but not quite. not quite. "squawk box" begins right now. live from new york, where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. i'm andrew ross sorkin. let's take a check on the markets. joe just mentioned the winning streak snapped yesterday as goldman sachs and walmart weighed on the dow. right now the futures are looking to open marginally lower. the dow off about five points. s&p 500 and the nasdaq even for now. we're looking at wti crude coming down a little. 30.17 is the number. we're going to talk more about the markets in just a bit. >> now to today's trading agenda. investors will wrap up the week with a key report on inflation that could help shape expectations on the fed's rate hikes. january cpi is out at 8:30 a.m.

eastern time. consumer prices are actually forecast to slip 0.1% after a similar decline in december. the core rate, which strips out food and energy, is expected to rise 0.2%. cleveland fed president loretta mester is speaking this morning about the economy and monetary policy. that comes just after cpi. as for earnings, look out for results from deere and vf corp. before the opening bell. joe? >> nordstrom is under pressure. the shares are anyway. full-year outlook was weak. nordstrom forced to offer big discounts to clear excess inventory from the holiday season. not the only retailer to cite that. shares of boston beer also lower. the maker of sam adams offering a down beat view of the coming quarters after reporting declining revenue, profit, and shipments. applied materials earned 26 cents a share for its latest

quarter, beating stip ining est penny. it also gave an upbeat forecast for the current quarter. do you remember when you used to think about 40, the number 40? you're not yet. >> not 40 yet, nope. >> people lie and say i'm 39. >> i got a year to go. >> looking back down at where you are, people lie. i want you to enjoy each and every day of 39. you got 365 of them. this is the first day. >> and i'm very excited to begin -- >> i know you're a feces -- >> pices. >> what did i say? >> that's a good one. >> i knew there was a reason i woke up this morning.

>> you should go with aquarius. when i know you're a pices, i'm going to say feces. >> i think from what i read, i act like a pices. >> have you looked at your horoscope today? >> i have not. >> save that for later. >> a good day. >> it is a good day. >> i'm going to check twitter immediately and see how many people are going to join in on this. i want everyone to join in. >> you're a kind soul. thank you for that. >> you're welcome. i'm not going to use it as material or anything like that either. it's going to be purely good wishes. benevolent good wishes. >> we're not going to make a joke out of this. it's not funny. >> a day to celebrate. >> we're going to celebrate. apple, though, i don't know if they're celebrating this or not. expected to invoke protections of free speech in the encryption court battle. the tech firm was now given an extra three days to respond after being ordered by a federal

court to help the fbi unlock an iphone. here's apple's argument. ceo tim cook warns that this is a, quote, dangerous request because it would break encryption protections. he's not alone in saying this. steve wozniak appeared on cnbc's "power lunch" yesterday and supports cook's stance. >> i don't think that the phones should have back doors. i believe that apple's brand recognition and value in profits is largely based on an item called trust. you believe you're buying a phone with encryption. we shouldn't have hidden back doors. >> facebook and twitter the latest silicon valley companies backing apple. google's chief executive officer also tweeted in support of apple wednesday. >> have you succumbed? >> to the other side? i've thought about it. i've talked to some people. some people called yesterday after some of the comments we made on the air. >> "huff post" said today -- i can't remember what it was, but

i'm laughing thinking, here i am back fully in the "huff post." >> i have backed down on one thing. i don't love the idea of the government telling a company they have to build something. >> they're telling them they need to write software. >> here was an analogy i was offered. ford or gm creates a car. there's something bad in the trunk. >> it was an apartment, mnow its a trunk. >> it was a hotel room. >> that was on loan. you didn't own it. you own the car. there's something in the trunk. the problem is you can't open the trunk. here's the real problem. ford has built a bomb into the car so if you try to open the trunk ten times if you use the wrong key, the whole car explodes, right. that's what this is like. so the question is, should the car company effectively disable the bomb?

maybe that's another way to think about it. >> the other question people are trying to get to the heart of is whether this software existed on previous operating systems on older apple devices. if this is something they spontaneously come busted after the revelations of edward snowden because they wanted to throw away the key to this device, then this is not something they would be creating from scratch. this is something they already have in their arsenal. something like it. that's the other question. they're not wholly innocent in this if they had the key to unlock the phones at a previous time. what would you say to that? >> i don't know. i've moved on. i'm already done with the pope story. >> done with the pope story? we haven't even done it. >> i know why. after watching cable last night and after looking at twitter for the last 24 hours and after looking at all the newspapers today, i don't know what else we're going to be able to say, but we are going to --

>> well, if you were asleep or under a rock -- >> they know. here's the thing. the platitude, it's better to build bridges than walls, we all know that. he was kind of saying that. that opened up -- trump's got the big fat pitch down the middle in south carolina with all the evangelicals. it benefitted him. we're being used. we're being used by both sides. >> by the pope or by trump? >> both, i think. i think the pope inadvertently gave him -- >> well, then there's the "daily news" take. first it was dawn of the brain dead with trump painted as a clown. now it's calling him the anti-christ. i don't know if they're selling more paupers on thpers on this. >> they tried to sell themselves. they asked for a dollar. that was too much. i think that sums up "the daily news." who's going to pay a dollar for that rag? it's a joke. i read it every day. i look at it, i don't read it.

i do the jumble. we've got to move on. sorry. the u.k. might leave the eu. >> brexit. >> right. let's get to day two of the eu summit under way. european leaders meeting in brussels, trying to reach a deal to keep britain in the eu. julia chatterley is live in brussels with the latest. good morning, julia. >> reporter: good morning. eu leaders were talking until the early hours this morning. in fact, david cameron didn't leave until 5:30 a.m. home for a few hours and straight back in there. he said as he entered, look, i'm doing the best i can. i think if this is a show to show he's putting up a fight, he's going for an oscar-winning type performance. what is he fighting for though? he's fighting for the terms, the terms that which he can go back to u.k. voters an say, guys, this is how our relationship with the eu is going to change going forward and hopefully

improve. at the heart of this debate is his efforts to try and restrict welfare payments to other eu workers living in the u.k. he also wants to restrict the money that they send home to families living back in their own countries. what's complicated this debate is other countries like germany, like sweden, who have said, hang on, if the u.k. can get better terms, we want them too. so this is really broadened out the debate. but i think what this boils down to here in brussels is we like the theater. we have debate, we have disagreements. everyone looks very stressed. positions then converge and we find a deal. i don't think this is going to be any different. the big issue here for david cameron is he's got to go back home and announce a referendum, when if you look at the polls, those that want to stay and those that want to leave are really finally balanced. that's his challenge. for now, we just like some terms, please. guys, back to you. >> yep, watching that, julia. i don't know what to think.

40%, i guess, chance is where people are. anyway, thank you. appreciate it. let's check on the markets this morning. you saw earlier that the lion's share of what happened this week happened at the beginning of the week. yesterday kind of a consolidation phase after three big moves up. until we get some data, nothing really for the markets to key off of. we're kind of out of earnings season. we have the retailers obviously like walmart yesterday and nordstrom. now we're sort of out of that part of the market where we were worried about revenue and growth. let's look at europe quickly, which wasn't doing much when i saw it this morning. kind of flat. down a little bit. just marginal losses across the board. asia was really flat as far as the shanghai went yesterday. it was down less than -- wow, that's -- what is that, 0.05. almost like co2 levels.

shanghai down one point. let's look at oil, which is maintaining its trading above $30 but down 1.75% on andrew's birthday. today the ten-year is -- >> do i get credit if the market goes up today? >> yeah, i'm going to give you credit. i think there's a feel-good air. well, it is a friday. nice to have a birthday on a friday, isn't it? has that happened every year on your birthday? >> no. >> the dollar -- so it's not like super tuesday or something like that. that always happens on a tuesday. >> no, but i did use your 29-day joke. >> you did? >> yeah, i did. >> you should do 28 because not all months have 29 most of the time. they only have 28 most of the time. >> you understand how that works? >> no. >> you still don't. february only has 29 once every four -- >> yeah, i'm aware of that. >> so use the 28. how many months have 28 days?

people will say one. you go, no, all of them. got this important stuff out of the way. avoiding a market discussion. no, i'm not. can't wait for this. we're now joined by allison deans. is your middle initial a? >> it is. ann. >> allison ann. that's nice. >> that's my father, whose birthday is today. >> no way. no kidding. >> great man. >> that's cool. jim tierney is chief investment officer at a.b. i read your stuff. it sort of sums up what i would think if you take a step back and look at what we've been through, in a perfect world, you're going to be right. that is overreaction. there were some negative things going on. the market discounted even more of a problem and maybe got oversold. if you just stick to your ps and qs, eventually you'll be rewarded. is that where you are? >> absolutely. if you look at the issues that

everybody's been talking about, whether it's china, oil, the global economy, all of those were known late last year. we got into january and people really just freaked out about it, sent the market down 10% plus. we really do think that was an overreaction. >> so it wasn't the market. it was people. it always is. we get confused. sometimes a sign of higher level of preshens to the overall market. you think it's people and people can overreact. >> without a doubt. >> that's what happened. so this year turns into -- are you going to tell me high single digits in terms of gains? >> i think it's low. >> a lot of people say that's what we were hoping for last year, but we didn't even get that. >> i think while people knew all this weakness, when we started hearing the corporate profit growth was looking sluggish, the revenues were challenging, the

market sold off. when you have a real event, your real piece of news, that prompted people to sell a bit more. my feeling is by the second half of the year, a lot of what's causing pressure will not be causing as much pressure because the comparison is getting easier. the strength of the dollar will not have the same impact because we'll already have had a full year of that. the declining oil prices will have stabilized. again, you'll have easy comparisons. so the second half of the year, i think that helps the profit growth. it really drives the market, where i think the economy will continue to be healthy. >> profit growth in your view maybe revenue growth is just as important. >> revenue growth is incredibly important. about 75% of companies have reported earnings. huge dispersion in revenue growth. you have about 15% of companies reporting revenues 10% or more. and you have 20% of companies reporting revenue growth dropping by 10% or more. there's a real opportunity for stock pickers, for active equity management to find the winners. >> first thing you do is just

buy domestic companies. >> there's some of that, but not entirely. you look at a google, a priceline, those are international companies, and they both had really nice revenue growth. >> there's not as much of a 4x translation? >> there was, but their base business is growing so fast. look at google. 31% volume growth, click growth, in the fourth quarter. that's spectacular for a $75 billion revenue company. those are the kind of companies that if you're an active investor and can find those few select companies, i think you can prosper eastbound in this market. >> most analysts and investors are looking through earnings for tech companies when it comes to the 4x issue. when it comes to other companies, they don't have the same approach. >> not sure i agree with that. look at coke. >> will you just agree with him today on his birthday? >> on your birthday, of course. you're right. >> that's a good point, andrew. then just slightly give a different nuanced view. >> thanks.

>> welcome. >> i think people have given coke the benefit of the doubt. we'll have had flattish earnings for three, four years now. >> nordstrom? >> nordstrom is a different animal. when you look at the retail space in the u.s., when you look at the higher end, it's been a tough place to be. so i'm not sure they've gotten the past. not sure they're going to get the pass. >> can i ignore the fed? i'm sick of the fed. whether they go once, twice, don't go at all. we're stuck at zero. the rest of the world is at zero. that's not the game anymore. they're just there. >> i'd be worried if they went negative. >> that's what i mean. and they won't, will they? >> no. >> so what are our choices? we're stuck talking about 25 basis points as if it's a factor in our lives. i don't know. we're going to have richard fisher on. i want to talk to him later. >> i think we should be looking at the economy and what's going on with companies and then figure out what would the fed do. they should not be driving it. they should be following trends.

>> unless companies sit around thinking about changes in direction. like, okay, we went from easing to maybe a long, long, long slight tightening cycle. the difference between zero, a quarter, a half, one. my entire life, companies have been dealing with seven, six, five. we have been getting along fine. do we really need to microanalyze every quarter? >> i don't think we do at all. >> i'm not talking about them anymore. >> well, if the feds were looking at wage growth, i think we should be looking at wage growth, what's going on globally. that's how corporations should be making their decisions, not by minute changes driven by the fed. >> i'm going to ask the managing editor if we can just not even mention it. >> just talk about trump all day. >> talk about trump and the pope. i got some good pope jokes, if you want to -- >> you think? >> no. >> are they pretty good? >> i don't think i can share them with everyone. >> during commercial break.

>> you hear the one about -- yeah, anyway. thanks, allison. thanks. the pope, a rabbi, and -- >> pope jokes are scary. >> they are. religion is scary on tv. >> yes. >> that's why i tiptoe. >> coming up, on the campaign trail, catching up with the gop presidential hopeful john kasich ahead of the south carolina primary. a look at the latest in cnbc's speak easy series next. it is my birthday. as we head to break -- >> sorry, i forgot already. >> this day in history. ♪ you're not gonna watch it! ♪

♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪

♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. welcome back to "squawk box" this morning. sumner redstone was the victim of undue influence according to the media mogul's ex-girlfriend. she's sued over her removal as the 92-year-old health care agent for him and says he wasn't mentally competent to make that decision. redstone's attorney now arguing that his ex is just looking for financial gain. earlier this month, redstone gave up his role as executive chairman of viacom and cbs.

that's a soap opera right there. >> yeah, it is. our john harwood is on the campaign trail in south carolina ahead of tomorrow's gop primary. sat down with gop candidate ohio governor john kasich. >> i think we're going to see a judgment that will value somebody that has had success. they don't want some fudd fuddy duddy. >> instead of anger, you're talking empathy. you don't have the standard rhetorical hooks, the apocalyptic vision of the abyss that we're falling into under clinton and obama. doesn't everything we've seen about this campaign suggest the market for that is just pretty small in 2016? >> i think i finished second in new hampshire, didn't i? beat everybody else except trump. well, look, if that's where the market is, then they're probably

not buying me. but i don't think that's where the market is. i don't think people want to live in the dark. i don't think -- i think they have deep concerns, and they should. if we don't have solutions to these problems and if we dwell on the negatives and not on the positives, how are we going to get out of this? how are we going to change things? how are we going to right the ship so we do answer the concerns of the people? >> candidates are giving voters a story about why their economic problems exist. bernie sanders says -- >> the business model of wall street is fraud. >> you know wall street a little bit. >> i don't even know what that means. what does he mean it's a fraud? wall street is there to provide some of the glue to make that economic system churn. did we have problems there? of course. is there too much greed? of course. are there rules and regulations that are necessary? of course. but what does he think we should do, abolish wall street? it's absurd. >> ted cruz, i was at one of his

rallies in new hampshire. >> how did he do in new hampshire? >> not as well as you. >> thank you. >> he said bernie is right, the economy is rigged. >> does he say the rich are stealing from the poor? here's the thing, the way i look at it. i believe the single biggest cause of income inequality in is country is people don't have the skills to command the pay they bring up. which brings about our fundamental effectiveness of education and providing the skills. >> when trump talks about the economy, he says the problem is mexico, china, japan. >> i think our core economic problem is we don't have a policy that creates economic growth because we overregulate, overtax, and can't balance a budget. you can just beat up mexico all day long, but if you can't balance a budget, have common sense regulations, help small business, and cut taxes, you're just not going to get what you need. >> john kasich is just hoping to

survive here in south carolina, get on to friendlier terrain down the line. you've got super tuesday states, including some in the north, vermont, massachusetts, where he's going to try to do well. then he's trying to move on to michigan, next to his neighboring ohio, and on march 15th, you have a win or take all primary in ohio. his goal is to be alive and be able to claim those delegates. now, if you look at the polls we've seen in south carolina, check this out. the new nbc poll shows donald trump's lead coming down. caution, other polls have shown him with a double-digit lead, but we show him coming down to single digits, five percentage points. john kasich here in the second tier, a more sanguine picture for hillary clinton if you look at the democratic poll in south carolina. that primary is not for another week, but she's got a very wide lead over bernie sanders. meantime, she's got to survive the nevada caucuses where she's running very close to sanders. we have to see how that comes

out. those caucuses are tomorrow. >> it's crunch time, john. super tuesday. all this stuff. rubber is going to meet the road pretty soon. i'm going to miss it a little bit, all the conjecture. >> reporter: joe, what do you think of john kasich? >> i don't think he's going to do very well anywhere but new hampshire. you know -- >> reporter: does he do anything for you? >> no, he doesn't. and i'm from ohio. maybe just a vice president. but it doesn't matter what i think. i'm thinking about jeb. jeb looks better without the glasses. i've asked him to get the tie knot a little smaller with the center dimple, but it's sort of a -- i don't know. it's almost a shakespeare tragedy to watch.

>> reporter: i think it's pretty hard for him. their goal coming into south carolina was to finish ahead of marco rubio. now, there's enough volatility here you can't rule out that happening, but the polling doesn't suggest that's about to happen. what the polling suggests to us is that donald trump is likely to win with ted cruz likely to be in second place and marco rubio in third. that's just not a good formula for jeb bush. he'd had to find a place to really breakthrough. based on evidence we have now -- what's that? >> nikki haley, that was devastating. that was very tough for him. trying to look up something on "the huffington post" they said about kasich. they love him. heart-warming kasich video may restore your faith in politics. that's all i need to know to not like him. >> reporter: that means you don't like him? >> yes. if "the huffington post" likes

him, i don't. the liberals love -- he's the liberals' favorite republican, by far. march madness is coming. you got to beat louisville tomorrow. we'll see after that devastating loss to north carolina. >> reporter: i'm not going to bet too much money on that. we're a little shorthand. >> maryland lost a guy. see you later, john. thank you. >> coming up, medical data. how big companies are tapping outside firms to help predict which employers could get sick. and as we head to a break, take a look at yesterday's s&p 500 winners and losers. vo: know you have a dedicated advisor and team who understand

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time now for today's executive edge, where you shop and whether or not you vote might reveal how likely you are to get sick. at least that's what some companies like walmart are banking on, teaming up with firms that collect and crunch employee data aim ted at stemmi health care costs. let's bring in colin hill, co-founder of gns health care, which mines medical data to help companies draw connections between consumer behavior and health needs. thanks for joinings us. explain how this works. you can figure out from what

that i'm going to get sick or not? >> so we crunch huge amounts of data from medical and pharmacy claims, even consumer buying behavior data to then predict who is most likely to get sick or be at risk for various diseases. more importantly, who's going to respond to various medical treatments and medical education. >> okay. so let's say you think your data says there's a likelihood i'm going to get diabetes. what do you then do? do you call me or the company i work for? >> right. so that information is handled and delivered by our health insurance partners like etna. they work directly with the individuals who opt into programs to improve their health care. >> and so this is what i'm still trying to unction. does my employer find out this

information, or do i? >> you, the individual, find out the information. employers are not interested in getting that data directly to communicate with employees. they're not allowed to. and they're not interested in doing that. what they're interested in is ultimately improving health outcomes, which improves productivity, and lowering costs. as health care costs keep rising in this country, there's a greater and greater need to use machine learning across lots and lots of data across many people to really figure out what works for whom, what treatments are the best for a given individual, who's at the greatest risk. this is all about having people stay healthier longer. >> can you give us an example of -- >> yeah, that's what i want to know. >> an example of what's unhealthy and what types of items you're looking at that when put together bring you to maybe a surprising conclusion.

>> sure. so for example, in what we were developing in metabolic syndrome, the kind of data that was being used is data across a number of different factors. health risk assessment, the claims, the visits to a doctor's office. even preventive visits. what's the impact of that on overall health outcomes? and we actually saw individual by individual some very strong signals that were driving better health outcomes when people, for example, did their annual physical. that's one example. >> so this is more health behaviors. when you say you're crunching data from purchases, that's more like a co-pay in a doctor's office, not a steak at a restaurant or something like that? >> so consumer behavior data, like what you buy at restaurants and other places, can be useful,

and we're using that right now in programs in medication adherence that are running in the pacific northwest. it's not that there's an individual looking through data to see what you're buying, what you're not buying. this is a machine that's crunching through data and looking at many, many factors in combination, even down to, in some cases, genetic data to predict what's the greatest risk. >> colin, how are you getting access to my amex bill, for example, to find out what i'm eating? >> so we purchase this data from groups that aggregate this type of data and that actually tie it to other sort of demographic markers. >> you're not tying it directly to me then? that's what i'm trying to understand. >> right. so in certain cases, yes, this kind of data is being tied directly to individuals in an anonymous type of way. >> what's the chance i get a phone call from my hr department that says, sorry, next year i'm

sorry to tell you that your co-pays, your insurance is going to cost you more because your behavior is worse than we thoug thought? or on the flip side, someone says, you're much healthier than we thought, i hope. >> on the negative side, i think the chances are zero. they're not allowed to do that. they don't want to do that. the folks we work with, they're very careful about these things. they're very careful about access to patient data. at our company, i'm not even allowed to access protected health information. but keep in mind, this type of risk you're talking about is well outweighed by the potential upside of using this data to drive precision medicine. at the end of the day, we all want to be healthier. we all want, when we do get diseases, to get the right treatments for us that are going to keep us alive, that are going to keep us healthier, and ultimately are going to cost less money. >> okay. colin, we're going to leave it there. thanks so much.

>> thank you. >> you know, spencer rascoff of zillow bought a fitbit for every employee. >> can they get a discount? >> if they sign up to be his friend. >> you want no encryption of anything ever again. >> just let it all hang out. >> now are you going to talk about guantanamo? >> it's coming. >> you want to expand guantanamo and waterboarding, right? >> supposedly. >> coming up, the war of words between pope francis and donald trump. the pontiff suggesting that trump's stance on immigration is not christian. the donald calling the statement disgraceful. will this help or hurt the trump campaign for president? that's next. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records.

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get one-touch credit lock, plus your score and report at transunion.com get in the know. welcome back. let's look at the u.s. equity futures, see if there's been any change since last time we checked. gotten worse. was down single digits. now the dow is called down 28 points. the s&p is called down 2.5. the nasdaq called down seven. the s&p still up about 3% for the week. probably the best week so far of 2016. as you have heard by now, pope francis touching off a holy war of words with donald trump. the pontiff suggesting the gop's candidate's stance on immigration is not christian, in his words. donald trump responding to the pope's comments. >> for a religious leader to question a person's faith is disgraceful. i'm proud to be a christian, and

as president, i will not allow christianity to be consistently attacked and weakened, unlike what is happening now. >> joining us now is the associate professor of theology at the catholic university of america. how you doing, chad? thank you for joining us. >> good. thanks for having me. >> 2016. things like facebook and cable news and twitter, and things get disseminated fairly quickly. when i look at this, i've heard the expression it's better to build bridges than walls, i don't know, since maybe the day i was born. i don't take much offense to that comment. i understand exactly what the pope is saying. and he is the pope, after all. so that's sort of his job, to say things like that. but when you do, it gives sort of a -- it does politicize it a

little and gives a political candidate the opportunity to use it as a talking point and maybe bolster his chances. i'm not sure the pope had that in mind. >> this was trump's first response, as the pope is a very political person. the pope responded, well, at least he thinks i'm a human person. i think the pope is good at sending out grenades on these papal plane interviews, which are not authoritative teaching, just the pope riffing off events and answering questions. the question about -- that he was asked was not a question which was asked in a way that would make the pope say, mr. trump is not a christian. the question was asked in a way in which the pope said, look, as you say, the walls and the bridges are metaphors for inclusion and exclusion. and those are getting at principles. what are the principles? the christian principles are

about loving your neighbor. so tell us how if you're a christian, mr. trump, how do christian principles guide you? i think that's a legitimate question that no one has asked. all the gop candidates are very explicit about their christian faith and they're explicit on the campaign trail about how biblical principles will guide them. mr. trump says he's a christian. tell us how the biblical principles guide him. >> it's so interesting for a candidate and politician who we normally see storming up to the podium with notes, speaking extemporaneously. in his response to the pope, he was very clearly reading something that was carefully prepared. i know your expertise is in the catholic church, not the current 2016 gop field, but i'm wondering if you think there's any legitimacy with what trump responded to the pope. >> we saw different responses. we saw the initial response where the pope said it's disgraceful for the pope to

question anybody's faith. especially the pope who says, who am i to judge. here he is making a judgment. you'd think that the viker of christ would make judgments. he's making a judgment not about mr. trump but about actions. we did see a carefully scripted statement he gave on wanting to support christianity, but we know almost nothing about his faith. he says he's presbyterian. does he know the difference between presbyterians and methodists and catholics? he talks about the eucharist as a little wine and a bit of cracker. he doesn't know how christians speak about the bible. he says 2 corinthians in stead of second corinthians. it's legitimate for us to ask what sort of christian is he. he actually doesn't gain the trust of most conservative christians in america when you survey them on his faith.

pew did a survey in january, which shows it's actually white protestant liberals who are very comfortable with his faith. conservatives are not comfortable with his faith. they're not convinced at all that he's a genuine person of christian faith. so it seems to be legitimate that when this becomes an issue, when faith and public life becomes an issue, we should be able to ask that question. >> to people that might base their votes on whether -- and most people, i don't think, would necessarily care that -- i don't think that would be the litmus test for whether they support a presidential candidate. i don't think mitt romney's mormon faith was a determinant. i don't think in any of these cases it necessarily should be. i don't know a lot about president obama. he's a christian, but i don't know -- he hasn't been openly, you know, effusive about a lot of the things you were just mentioning. next week we'll be on to somethi

something else, i think. >> absolutely. >> if i had a big wall around the vatican and the toughest immigration laws in the world, i would have thought of that, if you were going to use a specific example about the wall to close our border. maybe i would have thought what to say. >> his comments are not about border security. >> i think you're right. it's build bridges, not walls. >> exactly. >> and i try to do that. >> right here, we're doing it. >> we do that here, chad. >> no walls here. >> thank you. appreciate it. >> thank you very much. >> coming up, giving experiences rather than goods is a big trend for millennials. the company if only is looking to cash in on that. among the experiences you can buy, five telephone call lullabies for less than $1,000. you can go to a sporting event with the band smashmouth. the ceo of that company will explain next.

. have you ever dreamed of jafg john -- having john mayer serenade you. a new company called ifonly is offering these and giving a portion to charity. joining us now with more on this is the founder and ceo of

ifonly. this sounds distinctly millennial. you about you need a millennial customer who has the money and willingness to spend on these experiences. where do you find they people. >> to be candid everybody is looking for experiences. from retirees down to teenagers people are more and more interested in spending their money on expenses and fun things rather than just more stuff that piles up around-the-house. >> so how do you curate the types of different experiences that are not only possible to deliver to a customer, but also are interesting. i mean as much as it might be fun to see smash mouth in concert i don't know that's necessarily something i would seek out. how do you curate these? >> at ifonly.com we think hard about the type of experiences people would like to do. we do "food and wine," golf and tennis, sports, music, et cetera. then we think about what are the

once-in-a-lifetime ifonlies and what ones you want to do on a weekend. a lot of time people come and ask us if we can create an experience for them which we do. >> like what? give us an example of someone saying i would love to do and it doesn't exist any where else. >> people come to us and say i want to visit this cult winery in napa valley i can't get into. i want back stage tickets to this concert. people who are organizing wedding proposals and they want to do something extraordinary or they are traveling somewhere and they want access they wouldn't have otherwise or they just want to play with a famous tennis player or golf player. where else would you go ifonly didn't exist. >> how are you safeguarded against version. it sounds like fun stuff you're offering but i bet that's the type of expense to be the first to go if the economy gets soft again. >> the ugly "r" word.

i think the experienced economy was born out of the aggravate recession of 2008. if you think back and remember, people were embarrassed to walk down madison avenue with a logo shopping bag. people looked around their homes gosh i have a lot of stuff. what money i have to spend i want to do something fun with people i care about and create a memory. i think bad times create more of a shift towards experience spending. >> certainly sounds like you guys got some fun stuff to try. trevor, we'll check it out. we appreciate your time on an early morning. >> ifonly. thank you very much. what's the answer? >> to what? >> you asked the question. >> multiple questions. >> at the very beginning have you ever dreamed of having john mayer serenade you in a private concert. >> i never dreamt that. it sounds like it would only

happen on an episode of the bachelor. >> how about you? >> nope. >> i shouldn't get you that for your birthday >> in college. big john mayer fan. >> spelled the same way. >> that's weird. >> one of those $20 motels. >> no, no. >> he gets around. >> yes. i think. >> legendary. coming up, apple getting more time to fight a court order to unlock the iphone of one of the shooters in the san bernardino terror attack plus former congress secretary gutierrez on president obama's planned trip to cuba and immigration debate that has pope francis weighing in. "squawk" will return in just a moment.

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. apple protects its core. tech giants battling the fbi over iphone encryption hitting privacy over national security. who will win out. >> plus look out below crude falls from grace what it means for your wallet and economy. director of research for the carlisle group joins us with the hidden dangers. gone fishing hollywood hospital pays $17,000 in bit coin to return to normality. look how ransom ware works and how security experts are on high alert. 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" here on cnbc, first in business worldwide. i'm joe kernen along with kayla tausche and andrew ross sorkin. the futures indicating a lower opening this morning. we got worse as the session has moved on. we're down single digits, down about 30, now we're down 62 points. so far. oil also looking lower. that's one of the problems. now down 2% and threatening to break back under $30 a barrel. >> i thought it was supposed to be a good friday. >> i wasn't going to correct you. >> why not? we talked about it yesterday. unc -- >> lost by one. >> we'll give them that one. >> north carolina was doing well and then they lost. >> that's how they usually do it

on years they win the national championship. >> all right. >> they try not be too perfect. >> all right. >> let's get you caught up on some of the headlines at this hour. earnings just out from equipment manufacturing deere and company. they earned 80 cents per share. revenue fell below forecast pressured in part by strong dollar. deere also says its financial condition remains strong but expects another challenging year ahead. bogey's engineers union has approved a six year contract extension which include as 5% annual pay hike for next five years and new layoff benefits. current contract was set to expire in october. u.s. diesel passenger vehicle sales nearly disappeared in the wake of volkswagen diesel emission scandal. the automaker sold about 225 diesel cars in the last month before the scandal, monthly sales ranged between 4800 and

9,500. >> that's surprising because of the stigma of volkswagen. >> remember when diesel was supposed to be a very popular thing. remember that? >> i do. diesel cars -- it was the worst mistake i ever made. smelly. no acceleration. horrible. >> expensive. >> expensive. having to stigmatize at a different pump. thin little nozzle. it smells. >> you don't have a car? >> if you do decide to get one, even when you rent one of your -- what do you get rent-a-wreck. >> we are just down avis or whoever is thrifty, cheapest budget whatever thing is. easy. >> meanwhile -- >> what was the other one called? >> zipcar. the car is now owned by hertz. >> i love hertz. >> they are number one. >> avis. they try harder?

>> are you judgmental. >> i am. go with the winner like cnbc. number one. there you go. >> the fight between apple and fbi over iphone encryption is heating up. eamon javers joins us now with the latest. now that the deadline has been extended to next friday we're going to keep talking about this for a while because it's not going to go away any time soon. >> reporter: that's right. now that apple looks like apple will have until february 26th to get a response in to this court order but we're getting our first indication that this debate is starting to tilt in a way here in washington that apple is not going to like. the chairman of the intelligence committee up in the senate announcing last night that he's going to pursue legislation that would provide penalties for companies that don't comply with court orders to decided fehr encrypted communications. that could be a big deal for a whole bunch of technology companies, but bear in mind this is not a final proposal yet. he's saying he's work on a draft at this point and it's really

unclear at this point where the other committee members stand. also his office saying last night despite initial reporting out there he said these penalties would not be criminal penalties, they would be civil penalties. clearly there's some debate up on capitol hill as to what should to be done. you can imagine in a republican senate with a republican house that this is the kind of proposal that could gain some traction and we've seen the white house come out and back the department of justice and the fbi here in their investigation and in their effort to get apple to break into syed rizwan farook's iphone. is there a bipartisan consensus here in washington to do something to penalize these companies as they resist this kind of court order? that's an open question but we could see where it goes. that's not something that apple will like. >> now the question is being asked too, what happens if this goes the supreme court with its composition the way it is right now. >> reporter: unclear it would go the supreme court this year.

there's a number of procedural steps. they have to deal with this judge then if they appeal it goes to the 9th circuit. that was that there's two stages in the 9th circuit and after that it goes to the supreme court. does that happen this year, next year. what's the kpom isis of the supreme court? we have no idea. it's impossible to war game out the scenarios. folks in washington see this very differently than people in silicone valley that have a libertarian information wants to be encrypted mindset. in d.c. say there was a court order, a warrant. this debate is not ending any time soon and could be months before we see a final resolution. >> if apple or any other tech is asked to do something like this and forced or compelled by the courts to do this are they compensated in anyway for whatever the cost of actually build agnew set of software

would be? >> reporter: that's an interesting question. i would imagine there's some billing. yeah. but i don't know the answer to that. i'm speculating they could bill the government. but if you are the richest and most powerful company in the world it might not be in your best interest politically and in public image terms to send a large bill to the government for that. >> complicated. you need a scorecard to figure out who is likely to be on which side. when you said it's the gop, i was thinking well gop encompasses a lot of libertarians like rand paul. then again you had the security thing so after san bernardino you saw in the debates how rand paul was sort of out muscled by security. then you think about the left and the aclu usually would be very protective of privacy rights but in this case it's the obama administration going after apple. it's all screwed up. >> it doesn't slice partisan wise the way you might initially think. obama administration came out and said --

>> the president is pushing for tpp and his own people are -- >> reporter: right. republicans out on the campaign trail say they don't like these deals. >> it's complicated. >> reporter: it's not cutting -- we talk about the tech industry like it's a monolit. jack dorsey supporting apple and tim cook. a lot of tech companies have been quiet. you don't see a massive rally in silicon valley. >> cuban said, even on this set, andrew, you know, the "new york times" wants to go in and wants to privacy and i usually would be -- >> reporter: you can certainly -- >> you're getting hammered. >> i am. >> by your friends. you'll be with me by the time this over. >> reporter: guys, the fbi here

clearly has the exact techt case that will give it the best set of facts. this is a terrorist attack on american soil. we have 14 people killed. they are in hot pursuit of other leads, potentially other people involved. you look at that argument and you take that out to the public and people will say wait a second this is a terrorist potentially on the loose, potentially inside the united states why doesn't the government get that information. >> exactly. all right, thank you. going back to the markets we're joined by hans olesen. luckily i'm a pro. okay. all right. hans olson joins us. and todd gordon founder of trading analysis.com also a cnbc

contributor. start with the technical stuff, todd and let me know whether the chances are good that the loss are going to hold and the next thing we should be watching is whether we get through some resistance or are we going test them? >> i don't think we have the ability to recover. i think this is a sell up here and i think a lot of rally in this market is predicated on the crude oil market. i was lucky enough to secure the loss in crude. we talked about it yesterday with brian sullivan. >> what does that mean? >> what i did -- >> secure the lows. what does that mean. you wish you would have bought. >> a blind squirrel finds a nut. i've been long for the last week. in august to be specific when crude was trading 42 my model showed 26. so ultimately what i think is i'll be defeated on that call and we'll make new lows. if you look at the rally from january 20th which is this war of 1812 in the s&p, the rally

has been consistenting of sectors you don't want to see leading. staples, utilities, just not what you want to see. consumer discretionary, financials, health care are under performing on the upside. this whole thing is energy, materials, emerging markets coming back and include a rally that will be defeated. today is options expiration. a huge open interest in s&p and futures gravitating towards that. this is a sell. >> that's where we are with technical. hans, you guys are more long term in your thinking. you think we go down in retail or people should stay the course and be dollar cost averaging? >> on the market, on the stock market, we've tested the low. and we pulled what we've done back in august we reduced our equity exposure in the u.s.

we never bought the rally into tend of the year thinking that we would retest those loss. we've done that. now with that cash we're starting to look at u.s. equities and to a certain expect european equities. with respect to oil to your good point, in the short term we could test lower lows but i think that we are in the process of building a floor underneath the price of oil right now. what is well entrained at the moment is supply cuts. that's been happening over the last 12 to 18 months. you're starting to get the talk of some sort of deal with members of opec and some of the non-opec big oil producing countries. that's essentially the things that you would like to see for a bid to be put under the price of oil. and then ultimately if demand continues to go along we should see higher prices. >> todd, earlier this week it was such a great thing that we were able to rally in equities,

despite oil being down. we thought there was going this broad decoupling, oil wouldn't matter to the stock market and then here we are again. >> you can't fight fact correlation with crude and s&p as a trader it's air tight. to your point, kayla, if you look at the rebound justin last week oil has underperformed the rally in the s&p. energy shares and materials leading. i do think the correlation is very strong. to hans point crude oil market could and energy and materials could find a low. we throats uptrend in the dollar. the dollar has been sideways since march of 2015. it goes the point that market and fed is beholding to where the stock market goes. i think the fed has lost credibility in terms of raising rates. they did it once. now pretty much as people get more hawkish, it lays on top of the chart of the s&p 500. the fed is watching the stock market and as the stock market begins to push down the fed

stays on hold, the dollar selling off and that could put a bid in commodities. >> that's a good point. if the fed starts looking at growth opportunities in china, the stock market, they completely -- it's done. >> they have been doing that -- they did that -- what was the first thing, that temper tantrum? the thing is it doesn't matter what they do at this point. we'll have richard fisher on. they are like drug addiction is a progressive disease. you need more and more to get the same high. they are at the point where anything they do -- they are partly responsible for this. todd thank you. two first names todd gordon. when we come back the hidden dangers of oil price shock. researcher from carlisle group looking at hotel bookings and

car rental. then at the bottom of the hour we have carlos gutierrez who will talk about the president's historic trip to cuba next month. and spur of the moment things. sheraton. ♪ sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

animosity. welcome back to box. chinese top securities regulator is stepping down according to the "wall street journal". he'll be replaced by the current

chair mapp of the agricultural bank. china following a series of policy moves that contributed to a heavy selloff in chinese stocks come ago cross the pond. >> we'll see. that's a big move for a country managing its stock market very closely. if you think the stock market is overreacting to crude's fall from grace think again. "wall street journal" is out with a recent op-ed titled hidden dangers of the oil-price shock. carlisle's director of research jason thomas says energy represents 2% of the gdp its effects on the broader economy is much greater. joining us down to break it down is the author of the piece, jason thomas. for those who haven't read the piece lay out your argument where you think we'll see effect of oil prices crop up. >> first when you look at industrial capacity between 2009 and 2014 energy accounts for 70%

of the growth. so energy accounted for 70% of net u.s. industrial investment over that period. so this is a massive share. when you look at the industrial sector energy became the growth engine. in 2015 orders related to equipment for energy fell by 35% and those declines are persisting into 2016. that's a huge sthok the industrial sector and explains why the industrial numbers were negative for all of 2015. >> now there's a sense we've become such a consumption and services oriented economy that we can resist the weakness on the industrial, on the manufacturing side and that the two aren't as related as they were in the past. do you buy that? >> i don't. you know, most service portions of the economy aren't really that volatile. they actually don't show much of a response even in recession. shelter service, like occupied rent this doesn't move so much.

accounts for a large share of services output. the kparm i cite in the piece in 2008 strul equipment purchases accounted for 6% of u.s. gdp. but in 2009 the collapse in industrial equipment spending accounted for about half of the contraction in gdp. really it's focusing on these very volatile series even if they are as small as a share of the economy that provides the best guidance for where the overall economy is headed. >> what about the benefit on the flip side, jason, consumers are getting this tax break at the pump, they are spending 80% of their savings on travel, on experiences, that they are going to be plugging that right back into the leisure sector. why isn't that happening. or it's happening but not having the desired effect? >> it's happening. the magnitude is a little bit smaller than we think. it is happening. when you look at sales of suvs, crossovers, light trucks in 2015, you see a clearer pronounced effect. chevy couldn't produce enough

pickup trucks to keep on dealer lots. i do see evidence that this is having an effect on consumer behavior and consumption decisions. again, i think the contribution to growth is probably a little bit more modest than we expected and, of course, once oil falls through certain thresholds you start to introduce financial sector stress because of the potential default risk on the large stocks credit issued to finance energy investment. >> but the problem is the big banks say that oil and energy loans are such a small part of their portfolio that defaults won't be meaningful and if they are meaningful smaller community and regional banks that's not systemic it don't touch enough of the economy to matter. those are arguments we've been hearing for the last year and they seem to be staying pretty much the same despite the fact that prices have remained consistently low. will that turn at some point? >> well, i think it has turned

with respect to speculative grade credit spread. if you look at energy metals mining it accounts for about 20%. fair loss segment in the market is in the 45% range trading on 53 cents on the dollar. it's affecting the economy more broadly. so, even if the banks have successfully avoided exposure to energy default losses they are still going to be significant losses for the holders of these bonds and syndicated loans as well if prices stay where they are currently. >> we'll see if any of these production freezes, production cuts come to bear over the next few months but for now doesn't look like much in the picture is changing. jason, we appreciate your time this morning. there you see on our bug

down 17 and down 12. so that stuck. that stuck too. that's what's actually happening right now. there's the futures. the dow is down 65. so the future changes now down 79 on the dow. and down nine on the s&p. so we're trying to fix that bug on the lower right because that's wrong. it's not just down one point. markets are selling off a little bit but we're up monday, tuesday and wednesday. coming up a new corporate danger that could cripple computers and businesses it's called ransom ware. recently used to hold a hospital hostage digitally. they paid the ransom. up next drone flyers face a hefty fine or even jail time if they don't register their drone. from fwois corporations you're supposed to register your flying gadget by tend of today. details after the break. "squawk box" will be right back.

>> announcer: time now for today's aflac trivia question. what is the most downloaded song of all time? the answer when cnbc "squawk box" continues. ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician. he paid my claim in just one day. one day?! shh! how does he do it? in just one day, we process, approve and pay. one day pay, only from aflac. what is the most downloaded song

>> announcer: now the answer to today's aflac trivia question.

what is the most downloaded song of all time? the answer, "i gotta feeling" by the black eyed peas. i would have guessed that. >> never. >> black eyed peas. number one download song of all time nurp going to listen to it tonight. >> my birthday celebration. what about kanye west. he was going on title didn't go on title. jay-z was upset. >> i heard the audio from behind snl. >> that was downloadable. >> even the president called kanye a jack american century championship didn't he? >> i thought they are friends. >> he might know even more that kanye is jackass. >> the pope inserting himself

into the presidential race calling out donald trump. john harwood joins us more on the race for the white house. then u.s. and cuban government officials moving forward to strengthen trade policy and president announcing he'll make a trip to the communist country next month. we'll talk business opportunities next with former commerce secretary carlos gutierrez. >> de. he called him a jackass. >> thank you. from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions.

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>> getting cpi in an hour but futures have been selling off throughout morning. we started the morning in positive territory if even slightly but now we're having an implied open that would be in the red. the s&p by five points. dow by 47 points opinion nasdaq by 11 points. much of that has been tracking oil. among the stories front and center, citigroup has announced plans to sell its consumer banking operations in brazil, argentina and colombia. the company says it wants to focus its efforts on constitutional clients in those countries and not the consumers. and china's regulator is stepping down. he'll be replaced by the agricultural bank of china. missteps have gotten blame for a steep selloff in chinese stocks.

mergers and acquisitions slumping. new figures shows $$336 billion. >> today is the deadline for drone owners to register with faa. the rule was announced last year before 1 million drones were sold for this holidays. 300,000 registered in the first month. after today unregistered drone owners could face serious consequences including a civil penalty up to $27,000 and a criminal fine of up to $250,000 and imprisonment is also a possibility. so, if you have a drone in your possession you might as well get -- fill out the papers. >> "usa today" said there had already been more drones registered than there are registered pilot, air pilots. >> does even a little toy -- these things you buy at the apple store does that count? >> i think a couple of weeks ago

325,000 registrations had already happened. >> have you registered your? >> i don't have one. >> joe has a couple. >> when i was a kid i had rc stuff. you build them out of balsa wood and put the tissue over it and stuff on. i don't know if i ever got to a point where the rc actually worked. i did the -- it was on strings -- this is not that -- i would love to do that if i was a kid. love to have a drone. flying it around. have a camera. >> now you have to have it registered. >> gop candidate donald trump part of a town hall meeting in south carolina ahead of saturday's primary but the holy war between the donald and pontiff is still buzz ago cross the country and john harwood joins us now with more. it's friday. >> reporter: there's so much popping in this presidential campaign. donald trump spent yesterday in

this back and forth with the pope over his proposal to build a wall and whether it was christian or not and he said, called that disgraceful. but then yesterday afternoon buzz feed dug up audio of donald trump telling howard stern in 2002 that the united states should invade iraq post-9/11 which is opposite of what donald trump has been saying on the campaign trail. here's how donald trump responded to the news of that audio on town hall with krn last night. >> there's a report out tonight on buzz feed -- i've not heard it includes an audio clip of you on howard stern talking on september 11, 2002 he asked you are you for invading iraq. you said yes i guess so. i wish the first time it was done correctly. is that accurate? do you remember saying that? >> no. i could have said that. i wasn't a politician. first time anybody asked me that question. by the time the war started that was -- >> 2002.

>> by the time the war started i was against the war. >> reporter: now that's not helpful to donald trump but of course his relationship with words is different from what most politicians relationship with words is. nothing like that seems to stick to him. hillary clinton had her own problem at her town hall with our colleagues at msnbc when she was pressed by a voter on whether or not she's going to release the transcripts of her private paid speeches to wall street, goldman sachs. >> i'm happy to release anything i have when everybody else does the same because every other candidate in this race has given speeches to private groups including senator sanders. >> reporter: when everybody else does the same. that means she's not releasing them and bernie sanders is taking advantage of that by posting a countdown clock or counts up clock of how long she says she's been thinking about releasing those transcripts. he's keeping the pressure on. nevada caucus is tomorrow.

he's running even with her. hopes for an upset to add to his post-new hampshire momentum here in south carolina. donald trump has been leading going into tomorrow's primary. he's hoping to get a big burst of momentum as the campaign widens out for this super tuesday contest on march 1st, guys. >> where was the barking dog sound bite because i saw it on twitter because they had, they had a clip of bill murray going like bark like a dog and then they had hillary going arf, arf. can we run that? >> reporter: i don't have it at the moment but we certainly can run it. it was kind of funny. >> when it's suppliesed with bill murray. he's cutting a hole in one of the greens saying bark like a dog. >> reporter: there's a good vine going around with hillary barking and donald trump saying something funny and jeb and bernie doing the same thing.

not bad. >> hey, john, didn't the president -- it was your interview where he called kanye a jackass wasn't it? >> reporter: let's be clear. there was a portion before the interview, before we were taping for tv. we did not broadcast that segment, but other people with other networks picked up the audio feed as we were getting made up to go into that interview and broadcast that clip even though we did not because we considered that part of the interview off the record because we were preparing. >> that's the best part of the interview is when he caught the fly, dude. >> different interview. >> don't bury the lead. >> reporter: different interview. >> before you go there was this book party last night with mayor bloomberg where he teased people about the possibility of running still. at least left the possibility out there. the polls showing that independent run he has a 16%

chance. do you think he'll do that. >> polling at 16%. not that he's -- >> reporter: if we get a donald trump nomination on the republican side and a bernie sanders nomination on the democratic side i would expect michael bloomberg to get into this race. if hillary clinton is nominated which i think is the likeliest outcome i don't expect him. >> he has to make a decision in the next two weeks, doesn't he? doesn't he have to make a decision? >> reporter: i don't know about the next two weeks. i do believe to get on the ballot in all 50 states he's got to move say by the end of march. maybe there's a deadline a little bit earlier than that. probably a little bit of give there. but i think he's going to watch what happens in south carolina, in nevada, super tuesday and then he'll have a pretty good sense of where things are flowing by the time we get to

mid-march and those big florida and ohio primaries which are winner take all. >> thank you, john. appreciate it. we should tell you president obama will be traveling to cuba in march. the first visit to the island nation by a sitting u.s. president since calvin coolidge back in 1928. former commerce secretary carlos gutierrez joins us now. he was born in cuba and chair at the albright stone ridge group. good morning. so what is this trip about and what can the president do in this lame duck session or lame duck year before he's out? >> well, the trip is about a continuation of a process that was begun last year to normalize relations. that is well into the future. it's going be a gradual process. going to be long term. this is one more, i would say, major step. i think this is a huge deal. extremely symbolic. the fact that the cubans would invite the president, the

president would go. it's a very big deal. i don't think we should minimize it and it's a lot more than a photo op. cuba is changing and we should help it change. you know, it's going to the -- free enterprise is starting in cuba, i just don't get why the u.s. would not be more eager to change and because of the sanctions we have in place it's very tough. >> carlos, you know if you look, marco rubio, ted cruz said if elected they would severe all diplomatic ties. cruz said it's a mistake for obama to go on this trip. is there any possibility the embargo gets lifted while he's still in office? >> i think that will be tough. the sanctions, the embargo is codified into law. you know, to have one big vote take the full embargo, all of the sanctions put together may be tough. but i can see, for example,

chipping away at the sanctions and getting rid of the travel ban. right now, you know, u.s. citizens can't go cuba as tourist, which strikes me as just absolutely amazing, given that it's 2015. this embargo has been in place for 55 years. so, you may find some aspects of the sanctions being chipped away. it will be tough to get a vote for the whole thing during this administration. >> what will this do to the tourism industry. when does it open up? u.s. airlines are planning to actually start having regular flights for tourists. >> yeah. the airline deal was inked yesterday. this is brand new. people can fly a normal commercial airline to havana the way they would to any other place around the world. that is going to increase the number of travellers. perhaps not tourists because that's not one of the approved

categories. but look there are 3 million, over 3 million tourists or 3 million foreign visitors who are going to cuba every year. it's an island of 11 million people. we know that there is a shortage of hotel rooms. so this is an area that's going to boom. and there's no question that tourism from all over the world will continue to grow. there will be demand for hotels, demand for transportation, demand for services, for infrastructure. this is a good time to be looking at cuba. not that it's all going change overnight, but change, economic change has begun slowly. >> what about all of this, all these assets that effectively u.s. companies say were confiscated. exxonmobil, coca-cola, cold gate, office depot, starwood saying $70 billion of property was confiscated. >> there are talks right now

between the u.s. and cuba about claims against confiscated property. and u.s. companies who have claims, if they are looking to get into cuba they can negotiate those claims. it's not a matter of waiting to see. but the companies that have claims should step forward. but that process is happening right now. so, all of these things that we had seen as huge obstacles are being tackled. and they are being tackled little by little. >> do you think they will get their money back? either get their money back or get a better deal on the way in? >> i think the issue will be resolved. how will it be resolved we'll have to see. i believe the issue will be resolved because, you know, if cuba wants foreign investment we'll have to deal with this issue before a lot of companies move back in. >> carlos thanks for joining us this morning. appreciate it. >> a pleasure. >> coming up imagine being in a

hospital audiotape waiting the results of a test when you're told your information is now in the hands of a hacker demanding a ransom. it actually happened and it has cyber security experts and corporate america concerned for obvious reasons. we'll discuss that threat up next. you're an at&t small business expert? sure am. my staff could use your help staying in touch with customers. at&t can help you stay connected. am i seeing double? no ma'am. our at&t 'buy one get one free' makes it easier for your staff to send you

on >> welcome back to "squawk box". a crisis taking the cyber world by storm. it's called ransom wear. hackers held up medical records in order to gain a ransom. hospital paid the hackers if you can believe $17,000 in bit coin to regain access to its own system. joining us now is the co-founder and chief technology officer and we welcome him. this is a whacky story. but this is going on much more broadly than we cho about. >> ransom ware has been with us for a number of years now. if you're not familiar with how it works. you get a phish e-mail about an

invoice you need to click on. click it. then it starts encrypting your files on your computer. it can be particularly damaging like for this hospital if you have network attacks storage or other drives that are connected. and the only way that you're going to get those files back is if you pay the attackers in bit coin a fee that will allow you to decrypt those files. >> no way to unencrypt. this goes back to apple. if i hire you to help me, what can you do for me >> a few years ago we could help you because the attackers weren't sophisticated. the strains that are going on today we can't decrypt it. they are using proper cryp cryptography. we won't compel hack towers put back doors to allow us in. >> if i hire you, what can you

help me do except pay the ransom? >> there's very little to do. i can console you. unless you're kanye west i won help you. that might be what you need to do. if you look at the dollar amounts of what you're lotion compared to other phishing and other large attacks that may be what you need to do. >> how often do these attacks of scale happen. this is in the news because it involves l.a. hospital but also bit coin which has an alarmist type tone it. does it happen all the i'm? >> it's an embarrassing thing. if you're prepared and have your files backed up you can recover it without paying the ransom. by paying the ransom you're saying i wasn't backed up or didn't have the time needed to unencrypt the files. >> what if it was a million dollars. $17,000, patient stays an extra day. that's like $17,000 a day. what if they said a million

dollars and they needed that data. they would pay a million? >> it's possible. economics point of view hacker don't know who they are attacking. they are trying to come with a price point that they are going to profit from because otherwise -- >> i get a phishing e-mail and it's one of these things here's a dropbox file you need open. you click on it by accident. i get another message that says we have the key for this. pay us this amount. >> right. >> when you said it starts, does the computer stop? >> it's doing itsy lenly in the background and waits until it has enough files encrypted. then it pops up a message and gives you a very explicit instructions. telling you your files are encryption. if you want the deencryption here's the payment policy. >> i do have any files? >> in the case of this hospital -- >> you can't do it to us.

>> you may have photos. >> those are files. >> so they would do my photos. >> backed up on the icloud or g g-mail. >> yes, they are. >> what you are doing today. >> weigh in on the apple debate. do you have a view on whether apple should be forced or compelled to do this? >> absolutely. as a cyber security person somebody who cares about privacy and as a business owner there's ramifications. we have terrorism and terrible event that happened that's forcing this. i'm nervous at the outcome of this. in the case of these ransom wares we won't compel them to decrypt i want but making business do this. apple is a global company. we're a fwlobl company. other nations are watching especially what happened with merkel's cell phone what we're doing. if we misstep it could certainly impact apple sales in other

countries if we open up this path. >> what do you say to the argument that somehow tech companies and technology now wants to be immune, if you will from subpoenas and warrants. effectively they are building technology so they could ultimately be immune from that. and every other analog parallel, if you will that doesn't exist. >> well it's not just tech companies. individuals can do this, right? i guess the debate is, is that protected? you have information in your mind but you don't have to necessarily disclose. is encrypting something your data the same thing? that's where this debate is headed. >> these ransom guys are they based in the snus >> no all served pointing to you crane. the cyber game that is sending out this current large strain of this ransom ware emails, they've had similar activities out of the ukraine. >> thanks for being here. >> absolutely.

>> coming up former dallas fed president richard fisher will be our guest. we'll talk about rate hike expectations, state of the economy and much more. up later apple encryption. debate is heating up. we'll discuss privacy versus security. take a look at futures before we take a quick break. "squawk box" will be right backa ♪ you're not gonna watch it! ♪

♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. . we got to go back to break. but coming up in the next hour

we kick things off with information dallas fed president richard fisher and then online reputation exert michael fertik will join us with his take on the apple iphone debate over encryption. here are the futures right now which have improved a little bit now down just 30. sings bean 70 or 80 and now one 2k -- down 30. box will be right back.

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>> bull battle to close the best week in months. >> big tech versus the government. apple gets more time to respond the fed's order. some of tim cook's biggest rivals coming to his defense. >> virgin atlantic releasing their space tourism rocket today. >> 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. i'm andrew ross sorkin with joe kernen and kayla tausche. we're less than 90 minutes away from the opening bell on wall street and futures are pointing down. dow looks like it would open off of 18 points. s&p 500 off a little as well as would the nasdaq. by the way not nearly as bad as it was just about a half hour ago when things were looking worse. oil prices, wti crude trading at 30.24. apple is expected to invoke protection of free speech in its encryption battle with the federal government. the tech firm was given an extra three days to respond after being ordered to help the fbi unlock the iphone of one of the san bernardino killers. facebook and twitter are the latest silicon valley backing apple's position. we'll have more on this. china's top security regulator is stepping down according to the "wall street journal". how do you say this guy's name?

he'll be replaced by the chairman of the agricultural bank of china, a series of policy missteps under his regime have gotten the blame for the selloff in the chinese stock market over the past six months. and investors pulled 5.7 billion from u.s. based stock funds during the week which ended wednesday. this marks seven straight weeks of outflows. let's take a look at some of the stocks to watch this morning. deere and company earning 80 cents per share for its latest quarter. 10 cents above estimates. revenue fell short of forecast. not surprisingly by a strong dollar. deere says it expects what it calls a quote challenging year ahead. they missed estimates by six cents with profits of 90 cents per share. revenue falling short. it said it was hurt by a soft consumer environment. electronics retailer best buy

downgraded to neutral from buy at goldman sachs. a sluggish wireless market is offset offing the positive impact of strong tv sales. take a look at shares of nordstrom. that company's earnings falling short of forecast by sophisticate cents reporting quarterly profit of 1.17 per share. nordstrom gave a worse than expected forecast for this year amid heavy discounting. yahoo!'s board of directors forming an independent committee to explore strategic alternatives. today's release just out moments ago suggesting they are indeed they have now engaged goldman sachs and jpmorgan. former blackstone adviser group has financial advisors. the chairman of the board saying the board recently formed this committee to conduct a process to explore these alternatives

while supporting management and the employees in their impleamenation of yahoo! strategic plan and we believe pursuing these complementary past is in the best interest of our shareholders. yahoo!'s operating business is essential in addition to the reverse spin strategic alternatives to help us achieve that separation while strengthening our business. >> so this is mayer being able to run the company with a clear head and not having to be preoccupied with potentially selling it at the same time. >> that's the idea as well as having an independent committee that will evaluate this. >> i look at this they want someone there that might not have a vested interest in keeping it the way it to keep her own job. >> she said on cnbc when asked if the coffees up for sale. she said the independent directors are leading that

process and i'm not involved. people said how could you not be involved in that process. so i think there was maybe a specific structure that was needed to clarify. >> she does say we want to turn this iconic company to greatness. we can work with the committee to pursue various strategyish terms while executing our strategic line of business. we're going to shift gears now and go back to something ma cross the future of interest rates a major concern for the markets. st. louis fed president changed his stance about further rate hikes and saying it would be unwise. richard fisher joins us. former president of the federal reserve bank of dallas and a cnbc contributor and maybe better known as father of miles fisher. watching again last night because my kids and wife hadn't

seen that tom cruise -- i see it now. i want to do it. i want to do that imitation but i can't. richard, you have a talented son. great to see you. >> he was on "2 broke girls" last night. i've never seen that. he's doing much better than the rest of us. >> he does an unbelievable christian bale, there's a great thing. richard, i'll tell you what i've been thinking about lately and that's the notion that interest rates should purely be a function of inflation and inflation expectations because the latest i've been hearing for sort of enabling this thing we've been in for seven or eight years is that as long as inflation is basically zero around the world, that we should keep rates at zero. that there's no rush and that --

i'm not sure we see any positive benefit any more from this. i'm not sure what the deal is. but people are saying it's different this time and just stay at zero even with unemployment below 5%, stay at zero because inflation is at zero why not leave the pumps open. what's the worse that can happen. is that where we are now? >> well, first of all, i think it's debatable whether inflation is at zero. you have deflation in the good sector. so your viewers know the history. goods, things that we can touch and feel have depreciated since 1963. but others are inflating because the balance is inflation is slightly over 1% and i would urge you and the viewers to again study the entrails by

going the dallas fed website. and consumers also have to deal with what is the consumer price index which is no longer flat. rents are a big part of that. inflation is not at zero. it's somewhere north of 1%. at least in this country. and what happens is, as you know, joe, when you have more people go to work then you begin to get salary and wage pressures. that's what everybody would like to see, an improvement in the take home income. of workers in america. and they are rising. but they are very tepid right now. i think it's a question of how long it takes to get to that point. another key thing, we're deflating to the degree we are deflating or disinflating is a better word is good things for the consumer. those good things are you go the gas pump here in dallas, texas and probably even in new jersey where they slap on taxes in new

york i can fill my tank here for $1.40. this is a huge tax cut from when you remember the days it was $4. we have the super cycling in commodities running its course and price of greens and proteins and things like that. wheat and grains are down. this is a tax cut for the consumer and what we have in this country is an increase in savings rate. and of course great activity which you know, john in bars and restaurants which are humming along and sales increased to 5.8% year-over-year. so i wouldn't say we're at zero. but i would say that this adv e advises central banks to be cautious. i'm not of the position that negative interest rates will happen in this country. if you look at the japanese die at the time central bank was exoriated. they scared the hell out of the japanese public. and that public is used to earning nothing on their

deposits. there's political push back. b, it's not clear it will work. and we'll just have to see how the economy develops. but i think right now an even keel would be the right thing. the trouble with the monetary accommodation you have to undo it. you floated all the boats in the security market. we did have a good week this week. but, you know, you just have to at some point get interest rates back to determine only by the marketplace and in doing so you're likely to have enormous volatile in the securities markets. then you get caught up in this insecurity loop as i like to call it, policy loop. gosh the markets are unstable or greater volatility we better not say anything, we better not do anything and you get trapped in this low interest rate environment. >> richard, i'm not convinced

that where they are not be where they are normally. that's confounding. >> at this level of economic activity. normal interest rates aren't where they used to be in the 4% to 6% range. >> it's different this time. let me ask you -- >> it's positive. done have to be zero. >> we might as well be negative at this point. we're only at a quarter point. that's why when people come on and say let's stay where we are. i say what do you mean? why not go negative. if you think it's okay to be a at a quarter why not okay to be minus a quarter. here's my other question, richard. did the monetary accommodation that central bankers have done and the fed, of it just not effective in engendering stronger growth or was it part of the reason that better growth didn't happen? are he had actually partly responsible for it by not letting things clear where they

should have? >> general principle of accommodating monetary policy you hope to have a fiscal policy to create more jobs, to lift up the economy and enhance the prosperity of society. you and i know, joe, and we talked about this a billion times, we have a dysfunctional government that can't get anything done. so you can't fault the fed. >> no. >> the principle. and janet said this, janet yellen and ben bernanke said this and i said this, everybody said this, unless you have confident fiscal policy -- >> i under why they had to do it. >> i'm saying it doesn't work as effectively. >> so the sfed alone and took it upon itself. but by allowing companies to sort of, you know, just do buy backs and, you know, do financial gains and by not

investing for the future and just all these things that were engendered by this policy i'm wondering if that's partly responsible for not being able to grow above 1% a year, 1.5% a year. >> i don't think it's responsible. it's given private sector and corporations to lower the cost debt and do many thing you said. but also you want to see more cap x come out of this because there's no authority to put that money to put to work like we would have liked to seen. point number two is we also went way too far with qe3 and what we did is we floated the securities markets. we juiced it up. and now that things are settling down, you again are engendering volatility. principle is fine. the degree to which one pursues this is the question mark. i think negative interest rates go way too far and we don't need it in the united states because

we're doing well. >> on a separate topic what did you make of neel kashkari's comments earlier this week suggesting the banks should be broken up in his new role as head of the minneapolis fed? >> i had a simple suggestion because i felt dodd-frank didn't address the key issue which was too big too fail. it's created enormous problems for people with warehouse risk, large institution and those that are shock absorbers which is why you're seeing dysfunction in the bond market. gap downs because nobody is there to take the other side of the trade. we need to fine tune dodd-frank. my solution which the dallas fed proposed and i was very ardent about this, the only thing you should be giving government assurance and back up to is the safety of depositors. every other transaction conducted by a bank is at risk and accompanied by a two cent statement making that clear. >> your arguing the banks should be broken up as well?

>> no. i think the markets would have taken care of it if we had a simple condition in place instead of thousands of pages of dodd-frank. i'm not is going to comment on anybody at the fed. neel kashkari undoubtedly has his own agenda what he wants to focus on. he has decided this is where the minneapolis fed should focus. he has a different background than the other people on the committee and certainly than me because he worked so hard on those issues when he had that other authority that he had before. so we'll watch this develop. he's an articulate spokesman. he's picked an issue that he wants to drill down on. i would prefer personally if he focused on monetary policy but we'll see what he wants to do in his new role at the minneapolis fed. >> okay. thanks, richard. we got run. what happened you were somewhere and came over. >> you can see i have a little tan. i've been in god's anti-chamber

which was florida. i was sitting in a bar preparing to go to sleep before giving a speech. an elderly couple was sitting near me. and the man said, my god, there's that guy from cnbc. gets up with his elderly wife. they are both in their 90s. he comes over and says glow, which i guess is gloria i want you to meet a famous television star, i want you to meet joe kernen. >> i was his favorite. you're a good looking guy. i'm not complaining about this. my hair is not gray. but that's cute. if you do anything wrong i don't want to see my picture on the most wanted poster. really you think i want to be mistaken for a fed that drove us into the current economic malaise. i don't want to be you either, pal. >> remember you would be mistaken to someone who was resistant. >> i'm proud that they said it.

anyway. thank you for telling us that story and it's andrew's birthday too, richard. happy birthday andrew. >> thank you, sir. >> when we come back more on this breaking news from yahoo!. the company's board forming an independent committee to explore strategic alternatives. we'll have details and wall street reaction which appears to be good in the pre-market. game over for the fantasy sports industry. major players like fan did yuel which could question the industry's future. digm-shifting. its technology-filled cabin...jaw-dropping. its performance...breathtaking. its self-parking...and self-braking...show-stopping. the all-new glc. mercedes-benz resets the bar for the luxury suv. starting at $38,950.

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on to media news. daily fantasy sports business was booming but now facing steep legal challenges that may even threaten its survival. the ceo of fan duel sat down with our own julie boorstin to talk about his outlook for the future. julia joins us now. >> reporter: fascinating timing. good morning to you. fan duel and draft kings are hoping to convince legislators daily fantasy sports now a $2 billion industry are a game of skill and not chance. with a range of bills to carve out protections. but the uncertainty weighing on

his business won't clear up any time soon. >> i think it's a multiyear issue. you know, there's certain legislators not even open. texas is one example. that will meet in 2017. for a legislation solution texas we have to wait until 2017. we're really kind of looking at two to three-time year horizon. >> reporter: fan duel is part of the fantasy sports trade association which has 80 lobbyists spending $10 million annually to protect the industry. he says inslevesting is the sams the market. >> we work with multiple payment partners. not just one two. so we know that different people will make different commercial decisions. what i would say is vast majority of people we work with understand where the industry is headed and have been really good

partners and working through these issues. >> reporter: but there's no doubt that working through these issues is expensive for fan duel so he says the company will be spending less on advertising this year. got to wonder how much that could impact the whole industry's growth. andrew, happy birthday and back to you. >> before you go, what do you make of the yahoo! news? they said they would explore strategic alternatives before. some people didn't believe them. looks like marissa mayer may not have a say in all of this? . >> reporter: this is not unexpected. it means two things. one marissa mayer's tenure at the company is coming to an end and a big for sale sign hanging on yahoo!. there have been a number of names of companies thrown out there as being interested in yahoo! like verizon, iac and even private equity firms like tpg. be interesting to see who emerges. it's clear they would like to

sell the company. be interesting to see how they value it when they look at the alibaba stake. but certainly an end of an era. coming up when we return we got breaking economic news. consumer price index coming up at 8:30 eastern time. branson making another venture into space. >> announcer: you're watching "squawk box" on cnbc. "squawk box" on cnbc. first in business worldwide. this bale of hay almost derailed the ranch. when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding

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richard branson's virgin galactic is rolling out his new tourism space rocket. first test flighting since that 2014 accident that destroyed the original aircraft and killed one of its pilots. the space airline is designing rockets to carry up to six parents on a high-speed flight to intelligent of space. >> you have said you would like to do that? >> i don't want to be one of the first. but after maybe the first hundred make it, i would be thrilled to do it. >> i don't even like commercial flying. >> other people can do that. yeah. i'm not sure -- >> sweatily gripping the arm rest. >> i don't know what to get you for your birthday. >> why not a sweater? >> a sweater.

he has a lot of sweaters. >> there's a plane where you can -- does like a lot of things. pretend you're flying >> you're weightless. >> that's on my -- >> that's actually better than going out into space. >> can you go to like huntsville, alabama and cape canaveral and get inside a simulator and get all your kicks there. >> it's very easy with g forces to get kick, believe me. it's not a pleasant -- because it takes an hour or two. i did it at nasa, in fact on one of those things. you do the g forces. you think, try to go a minute. you really shouldn't go a minute. >> surprise. we'll sends you there today. >> wow. >> we are. >> i was thinking you might get me a car. a diesel car. >> they are on sale. nice little vw on sale. >> like a tesla, wouldn't you? >> yeah. you got me a tesla. >> i'm in the thinking about it

stage. >> it's not out on the street here? >> we're taking suggestions for birthday gifts. when we come back breaking economic news. key read on inflation. take a look at u.s. equity future. stay tuned. you're watching "squawk box" on cnbc, first in business worldwide. actions. they speak louder. we like that. not just because we're doers. because we're changing. big things.

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january cpi hitting the tape. rick santelli has the numbers. >> reporter: headline number unchanged up .3. what a roar behind me. up .3 when you strip out the all-important food and energy. up 1.4 year-over-year. here's the one many will be looking at. year-over-year x food is up. we had a lot of 2.1s but according to my list you have to go back to june of 2012 to hit higher year-over-year core level of 2.2 which equals this. you have to go to the previous month of may of 12 to hit a 2.3. so we could argue about whether any of this accurately measures

inflation. we could argue about service versus goods. but one thing we can't argue maybe you didn't pick this number but this number series is moving a bit higher. of course equities are looking lower after this number. i wonder if part of that is, of course, until applications for the federal reserve or the notion of how wonderful negative interest rates have worked out in the nikkei or in japan as a whole. but this is very important to pay attention to. also we broke 20 again in ten year bund deals and the spread is constant. a lot of forces. before this number we were around 175. kind of interesting. i'm very impressed with our market. it's up two basis points. inflation is higher. that makes some sense. joe. back to you. >> rick, real quickly seven years since your rants that started the tea party. is that right?

>> it is, joe. it is exactly, seven years, almost to the minute. >> to the minute. >> almost to the minute. you read all the morning papers, don't you, joe? >> i wouldn't say i read all of the morning papers, rick. >> all the papers that you and i would consider good journalism. >> all the papers fit to print. >> there you go. so when you look at these south carolina primaries we have, their governor, of course who endorsed mr. rubio, i believe she was swept in. i believe rubio might have been swept in. i believe cruz might have been swept in by what? what do you think they were swept in by. >> i hear you. should be in the history books. once again -- honestly if i hadn't asked you certain questions i don't know if you would have gone on that rant. very strange. >> definitely, joe, you were integral in that. one of those spontaneous moments that resulted in something spontaneous. i'm not sure what the outcome is but i can tell you one thing,

there's a lot of groups that formed that don't really make a difference by getting into the system and being proactive. as i said seven year anniversary pretty much the entire ticket has some form of tea party in it. >> what it means is less government and more freedom but you look at what the left -- you say tea party to the left it kind of means satan worshipper or something. i'm not sure how they glean -- >> they also criticized in the early days because people like you and me saw the socialist knitting needles weaving a new fabric. >> i know. maybe it will work this time. maybe it will work. anyway, but we digress again. actually it was you that's supposed to say thanks rick and then we wouldn't have said any of this stuff. >> i like to let you speak. >> that's nice. >> speak your mine. i get this sense you like to do

that. i'll let you. thanks to rick and let's get more reaction to the economic data. the chief economist at moody's anna lie ticks. >> core is worth watching. that's mostly because of service sector inflation. would it be surprised if that shelter clause continued to rise higher. what's christianitying about the core cpi 23% is consist of owners occupied rent that can't be observed. it's an intangible. the fed doesn't focus on the cpi, they to plus on the pc e price index overall that's up less than 1%. core pc e price index is up 1.4%. the difference between the core pc e index and core cpi is shelter cost inflation. >> what does this do for the overall inflation story. after the january jobs reports there were some nay sayers who said look 14 states that raised

minimum wage in january, had the walmart wage increases that went into effect in january but does this len more credibility that? >> inflation is not dead. it's edging higher. you expect that to happen. the fact that the unemployment rate comes down from 10% to less than 5%. the amazing thing is wage inflation is so tame. it's still running 2.5%. >> enough for the fed and strong enough for the fed? >> i think inflation is high enough we don't need a negative-interest-rate policy. we don't need a rate cut. no reason for that. >> i think it's ridiculous to talk about zero inflation. >> going back to zero percent interest rates. >> when i said we should go negative people said we should never raise rates. if we don't need to raise them we're not going gang busters we should go negative. >> they tried it in japan and backfired.

>> we're not at zero. that shouldn't be the primary determinate of fed policy. >> they have to take a longer view of inflation risk. they can't observe what's going on today. also who is getting clobbered. >> they won't get clobbered because they own houses and benefiting from the increased asset inflation. >> not everybody. some people don't want to take that risk. that's one of the bad things about a negative-interest-rate policy. you're pushing small savers out to take more risk. that may not necessarily be a good idea when the equity market turns lower or when we have a rising default rate for corporate bonds. >> right after the data this morning we did see the market initially tick down. do you think that that's just a knee jerk reaction or do you think after the market digest as little bit. >> to look at a 2.2% annual rate of core cpi inflation as representing the start runaway price inflation that's going to force interest rate sharply

higher is a bit stretched. >> john, have a great weekend. thanks for coming in. >> you too. coming up, getting to the core of apple's fight with pitting privacy against security. tech giant getting more time to respond to the hack order. we'll talk to a cyber security expert and talk a little bit about yahoo!. back in a moment. thank you, we'll call you. evening, film noir, smoke, atmosphere... bob... you're a young farmhand and e*trade is your cow. milk it. e*trade is all about seizing opportunity.

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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ welcome back to "squawk box". silicon valley heavy weights like jack dorsey, google's ceo

and founder of what's eer weig apple's tech fight. >> i don't think the phones have back doors. i believe apple's brand recognition and value is largely based on and i temple called trust and trust means you believe somebody. you believe you're buying a phone with encryption. it shouldn't have hidden back doors. >> apple is given five days to challenge the court's order which it says it plans to do. joining ingenuous on his take is internet cyber security is michael fertik. he's somebody we see often and eamon javers has been covering this story. michael i'll start with you. your take, is tim cook right or wrong in this instance? >> i think he's definitely making a point. the fbi and apple are in a pr war. the fbi has had a backlog of

requests that apple had only been partly complying with for half a year or a year now. they chose an extremely controversial request san bernardino terrorist attacks to pin tim cook and april told the wall and say look if you are not complying with this quo are in effect aiding and abetting the terrorists. of course tim cook is saying hey we have customer, we protect our customers, we stand up for our customers and we won't let the iphone turn into a chinese type investigation tool. in the end what will happen, i'll make a prediction rather than a normalized choice. what will happen in the end is that tim cook and apple are raising the bar that the fbi and the government, the law enforcement in the united states are going to have to year to get their request complied with. just think about the first half of last year. the first half of 2015 apple complied with over 3,000 such requests from law enforcement in the united states alone. and i think what apple is doing

is trying to extract a price, trying to raise the bar, raise the temperature, raise the friction to get the outcome it wants. the notable silence around silicon valley suggests there's a precedence not a legal prezens but tacit and cooperative precedence when it comes to very important issues of law enforcement and national security. i don't think anyone tend of the day predicts apple will never agree to comply with national security requests from law enforcement. however, apple may be saying look if you're the local d.a. in mississippi and you don't know how to open an iphone you shouldn't have to resort on imposing on apple employees to open an iphone for you. i think in the end the reasonable predictive outcome u.p.s. will prevail. almost all consumers will never have their stuff hacked or cracked. very few legal requests will be complied with. on the other hand national security interests will be

protected. >> michael, you mentioned there's certain companies that were conspicuously notable in terms of not speaking about this, being silent. who are you referring to? >> i think we've seen a report that there hasn't been a lot of discussion yet from some of the bigger social media companies and bigger data players in silicon valley. by the way i think that this is consistent with some of the stuff we've seen in the past where southeast big telecom companies and others have been found later to be complying with some of the requests of the government off line. this is not unpredictable. very rarely when it comes to hotly contested issues do we not see the reasonable outcome happening. i don't think we should expect any kind of very hard-line in the sand from the civil liberties folks. a comment from someone like dorsey is just simply saying twitter is still relevant.

>> reporter: the bigger debate is this overall question we've been wrestling with is should a company be patriotic. do companies have a patriotic obligation to their country. and that's a debate that's changed over the past couple of years. if you look back a generation ago the debate was what does patriotism mean. you think about the pentagon papers case where a private company is standing up to the government and saying we're going resist you, we'll print what we want to print. but it's based on our definition of what is patriotic. i heard some people on twitter yesterday talking about this idea of a post-american company, companies that have customers around the world, they are transnational, they do business with lots of different governments. should a post-american transnational corporation have any patriotic allegiance at all, seems to be out there in the debate. that's not what tim cook is saying. tim cook is saying he's doing this for love of country. but post-american countries that

exist with no national allegiance is out there in the debate. >> one man's patriotism is another man's -- that's a totally subjective notion. >> reporter: exactly. >> go ahead, michael. >> this is more to resources. the fbi could crack this on its own. in fact the chinese government may have already created a piece of software that allows a defeat of the encryption via software on the apple iphone because the chinese government has so much resource. the nsa may have done it already and the fbi may not have access to this nsa technology. fbi is asking apple to do the heavy-lifting for it. this is not a -- it sounds like a deeply symbolic question as a lot of things are when they are not fully understood by the parties around the table but at the end of the day fbi is saying hey apple we probably could crack this ourselves.

extremely hard for us to crack it ourselves. you do the hard work. that's what law enforcement has been doing apple for years. apple has been doing very simple kripg, very simple assistance with the icloud including the san bernardino case, very simple data provision and data unveiling a service for law enforcement. at all levels around the united states for years. this is simply a much higher bar of workload in term of the amount of technology and insight you need to make this crack. but it's not beyond the capabilities of government agency like the fbi or cia or nsa or the chinese to do. i think that tim cook is saying look, public, we're not going to give you up if you're dealing marijuana or if you're having an affair or simply living your life. we want you to feel safe in our hands and i think what wozniak was saying is the currency of trust is very valuable to the customers. i would hesitate, this issue of patriotism or corporate

patriotism or corporate anti-patriotism. i think both the fbi -- the fbi chose this case to draw a line in the sand and apple is saying no we're drawing a line in the sand. in this case apple requested that the fbi make its request in a sealed format in the court. and the fbi made the doj, made the request very publicly and openly so apple had to respond very publicly and openly. think of it more as a pr war in a moment when the reasonable out come of accommodation will happen. which means you as a consumer, you as a corporation will certainly be safe unless you're doing something really bad in which case you won be. >> michael we'll leave it. we'll talk to you both soon. >> when we return jim cramer will join us from the new york stock exchange. stay tuned, "squawk box" will be right back. tuff. every decision... every component...

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do you think we're still in a sell rally market or do you think it's healed enough to start looking at maybe challenging the old highs? >> i think we're in a less sell of rallies because there are companies that if the dollar has basically stopped going higher, that will start having easier comparisons. this earnings season is being classified as being subpar. i don't see it like that at all. i see it that there are places that are winners, places that are losers. in retail, amazon is a big winner. that makes everybody else a loser. but particularly in the industrials there's some remarkable numbers given that we have had a slowdown. ge, honeywell. 3m, doing incredibly well. if the dollar is indeed peaking, they're going to have good second halves. >> we had the yahoo!. i guess yahoo! it's like -- i don't know, is they moving too slowly with doing what needs to be done so they need independent people do it?

they want her to focus on the running of the business? what? >> it's not clear. there's as many as 20 buyers. two fridays ago, lowell mcadam said he wanted the assets for verizon. this is obviously a company that has many different thieftoms within it. reminds me of hewlett-packard in the old bays. a board out of sync with the ceo or if they're in sync it's -- >> jim -- >> is that the birthday boy? >> it is. the larger question, do you see today's announcement as a sign that there's a rift between the board and marisa? >> i think she had a self-proclaimed rift. when i asked her directly, are you doing it or is the board doing it? she said the board. the problem is the ceo is the person who runs the company. if you defer to the board, you're really saying you can take my company away, but i'll

run it in the interim. that's an untenable long-term situation. >> what about the nordstrom selloff. down 8% premarket. is it oversold or was the quarter really that bad? >> no. the quarter itself wasn't that bad. when they say the expenses are outrunning revenues, it says this is a story of amazon. and they're basically saying we can't -- we'll spend all we can to keep up with amazon. but it's too much. that was the subtext. i think the mall is so challenged. the nordstrom brothers put up a good call except they said, listen, we're spending so much to keep up. we don't know if it's working. this is going to be a continual thing. walmart is spending a lot, we don't know if it's working. >> that was supposed to keep working. >> in the old days, when you

went into nordstrom, they knew your shirt size, they could give it to you. now you go online, you go to amazon and buy. it has wrecked the model. we see this as saying that howard schultz predicted. it's coming due so quickly, it's extraordinary. >> jim cramer, see you in a couple minutes. >> all right. have a great birthday. >> thank you, sir. coming up, stocks to watch. first, becky will sit down with warren buffett for three hours, she'll do that on february 29th following the release of berkshire hathaway's annual report. we need your help. send us some questions. use #askwarren and your question might, if it's good, make the show. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation

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should know, last night when i put them to bed, they were whispering something. they said tomorrow is your birthday. a and i said yes. and henry said we're not coming to the studio. >> i was joking. >> you brought me a gift you want me to open up on the show? what is in here. >> this is not even funny. this is my wife. >> it's not. it's max. >> pull it out. >> you want to pull it out. >> i want to see what it is. >> okay for cable? >> yes, it's okay for cable. >> it's ear plugs. >> for the plane? >> what is it for. >> it's for when you go to sleep. so i don't hear you guys screaming. thank you, guys for coming over. >> do you know how old your dad

is? >> do you know how old i am? what do you think? >> 30 -- >> we don't have a lot of time here. >> 30 -- um -- >> pick a number, bud. >> 38? >> oh. >> pretty good. close. close by one year. 39. >> either way, he's old. >> yes. i'm old. >> is that okay? >> you're not too old. >> thanks. >> you don't look old. >> there you go. we're trying. >> you guys have great manners. >> what does this do? >> would probably delete everything. so let's not press that button. >> did you guys have a red velvet one there? >> we have -- >> this one's for you. and this one's for you. >> because it has the candle. >> thank you. thanks, guys. you guys want one, i'm sure. take that. >> that's yours. >> we got to go. >> cupcake force breakfast,

everybody. happy birthday. >> thank you. >> we'll take one more look at futures. >> probably more important than this. >> whether it's the hotter inflation number or oil is below 30 dan, we have a weak opening after a good week. we're still up about 3%. happy birthday, andrew. >> thank you. >> you forgot to light the candle. >> we'll do that after. >> make sure you join us on monday. >> how will you do -- >> "squawk on the street" is next. >> how will you do it after? >> cute. >> okay that was adorable. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. happy birthday, andrew. closing out the best woeek for stocks since before thanksgiving.