>> good morning and welcome to squawk box on cnbc. it is one of the most talked about fed meetings in recent memory. janet yellen and company gathering in washington for the conclusion of a two-day policy setting session. synchronize your watches everybody. we're counting down to the big decision. the statement and economic projections will be released at 2:00 p.m. eastern time and then a half hour later don't miss chair janet yellen fielding questions from reporters. it's all about patience and whether that one word will still appear in the fed statement. consensus suggests the central bank is likely to drop the pledge. that change could suggest a rate increase is coming sooner rather than later although a lot of people said even if they drop it it doesn't necessarily mean rates are rising in june. that seems to be what the market is prepped for at this point. you can watch the decision and

news conference here on cnbc. that starts at 2:00 p.m. with the announcement. 2:30 with the comments and questions they'll be taking from reporters. ahead of the announcement here is how everything is shaping up this morning with futures. you saw what happened yesterday with the markets. declines across the board for the major averages. you can see this morning things are barely budging one direction or the other. you can see positive arrows but these are gains of ten points above value for the dow futures. less than 1 point for the s&p and about 4.5 points for the nasdaq. >> a lot of people are buzzing this morning about a well-known hedge fund manager on wall street weighing in on what the fed should do. it's on the front page of the financial times this morning. an anticipated interest rate hike later this year could, he says, take a bite out of the economic recovery in a letter to investors he is arguing now that the move could knock over the apple cart. he says this is history

repeating itself to 1937 when the fed hiked rates after a series of programs to fight the depression and the after effects that the man behind the world's largest hedge fund suggesting that the fed should, in his words, air on the side of being later and more delicate than normal in it's approach to tightening. he writes we don't know nor does the fed know exactly how much tightening will knock over the apple cart. what we do know or rather what we do hope is that the fed knows which we don't know is exactly -- is how exactly it will fix things if it knocks it over. and that of course is the question. this morning he says we're all living in a managed depression and it will not end soon. so i don't know if you put him in that category but. >> all these guys are. can you be any more delicate than staying at zero for six

years? and christine lagarde, euro centric ideas. i'm afraid this may not be a one off episode. the timing of the interest rate lift off can still surprise markets. who is going to be surprised at this point. >> i love the headline in the wall street journal, the fed no more promises except for that we're promising this will be a very slow raise if we actually do go ahead with it. >> i see a lot of the people that talk about being delicate it's like a circle meeting. is that what it's referred to? a circle meeting? let some economies -- the notion -- let economies, let's go. let's take away the training wheels. let's do what we used to do. we didn't have zero for years and years and years. the idea that charging an interest rate for lending money

is somehow going to -- but this is what everyone worried about when we went so all in on this that we wouldn't be able to get out. is it going to be a problem getting out? >> you saw what he said in 1937. >> he manages money. >> everyone has a dog in this fight he is sets himself up because he expects they will be raising. >> this is the chart this morning. you can see what happened there to the -- s&p 500. we're looking at 1937. you can see where the drop i believe happened. >> were they at zero? >> i was wondering the same thing this morning. >> i do not have the details on where interest rates were in 1937. >> i hate whenever we go back and sometimes history repeats more often. maybe it rimes.

i don't know how many things are similar to 37 at this point however you wonder with appeasing and very scary parts that was the begin ofgning of the rise and you wonder now because we have scary events and we watch what happened in the middle east. >> the health insurer was hit by a cyberattack. they warn the breach may have exposed medical data and financial information including social security numbers. that's different than your health records. people are welcome to my health records, anyway of 11 million customers. in washington news senate republicans are going to unveil a budget proposal. yesterday house gop leaders unveiled a ten year blueprint which would cut deficits. we'll talk to house budget mitt tee chairman tom price at 7:15 eastern and breaking news out of europe this morning, protests

outside the ecb turning violent. police officials in frankfurt tell nbc news that seven police vehicles were set on fire during antiausterity protests in frankfurther. the new ecb headquaters is blocked off by barriers but some of the violent protests moved into the city center. our colleagues in europe will monitor the situation and bring us the latest throughout the morning. germany once had austerity in greece. maybe they don't like domestic austerity. maybe it's interesting that it's happening in a place where they're looking for everyone else to tow the line if they want to borrow more money from the northern economies doing better but austerity is not popular anywhere but we have to retire the term no free lunches. >> i'm trying to go back to 1937. i haven't tracked down interest rates just yet but if you look at things like inflation, inflation in 1937 was 3.6%.

you had president roosevelt that ordered a big cut in 1937. dropped it over two years by 17% at the same time taxes increase sharply because of the introduction of the payroll tax. >> if you're not worried about financial markets, people seem to be worried but if you just look at the u.s. economy it doesn't look like measures are needed. and whether the economy at this point would be derailed by a quarter point increase or even a one point increase i would say that probably wouldn't happen. it seems misguided to me. >> i think you really take things out of connection if you're looking at one data

point. inflation rates of better than 3.5%. when you have the federal government cutting it's spending over the course of two years and you have new taxes being added like a payroll tax for the first time all the factors in themselves have much more to do with just tightening. we're still chasing the deflation phantom which i don't -- i think that's starting a turn here. it's going to turn because the euro is so weak and if we didn't have that -- everybody says we're so far below 2% let's just stay. we're so far below, we're nowhere near it. if you were just looking at the state of the u.s. economy you'd say this is crazy. just looking at the jobs picture. >> these are emergency measures that we're still -- there's a crisis. there's no crisis. >> janet yellen is clear even if they start it does not mean quarter point interest rate hikes at every meeting.

>> but people also say why not stay here? how can it hurt? there's people that deny there's ever going to be any type of repercussions which they don't know. we don't know what the future brings. we don't know if money has gone to risky places where it shouldn't go. i guess i could argue if you knew for sure that nothing bad was going to happen. >> just let it go. >> stay at zero. >> stay at zero forever. >> yeah. >> why ever charge anyone to borrow money? i'd also print like $100,000 for every man woman and child in the country. this will stimulate the economy. go spend it. anyway sooner or later things come home to roost. maybe we're not there but all the circle meetings are all in a circle together. >> we put it all together.

i'm not sure which direction they necessarily need to raise in june or not but the fed is getting ready for it. >> it's all about removing a word that might indicate a quarter point sometime this year. >> all right. let's talk about some of the stocks to watch today. first up adobe reporting a smaller than expected rise in prescriptions and the current quarter earnings view falls short of consensus. the company was hurt a little bit by the stronger dollar. oracle is raising it's dividend by 25% to 15 krenltcents a share. jp morgan approving a buy back plan. shares down slightly down by about 21 cents. the programs are similar to a drugstore rewards program only with this time amex set up you

can earn and do things like earning points for making a purchase at macy's and use those points to pay your cell phone bill at at&t. so you get the benefits of those things. american express will collect fees from partner companies. they're coming off the news that they lost costco. watch shares of alibaba today. it's lockup expiration day. that means that a lifting of the restriction that prevents insiders from selling stock for 180 days after the ipo were there now. in this case about 18% of the shares outstanding do become eligible for sell. in recent days many banks have been slashing expectations for the companies shares on expectations that we will see a lot of selling and invariably that happens. we'll see what happens. >> this is part of the problem here. we're going to look at the futures now and they're not doing anything because we're going to wait to see what the fed is going to do. we can't make any determination without knowing what the fed is

going to do so we don't expect anything to happen because we need to know what the fed is going to do because the overall economy that's much less important than janet yellen and the fed. that's another reason i wish they would get out of the way. here's where we are. see what's going on? how do you get less than a point move in the dow indicated? you do not want to miss this opening today. you do not want to miss 9:30. >> you do not want to miss this. please let something be happening in europe. up .92. we might get a move on the dow. could have up a point or down a point. there's what's happening in europe right now. france they look like they're waiting although i will tell you that greece i haven't seen it below 700 but we were wondering if it would go below 800. i don't know what's going to happen there. >> i don't think anyone does. >> i don't think anyone knows at

this point. there's the asian markets. that's better. at least there's a couple of numbers there that don't have decimal points right away. 107 in japan. maybe oil will give us reason -- i like saying things like that. just because they're interest interesting. people that are long could call this volatility. >> you're now looking at between striking distance. >> this is more volatility, right? >> well it is volatile. >> for people that are wrong. >> that implies it might come back at some point. >> there's more volatility in the oil market because they're losing their shirts or something. and then here's the ten year. 2.03. 2% seems like a good place for the ten year right now. i don't know if we need to check it every day. the euro now 106. 10614 and then finally gold --

this is just dollar related. 1147. look at that chart. look at that chart. so we are down where at this point we could see some new lows at least in the last 12 months or so. here we are back down 1146. you don't see a lot of people deciding they need to hold that as a currency. >> not to belabor the point. one more thing about 1937. one of the things that the federal reserve did at that point was because of the banking act of 1935 and concerned about higher inflation rates the fed doubled the reserve requirements over the course of nine months from august of 1936 to may of 1937. the higher reserve requirements restricted the amount of money that banks could handout. that tightened lending at that point and that was probably a big cause of it too. not just raising interest rates but telling the banks they had

to double the amount of reserves over the course of nine months. >> it's not similar to where we are today but similar to where we were two years ago on the reserve issue. >> right but it sounds like a much more gradual and much smaller squeeze in terms of those issues too. anyway let's give more of the global market story from one of our squawk market masters this morning. joining us from hong kong is the editor and publisher of the bloom, gloom, and doom report. what do you think about these moves of central banks. not just here with the federal reserve but around the globe at this point? >> well basically at the present time about half of all bonds, the yield less than 1% and in europe we have next to zero interest rates in some countries and what is also interesting is that the paper of portugal italy, france and

spain all yield less than 10 years u.s. treasury notes. so in other words the policies of central banks have distorted financial markets and misallocated capital in my opinion. that's why i set about to rectify you about this point. last time you interviewed me i said in europe i would see betterer performance of equities because many equities yield say five times more than bonds where as in the u. s. the s&p and the 10 year treasury note have about an equal yield. so i think that actually this year european stocks unhedged could outperform the u.s. >> unhedged sure but if you are a u.s. investor investing with

dollars you're looking at much different returns and mark if you're simply looking at. >> sorry, yes you're looking at different returns since the beginning of the year if you invested in german stocks in the dax you're up 5%. seems to me a different return from the s&p basically flat. >> this is true. however when you start looking at some of the volatility and whether or not investors are willing to take a risk on that let's just assume that the fed does go ahead and start raising interest rates as early as june if that happens what does that do to markets around the world? what does it do to stocks in the united states? and what does it do to other stock markets? >> in my view it wouldn't be tragic for u.s. stocks they

would order and move. before you discuss what happened in 1937. yes it's correct. it wasn't just an inkeys in rates. it lead to stocks coming off again. in this particular instance i have to say the fed and other central banks would have to increase interest rates quite substantially to really knockoff stock markets but there is one point i'd like to make in my view the fed will not increase interest rates this year a because of the dollar strengths and b because the recent economic data has rather been disappointing and the economy simply not taking off. so i don't see that it will be an interest rate increase.

>> i agree a lot of the economic data has not been great but when you look at what's happening with the jobs market and unemployment number dropping so rapidly there's plenty of people that say it will be difficult for the fed not to at least raise a quarter point let's say in september. >> what is a quarter point? >> exactly. >> and it would be interesting, you know unless the fed goes with fund rate to about 3% it's quite meaningless. now what is meaningful i would say is what happens to interest rates in japan because at the present time japan spends 43% of its tax revenues on the interest payment on the government debt and we have our low interest rates in japan as well.

they are around 0.4%. so if the interest rates in japan doubled, all the tax revenues would have to be used for the interest payments on the debt. then you come into a situation that potentially could be very dangerous. >> which stock market do you like the best? you mentioned how germany has definitely out performed but if you're looking at the rest of the year where would you tell somebody is your favorite place. >> well depends on your risk profile. i think this year europe will out perform and i think actually that also european real estate is relatively attractive because the yields spread between the yields on commercial real estate and bond rates and bank deposit rates are huge at the present time. i also think that there are some emerging markets that will out

perform the u.s. since the summer of last year the chinese share market has enormously outperformed the u.s. we have been going up very strongly. last year india outperformed the u.s. very meaningfully. so there are some situations. i happen to quite like chinese stocks and let me explain why, i think overall, the economy is weaker than what the government is saying and i believe the economy will deaccelerate further. it's been a underperformer over the last 7 years compared to other markets in asia and the rest of the world and u.s. in

particular. the u.s. government has the tools to essentially ease. they will not up for having it because it may suit them to have a strong currency in the long run. they want to establish the yuan as an international tradeable currency that grows in importance but they have other tools and they could ease and that may move money into equities in particular now that the property market is weakening. so the money no longer flows into the property market for speculation but into the equity markets. >> okay. well mark it's great talking to you. we really appreciate it and we'll see you again soon. >> thank you. >> in global news israel's benjamin netanyahu soundly defeating his chief rival after

a bruising campaign. hadley joins us with more from telt -- >> good morning. >> it was a race fought on security. also fought on the economy. many saying the prime minister hasn't been doing enough to help the economy. and of course the question now will be how right leaning is his next coalition going to be going forward. this raises serious questions about the foreign policy of israel going forward. the eu has been putting pressure for a couple of years now in terms of the palestinian issue and we have the israeli relationship as well and sere warehouse things to be looking at and many members of the business community telling me privately that they're worried that the prime minister is

isolating them here. even in the worst days of the financial crisis they got $9.5 million of foreign investment. so it's certainly a concern for many here in terms of going forward and in the economy here at home they're telling me that business administration is going to try to redistribute the wealth. they're trying to make citizens happy but that isn't good for the bank. so serious concerns going forward guys. >> thank you for that report this morning. coming up when we return we'll talk about scary news for anyone that loves mac and cheese including those in my home unfortunately. the details on a big craft recall next. we'll talk about that. but first here's a look back at this date in history. ♪

now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. craft recalling $6.5 million boxes of mac and cheese because some more pound to contain small pieces of metal in them. the best when used by dates of september 15th 2015 through october 11th 2015 are

displayed. they had 8 consumer complaints and no injuries so far have been reported. >> these are original recipe. >> right. >> mac and cheese. we go through spirals. >> we like archie. >> but we go through spirals. >> it's a little character. >> is there a spongebob one. >> it's arthur. >> bingo. >> i know arthur. you know the powder i think that the first lady -- she said powder is not food that stuff you put in there it turns it to -- >> i know but if you're going to be progressive you shouldn't be serving this ever. >> ever ever.

>> natural, unpasturized cheese grown yourself. >> in you're worried about ingredients, added things. >> what's the other company that does it now. >> that's all organic now. do you know what i'm talking about? >> i do. and the gummy bunny. >> someone that writes in all the time is pretty clever. not circle meeting. circle joke. it's a circle joke. >> right. >> everybody is in on it. >> everybody is in on the joke. so it's a circle joke so instead of a circle meeting which -- >> sounds funny. >> we were talking about that earlier. >> and no jerks are allowed because they don't get the jokes. >> when we come back this morning why the head of the

google research lab says the giant should have curbed the hike behind google glass. take a look at the zap 500 winners and losers. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

thanks. >> welcome back everybody. we are in the chairs talking about some sorries that caught our attention today and you know how social media buzz is something that companies ever where really try to build up. they want people to want to engage with them on social media. well too much of a good thing can be a bad thing as ikea is finding out. apparently online there have been thousands and thousands of people. more than 19,000 people that signed up to play hide and seek in a ikea store in amsterdam and another 13,000 signed up to play hide and seek. these are impromtu raids. it's not anything they asked to but it seems like a great place to play hide and seek. >> do they play music while this is going on. >> there's somebody hiding. >> if you have ever been there it's miles and miles of

furniture. but apparently ikea said please don't. find somewhere else to play hide and seek. >> the winner like we were just talking about the old joke the winner might be like you'd find someone like a dead person. >> nobody found me. >> hike three months. >> really won though. no one ever. >> anyway never occurred to me play to hide and seek there but seems like a pretty good idea. >> do you still play? >> with the kids? >> with the kids now all the time. >> you live in an apartment in new york. >> we do and we find new places to hide constantly. >> 4-year-olds you can hide anywhere. >> you're right. you probably could because it's expansive i think and different floors and wings. >> with my son i can hide in the same closet every time and he won't find you. >> are you allowed to use the servants quarters to hide? can you go actually over there where the staff lives. >> no but you can use the service elevator. >> oh you wish you were privy to

that whole discussion. >> that's good. >> there's a regular elevator and the separate service elevator. >> i was at a restaurant last night. >> were you. >> okay. give him the tip he deserved i bet. >> we have a tip on google x. we give him a hard time about his glasses because they look like the google glasses. the head of google x that manages the crazy new projects they're doing has come out and said that the company should not have hyped all of these glasses the way they did. if you go back and look at the media coverage in the past two years of this thing and they apparently knew it the whole thing it wasn't -- >> i remember there were pictures on the subway. >> he used to wear them where ever he went. we all thought this was the future. >> maybe we pushed the stuff before it was actually ready. >> i don't know. i still don't want them.

anyway i heard the story i bet you heard they may have found his bones and i am trying to figure out, number one, do you always people of note do you want to know -- i guess you want to know where their remains are but this is fascinating because don quixote is the first major western novel and what i didn't realize was that he was a contemporary of shakespeare. they both died in 1616 on the same day. >> on the same day. >> on the same day? >> the calendars were different so actually it was a ten day separation but both april 23rd although some say he died on april 22nd. they lost his bones in 1673 so for the last couple of years spain has been looking for his bones and they think they finally found him in another place where they found an m and an c. his first name was miguel or

whatever. anyway what we don't realize mark twain -- >> those are bones? >> yeah. they're pretty sure. the forensic stuff issing going to be hard to figure out but all the things that have come from that novel. don quixote was a night that decided he wanted to bring back chivalry but apparently no one had ever written it and i feel guilty. and now i think just -- did you ever read it? >> i did not. >> weren't you an english guy. >> i read it in high school. >> did you read it? >> yeah but i don't remember massive parts of it. they made us. so it was homework and you don't enjoy. like going back and rereading all the stuff i read in high school now when you don't have somebody telling you have to read the stuff is much more enjoyable. >> i think of classical novels as written in the 19th century and this was written in the 16th century so it's almost like

renaissance art but it was an actual novel but would you like people to be looking for your bones? you'd have to be pretty significant. >> kind of creepy though. >> if they really do determine that it is and they think it is then there's going to be a huge memorial vote there for the 400th anniversary spain even spanish language they tie a lot of it. >> who pays for all of this? >> pain. >> it was outside the country. >> probably huge tourist attraction too if they do it. >> do we do that? >> i don't think we did. we cooked a few turkeys in the 17th century. >> if you go back you can go to mt. vernon to george washington's home. you can go back to robert e. lee. >> you look at us and think our culture, our cultural icons and works are like 100 years old. >> we build presidential museums. we do.

>> the question is who is buried in grant's tomb that's the question. >> grant i think. >> maybe. >> oh this is me. when we come back this morning, small business long hailed as the engine of growth. which are borrowing the most right now? what does that tell us about the larger economy. we'll talk to the lenders focussing on them. after this. ♪

can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ the answer is yes, it can. so, the question your customers are really asking is can your business deliver? now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte.

plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. small business optimism

ticking up next month. they're now investing in their companies and demand for capital is booming. steven is the founder of merchant cash and cap poll and we think about sometimes the other thing to note steven is what small businesses if they are in trouble and they need cash that's one type of loan but if they're actually in a good position and they're going to expand and they're optimistic that's a different position and that's what we turned to now instead of needing cash. >> correct. we have seen a tremendous shift over the last three or four years in the use of proceeds shortly after the recession most people were taking money as a lifeline to try to survive but now people are taking it to grow, buy inventories, open new locations, hire more people and it's been an exciting story. >> you wouldn't change your interest rate based on how desperate people are, would you? >> no. >> there were 20% loans when they needed it and now they're back down to 4 or 5%. that's against the law i'm sure.

>> we don't do that. technically we're actually not a lender. we buy future revenues at a discount but our price as good based on an applicants credit. >> in addition to that shift you have seen another shift you noticed in term of general optimism among the people you're dealing with. >> no doubt about it. >> in the last six months last year? >> in the last year our business has doubled and small business owners are normally reluctant to take on a lot. >> how much money are we talking about average? >> our average size around $40,000. we go from 5,000 to 300,000. >> so you are talking, these are mom and pop small businesses that like really this is the area where we really wish would recover because of middle class, the income disparity and everything else. these are the people we would really like to do better. >> we finance about 1,000 her chanlts a month

chanlt -- merchants. mom and pop diners and restaurants. auto parts and hair salons across the spectrum. >> are those the improvement in sentiment or are there certain areas either geographically or by type where they're feeling better? >> i think we see a bunch of increase in area where is the housing market has recovered. where the economy has been down for awhile and you start to see that recover but generally as labor has tightened business owners become more confident. people are outspending. oil going down put more money in people's pockets. spending is up a little in the small businesses. >> so these are too small for established banks to be involved with? what's the deal there? why is this huge niche available to you? why is it left? >> prior to 2008 we were postally financing the unbankable. you know restaurants, retail businesses that had a lot of cash at some point or weren't

open long enough or didn't have credit to qualify for bank financing but since then it's changed as more institutional money has come into our space we can create lower costs and longer term products and there's been an influx of technology. we can approve a loan in 10 seconds. we can fund in about two hours. >> why can't a bank do what you're doing and do it cheaper? . their cost of capital should be lower. >> cost of capital is much lower. i don't think that the banks are willing to do a $40,000 loan. >> it's just not worth it to them because the risks are too -- what's the distinction? >> they're not nearly as automated as we are. we're a nonrecourse product. people can come into our portal and in 20 or 30 seconds find out whether they're going to have an approval. it's a much more seamless

process. >> what are your loan rates? >> we charge off around 8%. >> what do you think of the new services on deck? do you feel like you're competing against them too? >> on deck is a direct competitor of ours. we do a lot of business with them. they have done a fantastic job. they brought real awareness to the space and we're like that. lending club is a little different. it's more of an income statement business and we hold the vast majority of deals on our balance sheet. >> okay. >> sounds good. >> thank you. maybe you really are doing god's work unlike goldman sachs. >> maybe. >> except for those 20% loan shark rates during the crisis. but you didn't do that. >> we did not do that. >> would you business be if we went into another real slow down could you be at risk again? because you have no colallateral for this stuff? >> we could be.

>> thank you. >> when we return we'll talk about oil prices dropping more than 12% in the last week. we're going to talk all about it. what's driving the moves in crude and whether rbc's chief commodity strategist is going to be right about the next call in a moment. you can't predict the market. but at t. rowe price we've helped guide our clients through good times and bad. our experienced investment professionals are one reason over 85% of our mutual funds beat their 10-year lipper averages. so in a variety of markets we can help you feel confident. request a prospectus or summary prospectus with investment information risks, fees and expenses to read and consider carefully before investing. call us or your advisor. t. rowe price. invest with confidence.

welcome back to "squawk box." oil prices dropping sharply by a

number of factors including a recent rise in stockpiles, uptick in prices. and the chief strategist for rbc capital markets. let's make this a little more difficult. >> of course, we can do that. >> when you were here in december, oil was trading at 64 bucks. you said the bottom -- >> i know. >> the bottom was $63. >> i know! we missed that one. zpr so what happened? >> well look i think one of the things we missed was the resiliency of u.s. production. we believed in the face of prices that you'd start to see the u.s. production coming up. what we're seeing u.s. protection is continuing to grow. >> we needled you a lot that day, too. >> you did. it was fantastic. >> and now it's down - where is the bottom this time? >> dare i ask, where is the bottom at this time? >> people were look at what is

the thought of '08 or '09. we still thought that was wiped out that nieb the floor. short term what you want to watch for is there some type of deal in the program. if you combine the sense of oh my god i've got a million extra barrels of crude coming back into the market that will add to the supply glut fields. >> there's a speculation that the israeli elections matter how do you think? >> i think they do. if you look at january there was really bipartisan support for new sanctions on iran. i think they kind of lost momentum on that. and the question is will democrats defy the president. he says i really need this deal. so i do think having netanyahu there i think potentially congress doesn't rely on the sanctions bills. sfwr we say there's an uptick in lebanon production. >> libya is the somali market.

the places where you grow production will be north america at this point so what we've seen as a result of the share revolution is, the question is who's going to spliet market? new york. america. opec is not growing at this point. >> why are we still growing? we thought it slowed down but it really hasn't. >> some of if is costs are coming down. producers are becoming more efficient. and hedge productions i think there's expectation out if it slows it slows in 2015. >> give us the final numbers so we can give you a hard time in a couple months? >> do i think by year end we will not be in the 30s or 40s do i see a potential recovery by the 60s year end going into 75 in 2016? yes. >> you do? >> i do. at some point the cuts are going to global through. you will see an uptick in demand

in 2016. grill me next time. >> we'll have you back. we'll see where it goes. >> it's the amazing. from andrew as we point out last time every $10, people that do this for a living it always looks like you might be making a bottom you just never know. commodities are crazy. stock market -- >> some of it is so political if you go into a june 5th political meeting and the saudis say we have had enough and peel off a million barrels, things change. >> it is amazing. i'm still waiting for it to be this great boon for consumers and everybody else. something good should happen. coming up -- it's decision day for yellen and the big fed. will policymakers lose their expectations? we'll talk that word -- expectations. remember, the expectations is another term that it moves substantial --

>> it replaced a different word too. remember it was a very long time or something.

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we are on fed watch today. and it all comes down to one key word in the central bank statement. >> hold on a second. >> huh? >> today's word is patience. >> grim brandt and black box's jim rosenbergers here to talk about fed hikes. >> patience! earnings alert. fedex delivers results but will they stack up to the street's expectations. we'll break down with analysts. and protests in germany

clashing with police ahead of the new ceremonial opening of the ecb building as the second hour of "squawk box" begins right now. >> announcer: live from the beating heart of business new york city. this is "squawk box." ♪ welcome back to "squawk box" this morning. right here on cnbc. first on business i'm andrew ross sorkin with becky quick and joe kernin. the fed expected to lay the groundwork in the first interest rate hike in nearly a decade. steve liesman joining us live from washington in just a few minutes. take a look at u.s. equity futures. see how things are standing up. they're dropping in the last 20 minutes. dow about 46 points off. nasdaq 6.5 points s&p 500 off about 5 points this morning as we all the way for this word "patient," not patient, what's going to happen?

>> again, for a while, nobody was willing to place a bet but now it looks like there is some effort being made to push things a little lower this morning. we also have a developing story for you this morning. thousands of anti-capitalist protesters clashing with riot police in frankfurt. just hours before the ecb's new $1.4 billion building. protest leaders say they want austerity politics to end. several police cars were set on fire. police are saying about 90 officers were injured by stones and other items thrown by the protesters. police used water spray and water cannon to make a path through the supporters. israel's prime minister benjamin netanyahu winning a decisive victory after a bruising campaign. opinion poll taken just four days ahead of the election gave the zionist opposition party leader a four-point advantage.

and continued to settle the occupied land. also keep an eye on shares of alibaba today. that means prevents stocks being sold for 180 days an an ipo. about 1800 shares will be siebl for recent sale. check it out by now, down by 65 cent. investors anxiously awaiting the fed statement at 2:00 p.m. eastern this afternoon, plummeting all prices. strengthen dollar have all thorred the u.s. growth picture, complicating the fed's decision. cnbc's steve liesman is in washington covering a main event which includes a news conference with the said chair janet yellen. steve, different outlets talking about, once again, on cue, some of the economic numbers have weakened a little bit going into you know this -- i'm not even going to say it

all-important -- but going into this meeting today. and so we don't really -- we're not really sure where we are. but they seem to feel that the economy is in a much better place. and that will probably be the thing that we take from this right? >> how did you do that whole intro without saying "allel leyes" joe? >> we actually say -- at the end of the day, all eyes will be on this going forward. >> what if all eyes are on the exact opposite thing, joe? >> that's a good idea. >> what i want to do is move a little beyond patience and let people at home play the fed game. be a policymaker. look at the world the way the central bank does at its meeting. and that would be compare the economy to what we know now as joe indicated softer overall growth. not bad but softer overall growth. a still strong job market.

here's yellen's dashboard. to compare with the january meeting. headlines come down quite a bit, running minus zero 1% year to year. core is the same. expected to decline. unemployment rate took a tick down from the january meeting to what they know now. payroll growth three-month average, about the same. but there's that big decline in the euro. it had had already fallen and now it's fallen some more. moving on looking at that softer growth we used the cnbc rapid update on gdp. which had been tracking north of 3%. not fourth quarter is track 2.2%. and the first quarter tracking just 2%. it's about in line with where it's been but quite a bit from where was. one other thing the fed will look at financial market indicators. the dow is actually higher from where it was back before the january meeting. and look at that tenure. it's already been as far as the fed is concerned about a quarter point built in. that's because of things with

stanley fisher told me get ready for interest rates this year. that's what he said? so the fed probably removes patience. lowers its assessment of the economy and signals it will await confidence in the inflation outlook. i think that's the key before raising rates. still leaving the impression that rates need to rise. i'm looking for the fed. remove patience guy. playing that word game. just like we were signal patience as well. >> we are joined by jeff rosenberger, chief investment strategic for fixed income at black rock. so many different angles jeff pipe remember in the past i can't remember your basic stance. i don't think you wanted them to hurry in the past. were you looking for 3% on the ten-year? there's something that i remember disagreeing with you? >> our expectation for the ten-year is 3.5%.

we talked about the fed can raise interest rates and it's all about that pace less about is it june is it september? it's really about what happens the day after the fed raises rates. we talk about what is the pace of normalization. >> we had had a discussion earlier. and the word now is so divided in almost every issue with people on one side. >> yeah. >> sand we're farther apart than we have ever been. there's cats and dogs people. there's people paul krugman and others who say it's absolutely insane to even consider raising rates at this point. and there's another point that say we have crisis conditions with a 5.5% unemployment rate could be at zero -- both people think the other side is insane. >> right. there's a huge gap there. >> who's right? >> i believe there's a bit of a middle ground. raising interest rates off of zero interest rates is not

tightening. the fear that he we were-v the fed raising rates is not the same. it's tightening but it's still massive -- >> it's tightening but it's not tightening. it's a quarter point exactly. >> i understand. but people once again on the other side say it is tightening. >> did you see this 1937 comparison? >> yeah, that's one of the fear. >> is that the right comparison? because becky made some really interesting points about all. other fiscal things and stuff going none washington at the time beyond interest rates unto themselves? >> without a doubt. the '37 comparison looks only at the model. the fiscal economies were more significant to what was going none the economies. the compares is more to what the ecb did in 2012. they raised interest rates, they made a mistake and they had to take it back. >> that's a good comparison.

>> yeah. >> what did that mean? i remember it seemed like the ecb was crazy raising rates. they eventually had to pull it back. you could say there were a lot of things happening. >> the ecb was quite defensive about this. you had a fiscal crisis on in the eurozone which had probably more to do with the ultimate weak innocence europe than what the ecb did. but certainly, a lot of time lay blame at the foot of ecb that they raised interests rates that didn't help. that's a concern of the fed here. i don't have that viewpoint. i think having zero interest rates or emergency levels of policy were running tremendous growth in jobs. the inflation picture, one thing steve didn't emphasize enough in his opening piece is that this statement is going to shift our focus to the inflation side. right? if we remove patience it's going to be replaced with reasonably confident in what -- in the outlook of inflation. the oil price story, headline or core inflation it's going to get

the message very confused. but the labor market picture has clearly turned to where you no longer need zero interest rates. how quickly you normalize is really about that outlook. >> but has the labor picture changed to the kept that where we've passed the inflexion point on wage inflation? where we're now in a position where people start racheteting up their estimates for wage inflation? >> so wage inflation is a lagging indicator. we haven't yet seen it. the lead indication for wage inflation, that's where we see it in that six months. you should see wage inflation. you've got to start moving now. >> is there too many complacency globally about inflation never being a problem again? >> i'm not sure there's complacency with inflation being globally a problem again. we have complacency with zero

interest rates, fuelling market gains or behavior and no belief that the fed can normalize and bring back in degree of interest rates -- >> without a big hoopla without a big crisis? >> well i think they can do it without undermining the real economy. the financial market implications of that are much more uncertain. typically when the fed transforms that policy you have a period of heightened volatility. >> so i just wonder the people that say -- because you just inflation is going to be quiet for years. that's maybe why the people on the other side say why not just stay easy? if your goal is 2% and you're nowhere near it then you ought to keep the spigots over because you're trying get to 2%? >> right. we're not talking about an inflation problem. we're no longer talking about a deflation problem. the issue why you don't want to keep zero interest rates forever

that in itself creates problems. it creates financial instability concerns. and there's a cost to having persistent zero interest rates. >> you sound pretty -- you sound good. >> thanks sthanks. you sound like this is all going to be okay. we can do this. the economy will continue. we may have a little tumult in the financial markets? >> yeah the issue is the markets are not prepared for normalization of interest rates. there's a disconnect in the short term. there's certainly a disconnect between the market's belief in low for longer. and what the fed is indicating they're going to normalize. and that is going to have to come together. and when it does that will be a better situation, but getting through that may be a little difficult. >> you talked to larry about this? >> yes, we talked. >> you guys agree? >> yes, we do. >> how often do you disagree? >> well as often as we agree. >> he just doesn't tell him? >> right. >> thank you. we've got a reminder for

everybody, cnbc will have complete coverage of the fed's decision and janet yellen's news conference at 2:00 p.m. today. the gop out with a new budget proposal that would slash spending by $5.5 trillion. that's trillion with a "t." we've got tom price to join us next. and jim grant with the grant proposal going to weigh in on what he calls the virus of radical monetary policy. plus your dream of owning a european castle may be actually closer to reality. why you can live like a prince at copper prices. erper erper erper -- pauper prices. stick around.

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plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. ♪ welcome back to "squawk box," everybody. keep an eye on shares of general mills today. earnings beating the street. and the company says it does expect strong growth to continue in the current quarter. check it out that stock up by just above 2%. in just a few hour the house will begin with chairman tom price's 2016 budget.

before they meet representative tom price joins us right here. the proposal would reduce spending by $5.5 trillion with a "t" over the years. and chairman price is here to explain the math. good morning to you. >> good to be with you this morning. >> let's walk through the budget real quick because i've got a lot of questions about it. but you would sort of give us a quick head line how you can reduce it by $5.5 trillion. >> we're $18 trillion in debt. the interest rate that you just talked about significant drive outlays the increase by the federal government. so what we've got to do is get the spending under control and grow the economy. the way you get the spending under control, you begin to reform the large programs. we put in place a large program to save and strengthen medicare. we allow the states the kind of flexibility that they need to be able to respond to that population. we put in place a guide path for

appropriate tax reform so we can get this economy rolling and get it off the doldrums of this 2, 2.3% growth rate. it needs to get back up to its historic average. and if it does, the federal government sees huge increasing revenues coming into the government because of that more vibrant economy. >> you missed one of the other headlines which is to me repealing obamacare which is a hot button issue in this country. let me ask you this, when the president made his budget proposal earlier this year republicans and frankly, even some democrats scoffed and said this is a joke. this will never happen. he is laying it out and there will be a headline for a news cycle for 24 48 hours that will be the end of it. how is this different? >> this is different because for the first time in six years we've had control of both the house and the senate so we can reach an agreed-to budget in the congress which is a novel thing over the last decade. in addition to that there's a process called reconciliation

within the budget mechanism that allows us again to get a piece of legislation through the house and senate. to the senate with 51 votes can't be filibustered and get it to the president's desk. the problem is who is trying to solve the challenges that we have to get this economy rolling again? and who's standing in the way? i think the american people will get a great education about that over the coming months. >> and what is the chance that any of this gets enacted? specifically the repeal of obamacare? >> well, obviously with this president in office that's not going to happen. but what is going to happen the american people are going to recognize that there are folks here in washington fighting for them. the program as a formerly practicing physician the program doesn't work not just from an economic standpoint but from a health standpoint. there are a number of. individuals who gained coverage through the program. that's a good thing we ought to recognize that. but what they've done is moved through a program where washington is telling them what

they must purchase instead of selecting the health coverage that they want for themselves. we think it's important to free up individuals so patients and families are making decisions not washington, d.c. we've got the program that will be able to do that and we look forward to laying that out for the american people. >> chairman price, how do you contend with corporate taxes? another big issue on this show that we've been talking to for a long time with no action? >> yeah tax reform is so incredibly important. we believe that corporate taxes ought to be lower. individual tax rates ought to have a lower rate. ideally it will be the same as the c-corp. rate so the tax rate is agnostic. and we think american companies, domiciles here who do business so far yaes overseas aren't punished to brings the businesses back to the united states. what we have is a budget with the ways aptsd ss and means to come

up with an alternative. we hope to at least work on parts of that in this calendar year. >> chairman price, we appreciate you coming on the program this morning. we look forward to see what happens today. with the viewers coming up at 8:10, we'll get reaction from the president's economic advisers jason fuhrman who i may recognize may have his own views of this. we'll show you what it looks like when a bomb squad detonates 20,000 pounds of fireworks. then reports from fedex and the analysts' reactions when we see them. >> announcer: time now for today's aflac trivia question. at its peak in 1973 how many tons of monetary gold was stored in the new york fed's gold vault? the answer when cnbc "squawk box" continues. and a gentle wavelike motion...

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today's aflac trivia question. at its peak in 1973 how many tons of monetary gold was stored in the new york fed's gold vault? the answer -- more than 12,000 tons. and check this out this morning, the police bomb squad in midland, texas, detonated 20,000 pounds of seized fireworks. the midland police department is helping the department of alcohol, tobacco, firearms and explosives get rid of the confiscated fireworks. it was gotten rid of during the day because it wasn't minute to be a fireworks show. but it was still a fireworks show. >> they should have saved that for july 4th. >> what a waste. macy's picked it up and brought it over here or something. it's come to this i was actually watching this game last night. the hampton pirates winning their play-in game against manhattan.

manhattan. yeah the jaspers. and the manhattan was supposed to win it's already an upset the very first night. think if you're hamton they got to play kentucky. they're taking on top-ranked kentucky in the first round of the ncaa tournament. they're like so happy. >> yeah we made it! >> we beat manhattan and now -- who do we play next guys? kentucky. anyway in the postgame news conference hampton coach edward joyner jr. his dad was a coach, too. asking for heavenly guidance. >> i told y'all i had jesus on speed dial. hello, jesus first of all, you can't play. they want to know how much of a mountain and what the odds are.

hello? hello? >> turning water into wine and fish into bread -- that's one thing. hampton taking on kentucky. ole miss defeating bnyu in last night's other playing game. and they will take on my xavier musketeers tomorrow afternoon. you may win, you may beat my brackets because i'm once again, if i'm going to pick upsets why don't i pick the upsets that i want to hope for. >> you're playing with your heart. >> no, just on a few. i'm picking xavier. and i'm taking cincinnati against purdue. >> that's the right way to do it. i would take purdue against cincinnati because my parents met at purdue. >> purdue is say big-time program. xavier has been pretty good. it should be fine. it's going to be great. i'm doing whatever nate silver says. >> no actually, i've nixed a

couple of these statisticians. >> i got grief last week. and i said do you want to explain what thursday and friday is going to be like -- yeah thursday and friday 16 games each day, i think. telling my wife about that. >> you're so much fun to hang out with. >> yeah. when we come back this morning, jim grant from grant's interest rate observer thinks that the fed is likely to stay patient on rate hikes. why he says we're addicted to easy money policy. stick around, "squawk box" will be right back. ce. you're quitting!? technically retiring, sir. with a little help from my state farm agent i plan to retire in 15 years. wow! you're totally blindsiding me here. who's gonna manage your accounts? this is a devastating blow i was not prepared for. well, i'm gonna finish packing my things. 15 years will really sneak up on you. jennifer with do your exit interview and adam made you a cake. red velvet. oh, thank you. i made this. take charge of your retirement. talk to a state farm agent today.

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♪ the key transport fedex reporting one number i see. this is one to use. $2.01. that is the expectations of $1.87. that worked out to $580 million profit on revenue. $11.7 billion which is $11.79

billion was the estimate. so the company also giving us a full-year forecast of $8.80 to 895. and the estimate right now is 8.97 but i wouldn't call that guiding lower. >> they tend to be conservative. >> and the company does expect a record fourth quarter earnings. and you can see at least at this point, that $2.01 looks real. because the stock is surging. up to 2.4%. and the company has called strong. strong third quarter results. the fedex ground segment $3.39 billion. average package daily volume is up 7%. >> that's interesting. revenue was especially flat. that's because in part you have lower fuel surge champrges.

we also talked about the unfavorable currency exchange rates which more than upset that yield that joe mentioned and the yield growth. >> that's an all-time high. let me just put up a chart here and check that. because it should be -- obviously -- well it's not. i think last year in december it got pretty high. it got up somewhere around 180. it might be above 180. >> after closing yesterday at $185.75. >> it might have been intraday -- let me see, yeah see it on what day did you say? >> i'm looking at 182.03 on december 5th? >> an intradate of 183.51 on the 12th of december, 2014.

take a look at future it's in last hour. they have dropped sharply in the past hour. the dow looking like they opened off of that close to 80 points. nasdaq will open as well 12 1/2 points down. s&p 500 looking at 8 1/2 points. quick silver and use of u.s. affiliates filed for bankruptcy protection. we imagine we may see more of this over the next couple of mops. exxon reportedly asking to reinforce taxes. arguing it overpaid taxes in the far northeast of the country. and a watchdog warning that fannie and freddie could need another tax bailout. risks rising due to shrinking reserves. literally every day i bet tweets from people who are a fannie/freddie conspiracy. >> i do too. >> not the conspiracy theory

but they have a view. they may be right. the whole thing becomes a real problem. about 2018 all of a sudden it runs out of money. >> we'll have to dig deeper into that. as we mentioned the futures lower ahead of fed's decision at 2:00 p.m. eastern time. >> the next guest is sounding the alarm. joining us right now is jim grant he is the founder and editor of grant's interest rate observer. he's also the author of mr. market miscalculates the bubble years and on. thank you for being here. >> thank you, becky. >> most of the people that we have spoken with say they expect the word "patience" to be removed and it may not happen in june and they do think the fed is going to raise interest rates this year? >> perhaps. that effect tracks gdp continuously with every new release of statistics. and yesterday, it came out and said that the first quarter was likely to grow by a mere 0.3%

annualized. and steve was on saying they were looking at 30.2%. and the rate is almost flat which looks at workers discouraged at still looking at 11%. and janet yellen in her very first fmoc meeting in 1994 came out with in favor of 54 basis points because among other things the dollar exchange rate was weak. the dollar exchange rate was very strong. i think the surprise might be that the fed reverts to its now very familiar stance of ease on the face of it.contrary it's going to remove "patience." >> you are for "patience" today? >> yeah. >> personally if it were up to

you, you would raise rates? >> i would reinstitute the price index in capital markets. first off, in the interest of hygiene, we should call this experiment what it is a contracted experiment in price control. perhaps the most critical prices in central banks the world over have been suppressing them. manipulating them and otherwise man handling them. in so far as price control it's never successful and never has been this experiment to when this demonstration will end. >> jim, i know this has been your view for a long time. none of us know how this movie's going to end. none of us know how is this going to play out. but is there a chance if the fed goes ahead and raises rates gradually beginning of this year things ease into it and the markets understand -- is there a chance that you would say that they did it right? >> well i don't think that the fed is going to do it right for this reason. i think that the fed on the one hand is suppressing and controlling this thing, this

price we call interest rates. and on the other hand the fed is virtually -- and i use this word carefully, virtually nationalized large-scale banking in this country through the most draconian and heavy-handed regulation under the leadership of daniel thorough. so the fed is trying to institute safety through governmental fiat as it institutes that through governmental fiat. you asked is it possible it wouldout yes. nothing is impossible in the markets but i think the odds are heavily against that because of the two -- the asphyxiating governmental presence in finances. >> i just wonder if this is the debate that will ever be resolve. your point is essentially we

will see another bear market because of the fed's markets? >> we'll always see another one of those, another bear market. and my point is come that time the fed will be duty-bound because now it's on record of saying this stuff works, it will be duty-bound to re-enter the market just as forcefully as it has done since 2007. so i'd say that the radical policy is in the political bloodstream, meaning that we can't go back now. they're bound to come in and do more. and what will more mean? more managerial control over banks? yes. more qe. more innovation to raise up interest rates. aggregate of demand as they call it. but what about this thing called free markets? we got to have them in my opinion. >> but that's almost an argument to not have a federal reserve, isn't it? >> yes.

>> and then we get to the bottom -- >> well, it's an argument at the very least for the reinstitution of free price in advance. the fed can change things how things look but they can't change what things are. and junk bond market is exhibit "a" in the example of this protracted -- the junk bond market is radically overvalued. overvalued with respect to price and coveted quality. that's the fine print that protects investors. so the consequences of price control play out silently. the benefits are evident. markets go up we like that celebrate. >> what about the idea that it's not just the fed at this point? you now have sentcentral banks -- >> oh yes, this is central banks worldwide. >> i don't know how we disengage

ourselves. >> the central bank has decided in the interest of human race they must raise up the stock bond and real estate prices which feels great as they're being raised but the cash flow must come eventually. >> jim, people that say everything is okay would argue -- would say -- i can't use that term. i'll use the phrase -- we are arguing a lot, that's the problem. if inflation globally were -- let's say it's 1% or zero. whatever you want to call it, then even though the fed you would say has orchestrated that for some reason the normal spread between inflation and where long-term rates are is kind of historically okay. it would be different if inflation was 6% in these guys that orchestrated in much lower interest rates. it's almost like they did it. and also the market itself did

it is that true? >> in a way, but a couple of sightings. one is that unemployment rate is 5.5%. over the course since the early eisenhower administration, when the unemployment has been 5.5%. the average has been 4.75 or so. >> we said either the 5.5 is wrong or the gdp, one of them is wrong. and people say the 5.5 doesn't really tell the whole picture? >> no it does not. it's always different otherwise the historians would have all the money. >> could we be in trouble because inflation is not price inflation -- that it's asset inflation, not price inflation that we're not taking into account? >> i think so. i think that inflation is an excess of purchasing power. consequence of which are variable. and this time, it seems to be playing out in the markets. >> i like what you you said the consequences are silent but the benefits we see immediately.

and that's what we're all worried about is what don't we know. you never know what you don't know. >> that's an entry of risk. it's so frequently what you aren't looking for. and the feds need to identify -- this is from the regulation side feds need to identify and then to stomp on it. but in stomping they are merely kicking it some place else. >> other side would say that manipulated prices aren't that different from where they'd be even if they been hadn't manipulated based on global inflation. that's what people say. we're not that far off where we would be if there was no central bank inner vention. >> that's why we have markets. >> that's right. i hope we don't know what we didn't know in 2006 looking ten years out. we don't want to do that anyway way or worse. coming up the euro is growing closer to parity with the dollar.

i'm looking at a couple flights over there. you got to go to europe. that can only mean one thing -- you guessed it. discount castles. i want to represent downton abbey. by owning your own home may not be as pricey as you think. anyway, that's next on "squawk box." cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. ♪ help northern china reduce its reliance on coal fire heating plants and prevent 60 million tons of co2 emissions?

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♪ so castles made of sand fall in the sea eventually ♪ welcome back to "squawk box." in the market for a castle perhaps? now might be the chance to pick one up on the cheap thanks to the plummeting euro. robert is here to tell us about it. >> if you dreamed of buying that tuscan villa or paris villa, now might be the time it's effectively 25% cheaper than a year ago. you combine that with the high taxes of france italy, you've got rising inventory and low prices. american interest in french real estate has tripled in recent years. 1 in 10 buyers the american

state brokers say the summer is getting filled up with showing for buyers from the northeast, and texas. in paris prime real estate in paris running around $2,000 per square foot. that's actually less than $2700 in new york city. you get a three bedroom in paris. $1.7 million. the chateau, 11 million uros which means $15 million listed a year ago. now $11.7 million. price cust $3.5 million. joe, i think you like irish castles. county court. nine bedroom, 60 acres. equestrian facility. tennis courts.

came on the market last june for 9 million euros. it's now down to 6.9 million jury uros. that's 5 million bucks off the original price at $7.3 million. in italy, this villa calls casa de luka. ten bedrooms restored house, pool, ten acres, stables, guest apartments outbuildings. an exhibition space and conference area 15 million uros. or 16.8 million bucks. that's down from $20 million a years ago. >> that's like a village. not a villa. >> it's huge. it's a former monastery. but the view is amazing. >> it's drafty. any of these have dungeons you know what i'm saying? you know what i mean huh? >> thank you, thank you for

asking the questions i wasn't prepared to ask. >> fifty shades of sorkin dude. the tuscan place does have a lower unused space. >> do you have anything in lower budgets? >> paris is amazing to me. compared to 2700 of prime real estate in manhattan. >> think of the french -- >> you get a two bedroom on park avenue or like some crappy place in west hampton for like $11 million. and you get that place in france. >> what's interesting is a lot of the private equity and commercial real estate guys in europe getting business deals are now looking around and saying i'm going to pick up property for myself. so you're getting a lot of these business guys going around shopping for their own real estate. this summer is going to be busy. >> when you get the new york

guys to laugh, that's when we know. when we get the guys around here -- >> in new york. >> because you're very guarded. would you get in trouble if you laughed at a dungeon joke or something? >> no comment. when we come back this morning, fedex just out with results. we're going to dig through a report with analysts. and we take a look at u.s. equity futures. we started out relatively flat. it's gotten worse as we go throughout day. dow down 71 points. s&p future down by 7. nasdaq off by more than 10.

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fedex posting better than expected quarterly earnings. joining us now, art hatfield managing director at raymond james. some of the numbers, like package delivery up 7%. some of these numbers other companies like to have. that's not a 7% economy, is it? >> well no it's not. that 7% number, joe, you refer to is. in their ground parcel business and that was helped by e-economy. they're doing well. they're just the overall growth in e-commerce propelled that 7% number. >> what the heck happened.

it was 180, 179 now 172. what came out after the initial stuff? >> well i think the initial reaction was due to the headline number for qe. the $2.70 number was better than what the street was looking for at $1.88. slightly better than what we're looking for, 1.87. then the company did end the high-end by a nickel in $9. everybody looks like the beat in qe and reduction in full year and they've got to take down fourth quarter number. signing that's the react you're getting here post the reaction. >> because we saw that too. we saw the guidance for 2015. and it was maybe -- maybe they were delayed trades. we were seeing -- >> that could be. >> but it all came out at the same time. people trade this stock crazily when numbers come out. i'd be embarrassed if i were a client and say improve got do

this immediately then you get a ten-point swing because you can't read the fine print. what you're saying if they beat this current quarter by -- what was it a 15 cent beater? >> about 13 14. >> you beat by that. then you high-end the guidance you already got an extra 13 cents and you're still lowering it. so people are just saying that the fourth quarter -- how does fedex know that the fourth quarter is go to be that much? >> especially when volume is up 7%. >> well keep in mind the company doesn't give quarterly guidance, right. where the street was for qe wasn't where the company told them they'd be. i think the street was cautious on q-3. it was hard model q-3 given the impact of the weather. this kind of volatility around the quarters is street-driven

with regards to where the estimates are for each quarter. >> street's at 2.86. so that could come down at least at 13 cents. we'll see, by the end of the day -- i don't mean at the end of the day, i'm saying literally, this stock, you don't know where it's going to be at 4:00. thanks art. jason furman of the white house reacting to the budget proposal. we'll talk to him and about what will happen with the fed's language in just a minute.

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patience is a virtue unless you are the fed. we dive into the fed's brands for raising interest rates and tell you how to play this market as we begin the countdown to today's big rate decision. the economic odd couple. >> i'll be by your side. i'll work with you. i'll nurse you. i'll bathe you. i'll light your cigars i'll change your typewriter ribbons if you fail i fail. what do you think. go to work. >> andy stern and glenn hubbard joining forces to tackle america's broken lob market. they're going to tell us why they're teaming up and the plan. plus the battle for

internet capitol hill all five fcc commissioners set to be grilled over the web. the man leading the hearing senator john thune comes to "squawk box." the final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york, this is "squawk box." good morning again, everybody, welcome back to "squawk box." i'm becky quick along with joe kernin and andrew ross sorkin. the fed decision is there. with the news conference that follows. the fed focused on what fed chair janet yellen has to say and the market is sure to react. this is the place to be as we get you ready for the opening bell. check out the futures this morning. when we first came in and started looking at things looked like futures up about 10 points for the dow. an 80-point swing, dows down by

87 points, cnns&p down by 7.5 and the ftse is up 10 points. and. >> a lot of stockings to tell you about. fedex earnings beating the street. shares of general mills getting a boost in earnings beating. and the company expects strong growth to continue. it also plans to cut 800 jobs. then adobe, reporting smaller than increased projections. and current earnings view is light. and oracle topping consensus and compete is raising its quarterly dividend by 25%. then nekis tar therapeutic, being a buyingeing a big loser today. its breast cancer drug didn't

reach its goal. and herbalife suggesting a district court has dismissed a shareholder lawsuit against the company. don't know how much that was weighing on the stock. pandora getting a bump. it cites more favorable counting cost scenarios. we have all of that but the real issue this morning is the fed. what they're going to say and do. let's get inside the mind of fed chairwoman janet yellen. with vice president of the american association of individual investors. we'll start with you, chris. tell us what you think janet yellen will do. and what you think she should do. >> look. i think what she's going to do is the following. "patient" out, likely to be replaced with that reasonably confident test they'll raise rates when they're reasonably confident inflation is heading back towards 2% over the median

term. they'll be reasonably upbeat on growth. watch for tweak, of the language on inflation. do they still expect inflation to decline in the midterm or muted in the midterm? what i'll be watching for in particular is the dots the rate dots. how far will they come down? i think they will come down for at least a quarter point not just for this year but the next couple of years now. if we see the fed acknowledging the dollar strength absorbing it in the rate path i think the fed will be able to cope. if the fed doesn't concede much ground on the dots then we could be in for a rougher ride today. >> charles, what do you think is going to happen? if they take the word "patient" out is it possible they don't raise any rate for six months so we're all battling over a word that's irrelevant? >> it's very possible.

i heard the fed chairman speak a few months ago and he said inflation has consistently been below the targets. the remove of "patience" just means they're taking a step towards taking the cast off the foot. and obviously, everybody is worried how the company will walk without its crutch an without its cast. but i think it's just a gradual step towards, during back to a more normal policy. i think most people are anticipating at some point, we will have removal of a cumulative policy and back to a more normal interest rate regime. >> kris i don't know if you saw the front page of "the new york times." the fed rate rise, risks 1937-style slump, in the recent report comparing the situation here in 2015 to then. and what turned out to be a terrible mistake. are these two periods comparable? >> i think those kind of

comparisons are a little over overwrought. look, there's no question that the fed should be careful. both in the times but more importantly in the pace of those early rate hikes. we're going to learn a lot about how financial market conditions will respond and how the economy itself will respond as we go. so, it's really important that the fed moves carefully and empirically. learns as it goes. figures out whether if needs to slow down speed up or carry on at a relatively gradual pace. >> you're sound be like miss yellen herself. what do you think should happen? >> look. i personally do not think that they should be raising in june. i do think the conditions are likely to be in place to raise in september. i'd like to see them move to begin with. say every other meeting. but making it clear to people that they're going to be very empirical. they're going to be learning as they go. and they'll tighter steer.

a little more slowly. based on how the economy responds. if they do that and they're very careful and do keep an eye on the dollar and its impact i think we'll be fine. >> charles are your sense of how investors will take all of this? >> we offered in january -- we asked our members how do they think the markets would react to the first rate increase. and it was mixed over half said either no impact or maybe a slight decline and then a rebound. a lot of the members are in retirement age and so the fed's then enemy of savers. and they actually would like to see higher interest rates but i think a lot of them expect that the rate increase has been priced in. and any reaction to the negative will probably be temporary and we'll see higher markets after a period of time. >> do you think that's right? do you think it's priced in? >> i think so. but then mr. market does have the personality of a 2-year-old

then all of a sudden he'll start crying as if somebody took his favorite toy away. i think eventually the markets will go back to focusing on earnings and on the strength of the economy. >> kris how much are we supposed to expect the strong dollar. we just did a segment with robert franken who told us about castles and going to europe. >> i think what the fed wants to get across is that it has to take the dollar into account in calibrating the path of rates over the next several years. but there isn't anything we've seen so far that suggests you can't raise rates. you're just going to have to do it a little more slowly than in a world where you have a more synchronized global expansion and monetary policy was going the same way in other countries as well. and it's important to understand the dollar isn't the only thing that's move be here. you also have the oil stimulus

and ten-year yield, and qe spillovers. i do think net-net, we're still going to have to deal with dollar drag. therefore, i think the dots should come down some. but i don't think it's anything that's going to prevent them from raising rate. >> okay. krisna charles, thank you for joining us. >> thank you. >> we will have the fed decision an the janet yellen news conference at 2:00 p.m. at "power lunch." chairman jason thurmond said it could be timing for the economy. and later solving the nation's employment problems. two opposing views coming together to try to find a solution. we'll speak to the economic odd couple from columbia university.

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welcome back everyone this is "squawk box." taking a look at the futures. dow down 75 points. nasdaq off by 13. s&p off by 8. this is all ahead of the fed meeting and the announcement that we're expecting at 2:00 today. tom price made the case for his case for the 2016 budget? >> we didn't continue on the course we're on. interest rate that you just talked about any increase in that drives significant increase outlays by the federal government. so what we've got to do is get our spending under control and grow the economy. >> joining us with reaction to the house's fiscal plan is jason fuhrman. he is the chairman of the council on economic advisers. jason, thanks for being here today. >> thanks for having me.

>> your reaction to the budget. >> look, we had a very successful year in the economy last year. part of why we did that we came together, we relieved a lot of the stress. we ended fiscal brinksmanship. now we're getting back towards fiscal brinksmanship. to the congress budget office we've cut our growth rate by half a point per year for the next three years. that would take a total of one million jobs out of our economy pipe don't know why we'd want to do that when we've seen a much more successful way to manage the economy. >> obviously, washington is setting us up for another battle where we could see government shutdowns again. we're looking at a congress where both house, controlled by republicans. price has said he's tried to provide a contrast to the obama administration which he has laid out. but you have both sides that did

thwart the other's plans with the house and senate. obviously, the president has the veto pen and can make very sharp cuts into anything that is proposed and put forth. what i wonder is where there's common ground on this. where there are things that can actually happen. or are we actually looking at another government shutdown? >> the president has offered a path forward. and the path is very similar to what congressman ryan and senator murray agreed to a year and a half ago. and that's let's relieve the sequester. let's do it in a balanced way where we're dealing with defense and nondefense. we have a lot of republican senators coming out as well. and that's paid for while reducing our deficit over the median and long run. that's the type of strategy that would help grow our economy as opposed to the budget that we put forward which really doesn't hold out a lot of common ground as i see it. and in fact holds out a strategy that would lower our economic growth over the next several years. >> do you think we wind up with a standstill and why a plan like

that has to come out and has to be negotiated behind the scenes? >> look i don't we don't have a standstill. the united states economy is growing faster. we're adding jobs faster and we should be able to continue that. and we can continue that by reaching an agreement on a budget that invests more in defense. invests more in nondefense. and there's no reason that we need to make a tradeoff. we can do that and we can also cut our deficit over the median and long run. and we can do that making the types of investments in infrastructure education that we all agree or what we need to help our economy grow. >> jason, the markets are watching today to wait to see what the fed has to say. we've seen very good numbers when it come to the jobs report. seen the unemployment number dropping significantly. do you think the economy is strong enough to withstand higher interest rates at this point. >>. >> i'll let the fed make that set of decisions. what we're doing is trying to do

everything we can to continue strengthening the economy. the budget is part of that but also reforming our business tax system and spending trade. there's a whole set of things which is what we're focused on. >> although it seems like the trade deals themselves have run into trouble recently. >> we're working through that process and we're work through the leaders and heads of committees in both chambers. we're going to keep pushing forward. and it's real important to our economy. and no reason we shouldn't be able to do it. >> when you are looking at your economic forecast how do you factor oil prices at $42? this morning, wti, how long do you think that lasts and what do you think it ultimately means for the american economy? >> we do our forecasts twice a year. the last one we did in november. lower oil prices are a plus for u.s. growth. it's a tax cut in the pocket of every consumer. every $750 a household that gets more spending. the spending percolates

throughout the entire economy. so looking at it today, it looks even better than it looked when we did our forecast back in november. >> you have been surprised that it seems to be taking longer than a lot of people had anticipated for those additional money coming into consumers' pockets to kind of find its way back out and be spent? >> analysis we've looked at it tends to be about four quarters until you see the maximum impact. at first, maybe pay down your credit card bill a little faster. and then you're in a better position to spend as the year goes on. so i expect you'll be seeing more of it as time goes on. >> one thing we have noticed from multinational companies in particular, they are definitely feeling the pinch of a stronger dollar with -- what that mean for their earnings. what that mean for their bottom line. is the stronger dollar a problem at some point? when do you think that actually factors in and ends up hurting our economy? >> there again, the fed will make their decisions. the treasury secretary will speak to the policy towards the

dollar. we have a lot of domestic momentum here in the united states. the domestic economy is 87% of our gdp. that's what matters most. but there's no doubt that when you see economies around the world slowing down or having some disappointing performance in terms of growth that's going to have some spillover into the u.s. economy. and that's whatunder scores the point that we started our our discussion on while it's so important to not be putting forward a budget that will take it off half a point off our growth rate every year, for the next three years, agency the house budget will according to the national budget office. >> jason i want to thank you for joining you. always a pleasure talking to you. when we come back this morning, wild weather in space making for quite the light show. we've got that when skwx "squawk box" returns, a look at the futures across the board.

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a couple of interesting

stories. check it out, a severe storm reaching earth two blasts of magnetic plasma left the sun on sunday. eventually combining and arriving on earth yesterday. about 15 hours earlier. and much stronger than expected. and authorities warned of possible disruptions to power grids. gps tracking and communication systems today. now, the storm ranked as a 4 or severe on the noaa scale for geo effects. is blamed on -- that's not true. that a joke. this storm is the only one not due to carbon. it's the strongest storm to reach earth since 2014. and the aurora borealis lights only seen in the far north dipped south all the way down here. check this out, warmer temperatures in the northeast over the past few days bringing a big melt.

folks in willmingtonwilmington, massachusetts got a surprising ice boulder. landed in the back. slid off the roof leaving a gaming hole. luckily, nobody was hurt. but the wife and kids were walking around a mark in summit new jersey and the transformers blew up. the lights went out in my house. the power wept nt off all kinds of weird grid stuff. >> because of the melt or solar? >> i don't know. >> is that dangerous for people to be walking around in that if it's -- >> -- i don't think it's dangerous to the grid. the magnetic field, i guess, it literally bounces off. that's what the northern lights is when you see it. but i don't know it just scares you if there's ever some type of solar direct hit what it could do to the grids.

we're pretty dependent on the grid at this point. when i return it's a modern day odd couple andy stern and glenn hubbard talk to us about fixing the employment issues. at least trying. take a look at u.s. equity futures.

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♪ welcome back to "squawk box," everybody. here is what making headlines this morning. chanel is raising handbag prices in europe while slashing them in china. "the wall street journal" notes the company is trying to get rid of the growing price gap caused by the weakened euro. a key architectural index rising. that indicates an increase in billings. >> kraft is recalling 6.5 million boxes of macaroni and cheese because the company has found small parts of metal. no injuries have been reported. if you're looking for boxes

affected i think it's the 7.25 ounce boxes there. they have a code "c"-2. >> you can find an actual chanel bag in china? can you actually find -- or did they lower the $3,000 bag goes to $2800. but in china like 1250. >> top dollars? >> you're thinking fear in the streets. >> is that where -- okay. i thought they cut that out on the streets here? okay. the other thing i saw, i think we got to go but, i thought i got a tweet that said i could subscribe to the "the new york times" online for 99 cents for four weeks. >> absolutely. >> you were talking yesterday -- >> that's way overpriced as far as the information i'm going to get from that rag. >> stop stop stop. >> how can they possibly try and get 99 cents for that? the idea it's free for most

viewers in the morning. as we count down to the fed decision answer the fed chair's news conference we want to take a look at what beyond the word patience the fed is looking at today. tipping the scales our very owndom chu. >>ly there. guys. we're plat for the year. the dow up 15 basis points. the s&p is up a whopping .75%. that doesn't mean we gyrations in the market. we're in this wait and see pattern. here are other things tipping the scales for the market. on the positive side of things in the overall u.s. market. you have on the macro, bigger picture scale say better jobs picture. whether you agree with the numbers or not the general consensus is that the jobs picture is better.

wages are an issue. health care stocks in the s&p, leading the way higher up by 6% year to date. in the course of the market later on this week apple goes into the dow and apple has been a huge part of the market-out performance. that's the positive side. if you look at the negative side, kind of what's balancing out retail sales, is it does show that the american economy is slowing down because consumer spending makes up two-thirds of the u.s. economy. those retail sales are important. right now not looking good. the energy sector we know with oil prices going down maybe those energy stocks take another leg lower with them. and intel, remember last week they said that they were going to reduce their forecast for revenues this quarter because a slow on pc demand. maybe people aren't expecting that much in terms of hardware.

on balance, andrew the fed is important but there are macro and micro economic stories. big picture, little picture, company stories that are really driving things in the market all the way flat to the year to end, back to you. >> dom, thank you. as we discussed all morning long. the countdown to the fed decision son. steve liesman is back with a little more on what investors want to know this morning. >> hey, andrew i know you're going to have an interesting panel of an odd couple come can go up on jobs. i want to talk about the fed's dilemma. that dilemma has to do with strong jobs growth but where is the wage growth? let's compare the last expansion. what you see looking at the orange line the current expansion, wage growth on a month-by-month basis is accelerating. at this point before, it was desellerate

desellerating. but yet look at wage growth. what you can see, wage growth lags compared to the expansion. if we can go to the full-screen chart, if not, i'll tell thought current line is below the prior ones. you had this wage growth that happened, by the way towards the end of expansion. and it continued for a while. there we go. there's the blue line. and there's the orange line just beginning to tick up. what has yellen said about wage inflation and what would constitute wage inflation? simple. take your wage growth add inflation, add productivity. and that is not inflationary. that could be in the 3% 4% range. what does that tell you? we're looking for the wage growth, wage inflation, and there is real average hourly earnings to the right there. what that tells you, lower inflation with constant or a

little rising wages has finally met some money in adjusted basis in americans' pockets in quite a while. we're seeing early signs, joe, but it's a long way before we get back to yellen's metrics. she's likely to let strong growth run for a while, joe. >> channeling you a little bit, steve, with grimjim grant, you didn't get to watch that did you? >> i did. i love jim. >> you heard me channel you. >> i did. i was proud of. you. >> i wasn't endorsing it. i know how you think. the idea that the prices would be manipulated, that would be bad unless they're right around where they would be anyway given the global growth outlet. you saw where i was going, jielgt. >> what would it be in the current cart anyway. >> that's what i mean. then we decided it's not price inflation necessarily we're not

monitoring asset inflation, and that's where the big bubble could be. >> i would agree with jim grant's concerns. i could ask him on the side is that the fed is always setting the price of money. and jim's objection is that i think, it's gone farther ever before in setting the price of money. but the reason is it tipped a zero balance. so what is it supposed to do? that's where qe comes from. you get to zero. you have an economy that is lower interest rates. you can go negative rates or increase the quantity of money. jim's money i think is going to be go to a gold standard. generally around the world, get rid of the fed and go to the gold standard. jim is going to say that. we've been there and done that. >> i don't ever expect you and santelli to rent an apartment together. but short of that these two next guys getting together -- >> yeah. looking forward to it. >> when i first thought about

it -- >> it brought feelings. >> it brought a tear to my eye that these two guys -- job growth say key maker for fed experts. i'm reading it now. two experts on different side of the aisle have teamed up in an unlikely meeting of the minds both looking to boost job creation. joining us now glenn hubbard, dean of the columbia school of business and the andy stern, senior fellow columbia university richmond center. former president of the seiu. the service employees international union. when i heard you guys were buddies, i said prove it. and they did. here you both are. this is a model, almost a metaphor for what we can about accomplishing in the country. is that overstating that? you can choose i don't know if you're oscar or felix, you can

choose. >> i think i should be felix. andy is more the oscar. we've been talking for a long time what it would take to support the country. we've been living in the past and policy. andy and i may not agree on everything but i think we got the same goals in mind. >> i think we do too, andy. i think we want to train as many people as we possibly can to have good job us and earn their own success and be happy, productive members of society. we all want that right? >> i think there's two things here. one is attitude. what glenn and i both believe in. generally, we may not agree on specific policies maybe because i'm a union guy. you have to make deals in america. you can sit in academia and in congress and in the end, it's about making deals. i think what glenn and i are trying to model is you can find common ground. for instance, glenn and i happen to both agree there should be some trade in congress amongst

infrastructure. i propose repatriation of foreign dollars and corporate income tax. you need voices outside of congress to make that happen. >> maybe it's just me, glenn, or either one of you guys can address this. we seem more polarized now. two big circles remember in school i never understood new math. this much in the middle. now the circles are like eight miles apart. and so we can't get anyway. >> i agree. i think you have to helicopter up and say what are we trying to accomplish? we all believe in supporting work in america. we all believe in success and learning on the train. why don't we strengthen the eitc for single worlds. why don't we work? i think there's a lot of room for compromise if people would strip out the rhetoric and focus on real goal. >> and i agree. i think what glenn and chris mayer did, they had a proposal early on with the housing crisis to try to refinance people's

homes to get their values back. i think those are the kind of practical solutions we need if we're going to get the economy going then we have to think what's the future look like. this is a 21st century idea many of the ideas we're trying to apply are 20th century ideas. >> that's frankly, why i askeded andy to come to columbia, our labor policies are not only in the past or deep past, most come in the 1930s. we need a new way to think about training in america. >> you guys are getting along really well. i feel like starting something. glenn, what do you think of wisconsin and right to work? do you just -- do you guys just decide never to talk about that like carlo and madison? what do you do with issues on that? >> no i don't agree with that. what we need to do is support work through the eitc through

better training not through inflexible labor laws. >> now, i feel bad to kind of ruined this whole thing. because i already said that the sides are so far apart. you're trying to bring them together, here i am pushing them back apart for cable news ratings. >> maybe it's a good lesson you that learn to disagree about it and focus on where you can make some progress. >> it was a message that more people heard. >> can we find out -- >> are we always -- >> we can come to -- they don't know that you're all plays footsie under the table? >> really? really? you thought was becky? >> yeah must have long feet. it's not my foot either. but i think the question of the future, joe, is really the big question, because i think we all see that the next 20 years, we're going to have a way of technology that we've never seen before. this whole idea that we have

job-centric policies when 30%, 40% of the people are in uber-type employment. >> andy is worried about robots? >> i think that's entirely possible. if we were the military we'd start thinking about the alternative scenarios. in academia you take one position, you say that's it. it's going to come back because it always has. with the military you say there's three choices. what are we going to do. i think we're totally unprepared for a world where there's not enough work. >> what would you do? >> i was down at -- >> what. we don't want to make work -- you were where? >> cato talking to people about a whole forum of basic income. and writing a book for public affairs. >> this is like -- >> the world is upside down. but the truth is people are hurting. the future doesn't look good. if you don't do what glenn and i are trying to do think our way out of it the future is going to pay the price.

>> glenn, have you written all of this down you and andy like a treatise or something? i'd like to see it and i'd like to talk about it more? >> no i'd be -- i think the real issue here is you know how do we help people in the 21st century work and earn incomes? and i think andy and i are around to a good agenda there. frankly, i think members of congress, if they stripped aside their bias could be there, too. >> it's not because you guys are academics, right? how long you have been an academic now, glenn, maybe used lost touch there at columbia? >> i think the real issue is getting people to focus on goals. as andy said the world is about to change. a tsunami is about to hit us. are we ready for it? right now, no. >> you guys will do this again? >> absolutely. >> really? >> sure. >> because this is like -- i really worry what will happen. yesterday it was a solar storm.

and we're messing with any matter here. glenn will you come down? we're not that far. >> yeah, i'd be happy to cross the bridge and see you. >> all right. >> he doesn't have to cross the bridge any more. he doesn't realize. >> we're down at 6th and 51st now. >> even easier. i'll get in the subway and see you. >> republicans don't ride the subway. anyway, thank you, both of you. >> a pleasure. >> thank you. okay. when we return you got to say good-bye to internet explorer. i don't know how many people are still using that. say good-bye. plus senator john thune call the s.e.c.'s broadband ruling overreaching. now bringing all the members to the senate commerce committee to ask them what they were thinking. make sure you keep it locked to cnbc all day. we're bringing you the fed's decision on interest rates. and of course janet yellen's

news conference at 2:30. financial noise financial noise financial noise

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welcome back to "squawk box" this morning. we have big news. microsoft confirming, this is for joe, i bet you still use this joe. internet explorer software is going away. >> don't we have it here? internet explorer user. >> i do. but i have fire fox. >> what do you use for all your

incognito browsing at home? >> i get i'm not incognito. i don't know. >> his is on a server. the company microsoft is using a new name code name and revealing the company is working on a new name. the internet explorer brand will have some versions of windows 10 with compatibility but the new project will be a primary way for 10 users to access the web. >> internet explorer had 80% market share which is kind of amazing. >> i'm on google chrome. he's on explorer. the battle from net neutrality far from over. thomas wheeler appearing on five congressional committees. today, he faces the senate commerce panel. and senator john thune. he is the chairman of that

committee. he's written bipartisan legislation that would replace the current rules. good morning. >> good morning, andrew how are you? >> so senator, two things. let's start with what do you want to know from wheeler? >> well first off, we want to get to the bottom of how they reached this decision. clearly, we think it's a wrong approach. a wrong-headed approach. and we actually a number of us have been working on a more direct limited authority for the fcc that is tailored specifically to some of the things that would protect us sooner that doesn't give the broad authority to go down the path if they wanted to of rate regulations and price controls. >> just to they've. that is your big issue. the sort of slippery slope that it could become in terms of ability to set prices. >> right. they're using a 1944 law to regulate the internet. and that law designed in a utility era is designed to

regulate monopolies. it's a very different times. we think that authorities granted to the fcc under that statute are far-reaching. even though they're saying for the time being that they're going to forbear from using those authorities, we think in the future those can be very dangerous. and it doesn't behind a future commission. the problem of doing this this way, a future commission could change this. the only way to change this is for congress to set clear rules to the road. that's what we're attempting to do in reaching out to try to get them to work with them. but they went down their own path. >> from a practical perspective, your replacement proposal how would that work? how would it get enacted? can it get enacted at this point? >> sure andrew it was 3-2, a very partisan exercise. in order for us to legislate we're going to have to have bipartisan cooperation to get to to 60 votes. we think a simple six-page bill

which is what we drafted would ban privatization. pan the content the very things that the administration and the fcc says they're concerned about. provides those consumer protections but does it in a way that doesn't grant this carte blanche authority to congress to do certain things. and a real issue for the investment community because otherwise you'll have these things tied up in a court. big debate what his thinking was in november and early disease and the president comes out publicly and it appears wheeler's view of the world changed. >> the timing certainly suspect. he can say what he wentants but it's clear when the president, november 10th, said he wants a title ii solution that the path that the fcc was had at the time headed down changed abruptly. it was a radical departure. the light touch regulatory

regime and framework we've had for the last two decades on the internet would be radically changed by what the fcc would do. it's pretty clear, from a timing, you know, sequence followed administration's announcement. >> senator, thune we need to thank you. >> senator, you got enough people to override a veto of the iran deal? >> it would be real close, joe. i think right now it's kind of on the bubble but enough democrats support requiring congress approve that deal that we could get there. we'll see. i mean it's -- we've been reaching out. there's a lot of work been done by senator corker and others to recruit and enlist democrats and there's a lot of democrat interest, whether enough to get to 67 remains to be seen. >> was that election ever close? do you have any -- i watched the news last night, mainstream news every sound bite i heard from people that weren't going to vote for him. remind me when mcconnell was

going to lose and won by 30 points. >> there were some parallels to some of the elections we've had in the country where the polls were very wrong, particularly the exit polls. >> i don't know if it's the poll. i -- he almost coasted. crazy. a surprise. >> all right. senator, thanks. >> senator thank you. when we return futures pointing to a weak open on wall street. a lot could change once we hear from the fed. we look ahead to the big event with our trader john brady, when we return. ♪ ♪ ♪ (under loud music) this is the place. ♪ ♪ ♪ their beard salve is made from ♪ ♪ ♪ sustainable tea tree oil and kale... you, my friend, recognize when a trend has reached critical mass. yes, when others focus on one thing you see what's coming next. you see opportunity. that's what a type e does. and so it begins.

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the fed will not increase interest rates this year a, because of the dollar strengths and, b, because the recent economic data has rather been disappointing and the economy simply not taking off. so i don't see that it will be an interest rate increase. >> that was marc faber on "squawk box" this morning talk about what he expected to hear from the fed. now let's head to the pits of the cme to find out what traders are thinking. john brady, yesterday it seemed to me like the market had take continue in stride. figured threat take out "patient," didn't mean they would raise rates in june but we see futures down again. so what happened? >> that's exactly right, becky. the fed's got a quandary here but we think, we have an out of consensus view we think the fed can accomplish two goals. the first one is pretty much done, the word "patient" will come out the statement. the fed wants to convey to the

market that if necessary, they can be patient later on this year. so how do they do it? we think one way they'll do it is to switch the structure of the first paragraph of the statement. they'll reprioritize what near term and medium term policy goals respect for example, since 2008 the first paragraph has always read employment first, business and consumer spending second and inflation goals third. today, they may switch them and make inflation the first policy goal employment second and fixed business and household spending the third goal. >> john, great to see you today. read your notes every morning really appreciate it. >> thanks becky. >> we'll wrap up the show after the break. "squawk box" will be right back. it can bring out the worst in people. but the m-class scans for danger... ...corrects for lane drifting... ...and if necessary, it will even brake all by itself. it is a luxury suv engineered to get you there and back safely.

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fed decision coming up today, 2:00. make sure you watch for that and join us tomorrow. right now it's time for "squawk on the street." ♪ good wednesday morning. welcome to "squawk on the street" i'm carl quintanilla with sara eisen, simon hob of the new york stock exchange.

cramer and faber are off this morning but you'll see jim later on "mad money" with howard schultz of starbucks. stocks are struggling in the premarket as we await the fed decision. fedex, oracle general mills on the tape. we will see eia inventories at 10:30 eastern time. ten-year yield inching closer to 2%, just a shade about that now. in our road map, earning