yesterday. the index coming up just a little over a point short of that 1,563. meantime, if the dow can add another 110 points this week, it will post its biggest quarterly percentage gain in 3 1/2 years. we have a great show coming up this morning. among our newsmakers who are joining us this morning, we have us airways chairman and ceo doug parker. he's going to be our guest host in the next hour. he'll be on from 7:00 to 8:00 a.m. eastern time. and then we have aig's chief, bob benmosche. he's going to be joining us on set for an extended conversation starting at 8:00 a.m. plus, we have a number of top executives who will be joining us from the new york auto show, including bmw's north american president and ceo. we also have ford executive jim farley. he was rumored to be on the short list to replace alan mulally. now he is charged with turning around the lincoln brand. at 8:15 eastern, nissan ceo carlos ghosn. so, obviously a busy morning ahead. first, before we get to all of that, andrew has some of the morning's top headlines.

andrew? >> thank you, becky. that's a heck of a show. >> it is. >> got a lot of big names, so this should be fun. let's talk about the headlines this morning. cyprus is working on capital control measures today to prevent a run on the banks. banks there, they are due to reopen tomorrow. cypriots, though, have taken to the streets to protest the bailout deal with international lenders, and our own michelle caruso-cabrera remains in cyprus today. she'll join us with a live report in just a couple minutes. in u.s. corporate news, pay attention to boeing. boeing could face a new challenge as it tries to get the dreamliner back in the air. experts now say that the faa may shorten the permitted flying time of the aircraft on certain routes when it approves a revamped battery system. here's the problem, this could be a blow to boeing and its customers because the dreamliner was designed as a fuel-saving jet aimed at lowering costs on long-distance transocean journeys. of course, if it can't go as far, that poses a big problem. blackberry posts quarterly results tomorrow, and ahead of that report, though, short interest in the stock has hit

record levels, more than doubling over the course of last year. more than 30% of blackberry's free throat is now being currently shorted. the build-up of bearish bets could send the stock price surging if they deliver a positive surprise. blackberry's share price has more than doubled in the last six months. as promised, let's head to cyprus and check in with chief national correspondent, i love that title, michelle caruso-cabrera. michelle? >> reporter: hey there, andrew. thanks very much. four things that you need to know this morning. the government's still, number one, committed to reopening the banks tomorrow morning. two, we are waiting any moment now to hear what the capital controls will be. what will the withdrawal limits be? how much can you take out at one time, per week? how much can you move in and out of the country if you are a large business? the third piece of news is troublesome. all of the newspapers -- and we've called to try to verify this to the central bank -- are filled with stories about a war between the president of the country and the head of the central bank. this particular newspaper says that the president asked the

head of the central bank to resign, he refused, and the headline says "that's all we need," a battle between the government and the governor, because here they call him the governor of the central bank. there's one report that says there's an attorney general's investigation into the head of the central bank. you need stability in this country right now when it comes to monetary policy and the central bank governor's extremely business eye trying to get ready for tomorrow's open, so i'm sure this is a distraction. the other key piece of news is that they are prepping for the movement of money. there's one particular company here, g4s. we spent the morning with them. they've got a big building in cyprus, 750 employees, 35 armored vehicles inside the building, weaponry, the armored vehicles, also money that they're going to start moving around tomorrow as we expect there will be, if they do reopen, there will be large demands for withdrawal tomorrow if we see lines as many people expect. guys, one final thing i wanted to try out on you this morning is a new metaphor, understanding the bank structure, the capital structure of a bank.

i get all kinds of questions about why couldn't this happen in the united states? so, try me out on this one. the capital structure of a bank. think of it like an army on a field facing off against bad loans. first is the infantry. that would be the shareholders. next is the cavalry, the bondholders. and then finally become the uninsured depositors, and then finally the insured depositors. and what happened here in cyprus is that the infantry was teeny, teeny, teeny, teeny, like ten guys, whereas in the united states, we'd have 10,000 guys. and the junior bondholders and senior bondholders, another ten guys. in other words, there was almost nobody between those bad loans as they moved across the battlefield toward the uninsured depositors. so, in theory, in the united states, our battlestar galactica would come down, step down between the depositors and those bad loans long before it ever became a threat to depositors. the battlestar galactica, of course, being the fdic. does that make any sense?

>> i think it does. i'm still working through it. that's complicated, but i think it's really good, michelle. >> reporter: okay. >> explain it a little more. tell us -- walk through it one more time. >> reporter: so, if the capital structure of a bank is like an army, the very first line of defense is the stockholders, right? >> right. >> reporter: if a bank fails, stockholders go to zero. that's your infantry. next up, if the infantry gets wiped out come the bondholders. if they get wiped out, then it's the uninsured depositors. >> yep. >> reporter: in the united states, when you look at our banks, we have big infantries, we have big amounts of cavalry before you ever get to the uninsured depositors. here in cyprus, you had almost no infantry, almost no cavalry. >> right. >> reporter: it was almost all uninsured depositors, mom-and-pops, the militia. >> the uninsured depositors, the militia or just the citizens themselves. i like it. that's good. >> reporter: exactly, the undefended citizens. that's a better way to put it.

>> you call that guy the governor, right? that's very confusing. >> reporter: they call him the governor. >> yes, very confusing. does he have an eye patch? >> he's referring to "walking dead." >> yeah, because you call him the governor, you're talking about someone very specific, david morsi. anyway, if i hear governor, i do hear that. >> arg. >> what was that? >> that was michelle. >> arg. >> all right, michelle. >> they're thinking pirates. that's not it. >> well, the eye patch. we need the sound of the walkers or the biters. depends on who you are. in other news this morning, walmart is stepping up its online game. the retailer says it's going to start using stores to get internet orders to customers faster. the company plans to test having lockers hold goods ordered online in stores until shoppers pick them up. it's also doubling the number of stores that can fill orders placed online. this is all in an attempt to match what amazon has been able

to do with its distribution network. and in fact, you know, i think when bezos heard about walmart -- >> here we go. >> jeff, walmart's going to put lockers, put lockers in their store. >> i don't buy that. i don't get this at all. i don't get this at all. why would i bother ordering online if i've got to go pick it up at the store? toys "r" us does -- >> they have lockers all over the country. amazon's already doing this. in london they have lockers. >> why wouldn't you just have it delivered to your house, if i'm bothering to do the online shopping. drive it to my door. >> some people live in buildings, apartments without people who can pick it up or they can't be left at your house. >> wait a minute -- >> i'm just saying. >> there are people who live in apartments that don't have doormen? you've heard about people like that? >> i started saying it. >> i heard you, and then you knew how -- >> i knew what it was going to -- >> you knew what it was going to

sound like. >> you caught it first. that was good. >> i know you like a book. anyway -- >> the point is that, look, i lived for many, many years in an apartment -- >> why don't you just go to the store? >> who brings the packages up -- >> fedex or u.p.s., they would drop a little envelope, a little notice at my apartment and then i'd have to go -- >> they did this to me when i lived in brooklyn and you'd have to go to redhook to get it. >> those people also have to -- like, you open the door yourselves? >> some have to actually -- >> wouldn't it be easier just to go to the store? >> there's buttons inside, these things you go inside, and apparently you have to press them yourself. i don't know about that part. >> how much mileage have we gotten out of andy? with you heard that. walmart's coming after you, jeff. are you scared? >> not so much. >> no. he's not worried. >> not so scared. >> walmart's been around the entire time he started the company. walmart's been staring him in the face the entire time. >> he's been staring them in the

face. >> he certainly has. all right, why don't we take a look at the markets? because we did mention that this is the last trading week of the year. you've got two more sessions left. the futures are a little weaker this morning, down about 31 points, but this comes after some big gains yesterday. the dow was up by 111 points yesterday. the s&p is just within 1.38 points of its all-time closing high. so, again, we got almost there, didn't quite push through. >> i was listening to michelle, listening all about cyprus and i was thinking about the sequester and all about that. and yeah, but i was thinking at the same time, another record. >> yep, still here. >> another s&p, right there. every time, all this stuff we talk about, there's a total disconnect based on what's happhappg in the stock market. either we -- either the market sees through this and sees, you know, good times ahead, or you know, it's being overplayed, one or the other. i mean, we have to -- >> and it matters what happens if you touch that level, if you're actually able to push through it and -- >> well, we've been going, you know, we were at almost 15,000 now. >> yep. >> on the dow.

>> yesterday, oil prices were stronger, even though the dollar was stronger as well. it was higher because of good economic news, including the durable goods report that was better than expected. there's a little pullback today, down about 50 cents to $95.84. the ten-year note is yielding 1.88%, so a lower yield. the dollar yesterday was at another four-month high against the euro. you can see this morning the dollar is up against the euro again, $1.2810. and gold prices at this point are down just barely, down about $1.40, $1,594 an ounce. now time for "the global markets report." kelly evans is standing by. good morning. >> becky, good morning. they're ruining the appetite in the u.s. we saw yesterday. to joe's point, there is a disconnect when you look at the indexes at multiyear highs against the backdrop we see of ever weakening growth, but it is precisely because europe is so weak that more and more

investors we talk to globally continue to pour their money into the u.s. so it's to some extent reflecting the risk that's emerging in the global environment as much as ignoring it. so, anyway, here's a look at the red arrows we're seeing basically across the board. the ibex 35 in spain down 1.3%, the ftse mib down 1.4%. these are the indexes to watch. italy's government, which has been on the back burner while we're watching the cyprus issue, is not being formed. bersani, who got one of the stronger mandates today, said he wasn't going to be able to form a coalition, and it sounds like this points towards fresh elections in a couple months' time. the five-star movement led by beppe grillo may have a stronger turnout in terms of support in a couple months' time, so investors are jittery about the outlook in italy. and any second now, we're expected to get the results from italy's latest bond auction. take a look at the wall behind me to look at where the ten-year, the curb is before those results. we have backed up by about 10, almost 15 basis points.

4.73%. and in fact, the spanish ten-year, if we want to look at that, is above 5% this morning. so, we are seeing some risk showing up. cds are a little wider, too. spain 5.04%. so, you're seeing capital leaving the periphery and to the safe haven trades, gilts and bunds, below 1.3% for the ten-year german bund. speaking of headlines, the euro/dollar, it did fall below $1.28. here it is $1.2794, down 0.5%. the point this time around being not necessarily that we're seeing the last round of systemic flight out of the eurozone, more that we're just seeing weak economic growth going forward that there's no reason for investors to bid up the euro relative to the u.s. dollar. so, i guess if there's something americans can do here, it's to go spend their dollars in europe, maybe help support the economy. >> all right. kelly, tell me your favorite

part about paris, while i've got you here, just quickly. >> i have to say it was the souffle restaurant that gives you a souffle as an appetizer, main dish and dessert. >> i love the souffle. it's fantastic. >> food? >> it is. >> the city of lights? the city of romance? the city of -- >> city of fabulous food? >> well, it is good food, but i'm disappointed. >> look, the trouble was, i didn't even get to stay the entire weekend. >> yeah. >> i was hauled off to brussels. thank you, cyprus. but yes, i could recommend the souffle place. >> did you go to lu or any museums, notre dame, anything? >> yeah, i walked by. i said maybe next time when the line isn't so long. >> you've got to go back. but i'm sure you saw enough to want to go back. i'd like to go everyay, don't you? >> yeah. >> it's beautiful. >> can i just say, from a broader point of view, the trouble with some of these european capitals, guys, is that

you get the sense like you could go in five years, ten years time, the louvre will still be there, the eiffel tower is still going to be there. >> you've got to do it while you're there, though. >> i know. i know. but anyway, i might try to squeeze in still a trip to the mideast or something. >> you sound like a jaded new yorker. >> yeah, i know, i know. exactly. >> it's like all the people here who have never been to the statue of liberty. >> right. all right. we shouldn't mention the statue of liberty. icahn will probably want to buy it. carl icahn is making headlines in recent days for his interest in dell, but no one else is interested in the statue of liberty, carl, chill. >> is that him? >> yes. >> he's stepping out? you know, it's like blankfein does it, then he wants to do it. >> oh, man! >> bernanke did it first. >> that's pretty cool. he looks all right. this morning he is on the cover of the latest "forbes" magazine. >> he looks kind of --

>> steve number toni, "forbes" executive editor. >> looks good. >> he was in miami, away from new york for like a week. >> you have the story. >> he's like, i grew the beard and i like it. when he's not making deals and not the penthouse office, he's growing beards, like a moss on a rolling stone. he needs to be in here swashbuckling or he grows a beard. >> does he have to clear things with his wife or is he the man? is there any man who doesn't have to clear things with their wives? >> it's a tough hurdle. gail knows what's going on. >> you don't know the behind-the-scenes story on whether -- >> she must approve. if he has a beard, i'm sure she approves. >> what else do you have in there? tell us something we don't know, because he's a colorful guy. >> so much stuff going on. he's 77, the same age when people are kind of doing crossword puzzles to keep their mind sharp. >> yes. >> he's in every headline in the country right now. >> why? >> because he loves it. he's at the top of his game, he feels. he's richer than ever and he has all the chips and he's making

plays. >> here's my question, and i've never been able to understand this about him, okay? do you believe that it's a -- is it research that he does? like, when he looks at dell, does he actually do real work on this or does he say to himself, you know what, i'm going to make some trouble? i'm going to get in here. i actually don't know much about this particular situation, but i've seen situations like this before so i'm going to jump in here, see if i can get myself an extra 25 cents or a buck a share and i'm going to go home? because he has a big issue about whether he's a corporate rater or green-mailing or whether he's in there for a minute. he loves to say he's a long-term investor, but sometimes i look at the things he does and to the extent he becomes a long-term investor, it's almost by accident. >> he does both. me and my co-writer nathan went and talked to him. pick your targets, how do you like dell? he goes, listen, dell is in every headline in the world. i looked at it and thought if michael dell is buying it, putting all his money up, it must be really cheap.

so, that's a gut instinct. >> that's the gut, right. >> but then he does his homework. he has 20 analysts and lawyers that dig through, then he starts buying up quietly. he put $1 billion at stake. he's not just rolling the dice. he has a gut feeling, then he gets really analytical on the side of it. he's like a graham and dodd investor with a kick, like a warren buffett with a mean streak, if you will. >> what do you think of that? >> i don't know if warren buffett would like to be in the same sentence as carl icahn. >> he might. i don't know. >> it's interesting. >> making more money than warren is these days. >> carl is involved in every deal that comes along. we're shocked how many times we talk every day about deals he's somehow a player in. >> he's everywhere. >> how did he get into herbalife? what drove that? >> first of all, he's a money-maker, but the fact that he gets to twist the knife at -- >> i think he wants to twist the knife and if he happened to make money at the time, that's -- he's got enough money. it's $10 million he's mad about, what took ten years to finally --

>> he's not mad about the money he's mad about the victory lap. for him, it's losing a quarter. >> literally. >> and he said he thinks they planted stories in the chest and icahn goes, hey, i'm a big boy. i've been against the best of them and i've lost sometimes, but we've remained friends usually. this guy goes out and kind of toots his horn that i beat carl icahn. not much love lost. >> it's all his money. he's not investing money on behalf of anyone else. >> it's all his money. it's incredible. when you look at the dell deal, it's blackstone and carl c. icahn. it's not his firm, it's the man. he has $20 billion right now and he has no investors to worry about. >> why did he care about the investo investors? >> two things. first of all, he didn't want to bother with it. he didn't need the money anymore and he was making long-term plays and it wasn't fair for investors to, you know, he wasn't playing for the quarter, he was playing for the year. he was saying when he wants to buy a company 100%, it's really hard, there's a lot of conflicts

if you have limited partners involved, so now he's free, he's unleashed. he has no one to answer to. >> to answer to. >> yeah, exactly. >> we've said in the past, he got to a certain point, a couple of billion. do you know the number in what he fell to? it was hundreds of millions he came down to and then went back. >> yeah. his fund lost 35% in 2008, like everyone else. >> but his own personal net worth dropped to the hundreds of millions at one point. >> i don't think so. >> it never went down? he was on a steady climb? >> maybe going way back, i'm not sure about that, but he's doubled up. like in 2008, he was worth about $9 billion. now he's worth $20 billion, so he's doubled up in the past five years. >> he was down in the hundreds at some point in the late '90s. >> might have been, yeah. >> might have been the late '80s and built it all the way back up. incredible. >> he went from a green-mailer, then did the hedge fund stuff, charging 2.5% and 25%, so he was making really nice money from

investors. >> you call him a green-mailer? did you really call him a green-mailer? >> used to be. >> used to kind of, but remember in the movie "wall street," they call somebody a greenmailer. lawrence wildman, or i think wildman calls him a greenmailer. >> my question is, all this has been good for carl icahn. is it ultimately good for the market and for shareholders? >> i think it has been. >> has he been a force for good? >> he's made his share -- if you own the stock carl's been buying, you're making a lot of money. there's the carl icahn pop now. you look at how much money he's made, he's made $2 billion in cbr, about $1 billion in chesapeake, and that's public holding. he's making money. if you're a holder in chesapeake, you're making money with him. he hasn't really blown anything up. >> i remember blockbuster. >> you're a two green pilot -- >> i looked it up because we have young guys here. >> the reed hastings. >> remember that, you're a two-bit pirate and a

greenmailer. >> from "wall street"? >> yeah, larry wildman talking to gordon gekko in his house, i think. >> in the hamptons, isn't it? >> yeah. but he was married to shawn young, which, i mean, that didn't work out, i don't think. anyway, i think the reason -- he wouldn't do "forbes." i think he likes "forbes." >> he likes "forbes." he did "fortune" last time. >> he did? >> but we got him this time, with the beard. with the beard. >> in "wall street," they tried to do "forbes" and they didn't. they did "fortune" and bud fox says this is the bible. >> should have done that, that would have been better. >> he does something for each magazine. last time i think he had sunglasses on. >> i think that was 2007. >> is that for you? >> no, that was "fortune." >> sunglasses for "fortune," beard for "forbes." >> yeah, been growing the beard for six years waiting for us. >> you have to get him up in the morning. >> he'll never come in. >> you have to get a new picture of him. the picture you use is like 20 years old. >> we have to talk to him. if we update the picture, maybe he'll wake up with us.

>> looks like he's in his 50s in the picture. >> he looks good, though, yeah. >> he thinks he still looks like that. >> eyes are going. >> thanks. coming up, we'll hop behind the wheel and make a stop at the new york auto show. luxury is the name of the game with the ceo of bmw north america. stay tuned for that and a lot more. before you hit the road, here's your "traveler's check." a new survey done by the u.s. travel association, an industry trade group, reveals more than 40% of international biz travelers may avoid the states because of long lines and wait times at customs and border protection. but there may be a fix coming for a large chunk of u.s.-bound biz travelers. that's next. 3 [ male announcer ] you are a business pro. governor of getting it done. you know how to dance... with a deadline.

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back now with today's "traveler's check." you may soon be able to clear u.s. customs at uk airports. the uk government has now given its okay to install u.s. customs checkpoints at heathrow and other locations. no word yet on whether u.s. officials will approve the move. bmw's making a big bet on diesel, and a north american debut of the 3-series grand turismo, but is this enough to reignite sales in the united states? joining us from the new york

auto show is a first on cnbc interview with ludwig vilsick, the president and ceo of bmw north america. ludwig, thank you very much for being with us this morning. >> my pleasure. >> we know that you have been kind of focusing on the united states market. what do you think you're going to be doing with this new launch? >> well, we think that diesel is on its move. we see that one quarter of x-5, which is very successful in the united states, is a diesel. so, we think our major model should have a diesel engine, too, and that's what we're offering now. >> but bmw's sales have been lagging the industry for the year to date. how do you make sure you revitalize things and really boost sales here? >> well, we're quite happy with what we've sold so far and wait until the rest of the year is finished, and i think we'll do very well. >> when it comes to diesel, what makes you think americans are ready for it? because some people when they think diesel in the united

states think back to the '70s and some of the diesel cars of that era. what's different about the diesel cars of today? >> definitely those days are over. if you drive a diesel, if you look at europe, the majority of cars over there are diesel. as i said, the x-5 is very well accepted. and today it's also about fuel efficiency. fuel efficiency on the one end side with torque and the other end side are both delivered by diesel in a very convincing way. so, we do think that diesel does have a chance. it may take some time, but we might take the first step. >> in terms of taking time, do you think this is something americans will warm up to over the next year or two or do you think this is a longer-term project than that in terms of trying to make americans love diesel? >> well, obviously, it depends on the part of the united states you're looking at, but in general, it will take some time. but if you have a convincing offer, i think the americans go for it. >> which areas of the united states are more prone to buying a diesel engine?

>> texas, for example, is very strong on diesel. so, i think, as i said, torque is something that the americans really like, and that's what's being delivered by diesel, and the fuel economy is really convincing. looking more than 40, up to 45 miles per gallon, so that's really something that hasn't been heard of so far. >> are you going to be making some of these models at the u.s. plant in spartanburg? >> well, the x-5 is being produced in spartanburg and we'll gradually expand our model lineup with diesel, and that would also include models that we build in spartanburg, yes. >> i know you have some new products that you can unveil for us right now there today. can you show us some of those as well? >> sure. we have the 3-series gt. it's a perfect combination between the elegance of a sedan and the versatility of a wagon.

we've combined that both and that's how the 3-series gt was born. and again, we think it's a very convincing offer because it combines the best of both worlds. then we have the active turo, which is a very compact, modern design, very compact on the outside, very airy, versatile on the inside. you sit a little up higher. so, this is also for a new target group we're looking at. >> in terms of sitting up a little higher, that's something that appeals, is it to women? because i have to admit, having driven suvs in the past, i do have a little bit of a feeling that i would like to be up a little higher. >> well, in general, i wouldn't connect it to gender. i would generally say that people like to sit a little higher, and this also helps you with your space in the car. and by the way, this car will also features front-wheel drive

as well as all wheel drive, so we're making a big step there as well. >> ludwig, thank you very much for joining us today. we really appreciate your time and best of luck with these new vehicles. >> thank you. >> by the way, folks, a quick programming note for you. coming up at 6:50 is jim farley. he is the executive vice president of global marketing for ford. we're going to talk to him ahead of delivering the keynote speech at the auto show. and coming up, it's a major supplier to apple and dell, and now workers at foxconn are complaining that orders are slowing down. eunice unibrings us the story. and next, "squawk box" takes plight with us airways ceo doug parker. we're going to talk about his deal with american, consolidation in the industry and much more. i want to talk about are there any more flights left anywhere? >> that's what i want to hear about, too. >> a lot to talk about. >> a little more expensive.

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good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin, who is in denial. >> no, he's not. i actually side with him on this. >> you do? >> thank you. >> let's start with the markets. john brady joins us from the cme. we made the point, john, and kelly says, all right, you've got anything that happens in europe probably helps our markets here, but i was making the point, you know, we've still got stuff we worry about, like cyprus, the sequester, other things, and yet we still keep setting new highs. so, is the market looking through it or are these things hyped? >> i think the market is looking through it, joe. you know, the challenges of europe, whether they be banking, foreign exchange, whatever, will in the medium and longer term benefit the united states, both equity prices and the u.s. dollar. in the short-term, you're right, there will be bouts of volatili volatility.

here this morning we've seen a little bit. in the last 20 minutes or so, there was an italian bond auction, five and ten-years that went poorly and s&p's downtaked and treasury futures have up-ticked slightly. there will be short-term bouts of volatility, but medium and longer term, this is going to benefit the american investor and the american economy. >> if we're growing at 2% here and the sequester does at least 1%, takes off at least 1%, people have said maybe more, whatever. let's say if it's less than 1%, little over, isn't that slow growth? >> well, it is, but i would suggest to you this, joe, i think that the sequester and the slowdown brought about by fiscal and congressional dysfunctionality is built into the market. the bar is rather low. that is if we surprise to the up side, and consumer spending's been robust, capital investment's been robust. the surprise to the up side lends itself to higher equity valuations. >> thank you. keep it short. >> thanks, joe. >> something's happening, you may be right. we have an interesting story about foxconn this morning and apple in particular.

foxconn workers reporting a slowdown in orders, and cnbc's eunice yoon joins us now from beijing with a very interesting inside story of what's actually happening over there. eunice? >> reporter: hi, guys. well, foxconn reported massive profits in 2012, but the big question that a lot of people are having here is how is it going to look this year? what happens at foxconn is seen as a barometer for the tech industry. we heard orders at its schengen factory had slowed, so we headed to the notoriously secretive manufacturer to find out what's happening behind the heavily guarded gates. outside the factory, we spoke to a half dozen foxconn workers. only one would talk to us on camera, but they all said the same thing -- "there are no orders," he says, "generally, there's nothing to do." like many migrants at foxconn, the worker moved from the countryside to make big bucks in the big city. he, like the others we spoke to, said foxconn pays the best.

big clients like apple and dell mean steady orders. to the workers, that means a chance to work longer hours and get better pay, but not since february. the worker who inspects ipads normally rakes in $480 a month. now he says he'll be lucky to earn two-thirds that. sometimes, he says, they don't do much at all. "there's no overtime," he says. "a lot of people have left." foxconn employs over 1.5 million people in china, but these days, the workers tell us that the company isn't hiring as much as before. in a statement, foxconn says 97% of employees returned after the lunar new year holiday and adds this period has always been considered low season for the industry. but all the workers who have been at the factory for over three years said the slowdown is more pronounced this year. what the workers tell us could be a sign of weaker sales, something we'll know for certain this earnings season. but this worker may not stick around until then. "killing time is pointless," he

says. "i might as well check out other jobs." as for working conditions, all the workers who we spoke to -- and i know you guys might not believe this -- said that the working conditions are actually pretty good and foxconn is a decent place to work, at least by chinese standards. >> it's interesting that they pay more, you know -- you hear all the stories picked up in the media and your point that they pay more than anybody else is a really interesting one and gives us something to think about. you know, is there a chance that this is a situation where foxconn has gotten so much bad publicity that maybe it's not getting as many orders, that this is more indicative of foxconn, or do you think this is something indicative of what's happening with technology sales overall? >> reporter: well, it's difficult to say. i'm not so sure whether or not foxconn would be affected by the bad press because, certainly, a lot of their clients would want them to continue with that relationship. however, there are a lot of people who are talking about how foxconn, despite the bad press, actually does, as you say, pay

the best. we spoke to a lot of ngo workers who even admitted that foxconn does pay the best because it does pay actually $50 more than the minimum wage, which might not sound like a lot, but it actually is by chinese starpdz. >> eunice? >> reporter: another thing people are talking about is how because foxconn is associated with -- yep? i can hear you guys. >> no, sorry. i know we're on a delay. my question really is about whether this business could have moved to some other company, meaning is it possible that apple and dell are taking the business from foxconn and giving it to somebody else and we just don't know about it? >> reporter: it's possible at this stage, but it's really difficult to say, because apple does have a very longstanding relationship with foxconn. a lot of people complained about how foxconn has a mill trystic culture, but a lot of times, that is set by the top because apple has such demanding specs. so, there are very few suppliers who are really willing and able to try to do, you know, really

put together those very high-tech gadgets, so it's difficult to say at this point, but you know, hopefully, we'll be able to find out over the next couple months. >> all right. eunice, thank you very much. that's a great report and we really appreciate it. we will talk to you again soon. when we come back on "squawk," hiring our heroes. the story of u.s. companies making a push to recruit veterans of the military. that's right after this. and then later this morning, a rare and extended interview with aig ceo bob benmosche. he's going to join us on set at 8:00 eastern time. stay tuned. "squawk" will be right back.

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hiring our heroes. it's been one year since the chamber of commerce rolled out the goal of finding 500,000 veterans work by 2014. a massive veterans job fair in new york is set to kick off later this morning as part of that effort, and brian shactman is there with exclusive news and a special guest. brian, good morning. >> reporter: good morning, becky. this is one of those events that's an easy one for us to cover because we can always do more for our veterans, of course. more than 100 employers, they're expecting more than 1,000 job applicants here. and the piece of news we can share with you is the u.s. chamber of commerce foundation has told us they have eclipsed 100,000 hires in their goal to get to 500,000, and also, they have pledges for more than 100,000 more. so, although there's a long road to go, they have made an incredible amount of progress in this effort. and i just want to put it in perspective for people out there, because the u.s. unemployment rate, as you may well know, stands at 7.7%, but for post-9/11 veterans, it's

more than 10%. and if you look at those under the age of 25, it's almost 30%. if you want to know what wall street's participation here is, well, they're definitely responding. citi hired 800 vets last year. wells fargo, over 1,000. and jpmorgan has hired more than 5,000 since 2011. i want to bring in owen finnegan from capital one. they've tripled their hiring of vets. you're an ex-marine. >> yes. >> and you served in afghanistan. >> yes. >> reporter: and now you work for capital one. >> i do. >> reporter: so, tell me this. when you got back and got out of the marines, what was it like trying to figure out what to do with the rest of your life? >> well, when i got back from afghanistan, i had about five months left as a marine, and i was fairly concerned because it's not a great economy right now and it's been hard for veterans. so, i hopped on a jet and flew to a hiring our heroes fair from san diego to new york last year

in june, about a month after i got back from afghanistan. and i met a lot of very good people there who were very helpful to me. and capital one actively pursued me and i signed up with them and started working with them three weeks after i left the marine corps. >> reporter: right. so, you were an officer in the marines and it was obviously a great transition. you went to penn state and have a masters in engineering as well. some of the marines who worked under you or some of your colleagues, what's it been like for them to try, if they haven't had such direction or haven't had such active recruiting of them? >> well, it is difficult. not all things that the military do well translate directly to civilian work on paper. they do in practice, but sometimes it's hard to translate that through interviews or on a resume. >> reporter: were you surprised when you traveled across country to go to a job fair how easy it was to get in step and find a job? >> i was surprised at how helpful people were. i was surprised at how actively

people were looking to help. >> reporter: another thing people want -- you know, we obviously treat veterans differently. i think the lessons were learned from vietnam. can you tell people who haven't served and aren't veterans, how are you treated? >> i can't be happier. people are welcoming us back with open arms. in my case, at least, my experience. and people have been actively looking to help me, both adjust to the civilian life. within capital one, they created a military network to help military folks, and they encourage those people to become interviewers so they can better translate the skills the military folks have into the civilian sector. >> reporter: quickly, what do you do for capital one? >> i work in the small business space working on strategy as an operations analyst. >> reporter: works outside of d.c. owen finnegan, thank you so much for your service and thank you for your time. >> thank you. >> reporter: guys, we'll be here throughout the day. it starts at 8:00 a.m., but there's already a line outside and obviously it's a huge

endeavor. comcast universal already reached 1,000 and i'm sorry about the p.a. announcement in the back, but our parent company, i'm proud to say, is heavily involved in this as well. >> all right, brian, great. thanks. got a little feedback or audio. >> starting the program. >> started the program. that's what's happening. anyway, brian, thanks. should be good down there today. >> we'll get a lot more of that coverage throughout the day. coming up, he was rumored to be on the short list to replace alan mulally. now ford's jim farley is charged with turning around the lincoln brand. and if you've seen some of their ads -- what's the oldsmobile? it's not your father's lincoln anymore. he'll join us live. mixing metaphors. that was a gm product. anyway, he'll join us live from the new york auto show, next.

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lincoln continues to struggle to capture luxury buyers. the keynote speaker at the new york auto show this morning. and joining us in an interview is jim farley, executive vice president of global marketing sales. and sir, it's good to see you. i remember when alan took over, he quickly decided that ford was going to be the brand. and what an incredible job he did. and i wondered about that strategy, but i can't remember every one, but there's to more mercuries. he kept lincoln with the idea that once he got ford going, he was going to come back and do

lincoln. is that what's happening right now? are you still in progress? >> just starting with the lincoln journey. we have all new products, mkz hitting the showrooms is a first. our thinking is pretty clear on this one. we wanted to be laser focused on the ford brand. but as we've attracted a lot of upscale customers with our new products like fusion and explorer, obviously some of them have luxury cars in their garage too. and well, we want that opportunity to sell them a car, as well. >> you look at the success that gm had with cadillac, almost helped reignite with the high end, definitely helped gm with other cars. i don't think you have a problem with the navigator. i've got the navigator. it's nice to have something a little nicer than an expedition or explorer, something like that. but the real hard thing to do is convincing people that a lincoln sedan is like a beamer or a mercedes or a lexus or an accura

or something like that. sales are down 24% for lincoln while the industry was up 8%. so this is going to be, you know, this is going to be an uphill battle, right? >> well, actually, we're a lot more optimistic than that because the reason why our sales are down the last couple of months, we're just going through the transition to the new model, the mkz, and we haven't had a lot available in our dealerships. but this month, we're starting to really see the flow of the new mkz. we have a lot of orders and we're very optimistic in april we're going to see that sales growth you're talking about. >> was the town car just not a good -- i can't believe that a -- the idea of not having a town car for a black car service is rough. was that not a good business? >> it was a great business for us. town car's an iconic name. and all of us associate that with the black car business. we have an mkt town car now, we

just launched it. and for that service, the whole backseat is just for black car service and it's built just for that reason. >> jim, it's a great car -- >> i do. i do. and there's more room. it's better than the old town car. it is. >> it has, actually, a few things like the driver has a lockable storage, which is something that they'd asked for in the old town car we didn't have. we made a lot of changes and we're really expecting this to grow for us. >> all right. well, you know, the ads -- some of the new designs, looks like you went back to the drawing board from scratch. we wish you luck on that. and thanks for coming on today. we appreciate it. we'll talk to a lot of different people from the auto show. thanks, jim. >> thank you very much. >> is it a leg room thing with you? you're not entertaining specifically? >> no. leg room. >> all right. still to come on "squawk"

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chairman and ceo doug parker lands on the "squawk" set for an hour. from airline consolidation to the state of the global economy, we cover it all and find out if there are clear skies ahead. so, fasten your seat belts and make sure your tray's in the upright position as the second hour of "squawk box" gets ready

for takeoff. good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick. we've been watching the futures. yesterday was a big market day. you saw the dow up by over 111 points. this morning, dow futures are down by about 50 points, s&p are off by 5 1/2. after coming in less than a point and a half of the new all-time high yesterday, we'll see how things shake out as we get closer to the opening bell. as we mentioned, the index, the s&p, index coming up about 1.33 short of that all-time high. capitol hill is trying to prevent a run on the banks. the banks are due to reopen tomorrow. back here in the united states, blackberry is going to announce quarterly reports. short interest in the stock has hit record levels, more than

doubling over the course of the last year. reegt now, more than 30% of the free float is currently being shorted. it's an amazing number. the build up of bearish bets could send the stock price surging if the company delivers a positive surprise. of course, that is a big if. blackberry's share price has doubled over the last few months. we also have housing news just crossing the wires. in the latest week, the number of filings for mortgages rising 7.7%, purchases and refinancing seeing an increase. >> okay. we are taking flight this morning with news maker and our guest host of the hour u.s. airways and american announcing a merger last month to create the largest airline. he came on our show when he announced that. doug parker, is the incoming ceo of the new american airlines. good morning. >> good morning. >> we have a lot to talk about. we've got to talk about the deal, the airlines, and cell phone use on planes. we'll get there in a second.

>> right. >> we had bill miller on the show about a week ago. and most value investors have avoided airlines like the plague, warren buffett, you know has made comments about your industry. >> right. >> but he said he's turned, he's changed his mind. and in fact, he compared the airline business now given all the consolidation to the railroad business. almost there's almost so much track out there and there's more consolidation, less competition, which could be good for shareholders, potentially bad for customers. do you agree with that? >> i agree it's a good investment, i don't agree we're reducing competition to the point -- we don't have rails, for example, it's an intensely competitive business. with -- and what our merger will create, which is actually a third competitor of two larger airlines that exist in united and delta. this is about creating competition and making it.

>> now you can raise prices. the extent that shareholders are going to win in all this, you can make more money and charge more. >> we're going to take two airlines that can't attract the same customers that we can. >> we'll be able to connect to the network. other airlines can do that. it's about 1 billion in synergies. none of it really to fare increases. all of it being able to attract more customers or a higher mix. we'll be able to do a better job of attracting business travelers. so none of it's about fare increases. >> what can we expect about fair increases? they said i need to know how much are prices going to go up? going up about 8% broadly in the industry. i was doing number checking,

after continental merged with united, prices jump between 24% and 39%. which seemed like a lot to me. >> yeah, there's a lot of other noise going on there. oil prices, not the least of which, our highest cost component is oil. so as oil prices increase, prices need to increase to cover the cost. look, again, we're putting these two airlines together and not reducing supply whatsoever. therefore, what's going to happen to prices? i don't know. this merger's not going to have an impact. >> since deregulation. and i can remember when i was -- and i'm old. i remember when i was young that i thought airline prices were expensive. and they were in the 70s. there were $800 -- >> expensive to go anywhere. >> and for 30 years we watched as they came down. and i always thought that the airlines loss was the customer's win. i sort of thought it was a zero sum game so that now if you are going to be a profitable industry --

>> right. >> that your gain is going to be a customer's loss. and it seems to make sense. and you can argue different ways, it seems it has to be that way. but then i look at the way capitalism works in other industries and as you make money, you're able to innovate, able to do things. you need to offer the best service to get people to come to you because your competitors are also nimble and trying -- and you watch the way computers and digital stuff has come down to where i don't think of a phone bill. do i even pay a phone bill? computers come down, chips come down. can that happen? >> your phone bill is probably expensive, by the way. you don't -- >> is that why? that's right, i don't ever get a bill. >> people at nbc universal do that. >> can it be a win/win for customers and the industry? it's hard to believe. >> well, it is. we're providing more utility for customers. >> what does that mean? >> we have people flying either on american -- >> you won't take my bags.

do i have to pay to go to the restroom anymore? i'm going to be strapped in standing in the back with one bathroom waiting in the line with 40 people. >> yeah, don't do that. we're going to have three airlines now that can take you all over the globe between united, american and delta. that's the more utility. american can't do that as well today as they'd like. u.s. airways can't do as well as we'd like. put them together, we create a competitor that can do those things. >> if i wanted to fly with you in the past, i couldn't get to certain places, but now you can take me anywhere i want to go. >> precisely. exactly. we do well independently, we can do much better combined. it's not about increasing fares. being able to connecting more cities. a slightly smaller number we serve they don't. we can connect people online and while $1 billion in synergies is a big number in terms of profitability for an airline, this is a $40 billion airline,

it's 2.5% of our revenue. >> what's the chances that prices go down? i think about pepsi and coke and during certain periods, there have been true price wars, or is that over? because part of the bill miller argument is if there's not enough competition, that won't happen. >> well, you're only as smart as your dumbest competitor. >> and, again, what we have is an industry now that can serve more customers the way we want. three large global carriers, we have intense competition between the three of us. but also between the smaller airlines, southwest and jetblues, the allegiants. there may be fares -- >> the full service needs a little -- what are the -- do you need the 500-passenger flying

goose? whatever that is. do you need that? >> what's the logistical model? is hubs and wheels going 150 miles. you've got to service all the small towns in the country. >> again, something the low cost carriers don't. the new american does really well that we will do. we've got a fleet of, you know -- it's going to be like 1,500 airplanes. >> which small jet do you use? >> well, those are great. >> how much do you outsource to the offshoots that operate under your brand? >> at u.s. airways, there's about -- nearly 25%, 30% of our departures do that. so there's a good bit of that. our customers see one brand, they buy a ticket on u.s. airways. >> is it more profitable for you

not to be on the smaller markets where they're flying under your brand. but i get on the plane and first it says, you know -- >> operated by. >> u.s. air, operated by -- as a passenger, what am i supposed to think when that happens? >> you should think, i'm on the u.s. airways network. they're going to do everything u.s. airways can. >> are you implying get nervous when it's not? >> no, i think in terms of why don't they own the plane themselves? >> does it seem like there's been a lot of deaths -- take it back. >> please, please. you know i'm a very nervous flier. >> how long has it been? >> i fly all the time. >> last time you said that one happened, though? take it back. >> take it back. >> the safety record is -- it boggles the mind. isn't it 50,000 takeoffs and landings a day in this country? >> it's the safest means of travel in the world. >> these lights are much -- >> yeah. >> any minute.

>> burned my laptop one time. you laugh, but -- >> or an asteroid. >> we keep harping on this whole idea. and i understand businesses, the airline industry more than any other industry needed to find ways to make it a smarter business. i also know i fly a lot. and i have run into trouble with just about every airline recently. seems like it is tougher to, a, find a plane that's going to get me there in the time i want to get there. and happened over the last several years and then deal with people working behind the counters who are thrilled to be there too. it seems like -- it does seem like the industry has gotten tougher for travelers. >> well, i think it's going to get better. the reality is, there was too much capacity flying around in the airline networks five, six years ago. certainly for the demand that existed then. and you've seen some reduction in capacity, not material, but some reduction in capacity as we needed to. now we have carriers that are

profitable, which is what we need to have. >> because of that excess demand, we had to have some difficult things happen to our employees. those employees you're dealing with, you know, as professional as they are and all they care about is getting you safely to your destination, they've been through some tough times. so a profitable business is good for them too. and it's going to be good for service. it's going to result in improvement -- we have tremendous support for our merger for the employees of both airlines. we're going to take some of these synergies and use that to create a stronger airline, but also compensate people better. it'll help morale, it'll help with our service. and i think over time you're going to see as we get to three global carriers, more of the competition being based upon the inflight product which will be good for customers. >> anyone mad? pilots mad? they still mad? >> nobody's mad. >> nobody's mad. no labor -- >> we have no opposition to the merger. >> to the merger.

but late last year there were more maintenance reports being filed. the pilots were mad about something at american airlines. >> at american they were. happy with the merger. >> it's hard to keep everyone happy. >> it is hard. but, you know, what our employees really want is airline employees want like most employees, give me the tools to do my job and let me do it and give me a company that i know is going to be there for me. >> nothing worse than a mad flight attendant. >> we've got to go to commercial, but everyone asks me to ask you this question. can i actually not use my phone or kindle before the flight takes off? this is a serious ridiculous situation. do you keep your phone on?

honest. >> sometimes i've forgotten to turn it off, yes. >> and has the -- >> no. >> he doesn't leave it on on purpose. >> precisely, thank you. >> they're not ignoring the rules. >> the flight attendants have had to remind me at times. this is an faa issue, once the faa tells us it's not a safety issue, it'll go away. it's not for the airlines. >> like alec baldwin. >> you haven't done anything on top of a tray, have you? do you remember that? >> yes. >> do you think it's a safety issue? >> i'm not the expert on the safety issue. my understanding is that it's being relooked. and i think it should be relooked. >> is there a rationale for it. >> you'd have to ask the faa. >> you get the hotel guy on and say why don't i have free wi-fi porn in my room? you get this guy on -- >> every single person asks that question. >> everyone thinks it's the silliest. he has a view. >> look, i'm with you on this.

it's a difficult customer service issue. our flight attendants have to come. they're required to. >> just about any other issue. >> do you pay attention when they show you how to work the seat belts. i still watch that. but then to get it -- >> i pay attention when they do it themselves. i feel it's not. >> how about could you put on the life vest. do you know when to blow, when to pull, i have no idea how to do that. >> you'd figure it out if you had to. >> let's go nnot go there. all right. coming up, he's calling on the government to reduce taxes and regulatory burdens. the head of airlines for america joins us. our first interview with you? when? 1995. you were nothing. you were cfo of something. >> america west. >> 1995? >> wow. >> it was a great -- you said it was a great interview. funny, engaging. >> you were fantastic. >> thank you.

i don't know what happened. and then the next hour, he paid back uncle sam, we'll ask aig ceo bob benmosche about the insurance giant. first, as we head to break, u.s. equity futures indicated down. giving back some of yesterday's gains.

♪ your finances can't manage themselves, but that doesn't mean they won't try. bring all your finances together with the help of the one person who can, a certified financial planner professional. cfp -- let's make a plan.

welcome welcome back. making headlines. leaders of the so called brics group, the nation's talking about establishing a joint development bank and taking steps to trade their currencies more freely. the emerging countries are looking to counter the influence that developed countries now exert over the global economy. the nation's airlines are joining forces to lobby washington on a number of key industry issues. our next guest is leading the charge. nick calio is the ceo and president of the industry. >> thank you for having me. >> you are lobbying for reducing the regulatory burden, trying to reduce taxes. but one of the things you're fighting for is something i've been watching for a while, what i think is really important. in terms of trying to update the infrastructure for the airlines.

i wrote a column on this for fortune about a year or two ago. the airline infrastructure just in terms of how we track airplanes. how old is that system? >> it's a world war ii system, and it's ground based. planes have to be moved here and here and be picked up. doesn't allow planes to fly as close together as they could. you probably have gps in your car, we have gps on the planes. we're asking them to try to implement that system. but there are all sorts of impedimen impediments, environmental, the faa hasn't kept up. but it would be so good for passengers, mean far fewer delays. we lose about $31 billion in this country because of air traffic management delays. >> because you have to have two minutes between each airline takeoff and landing. >> and we have congested airline space. and if we could implement the gps systems, planes could fly much quicker, much faster, much more efficiently. passengers get there, passengers more comfortable, not left on the tarmac.

we lose $8 billion a year because of air traffic management delays. >> it struck me when one of the airline executives i spoke with told me, again, gps on my car is better system than we are using on the planes, which is a little out there. what's the cost? $50 billion, $60 billion to overhaul it? >> probably, but we've invested so much so far that we haven't kept up with the programs of the faa. in the last bill that passed the reauthorization, metrics were finally put in that will measure the faa's progress in implementing next gen and everybody's working very hard to try to get this done. and we're going on a one-off basis. the houston air base, the seattle air base, we need to quicken. >> what's been the hold-up at the federal level? >> multiple problems, environmental problems, impact statements. there are bureaucratic delays, to be honest. people talking about getting more equipment, new equipment.

and from our point of view, we don't want to get any more new equipment. it's simple, it can be done and done over time. airlines and passengers paid $19 billion. we've paid $100 billion in the last decade. more of that money can go to next gen if we want to be smart and business like. >> planes are going to fly closer together, right? not going to get picked up in the same way by the air traffic controllers. >> it will be safer. and i think keep it in context. you worry about flying. flying is safer than walking out your front door, literally. >> to the extent you save money because of this. does it get passed on to the customer? >> of course it does. look, we price the product to try to maximize revenues at all times. anything that reduces the cost structure of the industry will always result -- >> think of the delay when

someone misses a flight and it gets canceled and they've got to book a hotel. >> and all the fuel that's getting burned. >> and we were sitting out for a different reason. but out in colorado, eagle airport, which is cool, it's in the middle of the mountains. we were on the tarmac, we had to go back in to get fuel because we burned waiting and get deiced and all that. it's amazing. >> what does it cost you? let's say cancel a flight with 250 passengers onboard. and you've got to keep people overnight and this whole lot. >> yeah, i'm not sure i know the exact number. depends on where they're going. we're going to have to accommodate all those people at our cost, of course. they've paid for the ticket, we still have to get them there. and we've got to get a new crew in there. it's overall -- >> for the industry it's about $8 billion a year. it's one of the reasons we're calling for a national airline policy. i think, again, putting it in context, the price of an airline ticket has gone down 15% adjusted for inflation since

2000. and for years, you know, airlines in the united states were flying people places for less than it cost us to get them there. we can't continue that as a business model. and the other thing is your typical $300 round trip ticket, $61 goes to the federal government in taxes and fees. coming up, we'll talk to a portfolio strategist with ubs, where he's putting his money and we're going to talk to robert benmosche. [ penélope ] i found the best cafe in the world.

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still to come still to come this morning, we have a top money manager from ubs telling us what's working now. plus, much more from our guest host u.s. airways ceo doug parker. and at the top of the next hour, we have a special interview with aig ceo robert benmosche. hey son. have fun tonight. ♪ ♪ back against the wall ♪ ain't nothin to me ♪ ain't nothin to me [ crowd murmurs ] hey! ♪ [ howls ] ♪

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to welcome back welcome back to "squawk box" on this wednesday morning. among the stories that we're watching, prosecutors are now examining jpmorgan's actions from the bernie madoff fraud case. wanting to know if the government alerted the banks. they require to alert of suspicious transactions. jpmorgan was the main bank for two decades. we're also watching shares of cbs this morning, the company's agreed to buy half of the tv guide network. cbs and lionsgate will operate the cable network as a joint

venture. this morning, see how things are setting themselves up. we do have red arrows across the board. dow looks like it would open off about 60 points, s&p 500 off about 6 1/2 points and nasdaq off about 10 1/2 points. >> you didn't walk, did you? >> i didn't walk. i did not walk because i thought i was going to walk the steps, but i decided we were just over here. >> we can look forward -- >> more authoritative. >> you're willing to do that? >> with the little kick as i'm coming down the steps no less. >> another strong rally for stocks as the s&p 500 finished within a couple of points of the all-time closing high. but our next guest isn't necessarily buying into this bull run. the chief equity strategist at ubs investment research joins us with more. is that fair? >> it is fair. i mean, this run has been really unusual that the underlying fundamentals have not been, you know, have really not driven this.

it's all about the liquidity being pumped in every central bank and therefore you don't need earnings. >> do you remember? and you've been around a while. do you ever remember a rally where the fundamentals coincided with the rally rather than the market is supposed to discount the fundamentals nine months out. why can't we say it's happening now? >> you know, there's a lot of -- especially when i was talking to hedge fund guys. they're saying follow the money. if i look at, for example, '02 through '06, it was a period where the economy, you know, after the tech bubble burst, the economy, you know, came back pretty strongly and i do think that, actually, was a driver of the market. >> now, you're not defensive yet, right? >> right. >> you're okay talking about this. but you've got clients at ubs that are listening to you. how long have you been telling them not to be in the market? has it been a year already? >> no, we put out a market call for this year in mid-november. our expectation is really that we're in a mid single digits

kind of environment, and we're in a 2% economy with 4% earnings growth. >> you could be wrong. we could do 20 this year. >> you could do 20 or it could sell off. and ultimately, either the growth needs to show up or the market's going to have a harder time. what is interesting, though, is that the high beta, high, you know, growth kind of stocks which normally do really well on a 15% rally which is what we had since mid-november, they're not leading. leading the market, which is not a bullish sign. >> that's suspect, another thing you think is somewhat suspect. because the negatives are pretty well known, and they were known in the wall of worry theory and we've known about the negatives for years now. i don't know, china, the after effect of the de-leveraging from the financial crisis. all of those things have been front and center and the market has still continued to go up. there's nothing new about being concerned. >> no, the one thing which may be new on the positive side. right now, people saying, well,

tell me the thing we're going to trip on that's going to blow us up. and it's really hard to say, you know, it's the next budget debate issue. i think going back a year ago, we had the fiscal cliff and debt ceilings. a lot of folks are taking comfort in the fact there's no stumbling block in front of us. ultimately, will you get enough growth to propel the market? or this thing peters out? >> if you're going to stick to your single digit call for this year, we've gone over that. >> right. >> in your view between now and the end of the year, we'll be going down to get to single digits. are you saying investors should sell stocks right now? >> yeah, i think we'll be lower between now and the end of the year. i don't think we'll have -- >> are you a sell side guy? >> i am and i'm not allowed to say this, right? >> you should never say things like this.

you should say we may continue to go higher unless we go lower. i'm cautiously optimistic, but there's the potential for a 3% to 5% pullback. >> i need to work on that. >> you do. >> if you look at the pattern here, we saw what about three weeks ago when there was a buzz about is the fed going to start to pull liquidity out and the market really abruptly sold off for a few days until fed officials came out and said this isn't happening. >> only like a 1% drop. >> a 3% drop. >> whoa. >> if we think about -- a year, you know, this is not the three weeks. if toward the end of the year, if you have all of this money printing, you should get inflationary pressure. if you look at what happened in qe-1 and qe-2, central banks started to tighten up because they were concerned about local inflation. >> we've also heard when the fed

comes out, initially, oh, no, the fed's coming out. a year later, indication things were starting to, the economy's going to do okay on its own and goes higher. >> if the economy is really in a self-sustained recovery. and right now we're not. we need the fed and budget deficits to keep this economy moving at 10%. the fed can tighten and this should be fine. on the other hand, if you're not getting the positive growth out of this fed policy and get instead is a pick-up in inflation or commodity prices, that's a whole different thing. >> if i sell my stocks today, i only get 0% in my cd. what should i do with it? i'm out on the yield curve.

>> first of all, within the market, we're talking about the market -- >> there are things? >> there are. >> throughout the entire recovery, it's the best sector. >> rotate into some of those stocks. >> i like it. within the whole north american energy story, there's exciting areas. the guys who built out the pipelines and railroad, the pipelines aren't built out yet, i think there's exciting stories there. health care, there's going to be a huge amount of dislocation because of obama care and the areas like generics or those that benefit from, you know, increased volumes of health care. you can make a lot of money in the market even if the market is weak and sloppy. >> airlines, of course. >> absolutely.

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call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. welcome back to "squawk box," everybody. after a big day for the markets yesterday, you're going to see some red arrows this morning. in fact, the situation has gotten a little worse in terms of the declines. dow futures down by about 75 points below fair value, s&p futures down by about eight points after 1 1/3 points yesterday. we're talking airline m&a this morning, let's get insight

into the latest mergers from the man who helped orchestrate the terms of this deal. we're also going to look at his involvement with fannie mae, freddie mac, and the future of housing. jim milstein is chairman and ceo -- >> you could have come up with a more creative name. >> i could have. >> restructuring officer. just because cyprus is in the news at the moment, and you are the man on restructurings broadly. you watched this past week. did you watch in horror? did you watch in se the imf is doing the right thing? the ecb is doing the right thing? how do you look at this? >> i think this is a work in progress. it's the eurozone trying to inch its way toward a fiscal can union. here, joe was probably cheerleading on the sides with big bank creditors taking it on the chin. you know, i think it's going to be much more consequential, actually. >> is that the right model? the wrong model? >> i think it's the wrong model right now. i think the -- these -- the problem in europe, these banks

are too big to save. our banks might have been too big to fail, but we can save them, we had the fiscal fire power to do it. in europe, they don't. >> we've been waiting and waiting and waiting, and thinking the time will heal all wounds. >> banks are actually reflections of the economy, right. so if the economy is in a recession, bank assets are deteriorating in value, the solvency is deteriorating. >> are these zombie banks forever, then? >> i think, frankly, what they're now doing in terms of a restructuring of these banks, good bank, bad bank process, i think that if in europe as a whole, your seeing a deleveraging process, voluntarily trying to get ahead of the wave here. but when banks are deleveraging, they're actually contracting credit in the economy. >> the journal, this is a take that some people would have. god forbid, how dare a european bank rescue not involve taxpayers.

in a perfect world, it should never hit -- it should never hit taxpayers. you want it to always hit taxpayers? >> no, in a perfect world. but it's about credit formation. look what is going to happen in cyprus now. >> how do you not -- the moral hazard, that means nothing. >> so, joe -- play it out, play it out. so you let your banks fail. you freeze deposits, money supply contracts. the economy goes into a deep recession. >> don't think hard next time about having a bank set up that way. won't they? >> that's right. so, so you need to make the banking system more stable with more capital, with greater cushion against failure. >> we decided there was not enough money. if draghi calls you tomorrow -- >> the question is how do you get out of where you are in a way that does the least damage? i think looking back what the paulson treasury department and geithner treasury department did was make a smooth transition from a banking system that was

overleveraged and ill-liquid. i think the way these banks, even our banks, we made our banks bigger than they were before. as part of the rescue, right, we took the weak and merged them into the strong or relatively less weak. >> if you can't fail, can you succeed? is it fair? >> i grew up in the bankruptcy world. i believe in failure. i think it's an important -- i think it's an important part of capitalism. if you don't fail, you're not going to have risk taking. >> you said something that's a big fight in washington right now. this argument about whether too big to fail has been solved or not. we've made the banks bigger. >> no, i think we made the banks bigger. i think there's a real question whether title two can work, which is the orderly liquidation. you know, the problem with these banks is they're global in scope. and for one jurisdiction to try to resolve a big global bank is very, very difficult. because you're going to -- and you're seeing this in cyprus. it's a great example. cyprus, they're going to impose and have imposed capital

controls and a freezing of access to your bank account. but in london, their branches are actually still giving access to deposits. so unless you can do this on a worldwide basis, you can't really resolve these global banks. >> you don't fly to cyprus, do you? >> we do not fly to cyprus. >> can you imagine a place where the banking -- we try to be not too big to fail, how much bigger is the banking system than the economy, that's not a way to run a country, is it? >> i agree with you. we spent the last 20 years actually, you know, boosting up the financial sector. it's a much greater percent of the profits. it was a much greater percentage of the profits of the s&p. it's become an enormous source of wealth for many people in this region around the eco systems of the banks. but, in fact, the real economy has suffered, i think, as a result. and so i think it's -- >> although it's not a zero sum game. >> no, it's not a zero sum game. and banks are important to the

risk taking in the economy. >> is it a financial company? >> we're an advisory company. i wish i had more capital. >> let's talk airlines for a moment. you worked with this gentleman over here on this transaction, also a number of other airline bankruptcies over the years. >> i have. long time ago. >> we've had this running debate all morning about whether this is -- we think it's good for shareholders. we think it's good because there's more roots and things that are available to customers. >> yep. >> but we're still a little anxious about the prices. what about you? >> i'm not anxious about the prices at all. this is an industry that has seen -- since deregulation in '78 -- >> he's not worried about it. >> i don't worry about my phone bill. you're right, i haven't gotten one. >> seriously, guys. this is an industry that's seen wave after wave of new entrants who disrupt the pricing structure. it's going to happen again with all due respect. >> jim, that's actually an interesting point. we were talking earlier about whether this is like the train

track model, the railroads and only so much train track. do you believe that a competitor can come into -- and you may have a view on this too. do you believe a competitor in the upstart, the next virgin america or jetblue will come into the market tomorrow, still find slots at the airports and compete on price. >> of course they can. you can do -- go talk to your favorite entrepreneur out there. there are airplanes on the market anyone can acquire, you can fly anywhere you want to fly. the constraint is, you can't do it profitably because the business is so intensely exce l competitive. >> it's true. you're a former boss, right? >> yeah. >> yeah, he's a new entry. >> yes. >> i didn't know what you were talking about. the chairman of spirit is the old ceo of america west. >> before we let you go, can we talk housing finance? >> you got an hour? >> we'll have you come back as

the guest host next time. it's a good topic. where do you think we are? >> i think they're making progress. i think the congress on both sides of the hill is very interested in this issue. i think fannie and freddie right now have been at risk financially. and we're at risk at turning them into piggy banks for others. last year you saw the payroll tax extension. they put a tax extension on mortgages to pay for the payroll tax. that kind of precedent is a bad precedent for housing policy, tax policy, government policy. i think the hill is waking up and recognizing they've got to figure out what to do with these. wind them down or reorganize and privatize. >> you would do what? >> privatize them. i think the aig model is one where we can use here and actually get -- they still owe today about $130 billion. i think if we privatize them, we can get that money back. and so save the taxpayer. >> ten-year process. >> i think it's a two to three-year process.

>> can you ever get a 30-year fixed mortgage after that? >> yeah, i think you're going to -- what we've been talking to people on the hill about and the administration about is creating -- you're going to love this, joe, a new government agency guarantee. where the guarantee is paid for. just like fdic deposit insurance. >> yeah. >> like deposit insurance. exactly. independent agency with fire walls. >> who pays for it? in that case the banks pay for the fdic. consumers pay for this? >> people who get mortgages guaranteed. actually it's investors are paying for it. >> you say i'm going to like these things, i'm like the bad guy, but they're good things, it's good i like them. >> i think you will have trouble digesting this. >> come on back, we can continue this conversation. appreciate you being here. >> great. >> sounds like you watch the show, at least. coming up, oh, that's you. >> when we come back, we've got final thoughts from doug parker the u.s. airways ceo. at the top of the next hour, aig

ceo bob benmosche on the key to the company's bounceback since the height of the financial crisis. stick around. [ penélope ] i found the best cafe in the world. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is only made with fresh milk.

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welcome welcome back, everybody. let's get final thoughts from our guest host. doug parker who is u.s. airways chairman and ceo, also the incoming ceo it have new merged american airlines.

and we've talked about that lot of things this morning, but we haven't talked about sequestration and how that may impact travellers. have you seen anything yet? >> we haven't seen any impact yet. we hope not to see any impact. things like tower closings, we can deal with those and we're dealing with those well. we get concerned starting to hear about reductions in tsa agents. that would certainly have an impact. reduction in customs agents. that would have a big impact. anything that makes lines longer for our customers, we certainly don't want to see. but we haven't seen material changes as of yet. >> do you expect that's going to happen? or do you have anybody watching that? >> indeed, a bit of a concern that our industry gets painted as the poster child for these things and it's so high profile, it's an convenience that is so high profile that we're somewhat worried about it. we haven't seen it yet. >> is it okay to do the -- to do

the high-end stuff? to have a line where people that pay more get to go through it? a lot of places are doing that now. do you hesitate at all in terms of emphasizes, you know, the disparity, wealth disparity that people are so worried about? >> not wealth disparity, it's paying for a product you want. so those that are willing to pay for that service -- >> you asked it exactly how i would ask it. no, i'm joking. >> i kind of did, didn't it? i was kind of channeling -- but there are people i watch them walk right through the -- >> i just don't want you charging people for that because if you already are a frequent flier, it makes that piece of it less valuable, i would think. >> the frequent flier program? >> if there's an opportunity -- >> no to pay for a -- >> it doesn't make it less valuable, you're just in line with the same people. you still move through the line faster. >> sounds like the line might have got longer, though. >> real quickly, boeing's 787, american still has some on order, you still feel confident

about that? >> absolutely. this is one of the new issues. aircraft, what is great about our industry, safety is never compromised. boeing's doing the right things, airplane's going to be grounded. and i think they're coming back soon and our delivery's coming 2014. >> we hope you come back soon. >> that was sweet. >> i'm like an anchor god. thank you. but seriously -- >> this was a lot of fun. >> i'll be back. >> thank you. coming up, the ceo call continues this morning. aig ceo bob benmosche joining us. we've got carlos live from the new york auto show. the ceo of nissan. we've got a big show at 8:00 a.m.

it's not what you think. it's a phoenix with 4 wheels. it's a hawk with night vision goggles.

it's marching to the beat of a different drum. and where beauty meets brains. it's big ideas with smaller footprints. and knowing there's always more in the world to see. it's the all-new lincoln mkz. two two more ceos come to "squawk." our special guest for the next half hour is bob benmosche the ceo of the insurance giant aig. >> and we'll ask the ceo of nissan about the weak end in electric car sales. plus, you pick the best

performers in our "squawk" money madness series. today's match-up jpmorgan versus intel. the third hour of "squawk box" starts right now. ♪ welcome back. one more day, tomorrow. welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernan along with becky quick and andrew ross sorkin. aig ceo robert benmosche and carlos goen in just a minute. we're going to do a quick check on the markets, equity futures are getting back so far, at least, looks like they'll be down about 70 points, giving back 2/3 of what we gained yesterday. that's part of the problem right there.

all lower by between basically 1% or 2%. and let's get to becky who is somewhere for more of your headlines. >> it's a long journey all the way over here. folks, cyprus is working on capital control measures today to try to prevent a run on the bank. the banks are due to open tomorrow. taking to the streets to protest the deal with international lenders. and boeing could face a new challenge as it tries to get the dream liner back in the air. experts say the faa may shorten the permitted flying time of the aircraft on certain routes when it approves of a revamped battery system. if that's the case, that could be a blow to boeing and the customers. the dream liner was designed as a fuel saving jet aimed at lowering costs on transocean journeys. of course as we heard from doug parker says he's okay with all of this. this is business as usual. and what you would expect with a new airline. andrew, i'll send it back over to you. the world's largest

insurance organization american international group has now paid back the government for the bailout money it received during the financial crisis. and shed many of the problem business units. what does the new and improved aig do to recover and grow from here. joining us now onset, robert benmosche. i do believe you are one of the few ceos i would actually be happy to call an american hero. thank you on behalf of the taxpayers. other people will get upset from me saying that. i truly do believe all the flak you took along the way. all the flak you took along the way. >> i love that. and they had tiger and it said winning is everything. and when you do win, things are better. but you've shut up a lot of people by paying it back. i don't see much criticism on the front page of certain newspapers anymore, right? >> well, there's not criticism, but maybe we could learn from this and i don't think we have. i think when you have crisis, it

doesn't help to panic everybody. and that's what you had our government trying to panic people and attack people and vilify people. and that was my hardest job to get them to stop so people could come to work and pay back the country. when you think about it, america gave aig $182 billion and then they tried to poke their eyes out. >> you're talking about after the actual crisis. you're talking about the after effect of what happened. >> you give them the money and then you attack them and then you attack them and then you attack them. and i would have thought they would have said, hey, can i help you so you can pay us back? that's what you would have thought. so we tend to react the wrong way to crisis. >> i'm having a flashback to elijah cummins. he was on -- >> congressman. >> someone getting paid more than $200,000, and he was throwing fits about aig and he was going to go over every single expense at aig, he had

nothing better to do with a fine-toothed comb. i just had a flash back remembering that. >> i did too. at the start, aig had $2.65 trillion, trillion with a "t," of derivatives. and you had a group of really talented young people. remember, out of 44,000 trades, 121 or so went bad a out of 44,000. almost all of the people did their job and did it well. and these people were there unwinding those trades, they accepted a fraction of their previous pay. >> right. >> and then we vilify them. >> vilify in the esz pr. you think it's still going on? >> i do. >> what needs to happen to make it change? >> when it becomes necessary for people to realize that the banks

and financial institutions have to continue to create growth on economies. >> but you understand the frustration that comes from people on main street who don't know all the details, don't realize what was happening there and who are outraged that they feel like they are either losing their jobs as a result of the economic downturn they think was created by the banks and others along the way. and they yell at the politicians instead of trying to educate people on what really happened and what went wrong along the way. say, by the way, this is a new company that people are trying to clean up the mess. instead of having a logical argument, they try to play into that. >> that's, i think, called courage. and when you look at our troops and the things they've done throughout various periods of our history, they had courage. many o theem gave up their lives. our politicians only have to give up a little bit of noise at home. it's not that tough. nobody's shooting real bullets at them. and i think that's the issue that i have and they need to show a little bit more courage and leadership. we're not going to get there by

playing to the populist youth. >> i know it's not your business, but dodd/frank affects your business. do you think banks are too big to fail? do you think there are insurance companies too big to fail? >> i don't see the insurance companies in that category even aig today. the challenge for -- oh, gee, it shouldn't be regulated. no, i'm saying, you need a regulator to oversee us so we don't go back to doing things we shouldn't be doing. that's what you want regulators to do. we've had great state regulation. we've had good global regulation for each country with insurance. so the question becomes a holding company that's unregulated. how do you regulate the resources. aig, there's huge resources at the top of the company. you need somebody to regulate. you need to make sure somebody's making sure we have rules, and the rules make sure we don't sink the country or the financial system and that we live by the rules. and then you have to let

companies do what they have to do. i think the challenge for dodd/frank and quite frankly for banks. when you ask people to put money in your bank and you have government guarantee and that's what the fdic is. i don't care how you pay for it, it's the government guarantee, then the institution has to be limited to what it can do. insurance companies don't have government guaranteed deposits. so therefore, we have a little bit more freedom, but not much because you have each of the states we do business with controls the assets in that state. that's the deal we're dealing with today. >> i've got a personal question for you. you've succeeded at this job. clearly you paid everybody back. there's ads all over the country that say paid it back, taxpayers who are much happier about aig than ever before. why didn't you just retire? >> well, because i'm not done yet. >> how many times did you almost quit? >> oh, actually -- how many times did they say i was going to quit? >> you weren't going to? >> the beginning, first of all, if you go back to it.

what i said at one point was before i start, i don't want pay to be a political issue. pay has gotten overcooked here. pay was the problem, pay caused everything. it's incompetent management caused things, not pay. and so clearly i didn't want my pay to be a -- and coming in for a dollar, that set the tone that we should all do this for free and it's not a big issue. that's not true, competitive pay is something that makes sense for this country and any other capitalist society. when i started they said, you know what, we're going to get that pay resolved. and i said it had to be more than $10 million. why? only because i had to make a statement. not a question of the money, question of making the statement. when i came onboard, all of a sudden they couldn't resolve it and then all of a sudden, give us another day, another day. well, i started in august, it was 2 1/2 months later that they were trying to figure it out. and meanwhile in the press my pay appears, my pay appears.

it became about bob benmosche's pay rather than what we're going to do to pay back america. what i said in november was, you know what, if we can't resolve it with feinberg, then i'm going to announce the fact i want to roy retire in april, you can't keep poking people in the eye and scaring them about pay. i had five of our top people ready to resign because if they didn't resign in '09 by law, they would forfeited any severance if they got fired. people had lost a fortune in this company. we say there was no consequences to employees. of the top ten people who worked for me when i got there, they lost $168 million of pay they had not yet received. that was the pay part. they also lost all of their stock, all of the stock that hank had put aside for them, all of it was lost. they've lost their entire fortunes. and they had nothing to do with the problem. they'd been running their part

of the company extremely well. you have to have credibility to build back their money or they were struggling paying their mortgages. you don't want people in finance having financial difficulty. >> right. you just mentioned hank greenberg, force for good or force for evil? you dealt with this huge issue of he's going to pursue this lawsuit against the government. you decided not to. >> what's the question? >> i was going to answer. >> did you secretly want to join the lawsuit? >> no. i didn't. and what you have is hank has a fairly good argument. and he has some very good facts. and he's got some very bad e-mails from the government. and the question that you have to ask yourself is there any legal obligation for the government to treat aig fairly relative to goldman sachs, morgan stanley or ge? that's the question. is there any obligation -- >> you can say that now. ge, we don't care.

>> i know. that's your boss. >> we don't care. >> knock yourself out. >> what hank is going to basically say is that you treated us unfairly and you put us in a position, and therefore you took from the shareholders at the time. the shareholders test, money you had no right. >> are you gambling that he has -- he's going to lose in court. are you gambling it's bad business for you to be involved in that lawsuit? >> it's not a gamble. the fact is if the real damages go to the shareholders at the time, that would be roughly -- remember, 92% of the shareholders are shareholders from the u.s. treasury sell of stock. we have to represent all of the shareholders, but focus on who the base is today. we have looked at the case, we think that it's got a certain probability, which we've gone public in terms of our release of winning. the questions become real damages and what they would be and what we feel is that becoming embroiled in this lawsuit for the amount of money

that might come out at the end of the day, it is disruptive to rebuilding this business and our credibility. people want to continue to see -- remember, we were called chartists in our casualty business. we have 44,000 people in that business. we call ourselves aig. and all over the world, people are proud of it. to get involved in a uit that has very little value -- >> i think you made the right decision. do you worry about the risk they could come back and sue you -- >> they have already asked for hundreds of thousands, if not millions of documents. we're going to have to provide and we are. we're going to show the process. what the "new york times" did was unconscionable. they knew they were crying fire in a crowded theater to empty the theater in a hurry. they wanted to create this whole

thing about aig, get the public worked up again. and they knew that a court ordered us, ordered aig to respond to this lawsuit. that you couldn't sit and watch it anymore, we want you to make a decision. therefore aig was obligated to go through it very thoughtfully, carefully, understand the arguments, understand the case, that's why we had in the end, the federal reserve, the u.s. treasury, hank's lawyers and hank was present for the entire conversation to listen to the argument so we can make an informed decision. and it's a shame because everyone, even the evening news, every one of them got on and said can you imagine aig's going to sue the government? and no one ever said why would the company do that? and they would know, of course, they were ordered to. and that's the crime when it comes to this country and some of the publicity and the politicians. they took 48 hours for us to clear -- thank god it was cleared up in 48 hours. but we had to do that. and i think we've done it the

right way. we will be sued and i believe we will prevail in any lawsuit because we did it the right way. >> okay. i've got so much more i want to ask you. >> we've got a lot to talk about. >> they were telling us we had to go to break a lot in our ears. i wish you would have said, we're going to have to take a break. i wish you would have cut it off, you didn't, you let him go, it would have been so obvious. >> we had lunch together, we discussed that whole period in some of those pieces -- >> you limped back in here. >> we will continue this conversation with bob. thank you for being here this morning. we'll talk to him in a bit. still to come, carlos ghosn will join us from the new york auto show, growth in auto sales and the effect of the weakening yen on his company. departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz.

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nissan's nissan's making a big splash at the new york auto show, but comments on the yen and acceptance of electric cars are what is probably going to grab some headlines. joining us first or cnbc is carlos ghosn. good to see you. we had the ceo of bmw on, he's going wild with diesel. >> thank you, joe. >> yeah.

he's going wild with diesel. i had a diesel car once, i'm going to be a tough sell. electric seems like a good way to go. and that's what you're spearheading at nissan to some extent, right? >> it is. anyway, if it's not pure electric, it's electrification of the car industry is coming. between the zero emission electric car or kind of hybrids, you're going to see more of it and i'm sure this show is going to show a lot of car makers coming with their own versions. >> and if we don't do it, china's going to do it. and they're already doing it, right? are we too late already? >> we are, we are. as you know, we are today at the forefront of the zero emission electric cars. but statement, we're bringing a lot of hybrids because we are responding to what the market wants. everybody though we believe that electric cars are going to be a very important segment of this industry. >> carlos, as an evangelist for

electric cars, would you be long tessla? do you have concerns about their business model? >> no, not at all. they're doing great. they are particularly working into a certain level of the market. these are more expensive cars at the higher end of the market. you know, everybody bringing electric car in my opinion are doing good things because they are diversifying the offer and giving an opportunity for the consumer to see something different. we are more attacking the core market with, you know, middle range sedan and small-range sedan. and there is space for everybody in the electric cars. we consider they are pushing in the same direction of us. >> carlos, new york city question, i take taxis in new york city, occasionally when i'm not on the subway. and you guys are in a bit of a battle over -- you were given the contract to create the next generation taxi. what's happening? >> well, i think starting in 2013, october of 2013, all the

taxis in new york are going to change to nissan. a model that has been designed in collaboration with the city of new york. this was part of the competition between different car makers. we won this competition, we're very proud of it. and, in fact, we've done a car and designed a car following the specifications of the city. so this car, we're going to see it on the streets in october 2013. little by bilittle, the taxis a going to change to this call. all the taxis in new york will be nissans. a lot of them will be normal gasoline engine, but also electric versions of the taxi coming. >> carlos, you said 100 yen sounds good to you. you even called that neutral. you think that's where we're headed? >> i think we are heading there. and i think we are still in what i call a handicap territory for japanese companies with the yen around 94, 95 yen to the dollar, 100 yen is a neutral position. and let's not forget that before

the whole crisis started in 2008, we were more around is 10, which is an historic level of exchange rate between the yen and the dollar. i'm very glad that finally the japanese government is putting its act together and trying to bring back the yen to neutral territories. >> if there was a handicap at 94, what was it at 77? >> well, it was a nightmare, obviously. it mean, it was all japanese companies face uphill struggle. in fact, it forced us to localize operation from japan to outside -- to outside japan. little by little things are normalizing. >> you've got a path finder that's a hybrid? >> we will have it -- yeah, behind me, we have a path finder which is a hybrid. in fact, we've done it in order to appeal for people who are particularly attentive to fuel consumption because this version

is 24% more fuel efficient than the normal path finder. 26 miles per gallon, which is very good for this segment of the market. >> all right, carlos, good luck, thank you, thanks for coming on today. appreciate it. >> thank you, joe. >> we'll see you later. and a quick programming note. coming up on "squawk on the street," jim lentz, president of toyota usa. >> let's get back to our special guest, aig's ceo. robert, you started -- it's coming up on four years ago now since you've been back at the company. how much of your time is spent trying to clean up everything that happened? and how much of it is focusing on the actual business as usual? normal business insurance? >> well, i think probably when you think about what happened almost nothing. but there's no such thing as normal, and we are focusing on rebuilding the foundation of the company. and our theme is we want to make sure aig becomes a great company

again. and then we'll worry about whether we're a great stock. let's get the company right. so we're investing billions of dollars into our technology infrastructure. we're working on huge amounts of big data. looking at ways of studying the claims. we have a huge claims history here at aig. and we're studying it in ways to give us more data modelling capability for the future. we're going to be much more scientific. much more data based. still have our strong, intuitivety underwriting capability. we have outstanding underwriters within our company. but we're going to give them better tools and better data. that takes huge investments. we've gone from 28 major data centers down to two. >> i've always wanted to ask you this. and going back, you know, we know what happened with the previous regime with the government, you had your own issues with the government, but at local government, eliot spitzer and hank greenberg. do you think that unit in connecticut would've gotten to the point where it was if hank had been still ceo with his risk

management? >> i think that if hank were still there during that period of time, you would not seen an fp do what it did. you would not see the lending program get out of control. he would've realized that part of aig was selling mortgages and the other part was insuring mortgages and buying mortgages and he would've -- >> aig was partly linchpined and allowed all the rating agencies to keep with the aaas. on piers morgan, i blamed the financial crisis on eliot spitzer in a tongue in cheek way. and piers morgan, you know, they cut the entire part. i think he was getting make-up because he still a show on cnn at that point. they cut that out, but i said let's blame the whole thing -- if you connect the dots. that's overstating it. >> it's overstating it. but i believe if hank were there, if we look at our sec lending program, went from $60 billion to $80 billion after he left. a lot of that was subprime and sec lending.

you can see the patterns of what was going on. >> was there good what spitzer did? was that offset by removing hank greenberg? >> i think that's too simple to describe it. when you attack somebody for what he did and look at people doing things in accounting and other activities that one does in a company, you have to look at the size relative to what's going on. but as maria would say and very aggressively and eloquently, he's never been brought to trial of anything's done wrong. and so i feel as bad for that young guy that was rested by rudy on the floor of the new york stock exchange, taken out in handcuffs and two years later, he's innocent. >> it brings up the larger problem, how safe should we feel with our regulations and regulators if we're only a bad ceo away from this happening again.

if it's all in the power of one person and whether or not that man or woman can do the job. >> it's why i believe that it's in aig's best interests to be regulated by the federal reserve. we have an outstanding team from the federal reserve now at aig. they're digging through everything we have, checking our policies, checking our procedures. >> banks were regulated by the federal reserve. >> pardon? >> the banks were regulated by the federal reserve and didn't catch some of those things. >> they weren't aggressive enough. and i think that -- i say to my people, look, everyone when the crisis came said where are the regulators? where were they? and they made a big to do. it's their careers. and they've decided to make sure you never question their ability ever again. and they are approaching it in a very aggressive way. you're hearing complaints from financial institutions. that's a good sign. when they complain that the stress test is confusing and all this other stuff. it's all great, what it says the

regulators are pinching and that's what we've asked for and we're going to get them. >> we've got to let you go. but just give us a quick health update. how are you feeling? >> i'm feeling terrific. so far, so good. >> how long are you going to stay at aig? >> the end of next year and the board will decide if that's enough and i'll be over 70 years old by then. i'm not sure how old you want to have a guy hanging around. >> this was a great morning for us. so thank you. >> thank you. pleasure. coming up. stocks on the move. what to watch ahead of the opening bell. and jpmorgan versus intel. which stock will perform better between now and the end of the year? "squawk" money madness continues. right now, though, as we head to a break, take a look at u.s. equity futures. we have some red arrows ahead of the markets this morning. [ penélope ] i found the best cafe in the world.

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welcome back, welcome back, everybody. in our headlines this morning, cyprus is preparing to reopen the banks tomorrow. today a british security firm is sending teams out with police protection to stock atms. the world's largest security firm is also preparing guards for when the banks open their doors. an official says demand is greater than we can provide. also, during the cold war, we tracked russian stockpiles of things like weapons and grain. now russia is stockpiling something much colder, snow. the games in 2014 in russia, the olympics organizing committee

constructed a huge snow storage facility at one of the ski resorts that will host events in the next year's winter games. they plan to conserve 450,000 cubic meters of snow to try and ensure the unpredictable weather conditions don't interfere with olympic events. in other words, joe, global warming. >> i know. i know. which is evidence this -- by all this cold weather and all this snow. all the changes in the climate, it's like every year's different than the last, it's so variable. it's so weird. let's get a check on the markets. rick santelli from the cme in chicago. steve liesman is onset here at cnbc's global headquarters as you can see from -- >> can you see that? >> you always sit there so that it looks like -- >> at cnbc global headquarters. >> i've got to ask him, though, the games in russia, i skipped over the name of the city. >> sochi. i went there in 1993 when they opened the first radisson

foreign hotel. we flew down there for new year's eve. >> that's where they opened your reeducation camp. >> and we took a helicopter ride into the caucuses in the day after new year's and the guy said that the law prohibited from going more than 500 feet close to the mountains, but i will take you closer, he said. and we said no, that's okay. we all kissed the ground when we landed. >> now we know. >> down in sochi. that was not what i came to talk about. >> no, i needed your expertise, though. >> you have a hit, don't you? >> i was just going to talk briefly about the debate yesterday which was reignited later in the morning when we got that plunge in consumer confidence numbers and whether or not that means retail sales is going to roll over. and there's a nice, interesting debate among economists, the keynesians and the nonkeynesians of what the effect of the payroll tax. first this graphic and i'm sure rick's going to want to comment on this in a minute or so. you take a look at what's

happened to consumer confidence. it's rolled over and you can see that line there going down and the question becomes will retail sales follow. and we did ask about this question in our all america survey, didn't present it yesterday. the results not conclusive. but 60% of the public says they're aware of the payroll tax hike. 40% reduce their spending or savings for some reason, but only 8% because of the payroll tax hike, 34% for other reasons, 5% for both, and 48% did not reduce their savings. here's the debate. ian shepardson saying the surveys don't ask people directly why they're miserable. the payroll tax increase implemented has drained substantial cash flow from consumers as has february's surge on gasoline prices. but then comes drew madison and maury harris with an antikeynesian idea. the temporary 2 percentage point cut was not a consumption booster. perceived permanent income instead of just temporary disposable income changes. so the bottom line there, what

those guys are saying, if it wasn't permanent, it probably didn't become part of spending. so you won't have a big impact. so far, the nonkeynesians have been right. and i put steven stanley in that score right there. the other guys are saying what is the word from -- was it eliza? it's whether or not the consumer rolls over with confidence. >> hmm. >> joe? >> no -- rick, are you -- i don't know, rick. do i need to ask you a question to get you started? or do you have -- you've never been to russia, have you? >> no. no, no. closest i've been to russia washes up on our shores here. >> you're talking about steve? >> no, i'm talking about general sentiment. general sentiment. you know, put a couple of leaders in key ivory towers and they'll take care of everything. i guess that's as close to russia as we get. i don't know. don't you remember when we were

in grade school, joe, don't you remember, even back then in the '60s, '70s, capitalism, socialism was that, russia was going one way and the u.s. with was going the other. and that was 35 years ago, and it proves to correct 40 years ago. i don't know. i find it more interesting when we're talking about the great rotation, the great rotation is actually back in to treasuries and back into boons as we see. yields dropping significantly. especially in a ten-year boon. lowest yield since august now. it kind of took out its little blip it had. very fascinating to watch this develop. >> rick, last i saw, they weren't rotating into gold. >> they don't do that anymore. >> i don't even look at gold as gold anymore. >> they securitized it. they've securitized. listen, if things go badly in the world that i used to observe

as the gold bugs. the gold would end up in the hands of the gold bugs. if things go badly now, they're going to end up with checks from etfs, sorry, it's not the same. the reign of gold is the end product. to me, that's over. game, set match. >> i did talk to an art dealer last night who said a lot of people are buying art because they're afraid of inflation. >> and steve's coen's excuse? >> maybe. >> you know, rick, as the ten-year yield falls, i would think that means stocks are even more extended, but other people could say, well, the yield's even lower, so you need stocks to try to get some type of return. it can't be a good thing watching ten-year prices go up, can it? >> no, it's not necessarily a good thing. but i don't know, i don't think that you're going to see a huge reversal in the u.s. equity markets. you know, we could spend hours discussing the reasons. what i find more fascinating, listen, i think what the fed's

doing with these ongoing purchases is, you know, one fry shy of a happy meal. however, to see how the ongoing insolvency of banks which we talked about in '09, '10, '11 that suddenly is so obvious to everybody, that dynamic almost usurps the need for them to do it anyway. but they still can't see that. it's just frustrating. yes, i think these low interest rates are going to be around for a variety of reasons. >> all right. >> okay. >> thanks, rick. steve. >> thank you. >> thanks, guys. coming up, inside look at how some of the nation's top cfos think about corporate taxes. plus, "squawk" money madness. the final match-up of the first round jpmorgan versus intel. we'll be unveiling the results of yesterday's battle between google and microsoft when we return. at tyco integrated security, we consider ourselves business optimizers. how? by building custom security solutions that integrate video,

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welcome welcome back, everybody. right now, time to unveil the winner of yesterday's money match-up. >> wow, it's close. >> and our "squawk" cnbc show show page. today is the final match-up of our squawk sixteen first round, jpmorgan up against intel.

here to talk about jpmorgan is jason goldberg, director and senior equity analyst at barclay's, and on intel, we have hans moseman. we need you to make your case for these stocks. jason, tell us about jpmorgan, what you think is going to happen with that stock. >> sure, that's a stock we are attracted to. it's able to grow and adapt to the ever changing financial services. last year, put up record earnings and a 15% return despite the fact it took $6 billion in related losses. we think it has another record year earnings this year, continues to improve on tangible common equity number and continues to take share in all the businesses chooses to compete in on the consumer side in the u.s. and globally on the wholesale side. >> do you have a price target where you think it'll end up at the end of the year? >> our price target is about $56, which is about ten times our 2013 estimate around 550. one normalized environment.

any sort of economic pick-up in the u.s. and any sign of higher interest rates. >> hans, what do you think about intel? >> well, i'll make the case on the other way. basically it should go down. we have an underperformed rating on intel. here are a number of factors and they're all product gross margins. pc demand is weak, cannibalization of tablets, bad for intel. there's a little uptake with windows 8 and the company's been not very successful at all in penetrating smartphones and the tablet market with the x-86. we think there are structural issues here, way, way over the top in terms of capex this year. that's oversupply, and we think there's a devaluation of the x-86 as a microarchitecture relative to a new guy in town. we think the stock should be in the high teens over the next year. >> this sounds like you don't like the sector and don't like the stock specifically. >> we don't like the sector and don't like the stock. >> this is a situation, again, we're doing this based on the

stocks that are most often clicked on by our viewers and our readers on cnbc.com, which is why you end up with a jpmorgan versus an intel, but hans, you would say stay away from intel, jason, you would say buy jpmorgan. thank you very much for your opinions on this. folks at home, this is your turn to play along. you heard what the experts think about it, now it's your turn to vote on our facebook page for jpmorgan or intel. which stock you think will perform better between now and the end of the year. >> i don't know, i think it should be are you going to make more money shorting intel? we should change the question. the guy was negative on intel. >> is hans still there? >> are you going to make more money -- >> who would vote for intel after that? >> intel -- >> the guy loves jpmorgan, hates intel. it makes no sense. >> that's a good position. he thinks it's going to the teens from 2165. a drop of about 20% versus the gains of 48 to 56 for jpmorgan. >> all right.

anyway. >> you don't want to -- i get where you're going with it. >> i hated intel. we thought he was going to make the case for intel. >> no, no, we didn't. we did this based on the idea that, look, you want the real opinions. >> then you should vote for jpmorgan because -- >> based on these experts. >> it should be 100%. >> we didn't think they were all winners. you pick the stocks most often clicked on. these are the stocks our viewers want to hear about. >> you aren't thinking one team is worse -- you're not hoping one doesn't -- >> it doesn't always happen that way. they're all seeded 1 to 16. >> they're trying to win. one team is not trying to lose. >> you'd be a long shot. just what happened with florida and gulf coast. >> i think you need to do -- he compares his performance to how he does on the short side. >> unfortunately, you're not going to have guys shorts on every one of the stocks that frequently clicked on. coming up, an exclusive read on the economy from cnbc's cfo

counsel. new data showing optimism from the cfos. we love these guys. very interesting. limited plans for expansion, that's the only problem, more on that next. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪ otherworldly things. but there are some things i've never seen before.

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the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. to welcome back welcome back to "squawk box" this morning. we do have some red arrows if you take a look at the futures right now. giving up the gains from yesterday. dow looks like it would open off about 63 points. nasdaq off about ten points. also, take a look at shares of

apollo group. the stock downgraded to market perform from outperform by wells fargo, and we're going to see pressure on that stock this morning, as well. >> do you follow me on twitter? >> i do. >> i'm going to retweet this. >> please do. >> the cfo global counsel survey. captures the views of some of the top cfos on the market. they report only modest hiring in the united states along with expansion plans focusing on latin america and asia. but there are still plenty of risk factors. number one on the council's mind is uncertain fiscal policy weakening consumer demand in the euro crisis. still over 60% agree with fed policy saying it's driving the market rally along with corporate earnings. and get this, the cfos are not expecting corporate tax reform any time soon. but half expect their effective corporate tax rate to actually decrease if and when corporate

tax reform happens. i guess that makes sense. half of them would see a decrease, the other half see it increase. also, with an eye to the second quarter performance, the council is split. 48% say no surprises in earnings growth while the 40% say it will be slightly stronger than expected. hmm. so if they're looking for stronger earnings and still hoping the feds hanging in there, anyway, it's interesting. for more results, check out cnbc.com. when they return on "squawk," what has jim cramer fired up this morning? we'll find out as they head down to the new york stock exchange. tomorrow, it's the last trading day of a record-setting quarter. will bulls finish out march in a strong month? tune into "squawk box" tomorrow and find out. it's a brand new start.

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welcome back. welcome back. let's get down to the new york stock exchange. jim kraemer joins us now. we have doug parker on for a while. i wonder about you, jim. you watched airlines for so

long. itt it used to be i just assumed. if the airlines assumed it was because customers got a better deal. if they start doing well, does it automatically mean we'll be doing less well or is it a zero-sum gain. >> to some point it will be a zero-sum gain. i he said there will be no raising of fares. they don't really need to, but they have these routes that they won't cut price on, and i think that's the problem. that interview was fabulous, okay? that interview was fabulous because it shows you this is a brand new kind of airline executive. i know he's been around, but i'm saying the confidence. that was just incredible. this is an investable stock. that was a fabulous interview. >> both ceos that we talked to are not going to apologize for anything which is also refreshing, isn't it? >> you see benmosche? unbelievable. >> i know europe will be down

today. how much did i want to buy both of these stocks after listening to these two gentlemen? they clearly have a view on what's happening in america and the world. they obviously are very confident despite what's happening in cyprus, and despite what's happening in spain and germany. i just love their confidence show and you asked them a lot of tough questions and they didn't bend. >> hey, jim, i thought the ten year would be at two. i've been thinking about that for a long time. what if it goes down to -- this is just conjecture and it's probably not going to. what if it started going back down to 1.5. how do you read that? >> i don't understand. >> that's why clorox goes to 90 and general mills goes to 55. i do believe the banks at a certain point are just going to say, listen, we're going to lend because there's a nice spread between what we can charge and that would be a recession.

>> if we're going to two 1/2 2% and 3% sunday. are we in a deceleration period? >> i don't think so. retail sales are going up because the value of your house is going up. i am talking to people who are literally getting their doors knocked on to say i have people who want to buy your house. i have no new home building to speak of. the rates are so low and the affordability is still amazing. this is not a bad time. it's just that you have to not look at europe. yeah, you get up this morning and i know becky is back and forth and we're on twitter and, oh, man, it's so bad over there and by 11:00 the money comes here. >> jim, thank you. that makes me feel a lot better after watching what's going on. >> what a great show! >> great show! >> ultimate voice of reason. >> and he likes the show. >> we have another couple of seconds. i don't know if carl is there yet, but would you ask carl to

look at andrew's tie and what if he wore that tie with that shirt that carl wore -- >> the skinny tie. >> he's's tall skinny guy. >> he has a lot of pattern, but -- as carl wrote on twitter yesterday, #jealous. >> there you go. thank you. thank you very, very much. >> i have a pvh outfit. sorry, mine is $38 at kohl's. you can spill something on that tie and your day's wrecked. mine, i can use it as a napkin. who cares? >> thank you, mr. cramer. stock and fashion advice. tomorrow on "squawk" let me tell you, we have a big lineup of guests to talk about the markets on the last trading day of the quarter. mike santoni, barbara marsen and

russ koesterich and we do have joe kern. it's not what you think. it's a phoenix with 4 wheels. it's a hawk with night vision goggles. it's marching to the beat of a different drum. and where beauty meets brains. it's big ideas with smaller footprints. and knowing there's always more in the world to see. it's the all-new lincoln mkz.

♪ ♪ ♪ ♪ ♪ ♪ talking about rogaine. there are a lot of side effects.

>> i think no. >> two stocks of the day, u.s. airways and aig. the company is run by our squawk news makers this morning. we had great conversations with doug parker and bob benmosche. >> that does it for us today. make sure you join us tomorrow. it's the last trading day of the week. "squawk on the street" starts right now. ♪ ♪ ♪ ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer and david faber. we got on the dow yesterday mostly on continued worries from europe. more political chaos in italy. the five-year bond yield there the highest since october and take a look at what europe is doing this morning all of those overshadowing the modest gains in asia that we saw overnight. let's get to the road map this morning and it starts with