i'm becky quick along with andrew ross sorkin. mark okada, peter wineberg, ron baron of baron capital, mark kiesel and mark black. strategy picks coming up over the next three hours, but in the meantime we'll get to today's top stories. ukraine tries to restore order after a week of bloody protests leaving hundreds dead and several others injured. the police are now looking for viktor yanukovych for the murder of several innocent citizens. and the acting interior says yanukovych is wanted for mass murderer or ordering strikes to fire into the protesters. we have a live report coming up

from michelle caruso-cabrera in a few minutes, but first andrew is here with the top stories. thank you, becky. hope everyone had a great weekend. in corporate headlines we have a big one, netflix need for speed at the center of the big deal. a new deal with our parent company comcast. the two sides have struck a deal under which netflix is paying comcast for faster delivery of the video streaming service. this marks the first such agreement for netflix and is sparking speculation that other content providers may also strike similar deals. we're going to talk a lot about this throughout the program with a lot of implications, also potentiality time warner. and the whatsapp suffering an outage it blamed on a malfunctioning networking router. the founder there issues an apology to 450 million users of the service. last week facebook bought

whatsapp in a deal that could be up to $19 billion. i'm wondering if there were a lot of people who didn't know what whatsapp was and caused a problem. and apple is promising a fix very soon for encryption issue with mac computers. it fixed the same issue on friday with the ios device. if you have an iphone, i just upgraded. apple and facebook are resolving their issues through litigation and will face off in court next month. we'll see where that leads us ahead. over to you, joe. if they called me about that broken router, you know what i mean, it's not working? >> you could have taken care of that. >> i would have one thing to try. >> the fonz, smack it? >> turn it off. >> reboot. >> i would reboot it. after that it would be somebody else needs to people, it is

router -- that's right. we need more engineers and to fix immigration. more tech news. we have -- >> i'm sorry, dave, i'm afraid i can't do that. >> robots will be smarter than us by 2029. >> that doesn't surprise me. >> no. i know a lot of people that robots are smarter than -- >> say that again. you say that funny. >> i know a lot of robots -- thanks cincinnati. microsoft is reportedly cutting the price of windows by 8.1%. okay. they are slashing 8.1 by 70%. wow! from makers of low-cost pcs if anyone still has one and for tablets, microsoft has been facing competition from apple and google devices. and ford is expected to announce the next generation of the sync

system will come from blackberry instead of microsoft windows. 40 of 70 million vehicles on the road useing -- >> they have a product they bought years and years ago. that was the software to built q&x. >> does this save blackberry? >> i have no idea how much money is in this. >> so many things, but in the s&p putin would trade the gold medals for ukraine? i do. this country had a look too far along. >> did you see the guy's spread and where he lived? he had 12 houses, his own

restaurant in the shape of a pirate ship, he had a zoo, a total zoo and a golf course! >> clearly you are stealing money. he's got 100 billion and god knows what else went on at that point, but the tyrants in communist places live high off the hog. the guy in north korea, they all, for people who are supposedly let's go. janet yellin will testify before the senate banking committee on thursday. this is a makeup for the appearance snowed out two weeks ago. the markets are looking for new comments about the recent employment report in the economic impact from all this weather, which snowed out. that's why we needed to reschedule because of the weather. and several major retailers report this week, macy's, home

depot and target all on the earnings calendar. these companies could also provide more insight on how the weather and snow impacts the consumer. the polar vortex is supposedly coming banging here. it is just a normal, it was not that unbelievable, but it was like, oh, my god, is that the sun? remember the fog we had -- were you here or -- >> yes. you can get into this place. >> yeah, all right. we'll take a look at the futures right now. i had hopes for the s&p 500 that was closed and almost got back up there. it almost got up to 1850 and then turned around. 1836 still below the december 31st close to see what happens today. >> but barely. if you were talking about the decline of 5.5% to 6% and making

up that grauound again -- >> but we have always done solidarity after doubling in the past six years or whatever. so you wouldn't be happy. >> no. >> all right. do we want to talk about comcast? >> not yet. >> you are not ready? >> i know where you stand. there's no overlap between comcast and time warner, so that should be a done deal. and nick is so -- it cannot be this way. and netflix uses so much. is there work up to my eyebrows! this is pay. >> there are like 33 million people in the population using a third -- >> we are told to move on. >> i am. >> you are walking a fine line here because i have no problem

being on comcast's side in this. i just really feel -- but you as an anti-trust lawyer, you have to see whether you are principle or allegiance, which of them comes in here. i have to see that. >> i'm on the principal side. i'll give you the principal version after we get to mcc. >> all right. think long and hard about this. are we going to have a break where we can talk before the -- ok okay. ukrainian officials are racing to restore order after president yanukovych was ousted over the weekend. michelle caruso-cabrera is joining us now and it seems like the situation on the ground has been changing so quickly. what can you tell us right now? >> yeah, it's been very fast-moving, becky. right now the former president, there's a warrant out for his arrest for the bloodshed that occurred here last week. the parliament is meeting to as well trying to form a

government. and behind me in the square, there are thousands of protesters. we hear worse news throughout the day. there's a religious ceremony going on as well. everyone is quite, quite somber. and the poor ukrainians are living in a situation. because of the economic situation, this government cannot borrow on the international markets. under normal circumstances they could, but it is not so bad. here's the problem. because they bring in less money every day compared to what they spend, and just like we saw in the western european countries, if you can't borrow to cover the deficit, you have to make choices about who you don't pay. do you not pay the pensioners or your workers? do you not pay the government employees? do not pay your energy bills, those are the choices you have to face soon. at the same time, they also have a current account deficit. don't worry, it just means the

basic is they need to fie a lot of stuff on the international markets and they need dollars to do it. why don't you run short on dollars and then you need to by energy at the national emerging markets. without dollars it will be a real struggle. they are supposed to get dollars from exports, but exports have collapsed because of the economy essentially last in the last sechbl months. they got a gap there of $2 billion a time. under normal circumstances they can borrow, but they can't do that. >> if you are importing anything, you are less likely to get it to the country. the other option is just to print money, but that means massive inflation. they need a bailout and need it now. the question is, who are they going to get back to the same question that pushed this country into an eruption back november. are you choosing the west, the eu, the imf or are they going

with lush that. those are the two choices they have. russia would give them money with far fewer strings attached. but many people here in this part of ukraine have said that's not what they want. they want to go to the west with tough requirements. the imf is looking to raise gas prices to hurt the people here. they want them to weaken the currency to punish the banks and lead to a recession. all the choices as in any political position about what the country wants to be in the future. and are they willing to take the road against governance, and they are trying to form a government right now. it's a really tough position to be in. and we'll watch it over the coming days. joe, i saved a special tart here at the en. when the soviet union fell apart, neighboringing poland ran as quickly as they could to the

market ukraine an. it has denied economic freedom and justice to its people since the fall of communist. now can you see the difference in the gdp. how the people in poland have used so you wonder why they are me messing. guys, back to you. >> so much to think about the numbers, number one, your voice was fine and sounded ahead of the -- i like a raspiness, but the chanting underneath your whole narrative, it was amazing. can you tell us where that's coming from, michelle? it sounds almost like -- i'm catholic, but what was that, do you know? >> i wanted to ask but don't know the answer to that question. but i was wondering myself. there's a religious ceremony going on right now in maiden

square. it's beautiful. >> the other thing i thought about was for the west, we are like the dog that was chasing the bus, you know what i mean? and it's like, wow, they chose democracy or are trying to. come on in. then you'll see what we have to do to help them. it's like, ah, is russia still around. russia can take care of it. and they can use it for the ukraine. this is a tough one. >> device, the other thing is next hour i want to show you something. it is just incredible. here in the ukraine it is very difficult than russia. here in ukraine control the parliament and control the government. so the choices that get made will be chosen by the wealthy business peopling here. and i'm going to show you data in the next hour. you tab about income inequality

in the united states. we got nothing on ukraine. it is unbelievable. again, you wonder why they are mad, you will understand why when i explain the rule of the with this -- it made my report that much more somber. we'll spend time getting the global markets report right now with julia standing by in london this morning to give us a sense of what's going on across the pond with red behind you. >> i think we'll make. just a bit of a choppy session and the european markets are 64 reds to greens. we are seeing the stock down 200 points by the big sell-off earlier in the session with results of the inflation ratio with the steepest month ly

outlook. for that we have to wait, as you can see, we have the u.k. markets down .40%. i'll talk to you more about the u.k. banks, hsbc weighing in on that index. the german market is lower 1.61%. perhaps some of the turbulence slightly affected export conversation there is, but much stronger than expected. we'll break it down in terms of the investor. on the stop side. on the sown side here, we'll hone in on the bank sector, in particular, because it was hsbc drawing a lot of the intention. investors there are not happy about the full eu results far weaker than expected. we saw a profit vortex rising just 9% to 22.6 billion dollars.

they played down the volatility we have seen in the emerging markets. a lot is from china and the asia pacific region reducing costs quite dramatically. 60 businesses already solved. 40,000 sold and have tried to playoff for the most time. but you can see the stock down 3.5% as they managed to raise the pool. i'll have that note, back to you, guys. coming up, we have a lot to talk about the. the biggest name in mobile and soci social. we'll give you the exclusive edge on the latest app, but dare i say snow is headed to the northeast again? i mate to say that. we'll go to the weather channel's julie martin. good morning. >> good morning, guys. we are looking at another blast of winter, unfortunately, coming

into places like the northwest and the northeast. temperatures now, single digits in green bay. zero in the twin cities. a big change to the 30s and 40s just a couple of days ago. so a piece of arctic air coming in from the east but keeping things chilly in the midwest where we have seen problems with flooding and ice jams already. all that stuff is going to freeze, but we'll be seeing all of this as i mentioned heading to the east. we are looking at temperatures being good, 10 to 20 below average moving into late week and maybe snow coming your way by wednesday. take a look at boston, 34. new york, 34. keep in mind the lows are going to be in the teens 4. and all the arctic air spilling into the south we'll see some cold temperatures in places like midweek. we'll be right back.

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welcome back. the mobile world congress kicking off in barcelona with power players like mark zuckerberg, ibm's chief and cisco's john chambers are giving speeches there. john fort is there to cover it all. john in barcelona, john? >> i don't have program. >> you don't have program. we will try to get back to john in just a moment.

>> last week you said ramedi. we've got to get to the bottom of this. >> hopefully he'll e-mail us and tell us. >> i think it is ramedi. >> i think it is ramedi. >> all right. are we strong enough to get john back or not really? >> we are trying to get him. i think it is ramedi. >> is it working? >> i think that -- barcelona, it's tricky to get from here to there. >> it sounded like he's telling us he doesn't have program. >> he's back. john, we have stalled enough, hopefully, to get you on the broadcast. how are you doing over there? >> although it is cable. >> reporter: i'm doing pretty well. the time change is a little odd, but i've got you, that's a good start. let me tell you, here mobile world congress, the ceo of

whatsapp is on stage right now. that kind of has set the stage for the overarching theme here. a lot more talk about emerging markets than in the past. let me run down a few things for you there. there are 7 billion mobile connections out there right now, but only about 3.4 billion people connected. so the focus is on expanding who is connected. nokia, for example, just probably weeks away from getting formally acquired by microsoft. just announced a nokia x-phone that runs android. we'll see if that will hold up once microsoft gets it, but the idea is to get their software in service into lower-end phones and the high-growth emerging markets. but as i mentioned, facebook's whatsapp set the stage for messaging apps being very big, they are seen as a platform not just for sending messages back and forth but potentially for

commerce in emerging markets. i talked to the head of chechen consulting to see what it is about whatsapp to make facebook want to acquire them. >> the anticipation was very high compared to whatsapp over anything else. that's why facebooks aer taped on whatsapp so high. >> and really it's the amount of time people are spending on it. the idea that you can layer in commerce, for instance, there's an example in india, there's a vendor selling fresh-cut vegetables through whatsapp. people place orders through whatsapp and it gets delivered to them. they pay on hand after that, but the idea is in the future congress could be layered into whatsapp, a lot of carriers and people trying to figure out how to adapt to that. and it will be clear to see what mark zuckerberg says about facebook's ambitions when he

talks at the end of the day here. we'll have live coverage about noon eastern time. so again, that time change is still messing with me, guys. >> jon, thank you. we'll check in with you later this hour. in the meantime, when we come back, setting up the markets for the week. james paulsen talks about the last trading week of february. and we are going to kickoff our mega lineup. >> i know what's on your mind, a little chocolate in the morning. >> and a prediction of dow 60,000. heading to break, take a look at yesterday's winners and losers. ♪

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good morning. welcome back to "squawk box" on cnbc. i'm joe kernan along with becky quick and andrew ross sorkin. the ousted president, viktor yanukovych. >> it is not ramedi, it is

ramedi. read it. i didn't say it that way. >> is it yanukovych? he is now wanted for mass murder in which dozens of citizens were killed. michelle caruso-cabrera is in kiev and we'll hear from her throughout the show. so you know how you mispronounce that, and you read that and told us the wrong thing. you just told us it was ramedi. >> it turns out most of the world pronounces it wrong. it is not ramedi, it is like eddy. >> i thought it was. >> according to business -- we don't know. >> i will say i have calls into the company and nobody knows there, either. >> i'm pretty sure it is

rometty. >> we'll stick with rometty until further clarification comes to us. more controversy surrounding the bitcoin. the ceo of tokyo-based bitcoin excha exchange mark karpeles resigns from the board of bitcoin foundation. that's the trade group that promotes bitcoin and follows a number of technical issues that led to mt. gox from going through with withdrawals. and blackberry shares getting a boost. the messenger service will be offered on microsoft's windows phone platform as of this summer if anyone buys a windows phone. and ford has reportedly chosen blackberry to be the partner on the sync system to replace

microsoft. have you used one? >> i have not. but the underlying service blackberry has, i assume for the sync it is one piece of the puzzle, it's not the entirety of the system. and ford, remember, had close links with microsoft for quite a while. in fact, alan mullali was up in arms over his job because of his relationship with the ceo there. we have been watching the futures and last week you saw stocks basically flat with the dow down by 0.3%. the s&p was down by a few points. in europe this morning with everything we have been hearing out of ukraine, the european markets are essentially flat at this point. in asia overnight, you can take a look and see the nikkei was

down just barely by .20%. the hang seng was down by .80%. the shanghai was punished down by 1.75%. and oil prices this morning is interesting because the last couple of weeks oil prices have run up significantly affecting prices at the pump. the lumberg survey shows prices up at the pump 12 cents just over the last two weeks. oil prices are down 15 cents but still trading around $102.05. and the ten-year note this morning as we await that testimony from yellin at the senate, you can see right now the yield is 2.731%. she'll be testifying later this morning before the senate. the dollar at this point is indicated down across the board. the dollar/yen is at 102.37. the euro is trading at 137.41. and gold prices which have also been up sharply the last six weeks are up another $10 this morning. 1,333.50 an ounce. as february winds down, the

markets will pay particular attention to janet yellin's testimony. i think we'll stay at 2%, we are good. i don't think it will be a big deal, did you read any of that? >> i read every single document. >> were you thinking, wow, these guys have no clue? >> they had no clue. and we'll talk about this later in the show, i was surprised there was less conversation about lehman brothers ahead of lehman brothers. >> in hindsight it's a lot different. >> afterwards, by the way, very little talk of lehman or aig. you really didn't get as much of an inside as you would have been able to see. and i wonder why that was. >> it would be too much to have see no evil, speak no evil. they were pretty bad. that didn't give you a lot of confidence. people that disparaged the fed -- >> i've always said i would give them very little credit up and until september 15th.

>> what grade? >> by default you have to give them a d or an f, right? >> with some great advice, i would give them the cornell d. joining me is the key investment strategist at wells capital management in minneapolis. we kind of know what you're thinking most of the time. who was it, i was watching the olympics and someone had the most unbelievable minnesota accent but i can't remember. jim, you think we end the year around where we are, maybe 5% higher and there's going to be some gnashing of teeth and hand-wringing between now and the end of the year, is that basically it? >> i think so, joe. i think we'll have a volatile year. we kind of started this year out with the underheeding fears with economic data.

the market price sold off 5% to 6%. now we are back to unchanged roughly, and before the year is over, we may have an overheated fear where maybe we get through this weather distorted data on the economy and we get into the spring and the data sort of catches up. and then we get to -- if we get enough ticket for the inflation majors, maybe we'll get excited that the feds are behind the curtain. and later in the year, it may cause a correction in the stock market from higher levels. and we end up back where we are again after maybe going higher for a while first. >> in your view, basically the market does these things and it actually is wrong in your view. the market, things aren't good when supposedly what you're trading on is getting better, so if the market purely did what it should do based on the economy, it should be getting higher throughout the year. >> well, yeah, i think longer term, joe, that we're a long

ways from the end of this bull mark. yet i think the likelihood is we'll have several more years where the market still goes higher, but i think that's just kind of what mr. dark. we had a good run last year up 30%. some people for the first time in the recovery are starting to think the water safe. we have seen positive equity flows for the first time. what does mr. market do? he gives you a gut-check and gives you a frustratingly volatile market that we are in the process of doing. there are good things happening. we start the upward projectivity for the markets. we have flattened out the market while earnings continue to rise. we have checked sentiment to some extent. all these things that are necessary to set us up for a run later this year or into 2015 or a more sustained basis. if you're a trader this year, you have to love this type of year. if you can call this correctly, there's probably a lot of

possibilities, but i think for most investors it's just going to be frustrated because it will be difficult to call. >> but you're in a position where there were years -- multiple years when you would come on here and argue with people bearish. there was a lot of these guys. you know who you are. and they give all the reasons for you to say, i know all the reasons, i just read all the reasons in the wall street journal. for a while, you shouldn't be bearish. and now two years later the market moved up and we had a great year last year. now you're saying sort of just the reverse, and that is, yeah, all these good things that we know about the markets are already anticipated. this is someone in the market for a long time that would know. that's why you wear the grizzled gray beard to church to make people think you are older than you are, right? >> well, i've been in business for 30 years and have earned every gray hair, joe.

i think the most important thing is i don't think this bull market is over. and i want to make that point clear that longer term. we have an output gap which is record-setting by post-war standards. we have a confidence gap yet. we have to improve back to midland range levels. we've got a portfolio gap where people are still way too over. we have a massive dry powder gap where all this two trillion plus dollars hasn't come off corporate balance sheets. my point in this is there's a lot of good things to happen over the next few years to drive equities higher, but it's not going to be a straight line. and i think the worst thing investors could do is to come out of the market and notice what's happening the next few years. prepare for frustration and maybe still stay in the stock

mark. >> all right, jim, thank you. we have breaking news right now. we'll go to jon fort at the mobile world congress. he's got news on whatsapp. jon? >> big update, the voice communication coming to whatsapp in the second quarter before summer. the i don't kn they gave an update on the user numbers, 465 million monthly active, 330 million daily active. that's about a 71% daily active user account versus the monthly and active. >> real quick, when you explain that voice is going to be introduced, we'll make voice calls as in skype calls or almost like text to each other that are instead of calls like

this. >> we have to see this key in the emerging market and how to keep it sample. other competitors in the messaging space have much more features than whatsapp. but they seem to adapt fast if they keep it simple. when we come back, one of the buzz topics at the world congress. is your information secure? we'll have an officer talking to us about innovations for swiping in a couple minutes. then later a squawk master ron baron has earn ed 60,000 a year for 20 years. that's coming up. tdd# 1-888-628-2419 searching for trade ideas that spark your curiosity

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welcome back, everybody. taking a look at what's happening with the u.s. equity futures after the markets closed flat last week. you can see there are green arrows this morning. the dow futures are up by 27 points above fair value. s&p futures indicated up 3 points above fair value. and we'll see what happens. the new season of nascar kicked off with the daytona 500. dale earnhardt jr. captured his second victory. a frantic two laps with the checkered flag waving. this is earnhardt's first daytona victory since 2004. the race was red flagged for more than six hours from rain and severe weather. >> they ran an old race because

fox had to run something to fill the time. it was like a 6 1/2-hour delay. they ran an old race and people were tweeting what was happening as if it was happening realtime. >> i've done that before in a golf tournament, too. coming up, the masters of the universe of the mobile universe are gathering in barcelona. a curby gig for jon, i tell you that much. that's a pretty cool place. and one of the issue buzzing the conference, we'll catch up with mastercard's chief of payment to find out what they are doing to protect consumers. more "squawk" coming up in a moment. every day of the week. but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment

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let's get back to jon ford at the mobile world congress in barcelona with a special guest with him. jon? >> thank you, becky. i've got ed mclaughlin with mastercard here. you made interesting announcements here about in-app purchase capabilities, but i want to start with something else, and that is security. the target breach over the holidays really woke a lot of people up. any technology you've got in the near-term to prevent that sort of thing from happening again? >> that's exactly what we are working on. we are working with merchants and issuers to bring around emv, which is the ability to provide a key for every transaction

that's out there. you make sure it can never be used out of context, that's what we are doing with chip cards. and we are also we're making sure every device the consumer wants to use, pc, through masterpass we can supply the same type of security with that. >> let's talk about masterpass. inside apps now you'll be able to use your payment system. it will stretch across different apps. tell me about the benefits that a consumer or an appmaker mate see for that. >> absolutely. this is one of the things consumers have been asking for. whether i'm using my pc to shop online, singapore airlines or j. crew. typically a consumer will have 26, 27 apps right now. as merchants are working with them for shopping as more experiences are enabled, rather than having to set up payment credenti credentials, master pass brings it all together.

i get one safe, secure connection through master pass to shop from any app i want to. >> a lot of the mobile world was surprised to see facebook making this move to purchase whatsapp for $19 billion. >> yes. >> all the buzz here. emerging markets are a big focus off that move. >> right. >> do you see that as a big opportunity and how do you get the unbanked people without credit scores on board here? >> two elements to that. one of which is absolutely, the things like whatsapp is changing how people are interacting. the changes with how we interact is changing how we transact. we reach consumers, in a way we never could before. we're working, for example, with governments in south africa to provide benefits electronically for all the citizens. ore what we're doing with the world food program.

we can give them all the benefits of electronic payments and bring them into the financial mainstream. >> ed mclaughlin of mastercard chief, emerging payments officer, lots of interesting conversations coming about how to safely and securely bring more of the world's 7 billion to 8 billion people online. thanks a lot for joining us. >> take care. back to you. >> hey, john, have you heard anyone say barcelona? can you do it? >> i could do it but i think it might be an insult to the spaniards so i'm going to refrain. yes, there's a little bit of th that. i'm not used to seeing spaniards speaking spanish if that makes sense. >> i get it.

>> i don't understand why pronouncing is correctly would be an insult. >> i wouldn't pronounce is correctly. >> barcelona. >> jose maria olazabal. >> and barcelona. >> i'm with john. >> what about johnny ramadi? >> ramadi. >> thank you. >> that's the way people say it. >> they do? i thought they told us not to say it like that. >> that's what it looks like. >> we'll talk a little netflix. comcast. we're here. >> okay. >> we've been talking this morning before the show about what's the feeling? >> the deal first of all for people who weren't aware of it, over the weekend we learned that netflix wit be paying comcast so they can get a faster line.

>> how much of comcast capacity is netflix gobbling up. >> about a third. >> about a third. how much does it cost to build it out? >> here are the implications. it comes ten days after the transaction between comcast and time warner cable. the question about net neutrality. >> the courts already decided. >> the fcc is putting it back on the front burner. there's the question about content. one of the questions i have has been whether content companies will be happy or upset about this deal. we thought they were upset about this deal. now that there's netflix doing the deal with comcast, i ask this seriously, does netflix step away? meaning does reed hastings say i'm not going to fight this deal? is that part of what's happening here? i do not know the answer but i wonder. >> were they going to fight it previously? >> of course. >> you think so. >> they must have said, okay, we're not going to fight this, we're going to do this deal. the more i thought about this, this is an equality issue.

at this point, 33 million people who are 234e9 flinch users, is 10% of the country are using 33% of the broadband, gobbling it up everywhere. 33 million people are. they are the richest americans. these are people who have a ton of money who have been getting a free ride. everybody else has to pay for all of those rich people who already have netflix who are downloading this stuff. everybody else who doesn't -- they're paying for it. >> the net knew tralt, it had to happen, andrew. >> if you're not a netflix subscriber you were paying for all of their gobbling up, subsidizing them. >> i'm not going to tell you this is wrong. i have a problem with the fact that netflix or any one company would take up a third of the spectrum. >> the rest of us are subsidizing that. >> having said that, there's a separate issue, though. the separate issue with forgot about the content piece of it. there is broadband and whether you really believe long term that actually you should make

content companies pay on the other side, if you're a monopoly. if you weren't a monopoly -- >> as a result of that neutrality you have netflix that has built up. >> now you're claiming comcast is a monopoly? >> for high-speed internet, in most markets there's one or two players. >> it's a utility, essentially a utility. >> the flip side is because of netflix arguably a lot of the companies, including comcast have been able to charge more and more for their broadband services. >> it's the rest of the people. the rest of the people who are subsidizing. i don't have a problem with it looking at it as a toll. make sure you don't have undue influence through monopolies. that's when the fcc can look at. when we came back, a huge line of investment markets. when does your work end?

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observing the markets. jim grant of grants interest rate observer will tell us what the market may look like under janet yellen's reign. the land of lets make a deal. we have an exclusive interview with legendary banker peter weinberg who is seeing more confidence in the boardroom these days. political unrest in ukraine. michelle caruso-cabrera went from sochi to kiev. a report from the country at a crossroads. "squawk box" begins right now. good morning, everybody.

welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the futures have been higher. they've been picking up steam throughout the morning. the dow futures are up by about 38 points above fair value. these the highest levels of the morning. taking a look at the ten-year, right now, the ten-year note is yielding 2.739%. we have janet yellen going before the senate later today to testify. and the bond market obviously along with stock market will be watching that very closely. in our headlines this morning, ukraine's leaders say that ousted president viktor yanukovych is wanted for mass murder. he was ousted over the weekend. the key question now is how ukraine balances its relationships with russia and the european union. a source of great controversy within the country also who's going to be paying to help that country on its way economically. you could be looking at $20 billion 0 are more that's needed. michelle caruso-cabrera is in kiev, we'll be hearing from her in just a few minutes. netflix has struck what

could be a ground-breaking deal with nbc universal parent comcast. netflix going to i paying comcast for faster speeds for its video streaming service. this sparked speculation that providers will have to pay to assure their customers will receive paid content at acceptable speeds. as i mentioned, fed chair janet yellen will be back before congress this week. she'll be testifying before a senate panel thursday in an appearance that was postponed by weather two weeks ago. yellen's appearance comes amid continued speculation over just how fast the fed will taper its bond program. economists are divided over whether the fed will actually cut back at a steady pace this year or pause to let the economy recover further. we want to get to rich greenfield, the media and tech analyst at btig. he has a lot more on the netflix/comcast deal. does this transaction between netflix and comcast change the

equation between comcast and time warner cable? >> it never hurts that market-based solutions occur. i think it takes pressure off the fcc from just a broader how do you regulate peering an interconnection. these are separate topics from net neutrality. i think there's been a lot of questions of how would tom wheeler and his fcc as he's bill the fcc out, he's come out multiple times already this calendar year and said this is a major issue that he needs to figure out how to address policy wise. i think a lot of people thought he was going to have to put something stringent into the comcast/time warner cable approval. i think the fact that these companies were able over the weekend to hash out an agreement, i think takes pressure off the regehrs to do something. because the market solution is actually working. >> does that mean reed haste sgz stepping aside in this? the expectation was that netflix

and other content companies would be aggressive between campaigning and lobbying in washington against a transaction like this. is that over? >> it looks like a very savvy move by brian roberts to did he fuse what is potentially one of the louder critics that people pay attention to, whether this ultimately actually does silence netflix from having concerns about the transaction. that i don't know. i think that's -- i haven't heard anyone from netflix weigh in yet on how they're going to think about the deal. but it certainly seems like a savvy move by brian roberts and team. >> i'm glad you came on to tell me that. i thought it looked like a market cloud even before time warner -- before that acquisition, the -- >> why do you argue this is a market-based solution? the reason i suggest that, if you talk to people inside netflix, they will tell you, they thought they were being held hostage by comcast, verizon

and others of the like. >> comcast has an incredibly fast network. verizon has an incredibly fast network. >> these are about the connections. >> exactly. the right way to think about this for any of your viewers, think of it as a house. everybody is trying to rush into the house. it used to be that the number of people coming in and out of the house were relatively balanced. now you have a rush of people, bigger and bigger people trying to get into the door. you need to build more doors so everybody gets into the house in a comfortable fashion. and with a good experience. the issue is, who pays for the doors? does the person trying to jam themselves into the house pay for the new doors and the construction of those, quote, unquote, ports to receive the traffic asser with talking about in this specific okay or the isp? that's where you came to a head here. >> let me play devil's advocate for a second. isp, cable providers and others

who provide internet service have been allowed -- have been able to charge more and more for their high-speed internet service and it's become more and more attractive in part because there's more and better content like netflix which they're able to transmit over those wires. >> sure. i would say netflix has gotten more and more subscribers because of the pipes that companies like comcast laid. both companies at the end of the day, have made substantial investment. >> is this deal good for both stocks? is that what you're saying? >> at the end of the day, netflix clearly did a 180. if you go back to the third quarter conference call, they said they didn't think -- they thought interchange should be free, both sides were getting equal value and they shouldn't have to do it. i think this is a recognition that there is a benefit to the size and scale of comcast to get paid for this. i'm not sure anybody else is actually going to get paid for this. there may be a couple of others but not everybody will get paid. >> if that's true, doesn't that say something about size and

scale? >> sure. size and scale matters in lots of industries. there's a benefit to comcast being bigger. i don't think anyone would deny that. this is yet another benefit of size and scale. one other really important part to this that's really important to get across to viewers. i think comcast as part of this gave netflix access into being integrated into its new boxes. xfinity users will see this. >> netflix prices will go up or down. >> netflix prices over time are going up regardless of this. >> we appreciate your time. joining us now to give us a sense of what he thinks the markets will be like under janet yellen's reign is jim grant, founder and editor of grant's interest rate observer. i wanted to ask you something totally different. prior to 2007 alan greenspan

would have been a shoo-in for the greatest fed chief ever. stuff happened. >> i vividly remember. >> now we have bernanke. he probably has a 95% approval rating among market players because of where the stock market is and we really are thinking, wow, they got in, they went from 800 billion to 6 trillion. now they're getting out. >> geniuses. >> god, it's working perfectly. what are the chances that we put him in as the top guy and two or three years from now we go, holy moly what a mess he left us with and poor janet yellen, what a mess he left her with. is that possible? >> yes, highly possible. the trouble is, the central bankers ought to be referees, umpires. instead they are down there on the field, running the bases, hitting home runs. they're throwing exceptionally

strong curveballs. they are the stars where they ought to be the stewards, the score coopers. bankers were doing what they ought to do in a suitably quiet way. when they become masters of monetary improv or not masters of monetary improv, we know something is wrong. something is in fact wrong. we know way too much about janet yellen. we know way too much -- >> a couple of things made it different. number one, the extraordinary problems of the financial crisis and two, the fiscal gridlock between -- there was no other game in town. you heard all the other excuses. >> you know what is curious, when you think, it is year six of this monetary improv. a couple years ago, chairman bernanke said we're learning by doing. learning by doing. >> right. >> there are thousands of years of monetary history they might have consulted. instead, we are making it up as we go along.

to get back to the idea of the umpire is not only running the game but playing in it, we don't know exactly from day to day where the strike zone is. we don't exactly know how many strikes you get nor the distance from home plate to first base. these things we learn while doing. sometimes they change the rules after the game is over. >> and you in a recent piece have called this a blatant example of price fixing, whether it's wage or price. price fixing by the fed, keeping rates up. my response, just to play devil's advocate, we now know because so little of the stimulus has been taken up by people. demand has been so weak that maybe these low interest rates would have been there either way, because of the weak global economy. >> possibly. we can't know what they might have been. >> maybe these locations aren't that great? >> possibly. it seems to me -- i take it as likely that the clearing rate

would not be zero. certainly would not be zero six years that a so-called recovery. my fear is that because interest rates are suppressed, therefore, earnings are inflated. the value of stock is a present value, future cash flows discounted by a suitable rate of interest. that rate of interest is fake, then so is the market's perception, must be of the cash flows. so when rates go up again, suddenly the hall of mirrors is shattered and we look at each other and see what actually is rather than what the fed wants us to believe. >> is it possible that the fed -- are you still arguing that it has been a negative for the recovery? >> yes, very much. >> it's been positive for the stock market but the overall economy -- >> right. >> it's not the stock market. it's something entirely different. that has not recovered very well. >> i know it has not. it seems to me that markets out to have been given the benefit of the doubt.

>> it's been counterproductive. >> absolutely. >> even in the beginning? were they needed to smooth that transition a little bit back in 2008 and 2009? >> if i were managing the universe, the fed would have been absent from that. i think it would have been better to have confronted the shards and the broken glass and the ugly noises in the night rather than to have -- >> would we have seen the great depression? >> no. no. we had that. there have been other episodes in which there was no intervention and in which there was a terrific, sturdy and job-filled and dynamic recovery with a balanced federal budget and with in fact high rates rather than low rates. >> why do you believe there wouldn't have been a deeper recession than there already was? >> why should we believe there would have been a deeper -- if the fed is preventing markets from clearing, if the fed center fearing with expectations and with asset prices, why is that -- why do we assume that

would be a good thing? >> look, we reached a point where we had unemployment that was something like 10% if not higher. >> 11%. >> 11% rather. i apologize. you don't believe had the fed not intervened we could have been at 15, 16, 17%? much higher. people like paul volcker have talked about higher numbers, paulsen, bernanke. you may not believe those numbers but that's the barrel they thought they were staring down. >> right. what happens in a capitalist economy when there's no intervention? prices get low enough to invite buyers to come in and seek -- seize that value. the fed has been on a mission to prevent markets from clearing. prices never got low enough. wages never got low enough to clear. it seems to me that we have been living through a very persuasive demonstration of the futility of intervention to solve recession. >> what are we going to see over

the next -- if you're right, this is really bad and we're living in lala-land right now. it will come back to haunt us. >> with respect to markets, the big risk is that interest rates go up and the cash flows that have been -- the perception of which has been exaggerated through artificially low rates, the cash flows now shrink. the mark set now suddenly not slightly rich with respect to earnings. it's rich with respect to earnings. we've seen the taper go up from the lows. it might be that rates are going up, withstanding the taper. >> all right. you're like -- it's great to have you. we're going to watch this. it worries me when i listen. because it makes logical sense that the markets needed to clear. you try to prevent pain with these measures.

you're not doing anything for the underlying cause. >> six years later, here we are. >> there's been government act 1ri678 from the administration and congress that hasn't helped. >> correct. >> with the fed. put them together and this is what we get. >> correct. >> in the meantime, much more from today's all-star investment lineup, including a peek inside the activist playbook with peter weinberg of perella weinberg partners. from the games in sochi to the chaos in kiev, michelle caruso-cabrera gets to one of the big reasons behind all of this political unrest. we have that when "squawk box" returns. ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app

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welcome back to "squawk box," a live shot of our nation's capital. we're going to go out of the country though for a moment. we'll get to michelle caruso-cabrera who's standing by in kiev with the latest on the ukraine unrest. michelle? >> hey there, andrew. there's still thousands of people in maiden square or independence square. there's a political speech going on at the moment behind me. mood down there is somber. it's a cross between encampment, people are still living out there and in many ways it's a

shrine to those killed in the uprising against the government last week. there are flowers spread in h honor of those who died. they need to form a new government now that the former president, there's a warn the out for his arrest in the wake of last week's bloodshed. he's m.i.a. as well. he's been ousted from his position by this parliament. the reason they need a new government, they have to start negotiating some kind of bailout. the country is running out of cash in some key ways. the decision that gets made by the parliament isn't necessarily what the parliament thinks but a lot of these folks within parliament have patrons this country, many believe is run by oligarchs, a lot of wealthy yesterday individuals who came to power and wealth in the mid-'90s. i want to show you a graphic from the council on foreign relations that is really telling. if you take the 50 richest people in america, their net worth is equivalent to 4.5% of the u.s. gdp.

you take the 50 richest people in russia, their net worth is the equivalent of 17% of russia's gdp. in ukraine, the top 50 people, their net worth is more than 45% of the gdp. it is astounding. when privatization occurred in the mid-'90s as it did across a lot of the former soviet republics it was done poorly, it was botched. the most important or the richest oligarch is rinat akhmetov, worth more than $15 billion. he's number 47 on the list, says "forbes." it's believed he's in one hyde park in london, one of the most expensive condominiums in the world. what is his position and what does he want this parliament to do? he has widespread influence like many of the other oligarchs. we'll find out over the next coming days what their choices will be.

i wanted you to seat data points to understand why many people here are frustrated that they have not participated and that this is not an inclusive economy. >> does the new government look at this in terms of reversing privatization, taking all of that back and nationalizing it, taking that back and finding new ways to privatize it. what are the options? >> well, former -- one of the former prime ministers, she's been released from prison, she appeared in a wheelchair over the weekend, she did that at one point. the question is was that legitimate what she did or was she trying to settle scores? that's the problem throughout the whole situation. they need a sherman antitrust act, something along those lines. those kind of things would probably be forced on them if they align with the eu. >> bring that picture back up.

ander, do you know this guy from davos? you know him? >> i can tell you i do. >> caviar, champagne. >> i've been to some good parties in davos. >> that's not one of the oligarchs that you have kissed up to? >> i have not come across him. >> you really don't know him? >> i've seen pictures of him. i don't know him personally. when you're in the back of a limb zoousine having your cavia the same time, sometimes you don't look up. more investment ideas, stock picks and ron baron's picks for the dow. ess. century link provides reliable it services like multi-layered security solution to keep your information safe & secure. century link. your link with what's next. save you fifteen percent or more on car insurance.d

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we constantly evolve to meet your needs every day of the week. welcome back to "squawk box" this morning. sorry, something funny just happened. it was the third weekend of domination at the movie box office with the lego movie, that film earning $31.5 million in north american ticket sales beating out two new movies,

three days to kill and pompey, the lego movie is the highest grossing film of 2014. >> lord business. >> they hate business. it's sort of like bane in the batman movies. >> if you need a villain, go to the problem providers. >> we have so many markets investing, angles covered this morning. coming up next, an exclusive interview with peter weinberg of perella weinberg partners. heed avieds companies, boards and investors. find out what he's saying about deal making and competence in the markets. back in just a moment. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021

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with the stunts and loud explosions and all the muscles. [ as cosby ] i want to see the comedy programming

with the children. [ british accent] watch bravo! yeah, i want to see "the real housewives." rewind! yeah! jimmy? it's been hours. we told you the x1 entertainment operating system show me "the tonight show starring jimmy fallon." that's what i'm talking about right there. [ cheers and applause ] [ female announcer ] control your tv with your voice. the x1 entertainment operating system. only from xfinity. welcome back to "squawk box." in the headlines, new leadership in ukraine, looking ahead after the ouster of president yanukovych, the country's acting president says the ukraine's priority now is integration with

europe. yanukovych is a fugitive and wanted for mass murder. apple says it will issue a fix very soon for what it says is an encryption issue that's affecting its mac computers. it pushed out a fix for ios. if you have an upgrade, upgrade. you need to. they've now fixed what is a potentially big problem. go into settings, press general, up grade or whatever. i'll do it after the show. systems install or something like that. >> i don't do anything. >> got to be on wi-fi to do it. >> what would they hack on my iphone. >> you don't have itunes or anything that stores your personal information on that stuff? >> somebody does. i don't. okay. >> the other big headline of this morning, netflix will be paying comcast for faster speed for its video service. the analysts say they could pay

more to get their services faster. this may set the stage for the deal for at least netflix and other content companies to get out of the way. >> to block the time warner deal. >> in this case, not to block the time warner deal. >> can i say one thing about the united states, quickly, and our system here? when our leaders leave, very rarely are they then wanted for mass murder. how many places where the guy that's been running the country -- egypt, the next -- one minute they're running the country, the head of the country, next minute they're on trial for mass murder. >> when you get a zoo in your house. >> here, it's all so -- we have our problems and the recount, the chads, you know, it's messy at times. >> it's all relative. >> very rarely is our former president arrested for mass

murder. you know? >> very good point. >> so we can finish below russia with the medals but i'll still take -- >> this is where we choose to be. >> yes. >> our next guest says that volatility in stocks and bonds will continue, so investors should pick positions carefully. mark ocato is the investment officer of the $19 billion highland management market fund. good to see you. >> good morning, becky, adam and joe. >> what do you think at the beginning of the year? you sat down with your partners and told them, are you ready for the best year yet? >> absolutely. i said are you ready for the best year ever? guess what that was last year, 2013 was a fantastic year. five years of a bull market. that's happened five or six times since 1927. guess what happens on average in the six years after that? >> what? >> in that year, in the market on average is down 2.3% on

average. the peak to trough is 23% on average. volatility is what we should be expecting. it's what i told our partners starting the year. the nice thing, that's exactly what active managers are supposed to manage. it sets up very nicely for people like us at highland. we're very excited about this year. >> meaning what, that every time you see a dip you buy or does this mean you look specifically for certain stocks and bonds? >> well, you have jim on the show. i'm a big fan of jim grant. i think he's one of the finest in the business. he talks about this intervention. as that intervention fades, the market goes back to being much more fundamentally driven. fundamentals in an economy that is running out of steam means that you'll have winners and losers. i think this market from a beta standpoint gets challenged. we don't see the stock market flying straight up. we have winners and losers. it means long/short becomes a great strategy. last year, you look at hedge

funds, they struggled a bit, of only 16 large funds beat the stock market, 20% of active managers beat the stock market. and our funds, last year we were up in the health care state, up 35%. we're up 17 this year. that stock picking, that fundamental work that we like to do is starting to add value to port foeios. that's only going to get better as a lot of the interventions go away. >> mark, jim's broader point is that he thinks that we could be in for a lot of trouble still because of what the fed has done. >> sure. >> it's hurt us to this point. he also thinks there's potentially catastrophic bad news down the road. do you agree with that perspective? >> we have to keep an eye on inflation situation although we don't have the capacity there. i do think that a lot of their free cover would be much better to that extent. we're in the financial services industry. and that area has specifically benefited from a lot of the qe. i don't think we should have qe

at this point. i agree with him there. but if you think about what's happening in leverage finance, for example, they probably made more in that space last year than they have ever in the history of the leverage finance. we see m & a picking up this year. companies are in this point where growth really -- and earnings expansion is going to get it for them. we see m & a picking up. they've got a lot of cash, high valuations. it's a perfect environment for m & a. and leverage finance funds a lot of that. so we see deals being very active this year and a lot of transactions. that's always good for our business. so you've got to always worry about some of the big tail risks but in the meantime, there's a lot of good transactions to do. >> mark, about an hour ago we spoke with jim paulson in wells capital management. one of the things he's worried about, later this year we could get to a point where you're

seeing an overheating economy. he's been watching commodities over the last two months, watching some of the other things that could indicate that you will see a much faster speed of money coming back through. do you worry about that? >> i do. i think we can't have this much intervention and this much liquidity fighting the system without some sort of response to it. the mcommodity picture, i think that is weather related per se. and the bounce from last year. i think the economy looks fairly good to us. although it will be fairly bumpy. back to my call on volatility, all of this situation where we have a lot of people that are worried about how all this intervention plays out, it's going to put us in a situation where you have volatility and volatility is good for people like us. we like that. when correlations are very high, it's very hard for active managers to make good money in the situation. and correlations have been

coming down every year since -- for the last three years. that's been very good. so at the end of the day, yes, you have to worry about some of these things but making bets in the marketplace is what we do. to the extent that the market is going to be more driven by fundamentals, driven by valuation, driven by what companies are actually doing, that's good for us. >> let's talk about the bond market. there are a lot of different levels in the bond market. high yield is one you are concerned about. do you think this could be distressed issues that start coming up? >> absolutely. anytime you have big issuance years like we've of over the last couple years, the street gets paid to do deals. you'll always see some of the deals not work out. it usually takes a couple years for that to happen. when we've had this massive increase in activity in the space, a couple years later you'll see some of that happen. we're getting ready for that. you've got to be very selective

about what's happening in the space today. we're being very careful. i think that sets up nicely for what we think the next cycle is going to be. i don't think we'll have this liquidity washout cycle like we've had in the past. i think the next credit cycle that we see will be a fundamental one. it will be situations where companies go into bankruptcy because they have too much debt, because they don't have enough cash flow. that's the kind of situation i think we're setting up for in distress. it will be a robust opportunity but it's probably about a year off. >> okay. mark, great talking to you. we appreciate it. we'll see you again soon. >> good to see you, becky. >> a little out of touch with the looney left. did you think of bush and cheney. >> no. >> you did, didn't you? >> i did not. you think my brain goes -- >> the looney left. they're telling me i forgot. serenity now. still ahead, verizon giving the market guidance. that news is next. check out the lineup, peter

weinberg, co-founder of perella weinberg. you swear? >> i promise i did not think that at all. >> okay. at the top of the hour -- >> i saw the tweets but i didn't think it myself. >> the haters, they live. we have ron baron, the billionaire coming up. we have pimco's bond guru, mark kiesel and scott black, all here on "squawk box" this morning. we'll be right back. mine was earned in korea in 1953.

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welcome back to "squawk box," everybody. the latest lundberg survey on gasoline prices is out. the average price for a gallon of gasoline up almost 12 cents just over the last two weeks. a gallon of regular grade gasoline increased to an average retail price of $3.41. developments in three global hot spots in ukraine, venezuela and south sudan causing gasoline prices to zoom up, i don't know why ukraine fits into that whole picture. according to lundberg that's been the whole situation.

the lowest price was found in billings, montana, $3.08. the highest price of $3.81 a gallon was found in san diego. this just in, chipmakers triquint and semiconductors to merge. >> is there a car thing? what was the -- >> a gallon of gasoline. >> is that what it was? >> that was years ago. i look -- it was bad then but i'm not much worse now. >> that was about eight years ago. >> yes, yes. >> i still had the neck. that might be hereditary. and that toupe looks good.

that doesn't age. verizon, the company says it will see higher profit margins in 2014 following its purchase of fvodafone's 45% stake in verizon wireless. lowell mcadams will be a guest on "squawk on the street" later this morning. blackberry will offer its messener is service to windows phones. palo alto networks earn 10 cents a share for the serebrakiais second quarter. hsbc reported a 9% increase in annual pre-tax profit for 2013. that was below expectations. stock off a little. netflix shares are lower but 4.24.2

andrew? >> i imagine reed hastings is probably not paying that much. >> because he's on board. >> he's on board with the transaction. >> you can call me cynical all the time. deep down, that's a really -- that's a sick thought you just -- i don't know where you come up with this stuff. >> i don't know how much he paid. >> you think it's a token fee to get him on board? >> it's a long-term deal. it's 180 degree turn. if it's so expensive it would be difficult. >> it couldn't be that he realizes i'm gobbling up all your -- this is only fair i do this, thank you, mr. roberts, for letting me do this for so long. you don't think it had something to do with that? >> that's what i think, too. >> you're welcome. >> thank you, mr. roberts. coming up next, he ran goldman's european business before creating his own investment bank. peter weinberg will join us to talk about mergers. and at the top of the hour, why ron baron, what he thinks of

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with the children. [ british accent] watch bravo! yeah, i want to see "the real housewives." rewind! yeah! jimmy? it's been hours. we told you the x1 entertainment operating system show me "the tonight show starring jimmy fallon." that's what i'm talking about right there. [ cheers and applause ] [ female announcer ] control your tv with your voice. the x1 entertainment operating system. only from xfinity. welcome back to "squawk box" this morning. m & a in 2014 off to a quick start from facebook acquiring mobile messaging service whatsapp for 16 -- i'm going to call it $19 billion. that's probably fair. we have that $45 billion deal proposal between comcast and time warner cable. joining us to talk about that and a lot more, peter weinberg,

founder of perella weinberg. you have jos. a. banks, a rumor that tesla talked to apple within the past year. that would be huge if it was real. do we think m & a, to the extent we think m & a is a barometer of confidence in the board room is actually back? we've been saying this for some time. >> finally is the right word. i in particular have been positive on the increase in activity now for a couple years. it does feel different now. i would say. i think what's different in at least in our experience in the boardroom is the level of conviction. and it just -- people just feel like they have a little higher conviction level, a little bit more risk appetite. and why is that? maybe it's because the market has been up for five years and there's got to be a point where people settle in. >> isn't that always the great

mistake? right? you only do the deal when the market is up and you're feeling good. you should be doing the deal when the market is down and everybody's feeling bad. >> the good chief executives are thinking ahead not just to tomorrow, but four or five, six chess moves ahead. that's indicative of some of the deals done here. they're thinking about what's in the best interest of the long-time shareholder. >> in is whatsapp or comcast/time warner deal, does it have a domination? are we forcing everybody to re-analyze what the land escape looks like. >> i think it does. these two deals in my view change a lot of things. some are quite obvious with respect to their sort of circle of business. but some have implications quite far beyond that. i do. i do think that. >> when you look at $19 billion,

$16 billion, whatever number you want to put on it, does that make any sense to you? would you issue -- what's the word i'm looking for? a fair -- >> fairness opinion. >> fairness opinion at that price. >> he weren't involved in that. i will tell you, 10% of the market cap of that company, if they feel that this is going to significantly impact their relationship with their customers and how their customers communicate going forward, you know, you can get your arms around it. >> right. >> these -- >> activists, some of the the smaller transactions you think are being generated by activists who are behind the scenes or by worried activists are coming? >> i don't know a company right now that extent focused on

activists, either because they've been approached by an activist or because they're just getting ready. that asset class is $100 billion. it's been performing very well. that's kind of well under way. to answer your question, i do think that some of these transactions have been driven by either activists saying do it or them saying rather than this being done to us, let's do it to ourselves. >> sorry. go ahead. >> we had jim grant on -- he's not necessarily quite as optimistic as many people but his notion is that we really is in terms of asset values, in territory where the fed has orchestrated a lot of the value here. do you think that that, to some extent, holds back people from being as aggressive as they would be in buying things? because they're not really sure the inherent value is there or something could be looming in the next two or three years that would make it a mistake to buy something? >> i think it's possible.

i think the strategic sort of pressures that a company faces, you know, literally, what are their competitors doing today? what are their customers looking for? i think those forces outweigh the uncertainty. >> why were you early then? why hasn't it happened quicker? >> i think it's taken time. i think the crisis had profound implications on people and boards and decisions and confidence. >> and the corporate managers aren't throwing money at anything. they're not building things, they're not hiring people. they're worried about commercial pay. they don't want to borrow money or anything. it could happen again, i think. >> the u.s. relative to the rest of the world, maybe not on an absolute basis, the u.s. relative of the rest of the world we feel is going to be strong. >> peter, i know that it's different for every company and you can't give a total blanket answer but if you had to look, just based on how much stocks have appreciated over the last

couple of years, do you think it's better to buy another company with stock or with cash? >> right now, the general answer to that question has to be with cash because rates are still so low. almost anything is accretive when your soft of borrowing is so low. >> right. >> i would say that. on the other hand, i don't think anyone to the confidence point and risk going forward, i don't think anyone wants to overlever and put themselves in a position where you did a highly levered acquisition and for some reason you struggle. of course there's a huge highly levered fixed income market right now. the high yield market, which is performing very well. but still, i think generally, you know, people can do it for cash they will. >> i want to cam back to activist for just a second, in particular, carl icahn. is he a constructive guy to you in the market? he gets involved in a company like apple and you say to yourself, he seems to have a great gut, right, on what's right in terms of investing? if you ask what he knows about

apple? i'd have a hard time arguing that he is the technology expert. he gets involved in ebay, says we should spin off paypal. maybe his gut is totally right on that piece of it. i don't know. but i wouldn't argue he knows anything in particular is special about ebay. if you're on the other side of it and on the board of this company, you're thinking, you know, uncle carl is here. what do we do? >> yes. the two book ends of activism on one side you have carl and others who aren't looking for the welcome mat. they're going to say what they think and they're not interested in the reception. the other end of the spectrum is blue harbor. >> they're in the news today with tribune. >> they come in and say, lack, this is what we've done, here's the analysis we've done, here's what we think. but if you don't want us, we'll leave. those are the book ends. look, i think there's some situations where activists have made a big difference and created a lot of value. and others not.

the thing that's interesting to me on the activist front is why the long only institutions have not been a greater part of the debate. the public debate. because here, the big long only institutions have a lot of equity. >> right. >> as a general matter. >> they own larger percentage pieces of the companies typically than the activist, yet they've been quite sideline the. that's been the case for a long time. now that this activist space has become so high profile, it's interesting that the institutions have not displayed a public voice. >> helping us sort through all of this. >> thank you. when we come back, billionaire investor ron baron, why he thinks now is the time to buy into the market and where he thinks investors can make a ton of money. the dow futures up 40 points above fair value. we'll be right back with ron baron.

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ye r ceo ron baron is our special guest. why he thinks now is the time to

buy. and the bond buzz from pimco. plus, value investment baron's round table number scott black on what's working now. a big market lineup. it's all right here, right now on the final hour of "squawk box." sounds like a ticker. news is happening. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. futures are higher across the board. they've been going up. you can tell from the ticker tape. >> in the headlines. >> give it to us. >> serious news this morning. >> it's good. it happened quick. the situation in ukraine taking center stage. president viktor -- >> you did this to me and it's

unfair. >> yanukovych. >> i know that. >> on the break i did say yanukovych. >> that's unfair. >> yanukovych has been ousted and is now considered -- >> you ousted me -- or outed me. >> he's considered a fugitive and is wanted for mass murder. acting leaders are moving to get ukraine and economic house in order as well as declaring new elections take place in may. and michelle caruso-cabrera will have a lot more live from kiev in just a couple minutes. netflix will pay comcast an undisclosed amount to get its content to customers faster. this deal is considered a possible forerunner to more agreements by content companies with cable companies and service providers. this is a little bit of the net neutrality argument. >> yes. >> it's worth noting these aren't connections into the home directly. these are on a server level, almost separately. there will be a debate about what this all means. >> it is -- i don't think you can minimize this as a

watershed. >> huge watershed. >> people saying here you go. it makes me think that they knew. they knew that their days were numbered getting all this free. >> this transaction apparently started or at leaf the conversation started before the time warner cable transaction ever happened. >> before the net neutrality. >> or the net neutrality because of the dates involved. what are you looking at? >> i'm looking at a netflix chart. if you can't tell when a stock goes from 20 in 2012 to $440 a couple of years later, you know, there's not free lunches forever. you can't -- you have to pay if you want to play. we can't show you stupid movies. >> they're taking up a third of the bandwidth. >> with 10% of the population. 33 million users. >> netflix is a luxury.

it's not something you have to have. >> i think everybody has it who wants it. >> i don't. i want it. >> did you sign up for? >> i haven't gotten around to doing it. i believe netflix users should be paying their own way. >> i do, too. preaching to the choir. look at that stock. it's all reed hastings because he's a genius. >> when you pay your cable bill and your internet connection bill are helping subsidize netflix users. >> it's a $26 billion company and it wasn't even a billion dollar company not that long ago. >> we'll see what this does 0 to the debate over the larger transaction which is the comcast/time warner cable piece. our next guest is a "squawk" market master. ron baron is the chairman and ceo of baron capital. he joins with us stock picks and his outlook on the market. good to see you today. >> hi, becky. hi, joe. hi, andrew. >> welcome to florida.

>> we've had a lot of people on today who have talked about how stocks have appreciated to this point, they're worried about the federal reserve and how they exit quantitative easing. many of them have concerns about whether the markets look very expensive here. what do you think? >> since 2000, we have been subject to a terror attack, to the internet bubble, to a financial panic. almost had a near depression. if you read "the new york times" this past weekend it shows you how narrowly we averted it. so people are concerned about stock market and stock prices, but there hasn't been a great deal of progress made in the past 13, 14 years. it looks like it's up a lot over the past five years but it's only 20% or 30% higher than it was in 2007. so i think that the most important thing to think about right now is that the growth of our economy is increasing,

housing is doing great. cars are doing great. energy costs are low. interest costs are low. credit is widely available. deficits are falling. and stock prices are valued at the median level they have been for 50 years or for 100 years. stock prices are right in the middle. normally 10 to 20 times, or 15 1/2 times. it doesn't feel expensive to me with the economy improving the way it is. i remember -- i have two -- my grandparents, both my grandfathers were immigrants. one came from kiev. i'm sure glad he left that place. and the other from golisha in poland. i'm sure glad he left that place. my grandfather who left poland became a factory worker in brooklyn. and he managed a candle factory and didn't miss a day of work for 52 years. 52 years. when you was a child i asked him, how come you don't invest in the stock market? he said he had seen the

depression, he had seen wealthy people selling apples on street corners. he was afraid. my parents hardly invested in stocks. my dad never invested in stocks until i began to manage money for him 30 or 40 years ago. so it's curious to me that every day when i watch "squawk box," when i work out, every single day, you have guests on and they predict what the market will do, whether you should have risk on or risk off. whether we're going to have a correction or whether the stock market is higher or low, everyone's predicting that all the time. they're basically predicting what i think you can't predict. that's what everyone thinks about. and the -- my family and i are the largest investors in our mutual funds and i invest every single month. what most people would regard as a substantial amount. every single month, dollar cost averaging they used to call it. and because i think that over the long term, the stock market will be much higher than it is

right now. i can't tell you what it will be tomorrow, next week or next month but i think the long term will be much higher, as it has been from my life -- during my lifetime, the past 100 years, the past 60 years, it's the same. what i think is that the stock market is likely to go with the economy, almost 7% a year, for a very long period of time, ten years, 20 years. and if it's 7% a year, that means you double your money in ten years. if it's for 20 years which i think is likely, you'll see a doubling again in the next 20 years. so that means 30,000 for the market in 2,000 and -- i'm sorry, ten years from now and 60,000 in 20 years. that's what we talked about before. it might sound like a huge number but that's what compounding is. it makes small numbers get to be real big. when i started baron capital in 1982 and the market was 880. and now it's 16,000.

16 times, 17 times. i think that the most important thing i think about is that the stock market is a hedge against inflation. >> yes. >> and if you go back to -- should i give you a chance? >> no, no, no. one question i have for you. you say you put in a substantial amount of money every month. does it vary? >> same amount every month. this year it's 25% more than it was last year. but every single month is the same amount. sometimes i do it every week. you know, divide the monthly amount into one-quarter. sometimes i do it at the end of the month. it's every month is what i do. >> so you point out 7% growth. a lot of people we talked to will say we're looking at 2% to 3% gdp. where do you get the 7%? >> well, when you add inflation. >> okay.

>> and the nominal growth for our economy since 1960 is 6.6% a year. that's including inflation. and the real growth is 3.1% a year. so our gdp in 1960 when president kennedy was president, was 529 billion. 529 billion. >> wow. >> it's now 17.1 trillion. so that happens to be 6.6% a year. the stock market was 600 then and it's 16,000 now. that's 6.2% a year. when you add back dividends that gets you to 8% a year. that's the norm since 1960 and it's the norm since 1900. so i don't think every now and then as everybody is talking about before, we've had an unusual decade where we've had all these extraneous factors that have had an impact. when you have an attack on terror and you have these wars and overleveraging.

fortunately for us we've had investment bankers, you know, chairman of the fed. we've had bernanke and now yellen. when you read the newspapers over the weekend with youio sue important yellen was while all this was happening. and fortunately, joe might not agree, but i think they've saved the world. >> you know i play both sides. i don't like when people fix prices. i tell you what i do know, is that like some of the greatest stocks that become really well known, i find out that you've had them since they were nothing. they weren't well known at all. i wondered, did you know early on with, i don't know, an apple or whatever, are there certain stocks you're really excited about early on? i always ask you this. i want those stocks that you've got now that you're just starting to buy. is there a couple that -- >> give us the modern day ralph

lauren. >> generac. >> let me go one more thing about inflation and then i'll get to stocks. >> okay. >> the other thing i want to talk about with inflation is that it's ever-present. the government's program is to make your money worth less. the reason they want to make your money worth less by 3% or 4% a year is to make it less important to the economy. they want to solve our indebtedness by making the debt worth less. and so yellen the other day was on television and testimony and she was saying that she felt it was very important that the debt that we have on our economy doesn't grow as fast as the economy. makes sense. and that means that the country has a $17.1 trillion of debt and you have to make that debt worth less than the $17 trillion economy. that's like a house. if you have a million dollar house and you have a million dollar mortgage on it, it's

important that the house grow in value more than the mortgage otherwise you'll be in trouble. that's what we're trying to do. it's important to have interest rates be less than the rate of inflation. that makes the debt worth less. then we go into stocks. so we're in our firm we're in the compounding business i started as an analyst in 1970. i had a negative net worth now. in 1982, started baron capital. we had $10 million in management, half of it was from george soros. in 1987 our first mutual fund. 1992 we had $100 million under management. we have 25.8 billion now. what's most interesting to me is that we've been able to make for our clients a compounded rate of return. we made them over $18 billion in profits. a compound rate of return of something 14.2% a year, the market's 9% and our index is 8%. those small changes mean a lot

over the long term. at our conference this year, our annual meeting, we had five companies that spoke. diversified by industry. we had koufax, penn national gaming, pro-merica insurance company. we invested $16 million in those companies six or seven years ago on average, they're now worth 1.6 billion. i thought they'd be worth twice as much in the next five years than they are now. i also told people, the 28.5 billion, if we didn't have another dollar coming in or out, i thought we'd be able to make another $20 billion in profits over the next five years. that's my hope. we'll see if we can do it or not. >> you didn't sell vale resorts yet?

how are you feeling about sale this year they have an 80 inch base in vail. >> our cost is maybe 25. now it's 75. we've owned it for 15 years. >> if you listen to me and you didn't sell it because of global warming out in vail. >> we had a hedge, cold weather stocks, warm weather stocks. everything will try to get to the same place in the next five years. we're trying to double our money all the time. there will be some times when some companies will be affected by weather and some will ab effected by the high price of oil, interest rates, whatever. in the case of vail, one of my friends called me and he was telling me that he was in vail. he was remarking about how amazing it is. there's a new $15 million lift, a $10 million lift, a $10

million restaurant, these $5 million worth of rides that they're putting at the to have of the mountains, well, some at breckenridge as well. the bottom line is, the guy says to me, we were an investor with leon, when he owned the company. we own 15% of vail. all of our investments are less than 9.9 except for four or five like vail which are grandfathered. he said maybe i want to buy your stock. i said it's not for sale. anyway, opportunities. so opportunities, number one, health care. we're looking -- the government is spending a lot of money on health care. we're trying to be in front of that. when the government spent money on roads in the 1950s, the people benefited weren't just the guys that made the cement and the steel and bridges. they were the guys like mcdonald's and disney and holiday inns, they benefitted

from the roads. we're investing in alumina, the sequence in the genome. >> what's the symbol. >> ilmn. >> energy. alumina has been an amazing stock in the last year, year 1/2. >> it's a $22 billion company. >> yes. energy. we think that the enormous amount of shale energy in our company is about to be exploited. i like concho petroleum. these big reserves that are aggravating acreage and exploiting it. it used to cost a million dollars a well. you pump it into the ground and oil comes out. now it's complicated. they have five or six of these int

intermediate size companies that are aggregating acreage. they'll be able to be acquisition candidates by the big oil companies who don't want to do the leg work. >> one of the companies you invest is in under armour. we had kevin plank, the ceo, on "squawk box" on friday. he was talking about the controversy with the olympic speed skating uniforms. >> i love kevin. you know, as a man would love another man. that's not even true either. i like kevin a lot. great executive. so kevin, i thought he gave an amazing performance and sir paul mccartney would say when you watch someone -- or listen to someone or listen to music, people remember the music, not the words. when you watch kevin perform and speak, he inspires confidence. he inspires -- he said, man, i want to invest in a company run by that guy. this one aside, that we go to

visit him every year. and when we did, i guess a year ago, two years ago, you watch him on television. the guy looks like he's in unbelievable shape. he is in unbelievable shape. we were sitting there and talking with him for a day. all day long he's squeezing this grip, working on his grip. most guys work on their pecks, abs, legs, all he has left to work on is his grip. when i travel around the country and i meet people like him, i meet people like elan musk. i didn't meet the guy that sold whatsapp what he did. you meet people like that. you say i want to invest in those people. the companies, the way they describe their opportunities are enormous. when you think about investing with someone who runs a company, you need to have opportunity, competitive advantage. you know, people who run the businesses invest for the long term. when you find someone like that in all these people and they see what they're doing and how they're building their

businesses and changing our country, it's hard for me to understand why you wouldn't want to invest in stocks that will increase in value over the long term as opposed to invest in cash and keep your money, which is going to every year fall 3% or 4% in purchasing value. it's an amazing country. i'm sure glad my parents left kiev and golisha. >> we always love have you you on. we really appreciate your time this morning. >> thank you very much. >> what's the symbol of the energy company. >> i think it's cxo. i used to know symbols for everything. >> there it is. >> cxo, concho resources. >> appreciate it, ron. meantime, take a look at the futures as ron's been talking here's what's been happening this morning. we'll put that futures board right up there. dow looks like it would open up higher, 49 points higher, s&p 500 up 6 points and the nasdaq up over 14 points. we have a headline for you that just crossed the wires.

we are learning that men's warehouse, you are going to like the way you look. the saga continues. they've increased their offer for jos. a. bank. up top $63.50 per share, up from $57.50. another deal allowed it to back out if it received a bid superior to what was on the table. the board of jos. a. bank has a lot to think about. >> i'd be interested to hear about this. >> you wouldn't even let jeeves drive by where these stores are located.

>> that's not true. >> i told you -- >> i purchase goods at these stores. >> when, before -- when? >> several years ago. >> several years ago. >> i'm using the word several liberally. >> you know what i got at jos. a. bank? a belt. i did buy a belt there. >> you wear a -- you do have a belt on today. >> you could argue by the way the transaction with eddie bauer forced men's warehouse to come back. a big week for janet yellen. she'll be in front of the senate finance committee on thursday. we'll preview her testimony and talk investment strategy with mark keisel, chef investment officer at pimco. we'll be right back. coach calls it logistics. he's a great passer. dependable. a winning team has to have one. somebody you can count on. somebody like my dad.

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good morning again, everybody. welcome back to "squawk box." shares of rf microdevices are on the move. it is merging with triquint semiconductors. microdevices will get one share for each of the one they now hold. when we come back, we'll be talking interest rates, the fed and investment strategy with a

member of pimco. later, we say bottoms up with scott black. his warren buffett approach haze made him one of the top stock pickers in the game. stick around. "squawk box" will be right back. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

men's warehouse is increasing is cash bid for jos. a. banks from 57.50 to $63.50 a share. remember, eddie bauer got brought into the mix, too, by jos. a. banks. as we mentioned a few minutes ago, you can look at what's been happening with the shares also with triquint semiconductor are jumping after the news of a merger. triquint up by 27% even though this is a stock deal. same is true of rf microdevices. the deal is worth a total of $1.6 billion. rf microdevices up 22%. dillards is falling in

premarket trading. they earned $2.87 a share for the fourth quarter. that missed the street's estimate by 13 cents. the ceo says he is disappointed in the company's performance. that stock down by 1.75%. pfizer is reporting a study for a pneumonia vaccine was successful. fed chair janet yellen will testify later this week in front of a senate committee. let's talk investment strategy, interest rates and the fed with mark keisel, pimco's deputy chief investment officer. i read it again. but i'll start at a completely different place. you lost alareon. your owe guy is running for governor. they just recently named you and

three or four other people as deputy chief investment officers. are you moving or at leaf going to market more equity investments? is that why you're here now? >> well, joe, as you know, that's always been our plan. we've evolved from fixed income. when i started at the firm almost 18 years ago we were one office in 60 billion. today we're basically in ten offices and $2 trillion company. this evolution into equities has been a part of pimco's strategy for the last decade. in fact be under bill's leadership our equity funds have done very well. >> are you any good? i love bill. he's such a huge success and a vet and everything else. when he's dabbled in equities, the 5,000 call on the dow, he says what's is on his mind. i don't necessarily listen to him about stocks, i'll tell you that much. >> he won three morning star bond manager of the year. >> bond, a "b," not stock

manager, right? are you ready to manage stocks? you're a bond guy, too. are you ready to do this, to take the mantle? >> we think our team is very capable to manage equities. as you know, joe, we've been actually quite positive on many industries over the last two years and those equities in housing and gaming and energy. those have done very well and we've talked on cnbc about our optimism on those sectors. >> i'll give it to you on the housing stuff. that's where i would definitely -- it's so inextricably linked with interest rates i would like to hear exactly how you think we should play housing and what stocks we should buy. >> with housing, what's going on there is three things. you have pricing power, great assets in companies and growth. pricing power is interesting because in the building material sector you have companies like usg which are raising prices double digits. you have companies like toll brothers in your neck of the woods, joe. if you look for a house in new

york city, those new homes are seeing price increases of 10%. you've also got superior land positions. we like usg, masco, toll brothers and d.r. horton. >> go ahead. >> i wanted to go back to the larger pimco issues for one second. >> people were concerned. >> people were concerned. here's the question. mohammed used to come on the program a lot and hopefully will come back at some point soon. can you give us a little bit of color of exactly what happened between bill and -- i'm actually serious. >> he won't do it. >> somebody needs to ask the question. our viewers by the way, many of them are interested because they've e-mailed and asked us the question. it happened so abruptly. >> we don't know why mohammed is leaving. you should ask him. joe and i would like to play golf with him. maybe when he retires we'll invite him out for golf. >> that's something we'll do. we can go to one of his teams -- if you want to see a losing game, we can go to one of the

teams that he backs, the jets or the mets. hopefully the investments are better. he came to new york. those are the two teams he picked. you also mentioned gaming. >> you've had a topic change. >> how about gaming? >> gaming is unique, joe, because basically you're talking about a recovering las vegas market. there's almost no supply coming online. the real story in gaming is macao. macao is now a seven-times larger than las vegas. there's only six licenses. and there's no supply for the next two years. gaming looks great to us. companies to invest in there include wynn, empel, mgm and las vegas sands. >> you like comcast, our parent, too. dominant market position and pricing power. >> yes, basically comcast will have 30 million subscribers. they're able to raise prices about 4%. they are actually paying,

believe it or not, content increases in terms of the likes of espn. this is a company combined with time warner cable that will basically throw off 15 billion of free cash flow. this is a cash flow machine. >> i think of years ago, i remember a guy, 1990 said if you can't buy airlines, he was early. when we get discretionary dollars and for leisure as the whole world, you know, the standard of living goes up, don't people travel? isn't that the one luxury thing they do? hotels and airlines seem like a long-term bet. >> that didn't make sense. >> until a couple years ago. once again being early. you think the airlines are a place to be and some hotel chains as well? >> the business traveler is back. the consumer traveller is picking back up. you're paying 6% to 7% more for business. probably 4% to 5% for consumer travel. the planes are packed. you're sitting in middle seats. when you go to get a hotel, it's much harder, particularly on the

weekend. those industries have significant pricing power right now. >> some of your picks are kind of like no-brainers but a lot of them are popular. then there's energy. anybody who is not -- if you're not clued into the energy situation, you have to be living under a rock. you have different names that aren't as common. i'd like you to tell us about them. >> sure. basically there's three ways to play energy. you can invest in the companies that actually drill. there we like companies like continental resources and we also like companies like pioneer natural resources. >> clr and pxd. keep going. >> we like the long haul pipe networks, plains all american, plains is touching 30% of all crude oil. enterprise products which has a dominant position in the gulf and finally, this is probably the most interesting sector is the mlps, the gathering processes and fractionating

firms. we like companies like targa in the gulf and mark west energy in the marseillcellus shale. >> you have $2 trillion under management. you're building out your equity business. is this a common teary on pimco's overall view on bonds that the 20-year bowl is done and maybe rates don't spike but at this point, you need to favor equities month are than fixed income. does pimco believe that? >> no. our strategy works across the capital structure. if you focus on that pricing power, superior assets and growth, that will work across the entire capital structure. by the way, we think interest rates are not necessarily heading that much higher because of the low inflation, because of the excess slack and emerging markets. you have decreased inflationary

talk. >> we introed you talking about yellen. we had jim grant on. i've had people make the case that she could be coming in at a difficult period where he's done a lot of stuff that -- like we've eaten a lot of candy and we feel a lot better. we've sort of avoided all the pain. she comes in and all the heavy lifting will be ahead of her. is she coming into a tough spot here do you think in trying to orchestrate this exit? >> there's no question. these are unprecedented times, not just for america but if you look at central banks and developed markets, you have 30% of gdp, these central bank balance sheets. there's no question that the fed wants to taper, over time reduce the reliance on their balance sheet. again, that's a separate

question from raising rates. our view is while the fed will taper, they will be slow to raise rates because of low inflation, excess in the slack in the labor markets and the growing economy in europe and the emerging markets. >> let me think here. crazenzi is still there, right? >> yes. >> and that guru -- >> paul mcculley. >> kashkari will be going for governor. you have about six deputy chief investment officers, you, virginia, scott, andrew and dan ivanson. do you all have different stuff you're doing? are you like -- what was that, those superheroes? you all got a certain skill? someone's good with the knife, someone is good with the karate?

are you all different or together. >> we all work together to deliver the best returns we can for clients. my responsibility directly is going to be investment grade high yield bank loans, municipals and insurance. basically the credit business at pimco, which i've been involved in for basically 17 years at the firm. >> what about these other people, what's is virginia doing? >> she'll be our new head of equities. >> i like that last name, too. i'm not going to attempt it. looks like she must be french. i guess we have to go. thank you. appreciate it. we love talking to people from pimco. you have $2 trillion. just wondering whether the writing is on the wall that the bond business isn't going to be as great as it was i don't think. you think? >> we actually feel quite good about bonds. >> thank you.

>> thank you. >> doc savage. you ever read doc savage when you were a kid? >> no. >> he had five guys and they all had a special -- there was a girl, too. like fabulous four or something. >> yes, i was into that. >> that's what pimco is apparently like. an avatar star finds himself in a bit of trouble in new york city. details after the break. then, jim kramer, live from the new york stock exchange. we'll talk netflix and its agreement to pay comcast for faster broadband access. "squawk box" coming back right after this short break.

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welcome back to "squawk box." sam arrington was arrested in new york after punching a photographer. that incident happened yesterday in new york. he apparently retaliated after a photographer kicked his girlfriend in the shin. the photographer was arrested on charges of reckless endangerment, assault and harassment. the australian actor is due to appear in court on wednesday. if you get a second, grab a copy of "new york" magazine. the cover has an article by alec baldwin. >> are you a photographer? >> what's happening here? >> you can't be cool if you don't -- get away from me. >> this is a lawsuit waiting to happen. >> you can't be big in hollywood -- you can't be sean penn or alec baldwin.

you can't be cool if you don't -- go hit him. hit a photographer. go ahead. >> i'm too nice. >> did that look like a -- did i look like a bad ass. >> you look like aquaman. >> they're all usually small guys. real tough with the paparazzi all the time. >> you read this alec baldwin piece. it's amazing. >> he says bad things about our sister network. i don't appreciate that. >> doesn't he? >> that is true. he's bitter. >> he was on twice. >> it's a very self-reflective, intraspecative piece. >> is he still on -- >> no, he's not. >> we don't have any reason to -- >> i don't know if we do or not. >> he's still getting checks for "30 rock." netflix streaming payments -- wow, streaming payments to comcast for faster broadband access. jim kramer joins us with his

take, right after the break. and then baron's roundtable member, scott black joins us with his latest stock ideas. "squawk box" will be right back. ♪ ♪ humans -- even when we cross our "t's" and dot our "i's," we still run into problems. that's why liberty mutual insurance offers accident forgiveness with our auto policies. if you qualify, your rates won't go up due to your first accident. because making mistakes is only human, and so are we. we also offer new car replacement, so if you total your new car, we give you the money for a new one. call liberty mutual insurance at... and ask us all about our auto features,

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welcome back. the futures are getting better and better. we're doing okay. up 46 points this morning. in fact, the s&p is up about 6. that will get us back above 1840. the december 31st close we keep talking about, 1850, we're still below that. >> we are. let's get over to the new york stock exchange where our friend jim kramer joins us. i want to know your view, really, really on this whole comcast, netflix, time warner cable deal and what it all means. >> i think it means win/win for everyone. i think the degradation probably worried them. netflix has to pay people otherwise. maybe now they don't have to make those payments. it's not clear how much netflix is paying or has been paying to these other providers. i think it's perfectly reasonable that netflix and

comcast goes higher. >> are you bothered at all about the issues that this raise? >> i don't think this is a net neutrality issue. it has much more to do with how comcast interacts with netflix. this is a more direct way to do it instead of paying the middle men. the initial reaction was that netflix was paying much more. that's not clear to me at all. it may be paying less. i think the netflix note that from bernstein is probably the most cogent this morning. >> what's your take on other content companies whether they will be forced to pay and whether the other beneficiaries will be other cable companies. >> i think cable companies are certainly in the driver's seat. we know that. this is very much of a netflix issue. they're so much of the traffic and are not concerned about the others. one thing that's important about netflix, if there is a buffering problem, it's not the speed but the buffer, you might be willing to drop netflix because you're tired of the buffer, you probably won't see that on any

of comcast systems starting now. >> very quickly, jim, just getting something that carl icahn sweeted, they took a stake in shares of ebay. there's a letter to ebay letter trying to download. >> i'm wondering when he's going to reapply the money to ebay. donna said on her own show that there is no real premium. i agree with i kann here. >> let me ask you this. one of the comments is that you need ebay, ebay forces everybody to use paypal and that creates the ecosystem. you take ebay out of that and it changes the equation. you don't buy that? >> if that's the case, then paypal isn't as big as i

thought. if you're going to rival a mastercard or visa, you've got to get a valuation that's higher. you've got to show how much paypal is worth rather than have it embedded in the overall structure of ebay. i like what he has to say about the incubation. that's good. it's been incubating for years. let's have it go out on its own. i know that he thinks it's just another big expense but i think paypal on its own would be more focused and more able to take on the big guys, and it's got to especially in square comes on here. >> carl ie kann is taking them on saying it les lead us to question about loyalty to ebay, how her purchased -- of the skype ipo i guess he's saying be on both sides of this.

this is going to be a personality battle. >> ebay board has a lot of a good people on it. i do not make these kinds of charges. terks bay board has always been one of the great boards that are out there. and he's done a good job. this is one of those situations where i think the stock will go up substantially if he caved to icahn. bottoms up approach to stock picking. we have verizon communications ceo loyal mcadam joining the gang at 9:00. "squawk box" will be right back.

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we are continuing our work's working series with some investment ideas from one of the members of the pris tig jous baron's round table. up know you're a guy who looks from the bottom up. do stocks look expensive to you or fairly valued or cheap? >> well, i think if you use the

s&p 500 as an aprax ya, wear using that, that punts you at 15.8 multiple and by historical standards slightly undervalued gaens 16 median. of course this is a stock picker's market. there are always tunts. but the market as a whole is fairly valued. it's certainly not overvalued. >> we have some breaking news. i don't know if you're looking at ebay but we were just talking about how karl icahn is in favor of the paypal being split off from ebay business. do you have any thoughts on that in. >> not really. historically it's sold too high for me. i have to go bottom fishing with cheaper valuations. >> let's talk about a stocks you do like. one of them is flextronics. >> i saw the company in san

francisco in the summer. the earnings were still trending down. then i talked to them in december and the earnings finally turned, we bought it ahead of the turn. the stock has come back from 7.5 to 9. it's a clean balance sheet, .19 debt equity ratio, earns well over 25% and is selling at 8.9 times earnings. one of the key things besides top line growth, the ceo is dedicated to lifting the margins, it's 2.66% whereby up about 22 basis points. i think it's moving in the right direction and therant too many stocks selling at single digit multiples. >> yeah, that's still pretty cheap. >> plus they generate a lot of free cash. they do better than dollar for dollar. >> we've talked to several

people today who have been focused on the energy sector, that is a hot area. but there's a specific stock you like that. pdc energy. what do they do? >> they'll basically is watten burg play. maybe five years ago they had different management, it was rocky mountain gas. 46% of the company now is gas. we got about $90 a share with year-end reserves. it's.65. it's a little expensive on price to discretionary cash flow. it's about 7.5 times. but the company is going to grow production from the drill bit this year over 30% that you're basically 266 million barrel oil equivalent and it's growing nicely. it's very economic. they are out-spending their cash

flow this year. that's not because the operations are bad it's just because thaz ear being very aggressive. they're also developing in a new field, only 7% of the reserve base. i but it's an explosive growth management. new management. the balance sheet is in great shape. they laid down some stock. they have the financial wherewithal to basically expedite their aggressive drilling program this year. >> when things got shaky earlier this year, you were fazed by that. why is that? >> because you've got to put things in perspective. the thing that the turkish lira, the cyprus crisis is going to be the debacle for the rest of europe and the united states is ridiculous. i understand if something going wrong in china and growth goes to 2 naef h 1/2 to 3%, that has a dell tear yous effect.

and you have to be like warren buffet. you have to take the long view that over time the united states economy is going to grow at 2 1/2 to 3%. it's a great place poob. >> that does it for us top. make sure you join us tomorrow. right now it's time for "squawk on the street." good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim kaimer. the three of us back for the first time in three weeks. a loif and exclusive interview with verizon chief lowell mcadam, jane williams doyle and goldman sachs equity strategist. this is all coming up. futures are positive on this last week