it's huge. 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. becky is out today. u.s. equity futures, as joe just mentioned, this hour they're looking down. dow looks like it would open off about 123 points. the s&p 500 looking to open off about 15 points. yesterday's 189-point loss for the dow, the index slipping back into correction territory. overseas in europe, we're keying off what's been happening over there. things are red across the board as well with most of the markets down at least 1.5%. the dax off more than 2%. overnight in asia, japan's nikkei fell nearly 1%. the hang seng off more than 1%.

china ease shanghai composite bucking that trend, ending the session higher by 0.9%. also, we should mention a bill catalyst for this morning's moves, the big move now in crude. wti this hour is 30.83. saudi oil minister is dashing hopes for a production cut. listen to what he had to say. >> countries are going to deliver. even if they say they will cut production, they will not deliver. so there's no sense in wasting our time seeking production cuts. they will not happen. >> he did say he expects producers to meet next month to negotiate an output. american petroleum institute data showed u.s. crude

stockpiles grew more than twice expectations. >> say it for him, kayla. >> i'm not sure i know how to say it. >> one syllable in the first part, al. not ali. >> his first name is ali. >> among our other stop stories, fed vice chairman stanley fischer says he doesn't know what the fed will decide to do about interest rates in march. speaking at an oil market conference in houston, fischer says future policy actions are by no means predetermined, but he says it's possible the market selloff this year may not damage the economy, and there are signs of pickup in growth in wages. fischer also says while they're looking at it, the fed has no plans to use negative interest

rates. >> we're still looking at it. we haven't got this figured out exactly. fortunately, we're a little way away from there. >> but he did say they are studying how it is going in the rest of the world. speaking of which, meantime in europe, the potential for a brexit, or a british exit of the european union, is taking a toll on the currency markets. the pound, sterling, trading below $1.40 for the first time since 2009. the euro, meanwhile, back below 1.10. it's 1.09, down another third of a percent today, which is quite interesting. i think the pound below 1.38 is something that currency traders are watching. there are people saying the pound could slip to a 40-year low if, in fact, the british decide to leave the european union. >> march 12th, i think. i mean, the 11th. >> oh, you're going over. >> lucky timing.

>> you started on the brexit thing on monday. i mean, the world started on the brexit thing. >> becky was just over in london. you guys just going over there to plant the seeds? >> she missed it by that much. i hope i get in about 1.35. >> now i see what's going on. june 23rd is the date. >> to be honest, over there it's like -- last time we were there, it's like dollars, but it's 1.40. there's no difference. everything costst ts the same. >> hopefully you're using a credit card that doesn't have a foreign exchange fee. >> it's the least they can do to get it under 1.40. i think we need that sound bite from stanley fischer that we really haven't figured this out yet. just keep playing that for the fed in general. we really haven't got this figured out. i think that's a metaphor. >> he did say it very solemnly. >> just about the negative

interest rates. i think it incaps lates the whole last five, six, seven years we really haven't gotten this quite figure the out yet. is this still you? >> this is still you. >> yesterday we talked about zero possibility of this happening because of so many anti-trust things. honeywell is saying, what? >> what are you talking about? >> there's nothing here. >> speaking of which, in corporate news, honeywell says it doesn't see regulatory hurdles with the deal for united technologies. the company suggesting a merger would maintain a strong investment grade rating, although that's not necessarily an anti-trust issue. they also said they would have higher, free cash flow. utx first disclosed the merger talks late monday after our david faber reported them. they said a deal would face

insurmountable regulatory obstacles. honeywell is getting advice from the former doj anti-trust chief. she has said that in her research, it doesn't look like there would be that much overlap. >> if utx just wanted a higher price, you come up with about 100 other excuses. once you start with this excuse, if this is the excuse, you have a much bigger problem because you've almost created the hurdle. >> you've given the government a case to bring. >> it makes it much harder. >> although, every time a target wanted to remain independent, if all it had to do was say that, that doesn't always work either. you wouldn't even need to resist anyone if you said, whoa, this will never work. >> if honeywell wants to show up with a massive breakup fee and a huge premium to compensate for the risk. >> then they'd say there aren't regulatory issues? >> they'd say there are

regulatory issues, but we're willing to chance it. >> yesterday, greg hayes from united technologies was on "squawk on the street." despite the fact the companies, when they were still discussing this deal in a friendly manner, they had 16 separate engagements, and he said not a single one did discussion of valuation come up. do you believe that? 16 times they discussed a deal, and valuation didn't come up. >> who's actually going to run this thing? the fact that both of them have approached each other at certain points, not to suggest the anti-trust argument is disingenuous, but it does raise questions. >> have their market caps swapped? >> there have been approaches on both sides. >> greg hayes is brand new. for example, 10, 20 years ago, i would have thought united

technologies would have been the acquirer, not honeywell. but honeywell has done well in stock price and in the way he's run it. anyway, home improvement retailer lowe's, we talked about them yesterday when home depot came out, just out with earnings. matching street expectations at 59 cents a share. revenue slightly above same-store sales. rose 5.2% in the fourth quarter. i think home depot was like 6.4. both pretty good numbers. the company says it expects to add approximately 45 stores in 2016. analyst brian nagel will join us in about ten minutes, as he did yesterday, with home depot, to give us the highlights of this report from lowe's. >> turns to the presidential and political race. with his victory last night in nevada, donald trump has now won three of the first four gop nominating contests. john harwood joining us now with more. >> reporter: andrew, republicans are waking up this morning to the growing likelihood that

donald trump is going to be their nominee this fall. not set yet. still have super tuesday next week. but he won last night a sweeping victory in the nevada caucuses on the heels of his sweeping victory in south carolina. look at this. 20-point margin. marco rubio finished second. it was a weak second. ted cruz behind. you don't see either of those guys really drawing closer to trump as the field narrows. donald trump made a point of talking about the breadth of his coalition and the surprising nature of it in his victory speech. >> we won the evangelicals. we won with young. we won with old. we won with highly educated. we won with poorly educated. i love the poorly educated. we're the smartest people. we're the most loyal people. and you know what i really am happy about? because i've been saying it for a long time. 46% with the hispanics. >> reporter: ted cruz expressed

the hope of republicans, which is that the non-trump vote can somehow be consolidated by another candidate. hasn't happened so far. the dream hasn't completely extinguished yet. he's ted cruz last night. >> if you are one of the 65% of republicans across this country who doesn't think donald is the best candidate to go head to head with hillary, who believes we do better for elections when we actually nominate a conservati conservative, then the first four states have performed a vital function of narrowing this race and presenting a clear choice. >> reporter: ted cruz is picking up the endorsement of texas governor greg abbott today. he hopes that will boost his support. he hasn't got an lot of institutional political porte. marco rubio is still hoping on super tuesday he can gain strength toward a breakthrough on march 15th if his home state

of florida. but he trails trump badly in florida, and as trump said yesterday in a rally appearance that had all of the characteristic trump appearances of schoolyard kind of talk, he called ted cruz a weak little baby. he said, if marco rubio hits me, he'll see what happens. so far, that kind of style, not what we're used to seeing in presidential nominees or presidents, but it's been working for trump in this republican contest. >> for south carolina, if you add it up, cruz and rubio, i think it was 44%, 45%, and trump was down in the 30s. didn't work this time. you add up cruz and rubio from nevada, it comes to 44, i think. trump was 46. even that argument, you know, pooling their resources wouldn't have worked. he's getting stronger. >> reporter: votes disperse and various candidates get some of

them. people talk about what about all the jeb bush votes? where are those going to go? >> they went to trump. this is his biggest margin yet, in nevada. >> reporter: even ted cruz said if you're part of the 65% of republicans who don't support trump, 45% were for trump last night. >> his math is off. he's using nee ining fuzzy math. what was that about? i don't know. it was some previous campaign you covered at some point. >> reporter: that was w's line about al gore. >> everybody misunderestimated him. what about super tuesday? is trump behind in any of those 11 states right now on rcp? >> reporter: not that i'm aware. there's not good polling everywhere. some of these things are caucuses.

he has been trailing slightly in the state of texas. so that's significant. y cruz is hoping to win his home state. you're talking really about a national contest now. this is what makes nevada significant. it was a short campaign after south carolina. the shorter campaign is, the more it resembles the national result. that's what happens when you're going across 11 states. it's more likely to reflect the fact that donald trump is just ahead most places. it's not easy to overturn sort of state by state when you don't have a lot of time for appearances and concentrated attention. you also have momentum effects. everybody's going to wake up to headlines this morning saying trump wins again. what that does is that weakens the resistance of the opposition. it makes people become resigned to the idea that trump might win. i want to emphasize, it's not impossible. this is still early in the process. the point is that all of the

signs that we can see and all of historical experience says when somebody is in a dominant position like this in the beginning and gets on a roll, they're very difficult to stop. >> but john, in iowa, we were talking about how trump didn't have a ground game, and he misjudged the importance of having that. it seems that either he's been able to ride the momentum he's built in other ways, or he's n been able to ramp that up quickly. >> reporter: ground game is way overrated. it matters in caucus states. it mattered in iowa because you're talking about an arcane kind of process and you have to talk to people and get them in a specific enterprise. nevada's caucuses were our bit of a hybrid. they incorporated procedures that let somebody just walk in and walk out if they wanted to. when you talk about primaries, going across an entire region, turnout is insignificant

compared to publicity, momentum. you're standing as you begin this contest. it's a very short amount of time. >> have you met diamond and silk? do you know who i'm talking about? >> reporter: no. >> those are the two ladies that do the viral videos for donald trump. they got mad at megyn kelly. actually, they call her kelly megyn. they've become viral sensations. i'm seeing them on twitter constantly. they keep putting out new videos defending donald trump. you've got to check it out. >> reporter: there's more material every day. >> there is. i think they actually are almost using it as a cash generator. they've gotten really popular. >> reporter: the trump campaign has defrayed some of its expenses by the vendors at every trump event. you go to a trump event, and there are people selling all

sorts of merchandise. i don't know what the financial rupp is exactly, but i believe a good bit of that revenue goes back to the trump campaign. it's one of the reasons why donald trump likes to brag, ai' the guy who spent the least and have gotten the most. >> you look at some of the numbers, like jeb's numbers, it's kind of painful. you wonder. 130 million, $140 million. it's almost sort of tragic. >> reporter: well, certainly was for jeb bush. he seemed to have all the sorts of advantages and convinced a lot of people like me that history would hold and the markers that we've known in the past, the money that you can amass in a war chest, the reputation you have, the family brand, while is controversial nationally, is still strong within the republican party. trump has shattered all of those

kinds of conventional calculations this year. it's a remarkable thing to see. >> okay, john. thank you. we'll see you. i don't know where he's headed. i don't know which state i would camp out in for super tuesday. we'll see him. back to the markets, the dow, s&p, and nasdaq all giving back the gains. the dow slipping back into correction territory. joining us now is karen cavanaugh, senior market strategist at voya. we've seen these types of bottoms being formed, i guess, before. it's like three steps forward, two steps back. we had a nice relief rally. now we're in another testing process. do we test the lows? >> we're saying we haven't seen the full capitulation yet. we're starting to see it in our global fund manager survey. cash has been raised. normally before you reach a bottom within the markets, you really get investors, and that's

professional fund managers, to underweight equities. we haven't seen that. we're talking about episodic volatility. we think this is going to continue. until we get that full-fledged capitulation, there is a little bit more risk, we think, to the downside. >> is there anything that fundamentally we can -- that will coincide with the bottom finally? are none of these things matter? >> no, no, no. the fundamentals are there. people just don't want to talk about it. there's bad fundamental. just doing price earnings ratio, we're in a earnings recession. we just got through earnings. they're down. top-line growth isn't growing. we don't have expansion in margins. you have a fed that has begun a tightening cycle, so the markets are starting to price that in, flattening out. then there's concerns about global growth. there's a lot of concerns. so that's why we think the price is starting to come down. >> why don't you underweight

equities and make a bottom? >> if you really look at bonds versus equities, we really find equities to be much cheaper versus bonds. when we talk to our clients, and we want to help them grow their assets, you're not going to grow it in cash. you're not going to grow it in the bond market. really, there is no other alternative but equities. a lot of the baby boomers need income. there's limited income in fixed income. there's a lot of income within the equity market. so we like large cap, very high-quality companies. we're looking at liquidity over leverage. you still have to delever that whole energy commodity part of the market. >> so you're not going to be fooled and underweight equities like your peers. your less informed peers need to underweight equities. you know better. will you be one of our peers that underweight equities and make a bottom? >> no, not really. >> bhowho's going to do it then? we have no one to make a bottom. >> the market is behaving just

like it should behave. oil, china, the central banks, whether they'll act, whether they won't act, those are all uncertainties. as maryann said, the bottom line is that these uncertainties would be on the back burner if it wasn't for earnings. there's no catalyst to move the market forward because earnings aren't growing. so when earnings start to grow again, and they will, then we'll see the market move forward. now all these worries are roiling markets because they're in the center of everything. it's the focus. on the other hand, there are some good things. there's the consumer. there's jobs. there's housing. that's good news. but until we really see that catalyst who has earnings growth, we're going to see the market roll around like this. >> why are you saying markets are getting roiled? for years, we heard a 5% to 10% correction of some sort was due. the market had been gaining steam for six, seven years at that point. now we've gotten that. >> that's a good point. we aren't really seeing markets roiled, but we're used to such a low-volatility environment.

so any kind of volatility, investors are saying, what's going on here? if you look at the vix, the 25-year average is around 20. we're at 19 1/2. so we're actually below average volatility. we've got son uten so used to t being our backstop and no volatility that any kind of certain volatility, and investors get a little scared. normal corrections happen a couple times a year. it's not anything new. it's normal volatility. >> all right. well, so things are pretty good. we're looking beyond some of the negative things. but you want people to really believe in the negative things before we hit bottom? >> no, these are just factual information. joe, you and i have been around for a long time. >> but you're looking for people to finally buy into the negative story. >> no, no. i don't think we want clients to buy into the negative story. >> you said people need to underweight equities. >> i didn't say underweight. we're overweight equities. >> i thought you said when the pros finally go -- >> well, money managers underweight equities, and you

get that full capitulation. that's when markets bottom. >> but you're a pro who's not going to do it. so these other pros need to be fooled and underweight equities before markets hit bottom. >> correct. >> feeling better now, joe? >> i don't know. i'm not sure that you're going to convince everyone. it has to be scary because everyone's pretty good at this. >> oh, at the bottom it feels auf awful. >> you're going to have to be questioning your belief at the bottom. >> joe, i'm always questioning. i'm always checking. this is just a temporary thing. >> don't try to time the market. you try to time the market, you usually ends on the wrong side. >> and keep in mind, there are some stocks close to breaking out to all-time new highs. not everything looks bad. >> right. >> all right. >> silver lining. coming up, we'll talk about silver linings.

lowe's just out with quarterly results. we'll dig through the report with an analyst next. you're seeing that stock up slightly in the premarket. later this morning, we're going to talk presidential politics and the supreme court vacancy with former congressman ron paul. "squawk box" returns in a moment.

welcome back to "squawk box." if you're just waking up, we're looking at red arrows on wall street. dow would open up off about 120 points. the s&p off about 15 points. all of that keying off of crude, which you know, had been on a bit of a roller coaster ride. we're at 30.85 at the moment. >> meanwhile, lowe's posting fourth quarter results just moments ago. the company matching earnings estimates and posting slightly higher revenue than expected. brian nagel joins us now. he's senior equity research analyst covering retail hardlines and broadlines. great to have you this morning. mpkt good morning. >> we saw strength from home depot yesterday. shares up 2%. what was the main takeaway in your opinion? >> a couple things here. first, the real key message looking at home depot yesterday and lowe's today is the overall strength in this home improvement retail market. a couple of your guests were all talking about what looks like a weaker spending, weaker macro

environment out there. these last two data points suggest that consumers are very much spending on home improvement products. that's the key message here. >> is that largely due to warmer weather than previously we've had or than was expected or more savings from cheaper gas prices that consumers had to spend? >> weather was definitely a factor. a positive factor. so home depot commented yesterday on their conference call, i suspect lowe's will do the same today, that the warmer temperatures through a big chunk of this fiscal fourth quarter definitely helped sales. as far as gas prices, it's hard to say. i tend to hethink lower gas pris are helping consumers. the bigger driver here in the quarter is probably weather. if we really think what's driving it, it's the strength of the u.s. housing market. we continue to get metrics saying the housing market in the united states is strong, potentially getting stronger.

that's helping drive better demand. >> when we saw existing home sales up 0.4% yesterday, so that was certainly a good sign for the market. construction, though, has been really tough to predict, and it hasn't been as strong as many in the market would like. do you think that we need to see construction come back in a big way to give lowe's and home depot another headwind going into the string? >> well, that would definitely be -- see, the way this business works is more construction, it would be a tailwind for them. i followed this group for a long time. i think the key metric out there is home price appreciation. since the economic downturn several years ago, we've seen very steady home price appreciation in the united states. what that does, is it gives that homeowner consumer the confidence to reinvest in their home, to make even small projects or large projects. that, to me, has been the key metric. >> they also gave guidance for fiscal 2016, the year that ends february 3rd of next year.

comp sales expected to rise 4%, ebitda expected to increase 80 to 90 basis points. is that stronger than you expected, brian? >> it's slightly stronger than the street forecast. i think the consensus forecast out there was 33.95. lowe's said $4. it's slightly stronger. lowe's is basically saying they expect another solid year. >> solid, but 4% comps would be still lower than we saw in the most recent quarter. even though this quarter isn't traditionally thought of as a big one for the home improvement retailers. >> yeah, but -- you're correct. domestically, 5.2. now they're talking about a four. i wouldn't read too much into that, so to say, deceleration. we have a long way to go in 2016. there's very much a tendency on the part of lowe's and home depot and other companies to at least guide initially conservative. >> brian, thanks for waking up early two mornings in a row.

>> no problem. thanks for having me. >> and coming up, millennials may soon be -- >> don't give me the side eye. >> i was looking at andrew. >> that wasn't the side eye. that was the stink eye. >> they're going to be able to invest in all their favorite things. new ets expeern shl. those looking to hop on the bandwagon of the hottest companies among the younger generation. that is next. as we head to break, a look at yesterday's s&p 500 winners and losers. victoria stilwell, you appear on tv working with canines. are you a dog lover, watson? i do not own a dog. but i work with veterinarians.

how do you do that? i help them analyse over one hundred thousand pages of medical studies. that's great... 'cause they can't exactly tell us what's wrong with them. isn't that right, rusty? rusty. who is a good boy? who is a good boy? you are. yes, you are. watson, i think you need to work on your dog voice.

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welcome black to "squawk box." it's time now for the executive edge. same-day delivery start up set to admit a round of funding today led by an unlikely source. this coming from shipping giant u.p.s. this brings the company's total funding to $40 million. it's one of a dozen start-ups in the hotly contested same-day delivery battleground. the company's drivers fetch goods from brick and fmortar retailers to bring them to customers' homes. similar to what uber is doing with uber food.

amazon with their same day everything. i think this could end in tears. i could be wrong. >> the start-ups that do the logistics, it's so cost intensive. it's hard to think about doing that. >> i don't get how they're going to make money. uber is still losing money. five years in. they're five years in, and they're losing money on not just the chinese rides, supposedly. they're -- how can that be a business? i love uber. >> every time they raise money, they say we're raising money so we can lower prices. >> the sharing economy is surreal. somehow we're going to figure it out. people -- like, one person driving around in a car going places, there could be -- cars hold like five people. let's say you're delivering something from one place to

another. it's less than a truckload. it's always less than truckload. if you could somehow aggregate everyone that needs to go to the same place and just know that and stick those things -- the reason i'm saying this is my wife figured something out. getting things shipped around, there are services now where they put a destination and origination together and just throw it on there and it's half of what it costs. >> a service called cargo that does that. >> there's all this room that we're not using. the internet is going to allow us to not waste any of this stuff. >> and i will say, people who wouldn't have traditionally been air bnb home renters, they like the tax writeoff. use your car for work. then all the sudden you get another windfall. >> i'm with becky on this. people are either carriers of bedbugs or, you know, the person when you go to their house, they already got bedbugs. >> when you see some of the homes that are available -- >> who knows what those owners

do. the richer they are, the more crazy they might be. they might be even more demen d demented. >> i haven't done it yet, but i've seen pretty spectacular places on air bnb that i think about. >> so someone is going to have an orgy in your spectacular place. then you're going to be walking around in, you know, wearing gloves. i don't want other people -- you don't see this? >> you think that's happening every time? >> i think it's a possibility. >> every rental is going to turn into an or ggy. >> they see where joe kernen lives and they say there's only one thing that can happen there. i think this is a great time to move on. >> just one more. oh, yeah. did you see that outfit out in san francisco? had to ban alcohol and sex from the facility. it was happening constantly. on the staircases they were finding condoms. >> that great story that said they had to send out a memo

saying stop having sex in the stairwells. >> this is the millennial stuff again. crazy, experiential. >> let's not stereotype here. there are investors who are looking to ride the wave of millennial spending, and they may soon have their chance. at least two investment companies are building etfs designed to hold shares of companies sold to those born in the late 1980s and early 2000s. they're vying to be the first in this area. according to the global x filing, the etf will focus on companies involved in, what else, social media, digital media, technology, and both are waiting for s.e.c. approval. if you could choose the stocks, joe -- >> i'd short them both. can you borrow? >> if you had to choose the stocks that would go into those etf baskets, which ones would you choose? >> i'm not the person to do that.

i know like two of them. >> but you love to hate them so much. >> i do. i want to go out. that's what we don't understand. you're both experiential, and everything you experience, you want it to be on an electronic device. >> that's not true. >> i will square the circle for you. because there's so few experiences happening by day, since everyone is in their -- on their social media, they need to go out and have their experiential experiences and need to have it organized that way. >> it seems a little bit -- it seems mutually exclusive. >> also, what i will tell you is we frequently talk about millennials as teenagers or college students 18 to 26-year-olds. millennials are now up to age 35, 36. they're middle managers, people who are married, buying homes. they have their blank together. >> i'm not sure. they may keep waiting, moving that upper -- >> we've got to go. you guys can talk about all the experiential stuff.

>> you're with me, pal. sorry to say. >> i'm old? >> you're not a millennial. >> the music is playing. coming up when with e come back, the great unbundling. but we aren't talking about your cable tv package. an approach to discorrupting tv college experience and why they need netflix for higher education. 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 appointment reminders to your customers... ...and share promotions on social media? you know it! now i'm seeing dollar signs. you should probably get your eyes checked. good one babe. optometry humor. right now get up to $650 in credits to help you switch to at&t.

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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." u.s. equities looking down this morning. dow off about 134 points. all keying off of crude, which has also come down. in the meantime, we're going to talk education this morning.

the question being, should higher education take a hint from the media industry and unbundle the degree? it's a move aimed at trimming the rising cost of college and saving students from paying for channels they have no use for while allowing them to customize their education. at least that's the idea. joinings now is principle consultant for entangled solutions. he's co-heading a new group to make cutting the cord, if you will, a viable option for college students. good morning, michael. >> morning. good to be with you. >> thanks for joining us. help me with this. when it comes to education, i understand the concept is you're only going to be effectively buying the class that you want. we're seeing more and more people just try to do this, at least online and in other respects. is there something to be said about the college experience, which is to say it's not just about what happens in the class, but it actually is all of these other things that come with the

bundle? it's the relationships, the network that you develop, it's the idea of learning how to learn as opposed to learning what's in the class unto itself. >> yeah, for millions of students, absolutely. that's a huge part of the college experience. i don't think that'll go away any time soon. but we're also seeing that there's millions of students, whether they're adult learners or what we have traditionally thought of as traditional learners, who really do want a focus focused experience, get into the job market quicker. so we want to bring transparency to allow those options to flourish. >> to the degree you're able to succeed at this, how much can you bring the price point of a college education down? >> i think you could see a drop quite significant. in particular, you'll see students go for targeted experiences that cost a couple hundred dollars, maybe a few thousand in certain cases if they're ten-week boot camps, say, and allow that to get in the market faster. then they'll come back to those college experiences, if you

will, throughout their life as they continue to need to level up in their career. so i think the lifetime cost will be less, but it could still add up over time. >> michael, in the media context, we constantly talk about the winners and losers. certain networks are going to go out of business as a result of the unbundling of cable, if you will. at least that's the thought. then there's going to be a certain winner take all approach to this. who are the winners and losers in your approach? >> yeah, i think what you'll see happen in the market, broadly speaking, is that some of the middle tier colleges that don't have clear niches that they really fill in the economy, not strong alumni networks, those colleges i think will be most vulnerable to this trend in particular. i suspect you'll see that the elite colleges and universities will still be fine, right. and by elite, i mean really top 200, 300 institutions. i think those institutions will be just fine. it probably won't impact them so

much. >> do you see the possibility for elite institutions to even take on something like this? i mean, if you're an ivy institution, do you just say, we're not doing this? we're selling the whole package. farther down the chain, people think maybe competitively this is an opportunity to upsell you later. >> yeah, i think you're already seeing that. wharton is doing it with online courses for the mba program. you're also seeing m.i.t. make noise in this space as well. i think you'll see that. i think it'll be difficult candidly for most of those institutions to split across the bundle in their core, but certainly institutions are trying that. i think you'll see a couple succeed. >> okay, michael. fascinating conversation. we should continue it at some point. we'll leave it here for now. i'd love to continue talking about it. thanks. >> thank you. coming up, saudi's oil minister down playing the possibility of production cuts, saying flatly they will not

happen. that's why crude is trading lower again this morning. we're going to talk to steven shork about that up next. as we head to break, take a look at currencies. the british pound under pressure, below 1.40, currently at 1.39 on those brexit fears. the lowest level since 2009. "squawk box" will be right back.

monday, warren buffett tells you what he's telling berkshire investors. he's answering your questions at #askwarren, sharing his personal strategies and stocks on his radar with becky quick. >> i've still got money left to buy. i'll never go below 20 billion of cash. >> don't miss a minute.

"squawk box" monday, 6:00 a.m. eastern, cnbc. oil is under pressure this morning as saudi arabia ruled out production cuts and u.s. industry data showed a further build in crude stockpiles. saudi's oil minister said although production cuts won't happen, more countries would join a deal to freeze output. joining us to talk about this is steven short. good morning to you. futures are down, and of course they are keying off of what's happened to wti crude, which had gone up, and now has gone down. where do you see this going? >> right now, of course we have our peaks and valleys, but the overall trend for the last few years, it's going to continue, is for lower oil prices. so right now we're looking at oil flirting with the $30 level. we've gotten down on the last two contract expirations, close to within striking distance of $25 a bottle. now that we are in the maintenance season, certainly i

expect to see further weakness and oil once again test that $25 barrier. >> stephen, that's your immediate forecast. send us out 12 months, because most of the people we've had on the network recently have suggested we should be higher and potentially materially higher. is that right or wrong? >> i don't necessarily agree with that, andrew. what we saw coming out of the conferences down in houston last week with regard to the saudi comments, i said it in my note this morning to clients and i've been saying it for the past two years. if you are long oil, get it through your head. saudi arabia is not going to throw you a life preserver. they have no choice at this point. we are looking at the largest chasm within opec ever. why would saudi arabia throw iran a lifeline at this point? so that said, we juxtapose the geopolitics again with the economy, and what's going to happen, and what has been happening, this year, saudi and

iran post sanction oil coming to the market as far as the iranians, are going to be competing for market share. where is that market share? it is in asia. so what's happening in asia? china's past year exporting its deflation. japan is on the cusp of its fifth recession since 2008. so so you have the two heavy weights in a market that is clearly troubled from an economic standpoint. theoretically, andrew, should oil be back at 40, 45, $50 a barrel? absolutely. in the long run, that's where we'll settle. but in the short term, that is through the remainder of the year, this year, oil going to remain challenged. >> okay, stephen, we appreciate your perspective this morning. it's not a good one for those who are long. before we go to break, check out this buzzer beater from last night's college basketball game between -- this was florida and vanderbilt. i didn't even know they played.

i guess i'm screening the top 25. >> the s.e.c. >> yes, they are. josh henderson snagged a blocked shot with less than three seconds left on the clock and turned and launched an 80-foot rocket and nailed the shot at the halftime buzzer. vanderbilt won the game. maybe florida was ranked early, i don't remember. but the big game is tonight, guys. that is number five versus number one. >> that shot looked like it was in slow motion. >> it does. maybe we can see it one more time. but xavier-villanova, tonight in cincinnati. so we'll see what happened. it starts at 7:00. >> so, yes. >> it depends on whether -- if it's a blowout, either way. actually, if it's too close, i might not, because then i get nervous. coming up, breaking down the race for the white house. donald trump claiming victory in the nevada primary. democrats in south carolina will go to the polls on saturday, and

then, it's off to super tuesday. former senator george mitchell joins us next to talk presidential politics and the supreme court vacancy. g we'll s. through small things. big things. and spur of the moment things. sheraton. ♪ ngo to ziprecruiter.com and post your job to over one hundred of the web's leading job boards with a single click. then simply select the best candidates from one easy to review list. and now you can use zip recruiter for free. go to ziprecruiter.com. 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.

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donald trump wins three in a row. >> we love nevada. we love nevada. thank you. >> can ted cruz or marco rubio bring down the republican frontrunner? >> we weren't expected to win much, and now we're winning, winning, winning. >> the road to super tuesday straight ahead. >> u.s. stock futures in the red. investors back on the

battleground. we'll tackle stocks and currencies with rebecca patterson and break down crude with former saudi iran executive. and new this morning, the robots are coming. the latest invention from boston dynamics will keep you out as the second hour of "squawk box" begins right now. 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. becky quick has the day off. in studio, cnbc contributor rebecca patterson. we're going to get her thoughts on the global market straight ahead. before we do that, kayla's got your morning headlines. >> thank you, andrew. it says thank you, andrew, in the prompter. so thank you. >> you're very welcome. >> let's start off with the futures in this hour. we've been in negative territory throughout the morning, driven there by the steep decline in

oil. the s&p, if it opened right now, would open down 18 points. the dow down 150 points. the nasdaq down by 51. honeywell says it doesn't see regulatory hurdles for a deal with united technologies. honeywell suggests a merger would, in its words, maintain a strong investment grade rating and have higher free cash flow. utx first disclosed the merger merger talks late monday after david faber first reported that. and the company said a deal would face insurmountable regulatory obstacles. but that is something that the ceo gregory hayes reiterated on "squawk on the street" yesterday. lo lowe's reporting strong quarterly results. actually, it's down about 2% despite being un2% when those numbers first came out. those numbers on an adjusted basis, 59 cents a share from the bottom line. same store sales for the fourth quarter rose 5.5%. we'll have more on the numbers and the strength in the housing

market in just a bit. and more on the battle between apple and the u.s. government. the justice department is demanding the tech giant help unlock at least nine other iphones in addition to the phone used by one of the san bernardino shooters. apple's lawyer says the company is fighting the government's demands in at least seven of those cases. and it comes as reuters is reporting that apple is also demanding that the issue be taken up by congress. >> ted olson, the lawyer for apple, who was on "charlie rose" last night, talking about how the whole argument by james comey is completely bogus in part because there are so many of these other cases out there and the idea that this is not precedent setting and is really about this one single case he believes is completely untrue. >> and if there are phones, 175 in the district attorney of new york's office, how many are there in other offices as well that they'd just be chomping at the bit to unlock? >> joe is giving me a look.

>> is it champing or chomping? i don't even know what that was. >> which did i say? >> i think you did right in between, which is perfect. but privacy, security? privacy, security? i'm 100% for both. it's hard, andrew. >> it is. >> you know, there's black and white. what's in the middle? gray. see what i'm saying? see what i'm saying? >> yes. >> and they didn't put thanks, kayla here, either. >> we have a statesman at the table. >> we do. just off camera, we were already able to come to all kinds of compromises on this whole issue. it was very interesting. let me intro. thank you, kayla. thank you, andrew. i want to thank my wife.

>> you should thank your kids while you're at it. >> dustin hoffman forgot to thank ted cruz. thank you, kayla. donald trump winning big in nevada. trump received 46% of the caucus vote, while things seem to be tightening up between marco rubio and ted cruz. they're so far behind. it's amazing watching this. is it going to be someone that actually runs the table? incredible. can either of them take away trump's momentum going into super tuesday? joining us now is former u.s. senator and former ambassador, also former disney chairman and so many other titles in his storied career. leader george mitchell is here. we will get to the current collection. but we talked about what it means to be a majority leader during supreme court type things. and you did not filibuster. you chose not to filibuster clarence thomas. you mentioned that to me. and you hoped that that might

turn the tide of the downward spiral of partisanship and it didn't. it's only gotten worse. >> it did not. it was wishful thinking. for the past half century, the two parties have been locked in a downward spiral that gets worse each time over court nominations and specifically supreme court nominations. in 1991, i was the senate majority leader when president bush nominated clarence thomas. it was a hotly contested nomination. there were 48 votes against him. so it would have been very easy for us to organize a filibuster to prevent him from taking his seat. i did get a lot of pressure from outside groups, from some of my colleagues in the senate. but i decided, and i think most have agreed the democrats, that we ought to do the right thing. the president had been elected by all of the people. he was entitled to have a vote on his nominee. so the vote went forward and comments were seated by a vote of 52-48.

what we hope didn't happen. >> the reason we went back in time was because i said do you remember senator biden's speech in 1992, where he laid out all the reasons to not do it during an election year. and then we came to the conclusion that both sides, whenever it matters to them, are capable of sounding really sincere and really objective. but they both switch. every single time it happens. when the republicans are in a position to do it, they do it. democrats a lot of times will do it. so it's kind of politics. >> and it's degrating for the senate. it's one of the reasons why the congress has a 13% favorable rating right now. if you can make the argument that the president should not be able to nominate in his next year, what's to prevent them

from saying it shouldn't be next two years? >> they'll nominate him, but they also have the ability to not vote on it, too. another comment made was given all the unilateral things that the president has done, no one should be surprised at this point that certain elements of congress are going to say hey, look. we've been stomping our feet when you do things. now it's your turn to stomp your feet when we're going to do this. >> is it okay -- >> yes, you can. you already gave me an answer. >> it's a chicken and egg situation. obama's argument is the reason i have to do things unilaterally is that the congress won't do anything. and they've made it clear they'll oppose anything i say. >> and then what did i say? >> i don't remember. but i said obamacare was done through reconciliation without a single republican vote, 17% of the economy taken away without any bipartisanship. and then he came back and said the bush tax cuts were done through -- we're all the way

back to the bush tax cuts. it's a chicken and egg thing. >> yeah, both sides have used it. the country is pretty much split. i think the republicans don't fear any reprisal from their party on not only saying they'll defeat the nominee, but they won't even consider him. >> the president didn't fear any reprisal. how many democrats lost their seats in state legislatures, in governorships, in the house and senate given some of the president's actions? he threw all those guys under the bus. >> well, i don't agree with that analysis, but that's a separate history. look, the fundamental issue is the republicans say let the people decide. but in 2012, 66 million americans voted for barack obama. >> and you saw what happened in the midterms, too, senator. >> true, but that doesn't take away his four-year term. the people that voted for him thought they were getting a full vote. the republicans are now saying they really only get 3/4 of a

vote. >> there are some people that are calm thinkers that say look, the president knows how important this is. and he does. he understands the gravity of the situation. just for the good of the country, it might not be a bad idea to see if senator clinton is the next president, she can pick someone that is totally ideologically aligned with the base of the party next year. >> you think the republicans will say that person should be confirmed? >> depends on who's in. i don't know what happens there. but it's not a horrible idea to have some type of resolution, given that it's already february. >> no, it's equally not a horrible idea for the senate to do its duty and consider. >> senator, given how polarizing this particular conversation -- >> no, it's not. we're going to breakfast after this together. >> i was going to segue to the polarization of the election. which is to say, what do you make of it and what do you think is driving it?

>> the polarization -- >> we just talked about it. >> you look at bernie on one side, donald on the other side. >> i think it's a combination of factors. the public is always stressed when economic conditions are tough. we went through a hard time in '08 and '09 and the recovery is incomplete. the technological revolution through which the world is now passing in my judgment will be seen by future historians as significant as was the industrial revolution. but in and after the industrial revolution, the worst didn't happen. the jobs didn't go away, they were increased. the technological revolution, nobody has figured out how to replace the jobs of skilled workers. >> do you think ultimately everybody comes to the middle and you get what might be described as an establishment candidate, or do you think the populist candidate actually has a chance of winning? >> i think the middle is shrinking. i don't think it exists much more in either party.

i think it still will be decisive in the general election. i think both parties have got 40% to 45% of the vote. and there's a shrinking middle. but still, in a general election, i think a decisive middle man. >> do you think the pendulum is swinging too far, though? what do you think the result would be of either sanders of trump being elected on the economy? >> i don't think either candidate will be elected, frankly. i think that either candidate will go into the general election with very high negatives. trump has them now. clinton has them now. the republicans have done nothing in opposition to him. they would like him to be the nominee, but i guarantee you ten seconds after he's nominated, he'll be deluged by attacks. you're going to see i think this presidential campaign labor day the highest negatives of the two candidates that you've seen in the past and a very rough

campaign with a pretty equally divided country. >> is there a candidate who can grab on to the idea of this technological revolution and americans feeling a lot of angst around it, what does it mean for me, my family, my kids' future? i don't feel like any of the candidates own that spacing. i understand what we're going through and here's our vision on how to help you through it. do you think there's one that might be able to grab that more than the other? >> i don't think the candidates can because i don't think anyone has figured it out yet in our society. >> that doesn't stop candidates from saying anything. >> i think there are two great challenges. joe addressed one before. security versus individual liberty. given the ease with which weapons can be distributed and used, that's an enormous challenge. finding that balance. the other is the economic issue. when i was a kid growing up in a small town in maine, in our town we had two textile mills, a

factory that made shirts and a large repair yard. the typical family was a father who worked and supported the wife and children in a manual labor job, either a high school grad or not. that's gone. they're relatively fewer number in comparison to all of the working men, and how do we find replacements for those jobs? i don't think anybody's got the answer yet and i think that is the crucial answer for our economy and others in the next several decades. >> before you go, and we've got to go quickly on this, and it's not a quick issue. can you help us solve the am fbi fight? what should happen? >> i'm afraid i can't. my knowledge of technology is limited, but it's a very good example of the challenge that joe described, but i do think it is possible to find a middle ground. i don't agree that it is an impossible either this or that.

i think that the effort between apple and the government should be to figure out a way to find a middle ground to do it. >> okay. >> thank you, senator. >> thank you, joe. nice to see you again. >> ambassador. former disney chairman. i was thinking about that, too. when we think about all of us being affected by security, think of the number of people that have been screened in airports now. and how many are actually -- do you not find anything. how many are terrorists? probably in the billions now. and you're talking about one or 2%. one or two people out of the billion. and we all go through that inconvenience because of a few people. >> willingly. >> but that's not that much of an inconvenience. if you throw all privacy under the bus because of a few people, you know, i feel violated. >> joe, that's going to continue and it's going to get even worse. 7.5 billion people in the world

today, 1.5 billion are muslim. 10 billion people in 40 years, 3.5 billion muslim. and islam is going through huge internal conflict that is roiling all of these societies. it's an enormous issue and it takes i think the kind of restraint and thoughtfulness and i believe decisiveness that will be necessary for an american president in the next several decades. >> all right. senator, thank you. >> thank you. >> thank you, joe. we should tell you -- that's joseph. you're very polite today. and they're directing us to be so polite. strong earnings from home depot and lowe's. an unexpected rise in home resales that has people feeling pretty good about the housing market. and then former the saudi executive is here to talk about opec and the bickering over

prediction levels. "squawk" returns in just a moment. victoria stilwell, you appear on tv working with canines. are you a dog lover, watson? i do not own a dog. but i work with veterinarians. how do you do that? i help them analyse over one hundred thousand pages of medical studies. that's great... 'cause they can't exactly tell us what's wrong with them. isn't that right, rusty? rusty. who is a good boy? who is a good boy?

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the dow is slipping back into correction territory and it's lower in pre-market trading after tuesday's losses. but a spring surprise may be in the air. here to explain, david bianco,

head of u.s. strategy at deutsche bank. our guest host this morning is rebecca patterson, chief investment officer of besimer trust. we should say welcome again. >> and i'll say thank you. >> let's start by saying thank you and welcome to everybody. there's a feeling that the sentiment in the markets is just bad. >> sure. >> and there will be something this the market clings to for that negative sentiment. if it's not china, it will be oil. what are you watching and what's the risk that this sentiment just drags out for the year? >> i feel like the stock market and investors are, as we often say now, an echo chamber and the words are china, oil, dollar, credit, haven't you see credit markets? it's a mess there. people are worried about the risk of falling back into a recession, as if we're past due to fall back into troubles once

again. the point i've been making to investors is that there are big problems in the energy sector. and i think of what's happening in the energy sector as for the most part an equity extinction level event. there's going to be only a handful of major companies that survive this. a lot of the rest are going to find themselves owned by the bondholders when all is said and done. i don't think oil prices have a meaningful rebound any time soon. they might in 2017, but that might be probably not long enough for there not to be more damage to the energy equity. so our advice has long been stay away from energy, keep selling energy. monday was a good opportunity to exit. i think now is still a good opportunity to exit energy shares. but keep buying the rest of the s&p 500. and x energy, the s&p is 15 times this year's earnings. and interest rates are exceptionally low. >> why do you think that there will be such spectacular fallout in energy? it's a smaller percentage of the economy than housing.

most of the home builders are still around. there's not usually this great bottoming out despite recessions happening. >> to many people, it's a new world trying to understand how oil is hurting the stock market. i get calls still asking why don't we see better consumer spending and better profits. and the point i've long made is that the energy sector is just a much bigger part of the southbound than the u.s. economy and a lot of the capital expenditures were related to energy. what i would simply point out is that the energy sector is gone from more than 15% of the s&p earnings and market cap, the right now there will be no earnings contribution. it's about 6% of market cap. the energy sector is shrinking. it it will probably continue to shrink. as time goes on, i do think you'll see other sectors pick up the momentum. >> that's exactly what saudi arabia wants to happen. they want our energy sector to shrink. >> and it is. we look at the baker hughes rig count. the drilling rates are. co-ing down. u.s. production is starting to

roll over. a production freeze is not changing its time. it takes time for the u.s. supply to come down enough in inventories, which are still near 85-year highs. they need to come down and then we can see things bottom out. but the market is so extreme. short positions around oil are so extreme. forecasts have become so extreme that as we saw, it doesn't take much to get a short covering squeeze. we might not have seen the absolute bottom. this happened in 2008-2009. opec had a cut multiple times before oil found a bottom. so it takes months, if not quarters. >> we're going to have to talk to you about the dollar, the brexit fears, but we'll have to leave it here for now. david, we appreciate your time this morning. >> i hope you're right. >> i do, too. >> thank you, kayla. >> thank you, andrew. coming up, the rise in machines. it can pick up boxes, open doors, and stay balanced on rough terrain.

we're going to introduce you to the next generation of atlas after the break. you're not going to want to miss this. it's pretty extraordinary. "squawk" returns in just a moment. >> time now for today's aflac trivia question. what is the only film to have won an oscar in every nominated category? the answer when "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.

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now the answer to today's aflac trivia question. what is the only film to have won an oscar in every nominated category? "lord of the rings: the return of the king." check it out, it's a new version of atlas from boston dynamics and it's designed to operate outdoors and inside buildings. the company released this video yesterday on youtube atlas, it's specialized for mobile manipulation and uses censors in its body and legs to balance it. in its head it can assess the terrain and help with navigation and the manipulation of objects.

the latest version of atlas is about 5'9" and weighs about 180 pounds. >> it can open the door. it's amazing. >> 5'9", 180. he should probably lose a few. >> it's almost a sorkin. >> sorkin is a 6'2". but you're a 180, right? >> no, less. >> are you really? >> a little bit. >> that is amazing. i have hypothyroidism. unexplained weight gain. actually, it is explained. coming up, we'll talk more. stay with us.

♪ at the for letting me be myself ♪ >> good morning. welcome back to "squawk box." thank you for joining us on this wednesday morning. among the stories front and center we're watching right now, futures are sharply lower yet again. we are seeing the dow would open about 150 points to the downside. oil prices are weighing on

investor sentiment. major energy conference comments ruling out production cuts being the main catalyst for a second day in a row. wti below 31, down 3.5%. and at that same meeting, fed vice chairman stanley fisher saying he doesn't know what the central bank will decide to do about interest rates in march. he also says that while they are looking at negative interest rates, they are studying them. they have no plans as of yet to actually use them. and a hat trick for donald trump. a big win in nevada. it gives him another blast of momentum heading into super tuesday. marco rubio finished a distant second and ted cruz in third. and cruz and rubio together would still see their support being less than trump. interestingly. d > . >> it didn't take much to stem the rushing tide of mortgage

refinance. total mortgage application volume fell 4.3% for the week ending february 19th. it does include an adjustment for president's day. refi volume fell a steeper 8% for the week. why because after six straight weeks totaling nearly 40 basis rates, it increased to 3.85% from 3.83%. like i said, not a lot, but enough. the weekly declines in interest rates had been having an outsized effect on borrowers with larger loans. the bigger the loan, the more a br rower can save and then it worked the other way around as well, as even a tiny rate move higher sidelines them really fast. mortgage applications to purchase a home, they increased 2% from one week earlier and are now 27% higher than the same week one year ago.

and that does bode better for home sales coming up. andrew? >> okay. thank you for that. we're going to continue this conversation, talk a little bit more about what's going on in the housing market with this housing theme. real estate and rental marketplace zillow seeing u.s. home values up 4.2% in january. stan humphries is chief economist and head of analytics at zillow group. good morning to you. >> good morning, how are you? >> i'm good, stan. we have to have a conversation at some point, because i've looked up my property recently and i think you guys are way off on your analytics, but we can talk about that selfishly in just a bit. >> we'll take that offline. >> way or high? >> way too lope. it drops precipitously and i thought to myself, huh, what do they know that i don't know? >> it wouldn't surprise you to know that we don't get many complaints that it's too high. so you're in the vast majority of people who are concerned about it. >> we will have that conversation. tell us what's going on, because one of the things that's so

fascinating is we've seen prices skyrocket on the west coast but not on the east coast, at least according to some of your numbers recently. what's that about? >> yeah, we're seeing a real east-west split in the u.s. numbers right now, with the west coast markets of denver and seattle, san francisco, san diego, all just doing really well. the east coast markets a little bit slower, if you look at new york, washington, orlando, miami. those markets are all -- baltimore, philadelphia. you name it on the east coast. much slower home valuation, much more skewed towards being buyers markets, whereas the west coast markets are all very strong sellers markets. very little inventory. nationally about 8% less invento inventory. it's tough for buyers. >> i understand the supply/demand piece of it, but what else do you think is happening functionally that's making that happen? >> i think a big piece is how much inventory is out there. we've got less for sale inventory, so buyers are going to find about 8%, 9% less than

they did last year. if you look at new home sales, housing starts are at a three-month low right now. what builders are building typically are skewed to the high end and we're just not building enough overall housing units either on the rental or purchase side. >> in terms of the instability in the financial markets, do you think that's playing any role in what's happening with real estate? >> yeah, i think there is a feedback loop in there, particularly when you think about foreign buyers, where if you look at home values being up, and zillow's number is about 4%. but if you take in exchange rates for chinese buyers, they're up about 10%. for canadian buyers, they're up about 25%. >> does that explain the east coast piece of this? because traditionally some of those foreign buyers have spent more money on the east coast than the west coast. is that right? >> yes. if you look at chinese buyers, you have a lot of chinese buyers in new york. a lot of russian and eastern european buyers. in russia, with exchange rates factored in, home prices in the u.s. are about 30% higher than they were last year.

in brazil with the real, they're in big demand in florida. home prices were about 30% lower than they were last year. so i think that's a big factor in some of those markets. >> stan, hi. it's rebecca patterson. i was just wondering, you mention currencies and foreign buyers. what about the equity hit? do you see a feedback loop where equities influence housing? or does housing influence equities? or is it hard to distinguish? >> yeah, they're the wealth effect. which way it flows is a little bit harder to discern. generally -- i guess i don't see a tight correlation right now with what's happening there. i mean, certainly in the bay area, a lot of the wealth is being created there from start-ups and stock option, is fueling a lot of the housing market there. so i think that the fact that nasdaq is way off and a lot of the high fliers in the tech sector are, you know -- have seen some big declines in the stock prices. that will i think over the

next -- that feedback loop takes a little bit longer to execute. could see some problems a year or two out. >> before you go, real quick, in your new book -- i guess it's an updated book "zillow talk," you found something called the starbucks effect. what is that exactly? >> yeah, the starbucks effect, we looked at basically the impact that is associated of living within a quarter mile of a starbucks or a dunkin' donuts. we found that home prices tend to appreciate much more quickly within a quarter mile of a starbucks. they actually were about twice the rate of appreciation as homes that were further away from a starbucks. dunkin' donuts actually had a little bit more -- still had more positive effect than being further away from dunkin' doughnut, but not as strong as starbucks. all things being equal, if you can draft off of the smart people at starbucks when they figure out where to put in a location, it can help you in terms of finding a place with

rapid home value appreciation. >> whole foods, too. there's a whole foods effect. similar kind of thing? >> yeah. people were so interested in the starbucks chapter, that when we released the paperback in january of the book, we looked at whole foods and trader joe's. the effect for both of those brands are even more positive than starbucks. trader joe's and whole foods, within a mile of either of those locations, and your home values appreciated over the 17-year period we looked at, appreciated about twice the national average. and two years after whole foods opened up, your home value appreciation within a mile of that location was ten percentage points higher than the overall city average. >> i want you to know i live near a starbucks, dunkin' donuts, whole foods, and a trader joe's, which means i think that zillow's analytics on my property -- >> i think you're lobbying for what you want me to do for your zestimate. i'm going to take this into account right now. >> thank you, stan. >> you live near everything. >> it's because i live in the great city that is new york.

>> you live in new york on top of people. >> if you live in manhattan, you are close to everything. >> within block. >> you're close to 100 starbucks. >> yes, proudly. >> i'm very excited about this. >> you live on top of people. >> i do. on top. below. >> they're everywhere. >> they are everywhere. it's fantastic. >> as you progress in society, don't you want more -- less people per square mile? you want to all be just -- >> i have a backyard called central park. it's fantastic. yes. >> your kids have seen a tree finally? >> they see trees every day. they walk right outside, they see the trees. it's beautiful. embrace it. embrace it. look at it. >> i don't know, man. there is some good news, though. >> let's give you some good news. this is good news for all of us. we have some bacon news this morning. the u.s. department of agriculture reporting that nearly 62 pounds of pork bellies in cold storage last month. that is up 14% from the month before and 13% higher than a

year ago levels. bacon comes from the belly of the pig and increase in supplies means there could be less demand, less consumption, which could drive bacon prices lower. the price of bacon has been trending down the last four months, so though it's still slightly more expensive than a year ago. one of our producers is on a cleanse. can't have bacon. >> i would find a different cleanse. i think a bacon-friendly cleanse. >> jane has found a lot of bacon. bacon bowls. bacon ice cream. there are more dense cities, i think. >> dense than new york? >> hong kong. probably. probably tokyo. beijing maybe. >> mexico city? >> i don't know about mexico city. >> what about mumbai? >> short hills.

coming up, i'm not going to throw my town under the bus. who's going to blink first? iran wants to boost production while other opec nations are looking for a freeze. we're going to talk to a former saudi executive next. as we head to break, here's a look at oil prices. this morning still above 30. but not by much.

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welcome back to "squawk box" this morning. thank you for being here. we're thanking everybody. the theme of today's show. the futures right now are not thanking you, however, because they are red. dow looks like it would open about 150 points down. the s&p 500 off about 50 points. >> thank you, andrew. and i want to thank you for getting in early today. to do the hit on wex. >> we had a great conversation. >> what a panic. you're standing up to get here. >> thank you. >> crude prices are falling as much as 5% after comments from the saudi oil minister. dismissing any possibility of

production cuts while speaking at the ihs conference. >> many countries are going to deliver, even if they say they will cut production, they will not deliver. so there is no sense in wasting our time seeking production cuts. it will not happen. >> and joining us now from houston, which is ground zero in this country. quantum reservoir impact president and ceo, who is also the former head of reservoir management for nearly a decade. iraq comes on. they're doing more than ever. and the saudis are not happy about u.s. production. everything is working against finding a bottom for oil. is that a true analysis?

>> well, you summed it up extremely well. right now, you have an oversupply issue. unless that oversupply is cured, you're going to see very weak prices. in fact, you may even see prices below the $30 level, which is where it is right now. >> when the saudis are -- we've always heard they're trying to punish the horizontal drillers in the united states. but then we hear that these guys can stop and then start again without that much trouble. is it possible for the saudis to inflict lasting damage on domestic production here in the united states? >> well, you know, the damage is universal. i think everybody is hurting. to say that the damage is only on the shale producers, i think

it's a very narrow viewpoint. because globally, oil producers, including saudi arabia, are having adverse effect of revenues. there's significant revenues in the billions of dollars. both within opec and outside of opec. and of course the pain is being felt in the states, particularly in the state of texas nobody has a monopoly over pain for $30. if it drops to 20, it's going to be even worse. >> good morning. thank you for coming on. i'm curious your thoughts on how long you think saudi arabia can live through low prices. clearly, they have a lot more time on their hands than some of the other major producers. very low debt levels. obviously a cheap producer relative to some others. so how long can they play this game? and then secondly, with a change

of leadership within the kingdom and the relatively newer person leading energy policy there, how does that factor into the reaction function? could this new person look at oil differently, look at what it means for the economy and the society there differently than perhaps the last administration? >> well, these are very relevant points. and the first one, how long can they sustain this? i think for a long time. because their costs are lower than anybody else and they're probably under $10 for the majority of their production. so at $30, they're still very profitable. but you have to look at it in the larger scale, that their economies are still suffering. they have a budgetary deficit. so when you look at them, the financials, you have to look at the total country financials. and this is true. not only for saudi arabia, but

it's also true for the rest of opec. so the pain threshold depends not only on the lifting cost, but on the total cost to the economy. in the broader question, how long could this last? in my opinion, it could last anywhere from six months to 18 months. beyond 18 months, it would be very, very unlikely, in my opinion, because right now, everybody is hurting. it's just a matter of who's going to take the pain longer. at one point, as the minister says, the common sense has to come in. and both opec producers and non-opec producers have to form some sort of agreement to find a reasonable price. which by the way is not $30. it's way north of $30. >> thank you. appreciate it. meanwhile, america's first

shipment of liquefied natural gas will leave the gulf coast en route to brazil later today. jackie deangelis is live in cameron, louisiana, with more on a pretty historic moment. jackie? >> reporter: hi. good morning to you, kayla. that's exactly right. history is going to be made here later today. as shanir is prepping and loading this ship to take off, as soon as the weather permits. this is really interesting because it's the first shipment of commercial lng that will leave the lower 48 states and that is why this is historic. this has been a massive undertaking for shanir, a project in the works since 2010. lots of cap x going towards this. but also it's a ground breaking moment for the industry in general. which because of fracking has found so much natural gas supply. in fact, in storage, we hit records just this year. now, the first cargo here that we're looking at is going to set sail and take shape to brazil.

but remember, shanir is looking to export, not just to south america and other parts, but also to europe, also to the far east. there is a big international market for gnat gas that now the u.s. is going to be entering. one of the risks, one of the concerns, of course, is that this might drive prices up for natural gas, which as we know, prices have come down under that $2 mark, really a critical level. and the abundance of supply has made it very cheap for u.s. consumers. so the concern is that we may see prices rise as a result of the exports, as a result of competing in the global marketplace. but studies show that there is enough natural gas supply that it shouldn't really have a huge impact. you guys were just talking about crude oil with the embargo being lifted. this is something to consider when it comes to the entire energy industry. and certainly an issue that

we'll be watching super closely. back to you. >> jackie deangelis in cameron, louisiana. jackie, thanks. coming up, more on the markets from guest host rebecca patterson. futures right now still in the red. the dow would open down 150 points. "squawk box" will be right back. oh remotes, you've had it tough.

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♪ i'll be there for you >> been a long time. i don't know why we don't do that more. this is a big thank you. >> huge. evolved on your part and watched for at least part of the last hour. now we're bringing back a viewer favorite. the animal orchestra. it's our way of saying thank you and a special thank you to carl quintanil quintanilla, because that was always his favorite. let's take a look at the stocks to watch. lowe's, the world's second largest home improvement chain reported a better than expected rise in quarterly sales and forecast 2016 sales above estimates, as it benefits from an improving u.s. housing market. yahoo shareholder canyon capital urging the company to

quickly with the option of its core business. canyon cited concerns that the intimate giant's management team doesn't share the sense of urgency held by the board of directors. thank you. >> you're welcome. >> thank the animal orchestra. coming up, former texas congressman ron paul is our guest the top of the hour. and then a five-star fund manager who bets big on large caps. t.rowe fund manager manager is going to join us when we return. actions speak louder. something we'll show you. through small things. big things. and spur of the moment things. sheraton. ♪

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the race for the white house. huge win for donald trump in nevada last night. the gop nomination all but a done deal? we'll ask former republican congressman ron paul and tom ridge, the national co-chair of the kasich presidential campaign. >> follow the money. oil prices under pressure. global stocks selling off. but don't fear the chase. we'll get investment advice from a fund manager who is outperforming 99% of his peers. >> and ouch. we'll tell you why a well-known hotel chain is apologizing to an

nba star today. the final hour of "squawk box" begins right now. ♪ you got to know when to hold 'em ♪ ♪ know when to fold 'em ♪ >> live from new york city, this is "squawk box." welcome back. kayla is sitting in for becky today. the futures are down around 150 where they've been for most of the morning. a lot of it has to do with oil slumping again on comments from the saudi oil minister. don't expect cutbacks any time soon. down more than that earlier. results are just out from target. retail reported earnings of 1.52 a share.

revenue of 21.6 billion, also below wall street expectations. earnings per share guidance for the full year of 520 to 540. a share in the stock is now up more than 1%. >> here are the stories investors will be talking about. mortgage applications dropping more than 4% in the latest week as rates ticked just a bit higher. refinancing is taking a breather as well after multiple weeks of strong activity. apple plans to tell a federal judge that congress and not the courts should decide the outcome of its encryption fight with the government. the company will file legal papers this week to that effect. and fed vice chairman stanley fisher says he doesn't know what the central bank will decide to do about interest rates in march. speaking at an oil market conference in houston, fisher says it's possible the market selloff this year may not damage the economy and there are signs of a pickup in growth and wages. andrew. >> thank you for that. lowe's posting earnings in line with estimates and offering up a

full-year profit guidance. revenue slightly better than expected. same store sales rising more than a tenth of a percent. latest quarter beating the street. chesapeake energy sees lower capital spending this year. the natural gas producer also says it will sell more assets worth 500 million to a billion dollars. honeywell says it doesn't see regulatory hurdles for a deal with united technologies. they first disclosed those merger talks after faber first reported them and then said a deal would face insurmountable regulatory obstacles. honeywell says not true. kayla, back to you. >> the plot thickens there, andrew. now to political news. donald trump turning in a big win in nevada last night. john harwood joins us now from washington with a look at what that victory means for our campaign that has gained quite a bit of momentum. >> kayla, what it means is that republicans are waking up this morning to the growing

likelihood that donald trump will be their nominee in the 2016 presidential race. he won a smashing victory in iowa last night. take a look at these numbers. more than 20 points ahead of a second-place finisher, appears to be marco rubio. ted cruz just behind in third. but those really don't matter given the breadth and the depth of donald trump's victory. here's his victory speech last night. >> we won the evangelicals. we won with young. we won with old. we won with highly educated. we won with poorly educated. i love the poorly educated. we're the smartest people. we're the most loyal people. and you know what i really am happy about? i've been saying it for a long time. 46%, with the hispanics 46%. >> ted cruz last night came out and said you still have a majority of republicans who don't want donald trump to be the nominee.

he's going to try to consolidate them. so is marco rubio. so is john kasich. but there's not much time left for those candidates. the race guess to 11 states next tuesday. so-called super tuesday. if donald trump isn't stopped on super tuesday, not likely to be any stopping him for the republican nomination, guys. >> okay. there you have it. john harwood, thank you for joining us. right now, ron paul ran for president three times and is the host of the ron paul liberty report. good morning to you. >> good morning. >> we love the highly educated. we love the not so educated. i thought that was fascinating. what do you make of what's going on here with donald trump? >> i think everybody is scared and he comes across as being very positive that he has all the answers, and people believe him. i think there's a disconnect there, but nevertheless people are scared. i think that the people's concerns, which i've argued for a long time are much greater than the politicians in

washington will admit. and they go by markets and stock markets and things, yet they fail to look at what's really happening when you see 47 million people on food stamps. i mean, people talk about the oncoming recession. it's there for half of the population. i think he's connecting with that the same as bernie sanders has been able to tap into that. the unfortunate thing is that i don't hear any answers. i hear the ability of politicians to capitalize on the worries and the fears and the concerns, and they build on this. and they're able to use the blame game. blame somebody. it's the immigrants. it's those mexicans. we've got to make them pay for what we do for them. oh, it's the chinese's fault. we'll put a tax of 35%. it's nonsense. so i think they're tapping into the concerns, but i think they offer zero as far as solution to our very serious problems.

>> where do you think this election cycle is going to end? are we going to see donald trump as our president and would you support him if he was the nominee? >> no, i wouldn't support him at all. but i think the conventional wisdom is oh, it's over. we've had two caucuses and two primaries. that's four out of 50. i understand there will be a few more elections. so the conventional wisdom, as far as the momentum from history says yes, it looks like he very well could be. but this is a year of surprises. i wouldn't be surprised -- you know, every once in a while, trump's name pops up in legal reasons. hillary's name is involved in legal concerns. so major changes could still come about. but the momentum and the excitement for the trump campaign is pretty strong. but there's still a lot of people who are quite worried about this because i think his tone is something entirely different. he's tapping into a narrow -- a

large minority who is very, very annoyed, upset, and angry, and he's able to bring them together. but with no solutions whatsoever. >> you've never been an establishment guy, but do you think there's an establishment candidate that wins? who would you support? >> no one on the list now. i mean, they're all establishment for me just because trump's approach is different. i mean, he still establishes the same policies. when it comes to foreign policy, when it comes to the federal reserve. i mean, in some places, he's worse than the establishment because he loves torture. the wisdom is we should be moving away from that. he's very aggressive. he's the conventional wisdom that we have to rebuild our military. when did the military get torn down? we have the most powerful military in the history of the world. and nobody's going to invade us. and yet the conventional wisdom is we need to spend more money. so he's very, very conventional.

he has nothing new when it comes to a serious idea. >> we had george mitchell on earlier, who suggested that the president should try to nominate somebody to replace scalia, and that the senate should on the merits not politically at least try to entertain who that person would be without dismissing them out of hand. what do you think? >> i agree with your statement, but the odds of that happening are pretty slim. whether the shoe son the other foot. they obstruct. so it will be done politically. the president has the authority and responsibility to appoint somebody. the senate should assume this responsibility. as a matter of fact, i think long-term, mcconnell's approach probably isn't good politics. i don't want to see the next obama appointment, because it won't help liberty in any way

from my viewpoint. but i think mcconnell's approach, his close-mindedness. i don't like close-mindedness when it comes to monetary policy or appointment for supreme court justice. but he could put somebody up, have a debate. look how long they debated bourque and made sure he didn't get in. they can debate and bring it out if he's a bad candidate. it looks like they're afraid of the debate. the general rules are you appoint somebody and the senate has a debate. but politically, the constitution is not very practical for the politicians. >> congressman paul, thanks so much for being with us this morning. we're talking about the supreme court divide. the angst that's being tapped into on both sides of the aisle. what changes it? where is the inflection point? is there any catalyst, any outcome you can see that actually gets washington to work

more effectively again? >> not under today's conditions. you could change 150 congressmen in the right direction. you still wouldn't have the votes. even if you did have the votes, the people would rebel because the biggest problem we face is economic. whether it's foreign policy, economics is very much involved and our economy is a lot worse off. if you want to have a policy of austerity and return to the basis that in a free market and a free country markets are important for setting prices, certainly the price of money. but this whole idea of the federal reserve taking interest rates down to zero, and how much this hurts people, and if you go in and do this, either with congressional approval or with a president, the people will be furious. i mean, we shouldn't have 47 million people on food stamps, and we're in bankruptcy. and yet here, i mentioned before that we're increasing -- everybody wants to -- especially

republicans want to increase military spending. nobody's going to cut. so you're not going to see this resolve. you're going to see trumpism versus sandersism, and there's not a whole lot different. they're more government. sanders wants to make the government much bigger and tax people when there's no growth out there. trump wants to come along and he doesn't want to make the government bigger, he wants to become the government, the sole person that runs the government. so that's not very good options. >> congressman, your son ran into the vortex of the paris attacks and the san bernardino attacks in terms of privacy. that stance became less popular because of events, but now we're back in it again with apple and the san bernardino iphone situation. it seems like it's going back the other way. it almost seems popular again to say we need to protect our privacy. and there are people coming to tim cook's defense.

where are you on this in terms of apple and whether they should design some encryption to hack their own phones? >> well, i don't take a strong position on apple, but i believe apple has taken the right position on the constitution. the argument is for national security and our safety, we have to give up a little bit of our liberties and i don't believe that is true at all. i don't think you ever have to. they say there should be a balance. no, i think there should always be a bias. if there's any question at all, the purpose of government is to protect liberty, not to sort all these things out. i think this is just another excuse, when you look at it in the scheme of things, how dangerous is the world going to become if the government isn't capable of mandating and forcing a company to make something that they don't have. so i think that's a sacrifice of liberty. what is to be gained is sort of like, how much have we gained since 9/11 with the patriot act and the nsa?

the fbi admits it's never stopped anything. but look at all the liberties we have sacrificed. we have become zombies to just march around and do whatever the government -- there's no financial privacy. no personal privacy. what apple is doing is what the government should be doing, and that's protecting our liberty. i think this is natural and good. encryption is -- you know, a form of protecting ourselves against the government. just as the second amendment was designed to protect us against a t tyranical government. people are scares saying oh, no, they're coming to kill us. but if you look at the last 15 or 20 years of where the real danger is and what's happened overseas and the danger we have here versus the conflicts, there is no comparison whatsoever.

>> right. >> i've thought about it in terms of the second amendment, too, because all the people that aren't terrorists that deserve privacy, so you're going to sacrifice their privacy. same way with law-abiding citizens with guns. you've got criminals that don't register their guns anyway and mentally deranged people and take all the normal people, the 300 million guns that are out there that are in someone's closet or whatever, suddenly they're the ones that are the object of all the disdain. so it's kind of the same issue. it's all about liberty. >> yeah. you've said that better than i did. >> thank you, congressman. that's high praise. i appreciate it. former congressman ron paul. thanks. jeff lacquer speaking in baltimore. he said there's still a case for raising interest rates further. he said the fed's analysis shows signs of stabilization. and that bolsters the case for

raising rates. he also said successive rounds of quantitative easing have had little or no tangible effect on the economy. i still want to go back to the stan fisher comment, where he said that. we're still trying to figure this out as we go along. i think it's an allegory for you should just run that on a loop. >> i have to defend fisher. i'm sorry. >> i'm not talking about fisher. i'm talking about the fed in general. >> i think talking to the bank saying if at some point in the future we had to go there, we needed negative rates, how would it affect you? understanding the implications of it is good research, right? you wouldn't want them to pull a japan and announce it without telling anyone in advance. >> maybe we should just take it off the table now that we know it's self-defeating. >> it didn't work in japan, but it has worked pretty well in europe so far, right? you haven't seen -- i mean, european banks have gone down in

recent weeks, butt i think that is les about interest rates. you want the feed to do homework. you don't want them to spring something on us. >> it's a novel idea. >> i think research is a good thing. in this current environment of anxiety, it added to the anxiety. >> as the banks are doing their research, then it is causing even more selling in the financial institutions, which is one of the concerns in the market right now. >> right. for a couple of weeks. and we don't want to ignore what's going on in the markets, but we also don't want to overreact to one day or even one week. i think this is the hardest market i have had the opportunity to live through. in '08-'09, it was awful, but it was clearly a recession, clearly a crisis, and you had a clear feedback loop. today you've got a manufacturing recession, an earnings recession. housing is doing great. not good. great. autos are doing very well. so what is it? is it bad or is it good? that's what the fed is trying to

figure out. it's not easy. >> i like your outlook. the opportunity to live through an investment. >> andrew, think about what your house would be worth -- >> if zillow got it right. >> if people were paying you to hold that mortgage. that makes a lot of sense to me. instead of you paying interest on the mortgage, they're paying you -- >> isn't that brilliant? >> see, i don't need to do a lot of research on that to realize maybe that's not the best way to set of economics. we both like that. >> going to check every month. >> could double our housing values. then we could flip them. >> thank you for your sense of humor, joe. thank you. >> are you long on the thai bot? >> i'm still short the euro and the yen. >> no position on the doll? >> no position on any asian currencies right now. >> just asking. not short or long? when we come back, tricks of the trade will be joined by t. rowe price's big-time money

manager jeff rottinghaus. his fund has outperformed 99% of its peers in the past year and he'll tell us where you should be putting your money. oh remotes, you've had it tough.

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our next guest is a manager with an impressive track record. his fund at t. rowe price is ranked five stars and has outperformed 99% of its peers over the past year. jeff rottinghaus joins us now from t. rowe price. he also manages the firm's price, growth, and income fund. and we've been talking about all of the dire things in the economy and trying to find some green chutes here, so can you give us something good beyond the housing market to talk about? >> well, actually, we are fairly cautious on the market. we don't see a lot of earnings growth or free cash flow growth into the future. we have a pretty cautious view on the market. on the positive side, maybe we could look at what we have in the second half of the year, where we lapse some of the difficult comps on the commodity and energy side. so comps do ease in the second half of the year, but right now, fundamentals don't look real strong for us. >> how long should we be cautious for? because the volatility hurts.

it doesn't feel good when you wake up in the morning and you see what's happening overnight, overseas. but is this something that if you can run for cover for two quarters you'll be okay? >> i'm not sure. right now, with companies, order books are soft. they started to decline second half of '14 and we were kind of sluggish in '15. in most cases, they're not getting a lot worse, but they're still sluggish. the central bank has pulled back some of the stimulus measures here. the united states, which we think helped growth 12, 13, and 14. so, you know, we're watching. we're talking to management. we're trying to understand what's going on in the macroeconomic side. but from the bottom stock picking perspective, we don't see the growth in earnings or free cash flow, so we remain cautious right now. >> hey, jeff. rebecca patterson, good morning. >> good morning. >> i was just wondering, when i'm talking to my portfolio

managers and their teams, especially in the last few weeks, we were seeing some interesting valuations on some interesting companies that have very strong balance sheets that aren't going to be as vulnerable to a possible continuation in the oil selloff. are there certain sectors where you're seeing more value? >> sure. back in the latter half of '14, we rotated our portfolio toward companies that we thought had good recurring revenue streams. we definitely took advantage of that. certainly companies that are returning cash back to shareholders, whether that be through dividends or buybacks. as we move through to calendar 2015, there were some cyclical areas of the markets that were really beaten up. recently we added a railroad in kansas city southern the back half of 2015, where we thought, you know, the stock was down materially from its high. great foot print in the united

states. we thought that company was pricing in what we thought was a pretty dire scenario within the macroeconomy. >> jeff, we're going to keep watching the markets, but we appreciate your insight and perspective this morning. >> thank you. >> jeff rottinghaus from t. rowe price. >> thank you. and thank you, kayla. coming up, we'll tell you why the well-known hotel chain is apologizing to an nba star. first, though, as we head to a break, take a look at where oil is trading at this hour. wti crude right around 30 buck. we'll be right back in just a moment.

coming up, fed speak. just three weeks until the next meeting, but policymakers are already playing ball. hear what they have to say about the economy when "squawk box" comes right back.

♪ uptown funk gonna give it to you ♪ >> welcome back to "squawk box." here's what's making headlines this morning. oil prices are falling below -- almost below 30. i don't know what 30 we're talking about. we must be talking about brent. it is below 33. wti was almost below 30. it rolled recently and we got a dplar or two of upside on thaol. we even had someone talking about the low 20s earlier today. among the reasons saudi arabia is ruling out production cuts.

a weekly report showed crude stockpiles hit another record high. check out the pound. the british currency dropping below 140 for the first time. i'm headed over. amid concerns about a possible brexit. 90% correlated with oil and they're down. the dow down almost 18 on the s&p and almost 50 points on the nasdaq. >> among today's stocks to watch with target, earnings two cents short of estimates. same store sales rising 1.9% better than expected. the retailer's four-year profit guidance is up beat. steve liesman is here. he's been tracking all of it and joins us now with some of the

highlights. jeff lacker says he sees nothing that indicates an imminent recession. and the well phone fed hock says there's a chance for interest rates. a few weeks out, another top fed official said last night it's still too early to say whether financial market volatility will slow the u.s. or the global economy. so fed vice chair stan fisher speaking in houston says it's still too early to say what impact that volatility will have on the fed when it meets. but he did sound skeptical it would have much effect at all. >> we have seen similar periods of volatility in recent years, including in the second half of 2011, that have left very little visible imprint on the economy and it's still early to judge the ramifications of the increased market volatility.

>> fischer sounds like a guy that would like to continue a march towards a normal fed rate, but he's also going to be cautious. he's been a central banker for a long time and will probably not support hikes until it's clear whether the recent market selloff creates an economic downdraft or is presciently signaling one. at the moment, the cnbc rapid update continues to signal a bounceback in the first quarter from the weak fourth quarter. here's our rapid update that we put together. that's off that weak fourth quarter 0.3%, likely to be restated. let me show you who's aware of that. the fed is the high in our survey of 2.6%. morgan stanley came way up, but still on the low side. guys, i don't think -- fischer is not getting the market back

on sides for a rate hike. he's not saying look, you guys are low. you're misunderestimating the federal reserve. it still signals to me that march is a very long way to go. it would need to be very strong, have a big decline for the fed to move. but i still think the market is underestimating the extent to which the fed could move if this bounceback happens perhaps in june. >> thank you, steve. >> you know, the same argument used to be that the sooner they do it, the less quickly they'll have to -- >> yeah. that's an argument stan makes repeatedly. >> i would think that would mean why not go another quarter in march? >> pretty much because i think they're concerned about this volatility. they're concerned that the stock market knows something. >> it's not manmade. >> they're concerned the stock market either knows something they don't know or, two, that the market downdraft itself creates an economic or a dismal

economic reality. >> we saw that yesterday. consumer confidence is still at a very high level, but we did see a decline in the last month and it appeared tied, at least in part, to the stock market. if you see that continue, there's a greater risk that it feeds into growth. >> what if boris johnson really starts making a compelling case and the euro starts going down and they're not going to be able to raise it again because of a brexit. we were worried about a grexit. what about a brexit? >> march 10th is a big day. we're going to have the ecb come forward with a new round of qe. that could indeed spark a rally in the dollar. you could imagine you could get back to stronger dollar, weaker euro in the context of what draghi may do. >> if you have more than a single mandate, then you have infinity mandates. that's the problem. >> this is the law, joe. >> all these understood mandates. a brexit is another mandate to

worry about. market volatility is something they should be considering. >> look, you're a policymaker. rebecca is smiling like, all right. you're trying to bring all these factors in. it's a $17 trillion u.s. economy. i don't know what the number is, that's 20% of what the global economy is. somebody do the math for me. it's a very complicated world. you bring in all factors. you don't decide not to look at that. >> about a quarter point to a half. up to a half from zero. >> weren't you one of the guys, joe, who was blaming the market selloff on the fed? >> no, i was not. >> you think it's fine -- >> no, i think it's coinciden l coincidental. >> you're raising a point here which is that the fed is in a political hot seat. >> you had so many people say -- >> did you see our coverage of jeffrey dunlap?

i'm sorry, i shouldn't put that on you. there were people out there who were saying that. >> the fed has two mandates, but there are dozens and dozens of inputs that can affect those. you can't ignore the inputs. >> don't enable them any more than they are in your portion as a private sector person. please. >> the fed is doing more than congress right now to affect our economy. so we have to care what they're thinking. >> thank god congress isn't allowing more to be done. >> i don't know. a little stimulus right now would help main street, wouldn't it? >> what did we do with a trillion? >> we have stimulus right now. we actually have fiscal easing this year. in an election year. >> how many shovel ready projects? >> we maybe kept the economy from falling a lot more than it did, but we don't have time to debate that, joe. >> was it the fed or the stimulus? >> a place and a roll -- do you know that your stimulus was 1/3 tax cuts? this whole big thing. it was 1/3 tax cuts. the problem that the conservative economists point

out, they weren't permanent tax cuts. there was actually a study -- i never had a chance to talk about this. there was a study that showed because of the stimulus program, federal spending on highways went up by 20%. however, it was exactly offset by a 20% decline in state spending on roads. so the effect was neutral. if you can imagine what would have happened had that 20% decline by the states not been offset. >> do you get these on your e-mail? >> which ones? >> just read it. look over here on my screen. i want to say thanks, joe. from who? >> who's it from? michelle obama. >> damn straight. right there. i want to say thanks, joe. >> you contributed to her campaign? how did you get on her e-mail list? >> this is not a personal -- darn it. >> it's thank you wednesday. >> thank you. >> i want to say everything you do to help barack. >> i'm going to teach this

morning, a visiting fellow. thank you for having me. we've had a lot of fun. >> down in the 30s, right? >> the students will make up for it. >> i get a lot of sierra club stuff, too. >> it's a joke, some would say. >> we've got a programming note. given the conversation we had around this table. james bullard is going to be at this table. tomorrow at 7:00 a.m. you can talk about all that. since it is thank you wednesday, we will thank him in advance for the conversation. when we come back, trump scoring a big win in the nevada caucus and the gop field is looking ahead to super tuesday in less than a week. we'll talk to former homeland security secretary and kasich supporter tom ridge on the other side of this break.

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donald trump winning big in nevada's gop caucus. it's his third consecutive win amid a narrowing field. joining us is tom ridge, former governor of pennsylvania and homeland security secretary. also the national co-chair of the kasich presidential campaign. can you paint some type of path to the nomination for your guy at this point? or is it becoming less likely every day, governor?

>> first of all, thank you for letting me join you on thank you wednesday. let me paint the path. as of today, we have 5% of the delegates that have been selected. so we've got a long way to go. secondly, probably no more than 30% to 35% of eligible registered republicans have voted in the first four states. so there's a lot of ground out there for any candidate to secure on the way to cleveland, ohio. here's the path. we're going to do very well on super tuesday in the s.e.c. we're going to win ohio. in some of those purple states, we're going to see the value of having a proven leader with a consistent conservative record shine. so we're going to do quite well in the weeks ahead. and at the end of the day, i hope that we can convince those, wherever the establishment is, that the best way to defend donald trump is to have a proven report of consistent

conservative leadership against somebody who talks about being a leader, who many question as being both a conservative and a republican. we'll narrow it down to two and take our chances. >> a proven conservative a couple of times. almost messaging, governor, because that's the problem, i think. the reason that governor kasich will do well in the purple states is because he appeals to a lot of the blue in the purple. the gop does not seem to be a party right now that's moving towards moderation in terms of where the geographic center is, any more than the democratic party seems to be moving to a geographic center of more moderation. >> listen, i think you raised a valid point. many, many people are talking about it. but as the field has narrowed and we get into the much closer to the convention, a much more serious scrutiny of these individual candidates, you're

down to five. there's only one individual that actually has a record of experience. and he's hardly an establishment candidate. he's been running the state of ohio for six years. he was in washington a long time ago. as people narrow, sharpen their focus on who do they want sitting in the oval office, who do they want dealing as commander in chief? i guess this is a great program to suggest the analogy. you talk about business every day. if you're going look at that field of candidates to hire a ceo for a major enterprise, would you focus in on somebody that's been bankrupt four times and started a couple of other businesses and tailed in the process and has slogan answers but can't tell you how he's going to grow the business? i don't think you would. i think you'd probably reach out and find somebody that's had a demonstrated ka pcapacity to le to govern, and to grow your business and i think that's where john prevails.

>> obviously, you know it wasn't personal bankruptcy. >>. >> i understand that. >> take any private equity company -- that gets taken in and out of bankruptcy all the time. >> that's exactly right. >> you might be making a case for hillary clinton. if you're talking about experience. >> i'm fascinated by your rush to defend donald trump. >> that's untrue. >> if you had been responsible for overseeing an organization, the organization goes bankrupt -- >> let me ask you this -- >> how many people do you know have had four? >> let me ask you this. governor kasich finished below goch bush in south carolina. and had low single digits in nevada. people have praised governor

bush for having the class to narrow the field when he saw it wasn't going to happen for him. so how do you defend someone that had a lower number in south carolina and what did he have, 5% in nevada? i mean, that doesn't seem to be -- go ahead. >> i remain fascinated by the notion that the media in general have decided with 5% of the delegates selected, that the most qualified candidate remaining in the race should drop out so that we can narrow the race. listen, i understand the phenomenon of donald trump. and it's something that i think everybody understands and respects. but i think you have to let the process play out before we decide who the victors are. ultimately, the republicans are beginning to make that decision and we still have a long way to go to cleveland. >> governor, you said you respect it? >> i beg your pardon? >> you said donald trump -- you said you understood and respected --

>> i respect the fact that he has gathered -- i don't -- i look at his -- i don't think he's a serious candidate. i don't think building walls solves the immigration problem. i don't think 45% tariffs -- i mean, tell everybody going into home depot or wal-mart that anything you get from japan or mexico, it used to cost $100, but now you pay $145. i don't think there's a serious solution in all that rhetoric that he's thrown out there over the past couple of months. you have to respect the fact that he's tapped into the angst and the frustration. that i get. >> 35% to 45% of the republicans that are in the states where he's won those numbers. >> those are 35% of the folks who show up to vote. >> you do that at your own peril. to immediately dismiss the 45% of the republicans in nevada that must be brain dead, i guess. >> well, let me tell you this. go look at the number of registered republicans that

voted in the caucus and you did not have 45% of the entire registered group. look, it is something -- it is a phenomenon that everybody's talking about. it's unprecedented. i get it. but being my commander in chief and being president of the united states is pretty serious business. i think america will find somebody who's got the resolution. >> it's been nonstop since the beginning of the whole campaign. that something's gotta give eventually. but governor, you're even hearing that the establishment media supposedly is picking rubio as the non-trump candidate. >> interesting. >> and the there's a question now as to whether he ever wins a state. ever wins any state. and the idea that kasich is ever going to win -- i think he's down in ohio at this point. he's even behind by five percentage points in ohio. >> i think it's a good comment. he's down by 5% in the latest poll, but when you get to election day in ohio, there's only one candidate that cut

taxes in ohio, built economic framework to create 300,000, 400,000 jobs. it took a several billion-dollar deficit and turned it into a surplus. i think i think they'll pay a lot more attention to records than rhetoric. >> before you go, how do we -- how d we solve the apple/fbi situation? >> that's a great question. i think you would take a look at what mr. cook said the other day, much more conciliatory approach. there's a means to do this, and i think this is the ultimate time for the public and private sector to get together to solve that problem so we can assure the folks they have some privacy. that's very important to us. i think there's a solution. i think we ought to tone down the rhetoric and get some thoughtful people in the room including mr. cook and others and get a solution. it's of the utmost interest to us, not only silicon valley but as citizens of the country and

corporate citizens, i believe they can tone down the rhetoric, get into a room, and figure it out. >> amen to that. >> governor, thank you. >> always a pleasure. >> you're very welcome. >> thanks for your service in that regard with regard to security. paramount. >> thanks. when we return, jim cramer joins us in the new york stock exchange room. back in a minute. . . that's wonderful but... i can tailor a curriculum for each student by cross-referencing aptitude, development, geography... sorry to interrupt. but i just have one question: how do i keep them quiet? (pause) watson? there is no known solution.

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let's get down to the new york stock exchange and jim cramer joins us now. i'm just going to play a loop. i don't they'rer this one of us needs to be here to explain it. here we go again. >> look. the whole saudi/russian thing, it was a bit of a hoax. they were presuming iran would keep its production down. it was kind of ridiculous. also the saudi arabia minister was making it clear the u.s. has to start folding. we absolutely haven't. very little is being produced in this country or continent. why should they go back to 26. >> have you factored in the possibilities of the euro

starting to go down? boris, people love that guy. i don't know if he swings the whole uk to a breks it, but i don't know wait would do. >> the cyclical stocks were hot yesterday. i kind of liked the idea the dollar had peaked. it clearly has not. they want very much for the dow to go stronger. so we're kind of caught. remember, lower oil is good except for the banks and exploration companies. >> i keep saying that. i keep saying that. >> don't lose sight of it. everybody wants you to. for the airlines, retailers, so let's not loods sight of the

fact there's good and bad. >> there's good and bad in the world. that's true. and we've been thanking everyone for coming on. thank you for taking us out to break. >> i'm going try. thank you. coming up, retail stocks and brokers when we come back. thank you. need to hire fast?

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sports news this morning. cleveland point guard kyrie irving left sunday afternoon's game after nine minutes due to bites from bed bugs. irving said he was bit bin the bugs the night before at an airbnb -- no, it wasn't -- at a team hotel. they ended up sleeping on the couch, leaving him with a tight back. he stayed at the historic skir vin hotel in oklahoma city. the chain is now apologizing and says -- >> if you google bed bugs, new york hotels, it's almost every hotel. >> that's what i mean. >> at one point or another. >> high end, low end.

>> thank you. >> thank all of you. >> thank you very much. >> i love it. >> i want to thank the highly educated and we want to shank you. >> thank you. >> "squawk on the street" begins right now. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla along with david faber and jim cramer. we get earnings from target, lowe's, the ten-year yield has softens after a tough 24 hours. our roadmap begins with crude fallingga