welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is still on vacation. stocks finishing off the best levels of the day yesterday but the dow posted a record closing high. the blue chip index hasn't logglog ed a three-day losing streak this year. still seeing a lot of up days. if you are looking t history for a bullish sign, the dow ended that year with an 18% rally. s&p closing higher yesterday and that meant they snapped the 14 straight days alternating between winning and losing. as for the fear index, vix slipped below 15. u.s. equity futures are indicated up. s&p 500 indicated up by 4.5 points. as joe mentioned, the fed will release minutes from last month's fmoc meeting today.

chairman ben bernanke said the fed will ease until employment and economy improve. earlier this week he said that the economy is not doing as well as the fed hopes it would be doing. the minutes are expected to show dissent among policy makers but the overall message should match of that bernanke. wile hear from the president of atlanta and indianapolis and dallas. that should give us an idea of who was saying what at that table. >> 14,673 versus 13,100. 18% is not going to do it for me. if you are looking for -- >> for a bullish market. >> 131 to 146. it would be almost flat for the rest of the year. >> bigger? >> yeah. i guess some people would be

glad if we just held onto these gains and maybe added to them a little. >> you won't have too many people arguing with 18%. >> we already got it. that would be flat for the rest of the year. kind of flat. you would hold onto gains. it's only the fourth month of the year. only april. we're on a really fast pace. let's not be satisfied. let's keep this pace up. let's keep it going. this is going to help. the president is rolling out his fiscal 2014 budget plan today. details are just crossing the wires. the plan mixes in approximately another 600 billion in revenue. it's revenue. don't even be concerned with that. and a few cuts. these are taxes. the white house says the budget incorporates the president's compromise offer to speaker boehner to achieve another 1.8 trillion in deficit reduction over ten years. interesting numbers in here to get to those deficit reductions. it includes 400 billion in

health savings. a crackdown on waste and fraud in medicare and raises $500 billion by limiting high income tax benefits. maximum over 1 million would be 28%. buffet rule goes into effect requiring household incomes over a million to pay at least 30% after charitable giving and taxes. it limits the value of tax deductions as i said for the top 2% to 28% and it ends the rule for carried interest that lets financial managers carry tax on current interest on capital gains tax rates. the white house says the budget proposal includes cuts that the president would not propose without these revenue measures such as adjust the chain inflation index requested by republicans. the president is set to make a statement at 11:00 eastern this morning from the rose garden. might be like the other -- i don't know. we'll see how this is greeted.

>> this was supposed to be a budget that was looking at entitlements and proposing cuts. i don't know what they do beyond cpi. >> we've heard that when republicans have been talking about this, you already got your tax increase. he wants another tax increase to agree to same cuts in the first deal when they were looking for the initial amount. there's a lot of investment and infrastructure setting up different innovations centers. the investment as they call it is spending on infrastructure. spending borrowed money once again. we'll see. it's probably going to be met with somewhat tepid response since it includes another 600 billion in tax increases. there are some people we'll hear the slowing economy and bad jobs number was a sequester and some people think it was the first round of tax increases with the payroll tax expiring that is

causing low income and middle income people not to spend. >> we talked to david walker yesterday who suggested this would be a step in the right direction in terms of looking for ways to raise revenue and tackle the entitlements. >> he wants to see whether they are serious. it's playing out just as "the new york times" piece from a week and a half ago playing out like clock work. >> good news people on the far right or far left agitated about this and didn't like the budget. he said he thought it was dead on arrival. >> which we're going to hear it's the republicans fault and then we have an election. have you done the math yet? >> i have not. >> how many months? yeah. pelosi is ready to go. >> it's going to be another fight this time around. we will continue to get some of these details but the full details aren't expected until the president speaks at 11:00 eastern time this morning.

you'll hear talk about people going over these initial details this morning. there is other washington stories we're watching today. senate negotiators are putting final touches on bipartisan immigration but the major unresolved matter for this bill rules for bringing foreign farm workers to work on poultry and cattle operations labor unions have reached tentative agreement in recent weeks on handling of low-skilled workers from foreign countries who would work as construction laborers, maids and waiters. senator mccain told reporters that senate negotiators are trying to get the bill done this week. we'll talk with tom donahue at 8:00 eastern time. the chamber is also holding a capital markets competitiveness summit in washington today. the planned remarks in them he's expected to say that dodd-frank is falling short. the expectation is he'll say it was built on the hope that regulators would coordinate their approaches and together

create a coherent system in spite of the layered structure built on the dream we can make financial services industry less complex and less diverse will jeopardizing access to capital. we are not against regulation. we just want smart regulation. >> let's check on the markets this morning as we said we're at another high in the dow. s&p closing in on another high indicated up another four to six points. we keep cranking along. many say it's money moving into the stock market not getting treated well anywhere else. let's look at the oil boards. still below on 95 at 93.96. almost back to 1.8. euro is recovering. almost 131. closer and closer to 100 on the yen which people say is inevitab inevitable. gold had a good day one of the last few sessions.

back to 1589. >> ross, i have to tell you, i have been thinking about what you told us yesterday all night, all day through this morning and talked to a lot of people about it the idea that when you were growing up you were doing your homework by candlelight. that's stunning. i can't get over that. >> that was when we had big power cuts. scheduled power cuts because workers went on strike. we had a three-day working week. there weren't people to drive the power so there were scheduled cuts. you knew at 7:00 the lights would go out or whatever time it was in the winter for a certain number of hours until you got up in the morning. i remember doing candles on. that was the state of the economy in the mid '70s. >> crazy reminder. it's given me a lot to think about. >> i hadn't thought about it for

a while. following the record close. you can see on the board behind me, weighted to the upside. 8-1 advancers outpace decliners. dow jones 600 you can see at the best levels for the day. how does that translate? 43-point gain for the ftse. banks are doing well. another pretty good auction today out of italy. they raised money they were looking for. 8 billion on one year and the point is yields continuing to decline from march levels. despite that we still don't have a government we try to negotiate our way to a new president in italy maybe trying to get elections before the summer. that might be a plan. hasn't really bothered investors

trading on the technicals and not fundamentals one investor told me today but nevertheless yields are lower at the moment as they are on in spain. plenty of appetite. one of the things we might see from the bank of japan monetary stimulus is japanese investors may go overseas looking for yield. they love fixed income. these two yields may benefit even more from that as well. one stock worth pointing out not here in europe, if you remember the main manufacturer of apple products not great news today. they posteded ed ed a 23.7 decl sales. w that's where we stand right now in europe. back to you. >> okay, ross. we're up 12%. another 6%.

people would like that. i don't like that. i want more. 50% above gains so far. >> don't be greedy. >> we deserve it after all this time. and there's so many great things happening like this. u.s. and south korean officials are warning that north korea could carry out a missile test at any time. we're joined from seoul with the latest what can you tell us? >> the latest is that very highly probable north korean missile launch, joe, did not happen today, wednesday, here in korea. today was actually the day that north korea has reportedly set as the deadline for its foreign embassies in north korea to clear out because it said it couldn't guarantee their safety in case of a conflict in this region. it did tell foreigners in south korea to leave as well. south korea did try to play down

the warnings, south korea did raise its surveillance level this morning. a u.s. official told reuters that two missiles are believed to have been moved for a launch along its east coast and this is in line with a number of south korean reports that i'm getting today so will they fire it? some experts here say that kim jong-un will have to do something. stage some form of an attack given his own rhetoric in recent weeks but an attack that is limited in terms of the repercussions that it will bring so that he stays legitimate to his own military and people and not go out of line too much with the international community including south korea and the united states. >> you know, things in the east are very hard for us to understand any way. we're not -- either we don't know about the aggressive moves that the west has made or we haven't been told or there haven't been any. this is all sort of his own deal

to try to strengthen his position and standing in his own country. i don't know where the aggressive moves of the u.s. or the west -- do we not know about them? there really haven't been any. this is all about him playing with himself more or less. >> exactly. and that's this prolonged duration of tough talk and this tough rhetoric coming out of north korea is having some north korea watchers saying that maybe he really feels the need to quiet down complaints at home and he feels the need to somehow stay legitimate and come out with all of this chest thumping. of course there are usual explanations. he wants to get concessions from relevant countries to tame the new conservative government here in south korea and of course to express its anger over the joint military drills between seoul and washington. >> i guessf had to, he

would hang his hat on that there have been joint military exercises. >> he wants sanctions cut too. >> it's about him. it's not about overt moves that we're aggressive from the west that are threatening north korea but i guess he can sell that to his people. thank you. we appreciate it. i worry about you. i don't know whether to or not. i hear people in cafes over there -- >> what's the mood there? is this something that you all look at as not a big deal? >> i don't mean to play down the seriousness of this situation but for example, my colleagues here have dinner plans and they show up at work. it's business as usual. it's pretty calm over here. i don't really feel like i'm working out of a newsroom located in a country that entered a stage of war like north korea said days ago.

>> all right. let's hope not. >> thank you very much. we hope to talk to you again in the days to come. we hope it is with better news. thank you. when we come back, we'll talk about what's working now and why some investors are turning to socially responsible investing. >> announcer: before you hit the road, here's your travelers check. a shocking number of americans aren't keeping track of their frequent flyer miles. according to a new study by travel website the points guide.com, 73% of americans who collect travel rewards don't know how many they have. who is least likely to keep track? find out next. [ male announcer ] you are a business pro. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle.

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>> announcer: nearly three out of four americans who have frequent flyer miles aren't keeping track of them and the worst offenders? young people. 80% of 18 to 29 year olds who have bank travel awards don't know how many they have. welcome back, everyone. as you can see, the futures are indicated higher this morning. the dow futures up by close to 45 points above fair value and s&p 500 up by five points. in our headlines this morning, leonard lauder is making a major

donation to the metropolitan museum of art. he promised the institute his collection of 78 paintings, drawings and sculptures valued at more than a billion dollars. it's one of the greatest collections in the world. there are pictures on the front of "the new york times." >> this is not cable friendly if you're going to show this. it's a nude. that's a nude. >> good luck figuring that out. >> that's a nude. that's a nude. they are right there. >> that's what we saw this morning. >> not only -- you know, she's -- well, we'll just put that forth without comment. >> there were a lot of pictures. >> there are 33 picassos. it will make it one of the greatest collections in the world exceeding -- >> is she reading "the wall street journal"? >> she's reading something.

>> or "ladies home journal?" she's reading a journal. >> there is apparently the museum that's getting these, the metropolitan museum of art, there's -- they don't have enough early 20th century art. it's a big deal. who is that? 33 picassos. i don't even know. leger. is that french? i don't know that guy. i'm not going to talk anymore about it. not that stops me from showing my ignorance about other things. >> another picasso. this is head of a man. >> i can recognize that. not sure what i feel about that. >> looks like a car with headlights. >> he's in a bad mood. >> a huge donation. it has gotten a lot of

headlines. why don't we talk about the national forecast this morning. the weather channel's julie martin is here. we have certainly been feeling warm weather around here. it reached 80 here yesterday which was a first for us. >> exactly. you are in for another really good day. we have summerlike temperatures on the east coast. we have a winter storm in the middle of the country. severe weather in between. it's a little bit crazy out there. here's what we have going on. showers and storms here in the northeast places like boston will get wet but check this out. washington, d.c., 90 degrees. that would be a record if we meet that today. 80s in miami and then mostly warm and sunny across the southeast but here's where it gets interesting. the mess here in the middle. severe weather in the red zone here all of the way from dallas, houston, up through chicago, indianapolis, possibly some hail and damaging winds maybe a tornado or two but that threat not quite as high as the others. and then on the backside of this we have a potent winter storm that's going to dump a foot of snow in minneapolis.

go figure. it is april and it is definitely a mixed bag out there. west coast looks good. lingering showers here in the pacific northwest. nice and sunny in l.a. today. 81 degrees for you. denver by the way hit the teens this morning and you're still going to feel the chill today. here's that severe weather threat i was talking about in more detail stretching from houston up through pittsburgh today. isolated tornadoes with this but hail and damaging winds really going to be the big problem and on the backside of that, snow and wind is tracking across the upper midwest and in fact minneapolis by tomorrow will be waking up to a foot of snow in the city and then all of that pushes eastward. things calm down by friday. it's going to be a rough couple of days for many folks unfortunately in the center of the country. if you live in the east, looking good today. back to you guys. >> thank you very much. we'll take it. it is feast or famine. 30 degrees in the morning to 85 in the afternoon.

>> i have no complaints. i can smell the earth thawing. this is great. >> we'll be in hot, muggy stuff soon. we're focusing on socially responsible investing. this is a new twist to the catholic fund. you went to university of detroit mercy. did you go to jesuit school or is there another one i don't know about? >> university of detroit. it is a skjesuit school. >> did you ever have detention? i had a little bit of problem with some of my jesuit friends. you were a good boy, weren't you? >> i wasn't an angel but probably wasn't as bad as you, joe. >> all right. basically you can imagine that i figured this out. if it's a catholic orientated

fund, you probably screen out things that catholics either don't believe in or do believe in. what kind of stuff causes you to do different things than a normal fund? >> our funds where we have a catholic advisory board that asks us to screen out companies that support abortion and pornography. we don't screen out things that socially responsible funds focus on. socially responsible funds typically screen out things like companies that are deemed to be polluters, tobacco, firearms, alcohol. we are focused. we screen out abortion, pornography, stem cell research and companies that contribute to planned parenthood. these are core principles of the catholic church. we have done good at it.

despite screening out about 150 companies out of the russell 3,000 only 5% of the companies are off the table for our portfolio managers and analysts to consider. >> it would be interesting to look at those. i wonder how many dots you have to connect to pornography, what would qualify. what was that old saying the supreme court justice said when they were trying to define pornography, i know it when i see it. something like that. >> i know it when i see it. >> i figure -- >> does that include entertainment companies that have rappers that sing for them? >> it screens out entertainment companies. screens out hotel companies that show pornography on their tv sets. screens out several of the hollywood studios that have subsidiaries that are engaged in production or distribution of pornography. abortion is a big one. abortion is the focus of our

50,000 shareholders and they are pro-life and pro-family and most drug companies are screened out as well as some insurance companies that pay for abortions and also insurance companies that pay for abortion and hospitals that perform abortions. total is about 150 companies that are screened out. portfolio managers have done a great job of selecting from 2,850 companies that are left and produce excellent investment results for our shareholders. >> let's look at your favorite stocks. how far back can we go to get an annual average return? >> we started in 2001 with the catholic values fund. we have six different funds with different investment objectives. our five-star rated fund is a

dividend fund that's been around since 2005. it's double digit returns on average over that time period. so far this year it's already up 11% which we're very pleased with. >> so double digit each year. >> on average, yes. >> can you go into some of the individual names you like in case some of our viewers want to participate in stocks? >> sure. one of our large holdings is ross stores. off-price retailer. a phenomenal company selling at 15 times earnings growing between 10% and 15% per year. i always say this company looks like a off-price retailer but it's above the ground gold mine because it's so highly profitable. extremely high profit margins. 40% return on equity with no debt leverage. extraordinary company. it's under valued in the

marketplace. another stock we like is emerson electronics which is an electronic connector company and they buy back stock. opportunistic terms which is the way to do it and not just buy stock back at any price. they keep shrinking the pie for us remaining shareholders. it's growing. it's highly profitable. and we well like the management of that company. paycheck is an extraordinary company. they have almost no cap x requirements. enormous free cash flow. we're looking for companies with enormous free cash flow. paychecks has that. the company is going to benefit from higher interest rates when they arrive and i think that might be sooner than most people expect because they have a great

float. becky, your friend warren buffett is a big fan of free float. this company has it. they're not earning money on that free float at the moment with zero interest rates. they will make a lot of money when interest rates go up and if employment ever picks up again, which is hopefully going to happen. >> that's an interesting theory. do we think of pope francis as a jesuit? i think he's a jesuit but he took the fame francis. so they are trying to claim him but he's a jesuit, right? >> he's a jesuit. and from all indications he's going to be terrific. >> i agree. we appreciate your time this morning. this is one i haven't seen before. i have seen the other ones with the politically correct ones that get out of tobacco and that stuff. haven't seen this. we appreciate it. when we come back, the call on commodities. why they've been telling a different story than equities.

first, the new york knick clas s claiming the first division title in years. this was the knicks 13th straight victory. right now as we head to a break, look at yesterday's stock winners and losers. all stations come over to mission a for a final go.

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>> i'm listening every day on my way home. i go back and forth. i wind up back here because it's good pop music. >> i do outlaw country. >> that was all those guys. >> someone had a shirt on. i love it. i can't remember who it was. good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick. andrew ross sorkin is off today. somewhere listening to country i think. or not. u.s. equity futures up 52 points this morning. that would be another all-time high because we saw one yesterday in the dow and s&p is getting close again as well. we're up 12% for the year. last time we were up 12% this soon we did 18% back in '70

something. >> improvement from gains we've seen. >> i want to annualize the 12% and we're in april. we have three times 12%. we'll all be retiring. >> that would be nice. >> we don't have stock but comcast and ge. >> comcast has done well. >> i wonder if that guy can invest in comcast. >> he said no entertainment companies. >> i don't care. we are a clean, nice company. >> we've been watching equities climbing to new all-time highs. what does the future hold for gold and other precious metals? phil, we've been scratching our heads as we watch gold every day because as you mentioned in your notes we have global central banks on a race to devalue every currency around the globe and the threat of a strike in north korea, a bomb strike, that is

the type of conditions you would expect to see gold get pushed higher but it's below 1,600. what happened? >> why didn't gold go up with these different things. we see a divide right now between essentially the shorter term orientated paper traders and people investing in gold based on fundamentals of every major central bank in the world printing money. >> the shorter term guys are etf guys? >> the hedge funds. the ctas. people who can't sit there and hold gold while equities are up 10% in a quarter and so they need to get out of those and get into things that they can make money in now. they can't just sit on it. and trend following guys getting short. you've had a tremendous run in gold over the last 12 years and it's started to break down recently. i would argue that the fundamentals of owning gold are still about the same because of

all of the printing that's going on. you just need to get technical aspect of the people who can't sit and hold it. >> how many people is that? how responsible were they for driving it to 1,600 to begin with? >> they had responsibility. absolutely. you've had large hedge funds with huge positions in gold that can't hold on. you have guys saying it's not reacting how i thought it would. he's getting out. there's a lot of pressure on gold that i think is much more technically based than fundamentally based. >> that suggest the reason we got to 1,600 was because of fast money and once fast money moves away from that trade you have a hard time finding support. what would be a fair level if you got rid of those guys who can't sit around on it? >> fast money tends to ramp up toward the end. if you notice a pattern of gold, i would expect fast money at

some point to come back but we'll see that as an alternative store for value. what would be a fair level? that's tough to tell. >> would you tell people to buy gold right now or do you think there's too much of this sort of churn that's taking place right now? >> depending on your personal strategy i would say if you don't have gold in your portfolio, you could start to add to some as the liquidation continues with the time frame toward the latter part of the decade. >> it's a trade i wouldn't want to get near. maybe wait out volatility. >> you would want to dip your toe to take a little piece but i wouldn't put 100% of whatever allocation you have into gold right now. >> would you put 10%? >> maybe start with 10% of your allocation. let's say you'll do 5%. maybe you buy 1% right now. and sit and wait. we could see certain things happen and you never know when

you'll be able to time the market. moving in slowly into a position. >> what would it take to see a spike? cypress didn't do it. north korea isn't doing it. the downturn we've seen with things like jobs number. none of those things worked. >> what is going to happen is these people who are short-term focused will get out of the gold market and then it will start to move and it will go other way around. i think if you look at its correlation with stocks, ever since the fall when stocks started to make this strong move that they've had, gold has been weak. i think if you get it away from where the fast money is so focused on just short-term versus equity portfolio, it's going to move in the other direction and it will go. any sort of event could make a small pop. >> you are talking about longer term. if you look at it for a year or two, you think it will be back

to -- >> i think it's easy that we could see gold up to the highs again which is 1,900 area over long-term and this is something you want to have as an allocation to hold onto given what's happening monetarily. >> thank you very much for coming in today. really appreciate it. coming up, few industries face more consumer complaints than the banking business and kayla tausche joins us next with the start of a day long series on the issues facing that sector. stay tuned. [ male announcer ] there are people who find their own path.

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welcome back. a quick check on the markets. regardless of the -- i can go irregardless -- no matter what the fundamentals are money is coming into equities. is that what's happening? >> it just doesn't stop. you have easing going on about in the world and everybody thinks everything is fine. somewhere down the line this is going to fall back. i would like to see a 3% to 35% correction in the market to feel more comfortable. this run has to stop somewhere. >> a lot of people are saying that. at this point when we see 50 points up in the morning and there's really nothing that you can point your finger at that's necessarily that you can attribute that to, "the wall street journal" is saying that money seems to be flowing

downhill. not necessarily from the central bank printing but just from investors looking for something with the yield curve moving into stocks and it has been for the last 18 months. >> that's correct. you know what scares me, when money moves in for no particular reason, you have to start questioning why is the money moving in there and there will be a bump in the road here. a lot of issues to be addressed here. a fallback in employment this week. let's see how that goes. it just doesn't seem to me to be sustainable given the situation that we're in right now. let's get a pullback and then i'll feel comfortable getting back in the market. >> there have been dozens of people just like you that have been saying this and if it were to go down 3% to 5%, it wouldn't get back to where they say it. they are already wrong. they can't be rehabilitated. 3% to 5%, they are talking that 15% ago. >> you are correct. >> i'll remember you said this. if we go up another 3% to 5%,

i'm going to say that was bad advice, dan. >> i'll absolutely agree with you. i wouldn't deny the fact. >> you don't care if you look back. look at that jacket. >> this is jim's jacket. >> is it really? >> it's the same kind. take a look. it's the same kind. >> that's your tag, right, dan? >> this is my tag. it's not jim's jacket. it would come up to here on me. >> that's a little bit cruel. all right. >> he'll know. >> see you later. thanks. >> take it easy. >> they are big, bulky, expensive and behind the times. your local bank branch. they cost billions to maintain so can the industry adapt? kayla, i will admit, i use these things constantly. >> i say that -- >> i hate to break it to you, you are part of a dying breed. i know i'm not the first one to tell you that. when you think of the bank branch experience you think of teller lines and you don't really think of 21st century

experience. with more consumers banking on mobile device, it's no surprise branch visits are plunging and banks now are playing catchup. you think starbucks is everywhere? for every starbucks in america, there are nine bank branches. from the advent of the atm in the 1970s, virtually nothing about the bank branch changed except there were always more and more of them. now consumers are going mobile. branch traffic is plummeting. more than 1,100 branches shut their doors in 2012. the most in a four-year downsizing stretch. banks agree. branches aren't going anywhere. >> it will be very difficult to convince people that you're here to stay and that you're a major presence in a market and you're here to serve them if you don't have any physical presence. >> reporter: jonathan larson steers citigroup's strategy from hong kong leading an effort to cut dead weight from five

markets worldwide to free up cash for urban centers. >> we're talking about the top 150 cities in the world. these include the most expensive real estate on the planet. we'll probably end up over time with more outlets it's just they will be of a different nature and smaller than traditional outlets. >> reporter: spending less on real estate means banks can spend more on high tech apps and atms. retail idol, the apple retail store and whether that's too modern for the customer taste. in prototypes, they are trying to find out. jpmorgan and wells fargo are waging a war over real estate. jpmorgan spending billions annually on hundreds of new branches and wells fargo already the nation's biggest branch network is only getting bigger. >> we have 6,000 stores in 39 states. we're one of the most convenient banks in the u.s. and i think you'll see us continue to keep that footprint.

we're not about closing stores. we're opening stores and make ourselves more convenient for our customers. >> there's bank of america. they loan shuttered more than 250 branches in 2012. 750 more on the chopping block. they announced major renovation project for thousands of the branches. the big question is will branch investment pay off or end up as dead weight? critics say they are expensive billboards at this point. >> i can understand in the city how the real estate would be really expensive. i know my teller's name. andrea gomez. i see her at pnc bank. you take kids in to take pennies. >> they're not trying to take away the relationship. they want to build the relationship for a bigger ticket transaction. you'll talk about your mortgage and open a credit card and discuss a loan for a new car, et cetera, but they want to take this simpler more routine transaction to the atm and away from that human experience. >> my branch is gone. i can't do any of that stuff at

bank of america. >> you'll get calls today i'm sure. >> i figure brian moynihan is going to call me and say i'm sorry. >> this abandoned place with a real estate sign in front will be it's going to be thriving again. >> i imagine joe living in a desert and walking with a picket sign. >> we took the kids in to open their accounts and they got the bankbook. >> people are saying they open an account, they close an account, they go there to do the big transactions, they don't go there to cash checks, deposit checks. >> i have one check from "fortune" because they pay me by check. i have a blackberry, so i can't take a picture and send it in. >> it's interesting how many people are taking pictures of their checks depositing them on their mobile devices. a lot of consumers are saying i actually don't need to deal with a person. i don't want to deal with a person. most days joe probably doesn't want to deal with the human race. >> no. >> exactly. >> i like andrea. >> with your blackberry you can take a picture, but they

wouldn't know it was a check with the quality of the camera. >> i keep telling you, the camera's not bad. >> there are some issues. i know, i know, i know, but i can't believe -- i also found out from you that we can't even upgrade to the blackberry 10. >> i tweeted this already, but i was trying to get the blackberry 10, i have an older generation blackberry i use for cnbc. i was told we can't upgrade because we're still on the blackberry 5 servers. >> which is a huge reason the share in the market that has dropped so drastically. >> we should migrate away. you just have to hold one of those things with a camera. >> you are such a newbi. >> she's got a foil cape. >> she's got to have it developed somewhere with silver. >> while we're on the topic of technology, i will give a small plug, i'm cohosting "squawk on the street." >> let me write that down. >> watch from home like you

usually do. 10:00 to 12:00 today. but we're talking about the issues of cyber securities, branches are going paperless, consumers are going mobile. and with the cyber attacks, are there risks to your money? what are some of the issues? et cetera. >> you don't know -- they're not boxes. >> what? >> no, i'm kidding. it's four, two in front, it's very strange -- >> sort of like borat. >> exactly. anyway, thank you, kayla. still to come, it's a hideous image, isn't it? >> it is. because i think of the green one. the neon green. >> they'll have my head on top of that as we come back from break. still to come on "squawk," masters week continues this morning. masters week, we are inducting two new members to the 2013 class, their names and their investment strategy still ahead. changing the world is exhausting business.

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still to come this morning on "squawk," hedge fund headliner, ken tropin. we have the cfo of united continental. and pro golfer ian poulter, stick around, "squawk" will be right back. i know what you're thinking...

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the bulls battle back. the dow sitting at a new high. the s&p closing in on its all-time high just in time for earnings season. a look at what's moving stocks and where you can move money. what's in the president's budget? "squawk" friend and former economist for vice president biden, jared bernstein will join us for a look at where the budget cuts will come and what stock sectors might be impacted. >> getting rich from getting high. >> did you see that unicorn? >> meet the founder of privateer holdings. why he thinks it will be bigger than the corn market. there's a second hour of "squawk box" lights up right now.

good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernan. we've been watching the futures and there are green arrows. once again, the dow futures up better than 50 points above fair value. after closing up about 60 points yesterday for the dow. so some continued gains. why don't we get to your morning headlines today. the white house out with the 2014 budget that hopes will pave the way for a bipartisan agreement. includes the slowdown in the growth in social security and other entitlement programs, but also includes tax increases which may make it a tough sell. jim nussle and jared bernstein will be joining us in a few minutes to talk about this budget. also scott london has apologized for his role in leaking nonpublic data to a third party.

that action actually resulted in his firing and the resignation of kpmg as auditor for herbal life and skechers. in an agree, london emphasized he passed no documents to that third party and did not impact accounting audits of those two companies. yahoo reportedly wants a bigger role on apple's iphone and ipad. the two companies have been holding discussions. data from yahoo's weather and finance sites are preloaded on phones. and have a business reliance to share and coproduce editorial content. let's do a currency check. the yen hitting a three-year low against the euro and edging closer to that 100 level. triggered by the bank of japan's radical monetary easing steps which were kicked into higher gear last week. gains against the yen helped push the euro to a one-month high against the dollar. supported in recent days by market speculation. the japanese investors are

looking for higher returns, they pile into eurozone, assets, and the next focus will be the minutes from the federal reserve's latest policy meeting and that is due for release later today. also, the bank of japan's aggressive monetary plan, what joe was talking about, that has p -- says he's raising allocations to try and take advantage of increased buying from japanese investors. the pimco total return fund allocation is now 33% in bonds up from just 28%. and by the way, the fund also decreased its exposure to mortgage bonds from 36% to 33%. our guest host is coming off a bullish first quarter with an 8% return for the january through march period. and today he joins the "squawk" elite. chairman, founder and principal, and the newest member of our "squawk" master market circle. he's bullish on bonds, that's

counter to what we've heard from a lot of guests who have come on our set. what do you think about the outlook for the equities market and the outlook for the bond market? >> i prefer the equity market over the bond market. i think the idea of being a long-term investor or commitment at these levels, the bonds, probably means that in the short run you're fine, but in the long run, i would like to think that that's probably not a trade i would prefer. and i would continue to favor equities over bonds at these price levels. >> i couldn't help think when did he sell allis years. do you remember the yield? it was above this. well above. >> yeah. >> hated him then, likes him now. nobody's perfect and we had him on recently, but -- >> talking about -- >> when he totally -- >> i think, i'd have to go back. >> and i'm sure given the size of his position, he's not just doing it at one price. it seems to me that with the

very easy monetary policy that we have not just in the united states now very much, though, in asia, probably eventually to come in europe, you're going to have to favor equities over fixed income. i think you consider every pension fund and the expectations or projections and it's forcing them to buy assets that are going to potentially yield 6%, 7%, 8% and fixed income. >> the huge editorial, yeah, the pension, all the pensions are still assuming 7.5% in 1.7% ten-year note. >> 60/40, you know, allocation between stocks and bonds, it seems to me that obviously that bond yield's not going to get there. >> have you been fully invested in the u.s. market in equities or other places?

we just pointed out that you had an 8% return january through march. stock market did very well. i think we were talking 12% gains for the year-to-date. >> yeah. we've done pretty well in being long equities sort of globally. we've done pretty well being short the yen, those are kind of the future trades for us. >> did you -- >> we're a little bit of both. graham is a firm that has about 2/3 of the business in the hands of discretionary traders, macro focused, not typical long/short equity traders. really focus on trading interest rates around the world. they're trading stock indices around the world, trading some credit. they're really in a sense a broad, you know, opportunity set of different markets where we can go long and short. and so we really do not focus on buying individual single names and trying to have a sort of

long/short -- >> weren't you a futures guy? out on the west coast? >> not on the west coast. >> not back here. and so and then you wanted to write a program that you -- and i read -- did you really -- you wrote the code yourself? >> i did. >> what kind of -- you know, i do a lot of that sometimes. i prefer a high-performance pascal. i have no idea what i'm saying. but how did you write your own program? >> software designed for trading systems and, you know, in 1993, john henry, one of the prominent hedge fund managers and i parted ways and i taught myself how to sort of designed for trading systems, i hired somebody to help me with that process, eventually invented graham's early trading systems. . >> you've got $8 billion under

management. >> $7.5 billion. >> and you found it shortly after, right? >> i founded it in '94. >> but you've been well beyond futures. it's just alternative -- is it just stuff that's noncorrelated that you find important? that's how you do it globally? >> the progress was as follows. between '94 and '98, all we did was computer trading. and i wrote all of those models in that era. and in 1998, in an effort to diversify, you know, the sources of alpha we try and participate in, we began hiring discretionary traders, which unlike computer models, more traditional portfolio managers in the sense they're looking at fundamentals to decide -- >> in the seat of their pants. >> and that part of our business is actually become the bigger business. it's about 2/3 of what we do today. it's something like 43 different teams of different traders, may

maybe. >> is that kind of the gut work? >> i think computers can do terrific things, but they -- it's only one way of making money in markets and we wanted to have the biggest opportunities we could. the discretionary traders in the last two years have outperformed computers and computers had a phenomenal year in 2008 and have been a little lackluster ever since where our discretionary traders have a very steady return profile that's really not correlated on anything else in the world. >> bill gross looks at what the japanese are doing and things it's a good play for u.s. treasuries. you look at it and obviously you thought this was a great way to short the yen. do you think that trade continues? >> i do. you know, we've gone a long way. we've got from 79 to 99 1/2 today. it's not inconceivable it's going to have a correction. it's not enjoying to be a straight shot to the moon, but i do think six months down the road, it's higher. >> the other piece in the

journal right below the one you read was don't raid carried interests. since 1913, if you're a member of a partnership, you get the same capital gains treatment as others. it's coming either way, and would it impact your business? would it change anything you do? >> it's not going to change what we do. it's going to change our tax rate, you know, on the part of our returns, on our proprietary capital and some of the fee income that we generate is characterized currently as carried income as a preferential tax rate. and they've been talking a long time about trying to get rid of that so-called tax loophole. i would imagine in the current environment that might happen. >> it's in the president's budget proposal today. so we will see how things carry out from here. >> let's say we do it. and let's say we look back on the industry three years from now. would you expect any activity at all? there are people who say this is

one of the great businesses we still have in this country. that generates employment and returns for pension plans and does all this great stuff, and these are the people that we would pay a lobbyist to make sure it doesn't change. is there any truth to that at all? or you don't think so? >> i don't think it's going to diminish the hedge fund industry in the sense that it becomes a less successful industry. >> would they do it to real estate firms and architectural firms? >> well, that's the big question. there's a very strong interest in the part of real estate firms to protect the carried interest structure and so on. so will they single out hedge funds and say, no, it's inappropriate for you to have a preferential tax rate versus a private equity fund which has more or less the same structure. >> are you okay with it if they look at everyone equally? >> i prefer it to stay the way it is. but if they're going to change it, i think they should change it for all partnerships that

have carried interest, yeah. >> okay. kim's going to be with us throughout the show and we have a lot more to talk to him about. if you have any comments or questions about anything we've spoken about on "squawk," go ahead and e-mail us. you can follow us on twitter, our handle is @squawkcnbc. where will cuts be made and how much will spending rise? former omb director jim nussle and jared bernstein are going to join us right after this. and one cut that is certain, the blue angels, navy's aerob aerobatics cancelling the show. but i wondered what a i tcustomer thought? is great, hi nia... nice to meet you nia, i'm mike.

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welcome back, everybody. if you take a look at the futures this morning, you will see right now the dow futures up by 50 points above fair value. up by more than five points. yesterday the dow ended the session up by almost 60 points. we're keeping an eye on all of this as we head toward the open. also going to be watching shares of discount retailer family dollar today. that company reported fiscal second quarter profit of $1.21 a share.

that was one cent below estimates, the fiscal year outlook is shy of consensus. family dollar says sales were weak at the beginning of the most recent quarter but have been improving as customers start getting their tax refunds. the white house releasing the proposed budget this morning. here now contributor jim nussel and jared bernstein a former chief economist and economic policy adviser to vice president biden. also a cnbc contributor. and both of them are insiders that should be able to cut through the b.s. and just tell us what's likely here. jim, does this -- as it's currently structured, will it go anywhere? >> well, that's -- i'm not sure that's what it's meant to do. remember what's going on here. you've got both parties trying to avoid these issues by and large. they've gotten their polls back, the president's budget is 65 days late because he didn't want to touch the issue anymore after what happened this last fall, the republicans have come out basically with slogans and some

policy. but they're really not serious about it until they get into tax reform and entitlement reform in earnest, and all of this is to try to set up a deal, some kind of agreement between the bodies of congress and the president before we get to a debt ceiling. so it's coming in at a point in time to try and instruct the negotiations that are really not happening yet behind the scenes before we get to a debt ceiling increase probably the first of august. >> so, jim, did the president put everything he wanted in there that his whole shopping list and then he gave one thing to pretend that he's trying to take something from his base and that's the chain cpi, he's got everything else in there, puts a stocking horse of chain, yeah, i'm ready, this is big for me to do this, but it's all posturing, isn't it? >> well, you can put it that way, you can also say it's a good first start if you're trying to be objective in looking at it.

i'm trying to be optimistic about it, i think we do need tax reform to get the economy going and we need entitlement reform if we're going to drop the debt to, you know, to a point which is sustainable in the long-term. have. >> no, i understand you lost a couple of elections, now you're rolling over and appeasing, you're battered and bruised like the rest of your party and ready to roll over. thank you, sir, may i have another? jared, tell me how this is totally wrong and it's really a great deal for. >> well, i guess probably the best way of explaining how you're totally wrong is just how really very deeply angered this -- that proposal has -- >> paul krugman's mad. >> well, not just krugman, policy makers themselves. and i wouldn't call adding the chain cpi just sort of some kind

of phony token. there's also hundreds of billions of cuts in medicare. so the president is going out, i agree with jim's assessment. i think the president is going after something that looks like what in d.c. they call a grand bargain. he'll give the republicans cuts and entitlements in exchange for increases on the revenue side. since republicans have just been absolutely stone walling on the revenues, the assessment that this probably isn't going anywhere too far too fast is probably the right one. >> 600 billion. if they're stone wallers, that 600 billion, they're pretty crappy stone wallers, aren't they? >> well, you've got to remember, so far, so far, there's been $2.5 trillion in deficit savings over the next ten year actually legislated. and 70% of that has been spending cuts, only 30% has been tax increases. >> jared, i want you to pretend that you're in meet the fockers and i'm de niro and i'm watching -- >> so far, i'm doing great. >> all right.

just pretend that we can all see the needle going -- >> no, everything i've said so far has been -- >> the scary thing is, he believes all this stuff. i don't think you register, your pulse is not even changing. you're like -- >> do you agree with that too, though? just in terms of what we've seen is it 70% that have come from spending cuts and 30% from revenue? >> but that all assumes that you believe that the problem is equal on both sides this has been a spending problem. none of the spending challenges have been addressed. >> but are those the correct numbers, jim? >> it's the money you're saving on interest. you double counted revenues and you say those are the real numbers because the cbo comes up with it? >> as usual you're bringing in lots of extraneous information. and jim may say that's an absolutely fine split, but that's the split so far. >> is any of this about

painting -- you just said it again, the republicans are obstructionists, is any of this about posturing about taking back the house. saying, look, we're not going to do it. i tried my best. i've never seen a campaign season end with this administration. >> yeah, i mean there is definitely, every budget is somewhat of a document that appeases to your base. but i think what's unusual here is that, you know, this budget is really going after the president's base in ways that i think it's pretty unique. you'd have to go back pretty far to find a democratic president who proposed these kind of entitlement cuts. it's happened before, but it's pretty rare. >> we're also talking about a unique situation where we have deficits of over $5 trillion. >> and they're so minor. >> on the deficit point, if you believe the numbers -- they're not out yet, but they've leaked out a few numbers this morning. and they do argue that their budget gets the primary balance

below 3% in a few years. i think maybe by 2016 and by the end of the budget window, the ten-year budget window, the deficit to gdp down below 2% meaning the debt will start coming down. >> we're not doing anything with medicare. we're barely touching security and you're already acting like this is such a huge concession to make. >> so, look -- >> never going to be able to fix medicare. these are $70 trillion worth of problems we have. >> i agree with you and i appreciate you're bringing medicare into the mix because that's where the pressures come from. what you need to understand and, again, jim will back me up on this. if you look at the projections now versus a couple of years ago, they're $500 billion less based on the delivery reforms in the affordable care plan. >> let me ask you this, a conversation kicking around washington that both sides say they could agree to would be something like combining the deductible that you have for medicare parts a and b, and that would be a big difference because most seniors end up paying more.

it would mean, i guess, one part is the deductible that you have for hospital stays, the other is what you have for medications you're taking and things. they did this before back in 1988 and lasted a year before it got repealed by congress. do you think something like that, eric canaditor says he ths both sides could agree to that. >> i think it's possible. it's going to be difficult without the president leading on that particular subject. because it's by and large the democrats are the ones in this instance that will have the hardest time coming that direction because it's entitlement reform and it's medicare reform. so i think in that instance, if the president leads on that issue, which is why being late in this budget proposal and waiting until both house and senate budgets have passed makes this an awkward situation for him to come in at this moment and try and lead on any of those particular issues. that's why i give him credit on cpi, i give him credit on what he's doing for social security.

will it instruct the process going forward? can they get a deal as a result of it. i think it all depends on what kind of pressure builds up before they get to the debt ceiling increase that will happen probably august 1st. >> he would take that off the table if the republicans don't do the investments in the revenue, right? >> that's what he says, yeah. >> jared, it's not like -- >> when he says it's not a menu they can pick and choose from, he means it. >> which means it's going -- you're offering things you're not going to have to deliver on. >> there's this word compromise that doesn't seem to be -- >> nussel's ready. he's got this new job. >> i'm not ready if they're going to do some kind of back room back deal that doesn't work. >> all right, jared, thanks. jim, thanks. good to see you guys. hnchts investo investors flocking to the marijuana market. why this budding business could be bigger than the corn market. a wealth of etf knowledge

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all right. still to come this morning, a private equity firm making money off marijuana. we will talk about why it's chosen to start to acquire

businesses in the cannabis industry. yeah. i haven't heard this song in a while. as we went to the break, though, take a look at the futures, dow futures up 46, s&p up by about 4 1/2. ♪ ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪ 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.

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welcome back to "squawk box," everyone. in our headlines this morning, investors looking ahead to today's release of the most recent fomc minutes. and the street's going to be looking for any further signs as to when when and how the fed might exit from the current policy. that stock has been rising recently on takeover talk. now reports that thermal fisher scientific has made a bid and private equity firms are also trying to finalize an offer. mortgage applications rose by 4.5% last week. that's according to new figures, that increase led by a jump in refinancing demand as mortgage rates dropped to the lowest

level we've seen since late january. our next guest was named the forbes 2012 midus list of best investors. formed or funded 100 start-ups that have grown to independent public companies. joining us right now onset is jeremy levine on the board of pinterest and yelp, 100 different companies that have gone on to become publicly traded companies. >> the firm's been at it for about 100 years. >> okay. we look through what's been happening in technology. a lot of people see some of the problems that some of these companies have head. get a little nervous when they start looking around. what's your sense of what's out there right now is? what's being developed? are there great new things on the horizon we haven't heard about? >> there are, although, fundamentally ecommerce is huge and growing rapidly, but ultimately, it may be more of a winner take all game than i

think people are anticipating or appreciating. >> and that means amazon? >> it does. it's an incredibly powerful juggernaut. there are essentially two different business models, one where you control the distribution chain all the way to the consumer, that's amazon. the other is a massive open marketplace. and there aren't a whole lot of opportunities around amazon and ebay to succeed. the industry has poured a lot of money into ecommerce start-ups. i think a lot of the start-ups may struggle in the end because it's hard to not get crushed by the steam roller which is amazon. >> are you putting money into any ecommerce firms? do you think it's too tough to compete? >> we were in 2006, 2007. you know, one of the companies we backed is a company called diapers.com is the brand name most know. amazon acquired it. since then, we've gotten a lot more gun shy. in part we recognize that amazon wasn't satisfied with books, music, dvds, it's going to everything.

and it has so much power in its scale and in its resources and it's an extremely well-run company. we're sort of scared about where it may go next and how that might impact us. just a small start-up. >> why did amazon need. why couldn't they get into the diaper business? why did they need to buy that? >> they could have. and, in fact, they were fighting diapers during the acquisition talks, deciding do we squish this company or acquire it? diapers, before amazon decided to get in the business built a brand, a loyal following. in particular, on the coasts, cities like new york, san francisco, los angeles, boston where the parents of young children could order baby supplies of all sorts. >> what does it stand for? how do you know what it's supposed to be? >> it's the corporate entity, but they have soap.com. >> basically, buying their customers? >> they were buying the brand, i think they were buying the brand. >> no adult diapers? >> they do offer adult diapers. >> okay.

>> in that case, joe's in. >> no. i'm okay. even though it's a three-hour show. it would make it a lot easier. >> i'll give you that too. jeremy, when you look at the seed money that's out there right now, you think there's a lot of it floating around and that as a result it's gotten pretty tough to find decent bargains or ways to find your way in even at the seed stage. >> it's actually pretty good for us as venture capitalists. what we do by saying there's really early company formation where a collection of investors might be investing a few hundred thousand dollars or maybe $1 million to get something going from scratch. all the way up to a business that might have in the scheme of start-ups a lot of people and a lot of resources, like 100 people and might be doing 10 million in revenue. but these are still tiny businesses. it's almost been like a return

to the original internet bubble. >> was that good news for you? gives you a lot more companies to pick from at that earlier stage? >> it does. and there's a level of sophistication. they know how to present to investors, they understand the key distribution and leverage points in these new business models, and they're quite talented. on the one hand, there's this massive flood of these companies which is exciting for us. we don't need to invest in all of them, we need to find one or two that are big businesses over time. it's daunting, so many different opportunities to look at. >> why aren't we running out of social networking stuff? is there something after that? or is it going to be all variations in refinements of social networking? do you think about that? >> yeah. >> i didn't predict. i had no idea this was going to become, you know, this area ten years ago. social networking was going to be it. and now it's all there is, it seems like for seed money.

is there something next? or is it just an extension? >> within the world, i'm sure there'll continue to be information. >> right. >> and you can think of all aspects of your life moving online. >> and mobile too? >> and that may be the next wave. and face book is where you maintain your personal relationship, fans, family, et cetera, your business relationships, twitter, increasingly your news. >> can you still have personal relationships with people? or should it just be through a machine, do you think? >> well, in fact, there's a small start-up called grouper which deliberately arranges for dates or meetings -- >> so you do go out in the real world once in a while. i was just going to stay home and get a bunch of electronics and that would be it. and it's weird, isn't it? it's supposed to facilitate what we've been doing for thousands of careers, isn't it? they can't replace it. >> now we do it increasingly in front of the glow of a computer screen. >> you didn't invest in -- did

you see that site? >> i didn't invest in that one. >> you missed out. >> there's something for everyone. >> i can't believe that one was real. >> i couldn't believe it was real either when i looked it up. >> jeremy, thanks very much. >> thanks for having me. >> we're going to talk about cannabis investments soon. you might want to stay in the green room and watch. anyway, coming up, the ceo of athena health joins us to discuss the state of health care. the president's budget and his plans to keep making money. then a yale school of graduate grad turned marijuana investor. you know while you're deciding how to invest, you should wait before you really -- you know, the craziest things seem like good ideas -- i think you need to stay sober to invest. find out why privateer holdings has a craving for a cannabis company.

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welcome back, health care costs, a major source of concern for businesses and individuals. joining us now, jonathan bush chairman and ceo of athena health. when were you on? six months ago? something like that. >> it was like it was yesterday, joe. think in terms of "squawk box" years. >> we miss you. a lot of things have been going on as we get closer and closer to that 2014 implementation of everything.

i hear there's nervousness about whether we're ready to do all these things. that must create opportunity for you, just trying to figure out how obamacare is going to be implemented, doesn't it? >> it does. what's really sort of happening first before the creation of these connectors and the mandate goes into effect is the activation of the aco, the accountable care organization where entities can file to have permission to be paid bonuses on savings they create. as a result of the law, guys are being able to see how much money patients cost for the first time. medicare is actually required to give us their paid claims data, which they've been very stingy with when we were serving in aco. and suddenly you see this incredible variation in cost and utilization that's driving, i think, a lot of the absurdity of

what health care costs us. it's very exciting really. it's depressing at one level, but at least you can see it. once you open the wound, you can scrub it down, you know. >> so the curtain is being sort of pulled back on like whatever the wizard was doing in there all this time? >> that's right. >> and you're surprised at what you're seeing. >> pay no attention to the claims behind the green curtain. it's extraordinary. utilization is widely variant. prices are incredibly variant. i was looking just for a client here in massachusetts. they're regularly 25, 30% cheaper than their closest geographically closest competitor. >> why? >> and the patients can't tell the difference. so you can't go to the cheaper one and keep the money. >> why? why is one able to get it so much cheaper? >> well, the -- you know, the competitor has a vertical monopoly and has been able to jam the payers very successfully.

they've also engaged in hair-raising tactics. i think j.d. rockefeller himself may have blushed while he watched these guys jam the health plans. they've mandated the consumer not be able to see the difference and get any savings by going to the cheaper guy. that's going to change now. we've got the doctor starting to see these differences. and so when they send their referrals, they can generate some profit by sending them to the less expensive place. >> well -- >> there was 1,000 difference in colonoscopy in two institutions. one mile apart using the same equipment. one was $1,400, one was $2,300. knock me over with a feather. >> i had one when i was 50 -- i don't know, someone else was paying for it, i didn't even check. >> bingo. >> that's the problem. >> i know.

jonathan, at least -- i'm not going to have another one until i'm 60. i don't think you have to do it every five years if you have no history. >> we'll get you to the right place. >> never had seen such a beautiful colon, he said, which was nice. >> i bet he tells all the -- >> it was extraordinary. he said it was extraordinary. not really. jonathan, at least we have the nonprofits that the big nasty profit centers that, you know, are gouging everyone, at least they're nonprofit since they don't make a profit. >> this is probably the greatest discovery of all in this is the best jackers of all are the nonprofits. so in my example, the $2,300 is a nonprofit complete with bow ties and little patches on the tweed coats, stethoscopes, the whole deal and these guys have got unbelievable monopoly power and seems like they're getting a hall pass from regulators and

from the markets from the health plans. it's really quite incredible. i love the profit motive. but let's come on out of the closet and acknowledge that we've all got it. and play the same game with the same rules. >> this is really good what you're saying. if we can actually start shining a light on some of these situations, the market will -- >> becky, it's great. >> will take care of it, right? >> it's great. it opens up and even for the expensive nonprofits, the opportunity there is going to be for them to -- they're going to have their low acuity kind of secondary and primary care stripped away from them as this happens. and they're going to go under, which will be fine, or they're going to start competing with other centers for the high-end surgery, right? when steve jobs' wife was looking for the perfect place, she ended up flying into tennessee to get his transplant because she shopped and found the best place. that's going to start to happen more and more and it's going to be a renaissance for the leading edge medical centers as far as i

can tell. >> i can't believe you founded this when all of this was happening in the sweet spot. anyway -- >> i'm, indeed, the dog that caught the car. >> your market cap is now $3.4 billion. how much of that -- do you still got a stake in your company, jonathan? what's your percentage there? you a billionaire? >> i don't know my percent, that's too depressing, but i have lots and lots. >> not depressing to you. who do you have coming up on "access hollywood" today at noon? >> j.lo is recently working with brad on something important. and they've adopted an elephant to live with their children. >> that's your brother, right? >> no, the other one is -- stay tuned, national geographic, he is currently trekking poachers of the rhino in nepal right now on an elephant, i'm not kidding. >> you're not kidding. wow. >> watch national geographic. he will with frosted hair and perfect clothing be hunting stalkers of elephants. >> wow.

>> rhinos. he'll be on the elephant. >> rhinos. >> this wasn't the athena health pitch i was expecting. >> you knew it was coming. all the stuff you needed to say and you said it well. we've got so much to do here. but at least we know where some of the -- if we work on some of these areas we're going to be able to stop the increases or bring down some of the -- we've got to do it in a smart way, right? >> yes. that's right. and just seeing the big deal right now is transparency. we've got to be able to move patients between hospitals without them losing their records. so these one hospital record systems have got to go away. and we've got to be able to make doctors make money by finding the best deal for their patients and the acl law and a lot of these global budget contracts that the commercial plans are offering are the solution there. and so we've got the puzzle pieces we need to make the beautiful -- the beautiful picture come together, which is just really exciting, but we've got a lot of work to do. >> great. jonathan, thanks again, it's always a pleasure to see you.

see you later. up next, marijuana and money, the market for legal marijuana may be small right now, but some investors are looking to get in on the ground level and fly high into the sky. with money that is. we'll have the story of pot and bankers from yale. that's up next. i know what you're thinking...

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yep. this was a college song. after washington and colorado, the pot business is if not mainstream, at least ready to push toward it. advocates hope the personalized use in another 14 states by 2017 and folks in the industry say the market could quadruple by 2018. so is there an opportunity to make lots of money to invest in something like this? our next guest certainly thinks so. brendan kennedy is the ceo of privateer holdings. his company invests solely in a legal marijuana business which, brendan, encompasses what, exactly? >> so we're focused on secondary and ancillary businesses so we don't prescribe cannabis, we don't grow it, don't distribute it, don't retail it. we're interested in professional service companies and companies that provide information and education to cannabis patients around the country.

>> patients. so this is -- this is purely for medicinal use what you're talking about then? >> yes, so our focus is on the 18 states and d.c. that have legal medical cannabis. of course, we are also focusing on colorado and washington which are moving towards full legalization over the next year. >> all right. so then, this isn't -- there's going to be other businesses that are involved in the commercial side of just marketing pot to casual users and to people that aren't actually using it for medicinal purposes. this isn't what you're involved with at all then? >> so we're not. and it's a gradual step as we migrate from full prohibition to states that are decriminalizing to states, the 18 states in d.c. that have full medical cannabis and then, of course, the experiment in democracy that's currently taking place in

colorado and washington. >> then tell us, i listen to e the -- where you're going to -- what you're going to do, not selling it, what are the businesses you're talking about then? just be a little bit more specific. >> sure, we have a private equity fund that has raised capital around the country. and our focus is on elevating the conversation on creating mainstream brands that are different from the ubiquitous cliches you typically see in the market. our first investment was in a company, which provides information to cannabis patients. in many ways, it's yelp for cannabis. we help patients find the right strain. most people don't know there are over 500 different strains of cannabis. and we help patients fine the right strain and we have 3,000 dispensaries around the country. each dispensary is rated on the quality of the atmosphere and the quality of the service, the

quality of the medication and so we help the best dispensaries rise to the top. >> are there -- i mean, if you -- i don't know all the different medicinal uses. i guess there's some, is glacoma a use? chemo? are there are different strains for different things you have? >> that's it exactly. most people don't realize there are over 500 different strains of cannabis and each strain has different effects. so, for instance, a strain that someone would use for glaucoma would reduce ocular pressure. and then a strain that someone had cancer and they were going through chemotherapy, they would want a strain with two effects. a strain that would reduce nausea and a strain that would stimulate the appetite. and that would be a very different strain from the glaucoma strain. and what it does, it's a container for over 50,000 strain

reviews written by patients from around the country and around the world. last month we had about 2.3 million visits. >> great, brennan, thank you. shed a lot of light on what we're talking about here. we appreciate your time today, good luck. >> thanks. when we come back, the chamber of commerce president and ceo tom donahue will join us. stay with us. we'll be right back.

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this hour on "squawk box," we'll talk markets, the economy, billion dollar art, the airlines, and one of golf's richest traditions. >> the president and ceo of the chamber of commerce will join us. >> we'll talk to a man the "wall street journal" calls credit suisse's cfo. we'll unveil the newest "squawk box" market master. >> plus, ian poulter looking for his first major win at augusta this week. >> it's i hole. >> he'll join us first on

"squawk box" to break down the masters, it's an hour unlike any other and it all starts right now. ♪ welcome back to "squawk box" here on cnbc first in business worldwide, i'm joe kernan along with becky quick. andrew ross sorkin is on vacation. founder and chairman of graham capital management, more than $7.5 billion under management. many from ken in a minute. president obama rolling out his fiscal 2014 budget plan today. in the details of that plan, it actually mixes in about $600 billion in new taxes with some cuts. the white house says that the budget incorporates the president's compromise offer to house speaker boehner to achieve another $1.8 trillion in deficit reduction over ten years. it includes $400 billion in health savings that crack down

on waste, fraud and medicare, by limiting high-income tax benefits. it implements the buffett rule. and it ends the rule that lets financial managers pay tax on their carried interest income at the lower capital gains rate. instead that would be charged the higher ordinary income rate. also, the fed was -- will be releasing the minutes from the last month's fomc meeting coming up a little later today. ben bernanke has said that the fed will ease until employment and the economy improve. and earlier this week, he said that the economy is not doing as well as the fed hoped it would be doing. those minutes are expected to show dissent among policy makers. but the overall message should match that of bernanke coming up at 2:00 p.m. today. in the meantime, take a look at the markets before the opening. futures indicated up when you look at the dow futures. s&p up by about 3.5 points.

overnight the nikkei did gain slightly up about .75% as was the hang seng. in europe right now, the trade reflects what we're seeing in futures. senate negotiators are putting the finishing touches on a bipartisan immigration bill. but a major sticking point still on the table rules for bringing foreign farm workers into the united states. labor unions and the u.s. chamber of commerce, on the handling of low-skilled workers from foreign countries who would work as construction laborers, maids and waiters. and speaking of the chamber, it's holding its annual capital market summit this morning. here with the cnbc -- on cnbc with a preview is tom donahue, ceo of chamber of commerce.

i remember, tom, when i saw some agreement between you and mr. trump. i thought there was hope for the world if you can agree on something. >> they have their own needs. they are looking at syncing numbers in the union side. they recognize that work will go elsewhere if the workers aren't here. and they understand that an immigration bill that has benefits for them in many ways. and i enjoy working with rich on this deal. and we're going to stick with it. and now we've got to see if we can help on these other issues that are being discussed. >> that worries me, because i see one of the things that the chamber and you feel most important and many people do and that is spending restraint in washington. i know you're not really saying cutting the deficit. you're saying spending restrain restraints. you're talking about the spending side of things. and to do that, you'd like tax

reform, comprehensive tax reform, and you'd like real action on entitlements. you've seen the budget that the president's going to introduce. it doesn't do either of those. >> i agree with that. let me say, first of all, i have heard all about the budget. i've yet to see it. second of all, i think we're in a good place that for the first time in four years, the senate has put out a budget. the house has had a budget for a long time. now the president is going to put his budget out. and we're going to have an opportunity to go back to normal order, debate this in the committees, debate it in public and find out what we're talking about. the problem with the president's budget, you know, never mind the components, the end result of it is he says he'll save $1.5 trillion over the next ten years, we will increase our debt by $1.5 trillion every year from now the next ten years unless we

make some serious changes. face up to what every legislator and everybody in this town knows, we don't have to cut entitlements, we have to bend down the cost curve. and if we don't do it in a dozen years. >> the chain cpi is a step in that direction, tom. >> of course. adjustments in the cpi will help. adjustments in copays will help. there are a lot of things to do. but the organizations in this town that are driving people to pretend this won't happen have got to get out from under their silver lining cloud and face up to the fact that we can fix this problem or we can leave it alone and let it destroy us and it. >> are you talking about arp? >> yes. and others. >> and others. so we got this, the sides are far apart, i just wonder -- i don't want to be pessimistic, there's a debt ceiling, there's

going to be times where we get in a position where two sides that are arguing so much, you know, they could retreat to their own corners again. what is the likelihood of that? >> i think we're in a better place than we were before. first of all, everybody's putting a budget on the table. second of all, that's going to force us to look at the analysis that are going to be done by professionals in and out of government as to what this really all adds up to. and because all three budgets are so far apart. but that's not a problem. as long as we're starting to debate it, as long as we have sort of a date down the road we have to get there. i believe we're in a better position. we look forward to anticipating in this debate. >> good. maybe we'll see. we could all be surprised. >> we'd be surprised, let's do it. >> probably no one hears from their members and is in a better position to comment than you on

the jobless picture in the united states. we have seen it fall from 10% to 7.6%, but at the same time, it doesn't feel that great. and we're reminded about when you do 88,000 jobs and you're cutting the rate again, you can see it's totally from people leaving the workforce. we've got more people added to disability than have come into the workforce over the last four or five years. this is no way to lower unemployment and this is no way to run a labor market. >> well, i think there are two or three things to really focus on here. first of all, until we get up around 3% economic growth, you're not going to connect net new jobs. the jobs are showing, you get 88,000 jobs, that's in addition to the replacement jobs that were put in place. but the bottom line is you've got to get over 3% to create jobs.

second, you know, people talking about manufacturing now. we have to go back to manufacturing. you saw some of that coming out today. 40%, 45% of the jobs have been taken out of manufacturing because we are the largest manufacturer with the most productive manufacturer. we use information technology, process engineering, supply chain management. those jobs are never coming back. in spite of all of that, today, we could hire 2.5 million or 3 million skilled workers to come into the workforce and expand jobs for everybody in the manufacturing system. there are a lot of opportunities here, but reality has to be considered. no growth, no jobs, no jobs, work goes somewhere else. >> i know. and we're, i don't know, some day we'll see if -- 3% to stay there for quarter after quarter and maybe go above it. how about -- you want to talk about dodd/frank a little bit, i understand. >> well, we're having our

seventh conference here, a capital markets conference. and you know just -- dodd/frank was written in a hurry and it was written in anger. and here we are three years later and we have written maybe a third. i'm giving you the best number, a third of the rules. so 2/3 of the rules have yet to be written. every kind of financial institutions in this country. if you run a regional bank, a big bank, if you run other kind of financial institutions, you've got five regulators and they're all telling you different things. but the fact that the other 2/3 of the rules haven't been written is good. because if we can focus on the positive things that we can do with the remaining regulations, maybe we can fix ourself to the point where we can maintain our leadership in the commercial world and financial world. just look at what's going on around the western world and you'll find out if we don't do what we have to do, everybody

that's looking for serious funding will be going to asia. >> and yet, tom, we still with all these regulations haven't settled or solved or resolved too big to fail. that is still a running debate in washington right now. >> well, yes, too big to fail is a running debate. the thing that amuses and concerns me, and i'll come right back to too big to fail, is now we have well-intentioned people putting pressure on the financial institutions to go back on the mortgage side and do some of the same things that are getting -- that got us in trouble in the first place. now, on the too big to fail deal, you know, that's a great academic argument. the bottom line or twofold. if you tell me that my bank is too big to fail, then i'm going to -- everybody's going to move their money there because the government's going to control it, bad for everybody else, and if we control or constrict the size of the banks, tell me who's going to do the things that the

big banks are needed in the biggest and most aggressive economy in the world. if you don't have them, people will go somewhere else. money goes where it's welcome, where it's safe, and where it's productive. very important for us to keep that in mind. >> thanks for coming on today. we appreciate it. good luck. >> thank you very much. when we come back, we get a read on private banking from the man the "wall street journal" called credit suisse's revenue machine. the art collection valued at over $1 billion donated to the new york metropolitan museum of art. cnbc wealth editor robert frank will join us live. [ penélope ] i found the best cafe in the world. nespresso. where there is an espresso to match my every mood. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is made at home. and where i can have exactly what i desire.

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welcome back. leona leona leonard lauter announcing plans to donate his collection to the art museum. robert frank joins us now with more. is it -- it's one of the biggest donations period. not in art or anything else, but how many times has that been done? >>reporte >> reporter: you know maybe about 20, 25 times in u.s. history. you're right, joe, it certainly is one of the biggest art gifts

in recent history and also shes just how desperate these big museums are to capture the great art that's still in private hands. let's put some context around these numbers. if you look at this gift, the total giving to arts groups in total in 2011 was $13 billion. this gift alone accounting for about 8% total giving to arts groups in recent history. it's right up there with the walton family giving $1.2 billion to the crystal bridges museum and the $1 billion that walter anenberg gave in 1990. those paintings now probably worth two or three times that. lauder was a great classic painting collector, paintings he collected over more than 40 years. these are some of the great works from picasso, george brock. and it shows that, you know, most of the great art today is either in museums like the met or it's in the hands of private collectors who are now in their 70s and 80s.

and the big game for these museums is who can get what. you know, you bet that some other museums would've loved to have this collection. it was a big win for the met. >> robert, you know, i'm going to want the dirt on all of this. hopefully now you're going to be prepared whenever i do this. but he gets to write off how much? he gets to write off $1 billion, does he not? >> reporter: well, it's kind of interesting. i was looking at this deduction limit that obama was proposing. >> well, you've got to do it now. >> well, let's say -- well, if it's capped at 28%, it's a difference of about $100 million. if he is allowed to write it off at 36.6% versus 26%. it's a $100 million difference for him. but you're right, it's a about a third, a little more than a third of a billion dollars he gets to write off. >> what do you think he paid for this stuff?

>> a lot less. you know, back in the '70s and '80s, art was worth, probably, some of these pieces, 1/5 to 1/10. >> he's going to make money on this. because the capital gains will be huge. he's going to write off the $1 billion and he probably put in, what, $100 million? >> reporter: maybe. i don't know when he bought some of the big pieces, but, yes. he could. i don't know what his tax situation is. everyone's tax situation -- he's probably got a very complicated return. that may or may not give him a big gain on this. but definitely a lot of -- a lot of philanthropists looking to give now or certainly last year before this possible limit on deductions. >> he's sick of looking at these anyway, i think, after owning them for that long. all makes sense, robert, thank you. appreciate it. >> thank you. >> cubis, we were playing hip to be square. >> i didn't put two and two together with that one. little slow this morning. all right.

where are investors putting their money to work right now? ask the man dubbed the revenue machine by the "wall street journal." he is managing director of credit suisse and head of private banking for the americas. phillip, thank you very much for coming in today. we have been watching equities take off. and i bet that really changes the question over the last couple of years that you get from your clients who come in. what is it that high net worth individual investors are thinking right now? when they start thinking about where to put their money? what are the concerns and the things they're chasing? >> they're looking at the last couple of years as having gotten off to good starts only to falter two years in a row and asking what's different this year. is there less headline risk from europe geopolitically? is it a better environment for stock picking? is retail going to come back? is there going to be continued investment in the bond markets? those are the kinds of things that people are looking at very

carefully before they decide what to do next in equities. >> especially when you see the gains of the market. maybe it makes them more reluctant to jump into hedge funds than they have in the past. i think it was something like $34 billion in 2012, which was down from $71 billion the year before. so they're thinking, wait a second, as the market goes up, do i need a hedge fund to do this? is that's what's happening? >> they've been looking at hedge funds as a way to diversify their portfolios. but their participation has been very cautious. and you see it in equities. it's hard to step into equities when they're at an all-time high. it's hard to step into high yield when it's no longer high yield at 5.75%. and so right now the amount of cash that investors are holding is still higher than they want. and they're looking for ways to put it back to work. >> what do you tell them? >> well, it depends on whether they're interested in equities, in the americas or in the emerging markets or in real estate and depending on that, each investor ends up having a

different profile in getting all in now, scaling in, being opportunistic, so we end up having a ton of very individual conversations. >> but if we were looking broadly at some of the themes. when you look at, you know, just your best guess from where the best opportunities are. would you say they're here, emerging markets, what do you think? >> well, investors have been looking for returns in the stock markets of about 10%. now, worldwide, they've gotten already just over 7%. they've been looking for returns in hedge funds of about 7% this year and half of that. hedge funds are up 3.5% after three months. so as they look forward, where are they really leaning? into equities. more than before and within equities, the u.s. and the emerging markets. >> if they would have just put their money in an s&p 500 index fund, they would have seen something like 10%, 12% already this year. that's got to be a much tougher time to start telling people

that they should be paying 2 and 20 on something. >> well, the hedge funds are built not to keep up with the long only markets. >> i understand that completely. they need to be there and they would do better in down terms, but it's got to be a much harder message to try to sell somebody when they're watching some of the indexes. >> yeah, it's always hard when the indexes are going straight up. >> right. >> and since hedge funds aren't designed to keep up, the conversation goes to trying to generate some risk adjusted returns over if whole cycle, not just in the updrafts. >> one of the things -- go ahead. >> i was going to say given that equities have outperformed early in the year -- >> right. >> that's actually a time when institutions start to think about how do i diversify? >> because they're worried they're going to lose the gains they've already seen? >> shots of the moon and equities and that they want to be diversified, they want to have something that's a defensive part of their portfolio. >> so it's easier to sell people on this right now? >> i think it's about the same

in the sense that the institutional investor is a long-term perspective. they know that there are going to be a lot of cycles in equity performance and they want to have something in their portfolio that's just not a beta bet on equities continuing to rise. >> one of the things we talked about earlier today was watching what's happened with the bond market. and as you mentioned, a lot of these big funds and a lot of these big endowments have to be looking at things where they're looking for returns of 7.5%, 8%, if you're looking at those returns you need. you can't find that safety and can't find that return in the bond market. what is a good, safe return? a safe place that has a higher yield? >> you're using words safe and high. >> that don't go together. >> and that has been the hunt that's been on. and so what we found around the world is investors have been combing through fixed income instruments credit instruments to try to find pockets of yield that they could be in without having to extend their duration and potentially get caught.

and so that's what they're continuing to do. but it's more cautious than it was a year ago. the expectations now for credit and fixed income to deliver the big numbers like they did last year, they're really tapering off. >> okay. thank you very much for coming in and joining us again. great to see you. and our guest host is ken tropin. and coming up, we're going to hear from our "squawk" golf analyst ian poulter, 15 tournament wins and two world golf championships and still in a hunt for his first major. but his performance at the ryder cup last year, it's singular as far as i can tell in all of golf. he'll join us.

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we have a busy morning still to come on "squawk." the cfo of united continental who will be joining us to talk about the airline industry. also, "squawk" golf analyst ian poulter will join us on his quest for a green jacket. he was the hero in last fall's ryder cup. plus, we'll unveil the newest member of the "squawk" market masters club. "squawk" will be right back. ♪ ♪ here we are, me and you ♪ on the road

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welcome back to "squawk box." let's look at some of this morning's corporate earnings reports. family dollar reported a profit of $1.21, a penny below estimates, also cut its forecast for the year. as you might imagine, sales are

being challenged by the financial pressures facing its type of customer. the dollar store customer, gas prices as well as unseasonably cold spring weather. but carmax earned 46 cents a share, that was in line with expectations. the car retailer's revenues beat consensus and increased sales to both the used car and the wholesale market. wine maker constellation brands earned 47 cents a share, 2 cents above estimate. revenue also above expectations, and separately the company expects to complete the deal to acquire the u.s. rights to the brand by the end of the current quarter. that's part of anheuser-busch's deal to acquire the portion that it doesn't currently own. yesterday, we spoke to sir richard branson. he had some fairly harsh words for united airlines. >> if you've got two planes flying side-by-side, people

going for virgin america, they're not going to go with united. we like to be competitive. but they've slashed the fares by 40%. obviously we've matched the fares and the public's going to be very, very happy with that. but it is, you know, it's going to hurt them enormously to their bottom line. >> let's get some reaction to that. along with some insight into the evolving nature of the airline business. onset with us this morning is the executive vice president and cfo of united continental airlines. also a member of the global cfo council. and thank you very much for coming in today. >> thank you. >> branson was on here yesterday talking about flights they started to the west coast, sfo and to los angeles, l.a.x. and he was just saying that as a result of getting in there, fairs have come down drastically. he actually blamed united saying you waged a price war on them trying to hurt them with fares down 40%. >> that's actually -- he's

accurate in that comment. any time a competitor comes in your market and lower fares to stimulate demand, we're going to match those fares. and to the extent that demand has increased, we're going to increase supply. it's what any corporation or small business owner does anywhere in the country. >> yeah, we were talking to him about that because airline stocks have done incredibly well. especially over the last several months as airlines are kind of in a position where they can raise prices like they haven't been able to before. somebody comes in and you can only -- you're only as smart as your stupidest competitor because you have to slash fares to keep up. >> that's right. and i'll tell you that we are turning the traditional model in terms of what people think about running an airline on its head. there are structural changes in the industry today with consolidation resulting in a less fragmented industry. having capacity discipline and return focused management teams. investors are flocking to the sector because of that.

they recognize that despite this industry's history of destroying shareholder value, sometimes in remarkable fashion, we're actually at a point now where we're earning our cost of capital. at united airlines, we've had a 10.7% return on invested capital for the last three years. it's why in my 16 years in this business i'm more excited than ever before. >> there are two sides to every story. if you look at the reaction from some passengers, despite the fact airlines have improved in terms of when they're on time with things and with baggage handling things, you've gotten more complaints. part of that comes with more people flying on fewer planes and fewer seats. passengers don't like it when the seats are full. obviously as a shareholder, you want the seats to be full. >> that's right. >> and united came out at the bottom of this recent survey in terms of where the passengers themselves rated things. >> that's right. the survey you're referring to from wichita state was looking at 2012 data. if you look at our operational performance last year, we deserved to be where we were. we did not perform to our

employees' expectations, customers expectations or investors. we've turned the corner this year. year-to-date to our operation performance is the best it's been in ten years. i'd like to point out an example, becky. look at 2007, which was the last year prior to consolidation. before delta and northwest merged. planes today are 3% to 4 percentage points. yet, if you look at the on time rates compared last year versus 2007, they're ten points higher. mishandled bag rates or cancellation rates are half of what they were. these are good for consumers. and more over today because airlines are healthier and profitable, we have the ability to invest in our business. providing things like wi-fi, things that customers find value for and will pay for. >> one of the big questions, though, one of the big issues, one of the reasons that passengers were not so happy are things like they showed up thinking they have a ticket reservation and the flight's been overbooked. have you changed how many people you book on a flight as a result

of that? what are you doing differently? >> we had a host of different issues last year. a lot related to our integration. and to be clear, the merger has been challenging. and we're glad we have that behind us. but, you know, the technology issues are gone. we have a good backbone in terms of our passenger system. and we're looking forward to the future. i think that technology is going to be one of the key things we focus on going forward. and putting more technology on the hands of customers like our mobile application, allowing you to handle things that today you'd have to wait in a line at an airport for or wait on the phone for something. >> 787s. the boeing 787s, you're going to be putting those back into your schedule at the end of may? >> that's correct. based upon our latest communications with boeing and hour expectation is we'll begin flying those again domestically in may and then we're going to launch our service on june 10th. i'm disappointed about the setback and that's what it is, but that shouldn't take away from how good of an airline this is. as a cfo, a finance guy, i tend

to get more excited about the hard numbers, the fact it's 20% more fuel efficient or has maintenance savings. i've flown that plane and it's an incredible product. >> the united employees are happy now? >> you know, they are, joe. and it's been kind of a long slog. >> right. >> a good data point is i was flying out of san antonio this weekend and i got to the end of the jetway and i talked to one of our ramp workers. and i contrast that to a year ago when i talked to abel. he was upset about the merger, distrustful of management. and i was talking to him sunday and we were talking about some operational performance. they've done a really good job in terms of what we call our star performance is the first flight leaving each day. and he had a smile on his face, he was happy to work there, he was excited and proud about their accomplishment. and so it's changing. you know, we're not where we want to be yet. >> and this is the same guy that told you -- this wasn't -- >> no, same guy.

>> it was cane last year, abel this year. >> that's going to be a key to the success of this merger. and we can do it and we're fully focused on it. >> thank you very much for coming in. >> glad to be here. still to come, "squawk" golf analyst ian poulter getting ready to tee off from augusta. he's going to join us. and we're going to unveil our latest "squawk" master of the markets. he worked with mark lasery before heading out on his own. the reveal when we return. [ male announcer ] it's the little things.

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welcome back. given the market's big run-up, is this a good time to be a value investor? founder and ceo of dylan hill capital and a new inductee into our "squawk" masters lineup. did you bring of a note people you need to thank? we'll don't play the music if you go on too long. >> i didn't know that's what you were talking -- >> most people are so honored to be made a "squawk" master that they have a long -- they go back to grade school. >> i got it confused with the masters golf tournament. >> how about it? does the run-up in the -- what the move in the market that we've seen it make so far, does it make you less bullish? >> i don't get that excited

about that type of a market where -- where, you know, and you've had countless guests come on for weeks and months about the fed and we don't need to rehash all of that. but my basic theory it's about the math. you know, it's about every asset pricing model, methodology is a function of the discount rate. the discount rate is a function of interest rates. if the discount rate is zero, asset prices go up in value. i think it's really that simple. and i think that you saw the reaction to the employment numbers i don't think people care that much anymore. i think as long as you're within a range and the market is confident that companies can manufacture earnings growth, earnings will grow modestly. you'll get your dividend, there's no risk of dividends in large cap equities. if you look at earnings growth,

plus dividend growth and you have a zero discount rate effectively. asset prices go up in value, and i think that's what -- exactly what the fed. >> had a foot in the door. if you're at zero, you can't go below zero. >> that's right. >> does that mean instead of watching things like the jobs number and other economic reports that come out, we should be watching the fed minutes and anything that the fed -- anything that the fed are saying to find out when it's going to change? >> to a certain degree. maybe i'm looking at it completely backwards, but i think the debate should be completely different than it is. it shouldn't be about what the timing is, what the process is, are they going to stop buying, leak paper into the market? i think there should be a cleanup trade discussed. the fed has $3 trillion on the books. what is the market clearing

price? let's create a syndicate, if you need more people, more investors at the table. one possibility may be give corporations that have trash trapped overseas. create demand for the fed product. it's $3 trillion, i think there are smarter people than me who can sort of get in a room and figure out the supply and demand and where that market-clearing trade is. the sooner we get that not so bad off the table, i think the uncertainty comes out of the market and supportive of not only higher equity prices but a stronger economy. >> bernanke's right, he does have a plan. >> he has a plan. >> you think we can get out of this? >> the legislators will would have to go along with that.

>> absolutely. that's why i say i'm not the best person to debate the pros and cons of that. but it seems logical there's a way to do it and, by the way, if the fed can divest its position, it's now in a position to reload if they want to. it just takes the issue off the table. and i think smart people in the marketplace and smart ceos and cfos at companies can price that risk once they know what the risk is. and right now, this is something hanging over the market. and nobody knows how to deal with it. i think it's entirely the wrong debate. >> and also, there's really no urgency for the fed to unwind in trade because they're making money on it. they're financing at essentially zero and they're getting a positive carryover coupon of 2% or whatever it is that they're buying. we don't think there's any urgency or short-term horizon of which they're going to think about liquidating. >> i think that ties into the debate and we don't have to mention names, but unlimited

debt is okay and we already have too much debt. and -- >> yeah. >> i'm not a politician and i don't care to get in the middle of that debate, but that's the wrong debate also. i think the right debate is that more debt and the risk of rising rates and how short our government yield curve is creates risks. and i think that is something that you cannot debate. that is a fact. nobody can convince -- no could convince me that more debt and risk of rising rates is not a major risk to this economy, to fiscal priorities. you know, there are going to be a lot of difficult issues to resolve. entitlements, taxes, investing in our society, all the things that i guess is coming out in the budget today. >> all right. >> but let's fix part of that discussion, as well. let's lock in long-term rates and get that issue off the table. i think it's pretty straightforward. and i think everybody's spending

way too much time talking about the wrong things. >> great. >> thank you, appreciate it. >> come back soon. when we come back, it is the masters week here on "squawk." and while we've been talking to the most talented names on wall street, up next, we'll catch up with one man going for a real green jacket in augusta this week. ian poulter will join us after this. first, though, to get in the spirit of the game, we're going to ask joe to don a "squawk" green jacket. ars e s evs erywhere these days. tdd: 1-800-345-2550 but there is one source with a wealth of etf knowledge tdd: 1-800-345-2550 introducing schwab etf onesource.. tdd: 1-800-345-2550 it's one source with the most commission-free etfs. tdd: 1-800-345-2550 one source with etfs from leading providers tdd: 1-800-345-2550 and extensive coverage of major asset classes. tdd: 1-800-345-2550 all brought to you by one firm with tdd: 1-800-345-2550 comprehensive education, tools and personal guidance tdd: 1-800-345-2550 to help you find etfs that may be right for you.

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i want to make sure, this is not an augusta jacket. they said give me that. thank you. all right. s.b., this is a "squawk box green jacket. >> now it's a squawk jacket. >> we paid a lot for this, too. i saw -- spare no expenses.

really, seriously, this is -- oh, no! now that really is good. b.s., that's perfect for the show. this is masters week and obviously this is not a masters jacket and it's's "squawk box" and -- i do not have an augusta jacket and my chances are slim. it kicks off for ian bolter as the only englishman to win a jacket and ian joins us on the squawk news line. i don't want to ask you a question that you've been asked a hundred times this week, so i'll let you ask your own question, but number one, how are you feeling? i know you were under the weather in terms of not feeling totally up to par. how about now? >> i'm feeling pretty good. i had a chest infection a couple of weeks ago and i've shrugged

that off and i'm trying to naught lovely green jacket and i think it will be a nice addition. >> you did well in augusta. it suits your game and the ryder cup captain jose maria is probably an inspiration with the way he won with hitters around him and you would have a similar game, i think. i know he said something to you that you haven't shared after the ryder cup, but you got a lot of good things that have happened recently in terms of maybe this could be the year, i guess. >> i hope so. yeah. i mean, jose, after the ryder cup said some amazing things to me which i'll take with me to my plant box one day. i love playing this game, and i love playing it with passion and something jose did exactly the same and he's got a couple of these jackets and it's

fantastic. i love the visuals and i love the approach shots with the tough green and the fast -- it's a great challenge and something i love. >> when guys want to win a major it becomes a big deal. we talked about this before. i saw retief, and it was the most incredible performance. >> chinocalk and i've seen every tournament for the last 25 years. something compares to what you did in the ryder cup. the number of putts you hit from 15 feet or less, i don't even know if you missed one and i don't know if you need to do anything. i don't know if that's surpassable, do you? >> i just need to be in the mix come sunday afternoon. i think we've all seen how

sundays unfold around augusta national. the last few years they've got that buzz back around that back nine. we saw phil go crazy making birdies and hitting crazy shots from behind trees and that's what -- that's what you get here at augusta national. the back nine seems to open up and if you're within five shots with the back nine, you can take advantage of 13, easy pin locations and you have the chance to make eagle at 15 and the location at 16. it's a really fun fini >> is mcelroy. he's playing better and that was hard to watch, but then what kind of guy comes back and wins the next major. pretty unbelievable. is he playing better? he's switched equipment. >> he's definitely settled into his equipment and last week it was the addition for him to play in texas, and i think he would

have been relieved to put himself in contention and i know he'll be disappointed that he didn't manage to win. and for him, he's settled things down and he got people to stop talking about the equipment so much and hopefully he'll go out there to play well. >> just very quickly, the name that must be mentioned and if i didn't they'd think i was living in a cave. tiger seems happy, you know. he's won a couple of tournaments. he may be there, i guess, at the end. >> well, you have to expect tiger to be there. he's won this event enough times, and i think with his speech, they've given him putter advice. >> we have breaking news about business. we appreciate it, ian. thank and good luck. let's get to steve liesman and he's on the phone with breaking news. >> thank you very much. the federal reserve will release the minutes of its most recent meeting at 9:00 a.m. this

morning and not the usual 2:00 p.m. the reason for the early release is they were sent out some time after 2:00 p.m. yesterday. there was a mistake apparently made within the fed. the minutes were released to 100 congressional staffers and trade lobists who normally receive an email from the federal reserve after the minutes come out. somebody punched the button early, it appears. the fed has apparently contacted the fcc and the cftc as well as the inspector general to see if there was any trading related to this. there is no indication of that yet this morning. the fed became aware of the release earlier this morning of those minute, and so moved up the time for the release and we will have those headline, guy, at 9:00 a.m. this morning. >> this went out yesterday at 2:00 p.m. to over a hundred people and the fed just found out about it this morning? >> we don't know the actual time

it went out. that's an important question. we don't know if it was released during the trading day or afterward. >> wow! that is huge information. so in three minutes' time we'll all be getting a look at the latest fomc minutes and let's put this in a little bit of context and the market has been watching every turn of the fed to try to find out exactly when and how it may start tapering or how it gets out of some of these trades. giving us a look at those minutes will give us a sense around the table. >> absolutely. if i had to look at the most sensitive documents from the federal reserve, they would be policy and the third most sensitive and important document the fed puts out are those minutes and sensitivity goes up and down with the questions about fed policy and the future and in this case, i would say these minutes have been very important and they have been moving markets in recent months.

you said yourself with the central banks are doing around the globe is a huge part of what you've been doing today and that's a huge trade based on how the bank of japan is doing. how person is this if they went out yesterday? >> in some circumstances & it's's huge deal. it's rare and it's troubling, but i think the marketplace expects the fed to be on hold for a long time. >> right. >> so it's a lot less sensitive today than it might be when the fed is on the move. so i don't really see this affecting the markets all that much because everybody knows the fed can't do a thing with that weak job report last week. they're staying pat. >> the employment report came after the fed meeting. these are minutes from what they were saying before that. steve, real quickly, we are almost out of time on this, but very quickly, if you are looking through those minutes when they come out in a minute and a half,

what are you looking for? what kind of discussion or who is speaking? >> i think the key question we'll be looking for is the discussion of the timing of the tapering of quantitative easing and thoughts about where it should end or where the center of the board is on that. we've had a lot of discussion about that and a couple of interviews we've done on cnbc, as well as their assessment of the economy and trajectory of unemployment. >> steve, much worse. this violation of f.t. is much worse than what happened with netflix. and they were released to a bunch of congressional staffers who -- those guys are probably traders. anyway, steve, thank you. we appreciate it and we'll be watching. >> okay. >> ken, thank you very much, we appreciate it. right now it's time for "squawk on the street." again, the early release of the fed