>> live from new york where business never sleeps this is squawk box. >> good morning and welcome to squawk box on cnbc. andrew is off today. our guest is the chief investment strategist. after several wild days of trading and a four day losing streak for the dow there will be more fed speak today. janet yellen will be giving a speech before the closing bell. get a check on the futures this morning and while the futures have not been a clear indication of where we have been headed for much of the week you can see this morning they're down about 41 points. we haven't seen something like this since last march. right now you see that the dow futures are down by 36 points.

s&p futures off by five. a coalition of middle eastern forces pounding targets for a second day. oil prices surging after a first roun of military action but right now crude oil prices are falling back down. down over 2% for wti. goldman sachs saying the strikes would have little impact on oil supplies because yemen is a small producer of crude but they're worried about instability in the region. crude oil prices are backing down. you can see wti is down by just over a dollar. $50.28. there's also a straight there with something like 4 million -- it's the fourth largest position where oil is being moved through that. >> just in trying to understand who is allied and who is not allied it's almost impossible at this point and the talks, whether we're doing it just to try to diffuse the nuclear

situation and we're not interested in being an ally of iran for some reason we're definitely -- it looks like at least the people over there i heard on the other news networks, it looks to some people they're not sure which camp we're in now and we do look definitely closer to iran than in the past and iran was mortal enemies with a lot of our long standing allies so here we are in yemen and the saudis are stepping in because they're iranian backed rebels. the enemy of your enemy is now at play over there. >> it's hard to say you're my mortal enemy on this front but we're allies on this front. >> it's screwed up. >> when you look at isis and how we're saying we'd rather be with you because isis is a bigger enemy. however on this active war front we're going to side with them and the criticism is coming on the administration's yemen

policy. earnest as recently as two days ago was saying it was a huge success. the guy had to leave, the backed regime is in saudi arabia now. >> but this is not something new. saddam hussein was our ally too. >> that took five to ten years to turn around. this has been in an instant. >> we conceded on a lot of issues on trying to get this deal done but trying to hard. >> the question is do we have any teeth or not. >> right. obama already has one. maybe he wants to bolster the credentials for why he got it in the first place. >> part of the problem is the economic sanctions on iran were effective in getting that regime to the table.

there's not necessarily any idea that we could get back to that position with the european partners that they don want to go back to the sanctions. it's a question of whether you can put those back in play. it seems like a reflection point. if earnings are going to be tough and going up this might be a tile where people say well there's nothing else well you know you want the best return you can but sometimes a return of your money is a pretty good return and if things are going to -- >> which may be why the ten year was back above 2% yesterday. >> all right. and then we got this. the investigation into the german wings flight crash into the alps is now centering around the life of the co-pilot. officials believe as you know by now that he locked the captain out of the cockpit and deliberately took the plane down. police in germany seized a lot of stuff. a host of items including a

computer and we'll have a live report on the investigation coming up in just a few minutes. nbc's bill nealy will join us from the crash site. switching gears to look at the stocks that could be on the move this morning, yahoo! announced it be boost the stock buy back by $2 billion. this is an extension of the $5 billion buy back program and that was started in 2013. restoration hardware giving weak guidance after fourth quarter results in line with expectations. they're citing the negative impact of that west coast port shutdown and check out gamestop. the video game retailer missing expectations after a 5% drop in revenue. also giving weaker than expected guidance for the first quarter and for the rest of 2015 and the company's cfo will join us at 8:15 eastern time to talk about the latest results and what it means for the next quarter.

>> she will have a base pay of $650,000. a $5 million one time signing bonus and a $25 million in stock grants that i think vest through 2016 or 2017. she will join google on may 26th of 2015. amazon.com may be about to add more luxury goods to its product line. amazon is in talks to buy the online luxury retailer net-a-porter. it says the talks are in the early stages and might not lead to a deal. >> those were nice numbers. >> even more. it was something like $70 million. >> go to school. study technology. >> finance. >> work hard. go get a good job. >> sounded like the numbers.

70 million, isn't that the same pay package i recently saw for an athlete, for a football player that went back to the jets. >> don't go work in media like at the new york times where you'll be bitter for the rest of your life and writing about how unfair this is that this lady is getting so much money. embrace it. it's a great country. i love that. >> most of this is stock option compensation so he'll only do well if the companies do well. >> she is very good at what she does. the first actress to break through the 20 million for a movie, do you remember when it was? she played a legal assistant and she was a pretty woman once. >> julia roberts. in 2000 or 2002 or something. >> i remember when that happened. >> don't be bitter with a was her name ruth? don't be bitter for her. she has to work years to make the 25. this was for a movie.

>> the senate passed a republican backed budget with 5 trillion in spending cuts and a rule that would allow repeal of obamacare with a simple majority vote rather than a 60 vote threshold. the vote took place after a long session that didn't end until after 3:00 a.m. local time. the house passed a slightly different version on wednesday night. i'm sure this is going nowhere. it's not going to get past the president's desk. >> definitely not. >> i had fun. i wouldn't stay up past 3:00 a.m. if i knew it was all for naught. >> they're going on recess today. so they had to get that. >> well if i did stay up we'd come straight in. >> because it's a half hour before the alarm clock goes off anyway. >> exactly. >> let's get a check on the markets this morning.

the stock market has gone 0 and 4 for this week. that hasn't happened for the dow since march of 2014. it hasn't happened for the s&p 500 since may of 2012. you can see some moderate declines this morning with dow futures down 23 points right now. s&p futures off by 4 and nasdaq down by 4 as well. in europe in the early trading you'll see mixed performance. cac is slightly higher. in asia overnight numbers were roughly in line with expectations. nikkei down by 1%. shanghai was up by about one quarter of 1%. wti this morning looks like it is down. down by close to 2%. of course this comes after big gains yesterday when wti was up by better than 4%. right now it's trading at $50.42 cents. in the bond market the ten year yield is sitting below 2%. it pushed back above 2% yesterday for the first time

since the fed spoke last week and lead investors to think maybe the rate hikes wouldn't be coming so soon. this morning the dollar is up against the euro and the yen. dollar wrrks en is atyen is at 119. the investigation into the germanwings crash in the alps centering around the co-pilot. bill is joining us from the crash site in france bill. >> good morning, becky. the search teams, the search helicopters are going back and forth here to the crash site where they're removing body parts, jewelry, clothing anything that can identify the ones that died on that plane and they're being brought back here to be examined. but the main focus of the investigation is in germany and

they're looking into the background of the 27-year-old copilot. in particular what happened to him six years ago. in 2009 he was training to be a pilot at the training school in phoenix arizona but he had a severe, what was called a severe depressive episode and his training was suspended. it was suspended for 1.5 years because he was designated as not suitable for flying. he then retook some of his courses but on his pilot's license there was still a code that designated that he suffered from depression in the past so obviously investigators are looking at that. it's also said that he broke up with his girlfriend of 7 years recently so people are looking at his personal life as well. his parents who were flown into southern france yesterday are due to be questioned by police

in southern france today. his parents, his father a business man, his mother a piano teacher to try to glean if they knew of anything that would have caused their son to crash the plane into the side of the mountain. so we're learning more details about him but still it's a complete mystery. the announcement yesterday still left everyone here absolutely reeling and as you say; the key question is why on earth did he do this? back to you becky. >> thank you again. we'll continue to update you as we get more information. >> all right. we already said four days down and there's a saying never short a dull market but let's talk about this market and if there's anything that could give it a sort of burst on the upside because we've seen down days some volatility. joining us now for the next hour is the chief investment strategist and author of my side

of the street and steven wood chief market strategist at russell investments good morning to you both. that sounds childish and selfish. you own a side of the street that no one else can use or something? >> yeah. >> really? >> what gives you the right? isn't it public property? >> you'll like the book because it's defense of the capital markets. >> we need it. >> the subtitle is why master of the university don't represent kind of the real wall street. i've been doing this for 27 years and i've gotten very tired of all the wolf of wall street stuff. >> he was based in long island. he should have been selling aluminum siding. he had nothing to do with wall street. >> exactly. but i had so many conversations on the sides of soccer fields about is that what you do or is that what it's really like? no it's not at all. >> why didn't anyone go to jail

when goldman and j.p. morgan are guys like wolf of wall street. >> yeah. >> so here's my just keep it simple stupid rates are going up and earnings will be flat or disappointing because of the weak dollar. if you believe that some of the move in the stock market was orchestrated by easy money then why not step aside right now? >> stepping aside for a short time might not be a bad idea. correction seems like it's in the process of happening. by the same token though i think ultimately what changes or what ends business cycles is inflation, the fed might tighten but you saw it on the short end by 150 basis points. they tighten to try to normalize rates. i don't see that as a long-term problem.

>> the fed will tell you that it's not tightening. it's getting toward normalization. we know it's going to be tighter than yesterday. the day after they move. >> that's true but normally though the stock market tends to do well in the initial stages of fed tightening in the same way it does well in the initial stages of margin declines because that's happening for good reasons. you to pay up for labor, cost of capital goes up so it's only in extremists that it becomes a problem. you have time if you're looking for the big one you have another year or two years. this might be a correction. i don't think it's the big one. >> that's assuming they do raise. if they don't raise that's negative too, don't you think? i'd be even more worried. >> yeah because of what it says about the global deflationary

environment. i think the fed is institutionally above zero. >> charged for lending money. >> they go to 50 basis points but i think that's an institutional preference they have. i don't think they're data dependent at all. they want 25 to 50 basis points and september makes a lot of sense and at that point then they become data dependent but it would take something really apocalyptic for them not to get back to that more normal. >> you were with fisher. >> i wasn't the only one. >> i wasn't accusing you of anything. >> nothing happened. >> did he say anything? >> yes. they would like to be in a range and get there sooner rather than later but his take on the labor market versus inflation so a

very long question about what about the labor force participation and wage inflation and his point was that doesn't make any difference. once they do their employment then they're going to turn toward inflation and they want to get close to if not at 2%. so this could, as you say, this could foam that runway on rates for awhile. they go positive but it's going to be a lower rate environment. they have to compete with the europeans, the bank of japan, so this is a loose monetary environment. >> i still liked the guy the other day that said sell everything here and buy japan and europe. why not? >> that's our call. we upgraded europe last fall and japan as well. the economy in the united states is doing well. sentiment looked good but valuations are something of an issue so hooking last year into europe because things didn't look great we knew that the european central bank mario draghi is like a wizard. he's like the gandolf of our

age. he gets these huge effects out of quantitative easing. that's just beginning and from an investor perspective that carey creates upside. >> i would say japan too. i still find when i run around and talk to institutional investors no one is behind japan. u.s. investors are saying i'm going to make another mistake. have gotten burned so many times here i'm not going to do this one again and one of the interesting things i saw out of japan a couple of weeks ago is one of the companies there had two outside directors. they were some what subject to activist pressure from the united states. and they actually gave back some of the cash to shareholders and you say, boy, you're talking about a marginal change for a career company in japan to actually -- the whole country is potentially a big lbo in a way so i don't know if ooifrd sell everything in the u.s. and buy japan and europe but i would

agree there's really great opportunities in japan and europe. >> i just you know so many things have aligned here. talking about apple and stuff like that. $800 billion company that we decide that's good -- yeah let's add it now. it just scares me. >> yeah. >> is it going to double again? >> no. the only thing is -- you and i talked about this like maybe a week and a half ago. the one thing you say is how could it not be in the dow. >> we've bbeen saying that for a long time. >> it has to be. it's supposed to be a diagnostic tool. so it has to be in there but listen the record of companies that hit these types of valuations -- >> when it was at 150 billion instead of 750 billion, why not do it then? >> well the s&p -- well the dow would probably be like 22 or

23,000 right now if we had done it then. >> right. >> so -- >> that's not bad. >> that's not bad. >> there's much less money index to the dow than s&p 500. >> thank you. they'll be with us throughout the oil. >> crude oil prices coming back down. will the violence in the middle east be a one day event for the oil markets? as we head to a break this morning, check out this date in history.

you can call me shallow... but, i have a wandering eye. i mean, come on. national gives me the control to choose any car in the aisle i want. i could choose you... or i could choose her if i like her more. and i do. oh, the silent treatment. real mature. so you wanna get out of here? go national. go like a pro.

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. since 2007 how much have airlines saved by reducing mishandled bag costs? $18 billion. >> welcome back to squawk box everyone. a very tense scene in new york city. a building collapsing late in the afternoon in east village. the early reports say it was

caused by a gas line explosion that occurred near the ground floor of the building. 19 people were injured. several in critical condition. >> it was another night of air strikes in yemen. hadley gamble joins us from london with an update. good day. how are you? >> hey, joe. so another round of saudi coalition air strikes pounding targets in yemen today and this time near the president's compound in the capital city as well as an air force base northwest of the capital. these rebels are highly concentrated as they come as saudi arabia and egypt are refusing to rule out the possibility in that country. thousand of people taking to the streets yesterday in protest to what they say is a criminal and unjust campaign and today the saudi-led coalition moved to secure through the red sea through the gulf of aden.

much of the oil exports head easts a sizable portion traveling through the straight. the straight is 2 miles wide. it's closure could force tankers to travel thousands of miles out of their way. the countries and egypt vowed to keep that open. also overnight a move from arab foreign ministers toward an escalation. they're agreeing to a join rapid force. it's a move on the table before but they're countries are now facing unprecedented security threats and they're talking about iran and all of this is coming as the u.s. is inching ever closer to a deal with tehran over nuclear capabilities. it's faced it on both sides of the aisle and galvanized sawudi arabia and the uae. it's quite clear it's going to go ahead. >> thank you very much. again we have been watching this situation closely as well especially because of what it's

meant for oil price. oil prices are backing off a bit this morning. still crude oil is up nearly 8% this week. for more perspective on this the ceo of brightlink energy joins us now. we know that yemen is a small supplier of oil but there's an important straight there that's a choke hold for oil getting transported and more chaos in the region. what does it mean. >> the middle east has been on a tender box for 3,000 years. what we've seen yesterday was more geo political risk driven into the price of oil. you're right about this straight that's about 25 miles wide. about 3.8 million barrels of of oil moves through there every single day. that done mean oil can't still move around. they have to go through africa though. what we forgot about yesterday is we have a global oversupply

of oil in the world. so for one day we don't have to talk about that because of the saudi air strikes but that was still overshadowed for the day. oil is going to start coming back down lower we'll see for today and for the midterm or long-term we can get oil prices up to the 60s and 70s by the end of the year but we'll be waiting for the second quarter to have supply come off line. i would expect oil around 40 or $50 barrel until the second quarter of this year. >> that's right around the corner. that's next week. >> my target would be june or july. we can get oil to stabilize above 50 grind back up into the low 60s by the end of the year. that's our targets internally here. >> is that a result of supply dwindling and production coming off line or is that a result of a stronger global economy. >> i think it's a number of things. i think demand we'll see an up tick but riggs are laying down. we saw a rig shift at first

where we saw the uneconomic basins, those were shifting so barrel of oil out of the balkin is the same as out of the eagle supply wise. it takes time to do these things. we can't program an start drilling over the weekend if we start talking about it today. it's a six month lead time. we started doing this in december. we started seeing supply come off. both of those things we think will factor into a july resurgence back into the 50s. we're not talking about going back to $100 but if we can get it back into the low 60s it makes areas more economical here in the u.s. >> is it fair to say it done take as long to bring production down and back up so maybe you're not looking at some of the massive speck and troughs we have seen in the past. >> it's a great point. we first drilled in 2008 and

2009 it took us 90 days to drill them. we can drill now in 24 days. technology is driving this thing. this was a great exercise for america to be put in by the middle east. we had to do more with less. faster at a cheaper price to make it more economical. at $100 oil we can drill anything we want. we have to do things better and faster. innovation is driving the market. we'll see technology over the next five or ten years. we'll operate in a different mind set as far as oil prices go. 100 dollar oil is a figment of our imagination through 2020. >> wow, chris, so you have wells and equipment and you make decisions and stuff, can you pretend to be an analyst and come on once in awhile for us instead of the ceo. he like knew some stuff. we have analysts on and they're like -- well -- where do you live? i live in new york.

do you have any experience in the oil business? no but i watch stuff. that was like weird. you gave us things that are actually happening. >> that's right. >> thank you. we appreciate it. >> you can come back then right? >> absolutely. any time. all right but you have a day job. >> i do. >> but we need you as an analyst. thank you. weren't you like shocked. >> yeah that was great. not that our other guys aren't great. anyway, coming up -- >> i have a feeling we're not ever getting anyone again so please join us every day. >> big loss. coming up one of the hottest shows on tv is going away. find out which drama is calling it a wrap. the biggest drama in sports the ncaa tournament west virginia was -- well they suck. they were nothing. anyway, four more teams advanced. that's next. as we head to break a look at yesterday's s&p 500 winners and losers.

thing more romantic than a spontaneous moment. so why pause to take a pill? and why stop what you're doing to find a bathroom? with cialis for daily use, you don't have to plan around either. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction stop taking cialis and get medical help right away. why pause the moment? ask your doctor about cialis for daily use.

for a free 30-tablet trial go to cialis.com can data help cure a disease? the right treatment for you is out there. the problem is some of it's in this lab. some of it is in her head. some of it's in this new journal. and the rest of it is in your personal medical history. ibm watson can not only read this data, but understand it. it's trained by doctors. and it's always learning. it can help find hidden correlations and help your doctor recommend treatment options for you. there's a new way to work and it's made with ibm.

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.

sweet 16 last night i won all four. this was my swan song though. i'm 5th out of 58. >> which is really good. i dropped drastically and i picked the -- >> you're 14. >> i'm 14. i just did the pick the top seed so it actually takes some skill to come out on top. >> it did and i don't have -- i only have one or two teams that could be in the final four.

>> see who is tied for third. matt and sandy. >> our producers. why didn't they put sorkin? >> he's down -- actually we need a bigger screen. go way down there's 58 people. i think he's 55th and 56th and 57th filled it out wrong. >> that can happen though. >> but so dean smith is something we want to mention. class sy classy as he was. how many players did he coach over the years? >> there may have been thousands but in order to get this you have to letter with him. >> you had to letter. he left $200 in his will a month after he passed away. to give $200 with each student to go have a nice dinner. >> it worked out to be 180 players. it's not as many as you may have thought. you had to letter with him. >> who thinks of stuff like that. >> go have a nice dinner cash this check, take somebody you

love out to dinner. >> everybody that played for him. >> was it roy williams or one of those guys that knew him well said every day they still try to do something -- >> yeah. >> nice for someone because of him. >> just the institution itself right, it was so based on -- dean smith was -- first of all, his first name was dean. there's all of these things that go together that was really traditional. >> but in terms of opening up the game to everybody. >> he was a big proponent of inclusion. >> how was that. >> i watched the first half of that game last night. >> it's nice they have confidence but it's not good to have doubles.

i had arizona. >> but you knew this was the case when you trash talk what happens. >> but i had all four last night. >> i only had one game tonight that even can effect me. >> see i'm a big east -- i went to georgetown. >> i'm a big east guy and villa nova blew everything. georgetown got smoked by utah last week. >> and you watch downtown abbey. >> no my wife does. >> you're going to spoil it. >> i'm not going to spoil it. a spoiler alert is that next year is the last year and i'm hearing some mumurs about a possible movie. i love this show.

>> it would be hard to go on without maggie smith but i would not end it. i would beg him. but he is working his next project is like the guilded age. it's going to be about the guilded age in new york city. >> long island? >> he's a genius. >> so maybe here in long island probably. >> oh, man. >> but that would be amazing. >> move on to something else that you also love. >> i'll miss the crawley's and i'm such an idiot i saw lady mary at the correspondence dinner. >> what did you do. >> i just saw her and i said you're so elegant. >> she's a british -- she's not royalty but i almost bowed and she looked at me and said you are an idiot because she can play any role and she can play a normal, he's not a lady apparently. >> he's a lady but not a lady. >> it was like seeing princess

di. anyway a technical take -- anyway markets after a break and then later citi group's chief u.s. equity strategist plus gamestop ceo and i think we have california pizza kitchen. we'll talk to the ceo plus we have some meatballs. not meatball himself. >> no. >> okay. stay tuned we'll be right back. investing strategies. my technology can help you choose the right portfolio. monitor it. and automatically rebalance it. all without charging advisory fees, account service fees or commissions. that may be hard to compute. but i'm a computer. so trust me. it computes. say hello at intelligent.schwab.com ♪ help northern china reduce its

reliance on coal fire heating plants and prevent 60 million tons of co2 emissions? when emerson takes up the challenge it's never been done before simply becomes consider it solved. emerson. 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. chris johnson is a director

of research at j.k. investment group wow, what is happening there. >> when did what start joe? >> the beard. >> are we talking technicals? >> what do you mean? talking razors. you have been growing that for awhile. >> it's been a long cold winner here joe. i know you don't make it back to the queen city other often but everybody here had to do what they had to do. you look like grizzly adams or something. >> which is his way of saying he likes it chris. >> thank you. i appreciate that becky. we're still good at the charts joe. we're really good at the charts here. what do we want to talk about on them? >> i'm talking about inflection

points and fundamentals. are you seeing any key areas? >> we're seeing key areas we'll call them right now. it was brought to my attention yesterday where we had the s&p closing on its low three days in a row that's one of those that only happened back in 1991. people saying look out and run for the hills. not necessarily the case though. you know typically we see mixed markets after that. what does stand out to me is the fact that the bull market is raging for years here reached a long-term overbought several years ago. it's everything is okay until it's not okay. that's one of the things we're worried the market might slip on as we go into what is typically a seasonally week period. obviously the beginning of

summer. >> well lay people don't understand overbought and i don't either. i thought it could be a short-term condition and you give it three days and it can become not overbought anymore. how can it be long-term overbought? what is that a measure of? >> the same exact measures when we're talking about the short-term. the traders are typically going to look at the 10 day rsis. we're looking at 20 months so we're measuring that like we would a technical. we're looking at the level of buying that's happening during that 20 month period and as it reaches extremes it's just as indicative of a long-term decline. >> historically, does that mean it trades sideways and for how long or that it actually goes to an oversold condition? >> a little bit of both.

we seem to forget about some of those rules when the market has been as kind as it has for the last five years. one of those that the markets tend to trade 80% of the high and trend higher 80% of the time. i think in this situation with that overbought condition, we're going to see a market that's going to start to favor trading ranges for awhile and moving sideways versus that big huge crash that you know some people might think is coming down the road. i think this is going to be one where you have to have more talent in terms of finding the returns versus the slam dunks, let's use the sweet 16 reference there, the slam dunks we've had the last couple of years where you could invest it and forget it. >> so are there different areas of the market that are more vulnerable and less vulnerable? >> there are, indeed. obviously bio technology has been a fan favorite for the market. that is one of those sectors

that when you look at it up 15 to 20% just in the last couple of months that on a shorter term basis has become overbought from a technical perspective. that's why we're seeing those stocks come down. there's a great fundamental story there joe that i don't think is present in a lot of the other sectors when you look at industrials and energy. i think the health care the bio tech and to some degree selective technologies are going to be those that tend to out perform the market here. industrials energy utilities, anything with a dividend is going to have a blilt oflittle bit of a head wind this year. >> you didn't make bad calls and people aren't sure whether you're the same chris johnson now, right? that's not why you grew it. >> this is not part of the witness protection program or anything like that he joe. >> does it itch. >> no. >> do you taste yesterday's soup. >> absolutely not. i have a little bit better hygiene than that joe. i like to believe that as long

as i'm keeping it where it needs to be. >> everything happens. >> you're projecting again joe. >> i'm going to put some notes together for you joe and i'll send them and by the time you come back memorial day, right? you'll come back memorial day like you do every year. >> gillette is owned by procter & gamble. just a thought. you have great basketball university of cincinnati. you have the dayton flyers and just down south lexington and louisville and then you got in the east west virginia, i think, right? you got some good basketball. indiana. >> how many places on the map in the united states can you drop a pen and within 100 or 200 miles have as many teams as we had in the tournament. it's great. >> something in the water there. all right. i was pulling for them but i had arizona. >> thanks. >> when we come back this

morning, you know names like bill ackman and carl icahn but there's more coming up on wall street that look a lot different. but fist check out today's economical lan economic calendar. stick around, squawk box will be right back.

introducing the new can-am spyder f3. with a cruising riding position and the most advanced vehicle stability system in the industry... ...you'll ride with a feeling of complete freedom and confidence. visit your can-am dealer and test drive the spyder f3 today. welcome back, everybody.

a new generation of hedge fund managers stepping out. >> the 71 activism campaign launched this year have the highest levels since 2008 when there were 101 filed by this time in late march. and the baton is passing to a younger generation. take a look at this group of five money managers part of the new wave. elliot management's jesse cone. scott ferguson. mick mcguire. and jeff smith. they're all in their 30s or early 40s and they're taking on the likes of yahoo! emc corporation, and the bank of new york. interestingly, too, thing of theme are alums of the more accomplished generations of activists. worked a decade for carl icahn. since then he's raised $7 billion and pursued companies the likes of the williams

companies and more recently american realty capital and signet jewelers which had a nice pop yesterday. something he kmeded. because he recommended some changings recently. ferguson and mcguire come from bill ackman. but their style is more below the radar than ackman's. you won't see four-hour presentations or interviews coming out of them. i even had trouble finding a photo of scott ferguson because he's such a kind of below the radar guy. so it's interesting. they're certainly approaching these companies with a tough rhetoric, but their style's a little bit different. >> in terms of not going public is that because they think they can get more done if they don't go public at this point? >> i think ferguson is low key so more of an exception. they do go public with your letters. at the same time he put together this 100-page deck and

distributed it on a website rather than ackman which is what i was referring to there. he'll sit people down for four hours, invite the whole media, take any question and flood the zone with information about a herbalive or something. mcguire is not adopting that. you argue he doesn't have that platform yet, doesn't have the track record. maybe that will come later. but to my experience these guys have different personality types. they sort of want to let their arguments speak for themselves. even if they're willing to you know brandish a tough tone in the board room. >> when i started the business, these same guys were called raiders. now they're called activists. many cases they were called raiders because they were doing asset stripping, laying a lot of people off. here it's very different. management's attitude towards them is different. i'm sure they're not thrilled to get calls from these guys but by the same token they're saying we have to listen to them. and ultimately they do right? because if you have a ton of cash if you have a balance

sheet you either have to do something productive with it or give it back. that's the point a lot of theiss activists are making. so it's hard to fade i think. >> right. absolutely. some of them like constructivist. >> are they still nothing more than a two bit green mailer and a pirate? >> well i mean i guess that's a subjective question. >> let's say meister gets famous. what do we call him? that's confusing to me. >> maestro. >> spelled m-i-s-t-e-r-o. right? >> just a reminder for you, folks. to register go to delivering

alpha.com. >> that's right. that's always fun. all right. coming up this morning, we have some top stories to go through. plus it was not a great week for stocks. leaving investors with a bad case of indigestion. we'll get the diagnosis from jim paulsen paulsen. as we head to break, check out this futures. nasdaq just turned positive up half a point. we'll be right back.

the rollest coaster ride that is wall street. five down days. should investors get used to the dips twists and turns?

chaos in yemen. the saudi offensive in its second day. more nations now involved. what's next for this new middle east flash point? bill richardson is our special guest. and meat ball mania in the city. the co-owners of the meat ball shop tell us how this single concept restaurant is taking over the big apple. a hot and spicy second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box," everyone. this is cnbc first in business worldwide. i'm becky quick along with joe kernen. andrew is off today. our guest host for the next two hours is jim paulsen. he's the chief investment manager. we're going to talk to jim in a moment. but in the meantime the pilot

investigated in the crash spent over a year in psychiatric treatment. we will have more on the investigation in just a moment. we'll also be getting the final reading of fourth quarter gdp in less than 90 minutes. economists think we'll see a growth rate of 2.4%. and apple's tim cook plans to donate his wealth to charity. cook is worth on estimated $780 million including his restricted apple shares. okay. don't remember doing sandisk the other day, but you own a black -- i guess you own a blackberry. the company was supposed to lose 4 cents and it made 4 cents. the revenue is $660 million which is below expectations of $786 million. we just mentioned apple. apple is not worth ten times

blackberry and it's not worth a hundred times blackberry. it's worth 144 times blackberry. so i guess you'd say at this point that the iphone has probably done a little better and has supplanted blackberries in at least certain parts of the market marketplace. >> let me tell you -- >> you have something interesting here? >> no different story. this morning dow chemical says it's going to be splitting off part of its businesses and merging them with olin and kraed a new company approaching $7 billion. sounds like it's a fairly complicated structure because of the tax situation with it but they do say that the transaction is highly complementary to the strategic objectives of both companies. they talk about substantial synergies and significant potential to enhance value for

both sets of shareholders. we know that this is an arena that has been very heavily focused on with both dow and dupont. looking for things to get shaken up. sounds like this is a fairly significant situation. and a taxable equivalent of $8 billion. dow chemical shares are trading higher right now. they closed at $46.44 yesterday. right now trading at $48.59. >> yeah. i didn't know that olin was such a small company. but dow we were just talked about activists. they have been in the crosshairs too. and i don't know whether this is -- how much of this actually is reaction to that. you know ethylene and all these things, if we knew everything they were used in, we'd be -- >> the transaction is valued at

$5 billion. an estimated $2.2 billion in olin stock using the olin stock value as a close of march 25th. and about $800 million of pension and other liabilities. they say in addition by virtue of the joint ownership, both sets of shareholders will benefit. >> dow will be a majority owner of olin at that point. 50.5% of the share. okay. we should also talk about what's been happening on the broader markets. u.s. stocks extending their losing streak to a fourth day. the dow hasn't lost ground in all five sessions since march of last year. and the s&p hasn't done it since may of 2012. fred tomsick telling steve leisman it's an inevitable by-product of the looming rate hike. where should investors be placing their bets? let's get to our guest host jim paulsen who is chief investment strategist at wells capital

management. also jason trenert is with us as well. jim, for a long time you were very bullish thinking stocks were going to do well and you were right. you have been more concerned probably for six months or so at this point? >> yeah. >> and part of that has been because of what we've seen with improvement in e the jobs market. you say when we see the jobs market, that's when we see things pulling back. >> one of the things i would put out is when unemployment claims get down around the 300,000 level. ever since that's happened every time back to 1980 the market struggles. and this is like the fifth time or fifth recovery in a row where we just broke 300,000 for the first time last fall. and it's been kind of a struggle ever since in the market. i think that's because that's sort of a representation of when the resource markets get tight and the conversation changes from good news that's always good, we're coming out of recession and now good news of more complicated. it means better growth but it

also means a resource pressures. the fed may have to tighten. inflation pressures. i think that's what we're dealing with. the conversation has changed. and i think where wee're going to get through this. but little too high of valuations and need to reset rates. until we deal with those, i think it's going to struggle and remain volatile. >> you also say you think the key for this is productivity. there was a piece out this week -- >> i did. that's a different issue. i think productivity in the shadow of the dotcom boom has been chronically underperforming its average. it continues to do that. and most post-war bull markets have been associated with better than average productivity growth. this has not been one of those. and i think the latter half of this recovery if it's going to continue, if the bull's going to continue which i think the odds favor it will it's going to need an increase in productivity. if we don't get that then i'm a

little concerned about the longevity of the recovery. >> jason, i would qualify you as being slightly more bullish. >> i tend to agree in terms of my view in the business cycle. i think that's the way things have worked. we've been using this thesis for three years now. there is no alternative in a world of very low interest rates, in a world of financial oppression. i might amend jim's -- i think jim's right about the labor market being a telltale sign. i would say it has a lot more to do perhaps not with claims but with wage inflation. and average hourly earnings i would say wages have started to bottom. but average hourly earnings are still 1.6. janet yellen is most concerned with getting wages higher. the fed is late even when it's trying to be early. janet yellen wants to be late. >> you think they're not going to raise rates this year then? >> i think they're going to

raise rates this year to try to normalize rates. you are so far away from the fed being tight -- >> normalizing rates would be 4% though. >> you're talking another two to three years. i guess my point is you have a long time before the fed is going to actually have something that is approaching even 0% real rates. if the fed tightened two or three times, you'd still have negative rate. s. >> wouldn't just the change affect the markets? even if it's way below equilibrium. >> i think it certainly i think in terms of volatility it will change just to the extent of which if you're changing the volatility of the risk-free asset, it would seem likely that the riskiness of the volatility riskier assets would change. by the same token, though you get into existential questions. what is the multiple for something you discounting by negative interest rates? you can't do it.

it's almost infinite. that's why the market seems expensive. but the lord only knows, 17 18 could be -- >> at this point, can you quantify what the fed's contribution to the market is right now? is it 10%? is it 30%? is it 60%? what is it? >> i don't know, joe. we'll be debating that for -- >> do you have a feeling? you for most of the bull market have been bullish on the economy, not on the fed. >> that's right. >> when you look at it now, are you still -- >> i still think, joe, that the economy would have done about what it did whether the fed did quantitative easing or not. >> that's why the market went up? >> yeah. it recovered on its own. >> so the point you're worried about more is now earnings being flat or -- it's not the fed becoming changing and tightening? >> it is but people think the

fed's in charge of that. i think the economy is in charge of that. ultimately the fed will take the structure on the economy. if the unemployment rate heads to 5%. if wages tick up for a few months in a row. >> what if we don't get all of that? what if we get the unemployment rate but not the wage growth? >> well ultimately i think we're getting close enough becky, that if one fails but the other one's there, that might be enough. so if you're at 5.5% but wage inflation goes to 2.5% i think there'll be enough outcry from bond vigilantes. i think the fed will have to respond. >> but the other sort of narrative is that things are so weak everywhere else and rates are so low around the world, we've got time to spare. do you think europe could recover quick enough to where all of a sudden those yields reverse themselves? >> yes. i think that's going to be a big surprise. >> we can't seem to go up. when it's 30 basis points over here, it's like we're fine. it's not even the fed.

>> it's interesting to me. we did the biggest simultaneous easing of economic policy about the globe ever in the recovery last year. we dropped sovereign bond yields everywhere. we dropped energy costs everywhere. and then we gave currency stimulation to foreign economies. why everyone thinks that's not going to work is baffling to me. i think the odds are it will work. and if it works and europe bounces, they're already showing better signs of growth. if japan bounces if the emerging world bounces, that's fantastic for those economies. that's a problem in the united states. >> if japan bounces we're all going to faint. >> that too. but the stock market returns as you talked about earlier suggests it is recovering. >> japan, too, listen. japan's doubled in the past two years. people still don't believe it. and we have eurozone forecast of gdp of 2%. which in europe is heroic.

you don't have a lot of population growth. you don't have a lot of productivity. so 2% real gdp in europe is -- you're line dancing if you get something like that. whereas in the u.s. it's seen as the low end of the range. there's a lot of things going on. one other thing i would say is while the market is at all-time highs, earnings are also at all-time highs for the s&p 500. that's true on a first share or notional dollar basis. so it seems to -- it fits with what jim was saying which is i don't know how much it has to do with fed easing. fed easing certainly helped, but i would also argue the market is not so disconnected from the economy as people might think. you may be disconnected in terms of the fortunes of the, let's say, someone who doesn't own a lot of stocks or second homes or the wealthy have done disproportionately well. but earnings and the market are closer than you think. >> one more thing about

earnings, that's an interesting point. one really big difference between this cycle and the past because the fed's taken so long to do anything earnings are already maxed out, margins are maxed out. if anything earnings are slowing. usually the fed starts a tightening process when earnings are still exploding. and margins are still expanding. they can use that as an exit ramp. >> but you can say anything under 4% is -- if they get to 3.5%, it's still easing. that's the absolute level. we argue about it all the time. if you go up a half it's tightening. but in reality we're going to be loose until 4% or 5%. >> i agree. i think they should have normalized a long time ago. i think the economic animal is bigger than the fed. >> i watched "in the line of fire" the other day. they were sitting down talking

about technology. john malkovich were lecturing how the japanese run their companies. they're not short-term. and it was from the viewpoint they do everything right in japan, we do everything -- this was 1992. we do everything wrong here. we do everything wrong here. right. [ overlapping speakers ] and i was watching it going, wow. japanese really know what they're doing. they've written the book on managing the economy. and look what -- that was 1992. clint was 60. anyway. >> jason, thanks for joining us. >> thanks for having me. >> jim's going to be with us for the rest of the morning. coming up following the crowd. this time into the world of real estate -- into the world of real estate how house flippers are using crowd funding to raise cash and turn big housing profits. and then a conflict in yemen raising tensions in the middle east. oil prices are calming down but the situation is far from over. we'll have former energy secretary and new mexico

governor bill richardson to be our special guest. he was also a u.n. ambassador. at 7:30 a.m. eastern. "squawk box" will be right back. never before has this kind of passion this kind of innovation, engineering, design and performance... been available... for this kind of price. the 2015 cla from mercedes-benz. see your authorized dealer for exceptional offers through mercedes-benz financial services.

welcome back to "squawk box," everyone. let's talk a little bit more about the breaking news story we just had a few moments ago. dow chemical is splitting off part of its chlorine value chain business and merging it with

olin corporation. dow will get about $2 billion in cash and about $2.2 billion in olin stock as part of the deal. and they will own a majority of that new company going forward. >> are they calling it dow-olin? remember dow-coaling? they've done this before. they put the two names together. the house flipper is making a comeback but getting an investor loan can be challenging. cnbc's diana olick found one company that made funding these projects a little easier. diana is live. sometimes i end up talking to someone and then i realize it's like a package. and then everybody looks stupid. >> no no. i'm real. alive and real. >> now it's just me that looks stupid. you're live, right? >> yes, i'm live. and i'm talking about rising home prices. they're bringing back the home flippers. buying rehabbing, selling at a fast clip. unlike during the housing boom

it's not so easy to get a bank loan to do this anymore so they found a new kind of funding. ben wallhood is flipping suburban chicago homes full-time at a fast clip. but he's getting no help from the big banks. >> without a w-2, without a pay stub they really won't process the application. >> in this era, wallhood instead turned to the crowd. a crowd funding platform called realty shares. this man founded the company two years ago. >> we're an online real estate space for investing. >> like wallhood's chicago area homes. for a minimum of 5,000 $accredited investors can get in on his flips and in return he gets the money. albeit at a fie higher interest rates than the big banks. >> we're making less profit because we're paying the higher rates, you can say. i would look at it a different way. if we were trying to look at the

banks we'd be lucky if we did one or two projects a year. and with realty share we've done 12 in the last 12 months. >> he says he can actually fund a full project in less than an hour. wallhood is flipping homes priced from $100,000 to a half million. realty shares is doing even bigger projects. i know you want to talk about the risk here. they say these are short-term loans so far. but so far they have had zero defaults on any of these loans. strong underwriting of the people who are flipping the houses and of course you know $5,000 in $5,000 out. you can get extra cash from these really high interest rates that the borrowers are paying. >> thank you very much. and thank you for getting up early for us too. >> sure. >> thanks for being live. when we come back this morning, how the golden arches are going into fashion. plus meatball mania is coming to the "squawk" set. more "squawk box" in just a moment.

eeep breath in. . . and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just one day. ahh! so he had your back? yep. in just one day, we approve and pay. one day pay, only from aflac. [duck snoring]

[ male announcer ] your love for trading never stops. so open an account with schwab. and when a market move affects, say a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move wherever you are. and start working on your next big idea. ♪ ♪

i love my mileageplus® explorer card. we're saving our united miles... ...for a trip to hawaii. we love free checked bags. i've saved $75 in checked bag fees. no foreign transaction fees means real savings. we can go to any country and spend money the way we would in the u.s. one of the best things about priority boarding is you can just get on the plane and relax. i put everything on the explorer card. i really want my united miles. ♪

so are you ready for a roller coaster ride? we don't mean the swings on wall street. we're talking about the amusement park in north carolina. it unleashed the world's fastest and tallest gigacoaster. >> this is not good right now. >> this 32-passenger coaster reaches speeds up to 95 miles an hour. members of the media got their chance to ride. season pass holders get exclusive access to the park today and everybody getting their chance on saturday. >> i saw it on "nightly" the other night. one of our guys were down there and he looked -- >> try riding that without screaming. >> it goes straight down. it's 345 feet or something on that first one. so you slowly go up. then it goes straight down. >> the worst is the slowly going up. anticipating the down. >> brutal. and my biggest fear my nightmare, it gets stuck up there and there's no way to move it and they have to come up and

unload everybody one at a time. >> i don't know how you get people down from that tall. >> i would die and rot up there before i'd undo the thing, i think. you see, you're not like totally in -- you got this thing here that but you're basically totally exposed. >> you know what happened? >> i don't like that. >> the khan. a kid got hit in the face with a bird. like ran into a face with a bird full on. no thank you. >> i think the bird got the worst end of that probably. >> but the kid wound up in the hospital briefly. he was okay the next day. >> i remember watching and my daughter said we're definitely going on that. see, when she says i'm going to go on that it's not i. it's we. when they said north carolina

if it was in jersey or something, i might be on the hook. and i'm not going it. i'm through with those things. i don't need to do those things anymore. the bucket list becomes the replace the "b" with an "s." i'm not doing it anymore. landing a nuclear deal with iran, bill richardson with join us on set with his risk assessment of the region what it could mean for the price of oil. more "squawk" next. the lightest or nothing. the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest ...baddest ...safest, ...tightest, ...quickest, ...harshest... ...or nothing. at mercedes-benz we do things one way or we don't do them at all. the 2015 c-class. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

♪ at mfs, we believe in the power of active management. every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else. put our global active management expertise to work for you. mfs. there is no expertise without collaboration.

welcome back to "squawk box," everyone. let's take a look at some of the headlines this morning. dow chemical is spinning off part of its chlorine business and merging it with olin corporation. it will generate $7 billion a year. andrew liveris will join "squawk on the street" to talk about this deal coming up at the 10:00 hour. right now it looks like it's going to open at around $49.

blackberry earned 4 cents a share in profit in the latest quarter. that was compared to an expected loss of 4 cents a share. revenue, though was well below what wall street was expecting because of hard-hit hardware sales. and we are just an hour away from the final estimate of fourth quarter gdp which is expected to show an annual growth rate of 2.4%. later this morning we'll get the latest michigan consumer sentiment index as well. >> the battle -- locked in a battle royale with apple, i don't know. i said it's 144 times -- apple is worth 144 times as much as blackberry. but the revenue number $660 million in the quarter. >> for blackberry. >> apple's profit for a quarter, $18 billion. people adopted the iphone didn't they? >> yes. >> except for you. >> no i have both. i have both. >> i can't believe it. that company is in business to

support you. you're still using it. >> there's two of us. michelle is too. women on the typing. >> don't unplug that. no. becky and michelle are still -- >> i have one iphone and one apple. >> i'm a sling shooter, whatever it's called. one in each pocket. >> as bill richardson can tell you, it's much more convenient to carry one device. anyway, with your own server. a saudi-led coalition in yemen making markets jittery. goldman sachs saying the bombing operations in that country will have little affect on supplies. we have cnbc's chief international correspondent michelle caruso-cabrera who actually is an alumnus of the horc. >> the saudi arabia-led coalitions launched fresh air strikes in yemen's capital sanaa

late last night. they hit a military basis affiliated with the military forces that are still loyal to the former leader of that country. that's according to a security officer which was said on condition of anonymity. the houthi rebels responded with artillery that could be heard across the city. thousands of protesters gathered in the yemeni capital yesterday to show support for the houthi group. television broadcast this huge demonstration in sanaa which took place after the skrabaudi arabia attacks. meanwhile, president hadi who had fled after the advance on the stronghold, he reappeared yesterday. he arrived by plane in saudi arabia's capital. this is a saudi state tv reporting this. there's going to be a big conference today of arab leaders. >> i know which side we support, but if you try to get into it, the iranians are now saying that

the rebels are part of the legitimate government too. how do you figure back on any of this? >> remember the current leadership of yemen is already considered a puppet government bolstered by the saudis. this is -- this is not -- >> it's hard to call the shots on who is in the right. >> right. all the ways we think about government and rule of law and governance and everything else in the united states is not applicable there. it's a different place. >> and the biggest reason just being that split in the population. >> remember the houthis have a stronghold in the north. but they're moving south. the sunnis are majority in the countries you brought up yesterday. >> we as a -- this administration has put the guy in saudi arabia right now. we are our money on that guy. >> right. >> when josh earnest comes out saying it worked perfectly, that's not true is it? >> move along, nothing to see here. that's the response from them yes. exactly right.

>> stick around. for more on geopolitical hot spots and the impact on oil price, we're join bid bill richardson. we can talk about oil, but i was glad you're going to be on to talk about just geopolitically what's happening in the middle east. i don't know how even to start. because i don't know how much you'll actually say to me or how much you'll cop to. when you were at the united nations, did you think the day would come when we would tell israel we're not going to back you with a veto of certain resolutions? did you think we'd be sitting here with iran sort of almost -- we feel like sort of friendlyier with iran? >> no. it's inconceivable. >> is it surreal to you? >> when i was at the u.n. the vetoes i cast were for israel. now the possible is we'll back a two-state solution. it's totally inconceivable.

what's happening right now in the middle east, we're trying to negotiate a nuclear deal with iran. we're on the same side as iran in iraq against isis. and then as michelle is talking about yemen, the saudis were backing the saudis in that coalition. what's interesting is the saudis are now becoming military regional players. and they've got nine countries arab countryies backing them in this effort. >> because they used to depend on us. and now they believe they cannot depend on us right? >> the situation is so volatile so explosive, it's not just a proxy war between iran and saudi arabia. you've got all these other countries that want to be players. you've got al qaeda, you've got isis, you've got a huge huge battle for influence. and we're right in the middle trying to navigate several sides. >> so as far as iran goes has it just gotten to the point you

would agree that israel and their threat from iran is so much greater than the immediate threat to the united states that we're doing the right thing by trying to get a deal here? because obviously prime minister netanyahu would take issue with the notion this is a good deal. is it a good deal for the u.s.? >> it remains to be seen. there's only a few days left. i'm a little concerned. i think the nuclear deal -- i was with the energy secretary the other day. he's a nuclear scientist about nuclear reduction. i wanted it to be an ending of their nuclear capacity. my worry is these other regional efforts, iran's behavior is support for hamas, hezbollah, efforts in yemen -- >> death to america was said just last week. >> that american journalist there, they've got an american marine. i want a package that involves a deal. maybe the deal involves all of

that it's going to be okay. but you never know at the last minute. i've been in these negotiations. something may surface that addresses the issues of iran state sponsoring terrorism. but we'll see. you know i've been a backer of the administration. you kind of chide me on that. but on this one, i don't know where i'm going to end up. yeah, nuclear capacity let it end or diminish. >> so i never thought really that our interest would diverge from israel's interests in the region. and at this point, that's the case they're making. >> well i think we have to continue whatever it takes. our beach front is israel. it's our strongest ally. this relationship has to be repaired. you know, the politics the relationship between the two leaders. you know, prime minister netanyahu caused a lot of these problems. nonetheless, we've got to come back together. because they're our anchor in

the middle east. their enormously strong ties. it's best we keep that relationship strong. but, you know, israel's neighborhood is a threat to them. the whole neighborhood. >> what about also the same degree you can say a lot about our relationship with saudi arabia. they're not pleased about a deal with iran either. >> no. i think that's happening is what i worry about the yemen conflict is two things. a dramatic effect on oil prices if something goes bad for the saudis. then what happens if the saudis start losing? we have military base there is. they're a source of great stability. they're with nine other countries. egypt, jordan that are our allies. >> through the years, no matter what, when analysts would write reports about oil. this is happening in this country, blah blah blah ultimately as long as saudi arabia was safe no problem. right? >> that's right. >> if we start now talking about

the stability there as we see this on the border that's -- >> i noticed your analyst said it's not going to have an effect on oil price, what happens with iran and saudi arabia. but if the saudis start losing it there's a weakness there. you know they control the price of oil of opec by decreasing or increasing production. right now by them not touching production, it means the price is going to stay relatively low and not necessarily go up. but if there's a huge geopolitical disruption, you know, the price is going to go down. >> governor this is all aftereffects of what happened with the arab spring years ago. has it been for the better or the worse? >> in the long run i think it's going to be better. because there are a lot of these repressive governments that weren't responding to their people. through twitter and facebook and social media are changing the

face of these governments. i think long run it'll be good. but short run, the disruption like for instance egypt, egypt wuss our strong ally. israel's strong ally. then all of a sudden that was jeopardized by the change. now, i do think mubarak, there needed to be a change. but i think it'll take some time for it to stabilize. >> we got to go but just begging for one more second. if someone told you when you were energy secretary in 2015 we'll be more -- well not more aligned with iran but there will be questions about our relationship with israel and we'll be almost energy self-sufficient or at least a bigger producer than saudi arabia, would you believe that? >> no. we're the biggest oil and gas producer because of renewable energy and shale. when i came on it was $10 a barrel. the gas guys were dying. >> i don't think we thought there was enough here for us. back then they said we don't

need to open any more lands because we really can't -- it's going to be on the margin. we can't produce that much here. and we did. >> it was technology. it was hydraulic fracturing that opened this up. >> you said renewable too. which part of that? >> solar, wind. >> it's more shale, come on. >> you said renewable first. >> exactly. >> that's your story and you're sticking to it? seriously? >> renewable is the future. you watch. >> keep telling yourself that. stone ages didn't end when they ran out of stones. governor, thank you. we appreciate it. when we come back this morning, it is meatball madness. the co-owners of the meatball shop in new york city keep it simple. they serve 16,000 guests a week and the numbers are growing. we'll get their tips for guidening entrepreneurs to success. and new deal this morning. dow combining with olin. the stock is soaring on this news and we'll be right back.

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? welcome back, everybody. meatballs are on a roll. a new york city restaurant taking the classic comfort staple to another level putting

it in heroes, sliders, and even eggs benedict. the restaurant has become a staple of the big apple and appetite is only increasing. there are more than a hundred meatball concepts have opened since its first location opened in 2010. let's dig in now with the cofounders of the meatball shop. thanks for being here. >> thanks for having us. >> six locations. meatballs is completely what you do? >> you know i think meatballs is the focus. but we have a very broad menu. so it allows you to really just -- meatballs is the vehicle for our protein. >> how did you come up with meatballs? >> this guy is a professional meatball. look at him. he ate meatballs every single night for seven years at a fancy restaurant downtown. i'd say what's with the meatball obsession. >> how did you think it would actually translate into a concept that would pick up? or were you surprised by it too? >> nobody had done it.

you know everybody's been eating meatballs forever and ever and ever. it's very familiar. it's super accessible. and so you know we just thought that hey, if people can sell burgers, pizzas hot dogs french fries, we can sell meatballs and people would come. >> what i thought was interesting was there have been a lot of meatball shops that have opened up kind of similar concept. not all of them have done that well. a lot have closed. what are you guys doing differently. >> i don't want to say we're the only authentic meatball shop. we did it first and we were you know, kind of blazed the concept. i think we did a lot of things right. but maybe the fact we were fresh and new and something for people to try. we're pretty excited that so many people have been inspired by us. >> you guys look really young too. >> they are. and you look young. so you have chicken meatballs. >> we have about 70 different meatball recipes that we rotate through. >> but you have veggie meatballs

too which are weird. your classic -- my mother god rest her soul made a beef meatball that i can't find anywhere. i know there was egg in it. are there eggs in yours? >> yeah. >> and some bread? you do it that way. >> you might have found your mother's meatball. >> i don't want to disappoint you, but i feel your mother would stand beside our -- >> there's a way of doing it. if you forget any of these things -- >> we wrote the recipe down. >> no pasta. so the carbs, that works for me too. so this would be good for me. just what is this? >> the idea behind the concept is you get to choose your own adventure. it's customizable. you choose what meat you want sauce you want, what sides you want. if your want your sides inside the bowl or outside the bowl. it's really sort of -- i think that's another hook we've brought to the table that you can sort of design your own experience. >> meatball parm sandwich at a pizza place, i would be so fat

if i let myself go. i'd probably that that three meals a day. >> you should let yourself go three times a week. you can have veggie balls on tuesday. but tuesday come in and indulge. >> so you guys like to hire class clowns. what's the concept behind that? >> the idea is that you know you go through your life and if you like to draw attention to yourself and you like to be funny and loud you're told that's not okay. your whole life. >> right. i know this. >> when people come to the meatball shop to work at the meatball shop we say we want to see your personality. if you're that person that can make the entire person smile and laugh and sing and have a great time, we want you to show that. >> if this doesn't work out here, i'm going to find you guys. >> wait a second. you call your employees ballers? >> we do. og ballers if they've been here for awhile. that's like an original gangster. >> that's cool. >> both you guys are total smart asses.

>> this man is -- >> that's what keeps us on our toes. he keeps me on my toes. he breaks my chops constantly. >> i'm a little taller so i keep him on his toes. >> so you got big plans going all over the place? >> we are -- we're thinking big. >> where's the money coming from? >> that's a good question. i heard you were interested. >> you got money? >> i have a little. but are you going to do vc or something? >> so far we've been growing internally and we've been really lucky that restaurants do well. we've had enough to grow slowly. we're young and learning as we go. we've been avoiding stakes by not rushing. we're not necessarily -- >> no reason not to right? >> you know the restaurants are successful i think because we spend our time in the restaurants actually concentrating. i don't know if we want to change that soon. >> growing slowly real quick, i want to make a statement here. for us at this point because we've been doing it for just over five years, it feels like it's not moving.

but the truth is six restaurants in just over five years in new york city is pretty quick. i would say. you know most people they'll open up a restaurant in new york city and get past the five year mark with one restaurant is like you've made it and you've done it. so we just celebrated five years in the lower east side our first restaurant. and it's super incredible. >> we'll let you -- you may need to get a little bigger but you're going to need a spokesperson eventually. and you know who we're friends with. not us. better than us. who would be the ultimate? >> obviously it would be spongebob squarepants. >> no. he's not real. who starred in the movie "meatballs." did you like bill murray? >> we don't like to kiss and tell but he comes into the shop and said he loves our meatballs as well. >> yeah he doesn't need the money though. >> but he can -- i think he could represent it. >> that's an incredible idea. >> he likes the meatballs.

>> he really comes in? >> but he goes to japan to do commercials for liquor companies. >> that was a movie. >> i saw that movie. >> see, i see things and i'm not sure. >> it all blends. >> yeah. blends together. >> guys thank you for coming in. it's been a pleasure. really appreciate it. and i know tonight there's a big show coming up on cnbc too. it is called "consumed: the real restaurant business" it premiere premieres may 13th so we'll be watching for that too. >> good luck. break a leg. >> thanks for coming in guys. >> i'll eat this when we go to break. i don't like to eat on camera. >> i will if you're afraid. i'll take it if you will. >> well women eating is kind of erotic. but yeah. >> look at that bite. >> bigger than your bite. >> yeah, it is. >> anyway, still to come this morning, new details emerging about the co-pilot of the germanwings flight that crashed

in the alps. and we'll get wall street's reaction to dow and olin. that stock up by 4.25%. plus jeremy siegel on the dow's wild ride. is 20,000 still in the cards? we're going to find out when "squawk box" comes right back. 80% of the poor in africa are rural farmers. 96% of them are doing rain-fed agriculture. they're all competing with each other; they're all making very low margins making enough to survive but not enough to get out of poverty.

so kickstart designs low cost irrigation pumps enabling them to grow high value crops throughout the year so you can make a lot of money. it's all very well to have a whole lot of small innovations but unless we can scale it up enough to where we are talking about millions of farmers, we're not going to solve their biggest challenge. this is precisely where the kind of finance that citi is giving us is enabling us to scale up on a much more rapid pace. when we talk to the farmers and ask them what's the most important thing. first of all they say we can feed our families. secondly, weend our children to school. it's really that first step that allows them to get out of poverty and most importantly have money left over to plan for the future they want.

some new details on the background of that co-pilot who is said to have purposely crashed the germanwings flight

into the french alps this week. andreas lubitz hid a mental illness. lubitz had suffered from a depressive episode six years ago and he spent a year in psychiatric treatment. they also found a doctor's note excusing him from work on the day the crash. there was no evidence that found a political or religious motivation for his actions. but this is news that is just breaking. when we return this morning, jeremy siegel is he looking to change his tune or stay the course when it comes to his call of dow 20,000? we'll find out after the break. then gamestop hits a glitch. that stock was down as much as 6% after results fell short of expectations. the company's cfo will join us to talk about all of this. "squawk box" will back after a quick break.

(trader vo) watching. waiting. for that moment, when right place meets right time. and when i find it, i go for it. (announcer vo) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps. and now, get up to a two-thousand-dollar cash bonus when you roll over your 401k or ira accounts. details at scottrade.com/retire.

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. are the bulls losing control? jeremy siegel says no. he's sticking with his 20,000 call but says buckle up. it's going to be a wild ride in the months to come. he's going to talk markets with

guest host jim paulsen. plus gamestop glitch. falling short of wall street's expectations. we'll go inside the minutes with the cfo just minutes from now. and we're halfway to the elite eight. a look at business on and off the court and the top ceos that graduated from the top schools. as the final hour of "squawk box" tips off right now. live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick. andrew has the day off. we're less than 90 minutes away from the opening bell on wall street. futures right now have narrowed their losses down to where it's right about 9 points indicated on the dow. and the s&p is indicated down

about 1.3. but the nasdaq has added to its gains up about 3 points so far. checking out the markets in europe mostly green except for the ftse which is down just fractionally. >> let's get to the headlines today. dow chemical is spinning off its chlorine business and merging with olin corporation. dow will get $2.2 billion in olin stock. dow's chief executive officer andrew liveris will be on "squawk on the street" at the 10:00 a.m. hour. stick around for that. also the senate passed a budget plan which included about $5 trillion in budget cuts over the next ten years. if you missed that piece of news, there is good reason for it. the vote took place at about 3:00 a.m. and the pilot who crashed the germanwings jet hid an illness. andreas lubitz had a doctor's

note excusing him from work on the day of the crash. he had been treated for a serious depressive episode and spent over a year in psychiatric treatment. and this news just in harry reid will not be seeking re-election. he said that the decision was not because of the senate coming under republican control nor was it due to the accident he suffered in his las vegas home. for more reaction on dow spinning off with olin mark connell is calling into the squawk news line this morning. thanks for joining us. >> thank you. >> so wall street seems to like this deal the stock is indicated up. what do you think of it? >> you know, it's a well structured transaction. that's the best you can hope for. from what we know, we still need to not know a lot about the economic. dow hasn't told us a whole lot about how much the individual assets are earning that fall into this transaction. >> what specifically do you need to hear when they talk on the

conference call? >> what we need to know is how much ebita is earning going in. dow's been specific about what the assets earn. we need to know what's left behind and what's going before we can have a firm sense of whether this is a good price or not. >> we know that activists have been circling not only dow but also dupont. it's something the chemical business at large has been getting a lot of pressure recently. you think this is a response to some of that activity? >> sure it is. materials companies in general i think have done a relatively poor job of convincing shareholders that they're really working in their best interest. dow in particular has changed its strategy so often lately we struggle to figure out exactly what they're trying to accomplish. this is consistent with what they've said most recently. the problem is when you add all of the things dow says they're going to do, it doesn't make sense for investors.

but of course this transaction is moving headlong out of commodities. >> what are some of the other moves you're talking about that this seems to be contradictory to? >> of course dow has decided that the alkaline business isn't where they want to go. the ethylene of 15 years ago. in essence you're just replacing one commodity with another commodity and talking about value add. but it's hard to talk about that when you're spending billions to -- >> go ahead. >> there's a mixed message. that's the challenge investors are facing. >> what did you think of this stock before the news this morning? >> we've been having a tough time getting excited about it. we're struggling to figure out who the right investor is for dow. we're moving headlong into the commodities but we're talking about how terrific ouring a business is which is of course a high value ag business.

which is something no chemical producer has really pulled off. so it's just tough to figure out where exactly liveris is going here. >> what do you think about dupont? >> i think that dupont is in a pretty nice situation. they're doing a lot of the things that shareholders want them to be doing. and while tran doesn't look like it's having a lot of success getting that done but they are getting success in getting dupont to move. i think she had a good agenda she was trying to push forward. >> the ceo. >> yeah. sure. >> i want to thank you very much for joining us today. >> thank you. >> again, dow chemicals ceo will be on "squawk on the street" later this morning. markets will try to break a four-day losing streak today. stocks closed off the lows of the session -- sharply off the lows on thursday but had a tough wednesday. so far the dow is having its worst losing streak since a five-day loss in mid-january.

the s&p 500 now dipping into negative territory for the year. jeremy siegel is professor of finance at the wharton school of business at the university of pennsylvania. still with us are jim paulsen. jeremy, i bet you know about jim's work. late last year in the third or fourth quarter jim did start to temper his enthusiasm a little. i bet you didn't agree with what he was saying. at this point nothing goes straight to the sky without some movement around and some sideways action. have you seen anything that surprises you yet in the most recent sort of sideways trading that we're seeing? >> well joe, you're perfectly right. we've had 20% to 25% annual since the last five years. that's certainly unsustainable. i'm a bit more relaxed and optimistic about equities than i was two weeks ago when i

appeared on your show. i think the fed gets it. well mostly gets it. i thought that they were being way too aggressive in their projections of interest rates and they have come down on that. but, yeah. i mean i think we're in a range bound now maybe 17,000 to 18,500. i still believe 20,000 is the fair market value of the dow given interest rates and even prospective interest rates. it's not going to be there in the next month or two. maybe by the end of the year if things go well. we're in a range in a choppy market, i think. >> you have the earnings headwind. you can't really just -- >> the earnings headwind -- >> the headline risk of earnings being flat with last year and some earnings being down because of currency you're going to see that and it's hard to -- what would cause the market to shrug that off and go higher? i don't know. i don't know what the impetus would be. >> again, i -- you know i believe that the 20% rise in the

dow over the last six months was amount to up to 50 basis points. i didn't want them to jump right in and go on top of that. we need to see the dollar stabilize preferably even maybe sink down a little bit. so the analyst and the forecasters can be more sure of what the earnings are going to be. you're right. 4% to 5% would be the slowest growth of earnings we had since the great recession. and until analysts are able to see a little bit better than that, you know we're not going to get a lot of headway in stocks. but then again, i don't think we're in for a big decline. and that's something, you know unless something surprising happens. interest rates are still so very low. >> jeremy jim paulsen. i was curious about how do you play this from here right now? we're similar, i think, in looking at near term volatility and the trading range. but ultimately the bull restarts

again at some point and we still have some years higher. how do you play this right now? would you suggest to stay in the united states through this or are you suggesting to maybe stay in equities but move off shore predominantly? >> i think -- well i think europe is looking more attractive because the euro risk has been taken out mostly from that trade. i mean, i was saying two years ago i liked europe valuations where 25% cheaper than the u.s. big euro risk. now valuations are only about 10% cheaper in europe but most of the euro risk is gone. so europe and i think the qe is going to help them they need those long-term reforms, but i think it's going to help them. and i think also we should not ignore emerging markets. they're out of favor because, you know, they've been whacked on either side. but their currencies are now

reasonably priced and their valuations 14 15. i know china is still 10 11 12. they're still at least 5% or 6% growth. so yes, i do think you'd be wrong just to pull back to the united states now especially since the dollar has gone up so much and valuations still remain i think reasonable abroad. >> jeremy when we finally get to 20,500 at the end of this year or next year then what do you do? do you take a look -- step back? do you say then well that's my objective and i'm out? or do you just re-evaluate and go to 23,000? >> well the normal range for stock returns, joe, is 6% 7% a year after inflation. what's that? maybe 9% if the fed hits its 2% target with inflation. it will be more normal rather

than the double digit 20-plus that we've had. but normal returns. are still extremely attract i have. one thing you have to realize. once you get to what i call full valuation. you know obviously the short-run volatility of equity prices is going to be with you. it could be up 20%, down 20%. you've got to have a long-term objective. when i worry when i see the pe ratio, 25 or 30 as we saw it in 2000 that's when i would really pull back long-term. but once you're at fair value, i don't see any reason for a long-term investors to pull back at all. >> you have to see interest rates go up quickly and more than people think. does anyone think that now? >> not at the moment. i think we could be surprised, though, by it. i think so. i think they might surprise us. >> all right. professor siegel thank you. >> thank you.

when we come back this morning with the cycle in full swing, we're going to see? gamestop can capitalize. the cfo joins us next. and we get the final read on gdp. also the secret ingredient to success when it comes to california pizza kitchen. stick around. "squawk box" will be right back. [ male announcer ] your love for trading never stops. so if you

get a trade idea about, say organic food stocks schwab can help. with a trading specialist just a tap away. what's on your mind lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are. and start working on your next big idea. ♪ ♪ sometimes the present looked bright. sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today.

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.

retail gaming giant gamestop posting quarter results after the bell. missed street estimates and lowered guidance for both the first quarter and the full year citing slipping hardware sales. the stock fell more than 5% in after-hours trading. joining us now to break down the quarter is rob lloyd, cfo of gamestop. between new hardware offerings and the importance of new names in software how do you ever have much visibility in the video gaming business? >> well, good morning. thanks for having me. we look ahead at the next year and as you can imagine, we have

more visible of what's coming in the next three months next six months than to maybe what's coming later in the year. but you have ten pull titles that hit throughout the fall. things like madden and fifa and call of duty. so we can count on those coming this year. between now and then we look at things like mortal kombat rory mcilroy pga golf which will be coming in june as well. >> it is. it's almost -- and you know how difficult it is to run a movie studio. and it seems like it's almost the same kind of thing here. you've really got to be an expert on content and how it gets translated into revenue at your shop. what about hardware? what do we know about mard hardware over the next three months, six month, a year? >> as we look ahead, we see the xbox 360 and the playstation 3 are going to have dropoffs of probably 50% or more.

we see that the neck generation of hardware the xbox one and playstation 4 will come in more. we see greater than 50% in the next year. >> you know the -- sort of just the knee jerk reaction for gamestop and i'll channel someone who's not here. the knee jerk reaction it's going to follow the way of blockbuster and happen tomorrow. obviously things take much longer, but there is you know some merit to that idea that everything is going to be online eventually and no one's going to have to go into a brick and mortar company anymore. >> that is the question. it's how fast will the industry move towards digital adoption. we did about $950 million last year selling digital content to customers that come into our stores. we recently learned from

intelligence that the adoption rate of full game downloads which is really the question in the industry that adoption rate is not as fast as people think. last year what customers paid to download aaa titles was to the console market. >> if it were to double every year, obviously you've got some time. can you pull a netflix? can you go from you know the mail delivery model of dvds to purely lyly digital? >> although why would you go through a third party player? why not go through a game maker directly? >> yeah. >> or from netflix or from apple tv. >> those are all daunting questions, right? >> well we do as i said over $900 million in digital receipts. most of that comes from our stores. the reason is our customers want

to come in. they want to get the expert advice from the story. they want to trade in their pre-owned games to trade for what they want. and they're in the loyalty program. they want their power points as well. >> i see it in my family with my son. he likes to go and talk to like, the guy at the counter. i think some of these guys -- i'm saying this in a nice way as far as being on the spectrum i think people on the spectrum like to talk to each other. my son likes to go in there and talk to everybody that's in the store. >> it is a social experience. particularly around the launch of a new game. we have midnight launches typically and we'll have hundreds of customers in line outside the store to come in and buy not only the physical game but the digital content to go with it as well as other licensed merchandise associated

with that game. >> gamers are hard core. i don't know if you can get your total fix over a computer or online. i think they're -- you know there's some camaraderie that comes from going in the store too. all right. maybe the clock's ticking but maybe it's really slow. i'll tell andrew when he gets back that he can cross this off his list of going bankrupt next week. >> we'll be around a long time. thank you. >> all right. thanks, rob. when we come back this morning, all business on the hard court. of the teams in the sweet sixteen sixteen, 14 of them have alumnus leading a publicly traded company. find which two didn't make the cut. and since going public california pizza kitchen is trying to reinvent itself. the ceo will join us in just a bit.

♪ at mfs, we believe in the power of active management. every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else. put our global active management expertise to work for you. mfs. there is no expertise without collaboration.

march madness isn't just for basketball players. here at cnbc we decided to pit the top ceo alumni from each of the sweet sixteen schools and to see who stacks up the best when it comes to the board room. our data guru joins us with the results. harvard almost won. you'd have a lot of them there. can you find well-known ceos in the sweet sixteen? >> you can find some. tim cook of apple, he's a duke grad. >> is he really?

i didn't know that. >> larry fink ucla guy. i'm from los angeles so it's like a local pro team. john chambers from cisco. he's a west virginia guy. obviously they got blown out yesterday, but as far as a sweet sixteen school he's one of those guys. you see a few characters in there. terry lundgren is the ceo of macy's. >> he's an arizona grad. >> he is. so most of these coolschools have a current ceo of a public company. two schools stand out. gonzaga, they don't have anybody. for a public company. but they're a small school a little more regional. that may be expected. but kentucky they have 30,000 students. there is no current public ceo that graduated from the university of kentucky. so they're much better at sending people to the nba than -- >> not just s&p 500. you're just talking about no -- >> all public companies in america. we're talking thousands of choices here. so they just don't have that

same stature when it comes to that type of product. and when you think about schools like gonzaga, for example, they have gotten a much better recruiting class of students because of their basketball success in the past 15 years. because they've been moving up the college rankings. they get more attention, all this media hype. but it hasn't translated in terms of going back 20 or 30 years where those graduates end up. so we'll have to check to see where they end up. >> i think boehner's an ex-alumnus. right? from xavier. i think so. >> you've always got the xavier. >> because i went to saint xavier. >> what other facts can you tell us about that? this can be a whole xavier thing. >> jesuits are great educators. >> gonzaga is a good one. >> if you're in the educated you're inferior from the start. >> probably. not 100%. >> but it helps. >> right. but i know becky will like this. if you look at fortune 500 companies, rutgers sends a lot

of ceos to fortune 500 companies. cornell, that's where andrew went, they're up there. m.i.t. they've got about ten. wisconsin usually does really well. >> iowa state must do well, right? >> iowa state didn't make the top ten rankings. >> rutgers has tony soprano. they don't need anything else. >> so you've got jesuit schools, from there you're inferior, tony soprano is for rutgers. >> kentucky graduate rudy vaughn christine sutherland. >> they're good at sports and entertainment. >> where's j-law? louisville? >> i don't know. >> jennifer lawrence. >> she's from louisville, but --

>> she was acting young. i don't know if she had time to go to school there. >> all right. >> that's interesting. that's good. when we come back fourth quarter gdp data. the ceo of california pizza kitchen. plus more on where to invest around the globe with our guest host jim paulsen. as we head to a break, look at the u.s. equity futures. they're flat now after being lower. stick around. "squawk box" will be right back. and so many other discounts that people think i'm a big deal. and boy, are they right. ladies, i can share hundreds in savings with all of you! just visit progressive.com today. but right now, it's choosing time. ooh! we have a winner. all: what? [chuckles] he's supposed to pick one of us. this is a joke, right? that was the whole point of us being here.

welcome back to "squawk box." breaking news. kind of old but still breaking our last look at fourth quarter gdp. and it is unchanged with our second look. 2.2% which keeps last year's gdp level at 2.42% if i remember my calculations right. let's go through the internals. the consumption number did ramp up a couple of tenths from 4.2% to 4.4%. the gdp price index up .1%. that's no surprise. quarter over quarter, personal consumption expenditure up 1.1% exactly as expected. exactly the same as our last look. corporate profits down 1.6% versus 4.7%. that's something to pay attention to. the setup here is yesterday we dabbled briefly in the tenths over 2% but the auction that didn't go well might be the catalyst with fiscal year end in japan. we do see rates backed off.

not much under 2%. up a couple of basis points on the week. and of course we're going to remain focused not only on what's going on in the mid-east but foreign exchange a big deal. euro somewhat unchanged today. another failed attempt to do better than that 1.10 that was so important on the wild session about a week and a half ago. that was the high tick. it's those extreme wild ticks that give you boat loads of information. back to you. >> all right, rick. thank you. for more on the numbers right now let's bring in annetteta markowska and steve leisman. i always look at these numbers and think, okay, final number of fourth quarter gdp how excited can we get about that because this is backward looking. >> i agree 100%. my concern now is what's happening in the third quarter. and since january every proportion or every segment of the gdp has a surprise on the

downside. if you extrapolate from the data right now and don't assume any bounce in march, we're tracking pretty close to zero. so things are not looking very well at the moment. >> different from back then. >> though there was a gasp around the table when we heard 1.6% decline for corporate profits. >> 1998 i did a story for "the wall street journal" that did not -- i said i'm not looking at these operating profits the companies massage. i looked at national accounts. it was about maybe a two-year head start on the idea. you missed a lot of years but there are some guys i think jim paulsen may be among them. when we say corporate profit we mean every corporate profit. it's private and public. and these are reported more or less according to gap numbers rather than operating profit. that's a big debate weave had around this table. but there is a signal you can get around what's happening with corporate profits that's earlier than what you'll see in the

massaged numbers. right? >> typically it is. so that's a little bit concerning. what concerns me more than anything i think in that number is not so much profits went down, but you're talking about margins, profit margins if you look at profits to gdp overall. nominal gdp would have went up more than 2.2%. profits went down 1.6%. >> hold on. that's okay in the sense that margins were at historic highs. >> yes. but it's not from the perspective of what jim's been talking about today. which is the fed is about to start raising rates. >> so it's concerning a little bit to me. >> if you wanted a little more balance in the economy that was more towards an economy that was perhaps sustainable, i think it would have been reasonable to explain the extraction of profit by corporations could not remain at that level. that there was not a lot going to workers and wages. and that a more balanced economy would have that. >> yeah. i guess from a stock investor standpoint --

>> you want it all all the time. >> i do. >> am i right it's okay to have a little more balance in this profit? or does this worry you for the economy overall? >> absolutely. and in the early phases of early profit contraction, stock market does okay. it's those phases when the wage growth picks up to where it squeezing profitability, it takes a lot of increased rates to squeeze profits once again. it's really those late phases of the profit cycle that corporate sector has to restructure and that leads us into recession. i'm not too worried about profit margins. >> if i could shift gears quickly, one mystery has been the consumer and where this windfall of higher employment and lower oil prices are going. i need to point out the -- and this is where the fourth quarter data is interesting. the 4.4% increase in consumer spending in the fourth quarter is the highest since 2006.

and i just wonder. we have -- 4.4%. 4.6% was 2006. >> maybe some of that is the gas prices that we were seeing relief and extra spending going in more than we thought. >> right. that could be. i just want to throw to aneta because all of the monthly retail sales data has been terrible. and yet this quarterly number is very robust and says consumers are spending. >> they're spending on services which is not part of retail sales. the recent numbers have been pretty bad, i agree. weather has obviously played a role. i'm talking about january and february here. i think also you know it takes a few months of these lower gasoline prices sticking for people to become convinced that okay this is a permanent drop. this is not just volatility like we saw in 2008 when gas prices went down pretty quickly ran back up. so i think once people see that these low gasoline prices are

here to stay they're going to be more likely to spend them. so i do look for a pickup in retail activity as we get into the spring months. >> this pattern this year played out like last year. we had a big 2% decline in the first quarter. then went 5.5% and 4.5%. but it did the same thing. the first quarter contraction last year lowered everyone's expectations about what was going to happen in the economy. and then book. >> jim, that's the only thing that matters to investors. do you make a bet right now on a quarter rebound. aneta said the first quarter numbers are going to be bad. we're running 1.6% on the cnbc rapid update which is above some of the other folks. and last several years we've had this weak first quarter and a bounceback in the second. would you maic a bet on the bounceback and make a bet that stocks would bounce? >> i think there will be a bounce in the second quarter.

lower mortgage rates and then you change the weather pattern. you bring the spring thaw. i think we're going to have a nice bounce. and i think that'll be good for the economy. i'm a little less confident it's necessarily good for stocks. i think it's going to radically change again the fed's outlook on their dot matrix at some point. >> higher rates again. you're also -- you're also a guy who in response to the cnbc fed survey was that you see europe coming on, japan coming on the u.s. coming on. that fuels commodity prices going the other way. so you're a contrarian. >> i am a little bit that way. some of this is still working its way through the system. some of the stimulus through gas prices and mortgage rates. >> absolutely. and the european qe is compressing mortgage rates here by probably 80 basis points. >> thank you mario. >> it's a big offset to all of the others.

>> thank you both. when we come back california pizza kitchen's move to a more upscale business has been paying off. the ceo joins us after the break. and more food this morning. first meatballs, then pizza. after that check out the futures. you'll see that the futures are mixed. dow futures down by about 10. s&p off by 1. nasdaq up by less than half a point. 40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank.

citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.

♪

mcdonald's trying to attract millennials but not through food but through fashion. we're calling it struggling. that's like when we had the analyst in saying she said keep doing what you're doing. it's the largest fast food chain in the world. it's an icon. i guess maybe subway has more locations, but -- >> that's because a lot of them are stores within a store and they're tiny places. >> when the president is gone and michelle will be gone i'm not sure we'll be focused on the pc nutrition stuff. anyway, the struggling fast food chain launching a line of hamburger clothing. i'm never eating kale. i'm sorry. it can only be purchased online. in europe where everyone thinks they're so cool, they go in and out of mcdonald's and they never -- they aren't -- the minute they get out they light a cigarette. so there's a lot of things

they're not ashamed about in europe. >> healthwise. >> mcdonald's in the louvre is like so clean and nice and crowded and a bunch of hipsters are there. here you have to have tofu or you're not with us. but you're right there. >> there have been some fast food chains that have been good all along at projecting a healthy image. including the -- >> order your salad at applebees. it's only 1400 calories. >> or try the cheesecake factory. it's 3,000. >> right. the healthy salad. >> for the last 30 years our next guest has been navigating the evolving taste of the community. the california pizza kitchen ceo joins us now on how they're keeping up with the changing tastes of the nation. thanks for being here today. >> good to be with you this

morning. >> we were talking about changing tastes and how we want healthy every day. california pizza kitchen seems to be ahead of that theme. it seems you were out there offering a fresher food option before much of the nation realized that's what they wanted. >> well we've always been innovative creative and first the market in many cases. and so that's what we try to do yesterday. and what we're trying to do today. today is our 30th anniversary so it's a. pi happy birthday to us. >> one of the things you do is to keep up with consumer tastes is to do things you might not ever expect. things like salmon halibut, corn. how are you bringing these new tastes and how do you shift things up when people are concerned about carbs from pizza pizza? >> what we're learning is trends are about flavors and they're

about ingredients that you can see and that are fresh and seasonal. and so what we're doing is widening our menu with some offerings like you just mentioned. fish and halibut and salmon that we're finishing in the pizza oven. just widening the menu a little bit. we in fact have things like lobster flat breads which are unique and different. so we're bringing them to market in a way that the consumer expects us to have a unique twist to it and we think we do. >> what do you think about the struggles that fast food chains like mcdonald's are going through right now? what do you think they're doing wrotening? wrong? >> every company goes through ups and downs. they'll be back. they're a great organization. they know how to do things well. it's connecting with the consumer and in fact that's what we're trying to do at california pizza kitchen in what we call our next chapter, the next 30 years is bringing that innovative spirit back to what we do day in and day out to be first to market.

>> how much locations do you have right now? >> worldwide we have 280 locations in 208 cities and 15 countries. >> so what would you say when you start looking at the health of the consumer? how are they doing in america? how are they doing around the globe? >> well when you talk about healthy, you mean healthy foods in general? >> i mean how healthy is consumer spending? >> well in the segment that our guests come from they are doing just fine. we focus on two particular targets. a young aspiring foodies, those are folks doing well financially. then the sophisticated foodies. empty nesters and those with disposal income. from that perspective we see that consumer and our core guests doing well. >> so you're not the type of company that gets buffeted one direction or the other with oil prices going up, oil prices going down? >> well we won't see it directly. it's hard to really know what the impact of that is.

i think that our core guests as i mentioned are not as sensitive to that as others. >> what about inflation when it comes to food prices? we know inflation has not been what the fed anticipated but we have seen swings in the commodity prices. how does that impact your bottom line? >> right. we've certainly seen food inflation. however, our menu is so broad that no particular protein or no particular commodity affects us in a huge way either way. so we're somewhat protected although we definitely have felt food inflation. >> the -- i love your stuff. i do. and the chopped salad, g.j., hold the garbanzo beans. you know which one i'm talking about. big item. have you had that? >> i haven't. >> you get the large, you can share it. >> is that the -- there's a strawberry one over there. >> it's your biggest selling

salad, isn't it? >> it's that and the barbecue chicken salad. >> barbecue chicken is good. i actually am going to have a piece of the barbecue chicken pizza. but you guys were the first to do that weren't you? >> we were. >> dominos has it now but we like yours better. >> well we like to think that we're pretty creative and innovative and bring things to market. you know, a lot of folks have followed us throughout the years. we still believe that we've got the best one out there. >> where was the first one? california pizza kitchen? >> in beverly hills. >> we go to the one of el pasao. you know that one. >> i do. in fact, the restaurant in beverly hills is still there going strong. >> it is? awesome. >> just one quick question for you. i'm just curious more than anything. you guys are, you're really creative. you're borderline funky when it comes to food creations. i'm kind of curious if you have

a real regional difference across the country where it works in certain places but not in different places culturally or whatever across the country just because of the funkiness of it? >> well we do -- certainly on the west coast being a california company, we do extremely well. we do well on the east coast. if i were to say an area -- but i think it's more the number of locations that we have. it's not necessarily what we're offering. it would be the midwest. you know it's we don't have as many locations in areas like st. louis or kentucky or even chicago. >> i'm from minneapolis. that's why i was wondering. we don't see a lot of them out there. >> right. we'll get there eventually. >> g.j. thank you for joining us today. and happy birthday. >> thank you so much. >> we have huge major egg on our face. not me but cnbc. get it together. we had the cfo of kroger on

earlier this week. >> is he a kentucky grad? >> ceo of kroger with 375,000 employees, got his bachelors degree in accounting his bba in finance, and his masters degree in accounting all from the university of kentucky. >> that's our bad. >> this california guy thinks everybody is a hick from kentucky. well, they're not. >> and an astronaut from there too. >> so university of kentucky is well represented with kroger. when we come back, jim cramer will wrap up the week on wall street and key jobs numbers on friday. check out the futures at this hour. still indicated to have a slightly lower open. s no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score powered by starmine, will help you

execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. hello. i am a fully automated investment advisory service. i can help you choose investments. monitor them. and rebalance your portfolio. i can do a lot of what humans can. except have a real conversation. if you'd like that, you can always speak to someone at schwab. they aren't algorithms. try not to hold it against them. say hello at intelligent.schwab.com

great time. let's get down to the new york stock exchange. jim cramer joins now. we've had meatballs and california pizza stuff today, jim. i'm sorry, you could make it up here and get back down -- no, i guess you couldn't. >> i like the chicken salad mentioned, that's my favorite. the barbecue chicken. >> yeah. >> fantastic meal. look, that was the short hills mall, remember the days? fabulous there.

>> i don't -- i am able to objectively look at all of these. these are your competitors, aren't they, for you? >> yes. yes. same price point, too. don't have the -- >> same price point. let's see what happened today. i think we need to talk overall, i don't know if you saw jim paulsen, siegel jason, we're all thinking it's about inflection points and the second derivative a lot of these things. if earnings aren't going to be great and if the fed is eventually raising, is this a time to be less optimistic or full-speed ahead in the u.s. market. >> didn't you love when jeremy said i'm feeling better than i did two weeks ago? for me i feel like that unless we see europe coming back we've got to see the dollar stop going higher i am not as optimistic because there's just fewer stocks that you can pick from. i mean we need to see the industrials have more robust earnings. we know they're going to disappoint. we also know a lot of

technology's disappointing. it makes it harder to pick among the field. if we could get some sign europe's getting better we don't have to worry about the strong dollar i'd be okay. >> jimmy, are you still -- not watching every game. >> notre dame and arizona. still in. >> what's that? >> still in. notre dame and arizona, i'm still in. but i've got to tell you, i have -- in my final play i have the knicks versus kentucky i'm worried about the knicks. you know could be a critical game. knicks may be blown out, like west virginia. >> score over 39 points that's the question. thanks, jim. >> thank you. >> see you in a few minutes? when we come back jim paulsen says investors should stay offshore. find out the areas he's suggesting where you should be putting your monthey to work. oil prices down by 1% today. stick around. "squawk box" will be right back.el ve in the power of active management. our teams collaborate around the world, which leads to better decisions for our clients.

put our global active management expertise to work for you. mfs. there is no expertise without collaboration. before earning enough cash back from bank of america to help pay for her kids' ice time. before earning 1% cash back everywhere, every time. and 2% back at the grocery store. even before she got 3% back on gas all with no hoops to jump through. katie used her bankamericard cash rewards credit card to stay warm and toasty during the heat of competition. that's the comfort of rewarding connections. apply online or at a bank of america near you.

in my world, wall isn't a street. return on investment isn't the only return i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. start investing with as little as fifty dollars.

at mfs, we believe in the power of active management. our teams collaborate around the world, which leads to better decisions for our clients. put our global active management expertise to work for you. mfs. there is no expertise without collaboration. getting your atm card stuck in a bank machine can be frustrating but check out this video of a man in china who took it to the next level. caught on camera smashing the atm machine with a crowbar. all right. he was drunk at the time.

entered the wrong pass code. the machine kept his card. this wasn't a smart strategy. at end of all of this had to pay $3,000 in damages and facing charges. jim paulsen, you have said that you're nervous about things. you think the bull market's still going to win out. >> i do long term. >> what would you do with your money today? put it in the u.s. stocks or outside. >> i wouldn't leave the stock market as far as overweight. i'd stay in stocks overweight but move a big portion offshore. several different diversified ways you can do that i think you can go from a hostile policy official in the country to a hospitable one in japan. you can go to the emerging worlds that sells 12 times earnings versus 18 in this country, and it's a region of the world that's probably going twice as fast as the developed world could hope to grow. that's a pretty good deal.

i think the dollar's going to come down. >> anybody who has done that has to be careful about the currency making sure it was hedged. you think we've run our course? >> i have. europe and japan are outperforming, despite the dollar strength to far. it could get better if the dollar weakens. i like at resource-based economies and stock markets, toop another too. commodity prices bounce and stock markets like canada and australia might have a good second half. >> the weakness in oil is based on the strong dollar than the supply-demand picture. >> i do. weak demand strong ply, i think it's both of those but more about the dollar. that's what really changed sense last june. and i think, if that comes down a bit, we're going to see a prizing spike in crude. i think before the end of the year. >> thank you for being here. >> always fun. >> we will see you again soon. >> you going back now? >> i am. it's friday. got to get home. >> real good.

going to brainer? >> not this weekend. >> make sure you join us on monday. "squawk on the street" is next. ? ♪ let's go♪ >> good morning, welcome to "squawk on the street." i'm david faber along with jim cramer. we are live from the new york stock exchange. carl quintanilla has the day off. let's give you a look at futures now. a rough week that's fair to say if you're long in the market. you're short, not so much. we are looking for a bit of a down open again after down day yesterday but not as much as we saw when we looks at futures at this time yesterday. crude oil always an important component of everybody's market story these days down a bit as