good morning. central banks on center stage. the boj announcing that it's keeping policy unchanged. up next, we have decisions from the ecb and the boe. plus, we're still trying to rise above. we'll see. president obama and republican senators break bread and discuss solutions to the nation's fiscal crisis. and another day and another record and close. the dow and the s&p 500 are now starting "squawk box." it's thursday, march 7th, 2013. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe

kernen. andrew ross sorkin is in new york today covering the warden economic summit. andrew has a number of great guests who are lined up with him. we'll have more from him in just a moment. also today's lineup. but fist, the morning's top stories. the bank of japan keeping monetary policy unchanged today. that is as expected. the bank of japan holding its fire to wait for new leaders who are expected to shift bolder measures. policymakers are revived softens. and the yen has been -- well, it's up just barely, 94.13. at the top of the next hour, the bank of england will announce its policy decision. opinions are split on whether the boe will unl veil another rouvend of bond buying. the ecb is expected to hold its

interest rates at a record low 0.75% and seek growth and inflation forecasts largely unchanged. president margo draghi will be holding his news conference at 8:00 p.m. eastern time. anything that might give us a little bit of an indication. the euro this morning sitting at 1.30. let's head back over to new york and see what andrew has up his sleeve. good morning, andrew. >> hey, becky. we're here today to cover the warden economic summit. the slogan here today is bridging the device between business and public policy. we've got a great for you today including jeremy siegel, one of our favorites, of course. plus dealermaker kenny molus. he will be here to talk about all things m&a. given the report yesterday about dell and carl icahn, i have

questions for him. and then we have a rare sit-down interview with alex gorski. finally, we have legendary investor michael steinhart. we'll bre bringing that to you throughout the program today, becky. >> and you were talking about dell. we're just getting a press release that dell has stood out regarding carl icahn's move. carl icahn age taken a pretty large stake in dell. at this point, dell is putting out a press release saying it received a letter from carl icahn urging dell pay $9 a shared dividend. if the agreed going private transaction which was announced back on february 5th if the deal is voted down by shareholders. >> evercore is actively solicited other offers and they're going to go all the way till the process will run through march 22nd after which

negotiations will continue if a potentially superior proposal emerges. >> guys, here is the problem. can you hear me? >> yeah. >> there's a problem with this, is that evercore's only incentive to find a superior proposal in the tent they have to find somebody else to come in and buy the company. so the incentive structure in terms of how to think about this may not be as aligned as ld necessarily want. >> that's really a cynical viewpoint, andrew. i'm a little disappointed that you would put that forward. so if evercore doesn't get paid, if they get a higher offer, they're going to be like, oh, maybe not. they're not going to listen or theory into the going to actively -- it doesn't change their -- but it's not about the

investment bank. it's about the shareholders at dell, right? >> no, no. evercore gets paid if they niend a better deal from somebody else. so you need -- you don't have a constituency inside that's working necessarily to put a deal like that on the table and decide whatever carl icahn wants to do -- >> but if it's really obvious that it's way too low, then the market should -- someone should come in and say the money is here for the taking and i'm going to give a higher offer. >> yeah. >> so i almost think it should work either way. even michael dell doesn't know if he's going to be successful in making this a great company. >> that's right. >> what would happen to the company -- i'm just reading through the rest of this carl

icahn dollar. he said a 9 billion million. it comes from 4.76% a share. and then he wants another and then 4 many 26 a share or 5.25 billion in new debt. so this is really interesting. i think carl acahn must have taken their proposal and is using it as jujitsu against them saying this is worth well more than the 13 something you guys have proposed. >> but wa he's doing is saying, look, if you're going to lever it one let us lever it up. >> exactly. >> but then then would be -- with this $9 dividend they take out of it, they would be taking all that cash that the company would be using to go -- to fix

itself. if it were private. and tig it kind of right out of it. but it is more 22.81 a share. wow. >> this would by the big debate. and talk talk tt people in new york city about this. >> are you on campus, andrew? >> no, we are not on campus. we're in new york city. >> oh, you are, okay. for the warden deal. >> yep. >> okay. so you're near. i feel your presence. you're close by. what did you think of the storm, the big storm? if they were going to name it using an "s," they should have called it the sequester storm. >> there's about three inches deep salt in our parking lot. >> i know. i got stuck in the salt.

people were pushing. >> andrew, you had to -- this is not your problem, anyway. you don't know what we're talking about. >> i'm just waiting for the reynolds wolf interview. that to me might be the highlight this morning. >> we have wolf reynolds. yeah. he hasn't been around the last few days. >> he hasn't. it's been eric. yeah. aip eric probably won't snow. he's working too hard, maybe. the nice suit and looking good was -- >> well, i think reynolds was out in this snow. >> all right. who is your first guy up. >> we'll talk health care and

everything else. president obama sat down for dinner with nearly 1 100 congressional leaders at the loemt last night. >> i'm encouraged by the president's outreach. i hope it bears fruit. >> okay. succinct. i don't think rand paul was at dinner. is he still talking about something? no, i was filibustering. i do have a mole in there. i hope it's worthwhile what's going on. >> in the filibuster? >> no. hopefully going to dinner. you know, it's not the house. i don't know how this works. if you get some senators to start thinking, yeah, maybe we want to --

>> i believe the plan is the president is supposed to be meeting with some house members. >> do you know what they want to do? in general, there's another 600 billion around in ten years with the revenue. but they don't want to -- they want tax reform to happen at the same time which might even lower rates. and it doesn't seem like the two sides are gsh if we keep them high and marginal rates state where they, that defeated the purposes. maybe they do it gokt to entitlement tough. i don't know. >> it's a big underfunded issue, but i don't think what gets us back on track, corporate tax reform, individual tax reform. >> but that's not saying that you're not concerned about the deficit. that's nothing compared to the entitlement. >> how do you deal with our future growth would go a long way towards dealing with all of our future promises.

>> although that would certainly politic avenue a lot of republicans, i guess. >> but you suddenly might have a 3% or 4% economy which makes us better able to deal with the -- >> then there's a lot of fractured parties and there's a lot ooh different opinions down there. trying to build consensus around anything will be tricky. >> the house yesterday passed a measure to fund government programs until the end of the fiscal year. on september 30th. that is what worries me is that the market will keep hitting new highs, the fed will be pumping, the light goes on and we don't do anything until september 30th. are they going to even do a budget? i hear that's going to be

introduced raets. let's talk about some corporate new, as well. the faa is reportedly poised to approve within days a plan to allow boeing to begin flight tests of the 787 with a battery fix. this is obviously a critical step towards returning the ground at aircraft service. and i don't know if you remember, bob dole talked about some as one of the defense stocks he likes. >> wrp talking about this a couple weeks ago. time warner is announcing plans to spin off its magazine groups. off to reviews that.

>> how often do you write it? >> it's every cycle or every other cycle. it's every three weeks. >> i think you should write it every week, don't you have extra time with your baby and everything. >> yeah, a lot of extra time. >> you're like mickenson sometimes, aren't you someone all work and no -- if i gets writer's block, he might come at us with an ax. do you remember that, andrew sn? that scares me. yanl you don't get writer's block. >> it is a scary thing. >> it is. >> i want to see that in your column sometime. when does the column come out? >> monday. >> tuesday. >> oh, you write it monday for tuesday. >> all work and no play jut all the way down, just like in the shining. r. >> the process request --

>> they thought they had the deal with meredith. they thought it would all work out. time warner would have kept the four big ones, which would have been time, fortune, sports illustrated and money. they thought they had this deal, but at the end, we hear that time warner decided they didn't want to keep any of the publication, but the meredith family didn't want to lose considerabling interest by taking on the -- the question is what happens to those? how much debt did that level there? >> when you look at what is happening to print broadly, people didn't thit was going to impact magazines yet. and it really is. and you see what news corp. has sdon with its newspapers and usz what time is doing with its magazines. i just wonder how much you have

to endow each of these companies about because they were indebt. it's a sad commentary on where all of these publications ultimately land and weight means to the future of media. >> well, the digital revolution marching on more quickly than people had anticipated. the internet disrupts all of these things. we talked about the app that you used to read a lot of these magazines. the content is still desired. it's a question of how much money you get, too. >> let's take a look at the futures this morning. yesterday, the market did inch higher at another record level, as joe mentioned. 1496 is where the dow actually closed. futures are indicated higher once again this morning. fp futures up about 1.25%

points. in europe, sul see some modest green arrows. in asia overnight, the nikkei edged up higher by 0.3%. shanghai composite up 1%. oil prices are up, but only slightly. if they fall below this region 960/2 960/267. >> the dollar, after what would he have heard today. we'll watch closely to see how they impact the forex markets. gold prices up by about $5.90. we're going to take, it says here a quick break now, but i would bet you it's the same as -- >> it's a standard break? they're all quick.

that's a break from quarterback quarterback. when we return, the battle for dell who shorted the d.c.maker into the deal. to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business.

welcome back, everyone. in our headlines this morning, a television consultant is suing al gore, claiming that the former vice president and others at current tv stole his idea to sell the struggling network to al jazeera. the struggman is suing for more $5 million. in january, al jazeera announced it would pay $500 million for current tv. let's get the national forecast from the weather channel's alex ross. >> not eric. >> nor reynolds. >> and why don't you take a shot at whether or not we're going to get knit snow here, alex. >> you know what? i think you guys will get a bit here mixing in with some rain. i think the bigger totals will be to your north getting up into massachusetts. let's getting tighter here with our storm system here. and you can see we're seeing snow showers showing up on the radar. from and around the boston area, hartford starting to report that. it's trying to speak down into

the new york city area, certainly across long island seeing some of that snow with flurries here trying to sneak into the city. north we head and more snow, boston seeing that at the airport right now. light snow and wind, that's going to be a concern for us. windy conditions through grout the day. coast to 30 miles per hour and that's helping to reduce that visibility down to quite a bit. >> so the forecast foor today, calling for a lot of snow across the east. then overnight, more of the same out there. rain and snow along the coastal areas, but mostly snow through the interior areas. even into tomorrow, we'll be dealing with some of the snow in these spots. through our saturday morning, the snow totals heading down towards new york city, we could be looking at 3 to 5 on the lower end of that scale is probably more likely with the higher totals to your north and east.

we can be talking maybe a foot around the boston area for you. the threat will be the wind causing issues along the coast piling up water and potential flood issues to deal with in those spots. guys. >> alex, thanks. the dow is pushing farther today or could as far as the turchs are concerned. into record territory. joining us is jim o'shaughnessy of o'shaughnessy asset management. when we get into periods like this, you can almost watch it happen, jim, where people say it has to put back, it has to put back and we published a again yagz yam buying opportunity. basically what we looked at was crickets. why would anyone be buying the market here? we were basing it all on basically quantitative relationship peps the market in

february 2009 had compounded it under 4% per year for the previous four years the and that hadn't happened since the early 1940s. >> the 12-year is 1.5% or something. >> yeah. and it's 1.5% if you're not stripping inflation. if you're stripping inflation, you're losing money. >> so it's all about over the years regression to a mean and it's 82 to 2000 period. >> yeah. we actually looked at that. everyone says 7% after inflation or 10% before. the fact is, it really depends on where you start. so if you start in march of 2000, when you've got 13.85%, all of the data says you're going to spend the next 20 years going down. regressing to the 7% and usually what's below it. that's exactly what happened. the good news from our perspective is we think we're now on the other side of that

equation. >> what if you start now? >> if you start now, we still believe we're in a cycle. were looked at the 50 worst ten-year periods back to 1871. what we found was, number one, february of 2009 was the second worst. the first worse was may of 1920. what was interesting was what happened three, five, seven and ten years later. in all of the observations that we had, there were no negative numbers. so right now we're sort of in the middle of that virtuous circle. >> so you're getting more than 1.5% if you were to start right now. >> absolutely. particularly if you focused on global high dividend stocks. right now, it's the worst environment for people looking for income. they're going to need income. and if they're going to look to the treasury market, you know, we're under two on the ten-year trishry. that doesn't take into account

inflation. if we have inflation, you're basically buying something that is guaranteed to lose money. so, in fact, t bills, let's say you, you know, freaked out on january 1st, 2008, and put all of your money into t-bills. right now, you'd have 90 cents as for inflation. whereas if you put it into the high dividend global stocks, you would have about 13 after inflation. >> the fed is not alone, it's a given that central banks are pumping money. i'm not sure if it matters if it's orchestrated by the fed, because they do create money that goes into the economy, that is going to eventually help with the housing market and help other things and so i'm not sure that it's -- is it -- do you just say, well, you separate out the fed and the market should be much lower. i don't know whether nthat make

sense. >> well, also, look at where we were the last time we were at this level and look at where we are now. the earnings are vastly higher. one of the oldest maxims is never fight the fed. what the fed is doing right now is very, restraightforward. >> so move out the curb. >> yes. if you're trying to be so art efficiently lee, but then studies say it could be maybe 50 or 70 points higher. >> the expected rate of return, which is the dividend yield plus the earninges yield on the s&p

500 it's about 8%. on the global high dividend stocks it's 15%. >> yeah. >> if you're just looking at numbers, what are you going to do? you're going to say, oh, i love the ten-year treasury at under 2%? or i want to go for something where i can get an expected rate of return of sa%. clearly, if you're rationale, you're going to go to the latter. >> japan, mild deflation for ten years. if you didn't know better, you didn't know better. >> the kids have to live with their parents forever. you have to take out a mortgage. you don't have the money to be able to do anything. >> and plus, you've got the japanese who are invetbly conservative investors. they put their money in the postal accounts and they leave it there. so you have a very different system and a very different outlook on the part of japanese -- >> 9 is the recent high on the

yen. >> yeah. so we're talking long, long ago. >> all right. o'shaughnessy, you were on like the first week of south carolina. >> your hair wasn't gray, was it? >> well, that was 13 years ago, joe. >> 17. >> it does happen. >> yeah, you did. why is everybody getting old except me? >> except you. it's amazing. you obviously have a portrait of yourself somewhere in the closest. >> yeah, well, you know, i sold my soul. when we come back, we're going to check in with andrew in new york. first, though, as we head to a break, let's take a look at yesterday's winners and losers. aw this is tragic man, investors just like you

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good morning. i'm joe kernen on "squawk box" along with becky quick and andrew ross sorkin. he is in new york today. you probably rolled out of bed. did you walk, covering the economic summit? although it's a big island. but how far away? >> to be honest, i should have walked. i should have walked. but i --

>> you could have walked. >> but i didn't. i didn't. i am here today at the warden economic center with a guy who is -- >> one of the brothers of aynuel. and can i out you on this? he doesn't own a television. >> are you a huge athlete from taking ballet, too, when you were a kid? was it all three of you or just ari? >> we're not supposed to do this. we're not supposed to talk about the book. i wasn't talking about the book. >> i'm going to run the new york city half marathon in two weeks with an aim of breaking seven minutes a mile. i don't know. does that make you a big athlete? >> it does. and it makes you crazy, i think. >> i'm running with ron's eldest son, zach, and we're going to

try to push each other. >> seven-minute mile for the whole marathon? holy cow. >> yeah. >> let me do a proper introduction, if i could, guys. zeik emanuel, he's served as special advises on health policy to the director of the office of management and budget and national economic council for the white house. so thank you for being here. >> great to be here. >> about a million things i want to talk to you about, the first of which is an op-ed that you recently wrote about the cost of health care and potentially the bending of the curve for the first time, but not in a way that i thought we were bending the curve. explain. >> before about 2004, 2005, we had begun to see a desill ragz of health care costs. there are many things that probably go into it. the 2008 session, no doubt. but this began to happen before.

we're beginning to see how hospitals and doctors are changing their practice and really beginning to do different things. >> now, one of the things you say, and given the arguments we've had about health care, the idea that we shouldn't change lblth, meaning we shouldn't be raising the age of eligibility, do you think that we're bending the current so war. first of all, i don't think wet need to change stability. you have to change the system for the entire health care system. not just medicare. so i think we have to keep our focus on the national health expenditures, not just one part of it. the second thing is, i have said if you're going to change the lblth age, it should only be changed for the rich people who can afood it and afford to go

into the exchange. and i have suggested that we have what we call graduated eligibility. but that is a much different story than what we're talking about moving everyone up. remember, if you move everyone up, you say eligibility is now 68, they still have to get health insurance for those three years. they're going to cost money. it doesn't disappear from the whole expenditure. >> so steve roe write a foormus. he believes if he lower the eligibility to 60 years old, you bend the cost curve because you would be putting more people in the pool. do you buy that? >> the pool thing does make a difference. you would be putting in younger people, healthier people. but you don't bend the cost

curve that way. that is just moving people around. that is not going to fundamentally change the cost curve. the fundamental way we change the cost curve is how doctors deliver care to patients. >> in the piece, the big, bad insurance companies in my mind were less big and bad. the big, bad folks in this were the doctors. frankly, not even the for profit hospitals. >> so there's more than enough blame to pass around in the health care testimony from the insurance companies. >> we need to believe the hospitals and doctors are doing good things. >> but if you read that article, they are more crooked than anyone else. >> they are definitely doing things they shouldn't be doing. we know this. let me give you my favorite exam. i'm a cancer doc. when people get bone mass, it's very painful.

the main treatment is raid agat. if you give ten zaps, you get paid more than one zap. so do you give the ten zaps or the one zaps? you give ten. >> do you give ten zaps? >> it's not a radiation specialist, so i'm not that smart. >> two things. i apologize. i didn't read the beige book. it's not my regular reading. >> it's not a lot of people's regular reading. >> i probably need to go to sleep tonight, i'll read the beige book. but you have to ask yourself whether it's short-term or long-term. because in the short-term, there may be dislocates, as we know. but in the long-term, and where i mean long-term is going to be

towards the middle or end of a deca decade, we're going to have -- if we get health care inflation under control, it's going to expand the economy. people could have more money to spend. >> i've heard the short-term versus slong term argument made in a real way. given where we are in the economy today, all the things democrats said, we can't touch anything, we need to do everything for unemployment right now. to hear you say that in the short-term may have an impact, i think that's meaningful. >> no, i don't think so. health care is a long-term problem for this country. it's what's going to sink the federal budget. it's going to what is going to really threaten our stability if we don't get the inflation rate under control. and if we get the inflation rate under control, wages are going to go up, we're going to have much more employment because people will be spending money in more productive ways. and by the way, we're not talk about taking health care from $2.8 trillion down to $2.4 trillion.

we're talking about how close it grows. and if you thought that it goes for a stronger marketplace, people will spend on other things. >> thank you. >> i'll be hosting the health care panel. >> what time is your panel? >> 9:30. >> be there or be square. >> andrew, thank you. a lot more things are coming from that wharton conference today. when we come back, we're going to head to the futures pits and see how today's trading session is shaping up. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy.

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oib to "squawk box," everyone. joining us is scott nations. scott, futures indicated higher today. in the financial times today, there's a column that says we shouldn't pay in the attention to the dow jones industrial average because it doesn't matter and it's not an index that he thinks reputable. what do you think? >> you know, we've had that conversation for a long time. the dow is making new highs. the mathematicians can have it out, but then let's look at the s&p, which is less than 2% from an all-time high. i don't know anybody who has a tough time with the methodology of the s&p. the dow is the headline number. i think for the dow, today is going to be a really interesting day. if we can make another high in front of the big one tomorrow, that is the jobs number, then i think it's going to indicate a

fair amount of conviction that people thought. >> okay. why is that? >> well, i just think that given that gdp was so weak, so anemic at 0.1%, i think people should be worried about growth. but if they're not worried about growth, if they think that anything above, say, 1.50 tomorrow from the jobs number is okay, then i think that that is flashing green light going forward. now, you might say that some of these indexes are overbought a little bit and that's fair. but with treasuries at 1.92% and with the pe on, say, the dow at 14 going forward, you can say that those are reasonably priced. they're not overpriced, they're not overdone. and that some of these might be overbought, that can come from the market bouncing sideways for a while. it doesn't mean that they have to take a big step back. >> scott, over 150, do you think

the market could go up on 150 tomorrow? >> if we're expecting 163, then i think how we would respond to that, i think people are geared for anything over 1.50 people fine. i think over 200 would be fantastic. and i think you would see big buyers coming in. if we saw over 200, we might actually see the sort of volume confirmation that people have been looking for. >> scott, thank you very much. great talking to you today. >> thanks, becky. a reminder, by the way, catch scott on options action every friday evening at 5:30 eastern time. still to come on "squawk bo box", jim chanos, dell, herbalife, china noo and much more. but first, andrew is going to bring us a guess who says he has the secret to a happy family.

business on a home front when we return. ♪ [ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪

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welcome back to squawk. you know, the phrase happy wife, happy life, well, there's a lot more to it. and we have an interview with a guy i've been trying to get on the show for the past couple of weeks to talk about a new book called "the secrets to a happy family." this is oddly a business book. it's like a strategy book about

how to treat your family like a business. a piece that bruce feiler wrote in "the wall street journal." >> yes. >> called family inc. and you said that there's -- you should have a ceo who runs your family. one of the parents should be the ceo. and, you need to have group meetings, and conference calls? i mean how should this work? >> well, i was frustrated as a parent. our lives were chaotic and out of control. and i was especially frustrated with the family improvement industry. that the only ideas we're allowed to implement must come from these family experts. but the truth is, we have, women are in the workplace now. we have dads much more interested in parenting and this new generation of parents is taking ideas from the workplace and bringing them home. and as you mentioned one of the ideas that many family that i interviewed are doing is they're having family meetings. and here's the -- >> what's a family meeting? you almost equate it to a board meeting, the way i thought about it. >> well, it's a 20-minute meeting and you basically ask

three questions. what's going well? what's not going well? what will you work on in the week ahead. >> so it's like a business meeting. >> it's not a business meeting. but the point is you need to get the kids involved. research shows kids who set their own goals, make their own schedules, evaluate their own progress, they're building up their brains and they're developing the skills that they'll need later on. and the point is, we have our jobs. we work on those. we have our hobbies. our bodies. we work on those. we know that nothing is more important to your happiness than your family yet people aren't working on it. >> so you're incorporating your family into these meetings. what kind of authority do we give the children in all of this? >> you do actually want them to have practice. you can't get kids to 16 and say go out and make your own decisions. you have to give them the practice along the way. nothing is top down anymore. not companies, not government, not religion. the truth is you've got to let the best ideas win. the kids know what motivates them much more than we do. >> you recommend that families put together a mission statement. i mean, similar the way a company might put together a

mission statement. what is that about? >> the first person who told me about this was jim collins. i interviewed jim collins. >> good to great. >> the defining management guru and he said all organizations that are successful do two things. they preserve the core, and they stimulate progress. this meeting system is very good for changing in realtime. but what about your core? here's an idea which is you go through this process of defining your values. and when i first heard this i thought it was kind of corny, maybe a little cold. but then someone asked me, can your kids actually say what values are most important to you. and i thought maybe they can guess it. but we went through this process. we had a pajama party, we made popcorn, we all piled into the bed, and we had this conversation, what's really important to us? we ended up with a list of core values. >> so what's changed -- you have a 20-minute meeting every week? >> every week because you can't predict in september what the problems you're going to have in march is. you need to be able, as business has done for decades, change in realtime. >> and the kids can criticize the parents? >> yes.

we let anybody -- it's a safe zone where pressure can be released. when you're fighting over the broccoli on tuesday or the curfew on thursday or whatever problem you had during the week, you don't have to have that fight at that time. you know there's a safe time at the end of the week where you can confront the challenges. >> nobody says anything all week and then they talk about it afterwards? >> things are going on in realtime. but the truth is there's this time where we say we're going to work on our family. >> biggest change in your family since you started to do this? >> we do something. and the number one thing that we've learned is to talk about what it means to be a family. kids who know more about their history have greater confidence. it's the number one predictor of a child's well-being is knowing your family history. so you want to tell your family's positive moments, but also tell the negative ones. how relatives overcame it. therefore when kids hit their own hurdles they can push through. so the point is, be mindful about your family. >> is there separate side meetings with the wife? >> yes. >> or do you have to do this all together? >> but cancel date night.

dinner and a movie is not going to make a difference. you need to put something that will take you on the same side. get lost, goic to a class. cook a new recipe. if you do something that is fresh and unusual, you'll respark those chemicals, you'll rejuvenate your relationship. >> bruce, thank you for coming in this morning. the secrets of happy families and it's going to be number five on "the new york times" best-seller list? >> it will, indeed. >> congratulations. >> andrew, thank you. we appreciate it. we'll be back in just a couple of minutes. >> i heard you guys were e-mailing this morning. >> we did. we e-mailed this morning. i'm sorry i didn't get to see him in person. but next time, bruce. you'll come here, right? >> i'm told you've got the happiest family in the room, becky. >> i think all of us do. we all have some pretty good family livss. we're in good shape. thank you, bruce, it's great to see you. >> my pleasure. >> also some news on facebook today. >> the social networking announcing that the chancellor of the university of california at san francisco, susan desmond hellmann will join its board of

directors. she'll be the second woman elected to the board following cheryl sandberg. she's genentech. i know she may be the chancellor now. but that's where obviously everybody knows her from. the company had faced criticisms that its directors were all men. meantime the company is expected to unveil a big changes to its home page feed likely making it both more visual and content specific to users. she's great at that. she's one of the people that saw how well genentech has done in terms of being a huge asset to roche's business, and a lot of the drugs that we talk about were genentech related. it was the first one to come public. >> it was. when we come back we have more of an all-star lineup. two hours and almost too much to cover. famed market bull jeremy siegel. short seller jim chanos. alex gore ski and michael stein hart. stay tuned. [ kitt ] you know what's impressive?

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the rally continues. the dow briefly crossing the 14, 300 level. the s&p now within 1.5% of a record high. can the bulls keep up the pace or will the bears claw back? we're going to ask guest host and hedge fund titan jim chanos. >> plus we are live at the wharton economic summit. market pros and thinkers gathering to talk economy and the markets. we're there and have a great lineup including jeremy siegel, and much more. the second hour of kwk kwk begins right now.

good morning, everybody. welcome to hour two of "squawk box" on cnbc. i'm becky quick along with joe kernen. andrew is in new york this morning at the wharton economic summit. he's going to join us in a moment with a preview of what he has still to come this morning. the futures have been indicated higher after the dow closed at another record high yesterday. this morning you can see those futures up 14.5 points. s&p futures up by just over a point. and in our morning headlines, dell is responding to investor carl icahn's demand for a leveraged recapitalization, and denying dollar a share special dividend if the current buyout proposal is rejected by shareholders. dell says that it is still involved in a robust go shop process for alternative deals and it says it welcomes icahn's involvement. as first reported by david faber yesterday, icahn has taken a stake in dell that amounts to 6% of the company. we have jim chanos here. he shorted it heading into this deal. >> bank of england was unch and then also didn't increase the bond buyout.

basically unchanged, as well. some people thought they might increase it. >> we have the ecb coming up in about 45 minutes. time warner is spinning off its time inc. unit into a separate publicly traded company. time inc. publishes popular magazines like "time," "sports illustrated," "people," fortune. they expect the spinoff to be completed by the end of the year. costco is reporting a 6% sales increase for february, above street estimates of 5.1% increase. joe? >> let's head to andrew for a preview of this morning's big guests. who's coming up? >> hey, joe. we're in new york city at the wharton economic summit. i should say the slogan bridging the divide between business and public policy. we have a lot of different issues to cover. we have one of our great "squawk" friends, wharton finance prefeeser jeremy siegel. he's been calling the market to go up. so we're going to talk to him in just a little bit. also dealmaker ken moelis.

and a rare interview with the ceo of johnson & johnson, alex gorsky and legendary investor michael steinhardt. we're going to be bringing it to you throughout the broadcast. >> all right. great andrew. our guest host this morning is legendary short seller jim chanos, founder and president of kineco. he's a visiting professor at the yale school of management. mr. chanos. you were worried i was going to say mr. shorty. nobody wants to be called mr. shorty. >> not in this market. >> well, i was being -- you know. sophomoric, again, but anyway. i couldn't help think of you, and actually i got a heads up, you know, i knew that the china thing was coming on "60 minutes." there's a time and place for "60 minutes." sometimes i have a problem with some of the business interviews that are done. i think they're -- you know, they could use a little background from us, maybe. but -- or from cnbc.

but this was a pretty good piece, it was a two-part piece that lesley stahl did on china. the first one i was amazed at the architectural designs they're putting up. are there businesses filling up those companies in the first part? the corporate companies? i know residential is a problem. but do they have tenants for the beautiful i.m. pei-type buildings? >> well, good morning. i'm not sure about soho, which was the company that built -- >> the 47-year-old lady that was a water? >> exactly. i saw her commentary on politics was more interesting than the thing about her company. >> right. >> talking about everybody wants democracy which is an amazing thing to say in china. but, there's just no doubt that the -- this thing is getting bigger and bigger and we talk about -- >> let's talk about the second part of the city, and you know, you think citi, and i was thinking like, you know, when you drive across country and you see some of these towns. that's not the kind of cities that we're talking about.

there are gleaming, they almost look like manhattan-type cities that dozens that are honestly, all those buildings are empty? >> pretty much, yeah. >> and you build them, they're sold to people that -- because there's billions of people that can't invest anywhere else, is that it? they can't invest in outside? >> well, it's not billions. that's the interesting thing. it's a very small number of people that can afford these apartments. >> but no one can afford to live in the apartment. they can afford to buy them. >> remember also they buy them empty. they buy them literally shells in china. so there's no, you know, internal walls or appliances. so they're really sold as sort of boxes. and the other interesting thing is, when i talk to my friends in china who actually own some of these things and i ask them, you know, do you know what happens to empty real estate? and in terms of vacant real estate? i sort of get blank stares. the other interesting thing in terms of ownership is that there's no maintenance fees.

there's no homeowners association. what happens when the elevator goes out? >> nothing. >> who pays for that? >> it doesn't matter. it's a tree falling in an empty forest. >> exactly. there's literally no thought given to sort of actually living in these things, and dealing with ongoing costs. >> okay, so -- >> it's remarkable. >> how much in residential is it going to be an impossible to question, how much is the government in for in overbuilt residential real estate? >> years ago, when we started talking about this on "squawk," the chinese statistical agency said there was 5.6 billion square meters of both residential and commercial underdevelopment. that's all been built, by the way. and at the time i said well half of that was commercial, and i did some numbers, and it was 30 billion square feet and that equalled the 5x5 office cubicle for every man, woman and child in china. that was three years ago. >> what do you think the value to put on a square foot was? >> residential, we use a value

of about $60, $70 a square foot. >> that's all? >> that's all. >> you can't build a house here like that. $300 or $400. does that come to trillions? >> well, now, my point is now the same statistical agency, and we always have to take numbers with a little bit of a grain of salt. the same agency is saying it's 10.6 billion square meters under development. almost twice as much three years later. >> oh, my gosh. >> so if you thought it was bad three years ago. they're building twice as much as of right now. >> is it safe to say the government's in for trillions of dollars of bad loans? >> absolutely. construction is half gdp, and gdp is about $8 billion u.s. so investment in china right now is annually about $4 trillion. >> the government says they're going to get growth of 7.5% this year. how do they do that? >> because the government says that they're going to get 7.5%. >> at some point does it catch up? >> well, again, it's the nature of the growth. if it's all -- if it's all sticking a shovel in the ground, you get whatever you want. but at the end of the day, what's sustainable?

because as i keep pointing out, every time you finish a building under this model you've got to put up another one. it's not as if it's consumers buying goods and services. >> everything in china is hard for westerners to understand. it's inscrutable. but, how does this, if it's trillions of dollars, it's really probably money that government's not going to get back, bad loans, how does that finally -- can they -- can a state-owned enterprise manage -- manage that situation, or does it -- it sounds like bigger than our housing -- could eventually be bigger than our housing? >> here's an interesting point. a lot of the bulls will say well it's not so bad because the average buyer is not as leveraged as our buyers were in the u.s. they're saying cash or they're only putting half down. the problem with that is, is there is some minority of buyers who are using generational wealth to sort of stretch to buy these apartments. >> and that can go to money heaven, can't it? >> well, exactly. unlike our buyers who walked

away and left it to the banking system and the fed to sort of bail out, these people are going to lose their life savings. and that could be a big issue in china. >> wow. >> well i just wonder, we're doing well over here now. housing is coming back. and we're a much bigger economy than china, and we don't need them for everything. i mean it's nice that we have them. >> we're twice as big. >> but could it -- i mean it seems like this could impact the entire world, if it were to implode. maybe it doesn't -- things like that don't happen in china. they don't implode all at once. >> china is about a point, maybe a little bit less, in global growth. so, you know, if china were to really seriously -- keep in mind, last year we had 7.8% growth, and corporate profitability over there imploded. so the question is, how profitable is this growth? and i think that you have to understand that the people that sell into china commodity makers and iron ore and that sort of thing, they're going to feel it. >> that's also companies like

the equipmentmakers, and caterpillar and anybody down the road. >> yeah. >> -- what you're doing? >> and look at anybody selling heavy construction or construction related -- >> are you short those stocks? >> we're short pretty much anything -- >> you are? that's what you're doing for -- for, is that a large part -- >> in terms of looking at short ideas right now in the globe, i mean, basically, we've made a lot of money in the past, almost 30 years now, in being short anything that was leveraged using a lot of credit, where the asset did not drop enough cash to support the debt. there's one place where that's at right now in the globe, and that's china. i mean, this -- none of these assets can support the debt being taken. so all the knock down effects construction equipment, cement, steel, iron ore are going to have a rough go of it, i think, when this all -- >> you've been skeptical about china for a long time. this is a new short position

where you've extrapolated it out to everybody that's selling into china kshs? >> we've been short construction guys for a little bit so we've been public on these companies. i think that -- that this is not sustainable. and we've sort of updated our recent presentation, and basically said, you know, bigger treadmill, same destination. and that's really where it's going. it's problematic. >> there are test patterns all across china now in cnbc asia. everybody's watching it, they're like adjusting their set and it's like, this is getting interesting. what -- started shaking their televisions. really. that's terrible stuff that you're saying. all right we got to talk eventually about this market. obviously. >> sure. >> and i -- earlier i was saying i don't care if it's the fed. the fed, everybody's doing it. all the central banks are doing it. you can't just say it's not justified because it's all steroidal from the fed. >> it's reality. >> yeah, it's happening. and it's helping the economy, which helps justify the

underpinnings of the stock market. so i don't care if it's the fed. don't tell me that the fed so it doesn't count. >> i didn't tell you that. >> all right. we'll get back to you, to whether it is real and whether it can keep going. it's going to go for awhile because everybody's expecting it to -- can't set a new high every day. >> sure it can. >> and then the more you don't want it to. the more you'd like to have a pullback to get in the more it doesn't let you do it. right? >> i have no idea where this market's going. nor does anyone else by the way. >> all right. it's great to have you here. >> good to be back. >> when we go to break can we talk about stuff? >> can he stop you? >> yeah. >> jim, we've got a lot more to talk about. we'll have more when we come back. if you have any comments or questions about anything we've been talking about, e-mail us at squawk@cnbc.com. follow us on twitt twitter @squawkcnbc. up next we have jeremy siegel from the wharton economic summit. why he thinks this market can go

much further. "squawk" is back after a quick break.

new high yesterday. new high the day before. and, if we were to open, well --

better earlier. up about three points. let's head back to new york. and andrew. and you have a guy that may be able to tell us where it's going to go, or where he thinks it's going to go. he's a happy guy, isn't he, andrew? >> he's a very happy guy. today he's particularly happy, joe. i am at the wharton economic summit and the happy guy i'm talking about to my left is jeremy siegel. we call you sometimes the perma bowl, also professor of finance at wharton. things have worked out your way. the past couple of days at least. >> yes. right, right. >> before we got on camera we were talking to one of our camera guys who was saying there's going to be a pullback. and tax time is going to come, open's going to come. at some point everyone's waiting for this moment when they think they can still get on the train. >> right. >> i know you're not a market timer and i want to hear what jim chanos thinks about this,

too, but is there an opportunity coming that people should be waiting for, or do they get in now, and do it that way? >> i think you had it right. you said when everybody's waiting for that market pullback it is not going to happen. because everyone's going to jump in on a 20 point decline, a 30 point decline. and that's really what we've seen in this market. i don't see any loss in momentum. we've seen the last two or three aprils, the market begin to slip. we do have tax time coming here. being a statistician as well as an economist, when you see things two or three times the market thinks oh, it's definitely going to happen next year. we know it's like flipping a coin. you get two or three heads in a row it doesn't mean it's going to be heads the next time. a lot of those trends that people see for just two or three years they think that's what's going to happen. the growth slowdown for instance that everyone talks about in the middle of the summer, we've had that the last three years. it might have actually been the

distortion of the date that that we had with the great recession but i'm not so sure it's going to happen this year, either. >> no pull back at all, okay. it doesn't sound like you are worried about a pullback. we saw the page book yesterday. talk to deem emmanuel i thought it was surprising. i don't think i heard him talk about a short-term dislocation before we have the jobs report tomorrow. >> there are issues -- >> the obama care and the impact, no one really knows. and you're right, i think we will be getting some data on that. most of the experts i talk to don't i thiths going to be a significant event. and adp did look yesterday in terms of a friday. so, 150,000 to 200,000 jobs, i think our economy can move ahead there. >> sequester not an issue for you? >> at most a half a point on gdp. and very honestly, the more and more time i talk to, they say,

yeah, for the government to tighten its belt a little bit, i like that. you know, a lot of this is show. we don't do tours of the white house anymore. come on. you want to -- you know those people that want to get, you know, get those spending back, try to make it very, very visible, but if the government can't tighten just a, you know, a couple of percent, you know, that is not a good sign. >> but you think the government, by the way forget about the government, the fed, you think the fed is going to come tightening sooner or later. >> i think because the economy is better. second half of this year i think we're going to see 3% to 4% gdp growth. not first half, because we do have the sequester, and the impact on the taxes and all that. but i think as housing, picks up speed the second half of this year, and then i think the fed has to think about well, first ending the qe, and maybe -- >> but the second we hear that the punch bowl is getting taken away you're not telling me that the market is going to go down? >> it will go down -- that will be the pullback. but only a pullback.

>> so the pullback is coming. >> the pullback will be when the fed makes some noises about, you know, things are growing fast, maybe we're going to, you know, stop qe, or god forbid maybe raise interest rates. andrew, have you looked at history? do bull markets end when the fed starts raising interest rates? answer is no. >> is there an opportunity for an upside surprise in terms of what the government does? we've all decided basically that the government can't get their act together and it's paralyzed. there was a meeting just yesterday, the president had with some of the republicans, and there's some other meetings set up for next week, do you have any hope that somehow we do get a grand bargain and then as brian moynihan said in "the wall street journal" last week, we're really off to the races? >> oh, yeah, absolutely. i mean i think honestly the market thinks there's a very small percentage, so any news like we are coming to the, we are going to get some cuts in those long-term entitlements, we are going to avoid any debt ceiling debate.

wow, i mean, that's going to add another 500 points right to the market. and really reinforce the bulls, and that could be the melt-up of the economy. >> i just want to get chanos. you there? is jim listening? >> i've been listening. >> can you help with this perma bowl for a second? is there a question here that needs to be asked that may change our view on how bullish we should really be? maybe you are bullish. i heard you a little bit earlier. >> we don't have a view on the market, andrew. i think the market will go up over time. in that case i'm with the professor on his long-term view. in short-term squiggles and moves who knows. >> well certainly the short run it's very dangerous. i think what's really important, people ask me, well, how much better off are we than five years ago? we just, you know, picked up

th that. earnings are higher than october '07. dividends are higher than october '07. the quality of earnings, and this is important, is much higher than october '07. remember, october '0720% of the earnings were coming from the financial firms that were booking earnings on all those mortgages that they thought were so profitable. so i mean, and, and i think this is the most important thing, interest rates are so much lower than they were in october '07. i mean those four features, to me, are so supportive of the market. >> leon cooperman was on yesterday and he said he felt the market was fairly valued. not too high. not too low. ultimately, though, he said there still is a ways to go, what that i assume means is multiple expansion. >> i agree with that. >> how much more do we have to go? >> first of all i think we're very close in terms of average price earnings ratio, we're selling around 14 times this year's earnings. the long run average is around 125. but what's important is, when interest rates are low, the

long -- the average is higher. 18 or 19 price earnings ratio. so i think -- i agree with everyone that said is most of the gain over the next 12 months going to be earnings gain or is it going to be multiple expansion? i say multiple expansion. we can easily go 16, 17. >> okay. jeremy siegel is going to be sticking around. i'm going to send it back to you in the studio. >> andrew, thank you. jeremy, thank you, too. when we come back we're going to talk a little bit more about the dreamliner. is it going to fly again? we have an update on the faa investigation, right after this. plus check out the futures. they've given back some of the ground they had picked up a little earlier this morning. basically flat-line across the board. the patient, presented with

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safety regulators are reportedly close to approving a plan to allow boeing to begin flight tests of the 787 dreamliner to evaluate that fix for its volatile battery. the faa is expected to sign off on a certification plan that would allow boeing to carry out the flight test to determine if authorities can lift the ban that's been in place for seven weeks now. the faa said it would announce the plan when it was aproved. there's been no announcement on when test flights would take place. i saw lahood making some comments yesterday that he didn't think there was enough information yet to lift the ban. i guess you do the flight tests first and then see. >> jim, you have any thoughts on boeing? >> no. no thoughts on boeing. airbus. >> you fly on the dreamliner? >> sure. >> so would i. >> all right. if you have any comments or questions about anything you see

on "squawk" e-mail us at squawk@cnbc.com. you can follow us on twitter @squawkcnbc. rising prices at the pump and the market rally. and then we've heard from the bank of england. now the european central bank is ready to release its decision on interest rates. the decision and market reaction just ahead. [ indistinct shouti] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ sales event has begun. ♪ featuring the lexus gs

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welcome back to "squawk box." we're just seconds away from the weekly jobless claims number. international trade numbers for january, and fourth quarter productivity numbers. rick santelli and steve liesman are standing by at 7:30 here. does that come at 8:30 doesn't it? >> coming at 8:30, i believe. >> oh, that's good. we love that. and all i see is chanos. i don't see -- >> there you go. >> all right. >> about an hour away from -- at least i know what time it is.

is it 2013? >> i think so. >> you're chanos, right? >> you're no anchorman. you don't read anything that's just thrown up for you. i'm ron burgundy? >> if were in a different city maybe. but we're an hour away. we're two hours away if we're like in some other city. three hours away. but we -- here we are. three government economic reports are due in an hour. jobless claims, revised fourth quarter productivity and the january trade deficit. we were going to try to surprise you with santelli and liesman but now you know that they're going to be here at 8:30, so i guess i can't do that. we'll have all those numbers and market reactions. now, everybody out there is really excited. wow, liesman and santelli are going to be on at 8:30. the bank of england has left the key rate interest rate unchanged. also opted against more monetary stimulus. some analysts thought that maybe the bank would increase its

asset purchase program considering the state of the economy in the uk. the european central bank is expected to leave rates unchanged. we're going to hear about the latest decision at about 7 -- >> this is right. it is. 13 minutes. >> are we sure? >> 7:45. which might be 13 minutes from now. time warner is going to spin off its time inc. unit. the publisher of "time" and people the zeal is expected to be completed by year's end. time warner had been in talking about combining some of those magazines, as you recall. with meredith corporation. but, those talks broke down. meredith is the publisher of fitness, family circle, and better homes and gardens. >> we've been talking about stocks continuing to soar to new highs. oil prices holding steady around $90 a barrel on stronger macro data from china. ahead of that key ecb policy meeting a little later today. joining us is sean hyman who is

editor of money new's ultimate wealth report. and john from the cme. how are you feeling just about how the stock markets have been headed? are you feeling nervous? you feeling like things are going to keep pushing higher? >> it's a slow grind, becky. one of the bombs has been this lack of volume. retail america isn't quite back in to the equity market and there continues to be a high amount of cynicism, given how far we've come on gdp growth that's averaged about 1.5% to 2% the last couple of years. that having been said the path of least resistance is probably still going to be the upside. a little nervousness ahead of tomorrow's employment numbers. i'd be surprised to see s&ps back above 1550. look for a chop trade around 1540 in anticipation of a number as expected. >> john is right, there are still a lot of skepticism when it comes from retail investors. how do you think that works into all of this? >> i think there is a lot of

skepticism out there. but i still think oil ends up going higher, keeps making higher lows. it may have bottomed in june. made a higher low in november. i think we're going to make a higher low once again here in march. and especially in light of recent dollar strength, oil has held up fairly well. i think that the dollar is going to turn down very shortly. and when it does i believe oil gets its next pop up and we head to $100 a barrel and wti. >> your guest host is jim chanos. we've been talking off camera with him about what's happening. one of the things we brought up was this general idea that most people we talk to is that the trend continues to go higher. you said yourself you don't have a view on the market right now. if you had any real concerns, it would be around corporate profits and where they stand right now? >> one of the things that we would point out in terms of glass half empty, if you want me to argue that is corporate profit margins are at all-time highs and keep growing.

corporate profitses a percent of gdp relative to wages are all moving in one direction. and if you ever get -- >> this is like the bond market being ready to go down, too. the first time i heard the profit margins were at a high and can't get any high are it's at least a year. might even be two years that we heard profits can't get any better. >> four or five years ago. >> corporate profits can't get any better. >> they can. >> sooner or later -- >> we're in a once in a probably generation if not longer transition we talked about it off camera into the digital age. in the old days capital spending led to higher employment. you put up a factory and you hired people. now capital spending does not -- >> that's what they said, in the 19th century, remember and i wonder if it really is difficult. >> it's observational. it's not a -- >> but we want to be -- >> jim's not arguing.

>> what the industrial age didn't your ear in zero employment. >> there were dislocations for a long, long time. >> i wonder if this really is where the machines, you know, do take over. and there is no use -- >> yeah. well, i -- then should be bearish. if sky net shows up and want to sell stocks. >> you're working with me on the sky net thing. terminator. >> sure. >> someone in that chair. that's good. >> i got your reference before. >> you do. >> i don't smell eau de panther. >> i could get used to this. >> you look at corporate profits, because it has certainly driven market prices. >> i think jim's point is well made. but i would counter that by this, becky, first there's nearly $7 trillion sitting in u.s. savings accounts that are making maybe zero percent maybe negative 2% after you include inflation. likewise, too, i think that once the legislative process and the

sausage out of washington gets made and there's clarity on the legal and political front stocks could explode to the upside. bonds do not offer value. housing continues to recover at a slow and modest pace but lending in housing still remains challenged. stocks to the upside still makes sense if washington gets its act together. >> but you say as if it's a given if washington can get its act together. what have you seen lately that makes you think the two sides will get together and come up with some sort of long-term deal instead of this jolting from one decision to the next? >> small steps, becky for sure. but dinner last night at the white house between the president, 13 gop senators, seems to be a very small step in the right direction. likewise, it the 2014 political calendar comes closer, specifically with the math in the senate races i think something will probably get done. >> you mentioned the money on the sidelines. for 30 years i've heard there's tons of money on the sideline ready to come in. there's always money on the sidelines, always money in

savings accounts and money market funds that are there for liquidity purposes and that money never comes in. we've got to be a little careful with that argument. >> go ahead. >> i would say it's a trade of most pain, though, jim, because for the last 30 years or so investors have been rewarded by having at least some type of interest rate on their savings. here today, it's actually negative interest rate. however you calculate inflation, it's actually kind of losing money here so it becomes the trade of most pain and i think the risk of a beta chase by professional money managers is higher than it otherwise would be because of the slow interest rate environment. >> well, but rates have been low for the last ten years. some would probably make the argument a little bit more and the deleveraging that's taken place has seen more money than otherwise has gone into savings accounts. >> we'll have you soon to talk more about oil. we're out of time. thank you both for joining us. >> was there cameras when they walked out of the white house? >> they weren't at the white house.

>> oh, right. but there was no food on it i mean, there was -- we know there was not a food fight. >> i think it went well from the comments. ron johnson was there, one of the senators or several senators who were in the room and i think they made some comments that it was productive. >> they were productive. >> meanwhile, you know the one thing good about our job is the worst thing that can happen is if you're in the wrong part of the show and you're doing that. what happened? >> nothing. >> think if you're a doctor. >> you fell out of your chair once. >> yeah, i did that on purpose. but if you're a doctor, oh, no, the left kidney, ooh -- oh. or a guy designing a bridge. ooh, ooh -- man. things can happen. or you. i said short china. i said short! think if you -- here nothing can happen. no one has ever died, you know. >> right? >> although we did have the lights blow up on us one time and melted immediate laptop. >> if you read something that's not true and rick and liesman are not here. >> we do that every day and he

is survive. >> when we come back a deal-making expert who advised heinz and amr in their recent deals. we ask ken moleous what he thinks about the recent a&m activit activity. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time.

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welcome back, everybody. smithfield foods is among the stocks we're watching. they reported quarterly profit of 48 cents a share above the street's estimates of 50 cents. higher sales of packaged meats helped offset a drop in sales of fresh pork.

back over to andrew who is standing by in new york. you have a great guest with you right now. >> thank you, becky. there's been a flurry of deals that started off the year. we'll see if they are continuing. we're here with ken moelis of moelis & company the founder and dealmaker extraordinaire. you worked on heinz recently. you worked on amr recently and herbalife. there's been a sense that we're about to have a wave of transactions. true, not true? >> i'm a believer that it's a lot like the market, what jeremy's been talking about. i think we're going to have a long, gradual improvement in the a&m market. i don't see the boom or spike coming. i think over time we'll see it improve but very gradually and over a long period of time. >> when you think about this dell transaction in the news today, and you think about management buyouts, are they a good thing? are they a bad thing? we have leon cooperman on yesterday and he said this is insider trading at its best. >> well, you know, you're making

for dell you're trying to make a very general statement. for some there are good, for some there are bad. for some i've been involved with management buyouts, six, seven, eight were very good for shareholders to take the money off the table right before the downturn. i'm not on dell. so i don't know the specifics. but i think it just shows why this whole idea of giving truly an unconflicted, uncompromising adviser in the room on these things, these are very, very difficult transactions to come up with a price on. >> but when you look at, for example, now there's this go shop that's on this deal so they have hired evercore to find an alternative buyer for potentially a higher price. is that even possible? when you have a michael dell and a silver lake that are pretty much already committed to doing this this way? >> i think go shop's in these controlled transactions, controlled by somebody whose name is on the door, it's very, very difficult. i believe -- >> so it's a farce. a little bit of a farce?

>> i'll let you use your words, i would just say it would be very interesting, i'm thinking of this morning if ken moelis tried to buy moelis & company i would be surprised if somebody competed against me. it's a very difficult thing to come after. i don't think the go shop in general, i'm not going to speak to dell specifically since i don't know it, in general go shop provisions for transactions that are this large, this controlled, are not effective in price checking. >> when you see a carl icahn come out of nowhere and say look, actually, stay public, give us -- still lever the cop up but just do it in the public arena which is basically what he said this morning, does that make sense to you and do you think the public shareholders are willing to suffer through whatever the transition is. one of the arguments to take dell private is that it somehow can't be done in the public markets because the public can't deal with all of the -- that's going to happen. >> it doesn't have to be on line. michael dell could make a tender for 80%.

if you want to stay with the company, fine. if you want to give it to him, there's an alternative. i think some of these people say instead of all or nothing, give the owner a shot. >> you said is the public willing to stay in as if the public is unentity. there's millions of people making various threats around the world. i think this idea that you can decide what the public can put up with, is crazy. if you can't put up with it you're free to sell your share to jeremy. maybe he'll put up with it. so the interesting part is, again, i don't know if this -- i don't have the information to evaluate whether it's a good price or not. >> herbalife. you took them on or they took you on quite recently. we do have back in the studio jim chanos who originally shorted this company. jim, are you out of this company now? >> we -- we do not have a position right now. >> what is your sense in terms of what happens next in all of this? you have carl icahn, you have dan loeb, you have bill ackman. >> well, look, those are all, as

you said, i'm representing herbalife, and we pick up the newspaper every day and read what's going on amongst all those people, as well. look, the main thing for us is herbalife's a real company with real employees, generating, you know, something on the order of $700 million of cash flow. ebitda. and so what happens next is in some respects, they just keep running their company and making it better and better. the earnings were good. and i don't know how you answer the question when did you stop beating your wife. it's a tough question. you just have to -- >> that is the question. that's the question that's been put on the table by bill ackman and how do you answer that? and do the extent the ftc is involved can you give us any sense of where that investigation is going right now? >> i can't comment on it at all. i don't have the information on that. and can't comment on the ftc. but the, as you said, how do you answer that? you keep performing. and really, performance speaks for -- performance will speak. the company will speak for itself, i believe.

that's what has to happen. >> is there a proxy contest on the horizon for this company? >> i don't see one. we just settled two icahn directors on. bought a large stake in the company. the company's happy to have him on. and all good ideas are welcome. but, i don't see, unless you know something i don't know, andrew, there's nothing i know of. >> okay. ken moelis, thank you for joining us this morning. what time is your panel? >> i'm not on a panel today. i had dinner last night. >> part of the summit more broadly. ken moelis, appreciate it. back to the studio. >> all right, thank you. we're going to continue to talk here about what's working now for jim chanos. we're going to get some investment ideas and find out where he's putting his money to work right after the break. we're going to talk about dell. that is a big story in the news this morning. and chanos has a position in that, as well. we'll get to that when "squawk" comes right back. tomorrow on "squawk box," economic data that could move the markets.

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jim chanos continuing our conversation. we're going to talk dell and herbalife. you know what i think of you.

>> herbalife, isn't it? >> it's herbalife. it's herb greenberg -- anyway. you know what i think of you. you started, you were 20 years old. you figured out baldwin united which was a piano company that was going to take over the world with its annuities and it went to zero. did the same thing with enron. you have no position in herbalife. right? but you did have a position? >> we were short last year. >> why did you cover your shorts? >> we were short at a price. i mean, i'm not crazy for this multilevel marketing business. i think bill ackman is correct in his analysis, and that when your business is based, in effect, on selling an overpriced commodity to your customers, or your distributors, you ultimately have a flawed business down the road. and, you know, at 50 bucks this was trading at market multiples. no multilevel operating company -- >> if you can figure out enron you can certainly figure out whether this crap they sell which i don't even know what it

is. soy stuff? >> dietary supplements. >> does it have any value whatsoever to help anyone? >> no. >> no, basically. so you give -- >> and it probably says on the label, not shown to not be effective at doing anything probably. but it may not hurt you. >> and the bull case is well yes, but they're selling support. ie people go to the herbalife centers -- >> i could go to a gnc store and half the stuff on those shelves i could throw in the dumpster. >> you can buy weight watchers, too. is >> but you think it's kind of a -- >> i just think at the end of the day, if you're selling a bad product or an overpriced product in a competitive marketplace it's not anything you want to put a multiple on. >> why did you cover your short, though? >> the stock almost got cut in half. >> you are short dell. >> we are short dell. we covered our dell short in single digits last year and shorted it into the deal. >> and there are some compelling reasons to be short in your view. >> yeah, the business. >> all this is going on we're focusing as you say on

personalities the herbalife personalities, with this personalities. >> and not enough attention is paid to the business. >> and the business is not going well you say. >> no, dell, the business is not going well at all. >> in what way? >> the cash floe is plummeting. it dropped from 4.something billion dollars to 2.7 billion in the last fiscal year. and i think it's going to drop some more. >> what were you talking about with the ongoing business payable or receivable? >> a lot of people look at the cash, and i mean, problem with the dell model is, is that you get paid up front. and that's a great model when your business is growing. because more cash comes in, you know, before the payables. as your business shrinks it works the other way. although dell has a lot of cash, most of it offshore, which is a whole separate issue, there's tons of payables here. so the networking capital, which is what you should look at, not net cash, is only a few billion dollars. >> we've got the letter from carl icahn, this is the letter that carl icahn sent to the dell board after the deal that he owned a 6% stake david faber was reporting that yesterday he

breaks it down like this, he gets to a valuation of about 22.81 a share which is a 6r7% premium in the 13.65 per share price in that proposed transaction. he breaks it down this way, he says, you know, we value the pro forma stub at 13.81 using discounted methodology -- >> what's that methodology? >> he says it's based on a consensus of analyst forecasts. >> oh, okay. >> so then he says that going in they want a $9 a share -- >> the same analysts that were recommending it from 30 on down? >> it could be. that's why i want you to go through these numbers with me. in this letter he says he wants a $9 special dividend if this transaction doesn't happen and he'd like to see it from the following sources. 426 a share or 7.4 billion from available cash as proposed in that going private transaction. he wants $1.73 a share or about $3 billion from factoring existing commercial and consumer receivables as proposed in the transaction, and $4.26 a share or about $5.25 billion in new

debt that would be loaded onto that. is that a legitimate valuation? >> i would come at it from the other side of the telescope. not how much debt can you put on this thing. i guess bankers will lend. why any banker would lend on this deal to make a spread over libor is beyond me. but deal has negative tangible equity. and even if you add back plant equipment, it's still has roughly negative tangible or zero equity. so all of these assets, while they're somewhat unencumbered because of working capital, at the end of the day have liabilities against them. >> if you -- >> and so you have to worry about your suppliers. you have to worry about the real world as opposed to financial engineering. and this is a declining business. they sell pcs. over 70% of their revenue are pcs, notebooks, or pc-related peripherals. >> over 70%? >> over 70%. we estimate. and so, so, this is a pc business, and it's a pc business that's declining. and one of the things that

people don't realize is that notebook sales only peaked globally in the first quarter of 2012. this is just starting. >> jim's with us for the rest of the program. we'll have more from him and more from the wharton economic summit taking place in new york including johnson & johnson ceo alex gorsky in a rare television interview. stick around. revolutionizing an industry can be a tough act to follow,

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our special edition of "squawk box" continues with two big names from the wharton economic summit. johnson & johnson ceo alex gorsky, and legendary hedge fund manager michael steinhardt. >> and one more hour with the legendary short seller -- >> none of these assets can support the debt being incurred. >> guest host jim chanos on china, dell, herbalife and a lot more. >> plus breaking economic data, weekly jobless claims, international trade and productivity numbers hit the tape at 8:30 eastern. the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business

worldwide. i'm joe kernen along with becky quick in the 8:00 hour. of "squawk box." andrew ross sorkin is in new york city, right? are you okay? all right. at least we have andrew. we have andrew. >> jeremy siegel is -- >> the 8:00 hour. i heard that. >> we're just make sure we're all on the same page here. we're covering the wharton economic summit, and i'm excited. maybe we're going to have a -- are you a billionaire? >> would i even think about -- >> is jeremy siegel a billionaire? we're going to say we're both billionaires because we're going to have a billionaire brawl. so if you could use the b.s. word, we'd appreciate that. >> this is not midday, joe. this is early in the morning. >> we're going to have this billionaire brawl. at least one is close, i don't know about jeremy as an academic. >> he's also involved with -- never mind. >> might be -- >> right. billionaire brawl. that's close enough. >> he's nodding his head no.

he wishes he was a billionaire. he says he's not a billionaire. >> billionaire in training. he will be some day. with us, jim chanos is here -- >> on his way. >> you are first the morning headlines. >> first up the european central bank leaving its key interest rate unchanged at three quarters of a percent. the ecb president mario draghi's going to be holding a news conference at about 8:30 a.m. eastern time. we will be listening to updates from the inflation target. we'll bring you those updates as we get them. the bank of england also leaving rates unchanged as expected. the central bank kept its asset buying program at current levels and some forecasters had been expecting an increase. been watching the european equities at this hour and still some modest green arrows there. can you see right now, the cac in france is up by about 0.4%. u.s. equity futures this morning have been mixed. basically flat. dow futures barely indicated

higher. s&p futures barely indicated lower. we'll see where things get as we get closer to the opening bell. and dell responding to news that carl icahn has taken a stake in the company. this is news that david faber first reported yesterday. the pcmaker is now saying that it would welcome icahn to join a go shop process. michael dell's battle to take the company he founded private is getting more interesting by the day. yesterday faber reported that activist investor icahn has built a stake of around 100 million shares in the pcmaker and wants the company to conduct a leveraged recapitalization. faber is with us at the new york stock exchange this morning. david, man, this got even more interesting this morning with this release that dell put out after that news you reported yesterday. >> yeah, well, in fact we also have a letter from carl icahn in which he is detailing, becky, his plans for the company. something we hit on yesterday when we broke the story. that mr. icahn was in the shares and was favoring a leveraged recap. he wants $9 a share to be returned to shareholders, and he actually has a fairly structured

deal here that he is at least suggesting. also bringing up the prospect of a proxy fight, asking the company to consider combining its annual meeting and the vote on the deal itself so he could conceivably go into the manual meeting with a slight of directors favoring what he believes is the right way to go here. not a deal at 1365. that is an lbo that michael dell and silver lake would complete at 1365 but a significant dividend of $9 a share that would be paid through a number of different ways. $4.26 would come from 7.4 billion from available cash as proposed in the going private transaction. remember dell is bringing cash back from overseas. $1.73 or $3 billion he says would come from factory and existing commercial conceivables and then another $5.25 billion in new debt and carl says i'll give you the debt. icahn enterprises would provide a $2 billion bridge loan and i'll personally provide $3.25 billion bridge loan to dell.

each on commercially reasonable terms. so, he's got a proposal here. haven't seen the 13-d as i said is likely yesterday but icahn is in the fray in a big way, joining this voice with that of southeastern, a number of other significant shareholders here who oppose 1365 deal becky. but there are a lot of questions as to whether that's the right way to go. mr. chanos bringing up sal yent points here in terms of why a special committee would choose 13.65. would choose not to leverage up this company enormously. it is a computermaker. and would go with the deal in hand as opposed to taking a riskier proposition that all shareholders would potentially benefit in but also take on risk when you add up that much debt. >> faber, before the billionaire brawl with icahn i asked if you practiced your icahn and you hadn't then. now do you wish that you -- you got a letter there written by him that you could have read in his voice if you had --

>> let me say this. i did speak to him yesterday. he wouldn't say anything. >> did he say that -- >> carl and i have talked many, many, many, many times, similar kind of things -- >> did he call anyone moron -- >> no, no. >> no? >> we have a very cordial relationship. >> no, i know. but he usually calls ceos that are running companies that he thinks are undervalued -- >> i thought you said me. >> no. >> i said listen, carl i know you're in there. i'm not going to talk to you about this. i'm not going to talk to you. i'm just not going to talk to you about it. so while i hear you have maybe 95 million shares, are you counting my shares? counting the shares up there? listen, you want to count my money. >> -- you want to hear? >> then we talked about his money a little bit. >> he's got a lot. not the richest man in new york. he said i got 20 billion. >> mayor's richer. he agreed. the mayor is richer. and he's like, he doesn't even have to work. the mayor just keeps going up. i've got to come in every day.

>> jim's here, too you wanted to comment. >> i'm just puzzled by all these numbers. i'm looking at the balance sheet at the end of january, and you know, dell had positive working capital plus receivables and long-term investments of about $8 billion. they had long-term liabilities of $13 billion. so it's a negative number. before we get to the equity and that's your asset base is a negative $5 billion on which to finance this so i mean all of this -- and that's even before we're talking about the taxes, which if you take some of that cash in versus the working capital, there's taxes to pay the federal government, tat money is offshore. >> offshore. >> so i -- i'm a little puzzled here that people looking at the balance sheet and the cash flow statement of this company, we'll they're talking about go-shop and this guy coming in, that guy, i don't think they're looking at the numbers. >> they're going to have some more time to figure that out, jim, of course, because we've got quite a ways until the vote.

we're going to get another earnings report and see if things are continuing to deteriorate. a company's missed six quarters in a row. >> that's why we've shorted it, david, because i think it's an interesting sort of cheap put. >> right. and don't forget, michael dell rolled in at 3.36 a share. he was willing to value his shares at less than silver lake to get them to come up. so anybody expecting a huge pump, 30 cents a share for silver lake if they go up that much to try to get this deal done is -- >> by the way, david, as i read the deal, isn't it silver lake committed to put up to $1.4 billion. it's not $1.4 billion. it's up to 1st did.4 billion. i wonder what the provisions are on that? >> listen, you've got an awful lot of people who bought this stock above 13.65 or above the two dividend payments coming. you've had a huge change in the shareholder base. >> that's why i'm selling it. >> david, isn't this short-term at its worst when you think about this carl icahn transaction?

and do you believe that the other investors that actually want to block this deal would go along with carl icahn on this given the amount of leverage that he ultimately wants to put on this thing? >> i don't know. you know, listen, southeastern wants to put even more leverage on this thing, all right? and they own 8.4%. they were talking about a $12 special dividend. >> do they know what business this company is in? >> they've owned it all the way down, jim, at southeastern. >> i guess they know, then. >> yeah. >> what do we think the chances are -- >> go ahead, i'm sorry. >> i was going to say, what do we think the chances are that icahn actually becomes part of the go-shop process. you saw dell come out and say okay put up or shut up if you want to participate, participate. >> buy the company. >> do you think he actually tries to play this thing? >> no, i don't. yesterday he was asked to be part of the go-shop. which he hasn't yet. the players, none of them by the way don't read much into any of

that hp, lenovo or blackstone. blackstone is not going to jump the deal with michael dell in it. but no, i don't see him doing that, andrew. at this point, participate in the go-shop the way the special committee is asking him to. but he can. he can present that recap, put up his own money. you're right. >> the history of very, very large buyouts in the high tech business in the past five, six years has not been a good one, david, as you know. avaya, and freescale, these are generally been disasters. this is not a business that takes on a lot of leverage easily. >> and no it isn't. and let's not forget it's a computermaker. >> it is. >> that's -- >> it is. >> yeah. >> jim just to clarify your position you mentioned this in the last half hour. but you were short this stock last year. you covered at around $9? >> we have been short the whole pc space but when dell broke into single digits we covered our position. >> then you went short again. >> in 2013. yes.

this year. >> -- the deal? >> yes. >> david, thank you very much for joining us this morning. we're going to be watching today. you're going to have a lot more on this throughout the morning. andrew will be back with you in just a minute. jim chanos will be with us the rest of the program. >> andrew has another special guest from the wharton economic summit in new york. johnson & johnson ceo alex gorsky will join us next. and then at the bottom of the hour, we will talk to famed hedge fund manager michael steinhardt. and as we head to break, check out the "squawk box" market indicator. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody.

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welcome back to "squawk box" everyone. we've been watching the futures after the market closed at yet another high yesterday. today, can't figure out exactly which way it wants to go. we have null beurres coming up at 8:30. remember tomorrow is the big jobs report. that can certainly determine the market's future direction. . we've been watching everything that's been happening here. dow futures up by just four points. s&p futures and nasdaq slightly lower. we did give back some gains that we had seen earlier this morning. we'll keep an eye on that.

oil prices meantime are up about 34 cents. still hovering just above $90 a barrel. that's been a close one to be watching. there are some questions about what that means for the consumer. good news is prices at the pump have been coming back down. let's get back down to andrew in new york with another special guest. and and drew, we're going to be watching very closely. >> thank you, becky. we're here at the wharton economic summit and we have a rare interview with the ceo of johnson & johnson, alex gorsky. we haven't had the opportunity to interview you in awhile. thank you for coming in. >> thank you. it's great to be here. >> we were talking about this steve brill piece in "time" magazine when we saw zeke emmanuel. and in that piece there is an anecdote about how hospitals are charging for acetaminophen which is a pill that should cost a buck or less, probably the generic pill, charging people $10. when you think about the overall problem that we have in terms of health care costs today, how much is it a pharmaceutical problem in terms of the costs that your companies are putting

into the system, versus the hospitals, insurance companies and everybody else? because i thought this article changed my perceptions about a lot of that. >> right. well, andy, first of all, thanks for being here, jeremy good seeing you. i thank the wharton program for pulling together such a great group of leaders from around industry, academia and health care and government in general for this conference. but that's a complicated question. there's a lot in that that you're just ask being. and i think that, you know, when you strip it away, first of all it just shows the need for all of us to get together to talk about the health care system. because when you think about the aging population, when you think about demographics, increasing middle class, and even this conference, here to talk about the economy, it's hard not to talk about health care in the context of the economy. and the systemic issue of how we somehow figure out a way to provide high quality affordable health care in a sustainable way. it's going to be probably the biggest challenge we face as a

generation. >> zeke was arguing earlier this morning that we've already begun bending the curve and that actually we bent the curve so much we don't really need to have a discussion about eligibility and raising the age that people get into the system. do you think that's right? >> well, i think there's a couple aspects to that. in the short term, interestingly enough, we have seen the cost curve starting to bend a little bit. and at johnson & johnson because of the fact we're in pharmaceuticals, medical devices and touch so many different aspects of health care, over the last three years when we look at things such as surgical procedures, hospital admissions, for the first time in history, we saw the growth rate start to come down. in fact over the last several years, we've seen it be actually flat. now the cause of that, we're not exactly sure what it is. it could be high unemployment rates. it could be increasing copays with insurance. it could be people just not wanting to be out of the office for an extended period of time. but in number of ways we've seen some of the programs, some of the systems that have been put in place are, in fact, having that effect.

the only thing we have to watch out for are the unintended consequences. the long-term issues that we face. are those simply being delayed. when you look at things like demographics and the sheer volume of people and they say worldwide figures going from $600 million to 2 billion in this country along probably from 35 million to 72 billion over the next 20 or 30 years. that's clearly going to put increasing pressure on the system. >> there's some news that you're trying to get out of a couple businesses. some of this is in the public domain, some of it is probably in the category of rumor and speculation. trying to get out of the diagnostics device business. a little bit. and then separately, there's some rumors around the shopping that you might be shopping your women's health business. can you speak to both of those issues? >> i can only comment on the things that we've been public about. and a few weeks ago when we reviewed our full year 2012 and our fourth quarter results we talked about the clinical diagnostics one of our businesses and one of the things we've been taking a hard look at going forward is where can we innovate to truly make a difference in the health care

system? and we've got so many opportunities in our pharmaceutical group, our medical device group, and our consumer group that it's also important for us as an organization, as a enterprise, to really be disciplined about where we are and where we're not going to invest. and as we looked around the health care landscape and we looked at that particular business, for a number of different reasons, the market growth rates, our market positioning, the technology, what we feel we can really do for patients in the long-term, we feel that we need to look at some strategic options to see where that business, you know, may have its best potential going forward. >> jeremy, jump in here. >> yeah, well, you know, it's good to have you here. >> thank you. >> there are some favorable short-term trends and costs. but you know in the long-term, as you mentioned the demographics, when we look at those long-term budget deficit in the u.s., 80% is medicare, medicaid, medical costs, of the government. if we're looking towards that long run, what would you say would be some of the primary,

maybe not solutions, but actions that we could take? how do you feel about raising the age to qualify for medicare more on the voucher system, something like ryan. do you have a feeling for where we could go in the long run, get a hold of those costs? because those are the big ones? >> sure, jeremy, it's a great question. as i go around the world, whether it's here in the united states, obviously we have the fiscal issues, if it's in europe talking austerity measures or in developing markets this issue of health care is on everyone's mind. and again, how do you provide in the high quality sis tainable affordable way, and i think there's a few. there's no easy answer to this. i think it's all because it's going to involve tradeoffs, participation from all aspects of society. i think it first starts with where do we think the unmet medical need is really going to be? if you look at a lot of the data what it suggests are things like

cardiovascular disease. things like type ii diabetes. alzheimer's are going to be major cost drivers particularly in an aging population with the high incidence rate. very high costs associated with them. so we've got to figure out ways, how do we treat them? how do we cure them? so we're doing a lot of investment in those areas to better understand those diseases to make a difference. the second thing we need to think about is how do we apply some of this technology in different ways? so how do we make procedures simpler? how do we perhaps combine diagnostic with the pharmaceutical so we can increase effectiveness, reduce side effects. and i think it's going to take different types of parter inning, moving more towards an outcomes focus. >> do you think obama care, it could lead us to that outcome orientation? i mean, do you think that that's a structure that can get us to the goals that we need to go to? >> i think that there are aspects, clearly, of the

affordable care act that are in the best interests of health care. number one extending access, getting more people in the system, absolutely essential. taking down some of the prerequisite requirements. we think that's very good. we need to make sure in the long run, however, that we have a system that continues to reward innovation. we still haven't solved type ii diabetes or alzheimer's. it's going to require more innovation and frankly some of the other things i was talking about earlier. >> come on back. we'll continue this conversation. we've got to have you -- you're just right across -- you're our neighbor. >> literally. right down the road. >> hope to see you again soon. guys, back to you in the studio. >> thank you. >> thank you, alex. >> lots of economic data about to hit the tape. really. this time. weekly jobless claims. january international trade and fourth quarter productivity, all will hit the tape in about 6 1/2 minutes. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ]

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it has been a busy morning. but we still have more to come. breaking numbers on employment and trade. we're going to get the weekly jobless claims. pretty interesting because tomorrow we get the big jobs number from the government. ap adp yesterday was a little better than expected. >> -- you don't mean -- >> i mean important.

important number. the adp number was a big number. its higher than had been expected. that's why these weekly jobless claims are pretty important, too. >> becky thinks we're going to have a great number. >> that's not what i said. >> oh, you said important number. >> international trade numbers for january and fourth quarter productivity as well.

welcome back to "squawk box." a litany of data. let's start out with the trade balance for january. we're looking for about 42.6. our last look was slightly revised to 38.1. best since january of 2010. minus 44.4. fours are wild. so a little bit larger deficit than anticipated. fourth quarterfinal productivity dropped 1.9%. dropped. we're expecting a drop of about 1.5%. and unit labor costs, even with that productivity drop jumped about as much, not a whole lot more than expected. we're looking at about 4.4. came in 4.6. it made sense. jobless claims dropped 7,000 to 340,000. now originally last week was 344. it was upgraded by 3,000 to 347 so there's your drop.

we saw continuing claims hovering just a whisker under 3.10 million. and of course we all are very excited to see what mr. draghi's press conference said. anything nick? all right so we're still hovering just above 1.30 in the euro. the uk monetary policy committee bank of england did not expand any of the programs, you know, the qe programs, let's see what mario draghi says. i have to admit i thought maybe there could be a little surprise of an ease there. many in the pit think the framework is going to be built for such an ease. but you know, let's see what mr. draghi has to say. back to you guys. i just have to say, today's ghost host is one of the floor's favorites, a number guy. >> jeremy siegel? >> no, we like jeremy, too. >> i know. he's a numbers guy. i knew exactly who you were talking about, one of -- both of them are our favorites. thanks, rick, for more on the numbers -- >> let me interrupt you.

i love what he was talking about regard to dell. simple balance sheet guy which isn't simple to find anymore. going this is leaning toward the left side of zero on the number line. what would he have to say in two sentences or less of the accounting of the u.s. government. does he have any simple thoughts? >> it's a short. >> i thought i'd ask. >> the accounting -- you know, rick, what i feel. it's cash-based accounting. not accrual based accounting. the u.s. government, if we kept our books like that, we'd go to jail. >> that's all i wanted to know. you made my thursday. >> did you see druckenmiller when he was on? trying to figure out our future liabilities, somewhere between 80 and 210 trillion. >> my numbers would be lower than that. it's all about the assumptions. >> if j&j would cure alzheimer's diabetes and heart disease it would be a lot better. hopefully they'll have the innovation to do that under this underwrite. more government heavy system.

let's get to liesman. and you were -- you were excited about the most -- some people don't get quite as excited about some of these -- >> they don't have this job. i mean i like what i do. >> i was gasping at the claims number at 340. let me read you -- 368, 342, 366, 347, 340. so i -- we were talking like below this range of 350 is it time to start to take the claims numbers seriously, that this decline is a step shift we're looking for that. there's a lot of volatility in this weekly number so you want to be really careful. following the four week moving average it stepped down of 348 pfr the last four numbers we have, four of them -- three of them are in the 340 range. maybe the jobs market is doing, certainly what seems to be happening is that we're not having a firing that we normally have had during this expansion. and one of the things that's

interesting is yesterday the beige book for the second time in a row mentioned the affordable care act as something that's restraining hiring. and i think that's going to be something that the president's eventually going to have to deal with. that's something that's out there. if it's starting to come up or percolate up through the beige book anecdote to the fed president and coming out nationally that's something that's going to have to take seriously. >> andrew are you with us right now? andrew is probably not -- he's not? okay. but the other thing i want so is 200 -- 200 -- >> i think 200 is a number that the market wants, i think so. 180 -- >> tomorrow? >> 185 to 200 i think is the number the market's going to want. i think it's worth -- it's worth thinking that you have the 198 on this, now you've got the claims here, and so, it's starting to feel like maybe you have a step shift upward. not huge. not the numbers -- >> the weekly claims. that takes government into account, as well? because that's always like, you know, lately we've done well in the private sector and the

government hiring -- >> should take government into account. unless there's some weather related thing that's stopped people from getting to their -- or from filing their claims or for the government from processing them which is always possible. but i do have to say, i got three numbers in the 340 out of the last four, and i'm going to go listen right now to the trichet press conference -- >> draghi. >> to the draghi press conference because as rick said he was sort of thinking maybe there would be a surprise on interest rates. let me tell you the one thing we'll look for. inflation. if he brings down his inflation number and sharply there it is, may already be out. then that's going to be the thing that's going to signal the market that you may get a rate cut. i will caution that the ecb's overnight -- european overnight funds are down below where the u.s. is right now. so i'm not sure how much good cutting is going to do. it may be just symbolic. but a lot of people are saying it's time for the ecb -- >> you weren't watching -- >> did you see the show earlier? did you see zeke emmanuel on? the reason i ask is that andrew

broached the subject of the beige book and kind of a gentle way that you know, we've all assumed obama care would be good for jobs and job growth. did you see this -- >> didn't say it exactly. >> sort of did. did you see this crazy beige book report that said that possibly it could be hurting job growth. is that even possible? but just, and then zeke said absolutely not. long-term -- long-term the way it's going to work, it's going to be a boone for job creation. but you just even you are starting to -- >> i am fully in favor of any other system that we could expand our health care coverage. >> i understand that. >> in the near-term -- >> hurting small business -- >> 49 hours -- >> let the president go to businesses and say this is my goal, to cover everybody. now tell me how i can do it in a way that doesn't hurt job creation. that's the kind of back and forth between government and business that creates growth. >> the ecb is lowering its gdp projections. >> gdp but not inflation. >> not inflation yet but they do say that they now see the 2013 gdp in the range of down 0.9% to

down 0.1% before they were looking for down 0.9 to up 0.3 so basically taking growth off the table at this point. >> joe would tell me to do this on the web. but there's a huge difference in the relationship -- >> you know this sounds like -- >> i will say this and stop there's a huge difference between how the ecb and the fed look at the relationship of growth to inflation. the ecb -- >> all right -- >> looks at lower growth and does not see lower inflation -- >> you want to see more on this, you can find this at -- >> you're the one going to get in trouble for this. the corporate priority of the dotcom, joe, you're dissing it publicly. i am -- >> no i'm not. >> joe, you are. >> i'm saying that there's a time and place where you can really get in the weeds with this. >> it's a very important -- >> it is very important and that's why you have -- >> expansion online -- >> much time. >> no, no, no. >> is not necessarily -- you're

a really wonky guy. >> he is going to go listen in and hear -- >> i'll break in with some important stuff for dotcom. >> thank you very much, steve. rick, thank you. our guest host again is jim chanos. and jim, we've been talking about this all morning long, both on and off air, but in recent weeks we've seen what a lot of people have been dubbing the billionaire drawls when it comes to a stock like herbalife, when it comes to dell. you say that that really -- >> the smart guy syndrome. >> the smart guy syndrome. you say we're losing sight of the fundamentals. >> one of the things we teach our analysts, and that is when they look at a company they should be looking at fundamentals, and not the personalities involved. because it's way too easy, and it's easy to stop doing fundamental work where you say, oh, mr. xyz is in this. he's a smart guy, he's a billionaire. you know, i'm going to buy it. because, if he sees something good, who am i to argue. in fact, if you look at every great corporate disaster over the last 30 years there have been a handful of smart guys in

every single one of them. and it's the nature of the beast. we're not all right all the time. and so therefore, you know, just to stop doing your work because mr. so and so has taken a stake or mr. so and so is short, same thing don't base on where we're on a lot on our shorts. and so you've got to do your own work. and i sometimes think particularly in the media we get sensationalized by the personalities. and not looking at the fundamentals of the story. >> because it's fun to watch the person -- >> well, of course. and it's a lot easier than looking at balance sheets. >> right. but your point is don't watch the -- >> don't -- >> don't get sucked up by the fear. >> by the fact that there's a handful of smart people either long or short. >> also, so you got icahn. that's worth $20 billion. he's got to know everything. then when it comes down to it, he has had times in the past where he acts on instinct or feeling and i'm, if i had to say

who's done more homework than ackman or icahn, i remember motorola, he didn't like the management that was in, so he's going to go in and stir things up. he had no answers for motorola. one time with king pharmaceuticals he scuttled a deal because he was shaving when he heard us talking about that. do you have a feeling on that? >> again, we're focused on fundamentals. and it strikes me in this is particular case -- >> that maybe carl's not quite -- >> i'm not going to speak to carl icahn or anybody that -- >> not on camera? >> some of these people are corporate governance people and some of these people are dpdal people. >> corporate governance versus doing the homework -- >> and i think where you get in trouble is doing deals based on corporate governance. and -- >> it's a great -- it's a great point to do the work yourself, do the fundamentals, and don't let -- >> do something. >> be swayed by any of these big arguments. >> you're going to always find someone on the other side of the trade. >> all right. >> jim is our guest host. he's going to be with us for the

rest of the hour. when we come back we're going to continue to monitor ecb president mario draghi's news conference. steve said we have to watch what happens with inflation. they are leaving, the ecb is leaving their central 2013 cpi forecast unchanged at 1.6%. for 2014 they're changing the forecast to up 1.3% from up 1.4%. we'll tell you more about what that means and bring you other updates as we get them. up next another special guest from the wharton economic summit in new york. hedge fund legend michael steinhardt is going to join us.

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welcome back to "squawk box," everybody. the futures this morning, they've turned around again. they are indicated higher again. those dow futures up by about 1 points above fair value. s&p futures up by about 3. we have seen them maneuvering around 18, 20 points you're right it could be the claims number that came in that was a decent number around 340 there. also a quick look at shares of colgate-palmolive. they've announced a two for one stock split and a dividend hike. andrew has another special guest. >> hey, becky. thank you. we're at the wharton economic summit and we have michael steinhardt with us. the chairman of wisdom tree and

legendary investor. >> my pleasure. >> we have perma bowl over here on the economy. he told me the stock market is still going to the moon here. where are you? >> not quite the moon. >> he should be given credit, because he's been bullish when relatively few others were. certainly in last three, four or five months. and the fact that he's been bullish most of the time probably has some justification. markets mostly go up. so he's worth listening to. >> what about you? what do you think? >> well, i have an innate inclination toward bearishness. that's the way i am. each of our own personality and character composition, and mine is tended toward the bearish side. >> so i said to jeremy is there a pullback coming for an opportunity for people to jump in? a lot of investors missed this train ride and think maybe i missed the ride or maybe i need to wait for the train to stop

temporarily. you think it's going to stop then? >> i didn't say that. i'm not sure it's going to stop. but, i think that one must marvel at where the stock market is in relation to the rest of our world, in relation to the economics, in relation to the politics. it's not a glorious happy time. if you step back and you think about how people were thinking just before the election, and how they were thinking about obama, i mean, we've just walked through the raindrops. at least in terms of the stock market, because, you know, fiscal cliff, and debt ceiling, and all sorts of other issues which were seemingly plaguing the market, done. >> how much are you worried, therefore, about the fed, and the fed pulling the bunch ball away? we had stan druckenmiller on earlier this week. that's something he worries about, and also worries about just the amount of debt we put on ourselves. >> he should. but, the issue is to time that, to time when that's going to be

a problem. my sense is that bernanke is not so comfortable with things that he's going to pull the punch bowl in the immediate future. >> so what are you doing with your money? >> i keep it under the mattress, which is where i've had it for awhile. >> is that true? >> no. >> no, really, what are you doing? >> i have a number of stocks, which are mostly very specialized, itsy bitsy things that i have for all sorts of personal, i hope, financial reasons. but -- >> can you name some itsy bitsy things? >> they really are itsy bitsy. i own -- >> i'm -- or was chairman of a company called genie energy. >> okay. >> so have you ever heard of it? >> never. i apologize. >> so immediately forget the name. >> now one of the other things it's interesting is you're the chairman of wisdomtree and i was talking to jeremy earlier about passive funds, etfs versus

active and he said he's never been he's not in anything active at all. he has no active management of any sort. you're the chairman of wisdomtree but you believe in active management. >> historically that's what i was. i was an active manager. i prided myself on having an approach that was truly individual. that didn't relate to very much else or other managers, or it was, you know, the ultimate act of management. >> right. joe kernen's got a question for you. >> because we haven't seen michael in awhile. and we go way back to some of our conferences we used to do, michael. i remember one where you were really worried about, it was either sars or one of those things, and you were also worried about the bond market, i remember, under bush. and i was thinking, wow, he was really bearish back then. and then i remember, wow, you were right about the financial crisis did come, and now it's gone, and now we've doubled back to where we were. if jeremy is a perma bull, would you say you've been kind of a

perma bear for 10, 12 years but you were certainly right in obviously 2008 and 2009, but then did you underestimate how quickly we'd come back from that? >> well, let me comment first on the perma stuff. i managed money for 29 years. and my average exposure in my funds for those 29 years was between 35% and 35% net long. that's probably as bearish as anybody was in that period. but it's also, you get stars in heaven for certain things, and i think having lower risk is a virtue. so, so, i'm not sure i'm a perma bear. but i'm not -- >> but you're not that long right now. >> no, i'm not. >> michael's being -- michael's being very, very -- >> in the studio. >> very modest. he's one of the great short

sellers of all time. i can tell you that personally. >> great return but then sort of -- did seem out of -- you know, for a while, that wasn't the right approach. >> to make his returns that michael made being only 35% long tells you that his shorts were nothing short of spectacular, right? >> when did you become less active, michael? you were less active probably -- you got out of that game 15 years ago, didn't you? or how long ago? >> i stopped managing other people's money in 1995. >> okay, even longer. >> and i had -- yeah, i had an avowed interest. i used these words, in doing something ennobling, virtuous, all that sort of stuff and that's what i've tried to do you know, if you've been in the stock market all your life, you can't exactly forget it. >> right. >> so i haven't and i'm still peripherally involved but not like i was. >> michael, before i let you go, last time you were on "squawk", you had some critical comments

about warren buffett and his charitiable approach to things. this was probably two years ago. we just had him on earlier this week, he has been giving a lot more money away. >> well, i guess -- >> i was curious if you had a different -- if you've updated that view at all. >> i would say i have not updated that view. i mean, if you've reached the ripe old age of 80-something, maybe that's time to start giving away some of your money and this business that a lot of people have signed a pledge to give away half their money, i mean, the irony of it i mean what are they going to do with it? i mean, what's big deal about giving away half your money? what's your choice? so i don't have much of a different view. >> thought it was worth a try. michael steinhardt appreciate you being with us this morning. back to you in the studio. you were waiting for the next horseshoe to drop in europe's horse meat scandal, your wait is almost over. more -- i love this story.

more on that story next. ♪ [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪

welcome back to "squawk box." now we're up 22 points, which would put us at another fresh high. and an update on a story we have been glued to for the past several weeks. swedish furniture giant, ikea is now halting hot dog sales in its russian stores after finding some horse meat in locally produced sausages. the second such discovery in the past week. horse meat sales are legal in russia but it must be specified on the ingredient list. just can't -- >> transparency. >> you said horse meat would be an uptick? >> you know, in england, how could they tell? a mistake over there? >> that's right. you can see the whip marks on

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