good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. coming up in just about an hour, we have a very special guest house, philly fed president charles plosser. we want to start this morning with the markets. you can see this morning the futures are indicated higher. dow futures up by about 38 points above fair value. s&p futures up by just over 3 points and the nasdaq is up by about 9. in europe right now, the major averages are at least at this point looking pretty strong. in fact, the gains of better than 11% across the board. the ftse, the cac and the dax all looking up by better than 1%. prices in ukraine, the united states, the world's largest economies have kicked russia out of the g-8 in reaction to russia's annexation of crimea.

meanwhile, on capitol hill, the senate moves ahead to provide more sanctions on russia, but the measure could get hung up over proposed reforms to the international monetary fund. those changes are opposed by more republicans in the senate and the house. that is the one that's gone. the republicans continue to set up those that don't have that in it in the house. when you get to committee, i don't know exactly what happens, when you get to conference. investors, meantime, are going to be keeping an eye on a new batch of economic data in the united states today. we get the s&p case-shiller home prices for january out at 9:00 a.m. eastern time. economists are thinking we'll be seeing a 13.5% year over year rise on home prices in the nation's largest markets. but, again, there will be a key read that economists are watching. at 10:00 eastern time, we get consensus forecasts, calling for a 4.9% drop in february new home sales. and at the same time, we'll be finding out how competent consumers are feeling.

the confidence boards, consumer confidence is expected to tick slightly higher from the february reading. let's get over to andrew. he has some of the morning's top stories. >> thank you, becky. disney doing some online shopping. the entertainment giant buying maker studios for $500 million. the company could rise if the company meets performance milestones. maker is one of youtooup tube's largest networks. it helps produce and view videos across more than 55,000 different channels. that deal will make disney a major online distributor. you can look at that disney shares right there, $79.85 is the price tag right now. after months of speculation, cloud source company box filed to go public last night. we've had the ceo on this program. he plans to raise about $250

million. the stock will trade under the new york stock exchange under the ticker box. box plans to use that money for the general corporate purposes. and then this story, i have to tell you, the maker of oakley and ray bans and so many others striking a deal with google to design and distribute the internet connected eye wear. the two companies will work together to create innovative eye wear. there has been a view, parker was working on a separate pair of glasses. i don't know if that's still the case and luxottica is a huge competitor. we'll see. >> the google glasses are pretty ugly to start with. they want to get luxottica to try to help with the way they look. however, luxottica has some ugly glasses that look like google glasses. they do nothing, they're just

ugly. >> but you know what? >> they look good on full figured guys. >> every time -- now he's not even here and you're going to insult him. >> he loves to here -- wouldn't you like it if a major -- >> he said yesterday in his column that you know you're the one who -- he said you know who you are out there and you forced me to pick. >> you said that yesterday -- >> he said he wasn't he was going to blame you, anyway. >> they were 35-0, only team ever, and you heard about them from me. >> look, i'm not a basketball fanatic like you are. >> i'm really not, either. >> you watch all sports. >> here is the most interesting business news today. andrew, will you make this interesting for me? >> i'll try. >> japan's sumatomo is in preliminary talks with rbs about buying the british firm citizens -- this company might

buy the u.s. operations of the -- >> a little business news for you in the morning. >> and we wonder why. can we get back to the shockers? did you actually read this story, andrew? did you know about it? were you interested in it? >> i've seen the story. >> can you tell me one reason why i should care about that? >> if you're in the banking business and you work for rbs, this would matter to you. >> okay. you've got nothing. let's go to the securities and exchange commission launching an investigation into the increasing number of complex deals on wall street that can create some new opportunities for fraud. "the wall street journal" and all the wall street firms are looking into it, as well, for new opportunities. nael, the journal says investigators at the s.e.c. are examining if banks and company are using a bond deal to high risks illegally, which you remember how all these off-loaded entities were part of

so many scandals, even before the financial crisis. securities packages of corporate loans and jets that are assembled and sold by wall street banks to investors and they've gained popularity after the financial crisis as investors chase riskier investment products that aren't necessarily as easy to package and put together any more. and the white house is expected to propose an overhaul to the nsa telephone program that would end with both collection of phone records. the "new york times" reporting that the administration plan toes ask congress to approve changes that would end the systemic collection of that information. but the government would be able to access the information when needed by getting -- from a judge. the report says the overhaul would propose that telephone companies keep the data, but the company will not be required to hold on any longer than they normally would. speaking of fraud -- >> speaking of fraud, five former employees of ponzi

schemer bernard madoff were convicted yesterday. each one was found guilty of securities fraud and falls falsifying books and records of a broker dealer. the six-month long trial was the longest in history and it was the first trial to result from a massive fraud revealed in 2008 when madoff was arrested. the contention was this was not a fraud that could have been perpetrated by one man, that there were many people stopping up that fraud and that they all personally benefited from the fraud while stealing money from investors. stocks fall back into the red on monday. with us now to talk more about this is u.s. equity and deaf rif is strategist at ubs. also joining us on set, rod seppi. guys, it's great to see both of you. >> nice to be here. >> i know you're both positive on stocks, but serat, you think things could get shoppy from here? >> do i. i think we've had a few really good years.

but i think as rates move up, you're going to have an issue where deleveraging is going to come into place and people will take profits off the table. you saw yesterday with the internet stocks, i think the next couple of months at least are going to be choppy and fundamentals are going to matter again. companies are the ones you want to invest in, not just buying the market. i think sector analysis are moving forward. >> would you agree with that? >> i would. and actually, the way we see it, the fed, after 5 1/2 years of suppressing volatility, is actually more likely to cause volatility because if you look at it, the tests they have in hand normalizing rates and reducing the balance sheet is something that they need flexibility. and in that type of environment, we like the sectors that have large cash balances, financials, technology and health care. >> but you did see the market closing up around 1950? >> we do. that's right. but it's going to be -- you've already seen peaks and valleys in volatility over the last year. and we expect that to continue

because, again, with the path that the fed has to take to get back to normal, it's not going to be an easy process and obviously you have other issues such as russia and china in the background, as well. >> we have some people who have come on the program and said okay, this is an okay time for stocks, but a year, a year and a half for now, you see the fed set to raise rates. you don't think that's the case? >> we don't think so. if you look back, when the fed begins raising rates on average, stocks still go 33% higher for about two years until the bull finally peaks. so we think that's not going to be an issue. >> does that sound like a possible scenario? >> i think actually three to five years will be pretty good. what the fed is doing now is signaling because they know volatility is coming, just as you said. if they didn't signal, people would get surprised and say wait a second, where is this coming from? because the markets hate uncertainty. we all know that. but if rates are coming up, then they're going to say what is

doing well on the market? companies that have refinanced already -- companies have the assets to grow and finally spend money and grow in areas such as industrials, such as discretionary. those are the ones in the next 18 to 24 months that will do well save volatility in the short-term. >> do you have specific names in those sectors? >> sure. if you're looking at industrials, we like companies like danaher. i think that's a global growth company doing very well. if you look at cloud computing, companies will grow as more and more corporations and technology don't want to do. they want to go and use other companies but they're spending money. so you want to be part of the company that gets the money. >> what do you think about a company like box? >> i think companies in that space need capital and they're growing because a lot of corporations do not want to insource any of this any more. so areas -- companies like excenture doing it, as well,

those are companies that you want to be part of it and will grow down the road because their demand for their products is going to increase and their information that they keep is going to be extremely -- >> where do you stand broadly on the ipo market right now? i think cramer was on yesterday or the day before and -- >> well, i think biotech, if you don't have earnings, you have to be careful. there are some good biotech companies out there that have earnings and are coming back a little bit and might be an opportunity to start putting money back in there. but be very careful. it's like the internet back in 1999. if you don't have earnings and all you have going on is speculation or we're in stage two and we potentially could be getting something, investors could be careful. those are the things where you could hit a home run but easily strike out. >> what you said about what we're looking at, i mean, all you really did was describe the first quarter. and that is what 1% in choppy

trading. so that's what we've seen for the past three months. is that your forecast for the rest of the year? >> i think the market will be better the rest of the year, but 1%, we could be down 10% in the next six months. >> but it's been hard to make any headway. we were hoping to get above 2%. >> what i would say is if you're going to try and trade this market, you're going to have a difficult time. stay invested, put more capital to work, but i don't think being out of the market is coming back in, that's a losers game because this market can turn pretty fast on the down and on the up. >> what specific areas do you like? >> well, i'll go back to the commentary on ipo. to us, the capital markets themselves reasonably healthy and that's one of the reasons that we prefer financials. in general. that's an ongoing --

>> you're saying the ipo market via the financials because of the fees? >> derivatives, yes, exactly. and among those names, citigroup has been suppressed because of emerging market exposures. but as you see the ccarr shares coming out, that's benefited those recently. >> it sounds like beijing at this point is starting to move more aggressively to -- >> well, i think china changed over the last five years, as well. it was more of a manufacturing led economy and it's more of a consumer led economy right now. prices have been going up 15% he year. a lot of companies have moved assets or moved what they're doing in china. china is going to grow, whether it's 5% or 6%. a large base.

i think a lot of that is discounted. what people don't want is a china to have a hard landing. >> do either one of you see the prudent situation of ukraine ever being able to utilize our stock market here or is it just the oil markets in general, the ruble? what would you have to do? you would have to move in and -- >> what about -- that's -- >> i never heard of that place. >> he could do ukraine and if he keeps on moving -- >> is there anything there? >> just the idea that it's not a one off. >> is there any reason to -- no? >> it's just a function of, you know, he's looking at the old soviet empire. much of it he wants to pull back. >> just like a risk. >> that's right. >> i think the other part is it's not discretion. other countries also start doing that. could china say now that russia is doing this, can we do that? >> exactly. with other countries that

decide, does iran want to do more things now because they know they'll have more support? >> that, i think, is something that we need to watch for. it could spook the oil markets or spook global growth. i think you have to be careful on that. but, you know, if that does happen, it might be more of an opportunity because long onner term that might be more negotiations amongst all the different countries. >> of emanuels, do you know ari? >> rahm and i go back -- >> can you get through to him? >> i'll try. >> okay. e-mail? i don't know. i don't know how to -- you know, i keep asking, maybe squeak or rahm would be better. >> rahm, he's going to switch parties. i really think he might switch parties. i'm not -- why? he has to run that city and he's hanging out with steve forbes.

he would move everybody to the -- he might. he has to actually run a place rather than just, you know, sounding good. >> we're going to see him later this week. >> who is we? >> we. >> he is going to chicago. >> i'm going to be in chicago. we're going to have him on the air. >> and i'm going to talk to sque ziek, too. >> really big shoes. >> rahm is going to be on. steve forbes -- >> oh, yeah, yeah, good. >> chicago. >> thank you. coming up, we have some snow in the forecast -- >> hoping that doesn't -- >> of getting chicago up in the northeast. how much can we get by this afternoon? we have tanss. >> snow starting? >> not here, though. mostly north. >> i'm not the weather man. >> i'm not accepting any more snow here. >> and the warren buffett fathead made popular by his

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welcome back, everybody. it is the second constitutional challenge for the nation's new health care law. today, the justices will hear

oral arguments in what's been nicknamed the hobby lobby case. at issue is whether or not bosses can deny their females contraceptive devices based on moral or religious beliefs. gentlemen. >> yeah, right. i have lots of opinions on this. >> i do. >> actually, one thing i did read -- >> this is a losing topic. >> one of the things in front of the supreme court is not birth control. it's these things that some religions -- >> it's after birth control. >> plan b. >> or these intrauterine things where they say it's like -- >> it can interfere with a -- >> they think fertilization has already occurred, so -- >> and look, i understand that. and it's going to be a very interesting case. with the supreme court just ruling a few years ago that businesses have political rights, it's very hard to then

say you don't have religious freedom. >> oh, my god, you're coming down on that side. i was just afraid to talk to you about any type of reproductive -- >> because of the -- >> control of your body. >> no, because of the descriptions of it, because of it being the morning-after pill, because of it being the interuterine -- >> because some religious people believe life begins at contraception and -- >> who do you like, do you like kentucky or louisville friday night? >> well, i didn't have louisville. >> no, i don't have either one of them. do you like iowa state or connecticut? i'm trying to change the subject because -- >> i'm amazed. >> do you want to weigh in on this? >> no, i'm -- >> you're a god -- >> but look, this is a situation of just the employers being forced to pay for those things. i think if it weren't further than that, if you were talking birth control pills, things like that, i think it would be a different scenario. >> well, i may have to -- >> hold on, i feel like i'm to

the left of you and that's weird. >> so let's say we work for comcast and if -- >> we do work for comcast. we don't have to let's say that. did you not know that? >> and etna is our -- and etna is our health care provider. >> are they? >> you have several choices, but yeah, etna is my health care provider, too. >> if comcacast decided they wouldn't pay for that, you would be okay with that? >> no. i think they might get some pushback, not from me, but i think they -- there are a lot kinds of things they won't pay for. fertility treatments past a certain point. there's another way to undercut this law that i think was just passed in a horrific manner and has done a lot of damage. but other than that, i'm not willing, you know -- this is below my pay fwrad. that's what barry diller said.

>> this is below my pay grade to have an opinion here. but you're a woman, right, becky? >> i am. but look, you're going to have people say that you should be able to do anything along those lines. i think that's a difficult question. >> then what do you do with the arizona law? your religious belief allow you to -- >> they are religious beliefs to -- >> do they allow you not to serve certain people at the counter? >> no. when your religious beliefs are -- what's the word that they use when they are sincere religious beliefs that go along with these things? it's not about serving people. it's about are you forced to pay for these services down the line. >> i saw the big article -- >> and that's not whether -- >> hobby lobby. >> i do think that the united states government should make sure that people have access to -- but making somebody pay for them, that's a different story. >> there's a big piece on the guys from hobby lobby that brought this about.

it was in the "new york times." even the "new york times" made the case for why this person -- but he started his company in an evangelicaler sort of a -- from day one, it's been evangelical. >> this is not a bait and switch, i don't want to pay for this, here we are. this is somebody with sincere religious beliefs that two along those luines. and again, i think all those services should be available to any woman who wants to choose. i'm just not sure that guy has to pay for it. >> you're not asking the person that believes that to do anything in his family. you're talking about someone outside of his family that is making the decision about their -- about what they do. >> you're asking him to -- >> as a libertarian, that's where it gets me -- >> and i agree. i think all of these services need to be available. everyone needs to have the right to choose. that's their right to choose. but it doesn't mean that someone who is religiously opposed to it needs to pay for your right to choose.

>> if it's, like, under the auspices of health care -- >> i don't know. >> i'm uncomfortable now. can we just move on? it sounds like we're arguing from the same side. this is a club i don't want to join. >> let's talk about a much lighter story in that case. a new fathead is now going to be available for purchase. fathead.com which sells the big oversized decals and the big heads, these are the one that's we showed off on "squawk box." fathead is saying it's going to be launching a an official warren buffett fathead. the proceeds of the $29.99 decal go to two detroit charities. still no word on when "squawk box" fatheads will be going out. it was something that they wanted to make sure was available. >> power of.

>> whoa, whoa, whoa, that is the smile, buffett smile someone who has $60 billion. me, why am i smiling? >> hi, joe. >> didn't -- i never got that fixed, did i? it just never seemed -- how do they fix those? >> it's your unique stamp. you shouldn't fix it. you should leave it. >> lauren hutton. i always liked her -- >> it's working out, working out for you, too, and madonna. braces. did you have braces? >> i never did. >> some people have braces and then you don't want to retainer and it goes back. >> letterman. >> he's never beat nbc no matter who we put up. and i think it's that thing in his teeth, you know? >> could be. >> none of the night line guys have a -- they do okay. >> that's right. you're still here hanging out with us. >> boy, that was dicey.

so we got through that, i think, right? >> we'll see about the blowback later. when we come back, we're going to talk about revelations over the weekend about the nsa reportedly tapping into huawei. now, had you awei is going on the defensive. we have a nice, calm conversation to talk about right after this. before we head to the break, though, let's get the national weather forecast from the alex wilson. >> you're going to see snow showers around the in, next area. the big winners will be up in the parts of maine. wizard storm warnings posted down towards sections of the cape. winter storm out for you guys. these are where the heftiest snow totals will be. even into the evening hours, be prepared for a messier evening commute. by tonight, dealing with snow from d.c. up towards boston into interior sections of the

northeast. and tomorrow, snow and wind will be the story all the way along the coastal sections of new england. it's going be a very tough morning commute, to say the least. through tomorrow, we're looking at accumulations of 1 to 3 inches from philly to d.c. the biggest winners are going to be along the cape. a foot to a foot and a half possible there. 8 to 12 inches possible into the sections of maine and that deeper shade of purple. wind will be going on with that snow, as well. snow, as well. about business internet? ok, how about thirty seconds? at comcast business our internet is fast. up to 5x faster than slow dsl from the phone company. and our phone's better too. sign up for internet and voice and find out how to get four weeks of internet for free. time to make the call. 800-501-6000

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. hollywood, i like to call him. although it's going to be done here in new york, right? >> explain to everybody what is this is. >> andrew, showtime is huge. it's the home of homeland and episodes and -- >> and soon to be billions by andrew ross sorkin. >> i wrote a pilot. just a pilot. >> but with some bona fide -- >> david levine. >> and great writing partners -- >> is it any good? >> 13. they wrote rounders, one of the great movies of all time. years ago, "run away jury." do you remember? >> i do remember "run away

jury." who was -- >> john grisham. >> who was in that, who was the female? >> there was, and i -- >> you saw that? >> we digress. so billions is about a -- it's like about an attorney general or a prosecutor in new york and you're going to make it really anti- -- it's about a godless -- no, no, it's about the nuance of it all. it's about the nuance of this whole -- when you look at it, did you ever see the wire? and you think the drug dealers are the bad guys and the police are supposed to be the good guys. that's invariably how you come to it. but when you really get down deep into it you and realize who these people are, nothing is black and white, everybody is gray, and i think it will really -- not change people's

perception, but allow people to understand what -- >> the prosecutors are very -- >> andrew -- >> you would never think of -- >> the hedge funds guys, the charitable endeavors of -- >> he wasn't the head of the seventh district. >> i don't know too many prosecutors who have provided for -- >> and by the way, that's one of the layers to this story. >> but it is the federal district that pubara represents that you would then be looking at this prosecutor inspect. >> yes. >> so there's a legal side and then there's a -- >> the bottom line is that there's going to have to be a lot of reporting on what's going on in this world. and they're going to need pretend cnbc anchors to do a lot of the reporting and it's going to be us. >> no, you said pretend cnbc

anchors. >> like we do here, as you do on this show when you participate. >> we would be pretending. >> i was on "damages." i still get money from glenn close. >> i'm sure and all the cameos we'll have arrangements made for everybody. we're on the case. >> it's really about how it affects me, joe kernen. anyway, in the headlines, russia being warned of more economic sanctions if it further escalates tensions in ukraine. i figure we've got crimea, no one is going to do anything. we'll get them back in the g-8 if this is all he does. so he may just lay low for a while, a couple of years, and get back in. i think he's very skillful and he works us and we were just, you know, completely unable to deal with him. >> it's been a superfalous

response. anyway, following russia's annexation of crimea, it's been kicked out of the g-8. other nations canceling plans to attend a summit in sochi, instead. wow. you're canceling that? putin is shooting off fireworks. the g-7 nations had made plans for their own summit elsewhere. in corporate news, blackberry reportedly tried to sell itself to china's lenovo last year, but was warned by the canadian government that it would block such a deal, according to the cbc. >> that's the canadian network. >> it is. >> they have now gone back and really looked through -- >> at the same time? >> at the same time. >> all right. contemporaneously at the same time they did it. it takes blackberry abandon the sales after being told that an

investment from either -- from either -- i assume that's china? unless there's a place called chian. >> you know what this is. >> i do, i do. or russia would be opposed. and the houston ship channel remains closed for a fourth day as the coast guard continues to clean up an oil spill. officials had thought they miblt able to partially reopen the key shipping lane area yesterday, but that didn't happen. the channel supplies crude to more than 10% of the u.s.'s refining capacity. >> let's talk about huawei this morning. a major revelation from he'd ward snowden. ironically, he was concerned about chinese hacking. joining us now, he's beaten the vice president of communications, bill huawei. the story came out just two days

ago. did you have any information before this that you might have been hacked potentially by the nsa? >> no. like any enterprise, our corporate network is under constant poking and probing and prodding and attack. and we have rather vigilant and dynamic procedures in place to deter such activity. but no, this came as a bit of a surprise. >> in the past 48 hours, what have you done differently? >> well, at this point, we are seeking to learn whether and to what extent has been alleged has actually occurred. and then we'll adjust ourselves accordingly. >> and what's your suspicion? >> well, you know, i think that we've seen a great deal over the last few years an increase in terms of cyber miss mischief.

the revelations over the last nine months have precipitated a growing lack of trust in information technology equipment and networks. we're seeing this as sort of a watershed moment where industry now needs to come together and address that crisis of confidence in networks in the industry. >> so we -- when i say we, the u.s. is considered your company a security threat to this count country, do you consider the u.s. a security threat to your company? >> well, i might challenge the premise of the first part of the question. i don't believe that we, the u.s., consider my company to be much of anything. huawei has not allowed people in the u.s. to form an opinion about my company.

in fairness, we're a young company, we're a very innovative company -- >> let me give you an opportunity. 2003, cisco sued huawei for stealing source code. 2005, the u.s. air force hired rand and concluded there was a triangle network working together to do things to concern us about our security. what do us to things that were happening over a decade ago? to a great extent, a lot of information over the decade has been misinformation and never ub stashated. and this is where i think, you know, we share some of the responsibility for americans not having had the opportunity to understand the company. >> so you're saying rand was wrong, that huawei was never in

any way spying on american companies or spying on any american military intelligence? >> 100% absolutely wrong. >> so what happens with cisco? >> back in that day, there was an issue and a lawsuit associated with a minority section of code in the product. and that case was settled with both parties and we moved forward. >> what's your relationship like with the chinese government? >> the same as our relationship is like with any government in which we do business. our industry is heavily regulated, which means we need to ensure that the gear we bring to market needs to be appropriate, the specifications required within that market. >> if the nsa may or may not have a back door into your services, which you may or may want believe, i don't know, do the chinese? >> again, the revelations over the weekend are still new and we're still seeking to understand what may or may not have happened.

huawei takes its products very seriously. we know there are penetrations and we address those when they happen. if you're a client of huawei, what are you supposed to think of all this? >> we're a $40 billion company across 150 markets with carrier customers, major carrier customers in every nato market, in every oecd market, and most of the developing world connecting about one-third of the world's population. this company is proven and trusted and we anticipate that we'll continue to work with our customer toes maintain that trust. >> okay. we're going to leave the conversation there, especially giving you the news .other companies in the future. >> wonderful. i look forward to it. thank you. coming up, the prophet, marcus lemonis tells us about

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welcome back, everybody. right now, it's time for today's squawk planner. housing will take center stage later this morning. the case-shiller home price index will be released. at 10:00 eastern, the markets will be absorbing the new home sales. plus we have the latest read on consumer confidence released at the same time at 10:00 a.m. that's your squawk planner for this tuesday. joining us right now, the profit himself, mark lemonis joining us

in studio. thank you for being here. >> thank you. >> just in from l.a.? >> i feel like i just woke up. >> that's the perfect time to get all the true answers out of you. he's going to talk to us about his latest attempt to save a company from ruin. more squawk right after this quick break. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today.

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profit." it airs tonight. here's a quick prae view. >> give me this line in the sand. i started at one number, i'm down to a much smaller number, one that makes me wildly uncomfortable. all the debt on the balance sheet is cleared. i want 30% of the business. that's a test of whether you really are guys that compromise as opposed to everything will be a line in the sand. i want to be able to have control over the financial side. financial control is simple for me. i don't want you taking on any debt or partners without me okaying it. >> i think that's fair. what do you think, peter. >> you want to shake on it. >> do we need to run this by your dad. >> no, i don't think so. he trusts my judgment. if i had to ask him everything i did, this place would slow to a halt. >> we have a deal? >> i feel good about it. >> this is a $1.1 million check. >> i think this is just another day. let's do it. >> we have a deal. >> we have a deal. >> here's your money. >> thank you. >> when i give you this check,

you know i'm 100% in charge. >> oh, boy. >> i'll say. that's scary. >> what are you scared about. >> i just thought of a bunch of stuff. the star of the shown, the turnaround king himself joins us now, marcus lemonis. he invests his own money trying to make struggling businesses mack a comeback. i'm starting to understand this. this is like a huge sort of a scheme for you, i think. you don't even care about tv. you can go in here and sort of push these people around and maybe get really good deals on businesses. >> i don't know i'm pushing -- >> you're building a huge portfolio. you're going to be warren buffett. the tv is a means to an end for you to get good deals on these interesting companies. >> you're finally catching on. >> this is how this is working. >> i want in on this somehow. >> there's a 9:00 time slot available. bring your checkbook. >> i want to talk about,

seriously, is this company. i'm intrigued. it's a toy company. and toy companies are just cool to think about. >> yes. >> $1.6 million in sales. but if they could get into a big box. >> yes. >> i mean, 1.6, that would just scratch -- what they make, i want to ask you what they make. the fossil replicas. we had a birthday party when a big block came, you scrape the stuff out and find a fossil. is that what it's like? >> no. the company started 20 years ago as a fossil replica maker, it makes skulls, they build molds and kids can pain the them that's dropped to 8% of their business. it's expensive. they started molding into more common tours. everything they put out looked like dollar store products, noen brad, no licensing, the cars are plastic, not a lot of sex appeal to them.

i take them to manhattan from california, i take them to the nascar headquarters and they actually look me in the face and say, they look at the nascar gentleman in the face and say why would we partner with nascar? we have a car. we don't need you. the guy from nascar looks at him and says are you kidding. >> that partnership deal didn't go off, i take it? >> here's what happens. when i do a deal with people i shake their hands. if they act like idiots through the process, it doesn't give me a right to walk away. i gave them three basic tenents. they can't take on debt. they were 900,000 in debt, i paid it off. you can't take money out of the company and you can't change your salaries. >> in the end they said we don't want you in control. >> too late. >> too bad. i walk out. >> do you get your money back? >> what happens is, all these deals, they can't cash the check. it's a little odd. they can't cash the check until

the paperwork is finalized. in some cases, though, i spend money. i built them out a $100,000 lab, assuming -- >> assuming the deal is good. >> these are basic tenents. i'm not asking to change their operations. the father comes in, that's why you see me ask. the father comes in and says this is not okay. i don't want you controlling my business. >> when you asked for the first-born son they had to draw the line. >> they had to draw the line, no first born son. >> what kind of diligence do you do prior to the show. >> none. >> zero? you're walking in totally blank? >> the premise of the show is trying to be as real and authentic, take you through the diligence with me. >> you usually agree before the first commercial you're taking them on. >> i've been there three days. i agree on a handshake. what do the financials look like for me when i shake somebody's hand. it's a million dollar deal, not a $100 million deal and i ask

them for three basic things and they say yes, i don't know what else i'm supposed to think. >> you think you have a gentleman's agreement. >> what happens if you find out later there's an accounting problem or this or that. >> then i leave. they haven't cashed my check. >> in real life -- >> we have to go. these are details. >> that's how i do my deals. >> i like the name. >> stupid name for a toy company. >> really? >> that makes skulls. >> that's 10% of their business. >> then i don't know. maybe i need you to help me. you would yell at me. >> can i come on. >> yes. >> i have to clear it with mark but we can try. >> wow. i want to do that. can i do that? >> yes. you have to bring a check, though, we'll 50/50 on the deal. you get to decide. >> never mind. >> thank you. thanks for joining us. that makes a difference. no, no, no. >> marcus, we'll see you tonight and hopefully back here next week. >> thank you. up next, "squawk" newsmaker, philadelphia fed president

charles plosser gets ready to join us on set for the next hour. we'll explore the economy, jobs and the future of interest rates. "squawk box" will be right back.

welcome to a special presentation of "squawk box." today's guest host, philadelphia fed president charles plosser. he's one of the first fed insiders to speak since last week's central bank meeting and janet yellen's first news conference as fed chair. forecasts for the economy, jobs and the future of interest rates. that's next right here on "squawk box." good morning, everybody.

welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the futures this morning. they have been indicated higher after a decline yesterday. dow up by 40 points, nasdaq up by 10 and s&p up by almost 4. the yield is 2.728%. it's a busy day for economic numbers. two key housing reports coming up. at 9:00 eastern, the january reading on home prices. and 10:00 eastern time, the government is out with its new home sales report for february. at the same time, we'll be getting the conference board's march consumer confidence index. we'll have a few numbers to sink our teeth into. walt disney will be buying networkmaker for $500 million that deal could be worth as much as $950 million if maker reaches certain financial targets. maker is one of the largest network's on google's youtube. they distribute videos to more

than 380 million subscribers across more than 55,000 channels. and eyewear maker luxottica, the company behind ray band and oakley brands. the goal is google glasses that don't look like geek glasses. >> then you don't know, if they're good at it, you're not going to know somebody has on these google glasses. >> in 20 years we'll all wear glasses. >> there's all kinds of weird things you can do. >> you can be videotaping everything that's happening. there's political operatives that think this would be a great tool to get in on the other side to do more of these behind the scenes tape recordings. you'll have to watch what you say everywhere. >> i think when ben white is on he's taping you. we've looked into his glasses.

and those are geeky already. they aren't even google glasses. a lot of times, remember -- >> you know he's still asleep right now? >> he'll hear all about this. >> he writes his column and goes to bed. >> it's a hibernation, a deep slumber. >> he looks good. >> i know. >> we have a couple other headlines to bring you this morning, after months of speculation, cloud storage company box will trade under the ticker symbol box, box. >> i'm glad you keep spelling box, b-o-x. just for anyone who doesn't -- some people may know it starts with a "b" and an "o" but not sure how it ends. >> my son max has only three letters. he knows the "m." >> "m" is complicated. >> it could be b-o-k-k-s. >> this is a good reason max is learning how to spell his name.

>> he has three letters. he's very good at "m." he can get the "a," very good at "x." >> you're walking around spelling stuff. >> you're doing things for 3-year-olds. >> pretty much. >> you think our audience should be treated like 3-year-olds. >> it's hard. ♪ how to get to sesame street >> bob is planning to use that money -- >> b-o-x. >> b-o-x for general corporate purposes, at least that's what he's saying this morning. >> hour guest host is morning is -- >> p-l-o-s-s-e-r. >> mr. plosser, thanks very much for being here this morning. >> pleasure to be here. good to see you. >> we have a lot to talk about. the markets reacted a little bit strangely last week when janet yellen was speaking. i think they thought that maybe she was saying the fed was going to raise interest rates sooner than the market had anticipated.

we're thinking maybe the middle of 2015. did we mishear something? or was there a wrong interpretation? did the fed change its position about when it expects to raise interest rates? >> i don't think the fed changed its position. it tried to say explicitly in its statement, we believe that the forward guidance or the expectations have not changed as far as we're concerned. so it's a little bit puzzling that the market will react the way it did. what you need to do is pay attention to what she said after her reference to the six months which was that it was going to be data dependent. it would depend on the outlook for inflation and improvements in the labor market, those were the things that would matter that would dictate when we consider raising rates. >> when she said six months, did that surprise you? >> no. i think there was a lot of evidence, a lot of surveys that suggested six months wasn't a wildly unexpected time frame. but i think it is better to get away from talking about time frames and talk about economic conditions is a much better way

to think about it. >> maybe it was a mistake to put a time frame around that and maybe that's what the market freaked out a little bit about? >> perhaps. i don't think that was a mistake. i think, again, it was consistent with what our understanding of surveys were telling us. i don't think it was that unreasonable. i think it's more important to talk about the economic conditions. >> do you think the reaction surprised chairwoman yellen to some extent and maybe -- did she already know how important it was to walk a fine line to not destabilize things? i'm sure she did, already knew that. >> right. >> is she hypersensitive now? >> i think you have to ask her that question. i was a bit surprised that the market reacted as much as it did. >> maybe the market is testing -- don't you think these guys naturally would test her since she's new and it was her first -- >> you mean the market would test her? >> yes. i think they would initially assume, look, we've had

bernanke. we know what he's going to say. we're used to him, comfortable with him. >> we'll see what she -- >> the market, everybody in the market seemed good. >> they sort of do. i mean, collectably it comes out. >> there was a weird headline that ran on dow jones news wires. suggested interest rates would rise in the fall. that would put us on a time frame for the fall. she was talking about the wind down of qe. dow jones news wires ran a headline that said she said it was going to be making corrections in the fall. >> on these short-term time loans it's hard to know what's being -- a lot of that was reversed the next day. >> greenspan. >> knee-jerk reaction. >> they're looking for a rookie -- waiting for some -- i mean they're on the edge waiting for a rookie mistake.

>> there's two things in flux. you have a new chairman and you also have a new policy. both these things happen at the same time. i want to button one thing up here. six months. first of all, yes, the trouble you have is that bonds have terms on them. they don't say, this matures when the fed makes a change. it says, a year, two years, a month, two months. that's why people get hyperabout this stuff as you know. the question becomes when the calendar begins. do you see quantitative easing ending in october, november or december? and when can i start counting six months? >> well, if you look at the schedule as we've laid out, at least the schedule we've alluded to that we were going to continue to reduce purchases at the pace of roughly $10 billion, meeting going forward, if we stick to that schedule, bond purchases would end probably either in october -- probably november or something in that range. whether it's october or november. it's hard to say.

but yes, then -- but i don't count months. i couldn't the that we can't -- it is silly for us to contemplate raising rates until we stopped purchases. that's the first message. all right? then the question will happen that we'll consider is what's the state of the economy? how does it look going forward? what are our forecasts? after all since december, our forecasts for the unemployment rate is for the end of the year has dropped about 0.3%. so i think we'll assess at that time what conditions in the economy look like and that's going to judge when we think it's appropriate. >> you also moved away from the unemployment rate as a target. so should we assume that that still matters to you quite as much or should we assume that -- >> i think the unemployment matters a lot. i think i would prefer us not to sort of dismiss the unemployment rate as some sort of irrelevant statistic because it isn't. >> we talked about this before. ed luzier had a piece in the

"wall street journal" maybe a week or two ago he suggested actually stop looking at the unemployment rate, look at hourly -- hourly earnings and number of hours. number of hours worked. he was trying to suggest actually that things have not gotten maturely better. >> there are lots of different statistics you can look at in terms of the economy, in terms of labor markets. the question is, which one do you think is the best guide for assessing the state of monetary policy? often times that's a different question. i think the unemployment rate still is a pretty good indicator. it's not the only indicator, clearly. >> luzier has been a jolts guy. every time he's ever come on here. >> let's dial in one of the things you think is going to happen. you have to put a dot out there. janet yellen was talking about the dots. she said don't pay attention to the dots. but they're important. when do you see the first rate hike and what is your estimate

for where the rates will be at the end of next year. >> 02015. >> first of all, let me remind you what the dots are. they are not forecasts of what committee members think will happen. that is not what they are. there's a big mistake that people interpret these. these are forecast of what we think the committee will do. these are projections about what each committee member thinks would be the best policy to deliver the best outcomes. that's a different conceptual question. >> fair enough. >> first place let's be careful about what the dots in fact mean. that's the first thing. the second thing i would point out is that when the dots first came out, if you remember i was a member of the subcommittee with janet yellen that developed these and came forward with them. i tried to stress to people that what the dots really look like at any point in time was not terribly interesting because the reasons i just gave you. the value of the dots in part

are is how they change over time. because how they change over time reflects how committee members are adjusting what they think is appropriate policy in response to economic data coming in. >> so how are they changing? >> that is the important message. not the level, not the individual numbers. >> i appreciate the explanation, charlie. i'm not going to let you get out of telling me where your dots are. >> i have -- my dot is at 3% at the end of 2016. okay? >> interesting. >> 2016, not '15. >> where are you in '15? >> 2 something. >> 2 something. >> i'm more than the median. >> you think the optimal policy is to begin raising rates earlier in '15 than perhaps your brethren on the committee. >> possibly. i work backwards. if you look at the forecast and the assumptions that many people

have, in 2016 we are going to be pretty near almost anybody's definition of full employment. >> but you're only at 3. >> let me finish. anywhere close to full employment as well as having inflation pretty close to 2%. i think it is inappropriate to have real interest rates, a funds rate at 2%, which was zero real interest rates when you're at full employment and near your inflation target. so i work backward from saying that's not the right place for us to be then. that means we have to start a bit earlier and gradually raise them. >> that's a much more gradual. if you think we're at two something at the end of 2015 and raise it to 3 something by the end of 2016, that suggests less than a quarter percent hike. >> that's not aggressive. >> we have a lot of people that suggested once the fed starts

raising rates they'll have to raise more quickly and aggressively than they have in the past. >> i've suggested that. we don't know that. our desire, the fed's desire is everything will go gradually and smoothly. we'll be able to gradually adjust rates back to where they need to be. we don't know if that's going to happen. i've often said financial markets aren't always patient. if they get ahead of us, we may be faced with a situation we'll have to raise rates faster than we otherwise would have chosen to do. that's one of the great unknowns about this whole exit strategy. >> we're above where we were when chairwoman yellen made those comments. in fact, we recovered that day. you can see it's going to be interesting the way the market responds. someone earlier today said that for two years, the fed has orchestrated no volatility in the stock market. by definition, as they exit, they're going to engender

volatility. >> i think there's a risk of that. i think one of the things i've said often times, we're in a world where we've never been before in terms of conducting policy. as we unwind from this, the question is how will this play out? what are the risks? if we have in fact been in a situation where the fed, through its policies, has been distorting risk premium or distorting relative prices of some kind in financial markets, if that's the case, within we stop doing that, those prices will have to adjust. >> by definition. >> i don't know what the consequences of that will be. will it be abrupt? >> none of us do. >> i don't think any of us do. >> stay tuned. that's fun. watch cnbc. >> you could argue the volatility is around certainty or uncertainty around fed policy as much as it is around the actual policy, what is the exit, what is the reaction function of the federal reserve. >> certainly some of that is. the question is how far, if you

really believe a lot of the actions we've taken have had big effects in the financial markets, the question is when we stop doing that, which we will at some point, those things will have to adjust back to where they want to be, the market wants them to be. what will the consequences of that be? that's a big question. >> this is an amazing day. there's so much uncertainty about fed policy and charlie is the first guy, anybody's had a chance to question. he has the whole burden of the entire fo many. c statement, all the fed policy for next year on his shoulder for the next hour. >> that's scary. >> that's serious stuff there. >> he's the big hawk and he's talking about maybe in 2016. the very end of the year. >> that's news to me. >> that tells you something, too. >> that's the big story we have to talk about next, the idea the fed said it will be lower than normal. what does that even mean? >> is there something else happening in 2016. >> an election. we'll wait till the end before this guy pays the piper. >> don't talk politics.

>> we'll have much more with philadelphia federal reserve president plosser over the next hour. coming up, an update on the search for malaysia flight 370. check out the futures this morning as we head to break. more "squawk box" right after this quick break. s protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. with investment information, risks, fees and expenses sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities.

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the search for missing malaysia airlines flight 307 got

blocked by nasty weather. it's the nature of apparently that part of the planet. >> yes. >> we are joined from kuala lump lumpur. i haven't watched it quite as much as some people, anybody that's had cnn on, sri. it took 12 days for them to know definitively like what seemed like they should have been able to piece that together for the first coup them in the first couple days. our hearts go out to the families. >> absolutely. this is what the families are so absolutely agonized about. the fact that the search operations, remember, this is using state-of-the-art 21st century technology as well as from rudimentary technology, eye balls on the decks of ships looking through binoculars have yet to turn up a single trace of the missing airliner, the b-777.

at a press conference was the acting transport minister who said he told reporters that the search in the northern corridor has now been called off and the search efforts are now being concentrated on the southern tip of the southern corridor. so we're talking about an area in the region of around 249,407 square nautical miles. consider what it was prior to that narrowing down. it was just over 2.2 million square nautical miles. as i said, very formidable task. you touched, joe, on one of the reasons why it's difficult and challenging. mother nature continues to be against the operation. it was called off today, all the aircraft surveillance aircraft,

the reconnaissance aircraft involved were grounded in australia and perth because of very serious sea swells, poor visibility, gale force winds and low altitude clouds that complicates these search efforts. they're now being characterized as debris recovery efforts. we have found, as i said, let me continue to stress this, any evidence of the remnants of 370. what is absolutely critical now and the acting transport minister talked about this to reporters, is that this is becoming a logistical and technical focus, technically focused operation now. so even more sophisticated assets are going to be brought to bear here in the search, especially for the black box flight recorder. this is where the u.s. navy gets involved. a tract pinger locator is what

is being described will be deployed by the u.s. navy. this has been used to search for downed naval aircraft and commercial airliners in depths, water depths of up to 20,000 feet. it will be deployed tomorrow. in the words of one australian official, it will make the task a little bit more simpler but it's still akin to looking for a needle in a haystack when the hay stack itself has yet to be defined. those are the challenges that the search operation has to contend with at this stage. the search does go on, though. joe, back to you. >> we appreciate that. it's one of those situations where you worry about, it's a salvage effort now. it's not even necessarily a rescue effort. you worry about the people whose lives are at risk dredging upin- >> all this stuff. >> you don't want to have to do

a salvage of the people that went to salvage it. i never thought of that part of the world, 1,500 miles southwest of australia. i don't even think i've considered where that is. coming up, a lot month are from our guest host, philadelphia fed president charles plosser. back in a moment.

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we're going to talk market strategy plus much more. philadelphia fed president charles plosser, guest host. we'll be back after another quick break. 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 from dedicated professional financial consultants. it's guidance on your terms not ours that's how our system works. e*trade. less for us, more for you.

welcome back to "squawk box" this morning. the securities and exchange commission launching an investigation into the increasing number, complex bond yields on wall street that may be creating new opportunities for fraud. that's what the "wall street journal" is saying, they're reporting that investigators with the s.e.c. are examining if banks and companies are using the bond deals to hide risks illegally. the securities are packages of corporate loans and debts assembled and sold by wall street banks to investors. they have gained popularity, parentally after the financial crisis as investors chase riskier investment products. we can talk to mr. plosser about

that, too. blackberry tried to sell itself to china's lenovo. that happened last year but was warned by the canadian government it would block such a deal, that reported by cbc, not cnbc, cbc being the canadian network. michael lewis's the big short about the housing crisis being turned into a movie. adam mckay, the director of "anchorman" movies will be directing it, according to variety, by paramount. >> i hope it's a parody. i hope it's like "anchorman." >> are they doing it as a comedy. >> i think they should do it as a comedy. i'd like to see "too big to fail" as a musical i'm thinking. >> there's a guy, recently, i kid you not --

>> i guy who writes musicals who approached me and said he wanted to turn "too big to fail" into a broadway musical. >> you did not dismiss that out of hand. >> i'm actually supposed to meet with him. >> there's money involved. >> do i know you -- >> like the back of my hand -- like the back of your hand. >> are you serious? >> i kid you not. i'm telling you the truth. >> can you dance? >> i can't dance. >> chuck prince can dance. come on. >> that's right. that's right. another down day. yes, i'm excited about this, this project. i'm not kidding. another down day for the markets. >> i'm not giving it high odds. there was an enron play on broadway. >> there was. >> that lasted about a day and a half. >> on broadway? >> on broadway. >> until it was off broadway very quickly. >> let's not get too excited. >> don't dismiss this. let's wait for lunch. after crunching the numbers,

standard & poors sam stovall said it's better to buy than bail. it took two months to get back to break even, on average. sam is chief equity strategist at s&p capital iq. he's chairman of the investment policy committee. he comes from a long line of famous stock market people. my generation it was bob stovall. >> that's right. still around, pop turned 88 in mid-february. he and i are going to be doing an event in late may for the executive forum, a program part of nyu. >> i remember him, was he chief market strategist at dean witter? >> if you go back to e.f. hutton, reynolds and company, my grandfather was the first employee of reynolds and company that later became dean witter reynolds, et cetera. >> that's amazing. three generations. okay. it's been good to be long since the bottom of right in the

middle of the crisis. you basically have been. >> yes. >> i remember as you've come on. you get criticized to are that. you sound look a permable. it's hard to criticize someone when it's gone from 666 on the s&p. >> devilish number, wasn't it. >> it was an oman. are we in a secular bull at this point still? >> i believe we are. it doesn't matter sman ti-- semantically. i think we have to look have we gone too far too fast, when am i, the investor, somebody like me who has to extract my emotions, what are we going to do going forward? in this day and age of instant information, i can experience fear and greed at the exact same moment. i will use history as virtual

volume. >> what you found is 58 times -- what's the average market break? >> what i basically found was that you're more often better to buy than you are to bail. you know, it takes a little bit of time for the market to decline by 5%. usually investors get very worried about what's going to happen to their portfolios and they either start convincing themselves or their financial advisers that it's time to lighten up, move toward the very defensive areas of the market or get out all together. my feeling is, no, if it takes us only two months to get back to break even from a pull back and only four months to get back to break even from a decline as great as 20%, and that's basically 85% of all declines since world war ii, you're better off actually taking a reverse position by saying, i want to find out the right thresholds at which to get into the market, not worrying about when to get out. >> be nice to have dry powder, right? should you slowly be taking profits on part of your position

and when you get a break then really go in? >> sure. i think there are three ways you can do that. first after if you continue to be employed you can put some of your excess money into cash to be used as the dry powder. if you are in retirement mode, maybe you don't end up using all of the capital gains and dividends that you are being paid. maybe you can put some of that into a reserve as well. maybe what you do, you sell half on a double as the stock trader's almanac likes to mention. use some of the proceeds to build reserves so when we see these declines, at least mentally you can say i'm being positively pro-active. that way i'm not going to let my emotions rule my decisions. >> am i supposed to wait for this moment? >> well, you can. certainly you could also have the other viewpoint that why wait at all. usually it's after the market

has advanced by 8% before it would decline by 5%. i'm better off re-investing my money altogether. a good book, the intelligent assess allocator says diversify, balance, ignore, ignore people like me saying buy or sell and let a diversified portfolio work for you. >> as the money trickles in from the musical "too big to fail" the musical, and the billions on showtime, use the money from that. >> when am i supposed to take this big hunk of dough -- >> as all these things keep coming in. >> you're bringing up a good point. if the market starts to decline when you put money in, i find that -- >> in this cycle. >> the average decline in a pullback is 7%. the average in a correction is 14%. the average in a bear mark set 28%. you could say that sir arthur conan doyle's 7% solution actually was a good recommendation on decline levels to add to your funds.

>> every time you see 7%. >> every time you see 7% or if you're so impatient you get upset if you miss a slot in a revolving door, do it every -- >> if it goes up 8% before it drops 7%. >> you can overthink it. just make sure you are well diversified. you can take that approach. why are people watching tv such as this unless they want to try to get ahead? >> robert ludlum, the bogle approach, that was after the bogle -- no, that's something else. >> the borne identity was bogle. >> okay. that's something different. >> let's get back to our special guest this morning, philadelphia fed president charles plosser. we had a guy on yesterday who was really smart. peter fisher. i've seen two ways of looking at the way the fed has been accommodative but a lot of it hasn't made its way into the

real economy. buffett says that makes it easier to pull back, that the balance sheet isn't that big and we don't have to worry. others point out that because banks haven't really used the money, that all that accommodation was actually self-defeating, that banks became more tight fisted about lending. because it put a cap on the terms, so they weren't able to make money with the yield curve. he thinks that it's possible as you exit that things actually loosen up for people based on the banks being more generous with credit. is that possible? >> lots of things are possible. one of the things i've learned in this job, never say never. a lot of things are possible. i don't think we really know very precisely any of those kinds of things. i think our balance sheet is very large. i am worried about the exit and sort of what the unintended consequences might be. i have expressed doubt that a lot of the asset purchase program has filtered into the sort of main street economy.

a lot of it's been used for sort of what i would call corporate finance, restructuring and sort of reengineering of corporate finance without leading to much new investment and new jobs and output. i worry a little bit when we unwind from all this, what are the consequences for re-adjustments that will happen? so i think there's a lot of big question marks. >> do you think that as buffett says that it isn't, the size of the balance sheet is not -- we shouldn't say it's 5 billion or whatever because it hasn't really left -- gone into the real economy. will it be easier to pull back? >> i don't know that that makes much difference. the question is that what happens to those reserves as the economy continues to grow. are those reserves, as long as they're sitting in the banking system, not much is happening with them. when we start to flow out, that's when the fed's going to face a challenge. >> there's a blog that shall

remain nameless that loves to write incendiary pieces about everything. maybe that's how they hope to make money. they took richard fisher's one of your associate's comments about boosting asset values as saying that it's just benefited the wealthy and did you see that piece? >> yes. >> we talked about this here. >> yes. >> but that he definitely said that it didn't help main street at all, all it did was make the rich richer and we knew it all along. they took that for their own -- >> right. >> eye balls to their blog, i think. even richard has been outspoken in saying that but i mean, it wasn't totally just counterproductive. >> right. no, i don't think it was totally counterproductive. i've always argued basically that i thought the marginal benefits that we -- the economy benefited from in the course of our asset purchases were pretty

meager, not zero necessarily but meager. the risk for unintended consequences were quite large and risky. and, therefore, we should be very cautious in blowing up that balance sheet in doing what we did because the costs outweigh the benefits, in my mind. >> not to mention with rates at zero for this long, it punishes people who are retired, living on savings, who have done things right their whole life and done what they're supposed to do and are now in a position of 0% interest rates, they won't be able to get by for forever on that. >> it's a very challenging position to be in. absolutely. >> could you see -- you're in the camp that thinks the economy is improving, obviously, or else we wouldn't be tapering. we get to somewhere near 3% by the end of the year. is there anything that can happen geopolitically? could the ukrainian thing turn into something that destabilizes our markets or unlikely? >> it's certainly true when you

talk about what happens in ukraine, i'm way out of my depth. >> you have to think about black swan type events at the fed. >> you do. clearly i think most people are at least currently are thinking from an economic point of view, there's an unlikely traditional spillover that are likely to be very large. the question is their financial event that causes sort of great panic and freezing up the financial markets in some way. >> as the ruble went to zero, it wouldn't be the financial crisis, would it? >> it wouldn't be a financial crisis. >> we haven't really talked about china. >> china is the other place. >> that's the big one hanging out there. >> if he moves into ukraine completely. if he says i like ukraine. >> i think even if he takes -- >> yes. >> at that point you're talking about this was not a one off. i am looking at empire rebuilding. >> do they have a ritz-carlton or not? >> i don't know. >> is it a big -- what kind of country are we talking about here? is it something you'd want to

keep? >> doesn't matter. >> i'm going to look it up and find out. thank you. >> more for you in just a moment. president plosser will be with us when we come back. and barry diller is joining the board of a security community startup. and in the next hour, senator marco rubio is taking on regulation. he'll join us live. "squawk box" will be right back. ♪ velocity 1,200 feet per second. [ man #2 ] you're looking great to us, eagle. ♪ 2,000 feet. ♪ still looking very good. 1,400 feet. [ male announcer ] a funny thing happens when you shoot for the moon. ahh, that's affirmative. [ male announcer ] you get there. you're a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. i takbecause you can't beatrning for my frzero heartburn.n. woo hoo!

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welcome back to "squawk box." we're getting back to our guest host, philly philadelphia president charles plosser, but first, steve liesman is here. we're launching later this morning what we call the cnbc rapid update powered by moody's analytics, a way to put dizzying amounts of data into context. we'll poll seven top wall street economists, including bark clays, deutsche bank, moody's, goldman sachs. these forecasts change with incoming data. that's way they're called tracking. it tracks data releases, into gdp points and gives investors a way of gauging the importance of the data. we developed this idea with mark zandi. he says this statistic

translates the blizzard of economic data into what it means for real gdp growth. no other statistical measure measures the economy's overall growth in realtime. we've been testing it for a few months. now we're ready to go public. i'll be reporting about it on cnbc, follow it on cnbc.com/rapidupdate. >> you're providing new data for mr. plosser. >> exactly. >> and miss yellen to study. >> some guys at the fed may have interest in this, because there's no way to do it. let's talk about the data coming in and what it means for the federal reserve. a paragraph in the statement got a lot of attention. it said that when we get back to normal unemployment, when we get back to normal inflation, a normal economy, the fed's funds rate may still be below normal. you voted for this statement. what does that mean to you? >> i think different people interpret it different ways. i think it's a desire on the part -- my view is that some people would like to see, well,

that's going to be necessary in order to be at full employment, that they view these headwinds and other rationales. other people say this is a way of committing to be lower for long in order to help the economy. those are two very different stories. they're incompatible with each other. other people have different rationales for it. >> what does it mean for you? >> my interpretation is that i think we want to get back to more systematic policy, normal policy. and frankly, when we get to something that looks like full employment and inflation target we ought to be pretty close to that. but we may want to slowly adjust to that in order to get there. there's a gradual adjustment process to get us there. primarily the desire is not to shock the markets too much. the question is will we be able to pull that off? will the market be patient with us enough in order for us to actually do that. >> you made a huge deal of putting 6.5% unemployment threshold in there. now you got rid of it. are we supposed to think the world is clearer now as to how

the fed will react to incoming data or is it less clear? >> i don't think it's much different. one of my problems with the thresholds was that it didn't tell anybody what in fact we did. how are we reacting to anything? the thresholds have passed. we still haven't told anybody how we're going to react. the challenge is how do we get closer towards describing a reaction function that provides actually information about what we're going to respond to and when. >> right. >> i want to talk about the health of the banks and what you think is going on in terms of risk. "the wall street journal" has a story, the s.e.c. is probing dealings by banks and companies and loan securities. we had the stress test last week. is there any place in the banking system right now that you worry about? >> i think banks generally are pretty healthy right now. that's a good sign. i think the fed is very concerned about the health of the financial system more broadly and whether or not our policies are putting at risk stability or increasing

volatility. they will be looking at these sorts of things. i think the sign so far is things are okay but as the word goes, we will be vigilant will the in monitoring. >> during the commercial break i mentioned china and the shadow banking system there. what do you think of the shadow. >> baing system here and how much you worry about that? >> one of the challenges will be as we keep interest rates low for so long and put more and more regulation on the banking system, there will be a tendency for regulatory arbitrage, things will flee into the shadow banking system. >> have you studied things like lending club and some of the other emerging systems? >> i think there's emerging technologies as well as in the shadow banking system. and they will come and they will go but i -- >> you know what i want to ask him. >> you have 30 seconds. keep going. >> i just look at you and i

know. >> back of the hand. what do you think? >> bitcoin. i think there's a lot of innovation going on in payment systems of various kinds. bitcoin is an example of that. whether bitcoin will fly or whether it will survive as a survivor in this new world of a payment system -- >> do you want to regulate it. >> i don't think we have the authority to regulate it. i don't think it will replace the dollar. >> what buffett said an andreasen said, buffett dismissed it, andreasen believes it. if you take transaction fees to zero, even though it is a credit card or check or whatever, it's still viable because you take transaction fees to zero. >> bitcoin may be around, it's just hard to say which companies or companies will work as a result. andreasen knows that well. >> andreasen thought about it a lot and he had to sell it to his investors. i can't dismiss him out of hand. i'd like to.

>> it's volatile. >> risk. >> r-i-s-k. >> an hour is not long enough, charlie. >> special thanks to charles plosser. >> thank you very much. coming up at the top of the hour, t-o-p, we can help people with this. we get a read on the markets and senator marco rubio will join us. he wants to regulate the impact of the government on the economy. good luck. an apron is hard work. an apron is pride in what you do. an apron is not quitting until you've made something a little better. what does an apron have to do with car insurance? for us, everything.

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a slump for the nasdaq. we talk to top strategists from rbc and barclays and help you, hopefully, avoid costly investing mistakes. our squawk newsmaker of the hour is taking on regulatory costs. senator marco rubio will add his plan to hold congress accountable for the economic impact of regulation. iac chairman barry dillard joining the board of a community startup. we'll ask the ceo of livesafe how she got the backing of one

of the biggest players in media. ♪ i know we'll be safe and sound ♪ >> i like that song. >> i don't like it. welcome back to "squawk box." here's on cnbc first in business worldwide, i'm joe kernen along with -- it's on commercials, too -- becky quick and andrew ross sorkin. >> what's that? >> it's on a mazda commercial. capital city. what was the song before this one that was popular? there was one before. you know, dave? all right. no. that's a group. let's get a check on the markets here. >> a one-sided conversation. >> yes, u.s. equity futures up 65 points. where's plosser? up 65. let's see what's happening in asia. it's not just him, obviously. we do think we're the center of the free world. >> you're talking about the royal we. >> i'm talking about "squawk

box." japan's down, hang seng is down. did we look at europe? there's europe. >> even better. >> nice. very nice. 76. germany up 1.5%. we have corporate headlines. disney doing online shopping. the entertainment giant buying maker studios for $500 million. the price tag could rise to $950 million. maker is one of yabu's largest networks, helping to produce and distribute videos to 380 million subscribers worldwide across more than 55,000 channels. those videos have more than 5 billion views every month. maker has programming on youtube, including polaris. billed as the deaf nation for geek culture, the platform which focuses on global beauty and fashion and cartooning. how do you pronounce that? >> cartoonium. >> which features animated shows

like "care bears" and "strawberry shortcake." the deal would make disney a major online distributor. disney up almost 2% in the premarket now. $81. also after months of speculation, cloud storage company box filed to go public last night. i'm about to spell that word. >> what is the symbol. >> box. >> how is that spelled? >> b-o-x. it will change under the ticker box. that's for henry and max this morning. also in washington, the white house ask expected to propose an overhaul to the national security agencies telephone program that would end the bulk collection of phone records. "the new york times" reporting that the administration plans to ask congress that would approve changes that would end the systemic selection of bulk phone call information.

the government would be able to access the information when needed by getting permission from a judge. which you're supposed to be able to do already. the roar also says the overhaul would propose the telephone companies keep the data but the companies will not be required to hold on to it any longer than they normally do. i don't know if that will help the situation or not. it basically sounds kind of like the same thing except the information is technically scored with us. with us being the taxpayers and the government. >> i guess it's supposed to make us feel better. >> slightly. >> we are watching the futures this morning after yesterday's losses. the nasdaq got hit particularly hard on biotech weakness yesterday. how should investors be playing the market today? joining us is jonathan gollup. we have investment manager of the barclays investment division. hans, you think u.s. valuations

are reaching a tipping point. why? >> i think events are reaching a tipping points and certainly a valuation. from the u.s. perspective, at roughly 17, 18 times earnings, you need earnings growth to come through. absent that, markets will be hard pressed to maintain the values they currently have right now. i think the problem we're dealing with, though, is the problem of the known unknown, which is the most difficult time to be in capital markets is when liquidity is starting to recede. and with the u.s. federal reserve starting to pull back quantitative easing, with the chinese trying to get a handle on their shadow banking system we're in the early stages of liquidity. what we do know is when you make money cheap long enough, people do adventurous things that go badly, go wrong. the thing we don't know is the nature of those levered bets that people made and how badly

sideways they might be. so this is a decidedly dicey time and you know, caution is required at this point. >> although we're probably not going to be getting higher rates anytime soon. we had charles plosser, the philadelphia fed president on for the last hour. he talked about it. he's one of the more hawkish members out there. he sees interest rates at 2 something percent at 2015 and 3 something percent at the end of 2016. >> without the fed easing the short end of the curve, there's no way you're going to get interest rates much higher. look at where credit spreads are. they're reasonably wide considering the lack of leverage on the part of corporations. i think that all -- i like equities more than bonds right now. i think this fear that bonds will crush investors by having interest rates run away from them is probably misplaced fear. >> do you think hans is right to think valuations are at a

tipping point? >> no. valuations were a tipping point when they hit 24 in 1999. >> 24 times earnings. >> 24 times earnings. right now you have on a forward basis, they're at like 15.5 which is about one multiple point above average. you don't bail on stocks when you are -- when you're still in the middle of a recovery and multiple is at 1 point above average. >> hans? >> that works. it's a good point. it works if your earnings are growing and it works if the quality of your earnings are high. the problem is, big cap space right now, they're not. earnings growth in q4 was all of 0.97%. it's all margin management. >> do you think we are looking at a 3% economy potentially for the rest of this year? >> sure. the good story in all of this is the u.s. economy is probably stronger than people are giving it credit for. the slowdown is weather related. we'll catch up there. that is the trade wind at the

back of stocks. if that starts to translate into earnings, i would agree. we could go higher. our expected returns this year are on the order of 8%, 9%. >> that's not bad. >> you need the earnings to come through, right? or you're just trading on multiple expansion which is not terribly durable. >> you sound like you think it will happen, we will see 3% growth and as a result you will get earnings growth of 8% to 9%. are you talking earnings growth or price appreciation? >> we'll need to see the earnings growth. our story has been it will come through capex which will be the virtuous turn in the cycle. here's the thing, though. we've seen it play out in the first quarter. we had a volatile first quarter. stocks were down 6%, recovered up 2%. we're on a total return basis of 1. that's churn for very little return. that's what we have in store for us this year. >> i listen to the tone of the comments and we're talking about

8% to 9% returns and a low interest rate environment and while the fed may be tapering or trying to pull out of this money printing business they've stated they'll do it incredibly slowly. there's still plentiful liquidity. if you have an economy that's accelerating towards 3% and earnings that will grow at 8% to 9% -- >> right. >> i just don't see any kind of speculative threat here that would say, you know, that we're at a tipping point. there are risks out there but stocks being too cheap -- i'm sorry, stocks being too expensive doesn't seem like it will be one of them. >> we'll leave it there for now. jonath jonathan, hans, thank you both for joining us. we'll talk about senator marco rubio about the cost of valuation. i want to bring something up, he's writing op-eds, el-erian.

he won't come on. >> he says he's going to. >> he's still in the press. but see, when you write, you can't ask him any questions. so what really happened at pimco, mohammed? >> he's helping our case to come on here soon. >> did you really say you're sick of cleaning up his doo-doo? >> you're not supposed to say that. >> sanchez is gone from the jets. i want to talk to him. where is he? >> i'm sure there's a quiet period. whenever that ends he will come on. >> we'll talk to him about global stuff. >> he told me yesterday dates he was looking at. just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own.

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know marco rubio is fired up about america's regulation system. he says it's impeding investment and free enterprise this morning. he's unveiling his new national regulatory budget bill. joining us now is senator rubio. it's timely because of something we were talking about yesterday.

there was a piece "new york times" in the business section over the weekend, "the new york times" had no problem explaining why entrepreneurs are fleeing france and heading to london. they even quoted a couple of guys who said, i think i actually have the quote that we ran yesterday and i asked my colleague andrew about it. but the guy said, here it is. it was called as entrepreneurs flee. but he said -- okay, we're not going to show it. they never seemed to tie any of our problems in this one to regulations and taxation. and i was told by my colleague, andrew, it's a matter of degree, that the regulations in this country have not risen to the level where they're detrimental to any type of corporate activity. >> i didn't say detrimental. i said marginal on a relative

basis. >> neither taxes nor regulations are really a problem. >> the senator knows. >> he didn't say that. that was your second choice. >> did i see the article. i think the point is this, here's the part i'm focused on is the aspect of growth called innovation, innovation, doing something else no one else is doing is the way you can explosively grow an economy. they're a barrier in terms of the cost associated with compliance. second because often times innovations are use as a tool by an established industry or established company to keep potential competitors out. we do need regulations. we want safety and we want to make sure that the customer is protected, the consumer is protected. regulations should never be use as a defensive weapon by an established industry or an established company to keep out competition. that's why yesterday i chose to go to the headquarters here in washington, d.c., a car service

company, which is not being allowed to enter many markets in florida because the established taxi cabs and established transportation companies don't want the competition. that was never the reason for regulation. we've unveiled a national regulatory budget bill which we'll file today which basically says every year the federal government will come up with a regulatory budget, a number of what regulations should cost the economy. and if the existing regulations in any given year exceed that budgeted number they'll have to reduce regulars per agency until they are under that budgeted cost. >> senator, we've seen how many regulations are introduced per year. there's people that follow this. the regulations that were introduced 20 years ago, you never take them off the books. every time we add new ones, it's almost like accumulative. did president obama appoint some guy that he'll look at all the old regulations and get rid of a lot of them? did anything -- was that just to

look good? did anything come of that that was actually productive? you know what i'm talking about, right? >> yes. here's the problem with that. it would be the same as if you had a massive leak in a ship and you're electric trying to shovel out water with a small pail or a cup. for every regulation they're cutting they're implementing hundreds of new ones to replace it. the give and take is overwhelming. this is not about anti-regulation. we do need some regulations in order for the free market to work, particularly for the public health and safety and to protect consumers. but you go too far on this stuff and innovation becomes difficult if not impossible in many sectors in our economy. if you look at the parts of the economy where you have massive amounts of growth, they're unregulated spaces like the creation of apps where a company sold recently for $300 million per employee, you see areas like tesla, there are states like new

jersey that won't allow you to buy one because car dealerships and established industry does not want people to buy a car over the internet. >> let me ask you about tesla. that's an interesting regulation. s there are a number of dealerships, obviously. in your state, you would have no problem with allowing tesla to sell direct? >> absolutely not. it's an established product. i think people should be able to buy those products. you can't buy wine online in florida. if you decided to buy directly from the grower, the maker, you can't do it, you have to go through a three-tiered system that has to go through a distributor and wholesaler to sell it to you. it's using regulation to crowd out competition and choice. >> how do you explain chris christie's decision in the case of what happened in new jersey and tesla. >> i don't know. i haven't use heard his comments

on it. the bottom line, time and again what you see are established industries and companies who use their access to government to impose and protect regulations that protect their status quo at the expense of competitors. imagine if blockbuster video had an able to pass a regulation that said the only way you can watch movies after they leave the movie theater is if they rent on a dvd or videocassette. you'd never have netflix or video streams. >> some say every regulation that's introduced from here on out should be viewed through the prism of what it does for job creation. that's paramount in all of our mind. and i think that fell on completely deaf ears and on this administration. i don't think they ever consider job creation. i've seen the epa tell me to the decimal point how many lives they will save with carbon caps or something.

they say we'll save 6,200 lives if we get rid of sulfur, yet they never are able to calculate any job losses based on the regulations that they're imposing. to me it's staggering. in an environment where we hear so much happy talk about trying to help people that are in need to get a job and the regulations just keep on coming from the same people expressing this faux empathy for people that don't have a job. >> right. that's what the national regulatory budget is geared to do, force a cost benefit analysis on every new regulation and existing ones to get under the budgeted amount. that's exactly the cost benefit analysis we do not have happening right now. when a new regulation is proposed, there's all these proposed benefits of what the regulation may or may not do. no one is looking at its cost, cost of compliance, its cost of job creation. and especially its cost in terms of snuffing out potential innovation in that space. >> senator, are there any regulations you do like, though? >> sure. for example, i want our water to be clean.

when i turn on the top in my home, i want to make sure there isn't poison in there. i want to make sure the airplanes i get on can make it to my destination safely and i'm happy to know there are regulations that oversee how those airplanes are maintained. i'd like to have the world's best sunscreen available in the u.s. which is not because of the fda dragging its feet. i'm also glad to know in terms of the chain of custody, the medicines that we take in the u.s. are not corporate fitunter. they she never be used as a weapon to crowd out competition or competitors. that's why big government fails. big government helps the people who have made it at the expense of people and ideas that are trying to make it. >> senator, while i have you here, as a star in the party and we saw nate silver, if he says that the gop has a chance to take the senate, they might

really have a chance, you know, if we hear from him. i'm trying to figure out whether the party will be able to snatch defeat from the jaws of victory between now and november. i always bring this up with you. there are libertarian aspects of the party that think the government should just stay out of social issues and maybe that's a way to do it. which republican party will be running in november of 2014? is it going to be the pragmatic one that cares about jobs or the one that seems to want to get into all of our personal affairs? >> i think you've asked an important question. i'd say where the republican party is unified and strongest is on the belief in limited government and the ability of free enterprise to create prosperity and upward mobility. while i don't believe government's roll is to tell people how to live their lives or worship or not worship, i would say values do matter, hard work, discipline and

self-control. those values have to be taught and reinforced by strong communities. i don't think there's anything wrong with saying you don't need a bunch of diplomas to succeed, you need the right values as well. our country is strong because of those values. while there's not much government can do to impose those values, the emotion of those values is having a real economic impact. the social and moral well being is directly related to their well being. >> 2016, not necessarily about you in particular but i was going to ask you about chris christie and whether you think he still has a chance to run or not given all the things that happen over the past two months? >> sure, absolutely. i think people are spending a lot of time getting overheated about elections that are four years and three years away. this stuff is increasingly covered as a sport. there are people that cover politics on a daily basis as if it were march madness, every day. they want to be prognosticating and so forth. elections for anything involve a

campaign where people have to go out, give their ideas and try to convince people to vote for them instead of one of their opponents. i think he and a number of other people look viable. >> he's looking good. he's getting down to fighting weight. he's down 120 already. he's looking good. >> i'm going the opposite direction. i think that's where i -- >> you will meet somewhere in the middle. >> wrestle or box? what's your thing? we'll see. senator, thank you. we appreciate it whenever you come on. >> thanks for having me on. coming up, community safety app livesafe getting a big backer this morning, barry diller. we talk to the company's ceo at 8:30 a.m. eastern. google glass may soon be getting more fashionable. plus, anthony weiner's new gig. stick around. >> there's the bell. he'll work p

from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.

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breaking news for you. mike cavanaugh, the co-chief executive officer of jp morgan's investment bank has been named co-president and co-chief operating officer with the carlyle group. d here's the important part. cavanaugh had been mentioned as a possible eventual successor to ceo jim my dimon. for those who are trying to read

the tea leaves this puts matt zames, the coo of the bank as the true heir apparent to jamie dimon. what this also means to carlyle is interesting. people have always said that carlyle, the founders still run that firm and they're always trying to build a bench. he's probably about as strong as you're going to get. >> we just had david rubenstein here. >> in terms of how much money you can make? >> better shout over. >> just multiple. exponentially more. >> i don't have cavanaugh's pay but zames was paid about $17 million back in 2012. >> carlyle, that's one deal. show up and you make that, don't you? if you punch a time clock.

>> you show up on january 1st you make that. other breaking news in the ongoing fight between carl icahn and ebay. ebay issuing a letter that will go out publicly in ten minutes. shareholders emphasizing the benefits to customers and share hoe e holders and on keeping ebay and paypal together. he said he only wants 20% of paypal to be spun off to shareholders. ebay says the following, they're citing the following benefits for keeping the business together. paypal grows faster because of e bay. data sharing leads to more profitable growth. ebay provides efficient capital for paypal and commerce and payments are converging. there's a lot of questions carl icahn said about mark andreasen. they're asking shareholders to

discard a proxy card sent out by carl icahn. let's get a check on some of the stocks in the news this morning. drugstore chain walgreens earned 91 cents a share, missing estimates by 2 cents. however, it says it is seeing an increasing earnings contribution in its stake alliance booth. mccormick reported fiscal first quarter profit of 62 cents a share. one recent headwind for mccormick, higher cost for raw materials and packaging. safeway declared a special stock dividend. safeway shareholders of record as of april 3rd will receive shares of blackhawk on april 14th. blackhawk is a distributor of gift cards and other digital commerce products. by the way, we should talk more. wearable tech may soon be getting more wearable or more

fashionable. google is collaborating with oakley and ray-ban to develop a new breed of eyewear for its google glass products. it was developed by luxottica. no financial terms were disclosed. google glass has a thumbnail size screen attached to its eyewear frames, including a camera that can take hands-free picture and video. if you can't tell people that are wearing it -- there are some bars that have banned these glasses. i think it all means be careful what you say all the time. >> you know, you just want to make sure -- >> with this next story -- >> wait a minute. remember john candy in the original "splash"? he used to walk around dropping cha chains. watch out for people wearing these glasses if they're wearing a skirt or something. the whole idea of having glasses

that can take pictures -- >> it's terrible. >> on subways. i'm worried about people trying to look up my pant leg or something. >> imagine if you were wearing a skirt. >> if this next fellow was wearing google glasses. >> anthony weiner has a new wig -- no, no, a new gig. not a new wig. he'll write a monthly political column. you know what? is this is a match made in heaven for business insider. where else? the name of the column weiner! the column launches this week. that's a match made in heaven. >> a lot of flack is being had for this appointment. >> that's perfect for that joint. go ahead. >> i like henry. >> fine. >> becky? >> okay. when we come back, a basketball addition of our million dollar home series. we'll be taking a look at some of the hottest real estate in cities that have recently

celebrated a national championship victory. right now as we head to a break, take a look at the u.s. equity futures. right now the dow futures are 81 points above vafair value. s&p up by 8, nasdaq up about 18. sacrifice, courage. 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 to "squawk box." livesafe allows you to alert police and other members of your commune to the danger in realtime. now media giant ise is leading a $6.5 million series "a" finance i ing. barry diller is joining the board of livesafe. joining us on cnbc, jenny abramson, the ceo of livesafe. i tried to explain it but maybe you could do a better job. >> we are a personal safety application that allows people to leverage something that most of us have in our phones, our smartphone, to keep themselves and they're communities safer. >> it happened after the virginia tech shooting. >> one of our co-founders was shoot three times in the virginia tech shootings and

survived. she and her along with another founder that had been mugged decided there needed to be a technological way of dealing with shootings, sexual assault and bullying. >> this is like the modern day blue light system on campus? >> blue lights are like pay phones. you couldn't find a pay phone anywhere if you tried to. schools mostly have the blue light phones. could you also have something in your pocket that not only can you turn to in an emergency but as critically, you know, most of the time someone knew something in a shooting or someone knows something and doesn't report it. this gives you a way to do that. >> how does it work? i can think of things, if i have my cell phone i could call the police and message somebody. >> the app lets you use geolocation, camera, video. you essentially pick a tip and

once you've done that you can take evidence. take a picture of the person you're seeing doing an assault or whatever they're doing and then you can send it in and then the safety officials, whether it's at a school or in another setting can chat back and forthwith you. what we find is students don't like to call their parents. they really don't like to call the police in many situations. this allows them to really chat back and forth. >> would there be a push notification if they knew you were in an area that something was going on. >> they can push notifications to you, including extreme weather. our push notifications don't rely on cellular networks. >> in the community, too. this could be everywhere. yesterday i got so scared, there was a guy in a scream mask in staten island put his arms around a little girl. she got away and ran to her school. this guy is on the loose. >> a the lo of people don't want

to stop in those moments but if they have a way to quickly take a picture and send something in, they will. it's extra eyes and ears. >> how did you get barry diller to join the board? i say that because he hasn't joined many private company boards. ario is probably the only other one we know of. >> he's the ultimate disrupter. i think a lot of people have gotten excited about livesafe and want it in their schools, for their kids, in their communities. i think when someone has shared it with barry and he met and got excited about what he could do. i think he's -- in many ways genius in terms of consumer and mobile app. >> what's the revenue model? i know this is a public safety thing. people think there's -- this is for the good of the world. >> which it is. which it is. but it is also is a business. we are a sass model. institutions pay as an

institution. >> the consumer can't sign up and get it. >> maybe over time that will change. right now we're going through institutions whether it's a sports team, a school or a military base might need this to allow anonymous reporting which we allow of various incidents of someone above you or something else. >> you provide the back end to the school or the institution. >> yes. >> did you ever see new york city or a major municipality saying, you know what, we're all going to go to this and this would be a way to cowl into 911. >> it's a great question. in three to five years i can't imagine a world where every application doesn't have a mobile safety application on them. whether it's through private sector or municipality. >> thank you very much. >> everyone go to livesafe mobile. >> let me take a picture of you as the culprit. >> you can make money. >> yes.

>> can we ask -- >> who would have thought you'd make money from online dating. >> can i ask what you charge an institution? >> it varies based on volume. it's a little complicated to say. if you want to give me a few more minutes i'll come back and share that with you. your referee for the matchup when we come back, dolly lens will be joining us. on thursday, i'll be in chicago with mayor rahm emanuel, steve forbes and bill ford. you don't want to miss it. back in a moment. ♪ [ cellphone rings ] hello? [ male announcer ] over 12,000 financial advisors.

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welcome back to the cnbc million dollar home competition is back. seven homes across america are battling it out to see which one is the best bang for your buck. since we're in the middle of the ncaa basketball tournament, all homes are located near schools which have won championship games in the past. homes compete on various shows throughout the day on cnbc. the champion will be announced on "closing bell" this afternoon.

here are the details on the million dollar homes in our first pairing. this traditional ranch style brick home sits on three-quarter acre in a quiet neighborhood. it's just five minutes away from a vie bran the downtown and the university center. >> this custom built tuesday can style ranch sits on five secluded acres just outside the city. there's a hot tub out back and a basketball hoop in the driveway. in case you want to practice your own game. >> this 5,400 square foot home is built for entertaining. this kitchen has state-of-the-art appliances and centrally located between the dining room, living room and nook. >> the gourmet kitchen in this 6,700 square foot home opens on to a cozy fireplace studded seating area and enclosed back porch, a perfect place for a time-out. >> the master suite of this four-bedroom, 4 1/2 bath home has easy access to an outdoor jacuzzi and a fireplace that you

can enjoy from both in bed and in the bathtub. >> six bedrooms mean guests reliving their college years can crash comfortably. the master suite is the architectural slam dunk with a fireplace in this spa-like bathroom. one of five in the house. >> if you're looking to relax, the secluded backyard is for you. the heated swimming pool has a water fall and the gazebo has a fire pit. all of this could be yours for $990,000. you'll feel like you're court side where there's a wet bar, billiards and a wine cellar. >> tell us where the homes are. >> no. you'll have to guess where the homes are. >> one is in louisville and lexington. >> you're watching. i watch your tweets on everything going on with you. you're visiting all the places.

that's great. >> friday night is the big game. it would have been wichita state against louisville which would have been great. you no he what that says to me, you can buy a lot of house in kentucky. >> those houses, both of them are absolutely spectacular. >> so much more here. >> i know. really hard to pick between the two. >> which is the better market. >> i think it's more about which is a better house. they're both good markets. it's which is a better house. the lexington house, there at least it's close to everything. three to five minutes away from town. you get every amenity. you're not missing anything from the fire pit to make the s'mores to the pool, to the jacuzzi. it's a ranch on a small, under an ager, l eacre, good for reti every group, which i love. it's a great exit strategy. the other one is on 5 acres, lots to do. 20, 30 minutes away from town.

you know, great house -- >> it's location. the age old rule of real estate, location, location, location. you look at the house you get for it. >> but it's a better house. >> but it's 20 to 30 minutes away. >> a better house, you can plop a house anywhere on five acres. >> the winner is? it's clear. >> the winner is not morgan brennan even though every guy here has already beaten me up saying morgan brennan has to win. the winner is dominic chu and his house and the wildcats. >> the brick beauty. >> yes. >> that one is moving on to the next round. >> i still like the tuesday can mansion. >> you like morgan brennan. >> i like both. i like chu but i like the mansion. the million dollar brick beauty winning round one. that's going to move on to the semifinals. let us know if you agree, tweet us using the hash tag million dollar home. you can catch dolly on "squawk

on the street." later she'll crown the winner during "closing bell." >> do you think kentucky can beat louisville. >> you mean million dollar homes. >> no, the game friday night. >> i do. i do. >> that guy hit every free throw. >> i saw your pictures. thought that was great. coming up, ebay firing the latest shot in its activist fight with carl icahn. and the shake-up with jim cramer. that's coming up next. make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

let's get down to the new york stock exchange. jim cramer joins us now. there is business news, jim, but watch how i do this. we were just talking about million dollar homes in the louisville and lexington area, so how can i not ask you, did you think before wichita state that uk could beat louisville? >> i heard that uk was going to be a disrupter not unlike uconn but i didn't go for that and i do believe that louisville beats them that's integral to my final four. >> me, too. how about the twins, those guys? did you watch the wichita state? >> i did. >> did you see him hit the free

throws, i wanted wichita state, i wanted to jump through the tv set to miss one for god's sakes but he never did. >> no. i got to tell you when i look at who people don't have, it is uk that is the one that would destroy the most brackets honestly. that is the one where if you have uk and uk wins you're going to be one of a handful of people because that is the one that was the outside. >> they were defending champs, too. >> i know. it's funny when i listened to that great report, like, don't you want to move there, jeetz, the places are inexpensive. >> did you see a waterfall in my pool for 995 or 990. i know. what else did you see today, jim? did you watch plosser? >> well, yes. i frankly the fact that he says, listen, it's panic makes me feel good because people are panicking. you guys just did this box ipo you mentioned that. there's so many companies that are coming public that are multiples to revenues people keep selling the existing multiple revenue plays and we

need to see the ipo market dry up and you know it hasn't dried up yet. it's kind of nerve-racking. >> do you think -- we also had a guy and i thought he was interesting. he said if you look at multiples purely on a historical level maybe they are not expensive, but is growth in corporate profits, is it really anemic? are multiples high based on the growth rates right now? >> not if we get worldwide growth. i was watching this morning let's say the sanctions we haven't talked enough about them, sanctions knock russia out, a volkswagen sells hundreds of thousands of cars there. germany is the one that could get hurt and you need to see europe get strong. that's been the strength underneath why people felt a lot of international companies are going to do well because obviously china not doing well. don't want to see europe derailed by the sanctions. >> why isn't it moldovia? why happened to the "i"?

it went to the same place as the "the" in the ukraine. thanks, jim. >> great tie and shirt combination. you can check it out in a few minutes. we're a few minutes away from case-shiller home numbers and we'll get a preview from the former chief economists for fannie mae. fannie mae. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. i just ah woke up today and i said i need something sportier. annnd done. ok maxwell, just need to ah contact your insurance company with the vin number. oh, i just did it. with my geico app. vin # is up to the loaded. ok well then jerry here will take you through all of the features then.

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in just a few minutes we'll be getting the latest read on housing with the case-shiller home price index so let's talk about where we are in the recovery and get a quick preview. joining us is david bernstein, he's the chief economist for nationwide insurance. what do you think? what should we be looking for in this number? >> i think we'll see a small gain with the seasonally adjusted number and a small decline in the actual number and both of them will leave us up 13% from a year ago. >> what does that tell us about where we are in the economy when it comes to housing? >> you know, the housing market certainly got hit by the bad weather. but even before we had the bad weather, housing was slipping a little bit because of high mortgage rates and the rise in prices. and we're really going to see a pick-up in job growth in order to see the housing market come back strongly. it will come back just because weather is going to be better but we really need the jobs to push housing much higher. >> you sound skeptical that

we'll be looking at great news over the next three to six months? >> i think over the next month or two we may not see great news. i think beyond that the job numbers will be better. i think the housing numbers will pick up. it's no a sure thing, you know, we need to see a rebound from the bad weather but if we start to see the payroll employment numbers over 200 and maybe over 250 for the next several months, then that should give housing a pretty good boost. >> there's been a lot of complaints about how investors have gotten in on the deal. it's no locker just home buyers themselves. there are a lot of big institutional buyers that came in. they are now gone. what does it do to the market? or at least they are pulling back. >> well, you know, the bad news is in areas of the country where prices have fallen so much if investors aren't as big a part of the market the prices won't go up so much but that's actually good news for the potential owner-occupant particularly first-time buyers who are finding the prices have gotten pushed up quite a lot over the last two years and while not unaffordable was making housing less affordage.

so, i think to the extent there were fewer investors it frees up the market for first-time buyers. >> david, thank you very much for joining us. pleasure talking to you today. >> good to be here, becky, thank you. >> okay. >> are we finished? >> we are. >> can you spell box one more time? >> b-o-x is how you spell it. "squawk on the street" is coming up next. ♪ everything that kills me makes me feel alive ♪ good tuesday morning welcome to "squawk on the street" i'm carl quintanilla with jim cramer at the new york stock exchange. faber is off. got new data on housing. case-shiller is just out and we'll talk to robert shiller in a little bit. in the meantime turnaround tuesday apparently in play. futures are higher. a lot of data coming our way this morning. ten-year yield plosser and williams are on the take today. plosser with some important comments to "squawk box" in the last couple of hours. europe mostly in the green. germany up