propelling the, you know -- >> i think you're born with it. >> steve jobs used to say it was about insecurity. >> fear of failure. >> fear of failure. >> that drives everybody. >> thank you, bb. make sure you join us tomorrow, "squawk on the street" begins right now. >> you just defined everybody on tv. ♪ good wednesday morning. welcome to "squawk on the street." carl and david are off. i'm scott wapner with kelly evans live from the new york stock exchange today. jim cramer is at the site of starbucks annual shareholder meeting out in seattle, where he'll have a live interview with chairman and ceo howard schultz later this hour. sleepless in seattle, jim, because you flew out there and you're pumped up with caffeine and ready to go today. >> yeah, absolutely. just getting started. this is a 36-hour marathon, i don't intend to sleep tonight either because i'm really tired

of sleeping. >> big things ahead today, right? you've got the exclusive with schul schultz, we can't wait for that. >> it's not about the triple pu on. >> the value of the payments business at starbucks talking about how much it's worth and how important it might be here as a rival to some of these card companies. >> yeah. look, bob nardelli made a great point if you can cut out the little big, the vig that visa and mastercard get, if you can make it so someone nearing the store is able to pay for it ahead of time and own the register why should this be limited to starbucks. this is a trillion dollar market and howard schultz moved over from his day-to-day running on starbucks to focus on this. is it worth more than the company? same say it is, i think it's a little bit of hyperbole but we'll find out. >> so fascinating. >> the red carpet on the stairs

behind you looks like the dolby theater like you're in the academy awards and you'll sit next to hanks and brad pitt. >> wow. i mean, if they show up -- if richard sherman shows up -- apparently he's on vacation. >> wishful thinking. >> we'll talk to you in a few. let's look at this wednesday on wall street and look at the futures. it looks like a third straight day of gains off the open, kel, with the dow an implied open of 17 points and the s&p is inside 1% away from an all-time intraday high. certainly a far cry with the way that last week ended with the situation developing in the ukraine and crimea and everything else. there's the ten-year note in focus today, the yield, of course, is, 269 ahead of janet yellen meeting the press later today. and as for europe, take a look there. how's the map look this morning? more green than red. so, that's a plus there at least right now. there you go. our roadmap today starts with, what else, but the fed. in just a few hours from now

janet yellen will give her first press conference as fed chair. big question on the minds of investors today, does yellen have any surprises in store this afternoon. plus, blaming it on the weather. fedex posting a big miss in its latest quarter thanks to, quote, unusually severe winter storms. we'll tell you if that could carry over to the rest of the year and other companies here as well. speaking of earnings both oracle and adobe going in different directions today after reporting yesterday afternoon. find out if you should think about buying either of these tech giants. and janet yellen and the federal reserve in the spotlight today. the fed concluding yellen's first meeting as fed chair with a policy statement in about five hours from now and it will be followed by yellen's first news conference as fed chairman coming a half hour later. the fed expected to cut its monthly bond buying by another $10 billion. investors also watching to see if policymakers fine-tune their forward guidance. be sure to watch cnbc's special coverage of all of that and that begins at 2:00 p.m. and that's

taking center stage today. >> absolutely. this is a historic day and we forget about it, scott, because we cover it day in, day out, hour in, hour out. we're talking about janet yellen taking over at the federal reserve. we'll hear from her during the press conference for the first time and where they'll make tweaks and rick santelli, he was mentioning it yesterday. nothing of significance happening. frankly this is a moment, jim, where the fed is going to start to rethink how through communicating with the public about what they're going to do with policy here. >> yeah. look, i think that yellen is a seasoned hand. i think we all kind of think she's never had the mike. she's been behind the mike for years. i'm more focused on the forgiveness mode. look at fedex, it was terrible, the stock is trading up. i didn't like the oracle call, but it didn't matter. adobe initially the stock traded down and now it is up. kb homes there's something that could be impacted by the fed. they had excellent numbers on every single line, housing, transport, tech. what more could you ask? >> you know, jim, how yellen

communicates with the market i guess is going to be the most important thing because i think it's fair to say that at times mr. bernanke and company had difficulty in getting their message to the markets, delivered in the most effective way, so certainly traders here on the floor and market participants everywhere are going to be hoping for a clear, distinct, direct message from miss yellen this afternoon. >> yeah, we have to, because remember the may fiasco, bernanke who is a very level-headed guy admitted they did not communicate right. obviously yellen is not going to get a honeymoon on this particular aspect bus the futures traders are going to be in there, i think they'll probably fire away the moment she started speaking in order to participate the market's been up three days and the shorts are dying here. ever since they put the shorts in on friday betting that secretary of state kerry, if you've seen him, if you haven't, it's the where's the waldo situation, a lot of people were praying there could be a macro decline to cover the

shorts. maybe yellen can be the excuse. they need an excuse because the fundamentals of the companies are not dictating a decline in the take. >> i don't know if saw it, but jay carney yesterday at the white house press briefing kind of joking to u.s. investors you better not be long russian stocks and if you are long, you better be short. what do you think about that? we were talking about the nature of the sanctions and the conversations whether you should buy the russian market because it's cheap. should there be an element of national interest here in these kind of decisions, should they even go there joking about it? the >> well, to paraphrase stalin i'd like to know how many divisions jay carney has. this is one of those situations where i think what happened is putin was well ahead. but, remember, what putin is really trying to do, he wanted to connect -- you say just with putin. you start thinking he looks better by comparison to some of the dictators in the 1939 era. but do you know what, this is one of those where, yes, maybe carney doesn't want us long russian stocks, but putin clearly covered his short friday and went long.

if you want to go who's winning in the storg stock market, i'm taking putin and i will actually spot carney about 2%. >> jim, quickly back to yellen for a moment before we move to fedex. you know, often in these conversations we say, well, what could yellen say that would upset the market. i'm wondering what you think she could say that would boost the market in that if she cuts the threshold from 6.5% on the unemployment rate down to 6% i've seen some folks on twitter saying then you go s&p off to the races that you're going right atten in00 and when knows where from then. what your thoughts on that? >> i think yellen needs to say, business is getting better. it's not so good that we can feel really complacent, but the accommodation has been the backdrop for one of the great gains of our lifetime. you got to be able to give the bulls something, meaning that the earnings will be okay in the next quarter, but you got to give the people who don't want -- who want to sell bonds a little hope that they shouldn't sell them too aggressively because the fed will be there.

this is one of those where if she comes on too strong about how strong the economy is, people will say, rates belong at 3% and then you'll have the bond market equivalent stocks come down, i think she needs to thread the needle and saying it's pretty good but not good enough. that's how you go higher. >> i wonder, too, what will happen, scott, to your point on the unemployment rate if they don't move the target. the jury is out on the street, don kohn was saying he doesn't think the fed will lower and it has to where the nuance of language becomes important. let's talk about fedex and highlight the issue of how much to blame the weather. if you are fedex you'll be more exposed. they posted a quarter earnings of 1.23 slrz a share and revenues in the company full year forecast missed consensus, they say severe winter storms disrupted the organization and the increased cost. should investors give them the benefit of the doubt? >> they'll continue to give this company the benefit of the doubt. look when this incredible rally

started. it started between 80 and 85 on the stock when they preannounced not once but twice and people decide this is the e-commerce play. it's really interesting that u.p.s. did not get the benefit of the doubt because they spent a lot of money to handle the christmas shopping. fedex has routinely gotten the benefit of the doubt and it's a great transport complex that's led the market that we don't talk about. the airlines and trucks and trains, of course, terrific. fedex is another piece of the puzzle about why commerce worldwide may be coming back and we need to hear what they are saying about asia. fedex took a big restructuring not that long ago. it's an al roker market. al roker says the weather's bad, we tend to believe him and we buy fedex. >> it's the ground business that continues to really thrive at fedex really at the expense of the more expensive international priority business and some of the other quick services that fedex has. is that concerning in some respects that the part of the business that appears to be growing the most healthy is one of the ones where you would pay

less for the service? >> well, you got to be careful because nordstrom's who i'm speaking to later today in the most recent conference call with analysts made it very clear, look, one and two-day shipping is here to stay. it's not going away. this is the preferred way. the american consumer has changed the old five to seven day and you'll get the package in the mail is gone. this is a trend in favor of fedex. if u.p.s. doesn't move from 95 to 96, you got to take the stock. they ain't that bad. >> the other think on the weather if they're considered the bellwether or a bellwether, jim, on weather if you combine what fedex is saying with some of the other transports norfolk southern or a conway, you really can do nothing but give fedex the benefit of the doubt when it per takes to the weather. >> yeah, well, look, norfolk southern, basically when they were able to reduce coal to a smaller part of the percentage of entire revenues and the coal

bottomed why because of the weather. i know to give a best of all possible worlds is really a fly in ointment from those that want to be pessimistic. the pessimism train left a long time ago. >> jim, lastly on this point. fedex still has outperformed u.p.s. to your point about some of the holiday stuff that u.p.s. was dealing with over the past six months and by a pretty wide margin. why should we expect or should we fear you'll not hear from u.p.s. for another month or so about how they fared during this period, what kind of headlines do you anticipate? do you still like a fedex versus u.p.s. trade? >> yeah, well, look, u.p.s. really got -- really got slammed not because of what they said but what they didn't say. they basically said -- they basically came out and said do you know what, christmas was strong but in the release they put out there was a little line with we basically missed what black friday was. we didn't know when the consumer was really going to swing into action. fedex got caught in none of the granularity, fedex got a lot of credit for how they handled the

christmas season, very soon we'll forget about christmas and refocus on the fact that u.p.s. is a great company. they've been stalled. they trade to 100 just on a benefit of the doubt catch-up trade to how well fedex is doing. >> not to mention, jim, u.p.s. on monday we were talking right hear on this set raised their rates by about 4% or so, right? >> yeah. >> yeah. take u.p.s. out of the doghouse if fedex trades to $140. that's ridiculous. all right, coming up, brewing innovation, jim talking live with starbucks chairman and ceo howard schultz. the company gears up for its annual shareholder meeting it's a cnbc exclusive. and also ahead former congressman ron paul sounding off on the fed. the first fomc meeting of the janet yellen era heads into the homestretch. let's take another look at the futures ahead of the yellen news conference and the fed decision. the dow implied 17 open. more live from post nine at the new york stock exchange when we come become. come become.

i'm the best corner in the game don't you ever talk about me. don't open your mouth about the best or i'll shove you real quick! >> that's jim cramer's vine channeling richard sherman of the super bowl champion seattle seahawks he of the famous rant heard round the world. jim is having a winning day of his own today. he's in seattle and later this morning he's going to be speaking exclusively with starbucks chairman and ceo howard schultz as the company

holds its shareholder meeting today. that along with a star-studded line-up he's going to have on "mad money" tonight. jim, you have a seahawks-like line-up on the show this evening. >> yes. let's not forget that r. sherman 25 did immediately tweet because he does follow me that that was the single best imitation of sherman of anyone and i put myself in the pantheon including frank caliente, i'm focused on the digital aspects of starbucks but a lot of people are worried about the granularity, are coffee prices too high. for nordstroms how does the best service retailer deal with the best service online company not far from them amazon. seattle genetics we've been watching on the tape you always see this incredible biotech moves. seattle genetics belongs in maybe the -- maybe in the upper tier of great biotechs. many of them are popping this morning. and then zillow, what can i say? zillow owns the online real estate business, they trumped

trulia and a lot of people think it's incredibly overvalued but it has social and mobile and glowd and that's the holy trinity and it means much higher multiples and including multiples on revenues. >> jim, you know, the other interesting thing happening in seattle as well the city council just ruled against some of the ride-sharing companies. i don't know how you're getting around out there. but, you know, this should be the city, right, that's the most pro innovation in the country, shouldn't it? >> yes. but it's also -- it's got a labor faction. look, let's face it. there is a kind of an undercurrent of left wing, perhaps left wing guilt so much money's being made here, so i think that's one of the undercurrents. we've seen in san francisco, too. this is the backlash of the 99 versus the 1 but i think it's really 95 out here in seattle. >> jim, you got a great line-up tonight. great line-up. so, we certainly are looking forward to that and we have a lot ahead as well. >> yeah, we're going to hear from howard schultz straight ahead. up next coast-to-coast edition of cramer's "mad dash" as we count down toward the

opening bell here on the new york stock exchange. look at what futures are doing. so far this week we seem to be continuing the rally but a lot will depend on what happens this afternoon. dow's up 15 points at least in the implied open. more "squawk on the street" from the new york stock exchange after a quick break. ter a quick.

♪ getting harder to find bargains in this thrift shop as the market keeps going up. we are ten minutes away from the opening bell and time for cramer's "mad dash" ahead of the market open. jim, you want to start with kb home? >> there was undercurrent going

into this quarter that california had cratered for home sales. people always relate california to kb homes. the bears could not have been more wrong. i'm looking at these numbers, people were looking for two cents and they come in at 12 cents. this is inspiring a whole group and the only thing that can shoot it down is janet yellen says, you know, i think mortgages are being given away and we have a housing brother. it was an incredible quarter and it will lift toll and poultry. and it's the one to watch in the first half hour of trading. >> but at the same time mo mortgage applications are down four out of five weeks and housing affordability moved kind in the wrong direction and a couple of numbers lately on the housing front that wasn't all that great. what's the disconnect here? >> well, we do have to listen to what kb homes says beyond that but i think one of the things we've been focused on, take a look at the raw costs of building a home. the actual margins, you never think of home builders as a gross margin play, but they are making much more money per home than they used to. i totally agree with you in

terms of the worries of let's say the spring selling season. a lot of people wrote off home building already. that seems to be premature. i think there's a tremendous short base in this particular group and i think that short base is going to be run over. >> jim just, you know, when you thought maybe apple was going to get going, piper out this morning saying that estimates are too high. it's gene munster. this is a guy as bullish as anybody on the apple story. >> but as he been right? i question whether he has been really on his game here. i know there's a lot of people who say it's the ax in apple. morgan stanley raises the number of iphones that could be sold. i want to say something about both these calls. i think you can't make a call. when i speak with people at apple, they keep saying the same thing, why do analysts keep trying to game us. they keep getting it wrong. they're right. tim cook interesting the call in to becky quick saying people misunderstand apple. you want to know who really misunderstands apple the analysts because they are trying to create a mosaic or a pastiche

of what the earnings will be. it's painful. why don't we start picking on the analysts and stop blasting apple. >> if everyone is getting it wrong whose fault is it really? it sounds like people don't understand how to value the company anymore and that almost tells more about apple, doesn't it, than the analysts that follow them? >> i think the fact that -- problem with apple, of course, is they don't have the revenue growth and the earnings growth that so many other companies in technology have and they're not going from bad to good like a hewlett-packard. the thing with apple is people think it's inscrutable and tim cook saying it really isn't. we're doing all this innovation. we're just not getting credit for it. in the end how you get credit for a stock is have big revenue growth and double digit and big earnings growth and apple has neither but let's stop trying to figure out exactly how many iphones they sold or what the earnings will be. it's been a fool's errand and it's time to stop it, tim cook is right about that. >> that will just continue, jim,

as you get closer to an iphone 6 launch you're going to get those numbers pouring out and everybody is going to be saying how big is it going to be and the estimates will be all over the place and people will take bets on where the stock's going to go. >> the parlor game for apple should stop already. look it. we've got old tech flying. microsoft just on the idea that maybe microsoft isn't as stayed as it used to be and is becoming more apple-like. isn't it interesting that we'd rather be at a company that's more apple-like than apple itself? what does it say? i think it says if you don't have constant innovation your stock can't go higher. look at oracle, oracle did not make the numbers and people are sending it down. adobe because it's cloud they went higher even though they, too, looked like they missed the numbers. i can take up numbers for adobe up 2014 but not oracle. and we've got howard schultz interview coming up and "squawk on the street" will be right back. back. ♪

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minutes. it's going to be all about yellen today, right? >> it is, scott, and i think a lot of people will be focused on the strength of the rally, the rebound we saw monday and tuesday after selling off 300, what, almost 400 points on the dow we've bounced back and redwaned a lot of that. the s&p 500 is closing high 1878 we'll open at 1872 probably a couple of points higher. >> this has happened so many times where the sentiment appears to get bearish and more bearish and people buy. people buy the dip and they've done it this time again with the russian news. >> remember, when we get the statement we'll have the statement at 2:00 p.m. from the fed, the press conference begins at 2:30 and the first thing to watch as always is what happens with the ten year and what direction does that move and stocks follow suit or not. so often it's not even then this afternoon, scott, it's often taken a couple of days even into the following week for people to really change their positions and maybe change their thinking about it. it starts today and may not end today. >> let's get to another interesting story this morning. comcast proposed purchase of

time warner cable is getting even more scrutiny. several u.s. states including florida and indiana are reportedly joining the justice department in determining whether the transaction is in compliance with anti-trust law. it's not known exactly how many states are joining the examination of the $45 billion transaction. comcast is the parent of nbc universal. it's said the combination would not reduce competition because the two companies do not compete in any markets. jim, but it's going to face scrutiny and i guess they knew even though they were confident going in that it was likely to go under the microscope pretty good. >> remember, attorneys general run for office and if you run for office, what do you want to say? well, i favor more cable concentration? mean, it's a high-risk thing to actually say, look, i'm going to look the other way at this. i suspect there will be a lot of pile-on. i also suspect in the end the deal gets passed. obviously we work for comcast. but i don't see any situation where it pays to say, look, i really like it, because if your cable bill goes up you'll hate

any a.g. that went in favor of this deal. >> a.g.s are making a lot of news, jim, the high frequency thing yesterday with schneiderman of new york, so they're on the front page and probably liking it. all right, there's the bell this morning. you are watching the opening bell at the s&p 500 at the cnbc real time exchange. here at the big board, arbor realty trust celebrating its tenth listing anniversary and endo international is celebrating its acquisition of palladine labs. >> we'll look at markets here and we knew futures we were looking at an open about 15 points higher on the dow. can we hang on here at the open and also, of course, nasdaq, the s&p, scott, this will be a week where we determine whether yet again u.s. equities at all-time highs how the fed ultimately responds to that especially if there's an accommodative fed. there will be more than one set of circumstances going on they're discussing in this policy meeting, there's going to be more talk about at what point some of the froth.

take the small caps, for example, we had joel greenblatt on "closing bell" saying they are close to 5% of their historical value range and only 5% of the time have they been more expensive on a relative basis. >> the market is just getting going. oracle, jim, is down 3%. the commentary that most of the analysts seem to be saying today already, i'll read you a couple things, not great but getting better, respectable but unexceptional. people seem to be trying to give oracle the benefit of the doubt. >> yeah. i mean, look, i think oracle trades like a lot of industrials right now. it trades kind of in its own right saying corporate spend will come back. do not leave oracle now because when it comes back were, this stock trades over $40. a lot of apologists for oracle. oracle doesn't have the same negativity it had not that long ago in the 32, 33 region when people felt they were missing quarter. but now it's a hope stock and hope is springing eternal, people are saying if corporate spend comes back, this is the

one to be in. it's not down enough in my eyes but i'm looking at the actual fundamentals of the company and not thinking about the hope factor. >> it sounds like you'd prefer an hp here. we know store bucs is doing their annual meeting and hewlett-packard as well, i believe. i guess you got to get behind the momentum when you see it. >> well, i think that -- look, greenblatt i loved that interview because there is froth. but it's funny froth can't co-exist at the same time with just a kind of let's say a re-rating of a lot of stocks. it's interesting that there's been so much froth and yet at the same time the cloud plays, there's many coming public, but the actual traditional cloud plays have all been going down. we needed to see a reversal. the money coming back into the senior growth stocks that are cloud plays and getting out of the plug powers. when you mention plug power anything negative about it, you're immediately blasted. it's kind of like some sort of -- safety froth stock. there is no safety in froth. wow, that's a better froth stock than ballard power, jim, why are

you saying that has less froth. if i want froth, i'll get a triple cappuccino. i don't want it in the stock market. >> hey, jim, what do you think of juniper here? it's up this morning and got upgraded over at wells. there's a little bit of activism going on with the story. >> yeah, juniper's pretty interesting because this subtext of every juniper upgrade, every positive juniper is basically, look, they're really starting to pants cisco. you remember the downgrade of cisco yesterday basically saying i felt that the undercurrent was cisco's missing the big spend cycle. there is a radically different spend cycle everywhere from china to the united states and europe and people think juniper has the right stuff. they have a soup-to-nuts solution. a lot of the optical plays, the f5 and the tan genital, i wish i could speak to them. i think people are perceiving juniper as the winner and cisco the loser. i know cisco never likes to be heard as the loser but, do you know what, it's not my job to

make winners out of losers. >> hey, jim, quickly on gm, i'm noticing that the stock is basically flat, maybe up a couple of pennies or so. is the worst over at this point or not? i mean, barra's been trying to get out there, giving interviews now, apologizing, et cetera. what's the play on this one here? >> well, my charitable trust owns this in full disclosure, bought it higher, because i did not understand -- i did not think that the headline risk was nearly as bad, one-two punch on safety. i think what is happening people are saying, do you know what, this thing is selling at the lowest multiple to earnings of any large cap company which, by the way, is true and it's got dividend protection so it's hard to knock down here. it's the largest pension obligation of any publicly traded company and yet higher rates in the pension obligation goes down. this is a unique yellen story now. barra switches to yellen. if we hear a talk that gives inflection to the yield curve people will buy gm. we're almost putting the safety issues behind them.

obviously if you're involved in the safety, you should sell and you'll never put it behind you. hedge funds are mercenaries. scott, as you pointed out in your fabulous roll, this is a hedge fund football. >> yeah. >> paylocity a is pricing ahead of the range. you talked about that name and we're talking about the ipo listings here and alibaba is coming to new york. >> right. and i think that paylocity, look it's the cloud play of the day and the castlight of the day. i would like to see salesforce.com which is the actual barometer of cloud start going up. yesterday seemed like it had a move. it seems to always be thrown back when it gets in the $60 to $62 range and it's been straight down ever since. we haven't heard from mark benioff and then you have the froth cloud plays doing well and the actual cloud plays doing poorly. that can't last forever. >> we've talked about new york relative to some of the other places to take some of these

listings the fact that alibaba picked it here, the kinds of share structure that you can do. and they are punching back and taking watson which is potentially a $5 billion or $6 billion listing and a london and hong kong listing and there might be a secondary in singapore. but i almost wonder if it's a little bit, sure, we might have lost this big one to new york and by the way, until alibaba lists that could be the biggest ipo since jam airlines in 2012. >> i think people are underestimating the size of the alibaba deal. every time yahoo! goes down to 37 or $36 it's on the strength or weakness of the business and we talk about alibaba and talk about the tax implications and take the stock back to $40 if it goes as high as i think it is, even if the fundament asphoria hoo proper aren't that good, the stock should trade higher and not lower. >> we want to send it out to phil lebeau with breaking news on toyota. phil? >> let's take in a live picture from the justice department in

washington, d.c., where attorney general eric holder is announcing a settlement in the justice department investigation into unintended acceleration involving millions of toyota vehicles. the settlement, toyota will pay just over $1 billion in agreement. justice department will df prosecution. remember, this all has to do with whether or not toyota misled regulators when they were looking in to complaints about unintended acceleration involving toyota vehicles in 2009 and 2010. ultimately toyota recalled more than 10 million vehicles. we issued -- or we talked with toyota and they issued a statement to us regarding this settlement. toyota saying, toyota has cooperated with the u.s. attorney's office in this matter for more than four years. during that time we have made fundamental changes to become a more responsive and customer-focused organization and we are committed to continued improvement. so, again, attorney general eric holder announcing a settlement with toyota for more than $1

billion four years after the attorney general's office first started investigating the handling of unintended acceleration claims by toyota. kelly, back to you. >> all right, phil, i'll take it. thanks so much. in the meantime, bob pisani is on the floor with a little bit more on what's moving today, bob. >> good morning. >> important day. >> yeah. a little bit to the downside but health care is still moving, you know, health care's up 7%. there's your big leader on the year and home builders really having a great day on kb home. i do want to note that eight, nine points, scott, away from a historic high on the s&p and a lot of people feel if yellen comes out and talks about no early rise in the fed funds rate we could get there fairly quick. the conviction is not high and the volume is not that big, it really isn't there right now. remember, we're basically flat on the year. all right, maybe we're up three-quarters of a point, but at the end of this year -- at the end of this quarter last year the s&p was up 10%. flat versus up 10% is quite a noticeable difference for the first quarter compared to last

year. elsewhere let me just move on to the ipos i know you were talking about paylocity the deluge will begin and we talked about it tw weeks ago but this is going to start. you'll see in the next eight days i have 21 ipos that are going to be coming. paylocity priced above 1416, priced at $17 and that's over at the nasdaq, hasn't opened yet, but bear in mind we'll see a lot of stuff including a-10 networks in the next couple of days. and look at next week and the biggest ipo of the month is not candy crush. it's cbsalcor america. they are floating the billboard next week. that is 540, could be even more $600 million deal far and away the biggest deal of the month bigger than king digital. bear that in mind. we've had 45 ipos so far as of monday. that's twice the ipos we had last year. okay? so bear that in mind. let's just move on. home builders are all up.

kb home great numbers and i'll tell you why people are happy about it, 6% orders above expectations and average selling prices are up 12% up 30% in the west. they are trying to build higher-end homes and that's the reason the prices are going up, but the bottom line the margins are improving on the company and this is a very heavily shorted group, kelly. remember, most of the other builders reported orders were down. and they cited the weather. but kb home is mostly out in the west. their orders are up 6%. and that's the reason that this group is so strong because the orders were so strong on that group. guys, back to you. >> bob, it's a great point. jim was saying the same thing about those margins. thank you for now. let's head over to the bond pits with rick santelli at the cme group in chicago, morning, rick. >> good morning, kelly. well, as i look at intraday of tens, 268. i guess the only important thing is if you're not above kind of 270, '71 pivot or taking out 276 resistance anything above the low close of 2014, which is 258,

is kind of in a range. it's heavily traded. now, if you often the chart a bit towards february, you can see all the consolidation right around that 270 and slightly higher yield level. if we consider the spreads, yield curve spreads as indicative fives to tens is the one to look at, year to date, it's kind of flat. and if we look at what's going on with the dollar/yen intraday, it's somewhat flat. open that chart up year to date at least of late somewhat flat. why do i bring this up? because both of those issues, the curve in the end auger we'll probably not have wild range, but we'll have to look after 2:00 p.m. eastern maybe there's something we don't expect. although many traders on this floor aren't looking for that. and the euro continues to be on a tear. this chart goes back to the fall of 2011 and keep in mind there's also comments out of japan overnight but they didn't really

move the japanese markets. could there really be more stimulus? i'm not sure. but the markets don't seem to expect it. kelly, back to you. >> all ears on kuroda now. thank you, rick. coming up next an early edition of stock trading with jim west coast style, plus his live interview with starbucks chairman and ceo howard schultz is just moments away. keep it right here. we'll be back. iwe don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com

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it is that time again time to "stop trading" with cramer. first solar, jim. >> okay, listen, this is really important. there are two kinds of solar companies. there are the kinds of solar companies that one day may be big and then there's a kind that was actually the leader before we got into froth. it's first solar. they missed the quarter. it's never about the quarter but about the guidance. the analysts meeting is going incredibly well, i think they'll trade at 62 and break out. solar city is a little bit about hope. elon musk is supposed to be inventing the $3 trillion solar.

the $3 trillion electric grid with solar and i'd rather go with first solar than solar city. >> yeah, solar city's down by about 4% today, jim. >> that will turn around. you know, solar city is a heavily shorted stock so that could probably turn around at a certain point. if elon musk talks about being the next edison and henry ford and steve jobs it goes right back up because elon musk is a hero of those who believe in pie in the sky, next coming of steve jobs. i prefer first solar because it's an actual technology company with real momentum. that's the play today. maybe tomorrow we go back to solar city but i like first solar off this analysts meeting. >> all right. well, to the interview you've all been waiting for, jim talking live with starbucks chairman and ceo howard schultz. here he is, in the chair, ready to go, when we come back. just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own.

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♪ 4,000 people gathered for an annual meeting, that's right, 4,000 people, is this shades of warren buffett out west, people want to hear what howard schultz

founder/ceo of starbucks. howard hassing the whole team. this is how i thought of starbucks for the first 20 years. is that playing out now or should we think of starbucks as a solutions company for the new consumer that doesn't shop the way they used to? >> first off, thank you for coming to the annual meeting. we're honored to have you here and the entire crew. but i think the question you're asking is very appropriate. first off we have been and will always be a coffee company, but the question that any consumer brand must answer today is how do you become relevant not only inside the four walls of your stores but on digital, on mobile, loyalty and card. we have a big lead and that lead has given us permission to play outside of our stores. we're going to be in the coffee business. we're going to be in the tea business. we're going to be in the consumer experience business and potentially we're going to be in the mobile payment business. >> howard, one of the things that i keep hearing, of course, you have now spent -- moved over -- moved up, moved over,

because you are only 23 yards one time i heard 18 steps a lot different from troy coo but it seems you recognize within the $56 billion plus starbucks market cap maybe another solution to all retailers. i'm talking about the digital dna of starbucks and how far ahead it is mobile payments, how far ahead it is algore rhythmically figuring out what the consumer wants. >> i think we saw early on that we were going to see a seismic change behavior and it played itself out in the last quarter. in anticipation of that we realized that we had to be as relevant with the consumer as i said earlier outside of our stores. the mobile payment platform has given us higher degree of frequency, higher degree of loyalty and the question is how can we leverage that beyond the four walls of our stores. and i think going back to what i said earlier. in consumer brand in any business today is going to be able to maintain its relevancy by just focusing on a bricks and mortar play. and i would not want to be a

mall operator today over the long term. >> right. well, we under you've been saying -- we're talking to nordstrom's later today, they talk about 2007 was the beginning of the mall decline and how they've had to deal with it. i don't want to get trapped in the four walls of the bricks and mortar but i also have to address the four walls of the spreadsheet. many analysts are concerned with something you may regard as being ephemeral, the price of coffee they are focused on 2014 earnings and why the stock should not trade higher given the fact that choffy is going higher. >> i think the market has completely overreacted and misread the coffee situation. first off, we're bought out almost 18 months. we've been through this many, many times over the last 40 years. the coffee market is going to do what it has to do. it's less than 20% of the cost of goods. the truth of the matter is dairy is probably a bigger issue for us going forward than coffee, but we'll be able to maintain our guidance and eps and absolutely manage through and negotiate through any rise in coffee costs so i think the

market should recognize that is not a thing. >> i start my day with a triple venti, and it costs me $5.40. can you charge me that and beat the numbers? >> i think this is a time in america where raising prices is not the right strategy. we have to provide value and trust with our customers. i want to manage through this without raising prices in our retail stores. we may have to raise prices in the grocery business which is a different story. >> should we be focused on starbucks as a broad line company because the consumer products initiatives are very important. the food initiatives are very important. we're talking about a situation where more people come in with a loyalty card, only 20% of them buy food right now. does it matter if you can get that to 30% is that not more of a driver than what we are paying for coffee? >> i think the question you're asking is a very good one and what we're going to say today we're going to accelerate the growth and development of our retail stores both in the u.s. and asia and latin america. what we have learned over the last couple of years.

this is really important, and that is despite the challenges and the seismic shift in consumer behavior our class of new stores for the last three consecutive years are the best performing new stores that we've ever opened which says to us we have a long way to go in the u.s. and around the world. the number of stores we're going to have are probably greater than we originally thought and we're going to accelerate the growth of our retail stores. the reason we feel so confident about that is because the relevancy of the starbucks brand inside and outside of our stores is just in the early stages of what we're going to be able to do and the relevancy we're going to have with the customer base. >> i got to circle back to a term many of the viewers may not understand but is integral to all the greats talking about the greats like chipotle and whole food. this concept of through-put i know it's boring -- >> no. >> but the more people you can get in through and out and what are you doing with through-put and what can it do for retail? >> here's the fact we're serving more customers today in our stores than any other time in our history. second what we'll talk about

today is what's coming at starbucks is espresso order and pay. that's news. and so -- so we're -- what we're in the early stages of not only the growth and development of our core business, but the innovation necessary to maintain relevancy with an ever-changing consumer. >> now, let's talk about the idea that the annual meeting has become a pilgrimage for followers of starbucks and how can you wow them. i mean, you just wowed them with the idea that perhaps you can put more people through the stores. i want something as cataclysmic as the seahawks winning the super bowl. can you give me that? can you have a richard sherman moment? can you talk to me at the end of the game and tell me what really matters? >> you know, i love the state motto of missouri and that is the show-me state. let's show you what we have to do as opposed to talking about it and you tell me after the meeting if it was worth your time in seattle. >> i think without a preview i don't know if i'm sticking with it. can you give me something that will wow me? >> no, i cannot give you anything other than to say stay tuned and put your seat belts on. >> i like the seat belt analogy.

i think that's terrific. howard schultz, thank you so much, i cannot wait for the pilgrimage to really begin. back to you guys. >> it was great, jim. we should also let you know starbucks shares are just about the highs of the day. 75.50, a gain of one.25%, and jim, you have a huge night. this is the first of a big, big day for you that culminates on "mad" this evening. >> yeah. i mean, look this, this is all about exactly what howard is talking about. you've got zillow, and that's a multiple trillion market. nordstrom's is programs the great service retailer of all-time. the service carries the internet. they've got a 30% grower in their dot-com, they actually call it dot-com and the future of health care will be seattle jeanetgenetics because the big companies have not been able to keep up with biotechs. and dr. clay siegel probably knows more about the future of health care than the traditional big dog pharma companies, let's call them sales forces for old drugs. >> great stuff this morning,

jim. thanks very much. thanks to howard schultz as well. and straight ahead the ceo parade continues. the maker of photoshop and acrobat software is riding the cloud. a live interview with the ceo of adobe systems is coming up. and janet yellen is hours away from wrapping up her first meeting as the fed chair. what her statement could mean for markets. we'll be right back. 'll be righ. iwe don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities

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and our roadmap starts with the fed in just a few hours janet yellen will give her first news conference as fed chair. the big question on the minds of investors today, does yellen have any surprises in store. plus apple ceo tim cook speaking exclusively to cnbc reacting to a new book that criticizes him and the tech giant. hear what he had to say about all of it. and blame it on the weather. well, that's what fedex is doing, the shipper posting a big miss in its latest quarter thanks to the winter storms, but will a lot of the pain continue for the rest of the year? but we start with janet yellen, the fed set to deliver its decision at 2:00 p.m. eastern this afternoon, then, of course, janet yellen will hold

her first post-meeting news conference as fed chair. cnbc senior economics reporter steve liesman is already in washington with a look at what we can expect. steve, good morning. >> good morning, simon, the yellen era begins today. according to the feds own forecast, it is supposed to get back to normal. let's look at the yellen challenge. the unemployment rate is supposed to come down to what is now the consensus 5 1/2 percent long run rate from 6.7% and inflation is supposed to come up to 2% and running a low 1.1% the economy growing around where it is now at 2.3%. not done yet the fed's fund rate supposed to normalize at 4% from zero, qe should end and the balance sheet should be reduced in some fashion. yellen has her work cut out for her. there's general agreement of what happens only this year qe has ended by december. the question is what happens after that.

and former new york fed official now vice chairman of the isi group thinks the normalization process of rates begins next year. >> my thought is they'll go late, mid, possibly late 2015. but when they go they'll go faster than they think right now. right now they are talking about raising rates every other meeting 2015 and that sounds implus a able the way the economy is moving right now. >> it sees a gradual rise to a median of 0.75 and 1.25% in 2016 and 4% over the long run. the long run could come down a little bit today in the estimate and yellen as soon as today could lay out her vision for how that glide path works, what triggers it and how far it goes. but today she expected to start small. removing the 6.5% threshold on unemployment rate for when rates rise and replacing it with verbal guidance about slack in the labor market but in the press conference we'll get her first view as chair about what

lies ahead how we get from zero to 4% and however dovish you believe yellen to be she's likely the one to engineer the first rate hike for the fed since 2006. the market judges today how soon, how fast, and how far. sara? >> steve, you have your question in mind already for miss yellen? >> i do. and you're not getting it out of me. >> well, we can't wait to see it. the fireworks begin in the 2:00 p.m. hour, looking forward to it. >> thanks. >> see you later. for on today's all-important fed meeting and the market impact, let's bring in al braddus and richard bernstein with us ceo of richard bernstein advisers a cnbc contributor. we've got the economics and the markets covered. al, to you, janet yellen taking out at steve pointed out at somewhat of an inflection point in the economy. how tough is her task going to be beginning with today? >> i think it's going to be tough, sara, and i think steve laid out the long and

medium-term challenge very well. focusing in on today's meeting, it is her first meeting. she'll be kind of on trial. everybody will be scrutinizing everything she says and the way she says it very carefully. i think the main thing she's going to have to do today is clarify the forward guidance. the guidance the fed gives the market regarding the what the future interests rate will be. >> i just want to ask you about this forward guidance because they don't teach this in the academic textbooks. this is a whole new world, so just explain how difficult this is going to be for her to walk this line between telegraphing when interest rates are going to rise and not upsetting the market? >> that's right. you know, we've had a criterion for a while, a circle in the past, but up until recently we had this unemployment rate 6.5% threshold which was pretty straightforward to communicate. now, since that has not worked

very well, the expectation is that -- and the fed has already begun to indicate that a wider range of data both labor market data and other kinds of economic and financial information will guide their decisions. but people and the markets want more clarity on that. and i think that janet is going to be pressed on that today. and i think her challenge is going to be to make that as clear as possible. if i could say one other quick -- go ahead. >> are you saying she's coming with a set of smoke and mirrors so she's not clear about when rates will rise because confusing the market and having ifs and buts will have people thinking that the rates won't rise sooner. >> i think you've touched on the central underlying issue here, simon, and that is sort of this tension between an objective rule for when you're going to raise the rates and how fast you'll raise them after that on the one hand and using sort of

discretion and "seat of the pants" judgment, subjective judgments as you go forward. i'm not sure i've got the final answer to that. i'm not sure that anyone does. but i to think it's going to be important for janet to bring enough objectivity to this so that markets are not confused and really nervous about how this thing is going to unfold going forward. >> rich, from a market perspective, where do the risks lie here? i'm not sure if you've checked out "the financial times" today, but hildebrand has an article in which he suggests the u.s. economy is closer to its potential level than people might think. rates may have to rise sooner than people think because the slack in the labor market is actually structural. it's not cyclical and increasingly they will realize there's nothing they can do really about the level of unemployment. it's here to stay for so many reasons. what would you make of that argument? >> well, i think, simon, first of all, you know, it's pretty hard to make the argument that the fed is going to move sooner

when we have an inflation rate of roughly 1.5%. i'm not sure there's any need for the fed to suddenly start raising rates in that type of an environment. >> what about wage growth, rich? what about wage growth? >> wage growth hasn't been doing very much either, simon. it's starting to finally start to pick up but, you know, everybody kind of expects inflation and wage growth to change overnight, like, it's suddenly going to change and we're going to wake up tomorrow morning and we'll have this massive inflation problem. the odds of that happening are very, very remote. remember, watching a big economy is like watching paint dry, and things don't change that rapidly. >> but, rich, you know as well as i do that they are very hot on this, the vice chairman, they are testing the rates for where the limit will be. with this amount of liquidity in the economy if the pick-up velocity could be very different. >> you know, simon, i've seen that and i love that discussion

because the fed historically has always been a lagging indicator. the fed is never a leading indicator through history. the markets are always way ahead of the fed and the fed reacts late relative to the markets. so, now we have this notion that the fed is now going to be looking out in the future. they'll be setting the perfect policy based on 18 months. i find that very, very hard to believe because the same fear that investors have about replaying 2008 is the same fear the fed has. and the disaster of 2008 is going to make the fed be later than normal i think. >> well, let's ask al. final word to you. you've been inside of those meetings, al. how does the fed get ahead of the curve when it comes to raising interest rates? >> you know, i think -- i agree with much of what has been said and my own expectation is that it will certainly be a while before the fed makes that first move. i don't think it will come any sooner than the middle of 2015. i do think -- i do have this

thought. i think that many in the committee will be looking not only at that first liftoff as president dudley has referred to it but also the whole process that follows of raising rates. and one thing that -- to be said in favor of moving perhaps a little bit sooner than might be expected, keeping ahead of the curve, is that it reduces the pressure if you've waited too long and you find out that you're a little bit behind the curve, then you're in a position where you have to move rates up very quickly which can be quite disruptive to both markets and the economy. so, i think that might be a factor that would tend to push the initial liftoff date a little bit sooner than maybe some people expect so long as the economy and basic economic and financial conditions justify it. >> well, it's going to be one of the biggest debates of the year and certainly we should hear more today when janet yellen speaks to the press for the first time. thanks for you both for the perspective, al broaddus and rich bernstein. just a reminder, up can catch

all of today's fed action, "street signs" beginning at 2:00 p.m. eastern time. yukari kane has a new book out about apple, and it's critical of apple and tim cook. miss kane was on "squawk on the street" yesterday. take a listen. >> i think there's just much more process, everything is -- is logical. i mean, if you're talking about -- about the bigger visionary innovation issue, you know, who -- my question is who is the decider at apple now that steve is not around? i just can't imagine it being tim. >> well, in response to that tim cook is out with a statement about the book. cook giving an exclusive statement, in fact, to our own becky quick saying this nonsense belongs with some of the other books i've read about apple. it fails to capture apple, steve, or anything else in the company. apple has over 85,000 employees that come to work each day to do

their best work, to create the world's best products and to put their mark in the universe and leave it better than they found it. this has been the heart of apple from day one and will remain at the heart for decades to come, says tim cook. i am very confident about our future. we've always had many doubters in our history. they only make us stronger. and i guess that cuts to what we were saying yesterday. that -- if there is a criticism of the book, it is whether she's been able to get into the dna of those 85,000 people to understand the degree to which they can bounce back and be better after steve jobs. >> and re-code wrote it up after the cnbc statement, clearly this book hit a nerve within apple and tim cook and his response actually was a little reminiscent of steve jobs, the defensive response that he would give. also it hits a nerve for investors. i mean, that is the question, right? the innovation machine that apple was under steve jobs will it still be? >> it's not new.

>> it's not new. >> this has come time and time again people have come on the show to say that very thing. if apple was here, actually tim cook, is fighting the corner, he fought it in congress, he fought it against icahn, he fought it against "the new york times." he's not one to sit back. >> he's not one to sit back. the question can apple continue with the product momentum that we were used to? up next, jpmorgan making a $3.5 billion this morning and we've got all the details coming up. and later golf legend tom watson will be joining us live here on the new york stock exchange ahead of the arnold palmer invitational to talk about the big business of golf and a whole lot more. "squawk on the street" will be right back. right back. scores and higher mortgage rates. it's a problem waiting to happen. check your credit score, check your credit report at experian.com.

welcome back to "squawk on the street." shares of pandora are popping this morning up about 2.5% just off session highs. the online radio service is increasing the cost of its ad-free music service by a dollar a month to almost $5 per month and for now that increase will only be applied to new subscribers but apparently investors like the new pricing power that pandora has. back over to you. >> i wonder if the customers will like it, probably not. dominick chu, thank you very much. jpmorgan striking a deal to sell its commodity business to

mercuria energy group. kate kelly has all the details on that back at hq. the latest big bank to sell its commodity business. >> that's right, sara, and this deal will rid jpmorgan chase of an ancillary business and make its buyer a bigger trader. jpmorgan chase as you said will collect $3.5 billion in cash in exchange for selling its physical commodities business which includes oil and gas supplied deals with refineries and other energy users and a metal storage business. it will keep its traditional trading capabilities which allows clients to hedge their exposure to crude and other raw materials through financial contracts. it's all part of jpm's effort to scale back on noncore activities which include both commodities but also prepaid cards and some of its foreign banking efforts a point that it talked about most recently at its february investor day. it also rids jpmorgan of a unit that created some headline damage over the years as a result of coal losses, for example, in 2010 and a power

plant pricing settlement last year with federal regulators. for mercuria it could be in ten years become the fourth biggest physical commodity trader in europe and nipping at the heels of its competitors. this deal no doubt will add to their market share, guys, and in areas beyond just energy. you notice the metal storage, for example. >> puts them on the map, kate. question for you. what about blithe masters? everybody wants to know the global head of jpmorgan chase's commodity business, does she go over with them? >> it's a great question. sara, there's no new detail as to what will happen with her and i'm told in terms of all the various personnel issues including which physical traders will go that probably won't be decided until later this year and they have to go through regulatory approvals, et cetera. having said that my sense is blythe may not go to mercuria as

part of this. i think the notion was if they'd sold it to a private equity company or another type of investor that wanted someone to run the entire business she would be a good fit for that but in a case like this where they already have management, i would be surprised. >> and clients to keep happy. >> exactly. >> thanks very much, kate kelly, with the latest. up next the president and ceo of the chamber of commerce will tell us why in his words banks are not bad guys. plus his views on the effects of high frequency trading. and later a living legend in the world of golf tom watson will join us live here at the new york stock exchange. you don't want to miss it. we'll be back after this quick break.

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banks are not bad guys. that's the message the leader of the chamber of commerce has just delivered in a keynote arguing now is the time to combat the misconception that capital markets are a burden and an accident waiting to happen or an instrument of inequality. in a cnbc exclusive interview now tom donahue president and ceo of the u.s. chamber of commerce joins us live. welcome to the program, sir, it's nice to see you again. >> i'm very glad to be here. >> how would you like to refocus the debate? >> i think that the american people should recognize that they demand a certain level of choice and diversity in the system depending on what they need to do in their family and in their business. second they need a set of very, very clear rules. the investors, the companies and people that are going to take advantage of it need to know what the rules are. and i think they ought to know

that there is risk in the financial system. if there were no risks, there would be no reward. why would you buy a stock if you didn't think it would go up? why would you buy a financial investment if you didn't think it would provide you growth over time? and the biggest thing we all have to work on is to understand putting another 400 rules written in dodd/frank on top of 100 years of regulation is a very difficult thing. we've got to simplify it. we've got to fix it and we've got to make it work for all americans. >> so, how do you feel when you see the new york state attorney saying that he's going to crack down on, for example, high-frequency traders, arguing that rather than curbing the worst threats posed by those traders our markets are structured today increasingly too focused on catering towards them? how do you feel about that? >> i think the new york -- i have a lot of views about the new york state attorney general and he's not helping the economy

and he's not helping the market. he's trying to help himself. on the specific question of high-frequency trading, people need to know more about it. the people that participated in it, understand what it does to help their investment and the risk has to be rational and we are learning more about it and i think you're going to find some adjustments that are going to make it more -- more comfortable for everybody going forward. >> so, how would you -- there will be people who are watching you now when you say banks are not the bad guys, will be trying to square that with what they're reading in the newspapers, that the s.e.c. is investigating whether foreign exchange benchmarks were fixed, that it's investigating whether interbank lending rates were fixed, and more recently whether the $49 billion verizon bond issue had some collusion within it. what would you say to people who read those headlines and go, well, it looks like there's stuff going on? >> well, i think when people

think about banks, they have to start in their own neighborhood. the bank where they go to cash their check, the bank where they go to pay their bills, the bank where they go to get a mortgage, the bank where they go to borrow some money to buy a car. and those banks are being interrupted and made more difficult to run and more expensive with an explosion of regulation. and then they need to look at the banks that they require, this country prrequires, to dri our economic situation, to make companies successful, to advance the international trading system. but i'm trifeing ing trying to clearly across the board this is the most trusted financial system in the world, and times of difficulty money from all over the world comes here. it doesn't leave here and go somewhere else. the banks have paid back every dollar that was borrowed from the federal government and then

some at a user interest rates and that said there are people in the banks that are bad people because they are human beings and when we get them, we should prosecute them. >> in the few minutes we have left, i want to ask you about a broader business question. the u.s. chamber of commerce represents businesses and not just banks. on the question of job growth and hiring, what is holding us back? we have easy money and borrowing is extremely cheap. the washington uncertainty has been lifted. we're not in the middle of fiscal battles. why aren't your ceos and members hiring as much as they need to be to create millions of american jobs? >> that is a great question. we are a country with people without jobs and jobs without people. we need people. we have to hire people with skills and education. we're trying to find ways to get

jobs for people who are no longer available to be able to work in the workplace because of the introduction of technology. pardon me. because an extraordinary improvement in productivity and efficiency. but most of all, a government that has made it very, very questionable about where we should hire people with an overregulation system that every day makes it more complicated from health care and you name it to put somebody on the payroll. >> okay. sir, it's good to see you again. i know that your capital markets event continues. we'll let you get back to it, tom donohue the ceo and president of the u.s. chamber of commerce. thanks for your time. >> thanks your help. i wanted to point out paylocity just ipo'd and just opened, up higher, 64%, a cloud-based payroll and human

capital company. and straight ahead blame it on the weather. fedex reported a great miss in the latest quart and unusual storms and storms were cited and could it carry over for the rest of the year and affect the industry? we'll be right back. 'll be righ. it's a growing trend in business: do more with less with less energy. be righ. 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.

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welcome back to "squawk on the street" i'm reporting from the nymex this morning. the department of energy

releasing its crude inventory report for the week ended march 14th. the number coming out a bigger build than expected. 5.9 billion barrels. this would be bullish -- excuse me, bearish for prices but they are staying in the same range where they were around $99 per barrel. do want to say that traders were looking at refinery run rates after last night's api reports which were expected to come down but they actually went up which means refineries are using more oil to produce product. where they are getting it? they are getting it from cushinges but the stock is expected to decrease. traders watching the reports and looking for the long-term trends and it shows the market is well supplied and wti prices should be lower than where we are now. but, of course, there are other factors that impact crude prices, we're looing at geopolitics and global economic data and the strong equities sessions we've seen here in the united states as well. i just want to give you a heads

up on distillates and gasoline a draw of 1.9 billion barrels and distalates more severe than expected. a cloud-based player has rocketed at the open. let's take you to the nasdaq where we are currently trading on paylocity which is a cloud-based payroll and human capital management software operator. the original was 14 to 16 and they priced at $17 and they are currently trading shortly after the open at almost 28 bucks a share a gain of 64%. the ipo-mania continues. nine expected to start trading this week according to renaissance. in the meantime we're also watching shares of fedex trading higher despite a big third quarter earnings miss. the package delivery giant saying it was hurt by unusual winter storms. and there's a market perform rating on fedex, $140 price

target on the stock. if it was severe weather as management has indicating, shouldn't that be temporary, donald? >> it should. it should. it's a sharp contrast if you look at the 125 million that they claim in additional expenses attributable to bad weather, that's 26 cents a share of earnings attributable for the miss, but it would have been even worse had they not been actively repurchasing shares. there's another five cents a share worth of benefit from share repurchase. but to their credit, they spent the money to get things delivered. u.p.s. claimed a ten cents a share deficit in the most recent quarter. but couldn't get things delivered on time. >> yeah. that's where i wanted to go. how nimble are these guys? we saw with u.p.s. they had the holiday surge where everyone was shopping online compounded by the severe weather. how did fedex adapt to those changes? >> they talked about a couple of things one that they run separate networks for ground versus express and that was a real advantage for them this

quarter. and also they just went ahead and spent the money to expand line haul capacity. they had asked for volunteers who wanted to work literally on christmas. i ask a package delivered to my house christmas morning by a fedex employee. nobody from u.p.s. was darkening my door on christmas morning. so, they paid up to deliver the services so they can claim a 99 plus 9% online and u.p.s. is not doing that. >> what's behind the scenes with you analysts, on monday the estimates were slashed for fedex -- >> i did as well. >> and u.p.s. i think yesterday for you as well. what are they doing? are they getting on the phone, are they calling you guys up and say, look, it's not going to be that great or is there suddenly a piece of information that has landed in the public domain that means you slash all of your estimates? >> it's just a matter of watching things play out and, you know, it's premature to do it in january because you don't know if february's going to be warmer. but we're at the point of the year now where we can see the weather trends.

we're probably through the worst of it so it's time to make those adjustments and realize it was just a bloody cold, miserable winter. and we're ready for spring. but you don't make those adjustments until you can see the whites of their eyes so to speak. >> the other big question for the shipping companies both fedex and u.p.s. the shifts to consumer habits going to ground the cheaper option versus express. how quickly are these companies and how profitably are these companies adapting? what did you learn from the fedex earnings report today? >> well, we've known for some time that the most profitable thing fedex does at least in the large silo perspective is ground. ground is their highest margin business. so, while it's a lower yield, it's a much higher margin. they actually make more per package in operating profit in ground overall than they do in express overall. so, what they really need is they've been working hard on this express reconstruction as they go through it they need

volume on express. it's just not there yet. >> all right. well, we'll continue to look for that and fedex shares which are higher as we mentioned. donald, great to have you, thanks. >> always good to be here. up next on the program, he is living legend in the game of golf and he just pulled off what some are calling one of the most incredible recovery shots ever. a one-handed backwards chip shot. he'll tell us all about that when he joins us live here at the nyse with scottie after the break. eak. lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today.

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welcome back. mastercard is debuting a new ad this morning featuring hall of fame golfer tom watson. the new spot comes ahead of the mastercard sponsored arnold palmer invitational which kicks off tomorrow down in orlando. let's take a listen to the spot right now.

>> now have some fun with these golfers. >> you want a golf tip? get a mastercard. it gets you lessons with pros. >> tom watson. >> couldn't even hit the cart once. my gosh. somebody did hit the cart. did you hit the cart? >> yes. >> access to tpc golf courses. >> you you hit the cart. >> and maybe a surprise. >> not everybody gets to see tom watson, that was awesome. >> and joining me right now on the floor of the new york stock exchange for a cnbc exclusive is mr. tom watson hall of fame golfer. either those are really good actors or were they really surprised? >> they were amateurs out there getting a golf lesson and i just show up in a ball cart. who is this guy, get out of the way. it was a lot of fun. >> i love that. you've had a partnership with mastercard for an awfully long time. >> since 1996. i've done several commercials for them and the new campaign out with the priceless part of it with the surprise campaign is

just starting off this week at the bay hill invitational at arnold palmer's joint. >> yeah, arnold palmer's place down in orlando. unfortunately tiger will not be there just pulling out because of his bad back. has the game of golf moved on beyond just banking on tiger showing up at an event? >> i think it has. from the standpoint of, you know, there have been more people being successful although tiger won five times last year, didn't win a major and people said he had the lousy year. well, he had the best year of anybody last year. >> who are the guys you like watching beyond tiger? rory looks to be back on the top of his game? >> i'm ryder cup captain so i'm paying particular attention to the players right now up on the list. and a lot of them are the young players. we've got people like jimmie walker. the fella patrick reid who won a couple weeks ago. >> jordan speeth, right? >> jordan speeth is in there and

young guys and many who may make the team. >> what do you anticipate for the ryder cup? 7 out of the last 1349 9? >> you've got it right. >> you need to turn it around. >> i've set the stage for them, gentlemen, i'm sick and tired of losing, it's your job to take the cup back. >> do you think tiger will eventually break jack's report? jack has said he believes it will happen one day. clock's ticking. >> when they said will anybody win the grand slam in one year? tiger did the tiger slam, he won four majors in a row. i said that was improbable but not impossible. i'm saying the same thing about his, you know, his 19th major championship. he can do it. >> i don't know if everybody saw or a good number of people had to see that ridiculous trick shot. it wasn't even a trick shot. >> it wasn't that tough, come on, scott, you could do it. >> behind-the-back one hand at the toshiba classic. it went in. >> no, it didn't go in. it hit the flag.

>> oh, it hit the flag. >> i was going to make bogey if it didn't hit the flag. >> you still got game. you still compete against the young guys several times a year. >> i play against the kids. i'm not there this week at the bay hill invitational, but i'll play against them at the open championship, british open, pga and the greenbrier classic. >> overall, what do you see as you travel the world for the game of golf, participationwise, sponsorwise, how healthy is it right now? >> well, the game -- the professional game is really good. i see dark clouds on the horizon because of this right here, right in my pocket. that thing right there. >> why is that? >> time waster. what it does, it takes people's time away from doing other things outside of this right here. you know, we are seeing a decline in golf. we're seeing a decline in a lot of other outdoor activities because of this and, you know, we have to get over this, you

know, you know, we've ramped up to a position right now where it's starting to affect us. >> it's so funny you say that, rick pitino, the head coach of the louisville basketball program was on this very program saying almost the same thing, that this generation millennials if you will or whatever you want to call them, are spending so much time on their mobile devices it's taking away from their everyday -- >> it's not just the kids. it's you and me and everybody else. we're so connected and so -- we have to get back to people that, you know, we don't have time to do the things that we should have time for. >> we have another special guest joining us right over your right shoulder. it's raja from mastercard joining us. i thought i was going to have the yips with the pronunciation of your name. i made the putt. what does it mean to be the sponsor of bay hill again this year? we were talking about tiger not being there. that has to be a bit of a disappointment. >> but we've got legends associated with the sport so we're just fine. from our point of view,

priceless has been a successful campaign for 17 years and what we are trying to do now is to evolve it from an advertising platform into a holistic marketing platform and trying to connect with consumers in new and surprising ways. and that's the launch of the priceless surprises and the context of api that we are right now doing. we have got various experiences we are giving our consumers from small things like access to golf clubs and also things like merchandise. but also big ones like unique experiences and once in a lifetime experiences with legends like tom watson. >> tom says the game's in great shape. even if a tiger misses an event and even if you are the title sponsor there's so many good players out there right now that they pick up any slack so to speak. >> that's absolutely correct. >> from a ratings standpoint, a ticket sales standpoint, is that fair to say? >> absolutely, absolutely so. and we have a number of golf events we are sponsoring throughout the year and we find what you have said is absolutely

right. it's always good to have a lot of star power but even if a famous star is not this which is a little bit unfortunate, but there are a whole host of folks that we have got and it's working very well for us. >> yep. and i guess it's going to continue. you guys, i've said, have been hong-time partners. are you going to be down at bay hill for the actual event? >> not this year. but i have a good friend down there scoping out the kids for the ryder cup team, andy north, he's my co-captain. >> we like andy as well. thanks for being here. thanks for hustling. the new york traffic can be difficult. >> i was trrunning and i'm stil breathless. >> thank you very much for both of you. simon? we have breaking news with mary thompson at hq. >> two men have been charged with an insider trading scam that netted them $5.6 million this coming from the u.s. attorney's office in new jersey. the two men involved are steve metro a 40-year-old from katonah, new york, who is a managing clerk at the new york law office of simpson thatcher,

and another man vladimir adelman who is 42, formerly he was a stockbroker at morgan stanley as well as oppenheimer. evidently metro who worked at the law firm provided information about deals the firm was working to adelman who then purchased securities not only for his own family but also for metro as well. the two defendants or the two charged, again, netting a profit of $5.6 million from these insider tips. now among the deals or among the companies involved in the deals, in which metro received that insider information, sirius xm, again, all of this according to the complaint, sirius xm radio, also graham packing company, smart modular technologies and international coal group among others, 12 companies, or 12 companies' stocks i should say were involved in this insider trading scam. again, the information obtained by a managing clerk at the new york office of simpson thatcher

and then given to a broker at oppenheimer and morgan who bought the securities on behalf of his family and the other man steven metro involved. back to you. >> okay. thank you, mary. still ahead on the program, the ceo of adobe will join us live for an exclusive interview following the company's first quarter results as, of course, they, too, turn cloud. "squawk on the street" will be right back. and i've got this runny nose. i better take something. truth is, sudafed pe pressure and pain won't treat all of your symptoms. really? alka seltzer plus severe sinus fights your tough sinus symptoms plus your runny nose. oh what a relief it is

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welcome back to "squawk on the street." my guest today for the santelli exchange, peter shift, needs no introduction. thanks for taking the the time to join me today. >> good morning, rick. thanks for having me on. >> we only have three minutes. we have to move fast. in 30 seconds give me what you think about the fact that several days ago gold hit a six-month high. >> well, what is surprising is that it's not at a one-year high or a two-year high. we're going to hear from janet yellen later today. every time janet yellen talks it makes me want to buy gold even more. >> let me stop you there. janet yellen is the topic. i'm going to do a little yelling on yellen. i continue to see that the programs are a mere $55 billion a month, that was said yesterday by an economist, by the way, mere in front of $55 billion a

month. we need to continue to do this. there's slack like in the labor market. what do you define structural versus cyclical unemployment, peter? and are the fed's programs one or the other going to address this? >> no, the fed's programs are making it worse. you know, all janet yellen and ben bernanke have succeeded in doing is re-flating the bubbles in the stock market and the real estate market. but that adds to our structural problems. it doesn't solve them. you know, these malinvestments are inhibiting legitimate economic growth. temporarily it feels good, but we have seen these movies before. >> give me one example. >> because we're misdirecting resources into speculative activities on wall street we're over building in housing, too much money is funding, money losing enterprises. we're not oh we oh we're not doing real legitimate capital investment. we're not, you know, investing

in plant and equipment. we're not producing more products. we're not creating good jobs. we're just blowing air into a bubble. we're creating phony paper wealth that we leverage up and we use it to spend more money on imported goods that we didn't produce. but this whole thing is an illusion and the illusion is going to shatter. >> okay. now, many politicians for the next cycle, epidemic, are going to be running on the platform of the disparity in wealth and income in the united states of america. are any of these programs addressing that fact? >> no, i mean, there is a bigger disparity than the free market would create. you're always going to have people wealthier than of ners in a free market. right now tchasm between the rih and poor or middle class is much wider than in a free market economy and that is because of the policies of the fed, that's because of the policies come ought of washington. what the democrats are advocating isn't going to make

that situation better. it's going to make it worse. >> peter, we're out of time. but thank you as always. look to hear from you again soon. sarah, back to you. >> all right, thank you, rick. yelling on yellen. up next on the show, toyota agreeing to the largest criminal penalty imposed on any automaker. more details on that. re details. announcer: where can an investor

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toyota agrees to the largest auto penalty on any automaker this morning. >> huge fine coming to toyota. toyota has agreed to pay this. settlement of the investigation of unintended acceleration cases. the department of justice was looking into. total penalty, $1.2 billion. toyota will be on probation for three years and is agreeing to have an independent monitoring system, a company coming in or a person to come in to upon ter how they comply with safety regulations. no prosecution for toyota if it complies with the terms. here's the attorney general eric holder on what toyota did and how this penalty came act. >> by the company's own admissions it protected the brand ahead of the customers. this constitutes a clear and reprehensible abuse of the public trust.

>> think back to five years ago and you probably saw this video. this case stems from toyota and how it handled unintended acceleration issues. specifically with the gas pedal and whether or not there were sticky pedals. toyota recalled more than 10 million vehicles. the u.s. attorney investigating this case, here's what he had to say about how toyota misled the public. >> in many ways this was a tale of two companies to the unsuspecting public, toyota said one thing but internally and in secret toyota said something different all together. as bluntly put by an employee who became concerned about what toyota was saying in january of 2010, quote, idiots. someone will go to jail if lies are repeatedly told. i can't support this. >> toyota issuing a statement overnight regarding the settlement. toyota has cooperate with the u.s. attorney's office in this matter for more than four years. during this time, we have made

fundamental changing to become more responsive and customer-focused organization, and we are committed to continued improvements. take a look at shares of toyota over the last five years. up 75% and then real quick, guys, want to point out a lot of people are looking at this case and saying, look at where general motors is right now. will we see this years down the road when it comes to u.s. attorney's investigation of gm? >> it's certainly add value to that news flow. phil, thank you very much. phil lebeau with the latest on toy oat tanchts if you're just tuning, in e ining in, good mor. >> welcome to "squawk on the street." here's what's happened so far. >> this is one of those where if she comes on too strong on how strong the economy is, rates at 3%, all the bond market equivalent stocks come down. i think she needs to be able to say, you know, what it's pretty good but it isn't good enough. that's how you go higher. >> there's the bell.

>> we have a big lead. and that lead has given us permission to pay outside our stores. we're going to be in the cough tee business. we're going to be in the tea business, we're going to be in the consumer experience business. and potentially we're going in the mobile payment business. >> putting another 400 rules written in dodd frank on top of 100 years of regulation is a very difficult thing. we've got to simplify it. we've got to fix it. we've got to make it work for all americans. it is 11:00 a.m. on the east coast. 8:00 a.m. out west. here's what we're watching out for you this morning in the next 60 minutes. janet yellen's public debut and we will peek with can congressman and noted fed cri c critic, yes, ron paul will be on the show. tim cook hits back, the book draws the ire of apple ceo.

adobe is surprising to the upside. wonder why it's the cloud, it's web subscriptions, it's digital software. exclusive interview with adobe ceo this hour. and the price hike from pandora. the street likes it. will pandora customers? just up, first up, the former "wall street journal" tech reporter is out with a new book on apple called "haunted empire, apple after steve jobs." the book is pretty critical. it has to be said of apple and its current ceo tim took cooke. that's what the author had to say. listen to what he had to say on "squawk on the street" yesterday. >> part of the challenges is that everybody has different idea of what would steve do. i saw this myself in different interviews and so the question is, whose version are they going to take and whether the troops will follow. >> yeah, she seemed to speak about the fact that it's still what would steve do kind of

atmosphere at apple and that is huge. apple's attention, tim cook speaking out himself, cook giving an exclusive statement to our own becky quick saying this nonsense belongs with some of the other books i read about apple. it fail a capture, apple, steve, or anyone else in the company. am has over 85,000 employees to come to work each day to do their best work, to create the world's best products to leave their market on the universe. i'm confident about our future. we've always had many doubters in history. they only makes us stronger. interesting and defensive, jon fortt is here. i'm curious about your reaction here. clearly this got tim cook's attention. >> it did but i don't think ukur icon vinced me yesterday. you don't need access to do a really insightful book on apple. adam taught us that. that didn't earn the same kind of response from tim cook.

i don't think we know yet whether apple has been kind of keeping their powder dry. they're going to come out with a big product. clearly they had to shuffle some things around post-steve. it really is a different reality for them than when steve was around. in terms of cash, in terms of corporate governance. >> it's actually better. apart from the fact that jobs isn't there, a lot of those dynamics are better. >> a lot of people would argue. and some of the things that they've had to fix, it could be argued, including the cash issues, including the smaller ipad, were things that steve jobs resisted for a long time. so for all of steve's brilliancer he didn't get everything right immediately the first time. >> i'm interested that you think it's a defensive statement. i don't see it as defensive statement. i see it as cutting to the core that she doesn't know those 85,000 people. >> he used the word nonsense. it sounds like a defensive statement. i thought the re/code recap of the statement was interesting. actually comparing it to a steve jobs type of defensive attitude. it does feel like apple

increasingly is on the defensive having to say, look, our innovation cycle is as fresh as ever, we have a lot of new products in the pipeline, jon. >> is it defensive or a aggressive? >> broadly irrelevant. has she moved the stock? no. is she saying anything new? not doing a tv. but apart from the fact that steve jobs died, this is a new administration. >> is there anything in the book that holds up? i'm not sure. has she cut to the quick of some organizational problem that they have that can't be solved? are we clear that tim cook hasn't actually cleared out a lot of problems that might have been hiding beneath the surface that nobody few about. >> any peek inside is going to be intriguing. jon, adobe, out with earnings. this has been a pretty optimistic story. the stock has been a moon shot. >> it's been impressive what the company is able to do.

they posted better than expected first quarter earnings. they continue to transition to the cloud. we saw their numbers after the bell. we saw them a little bit before the bell, too. they were good. that didn't so much matter. president and ceo of adobe. thanks for joining us. so 400,000 plus cloud subscribers added in the quarter. you're trending, targeting to about 2 1/4 million for the may quarter. what's the subscriber base looking like so far? how are the people who have already signed on different from the people who are holding out? >> jon, it was a really strong quarter for us and a great start of the year. when we think about two big milestones that we accomplished, the first milestone being that the company's revenue in the quarter was revenue. in transitions, that's really hard to accomplish. the second big milestone was that the revenue from the creative cloud subscriptions and

the enterprise license agreements actually exceeded the revenue that we reported from the old trend business. so it's clear to us that customers like the innovation that we're providinproviding, t that access to software is always current. and the over 500 new features we're delivering is rest son natding with new customers. we're going to have a major new update through the product in the next few months. exciting times ahead. >> which to me makes your 3 million subscriber target maybe look conservative because if you continue to add 400,000 a month at the rate you have been, and on the call you suggested that you would, you will exceed that with the launch coming up, are you being conservative on the subscriber number? >> well, what we said, jon, yesterday on the call was that when we look at the stock that we've had in q1, it's clear that it's a really strong start of the quarter. and we do expect to meet oh of

exceed all the annual targets we provided. we just don't want to get into the business of updating our annual guidance every single quarter. but i think it's fair to say that we're, you know, driving innovation, we're driving new subscribers. one of the highlights in the quarter, jon, was a new promotion that we had for photographers. when we think about the immense market opportunity that exists for photographers, the photo shop light room bundle we introduction sd off to an extremely strong start. we just have to keep executing and focusing on our customers. >> yeah, asia pacific i think was down around 22%. you mentioned how they're transitioning a little bit more slowly to the cloud. a little bit more slowly to the digital market solutions. got to ask about macro also. are you seeing the effects of emerging market uncertainty and the willingness of that base to adopt your new solutions? >> no. i think, you know, what's happening is, as you can imagine, the developed markets are moving quicker to the

subscription base business as a result of having access to internet. and in the digital marketing space we've made a very conscience decision to focus on the uk, germany, the u.s. because the opportunity is so large. we want to make sure that we're the digital marketing standard in those countries and we will definitely expand. i think focus on digital marketing is important. as that revenue had been growing over 20% a year, the revenue proportion for asia therefore naturally diminishes. >> you've got a big digital marketing event coming up. expect some product announcements. are you going to take on your rivals make in the dashboard area to give customers a single view of all of their campaigns across social? you do some of that already, but what should we expect? >> well, we're going to have a bunch of exciting announcements, i think as you correctly point out all marketeers want all of

their different marketing solutions to be integrated. we think we do have the most comprehensive integrated offering in the market. we have already introduced a dashboard that allows people to really look at all of their marketing solutions in a single unified view. one of the exciting things that we hear from chief marketing officers all around the world is they actually want us to help them with their entire media mix. how should they be spending money across all of the various digital channels that exist and how should they be communicating with their customers across each of the different channels. adobe campaign is off to a strong start. yes, expect us to continue to innovate both around the individual solutions but even more important on the integrati integration. >> thanks, definitely be watching and will continue to cover adobe's shift to the cloud. >> thanks, jon. ahead on the show, he has no love, zero love for the federal reserve. former congressman ron paul will join us next on cnbc.

as, of course, janet yellen prepares to give her first news conference as fed chair following the all important statement at 2:00 p.m. eastern. and as you might expect on yellen day, rick santelli is on a roll in chicago. rickster? >> we like to think that we always try to roll pretty fast here in chicago. we're going to talk a bit about today's fed meeting but what we're really going to talk about is allocating capital and resources and tie in some of the things going on with china, think copper, think iron ore and think about joining me for that discussion bottom of the hour. in today's market, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers

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relatively flat market today if home building sector is showing some moves. interesting moves there. bertha coombs has more back at hq. good morning. >> the interesting thing is the houser sector has been among the lagging sectors year to date. but today, it is on fire. homebuilders up more than 3%. take a look at kb home surging on the heels of a strong earnings report. new home orders rose 6%. the rest of the homebuilders are on the move, as well. lennar, d.r. horton, pulte group round out the top five performers in today's s&p 500. >> thanks for pointing it out, bertha coombs. today janet yellen will host the first ever news conference as federal reserve. next guest is notorious for his

distaste of the federal reserve and current policies. joining us ron paul the former republican congressman and presidential candidate, now host of "the ron paul channel." good to see youss a always, dr. paul. >> good morning. nice to be with you. >> it's great to get a mix of opinions on the federal reserve. this is janet yellen's first day as fed chairman making the decision, giving her news conference, investors seem to be encouraged by it. they rallied on the day of her testimony. they're rallying here into her first meeting. i take it you're probably not as enthusiastic. >> well, long term is, you know, an illusion. i don't believe that a federal reserve system where any one individual knows how to plan the economy by manipulating interest rates. interest rates are so important that if you give this power to one small group or one individual, there will be distortion. so sometimes you have housing bubbles and sometimes you have housing busts, then you have housing bubbles and bond bubbles. that's all reresult of the

manipulation of interest rates, which is my objection to it. >> one of the debates out there is whether the federal reserve itself should be paying more attention to financial stability. stanley fischer, for instance, in his testimony to be vice chairman of the federal reserve talked a lot about this. should the fed be more active in monitoring bubbles and distortions. >> see, i think it's the invisible hand that we lack. not the wisdom of a few people. a few people can't be wise enough to dictate the market. that's why socialism always fails. one half of our economy is socialized because it's the control, the money supply, control of the interest rates, so, therefore, it isn't that they're not well intended and that they don't get it right once in a while and i'm sure he's well intended to think that we can monitor this very closely. my argument and those of white house believe in the free market, that we don't believe they're capable of doing it and i think history shows that the record is pretty bad. the economy on the surface looks good but if you look at hard

core unemployment and standard of living of the middle class, there's still a lot of problems out there. if we look at only at the stock market, then we're in denial. >> yes, so why do you think, sir, that we have such big economic problems? what's happened to the invisible hand of capitalism? has the fingers gotten broken? why is unemployment as high as it is? >> it was destroyed by the intellectuals from the 1930s on because we were taught about interventionism and paper money and economic regulations. and so we gave up on the free market and sound money a long time ago. we don't believe that interest rates is the, you know, by market rates, is worth anything. so we reject it. so that's the reason we have it. intellectual fight. >> forgive me. forgive me. interest rates this low surely aren't really an impediment to growth. i know it's tough if you're on a fixed income.

but you know, with putting the interest rate issue to one side, why is the economy not making more jobs in what is the -- why is capital investment so low in this country? why are ceos spending half a trillion dollars a year buying back their own stock rather than creating jobs and growth in the economy? >> the simplest way to explain it is lack of confidence in the whole system. and there's too much malinvestment out there. too much debt. this monetary system encourages debt. everybody has too much debt. look at our $17 trillion debt, our foreign debt of near $6 trillion. cities are bankrupt. counties, pension funds, social security. our medical system is bankrupt and yet we're adding on now. there's more uncertainty with obamacare. so businesspeople are very, very cautious. low interest rates are not a n pancea and they won't admit this. no.

that's the only tool that yellen has. she has one thing that if there looksz like there's a problem you lower interest rate. but they're up against the wall. where do they go when they need zero, when you need more spending, when you need debt because the short run, minor ups and downs this seems to help. ultimately it runs out of steam. and when a country or an individual lives beyond their meensz eventually the country and the individual has to live beneath their means and that's the reason why middle class is suffering the consequences. somebody has to pay the bills. and it becomes unemployment and cost of living goes up for some people but not for others. that is -- it is, you should lay the blame at the feet of the federal reserve. not as their individuals. i don't attack the individuals. but i think this system is deeply flawed. it is the rejection of the confidence and the understanding of how the free market works. >> right. but having said that and we can go into the philosophical debate

around the federal reserve. they've already gone down this road and gotten very deep in this hole. now starting to get out of it and tapering by 10 billion, expected to taper even further. the talk now is of higher interest rates. not any time soon but what's the signal we're going to give the markets to let them know when we're going to increase interest rates? what do you think about the fed's communication strategy around this? >> well, they're not ready to tell you the truth. eventually interest rates will go up and nobody knows exactly when because interest rates will overwhelm when there's the reaction of the dollar. you know, last week we had a shake-up of the markets when we saw russia changing where they hold their tre treasury bills and other people buying it. when they reject that interest rates are going to go up. but the fed is not going to announce today, well, we're going to start raising interest rates. even this taper to this tapering thing is just, you know, deception. yeah, we're only buying 65 or $55 billion of long-term at the same rate we promise you we will not raise interest rates.

the only way to keep interest rates near zero is buy more treasury bills. so everybody knows what's going of happen -- >> they're trying to keep conditions easy because there's still a labor problem in this country. we're not creating enough jobs. >> and i understand that. on a short run they seem to be achieving what they want. but on the long run, it further distorts the market. there will be more malinvestment. everybody says the only thing you have to worry about is not 2% in price inflation or 4%, that's all okay. but there's something else that everybody forgets about. when you have low interest rates where does the money go? it goes into bonds. you have a bond bubble. one of these days a 30-year bond boom is going to end and there's going to be a bear market. >> it's too much gloom and doom, congressman. you mentioned russia. we do want to talk to you about that. i know you have provocative comments out about the u.s. role in russia and crimea. don't go anywhere. ron paul, we're going to talk about this op-ed that has everyone fired up.

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why does the u.s. care which flag will be hoisted on a small piece of land thousands of miles away? that was former congressman ron paul writing this week in "usa today" on crimea. the congressman is back with us now. why do you believe that people's correct reaction to this should be, as you put it, so what? >> well, i think we shouldn't worry too much about it. it's not our business. it's not our part. it's not gaun a no or san diego. i think we're just stirring up trouble over there. there's an argument going on in crimea and the russians are involved and europeans could

very well be involved. but i think it was wrong for us to get involved and participate in the overthrow of the government. we spent over $5 billion with our ngos to agitate and get rid of an elected government. i don't take a position that i know the answer there. all i know is that it would be best for us to stay out. american people are tired of it. getting involved. we don't need another war or fight. we don't need a trade war. we don't have the money to do it. so it's best we stay out. the best part about this whole story is that the market is going to overrule the rhetoric of both sides because russia sells $150 billion of oil outside. a lot of it to europe. so there are financial -- this is why the argument you should have free trade and friendship with countries, no entangling alliances, no militaryism and you're less likely to fight in is the reason this probably won't turn out to be quite, at least i'm hopeful that it won't be, because there's so much economic interest on both sides. americans have a lot of money invested in russia so they

freeze the assets over here. what's going to happen to the assets in russia? >> you know, congressman, other countries are very envious of the way in which this country, the united states, binds itself together. people unite around the flag. they unite around their military personnel. as i don't think any other country does around the world. do you think the heart of that binding of this nation together there is a belief that it has to be a super power, it has to be the world's policeman, that's what it stands for? >> well, in a country which promotes lib ber did and independent thinking, i would say that it shouldn't be uniform and if the country does something wrong and spies on its people and spies on the world and becomes the world policeman and starts wars illegally and has wars -- i mean, how much in violation of national sovereignty have we participated in over the last decade or so? and we accuse other people, you know, we're anxious to accuse other people of doing something

maybe similar. but, no, i think our responsibility is to take care of our own business, but to disagree with our government. i've never heard that story. i think like world war ii people generally rally around. but to disagree on policy, i think that is terrible. you know, what if they're doing the wrong thing? what if we're the aggressors, we have an obligation to speak out. >> it is always refreshing ini see you. thank you for joining us, former congressman ron paul there on the fed, yellen, and what's happening currently in russia. thank you. coming up, changes at pandora. why you'll be paying more and what that means for subscription service. that's next on "squawk on the street." also, an interview with the ceo of autodesk. a huge company. interesting play on 3d printing all coming up on "squawk on the street." street." ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪

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a price hike for pandora users. still higher but off the highs of the day. morgan brennan is in los angeles following the story for us. this comes down to managing cost for pandora, doesn't it? >> yes, it does. so pandora is raising the subscription price for ad-free streaming service by a dollar,

$4.99 per month for new subscribers and scrapping the annual subskrigss which represents a dollar increase for those subskripers. the music streaming giant is doing this to cover rising music licensing costs that artist royalties are up 53% over the last five years. and that they're expected to jump another 9% in 2014. subscribers may not be too happy, especially since there are other services to choose from. apple's itunes, spotify and beats which offer various subscription offers and more competition. actually coming in. we've got samsung just announced. milk music, amazon launching a service through prime and, of course, youtube. but also keep in mind, subscribers only make up 3.3 million of pandora's 250 million registered users. and consumer appetite for online radio, it keeps growing. streaming music revenue in the u.s. grew 39% in 2013. and that's making up over 20% of

the overall recording industry pie. that's compared to just 15% in 2012. still, not everyone thinking this will actually help the company or the stock for that matter. btig is telling me that pandora has been upping prices dramatically over the past few years and that competition, it is a worry. so ptig has a sell rating with a $10 price target on pandora. investors, though, still seem to be bullish. it's up a 150% over the past year. >> wow, thanks for the set-up, morgan brennan out in l.a. covering pandora for us. i think i'm the only one on the planet that uses pandora. the free version and stomachs the ads. >> yeah. i use the free version of pandora for a while and switched because i was tired of hearing the commercials. interesting play by them. latest data showed them far ahead sharewise for of these including itunes radio. they had that $36 a month plan,

apple's itunes match, $36 a year plan. itunes match is $25 a year which seems like a bargain but i'm frustrate with the data quality in terms of the song choice on itunes radio. it's frankly better on pandora. so we'll see how it goes. >> i don't know, you put a tweet out there this morning. >> i did. i did. $7 billion. >> yeah. >> justify that? >> it probably costs $10 billion. you know, once you pay the premium. >> apple has the cash. >> for apple, what is that? half of whatsapp. >> good point. >> whatsapp is a much better business. >> well, i mean, music is very important eco system for apple. >> seriously, are we seeing with pandora here the cost base for the entire industry is rising and others will have to follow through or do some have a competitive advantage on price? >> i think apple in some ways does have a competitive advantage because they are the biggest mu signature sic retaile that can easily convert a long you like into a song sale that's good for the whole eco system and adds a little bit.

it's interesting in line of amazon's prime increase, also, that just overall in the digital economy there's interest in passing along some of these costs to the consumer. >> we've got of leave it there, jon. the conversation will continue. let's get to rick santelli in chicago. yellen day and rick's on a roll. >> hold on, simon. you know what, simon, i have to thank you personally. you asked a question today when you were talking to ron paul that made me change everything i'm going to talk about. can low rates be an impediment to growth? it just seems like such a counter intuitive notion. my answer is a resounding yes, yes, yes. and i'm gv you some examples as to why. when you have low interest rates, you have one dynamic which is allocating capital to an investment. consider somebody who makes a billion dollars a year, you know, somebody like a warren buffett who is super wealthy. i can't imagine when they go out and buy a ford explorer that they get as excited as somebody who makes $25,000 a year buying

a ford explorer. because the allocation of capital to that person is very, very important. the point is, is that when capital is cheap it will go to cheap ideas and cheap ideas don't necessarily add productive horsepower to the u.s. economy. think about the u.s. government. with interest rates being so low they were able to allocate resources to solar. i love solar. i loved it when i was 7 years old. i bought my first solar operated electric car. you signed a dplash light on it, used to go. didn't work so well when it was dark. the point is is that a lot of those investors have now reached a belly-up notion. does this help the industry? no. because when it really is at a point where it can be a killer app investors may think twice. china gives us another great example. look at copper, look at iron ore, look at all the recent stories about how finance structure of those commodities used as collateral is

unraveling. let me think, how i can make that an allocation of capital low interest rate? when interest rates are low there's this whole crowd that tries to give you a better idea for an investment. wow, you can't make anything doing this but i have a deal on china property that's going to go through the roof. i have junk bonds that are absolutely terrific. so it addresses this hunger for a return that isn't poisoned by low rates and it causes really bad things to happen. now the stories in china are the hot, hot, hot money is unraveling. how are those a couple of good impediments to growth based on low interest rates and free capital? you decide. that will be my question to janet yellen, actually. back to you. >> i just asked the question, rick. >> i know. it was a great question, simon. you get an a plus. you're better than the ten-year note. >> oh, wow, thank you very much. it's a big day on cnbc with the

fed. thank you very much. building the future, autodesk makes 3d design software. it's an 11, $12 billion company with great returns so far for shareholders. it does work to engineer the freedom tower, tesla's model s. the ceo of the company will be with us on "squawk on the street" when we return. mine was earned in korea in 1953.

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. coming up at the top of the hour, what surprises could janet yellen have up her sleeve for the market? we're going to find out what the traders are watching out for from the fed chair this afternoon. and jim cramer live from starbucks hq in seattle. find out what howard shultsz has to say about the coffee wars. and fund manager out performing his peers and a part of the market some investors say is too risky. it's all straight ahead top of the hour. simon, see you in a bit. >> european close as well, scott, we should mention, at the top of the hour. >> shameless plug. >> i know. on the heels of new jersey's decision to block the direct sale of tesla cars in the state, the showdown is coming here to new york. phil lebeau is in chicago with his eyes on albany this morning, phil.

>> and specifically right now, simon, right now there is a meeting of a committee up in albany. a state legislative committee looking at revising this state's laws when it comes to the sale of automobiles. right now tesla is allowed to sell in the state of new york but there are more than a few lawmakers who have said that they may restrict direct sales from companies like tesla to customers in the state of new york and look at doing this similar to what we see in other states. by the way, a t lot of confusion out there about where tesla is banned, where you can see teslas being sold. officially only three states have banned tesla sales. arizona, "the call," new jersey, ban goes into affect. maryland, virginia, minnesota, and colorado, earlier today former chrysler ceo talked about how strong auto dealers are when it comes to fighting tesla. >> the dealer network from my experience is very strong, very tenured, they have tremendous

state support. >> they're going to be use that support to try to push through a law that could restrict sales of tesla's in new york. again, we're still a ways from that happening as you look at shares of tesla. guys, the bottom line is this. it's now a state-by-state battle for tesla in terms of either keeping it in place that they can sell vehicles there or trying to overturn bans that have been put in place by states. sarah? >> yep. we'll see how elon musk reacts to all of that. he's been fighting it approximately phil lebeau, thanks. speaking of tesla, from students to design professionals and engineers and architects, autodesk's design software has been used for creations ranging everything from the movie "avatar" to designing tesla model s to 3d tissue organs. ceo of autodesk. you're really getting into 3d printing of human organs and tissues? >> well, it not really us but our customers are. and certainly there's a whole industry coming up around bio printing, including printing

organs. you know, we're still a few years away from it becoming mainstream but a lot of research is being done on biological printing. >> i want to ask you more broad question here about your business. jon fortt joins us and he was just talking to ceo of adobe on making this shift when it comes to software from a pc world to a cloud world. i know you're very focused on this at well at autodesk. how is that going with consumer adoption and profitability? >> it's a huge shift going on. and you know it's going to become the mainstream. software is just going to be done on the cloud and on mobile devices. and we've been working really hard to transform all our products from desktop products into cloud products. customers like it. there's huge advantages. it let's them solve engineering and design problems theyer in could solve before. i'm really liking how we're doing. >> hey, carl, jon fortt here. i remember we were talking years back about autodesk's place in

the cycle of manufacturing and construction. people often buy your software when they're planning a large product or project. what do you see from the macro prospective? how much are people spending on manufacturing, on construction, particularly in some of those emerging geographies where we've had mixed signals lately? >> we're usually a pretty good leading indicator. as you correctly pointed out, jon, at the beginning of a product or project, people ramp up and they retool. and right now we're seeing really good signs, kind of all around the globe. you know, probably the one exception is southern europe. really hasn't returned to the pre-recession levels. but with the exception of that and particularly in emerging economies business is doing well. >> carl, are you going to be all things to all men depending on how this develops or are you clear about what the vision is? because on the one hand along with the move to cloud-based

products is also, of course, the move towards subscriptions which i know is you're hot on, the same as we had adobe in the last hour in a similar way. when you were in texas recently you were talking actually about how it could be just one that people might purchase the software for to print one single item they might have seen, for example. what is the future moving forward? >> yeah, i think if you just look at software in general, you know, like many technologies, they take a long time to come to market. you know, the first software is a service companies were really created about 15 years ago and now it's becoming mainstream. i think we will go to a subscription-based model. right now we have about 2 million subscribers who -- for our software. i think this is going to become the normal way for people to purchase software. >> where do you see your media business going from here? lots of action in the media

space. content, very popular these days in the tech space. do you see opportunity there or will it continue pretty much along the same trajectory? >> it's a really exciting time when you see what's going on with video games and film. you know, there's hardly a film that goes by, if you just look at the academy award winning "gravi "gravity." visual effects are playing an important role in all the entertainment and all the media around us. and so it's a really exciting time to be involved in. it's such a creative business, it's a pleasure for us to be able to provide the tools for people who are doing such amazing work. >> i want to ask you, carl, about 3d printing. the stocks have had a bumpy ride. bar baron's coming out with a negative article. everybody banking on this technology at the technology of the future. i know it's a big part of your world. you're optimistic about it. where are we in the consumer adoption? sort of how mainstream 3d printing and these companying are? >> you know, great question.

two things are going on. one is there's a consumer part of 3d printing. you know, and you see automatic kinds of small, you know, couple thousand dollar printers and there's a whole movement around consumer printing. and i think it's becoming a little bit more mainstream. but i would put that, you know, it's like the early 1980s with the pcs. and, you know, as you look back the companies that were making pcs in 1980 are not the companies that are necessarily around today. and so i think we're still really early. i think that's why there's some volatility in the stocks. i think there's a whole other part when it gets to industrial 3d printing and you see a lot of work going on there with material science and you see a lot of work going on with the software to actually make it so that new kinds of manufacturing are possible that were never possible before. and i think that's really where the real money will be. >> well, it's good to get your thoughts on it because we got a front row seat here for 3d

printing. carl bass, thank you for joining us. ceo of autodesk. we're ramping up for what will be potentially a huge afternoon for the market. janet yellen speaks, of course, the federal open market committee is meeting now. at 2:00 it will issue a written announcement on tapering and forward guidance and then yellen's press conference begins at 2:30. historic moment at the federal reserve and for a country that changes its presidents much more often than it changes its chairs of the federal reserve. it all kicks off in just over two hours. "squawk on the street" will be right back. ck. announcer: where can an investor be a name and not a number?

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female announcer: sleep train's big gift event is ending soon. ♪ sleep train ♪ ♪ your ticket to a better night's sleep ♪ ♪ and she, of course, is back front and center today. wall street waiting and watching for the fed's decision at 2:00 p.m. eastern. many expecting to it trim its bond buying and rewrite rate's guidance. and then, of course, at 2:30 eastern janet yellen takes to the stage to the news conference that so many people will be watching live on the cnbc. let's bring in cnbc con tributer financial reporter with "the washington post" will be part of this afternoon's news conference. also with us we're delighted to say michael, chief u.s. economist with jpmorgan. just before we go any further,

do you think the press pack is going to treat yellen slightly differently than they did with bernanke? it was quite a staged event whenever bernanke was there. do you think it will be more animate with janet yellen? >> well, i like to think that we ask tough questions of anyone that we come across. i don't know that we will be any easier or harder on yellen ban we were on bernanke. i do think the press conference will be important. i think that the fed will be issuing a new vaguer version of its forward guidance and that yellen may use a press conference to provide the color around what exactly she's thinking about, what exactly the committee feels the the conditions are in terms of the liftoff for rates. i think she will be provide that color in the press conference similar to what ben bernanke did when he gave some scenarios around when they might finally end qe3. >> mike, how rapidly will we go from where we are now to the debate of how fast rates are

going to rise and the possibility that the market rate takes off ploorly on the 30-year before they ideally would like it to? >> well, i mean, that's going to challenge for the rest of the year for the fed. tapering is kind of last year's issue. and now i think it's going to be this question of forward guidance and how they signal where they believe interest rates are going to be. right now they're forecast to reach out to 2016. and those show pretty low interest rates out there. and then in september we'll get 2017 forecast. i think, you know, the challenge here from the fed is going to be convince the market that rates are going to stay pretty low and that the path of rate hikes will be modest. that's part of what she mentioned that there's going to be potentially some new guidance today. i think a big part of that is going to be convincing the market there are forces that will lead them to be tempered in their case of rate hikes. >> do you think, mike, there's a debate inside the fed about the efficacy of the super low interest rates and how much longer they should stay low? in other words, whether they're

actually going to be bringing back the millions of american jobs we still haven't recovered after the recession despite the fact we've had super easy policy? >> there's always some disagreement within the fed but there's still a strong majority that feels low rates have been effective and stimulating the economy. and look, if, you know, if the unemployment rate continues to fall and rate hikes look more eminent it's not necessarily a bad thing. the fed's job is not to keep the interest rates low always and anywhere. they want to keep them low when labor markets are weak. if developments play out like we think that's a good problem to have. >> i guess the danger is that the market gets the wrong impression although there's a miscommunication and we should note, of course, actual any in the last fed minutes there were those talking about big rises, sooner rather than later. >> i think that those people are still on the outliers within the fomc or outliers among the participants in the meeting. i think the challenge for the fed again as mike noted would be

to convince the markets that this is a change in semantics and not an actual change in policy. you know, always expect to see much move in where the plots are when the officials believe the first rate increase will happen. they'll have to change the wording without scaring the markets off. >> all right. mike, very quickly to you. ylan is going to be there asking questions. it's for reporters and journalists, but what would you ask janet yell snn. >> i think i would ask her probably what's the justification for why 2016 interest rate forecasts are so much lower than the economic fundamentals would suggest. >> no doubt that will come up as a subject. it's good to talk to you both as we countdown to a big afternoon. thank you for joining us. thank you both. ahead of the fed meeting looks like markets are flat waiting janet yellen. coming up, howard schultz kicking off the starbucks annual meeting with our very own jim cramer. cramer.

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that meeting this afternoon. starbucks ceo howard schultz spoke to our very own jim cramer earlier this morning on this show. and hes wasn't exactly tipping his hand if take a listen. >> the show me state, you tell me after this meeting if it was worth your time in seattle. >> i think when that preview, i don't know if i'm sticking with it. can you just give me something that's going to wow me? >> i can just say -- no, i cannot give you anything other than to stay stay tuned and put your seat belts on. >> and yet all will be revealed, of course, jim is in seattle. he will be live on the network throughout the day with more on that. >> he's going to be there. we don't know what's going on the announced. starbucks is focused on mobile payments and the digital space. he's talking about the changing consumer and not going to malls anymore. not going to retail. jim has a great lineup in seattle. way more than just howard schultz. he will speak with executives

from nordstrom and zillow. >> and mr. watson, the "gold finger" legend. that's all from our program. from the entire team on "squawk on the street." thank you for watching. >> as we head noon on the east coast, let's get to the qu"fast money halftime report." >> never a dull moment on the floor. >> so true. >> you guys have a good one. see you tomorrow. welcome to the "halftime show." sleepless in seattle. jim cramer is at starbucks' annual meeting speaking with ceo howl ward shultz. how does the company plan on winning the ultracompetitive coffee wars? up in the clouds. what does oracle's earnings mean for the stock and the company swash buckling leader larry ellison trader debate is just ahead. emerging winner out performing the peers and one of the riskiest places in the market. you're going to hear from him live. jon and pete najarian are here along with mike murphy and steve