good morning. i'm michelle caruso cabrera. joe and becky are off today. the cfo of cisco, frank calderoni, win tilton, plus changing the world with oil been heir harold hamm, that is over the next three hours. >> are you ready for that? >> joe is away and the cat will if you missed mr. wonderful on shark tank on cnbc last night, you are in for a sweet play. treat. joining us now on set, kevin it's an exciting day. o'leary, co-host of shark tank, the fed is going to wrap up its chairman of the o'leary funds as two-day policy meeting today. well as tracy lunis. >> do you know what time the fed decision will come down? >> i was waiting for this. this is one of the kevin's 2:00 p.m. eastern time.

investments. welcome. welcome. are you stretching the definition of what a cup cake is, given that it is in a jar? the fomc is expected to stay on >> should a cup cake be a its current path. handheld -- >> not if you want to ship it and janet yellen's first news nationwide and keep it fresh. conference as fed chair begins >> good stuff in a jar. at 2:00 p.m. eastern time. she will likely field questions >> it is good stuff. on everything from the impact of >> a jar. >> cup cakes in a glass jar, the weather to the economy, political unrest in ukraine. where did you get this idea? i'm sure some bozo is going to >> when we started our business, we knew that they wouldn't stay ask about being the first woman fresh and they wouldn't arrive on the job. looking very nice. so my husband saw a show on canning. and he said, why don't you put the cup cakes in mason jars. and my daughter and i thought that was the dumbest idea ever. but it turned out to be a very good idea. >> du apologize to him? >> yes, many times. >> do you think that's a bozo question? >> that could happen. >> how much would we have to pay >> the tsa, are they letting him? >> who knows. all right. them go through now or not? >> do it, anyway. >> actually, in boston they are as for the markets right going through now, yes. now, futures are suggesting we'll have a positive open, but >> but there was a problem at not by much. one point. call it flat for the s&p 500 and >> they were deemed a national

security threat and not your the nasdaq. normal cup cake. the dow is up by 7 points. there was no better advertising. the ftse is lower by 15 points, >> this is exactly what i'm talking about. i'm an advocate for small cac in paris is lower by 10 and business. the german dax is higher by 21 i think we need more government points. regulation to stop them from growing. isn't that ridiculous? >> we'll talk about that in a little bit. wicked good -- the minute i saw >> go ahead, brian. >> the justice department is the name, i thought you're in expected to announce a settlement with toyota as early boston, right? >> boston, yes. as today that could cost the >> that is so new england. company over $1 billion. the deal to end a criminal probe i grew up in new england, so -- into the automaker's handling of complaints tied to unintended acceleration. so a capital four-year >> how many did you sell? investigation and would be one of the biggest fines ever imposed on an automaker. >> last year, we sold 175,000 the deal is expected to include a deferred prosecution deal cup cake jars. >> how much? which would allow toyota to >> 70 5 to 7.45. avoid criminal charges provided it meets conditions imposed by >> $7 for a cup cake. the court. this leads us to general motors, unbelievable. >> there are two in here. which is also facing a justice >> who is your biggest retailer? department investigation that >> we are. we sell online. could take years to wrap up.

nbc news now reports that gm knew about a defect in its ignition switches eight years ago. and changed the design of an >> i can buy them at the airport internal part, but never told in washington, d.c. >> no, that's not us. federal regulators for the drivers of its cars. >> we have a copycat. that's according to evidence >> this is a great example of from a recent lawsuit filed on behalf of a georgia woman who what the shark tank platform is. anybody can make a cup cake. died in a 2010 gm car crash. this business was doing maybe 15,000, 20,000 a month. in february, the automaker recalled 1.6 million vehicles >> in 2012, we sold 26,000 jars. saying the switches could be >> what are you doing a month now? turn from run to the stop position while the car is being driven. what would that do? it would shut down the car's i know what you're doing, power brakes, power steering and 300,000 a month. >> this is a shark tank factor. its air bag. gm shares not moving much now after hours. the platform itself let's however, guys, down big so far everybody in america know what the product is. and you on your own know -- year-to-date and i have a feeling that that $1 billion number that toyota just settled >> it's celebrating. for might be a precursors to gm -- >> and we're going to have bob >> above all, small business. nardelli on the show. and, you know, this is -- i want i want to hear what he has today. mary barra, the new ceo, says tracy to come on here and talk

about the challenges. she only learned about this in andrew, i know you want to text january. do you believe that? me for and i love that. >> i think i probably do. 12 confirmed deaths. but let's take my money and give >> i want to know if steve it to the government or should i give it to the tracys of the world who can actually deploy it ratner knew about this. and build more businesses i maybe we'll have her, if he knew anything about this. >> we can send steve an e-mail right now. >> this harkens back to the think we should create the department of cup cakes. grimshaw case, better known as the ford pinto studies where >> i think it's a learning experience. ford does a cost analysis if you want to do private equity suggesting it will cost us x to and investment -- fix the fuel tanks, it will cost >> i know they call you mr. wonderful, but you are the biggest hammer. us y to pay out claims to those you killed those guys last night who die in flames. with the swimsuits. they were found guilty and paid >> you know, i just speak about the truth. a huge fine. what i like about the truth is i if something similar comes out don't have to remember what i with general motors, we could said. see record -- last year, a month ago, >> if you're gm, why are you announcing that you're starting tomorrow, i don't have to do a trust right this moment? that. >> he's got a great pr guy. you're announcing the amount of money, you go big, you go home >> do you spend any money on and forget about all the lawsuits? advertising for the cup cakes? that's what i'd be doing.

and the second piece, of course, >> no, right now, none. >> because of the shark tank is whether it rose to the level factor. >> yes. of mary barra orr whether the >> we've created how many new jobs? at least 12. >> how do you hold off board knew about it. competition? washington, d.c., there is right >> that was there before the bankruptcy. at the shuttle area, you can the bankruptcy cleaned out, right? buy -- >> i can tell you how. wagner forced out by the government. >> hunting down the executive this is an incredibly difficult levels do i think it went? business to scale. and my hat will be off to anyone it's a huge organization. who can do it better than us. >> why is it so hard to scale? >> you think there were people trying to protect the mess that >> because you have a product they made? >> there's a lot of people still that's home made stay fresh. there who knew. you have to not only bake it, >> the part was $1 to replace, but now you pass it. you then have to get it ready $1. >> and you're suggesting that -- for shipping. and then we have to have -- >> not me suggesting. that's from reports that they u.p.s. is our biggest third party vendor. decided not to recall the vehicles. and you have to -- there's much that goes into it. >> you know, there's so much logic here that i think that's it is not easy. overly simplistic. is it helpful? there has to be more than that. >> amazingly helpful. if it's only $1, why would you let people die? i'm sitting here today, right? there's something more here. >> branding, advertising? >> maybe they didn't realize they were dying. >> building our logistics, this i don't know. j. crew. was the first company on shark do you wear j. crew? tank where after it aired, the >> i have tons of j. crew. website didn't blow up and every

single order that was received >> do you -- you can't? got shipped. that's never happened -- >> too tall, too wide, >> because of you? unfortunately. because you helped them in i can wear the old j. crew, but advance? >> it was my money that helped the new ones are made for guys that start because we needed a commercial kitchen. that have single slingbacks, but the team, talk about execution, this was a riding -- daughter .mother team that >> i am a j. crew guy. created a business that's scaled here's the news. up to three million. retail takeover deal settled object scene profits, thank you. between discussions between and -- >> and i'm thrilled for that. japan's fast retailing and j. my question, do you ever want to crew. get in -- they have broken down. >> andrew. >> do you want to get into the fast retailing walked away with retail business? would you actually open stores? discussions with j. crew management and private equity crumbs is out there. owners. >> there's a number of stores. tpg seen after "the wall street >> above 49 employees. journal" and others report the talks after late january. >> no, some companies spread some people said the fact that they become public was part of it. i have to imagine that i themselves out way too fast. can't -- i could never imagine i guarantee that within probably the next year, we will be selling more online than them. mickey directirexler, who ran t, >> did you get a buyout option ever working for anyone else when you signed up with kevin? again. that starts and stops the conversation for me. >> this deal created a huge unless fast retailing is going department online and on air to pay some absolutely about revenue based financing

ridiculously outside price which versus selling equity. would be almost embarrassing for >> yeah. thank you. that was fun. >> that was great. them pp >> this is called national security velvet, red velvet. them -- >> so he could start a second retailer. >> well, no, saying you would work with us for three to five >> and i like the karat cake one. years. does he want to do that? >> thank you. coming up, we've got two how old is mickey now? cnbc first 25 contenders. >> he's in spin class all the first up, black stoestone's ste time. >> your spin class? >> yes. >> which spin class is that? >> mickey drexel is in your spin schwarzman is our special guest. class? with the candles and everything? >> yeah. then lynn tilton, founder of >> i don't know. i don't do -- >> i've got madonna in my patriarch partners. then harold hamm will join us from continent resources. tinent. jazzersize class. >> used to be a lot more polished. >> the guy dresses good. i do want to say that. actually, i wear occasionally on our show -- not this, but occasionally i wear ties from j. crew. >> they put out the same skirt every year in different colors

and i can buy it online with the same size. i don't have to try it on. >> green or orange. >> exactly. markets in china are dropping after the country's central bank denied that it was in talks with another company facing bankruptcy. eunice yoon joins us now from beijing with the story. yet another topping to default, eunice. holy smokes. >> yeah. and that's what a lot of investors thought. that's one of the reasons why we saw the markets rattle. because of a property developer. let me give you guys the details about it. the property developer is a small one. it's from a city in eastern china. the company borrowed about $400 million from banks and borrowed more money from individual investors. now it's saying it can't pay the money back. now, in a different time, different place, probably this situation wouldn't get a lot of attention. but because of the fears about where china is going, the health

of the financial sector, the fact that china saw its first ever corporate default, there is a lot of focus on this company. the difference between the one that defaulted before and this case is that this is in the real estate market. and the real estate sector here is so important to the overall economy. so there are a lot of questions about whether or not we, as the no two people have the same financial goals. government starts to reign in more of its credit, as the pnc investments works with you to understand yours housing prices start to soften and helps plan for your retirement. as they already have been, what talk to a pnc investments financial advisor today. kind of impact is that going to have on the property sectors ♪ here? will we see more default and will we see a greater impact on the overall economy? in a we believe outshining the competition tomorrow so these questions are being raised right now and one of the requires challenging your business inside and out today. reasons why we saw a lot of attention on this case. now, the peoples bank of china, at cognizant, we help forward-looking companies run better the central bank, has come out and run different - and said that they are not in emergency talks for a bailout. to give your customers every reason to keep looking for you. even though there were reports so if you're ready to see opportunities before that they were involved. and see them through, so we're going to see how that we say: let's get to work. all plays out, but that would because the future belongs to those who challenge the present.

raise a lot of questions about moral hazard. which you guys have been talking about that for quite some time. >> it's super important stuff, eunice, but we all wait to see how the ripple effect is going to impact that market and the global markets. europe for china. thank you. as the world is still buzzing about russia president vladimir putin reclaiming crimea, putin took the opportunity to shock the united states. a group of soldiers, in addition to this, opened fire while storming a ukrainian military sight near ukraine's capital killing a ukrainian soldier. in washington, the white house is handing out investment advice when it comes to russia. in a rare move, the white house suggested investors avoided white house stocks. >> i wouldn't if i were you invest in russian equities right welcome back to "squawk now. box." i think the -- unless you're i'm andrew ross sorkin along going short. with michelle caruso cabrera. >> unless you're going short. that's the white house pretty see how the market is setting

secretary. you itself up. >> knew peter lynch, right. the dow is up about 22 points straight from the white house. >> do you think anybody in the higher. the nasdaq up 4 points higher room actually understood what an equity was? and the s&p close to 2 points higher. brian. >> i know. i'm swallowing the cup cake. it was delicious. oh, my gosh. >> i don't think they should be doing this. >> no. fedex shares under pressure. i think it's a screaming bond this is not delicious. the company reporting fiscal third quarter profit of a buck signal. >> russian markets have done well the last couple of days and 23 a share. folks, that was 22 cents below jay carney should know, anybody estimates. should snknow, that your loss i revenue also shy of consensus. more importantly, the full year on the short thyme side of potentially unmrimted. forecast was cut. fedex citing, what else? the impact of severe weather winter. we're watching automaker toyota, >> the question is, is that is in the unlimited sanction the justice department expected category. to announce a settlement of more than $1 billion with the company one of you were on the show this related to those unintended week because we were talking about it -- acceleration cases from a few >> that would be me. years ago. toyota is expected to avoid >> that would be you. >> might have left a mark. criminal prosecution as part of >> i think you might have left the deal. and jp morgan chase will this mark. we were talking about the issue announce the sale of its of what happened prior to the physical commodities unit later financial crisis. >> the default. on this morning. kate kelly reports the sale to i don't know if you saw this, swiss trading firm mark kuria michelle, hank paulson will be worth $3 the.5 billion.

apparently in a bbc documentary guys, marcuria was founded by edit that never made it to a piece of a documentary came out two commodities traders from and said, oh, by the way, when i was treasury secretary, a senior goldman sachs. they do hundreds of millions dollars in revenue. official said russia had called this is one of those glencore up china and basically said, like swiss-based super secret but incredibly powerful and hey, let's get together and wealthy trading firms. short fannie mae and freddie i love that. super secret incredibly power mac. >> that was in paulson's book. trading firms. >> that would really help >> and because of new regulations, they have to unload destroy the u.s. economy. this things because of all of >> was that in paulson's book or the -- >> yeah. apparently masters who formerly ran that division will not be in your -- >> it was later in paulson's going with them. >> this is a dodd frank -- no, a book. volcker rule option, right? >> so here, to be on tv, on the >> exactly. record saying this makes no unloading their be group, sense. >> and he also risks looking everything. >> by the way, quickly on that, silly and dumb because, to me, not to change topics, a buddy of that's a screaming buy signal mine works for a big bank, that jay carney is telling you whatever, prime brokers not to buy the russian market. division, saying that because of some of the new rules of that market is down. volcker, one of the unintended >> but what does it say to consequences might be stocks middle america, the folks who continue to go up. are not investors? why? because divisions may have a does it say anything? >> no. harder time shorting equities >> no.

>> something like one in five because prime brokerage americans can't identify their own state on a map unless the divisions are going to get squeezed, makes it harder to borrow shares, thus the cost of name is on the map? borrow goes up. so i'm not sure crimea will be thus the unintended consequence of the volcker rule maybe to see stock prices go up. >> just as a reaction to the high on the gheography desk stock price of what could board. ultimately happen. >> i'm not sure economic >> is it harder to short sanctions will be that painful to them. something than -- it's just like a red line to >> and i can tell you again, make these threats about the small companies like mine russian stock market and what's accelerate. some of the others that had going to happen. >> do you think most of america checking accounts and so forth cares about what's going on in with these large banks also were -- got a letter, crimea? >> no. not at all. termination, you've got to move. because they can't -- >> too small. >> well, we can't have any involvement. we don't want to be associated with investments and things that we don't have disability to. so boom, you had -- you know, you just had to start all over again, 30-day notice. >> okay. i want to direct us to take a quick look at apple shares this morning. >> remember sting had a hit song the former "wall street journal" tech reporter has a new book out called "i hope the russians love on apple. their children, too." apple after steve jobs, a book, they don't believe it, but -- >> your point is well taken.

and right after that, our own the reality, too, is what do becky quick got an exclusive they call it on the street? statement from tim cook responding to the book. flexing. he told her, quote, this they want to show they're still relevant. nonsense belongs in some of the their economy is in shambles. other books i've read about i was in sochi. apple. it fails to capture apple, steve when i left my hotel in sochi, it was raining and the woman or anyone else in the company. apple has over 85,000 employees behind the counter looked at me. that come to work each day to do we were chatting. their best work to create the and i said thank you very much world's best products, to put for your hospitality, it was their mark in the universe and leave it better than when they very nice. found it. this has been the heart of apple and she said, maybe putin will make it stop raining. from day one and will remain at and i'm thinking, she is being the heart of apple. i'm confident about our future. we've always had many doubters sarcastic but there's more than in our history that only make us that. he is the only one that runs stroker. in the meantime, our next guest that country. you can get the nationalistic is a private equity power feel. >> one of the services reported player. joining us now is steve on monday that behind closed doors, one of the senior schwarzman of blackstone group. government officials involved he is a conturned of the cnbc's with the economy say they are potentially on the verge of first 25 leaders, icons and crisis because of the capital hike that they've been saying rebels. jeff sonnenfeld is joining us, and an economy that is so dependent on oil. as well. do you want to be a rebel, >> let's not forget, russia has steve, or are you an icon? defaulted on its debt how should we refer to you?

>> appeared rue, that is more obligations in our looimt. former wall street tech your characterizations. i'm out there day-to-day trying to help build a really good reporter, a new book on apple is company and do well for our called "haunted empire, apple investors. >> i'm going to stick with after steve jobs" and it was rebel, then. let's talk about housing. released today. blackstone has been one of the our very own becky quick got a biggest buyers of housing in recent years. but recently, jonathan greg, who statement responding to the book. he told her, quote, this works with you as the head of nonsense belongs with some of the real estate group has the other books i've read about suggested you guys are going to start slowing down your apple. it fails to capture apple, steve purchases. and i wanted to understand how that came to be and where you think the housing market is as a or anybody else in the company. people come to work each day to result. >> well, the housing market has do their best way, to create done really well, as you know. we've bought somewhere between 7 their best products, to put their markets in the universe and leave it better than they found it. and $8 billion worth of houses. this will be the heart of apple this is on a house by house from day one. i'm very confident about our basis without really buying big future. we've always had many doubters packages of them. in our history. and we've experienced very big it will only make us stronger which leads me to wonders what increases in value of the in the world is he talking houses. we caught the bottom, if you will. and our objective of doing this

about? >> the story gave me me no idea. process is really to make money for our investors and we think a lot of the big pop in housing has gone out, for example, in what i don't understand and i the markets where we purchased, will say this to tim, why did he houses went up over 20% in one provide it? >> by providing the statement, year. tim, most people who were never we think that the returns are probably going to read this book are now going to run out and buy more likely to be somewhere this book. between 5% and 10%. i'm not clear what is in this closer to 5%, probably. book that would -- and that's just great. >> that's my point. i don't understand why you come but it doesn't justify us buying out with that gigantic harshly worded statement. at the same rate. and besides, for us an exposure now i want to read the book. in the seven-day billion dollar i have no clue -- i didn't even know this book existed. range is big enough. >> but now it's on my radar screen. >> steve, there's been an argument made, and i don't know where you stand on it, but so now you're interested. because of firms like blackstone but apple has always done a and others that really went, you pretty good job of pr. >> there is nobody in the trunk know, right into the housing of my car. market perhaps at the bottom, why would you say that? but as a result that you have coming up, a special edition ended up -- i don't want to say of the executive edge this artificially keeping prices morning. higher, but prices have gone yale idea's jeff sonnenfeld, higher in part because of the interest from firms like yours.

if you take your foot off the pedal, what do you think happens to those prices? stanley's ceo and any impact? >> i think it has virtually no impact. firms like ours, in the scale of huntington-engles. we'll talk about how they view the housing market, are, i think, less than 1%. the economy from the semesteras and it may be even lower than that. lines to the consumer. ♪ so we really have had no real impact on the market, may have had a minor impact on individual local market, but very, very small. and so we're in effect a bit player in a massive, massive market. and i think the laws of supply and demand really drive housing. in effect, for five or six [ male announcer ] how could switchgrass in argentina, years, we've way underbuilt the change engineering in dubai, amount of houses that are needed in the united states. aluminum production in south africa, our population keeps growing. and you're going to have and the aerospace industry in the u.s.? increases in house building and at t. rowe price, we understand the connections you're also going to have a of a complex, global economy. continued increase in house prices, even if interest rates

it's just one reason over 75% of our mutual funds go up a little bit. beat their 10-year lipper average. one interesting fact, andrew, is t. rowe price. invest with confidence. request a prospectus or summary prospectus we've studied historically in with investment information, risks, fees and expenses that i guess it's 25 of the last to read and consider carefully before investing. 26 times interest rates have gone up. housing prices have gone up that same year, as well. which is a little counter intuitive. but it just shows that when interest rates go up, it's usually because an economy is stronger and when an economy is stronger, assets like houses tend to go up very strongly. >> let's talk a little deal making. there's been news this morning that you're planning on raising your bid and then i want to talk a little bit more about the deal market. how high will you go? >> well, we can't really talk about gates. it's one of those things, you always ask these questions of can you please tell me inside information. >> i know. but we're on the air. >> when you say anything on cnbc, by the way, it totally

fulfills regulation and full disclosure, so go for it. >> we always obey the laws and as much as i'd like to share with you what we're doing, apparently this is not the moment. >> okay. well, i thought i'd try. in toerchls being a buyer, you recently bought a security company called actiban. i don't know if you would say you were a net seller, but there was a lot of selling going on broadly in private equity. there hasn't been the huge types of transactions that i think people expected. what does 2014 look like to you? >> 2014 has been surprisingly active. you know, our number of deals we're looking at is way up. and part of that is because prices are higher so there's some inherent caution that needs to go when you all of a sudden have more people wanting to sell things. on our company purchase of welcome back to "squawk

box." we've got yale university hosted acuvan, this is a company that their sixth annual yale theo will be accelerating the growth caucus in washington, d.c. this week. in terms of the cyber security. we've got a special round table with us this morning to share one thing that is absolutely stunning, i'm down here in washington for two purposes, one some of the key take aways. the seo summit and the business tell us what hot topic they have round table. been buzzing about. the senior associate dean for at the business round table, executive programs at yale and a which is a group of the largest cnbc contributor, john lundgren. companies in the country, we had a briefing by one of the mike header is the president and government agencies on cyber security. ceo of huntington-engles. and i was on a smaller group good morning to you twice. >> good morning. talking about this. >> jeff, why don't we start with you, if we can, to sort of set virtually every major company in the scene. i've been to many of your ceo the united states has been summits, all of which are penetrated from a cyber security traditionally off the record. perspective. if you can help us tease a little bit out of what came out of the dinner in terms of what the buzz is without necessarily some of the large companies that giving away the whole store. >> well, you know, it's do credit cards has a specialty have over 100,000 attempted interesting that particularly penetrations a day. with the guys we have with us this morning, andrew, is that if this is a frightening concept. we were doing this discussion on

"squawk box" a dozen years ago, and most of the people are not we would be all sort of aware except when it pops out on fascinated by the new, new some type of retail purchasing thing. we would be talking about lycos, geocitys, taking a look at snap, etoys, whatever, they're all going. problem. this is one of the major issues. netscape. we have with us companies, one i talked with the head of a of them are 128 years old, company the other day who told another one is 170 years old. me they are spending enormous amounts of money and time. with these proud legacies, being in this industry focusing they're able to dust themselves off and reformulate themselves. as we'll talk about, we have a on these problems at a chance a little bit later. reasonable price, a little higher than we normally do, but some interesting time frame the growth in this industry is issues and looking at the government people, we don't see going to be substantial. things quite the same way. we're looking at how we have to deal with building a business >> jeff, you're in washington for a longer term future in the and the big issue is what midst of a lot of the volatility regulations are going to both in the global markets, but ultimately look like, just based also in congress right across the street from us. on some of the stuff that you sent over and some of the so there's a lot of optimism. a shocking amount of optimism as conversations we had earlier in the morning, it sounds like the issues in washington are taking there's a sense that the budget less of a -- you know, an import process is going better this in all of this. year. we had sylvia matthews bur well, what becomes, then, the big issue if it's not washington? who is the new head of omb. >> well, yeah, a lot of the we have the secretary of transportation with us. history between either both sides of the i'll or business the ceos and the congressional

leaders have a surprising amount, the sense that we're not government issue is a going to see any budget, any partnership, especially at local government shutdowns any more, levels. some of the great concerns had we're not going to be sending to do with the uncertainty and, troops into the ukraine. sorry, michelle, if you're steve, you wanted to comment on worried about that one happening. but there's a good sense that this. with the ukraine situation, we the company is on a track. were surprised at the number of >> what were the other big ceos that were saying that they are disinvesting or staying away issues? i'm curious, traditionally, i've from the cis nations and a attend over the years and one of number are just backing off of the big issues that always comes emerging markets. i know, steve, you've had a up is activism. is that something that's been banner year, of course, at black raised this year? >> do you want me to take that, andrew? >> sure. stone. i'm sure the chinese investors >> actually, it didn't come up at all. it's certainly the topic du jour are thrilled. yet still there were some implications for the ukraine situation and just now every company in the room had it. of most companies. but in the past 3 1/2 hours, it's something that wasn't but even on the lng issue, i mentioned. it's something we're aware of don't know if you want to and it isn't always necessarily comment on how it would affect bad. black stone at all, the but honest answer, it didn't come up. >> which is kind of surprising, opportunities, because we can't andrew. it's a good question to raise. if you're with us in june, i'll sell oil. >> blackstone, we are the assure you of a mix that's largest owner of the only lng there, these companies, perhaps, exporter in the united states. because of strong performance, and is he building out that

but also just a particular facility with our partners at chemistry or frankly the issues, the headlines right now are so sheneer. in terms of a brooder issue, the concerning in the ukraine. emerging markets haven't performed well over the that's taken our attention away from some of your friends in the neighborhood up there in new relatively near term. currencies have gotten weaker. york. >> i know what you guys are and stock markets have gotten talking about, the malaysian plane. that's the only thing everything is talking about. down. >> good morning, everybody. >> would you invest in russia? brian sullivan. >> well, i think russia has been how much conversation is there an area that is very around russia? we were just discussing around this table whether or not this interesting. there are certain companies that is on the typical american's have done very well. >> but would you, considering the situation and the issues of radar. >> everybody in the room had implications for this. transparency and governance and we had the head of the everything else there, is that where you want bother to focus trans-canada pipeline. attention? >> we've looked periodically at the big implications there. investing in russia. we were looking at what we can it's been a pretty hard place do to encourage and raise for private equity firms. exports of l&g. we're not legally allowed to the bearings people have done sell our oil. very well, bearing captain. there's a widespread issue about ppg has had a good success with we should be looking into that. one of the retailers. but whether or not there is -- some of the people are quite

worried about doing business in the cis nations, not to name we've looked, but haven't found some names, but some big and anything at this point for prominent people were saying we reasons that have to do with won't do business. foreign corrupt practices act, >> mike, obviously, you build which is a law that we're some of the most spectacular and subject to and, you know, are large warships in the world. very mindful of. >> so you do have issues with do you think -- there's really a the governsance? defense contractor in many ways >> and, michelle, a lot of as well as a manufacturer. do you feel like this is a reignition of the cold war? >> well, i'm not sure that you companies didn't want to do business with the same level of would go so far as to say this starts the cold war again. intensity with russia and especially with the cis nations. but i think what was interesting >> from russia to china, how about the discussion last night was we had two discussions. about the issue with china? one was about building a better >> steve, it's brian sullivan. bridge with the government, the u.s. government, and then we had i wanted to ask you about china. this discussion about international relations. we wanted to talk about your and i kind of walked away from investments, the university in that thinking that both of china. you're doing good work. those -- in both of those cases, we've forgotten how to play the long game. how concerned are you right now the budget process is kind of an about china? >> china is a fascinating place. annual process with a lot of drama around it. but we build platforms in our this is the second largest business that take the -- you know, eight to ten years the economy in the world. design and eight years to build and i was reading the insurance and they last for 50 years.

in the paper this morning about and we find ourselves with the concern one company has crises overseas without ships or defaulted and perhaps there would be a regional real estate without capability to respond to it partly because maybe we developer that might default or didn't play the long game probably should default. diplomatically as well. but when these crises happen, you have to go with what you've got. we don't have eight years to think about how this would be build a ship to respond. nonnews anyplace else in the world. and i think it's normal to expect a certain legal of so i kind of walked out of there default or failure in an economy last night thinking that the nation needs to try to figure of that size. out how to play the long game again, whether it's inside of when president xi took over his our own government or position in the government over diplomatically in foreign a year ago, you announced that policy. >> so their case in point, since he thought growth would go down a bit and that that wasn't a we're just here among friends, we don't name names, we had a tragedy. chance to kind of update a little bit right. what was your message, grover norquist? >> it was a beautiful take away. >> the discussion is about sequestration. and the point that i wanted to make was that -- and dr. ash >> i don't think a default of

one company represents -- >> i know but that's not the spirit of my question. carter was there, as well. the spirit of my question is >> the secretary of defense, they are finally changing the way they do things, it's yeah. >> you have to think your way different, there will be implications and how worried are through that. you can't air drop that in and you about them? in i'm not enormously worried say, beginning today, we're about that. these are people who have been going to build 90% of the next pretty good at managing their ship. that is a long -- economy. they don't have a convertible >> nobody really believes that currency. so they're bound to be excesses would happen. as the money that's in the i think that violates what -- country goes into different investment classes. >> no, but he said they lost $1 billion on a given project and there will be dislocation. because they've got unfunded in the middle of it. for us as investors at it's a real issue. that's a bad day. you lose $11 billion on a blackstone, we're now putting commitment. money into chinese real estate, particularly in cities like >> the whole issue is not about shanghai, which are growing at 16% a year. whether the funding level is appropriate or not, but the mechanism for setting and developers throughout the priorities. and that's the expectation, that country are being put under real pressure, much the way you say, it was arbitrary. michelle. >> jeff, real quick, any and, you know, what do they say? conversation about privacy one person's tragedy is another person's comedy. concerns sort of in an edward snowden deal?

and so i think that was shakespeare. "the washington post" reported that the government is now able so we're seeing people under to record all conversations for 30 days, almost like a wayback real financial pressure right machine where they can go back and listen physically to the now where we think we can add money to that company and help recordings for up to 30 days of foreign conversationes. it or we can buy that asset at a much different valuation and have a very safe investment and prospects. >> well, actually, we did come >> steve schwarzman, that you up with -- mark lautenberg said can for joining us. i have a million more questions for you. i hope we get to talk soon again on the show. in this case, the issue is track jeff, you'll be sticking around. we will come back to you soon. our planes, not our people. coming up, self-made billionaire lynn tilton, always but another person and the outspoken. coming up on "squawk box." current second secretary are stick around. aflac. complaining, we still have a terrible air control and avio c avionics system out there. >> and it's disrupted by -- who know everything else. >> we have to leave the conversation here. jeff, john, mike, thank you for this. jeff is returning at 6:50 a.m.

eastern time. he also has the ceo of cardinal health care with him. when we come back here on "squawk box," the focus will be squarely on the federal reserve. will janet yellen lock the vote during her first news conference as fed chair? which by the way starts at 2:00 eastern time. we're going to kick off that discussion on "squawk box," coming up next. our guest will be bob nardelli. we'll get his thoughts on the consumer and much more. before we head to break, yesterday's winners & losers. we're back after this. ♪ aflac, aflac, aflac! ♪ [ both sigh ] ♪ ugh! ♪ you told me he was good, dude. yeah he stinks at golf. but he was great at getting my claim paid fast. how fast? these days, everything your business does mine got paid in 4 days. wow. that's awesome. is that legal? big fat no.

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welcome back, everybody, and good morning. coming up here on "squawk box," lynn tilton, self-made billionaire and cnbc's first 25 contentant will join us. then we have harold hamm, he'll talk about oil production, keystone pipeline and whatever else. "squawk box" will be right back. .

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good morning. andrew ross sorkin along with michelle caruso cabrera and brian sullivan. toyota is expected to announce a $1 billion settlement with the justice department today. the automaker expects to avoid prosecution. also, janet yellen and the

federal reserve in the spotlight today. the fed concluded yellen's first meig as fed chair with a policy statement coming at 2:00 p.m. eastern. brian will be on the air. that will be followed by yellen's news conference a half hour later. the fed expected to cut its monthly bond buying by another $10 billion. and while investors await that fed statement, they have a few economic reports to consider, as well. we're going to be getting a weekly look at mortgage applications from the mortgage bankers associations. the commerce department, they're out with a four quarter current account deficit coming at 8:30 eastern time. and at 10:30 eastern, we've got the energy department issuing its weekly assessment of oil and gasoline inventories. let's get a check on the markets this morning. the futures right now are our next guest is a private suggesting a flat open. dow jones industry would open equity mogul among few of the higher by roughly 17 points billionaires in the country. joining us now is lynn tilton, higher. across europe, russia is higher today. and still with us is jeff the ftse 100 is lower by 3 sonnenfeld from the yale school of management. lady and gentleman, good to see

points. cac is flat and germany's dax is you. lynn, always great to have you higher by 33 points. back. >> thank you. >> tell us about the private in asia, nikkei higher by 51 equity landscape at this point. there's so much competition out points. there. are you finding you're able to hang seng lower by 15 and get deals done at a price you're willing to do? >> well, you know, i'm doing shanghai lower by 3.5 points. more building than buying these wti is at $99.55 per barrel. days. you happen, with 75 companies, brent is at $106.12. i'm spending most of my time just trying to build value and let's show you what's going on put things back out into the with the ten-year yield, 2.669%, world so at 70 i can retire. just below 2.7%. >> and how is that going at this and the dollar across the board point? is this economy helping you out is mixed. or hurting you? 1.66 for the pound. the euro is going to cost 1.39 health care reform, is that and you'll get 101 yen for every making things more difficult? >> i'll tell you, health care reform has made things a lot dollar. >> and investors are focused on more expensive. and you know i buy companies when they're left for dead and the fed statement today. have to rebuild them. so every penny counts. and, you know, across the board, joining us -- there you go. thank you. i like the "squawk box" team. health care has gone up for you guys are so good to us. every company and that's a big issue for me. joining us now on set here are some squawkers. i also think that there's still michelle gerard and dan vuru, the populous of the permanently unemployed. we have so many people who really aren't working and i chief investment officer. think you're seeing that in guys, thank you so much for retail sales. so i think the economy itself is

getting up with us. michelle, you're looking spry. actually facing head whippeds. do you expect any changes from janet yellen today? >> well, i'll tell you, we've a that is difficult for us. for me, everything is about been talking about it. the surprise would be in the reinvention. sense of exactly what they do in everybody wants products that are sexy and wow and it's really terms of changing forward about changing everything we do. guidance. we know they're going to make some changes or we certainly technology is the lead and you have to bring it in to expect they're going to make some changes. but what exactly do they do? everything you do. for me, it's all about building whether or not they take out the value across companies. >> a big part of your story is how you've reinvented every one 6.5% unemployment rate, at 6.7%, of those businesses. it's becoming irrelevant. from the new technologies you do they take it out or do what have in the helicopter that was left for dead or taper mills the bank of england did, leave it in but talk about other that are creating jet fuel or indicators they'll be watching. whatever else you dedesign, so these kinds of changes will every one of them from stem to stern. i think your automotive be important for the fed now business, they were losing 30 moving to the next step. million and year and you're up 150 a year now? now what guidance do they give? >> yeah. it's been a big turn. that's what the markets will be a lot of that has been the looking for. >> i think that's right. automotive industry has helped. i think one thing about yellen but there, too, every product and her predecessor, they're needs to change. really, we're no longer a going to keep the stimulus in mechanical parts company but a mega tronnic parts company which

place for much longer than the market thinks they are. is the infusion of software and because i think the fear is taking it away too quickly. i mean, these guys are electronics into every mechanical part. i think when you buy companies historians from the depression that are left for dead, it's and the echo depression that back baus they lack innovation and the only way to re-ignite is occurred in the late 30s. i think keeping the stimulus in through innovation. for me, everything is a constant place for longer and given the amount of slack in the labor scramble of trying to bring market, despite what the unemployment rate might look technology and design into every like, we all know that there's a product, every process. lot more slack. >> so do you believe this rally >> michelle, there's more than is fed induced? 250,000 jobs in the u.s. that if that's good for stocks? wouldn't be there if not for you should i read that? and you're bringing in a couple more. >> we love job creators. >> i didn't say it was fed induced. i think you're at the very early bob nardelli has a question for portion of the economy becoming you. >> congratulation owes all your success. you talked about the economy and self-absorbing. jeff has talked about the year-to-date, the russlity 2000 plethora of businesses that you're in from rand mcnally maps continues to lead. to cosmetics. >> so a fed that is dovish we talked earlier about apple relative to either you innovate sounds even better for stocks? >> those are indicative of or evaporate. it's one of the toughest things domestic demand improving. to install into the culture of a that's the story that doesn't company. how do you do it?

get told enough, i don't think. what do you do to make innovation a cornerstone of success? >> well, i think, you know, it starts by bringing -- you know, getting people excited and >> we've had a tremendous rally. seeing the success. there's more to come? so a lot of times you have to -- >> i think so. to an organization. i think the weather needs to not but we built like this major be a factor. i think the economy should stand technology platform where we go on these -- to all our chief technology >> where do you think -- officers working together. and i think it's when you see that taste of success, then you can drive everybody forward. weather, weather. >> we got a little bit of a but it's very hard .sometimes you have to change out the people. preview when she testified you know, you start the before congress. inspiration and aspiration. i think they'll acknowledge that and certain people jump on the there's been some slowing in the economy, but it's not clear how bandwagon and others will try to hold back. much weather has played into the and sometimes, unfortunately, you've got to change the culture factor. >> do we hear anything about and change the people. russia, ukraine, china, but it really is survival of the adapter now, not survival of the anything? >> i don't think. fittest any more. >> if she gets a question, how if you don't change, you will does she hans? die. especially my company. if we do not innovate, if we do >> i think she'll suggest the not change our product, we have fed is monitoring all no chance to the future. and for me, so many of my conditions, but that's not -- companies are over 100 years

old. it would be sad to lose that what i care about is i want how american history. so we're really running on a long how she communicates. treadmill. >> didn't you sell some -- to chrysler? >> well, and with global bernanke, a little more clear automotive systems, yes. >> what would you like to negotiate with, bob? >> she was tough. she drives a hard bargain, but we enjoyed working with her, for than fregreenspan. sure. >> it's great to see you. >> she's mid transparency. >> she headed up the committee on communications and i think >> she's the only one in the that she -- >> that's not saying much. room that scared them, right? >> that's true, but the fed has >> hey, that was great. come a long ways in terms of thank you, lynn. it was great having you on. being transparent and trying to >> thanks, guys. be clear. coming up, a very big day chairman bernanke moved us in for janet yellen as she gets that direction and i think she's ready to face questions about going to continue along those lines. >> do we have -- and i talked to fed policy. what will the fed chair have to some twice. i had a drink with some guys who say today to surprise you? we'll discuss it. we'll discuss . (announcer) scottrade knows our clients trade discussed the idea of maybe the fed being too transparent. why are they overcommunicating?

>> we are saying, it would be better if the fed said less rather than more. and invest their own way. they're moving into a position where fed is moving. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. >> if they paint themselves in a corner, what they do is quite their quick trade bar lets my account follow me online so i can react in real-time. dynamic. plus, my local scottrade office is there to help. >> the bigger issue long-term, because they know i don't trade like everybody. we've been basically a 30-year i trade like me. rally in bonds, okay? i'm with scottrade. when i came into the business in (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. 1983, the ten-year was at double digits. >> the single piece of advice i've gotten from everybody, who says whatever you do, don't buy the -- take 6%, take 5%, take 4%. >> that's right. here is the point. there's a whole generation of investors who have never experienced a bear market in bonds. sustainable bear market in bonds. a lot of folks have had a lot of

pain in the stock market. there's a lot of warts on people's backs from a lot of volatility there. i wonder what happens when we go through that period of interest rates like five or six years? >> i'll tell you what, i know nobody else seems to be hitting on it. inflation has literally not been a subject of conversation for years. coffee is up 80%. wheat, soybeans, hogs, cattle, everything in your grocery store is up in price. oil is still at $100 a barrel. owner's equivalent, all your flat tv prices have come down. but -- >> on the food front, steve liesman was on two years ago and he said it's a function of. if you're janet yellen, you can't make it rain. >> you can't make it rain. who cares? what i'm saying is could the fed get behind the eight ball on inflation? if inflation starts to pick up

this rapidly -- >> to your point, it's wage inflation. i just don't see that -- there is slack everywhere. . think about the super cycle of commodities that's likely over. that's been a headwind for many companies that use those products and hopefully that is going to become a tailwind. >> you say i'm wrong nicer than anybody and i appreciate that. >> anything to make you look good. >> ladies and gentlemen, thanks for joining us. welcome back to "squawk when we return, disney giving pixar and star wars fans box." oracle missed estimates by two cents. a few big pieces of information results are sparking some investor concerns about during the shareholder meetings, increasing competition and that's next. slower tech spending. and as we head to break, a travel website operator quick check on the european markets, right now. orbitz world would have been has markets, rig. been down fwraded to sell from neutral. selling at a premium.

pacific sun wear reported smaller than expected fourth quarter loss. same-store sales would be up 1% opportunities aren't always obvious. to 4%. it recovers from what it is now sometimes they just drop in. markets, rig. calling a challenging holiday cme group can help you navigate risks and capture opportunities. season. we are mow counow counting we enable you to reach global markets janet yellen's conference. and drive forward with broader possibilities. cme group: how the world advances. steve liesman joins us now. >> the excitement is palpable, brian. >> i can see it from here. >> it's building up to the 2:00 statement and the 2:30 press conference. i have christian with me. he was the former senior policy adviser for bill dudley. thanks for joining us. >> great pleasure, steve. >> we know was going to happen. but you think there's a lot of interesting things on the table for yellen to decide. she wants to have continuity. she may not have that luxury. >> that's right.

the main emphasis today, we know even though the fed is approaching its 6.5% threshold for rates, they're going to emphasize the broader assessment of labor markets plus weak inflation means no early rises in the fed funds rate. >> but they've done a good job of keeping the markets lid on rates in the future. but they have not told us what happens once they start to raise rates. our fed survey showed for 2014 a lot of questions about 15. >> so i think, steve, that's right on the nail. the really interesting question for this meeting is did they go beyond just giving more information about the conditions for the first increase in the funds rate and talk to us more about the path going forward. >> you know both yellen and you knew bernanke. how is yellen going to run a committee that's different? how is her personality going to be different in terms of making policy? >> well, look, in a big picture, there's a lot of continuity in personality, as well, with ben and janet. the differences between them and the imperial fed chairs, volcker and greenspan who went before,

janet is mild mannedered, she has good personal relationships with the rest of the committee. she has a spine of steel. she will be tough when she needs to be. >> there's a lot of talk right now. saying you know what? the fed will have to move faster. how much pressure is yellen going to get from the hawkish wing of the fed and what is the possibility that she has to bend to them? >> i think another present, she's okay because the inflation data we had, you know, very, very mild. inflation is mia right now. but as we look forward, short-term unemployment down, unemployment in general starting to converge towards your estimate of the neru, there is going to be more and more pressure for, you know, the idea that we might need to move sooner. >> what's your base forecast? what is the first rate hike? how high does it go .how quickly? >> so my view is they won't go late. they'll go mid possibly late 2015. but when they go, they're going to go faster than they think

right now. >> how fast, how far? >> my view is that, you know, right now, they're talking about raising rates every other meeting in 2016. that sounds implausible to me if the economy basehaves the way ty think it will. however, i also think that this rate tightening cycle is going to end sooner than most people welcome back, everybody. good morning. think. let's take a look at u.s. equity i don't think the long range fed futures. they are mildly higher, indicating a slightly higher rate is going to be higher than open for the nasdaq. 3.5 points. >> is yellen just a dove? the market has done well this month, creeping towards all-time people come up and say what does that mean? highs again. does that means she's going to but the smaller midcap stocks look at 2% inflation or rising have done better. wages and say you know what? i'm not hiking rates. meantime, disney letting out a few movie announcements. >> i think we have to be careful. dove and hawk, these things only incredibles 2 is in the works make sense in a specific and is a follow-up to the hit context. i think when yellen assesses the situation today, what she'll see is that both sides of the deal ten years ago. and for all you "star wars" fans mandate, the inflation side and the employment side are still out there, episode vii will be calling for substantial set 30 years after the return of accommodative policy. i think she also believes that

the inflation target is the jedi. symmetrical. it's not a ceiling of 2% it will be released sometime in the year 2015. inflation. you want to hit 2% inflation on >> can't way. average over time. in the current circumstances, yay! >> do you think it will be that still allows you to run a better than the previous three? >> they're the best. >> my name is hayden christian stimulative policy. >> thank you for joining us today, vice chairman of isi. brian, back to you. it will be a great day. sen and i am very happy right i look forward to seeing you at now. >> my mom took me out of school the top of the 2:00. >> what time does that decision early so i could see all those. >> the problem they had with the come down sflp. 2:00, brian. >> what show is on cnbc at that time? prequels, because the technology >> i think it's called street of movie making is so much signs. better -- i believe mandy drury is the >> the old ones look lousy. host. >> mandy drury and -- >> also because the technology >> and this guy sullivan shows itself, it looks like they had up every now and then when he's more advanced technology three not driving a race car with a years prosecute. >> don't make me destroy you. stupid helmet on. >> the helmet has saved my noggin many times, my friend. but we will see you all day >> that's signal for us to wrap. long. janet yellen, steve liesman. coming up, the geocall going to cardinal health's chief thank you very much. >> by the way, one stock to look coming up next. and later, private equity giant at, a midcap, let's bring it up steve swartzman, co-founder of if we can here. usually when a company buys another company, the stock goes down because they have to spend

blackstone is coming up at 8:00 money. eastern time. horizon pharma is up above the more "squawk box" after this quick break. quick break. market cap. they're doing a reverse merger with another biotech for $660 million to combine arthritis drugs. what's interesting is that horizon is up 500% plus. we've highlighted these buy yoes tech. these names are up 100%, 200%, 300%. it's mind blowing how much stocks have gone up. >> wow. >> if they don't get that one particular drug down -- >> it's like a binary outcome. the drug is going to either succeed, be purchased or you're going to go under. coming up, next is a very big interview. billionaire howard hamm is going to join us right after the break. he has a lot to say about the crisis in crimea and what it means for the u.s. nat gat exports. we'll talk to him about that and much more in a moment. ♪

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welcome back to "squawk box." jp morgan chased a sale of its commodities unit. it is now official as kate kelly reported earlier this morning. the banks will be selling that unit to murcurio energy. that deal expectsed to close during the third quarter. the bank says the transaction won't have a material impact on its earnings. part of this, a result of dodd frank. part of this a result of just the fortune 500 company, the political pressure that's been put on some of these joining us now is george barrett institutions around that commodities business and even

questions about whether -- >> regulatory pressure. you can't do this any more. of cardinal health. guys, good to see you. >> leave it there. >> the crisis in crimea has mr. barrett, let me start with you. highlighted just how much europe depends on russia for natural can we call obamacare a complete failure at this point or do we gas. have to wait a little longer or 80% of natural gas -- go to is that just me? ukraine. >> it's very early. 15% of the natural gas from i think at this stage, we expected -- this is a very europe flows through ukraine. complex piece of legislation. addressing some very vexing meanwhi meanwhile, joining us with more challenges, it's not completely is howard hamm. surprising to us that it would roll out with some challenges. he is featured in the new book as we thought about this piece "opportunity knocking" by "squawk box" producer lori an of legislation rolling out, we loraco. expected to see some lumps and good morning, howard. good to have you here. bumps and, in fact, as we >> good morning. it's good to be with you. modelled it, we did not expect, >> this is really the situation. thanks for help lori ann with in our short-term models, to see her book. additional patients in the the situation in ukraine has system, recognizing that there would be some evolutions that given you guys a lot of political pressure to help you would take place in order for out when it comes to natural this to roll out. gas. >> how long before you -- in the is it finally going to work, do you think? >> well, yes, it should. system? >> it's hard to answer that question. i think we know that patient res absolutely. you know, we have had a great

coming in. thing going on with this american energy conference going some of those patient res new on today. and i say american because it into the system, some are not. only happened here in america. but at this stage, short-term, so it gave us a huge supply of we're not at the modeling additional patients in the system. what we do expect to see, and natural gas and certainly we ought to be aggressively exporting that to our european this may be as profound as any allies. right now, they're booel being change in the legislature is held hostage and we could help them out a great deal. additional demographics. >> so some extent, they're their we've got aging population, own worst enemies, right? 10,000 people a day reaching the they're not doing a lot of this activity due to regulatory issues, not my backyard, et sell age of medicare eligibility. >> but what you're saying is ra, etcetera, right? it's not a failure of the >> that's right. we have a great opportunity here system. >> i really do think it's too early to say that. to do that and they have several i think certainly at the early gas, as well, but we have a stages, we would probably great opportunity to export acknowledge, i think, as an natural gas and we ought to be administration that the rollout has been somewhat slow. doing that. >> there is a report out that noted that in terms of shale drilling these days, independent we would not see anything differently. i think we're seeing some of the producers are spending about patients that are coming into $1.50 in drilling costs for the system are patients that every dollar that they're able have already had insurance. to get back. how long do you think that will be the case and make the mk and so i think it will take time economics of this such a

challenge? to see how this rolls out. >> well, you know, a lot of us >> we did try yesterday, overspend a little bit. michelle, with the head of omb they overspend cash flow and that's a historical -- you know, to try to -- >> the office of management and there's been a time developed budget. >> who is a great problem today and a lot of land solver, probably one of the finest people in public service schedule. today, we were trying to set him especially for oil and gas. up on that exact battle. and certainly we're bringing on he turned basically to lord a lot of new suppliers, natural north's line, the only vacation gas and food oil in this i need is a different set of country. problems, is that this changes well, crude oil exports, too, the rules a little bit. in terms of the -- what the it's in the mix. anybody that is thankful about ground for competition is. but, in fact, they were just saying they were adjusting very well to the affordable care act, exporting inin inin ining petr. as much as i wanted to start that fight, they said things are refined products are going working here. across the water and it's just a -- you know, it's one of those situations, who gets the money? the independents? >> nardelli here. i want to congratulate you and the cvs deal is basically going the entire industry to get us to to be the largest generic where we are with relative distribution system in the world.

savings will come from that. energy independence. without you guidys driving the >> we do expect to see additional patients in the system. timing that is extremely train, we wouldn't be where we are. what could we do back here at difficult and we've modelled cautiously. but going forward, we expect home? what are the biggest consumption certain forces are inescapable. areas you see converting coal to one, we have this huge natural gas, power plants, cng population reaching medicare and autos? eligibility age. lng, cng, long haul trucks? today we have 11 million people likely to double over the next decade. what are you guys focused on in terms of getting consumption up here in the united states? >> well, one thing that's happened, you know, i think is we know we have a system that this light, tight sweet curve that's being brought on requiring different today with horizontal drilling, formulations. >> george, hi. it's brian sullivan. i want to ask you a quick basically it's given us what we question based on a "new york need and that is premium grade times" article from march 11th. this caught my time. of sweet, low sulfur crude that here is what i'm going to read. makes a diesel, all those things insurers say roughly one in five people who signed up for that we wasn't getting from the coverage failed to pay january power stands. so it's a very clean energy. premiums. next paragraph, 83% qualified that's what a lot of the for financial assistance to help pay their premiums. conservation is going into. i noticed some overlap, it's not >> do you think we'll see a lot

of the long haul trucks, fedex, a pure 100%. but i guess my question is, u.p.s., converting to lng in the george, who is paying? near future? >> you know, i don't. the cost of conversion is so >> well, i think at this point, if -- much, you know, the cost comes >> if one in five aren't paying premiums and four of five are down at the pump about 20% on getting some sort of subsidy, diesel. so, you know, it never pays. and it's all about economics. i'm left to wonder where is the >> and at what point does that bill being paid? >> at this point, better change? >> when does it change? answered by one of our health >> does it have to change in order for this to really take insurance partner us because off? that's hard for me to answer. >> well, for natural gas maybe, you know, as far as crude oil supplies, we're bringing on a lot of crude oil for a very long time. >> we've got two self-made oil >> regardless of how this rolls out,scapable that we're billionaires. there's another guy by the name of boone pickens, harold, i'm going to have a system that can not sure you ever heard of him. he told me he used to tell navigate people and turn in different ways. harold hamm i'm smarter than he part of that involved trading people with the right setting is. but do you think you guys can get this taken care of, with the right caregiver in the right sequence. that's not something we've done honestly? do you have the support of congress? >> yeah, i think so. historically. we know we're going to have a

system that pays for outcomes in it's about the thing to do. america can't be an energy some form rather than paying for leader in this century if we're a steeper service model in which going to hide behind a crude oil we pay for every different activity. so we try to build our business ban or won't fit for natural gas model with those things very fraud. let's face it. much in sight rather than being >> harold, sorry to bankrupt. completely obsessed by what's happening with the mechanics of do you think congress wants to the legislation. be an energy leader? solar is great. we know there are inescapable alternative energy is great. forces that we have to build a business model around. but all we tend to hear about in >> thank you. it was great to talk to you this washington is so-called alternative energy, not a lot of morning. political questions that we -- talk except for maybe sort of >> you said innovation on local knocking natural gas. >> well, i think that was true levels, too. >> thank you, guys. before, you know, everybody george barrett, chairman and ceo realized what we had and what we of cardinal health. we'll get more from jeff later have for today and certainly in the show. when we return, the man that with the supplies that we have makes the big decisions for and the fact that we are going to be energy independent. blackrock's investment assets. so i think that's changing quickly. then bob nardelli will join us >> harold, a personal question for you this morning. on set. plenty to talk about including his opinions on the gm recall. i'm going to go there. "squawk box" comes back with you've been involved in this very big two hours this morning. ♪ divorce and there was a big question about who was going to

control the company. the judge has ruled in your favorite. so you're going to remain in control. now that that's a defenive, is it going to change anything about the company, the things that you've been putting off or waiting to do that you now might consider? >> no. we've been going ahead, you know, just like we always have. change is nothing. it was a nice thing to have behind us, but, you know, it doesn't change a thing here. >> you gave an exclusive to forbes earlier when the decision was made by the judge and, again, more personal qualities. you were asked if you would ever marry again and you said definitely not, that's not ever going to happen. the justice system when it comes to divorce, it's pretty tough. i have been through one. i can't imagine how damaging or difficult it must have been. [ banker ] sydney needed some financial guidance so she could take her dream to the next level. >> well, yeah, it takes your so we talked about her options. her valuable assets were staying. thoughts somewhere else for a little bit. we have not changed what we do

and selling her car wouldn't fly. here at the company and moving we helped sydney manage her debt and prioritize her goals, ahead and these are the things so she could really turn up the volume on her dreams coming into mode. so we're glad to see it. >> good to have you on, mr. today...and tomorrow. so let's see what we can do about that... hamm. remodel. motorcycle. think about marriage. some day down the road, you [ female announcer ] some questions take more than a bank. they take a banker. might reconsider. make a my financial priorities appointment today. >> boone just got married again. >> yeah. because when people talk, great things happen. >> i used to feel the same way. i'll never get married again. >> al, thank you for joining us. >> all right. coming up, jim cramer joins us from the west coast. he'll be at the starbucks shareholder meeting in seattle. we're going to catch up with him next. "squawk box" will be right back. >> announcer: tomorrow on "squawk box," the cnbc global cfo council is in session. the chief financial officers of at&t and adp are here to talk business conditions, markets and what they are hearing from their customers. that's tomorrow on "squawk box," starting at 6:00 a.m. eastern. y. how may i help you?

oh hey, neill, how are you? how was the trip? [ male announcer ] with nearly 7 million investors... [ shirley ] he's right here. hold on one sec. [ male announcer ] ...you'd expect us to have a highly skilled call center. kevin, neill holley's on line one. ok, great. [ male announcer ] and we do. it's how edward jones makes sense of investing. ♪

good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with michelle ka rueco sa brar ra and brian sullivan today. joe and becky are out. our guest host, robert nardelli, he is also, k, the former chairman and ceo of chrysler and home depot. we are going to get to bob in a moment. we have to talk about gm and a lot of other things. before we do that, let's take a quick check on the markets. the futures right now looking up at, at least marginally. nasdaq up a little over 3 points and the s&p 500 almost up just a welcome back to "squawk box." let's get down to the new york bit. then the ten-year looking right stock exchange. we'll go to seattle, that's now 2.67% is the number to where he is this morning. >> did you get a tease? >> yeah. watch. we also have some morning >> jim cramer. headlines for you. >> i know, i know. the government expected to jim cramer is awake at -- what announce a settlement today of time is it there, jim? >> oh, my gosh, it's, like -- more than $1 billion in toyota

over the widely publicized >> coming up on 6:00? unintended acceleration cases. >> yeah. >> you are in seattle? what did you think of the fedex the automaker is expected to numbers today? >> first of all, you can't get a avoid prosecution as part of cup of coffee here to save your that agreement. we're an hour away from dow life. just kidding, it's the starbucks annual meeting. component fedex reporting. we're in up mode so we're giving fedex a pass on the weather. we're in pass of weather moment expected to report revenue of where people say i know the $11.4 billion. those are the numbers to beat. weather is not a good excuse but and jpmorgan will be selling its we're taking it and people are believing it. >> give us a little preview of physical commodities business to what's to come today. you had howard schultz on the swiss firm mercuria. show about, what, 9:30? >> yes. remember howard has really been talking about the digital assets of starbucks perhaps they may be worth a substantial part of the it's not yet clear what the company because they have mobile and they have digital down well ahead of almost every other terms of that deal would be. company i follow but in terms of in the meantime, let's take a being retailing, they are the quick look at shares of apple best. i've gotten nordstroms speaking this morning. of the best of retail but is bringing becky into the that enough? conversation in just a minute. it's brick and mortar. look at the seattle genetics it's in keeping with what you've been talking about the small $532.55 for apple. a former "wall street journal" biotech companies. reporter has a new book out on that will be on the agenda and zillow is the company dominant

apple called "haunted empire, in real estate online but does that matter given the fact that apple after steve jobs." competitor trulia is spending in we are bringing becky quick in an arms race making that whole segment very crowded. >> i think starbucks is ahead of right now with an exclusive some banks when it comes to statement from tim cook. processing transactions, et >> hi, andrew. sorry i'm not there today. cetera. they are so far ahead, i get a i'm still a little under the daily e-mail from one of the weather. but i did want to talk about debit lobby groups and they this book called "haunted always talked about starbucks far and away advanced compared empire." to every other retailer, every it's from a former "wall street journal" reporter named yukari other bank. >> i'll posit to howard schultz if they spun off the digital kane. she went around and interviewed people and came about with a would it not give a multiple of conclusion. at the end of the conclusion of maybe even visa, mastercard, this book she's saying basically certainly ahead of discover. apple's best days are behind it honestly, i've been saying that in large part because steve jobs howard should merge his business with verifone and therefore get the register all the way to the people who come near. is no longer there. they have an algorithm, this is she says cook is more of a delegator versus steve jobs who what we're hearing, how near the is more of a micromanager and store you are so it can be piping hot when you get there. got deep into the woods on anything that interested him on many different levers for this. it's an interesting perspective. starbucks to come in and all it's one tease been out there in anybody cares about is the spike the market for a while, but it's of coffee because it spiked and one that is a controversial one they are hedged for 2014, too. for people inside apple now >> it's a renaissance for particularly for tim cook who is

the head of am right now. seattle. and my kid looked at the tv and i e-mailed him just to find out what he thought about this book. said i know that guy, i know here is the response that he that guy, hello from my sent back. daughter. he says this nonsense belongs seattle, starbucks soaring and with some of the other books microsoft 14-year high and i've read about apple. it fails to capture apple, steve amazon $300 above what it was five years ago. or anybody else in the company. you mentioned other companies. apple has over 85,000 employees seattle kind of tucked up there in the middle, the northwest that come to work each day to do corner of the united states. they are rocking. their best, to create their best >> yeah, they're in the 12th man products, to put their mark on in terms of technology, they're the universe and leave it better the first man. a lot of different companies the than the day they found it. this will remain at the heart of are doing quite well. don't forget to throw in costco, apple for decades to come. let's go buy costco here. i am very confident about our future. but there's an incubator here. we've always had many doubters we're out here something's really brewing. in our history. i know that silicon valley is he only make us stronger. the hotbed of most of technology but if you want to see where there have been a lot of points it's applied, come here. when people have doubted apple. >> jim, bob nardelli here. this has been a narrative that's i understand starbucks is been out there since steve jobs working with a small start-up passed away, that the company that will allow you to bypass can't run the same without him, the charges you get from that it can't innovate without mastercard, visa, american express, so, you know, as an old retailer that's 2%, 2.5% and the him. that is one that has been out new mechanism will allow you to go to ach and avoid all of the transfer fees, is that something you are --

>> you are anticipating my first there. question to howard. >> i'm thrilled tim watches the you're absolutely right. >> good. >> and by the way, they want to show. i don't think anyone even knew own the mobile space. this book existed before he put not for starbucks but for all of out this statement. retail. and ilthink that's really why did he -- >> i have to commit, i hadn't important because remember, that's a much bigger total read this book. i was sick yesterday so i wasn't on top of my game. adjustable market than just selling coffee, selling bread, i will admit that she what was selling consumer packaged goods. on, yukari kane was on that's what i want to drill down on, that's why howard moved over yesterday. when i looked at amazon to find to the digital side. out where the book was, it was it may be worth more in the company. nowhere near in the top couple >> yeah, jim, thank you. by the way, ask howard, i'd be hundred books being sold. i've been trying to log on right curious what he thinks about the now. my ipad isn't making the ebay/paypal situation, starbucks connection fast enough to see has argued it wants to be in writ stands right now. maybe you can do it faster, electronic. do you need to be combined or andrew, just to say where this separate? for another day. >> another good idea. was. i didn't know about this book >> we'll look forward to the ahead of time. program. this is something that was a little bit of a surprise to me, >> remember, also, they are more square oriented than i think too. they are paypal. >> becky, first off, feel best. square is the one to watch. >> what do you got there? secondly, you need comcast >> to jim's point i have square, you know, on my phone it's infinity. >> i can't get comcast here. mostly mom-and-pop retailers and i've tried to. >> andrew, from the book, the starbucks. starbucks is the biggest retailer everywhere you go on writer calls apple, quote, a the mobile payment app. all right, coming up we'll

get our closing thoughts from cult build around a dead man. mr. bob nardelli here. and be sure to keep it here it's not a lot that apple responds to. they don't tend to care about because "squawk on the street" with jim in seattle will be criticisms. but when you take shots like coming up and ron paul is coming that, that might be something up on "squawk on the street." that would actually get that's interesting. somebody -- get some ire, that fed decision at 2:00. big day. you're watching cnbc. re watchin. actually forces a response for something like that. how do you know which ones to follow? >> basically, according to -- the equity summary score consolidates the ratings and, again, i haven't read the of up to 10 independent research providers books. >> i've read interviews about into a single score that's weighted it, synopsises. based on how accurate they've been in the past. >> to your point, it basically i'm howard spielberg of fidelity investments. paints apple as a company in the equity summary score is one more innovative reason decline. the problem isn't apple, guys, serious investors are choosing fidelity. more of a ford model, right? call or click to open your fidelity account today. henry ford started the company and built it up. every subsequent ceo inherited a i just ah woke up today large company who is coming out and i said i need something sportier. of a growth of an entirely annnd done. ok maxwell, just need to ah contact nation industry. >> here is my assessment on your insurance company with the vin number. that. you've got -- you know, apple is oh, i just did it. with my geico app. a great company. vin # is up to the loaded. microsoft, great company. but what i've seen in business ok well then jerry here will take you over the years is success breeds through all of the features then. why don't weeeeeeeeeeee

complacency. and it's one of the toughest go out to the car. things for a ceo to fight. and in today's world, you either ok, i'll just be outside... ok, yeah. innovate or you evaporate. so you can't live off your his dad is my boss. yeah. vin scanning to add a car. legacy. just a tap away on the geico app. i mooean, they both have tremendous runs. >> how long does it honeymoon [ crunching, rumbling ] ...it were possible... last? meaning people are waiting for [ low-pitched scraping, thud ] to capture... tim cook to come out. [ trilling ] the precision... some people say it's apple tv, [ sloshing ] passion... it's supposed to be a launch, nobody knows. [ low-pitched scraping, thud ] how much time do you give them [ whoosh ] ...and beauty... in a post steve jobs world to that goes into what you do? reinvent the business? >> it's not so much how much time we give them. [ camera shutter clicks ] look at the competition. you look at samsung, everybody ♪ is really nipping at the heels a better web starts with your website. here. and they're coming out with new create yours at squarespace. gadgets, wearable gadgets. ♪ it is the emerging trend, right, andrew? and so i think it's not what you say, it's what you do. and apple has to come out with some new innovative products very soon. >> becky, real quick, the answer to your question, the book is ranking at about 2,000 in hard cover on amazon, about 1,000 on

kindle. it only has about 1 1/2 stars, which is not very good. >> yeah. and what i'll also tell you, bob hit on some points, but when the author has been asked this point, what do you think about create yours at squarespace. this big company? the thing it still has going for so our business can be on at&t's network for $175 a month? it, it's still got the revenue yup. all 5 of you for $175. coming in, it still has the massive sales, it still has our clients need a lot of attention. there's unlimited talk and text. products that are hot on these we're working deals all day. issues. and i guess the question is, is you get 10 gigabytes of data to share. there something else to ten in what about expansion potential? behind that? is that is the question the add a line, anytime, for $15 a month. market is focusing on so low dues, great terms. closely. >> becky, please feel better. let's close! >> thanks, guys. >> bye, everybody. >> bye. new at&t mobile share value plans >> it's hard to feel bad for a our best value plans ever for business. ceo, especially one that is exceptionally wealthy in his or her lifetime. i feel bad for tim cook who is basically coming in doing another album after beggar's billions for the stones. there's no way you can replicate what was done.

>> they cast a big shadow. janet yellen will hold her let's get back to our guest first news conference today as host bob nardelli. closing thoughts on anything you want, bob. >> thanks. head of the fed. first of all, it's been great to jeff rosenberg says the real be with all three of you, brian, challenge for the fed comes after the meeting. michelle, andrew. i hope you make it the rest of the week. you're the lone soldier here. >> i am the lone soldier. >> dropping like flies. why? >> being squeezed out, you know. >> the big focus is maintaining expectations. >> i think today's show just what's happening in 2014, you reinforce change is the only think about this, this is a constant, you know, we've got transition year. yellen that will put something the credibility that the fed has out there. has been from a large part michelle, you're over dealing with some of the political supported by weak economic activity. issues, potential fallout. and yet this year is really i'm glad the market kind of supposed to be about and shook that off for now. obviously we had this whole >> ukraine. weather effect so we're not >> ukraine. we have all of these issues clear about it. the expectation is this is the dealing with the auto industry. i don't think it's a mistake year where the economy starts to do better. this is the year where inflation where steve schwartzman talked stops going down and starts to about pulling back from housing when you saw the number of go up. and in that kind of economic permits go down, so i think they're using a lot of environment, today would be the fed day. indicators. today would be the day where today facts are friendly and on they get the benefit of the be successful you got to have doubt. >> does she have a tim cook your antenna up and listening to issue? she has to follow bernanke here a variety of different venues

and everybody is going to coming in to make those compare them? >> in a sense. decisions both geopolitical and but it's not so much about the financial, et cetera. >> a lot of people out there people, it's about the policy. bernanke was about the policy of watch the show that are small business owners and maybe quantitative easing. that's a lot of power. wannabe entrepreneurs. you're printing money, you're you've made it. you've made the upper echelon of buying bonds. janet yellen is about promises. corporate america. give some advice. how do you do it? >> certainly lori ann in her book "opportunity knocks" the promises is a lot harder of a pyramid of factors that are very policy. promises requires a lot of other important. i liked her comment the other things to go right. >> she's promising things are day about world dominance i'm going to get better? not sure that's a legal term to >> she's promising to keep and be able to use. we tend to stay away from that. rates low for longer. and the market has given her the >> tongue in cheek. benefit on the doubt. >> i think it's perseverance and but the challenge this year is i think it's integrity, listen, going to be how does the market learn, before you leap. respond when the economic data >> what do you think drives it? starts so strengthen, when >> i think you have to have a inflation starts to go up? they're talking about zero passion. you know, you have to be interest rates for another two completely dedicated and years. >> jeff, your phone is going to absorbed in what you're doing. you have to take all facets of ring off the hook. what do you tell your investors the business when i was running home depot hooking at today? >> what we're telling our megatrends, listening to your investors is we look at where people. certainly customer focused, you are you worried about rising know, market backed kind of is interest rates? most people are worried about what really drives you, andrew. rising interest rates in their >> i'm always trying to figure

longest duration area of their out what it is that's actually portfolio. propelling the, you know -- what are the big outflows last >> i think you're born with it. year? people fled out of traditional >> steve jobs used to say it was fixed income. but you look at the shape of the about insecurity. yield curve, the biggest risk of >> fear of failure. >> fear of failure. rising interest rates is where people feel they're the safest. >> that drives everybody. >> thank you, bb. make sure you join us tomorrow, "squawk on the street" she's in the front end of the begins right now. >> you just defined everybody on tv. ♪ yield curve. the 30-year is at 360 basis points. so where is the risk in the market? the risk in the market is in the front end of the yield. good wednesday morning. >> so the yields are good, but welcome to "squawk on the the principal starts to street." carl and david are off. collapse. >> well, the practice starts to i'm scott wapner with kelly collapse. the issue is the yield curve is evans live from the new york very steep, so the bigger area stock exchange today. jim cramer is at the site of starbucks annual shareholder of risk for rising interest meeting out in seattle, where he'll have a live interview with rates is the -- chairman and ceo howard schultz >> just hold to maturity. later this hour. >> well, yeah, but holding to sleepless in seattle, jim, because you flew out there and maturity is difficult when you're pumped up with caffeine you're all the way out in 30 years. and ready to go today. >> yeah, absolutely. just getting started. this is a 36-hour marathon, i don't intend to sleep

>> the issue is when you're in the two to five-year curve. that's a lot longer than people are worried about. >> and people are expecting no losses in that part of the yield curve. that's the risk. >> the chinese government is letting corporate bonds go bust. are you scared? >> there's a long standing fear of the credit bubble in china. and when you start to see defaults show up in the chinese corporate market and the credit markets, that's something to pay attention to. >> it's problematic, it's systematic. there's a real issue, a long standing issue. >> expect your advice to your clients. >> absolutely. china and china growth expectations determine a lot more than just what happens in the chinese economy. it's what happens in the global economy. so the issue here is china's

growth rate expectation, the rate goes down, which is not bad for bonds, but it changes your outlook in growth expectations and all the asset prices predicated on there. >> another big drawdown? >> another big drawdown in risky assets. at some point, yes, when you're looking at a bigger systemic issue. it's not clear that this is it. that these corporate default rates are that signal. >> you have this long standing risk. it's certainly something you have to keep on your radar. >> bob nardelli will be with us for the rest of the show. don't move. still to come, cup cakes in the shark tank. i am so excited about this. kevin o'leary putting his money behind the cup cake in a jar. we'll meet the entrepreneur that has hooked up with mr. wonderful and has seen a huge jump. i'm hoping to eat some of these cup cakes. then at 8:00 a.m. eastern time, blackstone's founder steve

schwarzman will join us. an will.

welcome back to "squawk box." dow looks like it will open about .points higher, the s&p 500 up marginally. quick update on the story we mentioned a few moments ago, jp morgan chase sale of its

commodity unit will be announced later this morning. the deal will be worth about $3.5 billion. we're not expected to hear any details today about the future of why masters is the head of that unit. kay, thank you for bringing us that news. brian. >> when we return on "squawk box," we're going to get behind the wheel. is general motors making the right moves in its recall? the stock continues to move high they are morning. also, can tesla win a dealership war with new jersey? your guest host, bob nardelli, rand chrysler will join us next. .

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welcome back, everybody. two big stories dominating your headlines over the past week. number one, the gm recall fallout. number two, tesla's fight to sell its vehicles directly to consumers. joining us now, bob nardelli. gosh, where should we start. let's start with gm, okay? >> okay. >> another recall announced monday which brings it to 3.3 million cars recalled. we referenced the ford pinto in the 70s.

how much financial damage could this do to gm? >> first of all, i think mary is handling it as best she can. bless her heart, stepping into this position and being handed this problem is -- >> she's been at general motors as a high level executive. the question, was she literally handed this or was she involved some way? >> she's going to have to distance herself because she's been there, what, 30 some years. it's hard to believe an executive wouldn't be aware of these types of problems. >> do you believe that this was somehow in some corner of gm that nobody knew about and that the small working team didn't want anyone else to know about it or do you think it would have risen to the level of minimum senior management if not the board? michelle raised the question during the bailout, you know, whether somebody like even a steve ratner or somebody from government would have -- >> so let's look at it. there were three ceos. the government, ratner bloom, it's hard to believe that something of this magnitude

wouldn't have surfaced itself, wouldn't have been presented at a board meeting. we had those discussions at chrysler all the time. it's hard for me to believe this was cordoned off in a closet somewhere, andrew. >> it's hard to believe, the part only cost $1 and they didn't implement the change. it doesn't seem logical to me to make that decision. >> again, you would -- gm still has to pay for the labor, right? >> i get that. but the question is the cost for the piece. >> look at what's happening to target, look to their issue and the drop to customer count. so it's a lot about image, a lot about recall. >> your point, reserve, what, 300 million? you see today, toyota is going

to pay a billion. i think that's the bar on this type of issue. now they're going to go through gm, through -- >> listen, i believe in the first case you read about is grimshaw. that was a couple hundred million. >> inflation that number up. >> how much of that would be insured? i'm trying to get the financial impact of the company or would they have plenty of insurers who would spread that out? >> a couple things. their insurance coverage, i'm not aware of that. but you look at the vendor that provided the ignition, the switch, and they're going to have some liability here. that means they'll have to replace the part and have some additional liability. or, you know, engineering design in flaws and failures. >> if you were married, would you announce that the trust is setting up a trust immediately for the 12 slikt ims or do you wait to go through the course.

>> i think she's probably being advised by counsel not to do that right now. and the marketing team right now is saying trust immediately because they have a different venue. i think she's coming out, she's being very transparent, extending sympathies, setting up at least every day. but it's tough. >> is there liability for some of the previous -- of that company and other members of management? >> i'm not a lawyer, but i -- it depends on where justice goes with this and what else comes out as a result of the investigations. >> let's move on to tesla. the state is now saying you cannot sell directly to. do you think they should be able to or thelt be able y will be a? >> the dealer network from my

experience is very strong, very tenured and they have tremendous state party. >> they sounds like union mess. >> sounds like. >> it will be hard to break that, particularly in new jersey. >> i think there's certainly a proposition there where you would like to be able to go direct. i've had that in a number of different positions where you're dealers or your distributors say we don't want you to go online, but they're online. it is where the world is going. >> so you think 20 years from now we'll have deeperships? >> no, i think you're going to have dealerships because you still have to service these dealers. >> that's a body shop. >> that's the first defense to throw up. well, if you sell brekt, who is going to service them? >> mechanic. >> a mechanic.

>> there's plenty of small, family-owned mom and pop shops. do they the expertise and the equipment and will they make the investigate to do that. if they lose this new jersey kick, they'll fight it, and lose it to your expectation, every other state will feel emboldened. do you think this is a breaking point? >> i think it is a pivotal point. >> do they still just manufacture in california california, even if every state outlawed the way they sell, can they still manufacture a car and get it to me? >> if you go to the showroom, you're go to go to the whole thing and that's probably true,

too. when "squawk box" returns, we're going to tap into the cnbc global cfo council because we have the cfo of cisco joining us. he's going to give us a look at the silicone valley economy. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind.

into welcome back to "squawk box," first in business worldwide. the justice department expected to announce a settlement with toyota. earlier today, they could offer more than $1 billion. it will end a criminal probe into the handling of a consumer complaint tied to unintended accelerations. that would be the largest fine ever imposed on an auto maerg. discussions between fast retailing and j. crew breaking down.

while it isn't clear exactly why the talks broke down, some say part of the reason was because it h become public. and blackstone is now working on a higher offer for global. blackstone nitd its partnership with gpg capital is in negotiation, but raising its bid could clench that deal for the auto parts productmaker. looking forward to talking to steve swartzman very soon. earnings just hitting the wire. very short of the expectations, so we're not sure if that's apples to apples yet. $1.23 versus an estimate of $1.45. this is a pretty big miss. revenues came in at 11.3 billion. the expectation was for $11.43 the 5 billion.

i'm looking at the samt here to see if we have any other -- >> weather. no, seriously, they say the fourth quarter hurt by unusually severe winter storms. i hate it when companies use weather as an excuse, but this year in the south especially was such an anomaly. their guidance is interesting. 6.55 to 6.80. >> that's way below expect ig as of 6.89. >> not only that, but a pretty big guidance fwap. no visibility or -- here is my question. i thought given the weather situation, retailers would get hit, the but everybody would start ordering everything online and companies like u.p.s. and fed ix would be the big winners because that's how you get it home. >> they ordered it, but they couldn't deliver it. >> the others, costco is up given the weather. i assume there is incredible

costs given the weather. >> think of it this way. i want to send you a package overnight. everything goes through memphis. memphis is snowed in. you can't get the package. they need to refund me that money because they didn't get you the tie for three days. they're going to have to kick me back or give me a credit. my guess is -- >> then there's the cost, too. >> $25 million in operating income hit because of the weather. >> what kind of tie? >> you can have this one. >> andrew, what you have to do is they end up leasing vehicles to put drivers in to get them -- i've experienced this. we had that quarter inch of snow in atlanta and it shut us down for three or four days. >> on a refund, is that counting pass top line or the bottom line? if they're having to rebate money, are we looking at both the misses on the top and bottom? how does that get impacted?

>> i think accounting -- well, we've got the expert here with us. but it seems to me you have to back it out of both places. >> we have the cfo of cisco right here. but please jump in if you could. it basically is an offset to the revenue. and there are power costs and it's one of the -- probably a type of bottom line. >> let's move to frank, who is here. cisco systems is proving itself in the cloud computing based system. how is it dealing with cyber security concerns right now? frank is joining us, he's the chief financial officer at cisco.

"the washington post" said that the government is now recording up to 30 days all foreign telephone calls and they're actually able to use this as a time machine to go back and look at this. how is everything that's happening with the nsa impacting your business and your ability to sell products internationally right now? >> well, currently, we sell into that, we sell products. one of the things that as columbus up in every topic at nsa is what does cisco do related to that? we don't monetize products for any government. basically, the products we sell to all of our customers. i think the government plays a role as far as traffic that goes through. >> so when it goes away, there's a good thing. they're recording all of this audio -- >> broadband. >> again, the other side of the

poison has to are -- suffer used the network? that moves to drive markets. >> where is the u.s. government come in terms of your client? >> we're a global company. we sell a big piece to the u.s. and to government, we sell to enterprise and u.s. commercial. >> are you going to see a top five customer? >> it's more of an alleged environment tooicht. .

i think it always comes up. again, for us, we try to stay independent and stay out of the space in that sector. we sell our products to public sector companies around the world. we sell our products to private companies around the world, as well. >> yeah, but you didn't answer my question. >> here is a question i'd like to ask. this subject right now is increasing volume. so you're doing a lot more storage. and big data i think everybody is enamored with. let's get a ton of information. it serves you well. what do you provide to be able to provide intelligent direction for companies to be able to use this massive amount of data? because that is the big challenge. >> recording is one thing. extracting it i think is another. >> so whuj about data.

i think they're trying to -- it allows you to mine information so you have readily available information to make those decisions. another thing we're doing for our customer sess basically helping you do that. the network and how important that is with the security, as well. making sure you get that data so you can protect that data, whether it's your own data as a company or whether it's data from customers that you're providing and making sure that you have the agreement to a customer. >> i knew you guys sponsored it. in talking to my friends over there, to figure out how to take that massive data and provide intelligent direction for it. >> we had about 15 cfos just last week talking about the big gain and what's important in their company and the

investments they're making to do it effectively. >> a cisco question for you. you guys are now at $9 billion returning to shareholders, 900 million in dividends. and to me, one of two things that suggests, either you don't see a great opportunity in m&a. earlier this week, warren buffett, there was a shareholder that wants a dividend and warren said, i don't want to give a dividend because i think i can take that and -- >> first of all, we have $47 billion in cash. so we're very fortunate to have that amount of cash. so then you go down the path and what do you do with that? the first thing we do is we invest in a business. we see there's opportunity

growth in the future. and the last 18 months, we've done 15 acquisitions, small and medium size, all in the software, security and also from the standpoint of looking at different applications as it relates. those are the investments we've made from an acquisition. and then you look at what extra cash you have and these investors are looking for not only invest in your business, but return that cash. >> real quick, what do you think of prices in the valley? >> i think it -- they're from an acquisition standpoint. >> we've argued on street signs silicone valley is the new wall street. it's where all the money is, all the power is. 1.6 million was just paid for a teardown home. where does a policemen live? where does a teacher live? how do your employees live in the valley? >> the affordability in the valley has always been a challenge. it has its ups and downs in the

stock market. you look at strategies. but i think if you look back at ad acquisitions, you'll get peaks and valleys. we look at acquisitions. we also look at what kind of return you're going to get. and the one that we've done in the last 18 months, i think we've paid a good price for that. >> frank, when you look at that, are you looking at cash on cash? and what kind of target do you have? is it a one-year payback, a two of had year payback? we usually look at about three to five years. coming up, some not so good news for porsche, considering its 911gd model.

coming up, crimea has been all but lost to russia. what is next? cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

ford says it's going to replace the engines in all the current 911 gt3 sports cars. and it told owners to stop driving the car because it could catch fire. they've investigated two engine fears where a loosen ed caused the engines to leak. bob nardelli is shaking his head. >> here we go. >> it's just amazing. it's a very -- when you can of the number of parts in suppliers, tier one and tier two, tier three that go into assembling a vehicle, it's amazing. this is another example of

something as insidious as a connecter, springing oil on a hot engine is going to catch on fire. >> $130,000 car to start. you can easily take the gt3, go up two handles, you should not have any problems. >> you should not. regardless of the price, you should not have a problem. >> yeah, but these cars are built -- >> by hand. by hand. coming up, we're going to jump into the shark tank, talk to a successful contestant. kevin o'leary, next. y, next.

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