good morning, everyone. i'm becky quick along with joe kernen and andrew ross sorkin. we have breaking news if you're just waking up. mag tie nud earthquake hitting the west coast of sumatra. they said the tsunami watch was in effect for the entire indian ocean. individual countries including thailand, indonesia, sri lanka and india also issued tsunami warnings and people along the coast of six thai provinces were ordered to higher ground. it was in roughly the same area as the december 2004 earthquake of 9.1 nag magny attitude. that sent huge waves crashing into sumatra. that's why we're watching this very, very closely. guys, this is something that has just happened in the last hour, and at this point, there are warnings everywhere for this, people watching very closely. >> they have centers and they can measure the waves.

you thing 8.7, 9.1 is close, except the logarithmic, ten times is so much worse. >> right. so this could be. i mean theoretically it could be half as -- there's no reason to assume it's going to be good, but i'd certainly be worried at this point after what happened last time. but hopefully -- >> it was about 20 miles we low the surface of the ocean. >> remember, there was one headed for -- this was a couple of years ago, headed for hawaii at one point and then -- >> it was averted but it -- >> right. it was -- surfers, that's the only people that were affected by it. nothing happened. >> then we were worried. >> this could be a problem. >> what do you -- you expect the best but prepare for the worst. >> prepare for the worst. >> right. the earthquake was felt as far away as thailand and malaysia. that's part of the reason they're watching for this too. the tsunami watch again is in effect all the way to india, sri

lanka, iran, bangladesh, south africa and singapore. >> okay. we're going to keep an eye on that but in the meantime we're going to take a look at narkts following the selloff on wall street. also i was going to say looking down because they were looking down earlier but now we're in a much better place. this is literally five hours ago. >> five hours? >> i woke up. max woke up. it's a long story. dow is looking up, about 117 points right now if we opened up right about now. the dow has declined for five straight sessions now, losing about 550 points. the blue chip index closing yesterday at its lowest level since early february. benchmark treasury yields fell below 2% for the first time in more than four weeks. the big part of the market story is europe and specifically spain. the debt problems there driving spanish ten-year yields up nearly 6%. it's yielding.

it's unbelievable how the story has come back. >> it spread between the german yields. >> people have pointed out that, you know, every time it looks like any part of the world is pulling back on the extraordinary accommodation of the central banks, you know, the minute qe2 ends. >> we say, oh, my goodness, there's a problem. we can take a look again. >> every time we take the training wheels off, you know, you start -- you know, you look like you doan know hn't know ho the bike. where would you find the futures at 1:00 a.m. >> on the cnbc ipad app, if you can believe it. it has an amazing app. they don't have the sorkin fair value set up properly, and i've got to talk to them about that. you can look on the app. >> you wake up at 1:00. your kid is not feeling well. >> little max -- >> you check the futures? >> little max sorkin. i was looking at e-mails. >> dad, i feel --

>> wait a minute. hold on. oh, my word. look at that. that's why. >> we're going to head overseas. >> you can't get away. >> in just a few minutes to look at all of this. a number of u.s. markets to keep an eye on. at 8:30 eastern we get march import price. at 2:00 they plan to release their beige book. so we've got a lot of news to chew over this morning. >> the gop race got more interesting and smaller. rick santorum officially dropping out. cnbc's eamon jeffers joining us from washington. i read that this leaves newt the alternative conservative. i thought he was kind of telegraphing he was about out. >> he did kind of telegraph that. but he's still in the race

officially, and, of course, ron paul still in there too. so if that's your cup of tea, this enyou your alternative there. it could have been an embarrasses loss for santorum if he had lost there. he reminisced a little bit about his daughter who's been very, very ill and some of the people he's met along the campaign trail and he talked a lot about the sweater vests. take a listen. >> amazing thing that sweater vest. it happened on a night i was doing an event for mike huckabee in des moines and i showed up and everybody was in suits and ties and i showed up in a sweater vest. turned out i gave a pretty good speech that night and all of a sudden the twitter verse went wild saying it must have been the sweater vest.

from this point on the sweater vest became the official wardrobe of the santorum campaign. >> now for mitt romney it's about coalescing and bringing the party together in terrell season of this political year and getting everybody focused beating barack obama in the fall. one sign that that's already beginning to happen, foster freeze, the invester who backed rick santorum's campaign will spend money backing mitt romney. it looks like the republican money men are coming together and they're turning their attention to the general campaign, guys. >> all right. >> eamon, thank you very much. we're going to have more on this in just a moment. but in the meantime we want to bring you up to date, again, to the breaking news. there was a magnitude 8 president 7 earthquake that hit off the west coast of sumatra and for more of what's happened in that regulation, we're joined

by ian williams of cnbc news. >> reporter: there have been warnings around the indian ocean. here, six areas along the coast have issued warnings. phuket airport, that's a big western destination for western tourists is closed. beaches have been evacuate and people have been told to move to higher ground. i mean at this point, there's no evidence that a tsunami is on the way, but this is something they're warning of. most countries have early warning systems. and if -- this is if, we're

expecting to hit thailand in the next hour and to have arrived in indonesia, sore suze orman far at least there have been no reports of a tsunami. >> ian, i take it not only the authorities are being prudent but i would imagine that residents and tourists are very eager to cooperate and listen with this? >> they are because the 2004 badly shook the region and created all the fatalities. and i think all along the coast, thailand, indonesia, they have quite elaborate systems now in place. and there have been warnings over smaller earthquakes than this. this is a big one. this is a very big quake. experts' initial assessments are calling it a lateral quake rather than a vertical movement and because it was so far a offshore, 250 3rks 00 miles, they're saying it's less likely to create a destructive tsunami

than the thought of a vertical movement that we saw closer to shore with d 2004 quake. these systems that have been set up, carefully calibrated over the years to create an early warning have now clicked into place and certainly people are take nothing chances. >> the early wire reports we've been receiving suggest that this earthquake was felt as far away as thailand, malaysia, and india. did you feel it. >> reporter: we certainly did in the high-rise buildings, at least one of which, i'm told, was evacuated in bangkok not because of any damage but because of the fear of the people inside that building, especially on the hire floors when the shaking began. it was felt in sin a portion it was felt in ma la shlaysia and .

it was a poirful earthquake which was felt throughout the region. we haven't heard yet of any assessments of damage within indonesia. we do know that power was out. there's been a lot of -- there was a lot of panic in aceh in particular but as of yet, we've heard no reports of any damage or any casualties. because of the nature of some of the remoter areas, it could be a while before we laerp about that. >> again, the tsunami watch that's been issued for the entire indian ocean, do we have any idea how long it would take before we realize it was a snuchlt is it a three-hour affair, five-hour affair, seven-hour affair? >> reporter: it depends where it is. in indonesia, if it was a tsunami, it would have reached the closest places. the forecast was if -- and again i stress it as an "if" -- that would have hit half an hour ago

40rks minutes ago. india, for instance, would have taken far longer. here in thailand, they're talk about within the next hour. almost as we speak, in fact, would be when waters would reach phuket. further down the coast would be a little later on in the hour. places like sri lanka would take longer as well. it depends on how far away it is from the epicenter of the earthquake. these times have been published by the u.s. geological survey, but, again, it's merely for guidance. it's not predicting there's an earthquake but it's at this point it's a precaution, warning people to take care. >> all right. ian, thank you. for that report. we're going to continue to watch that situation. remember water goes out first completely. and you're like, wow, what's

happening? i think if it happened this time, people would know. last time people were like -- they hung around and looked for it. >> people go around and look for what's up covered. >> it's passed a couple of places it should have hit. >> that geesd news. >> we have him with us, always great to have him. also kevin mand, who dden who'se romney campaign. i'll tell you, tony, i spent part of the morning looking at intrade. i've watched it closely because, you know, it was below 50 for a lot of 2011, but for 2012 it's been above 60, the chance of the president being re-elected, but we had this in-fighting. we had, i think, damage done to mitt romney's likability or

reputation. but you had all this -- you didn't know he was going to be the presummitive nominee. there hasn't been much of a change now that everybody has exited. it seems to indicate he's got some work to do with american people, maybe reintroducing himself. can he do, that tony? >> yeah, thing he can. you love intrade, don't you, joe. >> what else should we look at? the other thing that gets me, tony, i watched the gallup daily and rasmus which stayed with minus 17, minus 18 for the job obama is doing and 43, 46 on gallup at this point. but i think the reason intrade stays above 60s, is they look at the polls from the swing states i wouldn't look at them joe. you've got to step back. >> you were a press secretary. you always ignore everything and give out your message, right? >> i think you've got to go big

picture and look at how much time mitt romney has between, you know, now and even the convention when a lot of people are going to start paying attention again. he's got a lot of time to deal with some of the attacks that he's had. he's had to deal with questions of, you know, whether he's too conservative. actually his biggest friend in trying to sell the message that he is sufficiently conservative for republicans is president obama. we had president obama last night at a press conference last night saying this would be the stark east contract since gold water/johnson. he'll help mitt romney with that part of his message. unlikable. -- >> you've got to bring up gol p goldwater and johnson. that's a big arrow in your quiver. that's beautiful. how many states did he win? >> six. >> how many are there? 57? >> i wasn't comparing goldwater

to johnson. >> don't bring that up. for god's sakes, you're a press secretary. >> that's a former secretary. >> i'm going to talk to kevin right now because i'm going to let you know, my friend an drew, thing we almost -- the romney campaign almost had you until the swiss bank account, kevin. can you explain why someone has a swiss bank account? >> well, i can. i'm not a financial adviser. i mean i understand that people like to have flexibility as far as it comes to diversity. >> does it mean you're definitely a felon? >> no. i think what happened with governor romney, he had a trustee who was making these decisions absent the governor. >> who was that? >> it wasn't me. >> it was a -- >> it wasn't me. this guy put the dog on the roof, too. >> your viewers know that it's

all around. >> has there been some damage done that they think is reversible at this point? look. thing the mistake a lot of people make is that they see public opinion as a vent versus it being a process, and think what happens is many voters, particularly those that are most persuadab persuadable, they teld to look at the pro is and in a very critical way they judge it very harshly. now we're going to be litigating -- i think republicans are going to be focused on where we agree and where we agree on the issue of the economy, i thurng, is going to help governor's standing with voters.

. i think as we look at the general election, as we begin to make clear arguments about where we want to take the future of the american economy, how governor romney will put the country back on track, how that differs with the very difficult four years with the economic stagnation that we've had, you'll see the number change. >> tony, is the time ripe finally for appealing to the own, the 1.99%? i mean yesterday -- the president's got a lot do, right? he's got an important job. so now he's going to a swing stay, talking about something that's not going to pass, the buffett rule, talking about it that would only raise $47 billion in the next ten years but axelrod and others have decided this is going to be the

time. is it sf. >> no. it's not the first time that kind of messaging has been tried. it simply never worked. they have some ability to look through those kinds of attacks and think about whether they make sense or not and, you know, they've consistently come down on the side of buying into that. there's late billion it of populous interest in that kind of -- in that kind of message. there always will be some interest in it. but i doan think that -- it's ultimately purr situationive in getting anyone over the finish line, including president obama. by the way, he was down in boca raising money too. >> on tony's point, he ascended to the president and that he was going to bring everybody together.

it's a pretty divisive message. >> if you get 444-0 on the budget, that brought -- i mean. think of it. that's really solid. >> that is bringing -- who's your vp pick? >> my vp pick? >> you're eligible, aren't you? >> i've got the greatest job in the world. i want to fin tish job here. who's your vp pick? >> zroinlt a list. >> give me one naples u you know who i want is our friend from the great state of ohio, porter. >> attaboy. >> he's great friend of cnbc. wouldn't it be great to have a friend from cnbc?

>> yes. i would haven't to be the salahis. i wouldn't have to sneak in. remember eagleton? >> yeah, yeah. >> then you got sarah palin, the queen of violating that rule, think. >> you're very smart to ask me about the vp process, but i would be dumb to'. i will say she's going governor going to approach it the way he always has i think he could be a hammer. >> very inspirational. >> he would g great. he says he won't do it. who's the first one, the guy with the great hair from virginia. >> mcdonnell. >> great vp hair. >> governor mcdonnell. i don't like the double down.

>> look at you. you're like a romney clone. gentlemen, thank you. appreciate it. i enjoyed talking with you. hopefully we'll have you on. between now and november, you'll be back. >> they'll be back many, many times. we're following two big stories. if you're just waking up, there's a earthquake triggering a tsunami warning for the entire indian ocean and we're following the markets. we've got more of both of those stories when "squawk" returns. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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. welcome back, everybody. there's break news if you euro just waking up. major earthquake hit off the coast of the west sumatra. there are differences in how severe it was. there's a tsunami watch that's in effect for the entire indian ocean. a tsunami wave is headed for the area. we'll more when "squawk box" comes right back. who have , there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and...

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welcome bachlkt break news. if you're just waking up, a earthquake hit off the coast of sumatra. chloe cho joins us from singapore. hi, chloe. >> it seems to be a repeat pattern of what we saw back in 2000 4rks on december 26, 2004 as well. i think for now, based on some of the analysts with very spoken to, seismologists, it looks like they're playing down the risk of major tsunamis happening. then, again, i thunk there are a lot of unknowns simply because of how the pattern of the earthquakes erupted, the fact that it actually erupted from the epicenter. in banda aceh, a similar pattern had erupted. it has been revised down twice. initially they had reported at

8.8, 8.9. once again the u.s. gee longitudinal call survey saying it's probably about 8.f as well. right now the indonesian president is meeting with prime minister cameron. what's interesting to know is power corporation says they're in touch with the authorities to gauge the situation. this is kind of significant because remember back in 2004 that was sort of the epicenter of the earthquake and the fact that the nuclear authorities of indonesia are on top of this case, they obviously want to prevent the kind of disaster that japan saw during the march tsunami and disaster as well. also interesting to know. phuket airport is shut according to what we hear. along with some of the other countries around the region all the way down to australia.

remains to be seen whether the tremors will be felt as far as way as alaska or even hawaii. which was the case in 2004 again. a couple of seismologists, tsunami experts have said they had seen seemed to suggest that the seismic movement were horizontal and the depth was not as shallow as what we had thought. the depth here is quite interesting. based on my understanding, the analogy is sort of similar. if you have a rock and drop it in a bucket of water, if it's shall yeo, you see a lot of movement. the deeper it is, in fact, there is less damage. but according to what some of the experts have told us, 33 kilometers is actually hi not that shallow, and the fact that we saw hor zone tall movements instead of vertical movement probably means there might be less damage. that said, we did hear from

various local authorities that they saw about 17 inches of waves moving toward banda aceh. it's uncertain at this time when the first wave might hit. there is a tsunami warning in effect for all of the indian ocean. i think what is different about this situation is when the big waves were felt, it was around christmas when people were getting offer for your the holidays around the region. we don't dnlt know what was going to happen. it with us one report. at the end of the day, the evening, we realized the extent of the devastation. remember, indonesia alone lost about 100,000 people, and in 14 countries, there were confirmed 230,000 deaths. so this is why a lot of people are on high guard. indonesia is sending rescue teams on the way to banda aceh.

we spoke to a couple of local reporters on the ground. they said they had not seen them. so far, port operations are running. so it seems to be that officials are on high guard. i'm in singapore. i heard the tremors were being felt, but in the studio, we're very much hunkered down. >> thank you, chloe. thank you very much. we're going to keep a close eye on this, of co morning and we'll be back to you as news develops and warrants but now let's switch to the markets. joining us on the set, alexandra leventh leventhal. >> i kind of go laven thal myself. >> you were -- >> she said jim never said that. >> no, he did not say that.

he said i'm jim lay venn thal. bonds are my babies. >> he did not say that. 40 years from now your daughter is going to be making her own way and she's going to have to talk about dad. >> oh, my gochld don't tell me that. so let's talk munis. i consider you almost like the anti-meredith whitney. can i say that? is that a -- >> you just did. >> in terms of where we are right now, and i was actually looking at this. i think these may be coming from your notes. insures like travelers and chubb, 50% of their debt holdings are now in state and local munis. is that a good thing? >> it actually is a good thing. why would it be? >> it'sing is that is not a new thing actually. municipal bonds are always

something. to look at your article of yesterday about other investments and other insurance companies might make, you can match up your potential liabilities with the income stream and maturities obviously that a music bond has. they have a lot of analysis and credit research that goes behind ichlt so i do not think it's a bad thing. >> where's the great opportunity right now and the great risk? >> great opportunity is that you can actually get the same yield or more in some cases on a municipal than you can on a treasury bond without even factoring in the in fact you're going to pay tax on the treasury bond. so that's always a buying signal. it's not as great as last year when there was at the end of the year a great return on the municipals. the risk is really --

>> what was that yo you fe nich for? >> that's what caused the mashlgtd to go down very, very significantly. that and build america bonds which kind of got lost in the whole drama of all the headlines. then starting in about march when all the retail investors had liquidated their mutual funds, lost money, then you saw the market go up silg nif can'tly. >> what has happened to the retail investor in the meantime? have they come back into the market when they saw what happened at the end of the year? >> yeah, they have. same old story. >> they sort of got fleeced with the whole move? >> yeah. you're either investing in mutual funds where you don't have a maturity. so if you need to sell or decide to get out, then you're going to tachlkt if you're a retail

invest investor, then you're actually able to have money come due. you reinvest in -- if you need to. >> that call, maybe they weren't pure default, but they were restructuring. would you say that she was 10% right, 20% right, 50% right? what percentage would you give that call because when she comes on, she still says, well, there's still time, things can still happen, there's a lot of restrurking. that's a de facto result here. when she came on, we think she was right about things. how wrong would you say she was? >>er entirely. >> 100%. >> entirely. >> you got a buyout. >> yes. this is one of the things i had given in my notes is talking about risk and i have come up with a new measure for risk, which is knowledge risk. is the person who is talking

about municipal bonds, corporate bonds, what have you, knowledgeable and should people be listening? >> yes, i have an axe to grind. i do know what i'm talking about because i have spent over 20 years in this business and then another 20 growing up listening to it. so the restructurings did not really take place. those are always going on. social default, i'm still trying to come to terms with that one. >> if there is a flisk the market and i have to imagine there are some, they are where? >> the risk is more, i think at this point, are interest rate going up and where are you investing in terms of your maturities. i don't, for the vast, vast majority of municipal bonds, i'm not looking at credit risk or default risk.

0.5% of the municipals default. they're the high yield, development authority bonds for projects that probably shouldn't have been financed. dearth bonds for housing in california. my focus is on the high grade sector. >> and you can trust the gradings in this sector. it's not like the aaa mortgage stuff that we -- >> it's -- there's -- it's not as complicated. the interesting thing is that a couple of years ago, the ratings agencies said they were going to come out and rerate or remeasure municipals, which actually would have made many ofem h rating. i think that you can. there are municipals that can file for events. yes, you can trust the credit ratings, but you need to make

sure wherever you're buying your bonds from, you know that the person who's selling them to you knows whats what they're talkin about. >> if you should have strong opinions you should know what you're talking about. >> well, you know. >> ooh, that's a problem. >> i want to talk about taxes and muni -- there's a lot more to talk about. we'll have you back. >> they're going to start taxing. that was part of the great idea to start tacking. that makes a lot of sense. >> it's been a potential threat for decades. >> we will see you again soon. thank you for being here this morning. >> when we come back we'll have more on the tsunami warnings across the indian ocean, plus the corporate trader o of the week. brian dunn, he's out. we have managing guru george sign enheld. we'll have his takes right after this.

we're back. brian dunn is out. numerous speculation as to what was behind his departure. jeff son enheld joins us from miami. this is a remarkable story of man who started on the floor. he was a store guy. what do we think has happened here? >> it's a very sad story, andrew, and, you know, in tyler mathisen's profile of the company, which is an excellent profile, is brian dunn talked about his happiest job was to be a store manager.

he probably should have stayed at something like that. many times somebody who's happiest at a ship shouldn't be running the whole line. >> let's go there and bring the viewers up to speed. he has been fired or in this case, he has resigned. he seems to have resigned in advance of an investigation. meaning they launched the investigation. he said, you're investigating, i'm resigning. we don't know exactly what thegation i the investigation is but it feels like mark hurd. >> or at boeing the kur mujenly good guy. this happens sadly periodically and boards that cover it up make

a huge mistake. it's an issue of trust and integrity. if you can't set the model at the top, you conditioned cass indicate. some people minimize the stuff. we don't know the large charges but you can't overlook it. it's one of the right things hp's board did back then. by the way, i think hp is really on track today. >> is it enough to by doing this investigation? if he ryan re signs is it it enough for the board to say it goes away or here's what happened and why we insisted he leave? >> it's not a mute poioot point. if someone has allegations against the company through the behavior of brian dunn, the report needs to prepare and shareholders need to be protect and they need to get the facts out there. it is rather condemning that he would resign at this point but

it could be a mere loss of faith by the board. however, that shouldn't sideline the investigation. and we want to know what he's gotten in the way of severance. in many of these cases we had issues at starwood and others where somebody le wi zero severance and that itself told a story. >> it appears they spent several days forming a severance. there are some terms involved here. how much of his resignation do you think rests on whatever his professional conduct is versus the business. best buy has struggled and there was a question of whether he could lead. >> there are many companies, newell rubber maid. raytheon, sadly a great company has allowed some things to happen because the performance for a while was okay at the

firms nchl this case, where we've seen this terrible loss at best buy, not to mention just as he's taken over as ceo. by the way, they pushed out an excellent guy way too early, brian anderson. but in the two years brian dunn has been on the job, the stocks have fallen in two years. the fact that these stores are a mess. one of his first moves was to fire the people who are great salesmen. you look at the displays of merchandise versus at apple. you don't have the point of sale of purchasing through a mobile device. they don't have the guys. the guys are in the back of the store playing video games. they're not engaminged the way the genius bar is at the apple store. >> one name for me, if you could give it to the board of best buy, who should be running the place? >> i would bring brad anderson back in. he's only 63. brad stemford coming up in a

little while. he's the same ainge. encouraged tom to leave too early on the board as chairman at staples. john i ler of toys "r" us. and the guy who ran successfully starbucks for a while, jim donald. >> professor sonnen hel nen hel much. enjoy the sun in miami. >> michael girl ka standing by. it looked like we're going to bounce the day. now i'm reading key stocks are in a position to correct a little bit more. where are we, michael, do you know? >> first of all, i really liken this to a horse race like the lead horse that you know is not going to win the race and gets out there really quick. that's alcoa. up 6% and -- >> what is that? what is up 6% for alcoa? >> i'm seeing in the premarket

it it's doing very well. >> my point is it's like $7. >> if you look at a reference point of the s&p, we're up at 1422. that's great. one thing we're starting to look, will we violate all the way down to 1313, which is that 100-day moving average? we're kind of hovering. euphoria comes in early. europe's not up by any measure right now. all of a sudden it looks like, boy, earnings are going to save us from a we big correction. a lot of multi-million-dollar managers are liking this. i take my cue a lot of times from how the commodity trades are. we're on the pivotal move today as we speak. i'm not getting caught up in this s&p right now. i think more importantly you're going start to see erosion as we

see how the market trades. from there we'll start to set the tone. i'm still bearish, at least on equity indices. >> thank you. if you're just waking up, major news. we'll have some updates for you when we come back right after this. stay tuned. they have names like idle time books and smash records and on small business saturday they remind a nation of the benefits of shopping small.

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welcome back. natural gas is getting a lot of attention right now. dave, we have a big question. why are gas prices so low? does it mean businesses are starting to figure out and will we see a transition to more usage of gas? >> it's a combination of increasing the reserves. you also have a warm winter. so the combination of storage and infrastructure, you now have adequate supply, an abundant supply, which has made it more affordable. at $2, they win. whether it's $2 or 4 to $6, businesses are now seeing an opportunity to invest. chemical industry is moving back to the u.s. and investing billions of dollars in new

facilities. transportation for energy securities is a remarkable opportunity, possibility. so there's a lot of good news out there on the natural gas front. >> with prices this low, we've seen companies say that they are not going to try to take more out of the ground until more uses for it. how long do you think it will be before we actually see a sharp increase in the amount of natural gas used here in the united states? >> well, there's been a shift of production to liquids because of the price of crude oil but that's going to balance out a little over time. direct use of natural gas benefits industry and consumers because it's environmentally clean and certainly affordable. i think you'll see more direct use. it's more efficient. people and homes that use natural gas appliances are 30% more efficient than direct electric appliances. the average consumer has seen over $200 benefit this past

couple of years compared to previous years. so when you contrast natural gas to gasoline prices, which have been high, if you contrast it to increases electricity prices, direct use of natural gas is a real opportunity. >> all right. david, we want to thank you very much for joining us. i'm sorry for the shortness in time but we have breaking news. >> my pleasure. international investing superstar mark mobias. plus, out of asia, a major earthquake. we're now seeing after shocks. tracking the tsunami warnings. stay tuned. ct duff & phelps finds the sweet spot dus financial advisory and investment banking services. that powers sound decisions.

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good morning and welcome to "squawk box." we have breaking news this morning a powerful earthquake struck off the coast of indonesia. a tsunami warning is in effect for the entire indian ocean and reports of aftershocks as well. we are singapore and have the latest. >> we are hearing reports of another aftershock measuring at 8.8. this is the second major aftershock to hit, the first one measured 6.6. authorities were putting it around 8.9 which caught our attention because the december 204 tsunami was measured around 8.8, 8.9. it goes to show you the scale of how strong these aftershocks were and also eriely down to

southern india. sir lawn ka, as well as australia. take a look at a map of southeast asia. this is indonesia. the capital of jakarta is about here. this is what we saw back in 2004. this is where the epicenter was. epicenter not far from the original location. this is why there's a lot of nervousness as to what is going to happen. we're looking at a size of 6.5, 8.8 as just reported. the big question remains how much damage can be minimized because various tsunami experts have told us a short time ago that the seismic movements move horizontal. as long as they are horizontal, the risk of a tsunami is minimal.

i think the key question is, there also tends to be a major earthquake that erupts before a big one and i believe that was the case in 2004. so maybe whether these are precursors to another big earthquake, that is a key concern as well. this is what we're trying to ascertain as well. what is actually promising at this point in time, rescuers are on their way to banda aceh. ink the risk is whether tsunamis happen. one expert told us, maybe the waves could range between two and three meters. no more than five meters. that would be a promising sign. but this aftershock of 8.8 would be, in fact, stronger than the

original quake. right now we do know that indoe doe neesh shan officials are securing their fuel depots and operations are running normal. this is something that we will keep an eye on as well. also worth noting that the nuclear power corporation has been in touch with the nicobar islands. it looks like they are trying to get a grip on it. >> we should point out that the aftershocks are still getting different measurements from all over the place. chl chloe mentioned 8.8. the u.s. geological survey is calling this an 8.2 aftershock. as this stuff happens, it takes time to figure out how big they

are. but we are keeping track of this and there is that tsunami watch in the entire indian ocean. >> and everyone knows about earthquakes for sure. but an 8 versus a 9, a 9 is ten times as bad. so if the one that was so catastrophic was a 9.1 and this -- the first one was 8.6 or 8.7, it's not a full point but it's not the same as -- hopefully -- >> and it sounds like people are much more concerned, 20 miles below and horizontal. >> 6:40 a.m. is when we would have expectee ve effects in thailand. it happened just yet. it doesn't mean that it's an all clear at this point. obviously authorities and people there are much more prepared. we'll tell you what happens as we continue to follow the story through the morning. we're also keeping a close

eye on what has been happening with stocks this morning. after the worst day of the year for stocks, the futures this morning are pointing to a sharply higher open this morning. triple digit gains for the dow futures. 109 futures. s&p opens up by more than 13.5 points higher. joining us is stock market mark mobias. as we look at things this morning, there have been all kinds of questions as to whether this spling wi this spring will follow last spring's pattern. >> i think we're in good shape. emerging markets have outperformed other markets so i think we're in pretty good shape. china is looking at 7.5%. that's their target. they may not reach that target. they are having difficulty slowing down the economy.

emerging markets are generally going to go on the average of 5%. we are getting pretty fast growth and the earnings being of course, are going to come through as result of that. >> do you think the emerging market is going to perform well despite what happens in the emerging market or will they get a boost from what happens there as well? >> i think they are going to perform well in spite of, mainly because of the key factors. one, of course, is growth. secondly is foreign reserves. much greater than developed countries. and, third, debt to gdp levels, much lower. so all of these factors add up to a very positive future generally. >> have the central banks that we've watched around the world, they've obviously changed the scenario for the last four years. at this point we're starting to see that it's the end of quantitative easing. if that's the case, what's the impact on the emerging markets?

>> well, the end of quantitative easing would not be a problem. it's if they decide to contract. in other words, decide to take money off the table. in other words, reduce the amount of money in circulation. then that would be a problem for everybody because, of course, there won't be enough money to move into the equities and bonds and other investments around the world. i doubt if that will happen, though. >> you don't think that will happen? you think this will be a wait and see year? >> i think more than that. i think bernanke is still -- has got his foot on the pedal and wants to make sure that the unemployment comes down and that's true of other countries around the world. the europeans, japanese, chinese, they still want to see good growth although they are cautious about it. >> if you had to pick one market of the emerging markets, where do you think the best performer

is going to be? >> probably in russia, because russia has been beaten down, has not really performed that well. the valuations are very good. the political picture is getting better. so i might pick russia. and then china after that because the chinese are now talking about boosting the asia market to get money into the hands of the small investors in china. so that will feedback into the hong kong h-share and red chips. >> what about southeast asia? i thought you were looking at those markets as potential growth? >> i just came back from indonesia and thailand. they are both doing very, very well. thailand has outperformed already. still, they are going to do very well. indonesia has done very, very well. we can expect more but not the

kind of spectacular growth that you would expect where the market has been beaten down. >> and your concern may be potentially with what is going to happen to singapore? they are more closely tied with what is going to happen in europe? >> the interesting thing about singapore is they are getting a big flow of money coming in because a lot of wealthy people around the world don't want to put their money in swit land because of the u.s. tax problems. they are getting the benefit of these problems in europe and elsewhere. also, don't forget now, singapore has got the two huge casinos and they have been attracting a lot of tourism. >> mark, i know it's very early still but you hear what happens with the earthquakes and after shocks and warnings about potential tsunamis in the area. as an investor who has watched this happen in 2004, is there

anything that you will do or you just wait and see? >> not really. we knew this was coming because a few weeks ago we were talking to an expert at singapore university and he mentioned that whole area on the west coast of sumatra is hot and we can expect more and more of this. so -- but that doesn't affect us very much. there is some coal mining in the south of sumatra. but as you pointed out, no. where all of the activity is, they are not affected by this, at least not yet. >> mark, thank you very much for joining us this morning. we really appreciate your time. >> thank you. >> thank you. we're going to have more on the earthquake in indonesia in just a bit. up next, we're going to welcome ed la zeer, professor at stand fard. and then later, does this market have you tossing and turning at night? maybe an investment in mattress

firms can help you sleep easy. the company ceo is going to talk about sleep success and much more in just a bit when squawk returns.

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here are the futures after a couple of rough sessions, including yesterday. europe and spain emerges as a real worry. and the employment report has us wondering about how strong our recovery is here as well. meanwhile, rick santorum suspending his campaign clearing the way for mitt romney to become the nominee. aim monday jaf verse joins us with more. what snels. >> rick santorum did suspend his campaign but there were two works that he didn't speak. he didn't say mitt and he didn't say romney. now all of the question is turning their attention whether he will endorse mitt romney. take a listen to what had he to say. >> while this is over for me and

we will suspend our campaign effective today, we are not done fighting. we are going to continue to fight for those voices, we're going to continue to fight for the americans who stood up and gave us that air under our wings. >> now, we did not see an endorsement yesterday but there is a lot of contact between the scenes between the two camps. clearly there is some kind of negotiation going on. what the timing of any endorsement would be, whether in fact there would be one and what role rick santorum is going to play in republican politics going forward. rick santorum has a lot of think to do about what his role will be in the future. >> eamon, we have a lot of things to think about here. who is he going to endorse? it's not going to be obama. it's just matter of time. let's turn to our guest

host. ed lazear was the council on the economic advisers. he now teaches at stanford university. he was a guy who had to sell things, sell a lot of the administration -- and it's a different skill. pr skills and hopefully you know your stuff, right? >> al did some things, too. >> al is great. like a frontman almost. he knows his stuff, too. i've been dying to ask you this for a while but then it was rekindled by your piece and i took a shot of your piece on april 2nd in "the wall street journal." here's why it's important. we're going to here the narrative in this election, one is going to come from the obama administration. this was the worst downturn since the great depression. our policies are working. we are going in the right direction and it's better than

when we came in. the narrative from the republicans are going to be, your policies made this worse and the u.s. economy is resilient and would have come back any way and 800 billion to try to keep the unemployment from going above 8%, it's been above 8% for your entire presidency. that's the issue. i bought into that this latest financial crisis was the worst one since the depression because we looked at the end of the world in the commercial paper market. we looked at companies like ge potentially. but when i think about the actual effect on workers and on the country, i'm not so sure that 80/82. >> the difference between '80, '82 was the recovery was strong. >> the causes were different,

too. >> they were but that's not an obvious situation. when you think about people like john taylor, he would argue that the causes are not so different. in fact, that the causes were misbehavior by the central bank. that's a controversial position, as you know. but the point is that there were financial issues involved in the '80-'82 recession and there are financial issues involved now. i think this is a different animal. ken rogauf -- he's a great guy and great economist and i think any point he makes you want to take seriously. >> but -- there's a but coming? >> there's not a but. even if you -- i should say even instead of but. even if you take that as a given whark do you do about it? the issue is we probably haven't done the right thing. and the reason i would focus on that is not so much as a criticism of the current administration. things were tough when they came

in. things were tough when we left. and everybody was trying to do the right thing. the problem is that there's a tendency to focus on what is expedient rather than what is effective. economists, i think, ought to be a bit more humble. we just don't know how to fix things in the short run. we don't know how to get things going in a six-month p period and we ought to admit it. that's what happened back in the '80s. it's probably not what happened in this period of time. if anything, i would argue that we went in the wrong direction. >> when you say we did things wrong, we went in the wrong direction, what do you -- >> okay. so the obvious things are regulation. i'm not ann ar kift, the problem is there is a delicate balance between regulating and making sure you do the right thing from preveb

preventing doing negative things on the economy. we've gone too far in impeding economic growth. regulation would be one point. the other thing is taxes. we should have immediately gotten on a permanent and effective tax structure towards doing two things. one is, low tax rates so low means having a structure that doesn't burden both the production of human capital and the production of physical capital and the other is efficient. we talked about this last time, becky. the tax code's a mess. what do we mean by efficient? primarily if you don't create distortion. you want as close to neutral as you possibly can. we haven't moved in that direction. >> the argument would come back that taxes have -- we have extended a lot of tax cuts. we've come up with new tax cuts in terms of the payroll tax. >> right. >> but your argument would be because it's been done in bits and -- that's the problem?

>> in a haphazard way. look, we have a situation coming up in a few months from now where the tax cuts are going to expire, it's going to be tough to get those things extended at this point, i think. and that's problematic and it's not just the uncertainty. people always talk about the uncertainty. the uncertainty is certainly a problem. what the big problem s. it's the certainty or almost certainty that we're going to go to higher tax rates in the future. that's what impedes investment and growth. >> let me ask you, it relates to regulation and uncertainty. we have a crisis. >> right. >> everybody -- crisis subsides. >> right. >> wherever you think we are. >> and people invariably wonder, we need to do something that b what happened. >> right. >> they need to regulate something. the process offing having a conversation about what that regulation should be by default creates uncertainty. >> correct. >> and maybe it extended too long. whatever. but ultimately you're trying to come to some permanent solution

about something, whether you think it's too much or not enough, it doesn't matter. in the grand scheme of this uncertainty, how do you avoid that? >> back in the '80s, we had a similar situation. what did we do for the thrift industry, after the s&l crisis? >> you had a guy named reagan come in who wanted to deregulate everything. there are all of these similarities, but until wamu -- did we have an equivalent back in the '80s -- >> with the s&l, we already owned those liabilities. it was just a question of how do you structure, how do you figure your way out of dealing with those liabilities. >> wasn't there a tendency to overshoot on regulation? did reagan say no? >> i think we were relatively balanced. that was one of the crises that we handled quite effectively, if

you look at it. >> mishandled, then? >> well, i would say that there were a lot of false steps along the way. i don't want to be too critical. i think andrew's point is a good one. >> but i think the point to remember is, yeah, you say we had to do something but now we're evaluating what we did. we want to learn from the past and ask if we are on the right track. i think at this point we have to say, you know, it doesn't matter whether you blame us, these guys. at this point the question is, what's the right policy. as we go forward, i think we know what the right policies are over the long run and that's where i would be headed. >> what about political realities? i was around '80, '82, but i don't remember -- what was the high? >> it was 10. >> for how long?

>> it believed i think at 10.8. >> it snapped back so quickly. >> it didn't snap back so k quickly. we had two recessions in the '80s. >> and the recession rate and prime rate -- >> my parents had an incredibly high mortgage rate at that point. >> and we had hostages in iran. our standing in the world was down and you could never buy a house again. there were really -- >> but it wasn't as divisive in washington where you couldn't get anything done. >> no. there wasn't much did i divisiveness. >> look. i think the divisiveness issue is overstated. washington is always a tough place. it's always a political place. if you look back to the mid-'80s

and say was tip o'neil in love with president reagan -- >> i never heard that. >> there was a lot of tension between those two as well. i would not say that there was ever a time when politics were gentle, at least in my lifetime. so, look, we've got to get through these issues. it's the responsibility of our leaders to get these things done. eventually they do. the process isn't always pretty. and it's not pretty right now. i think we'd like it to be better but i wouldn't give up on it. i'm not mess mystic. >> we've been in an election cycle for two years now, in my opinion. that's how long we've had the administration running for re-election. thank you, ed. do you disagree? it started with the boehner thing. >> i want to bring you an update again. we've had an earthquake that was just off the shore of sumatra. we're going to have more on that in a moment. also, i want to point out the

futures at this point. the dow futures are up 117 points above fair value. this comes after yesterday's losses. we're going to see what happens. s&p up by 14 and nasdaq up by 6. again, disappointing days for the markets. more with the squawk trading block. they are standing by with their reaction and we'll get to that right after this quick break. >> announcer: time now for aflac's trivia question. what current branch of the u.s. military was a corps of 50 when world war i broke out? the answer when we continue. aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!!

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>> announcer: what current branch of the military was a corps of only 50 sold customers when world war i broke out? the answer is the air force. we have fresh video out. an earthquake struck off the coast of indonesia. there was some shaking.

there is a tsunami warning out. the earthquake, 8.6 on the richter scale. of course, the tsunami hit back in 2004 was 9.1. we're going to keep our eye on this all morning. in the meantime, we're going to get market reaction from the "squawk box" trading block. that's coming up after the break. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel,

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welcome back to "squawk box" on cnbc. i'm becky quick. we are monitoring the situation in indonesia asfter a significat earthquake struck off the coast. it could be felt as far away as bangkok. an aftershock has been hit in the same area and the entire indian is on a tsunami watch.

>> there have been a number of other aftershocks. we're looking at 6.5, 8.8, 8.1, and also the depth of the second earthquake, the second aftershock seems to be quite shallow, at 16 kilometers. now, this is where the epicenter is. banda aceh. you notice a lot of similarities from what happened in 2004 and 2012 as well. witnesses at a nearby island just around here, water is retreating by ten meters. this really brings mack memories when a similar phenomenon happened and a lot of children in the villages ran back into the seas to pick up fish and crab and got wiped out by the wave that returned. this is just a one incident just happening to one island because

eventually these sea water retreating and roaring back to engulf the villages, these are the scenes that unfolded before our eyes in 2004. obviously a situation we're keeping our eye on. a stsunami warning has been extended for two more hours. it's 6:35. it could be a tough night for villages. >> chloe, thank you very much. we'll get back to you as we get more news in. also keeping a close eye on the markets. the dow is riding the longest losing streak since last august. u.s. stocks are coming off the worst day in 2012. if you watch the futures today, they are indicating a big snap back, at least at this point. joining us to talk equity markets is matt smith. joe, chief analyst at fx

solutions and peter. peter, let's start off talking about what is happening with the futures. right now we're looking at the dow features up to value. what are you talking about here? >> waiting for my taxes to be done so i can jump in there and buy stocks, too. we had a really nice rally this year and if you look at the highs, we just made a week ago and you look at where we started the year, the perfect retracement is where we traded down to and it's almost a perfect technical correction. for those of you who want to put money to work in the stock because the dividend yield is the best place to be, it's a great buying opportunity. we have no reason to think interest rates are going higher. the fed is the short. earnings are going to be there. if earnings are there and rates are this low, you've got to buy stocks. >> and yet we started looking

back to europe and showing some real concern after italian bond yields skyrocketed again. is europe something that could turn things around for this market or not? >> the european problem is going to affect us by going through the banking system and there's a lot of problem. but it's stayed pretty benign here. we haven't seen those in spite of the problems in italy. you've got to avoid the banks that have risk in the inner-bank market in europe but that still comes back to the united states. there's a lot of companies doing just fine in the lowest interest rate environment we've ever seen. >> what have you seen from retail investors, peter? is this a situation where they are nervous because of the big drops that we have seen four years ago? >> yeah. and a lot of people have been trying as hard as they can to stay in the short end of the market in cash and money

markets. they have been trying to stay safe and dry. nows a the fed has drained the pond on them, they are being forced to take more and more risk. i fear that people are going to push into bond with yields so amazingly low here. the risk is pretty scary and i hope that the demographics of the country don't punish the elderly and make them, you know, the -- they are kind of stuck because as we are getting older they should be in fixed income but fixed income is dead. they are not going to make any money there. i'm afraid the effort by the fed, while probably the right thing for a country as a whole, is taking unfair punishment out of our savers and the elderly. >> joe, why don't we talk currency. how is it affecting the currency markets? >> surprisingly, the current see markets have been prit pretty strong.

it's moved a little bit. if you're looking for a direction, it would have to be down in the dollar. this type of crisis, as we've seen over the past 2, 2 1/2, 3 years has not gone away. it goes away for a while, the europeans do something, they flood the money. it's standard central bank. response since the financial crisis to every issue we've had, that raises the problem but comes back. the basic economics hasn't changed. and eventually that affects the currencies. euro had a differential move. it was he canner against the yen than it was against the dollar. that tells you something about the perception of japan's stability regardless of its own economic issues which are so ongoing now that they don't really affect the currencies right now. everybody knows the economy isn't going to grow very much. they know the rates are not going to change. but because the markets have

been willing to tolerate that, the yen looks like a pretty good debt. >> joe, i want to ask, have they been focusing on quick fixes or the long term or is it too late for them to fix the problems? are they past hope? >> i have some sympathy for the europeans. the currency markets, credit markets need immediate changes. all they really care about is that the bonds get paid. that is a very short term. as we saw over the past few days, the change was in a few days. the long term fixes stretch out over years. you might say they are generational in a sense that people have to change their attitudes towards what their government provides and how much the government can provide. that can't be done by one administration or two. it takes a long time. so they are competing against themselves in different time

zones. and i think the euro goes down this year. >> let's talk very quickly, matt, on oil prices, too. we had heard a report earlier today that we are seeing expectations that oil prices will continue to climb over the next few months at least and americans will see prices north of $4 a gallon in gasoline over the month of may. is that your expectations as well? >> well, gasoline prices are seasonal. actually, this time last year on this day was when brent crude peaked and then we saw it retouch the highs in late april. and so we will likely see gasoline prices possibly topping out about now and then into early may. but hopefully, as we move through driving season, we should then see gasoline prices ease along with brent crude prices which are driving it rather than demand. >> if that's the case, when does

demand come back in? the basic supply demand dictating prices? >> well, the thing is, gasoline demand has been down versus last year all of this year. and gasoline prices have been driven by the input price of brent crude which is being driven by global demand and even though we are seeing benign demand, we're seeing benign demand out of europe. we are still seeing growth in emerging markets and totally on a global perspective, we're seeing it up about 8 million gallons a day. that's why it's driving gasoline prices from a global perspective even though it's down here in the u.s. >> matt, peter, thank you very much. joe, thank you for coming into the studio. great to see all of you. coming up, tom stemberg talks to us about gas and politics. up next, new concerns about spain which sends jitters through the markets yesterday but looking better today.

we'll discuss that. plus, the impact of this earthquake off the coast of indonesia. "squawk box" coming right back. >> announcer: tomorrow on "squawk box," two masters of the market. massachusetts governor deval patrick. don't miss "squawk box" starting at 6:00 a.m. eastern tomorrow. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying...

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do you want to finish it? no. does the baby want to finish it? no. welcome back. dow component alcoa kicked off earning season by reporting a profit of 4 cents per share as compared to estimates of 10 cents per share. increased demand and lower supply is helping to relief pricing pressures evident for much of last year. into all rig into. all right. when we come back, more on the earthquake rocking indonesia.

as we head to a break, take a look at the futures. a big snap back after yesterday's disappointing futures. s&p up by 13.5. "squawk box" will be right back. zap technology. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz.

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we're back. spain's banks are joining the

group of the most unloved. investors believe the country is on the brink of a recession. >> the spanish banks, the italian banks got hammered yesterday. growing concerns about whether they will need more capital. we started to see the effects with more news about kwwhat happened in italy. italy borrowed 11 billion. last month when they did the similar auction was only 1.4%. i added the november rate for context. this is better. let's show you what is going on intraday as well. because of the situation in spain and italy, we've had one member of the ecb come out and say, remember, we had that bond buying program. it still exists. we haven't been using it but we could. when you look at the ten-year

battalion, take a look at spain. you're going to see a similar intraday pattern. there you go. ditto as well. let's show you the one year. i like that as well. that shows you that things have gotten worse but, boy, they used to be a lot worse. take a look at what was going on back in january. have they been climbing? is it worrisome? no. in spain, they've started to do all kinds of things to deal with austerity. if you're poor, your bus fair is going up at least 10%. health care services, it looks like they are going to be means-tested. medicine no longer free anymore. college education should not be free. and just this morning, no more cash payments to professionals

above 2500 euros. you can't go to somebody and give them -- if they are billing you 3,000 euros, you can't pay them in cash. you have to pay them electr electronically. they've done it in italy and most of europe to prevent tax evasion. they have begun things you no longer need to go to a judge to do layoffs. >> what? >> in the past -- >> i would be -- i wouldn't stand for that if i were a spaniard. >> it used to be less demand for the product so we don't need as many workers. it's a very long and involved process. in addition, they have also now said that companies can actually negotiate labor agreements directly with their employees. it used to be that a union would

use an entire sector and cost is dropped by 50%. every one year thaw worked for a company when they laid you off, they had to pay you 40 days of severance. if you worked four years at a company, they had to give you 400 days of severance. >> unemployment is so high there. it probably won't affect additional layoffs but the employer is worried about bringing on more people? >> yes. especially young people. spain is just like greece. 50%. it is horrendous. labor costs have been kept so artificially high, you don't hire a young person, they don't have the skill set, the experience to justify that cost. >> i was just going to say i did a study of this 20 years ago where i looked at the european structure and severance pay associated with layoffs and i estimated that if we went to

their kind of structure it would cost us 3% unemployment. if the cost of firing is high, you tend not to hire. if you look at spain, portugal, france, what they've had to do is a substitute given that they've had all of these rules and initiated all of these contracts. so no one gets hired in a permanent way. they get hired temporarily and eventually some of them convert. most of them do not. >> let's see. we averaged 5.2 during both the bush and clinton years. now we're at 8.5. is that 3%? how is the nlrb around here? have they done it in. >> i would not attribute that to the nlrb. i wouldn't attribute that much to the nlrb. >> something, though, right? >> the problem with the nlrb is more for the future. it's not for the present. if we look at structure, we were

talking about regulation earlier. if you think about the kinds of things that we are engaging in that would impede economic growth, that's certainly one of them. >> i'm talking about the future -- it's not impacting -- >> i know. i'm talking about the future and the choices that we have. >> i agree. >> am i exaggerating to say that we are coming back and doing good things in their labor markets as we head -- we are converging in the middle. >> i think the big question that everybody is worried about is are we going to end up looking more like spain or are we moving in the direction of italy? >> municipality and a government, private sector is still very much fairly liberal compared to europe. >> i'm talking about -- >> if we're talking about the size of what the government should be in this country right now. >> small. >> i know. but how much bigger has it got citizen. >> although we're still significantly away from where we were in terms of employment if

you look back 20, 30 years ago. although it doesn't happen through legislation, we don't have the kind of legislative pay that france or spain has, we have a court system that's been aggressive in terms of enforcing anti-layoffs. >> michelle, thank you for this. >> you're welcome. >> by the way, what is the number on the ten-year spain that we -- is there a tipping point? >> you know, everybody still talks about 7%. that was definitely for greece, ireland, portugal. people could argue for italy but it could go a lot stronger. coming up in the next hour, at least two major quakes with a magnitude hitting off the coast of indonesia today. the sea level is rising and there's a tsunami warning remaining in effect. a live report from asia after this. ♪

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well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen, print it yourself, or we'll help you find a local partner and you find the customers that matter most. brilliant. clifton, show us overjoyed. no, too much. jennessa. ah! a round of applause. [ applause ] [ male announcer ] go online to reach every home, every address, every time with every door direct mail. dmoe fr. welcome back to "squawk box." i'm becky quick. our guest host is ed lazear. he's a former economic adviser

to president george w. bush. we have breaking news this morning and we've been talking about this through this morning. a powerful earthquake struck off the coast of indonesia. a tsunami warning is in effect for the entire indian ocean. chloe cho is joining us from sing dwa pore. chloe? >> a couple of aftershocks and they keep on rumbling. remember, the original earthquake that struck off of indonesia in banda aceh was revised lower to 8.6. take a look at this area. witnesses were cited as seeing waves that had retreated ten

meters. waves retreated, children went in the water to pick up fish and crab. i don't know if this is happening given the remoteness of the area but what is seeming to happen is the waves are getting bigger. the waves are somewhere around 17 centimeters. another report suggested they were getting higher. at about a meter or so. and now officials are saying somewhere around the nicobar islands, another flashpoint, disaster officials are saying that waves could be as high as 3.9 meters. we know that a tsunami warning is in effect all around the indian ocean. officials now say there is a new tsunami warning in effect because of the fresh aftershocks as well. officials have extended their tsunami warning by another two hours. so much is at stake.

just to give you an idea of southeast asia, singapore, the tiny dot where i am, malaysia, the entire region all the way down to australia certainly on high alert and certainly india as well. back to you. >> chloe, thank you for keeping us updated on what is happening. for more of the earthquake, we're joined by ian williams from nbc news. we spoke with you about an hour ago. can you give us an update on what has happened since that time? >> well, the thai authorities are reporting that they recorded a four-inch tsunami reaching the coast of thailand from the first earthquake and they've now extended the tsunami warning following the massive 8.2 aftershock which was almost as big as the original earthquake. warnings, alerts remain in place right across the region.

the size of the quake, the u.s. geological survey revised it down to 8.6 but it was still massive, and the epicenter of the original quake being about 300 miles from mandarache. experts say this was a latter ral quake, not a vertical quake. this means it may be a small tsunami but nothing on the scale of the 2004 experience. of course, it's that experience that is concentrating everybody's minds here. as a result, that's why the early warnings were set out and appear to be quite effective, certainly here in thailand where six provinces evacuated their

coastal areas. the holiday island was closed down and people were advised to move to higher ground. people are being very, very prudent. those warnings remain in place. although experts say they don't expect a major tsunami, suddenly nobody is letting their guard down. >> you know, ian, is it fair to say that, based on these early reports -- again, i don't want to miss interpret any of them. but based on a four-inch tsunami, is it fair to say that there's a little bit of time to breathe a sigh of relief at this point? >> i think there is but the authorities right around the ingeneral ocean are being extremely cautious. the horrors of the 2004 quake and disaster about being cau cautious, the early reports suggest that we're not going to see a tsunami on the scale that

we saw in 2004 and the early reports out of indonesia suggest that the damage -- certainly the reports of damage have not been large nor have casualties. but it's early day and they have dispatched a team where there has been a power outage and where information is still sketchy. but it does look at this point as if we can breathe a sigh of relief in the sense that this is not a repeat of 2004. >> this is the biggest test that we've seen of the early warning system since 2004? >> it is. it's a key test of it. and i think the early signs we're seeing -- we saw those pictures from banda aceh, people fleeing to get to higher ground. from what we're hearing, certainly from here in bangkok,

is it does seem to have been quite a successful test of those systems because certainly the warnings have gone out there. suddenly people did leave their homes, got off the beaches. it does seem in that sense the lessons of 2004 were learned. the warnings did get out there and they were largely heeded. >> ian, thank you so much. at least so far so good. we'll continue to monitor the situation and bring you the story throughout the day. the u.s. equity futures are looking sharply stronger today after yesterday's big selloff on wall street. the dow is up by almost triple digits. the dow has declined for the last eight sessions. it's down 550 points. the s&p is higher as well. mitt romney's claim on the gop presidential nomination looking stronger after rick

santorum, unemployment rates, jobs numbers continue to remain steady. joining us now is tom stemberg, managing general partner of the highland consumer fund at highland capital partners. we've said so many times, tom, it's so great to see you. you worked with mitt romney when he was at baen and you're now involved in the campaign. with that in mind, people need to know that. but you make a case that some of the tax policy is holding back jobs? >> well, i believe the president's approach, which is a class warfare, tax the rich, regulate the living bejesus is a wrong way to create jobs. they ought to get out of the way

and let other entrepreneurial society create jobs as they are capable of doing. >> yeah, both sides are talking. i hear what you're saying. i know that the chances are slim before we're going to get anything accomplished before the country decides which way to go. yesterday there was talk about policy and taxes. they called it policy and went to a swing state to talk about the buffett rule which has no chance of legislation in the current makeup of congress. they would only cut the deficit by $47 million over a ten-year period. that's not governing. >> it's exactly the kind of demogogary we've seen. >> we're not going to do anything until november. that's sad forth country. >> i think the american people have a choice. do they think the government

does a better job creating a job, an economy, getting the economy going or do they think that the private sector does? and i think jack welch said it very, very well. this administration is intent upon centralizing health care, labor relations and a whole bunch of other things that best belong in the private sector or with the states. and i believe the american people will make the right choice this fall and elect a new president who can lead us in the direction of success. frankly, yesterday down in florida the president said, you know, you ought to learn a lesson. if something doesn't work, you shouldn't do it again. he was referring to the bush years. i take that same approach to his 3 1/2 years in office. creating wind barriers where nobody lives with stimulus money and earmarks. fact of the matter is unemployment today is worse than it was when he took office so the lesson we need to learn is

that this approach doesn't work and we need a fresh new approach that involves the private sector. >> tom, i'm curious and on tuesday we had donald trump on and paul ryan on opposing his plan. saying that it is political poison i'm sure yous what you think of the paul ryan plan and also what you think of mitt romney's approach to embracing that plan. >> he wiwell, first of all, mit admires paul ryan as i do. hey, look, folks, there's a couple of issues like social security, like medicare, like medicaid that we as a country have to face up to. you have to face up to the big problems. and i think mitt romney, when he was governor in massachusetts, and every other place he's operated in the world, has identified what the big problems are and that has led a cohesive

effort in involving people from both sides of the aisle to begin to solve those problems and that's unfortunately what is missing in this country today. >> you have a few things that you mentioned and certainly things that i think about as well and we're thinking about reforms that we'd like to go in the other direction. when you're in business, when you see these things, we can think of a few things. one would be the size of the debt. the other would be the taxes and inefficient tax structure that we have. a third would be regulation a fourth would be trade policy. which of those, if any, would you emphasize in terms of thinking about job creation for the future? >> frankly, all of the above, ed. you hit on a number of key points. if you look at romney's economic plan, he clearly deals with the tax situation and saying that we ought to lower our corporate tax rate and move away from our system of taxation which is different than anybody else's in the world and encourages people

to leave money overseas as opposed to back here and allow it to go back to work. regulation is a huge problem as well. trade policy. ron kirk is a friend of mine, the trade negotiator. he hat no, sir implemented a single trade treaty, or has been allowed to, since he's been there. they don't allow him to do it because the unions don't want it. they barely happened the three that happened during the bush administration and after lots of compromising and hemming and hauing. the president is not a free trader. i think we need a free trade economy. all of these things are important. >> tom, i had kevin madden on earlier and i brought up intrade. they don't want to hear about in trade. you probably don't either. there are swing state polls and romney is down in the most important state. i'm just wondering, is the country more receptive to hearing about income and equality? you've got occupy wall street,

you've got that movement. what -- can this ship be turned around or is this starting to resonate with people, the takes fairness in the president's word is something to look for, not in light of growth or policy but in terms of fairness? >> well, i think mitt believes in fairness as well. mitt would like to eliminate and come out and lower flatter tax rate. maybe not as low as forbes is but simple and in that approach. mitt's certainly got a challenge because i think the president is appealing to the most advice ral gut instinct essentially trying to redivide the pie when in fact we ought to be growing the pie. >> who said it first? someone said it, if you've got

50% on the receiving end, that's a pretty good number if you're in an election, isn't it? if they are on the receive end of government largess. >> i hope you're right. we'll see. i hope you're not right about what happenses in the election. you're laughing. >> i didn't laugh. >> great to see you, tom. >> next month, tom will be on. >> i'll be wearing my lululemon. >> you wear lululemon or you don't wear anything at all. >> the tsunami watch has been lifted for thailand, myanmar, but remain for indonesia, the maldive and sri lanka?

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according to the signs, ford is having some sort of big tire event. i just want to confirm a few things with fiona. how would you describe the event? it's big. no,i mean in terms of savings how would you sum it up? big in your own words, with respect to selection, what would you say? big okay, let's talk rebates mike, they're big they're big get $100 rebate, plus the low price tire guarantee during the big tire event. so, in other words, we can agree that ford's tire event is a good size? big big

welcome back to "squawk box." joining us is the portfolio manager. barbara, we've been watching futures this morning. with the big drop that we've seen, it made a lot of people concerned that we were looking at another spring swoon. what kind of sense do you get? >> i think we have a lot of headwind coming up over the next year or so and i think this earning season is helping to remind us that i think we're

pricing in peak earnings here. we're sort of having a flat quarter this year year over year. corporate profits have been strong. they started to make records in 2009. between 2009 and 2011. i think we have a weaker economy than the corporate profits indicate. and i think that we're starting to focus on that. >> does that mean that the best days are behind snus? >> i think so. over the next year we have a lot of headwinds. $500 billion of automatic hit between the rise in personal taxes at the end of the payroll tax cut and also the end of the unemployment insurance. we also have -- remember lastier when we passed that budget control act? we have automatic spending cuts coming in there. so when we kicked the can down the road last year, we even

established the budget committee that met a couple times to say that the task was too difficult. >> the problem becomes, though, when you look around and try to figure out where to put your money as an investor, is there a better place, would you go to bonds, emerging markets? what do you tell people? >> no. i think the overall market holds mediocre value. i think in this case we do the obvious which is you buy dividend-paying companies. we have a lot of large corporations with strong balance sheets and cash generators, pay a good dividend. we will have growth so that with the government holding the risk-free rate at zero and 2% on ten-year treasury bond, that's with inflation giving you nothing. it should be unacceptable. pointing in the direction of dividend-paying stocks. >> what about dividend taxes,

though? those are going to go up, too. >> they certainly are. if you look historically, it's come through periods of very high, you know, tax rates. if you look at the early '70s, late '70s when we had 70% tax rate, i think that there won't be as attractive the dividend rate but i think it's an important component. >> to the extent that we're would you be buying dividend paying stocks right now? i know people literally sending out notes this week, this week go buy. >> i would. i mean, i would if you're putting your money somewhere. i think with what i think i see over the next 6, 12 months, you're going to have a better buying opportunity but i think it's very hard to time. i don't think individuals should try to time. >> barbara, you made an interesting point earlier. you said the profits have gone up by more than top line and of course what that means is that firms are making due with fewer

workers. productivity went up, which is unusual. is that a trend that can continue? is that something that firms can continue to do to get their profits up or do you see this as kind of topping off right now? >> i think that's a good point. i really do see it as topping off, tom. and it's a powerful and inevitable force. we had a profit peak of 6.8% in 2000 and we had a fee of 7.5% in 2007 and then of course we had a correction to that. now we have profit margins of over 8.2% and while we'd like to think that could revert more to simply growing the top line, it's more likely that we will get a better buying opportunity. >> when you say a better buying opportunity, what do you see happening over the next two

quarters? >> for those of us that want to -- >> for those of us that want a time, tell us. >> okay. the money that you make depends on, you know, the fact is the price that you bought. the next ten years you didn't have any return. if you could have pushed yourself to buy in the beginning of 2009, january, february, march, clearly off longer term. 13 or 14 here, the last couple of years we've had a correction of 15% or. so i think you're going to get that opportunity. >> we're out of time. barbara, before you go, can you give us a couple of your favorite names? >> yes. in the past certainly our dividend growth fund, the companies like that can have a good dividend, pepsi co, kratf, dupont mining. i think we will sell that

dividend growth at a very cheap price. >> great. barbara, thank you. coming up, breaking economic data. we'll get import prices right at 8:30. look at the u.s. equity futures. they are higher. "squawk box" will be right back. [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too.

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we have a quick update. the tsunami has been lifted for thailand, myanmar, australia. it remains for indonesia and the uk territory of diego garcia. coming up, breaking economic data. we're just minutes away from import price numbers. "squawk" returns with those numbers in just a moment. that powers sound decisions. duff & phelps financial advisory and investment banking services.

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into. march import prices up 1.3%. that is, of course, month over march and starts close to double from what we were expecting. so more than we were looking for. but last month was dropped to minus one tenth. a bit of give and take if you look at the revision. year over year, a bit of a different scenario. 3.4% as expected. and last month's year over year look from february was retro graded from 5 1/2 to 5%. if you look at interest rates, they are a little bit higher today. we settled to under 2% in tens. they are above 2%.

they are responding very little to that data. but they are four or five basis points higher because the stock market is higher because of the perception that italy had some pretty good auctions. well, they moved the paper. definitely at much higher rates last month. germany deals with the auctions a bit different than they do with the u.s. they didn't garner the same amount of bids is the same amount of paper they wanted to sell. maybe you would say that's a failed auction. there's a different perception in germany. they are still a bit more wounded economies and they can't forever issue at low rates but we still boom rates, shot rates, guilt rates and treasury rates leaning on the lower side of where they have been for the last month or so. 2:00 eastern is going to be big today. not only do we have the beige

book. the road map for the fed in two weeks. do you really need a road map? come on. we also have the march budget statement. and that's going to be close to a $200 billion deficit. if you look at the fiscal year ending in the u.s. in october and look at where we've been, we've looking at higher deficits than predicted. this is going to be a big deal for anybody out there. let me see. that cares about deficits. back to you. >> rick, thanks for that. of course, we've been getting all sorts of data that is changing the way that we think about the markets and the economy. let's get to steve liesman who has been looking through -- >> right. i'm doing this so we get the e-mails telling us that the nonpetroleum costs, import prices are the ones that the fed follows. the fed doesn't see import prices as a critical or as a major component of total inflation in this country as a

component but not a significant component. up over 1.4%. >> 1.4%, which they point out that the march game was the steepest than a year ago. >> so i think inflation right now for the fed is very significant. i think it's something that will delimit policy potentials and possible sees if inflation were running without a one handle on it or a two handle on it then i think the fed would feel more of a green light to do something here. as it is right now, i think that it's watching high oil prices. the expectation for the federal reserve is that these prices work their way through this system, and inflation starts to moderate. if that does not happen -- and if that happens, the fed will wait to see if they take additional action. pretty severe circumstances will

be needed -- that was this morning -- for qe 3. and also saying that -- richard from minneapolis, a center-right more hawkish guy, he thinks the fed should end their policy in six to nine months. where are you on that? >> well, i wouldn't do anything radical. i don't think qe 3 would do much if anything at this point. i think they are out of bullets. >> okay. that's what you think should happen. what do you think will happen? >> i think they are going to follow that rule. >> that's scary that we're on our own. >> that's reality, right. think about what is incominging into the market. incoming is new concerns about europe. spain, new concerns about the job market and that's happening without a net. >> gas prices should come down because they are no longer juicing the oil markets.

>> don't mistake, joe, the level with the change. >> i know. >> just because they are not kog more doesn't mean they are not doing a lot. >> people would say that oil prices should not even be where they are right now based on supply and demand. >> they know better than -- it's a different situation than it was three years ago. at that point monetary policy was -- >> rick, how much of the oil is the fed? you don't think any of the oil is due to the fed? >> well well, i don't think we should single them out. that can also be blamed for the generalized notion that paper is not a commodity and commodities are responding. china is building the strategic petroleum reserve and in the end what i was laughing about is people say, oh, i look at the supply of oil and potential for

crude. we don't put crude in our gas tank and they think it's too high. they know more in the marketplace. they know how to allocate the resources. >> rick, who is saying that? >> i thought i heard somebody in my ear saying they think the price of oil is too high. >> who is they, joe? >> they were sitting at the table. >> i said that if the fed really does, you know, not embark on another big, big -- whatever, they've got a quiver that is left, that maybe oil comes back down because we have blamed, even fisher has blamed some of the commodity price movement to the fed. i'm not the one two seconds talking about how wrong you were about inflation. that was liesman. >> i didn't say a word about that. joe is trying to -- >> between the fed and the issues that -- let me see -- we have a lot of issues in allocating oil. we don't know what is going to happen in the middle east. i'm actually surprised we didn't

get up to $200, to be quite frank. >> that was not me. you can't see that. >> again, if you and i got to calculate inflation, not only would we be right but we'd probably put a lot more accurate information that is out there. >> and you would be tightening policy. that's what you would be doing. >> instead of a bunch of -- >> well, take the responsibility for your forecasts and your date tarks rick. >> you know what, all along since the crisis, big guy, that i wouldn't short stocks and i think commodities are going to go a lot higher. >> so what am i supposed to say when you say big guy? am i supposed to say short guy? >> oh, my god. you know what? >> come on, rick. >> now i feel responsible. >> i was just remarking what a great job you did with the natural gas piece. that's what i was remarking because if you really want to know and i'm totally with you on that. we should be converting every

diesel engine. my buddy's doing it and we mentioned it a week ago. very nice job. >> to be fair, rick, you should do a balanced look at how these solar investments are -- >> thanks to rick and to steve. >> this is like wrestling sometimes. it's that obvious. when you see those guys argue. >> people say they enjoy it. >> i enjoy it. all right. hockey is coming to cnbc. this is exciting. fans can catch select nfl games this year. >> on this network. >> right. but before the teams face off for the stanley cup, we're going to talk to the nhl commissioner larry bettman. [ tires squeal, engine revs ]

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welcome back to squawk on this thursday morning. the futures right now, you can see the green arrows, 106 points up. in the meantime, we have an interesting thing going on, the stanley cup playoffs beginning tonight and for the first time ever, every game of the nhl playoffs will be presented on a national platform. the games are going to air on nbc, sports network and, yes, cnbc. darren rovell joins us with a

very special guest. >> dmigs ner gary bet commissioner gary bettman, thank you for joining us. i guess in every other sport it's like -- we know that every game is going to be on. it's taken a long time to get this. so what does this mean for the league? i was talking to frank brown, the spokesman at nhl. he was saying, if you're a fan a. detroit fan in philadelphia or whatever, it's possible you might not get to see a playoff game which is obviously a dire thing. what does this mean to you? >> if you go back in our history two, three, four decades, if you're a fan and your team was eliminated either by the playoffs, you couldn't watch the stanley cup title. this is a way for displaced mock fee fans, wherever you were in

the united states, you can watch the game. we may have been the single biggest beneficiary of the comcast merger because we were on nbc and we are on the nbc sports network and the production and promotion and scheduling for this league and our game is unprecedented and we're grateful for all of the support. >> it would be as much as 262 hours, or even more if the games go as long as they can. hockey's in a great place right now. you have the collective bargaining agreement to talk about. don fear has gone from major league baseball to the nhl association. his last name is fear. >> no punt intended. >> i know. i know you've wanted to engage with them? what are your goals here? >> actually, we're not involved

in collective negotiations and all of the focus is on the game. we've had a collective and exciting regular season. the playoffs look like they are going to be spectacular and they are going to be everywhere. when the union is ready with a new executive director, learning about our game, our industry, our players, our collective bargaining agreement. when the union is down, we will sit down and talk. it doesn't expire until the 15th. >> a lot of people screamed at you for allowing the former co-ceo of r.i.m.m. now that his net worth has gone from 3.4 billion when he was originally negotiating to 380 million, do you feel better about the decision not to allow -- >> it was never personal with jim. i happen to like him and have a great deal of respect for him. these crazy economic times,

unpredictable things happen. our biggest issue with jim is he panted to, in effect avoid league rules. the two most important rules, the two most important decision that any sports league can make is who will own the franchises and where they are going to be located and he cried to circumvent that by having the club in beang republicankruptcy uphold that decision. that was important for us but any sports league. >> what about the stanley cup? it's pretty amazing the story of this cup. mike, who has been the cup keeper for 12 years, travels 300 days a year. what's the insurance on this thing? >> like one product that's priceless. the fact of the matter is, this is probably the most revered trophy in all of sports. it's 120 years old. when you're on a team that wins it, you get your name on the

cup. there's an immortality to it. >> and you get it for a day? >> and you can get it for a day. there's an absolute charisma. it's amazing to see people's reaction to it when they see it this morning. here this morning, the number of pictures taken by the staff here before it came onset here, it's spectacular. we're about to embark on perhaps the best two months of sports in any sport and this is the treasure that everybody seeks we have a cup keeper. it requires adult supervisor. >> are there dents on this thing? have done anything too crazy? >> they leave it alone. >> 60-inch tv in high-def. >> totally incredible. >> it is. it was bad times for -- i

remember you didn't look quite as happy. >> we had to take a year off in order to get a new system. >> how do you gauge how well you're doing? where are you now? are you back all the way and above where you were before? >> we were back the day we came back from the lockout. our fans in our game have an incredible strength, perhaps the strongest in sports. the seven years since the year off, we've had record revenues. >> so don't be too positive. you have a collective bargaining agreement coming up. >> the owners are finally breaking revenue, right? >> yes. >> by the way, there's been misspellings on this cup. >> yes. >> this is the fact sheet for the stanley cup. i love it. >> and it probably doesn't even tell the entire story. >> $48.67 is what it cost in

1892. >> the silversmith in montreal was way too busy and i won't tell you who it was. we needed to know where it was at all times because as we discussed before t. is price zls somebody jumped in the pool with it? >> yes, it went in the water. >> and this is -- >> thank you. >> you're welcome. cnbc, we're with you on this. >> we love being with you as well. >> i got a 60-incher in high def. >> are we going to have the stop tickers around the board? >> there's a 21-foot stanley cup replica in times square which is going to be a fountain so people can go and drink from the cup. >> love it. >> got it?

>> how long is it going to be there for? >> a couple of days. >> gary, thank you. >> thanks for having me. >> appreciate it very much. by the way, we should point out again airing on cnbc tonight at 8:00 p.m. it's the national predators and the detroit red wings. they square off for the stanley cup playoffs here on cnbc. tomorrow, catch more with gary bettman and a special conversation with bubba watt so on cnbc sports with darren. make sure you stay tuned for all of that. when we come back, we're going to head down to the new york stock exchange for the latest buzz on wall street. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz.

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welcome back to "squawk box," let's gets down to the new york stock exchange. it's brian sullivan. >> i am, i'm thrilled. >> and that guy. >> oh, it's joe. >> that's your usual tone, melissa. the yields being lower in italy and spain, certainly helping

there. >> i think that spain -- how big and important the spanish banks are. if you want to follow something hire, it's bbba and san dera. >> the three biggest banks in spain have assets worth about 200% of the entire spanish gdp, mr. market says these are in trouble, guys, both tooks down over 40% in the last two weeks. we can talk about how that night be impacting and affects the markets, we don't know. >> which one did you get, jim? >> very funny.

people don't understand how these american -- we see the american version of these banks in latin america, they are the banks. >> coming up, we're going to get more from our guest host ed lazier when squawk returns.

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you know anybody with a nokia phone? >> ed lazier, lehas served with the economic advisors. do you think we're seeing improvement? or are you concerned it's another swoon? >> yesterday, some decent numbers came out in the labd market. the problem of course is that it goes back to february, so we don't know whether this will persist. even if we're on a recovery track, given where we are right now, we have lost 12% relative to where we should be in this economy.

we have got a long way to go and i just don't see that happening. >> you think there are two huge issues facing us from a policy perspective. >> debt is the most important when we have doubled the size of the debt in the past four years, we really have to get that under control. that's not the kind of issue we can put off until ten years from now. look another what's happening in greece, at this point austerity is so painful for them, it's not cle clear. >> i think we can deal with both at the same time, i'm not bick believer that tightening our belts will do much to stimulate the economy. i don't think reversing it will have much of a negative effect. we have got to get moving in that