jpmorgan ceo jamie dimon is responding to the firestorm that's engulfed goldman sachs after a former banker published his resignation letter in "the new york times" yesterday. in an internal memo dimon tells employees to resist taking advantage of competitors and to focus instead on strengthening the bank's own standards. sources at jpmorgan who have seen the memo say dimon did not identify goldman but it is said to be clear from the brief message it's the resignation of a deal if you didn't know it already in an op-ed in "times" a a little less stress for p greg smith called goldman a toxic place where managing directors, he said, referred to their own clients as mupts. and it has set up quite a bbpt. kelly king is the company's discussion about what happened chairman and ceo. did you know you were a little bitty community bank, kelly? here. people who look at this say this when did you become one of was a disgruntled employee who didn't make managing director, those? >> well, i like being a little bitty community bank. they don't pick on us that much. who took 12 years kind of >> i would call you a super working away -- >> 33 years old. regional, aren't you. >> yeah, they call us a super >> he may not have gone on. regional. >> 33 years old 0, one of 12,000 vice presidents and more than we are fairly large but to the

30,000 employees of the company. "the new york times" feels -- they just were salivating client on the street we're as small as they want us to be. because, you know, how many >> you're not small enough to be affected like we hear about dodd frank hurting all the small people can pile on the goldman banks, are you? that's the latest narrative, after the last three or four years and now they have someone inside the firm in the london that dodd frank is going to help the big banks but crush the little local competitor. office willing to spill. who knows what motivates people? you see disgruntled and you don't want to -- >> it doesn't invalidate any of >> i will disagree with that. his complaints but it certainly it's going to hurt everybody, the small and large. it's going to hurt everybody. makes you look. >> everybody has an opinion about where they work. >> you don't even take that >> sure. you are talking about the "times" decision to publish narrative. but as far as what you had to do for these stress tests, how does this. >> one disgruntled employee's your balance sheet look compared to the way it was three or four opinion about a firm that -- and years ago? >> well, our balance sheet was you saw what politicians are going to do. strong going into the credit did you see elijah cummings? >> no, what did he say? cycle and it's even stronger. >> just piling on. let's see if i still have it. >> did you see the bloomberg's we've improved our liquidity and capital structure. op-ed piece where they laid it out, yes, it took more than a what's been helpful to us we've decade for this guy to finally had consistently strong earnings power over what we call pretax, precredit expenses.

see the light of day what happened here and they basically which is kind of the underlying said here is a message to everybody. engine of the organization that if you want to go on and really help humanity, don't go to work has always been strong for bb&t. for wall street or goldman sachs. if your goal is to try to come for the last 15 years a 15% compound growth rate in our pretax earnings power so we've up with a humane -- humanitarian had strong earnings, strong efforts on your way out of school probably going to wall liquidity, strong capital and we street isn't the way to do it. >> i love cnbc, nbc, and general had no difficulty at all passing the test. >> and what do you make of the electric but -- >> nbc universal studios. overall procedure that >> but i would never, ever -- regulators followed here? i've been here 21 years and i know where bodies are buried. did they do a good job setting there's things that -- up the type of scenario that bajs need to be ready for, do >> solemnly focused on the you think? where were they smart about it consumer. we're solidly focused on our and where were they stupid about client. joe, the way i look it at this is whether it's true or not -- >> whether what's true or not? it? >> to me the notion of periodic one man's opinion? stress test is a good thing for have you ever worked at a wall street firm? >> no. organizations to do whether the >> okay. fed wanted to or not. there's always attention between it makes total sense. making money and client i think the conditions that they put forth were fairly tough

oriented. but every time you do a trade, coming from an already every time you do a trade, are you doing it because you have -- relatively depressed economy >> i think you're mixing up two although we're technically dm an things here. one is a broker who serves a improvement far interest where we need to be, unemployed up to client. the other is an investment bank 13%, housing prices dropping that has a very strong and another 20%, stock prices highly profitable trading operation. dropping 50%. gdp down 8%. that's a pretty tough environment. the point i was going to make is whether it's true or not, they are vulnerable to this type of on the one hand it's good to say criticism because of what we've just come through. i'm a little different than some that's the point i want to make. people, joe. i think doing the stress test >> every investment banker. between the banks and regulators >> pr 0 op trading itself makes the investment banks vulnerable gives the regulators insight in terms of what they need to do is here, and it's a very about the business model. i don't think it matters so much good. i'm not a big proponent of all this publicity. i think it alerts people, makes as goldman right or wrong here, is greg smith right or wrong here, the question is twofold. one is william cohen has pointed people more worried. i hadn't heard a sing is l soul say anything about worrying out quite a bit the move from about health of the banks. they're hardly even worried about health of the great banks. partner sh partnership to public company going out and fanning the fires for these investment bankers means they are basically playing with the public's money not one more time about difficulties their partners' money. in the banking industry in my mind is not a healthy thing.

that changes incentive. and the prop trading model inside the investment bank where you are supposed to be serving your client. >> we always think transparent whether it's true or not the doubts are there. si is good. you think you can harp on it too clients have to make those choices and banks in terms of what they present to their clients have to make those much? >> the fed put out the names the first time, didn't the second choices. >> that to me is an older time. i think the issue is how much discussion that we have had, this guy piling on is -- i did capital gets raised by the market decides whether or not this is a good thing. take this with a huge grain of salt. >> we can go down the list of if jpmorgan stock goes up after the top 30 professions in the they publish the numbers, country and i can find conflicts they'll think it's good. of interest and good apples and >> we're always putting up all bad apples. i can find doctors that this information is always self-refer patients and schedule public. >> but not like this, right? it was never consolidate this unnecessary tests. i can find so many ways. had a way you could read it and then you get all the way down to the argument whether across banks and understand the ratios this way. i think the public, investors, everything should be not for gets a much better look at the profit, whether that's a good shape of the banking system this way. >> well, i would agree with model. think about it. that. this is a good way to put on one >> i don't think you get down there at all. >> in health care. couldn't we have an argument sheet of paper all of the conditions of the banks and i

about whether the profit incentive should be totally devoid -- divorced from health don't want to overplay this. i just think it's time for us right now to stop talking about care? >> well, yesterday. all the challenges and issues of >> we talked about it off the banking system. the banking system is really strong. we need to be talking about what camera. >> between equity, providing health care service and innovation and it's a balance. the banks can do. it's a balance. >> if you didn't have the profit >> can we talk about loan demand? can we talk about loan demand? incentive, all those profits -- >> sure. >> what's going on there? >> absolutely. >> well, it's tepid. >> you could spend that on patient care. >> i don't think this is a regulatory issue. it's fairly strong and the large i think this is an issue for the free market. clients have to figure out where corporate arena. is my best. it's very slow in the small to >> and see whether -- >> i don't think this is an medium-sized arena. elijah cummings issue, this is the truth is people are very, for goldman sachs, for goldman very reserved still in terms of borrowing money. and i travel around a lot just sachs to come forward and say like i'm getting ready to leave here is the firewall of our company between the interests of the clients and the interests of our prop trading desk and the here in a few minutes to visit another one of our regions. interests of our -- >> i think goldman responded i do this all the time. i've talked to over 500, 600 last time with all the hoopla on business people. here is what they say. abacus or whatever those trades they say, look, my business is were, remember, with the john doing okay because i'm really paulson trade and a lot of clients of goldman came forward controlling my costs, but i'm not spending a dime until i see at that time and said goldman -- ask warren buffett about whether more positive leadership coming out of washington.

they're scared about taxes. these are ethical and whether they're scared about insurance. they're scared about regulations and, so, anybody who is sitting clients are satisfied with the out there expecting the economy work goldman does for them. to just take off in the next two >> i agree. or three months is really >> not a 33-year-old who is missing it. >> it is interesting that you disgruntled. is he giving his money back? went up 25% on your dividend a and in that respect you weren't going to do that anyway, were he seemed to be happy for 12 you? years. >> made $500,000. your shareholders are probably >> no wonder he's mad. glad that the stress test went off. >> oh, yeah. >> someone else pointed out this our shareholders should be very is the divide between the 99% and 1% on wall street. not everybody even makes it on 0 happy. we had the strongest results in all of the street tests and the strongest in terms of -- >> were you going to raise it wall street. anyway, can kelly? so he didn't make managing >> yes. >> you were? director. >> oh, yeah. the point being even if you work absolutely. we've always had a strong cash really hard you may not make it dividend. we paid it since 1903. to the elite of wall street. i don't know the guy so it's >> but 25% is a nice boost. >> yeah, it is. we're really excite body that hard to say. this is just what's being reported within the firm. >> i started 0 out -- >> and the defense of the firm. for our shareholders and, you know, hopefully things going well, the good lord will, we'll >> loyalty to a pirm, just not do in the future. being a rat, whining. >> kelly king, thank you. i tell both my kids, the minute appreciate your time today. >> thanks. they start pouting. have a good day. when we come back if you intent to get a lot done at the nobody likes it.

office today, well, maybe you'd better think again. march madness is oweticianly but you don't want -- here. we've got a little bracketology >> there's a difference -- >> a whistleblower. >> there's a difference between with our own darren rovell. rats and whistleblowers and that's the big -- it was a town that people >> and you have to look at their own 0 motivation. didn't really pay too much attention to honestly. >> right. now the thing that is probably most unfortunate -- i came to yountville really because of the french laundry. >> the fact that he's 33, hasn't really been around, but you have this is the place i had been looking for all my career. so i decided to plant to acknowledge the resonance of the story. a bay laurel seedling to commemorate that. why does it resonate? as a chef we are always committed to our suppliers... is there no issue here or an issue? >> is there a single "new york times" reader that didn't look you know those farmers, those foragers, those gardeners, those fishermen... at that and go, oh, i should for me it's really about building have known it was goldman sachs. this extraordinary community. none of this is new to me. they embrace that. american express is passionate about the same thing. >> can we call up the stock yesterday? the stock took a hit, and i they're one of those partners that i would really rely on to help branch out my business. think it's not -- it doesn't really do the story justice to whether it's finding new customers... say, oh, it's just "the new york or a new location for my next restaurant. times" doing it. it resonated on wall street. once you have strong support around you, then you can do anything. we have to ask the question. now this town has become a bit of a food metropolis. and that little bay laurel, >> i talked about this from the very instant where the phrases like muppet to be thrown out it provides bay leaves for every one of my restaurants. there --

>> that's a term for idiot. the customers, tools, and insights >> right, but to the idea you to help grow your business. that's the membership effect of american express. are calling your clients idiots in an internal e-mail stuck out. to have that after the squid, the blood sucking squid. and people. >> someone at goldman sachs at and the planes can seem the same that level of the food chain, so, it comes down to the people. what does he even know about how because, bad weather goldman is treating its clients? the price of oil those are every airlines reality. not that $500,000 is a lot. and solutions won't come from 500 tons of metal and a paint job. >> he wasn't managing anyone. they'll come from people. delta people. >> $500,000 is barely at goldman sachs. i know that's a terrible way of who made us one of the biggest airlines in the world. looking, an elitist way, but it's the facts with the way wall and then decided that wasn't enough. street pay is that he's a very -- >> that was their point. this is the difference between the 99% and the 1% on wall street itself. >> have we completely exhausted the topic? >> i think so. >> we have settle the goldman sachs issue. >> no, we haven't. what was jamie's point is this. >> i think jamie's point was focus on what's happening here. i didn't see that letter either. i didn't see anything more than what i read on the prompter. >> don't rub it in is what he

meant and he was rubbing it in by saying don't rub it in. >> don't throw stones. here but for the grace of god. you think i can't find a the world needs more energy. disgruntled employee? where's it going to come from? >> if every disgruntled employee ♪ got their say, you're right. that's why right here, in australia, >> the "times," i'd like to get chevron is building one of the biggest natural gas projects in the world. some employees from "the new enough power for a city the size of singapore for 50 years. york times" as the stock heads to zero. what's it going to do to the planet? >> do you think then goldman natural gas is the cleanest conventional fuel there is. sachs is a buy here? we've got to be smart about this. it's a smart way to go. >> they had a bad number and it ♪ was 125. >> did we put up the interday? i want to see what happened. i guess i missed it. i thought it was interesting we believe the more you know, the better you trade. that the market took it that so we have ongoing webinars and interactive learning, way. there it was. >> down $4. plus, in-branch seminars at over 500 locations, >> the treasury department plans to sell its preferred stock where our dedicated support teams help you know more position in six community banks as part of the effort to unwind bailout programs from the so your money can do more. [ rodger ] at scottrade, financial crisis. sell stock in banner corp, first seven dollar trades are just the start.

financial holdings, and willis our teams have the information you want when you need it. it's another reason more investors are saying... shore bank as well as wsfs [ all ] i'm with scottrade. financial. the government still has stakes of 361 banks. >> i'm looking for this elijah cummings. i'll find it. in other news this morning, more americans received home delinquency notices. reality track reports that the backlog of homes in the foreclosure pipeline showed signs of starting to ease. and it's a busy day for economic data. the producer price index and the empire state survey. then at 9:00 tlc data. that tells how people have been treating co-workers. >> tic. >> it looks like an "l." oh, tic data. >> the learning channel. the plans are done. >> thank god. just get -- the plans are done. >> thank god. just get -- we're not going to >> oh, had nothing to do with -- '96 or 128. >> it's how much investors all because those are horrible games. >> i would be opposed to that. around the world -- but the president went to one,

>> not upticks and down ticks. right, in dayton. >> dayton, yep. >> took david cameron. >> and not deer tics. >> because it is that season. he's like what am i doing here. >> i went fishing yesterday for those were pretty good games, the first time. too. >> largest comeback in ncaa you said i was hip to music, history. there is a band called deer tic. >> it starts in earnest at >> that's the new thing, right? 12:40. >> i think 12:15. >> oh, you said that. >> one good word and one bad >> how many games today? >> we'll have four -- i mean we word. danger muffin. have, you know, basically half >> you think it's new? >> what's your favorite band? the field of 64. >> grateful dead. >> and tomorrow? i didn't notice that. >> the other half. >> didn't think about that, did >> kansas state plays today. you? >> i didn't think about that i got kansas state beating syracuse. we'll see. like a lot of things. >> now that is out. yesterday the market didn't i want to run through a couple move a whole lot when you were talking about stocks but we did see major moves in the other numbers. what makes this -- >> productivity numbers? >> no, no, no. markets. you'll see the dow futures are what makes this so great is the indicated higher, up by 18 financial story. how can lehigh play duke? points above fair value. oil prices this morning, again, duke spends more per player than lehigh spends on their entire right now you're still talking above $105. up about 12 cents to $105.55. program. the first number i give you is zero, the number in dollars the joe? >> elijah, congressman elijah players earn for being in the ncaa tournament.

cummings quoting, even after i also have 48, which is the number of nike-sponsored teams, goldman received a $10 billion where you just look at jerseys, taxpayer bailout, paid the largest s.e.c. settlement in it's 48 out of 6, that's pretty history for misleading its good. 100 is the number of tickets investors, it still hasn't available to kentucky students learned the lessons of the 2008 financial collapse. putting its short-term corporate for tonight's game. profits before the interests of >> how come only 100? its own investors and clients is >> which is always like -- exactly what caused the economic >> that's lame. collapse and what continues to >> how many tickets does each corrode wall street. team get? >> i would have thought a a 33-year-old guy and thousand. >> 550. >> why? politicians take it and >> because it's about the immediately conflate it with the sponsors and the other people. entire wall street mentality. >> they're like the goldman sachs of ncaa, not taking care of -- >> oh. and it's also -- you pick that >> it's not necessarily about the students. as another opportunity to jump so 100. i got another number, this is steve's favorite number i'm onboard. >> and that's the problem. sure, 1,877, that's the percent that's the problem with this letter being out there for goldman is the idea that just about the time they're coming around the corner, maybe coming increase in value of the ncaa through the other side of that, tournament rights. you have this whole new in 1982 -- phraseology with the muppets and >> right. the rest of it. it sits on the public's mind and and then you got to put up zero after that again because it's it's hard to dodge that again. still the number that the i wouldn't say this is anywhere players get paid.

>> get to the harvard thing in a near what they dealt with but it's out there and that is not a great issue. sec.. in 1982, cbc paid $49.9 million >> sorry to interrupt. when i read it, oh. for three years of rights and last year was the first year of a 14-year $10.8 billion deal. let's take a look at the bond market because that is where we saw an awful lot of >> wow. activity yesterday. yields rising yesterday to the highest level that we've seen >> they're paying $680 million. since october of last year and this morning you will see that harvard in the tour, first year since 1949 maybe. yield as slightly higher again, 2.297%. so that's where all the activity >> six. has been. >> 1946. and you have a lot of questions about what's been driving it cost the harvard tuition, pay r there. is it that the economy looks better, the situation in europe has looked better? whatever it is that appetite for players pay it, i don't know how risk has gotten greater and much they have a ride but the people are moving out of some of those so-called safe last is $1.5 million, the investments. largest bonus given to a coach, dollar markets saw a lot of activity, too. nc state coach mark godfried the currency markets you can see now that the dollar is down against both the euro and the gets a two-year automatic extension a year. swiss franc, up against the yen. >> what's the highest paid position at the university? >> probably somewhere in the 1.305 is where we're looking for 300s. >> i don't think anything more

the euro and that's a low level. than that. >> the lost productivity story is a crock. >> did you see toyota yesterday most of these people don't do had a little spike because of anything normal anyway. what's happening with the yen. >> they're muppets. >> the great thing is the advertising and the hoop lais great for the economy. it's a great thing. i think other japanese exporters as well. it's a net positive. >> that's great. the other big mover is gold we have to go, sorry, we do. which has been losing ground at >> we'll save it for tomorrow. an incredibly fast rate. carfirmation. right now up $2.30. >> we did the gold special the other night. >> you're right. >> that could have been it. do you think so? >> it's up. >> it goes from $200 to $1,900 and now decide you have to have it in your portfolio. and i was just thinking about something, i'm going to go on. >> more goldman? >> no. i just think about -- i said doctors but go across the board and in any business -- >> any profession. >> any fortune 500 company you will find -- you can find some way where clients or where customers aren't taken -- where

their interests aren't -- >> it's not something to celebrate. >> i'm not celebrating it but i'm saying that how many people at gold mman did he know in his entire career, how many people out of the 30,000 employees how many people can he say with a broad brush culturally are deficient? how many did he run into especially at his level of the firm being in london working on a derivatives desk he knows what -- he knows the entire corporate -- >> he has no comparison. >> how many people -- he has three guys on his desk that said muppets so that means this is blankfein's fault that they didn't talk to those -- blankfein wasn't there scolding this co-worker of his that used the word muppet? >> you understate it. only hertz gives you a carfirmation. goldman is the premiere bank in hey, this is challenger. i'll be waiting for you in stall 5. the industry. it is a bank that has been accused publicly in many it confirms your reservation and the location your car is in, different ways of putting its the moment you land.

trading desk first ahead of its it's just another way you'll be traveling at the speed of hertz. clients. >> have you had work done on your house? the guy comes where you have a water heater problem. you can loosen a valve and he'll come and tell you you need a new water heater. >> no, i had that happen. i had a $4,000 job turn into a $60 job. >> people treat -- almost any company you find, you can find someone that treats customers so cnbc looks for an exclusive badly and that doesn't -- preview with the experts at the >> so are you saying, what's the implication? economist. are you saying we should dismiss exclusive content at all -- >> i'm saying "the new york times" got an opportunity to publish -- >> what about the substance? what about the charge which is out there and predate this had article? >> i think i can make an argument that all -- that anyone says if you want to paint it a certain way you can paint it a negative way. >> there's a movement on wall street that for banks that don't have these trading desks, give me your money, i will invest it and i don't have an interest on the side and those guys are

doing quite well. i've talk to a bunch of guys. >> that may be something to talk about. i'm talking about just in general, just the way business is run -- i'm really taking it to human nature that you're going to be able to find -- >> your point is valid. we don't know about this guy. to take a disgruntled employee -- >> and pile on. and pile on -- >> we don't know anything about it and i don't know him. >> after watching levin who knew nothing about prop trading and blankfein didn't even know how to answer the questions in front of the senate panel because they were so obtuse. they were coming from that senator and so sanctimonious. but i digress. coming up, the nasdaq hitting record levels. balancing the budget and we'll talk tech and ask if there tackling high energy prices. are still opportunities to make money. first, though, this is the most south carolina senator jim important thing for me today. an important birthday. demint weighing in on the scott kernan. i am wearing a special tie for sticker shock that americans are the occasion. facing at the pump. i do every year. agriculture secretary and it has scottie dogs on it. former iowa govern tom vilsack

and he's not up yet, i don't think. anyway, there are dvrs in the how new trade agreements with world. he's 10. south korea could spell profit >> double digits. at home. and ian shepherdson is >> we don't beware the ides of march. we who have -- breaking out his crystal ball >> celebrate. >> the ides of march. seeing what's ahead for investors and larry kudlow joins >> happy birthday. financial consultation us this next hour. the second hour of "squawk box" begins right now. ttd# 1-800-345-2550 when companies try to sell you something off their menu ♪ ttd# 1-800-345-2550 instead of trying to understand what you really need. ttd# 1-800-345-2550 ttd# 1-800-345-2550 at charles schwab, we provide ttd# 1-800-345-2550 a full range of financial products, ttd# 1-800-345-2550 even if they're not ours. good morning, everybody. ttd# 1-800-345-2550 and we listen before making our recommendations, welcome back to "squawk box" ttd# 1-800-345-2550 so we can offer practical ideas that make sense for you. here on cnbc. i'm becky quick along with joe ttd# 1-800-345-2550 kernen and steve liesman and ttd# 1-800-345-2550 so talk to chuck, and see how we can help you, not sell you. larry kudlow, host of "the ttd# 1-800-345-2550 kudlow report." good morning. >> good morning, beck. >> nice to see but. >> that's 13 hours before you finish, isn't it? >> long, hard working day. >> something like that. >> miles to go before we sleep. let's look at the future this is morning. you'll see right now they are a little bit higher, indicated to

open higher right now, up by about 14 points. this comes after modest gains yesterday for the market, but where you really saw some actions with when you dug into the bond market. bond yields pushing higher once again today for the ten-year and yesterday at the highest levels since back to october. >> can we just stop and ask larry about bond yields or you want to read on? >> yeah, let's do it. >> 2.3 representing a threat at all, could it go further, should it go further? >> no, it's a great sign. >> it's a great sign? >> it's a great sign. my theory is better real growth, higher interest rates. bonds are way too expensive, probably moving towards 3% if the economy continues. >> that's great isn't it. why are you laughing? >> i'm laughing because the way we've been conditioned for so long, on the way down if you said there was a 30 basis move between 3.8 and 7.7 you may not see it reported anywhere but

because we were down it's such a big move everyone's saying oh my god, people are running from the bond market. and also on the way up we'll hear oh my god 3%, what's that going to do with economic growth. it could double and be nothing, triple and be nothing. >> it should be 5% at normalcy if everything was normal included. the other thing is i think the stress tests are affecting bond yields. >> how is that? >> hear me out. because the banking system basically got a clean bill of health off these stress tests, right? whether you think they're credible or not for the moment i'll assume they're credible, and therefore, you don't have to just own treasury paper in the financial world. you can kind of go at the risk spectrum, that holding of bonds everyone.me back, the welcome back, everyone. had to do with fear, that the the u.s. equity futures today are indicated slightly higher. armageddon scenario for financial health, and it was dow futures look like they're up

by 15 points above fair value now. in our headlines new york state lawmakers have agreed to legalize public casinos. going to come. the improvement in europe and stress test health measures is they are going to be amending to allow seven new casinos to also moving people out of bonds operate. and the higher bond rates are the location will be decided next year. the state only allows table benefiting the dollar and the gambling in native american higher dollar is knocking down resorts. gold and all tied one investing steve? all right. beautiful weather yesterday. now to today's national in more productive economic forecast. assets rather than the fringe scott williams joins us from the players. weather channel. >> which is great news but let scott? good morning, steve. me ask this. if you thought yesterday was at this point again we're only talking 2.3%. warm in new york city, you were if we get back to the historic right. high temperature at kennedy, 72 norms, where we should be, 5% and above, if we get there degrees and, of course, take a relatively quickly, what does that do to the housing market look at the other record highs across the country. and economic growth? over 60 locations across the >> relatively key is the issue. nation saw temperatures well you're talking 5% bond rates above average. 86 degrees in st. louis. over the next five rates i say but i hope you enjoyed the 70s fine. if it's market driven i say in new york city on yesterday because i'm watching a frontal fine. >> i want to answer the question. it's very simple. >> i don't think there's any bou boundary on the move through the northeast and new england so threat from higher rates right that will mean high temperatures considerably cooler. now. it's all good. >> it's relatively quickly it's new york city today 55 degrees already not possible because for the high. it's already been five years. 40s in boston. it cannot be relatively quickly

but we'll keeping those because it's already taken five temperatures in the 70s and 80s years. >> the answer so becky's to the south of that frontal question is 4% or 5% and a boundary so washington, d.c., still looking good. person's ability to qualify for we'll keep upper 50s for friday. a mortgage is irrelevant versus has a job, doesn't have a job. new york city mid-40s around the boston area. >> income, right. >> but what is the mortgage rate if you have travel plans today at that point? watching out for showers and >> it doesn't matter. storms through sections of the if you have employment -- the ohio river valley and also out people who have been employed west where we it continue to recently are all now, except for those who are working part-time keep tabs on moisture, san for economic reasons, potential francisco as well as seattle. homeowners. so looking at that forecast they could qualify for a mortgage, whereas okay, the 3% today, 54 degrees. 80s for you issavannah and also or -- >> it will make price housing pensacola. we'll watch out for showers and overall more expensive and we storms in the ohio river valley. think we're at a turning point 80 degrees in wichita. based on what somebody said. low 80s san antonio. >> it's the reason for the price rise. 70 degrees in bismarck. >> you go back to joe's point and then toward the west coast, that you're so low, you're so of course, continuing to track clouds and showers. some thunderstorms this morning abnormally weirdly low that the move through parts of ohio, so if you have travel plans around normal interest rate effects just don't kick in for a long cleveland watching out for some of the thunderstorm activity, time. jobs and income is much more some of it has been a little important. i totally agree with you. strong to severe so take a look >> swamp the effect. >> i totally agree with you on at all the reports as far as that. >> you think it's five years those thunderstorms moving before we get back? through sections of the upper >> i'm just guessing, i have no ohio river valley and parts of idea. >> it's already been five.

the midwest. we have that threat for some >> you're not going to have -- severe weather today around memphis, nashville, louisville, the average recovery is only about five years, we're in year primarily toward the afternoon hours watching out for some three so it's hard to predict damaging winds and some spotty the figure. the federal reserve should hail so just keep that in mind follow rates up. >> that was my next question. would you wait until i ask the if you have travel plans. look at that system out west. a lot of rain and wind in the question. wait. >> these are all signals to the days to come. fed that the economic system is guys, back to you. >> scott, thank you. healing itself. >> caught my first striped bass >> should come back on late 2014, should they give it up? >> they never should have put it yesterday. >> of the day, not ever. out there in the first place. >> now that they're there. >> i call it early fishing not >> stay away, stop fine tuning, global warming. >> how was last year for you? stop fiddling, comes the keynesian manipulations, protect the value of the dollar and oil is. >> same c 0 o2. >> worst winter -- prices will come down and we'll all live happily ever after. >> and the best. >> i love this. >> he's still on goldman, ladies >> what does fed chief larry kudlow do now? and gentlemen. get rid of the late 2014 >> the "times" publishes one average? >> larry kudlow would abide by the john taylor rule, and i just guy's opinion and then it becomes the lead story. it's the lead story not just interviewed john. this there but, i mean, you know >> oh, now you're opening a can of worms. >> john would put us not less what this reminds me of in the than 1% on the target rate and business section, when "the maybe 2% on the target rate here post" decides what is news with

the hooker, with the madam. in the third year of recovery, so they do that story and then with gdp growing, 2.5, 3, 3.5%. "the post" has it on the cover every day almost to the point of yeah, i'm kind of a taylor guy. >> according to taylor's old they show this pad that the hooker was using $600 a month on version of the rule which nobody agrees with. >> he agrees with it. i just talked to him about it. the upper east side. and they do it every day. >> people dispute taylor is is the "times" any better? following his own rule. >> they all have agendas. they manufactured this piece, >> we don't want to go there steve. they manufactured this piece. because joe will criticize me >> c1 of "the journal." for being in the weeds. >> do you remember the which is the top market. beginning, which year it was, we >> no, and a1. are on january 1st, it's over >> is it? >> it's both. you're looking at "the journal." >> the journal has it on c1. for bonds, it's headed higher. >> but the "times" has it on a1. >> c1 is an important market -- i can almost remember when bonds were not going to be a good no? that's the way i thought when i investment, long bonds were worked there. i thought it was a good page. headed higher. >> every january. >> goldman is always going to >> i think maybe ten years, it's be, goldman is toxic and it's before the financial crisis. always going to be talked about. >> is this finally it? you know that. it's a flash point. >> what's your point, joe? is this the freight train? they're the vatican? >> i don't know -- >> this is not really the big >> you think it's unfair. >> i don't work there. one. i don't know if the culture has >> it's already too late for it to happen quickly. changed in the past ten years, >> it's interesting if this

plays out, if we have rising five years or any of that. interest rates, all of the i would rather talk to clients sudden the cost of financing the debt goes out. about whether they think they've been shafted or are happy with the work goldman is done with maybe washington does get serious about the issue of the deficit. >> i like that, we need a stress them than a single employee in a london office that suddenly the test for the whole budget. by the way we need a stress test entire wall street is back on for the federal reserve. trial again because of one guy. remember the fed owns a lot of long-term paper and they'll take we're now saying that the losses on their $3 trillion entire -- >> i get it. portfolio. >> it will reduce the amount of money that the fed gives to the >> wall street didn't learn anything from the crisis. nothing has changed. they're still screwing their client. treasury, mark-to-market. >> that is correct but it also could in the next few years put elijah cummings, still krug the entire fed portfolio under them. nothing has changed. nobody's in jail. i mean, just put it right on the water and what they're going to hug ton post cover. perfect. do about that no one knows because they've never done this in the meantime -- >> let me look at it. >> let's look it at the tech manipulative stuff before. sector. it's been making titanic moves >> they raised rates for a this year. joining us now from new york is peter, senior tech analyst, and, minute, and decided -- >> it would be nice if we did peter, when you look out at the see a little there just so show that we can go up a little, technology world do you think right. >> yes. gains like this can and will it >> so we can just not give continue? >> at least for the short term we do. people money for to us hold it. we usually get a nice spring

>> the value of the dollar sell-off and probably will get should go up 20% in the whole. that again and some of these >> and gold is over. stocks have really gone to the >> i don't like that. >> gold is over you're exactly moon. apple looks like it will hit right. oil would come down markedly. >> because of the strength of the dollar. 600. >> can't keep going like this >> i don't like the strong but it's defied gravity to this dollar. >> king dollar is what's missing from this whole calculation. >> i so disagree. >> the problem is that if the point. what would you tell people in terms of whether or not to invest in andle? >> we still like it. dollar strengthens in value, how we have a $700 price target. do we pay back all the debts? we still like it here. >> it will be fabulous. our enthusiasm at $600 is not as the dollar strengthening in value would trigger so many high as at $500 so we're positive things throughout the economy, lower prices, lower tempering it. >> at what point would you pull inflation, higher and real whack $650 or something as it incomes, higher and real approaches your price target? >> exactly that's how we would profits, my god. the dollar on the fed's index is look at it unless we had 80, 85. >> it's nice to see the stock something massively new. market doing well with the dollar going up. >> think of the '80s -- we don't expect that until later in the year. >> we needed to break that if we get there in the next couple of weeks we'll have to hideous from last year. tell people, look, it's time to >> '80s and '90s, reagan's first take money off the table. term and clinton's second term, >> bob pisani put out a quote, be bipartisan, tremendous i'm looking for it now and it increase, tremendous rallies in may have been yesterday he talked about the gains within the stock market. >> clinton was now a republican, we know that. the s&p technology sector and

how much of that has been >> we now know what a democrat dominated by apple. it's quite a bit more than you is. >> those two great bulls were accompanied by rising king might have expected. apple makes up something like 4.3%. dollar and falling gold. >> and free trade. >> free trade. 4.3% of the s&p tech sector at we had low tax rates. no budget restraints. this point and material sectors >> the ability to bring back our overall -- i'm sorry. export economy and manufacturing this is the weight in the s&p 500. apple makes up had.3% of the economy. >> you would because that's a keynesian asian sort of approach to the economy and somebody has gai gains. the entire material sector is to hold up that. only 3.5%. the entire utility sector 3.4%. that's okay. i myself don't buy it. the telecom sector is 2.7%. >> we talk about trade how much of the gains is really imbalances with the strong dollar. driven by apple alone? i think the dollar has to adjust. i don't think the dollar or the weak dollar or whatever value of >> in the nasdaq 100 we're the dollar is what holds this talking 20% plus so is it's company. >> steve you're such a good man. you fret too much. you worry too much. obviously had a huge impact. let the market forces then you look at the supply chain, anybody who has been a big supplier who has been able proliferate and we'll be okay. >> we have succeeded with the to turn that into some volume weak dollar and failed with the weak dollar. >> i don't think we've ever succeeded. gains has seen big improvement and then some other small names the whole story of the 2000s, this is true under the george w. like motorola solutions we would bush administration, the sinking highlight. we love that name and think it's dollar and easy money was one of the primary causes of the full

not had the same types of gains. velti has had a great move. housing and oil and commodity bubble, which ends in disaster. we've had great moves but nothing like apple. cheap money is never a good thing. >> i feel like letting you continue to go, because i don't >> velti is an advertising, mobile advertising company? >> it's a small cap mobile want to go back to this goldman advertising play. we think people will spend more thing but we're making me read time online on their mobile this. more drama over a goldman sachs resignation letter by a former device than their pcs and we see that as a big second is lar trend. unfortunately, we don't have a banker. big cap play for investors to morgan ceo jamie dimon told his play so right now we have a small cap play. >> can i ask you quickly if staff to resist trying to take advantage of competitors and apple gets to $650 and beyond, instead focus on the bank's own starts approaching your target level, your price target, would standards. you be concerned about the dimon didn't specifically mention goldman but it's clear entire nasdaq 100 and maybe sell that's what he was referring to, that at that point if apple is 20% of the gains or 20% of the banker greg smith discovered market there? like louie in casablanca there's >> yeah. if we get there in the next month we would be concerned and the problem is because of the gambling going on here and was waiting it probably would impact completely shocked, shocked as he accepted his winnings. "the times" op. ed calling the everyone else. we would tell investors that enthusiasm we would temper it down. >> okay. peter, thank you very much for wall street bank a toxic place joining us. >> a pleasure. i changed high mind, i agree where managers refer to their with you, joe. own clients as, and i hope no journalistically the "times" one ever calls me a muppet.

could have treated this letter that's about the worst thing you as a tip from a source -- can call someone. >> i can think of other things. >> no, i'm kidding. >> and done a whole story on it. >> and written a balanced story. and i think the public editor, he actually called someone he i'm predicting in the sunday worked with callinged him a edition of the "times" is going muppet. one person he worked with called to take that position, that that was unbalanced and the "time someone a muppet. >> the clients are dummies without brains. "times" -- you thts that we didn't really talk about it >> there's a producer that until we got the goldman comment desperately wants to go to break yesterday. >> because we all said -- and makes that the last thing >> waited for it. >> and i'm thinking now that knowing full well they're going from a journalistic standpoint, to punch your button and go off for another 40 or 50 minutes. right or wrong is a different >> we didn't have larry's take. debate, but how many -- would >> we didn't get larry's take on have treated it as a tip from a source. you would have done it that way, the goldman story. >> that's a fair story. we had bethany mcclain on "the be becky. >> you think of numbers of letters to the editor they get. by choosing that you're making a kudlow report" and she reported very big -- on this. >> how about this. i said do you guy into this or if you were "the new york times" not? she said i buy into it and her and there's 30,000 peep, you said to those 30,000, all right, contacts inside goldman agree someone else come forward, write me an op-ed where you've seen with that. there's a bunch who don't the client put first, where you've seen the ethics, where including lloyd blankfein. you would say, no, that's totally wrong. goldman went through the bad i'll bet you could get dozens and dozens not just from paper and sell it to your clients, don't tell them what's

in there, don't price it people -- anonymous saying i disagree with everything that's properly. >> this is revisionist, you're in this piece and not only that, spewing, too, larry. if you are a pre-eminent firm, >> probably. >> you like spewing it anyway. you can't treat clients like that for very long and stay p >> but the s.e.c. fined them $500 million. pre-eminent. and his point in the whole piece >> there were european banks was that this won't last much craving more of that paper and longer. well, it's not -- it hasn't hoping they could get a move to happened yet. paulson that didn't understand. i don't know how goldman -- how old is goldman? >> i don't think what they did >> like 100 years. was wrong. >> the guys on the other side of >> if you're assuming they're going to implode because of this that trade were responsible for picking the pool of mortgages in corporate culture, fine. there, too. it hasn't happened yet. >> tell them that, yeah, probably. you can't treat clients -- you you're a sociopath. >> he's our guest, joe. can't be slashing and burning >> how long can you stay in through your client lists constantly. >> write a story. >> because it's in your best business if they don't have. interests. >> when i was a partner in bear it's in your best interests to do well for your clients. >> and put all of us in an stearns, the client was always awkward position yesterday. king. i've been out of there a long time but i'm just saying if you don't know who the guy is. enough people, if you sell you don't know what the other side of it is. you inevitably take the side of, enough bad paper you're going to well, maybe this guy -- lose clients. >> when i play this -- >> i had friends that worked at >> a disgruntled employee. bear stearns back then with ace and jimmy just as ruthless as >> you can't do business like that and survive. >> when i play this out any other place and hope the

journalistically anybody could clients make money because leave any company, write any letter and publish it. that's the way you stay in business. >> the business is driven by i don't think they would. so i was going to be the tease, clients. >> it has to be but how long can joe and i agree. goldman succeed if it's not. >> if you trade for the house and trade for yourself, all >> you can't run a business like agency trading, maybe they don't that. >> i agree. think it's all client-driven >> it is in your best interest anymore, maybe they think they to be client oriented. maybe if it wasn't, if you could can earn it all with their own succeed and do really well. >> still, i'm not disagreeing on the conflict in the business. trading. anybody that thinks their clients are muppets will eventually have a problem. somebody has to address that. >> yeah but that's, you know, that's a different story as to all 30,000 employees think their whether or not eth chi the "times" should have published clients are muppets or one guy and one of his friends called it. >> you can't crash and burn. them muppets? i don't think you can stay in business long if you're not client oriented. and he says it. always comes home to roost. he actually says it won't last much longer but that's a >> i'm sure. >> they've been in business how prediction. who knows. long? >> okay. is joe a muppet? coming up, no stress here. am i an asian keynesian? i'm very stressed. what will larry kudlow call no stress here. we're going to talk to one bank becky on the other side of the break? comments, questions, e-mail us that passed the government's at squawk@cnbc.com, follow us on latest test. the ceo will join us live. first as we head to break a look at yesterday's winners and twitter @squawkcnbc is our losers.

it was wonderful. >> bravo. >> i loved it. handle. up next, u.s. agriculture >> it was great. >> well, it was pretty good. >> well, it wasn't bad. >> there were parts of it that weren't very good. >> it could have been a lot tom vilsack. better. >> i didn't really like it. >> it was terrible. >> it was bad. "squawk box" with larry kudlow, >> it was awful. coming back. >> terrible. >> take them away. ♪ there's a place i dream about ♪ you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. ♪ where the sun never goes out ♪ trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, ♪ and the sky is deep and blue ♪ and we'll throw in up to $600 when you open an account. ♪ won't you take me american flight 280 to miami is now ready for boarding. ♪ there with you we asked total strangers to watch it for us. fly without putting your life on pause. thank you so much, i appreciate it, i'll be right back. be yourself. nonstop. american airlines. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger,

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slime or no slime. the department of agriculture is offering schools a choice of the ground beef that they buy amid concerns over an ammonia treated filler otherwise known as pink slime. under the change, schools will be able to choose between beef patties made with the siller, the slime ones or bulk ground beef, hold the slime. the controversy centers on a processed ingredient common in ground beef but used to kill bacteria so before you get too skeeved out about it. >> i'm bothered by both options because if the unintended consequences, no longer killing the bacteria and wind up with listeria burgers being served. welcome back. >> if you see too many, too much joining us welcome back. joining us from the future packaging that says no picks, scott, a great day two preservatives or additives, days ago. great. i'm definitely going to die if i yesterday we were fickle. what's today? eat this thing. >> today we'll see some economic >> i'm concerned on both sides. news coming out. >> some additives and some later this morning we have things you're glad. >> i bought some of the stuff,

no preservatives, nothing in it produ producer prices, weekly jobless and if you don't cook it that claims. it will be very interesting. this is the first triple witching i'd say in probably six months that there's actually day you're in big trouble. some excitement on the floor. you got to cook it right away. lots of volume and lots of >> in europe, bathroom. activity. broadly across the marketplace. the u.s. trade agreement >> is it tomorrow or today? >> friday. takes place today and expected to add $10 billion to $12 >> it's tomorrow. >> trade for it today, we get prepared for it. >> that's correct. >> why don't we do it on billion u.s. gdp. former iowa governor tom wednesday while we're at it? >> that was a big day but s&p index will settle tomorrow morning on the opening print. vilsack, mr. secretary good to have with you us. >> great to be with you. >> today as this kicks off with this trade agreement and under this agreement about 80% of the the last day to trade that is today. it all begins today. a lot of positioning. tariffs on all u.s. goods that >> i wanted to ask joe this as are going out are going to be well as you. dropped for south korea. what's the market smelling? again, the expectation is that is it smelling 3% gdp growth or will add $10 billion to $12 if it comes in 2% is this market billion in u.s. gdp. can you tell us how we get rally -- will it be satisfied? there? >> in terms of agricultural products today is a big day. >> i think we are looking at 3%. two-thirds of the tariffs in agricultural products will be eliminated today and over the course of the next five to ten years many will be eliminated traders on the floor are looking completely. so it's a great opportunity for

to us increase agricultural for this continued upward movement. they're looking for the 3%. trade. we expect about $1.9 billion of they're looking for bond yields to start increasing again now. additional agricultural trade with korea, fifth leading there's a feeling on the floor, partner right now, expecting nothing but great opportunities a sentiment that there hasn't and it's also a job creator, so been in quite some time that it's a win/win for their we're in a really -- just a very country. >> where are the areas in the united states that will benefit the most from this? >> the beauty of this is that good place which is unusual. it's basically every area of the we haven't seen that. country. it's all types of agricultural i haven't seen that on the floor like that in probably two to three years since the big products, not limited to corn and beans, basically livestock gets a benefit, nuts and fruits meltdown. also get a benefit, orange this is crazy right now. juice, wine, every part of the >> even though greece didn't matter -- >> but what's behind your 30? >> we talked about it a lot and country, agricultural aspect of the country gets impacted and this does seem to be coinciding positively affected by this. this is a huge deal for us. a little with at least getting it's the largest trade deal that on the back burner. we've seen in quite some time, >> was your 30% based on just if you take the last nine free trade agreements and total them undervaluation and capital all up it wouldn't equal what we're doing in agriculture in allocation? >> it's sign of a regression. north korea so it's a big deal >> regression and reversion. for us. >> secretary vilsack, good to see you, sir. i think this is a monumental deal. what i was reading in the notes >> and when i said to someone is beyond agriculture, about 80%

of altar i haves come down. 30%, people around here -- not is that true? here but people at cnbc say 30%. that's a huge free trade movement which has got to be great for economic growth. >> larry, within five years 95% >> not possible. >> they think you're -- that's of the industrial consumer kernan. and they've never seen it but it products basically in our bilateral trade agreement will be tariff free so it's a big, happened three years in a row. huge opportunity for us, a job >> what scott said is very interesting. remember we did that story earlier this week. creator, an opportunity for us what the real growth number is. to increase on the record is it the payroll number, the demand side number and i'm exports we've seen in looking at this market and i agriculture. right now agriculture is responsible for 1 out of every think it's trading more on the payroll growth story and i'm wondering if it's going to be to 12 jobs and trade is a key be mathematically upset that the numbers will be closer to 2%, component to that. >> 1 out of every 12, what are 2.5%. >> i know it's different than in the green eye shades saying about half a percent of gdp or 5 '80 and '82 but you remember million jobs? those prints. do they have any numbers on that what's possible if you're below stuff? growth for a number of years. >> well, we're basically in terms of agriculture expecting 300 or 400 -- and anticipating this is going >> or 8% or 8% gdp. >> real inflation adjusted. to add somewhere between 16,000 to 20,000 additional jobs. you can do the math. >> we've been so acclimated to there are tens of thousands of getting happy with 2% or 1.5%. jobs involved in this. 3 ps is great. in addition it's an opportunity >> it ain't that great. for us to build on the record >> we shouldn't be shocked if the united states economy can income levels we've seen in

still generate that. agriculture in the last couple of years and record export levels we've seen. it's a good news story for the >> i'm concerned. i'm trying to figure out what's economy and the country. >> especially when it comes behind it and i want to know. toint tointo agriculture it's a good story. in south korea they have limited areas to grow what they need. it will be a huge import for what's ahead of it and where it's going. >> even if and especially it's them. what areas might we see more competition coming into the united states for export? >> one of the beauties of the counter intuitive, if rates go agreement, president obama up it could go the other way. renegotiated the deal so we got a better arrangement in terms of >> but you want to get out of the way of the freight train automobiles. until it moves from one place to obviously we've seen a lot of green automobiles coming to the the other. >> still 3% or 4% dividend. united states and the president wanted to make sure the koreans had an opportunity to see our you will not be able to keep any of it. good products. >> taxation. >> it will be all tacked away. so it's a two-way opportunity >> we will continue this in just here, financial services, a moment. coming up, kelly king. technology, industrial products, it's going to go both ways but how his bank passed the stress test. if you are one of the millions of men at the end of the day, $10 billion to $20 billion of new economic gdp, this is massive in the agricultural community. this gives us opportunity to reopen discussions with china and japan, beef, a new arrangement with the koreans.

it's a really good opportunity for us and asia. >> we've seen agriculture prices, specifically the commodities jump in recent days because of some of the drought conditions in south america. we know that that's going to be an issue. what are you think being this as the secretary of agriculture? >> we're going to continue to see strong, stable prices for a who have used androgel 1%, number of right-hand side, not just the weather conditions in there's big news. other parts of the world. we found alternative ways to use presenting androgel 1.62%. agricultural production. we have 3,100 companies and both are used to treat men with low testosterone. androgel 1.62% counting that are buy row-based is from the makers of the number one prescribed companies producing new products that are plant based or crop testosterone replacement therapy. based. we want to see an expansion of it raises your testosterone levels, and... that opportunity in the united states, an opportunity to is concentrated, so you could use less gel. rebuild a world economy. the president instructed the usda to increase the number of and with androgel 1.62%, bio-based products the federal you can save on your monthly prescription. government could purchase, a new income opportunity, biofuels, [ male announcer ] dosing and application sites between these products differ. local regional food systems, a women and children should avoid contact with application sites. lot of activity taking place in the world communities, that's why we're seeing unemployment discontinue androgel and call your doctor come down in the rural if you see unexpected signs of early puberty in a child, communities at a fairly rapid rate. >> if you worry about the price or, signs in a woman which may include changes in body hair of some of the commodities going

or a large increase in acne, up and then pushing them to be used for biofuels, there's an possibly due to accidental exposure. men with breast cancer awful lot of pushback about or who have or might have prostate cancer, that, too, not just the and women who are, or may become pregnant efficiency of some of these products, which a lot of people or are breast feeding question, but also just the idea should not use androgel. that it pushes the prices for serious side effects include worsening of an enlarged prostate, the commodities. >> well, one of the things that possible increased risk of prostate cancer, people have to recognize is the lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, extraordinarily productivity of american agriculture. problems breathing during sleep, it's because we've invested in and blood clots in the legs. new technology, so we've seen tell your doctor about your medical conditions the productivity increase and and medications, especially insulin, we've used that increased productivity to essentially corticosteroids, or medicines to decrease blood clotting. allow us to fuel the biofuel talk to your doctor today about androgel 1.62% industry. we're looking for alternative feed stocks now, experimenting so you can use less gel. in a number of different areas of the country so you'll see log on now to androgeloffer.com less stress on the crop side and and you could pay as little as ten dollars a month more, new opportunities to take marge jal land or perhaps waste for androgel 1.62%. what are you waiting for? product and turn it into a this is big news. biofuel, and that's a good opportunity for us. with a healthy biofuel industry, consumers in america are spending somewhere between 80 cents and a dollar less per gallon of gas than they'd otherwise be paying. >> secretary vilsack, thank you very much for joining us today.

>> thank you. when we come back on "squawk box" we'll be talking high frequency economics, global policies and the effects on your portfolio, with one of the most respected economists on the street, ian shepherdson, of high frequency economics will join us in a few minutes. tonight on "the kudlow report" mitt romney's right-hand man on energy, harold hamm, will be joining larry to talk about gas prices and much more. make sure you tune in to "the kudlow report" tonight starting at 7:00 p.m. eastern. has been working hard for their clients' futures. never taking a bailout. helping generations achieve dreams. buy homes. put their kids through college. retire how they want to. ameriprise. the strength of america's largest financial planning company. the heart of 10,000 advisors working with you, one-to-one. together, for your future. ♪

up up next, he warned of the housing crisis in 2005 and he's been consistently on target with other economic predictions including a turnaround in the economy in the second half of 2011. so what's ian shepherdson predicting for the remainder of this year and beyond? we ask him, after the break. ol to follow me around. ew. seriously? so gross. ew. seriously? that is so gross. ew. seriously? dude that is so totally gross. so gross...i know. there's an easier way to save. geico. fifteen minutes could save you fifteen percent or more.

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welcome back to "squawk box" on this nurse morning. among the stories we are following today, $4 gasoline is becoming more pervasive, according to aaa. new york states average gas price surpassing $4 overnight, it joins illinois, california, alaska, hawaii and the district of columbia with that dubious distinction. foreclosure filings fell by

2% in february compared to the prior month and 8% from a year earlier. activity did jump by 24% in a years ago where foreclosures must be processed through the courts. steve? >> our next guest considered one of the top economic forecasters of his time "notes on the u.s." is read in more than 25 countries. i talk about it all the time, joining us is ian shepherdson, chief economist at high frequency economics. >> good morning. >> it's great to have you. >> his final four picks. >> he's got his final picks. >> that's all he asked us not to talk about. >> but he also wanted to give us football predictions, american football. >> only in soccer. >> let's move on. >> we don't really care about your economic -- no. you have been consistently on the bullish side here. >> yes, i have. >> and it's been not a bad call, and i remember reading your work during the time when everybody was afraid in august of a

recession. >> yes. >> you kept sort of straight ahead on the economy is going to expand, so who cares about the past. tell us what will happen the rest of this year. >> it will be okay, bumps in the road, i don't like the rise in gas prices but apart from that things look good. bank lending to business particularly is really roaring now, up 12% year over year and it's really pushing the economy forward. for the last two years it pulled it back. that's a big deal for small business and potential homeowners because mortgages are just beginning to get a bit more available and things are improving. >> there's a lot of talk, a lot of discussion, a lot of debate about the jobs numbers in the 200,000 range for a while. i've said 200 is the new 100, a number you might want to yawn about right now. does it get better from here? does the unemployment rate start to come down? >> it does. i'm looking to are 300 plus by spring. certainly by the summer i'd be disappointed if we're not 300 plus on a consistent basis. >> every month?

>> yes. we have strong hiring and strong surveys and the small business sector which i bore everybody to death about because i talk about it so much is really beginning to hire and move and that's important because small businesses generate jobs faster than larger companies. >> are you throwing out what the nfib is saying? small business is just about as depressed or happier a little than a year ago whereas the adp numbers shown small business hiring. is small business really out there hiring? >> small business is hiring. the adp for february was a big number. the nfib is a mixed back. i think it's credit dependent. credit is improving, it's changing. >> do you follow the household survey, booming. >> super strong. >> 450,000 jobs the last three months. that's a small business indicator. >> it's a great indicator and usually it moves pretty much in

line with heralds. we could be looking at 350 payrolls so household survey has been super strong. >> what about the unemployment rate, the idea was especially last month you had people come back into the workforce, almost equal to the number of people put to work so the unemployment rate stayed the same. >> i don't think that will continue. i'm sure people will come back in, participation has got to go up but if we're going to print 300,000 a month, generate 4 million plus jobs a year i don't think it can keep up, and the unemployment rate will come down faster than the market thinks. >> take me from 300,000 per month which is a huge number, a great number, to gdp growth, 3% to 4% gdp growth? >> yeah, 3 to 4. doesn't have to be huge because the flipside of this is the low point in the productivity cycle now. two years ago, productivity was 6%. now it's about zero, so dollar for dollar we get a heck of a lot more jobs. it's not what you want in the

long-term. he don't want zero productivity growth in the long-term. >> we'd be negative for the next two weeks. >> i was trying to teach steve liesman a few moments ago that the rise in treasury bond rates was associated with the rise in the economy. >> we had no success. >> so real interest rates and exchange rate was going up, which is stuff i learned when i practiced economics. can you help me make any headway with steve? >> i was listening in the green room. you were saying my stuff for me. i agree entirely. real yields ought to be 2 32rs and minus a little bit on ten-year tips. the baby step we've seen in yields is nothing compared to where we're going. >> to continue this because i think you're a brilliant economist with these ideas you're spewing forth. >> agreeing with larry will get you everywhere, ian. >> i realize that. >> these high interest rates won't inhibit the economy. they're a function of the

economy. >> that's right, every time the economy picks up and mortgage rates rise higher, you hear people say this is going to kill the economy but rates move up because people are doing better and people no longer need to centralize. >> let me try it on, larry. >> larry, get him on the dollar, stake in the heart of liesman. >> what if yields are rising because what happened on tuesday is people started to back out additional fed easing and what they're doing is backing off of the additional artificial dampening coming from the fed rather than real economist? >> people are walking away from qe3. qe3 i think was always a crazy idea and the fed is stepping back from it and the market is pulling away. the market is starting to lose its faith in the ability of the if towed keep rates down. the market sees better data and says this doesn't make sense. >> we have to figure out what you think the risks are to your forecast, 300,000 growth economy, 3% growth, what are the

risks? >> the big rilsing is iran, oil prices without a doubt. if we get a shooting in the strait of hormuz and oil goes to $150 a barrel, forget all this good stuff. >> does oil have the power to stop? >> not at $110 a barrel roughly, that's fine but $150 is a really, really big problem. >> the next shock would be a killer. >> that would be 2% upgrowth. >> you worry about tax shock? we're running out of time but there is big tax hikes built into the budget next year. >> in theory but after the election it's up for grabs. the extension will be the bush tax cuts. >> does deficits have the ability to hurt the u.s. recovery? >> no. >> deficits will come down if your predictions are correct, then. >> revenue also rocket over the next couple of years. >> we have jim demint coming on talking about a debt crisis in this country? isn't that true? >> he may be right but ian's growth solution is one heck of a way to go about it.

>> greek has a deficit crisis. the u.s. has a deficit but not a crisis. >> thank you. did you learn anything from this? >> i learn something all the time from ian, i learn something from you. >> i don't see a single page in front of you. >> i kind of think you misrespected what i thought because i agreed on the economy. we disagreed on the king dollar stuff. >> oh, the asian export model. >> you call me an asian keynesian, i don't know what that means but it sounds good i guess. you called joe a muppet. what are you going to call becky? >> i never called joe a muppet. i asked becky what a muppet really was. >> i thought you called him a muppet. >> i'm still unclear about a muppet. >> larry is picking on everybody. >> more from special guest and host of "the kudlow report" larry kudlow. later, senator jim demint joins us for a closer look at gas prices and the economy, at the top of the hour delaware governor jok maack markell, sta the state, the budget and the economy.

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i thought three months ago it was a done deal, whatever republican won. one of the interesting developments here is that counter effect shoe is on the other foot. obama was saying if not for what we did it would have been worse. now the republicans have to say if not for what you did, it would have been better. that seems like a harder sell for the republicans >> it might be, but if you look at polls, wabc -- "the washington post," abc, "times," rasmussen polls obama is going south because he's on the wrong side of the energy issue, on the wrong side of the keystone pipeline and drilling. >> we have five or six states looking at average prices of gasoline over $4. >> exactly. the rise in gasoline prices hurt him a lot, a lot of his rhetoric hurt him a lot and the showing up in the polls. now that could change but if gas prices continue to rise, and that issue stays on the front pages, to some extent it knocks

out his economic progress. a month ago, or two months ago, when the job numbers came in better, obama's numbers went up, no question about it. but it's been blocked out. >> ian during the break said at 7.5% unemployment, obama is a shoo-in. do you think that's right? >> i don't think there's any shoo-in. 7.5% will help him a lot and if ian is correct and you're printing 300,000 new jobs a month it's a big number, it's going to help him a lot. on the other hand there are other issues, deficits and debt remains an issue. health care entitlements remain an issue. >> health care is not getting any more popular. it's less popular, it's skaery. >> how is that an issue for romney? is romney able to make that into an issue that gets the votes? >> that's what the 61% that haven't voted for him, that's what they're talking about i think. >> why would you vote for romney? >> 61% of the republicans. >> who didn't vote, republicans, right. >> romney we talked about this last night on "the kudlow

report." romney needs in my opinion at least a much better narrative on why romney care is not obama care. >> is there such a narrative? >> yeah, he's got a narrative. he's got different ideas about how to reform the national health care system but i don't think he's delivered on that and that's why he's still got a lot of grassroots opposition. >> interesting. >> but it's up, this election is up for grabs. >> i agree. >> up for grabs. >> 41 the other day, this is the new york times. if they had time they would have gotten a whole new sampling. up next, senator demint on rising fuel price, the economy and the next hour senator chuck shumlchumer will join us. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important.

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senator jim demint is a republican from south carolina, with us from capitol hill. senator, good to see you. we've been, i don't know if your ears are burning, we've already talked about you a couple of times because we're having the argument again and it's so, you can just see how it's delineated. people think the deficit is something we got to work with but not right now. it's like, who is that, st. augustine or something? we've got to do it but not right now. you think it's more important than that? >> it's like working with an alcoholic. they are always going to quit but it's going to be tomorrow. unfortunately, i've been hearing

the same story for ten years. i mean you can't know anything about balance sheets, about adding and subtracting and think that america could go much longer adding this kind of debt every year. the cbo just said we're going to add another $1.2 trillion this year, more than we expected. our debt is already bigger than our economy and we're getting to the point where some of the european countries began to crumble. so we know we're in that range of danger and it's foolish to think we can double that debt over the next ten years, which the president is basically, put us on that course. so i think it's an urgent situation. i believe americans believe it's urgent. they're looking to our presidential candidates to have that sense of urgency, and i think that's one of the things that's been missing in the campaign. >> senator, we yesterday had on an interior department official and once again, i was talking about drilling, and i can't get a -- it wasn't him, i don't get

a straight answer from either side about whether there's a lot of land that is already open, not being produced by or not being developed by the big oil companies. i heard that again yesterday, that three-quarters of it is ready to go, and they're just not developing it, so there's no reason to open up any more. >> well, a lot of the opportunities on federal land and this administration has decreased production, leases and other opportunities on federal land. the only thing that's saving us now particularly with natural gas is things that were started under the bush administration on private land, have increased production and discoveries rather dramatically, and created a lot of opportunities for us and i think it's shown us that if we open up these opportunities all around our country, we could solve our energy problem a lot quicker than most people think. but this president, despite what he says, has suppressed our energy production, and i think that's added to the speculation that we're not going to have the

supply that we need in the future. so the president has had a lot to do with our energy prices. unfortunately, it's the only promise he's kept. he has said he wanted to increase prices. his secretary of energy has said he wanted to increase gasoline prices, and he's kept that promise. >> senator, if you look at natural gas, though, those prices have fallen to levels that are so low, it's crushing anybody who has made investments in these areas to the point where they're actually stopping doing some of this drilling. is that an argument for something at the national level taking a look at natural gas and finding a way to use that, more of that in our energy needs? >> well, yes, and i think it's going to happen naturally. washington does not need to intervene. there's going to be a low point until new uses are developed, but very quickly, we're going to see if these prices stay low and the projections of more supply in the future, more cars and trucks will convert, more electricity generation, and it gives us a capability to

actually produce energy at the residential level, through natural gas generators, and compressors at home, where we could fill up our own cars and trucks. so it creates a lot of opportunities. it will take just a short time to develop, and i just hope washington can keep its hands off this new market, and that we can let this develop. >> senator demint, do you think there's going to be another pipeline keystone pipeline vote? is there anything on the table? last one was 56 votes, that's pretty close to 60. is there another one coming? >> i'm not sure if there is. you know there are already thousands of pipelines across america today, and it's one of the most absurd decisions i've ever seen in politics was this president to slap canada in the face and tell them to send their oil to china. that's the kind of decision making that suggests this president thinks america is stupid, and -- >> muppet. >> we'll eventualily get this i

investors don't move somewhere else but it probably is not until after november. >> senator i was at a conference yesterday and nec head larry summers asked the audience before 700 people to raise their hand, who had been to kennedy airport. everybody's hand went up. he said who thinks kennedy's airport is a nice place? nobody's hand went up. his point was with interest rates as low as they are, 2 million unemployed construction workers, now is the time for the government to borrow and to build, rebuild the infrastructure of this country. do you disagree with that? >> yes, i do. >> why. >> this idea of borrowing and spending and that's going to build our economy is literally nuts right now. it creates so much uncertainty long-term for real investors, private sector investors, construction companies to actually add people. this idea that our government and our government spending is what creates our economy is

what's bringing down our economy, and what's creating the uncertainty. we don't need more government spending right now, because the debt that's associated with it is what's bringing our economy down. >> but airports and infrastructure and roads and schools, that can't be good for business. >> no, it's not but we can get more money to roads and bridges if we get the federal government out of it. i had a bill on the floo are th floor that voted down and evolved more power to the state and they would have had more money for roads and bridges if we took the federal bureaucracy and administrative costs out of it and all of the regulations like davis-bacon that come with it that force union rules on right-to-work stagts we could get more money in education, more money in transportation, more energy development without any additional taxpayer money if we just get the federal government to let some of these things go. >> senator, thank you and we appreciate your time today. thanks for appearing with us. >> thank you. >> you're welcome. you don't know where newark

airport is? you have been to newark? >> i've about on it newark. >> it's fine. >> newark needs some help, too. >> i don't think god i hate it here, i want to blow my brains out. it's fine. >> it's terrible, joe. >> you live in new york. that's your first mistake. >> aero flight was better than delta. new boeing air bus. >> tune in to "the kudlow report" monday through friday starting at 7:00 p.m. eastern. >> larry it's been fun. >> great shot of you. >> great, you called me an asian keynesian. >> it was a term of endearment. >> there you go. when we come back, delaware governor jack markell joins us for the remainder of the show and bracket busters and more with digger phelps.

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energy picks for your portfolio and senator schumer on his plan to keep gas prices under control. and breaking economic data -- ♪ jobless claims and producer price index numbers due out at 8:30 a.m. eastern. if you're waiting for the last minute to fill out your ncaa brackets, wait a little longer, last-minute picks from espn basketball legend digger phelps. the third hour of "squawk box" begins right now. ♪ >> he's like a republican, markell is. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and steve liesman. andrew ross-sorkin is off this week. futures are indicated up about

36 points. listening to ian shepherdson -- >> turned things around a little bit? >> i'm not saying that but i don't think it's a totally absurd thing to say because he's so widely followed and he was so positive. >> a great debate about whether or not what's fueling the market and the growth outlook for this country and he's in the 3% -- the double threes, 300,000 jobs, 3% growth. >> larry we all agreed that higher rates if it's for the right reason -- japan's had lower rates for 20 years and that hasn't helped anyone. when rates go up based on improving economic growth it's okay especially at 2.3. we're not at 9.3 or 19.3 >> higher mortgage rates will hurt the market but the person with a job is way more capable of qualifying for a mortgage. >> low mortgage rates aren't helping. >> i think it's helping them make prices more affordable for people who wouldn't be able to do it otherwise.

the concern is everyone has said this entire economy rests on the turn in housing if you're really going to see a strong comeback you have to get the numbers up. i don't know it's worth keeping rates for that low this long. >> you get my point that i don't qualify at a mortgage of 3% or 3.5% if my income is zero. >> right, but you can buy a house if you're paying the mortgage. >> keeping it at the margin helps. the treasury department plans to sell its preferred stock position in six community banks as its plan to roll out the public auctions to sell its stock in banner corps seacoast banking, willshire bank corps and wsfs. president obama and british prime minister david cameron discussing the possibility of releasing emergency oil reserves in an effort to knock back rising fuel prices. are you shaking your head, joe? >> yeah, not time for that

obviously. >> according to sources the president raised the issue during a bilateral meeting yesterday at the white house. no agreement was reached. u.s. officials have said for weeks they're considering all possible measures including a release from the spr. taking a look at where we are, gasoline is right now, $3.33, the wholesale price to add a buck or 70 cents on to that. >> i think there are six states in the district of columbia where the average price of gasoline is above $4 a gallon. new york just overnight jumping to $437. >> annual auto sales in china expected to hit 30.5 million vehicles in 2020, by comparison roughly 76 million vehicles sold worldwide last year. that's amazing. the report also projects india will overtake japan in car sales by 2016. today we're taking a look at the state of the states, trying to get a feel for what's happening on the economy across the country.

delaware actually closing its $377 million budget in the last fiscal year. joining us with more on how delaware got out of the red is jack markell, governor of the state of delaware and he will be our guest host for the next hour. welcome. >> thank you, great to be with you. >> delaware is in a better situation than the average across the country. unemployment is 7% in delaware? >> it is. >> 7%. you were able to close the budget deficit as we were just talking before, though, 49 other states are required to close the budget deficits. talk about how you reached some of the numbers because closing that gap of $377 million is not an easy task. >> i'd say a 7% unemployment rate while better than the national average is nothing to celebrate, and we don't think much about the rate. we're focused on the fact there are 30,000 people in our state who want to be working and who are not. the best way for sure is to figure out how we can grow out of these problems. it's true in delaware and across the country. so our main focus is how do we

make the economic climate better? i visit businesses every single week, ask them what we can do to facilitate their success and they try to execute what they tell us. >> what are you hearing on your recent visits? >> it's not a long list. a handful of things are important. businesses want to be in communities with areal good schools, with reasonable taxes, a great workforce, a really good quality of life and that means a 15-minute commute instead of a 45-minute commute, nice outdoor faces to enjoy with your family on the weekend. people want to be in linkage of institutions of higher education and finally want to be in places where the government is really responsible. >> first two places you don't have a whole lot of things that you can do to change someone's commute time to make it more outdoor spaces, to immediately bring higher education into the area. >> well, but it's a couple things. first of all we're investing in bike and walking trails and those kinds of things so there are things that we can do but in terms of higher education, one of the most important things we can do is that there's a strong

linkage between institutions of higher education and local companies so what is being taught is relevant to the jobs that are valued in the marketplace, and this is critical so we spend a lot of time connecting our for example delaware tech or community college with real jobs that people want to fill right now. >> the third part about government, i didn't let you finish that point. what are you hearing from them in terms of what they want from their government? >> they want us to be responsive. as long as they have to fill out forms and wait in line, they're not putting people to work. and they want to feel, they want to feel wanted, and so we spend a lot of time working with our businesses, asking how we can help and then following through on what they tell us, and when do you that, it's like anything else in life, if they feel wanted and feel you're going to follow through on the commitments you make it's more likely you'll be successful. >> you wrote an op. ed, was it this week in the "wall street journal"? >> last week. >> last week where you laid out the case for why you think we

have been a much less friendly nation to ipos recently and the broad impact that that's had. you think because we are not winning the same number of ipos it's having a huge impact on the amount of new jobs that are created in the nation. >> there is pretty good research that suggests, not surprisingly that the period following an ipo is a time of significant job growth for companies, because let's face it, a lot of companies go public in order to raise the capital they need to grow, and so the numbers are pretty stunning. the number of ipos in this country plummeted over the last 15 years, the number of ipos in other markets around the world has soared and you can't really blame the owners of the companies, because they say it's too cumbersome, too many rules to follow. it's too expensive to try to go public these days especially for smaller ipos. instead it's not worth it. i'm going to sell out. you can understand from their perspective why they do it. from our perspective as people trying to create jobs, it's really not a great thing for our economy. >> what do you think that was? was it the beginning with sarbanes-oxley or something else

that happened? >> largely the begin of sarbanes-oxley and i understand the reason for it, with he want to make sure there's transparency and investors are protected but i think the bill that passed the house last week was actually an important chunk of it sponsored by our congressman in delaware john carney is right. it basically provides what they're calling this on-ramp so that the bigger you'd get, the bigger the burden that kicks in, so smaller companies have less of a burden, less expensive for them to go public. >> i was kidding when i said, you know i'm a democrat but check this out. here is "the huffington post." "congress creates jobs for fraudsters, shills and wall street analysts." this is the jobs bill that will make it easier for ipos to get started. >> well, look, i think there's a happy medium here and we certainly want -- >> this isn't it here? it gets worse, but this is typical for this, i don't know

what to call this outlet here, but and then i listen to the rest, you're constantly talking about being nice to business. you just don't get the message from the white house or something. >> we just visited the white house a couple of weeks ago, all the governors. >> why don't you stay down there and advise, have a few conversations? >> we heard the same message from the president. we talked specifically about this ipo issue. the president was all over it. he really -- >> when you look at illinois versus wisconsin, which governor is doing the right thing? >> i'm not going to start sorting out one governor versus the other, but when it comes to national policy, what i will tell you the president had steve case meet with us because he's focusing on the start-up america initiative. >> we've had steve on. >> yeah, he's great and they had secreta secretary bryson to talk about what it is the federal government can do to help the states with exports and promoting foreign investment in our states. it's exactly the kinds of things

that we want. it's what we're hearing. sometimes that message doesn't sauls get out. i'm telling you this is what the white house -- >> just be honest, you have, in the last three years you've never gone woo with some of the rhetoric or some of the policy moves that have come out of here, where you didn't chafe with your view about the private sector? >> i was troubled by some of the things around the durban amendment for instance. >> yeah? >> i said it on the show and it wasn't popular afterquards. >> i won't begrudge someone if they need to make a profit but once you've made enough i think you should stop. >> i've been focused on the actions, i was literally at the white house two weeks ago, very tangible, practical assistance to the states. >> in d.c.? that white house? >> same one. >> good. maybe there's a little bit of a -- it does help if you're trying to get reelected for jobs to be, i mean right? seemed like it was always in the

best interests of thes white house to help the private sector. >> i agree and i think again some really practical things like the export help, like the foreign investment into this country. >> and the job creation for fraudsters, shills and wall street analysts. >> that was a bipartisan bill actually. >> i know. even maxine came on and liked it. >> the white house said we want this to come through. governor markell will be with us for the rest of the show. we have a lot more to talk about with him. coming up with oil prices rising and natural gas ten-year lows is now the time to invest in the energy sector? david foley joins us. and next, march madness time, hours away from the first tip-off, 12:40, another great game. espn david phelps will join us for bracketology. "squawk box" will be right back. since i was a kid. [ mike ] i always wondered how did an airplane get in the air. at ge aviation, we build jet engines.

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if people work anyway. i talked to you yesterday. let's do some bracketology. digger phelps, espn college basketball analyst, former coach of notre dame. i think people are more productive when they're watching because they're doing something worse if there are no tournaments at work. i don't see this, oh they're sitting there working and the basketball games come on and they stop working. i think they're less productive and at basketball they're watching advertisers and it's good, right? >> but joe, the key is this, that the nation loses $1 billion of productivity. >> stop saying this! >> because for march madness this is everything everybody is doing. >> the networks gain and the advertising and all the good feeling and the bars and the alcohol being and the chicken wings. i think you're just looking at a vacuum, digger. stop cutting off your nose despite your face. >> joe, this is the biggest weekend in las vegas, 48 games starting today at noon, all the way through sunday night, 48

games, the biggest weekend where people just pack up and go to vegas. >> let me ask you about the games. i always hear every year this is going to be the year that the top seeds finally, there's going to be no upsets and never happens that way, does it? >> well, you can go chalk if you want and yes probably, i like florida state a lot in the east and i'll tell you why. syracuse is good but i think vanderbilt can shoot threes against that two-three zone. believe it or not syracuse is the second worst rebounding team in the ncaa tournament. their rebound margin is 235, where they get steals off points is bad passes and steals against the two-three zone and that's where they get their transition points. florida state knocked off north carolina twice, duke twice, they're on a mission. michael snare is a great guard. the last time they went to boston they lost to boston college but now they're in nashville for two games and should win and i think they can

beat ohio state. i this i florida state will get to the final four from the east. >> uh-oh. i got them going a ways but i don't have them. >> your 10-7-up set in the east, are you ready? west virginia over gonzaga, ten seed over seven. why? the game is in pittsburgh, gonzaga the three-hour time change zone. >> i got that. i wished the melo news would have come out later today because that would have busted so many brackets. >> i've changed mine. >> she's changing hers. >> if i can, i'm going to change it. i forgot my passwoord. >> the east plays the midwest. when you look in the east playing the midwest, north carolina is number one seed. one issue, being played when the regionals start in st. louis. kansas loves being a two-seed. robinson and taylor know.

they lost at florida state and lost at unlv, 90-80 so you can get points against them. you look at everything else, acc winners on the road lost to florida state. even though that bracket has georgetown, michigan, temple, it comes down to kansas and north carolina and regional championship. i think kansas beats them because the sixth man in the crowd will help kansas upset north carolina, kansas goes on to the final four. here is your 11-6 upset. north carolina state over san diego state. north carolina state played very well in the acc tournament. they've got to travel east to columbus, ohio, there's your three-hour jet lag, three-hour time zone and when you look at lorenzo brown and esley and howell in the paint, that's the upset in the midwest. >> okay, so i got florida state, i got kansas, who is the last two? >> all right, let's go down to the south. everybody's talking kentucky and they should. everybody's talking indiana/kentucky matchup. oh really? well the reason why kentucky

lost that game at indiana, went 10 for 17 at the free-throw line and missed a lot of free-throws at the end of the game. indiana hits the three to beat them. they're looking at christian laettnor history matchup, it's not going to happen. baylor is playing very well with perry jones iii and kentucky still, even though here's the side bar, kentucky and the sec conference tournament, 12 for 53 shooting threes, i would play them like playing joe kernen, play six feet you'd be lucky to shoot an air ball but kentucky gets in new orleans. >> i'm more identifying with and i played with you and my six foot putt is usually an air ball. not my shot. all right, good. >> i got to go to the west. >> finally, finish that. >> michigan state, they got the easiest seeds out there. why? michigan state is strong, physical, blue collar team, dramn brown is the coach on the

floor, tom izzo the picasso of basketball. marquette and louisville there's no beast in the big east this year but missouri if they get in rebounding trouble which they will or foul trouble because kansas state beat them race to, green and company is too strong. ratliff can be in foul trouble on the bench, that's why i have michigan state going. here is your 12-5 upset to get to the sweet 16. long beach state will take care of business against new mexico. then they'd have a second round matchup against louisville. long beach stayed back when, preseason. they played everybody and lost by eight to north carolina at caroli carolina. they lost by six at kansas on the road. so the thing is this, they lost in double figures at louisville, so it's a payback came. casper ware, 33 points in the championship game against santa barbara, they've got four seniors who when they were freshmen only won six games.

this team is on a mission to get to the sweet 16. but michigan state is the team that's going to get to the final four and i think michigan state wins the national title. >> digger, what is your unemployment rate forecast? >> well, let me just say this. after everything i've been hearing around the country, my fellow americans, the nation needs a coach. >> you're right. digger, you do great work with charter schools in new orleans. >> in two weeks in new orleans we're making a big announcement about john mcdonagh high school, make it a culinary high school. we had kids and guns and gangs. 200 street vests. we're going to say you want to be a corpse or do you want to be a chef? finally with all these restaurants and all these chefs, john mcdonagh high school will become a culinary high school for new orleans to get the kids to see another option in the game of life.

>> how can there be a culinary school in new orleans? i'd like to learn how to do that even. >> in memphis there's a school called soulsville high school, music was the hook. these kids take an hour and a half of music a day, english, math, science, history the rest of the day, 8:00 to 5:00 six days a week, walk to class reading, reading a book. i tell these kids, if you get a degree from this high school, soulsville high school and get a music scholarship to depaul university in chicago, you can play that cello in the chicago symphony but with a degree in business from depaul university you can run, you can run the chicago symphony. so taking all of our cities in this country, i saw your stat the other day. $555 billion, ten years in afghanistan. remember the soviet union did it for ten years, there's no more soviet union. it's not going to work over there. as soon as we leave, i don't care if it's in three years, the taliban, the al chida, the

tribal chiefs, no one is going to take care of afghanistan, maybe kabul. if we spent the $555 billion last ten years in education? please. >> david, thanks. we're going to have to come back to you next week or something, even after and figure out health care, maybe and the deficit. digger, thanks for coming on. appreciate it. >> my pleasure. >> he knows about the blackstone group expanding its natural gas footprint with its $2 billion in shineer. so what other energy opportunities are in bla blackstone's sight? we'd love to hear, david foley because we're worried about natural gas and when prices get too cheap it's the greatest thing we have and now doesn't make sense to look at it. >> the nice thing about prices being cheap, that will create additional demand and as an investor at black stone we've been focused on oil for the last few years, inside the u.s. and

eaglesford and overseas in africa, one of our companies made $1 billion a barrel discovery and with gas prices so low and the forward curve collapsing as well we look at natural gas related investments in north america. we don't think it's too late. it's probably just getting started in terms of finding some bargains. >> does it take a while? how long are we really talking before you can ramp up the actual demand on natural gas to get some of those prices to come back? >> it will take a bit, becky, but i think you've already seen industrial demand, petra chemical come back in demand. over the years it was declining, flat natural consumption in the u.s. for well over a decade. ultimately it needs to come from power and for it to come from power we need the economy to grow a bit so we consume more power and as the environmental regulations kick in and some of the coal plants close we think that probably won't happen until 2015, 2016 a i natural source of

embedded growth. >> is it a government investment thing or is it private sector? >> private sector is taking care of municipals. i served on a company in the u.s. and one of the things they were doing before i stepped off the board was converting some of their diesel truck fleet, garbage trucks to natural gas. it was both an environmental decision and a cost decision they could reduce the costs quite a bit and for trucks that come into the same hub every night it's easier the refueling options are easier for the 18-wheeler fleet. for the diesel fleet it's more challenging because of refueling. if they start with the high density corridor that could kickstart it. >> blackstone has been an incredible partner in delaware. we had a refinery that closed in delaware and all over the country. the one that has a new lease in life, tom o'malley with

blackstone and the reserve. the refinery closed in november of '09, reopened a month ago and contemplating an additional investment. for us it's 750 people going to work every day right now, could be another 1 million person hours of work. i'm just interested on behalf of myself and other governors when you're looking at energy investments you're going to be primarily focused on what the specific company, but the question is what is it that states can do to make it more likely to invest in those states. >> well i think, jeff, we tried to buy that refinery in late '09 and weren't successful. we had a great management team, tom o'malley won premcorps which we owned from 1997, brought him in in '02, ult vatly sold to valero in 2005 so we knew the asset pretty well and saw what we could do to make it more profitable, change the process configuration, make the refining more reliable and reduce co2

output to 40%. the offer was rejected and it closed by the end of the year. what changed was political leadership, and a can do attitude, not business as usual. a lot of what we do actually in the energy business at blackstone is greenfield investing, start-up investing. people think of us as just doing big public to private buy-outs and we do those, too, but we're finding better value creating businesses from scratch, and makes such a difference if you have leadership that can cut through the red tape, say how can i help. we want to get these jobs back, labor, u.s. steelworkers union, very cooperative, flexible, able to hire back several hundred folks and invest in several hundred million dollars to restart the refinery, safely, reliably. that wouldn't have happened without a good sense that we had a team that was pulling for us, not working against us. >> david, thank you. we got a claims number and ppi, i said it, ppi at 8:30, we

appreciate it this morning. >> thank you. >> good to see you. coming up, minutes away from jobless claims and "squawk box" is coming right back. [ male announcer ] what if you had thermal night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.

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back to "squawk box," we're seconds away from the jobless claims and the producer price index day it. who better to give the data than rick santelli. get your microphone on there, rick, he's in chicago. rick? >> reporter: yes, sir. >> five seconds to the numbers claims. ppi, empire state, here you go. what have you got? >> reporter: here we go and the survey says producer prices headline up 0.4%, that's about in line with the expectations, maybe 0.1 wider but bench market against unrevised up 0.1 from january and you could see the trends. if we strip out the all important food and energy, came in exactly as expected up 0.2, and here is the of course issue, this is half of what january's

0.4 was. we went from up up 0.4 to 0.2. 3.3 is cooler than 4.1 on the unrevised last look but if you look at the core 3% continues to run high. jobless claims down 14,000 from 365 originally released at 362 to 351,000, as we continue to hover in that neighborhood of four-year lows on initial claims, continuing claims, 3.42 million, down to 3.34 million, so we see a bit of a drop there, as we continue to handicap all of this, and the fact that the 30-year bond leading the charge to higher rates coming very close to 3.5%, to levels we haven't seen since last summer. back to you. >> rick, why are they selling ten years down there? because of the economy or because everybody's selling? >> well, can't be the economy,

because the fed would have been so much more upbeat and they know all, right, steve? i would say it's 20% of this, 20% of that. yes, the economy is improving a bit. that's a good sign. the market's handicapping the availability of that fire hose, whether it's the twist or some derivative form they're in after june, and didn't see anything. also corporations, the historic february numbers for investment grade and high yield even offer a global basis in terms of securities i think is lending the notion that the lowest rates basically in the history if you go back to the eisenhower administration, are probably more in the rear view mirror. i think this normalization, the rate of change will not sustain. i think 3.5 and 30s and somewhere around 240 to 250 in tens is going to probably be the upper end of some new range. >> thanks, rick. one more data point this

morning, i got the empire state in at -- >> reporter: i apologize. >> 20.21, expected at 17, gains in the number of employees and average work week. for more let's get to jerry webman, chief economist at oppenheimer funds. we get the manufacturing sector of the economy doing well. talk about claims at 3.51 >> 351 tells us the 250,000 job per month trend is going to continue. we're hiring. manufacturing is great, the fact that we see strength in manufacturing, we all know this, a nice multiplier. this is part of this good sustainable, okay not great but the key word is sustainable growth pattern the economy is in. >> when you look at risk to the economy, the price of oil and inflation has to be one of they will. 0.4% on the headline, 3.3% on producer price index can't make you feel that good. >> it doesn't make me feel good.

i think what we're looking at, steve, is a foot race between printing more paychecks and charging more for gasoline, and right now the fact that we're continuing to print more paychecks which is how i looic like to look at the job numbers, more people haven't bought something, need to buy something, will buy something and higher gasoline prices will be a damper on it. it's a footrace between the two tends >> what is your outlook for this quarter and rest of the year. >> people need to have the big fancy models to do this but this 2.5% range for the rest of the year is not great but 2.5, maybe 3% if manufacturing picks up, 2% if gas prices go lower. it's okay. it's not great. >> and how about the federal reserve. we're talking the end of june, what happens in june? >> well, so far, i hope, they continue to do nothing. i would like the fed as they have disappointed, which is i

think the wrong word entirely the market by saying yeah, this is is going along all right. we don't have to do anything right now. i this i that continues to be the case as long as this path of modest growth and improvement in employment continues. the fed can't do anything about energy prices. it can't. >> and shouldn't. >> god forbid they try. >> governor can you help us on the state level? i know you guys had to right size your government employment. are you about the at the end of the process and can you talk to us about where other state and local governments are right now? >> i'm not sure we're ever at the end of the process. the new normal we have to ring out efficiencies every single year. we're down since i took office by 1,071 positions at the government of about 15,000 and that may not sound like a lot but in the context, the irony is exactly at the moment in time when revenues are down that the demand for government services increases and so it is particularly challenging and

when a correctional officer retires, when a teacher retires, those kinds of folks need to be rehired but i think we have to continue to be focused on how to wring out efficiencies from here on out because i don't see the old glory days come back any time soon and my sense is unless you're in a state like north dakota, south dakota, nebraska, wyoming, lots of energy. >> all of that energy money. >> you're probably in a similar situation as we are. >> what happens in june if the fed does not continue operation twist? is that your forecast when you talk about what happens to the ten-year being in that 250 or is there an upper range that's even higher when that happens? >> reporter: you know i think the market is discounting, in my opinion, maybe a two in three chance that it ends in june as it's posed to so i think if anything changes that they do something, you have a big move but if they don't do anything, as i think the market's telling us, i think a good deal of that is priced in. i think a bigger question is will the treasury market try to

normalize what i consider abnormal times for interest rates. i think that's the big question, and if we get a three handle on any of these quarters in 2012, and i am not in that camp, but if you do, i think that would be your next leg in extending the top of the yield range again. >> it's interesting to think about what the market perceives to be underlying inflation right now because it's not getting a return on inflation and it would have to be what, 3.5%, 4%, even if you concede 2% underlying on inflation. >> you know the inflation, and i traded fixed income at times in the '80s, where of course we had t-bill rates that were 16%, 17%. >> right. >> when it comes to inflation, that we are building a strategy for it, but i think the fixed income world is really hovering in a very short term time slot, and i think as we start to get

after the election and towards the end of the year and we get more clarity on things like taxes and big policies. >> spending. >> the focus may change. >> let me just ask jerry quick your outlook for the ten-year and the underlying sort of inflation compensation that will be eventually demanded by the market. >> eventually, that's right. you can't keep having negative interest rates for a long time and not get really bad consequences. >> right. >> i think we continue to creep up. i'm with rick on this. seeing a three handled this year is awful by tough on the ten-year because that would restrict the modest growth we're seeing so it ticks up. treasuries are good insurance for something very bad happening. they're not a very good way to make money. >> jerry, thanks for joining us. >> always a pleasure. >> joe? coming up, new york senator chuck schumer will join us to talk blt gas priabout gas price politics. 3q we always hear about jobs leaving america.

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welcome back to "squawk box." among the stories we're following, cisco systems is acquiring nds group is a $4 billion deal. nds is a provider of video and content security software and that is bigger than most of the deals cisco has done out of the hundreds and hundreds of deals the company has done in the past. newscorps owns a 49% stake in

nds and the deal is expected to close during the second half of the year. senator chuck schumer has been calling for an increase in saudi oil production and looks like he's getting what he asked for. we heard from the saudi oil minister the other day who said the country is ready to offset a shortfall in oil supply either real or perceived. senator schumer is with us this morning, and you talked about it last time, senator, and then lo and behold, we heard so did you call this guy? you got a lot of influence it looks like. >> no, i don't think so. the administration deserves a lot of credit here. they've been working long and hard on this shall issue. it is extremely sensitive for the saudis to do things publicly would be a mistake but having other figures increase pressure on the saudis publicly is a good idea, and look, he made a very good statement. it's a great step. it shows the saudis are inclined in that direction but you know the markets tend to doubt the

saudis on one statement alone, because there have been so many back and forths in past history in terms of how much they would produce, wouldn't produce, et cetera, and so what we need is saudi officials, the oil minister, as well as others to be explicit and to repeat what they've said. they should be more explicit and detailed and repeat what they've said and the oil prices went down a little bit yesterday, $1.50. if the market's come to believe that the saudis are serious and will really do this, no ands, ifs or buts the markets should come down a lot more. >> senator, all week we've been talking about the dynamic going on at domestic production versus, you know, imported oil, and the obama administration, whether, we've heard that domestic production has gone up every year but then republicans say that it's still too hard, too many permits. what should we be doing with hydrocarb hydrocarbon, just talking about the overall benefit of switching

to alternative energy anyway. what should we be doing? >> okay, well first, just you have to cut this argument in two pieces. short term, what can be done about prices? the best thing obviously is for the saudis to convince the markets that they will actually replace every barrel that iran takes off production with a new barrel of oil, and they have the capacity. they have 2.8 million barrels of extra unused capacity. iran total exports are 2.2 million. so if they keep at it, that will help in the short term. in the long-term obviously we have to wean ourselves away from foreign oil, and there are lots of ways to do that. first, people always talk about the supply side. the greater asset is the demand side, in fact the number one thing that will reduce oil imports is the fact that we raised mileage standards on cars, it's going up and by to 2020 it's estimated we should be

able to reduce our foreign imports of oil by a third as our cars get more mileage. the president under that legislation is ready to move the standards over the next ten years from 2020 to 2030 to 50 miles a gallon. if that happens we won't have to import any oil at all, even if we didn't increase production. on the production side, it's the president's right, it's all of the above. certainly wind and solar should be encouraged. right now tax incentives that help, have helped produce a significant, small, 3%, 4% of the electricity market of wind and solar, has not been renewed. that makes no sense. and there ought to be agreement in the congress to renew those. i don't know why people in the house are holding that one up. second domestic production, oil and gas is a good thing. i was one of seven democrats for instance to open up parts of the east gulf and we're beginning production there. so because we can't rely just on alternative energies, and i'd look at nuclear as well but the

forgotten 800-pound gore little lain this discussion is conservation. forgotten 800 pound gorilla in this discussion is conservation. california, in 1978 they put in building standards similar to europe. they have -- 40% of our energy is used cooling and heating buildings, and california has per capita use of energy to heat and cool their buildings similar to denmark. if we were to just do those two things it would be huge and they're politically less damaging and come about just about as quickly as more production. >> senator, while i was -- this has nothing to do with this but since i have you here. >> it's okay. >> i wanted to ask you about goldman. everybody's talking about it, and you know, nobody likes to hear that clients aren't being served. i don't know how long a company stays in business if clients

aren't being served. i new york city the shining thing is our financial sector. you usually will support that. what should we make of this? should "the new york times" have printed one disgruntled employee, hear someone call someone call a muppet and it turns into this, goldman sachs didn't have enough problems with pr? >> okay, it's a good question. first financial is important. you know, with all the excesses and problems in financial services, the public generally forgets the valuable function that financial services serve. allocation of capital is one of the most important things that our society can do, to do it well means more jobs, more productivity, more income for americans. and that argument has not been made enough by wall street itself, by political leaders. >> you can help. you can help. >> i try to make it, i'm making it now. >> especially from your side of the aisle. >> i'm trying to do is right now and i've done it over and over again. secondly, this is one employee.

obviously a company in the long run that doesn't serve its clients, as you said loses out, any company, not just in finance. if you take widgets and cut corners to make profits and make a junky product you lose in the longer run. it's not in goldman's interests not to serve its clients so i think we ought to look at this, see if it's real, but you can't base everything based on one person. was he a disgruntled employee? i have no way of knowing. is he representative of the whole culture or the culture that the younger people there feel? we have no way of knowing. it's a little premature to jump the gun one way or the other. >> if i were to call you a muppet, you can call me a muppet, i think the muppets are -- i love the muppets. >> well it depends. i wouldn't want to be oscar the grouch, you know. >> which moneyet? >> bert or ernie is just fine with me. >> depends on which muppet. >> senator, have a nice day. >> thank you, tu.

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let's get down to the new york stock exchange, where we find none other than jim cramer.

what's driving trade today? jobless claims or goldman sachs? >> i think the jobless claims are very important. obviously a series of good news over and over again. a lot of people, steve, felt we were about to roll over. with this kind of day, it's too hard to sink us. you hairless guys are sticking together? >> they have hair, they don't countisms that was blatant bias. >> that's baldism, that's what it is. >> you feel sleighted, david? >> always. though i had not noticed that suit. >> i think it's a clarion call. i usually switch to gin and sonic -- >> how long can you stand the winter grays and blues. it's 80 degrees in washington. >> pisani yesterday looked like a tootsie roll with that brown on brown. >> i know the exact suit and tie combination. >> is his wife still down in

philly? >> hey, c'mon, bob can pull that off. >> if anybody can. >> exactly. >> you know, there's over 4,938,265 cents lost by people playing brackets? it's apple. the whole size of apple. i'm sick of those stories. first of all, it doesn't -- it's not a waste of your time. >> it's commerce. >> a waste of your time is watching the same "ncis" 40 times. a waste of your time is watching "luck" which just got canceled. >> three horses put down. not good. >> we'll talk about that later. apple, pennies away from 600 as yet another analyst puts the price targets above and we'll talk whether the new 700 club is getting parabolic. >> i like that. >> did you change your brackets after listening to digger? >> i listened, and said, do i go

in one more time? i've changed so many times. i downgraded syracuse, which i thought was a good call for him. >> i'm like, long beach state? >> liu brooklyn. >> i felt i should change florida state, but felt it was too derivative. i'm listening to this guy on squawk and going to change? i've loved digger phelps. that was a great get this morning. >> that was my thing. i was going to say you can tune in in a few minutes to see the follic folliclely challenged. are you an anti-baldite? >> no, because if you look right here. >> it is happening. thank god. >> i know. coming up -- i mean, it's killing me, killing me. final thoughts from our

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let's get some parting shots from our guest host. governor jack markell, how do we finish up? you're very pro-businessisms i am. when you're pro-business, it can pay off. in the last month we've announced amazon just broke ground on a distribution facility, 850 jobs. bank of america 500 new jobs. citigroup 200 new jobs, just within the last month. sometimes it feels like it's a step forward, half a step back, but we have to stay unbelievably focused on improving that economic climate. >> as the companies do well, they have to pay taxes to delaware. >> of course. and that's what -- >> i'm connecting these dots. if businesses are doing well in delaware, everything goes

better? >> it solves some of the challenges. >> why are you laughing? >> because you're playing. >> i'm going really slow for for people that might be watching in washington, d.c. >> folks, at the brack, joe has been involved in this conversion process, trying to get him to switch parties. >> governors basic already are republicansisms i'm a proud democrat. >> you have to be republican to govern wellisms that's not the least bit true. >> you just described three things that are definitely not -- that your party a not known for. >> i respectfully disagree. >> uh-oh, who is that? the censors? >> the democratic party. >> they know how to get in touch with you. >> plenty of democratic governors across the country focused on jobs, schools and being good stewards for the taxpayers. >> a governor has to be more fiscally prudent -- >> you start out as a ceo.

he's a ceo. >> you can't go out and borrow. >> we are proud of our aaa rating, democrats, republicans, very proud of that. >> neurolegacy is just a really poorly paid ceo. >> we didn't talk obama-care, we'll have to do it next time.