call it -- if you said hyper, i apologize. but -- >> we just kind of schlep along and somehow we're doing reasonably well. >> thank you for being here. >> it's been delightful. thank you. right now it's time for squawk on the street. we we begin with the sounds of u2. good morning. welcome to squawk on the street. i'm carl quintanilla along with jim kramer. melissa is off. in europe today, german investors sent to the highest level since june. big fed day today. could they set up for more

interesting meeting in april. in the meantime, the outlines of the bank stress days are out. yahoo suing facebook over ten patents saying that innovations have been infringed upon. the saga with news corp continues. jeff reece ups the price target on apple to $699. tim cook sells $1 million worth of apple in the last two days. meanwhile, the latest statement of the fed chairman expected around 2:00 p.m. no changes expected except the

retail sales numbers may argue that it's not just the labor market getting better but final demand and real consumption. >> they were talking about how a lot of it is just rising prices. i never ask to rise anything. the reason i say that, the moment you look for a good number, you can always pick apart a number. retail sales should have been down. people should be more cautious. they are not. rlx, rth, those are the etfs. >> broad base gains, too, david. only furniture saw a decline. up more than 1% in the last two months. some of that is going to be weather but some of it may not be. >> yeah. and it's a conondrum gasoline prices have moved up substantially in the last six months and yet the consumer is

coming back perhaps even more than we would have anticipated. >> jobs, jobs, jobs. if you have a job, you can afford gasoline. >> i don't know what you're picking up, jim. the ceos i talk to are constructive but still cautious. they don't seem to embrace some of those animal spirits, if you will, that things are really coming back strongly. many of them perhaps reminded a year ago when we felt like we were in full recovery mode and then we hit europe. obviously you had the tsunami in japan. a number of things occurred, not to mention the budget battle that stalled us big time. >> i think it's permanent negativity. there is no more of this, i feel great. i feel great nature means you have no rigor. all of the ceos are so afraid we'll come on this show and say, remember that joker -- >> that means that you're not going to open the deal and open

the plant -- >> you're not going to trade stocks. volume the lowest so far. >> they will be gun-shy. we get deals like we get the powerhouse deals for a great wolf. those of us that have had go to great wolf -- >> explain what it is. >> you were there recently. >> it's a water park. there are a number of them. >> is that because 99% go there? >> it's like sleeping at a rest stop on the highway. the water park is great. >> don't forget, the stock can go higher. >> including debt. >> look at that. look at that. i want to go there right now. >> that's david right there. >> you know, i do love the water. that part is fun. it's the actual sleeping part and eating part. >> the parents are not as happy as the kids. >> yeah. >> as far as the fed goes, a lot

of people look at what they call a fiscal cliff. there's going to be a huge drag. maybe in april or june they try to get in front of that. >> i think very strongly b bernanke is saying, 1932, 19933, the recession changed it. i think bernanke is aware if we get tough on the budget, he's not going to have to worry about the economy slowing down. >> not raising. not raising. europe wants to raise. >> this is going to go on for years and is going to keep the cap on growth, many would say, for years to come.

we are still in the midst of major deleveraging. >> there is under armor and chipolte, they sell at 40 times earnings. the other company growing at the exact same rate as those two is apple. >> let's put it this way. you take it to $1600 if you gave it the same as under armor and chipolte. >> $500 billion market value. >> versus the, what, what equals to that? >> right. >> planet earth. >> planet earth.

>> selling at 550, 5 # 1, mean anything to you? >> the guy does have a lot of stock. it means to me that he's san, as san as the michael core people. so sense in being greedy here. i think that's proven. i'm not going to take my cue from it even though i think the $1600 price target will hold off on that. >> 1600? yeah, that's a little -- >> or jack? >> i'm now on hunger games. can't wait. i'm going on ebay. >> more than twilight, can you

imagine? >> no, i can't. >> by the way, a couple hours from the now the president is scheduled to issue a statement regarding efforts to enforce u.s. trade rights with china as there are complaints being filed with the wto accusing china of reducing its rare earth metals. >> i'm worried about bashing china too much. there's a china that allows procter & gamble and china ge and then the jobs are really needed. they take the steel and say to heck with america. i think you've got to be targeted. now, a rare earth materials is not targeted. he ought to go in there, the president, and say, listen, we've had it with your steel and we're done with your exporting steel. you stock.

and then i will feel better. >> it's not clear what it does other than make people feel better. it's a clear relationship to navigate, one would expect. they still holdover $1 trillion. >> how about the military thing? do we really need to get military with -- i think that's a major mistake. i think these are trade partners. we don't like the way they are dumping but they are not giving us rare earth materials. >> taiwan to come to their defense which seems -- >> tom friedman said it is the greatest country on earth. >> yeah. >> chinese espionage, every day there's another story. believe me when i say, this will become a huge issue at some point. it is already a big issue for corporate america. >> that's between the murdoches and china, who hack better.

>> rebekah brooks was editor at the time that the conspiracy took place and may mean investigators are focusing on possible cover-up efforts. and from what we understand, the arrests came from information that did not stem to news corp. >> it's always the obstruction. did they get martha on that. >> i'm working on something, justice perversion. >> justice perversion.

>> material news corp. or -- >> this is the pie-throw incident. that was your moment. >> the buy back. >> you're going to say that's more important than the pie throw? you're going for substance over form again. >> justice perversion. >> in new york city. >> here it is. >> don't forget, wendy's left hook. >> that was the best. >> i think it might have been a shepherd's pie. >> there's joe klein. >> so you're not worried about the cash impact? it's not a stock story? >> no. i think it's print. and one of the things thaw find is, do they want to get up to some level? do they want -- i mean, is it their goal to take down a murdoch? >> no. i think for investors it's a distraction but could be something that they have to

focus on again. >> i know. >> because it could come across to these shores. >> you're right. james murdoch is over here now. >> look at that rebekah. she's got a hunger games look about her. >> is that raymond hair? >> yes. raymond hair is black hair, my friend. geez, you go and quote the raymond. that's wrong. >> meantime, yahoo! accusing face boong of infringing on its patent. facebook calls the action puzzling. how do you go public if you have a lawsuit like this. >> and it's one of many risk factors that probably most investors won't bother reading about. it's more interesting from the yahoo! perspective. they are going to be about a fifth of the size of facebook. but the new ceo is firing here.

meanwhile, he's got a battle on his hands with dan low. trying to get four seats right now. proxy fight yet to come or in process. the other deal fell apart because mr. thompson started to get involved there. you just have to wonder, what's the new strategy. >> right. >> it's not about lawsuits, one would imagine, but there's not to be something more to it. >> i read the complaint this morning. they are saying that facebook took their social network model. hello, what is yahoo!'s social model? and then they say facebook took its display advertising model. basically what they are saying is they are facebook. if they are facebook, why are they not any good? if i go to yahoo! do they have

everything i need to know about you. they don't have one. >> we've invested in r and d and we could license it down the road and we don't want to start a slippery slope. >> right. but if there lawsuit has gravitos, then i think facebook would never come home with it. they are saying words with friends owned by zynga. >> so you think the suit is a laugh? >> well, it's not like a laugh riot. i'm going to put it in more of a -- let me see. >> where are we going? >> i'm trying to figure out what -- it's kind of like a dry humor thing. >> sort of a larry david lawsuit? >> yeah. >> what are you talking about? >> it's idle gesture.

and wanda would kick his butt. right? i went to harvard law. that's how i'm able to panagle this stuff. >> you're about to become a computer programmer in addition to all of your other stuff. >> justice perversion. we'll get that raymond hair. >> when we come back, the man who brought you the black swan breaking his silence after two years because he's fed up with the current state of affairs. we'll talk to him in the 11:00 a.m. one more look at futures. nice 51-point gain. live in a moment. ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about how some companies like to get between ttd#: 1-800-345-2550 you and your money. ttd#: 1-800-345-2550 at charles schwab, we believe your money should be available

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of course and rates at that point were at their high yield price of the recession and we continue that melt and we move higher. two big meetings today. we have the fed on monetary policy and disney executives facing shareholders as well. if disney made a motion picture about the fed, what would you call the movie and why? that's our twitter question of the day. tweet us and we'll get you the responses early in the morning.

>> thoughtful ben. >> i'm thinking of sleeping beauty. >> that was a big hit for them. >> can you name them all? there is no way. not that it could really grow but it would. >> you're very kind. >> are are you able to do it? >> it's easy. >> let's give them a break and let's see. >> i've got to put my mind to that. but i will say, one thing they will not call this movie is john carter. john carter 2. i'm back and bigger than ever. of course, the disney thing is ridiculous. the stock has been a great performer. come on. >> there's been some discussion about 25ik taking on the chairman, $30 million compensation. that's how much they made in the

opening weekend domestically. >> there is. but you don't have a lot of shareholders and i think it would be hard to argue that his tenure has been anything but a big success. some of us looked at the $7 billi billion deal. how could you not grow? and their ability to keep pushing through prices. >> did you see their numbers, espn is having a terrific, terrific quarter. cbs and time-warner, tbs and tnt ratings are coming back. >> look that the. >> the key question is nickelodeon. that's the most important network. when we come back, making moves for money. cramer's mad dash. as we take a look, one more look at the futures as we kick off with a tuesday morning. you're watching "squawk on the street" on cnbc.

today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.

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you're watching "squawk on the street." cramer's mad dash, of course, has to happen before the opening bell. comments on netflix and customer satisfaction? >> people still like netflix. it's really interesting. at netflix the stock went too high. i got caught up in it. one of the reasons? because i love it. i think that people still haven't backed away. 21 million subscribers.

a market cap with similar numbers. market cap doubles that. i think netflix can do okay. don't write him off. >> there had to be a reset of expectations. but the product itself continues to be reliable for those who want to go that direction. >> i'm going to set it up tonight because i want to be able to stream, you know, stream okay. i want to get professional streaming. but i think people underestimate the fact that netflix raised the money when they had to and people love to binge view. i think that's something that casting recognized. >> apple going to $699 on it is target. they see a commercial tv product in the fourth quarter. >> i know that that was something that steve jobs talked about. this is the one remote. so can you imagine one remote.

i've got the free remote, panasonic, i got confused. it's crazy. >> and think equity, negative review on rimm. >> no. no. no. no, rimm. >> what has happened between apple and rimm is telling. >> no. maybe i'm qualifying that by saying no. okay. >> we'll get the opening bell in just a couple of moments. a lot more "squawk on the street" still ahead. choose control.

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never under estimate that they are going to do business over there. i like that. it's much better than people give credit for. >> the big board, brazilian bank. >> they are lowering rates. i think that's a good call. >> that's pretty interesting, isn't it? >> over at the nasdaq, iberia barveg. >> i've been watching your computer. >> i don't think people understand the production growth here. 20% production growth. i have jim hacket on tonight. chevron has more growth than a lot of the majors. >> it brings to mind the poll numbers. 41 approval largely based on

what gas has done. >> there is one quick solution. it is clean energy fuels for diesel, trucks, and lip service right now the stock is getting hit because they missed the numbers. but if you want to get the price of oil down you've got to bring in natural gas as a fuel or service vehicles. >> got hammered again yesterday, lowest intraday since january. getting off to key levels. >> boy, you can talk about 47 and 1 ratio. it's never been like this before. diesel is the biggest importer of oil. clean energy had 3% of the waste of the trucks for trash just a few years ago. now it's up to 40. you can switch on a dime if the government says it is right, meaning postal workers and military. we have to get the united postal worker for gas. >> if waste management can do

it -- >> urban outfitters misses by 2 cents. >> oh, my. >> we had a new ceo there. the stock jumped up a dollar and a quarter. that was stupid. now we're seeing a lot of difference of opinion. rbc likes it, too. raises the target. all i can tell you is that it was a disjointed conference call. kind of saying, listen, we'll deliver. we'll deliver anthropology. there's a lot of turmoil there. >> i want to get your take on journal. getting to the web service television business. >> it seems like intel, every time it tries to get into something new, they put a release out and it doesn't happen. i know intel is a great company and the stock is inexpensive. that is a very, very tough area to crack into. >> they appear obsessed with getting beyond pcs.

>> he feels like he's missed wireless. he's moving into wireless. you're really just talking about a shooting war. there are so many companies already there. i just can't -- i can't own the stock with that. it's not a needle mover for me. >> yeah. bank stress test thursday. >> i think they are going to surprise the upside. the fed will reserve once the banks start lending, i had associated estates, which is a very big rental company. it's clear that there's no construction going on to speak of in apartments. no construction going on in shopping centers. none in shopping malls. i think that the fed doesn't like that. they want to make it so there is more lending, not less. >> the worst case scenario, 13% unemployment, 50% decline in stocks, 21% decline in housing. >> geithner, who i sure wish

would, again, issue long bonds for the treasury. >> yes. >> geithner has come in with, this has always been his strength. he uses 1933 stress levels. he is using great depression stress levels. it's not like europe where everything goes. >> bob pisani and david, meantime, on the floor with more. hi, guys. >> we're talking china as usual, which is a great importance. not just to their market but to ours as well. >> i think the issue, david, is how do you resolve the global growth story. what side are you going to come down on? are you going to come down on the hard landing side or soft landing side. today we have green chutes. let me revive. number one, this is the big issue in the world. what side of 8% do you come down on. 7.5% for 2012.

that caused everybody to go into a tizzy. they raised their estimates and the number nomura is 8.3% and, in other words, over 8% the chinese government itself is underestimating. they are citing the fact that there is going to be low inflation, they are going to change the numbers for interest rates. they are going to be stimulating the economy and helping out. bank of japan, did you see what happened there? they left rates unchanged. no additional quantatative easing. the nikkei was up when it dropped. because like us they are hopeful, some people are, but nonetheless, the bank of japan specifically said, the u.s. economy was approving. the bampg of japan feels less need to go out with stimulus measures. >> of course, they have the

worst look of deficit versus any country, period. >> i'm going on the macro commentary at the moment. >> by the way, japan may be fine short term. >> i'm simply making note of their macro commentary. have you seen the german investor confidence number, up fourth highest in a row. how do you know if things -- how do you know who is winning? the global growth slow down is going to get worse or better? my favorite index here is to watch the cyclical index. and global industrial and material companies. you'll notice that it stopped going up after january. it's been side ways and that's because there's been global growth concerns. it's underperformed the s&p 500

for a year because those are the ones that would really blow up. if you want to see -- if you could tell who is winning by watching this index and right now it's not clear. you would need a breakout to indicate that there is clear trade. that's the index. right now i would say it's totally neutral. it's not clear who is winning this particular argument. >> so far. but today i see optimistic signs. >> there you go. we'll end on the optimistic signs. carl, back to you. >> since 2008, 18 instances have had stocks up. a lot of that is skewed towards the early days. >> but i saw some numbers along those lines and i was comparing that with numbers that we got on the employment situation which brian sullivan said on friday, there we have the all important

employment situation. maybe it really is -- look, i think that bernanke has made things good. i think bernanke doesn't want to affect the stock market. i am a big fan. there is easy money. oil is going up. can i point out that we're on the verge of a war with iran every single day and iran is raising prices? i think the fall is not in bernanke but in iran. you can hoard oil very easily by renting a tanker. $10,000 a day. >> they are available. >> yeah, $10,000 a day. the carnival cruise can cost -- >> quickly, yoush watching dimon as well? >> the premier for alex partners going in, they find their man. that makes me worried that we're going to get to the bottom of diamond. okay. let's shift to bonds and the dollar. rick santelli, what is happening?

>> well, of course we had a pretty good retail sales numbers. we'll have a little more data today and that continued to push-up yields on this fed meeting day. three basis points. let's look at foreign exchange. an interesting article about the yen in the journal today. there was the mentality and they want it to be a bit weaker but my guess is they are pretty darn happy today. these are 11-month highs on the green back versus the yen and maybe the most popular trade is the canada versus yen. that's about an eight-month high on the canada versus the yen and if you look at generic currencies, the euro and the dollar index, euro is at the lowest level since mid-january and euro centric aspects, at the highest level since mid-january. we continue to wonder if there's going to be any change to the

twist but most traders say, no change to the twist. we're going to play out that last tune at the mid-june mark just as oshlgly planned. back to you, jim. >> thank you vi much, rick. let's check out the latest moves of energy. and metals and sharon epperson. sharon? >> jim, we are looking at weakness across the board. there's a pull back of levels that we saw earlier today. the dollar and euro, as rick mentioned, definitely playing a role here in presh ug energy prices. gold as well. keep in mind that we are looking at the situation. while we continue to follow that, as brent mentioned. brent crude is at a record high, higher than we saw in 2008 to let you know the geopolitical risk premium in that market. keep in mind as well, when you look at what is happening in terms of the sales data, that helped to lift copper up a bit. there's still the question of what they will do and also and

watching very closely in the copper market. >> thank you very much. sharon epperson, when we come back, the magic kingdom meets bernanke. if disney made a move about the fed, what title would they give that film? you can tweet us at cnbcst. look at the early movers. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial

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there are only a couple of components in the red. everything else is green as we await the fomc at 2:00 p.m. this afternoon. a couple big meetings. the fed and disney facing shareholders. we're asking you, if disney made a movie about the fed, what would it be made and why?

jim said, if disney were making a movie about the fed, it would be honey i shrunk the dollar. and fantasia 2, and one more, michael, chitty, chitty bang, bang because i can't say the real word on tv. >> i'm too busy talking and looking at the rails. >> that's a tough one. >> yeah, it is. >> what specifically nine lives here, i am convinced that this fundamental story of natural gas being so low and coal staying up there is just a major undercurrent in this economy.

we have way too much coal given the facts that natural gas is so cheap. the big coal shipper, that is just killing the rails and then the transports which bothers me. because the transports, i need to see them confirm the rally. >> how about this report that u.s. airways is beginning to procure domain names with american airlines? >> you know t. may be that this happens often times and we don't see it and why they fail potentially to protect some of these names. but they are trying to extend the period for the bankruptcy and there is going to be a battle there. u.s. airlines up its advisers. we'll see. there is no doubt that they can create a carrier together that will be a viable competitor to the ones out there. but this has some time to play out. focus next on whether or not amr does get that period extended as long as they wanted it to be.

>> also, we have not touched on cablevision. deutsch bank taking it to a hold. price hikes are coming in 2012. what do they see here? >> geez, i don't know. >> we talked about this, carl, and the stock has already suffered as a result of it. that day when we were here and the numbers didn't look that bad from the last quarter and then they crushed everybody talking about not taking price increases, what you are talking about, though, is a levered company where if ebitda is not coming down substantially, they are not going to have the ability to buy back much stock. it's an operating story. >> we have seen cable companies actually go belly-up. >> yes, we have. absolutely. we have. >> too much leverage, charter. >> that's a prime example. >> i don't want to be in that

stock. >> trading day still young. a lot more "squawk on the street" still ahead. >> announcer: coming up, time is money and cramer wants you to make some quickly. six stocks in 60 seconds is next. "squawk on the street" will be right back.

six stocks in 60 seconds. scripts. >> instead of at the end of the first half, it's going to be early part of first quarter, boom, the deal will be done. >> whole foods market? >> it's food that is good for you. >> vcvs? >> ulta salon. >> they are doing better than the consumer spending beyond what anyone believes. >> we talked about an oracle downgrade. >> s&p is an amazing story. >> the first time he's been

going higher, there are the nigerian properties. >> it's the quality in the wells. >> i will point out, clh is what you bring in when you've got wells that are messy, it's been a terrific growth story. >> for more on those names, go to sots.com. >> deutsch bank caught my eye. we've talked about it a great deal here. buying versus renting in terms of afford built. it's much more expensive. that's a percentage of after-tax mortgage payments. it's more attractive to own a home relative to household income at 9.3%. renting is a percentage of household income with 80 basis points higher than the cost of owning in the fourth quarter.

my question, mr. cramer, is, given those numbers -- and by the way, the reason i'm mentioning it in part is because deutsch bank is doing this analysis since '06. they've never seen it this high in terms of owning being better than renting. >> i put the apartment real estate investment trust in my cell block on "mad money." they point out, one, you still can't get that darned down payment so people aren't being able to take advantage of it and, second, it really is a remarkable moment in that people -- the numbers are not that strong. there's not a lot of -- you would think that people would want their own home. >> right. to warren buffett's point that he made -- >> the in-laws, people are renting. rates are going up in rents but there are not a lot of new apartments built.

i think that's a way to play the deutsch bank blow back. it's not happening. >> we talked about household formation which continues to drive those numbers when they come out every month. >> yep. and we talked about renting versus buying and they made that point. but at this point we don't really see a significance in the housing market and there are the lowest levels that we've ever seen. >> fha is offering good deals and home builders have been on fire. >> are we going to be surprised at one point, suddenly we'll see housing prices truly put a bottom in and significant increases and/or sales? >> i think there will be a switch. it's new. we have all felt that the minute you bought your home you're down 5% on it. that's the perception that needs to change.

it's not a used car. >> no. >> and you speak as somebody who has been looking at property? >> i just bought and closed on friday. down 35% from where it traded before. i felt like i had to take advantage of it. got a 3.5%. my points skyrocket can. that's a 1% issue there. but, yeah, i -- >> actually, it's a .01% issue. >> let's put it this way. i was sick of renting. my mortgage payments are lower than my rent. i took advantage of the deutsch bank call. >> jim, we're sitting right at 13,000 today on the dow. and you're arguing last night, the bears are cogent. >> but not enough to stay along the rest? >> i think the bank yesterday was at spirational. i think it's going to show that the banks are much stronger.

>> making up the losses of the banks today. >> what do you think of that? i think people were focused on this thursday. i think you're going to be pleasantly surprised. carl, also, this consumer, the retail sales number, look at this thing. you just don't get this kind of rally in retail if things are so weak. so i continue to feel that the markets got good and bad. i need to see the transports do better. that is crucial for me. >> even if this is not one of the many green chutes that turn brown, the economy will need more stimulus if it returns to full employment any time soon. because you can always pull it back. >> are you ever really going to get to full employment? he has harsh words in terms of the job market. >> is 7% good enough.

president paid at lip service. andrew little fair on tonight, that's a way to stop using diesel fuel. by the way, union pacific. they can switch in that gas. engines being made by westport innovations to switch trains to that gas. that will cut back on diesel use. >> see you tonight. when we come back, breaking a silence after two years. the author of the black swan says he's fed up. don't go away. ♪ when your chain of supply goes from here to shanghai,

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welcome back to "squawk on the street." january business inventories just released up .07 of 1%. we were expecting up close half to 1%. it's a bit higher. it's the highest inventory since october which was up .8 and last month revised from .04 to .06. of course, making more widgets

had an impact. that really is the driver. we see virtually no movement in the marketplace. although better than expected retail sales and general trends of rate. rates continue to push-up challenging four-month ranges. carl, back to you. >> all right. thank you very much, rick. the markets are trading higher ahead of the day's key fomc meeting. what is the next step as the employment picture keeps getting stronger. we're breaking down big bend's next move. cutting the price target saying it sees 8% more downside ahead. we have the analysts behind that call in just a couple of minutes. the u.s. said to bring a more trade against china with rare earth minerals. and the disney backlash heating up as the company is set to host the shareholder meeting in kansas city in about an hour. we'll talk to the main officer about the trust funds.

disney shares in just a moment. okay. chef donohue will be quitting and will be replaced and accuses china of rare earth minerals. and china produces almost all of the rare earths available in the world. >> as we talked about earlier in the morning, china talking about after six years of letting it gradually appreciate. >> 30% against the dollar. >> that's probably about enough which is going to make the conversations between us and them very sensitive going forward. >> no doubt because most people here completely disagree with that. they cite the recent trade deficit as one reason why they think it has reached sort of fair value. that is a battle yet to come and it's also a battle on the campaign trail as we see mitt

romney taking office, they would call them a manipulate for, day one. >> the president is getting ready to speak in just over an hour as the u.s. gets ready to file a wto complaint over the rare earth caps. what is this going to be all about? >> reporter: well, it's going to be about trying to pressure china. you know, there are various ways in which the united states can can seek redress of the trade deficit we've got and the economic challenge that we've got from china. one is about the currency and another is particular sectors like rare earth minerals and say that the chinese have export quo quotas. therefore, they are helping chinese industry. president is going to speak to that. i just got off the phone with an adviser to mitt romney who says this is a weak case, it's political. this adviser also said the same thing about mitt romney's statement that on day one as

president he would label china a currency manipulate for. this is clearly going to be a political football in the year in which the economy remains relatively soft even as the job market improves, guys. >> all right. we have one more question on the new york times approval poll for the president. 41 versus 15 the prior month. how much is gas prices to blame? >> gas prices clearly are a source of vulnerability for the president. i talked to advisers to president obama who said you've got to be cautious because as we had in our own poll, president obama was at 49. but as gas prices continue to rise, this president is going to take a hit. we've seen a relationship between gas prices and presidential approval. this president remains vulnerable in the economy. >> john harwood in washington, talk to you later on and the president speaking at 11:10 eastern time. another twist with the james

murdoch story. rebekah brooks arrested for the second time along with her husband. katherine boil is in london. good morning, catherin. >> reporter: good morning, carl. this has brought the tenticles of this scandal heating up again. we're expecting a report from a committee of british mps into the phone hacking scandal and my sources on the committee tell me that they are fighting over whether or not there is evidence or not. rumbling along in the background of all of this is an inquiry into past ethics. there's new revelations coming out every day and let's not

forget this could get them in trouble on the europe side of parliament. >> catherine, a lot of things going on. rebekah's husband potentially implicated. a laptop thrown away in the garage. what is that all about and what are they alleging in terms of this overall sense that there's an obstruction of justice going on here? >> i think what you're referring to is a report back in july when the phone hacking scandal first broke and a cleaner until -- close to charlie brooks found an ipad and a laptop which he tried to expose of. the police have not confirmed anything about whether there is a link to that or not but obviously at the time it's quite suspicious that he was trying to get rid of this -- at that particular point in the inquiry. of course, let's not forget that

charlie brooks himself has very, very close connections to the british elite. >> it has made celebrities of horses in the uk. thank you. starting with the fed meeting later today, what can we expect at 2:15, let's bring in michelle meyers. always good to talk with you. good morning. >> good morning. nice to be here. >> the general take is that the meeting will not be like that of the summertime. >> it's only a one-day meeting so the fed is only releasing the statement. we don't get the press conference or the forecast. we don't have the ability to communicate quite as much as they have in the prior meetings and the other important thing to remember is that the fed is in

wait and see mode. the dow is coming in stronger. they still have operation twist under way. it seems like it's doing what they want, keeping treasury rates low and keeping asset classes quite supportive. at this point the fed is saying, let's see how this goes. a policy put in place can lead to strong momentum. >> operation twist a success, then. will they extend it once it expires in june? >> i think it it all depends on the data and what the economy looks like. so if this type of data flow continues if we see 250,000 or so for payrolls, unemployment coming down, signs of more sustainedism provement in terms of consumer spending and business investment, i'm not sure that they will need to extend it. they will want to pause for a little. our view is that the data starts to deteriorate and the economy starts to slow and it prompts the fed to go ahead with qe 3 later in the year. >> why do you see that happening? >> a number of factors.

probably the most important is the extent to which we see fiscal tightening. bernanke said it's a fiscal cliff kicking in and as a response to that, businesses, in our view, will be anticipating that and will cut down in terms of their investment and spending in advance and that will cause slow down and overall growth. >> michelle, do we think that the journal last week was a head fake for anyone who took hope from it? >> no, i wouldn't say that it's a head fake. i think it expresses one more option that the fed has and for good reason. it's an interesting way of looking at it. it's not our baseline view. we don't think the fed will go ahead with sterilized qe but it's something that we should be looking at and put some weight on. it's kind of another way of doing an operation twist on this. >> if the lighter thought is that, okay, jobs are good but you've got to see final demand and consumption, are retail sales data point but isn't that a step in that direction? >> it's a pretty big step in that direction. the retail sales numbers were

strong and the one point i would say is there has been a usual divergence for the retail sales figures and what you're seeing for spending. that's because it only captures one part of the retail basket. it's only one-third of total consumer spending. you have service expenditures and that's where we see more weakness as a result of the budget constraints. in our view, real conception is going to continue to slow -- be slower than total resale sales which is why we're only tracking 2% for q1 gdp. >> that puts it in context. michelle, thanks, as always. rt will. shares of r.i.m.m. is up. cut from 18% to 12. there will be an additional 10% down side from here. we'll talk to the analyst behind that call, next.

>> announcer: coming up, we'll discuss key issues being discussed by the choice of chairman to captain john carter, virginia. >> announcer: "squawk on the street" will be back after this

break. ♪

welcome back to "squawk on the street." the cfo of southwest saying that the company does not expect to make a profit in the first quarter of this year. this will be the first time since the first quarter of 2009 that southwest has a loss for a quarter. blaming the cost of jet fuel which is up in the last six months. the cfo says it's averaging 15 mrs. higher than the company's higher forecast. if you look at the last few fare increases, they have been less effective. what we're hearing, carl, there is resistance coming into the airline market in terms of airfare increases being able to offset higher jet fuel costs and, again, southwest saying that it plans to lose money in the first quarter of this year. carl, back to you.

>> thank you, very much, phil lebeau in chicago. amazing video out of jackson's airport. they were testing the engines of a boeing 737 when they experienced a problem with the aircraft brakes sending the plane off the taxiway and into an em bankment. no passengers were on board and no one was injured. >> luckily, nobody hurt. >> yep. >> let's talk r.i.m.m., shall we, getting slashed. shares hovering close to lows for the year. r.i.m.m. shares have been off and, mark, it's going in a different direction but why do you see it as a new price target

from here? >> right. i mean, a couple reasons but and i was disappointed when the new management team took over and essentially tried to stay the course and as you may recall, i had gotten positive at this level back in december. >> have you yet to hear anything from that management team or what you have heard from them have led there not to be any change with the company? >> and there is a key strategic area and i've been trying to expand their offerings. if you can't beat them, join them.

it sounds like this management team, for the near term, is planning to stay the course. >> yeah. and you'll see the course for the stock at least for here is down. not that much but $12 wide. for a company that seems to be in free fall, certainly the stock price and in some ways operationally, why not throw the towel in completely? >> it's definitely a special situation stock. they are seeing growth internationally and they've got some patent that i think is worth at least $10 a share. so i'm kind of looking at the salvage area for the declining operation. >> yeah. okay. $10 a share for intellectual property. salvage value, is that really where we are with r.i.m.m.? it sounds like it's too late now if management doesn't take really bold steps as you don't believe they are going to. >> well, that's the issue, right? the clock is ticking and every

day that goes by i think there will be a displaced here in the u.s. >> ticking to what end, mark? is an iphone 5 -- is that the death nell? and, also, what advice do you give to shareholders but also to contracts that are up? do they stick with that or go to a new product? >> i think there are going to be die-hard blackberry users that continue to use it, they are comfortable with the keyboard and it works fine. they are not going to go to zero by any means. i'm not making that call. but the third party spokesman, there are companies coming up, even sap offering same levels of device management and even security that r.i.m.m. has been

known for. they have done great things for the smartphone industry but it seems like the industry is catching up and consumers want a product that offers more consumer appeal as well. >> all right. mark, a story that we'll continue to watch. not a good one, of course, for shareholders. although, today, not too bad. mark, thank you. >> thank you. we're covering black swans. a very special black swan guest. the man behind it. his first interview on cnbc in over two years. i love that my daughter's part fish.

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trade deficits and currency wars and traders are watching china in light of recent headlines. they are taking a position against china's rare earth export actions. how should you invest amid the news? tim seymour is joining us. >> good morning, carl. >> this statement by the president today, is there a trade behind that? >> well, i think the statement by the president is a very political statement and mitt romney has said that he's going to make china's currency has appreciated very mildly over six years but they've said over the last few days that they may actually see a halt to that weakening process, at least the trade deficit numbers announced a couple of days ago give them reason to feel that they've done something here. i think the ultimate trade here

is, look, the headlines are horrendous, carl. that's the issue. the problem with the roll is not china. certainly if you're an e.m. investor, this is an opportunity. china relative to the em space is trading at a two standard deviation valuation relative to where it's been over the last ten years and i think if you look at the opportunities in china, people are expecting what have been the typical places to play, and that's cyclical commodity names. i don't think you're getting that kind of a play here. one thing we like to do is give people opportunities to trade on u.s. names that have extraordinary growth in emerging markets. morgan stanley has a great piece out this morning. both the gm strategist and parker, the guy in the u.s. have given you a handful of names that i think makes some sense. on the u.s. side, look at people like nike. nike is at all-time highs. their growth has gone from 15 to

25%. mcdonalds, we know about this story. starbucks is the most interesting because they have the most growth ahead of them where mcdonald's, young, nike, i don't think they are screaming value. if you want to play china directly, you should really think about the names that offer valuation opportunities here. china mobile, good dividend play. isn't even a carrier of apple. that's an opportunity. when you look at the names in the gaming space, melco, it's going up 30% a year and this is a great way to play it. so i think china negative headlines are an opportunity to be buying this market and i take a look. >> yeah, it's going to give some people the jitters today but there might be a trade behind that. jim, thanks a lot. >> you bet. catch more global trades from tim every night on "fast money". gas prices hedging higher.

topping $3.80 a gallon. how can can your portfolio from paying at the pump? we'll talk integrated energy names in just a moment. >> announcer: want more "squawk on the street," no problem. talk to us any time. e-mail us at sots @cnbc.com. get twitter updates at cnbcsquawkst. idates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity.

get 200 free trades today and explore your next investing idea. [ kareem ] i was fascinated by balsa wood airplanes since i was a kid. [ mike ] i always wondered how did an airplane get in the air. at ge aviation, we build jet engines. we lift people up off the ground to 35 thousand feet. these engines are built by hand with very precise assembly techniques. [ mike ] it's gonna fly people around the world. safely and better than it's ever done before. it would be a real treat to hear this monster fire up. [ jaronda ] i think a lot of people, when they look at a jet engine, they see a big hunk of metal. but when i look at it, i see seth, mark, tom, and people like that who work on engines every day. [ tom ] i would love to see this thing fly. [ kareem ] it's a dream, honestly. there it is. oh, wow. that's so cool! yeah, that was awesome! [ cheering ] [ tom ] i wanna see that again.

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we're talking about alcoa, jpmorgan and chase and b of a are the biggest gainers on the dow. home depot at 52-week highs. volatility is down 6% falling below 15. we should point out that the s&p is at 1377. it's a 3 1/2 year high. here's a look at the dow. nasdaq right at 3 grand and s&p at 1377. and up 27 and advances leading decliners almost a 2 to 1 ratio with winners over losers.

we'll head to chicago with more on the latest moves. good morning, as always. >> good morning, carl. how are you? >> good. how much of this is optimism about what the fed may or may not say? >> i think the market is resigned at this point. it would want to see more direction and it would be disappointed. and provide more reason, if needed. however, in this particular case i don't think the traders are expecting it and the market is rallying. you almost have a good result. if they mentioned more easy money, you rally even higher. >> gold is up $12 and it held a lot of key levels. you still say there need to be core holdings? >> i do. gold is here to stay as an

investor. it's a fiscal commodity. i was smiling to myself when people said that gold doesn't have earnings and accountings scandals and it just provides value as an asset, as its core. i like gold as a eltd hoing. i think it's a permanent, long-term withholding. >> all right. that's a good point. you don't have to worry about whether it's going to the cfo office. >> no. look, they don't look at apple dropping from 560 to 200. it's the same depreciation. so to me it's an asset that will continue to increase in value. i think it's reachable in the next two years. >> thanks a lot, bob. >> thank you. about an hour into trading, let's check energy markets as well. sharon epperson is over at the nymex with the latest on that.

good morning, sharon. >> good morning, carl. we are seeing oil prices, wfi prices off the lows of the session. we're seeing a little bit of gain in brent crude. technically, according to oliver, we are looking at improving technical for the oil market going into the fomc meeting. that's what they will watch to see if there is positive commentary or at least the status quo as we see oil prices move higher. what will the feds say if anything about inflation? keep in mind, prices at the pump above $3.80 a gallon. it will be interesting to see the momc in that regard. futures are at the highest level for corn. surprise issues raising corn as we go into the fed meeting. back to you guys. >> sharon epperson, thank you very much. let's stay on the subject of oil

and gas. $3.80 is the national average and it is expected to go higher. how can you turn soaring gas prices into high octane profits? energy analyst at raymond james join us. i'd like to start with a report that came from your firm about a month or so ago. i quote, when it comes to u.s. oil supply in terms of production, the numbers are crazy. forecasting u.s. oil production grows from 5.6 million to 9.1 million in 2015. what is that going to do to this overall equation that we're talking about? >> energy independence has been a talking point in washington for a long time and for the first time in half a century we actually have an opportunity as a country to get there. to be clear, none of this has anything to do with politic. it's clearly the ingenuity and

capabilities of the oil and gas industry to unlock these unconventional plays and this is driving at an unprecedented increase in don't mess stig oil supply, so much so that it's really adding in a material way to global oil supply which is one reason why we generally feel that oil prices over the next, certainly, 12 to 24 months may be longer and will generally be range found and in fact ought to come off of current levels. >> you believe opec excessive capacities above the cartel official estimates. does this sort of negate that view? >> well, no. i mean, to be clear -- >> it's a supply, i guess my point is? >> sure. opec is indeed below what they have officially said. but let's look at the trend. the trend is moving up. the reason is that if global oil

demand is relatively weak, as it has been, and domestic oil supply in a few countries like canada and brazil, how much opec needs to pump is going to diminish and that means that the spare capacity is going to go up, not down, over the next two to three years, maybe longer, again, that's a real directional shift from what it's been doing for the last decade. >> right. but for now, of course, we're dealing with higher oil prices, consistently higher, both brent and wti. how much of that is concern over iran and whether there will be military action taken by israel or even the united states? >> a great deal. look, year to date, oil is up over $15 and most of that is, i would argue, is a function of the premium generated by the hysteria and, look, the odds of

military action in iran is predictable but the idea that they are so much higher today versus january 1st, sure, look, in an oil environment and chevron, i think, is a very good and ebitda, based on yielding 2% production and 5 to 7% a year and keep in mind many of these

companies and in the future, let's not focus exclusively on what oil will do. let's look at the production. because, as i've said, we're in this game-changing scenario where the u.s. will be the dominant driver of oil supply for the world. >> thank you. disney is less than an hour from hosting the annual shareholder meeting in kansas city. so is the backlash that ensues, we have one investor fired up and ready to talk right after this. all energy development comes with some risk, but proven technologies allow natural gas producers to supply affordable, cleaner energy, while protecting our environment.

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stocks and gnc holdings raising the third quarter guidance saying that sales are growing in a faster pace than previously expected. the price target raised margin in the business jet and disney is just moments away from starting the shareholder meeting in kansas city. but there is a dark cloud over the magic kingdom. particularly those that agree to let disney take on the title of chairman. the trust funds hold more than

$20 million. the state treasurer of connecticut joins us now. you know, many would argue that bob iger created tremendous value for shareholders like you. why would you have a problem with him holding the chairman and ceo title, something that is done in many companies? >> well, the company has done tremendously well since the separation of board chair and ceo and we want to make sure that they can sustain their stellar performance out into the future. let me also say this, that connecticut is the proud home state of walt disney's leading member company cans. espn. and they are growing and prospering in connecticut soil. and we hope to keep it that way for years to come. >> well, espn is perhaps the

most important single unit of disney and has contributed a great deal tos growth. but back to the separation or not, is there some study that you're relying on in terms of the performance of companies that have separated the chairman and ceo post versus companies that have not? >> well, academic studies have shown that ps can embrace, there's a premium than companies that do not and we believe that the board leadership and the management leadership should be separate. these are different roles. it is the role of ceo and management to run the business of the company and it's a role of the board leadership to oversee, to monitor management. and that's why we believe it's important to keep those roles separate. now, back in 2004, when i proposed the shareholder resolution, calling for the board of directors to set down

in formal policy the positions of board chairman and ceo, the company initially hesitated, resisted that resolution and then they agreed to embrace it because they understood that it was in the best interests of the shareholders and the company's bottom line. >> right. what did you hear back from them, then, when they were going to go back to the -- >> okay. i just lost my hearing aid. >> can you hear me now? >> yes. >> okay. well, in '04 they made the change. they reluctantly agreed, perhaps, according to you, or made the change later. let's get to now. john pepper stepping down as chairman. i believe you've spoken to him or representatives for the company. what have they told you was behind the reason to go back to a chairman and ceo being the same person? >> i did speak to chairman john pepper after he received my letter expressing my

disappointme disappointment in combining both roles. he then called me up. we had a good conversation. he was very polite but unconvincing. my understanding, based on the board's filing, is that they believe they will have ready access to the skills and experiences of mr. bob iger by having him named as chair and serving at the same time as ceo. you know, i believe that as long as he's still employed by the company, he will be accessible to them. his skills and experienceses again, be of value to the board. he does not have to be chair to provide that kind of talent to the company. >> all right. treasurer, appreciate your time. thank you for joining us. >> you're welcome. if disney made a movie about the fed, it being fed day as

well, what title would the company give the film? that's our twitter question. tweet us at cnbcsquawkst. plus, what is happening ahead of the fed. rick, what is coming up? >> well, i think we're going to discuss that op ed about california in "the wall street journal." also, david faber quoted a study. is it cheaper to buy a house or rent? i think we need to discuss that. and, of course, supply. we have treasury supply. there's been a boat load of late. all of that at the top of the hour, carl. man, i'm glad aflac pays cash.

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another gorgeous day here in new york. maybe that's why volume is light. >> people are out enjoying the weather. of course, it come ts back to real world things, such as natural gases. heating your home was not a difficult thing in the u.s.,

northeast at least. >> we hit an intraday low. it was the lowest since january. 231 is the ten-year low and people are now talking about 214.7, but basically getting closer to a one handle. >> which is a shock. of course, if jim cramer was there, i thought our last guest made an interesting point that perhaps we don't think about it enough, which is the incredible increase in oil production. not just nat gas but oil production that is taking place in the continental united states is shocking. it's not offshore, it's onshore, like in places like north dakota. it's going to have an extraordinary impact and a story we should be watching closely. >> and it's strange as gas

prices are rising but the effects will be felt down the road. new standards for medicare reimbursement rates are already moving ahead. bertha coombs has a new look at. >> it does, indeed, the pay for performance model on many fronts, starting this year, patient satisfaction scores will account for 30% of the calculation for hospital reimbursement. at florida's largest hospital in orlando, with a big medicare population, they've turned for help to experts on happiness, the disney institute. >> weith disney's name on the nw florida pavilion they turned to the magic kingdom to get the design right. >> they took our desires to have our environment be about healing and about nature. >> hello! >> and to improve their patient

experience. >> we're getting away from the concept that you had to wait in an e.r. for two hours. >> kids are seen within five minutes, and in an e.r. bed within 30. and parents are raving about it. >> our patient satisfaction scores at times have been top in the country. >> now disney is helping them with getter high marks from holder patients as new medicare payment rules will start linking patient scores to reimbursement rates. >> more hospitals are saying, ooh, we need to pay attention to this experience portion. >> obviously the festive, childlike environment doesn't translate for medicare patients. but focusing on their needs does. >> i can't say enough about the nurses here. >> marty, a nurse from a competing hospital, gives them an a-plus. >> they look at the patient like they're the most important thing. >> with 40% of revenues tied to medicare patients, it's important that they do. >> it's in the millions. it could be 20-plus million dollars for our organization if we don't get our scores right.

it's not that it wasn't being done before but we have to be more thoughtful about how we demonstrate our outcomes. >> boy. talk about demonstrations. those high-tech rooms in the children's emergency ward help a lot with the high scores. we got a tour of all the bells and whistles on cnbc.com. and later on power lunch, the supreme court health reform hearings are just two weeks away. i'll handicap the impact on health care stocks. david, and carl, back to you. >> all right, thanks very much, bertha coombs. >> we'll see where that supreme court decision goes. >> yeah, exactly. >> tweets when we come back. >> yes, we are. >> not enough, right? in fact we're going to take the story to disneyland. if disney were to make a movie about the fed, what would it be called? tweet us. your responses are coming up. [ tom ] we invented the turbine business right here in schenectady.

without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world. they go into power plants which take some form of energy, harness it, and turn it into more efficient electricity. [ ron ] when i was a kid i wanted to work with my hands, that was my thing. i really enjoy building turbines. it's nice to know that what you're building is gonna do something for the world. when people think of ge, they typically don't think about beer. a lot of people may not realize that the power needed to keep their budweiser cold and even to make their beer comes from turbines made right here. wait, so you guys make the beer? no, we make the power that makes the beer. so without you there'd be no bud? that's right. well, we like you. [ laughter ] ♪ wheeeeeeeeeeeee! whee! whee! wheeeeeeeee!

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and we've been honored to walk with you to help you get where you want to be. ♪ because your moment is now. let nothing stand in your way. learn more at keller.edu. time to get the squawk on the street for a tuesday. two big meetings today. we've got the fed talking monetary policy and disney executives facing shareholders. so we're asking you if disney made a movie about the fed what would it be called and why? got a lot of good responses. poppy rights, pay rots of the potomac, curse of the trillion dollar debts. jeff writes if disney was to make a movie about the fed they

should call it finding nairu. a pixar animated film, of course. and jill writes, the lying king. a lot of skeptics about the fed. even at this stage. >> a lot about all that money that's been printed and qe and everything else. >> i'm still waiting for cramer to come up with the seven dwarfs. >> we never got to do that. >> interesting, though, the concerns over disney today, whether it's succession, whether it's pay, whether it's john carter and the stock as you pointed out, hasn't reflected that. in terms of a dollar value. >> no, listen, it's had very strong performance. i think there's great consensus that uighur has done an extraordinarily good job running this company. it's not about any one thing. it's certainly not about the movie studio of so many of these media companies. investors expect the up and down of a movie studio. they discounted a great deal. it is about cable networks, cable networks of walt disney led by espn. cable networks at time warner.

cable networks at viacom and news corp. those are the key drivers, both in terms of subscription fees and advertising. >> meanwhile, the s&p at 1380, we had some traders earlier in the week saying we want to see some kind of conviction at 1375. over the next few days, we appear to be getting it now. dow is awfully close to the session highs. hard to tell how much of this is related to stress tests predictions coming out later in the week, what the fed may or may not say today. >> and the retail sales number is pretty good. what's interesting carl as we wrap up here, we barely mentioned europe today at all. i can think of days where we've done this show where all we've mentioned is europe. italian yields well below 5% ten year, i believe they hit their lowest level in quite some time. spain is just above 5%. we're just not talking about europe.

there's still concern some way we're going to come back to something, whether it be europe or something else that holds up this recovery and has people concerned again. >> i saw there was a slight online today from barclays asking about whether or not he'd be talking about private sector involvement plans in portugal. and whether, clearly what we saw in greece is unlikely to be the last chapter in this saga. >> no doubt about it. portugal, ireland, questions of fire walls. but for now at least, europe is not the story or the concern for this market. >> all right. david, thanks for sticking around. >> all right. >> we'll see you tomorrow. right now the third hour of "squawk on the street," it starts right now. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> in the new administration is so condemned and has such contempt for business that if -- they've got to come together and work together or otherwise there's no hope. the public sector cannot involve these problems. >> they're going to stay on hold

basically until the unemployment rate is 7% and inflation is 2%. does it smell right? >> no. >> february retail sales headlines, up 1.1 prps >> eventually there will be lots of confidence in the dollar, because that's the last thing that's holding us together. and to me it's an illusion that the dollar can bail out the world. >> retail sales should have been down. gasoline is higher. people are -- should be more cautious. they're not. that's the story of the first quarter. so i'm now on lion's gate. i'm now on hunger games. my favorite trilogy of the year, better than the hobbit. >> more than twilight? >> more than twilight. i'm thinking got to go get tickets for a movie. can you imagine? >> there's the bell. and yes, the s&p 500, realtime exchange. >> the dow is coming in a little bit stronger. they still have operation twists under way. it seems like it's doing what

they want, keeping treasury rates low. keeping other asset classes quite supportive. the fed is probably saying let's see how this goes. maybe a policy put in place so far can really start to lead to stronger momentum. >> good tuesday morning. markets are spiking on this fed meeting tuesday. get a check on the indices today. the dow once again above 13,000 at 13,043. s&p at 1380 a 3 1/2 year high. the nasdaq holding steady above 3,000, moving up six points to spare. micron is the biggest gainer on the s&p. urban outfitters brings up the right. micron on a price target increase to $12 over at pacific crest. urban down sharply after fourth quarter results did miss estimates by a couple of pennies. we're waiting for the president to take the podium at the white house to make a statement on trade rights with china. we'll bring that to you live as soon as it happens. in the meantime, get to our road map today. first up, the black sworn himself, he's sitting right next to me. he hasn't spoken in years, at least on this channel, but he is breaking his license here today.

we'll see what he's watching and talk to him about what's worrying him now former federal reserve governor gives us his thoughts on what to expect from the fed today and in april and june. and the comptroller on currency is with us on banking, regulation and how to stabilize the american financial system and a new way to invest your retirement in foreclosures. why putting your nest egg into foreclosed homes could potentially make you some money. all that and more is coming up in the next hour. we begin with a cnbc exclusive. a black swan is an event outside the realm of regular expectations. no mother person personifies the concept like telev. he has not appeared on cnbc since 2010 to break his silence about what he fears will be a black swan event. >> thanks for inviting me after all these months. >> we made it sound like you've crawled into a hole. clearly you've been writing,

speaking. >> mostly finishing my new work. but, you know, i came out of this -- i watched the election and something wrong is going on. only one candidate ron paul seems to have grasped the issues and is offering the right remedies for the central problems we facing. so i came out just to support -- i'm not involved in politics. i'm a risk based person. but from my risk base vantage point i think one candidate represents the right policies when it comes to the big four, and that candidate is ron paul. what are the big four? the first one is deficits. of course, governments self-feeding bureaucraciebureau. second one is the fed. he's going after the fed. the only one with the guts to do

it. the third one is mill tarism. i like defense but not defense because it becomes self-feeding again. and the fourth one is that notion that america, that central notion that america is about is about resilience. and you don't achieve that through bailouts. you need the economy to stay vital and you need a certain rate of failure. what is -- what is fragile to break early not too late. and he represents these ideas. this is why i came out of my hiding to just express my support and going to be fund-raiser with some friends. but is the idea. although i'm not a libertarian and i'm not coming from a political standpoint, but on a risk-based view of the world. >> actually we have a sound bite of a recent interview or a conversation with ron paul, i

think in which he sums up the kind of points you're making. let's take a quick look. here's ron paul. >> you continue to do exactly what we're doing now, it crashes the country. we're not there yet. but it will come. you know, last month, two -- a $200 billion deficit in one month. that used to be the entire budget are our country. that is unsustainable. and eventually there will be loss of confidence in the dollar, because that's the last thing that's holding us together, and to me it's an illusion that the dollar can bail out the world. >> it's an illusion that the dollar can bail out the world. his words on "squawk box" this morning. so your opinion is he's addressing structural problems and no one else is? >> exactly. he's doing the chemotherapy. he can come up with a plan to cure the fundamental issues. rather than spending time on all these peripheral matters. and also he's against the notion of novocaine, giving novocaine when you have a severe problem. you do a root canal, okay?

that's how you cure a problem. four years in this situation, we have now swelling government deficits coming from an ill, you know, structured cure to the private problem. that's not even moral. >> you put it in the framework of chemotherapy. chemotherapy may kill the cancer but it will make you very sick. you lose your hair. >> it may make you sick but that's the only choice you have. you have to start with government budget that is in control. you start with that. it's unconditional. you don't gamble with future generations' money and you don't gamble with hyperinflation. you want the government first, like we're doing with the greeks. we're doing it to the greeks. we should do it to ourselves. you start with that. that's 90% of the problem. and then the fed, yes. >> what side effects are you

willing to live with as a result of those actions? >> we want jobs. we want healthy economy. i want to live in a country -- i immigrated here. i didn't go to soviet union when i came here 30-some years ago. i came here, lrpt? i want to live in a country that -- and that's something that has -- that has this energy to rebuild things. and this is gone. okay from discourse. we have metastatic government, large government, civil servants having higher standards of living from other people, shielded from all the problems of the rest of the population. this is not the way you will have the competitiveness in the future that we had in the past. okay? and you need to do something drastic about it. so long run you want jobs. you want safety. it's like someone doesn't gamble, okay, to feed his family. you don't gamble, all right, to your family because you know losses are going to hurt them

more than what benefits you may have gambling. >> right. >> long-term we want jobs, we want stability. we want a vital economy. >> short-term you're willing to live with higher unemployment? >> there's a problem of four years. short-term, spend four years from the money? at some point you've got to do something. >> you mean by addressing the structural problem. >> they're not addressing structural problems. novocaine after novocaine. >> you've watched congress try, right? they've tried to have conversations about fiscal discipline. >> i mean, the whole thing is rotten. number one, the advisers around obama, okay you know, the ones who were part of the problem, okay. the advisers, they're friends with the bachers, okay. the republicans don't seem to be addressing the problem and i don't trust them with deficits. the other republicans. i don't trust them with deficits. look what we've had under republican administration, including george bush, only. so ron paul is the one i think who is at least rallying

intellectuals like me, who normally are completely independent, okay, who want the main problems to be addressed and who want the major cleanup. >> right. what kind of chances do you give him? >> i don't think from the chances -- i'm not going to -- i don't care. i'm supporting him regardless of the chances. whether he has 1% or 900% i'm supporting him. because we have no other solution but to come out of my -- my line rather to come support him. i have no other solution. it's my duty as a citizen, as a person who lives here and as a taxpayer who doesn't want to be hoodwinked. >> right. >> in the long run by bureaucrats. >> what kind of solutions, before we let you go, do you think, being a realist and knowing how this country works, how the world works, what is feasible either now or after the election? >> well, i think that the support he's getting among the youth who normally would voted obama, okay you're starting to see, he has staying power and he's there. and the support he's getting, on the left, people who voted obama

because they're idealistic, because they're idealistic, people who are on the republican side, and are disgusted with the other candidates' lack of clear policy and willingness to take the personal risks to solve the problem, i think that there's a big chance that we'll have a major movement in this country, an independent party in the middle that would come up wi with -- with -- with a platform and address these issues. >> and before we let you go, if you were still trading and empirica would you still be betting, despite everything you're arguing that the market would go higher or lower? >> i don't own stocks, why? because i don't trust treasury bonds. i happen to own stocks. i'd rather have a dividend than a coupon. so i own stocks. okay. i just own them as a fund management principle, and -- >> but stocks are benefiting from fed moves even though you may say they're misguided. >> well, i am afraid of hyperinflation, not of

inflation. hyperinflation. i have no choice but to own stocks. stocks and some real estate. >> just to stay afloat? >> to preserve my -- my staying power. my financial situation. >> and that will be your path, that will be your instrument? >> i also own some euros because in spite of the bad press they know the problems in europe and here we're not aware of it. so i hedge some euros. >> when is your book coming out? >> september, october, november. i don't know before or after the election. when it's done. okay? it's actually on systems that like disorder and help to build a system, a robust system is a system that not just can sustain shocks but one that improves after every shock. and this is why i don't like bailouts. i want the system -- normally the system should gain after a crisis. just like after the forest, every small fire. we haven't had that. so this is my theme now. >> you'll come back? >> if you invite me, i'm here. >> very nice.

nassim, thank you very much. >> thank you very much. >> good to see you. >> let's head toefr to the cme, with the santelli exchange. interesting stuff. >> oh, boy. he is great and i'll tell you what, i'm right with him. deficits scare me. listen, it was a great report that i learned of from david faber this morning. it was by deutsche bank. what it was about was own or rent with regard to housing. the reason why i find this so interesting, at the end of the day this really epitomizes why we can't see the economy do better. because one of the most important aspects of this, i have my little radio shack trs computer back in the early '80s, and i programmed a quick program that allowed me to deduct, at my tax rate back then, how much i would save on my deduction for interest. this is impossible to really answer because we have no idea what tax policy is going to be. we've heard that there are so many things on the table

potentially a mortgage deduction. get the point here? if we can't even truly make a decision about what our expenses are about buying a home, and believe me we need to have homes move, just think about the complications through the rest of the economy, just on tax policy alone. forget everything else. second point, great op-ed in "the wall street journal" today. california's greek tragedy by michael boskin and john cogan and what i found almost as scary as our black swan guest from the 1980s to the 2005, we saw the population of california move up 10 million. we saw people on medicaid move up 7 million. but here's the part that made me perspire, through that time tax filers only went up 150,000. remember, these are millions. listen, no matter if you're a democrat, independent, libertarian, republican, in the end, it's all about growing the tax base and bringing more people through jobs in to make everything hum along. we're not doing a good job at

that. and i guess california, and even illinois, are almost poster childs to the bad math there. carl, back to you. >> that's for sure. rick, thank you very much. when we come back, see what stocks could get a boost or take a hit after the president's statement on china. in just a few moments. sharehol. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ here's a chance to create jobs in america. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone.

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president obama set to speak on trade and china in just a few moments. there's a live shot of the white house. we'll take that as soon as it goes live. in the meantime some of the stocks that could move on that statement. brian shactman is live at hq with more on that. >> focusing on rare earth space. china has 97% of the global rare earth production. and of course they've been messing around with exports for the past few years. these are all the major players outside of china right now, lyn after s, molycorp the biggest one in the u.s. they're all up big today. it depends on how the chinese react to it. they've been exporting and exporting enough of late, so basically the eu, japan and the u.s. want the chinese, the wto to make sure the chinese export enough and don't mess around with pricing here. but there's a take away i want people to watching to understand here. if china reacts positively and loosens up exports that's a good thing for your apple and your iphone, the cost of making that

will go down. good for defense companies that use rare earths in their technology. good for clean technology. but it's not necessarily good for those stocks that you see there, because if they export more the prices go down and those companies, some of which aren't even producing right now, might not even be able to exist. right now some people see rare earth in the headlines, they buy these stocks without really knowing. if china loosens up their exports and the price of rare earths go down, these companies are going to have a tough time. >> mean while, it's also about, and the white house lays it out, hybrid car batteries, lighting, steel, chemicals, it's a huge input in to our manufacturing process. >> there is no doubt. and you know, remember a year-plus ago they cut off they're shipments to japan entirely. so they've used this rare earth space as a political move when they want to get something done and obviously the u.s. government, the eu and japan are tired of it and want the wto to intervene. we'll see what china does in reaction to it. >> brian, thank you for that. meanwhile let's check in with

john harwood who is in washington. can you put this move into a larger context? is it the beginning of a new chapter in the way the president addresses china? >> well, i'm not sure it's a new chapter. i was on a conference call with administration officials who put it in context with the raw materials case they brought against china in 2009. so it's of a piece with that. but clearly, at a time when the united states is feeling economic stress and difficulty china has become a political target, both parties not just running for president but also for the house and senate, we saw it in campaign ads in 2010, the administration is trying to take this case where in response to what brian was just talking about, the manipulations that china has engaged in, the united states is trying to respond. of course, there's a counterargument from china that president obama's playing politics. that's what a mitt romney adviser told me today while acknowledging that mitt romney

himself is doing the same thing. because he says he's going to label china a currency manipulator on day one. so this is a political hot potato. we're in the middle of an election season. the administration's going to try to bring this case and see if they can make some headway and score some points with voters. >> you mentioned the currency issue, as well. here's the cover of the f.t. today, of course. renminbi has reached fair value against china after the horrific trade deficit numbers yesterday. the worst in about twelve years. six times the consensus to the downside. did a move like today, when we're talking about trade, does it migrate into areas like kur sin? does it move us forward in certains of naming a manipulator or not? >> no, i wouldn't think so. i think in some ways this is a substitution. this is a displacement of some of that pressure in to another arena, more tangible, more specific, and narrowly defined arena. but no, that pressure is going to continue. the ebbs and flows in the congress, it's been running a little bit cool lately. but i would expect that when we

get around september, october, you're going to hear a lot more about it. >> of course it's coming on the day of some contests in mississippi. and alabama. we've already been through kansas. and we'll work our way up to utah later in june. how much of this -- i mean, where does this in terms of voters, john, what is the target on a move like this? does this win you points in the south? >> both parties, in both of their nominees, are going to try to fight for the allegiance of some of those working-class americans who feel aggrieved by international trade, feel aggrieved by china. of course, the countervailing argument is, of course, that china not only lends us money, but helps keep the price of our goods cheap. nevertheless, a lot of people blame china for economic difficulty, for softness in the job market, and so you see both romney, rick santorum, should he get elected or get chosen as a republican nominee is going to be talking about that issue. and the president of the united states is going to do that, as well. >> we just had nassim taleb on,

author of "the black swan," john, basically coming out with a full endorsement of ron paul. saying he's one -- the only of the four major candidates at this point to address the structural deficits, the real structural problems in the, not just the numbers, but the makeup of government. and i wonder if you think ron paul's influence in the race is moving ahead, or being constrained as we move on. >> well, ron paul has a structural, political problem in the primaries which is he's not winning anywhere. as long as he's got that problem, i think the idea that he's having an increasing influence is going to take a hit. ron paul's goal, and to some extent he's already realized this goal, is to bring the libertarian brand of politics he believes in more squarely into the mainstream, whether that's because of him, or because of developments in the united states over the last couple of years, and the extraordinary measures that both the bush, and the obama administrations took

to prop up the auto zris and wall street. those contributed to it, as well. but he's right now at a point where his presidential race is kind of stalls. he's going to continue to the convention, try to amass delegates, especially in caucus states but he's not advancing the ball, not really making new headway in this race at this moment. >> and finally before we move on to rick santelli, labor, john, in 2008, spent $400 million supporting democrats, big story in the "times" this week about how there's the potential for labor to give less to them this time around, maybe run their own super pacs instead. is this china move an attempt to court them, as well? >> anything you do to toughen your trade policy is going in the hopes of democrats to appeal to labor. i don't think it's a specific response to that. but i wouldn't expect, even if labor directs more money at super pacs, i wouldn't expect them to diminish their effort to get democrats elected one way or the other in 2012. >> all right, john, don't go anywhere. i'm sure you won't. we'll wait on the president.

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still waiting on the president to come out and speak at the white house, delivering a statement announcing some new efforts to enforce the country's trade rights with china. and in their words, leveling the playing field for america's businesses and workers. and that's the shot of the rose garden as we await the president's move outside those doors. meanwhile, rick santelli in chicago i know has been listening, not just to nassim taleb in the past half hour but

john harwood talking about the political significance around the move regarding trade, and also, of course, potentially down the road, a move surrounding currencies. >> you know, i really don't like election years and i don't like the process of how things are ignored by both parties. rise to the surface with the sense of urgency. we all know there's only eight months before the election. you know, to me, when it comes to china, what we need to do, same as tax policy, same as regulations, it isn't how much of anything you have, it's the quality of what you have, and with regard to trade relations, currency valuations, intellectual property, i think, you know, a simple report needs to be done where we share with china, with a three or four month down the road deadline that here's the way we'd like to see these things move, if they don't, here's the action we will take. there needs to be a plan. you know, this, you know, let's light a firework every election cycle and all politicians are guilty of it is counter

productive and it underscores whether it's tax code or relations with china or nafta. these things are too complex. our needs are obvious. we don't communicate well and i think this is not only with regard to china. >> it's a good point. john harwood, would you agree that to a certain extent, our relations with that country are on an ad hoc basis? >> actually, i wouldn't. look, ever since the bush administration, hank paulson initiated the strategic economic dialogue and the obama administration continued that. the president's met with hu jintao ten times since he's been in office. so i think there's a long-running dialogue. certainly the timing of particular actions, this one is coordinated with japan, and the eu, is subject to criticism on political grounds. that's what i was hearing from the team romney today. but, we are talking all the time, this is the president makes the case that he, like china, is trying to play the

long game here, i don't see it quite the same way as rick. >> interesting. >> carl, dialogue, blah, blah, blah, blah. that's dialogue. i think action, either you're part of the solution, you're part of the problem. i remember interviewing hank paulson in the euro/dollar pit at the old cme five years ago. he was telling me how many trips to china he had. and all the strategies that he wanted to implement. blah, blah, blah, blah. you can still buy a knockoff purse on park avenue. we don't lead by example. we don't take action. how can we impress others to hold true to intellectual property, and knockoffs when we don't even police it in our own east coast or our own backyard. doesn't make no sense. dialogue doesn't do anything. >> john, do you want a crack at that or let rick have the last word? >> well, you can let rick have the last word. i would just say that if rick wants action, action is what we're getting today, for better or worse. >> action is something you can pass out to an average guy, put it in the chicago tribune tomorrow and six months we could

say, gee, this hasn't changed, here's the course of action we're going to take. but anyway, good discussion, john. >> it really was. the president was scheduled, by the way, john, to speak at 11:10. his prior appointment today was a meeting with the 2012 intel science talent search finalists. so i assume he's still hanging out with those kids. maybe that's the reason for the delay. >> i would assume so, carl. but i've got to tell you, while sitting waiting for this live shot i saw an espn crew go in with big white display boards so i'm suspecting we may be getting some march madness picks. although my guess is that that's going to be later in the afternoon. >> of course the president and david cameron are going to attend the ncaa tournament first four game tonight at the university of dayton. so he's got to get this out of the way first. but guys, thanks for helping us fill some time. rick santelli and john harwood. we'll bring you the president when he comes out of the doors. in the meantime the fed is in the spot light today. expected to stay the course on monetary policy. economists say they'll be paying

close attention to what the fed has to say about his bond buying program, what is next for the central bank. joining us today, robert haller is a former federal reserve governor and cnbc contributor. he joins us along with kelly evans here with me at post nine. mr. haller good to see you again. good morning. >> thank you. >> one general take about today's meeting is that it's not going to be very interesting. but that the april meeting could be a lot more interesting. would you agree with that? >> probably. it all depends what will be happening in the u.s. economy in the meantime. i don't see much happening at the present time. it is going forward in slow gear, basically. >> but it's interesting, carl, if you take a look at what the market's doing today, we've so far seen in a period where people expect stronger growth but one that isn't necessarily propped up by the federal reserve. the dollar is an important thing to watch here. you want to see whether people expect those growth to come up even without additional easing. >> steve liesman joins us, as

well. steve, thoughts about the degree to which the fed's watching job growth and wants other things to improve, as well. and then couple that with the retail sales we got today. >> there's going to be a couple discussions going on. you got to one of them. essentially this is the meeting before the meeting and they'll be talking about steps going on to june, if you look at where the fed's balance sheet is right now. it's kind of flattened out as they do operation twist and what's happened is now is they're now selling the short-term, buying the long-term. as for jobs, there's the balance sheet. you can see it's kind of basically flattened out as qe has rolled off and they've gone to twist. take a look at the next there's the short-term securities being sold, long-term securities being bought. they're kind of running out of short-term securities. so the question is how do they do that? that's where that rico thing comes in. as for jobs, carl, the issue is going to be the output slack. what's the right level of unemployment that would cause

the fed to start to get nervous about inflation? we've seen unit labor costs pick up. my guess is that the hawks on the fed are going to start talking about rise iing labor cs as a precursor to an inflation problem. they're going to have a debate. how much slack is there that we can grow and not have an inflation problem. >> robert, you go with that? do you agree that are we beginning to see some bottlenecks in the labor market? >> especially in the labor market it's very difficult to find the right people. skilled workers are short t that doesn't mean that the overall labor supply isn't very large at the present time. a lot of people have the labor market so we do have an unemployment problem. >> here's justice stiglitz, even if this is not one of the many green shoots that soon turn brown the economy will almost certainly need more stimulus if

it is to return to full employment any time soon. if my forecast turns out to be wrong, stimulus can be cut but if it turns out to be right and we do too little we will live to regret it. how many legs does stiglitz have to stand on? >> i think the federal government essentially has spent its am nation. and for federal government to engage in more deficit spending at the present time, as stiglitz supports, would be very, you know, very ill advised. the federal government got to tighten up its budget. >> let's remember that there is already -- that this is already under way. it's not -- part of the problem when people look and wonder where is growth, where is gdp right now or what's going to happen at the end of the year, is that we already have significant fiscal tightening under way. we have the sun setting on some tax cuts and other measures going on. this drag has been a key factor behind the reason why growth -- >> kelly the drag at the moment

is theoretical. it's something that's going to take place. the tax cuts are supposed to expire in december. the sequestration is supposed to take effect in december. i'm not sure it's going to happen, as we see the president come out there, carl. >> all right. very busy day for the president. as we said, meeting of course with david cameron of the uk, going to dayton to watch some basketball tonight, but in the meantime here is the president of the united states. >> good morning, everybody. before i make an announcement about our efforts to stand up for u.s. businesses and u.s. workers i'd like to say a few words about the situation in afghanistan. over the weekend, as many of you know, there was a tragic incident in which a number of afghan civilians were killed. what i made to president karzai when i spoke to him is that the united states takes this as seriously as if it was our own citizens and our own children who were murdered. we're heartbroken over the loss

of innocent life. the killing of innocent civilians is outrageous and it's unacceptable. it's not who we are as a country, and it does not represent our military. for that reason i've directed the pentagon to make sure that we spare no effort in conducting a full investigation. i can assure the american people, and the afghan people, that we will follow the facts wherever they lead us. and we will make sure that anybody who was involved is held fully accountable about the full force of the law. yesterday i met with general allen and ambassador crocker who were here in washington, and i have extraordinary confidence in them. and in the many americans who are serving in afghanistan, and who have made extraordinary sacrifices to be there. today i'll be meeting with prime minister cameron, who's part of

our broad coalition, serving in afghanistan. and we'll have an opportunity to consult about the way forward as we prepare for the nato summit in chicago later this spring. make no mistake, we have a strategy that will allow us to responsibly wind down this war. we're steadily transitioning to the afghans who are moving in to the lead. and that's going to allow us to bring our troops home. already we're scheduled to remove 23,000 troops by the end of this summer, followed by -- following the 10,000 that we withdrew last year. meanwhi meanwhile, we will continue the work of devastating al qaeda's leadership, and denying them a safe haven. there's no question that we face a difficult challenge in afghanistan. by i am confident that we can continue the work of meeting our objectives, protecting our country, and responsibly bringing this war to a close.

now, one of the things that i talked about during the state of the union address was making america more competitive in the global economy. the good news is that we have the best workers and the best businesses in the world. they turn out the best products, and when the pay -- playing field is level, they'll always be able to compete and succeed against every other country on earth. but the key is to make sure that the playing field is level. and frankly, sometimes it's not. i will always try to work our differences through with other countries. we prefer dialogue. that's especially true when it comes to key trading partners like china. we've got a constructive economic relationship with china, and whenever possible we are committed to working with them to addressing our concerns. but when it is necessary, i will take action if our workers and our businesses are being

subjected to unfair practices. since i took office, we've brought trade cases against china at nearly twice the rate as the last administration. and these actions are making a difference. for example, we halted an unfair surge in chinese tires, which has helped put over 1,000 american workers back on the job. but we haven't stopped there. two weeks ago i created a trade enforcement union to aggressively investigate any unfair trade practices taking place anywhere in the world. and as they ramp up their efforts our competitors should be on notice. you will not get away with skirting the rules. when we can, we will rally support from our allies. and when it makes sense to act on our own, we will. i just signed a bill to help american companies that are facing unfair foreign competition. these companies employ tens of thousands of americans in nearly 40 states. because of subsidies from

foreign governments, some of their foreign competitors are selling products at an artificially low price. that needs to stop. this morning we're taking an additional step forward. we're bringing a new trade case against china, and we're being joined by japan and some of our european allies. this case involves something called rare earth materials. which are used by american manufacturers to make high-tech products like advanced batteries, that power everything from hybrid cars to cell phones. we want our companies, building those products right here in america. but to do that, american manufacturers need to have access to rare earth materials, which china supplies. now if china would simply let the market work on its own we'd have no objections. but their policies currently are preventing that from happening. and they go against the very rules that china agreed to follow. being able to manufacture advanced batteries, and hybrid cars in america is too important

for us to stand by and do nothing. we've got to take control of our energy future and we can't let that energy industry take root in some other country because they were allowed to break the rules. so our administration will bring this case against china today, and we will keep working every single day to give american workers and american businesses a fair shot in the global economy. we're going to make sure that this isn't a country that's just known for what we consume, america needs to get back to doing what it's always done best, a country that builds and sells products all over the world, that are stamped with the proud words, made in america. that's how we create good, middle-class jobs at home and that's how we're going to create an economy that's built to last. thank you very much, everybody. >> that's the president not taking any questions. but again talking about the number of trade cases that the u.s. has taken against china.

double the previous administration in their words. as he said our competitors should be on notice. you won't get away with skirting the rules. john harwood in washington, as well, did you get any surprises in there? >> no surprises but i've got to tell you you can tell this president is on the right side of this politically when you look at the response from republicans. i just got an e-mail from chuck grassley, influential republican on finance and trade and agriculture issues in washington, and his criticism was not of the action the president's taking, but rather of that trade enforcement center that the president referred to in his remarks. what chuck grassley said was this is a good step and it proves we don't need the trade enforcement center, just more bureaucracy. relevant point there is he approves of the step. other republicans will approve of it, as well. the president is aiming right for the middle, and for some of those blue collar and working class voters i referred to earlier. >> just the timing of it all, with stories about the renminbi on the cover of the f.t.

a day after the big trade deficit numbers out of china, why did? why do this today? >> well, i think this has been long in the planning. again, it's coordinated with japan and european allies as the president said. so i don't think it is tied to any particular headline but look we're in the middle of an election year and this president's going to take every opportunity when he can to demonstrate that he is trying to put the interest in the american workers first in terms of trade. mitt romney and his republican counterparts who are running for the republican nomination doing exactly the same thing. >> john, appreciate it. appreciate all the help. john harwood in washington today. thank you very much. meantime, as we've been watching the white house, a bit of a jump on the dow. >> a melt-up. i know everybody's winding about the low volume. everybody's unhappy. forget the volume. we're at new highs. we have slowly hit new highs in all the major indices. dow industrials, s&p 500 are

essentially at new highs. here's the problem, small cap, mid cap and transports are still lagging behind. that's a little bit of an issue here. but as you notice, five days in a row we're up. that's a melt-up. may not be exciting to be up 30 or 40 points a day but today we're up 100 points. everybody who is bearish right now is a little bit caught and a little bit behind. move on and i'll show you what's moving is the ones that were the market leadership earlier in the year. the global growth names, the kind of companies that you want to see, the global economy is expanding. financials, technologies, materials industrials and consumer discretionaries. part of the problem we've had in march is these have not been the market leaders. if you take a look at what's happened to the big cyclical names this month, freeport, eaton, caterpillar, alcoa, 3m, they've done nothing. they've held the s&p and dow back essentially. what's been the market leadership? why have we had this fairly flatish move sleer?

if you look at consumer stocks, the more defensive names have been the ones that have been moving up this month. pfizer, safeway, pepsi, colga colgate-palmoli colgate-palmolive. we've got to resolve that conflict. is there going to be fairly decent global growth? here's how you can watch the whole thing play out. this is the consumer versused cyclicals for the year. there's your cyclical index that's dropped in the middle of last year, concerns on global growth. specifically on the great slowdown in europe. there's your consumer names and that's the gap that's been going through, we've been playing all out with. it narrowed a little bit in january when there was some optimism on global growth as we've been a little bit uncertain about just what direction are we going on china, on europe, and even in the u.s., that gap has stayed very wide. we've got to close that gap if we're going to get any real kind of growth here. the bottom line is, let's see if we can get it. we saw do, newspaper or ra and deutsche bank raising on gdp.

the rest of the world thinks it's over 8%. that makes a difference. we've got some positive news on bank of japan. they did not raise rates, said the global economy was improving. we've also got german confidence a little bit better. little builts of nuggets, i think we're a bit positive today. again how to resolve this whole issue. >> someone pointed out to me in the past six months. 75 instances of easing among central banks around the world. that's been a lot of easing. >> a lot of help. >> when the bank of japan said they were not going to expand their quantitative easing program, the nikkei was up 1.5%. immediately dropped. and ended up on the day. but dropped on the same disappointment we get here, no qe-3, some people will sell off on that. i take growth over qe-3 or any kind any time. >> thanks, bob. meantime comes on a big day for the bond market. rick santelli in chicago. rick? >> well you know, as we approach 210 top of the range for ten-year notes i have my cpa,

certified financial planner, bill herr. we always like to talk taxes. that's your cup of tea as we get ready to slide into april and everybody thinks taxes -- lbj is famous for a lot of things. one thing he's famous for is ending the trust fund with social security. but it's also a good quote you talked to me about. >> lbj said that the most dangerous thing for an american businessman is doubt and uncertain tax policy. i can't think of a time in the last 30 years when there's been more doubt, with regulation in tax policy than there is today. >> you're a font of information when it comes to taxes. many members have used you in the past. how many hours did you tell me are spent dealing with irs and getting your tax natures in order? >> well, you know, nina olson in a report said that the biggest problem right now is the complexity of the code. she estimated that 6 billion hours. >> billion with a "b"? >> 3 million workers, 2,000 hours a year, is spent trying to comply with the tax code. and we just talked about

manufacturing -- you know, manufacturing the president just commented on building up the economy and manufacturing and i can't help but think, we've got these great minds on taxes and accounting, spending time on trying to get profits overseas instead of the u.s. to pay taxes. if we could use that to build business the economy would be better off. >> now "money" magazine, they've done some interesting stories about tax policy. one we were talking about, maybe you can elaborate to the audience. >> well every year, i don't know if they did this year, for the last three, four, five years, they have given the same return to 50 different tax preparers. and some years maybe two come up with the same answers. some none. sometimes the range is really wide. so you know there's a problem with the tax code. paul o'neill when he was treasury secretary said that even the irs can't understand the tax code. so, that's a problem. >> that might be my favorite and only quote of mr. o'neill that i really like. carl, back to you. >> thank you very much. rick santelli. when we come back the acting comptroller of the currency john walsh with us live to discuss

regulations, safeguarding the financial system and a lot more. [ artis brown ] america is facing some tough challenges right now. two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough.

that's good for our country's energy security and our economy.

turning our attention to the future and health of our community banks. the end pind community bankers of america is taking place in nashville. it's the largest and most come prensive of bankers. acting comptroller of the currency john walsh joins us

this morning from the convention. john, good to see you again. good morning to you. >> good to see you, too. >> comes on a busy week, obviously, the fed meeting today, stress test results out, later in the week, even the fed chairman delivering, i think, a taped address to the convention. what is the main thought right now running through community banks? >> well, i think their concern is trying to get back to a normal level of business, trying to make sure that they are positioned and ready to support the economy, which by and large i think they're ready to do. and their concerns are also with the burden of regulation, and the impact that some of the dodd-frank rules, the basel rules and some other things being done are going to have on them. although by and large the effect on community banks will be quite limited. >> i was going to say, compared to the effect on the big banks. it's kind of hard to pin down

where you think dodd/frank is going given that we're still in this comment period, right? >> well, difficult to say much about where we are with the risk retention rule, the volcker rule and some of those big pieces. but there are many pieces of the law that are in place, the resolution elements and we have, in fact, done some of the basel improvements although there's more to come there. we talk about big banks and their ability to lend. would you argue big banks are being better on a main street level? >> i think that they are certainly working at it. obviously their focus is on the communities that they principally operate in. i think they're working very hard to make sure they're supporting local businesses and providing credit. there were some statistics quoted here at the meeting that they are, as compared to their

role in the economy, make iing outside share of ball business loans so that is certainly an area in which their providing support. >> a large piece of that is making sure that housing improves. we haven't seen a lot of movement on prices themselves. but obviously, housing stocks, starts, sales of building materials have all led us to believe that that sector of the economy is getting better, not worse. is that a sentiment that you would agree with? >> well, i would. but it's been down so long, and we have found enough problems there, and there's kind of an overhang of those proble that there's still some work to do. but it's hard to imagine a healthy economy without a healthy housing sector. so certainly, the signs of life are very important for the banking system and for the economy. so we are cautiously optimistic. but there's still a way to go in solving the problems in the housing sector. >> and what do you think

community banks are wishing for as we await the fomc statement this afternoon? i think they're wishing that they could earn more money. they're, i think, torn a bit between the low interest rate posture, and having a bit more room in the interest rate space. but, you know, the low interest rate has kind of kept the economy going, albeit at a subpar level. so, it's hard to argue with what the fed's doing. but i think the bankers would certainly like to find some more opportunities -- some more earnings opportunities. >> i'm sure savers around the country would say the same thing. thank you very much for your time. good to talk to you, john. john walsh, the acting comptroller office of the comptroller of currency. if you're looking for a way to boost your retirement savings you might have a look in a pretty unconventional place. more and more people are investing their savings in foreclosed homes. and the potential for profit is huge. pour diana olick live at hq with

that story. >> hey, carl. it is a great time to invest in housing, especially in distressed properties like foreclosures or short sales. but you're going to do best if you have cash in hand and a great place to find that cash is in your retirement fund. yes, you can do this. and it's a little -- you may feel like it's risky but i'm going to explain. you can only do this to buy the property as an investment. you can't live in it. and you can't even use it as a vacation home. the property needs to generate income. that income will go directly back in to your i.r.a. now let's take you through how it works. first thing you want to do is of course find yourself a property and you want to consider how much you'll need to pay for repairs, and for renovations. because you're going to want to rent it. then you want to set up what's known as a self-directed i.r.a. only a handful of administrators will do this. a couple of them are i.r.a. resources, sterling trust, pensco, entrust and guidant financial. you want to make sure you check out the fees and the services. then find yourself a property manager. this is somebody who is a third party, they're going to maintain

the property, find your renters, collect the rent. some administrators do this. you can also do this yourself if you want, but it may be too much of a pain. whatever you decide. then, of course, you want to use your i.r.a. to pay cash. you can actually use your i.r.a. to get a mortgage, it's called a non-recourse loan. it's a little more complicated. but you want to use the cash to buy that i.r.a., and use the money for the repairs, for the property, and any contingencies. one thing it is very important to make sure that you roll the money over into this self-directed i.r.a. don't take it out of your 401(k) or your present i.r.a. first because then you're going to have to pay fees and taxes. you don't want to do that. coming up on "power lunch" we're going to introduce you to one investor who is now a landlord and he seems to be doing very well. until then we've got lots more of this on the blog. realtycheck.cnbc.com. >> as part of our week long black swan series earlier this morning we spoke to nassim taleb. he hasn't appeared on cnbc since

2010. but he broke his silence today to discuss the economy and more personally what he's actually invested in. >> i own stocks because, why, because i don't trust so i rather own stocks. i'd rather have a dividend than a coupon. i just own them as a fund management principal. i also own some euros because in spite of the bad press they know the problems in europe, and here we're not aware of it. so i have some euros. >> he also mentioned that he does own some real estate, as well. interesting comments from nassim. time for squawk on the tweet. we're giving the fed a disney makeover as the two each hold big meetings today. if disney were to make a movie about the fed, what would it call it and why? gregly writes, entangled because it accurately depicts the fed's entanglement with the equity markets. gus writes 20,000 leagues under the sea of red ink.

and how about the printer's apprentice? a reference to fantasia. thanks for that, guys. take away time from rick santelli. we made our way through the president talking trade, nassim, and of course we'll see what this auction of ten years brings us today. >> absolutely. but i think you know it's a question of respect. rodney dangerfield, my movie will be easy money. danger field. that's what the fed's all about. the one issue i want to talk about, carl, rare earth. the president mentioned it. you know, china's been very capitalist in their nature for the last ten years. many friends on the floor telling me to monitor how they've taken over minds, bought into the business, bought into lease rights. they've done it right. now their plan is in effect, and the united states wants to cry foul. where was our plan for going around the world and investing in rare earths? see this is the problem with our relationships with some countries. >> you're saying they've put in the money and the effort, and now that the payoff ostensibly would come due, they're being denied it, is that what you're saying? >> well, not being