good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. u.s. markets will try to rebound after two straight sessions of sharp declines. at this hour, though, the futures if you take a look, the u.s. futures indicated slightly higher. nasdaq futures up by just over 1.75 point. the s&p futures are slightly negative. this all comes after the dow fell another 166 points to 16,245. as for the s&p 500, that index capped off its biggest three-day drop in two months with a decline of 20 points it closed at 1845. you are looking at the nasdaq. it got the worst of this. that index had its worst three-day decline. negative for the year are the markets. we will talk about the momentum shift in just a few minutes. first, andrew has more of the top corporate stories.

>> we're happy you're back. >> me, too. if you're a citigroup shareholder, not happy. they'll take $1.2 billion to settle claims. the settlement resolves a significant legacy issue left over from the financial crisis error. citi will take a related charge of $100 million for the first quarter. here's where shareholders are getting unhappy. citigroup warning invests, after the federal reserve rejected the capital plan last month. t"the wall street journal" says the rejection makes it unlikely that citigroup can hit its 2015 goal for return on tangible common equity. the measure is a ratio of profit-to-equity own by shareholders. citigroup shares, unchanged in after hours, 46.55 is the

number. in related news when it comes to the federal reserve, this could impact citi in some way, the federal reserve giving banks more time to divest collateralized loan obligations that fall under the volcker rule. the fed said banks will have until july 21st, 2017 to shed those funds which pull together risky loans. clo is a way for banks -- the volcker rule part of dodd frank, ability to invest in risky funds such as hedge funds or private equity funds. financial regulators vote on tuesday to finalize tough requirements for u.s. banks. a lot of news in banking and federal reserve land this morning. joe? andrew, in ukraine, a lost commentary and things happening. tensions rising. russia's foreign minister warning kiev, warning kiev, that any use of force against

pro-russian activists could plunge the country into civil war. ukrainian officials are accusing russia of instigating the protests. that led to these guys seizing government buildings in three separate cities all in eastern ukraine. ukraine's president warned on monday antitrust measures would be taken against protesters who have seized arms. meanti meantime, secretary of state john kerry is attending a meeting to ease tensions. the flare-ups are being felt by the oil markets. th that's when it affects cnbc's news. take a look at the lead story in the "journal." the core, russian citizens, a lot of them look like special forces. theoretically, putin is able to send these guys in and then on a

pretense -- and on the pretense of protecting them. brett stevens today, putin's moment, if i were vladimir putin i'd invade eastern ukraine this week. strike while the iron is hot. a lot of people think -- i saw jay carney yesterday. i was quaking in my boots. he's cautioning. there will be -- i would not -- just liked kid. no, no, no. remember when you tell the kid don't do that, don't do that, then the kid does it and you're like, okay, if you go any further. >> you know there's no selfies in the white house. >> that's another issue. this is going according to a pretty -- the playbook, we've seen this before. we'll see whether it happens. no one would be surprised if they move in at this point. >> not at all. >> it was interesting that said we had larry lindsay on.

i don't think he'll wait for any of that stuff. i think he's looking and willing to take it by force. >> do you have -- i don't have my risk game anymore. the board game. i know it was the ukraine then and camp chatka. >> it was a region of the ussr. >> this was pretty good territory. i'd be moving -- >> do you have risk for ipad now? >> i wonder. as an application. >> i don't think we have so many board games at home anymore. we have connect four. >> i love that game. >> you know what's weird, the market had nothing to do with this, the market's three-day sell-off. we'll talk about that in a second. i have some -- i don't know how closely you're watching at home. did you see the ten-year yesterday. >> i didn't see where it wound up. >> it was below 2.7 for a while. they say it's a death cross, saying yields could drop

sharply. at this point i think we've come full circle. where now higher rates, people want high rates for the stock market. it's all about an economy -- good news is good news. it's good news is good news at this point. there's two schools of thought. i don't know which to think about. did the ten-year go up first and that hit the stock market or did the stock market defsh a break and people put it into bonds? >> i think it was the stock market first. >> you better hope so. >> i do, too. >> that doesn't explain what's happening in europe where yields are down. they're rushing into possible qe. they're worried. >> what do you think it is? >> you know, as a conspiracy theorist, i'm worried that you know, we assume we can't have another slowdown in the economy. certainly not a recession. it's been a five-year recovery which was already pretty long. >> right. >> if interest rates were to start dropping and if unemployment were to go back above 7%, it puts the fed in such a box.

>> if the unemployment rate is rising right now, it's because the participation rate is rising. >> if we don't hit 3%, if there's no -- see -- >> if we don't hit 3%. >> people say we're going to 3% because there's no fiscal drag. what if we're stuck because of the regulations and taxes and policies. >> i think we're going to 3%, too. >> why would we? we volcano in the five years. and so i'm just saying, that would put this nice, neat way the fed exits and everything's fine and we all live happily ever after after they saved us, a lot of times life isn'ts asimple. what would yellen do if it looked like unemployment was going back up? >> what can you do? >> we're still 55 billion -- >> she's locked and loaded. >> we're still 55 billion a month. >> she can go back up. >> she can go back up. she feels every pain, the death of a thousand. she feels every person who is out of work.

>> i agree. >> the fed has for years. >> you don't believe that unemployment could start creeping back up. >> if the fed were to start going back up, i think it would get congress more involved with taking a look at the federal reserve's powers. that's died down. >> they wanted to audit the fed. they wanted to do a lot more with it. >> what can they do to help the economy? >> i don't know, because it depends on your perspective what you think they could or should be doing. congress is not going to do anything, i think, to change its trajectory. if the fed were to get more involved there's a chance they could do a stronger job. >> this may all be -- we're three points below where we close. >> we're going to 3%. >> you think the gdp will be 3%? >> by the end of the year. >> why do we get 3% with these guys in charge. >> i think the american economy is a dynamic one. i think it's been held up for too long. >> it's fighting an uphill

battle, when the private sector doesn't have to argue for its relevance. >> 3% isn't the type of growth you'd be writing home about. now it would. >> we're at 2.25. >> i think we're going back to 3%. >> i'm not at 3 but i'm not a 2.25 either. somewhere in the middle. >> how close do you come to saying that the citigroup shareholders were not happy campers. i thought you'd use that word. >> i think you were going to say campers. >> they took away my story. >> can you get the tape? you didn't believe me. >> anything you say about sports or basketball -- >> is irrelevant? >> totally. >> at 9:00 a.m. eastern time this morning -- >> since when? you haven't been interested in march madness. >> you asked me the other day. i told you who was going to win,

you looked at me like i lost my mind and look, uconn win. >> you had a 50/50 chance. >> what's their name, the uconn -- >> huskies. what are you talking about? >> just wondered. seeing how much you actually -- >> i'm not a total idiot. economic counselor -- >> who led the team? >> and director of research -- >> one name. >> he'll be on "squawk on the street" following the briefing. >> can you name anybody on the team? how about the coach? >> the global markets report. julia chatterley has been standing by. >> julia has a better chance of saying shahbaz than you. >> she's been standing by across the pond. >> i called him kemba wood yesterday. >> i'll be really quick. i can see you're running out of time. reds to greens, 9-1.

taking the stock down by 0.4%. we backed a nine-session winning streak yesterday with losses of 1.2%. a bit of tension concern, concerns over the tensions in the ukraine. we've had another ecb official saying conventional policy tools are available. push back again on qe, not helping, i think in the european markets. we're down 0.7% across the board. the frank markets outperforming chie. still watching the tech sector, not making my board in terms of gainers or losers. it's down by around 1%. we have the gainers of the basic resources. we're focusing on the tech sector here, in particular, nokia shares trading higher around 2.3% after chinese regulators gave the green light for firms to agree, that tie-up with microsoft was a $4.7

billion dollar. chinese regulators giving it a green light. they have regulators on board, including the u.s. and europe. good news for nokia. back to you, guys. >> all right. thank you. she said shahbaz under her breath. >> under her breath. >> we now have a new national champion, the uconn huskies beat the kentucky wildcats 60-54. i didn't even see a minute of the pregame. thank you for starting at 9:10, after 9:00. this is uconn's second championship in the last four years. last year, louisville won. senior shahbaz napier was named the tournament's most outstanding player, having 22 points last night. both teams didn't make the tournament last year. i don't remember an eight and a seven being in the final. >> why this song?

why do they play this song? i hate this song. >> you do? >> uconn lost 81-48 like two months ago to louisville. 81-48. not many teams -- it's weird, the culture that gets you to this point. not that many teams have won a national championship. ucla has won like 11 and kentucky won 8 and then i think it's uconn after that. >> duke's done well. >> they've won three or four. i think three. university of cincinnati won two but you know why, the big "o," oscar robinson. >> what was that song from? >> "one shining moment"? i don't know. it's lame. >> it was the -- >> "glee"? >> no, no, no. >> you'd know if it was "glee." >> show from the '70s. it was the theme song. who was the guy with the puppet? he had a puppet. san francisco. >> come on. >> alf. >> it was written about the ncaa, if they used it somewhere else -- >> no, no, no.

>> a guy with a puppet? >> i don't remember the guy with the puppet. >> a show in the '70s, guy with a puppet. >> mr. rogers. >> comedy show. another guy lived above them but in the same house of the apartment i believe. no? there's market news to get to. >> i was in college in the '70s. i missed a lot of -- i missed knight rider. >> if you were in colorado -- back when it was illegal. >> i was in the world. college kids don't sit around watching that. we were out every note ight. the s&p suffered its worst three-day losing streak. joining us now from ft. lauderdale is richard steinberg, president and chief investment officer of steinberg global asset management in florida. we see some rotation, rich, out of these momentum and tech

stocks and the utilities. we start wondering whether there's more to it, even some of the cyclicals didn't do so well. do you think this is indicating anything about the overall economy or it's a refreshing pause here? >> i think the economy is pretty decent, joe. i think earnings are going to be okay going into early reporting, starting this week. this is where kind of investors need a gut check. and when you had the momentum names in biotech and the real high flyers in nasdaq, kind of parabolically moving, it's healthy to see a pull back in a rotation to what i would call more borg stocks in the dividend names and utilities. i'm perplexed by the major rally we've had in the bond market. i think the utilities may be short lived. this is a healthy pull back. we probably have more work to do on the outside. maybe the 1800 on the s&p. and cash that's on the sideline could be put back to work.

>> what does that say, steinberg? is that the way you say it, s-s-steinberg? >> he can't see the screen. >> that's a way to set yourself apart. i thought david steinberg -- >> sometimes i have trouble spelling my name. that's good. >> david steinberg, was he funny? i saw him. he was in town. >> can i interrupt for one second. >> sure. >> wikipedia has been upgrading this. this is for the national championships. ucla has 11. kentucky has 8. >> i said that. >> north carolina has 5, indiana has 5. >> indiana, that's right. >> connecticut and duke are tied for 4. they've updated from last night with the uconn win. i don't know why i forgot indiana. >> that's what i call the john

wooden award. in all sports, with 11 -- they had walton and kareem abdul -- or cinder was his name. >> i was thinking about "too close for comfort." >> if you remember the program. >> who was in it? >> ted knight was in that. you'll get nothing, spalding. he lived in san francisco. >> with the puppet. >> anyway, i didn't know -- >> quick thank you to chad bray who sent me a note. thank you for that. >> you're perplexed by the bond market. my question, it's hard to know whether money comes out of the stock market or gets parked in bonds, that's why yields go down or whether something else is going on globally. look at the yields in europe. why are rates going down? why is there a deflation fear around the world again right now

if no one is worried about a slowdown? >> i think in europe, the issue is they need to continue to export their growth. and the qe that may be coming in is going to push money back to equities. i think in the u.s., the beginning part of the year might have been pension, endowment rebalancing. if you started at a 60/40 blend in 2013 you ended probably around 75/25. now, you know, we think that the ten-year could end up back at the 325 to 350 level and we're hovering around 270. i am perplexed. >> it's not cooperating with that call at all right now. >> at all, no. >> we're still doing 55. i feel like we're in a row boat and the water is coming in and we're going as fast as we can to get it out. the 55 billion is still a lot of money. it isn't even doing it for us anymore. it's not keeping us level. we have three straight days now.

we certainly haven't raised short-term rates. we're still involved with qe. 55 billion a month is still a lot. the economy is not strong enough to warn the that, it seems like right now. >> that's why i called this market the investor, know thyself market, know. we'll be up 4% or 5% on a rally, pulling it back. you have to really know what sectors you want to be in and what market caps you want to be in. midcap is completely valued right now. there's probably about 3% upside to small cap. we're actually starting to see more value in the large value space than we are in the growth space. that space with the 15 multiple has 6% upside without dividends. the energy sector and the banking sector may be the next rotation. >> okay. all right, rich, michigan state, two? kansas must have three, don't they? >> kansas has three. michigan state has two.

>> just two? >> yes. >> it's hard. it's not easy. it really isn't. it's weird how -- i don't know whether it's the recruiting a coach does. >> there's only 14 teams that have more than one. >> there's only 30 teams total or 35 teams total that have ever won. it's not easy to do. did the women already play? i don't know. did they already play? tonight. uconn could win both again. they're both undefeated. they've done it before, won both. to win the men and the women's would be unbelievable. what's in the water up there? >> i hope notre dame wins. >> you want notre dame. >> yes, i do. >> they're both undefeated. >> a new service from uber. should fedex and u.p.s. start to worry? that's coming up first here on

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welcome back to "squawk box." you're looking at new york city where we have lingering rain showers across parts of the northeast. as we take a look at the radar, this is the last bit of it. boston morning rain showers over the next few showers.

bangor, maine will deal with the wind and the rain today. here's a look at the timing as we watch the rain showers lift off towards the north and east. we see peeks of sunshine as we head through the afternoon. across the south, still dealing with heavy rain and thunderstorms. charleston to savannah to jacksonville, it has been a tough morning commute for a lot of those spots. the early birds are getting wet roads. jacksonville, rumbles of thunder in the area. those showers and storms push southward for the day. we could see rain showers with thunderstorms, those storms could produce small hail, also some gusty winds, both today and tonight. tonight we'll be watching a lot of the same areas, including birmingham, jackson, close to the new orleans area. i think they'll be clearing out and quieting down. some other big stories, warmth. tomorrow we're back in the 70s in minneapolis for the first time since last year. >> alex, thank you very much.

>> sure. in our "executive edge" today happens to be equal pay y payday. president obama is expected to make an announcement of new initiatives today in honor of equal payday. he'll be signing an executive order. obama will also be signing a presidential memorandum requiring federal contractors to submit compensation data, including sex and race for their employees to the labor department. >> i don't know if you saw the other study. there's a study released that shows female white house staff memb members make on average 88 cents for every dollar a male staff member earns. now we should note, most salaries for white house staff are set by a pay schedule but because more women occupy lower posts, the median salary for female employees is 65,000,

nearly 9,000 less than the median for men. it's not a job for job, same job is being paid less -- >> they don't break it out. you don't know that for sure. they explain there are more women in lower posts. they don't break it out post by post. you can write that off. if you look at things, women still make on average 77 cents versus what men make. part of that can be explained by the idea that women take time off, leaving work to raise children. there's still 40% that most experts will say is there because they think some sort of discrimination. >> right. >> so the big "o" is not on. he finished in 1960 at university of cincinnati. he averaged 33.8 points a game in college. third highest ever. the guy who was on was jerry lucas. he was then signed with the cleveland pipers. guess who was the owner of the

cleveland pipers when he signed? george steinbrenner. that's weird. >> that is weird. >> ties you back to new york. >> bob koozie was here as well. being from cincinnati, everybody knows the bearcats won back to back. yum brands, the parent of kfc -- aren't they the parent company of taco bell? >> and pizza hut as well. >> kfc is the engine of growth. launching this week, super chicks. you go to a different place with that name, i think, super chicks. >> it's a late-night place you're talking about? >> after you get a bunch of singles. >> it will open in arlington, it will have a limited menu.

sounds like it's -- >> healthiehealthier? >> no. sounds like a chick-fil-a competitor. >> it's not men to the compete with other u.s. companies of the menu but it's very similar, as i just said. kfc has been losing market share in the u.s. yum said this new restaurant is being tested for international purposes. super chicks. >> the true question is if they put a pickle on the sandwich. when we come back, we're talking about momentum shift. the focus on the sell-off that's hitting stocks right now. and sam zell 0 our guest host. we'll be talking deal making, the economy and the political arena. as we head to a break, take a look at yesterday's winners and losers. i know what you're thinking...

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squawk planner.

>> perfect. is this the squawk planner song? >> can i do the squawk planner with a puppet? >> that's a good idea, too. i'm joe kernen along with andrew ross sorkin and becky quick. >> they were in the boxes, the star show. >> "hollywood squares." the guy was there all the time. >> the guy that was on the show with him. >> jim jay bullock. >> i need a picture. >> hold on. i have a picture. i'll show you. >> we've gone completely -- >> completely deep end. >> go to the headlines. this is what business news can drive a person to. in the headline after 24 years, general motors is planning to begin fixing defective ignition

switches this week. many dealers are apparently still waiting for the parts, though. an nbc news survey of more than a dozen dealerships in eight states found none have received the parts necessary for the repairs. as yet. and google is reportedly set to announce a program called glass for work, to pitch its google glass product to businesses, that's according to "the new york times." the paper says google glass has met with less resistance from businesses than it's seeing from ordinary customers. and microsoft ending support for xp today. she has an xp, her computer doesn't have memory. we had a whole little sorkin family tech session about it this weekend. >> oh, that dude.

yes, i know him. yes, yes, yes. young guy. and microsoft extend the ted th support date a few times. >> a number of atms don't have it. a number of banks will pay microsoft extra to extend the service on some of their atms. my mother on the other hand needs to get a new computer. we've been watching the futures. yesterday was a big down day for the markets. nasdaq down by 1.2%, its worst three-day losing streak since november 2011. the dow and the s&p 500 each lost 1% yesterday. the futures have barely budged, sitting around the flat line. let's take a look at what's been happening on the early trade in europe. things are decidedly weaker there. the ftse is down by almost 1% in london. the dax is down by 0.9% and the

cac in france is down by 0.8%. in asia overnight, you did see the markets there, not massive declines, the hang seng and the shanghai were both up decidedly. the shanghai was up by 1.9%, the hang seng up by 1%. the nikkei closed down by 1.3%. oil prices this morning have been indicated higher. part of those you can point back to what's been happening in ukraine, the pressure from russia. wti is up by 67 cents to 101.11. the ten-year note is yielding at this point, 2.706%. as joe pointed out, that yield pushed below 2.7% at one point yesterday. that's something the markets are watching closely. if you take a look at what's been happening with the dollar, the dollar is down against the euro and the yen. euro is trading at 137.67 and the yen is at 102.55. gold prices in the meantime have come up. they're up by about $13 this morning. well back above $1300 at

$1311.40 an ounce. for more on the markets, let's bring in jason pride, director of investment strategy at glenmede. and we have a chief economist from ihs. how nervous are you about what's been happening in the markets lately, jason? >> we're sitting in a position of guarded optimism here. the economy is moving in the right direction. we're still seeing expansion. but other economic leading indicators have turned into what is technically a slowdown period where growth is moderating out a little bit. that's coming at the same time the valuations, particularly in the u.s. are quite fully valued, maybe not necessarily dramatically expensive but we're definitely not cheap anymore. that creates this kind of unique environment where equities have less support underneath them, at least domestic equities. that pushes us in a position of in the u.s. we're using more

guarded positions. we're twisting towards the higher quality, the consistent growers. outside of that we're emphasizing the international waitings. we're getting considerably better discount. you know, i think we all know we're having to put up with a lot of other things there, whether it's weaker economies in europe or japan or just the turmoil that's going on in the emerging markets. >> has this year caught you by surprise? when we started on january 1st did you expect to see a flat-to-down year for the markets? >> we did not. the interesting thing is, you have a 25% or higher up year or the year before. a lot of people look at that and say that means the next year is going to be bad. it's normally some indication there's something going on inside underneath that market in the economy. that's still the case, it's just that this first quarter has been rough.

we're having a slowdown behind that. it's making for a tough first quarter. i would expect as we pass through the year, things will stabilize out. but for the meantime, we're sitting with a more guarded optimism. >> where do you expect we'll end the year? >> we could easily see up 5% to 10% from the start of the year. let's face it, when you're forecasting one-year returns, the likelihood for error is wide because of the volatility of those numbers. anything could happen from now till the end of the year. the best case scenario, most likely case scenario is a 5% to 10% year. >> let's talk about the economy. jason thinks there's something happening here besides the winter weather. what do you think? >> i think there's a little bit of a something else going on here in the sense that we're in the middle of an inconvenievent

cycle. we have a buildup at the end of last year. the first quarter will be pretty bad. we all know that, probably below 1%. by the second quarter, we think we'll be up around 2.5 and by the end of the year, 3. i don't think this is a permanent bad news story. it's a temporary bad news story. >> the ten-year note yielding at this point, 2.7%, it fell below that yesterday. what do you think that is an indication of? >> i think it's an indication of softness in the economy. it's an indication of flight to quality. with all this risk, where do people go? they go into u.s. treasuries. the ten-year treasury yield is not always a good indicator of what is going on in the u.s. economy. >> you don't think this is signaling weakness in the u.s. at this point? you think this is more of an international concern? >> i think there is. there's obviously a little bit of u.s. concern. it's mostly an international concern.

anytime there are jitters, people come in to treasuries. i think that's what's going on right now. >> where do you think the ten-year yield is at the end of the year? >> certainly i think it will probably go over three. if you expect or believe what we're seeing in terms of growth, i would expect that will get reflects in terms of a higher number. i wouldn't see it much above 3. >> why do you think we'll be looking at 3% gdp by the end of the year? i agree with you but i'm not entirely sure why or how we get there. >> there are a variety of reasons. one is the strong head winds of deleveraging and austerity easing. we have a pretty good tail point in terms of the energy boom. europe is adding to global growth. a variety of factors, none of them spectacular. all coming together, we think that would help. >> anything that would change that forecast? what have you seen this year

that's thrown that into doubt? >> the internal risk is that businesses still stay conservative, continuing to hoard that cash. they don't spend it, they don't hire as much. that's the internal risk. the external risk is geopolitical. those are the things that would keep me up at night. >> thank you both for your time this morning. >> thank you. coming up, the country best prepared to handle a disruption in the oil market and our exclusive guest host today is billionaire investor -- used to be called the grave dancer, grave dancer, real estate titan sam zell. i was a stockbroker i used to buy this guy's company back in 1982. >> you didn't want to be on the other side of the deal with him. that's why they called him grave dancer. >> no, on the same side. a quick check of what's happening in the european markets right now. ♪

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welcome back to "squawk box." it's time for the "squawk" planner. the markets will get a read on small business confidence with a march report of the national federation of independent business. alcoa is also on the earnings calendar. the aluminum producer is expected to report after the closing bell. on the ipo front, black stone backed hotel chain laquinta, the estimated price range is $18 to $21 per share. that will value the company at just over $2.5 billion. that is your "squawk planner"

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welcome back to "squawk box" this morning. we have big news this morning if you're a new yorker. uber is now launching a new service enabling use stories pick up and drop off goods through a courier service. new york general manager at uber. you're sending people out on bikes. this is not the cars. >> uberrush, in the same app that you have on your phone, slide our selector over to rush. tap a button. a courier will come to you.

>> this is getting into the messenger business. why do that when you have this other great business you have completely revolutionized? >> we are seeing people use uber cars tpaor this business. a pair of keys to a roommate locked out. or book to a client. we are seeing this used on our cars. this is an experiment. we're going to try it here in manhattan. doing it by bike or foot makes the most sense. to come to your office in midtown. >> which makes it much harder to do in new york. you can't take advantage of the scale that you already built. you have to build an entirely new infrastructure. >> we are going to start today. our promise is it will be reliable. the service will be faster than the competitors.

he or she will take that thing to somewhere else directly. you'll see the progress. >> what's the pricing? >> it starts at 15 bucks. five zones. up to 30. just across town, 15. upper west side to financial district will be 30. this will be cheaper for what it's offering. for cheap, under an hour delivery. >> i see this as a hint directionally in this idea that uber wants to be this on demand service that does everything for you. say competing with amazon, with fedex, with all pieces of the last mile. what is the ambition? >> uber is lifestyle logistics. it started as transportation. that's going well. you may recall on demand ice cream.

on valentine's day, on demand flowers. on christmas, on demand christmas trees. we have been experimenting to see where we can make people's lives better. it's an experiment. we don't know if it's going to work. but it is taking it one step further. >> they can't buy stuff for me. post mates is pretty cool. or seamless can go pick up food for you. you aren't do that? >> for now the experiment is let's see if you want to move your own thing. but part of the experiment is to see all the creative ways that new yorkers use the service. people do want their courier to go buy something for you. for now bringing something to from the point a to point b. >> how many do you have? >> we have hundreds coming every

week. we have been training three weeks. we will keep asiding to keep this reliable. >> how many drivers do you have? >> in the thousands. >> you raised price on the black cars. have you raised on the cars? >> no. we have taken it up 7.7%. >> i use the service like crazy. one of the things i hear is now that you have so many drivers actually the business isn't as good as it used to be. it's harder for then to make a lot of money. >> that's not true. drivers are earning as much as as they ever had in nyc. we make close tabs to make sure we are not oversupplied. >> josh, congratulations. thanks. we'll see how it goes. when we come back, sam zel will be joining us.

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squawk exclusive. our guest host today is the one and only sam zell. the they're investor will sound off from the economy, shareholder activism and maybe even washington. crude realities. which country is best prepared for a disruption? u.s., russia, canada. we'll reveal the name on the top of the list >> another rough day for the markets. how to invest from the momentum ships. today's platinum portfolio manager oscar schaeffer has a few picks.

"squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick. we've been watching futures this morning. after the big declines yesterday, the s&p and the dow both down by 1%. you can see the red arrows continue. the dow futures are indicated down 16 points below fair value. nasdaq off three points, as is the s&p 500. the 10-year note we have been watching closely. the yield 2.7%. it did trade below that yesterday. again, the 10-year trading 2.701%. and in our headlines this morning, citigroup will pay a little over $1.1 billion to 18 stpaourbl investors. that payment will settle claims involving mortgage-backed

securities sold prior to the 2008 security crisis. eli lily has been ordered to pay $9 billion in damages. that case involved claims that the companies concealed cancer risks related to diabetes drug actos. they plan to appeal the ruling. a florida jury ruling the company did not infringe three patents by nxp. nxp claimed various infringements in different blackberry hand sets and playbook tablets. >> a new national champion in ncaa basketball. women's champion tonight. it could be from the same school. uconn huskies won. kentucky last won in 2012. napier had 22 points last night.

it was like kemba walker. yesterday i said kemba woods. looked it up. bill clinton picked her. the first time an attorney general would have ever been a "playboy" bunny. it had to be bill. i'm going to get an attorney general. why not a playmate? if you're going to do it. better than eric holder. don't you think, andrew? if you can find an attorney general that was also -- unform, kemba wood only five days training. she was trying to make money. she was in a tough position. funny bill was the one. what president would have picked her? had to be, right? am i right or am a right? >> sure. >> from his city, one of real

estate's biggest names. i don't think he loves his president so much. sam zel chairman of equity group investments. good to have you. i want to talk real estate. give us your sense of what's going on in the economy and the markets given what we have seen the past few days. >> well, i have been pretty consistent that i didn't think the market was left of the economy. and that is still very much the case. the stock market was up 30% last year. where is it? i'm looking at operations every day. things are not terrible. i'm not suggesting that. but we're missing an awful lot of bounce. the stock market would have suggested everything was

kumbaya. >> what happened here? how did you get -- >> i don't know. >> didn't you see me on the guest list as leading sam? i had all my questions. what happened? why was it changed in the prompter? why don't you try to find out for me, rob. that would be good. hi, sam. >> hi, joe. how are you? >> i'm fine. you're leading another one. >> it's overcomplicated. >> not really that complicated. >> i think competition is good for you guys. >> it is. >> here's where i wanted -- i would have started by saying -- for a while you thought the entire move in the market has been orchestrated by the fed. i know that. my biggest question is whether this 10-year note, which we have been talking about, which is a 2.7. are you a 3% gdp for the rest of this year?

are we going to 3%? >> i don't think so. i mean, maybe it will be 2.5%. maybe $2.70. i don't know. at least so far i don't see the buoyancy in activity levels. but it's early. if you think of the last three years, the first three months of the year have had a lot of enthusiasm that has waned. that's a result that as it increased, and i think companies were reluctant to the that. >> this was the point i made in the last couple of days. is that there's been this discussion about what causes this horrible recoveriy we have seen. the weakest in history probably. is it the depth of the financial crisis or self-inflicted from uncertainty, tax policy, obama care, all these -- even the fiscal drag where we had, you

know, the sequester. whatever you want. >> sure. >> so since nothing has changed based on all these policies, i wondered how everyone thought we were going to 3%. they thought like night follows day that unemployment continues to come down. >> on that thesis, first of all, the unemployment rate coming down is certainly questionable. when people drop out of the unemployment market and the market goes down, i don't think that's a positive economic signal. so i think that the issues you're raising about uncertainty, about obama care, about all the head winds. look. take a look at the map of the world. and then take a look at the map of the world in 1914. 100 years ago today. or 100 years right now. and when you compare those maps, what you see is a whole bunch of

burnishing problems all over the world. we have the same thing today, whether venezuela, crimea, ukraine or -- these are all very significant issues -- china, japan -- that are head winds, any one of which could change the game. >>. >> we think about, you know, maybe we have similar thoughts on a lot of this. but the idea that the fed can write this story, we saved the world, increased the balance sheet to 4 trillion. we exit effectively and we're the heroes. it is such a weird narrative. there are so many ways that could go wrong. if the economy stops improving the fed is in a box. it said it will exit. these people won't exit. if they think unemployment could go back up, they're stuck. is it possible they can't get

out? >> i think that they can exit. whether or not they will have the wherewithal or the guts to exit -- >> that's what i mean. >> -- remains to be seen. i think it's late in the game to consider anything other than exit. >> right. >> and i think just think this comes down to a very simple concept. that is when you have a goal of redistribution, growth is extraordinarily difficult to achieve. the two conflict with each other. the result is we have spent an awful lot of the last few years trying to, quote, redistribute because that's the president's policies. and i think growth is the victim of those policies.

and i think we will have subpar growth. >> examine the market is based on the economy not improving to justify where the stock market is, power value, what do you think it is. you're not a stock guy. >> i'm a hard asset guy. >> i thought you were going to say a hard ass guy. >> the market, and particularly, you know, what i call the basics. stocks haven't gone down in this thing. we're talking about twitter and what's app is worth billion dollars. does anybody remember etoys? all of these things? i don't get it. i can still count on my fingers. when i start the count on my fingers, i can't figure it out. >> when you're looking at hard assets, when you're looking at

real estate, you're not impacted by what you see in terms of the geopolitical head winds, are you? >> oh, for sure? >> yeah? >> oh, for sure. just think about some change in one of these military situations. and very significant alterations in real estate values. to some extent the united states has benefited from the fact that everybody in the world wants to invest in the u.s. real estate market. but the u.s. real estate market to some extent is that attractive because it basically has demand. there aren't very many other places in the world where demand is obvious. >> does that mean they would invest more? or you're investing more heavily now because you think we're continue to go benefit from that? >> i don't think i think that way. in other words, i think that it's a big mistake to in effect

tie what you do every day to, you know, what i call global issues. >> so you look at a deal and you base it on what you know on that deal in particular. >> and the price of the dial. in the end everything comes down to price. if the price is cheap enough, you can buy something in the middle of depression. >> you are "the master" of of finding the right price. have they gotten expensive or locked in when it comes to real estate or is there still room to run? >> i think that the liquidity factor exists today is unprecedented. and i think it has made real estate in the united states, commercial real estate extraordinarily liquid. more liquid than at any point i can remember. whether that translates into crazy pricing, at least so far i don't think we have seen crazy

pricing. the kind of stuff we're talking about, instagram, what's app. >> do you have a feeling that the 10-year is not creating where it would if no fed right now? where do you think it would be right now? how low do you think the yield could go? or should it be above three? >> rates are dramaticic i drama. i think the hoo-ha-ha -- >> what's the latest move in rates? how do you see it? >> well, it appears to be europe. draghi is talking about adopting a qet kind of policy. so i think that's very much the

case. >> just get a snap sho. >> sal, you mentioned what's app and that you don't understand it. you own, i was reading this piece the other day -- actually, last night rather. you own 70% of all the rent controlled real estate in palo alto. >> yeah. >> what is that bet about? they claim they're getting evicted and it's pushing the representatives up. you have made a bet on palo alto. >> we had an opportunity to buy this project. we felt that owning this kind of piece of a great community was a

very terrific, very long term commitment. when we brought the property the property was subject to rent control. it is still subject to rent control. the gentleman who wrote the article forgot to mention that, yes, we out 165 notices, which we are required to do by california law. it doesn't mean anybody was evicted. >> okay. >> but there's this problem that says you have to pay your rent. if you don't pay your rent, we will replace you with another affordable tenant who can pay their rent. >> so this is not to charge them higher rents. >> i only wish. then the property would be north five times what it is. >> you know rent control in new york, if you can actually get them out, the rent control goes away. >> well, there's a lot of conditions to that.

in this particular case, we bought it with rent control, we accepted the fact that it was rent control. it was priced into the deal. we have abided by it because of exactly this kind of issue. we literally in the board meeting when we bought this property, we talked about the issues. and we said, as long as we follow the state of california's laws and the local community to the letter -- and by the way, if we don't send the notices we lose rights under the california law. >> are you a fan of brom? is he doing a good job. >> i very much like rahm. >> he's chief of staff of the white house. has he changed? it's weird. do you see a disconnect? >> you're suggesting he's not doing well? >> i'm suggesting he's doing well. i just don't see --

>> he had to move to the center. he's running things? he's no longer in washington? >> well, first of all, i don't think rahm's political views and expressions are much different today than they have always been. i knew rahm very well as a congressman. >> he had to do what the president wanted to do. >> of course. he was chief of staff of the president. >> okay. we have a lot more from sam throughout the next two hours. thank you for that. coming up next, which country is prepared to deal with the major disruption n oil market? we're prepared to talk about it. let's just say the united states is not in the top five. the answer straight ahead. back in a moment. back in a mome? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade.

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really no one has taken awe sophisticated comprehensive look of what they mean. we took the economic impact, the structural dependency and the oil security and supply and put them together and ranked the players. japan is number one, which is incredibly surprising because they have no oil. russia as last because they have all the oil. >> plain that. >> if you look at all the metrics, efficiency of an economy, consumption per capita, there's a greater importance in

some of those as there is in supply itself. japan is an incredibly efficient so they are less efficient of oil per gdp. uk has oil production which helps it out. i think this helps redefine. it's a global oil mark. every economy is impacted in ways the same. so what you see as oil prices go up, different economies get impacted in different ways. >> despite the incredible revolution and supply, what you do see is that our economy is rather in efficient. actually the second worst economy when it comes to fuel per capita. we're incredible fuel intensive compared to our peers in the oecd. yes, we are producing a lot of

oil. but at the same time it is so important to our economy. i will just note last year, despite the record production in over two decades, the united states, both consumers and businesses, spent more on oil than any time in our history. that's people taking money and buying gasoline instead of other goods. >> we were just talking before off camera. sam zell, you guys know each other. sam invested in a pipeline from egypt to israel. i don't see either of those on your list. where were they placed if they were going to? >> we can't do every country in the world. we took the 13 most important sort of oil markets based in terms of consumption and production. >> right. >> and came out with this list. what i think is interesting at the bottom of the list is russia and saudi arabia. if you look at russia, which fell last, yes, they have a lot of oil. but government budgets, 50% are

depe dependent on oil and gas revenues. we think of the proverbial gun at our head but the truth is we're really smart and have the right policies and our businesses take the right action, we could turn it around and it's pointed at their head. >> what is going to happen to your pipeline? >> i have no idea. >> it's mott operational? >> it's not operational. the muslim brotherhood running egypt, they blow it up every day. i think it's been blown up 30 or 40 times. now it basically turns out egypt doesn't have the gas they thought they have. >> right. >> and israel is loaded with gas. so you have a real opportunity to dramatically benefit egypt by turning it into a causeway for israeli gas to get to europe. because sitting on the

mediterranean are two giant liquid nitrogen plants for converting gas to transportation. one is running at 30%. the other not at all. and they don't have any gas. so egypt could benefit. israel could benefit. >> thank you. >> coming up, the masters ready to tee off later this week. we have gram mcdowell, u.s. open winner at pebble. gunderman group. gunderman group is growing.

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when we return, a money manager who outpaces the s&p 500. up 38% in 2013 alone. oscar schaeffer joins us with some of his platinum picks right after this. after this. at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control. ford technicians are ready to find the right tires for your vehicle. get up to $120 in mail-in rebates on four select tires when you use the ford service credit card at the big tire event. see what the ford experts think about your tires.

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welcome back to "squawk box" this morning. in the headlines, the senate has voted to restore jobless benefits for 2.4 million. republicans are against the bill. but there are indications that opposition isn't quite as vehement as it has been in the

past. and g.m. still waiting for parts to fix the switches from the recall. none will begin work this week as planned because they do not have the parts. u.s. issued a warning over china over the depreciation of its currency. it could raise serious concerns if it means china is moving away from allowing the market to determine exchange rates. >> we are on day two of our squawk platinum portfolio series. we have been picking portfolio managers to come on and tell us their stock picks. today we are adding oscar schaeffer. his stock returns 38% over the last year. 2002 to 2013 his firms

compounded returns crushed it by more than 14%age points. over $175 million in assets. let's talk about your stock picks. these are three picks you're looking at. you got good reads on each of them. the first is bioscript. >> about a month ago warren buffett talked about how to invest in health care services. they had a few criteria. one is does health care delivery deliver better than elsewhere. does it deliver net savings. we own a stock called bioscrip. at-home infusion therapy. the stock has come down two-thirds from its high. they had a problem with a noncore asset integrating their

acquisitio acquisitions. but i think businesses have basically stopped going down. in a couple of years it will earn a 100 until in ebitda. cvs and wall greens are both home infusion. >> what is home infusion? >> if you have a chronic disease, hospitals will save money by getting your treatment at home. >> do they do oxygen too? >> yes. >> it's like an outpatient. it's a lot cheaper. >> out of the high-cost hospital into the home, which is a whole trend. home infusion is just one of it. >> something is going to happen where the -- some wage was going to be raised on all these providers. >> i think they have. these guys don't have reimbursement problems.

there are people, recently dialysis who get reimbursed. they raise the price, lower the price. this company does not have that problem. >> how come you only have $175 million. is that all your money? >> no. i gave all the money back to my old firm and started with two great partners who have been with me five years. we have a concentrated portfolio. i'm the chair but they basically run the fund. >> interaction holding. >> it is strangely spelled. it is not able to see and pronounce it. there are few mega trends whether it's streaming video, cloud computing. i can't pick the winners. so i pick a come who benefits no matter what happens. interxion. inxn. it's a data center business.

in europe, there's a great company that has a network of data centers all over europe. and they generate huge cash flow. it's a great real estate play. and they're at the peopremium e. it generates large cash flow. they put all the excess into expanding data centers. if they stop expanding 10 or 11 times free cash flow. whether it's, you know, you have more mobile. you have more video, more data, data center business is a great business. they dominate the high end in europe. >> you say you have been paying 10 or 11 times if they were to stop it. >> all the cash flow goes into expanding. business is growing so fast they put money into new data centers. >> who do they compete with? >> in the united states, equinet. u.s. analysts don't really

understand it. the people in europe don't want to buy american stock. that's why it falls between the tracks. great management, great company. >> is that what you look for in general, companies that the market still don't understand? >> we hope that's the case. we hope we understand it better than the market does. >> real d is a company that licenses 3d technology. >> right. >> what else do you know about it? >> i hope i know a little bit about it. the 3d business boomed with avatar in 2009. the problem was the movie companies produced really lousy movies in 3d. so the 3d business went down. after a few years in decline, we think the take rate has bottomed. "gravity" reinvigorated 3d.

>> there is one movie a year that i feel i need to see in 3d. >> well, the beauty of reald is it's a toll booth. they sell the machine for $10,000. then they collect 50 cents for every person who watches 3d. and "gravity" this year. next year star wars. 2016, avatar again. so the company that spent a lot of money domestically reduced its sgna. they reduced 3d in china. i think in a couple of years they will have cash flow in the stock which i think is around 10 will be probably 18 in a couple of years. >> are these the same screens when you go to imax? >> no. it is a different company and different screen. much bigger. and they have a limited number of screens. it is a 3d screen. and as you know, you have to

wear those glasses. there's app effort to do 3d at home. it hasn't worked. my sense is they are working on it. >> how much of a bet is on the tv component? >> none. it's a free option. >> because tv has not worked. >> has not worked at all. >> so, again, you're looking for things that you think the market doesn't understand or has misvalued in some way. >> or there's a change in management, in the perception. in reald the business is bottom we think. interxion it falls between the cracks. >> where prices have come up significantly, is it harder to find deals like that or does it not matter what the macro is because you will always find stocks that the market doesn't understand. >> reald is down a lot.

and bioscrip down two-thirds. we own 12 to 13 stocks. in a way it's gotten easier. yes. as sam said before, there's some crazy elements to the market. only 15 stocks. >> how long have you known sam? >> too long? >> in 1979, a mutual friend of ours -- i went out to california. a future friend of ours, i had dinner with him. he said who are you here to see? >> president of itel. he stopped eating. i said what's wrong? it stock was 3.5/8. and i went to see the company. i get a call from him. he said i just spoke to sam zell. the guy in chicago. he wants to compare notes with you. i said, can i trust him? and he said yes. so i called sam. he said the same thing to sam about me. he had known me forever.

and sam said, can i trust him? and that's how i met them. >> and now you spend time together even on vacation. >> we ran motorcycles together. if you ride motorcycles with someone, you better trust them. >> thank you so much for coming in today and thank you for joining the platinum portfolio. >> bioscrip, interxioan and reald. one was 480 million. oh, god, are you kidding? they're moving already. you'll be winning the year in the platinum thing already. >> but there are only three so far. >> in fact, i like louie and jim, a lot more distinguished today with oscar. itel was a stock that i owned in 1983. rail cars. >> exactly. >> nobody wanted them. >> nobody wanted them.

it was terrible. >> other people were buying intel. >> you could go in the bank in those days and tell them you had rail cars. >> what else were you doing? i think he was in the real estate business. >> real estate as well. but this was a little bit -- >> oh, yeah. when we started, that was 1980 we decided that we didn't like the commercial real estate business. and we said we were basically good businessmen and why couldn't we do anything else. >> you were friends with lefter and renee crown? >> yes. >> my buddy went to northwestern business school and i stayed at his house. you were a good friend of theirs. anyway, small world. coming up, more from our guest sam zell. new list of the colleges that give the best return on your investment. and then we kick off masters

week. we'll talk to graeme mcdowell. he won at pebble, won the u.s. open. nerves of steel. made the final putt when the european won the ryder cup. so we'll talk to him. k to him. k to him. hi, are we still on for tomorrow?

tomorrow. quick look at the weather. nice day, beautiful tomorrow. tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. what a day. can't wait til tomorrow.

checking the futures. after three pretty tough sessions we'll see if they with he get any bounce. not so far. is this the time? when are we going to do the 8% to 10%? it would be bizarre to see it happening as yields are coming down. it would be bizarre enough for that to happen. >> i think it's mixing apples and oranges. if you look at the last three weeks, biotech. >> momentum stuff. >> these are the stocks that went up like nothing. >> they were allover extended. >> we haven't seen what i would call core stuff, the real estate stocks.

>> i think generally the market is overvalued and there's too much optimism. >> salary and career research shop pay scale is out with college rankings for the best return on investment. it ranked 1,000 colleges and universities based on total costs and alumni earnings. top of the list is dominated by so-called stem schools. ones that put heavy focus on science, technology, engineering and math. number one for 2014 is harvey mudd college in clarmont, california. total cost, $230,000 with a 20-year net return of about $981,000. typical starting salary after graduation, $73,000. cal tech and m.i.t. take second and third spot on the pay scales list. and science, technology, engineering and math.

we need more guys like that. >> sure do. and keep the foreigners that part of the procedure here in the united states. >> staeyou get to party for fou years with the cush stuff. >> it's not liberal arts degrees from top colleges. you have community classes, you need to educate to get them to do another job. >> you have to get trained to do something. >> i went to michigan. i was a political science major. i thought that was fabulous preparation. and then i went to law school. but in terms of just a broad scale.

if you're worried about getting head over the head, you better look out for the guys doing the hitting. >> knowing the law is important. >> i thought law school was the biggest bore of my life. i hated it. but i use it every single day. there isn't a day that goes by where that training and the way you think is -- >> i use molecular biology the same way. same way. >> joining us first to handicap the field. squawk will be right back. ill be been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you,

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the unofficial start to the golf season this week at augusta national. the best of the best will gather to compete for the coveted green jacket. joining us on the squawk news line from augusta, georgia is one of those contenders, professional golfer graeme mcdowell. >> guys, how are you doing? >> great. irishman, how are you? thanks for joining us. first of all, what's the temperature right now? how is it looking for the next couple of days, graeme? >> yesterday was big storms.

we had a washout. it was a huge disappointment for the fans. they have a ticket for next year. it's a big disappointment for everyone. from today yon wards, clear skies. >> obviously to say the season is just starting. there's other good tournaments already played. there's just something about the, i don't know, the atmosphere at that golf course with the history with the kind of stuff that just seeps to happen every year. it's weird, isn't it? >> it returns to the same venue every year. like you said, there's something special. the risk reward.

par 5, par 3. it's a special major championship. we're all extremely excited and ready to go. >> i always said if i ever met you, it was so nerve-racking, pebble in 2010. you hit your second shot on 18. weren't you in the bunker? you had to get out and putt. what did you have to do? i was on pins and needles watching it. there was ice in your veins? that drive is hideous, isn't it? >> exactly. the tee shot. it never crossed my mind. i had a par 5 at the last to win the u.s. open. two putts from 30 feet that i mantled all my life.

managed to still knock it in i have hit the in the ocean and pebble beach lodge on the drive there. and then the putt you sunk to win the ryder cup. how are you playing now? if you haven't won any majors since 2010, how is it different now? >> my game has steadily been improved. the u.s. open was obviously a massive goal. it's been a process of resetting and continuing to improve and adapting to my new life. it certainly thrusts you into a new echelon in the game. i have a couple of chances in 2012.

the game is ticking along nicely. there's a lot of great players in the world. everyone has a lot of belief. everyone hits it a long way. >> tiger is out. that does make it -- it is a little bit more wide open, you would think. who besides yourself is right there for the title this year? >> it's disappointing to the fans. sort of everyone globally. it gives an opportunity for some other players to make headlines and perhaps some of the young guns this week. you picture rory mcilroy, jason day, dustin johnson. if i can execute my game plan, i'll be there. certainly the stage is clear to

really show the world. >> it was hard to watch. yeah. it's going to be great. in tv you say break a leg. that doesn't work in golf. we wish you luck. hopefully you can maneuver the greens. you have to have a good caddy, graeme. >> for sure. you have to chip and putt really well. you always need luck in life. >> we'll be watching and pulling for you. thanks for talking with us and talking the time. >> see you later. >> we have much more, sam zel. what's holding back the european recovery. what more central bank or whether it's on the way. and we'll induct the newest

member of our squawk platinum portfolio. back in just a moment. in just . why relocating manufacturingpany to upstate new york? i tell people it's for the climate. the conditions in new york state are great for business. new york is ranked #2 in the nation for new private sector job creation. and now it's even better because they've introduced startup new york - dozens of tax-free zones where businesses pay no taxes for ten years. you'll get a warm welcome in the new new york. see if your business qualifies at startupny.com gunderman group is growing. getting in a groove. growth is gratifying. goal is to grow. gotta get greater growth. growth? growth. i just talked to ups.

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shy about speaking his mind. >> when you have a goal of redistribution, growth is extraordinarily difficult to achieve. >> one more hour with sam zell. plus, our platinum portfolio series conditions with kevin landis. it's tuesday, april 8th, 2014. and the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc. our guest host is sam zell, chairman of equity group investments. much more from sam. still ahead. first your morning headlines. >> citigroup will be paying $1.12 billion to settle claims related to mortgage-backed securities. the bank reaching the agreement with 18 institutional investors.

it says it resolves an issue left over from the financial crisis era. they will take charge of $100 million in the first era. the federal reserve rejected the capital plan last month. it makes it unlikely they can hit the goal for return on tangible equity. citigroup shares look like they are trading six cents. 46.49 the last trade. more time to i did vert collateral loan that fall under the volka rule. it pulls together risky loans. you can sell the ex poker herb to other investors. it is part of dodd/frank hedge funds and private equity funds to around 3%. financial regulators will vote

tuesday to finalize tough requirements for the us bank leverage expected to be stricter than overseas firms have to follow. right now a look at the markets. u.s. equity futures have been indicated a little bit lower. down 12% below fair value. s&p down 2.5 points. nasdaq off 1.5. >> more trouble for g.m. center for auto safety warning of a possible air bag defect. this time in chevy impala's manufactured between 2003 and 2010. the problem is with the al go rhythm that determines when the bag deploys in an accident. the air bag may be improperly deactivated if the passenger is bounced in the seat just before an accident. shares of g.m.

closed well off their best session of the year. got out in a pretty good time. update. >> i know you have a tearal view of that. >> i wonder if they knew? did anyone know it would mushroom into this size. probably not. >> i'm going to give the benefit of the doubt. >> you give the government the benefit of the doubt on everything. >> not always. >> an update on missing malaysian airlines plane. they picked up possible pings. the battery was supposed to be out already. >> give it 30 days. >> over the weekend they saw the ping. i think they heard another one. unable to detect any further signals. time is running out. they have reached the end of their 30-day life, as we said.

the search for the missing plane is on track to cost hundreds of millions of dollars. probably the most expensive search in aviation history. resources involved in the search including 26 countries in planes, ships, submarines and satellites. obviously a lot of manpower. you hope nobody else gets hurt. it's not a rescue mission. >> it's recovery. >> it's recovery at this point. >> sam zell, equity group investments chairman. we had steve schwartzman on the show a couple of weeks ago. we were talking about residential real estate. blackstone has stopped buying. they have big a huge buyer. what does that say say about where the markets are. are you in agreement with him? >> i actually had a session

yesterday with john gray for blackstone. i, from the beginning, had a different view of the opportunity in the single family market. i always said i think what blackstone and other members have done is a good trade. meaning what they bought it for and what they're selling it for will make a profit. >> right. >> what i have always challenged is whether that single family structure can be turned into an operating and efficient company. my real challenge is as time goes, on even today, if blackstone sold one house they would be unable to replace it. in terms of a value playing field. as we know, public companies don't do well on one-time events.

they started by buying 5,000 homes. and i think you will watch them liquidate 5,000 homes. >> there's been an argument that firms have propped up the market in certain areas because they have gone and been as aggressive as they have been. >> there are markets where commercial buyers have made an impact. >> i don't think there's any question. when you move into an area, you buy 1,000 homes. 1,000 homes. >> you don't think blackstone strategy -- you think they will sell them as opposed to actually operating them? >> that's correct. >> some investors think it is coming. >> that's been part of my difference in opinion with a lot

of investors. i think the single family business is going to be a good trade. but kwrorz it as an operating business. if you compare it to equity residential, on average, we have 300 and some odd units per location. they have on average, one unit per location. we have 350 units and one hvac system. they have 350 and 40 different hvac systems. et cetera, et cetera. so all the things that make scale important are all missing in this process. as i said, i think it's going to be a good trade, just not an operating business. >> joe is giving me a hard time for the question. it's a private equity question. >> bitcoin stkpwhrb we could go to bit coin. >> we will get to income and equality. it is loaded.

>> in a different way, david rubenstein was here. >> they said he would be fine. only prepared to give up his carried interest if the real estate industry which he suggested is a much bigger debate gives it up. >> there is the first lady's birthday party. were you there? >> no. >> you're from chicago. >> missed it. >> he's in pretty good. he might be exempt, you know. >> he worked for jimmy carter. >> still very successful in private equity. go ahead. >> where do you stand on that

particular issue? >> the whole concept of carried interest is predicated on the assumption that it's a long-term investment. i don't know about anyone else, to the extend we created funds in our average fund life is eight or 10 years, i'm making a very significant bet. i'm putting up capital. >> right. >> why shouldn't i be treated as a long-term investor. >> the argument is on your own capital, no problem. you should get capital gains on capital you invested. on capital you are managing effectively on other people, which is the carried interest component of it, that is more commission oriented fee as opposed to a investment. that would be the argument. >> in response to the argument

is, number one, if i'm selling disks for xyz company and i get a commission, the sale is made and i'm done. in this world, there's a continuing level of responsibility that keeps going. and the responsibility is defined in terms of people, et cetera. and you are measured against how you do over a long period of time. it's that long period of time that justifies capital gains treatment. >> real estate agency could take years to sell a property. they would get paid a commission. it would be considered ordinary income. >> they sold other houses. they did other stuff. they have no exclusivity, no commitments. they said if i can find a buyer, i'll tell your house for you. that's very different taking your money and investing it and

being respond spoeut and having a fiduciary ear responsibility. it's a very different animal. >> you want to weigh in, ms. quick? >> i do think if it's something you're getting paid for managing the money, it should be treated more as income and not capital gains. >> how about lowering everybody's taxes to that instead of raising yours? >> that's jumping on the corner. you have to go back to this is long-term commitment. everybody says, well, you raise the fund. you go like this and it gets raised. that means you go on the road a year and a half. it's no different than building the foundation to a house. >> i was going to use that same argument. the contractor built the foundation of my house. >> he got paid. >> not after a year. >> but he still had a very

defined period, very defined measuring point. here we have had situations where all of a sudden the proverb hits the fan. but he could still walk away. i can't. >> i threatened to move in with him if he wasn't going to be done in time. >> wow, what a horrible threat. >> my entire family. >> oh, that's a different story. >> it was getting exciting for a minute. >> i threatened to move my entire family into the basement. again, i think there are situations where you could say the same thing. people happy to pay the taxes they were paying had a lot invested and have a lot going on too. >> we have a basic principal that said we in effect treat

longer term equipments different than short-term investments. >> is there a way to measure it? >> it may be part of it. lots of ways to change the standards. we want to encourage people to make long-term investments. >> how would you change how you operate your business? the net bottom line would be dramatically different. give or take half. >> meaning you wouldn't make the same investments? >> no. you wouldn't make the same profitability. when you attract young people to work for you. >> all the things of how you, quote, build the business. and the answer is, what's your margin? you cut the margins in half. duh. it's going to have an impact. you're a journalist.

maybe you don't understand the math involved. >> i get the math. >> i could talk slower. >> we are going to go to commercial on that score. thank you, sam. we will continue this. you set me back up. touche. coming up -- i'm still working on interaction with the stock from oscar. is there more easing ahead? and we will induct a new member into our platinum portfolio stock picker bubbles. picks in the tech sector. salesperson #1: the real deal is the passat tdi clean diesel

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as inflation in the eurozone slips lower, should investors be concerned about the slowing european recover. head of investment strategy at brooks mcdonald asset management and cnbc contributor. is it as simple as we are on the other side of this in terms of tapering and the europe is

moving into the accommodative phase? >> investors shouldn't be scared of deflation. it's low flation. it is inevitable and it's a good thing. it's a redistribution of competitiveness. the core starting to struggle. but the periphery which struggled in the beginning, are accelerating at growth levels. italy's growth hit a three-year high. if there wasn't a single currency, we would see this act out by currency devaluation. >> michelle has been talking about greek bonds. all these place where we basically thought they were insolvent. when yields get this low, it is hard to understand that the economies are bad because they have all this debt service. so it couldn't be that bad. what does it indicate when investor are willing to take so

many for countries we thought were so risky. >> we have to be specific. if you look at the likes of italy, it's still very different from spain. it has half the level of unemployment as spain. a lot of u.s. companies have been lending, trying to step in where the banks were. that is a risk if they are lending sporadically. as an investor it is important to reexamine what you mean by safety and risk. >> low risks are necessarily bad in europe, showing that the economies are slowing and that there is deflation. couldn't you look at it positively that they are accepting less to go there? >> you are seeing low labor costs. corporates are feeling in other parts of the world. it means the corporates will be able to regain competitiveness. as long as this environment is short-term, then what you are going to see is growth come

back, rehire. you are starting to see enough momentum in the tpreufry countries to bring you out of that. >> how much is the recently drop? how much is due to what we saw in europe and what's happening here, do you think? >> well, there's generally been a lot of optimism. it has had a follow-on effect. what's interesting to see is the trade is also reversed. what we used to see is investors feel comfortable in gen exporters export to go emerging markets. investors very much are focused on investing in the inner search field. they are then -- >> you don't see the yield in

the 10-year indicating that we're over optimistic about growth in the united states? >> i don't think we're over optimistic about economic growth. where i see the risk is in the fixed income in general there's been overbuying of bondsing et cetera. history is at risk of repeating itself. we have seen it in financial debt. there seems to be these pockets of risk that's there. the long-term trends are positive. the concern is the divurgence. >> the risk is rates are headed higher. >> yeah. >> really? >> because if they were e headed lower, i don't know what that would say about the recovery here. exactly that.

it is about the rates going higher. >> the rates are going higher whether we have a recovery or we don't. >> keep saying it you'll be right eventually. >> it's just a death cross. just such a good term. but the death cross, there's been 10 of them and nothing has happened. >> it is very slow. it will be gradual. markets are forward looking. they will be expecting this. >> they started tapering at 2.9. >> there has been this optimism. self-perpetuating will for it to be where it is. >> don't you think you have to include crimea and venezuela and syria in this calculation?

as event occur around the world they get more skaerg, the demand for u.s. securities goes up. i don't think you should make the assumption that it has anything to do with the economy and more to do with looking for security. >> that's what you said. you think it's all coming from external factors than from what's happening right here. >> you have to see where the flows are coming from. we have seen more buying of bonds than stocks during the tech boom. there is this real risk of -- >> somebody pointed out earlier, if you were 60 stocks, 40 bonds at the beginning of last year, that went to about 75/25 because of the huge run we saw in stocks by the end of the year. >> rebalancing the portfolio is so important at the moment. another one worth mentioning is they are being used so heavily in china as collateral to get

around lending laws. it will be correlated -- >> we have no time. you're convinced his bow is the particle. >> i'm confident. i'm not a scientist. you hem your bets. i would say i'm confident. all the signs are there. they identified signs of the big bang. >> low levels of radiation. >> the size of the pin of the head, the whole universe the pin of a head. people are wondering why in god's name did i ask that. >> rocket scientists. >> when we come back, much more from our guest host. stick around. "squawk box" will be right back. .

sam zell chair of equity group investments. we talked a lot of things. are there things that you still want to hit on? >> no. i'm done. >> you're easy. off the set. >> i'm listening to the lady from europe. >> which she had to say. >> we have heard from a lot of

people. you have been pessimistic about the stock market this morning. >> i don't think very pessimistic is the right term. >> i had over and over again that i don't understand the correlation between economic activity and the price the stocks are trading for. >> you're talking about the stock market overall, not just pockets of technology stock. >> i think the pricing is crazy. if sis qaa was worth what the stock was trading at it would represent 25 percent of the economy. >> it is unsustainable. >> yeah. so is a lot of this other stuff. generally speaking, i think everything is a little frothy. and more optimistic than i think the boots on the ground are

suggesting. >> relationship, does that tend to be a leading or lagging indicator. >> generalingly a magging indicator. we have gone through this unusual period where except for limited exceptions we built nothing since 2007. >> it tends to be a great factor. you're looking at a limited supply and demand that's built up. >> on the other hand, except for a couple of markets in the country, prices, rents are not high enough to justify new construction. if you think about san francisco and new york, very little office added to the overall supply since '07. and other areas. apartments are now finally

coming back to the scale they were e at before. but the demand has increased. so percentage of people living in apartments 10 years ago versus the percentage living there in the future is higher. so the new construction is not fueling a surplus as trying to catch up with demand. >> a lot of your thesis for why you think apartment living in urban areas is more people will want to live there. it's not about people not being able to get loans for houses. >> i don't think it has anything to do with that. i think it comes down to, you know, our lifestyle has changed. you know, look at our chiropractor. they live very differently. you know, we look at, say, our apartment projects in new york city. what's amazing is people don't live in them.

they sleep there. they get up there. but they spend all their day at starbucks or down the street or at work or whatever. therefore, it say different criteria for renting than my castle in the sky. >> that is a thesis that has served you well. one you have laid out on squawk in the past and continues to hold out. >> and i think whether it be congestion or all the other issues. >> in terms of trying to get to work. >> trying to get to work. frankly, i gave this example "squawk box". >> 20 years later they were renting office space and it was 40% occupied. nobody wanted to go out there. what was it all about?

the engineer they hired in 1968 was already married or about to be married. and he therefore brought a little house and drove to the plant. the word marriage is offensive to him at that age. all he wants to do is live in a 24/7 city and experience life. very different set of criteria on how life really works. >> you are buying into the death of the urbs suburbs is upon us. i'm a journalist. i'm looking for depth of the surbs. but we're not seeing the death of the suburbs. but what we're not seeing i think is the demand is to get your stake in the ground and get on the track and own a house and da, da, da. despite all the discussions about ultimately the suburbs equate to schools.

and you are beginning to see through the charter system, through special schools created. chicago, for all its typical school system has a number of these magnet schools moral class. 25 years ago that was not an option. so therefore if i had a son who was a techie or something and he couldn't possibly play in the city. today there's just a lot more options. and frankly we prioritize education or lifestyle in a way where we are willing to spend more of income on schools to preserve the lifestyle. so all dramatically different things than white picket fence in the suburbs of four years ago. >> sam zell is our best host.

when we return, we'll be talking about your list of stocks opening bell. plus, we'll be adding a new member of our platform portfolio. squawk platinum portfolio will be adding a new member. u.s. equity futures have been lower today through most of the morning. right now they have turned around. around. look at them. making moves that would put an adult in the emergency room. yet all they really want to do is grow up. it's funny, everyone i know wishes they could go back and feel younger. sound familiar? then test drive one of these. current non-gm owners and lessees use your $1,500 allowance to lease the 2014 cadillac ats for around $359 a month with nothing due at signing.

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welcome back to "squawk box". let's take a look at stocks to watch ahead of the opening bell. nokia is moving higher after chinese government approved the sale of the deal to microsoft. $7.4 billion. it expects to close at the end of the month. nike is buying. athletic apparel and footwear macker has standout fundamentals. and a recent correction makes for an attractive entry point. and twitter has been rated.

they have too many new things. it's the biggest apparel company. >> nike is -- >> that's what i said. >> i said it because i knew i could shock myself and shock you guys. it shocks myself to remember. and twitter has been rated. >> 2013. nike, goldman, visa. >> i forget about goldman and visa. >> we get news here. goldman added to it. >> and twitter, look at that. that's one of those stocks. those tech momentum stocks. the air has just been slowly leaking out. fast leaking out. this is new coverage. jannev said it will benefit from the shift to mobile advertising. i see every once in a while.

>> cramer does too. if i were cramer i would be blocking. he has so many followers. and he takes so many stands. just obnoxious. >> you would block them. >> you want them as followers, right? >> no. >> you want to see what they're saying. >> it's a very democratic way of looking at things. >> people say dirty things. >> i like those. >> coming up, our platinum portfolio continues with dirty things. no, just kidding. here to talk tech. and a programming note. don't miss squawk tomorrow. treasury secretary jack lew will join us in a cnbc exclusive at

8:15 eastern. steve liesman will john tomorrow.

we're continuing our platinum portfolio. kevin landis of capital management, four star technology. ceo of the firsthand technology

value fund with this fund focuses on venture capital. facebook and twitter years before they ever went public. it has a one-year return of 40% in a five-year return of 10%. $400 million of assets under management and average length holdings two to five years. kevin is here. good morning to you, kevin. >> good morning, andrew. so let's start with the top one. gt advanced technologies is on your list. what do you like about it? >> right. gt advanced technologies started out as a solar play. they made the furnaces. they also work well with sapphire. it is a great material that's been famously tough to work with. if you can do it right, you can get a glass display that's a thin sheet of sapphire.

>> and you say this is a play on apple. >> that's right. >> well, apple hemmed guide gt into building a huge new factory in arizona the to produce the sapphire displays for future iphones. and your last iphone probably had a gorilla glass display. the next could well have a sapphire display. >> so sapphire is not on the current phones? >> there are actually three places you can put it on a phone. the smallest is on the cell phone camera. they have already done that. the last thing you want is a scratch on that lens. the second is the finger print recognition sensor. it has to be scratch free to read your fingerprint the toughest, the most expensive is the main display. >> and how much u do you worry, though, that another technology will come up out of nowhere and take over this in five years. and apple will decide we're not using these guys. now we want flexible displays

and somebody else makes it. >> it's a flexible display would be the one thing that would be a challenge for sapphire. because sapphire, it is so tough. it is so hard that you can't make it flexible. but, you know, cracked screens are such a problem now that i think gtat will do terrific with this first shift over. not everyone is foggy to want a flexible display. >> i have a case. i would love to take the case off. lam research, what's behind that. >> it is what's happening at two other companies. it is the number three semi conductor company. it is hard to find a less sexy tech. number one and number two are merging. applied materials and tokyo

electron. typically when two companies merge it's a mess. it's a play on that. >> is that a short-term activity or long-term play given the dislocation in the business. that often is temporary. >> i think it's probably a couple of years. this year and next year that tokyo electron will be sorting things out. adobe. >> right. >> that's a company that has -- it's been an up and down story. if you look at it long term, we are showing a straight up story. it's come down recently. >> you can go all the way back to postscript if you want with adobe. go back to when i was young. it goes all the way back to the 80s for goodness sake. in tech land, it's an old, solid company. but, you know, they've got $4 billion in revenue.

it is in digital ad technology. look at the sexy pure plays, rocket fuel and the river con project, recent hot ipos. iffeded ad tech or digital media portion were in it, it would be a hot item right now. >> we'll be talking a lot about the markets. nasdaq is taking a huge hit. where do you stand on what's happening here? >> you know, i still think that money needs to flow back to equities. but more importantly i believe the scarce commodities these days is growth. so it does you not that much good to rotate into sisco. it's not really growing. or intel that might even be shrinking. find the growth companies with in tech. this sell-off -- >> a couple years ago, did you think we would be back to 4400

or whatever? there were dark days in the nasdaq. if we asked three years ago, wouldn't you have said i'm lighting it up at 4400? like 5,000 the first time, i never thought we might not ever see it again. >> it's really hard not to get anchored by things, right? we're all anchored by nasdaq 5,000 way back when. by the way, if you look at tech within the nasdaq, it's a lot less now. if you look at tech companies in the 100 back when it was at its highs, most of them were gone. >> kevin, thank you for this. appreciate it. >> jim cramer getting fired up for the trading day ahead. bank stocks and probably the

huskies. maybe what happened tonight with the huskies. lady huskies. tomorrow on "squawk box", guest host barry sternlicht will talk real estate, energy, the hotel industry, and a lot more. plus, an exclusive interview with treasury secretary jack lew. "squawk box" starts tomorrow at 6:00 a.m. eastern. 6:00 a.m. eass could save you fifteen percent or more on car insurance. everybody knows that. well, did you know bad news doesn't always travel fast? (clears throat) hi mister tompkins. todd? you're fired. well, gotta run. geico. fifteen minutes could save you fifteen percent or more. today is tuesday today, we greet you. treat you. care for you. today, you can come to cleveland clinic

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. welcome back to "squawk box." cnbc has learned that tech hedge fund coto is returning $2 billion from its flagship fund out of $7 billion total. a letter cites volatilities that caused the fund to lose 9% of its value last month. the fund says it hasn't seen this level of portfolio volatility until at least the financial crisis era. >> we've lad the ceo on. >> yeah. >> they bought a stake in snapchat very early if you remember. very successful tech investors but being in the tech space has been -- >> i meant to add this earlier i was looking through pistorius the testimony today, and they have all the e-mails between the two trying to prove one thing or

another. all of them on wats app. every one. years ago. people internationally use that -- what did they pay for that? >> $19 billion. >> 16 with 3.5 -- >> pistorius and his girlfriend to say the apps back and forth. >> nothing. like $1.99 a year. >> justifies $19 billion. imagine if they paid a penny, it would be $25 billion. >> there it was right in -- >> let's get down to the new york stock exchange. jim cramer is standing by. what do you think about the news we just reported with the hedge fund? the return to volatility doesn't seem like there would be a huge surprise coming. >> a as a former hedge fund manager the word volatility is one of the silliest things in the world. what you mean so say stocks are going down that i own and -- >> right. >> right. maybe a little bit truth in advertising there, jim. >> i feel i have to, because i'm listening to sam, which is so much fun, and so much truth coming out.

it's so great not to be politically correct, it's great to speak your mind. thank you. thank you for just coming on and saying how you feel. no kouchg. it's a joy. >> i didn't know you were ever accused of not saying what you thought. >> well, you know, sometimes the guests rather be a little more diplomatic and i think that you lose your edge. you've never lost your edge. you're a joy, man. i love it. >> thank you. >> jim, what else is catching your eye this morning? what are you going to be talking about when we come to you in a few minutes? >> the kevin landis call is interesting. people at home have to rec fize he's got a very long-term view. you may think i have to take adobe here, buy some, and not understand landis is saying over the next two or three years adobe will go back and then some. a lot of people want to talk take a cue from someone like that. i don't want them to guess disturbed if -- get disturbed if the selling continues. >> we're going to be with you. wait. before we go you want to talk

about uconn, didn't you? >> i don't -- i know jimmy is -- i mean, they could win both and i know a lot of people, becky wants notre dame but it's amazing to have a program that -- how do you do it? >> last night's game was one of the great joys of sports. i mean i just -- every time they got close, uconn showed clutch. just a fantastic game. amazing how much fun college is. >> next year, i don't know how impossible -- how do you possibly, after this year, how do you figure out who to pick? how do you get anyone in the final four? who would have thought uconn when they lost to louisville by almost 40 points a month or two ago. >> you have to do a disruptive block. disruptive, haven't mentioned that word today. but you have to do something that basically says i'm going six to eight seed and give it a shot and be willing to be blown out early on. >> yeah when a number seven and eight meet in the finals it's like i don't think anyone in our

whole tv newsroom, that everybody was finished three or four rounds ago. >> in our pool, one team had kentucky and connecticut. >> wow. >> you're kidding? >> and they won $3500. >> wow. >> and every other team lost money. >> wow. >> that's what seven and eight does. >> thanks. we'll see you in a few minutes. >> thank you, guys. >> more from sam zell. we'll talk activism. the bid to take over the commonwealth. that and a lot more when we return. return. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past.

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sam zell our guest host this morning, talk about -- we haven't got much time, about your bid for commonwealth, that re reit. >> we've had the process, it's a unique situation, we've won with 81% of all the vote and 99.5% of everybody who voted. we now have a company without a board of directors. which is very strange. and i guess the outside date is may 28th for a new board to be elected. i would expect that the slate that we put up will be elected on may 28th and that will allow us to take the steps necessary

in order to turn this company into a conventional reit. >>sive seconds, anneck ster, is it going to be sold? >> i don't know. we don't want to make comments on that. >> thought we would try. make sure you join us now. "squawk on the street" begins right now. ♪ and congratulations to the uconn huskies on their fourth national championship in 16 years. good morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. we're going to watch the market open carefully today. futures are mildly positive but the s&p trying to avoid its first four-day losing streak of the year. the ten-year remains critical too, back above 2.7. the bank of japan saying it's not considering new stimulus and the nikkei did fall on