live from new york, where business never sleeps, this is "squawk box." good morning and welcome to "squawk box" on cnbc. we're first in business worldwide. i'm michelle caruso cabrera along with andrew ross sorkin. joe and becky are off today. we'll start with crude prices. we saw a $27 handle on wti yesterday. 28.55 at this hour, higher by 61 cents. that's a gain of more than 2%. brent is back above 30 with a gain of 67 cents this morning. also a gain of more than 2%. crude is getting a boost by comments from iran's oil minister, saying tehran is ready to negotiate with saudi arabia over the current conditions. if that were true, i think you'd see an even sharper increase because iran has been the problem in terms of getting a deal done theoretically out of opec. among the other big market movers this morning, another selloff in asia overnight.

banks and commodity stocks weighing. the nikkei dropping more than 2%. the index is down more than 10% since the beginning of january. in the u.s., stocks coming off a wild session. the dow traveling more than 1,000 points yesterday during a very choppy session. this despite a relative ly leve trading range of 256 points. a big move yesterday. sharply higher open for the dow jones. the s&p opening higher as well as the nasdaq. mike, deutsche bank says they're going to buy back senior debt, potentially. why would that move the u.s. markets? why would that help deutsche bank with its capital? >> you have a bid in the market, especially in the bank stocks, right in the afternoon when you

got that report. clearly the market likes it. it signals deutsche bank can do this, that it has the liquidity to buy back the debt. it's almost a signaling mechanism to say, we're not so constrained, we don't have a liquidity trap right now, and we can actually do this if we want. that's one reason. >> if the concerns are about if in the future they're going to have to raise more capital, how does buying back debt that hasn't fallen that much, because it's the senior dead, help the capital profile? >> only marginally does it help because of the weird accounting at banks. if you buy back your own debt that's trading a the a discount, you can book a profit on that. you've essentially kind of created value somewhere by doing that. that profit runs down to the bottom line. at least in a small measure, it will add to your capital. >> we don't think that's what set this off. >> there's a lot of things to have set it off. >> oil is what set it off.

>> deutsche bank in particular. >> but in terms of why you think the market moved the way it did. i thought you were referencing -- >> deutsche bank reports yesterday afternoon, right when with the market picked up. >> you think that was the whole -- >> i think it was a big part of it. people are getting too nervous ahead of janet yellen. >> the european banking stocks have sent fear into the u.s. marks. wait until you see the german stocks. big spillover. the fed will be in focus today. janet yellen will head to capitol hill to deliver part one of her semiannual testimony on the economy. she'll testify before the house financial services committee at 10:00 a.m. eastern time. we'll have full coverage here on cnbc. >> okay. and then the big story of the morning. it's politics again. decisive wins for donald trump and bernie sanders in the new hampshire primaries. the main theme, voters backing anti-establishment candidates on the gop side, trump getting 35% of the vote, followed by john

kasich, ted cruz, and jeb bush, who came in stronger than people expected. and marco rubio. >> everyone said, how come they like trump so much? but i have so many friends up here, and they're special, special people. new hampshire, i want to thank you. we love you. we're going to be back a lot. we're not going to forget you. you started it. remember, you started it. >> on the democratic side, sanders taking 60% of the vote to hillary clinton's 38%. >> together, we have sent the message that will echo from wall street to washington, from maine to california. [ cheers and applause ] and that is that the government of our great country belongs to all of the people and not just a

handful of wealthy campaign contributors and their super pacs. >> we'll have a lot more on decision '16 in just a bit, about who's going to be leaving from the gop race. we have people like chris christie and ben carson and possibly carly, who may have to pack it in. also, hillary didn't win as many female voters as anticipated. >> that's been a chronic issue. >> a big issue in how this plays as it continues on. >> and that was supposed to be her strength. first woman candidate. >> also, trust and honesty. they polled people on trust and honesty on the way out. she did not score well. they say that once you get into some of these other states, they think they can somehow run the tables, that the math does this. >> the generational divide seems

to be playing much more heavily than the gender divide. in corporate news, shares of disney tumbling after the media giant failed to ease cord cutting concerns in its latest earnings report last night. "star wars" helping the firm post earnings, but investors couldn't overlook the drop in profits. julia boorstin sat down with ceo bob iger in a first on cnbc interview. >> we're going to say on our call in a few minutes we've actually seen an uptick recently in espn subs. we did reference in candor in the august call that we had seen some sub erosion, and that, in fact, was the case. but the last few months in particular have been encouraging. >> so iger walking back a little bit of the alarm from the summer, but despite the optimism, the dow component saw programming costs rise at espn. that's been a concern as well. >> okay. now getting back to the markets this morning and all the moves,

let's take a quick look at the futures, see how things are setting up after what was a wild day yesterday. dow looks like it would open higher at the moment. about 144 points higher. nasdaq looking to open 58 points higher. let's also flip those oil boards around. we are now under 30. we were, by the way, over 30 yesterday morning. >> you talking about crude? it was crazy yesterday. >> now we've officially duck ee under in a big way. let's also tell you what's going on with the ten-year note. 1.765. you know, we could talk about gold. not a bad trade. bitcoin, not so much. gold, better. actually, that's down now marginally as well. for more on the selloff overnight in asia, let's get to sri in singapore. >> good morning, andrew.

heightened risk aversion out here. china markets are closed and will remain closed for the duration of the week. so it's really concentrated in japanese equities. it was the classic flight into the safe harbors of the japanese yen. we have seen the yen higher. overnight we saw it at a 15-month high against the u.s. dollar. therein lies the unintended consequence between the currency markets and japanese equities. very strong. so a stronger japanese currency means pressure on the exporters, pressure on the broader market. the banks leading the decliners. the adoption of negative rates seems to be compounding the stresses amongst the big japanese mega banks. they were all big, big losers today. so there are issues about their sustainability at their margins and profitability going forward. all in all, it was a dash into safety. the trigger this time around wasn't oil, it was the health of the european banking sector. let's also not forget, we saw money going into the jgb market

and the yield on the benchmark ten-year jgb, going negative for the first time ever. all eyes now on janet yellen. it's over to the fed chair. what tone is she going to strike at the congressional testimony? what does it mean for the dollar? what does it mean for risk appetite, and what does it mean for the rates outlook? asian markets watching that one closely. guys, back to you. >> sri, thank you. see you soon. >> let's show you what's happening despite that selloff sri was telling you about overnight in asia. look at the european markets this morning. it w italy rebounding by 4.5%. the spain index is higher by more than 3%. let's talk more about the markets. so much concern about the european banks spilling over into the united states. when you see the reaction in the

european markets this morning to the simple news from deutsche bank, is this because of deutsche bank saying they're going to buy back some debt? >> i think that's certainly the catalyst for this very short-term rally of today, but the weakness that we've seen this year is not just about energy or china or financials. if you look at the earnings season, there are negative earnings growth across the board. just consumer discretionary, health care are the only ones with real growth. it's more pervasive. >> of all the stuff you're talking about that feeds into the whole profitability for banks. if you're worried about a slowdown in world economies, it's going to feed into profitability concerns. >> in fact, you've seen it in the bond market too. the high yield selloff, which of course was sort of energy driven, as now expanded into the

financials, and that has impacted investment grade bonds, where the spreads are as wide as they've been in a long, long time. >> joe, what do you think? the weakness that we're seei ii in financials, does that portends something much bigger? how concerned should we be? >> if one believes that we're headed to a recession, absolutely you get it. a lot of popular barometers are saying those recessionary risks are rising. the reality is recessions don't start with conditions like this. recessions don't start with consumer confidence being high, with employment looking good. when you dig inside employment, one of the things we saw was the number of people quitting is on the rise. you quit when you're confident. you don't quit when you're uncertain. you don't quit when you're nervous about making car payments or housing payments. underneath the surface, there's a strong argument to make that we're seeing a trough here. these are not recessionary conditions yet. that's what the financials have been pricing in. that's what oil and all these

other things -- >> so would you commit to buying financials here? would you commit to buying the market at this price? >> to buying the market, absolutely. i think the number one spot in the market is going to be the consumer. a lot of people have equated falling oil with fear. the reality is according to aaa, there's now eight states in the u.s. selling gas for $1.25 or less. that's a massive stimulus for the consumer. people say, wait, where is this consumer spending? haven't seen it. what's interesting is if you look at the consumption data, for the first time ever in the history of consumption data, the real retail sales exceeded that of nominal retail sales, which means consumers bought more units, real retail sales, they bought more units than nominal, which includes prices. so that shows the effect of this walmart world we've been in where all these countries are -- >> you can buy more is stuff because everything is cheaper. >> this gets to a little bit of the question of how much does it matter if technically we get into recession. for the markets purposes, it's

facing an earnings recession. it's facing the corporate sector not being that healthy. the credit market has peaked. i guess the question, does it really matter if we technically get into a recession or is the market dealing with other things here? >> i think what we've seen so far this year is a real split in the equity markets. the quality companies, the companies that are generating earnings growth, that have generated consistent dividend growth, have dramatically outperformed year to date. that's the story. you've really got to look for companies that can weather weaknesses in the broader economy. on the bond side of the equation in high yield and both investment grade, one thing to keep in mind, sure, we're not worried about rising interest rates, but keep in mind that if you're ready to put your toe into the water, that you think these 800 basis point spreads in high yield and 200 in investment grade are attractive, remember the same factors that are likely to bring in those spreads will bring those interest rates back up.

managing the interest rate risk is important if you're seeing that. >> janet yellen today, can she move the markets? i mean, she can. what would she have to say? >> i would say the risk of a policy mistake is clearly high. there's a huge expectation the fed needs to walk back their plan of four hikes or whatever it is. so i think she's got to come off as sounding very dovish. otherwise, that risk is high. there's two big policy mistakes that could happen. one is here, the other is china. if at some point they don't panic. i think china needs to panic, to do qe, to do all these different things that the fed did in 2009, that europe did a couple years ago. the two big policy mistakes would be janet yellen today potentially not walking back -- >> does she have to say she made a mistake? >> walking back the hikes would suggest it. >> but how does she do it? >> the fed can't drive

everything. i think there's almost too much of a focus on the fed. it's more about the broad economy and the legacy, the continues qe around the world that can almost overpower what janet yellen does. >> are we at -- i feel like central bankers must feel like they're in crisis, right. japan goes to negative interest rates. they get a surging yen. that's not how it was supposed to work out, right. the ecb hasn't gotten anywhere near 2% inflation. now we're talking about financial stability in the banking system in europe. what have these guys achieved? >> when you look at the banking system in europe today and their fears of whether it's exposure to oil or emerging markets or other places, the number one thing -- and yesterday financials were obviously a big focus. it was a big focus on cnbc all day yesterday. but one of the things people are missing is oil to financials today is not the same as housing to financials in '07. if for no other reason, it's that financials simply are not

leveraged the way they were in '07. rules and regulations prevent that. i think people have made too much of this. i think that is one of the main ingredients here for a trough. >> all right. thanks, guys. >> thanks very much. >> you see this piece in the "new york times" over the weekend? do the not break up the banks. for this very reason. an interesting thing to see. >> they haven't been permitted to be that profitable. >> not a popular thing to say though. coming up, big wins for donald trump and bernie sanders. now the focus turning to south carolina and which republican can win enough support to challenge for the nomination. we're going to talk to political strategists from both sides of the aisle when we come back. equals great rates. it's a fact. kind of like grandkids equals free tech support.

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welcome back to "squawk box." the theme in new hampshire yesterday, anti-establishment wins. donald trump and bernie sanders locking up first place in the nation's first primary. john harwood joins us now. he's got a lot more on what happened last night. john? >> andrew, what happened was a populist revolt in both parties, on the left and on the right. let's start first with the democrats. bernie sanders not only beat hillary clinton in new hampshire, he crushed her 60% to 38%. that's a wide margin. he said there was real content to the message on economic

policy. >> tonight we serve notice to the political and economic establishment of this country that the american people will not continue to accept a corrupt campaign finance system that is undermining american democracy, and we will not accept a rigged economy in which ordinary americans work longer hours for lower wages while almost all new wealth goes to the top 1%. >> now, donald trump on the republican side had a similarly convincing victory, scored 35%, did not underperform his poll standing as some had predicted he would. as he did in the state of iowa, john kasich had a surprising second place showing, but he's got a tougher path ahead. after that, you had marco rubio fade into fifth place.

very damaging night for him. jeb bush got a little bit of life. donald trump, when he addressed his supporters, talked about some of the same populist energy bernie sanders did, but he chose a different group of targets. >> we are going to make america great again, but we're going to do it the old-fashioned way. we're going to beat china, japan. we're going to beat mexico at trade. we're going to beat all of these countries that are taking so much of our money away from us on a daily basis. it's not going to happen anymore. >> so there you have two sides of the same coin. working class americans feeling that they're not getting what they need out of this economy. they're not moving ahead. bernie sanders and donald trump both speaking to that, andrew. >> okay, john. thank you for that report. we're going to try to dig deeper into the conversation right now, try to figure out what comes next. former u.s. congressman joins

us. also, steve mcmahon. let's talk about this for a second. i want to go on the democratic side first. how damaged was hillary last night? as we were discussing before, on issues like trust, in some of the polls doing terribly. congressman? >> well, i think for democrats and republicans both, i think you're going to get a little better barometer of the electorate once you go down to south carolina. candidates got up this morning saying, hey, we've got 48 more of these contests to go. we've just gone through two. we've seen hillary win one. we've seen bernie win one. we've seen donald win one. we've seen ted win one. so there's 48 more of these to go. i think south carolina, i'm not really shaken on either side by what happened last night. but i think you're going to see

a little more better stability in the electorate in terms of these candidates and their popularity and how they might do. >> steve? i'm looking at these trust numbers. only 5% -- 91% chose sanders. 5% chose hillary clinton when asked about honesty and trustworthiness. >> there's no question secretary clinton's campaign is in a different position today than it was yesterday or the day before. new hampshire is the reason for that. turnout in new hampshire was at record levels. she lost not only young voters, she lost women voters, which is something that surprised many experts. the independents and first-time voters who came out and voted overwhelmingly for bernie sanders. what happens on the democratic side at least is once the voting starts, the presidential campaigns are usually about energy, enthusiasm, and momentum. right now most of that is on bernie sanders' side. the democrats now go to nevada,

which is a caucus state. both campaigns have been stealing for nevada for some time. it's a more diverse state, as congressman watts points out, and it's a much friendlier state for hillary in terms of the demographic profile of the state. but there's no question that bernie sanders has momentum and that the fire wall for the clinton campaign in new hampshire, nevada, and elsewhere is something they set up and they're hoping today it holds. >> on the republican side, does jeb bush have a chance? does this do anything for him at this point? >> well, i still think he has a chance because i think he's got the resources to give himself a little bit of runway. again, i think south carolina kind of determines that because you've got a little more -- you have got a little different electorate. you've got evangelical populists down in south carolina. you've got more of a secular

populist probably in new hampshire. so donald trump, i think, probably finds it a little more difficult in a place like south carolina, where jeb and kasich and cruz and rubio, those four guys, would find it a little more comforting down in south carolina, if you will. so i don't think it's over for jeb, but i think he's definitely going to have to, you know, ramp it up a bit going forward in the next couple primaries. >> are we all in agreement that chris christie is officially -- i mean, he hasn't officially yet, but christie is out, carson is out? >> christie sounds like he might be going home. but fiorina and carson? >> i don't know if they've given up, but i think it's all over but the tears. the voters have spoken. the direction for both of their campaigns is pretty clear. they might not have read the tea

leaves yet, but i think everyone else has. >> how damaged is rubio? >> i think rubio is pretty significantly damaged. one of the things about both a negative attack and a mistake like this is to the extent that it reinforces a narrative about you. it's a problem. there was this narrative he was a little too scripted, a little too rehearsed. maybe not quite ready to be president. he walked right into it in that debate. i thought his recovery last night was quite good. his statement where he said this isn't on you, this is on me, and i'm going to do better. i thought he did as well as he could. >> congressman watts, kasich came in second, but almost -- we haven't mentioned him once. when you read all the analysis, everybody complete lid dly disc him. is kasich next to go? does he have any hope here? >> well, i think the runway

question becomes more -- becomes a pretty serious concern. john put a lot of resources into new hampshire. he didn't do anything in iowa. he staked his claim in new hampshire. he came in second. now do you have the ground game and the resources to continue on? as i said at the outset, you have 48 more places that you've got to go and kind of put your tent up and say, we're going to compete here. and there's a lot of candidates that carson probably has the resources, but i think it's probably over for him. carly's got to take a serious look. christie's got to take a serious look. kasich came in second, but does he have the resources to continue on. i think the ground game gets much more important here on out

than it has been in these last two contests. that's going to be the $64,000 question for probably five or six of these candidates. >> all right. okay. we're going to thank both of you for the conversation. we appreciate it. we'll see what happens. i'm sure we'll continue talking to both of you throughout, well, the next couple months. >> coming up, fears of the zika virus may keep at least one high-profile u.s. athlete from going to rio for the olympics. we'll have those details next. plus, "frozen" is coming to broadway with new original songs. that story coming up. and as we head to break, a look at yesterday's s&p 500 winners and losers.

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♪ welcome back to "squawk box" on cnbc. time now for the executive edge. stories we've been reading in the paper that we found interesting. the olympics aren't until august, but hope solo says she might skip the games due to fears over the zika virus. this is the u.s. women's national soccer team star goalie telling "sports illustrated" no athlete competing in rio should be faced with this dilemma. zika is suspected of causing a birth defect, and pregnant americans have been urged by the

cdc to avoid traveling to affected areas. she says, i would never take the risk of having an unhealthy child, and if i had the choice today, i wouldn't go to the olympics. >> unless this gets solved, they're going to be spraying and doing a lot of stuff over the next couple months, but you're right. if the olympics were tomorrow, think about the number of athletes that probably wouldn't show. >> women of childbearing age. >> and there have now been reports of how many female athletes have been pregnant at prior games, whether they knew it or not at the time. obviously you have a little bit of lead time, if you care to plan it. it's not something that once you get the virus it carries on for your whole life. at least they don't think so. >> here's the thing. no matter what the brazilian government says, i don't have a lot of confidence in their ability to control it or to do what they say they're going to do. >> but do you remember -- there was a mosquito born virus down in the caribbean last year. the sorkin family canceled a vacation because of it.

>> i'm getting out the violin. >> the only reason i mention it is everybody was very nervous. you go to a doctor in new york, they say, do not go. within two months, it was basically gone. i don't want to say we're overstating the case, because i don't know how eradicatable this is. is that a word? >> but understand people err on the side of caution. >> as they should. >> well, related to sports, draft kings and espn are ending their exclusive advertising deal. it's likely draft kings asked out of the partnership. the deal inked last june gave draft kings the exclusive rights to run ads on espn in 2016. in fact, the obligation. the daily fantasy sports site is facing several class-action lawsuits and is in a legal battle with the new york attorney general. this is kind of interesting. at the time, there was a lot of fanfare around this, that draft kings was going to be exclusive, they were going to promote draft kings in terms of some of their

talent. now that whole industry immediately seemed like this indispensable market. then the clamp came down on it. now we can do without it. by the way, draft kings and fan duels were such big advertisers for a short period of time in the beginning of the football season in year, everyone raced to figure out how important they were. then these legal challenges came, and they kind of shut the tap off. kind of interesting. >> not big enough to hit earnings to the parent company. >> no, it's not at all. in fact, obviously $200 million i think was the number over years that they were going to have to pay to advertise on espn. >> the poor sales guy. >> his commission just disappeared. >> exactly. >> we have some good news if you're a fan of "frozen." >> i haven't seen it. >> i used to do a lot of singing. anna, elsa, and olaf are coming to broadway in the spring of 2018. you're going to be stuck with this all day now.

the hit film -- this will be the ninth musical disney has brought to broadway. they will write additional songs for the stage adaptation. i would argue this is perfect for broadway. we should say "the lion king," $6.2 billion just from the theater. >> that's amazing. >> still running. "avatar" was the highest grossing movie of all time. "lion king" in the theater version. i don't want to predict now, but you could see "frozen" outdoing that. >> did it outperform on every metric? at one point, it was a huge surprise. >> it definitely came out of nowhere to become this huge thing. of course, the sequel is coming too. this is a franchise that disney is going to rides. >> have you seen it? >> i have two daughters. we somehow missed the absolute heart of the craze. they were interested, but it wasn't like the song was in my house all day. by the way, took the whole

family to "matilda" on broadway, which was great. so this model really works. >> i have boys and we've probably seen it a dozen times. so many times. what was the other movie last year? there was another movie where they had a little trailer for "frozen." >> an additional short. >> it was not a good movie. might have been "cinderella." apologies to the folks in "cinderella." coming up, fed chair janet yellen set to testify on capitol hill. markets watching closely for hints about the next rate hike. we'll tell you what to expect next. and a quick check on european markets. sharply higher across the board. gains of more than 2% for france and germany. that german move is deutsche bank. we'll discuss later in the show. be right back.

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welcome back. u.s. equity futures at this hour in positive territory. they suggest a positive open for the dow, higher by 124 points. the nasdaq by 55. part of that is because of moves higher in european shares, driven by a bank rally. look at shares of deutsche bank, as well as its european competitor. had been up as much as 14%. reports that the company is considering buying back some of its debt. that's helped deutsche rebound from its recent slump, at least today. it's also lifting shares of ubs and credit suisse.

likely to impact the banks as well here in the u.s., janet yellen heading to the hill to give her semiannual monetary policy and state of the economy report. she'll be in front of congress. investors will be looking for some insight into the pace of rate hikes in the year ahead. joining us now is aaron klein, currently director of the bipartisan regulatory reform commission. >> pleasure to be here. >> we've had guests on all this week who say she's got to walk back in some way the talk of rate hikes. >> at some level, she has to. the gap between where the fed is and where the futures market is, is as big as i've ever seen it. fed, four hikes. futures, probably zero. less than one. so she's going to have to move it back. she faces a really tough dilemma in doing so. she may appear to signal weakness in the u.s. economy. and that itself could become a fulfilling prophesy.

the fed chair usually likes to go before congress and talk up the economy, not express concerns about weakness. >> couldn't she say, the credit markets are already doing the tightening for us, so we don't need to? >> she can in that sense because there's no question that the 25 basis point hike in liftoff in december now feels like 75. it feels like it's been amplified. but think about it in reverse. why was the fed raising rates? they wanted to pull bullets in the chamber so they have ammunition to cut in the next recession. if the fed is one and done, what does that leave them when the economy turns south? >> to michelle's point, you could say our job market looks like it's in great shape right now. we've kind of mission accomplished on that front. inflation is not a problem. we're mindful of it. we want to get the target back up. it's just this messy stuff in the rest of the world that seems to be complicating our plan. >> the fed has continually got inflation wrong. i think it's gotten it wrong because it gets oil wrong.

it keeps saying it's going to bounce back. it did when it went from 100 to 80, 80 to 50, 50 to 30. it keeps getting oil wrong because they have a model that doesn't look in reality. reality is a lot of countries are not trying to be profit maximizing in how they produce oil. they have geopolitical goals. i'm concerned the fed is going to continually get inflation wrong until they adjust that in oil. i'm going to be keeping a close eye on chair yellen when she's asked that. >> doesn't this go back to when ben bernanke got oil right? he resisted the european push to raise rates. he said, no, no, this is not going to pass through to real inflation. that was kind of a victory. i wonder if they have a bias against pinning things too much to oil. >> i think they do, and i think they don't fully appreciate where the u.s. has now moved as a net energy producer. the giant mystery -- and i think congress is going to push on this -- the price of gas fell

drastically in the fourth quarter, but people didn't do more holiday shopping. where is that money going? i think the consumer can be a source of demand going forward. i think yellen is going to have a tough time talking up u.s. economic prospects without appearing hawkish on rates. >> deleveraging like the rest of the world. you mentioned not hitting the inflation targets. nobody's hit their inflation targets. japan has failed miserably. and this big move into negative interest rates that moved the markets for a couple days, the yen now is going in the exact opposite direction. the ecb continuously misses, not even close when it comes to trying to achieve inflation. and now we're talking about -- now we're back to talking about whether or not the financial system in europe is stable. they have failed on that mandate and mission, which is implicit in all central banks. this is a crisis moment for central bankers, it appears to me. they've achieved almost nothing, and now we're back to worrying about global financial stability. >> so it's a real interesting thing. when i helped write dodd-frank,

one of the things dodd-frank did was increase financial stability, power p and authority in the central bank. that happened globally. the ecb did it. the bank of japan, the bank of england. global policymakers kind of doubled down on central banks to handle financial stability. now they're being put to the test. >> and how are today doing? >> well, you know, i think they've been doing better than they've been given credit. i think the banking system has been resilient in the faus of several shocks. i think a lot of the rules are working. you have problems going on in puerto rico and the u.s. you have problems in greece abroad. you're right about japan. it's a complete mess. i'm concerned that the u.s. could be headed in that way by continually underestimating inflation. on the other hand, central banks have to deal with the hand they've been dealt. a lot of these problems were not of their own doing. as they've tried to equip themselves, one of the concerns is they're moving e ine ing in directions. in that split, yellen is going to be pushed very hard by congress. are you maximizing u.s. economic

growth, or what's your responsibility as the central banker to the world? and that's a tough question. >> you think congress cares about that? >> congress wants her not to be central banker to the world. congress is going to push her to only care about the united states. but you got to be a little careful. we have the world reserve dollar currency. the federal reserve has a huge global impact. eyes all over the world are going to be on here. she's going to have to answer the question that congress pushes her with a very big u.s. focus. >> you helped write dodd-frank. you're lucky joe's in the here today. >> maybe i'll see him next time. >> yes, that's a longer conversation. we will have to reserve a longer segment for this. thank you. good to see you. when we return, slow user growth and rumors of a revamped timeline weighing on twitter stock despite jack dorsey's insistent. down nearly 13% in one week. we're going to tell you what to expect when twitter reports after the closing bell. "squawk box" returns in a moment.

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cme group: how the world advances. twitter getting battered still or again. the stock tumbling to an all time low. down a whopping 35% so far this year. social media giant feeling the

heat and slowing user growth and rumors of changes to the real-time messaging feed. it caused an uproar in the twitterverse. can the company come out from the tweet storm. victor anthony is joining us now. victor, thanks for joining us. can this company possibly please those people who feel like every move it makes is met with criticism? >> well, you know, change is always difficult for most people particularly when they are accustomed to a news feed that they did like and engaged with. twitter needs to reaccelerate user growth so they need to launch product changes. i think that change will come. it's not coming over the next several weeks. they need to do something to accelerate user growth. >> everyone seems to have their list of things twitter must do. >> correct. >> everything on that list seems to offend somebody else. do we have to examine the idea

that they absolutely need to ramp up user growth again or can they optimize revenue from the user base that they have right now? >> wall street is expected -- for a stock to work, it's paramount they need to reaccelerate their growth. the expectations tonight are for the worse, decliner user growth and guide below consensus for 2016. i'm hoping for the better which is moderate user growth and guidance that will bracket the consensus. i think user growth is paramount. jack dorsey when he comes into the call tonight will say how he drives user platform over the coming year. that's what wall street is expecting. >> it was months after jack dorsey was re-installed as ceo they had this huge number of senior management changes. the street said wait a second you guys didn't have this figured out before that. i guess he has to give the impression he has the plan. he has a plan.

>> today's investment in jack dorsey, five team members left. that was not supposed to happen. he was supposed to instill confidence in the management team with the appointment of the ceo. that's risk for 2016. so he has, to i think, again instill that confidence. >> we've come on and talked about this repeatedly. you would like to see an algorithm on the timeline? >> i do. >> we talked about this. we talked about how you make the service easier to use. that's not happened. >> you're right. they need to accelerate the product iterations. they need to push through these product changes. algorithm change, servicing the best content relevant to that particular user goes a long way. >> do you think they won't do it? >> i think he will do it. >> you read his stuff last week pup read his tweets. >> he basically said we won't do

it next week. if you saw that comment -- >> guess how much the twitterverse will hate him even more if he does it. >> i've been around this space for often years, a decade. follow these companies. they always have product changes. customers get it done. customers get used to it. >> i hate the new uber display. i hate that logo. we giving up on anybody buying twitter? >> no. i think the stock just continues to languish for most of this year, google comes in and makes a bid. >> they already got the api. >> what's the api. >> application program interface. let's developers develop products. >> right now on google, if you were to put in a certain word you will also often get the tweets. they got the tweets in the stream. why do they need to pay for the thing? >> innovate better than these guys. >> google missed the whole

social media trend. not for lack of trying. i think owning that twitter completely would make sense, i think, over the next several years in terms of giving them complete exposure to social media. >> all right. thanks very much. great to see you sir. coming up, big wins in new hampshire. donald trump and bernie sanders. if new hampshire was america, i don't know. >> i grew up in new hampshire. >> reaction from former republican senator kay bailey hutchison. controversial budget proposal from the white house. we'll talk to congressman chris van hollen. we're back in a moment.

a huge night in new hampshire. >> and i say you. >> donald trump and bernie sanders both winning big. >> we love you. we're going to be back a lot. we won't forget you. you started it. remember, you started it. >> should wall street be worried? >> waiting on the fed chief. futures are higher ahead of janet yellen's first public comments since the rate hike back in december. will she say what the markets want to hear. >> the profits awaken. new "star wars" movie setting records for disney. but the shadow of the espn empire still looming large. should investors buy into the kingdom right now? the second hour of "squawk box" begins right now. ♪ >> announcer: live from the beating heart of business, new

york city, this is "squawk box". welcome back to "squawk box" right here on cnbc first in business worldwide. i'm andrew ross sorkin along with michelle caruso-cabrera and mike santoli. joe and biggie are off. we'll cover many topics from wall street to washington especially given just what happened yesterday. in the meantime fed will be in focused. janet yellen heading to capitol hill to deliver part one of her semiannual testimony on the economy and monetary policy. she will testify before the house financial services committee. that happens at 10:00 a.m. eastern time. we'll have full coverage right here on cnbc throughout the day. blackrock's income chief with more than a trillion dollars under management, rick rieder will give his view of the economy. that happens at 7:30 a.m. eastern time. check out the markets right now. the markets are in positive

territory ahead of yellen's testimony. the dow will open higher by 138 points. the s&p by 20 and the nasdaq by 56. that's coming off a rally we've been seeing in europe. germany is higher by more than 2% so is france, ftse. italy is rebounding. one of the reasons for the move particularly in germany is deutsch bank that stock is up sharply this morning but coming off its highs, up 9%. doifrp bank is considering a multibillion euro bond buy back which they were hoping would instill some confidence in this structure of the bank that's why you see gains there. let's check out the price of crude which was down 6% yesterday. went to $27.56 before rebounding mid-session. right now at 28.35 a gain of 41%. a gain of 1.5%. brent is back with a gain of 42

cents. shares of disney tumbling after the medial giant failed to ease concerns. investors couldn't overlook the drop in profits. shares of paycom software getting a big boost much beating the streets and its outlook is upbeat. now a very different story at solarcity. it installed fewer rooftops than expected. warning growth would slow this year. >> despite the market's t tumultuous ride our gechuests a here. chris you're positive at this point although we see derns about the financials in europe and concerns about what janet yellen might or might not say

today? >> the positivity comes from the fact if you just step back from the shorter term, i know it's hard to do. every day there's something else negative coming out. we have janet yellen. if you step back and say is 2% growth okay to inch forward? is earnings growth x energy 2% to 3% okay. are multiples at a level where you can establish two or three year activity absolutely. there's a whirlpool in risk assets and creating this vortex that brings things down and assimilate things of dangers of '08 and that's not the case. >> not the danger zone of '08 but you're assuming 2% growth? isn't the market telling us it's possible we won't get that 2% growth. there's possibility the markets are signalling a recession. >> i think it's overdone. when you look at the consumer and it's hard to balance out all

of the thing that are coming in right now, which are not completely backward looking but a lot are. manufacturing industrial based, stronger dollar from last year hurting them still. they are starting to base out. not a lot of people are talking about this. the asian leading indicators are coming up a little bit. that basis things out. the consumer comes out and spends more. they aren't spending a lot. retail sales are better than people are saying. when you actually just look at credit card resent and et cetera, quarter over quarter, january over january, 4%, 5% higher than they were. >> do you see signs ever recession in your world? >> the manufacturing economy is flat, down. we can see it across the board. we're seeing fewer orders in our middle market manufacturing companies. it's stable. it's not a more bill -- not like we're heading in to recession. doesn't feel that way at the company level. it's not as good as it was a year ago.

>> for somebody dealing with companies within the real economy, when you see what's happening with the financial stocks getting hit so hard on wall street, we all lived through 2008. do you get that fear about what's happening or do you get a sense we're close? >> anybody, you know, that lived through it can't help -- there's a tinge of something, the hair stands up on the back of your neck. on the other hand there's also a sense that we've stabilized underneath these financial institutions. we know what those problems were in '08 and they have been fundamentally sort of shored up. not fully. still some issues. fundamentally we won't see some huge down draft. meanwhile i think chris points out, can present a buying opportunity because everything has been taken down by, you know, that tinge that people -- >> baby and bath water. >> exactly. >> one of the issues the market is dealing with there's a lot of room between a 10% in this s&p 500 what we've seen and 2008.

so could get worse and still not be as bad as 2008 and the credit market is something we have to see firm up. >> absolutely. great point. that's part of the vortex. credit market does need to firm up starting in europe where the biggest worries are. if you look at credit spread, credit default swaps and et cetera you look back in time you say what does it most look like? it's 2011. we had a 19% peak to trough move in 2011. very difficult time. why did we come up? central banks had more fire power. so do they have more fire power now? fire power is just to create stability of prices. it's not to create stability of financial assets even though technically they are targeting that. >> 2011 is the european financial crisis which drove that. thanks, chris. >> let's turn our attention now to politics. decisive win for donald trump and bernie sanders in the new hampshire primary.

main theme voters backing anti-establishment candidates. >> all of a sudden we started getting numbers in and everyone said how come they like trump so much but i have so many friends up here and they are special, special people. so new hampshire, i want to thank you. we love you. we're going to be back a lot. we're not going to forget you. you started it. remember, you started it. >> then on the democratic side sanders taking 60% of the vote to hillary clinton's 38%. >> together we have sent the message that will echo from wall street to washington, from maine to california. and that is that the government of our great country belongs to all of the people and not just a

handful of wealthy campaign contributors and their super p.a.c.s. >> joining us now with her thoughts on primary and what it means for the candidate heading to south carolina and nevada, kay bailey hutchison, former u.s. senator. j.b., you're right here. i know you have a view about this. i think you believe we're supposed to see past bernie sanders. this bernie sanders thing was a fluke. >> no i think some of the message of bernie sanders is not a fluke. what is a fluke is the idea that we ought to watch the results of new hampshire and say somehow this is a harbinger of what's going to happen in the democratic primaries going forward. remember, new hampshire is neighboring state to vermont, it is very much like vermont in the sense of it is a vast majority white liberal. doesn't reflect the -- >> we talked about it last hour -- >> the polling on honesty

integrity issue terrible. >> you got to remember in addition -- >> terrible. >> first of all, the female issue let's put that aside, hillary clinton's entire campaign is based on the idea that she's going to get all women to vote for her. the idea here and this is very important she's going after the broad swath of democratic votes. that means hispanic votes, black votes, means going into not so much nevada as south carolina and into the sec states. >> there are female hispanics and female blacks. >> she wants to win every female vote and every male vote. >> there was a narrative she was going get the women's vote and that pillar has just crumbled like the roman forum. >> instead your narrative is wrong. in new hampshire he was always going to come to nature. that was -- remember is he from neighboring state but he out spent her 3-1 in new hampshire. >> the whole race.

>> remember she won iowa. that is the state -- no woman has ever won iowa. >> barely. >> she won iowa not expected. the three most, you know, whitest most library wall states in the united states are vermont, new hampshire and iowa. >> senator, is j.b. right or wrong? >> i think bernie sanders is finished. i think he's had his run. but really the damage he is doing to hillary on the democratic side is that he's promising something for nothing which voters love and it's making it harder for her what she's doing is saying, everything is great, obama has done a great job, i'm going to continue those policies, and i think that is going hurt her more in the long run than bernie himself and these two states because i think from now on she withins. >> senator where does the republican money go now? does it go donald trump?

is rubio out? people thought that -- in the past week or two the money was going to rubio. does jeb have a chance. what happened last night? >> i think we're not going see a true trend until march 1st. i think that these, certainly have helped, certainly donald trump won last night. i think kasich did very well, elevated himself. i think bush is still in it. i think that going towards these 11 states on march 1st, we're less than a month away from that is when you're going to really start seeing the differences and where there is a coalition around one or two candidates probably from the sort of get it done establishment type, i think -- i think this iowa/new hampshire will completely set the pace. trump is ahead, no question about that. but who the others are, the

challengers, i think there still will be more than just one. >> you think trump gets knocked off the pedestal? >> i think it's going to get closer as we winnow the field and 34% is what donald trump got. that's where approximately he seems to be in south carolina. and 34% is not 51. so i think as other candidates go away and there is a smaller group on the other side you are going to see a much closer race and possibly in delegates selected something that causes this to go on all the way into the convention. >> one similarity with hillary clinton they both have very high negatives. right? they both have very high negatives. >> hillary is fighting also two major republican super p.a.c.s that are sending messages into

these early states. that's a tremendous amount of money that's being spent against her both by her opponent in the democratic primary as well as by two major super p.a.c.s in each of these early states that are, by the way, sending messages within democratic circles. in other words they are sending twitter feed, sending messages, trying to get liberals to stand up against hillary clinton. why? because they know she's the toughest candidate on the democratic side. they want her weakened. >> have you done business with donald? >> my family has. >> and? >> and i would just say he would probably be as bad a president as he is, you know, as dangerous as a businessman. >> you think the business you did with him went poorly? >> what happened? >> he was by all accounts -- i'll just say generally about people i've talked with, he's a bully. he's a bully. that's not something we want in the white house. >> there's a lot of bullies that own business.

it works well. senator hutchison does jeb bush have any chance at this point the fact he almost came in second or there was talk he almost came in second? >> yes i think he's still there especially south carolina should be a good state for him and he's got lindsey graham working for him there. i think definitely he's in the top tier, certainly kasich is as well. and marco rubio is. so i think that and cruz. i think you got about four there now who are going start vying for the i am not donald trump vote. >> okay. >> the only way to beat a bully is punch him in the nose. and nobody has done that on the republican side. somebody has to do it. i'm not sure if it's kasich or cruz but somebody has to do it. >> fighting words. six months ago you have ceos and executives come on say the word trump and very critical. more recently, it's harder to find people who have been

critical because there's now a chance he can be president. thank you. >> thank you, senator. >> we appreciate it. >> coming up president obama's $4 trillion budget is already a no go with republicans and the plan takes aim at the nation's biggest banks and the wealthy to help pay for it. chris van hollen gives us the election year pulse on capitol hill next. visor and team who und visor and team who und where you come from. we didn't really have anything, you know. but, we made do. vo: know you can craft an investment plan as strong as your values. al, how you doing. hey, mr. hamilton. vo: know that together you can establish a meaningful legacy. with the guidance and support of your dedicated pnc wealth management team.

welcome back to "squawk box"

this morning. earnings just in from time warner. profit $10.06 beating estimates by five cents. revenue coming in below forecast impacted by strong dollar and lack of hit movies. time warner gave a 2016 earnings outlook that exceeds analyst's estimates and now 15% dividend increase. we'll go through some of those numbers and talk about them in a little bit. >> president obama is submitting his final budget to congress this week. tensions are running high in an unprecedented move the republicans are refusing to hear the president's proposal. joining us now is ranking member of the budget committee chris van hollen. sir, good have you here. why should they bother when they know it won't pass. it was a budget built on all of his -- he wanted to stake claim and talk about his legacy without actually really governing and coming up with something that might work. >> oh, come on. you're really going defend the fact that republicans on the budget committee for the first

time in recent history, first time ever as far as we know have decided not even to hold a hearing to listen to the president's budget. >> we haven't had a real budget process in ten years. >> we have a budget process. it's not a very good process in many ways. the process will break down even further if republicans establish a precedent where they are not only going refuse to consider the ideas but they won't even have a hearing where they can be presented. look i think the american people, i don't care whether you're a republican or democrat or independent they are not going to like the idea that republicans refused to even have a hearing to listen to the ideas in the president's budget. the president's budget is very different than the republican budget. the president's budget wants to invest in education and transportation. he doesn't want to turn medicare into a voucher program. apparently republicans don't want to hear those things opinion that's why it's pretty appalling again that they've broken what has been a

bipartisan tradition on this matter. >> the republicans won control, correct? so perhaps the american people weren't satisfied with those ideas. >> but, the president won re-election. and he put forward his budget. and so the reality is and i really think it's kind of wild that you're defending the fact that for the first time ever they haven't had a hearing. when the democrats were in charge of the congress, we listened to the budgets put forward by republican presidents. that has been a bipartisan tradition. so to throw out that tradition at the same time you have a new speaker paul ryan coming in saying the house will be a more open place, a more open place and then you shut the door, slam the door on the president's budget, come on. >> what about new hampshire last night? what do you make of the outcome of what's been happening? >> i think this will be a wild roller coaster ride through these primaries. so, look, you see, obviously on the republican side you saw trump way ahead in the polls.

on the democratic side you had hillary eke out a victory in iowa, new hampshire, obviously bernie sanders from neighboring vermont ahead. but look we're having a feisty conversation on the democratic side. on the republican side as i listen to it they are also having a feisty conversation. most of the proposals they got out there are actually to roll back important progress we've made in the country and they are trying to get ahead in many ways by dividing america, turning americans on one another. i don't think at the end of the day that's the optimistic positive message american public wants. >> where does this leave us in terms of governing and spending this year if congress will not hear the president's budget there's kind of a little talked about fact that seems to be a spending thaw just because of some momentum for various initiatives out there. what happens next? >> the only silver lining here is last november we actually had

a bipartisan agreement that set the overall levels for discretionary spending and defense and things like education and transportation. so at least we have some parameters to work with. in recent days we've been hearing folks on the tea party side of the republican caucus want to throw that bipartisan agreement overboard. if that happens, then we're in a world of hurt here for the budget process perspective. but that at least provides some guide posts that people will stick with it. what will happen now if we stick to those overall levels is the appropriations committee, the folks who decide how to allocate those different investments will go to work and hopefully produce appropriation bills on time by october 1st. so we'll have to see whether that plays out that way or whether the republicans cow-tow

to the tea party and throw the bipartisan agreement under the bus. >> coming up, high flying technology crashing back to earth this year. what does it mean for that unicorn stampede we talked about. >> look at that nice unicorn. >> announcer: time now for today's aflac trivia question. which nfl team is the oldest continually running franchise in the league? the answer when "squawk box" continues. no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay at aflac.com/boat blurlbrlblrlbr!!!

today's aflac trivia question. which nfl team is the oldest continually running franchise in the league? the answer, the arizona cardinals. >> did not guess that. coming up the new "star wars" movie had profits going at light speed for disney but the shadow is putting pressure on stock. plus back rock chief investment officer of global fixed income on the challenges for the fed, that's coming up in the next half hour. we're back in a moment.

welcome back to "squawk box". one of the stories front and center mortgage applications rising 9.3% last week according to some new figures. the increase driven entirely by a jump in refinancing activity as average mortgage rates fell. staples got approval for its deal to buy office supply's rival office depot. the deal is still subject to on going litigation in u.s. and canada. irs saying hackers attacked its computer systems last month. hackers used personal data stolen elsewhere to try to generate personal identification numbers that could be used to file freaudulent returns. that data needed to be on file or needed to be filed to prevent a fraudulent return. i should tell you this is what i was freaked about. you hear these reports about stolen data, nothing would happen. no breach. but now they are using that data

to breach other places later. you know what i mean? >> this keeps you awake at night. >> it does. >> the irs is the place to go for. >> a lot of information. >> not just that, a great hacker cannot only get data but what a lot of them is getting a refund to themselves, they are stealing your refund. >> i'm glad somebody is worrying about that. the countdown is on. we're just a couple hours away from fed chair janet yellen facing congressional leaders in her first testimony since the rate hike in december. steve liesman joins us now. >> a couple of hours before the testimony but this testimony from yellen will break bin an hour. we'll get headlines from hampton pearson. it will pit what the market wants to hear and what janet yellen can and will say. fed embarked on a plan to

normalize interest rates at a pace regulated by the economic outlook and paused in january but the market seems to be screaming for reversal in policy where the fed goes either formally to neutral or in reverse. that's outright easing. if that's what the market seeks i'm afraid it will be disappointed. with the next fomc meeting still five weeks away, yellen will probably keep her cards lose to the chest in terms of the policy outlook. yell jones runs through the committee. expect her to say financial conditions have tightened, inflation outlook has deteriorated faend will maintain a positive outlook on the economy. expect a pause in the policy but not a reversal. the lasting impression should be one where a march hike is a

possibility but not likely and june is possible. people will hate me, even likely if the data and the markets cooperate. there's still time in the way the policy works is, you kind of like a zone defense. if there's room you go if not you stop. >> stick around. our next guest says there are three main issues investors need to know about market returns. joining us now is rick rieder, he oversees $1 trillion in assets under management. kind of something. our guest host is j.b., the co-founder and managing partner of his group. do you disagree with anything mr. liesman said? >> i think the comments were spot on. the new toy is we're going to negative rates. i don't think the federal reserve is in negative rates. we got a lot of data. they won't go with march.

if you think about the next press conference is june, there's four pieces of employment data that comes out, four pieces of cpi, four pieces of core pc. there's a lot of data. i do think they will go down the road pointing to global conditions. absolutely. the market is not moving. i think the u.s. economy is slowing and the global economy is slowing. i think with itting be hard for the fed to go many times this year if at all. the markets are moved to -- >> i know you think that. on the market, do you think the market has priced in the down side? >> you talking about stocks or credit? >> both, actually. >> i think there's more volatility. i think we're still going to be in this mode of volatility. tuesday wants to balance the system in terms of u.s. growth. i think we've seen the best of u.s. growth. i think people understate how the u.s. economy did for the last three or four years. home sales, mortgage applications pretty solid.

i think we're slowing. that's one. two the chinese situation is volatile. what it means in terms of the currency is significant. then you have a dynamic in the rest of the world, emerging markets and a lot of buyers with asset are not buyer, surplus countries like the mid east and china. >> you have a concert to get to tonight. you think that the market is a better chance the market goes down after her comments today? they won't get what they want. >> i have enough trouble predicting what yell en will sa and what the market will say. i leave it to mark santoli. i don't think the market will get the complete capitulation it seeks. it may have priced it in already. i don't think yellen can go as far as the market wants it to go and i don't think she should. there's a problem here of the fed chasing its tail. every time it changes course the

markets react. what if that's what the market should do and that's a normal reaction to the fed changing policy. there is some amount of give back the fed should have expected from a policy reversal here towards tightening. i would think we're still, despite all the tumult in the volatility within that reasonable bound. >> you argue that the market has tightened for her when you look at the credit markets they've tightened and specifically when you look at the credits of european financials, is that a big red flag? would you buy any of that stuff over there? >> we are. you have to pick away at it. we're looking for some value in that market. listen i think there's has been an effect of is it going, not going, 25 basis points. companies don't borrow off overnight funds rate. >> more expensive -- >> i think we're beyond. there's incredible focus on

monetary policy, this focus on negative rates will do for economies in a developed world. it's gone too far. the markets have made the decision we'll make the decision where we want to tloend a company. we'll make a decision where we want to tloend auto finance or the mortgage market than obsession of go 25 or not going 25 the fed should have gone two years ago. the economy is operating at a solid level. >> when you look at the way that the market has done exactly what the fed feared which is to price forward the whole spectrum of rate hikes and the kind of tightening that happened as a result that's where they were worried to do 25 and be right to be worried. >> when the market has had difficulty with its outlook on the fed, when they thought the fed was operating on its own prescribed agenda that it just was for some reason being very

kind of didactic how it goes. if yellen says we understand how the market responds in this way is that enough to calm things a little bit? >> i think so. i think it's helpful. a fed that's sensitive to what's happening in the market is helpful. i do think that she's going to point to that in today's commentary. listen, i think we've been in a world where markets are adjusting. they are adjusting appropriately. i think the fed has done a great job. the last couple of years we could have moved a bit faster. quite frankly when you think about where the economy is today versus a year ago, something people don't focus on, companies ability to invest, return on invested capital, cost of debt has changed. what happens on the back side, deh

decelerates the economy. the risk free rates in the hundred is 100 basis points lower. risky rates high yield, 100 basis points higher. carry the market in fixed income is attractive. different than the equity market versus where it was a few wears ago. some pretty interesting places. >> you buy any of these that have been selling off so hard. very risky. could be tremendous. >> great question. there's been some i would argue some policy errors in europe that have questioned what happens to contingent capital, what happens to the lower quality debt. some of the high quality names and some of the banks that you will own further down the capital structure, it's starting to be very attractive. you have to be careful where you do it because the markets are rightly so and all markets are bifurcating the winners and

losers. oil still has room to go down. we still think there's an over supply in the system. we still think it can go down. we think the industry will be fractured for a while. some mid-stream is interesting. we're staying pretty cautious. >> okay. rick, thank you. great insight. stick around. we appreciate it very much. >> coming up the fall out in the world of technology. this year-to-date chart showing the nasdaq tells only part of the story. going to come up any second. gosh that looks awful. what does it mean for the start ups and the unicorns we talked about. then one of those beaten down stocks, twitter. stock trading below $15. quarterly results due after the bell. "squawk" will return in just a minute. every year, the amount of data your enterprise uses goes up.

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theoretical. we're back. first weeks of 2016 sending a big chill over the technology sector. nasdaq down 15% year-to-date.

the tech wreck in the markets and impact on public and private markets. thank you for being here. the private guys are privately getting slaughtered. what was the right answer? >> i think if we all knew the right answer we problem with bring be in a different business. but i think it's interesting. you're starting to see the, you know, the prevailing wisdom you can access the private markets. we stay out of the volatility of the public markets. yet we still have option value, essentially got big balance sheets. people are throwing money at us. we can always go public at some point. i think that was one of the flawed assumptions, you're seeing the ipo market has been tepid. later stage of invest cigarette slowing down. that's where we were the most over heated and that's the first

place pulling back. you're having a lot of conversations around how do we get our financials in order, how do we get back to fundamentals, such that we'll be able to actually go public or be able to get to profitability with the balance sheet we have today. >> i guess the question is this like 2000? is it that bad? >> i don't think so no,. first of all, the list of companies we're talking about is still the ones that everybody is throwing around, unicorns. relatively short. so i think the very top of that bucket will be totally fine. you'll see pain in the middle and some of those should never had those valuations and it's not bad thing overall for the world to right itself a little bit in our private land and have valuations that more closely mirror the multiples that they will eventually have to answer to. >> there are dozens of unicorns that are spending money like

there's no tomorrow. had the anticipation that they would either go public or do eighth pre-ipo round, you would get if i at the time or t. rowe or somebody else to re-up and those companies won't see that kind of money. those companies are going through restructurings. layoffs. >> you're seeing it. you're seeing it not just in unicorns. there's a whole other universe of companies that are having these conversations day in and day out. it's coming down gradually and it's all getting tighter. taking longer to get rounds done, investors are sitting quietly. they are being more selective. >> is that because there isn't access to credit or they see what's happening in world markets and thinking maybe i'll wait. >> may as well wait. the pendulum has shifted. in the last four wears do this deal now. >> uber, just last week morgan

stanley is running around talking to investors, not telling them a word. this is how much they talk about the company, like nothing. people are giving them a lot of money. >> there's a few people will go for. that's one of them. >> if it's just an adjustment, a painful one in private land as you put it, that probably is very manageable. these are big institutional investors, in this game. i think that public investors are struggling with is how much that kind of value chain extended into public companies. so this flood of venture money that went to these start ups they spent the money. what did they spend it on? advertising. software service. all these other things. there was a bulge of false demand in the entire industry that was supporting these private companies? >> i think there's probably some element of that. but i also think there's some fundamental shifts in the economy. one of the key differences you asked me about 2000. the retail investors, you know,

are not really affected by this in a way they were. >> what about the culture of the valley which is to say right now -- google, facebook started it. but the perks. all the money that just lavishly being spent. you go to dropbox headquarters and you think wow something is really going on. that's a company that's not gone public. valuation of that company has been basically halved in the past month. >> that's right. so there certainly has been some overspending. i think everyone is willing to admit to that. it's bean war on talent. lot of different ways people have justified it over time. all of those things now come in to focus when money isn't easy or cheap. >> you're putting any known work right now? >> we are. >> your doubling down on stuff? >> so we're seeing more flat rounds and down rounds. we're seeing more of that than last year. i think now is a great time to invest. i'm excited about investing.

valuations are coming back down. you're having better conversations that are a little bit more grounded in reality. i think now is great. >> okay. thanks for coming in this morning. coming up the force was with disney during its latest quarter but what does the future hold for the magic kingdom. as we head to break check out futures. "squawk box" returns in just a moment. looks like we'll have a positive opening.

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welcome back.

disney reported earnings beating both top and bottom line but shares were sent tumbling. there's a big concern for investors a big decline in espn subscribers. >> we've seen an uptick recently in the espn subs. we did reference in candor in the august call that we had seen some sub erosion. but last few months have been encouraging. >> joining us now to talk through some of these issues is brian weiser. brian, obviously this big picture concern over the cable bundle, over espn affiliate fees and subscriber shift is not going to go away. did disney do anything to put investors at ease yesterday? >> on balance, no. i think that, you know, there's

a lot of noise in the quarter's result in timing of bowl games which impacted revenues and expenses and there's all sorts of reason for noise in the quarter and saying their guidance is unchanged around growth for espn. at the end of the day, you know, i think there were a lot of concerns that amplified by viacoms call in the morning put the ceo issues at viacom aside. there were real issues to be mindful around of what at&t is doing in resetting rates. the dispute they may be having with dish. all of that spooked the market further. then you see time warner this morning calling out again they are losing subscribers too. >> part of disney's message for years has been obviously we see this big secular change coming but we control our destiny to a large degree and go over the top or go with different payment options. do you think that's legitimate, they have some control over how they have people consume their

product? >> i think you have to be pretty optimistic that will hold out and that they can get consumers level on distributors to continue to pay growth rates that are equivalent to what they've seen in the past. that's problem. i don't think anyone is disputing the relative stature of disney as the giant but it's so expensive per subscriber. it's difficult to imagine all the people who don't want espn will continue to pay for it in the future. >> brian, did you gate chance to look at times warner. was there a break out. i didn't see it. maybe you did. on hbo now and what the uptick is that you believe that could be a comp in the future for something like espn. >> there's a lot of different dynamics with hbo versus espn. we'll wait to hear the call. i think there's a line that maybe more relevant around turner. turner networks have been investing heavily in sports. they have been chasing

significant increases in subscriber fees and getting them. however it's come at the expense of guesting less distribution. they've gotten distributors say we'll pay your increase but not if all subscribers have to get it. they acknowledge they are seeing lower subscribers. >> finally, brian, where does that leave you with regard to the disney stock. down significantly off its highs of last year but flat year-over-year. >> i've been low graded on disney. relatively unchanged. that said i didn't change my price target still $104. i think the fall off of the stock may be related more, to you know, the numbers had a lot of noise in them, rising programming expense, absolutely an issue. the growth that espn was not that great. here's the thing. when you look at the growth of the business even if you assume single digit growth, the stock is still valued at $104. >> thank you very much. mike thanks for coming in

this morning. you're taking off. nice to see you, sir. the countdown to fed chair janet yellen's testimony before congress, her first appearance, public appearance since that rate hike in december. we'll find out what one folk wants to hear. we'll be back in a moment.

. new this morning, chairwoman yellen on capitol hill. a first look at her testimony to congress now just 30 minutes away, the fed head breaking her silence, speaking publicly for the first time since december's controversial rate hike. >> decision 2016, big wins for donald trump and bernie sanders in new hampshire last night. the main theme voters backing anti-establishment candidates. our special guest this hour, former rnc chair michael steele. >> house of the mouse. the force wasn't strong enough to overcome concerns about espn and disney's latest results. but now the entertainment giant is ready to let it go. as the final hour of "squawk box" begins right now. ♪ let it go ♪ let it go

>> announcer: live from the most powerful city in the world, new york, this is "squawk box". welcome back to "squawk box" right here on cnbc, first in business worldwide. we're playing that song because "frozen" is coming to broadway. we're now less than 90 minutes away from the opening bell on wall street. futures right now after what was a wild ride yesterday dow looks like it will open up higher by 155 points. nasdaq looking to open 66 point higher and s&p 500 up 22 points. checking out the markets in europe at this hour. we got green arrows across the board in a big way. dks up over 2%. same thing with cac. ftse 100 over 1%. in italy looking at 5%. spain as well opened up 3%. >> deutsch bank may buy back some debt. that sector plagued. see if this rally lives.

here are the stories investors will be talking about. fed chair janet yellen will face congressional leaders since the rate hike in december. she will appear before the house financial cheat. we'll get her testimony at 8:30 printed. coming up, we have jeb hensarling joining us first on cnbc in a few minutes. financial committee chairman and republican from texas. mortgage applications rising by more than 9% in the most recent week. big driver? big sharp drop in interest rates sparked a wave of refinancing especially from wealthy borrowers with large loans. that ten year yield slide and pushed mortgage rates lower. pay attention to oil prices yesterday. today opec cutting its forecast for how much oil noncartel producers will pump this year. see if they are right. opec has continued to ramp up its own production levels. 28.61 is where wti trading right now. went to 27.54 something like

that yesterday. 27 handle yesterday before rebounding. higher by 2%. brent is above $31 barely. a couple of stocks on the move. disney is the top one beating the street on top and bottom lines. shares are under pressure on continued worries about declines in profit at espn and other disney own channels. we'll hear from disney ceo in the next half hour and his view on what's happening had a here. shares of deutsche bank surging on reports that the bank now considering buying back its own debt. being joined in today's rebound by fello european credit suisse and ubs. shares of console energy trading higher after the supreme court blocked a white house plan to limit carbon emissions from power plants. fascinating decision that has probably large implications. and akamai beat street

estimates. akamai unveiling a $1 billion buy back share program. and solarcity, shares getting slammed after the company said it installed fire rooftop solar systems than expected for the second straight quarter. solarcity warning growth would slow this year. >> this is an elon musk company. >> he's tesla and spacex and got a spacex investor right here. of those three, oddly enough, spacex seems to be the most successful and the most durable long term. >> it's doing terrifically well. >> would you invest in tesla? >> truthfully i just recently finally went off the edge and bought one. i got the model x. ice awesome.

>> aren't there issues about the gold wing? >> there are not. there's a lot of discussion about issues. that was, i think early, early, early test models of it. i can tell you i take my kids to school. i've had my son stand in front of that gold wing to see, you know, will it stop. he's ready to step back. it has a sensor in it. it won't touch anything. it's terrific. it will stop. truly stop. >> inside looks huge. >> it is. so it's got three seats right. it's got a front, middle back. so you can fit seven people in that car. >> do you get to go into space? >> i asked where the button was on model. x so you can turn it into a spacex but they haven't put that in. there's something called summon you hit a button on your iphone, car will come to you. >> to when won't. >> yes, it will. >> stop the show for a second.

>> andrew's driver will come bring it to you. >> you can press a button and the car will come flying round. >> right. it has a self-driving mode. >> how does that feel? >> amazing. i was nervous. i was on a highway 94 in chicago. and, you know, it's a bit windy and i wanted to test it out. i tested it on a straight. it stays within the lane and if you hit the blinker it moves to whichever way your blinker and moves into the lane. >> you wouldn't stop paying attention to the road. >> no. i wouldn't. >> you're doing 85 or 90 you can't. >> not in chicago. we all obey the law. it is true that it is -- you at least are hands-free. and a little less likely, by the way to want to watch everything on the road. but my hands stayed nearby and just grab the wheel and it turns

off. it's great. >> the other big story, besides tesla outside the world of business big wins for donald trump and bernie sanders in new hampshire. john harwood joins us now with those big headlines and some other key results. john. >> reporter: michele, both populace candidates had outstanding nights. look at the numbers for donald trump. he bounced back from that defeat in iowa to swamp his competition including surprise second place finisher john kasich by a 2-1 margin. on the democratic side bernie sanders not only beat hillary clinton he thrashed her. he got 60% and she was held under 40. he attributed his success to his message targeting wall street. >> tonight we serve notice to fulfill and economic establishment of this country that the american people will not continue to accept a corrupt

campaign finance system that is undermining american democracy and we will not accept a rigged economy in which ordinary americans work longer hours for lower wages while almost all new income wealth goes to the top 1%. >> reporter: that was a surprising amount of overlap between bernie sanders message and donald trump's message which is targeted towards those working class white voters who loom large in the republican party. the difference is that donald trump largely targets external threats to american's economic well being. >> we are going to make america great again bath we're going to do it the old-fashioned way. we're going beat china, japan. we're going beat mexico with trade. we're going to beat all of these countries that are taking so much of our money away from us. on a daily basis.

it's not going to happen any more. >> reporter: now the road ahead is going to test both men. the campaign goes to south carolina and nevada and the super tuesday states across the south in south carolina, donald trump is going to face jeb bush who has a little bit of a second wind with his fourth place showing. he has the advantage of the family name. ted cruz a strong conservative candidate not expected that john kasich will do well in south carolina but there's some states beyond he's targeting. on the democratic side hillary clinton is counting on her support from african-americans to lift her in south carolina but it's an unpredictable race. been unpredictable all year long and right now bernie sanders and donald trump are the candidates with a head of steam. >> help me figure out the math. if bernie sanders put all the bankers in jail he can't tax the 100% and can't get the free stuff. the math doesn't work. >> reporter: you are summarizing some of the objections that we're going hear from hillary clinton as well as republicans

if san sand gets that far. but, yes. look he's proposing a direct challenge. in fact he was asked last night everybody says i can't pay for all my free stuff. here's how i'm going to pay for it. i will tax wall street speculation. he has wall street in his sites and that's for a certain swath of the democratic party, substantial one in new hampshire. >> john, thank you. we are going to stay in washington, however. continue with a different conversation because federal reserve chairman janet yellen is on the hill this morning. this is important because it's her first public appearance since the central bank raised interest rates in december. a lot of questions to be asked. one of those people asking is representative jeb hensarling. he's chairman of the finance committee. thank you for joining us. what's your top question? what will you try find out? >> what i want to find out is will the fed let us know what their strategy is? what are the variable? how do they weigh those

variables? what is the reaction and function between them? when is monetary policy going to be more predictable, more method base? we know about the 25 basis points hike. are they going stay the course or not? it's something that terribly unhealthy to have everybody in america to take her testimony and dissect it and bisect it and put it under a microscope and get 17 analysts look at it. we need something easily communicated to the american people. so we need to understand what's the direction of monetary policy going forward. >> the economy is not digestible. all this talk cigarette a bad thing. it doesn't give her the flexibility or the fed the flexibility that they need. >> my reading of economic history particularly when i look at the grade most ration the closer we have come too rules based monetary policy more

closely associated with positive economic growth as oppose to the stops and starts and to para phrase an economist it's fatal to think half a dozen of people managing the dials of economy and lead us to economic nirvana. we're in the slowest tepid recovery in the history of the republic not with standing the great in monetary policy stimulus we've ever seen which is another way of saying also there are limits to what monetary policy can do in our economy. as we continue to suffer under the weight of obamacare, the weight of dodd-frank, this who regulatory burden that's putting entrepreneurs and capital on the sideline until we do that there's limits what monetary policy can do. >> the more predictable janet yellen's statements are the less effective, frankly, that fed policy can be? >> well her statements may be

predictable because i know there's a competition among fed chairman who can employ the greatest amount of words and say the least. her comments will be predictable. i'm talking about the monetary policy course set by the fomc. that should be laid out. we should know what the strategy is. if the strategy is a rousing game of rock, paper and scissors determining the monetary policy american people ought to know it and plan their economic futures based upon it. by the way i hope it's not rock, paper, scissors. >> how much confidence do you have in central bankers any more? the japanese went to negative interest rates and they got a surging currency. how are we supposed to work. european central bank missed. now rear worried about the banks over there again. are they even the right people

to be doing this? i don't even know what to think any more at this point. >> again, there's certainly -- whatever positive aspect was rendered out of the zero interest rate policies and this historic quantitative easing, whatever was to be gained has been gained. now my fear, we may be seeing inflation asset bubbles that are beginning to pop. so, the answer is, no, i don't have a lot of faith that, again, half a dozen folks around the table at the fed are going to be able to take our economy to where it needs to go. ultimately we have to have an economy that has some common sense regulations, it meets the cause benefit test and people have to have more confidence in the future. with the crushing rate of obamacare, in dodd-frank that can't to be done.

>> are you concerned, is one of the reasons that the congress isn't having hearings over president obama's budget that there are significant enforcement dollars, oversight dollars going to the sec and ftc. that's your area. it seems like you would be in favor of that but yet no debate over it. >> well my guess is if there was ever a budget dead on arrival it's the president's. as we all know he's taken our debt to places we've never seen it before. the cbo, the congress budget office came out with their january baseline. they focused on the debt no less than 199 times. so a budget that has so much debt puts us on an unsustainable level of debt. my ipad is awash with reports calling the debt is unsustainable. >> enforcement and oversight has been drained over the last few years and it's time to sort of replenish the capability of the

sec and ftc. isn't it time? >> the sec just got a raise in the omnibus and i don't have the numbers at my fingertips but as far as government agencies go over the last decade they have seen huge increases in their budget. the oversight function of the sec is very important. but due to provisions of dodd-frank they are focused on things like conflict minerals, executive pay and a whole lot of other items that have nothing to do with their core mission to make sure -- >> there's more regulate than they are being given money for it seems like. >> then i would be happy to roll back the provisions of dodd-frank to take them away from their core mission. >> congressman it's a longer conversation. we wish you well in today's hearing. we hope to have you back to talk more about that. back in a little bit. coming up the fall out from the tech wreck. nasdaq is down 15% so far but

there are bright spots in the battered sector. and susan byrne joins us next to sift through the wreckage. in new york state, we believe tomorrow starts today. all across the state the economy is growing, with creative new business incentives, and the lowest taxes in decades, attracting the talent and companies of tomorrow. like in the hudson valley, with world class biotech. and on long island, where great universities are creating next generation technologies.

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the slump in technology continuing to be a source of worry for investors. s&p 500 technology sector suffered over $380 billion in losses this year. look at your screen. our next guest believes she's found a few bright spots. susan byrne is chairman of westward holdings and joins us with her first quarter stock plan. good morning, susan. are you bringing us names because you have to, because you're part of the platinum portfolio? in other words are you finding value here or when you look what's happening in the market would you wait a little bit if you had your druthers? >> i suppose you would always wait a little bit which is why you probably need to take a more disciplined approach. but i think right now, not just in tech, but with a ten year at 1.7 all four of my picks in the platinum portfolio yield, their

dividend yield which i think will rise every year for the next three to five years are yielding way in excess of the ten year. so, that really shouldn't be happening. it should be the other way around. and a couple of those are in the tech area. >> texas instruments is the first one. >> yes. texas instruments is basically, has the analog basis all to themselves. some might question whether that's a good idea. >> i was going to say. how much analog business is there any more? >> there's enough business and especially in industrial automotive applications around the world that they've done very well. they have focused -- they just had a meeting on their capital strategy yesterday. recommitted themselves to sharing 50% of their free cash flow in the form of dividends and the current dividend is at

3%. i think it's -- no reason to wait on this one. >> okay. >> you know. and the other one that i included was apple. which sounds so boring, but a 10% free cash flow yield to me -- >> 2% yield on the stock. >> that's not boring. that's a winning combination. you're not going to wake up and yesterday people who owned let's say conoco got a very rude shock and you're not going to have rude shocks with names that i picked in the portfolio. honeywell. >> honeywell and cbs. honeywell has 2.3% yield and cbs has 1.8% yield. >> exactly. cvs domestic benefits from the increase in unit prices of more and more people coming under

prescription drug coverage. that unit was up 5% in the fourth quarter. and honeywell, not only do they have a defense industry and a process industry, but they also participate in hvac systems for commercial and residential housing. so i think it's a very broad portfolio. i think it's a good portfolio. i think you can buy it today. >> great. susan, thanks for the ideas. >> thank you. >> and got some income as well. >> also remember for the latest news on our platinum portfolio go to cnbc pro on cnbc in case you missed it. still to come this morning it's about to get a bit colder on broadway. where's the music? "frozen" is headed to new york. i'll start singing "let it go." we're back in a moment. know your financial plan

won't keep you up at night. know you have insights from professional investment strategists to help set your mind at ease. know that planning for retirement can be the least of your worries. with the guidance of a pnc investments financial advisor, know you can get help staying on track for the future you've always wanted.

good news for fans of disney's "frozen." it's coming to broadway in the spring of 2018. disney announcing a musical adaptation of the hit film. ninth musical that disney brought to broadway and members of the movie screen will write additional songs for the stage adaptation. >> coming up, janet yellen heads to capitol hill. will the markets rejoice inshe's said to break her post-december

meeting silence. details of her prepared remarks just ahead. we get her written marks in four minutes. stocks are higher across the board. you're watching cnbc first in business worldwide. tune in after the break for the breaking news.

fed chairman janet yellen will testify on capitol hill this morning but we already know what her prepared remarks are going to say. hampton pearson has the details. >> reporter: the fed chair janet yellen is prepared to tell the house financial service committee when it comes to monetary policy quoting now, monetary policy is by no means on a preset course. the fed funds rate path will depend on the data if the economy were to disappoint a lower path, a lower path to the fed's run rate would be appropriate. but she also goes on the say the fomc anticipates economic conditions will evolve in a manner that will warrant only gradual increases in the fed funds rate. drilling down morton economy

itself, she says it has made progress towards maximum employment however inflation is low in the near term due to declining energy prices but the fomc expects inflation to reach its 2% objective in the median term. there's a fair amount of language of what we call economic headwinds. among other things there's still some slack in the labor market. fourth quarter growth has been slowed down due to a weak net kprkt, weak investment, financial conditions her testimony says are less supportive of growth due to broad declines in equity prices, higher risk for borrowers, and further appreciation of the dollar. she also says, those the u.s. economy, those head winds if you will could be offset by employment gains, income growth, and consumer spending. and she anticipates a global growth should pick up due to

monetary policies abroad. however the fomc expects gradual adjustments and economic activity to expand but the economic outlook she says is uncertain. foreign economic developments, especially in china do pose risks to the u.s. growth. those are the highlights of her testimony which should get under way shortly after 10:00 eastern time. back to you. thank you for bringing us that. steve liesman joins us on set. he's been looking over some of that information. what do you make of it? >> she went about as far as she could. she's still holding on to the towel. she hasn't thrown in the towel. however she reiterated that rates would rise only gradually and reiterated the idea it depends on the data and she talked a little bit how some of the data has softened. she's aware of what's going on in be the market and what's happening globally on the economy but she thinks the united states will motor through

what's happened. >> what happens if there's no hike this year. >> i don't think so. those people their view of the economy and markets has to be justified by what actually happens to the data, right? at some point you can be bearish and if the economy doesn't support that you would change as well. if you have jobs stronger, u.s. economy rebounds in the first quarter then, you know, we're back to the races. >> i asked to bring up two day charts so we can see if there's any move. slight tick up in the dollar at this point. ifts not meaning fful. i don't see a huge movement at this point. moving pretty flat. >> so -- >> the futures didn't look lower. looked like dow futures moved slightly lower. maybe a tinge of disappointment. sometimes it takes -- >> first couple of minutes are

algorithmic testing and then human trading after. i wonder if the market, you know, kind of trimmed its expectations to the reality of what yellen could do. it's one of those things, the market may be dumb but not stupid kind of thing. you want yellen to say x but you know she can't. you know she's going to run it through the committee. ultimately i'm a little bit amazed and how much the market needs to hear what it already essentially knows. in the sense you know that the fed is data dependent. you know the fed won't hike into a 0.3% quarterly growth rate and inflation rate that's not moving and a market that's down 10% and going down further. you know it's not going to do that. yet the market seems to only react when a fed official gets up there and says what it already seems to know. >> if she suggested that there be change in policy right now, it would feed a panic, i would guess. if she reversed course and

instead of a rate hike you had an indication of rate cut, wouldn't there be a panic in the marketplace? >> you're absolutely right. you put your finger on what is an age old problem in the central banking business and that's the signal value of what you end up saying you'll do. that signal value is if you have a weak economy and then step up to really address that weak economy what are you doing? you're confirming the weakness of the economy whereas if you step back and say you know what sydney think things will be okay from here. she's doing that. remember 4.9% unemployment rate and that could tick down next month again and you have a really strong wage gain. had a very strong jobs report the other day. the jobs market is doing well in this country and very hard to say, you know what? we need to reverse course and we're substantially too tight here. >> you'll be monitoring the q and a later. >> absolutely. >> thanks, steve.

turning to results from new hampshire donald trump and bernie sanders posting big wins last night. how does this change the race for hillary clinton along with the gop field contend sners joining us now michael steele former chair of the republican national committee and j.b. pritzer is here. we know the big headlines. bernie sanders, donald trump, big wins, anti-establishment. what's the next takeaway? what's the most interest towing based on what you saw happen last night? >> there are two. one on the hillary side of the field that the reality is, yeah, tough night, ugly loss, but for her she's heading south. she's going into parts of the country now where she's got strong, strong alliances with minority communities, blacks, african-americans in particular. and that will be in many respects the sort of saving grace for her. bernie sanders has yet to really catch fire with groups other

than white voters. and now the democratic contest opens up across the country more broadly into a myriad of voters, largely minority where bernie doesn't have that cache. interesting to see whether bernie can grab a piece of that, certainly some of his recent endorsements indicate he'll try, naacp, former chairman, for example, endorsing, but the reality still remains that is a foot hold for hillary. she will be in firm footing going forward. >> how about the republican side? >> on the republican side very different dynamic. i almost feel really bad for chris christie who went back home to new jersey last night he set up the reset in this race by taking down marco rubio by exposing marco rubio in such a way that put marco in fifth, chris christie in sixth and now pretty much damages his campaign potentially. now we'll see if he comes out today and makes the announcement he's going to south carolina but he reset this race and is going

to be out of it potentially. >> got it. how much of what's happening with bernie sanders -- i mean you talk about where hillary clinton moves south where there's a much more natural place for her to get support. and yet we thought she would get support from women. we thought she would get support from young women. bernie sanders has outperformed in some ways that nobody expected. >> that's true. that could be sort of his key to victory to offset the support that hillary has among african-americans, for example. to have a resurgence, continuing surge in the number of women, particularly young women who come to his campaign. if he's able to do that, sustain that beyond iowa and new hampshire, when he gets into south carolina, when he gets into sec states, the southern states on super tuesday, yeah then he would be able, to i think, go toe to toe with her which is something hillary

clinton does not want. she need a knock out in new hampshire. she didn't get it. now it's the fire wall in south carolina. >> it's kind of funny so much is being read into the new hampshire results because the reality is she won the first states lost the second state. the current, you know, tally of delegates won with voters is 30-34. you need 2382 on the democratic side to have a winner. and as you point out we're going into the big states, the really important states starting with south carolina but going into the super tuesday states on the democratic side and she really is going to see a big resurgence because the broader coalition of the democratic party is represented. but on the republican side i'm curious. john kasich did what marco rubio did in iowa, that is he way outperformed expectations and yet i don't hear a lot of talk this morning that john kasich is

the establishment wing candidate. >> totallily dismissed. >> who it is. >> or talked about cruz either this morning. >> trump lane, conservative lane, which is occupied by ted cruz, the establishment lane right now, i think, lends itself better towards a john kasich longer term. because, again, he's got that broader appeal. a state hike ohio is a cross section of the nation. you got white collar, blue collar and he's showed in fashion through his discipline in new hampshire the ability to make that case and it stuck. so i think given the weakness that the rest of the field seems to display relative to trump kasich positioned himself to go into south carolina built more importantly beyond south carolina and in those bigger suburban and urban communities across the country to make the case. so he right now i think is in the best position to go forward in that establishment lane.

it will be interesting to see what bush does. bush has a good ground game in south carolina. if he posts well say a third place even second place finish behind trump another reset and that's problem we have in this. as long as all those folks stays bunched together trump will ride this pony to ohio and the convention and be very little folks can do to stop him. >> it has been so unpredictable. michael steele thank you for joining us this morning with your insights. coming up, a new chapter for the wimpy kid the author of the hit children's book series. he's discounting retailers and betting on traditional bookstores. we'll talk to him in a moment.

"star wars" leading disney to a record quarterly profit. julie boorstin joins us now with more. >> reporter: despite reporting best quarterly results, disney shares are trading lower pre-market onion going concern over media's growth slowing. he announce ad recent surprise increase at espn. >> we've actually seen an uptick recently in the espn subs. we did reference in candor in the august call that we had seen

some erosion and that was the case. but last few months in particular have been encouraging. >> reporter: iger saying it's unfair judging disney as an old media company. he said many of disney's brands are tailored made for over the top direct to consumer products. >> we want to be present on these new platforms. we want to be invested in these new platforms. we want to balance the revenue that these new platforms are driving with the revenue we're getting from the more traditional forms of distribution. we're going to continue to take an approach, that i think is smart in that we're not going to sit back and let the disruptors just disrupt. we're going participate in some of that disruption. >> reporter: certainly some disruption that we'll be watching very closely. you can find more from my interview with iger on cnbc.com.

back to you. right now we'll talk about children's books, blockbuster 's author jeff kinney turned a story about a middle school kid into a half billion empire. jeff kinney is the best selling author of the "diary of a wimpy kid" series. >> it's an awful lot of fun. called an unlikely story. it's about plainville, massachusetts. most fun i ever had. it's a ball. >> how much time do you spend doing wimpy kid and how much time do you the book store? >> it depends on what time of year. i'm in the book store just about every day. i work in the studio on the top floor. i feel i'm always there. i've been there in the past six months. it started up in may. >> i want to go back. how did this happen? >> how did this happen? >> did you plan this?

>> the book store or -- >> no wimpy kid. it's a huge best seller. it's an empire. >> this is a half billion dollar empire. >> it's wild ride. i started up in 1998. i wanted to be a newspaper cartoonist. i couldn't break into the business. i said to -- i came up with this character, cartoon character who draws himself in books. that was a big leap for me to leave my dream of being a newspaper cartoonist behind and go into books. i worked on it for eight years. finally i had a break through. since then i've published or i've authored ten books. >> you were talking to one of our producers back stage and he asked you why do you keep doing it. and you had a very interesting answer. >> well i always felt i wanted to be a newspaper cartoonist. i don't think a newspaper cartoon has a life span like a sitcom or something like that.

like charles schultz with peanuts for 50 years. kids expect there will be a new wimpy kid book out and a lot of people depend on this for their jobs. there must be 2,000 people around the world whose jobs are directly related to "diary of a wimpy kid." >> i think everybody here on set owns at least one. maybe multiples. i got 11 and 13-year-olds. we've been through several of your series. how do you come up with the new ideas? >> i wish i knew that. right now i don't know what the next book will be about but it will be out in november. it's a weird thing knowing the ideas are there in my head. >> how long does it take you to do one? >> about seven months. it gets really intense in the summer. i usually work between 13 and 17 hours a day every day through the summer. >> i read here in the notes you made $29 in 2014.

you wanted to be a newspaper cartoonist. >> right. >> you never dreamed you would make this much money did you? this is like wonderful happ happenstance. >> that was not the objective. i never set out to be wealthy. i feel very fortunate i touched a nerve and found something that really works for people. >> why do you think that happened? have you thought about it? it's a great country. what is it? >> i think that kids were looking for something as a stepping san antonio reading. my books, if a kid opens one of my books it looks like fun, doesn't look like work. there's these little islands to swim through as a reader, the pictures. i myself when i was a college student i would open up a psychology textbook i would see a picture here and there. i can read from here and there and get my image. >> now you started your own bricks and mortar book store.

what does it say about amazon. system amazon good or bad for you >> amazon has been very good to me. so has barnes and noble and independent bookstores. thestores, the more the better a kid can get a book, the better. >> you are not one of these sort of traditionalists that say amazon have crowded out your book store? by the way, amazon now doing their own book store? >> yeah, amazon is another avenue where people can buy books and for me, anywhere a person can get books is great. >> is it physically or -- >> they are mostly sort of shockingly reading them exclusively, almost exclusively in books. it's about 5% print and 5% -- >> to most electronic readers won't give them all the images, right? >> they do. they do now. they have that capability. >> do you think five or ten years from now they'll be on the tablet? >> i don't think so. i think we seen a leveling off

with the ereaders. thank god for. that you into ed to put a book into a kid's hands. you don't want to give them a download for christmas or tear birthday. >> do you like the movies as an author? >> those are fun. i think they add an emotional dimension that's not in the books. we are work on another one, i hope it gets green lit. because i'm writing it. >> congratulations, so happy for you. >> thank you very much. >> one of those great success stories. >> whohoo! when we return another great american success story, jim cramer joins us live from the new york stock exchange. you are watching "squawk box" first on cnbc business world wide.

. >> let's get down to the new york stock exchange him criminal cramer joins us now. we talked about all sorts of things, janell yellen -- janet yellen the big story. >> disney can go through the conference call. it is literally, there is a terrific ceo telling you about all these great things and an analyst will ask you one thing. it's back and forth and back and forth. why don't you raise the company up? the whole thing you like disney,

it's one company imtime warner, i don't know, they've made it clear they're not going to take any action that will bring out value. they're happy with this value and the value they lead to you to is something that doesn't have a lot of growth. both are conundrum stories. the headlines are fabulous. people at home are confused. it has to do with the an liths, she didn't take march off the table. she makes it an all day suspect. other than the fact that they have a lot of bears. >> is the indication she's fought going to give them enough? >> she needs to. my advice to congress. someone ask her about the banks, tasht slowdown around the world. ask about russia, brazil, china. anything, just about any part of the economy. we have to do this at some point

it will sound like 345rco rubio 4. 4.. governor christie says you keep saying the same thing. woubt the rest of the world? >> got it. >> thanks, jim. coming up, you are watching cnbc first in business world wide. ut? no! i'm trying to build something here. >>how about using fedex ground for shipping? >>i don't need some kid telling me how to run a business! i've been doing this for 4 long months. >>fedex ground can help us save money and deliver fast to our customers. not bad, kid. you remind me of a younger me. >>aiden! the dog is eating your retainer again. let's take a short 5-minute recess. fedex ground is faster to more locations than ups ground.

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welcome back to "squawk box." our guest host this morning has been j.b. we haven't gotten the first permeatations for this election. >> bo are the nominees? >> i don't anything derailing drumplt i know there is talk on the side, gee, we'll get to a convention or some establishment lane. i don't know who that is that will take him down. i don't see vulnerabilities like we see with marco rubio. >> so donald and. >> hillary clinton. maybe the interesting prediction might be nevada will be closer than people think it should be, partly people aren't looking at the gree graphics. it's very, very latino, only 15% in the democratic primary.

>> who wins the whole thing? >> it will be hillary for sure. >> think about a debate. >> no scrutiny has been, has befallen trump. >> you would have said there is no scrutiny that can befall trump. >> in the general election. there will be heightened. there won't be fine candidates. two. >> ""squawk on the street"" is next. sorr sorry. >> good wednesday morning. welcome to "squawk in the street." i'm carl cantania. the futures have lost some of their shine, highlights risks to economic growth. when janet yellen speaks, we'll take it live a. part of a buy back consideration of deutsche. nikkei overnight. the ten