>> ah, yes, joe, the social butterfly when it comes to facebook. we know. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. let's start this morning with the markets. stocks getting a boost from dovish comments from the fed yesterday. the central bank suggesting that interest rates would stay slow for just about forever each as the economy recovers. >> inflation continues to run well below our objective and we're still some ways away from maximum employment. and for the moment, i don't see any tradeoff whatsoever in achieving our two objectives that those call for the same policy, maybely a highly reaccommodative monetary policy. >> so, in other words, don't look for higher rates until well

into 2015. you can see this morning that the markets are barely budged overnight. we'll see what happens as we get closer into the opening bell. right now, take a look at the ten-year note. at this point, the ten-year is yielding 2.577%. still below 2.6% based on some of those dovish comments, again. on today's market agenda, we have weekly jobless claims. first time filings are expected to climb by 3,000. in addition the economic numbers, we have investors continuing to pay attention to the situation in iraq. white house officials say the u.s. is likely to use air strikes due to the lack of clear targets. meantime, "the wall street journal" reports the obama administration is using without. first, andrew has this morning's top corporate news. >> the story on the front page of the "wall street journal"

this morning really makes you think. this op-ed, did you see that from rupert murdoch this morning? first, corporate millions. jeff immelt, the general electric ceo is flying back from paris after a new round of talks with government officials. how long has this been go on, about two months from now? alst alstom's board has until monday to decide, but is it alstom's board or is it, as we just discussed, paris? >> and it's not hollande, either. it's another guy. >> there's a number of people involved. >> and they are making it very difficult and -- >> which minister is that again? >> he's making it tough on ge for almost personal reasons at this point. >> i think it's an anti-u.s. sentiment. for a company that employs more

people than all the other suitors and -- >> right. >> eats pretty friendly with prior -- ge is well known in france. >> but it shouldn't be this hard. te connectivity to buy sensor maker measurement special tilts for $86 in cash. that's rough lay 10% premium to the stock's closing price on friday. and if you were up early trying to check facebook, it was briefly unavailable in the united states and several european companies. a message read sorry, something went wrong and we're working on getting that fixed as soon as we can. anyway, services back up about 17 minutes. joe, what did you do during that 17 minutes? >> i had to -- to face someone person to person and try to

communicate with them. and i couldn't. i didn't know any more. they were right in the same room and it was so foreign to actually have to -- like i had trouble -- i can't -- >> poor baby. it's okay. it will be back soon. >> people around the country unable to -- you know, they had no keyboard to communicate with someone and they had no pictures of what the people were doing. seriously? 17 minutes in the morning? >> it's the morning somewhere but the nice anywhere. >> yeah. facebook has been down 24 hours a day, seven days a week. >> mark's dorm room 2004? >> i know because we had him on bull's eye. about 2004. >> are we sure? the internet was going to be a phase and it was going to about a fad and it was not going to be

going on. are we sure there's not going to be a day where smnl goes, oh, yeah, facebook. are you sure? >> i don't think. i think we've pushed beyond that. >> we might be stuck whit. think about mooem, if your e-ma e-mail went down. >> i actually have a yahoo! account. >> is that for real? >> is that 168 billion? >> that's real. i don't know if it's real, but that's what the os ticker. >> 1234 they have more than 150 customers. >> what do what? >> i don't know. >> some day they're going to know how much about these people that they're going to sell something to those people -- >> they've done very well with mobile ads. they ramped it up. >> i'm fighting a losing battle. the amazon thing yesterday -- >> the phone was cooler than i

thought it was going to be. >> how much is amazon worth? >> hold on, hold on. >> i'm like facebook. >> amazon is worth $153. >> so amazon, which sells real products all over the world, and you guys -- you like the phone? >> i was more impressed than i thought it would be. >> you could sort of tell it was 3d on tv. >> i don't know where they can't put that app -- there is an app. you can get an app for your iphone where you can look at -- you put it up at anything. it's unclear to me -- >> it seems like a smart move to get the consumer and get more of a foothold. i understand trying to build the ecosystem. >> if someone told you a year ago, hey, i know you like this apple, but wait until amazon comes out with their phone. some say amazon is going to compete with appearing in

innovation? >> but they had a reader, too. it's not first product. >> but i need to buy something. >> everything i buy is online at this point. >> you could be walking to your car and it's like, oh, i dprot b forgot to buy that. >> i have an app on my iphone. >> like you with sports, i need to recuse myself with this entire -- no, with any high tech. i thought he would subsidize the phone and it would be a very cheap phone. >> you get amazon prime free for it with this. so if it's a $is 99 phone, it's really a $99 phone. >> i hope you're up to speed on

the world cup. anyway, we've got to go. wait until you see this one goal, though. >> wow. >> we had that ready to go. that was a goal. but wait until you see this -- did you see the greatest goal in history? >> no. i was on a plane yesterday. >> have you hear about it, the australian, cahill? >> no. we're going to talk about that in just a moment. but in the meantime, we want to get an update on iraq. michelle caruso-cabrera joins us now from northern iraq. it is of course, an eyewitness is suggesting there's a black flag over the area right now. the government here claims that they are in control of it. it's extremely unclear what the situation is there. what we do know is it is

off-line and as a result there are long, long gas lines here in kurdistan. take a look at the video here. hundreds and hundreds of cars long. that's if the station has some gas. we've seen many, many stations without gasoline at all. these people are waiting in line for hours at a time. one guy told us he waited four hours in 209 heat. here in kurdistan, they have capacity for around 1100,000. down in basra, exo and bp are declining to comment that exxon has evacuated their ex pats and bp has evacuated nonessential staff in the uj facilities in the south. this is a very politically different situation tore these

companies. the head of the iraqi government controls southern oil companies and went as far to give reporters an interview criticizing those two companies and going on as far to go say any weather ford schlumberger have not evacuated any employees. baghdad has questioned air support. the s&p is not so it that ping the video we'ring showing you was uploaded by the u.s. navy to its website. the wall street reporting in their conversations with dip hoe mats in the area. i guess they are looking for someone else that they can push

forward that hopefully government would push around to have a more inclusive government. >> are we in the position of trying to do another government that we build ourselves or are they looking for somebody else to lead up to an election? i don't quite get it. >> yeah. i asked that question myself. anterior we in a tough position or aren't we going to be criticized for doing that as we have done repeatedly throughout history. it's unclear. i don't know the reporting on that story. maliki is accused by militants and this area. they gave very little resistance. are they going to be able to find or can someone come forward what everybody is rally around and be seen as northbound who is

inclusive and can that be done wholistically instead of the u.s. doing that and appearing to be the puppet master again. >> right. we were supposed to be doing this for democracy. but then when you get so involved with who comes next, that defeats the purpose. anyway, michelle, that you know. another day, another record high for stocks after the fed may have affirmed or reaffirmed the -- >> oh, the dove birds were flying everywhere. >> did you see that quote from yellen? for a second, a light bulb went off in my head. no wonder the market is off highs. both of them are craving to keep the party going. she said where employment is and where inflation is, both of them are going to fill in the same

thing and that's like filling up the bunch bowl again. but they did say they're going to go up a quarter point faster in 2015 or '16 on rates. and they did take down -- did you see the 3%? we're no longer anywhere near 3% for the year. we're at 2.25% or 2.something. >> 35, he was krndz because the feds is essentially buying the same a. of of tresh remember i issued. the training wheels are still

on. >> now it really doesn't matter at all. >> we're not there, anyway. let's get to paul schatz. he's president -- >> we were talking about 6%. >> we went up the last time, anyway, didn't we? weren't we at 6.7%? >> i thought it was 6.4%. >> we aren't going to get to 6% anytime soon. i think we should get some birds and keep them on the set. liesman was right here. hawks are pretty cool. but doves, who doesn't like doves? and you tuckel them and they pooh. on the phone, we have lindsay prospect you down where the fed is so we're not doing 3% any more? will we end with a quarter of 3% or 4%? >> you know what was so interesting about what we saw yesterday was the updated

economic projections from the fed. there was a clear contradiction between the downgrades for the assessment of current economic conditions and the acceleration in terms of the committee members' expectation for policy serving. joe, you alluded to the fed that the fed committeed to 3.5% next year, mon tale policy plus in terms of their forecast, and yellen has consistently said she will wait for that optimism to come to fruition prosecute changing monetary policy. >> and paul, we heard yellen -- it was simple to me. as far as stock market, she said

everything prints at earning more money. doesn't it seem like a no braber that asset prices will continue to rise? >> yeah. europe, they're just beginning. europe is where we were essentially in 2008, 2009, so certainly europe. and don't forget japan. they're not done. they're going to have to really crank it up. regarding the fed's forecast, sadly, the feds know better than frankly anybody else in forecasting economy and any reasonable runway down the road. so the punch bowl is needed. it's the only thing you ever disagree on is whether we should continue to print money. once you start, you have to go to the end. my worry is that even all that yellen said, my worry still is that the fed is going to stop qe early and the economy is not

going to continue and they're going to be kind of in that conundrum, what do we do now? we tailed it off, we tapered it. >> when do you think they're actually going to stop, though? >> obviously, the printing of money is going to be done this year. and yellen did the amazing walk back on the considerable period of time. that's a footnote from now. so they're probably going to raise rates next year. again, becky, i think we're in the typical post financial crisis recovery. it kinds of stinks. it's stodgy. you don't get out of your own way. how come no one is talking about obamacare, the payroll tax increase and the raising of the rates on the top tier? all that is dragging on the economy. how can anyone be surprised the economy cannot get back to even trend growth? yeah, but as far as the tock market goes, you can keep saying, you know, the fundamentals really don't live up to where the market is, but does it really matter if the fed is printing, printing, printing?

you can argue until you're blue in the face that the markets shouldn't be here, but -- >> the markets should be here. >> what would he know about the stock market? >> whether it's high or low. >> whenever i hear that, i don't even think we found out really how long it was. he said he was there. >> let me see. that's 35% right there. if you miss a third of the market -- then i said if the market keeps going up, will you ever turn bullish? he said no, i could never turn bullish. >> operators have a view of what's going on in the economy. >> with the fed doing this, it has nothing to do with the markets. >> but that's your distinction. >> but the market should be here. >> why is he arguing against the market? the market should be here. it's the only -- sadly, it's the only game in town. there's nowhere else to go. >> so liquidity flows, money

goes, they treat it best in stock. >> lindsay, what's the highest print on the gdp that we get in the next three quarters? >> in the next three quarters, we're not looking at anything above 2% at this point. we continue to see lackluster growth. >> for the year? we won't see a 3% print when we get some snack back from the weather in the first quarter? >> no, i don't think so. retail sales rebounded, but at the expense of a decline in service. that's virtually the trend we saw at the beginning of the year. >> what happened to my world cup story? they moved it. >> we talk too much. >> let's get to the next topic. >> the next block after the commercial break. >> i downloaded a fifa application on my -- >> fifa. >> whatever. >> i know every group all the way to h. >> i think it's like march madness. >> there's eight and -- >> double elimination, right?

>> all right. anyway, the password, it's not mine. anyway, paul, thanks. lindsay, i can't believe that. 2%. >> thank you, guys. >> it's not very optimistic. i wish i could say it would be higher. >> thank you, guys. market is going to 18,000. we'll take that to the bank. >> when we come back, we're going to get to joe's world cup, plus jon fortt sat down with find out what he has to say in today's executive edge. and last month, larry fink said they present a structure problem that could blow up the entire industry. here is a quick refresher on leveraged etf. >> a leverage etf is an sxang

traded fund that ames to amplify the benchmark. that could be a number like the nasdaq or the s&p 500. these funds are financially engineered with leverage which comes from derivatives and debts that had be super charged to deliver two to three times the index. a leveraged etf aiming to amplify the s&p 500 can deliver twice the daily from the from the ept. that leverage magnified the lawsuit, as well. the leverage etf from its 4%. now, there's another problem with leveraged etf. because they reset he day, you may not be making the return you think. that two times return you are offered is only guaranteed for that day. over time, your returns may differ significantly. the bottom line for the average investor is this. the financial engineering used in leveraged etf makes them

complicated to understand and much riskier than a traditional etf.

the defending world champs are out of the world cup. they lost to chile 2-0. their second loss, so they're gone. cameroon is gone. they had great, great uniforms.

red and green and yellow. spain lost to the netherlands, 5-1 on friday. now, i was hoping that the netherlands would lose and i'll tell you why. it's because of that ox noxious skating coach who said we're idiots over here because we like football. he's so pc about it. and then he said we're so great at hockey and we're so great at soccer. and they really do look like they're pretty good at soccer. so i'm watching the netherlands. who went up first? i think australia -- no. i think the netherlands may have -- one of them went up fist. but you have to watch this goal from cahill. they did eliminate australia. look at this. it looked like about a 40-yard pass in football before it hit the ground. this guy, cahill, as it was getting close to the ground he kicked it into the left corner of the ball. look at that.

came down, he saw it come over his shoulder. that kind of thing is just -- >> this is an awakingly. >> he also plays for new jersey, the red bulls. i think australia scored and then the netherlands scored and then australia went up 2-11, but then the netherlands dominated for the rest of the game. i watched this. >> alajandra bedoyi, who got cut from the team in 2012 who started the other night against ghana. >> no kidding. >> yes. he's a local boy. >> you know, i saw -- i'm sorry of just getting into this. a lot of americans, and there was an article yesterday that said it's finally turning the corner. on this thing i downloaded, i've got each -- i didn't know there were a through h and i think there's eight in each.

that's 64. and then we don't -- this is the group round and we find out who goes -- >> it really is like march madness. >> it really is. and the u.s. plays portugal. portugal got beat pred badly, but they're supposed to be good. >> tonight, japan is playing. >> you know nbc is big with soccer. we have the premier league. so it's all aligning -- >> when does the season begin? >> that's below my pay grade. i'm new. i'm a neophyte. but you'll be able to watch it, andrew. you're basically nascar is your thing, right? >> yes. >> because, you know how much i love -- >> do you know the star-spangled banner ends with gentlemen start your engines, right? that's the last line?

>> you have an inappropriate joke about how you watch nascar. >> t-mobile's ceo wants to lure customers from rivals so he's announce ago new internet radio service up limited music streaming free of data charges. he sat down with jon fortt to explain. >> we're unleashing music. so for our customers, all music streaming on we announce seven services, which account for about 85% of the music streaming will be free and will not be allocated to the high speed data bucket. we're doing this for, amongst other reasons, they can. how about the other guy? either they can't or they're greedy. >> is that the ceo? >> that's the ceo. >> he wears t-shirts. >> he's a record producer? >> he's not a record producer. >> that was the stock trade, still? >> t-mobile as part of -- as

part of a larger company, deutsche telecom -- >> the haircut and -- >> they do a deal with sprint. but yes. >> that's the guy? >> no, it's a type of a trade stock. >> just kidding. >> some people say -- >> is that the guy who snuck in -- >> yes. some people think that his game has not to offer such cheap phones and to buy people out of their contract hes with the hope of eventually forcing somebody else to buy him because he does so much damage to their bottom line. >> isn't the print guy, that's the guy that wears the trench coat at night in central park? >> what? >> yeah. he has the ads where he's in central park wearing a trench. so i don't know, that's the compensation, that's t-mobile sprint? >> he that's what it is. >> i'm going with verizon and at&t. >> we'll tell you what he said about this amazon phone. >> outside of the fact that the

phone can look at things and tell me what it is, i usually know what i'm looking at except late on a friday night, and personal the phone is going to tell me what i'm looking at. the much a hardware announcement. >> it is tmus is the stock. it's a $26 billion -- and tease the company that spun off from deutsche. >> right. >> you're not one of the dominant players, so you sort of need -- >> yeah, yeah, i guess. >> that's the game, though. and the good news is they've kept prices down. that's why i -- we were arguing -- >> we have analysis saying we don't think that's the same business model. >> may not be. when we come back this morning, bp unveiling its annual review of the world's energy markets, a very timely topic

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if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. good morning. and welcome. welcome back to "squawk box." there's four in each group. they're down to 32. group a -- group a is brazil, mexico, croatia and cameroon and

cameroon is going home. anyway, i'm joe kernen. i'm learning. work with me. people are happy because in the past i have -- >> told me for years. >> i know. >> the guy who has an app called the score, which apparently has the world cup, he wants you to download it. he said he wants to be considered for the disrupter series. >> really? >> not for this year, but he says for joe -- >> it's cool, too, because there's a bunch of different stadiums in brazil and it's beautiful and sunny, everybody is so psyched when they're watching it. i'm into it. as a citizen of the world, i'm kind of into it. becky is here, andrew is here. you've got to get up to speed. but you have to start with football, i mean regular football before you move on to this. we will start slowly. >> how about nascar? >>ic still have nascar. making headlines, prosecutors want to know whether congressional staff helped tip

trade toers a chanrs to a chang. subpoenas have been send. no word yet on whether these are the same employees that blew up the hard drives where apparently we're never going to see those e-mails. have you seen that? >> i did. >> apparently the permanent -- nobody was -- they don't know. they claim the hard drives crashed and then they threw them away. >> you know what this is? this is like one of these moments. remember the 17 -- >> but neckon got in trouble for it the. she had to have her foot over here going like this. >> but slees quoted as saying -- in fact she may have used the word shih tzu. she said shih tzu happens. >> and the other piece of it is when hard drives crash, there are people traditionally who can

still get the stuff off it. >> does either the nsa or google have these e-mails? one of them must have them. the. >> the nsa would have a better shot unless she's using a g-mail account. >> please move on. >> bp is out with its annual review of the world energy markets. krzysztof is vice president for bp. steve liesman is here today. chris to have, it's great to see you. thank you for coming in. >> good morning. >> when i think about the energy markets, the though things that jump to mind is what's happening in the united states, new ways of finding this energy we didn't know we had. when you look around the world, everything that's happen from a geopolitical nightmare standpoint, how do you put those two things together? >> we look at last year's state.

oil has been throw. the lowest three-year volatility since 1970. and underneath, when you look at production, you have these two developments wsh massive growth of production in the u.s. and a very, very high level of disrupgs in the middle east and north africa. in the u.s., oil production last year, that's the second consecutive year where you have another record growth in u.s. production. and dubai has been producing oil since 1859. if you want to fine tune it and do the numbers, it turns out there are nine other big increases until the in the history of global markets, all in saudi arabia. but six of those were based on the spare price existing capacity. so if you talk in terms of organic growth, expansion of production capacity, what happens last year in the u.s., that was the fourth biggest increase in global oil markets ever, all countries, all times. and on the other side of the coin, what you have is since the

beginning of 2011, what people call the arab spring or the civil war in libya, ongoing disruptions of key producing iran, syria, sudan and so on. the interesting part is, you may ask with all these movements, why do prices keep stable? because of the cumulative amount of disruptions over the last three years. so it's an absolute fair statement to say if we had only had the disruptions which we have seen in the last three years, you would have seen oil prices shooting up, talking about reserve, damage to the economy. and if we had only seen the title production increases in the u.s., talk about oil prices under pressure. >> where did it go? >> in the united states, how big can it again? >> so far this year, it has been even bigger than last year. up to 1.3 million barrels. you think it would go up and

gently start to decline in the 2020s. >> where? what number? >> i don't know how much more because we're sweeping the benefits of having invented this new technology. >> so energy economic detective work, and something doesn't square. if i'm not shaken but you show energy growth levels not expanding much but energy country congress in the united states is above it. >> what we've seen last year is a rebound very strong energy consumption growth in the oecb countries, the industrialized developed world, despite slowing economic growth. and a very sharp slowdown in the

growth of energy consumption in the developing countries despite relatively robust economic growth. >> so who is wrong here? the energy numbers? are the energy numbers wrong or the economic numbers or are we getting more or lessee efficient on either side? >> before you answer that, you ever to see where it comes from. massive growth in north america, massive slowdown in asia. before then, it's two countries. it's the u.s. which drives china. and in china, it's a massive, massive slow down in consumption and also a big slowdown in oil consumption. last year, for the first time in 15 years, u.s. oil consumption was stronger than the increase in china. in the u.s., the acceleration of energy consumption comes from oil and 80% of that was consumed by the industrial sector. in the u.s., people look at industrial -- >> but it can't be that the industrial sector is lessee efficient.

that can't be. it has to be that they're actually conassumption stuff and putting stuff out and we're not measuring it. >> no. the story here, because of the legal restriction owes crude exports, there's a lot of light in refining and petro chemical stand. why do you have this increase? u.s. oil consumption last year, up the 11110,000 barrels every year. and i don't know why i waited with cheap and eventually into a stronger economy. i have a very hard time understanding why allegedly very strong growth, economic growth like in china should be combined with this massive slowdown in oil consumption and why that should only affect energy demand and eventual economic growth.

>> one thing for jerry joe on the way in, i asked christoff about oil production. he said it could be better still. >> i'm sure. in german? >> the world cup. >> yeah. >> i missed the german game. >> they call it the german game because in the u.s. you have apparently a lot of players either born or raised in germany. >> you're doing fine. >> this is fascinating. you know, they had to qualify to get into the world cup. and there were 820 mamps play. so get out of the 820 matches, guess how many goals there were. 2350, about three per game. >> hockey is the steam tieng.

>> you're into it, too. >> oh, man. >> what time -- >> i don't know what time it is, but i'm there. >> michelle, thank you so much for coming in. >> and you're going down, by the way. you're going down. >> i was listening to your oil. >> okay. >> we're talking about oil and the world cup. first time in a row -- >> it's an economy. >> no, no, the energy economy. >> what did you say? what did you actually -- >> it's a little bit of american -- when we come back. >> okay. >> stick around.

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still to come, a special hour-long conversation with larry fink, the blackrock boss. he's getting ready right now and we're going to talk to him. we're going to talk about the fed, the economy, the markets and much, much more. but first, we're going to welcome to the table franks. he's going to discuss a deal with equity giant kkr when "squawk box" returns. okay, listen up! i'm re-workin' the menu. mayo? corn dogs? you are so outta here! aah! [ female announcer ] the complete balanced nutrition of great-tasting ensure.

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welcome back to "squawk box" this morning. global payment processor first data announcing a $3.5 billion private placement led by kkr. when we explain what it means i think it has some big ramifications. first data's chairman and ceo, good morning to you. >> good morning to you. >> what's fascinating to me about this is kkr is making an investment in your firm, but it is not kkr's lps, limited partners. it's not their fund that is doing this. it is kkr proper. it is the company kkr making a huge stake in your company. they don't normally do this. they don't normally use their balance sheet or historically haven't. this is sort of a shift for them. what does this mean? >> i think when you look at the investment, and see $3.5 billion you see previous investors, about $1.5 billion, $1.2 being kkr. >> right. >> but the right preemptive --

>> that was kkr balance sheet or kkr fund? >> this $3.5 is $1.2 kkr, part fund 500. >> right. >> from the fund. and 700 from the balance sheet. but you also see fabulous investors in there. and i think the whole thing is a testimony to the work that's been done for the past year, and the fact that there's a great belief in the future of this company. and that there's great belief that this is both a growth story, and a deleveraging story, in a -- what was a payment processor, and now is a technology innovation and solutions company. >> right. i know you can't speak for kkr. but i'm fascinated by this, because as you're watching the big private equity giants now using their own balance sheet to do investments that i assume are strategic, so my question is long-term, do they try to pull you in to kkr? >> well, i think -- you know,

when i took this job a year ago, you know, i went in to business with kkr, i mean, and that was a great attraction to me. and it's actually been way better than i even imagined. and when you work that closely together, and you work on a property that closely together, i mean the reality is kkr had owned a lot of this company already. so i don't -- i think this is an extension of what was already done, and -- >> a lot of -- >> sounds like kkr's fund owned a lot of this before. >> yeah. >> it's not the firm owning it. and that to me is a huge distinction when the firm starts buying stuff. anyway, that point's been made. let's talk about security right now. because one of the -- i mean always sort of the issue du jour. you're taking on the banks in some regards as you're doing a lot of the services that they have provided historically. where are we in terms of where we were -- the last time you were on we talked about target and where that was. >> right. >> and you talked about the new chips and all of the things we're going to be seeing.

but i think the was a couple months ago. are we still -- >> continually advancing. you know, we're in business with 4,000 financial institutions. we're a huge provider, we're a partner with mastercard, visa, amex, discover, and as you watch this unfold, emv will happen. you know, there's -- >> those are the chips. >> that was the chip. it's both on the terminal. >> right. emv enabling it. and on the card, a chip. and we see a tremendous movement towards it. >> right. i have a question that joe is going to laugh at. what would be the one -- so i was out in san francisco two weeks ago. i have been a skeptic on bitcoin. >> we're going to go to income inequality and how you're adding to it with your high ceo conversation. >> that is not where i was going. >> we won't have time for that. >> real quick, how much are you getting of the $3.5 billion? how much, huh? tell me. >> don't go out. >> really, where are you on bitcoin? >> well, bitcoin -- i think the

issue is virtual currency. not bitcoin. and i think we should really think that we need to be enabler of what are good means of currency. and so we don't really focus on bitco bitcoin. but we focus on there is the potential at some point for a virtual currency. if that virtual currency doesn't have the risk in it, and that it becomes a way that our clients -- we're in a client focus based. we're going to do it if they want to do it. >> okay, frank, thank you for coming in. >> congratulations. >> huge number. >> we appreciate it. >> thank you. when we come back our newsmaker of the morning. blackrock chairman and ceo larry fink. we're going to be talking about the fed, the markets, and why he says companies should manage for the long-term, rather than the short-term activist investors. "squawk box" will be right back.

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welcome back to "squawk box." for the next hour black rock's larry fink will be guest hosting. many market moving topics to cover with the chairman and ceo of the world's largest asset manager including the fed's latest move. the crisis in iraq. politics on the hill. and the impact on investor confidence. this "squawk" exclusive starts right now. >> who was that? >> our voiceover guy needs vacations, and he couldn't do the voiceovers before he left because he -- >> he's never gone on vacation before. >> who was that? was that an in-house guy? who? brian lee. weren't you available to voice over -- >> we're so used to our --

>> the fees are so high that they -- they came to me, i had to pass. >> you sure your insurance is high for your voiceover -- >> then we have a policy. >> anyway, good morning. and welcome to "squawk box." it could be names, i'm joe kernen along with becky quick and andrew ross sorkin. the futures at this hour. what's going to make the market go to new highs? and i don't know if anyone really thought it was going to be the fed again. because we wanted good news. now we don't need good news anymore. we're back to 2.25% for the year. and we're back to being happy that the fed stays involved. here we are again. that's all we need. we don't need anything else. which has some people worried including maybe our guest host. but we'll talk to him about that in a moment. >> let's get through some of the head lines real quick. this morning investors are going to be getting a look at a number of key economic reports following the s&p 500's 20th record close of the year. the labor department's weekly report on initial jobless claims. that's coming out at 8:30 a.m. eastern time this morning. economists there looking for a slight decrease also going to get the philly fed index that

comes at 10:00 a.m. along with the index of leading economic indicators. also a takeover deal in the electronics industry this morning. former tyco unit finds sensor maker measurement specificsties for $86 a share. that's a 10% premium over yesterday's close. measurement specialties makes sensors used in medical, industry and consumer applications. t-mobile offering potential new customers a one-week free trial. consumers can sign up online to get a free iphone 5s and pay nothing if they return the phone a week later. our own jon fortt spoke with the company ceo. we'll have highlights of that conversation. and pier 1 imports today, that company reported quarterly profit of 16 cents per share. missed estimates by four cents. also cut its outlook for the year because of what it's calling a highly promotional environment. >> the fed cutting an additional $10 billion from its bond buying program. our guest coast had some pretty strong views on the fed's

tapering strategy. here's what he said in an investment conversation just last month. >> the federal reserve is actually causing more disorientation in the marketplace, because they're purchasing more than is being created by the treasury. and so -- and so i think they should just get it over with, and move on. i don't think it will be disruptive of the marketplace. since they started talking about tapering now, rates are down 75 basis points. and, that tells me they have not been aggressive enough. >> joining us right now on a "squawk" exclusive interview with larry fink the chairman and ceo of black rock, and larry, thank you for being here today. >> good morning, everyone. >> when you said that we were all a little stunned. we played that sound bite the next morning and spent a lot of time talking about it. you think the fed should have been more aggressive. >> i think that the federal reserve purchases bonds they need to be aware of -- of the supply and the deficits have

been being reduced because of tax increases, a little stronger economy. and as a result of it, the fed is actually more aggressive in 2014 in terms of how much they are purchasing versus the amount of issuance than they were in 2012. in 2012 we had a deficit of about $1.2 trillion. they purchased a trillion dollars. our deficit appears to be hovering around $400 billion. and you add up all the purchases this year, even with the idea that they are going to continue with $10 billion reduction every meeting, they're going to purchase around $600 billion. so they're actually more aggressive than they were in 2012. >> you meant that larry wanted the fed to be more aggressive in getting out. >> yes. >> is what you meant. >> because it sounded like -- you said more aggressive. >> more aggressive. >> you get out more quickly. >> and i think they've been more disruptive as a result of it. >> they haven't gotten out quickly enough. >> rates are much lower. obviously we had other issues. you have ukraine. you have the uncertainty over

iraq. you have the uncertainty around oil prices. i'm not trying to suggest they're singularly responsible. >> since you were on saying that. i think afterwards, kohn came out and said there's no volatility and citigroup said we're going to be down 25%. is that what you were alluding to they're somehow masking what the markets would normally be doing if they weren't involved? >> i think central bank behavior has reduced the supply to the extent now that we are seeing more muted volatility. that's what i think they're referring to. unquestionably you're going to have more volatility when all central bank's behaviors are complete. i think the ecb is going to become more aggressive. you're going to have central bank behavior -- >> but we haven't seen the negative effects you're talking about. we're at new highs. everything's great, larry. >> the central bank is making -- >> are you sure? are you sure that they shouldn't be here? i mean it seems pretty good. >> i believe they should have been much more aggressive in

reducing -- >> even if it meant we were 400 points lower on the dow -- or 200 points lower on the s&p? >> if that's what it takes, sure. i don't think that's a problem. another component of my views is i don't think we have bubbles in the marketplace. if you look worldwide we're still seeing deleveraging going on. that doesn't mean we don't have mispriced security. there's a big difference between mispriced securities and mispriced valuations versus bubbles. there are a lot of things that appear to be that once the central bank's finished purchasing bonds, whether it's the ecb or japan or the federal reserve, we will have different valuations. but one thing i do believe is certain, the options of the ecb last week is going to make certain equity markets are going to go higher. >> i think you're just making equities even cheaper. especially when you look at where credit is in europe, lower yields than the united states. would you buy italy at a lower yield -- >> but i would think that the worst case scenario that you

describe, if it's something really bad happened from this it would have to be brewing inflation. it would have to be stirring up really inflationary -- and it just doesn't seem like that's really the case. although, we did have a pretty hot number recently. >> there's no question that i believe we're going to probably have higher trending inflation in the united states versus europe. i believe today we are seeing shortages of high educated labor in the marketplace. there's now becoming more pockets of areas where people are finding it more difficult to hire people. and so we have this very fragmented society now where we have technology gutting jobs on the low end. ultimately that transforms new jobs. we're seeing in some cases shortages of great workers in the high end. we believe even this year interviewing at college campuses we have more competition this

year than we did in the last few years. so you're just seeing, you know, a change albeit modest in the labor market. so you're going to have higher wages in the high end, and unfortunately you're still going to have wage pressure on the low end. >> you didn't think that yesterday? yellen? >> well, my struggles with the federal reserve they are not officially admitting the structural unemployment. >> right. >> the problem is if they admit there's structural unemployment -- >> it's a kruger argument. >> then you can't do quantitative easing. >> and they don't see it coming supposedly. in his view. it already came. >> i think it's tight on the high end. and obviously very loose on the low end. i think the problem is it's so fragmented. >> larry, let me just clarify when you said you don't see bubbles building in equities, but you do see some dislocation, does that mean you think things are potentially getting a little frothy in the stock market?

>> i think the central bank behaviors worldwide, and also higher petroleum prices. we have more investors investing. central bank behavior puts a floor on equities. so my view is what the ecb did is there's a risk in europe we could have a melt-up in equities, not a meltdown. they're putting a floor, they're making, you know, bond prices so expensive that you're going to be forced to go into other asset classes. this was the behavior of the federal reserve. >> where are we now, here? i think the market's more fair priced here. the sun trael bank is further along. the u.s. economy is further along. i would not expect to see large price increases in equities over the next year or so. unless we see corporate earnings continue to do better. we're not seeing as much topline growth as we'd like to see. we're seeing still great

efficiencies. companies are still able to have higher profit margins, but it's more from expense reductions -- >> if it's fairly priced now does that mean there's greater risk on the downside. >> than relative to two years ago? sure. but there's still upside momentum and we're going to continue to have upside momentum. i still do u.s. equities today. >> you're a young man. you don't even have any gray hair and you built an incredible investment firm in -- and you're still young, based on your being an expert mortgage guy really. that's your expertise and somehow you translated that into building one of the most i mean you have more money under management property than just about anyone at this point. so tell me about mortgages. what has the fed done right now, all this -- dislocation that you're talking about. are mortgage rates totally dislocated? should they not be here? are we building another bubble? a bubble is predicated on leverage. >> so we're not? >> you know, would i want to own mortgage rates at this price? no.

>> you'd like to get a mortgage at this price? >> sure. this is a -- you have a low rate that you probably are not going to see. >> is it fake or should it really be here? >> no, it's monetary policy doing its job. >> purring housing. >> we have structural issues in housing that are, in my opinion, lower rates don't make that big of impact. and that's connected to student loans, and things like that. i think we're going to have a structurally lower housing market relative to our economy than we would because of some of the indebted innocence we have with young people. >> wealth creation this guy. how many jobs have you created? >> we started with eight and now we have close to 12,000. >> 12,000 jobs. 50 plus billion dollar market cap. >> yeah. >> brown hair. $4 trillion in -- >> what's the total? >> i -- something north of four. >> you'd make a really good republican. how did they lose you, larry? what happened?

what do we do? if we leave the lights on -- >> in the last week i've had three republicans visit me. i'm pretty balanced in my views. i mean, i may be more biassed towards being a democrat -- >> you like the private sector? >> i enjoyed my career. >> you feel guilty. >> no, i don't feel guilty. >> do you? >> no, i don't feel guilty. >> but i don't pretend, either. you know, i may have very different views -- >> ceo compensations okay? >> i'm not complaining about that, either. especially -- >> complaining about other people? you think it adds to income inequality? we'll get andrew on this in a little while. >> we should. >> you're going to lead number three. >> larry is with us for the rest of the hour. we will sneak in a quick break. we'll have more with larry fink in the next hour. plus, a live report from iraq, where the prime minister could be losing support from the white house. "squawk box" will be back in just a moment.

welcome back to "squawk box." let's check the futures out. this morning after another high. and i was looking -- i looked, becky, 20 records highs in the s&p this year, up 5.8%. so that's kind of weird. it's like -- >> it's because of the lack of volatility we were talking about. you've seen fewer 100-point moves. >> you've got to divide the 6% up by 20 new highs. so you're talking about getting new highs when you're up 0.3 of

a point. there's where we are today. treading water so far. i guess we've got some numbers. >> what numbers matter now that we know the fed told us about the next two or three years? then the imf says we should stay at zero all the way through 2017. >> we said that for years. we don't need earnings. we just need janet. put your faith in janet. blackberry. we're watching them today. the company posting smaller than expected loss. revenues were slightly better than consensus. were you watching it today. >> i wasn't focused on it. >> but now? >> i am -- >> you weren't watching it. you weren't focusing or watching. >> no. >> now are you? >> i'm considering it. >> then i've done my job. >> going to put blackberry into the ticker. >> what is blackberry going to end up as? if amazon's got a phone, who still -- besides becky who still has a blackberry?

>> larry does, i bet. >> the wife. >> i have an iphone and a blackberry. >> for typing? >> you get twice -- >> when you dictate on iphone you have so much fun because you can't believe the stuff that she thinks you're saying sometimes. it's worth a laugh. but it does work most of the time but then you look at something, it's like -- >> i believe the black bearry will continue as an andrew advice. >> the blackberry will continue as an android -- >> they will put the android on top of a blackberry and you will use your phone and be able to type -- >> why hasn't that been done already? >> i don't know. i think if they'd done it three years ago they'd be in a much better place today. >> let's get an update on iraq. michelle caruso-cabrera joins us from northern iraq. michelle? >> hey there, becky. oil is at a nine-month high. brent trading at $115. near $115 per barrel over in london as there are concerns about disruptions. so far, there's been no effect on iraq's exports.

even its production. by the baiji refinery under siege by militants. it's unclear who controls it at this point but it is offline. so in this part of kurdistan -- in this part of iraq to the east there is a gasoline crisis. take a look at the lines that are all over the region of kurdistan and northeast of iraq, because 300,000 barrels worth of capacity were -- refining capacity has come offline as a result of the baiji refinery being under attack. and the number of people who are now lining up here because they escaped that part of iraq to come here to try to buy gasoline and escape violence has surged dramatically. and so the lines are extremely long. we went by one line that had at least 500 people. people waiting hours at a time. and keep in mind, it's 109 degrees out today. we visited the largest refinery here in kurdistan. it's got a capacity of 100,000 barrels per day produces fuel, gasoline, jet fuel, diesel, et

cetera, also kerosene. they're running at full tilt. but when you have such a sur surge -- >> we may have just lost michelle obviously there are some difficulties when you're trying to get these satellites up and running. we'll get back to her in a little bit. she's been bringing us these constant updates. larry your thoughts on what's been happening in the situation? at this point there are no easy answers. there are no clear solutions. >> no, it's a very difficult situation. it's just -- it's hard for me to understand where we should take this. the united states is supporting the sunnis in syria. when they cross the border they're the enemy. it just does not appear there's a consistent prensive policy and i think this is the position we're in. when maliki became the president, he stated that he was going to be an inclusive government. this is a number of years ago.

it has been anything but an inclusive government. and i think this is some of the problems we have today. so the question he could raise is why haven't we raised this issue about inclusiveness before we had this rye sis? >> you know, larry, we're going to have richard engel on a little bit later. he made the point that we didn't support the sunnis when we could have and that they turned in to, when they were rat callized, they turned in to the isis now. so it's not really specifically just the sunnis initially. now it's this radical group and if we had supported the more, you know, the more mainstream group initially maybe it wouldn't happen. i don't know what we can do either. but in your investment thesis, you're not even thinking about ukraine now, are you? are you thinking about either one based on what to do with money? i mean it hasn't seemed -- unless you think oil, none of this seems to have affected the financial markets. >> well, i was in europe for a true weeks, and i had 50 bilateral meetings and nobody brought up ukraine.

i was kind of surprised and i left europe a little more worried. i think the uncertainty in iraq is going to make europe a more difficult place. the problem we have in europe and this is why i'm medium term bearish on europe is their energy policies are terrible. they have the highest energy -- the highest energy cost of any major carrier in the world. germany right now has the highest electricity costs, so, it's going to -- >> they've given up on nuclear. >> yes, they gave up nuclear. and france has not begun ever fracking. there's even a pipeline from algeria to spain. but it tops at the pyrenees. so they're -- so actually spain is not harmed by all this because they have a source of energy because the rest of europe is much more dependent on russian oil. and natural gas. >> we'll continue this conversation. it does lead to a lot of questions. you said you're negative on

europe but you also said the potential is for a melt-up, not a meltdown in the short run. >> the short run, yes. >> a melt-up here in the u.s. a little bit. >> no. >> not melt-up. we're up 5%, 6%. can we be up another couple percent between now and year end? sure. >> we're going to talk much more with our conversation with blackrock's larry fink. later in the show a disruptor 50 member. going to find out how the company is breaking ground in the biotech world. "squawk box" returns right after this. time now for today's aflac trivia question -- er that in. nice. wrench? what? aflac! so this is who you brought to help us out? oh yeah, he's the best. he doesn't look like he's seen a tool in his life. oh, he doesn't know anything about tools. aflac-ac-ac-ac-ac-ac-ac! but when i broke my arm, he lent a hand. he paid my claim in just four days.

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now the answer to today's aflac trivia question -- welcome back. american apparel has now

suspended its founder ceo and plans to terminate him for cause. i don't know if you'll have comments about this. the board citing an ongoing investigation into alleged misconduct. the company cautions the move could leave it in default under its credit agreement. it says that it will talk with its lenders, and a regulatory filing in april said that charney has been caught up in several legal cases asserting claims of sexual harassment, assault and battery. first the nation through the internet defamation and other related claims. >> that was a boring story. you obviously know a lot more about -- what's the real story here? >> there have been allegations for years. >> yes. >> that he has been involved with employees. >> okay. >> that he has taken pictures. he's invited people to his home. i'm not saying -- >> "the post" has been running -- >> there have been allegations for a very long time. >> you're still dancing around. all bosses have involvement in some way with employees. you're talking about some -- >> some other type of

involvement. >> and they took pictures of us here all the time. be more specific. >> you've seen the ads for american apparel. they're very suggestive, could i just suggest. >> suggest of? >> s-e-x. >> s-e-x. >> the new tesla car models, aren't they? >> year. >> all right. we've got to go. we'll talk to larry more when we come back. at optionsxpress our clients really appreciate our powerful,

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last year our first ever disruptor 50 included ten companies that filed for an ipo or went public.

welcome back to "squawk box," everybody. financial information provider market pricing its ipo at $24 a share. that's the midpoint of the expected range. that values the company at about $4.3 billion. red hat raising its earnings and revenue forecast driven by strong subscription growth. the company's ceo says that red hat is benefiting from an improved i.t. spending environment for open source enabling technologies. and house republican lawmakers will be meeting privately today to elect their leadership lineup for the rest of this year. the gathering comes after leader

eric cantor lost his primary race. kevin mccarthy is expected to win the number two job. >> let's get back to our special guest host larry fink chairman and ceo of blackrock. i thought of a couple of different ways to launch into this, larry. i was going to do some off ram ka stuff that we talked about. but maybe just let's start with what just for investors now. you manage a lot of money. and people talk about how difficult it is to get any type of volatility to distinguish yourself from an index fund or something like that. where is it? you're stuck with the stock market right now that you feel just by definition is not really necessarily trading on midals? is that what blackrock is telling people to do? >> blackrock is trading on fundamentals. >> the fed is here. >> the fed is here. that's a major component of what you think about in terms of investing. it's trading on that you've had raising earnings from whether it's top line or bottom line, you're seeing better earnings across the board. and you have -- just a huge pool

of money that needs to be put to work. if you also know include this whole concept of longevity and people are living longer the concept of focusing on longer-term investing is very important which leads you more to equity investing, too. i think the combination of longevity, combination of a very dovish federal reserve, a very dovish central banks in japan, and in europe, and as a result i believe equity markets will do -- >> you're not going to have as much volatility and this is why, i believe, the lack of volatility force you to have a longer-term view because you're not going to make as much money trying to move in and out of the market. >> as an asset allocator at blackrock would you increase your cash position higher than your bond position right now? >> you still could make money in some credit strategies if you believe the central banks will continue to be dovish. you're making higher yield

earning in intermediate bonds than you would be in cash. and so, there is time to continue to earn. >> is it lighter right now than historically your bond, what you would allocate for bonds right now, blackrock? is it a lighter percentage than historical average? >> you're seeing more allocation towards alternatives. >> you said you agree with that at blackrock. >> it depends where. i mean, alternatives could be real estate. could be infrastructure. could be hedge funds. and private equity. >> but we're at -- >> i don't -- i would have a higher allocation in equities than i normally would be. i would have a lower allocation in bonds. i've been saying that for three, four years. >> you're not changing? >> no. >> what would be the tipping point for you? >> corporate earnings starting to fall. corporate earnings starting to decelerate. a more hawkish federal reserve, a more hawkish ecb.

i don't think you're going to see that. i mean, what the federal reserve said yesterday, they're going from extremely dovish in my mind, to just dovish, and so and we're still talking about low rates are going to remain low for many years. that's a great foundation to be in higher yielding fixed income. and that's a great foundation for equities. >> activist investors get a lot of time and attention from the media including right here. they come on and talk about their strategies. you're a long-term investor, and you have a bone to pick with some of the activist investors. if it's a situation where the activist investor gets in and pushes for changes that are short-term profitable but not good for the long-term investor. >> so 70% of our equity ownership's in the form of index funds or etfs. we have to own these companies. whether we like them or not. if they're part of the index we have to own them. we have no choice but to be a very long-term investor, because

we're going to own these stocks as long as these companies remain in indexes. so, we have to make sure that the company's behaviors are focused on long-term. so my letter i did not have any words suggesting activists. i think the media made a play that it was an activist statement. it was not an activist statement -- >> but it's sexier to us. we also want to hear from the long-term investors. >> there needs to be a voice. a louder voice from long-term investing. this ladder that we went out we received more feedback than anything we've ever done in the firm's history. >> feedback from the ceos. >> ceos, but also from different sources, like people think we need to now focus more long-term -- >> can you speak, though -- can you speak to the activist investor issues? do you think of -- i mean if bill ackman were here or carl icahn were here they would suggest to you that they unto

themselves are long-term investors that they're in stocks for a year, two, three years -- >> i wouldn't call that long-term. >> that becomes the question. what is the definition of long-term. >> 5, 10, 20, 30 years. warren buffett style. >> what would you do -- >> i think wouldn't worry about volatili volatility. it's a wall street problem, it's a trader problem. it is not an investor issue. >> 30 years ago you bought eastman-kodak. >> 30 years ago you could have bought -- 30 years ago, apple. >> better be right. >> from a policy perspective what would you do, though, to actually create more long-term holdings. and by the way, i don't know what the average turnover -- the average turnover in active funds these days is close to like 99% in 12 months. >> correct. >> still. >> so i'm not trying to suggest -- >> and some are active funds. >> some are active funds. we may have that type of turnover. so i mean, so -- >> so then are you a long-term

investor or short-term investor? >> we're both. and but 70% of equity investments are index based. and so, unquestionably some of the activists have done some really fine investigation, they've actually forced better behaviors from some companies so that's what i'm saying we did not attack activism, we attacked the notion that ceos should be focusing on longer-term outcomes, not just short-term outcomes. they should not be just focusing on stock repurchases and dividend increases. they should be focusing on what would be the best outcome for long-term investing. dan lobe called me and said he thought the letter was good for what he was doing and what we're trying to achieve. so this was not an attack on activists unless an activist was suggesting, go issue a large-scale sums of debt and buy back equity. >> but larry, what you did was provide cover for some of the ceos who have felt pressured by activists, who i think your

point is not respond to just one group of investors. make sure you're looking at the long term. >> correct. i don't know if we've given koufr. if the bad leadership team in a company, i hope i didn't provide cover -- >> provide cover from reacting to quickly and improperly to just one group of sharmds? >> long-term investors need to be louder. and they have been pretty silent. the letter was, that we are going to be louder, we're going to talk to our companies that we own stocks in. we are -- we develop this whole proxy team that blackrock that is independent, that is having dialogue continually with companies. and, because of that, we are not going -- we're not outsourcing our vote to these -- we internalized it, and we're -- we're just suggesting to companies have a dialogue with us. talk to us before you're involved with a proxy voting company. talk to us if there is any

issue, and we could provide you with our views. and our views tend to be focusing on the long-term opportunities a company can provide. i do believe we're starting to see a change in capital expenditure. so if you look in the first quarter we're beginning to see rising capital expenditures. another reason why i think the economy is doing a little better, and more importantly, why i think equity markets are going to do better. we're not focusing on that enough. capital expenditures are starting to improve. now, hopefully our letter had something to do with. and maybe that was already happening. but i do believe we need to be getting back to the basics of building, you know, more manufacturing in the united states. hopefully through that process we're going to create more jobs. >> larry, stick around. we're going to keep this conversation going. a lot more to talk to larry about. >> but you're not ordering -- >> i'm not ordering larry to stick around. he's changing the seat there. the fed decision and your money.

we're going to talk about it. what should you be taking away from yesterday's meeting. steve liesman is going to join us and guest host live to discuss all of that. in the meantime check out the futures this morning. see how things are setting themselves up. dow looks like it will open off 5 1/2 points. [ male announcer ] the mercedes-benz summer event

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welcome back to "squawk box," everybody. we are speaking with blackrock's chairman and ceo, larry fink. we're going to get back to larry in just a moment. but stocks have been liking what janet yellen had to say. steve liesman joins us with more on yesterday's fed decision. >> it was interesting market reaction, becky. the market reacted almost immediately at 2:00 p.m. with the statement. and perhaps to the statement that made clear there were no serious concerns with inflation. it was kind of like i sounding the all-clear signal on the issue. then it takes off after journalist questions asking fed chair janet yellen to directly respond to the recent uptick in inflation in the consumer price index. >> the recent evidence we have seen abstracting from the noise suggests that that we are moving back gradually over time toward our 2% objective. and i see things roughly in line with where we expected inflation to be. i think if you look at the sep

projections that were submitted this time, you see very little change in inflation projections of the committee. >> so what happens is the fed funds futures actually, there's a december 15, you can see that it comes down. the yield comes down, and this is part of the stability. larry was talking about lack of volatility. it is an extraordinary time period to live through right now where what we're talking about is where the fed is going to be in december 2015. and this has been in about a 30 basis point range for about eight or nine months now. okay? and then take a look at the new fed funds forecast. this is the median. 1125 is really the number there which was up 0.8. 20162.5% up a quarter the long run 3.75 that's down a quarter. but i have been calculating by the way this hawkless. warren picks out the top three guys and it's much more muted. the long run, the top three is

2.5. goldman saying changes to the june fomc statement were limited and on balance just slightly more dovish than expected. the weakness in wage growth remains a key policy driver keeping an eventual rate liftoff pushed back probably not until the second half of next year. this is how yellen thinks about wages. noninflationary wage growth is inflation which is at 2% plus productivity is 1%, that's 3%. we're currently at 2. yellen pretty specifically has said, she's willing to abide wage growth of 3% to 4%. larry how sensitive is the market right now when it comes to these inflation numbers? how much time does yellen have to say, it's noisy if these numbers keep going up? >> i think obviously if the noise is loud -- you know, more than 0.4%, and gets higher, then she's not going to have as much time.

i just don't -- i think it is noise. i don't think there is that much inflation within the economy. so, i think she has more time. i would like to see wage increases too. i think that's one of the big problems we have in the economy. but marketplace is -- has been always understatementing janet yellen since she became fed governor. >> how? >> i think she is more dovish than expectations were and she continues to be quite dovish. we need to see what the new with stan fisher joining the federal reserve is as vice chairman. we need to see how that changes and does it move a little more to the center in terms of the debate. but right now i think it's heavily more dovish than we've all expected. >> do you think she's more dovish than bernanke would have been? >> yes, i do. >> do you think that? >> i don't. i actually think there's a case to be made. and this is a slightly depp rat argument, that yellen is more like greenspan than bernanke in the following way.

yellen doesn't let the dee tails get in the way of the big picture. the same way greenspan did. bernanke, i think, overestimated the market's ability to handle detail. yellen is like you know what? i got inflation problem, it's noise. my idea is i'm dovish, i'm dovish for the long run and kind of discarding some of that. i think yellen, as a governor, or as a president, is going to be different from yellen as the chair. i think her inclinations are dovish. i'm not going to be able to follow through with that, larry. >> what i'm saying is pretty consistent with what you just said. i do believe she has a foundation that tends to be more dovish than bernanke did. i think she actually is more worried about income inequality than maybe bernanke is and i think this is one of the foundations of her views. i think her whole foundation of being a berkeley economist is an

indication that, you know, she is more focused on -- >> that's great that savers can make nothing and yet all the money flows to guys with access in the stock market. that really helps for income inequality, larry. she must be really concerned. maybe we can stay at zero forever and never be another saver make a dime. >> that was totally contradictory to what's happening what you just said. how could she be concerned with income inequality and continue these policies? >> because, joe, because she is trying to find ways to keep -- >> you know -- >> what's the other side of the rap? >> the other side of the rap -- >> you don't think the reason that -- that the last five years we've seen, i mean it's been housing, because it's been the owners of assets -- >> you've got to own assets. >> bernanke who said -- >> assets -- >> and the owners of assets made money -- >> bernanke's view that would have suffered even more -- >> talk the talk and say i -- >> i don't get it. i don't get it. you give the fed a job to do. >> if you're only playing the

equality game. >> the big problem is we have government not doing anything to assist. we're not creating jobs through infrastructure. >> they're doing plenty to not assist. >> the fundamental problem is the only game in town are central banks. this is a problem we have worldwide. this is one of my fundamental views. we're not going to have as much central bank behavior in the next two years. >> are you in the krugman camp, larry, that the government didn't do enough? >> he's in the kruger camp. >> we're going to get larry's answer to that question when we come back -- >> steve liesman thank you for being here. we're also going to get the latest on the situation in iraq. markets on edge this mornings investors watch that situation closely. and then the 26th annual morningstar investment conference is under way. cnbc's going to be bringing you guests all day long in the next hour aerial investment chairman john rogers is going to join us. also chairman of the president's add viedry panel for young americans. and larry fink when we come back.

let's get back to our special ghost host, larry fink, chairman and ceo of blackrock. before steve left we had -- he asked you a question about whether you thought that you were more aligned with krugman in terms of what type of stimulus needed to be done earlier. >> well, i'm not going to talk about the timing of stimulus. but i do believe going forward we need to have more governmental policy. i think the federal reserve cannot do it alone. i think this is why, you know, i think they believe they are only doing it by themselves. and that's why they have been

more dovish for longer which joe is correct in talking about what it does to savers. so i agree with him. and we need some form -- >> larry, the government policy mean reforming the tax code? >> sure. >> okay. so that's -- >> we need to have -- >> you're not talking about a keynesian government stimulus policy. >> a little bit. >> i know he is. i want him to say it. i want him to -- >> i believe one of the great -- if you look in the 1960s and '70s and '80s we spent so much more governmental money on infrastructure. >> do you have a place where we could fill the holes to build back up again. >> airports. >> the grids -- >> it should be publish/private. >> it should be states, too. >> the problem is federal government is -- >> i just spent a couple days in mexico. and zkz >> one afternoon? >> and the government there is now working with investors

worldwide to invest in infrastructure there. so they're making it, they're cooperating and creating this public/private atmosphere that foreign capital can come into mexico and work side by side as they do the reforms. more and more countries are putting more and more effort towards this public/private. >> weing were go to repatriate some earnings abroad but they won't -- >> we need a comprehensionive tax reform. we need to be focusing on infrastructure. and that is one way of creating jobs. and we're not going to have the same strength in housing for the next ten years because of the student loan issue. and we're going to need to find ways of creating jobs and that's going to be an infrastructure, and i think it's a huge mistake, and joe you may disagree with me. but i do believe there has to be a public/private type of combination -- >> is there a fix on student debt? >> we have to -- >> besides lowering the cost, obviously? >> maybe changing fico scores a

little bit so the biggest problem is there are 40 million americans who have student debt. average student loan is $27,000 today. and so, this is why we're seeing a housing not accelerating. because there's so many young people sitting with this debt load. they're not going to be able to qualify for a home because they have this debt load. and unless we change things like fico scores, or we're just going to have to accept we're going to have a less dynamic housing market, because so many young americans are going to be -- are going to be priced out because they don't have the savings to offset their student loan and having enough for a down payment for a home. >> can i ask you a blackrock or industry question? >> yes. >> you talked a lot about policy today. >> yes. >> pimco your biggest competitor. >> who? >> no. they're -- >> one of your competitors. they have been losing assets. there has been obviously a lot

of commotion around what's going on. what do you think is happening there? >> what happens to that firm. you must have views. >> it's a great firm. i've known bill gross for -- >> he's got a lot of putting it on the same level with blackrock is what he was saying. take great offense to. >> i mean he immediately took issue with that. >> you have a high bar -- >> we have more business in equities than we have in fixed income. they are a great fixed income house. blackrock is a great mixed income house. there are going to be moments where they pick up market share and those moments are going to lose market share. moments we're going to pick up market share and other times we'll lose market share. we're at a point now where we're picking up market share. >> that's what you get -- >> what do you expect from me? >> i don't know. they were like in the bottom 5% of all bond funds. can you say that? >> you could say that. >> i don't want to say that. >> oh, you did. >> we're going to thank -- >> thank you for a wonderful hour. >> thank you guys. >> come on back. we enjoy this very, very much.

>> that's good. >> all right. coming up the fed's upbeat outlook and where markets may be headed. pantheon macro economic chief joes ian shepardson is here. and then value is the name of the game. ariel ceo john rogers joins us live. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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9 fed's upbeat outlook. >> you see very little change in inflation projections of the committee. >> today investors will be watching jobless claims. the numbers in the market reaction just ahead. >> t mobile making waves to attract new customers. would you test drive the iphone? the ceo on his company's new plan and an update on a possible merger with sprint. and treating illnesses with your own proteins. a disruptor who's looking to change the face of disease fighting drugs. ceo of moderna is going to join us as the final hour of "squawk box" begins right now. welcome back to "squawk box," 8:00 right now. we're all here. we are first in business worldwide. i'm joe kernen as you know.

this is becky quick in blue. >> hi. >> resplendent in blue. andrew ross sorkin is over here. >> hi, everybody. >> the man of three names. and the dull ties, typically. >> dull ties? >> you don't wear yellow. >> i don't wear yellow. >> you don't wear red, you don't wear green. >> that red is bright. >> it is bright. on blue, though. >> okay, looks good on camera. >> you know who had a good tie on. >> and it's thin. it's thin -- >> a little weird though. >> think had a good tie on. larry good a good tie on. >> this tie is making its debut. >> we're all here. we all, look good to at least in our own mind look good to ourselves. futures this morning is, trying to consolidate yesterday's gains, after we hit another new high in the s&p. that's the 20th this year. we're up 5.8%. and there's been 20 new highs and it's only moved 5.8%. so that shows you it has been sort of not a lot of off and not

a lot of volatility. and that makes people complain although do they want volatility if it means stocks going lower? i guess they do. then you can buy them and make more money as they go back up. >> let's get you through some of the head lines. we told you earlier blackberry, getting a boost in early trading. that company posted a smaller than expected loss. still a loss though and gross margins did improve. revenues slightly better than consensus. also prosecutors want to know whether congressional staff helped tick traders to a change in health care policy. they're gathering evidence for a grand jury probe. "wall street journal" reporting that the s.e.c. has sent subpoenas to the house ways and means committee and a senior congressional health care aide as well. we've been talking all morning about the amazon fire phone this morning. the pricing surprising some. people had expected it could be a little bit cheaper than competing products. there you can see him jeff bezos showing off that phone just yesterday. it is the first-ever amazon smartphone.

it goes on sale for $199 for 32 gig bytes. and $299 for 64 gig bytes with a two-year at&t contract. it's exclusive with at&t. and john forbes is zbg going to join us more in the next half hour to go over the details. i think we're all a little perplexed about this. >> we'll see. >> yeah, okay. >> shop from your phone. >> it's just that, you know, who's going to compete with apple in terms of innovation? and if someone said amazon you think that's not what they do. they have big warehouses where they get things that they send them to you and whatever you want you can get. they're moving into food and all that. you don't think that they innovate phones. maybe it's not that hard to get a base level phone? >> they've innovated. >> you can get the 3-d thing. >> i'd like to see one in person. >> the phone market must be wide open. has google made any money on the phone? >> no, google's lost money.

>> it's not necessarily a bad thing though, right? i wouldn't think that they'd say it's not worth it to have it out there. >> right. >> once i got it, it's really good. it is. i haven't downloaded that many apps. but the ones i have i use. investors continue to pay attention to the situation in iraq. white house officials say the u.s. is unlikely now to use air strikes due to a lack of clear targets. meantime "the wall street journal" reports that the obama administration is using iraqi policymakers in an attempt to form a new government without prime minister nuri al maliki. joining us on the "squawk" nzline from baghdad is richard engel. nbc chief foreign correspondent. is this a new story? did you have wind of this, that this guy does not have the support of the united states anymore and does it matter at this point? are we still kingmakers in iraq? >> we are not still kingmakers.

to be honest, we really never were kingmakers. i don't think u.s. officials had a lot of confidence in maliki from the beginning. but yet we still backed him. and this is one of the weird things about u.s. policy. and i've been watching it now in action in war zones for a long time. we never liked karzai in afghanistan, either. we had no confidence in him yet we stood behind him even when karzai stole elections, and got elected time and time again. and then when things started to go badly with karzai, and i know i'm confusing countries here, but i'll get to the point, then when things started to go badly we blamed karzai, he's the problem. but we always stood in his corner until then. now you hear these unnamed u.s. officials coming and saying well maliki's a problem. it's all about maliki. well maliki's been there for a long time and he's been to the white house and he's had u.s. support all along while he's been doing these disastrous policies that have led to what we're seeing now which is the collapse of this country. everybody knew it.

i reported on it. others reported on it. this is not a new problem. half of the people in the u.s. government thought maliki was sectarian and wouldn't be able to lead this country. so now it's a little bit disingenuous when you see these unnamed officials talking to "the new york times" and "wall street journal" say well, you know, we want a new government that doesn't include maliki, because we don't have confidence in him. well, where were you when he was doing all these policies for the last several years? >> what are we going to -- what's going to happen next? we seem to be in almost not a news lull, richard, but what they're sort of outside baghdad, there's not going to be air strikes. what do you think is next that's going to be on the front page? >> i think the next is probably this political thing. there are meetings here. this is why i'm saying the u.s., we're not kingmakers but by making these leaks, by putting these statements out there, we're signaling other iraqi

politicians that hey, there's now political space. the game is afoot. and i've been watching and listening to iraqi media, and listening to the raid yeah, and there are plenty of other now politicians in this country calling for malsy to step down. and i think this is going to get solved internally. i think it's going to be solved at least on the government side. within the shia camp, there are meetings going on in najaf. he's always been the kingmaker in iraq. it is the holy shiite city where the religious clerics sit. there's meetings going on in that religious holy city behind closed doors. where they are looking at the chess board. and the u.s. is now signaling to them, hey, it would probably be a good idea if you got rid of maliki and put some of the other figures on. i think that's the phase we're in right now politically. i don't know if that's going to be enough to stop this conflict. because if they just, you know, pick another name out of the magic hat, and it's another name

that we've all heard of before in this country at least then i think we still have back to where we were, which is ethnic divisions, religious divisions, and violence. >> you're listening to the radio -- >> how is that for cheery? >> i'm trying to figure out how you can listen to the radio. you've picked up enough arabic to be listening to -- >> i speak arabic. i've been working the middle east for 18 years. [ speaking arabic ] >> i resent that. i resent that. you don't know -- >> come on i resent you -- the questioning. i've been working in this region for almost 20 years. >> there you go. >> it's amazing. >> okay. figures. the figures, richard. how else -- there's not someone there translating for people listening on the radio. richard engel we hope to speak to you soon. we'll get you in front of a camera. thanks for joining us. >> my pleasure. >> getting back to the u.s. economy fed chair janet yellen say the fed expects the chairman to move back to the 2% target

but many were surprised she didn't have more to say. joining us is ian shepardson. chief economist at macro economics. were you in that camp of people who were surprised that she wasn't saying more? >> i wasn't surprised. i was hoping she might say some more. i wasn't surprised that she didn't. it's too early. the upturn in inflation in the data is really the last two or three months. for a fed, you know, concentrated on medium-term policy it's easy to dismiss it as noise. when steve asked the question in the press conference yesterday she just said it's noisy. well it is noisy but there is some stuff going on there that i think they're kind of deliberately downplaying. i'm worried they're going to find themselves blindsided as inflation picks up further through the second half of the year. then they're going to have to scramble. that's when the markets get upset. that's what they're set being themselves up for. we've got pressures on rents, drug prices, airfares, hotel room rates, business confidence and margins are rising steadily. quite sharply in some cases. a lot of stuff going on. airfares are going nuts and hotel room rates are lodging away from home in the cpi.

this is not an accident. this is because demand is picking up. in the case of the airlines capacity is being reduced. there's scope for margins to be pushed higher. >> that's an interesting argument about market expectations. you're saying she could have missed an opportunity yesterday to easily -- gradually let a little bit of air -- >> just to let a little bit out. but they're stuck, you know, the fed statement after the meeting stuck pretty religiously to the usual line which is that all the risk is downside and we've got to be concerned about the risk of excessively low inflation. this was an opportunity just to tweak the language a little bit. not enough to scare anybody enormously. there would have been panic. but to pull back a little. >> maybe see a drop of 100, 150 points in the market. not a big deal. >> not the end of the world. it's better to have those expectations of a change in policy come through than to wake up one day and say oh, we weren't expecting this and we now find ourselves with core inflation on the core pc deflator the number that they target could easily be above 9 end 50, you know, end 60 target

by next spring the way that it's moving at the moment. there's been a lot of very favorable one-time factors that have pushed it down the financial services component. the health care services component. these things are technicalities that are in the process of unwinding already and at the same time we're seeing margin pressure in the ppi. they're picking up quite rapidly. this is not an accident. i think businesses are looking around and saying hey, we can't find the people we want to hire. we're going to have to pay more for them. we'd better start -- >> don't agree with you on any of this -- >> i didn't say me. i said she doesn't agree with any of the things -- and i agree politics. but she doesn't agree and your keynesian stance. she at this point was like music to a stock market bull's ears yesterday. she said both of our mandates are satisfied by just that we're

below on the inflation target and still too high on unemployment. i'd rather be -- can't we be ostriches and just stick our head in the sand and say that, you know, there's how many people are not working? always 92 million people are not working. you point out and larry fink pointed out if you need someone to do something specific, you may have to pay up and they're not in that 92 million. >> you can't find them. the yellen view is a lot of these people who've left the labor force will gradually come back in as demand picks up. but employers don't want them. employers are not looking at them. you look at the small business nfib which has been running for 30 something years it's reliable it's telling you small businesses can't find the people that they want and they're expecting to have to pay more. >> there's a very serious divide between what you're saying and what most -- and what other people say. i think about 50/50 when i mentioned fieldstein's piece that the fed doesn't understand that inflation is coming back other people say he's absolutely wrong. there's nothing to indicate that there's inflation on the horizon. >> there is -- >> it's amazing.

>> an awful lot of evidence. >> it is amazing. a lot of people don't want to believe it. >> it feels good. >> of course it does the market's going up. >> we could do both. >> there's no -- >> there's no risk. >> but this you know this situation to me is getting to be sort of reminiscent to where we were back in, you know, in '03 after the fall of baghdad. the economy almost stalled during the iraq war. >> the first fall of baghdad. it hasn't fallen again yet, has it? >> that was the second. >> we're waiting. >> but in '03. everyone was very gloomy. the economy had stalled. the fed carried on on the gloomy deflation tack they cut rates in june '03 and the economy grew nearly 7% in the third quarter of '03. it was a huge mistake to cut rates. we're not quite at that extreme and i'm not looking for 7% growth in the third quarter of this year but the risk is, i think, to the upside and looking at small businesses again, their sentiments at a seven-year high. this is not an accident. you know, this is a real change. and the market is just choosing to ignore it. >> ian want to thank you very much for coming in today. always a pleasure seeing you.

>> thanks for having me. >> okay coming up. the morningstar investment conference kicking off yesterday. we're going to bring you guests all day today right here on cnbc. up next he has $9 billion under management and he's also "squawk" platinum portfolio member. i think that's probably his biggest title. john rogers, of ariel capital is going to join us. check out the "squawk box" market indicator. you're seeing some green arrows across the board. back in a moment. 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. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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cnbc is live at the 26th annual morningstar investment conference where top advisers and strategists convened to discuss whether finding opportunities in the markets and join us now to share this investment strategy is john rogers jr., chairman and ceo and cio, that "i" is what we're interested in, if you're the chief john, we want some names, all top down macro stuff today. we want to delve into some of your favorite stocks. you have $9 billion under management. you've talked about certain names before. have you hung on to them? added to them? you got any new ones? >> well, we've been adding to some of our all-time favorites

companies like madison square garden that we've owned for quite a long time. the thing is it's extraordinarily valuable today, this recent $2 billion deal with the clippers makes it feel like madison square garden is worth a lot more than ever and of course the new york knicks, new york rangers are probably much more valuable than people had anticipated. >> a lot of, you know what, it's funny that you say that. i can name great things about everything that you just said. you're right. the rangers obviously, all of hockey was under priced probably three, four years ago, after what we saw in the stanley cup this year. that was riveting. and then the knicks got, you know, got a new coach, everybody's excited about that. and then you mention, i think you're absolutely right. that makes sense for msg and live content is king, john, because you can't, you know, you can't fast forward through all the commercials. >> you're exactly right. they've got a great television deal, which is extraordinarily valuable, continue to get more and more valuable over time. you think about that downtown

real estate, and just this idea that over time, you know, sports programming is more important than ever. >> but you don't think they're going to sell the real estate, right? the people have made this as much a real estate play as even a content play. >> you know the rumors are the dolans really like having everything together and they're more likely to be able to do more transactions, buy more businesses, and add them to madison square garden than to do any types of major divestments. at the end of the day even though the dolans are controversial they've added a lot of value for shareholders. >> in sports it's just clear to me, i don't know -- it's not that there's nothing else on but suddenly i'm sitting there for four hours watching soccer now. and i never would have believed it. but it's the high def stuff. it's the high def tv and the high def programming. >> your own maturation. >> is it me? >> yes. >> might be me. hockey and soccer, i would have never, ever admitted it. give us some more names.

>> mario likes that stock. >> mario likes msg? >> i thought it was an additive. >> you know some of the problems these days going on around the world we still think that companies that are related to the oil and gas industry are very, very valuable. our favorite name is bristow. they're providing helicopters to get people out to where the deep wells are drilled in oceans around the world. they have this great, great brand. they're also big in search and rescue around the world when you need to go out to the high seas and save people. so we think they're well positioned for this environment today. >> is that an old name or a new name? >> that's a relatively -- a name we've owned for several years. not one of our long thytime favorites for several years. this is one we've owned for the last several years. >> we just heard larry fink, we kind of looked at him when he said, long-term, because we said well there are activists who are

long-term. they own for two years or three years. he said i'm not talking about two or three years. i'm talking about 15, 20, 30 years. so that's possible to do that. but i mean you might have owned -- you might be sitting on eastman-kodak or i don't know digital equipment or something. i mean things change, don't they? how do you know? >> we try to find those brands, as warren buffett talks about, that you think will be around for the next 10, 15, 20 years and we've been able to find some of those over the years and own them, literally for 15 or 20 years continuously. sometimes we trade around the ideas. but often we'll hold them. not only t. roe price. companies like snuckers that have been in the portfolio seemingly forever. we have big brands that you feel highly confident and there's going to be real barriers to entry. >> what about bally? >> we own the slot machine manufacturers and the casinos off and on for more than 20

years. bally technologies we think has really preeminent brand when it comes to traditional slot machines. they also bought chevelle master. all these table games that have all the types of things where three card poker or new types of games that they're playing shuffle master provides the equipment to make that happen. and even traditional games like blackjack, you need to have fancy shuffle systems. and it's a worldwide global business, and technology and shuffle master truly dominating. >> have you bought anything new in the last two weeks, john? >> haven't bought anything brand new. we're looking at a lot of things. and we've got a lot of irons in the hopper. because, you know, the markets have started to get a little weakness. shown a little weakness over the last few weeks. a little stability. especially in certain sectors. so we're out there searching, looking, hoping to find some brand-new ideas and have some company visits planned to go out and see management teams that we

think are quite exciting. >> okay. i was asking becky something. i was going to ask you, do you know if harrison ford's feeling okay? you got any info on that that's not -- from melody who is married -- you got anything for us on that? how's he feeling? >> you know, it's funny, melody and i had dinner with staley kates last night we talked about melody and her new baby. >> give her our best and -- >> george harrison. >> we've got to go. anyway. >> we'll talk. >> thanks, john. we'll see you later. >> we're back in a moment talk moderna and some other stuff in just a moment.

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harley-davidson has introduced its first electric motorcycle. the company hinted at this. consumers will be able to test ride the bike and provide feedback on it. this new cycle is not for sale but rather it's being used as a basis for designing one that would eventually be sold to consumers. you are looking at the first pictures of the bike. the company is dubbing this effort project live wire and my only question is, does it sound like a harley? you have an electric bike that actually sounds and has the rumling, vibrations. >> you most certainly can if

you're on "60 minutes." >> where they dubbed in the sound, right? >> for tesla. i was watching scott pelley, and it's going rrrr, rrrp that's weird because tesla makes no -- who messed that up. >> i don't know. >> coming up, davos claims data? >> we can do it. they can't. >> and the ceo of cnbc disruptor moderna. as we head to break take a look at u.s. equity futures, please. [ male announcer ] don't just visit hawaii.

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welcome back to "squawk box." continuing claims hitting the wire, 312,000 on initial claims. that's down 6,000 from a 1,000 upwardly revised 317 that now stands at 318. continuing claims moved down from 2.615 to 2.56. definitely continuing to see on the alternate universe of time scale what the continuing claims are doing in the rear view mirror. of course the big news continues to be a press conference that i don't know, maybe would have garnered a c-plus in my opinion at any major university with regard to how the questions were answered regarding, why isn't housing doing better after all the heavy lifting we've done for

5 1/2 years. why can't we get, you know, more horse power out of the u.s. economy. suffice it to say the markets get it. so s&ps are doing better. record territory. the dax is about ready to go in record territory. we're at two-week low yields on 10s. boones are at month low yields, ready to test their 130 which has kind of been the multicycle year low of late. so everything is still firmly in place. and the band plays on. back to you. >> okay, rick, stick around. also checking the markets for us is teach liesman. the vice chair of the isi group is also a former executive vice president of the new york fed. steve. >> just a real quick thing on the jobless claims 312 in line with estimates. commensurate with another this is the survey week to commensurate with another 200,000 job lift that's what the economists would say is sort of automatically if they plug it into their model. so that's alone the lines. and then we got the philly fed

coming up. i'll tell you a new thing we're going to be watching. >> which is? >> prices paid. i think the whole -- >> the wage -- >> an interesting little changeover here. we want to get to krishna for sure and rick for sure. prices paid and inflation, i think the markets will follow more closely. >> krishna do you agree with rick's assessment about just the answers coming from the fed that there were some tough questions that maybe the markets didn't get the answers they were necessarily looking for. not that we minded that. obviously we saw stocks push higher yesterday. >> the markets seemed to be happy enough with what it got right? what the market took its cue from was yellen making it very clear that the fed wasn't troubled by the firming we've seen in inflation. you know from yellen's perspective, 2% on the pce measure is a symmetric inflation target. so if inflation is coming in at 1.4, 1.5 on the core measure it's still way too low. and yellen is concerned about that as she would be if

inflation was coming in at 2.5 on that preferred measure. remember, also, that pce of 2 basically means cpi at 2.5. so i think the market saw that the fed is not yet getting worried about inflation. took that as the cue to go forward. but i think the message was actually more complex than that. >> then let me ask this. ian shepardson was just with us. he laid out a very interesting thesis. he said he thinks the fed missed an opportunity where they could have maybe said a little bit more, let a little bit of air out of the markets. not necessarily deeply disappointed the markets. maybe seeing the markets trade down a little, yeah we are seeing some higher prices, we are seeing things that we'll pay attention to down the road. he thinks maybe -- >> in other words not a red flag, a yellow flag. >> so you don't have a crash later and all of a sudden you wake up and say hey we've got to pay attention to this. >> so krishna, before he worked at the new york fed was a reporter for the financial times. >> yes. >> and he understands how to listen to these guys. >> mm-hmm. >> and gals. and one of the things he

listened for is when an official answers a question you didn't ask, so i asked janet yellen if the fed had tolerance for higher inflation. >> yeah. >> which necessarily means temporarily. but here's her answer yesterday, and i'll come back and get krishna's comment on this. >> we would not willingly see a prolonged period in which inflation persistently runs below our objective or above our objective, and that remains true. so that hasn't changed at all in terms of the committee's tolerance for permanent deviations from our objective. >> i didn't ask janet about a permanent deviation from your objective. i asked about a temporary. so krishna, my takeaway, and this is not so profound i suppose, is that there is some tolerance for higher inflation, inflation above normal for at least some period of time. >> unambiguously the case,

steve. i think janet is just being careful. and i understand why given her reputation as an uber dove. she's being careful about how she introduces this concept. she doesn't want to just jump up and say, hey, guys, you know, i don't mind inflation going up above 2 for awhile. the market could respond badly to that. you could have inflation risk premiums start to move higher. i think she needs to articulate, you know, more of a framework about how look, we've got a symmetric target. that means there will be times when inflation is a little bit above. just as there will be times when inflation is a little bit below 2. there's a very strong commitment to averaging 2 over the medium to long run. >> rick -- go ahead. >> just one thing i would flag up though is that to the point you raised, you know, from the previous guest, i think yellen did actually give us a very clear warning that there's a lot more uncertainty about the path of interest rates over the next two or three years than she's been given credit for. she said it in her introductory statement. she said it two or three times

to my recollection in the q&a. look the base case, sure. base case is a late start and gradual tightening. but there's some -- there's upside risk here. just as there's downside risk. >> krishna that is not what the market heard. >> absolutely. the market didn't hear it. >> the fed futures pushed back. when they expect the fed to actually start raising rates, right? >> i couldn't agree with you more. for the listeners here i really do think that -- >> she has gone out of her way. >> to put down a marker. there is upside risk just as there's downside risk. i think people should listen to that message. >> rick? >> i think we've had rorschach statements. now we have rorschach press conferences. our guests are totally going along the emperor's design of his clothes as he is definitely in his birthday suit. i've never heard so much nonsense of interpretation in my life. the markets, first of all, fed funds, never are going to tell you when a cycle is going to flip.

they're never going to give you an indication of the first tightening or the first easing. it's a cycle trend that gets priced into fed fund futures. now that we have that and it will never change, everybody will still interpret it, it's just a market arbitrage spread right now until we begin the cycle. >> is it wrong -- wait, wait, wait. is it wrong to think that market players heard what she said yesterday and thought okay it's going to be longer before we get that? or was there something else that the market was hearing? >> i think what the market hears is they will say and do anything whether it's ben bernanke, or the new manager of the cubs or the front office of the cubs, with the cubs' economy that they just don't have the nerve to do anything but stick to a strategy. it wasn't about the inflation yesterday that traders were talking about. >> it's hard -- >> they know that will take care of itself. what they're talking about is a failed strategy zero interest rates, quantitative easing still at 35 billion. >> rick the market has a choice. why do you think if somebody put

a gun to their head and say buy treasuries? >> no. they can sell treasuries. they can sell tips. if you look at what happened yesterday, implied five-year inflation went down. yields fell. and the fed gave a view on inflation. a view on inflation -- >> you ever talk to anybody that trade them? >> yeah but rick, rick -- >> i mean you call -- >> the question is why isn't the market -- if the fed is so offside as you think why is the market not challenging this? >> i said their strategy isn't working but traders love the strategy wp. the goldmans love the strategy. i want to say with the equity positions. nobody challenges it. but they're getting a little nervous because the end game, no volatility. they get it. >> they can sell treasuries. >> why would anybody in their right mind sell treasuries right now. >> you just gave a whole bunch of reasons. >> no i did not. maybe in the old days when we really had a treasury market that wasn't owned by central

banks. the bank of japan. the federal reserve. those are the only traders that can move markets anymore. >> we're going to end it there. thank you guys. coming up next, moderna delivering the next wave of innovation to treat serious illnesses.

we are continuing our cnbc disruptor 50 list with a closer look at the start-ups that are

threatening the status quo. julia boorstin joins us with more. >> today we're talking with the ceo of number eight on our list, moderna therapeutics. a biotech that uses your cells to develop treatments for previously incurable diseases and speed up the pharmaceutical development process. moderna's technology gives patient's cells instructions to create proteins and antibodies to fight diseases from diabetes to certain types of cancer. and the company says it's relatively inexpensive. that promise drawing astrazeneca to invest more than $e$200 million. last year the defense department's experimental research group awarded the company a $25 million grant to fight infectious disease. the company stands out among our disruptor 50 because it's the only biotech on the list. and the only company from massachusetts. joe? >> thank you. all right. let's get more on how moderna is breaking ground in the biotech world. joining us the president and ceo of moderna therapeutics.

we're going to program cells to make certain things or not make certain things and you're using rna? how are you doing? >> good morning. thank you for having me. >> you're welcome. >> we are sending instructions, we're sending mentioner like your body does 2 million times a day. what it does, if you look at the biology you have your dna in each of your cells, messenger and then you have a machinery to mix the protein. instead of doing it the way the biotech industry does for the last 40 years for genentech, you know, what we do is we basically make messenger inject it into you and you are going to make your own protein. so you make your own drug. >> okay. i mean that so not make you unique. obviously how long -- what's the half life of the protein? how do you get it where the cite

of action would be to where it would do what you're trying to do. that is a very simplistic example you just gave. >> right. >> because that would never work just injecting some messenger rna into someone and hoping it makes the protein to go to the site where it would be therapeutic would never work. >> if you look at the proteins in the body and we have about 6,000 proteins going through your bloodstream so what we have done already is to inject the messenger rna. your muscle is a factory where the protein is made, and then it goes into your blood. when it goes into your blood it goes to the right site. so we don't do that. your body does it. >> oh, it does do it. >> okay, number one, how do you get to -- so it only works intramuscular? messenger rna it's going to be broken down immediately before it's expressed? >> actually a bit like the first time i was to do the iv. >> that can't possibly work. >> impossible. and as we know progress made over the last ten years that enabled us to stabilize.

>> i thought you'd use liposomes or something to deliver it to the site of where it would be expressed. you're not doing that? >> no. >> you've got to give us a -- >> conversation would carry the thing to it. how do you make it stable? >> techniques to make it stable, depending on how you put the chem city, the tail to stabilize the rna. what you can do and then to your point how to you formulate what do you put around it to protect it. what we have now is lasting in the body a couple days. >> the next thing you need is something where you identify a disease where a single gene product is actually going to be therapeutic. >> yes. >> and i can't believe there's many of those, are there? >> they are lots of -- if you look at just where this is another 6,000 -- >> you mean where there's one genetic mutation? >> right.

and you just go and replace it. and there's a lot of products that you can do. >> but diabetes or some of these diseases that we're talking about i can't imagine that they're not more complex. >> they are much more complex you're right. one of the beauty that you can do with rna that you cannot do with protein you can inject several in different pathways. we've done up to eight and basically it hits three or four different pathways. >> the biochemistry would be very complex i would think in terms of promoter sequences to get the rna expressed and everything else. i mean in things that cause things not to be expressed. it seems like it's almost easier to do an anti- -- >> this is like me talking about facebook to you. i don't understand what you're talking about anymore. >> are you -- >> i'm sorry. i understand enough to be dangerous. and so the -- what we're trying to do is to start where the technology is ready now. and so we have a 35 programs

between what astrazeneca is doing which they announced last week. >> did you see the fascinating treatment that they come up with where it's for muscular dystrophy. normally the rna being expressed falls off and you get this truncated version of a protein which doesn't work. all you do is you correct one base and it goes all the way across makes a long enough thing to cure so that's anti-sense. >> exactly. exactly the opposite of what we do. we basically want to turn things up. >> turn it off. >> we're turning it up. >> let me ask you a quick question there's an article in "the wall street journal" in the last few weeks that suggested that some insurance companies are now paying doctors fees, like premiums to do things the way they want things done. here's a best practices, in solving these diseases. does that hurt if doctors are less willing to try new ways, instead of listening to the

insurance companies. >> i think it's all actually help us because if you look at the value of what they're trying to deliver with moderna, i think one is to do drugs that are undoable using -- because we can get protein inside cells. two is the speed. the way we think about mrna it's like software. you send a message and it makes a protein. so we have a speed advantage which is fantastic. we make them in weeks. and so that's really help you in term of development which if you look at one of the drug's that's expensive it takes so much money. >> the rna you make the exons are already gone. >> it's a -- >> but is your problem -- >> all the science -- i have -- one policy question they're going to kill me because we're going to run out of time. you know we got to go. i'm going to ask you during the commercial break. we'll do that in just a minute. >> whee we come back jim cramer live from the new york stock exchange. we'll get hills thoughts on the

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all right. let's get down to the new york stock exchange, cramer joins us now. we talked about inflation.

you were one of the people i was channels because it's a huge divide between people that think it's going to be an imminent problem and people who think it's not. you still tend to think that inflationary expectations are well under control. >> well, the main kinds of things that are driving up inflation tend to be related to weather, and i think the word "noisy" was a good word that janet yellen used. the markets seem to agree with me. it's the stock market. say, listen, that isn't what matters. i'm stuck with the target because the people at home are stuck with the target. i'm not a bond trader. looking at the food stuff going up, if we got some rain, able to get the end of the drought, those would have gone down. gasoline, obviously, we're not related to u.s. production, rem related to world production, hostage to iraq. it's credible. do i want everything to be terrific?

yes. has it been that way since 1982 with the dow at a thousand, no. but i'll take it because i'm an equity guy and equities react to positive. >> yeah, everybody that thinks it's coming talks about labor that we're under a false sense of, you know, that because the number of unemployed americans is so large that we can -- we need to hire a bunch of them back before there's any wage pressure where the other people made the point that the ones we want to hire are scarce and that the other ones are gone for good. so i don't know how that -- >> well, of course, there's a mismatch between where the jobs are and where the people are because there's ten states begging for people to come to work. larry fink raised the point, the tuition drag on the country. it's the single biggest thing that impedes household formation, impeding construction, impeding jobs. larry was a great guest today. he was just a fabulous guest, and he really tells the truth, and, wow, i just take a cue from

him. he is so good. >> excellent. all right, so are you, jim. >> thank you. >> all right, see you later. by the way, i saw jim yesterday, had on a fifa shirt. he looked good. >> he did? you notice like that? >> i was watching on a plane. >> i'm buff. >> yeah. when we come back, t-mobile offering iphone tests, and we caught up with the ceo spoke about that and possible merger with sprint." squawk box" will be right back. you used to sleep like a champ.

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welcome back to "squawk box," t-mobile letting iphone users test drive the product, a simple choice plan, the company looks to work out a deal with sprint. john ford spoke to the company's ceo yesterday, john? >> hey, andrew, yeah, it comes down to if it's working, why not keep doing it. they added 1 .3 million subscribers, and at&t and verizon combined offering consumers contract-free access to the network, some other things as well, and t-mobile's ceo who has fashioned himself as both a corporate turn around artist and the mascot for the

company, free music and easier way to try out t-mobile's network. take a listen. >> you can go on to the website that'll be distributed, t-mobile test drive, and you can sign in, two days, you get a fully loaded iphone 5 s unlimited data plan to use for seven days to marvel in the experience of the network, especially people in new york, where you are, and at the after seven days, bring it back to a store. no down payment, no charge. put a credit card up, but that's for security, but there's no charge, no ov rang, and this is a chance for verizon, at&t, and sprint customers to have a seven night stand. cheat on your carrier. >> this is important because it gets t-mobile iphone 5s's who think they do not need the phone or plan, and offering free music

streaming services. think of it this way, t-mobile has more wireless spectrum and network capacity than customers. it's like a big bar offering major happy hour specials to draw a crowd. listen. >> we're not a media or entertainment company. we're a wireless company. that's what we spend our cap, providing capability to customers to let them seam leslie use services they want on our network. that's what we do. we're providing that piece of the streaming network for free so they get used to mobility as a way they live their life. >> we'll see how the other bars answer, guys, back to you. >> all right, john, thank you so much. the question is is that business model sustainable if not for the purchase with sprint? a quick question, we don't have time to get into it. >> john, was he the front man for nine inch nails? i've seen him before. >> no. different guy. >> i wanted to get his views on the amazon fire, but i imagine

we'll have to -- we got him in-house, we'll talk again soon, and, yes, he'll be on "squawk aa all alley," the futures, barely budged after the move yesterday after the fed news. all of that is covered on "squawk on the street" have a great night everybody, we'll see you back here tomorrow. right now it's time for "squawk on the street." good thursday morning, welcome to "squawk on the street. we're on the new york stock exchange, favor is off again today. good to see you after a couple weeks away. >> missed you. >> beginning at the s&p after the 20th record close of the year, dow 39 points from its own record, two years of 25 7, claims in line, getting phillie fed in an hour, looking for clues of inflation. europe's mostly in the green as spain welcomes a