to davos, switzerland. andrew is there already. we'll be talking to dow clem kal ceo andre liveris and ken rogoff at 8:40 a.m. also a huge chess player. making headlines, earnings season is in full swing plunge the names reporting before the bell today, johnson & jounsan, travelers and verizon. after the bell, we'll hear from ibm and texas instruments. roughly 50% of s&p companies have reported, roughly 50% have missed estimates. u.s. equity futures this morning are suggesting that we are going to have a positive open. the dow would open higher by about 57 points. the s&p by 6. the nasdaq by nearly 16. scott. >> michelle, thanks. in corporate news, two people have been nabbed at the texas border in a credit card fraud case. police in south texas say

account information stolen during the target security breach is now being divvied off and sold regionally. two mexican citizens were arrested at the u.s. border in connection with 96 credit cards. federal officials say there is no connection between those arrests and the retailers credit card data theft. lenovo has reportedly in talk toes buy ibm's server unit. and an experimental roach schizophrenia drug misses two gomes in late stage trials. it's kind of hard to read serious stories as the "people's court" theme is playing here. you have to keep your game face on. >> it was a test of your

professionalism. it's the equivalent of playing the super bowl in 20 below or something like that. you really did well with that, i think. >> that's why i'm here. >> i've got to ask you, they're beating on the revenues, but missing on the profits? i don't remember ever seeing that. >> usually it's the reverse, right. the top line has been weak, the bottom line has been weak. >> they do every to offset to the to the bien line. >> they're beating on revenues, it's just there's more activity out there. but why they're missing it, maybe, maybe they're hiring folks. that has a tend to be a short-term drag. >> and that will be good news for the economy, as well. >> there could be inflation out there. it could be they're missing on execution. it could be 10% of the company is reporting too early to make any conclusions. >> from a macro and a market standpoint. people have been talking that the only way you're going to extend this rally and get margin expansion is by having top line

growth. >> we've been waiting years, haven't we? >> it is finally arriving. >> it's important to point out. first of all, gdp was much stronger in the second half of the year. there's more dp dp, there's more activity, there's more money to profit from. the percentage of total gdp is in corporate bond and a lot of analysts think it has to come off because it has been so high. on the other hand, one other quick thing, there's a thing called operating leverage. should be should be exquisitely attuned to better revenue growth. it would mean operating leverage would suggest if they get more top line growth, profits would soar on ovunderneath. >> last week was the kickoff. let's see what happens this week. we have a huge amount of very important conditions.

j&j, texas instruments, imm, and those are just a few. last week was mostly the banks. >> china, lenovo and the possible purchase of that division. that's a big deal. we continue to see this wave of money leaving china to invest, whether you're an individual investor or you're a company that wants to diversify, the ministry of china in commerce thinks this is the firsts year where outpound is drik -- >> you knew you would see it that way, yes. but think about all these years where we've talk about so many -- >> right. >> trying to invaeft est in chi. now china is looking out wards overly and overly again. >> they have a ton of money. they want to diversify away from china. as individuals, i think a lot of them are frighten dollars about

instability coming in the future, whether or not this is going to be issues like we've seen 20 some years ago. you had issues with corporate governance. by the way, have you seen the -- it sucks living there. it sucks living in beijing. >> syria, ukraine, it's great michelle is here with a ton of earnings, it's great scott is here. what exactly i'm doing is the question. >> it's a natural segue which you just threw out. liquidity makes the argument that it's been dramatically undershipmented and no one is even passion attention to it. the pboc dumps money in. asia is up as a result of that and everybody says hey, it's fine. >> what happened happened in june, everybody wab terrified. i think it's because maybe

people think they know what's going on there now that this back and forth is going to map with the central bank easing atlant liquidity. i think they're learning as they go. >> scott asked me before the show began are we underestimating the risks? i said i don't see china poetsing some kind of banking meltdown. but it is a risk to investment and it's a rifkt to economic growth. >> isn't a china issue going to have -- if credit mass a major country size -- >> there are bearish people who look at that and agree with you and then there are others who say look at the entire country as a balance sheet. and i have more than $1 trillion to throw at the problem. the question is at some point do

you want people to learn a lesson? >> there's also an issue of interconnecting this. are chinese investment and derivatives and loans so intertwined into the banking system that fears of failure would create concern? i don't think so. >> and this is not meant to be an insult. they have an infantisle banking system. the transmission mechanism from cutting rates and the impact on the economy, it is so not what we are used to in the united states. it's alps and oranges. >> so let's continue in the markets mow. chbing with oil, $94.67.

brent at 107.80. rbob, 2.66. we'll see if we get some relief on that. with a storm coming, we want to follow the natural gas futures, up just a little bit. 4.34. ten-year, 2.86%. something to watch. it's been right in the mid zone in the post taper world. and the dollar had been strong. it is up against the yen. down against the euro. so 1.35. the euro -- a little stronger against the euro, weaker against the yen. and checking gold, 1248, down 3.5 bucks. >> time for the global markets report. ross westgate is standing by in london. ross, they're talking about deutsche bank over here, over there and it seems everywhere else this morning. >> yeah. deutsche bank surprised yesterday, came out with numbers

ten days earlier than expected. they made up a quarterly loss. even when you stripped out the exceptionals, only a very small profit from fixed income trading, as well. basically, huge litigation rolled into that. they said 2014 is going to be fairly tough. they will hit their target in 2015. but look, it's a bumpy road ahead for deutsche. today we rebound from those losses, 6 to 4 at the moment. advancers currently outpace decle decleaners. the ftse is barely flat. got up 0.4% for the ftse mib, as

we well. back of them expected. unilev unilever, its competitor of procter & gamble, of course, had come out in the third quarter with a profit warning, its first in ten years. today, it was nice for investors to see something that was better than expected, stock up 3%. it will be interesting to see how this compares with procter & gamble. one other thing to point out here, we didn't think it would happen this soon, but irish borrowing costs, 1.64% on the five. year that year, 1.7 will so ireland now is revealing both more than the u.s. and the uk.

back to you. >> ross, that is amazing. irish yields, are they the equivalent of u.s. yields? crazy. >> on the five-year, they're lower. >> wow. good restructuring will do for you. thank you, ross. >> yeah. >> the world economic forum is being held in davos, as we mentioned. joe, becky and andrew are there. joining us to discuss the critical issues likely to dominate the agenda is charles dorva. mr. delora, good to have you here. >> good morning, michelle. it's a pleasure to be with you again. >> i don't know if you just heard ross westgate reporting live from london, but irish yields are now lower than u.s. yields on the five year. i don't know if you've seen what's happens with italian yields and even some greek yields. you were at the fer front two years ago.

now what do you think? everybody is expert in europe, right? >> well, i think, it is xwris i ive. there is a disconnect and market pricing and lift. that doesn't mean that these yields reflect fundamental improves in the underlying economy, does it? >> no. especially if this starts to invert that the economy is not growing fast enough. in fact, there's concerns about whether or not there's a deflation problem in europe. based on where you are, are you worried about deflation in europe? >> globally, i do not think

inflation is a big issue. i am worried about continued sluggish growth in europe. i do think the risk is quite high that we are embark on an extended period of sluggish growth. everyone is talking about the bottoming out of the u.s., of the european economic situation, the modest improvement from the outlook. but on current forecasts, michelle, european unemployment in 2015, after another year 1/2 of growth is expected to be higher than it was in 2011. this is not a recovery story, certainly not adequately strong in order to boost the underlying prospects for these economies. >> charles, steve liesman. good to see you this morning. we were talking about global systemic risk. is greece off the table as the kind of thing that could bring down financial markets globally? and what are your thoughts on whether or not we should be concerned about china from a global perspective?

>> steve, good morning. good to see you, as well. i do think greece is off the table. that assumes, however, that europe is prepared to continue to support greece and be a bit more on generous in terms of the financial support. greece has gone through a tremendously painful period of adjustment. i think it's time europe recognized this. they've done a lot particularly on the financial front. globally, i do not see china has posing a significant systemic risk, but i do think that china has the potential to lead to instability in global markets this year. not enough to destabilize the global financial system by any means, but the fact is that most chienl auto chinese financial institutions went on road shows in the last few years, raised a good bit of stock in global market. they each have a cod berry of

shareholde shareholders. it raises the question as to whether or not regulation has gone too far and banks, particularly in europe that don't have as much ability too spread credit like we've seen here in the united states and the capital markets, has it gone too far? are we seeing now the results, the other end of too much regulation? >> well, i think it has gone too far, michelle. i think the pace of it is a problem. it's not just the magnitude of regulatory reform, but it is the pace of on it. if you look at the reality of the credit markets in europe today, there's still very little significant credit growth, particularly into the small and medium sized enterprise sector. it's no wonder that the european economies, by and large, including large economies such as glance, remain so sluggish. not only have they pursued an inadequately robust structural reform agenda, but they don't

have credit moving through these economies and that is due in part to the substantial capital. capital are to be ranked, but why is that cost? there has been deleveraging and shedding of assets, trults of which are that borrowers in the european economy are still struggling for credit despite the relatively low prices. in that environment, it's not surprising that growth has been virtually stagnant. >> absolutely. thanks for joining us, charles delora, who we saw so much during the greek banking crisis and thou with a private equity firm out of europe. good to see you this morning. >> you know, one more note on deutsche bank real quick. we'll have been worried about deutsche bank.

steve, you know this, as well. for a long time, and if they didn't have enough money to set aside litigation risks which seems to be fairly substantial and large shareholders of that bank have been worried about it for some time, are increasingly worried about it now because nobody ultimately knows what the risks are going to be. if you look at jpmorgan and the types of fines that they've had to pay, the libor litigation risk is significant enough that people are worried about it. >> we have to go, but i want to ask you on the other side of this if this is something that you may be concerned about u.s. banks or if u.s. banks have been there, done that and deutsche bank -- >> yeah. >> so it's not an issue to be of course aing u.s. banks and their stocks? >> i don't think so. >> coming up, windows 7 back by popular demand even as microsoft pushes windows 8. and bridgegate taking its toll on new jersey governor chris christie. what will this mean for 20 16?

first, the national forecast from the weather channel's reynolds wolf. >> absolutely. we're going to see lots more. a surface low is going to be developing. we'll have quite a bit of upper level energy. the atlantic ocean is going to play a part. with the overriding moisture, we'll have meant of snow in the capital. some places up in boston, perhaps by cape cod, maybe even a foot. this will cause all kinds of travel headaches. more coming up. you're watching "squawk box." [ male announcer ] this is the story of the little room

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welcome back to "squawk box." bec becky, joe and andrew are on the ground in davos. we have quite a best list coming up. matt damon, lloyd blank fine, it all begins tomorrow on squawk. we can confirm that joe has arrived in davos, green hat and all. >> i want to keep that on tv for a little wile. that's a heck of a -- very fashionable. >> does that look worth it for joe, do you think? >> i don't know if it's -- it's like a grinch green. >> it covers up his hair which he considers to be his most

important aspect. in other -- why is this other washington news? there is no other washington news. new jersey governor chris christie is taking a hit from brid bridgegate. there were a couple of stories over the weekend that was a complaint from the hoboken mayor that the governor's office held some relief money hostage and then there was a denial from the governor's office. >> a strong denial from not just the governor, but the lieutenant governor who is the one who supposedly had this conversation. this is more difficult to ais sess than the bridgegate revolutions. this shows what happens when there's bloots blood in the water, you've got a lot of people coming forward. when she was asked a couple of weeks ago about this, she said i

hold aid wasn't with held for this reason. now she's saying it was and she's offering to take a lie detector test. with all the subpoenas facing chris christie, we're going to find out. more stuff is likely the come out. more allegations likely to comp out. it's a big mess for him. >> john, i was trying to think over the weekend ma maybe the bigger picture story is here. here is my thought. it's almost impossible for a local politician to mistake it out of the new york/new jersey area and with stand the national scrutiny that that it takes to be a i don't think it's impossible, although if you're in the republican party, you're talking about a party in new york and new jersey that doesn't look like the republican party everywhere else. and one of the concerns for the christie people is a guy who was

possible an earn certain fit for the republican national party is he's going to look even less attractive to your republican primary voiters in maces like south carolina, iowa and other places to decide the nomination process. >> the governor has a speech today. ex spets are out. we're going to see how will he can pull it off. >> john, the hoboken situation, it seems to me, just gives national voters another reason to question the credibility of christie and his administration. because this story does seem to have some legs. was on the evening news forecast last night. >> no question. and because of what happens with the bridge disaster, there is a presumption that christie's

administration is not playing straight. because remember, we had these traffic jams, there were these aggressive denials, chris christie made fun of the allegations and then it turned out they were true. so that puts him back on his heels in trying to defense himself against these allegations. >> can i just point out one thing, though. >> sure. >> we don't know that the truth is. >> that's right. >> but the history of hoboken is not clean. they had to bring in bus toes take away corruption, there was a rabbi involved selling organs. new jersey politically, you know, it's -- >> jon stewart would say -- >> we don't know what the real story is here, okay? >> as jon stewart would say, you've got your hoboken, you've got your new jersey, what do you pick them? >> thank you, we have to go.

thanks for joining us. >> notorious. i'm sure in current mayor is 100% clean. >> i think this issue of getting out of new york and new jersey politics to the national stage is really what's at play here. i think what it -- >> because it's real, okay? they're real. >> at this point, the truth may matter more in new jersey than it matters nationally. people just question the credible of a well known public political figure. >> next on "squawk box," putting the markets to the test. more squawk, next. tdd#: 1-800-345-2550 trading inspires your life.

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good tuesday morning. welcome back to squawk right here on cnbc. i'm scott woman nwapner along with steve liesman and michelle caruso cabrera. andrew kicks things off with andrew liveris and ken rogoff. inbev is repurchasing oriental brewery. that deal worth about $5 billion but sold the company to kkr about five years ago.

>> did i wake you up? anchors make money every step of the way. >> have you ever had an ov beer? >> no, i have not. >> i have. >> is that the leading south korean beer? >> i think it is. it's good. it's good. >> yeah. >> yeah. >> but don't you see the irony in it? >> you take them public, take them private. >> you need to be vertically integrated. >> horizontal. the postal service is set to reopen centers in dozens of staples around the country. the move is being met with threats of boycotts by the agency's unions. the outlet is staffed by staples staff, not postal workers. demand is likely to outstrip supply. let's show you what's going on with the global markets this

morning. u.s. futures, we'll start there. the dow will open higher by 68 points. the nasdaq higher by 19. in europe, we see the dax higher by 37 points. the cac 40 in paris higher by 15 and the ftse 100 is higher by roughly 14. shanghai was very interesting. we saw a gain of 1% as a result of intervention by the central bank of china into the short-term interest rates markets. hang seng positive. the nikkei was higher by roughly 1%. the price of oil is higher across the board. brent is trading at 107.87. the ten-year yield, my grand mystery, my object session, is that an eighth of a point? yield of 2.86%. why, oh why, steve? doesn't it cross above 3%? >> i have a lot of answers for that. >> we have economists coming up the.

>> we have an economist coming up. i think that the level of the ten-year is commensurate with the underlying growth and inflation. you know what? we're going to say that. >> so this fear that the fed was not going to -- once they started tapering, whatever the hell it is, that they were going to see interest rates -- >> but remember, they're giving stronger guidance on the back end. they're going to keep rates lower for longer. low inflation plays another part in it. if you had growth take off, maybe a different story. if you were doing it two -- if you had underlying 3% growth, i could see a case for higher -- wall street, we get into the holiday shortened trading week tid, follows the dow's first weekly gain of 2014. so the entire year is not a write-off. joining us now is anthony chan, david blitzer, chairman of the understandsy necessary new york, antho anthony. let's start with you. i am going to throw to you michelle's question.

why aren't we at 3% or higher on the ten year? >> well, i think the reason for that is that right now the central bank is going out of its way to say that short-term interest rates are going to stay low for an extended period of time. remember that long-term rates are really an average of a lot of short-term rates. and if you keep those short-term rates low for a long period of time, that can hold down the ten-year treasury rates to this is levels. but make no mistake about this, steve, we are going to see higher rates in the next 12 months because as the economy starts to pick up and aspectations start to come into the picture that the federal reserve is going to raise rates, that long end will rise to 3.5% or 4% within the next 12 months or so. >> the key, i think, of what you just said is that it comes with stronger growth. it doesn't come because the fed is pulling back. david, do you want to take a crack at that at what higher rates, if anthony is right, will mean for stocks? >> i think it will worry people

a little bit. but i think the basic conundrum is to surround. that is if you don't like the stock market or you're not in love with it at this point, where do you put your money? you put it in ten-year treasuries. with 2.8% today, but it's a losing proposition. if it goes to 3.5% or 4% at the end of this year, i can't do the arithmetic, but you roughly break even, i would guess. so you still have that puzzle. that part is what got everybody into the stock market last year, especially the beginning. they kept pitching themselves to figure out why it was going high. >> david, are you a believer in the growth we had in the second half of the year? >> yes. i think the growth is largely rare. i don't do a point to point forecast of the economy at this point. but i think the growth in the second half was real and we'll see some more of it in 2014. and for the economy, i think this will turn out to be at

least a reasonable year. and given where we came from in the financial crisis, not too disappointing. the stock market, on the other hand, i'm a bit nervous about. >> well, that's weird, right? and maybe, anthony, you want to pick up on that. we just read a story earlier this morning, revenues beating profits. anthony, if the economy is doing better, profit margins have been at all-time highs. why wouldn't the stock market do better? >> well, i think the stock market will do better. remember, the stock market anticipates improvement. last year, the s&p 500 gave you 29.6%. you add in dividends, that pushes you above 30%. so to some extent, the stock market anticipated the improve this year. i'm looking for economic growth to get very, very close to about 3%, which is an improvement from last year when we were closer to 2%. but remember, much of that improvement has been anticipated. so this year, the stock market will just give you the organic growth out there. and that means that if corporate

profits grow at 6% and dividend is around 2%, you can get 8% to 10%. not 29en 6% or 30% including the dividend that you got last year. that was built in and baked in the cake. >> the journal with a story that i don't think should surprise too many people, we've been talking a lot about it. the issue of the fed continuing on track despite the jobs report to taper in january. what's your expectation for the full year, anthony? >> well, i think the fed will continue to taper. about 10 billion or so every single meeting. they have another meeting coming in at the end of the year. and remember, there's that exciting study that came out of the bank of england that says that somehow quantitative easing is not as effective when financial markets are normalized. it's more effective when they're dysfunctional. that means it was very effective during the financial crisis. but the good news, steve, is that the when the federal reserve starts to taper in a more normalized market, the

positive impacts of quantitative easing weren't that great, the other side of the picture says it won't be as disruptive. so it really gives the central bank a free pass to go ahead and taper and continue its tapering while keeping short-term interest rates low for a little longer, it's not going to hurt as much. that will give more encouragement to the federal reserve to continue to do that. certainly, hildengraf's article supports that, also. >> david, you used the word nervous when describing how you feel about the stock market. on what measure? what are you looking at to make you nervous? valuations? >> i think two things. valuations, definitely. pe. the long-term so-called tape. price, all those measures are pretty extreme. profits is a percentage of just about anything are very extreme. >> i don't think on a historical basis you could make the argument that valuations at these levels are extreme.

>> i think you're looking at pe around 17 times trailing earnings. you're looking at tape at 25. and you're looking at profits, as i mentioned, as a percentage of gdp at record and near record levels. and on top of that, you're looking at this fantastic run on the stock market. so it's not that it's going to dive or anything like that. i think you've got to see a pullback, correction, adjustment, whatever you want to call it. the order of 10% sometime in 2014. >> anthony -- >> and i think it could make a few, you know, 5% to 8% on the year. >> anthony, we have to go, but i want to ask this question. if we end up -- profits end up being lower because companies are hiring more people, investing more in r&d, higher incomes, that is good for the economy which should be good for the stock market. i don't want to make it out to be a total win-win situation. but if profits are lower because wages are higher, that would seem to be a healthier balance

than we have in the economy right now. >> no, that's absolutely correct. all that will do is perhaps temper the activity. we may not get the multiple expansion. we may, instead of the upper end of the range of 10%, we may be closer to 8%. bit sets up up for a much better 2015. keep in mind that i think we're in the mid cycle of this economic expansion. so i don't think the recession is coming anytime soon. but even if we get something close to the 8% in 2014, if your scenario comes through, we do a lot better in '15. >> anthony, david, thank you very much. great discussion this morning. >> thank you. have a great day. coming up, back by popular demand, windows 7? but microsoft is up to windows 8. find out what is going on between pcmakers and the software giant. kech o'leary will be here to celebrate pit for my birthday. "squawk box" will return after

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welcome back. u.s. equity futures at this hour suggest a positive open. dow jones would open by 69 points high he, nasdaq 19 higher and s&p within 7. jpmorgan has stopped working on a chinese firm's ipo amyself priceling probe. this is the second time the bank has stepped aside from an ipo candidate while securities regulators look into whether jpmorgan violate onned federal law. at issue is whether the bank hired relatives or with the sole purpose of gaining business from them.

hp is going to start shipping computers with windows 7 again due to popular demand. this is not a good sign for microsoft. no kidding. some analysts said problems with windows 8 have contributed to the pc market decline. the i've got to tell you, it's a pain. i wish we were still at windows 7. i can't find anything any more. am i the only one that has this problem? >> i bought a mac. >> my kid has vista, i think, still. but what about this richard sherman thing? are we going to talk about in this morning? they're calling tilt best worst interview ever given in the history of sports. >> there were some, boxing interviews right up there with it. >> this is unbelievable. apparently this guy goes into a tirade and the reporter has no idea what's going on. >> and then she -- a great follow-up question from erin where she's like, i'm sorry,

what? >> i was getting vilified after that. >> because he had taunted another player. >> is that the first time that's ever happened? >> he said send a receiver like crabtree at me again because -- >> and he used a really negative term to describe crabtree. >> and i'm the best cornerback in the nfl. however, it looks like he went to stanford. >> oh, yeah, he's very bright. clearly a communications, major, right? stared straight in the camera, never actually swore. >> to america. >> what was weird was actually getting some information or any kind of real reaction from a player at a postgame interview. they're mostly just nothing, right? >> the reaction to what he said was so unbelievably negative, i thought, that at some point i tweeted out yesterday, okay, the guy plays human crashup derby for six minutes. and everybody loves the big hits. and if you watch the broadcast of the game, you know, they're

slow-moing the trash talking between people. >> and people love it. >> everybody loves it. and then a guy pops off after the game after he makes his first super bowl and we're suddenly all appalled? come on. >> i thought it was funny. >> a lot of people were killing this guy. >> it's a little over the top. but we can confirm now, speaking of over the top, that the entire squawk gang is on the ground in davos. yes, we have landing. becky, joe and andrew are on the ground in davos. we have a picture of joe with a jeanion -- kind of seattle seahawks looking hat. >> good observation. >> and what they're calling the legalized marijuana bowl. we haven't talked about that yet, denver, and seattle. right. coming up -- there's the green hat. >> that will be the davos motif, i think.

is that a seahawks hat? do we know if joe is a seahawks fan? >> becky, being a hat, she doesn't put on a hat. i don't blame her, neither would i. >> andrew, being a man, doesn't need a hat. squawk is coming right back. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. mayo? corn dogs? you are so outta here! aah! [ female announcer ] the complete balanced nutrition

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. . welcome back. after a record year for the markets it's bonus time for hedge funds on the street. which types of funds scored the biggest payout and which ones fell flat? join is us now is adam zoia.

>> good morning. >> by and large, hedge funds underperformed the s&p. what kind of bonuses are we expecting to see. >> the bonuses this year are up about 5% to 10% on average. there's a lot of variation as you say between the different strategies. so, for example, equity long short, where a lot of those firms did outperform the market materially, you would have seen much larger increases. macro funds saw a small increase to no increase whatsoever. >> it was difficult to short the market last year. >> right. >> the firms that have a larger exposure to short only, if you will, or those strategies will see smaller bonuses? >> and mack rose aros as well,

>> what about hedge funds overall? >> up. for two reasons. one is the total assets in the space is up materially, about 2.5 trillion. in 2008 it was 1.5 trillion. it's a it's at a record high. that drives management income in general and bolster to bonuses. compared to private equity, for example, where it was flat according to our report or banking, where most reports are that it's down slightly to flat, it's doing better. >> banking bonuses are down, right? for obvious reasons as the banking industry shrinks or for whatever reason bonuses are down there. private equity flat, why? >> there's been very little growth in asset under management. it's also just recently this year where there's starting to be liquidity event which is help to drive incentive fee income. what drives annual bonus ins in private equity is management fee income. that means that you look at the

assets under imaginement. assets under management in private equity have not increased and are below their peak. >> i don't know if you can comment on this. a source of mine in the hedge fund business says not only was it hard to short the market, did those guys do poorly, too, those guys that advertise themselves as net market neutral? >> they had a significant long bias. they were basically riding the beta being generated in the market and presumably adding alpha on top of it. the true market neutral funds at best were typically in the teens. >> the story there is when the market is going up 25%, 30%, it's hard, even to make the investments that are offset without dragging you down. >> virtually impossible. no one does it successfully. >> is there one thing that looks like it's a great strategy for

this year? >> it's been two bad years for macro funds. maybe this is their year. >> the breakdown of actual jobs at hedge funds and how much bonus they're likely to see? >> there's been an increase in employment in the hedge fund industry primarily driving by the growth in the size of the industry. in addition, it's more competitive and there's been an addition to back office staff related to the requirements. all those factors together have increased employment in the sector. >> adam zoia at glocap ceo. thank you. >> the "shark tank" co-host, kevin o'leary is making his way to the set. we'll take on the economy, politics, small business and more when "squawk box" returns.

it's "shark tank" tuesday on "squawk box." there's blood in the water. today's guest host, "shark tank" co-host kevin o'leary. and he's ready to sound off on the economy, washington and the markets. plus, it pays to be loyal. the ceo of loyal three on his crew yad to bring investing to the masses. and the fifth rolling stone. ♪ chuck lavell gets down to business before the next tour. start me up because i can't get no satisfaction. "squawk box" begins right now ♪ start me up i'll never stop ♪ start me up >> that's a heck of a lineup. welcome to "squawk box" here on

cnbc. i'm michelle caruso-cabrera along with steve liesman and scott wapner. joe, becky and andrew are making their way to the world economic forum in davos. we'll have andrew liveris and ken rogoff in the 8:00 hour. the ten-year yield, comfortably below 3%, 2.85%. slightly higher this morning but still, we've been puzzling over why it hasn't moved higher. here are your morning headlines. travelers, the insurance company earned 2.68 per share, excluding certain items. that was well above estimates of $2.16 with revenue also above consensus. among the factors helping the results, stronger pricing and better retention levels in the company's business insurance unit. ibm is reportedly in talks with lanovo.

more talk about chinese purchases ever overseas assets. new jersey governor chris christie remains embroiled in controversy. his administration is denying accusations that it held back superstorm sandy money from the city of hoboken pending approval of a politically connected development project. that comes shortly after the controversy over whether lane closures on the george washington bridge were politically motivated. >> joe, becky and andrew have made their way to davos, switzerland for the world economic forum. andrew joins us from there right now. glad to see you got there safely, andrew. you have a great lineup, coming up, starting today. >> yes, scott. we are in davos. very excited for a huge week, of course, the biggest names in the world of business, politics, the regulatory world, all converging here in davos, switzerland. among the big issues on the table this week that we should

note, by the way, senator kerry -- he's the secretary of state kerry is going to be coming to davos. that's throwing a couple things up in the air because the president of iran was supposed to be here. there was a conversation to be had, potentially, unclear now whether it will take place. also given what happened with the u.n. yesterday, so that's going to be a big issue. we'll see what happens throughout the week. also, a lot of people are trying to get here today from london having a bit of a tough time, because there's been fog over heathrow. that's been a bit of a struggle. i should say, i think we have video of it, becky and joe who took one flight over, a plane over, got here this morning. i got here just prior to that. we had a couple of -- there's the shot. they have us walking into our hotel. i don't know how happy everybody was with the rooms. hopefully they were happy enough. a couple interesting sightings on the flight, al gore traveling

in the front -- i was going to say the front of the bus. but the front of the plane. that's what we have on tap. andrew liveris will join us in the 8:00 hour. also, ken rogoff. we'll be talking about the economy and where things are headed. as the week progresses, the names don't get bigger. you'll be talking to lloyd blankfine, roy dalio, a tremendous week. eric schmidt on friday, richard branson. so i can't even get over all the people that we'll be seeing. an exciting week ahead. for now i'm just going to throw it back to you guys. back to new york. >> we can't wait to see it all. i would have loved to have sat near al gore on a plane, andrew. enjoy davos. >> what would you have said, michelle? >> you can imagine, andrew. all right. thanks. >> yes. we'll see you in a little bit. >> "shark tank" tuesday on cnbc. our guest host is none other than mr. wonderful himself, joining us is kevin o'leary,

chairman of the o'leary funds, co-host of "shark tank." he's also the author of "cold hard truth on men, wom women & money." great to have you here. >> thank you. thank you very much. >> how is the economy looking to you? >> i think it's looking pretty good. we focus mostly, particularly here, the s&p 500 is what people try and make their measure on, earnings, et cetera. here's my beef. i've been investing through "shark tank" for five years in small businesses. there are 6 million of them in america. they provide pretty well 50% of the jobs. we don't use them as a litmus test. we should. we have anemic growth in employment issues is that these businesses aren't hiring for a whole host of reasons. i think it's worth starting to ask them how they feel about this. >> why aren't they hiring? >> here's an issue for me. i'm not going to debate the merits of regulation. last year, the feds put out 2,800 new regulations, that's just federally. then the states put regulations

out and locally, for example, new york put their own. new york city has regulations for small business. >> you're not saying that's a bad thing? >> even if we don't debate the merit of those 2,800, we'll leave that aside for a moment, what do you think the cost of compliance is. >> horrendous. >> beyond horrendous. probably about $10,000 a year for each employee. if you're only paying 40,000 or 50,000, that's 20% of the value evaporating for something that we're not sure adds value. >> those regulations are there to help people, kevin. you're suggesting they're not helping people. >> i sense your skepticism. >> you do? >> really at the end of the day, am i the only person that sees this? i don't think so. it's just that we don't focus on it politically. there's no advocate in washington for a guy with 2 million in sales. he can't borrow any money or she can't build her business because she's got two outside source people just worried about regulations. in a way it's kind of

unamerican. it's not what made this economy work. i say it's a problem. i'd like to focus on it. one of the things -- >> i want to add one other thing, kevin. >> sure. >> one of the reasons it can be harder for small business is the money that big business has to come in and basically close down markets and create either monopoly or oligopoly situations. >> or get out of the regulations themselves in washington. >> some of the regulations exist because big business comes and supports them. >> right. to keep out the mom and pop businesses. >> when people say what is a mature market? it's a market that's mature enough for existing power structures to come in and make it difficult to have new businesses. >> if you're a km company in california and you're a part of the s&p and you don't like the regulatory environment in san francisco, you quietly move your business to mexico. you don't have to worry about it. you can afford it. >> you can also afford to lobby in washington. >> you do that also.

>> right. >> if 50% of our economy and employment relies on the backs of the small businesses, how do we give them the power to do what they want to do, grow? i'm an advocate for them, because i'm personally investing in them and seeing the atrocious environment they have to work in. imagine if you're trying to grow, hire 20 people and you spend 15% of the day with your compliance officer, trying to figure out if you're in breach of state, local and federal regulations. >> there's a particular difficult place. some of these guys are not under the radar but not so much in the spotlight. there are the guys who can afford nice radar. there's the guys in the middle who i think you're talking about, the ones that can't afford to really be that kind of scrutiny in regulation. >> look at the numbers. there's 500 s&p companies, largest market caps in the world, wonderful. there are 6 million small businesses in america. they're the future. they're going to be the next growth companies. we are absolutely screwing them. that's my message. >> what are you hearing from them in regards to the health

care law and what that now means? >> i can't find one that tells me this helps them grow their business. all right? i'm going to stay out of the politics of it. i think health care is important. there's debates going on simultaneously. there are two lightning rods occurring in small business right now. minimum wage debate. i cannot find one that tells me that helps them grow their base of employees and health care. i can't find one that likes this law. >> but those are -- >> i thought you're staying out of the politics debate? sorry. you're in it. you just entered in it. those are two critical issues. >> it doesn't work. >> your starting point is wrong from their point of view. >> why? >> those laws weren't designed to help business. they were designed to help protect people, right? the fact that it hurts or screws businesses, you say, they don't care. >> it's a form of redistribution of wealth which may not -- >> which they like. >> no, no. here's the thing. i love to support people and so does every other american through the creation of a private sector job.

that's the best form of social welfare there is. >> to get a job. >> of course. >> if you have a company that wants to hire 20 more people and i've got one in my portfolio, listen to his story of the hell on earth we've created for him to create 20 more jobs in america. he wants to employ them, give them a future, help them become wealthy. no, no, no, let's screw him over. that's stupid. >> i need to say a word here about this. to me, i don't know the answer to this. but there must be a way for workers to get more of the share of what's happening out there. we have deunionized the country. i know michelle wants this to be a free market situation. as a result, the last ten years you have a stagnant median income in this country. >> who should decide that. >> it would be great if it were the market. it would be great. are you telling me that the market is doing that? look at the returns to capital. they have been out of control, the returns to capital. >> the way the market does that, one form of taxation,

redistribution is minimum wage. >> which we haven't raised practically in this country in many decades. >> if i give you 6 million reasons not to do that, would that sway your thought on minimum wage. >> 6 million. >> 6 million businesses saying you're not helping me with this. you're not helping me create jobs. >> i can give you 300 million, maybe, reasons to do it. >> the 6 million and the employees that work for the 6 million and multiply that. >> you're suggesting america is uncharitable? >> i'm not suggesting -- >> what is redistribution of wealth. >> i'm advocating for a higher minimum wage, i'm saying it's something to talk about in fixing what is a persistent problem in this country. >> i want you to help me find one small business owner that wants to increase the minimum wage. >> i could help you over two hours. you can help us. >> more from kevin throughout the show. coming up, morning money with politico's ben wyche to bridgegate. we have something for everyone. tomorrow, matt damon will be one

of the many big names joining joe, becky and andrew, big names themselves, in davos. we're coming right back. [ intercom ] drivers, to your marks. go! [ male announcer ] it's chaos out there. but the m-class sees in your blind spot... ♪ pulls you back into your lane... ♪ even brakes all by itself. it's almost like it couldn't crash... even if it tried. the 2014 m-class. see your authorized dealer for exceptional offers through mercedes-benz financial services. of the dusty basement at 1406 35th street the old dining table 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 ♪

futures suggest a positive open right now. the dow would open higher by 63 points. more snow headed to the new york city area. we are edthnocentric since we

live in new york. let's get the forecast from reynolds wolf. >> this is bad stuff. we have a variety of things coming together to give us an epic situation, headaches for people trying to get from point "a" to point "b." you have the jet stream, this developing surface low, upper level energy coming through, the atlantic ocean, a lot of stuff. and the cold air coming in, too. overrunning moisture in all of this gives you one giant weather burrito that spells out the flavor of trouble. we're talking nasty stuff. in terms of snowfall totals, it depends on where you happen to be. from the nation's capital, 5 to 8. >>s of snowfall. i have to tell you, in some of the suburbs you might as well have 10 inches of snow. farther to the north and new york city, i'd say 8 to 12 but there's a pocket out near yonkers and also along the parks of long island where you might

see greater amounts than that. boston, looks like the bigger day could come together. parts of cape cod and nantucket, some locations up to a foot. mind boggling stuff. a lot of delays to be expected, headaches on the roadways, a lot of people will be suffering from those. back to you in the studio. >> weather burrito. >> that was the best weather report i ever remember. >> that was fun. >> not going to be fun around here. >> that's true. >> you were making fun of it. >> a little bit. >> i thought it was hysterical. >> thank you. >> remember the l.a. story, the weatherman. >> that was like throwing you under the bus. >> yes and running me over. we've been talking about a number of political stories, joining us is ben wyche. >> good to see you. >> the aftermath of obama on the nsa, that was making the rounds

on the talk show and obviously christie in this ongoing saga. >> the ongoing tornado of controversy, if you will, to play off the weather. what story are you focussed. >> christie today. he'll apologize about 15 more times, i think for bridgegate and try to move on, blame the media some more, blame msnbc a little bit more. >> strong denial on the hoboken thing. >> i don't know if he'll get into this in this particular speech but he has to turn the tide and see if he can move beyond the scandals and get the focus on his plans for new jersey going forward. it's going to be difficult for a while, particularly as new things start to come to light, like this hoboken story. you have carl lewis and the press saying he felt he was intimidated by chris christie running in new jersey. the thing about christie, his favorables are staying where they were. people who didn't know him before, don't really like what they see.

folks who liked him from the start are sticking with him at this point. i think they will until there's an indication that he directed this stuff himself. >> isn't that potentially as damaging as the new folks that are getting to know him? >> on the national scene, yes, if he wants to go to iowa, new hampshire and start running for president, which i think he will do. that's problematic, folks who are just learning who you are, not thinking you're the greatest guy in the world. >> the base of the republican party is not inclined to love him anyway. >> that's true. >> being a centrist republican. >> i don'tny he's as centrist as people make him out to be. >> you have to be a centrist in this next election. >> if you want to win on a national level. what people are realizing with christie at least on social issues, he's not as moderate as a lot of people thought he was. this idea that he's a new republican moderate on abortion rights, on other issues, not true. he's very conservative guy on all that stuff.

you know, add that into all these scandals that are coming to light. his being the ideal republican for the national presidential election in 2016 is getting knocked down a little bit. i think that's why you see, at least on wall street, a lot of stuff for jeb bush. >> if you get your patina and callous from being a new jersey politician, you're an even better president. >> you're tested. >> or the other way around, kevin. my point last hour, there's not been a politician from the new york, new jersey area that's made it to the national stage, not counting senators like bradley, quote, unquote, from new york. >> if you can run the gauntlet, he might make it. >> why didn't mario cuomo ever run for presidential office. >> you go through tough stuff to get there. chris christie certainly has. i don't think the things we've seen so far are deadly to him, they are challenging for his

long-term ambitions. >> i think he has fortitude. >> the people who liked him already say we know this guy. this is the guy we already knew. >> wasn't on my radar screen. >> front page story in "the journal." is the senate in play for rains to take control? >> it absolutely is in play. democrats have tough seats to defend, more open seats than republicans. you have obama's approval ratings down considerably. they had hoped to be running on a stronger obama economy. they may get the stronger economy a little bit. democrats will, obama will not be a plus for them given where his approval ratings are and where obamacare is right now. republicans have a chance to pick up the six seats they need to run the senate. they have to run the table but they can do it. >> that follows a cillizza piece over weekend. take a page from the democrats' playbook in the last cycle and that put a credible candidate up there who can raise cash, sort of just in case. >> right. i mean, what republicans have to do this cycle is avoid what they

did last cycle, get a lot of folks from the tea party base who upset people with comments on abortion and legitimate rate, that kind of thing, todd akins. if they can avoid that, get candidates amenable to the base but attractive at a statewide level, they can make it to the senate. they have to avoid a debt fight if they want to take back the senate. they have to show they can govern. and if you're involved with the budget and the senate, that you're not going to crash the economy. >> i totally changed my opinion on him. i didn't like him before. i read his piece. >> all right. activist investor nelson peltz has been added to mondelez's board. peltz criticized them saying it did not generate as much profit as it could, arguing it should be acquired by pepsi. andrew ross sorkin will have

more in a half an hour. >> a ceo that entered the "shark tank" and lived to tell. we'll check out his cool app later this hour. >> harvard economist ken rogoff will be showing up at 8:40 eastern time. plus, if you like the rolling stones and who doesn't, don't go away. one of them, right here in studio ♪ it's all right now . time now for today's aflac trivia question. sony has a new pocket analogue radio. known by the model number srf-39fp. who is its target consumer? the answer when cnbc's "squawk box" continues. ♪ yeah, he's clean, boss. 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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and drive forward with broader possibilities. cme group: how the world advances. now the answer to today's aflac trivia question. sony has a new pocket analogue radio known by the model number srp five 39fp. who is its target consumer? the answer, sony manufacturers it for prisons. fp stands for federal prison. >> aflac. >> headlines this morning, we're waiting for a ceo announcement

from microsoft, rico reporting bill gates will be more visible, predicting he could be more active in microsoft. >> we're doing this now? >> yes, we are. >> i went to take my jacket off. >> we're here with jack lavell. >> we know you're a hard-working guy. it's hard to get a rock 'n' roll start up early. you came in, you have a lot going on, environmental stuff, businesses, all kinds of things going on. >> tell us about your major product ekt right now. >> mmn.com, it's an environmental website, now getting 10 million visits a month.

>> he we have 15 seconds to break. two, three, four. ♪ >> obviously waiting on a friend. love it. coming up, a "shark tank" survivor will get into the "shark tank." he transforms photos from your phone in a photo book. another ceo on set, barry schneider of loyal three. find out how his company is using social media to bring investing to the masses. "squawk" and more music, coming right back. ♪

all right. welcome back to "squawk box." let's check out market reaction to some of the earnings reports that have come out already this morning. dow component travelers beat street estimates on both the top and bottom lines for the fourth quarter. take a look at what that stock

is doing in the premarket, up 0.75%. the insurance company's results were helped by strong performance in its business insurance unit. another early winner is drugmaker forest labs. that company earned 27 cents a share for its third quarter, excluding certain items. that was well above 4 cents, revenue also beat and the company upped its full-year forecast based on a jump into sales. oil field services company, baker hughes reported fourth quarter profit of 62 cents per share. that beat estimates about i a penny. revenue also beat with the company getting a boost from businesses in the northeast and africa, that stock is up nearly 1% in the premarket. >> other corporate news, we're looking over verizon numbers just out. mondelese, it's being argued it should be acquired by pepsi.

made its first public comments in july. andrew is in davos at the world economic forum. even there you'll have to do reporting, andrew. >> even here i do have to do reporting. these are fascinating news to come out this morning. irene rosenfeld, the ceo of m mondelez will be here. possibly, i want to track down both of them. try to understand what this all means. to the extent that you might think that this would give mondelez a better opportunity to merge with pepsi, unclear. you should know, mondelez is a much smaller company than pepsi. 62 market company. pepsi is 125-ish. it's a totally different scale. having said that, the big issue is could pepsi ultimately break itself into two and would one of

those pieces then go to mondelez? the other big issue is what this means for irene rosenfeld. you know, nelson peltz had been critical of her when he talked to us publicly at the delivering alpha conference. does this now mean that he's been brought in under the tent as a way to shut him up or does it mean now that he's in under the tent he can make even more noise? that's what we'll be watching to try to understand over the next couple of days. we'll be doing some more reporting. i already called in to nelson peltz's house this morning. i think i might have woken him up. we'll try to find out what this means in a little bit. in the meantime, let me tell you what's going on here. a lot of people just arriving. most of davos does not begin until tomorrow. like i said at the start of the show, we have a huge lineup throughout this week. later in the 8:00 hour, andrew liveris is going to join us from dow chemical. he has a lot of interesting things to say about the economy. he's also involved with the

sochi olympics. given the security concerns, we'll want to talk to him. and then we talk with ken rogoff in the 8:30 hour. the man told us what to believe after a financial crisis. he's doing a panel tomorrow on the future of europe. we'll get his views and in the meantime, i'm going to send it back to you, becky and joe just got here with me a little bit ago. we're all sort of -- i think we might have video of that. i'm now sort of having a lunesta hangover. >> i haven't done that one. i always take ambian over there. >> talk about the new star in the chess world. >> we'll do that. >> good. >> you have to jump in on that interview. >> see you later, ars. let's talk about verizon. >> verizon is out, delta's out as well. let's take a look at verizon. >> beat by a penny, revenue in line for verizon, correct?

>> yes. looks like a modest beat on both the top and the bottom, at least i had. was it in line on revs? the big thing to watch subscribers, obviously. subsidies when it comes to what they are paying to get subscribers for apple and all the smartphones and everything else. they was a story recently about cutting data plan prices. that's high margin. we want to pay attention to the margins. and then the t-mobile competition. in the last couple of weeks, t-mobile has really upped the ante in the wireless business. >> and the pricing and the contracts. >> we'll pay you to leave at&t or whoever they're really trying to compete more heavily with. verizon is in the game as well. >> the other thing that's attractive as a parent of overusing data children, the single plans that i think some of these other competitors are

offering that allow you one price. t-mobile -- >> t-mobile was a brain dead company two years ago. all of a sudden they come out of nowhere as the major competition. >> weren't they going to be bought out by someone? >> we never talked about them encroaching on customers. now all of a sudden you're more invested in t-mobile but at&t. >> does it work? do they have enough of an infrastructure? >> they've been stealing customers. they're real. >> exactly. >> on price. at some point you have to perform on service. >> delta 65 cents. is that what you have? >> i haven't seen it on the screen yet. 65 versus an estimate of 63. >> i was going to stay, i would be surprised if delta wasn't positive given the momentum behind the airlines. >> given how much we're all paying in fees to travel on their airline? >> it cost money to do

everything. >> i wonder when the weather will take a nip out of these quarters? we're having a snowstorm every two weeks. >> i heard this morning that they're upping the fees again, going to be charging more for oversized bags. delta made it tougher on the frequent flyer mile thing. >> i love that. that's fair cash flow. >> whose side are you on? >> this is a beaten down sector that's been abused forever. >> they've never been profitable. >> i want them to make money. >> pay a fee. >> as a customer you hate the airlines. as an investor you love them. the game has changed. >> right now i'm an investor. i've been loving them. >> you're always an investor. that's all. you wake up in the morning -- >> this investor has brought a guest, barry schneider, chairman and ceo of loyal3. like that cutoff so we could finally get to you. >> i sure do. >> let me explain what i think your business does.

amc went public, 21 million shares they were going to offer to the public. they put aside roughly 300,000. you put those -- some were on a platform so the people who liked to go to the movies could buy shares and some employees could buy shares, right? >> absolutely. >> normally if i'm a client of jpmorgan i have to have a big account if i'm going to get close to having a piece of that ipo? what if i wanted to buy those shares, what do you need to put down. >> $100 minimum. >> and i have access? >> if you care about the amc brand, why shouldn't you have access. >> you've done two companies this way. >> and a third one we can't speak about. it's in the quiet period. >> maybe you love amc but shouldn't be investing in the stock. maybe the retail investor who has access to what you're doing doesn't have all the knowledge

that they may need to make a smart judgment on whether the ipo is worth getting in on or not. >> very fair point. i think you look at the legendary investors, warren buffett says people should invest in what they know. let's look at metrics. in 2013, ipos outperformed the s&p with 40% returns, s&p at 30%. why should americans be locked out of ipos? >> they have been locked out of ipos by wall street, right? so how are you able to break the mode? you have a software platform, "a," right? you must have to do deals with either the companies that want to go public or the wall street houses. >> the ceo drives it, tells the buck runner we're giving 3% to these guys. it has to be that way. >> it's both. it's ceos that really have a passion toward the people that care about their brands and want to allow them to have access at the same price as institutions. but it's also wall street.

we have very advanced social technologies. we have the ability to lower costs and provide access at small amounts. so we're getting good support on the street and we're getting great support from the issuers. >> goldman sachs says, you matter because the ceo says give this guy 3% of the float, right? >> goldman sachs says you matter because we see that every day people should be given the opportunity. >> hard core capitalist kevin, why would a ceo do that? where is the financial interest? >> the stock is sticky, steve. i love amc. i love the movies. i love this guy's deal. >> you're asking for altruism from the ceo. >> i'm not finished. here's my question that really matters. how do you make money? >> let me answer his first. >> there's no answer to that? >> we make our money through charging issuers fees and by having a disruptively low cost platform, which allows us to charge no fees to the investor,

100% of what you invest in our platform goes toward buying stock. >> define your shareholder. do i get 3% done to me as part of this vindication. >> our shareholders get the return for our company based on what we generate in revenues from shareholders. >> why is it altruistic? >> i didn't understand the motivation. i was half being sarcastic. >> the amc share holder who likes to go to the movies is less likely to flip the stock. at least that's the theory. >> exactly. >> you get stickiness. >> that's the point i wanted to make. you get two things. as a company you get amazing brand engagement. that's a buzz word today. number two, you get investors that are totally -- >> that's cool. >> the first day trading with amc, 98% of the people held their stock. >> you see why he won "shark tank"? he's a "shark tank" winner. >> i want to know how you get around the regulators? >> we'll talk about that during

the break. >> he is out of control this morning. it's unbelievable. "shark tank" contestant and co-founder of an app from groovebook. check it out. and chuck leavell, the fifth rolling stone, getting ready to hit the road again. play us out, chuck. ♪ tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading.

tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. 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. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪

is your tv powered by coal? natural gas? nuclear? or renewables like solar... and wind? let's find out. this is where america's electricity comes from. a diversity of energy sources helps ensure the electricity we need is reliable. take the energy quiz. energy lives here.

welcome back. a "shark tank" survivor is swimming on the "squawk" set this morning. groovebook is an app that transforms photos from your phone into a photo book. the subscription service gets you a customized album every month for $2.99. joining us now is brian whiteman, the co-founder and ceo of groovebook. interesting business. tell bus it. >> we have an incredible app. the app is free. you download 100 photos from your iphone and we ship you a beautiful found photo book for only $2.99 a month, including shipping and handling. >> we have one here. >> very cool. you're taking the photos you

shoot on whatever phone you have. >> yes. >> the app is free. the app is free. you download the photos and you can pull out the pages. they're perforated for easily removal. >> there is a monthly charge. >> it's $2.99 a month. >> if you go anywhere else on the internet, it's $14 to $30. it turns out he has a patent, a groove that allows these to be shipped as a magazine. >> this is a big technological advance. >> it bends like a magazine. you pay 78 cents to ship it. that's the eureka moment. >> how did you come up with that? >> i was -- my wife lost her cell phone and lost 2,000 photos of our three kids. she was devastated. i decided to make her a photo book the following month so she wouldn't have the same issues and problems. so i printed a book out for her and she said, wait a second. every single mom in america

needs to have this. i had to figure out how to get it so cheap they could afford it every single month. i went to work and one night i couldn't figure out how to get the book flexible. we got the book flexible. >> for the groove. >> hence the name of the company. >> i assume the vast majority of your customers are women. >> 09% of our customers are moms with younger children. we're finding out now -- >> it's not even women. it's mothers. 90% of your customers are mothers. >> yes. now small businesses can order groovebook. they put the photos of whatever product they want to sell, for $3 a month they have a built-in catalog. they can order 1, 20 or 2,000. >> the greatness about the show is the drama that's created. can you describe the feeling of pitching your idea to -- in the tank? and what it's like to come out on the other side. >> my wife and i went in, we were obviously a little nervous. we knew we had an incredible

product. we knew once the sharks saw what we had they would all be interested. it turned out to be incredible. before airing on "shark tank" we had 35,000 paid subscribers. today we'll hit 100,000 subscribers. >> now you've been on "squawk box," you'll double that. >> exactly. >> moms with children are a big part of our viewers. >> i think the customer base is incredible sticking. you're archiving your photos in the cloud at the same time while you keep your account open. it's the best of the old world, a frf yphotograph you can touch the digital delivery. >> look at this, you rip it right out. it's so easy. >> i did it last night, the second i heard about your company. >> thank you. >> not only did you get money from the "shark tank" guys, you've invested significant dollars out of your own pocket. >> i've spent about 400,000 on the app so far.

>> is this not the essence of small business in america and success? how many people have you hired in the last couple of weeks. >> in the last ten days we've hired 19 people. >> how are you loving the environment? what's it like to run a business in california? tell us the truth. don't hold back. >> it's very, very difficult. the rules, the regulations, the taxes. it's just very difficult to do. >> how do you feel about minimum wage and health care reform? >> i don't believe in it. the less regulation small business has, the easier it is to grow and to, you know, as a business owner, i like to spend my time growing, being passionate about my business and -- >> the government says they're defending your employees. >> they're not. they're not. i relate it to my kids want to start a lemonade stand. and if we gave them the rules and regulations, if they knew what they had to do to open up a business they wouldn't open it up. they wouldn't even try to open it up. i think the politicians need to

look at it, not like big business, need to look at it as if they're opening up a simple lemonade stand. if i explain to my kids what they had to do. >> they wouldn't try. >> this is criminal, it's criminal. >> i agree with you. you're preaching to the choir here. >> yes. >> thanks, guys. that was so fun. i can't wait to get my book. speed up the shipping, please. >> congratulations. >> thank you. >> brian whiteman, groovebook is the name of that app. "shark tank" airs tonight, 8:00 p.m. eastern on cnbc. steve? ♪ >> here we go, still to come, dow chemical chairman andrew liveris live from davos and the world economic forum. johnson & johnson, posting earnings of $1.04 a share. up next, rolling stones, ready for 50 years. we are here with stones keyboardist chuck leavell.

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next week, the rolling stones set to begin rehearsals for concerts around the world. chuck leavell, best known as the fifth rolling stone. founding member of the allman brothers band, author of the greatest piano solo in american history, founder of mother nature network and a tree farmer. did we miss anything? you do more than just play piano. you do the set list. tell us what you do for them. >> it's been 32 years now, steve. the role has morphed over all those years. when we do rehearsals i take notes and i have these two ensiens encyclopedic books, it's more of a reference, if they want to do something in particular, i have it right there. you mention the set list. i have fun drafting up the set

list for the guys. >> what's it like working for them? are they business guys, having fun? give us a mix of business and pleasure. >> it's a pretty cool gig, man. it's so much fun. it's the rolling stones. the music speaks for itself. it's amazing playing all those songs, "honky-tonk women," "jumping jack flash,". >> tell us about mother nature network. >> we realized there was a void out there for people who wanted good information about environmental subject matter. my partner, joel babbot and i launched it, put it together. we're getting 10 million visits a month and 30 million page views a month. >> that's big time. that's not just a little tiny environmental website. >> we're very, very pleased. >> michelle has a question. did you want to ask chuck the

question about his op-ed. >> you had an op-ed in "the wall street journal" several years ago. you were a tree farmer and you were frustrated by all those e-mails that said please save paper, encouraging you to not print everything. >> we have to have a reason to grow trees, make products, whether we're talking about paper products, lumber, packaging, whatever. it's a bit of a misunderstanding for people to say we're going to save the planet by not printing an e-mail. >> what happens? what are you going to do with that land if growing those trees is not profitable. >> i could wind up a parking lot. >> selling it. >> concrete, asphalt, development. in order to keep our natural lands natural, we need reasons to do that. >> awesome. print. >> check out chuck's website,

mothernaturenetwork.com. >> mmn.com. >> check out his books, cds, check him out on tour with the rolling stones. now we're going to end with a song that you wrote. >> it's not a song i wrote but it's on my latest record, it's called "low down dirty dog." goes like this. >> sound goods. ♪ >> isn't it great, i love it. coming up, andrew liveris and harvard professor ken rogoff, plus earnings reaction to johnson & johnson. "squawk" will be right back ♪ i brought you home on my pay ♪ i work hard mama

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where does the united states get most of its energy? is it africa? the middle east? canada? or the u.s.? the answer is... the u.s. ♪ most of america's energy comes from right here at home. take the energy quiz. energy lives here. verizon and johnson & johnson out with quarterly results. we get the street's reaction. >> investing with attitude. "shark tank" co-host kevin

o'leary shares his ideas and talks small business success. plus, we head to the alps where business leaders are looking to reshape the world. andrew is joined by dow chemical ceo andrew liveris. plus, economics professor ken rogoff helps kick things off as the final hour of "squawk box" begins, right now. welcome back to "squawk box" here on cnbc. we are first in business worldwide. i'm michelle caruso-cabrera along with scott wapner and steve liesman. joe, becky and andrew have arrived in switzerland. all three will be together in the alps, talking to some of the biggest names in the business, live from the world economic forum going on live in davos. andrew joins us with a preview and breaking news. andrew? >> thank you, michelle. we do have breaking news as we talked about in the last hour, nelson peltz joining the board

of mondelez and the ceo of that company coming to davos. also, pindra nooyi will be here as well. i got off the phone with nelson peltz. here's the headline. as part of his agreement to join the board of mondelez, he will not be pushing for a merger between mondelez and pepsi. that's an important distinction. a lot of people waking up this morning scratching their heads, looking at this announcement that he's joining the board of mondelez thinking this means a deal with pepsi is in the works. that is not the case. he's actually, as part of his agreement to join the board, said he will not be promoting, pushing or advocating for sux a transaction. instead he'll continue to work with pepsi.

i should also note one of the funny things he mentioned when we were on the phone, the last time we spoke, he had tried or at least talked about wanting to change the name of mondelez. said it -- he thought actually the value had gone down simply because of the name. he has now said he's going to work with irene, try to stick with the name at least for now and we will see where that goes. worth noting by the way, that he did work with irene when she was at kraft in breaking that company up and in increasing the company's margins. you'll see a pop on that stock today. but in terms of what it all means to pepsi, a little bit of a different story. we are, of course, in davos, switzerland. a lot of big names going to be here, including indra and irene. we will be talking to andrew liveris in just a couple of moments. later in the hour, we talk to ken rogoff and that gets sta started. as the week progresses we have a huge lineup.

in the meantime, i'll send it back to you. we'll come back in just a little bit live from davos. >> we'll see whether the stocks start to move in light of the news you're just breaking here on cnbc. steve? >> i don't have the earnings yet. >> both are moving. >> yes. >> because there was a belief that peltz was going to push and push and push and push for something to happen. now if, you know, andrew is reporting that's not going to happen, both pepsi shares and mondelez shares are down. >> right. >> travelers earnings and revenues topping consensus this morning. verizon's earnings beating the street by a penny, revenues also topping estimates. earnings and revenues at johnson & johnson better than analysts were expecting. we'll talk to analysts in just a minute. stocks rose in china after the chinese central bank offered emergency funds to ease the latest cash squeeze. the central bank pumped $42 billion into the financial system. money market rates fell sharply

as a result. two people meanwhile have been nabbed at the texas border in a credit card fraud case. police in south texas say account information stolen at the target security breach is being divided up and sold off regionally. two mexican citizens were arrested at the u.s. border in connection to 96 fraudulent credit cards. federal officials say there currently is no connection between the arrest and the retailers credit card data theft. >> they got 72 million cards and they only got 96? i hope they didn't pay too much. >> this is not related to the target credit card fraud subis that what you're hearing? >> i noticed a second ago the stock got downgraded. the headline was buy, buy, buyback. they don't think a buyback is coming as a result of what's been happening with the situation. the stock is not reacting heavily to that news but nonetheless, it is down this

morning in the premarket. >> we look at johnson & johnson's shares. here to break down the numbers is damian conover. it looks like a beat on the top and bottom line? >> yes, it looked like strong performance being led by the pharmaceutical division. devices, a little bit weak. i don't think people were expecting a turnaround there. i think the strength in the pharmaceutical division will continue for several more quarters. that should body well for the company. >> i think a lot of people, general viewers might think this is about baby shampoo and things like that. the vast majority or more than half of the revenue comes from pharmaceuticals, right? >> yes, pharmaceuticals is driving the engine there. from the profitability when you sell a drug, it's much more profitable when you sell consumer products. that's driving the profits and growth, especially recently. >> what about guidance for the future? you happy about that? >> the guidance lower than what we were anticipating. not too much difference. the other thing we might being

here is conservative. management might want to set the barlow so they can meet it, potentially beat it. >> stock in the premarket is a little higher, what's your price target on the stock? >> we would have expected the stock to be trading a little bit heighter based on the news. it's a little bit better than what we thought. guidance, look for strength in the stock. from a fair value target we're looking at something around $90. that's lower than where the stock is at. we think there's been a lot of enthusiasm in the stock. we think rightfully so. we don't see upside to the name right now. >> do you have a sell on it, a hold? >> it's kind of in our band that's still called neutral. we wouldn't be buying or selling it. >> no stand. got it, damian. thank you. >> thank you. help us figure out the johnson & johnson earnings. >> verizon earnings also out. joining us now on the "squawk"

line, hudson square research managing director and senior analyst, todd rethemeier. what would you take from the earnings? you've had time to take a look at the release. >> good morning, everyone. generally pretty good. the wireless business at verizon continues to roll. they added 1.6 million new post-paid customers and perhaps even more importantly, the average monthly bill was up 7% year-over-year per account. customers continue to upgrade to smartphones. fourth quarter is usually a weaker quarter on margins because there are a lot of smartphones sold. those are expensive, as you know and they're subsidized. the margins were pretty good in the wireless business. >> i saw a note from socgen this morning. what sort of follow-through would there be to verizon on that? >> i didn't see a number in the verizon press releases. they had another good quarter on

smartphone sales. it's hard to read too much from verizon into the rest of the u.s. industry and it's even harder to read into the global smartphone market, though. >> what do you make about what t-mobile is doing and getting so aggressive on pricing? is that going to hurt verizon at some point? >> i think verizon is more insulated from that than the other two in the industry, at&t and sprint. >> why? >> i think you eluded to it earlier in the hour that verizon is perceived as the quality leader. if you want the best network you go to verizon. that's the perception in the marketplace. >> until somebody comes in with the heaviest hand who's willing to cut prices, more than the others to steal away business. and then all of a sudden that affects your margins. >> yes. absolutely. it's something to watch. i think verizon will be less affected but certainly they'll be affected by things that t-mobile does also. >> look at what the stocks are doing. >> what about the issue of

subsidies? we've been saying for more than a year, the wireless companies will fight back on the subsidies. it hasn't happened. is it going to? >> t-mobile is trying to sell phones to customers at a full price and pay on an installment plan. the biggest challenge, i think to the subsidies is the secondary device market. people are starting to sell their used iphone when they upgrade. that could have an impact. >> all right. todd, thank you. >> no problem. >> previous analyst he didn't have much of a take. that wouldn't fly in the "shark tank," would it? >> the number -- i'm an investor in verizon. most of the tel cos. i would like to know what the churn rate is. customer acquisition cost is very high. the trouble with verizon, maybe one of the reasons the stock has slowed down and why it's gone

neutral, their churn rate is creeping up to 1%. at 2 3re%, you have a problem. if it's creeping up, that's not good. it could have a lot to do with what t-mobile is doing. i never consider them a valid competitor. now i do because of what you talked about earlier, steve. package up all the data, come on, you want that for kids. >> if you can get the data. >> the challenge is to find a business kevin does not know something about. i think you're 5 for 5. >> i'm an investor. >> you're an animal when it comes to business. >> i have a simple philosophy, i want to go to bed richer than when i woke up. >> that's not right. you shouldn't want more money. let's go back to davos. andrew is there with some news and many great guests ahead, andrew. >> thank you. when we return to davos, switzerland, we'll have andrew liveris, the ceo of dow chemical. he's going to join us to discuss the state of the global economy and why he's come to davos and

what he hopes to accomplish over the next few days right here. first, here's a quick look at how joe, becky and i got here. 4,000 miles from new york city is davos, switzerland. europe's highest city, no, not that kind of high. davos is over 5,000 feet above sea level. it's also the birth place of modern winter sports, including sledding. the town has a permanent population of 11,000. come january of every year, many of those residents bolt. making way for some 2,500 participants of the world economic forum who come adorned with furry hats, puffy jackets and boots with good traction. at least they should. they arrive by train, car and even helicopter for the most elite. from more than 100 different countries, heads of state, business leaders, celebrities, and, of course, the media. the mission of the annual

meeting, saving the world one problem at a time. this year's theme, the reshaping of the world, consequences for society, politics and business. t the old dining table 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 ♪ to 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. and let it do its thing. wow, more fan mail. hey ray, my uncle wanted to say thanks for idea hub.

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we're live at the world economic forum right here in davos, switzerland where one of the main topics of discussion will be manufacturing and global economic growth, of course, always the big issue. joining us now, though, andrew liveris, the chairman and ceo of dow chemical. thanks for being here on this cold day before things get really started. >> happy to be here, andrew. >> we were just joking, we should say. what is her name? there was a woman, we talked about this on the air last time, looked like angela merkel on the plane with me last time. she's not her. >> no, she's definitely not her. that's carol williams, my executive vice president of operations. she is here. >> let's start with the global economy. when we were here last, you were remarkably optimistic, i do think, that was a good thing. you were right a year later.

are you in the same place? >> i am. i think '13 and '14 are going to look-alike, a little more tail wind, especially coming out of the united states and china. the trouble spots are still there. the conference, what it's being called this year, the cautious optimism, the unknowns, the known, i think we know the unknowns. self-help and what we can all do to actually get more out of this economy, i think productivity is still going to be the mantra of many companies like ours and remember, what we've been anouna announcing lately. that's what the geopolitical thing will be this year. >> you have been announcing a number of things. >> yes. >> what were you thinking of? >> the decommoditization of our company. competitiveness through innovation is the way we've been moving. $13 billion of revenue of businesses we've sold over the last four years. dow's original business,

chlorine, self-help, getting out of commodities and investing in our good businesses. >> if you look around the globe right now, biggest risk for dow? >> without a question is political uncertainty. >> where? >> everywhere. i would include the united states. there is no functionality in government. and frankly, because of that, companies like mine are engaging governments all over the world like never before. i flew in here from saudi arabia where we're investing in a very big way. how to derisk that is put local people on the ground, work with governments as partners and figure out how to create the win/win solution by country. >> one of the big issues here always is the environment, climate change. i was on my flight, al gore was on the plane. he always talks about carbon. >> right. >> you just signed on to a letter to the eu, just last week. >> yes. >> about what the policy should be in europe which people think is going to be much more aggressive than whatever is going on in the u.s. >> yes. clearly, the u.s. has taken a lead and we're all for climate change policies that make sense.

they have to hit that sweet spot between economics and environment, right? to put in place a top of the house emissions target without taking into consideration the economy, taking care of manufacturers and rendering them uncompetitive. >> how worried are you about that? ms i'm quite worried about that. this goes back to your question of political risk. that's an uncertainty. the european manufacturers will go to low-energy jurisdictions. you have to get that sweet spot between environment, energy and economics. i'd like to keep dwelling on the self-help. >> okay. >> when you think about it, companies like mine have doubled our share price in the last two years. what we've done, we've re-improved our share price because we've been our own best activists. we have worked on the cost line to release value. self-help -- >> is this a nice way of saying, nelson peltz, please don't call

us. >> we should all be thinking like the nelson peltzs. i have no problem with people saying here's better ways to get things done. what you have to do as manage mts is thinking about those ways. if you look at my balance sheet, which is the best it's been in about a decade, we have the expensive items like the preferred from warren buffett. >> that's where i was going to go. >> look at the things we've been announcing year in, year out since december. the share price performance means it's in the money. you know what, these have been great instruments for us. as we keep doing the things to perform, we don't need to negotiate and pay them at a premium. >> when you talk to warren buffett about that, he says what? >> warren buffett, he is who he is, right? the sage of omaha, all the things he is. he's made a lot of money out of the vert converts.

he's happy either way. >> is there a deal in the works. >> very simple, keep performing, get the share price up. >> no deal with him. >> no deal in the works. >> final question, what is going on with this name change? everybody says you want to change the name from dow chemical to dow. is this real? >> the dow diamond is the dow brand. great companies like ge, ibm, 3m brand themselves on their future, not the past. we'll always be dow chemical but the brand dow, i brought you an olympics pin. >> i know -- >> why are we an olympic sponsor? because of the bran and what it means. >> you're going with dow. >> it says dow. that's for you. >> what does that mean then? are you going to change the name. >> no, not legally. we're changing the brand. great companies have a brand, a brand promise. we have a brand compromise. sustainable solutions at the intersection of sciences and markets. which is why we're proud to

partner with the olympics. >> we have a lot of security around here. it's amazing how much security. how worried are you about the security of the olympics? >> look, if i worried about security anywhere, including the olympics i wouldn't be going anywhere, including here. i just came from saudi arabia. the ioc works with everyone, including the host company, the host city. i'll be there at the open with customers. we're going. >> andrew liveris, thank you for joining us. we appreciate it. have a great davos. >> you, too. >> coming up in the next half hour, harvard economics professor ken rogoff will join me live here in the alps. we certainly look forward to that and all the other interviews for the next few days. checking the futures at this hour, let's take a look at how your trading day is shaping up. it certainly looks, at least right now, that it will be a nice open on the street. the dow with an implied open of 77 points. the nasdaq, tech is going to

stand out. nasdaq up 20 points off the open. among our stocks to watch this morning, delta airlines. earnings beating the street by 2 cents. among the catalysts, fuel costs drop from a year earlier. the company sees both trends improving. "squawk" will be right back. "squawk box" is headed to davos, switzerland for the world economic forum. joining us will be ray dalio, james gorman, matt damon, larry summers, steve schwartzman, lloyd blankfein, eric schmidt and more. the biggest names on "squawk box," only on cnbc.

welcome back to "squawk box." we're watching shares of mondelez international and pepsico this morning. mondelez has added peltz to its board. andrew ross sorkin as part of the deal, peltz would no longer push for mondelez be acquired by pepsi. peltz will not push for a name change for mondelez at this time. mondelez is former kraft foods. i'm dizzy by all this.

they buy, they sell, they sell, they buy. that business operates under the kraft foods group name. peltz will continue to push for a split of pepsi's beverage and snack business. of course. that's an effort that's gone on for months. so far, unsuccessfully. >> we see mondelez not moving a lot in premarket and pepsi is lower by a quarter percent. >> are they going to spin this off or not. >> nelson peltz is not going to -- >> indra nooyi has said repeatedly, no. >> the last bit i read made me think it may be under discussion. >> she's been steadfast if saying she's not going to do it. >> we head back to davos, switzerland where joe, andrew and becky have arrived. ken rogoff will join andrew live in just a bit. as we head to break, check out the "squawk box" indicator. we'll be right back. passenger: road trip buddy. let's put some music on.

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welcome back to "squawk box." a few stocks to watch this morning, forest labs earnings beating the street by 23 cents a

share. results were helped by higher sales of drugs for hypertension and alzheimer's disease drugs. the company also raising its full-year forecast. halliburton earnings topping estimates for strong performance mans of businesses outside north america. irshaz of burger king, goldman sachs -- shares of burger king higher, goldman sachs adding the stock to the conviction buy list. they expect the fast food chain to recapitalize in the next year or so, believing it will unlock meaningful amounts of shareholder value. >> was there a miss this morning? it seems like everybody beat. or are we just reporting the beats. >> i don't remember a major company missing this morning. >> that's why the market looks like it will open higher t. was up 50 and last i checked it was up, what -- >> it was higher. >> let's see what happens when the ibms of the world come out with that later.

>> stuff matters. >> these matter. >> i think the market's anticipating softness there already. you should look at the market this way, 2.3% dividend, cash distribution on the s&p 500 and 6% earnings growth. 8% would be great this year. that's what i'm betting. >> especially with a 1.5% underlying inflation rate. >> i think we'll be in that zone, give or take 1%. we'll have political turmoil. >> they'll tax it away. >> is that a competitive return if i give you a 3.5% on the ten-year treasury? you still like that, that risk adjustment basis? >> i do. i have to time it perfectly not to get damaged on the way to 3.5% on the ten-year. this is one of the -- the duration risk in people's personal portfolios is perhaps the biggest land mine in this country. >> they don't know it. >> the average mutual fund has 42% off ten-years in it. you'll get brain damaged on the way to 3.5% on the ten-year.

people should be going back, scrutinizing their holdings for duration risk. >> here's the one thing. for 15, 20 years people have been saying don't own the long end of the curve. even now, the fed will start to taper the long end of the curve. the long ends are moving. >> a bank today take your cd or deposit loan it out with a floating attribution. say 4% over libor. that's what you want to own. that's the answer. >> capitalist animal. on that note let's go back to davos where andrew is. andrew? >> thank you for that, scott. the world's most powerful people gathering here in davos. big issue is security. it's always an issue. this year it's not just physical security. it's also tech security. from snipers to swiss army checkpoints, in davos, security is no joke. with heads of state and heads of

businesses all in one location, the visible security is re-assuring but according to security consultant and former fbi agent edward strauss, there's one risk that virtually no one can prevent. >> i think all the security you see is part of a comfort level, absolutely. but it can be a step in a direction that doesn't take you as far as you think it is taking you when it comes to your information security. >> that's e-mails, phone calls, text messages and computer files. >> people have to work an you have to be realistic. the fact that they are located in a single location, they can be targeted. >> targeted through wi-fi and usb thumb drives. >> with hen they get a thumb dr think of it as a syringe or needing. it's possible there is a code on that thumb drive that is going to be loaded into your device and could have unintended consequences. >> just last year, unconfirmed reports surfaced out of the g-20

summit that participants were given thumb drives bugged by the kremlin, something russia denies. this is a major area of business risk to an operational level. we employ encryption technologies where required and subject ourselves to external and internal audits. there are steps you can take as well. strauss says start with the basics like passwords and having your i.t. team check your device before you plug them in back home. he also suggests bringing secondary devices, ones with the bare essentials in terms of what's loaded on to them. that way if it's compromised, the data accessed is limited. >> even for smartphones, you're in meetings and they are confidential, perhaps put them on airplane mode. this way they are less likely to be activated for the microphone to be turned on, camera to be turned on. >> reporter: small steps that can go a big way in terms of

protecting your information. >> a lot of people will be focusing on their phones and whether they'll get into wi-fi networks and how they're working this time at davos. a little bit of a change. in the meantime, we get back to scott who i though has breaking news back in new york. a lot of news developing this morning. david faber has some right now in fact. david? >> thanks very much, scott. you know what, you might want to get andrew liveris back on the show, the ceo of dow chemical has a new large share holder in the ranks at dow and active shareholder at that. dan lobes has taking a 1.3 billion position in dow. on this new investment site, called the harvest exchange, hvst.com, he's released his shareholder letter essentially

where he's outlining the position that third point has taken in dow chemical and also going and more or less asking the company to move ahead with the consideration of a split of its petro chemical operations from its overall business, saying that to do so would of course add a great deal of value. we know mr. lobe as an activist in sort of two ways, sometimes very nasty, think sotheby's with the likes of the letters he's written there and more constructive, think sony, or even cf. this certainly would seem to be the case here. it is along the lines of the kinds of activist campaigns we've talked about a bit lately where even a large shareholder suches amr. loeb is small in comparison to the market cap at company. it's still not large enough necessarily to sway a lot. the question is whether you can

sway the top ten shareholders to your side and perhaps get management thinking this is something they need to consider. >> david? >> yes. >> you were probably doing a lot of reporting. did you see the end where andrew asked him and said we hear all these rumors you want to get rid of the name chemical from dow chemical? is there any tell in that at all. >> i'm not aware that there is. typically mr. loeb will have conversations with management although in this case i'm not sure that's extended to mr. liveris. i would say they're both there in davos. loeb is there, we know liveris is there. this is interesting, it's following that newer trend of activists taking large positions in mega cap companies with t the -- we can't expect a proxy fight soon. the dead lien for nominations also passed. they are going to give him quite a bit of time, perhaps as much

as a year. then i think you have to assume if in fact they don't move down the recommended path and there seems to be shareholders behind them in that viewpoint, then you might see a proxy fight a year from now. >> david. >> we'll see where it goes. >> andrew is standing by in davos. >> david, you know, the thing that struck me is, if you listen to andrew liveris, just 20 minutes ago, he said two things repeatedly. he kept using the phrase self-help. at some point i said to him, we should pull the tape, you're trying to avoid a nelson peltz? he said, yes, i want to think like an activist to basically do what an activist would do before an activist would get to me. that's one of the reasons they spun off -- or rather sold the commodity chemical business in december, at least announced they would be doing that. it's interesting here we are and as david just said, you're absolutely right, dan loe bext just arriving today now and andrew liveris here, literally

sitting next to me moments ago. we will get a camera and we will follow them down the street if we can and try to get an interview. >> andrew liveris sat with you, did he know about this dan loeb news? >> he did not know. i don't think he knew. >> okay. >> i don't believe he knew either. i don't believe he knew. just so you know, we've put calls out. we believe -- we're going to try to get andrew liveris to come back and sit back here. i don't know if we'll succeed at that. we are on the case on that issue. what were you saying, david? >> i'm pretty certain he did not know this was coming. again, this has been released on that harvest site i referenced. one quick point here, of course, mr. loeb and other shareholders will make the underperformance of the stock over a long period of time, talking about a generating return of 46% over the last decade versus 199% return for the s&p 500. chemicals index, 101% return for

the s&p. stock price the same as it was in april 1999. >> andrew -- >> we know he can do a lot with that, mr. loeb. >> it's scott. for either one of you, you or andrew, the presence of buffett in dow chemical means what now that loeb has taken such a big position? >> you know, it's interesting -- >> that's an interesting one. >> go ahead. andrew, feel free to go at it. they prefer the kuwaitis, i recall, or at least i do know there's an ability to convert if the stock price trades above $52 or averages that price for 20 days out of a 30-day period. that would be favorable by the way. maybe a force convergence of some kind. that figures into mr. loeb's thinking about where a favorable thing could arise. >> the history though is that andrew liveris has tried

repeatedly to try to make a deal with warren buffett to get out of those preferred on some other kind of transaction. you know, there were transactions that buffet had with goldman sachs. i don't remember how the ge deal ended but that we're clearly on beneficial terms frankly to accompany more than either buffett. and buffett obviously these deals were tremendous for him. but he took a longer term view. it is interesting to see, have we seen a company where an activist has gone off a company where warren buffett has been a major investor before? >> that's a good question. i don't know -- off the top of my head, i don't know the answer, andrew. i'd have to think about it. >> i mean, certainly -- >> warren's long been seen as sort of the halo effect of warren buffett. you don't go after companies where warren buffett is involved. >> jim cramer is sitting to my right. he says peltz/kraft.

we've been talking about nelson this morning with mondelez. yes, it will be interesting to see what develops from here. again, i think it's important to say loeb in this case seems to be or wants to be viewed as constructive. it's similar to the letter we saw initially with sony, andrew, a story you broke, where it was not about attacking. it was much more about working constructively. >> and selling the petro chemicals business will do what exactly, he thinks, for them? >> it would create an enormous amount of value, they say, couple that with enormous cost cutting and operating optimization is what they're talking about. he says you could see several billion dollars added to ebitda, michelle. they criticize the company's push downstream which they say has led it to use upstream assets to subsidize downstream derivatives. >> liveris, andrew --

>> david, before -- david, i think we have a clip. i think we're going to run it right now. we have the clip of andrew liveris when we talked about the issue of activist investors potentially coming. >> we should all be thinking like the nelson peltzs. i have no problem with this motion of people coming in to your stock saying here's better ways to get things done. what you have to do as management is thinking about those ways. what i think we at dow have been doing. if you look at my balance sheet, which is the best it's been in about a decade, we have expensive items on it like the preferred from warren buffett. >> you say he didn't know. now that i'm rewatching that video, i'm starting to think maybe he did. >> uh-huh. uh-huh. >> i don't believe there were any talks between liveris and loeb. whether i believe there may have been generally speaking as you would as an investor between management. i don't know the answer to the question specifically, andrew. >> it's particularly crucial in

the following regard, right? he just said i don't mind activist investors. right? if he said that knowing it, it sounds like an olive branch. if he said it not knowing it, you wonder what he really thinks. >> the question, of course, will be, i haven't had an opportunity, andrew, you may get it, to see what their response is to this strategic idea being put forward by one of their largest investors, namely splitting petro chemicals. i don't know the answer from dow, what their thinking is. perhaps you've already discussed it with mr. liveris. >> we will endeavor to find out, to find dan loeb as well as andrew liveris, so we can continue on this news. >> thanks, andrew. up next, professor ken rogoff, live from davos, plus a new meaning for fender bender. how is that for a tease? "squawk box" coming right back. the equity summary score consolidates the ratings

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welcome back to "squawk box." we're live at the world economic forum in davos where income disparity will be one of the major topics of discussion, here, of course, the economy as well. ken rogoff is professor of at harvard university. one of the things, you sort of can tell us historically where

we are. where are we in the context of everything you did in that book? >> we're ding a little better than the average -- >> the united states is. >> let's start with the united states. the united states is doing a little better than the average of countries that got hit with the systemic crisis. >> 12-year comeback? >> depends on how you define comeback. six to eight years to get back to the per capita gdp you started. the u.s. and germany have reached that but a lot of other countries haven't. europe stands to have i arecession that by some measures is sad bad as the great depression. it's pretty severe. >> one of the things that makes me anxious, i remember looking in the book on this, you say your study shows 43% of the time after things get better, these countries actually fall back into recession. >> that's our most recent paper. >> that's the new paper? >> yes, yes. this is looking before you climb

back -- >> right. >> double dips happen a little less than half the time. >> when you look at the united states, how do you handicap that? >> it's outside that, you know, place, because we've come back. >> we've already come back. there's no chance to -- >> i can't promise you that. >> you can only hope. >> i think the risks are balanced in the united states. anything possible. >> what's your sense -- when you lack at what countries are doing right and what they are doing wrong, you look at the united states and you say, things look great. they feel better than they did before. and then we complain and we say that washington is awful, awful, awful. how do you square those two circles? >> i mean the thing where they've been unambiguously awful, no structure reforms, japan talks about their third arrow. where's our third arrow. >> let's talk about that. abe is going to be here. is the third hour real? there's a lot of talk about the third arrow. >> i don't know. i hope so.

i'm drinking the kool-aid still. >> you don't think it ends badly? >> they have to reach a point where a point where people believe them that inflation will go up and when they do, oh, my gosh, interest rates will go up and that will cause all sorts of issues that they'll have to deal with. >> do you have any hope that there will be any structural reform in the united states in the next two years? >> one can hope. that's been the most discouraging thing and obviously fiscal policy with the sequester and the shutdown and having. >> i know you're not a market guy but one of the things i did notice is every time a new federal reserve chair has come in, within six months there has been a major pullback in the market historically. it's not your own research but it's the research i've done that others have done. what do you make of janet yellen in terms of the policy? do you think it's actually going to be a shift at all? >> i think if you would pick someone to have continuity from

ben bernanke, they did. they are similar in temperament, both academics, explaining things. she clearly has focused on unemployment as a lot of her research and you might think she's very empathetic. but she's been the vice chair. she's been doing these policies. any time there's a new chairman there's some uncertainty, even if it's a clone of the same person, how do you know that the clone didn't have some environmental difference? >> right. this is a much longer conversation and i hope we get to have it while we're here and just not on camera. thank you for being here. look forward to seeing you a little bit more, in the meantime, i'll send it back to you, steve, in hq. >> thank you, andrew. coming up warren buffett wants to give you a chance to win $1 billion. that story is next. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets

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welcome. we have -- thisfolding up came in this case. you made this investment in "shark tank" and you finally made a deal. >> fender looked at the technology and put it into a fender. i call it the fender-bender. i was a shareholder. this is an incredible guitar, so is that one. >> this is the holy grail of guitars. >> 200 years they've been trying to do this. >> ready? we'll do blues. ♪

>> everybody wants -- >> what's it sell for? >> that will sell for about 600 bucks. >> and it's called the fender-bender. >> no. >> but it bends. >> take it off, steve. >> take it off, steve. >> ready? unclip that. right there. pull that ledge out. >> okay. go ahead. >> bingo. >> and it folds? >> that comes right off. pull it off this way. and it's going to go into this case. i'm going to do it right now. ready, bang? >> it's out of control. now it will pick up. >> amazing. >> that's the electric version? it's never easy to do stuff on tv. and put it like this. 20 seconds left. can i get it in the case in 20 seconds? there it is, boom.

>> let's get back so people can see the guitar. look at it. >> it folds right up. kevin, thanks for joining us. >> fender-bender. million dollar idea. only on "shark tank." >> "shark tank" tuesday. >> it was great having you on. it was so fun. make sure you join us live tomorrow from davos. "squawk on the street" is next. ♪ rocky mountain high colorado ♪ rocky mountain high colorado good tuesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. buckle up for a busy way, davos and the s&p reporting and we've got it all today. the futures looking not too bad. the ten year is 284. europe is mostly positive