good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew is off today. our top story, two major global pressure points leading the markets. russian troop movements along the ukrainian border raising the tension levels ahead of the weekend's referendum vote involving crimea joining russia. that combination creating a wall of worry for investors. overnight, the nikkei tumbling more than 3% today. it's down more than 6% for the week. a couple trading hours into europe, the markets there are lower, as well. the cac is the biggestdy cliner, only down by 0.5%.

in russia, though, the benchmark micex index fell by more than 3% at the open. right now, it's down by just over 2.3%. the u.s. futures at this point are hanging in there. they're showing a slight rebound after yesterday's sell-off in wall street. you saw that decline when the dow was down by 230 points. also saw the s&p and the nasdaq down significantly. we will have a deeper market discussion with our panel in just a few minutes, plus a live report from kiev. secretary of state john kerry gets ready to meet with his russian counterpart in london. coming up at the bottom of the hour, michelle caruso sa brar ra caught up with ukraine's prime minister who was here. there was a question that he wouldn't answer. in fact, he walked away from the camera. that's coming up at 6:30. >> about bitcoin? >> no, not just bitcoin. >> it wasn't whether he was the -- that was the guy that we pegged as the person that looked like -- >> no, that was not the question. >> because andrew said the guy didn't look like -- the actual

guy. the "newsweek" fingered. and then we said what would he look like? and we said nerdy looking sort of -- >> that was not the question that had him walking away from the cameras. because if he wouldn't answer it, then you would think he might actually be the -- you know, these foreign things that are coming in and impinging on our markets, we decided -- >> in january that it didn't matter? >> yes. no, we decided recently that external things. but remember when i said is he going to be hungry with tanks? it kind of is this hungry 2.0. it's like the way you do it now. you kind of do it and, you know, we just sit around and go, yeah, they're doing it, but there are some -- but no shots were fired when they took over some of the navy facilities. >> there were two protesters killed yesterday. >> but it's different and it seems like sort of a kinder, gentler russian annexation of a country. which they've done before. >> i mean, the people on the ground are very concerned at this point.

for the referendum, there's only two votes. you get to vote to be part of russia or you get to vote to go back to 1992 when you were basically separate from the rest of ukraine, anyway. there is no vote on the referendum. >> i think china was worse. i think china was worse. i think people are more worried about the -- but even that, i don't think, should be really more than a one on or two-day -- we'll see what happens. we're ready. we're probably -- well, we had everyone coming in here saying we're ripe for about 5% or 10% or 15%. so we're ripe. we're set up for that. you've got what seth carmen talked about. you've got some serious froth and a couple of names, warren technology, you've got the nasdaq back well above 4,000. but in terms of whether it has the -- the potential to derail the 3% -- >> right. >> to derail the 3%. >> we'll find out the biggest shot depending on what happens. right. because of the rip off effect. but yesterday we had welch say

it. >> things are good and that the orders are coming in. >> and no change yet, but optimi optimism. >> optimisms based on orders actually coming in. >> but nothing has changed. as of right now, nothing -- >> they have seen orders coming in and that gives them hope. >> but i had the feeling that they weren't concrete. yesterday he said nothing has changed except it's optimistic that it will change. >> it seems optimistic. >> but it has in the last couple of years. >> the gm recall crisis is -- we hear new things about it every day. anything that goes back to 2001, you know it's sort of keep coming out, dribbling out. a report from an industry safety watchdog says as many as 303 deaths -- there were 12 or 13 -- were recorded when air bags failed to deploy in the 1.6 million cars that were recalled last month. that's a little different. the center says it used fatality data from the national highway

traffic safety administration. this doesn't sound like you can just point to the ignition thing. this is like going back and figuring out what would have -- i don't know. >> what caused the air bags to deploy. >> you can't say for sure if it deployed that someone wouldn't have died or not. a little bit more statistical type analysis here than this, knowing that the wheel locked and you ran into a tree and died, right? gm issued a response to the report saying that, oh, the 303 deaths is based on raw data and without vigorous analysis -- i could have written the pr for this -- it is pure speculation to attempt to draw any meaningful conclusions. goes on to say gm's investigation into the ignition switch defect is ongoing. shares have had a rough week, but the markets have had a rough week. but at this point, down below 34 now. yesterday we were talking about below 5. so 3361.

but still, if you look at 12 months, it's right in the middle of its range. >> another story we've been covering for some time, activist investor nelson peltz blasting p pepsico. he is demanding answers on operational issues and its corporate strategy. he wants the company to hand over details about expenses and provide volume growth and market share data for all beverage categories in north america. plus, he wants a meeting of shareholders and board members without the presence of pepsico's management. here is pepsico's response. they say, in fact, our independent providing director and one other independent board member have met with trian without management present. the board has they are rowly reviewed trian's proposals and has concluded that they would not maximum shareholder value. taking a look, it's been a bit of an up and down for the last

couple of months, but it is higher, $81.82. >> john malone, liberty media are looking at splitting holdings into two tracking stocks. the other will cover liberty's 53% in sirius/xm holdings. and the atlanta braves baseball team. probably just something to do, knowing him, with taxes. liberty is pulling its offer for sirius/xm off the table in a deal with more than $10 billion. liberty plans to create the tracking stock by the third quarter and, you know, malone has given a clinic on how to do this stuff, among other things, over the past 25, 30 years. he's still in, isn't he? he'll make the top 25, won't he?

>> i don't have the list right in front of me, but he has to be on that list of 100. >> i'm surprised. >> exactly. well, we're wrapping up the trading week on wall street. stocks had their biggest loss in more than a month yesterday thanks to china fears and ukraine joining us now to talk about the economy is nariman birivekh. and phil is joining us, as well. i'll start with you, phil, first. we're trying to decide anywhere in this bull market, it's been going on for a while, but i've seen historically it's not that long in the tooth necessarily. are valuations stretched right now? is china or ukraine able to derail this? >> china and ukraine are speed bumps, certainly. and the heightened volatility this summer has been increased. but we city think we're -- we have a 2100 market on the s&p by

tend of the year. >> not on the dow? >> not on the dow. we look at the s&p. >> that would be a significant call. >> our people are saying that, by the way, guys like faber and others. >> 2100 on the s&p. >> okay. 21100 on the s&p. so from a valuation perspective, which was your question, we're probably trading at about 15 1/2 times estimated earnings of $120 this year, given benign levels of interest rates and inflation. that's a reasonable multiple. we think multiples continue to buy that. >> so china won't turn into a route in the emerging markets as it affects us? >> we don't like em. we have this -- >> don't we need them for our multi nationals? it's important for us, isn't it? >> we certainly need them. but right now, u.s. is working, developed markets are working, emerging markets are not. our models don't particularly like them. from an allocation standpoint, we're essentially zero em versus 6% benchmark. so we're 6% underweight. >> when did you go underweight?

>> we were short for the best part of the last three months or so. >> wow. >> just close that short for the last couple of days. >> before the january mess? >> exactly. we started getting nervous. our model picked up that decemberish or so. the em has been an area that we haven't liked, it hasn't worked. the markets have come down. >> so you're not shorted any more? >> we're close to short this week because the markets have come down. from a valuation perspective, we thought it was prudent to cover the short, but we're still under weight. that's a sideble bet. >> nariman, i haven't spoken to you about this conversation we've had all week long. that is are you at 3%? and it was -- the negative numbers have been mostly weather related and we should do 3% this year? is there a where you are or are you in the low 2s? >> no, we're not in the low 2s. we're in the mid 2s. mostly because the first quarter will be very weak.

first quarter is only going to be between 1% and 1.5%. we expect by the second half we're at 3% or above 3%. if you look at the calendar year average, that comes out around 2.6%, something like that. so yeah, we're going to start off weak, no question about it. markets may not be happy about that, but we'll start off walk but then strengthen. >> well, that's a pretty big statement, mid 3s by the end of the year. it's not a given. >> well, i think the fundamentals are very strong in the u.s. which ones? >> which one what? i'm sorry. >> which fundamentals? >> housing still strong, consumer finances are strong, corporate finances are strong. we've got an energy boom going on. there's a lot of factors that -- underlying strength in the economy that i think will finally show themselves. we've got all these temporary factors playing in. >> because we've had a chance for a couple of years to do that. and it just hasn't happened.

and i wonder, is it a leap of faith to think that finally it works out for us? >> no. just remember, the last half of last year, if you average those two quarters, we're about 3%. we had a -- over 4% and then we had a weaker fourth quarter. you average those, we're over 3% in the second half of last year. >> we can do this just domestically, too. i mean, if china slows or if the emerging market is good, or even europe, europe doesn't -- you know, is not going gang busters at all. i don't know what's going on with the euro. it's like a 1% economy, isn't it? >> absolutely. that's what we were saying for this year. yeah, i think we can pretty much do it on our own and that's what it's going to be this year for the u.s. >> if the yuan goes down, it's even cheater for us over here, isn't it, with the stuff we do buy from them? >> yeah, actually, it is. ironically, you're absolutely

right. obviously there's all these worries about a weak chinese currency, it doesn't hurt us because of all the outsourcing going on, all the supply chain issues you were alluding to, absolute absolutely. >> you were talking about leading indicate thaers suggest the u.s. may be ready to turn coming out of this weather compact. just over the last week, joe, claims data the last couple of weeks getting better. the retail sales report says versus january was encouraging. some of the data we're looking at in manufacturing, the orders have been -- the shipments have been terrible, but the orders have started to perk.. we're starting to see the inflexion point right now. we absolutely agree with him in terms of the weakness in the fourth quarter and the first quarter from a weather standpoint. we absolutely believe that we're looking at three handles in the second quarter and beyond as we sort of shake off this weather impact. you know, europe, we're sort of in the 1% camp, too. and right now, em is a wild

card. >> okay, gentlemen. thank you. distracting to read these tweets. anyway, thanks, nariman. thank you, phil. but it's nice that people are wishing you well. good morning wishes, becky, from louisville. >> yes, we appreciate that. rutgers versus louisville last night was not exactly -- >> i told becky. >> -- a shining moment from there. >> we lost by 61 points, i know. >> 92-30, it's a rebuilding program. >> is that what it is? it's just our basketball team helping our football team feel better for when we enter the big ten next year. >> there you go. there you go. i watched some of that. >> you know what? they did a great job the night before. >> boone was in earlier. >> they did a great job the night before. >> they did. >> and you're wearing red.

>> louisville i think is sort of cardinal, too. florida state took kansas into overtime. but you know who we are on today, too? >> dan gilbert and warren buffett. >> buffett. do you remember who we were talking about with -- >> do you know he was at that crayton game? >> did you watch knit of the creighton game? >> he has tattoos on his face over the weekend. apparently those don't come right off. >> yesterday, 27 points in the first half. he's the coach's son. he's like a brown noser. right? the other guys on the team are like, oh, the coach's son. except he's the best player in the country so it's great watching him. anyway, we're going to talk about -- >> we're going to talk about some march madness. >> are you into this? >> i am. >> it's so much fun, isn't it? >> what does the nba have to do to get the same xiemtd?

>> college games are so much more exciting right now. >> is it the clock. >> i think it's the desire to play or something. college kids are going out all the time. >> it's like run and gun, right? you watch things happen. i don't know what to do with -- the players are the best college players are in the nba. why isn't it good? i don't get it. anyway, thanks, phil. >> you're welcome. thanks for having me. >> but i digress. sorry. >> nariman. >> i was trying to smooth over the wound. >> yeah. pour a little salt this morning. in the meantime, secretary of state john kerry is in london today where he'll be meeting with his russian counterpart just two days before crimea holds a referendum. steve, is this seen as a foregone conclusion there like it is here? >> yeah, well, michelle spoke to the ukrainian prime minister after his u.n. meeting yesterday. and he suggested foregone conclusion, the result is in the bag, obviously, for the pro russian element.

because this is not a legitimate election done any decent monitoring. i will give the point of view, though, of the crimean pm who is seen very much as the russian man in crimea. he says, look, this will be a guaranteed aspect of european law will be followed. we will include the security of voters. now, the u.s. ambassador, the oace, which is approved for the security cooperation is a -- which hasn't been able to get into crimea. he says no legitimacy, no legal effects, no moral effects, it's political theater perpetrated at the barrel of a gun. if we look at the question itself, it's not offering voters in the crimea to stay part of the ukraine. the question is do you want to join the russian federation or do you support the 1992 crimean constitution? that's very interesting because the original 1992 crimean constitution pretty much had crimea as an independent state, not part of the broader ukraine as it stands now.

so huge question marks about what people are being asked. people are very nervous throughout the rest of the one of what this means next. a russian population in the east of this country. with that as a back drop, we've seen huge russian military maneuvers in areas bordering the ukraine. big artillery displays, powerful maneuvers, as well. there are concerns, of course, that there would be potentially some form of escalation. escalation, as well, on the sanctions front. and it was very interesting to hear frau merkel despite the enormous link with russia in terms of trade talking hard yesterday. if there is this annexation, if it does go on, what happens next on both the sanctions front on the u.s. and europe could be very interesting, indeed. backlash from the russians, as well. back to you guys. >> steve, thank you very much. right now, though, we are turning to missing airlines flight 370.

today's news conference just wrapped up in kuala lumpur. sri, the details that we tend to hear outside of malaysia tend to conflict a lot of times with what we've been hearing. what did you hear today? >> well, the minister was tracked by journalists who question whether the back drop flowed on for several hours after it stopped transmitting signals. remember that there's also the question as to whether it deviated off course. not a great deal to go on, i'm afraid. and the other question mark that is being raised increasingly is whether the plane had been commandered. there have been records that the pilot had a flight simulator in his home. his home is yet to be searched. so that leaves that question unanswered. what we do know is that they continue to maintain this is not a normal investigation.

this is unprecedented and the transport minister said it forces us to look further and further afield. we can see some probing of the western areas off the coast of malaysia into the sea, even into the indian ocean has been confirmed. the south china sea is a main focus area. malaysian transport area getting back to this issue of whether the aircraft has been comandered. one other point i want to make, we raise this question as to whether it's been silence from the stakeholders in this investigation. that's boeing and rolls-royce, the aircraft manufacturer and the maker of the engines that go into the aircraft. they haven't said anything for the past one week. and i asked the minister pointedly, why was that? do they have things to hide? in the interest of full

disclosu disclosure, we need to hear all the facts. his answer was we don't need to put any pressure on them because they are working with us. so the bottom line here is the search areas is being expanded even further. back to you now. >> so, sri, it sounds like they are being evasive, but not knocking down the reports that that plane could have been in the air for five or five hours after its last transmission back, correct? >> that is correct, yes. everything is on the table. they're sxloe exploring all possiblies the that is a refrain that we have been hearing for the past several days now. and they haven't really narrowed it down. we really don't know, but they are not ruling that possibility out. >> particularly cruel for -- because if it were me and i had a loved one, i would be holding out hope that it landed somewhere and that there was some weird thing --

>> look, even if it was a hijacking, hope that they're still alive, that there's someone there. the things that are so strange is that someone intentionally shut off the transponder. >> they showed a semester ewe later. to turn the transponder off, you take this thing here and turn it two -- >> why would there be a legitimate reason for ever shutting off the transponder? >> i don't know, but you can do it easily. >> if i could come in here, if i may -- >> sri. >> yeah. >> right. just one or thing i wanted to add that is adding to a number of credit kim levels at the malaysian authorities who incidentally are the lead coordinators for this multi national investigation and the search operation that is happening off the peninsula of malaysia that is so expansive. and the response from the aviation chief was very clear.

he said there are adhering strictly to all international protocols. so he says they are going by the book, but there is a perception in the media and there is a perception amongst the public and amongst those who have been utterly affected by this that the authorities here are not really pulling their weight. >> no, sri, honestly, it's not just a perception. we are getting less incorrect information from what they are telling you than from what we are hearing outside. yesterday at this time, we heard the reports about the idea that the plane had been in the air for another four to five hours. the malaysian tharts were the ones knocking that down saying that is not the case. now 24 hours later, they're not denying it, but it sounds like it's more accurate information we're getting from outside that room than from inside it. so the perception is out there and it's a perception they have done a very good job of making us all -- in this situation. anyway, sri, thank you. i know it's difficult there to try to figure out what's going on given the situation.

on obviously, this is a very important situation. we will continue to stay on top of it. >> and the guy that they're going to, they've been going to every night, the expert, really good. he's the one who said china, there's no way. but then he said that -- do you remember silk air in 1997? >> i don't remember it. >> they're looking into a pilot's background because i guess a pilot ran a plane right into a river or something. >> that was the egyptian -- coming back from the united states? >> you look at the background, you might have to go with -- they go three days to look at the pilots, but they may have to go longer to see if there were any type of psychological history. but, you know, you don't want to -- policy because that might be might be -- >> you don't know. >> it could be hostile or everybody could be -- >> still, an incredibly frustrating situation. we will continue to keep you updated as more information comes in the.

up next, mark zuckerberg expressing his dislike of the government's surveillance practices. right now, though, as we head to a break, check out the futures. dow futures indicated up by about 42 points above fair value. s&p futures up by more than 5.5 after a big down day yesterday where the dow lost more than 230 points. "squawk box" will be right back. >> before you hit the road, here is your traveler's check. the airline industry is expected to earn nearly $19 billion in global profits this year, according to the international air transport association. but that's a $1 billion drop from its last forecast. so what's behind the drop? find out, next. (vo) you are a business pro. seeker of the sublime. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle...

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the international air transport association expects an extra $3 billion to be packed on to the industry's fuel bill this year. >> time now for the executive edge. facebook's chief executive mark zuckerberg blasting the government's electronic surveillance practices saying that he has personally called president obama to voice his

displeasu displeasure. zuckerberg's latest facebook page says when we work to protect you, we imagine we're protecting you against hackers, not our own government. unfortunately, it seems like it will take a very long time for true full reform. and the call between zuckerberg -- between the call and zuckerberg's 300 word miss owes friday come amid controversial surveillance practices that were leaked by edward snowden. >> i'm going to -- i think i'm going to call obama about the overtime stuff and the executive power and all this stuff. you know what i mean? >> i'm sure you'll get right to it. >> he called up and he said, you know, this is on ur spying that we wanted to do here. we were checking all this information to try the sell stuff and make some mope on it. what do you think you're doing? >> some of the stuff is pretty scary, though. talgzs are that the government was putting up fake facebook

postings and sending things back to people. it was taking that data or information off your computer. there's denials of this, but that is the allegation of this. >> 27 years old. can i call? >> he's 29. >> whatever. i might take jessie eisenberg's call. do you remember what a smart [ expletive ] he was? this is the same -- and obama has to listen to that from this guy? >> i'm glad. listen, i love the way he thought in that movie. i thought he was great. >> and we have a birthday chute out for a very special viewer, my son, scott. his official birthday is tomorrow, but, you know, scott is now 12 years old, okay? so this tie at one time was actually thin. and i haven't worn it the last

two -- >> you can see close up it has scotty dogs. >> and i wear it every year that it's his bird day. his birthday is the ides of march. you know these tie companies, they go thin, they go thick, it's all -- >> don't talk to a woman about twisted with fashion. >> the guy at creighton is proud of his son. i'm proud of mine. he's going to go to middle school. proud of both mf kids, obviously. >> it's scott's birthday, so happy birthday, scott. >> happy birthday. 12. 12 years. >> he's really cute. >> he's going to be 12. >> he's turning 12 next year. >> you know, every time they have a birthday, we have a birthday. have you added that into the mix? >> no. i stopped a while ago. >> put the halt on. coming up, markets are reacting after yesterday's sell-off.

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welcome back, everyone. secretary of state john kerry is in london today where he will meet with his russian counterpart. last night, ukraine's prime minister was right here in new york city.

michelle caught up with him. >> he spoke to the u.n. security council. it was the first time that you actually had a ukrainian leader facing off against a russian diplomate. thus far, the foreign minister of russia has refused to meet with the foreign minister of ukraine. so he spoke in russia and said do you want war? we spoke with him last night, as well, when he went to dinner. here is the conversation that unfolded. . >> what does ukraine do on monday? >> on monday? >> yes. after the results come out -- >>! indiscernible ] >> how? >> using all leverage from the international community, from our international obligations. we press in on russia to stop this -- >> do you use your military? >> that's one of the frustrating things about covering geopolitics and what i find frustrating is that you have to

ask impossible questions that we could never answer candidly. you get very dramatic answers that you know are meaningless. on monday, front page of the journal, great headline. ukraine arms gets actionses from the u.s. >> just the whole idea of this referendum, there's two votes. you can either vote to become part of russia or you can go vote to go back to 1992 where you are separate from the rest of ukraine. >> right. you can't vote to stay in ukraine. >> which is why some of the people there are even protesting even -- are going to boy got it. so you don't know what you're going to get at the end of the this referendum. >> so we have to get through what we acknowledge is a formality on sunday. let's show people the ruble and the russian market, though. this may be the one thing. remember, we looked at the dollar here. every time you see this thing go up, that's the ruble getting

weaker. now month after month, weak after weak, it's been hit very hard by this situation. they manage it to get weaker over time. we don't know if it's as weak as it could be. >> it's like limit down every day, probably. >> exactly. they're in final control sess what they're doing with it. >> here is the russian stock market which got really hammered. there's influence from china here, as well. so utz down 3%, well off the lows if you look at the chart. so it was far worse. it's down 10%port week. double whammy from the increased military sector on the border with crimea. and then also the situation with china that we've been talking about, as well, all week. >> yeah. if you're looking at russian bonds -- >> they've been hit hard, too. >> they've been hit hard. i think they're the worst performing of the market bonds. i think they're down something like 4% this year, too. >> obviously, as diplomate squawks, capital walks. and the question is, does that influence vladimir putin?

we thought maybe it was possible the last time because remember he stepped back from the edge more than a week ago. originally when the russian market got hammered, we assume that he's getting pressured by people around him who care about the economy. at least their personal financial interest. let's see if that has an influence. >> 1992. there's all of these things are so small in the history of everything. the border has been -- i don't know about putin, putin is -- i don't know if putin is likely to do. >> you're not familiar who is making fun of the fact that -- >> i'm not making fun of it. i'm referring to you. deferring to you. >> oh, yeah. he loves pumping iron. >> he does. wrestling bears. he's something to behold, right? worth 100 billion, the leader of

russia? we don't know that. we assume that. >> waiting for that other guy that was supposededly running the place. >> it's funny. >> and you can be a dictator for 40 years ago. >> he needs to be, right? if he really could amass all that money, the minute he's out of power, you can start to pressure him to say where in the heck his money is. it has to be all over the place. >> i bet you he's got a cooler pool room, better cars, right? not that i'm thinking about that. >> multiple places. >> michelle, thank you. michelle caruso cabrera. up next, economic worries about china hitting the global markets. we will talk about the fallout with bob morris, chairman of price water house cooper. u.s. futures are bouncing back after yesterday's big decline. right now, you see those dow futures up by about 32 points above fair value.

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welcome back, everybody. when squawk was in vegas, we caught up with penn. >> the idea that to make money is to spend more money, i know

that's the wisdom of the 80s. i know that's the wisdom of our time, but i really can't get my head around it. and so because of that, i can about the country and think, boy, it seems like you set up a budget like you're going to go tour with the carney and this is how much it's going to cost and you put that much money aside. and it's just very hard to believe that paying that much interest to the chinese is saving us more money than we would by cutting back. >> at the top of the hour, another voice of vegas. gary loafman will be our guest host. rising tensions between ukraine and russia, these have all been pushing the markets lower this week. stocks took a hit yesterday. but can the u.s. economy continue to recover? joining us right now with some insight is bob moritz, chairman and senior partner at price

waterhouse cooper. >> thank you. i started thinking about how you must have a great global view of what's happening with the economy. what do you see right now? >> i go back to a ceo survey we just did. about 1400 surveys around the world. 89% of them actually are pretty confident about their growth in this economy. even, i would say, barring the force that we've got and in our earlier segment this morning, you guys talk about the ukraine and china and everything else. so i'd say there's a relative and cautious optimistic view from an economic perspective as to what the companies can do. >> we talked to jack welch yesterday. he had just come from 48 hours of looking at six different companies. they're very closely involved with. he said it's the first time that he's seen these companies, first time in about six years that he's seen these companies so optimistic about the outlook. some of that is based on early orders that they're getting coming in. but he says the optimist is different this time. would you agree with that?

>> i would agree with that. i think as you look around the u.s. in particular, and you guys talked about it earlier, the fundamentals, good. consumer sentiment, still good. employment has a challenge there, but at least it's stable and creeping in the right direction. at least they're generally pretty good about it. the question is are we ready for the stocks? >> that is the concern. >> that's right. >> if you had to look at this level of confidence, where would you put it? >> actually, the confidence level up clearly. it's the highest it has been in the last six years right now. that changes country to country a little bit. on a relative basis, the u.s. is in pretty good shape. >> what worries you? >> i think you've got three big challenges out there. and i'll come back to what the ceos are telling us. number one, three months ago, it was all about the government response. but it's less now. the second issue is actually the emerging markets. the good news is, it's baked in. most of your board members, your

ceos, you know there's a risk there. potential risks in china and the like. and the third thing is around how do we make sure na we have the ability to -- one of the biggest challenges that came out was disruption coming from technology. it's a huge on, huge concern in terms of any ceo thinking about the business over the long-term. >> so a concern, but maybe a good thing, too, overall, at least for the u.s. economy, weight does? >> absolutely. >>, yeah. >> it has the decree oweceos tht do we do do disrupt the disrupters? >> absolutely. one is attune to that risk and that opportunity. secondly is taking advantage of it. it's interesting to watch, the companies that are getting it and trying to find the right talent. >> can you do that as a big company? are people willing to do that? >> i think they're willing to do it. i think the challenge is can they do it? so if you go back to some of the

biggest challenges, it's interesting when you look back at the survey, 67% of the ceos in the u.s. actually worry do i have enough technology skills to think about all the issues soeshted with that? that goes to fiber, social, analyt analytics. >> cyber security, too, right? that's a huge issue. >> and u.s. companies are tuned to that. they're trying to deal with that. there's opportunitieses for the companies within it. >> are we looking at being a job seekers market again? we're talking about a massive unemployment problem. >> let's take a look at the data again. a year ago, 50% of the companies in the u.s. that we interviewed said they weren't going to hire. about 20% were saying they were going to cut. today, you have about 65% of those companies saying they're going to hire and a little bitter than those we talked about previous and only about 10% are going to cut. and the challenges are still there. what do i have? what do i need? so you've got the combination of

factors in the employment space. it clearly is the confidence for them to invest. that's starting to come back and you're starting to see that. second is the skillset. what's interesting for the first time over 70% of the ceo >> preparing students, preparing the work force and i'll call it the education system community and business working together. what you find today is if a company can't find the skills they're doing the education themselves now, as you think about trying to up the game in terms of getting that talent ready for what they need. >> bob, thanks for coming in today. >> happy to be here. coming up, we'll talk more about the gm recall and the pr nightmare for that automaker. more on the markets as well. and the health of the bowls. and then later, quicken loans raising the stakes on the bracket challenge. it's always fun to fill out the brackets. i would do it. no one will win this. it's fun to talk about.

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welcome back, everybody. u.s. equity futures at this hour are indicated slightly higher after yesterday's big sell-off. the dow futures are indicated up about 30 points above fair value, s&p up by four points. yesterday the dow was down by more than 230 points. >> and coming up, andrew goes to vegas but we have vegas coming to us. gary loveman has his bill, sorkin's bill, apparently. and caesars entertainment chairman and ceo. we'll get stuck with this thing. he just left apparently. he's going to be our guest host and gambling entertainment, all the hotels, we'll find out what really happened, whether there was a tiger and a baby in andrew's room. find out next.

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ukraine anxiety. troop movements on the border ahead of this weekend's crimea referendum, causing concern for investors. combine that with worries about china's growth and you get jittery markets. should the bulls run for cover. >> general motors in crisis mode. the automaker playing defense after a new report on deaths linked to cars recalled last month. will consumers turn on gm? and vegas comes to squawk. >> did caesar live here. >> caesars entertainment ceo gary loveman takes center stage as guest host and we know celine deon is a fan. >> gary has been such an amazing supporter through the years. >> "squawk box" begins right now. ♪ near far wherever you are ♪ i believe that the heart does go on ♪ good morning, everybody.

welcome back to "squawk box" here on cnbc, i'm becky quick along with joe kernen. andrew is off today. our guest host is gary loveman, the chief executive officer of casino operator of caesars entertainment. he will be with us throughout the hour. great to have you. >> pleasure to be back. >> the optimism you were describing in the last segment we're feeling as well. in vegas, business has picked up. we've seen encouraging trends. it's been a long time coming. >> we are hearing a lot of this over the last several days. gary is with us for the hour. we have a lot to talk about with him. stay tuned in the next hour, that's when quicken loans dan gilbert and berkshire's warren buffett will be with us as well to talk about the billion dollar challenge. after the sell-off yesterday, you'll see a rebound this morning. dow up by 31 points, s&p up 4.5

points above fair value. the ten-year note is yielding 2.656%. you did get the yield get pushed down on the ten-year note, back below 2.7%. in our headlines, gm is battling claims that air bag failure in recalled vehicles resulted in as many as 303 deaths. this is still very early in all of this. this is raw data. they're looking at. the cars in question were part of the automakers ignition switch recall. gm says that number was based on raw data from safety regulators. it has not had rigorous analysis. gm is under criticism for the time it took to take action on the switches. >> they are probably looking at huge metadata statistics with air bags. any that didn't go off, they'd apply some formula to how often

an air bag makes a difference. >> this is linked to at least 12 deaths already at this point. >> it's millions of cars. >> it goes back 13 years when there was apparently, they've known about this at some level in the company for that many years. >> exactly. you know what i mean? >> that's not the number that will stand out in the end. >> you couldn't find 303 names because it's statistics you're talking about. you're saying this is what you would have been expected would have been saved if the air bags deployed given the data on how air bags work. i see what gm is saying but, again, numbers are numbers. >> it will be more pressure to find out. >> add to the question about why it took so long. >> right. nelson peltz is taking aim at pepsico once again. peltz has been pushing pepsi to separate its beverage and snok business. pepsi says it met with peltz's

end management and concluded that the proposals would not maximize shareholder value. the white house says that many of those schools bury students under a mountain of debt and don't give sufficient preparation for those careers. it's been nearly a week since malaysia airlines flight 370 disappeared. still few clues to its whereabouts. investigators are focusing on the possibility of foul play even more than we had been all along, possibly the jet was deliberately flown off course. and whether it's transponders were deliberately turned off manually. they say the plane continued to transmit data after its disappearance but none of that data indicated where it was headed. i saw our old buddy tom costello explaining it last night, it's a ping and almost look a router, a wireless router that you're not using but it continues to send

out a little ping, but you have no idea where the pings are from. the pings were coming out. >> it tells you the altitude. >> not not the direction. >> and the speed. >> they say they don't have any idea, north, south, east west. >> someone thinks the u.s. has some kind of data that it has us looking in the indian ocean. >> the story changes and from different sources you get different things and other sources batting down, saying that's incorrect. >> they're telling us selectively, why i don't know. >> we are watching the futures closely. joining us now from new york, mike ryan, ubs strategiest. raymond james chief investment strategist. i'll start with you, mike. yesterday was a big loss, the biggest in a while. you've been in the business a

long time. these things happen. you think it's the beginning of a near-term correction or could it be something worse or is it a bump along the road? >> i don't think it's the beginning of something broad. i don't think we'll see a big pull back in markets. i think it suggests we'll see volatility in the markets. let's keep in mind, joe, we have a couple things we're working through. we are the referendum in crimea over the weekend. we have this issue about the weather related data and how much it's impacted growth in the u.s. and we have the concerns about china. these things will be chunky issues we have to work through. i think at the end the day we won't see any of these materially undermine growth. we'll tellati we're relatively -- on markets. >> i think yesterday's dive if you will, the dow dive had a lot to do with the china syndrome. there were rumors going around that looked like they confirmed

today that the chinese banks were going to curtail lending to their companies by 20%. that was the key rumor yesterday which evidently this morning has proved fact. i agree with mike, i think we're in a secular bull market. i think pullbacks are for buying and we'll be higher by year end than we are right now. >> not just the market itself. the underlying economy itself, is that also more in our own control? because we do -- all our multinationals do sell outside this country. is it enough where our 3%, you know, the one we're hoping for this year, our 3% gdp number, is that in peril from this other stuff? >> i don't think so. i think you'll get a capital expenditure cycle that will light up at the end of this year. if you talk to automobile companies they'll tell you they have put off capital investment as long as they can. the equipment is wearing out. i think you'll get a cap ex

cycle. that's below trend where you should be at this stage of a business cycle or an economic recovery. it is simple but it is sustainable. i think that's very likely the sweet spot for the equity markets. >> you have similar thinking there, mike. would you change your mix of equities to be more domestically oriented or do you just stay like you are right now and come what may in emerging markets? >> we're domestically focused. we also believe there will be a pickup in capital spending. there's been the conditions for it. low cost of capital. i think the one missing link has been that much kaing on of animal spirits. i think as you see demand, growth, recover, that kicks in the second half of the year. one of the ways we're playing it, joe, is through domestic companies. they have a cap ex angle to them, it includes industrial companies and financials.

>> gary, you have employees in crimea and in kiev as well. >> we do. we're in the social games business. we offer casino oriented games on mobile devices that compete with games like candy crush and some of the world's young best developers for mobile applications live in kiev and crimea. we have employees in both places. >> how do they find you? >> they're found through -- largely through network of entrepreneurs that begin in tel aviv. these are largely russian-speaking jewish young people who know one another through a variety of affiliations. we started in tel aviv and made the acquisition of mobile development labs in places like ukraine. >> the world is as small as your keyboard. it's not long distance phone calls. everybody is talking to each other. >> we've been in touch with our new colleagues in the crimea and ukraine, worried about whether their technology platform is available to them so they can continue their work and of

course that they're safe and in a good place. >> okay. and then we'll talk in a minute about whether you agree with the -- i saw you nodding at certain things. all right. we're wrapping? we're always wrapping. all right. all right. some guy named buffett is here. is that restaurant chain buffett? >> there he is. >> is he bringing food? is buffets different than buffett? who's that handsome, tall, strapping young fellow? is that mark hoffman, my boss. >> that is debby, warren's assistant. >> no kidding. is that cnbc -- we better get out of here. thank you, mike and thank you, jeff. when we return, the vegas economy, how will the slowdown in china impact business in the sin city? we'll talk more with caesars

entertainment ceo gary loveman. he'll give us the rundown, coming up next, and this restaurant magnet, buffett, whoever. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.

welcome back to "squawk box." checking the futures right now, if you thought it was just going to be straight down after yesterday, at least on the open we might get a bounce. it was up 40 earlier. up 23 right now. europe is still responding to our big sell-off yesterday. that's even gotten better. in russia, we check the benchmark. it is down almost 3%. that's definitely not a dog that's going to wag our tail, hopefully we're not going to trade on what happens. >> probably not. although what you saw in january, things that emerging markets quickly spread. when it looked like it was a larger reaction to the fed's potential tapering, that's when people got concerned. >> except in this case there's four shareholders, four oligarchs. china might be more of a public

market, probably. are there five guys? it depends on the day. >> exactly. >> which ones are in favor and which ones aren't. >> right. >> the las vegas strip is always under a constant makeover. the demographics of sin city are getting younger and younger. our guest host is transforming his part of the strip to attract a younger crowd as well. he's changing the skyline with the newest attraction, the wheel. gary loveman is the chairman and ceo of caesars entertainment. he joins us for the rest of the hour. great to see you. >> great to be here. >> we started off talking about how the economy is improving and what you're seeing is that people are coming back, they're willing to spend more in vegas? >> we are. we're seeing that in vegas and several other markets as well. in vegas, we've had finally, the combination of stable supply and growing demand. remember after the crisis we had all this unwanted supply arrive just when we needed it least. the industry really had to suffer through that for a while. now we have a stable supply environment. visitation is up. it is younger. the average age of the vegas

visitor dropped by five years. people are coming for a much wider variety of inducements. >> are they not necessarily coming to spend as much money in the casinos themselves? casino revenue was down. >> essentially anything other than the casino revenue has grown nicely. food and beverage, hospitality. casino gaming revenues have been relatively flat. that reflects a younger audience that's there to party, shop, hang out at the spa and the pool, do things other than gamble. >> what does that mean for your margin? if the casino revenue is flat, do you have to work harder to make it up in other areas? >> nightclubing, we have high margins. so if we find the right mix, we can sustain it effectively. >> you mentioned dan gilbert is a partner of yours in horseshoe,

cincinnati cleveland and the soon to open horseshoe baltimore. >> right. >> what do you see in those areas outside of las vegas? that's been a tough market for a lot of people. >> what we've seen in all these markets, when people visit us they spend as much as they used to, which is encouraging. the number of visits that our better customers make has dropped off a bit over the course of the last year or two. some has been attributable to awful weather. on days when it's both very cold and there's precipitation, visitation suffers like crazy. i think it's been a big contributor. i do think there's been a shift away from the number of visits our customers used to make to all sorts of other types of leisure activity. >> is it other leisure activity or things like online gaming that's now legal in places like new jersey? >> i think it's online everything. in most cases, if ohio would be an example where online gaming is not legal. i don't think it's online gaming. i do think it's online everything. the amount of hours that people,

particularly our customers that are 50 and older, are devoting to online social activity, shopping, education, whatever it may be, puts a dent in it. >> is there a hotel horseshoe cincinnati? >> we don't operate a hotel but we use the hotels that are nearby. >> can you bet on sports. >> no. sports is still limited to nevada. >> because that would be -- there's a lot going on in cincinnati sportswise. you have to get that going. >> we collaborate with the teams but you can't bet on them. >> the bookies are still in business. >> right. >> there have been analysts trying to figure out the structure of the company. caesars entertainment operating, caesars entertainment resort properties, caesar growth partners, parted owned by caesars acquisition company. >> right. >> there have been shifting of the assets and analysts have struggled to try and figure out what's happening with the company. can you explain it? >> sure. there are three component elements to czr. they include the ones you

enumera enumerated. the third is the legacy lbo entity which remains more heavily levered than we'd like it to be. that's the caesars entertainment operating company. we have been trying to make the right series of decisions to enhance the liquidity and financial health of the more heavily levered entity while supporting the growth of the less levered and more financially held companies. >> what some analysts have question, though, is whether by moving those assets you're setting it up so that caesars operating could eventually file for bankruptcy and you'd be protecting the assets elsewhere. they question whether that would hold up in court. >> that's not what we're trying to do at all. we're trying to enhance the liquidity of the entity that has the greatest leverage so we have better options to avoid bankruptcy and do the right thing to make it healthy again. >> when you look around the environment, obviously things turning a bit. where do you think you can compete and drive away from the

issues you just laid out in terms of competition coming from online, even for people who are over 50 years old, how do you do it? does it take more investing to make things exciting to bring people in? >> i think it takes investing but it takes integration of offline and online offerings. just like we see in retail and every other form of activity, travel or anything else, people want to be able to engage us online when they're not at our buildings. they want to play some games when they're waiting in line for their kids to come home from school. they may be social games. they want an interface that allows them to do that. we built the only company that offers that. it's always integrated through our rewards and electronic platforms. i really think that's the future. >> how is the online gaming working out in terms of revenue? is it profitable right now? do you get the eye balls or what happens. >> the social games that people

play largely for fun, that's a profitable business, even though a small percentage of the users pay us anything. that type of activity is not gambling. it's legal anywhere in the world. >> is that advertising based? how do you make the money. >> a small number of people pay a premium to play the game at a higher level of activity and enthusiasm. there are certain features you pay a dollar or two dollars to receive. >> who is involved with deciding if the sports book gets out of vegas? >> it's unfortunately other way around. the state governments can decide to do this. governor christie has been an advocate in doing this in new jersey. the sports league are the powers and they oppose it. >> do they think people would try to do something like --

what's his name. he's on boardwalk empire. >> i have tremendous respect for the leagues but on this point, i think they've got it wrong. they prefer these gaming activities to occur in an illegal fashion rather than having it in a legally, regulated fashion. if a guy wants to place a bet on a football game, have a pool or a bracket, he can do so legally through a regulated entity like us in nevada. for whatever reason the leagues continue they'd have it in the latter. >> pete still lives in cincinnati. we don't need him, right? my god. all these other guys with the 'roids, they might get in the hall of fame but pete can't -- never mind. >> there's legal sports betting on what they call football, on soccer. you can bet on the game real time, you can bet in the

stadium. >> do they bet on speed skating. >> i think he would. >> they bet on curling. >> they bet on curling. curling's great. we carry that here on cnbc. it's the best. >> gary is sticking around for the rest of the hour. we'll continue this conversation. okay. coming up, we'll have gm in crisis mode, more developments on the ignition recall. has the automaker playing defense. will it destroy trust with investors and consumers? as we head to break we'll look at the biggest winners and losers. warren is in the green room now. he's in the control room? he may stop off in the lavatory at some point. we will bring you that if we're told to. the way things are going, we might. there is warren in the control room.

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this gulls me. i'm not really sure why. facebook chief executive mark zuckerberg said he personally had called president obama and they took his call. what am i, chopped liver? i have some complaints about -- >> they've heard them, i'm sure. you have a three-hour platform

every morning. >> that's true. that's true. zuckerberg in his latest facebook post says when our engineers work tirelessly to improve security, we imagine we're protecting you against criminals, not our own government. i've called president obama to express my frustration over the damage the government is creating and over -- i can't ad lib here, for all of our futures. it seems like it will take a very long time for true, full reform. this is me speaking. this is my -- facebook is the one supposed to be doing all the spying so we can use the information to sell them things and make more money, not you, obama. >> you think that's how the conversation ended? >> it's about money. if i have money i can get through to obama? >> no, if you have money and influence, there are a lot of ceos are able to get in. he's worried about innovation and he's worried about jobs. >> i bet buffett can get through to him. >> can you call him? >> i can call him.

i don't know if i'd get my call through. i'd get some polite response. >> i bet you can. >> i bet he can. let's do it. we'll set him up right now. within we come back, gm in crisis mode, more developments on the ignition recall has the automaker playing defense. will it destroy any trust with investors and consumers? we'll find out. "squawk box" will be right back. i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today.

welcome back to "squawk box," everybody. let's take a look at stocks to watch. aeropostale lost 35 cents a share for the fourth quarter, 4 cents wider than analysts had expected. the company announcing private equity firm sycamore partners has taken a 5% stake. the stock down at this point 14%. ulta cosmetics forecast a current quarter profit below analyst forecasts, though. that stock is up by more than 7% this morning.

mattress firm reported quarterly profit of 40 cents a share, beating estimates by a penny. it's boosted its earnings guidance for the current fiscal year. that stock is up by 5.75%. joe? more problems for general motors, the center for auto safety, a consumer watchdog group tracked 303 deaths after air bags failed to deploy in vehicles recently recalled. phil lebeau follows the autos. he joins us now with more. you know, phil, we've already figured this out, that i guess you can do like actuarial stuff about air bags and how they save a certain amount. they went back an extrapolated, if they didn't open, this is what you might have expected would have been the mortality. it's hard to tie it to actual -- >> not really in this regard. >> really? >> the argument the center for auto safety is making, their

argument is these models may have had faulty keys and ignitions which cut the power to the engine and the electronics in the car. if you cut the electronics in the car, then the air bag does not deploy. you see the connection they're making there? they're saying you need to look at the recalled models as more than just the ignition key and look at the other impact here, in this case, the air bags not being deployed. clearly, general motors has a different viewpoint. 303 deaths as they went back and looked at the recalled models being linked to the air bags not deploying. the accidents as we mentioned, the air bags did not deploy. this is about two of the recalled models that general motors has recalled within the last month. the center for auto safety says this is an indication that general motors should be doing more, should be recalling these vehicles because of the air bags not deploying. they are saying that nhtsa, the national highway traffic safety administration which is going to be in charge of all recalls, is not seeing these defects.

we reached out to nhtsa last night and nhtsa says, look, three investigates were done of gm air bags not deploying and those investigations were inconclusive. we also reached out to general motors, the company says as knowledgeable observers know, fars, fatal accident reporting system, tracks raw data with rigorous analysis. it is pure speculation to attempt to draw any meaningful conclusions. shares of general motors over the last year, keep in mind, the link that the center for auto safety is making that the electronics in these automobiles may have been cut because of faulty keys and electronics and, therefore, the air bags did not deploy. there's the connection there. this comes a day -- go ahead, joe. >> that doesn't do the it, though. you're going back and identifying some fatalities and saying that they would not have occurred if the air bag had deployed. and that, you know -- >> joe, first of all, it's not

me making that. >> they're picking it out, doing it with a large amount of data and saying you would have expected -- >> i understand what you're saying. what general motors will also say, joe, general motors will say look at the percentage of accidents where the air bags did not deploy and compare that with other models in the same time frame and the percentage of air bags in their accidents that did not deploy. we don't have that data here. there's no way of saying, look, they deploy more often in a toyota camry, for example or a honda accord. there's no way of drawing that conclusion. that's the argument. this record comes a day after nbc ran a report yesterday. i'm not sure if you had a chance to see this from gabe gutierrez. a program engineer was testifying in a case related to the case involving the faulty keys.

did general motors choose not to make a fix in order to save money? make a business decision? here's the deposition. here's what the program engineer had to say. >> it made a business decision not to fix this problem and five months later sold her a vehicle with the problem, didn't it? >> i object to form. argument, lack of foundation. >> you can answer. >> that is what happened, yes. >> you heard him there at the end. he said that is what happened, yes. you take that tape along with what's been happening here on this recall situation over the last month, joe, and there are a lot of questions coming up about how rigorous general motors has been or failed to be when it comes to initiating recalls. >> i saw it, phil, i watched it last night and every night, gabe went to the gentleman's house. i don't know if you saw that part. >> did i see it. >> and confronted him at the house. in the report, he also said but i also thought the cars at that point were still safe.

i didn't know -- when he said they didn't necessarily recall it, he also said, but, i didn't know it was -- >> and joe, the other argument you'll hear from general motors is they put out service bulletins regarding these keys and faulty ignitions. in their opinion those service bulletins should have taken care of any problems that were out there. >> i don't get that. service bulletins should have taken care of it, what does that mean? >> they told technicians at dealerships if a car comes in, if becky is driving a cobalt, you come in for an oil change, they say you know what, becky, we're going to fix it. >> if you're telling people to fix it but not ordering a recall, i just wonder -- >> now you're getting into a debate of whether you call a full recall. >> i have a recall on my commander. i haven't taken it back in yet.

if it is a bulletin, in my mind as a consumer, that doesn't say this is dangerous, you need to get back in. they've even issued a recall with the commander. i haven't had time to book it yet. >> when is a service bulletin enough versus a recall? that's a gray area. >> we have harry in to talk about this of maeva. he's the former ceo of the president's task force. president obama's task force. hard stuff here. unfortunate for gm and anyone that was hurt what do you make of what you just heard? >> there are tragedies on multiple levels. the tragedy of nhtsa failing to deal with this for several years. they knew about it in 2007 and did not. how does general motors deal with the fallout and fixing it? there are a bunch of things they've done right, which is

bring in an outlied law firm to investigate it and dive into it quickly. marry b mary bauer has to own this. she should be focused on two things, one making clear that the product quality issues that led to this are a thing of the past but secondly gm will do anything possible to break through this bureaucracy, address the issues, deal with the fallout of it and make sure it doesn't happen again. >> mary is somebody who has the experience of gm, when she was in charge of hr there, she was really trying to get rid of a lot of the bureaucracy, to streamline things, make sure you could hear from people underneath. that would come back up. that was one of the goals she was trying to do. >> she's in a position to own it but didn't own the situation in the first place. >> it's good timing for her. >> she needs to come out publicly quickly. she hasn't done that yet, own the issue and address it. i think she's a smart person, a sympathetic person. she knows the business really

well. she can use this as a launching point to further improve upon gm's bureaucracy. >> there's been a suggestion, that because gm went through the organization, that the company wouldn't be liable. because the stuff happens before. that seems crazy to me. do you think that is something that would stand and would people be okay with gm if they tried to dodge it like that? >> there's no question that accidents that occurred before the bankruptcy filing are legacy of the old general motors. >> good luck selling that to consumers. you're telling me you're still there and you're not responsible for this? >> there's a legal issue. that's your question. there's the consumer issue of how does gm deal with it in terms of the faith of the consumer. they have to think through that. they'll have to overpay effectively to rebuild brand equity. >> i think so, too. phil has a question, too. phil? >> sure. >> from your perspective, especially when you look back on toyota, the consumer can be incredibly forgiving. in the darkest days of the unintended acceleration cases

from toyota, i'm sure you heard people saying, never going to go near a toyota again. they did take a market hit but they have most of what they lost back. do you think that will be the case with general motors, that we'll see a forgiving consumer in the end. >> i think it's certainly a possibility. if they don't handle it well, it could be worse. but if they explain this is a product quality issue that ended seven years ago when they do the right thing vis-a-vis the consumer, they can solidify share. >> that's a really good point, though. i was one of those people who said i would never go near a toyota. we've since bought a toyota ciena. >> you would be surprised. harry, i have one last question for you. you know this company well, i know it well because i'm there in detroit a lot. the biggest concern, dan akers talked about this, was getting rid of the rotten middle core,

the core that's there, it's bureaucratic, been there 25 years. i guarantee you, this is somebody who said, it's good enough, back in 2003 or 2004. how does mary barra convince people she's getting rid of the rotten middle core? >> it's the core question. we left the new board with a charge of dealing with the bureaucratic issues and that mediocrity. it still has room for improvement, obviously. the human face of these tragedies. there's a took page on the recall victims. it's very, very sad. there will be more victims when this is all said and done, the more victims that are discovered. using that human face as a rllying call to really drive the business forward and say what we do has enormous consequences. we cannot settle for anything less than a world-class effort. that can have positive effect going forward. >> you're at 303 with this, the

way phil, you're extrapolating the 303. if you get the lawyers involved with this, anybody that died in a gm, they're going to try to extrapolate this to every single fatality in a gm car over the last 15 years. >> it's the company's fault for not acting pro-actively. >> there are plenty of times where companies are walking a fine linetown a full recall. it's dangerous driving cars at 80 miles an hour. >> when in doubt, err on the side of safety. >> that would have been getter for gm and everyone involved. there is the bar that, you know how the bar works with whatever it is. >> this is one that sounds like it should have risen over them. >> not every single person, 30, 40, 50,000 people die on the roads every year. you'll have 40,000 cases after the lawyers. coming up within what celine

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still to come this morning, caesars ceo gary loveman on the gaming industry, both online and at casinos. we'll have another conversation with him. stick around, we have a special interview coming up at the top of the hour. quicken loans founder dan gilbert and berkshire hathaway ceo and chairman, warren buffett will join us. get ready for this, billion dollars if you have a perfect bracket. we'll talk everything from basketball to business. that's starting at 8:00 a.m. eastern.

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gary's been such an amazing supporter through the yeerdz. he's been an amazing team around all of us. we've had tremendous confidence in them, because they always treated us so -- like a family. >> people know who that was. that was celine deon, one of the many stellar performers in gary loveman's entertainment portfolio. you have one of those. >> we do. >> that's cool. inducted into the gaming hall of fame. >> right. >> who else?

in caesars, zack galifianakis. >> no, zack didn't make it. >> in terms of entertainers. >> rod stewart, shania twain, elton john, and the newest one is britney spears who has had a spectacular reception at planet hollywood. >> instead of the artist going on a multicity tour, the city has come to vegas. >> celine has one of the great working mom jobs in the world. she lives near us in las vegas. we come and get her at 5:30 in the afternoon, bring her in for her performance. she gets ready, performs and by 10:00 she's back home with renee and her sons. she's done a wonderful job for our guests. she's done more than 700 performances with us at caesars. >> when did they abandon that project in vegas? remember that was the top. what project was that? >> it was called echelon.

>> where is that. >> the north end of the strip. the malaysian entity ginting bought that project. >> what year was that. >> about a year and a half ago. they're commencing construction. >> what was the peak year. >> in 2009 i believe they discontinued that. >> at that point we thought vegas could never be overbuilt. we've been through this how many times? it can't be be overbuilt, it's overbuilt. >> there's onner wi er witner nr one that's on the north end. it's been abandoned. your friend, carl icahn owns it now. >> the demand has come back to where you're probably ready to -- >> please don't say that. >> there won't be ground being broken. >> while demand has improved and visitation has risen, we still have average daily room rates that are well below peak levels.

>> all hotels do. >> some of the sectors of the hotel business have done better than vegas has. we had $15 billion of new supply arrive in vegas just after the crisis. we've had a lot of absorption. >> how far below from the peak. >> in many cases 30%, 40% below. these are quite uneven depending on what's in town at any given time. >> that's when you should have called obama when he was making those comments about vegas. >> we did. senator reed did as well. we suggested that might not be the best thing for our front line employees. >> there's no bus boys or waiters or anyone hurt by saying don't go to vegas. >> if you don't have a convention, you have food servers, bartenders. >> think what you say. >> has the convention business come back fully. >> no, no, no, the convention business has come back strongly. the only thing that's affected room rates is the influx of

supply. >> what is that thing we showed? >> don't look like that and use p language like that. >> you get in a cabin. 38 people can fit in the cabin. think about this. you can go in the cabin as yourself and a friend with a group of others or rent the cabin just for your own purposes. you can have a wedding, enter into matrimony at the peak. >> the mile high club or something. >> you can get divorced. you can have a cnbc anchor party. >> tinted windows or wide open to public view. >> they're open to public view. you can see out, you can see in. you can cater it with whatever food you'd like.

>> you can ren it the yourself. >> this is vegas. what goes on in those cabins at 2:00 in the morning on saturday morning, we don't know yet. one can speculate. >> can you clean that thing? >> 2,200 people come off the wheel every hour. we think 2.5 million people will ride it. it sits back at the eastern end of our holdings at the center of the strip. this will be a magnet for visitors coming to the north and south. they'll come to the middle of my neighborhood and go to all the attractions around it. the food and beverage portion just opened and the wheel we believe will start carrying its passengers at the end of this month. >> wow. >> very exciting. >> i'm going to avoid las vegas. >> i'll ride it with you. >> we'll do a half hour interview from there. >> i'll make sure you feel comfortable. >> you'll have to peel me off of

you. >> you've effectively killed the show. thank you. >> i am afraid of heights. i don't know why. i have to be attached to the ground to be afraid. i don't care about helicopters. i even did parachutes in puerto vallarta. >> come back again soon. >> will do. when we return, quicken loans founder and cavaliers owner dan gilbert teaming up with warren buffett for march madness. they are looking for the perfect bracket. you have a billion reasons to enter. a special interview right after this.

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it's march madness on "squawk box." >> inbound, the step back for the win. he got it! >> quicken loans founder dan gilbert and billionaire warren buffett teaming up to give away a billion dollars for the perfect bracket. details, just ahead. plus, we'll be talking housing, the economy and business. plus, more revelations about gm's defective ignition

switches. the center for auto safety says more than 300 deaths are linked to that problem. details just ahead as the final hour of "squawk box" begins right now. >> welcome back. first in business worldwide, i'm joe kernen along with becky quick. andrew will return on monday. checking the futures after what we saw yesterday. up 40 earlier. i wish someone was here that could allay our fears about the stock market and short-term investing and holding for the long term. oh, dan gilbert is here. >> in our headlines this morning, the markets are coming off their biggest one-day losses since february 3rd. the dow and the s&p 500 are on pace for their biggest weekly drops in seven weeks. the nasdaq is on track for its worst week since last august.

traders are citing worries over the rising tensions in ukraine and new indications of slower economic growth in china. the center claims that 303 deaths result from air bags that failed to deploy some of the models recalled. gm says that number came from raw safety data that was not rigorously analyzed and that any conclusions drawn from it are not meaningful. and a controversial referendum in ukraine's crimea regionen is just two days away. vote willing on whether crimea should be part of russia or go back to 1992 and be more independent. there's no vote for leaving things status quo. secretary of state john kerry will be meeting with sergey lavrov today. he wants ainsurances that russia will address its concerns over ukraine through negotiation. good luck with that. march madness is here and the stakes are higher this year. it is the epic battle for the national championship in men's

college basketball. these are the teams that are in so far. they have automatic bids from winning their conference tournaments. the rest of the field will be set on sunday night. get ready, folks. quicken loans is up be the ante this year with the quicken loans billion dollar bracket challenge with yahoo! sports. quicken is offering $1 billion as a grand prize for a perfectly picked bracket. warren buffett is backing this competition with berkshire hathaway. they're the ones who have to pay off if there's a winner for this. there's also an offer of $100,000 to each of the contest top 20 most accurate brackets. also worth noting, quicken is donating $1 million to help urban youth education projects in detroit and cleveland as part of this contest. what happens if you nail all of your bracket picks and win the grand prize? you have two payment options. you get $25 million a year for 40 years or two, you can get a lump sum of $500 million right up front. enter on the quicken loans

bracket.com website. all you have to do is go through yahoo!'s fantasy sports page. you have until march 20th at 1:00 a.m. eastern time to enter. quicken loans founder and chairman dan gilbert and warren buffett, the chairman and ceo of berkshire hathaway are with us this morning to talk more about this. congratulations. you've had us buzzing about this since you've announced it. >> we're hoping somebody wins. i don't know if warren is hoping. >> of course i hope somebody wins, i'll try to sound broad-minded about it. >> we have had math professors who have been on, all kinds of people who gleaned the odds. how did you figure this out? >> if it were purely chance, each team was as likely to win as another team. it would be 2 to the 63rd. if there are coin flipping contests and you had a bracket,

heads or tails. >> quintillion. >> any math professor better have tenure because he or she is in trouble of really figuring out. t the number two seed has almost always beat the 15 seed. you have to make a calculation as to probabilities. and there's no right answer. i made a calculation, another fellow made a calculation, we quoted a price. it only took 10 or 15 minutes. >> when i heard the quintrillion, do we need insurance here? you have 15 million entries. it's 15 million. plus isn't it subjective? you can't really say, how much does the 16 really give you?

the 16 always losing to the 1, how much odds does it increase it by? >> if you give me $10 you can have the contract back. >> that's okay. we're happy with the contract. >> how much did it cost you to buy insurance? >> a lot. a lot. >> not enough. not enough. >> was it north of $10 million? >> i don't know -- i don't know the exact amount. >> i do. >> it was just somewhere in there. >> we have a picture of you that we keep showing where you're leaning your head back laughing. which is what you've been doing with what's been happening with a lot of your insurance entities lately. it's a great business. you take in premiums and most of the time things don't happen. >> then katrina comes along and we write a check for 3 billion. >> last time you were on katrina set you up for the next five years where it was relatively quiet but you were able to have nice premium increases initially. >> hurricanes have no memory. you can have another one right

after katrina. >> it's been a great business to be in? >> we actually in the united states have almost eliminated our catastrophe insurance business. we've written quite a bit over in asia. the rates came down dramatically. >> right. >> and we do not regard the exposures as having come down dramatically. so we're not writing that business. >> the rates are -- everything we hear about the incidents of things like that is the opposite of what the rates tell us. you know who i believe? i believe the rates. i know how insurance companies work. they know exactly what they're doing when they're setting prices, as you know. you're sly as a fox. it's a great business. you know exactly what you're doing. >> depends on what year you're looking at. >> you just passed carl clslim be number two in the world. >> insurance is a pretty good business to be in. >> the property casualty business has earned less on

equity than the great majority of businesses now over the last four years. >> geico is one of your great buys. >> geico is a great business. >> look at the mortgage insurance business, not such a great business. >> the way he runs it, he's done a great job in mortgage banking. plenty of people haven't. there's a lot of ways to go wrong in business. >> when you see what happens, the way it bounces around the rim and the way some shots go in that are so serendipitous. i can't believe, i guess it's pure numbers. how many people do you think will be in this? >> you want to bet against uconn women, for example, the balls bounce out and all that. >> or florida. >> usually the better teams win. >> they do. >> warren insured it for 15 million entries. you can only have one entry per person. >> 15 million. above that, if more people want to enter, we'll probably call

warren up and say how much more is the insurance? i don't think he'll squeeze us hard at that point. he'll give us a good rate. >> soft hearted warren. i should be institutionalized. >> how did you come up with the whole plan for it? >> warren came to detroit in november and we were touring him through the city and everything that's beginning on in downtown detroit. a lot of exciting things there. on the way out, he did the colombo thing. one more thing. i've been thinking about this concept of insuring a billion dollars for the tournament. would one of your companies be interested in it? i thought he was kidding at first. he wasn't kidding. i talked to jay farner at quicken loans, our chief marketing officer and president. he loved it. easiest guy in the world to do business with. no bureaucracy, committees, no long contracts. just, okay, make it happen. >> it stirred up a little bit of dust when we heard yahoo! had been interested in doing a

similar one. they're involved on this deal. >> yahoo! after we announced it, they contacted it and said they were thinking about something similar. we said let's work together on this. we're using their technology and powering it that way. we're marketing it together. >> this will be like within you do the powerball and you get them, you're ready, they're announcing the numbers. the very first number comes out -- >> i lost already. >> in the first -- >> we'll let you know after the first 32 games how many people are left. >> that will be interesting. >> that will be fun. >> how many do you expect will be left? you go from 15 million to what? we had somebody on yesterday that said he suspected there would be several hundred left. >> that's a pretty good guess. >> that was a math professor. >> nobody knows. it's so much on whether you get a florida team from last year.

>> for some reason it seems harder this year because everyone but florida has lost to a crappy team at some point. >> you would bet the number one, you'd bet they win. you'd give a lot of odds on that. >> is it harder this year, do you think? >> the more even it is, the harder. >> i say crap. i shouldn't. even the teams that aren't that good can have unbelievable nights. wake forest beat duke. we see amazing stuff. seton hall won last night, beat villanova. >> creighton beat villanova twice by a pretty good margin. >> didn't xavier beat creighton? >> yes. you want to give a minute by minute recap of the game. >> that's happening tonight again, rematch. >> they're playing again tonight. the result won't be the same tonight. >> i just want to know how you

know all this? you know every single game, who's won what? >> i don't know why either. >> we're not allowing him to enter. >> like the last few years we've done it with -- here with our tv news bracket. how many games? the first day there's 32. i'm on the edge of my seat for 32 games. i love that. i love the last three minutes. this is on and actually we take a -- i'm off next week were believe it or not. i'll be watching -- i didn't take off just for that. >> there will be quite a few probably that get the first 32. >> you're thinking the final four we may already know it, you think. >> the final four? >> would you take the four -- >> i will go in the witness protection program. >> you think wichita state is for real, too? i do. there are people still questioning. >> we used to play them quite often. >> dan, do you have a team in

this. >> michigan state. >> ohio state. >> stuff happens during the regular season. >> i took them one other year and got mad. they disappointed me. i haven't had the final team the last two years. >> they've had injuries all year, it's been challenging. >> i think they play better when this comes about. >> i do, too. >> it's hard it stay up for every game in the regular season. >> the number one seed won the last two years. kentucky won and then louisville. louisville is peaking again. we'll take a break. people are going to think this is espn. are we allowed to ask you anything about gm? >> you can't ask me anything. >> i like what's going to be on your tombstone -- you're dirty. >> tell us. >> on his?

>> wilt chamberlain's tombstone? >> yes. >> at last i sleep alone. >> he lived to be really, really, really, really -- how many reallies? >> when we come back we'll shift gears. dan is here. we have to talk to him about housing. we have much more with dan gilbert of quicken loans and warren buffett of berkshire hathaway. right now as we head to a break, check out the "squawk box" market indicator. you will see that things have turned around. we had been looking for a gain with the futures up above fair value. that's turned around and you can see red arrows now. "squawk box" will be right back. , we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason

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let's get back to our two special guests. our guests on set with us today, quicken loans founder and chairman dan gilbert and warren buffett who is the chairman and ceo of berkshire hathaway. they're joining us once again to talk more about what's going on. you two have good unique perspectives on the economy. there was a big concern about what's happening in china and ukraine. are these fears warranted? >> they're not warranted in terms of the market.

i didn't sell my farm yesterday. i wrote about it. i didn't sell my property near nyu. why should i sell my businesses. >> you're in a pot position of not necessarily needing that income. if you were a senior, if you're saving your your kid's college -- >> if you're going to use the college money in the next year or two and you have enough money for college, you probably ought to sell it. >> the headlines will not make any difference. stocks can go up and down. they always will go up and down. american business will move forward over time. >> okay. >> and the dividends will move with it. >> dan, we -- >> i just agree with him, whatever he says. >> you have a unique perspective on what's happening with housing right now. with quicken you are looking at

mortgage original nation -- originations. >> close to 50% of purchases last year midyear were cash purchases, meaning that they were investors or they were hedge funds or big funds putting money together and going after a lot of the homes that were foreclosed. the question is what percent of the housing comeback has been propped up by these institutional like investors which you never really have seen before in housing. you have individual local investors buying homes. that's always been there. you've never seen the big institutional buys of mass amounts of housing. >> you made the call several years ago that it was the best time to invest. >> best time to buy housing

ever. during the housing runup, the percentage of people living in owner-occupied homes went from 64% up to like 68% or something like that. now it has fallen back to close to 63%, i believe. you've had a reset, again, to the normal level of people who own versus rent. maybe that will swing beyond the normal level. it kind of looks that way. but in the end we'll have more households in this country and we'll have -- >> you have net new households forming at the pace of a million to 2 million, depending on what numbers you're looking at on an annual basis. when you don't have construction for a long time or very little, there's a supply an demand thing. >> how much do you think the housing market has been propped up by institutional investors. >> half maybe. >> they're not buying anymore, with they? we talk to some of them recently. >> obviously they're not buying like they were.

the next six or nine months will be interesting to see what happens without that sort of buying support there. >> warren, i've always wanted to ask you about true black swan disasters, the end of the world, can only happen once, thank god. people predicted a lot. we looked into the abyss in 2008. but lately the calls, i'm starting to hear them again from some circles, mark farber or others about total global debt. it's like 100 trillion or something. you would sell everything, i think if there was going to be another 2008 or something even worse. are we safe? did it happen already in 2008 for the foreseeable future? >> for a while. it will happen again someday. we're not close to it, remotely close to it happening now. it will happen again. it won't happen in the same way. i'm in the midst of reading the galleys of time geithner's new book, which is just sensational. it tells everything leading up

to 2008 and subsequently. it's the best i've read. and that was some period. we talked about it at the time. even at the time i wasn't strong enough in terms of what was going on. that won't happen again for a while. it will happen eventually. humans will behave in crazy ways, both on the upside and downside in the next 50 years. very unlikely they do it in the next few years. after something like 2008, once they get out of the emergency room they're a little more careful for a while. >> you could be flabbergasted if the stock markets around the world would lose 50% of their value. >> it will surprise me a lot. it will happen again but not from this level. >> if it happens from 100,000 on the dow, i won't care quite as much. >> i won't see 100,000 on the dow but you will.

i saw it cross 100 with both ways at one time. i've had four times in berkshire's history where berkshire has gone down 50%. >> you say things were worse than an economic pearl harbor based on what you read in tom geithner's galleys or based on what you've learned since then? >> a combination. certainly it brought it back to me. he tells the story candidly. it's really a good book. i found some things were going on behind the scenes that i did not know. >> would you have been more hess tan the about stepping up for ge and goldman sachs at the time? >> i would have done it. >> you would have? you would have asked for more on the preferred stock. >> i should have waited incidentally. my timing was terrible. >> you arey timing has always been terrible. >> this country will come through anything.

and it will get tested occasion occasionally. >> what's the worst thing that could have happened but didn't based on what you know from the book. >> if they hadn't -- in effect the treasury did it. if they hadn't guaranteed money market funds like that once the run started, it would have been all over. >> what does that mean? what does all over mean? >> the economy would have stopped until the fed and he everybody woke up and started realizing there was only one party in the world that could handle the deleveraging that was going on and the flight from everything. at that point it would have been a flight from everything. there was 3.5 trillion in money market funds. as geithner points out in his book, the fed became the lender of last resort to the world. they were it. they were the only game in town unfortunately, had somebody that understood the implications of that in both bernanke and

geithner. for that matter, give credit to president bush, too. >> watching geithner's book climb on amazon. whoa. zblf if that's the case, the money markets, that was like a run on the banks. if they hadn't acted at that point, would it have been too late three days later? >> that's what this book gets into very well. yes. when bernanke said to pelosi i believe it was, if you wait around for a couple more days you won't have an economy to worry about. he was right. the united states still would come back. we would come back if we had some massive attack from abroad. well, we had the world trade center and that paralyzed people for a short period of time. but the farms don't go away, the productive capacity doesn't go away, human ingenuity doesn't go away, the desire for people to live better in the future. >> will you put guards on your transponders, please?

have you been reading this stuff lately? the power grid. you own power companies. i'm sure you're thinking about it. >> we own power companies and we own a railroad. both of those are potential targets. and they're difficult because of huge size and everything to defend perfectly. >> if the grid went down for a year, warren, that's a black swan, isn't it? >> yes. >> that would be hard to come back. >> that's a black swan. >> that would be hard. would we snap back? >> we have it make sure that doesn't happen. >> we came from nothing originally. >> if we were all using bitcoin would this have been different in 2008? what do you think of that whole thing? i was at a tech conference and bitcoin was the big two syllable word everybody was talking about. just curious about your thoughts on that. >> stay away from it. it's a mirage basically. it's a method of transmitting

money. it's a very effective way of transmitting way. a check is a way of transmitting money, too. our money orders, you can transmit money by money orders. people do it. i hope bitcoin becomes a better way of doing it. you can replicate it a bunch of different ways and it will be. the idea that it has a huge intrinsic value is a joke. >> that's interesting to compare it to those things. have you thought of that? >> you're transmitting money. >> there's something the checks are drawing upon something. >> you're transmitting money. there's dollars on both ends. >> it's a ledger, right, an electronic ledger. >> it's a very fast money order anonymously. >> let me ask you both about where rates have been headed. dan, you have to have a good idea about what you think will happen. we've been surprised that we haven't seen rates push back above 3%.

in fact, after everything that happened yesterday with ukraine and china, we saw rates come back below 2.7%. what's going on? >> we've been in the mortgage business for 28 1/2 years now, believe it or not. i don't think we could drink a beer legally when we started doing this. all we heard for 29 years is inflation goes up and rate will go up. inflation over the last 25 years has been pretty steady within 100 to 150 basis points. rates have been between 3% and 9% maybe, maybe even higher than that. for me, i don't know if there's that connection or not or if it's perceived or real. i have no idea where rates are going. i tried that too many times to predict it. it is surprising, though, if somebody would have said three, four, five years ago that there be mortgage rates that went down to the high threes, they would have put you in an institution.

>> will you pay us for this next commercial? can you write us a check? what would you rather do? >> if it's for geico, maybe i will. >> what do you want to do? i don't care whether we do or not. >> they just said that in my ear. >> let's not. we're not going to. you're too important to do that. we'll get back to a lot of economics. i'm obsessed. there will be a year where a one loses to a 16. what would that do to this whole thing? no one is going to take -- >> almost everybody will take the number one seeds. >> do you think it will happen this year? >> i would bet heavily against it. >> someday it will happen. >> of course it will. >> there might be a 2 -- >> everything happens someday. if you're in the insurance business you never forget that. >> that it will. take. let's talk a little bit, guys, about what you're seeing around the country. obviously we talk about how things are improving.

we had jack welch on yesterday. warren, he echoed some of what you said. he said based on the businesses that he's watching right now, he says it's the most optimistic he's heard in about six years in terms of the outlook for this full year. does that match up with what you two are seeing right now? >> we're involved in a lot of start upbusiness startup businesses. so the startup business is hard to tell if that's a flag, a symbol for the economy. i think warren has probably invested more in businesses and gets a bigger flavor of what the economy is doing. the startups seen in detroit and elsewhere is doing fantastic. venture capitalists are doing great. there's probably more startups and businesses being created in technology than ever before and others. i'm very optimistic about the economy in the long term. i don't really know as much maybe that you do about the

short terminate of that. >> i've been reasonably bullish ever since the fall of 2009. bullish on stocks earlier, just because they fell so far. the trajectory still looks to me pretty steady. so i don't have any reason to think that 2014 will be some break-away year on the upside. but we have had a recovery that's been disurging to some people, because it has been in this 2%, 2.5% range. that's not bad. it's just that we fell so far so fast, it does not look like we came out of it very fast. everything i see in our businesses is that they're continuing to decrease at about the same trajectory as before. >> are you surprised that with

the ba the lack of capital investment that people expected -- if you would have told people there would be so much cash on balance sheets, they can't get a return on interest rates, why aren't companies and even individuals taking big capital investments? that's the part i've noticed. it seems people are way more risk averse than they have been. >> the biggest amount of cash is on the balance sheets of companies that don't need cash. if you have an extraordinarily profitable business, you know, whether it's apple or whether it's microsoft or whatever, the cash just rolls in. you don't have things to put it in. you put a lot in r & d but that gets expensed. the retained earnings really don't have a place to go in most of those companies. that's the reason they're wonderful businesses. really highly profitable business generate cash and they don't use it. >> should they be returning it to the shareholders?

>> probably. >> let me ask you guys about general motors. dan it's in your backyard in detroit. it's a big deal, too. mary barra is in a tricky position at this point. what does she need to do when you're looking at 13 years of potential knowledge of what happened. >> when you're in a situation like that, it really goes back to what i told them at solomon. four things. get it right, get it fast, get it out, get it over. but get it right first. if you get it out before you get it right -- you have to say your limitations up front as to how much you know. always tell the truth about it and you try like the dickens to find out as much as you can. a place as big as general motors an something that goes back many years, it's hard to put your arms around everything, e-mail out there and all of that. that is what you're trying to do. you've got to get it right. you don't hold them back once you get it and you get it as fast as you can. then you deal with the authorities and that can take a

long time. >> i think becky would say they've gotten it wrong. it's too late for that. >> she's just come in. >> for the company itself, you would say they should have done something long ago. >> she has a new chance to do it. >> i had a new chance at solomon. she has a new chance. when you get something like that it's a good thing to have a person that has a new chance. whoever was around there -- >> it's conflicting. >> is in trouble. >> welcome to the job. >> this has to be a huge issue you're watching with detroit, too. >> no question about it. again, i don't know all the details. we're all going to find out. i think overall the big car companies in the united states, innovation is the critical thing and unleashing, you know, the innovation to be competitive in this world. cars are technology on wheels now. we notice some of the announcements the car company makes now happen in technology

conferences versus maybe in detroit at the auto shows and the car shows. i think holding themselves outs abeing technology companies, embracing that, making sure their people are able to innovate and create and make mistakes, i think culturally that's the biggest thing. general motors is doing pretty good. the renaissance center where they are is full. to maintain competitiveness, they have to be innovative and they have to let their people innovate. >> now we are going to take a break. is that okay? >> okay. >> we really are. i still want to ask you something, though. it's not about basketball. and you, too. please stay. >> i love you, too. >> we'll be right back. >> i understand fully. >> we'll be right back with more from dan gilbert of quicken loans and warren buffett. as we head to break, take a look

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we are back with our two special guests, quicken loans founder and chairman dan gilbert and warren buffett, chairman and ceo of berkshire hathaway here with us. the question i want to ask warren, dan, it will apply to you, too. back to geithner's book. we already talked about it. i look at how we've responded to what was really frightening. we've responded really by replacing debt with central banks being able to print basically a lot of money. we've gone from 800 billion here to whatever it is. 4 trillion. >> yes. >> and normally i would think the volcker era is coming back. i get worried. a lot of people have thought that. i'm wondering how do you -- how are you okay with that?

is it in this country since the dollar is backed by what we're able to do economically as an economic force, we're so innovative and so many things are happening, can we justify how many dollars we printed and catch up with what we've done? >> people will run to dollars. >> always. no matter how many we print? >> the interesting thing about it is, that has gone from a trillion -- a little over a trillion. it hasn't gotten pumped into the economy. what you and i learned back in economics 101 how there will be a multiplier effect and all of that. if the fed started printing. >> we're not going to take it back, are we? >> it does mature. the governments i think, four or five years on average maturity.

it literally don't have to sell in order to run the balance sheet down over time. what they'll do i don't know. the interesting thing is that the banks are getting 25 -- they pay fdic insurance on that, i believe. they don't make any money on this stuff. but they haven't been able to get it out. they want to get it out. >> why haven't they been able to get it out? >> if you look at, for example, you can get figures from some of the banks as to the percentage of the total lines available that they have with companies that are being used. those figures, which you would expect to turn up a lot by now, they're way down toward the bottom. >> they're not allowed in essence to lend to small businesses like they used to be able to. it's an overreaction. you talk to any banker, you know, we just can't. the regulators are not going to allow us to get away with this, whether it's a big bank or small bank. you're seeing companies emerge

at high interest rates, much higher than traditional banks, taking the place of that. >> so that's the evidence that the regulators in washington are messing up what the fed has been trying to orchestrate by having these low rates. it's worse than washington not doing anything. washington is impeding what the fed has been trying to introduce. >> from what i hear. i've talked to large bank ceos, community bank guys, small business guys. we have an investment or two actually in a couple of these companies that actually step in and take the place of banks. so you know, that's universal. there's got to be a goldilocks, something that makes sense. >> they go for a stress test and set out a scenario and that scenario, haircuts, different things at various amounts. before they can pay dividends, before they can repurchase shares they have to come up with a plan. that plan is subject to their own stress test. last year and the year before, i don't know how they're doing it

this year, it was a yes or no thing. if you put in a plan and they didn't like it, they didn't say let's negotiate it down 10%. it was just off the table. i would tell you this, if you take the two banks i'm familiar with, wells fargo and u.s. bank, they would love to get more money out. they're not constrained that much. they are in good shape. it would be terrific news at wells if they can get another 100 million out. banks have been selling to try and get more loans. because the deposits have flowed in. the u.s. bank is the same way. that's not true of all banks. but it is true of these two big ones. >> the currencies around the world have gone up five, six-fold, whatever it is. is that good for us here? everybody did it so the dollar will still be strong? or since the whole world was so far -- living so far ahead of itself with its debt, did we play everything forward? have we already lived beyond our

means and there's a day of reckoning coming? >> there's no day of reckoning. >> we're okay. >> we're okay. >> because of technology, innovation, productivity? >> just walk out here into manhattan and it's not how it looked 200 years ago. we just have a system that really, really works. it unleashes human potential and it tonights to. right now there are millions of people in this country thinking about how to do something better tomorrow than they do today so they will live better. >> we're still worried about deflation than inflation still. is that a bigger risk. >> no you always have to worry about that when people have the power to print money. when politicians have the power to print money, of course you tried to move it to the central bank, there's a bias in terms of almost any governing body in almost any country to inflate over time.

>> but it was justified this time from what happened? >> we didn't inflate that much. it really hasn't gotten you. there were all predictions about how inflation was going to go wild and it just hasn't happened. >> do you think a good economy automatically means that inflation has to be moving up? there seems to be a connection no matter what happens. interest rates have to go up when an economy does better. is that necessarily true? >> we have the central bank now that says they'd like to see 2% a year inflation. if you -- there have been long periods in american history before 1940 where the price level has either stayed level or fallen over the period of decades that used to be the great argument, because the guys in the west, the william jennings of the world, they wanted it to inflight.

the bankers of the country were keeping that from happening. it's been relatively steady inflation since world war ii. >> the story on the front of "the wall street journal" today says there's a surge in oil shipped by rail and that's been side tracking other industries. they point directly to burlington, northern, santa fe. they say part of the problem is because of bnsf, it's shipping the crude oil from the shale region, it's created this demand but it's creating a problem with other industries that can't get their stuff shipped in time across the country. >> it is certainly true that during the winter months there's been a lot of congestion. the biggest point of congestion is in chicago. that's where everything comes together, the east and the west and the interchange. if you read the union pacifics, they told about the congestion in chicago. traffic is not floating well this year. i wouldn't say it's overwhelmingly because of the

bakken. >> they do say it was exasperated by the weather. >> it is exasperated now by the fact they want to carry the oil at lower speeds. >> did you just do it? >> i did it. exacerba exacerbated. >> we have to change that word. >> we're slowing down trains, too. because of the dangers that have been showing up. the oil has turned out to be more volatile than people think. until we get the tank car situation, everything worked out. >> one thing you should know, probably because it's gotten -- oil, crude oil is less than 4% of what we carry. at burlington northern. we carry quite a bit compared to other railroads. it's added volume, important volume. it's still 4%. we carry 200,000 cars a week. we'll have less than 8,000 of that will be crude oil. >> wow. in terms of what you see with the shipments with all the other industries, we talk about

concerns with retail, concerns with whether they're weather related 0 are not. does that show up in the shipments anywhere? >> well, on that you have to look at the intermodal figures more. grain has gotten piled up some. and that's because of difficulties on moving goods generally which may be exacerbated by the crude oil, even though it's not a huge part. it goes to that northern corridor up there. and like i say, if it gets to chicago, it's a real problem. you have to rearrange, handing off to the csx or to norfolk southern, some of the cars you'll hand off go this way, some go that way. when it becomes a mess in chicago, it's a mess. >> the refinancing activity has dropped off significantly. we hear from the big banks that are laying off people in their mortgage departments as a result. has everybody who wanted to refinance refinanced? or everybody who's able to qualify. i know there have been changes

in the regulation. >> that's a great question. there's definitely a huge part of americans who have not refinanced and have high rates. part of that is just apathy, you know, not getting around to it for whatever reason. forever. there's just a certain amount of people who sort of forget about it. but the other part, you know, which you mentioned there, there's a ton of people who qualify and made their payments. a lot of it, you had no income verification which turned out to, you know, this bad word and, you know, why do banks and why do companies do that. well, that's true for a sector of it. but there was another sector of self-employed folks for whatever reason didn't -- weren't able to show the income the way they needed to, but 50% loan to values, have a lot of cash assets in the bank, have great credit who can't refinance under today's rules. so, you get the overreaction broad brush that comes out and it's a shame. because you can still can give somebody a mortgage 95% loan to value who has just one or two

payments in the bank, has a w-2 income and qualifies. but somebody who has a 50 loan to value, tons of cash in the bank, high credit score, can't get them a loan. >> they get lost in the shuffle. >> gets lost. >> we bought a bunch of 8%, 9% fannie maes more than ten years ago and we have a few hundred million on the books we own and they only go down 10% a year. and they go to -- they do go down 20% a year and i'd like to buy more of them but they trade very infrequently because they just don't get paid down as fast as they should. >> one misconception by people. they think, okay, if i'm into a mortgage of 30 years and i've got 9 years left, my rates, call it whatever, 6%, if i refinance that means i'll pay again for 30 more years. no. we hear this still every day from people. >> right. >> that's just a shame. maybe we haven't educated them as well as we should have. you always look at the rate.

the rate difference. you can amortize it the way you want to. >> 15 years if you want. >> that's right. >> sure. we'll be back in a minute. when we return we'll be wrapping up the special hour with dan gilbert and warren buffett, and they've been talking the housing and the economy. and warren buffett will pay off if somebody wins this. there's also an offer of $100,000 to each of the contest's top 20 most accurate brackets, no matter what, somebody will win something here. you have two payment options if you win, you'll get $25 million a year for 40 years or take the lump sum payout $500 million up front. you can enter on the quicken loans bracket.com website through yahoo's fantasy sports page, you have until march 20th 1:00 a.m. eastern to enter. t

♪ playing basketball let's talk basketball and wrap things up with dan gilbert the owner of the cleveland cavaliers and berkshire's sha m chairman, warren buffett.

>> you have the blue jays on your face there. did you know it was on your face? >> yes. >> i want to make sure. tonight creighton versus xavier, who are you taking? never mind, all right. how about cincinnati/uconn tonight? >> i know who's bread i'm eating, so i'll say cincinnati. >> that's a good one. iowa state or kansas tonight? that's a tough one. >> that's a tough one. where's it being played? >> i don't know where they're playing. i think it's in kansas city. they're in kansas city. >> yeah. >> and then i went to -- arizona/colorado. >> that will be close. you'll turn that one off after the first half. >> for the tournament itself you would go with -- would you take the final four as the number one seeds right now if you were making out a bracket? >> i take creighton all the way. >> dan, do you know? >> i would take michigan state. >> definitely taking them to win everything? >> even if you were trying to win a billion dollars?

>> i just have to. i just sort of have to. >> you don't need a billion dollars. >> if dan wins a billion dollars, believe me, there will be a few guys that look into the entries. >> how do you guys make sure nobody cheats. >> that's a -- people say how do you price this thing. you price it for two things. you price it that everybody will get it right and secondly that somebody will figure out a way to beat the game. >> technology, you got hackers breaking into everything. >> absolutely. >> there's a lot of techniques you do but a lot of the stuff you get off the technology and you put in different parts of the country and you try to match them after. >> yeah. >> in other words, you're printing -- all the brackets come off onto a disk or some other hard drive, remove it. >> so that it's not connected to the internet. >> it's not connected. >> you lock it up somewhere. >> and there's two or three and they have to match. >> three of them have to match but if we get past the first 32 games and there are 200 people left, i will print out all of

their brackets and i will sleep on them. >> is it okay for a great freshman, if i were coach "k" and i recruited parker for years and he comes and plays, is this okay the way it works? you're the nba owner. >> it really is a real tough, tough question because you have the most unique, best athletes in the world who have a short window that they can earn income and this kind of income and so who -- the one side is who are we or who is the college or the pros to say to them, an adult who is 18 years old plus that they can't earn -- >> because i want to see duke in three years when he's a senior how he could be. >> i know. what can we do? >> mcdermott stayed for four years at creighton. >> why? >> because he loves creighton. >> but could you pay college athletes so they're not missing out? >> i don't personally think you can. i think it would be really troublesome personally. but the other side of it, you

know, what you said, is it good for the overall game of college, is it good for the overall game in the pros. there are people in the pros who think two or three years should be the limit. i think the owners, i don't know if they're split on it or not. that's my gut. i think the players union is definitely not extending it more than one year mandatory in college, so it's a tough question. i don't know, warren, where are you on it? >> well, you're the expert on that. but i'll give joe a trivia question now. >> uh-oh, i won't get it. >> in 1960, and now mcdermott hold x the creighton all-time scoring record. in 1960 who do you think held the all-time? >> the big "o"? >> no, this was for creighton. >> oh, for creighton. >> all-time scoring record? >> oh, my god. >> you know the name. >> i don't even know who went to creighton. >> bob gibson. >> really? >> he was the all-time scoring -- >> he went to a jeby high school? >> and then he went to play for the globetrotters for years.

>> and you are a huge st. louis cardinal fan, too. >> you bet. you bet. >> okay. we got to go. thank you. thank you. warren, thank you. great seeing you. i love your music. >> sign up for the brackets sunday night. >> send me your bracket directly. >> i will. wasted away in margaritaville, make sure you join us on monday. "squawk on the street" is next. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jame cramer who is back and david faber at the new york stock exchange. the dow and the s&p on track for their worst week in seven. this soft producer price index this morning not helping matters. the ten year is down to 262. in asia the nikkei fell 3% plus overnight and the dax had its worst week since june of