good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen. andrew is off this week. he's still on vacation. the s&p is coming off its worst week in a year. but in context, it was only down 1% in the last five trading sessions. things looked uglier on friday when we got that last jobs report. by the end of the session, though, it was only down about 40 points as people realized that even if the economy is not stringing along as quickly as we had hoped, it means that the fed is going to hang in for some time. this morning, futures are indicated higher once again. those dow futures up by almost 25 points. the s&p futures up by about 2.8. alcoa is set to post quarterly results after the close today. that will mark the official start of earnings season. the outlook this time around is fairly weak.

thompson reuters says the s&p 500 earnings are expected to increase by 1 is.6%. that compares with an actual gain of 6.2% the quarter before. by the way, this quarter has seen an unusually high number of negative wordings compared to positive revisions. in fact, it's the worst pace in 1 the years on that front. if there are surprises, again, this could direct where the market is headed at this point. >> that was an amazing performance on friday. >> by the markets? jae. >> and the transfers were up 27. surging. >> they were down more than 2% at that time. >> it was up 27 points on an average of 6,000, what we had had been going down more. the transports had the biggest turn around. >> that was really impressive to come back to being down only 40. the previous report a month ago,

we said the employment moved a lot. the number of people that let me tell the workforce, to see it going to 7.6 with adding 88,000 jobs, it's getting so bizarre. i think it's a 30% low on the participation force. >> what is the participation right now sthp. >> it's like 60 or something. it's staggeringly low. and, you know, the people that attribute it to, you know, policy say that it's much easier to stay at home now with the amount of money you can draw and with government assistance. there's no reason for -- >> and you have more people retiring and other people who aren't going to be looking for a job because it's gotten too hard to find. >> but there is a lot of ways the government is helping at this point. it's well intentioned, but whether it's really helping or hurting is the question. in global market news, north korea has once again barred workers from entering an

industrial complex where south korean companies employ north korean workers. the north said it will temporarily suspend operations there. meantime, a top operation government official may launch a missile by went, but today south korea's defense ministry denied options that they. >> hagel's delay -- >> they didn't want it to be. why did they to which it. >> it was planned months ago to do it. but china has been getting tougher on north korea. if china backs out, north korea lass nobody.

>> i guess. >> there's a south korean plant where they employ north koreans and they allow them 20 to the into -- anyway, it's like joint cooperation. i didn't. it looks like appeasement. >> i don't think it's appeasing the north koreans. i think in some ways you're hoping china steps in and takes a much bigger role in this. >> but like you said, it wasn't planned long ago. it was joint exercises. >> but this is the toughest china has ever sounded. without naming north korea, the premier made some tough comments over the weekend. and without actually naming north korea, i think this is a way of them kind of pushing back on it. if we let that play out a little bit, that could take care of the some of the problems itself. >> we'll see. in other news out of asia, worries about a new strain of bird flu putting pressure on markets in shanghai and hong

kong. meantime, in japan the nikkei revisited the low against the dollar. a u.s. dollar bill could see the breach. we are getting close, 98.66. >> there some concerning headlines out of europe. portugal's constitutional court has rejected some of the austerity measures that were introduced as a condition of the country's bailout. but in at the same time, the european commission says st country has to stick to those targets that it agreed with, tinter national lenders, if it wants more time to repay bailout loeps. the court ruled something along the lines that you wouldn't be able to cut some of the payments they were hoping to. a lot of these civil servants get 14 monthly payments a year.

the court said that would be unfair because it focuses only on the civil service. u.s. treasury secretary jack lew is in europe today. this is his second international trip since taking office. he's going to be talk about the recent deterioration in the eurozone and prospects for boosting global economic growth. kelly evans is covering lew's meeting in brussels today. kelly, this is a big deal to see lew's first trip going over to europe. >> becky, good morning. what's important about this is it's his second trip. the first one was to china. there couldn't be more urgency just in terms of growth. tim geithner came here and carried the message jack lew is likely to carry, in other words, you have to put up these fire walls and make sure markets

don't dissipate. at the time, though, geithner was more or less sent packing and there were a lot of cheeky comments even saying to the u.s., why don't you get your own situation in order first and then come and tell us what to do. you can expect a slightly different tone this time around because you were just discussing the unemployment figures in the u.s., but 2.6% is better that the rate the euro don't just reached. and as a result of some of the austerity measures that have been put into place. what's happening this weekend is important, as well. portugal is resisting some of these austerity measures. it means a billion euros of budget savings they were supposed to come up with this year, they won't be able to. they'll have a harder time coming back to market. and all of this, guides, in the run up to yet another summit this weekend. where the tone might change towards one that's more growth friendly, but it might be changing too late for some of these peripheral countries and

it is just another indication of the way in which european policy is being made on the fly. there's no consistent message here and is last point, there's not even necessarily a go-to person for jack lew to meet. so he's got four meetings this morning. three of them in the berlin montana building i'm standing outside of and a fourth across the street. then he goes where? to frankfurt to meet with mario draghi. draghi, of course, was the guy who geithner talked to more than anyone, the de facto person for europe. tomorrow, it's france and germany with wolfgang shoiblood. people have said paul volcker among them is an alexander hamilton. there is no alexander hamilton in sight. he has a big task in front of him, kelly. you'll be watching all of these and watching these meetings today. what would be the thing that would surprise you the most or that might make the most of a change coming out of this

meetings, do you think? >> we'll hear from jack lew for the first time in just about 45 minutes after he meets with the president of the european council. becky, at this point, we know we are going to hear the same kinds of plat attitudes. they're going to work on, for example, the transatlantic free trade agreement. what i think could be interesting behind the scenes is the extent to which the u.s. is pushing back on europe's financial transaction tax, that does a lot of things, threatening to pull their european operations altogether if it goes forward. that would be a luge blow, obviously, to growth across europe. if it sounds as though we've had any progress on some of those issues, great. it's just that all of us are too cynical to expect it. >> but i know you'll be watching and you'll be reading the tea leaves, too. kelly, we'll be watching you throughout the day. thanks very much. we'll check back in with you in just a little bit. >> meantime, back here in washington, president obama will be releasing his budget this week. president obama says both

parties will be unhappy. two bills to overhaul the immigration system would likely be released by tend of the week. the group of eight has resolved all pending issues in a fellow deal. >> we've got an agreement between labor and business about the guest worker program, but we're revisiting that. we're hoping to get this thing done in the next couple of weeks. it's the guest worker program. high skill and low skill labor. how can you access it in affordable fashion when you can't finds an american worker? if we're reasonable with 11 million, if we'll give them a pathway to citizenship that's earned, hard and fair, get in the back of the line, pay taxes, learn the english language, then the democratic party has to give us a guest worker program to help our economy. >> a bipartisan group is working on its own immigration reform bill, as well.

now it looks week we're up about 28.7 been that will oom get us back to where we were after the horrific jobs report. the ten-year was really wild. a lot of the yield got crushed. >> the yield was down to below 1 11 -- 1.7%. >> and the dollar, almost 100. on the euro, back above 1.30. gold, there's a little bit going on, but it's an innegligent nuclear explosion was happening. it's a little strange to see gold unable to push through 1600. stocks were punished a little bit. not much, though, on the open for disappointing data. both our next guests agree that the fed won't change its money policy anytime soon. mark is investment strategist at danny montgomery, michelle gerard, what was your number

before it happened? >> i was at 1.95. i was very close to the consensus. the an ek doeltal evidence going into this report was fairly solid. we had heard -- seen the claims figures continuing to fall. we had heard anecdotally companies -- i saw one report that was blistering about what companies were doing in terms of their demand for looking and hiring staffing firms. the adp number was weak, but some of the other figures coming into it does not suggest this kind of a deceleration. what happened? >> these number res noisy month to month. if you look at the q1 average, it's not that different. to me, this wasn't so much a weak report. but what it told me was those stronger numbers that we had been seeing that made me almost think, maybe there is isn't happening on the employment front. even though it seemed so odd to me, i was starting to question myself, maybe there was something going on that i was missing. this report says, no, it is going to be more of the same. we'll have some strengths, the

period of softer numbers, on balance of the economy, can't break to the upside. >> we can start thinking the fed is going to start tapering the program in the summer? >> exactly. i think if you had seen 200,000 or better job growth, continually through the summer, the fed would have probably tipped their hand to that strength and is just cut back a bit or adjusted the program a bit. and now, this is their worst fear was that was going to repeat the last three years where things look strong and then certainly slow. this seem to kind of feed into those concerns and will keep them, again, waiting longer, providing more support and keeping the purchase pace steady. >> mark, we immediately heard sequester, sequester from anyone that carries water for the administration. and then the other side said it's all the tax dresses. and you can include the payroll tax or just include the other payroll tax increases. wa does cause it? >> well, you're right.

i think we haven't seen the effects of the sequester yet, joe. that's part of the issue. the new york coupnext couple of weeks, if we have anything from the payroll tax and the sequestration, the cuts on friday are not necessarily that there were no jobs being had, but continued deferment to see what effect we're going to have. we saw retail that did, in fact, not see the job both we had cut the first part of the year. so i think even indicative of perhaps spending which has turned cautious. a litmus test has to be taken to the consumer. i think we're going to learn more over the next several weeks that perhaps is still noisy in what was friday's jobs number. >> is it going to be continuing to see the rate, the overall rate, will the general media be

able to continue to report it's going down? >> i sure hope not, joe. that participation rate falling down closer to 3% is very disappointing. if we had had the same participation rate applied to friday's number as sood basically between 2007 and 2009, the unemployment rate would be about 11.5%, not 7.6%. so it's a very misleading number that's advertised as to what the job market looks like today. you have to look through the numbers to really see the fact that there are more people sort of falling out of those being counted as employable or at least looking for work and it isn't all attributed to the baby boomers retiring. >> what's the problem? can you tell what we're doing wrong? let's say it's not 11, but let's say it's not 7.6, either. wa is it that we're doing wrong here? >> well, again, like the other guest said, i don't see the numbers necessarily as if jobs are being purged or eliminated. that would show up in the

initial employment claims on a weekly basis. not egregiously, but directionally, we've seen a little back up on that front. it's that we're not seeing the pace of hiring that you would expect to see. >> construction is coming back. construction is coming back, we said we lost all thoughts jobs and housing is coming back. >> yeah. that's a green chute. definitely, joe. >> why aren't companies still a a lot of cash, michelle, and they're still not doing anything with it? >> the truth of the matter is, there's though -- i don't think any big reason the companies feel the need to go out and hire at the kind of pace we would normally like to see. 250,000 or so is kind of what you would expect to see if the economy was really able to be growing. >> will it ever again, in five years? >> i think it's going to -- i just don't think economic policies are conducive to that. confidence among large business owners, ceos and small business owners is very low. i mean, we're back to kind of almost a the lowest levels that we had seen throughout this downturn.

companies rpt very optimistic about their outlook, about their expectations or how the economy can grow. again, they hire when they need to, but they don't hire ahead of it. >> companies don't think we're going to do 3% this year. >> exactly. >> they must think we're going to do 2%. >> i think we're probably going to -- on a year over year basis, it will vary so much last year, right around the 2% mark. i don't think the sequester will be as much of a drag as some people fear. but you've got positive things like housing. you've got some fiscal drag .you've got ongoing uncertainty out of washington. all that i think keeps businesses hiring cautiously. if this suggests to me what we had thought, it will be very hard to think the economy can break to the upside in this environment. >> if we did three mark, i think companies will come in line. so it is demand. the question is what is causing the demand not to be there? you know, if businesses don't expect better than 2%, then they're going to stand pat.

>> well, we know. we're going to get a report this morning from the national federation of independent businesses, small business optimism survey which has been a bit of an oxymoron. surveys of small businesses rank number one, government intervention, as being the most problematic to them. >> knowing once they hear that a little more. if it's raining outside, you need an umbrella. put up the umbrella and get back to work. >> i don't disagree. >> but then you're going to have an economy that grows -- >> i don't want an economy that grows like this. >> something that's 20 give in that equation, joe. >> people get coming out of school, this is unacceptable. this is unacceptable. >> agreed. agreed. >> mark, thank you, michelle. thank you. >> thank you, joe. when we come back, we'll get the forecast for hurricane season. yes, that is right, hurricane season. and why retailers are taking notice. i can't believe we're talking about this when we still haven't

recovered from the last hurricane season, but we are because it's approaching. first, though, welcome to masters week. there is a little bit of activity in augusta this week. this weekend, condoleezza rice hits a link with thigh time masters champion phil mickelson. that meeting comes ahead of the 2013 masters which began on thursday. and it's master week right here on squawk. only we are talking matters of the market. these are legends of investing that we first introduced three weeks ago. john rogers. mark faber of the gloom and doom report and pimco's bond king, bill gross. although bill gross is saying you use flower spoeft to call him the bond king any more. we'll ask him about ta. carfirmation.

only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz.

welcome back, everybody. it is april, but never too early to start preparing for the upcoming hurricane season. joining us right now is paul walsh. he is chief meteorologist at weather fx which is part of the weather channel which is now known as the weather company. >> that's right. >> paul, thank you for coming in. we're still struggling on the jersey shore and the tri state area here. they haven't recovered from hurricane sandy.

>> it seems like just yesterday i was embedded here for hurricane sandy, now turn around it's time to start taking a look at the next hurricane season. we've had sort of two back to back big storms in the northeast which is really unusual. it's statistically unusual. >> and this one has been a tough one to recover from. >> weren't there three and 54? >> yes. >> three huge ones twice as big in '53. >> but we have not seen al gore's -- what was that, 2005? the one that was going the happen again and is again and again. that has not happened. >> no. >> the frequency has been even less than what you would expect. >> what we're seeing now is related to short-term -- or i should say medium term phenomenon. >> exactly.

>> temperatures, el nino, so we've seen this sort of short-term increase in storms. so the last three years, we've had 19 storms. this year, we're expecting 16. >> is that a lot? >> it's above the average, right. >> the other thing we're looking at is for the storms to continue to be following the same kind of track that we've seen the last few years. >> coming right back up the coast here? >> yeah. but the odds of that happening are so low. it's still pretty low in terms of -- >> isn't it -- when is the last time we saw a category 3 hit landfall? it's been over ten years. >> since katrina that we've had a big storm. >> but a category three hit -- that was a two, wasn't it? >> it was very close to a three. that was a big, big storm. >> but that's what people point to is it's been one of the biggest periods since we've measured things. >> i think one of the biggest risks with hurricanes now is related to the fact that the sea

levels are higher now. so when we do have the hits, the potential for damage is higher. because the fact that the sea levels have risen already. and so the essential impacts are very strong. hence with sandy, which was not even -- it was declassified, but it was still at hurricane strength when it hit. but look at the damage that occurred from that. >> when you say 16 storms, that means that we're expecting bigger storms or just more frequent storms or what -- >> more frequent storms. so overall, we're expecting 16 storms. i think out of that, nine of those are expected to be actual hurricane pes. >> how can you even figure that out this early? it's only april. >> the forecast -- >> i don't know if he has a high degree of forecast. >> the number of storms, there is some increase in terms of predicting the number of storms. what you can't say with is where they're going to hit, for sure. >> what do you look at and what do you measure? >> joe mentioned the el nino southern oscillation, so it's large scale ocean temperatures which gives you a good sense of whether it's going to be a bullish year on a lot of storms,

a bearish year, not a lot of storms. and that tends to be a pretty good prehe difficulter, as well as looking at the broad patterns of the pressure in the atlantic, which gives you a sense of where they're going to go. >> how accurate are these predictions? if you look at them over five, ten years. >> so wsi has done this since about 2006. they've been more accurate since colorado state and the others. if they're saying there's going to be 16, expect anywhere from 13 to 19. >> 13 to 19. >> it's a blunt force forecast, but it does give you a sense of the upside -- not upside, but the potential strength of the season. but, again, it's very important to point out that you cannot at this point say where they're going to go. >> if you don't know where they're going to go, what does does it go to start looking at these things? who using these forecasts to say i'm going to change my business, i'm going to change my planning, i'm going to change what? >> from a retail perspective, planners begin looking at the

storm to get a sense of how to strategize as you move into the season. so companies like home depot, companies like walmart have sophisticated operations where they plan for these storms. >> we're going to buy more batteries, we're going to buy more water, we don't know where we're going to ship them yet, but -- >> and there's a sense that they may be in the northeast as opposed to the gulf coast, so there's a sense that the warehouses will be stocked and we'll start to refocus our supply chain. >> thank you for coming in, and i hate to say this, but i hope we're not imbedding you this year. >> yeah. i don't like sleeping on those air mats are mattresses. >> yeah. it's going to be a mad house. >> well, it's been freezing. what is it, april -- >> april 8th. >> i feel gypped at this point. >> but you're going to love it so much more.

the idea of 70 degree weather, you're going to be outside. >> getting up last week and going outside, it's like, where am i? it was 30-degrees. >> same-store sales come out on thursday. i'm sure we're going to see some weather comments. >> good for retailers, good for us, good for the master. you don't need frost delays every morning doug in augusta, either. that would mess me up. >> i think we're going to go into april like a rocket ship for retail. >> yeah? >> it's been dismal. >> that's part of the swoon, too. >> exactly. >> thank you. thank you for finally -- thank you. it's going to get 70 today. >> it is. coming up, all aboard the squawk train. we've got to play some country. the dow transports, dow industrials setting two different stories lately. we're going to ask which paints the correct picture? first as we head to break, a look at last week's winners and losers. revolutionizing an industry can be a tough act to follow,

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wilma and katrina were both threes, but it's been seven years since a three hit landfall. >> we talked about this off air, though. you look at hurricanes the same way you look at the unemployment numbers. it's a disaster if it affects you, if it has affected you and sandy affected a lot of people. >> right. but if you look at it objectively, people would say, yeah, we've had more major hurricanes recently than at any time in history. that's what the average person would tell you. it's been a seven-year drought since a category three hit landfall. >> it's changing patterns, too. we haven't seen them come up the east coast like this. >> but not in recent memories. >> especially two straight years. time now to talk transports. we've seen a recent divergence between the transports and the broader estimates. but first, we saw the transports to better and set new highs and the dow finally reached in. and is then the transports pulled back a little as the dow

was going higher. but then on friday, the dow pulled back the transport for higher. joining us now is our transport analyst from ramon james. you've had puzzled by why the transports have been doing so well in certain parts of the industry, right? >> yeah. a little bit. the transports the last couple quarters have been very strong. >> why? >> but the fundamentals have been okay. i think there's a building expectation that we got a little bit of a tailwind from the economy going forward. and so the stocks are start to go reflect that. so the question is, do the fundamentals now catch up with the stocks who i think have gotten a little bit ahead of the fundamentals? so we need to match that up as we move forward. what's interesting about the performance recently over the last couple of months is they've done very, very well. and this has been a pattern we've seen over the last couple of years. they've done very well over a period where the fundamentals are seasonally weakest.

as we come out of the period, we need the fundamentals to get better to justify the recent mofsz moves. we'll have to see if that takes place over the next few months. there's nothing that really says the yes or no so that question. it's just we're going to have to watch it on a week to week basis to see how that plays out. >> so some guests that we've had on have talked about truck volumes that haven't been -- you know, that we're showing a little bit of weakness. how are truck volumes now? would you call them average? >> they're okay. i mean, i think that's the best thing we can say about anything and any of the fundamentals in the sectors we follow. they're okay. they're not really bad and they're not really good. i think that's the story of the global or u.s. economy these days. it's okay. so we need something to break to the upside or down side. otherwise, we're going to get a quarter of goods stock prvrms and a quarter of bad stock performance and it's going to move around with the fundamentals. for the last 6 1/2 to seven years, we've been in this pattern.

a couple good months and a bad month. two steps forward, one step back. there's really nothing that i can see that's going to change that pattern and i guess for investors, you need to either take a very long-term view or try and trade these names over a month or two. that's difficult to do. so you need to try and find stocks that have what you can find within their specific company fundamentals, something that's investable for the long-term. >> okay. so i guess people were thinking for a while the transports were doing well, anticipating better economic activity. they were discounting it and at this point you're saying you're not really sure whether that was a true signal or not. >> yeah. exactly. i think what we saw was a very, very good performance over the last two months. i think the group, the transports as a whole were up close to somewhere between 23 and 25% over that period. that's a very strong move. you know, i think that part of that is justifiable because i think we do think earnings are

going to get a little better as we move forward. the question is, is 25% too much of a move given where the fundamentals will go? and, you know, we don't have a lot of visibility these days with freight volumes, pricing or cost. it really is an opaque situation for the fundamentals of these companies. you know, as i've done -- as long as i've done this, this is property a period where we've had the least amount of visibility in all of these things and it makes it very difficult, i think, for investors so make highly confident decisions in what they're doing. >> art, we'll keep an eye on that. thank you. we appreciate it. >> you're welcome. when we come back, we're going to talk about why airline passengers say they are grumpy today. plus, ready or not, here comes earnings season. we'll talk expectations right after this. [ penélope ] i found the best cafe in the world.

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welcome back. u.s. equity futures indicated up about 23 points. if you factor out the plus seven on the fair value making headlines, airline passenger complaints to the transport department. surged by 20% last year. the government releasing a new report later this morning, other measures such as on-time arrivals and mishandled package baggage show airlines are doing a better job. but among the reasons that passengers are irritated, carriers keep shrinking the size of seats in order to stuff more people into planes. it's not by the pound yet here. >> not yet. that's in, where, samoa? >> samoa.

>> and more people who bought tickets are being turned away because flights are overbooked. they are. >> that's a problem. you buy a ticket, you think you have a seat. >> airbus is breaking ground in the u.s. today at a plant in alabama. >> it's good news for the carriers. that's why the airline stocks have done so well. >> they can make money. >> they can make money finally, the planes are full. it's not so much to fly when you are on a jammed plane. >> you don't want a bunch of bankrupt airlines. >> no. >> so that you can't fly. >> nope. >> so is it prices you don't think have gone up that much in the last 25 years. but it is a pain when you see -- >> they have gone up in the last couple of years, though. i've been watching, looking to buy some tickets. >> i'm looking at some, too. >> and it's harder to find flights. i know they say they haven't cut a lot of flights, but if you're looking for flights in the middle of the days because you want to do this show and then go, it's tougher. you can go in the mornings or at night.

you can't go in the middle of the day. >> bow. you were the a flight every hour. >> no. i79 one in the middle of the day. >> there's a way you can do that. >> i don't have the bucks for that. but i want a flight between 11:00 and 1:00. actually, flights between 10:30 and 4:00 are hard to come by. where are you going? >> to the west coast. i'm going to seattle for one and then i'm going out to idaho for another. and it's tough to get out there. i know both of what you're going for on both of those. i've already got -- i know you. i just figured it out. >> anyway, we are looking at earnings season kicking off. alcoa comes out after the bell tonight. that is the official start of earnings season. joining you us right now is s&p capital mike thompson. mike, people are looking for lousy numbers this time around. is that what you think, too sfp. >> well, idea. the consensus according to the s&p capital iq consensus is at

about 0.58. >> lousy. yeah, it is. but that being said, we've noticed a pattern of behavior. i think if you take a look at the revision activity, you're probably going to come out around 4%. if we look at what these folks have been doing. >> so we're going in with low expectations. odds are, we'll be able to hurdle over those low expectations. how does the market react as a result? >> people have been focusing on a technical movement in the marketplace. so, you know, everybody is talking about, oh, we have a bubble in equities and they're trying to figure out is it too much, is it overstated? so, you know, the funny thing is, i kind of have a different take on it. i sort of feel like, you know, these valuations look actually pretty attractive in the equity market despite the moves. you know, if you take a look at the annual number, you're probably going to do something on the order of 7..7%. i think we're going to set a new report in notional earnings at 107 a share from the s&p. that's up from 103. that will be record after record

after record. >> this year? >> yeah. that's right. >> there's going be some egg on some faces. because we had people saying 104 and then we had people flat at 1100. >> well, you know, it's really funny, though. i've got to tell you, it's funny because -- you know, i've been watching the program and everybody is talking about, oh, i'm really nervous about the move in the market. i was like, well, hold on a second. we're only back to '07 levels. i'd almost rather take my chances at under 14 times next year's earnings with a 2% yield in stocks. >> you saw me arguing with that guy from boston where he goes, i think that people are at 108 and he says i'm at 104 and at 104 we're at 15 1/2 times earnings which is versus a 16 average. and i go, that's making you bearish? in a zero interest rate environment, you're assuming the low end, you might be wrong auto earnings and even in the negative case you're assuming,

you're below the market multiple. >> in his defense, he was not advocating buying treasuries. he was still looking at stocks. >> but he was saying i think the markets -- like he was -- >> he was worried about the -- >> lightening up, not sure whether it's -- valuation is an issue and he made the case of valuation wasn't an issue. >> it's not hard to get the 7.7%. you think about a lot of companies. we've been kicking this around for years. just on price increases alone, companies get 4%, 5% off of price increases. in the slow growth know, you get 2% out of that. >> stock pickers always think the market is overvalued and you need them to pick the stocks that are going to go up. and usually they aren't any better than monkeys throwing darts. >> the guy you're talking about has been better. >> but i'm not saying who he is, anyway. >> right. >> so might as well say monkey pes. >> but you said where he's from. >> there's a lot of money manager necessary boston, believe me. >> so you look at this. if there are particular sectors you think are going to be

standout sectors this time around, what would they be? >> materials are going to light up the ever after this secretary we shall alcoa is going to report, i think they did a dime last year and they're going to do a dime this year. materials are going to light up in the last couple of quarters. energies are looking to have a very modest percentage growth for the next couple of quarters. you know, you can't go wrong with the consumer. 70%. you wonder why the economy is tooes limp around. they continue to be a constant -- they're like the all around best player. >> they get retail sales on friday. we'll get a look just tooz if any concerns about the job market are creeping in there. >> telecoms. they're going to light up. some of that is comps. but they're going light up. you have an interesting bag here. you don't have a lot of broad-based leadership. but, again, it actually makes a lot of sense considering the slack water economy we are in. >> so your message is, though, don't be too fearful about this

earnings season. it's likely going to be better than we think. >> and if you're worried about bubbles, worry about the fixed income bubbles. coming up next, what do the markets have in economy? zombies, country music and -- we're going to head to the chairs to find out next. and later this morning, bubba watson trying to repeat at augusta this week. but our squawk masters have an even bigger challenge to keep beating their peer. at tyco integrated security, we consider ourselves business optimizers.

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♪ ♪ quickly a couple of things to talk about here. over the weekend, lessons of zombie mania. and you might think that's funny, kind of a joke. this is in the wall street journal just talking about how hot zombies are. it started long ago with "night of the living day". >> i got in "48 hours later," danny boyle. >> i didn't see those. >> "walking dead."

i don't like the fast ones. it's a huge hit obviously. >> almost caught up. i'm three behind. >> so we can talk about the governor. >> yeah. >> walking dead is not coming back until october. there's a movie coming out called "world war z." $2.5 billion in annual sales of zombie video games. the cdc released a zombie preparedness 101 that prepares you for other disasters by using zombies. >> i'm guilty of this. >> department of homeland security has incorporated zombies into planning and publicity operations because you do basically the same things. >> we have a preparedness kit because we have been watching walking dead. it's crazy. i know it's out there.

>> i wasn't aware of this. calpers, they don't want any zombies on boards anymore. they don't do much more shareholders. >> suck their brains. >> they walk around and don't do a lot. >> can i tell you about breaking news. >> yeah. what happened? >> there is a deal out. general electric is buying lufkin industries for $3.38 in cash. >> we'll do more on this to find out how it fits in. it's been a transformed company, general electric. they're into a lot of oil and gas type stuff and manufacturing. they got out of broadcasting obviously. so we'll take a look at that. you didn't see any of the country stuff? >> i did not. i love the country music stuff but i didn't watch it last

night. you were up watching the awards? >> i thought i was going to get some sleep. 9:00 is walking dead comes on. i started watching this. i hate awards shows. >> but you liked this one? >> kenny chesney came out, blake shelton, luke brian. luke brian was opening for jason aldean. now he won entertainer of the year. >> and i love blake shelton too. >> funny because "the voice" was on at the same time. he was all over the place. >> hey, the other thing i wanted to mention, ikea has another food recall. lasagne, they had to recall 17,000 portions of moose lasagne because they found pork in it. 1.6% pork in it as well. >> i recently had elk. >> did you?

>> i did. >> i had elk, bison. the elk tasted a little gamey but not really. pretty good. >> you told me about eating the elk. >> never had moose. >> a lot more to talk about. we will look at the ge deal. fed minutes, geopolitical fears. we'll get ready with two well-known strategiesists after this. wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.

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'tis the season for earnings. can markets reverse course after friday's disappointing jobs

report? a closer look what the pros will be watching when quarterly results start hitting the nation >> and hewlett-packard looking at the way people store data. what it brings to the table for one of the nation's top tech companies. a big night for luke brian. country music takes center stage and pays tribute to a legend. the second hour of "squawk box" starts right now. good morning. welcome back to the second hour on cnbc. we have been watching the futures. dow up 26 points. s&p up by three points. this is despite the lousy job numbers we saw friday, gain of 88,000 which was a

disappointment to the market. by the end of the day the dow down 40 points. dow component general electric is buying lufkin industries for $3.3 billion in cash, $88.50 a share. this is a return for g.e. to get back in the gas and oil arena. a big change for the company. >> we have been -- oil and gas has been a big part -- >> i think it's 15.2 last year. >> the fastest growing part -- >> more than 10%. >> it's called lufkin because it's in lufkin texas.

i bet they listen to a lot of what we have been playing and will continue to play. >> country music. >> we could have bought this a lot cheaper in the last eight or nine years obviously. it's not bad compared to a year ago. you never know whether you're going to go into something necessarily like this. in hindsight could have bought it 30 bucks, 40 bucks. better late than never. $13 billion business. see, that's what i was talking about. it did run up there in 2011. you're not paying any more than where it was a couple years ago at him. >> that's right. g.e. expects to complete the deal during the second half of this year. airbus is said to be close to sealing a $7 billion jet order from british airways. that would be considered a blow for boeing, which continued british air as one of its most

loyal customers. reuters reports the deal is not yet sealed. the ceo ol' join "squawk" live 8:15 eastern. gas prices continue to drop. the average price grand 6 cents a gallon in the last two weeks to $3.65, down 15 cents the last six weeks. we've got play this to show you. neat, isn't it? see, it's tv. alcoa will report after the close today. that will mark the official start of earnings season. it's aa, like acme. they have to go first. aa, then ab. we have been saying that every quarter. >> the first dow component.

>> 88 times i have said and it has nothing to do with why they report first. >> you've said that 88 times. >> probably. >> never gets old for me. every time i say it i think it's the first time. scary. this is the first time i have called this bemo. you want me toall it bemo. >> bmo. >> bank of montreal. >> it's a big frisbee. >> call us whatever you want. >> barry nap, who spells his name with a "k" but doesn't use it. i say get rid of it. >> at the beginning of the week we thought the economy was percolating and doing pretty well. in fact, all the stories we

staud about were the fed guys saying this summer maybe we will be able to taper because we were doing well. the claims number was crummy. an abyss mal jobs report. ism number was also kind of week. where are we? >> it's one of these situations you have to be careful what you ask for. everybody is looking for a correction. let's face it, if you live under the premise of stocks, leader of the economy. >> right. >> so now everyone is looking at the economy given how many stocks were up. it's the economy's turn to get kicking in. we see these type of news events and numbers like last week. people get nervous and say, hey, now we have earnings coming in. we look at the actual numbers and we see the forecast for 2013 are down relative to six months ago. stock prices up.

people are saying, hmmm, does this justify this type of move. so we're not surprised to see this at all. >> thrals a disconnect. you never know why the market is doing what it's doing until nine months later really. >> do you think it was wrong about the economic activity? >> the the confusing piece, when you look at the s&p or any of the broad averages, yeah, they're sending a message that things are getting better. but when you look at the internals, the three best performing sectors, health care, staples and utilities. that told you it wasn't about the economic outlook getting better. in fact, we have been recommending those all year. we think that's in the sweet spot of fed policy. they can force people out into investment grade credit, into high yield and into parts of the stock market that look most like the bond marketment that's been

driving share prices. you start to get a little bit nervous because the sectors went parabolic. it's in the hideout, all of a sudden they're up on a line. we always thought the economy would struggle to make that transition to stronger growth because we slapped a $200 billion tax hike on the economy. everyone assumed it didn't matter and it's all behind us. of course it's not behind us. if you tax something, you get less of it. >> krueger, not freddy. sequester. this is a sequester. why doesn't anyone say this is a tax hike problem? >> it's a very good question. retail earnings have been plunging. the nap track. that's been plunging. a lot of good anecdotes that

consumption was slowing. big numbers have been strong, nonauto retail sales and personal sales. >> that would be the second quarter. that's when that would start to impact behavior. so there's still a consumption in front of us. >> they wanted to keep the payroll tax. >> which was bad policy all along. because in the first place all that happened was that money was a big wealth transfer because people used it to pay down debt. so you didn't get a multiplier on the way in. >> you don't believe in multipliers. >> right. i thought it was a bad idea to do it in the first place.

it was weight transfer that didn't create any multipliers. >> social security. >> well, that's a very gentlemen lit mat concern as well. >> normally i would ask if you feel comfortable with it. you're up there. you're more free arguments than we are at this point. you have old and gas. you want to develop them up there. >> well, isn't it interesting to hear the news about ge today to purchase their making right. from a longer term perspective we like industries, energy and tech because those are the driver the next three to five years. you never discount the u.s. consumer, blah, blah, blah. the best time to buy discretionaries is when the world is coming to an end. it's not like it looked like in 2009. that was the generational

opportunity. gas prices are falling near term. barry brings up an excellent point. i think in particular they will be the areas to watch this year, considering from a fundamental perspective in terms of valuation, earnings, operating performance, industrials, energy and tech look by far the best sectors. >> i agree with brian's perspective on that. the only issue we have, if you look at the energy story, for example, when do the sources for nat gas kick in? 2014, 15 and beyond. hey, growth, is going to accelerate. we will get 3%. we're not quite there yet. we upgraded tech. industrials and energy, we were looking for the slowdown as an opportunity. so if they get hit much more i would agree with you it will look attractive. to some extent the stocks ran

late last year because china was going to reaccelerate. >> i don't think that's true this time around. >> i agree. >> all right. are you recommending luxotica? are those the google glasses? >> listen, fit wasn't for my wife i would be wearing sweat pants. >> look straight on. you have to do that to really appreciate these things. >> i think i can lay in my bed and watch tv, they just flip over. >> can you weld with those, too? >> you can weld, you can run. you can swim. >> are you surfing the internet right now?

>> something more interesting? >> something way more interesting than joe. >> that's what i wondered. thank you. >> good thing you've been playing with us for a long time. >> those are canadian glasses maybe. blame it on something. >> blame it on canada? no way. >> blame canada. time for the music. these guys are sticking around for the rest of the program. if you have comments or questions, e-mail u us @squawkcnbc.com. ♪

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

"new york times" releasing its annual ceo pay. mary, good morning. >> good morning to you, becky.

a familiar face at the top of the list and new ones below it. a few notes how the survey was done by the the compensation firm equilar. a list including a proxy filed by the end of june published later. the highest paid ceo, oracle larry elli son. $96.2 million, up 24%. this pay raise coming even as shareholders voted down the firm's compensation plan at the last meeting. behind ellison, second place finisher, richard bracken of hca, pull down $38 million, $60 million less than mr. ellison. he was followed by disney's

iger, mark parker from nike, and dauman, viacom. as far as megan average pay for these 100 ceos, the total compensation up 3% last year to $14.1 million. total average compensation of 10% to $16.9 million. one thing to note, one thing a lot of compensation firms -- or compensation committees look at is they try to taipei to total shareholder return on average. this was up 17%. lastly, we would like to check on the financial space in large part because this has been the group highly criticized. the top earners, american

express, $28 million. capital one, fairbanks, $22.6 approximately. john stumpp of wells fargo, gerald hassell, bank of new york and michael corbat of citi. they would not have been in the top five of all the top 100 paid ceoss. >> they had to file by the end of march. >> we know what their pay was. it still wouldn't put them in the top five of the top 100. the top five of the financials. >> i know somebody that came out after the end of march definitely in the top five. i love him and he deserves it. but i'm not going to mention any names. >> i know who you're talking about.

you were able to do it, mary. i didn't hear one -- you didn't say one -- there wasn't one loaded term. the "new york times", it it just wreaks of judgment when i looked at it. it just weeks of raising an eyebrow, why is this happening, how do we prevent this. it's sickening, especially when you look at sports bars, actors. >> the shareholders. >> exactly. >> overall. >> there are a couple of things. if you look at the "times" articles, they pointed out average meeting shareholder or ceo pay did not increase that much. that is an important metric used by the compensation committees who determine this pay. the "new york times" was taking issue with some of the perks that were paid to some of the ceos. you might wall a number of years ago there was a lot of focus on perks. club membership, the use of the

company's private jet, et cetera, that decreased dramatically. a number of firms abandoned that more restricted behavior. we are starting to see a pickup in this. this could be something to watch and could lead to up side pay. >> those are the things that are -- >> that's right. that's most concerning. as i pointed out with ellison, shareholders voted down his pay. he owns 23% of oracle stock. so imagine how many people, if you get 50% to disagree with your pay package and he owns 23%. >> 70%. >> right. he is a constant presence. other people may say he founded the company so he is deserving of that and the company has done very well. but it's still an interesting issue to watch. >> all right. coming up, what do you think taylor swift made last year at

22 years old? >> $60 million. that's just a guess. >> throw in jay-z, beyonce. country's biggest stars gathering to celebrate music and a production icon. that's the enter takener of the year opening for jason aldean as garth and george played together for the first time. fresh fears over cyprus, korea and egypt. how all those will play out and currency markets next. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for.

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john deere green song. sunday night for the 48th annual of country music awards. luke brian who co-hosted with blake shelton took home entertainer of the year.

beat big names like taylor swift, amanda lambert. garth brooks and george strait, first time they performed together. has it always been this big? i don't think so it is. >> it is. you're just getting into it. >> blake was there with the boys. >> right. and he's married to miranda. i don't like awards shows. >> i've never known you to watch an awards show. >> i won't be caught dead watching the oscars.

>> but you've been listening to country music. >> from the highway, sirius xm. >> when we come back, we will talk more about brian's glasses. if you have comments, go ahead and e-mail him. he's getting a ton already. tweet us. up next, tools of the trade. what you need to watch this week >> plus, coming up at the top of the hour, squawk masters of the market of the week, john rogers joins us for a special interview. i like this song too. "squawk box" will be right back. it's monday.

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welcome back to welcome back to "squawk box", everybody. dell and carl icahn are in a war

of words. a dell commercial committee said it will not reimburse him for expenses unless he drops his threat of a proxy fight. icahn is considering that move. is that bid for real? i think they would like to see some of the financing as well. a takeover deal may be coming back to life. ups abandoned the transaction in january. ups is reported taking up the challenge because it considers what they are calling factually and illegally erroneous. listen up if you get special perks at work. irs is looking for corporate lunch buffets. they are specifically examining silicon valley google.

if it is determined they are legally fringe benefits then their value can be considered income. look out. if you've been getting all these free benefits, the irs is watching. and it surprised some people but not my family. sony's evil dead rises again at the box office. a remake of a film from the '80s was able to hold off the 3d debut of jurassic park. it was produced by -- 1983 -- by the original filmmakers. >> i'm surprised i missed it. i'm not going to give it away.

there's scenes from an electric knife, chainsaw, and includes five people -- i want you to spell this out. david, eric, mia, olivia, and natalie. do you know what that spells? >> demon. >> you told me in makeup. you laugh. there's a scene with a box cutter and her tongue. >> ah. >> but it's not real. anyway, it was good fun. a lot of gore. speaking of a lot of gore, blood and guts. >> i have a question, though, is your daughter also into the zombies. >> no, no, no. >> i have boys in the half. my boys are into the zombie thing.

>> we're all into the zombie thing. >> i'm a girl and i like the zombie thing. i don't want to see the "evil dead." >> you saw this. >> yes. some other zombie words are out there. >> called everything that the republicans think of as zombie ideas. low taxes, free enterprise. >> right. >> earned success. >> private sector. anything like that. >> you can talk about central bank policy.

>> if i told you on jobs day there was major revision on gdp you would have thought it was on the job report. >> not the case. >> not the case. lousy jobs report, and it actually did change thinking about gdp. there was a trade number on friday. that was a trade that was narrowed more than expected. people revised up gdp. i talked to zandi in the middle of the day and he said our forecast is up 4% for the first quarter. what we did is we came in, looked at all the zombie economists and their growth forecasts. and here's what we came up with. this is the average of 10 economists out there. the green numbers are the second half of 2012 versus the first half of 2013. on the left are the actuals. on the right are the estimates. so you can see 3.3%, when you include everything who is in there. some are up 3.5%, 4%.

a couple guys down still below 2. we slow down. so the first thing you see when you look at this, following the blue bars, the volatility in gdp. >> we have been having a conversation with barry how he is looking for much worse growth. >> i want to get to that in a second. >> what you notice about the chart we don't fall as much in the second quarter of this year. >> it was not the same. >> you don't give it back as much. >> i think the right way is average q4 and q1. we're still growing at 2%.

the market was accounting a deceleration. >> but the fact is we probably aren't accelerating from the 2%. the second quarter is worse. >> right. >> when you think how it ended, weak payrolls, ism falling back. we will see retail sales and ip. but we're going out on a weaker note. but the net of it is there is not much happening here. >> if you put the chart back up, what you see is the second half of this year it's up being 25. that is up from the second half of 2012. i don't think we're dramatically changing the outlook either way. i guess we don't have time to look at it. some guys said it didn't change their gdp but their outlook on

gdp. jpmorgan said the opposite. the concept was we think that march number is exaggerated to the down side. and given the strength of growth they could see a higher revision. given gdp you would expect stronger employment. there were two views on that. >> and you'll be back with us a little bit later? >> i don't think so. i think you have a very busy morning. and i have more numbers to crunch. >> i think think of zombie transition. my kid really wants me to watch. i feel like i'm doing my fatherly duty on that. >> what do you do? >> my free time? >> economic stuff? >> fly fishing and guitar. >> too many stories. joining us from the new york

stock change, mark chandler. here in the u.s. in the studio with us is deutsch bank. 100 on the yen tomorrow, today? when do you think, mark? >> no stopping it now. perhaps that's the real zombie. bank of japan wants to do two years. as far as qe relative balance sheet. >> wow. and that's expressed and you're talking -- how big will it get? and if you could express it in yen so it sounds even bigger. >> it's going to be difficult. the federal reserve is buying $85 billion worth of long-term securities. bank of japan will be doing twice that. >> i need that in yen. next time you come on, just bring that. >> several trillion. a few trillion worth of assets. >> a month?

>> a month. >> and the way the economy is here, we may be a few trillion. they're going to do whatever it takes to get to 6.5%? >> yeah. it's exaggerating how the fed will respond to one month of data. i think that the hours worked index, which is part of the key component of the employment report shows the probably affected the overall pace of the economy. the job production we saw in march. in general we should see them buy the 85 billion for the rest of the year. >> if it works, we might as well do it. that's the thing. if it doesn't work, we shouldn't be doing it at all. i guess that all or nothing doesn't work. >> almost all the wealth that was destroyed by the great crash

was recouped. even though the economy looks a bit soft as we go into q2 overall what we're looking at is one of the few major economies to have surpassed the 2007 sick cal peak. more goods and services than ever before with 3 million fewer jobs. >> you would think that given our dynamic economy and the world's economy, which is the best. you would assume five years, this is the whole counter factual argument. we cover from recessions, in growth. the one in the '80s looked a little different than now. why is this so tepid even with all this fed action. mark, thank you. paul, how does it factor into the oil markets? >> well, i do have to mention we have a zombie refining thing just to keep running with that one. oil and currency are very important.

one of the big things you know about we're disconnecting from global. the biggest is geopolitics. >> not a surprise when you see what's happening in american oil. >> the other thing that's interesting for us is something else you referenced which is the boards of these oil companies are getting found out. they are asking what are you guys up to. the settling of oil is not as volatile as it has been the past 15 years, the past three is really putting the slow. >> i don't know. it seems like oil is -- found a new base.

>> yeah. the big thing for me is oil went from 20 to 100. 100, 110 is equilibrium. >> has there been any kind of communication from the shareholders. people are all hopped up on mountain dew. how does this look relative to when you said from 20 to 100? can you walk us through that? >> they came in obviously with a lot more debt. they can finance against oil in the ground. they're sitting on a reserve of black gold. one of my things is you've been under leveled.

you can't grow return to shareholders. it's spreading a lot. it's a big deal. >> thank you for coming in. we appreciate it. >> when we come back, a new server hoping to revolutionize the way people store data. (announcer) at scottrade, our clients are always learning mor. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." are you still sleeping? just wanted to check and make sure that we were on schedule.

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welcome back, everybody. hewlett-packard unveiling a product that could revolutionize the way we store data. it's called moon shot. dave, you have a couple servers here. we were asking you what they were because they are really, really small. >> yeah. today we're very excited. we take a watershed moment in the industry. these are a new type of server, new class, built from the same technologies that run smartphones, tablets, the volume part of the computer industry today. >> why does that let you make it so small? why is that so interesting? >> it's small. it in essence is required going

forward. these that are shipped today require 89% less power, take up 80% less space and cost a fraction of what today's cost. the reason that's important, there's going to be 8 million deployed to support mobile, big data, all the web-based applications everybody loves. using current technology it's unsustainable. moving to these, you can start to drive the next leg of growth. >> this little thing you're holding is four servers? >> this is the one we're introducing today, single server with network connected to it. and this one, which is coming out soon, is four servers. >> you say that. on every method it sounds better. cheaper, faster, more efficient, smaller. are you wiping out the existing class entirely? >> what happens is these

transitions take time. hp invented the servers back to 1989. the idea behind that, it was built on whatwas happening in the pc industry so you could take advantage of the volumes of pcs. this is really the next generation. what it says is by using these volumes over time more and more computing would be done from this. 20% of the market by 2016 will be servers of these markets. >> are you cannibalizing your ownby utilizing these. >> absolutely. we're leading the move to these types of servers. >> it sounds pretty disruptive when you think about the the major industries based around servers and technologies the way we know it right now. >> we believe so. when you look at server, networking and storage, we think it will be led by-products. we have a clear vision where the the market is going. we're looking to bring new technologies to all the markets.

where we have done that we have seen great growth. in this market it is a $40 billion market opportunity. we think this is a great profit opportunity over time. >> do you slide that into a cabinet or something? so you would have a bunch of servers in a much smaller area. >> think of it as a file cabinet. you could put 45 servers in there. in a rack seven feet tall. depending which model, you could 450 to 800 servers. you look this year the current models would take eight of those racks and now do the same thing in one single rack. >> this looks like the thing when they were turning off hal, singing daisy, daisy. that was 2001.

so we're ahead of there? >> i think what we see is there is an in satiable need for kpaot. >> you heard my question. we've got to go. is that the only color. >> red, blue. buy enough, we will make any color you want. >> up next, the champion of money madness term. revolutionizing an industry can be a tough act to follow,

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tonight is the big march madness hoops. we have a winner in our own "squawk box" money madness. apple versus blackberry. let's take a look how we got there. we matched up the best 16 based on their 2013 performance. apple's recent slump made it a 4 seed. and blackberry top seed on its side. blackberry won with 63% of the nearly 16,000 votes on facebook and squawk.cnbc.com. the company has been struggling to stay relevant.

a lot of people are still holding out for the one with the physical keyboard. $14 a share stock peaked $230 a share in the summer of 2007. apple on the other hand has a market cap of $400 billion. iphone remains a dominant force. it has not radically changed in several years. after it has run to an all time highs in 2012, investors pulled a bit on the stock just over the last six months or so. when you look at apple versus blackberry, stock bottomed out. it's basically been the opposite story ever since. so your winner is blackberry. that's the best performer from now to the end of this year. thank you for voting and playing along on money madness. i thought for sure it would be the other. >> you know what we didn't count on? the nuts. the crackberry freaks.

>> i am a crackberry freak. they voted in big, big numbers. so celebrate financial literacy months, cnbc is telling us about their most memorable financial investments. brian belsky of bmo capital markets. barry, start things off. your most memorable personal investment. >> sure. as you know, i worked at lehman brothers 19 years. in 2005, we had stock, because it took five years, from '99, one of the best years on wall street. i sold that stock and bought a ski house in colorado. that is far and away the best single investment i ever made. >> you still got it? >> i still got it. >> do you come on this show? >> you can come any time, joe.

open invitation. it's up across the highway. you can see beaver creek and the top of vail. >> try to top that one. >> i'm sitting at my desk in july 2000 and i see my research director's name shine up on my phone. brian, things are going so well we're going to give you and everyone here in research a special mid year bonus. i said thank you. i called my wife, we're selling all our stocks. they usually pay at the top and sell at the bottom. and that's exactly what happened. we didn't buy stocks for two years. >> you didn't share that with any of your clients? that would have been nice. >> well, we were -- you go back, we were very cautious in 2000.

>> these guys will be with us the rest of the program. we have more things coming up. >> i can't wait to talk to mark faber. but you first a word just in. former british prime minister margaret thatcher died at the age of 87. we went out and asked people a simple question:

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age.

♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

it's it's masters week on sidewalk box. triple play. three masters of the market on the rally and their best investment ideas. rogers, gross and faber. airbus breaking ground on a new plant in alabama. >> roger. >> request vector. over. >> company ceo will join us first as the third hour of "squawk box" begins right now.

>> welcome back to "squawk box", everybody. i'm becky quick along with joe kernen. more from brian and barry in just a moment. but, again, word coming in that former british prime minister margaret thatcher has died at the age of 87. they served as british p.m. 11 years. she had retired from public appearances back in 2002 after a series of strokes and had only recently been seen in public occasionally since then. but this is a woman who was in charge for 11 years. she was the first leader there to be elected in three general elections. she had very strong tphaoeuread. thatcher-ism has been studied and studied. definitely changed over the course of a decade, changed

great britain and how it is seen. prime minister margaret thatcher dies at age 87. >> i guess you could say ronald reagan has his detractors too. >> two strong sides. >> a right side and a wrong side. >> but the the economic results. >> you have to be p.c. and say she had her detractors. >> i ad libbed that. >> there are two sides to every debate. >> history will look kindly on this woman. it's a great movie. >> hollywood movie. >> meryl streep did an excellent job and made people understand things they probably didn't

understand. >> capital gains, 95%. >> how long do they have to be gone before we say it? did lincoln have his detractors? >> sure. >> we're pretty sure he was pretty good. >> yeah. >> how about washington, did he have his detractors he was pretty good. >> i don't know that he did. >> how about mother teresa? no. there were detractors of hers. >> that she was pushed out after 11 years? >> yeah. >> i think she did great things for the country. but to ignore the fact that there were two sides is crazy. >> in journalism i guess. >> in general.

>> i see it the same way with reagan in hindsight. jimmy carter, can you say he had positive effects? >> sure. absolutely we will find somebody who -- >> habitat for humanity. >> up 26 points is where the futures are this morning. overseas in asia. we'll get a different look. looks like the same is here. same number. in europe, we're looking at -- oh, that is europe. >> all you have to do is look at the bottom of the screen to see what's happening. i didn't realize japan was doing twice as much. >> i was trying to do the math. it's like 17 billion. >> almost the same dollar amount. relative to the size of the

economy, it's -- >> oh, okay. >> -- it's much bigger. their economy is a third of the size of ours. his point was we could double our balance sheet in the next five years. and they're going to do it in two. what they're doing relative to the size of their economy is much more aggressive. >> billie elliott, they hated her. >> it was a big deal. >> i bet coal miners are bigger than air traffic controllers. general electric is buying lufkin industries $88.50 a share. $3.3 in cash. lufkin is based in lufkin, texas. it provides lift technology for lingerie markets. no, not really.

get it? it manufactures industrial gear. it is for unconventional shale gas production. so the boom that you have seen, this is g.e. it has 38,000 oil and gas employees, g.e. at this point. wow, $23. a big move for people who had lufkin. much higher capital requirements for big banks. kayla touschi joins us with more. >> unanimous support. it's taking shape over the weekend. they wouldn't need a bailout. they call for all u.s. banks to keep a 10% capital buffer. extra 5% is being called a surcharge for the bigger institutions. and then federal regulators still can add more capital

requirements for riskier access. this would appear much more lenient. banks must polled 9.3%. jamie dimon said he would exceed those if it couldn't buyback stock, evidence that all were being flooded with too much capital. banking system capital is currently at or near record highs. raising capital to high levels with severely restrict banks ability to lend to businesses and job creators. it was felt abroad that regulators in january relaxed requirements and extended those basel 3 deadlines. it appears the u.s. is driving a harder bargain. >> thank you, kayla. see you. thank you. bye. masters week. >> it is masters week on "squawk

box". joining to us talk about what stocks are hot and where to invest in the market is john rogers. aerial investments, chairman and chief investment officer. john, you look around. some people think things have gotten expensive i. you still see plenty of bargains, correct? >> i wouldn't say plenty of bargains but we're finding new stocks to buy-in areas we specifically haven't spend much time on. >> i think of you when it comes to media. is that a big play for you? what's a new area you're getting involved in. >> alternative financial services companies has been an area we're really excited about. so many people are investing in alternative ways. we think they will continue to do well if the economy recovers. >> what are some of those companies? >> kkr. the premier brand when it comes to private equity. most recently we bought western

union. >> western union, is that a play on how much more difficult it's gotten in how many more people have been debanked? >> that is part of it. cash still matters in lower income countries. you have to be able to move money all around the world. we think it is an extraordinary brand, great scale and less than 10 times earnings. >> when you talk about kkr and you talk about it being premier private equity and a way for investors to get involved in a way they hadn't been able to before they had gone public, do you think more and more investors will be looking for different ways to play the market. >> it's a great way for people to play the market in different ways. kkr is starting to find individual investors to be involved in private equity.

>> what other new trends are continue to go bubble up? >> we think health care stocks are cheap. the fda has been tougher with regulations. we think companies like hospira with the injectable drugs that are an important part of keeping people healthy, there's a lot of terrific health care bargains. >> health care is a pretty broad arena. are there other areas you think are more narrowly focused that you think will do well? >> we're looking at some of the companies that supply hospitals and be able to create bargains in the top economic climate.

we think they will be around 20, 30 years from now. >> what is going to happen when obama care gets put into place? we have been watching decisions that have come down in recent weeks that change the winners and losers. are you trying to get ahead of any of those decisions? >> this is not a new phenomenon. companies have had a chance to get prepared for the health care reform. we think it will be a nonevent. >> regulations will be determined and changed. the tax that's put on some of these companies, 4.3% for medical device makers. is it too complicated to know how they all come down? >> we're not going to figure out the short-term regulatory that happen.

>> gentlemen, thank you for joining us today. >> great to be back. see you in omaha. >> sounds good. coming up, two more squawk masters of the market still to come. mark faber and bill gross later this hour. and david faber at 9:00. airbus breaking down on a new plan in alabama. the ceo about hiring the new plant, and the decision not to use those lithium ion batteries in its new a-350 jets. cal analysis streamline their process? at fidelity, we do it by merging two tools into one. combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent. i'm colin beck of fidelity investments. our integrated technical analysis is one more innovative reason

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welcome back to welcome back to "squawk box", everyone. our futures have been indicated higher through most of the morning. dow futures up 25 points. s&p futures up by just over four points. again, this comes after some really bad jobless numbers on friday. job gains of just 88,000 when the market had been looking for double that. the market recovered, though, from its worst levels on the day. down 40 points. today we do see green arrows. airbus recapturing the top

spot with 410 orders versus boeing's 209. and airbus is breaking ground on its first u.s. plant in mobile, alabama. and phil joins us with another first on cnbc interview. >> hey, joe. this is a huge deal in mobile. you're here for the ground breaking. this is a crucial day for airbus at the beginning of your expansion. why here and why now in alabama for the new plants? >> good morning. yes, it's a great day for us. it is ground breaking. it means we are the only company in the world with assembly lines, in america, europe and in asia. and we selected mobile here in alabama because we know it pretty well. we have more than 120 engineers.

it's a harbor. we can transport all the parts. on top of that and probably the first reason is we enjoy very strong support of a business community and political community. >> how much will this plant help airbus when it comes to trying to land major military contracts? u.n. that's not in the plan right now. it's just commercial program. you won it, lost it, ultimately the deal went to boeing. how much would this change the equation? >> i think in this case it would enhance our image. we are procuring $13 billion from u.s. suppliers. we are not seen as u.s. manufacturer. so we will be seen as a very good u.s. citizen which is always helpful with regard to these contracts. >> let me ask about your decision regarding the legitimalithium

ion batteries. you said no more. we're going with nickel cad. why the change? >> we are in process of certification. we don't want to take any risk. we will start with conventional batteries. 60 kilos is not a lot. >> do you look at lithium and say we will have them in our planes. somewhere down the the road they're safe? >> yes, i think so. the technology is probably even better results. but we need to make sure everything is in place. so we don't want to rush. >> at this point you are in negotiations with british airways. i know you can't talk about those regarding a potential order for the a-350.

also an airbus customer. they fly the 777. a lot of people look at what's going on with the a-350 and call this a difference maker. the plane that can push you even further when it comes to the wide body market. what do you see? >> that's right. we are launching the 1,000, the stretch version. and 25 person. this is huge advantage. >> we have seen huge orders from lion air. you're in negotiations with british airways right now. how many large orders are still out there? >> there are still a few. >> a few are still out there. >> there is big growth in asia, southeast asia.

there is here in the united states renewal of the fleet. we expect to be 5,000 for the next 20 years. and we have launched new generation aircraft meaning they are incentivized to order new generation aircraft. >> we missed out on a whole regeneration of orders, correct? >> well, the airlines first had to restructure. now i think this is done with the latest one, which is the announcement between american and usair. >> of which you had a large order. this is time for renewal of a fleet, which is one of the oldest in the world. >> last question. any concerns about the the skilled labor pool? did you look at this and say, boy, there's a lot of other manufacturers there and it might

be trouble getting the skilled labor we need or did you look and say there's plenty here. >> we will be training them. here we create 1,000 trucks. or 5,000 for the region which i think is very substantial. no, we don't have problems. we have problems right now which tends to have difficulties to ramp up production. we do it step by step. >> a big day as they break ground on their final assembly plant here in mobile. guys, the final production will start kicking in in 2014. and i believe, what, first delivery in 2015 or early 2016. >> early 2016. >> so a couple years away but they break ground today. >> great place, phil. thank you. coming up, words of wisdom. marc fab eer.

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welcome back, everybody. alcoa will report today. the outlook is fairly week. s&p 500 earnings expected to increase by 1.6% compared to 6.2% the quarter before. compared to positive revisions it marks the worst pace in 12 years. again, these are low numbers and there are a lot of questions whether the market can jump right over. another food recall. 17,000 portions of moose lasagne has been recalled after traces of pork were found. 1.6% pork in that moose lasagne. it was a new product that had only been on sale a month before it was pulled. moose meat is common in sweden though typically is not used in

lasagne. >> take a look at the u.s. equity futures. up 21%. s&p up by just over three. [ penélope ] i found the best cafe in the world.

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welcome back to squawk, effect. let's look at some of the stocks we've been watch anything today's trading. general electric is buying lufkin for 3.3 billion in cash. it's up 37% on this news. the deal represents a big premium, 38% premium to friday's closed. the transaction, by the way, helped shares of weatherford international, the company that lufkin called its biggest competitor in its most recent report. these two have struck a preliminary agreement with the justice department to address concerns over hand highser bush's plan to buy modelo. >> g.e. has gone higher too.

>> masters week on sidewalk box. master of doom and gloom. markets good. hopefully you can extend some of the comments you have been quoted in recent weeks. they will face the same situation cyprus faced. what do you mean? depositors around the world will get a haircut. >> well, i think in general what has changed is that the mentality before the crisis in 2007 and after the crisis was let the tax payer bail out the

system. and the asset holders will have to contribute. and what we have seen in the case of cyprus, there is a strong redistribution impact depositors are penalized much more than small depositors. >> you have made the point that when central banks do a bailout or bail in that wealthy people are the beneficiaries because they are asset owners. that caused income disparity to get too wide around the world. sooner or later that's going to have to reverse itself. is that still what you believe? and how much do you think asset owners? what kind of haircut will they all take? 30%, 40% pwhroeblly?

>> i have been thinking about this extensively. i think if you have all the money in the bank you may lose 40%, 50%, depending on the quality of the bank and how you hold your deposit. if you hold a deposit in singapore, in singapore dollars that is relatively safe. but if you hold a u.s. dollar they place it in the bank mark and that may not be safe. it may become an issue. how do you hold cash with the banks? now, you may argue, okay, i don't have any money with the banks at all. one day the pressurery department may decide to impose

interest on payments to foreigners. or one day they may have that much money that it collapses or that could be a default. nobody knows exactly how the game will be played out. but in general i think well to do people that benefited and the easy monday tore policies that they will have to give back some of the money either through taxation or through revolution or through ex appropriation. >> this doesn't sound like we are on the cusp of a bull market or equities or if we are there's a day in reckoning. how have off? >> we come at the beginning of a bull market because the bull

market as of today is more than four years old. it began march 6th, 2009. we're now in april 2013. over the economy recovery beginning june 2009 and we are now in a weak expansion, a very weak one i may point out. it does not lead to the money flowing in main street in the ordinary americans. the corporate sector is very cash rich because the earnings

are record. no surprise since 2000 they have grown from 5 trillion dollars to over 16. so the corporate sector is very liquid. but nobody feels like building a new factory. what they do is take over a company like g.e. is doing. it actually hurts the economy because they are going to lay off some people. >> we have seen a strong consumer. that's been the pricing thing through all of this. even though you wouldn't necessarily think the consumer is being helped they have been incredibly resilient. >> because they continue to borrow. consumer borrowing is up again. that trillion dollars flows into food stamps, all kinds of

disability insurance premiums. so that keeps consumption at are relatively high level. capital spending and saving, that you should never forget and not consumption. >> and that's what's missing. give me a little bit of a time frame anyway, marc, on what you see the day of reckoning coming in. we went through what we think is the worst financial crisis we will see in our lifetime. do you think this next situation is going to make the last crisis, this is going to exceed that in terms of pain and loss? >> i think it could very well be worth. because the next crisis to lead to a deflation ear bust. and a buff in government.

in other words, we may have a total collapse in the season. at the same time we have international sepbgzs growing. it's all a test to see the resolution by the japanese and foreign powers. and they are watching exactly what the reactions are. >> even though china now, it looks like they're trying to talk some sense into north korea, you think they're in cahoots? >> of course. everybody knows that in asia.

maybe they do not always go by agreements. in general it's a country that can hardly produce bicycles. they have practically no industries. how can they have nuclear technology? how can they supply weapon toss iran. it's like in the time of the cold war. the russians used bulgarians to do the dirty work. china is using the north koreans. but i think in time frame, near term the market is overboard. and i think we could make new highs but with very few stops. a lot of stops have not performed well.

and we have every day some important stocks that are breaking down like oracle, federal express. so i don't think we are at the beginning of a bull market. now, can we go up just because of a few stocks, johnson and john, walmart, proctor & gamble? possible. but if we continue to move up the possibility or the probability of a crash becomes higher sometimes in the second half of this year. so i don't think it's a very good time to buy stocks. >> marc faber, appreciate it. thank you. >> welsh thank you very much for having me. >> you're welcome. >> zombies weren't part of the whole thing. but the preparations you would make would be similar to what you would do, hence, the cdc and home land security. >> we're all fascinated by zombies. >> they are creating zombies. zombie corporations.

by lowering the interesting they can stay alive. >> everybody owns gold now. when you go try to buy some food after the apocalypse. >> if zombies are out there gold is not going to help you. >> when we come back, our third of the hour on the rally. changes in investment outlook. sir richard branson will be here. it's an interview you don't want to miss. how old you've known? person we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age.

♪ the question is how do you make sure you have the money you need to y al years. ♪

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welcome welcome back, everybody. our third market master of the morning out with a new piece on changes in the investment landscape. joining us is bill gross of pimco. bill, you have been concerning a lot of people who watch you and look to you for any signs of what we should be looking out for. i have a question for you. >> sure. >> do you watch "walking dead"? >> no. no zombies for me. >> joe and i are addicted. you're looking for serious

drastic scary changes out there. what made you get to that point where you're looking for those kind of changes? >> over several years or longer term basis i'm looking for changes in the credit markets. we have seen an expansion since 1970 when nixon went off the the gold standard from $3 trillion worth of credit to 56 trillion now in terms of market. it's a fair question to ask whether that credit can keep expanding at zero percent interest rates whether or not the magic elixir of interest rates in the '70s, '80s, '90s will produce the same magical results as they have in the past. >> what changed your mind most, what we have seen from central banks? >> i think so. that and of course 2008 and the fact that the u.s. economy and

the global economy hasn't significantly deleaved. unless we ultimately delever that took metric then it is in difficulty. >> it has been at the advantage for all the trouble that we have seen with what's been happening with bonds. people looked and said, wow, that's the best play to put the money. >> we're talking about a slow drag i suppose. we talk abouted new normal. we have seen that in terms of real economic growth. it's been much better in terms

of stock. a situation at least in the equity market. earnings slow down significantly because it has bottomed. that's been 40% of the decline that we have experienced in interest rates. and an upward push in terms of earnings for stocks going forward. labor costs seemed to have bottomed as well. earnings per share as companies buy their stock back. other than that earnings seem to be flat. we'll hear this afternoon from alcoa. >> let's implement this. if you're looking simply with respect to stocks versus bonds and you're speaking with mom and pop in lincoln, nebraska or pop and pop in west lafayette, indiana, what could shoo their stock allocation be today, 10 years from now and the implications in between? >> it depends on their age, as

you know. a typically boomer being 57, 58, 59, obviously they have to look towards more fixed income and less risky assets. that's just an unfortunate process in terms of demographic aging. we would suggest that stocks have the better deal. they are 4%, 5%, 6% to our way of thinking. so stocks will outperform bonds. ultimately the aging demographic will force more and more individuals in retirement plans into bonds. >> a lot of the stuff is longer term, much longer term planning. if i can ask you to focus on the immediate. on friday we got gains of just 88,000. then we watched what happened to the 10-year. it got pushed back below 1.7%. if you're looking at short time, very near future for these things, how does this all add up? >> 3% on the first quarter,

becky, slower for the next nine months. they are feasting an japanese flavored red bull. $75 billion program here every 30 days in effect the largest relative quantitative program ever and not equal to the feds one quarter the size. we recognize its ability and financial marketsment that's what's happened with stocks and declining yen and over in europe today. monetary red bull can feel good for a while. not many calories and negative consequences down the road if stock price moving too quickly. >> this is barry knapp from collar clays. if you think about those costs, is it in calculation? is it the reach for yield?

or is it creative destruction and you're keeping companies alive that wouldn't survive otherwise and then you don't get the same capital investment? how do you think risks of all this really aggressive policy are likely to manifest themselves. >> i think there's a zombie element to that. gentlemen and becky have been talking the last hour or so. >> when you look at net interest margins, they borrow at the same yield 25 basis points but can only lend perhaps 2, 2.5%. net interest margins are narrowed. any company that deals in financial assets basically are saying net interest margins narrowed. that's not good for business formation going forward.

banks in effect lay off employees, close branches, et cetera, and you see negative real economic growth based on that. >> i know you said you don't like the japanese red bull version. it's not good with the long haul. what do you think the doing her? >> the fed is the same way. it's difficult to see exactly how they get out of this particular pickle. they talk about tapering and they're sort of giving the signal that at some point they'll have to, becky. the fed continues to buy a trillion dollars a year that expands their balance sheet by 4% to 5% gdp and at some point they'll own along with other central banks china and the like. a good lead portion, perhaps 60% to 70% treasury version and that eliminates the technical aspects and the liquidity of of treasurys and other bond markets and ultimately i suppose in stocks as well. the fed knows what it can't keep doing what it's doing and we

wonder what happens when they stop. >> bill, thank you. we will talk to you again soon. >> thank you, becky. >> coming up, we will will kick off the trading week with stocks to watch with jim cramer. stay tuned for that. tomorrow on "squawk box," we'll go straight to the source on the fed's exit strategy. st. louis fed president jim bullah rd will be our special guest and joining us on the set will be virgin group founder richard branson. you can't afford to miss "squawk box" starting tomorrow at 6:00 a.m. eastern. we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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welcome back. welcome back. jim cramer joins us now from the new york stock exchange. we were expecting the worst and as it turns out it was down 40 points. how do you read that? when you do look at the job i'm worried again. i look at participation rate and people say if we were at a normal participation rate the market would be just awful. we came back to down 40, are you feeling good again? >> i agree with you. i thought the jobs number was pathetic and ben bernanke would pull away. we have a tremendous wave of

money and you'll see this a lot of times during the day. waves of money both from europe and from japan they come in and buy our dividend stocks as almost if, look, the yen is not a currency anymore and the euro, you don't want to bank there. this is foreign money into our market that comes back? . joe, they love our stocks. they love our bonds. they love our banks. >> maybe we're not interpreting it right to always tie it to improving gdp. it may not be necessarily that we're going gangbusters. it could be once again to come back in here and get something other than 0% yield in a currency that might not go down. >> from 87 on to 89 with a brief break of the crash of 87 we saw wave after wave of japanese money come here. i think people are misunderstanding capital flows and guests don't understand that this money could be very well

money from overseas. the president initiated a very important rule change which allows foreign entities, and pension funds to invest in u.s. real estate without taking a tax if they take gains. there's a lot going on, joe, that says our market is the best even as we denigrate it, others love it. >> do you have an s&p earnings number, jim? what do you think we can do? earnings season is going to start. >> i think earnings will be better and i think we will once again complain about revenues. i saw a lot of stuff this weekend how there were a lot of preannouncements and i do wish we wouldn't kick off with alcoa. alcoa is a commodity company, but i think when you see the drug companies and the food companies you have to worry about translation, but there will be a robust earnings line that comes from the huge number of stock that these companies are buying back and the fact that we're taking share in a lot of places and i'm not as negative as other people are about our earnings. i don't have an s&p earnings

target. >> an s&p number like 108 or 110. ge is up, too, jim even though they're spending 3.3 billion. >> jeffrey immelt in a little-known piece in linkedin just last week said shale oil is the game changer. he's probable of the ceos that are not in the oil and gas patch, the most wisest man i have seen of understanding the revolution in this country. >> thanks, jim. we'll be right back. thanks. meeting. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪

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