good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin continues off today. a lot happened in the global markets while most of us were sleeping in the united states. the bank of japan announcing a radical overhaul of the policy framework. the boj is shift to go a new sergeant for setting monetary policy and it's pledge to go double its government bond holdings in two years. policy bondmakers are looking to end nearly two years of deflation. we'll have more from cnbc's kaori enjoji in just a moment. also, the european central bank is expected to keep interest rates today. but a decision is due at around 7:45 eastern this morning. and then president mario draghi will be hold ago news conference at 8:30 eastern time. the bank of england will conclude its policy meeting.

we'll have more on the ecb and the boe from kelly evans in just a few minutes. back here in the united states, stocks selling off yesterday. among many reasons for this were comments from john williams. he suggested that the central bank here could continue to out cut back on its massive bond buying program this summer if the economy continues to improve. this morning, we have a top fed official who will be joining us first on cnbc. steve liesman sitting down with atlanta fed president dennis lockhart, coming up at 7:15 eastern time. don't miss that news making decision. among the other reasons for that pullback in stocks yesterday, you know about this, worries about north korea. in a statement out this morning, north korea's army says that, quote, the moment of explosion is approaching fast. the loony stuff that comes out of this place. but the defense secretary john hagel says there is a real danger from north korea. washington is planning to employ a defense missile system to guam. eunice yoon is covering the

situation and she will join us at 6:15 eastern, joe. a lot to talk about this morning. >> there really is, becky. yesterday during the session as it was heading lower, it was because of the weak adp report. people were worried that the market had gotten ahead of itself based on economic fundamentals. then you get the guy later john williams who is making you think the economy is going to be strong enough to stop the end buying in the summer. those are diametrically opposed things. and then any country, even north korea, if a country says its army is preparing an attack on the united states, i don't think it matters who it is or whether the threat is real -- >> these guys are crazy, though. this is a regime you don't know what to think about. >> but no one really believes they have a delivery system that could reach the continental united states. but -- >> but it changes the entire

system. >> we've got 20,000 guys in south korea and all the other people in japan and in that yeah that possibly could be, you know? >> the capital of south korea looks right across. >> that's a big step, even for this guy. >> he's an unknown quantity and says some outrageous things. yes has. the more they keep talking, what was the latest thing he did? the explosion? >> that's what i mean. you don't even understand what they're talking about. who talks about these things? they had final authorization yesterday for a strike. >> it has to be unsettled for the markets, which we will now check out on. >> we were down 111 yesterday indicated to rebound about 69 points today on the dow. we should get a pretty good idea from the trading in some of the commodities, especially oil,

about whether we're swooning or not. you would think. and there we are below 95. we had been above 95. between 95 and 100. it's too early to say we're swooning, but we'll get a much better idea tomorrow to see whether wednesday's weak adp report is reflected in what we see tomorrow. that indicates a little bit, maybe, of wow. that would have been -- >> a spectacular wipeout? >> that would have been almost chevy chase like. >> it would have been almost like when you pretended to fall out of the chair. >> but the wheels could have slid back and your head would have come down and is crashed on to the desk. >> we're on wheel around here and i'm in heels and that doesn't add up to something very stable. >> the ten-year, 1.81%. 1.70% is after 1.8 and we'll see whether we get down there at some point. you would figure that with all of this saber rattling that the

dollar would know a place where people go, which it is. 1.27 now on the euro. i think, you know, towards japan, not about korea, but about trying -- you know, 20 years we're trying to get some inflation. now the target is 2% inflation from the deflationary -- >> the market wasn't surprised, though. i mean, it wasn't disappointed, either. there had been some things that if they didn't start delivering on all these things that they've been promising, that that would be a huge surprise for the market. it doesn't come as a shock. it was news they had been anticipating. >> and i guess maybe santelli has been foreshadowing the kind of stuff we see in gold. if you own paper, you don't really own gold. what's the point of owning -- you know, you have a bunch of etfs for safety if north korea goes crazy and it's all paper. so it's almost like gold doesn't occupy the place that it used to for when we have this kind of, you know, scary stuff. i guess that's how you -- how do you explain, you know, a country says they're going to launch a nuclear attack, how do you

explain gold going down below 1550 on that? >> i don't know. >> i don't, either. it's a technical point at this point. >> i guess it's technical. but a lot of people think they own a lot of gold. but if you own atfs, you don't have the physical -- you know, during the zombie apocalypse and say i'm trying to buy my way, i swear i own this gold. here is the paper, you can collect on this and you try the buy food or a gun -- >> i'm right there with you, but i think we're watching too much of the "walking dead." i'm trying to catch up, watching a couple episodes a day. >> so when i did the whole background check for a weapon -- >> i understood. when i finally started watching it, it was like, i get why joe is watching this. >> it's fought going to be a zombie apocalypse. >> no. i looked around my house to figure out which windows i need to board pup there are people standing in

line with a gas can 6/0 deep just go get their generator going from sandy. you can't help -- what if it was a food line? i don't know. you just -- you have to be prepared. all right. >> i understand. >> just trying to think about it. you know, i didn't buy a crossbow yet. >> well, then you're out of luck. >> that's right. there's been a run on crossbows because they don't make any noise. >> and you don't want to attract a zombie with the loud noise. let's get back to the bank of japan. this is the big story today. kaori enjoji has more on what the bank of japan is doing with that aggressive monetary policy. wa do you think of all the moves today? >> well, good morning, becky. i think this is the most aggressive move the bank of japan has embarked on in recent memory. you talked about increasing the jgb purchases. it but it goes far beyond that. they basically overhauled the whole framework that they use to

conduct monetary policy. from today, they're going to use the monetary base as a tool to gauge how effective they've been in stimulating the economy. and think about it, come may, which is only in a couple weeks' time, this central bank is going to be buying $80 billion worth of japanese government bonds a month. that is a staggering figure. and when you add on top of that the possibility that this could go on for a considerable period of time because you're talking about 2% inflation and most of the economists we've been speaking to say it's probably going to maybe hit 1%, in a year and a half, two years, it's going to the take about two years to get to that 2% number, you're looking at a central bank that can buy jgbs up the yield curve. effectively limitlessly. because until now, they could only buy japanese government bonds that match the amount of notes and circulation. so they could indefinitely do

that. if any other central bank embarked on this strategy, you wouldn't be having a discussion about, oh, are they monetizing the debt? i think kuroda, this new governor that has come into the bank of japan, his plate is right because he put the ball back in the government's court. he's saying, look, we pulled out all the stops to do what we can with monetary policy. now it's your turn to embark on structure changes that foreign institutional investors have been calling on for such a long time. >> kaori, what do people, the general population, think about these moves? >> i think the general population is a bit removed from this. if you talk to to the people who are over 65, they're a little bit worried because for 15 to 20 years, they've been living off their savings and they've been doing quite well because of deflation. but if you talk to the younger group, and they say about 65% of the people in their 20s are not fully employed, they're casual

workers. i think they have a bit of a problem, especially because their parents' savings are far less than what illustrate was a generation ago. but i think we talk about asset bubble, but i think right now at the moment, no one really is concerned about that, which is a little bit surprising. because if the yen is weakening, the export price res going up exponentially. >> i wonder how this is going to play out. is there hope that this kick starts the economy, though? >> i think it really depends on the corporations and the change and the mind-set for corporations. and that really hasn't happened. they've been so defensive until now. they've been profitable, they've been struggling, hoarding that cash. whether or not they take on all this cash and try to reinvest that and take on more risk, expand not only in japan, but overseas, that will take a huge change in mentality and i think that's going to take quite some time. that feeds to happen for them to hire more and pay wages.

>> kaori, thank you very much. we will check in with you very soon on this. and now to europe where investors are reacting to the boj's announcement and preparing for some decisions from the boe and the ecb. kelly evans is standing by. in london, we have actor tony on for an hour today. you know, you get this yen too weak and these guys are not going to like it now that we're in 15 mode on our domestic auto sales here. this is not fair, kelly. >> exactly. no, joe, this is exactly the question i asked an analyst we were speaking with yesterday, which is to say just at the time when toyota is recovering from some of its recall woes and the market share losses, anyway. now you add a weak yen on top of this. but remember, a lot of these guys, this is how the argument goes, as well. a lot of them now have u.s. cost basis. we know how many people are employed by the bank of japan, automakers across the u.s. who don't think it's as much of a

help as you might expect. some of these guys say you might expect to see the yen weaker. now there's a lot of pressure on the bank ofapan actually deliver. but this really is the story driving markets this morning. even though we have more central bank meetings, we're going to hear from the ecb, we'll hear from the bank of england, still, as you look at what's happening with risk assets, the rally is pretty much continuing around the globe. we had another strong spanish auction this morning. the ten-year bund is falling, gilts are a little higher, but spain and italy, look at that, italy down to 4.5%. and it did have some good signs in its pmi figures which were out, not the same story for the rest of the eurozone, but completely shaking it off. even as the composite figure shows, territory on manufacturing and services, the xetra dax is rallying, the ibex in spain is up 1.4%. you have to wonder the extent to which the kind of liquidity coming into the market from japan is having a global impact that goes beyond the domestic

japanese economy. timely, a note about forex, we are seeing weakness on the euro/dollar. there's a view that this isn't necessarily correlated to risk off. here is a look at what we're seeing. the dollar/yen up 277%. so it is a big move that should help a lot of japanese companies. again, just not those who have moved much of their production base to markets closer to where they do their sales at any case. we'll wait to hear from mario draghi in just about an hour's time. ahead of that decision, the focus will be on cyprus and just on europe's macro weakness and how much draghi can actually do about it. guys. >> kelly, thank you. we will be watching. big news coming up later in the program. in corporate news back here in the united states, facebook is set to announce a new android product today. an event is planned at the

social headquarters. speculation suggests that it's going to be first rolled out on an htc phone for us launch. and best buy is offering a 30% discount on its current supply of apple ipod 3 tablets. the goal is to try and clear out the old veptory. a best buy spokesperson says the retailer is not discounting the price of ipad minis. you'll see that the stock has barely budged, up one cent to 21.65. best buy will open a samsung store within a store in most locations. that roll out is set for may. >> oh, boy. >> i couldn't believe this. june, more problems for carnival. more problems for a crippled cruise ship. i thought it was good that it was the same one. cursed. remember the one, triumph, the

medically cruise ship. it broke away from its moorings due to strong winds. the ship was there to be repaired and fumigated. two shipyard workers, unfortunately -- that's the problem -- someone is missing from this. two shipyard workers fell into the water. officials have recovered one and are still searching for the second. the vessel drifted in the water, at one point slamming into a tugbo tugboat. two weeks ago, carnival canceled ten more cruises aboshd the triumph. the return to service was pushed back to june 3rd. this is an unlucky ship. we hope they find that guy. but it's been a while, right? >> it was yesterday afternoon, yes. >> annie, the federal judge dismissed claims against jpmorgan.

the decision deals a blow to a lawsuit against the bank that had accused it of duping investors into buying troubled mortgage-backed securities. the belgium french bank heads to jpm over losses on 1.6 billion in residential mortgage investments. another plaintiff can continue to pursue its claims over five of the soured investments. but this is a victory for jpmorgan because the ruling significantly limits what the damage could be from the case. and in other financial news, germany's bundes bank has launched an investigation into claims that deutsche bank hid billions of dollars of losses on derivatives backed during the financial crisis. the ft reports investigators from germany's central bank are scheduled to fly to new york next week as part of this inquiry into allegations. slowly gotten able to say -- >> i like how you say bundes bank. >> but inquiry used to be -- >> that's a tough one.

>> especially if it was an inquiry into some -- practices. i wouldn't attempt to that. >> inquiry into pruiernt practices. that's where you just change it. and there's a very famous news anchor that wouldn't want to read this story. i'm not going to mention this story. but lululemon says its chief product officer will leave the company, the announcement coming as the firm gave an update on the march announcement that it was recalling yoga pants that were unacceptably sheer to some people, apparently. the shares, whoa, whoa, lebeau. the shares were down. >> good morning. >> look, he's got sheer yoga pants on, too, to drive the -- oh, man. whoa. whoa. you been doing squats? you've been working out. you look good. >> you chase people away from

the sets. >> looking pretty good in these jeans. >> phil is going to be with us on set today. he's joining us on the set from 7:00 to 8:00 a.m. eastern time. in washington news, the gao is expected to release its report in political intelligence on that industry today. the front page story in the "wall street journal" says the political intelligence agency drove the jump in health insurance stocks on monday. height securities predicted that the obama administration would eliminate planned cuts in payments to insurers running medicare plans. now, that policy change was announced 35 minutes later pap height executive tells the journal that the firm didn't do anything wrong, but simply followed up on a rumor about plans for centers to medicare and medicaid services had put out there. the expected report from the gao is said to suggest it's hard to figure out how traders get their information. but senator chuck grassley says there is a chance that what

political intelligence firms are doing is unfair to everyday investors. the current rules clearly profit some behavior to get inside information from the government. other strategies appear to be legal. the question is, which these were. you can imagine there will be follow-up. in an unrelated story from gao, the federal watchdog is faulting regulators for a re view of foreclosure documents. a report says the agency did not adequately monitor firms done conducting that work. coming up, a live report from beijing. we'll talk about the tensions on the korean peninsula and why global markets are worried. and then at 7:00 eastern, fi phil lebeau and his spec guest, daniel akerson. the ceo of general motors, we definitely want to talk to him about the yen. but first, as we head to break, a look at yesterday's winners and losers. [ penélope ] i found the best cafe in the world.

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welcome back, everyone. eunice yoon joins us from beijing with the latest on the difficulties between north and south korea. we're worried about it here in the united states, as well. what's the mood there? >> well, right now in china, really, there's a lot of growing pressure on china to ex either its influence to reign in north korea. but on an official level, nothing really has changed. all the comments that we heard out of the foreign ministry here have been calling for calm, calling for restraints, calling for a diplomatic dialogue, a solution. but these, of course, have been comments that we've been hearing for years. now, there has been some speculation that the new leadership could be changing its stance only because there have been several editorials recently in the state-run press that had been critical of pyongyang. also, there was a chinese editor that was very critical of pyongyang saying china should

abandon its relationship with north korea. but, again, you can tell there's a lot of discussion going on within the chinese leadership because that particular editor at the end of the day was sacked, which suggests the official stance in china still remains the same. >> jong il, from our perspective, he's an unknown entity. do you get the feeling that the leadership has a real handle on what he's about? >> that is a big question, but, obviously, china has a good relationship with north korea so they would have more interaction with the north korean leadership than, saying, anybody on the united states. but at the same time, there had been some belief here and a growing feeling that china really doesn't -- you know, at the end of the day, doesn't really control north korea in the way a lot of people seem to believe. there had been a discussion about how -- and staying, in

fact, that china and north korea are -- but these days, a lot of people here feel that the teeth have been biten the lip. and there's been a lot of commentary on the chinese internet that has been -- where people have been staying is that all of these north korean hostilities are lead to go a build up of the american military within the region, which they say can't be a good thing for china's interests. >> yeah. i mean, that's what i wonder, too, as an outsider trying to figure out what china gets out of this relationship at this point. it has changed drastically since the new leadership came in. >> right. and a lot of people would say that the reason why china continues to support north korea is because at the end of the day, they don't really want to see a huge u.s. military presence right on their border. they don't necessarily want to see the u.s. military come right up, you know, right on the border with them. but at the end of the day, you know, when i watch -- i mean,

i've been watching that story for quite some time. in fact, i have a lot of family in south korea. usually at these types of incidents, the conversation goes, you know, hey, north korea is launch ago nuclear attack on us.really? was for lunch? and the reason why the attitude is like that in south korea is because people have been living with this threat for so long, for decades. and the feeling there is that north korea is excellent at brinksmanship. they are great at making a lot of noise .there's a lot of luster, but the feeling in south korea is that the, really, this is a way for the north korean leadership to play to its own domestic audience and shore up its credibility within the country. another thing is it keeps the americans on our toes. because we don't know if north korea is going to be that crazy. but at the end of the day, the regime's ultimate goal is to

stay in power and to survive. there's been a lot of discussion about how there could be a miscalculation on the part of any of the players and that could lead to some sort of a military threat or attack on the peninsula. but at the same time, north korea wouldn't want to miscalculate, as well, because it could mean that they lose everything. >> and i guess there's a very fine line between crazy or crazy like a fox. eunice, thank you. and we will talk to you again very soon. >> you don't -- janice joplin, if you've got nothing to lose, you don't have anything, you have nothing to lose. at least the new york tabloids have their priorities straight. a country threatened says we've got the go ahead for a nuclear attack on the united states. and we were lucky enough to -- that -- well, there's the headline. it's jay and jimmy is the headline for the changes occurring at nbc. >> next year. next year. >> yeah, next year.

at least the daily news. oh, no, wait a minute. which is which? follow that hook line and sinker. anyway, it was great. jay, i love him. and jimmy is great. >> for 23 years he's been doing this. >> yeah. he said he's leaving. who knows what's going to happen. he's great. he was the best for the last 22 years. >> and fallon is very funny, too. he's always there. >> coming back to be with lauren in new york city. >> did you see the los angeles mayor wasn't very pleased with that. >> going on a hunger strike. yeah. i feel bad for beautiful downtown burbank. what's going to be left? disney studios, that's about it. coming up, the call on commodities, from the fears of north korea to the state of japan, we'll talk about the state of the dollar.

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connect a few dots. good morning. welcome back to "squawk box" here on cnbc. comments by john williams and the fed -- >> i thought you were going to play a game and is make everybody else figure out -- >> did i just say what was going on? >> yeah. >> i think it's better than people are in on it at this point. everybody knows sorkin is in vietnam, right? >> no. you are spoiler alert this morning. >> do you know who dies in "the walking dead" on sunday night? >> though. stop! >> i'm joe kernen with becky quick and andrew ross sorkin is off today. let's talk about the ultimate one percenter. among our top stories this morning, the bank of japan unveiling aggressive monetary policy. joining us now to talk more about that, joe trevisani, worldwide markets chief market strategist at the cme. joe kinnehan. i don't know. i think i could have figured this out quicker than 20 years.

couldn't he? is it that easy to do this? apparently it is because they keep doing the same thing over and over again. >> i thought they didn't do this before to this extent. >> not to this extent, but as to the facts of what they're doing and what they're trying to do, they've done this a dozen times in the past. >> why doesn't it work? >> because monetary stimulus is not a very effective way of boosting an economy. and if you have an economy which is tilting downward, then it's not even a very effective way of boosting inflation. we've seen that in our country right here. the fed has been pouring money out and inflation hasn't moved because there's really no inflation demand. there's nothing pulling it out from the banking system out into the economy to boost prices. >> and kay otherry enjoegy's point this morning were that the companies have been so conservative, you can't change their mind-set and convince them to send that money. >> that's right. the japanese companies, even world beating companies have not

really performed well. they haven't produced any new products. they're not out there at the cutting edge of a technology business such as sony has. so there isn't a lot of demand for the money that everyone is producing. >> how do you change that? that's such a crazy problem to try and tackle. >> it is very difficult. it goes to depths of the economy, really. that central banks and their policies can't really reach. now, the other side of that is mr. bernanke's points is that, well, if we hadn't done this, it would be worse. and that's a second line, kind of a secondary defense. deflation would probably continue in japan. deflation is a danger for the economy. so on that side, there's a positive reason for doing it and perhaps there will be a positive response from the economy. >> and the thing that we always wish that .of the problem areas in europe, we wish that they had the ability to devalue their currency. that's the way it always works when you need to do so. >> correct. >> this is a way for japan basically to devalue the yen to

make themselves more competitive. i mean, we want -- we want these countries in europe to have that tool. why do us it's a tool that doesn't work? it's the one tool that we've been told does work. it worked in south america, it worked in russia. >> it does work and it will work to some degree to devalue the yen. now, if you look at the response this morning, the yen went up about -- went down about 2 1/2 figures against the dollar. it didn't even reach the level that it had reached before. it was above 96 and somewhere up to 95. so the markets respect what they can do. but it isn't enough to make the economy move. i mean, japan needs to do two things. they need a weaker yen to help exports, but they also need products from the economy that the rest of the world wants to buy. the koreans are doing a far better job, say, of exporting cars and developing cars that people actually want than the japanese are at the moment. that goes to electronic products, too. a weaker currency will help, no

doubt about it, but it doesn't create the momentum within the economy. >>o and joe and joe. three of them. kennaha this, j.j., i don't like these doom's day scenario webs obviously. but north korea, the stuff that it's saying, let's say the worse case were to happen and that they actually had a small nuclear device that they set up somewhere. i would think the vix or that the markets would react violently to that. so we've got the vix at 14. because it hasn't done anything, are we just totally -- or is the market totally discounting that this actually happens? >> i wouldn't say we're completely discounting because, you know, again, it came from 12 1/2. and i know if you look six months ago, this is nothing. but actually, the vix itself has had pretty good trading ranges interday. we're having days of 30% trading ranges within the vix.

that being said, joe, it is difficult to predict what will happen in north korea. you have seen over the last couple of days people coming in and buying some way out of the money calls, oun, of the 20, 24 areas for exactly a scenario -- >> god forbid, where would it go? what do you think the a number would be, into the 30s? >> again, tough to predict, but i would certainly think it would go over 20, maybe 20 to 24 been i think, joe, what would be more important is you might see a one-day spike. how widespread if something like that did happen it was and of what our immediate reaction along with the rest of the world's immediate reaction would be, we'd have to see who would sort of align with north korea or if everybody would go hands off to them. if everybody goes hands off to them, i wouldn't see the vix would continue. if for some reason another country became their ally, it would be a lot worse scenario. but, again, circumstance and what can happen is very

difficult to predict overall. i think those that are smart that are larger predictions have done things to hedge themselves, not only for that, but for a lot of the things going on right now, particularly if they're long stocks. outside yesterday, they have enjoyed a pretty good 2013. >> i mean, it's the unthinkable. i don't think anybody for a long, long time -- >> we never thought one would be used again, really, at least not by a normal country and that's the problem. auto evil, remember bush? he said the three axises of evil. and then remember the three? a pretty good guess. iraq, iran and north korea. but i mean, it's been unthinkable. in my mind, i never thought it could happen again. we could never let it happen again. now that we're talking about it again, we get a 14 on the vix. i mean, obviously the market doesn't believe it. >> but, joe, if you think about it, look at all the times during the cold war that people would arm up on both sides and

ultimately nothing would happen. i mean, you know, god forbid -- >> it was a long time ago. >> i understand but history does repeat itself and you can never -- you're dealing with a little bit of a mad man so that's tough to predict. god forbid, something does happen. but i think the market's take on it is there may be a lot of grand standing, but at the end of the day, people better sense sort of prevails on what the long-term outcome would be for his country. and i don't think he's that great. >> all right. duelling joes. thank you. we'll see you. >> take care, joe. bye. >> bye, guys. when we come back, a portfolio manager names some names. these are stocks to own in today's market. we have that right after that. coming up at 7:00 a.m. eastern time, one hour, two newsmakers. dan actorson and dennis lockhart. but first, a story plastered across the morning on tabloid these morning, nbc announcing details on the future of late night. here are jay leno and jimmy

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welcome back, everybody. yesterday was a tough day for the markets. the dow dropped more than 100 points after closing at a record high on tuesday. mark tavis from intrepid capital funds, mark, you have to look around and find stocks that you think are at a fair value or a low value to what's happening in

the rest of the market. has your job gotten tougher these days? >> becky, if you think about it, talking about volatility in the earlier segment and the vix at 14, you sense that our u.s. debt was downgraded in august 2011. you haven't had much volatility. it's been upward bias market. as i would say sarcastically, if the market goes up every day, you don't need somebody like me to manage money for you. but if you're concerned about things like north korea or any number of other things that could happen, you know, maybe we should talk. but it has been difficult to find things where there's a disconnect between rice and value, in our opinion. >> let's talk about some of the things that you think hit that criteria, though. microsoft is one of those stocks. this is a stock that people have been watching for years and years and years and over a decade and waiting for it to pick up traction. why do you think that now s time? >> well, becky, i would say most of the places we have added

value have been smaller to midcap size equity. microsoft is somewhat outside of our typical strike zone. as i would look at it, looking over the ebter price sexual recovery the last decade of so, prior to lehman's failure in '08, you had a quarter of the cash on its balance sheet and it traded at 14 times multiple of its operating income. today you've got 68 billion in cash where you have 38 billion in cash 4 1/2 years ago and a trade of seven multiple operating income. the way i intend to deal with that is i wrote a check for the entire company and its liabilities. i get a roughly 14% pre ttax yield. and in an environment where you've got suppressed rates, ten-year treasury at 1.85%, i think owning a monopoly business

like a microsoft and a dividend rate that's almost 200% of that ten-year rate, that's a bet i'm willing to make. the thing i don't like about it is it's such a large component index, it swings around with s&p which is not what we typically like to do. >> let's talk about a smaller company, swift energy. i get the feeling this is one you like? >> well, it is. despite the run up in asset prices, particularly in the first quarter with the market, as i would say sarcastically up 1% a week, the natural gas area is a place we have been finding discounts to conservative valuations. swiss energy has most of the production in the eagle ford area of southern texas. about 20% in various parts of louisia louisiana. and if you look at their 192 million barrels of oil equivalent, we think it trades at a conservative discount to

that proven reverses, given very well value to the unproven reserves. the son runs it, has been running it for 12 years. and, you know, the shares today are in the mid 13 range. we think the asset valuation is much closer to 20. so, you know, we're trying to not to make herculean suctions about natural gas prices which today have been bumping up around $4 had per mcf. we don't want to make too big an assumption about oil prices, either, in case we get the leader of north korea decides to push the red button and prices were to fall. >> mark, thank you very much for coming. i know it's early morning and we really appreciate it and we hope we get to see you again sometime soon. >> thank you for having me, becky. thanks. coming up, it was once known as boston chicken. why is boston market now getting into ribs? we'll ask the company's ceo, next.

but first, let's peek in on a squawk green room. that is phil lebeau, who you saw earlier catching up with gm's ceo dan akerson. the two men were make the drive to our set for a special hour-long conversation. i just looked at the web and saw the new corvette. the new sting ray 2014. really nice.

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i just sent mack to get some ribs and chicken. let's go! >> i'm hungry. >> he thinks he has to count us down. >> he has to do his job, yes. >> welcome back. boston market is opening new locations for the first time in six years and is adding ribs to its menu, which mack is now going to get us. joining us on set is ceo of boston market. it goes back -- my love affair goes back to when it was called boston chicken. and i remember back long ago on "squawk box" bob olsteen said something about the chain itself. it was such a hot stock. it lost its way a little. changed the name. now i see them everywhere. i still love them.

>> bought by mcdonald's. >> and now ribs make sense. why? >> ribs is a natural progression. ribs are a comfort food. i scoured the market in u.s., canada and abroad. ribs make a lot of sense. it's just like bacon and eggs or steak and lobster. we thought ribs would make a great addition. >> when you say comfort, i hate to say it but i feel like i'm going to get fat. i want to go have six sides. i'm going to do it right now actually. does comfort mean it is going to fill my stomach and i'm going to get fat? >> no. if you can have quarter white with steamed vegetables and potatoes, you're hitting the mark. >> right now. >> we have 100 combinations of

boston market 550 calories or less. >> does it include macaroni and cheese? >> no. we feature both. the great thing is you get a choice. you can indulge or have a great meal with locale list. >> is it trickier to make the ribs? what kind of changes did you have to make in the stories to produce that along with everything else you're making? >> it fits into our system. we have offens and rotisseries. we do not have fryers. >> you have hot pies too, don't you? >> we do. they are baked in our ovens with natural chicken or turkey. >> could you describe one for me? >> you must love it. >> i do love it. it's called a pie. that's a problem with that right from the beginning. as far as growth goes, this is going to help, obviously, right?

>> absolutely. we've been on a great trend. we have had 30% up in sales. we have had a great track record. >> what do you think is happening? a tribute to all our staff. once we got engaged we upped the service. we went to real plates and cutlery instead of plastic. we added some positions in our restaurant. >> so you're not competing with mcdonald's or something like that? >> absolutely not. we bring the food to the tables, bus the tables. we are about to open our first restaurant in six years. >> does that mean you charge higher price as you go upscale? >> well, we haven't had to change our pricing on chicken. >> i hate to cut you off but this is getting cold. my food. thank you very much. appreciate it.

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under the hood with g.m. ceo dan ackerson. from jobs, career, tech, innovation, we cover it all. a special hour with g.m. ceo dan ackerson begins right now. good morning, everybody. welcome to "squawk box" on cnbc. the bank of england is leaving

rates unchanged. asset price purchase program also unchanged. no change. that is expected. we will be hearing from the ecb 7:45, 45 minutes away. watching futures this morning. after a big drop yesterday more than 100 points you can see this morning that the future are roaring back a bit. they're up 65 points above fair value. s&p futures up just over seven points. yes, you are seeing a big swing after the downward draft yesterday. in our headlines this morning, investors continue to keep an eye on north korea. its military said it's been authorized to attack u.s. installations. south korea said the north has moved a long-range missile to its east coast. it could be just for testing purposes. this is something we have been watching very carefully. china, south korea and some of the people look at this as, yes,

this is more of the same they've been hearing. that does change the dynamic a little bit. the bank of england leaving things unchanged. 7:45 yesterday the the latest policy statement from the european central bank. it may hint at future cuts. the press conference is also going to be something we'll be watching very closely. facebook makes a major product announcement at its menlo headquarters. some speculate a mobile phone will be the first to contain that new system. the event is scheduled for 1:00 p.m. eastern time. also announcing a rad cole overhaul of its framework. shifting to a new target for setting monetary policy. central banks have been active

this morning. you can see the dollar is stronger against the euro. after this news from the boj, dollar much stronger against the ye at the which is trading 95.45. huge news. animation/joe. the biggest fall in five months. private sector hiring was lower than expected in march. adp -- it's been better. >> closely tracking. >> i don't know if you decide on 30,000 shortfall. >> he said you're probably looking at 175,000. >> we want to see tomorrow obviously. markets are now waiting for the big number which hits tomorrow. escalating tensions in korea is of course a focus. we have a very special guest

host. dan ackerson, chairman and ceo of general motors. it says dan but i was thinking lebeau. you are both co-special guests. >> that makes me feel good. >> does it? >> i'm just glad to have dan here. >> this is great for "squawk box". mike jackson said 15-5 run rate. that's good. did you think we would be here this weekly? >> it is good. we kind of estimated between 15 and 15.5. there's been steady growth coming out of the great recession back in '09 and '08. we dropped to lower levels than anyone could have mantled. so it's been a steady comeback

fueled by people did not buy cars almost 24 months to speak of. so the average car in this country is now about 11 years. so there is underlying support, systemic support for continued growth of the economy. >> you sound a little cautious. >> how far along are we in taking care of that? i asked jackson too. like in the baseball game. have we already done the fourth inning? eighth inning? where are we in getting these beaters off the road? >> we're putting a lot of g.m. cars on the road right now. we obviously want more. there is this under penning strength that may go the first four or five years until we get it back in the eight, nine range of average, age of the car part in the united states. >> but at the same time, dan, the retail sales component in

the last couple of months has started to slow down a bit. it has not been growing as quickly as overall sales. are we do for a pause? not a slowdown or drop in sales but a pause because we have come so far so fast. >> it's interesting you mentioned that. when the payroll tax kicked in at the start of the year, i look at sales numbers every day. you could see it hit. there's a dampening effect, which is healthy for the germ economy. it is going to have an impact for a period of time. >> is that across the board? or do you notice with certain segments? is it hitting somebody in the entry level market? the first car or any vehicle out there on the showroom, you will see the impact. >> there are exogenous results. our sales are up 50% year over

year -- first quarter '12 versus '13. it's hard to look at a seven element of the market given so much movement. >> one thing talked about in the past is resurgence of trucks. he cited what's happening maybe in the housing industry. contractors buy some of these trucks. do you see the same sort of trends? >> yes. no question. housing and energy are driving trucks. and truck demand, which is a propicious moment for us. we start to manufacture late this month, fill the pipeline and the inventories the rest of the year. there's a sequential role all during this year which i think is favorable given the movement in the economy. >> from your perspective, the housing resurgence is for real just based on truck sales?

or is it hard to really -- >> it's hard. there's a correlation. we're pleased. i think as americans we ought to be pleased. that's where the recession started. i remember i was in private equity when the recession started. people thought it was odd the economy will get better when the source is properly addressed and corrected. it's been a long four or five-year period. i think it's coming back now and i think that's healthy for all of us. >> you're ceo of g.m. the korean thing is something for all of to us watch. shareholders, employees, companies that you have to think about. and facilities. don't you have a big facility in korea? >> we have five plants in south korea, yes. >> what do you make of it? can you make contingency plans for something like that?

? well, we are making plans for our employees to the extent we can. beyond that it's difficult to shift production. we have any one point in time, $90 million in product moving arched the globe. korea we produce about 145,000 cars and trucks for domestic consumption and $1.3 million to veloped, don't have esser manufacturing kpaeublt. anything that goes on in korea is pretty important to global production and how we view the >> do you have guys that wear overcoats, like cia-type guys? what are the chances something happens? do you try to handicap what's going to happen? do you have corporate intelligence guys that try to figure out what happened? >> you probably know more than i do, joe.

but we do have outstanding cutting officials that we seek their advice, counsel, and try to estimate what's going to happen. quite frankly it's quite likely talking about baseball, who is going to win the national league and american league this year. i don't know what's going on top more than -- >> i think policymakers in washington probably don't know. you have an untested, unseasoned leader. and the dynamics underneath are hard to understand. >> and then you throw in dennis rodman. you think you've figured something out and then there he is. watching a game with dennis rod man who gladly wasn't dressed for a wedding. makes you wonder about the whole stability. >> i was surprised they hugged one another. >> the whole thing made me

unkphfrlable. at least they're hugging. he is an american. but this happens anyway. >> i was going to ask you mentioned contingency plans. that is the linchpin for your asian operations, correct? >> correct. >> is this the topic of conversation when you're having your global conference calls and you're discussing operations? >> well, i don't want to get into what our global calls are about. we are very pucked what's going on in asia, china, thailand, india. we're looking to open a new plant in indonesia. this is an kwrar of growth for us, markets generally. any time you think of global strategic threats it has an eupl

act on all. 70% of the automotive product we produce, cars, trucks, crossovers are made overseas. g.m. is a trades engine. it creates a lot of jobs around the globe. if there were something to happen to korea, it's going to affect our entire industry, not just general motors. >> you said you can't change production overnight. but something like this, do you start thinking about longer term planning if it continues to escalate moving some of that production? >> i think that's fair. you've got to start thinking about where you have the continuity of sly and assets and employees. i think that's concern to everybody. >> dan will be with us the rest of the hour. a lot more to talk about with him. also this morning, we have job cut numbers.

and what's happening global markets including the situation with stphoerbg we have just been talking about. when fed head speak they speak history first. steve? hey, becky. very excited. the rise is going to begin. about 2,000 students here. we're going to kick it off with dennis lockhart. a lot of weapons about fed policy.

>> welcome back to "squawk box". i've steve liesman at the university of dayton. redefining investment strategy education. we have atlanta fed president first on cnbc. >> thank you, steve. >> one of the big issues out there is the timing for when there will be improvement a tapering of quantitative easing. jed fed president john williams said he could see it happening in the summer. could you see that happening in the summer? >> wouldn't totally rule it out. the position i've been taking recently is i think we need a

few more months of really solid data and evidence that the recovery is moving ahead. the last two years we have had a strong first quarter which they will certainly get when the numbers come out, followed by a swoon in the middle of the year. i really want to get beyond that. ? up commitment is one thing you're looking for. is it an important indicator for you? >> we approximately together a dashboard approach. we have 10 or 12 indicators that give us the health of the market. the key is the unemployment rate, job creation, initial claims. those are three of the key ones. but we look at a little more of a broad set of indicators of how the employment markets are evolving. >> in a speech the other kay you used the word "curtail."

can you plain? did you mean taper, end? >> there are three or our options, which is to taper. i think we could just announce an end date. we might change the mix while we're tapering or towards the end date. so there are a approaches teufrt that may be taken. it's a good way of tag all of those options. >> in your mind does the federal reserve first reserve them or end them or could it end on a dime? >> i can't anticipate what the committee will decide to do. all options are possible. >> some other have used the level of 7% unemployment as one that would constitute substantial improvement. is that a number you're subscribing to. >> i would love to see 7%. the approach i'm taking is i'm thinking of this as a confidence

in the outlook building process. as the months go on. >> if my confidence in the outlook. if that increases i will be in a position to make a ducks that we have seen in the outlook. that's really the key point. >> how about all the discussion of the costs of the qe program? what are the big ones in your mind? >> i think all of us recognize there could be unintendsed consequences in the buildup of the balance sheet on the fed. yes, i'm concerned. what are the big ones? clearly inflation has to be front and center as a concern. so the potential that a large balance sheet simply changes the value of public inflation going forward is one.

a second one would be the losses we mitre occur if we were in the process of selling assets. there are two or three things we have to be aware of as hypotheticals but not something that is certain to happen. >> looking at the data but also from anecdotal evidence. >> my district covers the southeast united states. very diversified economy. we talked to a lot of people. generally the tone is upbeat. it's more optimistic. we're hearing more comments about intention to makin investments, for example. businesses are still cautious about who is hiring.

we hear more optimistic, upbeat kinds of comments and so i think the tone is actually improving. >> what do you wish the federal government was doing right now when it comes to its spending levels? >> what i would like to see is simply a credible long-term plan that everyone can agree on and buy into. it doesn't have to solve the problem immediately. it is really a decade or more on the deficit and the stabilization and reduction of debt. so really it's the longer term grand bargain that i think is the most important thing. >> thank for joining us this morning. >> staoefrbg thank you. >> steve, good questions. the 7% solution that you uft said, did he mean the outlet to get to seven we got close to figuring this out.

i feel like i tphgs a lot better. >> okay. thanks, joe. what do you think, seven or the outlook from seven? we've got to go. >> i'll talk to you after we go. i'll be back at 8:30 and give you the answer. >> thank you. that will be perfect. jocks, globe economy, g.m.'s outlook at the global economy. plus, the steel range. awe then particular design. looked so good. we'll outside to kick the tires. not actually to a look at the car. acceler-rental.

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that's why southwest worked hard on the little and big things to build a better in-flight experience featuring access to wi-fi, live tv, and updated cabins. getting there just got better. we are southwest. welcome aboard. the pork industry, along with the usda, signed off on a couple of new names you could see popping up in area supermarket. it will come with new labels to

tell you which parts of the pig the pork comes from. if you're wondering what they're talking about, here are a few names. pork chops will be replaced with porter house chops. ribeye cops and new york chops depending on the cut. pork butt which is a shoulder cut will be called a boston roast instead. you understand why they may change some of the names. no one wants to eight a pork butt. and the rechanging chicken breast is still on right now. >> did you see the guys wading in the water. >> people are eating bacon at home. >> probably not from those. >> probably not. >> all right. if you have any comments or questions about anything you hear on "squawk", he's eating ribs, any new name suggestions for pork, chicken or the rest,

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welcome backing everybody. as we count down the march jobs numbers tomorrow, a new report shows the nation's employers slashed 50,000 jobs last month, 30% increase from a year ago. joining us is the author of that report, ceo of the outplacement company challenger. when you take this is this

reason for people to start being concerned about what's happening on the hiring front? >> well, certainly it means there's volatility out there. certain sectors are taking the hit harder than others. we know generally the economy has been improving. the job market has been improving. there's always the upside of the job creation. >> what are the sectors where you're seeing some of the cut backs? >> retail was hit hardest, just over 16,000 job cuts. that changes and gets more -- moves towards strategies, more segmentation, more internet driven. sears, blockbuster going through heavy cuts. and so far in the first corner in banking.

>> he was analyzing adp numbers he compiles. he said he's a little concerned that some of these industries are reacting to the health care law changes that are going to come in. they're acting ahead of these changes coming in because they don't want to have as many employees they will have to provide health care for. do you see any trends like that in the numbers you analyze? >> it seems it's happening in smaller businesses. so our numbers get at lay justifies from larger companies. we may not see the numbers. no question smaller businesses are going to see their net grow no question it's going to affect employment in 2013. >> john, thank you. we always appreciate your time. thank you for coming on with us. >> thank you.

>> general motors chairman and ceo dan ackerson. we did not talk to you about what some of the central banks have been doing for years at this point. but the focus today is really on what the backe of japan is doing. these are some extreme measures. you have 70% of your operations coming from around the globe, not just here in the united states. how do you deal with all of these changes. does it have a big impact on business? >> sure. on a macro economic basis what the banks are doing i worry about. we're doing it in this country too. quantitative easing. what you get is when you have large institutions represented by governments in markets you ultimately will get knuckles in the marketplace and in efficiencies. and you could build bubbles. and i think market discipline is required. and you start to get distortions when governments start to have sustained long-term involvement

on a macro economic level. and you can see just the announcement in japan today. right away the dollar rallies. they weaken. it goes to a basic principal for a large manufacturer like ourselves. we must have our operations. we must build where we sell. not only do you have the risk of foreign currently fluctuations which are rob you, but you have terrorists in different blocs or countries. you have to build around the globe to offset the risk of government intervention on a macro and micro economic level and repercussions as it results in currently fluctuations. >> if you could set the yen for

maximum benefit for g.m., just give me a raping. if's it iacocca who said give me -- and he set some level. give me this much dollar/yen and i could do this much with domestic autos. i don't remember what it was. they moved so much since then. a number that would probably sound ridiculous now. do you like 85? what do you think would be fair value? >> well, first of all, i don't think a company like general motors should make excuses about foreign currently. we have to compete. you can complain about the the weather but that's the way it is. we do plan. we manufacture around the globe. but the japanese have had a history of currency manipulation. >> are they manipulating now? >> i don't know. but with -- i mean, it was odd to me when they had the

earthquake and the tragic tsunami their currently rallied. personally i thought it would weaken. it strengthened and now it's weakening when the economy is doing right well. >> they gave some rationale for why it strengthened. >> right. >> how much is it hurting you? >> currencies take a while to have an effect. we had one of the best marchs in five years and outperformed our competitors in this market. we don't have much of a presence in japan itself. most american manufacturers don't. rather than competing on currently we have to compete on fundamentals.

that's what we're focused on. >> when you look at your market share. we should point out your market share is up. 17.5 to 18%. are you worried that you cannot sustain gains when your competitors from japan have the weak yen and ultimately perhaps a real pricing advantage? >> i worry about everything. there's no question it's in the back of my mind and what we do. now, when the yen strengthened a lot of japanese manufacturers said we have to manufacture in north america. many of them were going to mexico. be that as it may, at least they recognized the same problem we have. their currently will fluctuate.

this is a different company than back in the 70s and '80s. we had $49 billion of debt prior to the bankruptcy. now we have five. we weren't cash flow positive in the years leading up to bankruptcy. so we're a much stronger company. wegoing to leave up like we did before because we have invest in dips in the economy around the world. that is a staying power that is a bigger plus. >> but it does impact profitability as they can have that flexibility if you want to call it that, to really come at you on the pricing front. >> no question the competitive profile we have. >> have you got business plans at 100 yen? is that where it's going to be? >> you know, it's interesting. it manifests itself here. but it also manifests itself

around the globe. for example, when we're competing against japanese competitors in europe, it's a different dynamic depending how the yen competes against the euro or in china or in australia. you can't think of a portfolio but essentially dow have that. we see different risks whether they be in manufacturing, regulation, safety co2 emissions. we have to play that specific to a region, specific to a country. >> accusations have been placed against us. >> we have benefited in recent years. >> there's no question. >> and we have done a lot of qe. >> that's one of the things i think is good to have an

international dialogue among major trading partners. clearly we have had that in the last couple of months. let's not trip into a currency war. so i think the japanese are acting in their best interest. and every country has that right. i wouldn't call them currently manipulator. any more than i would the united states or any other major economic power. >> as far as how you feel about the jobs picture, is it really -- does it feel like a sub8% unemployment? does it feel real? the rate has fallen. a lot of people working part-time. or people don't feel fully employed. what can you tell? >> i feel like it's worse than

7. 7.7. >> there's that underlying strength. when you have an average age of cars on the road 11 years where before it was seven or eight, that may be sending false signals to us. every time you look at a lot of data i think it's best to question every data point, am i getting a false signal. is this real. and i don't think you can take any broad data and say 7.7% is real. how does it affect your specific market. >> other tailwinds. >> when you look around the globe, and i'm traveling all the time, it's good. it doesn't feel as robust as i would like to have. >> up next, we'll be -- are you going to be here for a little while? it's cold. >> it is. but there are some pretty cars. >> they are hot cars. >> breaking news from the ecb on

interest rates. plus, more of your morning headlines. as i said, we're heading outside to wrap things up with dan actor son. we'll talk economy, and much more. at the top of the hour, neil irwin will join us. "squawk box" will be right back. welcome to the new new york state. what's the "new" in the new new york? a new property tax cap... and the lowest middle class income tax rate in 60 years... and a billion dollars in tax breaks and incentives. new opportunities for business. over 250,000 new private sector jobs were created over the last two years. and 17 straight months of job growth. with the most private sector jobs ever. lower taxes, new incentives, new jobs, now that's news. to grow or start your business in the new new york visit thenewny.com

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welcome back to "squawk box". taking a check on the european markets as we wait for this ecb decision. ftse slightly lower. cac and dax higher. the decision is out right now. it turns out it is unchanged at.75. a lot of investors out there waiting for the press conference in about 45 minutes time to see if mario draghi says anything about bringing the rates down in the coming months.

the decision after the bank of england maintained its low rates early this morning. both in sharp contrast with what we saw out of the bank of japan overnight. it is saying it will pursue that easing until it gets its inflation target to about 2%. let's move on, get some other corporate headlines for you this morning. if you don't mind last year's ipad, best buy is trying to lure customers with a 30% discount on ipad 3. some are taking that as another hint that apple is about to launch another version of the ipad and iphone. best buy said it is not discounting the price of the ipad mini. the carnival "triumph" is back under control. high winds caused it to rip loose from the dock.

breaking news decision out of the ecb. rates unchanged at.75. joe becky, phil lebeau and ackerson heading outside. the new corvette stingray. buckle up and hold on tonight. "squawk box" is coming right back.

welcome back to "squawk box". we're with chairman and ceo of g.m. phil lebeau is here. we're all acting like it's 80 but it's not. >> i'm not. i put my coat on. >> it's like 30. we're going to actually go over and look at the stingray eventually. i want to talk first about some of the stuff you told me about, the caddy. where are the caddy commercials filmed? is that in iraq? >> morocco. >> amazing. and cadillac has, in my view, has really helped g.m. regain

some of the lost luster. this new one is a beautiful car. and you said you wanted something to compete with some of the euro -- like the the 300. >> we wanted a small luxury car to compete with the very best that the german and japanese have, specifically the bmw 300. this was designed to do just that and it will. >> it outperform the beamer on just about every metric. >> that's right. this is american ingenuity, american innovation at its best. you think about the storied history of cadillac. you don't know this but cadillac was the first car to have an electric start. that kind of liberated women. even the old crank would break men's arms. lighting. air-conditioning. we let it go steal in the '60s

and '70s. it didn't go global with you the audis, bmws and per day december did. now it is. over half the people buying this car are coming out of german competitors. and well over half these people buying cadillac have never had a cadillac before. >> how much is the stigma of government motors overhanging on your sales? you have been quite vocal saying we have got to show people we are not government motors. you admitted that it impacted people, kept people from going into a cadillac, chevy or gmc showroom. is that still happening? >> it's largely behind us. we did a survey coming out of bankruptcy. it's right with the best there are. people have seen we have generated 23 million plus in profits coming out of bankruptcy. the industry needed to be

restructured. not unlike the steel injury in the 60s, 70s, 80s. this had kind of atrophied. it's competitive not only in this market but globally. people kind of like that underdog story. and the fact that we're hiring people. we have hired 24,000, 25,000 people since exiting. and we have invested $8.5 billion. people like a success story. with all that success i think we have a long way to go. and a lot more to prove. >> can you get a "v"-8 in that car? >> not in that one, no. >> but it's fast? it's a six banger? >> it's fast. >> the sting ray, the rvet this is a "v"-8? >> v-8. seventh generation and storied

history of corvette. this in my opinion is the most beautiful. it is a combination of not only fiberglass but carbon fiber. it looks like an f-22. three dimensional optics on the display panels. it has stability and control. >> go get in your truck. >> all right, fine. i don't want to drive at the same time as you. >> i won't hit. >> you i will hit you. >> i won't hit you with an aluminum body. i can't even open it. >> it comes with an aluminum frame which took off 100 pounds but gave a stiffer body, better handling and control. the best stability track in the industry. >> this is an automatic.

i was looking for the clutch. >> you need gmc to tell you how to start it. >> no. i was looking for the clutch. you don't have to drive it. >> get out of your car is what you're saying? >> no. i'm riding with you. thank you, dan, for joining us. thank you for bringing him. by the way, folks, when we come back, neil irwin. the latest on north korea, a check on the futures and a lot more. >> is the gate open? >> it will be open. >> "squawk box" will be right back! [ male announcer ] there are people who find their own path.

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where every cappuccino and latte is only made with fresh milk. and where the staff is exceptionally friendly. ♪ nespresso. what else? nuclear rattling in north korea. the united states stepping up missile defense plans. an expert from harvard and m.i.t. about the the potential threat and geopolitical risk. blackstone will join us for the hour with lessons from his first 80 years. facebook's big announcement.

a preview of the move into smartphone software. the third hour of "squawk box" starts right now. welcome back, everybody. this is "squawk box" on cnbc. first in business worldwide. i'm becky quick with joe kernen. u.s. equity futures have been sharply higher. 62 points above fair value. of course this is coming after a big down day. yesterday the dow was down 100 points. european central bank and the bank of england both leaving rates unchanged. if you're watching european equities you see green arrows in france and germany. ftse down 18 points.

mario draghi will be holding a news conference. the bank of japan, that was a totally different story. it announced a radical overhaul. it is pledging to double deposit bold holdings. policy makers trying to end two decades of inflation. we have seen some reaction to this in the markets. dollar rising sharply questions the yen. >> an event is planned for 1:00 p.m. eastern at the social network california headquarters. the company is expected to unveil a new facebook operating system for android mobile devices. suggestions that it will be first rolled out an htc phone.

julie will bring us more on this story at the bottom of the hour >> in a statement this morning, north korea's army says that the moment of explosion is approaching fast. yes. some strange terminology. this is a strange situation. the united states sees a real and clear danger. washington is preparing an advanced miss el system to guam. joining us now to talk more about this, what it means from the foreign policy implications and the market is a north korea specialist at harvard school of government and m.i.t. and byron wi. welcome to both of you. we spent the morning trying to see how seriously we should take this. saber rattling is kind of the norm for north korea. but with a new regime, new leader, untested one, people aren't sure if this time is

different. what do you think? >> that's correct. i think right now there's a lot at focus on why this stream of threats is different. the key thing is the new leader. he is all of maybe 30, 31 years old. it's unclear if he's gone through regime consolidation. he is the the leader of north korea. he's recognized as that. but there is a power consolidation going on. so who is driving all of this is a big question mark. in all of this we have to look at different threats and capabilities that the north koreans are projecting and realizing there are different timelines. the clear and present danger are the 11,000 artillery tubes trained on south korea. the work in progress is the missile and nuclear program. the north koreans have to conduct more nuclear tests. they have to conduct more long-range missile tests, increased pay load. >> we were willing to shrug this off as more of the same until we heard from the united states and its countermeasures that it is

taking to deploy that missile system to guam. maybe the united states knows something that the rest of us haven't figured out yet. what do you think? >> two factors. one is the fact that the united states has moved assets from hawaii. very sophisticated radar used to track missiles. that's on its way to south korea. u.s. destroyers that have defense capabilities. now this report of what's called the terminal high altitude area of defense. very advanced in the current arsenal of defense systems. but that is still actually a work in progress as well. those missile defense systems are scheduled to be there in 2015. the fact that they're happening earlier could be one aspect of using this as somewhat of a focal point to get them out ahead of time. >> we spoke with our correspondent from beijing.

she pointed out there had been different opinions and different op eds written suggesting possibility that china is rethinking some of his alliance with north korea. are we log at that a little too hopefully. >> there's a saying in china those who know don't speak and those who speak don't know. there is a debate going on. but when it comes to the elite decision-making processes it's unique cell within the communist party of china directing with the north korea workers party. here i would raise a point that hasn't been captured in the headlines. it is continuing to produce close to the provinces close to north korea. and the titanium mine. it's a very different type of parallel existence where you have the mineral trade continuing in the midst of all this bluster. >> if you have to put a radar

measurement on it, yellow, orange, red. how concerned are you at this point? >> the concern for me is specifically related to the fact that north korea has walked away from hotlines in crisis moments with south korea and the united states. so if there is an accident or escalation of some kind there is no immediate emergency communication available. that i think is a clear source of concern at this point in time. >> is kim jong-il as crazy as he comes off from all the reports as we have heard? >> his son is untested. that's the part that gives people a lot of concern. he has no track record of sorts. kim jong-il had 17 years of rule. this is a first major standoff kim jong-un is unveiling. we have very little reference points. some would say none.

>> when we see them walk back the economic sort of aspects they like the talk but they do need the west to some extent. and they did do that. they have so little to use. is that wrong to use the analogy. if you have nothing you don't have much to lose? was that significant when they backed off the economic cooperation? >> sure. the economic cooperation with south korea is just north of the demilitarization zone. the key thing here to remember is north korea doesn't function like a normal state. it's 1% of the population that runs the the country through web of state trading companies deployed to generate revenue for that 1%.

when you look at the money generated something like that complex through wages and the rent for the facilities, that goes disproportionately to this 1%. your key point of why the the north korea is walking away from this and what we can perhaps discern by the tea leaves, one thing that i think is important to keep in mind is this ongoing trade between the chinese and north koreans. it is increasing dramatically. for north korea they might feel emboldened that they have capabilities and something that makes the south koreans and u.s. in terms of offers for negotiations less attractive at this time. >> john, thank you very much for helping us try to understand that. we need all the help we can get. it's still pretty complicated. >> thank you. >> byron, you watch this. you have seen stuff in the past. how do you figure out what this

means for the market and for the u.s.? >> it's hard to understand what the up side is here. this fellow is trying to put himself on the map like his father was. so it's an irrational situation. if it cools down it won't have a lot of impact. but if he actually does something, if he shows some violent way it could have a market impact. my bet is he's not going to do that. >> there is still some logic driving something behind this? or some self preservation? >> he wants face time and he's getting it. >> north korea and all of its provocations has been one of the things impacting stocks recently. we watched what happened with the bank of japan. that could have much longer

implications. what do you make of the central banks all ramping up like this? and now the bank of japan doing exactly what it signaled and then some? >> the essay i wrote last month is something my mother didn't teach me. money isn't everything. >> in the next 80 years you will find out even more. and i think you would liken this to the national -- >> dim memory. >> 1901. you know, what i thought of immediately, byron, because i never forget anything. the last time you were on after being right for so long, bullish, you pulled your horns in quite a bit. how long was that? three months? that was too early. >> definitely too early. >> what do you think now? >> i'm not backing away from that. i think this is a market that's

levitating on monetary expansion not only in the united states but in europe and japan. maybe it will go on forever. the federal reserve balance sheet in 2008 was $1 trillion. it was all treasuries. today they are putting $85 billion into the economy every month. it will expand $1 trillion in 2013 alone. europe doing the same thing. japan even more relatively. so i think if the money supply supply eases down it's going to have an impact on the market. i'm also concerned that margins are peaking. profit margins, a percentage of national income is peaking. percentage of sales are peaking. i think earnings will be disappointing. i'm not a bear but i do think the market has come a long ways. up 16% last year. up 10% in the first quarter

alone. it's continuing to rise. i think a correction is coming. >> i think profit margins three months ago that was part of -- >> that's been my thesis all along. >> you know what scares me a little bit. >> oh, my god. you're going to be on the same side i am? >> only in the sense that mark farber is smart. and guys that do worry big time, i mean, about, you know, cataclysmic type things, in the past weird global developments sometimes coincide with a market that's already some people think, levitating. and if there were -- i would have no -- i never really thought we would ever use a nuclear device again. i thought it was over after the cold war. and i still don't know what to think. we just had some guy who knows so much more than we do on. if one went off and where there

are people instead of an underground coverage i don't know what that might do. the fabbers of the world, something like that could make a top. >> you can't predict that. >> and it's already vulnerable. >> it's vulnerable, yes, if i'm right. but if i'm wrong -- i'm not right all the time, joe, you would be the first to point that out. >> we have plenty of time. but not enough. >> the market is not accessible. >> do you have an s&p number for this year? we had a guy scott black, he said the street is at 111. i'm at 104 for s&p. he said that puts it 15.5. usually we get 16 is average. and i said, well, you could be

wrong on the 104. it could be higher. 15.5 is already below 16. you don't seem to be making a bearish case to me. >> no, i'm not making a bearish case. i'm even below that. i want earnings will be flat down. >> where? >> 100. >> all right. byron will be with us for the rest of the program. a lot more to talk about coming up. but we also have some numbers. >> "washington post" columnist neil irwin will be here to talk about the fed's exit strategy in light of more information from dennis lockhart with steve liesman. and a new book, "the al chemist." tomorrow, we'll break down the march employment report with the economic advisers to two presidents, a vice president and a presidential candidate. ghoulsby, feld st tein, at 8:00

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welcome back. comments from san francisco fed president john williams suggested that central bank could begin to cut back on massive bond buying program as early as this summer if the economy continues to improve. and dennis lockhart earlier on "squawk box" with steve liesman. joining to us talk about the fed's exit strategy, "washington post" columnist neil irwin, the author of the "the alchemist." three central bankers and a world on fire. it reminds me of the three men who saved the world. >> you remember that? >> yeah. >> that was summers, rubin, greenspan. they all had their issues.

we'll see what happens. so we took that yesterday like it was surprising. what lockhart said, yeah, maybe by the summer. it's surprising. but is it really surprise something. >> the important thing to remember is there's a difference between tapering and cutting it altogether and stopping new bond purchases and tightening. you start to taper and dial down to 60 or 50. then you stop buying altogether. somewhere after that you're tightening and raising interest rates. it's not a free ride forever. they will start dialing back. that could happen pretty soon. >> maybe there was some housing boom we thought we were going to have forever and that got us the 5.3. i think bush and clinton both had 5.3 over the terms of their presidency. >> right. >> maybe never getting to 5.3. maybe they're not trying to get

to 6.5. maybe 7 really is the number where they stop. maybe 7 if they get that close. that's getting close to full employment. do you think it's different? >> there's good reason for modesty. real evidence that maybe the 5% we used to consider, the thing we were aiming for and the national rate of employment in the clinton years, chunks of the bush years, maybe that wasn't sustainable. if you need a giant housing bubble to get to 5% unemployment, maybe we won't see 5% unemployment any time soon. >> what are we going to see? >> 6, 6.5 is totally reasonable. >> you think the target is reasonable? >> i do. >> i know the stock market is not your area. but what do you think would happen. most investors think any amount of restraint is going to have an impact on equities. do you agree with that? >> you know, i realize everybody in market sees qe as the driver

over the last couple of years. earnings yields, pes. you know, it's clearly the case that there is some effect of qe. one of the major channels tries to help by boosting asset price. the thing to watch for is earnings yields getting to a point where they don't make any sense. and that's when you have to worry. >> right. >> well, they're not -- >> your point earlier about will we see margin compressed, that's something to worry about. the labor market gets tighter. suddenly they want that raise. more of corporate income is going to wages rather than profits and -- >> from your point of view, what do you think real gdp will be in 2013? >> we have seen it locked right around 2%. 2009, four years ago. i don't see much reason to expect something different from that.

>> neither do i. >> 1.5, 2.5 very plausible. much beyond that -- >> my case is with one and a half or two or two and a half there's not enough revenue improvement in offset cost pressures companies experience. does that make sense for you? >> it does make sense. it seems like there's two competing for corporate earnings and ultimately the stock market which is on the one hand growth. do we get better than 2% pattern? on the other hand margin compression and that's works the other direction, which is a more powerful force? it's how quickly wages start to increase. >> no internet bubble. no housing bubble. we ratchet up our estimate for what full employment is.

we had mark zandi, the last person i would think obama care was hurting job creation. i don't know why he's the the last person. he was mccain's guy. i don't know. i think of him more as obama guy. he designed some of the stimu s stimulus. can we factor in obama care to add another half a point? even 6.5 isn't possible now? and i saw the president is in san francisco. the best thing for the the country is to get nancy pelosi back in as speaker of the house. and i think about the last two years with him and nancy pelosi back in as speaker of the house. we might as well bring it up to 8% full employment. no? can you channel ruben? >> it can certainly -- >> even though you have -- you go over 49 and you're in

trouble. over 29 hours. >> where is the evidence that's something really holding back. >> in five years subpar growth in i think when you look at what happens after financial crisis that's what happens. >> time will tell. >> we'll see. that's for sure. i know you're for it. many thanks to neil irwin. say hi to jennifer for me. >> sure. >> there's the new book "the alchemists." >> neil, thanks. when we come back, closely watched weekly jobless claims at 8:30 a.m. eastern. stick around. we'll be right back. revolutionizing an industry can be a tough act to follow,

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welcome back to "squawk box". 11 seconds away from weekly jobsless data. rick, the incomes, please. >> and the initial jobless claims number jumped to 385,000. i am very surprised at that. that's a big number. we're up, what, 28,000 from last month's 357,000. continuing claims pretty much going side ways from 3.07. 3.06. of course there's a time issue there. it's not the exact same reference point. but you get the picture. that isn't the big news of the day. here's the big news of the day. i want everybody out there in tv land, and i can see you, to raise your hand if you would

lend the japanese for 10 years your money at 44 basis points? oh, my goodness. that's what a 10-year jgb is, 44 basis points. unreal. anyway, what do you guys think of that? >>. >> and you pay your interest in yen, which is also going down. >> interesting. >> oh, my goodness, one of the biggest problems that i've seen in a long time. cash markets dollar all the way up to 95.30. this is pretty much against every currency on the planet. yeah. it's pretty amazing. i don't know. the more i look at this, guys, i don't know how this is all going to turn out. but somehow way in the back of my mind i can't think it's all going to end well. especially when it's one of $12

trillion jgb market. >> what does that say about the confidence in japan? >> it's an easy one. i was hoping you would ask that. look at the nikkei. it's up 2%. so the whole thing is the stencil of post greenspan, ben bernanke. the japanese have been told to follow the the model. now they're not only following it, they're putting their own touches on it. >> liesman, see what i'm getting at? the market obviously doesn't believe they're going to be successful in reigniting inflation if they lend at 44 basis points. you're losing a point and a half. >> what's wrong with the test that rick just did, something whether or not they would buy that 10-year, 44 basis points. people watching have to be in

japan. japan has a huge percentage of home bias. they buy their -- local japanese buy japanese bonds. >> you're right. the government too. the government oedz boat loads. they have been accumulating forever. >> people are clapping with your answer. that was so good. amazing. they were like cheering. >> i have to come to dayton to get some respect. >> we decided the new full employment is where it used to be. if they get to seven that should be enough. is that what he said? >> well, you know, that's not where they're going to end. williams yesterday 5.5% as to where his -- >> what? >> 5.5%.

i asked lockhart about that 7% yesterday and he basically said he would like to see it but it's not a trigger for him, where he would change policy. if you want, joe, we could run the quote that we had earlier today from lockhart where he talked about what that 7% figures means to him. let's listen to it. >> i would love to see 7%. but the approach i'm taking is i'm thinking of this as a confidence in the outlook building process. if my confidence in the outlook, key word outlook, if that increases i would be in a position to make a judgment that we have seen substantial improvement in the outlook. >> steve, that sounds like he could do it before 7. all right. i would love to see 7 but i just need to see -- that sounds like -- you're trying to see they would have to go past seven. he sended like he was saying as we get closer to seven i would do it. >> i can't disagree.

i think it's a bit like you're out in the boat. your motor conched out a little bit. i'm not confident i'm on my way until i have gone a certain distance. it could be 100 yards, 200, a mile. getting back to the data, the adp, claims all a little bit soft telling us, hey that, 3.5% from the first quarter iss which is where all the economists are is not going to last. but how soft does it get? >> they are already dated. we're swooning again. after yesterday's adp and today's unemployment, i don't care what they theufplt we're swooning again possible. >> i think you're highlighting what is the new fed way of doing business, which is that data

comes in and you automatically adjust your outlook for when the fed is going to change based on the data rather than a calendar date. it's the outlook for g t 7% or call it just below 7%. getting down to some substantial in the market. that's what we're doing. i'm going to be talking to more fed guys figuring what is that litmus test you have? williams wryesterday said we cod get there by summer. we have evans later on today. we're going to ask the the same thing. >> we have breaking news from scott coen. former enron ceo, we didt we think we would be saying his name again for some time to come.

what's new. >> we didn't think we would say it for a couple decades. 24 years in prison for his role in enron's collapse. now there is a deal in the work between attorneys and the justice department that could shorten the sentence. we don't know yet by how much. this has been quietly going on for a while. skilling's sentence was overturned by federal appeals in 2009 saying it was too harsh. the appeals process played out more and the parties began talking about what they could do. skilling was planning on filing a motion potentially as soon as next month alleging the motion would go away under this deal. we found out because the

government issued notice to the victims. the judge would have to approve this. there may be some indication by the fact that this announcement has been issued that the judge has given at least some indication he might go along with a deal. he held a private conference call in his chambers in houston last month. again, all of this is still at sensitive stage. we can report that a deal is under discussion that will shorten skilling's sentence considerably. guys? >> i have no idea -- so he had 25 years. >> 24. >> and he's been in for -- >> he's been in for six. >> is he get out next week? >> time served? >> it's possible. now, what the the appeals court ruled, was that the sentence was too harsh.

enron was not a financial institution. so the court sent it back to the judge to resentence him. taking off that enhancements for financial institution could right away knock 10 years off his sentence. and there are other way toss shorten it for things like good behavior and alcohol rehabilitation, drug rehabilitation and things like that. presumably it could be shortened considerably. this is all speculation on my part. we don't know how much it would be shortened. skilling has always from day one maintained his innocence. convictions would presumably stand under this deal. >> he can still go along with the appeal that found in his tpaeufp. he wouldn't cut 14 off or something. he wouldn't even accept five more. i would continue the appeals

process and try to get out immediately. >> that's what the big chess a match is here. again, the other thing that was going on and the reason the government may want to make a deal, skilling had been planning to file a motion by the task force. that could have gotten messy. presumably that will have gone away. while in prison, both of his parents died, his college age son committed suicide. the government has exacted quite a penalty from this guy. regardless of what happens. so perhaps it's over now or soon to be over. again, i don't know. there's no indication here how much the sentence will be shortened. but the the fact that we're talking suggests both sides have something to gain here. >> why do financial institutions exact a higher penalty? >> it's just part of the federal sentencing guidelines.

if you defraud a financial institution as opposed to just a company there is a higher sentence for that. we know what financial fraud can do at a financial institution. so it's a deterrent as far as that goes. of course we know what happened in the wake of enron, which was part of -- the first wave of crisis of confidence back in 2001, 2002 and beyond. >> yeah. and i know how we've talked in the past, scott, how you feel -- you have asked questions about the the financial crisis. no one served any time. if he's doing 24 years you could think of a couple people who could do six months, right? >> there are a lot of true believers in houston still to this day who say the biggest sin enron committed was not being on wall street. it was an energy firm in

houston. wall street folks knew how to do this right. the wall street folks were more careful about lawyers and disclosures and things like that. although skilling was and is a businessman through and through. and he felt that what he was doing was appropriate. what the company did wrong was not try to seek a better credit rating going into the confidence in 9/11, 2001 that helped exacerbate things. and it was business decisions as opposed to any misconduct or whatever that caused enron's collapse. >> scott, thank you. we'll hear a lot more about this today. but this is breaking news scott is bringing to us. you can find more on cnbc.com as well. when we come back, facebook continuing its push in mobiles with a big announcement today. [ penélope ] i found the best cafe in the world.

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use the ford service credit card. did you tell him to say all of that? no, he's right though... welcome back, everybody. facebook is hosting another event at its headquarters. julia is there and she has more on this story. julia, what should we expect today? >> well, becky, facebook's invitation said come see our new

home on android. we expect the social network to unveil an operating system built into google's android on an htc handset. last year he said he is not interested in building a physical handset. >> let's say we build a phone theoretically. we're not. we could get 10 million people to move it. it doesn't move the needle for us. >> they will reach a much broader device. so what could we see today? we expect facebook to give users the option of effectively making it the home screen on mobile device. aims to drive use of all tools beyond news feed including texting, voice calling and eventually search. emarketer said the domestic mobile app market is $7.3

billion and they are expected to have 13% of that. it is definitely looking to grow its market share with today's announcement. analysts have been reserving judgment until they see how it works before they actually make any decisions about how this could impact their estimates for the company. a number of analysts told me anything facebook does to make products more engaging is good for the bottom line. >> we are continuing on squawk money madness tournament. the winner of apple and bank of america was apple. >> the winner will be facing apple in the championship. joining us on facebook is tom forte. covering blackberry is daniel ernst. tom, you like the odds for

facebook in terms of where it's going to go by the end of the year. you're looking at a price tart of 38 bucks versus $26 the stock is trading at today. >> yeah. we have a $38 target. we're looking for 31% of their ad revenue to come from mobile in the fourth quarter, versus 23% in the fourth quarter of last year. we hope for a good announcement today at 1:00. >> what would a good announcement be. >> anything that gets them more integrated into the consumer mobile interaction is a good thing. i'm not sure a htc phone will be a huge mover in its own right. when you look at what amazon is doing, the kendall fire and ultimately amazon we think will have a smartphone. it's about getting consumers to do more within your set of services on the internet via mobile given that's where all the growth is occurring. >> daniel, you're not feeling so great about the prospects for

blackberry. what's your biggest concern. >> i say vote apple in the final on monday. but for blackberry, i can't recommend it. 28 times earnings and significant business risk it's far too risky. in the short-term, one is they're rolling out several hundred air kwrers. it will significantly boost top line sales. the average blackberry is two years old. today it's four years old. and the margins is significantly higher because the price of the z10 is three times what the legacy models is. they have tailwinds that are at their backs at the moment. but service revenues which accounted for 100% of their profits, are going away. the question is can blackberry, as a relatively low-volume producer. >> right. >> -- become a hardware margin

only company. and i don't think they can. >> saying don't five for blackberry. tom says he likes facebook. shoe vote for that. folks, you've been listening to all of these. you can vote page or squawk.cnbc.com. we have had a lot of news this morning. very active central banks. as a result the euro is trading right at about the day's lows. let's take a look now. it's at 1.2763. the other thing we've been watching today is the yen which got smacked around, too. weaker on the bank of japan's extreme actions that they're planning to be taking on all of this. some people even suggesting this is currency manipulation. as the yen has hit lower you to see some advantage to stocks like sony, toyota. big exporters getting a boost from a weaker yen.

expectation that things like this will continue. futures right now, equity futures back here in the united states, a lot of gains have disappeared. this morning we were up by as much as 67 points for the dow futures. right now only up by 8 1/2. s&p is still positive but only up by with one point. this is after big losses yesterday. >> the claims number. we got the lousy adp number. >> joe, when was the last good number? >> week ago. we had the big employment last -- month ago friday. tomorrow it will be a month. coming up, jim cramer -- you shall have waited to get negative. because you got negative like three or four months ago. i missed 10% probably.

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another one? traders love our trading patterns, now with options patterns. what's not to love? they see what others are trading -- like the day's top 10 options trades by volume -- and get ideas! yea i have an idea: how about trading that in for a salad? [ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-330-3137 now. optionsxpress by charles schwab. jim, you remember when the money supply was everything and it came out every friday. i saw a cartoon that said markets sold off when it was disclosed, an asteroid was going to slam into the earth on saturday but it rallied after the money supply numbers were better than expected.

they say the explosion is soon, we're going to attack with nuclear weapons, we're going to attack south korea and the market's up 70 but we get 15,000 too much on the unemployment claims number and the market doesn't go down on the nuclear tech, it goes down on the 15,000 on the claims number. >> it is incredible to me that you could leave here yesterday and think, i hope that that guam, whatever we are doing offense there will shoot down the rockets when they come our way. instead i come in, say maybe the sequester knocked off 15,000 jobs. yeah, that does bring this all done. i think if the employment number weren't tomorrow it wouldn't be so worrisome. looks like march was a very tough month for the economy. don't know how much is weather, don't know how much is federal government layoffs but it is weaker than -- >> but jim, we must be thinking that the chance of actually a nuclear device going off must be

zero. otherwise the market -- that would be a big deal, would it not, if it was -- if one was detonated? >> i think the tone of it is if you were in north korea with that tremendous free press they have, the south koreans and united states pulled back from their joint that noofmaneuvers they're not going to attack us, we don't have to attack them. i understand that nut job 30-year-old premier over there probably was a little concerned. >> lot of stuff happening. we didn't get to talk to you about the yen. 44 basis points for a 10-year? >> i'm going to drop my tablet and go by a sony walkman now. >> thanks. when we come back we have the last word from our guest host. stick around. hello!

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