it happens, but ultimately it gets down to fundamental econ101, through and demand, if we want to be independent we got to let the folks go out and drill. >> thank you. we'll have you here until 9:00, we'll have a lot more. let's get investing ideas ahead of the federal reserve policy meeting, donald yakman is

investment manager of yakman assets. your fund beat 96% of its peers in 2011 and 95% for the past five and ten years. you must have good advice on where you are finding value in the market today. >> well, i think this business boils down to what you buy and what you pay for it. and right now you've got a situation where what i would consider -- if you look at them as bonds as opposed to stocks, what we find is that the high-quality, very predictable businesses is where the value is. and, i mean, i'm talking about things like pepsi. and procter & gamble is an examp example. >> news corp. is on your list, microsoft. it's interesting from the tech holdings that you have microsoft and cisco, i read something if

you would have told me ten years ago that these stocks would be in my portfolio, i would have laughed. >> yes. >> and yet they are. >> yes, they are. they are two of the biggest holdings we have. >> why? >> because they're cheap. we look at forward rates of return and on that basis they are cheap. >> how come apple is not in your portfolio? >> it is not. >> that's cheap, too. >> that depends on how you look at it. >> you don't see it as cheap i guess. >> i think the problem with most technology businesses is they're very difficult to predict. apple has done a wonderful job in creating a very high margin niche-type company. the question is, is the sustainability of those profit margins over a long period of time. >> give me the story on pepsi quickly. >> i think it's just cheap. i mean, the very simplistic way to look at it, we look at cash flow, but one of the derivatives of cash flow are dividends.

the dividend yield is a 30-year treasury and the last two years as an example they've grown the dividend 7% a year. you add that together and to us that looks like a aaa bond that's skewed very much on the tail of the bell curve. >> right. do it's good to talk to you this morning, don yacktman. if you have questions or comments about what we've been talking about this morning, e-mail us. and you can follow us on twitter. still to come this morning, we've got breaking news from the nfib on small business sentiment. ahead of the break, let's look at the futures, it looks like the dow will open up about 82 points and the s&p and ten points higher. you can see the changes right there. up next, getting deals done. jimmie dunn has an extensive

list of successful deals in the financial sector to hang his hat on. so, what's he seeing now from financials and is there another deal in the pipeline?

♪ you'll be swell you'll be great going to have the whole

world on a plate ♪ making big deals. unionbancal announcing it will buy pacific capital bancorp, it's the largest bank deal of 2012 so far, joining us right now is the map that worked on the deal, jimmy dunne is the senior managing principal of standler o'neil, jimmy, welcome, it's great to see you. >> hi, becky. >> let's talk about m & a and what you are seeing out there. >> it's good, it's got some activity. we did the encore deal and a couple of devils in texas, we're seeing a little more activity. there's a little more discussion. the market is a little better for it. it has capital and credit being less of an issue than it was. regulatory environment will still be difficult, that's a plus and a minus for it but we're seeing a little activity. we did 28 deals last year and we

usually run about 50 deals a year, so we're well off that pace, but we're trying to do the lord's work and make something happen. >> is the credit the biggest issue, not being able to get the credit? >> capital liquidity and credit are the big problems. this is the only crisis where liquidity has not been an issue and to some degree the fdic has done a spectacular job. so you haven't had the hemorrhaging that forced to people to move quickly. it's about how much they can give back and the rates between dividends and buybacks not how much they'll raise, that's a real positive and you'll have a prolonged period of lower rates and, you know, difficult margins, so that should be a positive. so, you have a lot of positives. regulatory environment still will make it a little more difficult. >> we talked to brian moynihan from bank of america last week who said you'll get through the fed stress this week which is

great, but you have basel looming and the banks have to keep liquidity around. >> there are all kinds of banks, the superbig, they are by themselves, so they have all different issues and they're not going to be acquired by any type, they could deleverage maybe a little bit, but the larger, larger banks don't have a need to do it. the secondary and tertiary institutions is where the activity's going to take place. the big difference, though, i don't merely think of it as a stress test, it's more a capital giveback test. it's how much and how through dividends and buybacks are people going to be allowed to give back and how soon at what rate and investors will decide who has the best news and who has the worst news and they are all nervous because they don't know how it will be articulated and they can't control that, so i think that's a real positive for the market. >> which of the big banks looks best to you right now?

>> i'm not a stock jockey. >> i don't care about the stock. but who do you think is doing the best job right now on the street? >> i think -- has done a good job, but i think he's fought a lot of issues and i think he faced a lot of stuff headup, i think he's been dealt a difficult hand and i think he's done a good job. everybody knows that jamie has done a good job and he continues to do a good job. pnc, my pal, i'm always on with a pal, you all are not pals, but i think jim roarer is the best, i think he's the best. >> of all of them. >> of all. i think he's the best. you know, the greats have the sort of humility to him and i think rohrer has demonstrated over time, because the deeper you dig with him, the better he is. it isn't to say that jamie doesn't qualify for that. >> how does the landscape look

for, say, the smaller broker, dealers, the sandler o'neil some of your competitors? >> well, look, i think our model which was, you know, we never used any leverage, we believe in leverage, we believe in putting the client in the middle and giving that advice. that fell out of vogue a few -- 10 or 15 years ago. it came back pretty fast. so, we're very comfortable with our model. we know who we are. we're going to give advice and execute for clients, that's what we do. we'll try and do it very well and we'll try to do a lot of it. so, that model has survived reasonably well. >> what did you want to ask jimmy? >> one of the thing that concerns me about the dodd/frank legislation we know since 1975 small businesses have created over 60% of new jobs in the u.s., and now with dodd/frank it's very expensive. are these community banks who provide the credit to some of these small businesses, are they going to survive? can they comply?

can they afford to comply? >> it's very difficult with the smaller banks, we had the conference with the smaller banks and stump would certainly be in that category. >> both guest hosts. >> you have good taste, joe. and stump is excellent. i would put stump and rohrer in the same boat. he made the point and one of his things was all of the efforts to go after the big banks are much more painful to smaller banks. this notion of 8% of capital being the floor and not the ceiling that's more advantageous to small banks because they were already there. the problem is the compliance, the bsa issue, all of the regulatory issues are incredibly expensive to small banks. now, that should help ultimately m & a, and no matter how you figure it you'll go from 4,000 to 8,000 banks over a period of time. i've been saying it for eight years, it hasn't happened yet, it's going to happen.

the issue of what it does or doesn't do to the economy, you could make the point that the banks are not systemic and critical, and probably they're not, but one thing we're seeing is when we're doing m & a it used to be they had a deposit base that they wanted and a loan book that they wanted and they had regulatory corporation so to speak. and now everybody is awash with liquidity, so they're not really after their deposits and in many cases because of the regulatory environment the larger banks aren't as interested in the smaller customers, the smaller lending customers, so between their inability to attract capital given their size, that's going to push them towards mergers. and the reality of it is, i think it will have a bigger effect to what you are talking about in terms of credit be i being -- i don't call them marginal, but the smaller players that the big guys can't waste time on.

>> and the think about getting away from too big to fail. >> in fairness because we're speaking at our conference and there's a lot of small banks out there was that these efforts have a much harder, much more lasting, devastating effect on the secondary, tertiary institutions than they would the larger guy, because for them to throw 100 lawyers at something, it's 0.00001, it's irrelevant. >> the consequences are always there. you could bring on unbelievable guests if you would be a guest host. >> i don't want to be a guest host. >> i know you don't. what is worse than coming on here? is there anything worse than coming on here? >> i love come and visiting with you, particularly, you, becky. >> i know you do. i resemble that. if you invite a friend that is a guest host -- >> why don't you come for an hour? >> i won't. >> why is it unpleasant? >> it's live tv, i'm going to say something that i'm going to

regret. 100% guarantee. >> you're not tweeting either. >> i don't tweet. i don't know how to tweet. >> i don't either. >> we have yet another thing in common. >> something could happen to me. i got to do three hours every day. >> but you manage to make it. >> it gets close. >> but i appreciate it and as long as you bring my pals on. >> you mentioned the greatest guest host. maybe you two, then, be a great ceo. >> i'm a private company. i need to get back to work. that's what i appreciate. >> we appreciate you coming and we'll give up on the guest host. >> go ahead. >> let me ask one more thing and it relates obviously to the banks and the big banks. what has a better chance of going up first, your handicap -- >> yes, my hanky ddicahandicap. >> or the citi dividend? >> i think the citi dividend. i think it will go up at a

higher rate than my handicap will go up given that it's a penny now. i'm playing like a dog, though. >> you thought your -- >> no. i don't think that will happen for a while. >> would shoot for 9 holes. >> i played well out there. >> yeah. all right, well -- >> am i done? >> do you want to be done? >> seriously it's like a root canal for him. but you don't have to come back. >> anyway, i love being here with jay. >> and rohrer will be on that day. >> i know, but i've got my college roommate that day, i can't do it. >> you've already got your excuses ready. >> it's not an excuse, it's a fact. >> he sounds like it's real. >> it could be a fact but it could still be an excuse. >> we got to play in georgia. >> who will win the masters?

>> that's a good question. >> there are so many good players, aren't there? >> there always are. the thing with tiger is worrisome for the tournament not so much for him. you know, there's a lot of pressure for rohrer to do it. i think the whole world will be pulling for him. you know, i played the other day with a guy that hits it a mile, b.j., he putts pretty good. he doesn't putt very well. >> how could you pick schwartzel? >> i told schwartzel's mother the year before we were in the ninth grade and the fellow was there and schwartzel was coming up and he said, who is that, and i said that guy is going to win the green jacket. and a woman turned around and said do you believe so? i said, absolutely. well, i'm his mother. and this is his fiance, and now i happen to say everyone is

going to win, it wasn't as analytical as she thought. he's got the heart. guys like that win. when it's in here. it's got to be in here on the back 9. >> it's so nice to have someone that says nice things instead of trashing them. can you imagine if you were trashing him? >> there's nothing to trash about him. yes, no, thank you. he wrote a wonderful thank you note. he's a classy guy. most foreign players are very, very nice. that's why i don't do this show. >> i know, i know. >> it is a contrast. >> anything else about the banks you want to talk about, joe? >> no, we're done. >> jimmy, thank you very much. >> thank you. >> you bring so much heat, that's why i'm even nvious that don't come more. if you have questions about anything you've seen on "squawk

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the latest on small business sentiment out from the national federation of independent business, steve liesman is here with more. >> the nfib index rising 0.4 to still recessionary levels. joining us from philadelphia nfib chief economists, bill, good morning. >> good morning, steve, how you doing? >> you know, bill, we started this thing when it was in the -- what's the right word that i could use there, the pothole, is that fair to say, and it's barely, what, clawing its way out right now? >> that's right. we've had six monthly gains in the index and it's still below where it was in february of 2011, so, you know, the whole year and we're still, you know -- 0.2 of a point is not much difference so we're about where we were a year ago.

>> that doesn't concern me as much, because we had the decline and we're on our way back up in 2011, the real issue is over that whole time period we haven't come back to what is normal, around, what, 93, 94, this thing should be, what, about 100? >> the average going into the recession in '08 was 100, so just to be kind of at average we should be many points higher, another six points which would be 60 percentage points on the ten components, that's an awful lot. we're way down and we need to see it move up. >> higher retail sales expected went up, inventories went up. but only four of the ten components went up. what is troubling small business right now, bill? >> a lot of things are troubling them, everybody complains when we say uncertainty, but when we talk to the small businesses out there, they are not sure what is going to happen to them, they don't know what taxes will be, what will happen with health

care, a lot of regulations still coming down and they're still unsure where the economy is going, you look at the surveys and more think more government policy is bad and not good, and they are not sure that we can solve the problems and get on a good path that will support growth. >> i brought two charts i want to see if i can put up here. when you look at -- you know, people are talking about regulation as an issue for a while and then there was the debate about real sales. what i think is interesting about your latest chart is sales have fallen as a problem and regulation has increased, so now those who were complaining about regulation, the data is just now starting to back them up. >> sure, the way we asked the question, you could only pick one thing as your top problem, it doesn't mean the other things aren't, so for a while we're in the horrible recession, the worst recession since the '30s and they picked sales but now we've got as many saying taxes and preglations and red tape, a

total of 40% as compared to 22% say sales so we're kind of getting back to more normal trends there. >> it's sort of a good sign where we're back to this area. the other thing i want the guys in the back to put up is the question is small business hiring. month after month we've been there, and small business is heading over 100,000 workers, look at the gap there, you can't see this bill, but the blue line represents adp and the month over month change and the yellow line is the nfib survey, and that's barely zero, who has it right, bill? >> nfib has 300 member firms and we're taking a sam ple of them, i'm not sure what adp's clients like and they've got likely different members for us. we've got a 139-year history and relates to what's going on in the economy.

we think we have it pretty much right. we have big samples there and we don't have a whole lot of sampling error there. >> small business hiring is not as strong in the nfib survey as indicated by adp and people need to know it's another thing, the nfib survey undermines that. thanks very much. >> take care, steve, thank you very much. >> they didn't have the chart i wanted but it shows regulations up there as one of the most important problems and demand still is coming down. which is a luxury -- >> do you know what data? it's trump tuesday. time for another weekly insta installment -- >> am i supposed to know that? >> most people do know that. >> well done. >> donald trump is chairman and president of the trump organization. you think, donald, that we'll know more after these southern contests? >> well, i think you will. i think that mitt romney's doing much better than a lot of people have thought. he's way up now and he's got a

good chance of winning and i think if he wins, it's getting to be close to being over and that will be a great thing because they can focus, then, on president obama. but i think that it's going to be a fairly good day for mitt romney. >> what do you think -- now, gingrich, do you think he's the first to drop out and do you hear -- you have your ear or a lot of people go after your ear, do you hear that maybe he's getting close? >> well, you don't really hear he's getting close, you know, there's no real reason for a political person to drop out. other people have to drop out because people have to go back to business and they have to make a living and they have to run companies. but a politician never has to drop out. as an example, rick santorum who lost so badly in pennsylvania said i'm going to now run for president, why would he drop out? he gets on to a commercial airliner and he pays $109 for a ticket and the news interviews him, and i don't know when they

drop out but they should, and they should drop out because people are getting tired of what's going on and they want somebody chosen, i think they want romney and i think they want somebody to go out and beat president obama and get a new president. >> you know something about branding and just hearing that from you, suddenly, i think you're absolutely right about that one. why would santorum -- if it were you, you never pretended to run for president for your brand or anything, right, donald? >> i would never do that. >> the headline of "the washington post" says the gop contest shaping up to be the cheapest race in years, that the candidates have spent half as much now as the gop candidate did four years ago. do you think that speaks to a lack of enthusiasm about the candidates? the economy in the current situation? what does it mean? >> well, i think it speaks to almost what i just said where a candidate doesn't have to spend that much. you have television, you have interviews every day i get a call could i be on "fails tce t

nation "or "meet the press," there's no reason to spend hundreds of millions of dollars to run for president you can do it for a lot less especially if you have a way of getting publicity. and in the case of santorum, he's done that, he's done a good job of it, but he's done it. he gets on the news and he doesn't have to spend money on commercials. >> it's interesting, donald, you think it's more about the media attention and less about the big superpac money. >> i think if you understand the media, you can get a lot of attention, i think the super pac is amazing for some people, but i'm sure they have no idea what's going with the super pac, you are supposed to be absolutely isolated from the super pac, and i'm sure they never speak. when they do the vicious commercials about each other, i'm sure they never talk to the people running the pac, because

you know they're not allowed to, what a joke. but the super pacs have a influence, there's no question about that. >> i asked this when we had governor romney on the day after super tuesday and i said, the obama administration has a billion dollars. what are they going to say about you, and how are you going to try to refute what they say? what do you think they're going donald? >> i think they'll say the same thing that everybody's been seeing all last year, that's the good thing about the lengthy and now getting boring primary, it's really been said,said, and i th when obama says it, oh, we've heard that stuff before, it could very well be the reaction. now, on the other hand if oil prices go up, and i just saw some amazing polls on romney versus obama where it's at least tied and maybe obama's losing, and he's getting very unpopular. people are getting tired with what's happening. i heard your previous guest talking about real unemployment and it could be 23% and that really is the number.

it's over 20%. it's not 8.3% and i really think that the polls are starting to indicate that president obama is losing it. and i believe that if oil prices go up just a little bit more and maybe if they don't have to go up more, but they will be, because right now it's an all-time record for this time of the year, in the summer they predict $5 gasoline, maybe $6 gasoline, if that happens obama cannot win the election in my opinion. >> yeah, so, donald, it's jay jordan. >> hi, jay. >> i wanted to ask you about the credit markets and how it's affecting your business, have you seen more liquidity in the real estate business or is it still fairly tight? >> no, there's no liquidity. if i can borrow money, i can get all i want. if you need money, you can't get money. if somebody is a great developer, as an example, has a wonderful development, has a good track record but doesn't have a lot of money, but a good

developer, somebody that will put a lot of people to work, they go to the bank and they won't take their call. if you have a lot of money and you don't want the banks, they're calling to lend you money. the banks have been very disappointing in terms of a lot of things but certainly in terms of the real estate market and homeowners that have wonderful records and have paid their interest rate and everything else on time or before time, when their mortgages come due, the banks are demanding that they pay them off. i mean, it's really a terrible thing. the banks have treated the real estate people and people that have houses very, very poorly. >> i can't believe you bought doral before the tournament, we know you got a steal on that. we want to talk stocks. do you feel comfortable talking stocks? we take it with a grain of salt. i know, you are an amateur stock picker. >> no, i'm an amateur because i listen to you, joe. >> i will keep you an amateur.

>> as you remember, i bought a lot of stock based on cnbc and based on joe. and becky, by the way. and i bought a lot of stock, and procter & gamble and some others and it was about a year ago, wouldn't you say? you were the one. >> yeah. >> so, my stock, in fact, i was just watching your previous guest yachtman and he had a nice record and i notice he had pepsi on his list and procter & gamble a stock i actually have and a couple of others and i'll go out and buy some. this is after doing massive research, but do you know what, if i respect somebody and somebody has a good record and i happen to see him on cnbc on your show, i will go out and buy some of that stock, so that has been -- i haven't been paying the 2 and 20. you know, the 2 and 20? i'm not a big believer in that, but i go out and i see somebody on your show who is impressive and i'll go out -- if i agree with them, i'll go out and buy

some of the stock. now, my timing was better than my knowledge. >> you bought bank of america. >> i bought bank of america in the 6s. >> it sounds like a "fast money halftime report." it sounds like a perfect place for donald trump to come on. >> if i like somebody, i buy the stock. if i don't like somebody, it's called a pass. >> have you bought anything recently? >> procter & gamble i will buy some today because of your previous guest liked it and pepsi, some of the other companies i've never heard of. >> yesterday we had mario gabelli on, and he was talking about pepsi and saying it's an interesting play because you could eventually, you've got the strategy to keep the whole company together, but he says because of frito-lay, if that doesn't work and the market doesn't respond, you could see it spin out. he thinks there's more value there if the market doesn't recognize it. >> mario is a friend of mine and he's a great friend financially

and he plays at my golf courses, you tell him to go out and buy a little extra pepsi. >> i'm telling you what mario said yesterday. >> mario's a great guy, he's a very knowledge beable guy. >> did you fill out a bracket for the tournament? >> no, i'm not into it. i like watching the final couple of games but i'm not into it. >> i don't know why, suddenly i never was before either at this point, but now i am. but don't -- you make it a point for him to go on "fast money"? >> no. if he is looking for potential stock picks, that would be a perfect play, maybe he'll like the traders and he'll like what they have to say and he'll go out and buy the stock. >> you really can do well, joe, by watching and listening to a lot of your guests. i really believe that, this is not games. >> we've never been able to, you know, invest in -- i think it's good that we're --

>> i'm not talking about for you to do it. >> but i think over the last 20 years probably. >> yeah. but your listeners, watching and listening to some of your guests, you know, hey, look, the market has gone up since i went in, the day i went in, i told you, i'm going to go in today and it's sort of interesting and at some point i may say it's a horrible investment and the market crashed and that could happen, too. the bottom line is i love real estate, i bought doral country club, i bought 800 acres in middle of miami and i love it because i think you'll have massive inflation at some point, and i really believe that, and to me real estate is a hedge against inflation instead of gold which you can't touch. >> with you in that camp, you know how far phil ackman, he said single family housing, buffett said single family housing, donald said single family housing. >> i think it's a great time for a small investor who really wants to buy something, i think it's a great time to buy a house

whether you live in it or rent it out, because the banks and now i told you how bad the banks are, they are, they've been terrible, but the banks own houses. you should only buy a bank from a bank that owns the house because the bank will give you financing for that one because they want to get rid of it, if they're involved and they own the house, i think it's a great deal to tell that bank i want a 30-year mortgage at 3%, you know, et cetera, et cetera, this is an amazing time for people to go out and buy houses. >> did you finish the taping of t "the apprentice" >> who is the biggest freak? >> we've got a lot of them. but ferrigno -- >> who? >> lou ferrigno is having a tough time. >> we fired michael corolla and mike at ferretti and cheryl tiegs, it's an amazing cast and it's doing well. >> do you know what i want to invite as a contestant?

>> go ahead. >> george will. >> he's a loser. i don't like having loser on the show. >> he's the guy that said the republicans shouldn't focus on the presidential election because they won't win and they're tied in the polls, you know -- >> i want you to fire him! >> the problem with george will he'd be fired the first night. >> i knew i could get you on that. donald, thanks a gen. >> okay. have a good time. >> it would be a hard tuesday if he wouldn't come on. >> he said he would. >> you are good the way you set that one up. >> with will? >> yeah. coming up lawrence myers previews the fed meeting and talks policy strategy, and ron paul joins us to talk about the state of the economy and the presidential race. optionsxpress, where you can trade your favorite products,

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i was out there. former news international ceo rebekah brooks is among six arrested this morning in connection with the alleged phone hacking scandal. she was editor of "news of the world" at the time the hacking was said to have taken place. they were taken in on suspicion of conspiracy which may mean the investigators are focusing on possible cover-up efforts. coming up we'll preview the fed meeting with former fed governor larry meyer, and scott walker will be talking politics, taxes, and business, "squawk box" will be right back. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national.

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the fed's open market committee meets today, larry meyer will tell us what to expect from the meeting and how the markets will react and what it means for your portfolio. the race for the white house gop presidential alabama and mississippi. wisconsin governor scott walker will join us to break down the

race and texas congressman ron paul will handicap his prospects in today's contest. and breaking economic data, the government's latest retail sales due out at 8:30 a.m. eastern, the third hour of "squawk box" begins right now. welcome back. welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe kernen along with becky quick and scott womer in, andrew ross sorkin is off this week. he'll be -- when he gets back. >> i say where you go. >> no one -- i'm not happening. i mean, if i knew, you know, he could get mobbed down there. nobody is going to mob me. our guest host is jay jordan,

chairman of the jordan company. checking u.s. equity futures they've been up most of the morning, if we take a look at it, up about 75 points just under 40-point gain yesterday and as someone mentioned, it's been a week now since the sharpest break of the year and it's been sort of a nice slow, steady move back up to almost 15,000. >> the s&p closed higher. >> 1260 or so this morning, so we may make another 13,000 today. >> it's funny because when we had the big pullback, everybody thought that was the beginning of something potential lly wors. >> a halftime thing to check in where the market were at 12:00 noon today, that's what i would be looking to do. >> i'll work on it. >> you were saying it was the "fast time --" >> halftime fast money report." >> work with me. >> we get along well. >> in our headlines this morning

employment services company manpower said the hiring outlook has improved in the most large economies including the united states, but manpower warns that the employers could turn cautious if a crisis erupts. small business confidence rose to a one-year high, according to the nfib survey, the optimism index marks the sixth consecutive gains. and yahoo! is filing a suit against facebook they said that facebook infringed ten of its patents. at the end of last year only 56 u.s. patents had been issued to facebook, that's a relatively small number compared with other big tech companies. and in our european headlines, more fallout from greece's bailout, moodies has cut cypress to ba-1, and warns that cypress has, quote, very significant risk from the greek debt crisis because its banks

have a great deal of exposure in greece. take a look at european equities and you'll get a good read at how things are looking across the pond. looking good. gains in the green from london to athens, becky? the federal reserve is holding its one-day policy meeting today, they'll be paying attention to the commentary on the job market since the gains in employment from the last meeting, and joining us to talk about it is larry meyer, he's the senior national director of national macroadvisers and steve liesman is on set with us, we're not expecting a change in policy, but it will be pretty interesting to see how they detail what we've seen with the economic numbers. they've been pretty decent since then. >> yes. the fed will be very cautious about upgrading. it has to recognize that labor market conditions have improved so that's one thing we'll see in the statement. otherwise we have to recognize increase in commodity prices and put it in perspective in terms

of transitory and not worrying about medium-term inflation. maybe a little less concerned about downside risk with the calmness in the euro area. but what people really looking at are the final two paragraphs on policy, okay? this is basically boring, fully anticipated. i was telling steve maybe we'll talk about the ncaa march madness and we'd have more fun. >> we have been talking about that. although, steve, idea we had a pretty interesting conversation where we talked about gdp, and they were looking for 1%. maybe it shakes it up a little bit. >> a big disparity what the payroll numbers are saying about growth and the output numbers are saying about growth and i think the fed will be puzzling over that and the participation rate. what we're looking for, becky, is a signal about june, right? because june is when the twist ends and the way the meetings are scheduled is very interesting. it's march, april, and then a

big break until june. so, april is queueing up as the more important of the meetings as to whether we get a signal that the twist continues. >> what are the odds right now? what is the market expecting? that it's done or over or what? >> i think the market should believe that there's extremely low chance that operation twist will continue. the fed has very few short term assets to securities to offset the purchase of longer-term assets, that would be the most unlikely development i would think. >> why is the fed seemingly slow to acknowledge even crow incremental the improvement we've seen in the economy and the labor market? >> well, they will recognize it more today, but after all, growth in the first quarter, we talked about steve's 1%, 1.75, that doesn't merit more than -- you have to be cautious about it. the momentum suggests growth around 2% in the first half. you don't want to get very optimistic.

>> sure, but the chairman has almost been i think it's fair to say downbeat in his assessment and others and the data would suggest that maybe he should be more upbeat, fair? >> i think it's fair. i think if you're the chairman, you probably want to be cautious, okay? you don't want to be over optimistic, you would rather be wrong because the economy is better than expected rather than be wrong because it's worse than expected. i think he's telling it like it is, the headwinds are out there and the labor market doesn't tell us anything to get excited about. >> everything is about the reaction of the market to the late 2014 promise. bernanke has huge constatements about what he can say about the economy. because the late 2014 promise is basically, you know, really on tenterhooks right now. if he says anything that's read as too optimistic, all of a sudden the market will bring that date back and you'll have a pop in long-term interest rates.

you have to maintain a reasonably downbeat to very neutral view on the economy or people will start to backprice that date of late 2014. >> hasn't he in a sense boxed himself in? >> very much so. very much so. >> a lot of flexibility here. has to change the guidance because the forecast changes. can't change the guidance if the forecast doesn't change but there's a lot less flexibility. >> late 2014 there's very little you can say right now because if you think about -- if you are going on a long trip, if you change your angle just a little bit, you could end up 100 miles off and i think that's really an analogy for right now. >> which is why you don't want to shoot for way out. >> we'll ask in the fed survey that we're putting out right now into the field about how much the market really think the fed's going to stick to the 2014. larry, if you had to guess, what are the odds that the fed remains, quote, exceptionally low until 2014? >> we think it will be the second half, later in the second

half, but maybe september. hard to pick a meeting. but you have to ask yourself this, right now they are saying they will stay on hold basically until the unemployment rate is 7% and inflation is 2%. does that smell right? >> no. >> okay. >> i think they're going to be dead wrong on inflation. i think inflation is going up. >> let's ask jay sitting at the table, as an investor are what do you make of the messages and the signals the fed is sending out? the >> one thing i wanted to mention, those of us in the world of commerce and businesses, we're planning for the hammer to drop, the hammer being inflation. we look at long term when is it going to happen. i know the fed has been sterilizing the reverse repo programs and they are able to keep the money in check but when they are going to reduce, and lower the balance sheet and we think it's going to be hyperinflisary, that's how we plan our business. >> it's one of the worst investment decisions you could ever make. you'll regret that. basically what you're saying is

you think bernanke is lying. >> no, no, no. >> i'm sorry, i'm sorry, you think he doesn't have the right model of inflation, he would allow hyperinflation. not a prayer. not a prayer. if you wanted to forecast inflation three or four years out and you don't have it close to 2%, i don't know why. balance sheet, no impact. level of reserves, no impact, so you have a different model of inflation, hey, you like the hawk on the committee, you got good company. but it's not the model that is the mainstream model that the chairman looks at and the board staff looks at and rules monetary decisions. if i caution people, i hear it among clients, but i tell them worst decision they could ever make is to bet on that. >> i think it's a political model, too, which is how much tolerance is there in america for inflation to stay above 3% or 4%? i don't think there's very much. >> i don't think so either. >> i think if we get a high inflation almost no matter what the unemployment rate, i think the fed will act and i think it

will do so generally with the support of the american public and i think that matters a lot. >> what number matters to you when you start looking at inflation? what would make you nervous? i happen to think 2% to 3% is healthy for the economy, but we're worried about the hyperinflation and how the fed will get out. >> i think you have to appreciate at a 3% inflation rate, everybody's a hawk. there are no doves on the committee. everybody wants to be the biggest hawk on the committee to show that they care. the most important variable for the fed is really long-term inflation expectations, no central bank can afford to have its credibility undermined, that's not just the fed, that's every central bank in the world, okay? >> but you have to hear what he's saying, if the fed does not have the support of the biggest men, you know, and the public that it has the credibility to bring it down, then the fed has a problem. no matter what the reality -- what you think the reality is, the public has to believe in the fed's inflation-fighting ability.

>> that's easy, though, it's the fed actions that count here, if the fed stands back -- >> and all the actions of bernanke have been dovish. >> but it's unprecedented. the chairman is an activist. i believe he's hawkish. if inflation picks up, he'll be the first one. >> one of the things we're looking at and we have a global view is we think china is going to reverse itself, has been exporting deflation and i think in the next five years it's going to export inflation. so, we look at that and we say, hey, you know, you put all the factors together we anticipate an inflationary environment. i don't mean 20% inflation or double digit like we saw in the '70s and the like, but, you know, we're talking about 5%, 6%. >> 6% in china, okay, the question is, hey, i don't want to say we don't care about china, but let's say we don't care about china, what we care about is what happens to inflation in the u.s. -- >> but how much of it could come

from central banks in other places? it seems that the feds have no control over. >> so, what central banks? no central banks other than china that we're talking about. so, that could be an example. let's not get carried away here, there's a secondary impact on inflation and you're talking about hyperinflation, okay? >> how do you define sorry. )jj >> hyperinflation is usually defined by -- >> triple digits. >> oh, no. i never suggested that. >> hyperinflation is above 3% and below 5%, that's unacceptable. >> when i would go to moscow, something was 60 rubels and then it would be 80. >> and it depends on what happens to oil a prices and the hike. the fed is worried about medium term inflation, what are they

predicting for the next year and the year after. you can't do anything about inflation this year, okay? if it's lower and in line with your objectives the next year and the year after, just sit back and tolerate and let everybody know that you have confidence. you look at inflation expectations, they're supporting you, they're stable. that's where the fed is right now. >> why does bernanke, then, make any comment on what he thinks longer term inflation will be, when he talks about gas prices he said it's a short-term effect, long-term inflation will remain whatever he uses, mild, benign? >> the question is do you think oil prices will go up every year by 20% or do you think that oil prices are going to stabilize at the high level or even decline. stabilize at the high level, not an inflation issue. reverse, brings down inflation for a while. so, we don't want to get -- we don't want to get happy in the terms of inflation prospects. if oil prices decline and inflation is very low, that

doesn't tell you anything. the same as if the headline is high. >> if you just think about global leverage and what it's going to take just to deleverage and how many places are just going to have the printing presses on. i mean, it just doesn't seem like a very big stretch to say we've lived everywhere well beyond our means and you look at our entitlement problems here and how intractable everything is and it's every single currency, every fiat currency will be debased as far as you can see into the future. and was william g. miller, who was the last idiot -- >> please, please. >> who were those guys that resi presided over the hyperinflation in the '80s? it happened before, larry. >> the '70s are a bad example. because we know monetary policy was terrible. >> definitely france. >> bad policy. >> but we didn't know what good policy was in those days. and inflation -- >> we got it figured out now,

ah! run! >> with respect to inflation, oh, come on, any central bank can control inflation. okay? that's kindergarten stuff. >> you are scaring me. >> you raise rates enough, you bring down inflation. >> i think joe brings up a point about debasing currency as a solution to the entitlement problem is a serious issue, and, joe, i will tell you that will create an interesting conflict between the treasury and the fed. my guess is that the fed would not allow that. >> long-term capital had it all figured out, too, larry. >> steve is exactly right. >> but i don't know who wins. i don't know who wins. >> if you have an independent central bank, this is when independence matters, when treasury is wanting higher inflation, wants to keep rates low. >> right. >> wants the currency to depreciate and the fed wants to focus on inflation, so that's the real -- when you talk about higher inflation, you are talking about independence of the fed. so, if your story is 3% to fi5%

the fed loses its independence and congress makes a decision, i'm with you. >> larry, thank you very much for coming in. and, steve, thank you. >> wow, okay. anyway, coming up wisconsin governor scott walker is joining us to talk about the health of his state and the breakdown of the gop race for the white house, and in the next hour, republican ron paul, congressman ron paul will talk about today's primaries and so much more. we'll see what he thinks about whether it's -- [ baby crying ] ♪ what started as a whisper ♪ every day, millions of people choose to do the right thing. ♪ slowly turned to a scream ♪ there's an insurance company that does that, too. liberty mutual insurance. responsibility. what's your policy? ♪ amen, omen

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america's beverage companies are delivering. welcome back to "squawk box," everyone. making headlines in the united states, the united states, japan, and the eu plan to bring a new trade case against china, at issue chinese export restrictions on rare earth minerals used in a variety of high tech and energy products, one rare earth to watch is molycorp, and it's up in the premarket and you see what the stock has done over the last year or so, down 36%, joe. job growth continues to be a critical issue facing the nation. joining me now from milwaukee is republican governor scott walker from wisconsin. our guest host jay jordan continues with us. governor walker, thanks for joining us today. as always, good to be with you. >> good to be with you guys. >> do you think romney beats expectations you think? >> hard to tell.

the only thing that's been certain about this political process in the presidential race has been its uncertainty. we see ups and downs here in wisconsin. our primary is three weeks from today, if you would have asked me six months a go would we still be relevant at the begin of april, i would have laughed at you and we may play a big role come the first tuesday in wisconsin. it's an all-out battle. but i think more time for the republican candidates to hone their message and more time to get connected to the voters and it's a good thing if they translate it into a crisper message for the fall election. >> you are not one that think it's been damaging for the prospects of the potential nominee? >> no, i've been through primary and as a candidate that has been through a primary, you don't like primaries, but the primaries make you stronger. the idea that assuming mitt romney is the ultimate nominee, gets the nomination, i think it made him stronger. i think it made him spend more

time out in the trenches with people and i think that's helpful on the way to the path to the white house because i think it helps him hone in on things and instead of a 59-point plan, he starts honing in on two or three or four issues that detype the difference between him and this administration and i think there are many, but you have to hone in on a couple and make the difference. >> governor, you're in a unique position where you've become a national flash point for all the battles that are going on, and i see arguments depending on where it comes from about the record in wisconsin. i saw for a while it looked like you were succeeding in reducing unemployment. things were going along well. but then i see from the other side that things have -- it's not working and it's actually been backtracking. where are you on job creation and deficit reduction in wisconsin right now? >> yeah, well, you know, we took over a losing team and just like vince lombardi did several generations did with the green bay packers, got them to an even

record and ultimately a winning record. and in our case we went from losing 150,000 private sector jobs under the democrats and to leveling off in 2011. we had job numbers a week ago for january here in wisconsin, we were up 15,700 private sector jobs. unemployment rate has now this past month dropped to below 7% for the first time since 2008. it's much lower than states like illinois to the south where they've gone down the path that some of my opponents would like to go of higher taxes and massive layoffs and things of that nature. they are at nearly 10% unemployment and ours is below 7%. by any measure, you talked earlier about the manpower survey out there nationwide, manpower a good wisconsin-based company, for wisconsin that survey shows a healthy outlook for the job creation for our state, about as many three times businesses surveyed said they'll add jobs the next quarter as those that will go in the

opposite direction. we see a healthy growth and foundation. we're moving our state forward but we've still got a long ways to go. >> i also every day see something about the recall. you know, i see one side saying, yeah, that was good for them. what's the latest stuff that's happened there? >> well, the recall has not been called yet, but it will probably be called next week. it will be the first week in june will be the general election and a month earlier will be the primary election. for us it's a great opportunity. we go back to the days of the double digit tax increases and the billion dollar budget deficits we had in the past and the record job loss or do we take the positive foundation i just talked about and build upon it and provide greater prosperity and freedom for our people. i think that's the real test. once people see the choice out there, they may not like everything that we've done and every way that we've done it in the past year but it's hard to argue with the results when we went from really heading backwards to like illinois is today to moving our state forward. i think in the end we'll prevail.

i think the biggest challenge is not an opponent, it's the tens of billions of dollars coming into our state from washington and the big unions out there and we'll have to counter that. >> the polls at this point are close? >> they are close. oftentimes in our state, a 52% victory like i had two years ago is considered a pretty big -- pretty big win in a state such as wisconsin which is very close. but, you know, i'm still humbled by the fact that we earned the majority of the votes in wisconsin in 2010. i hope that we can do that again. and i think really, you know, beyond just politics, people want -- they complain to me all the time about the politicians that are afraid to make tough decisions. that's exactly what we did. my hope is the message here is that we reward that. we don't punish that. >> you know, wisconsin was the home of the public union, right, 1960, or something and that's where you decided to try and take it back. it will be rough. anyway, governor, we appreciate your time, thank you. >> good to be with you guys.

have a good day. >> see you later. >> he said he was still humbled and yet he compared himself to vince lombardi, did he not? >> he did. when we come back, we'll have more of today's top stories. and still ahead republican candidates hoping to gain momentum from today's primaries in alabama and mississippi. we have texas congressman ron paul who will be joining us to talk about his chances in today's primaries. choose control.

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all right. coming up we'll get the government's latest data on retail sales, and as we head to break take a look at how dow futures are ahead of that data. "squawk box" right back at what looks to be a pretty positive open. hey, did you ever finish last month's invoices? sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's

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okay. welcome back to "squawk box." we're just seconds away from the retail sales data. rick santelli standing by at the cme in chicago. rick, the same-store sales for february were good, so i'm excited to see what will be the retail sales. >> the february retail headlines up 1.1%, what we were expecting. if you look at january, a positive revision from a headline originally at least at 0.4 now up 0.6, less take out the autos, up 0.9 better than expected, gasoline up 0.6, better than expected and if you look at both categories respectively, positive revisions to january from up 0.7 up to 1.1 and from 0.6 autos and gas it's up 1%, so no matter how i twist and turn and look at this number, it looks pretty good.

expectations were met and exceeded revisions, exceeded expectations and yields continued to move to the upper end of trading ranges on a closing basis we've established for four months, 206 and a 10 and the third year which is a little bit more defined toward the upper end of the range. and preopening equities has definitely improved although marginally. equities seem comfortable where they are, so it's fascinating on this fed day to see which side of the 209 to 2011 final closing range ten-years end up at, back to you. >> thank you very much, rick. for the data, let's get to steve liesman. not a big surprise? >> i'm less excited than rick is about the data, when i look at a 3.3% increase in gasoline station sales and a 1.9% increase in january, these are nominal spending numbers. they're not inflation adjusted. what economists care about, the way we calculate growth, is by

adjusting for inflation. we don't really care if sales went up because prices went up. we care if sales went up because people were buying more at the same price. so, there were some signs of strength. at the moment the consumer seems to be able to kind of keep on keeping on despite the higher gas prices. but i look at stuff like clothing and accessories up 1.8% and sporting goods and hobbies that's obviously discretionary stuff, up 1%, department store sales up 1.5%, so you can put that into your "fast money" discussion today, scott, when you talk about some of the retail change-up, 1.5%, that's not too bad. we look at core numbers, why do we look at core numbers? because these are numbers that feed directly into the gdp calculation, they were decent, excludeing a bunch of stuff, i can read you what they were, up a half, and rick is right to point out, may gave us on an inflation-adjusted basis more pop to the gdp discussion we're

having. we know the salaries and wages and incomes for the third and fourth quarter, people saved more, they didn't spend more. question now at the current levels of income are they feeling a little bit more comfortable relative to the debt levels going out and spending? i think the biggest question out there is the most unnoboknowabl question. if you tell me what the average american feels comfortable saving, i can tell you what gdp will be. but nobody knows. we were zero in the 2000 -- actually, we were negative. >> yeah. >> then we popped up to six and we came back down to four. are we at the right level now? >> it changes every day. >> you're right. >> there are polls that fluctuate all over the place, people have not found their e i equilyb equilybryium, and it changes. >> i was talking to investors and guys that were moving around big money, they got scared last spring and they changed their dynamic and the consumers are the same way, they read the headlines and they want to save

more, all of a sudden things look worse. somebody said to me the other day if you would have told me that $400 billion of consumption would disappear from the u.s. me, that's what it is, it's a huge number that people are not borrowing and they are not spending because they're saving morning, that's a big change going on. it changes the retail landscape. >> can i ask you a question? >> given the fact that household debt and income has dropped down under a 100, how has it impacted the whole thing and the saving rate? >> it's part of the process. joe was mentioning it in the last half hour. it's a deleveraging process and, again, you tell me what the right level of debt that people are comfortable with, we know that their debt service has gone down quite substantially but that's because interest rates have gone down. we also know that there are two other processes going on, one is because they are paying down debt, but more importantly, they are defaulting on debt. it's getting back to a right place, a more normal level.

are people comfortable? maybe they'll start to write in and tell us, are you comfortable with your level of debt? how about you, are you comfortable? >> i vary back and forth. i feel real good some days and other days you watch all the numbers come in -- >> are you comfortable, joe? >> i don't have any personal debt. >> i don't have personal debt, but i think about the bigger purchases. >> i have no credit card. >> that's the difference, right, because we used to feel comfortable going into debt to make a purchase, but we don't feel that way anymore, when we do the all-american survey, debt is not trendy. >> do you have a mortgage? >> yeah, i have a mortgage. >> how much mortgage is also significant. how much do you aspire, joe, how much will you borrow to live in how big a house. people are actually renting more than they were. >> do you think it's data last week that said it was starting to go up again? >> 0.25 percent which is better than negative, but it sure ain't back to the races. >> hey, rick, you never get to

watch the show, and there's some time when i just wish you were watching. you didn't see larry meyer, did you? >> you know, i was in a little earlytoday, and i was on the train, they could control inflation. >> got it figured out. they got models. >> do you know what? >> not to worry, dude! >> yeah. no, everything is fixed. houston, there is no problem. listen, i think he's a very nice man and i think most central bankers are so immersed in their world of theory that they really i don't think are good judges about their own -- >> do you doubt if there's inflation the fed could hike interest rates and slow the u.s. economy, plunge it into recession and kill inflation, is that a doubt in your mind? it's difficult to find the will to do so and the -- >> i know there's a huge amount of doubt because i hear you walking back what looks like a pretty good retail sales number

inflation adjusting growth because even you are very nervous, i can tell. >> all right, guys, rick, thanks. steve. >> we got to go. i'm a not allowed to respond? >> not allowed. coming up -- he knows they got it figured out. ron paul. put your trust in the feds. the gop congressional candidate and congressman -- >> you are upset? >> at who? what makes the sleep number store different? the sleep number bed. the magic of this bed is that you're sleeping on something that conforms to your individual shape.

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welcome back to "squawk box." futures right now indicated up about 74 points. just minutes ago fed chairman bernanke arriving at the office in washington, and he's convening a one-day fomc meeting, and they are seen to keep interest rates at record lows until late 2014. i wish we had a shot of him in the briefcase and what, because we used to tell with greenspan -- >> what he was going to do. does he go in in the car or through the gates? >> i don't know how he goes. >> in the car. >> in the car through the gates. >> we should have paul giamatti walk in and film him doing that. >> i know who could set that up for us. >> i do know who could set it up. >> andrew. let's turn back to the race for the white house, congressman ron paul is fighting on in his race for the gop nomination. he joins us from his home state of texas.

thank you for joining us this morning. >> you're welcome. >> a big day today, a couple more primaries coming up, how do you expect you'll fare in the south today? >> in the south we don't expect to do a whole lot, but in the far west we expect to do better and that's hawaii. that's where we put a little bit of energy and investment into it. >> and you have -- you've come throuí9j÷ thisíñtlnd you contino pick up ground. you continue to win votes. my question is, you are probably not going to be the one who wins the nomination in the end if things continue at this pace. what do you hope to do with your candidacy and how long will you pursue this? >> well, there's four of us in the race, and, of course, romney looks like he's ahead, but he's far from having it won. >> that's true. >> so, there's a lot of talk about a brokered convention, so with the enthusiasm and support of a whole generation of individuals, you know, i feel obligated to stay into it until we decide who is going to be the

nominee. >> if it went to a convention, do you think it would be one of the four of you who is still in the race? >> i would think so, but i know there's some that would like to change that and sort of cancel out a year and a half of campaigning, some of the people in the leadership of the party, you know, sometimes don't like saying and sometimes the leaders of the party don't like a lot of young people coming in and taking over the party, so they rather resent newcomers into the party and i think that's what has happened to us is a lot of resentment of new people coming in and there's a lot of fighting going on with leadership in the various states with young people coming in and wanting to participate. >> you've done a phenomenal job of tapping the young vote. how do you think you've done that? >> i really don't know. i didn't start off and think, oh, no, we'll see, we'll mean that the young people will support me. no, i just talk about what i think is important, what i've done for 30 years, the sound

money issue, following the constitution, personal liberty is something that other republicans never talk about. young people like that. and the young people really, really resent the fact that these wars are perpetual, they're paying for the past wars. there's a lot of debt, and it looks like they won't end. that is one of the big issues that the they talk about when i talk to them on a personal level of why they like what i'm doing. >> one of the issues that has certainly been a touchstone recently is the rising price of gasoline. that's something that the president has been dealing with. newt gingrich has come out for his campaign for how he plans to keep gas at $2.50 a gallon. what's your plan for tackling gas prices and how do you want to help the american voter? >> to make my point, i would say if he had sound minneapolis, it would cost a dime in terms of silver, that's what you would pay for the price of gasoline right now. it's not the price of gasoline that is going up, it's the price

of the dollar is going down. the regulations and the lack of drilling and competition and production is one thing. so, deregulation certainly would help, but that's -- you know, we all know about supply and demand of the product, but very few people talk about the supply of the monetary unit and that's -- transaction, you can't ignore it and say increase the supply of energy and all of a sudden the prices will go down. i think that would have a hard time just by trying to increase the supply of energy and get gasoline down to $2, that's not going to happen. but i think it's a money issue that people forget about and they should be talking about. >> so, congressman, we've been having this little mini debate today about the ability of the fed, once it realizes that inflation is more than just a future worry, that they have the tools to make sure that it doesn't get out of hand, and i question you, i asked the question, if you just add up all the debts that we have here and

all the entitlements, the future promises we've made here and then go ahead and throw in europe and everyone, is the fiat currency that we have right now, does it really reflect the future obligations that we have? could the fed just say, okay, now it's time and we're going to do it, or are we already too late? >> i think it's too late, because we've made the commitment. the only thing holding it together is sort of an illusionary trust in the dollar because there's no place else to go, except some countries now are saying, it will end, so we better subtly move over and use gold and do other things. in the far east they are seriously talking about it and even in the oil countries, they're talking about this. but for now everything depends on the dollar, so if they come to a crisis where the prices go up and you need a paul volcker, you know, to do something, this would crash the economy, and, of course, if you continue to do it exactly what we're doing now, it crashes the economy. we're not there yet. it will come.

you know, last month, two -- a $200 billion deficit in one month? it used to be the entire budget of our country. and that is unsustainable. and eventually they'll be loss of confidence in the dollar. because that's the last thing that's holding this together, and to me it's an illusion that the dollar can bail out the world. >> when you look at what you hope to accomplish, again, by the end of the day, what's the most important things that you've brought up in this campaign that you hope will be lasting effects? >> well, the status quo of politics in washington and around the country has to end. and i see it as both parties, people have to i think more independently, and this is where i have thrived. the young people that are coming into are understanding what they are getting. and i do the best with the independents. and they are not measured in the republican primary. they are sick and tired of it

all, the majority of the people say especially with the message in afghanistan. the american people by and large are saying it's time to come home, if you can't do better than that running up these debts. so, i would say contributing to this whole idea that the status quo won't last. you can't keep bailing out. you can't keep the same monetary policy. you can't keep the same foreign policy and the entitlement system is totally out of control, it's on autopilot, and nobody else has proposed a cut. the other candidates say, yeah, cut on the proposed increases i've proposed a $1 trillion cut, so i'm serious about it, i believe the problem is very bad, and evidently nobody else considers it because nobody else really wants to cut anything. >> after one of the recent debates rick santorum seemed upset, he seemed to think that you and mitt romney had teamed up somehow and were tag teaming him in the course of the debate. was there any truth to that conspiracy theory? >> no. some people are more into conspiracies than i am. i think he's more involved in

conspiracies. no. it's just because we're cordial with each other. we've known each other and we talk about family. he has five kids. we have five kids. so, i don't know whether it's a crime to -- >> ron, will you back the eventual republican nominee wholeheartedly whoever it is? >> wholeheartedly, i would have to reassess that, because -- because, you know, they're still talking about -- they want more than obama. i think obama wants way too much. he's ready to go into syria under the u.n. resolutions and flaunting the responsibility to tell congress or ask congress. no, i would have a lot of trouble with that, i want people -- and i think it may shift. the people are shifting so the politicians will shift their views, too, now that people want to come home by november. and obama is upstaging the republicans because now he has once again become the peace candidate, he's won the nobel prize and at the same time he

wants warp, s war, so right no getting away with something. the republicans are the john mccain war party, and this is the reason that obama won before is usually a more sensible approach to dealing with other nations and the willingness to go to war is a major factor for the american people. just think world war i and world war ii came on after wilson and roosevelt said i'm going to keep you out of war. so, people don't quite understand this. i think the republicans have fallen into the trap because now they're the war party and they support, you know, the patriot act and, you know, the tsa and all of these things, that's what the young people and independents do not like. and i think they're setting the stage for a difficult time in the fall. so, if the perceptions change and the attitudes change, you know, in my mind about the other candidates might change, but right now they're in favor of way too much big government for me. >> all right, congressman paul, we want to thank you very much for joining us today. >> thanks for having me.

>> appreciate it. all right, coming up, we'll head to the new york stock exchange to check out stocks moving ahead of the open. [ male announcer ] this is the network --

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you wanted to make a few comments about china. >> i think scott wanted to do that. >> i don't know if we have time. i want to read what a competitor of yours said 25 years ago. jay comes in, his suits are wrinkled. with jay it's not really a financial transaction. the essence of jay is that he knows what people tick. he doesn't play a game. i can tell that the suits have evolved. is the art of the deal the same? >> in the markets we serve, our model, private companies, it's absolutely the same. it's less about financials and computer programming. it's all about billing relationships. that's how we built our business over 40 years. we'll continue to do so. if you get the business owner to want to do business for you, he or she is going to try to figure out how to do it and you're going to be able to succeed. >> even with larry myers