andrew ross sorkin. joe kernen is off today. he will be back on monday. we have another bullish session on wall street. and a rally in financial stocks like jpmorgan. jpmorgan jumped more than 3% to close above $60 a share for the first time since april of 2000. that helped power the dow. the index adding 108 points to close at 16,331. and the s&p 500 adding 1 1 points. it's now just about six points from an all-time high. the nasdaq higher, it now stands at 4319. if you check out the markets this morning, take a look at what's been happening with the futures. you'll see right now there are green arrows once again. up by about 58 points above fair value for those dow futures. remember what happened yesterday. we saw red arrows across the board. s&p futures are up by about 7.5 points this morning. in europe and some of the early trading there, you can see green arrows there, as well. the cac is up by 0.5%. same story with the german dax. we watched everything reverse course as we got good economic

news coming in. it was the philly fed that looked like things were turning around. >> yeah. higher in western europe, becky, but an entirely different story in russia. let's get to that. russian deputy finance minister saying he expects no big immediate impact from western sanctions on russia's financial sector. and he argued that the country's creditworthiness has not worsened. u.s. imposed a second wave of sanctions on moscow yesterday, and the european union is expected to announce measures over russia's moves to the next crimea region of ukraine. russian officials criticized the downgrade of russia's trading outlook. saying there was no basis for the move. the s&p and fitch provides their long-term assets on russia's debt from negative to stable. so far, the russian markets are feeling the pinch. the russian rtx down almost another 3% right now. while the broader miex micex i. their version of the down is

down over 21% over three months. it is down 24% over the past 12 months. nothing short of an unmitigated disaster for russian equities. >> and it hasn't stopped putin nonetheless. he's getting standing ovations when he's talking about taking back crimea. >> well, listen, the russian rtx, while week weak recently, has had about a 400% gain in the last 15 years. and there's speculation that putin probably owns small if not larger than small stakes in many of these companies because, remember, when the wall game down, they gave certificate toes all these people. .

fits now affirming the u.s. credit rating at the top notch aaa level. it removes the danger that it might downgrade the world's largest economy. a lot of questions about that. put on negative watch back in october over the debt ceilings to date. i put this in the good news category for wall street this morning. the latest results are that the bank stress tests are in in 29 out of 30 u.s. banks, net capital requirements. the results show continued improvement since the 2008 crisis. the fed will announce next week whether it will approve some of the banks to increase dividends or buy their own stock. the s&p 500 financial index was up nearly 2% ahead of that news. the bank that failed the annual test was utah based zion bank corp which has said it will resubmit its capital plan to the fed. some people are worried that these stress tests are whitewashes. but i actually think -- >> i don't know. i think some of these stress

tests are tough. i like it. >> i think they're good. >> i think the u.s. stress tests banks have significantly fixed their balance sheets, their capital structure. >> i think you do more. >> it's ironic that zion bancorp was up 10% today. so the market is up, punish them one single bit. >> even greenspan will tell you, the banks arguably could have even more capital than they do. on a relative -- >> they would say if you look at the banks in europe and you look at our competitors -- >> on a relative basis, we are in a much better place than every other bank. does that mean we couldn't do slightly better yet? >> wouldn't you say if you were to push higher capital standards even yet on the banks, that it would slow down the country and the economy? because it's people who look at the loans -- >> it's a total double edged southward. gary cohen from goldman sachs as an op-ed out and made some

comments this morning in australia. i think he's on vacation now, right? i don't know. but he made comments about how he thinks there is another potential crisis in the works. he talked about shadow banking and all sort of other on things. ultimately, when you think about every financial crisis, it's a function of debt, it's a function of leverage. >> where does he think the problems for the next crisis is coming from? people who aren't being regulated? >> for obvious reasons, given that he is highly regulated, the comments he made this morning were really about shadow banks. but i would argue that part of the -- yes, there's the shadow banking system, but you need the banks to loan some of the shadow banks, if you will, some of that money to actually get -- >> so you're talking about regulating not banks further, but regulates those who are skating around the regulations at this point. >> that, too. that's a separate issue. >> i think you have to look to see where the next bubble is building. if there are areas not being regulated versus areas that are being heavily regulated, that

led us to the problems in the past. >> let's talk about some other corporate news this morning. general motors ceo mary bara will be testifying in front of congress about faulty switches. gm released a statement saying something went wrong with our process and terrible things happened. 12 deaths have been linked to the defect that led to the recall of 1.6 million vehicles last month. if you take a look at what's been happening to shares of gm, you can see how this has been pressured. the question is how long these investigations last. the general motors is trading just above $35. and a shake up at the top of symantec. ceo steve bennet has been fired. the company says the decision to let go of bennet was, quote, the result of an ongoing deliberative process and not printed by any event or

impropriety. that stock is down by about 9% right now, down $1.90 to $19. >> nike shares taking a hit this morning. they reported fiscal third quarter profit of 76 cents per shares. that did beat estimates by 4 cents and it said sales were surging ahead of this summer's world cup soccer tournament in brazil. that gave an initial boost to the shares. the company reversed shares after the company's ceo cautioned currency headwinds would -- for this quarter. in the last week or so, we've had a number of companies come out .talk about currency head winds. we've heard venezuela and currency trend ratio there mentioned a number of times. companies such as general mills and others. so watch -- we always talk about currencies and people say, why do i care about the dollar? i don't trade it or whatever. this is why you care. >> and overall, it's been a hit of about 5% from the global

corporations. >> just raised prices. >> yeah. >> we've got another in us new story this morning. in the cable world and our world is making a lot of headlines. netflix ceo reed hastings calling for stronger rules to control internet traffic weeks after announcing a deal with comcast to provide faster connections to its subscribers. hastings is firing back at internet service providers, accusing them of compromising internet freedom and disagreesing consumers. he says some big isps are extracting a toll because they can. they effectively control access so millions of consumers and are willing to sacrifice the interests of their own customers to press netflix and others to pay. hastings wrote though they have the scale and power to do this, they should realize it is in their long-term interest to back strong net knew translate and we should give you the replay from comcast, of course, the parent company of this network and nbc. the open internet rules never were designed to deal with peering and internet

interconnection. we'll talk about that in a second, guys. providers like netflix have always paid for their interconnection to the internet and have always had ample options to ensure their customers receive an optimal performance through all isps at a fair price. we are happy that comcast and netflix were able to reach an amicable market-based solution to our interconnection issues and believe that our agreement demonstrates the effectiveness of the market as a mechanism to deal with these matters. the reason it is so important is given the time warner transaction with comcast. it seems -- >> this is a huge bait and switch by read hastings to say, okay, i'll sign this deal, but then i'm going to turn around and say look what you're doing to me. >> but there were some people that -- let's set it up for people. there was the time warner deal with comcast. a week later, there was a question about net knew translate. all of a sudden they sign this

deal with comcast. >> net neutrality is getting knocked down. >> yes. comcast has scored some deal with net flex and netflix is not going to say anything and -- >> the time warper deal as a result because you're not going to see some of the big complainers. >> however, hastings is now back to the table to say not just that, and i think you're going to see him and it seemed like, i would argue, if he's coming out, you will see other content providers. >> cost cam is the only -- and, of course, they're our parent company. but they're the only large isp that is going to be abiding by the net knneutrality rules for e next couple of years. agreeing we'll push it out a few more years. >> down the road, it will be mentioned. right now, we're not subject to -- >> but this basic question about whether or not you should have to pay if you are using more of the freeway is the question that comes up. now, i've read through reed

hastings' pushback, the idea that they shouldn't have to pay, isps connecting to each other, it's a different scenario. but to me, it still comes down to the idea that at&t, which spends more capital expenditure than any other country in the entire country on building out its networks, the idea that they should've to pay that alone and people who use as much of the ramps and freeways that they want don't have to pay still is a bit shocking to me. reed hastings at times is responsible for 30% of the network traffic. and the idea that he shouldn't have to pay for any of the -- >> but the flip side is -- here is what he would say. he would say, all of these isps, including comcast and others, they have been able to sell for more and more money every year higher broadband speeds because customers say i want to be able to get this content. which comcast and others don't pay for. >> ultimately, the consumer is going to pay for this one way or the other.

the consumer is going to pay for it. if you pay comcast for how much they pay the monthly. i don't have netflix. i don't particularly care to subsidize all the people using 30% of the bandwidth. >> easy now, i watched an episode of season three of magnum p.i. and -- >> terrible idea. one way or the other.o pay for >> if you believe -- and the argument goes back even a step further, which is are isps to the home, google, whatever it is, are they public utilities? there are those who argue they are. is it i-40, where i guess there's still roads free in america. or is it the garden state parkway which is privately built and funded by the users? >> again, i -- where is your macro debate sflp. >> i have netflix. as a result, i don't feel like i should have to pay for all the traffic that comes across. >> you recognize your cable bill is subsidizing every other channel that you don't want? >> i know. and i don't want to subsidize more. my point is, there should be a

limit to how much i am forced to pay for if i want cable, if i want basic access to the internet, if i want basic access to the internet, i shouldn't be forced to pay what the premium customer is paying. you should argue netflix customers or premium customers -- now, i used to be a netflix customer. eventually, i can see myself doing that. but in the meantime, for people who are just looking for the basic prices for getting -- >> hold on, let me ask you a question. there are different pricing schemes for different seeds of broadband access, right? >> right. >> so i pay more, time warner cable currently because -- >> i pay more to verizon fios currently. >> i pay for the fastest package that -- >> no, no, no. >> hold on. >> hold up, my friend. >> should my netflix buffer even though i'm paying -- >> let me tell you why your argument is largely moot, okay? >> okay. >> do you access netflix or anything via wi-fi in your home?

>> sometimes. it depends. >> so the speed you pay -- here is the irony. the higher speed you pay is coming through the pipe. >> correct. >> you're going to be slowed down to the max speed your wi-fi router allows you to go, anyway. here is the irony. we're all talking about faster speeds. if you plug that ethernet cable directly into your computer, you will benefit from the faster speed. the minute goes over the wi-fi, you are limited by the max speed of your wi-fi router. literally, you're buying a ferrari and putting a governor on the engine through the wi-fi, so i don't understand the -- >> in our house, we actually have the fastest wi-fi speeds that you could possibly have. >> yes, but that is not anywhere near hard wired speeds. >> it's slightly slower. >> our tvs are jacked right into the internet. >> physically plugged in? >> physically plugged in. >> that's a different story. my point is people accessing everything virtually wi-fi -- >> if i'm going to pay the

maximum amount, i want everything -- i don't want anything to buffer, right? >> but people complain about the speed of their internet. they know i work for a comcast company and complain to me. i go to their house, they're using some 7-year-old 8011.b wireless router. i'm like there's your problem. you're flying a southwest camel. you've got the runway. >> will you come to my house. >> i'm a tech nerd, so i -- i need a little help with my house. i have been thinking about putting netflix back on the television. >> i use the tv box. i do use comcast. they give you nice discounts. if you get it, get it. >> i have verizon. >> and i've hard wired one of the apple tvs so i get the full thing. but you are subject to your wi-fi -- a lot of people forget that. if it's slow, it's ten rooms away or through a concrete wall or a lead wall. >> that's true. that doesn't change the larger issue. >> it doesn't matter how fast the pipe is. >> at any point, it is going to

get interesting. let's talk about stocks again, rebounding by the end of the trading day yesterday. in fact, rallying in the financial sector. joining us right now in the markets is jason pride. he is director of strategy at glennmead. with us right now to talk about the economy is steven whiting, global chief strategist at citi private bank. why don't we start with you, steven. >> okay. >> yesterday it was economic numbers that turned things around. what is going on? is the economy stronger? are we getting out of that weather period when we start to see real numbers? >> absolutely. and there's probably a number somewhere in the april or may reporting time, close to 300,000 on nonfarm payrolls on one of them. down 130 on payrolls per month for december through february. we did close to 200,000 last year. so i think we're going to get out of this frostbite period for the u.s. economy. i think markets largely look through it. so how much further they have to go. but we've seen a trend where every time for the last five quarters we get into any kind of

macro worries. ukraine or other issues. we get unusually small depths and very large readouts. >> although in terms of the economy, you mean? >> in terms of that, in terms of the market. >> okay. with the ukraine this time around, though, jason, we really haven't seen that much market concerns. it's surprising to me. >> well, you know, i think the interesting thing is it really is and serves as a stark reminder for investors that at this valuations, equities are not necessarily cheap, they're not necessarily expensive, but they're maybe a little bit above average. but these sort of valuations, investors need to be careful not to be too far over their equity allocations. what they want to be is they want to be positioned to benefit from the long-term growth and outperformance of equities. so they need to be not so far away that when these dips occur, because we're going to have risks that we run into, whether it's ukraine, russia, what's going on in china, what may occur in europe, maybe the fed, you know, going through tapering a little bit too fast, investors

need to be prepared to react to that because those are going to be opportunities to actually add to your equities. and if you're too far over on your equities, you know, reality is you take a 5% dip in the markets and you're not going to be comfortable to add to your equities. you won't allow yourself that breathing room. and i think that's what's provided and i think some of what's going on is there are a lot of investors that aren't too far over. and when these events come about, they're coming in buying because they still need some more equity positions. >> are you suggesting that people will keep a larger than usual cash position so that they can jump in with extra cash? are you suggesting they have more in bonds and then they switch out of bonds into stock when that happens? >> neither, neither. we're actually still suggesting that investors carry an overweight equity. but maybe they're not sitting at their extreme. because if you're a little bit overweight, then, you know, when a dip comes around, it's not exactly what you wanted, but it's not exactly horrendously painful, right? but if you're well over your regular kind of normal equity

level, you're not mentally prepared. you're not going to be there and be capable of equities basically because you sustained so much damage in what is a fairley shallow drop. >> i think it's increasingly, again, a safe haven. we've had this massive rise in energy related investment. four times faster than gdp in the past ten years. if you look at the correlation between crude oil and equities, it's showing a general updrift. and if you think about what could happen under worst case scenarios in the case of russia, ukraine and energy supply revenues around the world, the u.s., at least from the perspective of natural gas, is not going to be interrupted by that. we've seen increases in inflation and difficult periods where savings inflows have been difficult to attract in some emerging markets that are now deficit countries again. and the u.s. dollar spends most of the last decade falling.

so we're seeing the resumption of strength in the u.s. dollar. >> jim cramer was just on an offshore oil rig a couple of weeks ago. and he and i talked. if you look at an oil rig, there's probably 100 different companies, public and private, that are somehow involved in that rig through the physical construction, the piping, the extraction, the refining, whatever it might be. so you're saying the energy boom is directly contributing. >> oh, yeah. >> to the gdp and the economy and jobs. >> it's been an important catalyst. it is a small industry, but it's growing rapidly. it's changing the composition of american economic growth. i think housing is up, but it's been a little over rated in terms of builder sentiment, things like that. but the energy sector is really strong. it is having dramatic effects on the composition of american economic growth. it means more production. we are going through our first economic recovery since the 1970s, for which the savings

rate has been plunging and the trade deficit is exploding. now, we might import other things rather than energy, but it's helping. it really is now. >> steven, thank you so much for coming in today. jason, it's great talking to you. >> thanks for having me. >> this is why this time of year is the best for sports. let's just be honest. >> no, all my dreams were crushed yesterday. >> your dreams were destroyed, you and pretty much everybody else. folks, it took one game, the first game in march madness to bust millions of brackets across the nation. number six ohio state losing to number 11, dayton, crushing the flyers of hopes of millions trying to get that perfect bracket. four of our five pick up players were knocked out. those players didn't necessarily play the quicken loans bracket challenge which was insured by warren buffett. >> warren buffett is licking his lips while this is happen. >> it's safe to say the fluctuation between the two would be minor. >> 75% to 90% of people got

knocked out. not only that, but harvard won. are you kidding me? i got totally wiped out. >> in my news bracket, i did not pick harvard. but in another bracket -- >> you picked harvard? >> which may or may not involve money. >> in multiple brackets? you have no loyalty? >> no. i did a couple, too. i did the newser one and i did the million dollar one. >> and you went different ways snch. >> no. >> there are people that make five or sixty brackets. you got two, here is the stupidity of me. the two brackets are relatively similar, right? they have maybe one team winning the final and another team not but they're pretty dog gone close up to that. so it's really dumb. if you're going to do multiple brackets, make them completely different. >> i just want to get the higher seeds, maybe one with a lower seed. but remember, buffett was here and talking about how a number 16 seed has never beaten a number one seed.

so i figure, fine, i'll take it -- >> how about the lottery. >> your odds of winning the mega millions are greater than your odds of winning this perfect bracket. >> apractice pro of our previous conversation about the internet, how much people are going to be watching these games on cbs streaming while you've got multiple things going on at the same time. last night, i was watching st. john's uconn on my computer sitting in the bet bed in my paja pajamas. >> you've been eating the early bird special this week, right? we know it well. when we return, the first tweet was unleashed on the world eight years ago today. the rest they say is history. how twitter changed the world of social media and business. #executiveedge. we have that story and a lot more when squawk returns. >> announcer: before you hit the road, here is your traveler's

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>> announcer: how much sditd cost per day for a business trip in san francisco? nearly $445, according to business travel news. time now for the executive edge. the white house now taking smartphones and samsung according to the "wall street journal." this is one of the last and most high profile strong holds of blackberry besides becky who gave it up and is now on the iphone. they have been testing the internal communications team. the tests are in the early stages. no indication that mr. obama himself is switching from the blackberry. guys, the white house using a samsung phone? not a u.s. phone? how does everybody feel? >> well, the blackberry is not a u.s. phone, either. >> that's true. >> is any phone a u.s. phone? >> apple? it could have been an apple phone. >> it could have been an apple phone. i'm a little surprised maybe it

wasn't. >> i'm told that one of the reasons that they liked the samsung phone is because samsung owns the whole stack. they're not using multiple providers of hardware. therefore, they can control the security of the whole phone and that may be one of the reasons that samsung could be getting the contract. >> if i was a white house level officials i'd be like the godfather, i'm going to tell this guy in person who can whisper it in that guy's here. use a pay phone on the corner. >> that's your best option. >> yeah. at this point, everything comes out. >> today, we should say the anniversary of the first tweet on twitter. now, eight years ago today, jack dorsey published the first tweet ever. here is what he said. he said just setting up my twitter. eight years from now, will there be twitter, guys?

>> i have to say, i'm a heavy twitter user. i use it when i'm looking to see what's happening in the news. i find out on twitter if you're not near a television or the radio, like the boston bombing, that's something i found out on twitter because that's what i had handy. so i do use it heavily. that may be a result of what we do in our line of business, though. >> i use it, too. it's an excellent news feed. you carefully get involved in back and forth, but -- >> i think in our line of business, it's a tool. >> with the valuation where it is, who knows, i'm not a stock analyst. >> that's a great segment. when we return, we have a leading market analyst. usually we see him from the west coast. will the internet stock get some price pricing power this year? do you have an answer? >> yes, i do, yes. >> the answer is yes? we'll have more details on that in a bit. as we head to a break, take a

look at yesterday's winners and losers. back in a moment. >> it was wonderful. >> bravo. >> i loved that. >> it was pretty good. >> it wasn't bad. >> it could have been a lot better. >> i didn't really like it. >> it was terrible. >> it was bad. >> it was awful. >> it was awful. these days, everything your business does >> it was awful. is done on the internet. and tomorrow you'll deveno more. that's what comcast business was built for. slow dsl from the phone company was built for stuff like this. sign up for internet and voice and find out how to get four weeks of tomorrow ready internet for free. and you'll be ready for tomorrow too. comcast business. built for business. anbe a name and not a number?tor scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions,

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which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. welcome back, everybody. happy friday. in our headlines this morning, general motors ceo mary about a rra has a date with congress on

april 1st. she'll be testifying before the house energy and commerce committee which is looking into gm's handling of its recall involving defective ignition stwichs. the problems have been linked to 12 deaths and gm has faced a storm of criticism over this issue. nike taking a hit in premarket trading. the company beat estimates on both the top and bottom lines and said it was getting a beast ahead of this world world cup tournament in brazil. but they're warned of head winds in this quarter and the fiscal year ahead. the earnings calendar issi relatively light. we'll be getting quarterly numbers from tiffany as well as darden restaurants, which is the parent of olive garden and red lobster. darden reported earlier this month that it could be affected by severe winter weather. pandora fees are making consumers redo their monthly budget. netflix said it would offset prices this year. is pricing power the new name of

the game for internet companies in 2014? with us now on set, mark mahaney, lead market analyst at rbc capital markets and a rare east coast appearance. mark, thanks for getting up at the crack of dark for us. >> this is easier for him because normally he gets up at the real crack of dark. >> he comes on our program at i don't know what time. >> first amazon. >> happy to be here. >> i thought even as a prime customer, i don't want to pay more, but i thought if you were an investor in amazon, i love to see it because to me it said amazon is maybe growing up, but they're thinking about making money. does the $99 move change anything in your view about amazon.com? >> brian, to your point, i think it's very interesting. this is a sector that's usually bricking down prices, especially amazon over the years. now we have three companies raising fees that are doing this out of desperation or their value proposition is established enough that they have the power to do this.

we think it's the latter. so we think it's a bullish indicator for a couple of these companies. >> does it signal a fee change for amazon, which has always followed the field adage i'll lose money on everything i sell, but i'll make it up in volume? >> no. but at the margin, we think we're coming out as an investment cycle. they doubled their distribution capacity over the years. the as a margin, this will help reduce the margins. >> let's go to twitter. can i go back to amazon for one second? i'm serious about this. did you ever think of amazon as a media company? we talk about netflix a lot. do you think people are going to really use prime connected to their tv and we'll ever have the same type of penetration that netflix does? >> no, i don't think so. but they will be a dramatically large retailer. they're one of the largest sellers of all the media sellers. this point about amazon's profitability, this is a low margin business. it's a mid single digit margin

business. on top of that, like media sales and you roll in things like amazon webb services, margins will go higher. >> fine. i would agree with that, too. however, if you're going they are a retailer, why are they not valued anywhere close to a retailer? >> because they've got extraordinarily high growth versus retail companies. what is this company growing units by? 25% year over year? that's 10x. that's why. and they've got much higher return on invested capital. the cap ex requirements of this company are dramatically lower. retail costs are going up. that's the om zon bid. >> talk to talk about turkey. the amazon prime minister saying he's going to wipe out twitter. the guy has always been a basher. let's forget about twitter, the

value of it for becky and for andrew and for you and myself as a platform for what we do. let's talk about twitter as a company, as an operating vehicle, the balance sheet. right now, and as a user and pressure of the platform, right now, twitter is nothing more than a money borrower. s&g costs are high. why the optimism? why the valuations. >> the advantage, the business model has been proven. we have this thing called cash flow margins, 60%. twitter has a similar business model. what you're doing is you're looking at twitter as it was was facebook five other six years ago. so you buy this already with the business model proven. how long it takes to build up, you don't know. but the margins have been

proven. >> i don't think facebook and twitter are anything alike. in terms of how they monetize usa usage, in terms of putting in native ads or putting an advertisement between news feeds or posts. you have a deal, why wouldn't you be willing to do that with twitter? >> the management team right now is more proven valuation is a little easier. it's aggressive, but it's easier. >> eight years from now on twitter, given the eight-year anniversary, will twitter exist in eight years? >> unless turkey takes them out, yes. >> could it be owned by somebody else? >> that's possible. there's two or three companies that could potentially take it out. but one that would be the obvious player will be going.. but i think twitter will be an independent company in years. >> what are the other companies? >> companies like microsoft, apple, potentially. >> facebook would just say let's

get rid of these guys. >> possibly. i think the natural play would be google, but i think that's highly unlikely. thanks for coming on. great to see you. >> great to see you, too. when we come back, david rubenstein will be our guest host starting at 7:00 a.m. eastern time. but first, the first lady traveling to china. we'll have a live report on her trip from beijing right after this. as we head to break, take a quick check off what's happening in markets right now. i see green arrows there. about 0.5% gain in germany and france. stick around. "squawk box" will be right back. . well, did you know the ancient pyramids were actually a mistake? uh-oh. geico.

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welcome back, everybody. the u.s. equity futures after yesterday's big gains are looking to open higher once again. you'll see right now those dow futures are indicated higher by about 50 points. s&p futures are 6.5 points above fair value. we'll see what happens as we get closer to the opening bell. the first lady of the united states traveling in china today. eunice yoon has more details of they are trip live from beijing. hi, eunice. >> hey, well, michelle obama is getting a lot of attention. i don't know if you guys can see these newspapers, but she is all over the press. and the people here are calling her the first lady with the most firsts. and that's really the way people are viewing this trip. they are saying that both of these women are really viewed -- hold on. i'm getting a bit of an audio kickback. but both of these first ladies are viewed similarly in their own country that, you know, both of them are seen as fashion icons, they're seen as hip and cool and cooler than their

predecessors. they have their own pet causes. so what people are talking about is whether or not these two first ladies are going to be able to repair what many here have been viewing as a very strange relationship between the united states and china. that's one of the hopes here. now, in terms of her overall trip, she is going to be going from here throughout the country for the next seven days. she's going to be hitting some big tourist spots. she kicked off the tour today by going to a school because she's stressing the importance of education, both in the united states and in china. she was doing a little bit of calligraphy with the first lady of china. she was playing some ping-pong. another thing people were talking about was how she was enjoying herself in beijing and would move forward to visit the great wall here in -- outside of beijing as well as moving along to xian and onward to a big panda base. now, basically, overall, the view of her here has been that

she's very charming, she's fashionable, and some people have been talking about her fashion choices, which have been so far chinese labels. and in terms of what else they're talking about is basically that they see her as a very warm personality. now, most of the commentary hasn't been on her as much as it has been on china's first lady. there's been this upswell of national pride around you her because they're saying that she really is a woman who now is able to go head to head with the first lady of the united states. >> okay. thank you for that report. pretty interesting stuff with the first ladies are doing. coming up, has global warming reached its heyday? we've got the question on the table. our next guest says the green wave is coming to an end. we're going to talk to him after the break about that and his new book. in honor of his first tweet

anniversary today, check out brian sullivan's first tweet. he wrote this on july 5th, 2009, just back from the midwest. nine-hour flight delay on way out. two canceled flights. the airline business needs a reboot. wow. >> that's what twitter is for. >> i'm so ashamed. i didn't realize my first tweet was an epic one. was an epic one. can can

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just how safe is the ar you drive and who's watching the automakers? are they asleep at the wheel? you can catch "on the money" 6:30 p.m. eastern time on sunday. check your local listings. "squawk box" is not coming right back. we're right here. if you do nothing else, watch becky quick on "on the money." 7:30 sunday night. there's other shows on but we switch off some of those other shows just to go to miss quick. >> my biggest booster. thank you, andrew. >> the next guest says the age of global warming hysteria has come to an end. he has an op-ed that said green politics made europe vulnerable to putin. had joe been here, you could hold hands together on this maybe you know joe. but he has views that i think

may be similar to yours. your view is that this whole global warming thing is a big hoax. >> no, that's not quite my view. in terms of the politics of global warming, if they really came to the fore in 1988 when james hanson did his senate testimony and when the ipcc, the u.n. panel in climate change was established. and i think the age of global warming ended with the collapse of lehman brothers in september 2008. after that, the world had more important things to focus on like fixing the financial system. >> is global warming real or not in your mind? >> well, what i've tried to do in the book, andrew -- >> right. >> is tell the story. i want the reader to make up their mind. it doesn't matter. i think so many books on global warming, trying to tell you what to think and do about it, i tried to tell a story and let the reader make up their own mind. >> talk about the economic implications. you make an argument about putin and what's happened in europe.

>> it is the case that green policies in europe and particularly germany have pushed the german economy into the hands of putin. because if you switch from fossil fuel par generation to wind and solar, you depend on the weather. because you're depending on the weather, it means you need other sources of fuel. they're pushed into the hands of gas prompt, the russian gas company. and you've seen gas shipments from russia rise by about 30% in 15 years, which is a big amount. >> rupert, i understand your point completely. you're right, germany and the rest of europe have been ham strong by this reliance on someone who is not very friendly at this point. do you think climate change is not real? do you think climate change is not linked to human behavior? or do you think it just doesn't rank high enough on the problems we should be addressing? >> 1992, a cnbs poll, 67% of

respondents say environmental standards should be set irregardless of the cost. if you look at polls today, they put economic environment and global warming at the bottom. there's been a shift in public opinion. people are warn out by the hysteria, the predictions of catastrophe. the other thing is we've had 15 years, according to the ipcc, of basically flat lining global temperature. >> is it that statistic which gives you comfort in suggesting we should put it on the back burner or not? by the way, i don't know the science. >> there's the kind of geophysical question but then there's the policy question. what's unquestionably the case is the big emerging economies say no, we are not going to cap our emissions.

unless china and india and brazil and those economies say we are going to join in and cap our emissions, there's absolutely no point in u.s. and europe going alone. the thing that people kind of forget is it's global warming, it's not u.s. warming. >> i guess from an economic perspective if you go to the county where my parents live in rural virginia, it's a pretty poor county. we can have this discussion. i can fly business class to san francisco to go to a conference about global warming and talk about action. when you talk about the person in my parent's county who are commuting 30 miles to their job which pays 9 or 10 bucks an hour, the price of gasoline impacts them dramatically. these people mostly are looking for the cheapest hydrocarbon. i don't care where it comes from. it could come from solar, wind, i don't care. most people in the world are just trying to eat every day. >> correct. >> and get to work and not go

broke on their gas bills. >> the proponents of global warming forget, it's that the big developing economies have been against anything that fetters their growth and raising their people out of poverty. this goes back to before global warming started as politics in france. back in 1972, they told the west we are not going to buy into your environmental standards if it hurts our economies. >> we should live as smartly as we can, we should all recycle. >> it's worth the read. when we return, changing the world with private equity. david rubenstein is our special guest host. does he see opportunities in russia? is he worried about china? we'll find out more, right after this. disney started in a garage. amazon started in a garage.

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u.s. markets on a roll. we have a private equity master guess host today. david rubenstein, co-founder of carlyle group, his plans for russia and china. plus, opportunities for the next big deal. no water, no beer. how the drought in the west could threaten the entire industry. "squawk box" begins right now. ♪ a long time ago way back in history ♪ ♪ when all there was to drink was nothing but cups of tea ♪ good morning, everybody. back to "squawk box" here on cnbc. it's still st. patrick's week. i'm becky quick with andrew ross

sorkin. joe is of all week. the fews have been indicated higher this morning even after the gains we saw in yesterday's markets. the dow futures are indicated to open up about 50 points above where they closed yesterday. s&p futures are up by 6.5 points above fair value. the nasdaq is up by over 16 points. the ten-year note has pushed higher since we heard from the fed on wednesday. you can see right now the ten-year note issieling 2.772%. in our headlines today, 29 out of 30 u.s. banks have passed the federal reserve's annual stress test. those banks have enough capital to withstand a severe downturn in the u.s. economy. the only bank that didn't pass was zion's bancorp. more on the stress defendant in just a few minutes. australia now at the forefront in the search for the missing malaysia airlines jet. prime minister tony abbott said the search is focusing on debris spotted in the southern indian

ocean by satellite imagery. that area is extremely remote. but if there is anything there, he says they will find it. fitch and standard & poors put russia's outlook down. mary barr will be testifying on april 1st. before the house energy and commerce committee. the panel investigating the automakers recall of faulty ignition switches earlier this week released a video statement of barra declaring something went wrong with our process and terrible things happened. 12 deaths have been linked to ta defect linked to the recall of 1.6 million vehicles.

ative niz earned ee ee ee ees missed estimates about i anickel. revenue slightly below estimates. it guided the current fiscal year below wall street forecasts. despite the miss, the company said it was prout of its performance over the past year. sales in earnings rising to record levels. nike taking a hit in the premarket. the company reported fiscal third quarter profit of 76 cents a share. that did top estimates by 4 cents. sales were surging ahead of this summer's world cup soccer tournament in brazil. that initially gave the stock a boost. they reversed after the company's cfo cautioned currency head winds would cut earnings growth for this quarter and all of fiscal 2015. becky? let's welcome our guest host who is supremely qualified to talk about the busy m & a and ipo markets. his private equity and corporate

culture strategies are featured in "opportunity knocking." . good morning. >> my pleasure to be here. i'm not o'rubenstein. happy to be here nonetheless. >> sell braiticelebrating with . >> where do you think we stand from an economic perspective? >> the economy is recently in good shape. people wish the congress and president would get along better and we could pass more legislation that would be helpful to the economy. that said, i think the economy is doing reasonably well. i think 3% growth is not unrealistic this year. it could be within a couple tenths of a point either way. ear optimi we're optimistic. we're looking at some things seriously in the emerging markets. we think europe has come back. prices are pretty attractive for people like us. we're reasonably optimistic

about the global economy. though there are weak spot in some places. >> jack welch says this is the first time in the last six or seven years they sound truly optimistic because based on the order flow we're seeing we could push through to a higher level. does that echo what you've seen. >> yes, i did try to recruit jack. he's been a very good job. their business is more europe and the united states and probably the emerging markets. i think their european and u.s. portfolios have done pretty well. those companies are doing quite well, for example, home depot supply. we are quite pleased with our reactions with them and our relationship with them. i think jack is right. we do see some growth and we see more growth today than we probably saw a year ago at this time. >> you tried to recruit jack, you said? >> i did. >> to come to carlisle? >> i did. >> he came over to my house in

nantucket. all of a sudden tiger woods was playing in a tournament. he wanted to watch it. it went on so long, he said we can't finish it today. before we had a chance to talk again, he decided to go to slitten. >> you' >>. >> you're kidding me. >> i think he's done okay. >> he's not struggling. >> i have a headline question for you. we were talking about air b & b. >> yes. >> your company is worth $1.64 billion right now? >> no, no, no, closer to $11 billion. >> carlyle. >> yes. >> carlyle is worth how much now? >> $11 billion. >> really? >> yes. what are you trying to do? the shares are going down as you're talking. >> i shouldn't say that. i'm looking at google right now. they have the wrong market cap for you. i shouldn't be looking at this. >> no. market value is much higher than that. at davos this year where you all

were, bill gates and i hosted a giving pledge, kind of recruiting session. bill said i'd like to have a young man come who's not yet ready for philanthropy but he might be. brian chesky. he described his company. i've never heard of it. it's air b & b. he's 32 years old. his company may go public at some point at a higher market value than mine. after three years his company might be worth more than mine after 27 years. a little disconcerting. >> is that indicating something is going on? >> 19 billion for a company with no revenue? >> it was surprising but if it can work on facebook's platform, it may be worth it. you won't know whether these things are worth it for a couple years down the road. people get against facebook. i bet against facebook early on. >> if i remember correctly you had an opportunity when

literally marks with in school. >> he was in college. eventually my son-in-law, the person to be my son-in-law introduced me to him. he had been his classmate at phillips exeter. describe the company. i don't think that's going anywhere. i don't think i want to meet him. the initial $10 million was worth $9 billion on the ipo. >> when you say you bet against him -- >> i didn't bet against him, i just didn't take advantage. >> air b & b, they may turn out to be a great company. i don't know. everybody i talked to say i didn't know the company. everybody i mention it to seems to know the company. i'm not the first dopter on technology things. >> we talked about on our show -- >> "street signs," 2:00 eastern. >> thank you. >> silicon valley in san francisco is the new wall street. doesn't matter if they're in jeans and aend t-shirt or a

brooks brothers suit. will that ultimately be the best opportunity in a variety of ways for the next decade? is new york city over in some ways? >> hardly. if you try to find apartments there, at low prices you'll find it's not over. new york is doing quite well. new york is the financial capital of the world. i think it's more so than even london. but there's no doubt that one aspect of the financial world is venture capital. and venture capital is really headquartered in silicon valley. it's a feeding frenzy. it will have some mistakes made by some people. in the end, technology is driving the economy around the world. we don't really have competitors around the world with this kind of technology. china, europe, latin america, they're not doing the kind of things being done in silicon valley. it really is unique. there may be bubbles in certain companies but in the end it's a great thing for the country. >> do you have a venture arm. >> we don't have venture

capital. we do growth capital in europe and the united states, somewhat in the united states. >> have you ever thought about it. >> we did it early on. i don't think we were that good at it. large global investment firms are that the great with venture capital. venture capital, you have to be used to losing money. in our kind of businesses, our deals work out reasonably well and in venture capital, nine out of ten deals might not work. that isn't a ratio that private equity people are comfortable with. the great venture firms are doing well right now. over the last ten years, very few firms are doing well in venture capital. >> what kind of buying are you doing right now? the last year or two, there was selling, ipos. not as much buying as you might imagine. >> last year we invested less than we had the previous year. we expect to invest more this year than last year. last year it was difficult to find buyouts.

companies were at high prices they had a lot of cash. they had no incentive to sell. we're seeing a pickup in europe and other opportunities. i suspect we will invest more this year than last year. >> in terms of size of transaction, are we ever going back to the 2006-2007 days? >> i would never say never. pure buyout firms, $10 billion, are more likely than the 10 billion, $20 billion. buyout firms tend to want to do smaller deals. they don't want to put that much equity in a deal. >> right. okay. >> we'll continue this conversation, david rubenstein is with us as our guest host for the rest of the program. coming up next, though, just one bank failed the fed's latest round of stress test. here's a hint. it rhymes with lion.

and check out andrew ross sorkin's sorkin's first tweet. well, here it goes, ellipses, my first tweet ever. better than my whining about the airplane. ♪ it feels like the very first time ♪ no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪

take a look at the futures.

you can see there how we have green arrows. dow looks like it would open up 52 points higher. brian? >> the results are in, the of 30 banks that participated in the latest round of the federal reserve stress test one bank, zions bank failed to meet capital requirements. zion up 10% this year. we'll have to wait and see what it does today. joining us now to talk about the results is governor frank keating. are you pleased by the results? one failed out of 30 which means 29 passed. on the stress test, stressful enough? >> i need to take a patriotic moment. david rubenstein is on your set. he's a major funder to keep george washington's there and the library. i'm on the board of the national archives foundation, a duplicate original of the magna carta hanhang

s there because of him. and the washington monument is being rebuilt because of him. thank goodness for david rubenstein. >> thank you very much. you're very kind to say that but your own contributions to our country are quite considerable as well. thank you for what you've done. >> let me thank you, david. brian, let me answer your question this way. remember, this is the first time the fed put an extreme stress test on 30 institutions, regional banks as well as the largest banks. 29 of the 30 made the grade in their view. the reality is, they were extreme. it's like if you set your treadmill at 70%, incline of 70%. this was an extreme, half of the stock market gone. and 29 of the 30 did well. one has some work to do. but zions is an excellent bank.

it's very well run. i'm sure they'll address whatever it is they need to address. it's good news for american banks and borrowers and customers. we looked pretty strong in industry. >> here's the balance we have, governor, which is this. zion has had a capital ratio of 3.5%. you need to be at 5%. they're not that far off. they'll have to elevate the capital ratio. we want our banks to be safe. that said, you can argue if they're too busy accumulating capital they won't be able to lend anything out. they'll be playing it too safe. is there a level at which -- is there a perfect spot basically for a safe bank that has enough excess capital and money to be able to lend and help the economy grow? >> we're talking about tier one capital here. the ratios that the stress test finally identified after that 70% treadmill exercise, i think

is fine. the regulators are going to say, this is what we want you to have. at a ratio of 10-1 for every dollar you put in capital, arguably you have $10, those dollars are not len the into the economy at large. you can have too much capital. i think there's a balancing act. we want to be strong and safe. if the last five years we've doubled the capital levels of the american banks. i think we're very safe. you always have to look at do we have too much and do we need to focus more on lending than security. >> frank, are we looking in the wrong direction? part of me wonders whether these stress tests are a distraction to what may, if we have another financial crisis, it probably won't happen from the banks but it might happen from the shadow banks where so much of the risk is actually taking place. are we focusing or applauding? i don't want to not applaud for what the banks have done. when you think of the risks for the system, are they at the

banks or elsewhere? >> people avoid paying before they embrace pleasure. the reality is, if the banks are too difficult to access for capital of lending because of regulatory overkill if you will, there's just, for example, on the housing side, 43% debt-to-income, basically fence line lending, no character loans anymore. if you go into the shadow banking system, to make those loans you do volcano an opportunity and a concern, obviously that you're going to do things that can blow up and be very dangerous for the economy at large. i think what we have to do is have, as we're trying to do, a strong, well capitalized banking system that is willing and able alone and let them lend money. not every loan will be a good loan. by definition if we borrow money, i may not be able to pay it back. that's what business is all about. i think we have to find that balance. >> do you want further regulation on what is considered

the shadow banking system or do you say leave it alone? >> no, i think you have to have regulation. the consumer financial protection bureau under don frank is looking at that, the nonbank banks. why should the lending kmuchbt the united states be so highly and heavily regulated and other people are lending money. there's not a sole that knocks on their door. that's not fair to the banks. >> how do you regard the american banks relative to the european banks or chinese banks in terms of their strings. >> the american banks, you know what they have and don't have. there's some countries that is clearly the case. we are better capitalized. there's is a very different system. what concerns me, david, over the course of the last, let's say, seven years, we've lost -- six years, we've lost one community bank a day in this one five days a week. how much of that is natural, how much of that is just competitive pressures?

the economy? and how much of it is overregulation for an essential part of the banking system? europeans don't have the community banking system we have. i think it's a precious asset. smallest towns and cities in america simply will not be served if there aren't community banks to serve them. >> is it more stressful being governor or representing bankers. >> i think since the collapse of '08 it's pretty stress representative bankers. anytime you're in the public eye, the tallest tree always takes the wind. you know that, david. >> thank you. >> thank you. >> appreciate it, governor keating. okay. coming up, brackets busted we were talking about this earlier. only one game end millions of quests for the perfect bracket. as we head to a break, check out becky's first tweet back on march 3rd of 2010. >> all right. that's stupid.

>> enough. >> wow, brave new world out there. i'm late to the party. rapidly trying to catch up with twitter nation. >> at least mine was complaining properly which is what twitter is for. >> you embraced twitter. >> i went right at it, airlines stink. ok, here's the way the system works. let's say you pay your guy around 2 percent to manage your money. that's not much, you think except it's 2 percent every year. does that make a difference? search "cost of financial advisors" ouch! over time it really adds up. then go to e*trade and find out how much our advice costs. spoiler alert. it's low. really? yes, really. e*trade offers investment advice and guidance

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welcome back, everybody. it is that most wonderful time of the year for sports fans, march madness. it took one game into march madness to break millions and millions of brackets. number 6 ohio state losing to number 11 dayton. four out of five yahoo! tournament pick 'em players were knocked out. all those players didn't necessarily play the quicken loans billion dollar perfect bracket challenge that's insured by warren buffett's baerkshire hathaway. you're talking about 80% knocked out by that game. later in the day, harvard won, too, which surprised a lot of people. yes. it's probably safe to say it's better than 90%, maybe even 95% that have gotten knocked out of the perfect bracket challenge for winning a billion dollars. >> did vegas do well or poorly? >> that's a good question. >> vegas always does well

because they make their money off the middle. they take the cut. they want everybody to be perfectly balanced. they want the bets to be perfectly hedged. >> today is a new day. >> we asked david earlier did he have a bracket? he said no. >> i'm the chairman of the board at duke. i would favor duke. i think we'll get to the final four. harvard has a duke player at its coach, i will point out. there are very good duke players playing for mike krzyzewski. >> you have duke going to the final four. >> yes. my wife asked me to fill out a bracket for her. i'll do it. she's tied for third. i should have gone with the heart instead of the head. one missed pick. she'll win the money and i'll -- >> i think picking out the winner will be warren buffett. the amount of publicity he's t

gotten has been tremendous. >> nobody has had a perfect bracket. >> ever? >> i don't think so. >> there's urban rumors. how players like the carlyle group changed the corporate world by turning companies around. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪

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welcome back to "squawk box," everybody. let's take a look at stocks. tiffany out with quarterly numbers a short while ago. the company missed on both top and bottom lines. however, analysts point out that the company did end the year on an up-trend and same-store sales are on the rise. all of tiffany's regions around the globe. the stock bun by 3.5%, trading at $88. darden restaurants met estimates with its latest earnings. we could point out, though, those estimates were scaled down after the company warned of an earnings shortfall a few weeks

ago. they are the parent company of red lobster and olive garden. it cited the impact of severe weatherer it weather. that stock is down by only by 10 cents. >> we're watching shares of dow component boeing. goldman sachs downbraiding boeing. that stock is down by 1% today, too. that's worth pointing out because it is a dow component. >> last time we spoke to dave rubenstein, joe criticized him for not explaining and defending what private equity firms actually do. you remember that. here to give us an inside look, david rubenstein, our guest host, co-founder and ceo of the carlyle group.

tom, is an operating executive at carlyle. carlyle exited that deal in 2005 when udi was acquired by bea systems. carlyle made 7.5 times its original investment. congratulations to you as well. >> thank you. >> no time left for the actual interview after that intro. >> thank you all for coming, have a nice weekend. >> here's the real question. the real question is these companies you had were publicly traded companies. why can't you do in the public markets what you can do in the private markets? for the public shareholder and the people out there who trade in stocks and want to own investments, they say why are you able to make those type of returns privately and you can't do it publicly? >> andrew, i'd say it's a matter of focus. in the case of by business it was a business that had been for sale for five years. talent gets drawn out of it. it's not going to get the

capital resources and tension. it doesn't have the all-star team of management and drive it in new and creative directions. at the end of the day, the focus is not there. when we take over the business, we're focused and we'll drive it in new and better ways. >> it's all about business intensity and speed of execution. we deal with orphaned businesses. they've been starved of capital, often times they've been starved of interest in the business. on occasion, they're starved of management talent. we come in, give them a shot of adrenaline, we get a passion in there, increase the energy and enthusiasm for the business. and lo and behold, it does very well. >> let me just add, when the press often focus on private equity firms they have the picture pictures in the newspaper of the founders of these firms. the people who do the work are the upward executives. after they run companies for us

they've stayed involved with us as operating executives. they sit on boards and help us in other ways. these are the starters of private equity, not me. >> the thing i was impressed about by reading about both of you, it created so many jobs. your company was able to provide twice as many jobs going into private equity. talk a little bit about why you were able to double the number of people working there. >> we look at that business and we had a distressed asset, a business that lost its swagger, a business that was starving for investment. when i came in, the first thing i had to do was change the culture. we had to raise the bar in terms of expectation, in terms of talent and key leadership. once you do that, you're able to go in and do innovative things, attack new markets, go after new customers. we were able to double our

employment. >> we went from 500 to 1,000 employees. >> 500 to 1,000 employees. we have two different private equity investors. first one, 70 x return on cash and carlo had return on cash as well. >> let's be honest around this table. there are private equity firms, maybe carlyle is not one of them, there are a lot of private equity firms out there. there are some that starve their own companies of capital, that deserve the criticism. is private equity still a bit of a wild west? the whole industry can be dragged down, like a lot of things, by a few bad players. >> i don't think it's so much a wild west. you ought to take a look at each of the individual investments that are made. i'll give you a good example. you talked about increasing employment. there's a refinery right outside philadelphia that was struggling and it was recently put up for sale. carlyle looked at that.

>> this is one delta bought? >> no were carlyle did. >> you actually bought it. >> yes. you can look at the situation and say there's too much risk there. carlyle with their analytical capabilities and in-depth knowledge of energy identified a very key ceo to bring in with a lot of imagination. they took an innovative approach to that risk with be they saved 20,000 jobs. and for all of us in the northeast, they probably helped put a cap on the energy prices during this tough winter. i mean, it was a great approach. >> there are 5,000 private equity firms in the world. i can't say every one of them -- >> i didn't know there were that many, david. >> there are 5,000 around the world. some are small, some are larger. every one isn't perfect. if you take a look at what private equity about 30, 40 years ago, sometimes there were s excesses. today, you have professionals

running these companies. >> my buddy is trying to get him to road trip with him up to buffalo. if i go to buffalo with this guy -- bad mistake. if i go to a bar in a working class area of buffalo, i say private equity. these guys will get angry. do you care about changing their perception? if you do, how would you? >> everybody wafshts to be well liked. nobody wants to have people hate them. if people don't like us, we're not happy. we don't have the best image all the time everywhere. people recognize we are doing a better job than many people thought years ago. >> the people in that bar would say, if they're smart, if they're government workers or have pensions that are investing in private equity would be happy. most of the people that invest in private equity are private pension funds. new york state common fund is a giant investor in public equity. >> real quick. public shareholders. you are a public/private guy.

you have a public company. arguably you take companies private because you think there's a better opportunity. are public shareholders a help or hindrance to creating a great business? >> carlyle is a public company. we think we're better as a private company. very often we take a company that is public/private and re-align compensation, get better focus. >> sounds like when the going's good, public shareholders are just fine. when the going's bad, public shareholders are a nuisance. >> at certain times public equity isn't going to be the best for you. compensation can't be properly aligned and you have to worry about quarterly earnings. eventually you want to go public again typically. >> thank you for coming in. appreciate it. >> pleasure. >> david will be sticking around. we'll continue this conversation. the battle for net neutrality battles.

reed hastings blasting internet service providers saying his company is being forced to pay for access to customers. we'll dive into the topic, next. media analyst rich greenfield. 7:38 here in the east.

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three weeks ago next flinch struck a deal with comcast. netflix ceo reed hastings saying that's exactly the kind of deal he shouldn't have to sign. he's making the call for stronger net neutrality. joining us with green is rich greenfield, telecommunications analyst at bgit. this was a big surprise, i thought, rich, given they just struck this deal. i thought that meant netflix was not going to be saying anything about the potential netflix/time warner deal. hastings said some big isps are extracting a toll because they can. they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers

to press netflix and others to pay more. they should realize it's in their long-term interest to back strong net neutrality. were you surprised, rich. >> it's unusual to see somebody sign a deal and then complain about it to the government. it's a strange strategy. i think the real difficulty, i think when your viewers are thinking about what is the difference between net neutrality and peering and interconnection. reed hastings conflates them all together. the reality is fcc chairman tom wheeler recently talked about these issues and very specifically said that net neutrality and peering intersection, these are different and distinct issues. maybe cousins but distinct issues. i think if you want to simplify it for your viewers today, think of it this way, you have lots of doors -- you have a door to your house. lots of people want to get in, they're all trying to bring you

things. think of the internet trying to bring you lots of things through that door. the question is when someone gets really, really big, we're not talking about discrimina discriminating, the door isn't big enough. who should pay to make that door bigger or add more doors, is it the housing owner, comcast, or the person trying to get in, netflix. these are complex issues with no easy answer. >> just help me understand this. was this an opening salvo in terms of what this means for the comcast/time warner transaction. are we going to see reed hastings and other content companies say you have to block this deal or is this something else entirely? >> i don't think this is about blocking the deal. what's interesting, if you would have asked me yesterday morning what was the importance or significance of hastings getting a deal done with brian roberts, i would have assumed part of that agreement was now we've

taken a potential critic of the deal out of the potential filers criticizing the deal or criticizing or asking for a specific term. obviously that's not the case. we're seeing what happened last night. what i think, though, this is not about blocking the comcast/time warner deal. this is probably about getting some form of consent decree where comcast has probably agreed to certain terms and using the review process to -- for netflix's long-term gain in terms of how net neutrality and this peering interconnection are handled by the government. >> you mean using this to get concessions along the way. >> absolutely. there is a goal of this that plays into that review process, not to block it but get something. they want something out of this process. >> let me just add for those who haven't obsessed over these rules, net neutrality rules, when they did that, the courts

ultimately ruled against the fcc's position. there's a regulatory uncertainly because the courts have said what the fcc did is not legal. therefore, we're in a land of uncertainty right now. that's why nobody really knows what the rules are. >> if i can go back to telecom law, they're trying to make it a public utility which is defined legally, i believe, as having an essential public service. is the internet a public utility in the legal sense of the word? >> i think regulating is title 2, regulating this the way a telecom provider would be regulated, is a very dangerous step. i think the fcc held it out there saying we're not going to give up on that potential of reclassifying. the risk, though, is you really are going to limit innovation and change the future of america if you do that. my guess is that's not the path they want to go down. they'll hold it out there. if there's really bad behavior, they always have that option.

i think the real question is, becky mentioned this earlier, you know, comcast is -- was certainly, so was at&t and verizon, you are seeing these companies not upgrade their interconnections, not upgrade their ports and end up resulting in their customers getting worse netflix service. the question is, of course they want to get paid. of course they want to make money off of this from netflix. reed is correct. they were absolutely hurting the service they were providing of the most important video services to their customers, which is a strange business practice. >> going back to it, i agree with what you said, the doorway is not big enough. who will pay for it? i think ultimately consumers will pay for it, either to comcast or netflix. my question is should all customers be subsidizing netflix customers? >> i think that's a great question. the reamount is it's netflix today. i think you'll see many other very heavy bandwidth politics

over the course of the next four or five years. netflix may be the first in terms of massive size and scale. do you talk about 30% of primetime traffic? youtube is becoming a significant percentage as well. >> pick it. who's right, though? from your perspective, you studied this longer than anybody else at this table. >> we have to separate net neutrality. there's no doubt discrimination, if occurring, is a bad practice and should be regulated by the government. these issues have been going on since the very first day of the internet. people have been paid back and forth for years. these have always been business negotiations. this seems like at the end of the day netflix is looking for the government to regulate those business negotiations. i think that sounds like a real challenge. that being said, you know, i think there is this question of, you know, the internet is not living up to where it is overseas. you heard massa speaking in

front of representatives of the u.s. talking about how we were number 15 out of 16 versus other countries. when you think about, you know, slowing down bandwidth or not -- not slowing down but not upgrading fast enough, it does make you think whether there is a government goal. >> we have heard from at&t repeatedly. they've spent more on capital expenditure than any other company in the entire united states. why are things so much slower here if you have these companies that are here spending more money than anybody else to upgrade networks. >> i live in manhattan. time warner just upgraded the highest speeds in new york from 50 to 100 megs downstream and they're going to 300 this summer. these problems are getting adirecti adirecti addre addressed. the speed issue may become less of an issue as competition bulls. this may be something where the government doesn't need to regular. >> you put those connections on a wi-fi router as i said earlier

today and slow everything way back down. rich, i don't understand netflix point of view. wouldn't they want to make these deals and have a barrier of entry to another competitor? >> they can afford to pay. why not pay for the access, make it fast and useful for your viewer and make it harder for a competitor to come in? >> it sets a precedent. re trans used to be a small payment. i think it's a slippery slope. that's probably part of the equation. i think netflix is trying to buy time. you think of house of cards and orange is the new black, both good shows that many of you may watch and like. the reality is, there isn't enough content yet, original, premium content if netflix wasn't valuable or really bad quality, i'm not sure it is enough to make you switch

broadband carriers. >> the technology changes so quickly that the regulators can't keep up with it. >> that's for sure. >> when netflix started they weren't doing this over the internet. they were mailing things out on fedex. the technology changed. now they don't have to use fedex anymore. the technology is likely to change before the regulators figure out what to do. >> thank you, rich. >> thank you. comcast, the parent company of cnbc and nbc universal. >> if people want to push for internet as a public utility, maybe it is be, maybe it isn't, i don't know, whatever. once you get the government involved they can regulate content as well. >> david rubenstein is staying with us. >> i don't usually quote ronald reagan but his favorite line is, i'm here from the federal government, i'm here to help you. usually that's a problem, when the federal government is going to figure out how to regulate

things and make our lives better. it's not that easy, though. >> more from david rubenstein as guest host of the program. up next, imagine a world without beer. in honor of world water day, which is tomorrow, we are taking a look at an industry whose livelihood relies on h2o. check out the first tweet from our own "squawk box" show account @squawkcnbc follow us while you're at it. stick around. we'll be back in two.

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♪ oh, oh-oh, oh, oh hey, it's me! [ whistles ] and there's my dog! [gasps] there's my steps! i should stop talking. perfectly paired savings. now, that's progressive. david rubenstein sharing his private equity prowess. spring is here. retailers rushing to move extra inventory and cancelling shipments after a har be winter. find out why your spring goods could be put on the back burner retail detail just ahead. a world without beer?

>> i'm letting go. >> you're letting go. >> i'm letting go. >> okay, fine. >> he broke your beer! >> it's hard to imagine. but it could happen. what the beer industry is doing to make sure you get your suddens as the final hour of "squawk box" begins on a friday, right now. ♪ ♪ i'll say i think i'll have myself a beer ♪ welcome back to "squawk box," right here on cnbc, first in business worldwide. i'm andrew ross sorkin, along with becky quick. brian sullivan is in for joe who's back next week. i saw him tweeting about his ski trip. take a look at the futures this morning, see how things are setting themselves up. green arrows across the board. the s&p 500 a little over six points higher and the nasdaq looking like it could open 16 1/2 points higher as well. it's a quadruple witching friday. that means volume and volatility could be higher. thank you for the sound effects.

>> i think that was just me laughing. >> oh, that was you? >> yes. >> i see, i see. >> all right. when i said thank god for joe's return, it's not because i don't enjoy being with you fine people. these 3:00 a.m. wakeups -- >> it's rough. >> it's hard. or i'm just getting old. strike around for "street signs" 2:00 eastern. in the headlines, russian stocks taking a hit following the imposition of additional sanctions on russia by america. vladimir putin nonetheless, though, pressing forward. he's annexing crimea into the ukrainian region now of russia. we'll get more from nbc's richard engel on that in just a moment. tiffany's shares under pressure. tiffany nonetheless optimisting say it's proud of its recent performance. >> also falling in premarket

trading, shares of athletic apparel and footwear maker nike. dow component did beat street estimates with latest earnings. it warned of currency headwinds for the current quarter as well as for the coming year. russia is reacting to the latest u.s. sanctions firing back, banning u.s. officials and lawmakers from entering russia. nbc chief foreign correspondent richard andle joins us now from ukraine with more on this story. there are a lot of questions here. one of them is how effective any of these measures might be. >> well, as you mention, there's already pressure on the russian stock market. there's pressure on the russian currency. the ruble as well. although today vladimir putin signed officially the deal to annex crimea and make it part of russia, he said there won't be further punitive sanctions. it seems that the first round of sanctions that have come out yesterday from washington were a little bit harder than russia

had been anticipating. there are threats coming from washington that these sanctions could be quite a bit more significant. what the sanctions on the table are now are mostly against individuals. several dozen key individuals, including people very close to vladimir putin have been declared pdeclare ed persona non grata. the bigger threat from washington would be to impose sanctions on entire sectors of the russian economy, entire industrial sectors, including mining and oil and gas. it seems that washington is holding back on implementing these draconian sanctions to see if russia actually invades this country and takes the south and eastern parts after crimea as well. that's on the russian side but

there are also developments on the ukrainian government side. today the government in kiev signed an association agreement with europe. and this commits it to closer economic ties, closer political coordination and puts it on track to be much more of a european partner. that association agreement was the deal that put ukraine in crisis four months ago. four months ago to the day in fact when the previous, not ousted, ukrainian president, viktor yanukovych, refused to sign that association agreement with europe. that caused the street protests and ultimately his ouster. >> richard, some of the people who are put on russia's list of who they were sanctioning, banning, included names like harry reid and john mccain from the senate. it also included mary landrieu. she's a senator who's been pushing very hard to allow americans to adopt russian orphans. i just wonder if that has

brought her political implications, too. if we should look for things to come along that line. if they can't hurt us financially necessarily, if they look like other matters like that. >> of course. it is very personal for vladimir putin. they want to target individuals who are involved with russia and send a message that they know who's pushing buttons in washington, who has the russia portfolio, so to speak. for vladimir putin, all of this has a domestic factor. vladimir putin's approval ratings according to recent polls are about 72% in favor of his actions in crimea. this is not being presented as a takeover of crimea. to the russian people. this has been being portrayed as the return of a historic homeland for russia. the return of crimea to the motherland. a lot of people in the country welcome that. they don't want to -- they want

to also punish the united states. punish those who are trying to keep russia down, punish those who are trying to insult moscow in this period. yes, i think in the selection of the names of the individuals, they're also these domestic concerns. if you ask a follow-up question i'll have to dial you right back on the ip because i've lost you. >> we've lost richard. thank you, richard engel. if you can or cannot hear us, we appreciate it. let's get back to david rubenstein, co-founder and ceo of the carlyle group. it occurred to me in 2004 you started a russian unit moscow. i think you shut it down. have you thought about going back and would you? >> for private equity russia is a tiny market. there are only a few firms that have been successful able to navigate private equity. it's not an area that we're likely to go back into.

it's just not an area where you can buy very much. the oligarchs seem to get most of the good deals and other deals aren't available to people like us. >> are there other markets you won't touch right now? >> russia is the largest of the bricks we won't go into. we don't find it appealing for a lot of reasons. most of the other emerging markets we're looking at are -- >> is russia a market in a sense, where rule of law stands. can you do business in russia without having to slip some, you know -- >> it's complicated there. in other words, we have to worry about the foreign corrupt practices act. we have to do this without doing things that may not be legal. it's possible for people to do things there but generally smaller deals, anything of size would probably be more complicated. >> david, i want to go back to washington for a second. >> sure. >> the political environment. you saw the camp came out with a

new tax proposal and one of those pieces of it was the carried interest component which we talked about for the last few years. >> i had a bet you would ask that question. i knew you would ask that. you're the only person that asks me about carry interest acts. >> i want to know if it's back on the table in a meaningful way, what's going to happen and if you've changed your position. >> i haven't changed my position. for those of you who haven't followed this, the congressman, the chair of the ways and means committee who ill with be term limited off that by the end of this congress came out with a proposal. among his proposals was to tax carried interest but not for the real estate interest. energy was hived off. it was private equity. i think it picks up roughly $3 billion over ten years. so it's a diminimous amount of money. treat everybody the same, look at everything. everybody that's being taxed in terms of carried interest one

way should be taxed the same way in the future, venture, private equity, do it the same. >> i agree. this has been in president barack obama's budget many times. >> it has been. >> republicans have been defending against it for this whole point. >> very few republicans have endorsed what congressman camp proposed. let's have a comprehensive look at everything. >> you're a democrat. >> i'm a capitalist as well. that's because i'm a democrat, doesn't mean i don't support certain things. a lot of democrats don't support the changing in the carried interest rules. we dominate the world in operate equity. let's not tinker in it without making sure we know what we're doing. 55% of the carried interest taxation is paid by the real estate industry. that's where the real money is. private equity pays a modest amount of that. >> i think we should include

them, too. >> everybody should be treated equally. let's look at it comprehensively. i have not changed my position. >> i'm glad i can help you win that bet. i don't know if you get a billion dollars like the brackets. >> did i win that bet. coming up, in honor of world water day, which apparently is today, we are taking a look at an industry whose livelihood relies on water, not just human existence. but beer. and then are pensions under pressure thanks to janet yellen? we'll find out. big bracket busters yesterday. which games will be worth watching today as the first round of the ncaa tournament winds down. my own bracket, let's go cornhuskers. we need nebraska with an upset of baylor today. we're back after this. to a fidelity ira. it gives you a wide range of investment options... and the free help you need

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welcome back to "squawk box." a big media deal this morning. media general is buying lin media. 49.5 million shares of the stock. the approximate per share value $27.82. the combined company will own 74 tv stations in 46 different markets.

attention beer drinkers, this next story is for you. the drought across the western part of america is having a disturbing ripple impact. guess what? you can't make beer without water. somebody that knows something about beer, sara eisen. >> she joins us now with that story. >> i have a light one for you, brian. i'm not a beer drinker but i was surprised to find out 09% of beer is actually water. by mass, everything from the crop to the can. the beer industry is realizing it cannot afford to ignore this problem of water scarcity. millercoors has been way out in front of this. 3.9 barrels of water for every one barrel of beer. it sounds like a lot. it's way less than the industry average. this is 5-1. millercoors increasingly focused on the barley farmers.

they work with 850 barley farmers. we went out and we visited actually the growers meeting in the st. lou in san luis valley. they were hearing from millercoors people, water experiments. we met jamie hart, a farmer than been suffering recently because the surrounding mountains around him haven't received as much snowfall, which means less water trickling down into the rio grande water. which is the main source of his water basin. have a listen. >> water is getting to be more precious every day. we have to be able to conserve that to keep the livelihood we know going. >> millercoors hired eight eegronomists.

they're looking at irrigation system systems, even testing ways to breed barley that would be drought-resistant. >> we changed out sprayer nozzles. we were able to save over 400 million gallons of water in three years. >> that woman is in charge of sustainability at millercoors. this company is not alone. the entire industry is facing this, working at this. they say they've reduced water in the brewing process by 19% in 2009. it's just not the beer industry. increasingly industries around the globe, even soda companies, are realizing that they're going to have to start conserving water because it's the life blood of this industry and it's going to be kreincreasingly becoming an interest. >> doing a live shot from her

kitchen. unbelievable. >> there's a pretty nice beer selection. i'm not a big beer drinker but -- >> would you hold up for me some 16 ounce -- what is that. >> a chose a light version for you. >> not a silver bullet. >> coors light. >> good company, not my style. >> probably not your favorite. >> humans are also apparently 90% water. how is the fed's tapering impacting the nation's pension plan? steve, welcome. >> thank you. >> david rubenstein probably loves some of the changes going on. what's happening with all the craziness, you need to have the money for your retirees, period. are the things that are happening driving you into more longer term investing like

operate equity in carlyle group? >> let me explain me. i did spend five years with the teachers retirement system of texas helping them manage the pension plan for the teachers. as david has talked about, we're a great client and customer of david's and supportive, when i was at trs, it's very important. pension plans in general are moving away from the standard 60/40 equities/bonds. they've also shortened their duration. it's probably four, maybe five years. where the barclays ag is 5.7. they're short duration, trying to find that yield. they moved into emerging market debt and high-yield bonds. i see the overall plan is that they're moving away from the standard 60/40 more into alternatives, private equity and real estate. >> the 06/40 being 60 stocks, 40 bonds. >> they're moving into 5, 10, 15% private equity where they can get paid for a longer

duration, a longer time horizon, a value creation and the fixed income, 40%, a lot is moving into real estate. >> does that come with higher risk and are you worried about the pension plan system in general? just down the road where you get back to things, maybe it's not quite the same growth you've seen to this point. are you worried about pension plans that will wind up in trouble? >> i think there will be but most pension plans are underrisk. they done have the enough risk. they don't need liquidity this year, next month, next year. they need liquidity over a long period of time. if they don't move into more risky assets, they'll never make their 8% actuarial. >> that's how much they figure they have to gain each other to pay out what they owe? >> yes. >> the fee structure is much higher than what you get elsewhere. you put some pressure on some of that fee structure when you were at texas. do you see it changing

materially? >> i will go back and say i didn't put pressure on the fee structure. i put pressure on transparency, governance and alliance of interest. carlyle is the leader in one of the companies that embrace this. about transparent subgovernance and alignment of interests. the market fee should be the market fee. >> in an age of walmart, in the alternative space it's one the few that has not really been touched in a meaningful way? you may push back. i don't know. >> there has been some change in the fee structure somewhat. there are preferred returns that are very high today. that would be -- you could say a a very favorable thing for limited partners. if you want a higher rate of return, you generally pay for it. you want a better suit, you'll pay for it. in private equity you get good returns and pay for it. the biggest problem is this, the

pension funds in the united states are roughly $3 trillion underfunded. we're not going to be able to honor all the commitments that have been made to teachers, firemen and policemen unless we get higher rates of return. they are trying to get higher rates of return to honor their commitme commitments. some states have alternatives as highs a25%. if we were to tax people more we wouldn't have to do this. >> some states both republicans and democrats have been doing this for years. >> that's correct. >> they haven't been putting in the money they're supposed to along the way. >> we are getting the pensioneer s -- >> how do you feel about the pension funds in canada that have effectively tried to go into the business of equity and alternatives and bypass so some degree the traditional firms like carlyle? >> it's a fabulous idea.

and now i'm on david's side with cap ridge partners we are on a mission to take the private pension, the public pension plans capital, put it in fiduciary investments, help them meet the payroll and obligations for the pension plans. i was just at preia. preia is the pension plans real estate association. all the pension plans in the world investing in real estate. one of the cios of a major plan said they paid out $400 million a year in asset management fee. their total salary of star is $4 million a year. >> that's a very important point. in canada, like the canadian pension plans their senior executives paid a couple millions a year. >> you can only pay college football coaches that much, david. >> you're exactly right. you can't pay the people in

charge of saving people's retirement. you have to pay the college football coach. don't steal the money for the football team, david. >> they are very talented but in the end they have to support their families. they tend to leave because they're not getting paid enough. there are many people that have tens of balls of dollars at their disposal and they're being paid 100,000, $200,000. >> the head of private equity for teachers system is leaving to go to harvard. the head of real estate, eric lang, will take over both private equity and real estate. both are fabulous people. the state of texas is so lucky to have both of them working for them but the market is the market. rich is a wonderful man. he's very talented. that's a big loss for texas teachers. it's a big gain for harvard.

you'll see that happen more and more. >> thank you for being here. >> thank you. retailers may be late for spring a glut of inventory st l stillistill exists. some are cancelling their orders. gunderman group is a go.

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box," everybody. you were so confident in your bracket, hoping to win the office pool and maybe even get lucky and take down that $1 billion prize. one game in and most of us are out of the running. way to go, dayton. the flyers beating ohio state in a nail biter. four seconds left. ohio state had a chance to win only to see the ball bounce off the rim. dayton wins 60-59. good job, guys. if you were watching the president's bracket picks you could have taken the harvard crimson along with them. harvard moves on to play saturday and will be facing the winner between number four michigan state and number 13 delaware. here are games to watch. duke gets things started against mercer at 12:15 today. david rubenstein will be watch that closely. creighton takes on ul lafayette and tonight it is undefeated

wichita state taking on cal poly. u.s. retailers cancelling a ton of spring orders from factories in china. that story, next. as we head to a break, take a look at equity futures with those green arrows. we'll back in just a bit. 2 aleve for... ol in s ...all day relief. hmm. [bell ring] "roll sound!" "action!" [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim from td ameritrade.

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welcome back to "squawk box" this morning. let's check out the futures ahead of friday's session on wall street. the dow, nasdaq and s&p all on track for their biggest weekly gain in five weeks. earlier this hour we told you about a media deal, media general buying lin media in a cash and stock deal worth almost $28 a share. that boosted that stook of lin media and others in the tv space. shares sa s of semantic has fir their ceo, dave bennett. the move was not precipitated by any event or impropriety but that's a company that's gone through two ceos in two years. >> that's right. let's talk about the retailers.

retailers are slashing prices, trying to unload built up inventory and make room for spring products. apparently factories in asia are seeing massive order cancellations for spring goods as well. joining us now is jan niffon. you e-mailed me yesterday and talked about what you were seeing yesterday. i was under the impression, we got through the winter season, if you want just unload that stuff. but if they are seeing order cancellations for the spring season, that's another story altogether. >> they don't want to wait till easter which is coming late this year to figure out they're wrong. easter was, like now, last year we were starting to sell already for easter because it was so early. they're up against that. they don't really know what happened in january and february. they think the weather was a problem. but in order to be sure that they're not backed up on

inventory, they started cancelling spring goods, not fall goods. they're confident about the back half. i have a friend in asia that does what i do over there. he's surveyed a bunch of the factories, about 80 factories and he said cancellations are the highest they've been since '05. >> ooh. >> that surprised me. that's not -- there's a thousand factories in asia making apparel. >> these are apparel factories. >> it will be a good thing if you want to buy special orders, if you're tjx, ross, burlington coat, steinmart. pricing will look like the off price channel than the full-price channel. we're seeing that. we saw averages of about 55% off for presidents' day. we're back there now at 45% off of regular price. we've seen aggressive discounting already for spring. >> who's cancelling, the big

department stores? >> we don't actually know who's cancelling because they won't tell you that sort of information. that's really all there is to cancel, the big department stores would cancel. >> maybe a gap. >> inline guys that are big enough, can do that. >> when it says 45% or 55% off, off of what? are they losing money. >> if they can sell it at 30% off, they make full gross margin. any time they're deeper on 30% off, it doesn't mean they're losing money. but they're not making what they anticipate. >> normal margin is 40.6%. they started this year, gross margin, this year and last year. if you're in the specialty store business you need to be at least 55% gross margin. so you know, it varies among the various players. if you're costco you can make a living on 7% gross margin.

it's a totally different model. if you're looking at the people that sell apparel all the time lake macy's, penniipenneys or k. >> if i see macy's 40% off sale because they have to dump all this stuff, you have to presume they are still making some money on what they're saelling. >> absolutely. this whole game when you're investing in retail is expectations. are they going to do as well as you thought they would do. it will be a tough first quarter. >> where do you shop to get bargains? >> where do i shop to get the bargains? >> i'm a macy's shopper because i worked for them and i get the discount. >> what's your discount? >> 25%. >> can i ask you a quick j. crew

question? >> absolutely. >> someone was in talks to buy them. that's no longer on the table. >> fast retailing has loved j. crew for at least 15 years. they think that j. crew does it all right. they're huge fans of mickey drexler. i wasn't at all surprised they wanted to buy them. i was a little surprised that j. crew might want to sell to fast retailing. but i think it would be a great merger. fast retailing is a big powerhouse, worldwide powerhouse. they'd like to have a big strong presence in the u.s. unicloe has been big for them but i know they'd like to own j. crew. >> we were talking about walmart offering deep discount, much like you'd see on black friday. is walmart going to crush the competition in the spring once again and force all of these

guys down to bring their prices down to match? >> i've competed with walmart my whole life. we always said walmart takes out the bottom. when walmart takes out the bottom, compression happens all down through the chain and everybody has to price more aggressively. remember, walmart's biggest competitor is not really target. it's not really the dollar stores. it's really amazon. amazon runs at zero gross margin for all practical purposes. they have to be aggressive on price. >> do you think jcpenney could be a private equity target? >> nothing would paek make it impossible. it's a big company and would take a lot of equity and debt to do it. i don't know if anybody's working on it but i wouldn't say it's impossible. >> we have a bet on "street signs" that the stock will hit 10 by the end of the year. i'm giving you a chance on national television to back out of your bet.

>> we made that bet $5. now it's at $8.50. i'm feeling about about my bet. >> cocky. >> if you were an investor in retail stocks, which you're not, what would you buy? >> i really like, if you're looking for best in class over time retailers, i lost costco. i think they're the best retailer in the world. macy's owns their space now. they're a great retailer. i love gap because they're going to the omni channel world. they're the only one inside the mall i feel great about. except for footlocker who turned in great numbers, therefore nike turned in great numbers. it's a destination. you can't go wrong with foot locker. i like people who i think are winning the game who own the space, dick's sporting goods owns the space. i love dick's. the biggest threat is online. i think they can win that game online. >> you don't buy over the internet that much? >> i'm a huge amazon shopper and

i believe that amazon is the greatest threat to retailing. number one, investors don't require them to make money which is a gift. on the other hand, i think walmart's the greatest threat to amazon because walmart is moving into omni channel retailing. they'll distribute out of 3,000 stores, they're closer to the customer than amazon is and they don't mind fighting on price. >> thanks for joining us. great talking to you. >> thank you. paving the way for global expansion of u.s. retailers. border free helps some of the nation's biggest companies with logistics and e-commerce. they're going public today. the ceo joins us right after this. ♪

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is . welcome back to "squawk box," everybody. we have news just in on blackberry. the company has struck a deal to sell the majority of its real estate hold innings canada. this deal involves more than 3 million square feet of space as well as vacant land. it will be leasing back a portion of that space once the deal is completed. blackberry did not say who the buyer is or the deal's terms but

says it will do so. give us more details, once certain conditions are met. border free, the company that allows u.s. retailers to reach international customers priced its ipo at $16 a share. the company begins trading today under the brer. joining us now to talk about the ipo and the growth of international e-commerce market is michael de ssimon. >> border free works with leading retailers to extend their e-commerce business into 105 territories around the world. we do everything from localization at the currency level, helping to manage payments and statutory things like export compliance, import compliance, transportation, the payment, all the heavy lifting necessary to help retailers. >> what kind of retailers do you work with? >> we work with macy's, j. crew,

newman marcus, guilt group. you can pretty much name a retailer and more than likely we're working with them. >> do any of the retailers do this on their own long term? is that a threat to their business? >> i think the key to the business is scale and operating at scale, really i think gives major cost advantages in terms of how we work with retailers. we offer them really good lri, maybe just as important or maybe more importantly, focus on that brand. >> who do you compete with? >> i think my biggest competent it igs is probabl -- competitio yourself. increasingly we had retailers who have chosen that path move to our platform. interestingly, we compete with not selling internationally. most internet retailers in the u.s. still don't sell internationally. >> right. in terms of this ipo, what are you going to do with the cash? >> invest in growing our

business. we think it's a great time to be expanding. we think this opportunity extend beyond u.s. retail outbound and starting to talk to international retailers and we want to be able to use the cash to accelerate that. >> did you take advantage of the new s.e.c. laws in terms of going public and the disclosure process? >> you mean the jobs act? >> yes, absolutely we did. we've been at this for a while. you don't go public overnight. we took advantage of it. we think it's terrific for businesses like ours, smaller market caps that really helps you get through the s.e.c. process. in a way, when you actually publicly file, you're ready to do so. >> do you think prior to the jobs act you couldn't have done this? >> i think we would have taken a different approach. >> you had leading venture capitalists invest. how are they doing on the ipo? >> down the road i think they'll be happy with the follow-on in terms of return on their investment. they've been with us a long

time. >> in terms of looking at valuation, what do you make of what's going on in the marketplace? >> repeat that question. >> i was just curious, what your take was on terms of valuations in the market? i assume your decision to go public now, given those valuations and the ipo window. >> that figures into the timing. you don't do this overnight. we've been at it for over a year. it's something you plan and of course the market conditions are helpful. we're doing this because it's the right thing for our business and customers. >> are you getting e-mails yet from our high school classmates telling you they always knew you were brilliant and going to be successful. >> i've got a lot of e-mails within the past 24 hours. >> we wish you luck. >> thank you. we get down to jim cramer at the new york stock exchange as we get ready to wrap up another week of trading. so far it's been a good week. "squawk box" coming right back after this. ♪

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welcome back to "squawk box," everybody. we've been watching the futures this morning. after the big gains we saw yesterday, after better than expected numbers from the philly fed, you're seeing green arrows this morning. dow futures are up by 36, s&p indicated to open up about 6 points, nasdaq higher by close to 17 points. let's get down to the new york stock exchange where our good friend, jim cramer joins us now. good morning to you, jim. >> good morning, andrew. >> we can go about 100 directions this morning. we've had a couple different numbers come out from a number of companies. we had the banks yesterday with the stress test. you can take it from wherever you want to go with it. >> let's start with border free, where you just talked to the ceo. there's an incredible thing going on at border free, amber road, paylocity. people think, i haven't missed these stocks, i can buy them wherever i want. at the same time, you have

tiffany, nike, they actually report these numbers aren't that bad at all. these stocks are selling off. you have unproven stuff that's going higher. the proven stuff going down. people say you know what, i missed nike, i'm or let's just sell it and the banks have done nothing at all and suddenly they get that the yield curve is going to change and they'll make a lot of money. this a reversion to craziness i think, frankly, not for the banks ipos is coming public and you'll find that most of the companies you just can't of what was that, what was the amber road or border free. >> i asked about the jobs act and whether they could have come public otherwise and they suggested they could have but do you think it's been a good thing or a bad thing for capitalism for capital formation for the ipo market, how did you think about it? >> i think reet now we're in this window if i said something

bad about capitalism and the jobs act, people would say it's heresy, oh, my god, how can you not be in amber road or paylocity. look at salesforce, look at workday and concur, these are really great companies that are growing really fast and they are being thrown away. in return they're buying these companies. look at the big biotech companies, they're being thrown away and in turn they are buying biotechs that have one product. and it's pure froth with the ipos and you'll regret it. >> i don't know if i'll put him on the spot. what do you think of private equity firms right now, carlisle, blackstone, as stocks? >> well, you know, look i was a former hedge fund manager and all i can say is they make a lot of money but i'm not going to say whether they are good or bad for society because to me good for society is a company that creates a lot of jobs i'm sure

carlisle say they create a lot of jobs but i spent the week nordstroms and zillow and seattle genetics and they create been joes and are very creative and when you knock private equity they come at you why they are great, they help pension funds they don't really -- you know, they're all good -- they're -- i mean, they are everything other than mother teresa and i'm not going to criticize because i'm done taking heat that saying private equity may not be as good as real equity. there i said it, okay, you know, i -- i'm a throwback. i look for companies where a guy like howard schultz he starts with a little coffee shop and he does an incredible thing and he's got 200,000 people who work at the company and it's remarkable and i wish private equity would start a lot of companies rather than reinvent them but you are not allowed to say anything bad about private equity or carried interest and people attack you for it. i've been attacked a lot this week. >> private equity includes

buyouts but includes venture capital and venture capital has started a lot of great companies and they get taxed on the same way as private equity people that do buyouts. >> well, okay, fine. i'm not fighting. i'm not fighting. >> and you were in hedge funds -- >> i didn't take the carried interest. >> hedge funds often use the carried interest model as well. >> i didn't like it and i didn't take it. >> you're a great american. >> no, i'm not a great american. i'm just a guy like everybody else. >> because it's my last day on the show, you know, for probably ever by the way, with my performance this week, but i got to ask you about something that's even more controversial -- >> take the raging cajuns, that's the most controversial thing i have. >> baylor and nebraska. >> i'm going baylor for final four. >> what? >> without taking -- yes, i am. sometimes you have to have a long shot. this is fine to talk about. the other stuff is too hot. too hot. ipos are too hot. the private equity is too hot. >> what about your harvard boys with the victory yesterday? >> i said don't go with emotion and that was a mistake i should

have gone with emotion. by the way, north dakota state i had them two years ago to go all the way and then yesterday i forgot about them that was a mistake, too. >> jim, we will see you in a few minutes on "squawk on the street." >> too hot. >> knowing jim for many years he was one of the first people that put me on tv for larry kudlow and i would say that both of you are great americans. i will leave it there. >> you're even nicer than i am today. >> it's true. >> i'm trying to go out on not a so level. >> i love jim, smart guy. i can't go baylor final four. baylor's going to lose to nebraska so how are they going to make it to the final four. >> zing! >> coming up more market thoughts with our special guest david rubenstein of the carlisle group. and the ceo of lane bryant will join post nine to talk about the cancellation of orders because nobody could get to the doggone store. and be sure to join becky for "on the money."

how safe is the car you drive? whether or not's watching the automakers? are they asleep at the wheel? catch "on the money" this sunday 7:30 p.m. on cnbc or check your local listings. "squawk box" back right after this. r this.

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welcome back, everybody. let's get back to david rubenstein from the carlyle group. jim cramer laid out an argument for why he thinks private equity isn't the greatest place. that would certainly seem to me to be the populist argument we've heard over the campaign. it's probably a difficult time to be a private equity guy. what do you say back because there are large segments of the bess population that have kind have been hammered out private equities and the banks are places that probably haven't been all that fun to be. >> venture capital is a form of private equity and venture capitalists are well regarded and they've started many good companies in the united states. private equity tend to buy companies that have trouble and try to save them from going under. we create a lot of money for our investors often who are public pension funds so i think the industry doesn't really need to be defended unduly. it's done a good job for people and employs a lot of people, i wish we were better at getting our message across.

but private equity is a great industry for the united states and people around the rest of the world they want our expertise, when i go to china and other foreign countries they want to learn what they've done in the united states because they want to make their country more efficient and i think we're dominant in the private equity world. >> you used a lot of your money for philanthropy namely in rebuilding the washington monument and buying the magna carta. what is next on your list of documents? and then traditionally giving them back to places like the smithsonian and others. >> there are rare copies of the declaration of independence and i own a few and i might buy more and i own a few copies of the emancipation proclamation one in the oval office and there's a few other documents that lincoln signed and i might look in to them again. >> do you have people scouting? >> i get calls when things are available but i'm not obsessive compulsive about it but if something good comes along i might buy it. >> thank you very much for joining us today. it's been a pleasure talking to you. >> my pleasure, thank you for inviting me. >> brian, happy to have you

here, too. >> i lovedving about it except for the hours. >> we loved having you. >> 2:00 eastern "street signs" with mandy drury and some other guy. >> that's you. >> thank you, again, for beefing here. becky, we'll see you on monday. watch "on the money" over the weekend, everybody. david thank you for being here again. and "squawk on the street" starts right now. ♪ good morning and welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange today. carl and david are off. let's take a look at the futures and how we are shaping up on this friday. there's a look at how the dow will open up 42, implied. the s&p and the nasdaq look to continue gains of the last couple of days. take a look at the ten year. that's the thing that really hasn't budged much since the fed. that being the yield. 278 is where the ten-year yield currently sits.