>> 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. revised talk of a fed move.

europe relatively soft. those uk and eu talks continuing. and watch the short-term move in bonds. oil, as joe just said, back below 30. our road map is like this. apple's deadline extended. they have until the 26th of this month to respond to the court. twitter and facebook both chiming in siding with tim cook as the security debate marches on. >> yahoo! forms an independent committee of its board as it formalized a process to review the sale of its core business. what is the next move for marissa mayers? >> deere and nordstrom poised to open lower. first, stocks poised to open lower. s&p up more than 2.8% this week. consumer prices flat for january, strip out food and energy, they're up 0.3. separately, data shows that 70% of the nearly 175 companies that went public last year are now

trading below their ipo prices. guys, that's -- that's a rogue's gallery of names. >> yeah. michael semblis, a fabulous strategist put out a piece talking about the unicorns. no one wants these companies because so many people have lost money in these companies. even the good ones. the ones that actually have worked are few and far between and tend to be way off the radar screen. the ones that have worked, if more a moment, like fitbit which reports next week, which i happen to like but have been wrong on, they go up and get clobbered. we kind of say no mas. please. don't give us another because we lost too much money. that's the treatment. >> y theme. >> you tweeted out a long list last week -- we knew it was bad, i didn't know it was quite that bad. i pointed out the container store wasn't on that list. that's one of the worst i've

seen. >> that can't be contained that container store. >> the down side can't be contained. >> i did a piece for "mad money" on ipos. we have certain restrictions, we can't talk about stocks bel s s $2. i couldn't talk about 50 companies. >> jim, now there's inflation data. i'm keeping a list of things that have beaten expectations. core producer prices, core consumer prices, the quit rate on jolts, retail sales, industrial production beat for the first time in a half year. >> industrial production not that high as it was in the beginning of the year. rent is higher because of not enough building. clothing is higher. forget that -- next month clothing will be down. medical costs are just intractab intractable. the way that obamacare, the

medical costs are too high. somehow they got to solve that problem. they have not solved it. >> yeah. good luck solving that problem. people have been quite focused on it for a long period of time. some say we were bending the cost curve when it comes to medical care. that at least -- i heard larry summers say that a number of times, bag key positive. maybe we stopped bending it. i don't know. >> united health came out -- stock okay. united health came out and said listen, we're not going to compete. we're not going to make money on these exchanges. >> yeah. >> they need more competition, not less. you talk about people and what costs have gone up most -- it's made up far what oil and gas has gone down. you want to say the economy is running hot. i'm going to say that the fed could raise rates to 4%, it won't take healthcare down. they could take it to 7%, it won't take healthcare down. >> ivan joked that january is back on the table.

>> he's funny. >> what does it mean for the progress of normalization? >> i come back to what bullard said. bullard is saying let's change the narrative. that's james bullard in st. louis who had been very much a hawk. let's not talk about rate hikes. these numbers are variable. again, rent, can it come down? not without more building. clothing can come down big. oil and gas can come down. walmart yesterday, food coming down big. so i come back, what's really hot? minimum wages. forget it. the fed doesn't control that. that's hot. and healthcare. the fed doesn't control that. these other things, they will have to go to each of these individual areas that raised wages. that won't happen. >> no. >> the tightness of employment is not nearly as much of a factor as the minimum wage is. you can -- there's people who want to work so badly. there's shifts-when you see the

shared economy. that says i will do anything for work. but when you see minimum wage, that's to protect workers. and the fact that we're actually discussing that after years of not even thinking it's a factor is much more a sign of what the real economy is doing than the so-called red hot numbers. >> a lot of skepticism about this bounce being sustained. what does that mean? at what point do the shorts reset and make another run? >> if oil and gas, natural gas is terrible, but if oil goes below 25. what happened -- this was a week where chesapeake got breathing room, or glenn corps got breathing room. iron ore went up. china did not fall apart. the canadian tar sands are losing money every single day. the utica is so incredible that

you can't make money in natural gas. i see marathon dropped down. the only person buying the pipelines is warren buffett. i'm so glad becky is spending three hours with warren buffett. we need a reality check. >> we mentioned the lack of ipos, but a plethora of offerings from energy related companies. yesterday we spent a lot of time talking about devon. >> they worked. that was up. >> it is reminiscent for me of the time when the banks were replenishing their capital coffers after the stress test by issuing equity. it's a bit different here because i think frankly a year ago there was equity issued by the companies, and everybody was sorry. it is an underlying theme we're seeing of these companies being ready to continue to battle through this very difficult period as opposed to smaller ones who are going to finally

get -- >> ipos, oil and gas ipos have been unmitigated disasters. people bought them without a lot of thought. the oil companies that we see going down now are kind of -- still tertiary players, energy 21, for instance. there was a note today, one of my favorite notes, sometimes they are kind of notes that are like jackie mason. much more jackie mason than jimmy kimmel or fallon. credit swoo credit suisse they go from buy to hold on edison. they go from 19 to 3, david einhorn liked that stock. is he from queens? >> i don't believe he is. he's not. >> i would have said more positive things. >> he is not part of the great group of people who come from queens. such as carl icahn, or donald trump or jack lew.

i'll go on and on. >> geez. >> paul simon. >> really? >> yeah. a lot of simons. >> yellen is from bay ridge. >> really? >> yellen from brooklyn. justice scalia was queens. >> where's neil diamond from and barbra streisand? >> i think brooklyn. >> there you go. these are companies that people have brought public to take advantage of energy, and they've killed people. the master limited partnerships, maybe they can come back, but holy cow. if this oil goes back to 25, we're back in the same soup. that's not where we want to be. >> apple's core response to the fbi's demand for that encryption breaking technology is due on the 26th instead of the original deadline today. more members of the tech community are supporting their fight against that judge's order to help unlock the phone of one of the san bernardino shooters.

late yesterday twitter's jack dorsey wrote we stand with tim cook and apple and thank him for his leadership. facebook says they will continue to fight aggressively against requirements for companies to weaken the security of their systems. today all three major editorial pages lean apple's way. mostly on the argument that the administration went to legal and political def con 1 too soon. >> wouldn't you love to hear what al gore has to say, board member of apple? whether he's on board with apple. >> is he still on the board? >> still on the board. one by one you get these tech companies coming out and saying it. i think it's interesting -- i remember the debate about whether would have privacy on your cell phone. people said we totally trust our cell phone but on the other side we hate these guys so much. it's a shame that the broadness of what they want is out of sync

with what these guys want. i think a one off would have been the way to go here. private one off. >> there are -- yeah. essentially -- the "journal" is saying there must be a way to form a solution. but the technology in this is still cloudy, right? what's possible? what can they design -- >> the chinese. i have a lot of friends, when they go to china, they don't want to use their iphone because they think it's been hacked. >> that's true. you want to bring an iphone that has never been used in china or an ipad and then wipe it when you get home. if apple were to create a back door or an exploit, as they describe it to get into this phone, it would be taken by the bad guys. >> right. >> we'll be revisiting this debate in so many different realms for years to come. interesting journal story today about the telecommunications

companies, how that's changed in terms of what you really want to get. used to go to at&t, 1994 law forced them to open up their network for certain things. now it's not that easy. you can't just tap a phone call. >> give me a rico. remember when they put through rico. i remember studying rico. the racketeering. they said we'll tap your phone just because we think you're a bad guy. go to congress. go to congress, get something done. don't just make this, listen, fbi versus tim cook. that's pathetic. >> that's increasingly the call. >> tim cook's pro law enforcement. this has become -- u.s. government, will you please, like, realize that stop -- stop freelancing. if you feel like this, get a law. pass a law. patriot act. they did that like that, huh? congress. they pass laws. >> they do. >> they do? >> sometimes. >> just want to double check on

that. >> sometimes the president signs them. that happens, i'm told. >> i remember that -- >> i have a vague recollection of that. >> i went to congress. >> a bill on capitol hill, but one day maybe not. maybe still i could become a law. >> that's called a government. when we come back, the latest on yahoo!'s formation of an independent panel to explore strategic alternatives. later on, set top box competition. we'll talk with commissioner ajit pai who cast up with of the dissenting votes. the premarket, again, for the dow, s&p and nasdaq, best week since december 20th.

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yahoo!'s forming an independent committee of its board of directors to review and pursue the potential sale of its core business. in many ways formalizing something that the company's already said it would do after it released earnings a few weeks back. we had marissa mayer, the company's ceo, as a guest here on cnbc. sources tell me the company felt like that message was not fully

received by the marketplace. there seems to be growing expectations that there may be another proxy fight mounted against the company's board of directors, perhaps by starboard to try to continue to push them on this process. if you recall, yahoo! has said it is pursuing a reverse spin of its core business. essentially leaving behind its 384 million shares of alibaba in what would you a 40-act company, an investment company and then they would do what they want with those shares. it's a way to create value overall. now the board formalized this plan. they have advisers up the wazzu, whether it's jpmorgan and goldman sachs, they are advising the people reviewing this process. they have kervathan on the law

side. today yahoo!'s advisers will be making outbound calls. >> that's what we've been weighing for. that's what verizon has been waiting for. >> they're hoping to shut verizon up already so they can start talking to them and stop hearing them yap about how they may want to buy it. >> you're making him sound like john ledger. lowell mcadam two weeks ago on "mad money" said we're ready to make a bid. you did an unbelievable interview with marissa mayer, where she was like, i'm the ceo. i'll run the company. when it comes to whether i will continue to work at the company, that's up to someone else. >> people close to the company, advising it, want you to believe that the board and ceo are together about this process.

yes, she's focused on the turnaround of the company, on the potential spin, reverse spin of the core business. but also fully endorses this plan to review it. other people who i believe also have a good sense of what's going on say that may not be the case. we're in a position where there's a lot of strategics that they'll be calling and potential financial sponsors, private equity firms. we'll see where things end up. as i said before, it's somewhat complex. you have the significant stake in yahoo! japan. no real buyer may want that. they may have to sell that down. we'll see how that ends up playing out. will they want to buy it back. they're serious about this process. it won't affect the ultimate return to shareholders as much as if alibaba just goes up. >> right. >> that's so much more of the

value. >> yeah. one thing i'm confused about, she's been closing divisions. i want to look at the book. why wouldn't i make a decision? she's running it independent of what you typically would do if you're selling a company. >> yeah. she's running it assuming that the reverse spin is going to be the more likely outcome. >> right. >> but that doesn't preclude somebody from coming in and making a significant bid that this group of advisers, in conjunction of the independent committee and board decides what is value bond what they could get in the public market when the reverse spin takes place. >> activist role here? >> some people wonder what mckinsey was doing this whole time or if this reflects what they have been working on? >> i think mckinsey has been looking at the inner workings of the company. this is more about can we get a real number? i think it's about trying to prevent another proxy fight. >> and her personal adviser -- >> he's not involved in the

sale. >> i don't think a person should have a personal adviser talking about yahoo! >> you don't? >> no. >> that's 3:30 wakeup? >> i'm getting my advisers on the phone, calling them on my cell phone, which is encrypted, and find out what they're saying about what i should say. >> encrypted for now. when we come back, cramer's mad dash. one more look at the premarket. we're back in a minute. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet?

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apparel sales, oh, wow. >> i got -- this is nordstrom after the close. it reported a number, looked good, stock immediately jumped. then, as i so often tell people, you have to listen to the conference call. conference call was dreadful. material gross margin miss, down 150 basis points. guidance, 310 to 335 that's below 353. most importantly, here's one, you know amazon better than anyone. i whether quote here their co-president. our expenses have grown faster than sales to support our multi channel growth. amazon. >> amazon is eating everybody's lunch. >> holy cow. >> and dinner, i think. >> lunch and dinner. >> soon to be breakfast. >> yeah. >> 14 times earnings. david, people are saying if it's in the mall, it ain't happening. this is devastating for a couple of reasons. one is that nordstrom spent

billions online. billions. >> and i thought had a successful -- was viewed as one of the successful strategists. >> yeah. >> got the website. then, david, they have this off price that's -- off price not bad. that remains a good theme. david, you'll see -- you'll hear vf corp today. they were dreadful comments. they tried to put on a good face. apparent, department stores, in other words, stay away. >> stay away. >> stay away. even for me, david, i was going to shop this weekend. i got to hold off. i'm too depressed. i'm going to my handheld, my encrypted handheld, i will start doing some serious buying. unless -- >> i got the amazon app. go ahead. >> have you used the walmart app lately? >> no. >> a deal on velveeta cheese they had six months ago. it's everlasting. >> i remember once they had

malomars for like a buck. >> season or out of season? >> like now. we'll be back with the opening bell.

>> live shot this morning of the supreme court where the body of justice scalia has arrived. it will sit in repose in the great hall of the supreme court, private ceremony begins in a couple minutes. at 10:30 the public will actually begin paying their respects, well into the evening. the funeral on sunday. the longest serving justice on the supreme court. of course setting off a whole raft of political questions regarding his would-be successor. finishing off a week that's been good for stocks, then capping it off with some inflation data that ran warm again. you already covered that. >> the rents. i would point out this was a week where oil stabilized, where china didn't fall apart. where some of these companies

did okay. oil inventories were bad. i'm shocked it stayed here. i still think oil is going lower. >> let's get the opening bell to finish off this friday. at the big board, it's norberd incorpora incorporated. at the nasdaq, copa america. we covered nordstrom. you mentioned that. deere 80 cents, beats by a time. they're equipment forecast for '16 is down by 10%. >> deere kept going higher. agco came on "mad money" saying business is horrible. people kept saying deere is going to be good. people thought they would be down 7%. continuing impact of the downturn in the global farm economy as well as weakness in construction equipment. wait a second. i have david steiner on last night from waste management.

he said construction is doing quite well. now i start thinking what is the deal here? construction equipment. i will say that prices for agriculture are coming down fast. you may say core cpi, that's not core cpi. this construction equipment call is disconcerting. i thought that would be a bright spot. >> cat's numbers yesterday not good at all. >> these stocks have been enjoying a renaissance. emerson had better orders yesterday. that was interesting. honeywell, 3m had good numbers. deere, i don't know who was buying that. why were you buying it? agco point blank said it is bad out there. it's not like there's a retailer and sunny on one side, raining on the other. ag equipment is ag equipment. you may think some -- my gator was at one point my favorite toy. your gator? >> i've enjoyed the gator.

>> you guys ever been in a gator? deere equipment is so fabulous. >> i have. i think. >> i used to cover deere. driven a lot of their different road graders. >> deere is a great company. to see these numbers is is a reminder that you have parts of this economy that remain so weak. just very, very weak. you know what is the strongest part of the economy? i didn't know this. i want to thank my friend, matt horwin. it's the conventional business. remember wh you know mgm, jim murin, 98% booked for conventions in vegas. >> funny you mention him, he will be my guest at 10:20 today. >> that would have been a great promo if i had known. a natural promo. >> yes. >> but they reported numbers yesterday, mgm, not well received by investors. a write down on macau has caught

people unaware, even though it was a non-cash write down. that stock down 8%, 9% yesterday. >> i like him. >> yeah. i think that convention number was shocking. >> very strong. >> yeah. you ought to have murin on the show. >> thank you. we'll have him on. less than an hour from now. >> yesterday we talked a lot about some of the brocades of the world posting better than expected results. >> it's a very good number. these are the guys who are having a great civil war with cisco. cisco won some recent patent agreements. but there's a woman who runs amat. she's brilliant. a brilliant, brilliant man jefr ager. amat is good, applied materials,

what an amazing story about nand, flash. qualcomm is signing up some people. so you have good news in tech. amat being good. i regard the qualcomm signings being positive. tech remains a standout here. >> though the fact that it along with financials have been underperforming in this little bounce here, that's what makes some people suspect. >> well, i mean, i saw a note today about sales force. worried about sales force guidance, marc benioff. some of these things are just -- it's so spotty out there. there's a stock you will see, trinity. railcar orders. was it really shocking to people that they would have bad railcar orders? that's -- who uses rails? the numbers are bad. but it's oil. i think that trinity was -- here's a great one. guidance, 2016, eps guidance 200

to 240. people were looking for 365. subpar. >> suboptimal. you mentioned retail. best buy downgraded for the second time in a week. last week it was oppenheimer, today goldman going to neutral. i guess worries on discretionary spending? >> they're not as negative on tvs as they are on cell phones. i was going to buy the 9,000 inch tv. the wife doesn't like that. >> that's a lot of inches. >> the ipad pro. who needs a big tv. best buy, nobody wants to see best buy down anymore. that's the discretionary thing. if it's cell phones that will be a read through. someone will say you have to sell apple again. give me a break. apple is so much cheaper than ibm. i know ibm has other streams of revenue software. >> ibm had an acquisition. healthcare data, i had no idea it was such a high area.

trying to incorporate that for watson to have a larger data set to continue to make -- take conclusions from. >> that's what martin schroeder has been saying. when we get critical mass on these -- on the higher growth areas, cloud, analytics will be good. watson, i've seen watson at work on healthcare, being able to analyze disease in a quick fashion. david, when you played watson on jeopardy, he was not nearly as smart. >> no, watson has gotten a lot smarter. >> watson -- bob dillon even -- >> watson keeps getting smarter, until it gains consciousness and then takes over. then it's the matrix. >> how did he do in the a.c.t.? 36? >> i think. >> got into every school, watson. >> watson is doing fine. can go through 6 million pages a second. >> to see watson at work. it is remarkable.

ibm does have a good analytics business. becky quick asks warren buffett about ibm, you do not want to be shorted ahead. i think he will show great confidence in ibm. >> interesting. >> good call. retail apparel, as you guys were saying earlier, just getting hammered. nordstrom, vf corp, pvh -- >> oh, my. look at pvh. it's funny, there's an outfit called columbia sports wear. they have the hot boot, the hot outerwear, they're delivering. vf corp, i was stunned. i love this. here's the quote. our focus discipline and agility amid a softer consumer buyer and warmer weather have us well positioned to navigate what we believe it a short-term challenge. i guess not. people didn't think that.

the outdoor and action sports. north face down 4%. constant currency down 2%. north face was the hottest thing. >> outdoor is doing better than apparel. it's part of apparel. at least outerwe a, outerwear dr than shirts. this is a bad quarter for vf. that's eric wiseman. >> has this change in willingness of people to buy lots and lots of different pieces of clothing, has that ended? >> i think millennials don't like to buy a lot of clothing. they like cocktails. they do they like cocktails. they like wine. >> they switch it up. doe don't just drink beer. they'll have a cocktail, beer, wine. >> they like those beers that taste like cheerios. what is that? >> did you say beer lost share

again to spirits? >> to liquor. >> you have to be in corona, you have to be in modello. those other beers -- i was with the head of brooklyn brewery the other day. they are not losing share. they are hitting it. craft beer. people like craft. it's a rebellion. the millennials like craft -- not kraft cheese. they don't like kraft cheese. >> they don't like apparel. >> and they like chipotle. chipotle is coming back. look at chipotle. coming back. dr. agnes, i had him on. they think it prolongs your life. they want pinot noir, go figure that. >> 100 buck move in -- well, in about a month. >> people have short memories about e. coli and long memories about horrible diseases from processed foods. nobody likes processed foods. i grew up on that dole. my mom had those peaches with the -- the pairs with that syrup. wow, that syrup.

i thought it was so good for you. >> so good. >> wasn't it good? >> i grew up on hawaiian punch. that's why i'm -- >> you want a hawaiian punch. >> it stunted my growth. >> it was hawaiian electric that hurt sun edison. they gave david eihorn a punch. >> he can take anything and take it anywhere. >> let's get to bob on the floor. >> we have a mixed market again. slightly to the down side. i continue to believe that side ways, even slightly down is what the market needs. consolidation. we need this for several days. we don't want to start slipping down again, sideways is good. i want to point out, the global markets have recovered overall in the last five or six days. just take a look at what's been going on. the u.s. up only 2.8%, that's the laggard. japan up about 7%. shanghai, germany, france, all the global markets are on the upside. even the emerging markets are

generally up. the big commodity stocks that had the worst showing for the year, we were always putting up every single day, have had notable returns this week. freeport, chesapeake, tide water, diamond off shore, even most of the steel stocks are up in the double digit territory. as for sectors today, energy is lagging a bit. oil dropped below $30. consumer discretionary down a bit because nordstrom and the department stores are weak. healthcare lagging. by in large, all ten sectors of the s&p 500 are up this week. all ten of them right now. reason we're getting weakness in consumer discretionary is because of department stores and nordstrom. if you put up nordstrom, you can see most of the department stores are to the down side. down 9%. obviously on the poor guidance effecting them. that guidance is affecting the 2015 and 2016 numbers. look here. we're almost done with 2015.

we have 84% of the s&p 500 reporting for the fourth quarter. right now the number is $117. this is a trailing pe of 16.3. now, remember the historic average is 15 to 16 -- it's somewhere right in there. and for 2016, 122 has been coming down for a while. i think it will come down more in the next month. that number is a pe ratio. that's a forward pe of 15.7. people keep saying the market is cheap. it's not cheap. even though the price is coming down, the e, the earnings number, is also coming down. so the market is not really cheap. it's just sitting there at historical average. not a lot of par gains sitting around here. finally i want to note, the "wall street journal" had an interesting front page story about how bad the ipo market is. that's certainly true. there's a basket of ipos recently. this is the renaissance capital ipo, a basket of about 60 recent

ipos. down 16% on the year. the s&p down 6%. where they're behind the curve is you are now starting to see the ipos, that ipo market starting to outperform. this is what we need to have a sudden comeback for ipos. you have to see the old ipos starting to do better before everyone says, okay, it's clear to go out with new ipos. here's the ipo etf versus the s&p 500 this week. as you can see, this is a nice outperformance. up 6%, twice the outperformance of the s&p 500. this is what you need. this has got to continue for several weeks now before everybody says we're in the clear. then you'll start seeing new ipos coming out. i see a turn this week if that continues, it will be good news. remember, guys and david, in 2008 and 2009 we went six months without any ipos. the first one that came out as i

recall in march of 2009, i think it was visa. we had a six-month period during that time where there were no ipos. right now we're at a two-month period. >> two months and counting. >> want to come back to time warner a company i reported on about a month and a half ago. january 7th or so. talking about a lot of activist chatter. worth coming back to it, the window for nominating directors opens i think as soon as storm. though tomorrow is a saturday. let's just say in the very near-term, which they open for roughly a month it does appear, despite that chatter, that nobody is showing up. i wanted to mention that the stock moved higher through parts of january. really into the earnings in part on this belief amongst some investors that you would see somebody perhaps even mount a proxy challenge or certainly a come forward with significant stake. while there were plenty of phone

calls made and a number of big names in and out, icahn may have owned some before he sold it and said see you later. made some money. dan lobe made many, many phone calls, talked to a lot of people. third point may have owned some. trian also took a look. none of them decided to move forward. why? any number of reasons. one simple point, it doesn't appear if you pushed them to sell that there was enough potential buyers there to make it worth while at this juncture. fox which had once tried to buy the company, stock price too low. the cash consideration too high for them to mount any significant real challenge here. the old deal with 69 bucks a share on fox's current stock price. time may be a better way to get to that value. another key consideration is the

cross collateralization on some of the bond issues that time warner has done. even if you were able to spin out turner, would have had a guarantee from turner to the old parent company despite them being completely separated which would have then meant you would have had to spend a lot of money to mitigate that cross collateralization, which would have defeated much of the purpose of the spin. so, sometimes it's worth revisiting things. we had not reported on it since then. mentioned some of these other names that the press talked about. what i can tell you now is with the window opening, none of the big guys are really there. >> perhaps that whole financial engineering, breaking out things wouldn't -- doesn't inspire people. they want go with earnings per share. >> they do. now as the great american, jeff bukus will have to deliver on fairly aggressive and ambitious target targets. >> so people must think cord cut

hag reached a peak and they don't want to value hbo like netfli netflix. >> it's hard to value hbo like netfl netflix, but netflix has opportunities internationally where hbo is more confined internationally by the existing contracts they have and the inability to go over the top in foreign markets. >> people must believe in the earnings per share numbers, decided it was cheap. >> maybe. a key question, tnt and tbs, are they a must have? do you need them in your bundle? >> i needed them march madness. >> if you like basketball. >> villanova, number one. jeff bewkes, give me all the nova you can. >> there's an answer. >> i think it's great he doesn't do that short-term engineering game. at one point i favored that. change of heart. >> we allow that here. we allow changes of heart. >> james bullard, change of heart.

>> you and him, man, simpympati. >> fed mo bro. >> it's me. let's get to rick santelli. >> thanks, david. all you need to know about today's market, you can see in the short end of the treasury curve. an intraday of two-year note yields, up five on the day. that was in response to the hotter than expected cpi, which was followed by its cousin earlier in the week, which was a hotter than expected ppi. we've all heard the song and dance about goods being offset by services with respect to upward pricing pressures. all this in a low-growth environment is something the markets are cognizant of. i still contend that if you're looking at the long end to be dealing a hand of greeting

future price indexindexes, you' wasting your time. look at the intraday 30. unchanged on the day. we're handicapping the market in realtime based on that 8:30 data. tens versus twos, that trade flattening is giving you all the things you need. even the 30 versus the 5, flattening. 24-hour bund, probably operating under the premise that it's just low growth. look, it breached 17 today. two day of the dollar index, we had volatility but basically unchanged. this is a dollar index since the rate increase in december of '15, very interesting how it responded in the last part of january. back to you. good stuff, rick santelli. mgm resorts looking to boost convention capacity on the vegas strip and overcome those challenges in china we have a

live and exclusive with jim murin coming up. dow still down about 94 points. back in a couple minutes. the future belongs to the fast.

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>> it's all about tech this morning. amat the top leader on the s&p, followed by some of their rivals. we will get stop trading with jim in a minute. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.

so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

>> i'm for cramer and stop trading. wells fargo, makes a valiant effort at knocking down value. they put out a sell this morning. we believe valeant board and management made decisions that may put valeant at significant at reputational risk. they think it's a 46% premium to the discounted -- the dcf here! is that unbelievable? they're basically saying this thing is worth -- they talk about irs. they say look out. you have to get out of valeant. and it's a very long report. i think it is very cogent. and i don't think you want to own valeant after you read this report. if you don't read the report, you may like it. it's not prince valeant, it's pawn valeant.

hat off to wells for doing amazing research. >> what's on "mad" tonight. >> one of my favorite companies is on tonight, brigs & stratten. you will see a stock on the move. i don't know how often you power watch your apartment. i like to power wash my place. we use a briggs & stratton engine. >> inside or outside? >> it's power wash. wouldn't want to do that indoors. >> we'll see you tonight. >> i'll be shopping. >> jim cramer, "mad money" at 6:00 p.m. when we come back, casinos, vegas and the china effect. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here.

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. >> good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, simon hobbs, david faber. a pretty good week for stocks. the best since last fall.

retailers, equipmentmakers like deere, even inflation taking a toll. >> our road map heading into the weekend. stocks in the red today after a volatile week. can the markets hold the gains we made monday to witness? >> and david cameron trying to find a way to keep britain in the eu. and apple's deadline to respond to the fbi has been extended. the company has until next friday. big tech names continue to weigh into the debate over privacy against security. >> coming up later, mgm reporting a fourth quarter loss, delaying the opening of its new resort in macau. the company's ceo, jim murren will discuss that and a lot more. >> let's look at the markets. the dow down 111. stocks trying to end the week with solid gains as the oil rally falters. joining us to discuss that we have ellen zentner and jim

paulson. jim, it has been a strong week for stocks. and heading into the best week of the year, you say we've already seen the bottom? >> well, that's my guess. i wouldn't be shocked if we had to go down and revisit those levels again. i think we've seen close to the bottom. even if we break lower. i like this. last sell ooff we had, we did se of the things we needed to do we need to revalue stocks, couldn't trade at 19 times earnings. got down as low as 16 times, which i think is more sustainable going forward. we finally gut checked sentiment. i saw some real fear there at the lows. people talking about a global recession. people rushing to safe haven treasuries and gold in a way we haven't seen before. i think we're starting to get the catalyst that will turn this. that's better economic reports.

the economic surprise index in the united states has been turning up. seems like every day we're getting better reports. >> ellen, on today's inflation number, we got some inflation in the u.s. at least looking at core. it's not the 6500 percent inflation that venezuela reported this week but we'll take it. what are the implications for the fed? >> i think the fed will focus, the core of the committee, on core pce measures, which are different than core cpi. while will you see some policymakers refer to the cpi numbers, the important people on the committee, let's say, will continue to focus on that core pce number that is so low, and inflation expectations that keep plumbing new lows. i don't think the cpi report has any game changer implication. but i agree, it's been some time

since the market sentiment has been disconnected from fundamentals in the economy. it feels like the market also come to their senses that the economy is not falling off a cliff. and that the data is okay. and that sentiment was overdone. >> jim, it's carl. there's a big view out there that unless you put a real cap on the dollar, it's hard to find any new stock for stocks to breathe new life into stocks. why is that sentiment wrong? >> i think if the dollar keeps going up, i agree with that. it will be a huge head wind and has been. i'm not convinced the dollar will keep going up. i think we'll get a better bounce around the globe and the growth gap to the u.s. might close a bit. i think we might get a bit of a dollar weak answer that comes about the same time that we finally get a bottom in commodity prices. i would agree f we continue to

raise the dollar like we did in 2014 again that would be a severe blow on an earnings recovery that's already in recession. that's a risk. >> we should point out, jim, there are some very powerful central banks aiming to send the dollar higher. european central bank, bank of china, also the bank of japan what do you think the shape then is of the economic cycle now? if you -- i will ask ellen the same question. if you don't think we're going into recession now, what happens to growth? what is the line looking like over the next three years? >> i think growth in the u.s., simon it will be around 2%, 2.5%, 3%. the difference is growth from here now from full employment is going to continue to bring more inflation concerns. we're going to see not only the core cpi, but core services going to three.

wages at wages at two and a half to three. >> so you triggered the fed presumably. we can debate on what the fed would do. what then is the shape of growth over the next three years? what i'm really asking you is have we postponed the discussion about recession until 2017? >> i think it's possible this could be a long recovery. to me it is what happens with productivity. if productivity does not recover, recession risk within a couple years remains high. if we do see a bounce in productivity, we could be in the middle of what might prove to be the longest recovery in u.s. history. >> ellen, what do you think the shape of growth looks like? >> we've been pretty constructive on growth. i have to disagree with a decent amount of jim's points. we have below 2% growth pencilled in over the next

several years. we think 1.5% is the economy's potential. part of that goes back to the productivity story. on this, jim is right. we should be laser focused on productivity. if productivity fails to pick up, that means no corporate profitability. it also means we hit the danger zone of price spillovers sooner than the fed would like. that will get the fed into a situation where they have to hike faster. productivity we should be focused on. we have released analysis that we think this could be one of the longest business expansions on record. because it's sluggish, because that takes that much longer to overheat and we don't need a reactive fed. >> ellen, very quickly, having said all this, because of the lumpy nature of the economy, do you think the fed made a mistake hiking rates in december going into an earnings recession and a

mann manufacturing and industrial recession? >> i think a lot of the problems are outside the u.s. did the fed need to hike rates in december? no, they do not. do they need to hike rates in march or beyond? no, they do not. if you look at the inflation picture in the u.s., there's no compelling argument for them to move forward. but there's an overwhelming desire to get more space between zero and the target range so they have room to cut and don't have to go negative when we hit the next downturn. >> we will continue to debate it here. thank you for joining us. ellen zentner and jim paulson. up next, will britain leave the european union? david cameron trying and failing to get a deal to prevent an exit so far in brussels. more on that when "squawk on the street" returns.

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investors and the hundreds of international banks in britain that self europe may have a problem. david cameron is struggling with the bloc's over leaders. cameron has promised the british public a full referendum on leaving the eu this summer if cameron doesn't bring back the bacon by sunday, the once unthinkable becomes more likely. britain exiting the european union after 43 years. brexit as some people like to call it joining us from london

is martin wolf from the financial times. welcome back. is cameron fundamentally misjudging this on both fronts? >> he's taken a huge gamble. we all knew he had when he announce the the referendum. i'm supposed the view will be taken he couldn't have avoided the referendum because the conservative party would have broken under him if he refused to have a referendum, and if he had a referendum he had to justify it by having a change in our relationship. he had to have the negotiation with the other members of the eu that he's now having. so you could say he's not misjudged it. you could argue that he's simply put into an impossible position. he's threading a very, very narrow needle here. >> what is your impression of what's now happening in brussels? without wanting to get too in the weeds about what he's asking for. what in essence is the dynamic that he's experiencing?

>> i'm assuming -- of course this has been our experience, that in the end, after an immense huffing and puffing, and the huffing and puffing is part of proving attorney's domestic audience that they have fought, they have really shown a tough spirit in these negotiations, that in the end they will reach a deal. the deal won't be that far from what we thought about before. and because the alternative of a real breakdown is unthinkable for both sides. ultimately unthinkable. so, my guess would remain pretty strongly that by sunday we will have some sort of deal. >> will it be enough to sell to the british public? the thing that americans have to understand is that europeans have a habit when they have a referendum on europe, they have a habit of sticking the finger up and going i don't think this is important, i will cause you trouble. that's why treaties don't get

passed. will cameron get a stay in the union vote past the british people? >> that is the far bigger difficulty. assuming he gets a deal, it will generally not fundamentally change our relationship with the eu. the skeptics will be able to argue it hasn't changed anything. the relationship remains as it was before, largely. his cabinet will split. there will be people in the cabinet who will go out against him. the conservative party will split. the mood in the country is angry, unhappy. my guess remains, however that it is more likely than not, but not overwhelmingly more likely than not, that we will vote to stay in. and the reason is very simple. if we stay in, we sort of know what it's like. britain is a conservative country. we're familiar with what's going on. people will choose what's familiar. there may be just enough people,

unhappy enough with the government and unhappy enough with the economy and whatever to say, no we want to leave. the eu membership will be sacrificed for that reason. it's very uncertain. >> i want to make it clear to everyone here, britain is not a member of the single currency. this is not a conversation about britain leaving the euro, the pound exists. pimco said there's a 40% chance that they will get a no vote. citi is calling for a 20% decline in sterling. as we work through this process what do investors fear, martin? what becomes the issue at stake? well, there will certainly be a lot of currency turmoil in the short run. probably asset price turmoil in the short run. the really interesting question is the long run effect. we have to assume that a lot of businesses, quite a bit of business activity will move from london into europe. very complicated way. but i think the really big issue

is that if we vote no, what happens next is complete uncertainty. nobody knows what the new relationship will be. so investors will have to cope with high levels of uncertainty. that will make prices more volatile and probably the risk premium will rise so it will lower value. >> a treat to talk to you. martin wolf there, chief economics commentator at the financial times in london. when we come backs, a live exclusive with the chairman and ceo of mgm resorts, jim murren. ♪ ♪

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shares of mgm are lower after the company reported a loss yesterday. mgm said it is taking a $1.5 billion non-cash writedown to reflect the lower value of its chinese opening and said it would delay the opening of its new macau resort. the stock was down yesterday. jim murren is chairman and ceo of mgm resorts. happy to have him with us now. nice to have you. you had a great quarter when it came to las vegas and your stock got hammered yesterday what are

people missing here? clearly the focus seems to be on macau. >> you know, david, good to talk to you. we did a lousy job yesterday explaining the quarter and explaining what was going on. in macau, back in '11, we wrote up our investment by 3.5 billion. yesterday we reversed some of that gain. i don't think we explained that well. in macao, we had a quarter on target. the noise around macao and the writedown missed the entire point. the point was we had great, great quarter in las vegas and are off to a great 2016. >> the focus on macau, in listening to the conference call you guys seem to say things are

stabilizing. those are your words, your management team's words, not mine. is that the case or things are worsening a bit? >> no, they are stabilizing, and i think they will throughout the year. the worst is behind us. it grew so rapidly. it was a hot, overheated market and took a big hit in 2014 and 2015. we're seeing a good stabilization of the business. chinese new year's volumes have been strong in macau. i don't we'll have a great year, but no worse than last year. early next year with the project, and mr. wynn's project that will grow the market again in 2017. >> when it comes to vegas, as you say and many analysts who put reports out in the last 24 hours agree, you outperformed

many peoples expectations on margin. you put up decent top line growth. ebita growth is significant. is vegas as strong as you've seen it in some time? >> it's the best we've seen it since before the recession. i think las vegas as a market will have the best year we've had as a market since 2007. we're off to a good start here in the first quarter. i think we'll have a great second quarter because this bad boy behind me, this arena opens up. it's going to be chock full of folks at concerts and fights. we have a good second half of convention business planned. our competitors are doing well also. so i believe that 2016 is going to be a better year than we had since the recession began. i think it's time for us. new york, orlando, chicago, houston, they all had great recoveries. they had their day in the sun.

i think it's las vegas's turn to outperform. i bet las vegas will outperform markets in terms of revenues and profits. >> i want to understand this. so, others have had their day in the sun. why is it las vegas' turn to have its day in the sun? >> because developers are smart. so when you see room rates going up rapidly and profits expanding -- like in new york city, what's going on in new york? you have dozens and dozens of hotels being built. capacity will be up in hotel stock this year alone in new york city. of course that is going to lead to revenue compression as you have a more saturated market. in vegas we have zero new supply coming in to this market in the next three years. so when you have report visitation as we did last year and we will again this year. when you have higher room rates that are still way below the

recession -- the pre-recession peek and no new supply, that's where you learn in high school and in supply and demand that's when hotels do well. that's why we did well in the fourth quarter, that's why we're bullish in 2016 for the market. for us, when you're adding a brand-new arena, which would be the best in the united states, you're expanding convention facilities, and adding some cool new restaurants, we should do better than the market itself. las vegas as a market will kick butt relative to new york, orlando, dallas and chicago. >> point taken. last time you and i spoke, it was around the news, big news, that you would creating a triple net lease reit and you were contributing a number of properties. you hoped to be concluding that at the end of the first quarter.

you are still on track for that? >> we are. i wish this company were public now. it had a killer fourth quarter. better than mgm resorts in the aggregate. i think it would have -- the ceo of that company would be telling you if he were here today, what a great quarter they have. he would be taking credit for it. even though we did all the work. and i -- it's off to a good start in 2016. it's going to be, i think, a well received company. because it's a triple net lease wreath. investors are flying to safety of fixed income, predictable cash flows, got a good portfolio of assets, it's built to grow rapidly over the next few years. and really now the only way to play that is buy mgm resort stock. ultimately when we go public with it, mgm resort shareholders will own 70% of that new reit that you and i talked about.

>> yeah. real quick, couple of housekeeping items. ki there's some question as to whether or not the shares of kirk krikorian's shares will be sold? >> he will make sure in the after life that mgm is rewarded and protected. there are no sale actions any time imminently. there's no timetable. no deadline. the executor of that estate has made it very clear that they really enjoy the prospects of mgm, excited for our growth potential. some day some of that, or all of that stock will be sold. when it is, all of it goes to

charity which is another legacy of his. because it day is far from today. >> all right. well, in the time you've been speaking, you managed to get your stock up a bit. as you try to clarify some of those thoughts on macau. we're out of time right now. jim murren, always, appreciate it. thanks for joining us. >> thank you very much. straight ahead, the battle over encryption is heating up. apple has one week to respond to the fbi. more tech giants weighing in on this debate. facebook and twitter siding with tim cook. more on that when we come back. hundreds of crash simulations. thousands of hours of painstaking craftsmanship. and an infinite reserve of patience... ...to create a vehicle that looks,

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here's your cnbc news update. american warplanes struck multiple targets in libya overnight. hitting an islamic state training camp and a senior extremist leader. the u.s. official did not identify the leader or areas in libya where the strikes occurred. china's naval air force recently conducted aviation drills in the china sea. this after china deployed an advanced surface-to-air missile system on one of the islands. one person is in critical condition after a helicopter made a crash landing in the waters of pearl harbor. all five people on board the civilian chopper were transported to hospitals. rescuers and coast guard personnel rushed to the scene. opposition lawmakers again released tear gas in kosovo's

parliament as they try to renounce deals with serbia and montenegro. the session was temporarily halted. back over to "squawk on the street." thank you very much. apple's core response to the fbi's demand for that encryption breaking technology is due february 26th instead of the original deadline today as companies like google, facebook, twitter and disney s. sided with apple. joining us with his thoughts is cnbc contributor jim stewart. happy friday to you. >> happy friday to you. >> rough week, though, for the security debate in this country. you have -- what are your major thoughts about this? >> well, the lawyer in me is tingling with excitement. this sais an amazing case. this is a textbook classic. i think it's good that we're having this debate. i'll say two things. i understand why apple is taking

the position it is. i think it's smart. apple is not an arm of law enforcement. it's not an arm of the government. it has to put customer interests first. and it's a good corporate zit s citizen. this is not an established area this has not been clarified by court rulings. and apple has rightly said our position is with our clients. that doesn't mean they'll win. >> that was my next question. >> this is a tough case, but my guess is ultimately they'll have to provide access, or the courts will order them. it may go to the supreme court. this is an unusual case. i think a court could craft a remedy that would meet the needs of the government without jeopardizing much privacy of anyone else. let me point out one key thing here. the user of the cell phone is dead. i could -- there is no privacy

interest left in someone who is dead. i could write an opinion, it will be premature, i could write an opinion saying in cases where the suspect is dead, yes, the government has a right to gain access to this. i think the technology question, which i cannot answer is, is there a way do this that lets the government into this cell phone and only this cell phone and does not threaten the security of everyone else? given what software engineers can do that, my hunch is -- >> you believe the dead person dynamic is a limiting principle? after that it doesn't bleed out into something else? >> could easy be a limiting principle. the supreme court likes to do limiting principles. they only like to decide the case in front of them, not sweeping things that affect everyone else. if we said in this case, the user of the cell phone -- he also didn't even own that. he didn't own the phone, he's dead. in cases like that, where

there's strong evidence of a crime, yes, the government has access. how many of those are there going to be? practically none. >> so there's some chatter that apple might go through first amendment law protections of free speech. and that they might treat code as free speech. is that an effective argument? >> free speech won't win the day here. virtually -- the right to privacy, the right to speech, all these typically give way under the constitution to the needs of law enforcement in certain circumstances to gain evidence of a crime. this has been raging -- the first amendment debate about whether reporters have to disclose sources, that issue has been raging for a long, long time. the courts have ruled over and over again against the press and in favor of law enforcement. i have a feeling the first amendment argument will not take apple farments. >> on the subject of public

opinion, i think it's fascinating to watch how the discussion is evolving. and people who are daring to counter the security services on the question of terrorism, which clearly the fbi and doj thought they might have in the bag any way. i wonder if that's about the deep distrust that many millions have about security forces and the nsa, and if they get technology, they'll use it. that's a debate that's changed in this country since snowden. >> there's a big populous crowd on the other side of that, too, will say how dare you not support the government in a terrorist case. >> of course, but it's interesting that people even dare to speak out. usually you would expect that to wash over everything and everybody would be quiet. >> also, let's think who is the apple constituency here? i don't think that -- they're pretty sophisticated users of

technology. they're more worried about the snowden effect. >> or that china would get hold of the technology. >> exactly. i think you'll see a sharp political divide here between the people who put safety first will be on the side of the government and people who put privacy first will be on the side of apple. ultimately i don't think that's what this case will turn on. there are established cases for when law enforcement gets access. i think it could be a good ruling it will help clarify the issues. some people say congress should do it. good luck with that. >> that was our discussion earlier. how odd it would be to have a law written and passed on this. >> that won't happen. >> is healthy this will be litigated in the courts. it will be clarified and more fact also come out. one thing that worries me, apple has said you're not just asking

us for information, you're asking us for steps to assist you into breaking in with this. that's different than handing what's over already in the cloud. that argument worries me a bit. what if the government comes back and says give me all the underlying proprietary software for how you program these phones, and then we will create the program that -- c >> can they do that? >> i suspect they can. >> they could but it would take longer. >> it could take longer, they could hire the experts do that. they would say this is information you already have. that would really blow open the possibility that they could break into anyone's phone. >> it will be a story with us for a long time. >> absolutely. good seeing you. >> great seeing you. we are now just one day away from south carolina's republican primary and clearly the race is heating up. gop hopeful john kasich took

second place in new hampshire and john harwood sat down with the governor ahead of tomorrow's vote. john? >> simon, john kasich is the one republican candidate who stands out in style and tone with his message. and i asked him to give a reality check on the economic message of his rivals. >> 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. i mean, did we have problems there? of course. is there too much greed? of course. are there rules and regulations necessa necessary? of course. should we apolish wall street? >> ted cruz, i was at a rally of his in new hampshire. he said -- >> how did he do?

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 this country is the fact that people don't have the skills to command the pay based on the skills they have. which brings up the question about our fundamental effectiveness of education today and providing 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. to blame these other boogiemen misses it. if you can't balance a budget, have common sense rsense things

will be hit. >> you got hit for being part of a lehman brothers banker. >> john kasich gave wall street a blank check. >> if i had bankrupted lehman brothers, i should be pope, not running for president. >> john kasich has been struggling to crack the top tier here in south carolina. he hopes to hang on, move on to the super tuesday states which are spread across the country, including a couple in the north like massachusetts and vermont, then get to the midwest. that's his bread and butter. michigan, on the 8th of march, then ohio, his homestate on march 15th. ohio is a winner take all vote. we'll see if he can make it. >> he is popular in ohio. john, thank you. john harwood for us. when we come back, will toyota's partnership with nascar help its brand here in the u.s. and resonate with buyers? we'll talk with the president of toyota north america along with the famed nascar driver, kyle busch after the break.

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baird. breaking news now on hover boards. let's get over to eamon javers. >> a new letter from the consumer product safety commission, this letter going out to the manufacturers of hover boards, those self-balancing scooters. this is a warning letter from the u.s. government telling them that they better make sure their product is safe or else it might face seizure at ports of entry into the united states or recall domestically within the united states. i'll bring you some of the language. it says i'm writing to urge to you make certain that self-balancing scooters that you

manufacturer comply with currently applicable voluntary safety standards. going on to say they had numerous instances of the hover boards bursting into flame and causing property damage. saying from december 1st 2015 through february 17, 2016 that cpsc received reports from consumers in 24 states of 52 self-balancing scooter fires resulting over $2 million in property damage, including the destruction of two homes and an automobile. the commission going on to reiterate that they may seize these hover boards at import or recall them domestically if these products are not deemed safe by the u.s. government. back to you. >> wow. that's huge. thank you very much. eamon javers. rick santelli, the dow now down 70 points. time for the exchange. >> i'd like to welcome my guest, bob stauffer. bob, thanks for taking the time today. >> glad to be here.

>> listen, you wrote an op-ed, the fed's mismeasure of gdp? no, mismeasure of growth? malinvestment? no. mismeasure of inflation. that was it. you tell me, it's like you're a prophet in this regard. the last couple of numbers measuring pricing issues certainly point to a disparity between the service side and the good side, which was at the epicenter of your piece. >> right, rick. let me start by saying i'm not a big fan of this 2% inflation target. but since this idea has become so entrenched, i think we need to interpret it correctly. in order to do that, you have to look at the sharp dichotomy between prices in the service sector versus prices in the goods sector. i would argue in the service

sector where monetary policy can have influence, that basically the fed has reached that 2% inflation target. in the goods sector, where prices are basically influenced by independent supply factors, monetary policy cannot have much influence. prices there have been either falling or quite low. they've been dragging down the overall averages. >> well, you know, you bring up an interesting point. i believe the fed is painting themselves into a corner what if the service side prices keep going up, goods stay where they're at, employment stays about where it is on job creation and the artificial low. in the final minute, it's all yours, describe that what-if scenario. >> well, the fed's credibility

is at stake. they keep promising 2% inflation. they keep missing the target. and i would argue that the thing they need do is start measuring it correctly and say we met that target. the main drawback of all this is that it provides a perfect excuse not to normalize interest rates. i think that's a big problem. the cost of not normalizing interest rates are accumulating, and if the markets can't take another quarter percent increase or so, we're delusional, i think. >> we have a little extra time here. listen, i saw a smart guest today, i won't mention his or her name, they said the fed cannot do any more tightening. there's no reason to. you've said that normalization, they're looking for any excuse not to. is there any way to square that notion? >> i don't think so.

i would argue that not normalizing is a mistake now. the thing the fed never talks about is that bank lending is increasing at strong rates. monetary policy has been successful. banks are using excess reserves more intensively. i would argue strongly that in these circumstances, the system could easily handle short-term interest rates of, you know, 1% or a little higher. and in that regard -- it's also worth noticing that longer term rates, you're the expert on ten-year yields, they have come down significantly in the last year or two. >> bob we are out of time. i think i know where you're going on the long end. next time we will talk about the strange aspects of the yield curve. thank you. have a great weekend. back to you. >> thank you very much. it is a big week for government. next, ajit pai will join the

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>> daytona 500 is happening this sunday and toyota is announcing a renovation of the daytona motor speedway. phil has new special guests. >> let's bring in the senior vp along with kyle busch who is the current sprint cup champion. they join us from toyota motor speedway. bob, let's begin with you. we can hear the cars in the background but toyota's investment in daytona rise as good part of a broader movement to really lift the fan experience. tell us a little bit about it. >> well, phil, we have been involved in nascar for now 13 years and it's a really good venue to come out and expose our products and tell our story to our fans. it remains one of the most popular fan sports based in the u.s. and daytona is really the heart and soul of nascar. so when we heard about this

incredible expansion we knew we had to be a part of it. >> when you look at the daytona 500 and you look at nascar overall it looks like it has plateaued. not the 500 in terms of popularity but the sport overall. what needs to be done to get that mojo back and bring more people in aside from the core fan base. >> i still think we have a huge fan following. the sport of nascar is a continuation in being able to evolve with sponsors and getting people to the racetrack and whatnot but for us we kind of look at our sport in a broader spectrum with social media and the hits that you get on book and twitter during the race and tv numbers and the fan attendance at the racetrack too. daytona is going to be huge. it will be big this weekend. they're already sold out. the in field is looking full. i'm looking for big thing across the sport this year. across the whole board. >> we're showing videos.

two years in a row. heck of a wild finish there at the end of the race. bob does it still pay? does being as actively involved in nascar, does it still pay when it comes to sales? >> i believe so. i enjoy racing my toyota camry on the racetrack every weekend and putting it in victory lane. they always had the mantra that says if you win on sunday you sell on monday. am i right? >> absolutely, kyle. our story is still not wildly known throughout the u.s. phil as you're aware we have ten plants, 365,000 associates here in the u.s. so it gives us an opportunity not only to display our product but to really tell our story of how much of a contribution toyota is providing to this economy. >> bob, quickly we don't have much time. how are sales looking in february across the country now for toyota and the industry? >> so far so good.

if we have a little bit of help from the weatherman. but we came in at 17.6 million on an annualized basis in january and it looks like february is going to be very similar. >> bob carter, senior vice president toyota motor sales joining us from daytona along with the current sprint cup championship and the driver going for the daytona 500 this weekend, kyle busch. thank you very much. >> thanks very much. all right. before we get to what's coming up on squawk alley, i wanted to congratulate a deer colleague and my producer katie spencer that got engaged very recently. our congratulations to katie and her fiancee, greg. i would also mention she's the second consecutive producer i've had to get engaged during the time she was working with me. so i feel good about that. >> this is about love and i create a love environment. >> oh, wow.

>> congratulations. >> first thing i think of. >> a look at what's coming up next on squawk alley. >> i'm going to bring some of that to squawk alley and going to weigh in on the stakes as apple resists this court order to essentially hack the iphone. also fcc is going to join us to talk about this new direction the fcc is going in opening up cable boxes. there's a 3-2 split on this issue. and the ipo slow down. and all that more coming up on squawk alley. ♪ they say that in life, we shouldn't sweat the small stuff. but when you're building a mercedes-benz, there really is no small stuff.

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>> it's 11:00 a.m. on wall street and squawk alley is live. 1