growth mindset and isn't talking about growth and reinforcing all that stuff is just missing the boat. >> it's been great having you here today, jack. >> good having you, jack, we'll see you again soon. >> i look forward to it. >> make sure you join us tomorrow. "squawk on the street" is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with simon hobbs, david faber at the new york stock exchange. cramer is off today. not a bad morning taking shape. futures rebounding after a couple of rough days. retail sales came in with a beat. jobless claims a three-month low is the weak winter data starting to thaw. ten-year yield would suggest still some reason to doubt that around 274. stan fisher on the hill today for his vice chair confirmation hearing and europe is relatively mixed today. the roadmap begins with amazon, new prime pricing going up, but

not by as much as the company had indicated it could have. it's the first hike since the service was introduced. a lot happening in the retail sector today. data showing a slight increase in february sales. results from dollar general and jcpenney relaunching its home goods department. and some new information in the gm ignition switch recall. the automaker now telling affected owners not to weigh down their key rings with anything more than the car key and key fob. we'll talk more about that. first up, though, amazon is raising the price of its prime subscription service to $99 up from $79. the first increase sense the service was introduced nine years ago. prime offers free two-day shipping and access to thousands of streaming movies and tv shows. amazon said those who sign up for prime in the next seven days can lock in the $79 rate. nice to be grandfathered if you act quickly. the big question, though, is and you, david, know this company pretty well by now -- >> i do. >> -- how much do people exit the program because of the price increase? >> yeah, you know, they had put out there the possibility of a

$40 increase and, of course, then you come in with $20 and it seems like a relative bargain. but as i tweeted amazon knows its customers and their behavior better than any company period in terms of what they can do when it comes to data, big data and everything else. one has to believe they have researched this in every way possible. still, interesting to note just, you know, anecdotally a lot of the conversation after my tweet on, for example, twitter was, i'm leaving, i'm leaving, oh, you know, they're still not going to be profitable. of course, this does go back to the basic profitability of the company, which is in the fers party business, namely amazon is sourcing the goods and storing them and having them in inventory and shipping them to you, does the company continue to actually lose money and much will a $20 increase address that. we don't know how many prime members there are. >> we don't know anything about anything. >> we know very little. the company doesn't give us a lot of information and its investors are happy not to get it apparently because they've continued to award them on an

extremely high multiple. we think at least 20 million prime members, though, that at least is the number out there. they added many during the holiday season. >> a million. >> you can do the math. what this will mean for the company in terms of additional profitability or certainly -- >> some have said 200 million in incremental revenue for a company with margins this slim might move the needle if nobody leaves, right? >> without a doubt. >> yeah. >> the question is how many people. there's also been a belief, you know, they're developing this streaming music service and interviews i've been doing we're working on a documentary on amazon and so in interviews that i've been doing for that people had brought up the idea, i wonder if they'll tie that in, i wonder if they'll add some new value proposition when they raise the prime price. that does not seem to be the case. >> to be clear we believe amazon prime is a loss-making venture, do we not? >> we believe that amazon does not make money in the -- in the shipping -- >> on the shipping. >> in other words, two days. the cost of actually what goes

on, all the fulfillment centers that they are building, for example, to get closer to urban centers and all the people who man those fulfillment centers, even though many of them making $12 to $14 an hour, yes, the basic idea of getting you that package in two days is not a money-winning proposition. >> if they lost customers, they would lose less money. >> that's not the way jeff bezos sees it at all. >> there are two surveys that they would lose -- both for "the journal" and cirp they would lose half of their customers. >> 50%? >> let me put it the other way around, less than half said they would renew if there was a price hike to $99. >> the parlor game is the over/under 10%, 2%, that would be amazing. >> i would take amazon's data and what it knows well beyond

any survey that anybody has come out with. >> what you need to know whether they are purely shipping customers and they want to get a deal there or whether they moved over to the value added to the prime video and, therefore, more likely to renew. >> prime is very important for this company. prime members typically buy more stuff as a result of being prime members. and so there is the fly wheel which is something very important at amazon. just things keep rotating faster and faster as a result of it. >> yeah. the stock's going to be up today at least at the open. we'll talk more about it later. retail sales for february did accelerate 0.3 despite the winter chill. also dollar general out with earnings. jcpenney redoing their home goods. we want to get more insight on all things retail and the state of the consumer. joining us on set david henry vice president and ceo of kimco reali realty, great to have you back. good morning. thank you for kicking us off.

0.3 is not bad. a nice beat. some are saying the economy is sort of coming out of the rough winter. is that what the number tells you? >> it was a slow start certainly with the cold weather and also a little bit of a sticker payroll shock. a lot of retailers are saying the first week of january when employees got their paychecks they looked at higher payroll reductions and higher taxes and that may have paused everything a little bit. but i think we're back on track. national retail federation predicts 4% retail sales growth this year and they are sticking with it. i think it will be a strong year. most national retailers are expanding again. strong growth plans across the board. >> we've been talking about it seems every morning a new round of store closures, right? a radioshack and a staples and even some already in progress that were announced earlier last year. how much is coming online in terms of vacancy? >> you have to be careful when you see the headlines of radioshack or staples, for every one of those there are three

others growing like crazy that don't make the headlines. aldee's will grow to 2,000 stores over the next five years. tjx and ross stores alone are going to grow 200 stores per year, so you have a lot of retailers doing very well that more than offset the store closures that you see. overall in the next two years 82,000 new stores are going to open up across the u.s. >> you're not that concerned. every day we sit here and talk about fashion-based retail malls, for example, that seem to be getting hurt by amazon which we just talked about, by everybody doing things on their mobile phone or even if they go to the store, actually not buying something there. you're not seeing that in your business? >> of course, e-commerce is a factor. but, again, you have to keep it in perspective. total credit card sales, only 6% are internet e-commerce based. so you still have 94% of sales on credit cards still brick and mortar sales of some sort or another. most of the none-commerce retail

blends their store operations in with online sales. macy's, for instance, tells us for everything ordered online and returned on store they sell $1.30 for every dollar returned. nice ways to blend them together. >> williams sonoma with a comp brand metric, meaning combining online and bricks and mortar up 10%, that will be a record high on williams-sonoma. we've got dollar general out today, what smells the sweetest? >> the restaurant business is growing like crazy. a fun fact. 50 subways a week open up in the united states each week. people are eating out more often. one dunkin' donut opens every day and that drives -- >> these are franchises and people kind of giving it a chance, aren't they? >> yes, right. >> what about mall traffic overall? the press is continually full of the idea of malls shutting down, that the traffic is plunging?

i know you're going to say we're at the community level so it's slightly different. what is the general landscape there and how can more owners boost the traffic that's going through or is it up to the retailers individually? >> let's start with the very good malls. nothing has changed about the very good malls in the united states. most of the real estate investment trusts own the prime malls in the united states. traffic if anything is up in the very best malls in the country. the "b" malls that are programs anchored by a penny's and a sears, they're struggling a little bit more. but the very best malls in the united states are doing fine. in kimco's case we are about neighborhood and community shopping centers, we're the drugstore, the dry cleaner, the pizza parlor that's what you see every day and most of that is internet resistance we would argue. the health club is another example. >> people coming every day. >> right. but you mentioned jcpenney's and sears, we talk about them a good deal here. what do you believe is the

future for both of those retailers? >> identify think you have to put them in two different categories. sears and kmart have not been investing back in the stores which generally is not a good sign. sears, kmart are placing a major bet in converting their brick and mortar to more of an online business membership only. we'll have to see how that works. penny's i believe deserves come credit for putting a lot of money back into their stores. a lot of the stores have been refreshed. they've turned sales around a bit. >> you mean post-johnson. >> yes, sir. >> we talk about the dijon de-johnsonfication of the stores. >> he did launch the cap-x. >> he spent a lot of money. >> but they are back to basics and they are offering coupons and discounts and trying to get their old shoppers back. >> thank you for being here. general motors is telling owners they should avoid weighing down their key rings with anything more than the key

and the remote to their car as new details emerge on its massive ignition switch recall. phil lebeau is what is becoming a nightmare for mary bar ra i would imagine. >> it's a long way from being over. the entire recall originally was an indication from general motors they had a first sense of problems with the ignition in 2004. well, now according to new documents the company filed last night they actually knew about the problem potentially as early as 2001. general motors saying at that time a technician who was working on a pre-production saturn ion first noticed stalling in 2001 and then in 2003 a dealership technician observed a stall, changed out the ignition, so those are two incidents before general motors first reported seeing problems with this vehicle or these types of vehicles and that was in 2004. and you mentioned the heavy key chain. once again general motors is telling those who own one of these 1.6 million vehicles that

they should only be using the key in the ignition and the key fob on the key chain nothing else. it should not be weighted down. that could cause some problems with the ignition. they are telling these owners to do this until the car gets fixed. the recall notices, by the way, they went out this week to 1.3 million owners here in the u.s. 1.6 worldwide. the fixes will start next month. general motors working along with delphi in terms of getting new ignition switches out to the dealerships. the fix itself shouldn't take that long, it's a matter of getting all the pieces in place in order for it to take place. shares beaten down big time this week, carl, but you see a bit of perhaps a bump back today. it's premarket and trading a little bit higher but we'll have to see what happens throughout the day today, because it's been a rough week for general motors. >> and it will be a long year for the lawyers. when we come back shares of plug power and other fuel cell companies obviously surging

after the companies' last quarterly results but what do we make of the 380% jump so far this year? also ahead the live interview of the ceo of petsmart. and a lot more "squawk on the street" live from post in a moment. moment. usic) defiance is in our bones. defiance never grows old. citracal maximum. calcium citrate plus d. highly soluble, easily absorbed. or how ornate the halls are. tall the building is, it doesn't matter if there are granite statues, or big mahogany desks. when working with an investment firm, what's really important is whether the people behind the desks actually stand behind what they say.

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shares of plug power up. helped by a jump of product service revenue. the stock is up 380% this year, and ballard and fuel cell have also been on a tear. plug power's ceo appeared on this program and he expects his company to become profitable in this year. >> in 2014 we'll make money and it's because we've been building this company for five or six years. we focused on a market where fuel cells could make a difference today. and we put it into ehecktronic trucks. we convinced customers like bmw, walmart that our units dramatically improve the product i. of their organization. >> got to make a disclaimer, of course, market cap here relatively low given the companies we normally talk about, but this is quickly becoming as we talked about with jim yesterday sort of the poster child for froth in the current market.

>> one of the cult stocks to a certain extent. >> a penny stock last year. >> it was. >> less than a dollar. >> that's just shocking. you know, history will tell you most of the time these things don't pan out. but -- >> but they are getting orders. >> i wouldn't want to pass judgment. i know there have been various people on both sides of this. we had a research report earlier this year saying the stock is worth 50 cents a share. >> but they are getting orders from walmart and fedex. >> and walmart is the make-or-break account. >> they may be very dependent on that. >> we'll see. but, man, you are getting it hit on both sides. the longs and the shorts have been torn apart this week because of the wild moves. when we come back, what's first and foremost on art cashin's radar today? he'll tell us on post nine after the opening bell. and following its june ipo gogo has been heading mostly

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and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪ as the search still continues for missing malaysia airlines flight 370 u.s. investigators are reportedly saying that the flight may have flown on for four hours after reaching its last confirmed location. we've got more now live.

sri, over to you. >> reporter: simon, as you said, it was another day. we started this day with some hope, but that hope was dashed ultimately later on. and let me just start off by saying what generated this hope. the first one was a story while an official piece of data, satellite data, from the chinese, which did apparently show what could have been floating objects in the south china sea. some of them quite considerable in area size. 21x24 meters one of them was. now, that caused a lot of excitement. planes were dispatched from malaysia and vietnam but they turned up nothing. and then we got the real shocker when the malaysian transport minister told the press over here a few hours earlier where i am that the satellite images were issued by mistake. the malaysians contacted the chinese embassy here in kua

kuala lumpur and said they were issued by mistake and shouldn't have been issued in the first place and the chinese were investigating them. so, this is turning out to be a real exercise in complicated messages, contradictions and at one point the chinese were very critical about the way the may laishens were handling this operation and now the shoe really seems to be on the other foot. this is a big backward step, in other words, for the -- in terms of the cooperation and the mutual trust when you consider the multinational coalition that is looking for this aircraft. then finally we have another report in "the wall street journal" that generated a lot of excitement, the chatter here, that the aircraft could still be airborne. was airborne, about hours after it disappeared off the radar screen. rolls-royce and boeing are in town. they have technical teams here and are trying to get to the

bottom of this investigation. but what had happened was that this was, again, categorically denied as inaccurate. and last known point of transmission was at 1:07. so, it's really been hope after hope has been dashed here. if there is anything a grain of positivity to take away from this, it's this, that the search does go on. and it is being extended but for how long. the relatives here of those passengers on 370 are becoming increasingly despondent. not a shred of evidence has been turned up yet, simon? >> thank you, sri. you've got to wonder who is being straight with the public. thank you. thank you, sri. opening bell just a few moments away. "squawk on the street's" coming right back. right back. female announcer: what will you get with your new sleep train mattress?

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♪ ♪ ♪ [ 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 from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world on a thursday. opening bell in just about 3:30 and futures not looking too bad, simon. >> let's bring in art cashin director of floor operations from ubs.

good morning. >> good morning. >> we had a very upbeat jack welch earlier. take a listen. >> every forecast we've had in the last 48 hours in our businesses call for a pick-up in the last half of the year and they all believe it's going to be there. they are seeing new orders, bookings not bad. but it hasn't changed yet, i'll tell you that. this is a 2% economy. >> does that fill you with enthusiasm for the stock market, art? >> well, second half is a bit off, you know. you live by the minute here in the stock market. and i would be enthused. one of the things that has lagged is capital expenditures, and it sounds like jack's looking for that to pick up. that could be a big help. it will also put pressure on profit margins. but let's look at the optimistic side. >> the list of red flags today. we got auto loans that are longer than six years becoming a bigger piece of the pie out there and margin debt. people are talking about that at a record level. what's the possibility of a forced liquidation down the

road? >> well, forced liquidations are very difficult. you can recall what happened in 2008. and i think it would require a trigger. i don't think the trigger would be directly in the market. what we saw particularly in 2008 and the viewers should keep in the back of their mind is what happens is when you can't sell what you want to sell, you sell whatever you can to raise money. including your grandmother's necklace, so those kinds of forced liquidations tend to spill over. we're going to watch china. see what happens, see if that default was, in fact, a bear stearns moment and begin to see things change. >> why can't we be glass half full here? this market is at a near record. we had strong data coming through on friday. u.s. economy is clearly gaining some traction through the poor weather if the data is to be believed. why can't the market rise substantially from here through the year? >> well, it certainly can.

and, you know, it's been -- we're, as you state, we're at a high already. it's been reacting. but there are cautions out there. you got reasonably good news in the retail sales. and then they revised last month down. so, the two come together and give you still those question marks. so, we'd really like to see employment pick up. things are good in wall street. we need for them to be good in main street and then we can move on from there. >> how concerned are you about the referendum in ukraine over the weekend? do you think people will position for that and the possibility that everybody falls out over it or have be basically discounted that as a market phenomenon? >> well, i think there's a kind of default posture here where people think that the only thing that can be brought against the russians if they decide to absorb crimea is sanctions, so then we'll have to wait to see how that plays out. sanctions will not be good for the market. >> have a good day, art, thank

you very much. >> thanks. just awaiting the opening bell in a couple of moments. get a look at the s&p at the top of your screen. again, the dow is down today four straight. something that hasn't happened since the end of january. down here at the big board illinois-based copper holdings doing the honors and over at the nasdaq national kidney foundation highlighting world kidney day. as we said at the top of the show, busy day for retail. williams-sonoma, does beat by two cents. comparable brand metric is the metric they're giving which is a combination of bricks and mortar and online. that was up 10%. 6% dividend likhike. they do guide below the street for q-1, and inventory up 17%, the eighth straight double digit gain in inventory which continues to be a worrisome sign for retailers if they go into spring with too many goods on

their shelves what will it do for the margins. >> the weather has become important with the winter hanging around even today longer than many might have expected. for apparel you need the spring to come and the weather to change and the sales to pick up. >> shares of dollar general are also down, we mentioned it at the top of the show but didn't feature the stock. the guidance was a bit weaker than expected. some of the research out says, don't worry too much about it. investors don't seem to be that concerned. but we've had this undercurrent of consolidation chatter that i've been talking about for some time and that has seemingly died down. we'll see whether that is revisited at some point, but nothing really going on there. but they've had a tough time like a lot of them. >> comps up 13, and then warning, again, of increased shoplifting which might be, i don't know, causation because you're selling cigarettes all of a sudden, but gross margins under pressure because of leakage as they like to say.

>> shrinkage. >> or linkage. whether its employees or shoppers actually taking it. >> a lot of times it is your employee base. it's surprising when you look at some of these retailers just how much disappears so to speak. >> that's why i think cvs ditched tobacco. i think losses within the chain there that they never said it was probably a major reason. >> amazon is the best performing component on the s&p. if you missed the news at the top of the show, raising the price of prime from $final to $99 if you are a student it's still $49, we talked at the top whether or not it will cause some sort of exodus of subscribers. on the other hand how much incremental revenue it might bring to the company if, in fact, everybody stays with it. >> we can have a general sense of the number given there are at least 20 million prime subscribers. my most of the analysts who follow the company have to guess because amazon does not give you the number nor does it tell you how many kindles it sold or give you a lot of metrics. it gives you a long list after

christmas of everything it sold in terms of what that would amount to when it turns around, it goes around the planet. but the actual numbers are hard to come by. the key number, though, is almost infinite p/e multiple that investors are willing to expect. others say they believe jeff bezos they have for a long time. he's also about capturing future cash flows and not about the reported earnings near term and that goes to the basic idea which we'll deliver things to you faster and faster with shorter and shorter lead times and we'll spend an enormous amount to do it but we'll lock up the customer for the long term and generate a great deal of loyalty. this will be programs the first test of that. >> and it's not really -- to the point you're making it's not important whether they lose the customers now it's about how they are positioning that whole ecosystem for two or three years down the line. they'll add a lot of services with streaming, streaming music in addition to the video

services. >> music is not necessarily a part of prime at this point. i haven't seen that. there was an expectation that might be the case but at this point it's unclear what that -- or how that, what form that's going to take. of course, streaming movies, they would say we're almost the equal of netflix and they have been spending money, many would argue they're not, and netflix is what, $7.99 a month to stream. if you are getting that and prime, chom on. what's the problem? >> right. >> more importantly you get the new releases on amazon first. most of the academy award winners are now on prime, "wolf of wall street." >> all i care about is dora. >> that's not free prime. >> yeah, but at least yourve you get your hands on it. >> get your hands on it so to speak. although it is streaming so you can't really actually. >> your imagination. >> amazon is helping the nasdaq which has now gone positive for the week and if it hangs on here that is six straight weeks up for the nas, that streak was in

jeopardy, of course, earlier in the week but we'll keep an eye on that. watch ge filing to spin off, david, their north american consumer lending business. complete sometime in 2015. that's been a long time coming. >> it has. that was announced some time ago the intention to do that. and it will be completed as you said 2015 is the aim there. this is the credit card, you know, behind a lot of the credit card transactions is ge capital this part of that business. and they are separating. ge capital, of course, still going to remain with the company. wanted to talk about -- talking about not quite separations but realizing value for potential ipo. shares of yahoo! up again. they were up at this point yesterday when i checked them. up another 2%. a lot of chatter about alibaba out there. reporting it's likely to list its shares on the new york stock exchange right here, certainly hope that's the case. it will be one heck of a fun morning. but that being said, we'll see. the question really is when will

alibaba go public. i continue to hear that will be an event that takes place this year because there has been some talk that perhaps it will even be pushed out until 2015. as for the sequential growth rate of that enormous e-commerce company in china and whether it can continue to post ever-increasing rates of growth, that perhaps is a key consideration there. will it come here and try ask and compete with amazon, but yahoo! is up. don't forget also a big owner of yahoo! japan, we talked to masa son. and the real question is what will they do to turn around yahoo! >> finally jcpenney above $9 that's basically the highest level of the year as they are relaunching their home goods division which has been a big laggard over the holiday season. in the meantime the dow's up 56. let's get to bob pisani down on

the floor. >> morning. not a bad start here. all the -- we used to call risk on the upside here, take a look at the sectors. materials leading. remember they had a tough time recently. consumer discretionary. good numbers in retail sales. industrials and financials. there's a group that the bulls always want to see leading the markets here. very mixed in europe and asia. the chinese numbers were crummy here. industrial production numbers were below expectations. retail sales. 11.8%, the slowest pace since 2005 for that. but look at the chinese market. shanghai index is up 1.1% because there's all sorts of chatter that the peoples bank of china might start another stimulus program but that's why the market was moving to the upside. remember yesterday we were talking about a lot of traders felt based on the data they've seen that the chinese gdp growth would be in the 6% range not

7.5%. and mark faber thinks it's 4%. he admitted nobody knows what the real gdp is and that's mark faber talking but a lot of people are concerned it will definitely be in the 6% area. the retail you mentioned dollar general the key is the consensus on revenues and earnings for the guidance in 2014 are below expectations. but i want to point out something with williams-sonoma and while it's true their 2014 earnings guidance is below expectations. something i haven't seen for a while the revenue guidance 4.63 to $4.71 billion that's just about above the consensus. the consensus is $4.64 billion. i haven'tstein that in a while. here's a little bit of an outlier and good news, dollar general ceo i do want to pont out was a little bit more optimistic than the recent ones. some of the severe weather impact has continued in the first quarter but we're pleased with our sales performance on days when weather is more normalized. let's look at gainers and losers amazon is up.

you were talking about the prime membership increase. pvh, downgraded at morgan stanley, electronic arts downgraded at bank of america. con ed was downgraded at barclays. an interesting piece of news here "financial times" is reporting that alibaba is 95% certain that they are going to list in new york not in hong kong. remember, they've had a lot of disputes in hong kong over to the board structure according to "the financial times" they will list here, if that's true where will they be listing new york stock exchange or the nasdaq. the new york stock exchange has no comment on this. i did ask. nasdaq hasn't responded to my request. but this would be, folks, david, as you know, arguably the biggest ipo and the year, or maybe the u.s. visa was $18 billion as i recall, david, and there is speculation that alibaba's could top that as well. a little bit of chatter on the

floor over this. guys? >> thank you very much, bob. let's get over to chicago and the cme after a stellar ten-year auction it's time for the 30-year today. good morning, rick. >> good morning, simon. 1:00 eastern we'll be grading the $13 billion reopened 30 years at auction. if we look at today's market we have to be cognizant of the fact that even though we had negative revisions, the data for february retail sales was a bit better than expected. if you look at a one and a two-day chart of tens, you can see the effect. you can also see on the two-day chart we basically held the 270, 271 area. it's important the ranges are compressing. they've been compressed in many ways. 275, 276. it's the major pivot today. you want to pay attention to that especially on a closing basis. open the chart a bit and you can see all those days in february we were going sideways in the low to mid270s, that is all below the market considered

support. let's switch gears a bit. let's look at another interest rate market, the jgbs the japanese government bonds, never has several basis points looked so large. look at a chart of jgb, rates have moved a bit higher. but here's the important part. look at a year to date of the jgbs, maybe it's only 64 basis points, but it happens to be the highest yield close since about the third week in january. we want to pay attention to this one. now, let's also look at another market that's important to foreign exchange. look at what's going on with the chinese currency. the dollar versus the yuan, it looks like it may be stabilizing and this is a very key issue because a lot of roads of anxiety lead to china or from china i should say. look at today's data. but the foreign exchange side of this is very, very important. another thing we want to bring up whether you look at the barclays spreads on the high yield or you look at the hyg,

these are areas where they're very much competitive, meaning the spreads are historically tight, but they do seem, again, to be in rally mode which means maybe risk is getting more appropriate. that indeed could lead to higher rates so you want to pay attention to 2.75. david, carl, back to you. >> thank you very much, rick, rick santelli there in chicago. well, energy, precious metals, industrials have opened in negative territory. jackie is watching the action at the nymex. good morning. >> good morning to you, simon. starting in the crude pits first this morning, we are seeing oil struggling to find direction this morning. brent is lower but west texas intermediate hovering and moving back and forth between positive and negative territory hovering around the $90 mark. we did have a $2 drop yesterday. on concerns about china and also that bearish inventory report. but right now struggling to really make any moves either way, but traders watching equities very closely as well. in the meantime i do want to talk about nat gas because we are significantly lower from some of the highs that we've seen recently.

of course, traders are still worried about some of the cold temperatures out there, but they're watching the storage report today. that's going to be out in about an hour's time. they are suggesting we'll see a drawdown of supplies of 100, 193 to 197 billion feet. if we get that kind of a number that's more than we saw last time this year. it will be more than the five-year average and could send the prices a little bit higher. finally i want to take a quick check on gold because we saw a more than $20 pop, safe haven buying in the gold trade but now giving up about $4. carl, back to you. >> thank you very much. when we come back, lebron james tweets about what samsung cannot be too happy about. what he's saying about his phone. and the business of marijuana gets a briefing on the hill. we'll talk about it with the congressman from colorado when "squawk on the street" continues. continues.

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an air ball for samsung courtesy of lebron james. late yesterday the nba superstar and the spokesman for the phone company tweeted his displeasure with his mobile device. he wrote my phone just erased everything it had in it and rebooted. one of the sickest feelings i've ever had in my life. james then quickly deleted that tweet and tried to downplay it with additional tweets including one an hour later saying he got all of his information back. a samsung spokeswoman told cnbc everything has been recovered adding that lebron didn't lose everything. we spoke to him about samsung. listen. >> your work with samsung, it's been a busy couple of weeks for apple, though, is there anyone that could convince you to carry around an iphone in your pocket? >> absolutely not. i'm a samsung guy. and, you know, it's a great product, you know, and i'm not, you know, knocking what apple has done and, you know, what they continue to do. they continue to push the envelope. and, you know, me being a part of samsung we'll continue to try

to do the same thing and continue to push the envelope in new and inventive ways and see what the market has to say about it. >> that does bring us this morning to the squawk on the tweet, how should samsung exact revenge on king james for his tweet about the company. tweet us and we'll get your responses later on this morning. we've all had tweets in the, you know, heat of the moment. >> want to take that back? yes. got to be very careful with this internet thing i've realized. by the way, lost by a point to the nets. i don't know if anybody watched the game it was a good game at home in miami. >> if you are paid tens of millions of dollars by samsung you don't make the mistake. or whatever the deal is with nike, $90 million with nike, you know you're in the danger zone. >> hey, you get frustrated, don't go to twitter when you're frustrated. >> that's why i don't do twitter. >> at all? >> six times for fear that i'm going to do something wrong and i don't have anything interesting to say. >> that's true, that's true. nothing to say. >> nothing, zero.

coming up, jpmorgan chief u.s. equity strategist tom lee, find out which are the big money makers on the sector. the sector.

stocks are in the green this

morning, the dow is up 54 points here. s&p is back to 1872 trying to make up lost ground. let's bring in tom lee the chief u.s. equity strategist with jpmorgan joins us this morning. good to have you back. >> carl, how are you? >> i'm good. we've had a few cascares, ge geopolitics but you are steadfastly bullish, right? >> that's right. i understand why investors are a little shaky. there's a lot of talk about valuation and as you mentioned there's a lot of things in the headlines. but you have to remember, the most important thing that i think supports this bull market is we think there's a lot of pent-up demand, you know, it's consumers' balance sheets look much better than they did five years ago. corporates have not spent on cap-x and there's a construction boom coming, so i don't see why we should be worried about the short-term noise and focus on the fact that we're in a bull market. >> you've made the cap-x point a few times and you've been

largely right at least last year you were. but those are intentions and we do see big giants like exxon rein in cap-x. can you separate it from the overall trend? >> i do think companies have a lot of discretion in a 12, 18-month period because they can sweat out their existing equipment. i think when there's lack of confidence and, you know, as economists say lack of spirit, businesses can sort of sit on the cash. but as businesses see their equipment get obsolete or market share opportunities develop, they either have to do mergers, acquingss, or they have to start spending capital. where we're seeing a response is companies are more willing to do mergers. if they do mergers it's actually still good for stocks. >> if i accept your premise that the market will rise by 10% i think is the projection that you have at the moment, how do i play that? in the note here you say growth outperforms value in a sluggish economy which is obviously what we've seen but when that turns

presumably, when the economy picks up, the cyclicals will do better, the value stocks will do better. is that what you're saying? >> yeah, that's right. when investors have fear about growth they'll gravitate to the few names that actually have unit growth which is why growth does well in a slow growth environment. but i do think growth is going to pick up in the second half. we've got a tailwind from weather improving, lower oil, all these pent-up demand measures and i think that means we'll see more widespread evidence of growth. investors will actually want to buy value stocks. but i do think they need cyclicals, so i think you want to buy things with smokestacks, you want to buy technology and financials here as well. and -- but i think, you know, you still always want to own health care. >> tom, another thing you say you want to buy heavily shorted stocks that worked in 2013. why do you expect that that's still going to perhaps work as a strategy in 2014? >> well, i think part of the reason is we don't think that there's a lot of high conviction short stories out there. i think a lot of investors are

doing, you know, thousand-foot birds-eye view shorts as hedges so i think stocks that are heavily shorted probably are a bit crowded. on the flip side if growth is picking up, there's really a chance for companies that are having some trouble to actually have a growth surprise. i think there's a couple of reasons to like heavily shorted stocks here. >> tom, we've mentioned a few times the record margin debt in the market. a lot of the ipos coming online are not profitable. in fact, a higher ratio than we've seen in a while. i just wonder, i mean, china, how many red flags do you need to see before you at least get incrementally more cautious? >> i mean, these are things we can't ignore, right? because, you know, you don't want to have a market that becomes speculatively frothy. but i think the most telling bear sign, like, the most important thing for us is the signs of a recession because any bull market lasting at least four years has solely ended because of a recession.

i think a simple way for anyone to kind of gauge it is to look at the long-term yield curve. it's inverted. it's inverted in front of every recession. it's actually had a lot of false alarms but if you see an inversion of the ten-year versus 30, that's when we'll get cautious. and the shortest lead time ever for the market was only two months. we had time to fade it before the top. >> tom, you know, something we used to talk about a lot is the tracking and active money managers that are trailing their benchmarks and what they need to do to make it up. where does that stand these days? is it a factor in your bullish outlook? >> in 2013 it was a very good year for active managers and as a consequence a lot of them faded the december rally. what we started the year was with mutual funds basically underweight or lower than normal into the market. and that's actually caused a little bit of underperformance. i do think that there is a tailwind where active managers, i'm not talking about hedge funds, but it's also true of

hedge funds, are really probably in a position where they'll have to chase the market if it starts to rally which really tells us that you really want to buy these dips because it's kind of consensus to be a little underweight equities right now. >> tom, you are one stubborn guy but we like hearing from you nonetheless. we'll talk to you next time. >> yep, speak to you soon. >> tom lee over at jpmorgan. >> shares of gogo down 5% and we'll get an interview with ceo coming up. and let's hear what savita subramanian says about the market. we're back in a minute. ck in a . [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪

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talk to a pnc investments financial advisor today. ♪ welcome back to "squawk on the street." i'd like to welcome the inventory numbers into the first quarter. january business inventories rose 0.4, matching expectations and as i referred to, we are now in march. the last month of the first quarter. so at the end of this month we are getting our final revisions on fourth quarter gdp and a month from then our first look at first quarter gdp and this will be one of those inventory numbers we start to factor in to see if it adds or subtracts from first quarter gdp.

simon hobbs, back to you. >> more importantly spring will be here. rick, thank you. let's bring in steve liesman, the senior economics editor. more data, the jobless data and the retail sales. boil it all down, fed is till on track to taper assets next week? >> i think that's right, simon. just a quick word on these inventory numbers, you know, you don't necessarily want to see these rising. they are up a little bit more than expected at 0.4. the inventory-to-sales ratio creeping up a bit from 1.3 in december to 1.32 in january. it might mean there's a little bit more inventory to work off depending on how the economy does and sales do. a lot depending on jobs and retail sales which we got this morning. 315 on claims coming in better than expected. jobs doing okay, the forward moving average hasn't been this low in quite a while. february retail sales up a tick. exauto 0.03. and we are discounting this

number both because of weather but because it wasn't much of a snapback. the big declines in december and especially january and then this modest about a zero three rounds up from zero 2 six. look at the retail details. autos up 03 after being down 23 in january. and the left-hand side and the right-hand side of the screen without memmizing the numbers and only see in some cases like health and not department stores and not in core sales did we get back what we lost in february. here's the comementary and the february performance is encouraging given its weather was worse than january relative to normal. and the weather was worse than january relative to normal. and fhe on claims said the claim add to the evidence that the recent slowing in payrolls is weather related and temporary. we're back to where we were. we got some bad january data and modest february data and will be

march, maybe april until we get a good feel on where the economy is headed. carl? >> it's always something as rosanna used to say. steve, thanks a lot. retail is in focus this morning. jcpenney relaunching its home good section as part of its turnaround strategy. dollar general up 15% on strong sales and the retail sales number that steve mentioned. chuck grom joins us this morning from new york. good to have you back. >> thank you, carl. >> you think this february number is a sign that we are, in fact, coming out of winter? >> i mean i think generally we've listened to a enough retailers over the past four to six weeks to know that the weather was a real big drag to sales here in the quarter and i think people are looking for green chutes on conference calls, you know, to find out exactly how february sales and march sales are going to look and basically the tone here is from mid-february on business has started to bounce back. and i think with the later easter this year versus last

year the weather is supposed to get better towards the end of this month. i think at the end of the day the first quarter -- will finish stronger than it started. >> you mentioned the green shoots. it does seem, though, like every conference call talks about margin pressure. more inventory. i'm looking at williams-sonoma today. dollar general margin. how is that -- i mean, how is the spring going to look better if, in fact, there's too many goods on the shelves? >> i think you'll have to go through and look through whose inventory levels are clean. if you look at dollar general in particular who reported a little bit of a disappointing comp this morning but the inventory levels are very much in check. inventory levels across my group, the department stores and some of the discounters aren't too heavy relative to where they finished. there's some retailers in some parts of apparel where you'll see heavier inventories. >> i like how we're bringing back the green shoots terms. what about the president's proposal to boost minimum wage

across the country, to boost overtime? will that help some of the names in your sector? particularly i know you are watching the dollar stores, the dollar general today. >> it's really kind of a catch-22 for the minimum wage. to some extent, you know, you see an increase in spending, but at the same time the increase in labor costs. i think most companies we've talked to historically five or six years ago we saw the minimum wage increase it was kind of a push. so, i think it remains to be seen. i think the low-end customer in general continues to face a lot of pressure from higher home heating costs that are going to linger into the spring. from, you know, low unemployment levels. a lot of that really hasn't changed. >> a lot has been written about the middle to low-end income bracket. what's interesting the dollar stores seem to be weathering it better than, say, the walmarts and targets. why is that? don't they cater to the same group? >> a little bit different. the target demographic is higher than the dollar stores. but i think the dollar stores

have been benefiting from growing the store base and there's maturation of stores into theiram could. base and they've been proactive adding certain categories the food business to drive traffic and i think that's leading to the outperformance of the dollar stores relative to walmart and target. the dollar stores are much, much smaller in size. and i think that's why are seeing walmart in particular start to grow some of their express and neighborhood market format stores to try to act more like the dollar store. i think the consumer values, you know, price not just by the ticket and list items but also by the convenience factor. >> hey, chuck, on jcp i know some of your colleagues on the sell side have d recently. is the home good relaunch really something, is-and-will that transfer to kids and some of the other spaces that were under pressure? >> if you go back and look at jcpenney's home business five years ago it wasn't anything to write home about.

relative to a few years ago, though, and clearing through some of the ron johnson mistakes, it's a big improvement for jcpenney. it's an opportunity for them to clear through, you know, some sales that they have lost over the past couple of years. and at the end of the day it looks a lot better than it did 12 months ago. we think it's a net, net positive for jcpenney. the big question for penny's can they get people back in the store. the issue is traffic. the store looks a lot better. we did checks last week. it looks a lot better than it did a year ago. it looks like the old jcpenney. the biggest question we have is traffic. can they get people back and that's a big question that we don't frankly have aens to ri a right now. >> chuck, it's good to talk to you, we'll talk to you later on. amazon is raising the price of its prime subscription service to $99 up from $79. the first increase since the service was introduced nine

years ago. prime offers pretwo-day shipping as you'll be away and access to thousands of streaming movies and tv shows. amazon says those who sign up for prime in the next seven days can lock in the $79 rate. so, sara, you'll have until wednesday night. >> i am a prime user. full disclosure. i think it's a question whether customers will continue. david you said the metrics inside amazon have to be that it knows what its customer is going to do. >> right. it has as good a sense as any as to where this price point will be that they can keep as many of them as possible and/or encourage more people to sign up. >> but the analysts aren't so sure. ubs actually lowered the price target of amazon a few weeks ago on a client survey where it asked about the $20 increase and $40 increase and saw a significant drop-off even with the $20. 58% said it would renew versus 100% stayed the same. >> are we sure the third party vendors aren't inflating that prices to cover the shipping on prime?

we talk about how the deal is getting better and because they are streaming. there's the possibility as the third party venders become more of a business, people think hang on a minute, this isn't what it used to be. >> but you won't get the buy box at amazon unless you have the competitive price and oftentimes amazon competes against the third party vendor for the same product particularly if they don't believe it's being offered at a competitive price. >> very on message. >> no. i spent a lot of time on this. >> for the documentary. >> that is the case. and the fact is that the third party businesses is a very good one for amazon because it's 15% more or less off the top as a result of using the platform. and then use fulfillment by amazon which they charge you for as well. when you are using prime, most people don't know whether it's coming from amazon or coming from a third party vendor. >> we've seen rates rising at the fedexes and ups schss of t world. >> maybe they are coming back we

didn't get your stuff for christmas but we will next year but you have to pay more. >> added value perhaps. >> i thought after the christmas trouble that prime would be going up in price. in fact, now it is. >> you're right. >> you were right, carl. >> victory lap. up next it could be the ultimate test for gm's fledgling ceo. can mary barra lead the automotive maker through this major safety investigation and still convince consumers and investors that gm is a better company now than when it was bailed out five years ago? more on that when "squawk on the street" comes back. back. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected.

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welcome back to "squawk on the street." breaking news on mortgage fraud. the justice department apparently did not uniformly ensure that mortgage fraud was prioritized at the level they said it would be in public statements that from a report just released by the doj's office of then specter general and independent auditor. the oig further found significant deficiencies in doj's ability to report accurately on its mortgage fraud efforts specifically the oig found that the fbi ranked mortgage fraud as the lowest-ranked criminal threat in its lowest crime category. the fbi received $196 million in federal funds to investigate mortgage fraud from 2009 through 2011. that was during the robo-signing foreclosure scandal. but in 2011 the number of fbi agents investigating mortgage fraud as well as the number of pending investigations decreased. the oig said it tried to review

the scope of doj's prosecution efforts involving mortgage fraud but couldn't because doj didn't provide enough data. apparently doj had underreported or misclassified mortgage fraud cases in its management system. one glaring example oig says the justice department inflated the number of criminal defendants charged in mortgage fraud by five times the amount during a highly publicized press conference about the success of its distressed homeowners initiative, it didn't correct that for two more years. so far no statement yet from the department of justice. back to you, sara. >> thanks for bringing the new developments to us. speaking of investigations, just weeks after mary barea took the helm at gun motors she's fighting her biggest battle yet. no reports indicating gm new year's before it disclosed the issue that there was a problem with the ignition which has been linked to 31 accidents and 12 deaths. how will mary barra steer them out of this mess.

jeffrey sonnenfeld joins us on the phone. this is your wheelhouse, we've got a pr disaster for gm, the stock price is suffering. it's all about perception. what does mary barra need to do next? >> well, there's no good news here. no good news for the company. no good news, of course, for the victims' families hearing about, you know, more than a dozen of these horrible fiery deaths that should never have happened. it takes us back to other on auto industry fiascos which were preventable and management unattendant is inexcusable. you can't lay this on the feet of mary barra and her top leadership team and she's a remarkable ability to break from the past. if you look at the awful model of the carnival cruise line, tony hayward of bp and his inability to want to be accountable and you go through these. repeatedly we've seen a lot of leadership and consumer oriented

businesses that should have done a better job. here she not only apologized for it, she's put her absolute best lieutenants on the repair job here. independent outside investigators, the head of product development to get the vendors ready to supply this stuff ahead of north american automotives and the retailers ready. they'll have a way to put a spin on this where they'll reacquaint themselves with old lost customers to bring them back into the dealerships. >> it's a good point but increasingly it looks like it will be even a tougher battle. members of congress are making noise about it and she'll be brought to the hill and there will be investigations. we've seen it before. we saw it with the toyota. the toyota executives had to come to washington. firestone tires and ford. is there any reason to think this one will be more serious and difficult for gun motors to manage. >> i'm so glad you jumped past the bp and carnival cruise lines, but chrysler has had

problems. and thoit was reluctant to engage. ultimately he did. jon stewart made fun of him in davos where they caught up with the ceo he hopped in a mercedes to speed away. the head of toyota hopped in mercedes. he said, he had multiple stops and they couldn't stop the car. and ford is quite different company today and gm is very different. mary barra is a lifetime gm employee. her father was there. but they represent the loyal part of gm that made this company -- this company's been producing great cars, cadillac cst, the new impal ha, getting incredible awards despite the volatility in recent top leadership the soul of this company has been great. that's who her father was and she was. mark royce who is the head of product development, his father was senior leadership. and there was an year when gm

was being run by the, quote-unquote, finance guys, internal financing types. they were never car people. the car people are the ones that would have wanted to fix it. the investigations will probably vindicate the soul of gm. this could almost be good to get the truth out there and tell what was happening along the way. rick wagoner and others leading the company were not the group that actually understand this product, understand the customers and i think that is what is probably going to come out here. the investigations, having multiple investigations is a good thing because it will key the internal investigations from any kind of a whitewash. >> all right. jeffrey sonnenfeld, always valuable insight. yale school of management on what mary barra needs to do. sounds like he has a vote of confidence. want to bring your attention to stanley fisher who is testifying for the first time we're hearing from him. he's before the senate banking committee. this is his confirmation hearing there won't be a vote today but they'll have to vote eventually on whether he will be the number

two under janet yellen at the federal reserve. for those of who don't know him, he stepped down last year from the bank of israel. he was the professor of ben bernanke and mario draghi and larry summers and he is considered a rock star in the world of economics. he's held top positions at the international monetary fund. he's held positions at the world bank. he's literally the number -- >> i think it's great that a career -- this guy is 70. >> he's 70. >> the career of a clever person can continue on and have a new fresh, important chapter at 70. that says a lot actually about this country as well as other things. >> and i interviewed him as recently as last year. he's sharp as ever. he has a lot of thoughts about the federal reserve. but haven't really heard from him in this new world of tapering or starting to scale back the monetary easing that everyone wants to know. >> or forward guidance which he wasn't a fan of, was he? >> he wasn't so much but he understands the value of communication for central banks and that's what is behind the

policy of forward guidance. we'll continue to monitor and bring in the headlines as they hit. let's get a market flash with dom chu. >> carl, good morning. check out shares of general electric. off session highs, the company has filed a registration statement for an ipo of its capital retail finance unit part of a previously announced plan to exit from that business. it will operate under the name synch synch synchroy financial. you see ge shares currently trading above flat right now. back over to you. >> thanks a lot. the owner of some of the hottest bars and restaurants in the company opening a new rooftop bar here in new york city. >> oh, yeah. >> how will this one stand out from the rest of the city's rooftop locales? the ceo of the gerber group will join us live in just a moment.

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it is pretty darn cold in new york this morning but the clocks have shifted to make way for spring and for hospitality ceos that means getting ready for rooftop season. here in manhattan the gerber group debuting what some review and are calling the most anticipated part of the

refurbished viceroy hotel, simply called the roof. scott gerber joins us this morning. good morning. >> what a time to open a rooftop bar. >> we got open on tuesday when we had nice weather and the terrace was packed and everybody was enjoying the tease of spring. >> designed to look like the inside of a luxury yacht. talk me through. central park views. why is this important? >> i think it's important because people love to be outside. especially coming off of a winter like this. so, we designed something that is very comfortable but elegant. it's not often that you can get views of central park. they're unobstructed and they'll be there forever. we think it's a great amenity to the hotel. we have kingside restaurant down on the ground floor and this is kind of the crown on top of the building. >> you know, people have got to understand what the dynamics are behind this. you are employed in part by the hotel groups. they lease you space to make the difference on their hotel. this isn't just about selling cocktails. this is about filling the viceroy 240 expensive rooms on

central park again and again and making the difference with all the properties you would argue that you occupy. >> correct. i think that today every hotel has similar offerings. they all have great beds. they have great sheets. they have nice showers, room designs are nice. what is the differentiating factor? it has to be a food and beverage offering and, you know, a great bar. and it's not -- we are not exclusive. we are inclusive, but by vire tu of the fact that you have fact that you have a limited occupancy, we can only let so many people up there. we give the guests the first chance. >> we don't like to turn anybody away. >> i thought that was part of the deal with nightclubs and bars? >> that's not our business. >> you have to let in enough women. >> thank you, carl. >> i'd like to get your take on spirits, you know, this jim beam, suntori dieeal was huge.

is it a bubble with spirits versus beer or will it last for a while? >> i don't think we're in a bubble. people's palates are changing. the tequila business, my brother has a te queel lat that has really taken off the charts. and i think that people are just drinking differently. somebody called me the other day and said your vodka business is off. my vodka business is off because people are not ordering vodka and soda anymore. they are going back to more upscale brands again. but i think the brown spirits business is, you know, i think is here to stay. >> and local, local sourcing as well i think is important. >> very much. we're getting a lot of our spirits from brooklyn. doing a lot of stuff in long island, wines from long island. there are beers coming out locally, whenever we can do that we like it because it's also small batch because the flavors are great and we get great support from the people that are doing it. >> it sounds like you are raise prices on the drinks. >> we are not inton raising

prices. we don't believe of selling the bottle of vodka for $500. we don't need to. that's not our business. >> before we let you go. two questions on demand. first of all, general consumer demands and i appreciate you are towards the high end of the market. >> yes. >> which i imagine has been relatively stable with the stock market bounce. >> it has been. >> the second question is demand for hotels. an awful lot of hotels compared to the rest of the country are being built in new york. are you picking up contracts? what's the atmosphere like? >> we are opening three new hotels in the next 12 to 15 months. there is a very strong demand. and, you know, we've built our business really in hotels. so we have a lot of big partners whether it be host or starwood and they come to us with opportunities. i think we're great at the food and beverage part, the hotels are great at putting people in their rooms and that combination works. >> good to see you, scott. >> thank you for having me. >> may the sun shine on the roof. >> how about we do the show from the roof? >> i'm up for it.

scott gerber, thank you. >> thank you. straight of ahead, bank of america's head of u.s. equity strategies savita subramanian joins us. where you should be putting your money. the dow up 25 points. we're back after a quick break. .

welcome back to "squawk on the street." we've been waiting for the department of energy's weekly storage report on nat gas inventories and we did see a decline, a drawdown of 195

billion cubic feet that was right in the middle of the range expected. prices were down before this report. and they're continuing to decline a little bit here. traders are talking about the spring being about a week away. and saying that these cold temperatures we're feeling especially today are just temporary. at the same time analysts are saying that inventories are probably going to see a trillion cubic feet drawdown before the end of the winter, but traders are also optimistic that we may be able to replenish some of that smi so we are seeing these prices trade down. i want to highlight overnight we did hit a seven-week low in the nat gas price. we broke the critical level of 450. just trading around 440 and maybe 430 is the next stop. guys back to you. >> thank you very much, we're watching the energy trade. the dow and s&p seeing the best gains of the week as we speak. our next guest favors tech, industrials and energy. let's bring in savita subramanian, the head of u.s. equity strategy and quantitative

strategy with bank of america, merrill lynch. great to see you, savita. >> great to see you. >> clearly u.s. investors are focusing on the positives here, is it enough to reinforce the bull rally and not get distracted by the global concerns about what is happening in china? >> i think it is. here's our thesis for the year. we're forecasting about a 10% upside return for the year. not really as strong as what we've seen over the last couple of years. really more closer to an average return. but we think that we're going to see leadership change pretty dramatically within the s&p 500. as you mentioned the economy is looking like it's moved to some more solid footing. granted it's clouded, no public intended, a little bit by the weather. but i think that once we get to a point where we do get a better sort of sustained sense of the economy as an improving trajectory, investors have no better place to be than stocks in our opinion.

and u.s. stocks in particular the s&p 500 we think offers a pretty good proxy for the global economy rather than just the u.s. economy. you know, i think that a lot of the stocks that have exposure to emerging markets are pricing in a lot of pain. so, valuations may adequately reflect a lot of the risks that we're seeing in other parts of the world. >> and i just want to zero in here on the groups you like within the u.s. stock market. mentioned technology, industrials and energy. read your note and part of your thesis here is that we're going to see cap-x finally. companies are going to start investing in their business. why do you see this happening now? we've been waiting for it for years. >> exactly. exactly. why now. and we've seen this story every year. it seems like we're going to see cap-x return and we don't. but what i think is different today is that the market is actually rewarding companies that are spending on growth be it through acquisitions or through capital expenditure. whereas, you know, for the last two years, companies have bought

back shares have been on a tear. the only thing you needed to do was buy back the company that was buying back the largest percentage of shares and you did well. but we have noticed that that theme is starting to tamer off and companies that are engaging in large buybacks aren't necessarily outperforming as strongly. so, i think what that's telling us is investors want growth not necessarily cash return via buybacks. which is an interesting and a big change from what we've seen over the last let's call it four or five years since the credit crisis so, you know -- sorry, go ahead. >> i was going to ask you about individual stocks here. "journal" had an interesting piece that etf volumes are down recently and it could signal we're more in the world of individual stock picking instead of a macro-driven headline market where etfs are very popular. would you agree with that? >> i would. we're seeing strong signs that stock selection is coming back. some of the best-performing

funds have been concentrated in terms of their holdings so that suggests to me we're no longer on the risk-on, risk-off play the macro-cycle word. we want to look at specifics what the companies are doing to either turn around their businesses or grow their businesses meaningfully and that could be the bigger driver for generating returns this year. it's less about picking the right asset class and more about picking the right stocks i think. >> savita, i wanted to come back to this idea that suddenly buybacks perhaps are not bringing as much of an increase in share price as they had in the past. is that over any meaningful time frame that you really can draw a conclusion from? >> we've looked at this. we've seen that performance has just systematically waned as the market's gotten more and more expensive, you know, i don't think the market's expensive today, but it's not as cheap as it was a couple of years ago when it made a lot of sense to, you know, buy back cheap stock and reissue it later at a better price point. so, i think we've seen this

waning perfectly formance in tandem with valuations hitting more normal levels. you know, again, i think it just doesn't make as much sense anymore to buy back stock given that prices have actually come back to more normal territory. >> and that is -- that is critical for the rally, isn't it, savita, when they've spent -- when ceos spend half a trillion dollars last year buying their own stock and boosting the market, fe thif th are sitting there going when we get to the end of 2014 we cannot justify the money we spent if the stock goes nowhere or down. that could affect this rally, wouldn't it? >> you know, what i think happens there's a handoff where share buy babbs drove stocks or the recapitalization argument drove stocks higher over the last couple of years or the idea that stocks were cheap, now we're seeing the corporate sector actually start to participate in driving the economy. they have really been the last holdout. the government stimulated the economy.

then the consumer did a lot of work to keep things going but corporations have not necessarily spent a lot to drive economic growth. i think that's what we're going to see this year. >> well, hopefully job growth comes along with it. savita, always good to see you, get your perspective on the market. savita subramanian. >> shanks. shares of plug power up sharply despite posting a fourth quarter loss. the hydrogen fuel cell company helped by a jump in product service revenue. the stock has soared more than 380% so far this year. last week, of course, plug power ceo appeared on this show, "squawk on the street," and said he expects the company to become profitable this year. >> in 2014 we will make money. and it's because we have been building this company for five or six years. we focused on a market where fuel cells could make a difference today. and we put it into electronic trucks. we convinced customers like bmw,

walmart that our units can dramatically improve the productivity of that their organization. >> said it was like playing a casino. >> called it a casino stock, exactly. and a lot of shorts agree if you read twitter right now. let's send it to dom for a market flash. >> herbalife losses mounting after bill ackman the hedge fund manager stepped up attacking the company questioning its businesses practices in china. shares down, again, another 5%, they had been covering close to unchanged but down toward session lows. back over to you. >> dom, thanks a lot. here's a question are you ready to be on a plane with people talking on the phone and texting? >> super idea. >> no! >> ready or not the technology is here and gogo is at the

forefront. we'll have the ceo joining us live on the text and talk app and what it means for travelers in a moment. a moment. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates.

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dow's lost basically all of its gains and nasdaq has gone negative. speaking of the nasdaq a new entrant is here along with jon fortt. good morning. >> gogo reported fourth quarter earnings this morning announcing revenue up 46% year over year. this past week they launched the gogo text app for commercial airline passengers currently working on bothtecting and calling capabilities in flight. so, we have here with us the ceo of gogo michael small. thanks for joining us. >> glad to be here. >> very interesting business that you're in. a lot of people experience it in flight and commercial flight. but you also have business

aviation, and that's where the money's made. tell me about how that strategically important. >> business aviation was actually where the company was founded in the early '90s providing voice service and then, of course, in the 2006 we got our spectrum and built the brad band network and we now have 2,000 business jets hooked up with the broadband service and it's a very profitable market for us. we sell the equipment. the nice margin. and then we provide monthly service. approximately $2,000 per month per aircraft. >> am i reading this correctly that you're at about a 7% take rate as far as the people in the plane who actually connect to gogo. it seems to be growing. how high do you think you can get? >> well, ultimately everybody in the plane will use our service in one fashion or another. the 7% has grown steadily over the years. even as we've raised prices. there's a real demand today among business travelers to pay us $10 to $20 for a session but

over time we're going to find new services such as text and talk that will be a lower price point and we'll be able to give it to the leisure traveler. >> that's already been popular with your -- with your business aviation customer. what are you going to do about the speed of that connection in flight? do i have to blame the person next to me who is trying to stream video? i don't know, it drives me crazy. i buy it and then it's slow. >> yes. we're working day and night to make it faster and it will be faster. so, it's amazing when we got our initial technology upgrade they could actually connect it in flight. as more and more people use it, it gets congested and slows down a little bit. right now we're employing the next generation that takes it up to ten megabits per second and recently reannounced technology called gto that combines satellite and air-to-ground technology that will take it to 70 megabits per second and that will be deployed on the first plane later this year and you should see it in the market next year. >> along with that better

service you point out are higher expenses for you. satellite transponder fees and things like that. how does it vary versus the growth? >> so we've shown significant improvement in profitability. this is a global infrastructure play to deploy connectivity to aircraft. and a lot of upfront investment. our margins have been improving a lot in commercial aviation. you see business aviation as profitable. we're incurring losses as we go global outside the united states. but we love the underlying economics. we run about a 50% gross margin and we think that's adequate to make this a very profitable business. >> you've expanded into japan. you talk about the opportunity for further expansion into the fleet outside of the u.s. where there's very low penetration. >> correct. >> of internet service. where's the next area where you think you can make significant inroads? >> we're targeting the leading airlines of the world, the top 30 or so airlines control a pretty high percentage of the

aircraft. outside the united states. so, that will be the primary focus, but we set up a sales force in every region of the world. in europe, in asia, in latin america. >> you expect it to be more europe or more asia as you target those airlines geographically? >> nope. my belief is within a decade virtually every aircraft in the world will be broadband connected. >> what do you say to people who give you a hard time that you're corrupting the last -- right, the last state of being where you are free from texting and calling. >> that same complaint has been wage -- raised about every new telecom technology, the cell phone, the cable tv. it's inevitable. the world wants to be connected. they'll get over it. >> at the same time they're complaining it needs to be faster. corrupt me faster. >> yep. exactly. >> i appreciate it. >> okay. >> one last thing i want to throw in there actually. how much of your revenue is coming from the business travelers? do you have a sense of how much is getting paid for on expense accounts versus personal credit

cards? >> we really don't know that number precisely. but a high percentage of our customers are our most loyal and frequent customers are the business traveler and, of course, the business traveler in private aviation is also a big revenue stream for us. >> well done. michael, thanks for coming in. >> thank you. >> we'll see you on the next long haul flight. sara, over to you. >> thanks so much. still ahead on the show, mr. gloom, boom and doom himself, marc faber will be joining us later on "squawk on the street." [ male announcer ] this is joe woods' first day of work.

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it's dipping into negative equity let's send it over to rick santelli in chicago with the "santelli exchange." >> thanks, simon. you know, i'm sure all the listeners on satellite radio and viewers love some of the correspondence and some of my peers that work for cnbc. one of my favorites is scott cohn. one of the first people i met that was with cnbc in the early '90s when i was a trader. then with cnbc since day one. and yesterday he did a report that was truly terrific and fascinating. i'd like you to hear a couple of spots. but hold on. i want to give you more background. when it comes to market, scott's

that perfect blend. he understands markets, covering markets, but also covering people that abuse the markets like madoff, like stanford. so we has that distance where he can see the forest from the trees. here's what he said talking about some of these outrageous crimes of the past, throw it up on the screen. this is regarding a madoff feeder fund. had 13 down months in 16 years, about a 94% success rate. he went on to say, and this is the part i like because he framed it right. beware of returns that seem too good or too consistent. nobody is that good. well, scott, there's something going on that's completely legal that may question that common sense. i'll tell you what it is. there's a lot of websites and blogs writing about something yesterday that was passed around the floor to a great degree. wall street daily ran with it. what it is is, it is about a per speexpect prospect us thus grou.

in the prospectus, virtue financial, what they reveal was that they had 1238 trading days with only 1 losing day. the prospectus went on to show a variety of information like the fact that on a daily basis they make between half million and 5 million a day. for 2013 they filed a $624 million trading income. that's all fine and it is legit. but can anybody be this good? now, hft, i don't know what it is, but what i can tell you is, pull any trading groupon the planet that takes the kind of risk that people on floors make, if they're 55 to 60% they say that's terrific. good capital management, you're making a lot of money. i guess what m saying is in the context of scott's comments somebody really needs to start looking at this because it just doesn't seem like it is something that is good for the

markets in the big picture. sarah, back to you. >> we know the regulators have said they want to look into it. we'll see if they follow up. rick santelli, always good to see you. it's tweet time. air ball for samsung courtesy of lebron james. late yesterday the stupor star and spokesman for the company tweeted this. quote, my phone just erased everything it had in it and rebooted. one of the sickest feelings i've had in my life. james quickly deleted the tweet and trieded to down play with it additional tweets but the damage was done. so we're asking now, how should samsung exact revenge on lebron for his tweet? tweet us @squawkstreet. your answer on the show next.

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for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. squawk on the tweet. lebron james, a spokesman for samsung tweeted displeasure with his mobile device yesterday. he wrote, my phone just erased everything it had in it and rebooted. one of the sickest feelings i've ever had in my life. and he quickly deleted that tweet and tried to down play it with additional tweets including one an hour later saying he had gotten all of his information back. how should samsung exact revenge on lebron for his tweet about

the company? samsung should have mutumbo block his tweet and say, no, you didn't lose your data. sam shung should move their headquarters to cleveland to exact revenge. samsung revenge on lebron, release his number to the cav ticket holder base. samsung should remove vowel keys from he blebron's smartphone fo week. dow is down 31 on this thursday. if you're just joining us, here's what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> we don't know how many prime members there. >> we don't know. >> the company doesn't give us a lot of information. the inest vers are happy not to get it. >> i think we're back on track. national retail federation predicts retail sales growth this year. they're sticking with that. i think it's going to be a strong year. >> she's not only apologized

right away but she's put each of her absolute best lieutenants on the investigation and the repair job here. >> somebody called me the other day and said, you know, your vodka business is off. well, my vodka business is off because people are not ordering vodka and soda anymore. they're going back to more upscale brands again. >> 11:00 a.m. on the east coast. 8:00 a.m. out west. here's what we're watching this morning. amazon raising the price of a prime membership by $20 to $99 here in the u.s. the big question is amazon prime still worth it at almost $100 a year? plus, there's a quote, gigantic credit bubble in china right now. he's here to tell us why. even though marijuana is legal in two states the government has yet to fully explain how it wants to regulate pot at the federal level. congressman is searching for clarity. he'll talk to us this hour. is your pet going high-tech?

petsmart hopes your answer is yes and making a big bet on pet technology. first up, amazon slapping its first ever price hike on prime to $99 a year from the current $79. good idea? bad idea? jason dell rey is joining us on the news line. nbc news group is a shareholder in re/code. jon, first off, we've been talking about this for a while now. reach toog fing too far? >> no. i've had 30 separate charges to amazon this year already. i cost them a lot of money. i'm happy to give them another 20 bucks for prime. love it. got the two-day delivery. i suspect a lot of people feel that way. psychologically there's probably not that difference between $79 and $99. >> jason, what does this do to churn in your best guest? >> to churn.

you know, i think -- i've seen some projections this morning that it doesn't do much. i mean, there are some surveys saying that as many as 50% of current subscribers would consider not renewing with a price hike. but i just don't see that happening. like jon said, psychologically, i just don't see a big difference in the $20 and my house hold's also wouldn't blink at this increase. >> we're all looking at this through the prism of our own family life no, doubt. they did send this out, by the way, to users this morning. i think we have a full screen built, not only the price hike but also the ability, if you lock in in the next seven days, to grandfather in at $79, they must have done some qualitative work on this, jon. >> indeed. i believe they have. likely to get a little bit of a rush over the next week as people try to get that price. mark me hanie at rbc estimates 1% to 5% churn.

could happen hear hear in a note he's got out this morning also says they could see -- amazon could see incremental earnings per share increase of a 45 to 55 move on this. they haven't raised prices in nine years. so some would say not unreasonab unreasonable. >> that's how the company is trying to bill it at this point. jason, it's interesting when we saw some analyst carry out the surveys, rbs, ubs, and piper jaf frid , amazon to a certain extent seemed to manage expectations with that. do you think that they underpromised and over deliver we'd this? >> i think there's a great chance that's exactly what they did. a one big question is what this does potentially to future subscriber growth. we don't know what the exact numbers are, estimates of around 20 million. will this impact that?

i guess we'll see. >> interestingly, mahaney notes he was talking to costco and based on his conversations with them about their membership fee and kind of elasticity of demand there with pricing, he thinks this won't be a big negative for amazon going forward. costco has been able to do some things with raising their membership fee without seeing a falloff in demand. >> interesting point. jason, i don't know if you follow costco much but their demographic is a higher income household than on average. i don't know how that would compare with amazon. but if amazon feels their audience does have some elasticity, maybe they do see a costco model happening. >> yeah. yeah, i saw that same report and, you know, costco is not as much on my radar day to day as amazon is but there have been reports certainly that amazon is considering a costco-like bulk

service. so a lot to read into here. >> jason, we talk a lot about this standard prime membership that will now be 99 bucks but they didn't change amazon fresh at $299. they did make a few changes to the student membership at $49. do you think those price points matter at all or are we really talking about that middle bucket? >> i mean, i think they all matter. but the middle bucket is where we undoubtedly see the largest group of subscribers. so i think that's what you will get a lot of focus both from wall street and from media like us. the $299 is still -- still a big question mark. it's only in a few markets right now. so, you know, expect it to roll out widely according to various reports in the next year. we'll see what the demand is. >> jason, jon, thank you guys. big move. and one that we've been talking about for a long time. >> you saw it coming a mile away.

let's send it over to dominic chu with the dow down close to session lows. >> check it out. chicago-based maker of electrical components for cars among other things. the stock is taking a hit after the company reported third quarter profits. why the sell-off? this stock had surged after better than expected first and second quarter results of rw baird saying there was anticipation it would follow up, it didn't. that stock is down 14%, 15% in today's trade. >> it's a big move. we also want to look at shares of gm on the move after news the company is now saying that they were aware of some issues with the ignition switch that ended up being a recall since 2001. there are a lot of issues in the transportation sector today and transportation secretary anthony fox is on capitol hill answering questions on gm but also on the missing malaysian plane this morning. phil lebeau is live in chicago with the latest. phil? >> kay larks let's take a live

picture from capitol hill will you will see secretary fox before a senate committee answering questions. the very fist question he received today from senator patty murray, what's going on with general motors? that's not senator murray right now. that was her question to secretary fox this morning. and this comes at a time when you look at shares of general motors over the last week. under pressure in part because investors are saying what exactly did general motors know and why didn't the national highway traffic safety administration act sooner? here's what secretary fox said a few minutes ago about the nhtsa investigation. >> there were three grash investigations that nhtsa went forward with. the results were inconclusive. now, a question that we are asking is whether and why -- whether there was a timeliness issue with gm's bringing to our attention the issues regarding this ignition switch. it is our belief that had we known that there was an issue,

that might have changed the out come of those initial crash investigations. >> transportation secretary foxx on gm. the other issue involves what's happening in malaysia and the search for this missing plane that has now been going on for more than five days. he was asked about whether or not there is a need for more updated radar, more advanced radar that would allow us to track planes at all times. here's what secretary foxx had to say. >> we do believe there will be opportunities to have better tracking of aircraft in not only our national airspace but potentially in the global airspace. with specific respect to the t malaysian incident i think it would be premature of us to make a connection between the technology and so i can't make any representations there. but i can absolutely tell you that we think there will be huge benefits to getting next gen deployed. >> secretary foxx and others in the transportation arena have been saying for some time we need a next generation radar

system installed not only here in the u.s. but around the world to allow us to have more advanced not only tracking of aircraft but allow them to be used more efficiently by airlines and other providers as they're flying around the world. we're going to continue monitoring this hearing on capitol hill. we'll bring you updates as they warrant. back to you. >> thanks for that, phil. we'll keep coming back to you as news merits. thanks for the latest from capitol hill. meanwhile, up next, china data was weak today but is it time to start worrying more broadly about the country? marc faber says it has a gigantic credit bubble when it may be about to burst. edit of the gloom, boom, and doom report. amazon raising the price of the prime service this morning. but will that move have any impact on the company stock? mcmahaney had a big note on that this morning. ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s.,

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sim simon hobbs has a special guest. >> joined on the phone by hong kong, editor and publisher of the gloom, boom, and doom report, marc faber. welcome to the show. >> i my measure. thank you for having me. >> i guess the question is, when is a contrarian not a contrari n contrarian? >> well, i celebrated it very well because i was in the north

of thailand where the weather was very nice and i was surrounded by very nice people. >> right. >> and in 2009 i was in and i said the risk/reward was not to be in the market. in other words, that you should be long stocks because everything looked horrible at the time. and most investors stayed bearish between 2009 and 2011. and just in the last six months there has been a euphoria for u.s. equities. and my view is that it's not a good time to buy u.s. equities at the present time. this bull market has been longer than the average bull market for the last eight years. and the economic expansion will

be five years old this june, so we owe a mature economic expansion, a weak one, but never the less, an expansion. but all together i would say it's a better time to get out of stocks than into stocks. >> you see it's interesting, marc, so many people on the network at the moment say, particularly obviously from within this country where it's much easier to invest in this market than elsewhere. you know, where else is there to go other than the stock market? the american stock market. others like jack welsh on this network earlier will say the economy is beginning to accelerate. the second half of the year will look better. and in essence, what they're saying to the point that you're driving at, is that it's not a normal cyclical situation. we've been here for five years. we could continue expanding for, i don't know, another two or three quite easily because we're coming off such a low base. >> yes, it's correct. it could go on for a while. and the bubble could get bigger.

but don't forget, since october 2011, we haven't had the more than 11% correction. and we've been rising for the last six months almost vertically. and these type of bull markets without the correction usually lead to more than just a correction. they lead to usually a decline of 30%, 40% as happened after march 2,000, it's happened after october 2007. so i will be very careful here. >> so would you advise people to go into fixed incomes? are treasuries safe when we know now that there is $100 trillion on debt around the world according to the bank of international settlements? >> yes, for now, treasuries will be relatively safe because the u.s. has the ability to print

money and the worse economic conditions become and the more stocks would decline and the more geopolitical problems there might be, there will a risk of trade so money will move back into treasuries. but i think in general, when everybody thinks alike, one has to think differently. and if one asset class is hated, it is cash because it doesn't pay you anything. but i think going forward or for at least the next 12 to 24 months, investors should consider where will i lose the least money? and i think in treasury bills, you're not going to earn anything but it's unlikely you will lose unless the dollar

completely implodes, which is not very likely. >> mr. faber, it's approaching midnight where you are in hong kong. we'll let you go. thank you for joining us there. marc faber, editor and publisher of "the gloom, boom, and doom report." back to you. where to lose the least money, always the optimist there. meanwhile, coming up on "squawk on the street" today, squawk breakthrough says it's developed the first ever image recognition technology for google glass. what exactly is the company using it for? we'll tell you in a moment. plus now that marijuana is legal in washington and colorado, what happens next at the federal level? at this moment congress is holding a briefing trying to figure out just that. congressman jerad polis is one of the congressmen run that briefing. briefing.

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welcome back to "squawk on the street." check out shares of fire eye and the roll in target's massive security breach. the malware detection tool used

target alerted them on november 30th but failed to respond to warning signs did target according to a media report, that was three days after the breach began. if the warning was heeded it could have cut short the massive data breach that effected millions of target customers. shares trading more on the flat side today but still that bloomberg business week report having waves in the market today. a new tool that let's google glass recognize images is likely to be used for advertising if google approves it. start-up blipper released what it claims to be the first image recognition technology for glass. blipper is best known for smartphone app where users can scan a brand logo to use a app. blipper has almost 5 million users worldwide, over 750 brands in publishers on the platform. ceo of blipper joins us this morning. great to have you.

we were talking about t the concept for it came before glass but it's hugely fortunate for you in the business. >> yeah. so i mean, blipper is going to bridge the physical and digital. and that whole phenomenon was being run through mobile. but evolution of glass and bringing the concept of wearable computing through a head-mounted device, definitely enhances and reduces friction, how people access information. is something like glass a gimmi gimmick? when you see the price point at 1500 bucks. even if it comes down to $1,000, is it going to reach near the scale of the smartphone and the installs you have there any time soon? >> smartphones are expensive as well when they came out. i think any form of technology, whether it's lcd television, mobile phones, always start up with a high price point. but i think anticipation is the only way i see wearables

becoming smart are for two reasons, one is you will be wanting to wear it even when it's switched off so it's very stylish, and secondly, use it. i think hence companies like glass rely on technologies like blipper to actually make the device smarter. >> the wearable space is still fairly new but you have a couple of big clients in your 750 database, sony, nike, disney, coca-cola. what have they seen? >> what we are doing in our business model is enhancing the value above the line media. so brands still span majority of their budget and outdoor press, all forms of advertising. by making it interactive you're making it full based. users will be able to drive value out of this real advertising and drive more engagement. >> what does google have to say about you guys? >> i mean, google doesn't have nn opinion or hasn't given an opinion on this. blippar is 100% off full base

behavior. doesn't mean that advertising subconsciously appears in front of your screen. you decided to blip something and you are actually engage with the ad. >> what other wearables could you see adapting this technology? where are you in the development cycle? >> we want to be the default space, the default to wear it as a lens, whether it's wearable computing, where it's a wristwatch, whether it's glass, whether it's a phone. wear it as a lens when people interact with lens, we want that behavior gob called blipping. >> what about television? it's a similar area to what shazam is in. i'm sure brands would be interested in having more information pop up. is that interesting? are you more interested in the real world? >> today we work on the consumer touch point other than radio. blippar is on television already. audio recognition technology but we feel there's a million times better than an audio field.

>> if you can scan a company's logo, the qr code at this point is pretty much outdated, right? >> yeah. >> that went quickly. right? lasted five minutes. you know, google has been inquisitive. what if they came to you and said here's a billion dollars, would you take it? >> not at all. we are driving a behavior. we see what we are building and there's a huge potential. i think if four year's time, it will be a completely different era where people will be accessing information beyond just type in key within a search engine. >> what about $19 billion? >> we can play that game. >> it's great to have you. please come back. >> thank you. good to see you. >> ceo of blippar. up next, next guest introduced a bill to end federal laws banning marijuana leaving it up to cities and states what to do. the most popular bill all of last year on congress.gov. jared polis will join us in just a moment. plus talking about amazon's move to raise the price of prime service all morning but what does the price hike mean for

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marijuana is a hot topic on capitol hill today. a briefing on the issues facing legal pot at the federal level is just wrapping up. here with us now is representative jared polis, democrat from colorado and one of the three congressmen who spoke at the briefing. this was billed as largely bipartisan hearing with the

lobbyist talking about the changing attitudes towards marijuana. how did it go down? >> the room was packed. standing room only. i kind of joked that we need to get a bigger room each time we have one of these briefings. there's enormous interest in this issue, in part because recent poll majority of the american people support legalizing marijuana. >> it was in that most recent nbc/wall street poll more than half of americans in each generation said that they did view legalized pot as a good thing. what were some of the other topics discussed? i know you've been a proponent of changing the banking rules and introducing rules about penalties if you're driving under the influence. >> what the american people want and hopefully what congress can reflect is not that there would be some complete sort of wild west in marijuana. they want to see it regulated like alcohol. that's what the voters in my state voted for, which means we need to make sure that we have laws in place to prevent driving under the influence of marijuana. laws to keep it out of the hands

of kids, make sure the minors have less access after legalization than they have now. and that's easy to do because, guess what, the corner drug dealer us doesn't care if they're selling to a 15-year-old that are regulated dispensary would lose their license if they sell to anybody under the age of 21. >> it seems like we have a couple of interesting test cases here like a petri dish in washington and colorado. and wouldn't it be interesting to just see how that develops before we jump into something on the federal level? why not wait? >> well, that's the beauty of our federal system is allowing for that experimentation. under my bill, hr-499, which regulates marijuana like alcohol, it doesn't legalize it in any jurisdiction. it om allows the states to choose to legalize it to do that. we have an act of conflict between washington, colorado law with national law not just washington and colorado, also the 17 states that have medicinal marijuana, technically it's still a scheduled substance under federal law.

felony for procession. the issue we have is state laws and local laws are in direct conflict with the federal law. you know, look at what we did with alcohol and prohibition. to this day there are dry counties in states like tennessee and texas, among others. there will be counties and cities that don't allow marijuana even if it's legalized nationally. but we need to allow that flexibility for the federal system to work. >> congressman, one of the big issues facing your state, that federal law would help, is the ability for banks to start processing some of the profits for marijuana and for customers to start using credit cards and the like. i know you've had some discussions with the colorado bankers association and i'm wondering what sort of progress you've made on that front. >> well, we have another bill that would specifically allow banks to bank the industry. we also got recent guidance from the attorney general's office which we had been seeking clearly the administration is not planning to go after banks that allow normal banking practices for businesses that are legal under state law but

that's not enough for many of the banks. they are very conservative institutions. we find that many dispensaries in colorado and washington are forced to deal in cash to the detriment of their safety and their consumers. >> congressman, a lot of people still trying to make up their minds about this. we can debate the health impact, the impact on driving, the tax revenue impact, but overall, when people say i wonder how great can a country be if people can get hyatt will, what do you say to that? >> well, alcohol has been legal since prohibition and so, yes, people can get drunk, which is more disbill dating state. we have country of freedom and liberty and people can do what they want to do. if they want to get drunk or if they want to get high, i think the answer is look at the underlying causes. what's wrong with their own life

that they need to somehow escape it and we need to have the right mental health resources to make sure they don't make bad decisions. >> one of the top national debates going on right now, representative jared polis. thanks for joining us today. >> pleasure. getting back to amazon. here's a hard right turn. company's prime membership getting more expensive, going up by 20 bucks to $99 in the u.s. joining us on the cnbc news line today is mark mahaney, lead internet analyst at rbc capital has an out perform on the stock which i think he's maintaining. and jon fortt is here with us at post 9 as well. mark, good morning to you. >> carl. >> million dollar question, what does this do to membership, this price increase? >> our guess is that it's going to lead to extremely modest churn. less than 2%. it's a relatively modest price increase. first time they raised fees since they announced the program about seven years ago. in that time the number of prime products that have been covered has gone from a million to 20 million. amazon is not a company

traditionally grown through price increases. this is a bit of a surprise. none the less, we think this fee increase will stick on prime. >> mark, what does this do to amazon's media ambitions which are under the prime umbrella? if it doesn't affect prime membership itself that much, we also guess that it won't affect media or might it affect the growth in media? >> jon, it could affect the growth in media. key thing is why thigh did the price increase. they have seen substantial demand in prime service and it's led to infrastructure cost that they needed to make sure they cover going forward. you are seeing dramatic increase in the adoption of prime. about 20 million u.s. subs. that's growing about 5 million a year. there were shipping costs they had to hedge. in terms of the media strategy there are people who look at thiss a a derivative playoff netflix. we haven't seen amazon gain a lot of traction just for its video only prime membership, i don't think it will have that

much of an impact on the overall draw of amazon streaming business. >> mark, you know, amazon has gotten away with razor thin margins for years now and said, look, we haven't raised the price on prime for nine years. now that they have, what will wall street need to see on margins? are they going to have higher expectations? >> i think they will. you know, we sort of tried to map it out. we think they're adding 50 cents a year to their earnings power with this price increase. i want to just get across two simple points on the margin. this is a retail company. this is a mid single digit margins company. don't dthink about google and facebook. think about walmart. in addition to that, you've got amazon web service, advertising revenue. that's what causes those margins over time to rise to high jingle digits. that's not mammoth by internet standards but by amazon standards that is. you could have a 200% growth in earning just from rebound and recovery growth in margins.

>> mark, you talk to costco and try to figure out how to model this amazon price increase. where is the potential for amazon to go from here? costco has multiple tiers of membership. amazon does, too, with a grocery business. do you expect to see more of that? would that be good for amazon? >> jon, we tried to dig into this, the costco membership fees. it's not a company i cover but this is a company, costco, has been successful. they have raised fees for core membership program for three or five years and hat record high retention levels in terms of subscriber base. to us that was the thael that amazon can probably do this kind of price increase and not suffer a major change, a major increase in churn. the value proposition is clear for both companies. i would not expect to see another price increase out of amazon for prime for five to ten years. this is a company that rarely ever resorts to this kind of thing. so i would be surprised if we saw it again any time soon. >> mark, you know, a lot of the skeptics say whatever they do

and however they do it, we'll be guessing about the impact because they tell us so little. is this making your model forechallenging? >> i don't think so. there's limited disclosure. spend a lot of time on it. there are a lot of clues you can put to the. . this is straightforward math. 20 million u.s. prime subs roughly, give or take, and a couple million and you know with a $20 price increase is and you know what the margins are in the price increase, 100%. so the math in terms of accretion to the model is pretty straightforward. amazon in terms of strategy is a consumer first strategy. they always said they're going to run at low margins. occasion we will go into investment cycles. we think we're coming out of one now. a reason it's a topic for the year. clear evidence of margin expansion in '14. >> that would be a big story, mark. good to talk to you on the phone. see you next time. >> thanks, carl. shares of power rallying despite news of the fourth

quarter loss. hydrogen fuel cell company was helped by a jump in refer knew for the product services. stock is up 380%. and then last week, the ceo appeared on "squawk on the street" and said he expects the company to become profitable this year. >> in 2014 we will make money and it's because we've been building this company for five or six years. we focused on a market where fuel cells could make a difference today. and we pud it into electronic trucks. we convince customers like bmw, walmart, our units can dramatically improve the productivity of the organization. >> that was andy marsh, the ceo of plug power here at post 9. up next, he may be man's best friend but could he be technology's best friend? the ceo is here to tell us why when "squawk on the street" comes back. comes back.

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hour, is the market ready to brouk out or breakdown? we're going to talk to stop stlat gi strategist at bank of america.

outspoken herbalife investor robert chapman is back, he's going to tell us how he is managing the trade now with the ftc involved. and dallas mavericks head coach rick carlisle joins us to talk about everything from the nba playoffs to fund-raising to, of course, march madness. it's all straight ahead at the top of the hour. see you in 20. >> he's coming up, scott. keep it tuned to "halftime" report at noon. how much do people love their pets? if you ask the american pet products association, $65.5 billion last year alone. that's the biggest amount yet in almost two decades. how are some companies capitalizing on this growth? our courtney reagan is live at the rbc retail conference in boston with an exclusive interview with the ceo of petsma petsmart. over to you. >> thanks. good morning. i am with david lenhardt, ceo of petsmart. let's talk about traffic. weather has been an issue on top of mind for companies and consumers. what happened over the winter and is it getting better?

>> yes, we've seen, you know, very severe weather, particularly december/january continuing into february. and it wasn't just the fact that the storms were big, it was the fact that they were one after another. really not letting our consumers get up for air and get out and shop. and, you know, snowing here in boston today so let's hope it gets better. >> in your presentation you talked a little bit about when that weather happens, folks are coming in and they're stocking up. so they're making fewer trips. how does that impact your business? >> that impacts our business from a food side. they are going to come when they do get the chance and really stock up because they don't know when they can get back in. that's going to hurt the hard good side of our business. a toy they may not get because they don't come to that additional trip isn't going to happen and our grooming business is an example. if you miss a grooming appointment and your next one is three weeks away you're going to wait for the next one. >> you made a lot of investments in your lonline offering. is that going to be accretive to

sales or cannibalize what happens in the store? >> we know that our customers who shop online also shop in our stores and, in fact, shop more in our stores than an average customer. we think it's critical with technology. we think customers are rapidly changing how they want to interact and transact with us. we think it's critical to be there for them however, whenever they want. so we're very much investing not only in online and continuing to grow our sales there but how do we use technology in our stores to deepen that connection with our customers? >> how complicated is it to ship something like a 50-pound bag of pet food and to get the ship from store delivery? can you talk about where the xaern company is there? >> we're going the roll out order online and pick up in stores. that was one of the fee features the customers have asked us for and probably the biggest change is an in-store change because we're asking associates to pick an item and then put it it in a separate area for the kus more to pick up. that's where all the change is. we've got the technology and we're going to begin rolling that out this year. >> we have to talk about the

humanization of pets. >> yes. >> something very interesting you've talked about not just when talking about foods but xwrooming, too. what is petsmart doing and is it working? you've got whistle in stores now and new grooming techniques. what's going on? >> innovation is a critical piece of who we are as the leader in the pet industry. we continue to bring that in for our customers. again, centered on this idea of humanization of pets. we know more and more people are treating their pets like families. what that sent abling us to do with our services so grooming, for example, rolling out ped expressions. this is the opportunity for our customers now to take a trend in the human world, chalking, where people change their air color, feather their hair. they can now bring that to their pets and personalize their pets. just yesterday i got a photo from a customer whose husband was coming back from afghanistan. brought in their labrador. personalized their labrador with usa, red, white, and blue on one side and welcome home on the other side. customers are loving this. it's creating energy.

we're doing that in services. we're doing it on the product side as well. you mentioned with technology whistle is one of our newest products which is really like the fuel band which, again, humans are doing that to track what they're doing through whistle, we're now offering, again, our customers a chance to do that with their pets. not only do they get a chance to track their pets activity, they can then also become part of a community of other like-minded pet owners. if i've got a terrier i can compare how zoe is doing versus others. i want to know that. >> just what we need, right? our dogs competing with each other like we do with our kids and ourselves. >> absolutely. >> thanks, david lenhardt, wonderful to be here with you today. keep us updated on the trends. >> absolutely. thanks very much. >> thank you. for now, back to you guys at the stock exchange. >> all right, court, thanks so much for bridnging us that. bob pisani and the look at the floor with the dow down 56,

bob. >> listen, everybody is abuzz down here about the financial times story this morning. it says that chinese e-commerce site alibaba was 95% certain, a quote from them, they would list in the u.s. shocked a lot of people here. that leaves hong kong out in the cold. what may be the biggest ipo of the year and new york suddenly very much now in the running. what we don't know is what exchange they might list on here in new york. nyse and nasdaq, i spoke with both of them this morning. they have no comment on whether they're getting the listing or not. why not hong kong? the company is based in hangzhou on the coast. alibaba is in dispute with the hong kong stock exchange over the partnership structure of the company. they allow a group of top managers and founders to control the board but only control 13% of the shares and that's a problem with the hong kong authorities. is this a problem in the u.s.? and it's not. we allow any company to have two glasses of stock, one class could have ten times the voting

power of another, for example, we allow this to effectively control the company. all the media companies have these super votings classes of stocks. so what they have, not a problem here. alibaba says they're t not going to change their partnership structure and that sure priced a lot of people. hong kong is digging in their heels. we don't know. as for the amount of ip orksz it could top the 17.8 billion ipo record here that was set by visa. this could be $20 billion. that's what's got people abuzz down here if hope is this could set off another potential wave of ipos. here and in china. half a dozen in registration from china. right now jd.com, a come petder of alibaba is expected to come shortly. and wabo, twitter of china, also scheduled. this is going to be big ipos in the next two months including chinese ipos and there will be days down here, three or four ipos in a single day. so get ready. we'll have some very interesting openings in the next month or two. back to you. >> start working on your

mandarin, bob. see what happens. bob pisani. lebron james air balled this pitch late yesterday at the mba superstar and spokesman for samsung tweeted this. my phone just erased everything it had in it and ret booted. one of the sickest feelings i've ever had in my life. how should samsung exact revenge on king james for his tweet? tweet us @squawkstreet. dow is down. rstz is working on something to come. >> we're going to be talking about gse reform. to quote redd foxx i think i'm going to have the big one. we're going to have the ranking republican on the senate banking committee, senator mike crepe to talk about what might be released tomorrow in the form of a bill to accomplish what seemed like the impossible. all after the break. (vo) you are a business pro.

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released a blueprint for winding down. government-owned financiers, fannie and freddie. rick? >> this could be a big deal,

carl. i'd like to welcome our guest, the republican ranking member of the senate banking committee, senator mike crapo. thank you for taking time out of your busy schedule, senator. >> good to be with you, rick. >> all right. listen, i have three areas i want to cover. the first is, there's been many articles written of late that was just recently one in the "new york times" that when it comes to gse reform one of the areas are the thousands of shareholders and what will happen to them in the kind of bait and switch done by treasury and the federal government to potentially result in a lawsuit. just touch on that briefly. that really isn't the focus of what i want to discuss but it's important. >> yeah, it is very important. it's an issue, however, that's going to be decided in court rather than in congress. the bottom line is that under the current conservatorship, all the current profits op fannie and freddie are being swept into the treasury rather than being utilized to recapitalize fannie and freddie. the fact is that the courts will

determine whether that was a proper action and, if so, if the courts determine that that's not legal or appropriate, then there will have to be adjustments made. >> all right. now, let's get into the nitty-gritty. now, from what i've read, senator, we will actually see the bill tomorrow so i'll keep my fingers crossed. maybe you should give us a quick run around in the block and the most important issue to everybody is most people understand the government shouldn't own airlines, railroads, computer companies, but what is it about the mortgage arena where all of a sudden, you know, it seems as though there's really inertia here to bring them back to private entities and still potentially a government backstop. tell news a minute or so what we're going to be looking at potentially tomorrow. >> well, first of all, we wind down fannie and freddie. they are no longer going to be over time as they wind down. they are no longer going to be either government or private corporations. they will terminated ultimately.

what we do is put private sector capital in front of a government reassurance. and the level of capital that we have put in front of the government reassurance is 10%. if you look at the $5 trillion mortgage market, that's $500 billion of private sector capital in place to protect against any kind of a risk of a taxpayer involvement of a bailout, if you will. and on top of that, we are establishing very strong underwriting standards to make sure that we no longer issue toxic mortgages, that the borrowers have the ability to repay and that there's adequate loan to value ratios in the underlying assets. so we're really stabilizing and strengthening the market. and essentially winding down fannie and freddie taking them out of government control ultimately. >> all right. the last topic is going to be the diceyest. for our last minute, let's look at all of this through the optics of politics and the landscape of a midterm fast

approaching. it seems to me all this energy wouldn't be expelled if there wasn't a potential actually get this done. conventional wisdom, on the other hand, dictates very little will get done before the midterm. >> with regard to almost all legislation in congress right now there's a notion that the upcoming election is going to make it hard for anything to get done. i think that the opposite is true for this legislation. we have a bipartisan agreement here in the senate. we're moving forward with very critical and important legislation to stop too big to fail in the mortgage industry and housing industry. i think that there is strong support across the stakeholder interest in the country. because of that, i think we have a very good chance of not only passing it in the senate but passing legislation in the house as well. and moving this to the president's desk. >> awesome. thank you. listen, senator, it's been a pleasure. i would like you to do me a favor. if we get this bill and we have a chance to read it tomorrow,

hopefully if you have time next week i would like to bring it back and go through some of the granular details. thanks for taking the time. "squawk on the street" gang, back to you. >> thanks for bringing that to us, rick. of course a lot of people watch that. tweet time, air ball for samsung courtesy of lebron james. late yesterday the nba superstar and spokesman for the company tweetded this. my phone just erased everything it had in it and rebooted. one of the sickest feelings i've ever had in my life. james quickly deleted the tweet and tried to down play it. the damage was done. so we're asking today, how should samsung exact revenge on lebron for his tweet? tweet us @squawkstreet and we'll get to some of your buest answes next. next. save you fifteen percent or more on car insurance.d

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an air ball of samsung courtesy of lebron james in yesterday superstar and spokesman for the company tweeted displeasure for his mobile device. he said, my phone just erased everything in it and rebooted. james quickly deleted that tweet and tried to down play it later saying he got all of his information back. here on squawk, we talked to james a while ago about samsung. take a listen to this.

>> you work with samsung. it's been a busy coupling of weeks for apple though. is there anyone who can convince you to carry around an iphone in your pocket? >> absolutely not. i'm a samsung guy. you know, it's a great product. you know, i'm not, you know, knocking what apple has done and what they continue to do. they continue to push the envelope. and you know, me being a part of samsung we're going to try to continue to do the same thing. continue to push the envelope in new and inventive ways and see what the market has to say about it. >> squawk on the tweet's question of the day, how should samsung exact revenge on bele bron for his tweet? eli writes, i think losing his data is revenge enough. lebron james, go iphone. don't worry, we have it stored at the nsa data facility in utah. trade it for apple. and they can use another samsung product. there's nothing like tech, jon, to get people's snark up. >> all of those playoff appearances and that was the

sickest feeling in his life? bottom line, who hasn't had their phone crash. not good for samsung, at least he maybe got his data back? i don't know. >> sounds like it. he says they will be doing new and innovative things it sounds like. they've been giving it back to him. >> of course he's going to say he got his data back. >> let's get to wapner and the halftime who is going to talk more about basketball in the hour. >> carl, you guys had faber on and maybe that interview has had a little bit of an impact in the market today in that you've got this sell-off now, what started as an up day. did you notice bond yields as well? they've been pushed lower in the last hour as well. >> yeah. europe did close down close to the lows and i think the dow's 50-day is 16161. not that much farther to go. >> we're going to follow that. you guys have a great rest of the day. here's today's game plan. breakout. why the u.s. market is about to do just that. the top street strategist who is make that call is with us live. f