good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. as the s&p is coming off its fourth losing session in the first five days of the trading year. futures are indicated up sharply, up by about 68 points. i don't know if we made this ground up today, i don't know if we would take it. it's supposed to be the first five trading days. i hear joe complaining even though his microphone is turned off. >> file for an extension. >> an extension? >> i filed for one. >> there you go. so maybe we take today and tomorrow's activity? >> we'll see. we're going to make our own understand indicator up. keuchly jobless claims are going to be released at 8:30 eastern time. first-time filings rose slightly to 340,000. in global economic news, the

european central bank and the bank of on england are holding policy setting meetings today. the ecb is trying to deal with the slow recovery and inflation that's too low. we'll have a live report from our colleague, geoff cutmore in frankfurt in just about ten minutes. first, andrew has some of the mornings's top stories. >> good morning. thanks for that. a number of stories out about the retail industry this morning. some of the nation's largest stores will be reporting december comps today. also, costco, one of the first out of the gate. the warehouse chain posting a better than expected 3% increase in december comp. the retailer was helped in part by online sales. macy's cutting 2,500 jobs as part of a reorganization. the company plans to close five stores, but open eight others. macy's says the move will save $800 million per year. the company reporting a profit

above wall street's consensus. take a share -- that i a look of shares of zs today. the specialty retailer cited quarterly outlook. shares of bed, bath & beyond coming under pressure. the houseware retailer, i go there all the time, they posted quarterly results. i'm not sure how that happened given the amount of shopping the sorkin family does at at bed, bath & beyond. >> that's an old bit that we used to do here. we would say, rainey weekend, rainey saturday? what better way when you can't go outside than to go and spend seven, eight hours at the bed, bath and beyond. >> i could stay there forever. >> look through the linens, bedding, duvets. >> i like to buy the stuff that

they say you can buy on tv. >> maybe there's one in davos and we can hang out there. although i'm invited to so many bizarre, crazy things -- >> parties? >> yeah. from every country in the world. >> and they start their cocktail parties at like 5:00 and run three like 2:00, 3:00 in the -- >> i've never felt so -- >> wanted. >> yeah. >> do you get invited to all these? >> i do. >> so everybody. but do they have some vodka? >> probably. >> we'll talk about the markets. i have a lot of thoughts on this. how ridiculous is it to base it on five days? that's silly. >> wait a minute. >> just listen, if things are moving, and not only that, but every year the first five days are on different days of the week. so this was a -- did you read how this monday, my birthday, was the most depressing day of

the year? school starts, new year's, it just happened to be on a monday this year because christmas and new year's were both on wednesdays. so you've got all this, the way people feels, and that is what causes buy or sell fogs and it's different every year. >> there was a huge run up in the second half of the year. but they're talking statistics. >> six days, seven days. >> if we were up, you would be cheering all the way. you don't know the year is going to be -- >> i don't think it is much different in five days. i'm willing to file for an extension. if they say the first five days so goes january, so goes -- but we haven't -- >> have we looked at the stats of what happens when it's a wednesday? >> yeah. you see, that makes it totally different. >> i think we have to do some math. >> i'm not giving any credence. >> i'm going to do a little work here, try to find out. >> seriously? >> i'm going to try to find out. >> it's worthwhile.

>> i'm start to go sweat. and i never sweat. and i'm on drugs. >> you're just starting. >> look how close we are. how can you not get this? >> because you come in sick. >> you don't want me to be here? i'm willing to go home. but i'm starting to sweat, i feel it. i'm govern some unbelievable cough syrup. anyway, when they say definitely don't drink with it, which to me means you've got to pop one open, right? if it says definitely don't, you can it's going to -- >> really. >> no. probably bad advice. in tech news, apple and samsung have agreed to a mediation in their smartphone patent site. the ceos of both companies are going to attend the session with in-house lawyers only. the rivals are facing a trial in march over apple's claims that samsung inflinged its patents.

the two have gone to trial twice, if you recall, in the last couple of years. and juries have awarded apple a total of roughly $903 million. they never got the christmas card from tim cook. >> he did send you one. >> all the work i've done trying to convert you. >> i kept saying the iphone changed my life wasn't enough to get a christmas card. >> he definitely sent you one. he said he sent you one. >> he got guilted into it. >> i'm sure there's no way he sent one to two of us and not you. i am sure. >> fine. >> you lose it and it's his fault. ibm plans to invest more than $11 billion to establish a new business unit for watson. the tech giant, more revenue from the super computer system that beat humans on jeopardy. ibm says it's the size of stacked pizza boxes.

and they're saying as many things as they said it was going to. the applications after winning -- it's not what i think is going on here. i think they started to detect some malicious level of intent in this thing. .i think this is a way of ba burying a real story. starting to talk back, you know, and we want you to play a game of chess with this person. you play a game of chess. you play jeopardy? no. you play jeopardy. >> so it's like a teenager? >> i think it's much more on the level. and i noticed the way it buried on jeopardy and with that to know -- >> the feeling? >> yes, exactly. anyway, fairfax financial is going to buy another $2 billion worth of blackberry's debt. the deal will provide the struggling smartphonemaker with a much needed cash infusion and the news will double fairfax's

holdings to mrb's debt. the firm holds a 9.9% equity stake in that tech company. let's check on the markets this morning, as we mentioned. the futures are indicated higher this morning. at this point, at least, the dow futures are up about 64 points above fair value. s&p features up just over six points. steve liesman writes in, listening to our debate about the january indicator and the first week indicator. he says it's not statistics, it's trivia. in other words, give it up. so he's right on that count. >> if things are positive, if there's a positive overall environment, you know, it doesn't matter how many days it is. and in markets even after that big gain, it's acting friendly and the adp number and we'll see what happens tomorrow. the ten-year did back back up a little. >> the adp number was better than expected and the markets still dropped. >> by the s&p was up most of the day. >> there were some big components in the dow that put

excess pressure on it. there was a big drop in oil prices today. it was down for the sixth time in seven sessions. yesterday, oil prices settled at their lowest level. also, the ten-year note which pushed back above 3% is right now yielding 2.991%. if you take a look at what's been happening with the dollar, it was up yesterday. gold prices, at least this morning, are up, barely, just over $1. $1,226 an ounce on. >> okay. it is now time for the global markets report. geoff cutmore is standing by in frankfurt the. >> i don't even know what to describe that is.

>> it's a metaphor for the euro. geoff is a handsome man, but the shot is not only because of what is behind him. >> you're talking about the big euro symbol over my shoulder. we are once again staking out the ecb, waiting to get a bit of news on interest rates. the november move was a surprise to us. what exactly can mr. draghi pull out of the bag today here? there are some pressures on him to react to what is seen as a disinflationary trend now. the ecb has as its target rate about 2% on core cpi. we had a print come in for december that was 0.7%. at the moment, it feels like he does need to do something about these prices that continue to

declining in the eurozone until more confidence comes back into the region's economy. and we had some november numbers on bank lending, which show that the lending into financial numbers continues to de-china here. some negative points i think he'll have to talk around today as he tries to convince the market that, a, he is still ready to act and, b, he has has some tools left in the toolbox. but benchmark rates are at 25 basis points. there's not a lot of room here. that's pretty much zero if he ask anybody in the markets. but there is one phrase that may comfort him and that phrase is rising angels. i don't know if you're hearing much about this, but this is the line we're getting some some of the fixed next desks. they talk about eurozone sovereign debt, they point to ireland which manages to get away just under $4 billion worth of debt this week.

the first issuan they've been able to make since they came out of special measures and they point to that and say this is evidence, at least, that we're traveling in the right direction right now for the eurozone. back to you guys. >> okay, jeff, we're trying to figure out your shot. what is that thing, to your left behind you? it looks like the empire state building of a knockoff or something. what the heck is that back there? is that a building in frankfurt? is it real? what is that thing? >> yeah. yeah, yeah, that's -- that's not a knockoff. it's just another building here in frankfurt. i don't know if it has any -- >> no, actually, when the camera focuses in on it, it looks more like a churchy type of thing. >> it's just a long way away. >> there is a little landscaping that has been done there. is that weeds? is that a trash can? where are you? it makes me wonder about germany. are they running short on

municipal funds or something? >> yeah. look, joe, i told you the last time that this is a fairly salubrious part of town. you go a block that way and you're in the frankfurt red light district. but they keep the bankers quite close. and we have the euro tower behind me, which is what houses the european central bank. but since you're coming over, we're going to get a chance to chat when you come over. for sure. it will be good to -- i didn't even know you had a passport, so it will be good to get you ow of the states. >> i've been over there a lot. i told you i was on -- i'm still, you know, just throw that underwear away. i was so afraid on that i. anyway, geoff cutmore, thank you. >> as it moves, it's a snail's pace. >> oh, my god. and before you get on, they use

the near things. >> what? >> on each car to make sure that there's -- >> i went on a date in one of those capsules. >> was it a first date? >> no. >> this was not a mile high -- it's a 500 yard high -- >> no, but it was spectacular, actually. and we were the only ones in the little cube. it was like midnight. it was great. >> i would be all over you, holding on to you if you take me up in that. >> it wasn't scary. >> oh, my god, i'm afraid of heights. i admit it. i always have been. anyway, and it's not -- i don't mind helicopters and things like that. it's when i'm attached and i can look out and see the people. i imagine the people putting the bolts into it when they were making it and if i were out there -- i don't know. i don't like the eiffel tower. >> do you like bridges? >> bridge gates? i don't mind those. >> i would dive. cut right into the water. >> this is my favorite story of

the morning because it explains why i've been late a couple of times. >> it was really on the other side. >> this is the other way. >> this was funny until you realized that people do need to get places and, you know, ems people and the missing 4-year-old. governor chris christie is coming under fires after e-mails. hey, there's some traffic coming. yeah? well, the kids are -- their parents voted for barbara whatever her name was. it suggests that one of the top aides pressed for the creation of traffic problems. in the city of ft. lee which we know so well because cnbc was based in ft. lee for years. the mayor there had declined to back christie's -- he's a democrat and he still -- and then they wouldn't, i guess, return his calls when he said what's going on? if you do close, like, one or

two lanes of the bridge -- >> i feel like i've lived through some of this for a while. >> september 9th, the first day of school. >> there were times that you would sit for an hour in a. >> bad traffic a lot of times because everybody -- a lot of people from northern new jersey are trying to get into new york city. if you close a couple of those lanes, it really backs things up. >> there's massive gridlock. it does cause a -- there is an investigation going on. he said misled, i think, but -- >> he said his aides misled him. because at first -- >> but they're pretty senior aides. >> yeah. >> this would be like if valley jared had done this to -- >> i don't think there's any other aide in the country as senior as valerie jared. >> here is chris christie suggesting the lane closures were politically motivated. >> i worked the cones, mat. unbeknownsted to each other, i was the guy out there.

i was the guy working the cones out there. you really are not serious with that question. the fact is, let, you know, senator wineberg find something to occupy themselves. they always will. and almost always will include being critical of this administration. but i don't get involved in traffic studies. i don't get involved in lane closures. i didn't work the cones, just so we're clear on that that was sarcastic. >> that was a couple weeks ago. and now that the e-mails have come out -- >> he has a much stronger response now. >> that it's unacceptable and new jersey people don't deserve it. >> he didn't fire the aide yet. you have to assume the aide will be fired. >> there was a fall guy that was in the. >> in the port authority. >> one of them was a high school classmate of his.

>> one guy already got fired, right? >> two guys stepped down. >> but not the chief of staff. >> and so the question is do they get fired and do they then turn around and say he actually knew? >> right. >> that's where this all is going to get sticky. >> there was a posting by ezra cline to say he's not going to go so far to say the governor knew about the this, but the governor created a environment where bullying was allowed. >> you've seen the video clips on youtube. when someone asks a snarky question, he'll fight back. that's always been part of his image and that's something that republicans around the country have rallied around and said, yeah, this is the way we like to see somebody response. but now part of that is he's had aids that walk around wind him

and say some of these things and that's coming back in this environment. >> if i close a couple of lanes, it doesn't seem like it could determine your political future, but the way it's handled -- there have been people that can question whether he can wear well. four more until the -- three more until the next election. >> he's a passionate guy. i like him a lot. times in this world, the twitter -- in this crazy world we're in right now where, you know -- >> you know who i'd love to talk to in the coming days? ken langone. ken is a big supporter. that is going to be interesting. >> i would be needling this democratic mayor in some other way.

but if there's a way to just needle him -- >> but i don't understand how this needled him. >> democratic mayor wouldn't even return his call. his whole city was called with gridlock and he was calling saying, please, governor, help me and they wouldn't call him back. >> but why would people blame him for that? there was something very peculiar about that. coming up, exxon mobil's ceo is putting a date on u.s. energy independence and it is sooner than you might think. plus, ford knows if you are been naughty or nice on the road. joe, you have a ford. so they know what's going on. you are never really driving alone and that's coming up in today's executive edge. boy, is it one story. and then are you sick with a cold? robert frank tells us how to escape in style. first, the national forecast from the weather channel's alex wallace. >> good morning to you. tracking some uncertain weather

in the middle of the country. frozen precipitation across arkansas. want to be careful along that 40 corridor. snow in st. louis. by tomorrow, we'll watch this shift farther north into the upper mississippi valley. tomorrow .tomorrow night we've got some snow to deal with. a couple of inches. no huge deal out there. the highest totals, 3 to 5 across central portions of wisconsin. now, while the snow is going on here after getting a chance to warm up as we head into the northeast and the rest of the country, the rest of the country is in this deep freeze. that arctic air mass restreets, the warmer air returns. now that brings wet weather that we'll be dealing with as we head into the weekend. showery conditions for us here. into the northeast, good news is at least we establish our saturday up and down 95 with dryer skies. more "squawk box" coming up in a bit. now listen to me, duck. i have an associate that met with, uh, an unfortunate accident. while he's been incapacitated, somebody's been paying him cash. now, is this your doing? aflac?

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welcome back, everybody. rex tillerson talking about energy and the ability of the united states to be self-sufficient. >> we're already the world's largest natural gas producer. we're producing last year our crude oil production surpassed levels not seen since the 1980s. and it's expected that we'll continue to add to crude oil production capacity over the next two or three years. so i think it is realistic that the u.s. could be energy self-sufficient, energy secure

by tend of this decade. >> guys, some of the numbers are pretty astounding. it looks like we will overtake saudi arabia in terms of being the largest crude oil producer by the year 2016, which is just around the corner at this point. we're already the largest natural gas producer. it's pretty stunning to see how quickly some of those numbers have really come back. >> we never -- when this -- when we talk about this singulairty, we never fact -- we don't know what technological advances are coming. it's the old argument, all these -- you know, and there's another story today, china control wear earth metals and we have technology that can get at that. no one knew horizontal drilling was going to open up these vast amounts of hydro carbons. i think this is really exciting. i don't think you can overstate how much this is going to help our manufacturing base and help us compete with the low labor costs. >> i want to know what the geopolitical implication comes. we have relied on the middle east and --

how much should we snicker and go like this? >> how much should we pay to protect? >> that, too. >> for a very long time, we've paid a lot of money to be the global police or, really, the police for the middle east because we had -- we had interests there. >> looking at china, in china, they have shale reserves greater than what we have in the united states, it's just more complicated to get to that. but part of that is because they're in regions where there's not infrastructure to bring oil and gas back. if china builds out its infrastructure, you could look at massive reserves there. >> you think about how people said it won't be internet companies, it will be what the intent does to everybody else in terms of productivity that will be so great. think of the jobs in building out the infrastructure.

then when you have the low cost energy that goes as input into everything. it's a very powerful, compelling and optimistic story that will maybe rekindle your faith in the american dream, i hope, some day andrew. >> i hope so. i wanted to. >> you must have to be a redneck -- nor, a rough neck. you may have to be out on an oil rig to get a decent job. but those are going to be high paying jobs. >> fantastic. i'm all for it. >> but it does involve going to places west of the hudson. north dakota, south dakota, you know, places where there's not a lot of museums. not much culture. >> i'm okay with that. >> for a couple of days. your car knows more about you than you might think. ford talking about data and privacy at ces in las vegas

yesterday. he says the gps units allow the automaker to know when drivers are speeding and where they are while they're doing it. now, he was trying to describe how much data ford has on its customers and explain that the company uses very little of it in order to avoid raising privacy concerns. but, guys, this was way more information than i thought they -- >> by by the way, this is true not just with vehicles. if they walk around with your iphone, they know where it is. >> if you're walking, you can't get a ticket. >> but if you go in a car with your iphone, it's the same thing. >> that's a problem. >> i would argue that apple and google probably know more than ford. >> but isn't it like -- it's like so much of this meta data, you can't do anything with it. >> i'm concerned, if there's a time when everybody keeps out how to keep track of it and what to do with it. >> it is interesting, if there was sort of big brother of the traffic cop. where there -- it was colated to

anybody going over 80. >> they can do that now with your e-z pass. if you drive through the lanes and you get there too fast, they can issue a -- >> oh, like rosy louise, the boston marathon, she took a subway. >> marketers are going to try to figure that out. i don't know about you, but do i ways in the morning to see what the traffic -- >> you get involved with the logistics? >> sometimes i do, to see if there's traffic. if we should be going in different directions. >> just sit back. don't your nails need -- >> it said it knows we're going to work. it knows in advance. so at some point they're going to say, do you want to stop at the dunkin' doughnuts? >> i get point. i blahty game. >> you do? you report back to them? >> i say there's a vista over here, there's an accident here. you have to be very careful over

here. >> i still flick my lights if there's a cop. did i just say that on tv? >> i used to, but as i've gotten older, i am more crotchty, like you should get a ticket, you crazy young man. when we come back, we're going to track the market's behavior he ahead of this big jobs report. later in the show, senator mark rubio declares a war on poverty. right now, as we head to break, take a look at yesterday's winners and losers. [ male announcer ] this is the story of the little room over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories.

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. we are now about two hours from the economic data point of the morning. weekly jobless claims will be released at 8:30 eastern. economists say the first time filings likely rose slightly in the latest week to 340,000. consumer delinquencies dropped sharply in the third quarter of last year. the economy started heating up a little and the housing market improved. it was stated it was released yesterday. the american bankers association said bank payments dropped significantly. the aba doesn't track traditional mortgage payments. let's take a look at the markets this morning after hour out of the last five days trading lower. the futures are indicated

higher. you can see right now the dow futures are up by about 65 points. the s&p futures up by just over 6 points and the nasdaq is up by about 13 points. in the early trading in europe, you can see at least at this hour green arrows there, modest gains. the best performer is the dax in germany up by 0.4%. you've got slight gains from both the cac and the ftse 100. and in asia overnight, the nikkei was down by about 1.5%. the hang seng was down by 0.9%. >> me again? >> you again. >> what happened to you? >> i don't know what happened to me. >> kirsten. let's get a check on the markets. >> nobody is going to understand the joke. >> let's get auto check on the markets today ahead of tomorrow's jobs report. joining us is michelle gerard, chief economist and phil orlando. we'll start with the jet get the back drop of the economy, michelle, after yesterday's adp report. what are we going to do tomorrow? >> well, i don't think it -- first of all, adp may have some

issues around december and has a tendency to trend stronger. so i think people took it even with a little bit of a grain of salt. the bottom line is, it doesn't change very much. i don't think tomorrow's number is going to suggest the labor market has changed very much. we're kind of debating in terms of the 195, is it 220, 230? the point is, we haven't moved much off that 200 mark. >> it hasn't changed since when? it changed three months ago, right? >> chill, kirsten. >> just call me. call me for dinner. >> the truth is, joe, we haven't seen unemployment growth change in the last three years. we averaged about 180,000, 190,000. in terms of the economy growing another 10 or 20,000, it's not going to make a meaningful difference. we need to get to 250. you were saying this earlier. 250 or more to set the stage, i think, for the economy to expect the economy to be able to go

meaningfully stronger. >> when we got this yesterday, both liesman and zandy both sort of indicated that we could look for this year for unemployment to drop even faster than it had because we're ratcheting up. and it was sort of going along with the thinking that we're going up to 2.5% or 3%. that we are, in fact, ratcheting up global -- >> well, if we do -- >> you don't buy that? >> i am more skeptical. i don't know why businesses are going to be mover aggressive hiring this year than last year. >> would you know if they were? >> i would there would be some indications of that. the hiring plans, the confidence numbers in terms of business are better and i think the lack of kind of fiscal overhang, the uncertainty surrounding fiscal policy definitely is going to be less in 2014 than we've had. so maybe businesses are a little more optimistic. i don't get a sense, though, that the animal spirits are strong enough. >> so, phil, i don't know

whether you want to just assume she's right and then what do you do with stocks? >> let me jump in. michelle and i had a nice conversation in the green room this morning, so we've debated this issue. we have a slightly more constructive view tomorrow. we're at 230 or 235. >> where does that word come from? >> more positive. we've been running now at that 200k plus rate for about four or five months. yesterday's adp report was pretty interesting. one of the reasons why we think adp is more of a leading indicator is because the data, as they break it out, they give you jobs from small sized companies, medium sized companies and large companies. they do a good job of capturing large companies. they don't do a very good job on the small size. yesterday's number, 100,000 of those the 238,000 jobs came from small companies.

that means that the bcs will capture that in a month or two. that would suggest fous that this job trend is likely to continue into the spring. >> wow. >> if that happens, then i mean, as we were saying, if we were going to get better employment growth, that is really, then, i think validates the expectations that people have, many people have that the economy can do better in 14 than we've seen in recent years. >> i was reading something this morning that suggested that because the economy is improving, that's going to push interest rates higher and that in turn is going to hold back economic growth. it's like this crazy sicycular argument. >> is this economy going fast enough to get people worried that the long-term interest rates are going to 4%? >> cuff a better economy with low inflation and rates don't go

up? couldn't you have the best of both words? >> you could. and you do have the fed trying to do its part. but i also suggest that they're not going to be quick to raise the interest rates. >> basically, they can control it. >> they're worried about a bubble. >> we have another filing -- >> nowhere. you've got core pc at 1.1%, 1.2%? >> exactly. >> the fed would prefer that number doubles over the next couple of years. >> why are you, stocks? >> i just got some tweets. the "new york times," this traffic jam is a much bigger story than benghazi ever was. you know, a couple of lanes closed. but it's a republican. but the democrat benghazi was like c-14, isn't it? we want to keep our priorities, don't we? benghazi versus a couple of lanes blocked in ft. lee. anyway, where do you see the s&p at the end of the year? >> 2,100. >> man, finally, someone with some -- >> yeah. with -- >> moxy. >> with a little correction along the way or no?

what does the year look like? >> the year -- >> it's not even that much. >> no. it's a 15% total return kind of year from where we started. that's half of the 30% we did last year. so we still think it's going to be a constructive year. but in terms of -- you did a lot, phil. i like it. >> the mix is very much -- >> hard not to. >> we think we'll have a decent start to the year. economic data is picking up. we think fourth quarter corporate earnings will be pretty good. you might have a correction in the middle of the year as some sort of instability around dr. yellen's chairmanship takes hold. >> that's interesting. you're now citing dr. yellen as the reason for the instability. usually people say i don't know what the instability. you're stating ms. yellen may be -- >> no. eight years ago, i went back and we did some work on this, we looked at the first year of every new fed chairman going back into the 1920s. it was a remarkably similar

pattern. we could see a correction based on that. >> if your forecasts are right, then we'll feed into that instability. if the data is stronger, the markets will question this guidance of lower for longer. >> thank you. >> and that is a really good point. >> i have to say, our view in 2014 is the fed is going to be very challenged with the idea of provided forward guidance to anchor lower rates, but wanting to be data dependent. so we say that and is we can switch, but if the data are stronger, that's going to be a problem for the fed. >> in terms of trying to keep rates down. >> exactly. like yesterday, rates move on

the front end of the market. coming up, what happens in vegas doesn't always stay in vegas. sometimes it makes national headlines. the ceo party crasher talks to cnbc about getting tossed from a rival star studded get together. and if you needed to get away from all the cold weather, robert frank has a few trips to escape from the polar vortex in style. i'd like to do that. "squawk box" coming up.

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welcome back, everybody. making our headlines this morning, las vegas's iconic welcome sign will now be powered by the sun. officials linked solar panels on hours to the glittering neon

sign. i guess if there's a place for solar power anywhere, it would be in the desert. ces is stealing the show in las vegas, tweaking one of the buzz stories of the event. t-mobile's ceo stopped by the at&t party uninvited. cnbc caught up with him yesterday afternoon. >> this particular day, all i can tell you is the humanity that surrounded me and escorted me out, i said to the woman, do you -- are you sure that at&t wants to throw me out? and she said, yes, in fact, i talked to the ceo and she wants you to leave. so i'm not sure what that was. >> the ceo is a woman. >> yeah. >> t-mobile reported a boost in customer growth and offered to -- get this, to pay customers to switch from their rival services. so if you have a contract, they will now pay to buy the contract out. i don't know how they can make the math work, but god bless

them if they can. >> so he wanted to see mclemore? >> that's what he said. but he showed up in a pink t-mobile shirt. yes walks around in this pink t-mobile shirt with a blazer on wherever he goes. >> and he crashed the party. >> do you think randall would have been pleased with that? >> i don't know if this goes all the way up to randall. i doubt it. >> the fwie said, and i asked the security guard, do you really want? and he said i talked to the ceo and she wants you thrown out. >> oh, the security guy. >> like, okay, the ceo is not a woman, but -- >> no, no. coming up, escaping the cold in style. if you've had enough of the single digit temperatures, balmy, 22 degrees. >> i said 22 has never felt so good. >> the pipes in my building part of my apartment can't use certain sinks in two bathrooms. >> really? >> yeah. >> it's weird because the building should have been warm all along. >> that's what i thought, too. >> 22 feels pretty good.

>> you just want to bake in the sun. robert frank has a few destinations to consider, next. ♪ ♪ [ male announcer ] eeny, meeny, miny, go. more adventures await in the lexus lx, rx, and new seven-passenger gx. dare to be spontaneous. afghanistan, in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

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welcome back to "squawk box." if the plunging temperatures have you thinking about getting away, robert frank has a few ways to escape the cold in style. and he joins us now. this is fantastic. >> yes. this is good escapism this morning. whether you're wealthy or prewealthy, i picked out good beach places where you can warm

up. we start in st. lucia where today it will be 82 degrees. it's called sugar beach, a new resort. they upgraded this place with a $100 million renovation. it's 100 acres of rain forest leading right down to that white sand beach. you get your own butler. most of the villas have their own plunge pools, a spa with treehouse treatment rooms, $700 a night up to $3,000 a night. they do have a linger longer package as if you need to be convinced last night, allows you a seventh night free. matt damon rented out this entire resort recently to renew his vows. it's in nicaragua, another place, mukul beach, it's the mayan word for secret. $250 million resort, first five star resort on the emerald coast. it has 37 villas, spa, beach club, 18-hole golf course.

it's pretty inexpensive, starting at $550 a night, getting up to $6,000 a night for a whole estate. if you want to warm up like a rock star, well, get this, in st. barths, the eden rock rock star villa, it has a four king bed suites, four suites in total. sun deck, private access to the beach. butler, personal staff, a choice of cars in the rock star garage and get this, state-of-the-art recording studio with a console used by john lennon to record "imagine." this place, a little expensive, $15,000 to $20,000 per night. >> when i stayed there, the water in the pool was a little cloudy. >> just one butler? there's -- the evening butler and the morning butler are the same person? >> at the rock star villa?

>> for $20,000 a night you should get a butler and four full-time groupies. >> what's the evening guy know about getting you ready in the morning? it's ridiculous. >> is there a pool guy. >> there probably are lots of guys. eden rock is crawling with staff. anyway -- >> i'll put that on my wish list. >> all these places at 80 degrees or above. that was my main requirement and there's still vacancies. >> wow. >> are planes taking off right now? do we know -- >> from here or from there? >> from here. >> some of these places are hard to get there commercially, too. >> i think now that most of the storms are past. >> i'm not talking about teet teeterborough. >> i did talk with net jets. they gave me a list, palm springs, california, naples, another one is a small island

east of nassau in the bahamas. that's where the rich are going. they don't have to worry about flight delays. >> thank you for making us feel worse about where we are this morning. >> i warmed you up. >> no, you didn't. janet yellen making the cover of "time." she's about to become one of the most powerful people on the planet. find out what she told the magazine about the economy, jobs and housing, right after this. activist investor dinakar singh will be our next guest, right here on "squawk." ld dinine at 25th and hoffman. ...and the little room above the strip mall off roble avenue. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪

janet yellen speaks.

find out what the incoming chairman is about to say about jobs and the housing market. dinakar singh opens up about his playbook for the new year. and getting hospitals and doctors to convert their files into digital record, well, it's proving to be costly. can the government get this under control? "squawk box" begins right now. ♪ it's time to begin isn't it ♪ i get a little bit eager i admit ♪ >> good morning, everybody. welcome back to "squawk box" on cnbc, i'm becky quick along with joe kernen and andrew ross sorkin. dow futures up by 64 points above fair value, s&p 500 up by 5.5 and the nasdaq up by 11. the ten-year note yesterday pushed that yield back above 3%, this morning it's just below that, 32.89%. retailer macy's is cutting

2,500 jobs, 1.4% of its u.s. work force. it says it will save about $100 million annually. macy's is reporting strong holiday season sales and is raising its 2014 earnings outlook. costco says its resulted were helped by an improvement in online sales. that toing has barely budged today. apple and samsung have agreed to a mediation session in their ongoing dispute over smartphone patents. apple chief samsung ceo will be attending that session along with in-house lawyers. also the bank of england announced that as expected it is leaving its key interest rate unchanged at half a percent. and take a look at the cover of "time" magazine this week. it's a big one in the financial world or should be maybe. janet yellen sitting down for

her very first interview on the record following her senate confirmation as the next chair of the fed. the issue hitting stands tomorrow. the $16 trillion woman is the title of the story. it's a great picture. joining us now, from new york, the author of that piece, rana forooh foroohar, she's "time" magazine assisting managing editor. steve liesman is also with us. >> rana, the big question i'd have is whether you think that we're going to see any real change in her policy. the thing i was struck by throughout the piece was both the issue of unemployment but also sort of, you know, how that's going to be a big issue but on the other side, this sort of all tides lift all boats. >> a rising tide lifts all boats. >> thank you. it was the kicker of your piece.

>> that's right. i think that you'll see a lot of continuity. she was one of the key architects of the later stages of quantitative easing. she was really ben bernanke's right-hand woman, as the vice chair. i don't think you'll see dramatic difference in policy. she is someone who stressed again and again she's very concerned about the human impacts of unemployment. she is committed to the fed's dual mandate of keeping unemployment low and keeping inflation low. as we all know, there's no conflict between those right now. we don't have a recovery that's strong enough to drive inflation up right now. >> she says, this comes towards the end of the piece, she takes on the issue that she's effectively creating inequality, right? that seems to be the big issue. we've talked about this at the table. >> yes, yes. well, you know, she speaks directly to the criticisms about the fed's asset buying program over the last few years and this idea that it's bolstered the markets but what has it done for the real economy? the fed knows this. they've been talking about this

issue internally. her belief and there's a direct quote in the piece is that it has done something for the real economy that monetary policy can still push the money flow in the real economy, get businesses in consumer spending and actually she says she's optimistic that this coming year is going to be a shift and that there is going to be more spending, that companies will get off of that $2 trillion in cash on the balance sheet. >> right. this is the issue they've taken on the whole time. >> you mean inequality. >> you don't buy it. >> when you do an all-in analysis, you find wealthy people have suffered because of low interest rates but they've gained a lot because of high equity markets. they've also benefited from mortgage rates being low. but that's also helped regular folks. i've not seen an analysis, which is really my point, that does an all in and look at whether or not they've benefited on that or done worse. i also question the idea, what

else would you have them do? >> right. >> this is the tool they have. they do not have the ability to distribute money. they have the ability to raise and lower interest rates using the funds rate or through using quantitative easing. this is how they operate. this is what they are designed to do. >> what i thought was interesting here is yellen's optimistic outlook. and the question about whether or not she is the same as bernanke is a little bit irrelevant in the following way. i think the circumstances will be different. i don't think yellen and bernanke will face the same set of facts on the ground. >> i think that's right. >> and the optimistic outlook is important but what i'm also interested in is how she reacts to that optimistic outlook. you had gerard on saying the questions to janet are different from the questions to ben. >> but michelle girard also pointed out that, look, if the idea that the economy improves and we did see an improving economy can the fed

realistically try to keep this idea with the forward guidance that the rates will be low for a very long period of time and does the market buy that. >> that's a huge issue. when i asked her about that question, she stressed, well, we'll keep communicating and tell market we are going to keep rates as low as needed to bolster things. the question is -- >> does the market believe that. >> is that going to hold? that's right. i think going to the point earlier, the facts on the ground are going to be different. there's a lot of consensus right now within the fed when things are going well. the economy is on the upswing. what if europe blows up or there's a big china debt crisis. greenspan got credit for the dotcom bubble. he may not have deserved it. it depends on what you're taking on what kind of chairmanship you're taking on. >> maybe not got credit. got blamed for it. >> well, yes.

>> did she talk at all about a bubble in the financial markets. >> there have been critics, a lost critics that said while she's not thinking about that long enough, she's not worried about longer term inflation. i think she's a data driven person. everyone i spoke to about her, i interviewed 20 people close to her over the years. she's not an idealogue. >> worth reading. >> thanks. >> there's great anecdotes about her in there. >> she's a brooklyn girl. >> she is a brooklyn girl. thank you so much. we are going to introduce our guest host. >> steve, thank you. we'll continue this conversation, too our guest host for the morning is one of wall street's top activist investors. dinakar singh is head of the hedge fund tpg-axon.

what do you think about what we've just been talking about? will janet yellen be able to keep rates low if wall street thinks the question is improving? >> you know, we're not macro guys but if you start companies, it matters for everyone. we look at rates right now. i suspect the fed will find out that once they start raising the ability to control the back end is going to be not gas they think. think about the last ten years. asian central banks for the buyers for the treasuries in the last couple years. in a year or two, all three of those will be gone, give or take, right? the incremental buyer will be someone who buys a treasury as a good investment. the gap between asian central banks and the fed buying it because they're doing it for mechanical reasons and an investor buying it because it's a good investment with a wide one. fed controls where the short end trades. it doesn't control the back end. >> liesman said the fed had no choice but to do qe.

like we all -- >> there are a lot of people who would say the first qe. >> we never heard of qe. when they first did it -- >> where would we be today. >> i don't know. i don't know what the counterfactual is. >> qe 2 and anything that came after that -- >> remember when he said this is absolutely shock and awe when they did qe infinity. >> yes. >> the first qe was a novel approach, wasn't it? >> the first qe -- >> we had never done it before here. >> i think for all this, this is like surgery in a way you've never done before and you're learning as you go along. >> it was necessary. we were in that bad a shape? >> i don't know whether it was the best idea or the worst idea. >> or delusional. >> if it got people to the point where they stopped being scared of an immediate shock tomorrow, fine, good enough. >> you said trying to get out, they may not be able to control it all in. what if the adverse consequences

we don't even know yet how we get out there. >> when you're trying to figure out the dose to give a patient by observation it's tough. a little more medicine, see what happens. sometimes you find the impact is bigger than you think. we are at a point now where at least people aren't nervous about an immediate shock to something tomorrow. for the first time in a bunch of years we start in january without people nervous about a shock some place. maybe that's a complacency. that's good news. >> is it good news or bad news. >> when we thought there was a shock tomorrow we saw returns of 30% last year in the overall average for the markets. does that mean it's a lot tougher to get returns? >> i think you're paying a whole lot more and the risk you're getting for are less. the bigger issue as well, there's a price to pay for all this stuff. we talk about the government and rates, actual cost to the u.s. is paying on its debt is lower than it was five years ago even though the debt is higher.

average interest rate was 1.6% or something like that. that means that quarter trillion double triples. for companies if you're time warner cable, it's the same thing. rates have been terrific for earnings. companies are using that cash to buy back stock, which we like. the only bad news is if your stock price is high and you've levered back up to level with rates, the game gets tougher from here. >> dinakar, according to an investor, your fund was up 19% in 2012, up 19% again in 2013. when you look at up 19%, that sounds great. when you look at an index fund being up 30%, it's been tougher for hedge funds to market themselves. the point of a huj fuedge fund y and maintain and not get sucked into dips. is it harder to get clients to come in when you look at market returns? >> i think it depends what you do and whether people believe

what you do. we run long and short both. markets being up on the margin hurts us. people get excited. your shorts get squeezed, all that sort of good stuff. on the other hand if you're running huge net exposure and up 19% and the market was up 30, that doesn't sound good at all. i think it's a tougher year for hedge fund investors to figure out what to make of their hedge fund returns and based on that, what to expect going forward. premarkets don't go up 30% a year or 20% or 15% over the long run. trying to figure out where you on the equity market cycle -- >> couldn't all your longs go down and shorts go up? >> yes. >> how do you know you're not exposed? i guess you said that, you have to believe we know what we're doing. >> i think everyone has turned the dial up on how bad things could be. and tried to position their portfolio to withstand a bigger shock than before. >> you feel versus the index,

the s&p itself, that's 100% expose even you're only 15% or 16% exposed? >> correlation. typically you end up having the correlation be a little bit higher. >> if you were really bad, every long was down and every short was up, you'd be 100% exposed too, wouldn't you? >> sure. i think at some point if you have enough liquidity, at some point it will work its way through. i don't know where the market settles, higher or lower. wherever it settles if people are call for one day, people are doing just fine. >> it would have been nice to have shorts in '08 and '09. >> yes. i think you need to make sure you can hold them. if you can't hold your ground and you're forced with liquidity at the worst time, the fact that you're going to do this in the long run -- >> do you buy that for the whole industry. >> 2 and 20, just the average hedge fund to do 19 when the market is up, 30, it's tough to explain. >> true. over the last years we were up

38 give or take. that's not far from the market even though if you can be roughly in line with the market in the two best years in a long time, no one is going to give you a long time. the flip side is what happens next year. >> it's hard to generalize about all funds but do you really think everybody is not that correlated? >> it's a huge spectrum. >> how are many closet indexers. >> if you look at the hedge fund business, the long/short portion has become more and more net long. it's 50% long and beta on top of that. hedge funds, the long/short funds did a whole lot better because stock picking was a good environment and partly because they're more long. funds that were less long did well. so multistrategy funds, macro funds, event-driven funds,

depending on the type, single digits to the low teens. >> dinakar will be with us for the rest of the program. he's our guest host today. cutting calories. find out how much the nation's top food producers have trimmed from their products in a very short amount of time. then the flip side, a machine that can add to your waistline but it would be worth it. progress in fast food. "squawk box" will be right back. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price.

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welcome back to "squawk box." making headlines, a study find something of the nation's longest food companies have far exceeded calorie cutting goals. they cut the equivalent of 78 calories per person per day. the total is more than four times the calories those companies cut to pledge next year. they also kraft, kellogg, coca-cola, pepsi, hershey and conagra.

pepsi co-'s ceo indra nooyl will join us tomorrow. nbc channel 4, they're doing this story. immediately, to me, it was just earth shattering. an explosion went off in my head. if you love burritos as much as i do, the next story is for us. welcome the burrito box. it's being billed as the world's first burrito kiosk. >> what? >> automated. five different varieties available for $3. the first kiosk is located inside a mobile gas station. there's an interactive touch screen menu that lets you choose between flavors, then adds sour cream, tabasco sauce, guacamole, any of that. the machine plays a music video as it warms your food. i've said in the past, andrew doesn't believe that the si

singularity is possible, that we could eventually choose how long we want to live. >> you're telling me the machine adds the sour cream and guac itself? i think they have it prepacked and they're heating one up. >> the greatest world we could create. >> it does not commute. >> we have to look into how this burrito box works. >> that's not the same as buying sushi at a gas station. >> no. >> thank you. >> the condiments come out separately. all they're doing is warming the burrito. >> you shouldn't be buying commandments s anyway at a g station. >> all it does is heat up a burrito. >> another side of -- spend a little more money in walgreens, will you? another side of health care reform that's hitting a rough patch. we dig into the waste surrounding the effort to digitize medical records. "squawk box" will be right back.

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now the answer to today's aflac trivia question. which country was the first to fully legalize marijuana? the answer, last month uruguay was the first country to legalize marijuana. >> aflac. obviously one of the first states to do the burrito machine. >> colorado. >> colorado. i mean, when you think about it. the federal government spent more than $22 billion to incentivize hospitals to convert their files into digital records but a new report shows some of the systems that the government is subsidizing don't even meet its own standards. here now with more, dan haley, vice president of government and regulatory affairs at athena health. at athena health, is that our buddy. >> that's our buddy. >> billy bush. >> who's now on sabbatical.

>> jonathan says hi. >> this does not surprise us because we've had jonathan in a few times. but just go into exactly what you're talking about and how bad this is. >> sure. well, what the study that just came out this week indicates is that -- or found is that there's a potential that electronic health records could be used to commit medicare billing fraud. which isn't a new concern. it's an important concern but it isn't a new concern. the same finding was made by the centers for public integrity a year and a half ago. what's important to note is that what they found is a potential for doctors to use, misuse, electronic health records to commit billing fraud. like any powerful tool, an electronic health record can be used for its intended purpose, improve patient care, or misused. just like a baseball bat can be

used to hit a ball or break a window. the important thing is, there are safeguards to built to prevent fraud. that's called the criminal justice system. whether a doctor commits fraud using a pen and paper or an electronic health record, you'll be prosecuted and face jail time. technology doesn't commit fraud. people commit fraud. what concerned me about "the new york times" article this week is $22 billion have in fact been spent by our federal government, real dollars, not potential dollars, not theoretical dollars, real dollars to incentivize doctors to adopt and use meaningfully use electronic health record technologies and a lot of those dollars are being used to subsidize systems that, frankly, don't meet the standards that the get set for its own program. we've got main medical center recognized say $13 million loss which is huge for them. they are laying off hundreds of

people, fired their cio, all tied to implementation of their electronic health record. you've got a small hospital in montana just this week suing a major electronic health record vendor specifically because that health record does not meet the federal standards. >> what's most frustrating, we spent a lot on obamacare and when that came down to it, it didn't meet the standards of the government. here's another 22 billion. like so many things that the government does, it seems like a good idea. who's going to disagree or argue with electronic health records? why don't they make it at least live up to the standards they've put into effect in the first place. 22 billion, if it didn't work, it's wasted? >> 22 billion and counting. i hasten to add not all of that 22 billion is wasted. there are plenty of doctors and hospitals who are effectively, meaningfully using electronic health record technology. >> it gives unethical people a chance to -- they can get around

it. we'll have to cut it short. you'll have to come back. we love athena health. we don't care who we get from there. we need more private sector -- >> it helps us understood. >> we love "squawk." thank you. appreciate it. >> good to see you. >> take care. >> when we come back, we have another snapshot of the nation's labor market. we take a look at at layoffs in the work force during december. and marco rubio declares war on poverty, the details at 8:00 eastern. stick around. "squawk" will be right back. well another great thing about all this walking i've been doing is that it's given me time to reflect on some of life's biggest questions. like, if you could save hundreds on car insurance by making one simple call, why wouldn't you make that call? see, the only thing i can think of is that you can't get any... bars. ah, that's better. it's a beautiful view. i wonder if i can see mt. rushmore from here. geico. fifteen minutes could save you fifteen percent or more on car insurance.

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the challenger jobs report is out. steve liesman joins us. the more input and data we can get on jobs, the better. >> december cuts total 6223 and it is the lowest monthly jub cut level. john, i went back and looked and these are late 1990s or mid-1990s employment numbers

here. >> these are very low. you know, steve, if i were a keynesian, i could be telling the government and the fed to get its foot off the gas pedal right now, not go into 2014 with a sense we're still going to keep stimulus going, hoping that unemployment will go down even further. this engine is really rolling. >> john, let's talk about total cuts for the year. 509,000, down 13,000 from 2012. there was a number, the total number, the best since 1997? >> yes. we haven't seen cuts this low since, like you said at the beginning, back in the late '90s before the dotcom crash, layoffs were low, the economy was really rolling. think about that. that's a '97 number. we've been into this recovery for five years, not recovery but this expansion, it's just been a

slow expansion. we dug such a deep hole that unemployment is still high. there's a lot of people still unemployed, 11 million, right? is it does seem like all the numbers are pointing positive. >> john, i want to pick up on that. i think a little exception to what michelle girard was talking about in the last hour when she was saying there's one number out there. there are now four good numbers on jobs here. let me tick them off, the adp number, 217,000 over the past three months. it is meaningful. both employment indicators in the isms, manufacturing and services where it rose in december to high numbers. nfib, yesterday afternoon i reported the best jobs numbers since '06 and gdp is suggesting improved job growth. john, i need to use your knowledge to do the other side of this. where were the job cuts? >> well, job cuts in december

came out of electronics. we saw retail cuts, the macy's cuts today are an example of what happens after the season is done. some companies kept some of their stores open. we'll see more of those cuts? january to take advantage of the holiday season, but now they start to cut them. we've seen banks cutting their mortgage, kind of refinancing, foreclosure areas. they don't need as much of that anymore. these seem to be the normal cuts you see happen even in good times. >> where weren't there the cuts? where are the places people are out there looking for work now? what industry does this data show they should be focusing on? >> well, the areas of the economy we know are strong, even though health care cut jobs, we know that's a long-term job creator in this country. jobs are consistently created, month after month. professional business services has been taking off. there are many sectors of the

economy right now that are adding jobs. >> yes. one other area, john, i noticed was the government cutbacks were reduced this year. that was another area where there was somewhat better results in terms of job cuts. >> well, again, if you are a keynesian, you might say, all right, keep on cutting, government, let's take some of the fiscal pressure off, too. this is the time we want to try to get at those kinds of issues. the economy will roll right into full employment. maybe that's a couple years out but it's rolling. >> john, thanks very much. you're the second job expert in two days to tell us that that we have an upward shift in the job market. we'll obviously see if that's the case when we look at the jobs numbers on friday. >> we get jobless claims at 8:30. steve, thank you. >> pleasure. >> challenger going with the sweater under the jacket, sorkin. see that? >> good luck, right? >> i don't know. >> i got one look. i have one look. although i'm going to have sweaters.

i'm in a sweater of the month club in davos. they're putting together combos for me. i feel pampered. it's very cool. let's get back to our guest host for some of his top stock picks of the year. dinakar singh is capital founder of tpg-axon. if the u.s. was totally outlandishly in bubble territory, it would but at this point, you don't think it's cheap but you could still find some things here? >> absolutely. look, i think for us, we want to make money by picking stocks but we look around the world and try and think through where we think things are unusually cheap and where they're expensive. if you look at the u.s. and japan, which is a market we talked about last year as being one of our favorites, things aren't that cheap anymore. almost every good stock is 15 and 20 times earnings. if i have to make money i have

to find a place where the e will change or the p/e will get rerated a lot. something meanleful has to change. japan, we still love because the market isn't cheap anymore. but it's one place in the world where many companys have low margins. you can find companies like hitachi where margins could double over the next few years. you can't find that in the u.s. anymore. ha -- hitachi is in the middle of their cycle. macy's, the department stores aren't a category, meaning people hate department stores. they've traded at low multiples. they look at the aggregate numbers and say department stores are losing share. what's that missing is there are two good ones and two bad ones.

they're losing share in part to macy's and companies like dillards. macy's, for example, trades, we think it's 11 times earnings. every other retailer of any substance trades 13 to 20 times earnings. macy's is doing better than the gap, better than limited. >> better-looking ceo. >> they are crushing it in terms of cash. they'll buy back half their market cap. this stock creates 11 times earnings. huge discounts to macy's, gap, limited, you name it. you can see the stock be up 40% over the next year. hospitals which i think another topic of the morning. >> that's a part of the health care you like. >> we think hospitals are the biggest winner for obamacare. people have been uncertainty about health care programs, they've basically held off doing things. >> people getting procedures? >> yes. you've seen shockingly bad

admissions in hospitals the last four or five months, partly random, flu season and things like that. partly because people don't know what's happening to their health care programs. community health is turning 11, 12 times earnings. if there's more insurance money for people to go and pay their hospital. >> no one will check anything. hospitals will clean up. >> i think for us, that's one of the mull plier, 10, 11 times earning earnings. energy sector, here to a case where you can buy a company for 6, 7 times cash flow, we think ebitda will double over the next five years. with all the noise behind it, now it's going to be a boring growth company going forward. the u.s., the bad news is, let's

say the fed is right and rates will be at 4% in four or five years. most multiples and sectors in the market are probably 10 plus percent above where they've been. four or five years from now, rates are normal and multiples are normal, your entire return in the s&p will come from earnings growth. maybe that's 8%, maybe 10%, 7%. i think it's 30. look back over the last five years, first margins are covered, then valuations are covered. >> if people in the '80s or '90s could have signed on to 4%, they would have run the multiples up up. >> you know -- >> doesn't the discount the cash flow model. >> 4% short rates mean you probably have. >> you're talking about short rates? >> yes. by the way -- >> a normal 7 or. >> that's normal.

market of a high teens multiple isn't crazy. that's where it is now. it strikes me that most of your return in the s&p in the next four years is going to come from earnings growth. and you've seen the big step up in margins, that's already happened from the bombed out levels of '09. you see the big step in valuations happen, the last year or two. it's got to be growth that drives it. i think where we're more bearish than the average guy, it strikes me that the last couple of years profits have been above growth. when i look at many companies, it strikes me you could see the reverse going forward. as rates drift higher, competition picks up margins -- >> we see the revenue growth that won't go to the bottom line as much. >> yes. >> we have another hour and 20 minutes. >> stick around. >> where are you in energy? there must be a specific place with the frac'ing and all that. >> we'll come back to that.

mario draghi, he'll be speaking and monitoring his comments. at the top of the hour, senator marco rubio shares his plan to redirect funds directly to states and why he says the current system is a failure. "squawk box" coming right back, after this. d tablet approved to treat symptoms of bph, like needing to go frequently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial.

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welcome back, everybody. the bank expected to maintain a key lending rate of a quarter percent. joining us right now is the president of the peterson institute for international economics and a former member of the bank england's rate setting monetary policy. we put these things aside, thought things were getting better. when you look at what's happening with the overall economy, is this something we need to start paying attention to. >> it's robust stagnation. they put a floor under things. nothing good will happen. there's a ceiling on growth because of the slow wage growth and the tight fiscal policy. very little structural forum. it will take five years to pay

off where it exists. there's issues in the euro area. the only issue really remaining is this asset quality review, their term for trying to do the stress tests on their banks. that will take place over the summer into fall. >> the ecbc has come out with that decision. it's left rates unchanged. if you look at the eurozone versus what's happening in the united states, versus what's happening in japan, versus what's happening in china, do they get left out on this? >> they certainly do. they are the laggard. the ecb should be doing something. >> what should they be doing. >> they should be aggressively trying to get credit out to small, medium business throughout southern europe, particularly by intervening directly to help liquidity in certain banks. they're in charge of the bank supervision. they should be forcing new capital to be put into the banks and get that over with so the banks are not withholding

lending. >> you think they're not doing it because it's a weaker organization than the fed, than the bank of england? because you're dealing with so many countries that have a seat at the table? >> it's a fair question. unlike the bank of england when i was serving there or the fed, those are both very much subject to the elected legislature. you can change the rules on them at any time. the ecb is protected by international treaty. nothing can happen to it. it's the most independent central bank in the world. it's true, however, there is a german-led voting bloc that is blocking activist policies. that's another reason they didn't move today. there's a new german person on the board and she was in the going to let anything happen in her first meeting. >> so the germans have been putting up these walls, maybe that's part of the problem. >> yes, it's part of the problem. it's also ideological that they don't believe in the kinds of interventions that have been successful in the u.s. in japan and arguably in china. >> we always say you can't argue the counterfactuals.

when people start questioning what the fed has done, what other central banks have done, is this almost the counterfactual because they haven't done these things. >> thank you for putting it that way. i heard earlier today joe talking about this with your guest, talking about the fed doing this unprecedented thing and we still don't know what's going to happen. that's nonsense. central banks have been buying and selling securities, private securities -- >> he was talking about the qe infinity. >> it wasn't infinity. it's still a small portion of gdp even though it's larger than it used to be. as milton friedman told us, money supplies only matter as far as the financial system transmits it. when velocity picks up, the fed will have to pull back. the more velocity, the more health, the easier it is for this. >> why did we never hear of qe? >> because the japanese chose -- >> did miller ever did it?

>> william mckenzie martin did it in the '50s and '60s. >> they were buying? >> government bonds but they were also discounting a huge range of bank notes in the same way the bank of england did. >> historically it was larger in size but we also have a larger crisis. >> would you argue there was no option? >> you always have an option but it was the best available. >> what did a balance sheet go up, ten times in value almost? >> it happened in a period where we never saw a recession was bad. >> people argue that the late '70s, early '80s was bad. >> it was a different nature of recession. >> the pain seemed to -- >> when you had stagflationary recession when supplies are cutting back, it's not just demand shock. when it's about oil prices coming up, not about a panic in the markets, there's a different response. the fed screwed up in the late '70s. >> we never know whether the fed is crewing is up until five years after they do it. >> i think we're now five years out and the record is that the

bernanke fed didn't screw up. >> i don't know. >> why hasn't it been done before? for many countries outside the u.s., if you tried to do this, your currency would fall apart. why didn't korea just do qe in this whole nasty crisis thing? if they did, it would be a disaster. >> you're absolutely right. a small country and a country without fiscal monday tear credibility can't get away with it. there are a lot of countries that can. japan has done it. china is doing it. uk is doing it. >> you couldn't do it with it a bitcoin. >> your bitcoin would be worthless. we have to jump to a break. when we come back, dinakar can finish that thought and he'll share some of thinks targets to for next year. back in just a moment. i'm beth...

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welcome back to "squawk box." we get back to dinakar singh. he's with tpg-axon. you were trying to say what? before we left this conversation. >> i was just saying on the rate side, overall, the u.s., what's happened the last couple years, qe was risky because people worried it could end up with inflation and cause the dollar to weaken and money to flow out. it didn't really happen. imagine someone taking steroids, he took them and nothing happened. you've been saying steroids are bad but nothing has happened so far. the question whether there's going to be a price to pay later on or not we'll see. at some point, a country can't do this forever. >> dinakar, the bigger thy neighbor. what's not politically incorrect? when you're the best house in a bad neighborhood, that's what happened.

>> they gave us cover, the rest of the world fell off a cliff which gave us cover to devalue our own currency but they were devaluing quicker. >> that's a great point. we left japan for stock picking. things were changing. the u.s. and with it, china and everything else devalued while europe and japan sat there. people talk about low rates in japan. the reason why jjb did very well is because people were smart. if you could get 0% in a currency that goes up 20% or get 5% currency in a currency that goes down 20%. what's happening now is interesting. you're seeing now that the game is changing for the first time japan is saying, wait a minute, we're not going to play this game, we're sitting out while you're playing this game, we're going to get involved, too. you see them juice the economy up. >> do you think what they're doing is to the extreme more so than what we've done? yes. and does it end badly? i don't disagree this year may not be a bad year in japan, it

may be a great year but i wonder what happens in the year after. in a much different way than i think about the united states. >> one reason why i'm more cautious than the average person is because there are things that have been settled down for now. in a year or two are going to get much more controversial. right? on all fronts. it's true in europe and japan. they are good answers, these equations. you could see how this could work out well. it's going to become more of a drama and discussion. i think in some ways we're in a sweet spot right now. do i worry that you'll have seen the growth step-up happen and you'll get closer towards the bigger questions on these issues. i don't think it will get back to '09, '10, '11 issues. >> even the recovery is getting long in the tooth historically. >> yes look, from a bad point. >> yeah, right. >> some of this, the markets get some of this, europe, if you look at europe, consumers traded big discounts.

people forget the fact that domestic europe is a problem. >> we continue our conversation with dinakar after the break. >> that is not fair. it says joe there and it says up next. am i joe? >> you are. >> you are leading an interview by the way as well. >> up next, senator marco rubio lays out his plan on how to take on poverty. and a traffic nightmare for governor chris christie. who thought this would be a scandal? lane closures sat the gwb used as possible political revenge. so ally bank has a raise your rate cd

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gaining the upper hand on the fight against poverty. >> real free enterprise is about a broad and growing economy that creates opportunities for everyone. >> senator marco rubio joins us to discuss how the federal government can get states involved in this 50-year war. >> booze news from beam. we talk bourbon and why a high-profile entertainer is now backing the company. >> and the rocky mountain high just got a little higher. >> is that a joint, man? that looks like a quarter pounder, man. >> and a price that is jane wells with a look at how colorado is handling the extremely high demand for recreational marijuana use as the final hour of "squawk box"

begins right now. ♪ colorado rocky mountain high ♪ i've seen it rain and fire in the sky ♪ >> welcome back to "squawk box" here on cnbc, first in business worldwide. it's murphy's law. >> i wish you wouldn't say that on air. >> i know i can't say that. i'm joe kernen along with becky quick and andrew ross sorkin. we'll bring you the numbers and the market reaction. the futures right now are positive. i want 11 s&p points. i don't know how long my extension is. >> double the gains you're looking agent right now potentially. >> yes. >> got to double. that's possible. we get back to -- we close -- >> maybe extend for two years. >> we need 1849 on the s&p to be up for the year. and then maybe january, you know, doesn't know that it was only six days instead of five days. >> maybe it thought the first full trading week. >> may be able to fool january

and then set up for a good year. >> this is total wives tales. >> it's not an ironclad rule. it doesn't have to be. i like to stack the deck. >> i got it. >> let's talk about some of our headlines this morning. the ecb and the boe are both keeping interest rates unchanged. the ecb president mario draghi is set to have a news conference at 8:30 eastern time. retail stocks on the move as well, macy's shares rising. the retailer is cutting 2,500 jobs as part of a re-organization and offering an upbeat, full-year outlook following a strong holiday shopping season that stock is up better than 6% this morning. our guest host, dinakar singh was talking about this, too. this is a major position for him. you think this could be up how much this year. >> we think 40% is base case. earnings solidly in the 4s.

and they would -- if they traded at a 13, 14, 15 multiple, which is far lower compared to other retailers oob youyou'd still be some money. increased liquidity, positive business performance, increasing dividends have 12.5 cents a quarter. it was 40 cents a year. it's know going to be, i quickly deduce 25% of 40. the new yield will be 25% above that. right? you're looking at 2.4, add about 65.6 -- add 65 basis points. 3.1, 3.2% will be the new yield. that's a significant, you know, if you believe that it's going up, you get 3%, that's where the

ten-year is anyway. >> we'll talk to phil lebeau about that in a moment. in the meantime, a couple other stocks on the move, l brands. december same-store sales rose by 2%. that is below what the street had been expecting. it cut fourth quarter outlooks citing lower margins. they had to offer sales to get things out the door. shares of family dollar under pressure, the retailers earnings missed by the mark by penny and cut full-year guidance. it's falling short of consensus. that stock is down by better than 7%. 61.50 is the last trade. get comments from phil on this. i don't remember the whole history of -- did ford cut the dividend at some point? >> i don't know what the high all-time was but i do know, not only did they cut it, they eliminated it for a number of years. >> creeping back here. >> 2007 all the way through -- i

think they brought it back in 2011, late 2011 or early 2011. and they moved it first it was a nickel, moved it up 10 cents last year. so this is part of their game plan of putting some of that cash that they and the other automakers have all put up pretty good numbers. they have a good cash horde and are putting that cash back to use. one interesting note here, when you take a look at the ford family and its shares and how much of the common stock as well as the class b stocks the ford family, they're the only ones who own it, when you look at that, this dividend here basically increases were a payment increase of $34 million for bill ford. so for a lot of people who sat there and said, you know, the ford family is not getting anything, not that they were feeling sorry for the ford family but during the lean years they didn't take anything. now they're getting some of that pay back, if you will. >> yes.

you know, whenever you have a -- like named ford at a company like ford you don't expect him to do a lot of the stuff he did. he's an exception to the rule. i think maybe he was -- which generation is he, fourth or fifth? he got beyond some of the bad genes of the first generation heirs. he's been a phenomenal ceo -- not a ceo, obviously. he was a for a while. no ego. he handed that off to mulally. >> that's what you're supposed to do. >> fault them for getting a little out of the company at this point. >> he's fourth generation, just so you understood. >> fourth. >> yes. just so people understand also, he should get more credit than he probably does get for the fact that he knowingly stepped aside when he realized he was not the person to run that company day to day. he went outside the box by bringing in mulally. >> how many guys named ford

would have done that. that's the point. thank you, phil. >> okay, guys. >> dinakar, you're a new jersey boy. >> i am. >> originally. political news, bridgegate dominating the headlines, new jersey governor chris christie coming under fire after e-mails suggests that one of his top aides pressed for traffic problems in the city of fort lee. the mayor declined to back christie's re-election. the closure of the access lanes to the busy george washington bridge created massive gridlock. i experienced it myself and sparked a state investigation. the lane closure were politically motivated, here is christie responding. >> i worked the cones, unbekn n unbeknownst to everybody. i was the guy working the cones out there. you really are not serious with that question. >> fort lee's mayor was on kudlow's program last evening.

>> calls are going to be made. call the families that waited two to three times longer f eern ambulance to arrive while a loved one was clutching their chest. call the thousands of parents who couldn't get their kids to school on time for the first day of school and the three or four days thereafter. call those people who had to deal and endure this. >> we will see where the scandal ends up. two heads have rolled so far we think? >> from the port authority. >> but not as part of his administration. so the question is going to be -- >> they were political appointees. >> the question will be if heads roll inside the administration. if heads do not roll from inside the administration, there will be problems. >> one was a friend from high school. there were pictures of the two of them. >> i wonder if someone rolls on christie. coming up next, booze news this morning from beam, the company's president will join us after the break. as we head to this break, check

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welcome back to "squawk box." if you aren't familiar with tequila, get ready, the beam brand about to bring sexy back. not really. with a new celebrity partner, you were hearing justin timberlake before. the spirit company north american president bill newlands joins us this morning. you're teaming up with justin timberlake for sauza 901. is what it's called? >> exactly. >> everybody seems like -- p. diddy has his own tequila. why has tequila become the thing that every celebrity wants to be part of? >> i think one of the interesting things about justin and what he did, he's interested in tequila.

he went to halisko and put together the taste profile of what this could be. >> he came to you or you came to him. >> he started this himself. he was looking for someone who could build brands and bring the marketing and sales muscle behind a great product he put together. >> how does something like this work? do you pay him a licensing -- is an endorsement celebrity fee? does he take a cut of every sale? >> not at all. >> how does this work? >> we jointly own this. so this is really -- he was the founder of the thing. we've had great success when we've dealt with founders. we're much more interested in founders than we are with celebrities. the fact that he happens to be a celebrity is terrific. he's got 30 million followers on twitter. which is great for us. but what we were excited about is he's the founder of the business and he put together a great product which we think we can leverage along with our

sauza brand. you don't think tequila is a crowded market. >> not really. tequila has changed quite a bit. it used to be a margarita or a shot occasion. it's turned into a sipper, much like you see bourbon is the hottest category in our industry today. that's been a sipper product as well. so you get to the point where people are appreciating tequilas for the differences that exist within them. >> right. final question, justin timberlake isn't -- isn't justin bieber but do you worry about the age issue in terms of marketing to young people? >> we're always careful with that. we are probably at the forefront of our industry of making sure that we are doing all of our marketing to people of age. so this is an important aspect for us. all of our efforts and marketing efforts will certainly be focused on people of age. >> thanks for joining us this

morning. appreciate it. >> thanks for having me. >> you bet. still to come within marco rubio on his fight against poverty. "squawk box" will be right back. barreling down i-95. s ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪ make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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start investing with as little as $50. it has been 50 years since president lyndon johnson decleared war on poverty. senator marco rubio is continuing this battle on capitol hill. at least we're talking about it again. joining us now, florida senator marco rubio. >> good morning. >> it's such a -- it's not just poverty, senator.

but we want a vibrant middle class. >> right. >> we talk about income distribution. it's really a paradoxical discussion that we have again and again. and republicans ought to have a much better story than they've had in the past, especially with what has happened to people in need over the past five years, because the people that the president so wanted to help, if you look at metric, food stamps, disability, participation in the work force, you look at any of those things, you would say they're headed in the wrong direction. simply widening the safety net to a much greater number of people is not what any of us wanted in this country. yet the republicans seem to have a hard time getting that message out. >> well, again, we hope not. we hope that will change. here's the problem as i see it. the problem is not simply the income and equality that the president is focused on, the problem is opportunity and inequality. the cashier at a fast food

restaurant makes less than the e consider of the company. that's not the issue. the issue is if that person working caz caas cashier gets s there forever without the ability to move up. we have to address the structural causes of that lack of opportunity. and they are social, they are educational. they are economic. and the problem with our current safety net programs is that they help alleviate some of the pain of poverty. they do absolutely nothing to help people emerge from that poverty. >> right. >> that's what we should be focused on getting out of. >> to succeed, senator, we need people to succeed by having an opportunity to work in the private sector and to earn their success. >> right. >> and to do well. >> but to do that -- >> the government -- anything that we get the government to do to try to make it easier to succeed in the private sector, a lot of times it's

counterproductive. we need to find ways that the government can be productive. not counterproductive and whether it's education, immigration, whatever you need to look at. a lot of times the government is so ineffective at doing anything that we waste money trying to help the people but no one connects the dots when 'end up in a worst position than they were. >> in order to help people have more mobility you need to do two things. have a vibrant private market creating these better jobs. >> right. >> you have to have people with the skills and capabilities to do those new jobs, particularly in the modern economy where the higher paying jobs all require a higher level of education than ever before. there's where the gap exists. we are not accurately or effectively delivering to people the skills they need for the middle class jobs of the 21st century. for example, this is one thing i want to focus on. if you're a 30-year-old single mother working full time and raising your kids you can't just drop everything and go to a university for four years. we've got to figure out a way to allow her to access skills while she works full time and raises

her family, because that's the only way she's going to triple her pay. and are the things i want us to focus on. that is where government can be effective. we can't forget the first part of it, policies on regulation, on the national debt and taxation that also create and foster a vibrant private market that's creating these better-paying jobs. >> we know now this is going to be an issue that the opposing party of yours wants to run on at this point. so the republicans, you know, better get a decent plan together instead of just, you know, cut taxes, help corporations and that will eventually trickle down and, you know, the middle -- >> that's not free enterprise. what you just described is not free enterprise. that's corporatism. i believe in free enterprise, not corporatism. if somebody has a better idea, they can quit their job and put their boss out of business by telling a better story. >> people associate that with corporatism at this point. but in the back of everyone's

mind, you know that private sector jobs are what generates taxes to fund the government to allow us to help everyone. so there's a chicken and egg thing. sooner or later you just can't escape it. >> i'm trying to -- >> that's not on the back of my mind. that's on the front of my mind. of course you have to have a private sector job creation. >> it didn't go too well for a party that should have been able to explain that better. >> in 2010 the republicans took a majority in the house based on rejection of big government. the 2012 presidential elections didn't go well. but i is sure you, there are defenders of corporatism in the democratic party. >> here's the question. most of the jobs being created db not most but a large percentage are lower wage jobs. it's the reality of where we live today and unfortunately these jobs are not stepping stone jobs. the job had people said you go to work at mcdonald's and that's where you start or you go to work at walmart and that's where you start. that's no longer the case.

>> that's a fundamental problem. >> it is but i'm trying to understand what you do about that in a meaningful way. education is one thing. i wouldn't dissuade you. it's a great way to go. it's a 20 to 30-year -- i don't think you'll see the results of that for 20 or 30 years. i'm curious what you do right now. >> first of all, i don't believe you'll see the results in 20 to 30 years. i think you'll see them immediately in terms of empowering people being able to fill some of the jobs to be open. beyond that the jobs you're describing are accurate, many of the middle-income, lower-skilled jobs have been outsourced or have been replaced by technology. the truth is, though, some of the higher paying jobs are being created through a combination of factors. number one is lack of a qualified work force. number two is we are in many cases deporting or asking to leave some of our scientists and potential job creators through our broken immigration system. number three, i would say we have a tax code and a regulatory

code that is incentivizing investment and re-investment of profits overseas instead of here in the united states. we have got to change those things. >> you mention that third. you know, that's what i mean. it used to be that would be first. in the real world that probably is a pretty good answer, that you need to make us more competitive, our companies more competitive in this country because it's a global economy right now. and the more we can do in terms of regulation and tax policy and territoriality and all that, the more we can do, sooner or later would probably help us get down the unemployment rate and help us jen right those jobs. >> right. >> you mentioned it third because you can't say that given the history of the last couple of elections. >> you have to do all three. that's my point. >> you need the money to do the first two. >> you need to do both. the point i'm trying to reiterate, you've got to do both. have a healthy, vibrant private market. >> we don't. >> you have to have people with the skills and capacity to do both. >> we don't have a government

that's doing that, unfortunately. >> correct. that's what we're trying to do. >> the headlines are covered with stories about governor chris christie. the take on all this is that he's a bully. do you agree with that assessment. >> i'm not going to comment on that story. i don't know anything about it other than a couple headlines i've seen. we'll let new jersey focus on that. >> you say it's a new jersey issue. it becomes a party issue, no? >> no. i'm not going to comment on every story and every controversy in the country. i mean, like i said, there's a process under way, the legislature is looking at it, governor christie has made a statement. this thing will work its way out. i'm not going to comment on something i know nothing about other than a couple press reports. >> it's hard to keep track of everything with all the different players. that's something that gets bipartisan support and attention in terms of being one of the missing pieces to the puzzle. >> where we are as a country has

a big problem. this is not an environment that's conducive to solving it in one big piece of legislation as the senate tried to do. the house has expressed a will isness to deal with immigration in a sequentialed ordered way where they take individual issues on its own. i think we should explore that route. to get anything done requires both the house and senate to agree on it. i think that's an appropriate approach given what they're willing to do. maybe that's what will happen here. >> would you say the republican platform in '16, is it going to de-emphasize social issues that republicans seem to be behind the curve on? >> i think that misses the point. one of the greatest eradicators of poverty is marriage. when a kid is being raised in a married family, their likelihood of being in poverty drops dramatically. that's a social issue. should we de-emphasize that. >> they can be raised in a same-sex marriage successfully. >> we don't know. we don't have empirical

evidence. that's a new dynamic emerging in the country. that's at a state level. >> it will be soming to watch. you'll pick up seats in the house? >> i don't know the answer to that but i believe we'll have the majority in the senate. >> all right. all right, senator. >> thank you. >> see you later. thanks. up next, jobless claims numbers. we have that add half tom's big nonfarm employment report. and the demand for recreational pot in colorado is much higher than expected. go figure. jane wells will bring us that story in just a moment. ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. a research tool on thinkorswim. you wouldn't have it she any other way.our toes.

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welcome back to "squawk box." initial jobless claims moved down 15. that's from a revised 345 down to 330. as far as revisions, originally 339. continuing claims moved from 2.815 to 2.865 million. that's really -- those are really the only data points of the day, of course. the ecb left rates unchanged. historic record lows. we do see that that pushed our interest rate complex possibly. cause and effect, only politicians seem to think they

have a patent on being able to do that. there seems to be something to it. it's about the time that all of this was coming into our time zone. so we are slightly below 3%. and of course we have the last of three options today. we've somewhat moved from a "d" on the three-year to a "c" on the ten-year. we see what happens with the long guy, 30-year bond today of course at 1:00 eastern. back to the table. i don't know what's going on out your way. how is traffic? how's bridgegazi going? >> i made it to work. >> i haven't seen it myself. i've been here in since before traffic started this morning. >> one thing, we're getting a lot of mail on this, rick, people are immediately assuming that christie knew everything about this. and yet if you look at the history of the president on -- start at "a" and go through "z" on the things that happened, he wasn't aware of a single thing. irs. go through them.

there's ten things. we believe him that he didn't know anything but we're already questioning christie. >> you nailed it. here's the one thing we all need to say. whether it's the irs which by the way general media has the big broom to sweep these things under the rug. why do employees whether at the irs or the port authority, why would employees have so much flesh in the game to do things to have people elected? i'm sorry, i guess it's possible. it doesn't make common sense to me. >> then you're saying that christie did it? >> if lower level people are doing things, i think for the guy on top, it doesn't really make sense to me, especially that it goes from the bottom of the triangle up. i would think that most of these things go from the top of triangle down. what do we know? whether chicago or new jersey, it's whether it's tommy guns or tony soprano. >> you're suggesting christie did know. >> i'm not suggesting he did. i'm saying a logical man looking at it, whether it's the irs or the bridge, it doesn't quite make sense.

>> i don't think the media swept the irs under the -- >> oh, come on! this is a huge story. >> we've been talking about this -- >> i never stopped talking about it. >> you don't think there's a liberal bias. >> i didn't say liberal. i think there's an intelligence bias. >> that's a different issue. when the irs issue came out we started thinking that the president -- >> we do talk about it. we're the best. i'm just saying that i don't read about it in many places. i don't get it. >> i don't think we read about it as much as anymore. i don't think we'll be reading about the christie situation, the gate situation with the bridge -- >> what is this called. >> bridgegate. >> bridgegazi is what they're calling it in chicago. >> are they cawley, bridgegazi. >> i had no idea what anybody was talking about when i first heard it. now it's a come cal water cooler

buzz. being a person that was encumbered by weather issues and transportation, trust me, when you put people's transportation in jeopardy, it seems like they're more worried about it than things like the irs. getting to work on time is important. for those of you who do work. >> let's weigh in on what you're seeing with the jobless numbers. what do you think about the report? >> i think it's okay. i think a bit of a puzzle what's been beginning on with claims. you had bad weather in december. that will continue through january. the gbottogobottom line is the numbers have not correlated all that well with the jobs numbers. you've been between 300 and 400 or 400 and 350 and you've done 180 to 200,000 on total job growth. the idea is claims in the 300,000 range are necessary but not sufficient conditions for there being strong job growth. we'll watch these continuing claims and the emergency claims as they roll off. that will be something that

we'll follow ahead. but overall, there's been a bunch of indicators that suggest tomorrow's job numbers should be reasonably strong in the 200,000 range. i don't know if you saw, after adp, the average went up for dow jones to 181 to 200,000. we'll watch for the unemployment record. for the record -- >> why are you talking about other people? what's your work showing. >> i do that later. >> it's thursday. >> i'm late. i'm late, joe. i will do my scatter plots. what i do want to point out -- >> you're hanging on all these other people. i want to know what your work is telling you. >> do you know what my number was for unemployment in 2012? >> what? >> 6.9. >> we would end 2013 at 6.9. i'm a point away. >> a year ago. >> i'm bragging. that's what my work did. it felt about right.

yes, so i got no comment on this media stuff. have fun at that. i'm just watching the numbers. >> you're just enjoying it. >> i am enjoying it. i like andrew being in the hot seat on this. >> come on. you agree with me on this, right? >> i don't know you're saying so it's okay. i don't know what anybody's saying. the idea that we didn't report this stuff seems weird to me. >> i felt like we reported the irs thing con stanley. >> we reported it enough for your taste. >> when it included people with patriot in the name. we reported it a lot when it included democrats as well. >> we reported it as if we thought the president knew what was going on. that's what happens. it happened. >> on day one or day two? we're on day two of the story. >> you think obama knew they were targeting conservatives. >> at least christie fired two people over a bridge. it's unfathomable to me, unbelievable. fifth amendment, gee, there's nothing going on there. >> huh?

>> which amendment? >> i don't know what to say. >> you're talking nsa stuff now. he didn't know anything about that either. >> draghi is saying he expect key rates at the present or lower levels for an extended period. >> the ecb president is having a press conference. i'm going to crawl into my hole and listen to draghi. >> you're going to crawl back into your hole. >> yes, and listen to graggy. >> that seems like something we'd say. >> under my rock. >> under your rock. >> said it for us. joining us now with more is jim paulson, also our guest host dinakar singh is the founder and ceo of tpg-axon. welcome. i know you've been more concerned about the markets lately. what do you expect is happening at the beginning of this year? is this anything we should be concerned about or giveback from the end of last year. >> it's probably healthy. it's probably a pause after such a big run in the latter months

of last year, becky. and in some sense you'd be more concerned about a near-term correction if you just kept running. i think the pause is probably a good thing. i still think we go higher yet before we correct later this year. i just think that economic momentum remains extraordinarily good. for now, every time it's better than expected, that's good news for the market. and we'll see what the job number brings tomorrow. but you know, there's some chance we get a really big job number. if you get a 250 job number or something, and a bigger drop than expected in unemployment, that would be another big catalyst upward. i think eventually this good news is going to turn a little bit more concerning if it continues to be good news, we may start looking at it as possible overheated news. that might come later in the year and cause turbulence for the markets. >> we go to 2000 and where do we end the year. >> we come back to where with we started the year, joe. >> okay. >> that's just a guess. i'm looking at the ten-year yield, headed 3.5%, 4%,

eventually people start to expect better economic news. and even if it's good news but not as good as expected, it becomes bad news. so i think we're going to go up for a while but eventually have a correction again. >> so we should sell at 2,000. if we were going to trade, sell at 2,000 and buy back in at 1,850. that's what you're saying. >> good luck with that. >> you told me to do that. did you tell me to do that or not. >> i think it will be difficult to call the timing on this, joe. >> that's sort of what you're saying. >> yes. i'd be more cyclical earlier in the year, joe, and if rates back up 3.5% in the ten-year, if we go above 1900 in the s&p, i'd start moving more defensive. >> as long as you've been bullish. i hope we don't have another 30% year where you stayed bullish for so long. >> and get run over. that could happen. >> i don't think the bull is over.

i think the bull will continue beyond this year. i wouldn't get too cute trying to time this and miss out what might happen in 2015. >> all right. >> one of the biggest disconnects we see is on the industrial side. if you look at the market, it is looking ahead and requiring and expecting good growth. emerson electric, ge, it's not trading at 18, 19, 20 times earnings. if you look at a benchmark industrial, they talk about their areas of growth, asia is still their best for the next year. 23 you look at china, almost every cyclical in china is turning at nine times earnings. for us, not everything is cheap there. yet, for example, we owned a real company in china that's eight times earnings, net cash balance sheet and could end up being an enormous winner for reform. there's a big disconnect between companies in the u.s. that are exposed to emerging market growth and requiring it trading at 20 times earnings and those markets themselves where stocks are bombed out and are trading

at single digit multiples. >> you're buying that rail company in china? you know how to do that? >> we are. cheap stock. >> how do you do that? would you know how to buy a rail company in china? your job is too hard. isn't it government owned. >> partly. that's why the government -- area that owns it wants their money. that's why they have a huge dividend. they are required to pay half their money each year in dividends. some companies are good and some are bad. there are some ministries and states that are terrible and some run them really well. >> sounds like a lot of work. that's why i'll let you do it, i think. paulson, thanks. we've been monitoring the ecb press conference taking place as we speak. mario graggy says he expects key rates at present or lower rates for an extended period. up next, colorado's pot problem. jane wells has a preview. >> andrew, colorado's joint

venture into the marijuana business has led to mile-high demand. problem is, they're running out of supply. we'll have that story, next. fifteen minutes could save you fifteen percent or more on car insurance. yeah. everybody knows that. did you know there is an oldest trick in the book? what? trick number one. look-est over there. ha ha. made-est thou look. so end-eth the trick.

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you should not start humira if you have any kind of infection. ask your gastroenterologist about humira today. remission is possible. dinakar is smart. wow. we're back. colorado residents have been able to purchase recreational marijuana for a little more than a week. the state is already running out

of pot. wow. jane wells joins us now from denver. did we send you there or you went to get pot and you couldn't get any? >> no, no. i love covering this business. i love covering vegas but i don't gamble. i love covering this business but i don't use, i really don't. one week ago yesterday it started here, 3-d cannabis. the first lesson learned in the great colorado experiment into legal recreational pot, demand is much higher than they were prepared for. is this place going to run out of pot, at least in the short term. >> in the short term we will, yes. >> reporter: that is david martinez with 3-d cannabis which had to shut down two days to restock. even when it opened back up, it is rationing how much each customer want die. what's the deal? in colorado sellers have to grow at least 70% of their own pot. since licenses to grow for recreational purposes and are

also new and they'll have to tag all the plants, the first stores have been using a portion of their medical marijuana supplies which the state is allowing in a one-time transfer. but it isn't enough. how long before supply and demand is back into equilibrium. >> we're hoping by the summer but it could be a year or two years. >> reporter: there's a 21% sales tax, two to three times street value but the customers we saw, most of whom coming from out of state were not complaining. >> we drove here because we heard about it. we wanted to see what the hype was about. we thought it would be cool for a vacation. >> if you buy it here, you have to use it here. you can't take it to the airport or take it out of state or smoke in public. guys with be pot tours, later we'll show you one, have been providing private residences and the first pot club has opened

here. back to you. >> recreational users are hording it all up, does that mean medical users aren't going to be able to get what they need for medicinal purposes? >> this is the big thing. because the medical providers, some of them are very committed to those patients which pay a much lower sales tax. only a little over 7% versus over 21% for recreational. they want to set aside some for a new lucrative market. they don't want to get rid of it for the medical. they can't get rid of it. both types of marijuana are past, they're in the state constitution. they can't get rid of the medical side. it's just a matter of ramping up -- here's the other deal, becky. they can't get financing to expand and get more greenhouses because there's no traditional banking. they're betting on the private equity and other ventures to help them expand. it's crazy. >> when would we know -- one of the reasons people think this is a good idea, maybe we can get rid of the criminal element associated with all of this, the whole black market aspect.

i'm hearing if it's too expensive legal, there's still going to be people where you can buy it cheaper. when do we know when the whole criminal element is gone and they're successful in making it legal? >> i don't think -- i don't think the criminal element will ever be completely gone. >> you can't buy moon shine anymore. >> some places do. >> really? >> price is an issue but not a single person that i talked to lining up to buy yesterday was complaining about the price. yet. i think it's still very knew, exciting, the fact that they're getting a standardized tested package, clean product, carries a premium. whether it carries a 200% premium, at least in the short term, i don't know. >> we'll be watching the rest of the day, too. fascinating stuff. jane wells. thank you. when we come back, jim cramer will be joining us. and much more from dinakar singh. "squawk box" will be right back.

i lost my job about, probably about six or seven months ago. i'm a year short of qualifying for my retirement. they had some cutbacks. i was the most skilled technician and also the highest paid. for my unemployment to end now, i wouldn't have money to go on an interview. my retirement is going away as a result of this. i do have a husband, thank god, or i would be homeless. tell republicans: restore unemployment benefits now.

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[ male announcer ] introducing fedex one rate. welcome back. making headlines this morning alcoa has settled foreign bribery charges with the s.e.c. as part of that the company will be paying $384 million. and in other news this morning an interesting story i've been thinking a lot about this morning black rock has agreed to end its analyst survey worldwide as part of an agreement it reached with the new york attorney general's office. the firm had been surveying wall street analysts to get clues on their views of companies before the opinions were publicly is e issued, so apparently before the company was going to earn -- >> it wasn't that clear, though, was it? it was not public already? i thought it was sort of public but they got a little bit -- >> what was happening they were sending out a survey to all the

analysts on wall street what do you think of this company, do you think the stock is going to go up, do you think it will go down, do you think it might change of -- >> what you've already published. >> -- your ranking or rating on this thing. and the second piece was many were arguing that black rock was giving those analysts that participated in the survey higher rankings. the question whether you got more information from these surveys and the analyst had a report out to certain people but then was telling black rock something else. >> mr. schneiderman -- >> mr. schneiderman. >> didn't they settle for $400,000? >> it's not a true settlement, they are paying $400,000 which is the a.g.'s cost. they are paying their legal fees. >> it is more interesting than my burrito machine. >> definitely. let's get down to the new york stock exchange. jim cramer joins us now. i don't know whether you heard, but can you imagine a kiosk serving up custom burritos, me and you, you got some money,

right? let's tart ostart one in colora where does that sound? where people get the munchies and you go in and order your custom -- >> you have a natural question here. i mean, could this be the next growth leg for frito-lay? >> or you can talk about the -- so, black rock is another assault on, i don't know, do you think there was any insider information that got out from this? >> i'll tell you what's hilarious, look, i've been around a look time, i didn't know they were doing the survey, i didn't know it was some sort of leg up. this is what makes people at home say do you know -- i can't even be in this business. i mean, here's a big firm and they're doing some survey, maybe there's some sort of, like, linkage between what they know and what they don't know. i'll go buy cds. i just wish -- i didn't know that this stuff was going on. obviously it was bad. but i got to tell you, i don't think that blackrock got any real edge, but it doesn't matter, it's what the people at home think.

do the people at home think they got an edge. >> what do you think of schneiderman, a net positive or a net negative for wall street? >> it's not trying to -- i think he's a net positive. i think he's very thoughtful of what he does. he's not trying to run for president. he seems to be a reasonable person when he comes on, he seems to make a lot of sense. kind of a populist. but that position has always had a populist. >> all right, thanks, gem. we'll see you in 4 1/2 minutes. when we come back we'll have more stock ideas from our host, and also make sure you join "squawk on the street" today. jim and the gang will be talking console wars and more with the general manager of microsoft's xbox division. "squawk box" will be right back. so i c

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and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve. something you don't see every day, the stock closed at $70. it's up 143 points, intercept pharmaceutical. and it's going to end up being a company that's worth over $3 billion after this. there was a -- there's a liver disease, nonalcoholic -- it's a

condition that could lead to cirrhosis. eventually it could become the most common indication for a liver transplant. they had a trial of a drug and they stopped it early. the efficacy was so great that the 230 patients that were enrolled in it, the ones that aren't getting it, will get it, it worked that well. that's why it's up. >> let's get back to our guest host. we only have about 45 seconds left, but a quick thought on what to expect in 2014. >> i think it will be an okay return year markets at best. and so i think it's going to matter much more what sector you pick, what stocks you pick, because just buying that will get you the kind of results you've gotten the last couple years. >> you've gotten more specific. when people come on here, you say industrials. you are a little skeptical that all of the industrials will do well in this. >> u.s. industrials are expensive. the market is already paying for the pickup in growth and you can buy the same growth in other parts the world for literally

half the price which is extraordinary. >> that's an interesting call because a lot of people have come on and just said the industrials over the last couple of weeks. >> that's why they are 20 times earnings. >> it's been a pleasure having you here. make sure uf joyou join us tomorrow. we're actually early to. "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quinntinia at the new york stock exchange. welcome to the official start of earning season as alcoa reports tonight. a ton of news from retailers. chris christie speaking on the bridge controversy in a couple of hours. the ten year is one to watch. jobless claims were in line and janet yellen with an interview in "time" magazine. and europe and the ecb and the bank of england were unchanged.