2014 and "squawk box" begins right now. >> good morning. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. and the major u.s. averages are on pace for their best week of the year. volume was lighter than normal yesterday base of the major winter storm hitting the east coast. boy, this one has been a doozy. stocks closed at three-week highs and dow futures down by about 20 points below fair value. s&p futures are down by about 2.5 as are the nasdaq futures. by the way, have you seen gold prices lately? the pressure metal topping 1300 for the first time since november. it's up another $10, $1,310.80. and today, it is valentine's day. historically it hasn't been a sweet day for the markets. the market has been up only 40% of the time on february 14th. we'll see what happens today. there is some deal news just

crossing the wires. it is official. joseph a. bank is acquiring eddie bower for more than $800 million in cash and stocks. talks will be rooub roumored ea this morning. joseph a. bank does have the right to end that agreement if it receives an acquisition bid that et feels would create more shareholder value. joesest a. bank and men'swearhouse have made bids in the last few months. andrew, you've had some pretty strong thoughts about this move when it was first rumored that it might be happening. >> this is the talk to the hand because it's -- >> nanny, nanny, nanny. >> yeah. craziness. we can talk about that more in just a moment. we've got some frozen-nomics to talk about first. the unusually harsh winter will be trimming 0.3 percentage

points from gdp this quarter pulling q1's annualized growth rate down to 2.2%. the weather has closed businesses. it's disrupted transportation supply chains and kept a lot of shoppers at home. among the other drags on the economy, energy bills as consumers have to pay a lot more to keep warm. the general survey, taking before this week's latest storms, those polls said the economy should pick up once those moderate. we have a storm coming tonight, joe, and -- another one to three, apparently. >> and tuesday? >> maybe tuesday's not on. i don't know. you remember when i brought in last week your newspaper? it says the end of snow with -- i didn't save that. i wanted to actually have that -- you should see my house. i've got drifts like this. i wanted to stand in front of it where it says the end of snow. >> i believe -- and i don't know this. i thought it was written by a ski editor and it was about the

end of snow at some of the great ski resorts. >> i went back and read it after joe talked about it. it said the end of snow. he didn't specify that this was the end of snow just a there. >> the end of snow everywhere? >> he was talking about it from his perspective on that. but i didn't see the framing that was like, basically, the snow has moved. >> i only read probably the first three or four paragraphs. >> i'll show you the comments from 2008 where he blamed the end of snow on sarah palin's love for big oil. but he said kids in virginia will not snow what snow is very, very soon. .there's a lot of people that said you will not know -- your kids will grow up not knowing -- >> politics aside -- >> luckily, you changed it to change. >> to climate change. >> yeah. so now -- you see, you do need to decide. i've seen the alarmists. they said no snow means it's happening and lots of snow means it's happening. now i guess they're on the lots of snow means it's happening.

but you have to make up your mind. >> the farmer's almanac was right this year, really cold, a lot of snow and -- >> the farmer's almanac is a better model. >> but i think municipalities and states are gsh municip-- mus are going to have a rough time. here on the east coast, they've run through the snowplow budgets and the salt budgets. there wasn't a road plowed between here and my house this morning. i think people are exhausted from all the plowing. >> it's really pretty amazing. in our headlines this morning, procter & gamble is reportedly beginning the search for candidates to succeed the chairman aa.g. lafley. he was not going to be a long timer. the household productsmaker said considering some of its current and former executives, no normal search process is under way. it would help us if that mohler

guy would get it. we like him and just for us as a show, i don't know if it would be good for the company, but we would be able to get the ceo of p&g all the time. >> go john. >> yeah, go john. the 66-year-old came out of retirement after his successor was abruptly replaced last year amid prompting from investors. and tesla closed at an all-time high yesterday. earlier this month in toronto, a model s parked in a garage reportedly caught on fire after it was taken for a drive and was not plugged in. tesla confirms the fire, but it's down playing the incident saying the fire didn't originate in the battery or the charging system or the adapter or the electrical -- >> do they have to responds every time -- this is a question. does it have to respond every time dallas fire of any sort? >> yeah. >> and when was the last time you heard -- >> but this is new technology. the point being that it wasn't

any of these things, you still have to respond to it. there still are questions about the technology. >> so there's going to be one on month -- i don't know what the average has been. >> there are fewer model ss on the road. and if 12 of these cars are on fire, i think it's a pretty big deal percentagewise after the number they have out there. >> how many cars do they have out there, do we know? >> you're talking about the pretty woman -- that may have been bought by four seasones. >> sorry. the topic from before the show. >> it's nice, but it's kind of old. >> back to the model s, i don't know how many there are on the road. i would think the percentage numbers at this point maybe aren't a big deal yet, but we are interesting. if you hear about these buyers, you want to hear what happened. >> it's the fifth place, though, involving a model s in the last five months. regulators are currently investigating the car's battery safety system. the elon musk says he believes that the nhtsa's probe will end.

but we have had people say that because the battery is spread out over the entire car that if you hit a pothole -- those are the guys that must be short the stock, the ones that say stuff like that. but there are people that say it's really safe. >> even having said all this, i'd drive one. >> but because it's the entire bottom of the car is -- yeah. >> just to put it on record, there are, according to the "l.a. times," about 23,000 model s cars that were sold, in 2013. >> but five fires on 23,000 versus the number of fires you have in the united states on every other car versus how many cars are out there -- >> what happened to this gm car? 778,000 being recalled of these crappy little cobalts and opponent y pontiac g-5. i think oprah gave away a g-5.

isn't that what she gave away? she gave away one of those small, crummy looking -- >> a g-5? >> i think, remember she -- >> everybody gets a car. >> when i think of g-5, i think -- >> are you thinking of a g spot of something? what g -- you mean -- you think jet? you do. you think caviar? >> you think cobalt and i think about the plane. >> the 1%ier. caviar. you would like those caviar chips that carl tried the other day. >> i might. i have a note to have him bring them back. on other auto news this morning, china's state media slamming aston martin over its slamming of a sports recall. recalling more than 17,000 cars, what sort of vehicles did it

produce in late 2007? it discovered a chinese subsupplier using counterfeit material in its accelerator pedal arms. but china media says the carmaker invoted a stereotype to mask its own short comings. i love this little battle. other major corporations such as apple, walmart and yumm brands have all attracted criticism from chinese media, as well. tech news to get to this morning, as well, microsoft's windows 8 system has now recorded more than 200 million licenses since 18 months ago. it now lags windows 7 which launched 240 million within its first year. this is the first microsoft to stay public for more than six months. microsoft research reports only 11% of pc users worldwide are using windows 8 or 8.1. 48% are sticking with windows 7 and 29% are still running windows xp, which is now more

than a decade old. do we have windows xp on our computers, folks? the ones right in front of us are window xp. >> buehler. buehler. i have a high performance pascale. did you see pretty woman? >> years ago. >> that's the beverly wilshire, right? >> owned by the four seasons -- >> now. four seasons on -- >> putting it out there. >> four seasons on dohini. anyway, number of stocks -- it's all about 1% here. you saw robert frank's piece. did you see how we titled that? >> i don't know what you're talking about. we had with guy on from nicole miller. so we entitled the piece, i think whoever titled it, rich ceo -- >> the 1%. >> says -- the recent ceo says poor people just get over.

so the huffington post picks it up immediately and put it there. and robert frank put dell tails in there. >> 31% around -- >> around the world, china, you being the upper 30th% in china. anyway, a number of stocks are moving in extended trading, kraft reporting a higher quarterly profit, lower costs and high accounts gains. but the food giant says it expects a slow start to the year in part due to the weak u.s. job market and the recent reduction in federal food stamp benefits. and shares of aig getting a boost after the insurance companies earnings and revenues beat the street. aig raising its quarterly dividend by 25% to 13 cents a share. and brocade up in extended

trading. >> you always go straight to the prompter. >> i never deviate. better-than-expected earnings and revenue, we're to talk to the company's ceo at 8:30 this morning. but weight watchers was a big loser after the bell. i heard about this, also. >> oh, my god, i wanted to -- if i hear -- if they give me the world again in 20 minutes, because it's a 60-minute drive. i've got the world three times and they just keep tossing to people, tossing, tossing, i didn't like it. shares of the diet company -- >> the guy who -- the anchor in the morning is pretty funny. >> he's talking to some lady driving you around out in long island. oh, it's slippery out. it was slippery yesterday. >> but he definitely ad-libs some stuff. you have to listen to the guy. he's pretty funny. >> there are some crazy ones. >> no, but he's actually funny.

you can tell he's writing -- >> i would rather listen to some jazz. >> i used to have my radio show on. >> that's a big selling point. shares of the diet company fell sharply after it offered a full year earnings forecast far short of wall street. you know what people are doing? they're wearing your stupid things now, your bracelets, and they're monitoring your own weight and they're not using weight watchers anytime. that's the competition from diet app and calorie counting gadgets. i'm up to speed because of 1010 wyn. anyway, the company seas it's going to finalize plans to reorganize its business. >> this is the fourth time. >> this is the fourth time i've had a dose of -- >> you're going to be fun by 8:00. >> mac, coffee? do we have -- oh. >> well, i didn't have time because it takes an hour to get in. it takes an hour to get in. >> 15 minutes to the show.

>> no, it's true. i thought i was going to have a wet head still i walked in so late because i was driving 10 miles per hour because it's a mess out there. >> and tomorrow morning and again tonight. but the kids have school today. did you see what the rokanator said? my man al. >> oh, yes. >> i heard that. >> he -- >> it's because de blasio blamed the weather forecasters. and it was like, wait a second, we were on -- >> de blasio, i thought that he sort of stood down on this whole thing. >> well, they did. they sent kids -- >> no, he said i respect al and the whole thing. >> al said i have a forecast for de blasio, one term. when i thought was, wow, step out. >> willie geist was sending pictures of al tweeting all this stuff. >> al is in sochi, right?

>> yes. anyway, let's get more details on this joes on he a. bank deal to buy eddie bauer. joining us on the squawk news line is gilbert harrison, adviser to joseph a. bank for a long time. good morning. >> good morning. >> is this deal just a way for joesest a. bank to thumb its nose at men's wearhouse? >> no way, becky. we were first karr contacted, eddie bauer in february 2012, two years ago, when we were retained to start the acquisition search. this was one of the first companies we contacted, actually, one of two. and say golden gate bridge owns them, had just bought it recently. they were in the process of turning them down. we talked to them several times during the process and finally a month or so ago they agreed to talk to us. it's a great deal. and you couple this deal with the tender offer, which i'm sure you've seen it, $65 a share,

it's a win-win situation for the company and its shareholders. >> what i don't understand is i could see the men's wearhouse joesest a. banks deal lining up beautifully in terms of the synergies, in terms of the overlap. eddie bauer to me is a very different business than jous he a. banks. what do these companies together look like? >> these companies have a potential to be a diversified apparel retailer with huge growth potential over many years. the men's wearhouse acquisition gave you significant synergies. we thought maybe 75 million of synergies rather than 125. but after two, three years, your category would be filled up and the growth would slow down. with the eddie bauer situation, we have tremendous growth that will continue for a long period of time. they haven't saturated the

business and the new management team that's been put in, including mike ejax who turned around north face and columbia is extremely good. you couple that with bob eldridge and neal black, and you have an unbelievable we think growth story with a diversified business portfolio. >> bring us behind the scenes a little bit so we understand what happened. would have been covering this, i almost feel like for months looking at the men's warehouse and joesest a. banks deal back and forth. it felt like a little bit of ego got in the way of that transaction. both sides wanted to ultimately merge, but both sides wanted to run the company. >> i think it was more than that. we approached men's wearhouse last september. we did it quietly.

talking to doug ebert, the coo. we sent them a letter. we heard silence, silence, silence. we were patient. we happened to do a friendly deal. we talk about the synergies. we offered them a 42% premium over their price the day they sent the letter. a 26% premium over their last high over the last six years. and what happened? they not only leaked it to the press, they came back and they absolutely trashed our company and told us that we didn't know what we were doing. we grew over the last six years 11 11.6% in sales. they fell. that 12% included the bad year we had last year. so copy autopll of these things together, copy their comments

about anti-trust and that would be an anti-trust situation. and you know that we have gotten now inquiries from the fcc about anti-trust. it was a nutty situation. >> although, gill, let me ask you this. is this idea of the men's wearhouse deal completely off the table? because you have the right to terminate the agreement in order to accept a superior proposal. how likely do you think it is that a men's wearhouse deal would come back? >> i think it's up to men's wear house. we have a fiduciary duty to do what's in the best interest of our shareholders. there is a fiduciary out that we have should men's warehouse come back and offer us something that would make sense. as you know, when we reject the $57 a share, it was so below what our company is worth, another one without the synergies and with the synergies potentially significantly more. >> real quick, is there a break-up fee on this transaction if men's wearhouse wanted to jump in? >> yes, there is. >> what's the price?

>> a little less than 3%. >> gill, thank you very much. it's great talking to you. >> okay. thank you. happy valentine's day to all of you. >> you, too. >> thanks. >> break up fee. >> look at this. a merger and marriage on valentine's day. isn't that a nice thing? >> really nice. really nice. what color is that tie? you're a real -- >> you know what? i had a red tie. i preferred -- >> you already had your red. that's your only red tie of the season? >> well, i couldn't find my other red tie. >> i'm almost red. >> we will come back. >> will you be my valentine? >> more than your valentine. coming up, a sector literally grounded by the snow and ice. how much is this powerful storm going to impact the airline industry right before a big getaway day? and while it's snow and cold here in the states, it's spring-like at the winter olympics. we've got highlights, fresh medal count and a ceo doing big

time business in russia. that's coming up in the next half hour. we're back in a moment. . >> announcer: before you hit the road, here is your traveler's check. winter storms, storm related or not, it's always good to know which airline has the best on-time performance. so which one topped the list for 2013 sflp that's next. (vo) you are a business pro. seeker of the sublime. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental customer satisfaction by j.d. power. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro. ♪

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. >> translator: which airline had the best on time performance last year? hawaiian airlines was the top carrier for on-time arrivals, followed by alaska airlines and delta. that's according to the u.s. department of transportation. we got our own frozen-nomics traveler's check right now. let's get a sense of how the major airlines are faring during this deep freeze. good morning to you. >> good morning. >> help us through this. if we were to sort of list in a one, two, three manner, who is is getting hit the most? and then is there any airline that's not getting hit in all of this? >> sure. it's just the weather we've had so far this quarter has probably hit jet blue, given their

exposure to the east coast a lot. it has impacted united/american given the strong weather in chicago and new york and to a lesser extent southwest .delta. probably the least impacted from the carriers that we cover are probably the ones who focus on the west coast, like alaska. as well as spirit has not had as much impact from the weather this season. >> and what kind of numbers are we talking about? every year they always lose some money when there's weather-related events, but this winter is obviously very different thus far. >> yes. it's in a more difficult winter this year. the january storms are already in estimates. a big storm over a holiday weekend. if it's really bad can have about a 5% impact to earnings. my guess is this weekend is probably going to be a little less than that. but, you know, despite all of this, you're going to see most of the air lines report a profit in the first quarter of this

year. seasonally the weak's quarter. historically, going back a few years, it was only a have you few airlines that made profits in the fist quarter. so it's a healthy industry and one that can make it through this kind of weather. >> one thing i never understood, who pays for the de-icing and all of the snow removal at airports? >> the airlines do. and at the end of the day, i mean, those costs get through to passengers and fares. >> but it's not that the port authority, for example, in new york pays jfk for all the snow removal? >> the expenses get passed through. >> got it. okay. thank you for joining us this morning. appreciate it very much. >> happy day. >> thank you. coming up, an update from the winter games and the ceo of international paper is going to drop by our sochi set to talk about i.t.'s big business in russia. and it's that time of year again. si's swimsuit issue hitting the

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good morning. and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. making headlines this morning, joesest a. bank is acquiring eddie bauer for more than $800 million in cash and stock. eddie bauer is owned by golden

gate capital. joesest a. bank, probably you've heard by now, it does have a right to end the agreement if it receives an acquisition bid that it feels would create more shareholder value. as you may recall, joesest a. bank and rival men's wearhouse have made bids to acquire each other in recent months. in global news, china's consumer inflation held steady, the country trying to control living costs as leaders launch some ambitious economic reform necessary that country. back here in the states, a proposal in the california legislature would make the state the nation's first to require warning labels on sodas. and other sugary drinks. the bill would require the warning on the front of the beverage containers which with added sweeteners it would have 75 more calories in every 12 ounces. and i think the label would say, we have something we always -- can you press that, john? do you have that red? >> warning. >> warning. >> warning, warning. i'm just going to keep doing it

until -- isn't it at your fingertips? >> here, i'll do it for you. >> soda is why you're fat. >> the label would say drinking beverages contribute to obesity, diabetes and tooth decay. >> why do you look at me when you say that? >> because you are the -- on the set, you are the promoter of the nanny state and i figure you would give me a thumbs up or going like this or -- >> under the table. >> under the table you're stroking my toes. >> it's valentine's day. >> yeah. stocks finishing higher yesterday with the nasdaq ending positive for the sixth straight trading day in a row. joining us now is drew mattes. >> do you feel that? >> deputy chief u.s. economist at ubs and doug kokhae, chief investment strategy at ing investment management. drew, we were back where we had that great quarter, 3% plus. then everyone said inventories

at 1 to 1%. then we had a good first quarter number. we were looking for 3%. now i see it's down at 1 and change because of the weather. where are you? >> we're just above 2. there is a weather impact. it's very hard to break it out now. because, for example, january payrolls, the week we actually took that survey, it was a pretty good week in january. it was the one week in january where it wasn't cold and it wasn't snowing. but that doesn't mean people aren't looking at the forecast, right? so i think if you -- to be fair, if you look at everything, there's some hint of slowing in the overall economy. what's causing that? i don't know. but, you know, i am a big believer that people's perceptions of the world around them flavor how they act. what that means for me is that if you're a ceo, even if you're in some $20 million home and going on a private jet somewhere, still coming to work in new york right now is miserable. and it affects how you're making your judgment. >> button or not buttoned?

>> i know. >> i was shoveling. >> honestly? >> yeah. i had to shovel my car out this morning. >> and so you got a little bit overheated? >> i got a little overheated. i've got my boots on, too. >> so you're just kind of thrown together this morning. yes. and then i slid across the new jersey turnpike on the way over here. >> and he brought doughnuts. >> and you brought -- i did notice yesterday, wendy's, driving down the street yesterday, closed. taco bell, closed. >> what's open? >> did you think yunkin donuts. we said how do you do it? at least two employees sleep there. they're going to be open. they sleep there. they will sleep -- >> sleep in a dunkin donuts? >> i don't know. you can imagine it would be pretty soft on those cream filled doughnuts. >> so, okay -- >> sticky with the glazed doughnuts. >> i'm getting very uncomfortable sitting between you two.

>> you are? because it's valentine's day. tell me again what the base -- get weather aside, what is our basul sort of gdp growth rate that we can expect this year? is it 2.5 or 3? >> i'd sayite closer to 3. maybe we're trimming some of the upside in the first quarter. >> that's good. we've got no debt ceiling problems. europe is getting better. china -- >> you've got a recovery nase e et in asset prices. baby boomers retire. that's clearing the bottom rung of the economic ladder. >> this is new stuff you're talking about now, isn't it? >> i come up with this. that's what i get paid for to come up with new stuff every week. for you, actually, we've got the kernen file. >> dow? what does this mean, doug, in terms of asset allocation and, you know, whether you go into the stock market here. or is 1850 going to be something like a ceiling for 2014 on the s&p? >> yeah.

absolutely not. when you're in the global economic expansion, you don't worry about a little snow in new england and the northeast. what is driving chairman yellen has successfully transitioned our or handed the baton back to the markets. and fundamentals are driving the markets now. when the market went up 5% this past week and a half, no longer is that monetary stimulus induced. we're talking about real fundamentals and it's global, consumer, manufacturing, housing. my forecast is 2020 for the s&p 500. we're at 3% plus on gdp growth. you want to be in the market, you want to be broadly globally diversify. not just in the s&p 500. i think there's a mistake to be so u.s. sent rick when you're in a global economic expansion. so you're up, emerging markets, global bonds, be well diversified. >> so you're talking about not

just u.s. stocks -- this is like a global bull market that you think we're in in equities? >> yes. if you look at it, everyone keeps talking about recovery. we are so past recovery, compared to 2007, the peak rates before the crisis. the global economy is 30% bigger from 50 trillion to 70 plus trillion dollars. i'm not sure what all the fear and trepidation is about when you're in such an expansion. and sure, there's problems in currency markets in the emerging markets. but they are going to be on the margins the driver of global growth. and that's where u.s. corporations have their revenue, as you know, is overseas. they're selling to the emerging markets. emerging markets are still very important and they're a driver of growth. you need to be in this market. >> okay. all right. i'm supposed to start wrapping it up. it's friday. you know, we'll give you sort of a -- you know, you said a lot -- >> giving me that? >> no, i'm not giving you

anything. but you -- >> volatility is good. there's this idea that volatility is bad. volatility is good. if volatility picks up, the u.s. economy will pick up with it. >> all right. thank you. and it was not a g-5, oprah. >> what was it? >> a g-6. >> i was close. >> if you don't know the difference, that's why you're sitting here. >> anyway, it was going to be ten years in september that she gave away 276 of those. and they thought one person was going to get it. >> reach under, see who gets it. >> and they opened and it was everybody. >> that's your next -- that's what you've got your eyes on is that next generation composite g-5. what was that? >> whoa. coming up, the slip size of frozen economics. >> this industry, they've been enjoying a lot of snow and ice. we're going to check in with a lot of on operators. but first, springtime at the

winter games. michelle caruso cabrera is, like, we're digging out and you're just hanging out. what's going on in sochi? >> i know. i don't even have a coat on. sitting next to me is the ceo of international paper. i.t.'s single largest investment outside the u.s. is in russia. we're going to talk about that. by the way, he's dealing with frozen-nomics, as well. all that come up on "squawk box" right after this break. 't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪

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this true, is it a three will have day weekend? yeah. you didn't know this? >> i kind of did. with the long three-day weekend coming, it's the perfect time to check out the latest squawk

blog. get the word, jumble update. becky has been busy after the show this week so we've only done three and i've won two. so the most you can do is tie. >> but today, everything is riding on this and we're doing this one. >> and also, watch carl down four shots of vodka, which i don't know if that's legal on air, and the eats some caviar potato chips and some crab flavored potato chips. >> he didn't really eat them. he tasted them. >> and then he got out of the shot and i think he might have spit them out. and learn about the end of snow from the "new york times." they went right to a very -- a science based study. a guy who writes for powder magazine. a guy who says snow is going to end and then we got 16 feet. go to squawk.cnbc.com. it was in the editorial section. >> i thought it was the travel

section. >> no. it was in the sunday review, editorial section. >> his point was the places where it used to snow a lot, it's not. >> you get used to it. if you're -- you know, if you're above virginia -- >> i can ski out of my house at this point. >> yeah. you need snowshoes to walk out of your house. >> i'm going to read this. >> in the meantime, let's get straight to the winter olympics in sochi. michelle, back to you. >> yes, speaking of the end of snow, snow snow here on the sea level of sochi. sitting next to me is john faraci, the ceo of international paper. great to have you here. >> nice to be here, michelle. >> you're here because your biggest investment outside the united states is russia. >> yes. great hockey game. >> and you get to do some olympic games, as well. tell me about frozen-nomics. january has been horrendous. february has been horrendous, as

well. >> when i left, i thought it was over. $40 million to $50 million in january. >> in costs? >> costs, lost production, lost sales, higher gas, energy costs and that is through the first couple of days of february. so if we've still got it going, i'll have to go back and see where it's hitting us. it's really geographic specific. when it gets in the southeast, that's what really mucks things up because they don't have the infrastructure to deal with bad weather. >> so now to russia. >> right. >> your single largest investment outside of the u.s. is here in russia in siberia. it's a massive pulp plant. why? >> a third of the mass is in russia and siberia. russia's siberia is right next to the biggest market for just about every paper product in the world, which is china. we saw an opportunity to invest with a partner. we're now in our seventh year. we just completed a $1 billion

project for the china market. >> so you had to come to russia. give us some content. how does it match up to the united states with soft width? >> russia is the biggest soft width basket. russia is closer to any other part of the world in terms of shipping products into china. our next closest competitor, shipping products to china, comes from chile. >> chile? that cute slip of land way down in south america. this plant that you have produces 4 billion rolls of toilet paper every year. >> right. >> all of that is going to china? >> 85%, 90% of it is going to china. >> i assume there's skyrocket g ing demand for paper towels in china. >> there is skyrocketing demand for paper towels in china. >> so a machine makes what? >> paper towels, bathroom tissue -- >> 40 going in there right now and how many are in the united states total? >> there may be less than a hundred. >> so they're installing 50% of

new capacity versus what's in the united states? >> that's right. that's right. >> so there's all this concern about china slowing down. what's your assessment based on what you see there? >> i don't think 10% is sustainable growth for a $6 trillion economy. think about it. 7% growth on the kind of economy they are now is going to be a lot more than 10% growth was five, six years ago. let's think of driving a car at 70 miles per hour and it slows down to 50%, it feels very slow, but it's still driving 50 miles per hour. wouldn't we like 7% growth in the united states? >> yes, absolutely. you're right. back to russia. all these concerns about corruption, they talk about corruption here in this corruption, they couldn't get the lights turned on because they had to pay bribes, etcetera. how do you deal with that? i assume you deal with it. >> well, number one, we have a good partner that we've worked with, that we've been sket successful with over the last seven years. and together, we manage this big

project. we had to deal with lots of problems, mainly weather in siberia. we had two winters in construction. difficult customs, difficult infrastructure, long lead times in supply chains. and, you know, russia is not the -- it's not a perfect market. to place is. but it's getting better. but we got through this project with -- we had some delays, but we managed the business the right way. and it probably cost us a little more to do that, but it was worth it. >> mr. faraci, thank you for joining us on "squawk box" on cnbc. guys, back to you and in an hour's time i might put on a coat when it gets a little cold. >> thank you, michelle, for that interview. we will see you in just a bit. coming up, adding a key to this winter, the any new season of "house of cards" making its debut on netflix. binging the whole thing for the weekend.

>> downton abby. >> are you? >> yes. >> and then we can be looking through this weekend, as well, the si swimsuit cover making its big debut. >> is that uncomfortable, andrew? do you know? is that uncomfortable? >> for them or for us watching. >> for them. >> i think they look very -- [ park sounds, sound of spray paint ]

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welcome back, everybody. netflix unleashing the second season of "house of cards" this morning. the entire season became available at 3:00 a.m. eastern time, midnight pacific. there was a social campaign on twitter to release it early because of the bad weather notice washington, d.c. area. plenty of episodes to view on this long weekend. i think president obama was tweeting no spoilers on "house of cards." >> it's just ripe for spoilers. >> you get the whole season at one time. >> that's crazy. >> is the president watching it this weekend? >> he said no spoilers. i think he's watching "talking dead" this weekend. there was an article at how he was trying to get the dvds. >> "walking dead" you mean? >> no. "true detective." >> i was going to be --

>> you'll be on at 10:00 p.m. >> i'll be good. >> there you have it. >> great episode. i can't say anything about this episode. it's a great episode. >> we don't want you to spoil it. >> you're going to keep the secret. >> i have to keep the secret. i signed something. >> usually you taunt me every weekend. >> so much happens. in the first episode it's only rick and carl and michelle. >> i saw the first episode. >> i can't say anything. i can't say whether anyone new shows up. that would imply other people survived from the prison. i can't say anything more. i was going to ask you about "true detective." mcconaughey is a great actor. >> he is a great actor. >> i like him early on and i like when he's drinking a beer. have you watched "true detective"? >> i've only seen the first one so far. >> first episode. >> i love where it's filmed, down in louisiana, new orleans. >> cool shot.

>> i have a lot of watching to catch up on. >> you like to watch. >> and talking about liking to watch, we have to talk about another debut that always catches nation's attention. people like to watch. >> yes, yes. >> the unveiling of the "si" annual swimsuit issue. >> that looks uncomfortable to me. >> the 50th anniversary making its debut on the jimmy kimmel show. when you say uncomfortable -- >> when that happens to me, i do -- i have to go somewhere where i can be alone and just sort of -- you know what i mean. >> no, you don't. you do it on set. >> are you talking about the wedgey? >> yes. >> that's why i wear boxers. because that can happen is why i wear boxers. >> i want to suggest this seems like a more risque cover. >> do they have tops on? >> the bottom is risque, too. >> three young ladies grace the cover.

nina agdel, lilly aldridge and chrissy teigen. who happens to be married to singer john legend. they rang the closing bell, the magazine hits newsstands on february 18th. there they are. wow. >> a lot more clothing there. coming up, the cost of winter. this latest blast of snow, ice and rain comes with a heavy price tag. plus, where does this leave the airline industry going that a holiday weekend? and from "squawk" master to candidate, neel kashkari throwing his hat in the ring to become california's next governor. we'll talk to him at 8:00 eastern time. because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. get our multi-point inspection with a a synthetic blend oil change,

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an industry grounded, with much of the nation covered with snow and storms hitting daily, how hard will this affect the airline sector? we start to see the mother nature effect, blame game for corporate america. and the flip side of frozen economics. while the brutal cold may be keeping some indoors, some are hitting the slopes. we talk about the ski business with a couple of local operators. "squawk box" rights now. ♪ let it go let it go ♪ i am one with the wind and sky ♪ ♪ let it go let it go good morning, everybody. welcome back to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the futures. they are flat lining.

we saw the dow futures down by 20 points below fair value. s&p futures are down. the ten-year note is yielding 2.737%. and in our headlines this morning, clothing retailer joseph a. bank is buying eddie bauer for $825 million in cash and stock. eddie bauer is owned by golden gate capital. the deal can be vacated. this morning, joseph a. bank is up by close to 3%. the trading week, at 8:30 eastern time we'll be getting january import and export prices. at 9:55, the university of michigan's mid-february consumer sienement index. mukhortova's windows 8 operating system is not doing

quite as well as its predecessor. it sold more than 200 million windows 8 licenses but that trails the success of windows 7. it sold more than 240 million licenses in the first year. the winter weather hitting the travel industry hard. phil lebeau joins us with more on the impact on the airline industry. i have to fly tomorrow, florida. i was thinking when they cancel all these, sooner or later they owe these people the ability to get to where they're going. should i be optimistic? they have to run the flights tomorrow, don't they. >> if you've got a ticket and they can get the crew there and they have a flight that's ready to go, you're first priority. >> make sure you check in early. >> i'm going to check in. >> absolutely. the good news is, take a look at the numbers today, joe, the ripple effect of this storm, i know it's not good news for the people who will be canceled or bumped from their flight today. they are starting to slow down.

cancellations, more than 1,300. there you see the delays of just over 2,300. not surprising because we're starting to see the storm move away from washington and up towards the d.c. -- or the philadelphia and new york area. washington dulles this morning has three of its runways open. at d.c. reagan, the main runway is open but we're still seeing the residual cancellations there as they try to get up and running. by the way, the worst impact this morning in terms of airported, charlotte. delays are running more than an hour there. not surprising given the fact that that ice storm is taxing the equipment down there. here are the airports feeling the brun, newark liberty, charlotte, philadelphia, reagan and laguardia, you'll see some cancellations there as this storm continues to linger in the new york area. we've been talking about this over the last couple of days. some people find this hard to believe, the airline index is up year to date. that's because when you look at the fundamentals and the fact is

once these storms go by, you have pricing power in the industry. that's what people are focusing on. >> one question for you, phil. we have watched all of these delays, cancellations. we haven't heard numbers for what this means for the airli s airlines. >> right. i've called a couple of airline analysts and they say the same thing, it's hard to get their hands over what the impact is going to be. clearly it's going to be tens millions of dollars. we'll see an impact in terms of revenue, the cost for the airlines. they've mitigated some of that because of the cancellations. we still haven't had a chance from any of the analysts we usually talk with on wall street. for them to say this is what we think the impact is for the first quarter. >> stay where you are, phil. some analysts we should say calling this a 20-year winter.

michael boyd, the boyd group chairman. >> they recoup some of it later. >> revenue or profit? >> that's just revenue. the point is some of that revenue comes back later to recoup when people fly. a lot of flights, people aren't going to fly again. grandma's funeral is over. they're not going. >> if each plane is worth 20 grand how many planes have been canceled and how many of those planes won't get the money made up later. >> the second part is hard. we're looking at about 10,000 cancellations as far as we know, the last two months, last month and this month. it could go anywhere between 250 million to 500 million depending upon what they're really going to recoup and how much it's going to hit them. remember when these cancellations take place, and things like that, crews are in the wrong place, crews can run out of time. we might have cancellations at the end of the month. they might have to cancel

additional flights because of that. >> do you think the stocks for most of the airlines is fairly priced given what's happened this winter? >> i'd be careful to pass on that because i'm not into that bit of it. the reality is, i think we're looking at a healthy industry going forward. this is going to have some impact on the first quarter. i think going forward there's a lot of good things happening in the airline industry. notwithstanding things like pilot issues and other things. i think it will be a strong year for the industry. >> there are things that the airlines could do that they're not doing that would help their cause given the weather? >> one of the things, first of all, they are preemptively cancelling for a lot of reasons, that's good. one of the things is, i love this stuff where the airline grandly allows you to change your flight when there's an event like this. why allow me to change it? the meeting is over, i missed the meeting, give me my money back. those are the things that hurt the airlines later on. they have to be more customer

oriented when it comes to these kinds of issues. >> phil, jump in. >> are you seeing true demand destruction in is the corporate traveler, that's the one they're most concerned about. is the corporate traveler leaving? is there any kind of proof that they're saying terrible weather, therefore, we're going to look to travel less because of all of this? >> i think so. i think there will be deterrence of people traveling to some degree. but remember, consumers have a very short memory. and by next week they'll forget about that and keep on booking again. a lot of that traffic is not going to be recouped simply because the meeting is over, the wedding took place, whatever. we don't know how much will come back. >> one of the questions i had asked in the last hour, the costs related to weather beyond simply the planes staying on the ground longer than they should, when you think about de-icing, the snow removal, all of those other things that happen, who pays for all of that?

>> well, hopefully it comes out of the airline's -- >> some of that will be indirect. do the costs get passed on immediately? does an airport charge the airline more during that period? how does it work? >> well, how it works, when they de-ice an airplane you end up paying for the glychol, which is $3 or $4 a gallon. it does add to the ultimate cost. those things, like i said, crews run out of time. we'll see cancellations again at the end of this month probably because airlines don't have crews. >> the final question goes to whether, when you think about places like atlanta who historically never see snow and don't have any of the equipment traditionally on hand in preparation for it, does this change anything? >> no. i mean, they're not going to invest, for example, i had the only de-icing truck in san

antonio. i used it twice a year. the fact of the matter is, it's kind of like jetblue said, sometimes you let the weather win. >> unfortunately we're letting the weather win. we appreciate your time for being on the program this morning. >> thank you. >> thank you. beyond the airlines, the impact of the winter has been felt in everything, from jobs to retail sales. chuck watson, the directser of research and development at conne connetic. >> that's a reasonable number. one of the problems with these ice storms, especially if you compare to a hurricane or tornado, something like that is the damage is lighter but very widespread. and just as a comparison, a hurricane will affect maybe 30,000 square miles. this storm affected 250,000,

300,000 square miles, ten times as much of the country was affected by it. it's a lot more defuse impacts. it's hard to pin down the exact numbers. things like retail sales get shifted around. your week over week sales may suffer. you'll get it back at some point. the problem comes in particularly for government expenditures. that's one we've been looking at the last few days. if you look at the state of georgia, this probably cost about $200 million in salaries, extra expenses, that sort of thing. it adds up pretty quick. >> a lot of the states, not just the states, also the municipalities in terms of what they've been paying for overtime, making sure that they're shoveling people out, do you ever make that money back? or is that a one-time gain, it's

gone and it's out. >> the great thing about government, you pass it on to the taxpayer. >> great news. >> yes, you get a double whammy. the other thing to consider is your tax revenues are reduced. state and local governments are particularly dependent on sales taxes. you're playing salaries for workers that aren't going anything, which 90% of your workers are nonessential. they're sitting at home. the 10% of your essential workers are getting overtime. you've got the fact that your revenues are reduced you get hit all around for that. >> what about the insurance industry? you can look at what we've been talking about with business interruption, what the airlines have been suffering. how does the insurance industry get affected by this? >> that's actually a real interesting one. ice storms, the damage is very widespread. and so there's a perception issue that seems worse than it

is from a damage standpoint. the actual claims generally aren't that big of an issue. what is the huge issue as you say, business interruption. that's when the insurers and re-insurers are nervous about. they plan for these kind of events. what we've seen the last couple years is it seems like the frequency of the extreme has been increasing. there's a couple reasons for that. one of them is our infrastructure is more vulnerable to these disruptions. we have more stuff that can be affected by it. also, those in the climatology business looking at it, it does seem they're more extreme. blame employment change, look at whether it's a normal or cycle. my research and the folks i work with seems to indicate there are human influences on it. that has the insurance industry particularly nervous. once you start talking about 50

billion, $100 billion impact, those are the ones that get hit. that hits the broader capital market. they are having to pull out of the capital market and shift over to paying down to the insurers and ultimately to the consumers. >> chuck, thank you for joining us today. good talking to you. >> thanks. take care. the times of london. >> it's owned by rupert murdoch. >> that might explain it. "the new york post," did you see this. >> also owned by rupert murdoch. >> this is an article from the times of london. i don't necessarily buy into any of this. men have larger brains than women it says. a study by scientists at the university of cambridge concluded that the volume of the average male brain was 18% to 13% larger than a woman's. >> that's funny. sounds like something you said to me about 20 minutes ago. >> i want to see you tiptoe around this subject. do you think it means anything? >> no.

the density of smart stuff in the brain, in mine -- >> it's folded over. >> it doesn't really help. >> i don't think like the jumble record for the last five years that i'm so far -- you know, what is it, basically twice as many wins. probably has nothing to do with this. i would say, right? >> probably not. >> anyone else want to say anything about this? >> you are so scared. i wanted to throw it out to you, anything you could be beyond record on this. >> i'm going to pass it to larry summers. >> you've been telling me for years that size doesn't matter. >> i have. i've been trying to make that case. good one. let's leave it there. next, how the wicked weather will impact earnings. plus, the snow and ice means more skiing and the industry is enjoying -- that industry, enjoying the big mess. we may get the pulse of the snow economy from the mountains when we return.

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♪ do you believe in love

♪ do you believe it's true ♪ do you believe in love ♪ you're making me believe it too ♪ >> take a look at the futures this morning. they're flat lining. earlier we saw the dow down by 20 points below fair value. yesterday the markets were up. >> red is for valentine's day. >> 60/40 is not that different than 50/50. i'm using my big brain to figure that out. it's only ten points. >> j.m. smucker, earnings and revenue missing the mark. the company cites more competitive pricing and currency issues as well. >> this winter has been a long and difficult one.

>> particularly with retail sales, basically what you see traditionally is that if something happens that's weather related it dislocates, if it happens in the same quarter you'll probably see it come back. more concern would be what the impact would be on the construction trade. there's seasonality to that already. it's practiced into the industry. also it get featured into the analyst expectations for it. we've had rough winters before. >> how did we do in the quarter that ended in december? we're almost finished with that quarter. you point out up 7.6% but the equity markets haven't gone up. there's been a disconnect between good earnings and the s&p. >> it's interesting. if you look historically, this is interesting, right?

you have almost 8%. i think the fourth quarter will end up with 8%. the s&p 500 is trading on about 15.3 times next year's earnings. that's right along the historic average. i've been waiting years to be able to say that. we're there, okay? it's about 7%. we're better on the last quarter, right? at 15 times earnings. so what's really interesting, what i find interesting is the fact that the u.s. economy's growth is so slow yet you're commanding something that, valuations and earnings growth rates that usually co-exist with a morrow bust economy. that i find interesting. then it gets a lot of speculation as to why that's occurring. >> and? >> i think it has to be with rebalancing a global portfolio for companies. i think what's happening, you usually see this kind of valuation. you expect proportionately it would be skin the. you're getting credit for half a

percent of gdp, not here but coming from the benefits of having the ability to take cost centers overseas, use that for production of goods here and developing new markets. >> i can think of other reasons why it could be happening from both sides of the aisle that would explain it. corporations do continue to do better than the macro economy because, you know, the casts that their generating and the good profits and the good margins, they seem to be tight fisted with it because they're more rediscent. the corporations, the ceos are still tight fisted. unfortunately that makes the overall economy and people in it feel less flush than the stock market and the ceos that manage it. it doesn't feel that great right now. you ask most individuals, they

don't think the economy is very good. you look at corporations, they're doing great. >> we're talking about this yesterday. i think the only thing i'd say that's concerning around retail sales, we've had two back-to-back weaker retail sales in december and january. you had that mortgage application index take a little dip here. after the jobs report, you know, this is going to be ironic. i think your one piece of -- investors are probably starting to think your one piece of economic bad news away from good news which is that you can probably suspend further takedown of the taper, which will support valuations. >> all right. so this is good that they're doing that then? >> it's perverse, right? strangely enough what you do, what happens, if you get another bad piece -- listen, then we took $10 billion out of the monthly spend, right, look what it did. the markets got all dislocated, didn't feel good for a while, a little bit of a stomach ache. you have bad numbers. the market starts come back. they say hold on a second, they're going to basically not

be encouraging aggressive withdrawal of this taper. >> some people say they'll pause in june. do you believe it? >> i think it could happen sooner. >> they could pause sooner? >> yes. i think one piece of bad economic news -- >> one more piece? >> yes. >> michael, thank you. >> thanks for having me. are we going to head back to sochi? well, we are going to head back to sochi where the end of the snow is already happening. for the east coast, there's no end in sight. even more snow in the forecast. a perfect time to check out the price of natural gas, which has been moving higher since the start of 2014. a lot more "squawk box" from a snowy east coast. later, a little bit sochi. back in a moment. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities.

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that's what the music is about. get the word, the jumble update, watch carl down four shots of vodka. yes, he's eating caviar flavored potato chips and learn about the end of snow. go to squawk.cnbc.com. up next, digging out and cleaning up, the most recent storm spanning from atlanta to main. we check in with home depot to find out how it's been handling snow and ice and if it's helped ice. we'll be right back. [ both sigh ] ♪ ugh! ♪ you told me he was good, dude. yeah he stinks at golf. but he was great at getting my claim paid fast. how fast? mine got paid in 4 days. wow. that's awesome. is that legal? big fat no. [ male announcer ] find out how fast aflac can pay you at aflac.com.

♪ somebody somebody ♪ can anybody find me somebody to love ♪ welcome back to "squawk box." happy valentine's day. we have a lot of valentine's day music today. let's take a look at some of the stocks this morning. joseph a. bank buying the eddie bauer brand from golden gate capital for $825 million in cash and stock. it has the right to end the deal. this is the important part, if it gets a takeover bid that it feels creates more shareholder value than this deal.

there's a little bit of a soap opera going on on valentine's day. maybe a third party will emerge and try to have an affair. i'm taking that too far. >> way too far. >> clothingmaker vf corps, take a look at that stock. it was 2 cents short of estimates. 2014 forecast falling short of analysts forecasts. vf did benefit from higher sales of winter gear. all of us out there in the snow, but did see weakness elsewhere and then fireeye rising in premarket trading. news of cyberattacks becoming more common. >> let's get an update on when the snow will stop in the northeast. the weather channel's alex wallace joins us with more. we have our own bet here in the office. we're trying to figure out when all the snow they plowed in the

back was going to disappear. i took may 6th, i bet. >> that's a good bet. it may even be later than that because there's actually more snow on the way. i know you don't want to hear that. this winter storm, bringing us light snow showers, vermont, new hampshire, into maine. that continues to slide to the north and the east. we'll be clearing out as the day progresses. here comes the next weathermaker. light snow in and around des moines. this will try to sneak its way down to places like st. louis. eventually working into places like indianapolis. then working its way to the coast by tomorrow. it's a pretty quick mover, by tomorrow, just off the coast but then we get a little bit of a disturbance that helps to really energize this thing. we'll be talking about it strengthening rapidly. big-time winds and the snow will be coming down as well. the current thinking is coastal sections of new england will be getting hit the hardest,

possible blizzard conditions in these areas, including in around boston, portland as well, snow showers back from new york to d.c. yes, the winter that just won't stop. it continues, guys. back to you. >> are we still going to get a storm next tuesday, alex? >> looking that far ahead, there's another one coming right down the pike. one thing at a time. we'll focus on this one first. >> all right. alex, thank you. >> the end of snow. the city of atlanta iced in for a second time in a month. joining us now on the "squawk" news line is chris waits, home depot's regional vice president. before this, could you buy a snow shovel in atlanta. >> you could have got ice melt and other supplies for sure. >> in atlanta? >> yes, ice melt and generators and things of that nature. wouldn't that sit around for a while?

you don't lake to carry inventory that never moves, do you. >> that's right. >> you do not but you still had some. >> we had very little ice melt in the market. >> very little you're saying. >> little before the storm, yes. >> is anyone thinking about this could be for next year, are you going to have different inventory? would you start to do that yet? or is this a one off do you think? >> i think it's probably premature. i don't make those decisions for the company but typically atlanta doesn't get hit with this many storms, especially so close together. >> no. that's true. so as far as the normal business -- maybe you can speak to the midsouth, but if you were to try to forecast same-store sales for the month of january and february down in atlanta, is it going to be a decline? >> i really can't comment on that. we'll give updates on the storm and impacts in our earnings call during the next week or so here. >> are there any segments of the

stuff you sell that's been booming because of what's happened? >> well, the things you would think typically would sell like generators, i mentioned a moment ago, sand, salt, ice melt. in atlanta we didn't have a whole lot of those things other than the san. this time the storm came in the night before and early in the morning before people went to work. everyone heeded the warnings and weren't on the roads. everybody really stayed in. we actually had to close a number of our stores early on wednesday, which is very rare for us. we got all of our stores back up and running on thursday. >> chris, i know you have an advanced supply system that looks ahead and figures out where the storms will be. did you ship in a lot of things in anticipation of these storms. >> the way the storms tracked it was hard to pinpoint what was going to happen. we don't want to track inventory into a store before a storm like

that. when you get further up the east coast, you know the snow is coming and it will be everywhere. it's easier to spread things into stores and really pinpoint down in the south, it's hit or miss. >> chris, we appreciate it. thanks for calling in today. >> thank you. >> see you later. >> bye-bye. coming up next, all this fresh snow may cause travel trouble but for skiers, it is a pure delight. we speak with the ceo of peak resorts in just a moment. still to come, banker turned politician, neel kashkari on the state of the markets and his run for california governor. "squawk box" is back after the break. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here...

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welcome back to "squawk box," everybody. the futures are virtually flat at this point. we did see higher markets yesterday. not a whole lot of movement. you have trulia, the company

says it's going to start campaigning this year to start a target campaign to customers using mobile devices but still that stock is getting pressured, down by 12%. >> let's talk about the ski business. while the brutal cold may be keeping some indoors, plenty are hitting the slopes. tim boyd, founder and ceo of peak resorts. and bill bennian, ceo of mountain resorts. how are people getting to some of the mountains? >> well, i mean, that's always a challenge. that's why in terms of the storms, it's a lot better for us if they hit on wednesday, thursday, friday of the week versus hitting on the weekends. that does give everybody a chance to get up to the resorts. >> are ticket prices going up? >> ticket prices or because of the snow. >> either because of the snow? >> no. >> what's the average price at one of your mountains.

>> $65. people are paying full price they're not looking hard enough. >> what should the average customer be paying at one of our places? >> typically you can get 5% to 7% off. we use a program online, very much like the airline program. it's demand based. if you buy earlier, before conditions are clear you can save. >> tim, you in the same place. >> pretty much. the prices generally don't change due to the weather. they change during the holiday periods and the weekends versus the weekdays. >> is the big money in the tickets themselves or everything else around the ticket? i want to understand the economics of how this works. i'll go to you first. >> ticket will represent about 75% to 80% of the revenues and then food and beverage, retail, lessons. >> i always thought it was vegas. the room was one piece of it but it was all the other stuff that was actually what was -- >> for a day visit ski area, we have four hotels. lodging is a piece of it. admissions drives a big piece.

a lot of ski areas like ourselves are driving that presold. >> right. i've been surprised by the snow in this area this year. has that helped with bringing people out to mountain creek? >> absolutely, of course. this snowstorm, it's still about snow making. because of the base we can build with, manmade snow, we're open all year every year. this insights the interest of the confluence, the snow, president's week, the olympics, it's lined up to be a banner week. >> how much are you up this year over last year? >> about 15%. >> one of the things that joe raised over the last week, an article that ran "new york times" in the last sunday or the sunday before. >> yes. >> it said the end of snow is coming. did you see this piece. >> i haven't seen it. i have heard about it. >> are you worried about weather patterns? >> no, not really. the industry has had a huge amount of advancement in our

snowmaking technology. basically we've been able to level the playing field considerably with mother nature. >> right. >> and most of the time, you know, the snow making is what makes everything tick and is the backbone of our industry. the weather is really not going to have that big of effect on us. >> let's play that music again. we'll ask you a question again, tim. are you -- let's get that going again. are you worried about the future of snow? give us the right answer here. >> you can hear that, can't you? >> i can sort of hear that. >> do you care about it? is this a big issue. >> does it look like we have a problem with snow this year? >> what year is it coming? we have more co2 than ever. what happened this year? when is it coming? >> you're in the snow business. you must have a view on this. >> we're in the snow business. i hear the music, too. we're not worried. resorts, tim and i both run what

we call urban resorts. 100% of the mountain is covered with latest technology. as long as we get temperatures, we'll build snow, build a bass. last year was a great example. >> two years ago we had almost no winnerer it. that you had -- that was good for you guys. you could say to people, but this is not good this year. >> that's a great example. two years ago we filled union square with truck loads of snow. why? because we had so much snow on the mountain we could do it. we taught kids to snowboard all day in union square. >> i want to know about the technology in making all the snow. how expensive is to outfit an entire with this stuff? >> it's extremely expensive. the biggest investment a resort can make. you're talks tens of millions of dollars, well worth it. to operate it is not inexpensive either. >> will you ever be able to

replicate the powder of the west? >> when we have temperatures like we've had this month, absolutely. conditions have been stellar. even with the snowstorm coming we're still making snow to line it up, best conditions in two decades, hands down, no question about it because of the skin the cold weather. that's been the key. air, water, fan guns, it's a little bit of science and art. >> what would the fan gun do? >> electric powered gun with high pressure water coming through it. resort operators like to mix and match the technology to meet the conditions where you have temperatures and humidity to get the best snow out anytime you can. >> another question, this relates to the olympics. i'm just looking at an image of a snowboarder. what's the breakdown now of the consumer in terms of skiing versus snowboarding versus potentially doing sort of a snow park kind of, almost like a -- what do you call it? >> terrain park. >> how much of that is the business?

>> quite a bit. i'll speak for us. in the industry about 30% is snowboard versus ski. a resort like ours which is urban based tends to be more 50/50. terrain parks have been a big boone to the industry. it brings in a lot of the youth segment. aspirational. you want to keep going back and learning again and again. it's repeat visit, very tolerant. it's a good density. you can get a lot of guests in a small area. it's about the features, not about the big white slopes. >> can you stereotype your user, does the snowboarder spend more than the skier or does the skier spend more than the snowboarder. >> generally speaking what we find is the more beginning oriented customer is going to spend more money. they're going to be the people that rent the equipment. they're going to be the people that take the lessons. i think that's probably true in any recreational sport. the more advanced somebody gets into the sport, generally the

less money they tend to spend. >> will the rise of the snowboarder, is that going to eventually peak, do you think? skiing is not going away, obviously. will it end up at 40%, 30% of the mountain someday? >> there have been signs of thatha that. you know what's hot now? skiing is sexy again. free skiing, twin tips. a lot of the market is turning to that, both young and old. we have a guy 90 years old that skis on twin tip skis. i don't know if he goes backwards or not. >> they're loud, obnoxious. >> the snowboarders. >> the knuckle draggers. >> yes. >> you'd rather go to a mountain they're not allowed. >> i would. that would be a selling point for me. >> there are some mountains like that. >> you hear them coming down. >> how do you feel about head

phones and skiing? >> i was probably one of the first kids to wear a walkman in the late '70s. i'm okay with it. i don't care them myself. i keep the tunes in my head. >> how about smoking a big joint on the lift in colorado on the way up? is that smart? >> i haven't been to colorado this year. i'll have to check it out. >> i saw people doing that when i was there in college. >> thank you. >> even before it was legal i saw people doing that. there's me. that's not bad. that's much steeper than it looks. i am carving some of the turns. >> terminal velocity. >> bill, tim, thank you both. when we come back, is under armour's suit slowing down speed skaters? we'll get that and more buzz from sochi. and "squawk" master is running for governor in california, neel kashkari will join us. right now, take a look at the futures.

they've been relatively flat. the futures 20 points below fair value. "squawk box" will be right back.

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cnbc's chief international correspondent michelle

caruso-cabrera is in sochi russia with the highlights. it's hard. i looked at the suits. i can't tell whether you'd be slower or faster. isn't it the slightest little intenization we're talking about? >> this vent at the back. the controversy about the under armour speed skating suit worn by team usa. it starts because of this disastrous finish for shani davis in men's 1,000 meter. he came in eighth though a lot of people thought he would medal. ditto last night for the women with heather richardson and brittany boe finishing 7th and 8th. "the wall street journal" citing three people familiar with the team, they say they think the vents on the back of the suit designed to allow heat to escape are causing too much drag. under armour put out a statement, here's part of it, mach 39 is the most tested suit in olympic condition.

while a multitude of factors ultimately determine on-ice success. many skaters have reported personal best sea-level heat times, split times or race times this week. we're rooting for that to translate into medals over these next couple of days. the official statement is this, the evidence does not suggest that the suits have contributed to the disappointing results to date, however, there are many factors that determine olympic success. and we are constantly making adjustments to improve results. we're working with our athletes, coaches, trainers and under armour to figure out what we can do to produce better results for team usa at these winter olympic games. stay tuned, guys. let's get on to good news, the slopestyle skiing event was a team usa sweep. the gold, silver and the bronze. look at that. this is unbelievable event to watch. i hope you saw it last night. men's figure skating, american jeremy abbott overcame a very

tough fall, finished anyway. in his first jump, this is a quad toe loop he missed the landing, hit the ice hard. slow to get up. the crowd encouraged him. he did. he finished. take a look at the slow motion video. he lands a half turn short and he hits the ice squarely on his right hip. he finished 15th. which brings us to tonight, the men's figure skating final, also the men's supercombined gold medal final in alpine skiing. we get to see ted ligety make his debut and bode miller trying for a medal. and women's freestyle skiing aerials. fun. and curling, team usa and russia. here's the medal couldn't the.

germany has the most golds, norway with the most medals, 13. netherlands 12, the u.s. has 12. back to you. >> we're going okay. we have work to do here. politics and business with former treasury tarp czar, neel kashkari. that's when "squawk box" returns. still to come, the winter weather wreaking havoc for airlines. we get an update on cancellations and when flights will take off with the ceo of flight aware. i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today.

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geico. frozenomics. wintry weather putting a damper on consumers but not stocks. plus, the ceo of flight aware. from squawk market master. former tarp czar and pimco executive neel kashkari will join us. and "squawk" goes back to school. martin feltstein on business conditions, the economy and the fed. the final hour of "squawk box" begins right now ♪ i don't care if monday's flat,

tuesday wednesday ♪ ♪ thursday never looking back it's friday i'm in love ♪ >> welcome back to "squawk box," cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. the s&p, in case you're watching closed at 1829 and change. it's down 20 points from its high. 20 divided by 1850 is fractionally lower than where it closed out the year. it's going to be a long year. here's the 1850. are we going to see 2014 with a line underneath or does it get above the close last year? >> we can only hope. we'll get you through some of the headlines. we should also wish you a happy valentine's day. we have a valentine's day deal this morning.

j jos. a. banks, if they receive a takeover bid it feels will boost shareholder value more than the eddie bauer acquisition. it could spurn -- and go to men's warehouse if men's warehouse were to be a suter if you will. i've stretched it too far. the move will create the state's largest natural gas producer. shares rising on that news. and hackers have reportedly drained an entire bitcoin wallet belonging to silk road 2, stealing currency worth $2.7 million. this is a big issue.

he's talked about how safe it is. now it seems less safe. the hackers are said to use a denial of service attack, the same bug that has hit several bitcoin exchanges such as mt. gox. the original silk road originally allowed users to buy and sell unlawful goods and services anonymously. should we say what those services were? maybe not. after fbi closed down the original site, silk road 2 was launched in october. there are some illicit things going on on silk road. but we won't say what that list might be. this man is best known for helping the country navigate through the financial crisis. now he's taking a shot at the highest seal in california. joining us is republican governor hopeful neel kashkari. >> good to see you. >> this is the first time we're speaking to you since you made this announcement.

>> the state of california, i love the state. it's failing millions of middle-class families. 17% of californians either have no job or are stuck in a part-time job. our schools here are ranked 46th in america. you put those two things together, we have the number one poverty rate in america at 24%. the current leadership in sacramento, governor brown, isn't doing anything about them. someone has to try to help. >> so what would you do if you were to be elected? >> well, there's so much we can do to create jobs. people don't want welfare. they want to work. they want a chance to work hard and give their kids a good education. if we look at the oil and gas sector, you mentioned oci, california has huge untapped potential. we can absolute develop our natural gas resources, oil resources while protecting the environment and that alone could create literally hundreds of thousands of good jobs. there's a contest among all 50 states, many governors come to california to try to lure our

jobs away. there's a contest but we're not competing. we're asleep. california doesn't have to be the cheapest place in the world to do business. we have a lot of advantages. but we do need to be in the hunt and we're not in the hunt today. >> what are a couple things you'd do quickly, lowering taxes? are there other things you'd do first. if you had three top initiatives what would they be. >> oil and gas is one of them. the regulatory complex, this is like a giant ball of yarn, becky. every year it gets bigger and bigger. it's crushing small businesses in california. we need to streamline our regulatory process so we're not punishing businesses, we're out there encouraging them, helping them to succeed. we have to compete to try to bring manufacturers back to california so that we have strong job growth here. we can absolutely do this if we wake up and work hard. i'm absolutely going to do that. >> you have been able to raise money quickly for someone who is announcing they're getting into this race. you raised something like

$900,000 in the first two weeks. that is outflanking some of the others running for the republican nomination. you are potentially going up against jerry brown who has $17 million in his war chest. what are the odds someone could outseat jerry brown? >> the public employee unions will fund his campaign fully. we'll need to work really hard. i believe we'll be able to raise the resources we need to get out message out. the key is we have the better ideas. the status quo today is horrible for millions of california families. middle class families are struggling, many families in poverty. i want to be a voice for them. the good news is, pro-growth economic policy, give people a good education. grow the economy so they can work hard. this is how you lift people up. that's what my campaign is about. we're going to make governor brown answer. once we get our message out and force him to answer, anything is possible. >> let's talk about the country on a broader scale. where do you think we stand right now? we have seen lousy economic

numbers. >> i'm nervous. obviously we enjoyed the stock market going up strongly last year. that's why california's coffers look like we're in a budgetary balance. i think we'll continue to be in the muddal long scenario. i don't see strong catalyst for the stock market to go up strongly from here. i'm not paying a lot of attention closely to the day-to-day stock market. it does feel to be much more of a stock picker's market than any broad-scale rally over the next 6 to 12 months. >> you don't think it's just the weather? >> i think the weather has played an effect. we've had warm weather in california, low rainfall. we're obviously suffering a drought, which is a huge challenge for us here. different parts of the country are experiencing it more than others. i don't see the big catalyst for robust economic growth given what's happening in the global economy. it will probably be more muted. >> why do you think that is?

>> i think we're coming out of the terrible shock from 2007 and 2008. the worst is behind us. where the big engines for economic growth in america? one of the things i want to do, i want to make california a giant economic engine for the whole country. but today to give you that data point, 17% of californians, we have one of the highest unemployment rates in the country. if california is going to grow this slowly, it's going to be an anchor for the ref of the country. >> neel, one of the issues is that corporations have not been using cap ex, spending as much money, hiring people and bringing them back in. we have this debate constantly on the show. what caused this, is this a chicken and egg? how do you get the companies to feel more comfortable to hire more workers? >> our economy is transitioning more towards a knowledge economy. i want to bring that back to california. we need to make sure our workers have the skills they need. you know this. there are a lot of jobs going unfilled because workers don't

have the right skills in the right locations. i think globally we're seeing a breakdown and the consequences of a failing education system. too many kids are not getting the skills this he need and businesses are not finding the workers they need. it's not necessarily one or the other. we have to do it all at the same time. my platform, jobs and education, we have to do those both at the same time. we know how to do this. we can do this. we just need to be setting our expectations higher and really go after it. >> education is a long-term problem. it's also a pretty expensive problem. it generally means the state will have to spend more money. that's been part of the problem. california has been keeping up in terms of putting some of that money back, particularly into higher education. what would you do differently? >> that's a great point, becky. 30 years ago we spent about four times as much on higher ed as we spent on prisons. today we're spending the same amount on higher ed and prisons. our priorities are all wrong. there's so much we can do, for example, by adopting technology. if there's a great history

professor at uc berkeley, wian is the that professor's class available not just to every other uc student, but every other cal state student? we can expand capacity and lowering costs while maintaining standards. >> are you suggesting we should be spending less on the prisons and put it toward education? >> by expanding college availability we can help to bring down that prison population over time. if we do the two things i'm talking about, put people back to work and give kids a quality education, we'll have lower drugs. we'll have less crime and we'll have a much stronger budget, because people will not need welfare. they'll be earning money and paying taxes into the system. that frees up resources to invest in all of these other areas that are important priorities. >> that's a great plan but it's also a long-term plan, neel. what happens in the near future?

if you were to get elected, what would you do in the four years you had? >> on the jobs front, oil and gas, regulatory reform, improving the state's economic climate so we're luring factories back to california. that will also help put people back to work right away. on the education front, california spends more than $40 billion a year on k through 12. the estimates are half of that money is actually making its way into the classroom. i visited some of the best schools in the state and some of the most challenged. even in the most challenged schools i've met great teachers who are frustrated by the rules coming from sacramento and washington, d.c. i want to put the money that we're spending back in the hands of teachers and parents and give them the control so they can customize the education environment. we can bring vocational training back into the classroom. we're not doing that today but we could be. >> neel, do you think gerrymandering is one of the big problems in california? one of the big issues is how divided the statehouse has been.

>> what's a bigger problem, gerrymandering or jerry brown? >> gerrymandering we're at least trying to solve. we're trying to take the districts out of the hands of the politicians. governor brown is an honorable man. he's just unwilling to do the really hard work to take on the special interests and tacking the status quo. if the status quo was great, he'd be the right guy to be governor. the status quo is failing millions of california families. that's why i'm running for governor. >> neel, thank you for coming. we hope to see you again soon. >> great to be here. thanks for having me. >> good luck with it. >> neel kashkari, running for governor. >> unbelievable. saving the country in washington, now he's trying to save a state. >> i'd love to have a friend in the california governor. i think he'd be good for the state, too. it's very blue, obviously. it's possible. you know who else was governor of california? >> who?

oh, arnold. >> who? >> ronald reagan. >> you weren't born. >> i was born. he was the first president i remember. i was born, jimmy carter was really -- >> oh! >> it's vintage you don't appreciate. >> well, well. >> i'm going to start wearing my jimmy carter sweater. >> you have. >> it's a cardigan. that's right. up next, travel delays hitting the airlines. we'll get an update on those that have been hit the hardest. an update from the ceo of flight aware. as we head to break, green arrows for now. [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love,

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welcome back to "squawk box," everybody. again, the market looks like it's flat line, at least for now. there was low volume on the new

york stock exchange. the dow future is down about 16 points below fair value and the s&p futures are off by about 2.5 points. vf corporation is falling in premarket trading this morning. its latest earnings missed estimates and its 2014 forecast fell short of the forecast. the cold weather did benefit the northface brand but that was offset by weakness elsewhere. eric wiseman will join "squawk on the street" later this morning. weight watchers earned 54 cents a share, missing estimates by 7 cents. it's full-year forecast below consensus as well. fewer people attending meetings and doing things like monitoring themselves with these wristbands and other things they can do. >> you can wear them. they're great. >> that is a way of -- i think part of the appeal of weight watchers and nutrisystem is someone will monitor you. >> instead of monitoring the calories, they're sending you

stuff. if you don't eat anything else, you can know what your intake is. >> this doesn't manner it your intake. >> how many calories you're burning. >> how many calories you're burning and if you get the scale, they have scales that wi-fi up. you get on the scale, it tells you your fat content, does the whole thing. weather and flight, snow continuing to hit a large portion of the country. the airlines cancelling thousands of flight. joining us now to talk about it is ceo of flight aware, daniel baker. how bad is it? >> it was a really bad week. yesterday had more consolations than any other day in 2014. the whole year has been really bad. we've seen throw or four times as many cancellations year-over-year, looking at 2013 to 2014. the year is off to a bad start. what's been interesting is that there's been a lot of storms and a lot of them have hit areas that don't typically get this kind of weather.

we're all used to a big storm hitting the northeast, a nor'easter comes in, snow comes down, flights are canceled. that's the playbook that passengers and airlines are used to. we saw certainly in the last week or so, big cancellations at dallas, for example, which doesn't get a lot of winter weather and the big story this week and in the past has been atlanta. atlanta saw 70% of the scheduled flights canceled for a couple days. that impacted delta which canceled more than 50% of its flights for days. that's just not an airport that sees a lot of this weather. it's led to an exceptional year and bad week. >> daniel, help us with news you can use. if you're a consumer, use flight aware. that's one way to do it. how different do you think the flight aware data is from the airline website if you're trying to figure out whether i don't you should run to the airport or not? >> it's a pretty big difference. the airline website is taking their schedule and their updates to the schedule that they published to consumers and they're putting it out there. flight aware is looking at real time air traffic control data. we're looking at data when the

airports say we're not taking new new arrivals for the next hour. we're looking at real-time data from the airplane, maybe the flight coming in to serve your flight. so we tend to have a lot of delay information that we can publish ahead of time. certainly when we say a flight's canceled we got that information from the airline. if you have a flight alert we might push it out earlier it you. we can advice a lot more about delays. >> what is your personal routine? i actually want to know, what do you do? >> the key is to be pro-active. i would have set up a flight alert on flight aware yesterday. airlines are announcing these delays and cancellations 12 or 18 hours in advance. the key is to be pro-active. keep checking your flight status, particularly if you're flying to or from an area that's seen a lot of bad weather. if you think you might be delayed, reroute yourself. don't wait for the airline to call you or e-mail you or go to the airport. i don't show up at the airport

very early but i'm watching ply night for 24 hours in advance. what airplane is coming in to serve that flight. i'll track the flight coming in to serve my flight. if that flight is an hour late, your flight is not going to leave on time. >> good advice. thank you, daniel. stay warm. let's hope the planes take off the way they should today. >> thank you. >> happy valentine's day. >> tomorrow. you're getting on an plane tomorrow. >> i might look at that. coming up, back to the olympics from medal count and the latest from the games. then the business of brocade. we'll have the company's ceo after we come back from a quick break. execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments.

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team usa is back on the medal board, thanks to the x-gamers competing in sochi. carl quintanilla joins us live from olympic park with more on that. great to see you today. >> good to see you, becky, happy friday. >> thank goodness for the x-game sports. take a look at the medal board as we stand on this friday. very close to first place, norway has 13, we have 12 along with the netherlands. that u.s. medal count guys could

not have happened without the sweep. by that we mean men's slopestyle skiing, three americans on one podium. josh -- joss christensen. we talked to joss a few minutes ago. he dedicated the medal to his father in passed away in august. he talked about when the moment of that history, that sweep actually set in. >> i would say when we did the medal ceremony last night, it hit and i realized what happened. seeing three american flags raised up and we all have the same anthem. it was just something i'll never forget. >> one dramatic moment from last night was the women's short track 500 meter. take a look at this. elise christie of great britain is disqualified for causing a fall on the final lap of the

final. she takes out the italian skater, the creigh wrap skakore. china has won that event, guys, in four consecutive winter games. finally, probably the single biggest event of the entire olympics is going to be men's hockey tomorrow. u.s. versus russia. 34 years after the miracle on ice in lake placid, guys, it's kind of a tough call as to who may win. both the u.s. and russia beat their opponents earlier in the week. russia struggled a little bit more than some people thought they would. that is going to be a huge, huge matchup with a lot of egos and even politics involved, too. >> carl, have you seen bob costas there? >> i've not seen costas. his hours are a little bit different from ours. he's doing primetime and meredith vieira a few moments ago said she's filling in for costas tonight. >> i wondered who it would be.

>> i know bob is hoping to get back if not for the weekend then certainly for the beginning of next week. >> it's a contact thing. >> once you get conjunctivitis, it takes a while to get over it. >> he sounds just like bob. he sounds fine but the light, the bright light, it's difficult to read for him. >> sensitivity. i've had it myself before. it's a bear to get rid of once it's there. okay. >> i travel home tomorrow. so this is our last olympic chat. >> no way. >> oh, wow. >> one to ten? >> brian sullivan will be here next week along with michelle. >> look forward to talking to him. have a safe trip back. >> when you watch those -- you just -- you watch those moves and how high they are up in the ear with skis on their feet. you know how when we get a little air, just the feeling in the pit -- >> yes. >> to get air like that i need

to be on the chair lift. that's the only time my skis are off the snow. >> and to keep your skis parallel as the wind wants to blow your legs apart, unbelievable. >> it just is frightening. they practice with swimming pools and those big -- >> foam pits. >> foam pits. >> imagine the first time you have to do it on the actual mountain. >> that guy was so young. >> that's the thing. i never understood how you first get into it. how do you first get into this? you know? the first time you decide you're going to do that? >> i don't know. >> hopefully you're coming back to like 8 feet of snow, carl. >> i know. believe me, i'd love to stay here. >> bring your skis. we will see you soon, carl. >> okay. >> coming up, let's talk about import and export prices for january. that, plus, harvard professor on the economy and the markets.

get the jumble update, watch carl down four shots of vodka and then to top it off, he eats caviar flavored chips. go to cnbc.com and keep up with the show over the weekend. back in just a moment. requiresr business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

welcome back. we are just a few seconds away from import/export prices for january. rick santelli is standing by at the cme in chicago. rick, take it away. >> all right. january import prices, you know, i was betting the ranch that the numbers would be on time today. this is not a good thing. i'm sure it's weather related. i can sympathize. i have all my spotters here from foreign exchange looking for them. whether it's an airplane or a data point we'll pick it out for you. i guess what's noteworthy without the data coming out at this point is that yields somewhat moderated back into a range but grant it's still a bit higher than our low yield for the year which was around 2.58 on the 3rd of feb. one other thing we should talk

about, the supply this week moved pretty well. maybe the runup caught some flat-footed. becky and andrew, the data isn't out. >> it isn't out. i'm looking at at bureau of labor statistics websites. they say the next release is coming at 8:30. they put the numbers up -- >> hold on. we have it. >> import 0.1, export 0.2. >> 0.1 increase on imports, 0.2 increase on export prices. of course, thanks, nick. nick does a good job helping me look around the floor. these are close to expectations. we were looking for negative numbers on the import month over month. maybe that's a little bit better news. i think ultimately import prices aren't going to divine for us. everybody will be looking to, of course, see how university of michigan plays out and the 9:15

numbers, production, utilization. good luck with these. >> you're supposed to have the data. they're ready to trade on it and the data is not there. >> have to live like the rest of humanity now. >> right. it's not bad. i wouldn't mind if they did it this way all the time. >> because they put it up on the website? >> the fuel prices they say fell for the third time in the last four months in jarnl. that was part of the drop. yes. >> one thing i see interesting, year-over-year import prices down 1.5%. that's in line with expectations. but you know, it's a big drop from the 1.3 we had last time. what were you going to say, becky? >> i was going to ask you what you thought about where we've been watching the ten-year bond at this point, what the yield has been doing? >> this is a very unusual year for all the interest rate

traders out there. i think the normal cast of fundamentals we look at are really taking a back seat on big market moves. that's all about stocks. i think the first half of this year will continue to be that bonds, treasuries will have kind of a double life. and their double life is, of course, watching things like the data and the economy. but the other part is being the only natural hedge for weakness in equities. whether you look at the '87 crash. throughout history, some of the biggest up moves in treasuries are caused by some of the most unforeseen, unexpected biggest down moves in equities. i think we really need to focus on that for the first part of this year. >> all right. rick, thank you. have a great valentine's day, okay? >> you, too. thank you, becky. brocade reported better than expected revenue. if we're not experts at ip

networking can you just explain what drives your business? what do you actually do for a living at brocade? we know you compete with cisco. it's the buildout of internet protocol is the cloud, because it's more pervasive. >> brocade is the leader in data networking. 90% of the global 1,000 entrust us with their storage data. and so if you're building on a large data center anywhere in the world, china, russia, brazil, chances are you're using our equipment to build that out. we provide the most efficient way to connect your storage infrastructure to your compute infrastructure. >> yes. i can't work for your company i don't think. that's the first thing that comes to mind. i don't know. i have trouble turning on the -- a mac. we've seen recently with cisco and others, lloyd, is talk from

about emerging markets, talk about china, talk about nsa. was there anything that you had to navigate through recently in the past quarter that was different than what you've done in the past? >> well, you know, we've been on this journey for about a year. we set out and told the market what we're going to do and executed against that. our product is technically superior. we kind of can manage through some of these bumps in the road. we're going to deliver an ethernet fabric for your data center. that will reduce your op ex cost by half and reduce cap ex costs by a third. we sell value pop that is different from a brand message. >> lloyd, you are showing why we need skilled workers. so the ether net fabric that you provide, you can do it for less money for individuals -- or for

companies that need that? >> absolutely. and ease of use. you need less people to connect it, less people to run it. this is -- gardner says 25% of all data centers will run these fabrics by the end of 2015. the last quarter we grew that business 60%. it's a high margin business for us. we had more million plus customers than ever. we have more new customers than ever in that space. >> do you have job openings right now? >> absolutely. >> you can't find people, right? >> well, emerging trends are software networking. we opened up maybe 200 in the last month for engineers around sdn. it's not disruption trend in the networking space. along with that -- >> i'm going to use that, maybe this weekend. what is it again? >> software defined networking. it's causing major disruption in the networking space right now.

and you know, with that comes an opportunity that we're seizing. sdn is a follow-on to ethernet fabrics. the best analogy is your cell phone. think about what your cell phone can do now compared to 20 years ago. the same capability is coming to the data center. >> have you seen the blow back and aftermath of edward snowden in your industry? >> i think in the large data center buildouts, there were people who were thinking of large data centers and being able to share that data center across geopolitical borders. countries are now stepping forward and saying germany doesn't want its citizens' data to go to france. you're seeing a focus more on small efficient data centers. that's the business we're in. we're in the business of building out the most efficient data centers in the world. >> you're building out the most efficient data centers in the world and trying to connect them.

you're suggesting these centers ultimately won't be connected for political reasons. >> they'll be connected but they'll be cautious and more careful about where and how the data transfers from one data center to the next. >> will you train people? do higher education institutions need to change their curriculum? do we need to do immigration reform? what is it -- we'd like -- if you have jobs that need to be filled, we'd like to fill them. what do we need to do? >> well, everything you just said. i'm an engineer by trade. enough of our students here in the u.s. do not migrate to the technical sciences, right? whether it's physics, math or computer science. we need to start at an early age to encourage all our students, whether male, female, to be engaged in the sciences. and then in the next thing is, we need a stop gap and have

immigration reform. because we are being out-engineered. the chinese are developing five times as where engineers as we do. we need to fix the curriculum and we need immigration reform. >> it's easier said than done to tell kids you're not going to be a communications major. you have to go into electrical engineering. okay, i will have no social life for four years then. it's hard to do. you're right. if you want to have a great job and a great future maybe you need to put your nose to the grindstone for four years and then -- or six years, whatever it is. lloyd, we appreciate it. thanks for a beautiful backdrop, beautiful city. i was just there last week. >> thanks for having me on. >> we'll see you later. a harvard economics professor and former counsel of economic adviser, chair marty

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love does hurt sometimes on valentine's day. welcome back to "squawk box." >> what happened? >> because i saw a red arrow. >> i thought it was what's happening in your life. >> no, everything in my life is going just fine. the dow jones industrial average looking like it's going to open in the red to match this valentine's day. s&p 500 off marginally, the nasdaq not cooperating with the valentine's day red theme. it is up marginally on the flip side. the italian prime minister's resignation is official. he said yesterday he would be submitting his resignation to italy's president today. that just happened in the past hour or so. the president will spend today consulting with political leaders to forge a new government. the italian stock market has been volatile over the past month amid all this political uncertainty. campbell's soup is a stock on the move this morning, the company earning 76 cents per share for its second quarter, beating estimates by 3 cents. among the factors driving its

performance, turnarounds in its soup and snack businesses. maybe it's so cold, everyone is at home, they're having their soup. we have a new s.e.c. filing from jana partners. taking general motors to 7.9 million shares, versus 400,000 three months earlier. it's also taking a $50 million -- 50 million share stake in sirius xm radio as well as a stake in mondelez international which has been in the news recently. we have to see what they're up to over there. >> let's get to one of our very own "squawk" market masters, for more on the economy and the fed's current course of action, joining us is marty fedstein. i could think of so many things to talk to you about. starting with looking at some recent musings of yours that we

really may be in a period where we can't count on gdp growth we had for the past 40 years. we may have to ratchet is down. do you have a high degree of confidence in this? we were 2.1 for the 40 years leading up to the recession. we should do 1.6 from here on out? >> the reason for that is the demographics are changing. we're going to have fewer people of working age coming into the labor force. so of course we could experience faster technology growth. but unless that happens we're going to see a small decrease in the annual rate of growth. as i said in the article that you're talking about, i think that those official numbers understate what is really happening to the standard of living. >> i wanted to get to that. you said even at 1.6%, the average 30-year-old in the future will have 60% higher real

income than a person today. even with growth at 1.6%. >> somebody born today 30 years from now, if they have average growth, even at that reduced rate, they're going to have 60% more real income as officially measured than a 30-year-old does today. so the people who worry that somehow we'll have a falling standard of living, no, we're going to have a slowly growing one but not a falling one. >> this plays into a conversation we had earlier this week that generated some buzz. the income inequality in this country with the 1% and the 99%, if you look at it globally, the 99% here are -- have a much higher standard of living than maybe even the top 10% in many parts of the world. and as growth may be -- as wealthier have become more wealthy in the last 30 years, the standard of living in this

capitalist country we have here is pretty good versus the rest of the world, even for people in the middle class. >> that is certainly true. another thing that's come out recently in a national bureau of economic research study is that the increased inequality is being driven by the changing matter -- changing marriage patterns, that is high skilled people marrying high skilled people. and that has explained almost all of the increase in measured household inequality that's occurred over the last 30 years. so we shouldn't get carried away by some of the scare statistics. >> there are so many things i'd like you to weigh in. the cbo, you watch both sides try to, you know, work the numbers when they come out, whether it's a positive or a negative. they come out and the republican seize on 2 million fewer jobs because of obamacare and then

the democrats are able to find somehow this notion that, well, you know, some people, there's incentives here to help people work a little bit less and enjoy life a little bit more. >> if you raise tax rates on people, people are going to work less but i wouldn't call that a favorable incentive. i would say that causes economic waste. >> and there was a great piece written, i think it was talking about the working class, not working hard or less, someone is selling you a bill of goods. there's no way those were good numbers we got, were they? >> no. what the cbo said was the disincentives to work were going to take some 2.5 million full-time equivalent workers out of the work force over the next few years, we'll have that much fewer people working. >> marty, i want to go back to

this. i don't disagree with you on the cbo issue. on the mobility issue, the idea that it's strictly about what you're marrying and that's cha changed the game over the last 30 years, i know there are sta tvics that back that up. you don't believe there's a larger issue at play over the last 30 years in terms of mobility in this country? >> the studies on mobility, so what i talked about was not mobility but what happened to the income distribution. and the study about that, which seems pretty solid to me, is that the change in the income distribution is driven by the fact that you now have professional men marrying professional women. so you go from a household of two people each earning 100,000, now you have a $200,000 household. you get more concentration of wealth at the top. a different colleague of mine at harvard, in an important nbr

study, has looked at the mobility question and they have found over a number of decades there's really been no trend in mobility. that is the chance chance of moving from the bottom quintile to the top quintile just hasn't changed at all. now, that's not talking about the bottom 1% or the top 1%, but they're the statistical measure is just not very reliable. >> and you think that's going to become -- is there a way to make that argument politically for the republican party? >> no. >> i think they can point to this kind of solid research that says while it appears to people, and it's true in some parts of the country, but overall for the country as a whole, the mobility has not really changed over the last several decades. >> what do you make of the weather over the last month or two in terms of trying to figure out the gdp? i mean, is it -- it's a fool's

errand almost, isn't it, trying to figure it out? >> it certainly has to have had some impact on consumer spending particularly on autos. we know that you have to go out and buy your groceries, but you don't have to go out and buy a new car, so the auto folks say when you have weather of the kind we've had recently that leads to a pullback in people shopping for cars. >> wonderful, professor, thanks. a lot more things to talk to you about. hopefully we'll see you soon. when we come back we do have a valentine's day lovefest with jim cramer. stick around. we'll be right back. me-changing, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com

dividing the classes. let's get down to the new york stock exchange, jim cramer joins us now. jimmie, you're not fat. >> what? >> think about weight watchers and meetings, can you imagine going to meetings is it like a ww meeting instead of an aa meeting, right? 12 steps. they had a rough quarter, no? >> yeah. geez, i mean, that was actually one of those where they actually literally said that it was bad. typically you get these releases and you never know it's bad. these guys used the term challenge. frankly it's almost like they're

going away, joe, it's almost like they're going away, terrible, terrible quarter and down 11%. these are -- and then 2014 they call it a very challenging year. it just started. >> this should be their best time of the year if you have people in january you figure in there trying to decide they'll lose weight with their new year's resolutions, you would guess this would be a big time of the year. >> four out of five books on the self help are diet. and the rest are diet and religion. the restaurant numbers are down for the month of january but maybe people are eating better and not eating weight watchers. >> are there any numbers that came out yesterday in terms of individual stocks that really are in a good or a wad way caught your attention? >> do you know what, i think that yesterday you got to go back over whole foods what they said is we're doing 5.4 but we're advancing the most recent couple weeks is better and stock got taken to the woodshed. yesterday was one of those days

where the market looked hideous at the opening and came back and left whole foods being the worst in the s&p. maybe that's where the opportunity comes in because the market doesn't seem to want to quit. >> do you know what's after february? >> march. >> march madness. who to you think -- >> syracuse. >> who? >> the 'cuse. >> that looked like destiny, didn't it? >> it's all 'cuse. they are so exciting to watch. i don't know, i love college basketball. >> so do i. so did i. but i was sure the last two-pointer was going to do it, was going to bring the upset. i want the shockers to be the only undefeated team and i don't know if that will happen. >> villanova is a long shot, but i like nova. >> i know you do from philadelphia. i think wichita state has to play pittsburgh, pittsburgh looked awfully good against syracuse. they win at home all the time. >> big guys. wichita state because they are in wichita -- >> i love that. >> -- it's, like, a football team that's not in the s.e.c., who are those guys?

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this episode, number one. i mean, you don't have to, but it's a good one at 9:00 on sunday and you know this comedian jim gaffkin will be on with me with the "talking dead" which talks about the "walking dead." at 10:00 on amc. which is a competitor, but it's fun. >> i will be watching. >> i promise i will. >> and you, too. >> happy valentine's day. >> happy vd, valentine's day, more "squawk on the street" coming up next. ♪ good morning and welcome to "squawk on the street." i'm david faber with the page six proprietor of brooklyn's bar san miguel, that was yesterday, i did mention it. carl is still in sochi heading back i think this weekend. we'll hear from him later in the hour about all the goings-on at the winter