anyway, the gop candidates were totally in attack mode. the target, donald trump. it's friday, february 26th, 2016, and "squawk box" begins right now. live from new york, where business never sleeps, this is "squawk box." that was a rockette move. >> i think i pulled something. >> good morning and welcome to "squawk box" here on cnbc. andrew and becky are off today. let's start with the markets. u.s. equity futures are looking positive this morning, adding to yesterday's gains. the dow, if it opened now, would be up by 133 points. the s&p by 17 points. the nasdaq by nearly 46 points. that's after yesterday's 212-point gain for the dow. the index is now 9% off its most recent 52-week high.

down only 9% since the 52-week high. overseas in asia, the shanghai composite gains 1% after yesterday's deep selloff. the hang seng rallying 2.5%. japan's nikkei closing marginally higher. shenzhen was marginally lower. checking the european equity markets so far this morning. as they trade, they're higher by at least 1.5% across the board. germany higher by more than 2%. looking good over there. the price of crude oil, you see this? approaching $34 a bar reversal. brent above $36 a barrel. crude is higher by another 68 cents. 33.76 for wti. 36.05 for brent. >> yesterday you were saying it's down 20 cents. >> right. so oil and china were down, yet the stock market was up. >> the day before it had rebounded from threatening to go

below 30. yesterday, down 20 cents. we got 200 again yesterday. that was weird. during halftime, it was unclear whether we were going to be up. >> yeah, it was like an afternoon ramp-up. >> it really was. >> sorry. >> you okay? >> not really. pulled a groin muscle. it's like on fire right now. >> i have some aleve. >> i can feel every heartbeat. no, i'm fine. >> icy hot? >> you know, that's how i typically describe you. icy hot. right? all right. it's friday. >> i'll take that as a compliment. >> it is a compliment. >> all right. thanks. >> icy hot, i'm telling you. >> among this morning's top stories, g-20 finance ministers are gathering for a summit in shanghai. overnight, the head of the pboc saying they have tools to deal with potential downside risks to china's economy.

meanwhile, imf chief christine lagarde warning large capital outflows from china pose risks to the global economy. back here in the u.s., a couple data points to watch today. second read on fourth quarter gdp out at 8:30 a.m. eastern. growth expected to be revised lower from 0.7% to 0.4%, which would mean the fed hiked rates in december when the economy was still slowing down. also, look for trade deficit numbers as well as january personal income and spending. in political news, a republican slug fest. the gloves coming off last night during a debate in houston. ted cruz and marco rubio attacking gop presidential front runner donald trump. >> here's a guy that buys a house for $179,000. he sells it to a lobbyist who's probably here for $380,000 and then legislation is passed. you tell me about this guy. >> here's a guy that inherited $200 million. if he hadn't, you know where donald trump would be right now?

selling watches in manhattan. >> i really find it amazing that donald believes that he is the one who discovered the issue of illegal immigration. i can tell you when i ran for senate here in the state of texas, i ran promising to lead the fight against amnesty, promising to fight to build a wall, and in 2013, when i was leading the fight against the gang of eight amnesty bill, where was donald? he was firing dennis rodman on "celebrity apprentice." >> it was the final republican debate before next week's super tuesday contests. we'll have much more from the campaign trail in about 15 minutes. fireworks from the beginning last night. >> but they've waited so long in the process to finally go after trump. i don't know what took them so long. >> you could see a lot of it was prepared testimony too, which kind of irritates me. when you can see they had ready to pull out. cruz is the master of that. even at our debate. he was ready with that mainstream media line that he

gave. he had the -- and when he delivers it, i saw someone yesterday say cruz needs to just talk without the faux emoting. just talk like you're natural. he looks like he's a shakespearean actor, and not a good one. it was pt barnham, bearded ladies, and dancing bears or something like that. did you see that quote? it was so prepared. almost scripted. >> somebody had written it for him. >> the time has passed for pt barnham, circus clowns, and dancing bears. he usually only gets a tepid laugh. >> did you have the feels it was like rubio's last stand, like he was unloading everything? >> it's everybody's last stand. if they don't get through super tuesday -- >> he looked like he had to pull out everything he had to try and attack trump. whether it worked at all in the polls remains to be seen.

however, he came with everything he had. >> well, yeah, the original point was they finally put their targets on him. >> and the polls came out too. he's down in florida double digits. cruz is up in texas a little bit. kasich is close in ohio, but all those guys, that's their last stand. >> you got to win your home state. >> favorite son type stuff. but it's surreal to watch. it really is. it's surreal. i was kidding wilfred, i just fall back on how crazy politics are around the rest of the world. makes me feel a little better. >> oh, for sure. wilfred has nothing to talk about. i've been watching the u.k. parliament for the last week bauds of this whole brexit thing. they yell and scream at each other in a way that would never -- they make us look like, you know, skcub scouts over her. >> it's a spectacle. on the other side, you have a raving, like, dishevelled socialist that looks like the ghost of lenin coming back and raving about things.

then you have bernie sanders. >> that was funny. >> funny guy. >> i borrowed that. anyway, we're going to go -- you know what that's from? >> casino. >> funny how? funny ha-ha? then poor spider gets shot in the foot. he made it big in "sopranos." >> tequila commercials. >> you're with me. it's nice to have -- i like that. give me a high five. >> i know how you roll. >> apple striking back in court against the u.s. government demand it help unlocked a encrypted iphone belonging to one of the san bernardino shooters. eamon javers joins us with more. both sides seem like they're digging in a little bit. i'll tell you, it's not an easy issue when you see jim comey, who i have so much respect for, say this is the toughest problem

he's ever seen government try to figure out. so that shows you what we're dealing with here. it's not clear. >> yeah, that's right, joe. comey went out of his way yesterday not to attack apple. there was one moment in his congressional testimony on capitol hill when the fbi director was offered it opportunity by one of the members of congress to repeat the allegation that the government had made last week in which they said apple's defense here is all about its business interests, not necessarily fundamental interests. he didn't go there. he didn't follow up on that. but apple firing back yesterday. this was its motion to vacate. here's what they said. no court has ever authorized what the government now seeks. no law supports such unlimited and sweeping use of the judicial process and the constitution forbids it. apple making a constitutional argument, citing its first amendment and fifth amendment rights in this case. clearly, setting up a battle that everybody seems to expect is going to the supreme court. let me bring you a little bit of what fbi director comey said

yesterday because as we're talking about, he was very careful here to present himself as a balanced figure in this debate, not teeing off after apple. here's what comey had to say just yesterday. >> when i hear corporations saying we're going to take you to a world where no one can look at your stuff, part of me thinks, that's great, i don't want anybody looking at my stuff. then i step back and say, you know, law enforcement, which i'm part of, really does save people's lives, rescue kids, rescue neighborhoods from terrorists, and we do that a whole lot through court orders, which are search warrants, and through search warrants of mobile devices. if we're going to move to a world where that is not possible anymore, the world will not end, but it'll be a different world than where we are today and where we were in 2014. >> now, comey also said the fbi is not trying to set a legal precedent here. i can tell you that privacy advocates simply don't believe that. they think this is all about setting a precedent now so that the fbi and law enforcement in the future can go again and again and again to apple and

other companies to ask them for access to their devices. that's why you're seeing a lot of these other silicon valley technology companies weighing in now on the side of apple. a number of them said yesterday they're going to file briefs in this case alongside apple, guys. so a big battle now between silicon valley and washington, d.c. >> eamon, i started reading apple's response last night. it was 355 pages. >> good for you. >> i didn't read the whole thing. i didn't see anything new in it, just a rearticulation with a lot more legal information backing it up, in their opinion. was there anything new it beyond what we heard from tim cook? >> well, there were some new details, absolutely. what apple executives said in a concerns call with reporters yesterday was they expected this was going to be read by a broader audience than the typical legal filing. so they wrote it in a very broad and accessible tone of voice. it's very readable as a document, laying out their case point by point. we got a couple new bits of

information, including some of the tick-tock of exactly what apple did, how they responded to the government. apple making the point that -- remember, this attack happened on december the 2nd. on december 5, which was a saturday, they got the first call from law enforcement to their 24/7 op center to help with this issue of getting access to these accounts, access to some of the names they were investigating. apple saying that they went for several days before they got a search warrant cooperating, cooperating, cooperating. apple making the point they were willing to cooperate extensively, but up to this point, and from here, no more. >> got it. do you remember the old "mission impossibl impossible"? remember how the tape would destruct after they watched it? >> didn't they have to eat the tape? >> no, no, no. it would burst into flames.

it wasn't stored on the cloud. it was gone. companies like wicker are working on things that are, i guess, sort of like snapchat, where it really goes into -- it's not around anymore. if that technology becomes available where there's absolutely no record, so it doesn't matter whether there's a back door, what do we do, outlaw that type of technology and mandate people have to keep whatever was just -- it's weird. we might get to the point where we need to handle terrorists in a better way. we need to close our borders, maybe. or we need to go and attack these guys where they're hiding. we might have to do something instead of just trying to hear about everything through some surreptitious eavesdropping. that's the bottom line, isn't it? >> law enforcement makes that case. they say ultimately what you're doing is creating a

technological black box that we cannot get access to. they will argue, we have a legal search warrant, a legal court order. why can't we get access? we could get access to this guy's house, to his car. >> what if it doesn't exist? >> that's what they're afraid of. >> will they outlaw that technology, saying you can't do it that way? >> i think there are some people on capitol hill who would push for that. i think there are some people in law enforcement who would say we should outlaw that type of thing. that ignores the fact we live in a global economy where if american companies are prohibited from creating that kind of tech, other people will create it around the world. it's almost out of the scope of the u.s. congress to deal with this issue. but they're going to have to legislate on capitol hill. it's so gridlocked, and in an election year, you can't imagine them dealing with it this year. >> big downside to a freedom of everything. there's downside. >> there's trade-offs.

>> that's right. always been that way. >> i think it has. anyway, eamon, thanks. let's get back to the markets ahead of some big gdp data, which is being released later this morning. ed campbell joins us this morning. he's principal at qma, along with michael underhill, chief investment officer of capital innovations. do both of you have to figure out what you think gdp is going to be? do you have an estimate? >> well, i think what we're getting today is pretty much old news. i think what we really want to do is look -- >> what's the real, final number? >> for q-4? >> yeah. >> it's a low number. 0.5. one of the things we've seen lately with the data taking a tush faturn for the better withl sales and durable goods orders is we've seen the atlanta fed's gdp number increase over the course of february to one and change to 2.4.

i think one of the reasons why you're seeing the market turn here and take on a much better tone is that the nasty correction that we've had so far this year, investors priced in too high a project of a u.s. recession. >> citigroup and deutsche bank or whoever both said there was a risk of recession. and i saw something from the kansas city fed. they haven't seen business this crappy in 18 years or something. >> i did see the citibank report. they said there's a higher risk of a global recession. they're defining a global recession as global gdp growth of 2% or less. >> that doesn't sound like a recession. >> i don't think that's likely to happen. you know, as we mentioned in the u.s., i think with the data taking a better tone, the possibility of a u.s. recession

has certainly decreased. >> so you believe in the rally? >> i do. i think things had gotten too far oversold. i do think 2016 has been and is likely to continue to be a tough year for stocks and other risk assets. we did start the year with a 14% correction. we had already priced in a lot of bad news. >> michael, ed's kind of saying the market was prepared for the worst and maybe the worst isn't going to happen. is that where you are? >> well, i thinking what we're seeing is it's high volatility, low gdp growth. i think there was a lot of optimism, irrational optimism, if you will, in 2015. fed did a little hike in december. i think you saw things roll over. and it was across the board. utilities, energy, other types of risk assets fell out of bed the first 45 days of the year. now what you're seeing is a recalibration of the markets. what you're also being challenged with is some of the trading programs, algorithmic trading programs.

you've seen them. first, second week of february they were down 8%, 10%, 12%. what you're seeing is a value investor's market. active management now more than ever. it's pieces of gold, it's pieces of oil. it's different components within the market. you're even seeing things like companies where you have not great but decent numbers, and you can play companies that are benefitting from the slow but growing trend in single and multifamily housing. so there are positive data points out there, but it's high volatility, low gdp growth. >> so how do we view the market? as an all-knowing entity or a bunch of people that can get things wrong? >> the market can definitely get things wrong. the market weighs the news that comes out. we have collective bouts of excessive optimism and excess e

ive pessimism. that's what creates opportunity. >> is it still an opportunity? >> we had gotten more defensive earlier in the year. that turned out to be the right call. right now we're adding to stocks on the margin, getting back to a neutral position. i think where we see some of the big opportunities is like u.s. real estate, u.s. high-yield bonds. we like preferred stocks. there are select areas where you can find significant opportunities within the markets. overall, i don't think it's going to be a great year for u.s. stocks. i think we're going to end the year at higher levels, but as michael said, we're going to see increased volatility. if we look at the 2012 to 2014 period, that was a period of exceptionally low volatility. what we're doing now is, i think, moving back to a level of more normal volatility. things are going to be more risky here. and it's going to pay to be nimble. we're going to see the market trade in a range, a lot of up-and-down trading. so you want to be flexible and

nimble and be a bit of a trader. >> michael, do you have a last word? does that sound reasonable, or you'd be selling? >> i think it's volatility, uncertainty, complexity, and ambiguity. we had a high raiding on the vix. it went sub-20 yesterday. you saw short squeeze. you're going to see 8% to 10% kreks. and you're going to see short squeez squeezes multiple times over the next few quarters to the end of 2016. asset allocation matters now more than ever. value investors are going to start coming out with some pretty interesting forecasts. i think you need to be careful. have two things, cash and conviction. >> absolutely. asset allocation matters more than ever. and we are heavy on cash as well. cash yields nothing, but it provides optionalty in a volatile market. >> gentlemen, thank you. ed, michael, appreciate it. >> deadly story from kansas this morning. one gunman went on a shooting spree in the south-central part of the state late yesterday. authorities say the shootings

were at a manufacturing plant where the gunman was employed. the plant's parking lot and two other locations. four people, including the gunman, are dead. 14 others were hurt. >> stocks to watch today. strong holiday sales helped bolster jcpenney's results. posting earnings that beat estimates and providing an upbeat outlook. gap's full-year profit forecast falling short of estimates. it was weighed down by a strong dollar and weak sales at banana republic. and weigh watchers reporting a big loss in sales as it lost more subscribers. this despite the recent endorsement of oprah winfrey. the paper value of oprah's stake plunged by about $24 million. she's still seen a gain of nearly $75 million since she took that position. >> coming up, it was the tenth gop debate last night and the final one before super tuesday. the event was filled with fireworks like this one. >> we're having a lot of fun up here tonight, i have to tell you.

thank you for the book. >> donald, relax. >> i'm relaxed. you're the basket case. go ahead. >> john harwood has the highlights from that wild night in texas next.

it was a night filled with name calling, accusations, and

attacks on policy positions. john harwood joins us withes highlights from the final debate for super tuesday. as we said earlier, fireworks right from the beginning. >> reporter: i guess you could call them fireworks. you could call it craziness. you could call it absolute chaotic brawl. but these candidates, cruz and rubio, came out to try to take donald trump down last night because they see him running away from them. it produced exchanges like this in which marco rubio tried to turn his debate debacle of a few weeks ago back on donald trump. >> i've watched him repeat himself five times four weeks ago. >> i saw you repeat yourself five times five seconds ago. chpz [ cheers and applause ] >> i watched him meltdown on the stage like i've never seen anybody. >> let's talk about the substance. let's talk about your plan. >> he says five things.

everyone's dumb. >> senator rubio, please. >> reporter: so this was the level at which this debate was conducted last night. it's one that has worked for donald trump in the campaign. he leads in most of the states heading into super tuesday. marco rubio hit him more effectively last night, especially in that exchange we saw. but it's not clear whether it's going to dent him. ted cruz tried to make it about ideology. that drained some of the effectiveness out of his attacks. you had jay kasich also on stage trying to cast himself as the positive guy on stage, the one with actual solutions. ben carson at one point complaining that he had a lack of time in terms of questions at him, and he did have by far the least amount of time. one-third the amount of time that donald trump had. he said, you know, i don't like to whine about not getting time, but now i'm going to whine. that's what we had on stage for two hours last night.

>> he got more than 3% of the time, he's getting more than his polling. i don't know why you would complain. >> reporter: donald trump got 30 minutes, which was 50% more than anybody else on stage. >> that probably make sense too since he's the front runner. was that dana bash going please, please, please. they want a cage match. she's pretending she's going to keep it in control. i'm an anchor in control. what was that? >> reporter: this is the thing, joe -- >> trying to listen to the argument, and i got her. go ahead. >> reporter: that dynamic played out repeatedly. the candidates were going after each other. they wanted to -- >> oh, gosh. god forbid. cnn doesn't want that. >> reporter: the moderators would try to interrupt and usually fail, sometimes move on to other subjects, depending on who was getting the best of the exchange. if you were following it on twitter, the supporters of the candidate who was pummelling the other one would say, hey, wait, why are they switching to another topic? but this just reminds you, you

know, and this has come up throughout the course of the debating season, including in our debate. oh, well, are they controlling the situation? the debates become exactly what the candidates want them to become. if they want to bash the press and moderators, they'll do that. if they want to bash each other, there's not much you can do about it. >> cruz and rubio are so late to the table in attacking trump. it speaks to how many people dismissed him for so long. nobody took him seriously. so they never bothered to attack him in the previous debates as much as they should have. this is the kind of performance you should have seen early on, but i think a lot of people didn't think he would be around this long. >> reporter: that's right. you know, is this going to be effective even at a late stage like this? the whole thing became such a shouting match and food fight, it kind of diminished the stand-out potential for any particular moment. interestingly, right after the debate, i don't know if you were watching, cnn cuts from the two-hour debate to a very long

interview with donald trump explaining what just happened, which gives a second bite of the apple. then they interviewed him a second time after the debate. so it is a very odd campaign cycle that we're going through. on michelle's point, did you wait too long, the conservative foreign policy expert robert kagan wrote an op-ed in "the washington post" and said donald trump is the result of a lot of the arguments and passions that the republican party has been putting out on the table for years now, and now he's become strong enough to eat the party. we'll find out super tuesday whether he, in fact, has eaten it. >> president obama's had a little to help build donald trump also, i hate to tell you, and to build the tea party. you know what else i've seen today, john? seen it everywhere. rich lowery and "the wall street journal" both saying that it's about time because when david

brock and the clinton machine get on trump with trump university and with the polish workers building trump tower, that this is child's play compared to what they're going to do. >> reporter: i think that's a good point, joe -- >> but they've done it. now we know. if it doesn't impact those blue-collar types that are going to like trump no matter what, or whoever happens to love trump. 40% of the people in some states do. it's out there already. so maybe they did a service for the general election by getting it out on the table now. people are going to say, well, that was 30 years ago or this or that or whatever probably. >> reporter: yeah, this was the first debate where we heard in the extended discussion of trump university, of the case involving the polish workers. you had raw stuff from rubio saying if you didn't inherit $200 million from your dad, you'd be selling watches on the streets of manhattan.

it was very elemental stuff. >> they'd be expensive watches, john. >> reporter: well, had he a picture on his website of a watch that was all smashed and wrecked. kind of a knockoff thing. >> they wouldn't be knockoffs inside the jacket? >> reporter: and went after him for making his ties and shirts in china. >> john, thanks. >> reporter: you bet. >> coming up, former treasury secretary hank paulson oversaw bailouts during the financial crisis, but his advice to china, let companies fail. as we head to break, take a look at yesterday's s&p 500 winners and losers.

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welcome back to "squawk box." time now for the executive edge. that's going to be fun. g-20 finance leaders are gathering for a summit in shanghai this weekend. that's where we find eunice yun, who caught up with hank paulson today. interesting. what did he say? >> reporter: definitely very interesting. the opening session for the g-20 is now under way here. china is central to the discussions. the persistent worries we see over china's slowdown and beijing's ability to manage it

has been seen as a key risk to the global economy. i asked hank paulson about this. he said that beijing's leaders have a messaging challenge, but they're taking steps to address it. this is what he had to say. >> as i said in my speech, they're always adapting, they're always learning. i'm someone that learned, you know, that messaging is a very difficult thing when it comes to the market. part of it is substance, and part of it is messaging. as i said, i think a big part of things they can do is they can show right now they're very serious about dealing with inefficient state-owned enterprises as they take capacity of the steel industry, coal industry, and others by letting some companies fail. >> reporter: and china's leaders were messaging that they understand there's a greater need for transparency in their policymaking. the fact that chinese central

bank governor held a news conference today where he fielded questions, that's something that a lot of officials here have actually pointed to and said as a sign of more openness. also, the central bank governor had made some remarks today in english, which also was seen as a way to speak directly to global investors. he said that there was no basis for a persistent rmb depreciation. he also said from their perspective at the central bank, they believe they had enough tools in their tool box to continue to stimulate the economy, and that's been interpreted by many investors here that we could see more interest rate cuts in china. guys? >> got it, eunice. thank you so much. the head of the central bank speaking in english. he does speak english, of course. >> that's what's amazing. >> from the imf, right? >> he was, right.

>> so moany of these guys -- english is different. if any of our guys had to speak chinese -- >> no, they couldn't do it. but clearly a statement or a message about trying to be more open. you wouldn't have seen that a year ago, two years ago. forget it ten years ago. all right. warren buffett will release his annual letter to berkshire ha hathaway holders. buffett will talk about the performance of his many investments and share the broader view on the economy. he will sit down with becky quick starting at 6:00 a.m. eastern time for three hours on monday. if you have questions, now is the chance to ask them. send us your questions. use the hashtag ask warren. your question might make it on the show. is she fine today? is that why i'm here? >> no, i don't think she's fine. she's trying to get healthy to be able to go.

we've been flying around. >> a little under the weather, right? >> yeah, d a, haavos, pebble be. you're right, chief international correspondent. how is that ibm trade working out? >> real well. >> if you like it -- >> amex? >> yeah, but if you like ibm, is he buying twice as much now? if he's not -- >> the oil price leaving its market. >> he's usually not a seller. we know that. >> if you still believe in it, you should be buying three times as much because it's way down from 1.80. >> maybe he is. >> but if it's not, what does it stay? >> #askwarren. >> they keep saying coming up in my ear. why is that? all right. apple asking a federal judge -- >> you can turn that thing off. just take it out. >> -- to reverse a decision that helps the fbi unlock the iphone

of one of the san bernardino shooters. we're going to talk to congressman will hurd next. you're an at&t small business expert? sure am. my staff could use your help staying in touch with customers. at&t can help you stay connected. am i seeing double? no ma'am. our at&t 'buy one get one free' makes it easier for your staff to send 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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new today in the u.s. versus apple, apple filing in court, asking the court to vacate an order forcing it to unlock an iphone of one of the san bernardino shooters. the company claiming their first and fifth amendment rights have been violated. on tuesday, apple's general counsel and fbi director james comey will appear before the judiciary committee. joining us now with his thoughts is congressman will hurd, serves

on the house homeland security committee. sir, good to have you here. >> thanks for having me on. >> you're not the typical member of congress. you were an undercover cia officer for ten years in the middle east. before we talk about what you thought of the filing, what are your initial thoughts on the case? >> first off, i spent almost 9 1/2 years chasing terrorists across the world. one of the things i'd have to say is an important partner in this fight is the private sector. a lot of these companies help, you know, support those efforts of the intelligence community and law enforcement community. i also helped start a cybersecurity company, so i know a little something about cybersecurity and these issues. it's important -- you know, this is a much larger debate than just unlocking one phone. this is about how do we protect our civil liberties and chase bad guys at the same time? >> and where do you come down on that? >> well, we protect our civil liberties. i don't believe in building back doors to encryption.

if you build a back door for the good guys and the bad guys have access -- in this specific case, there are a lot more questions i have. why is the fbi asking for some of this information? trying to put in context that apple is not supporting them or helping with the investigation i think is inaccurate. the fbi has information from the icloud account. you know all the apps that are on the phone, so you can go to those companies to get the information that you need. if you want cell phone records or text messages, you go to the cellular service provider. so to take this extraordinary step of saying that the fbi can tell a private company how to build their widgets, that requires extraordinary evidence to say why we need to do that. i'm looking forward to the hearing next week. >> michelle is like, are you

married? that's exactly what we've been saying. and you're our cia guy. >> i'm only a little suspicious. i've seen "homeland." i know how much you hate the fbi. i'm wondering if that's what drives all of this. >> that's inaccurate. here's the thing. i started in the cia in october of 2000. i was in the cia when 9/11 happened. if you would have told me then that it would be over 14, 15 years before there would be another major attack, i would have said you're crazy. but it's because of the men and women in law enforcement, men and women in the fbi that are acting every single day as if it's september 12th, 2001. to take that level of discipline is hard. so i truly believe that, you know, the men and women, rank and file at fbi are good people and they keep us safe. >> sir, joe kernen brought up something earlier in the show. there's new technology already which if you use it, your e-mails just completely disappear. they're a bigger version of

snapchat. he's making a point, which is that this conversation may almost look quaint and moot not very far from now because technology is going to move very fast. we may not even be in a position for the fbi to be asking for this because things will have moved so quickly. it's a really static way of thinking about how technology is. >> yeah, you know, that's one of the scary things for me about this debate. the lack of some of the technical knowledge and understanding. >> why does the fbi need to ask apple to do this? >> and that's a good question. i've asked this question. i've asked for further information on the specifics. i hope we get -- those questions are going to be asked in the hearing next week. everyone acts like encryption is new. it's been around for a long time. people have been encoding messages since, you know, b.c. times. this is something that we have to adapt. one of the most important things we can do is make sure that law

enforcement and the private sector are having a sober conversation about these topics, about how do we protect our civil liberties and how do we continue to chase bad guys. >> congressman, i apologize for interrupts you, but i just want to hit this point real quick. if you were still in the cia, undercover, chasing terrorists around the middle east, you'd have the same opinion that you do today as a u.s. congressman? >> absolutely, because i don't understand what information the fbi thinks they don't have. because again, you've got to remember, how many weeks has it been since the initial threats and the initial attack? they called apple, you know, immediately to help get more information. so to think that there is timely information on this phone, what is that information? if you know all the apps that are on the phone, if you have the person's e-mails, if you have text messages, if you have

photos, what more information are you looking for? >> i don't know, but i'm just -- i'm not taking a side, but what if there is something? if we just don't know, what if there is something there to help people doing this job you used to do? >> i get that, but to take the extraordinary measure of the fbi dictating for a private company to design their program in a certain way, it takes an extraordinary amount of evidence to say we should do this. also, this is not the fbi's role. the fbi doesn't get to do that. this is where congress comes in. having this conversation about privacy versus security and how can we do both. i think we can do both. you know, having this debate in the court of public opinion, i think, is not the right place. >> you endorse anyone yet? >> i have not. >> you're from texas, right? >> i am from the great state of texas. i'm looking forward to tuesday night. >> thank you, sir. great having you on.

congressman hurd. >> coming up, it's the greatest show on earth. we're going to talk to elana feld, behind ringling brothers. if andrew were here, it would be better, because he doesn't want the elephants to go. but that's what we're going to talk about. olay regenerist renews from within...

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i think about whether it's a metaphor for the gop the elephants are going away. then i thought actually said circus this year that the gop. all the asian elephants from its ringling brothers and bar number and bailey circus will head to a permanent home in may down in the florida. the ringling brothers center for elephant conservation and joining us now is entertainment executive vice president at feld. we've had you on before. elephants live so long and don't get cancer that often so there's some research being done where these elephants are headed that might help humanity. >> we were surprised to find out elephants rather get cancer. we have an elephant now that's 70 years old and you would think the large alternative mall the more cells, the more likely they would be. but what happens is they have 20

times the amount of cancer fighting gene than humans have. so we're working with a doctor at the huntsman cancer institute to study why they don't get cancer. >> good story for everyone but andrew. andrew is not here. he's feeling and progressive about a lot of things but he still wants the elephants in the circus to see. my question really is, are you folding to bad pr from groups like peta that say elephants were mistreated. were they better off in the wild than at bar number and bailey and are they better off in florida? >> i think we're running a business and we have to do what's in the best interest of our business, of our elephants, of our associates. there's a mood shift among customers and they are not comfortable with our elephants

touring. we are an entertainment company that creates great shows and that's what we want to spend our time doing not fighting legislation and we do think that it's in the best interest for everyone and we're excited about our conservation efforts and all this research we have under way. >> do the elephants you get come from where? the zoos? the wild? >> our elephants we breed our elephants. we've had 26 births in our history of breeding which is the largest -- we have the most success of any zoo in north america. >> you don't think it will hurt sales you won't have elephants. >> ringling brothers is about so many things. the elephants were a piece of that. >> you have tigers. >> they are iconic. >> you have dumbo. >> ringling brothers has been around for 145 years because we're always changing. this is a big change. it's a huge part of our

evolution. through our center of elephant conservation they will be a huge part of our future. >> tigers. >> tigers and lions. >> anti-circus legation for that too. are they treated okay? >> all our animals are treated wonderfully. >> too many clowns in the clown car now you can only have five in a car. >> exactly. >> that's where it's going. >> but i've seen animals do things to each other that if i were in a circus i would be much happier. without the predator. anyway, elena when she was growing up, she wanted to be a cpa but got stuck in the circus. you wanted to join the accounting group, you were already in the circus. >> i couldn't leave the circus. i was trying to run away from it. >> should have gone to capitol hill.

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global rally with stocks surging around the world. the dow closing in on its second positive week in a row. top strategist tom lee is here. apple fighting back. the tech giant telling the court it shouldn't have to help the fbi unlock the phone of the terrorist. now some of apple's biggest rivals are coming to apple's defense. the details just minutes away. >> plus the gloves come off in texas. . it you to think about if this man is the nominee having the republican nominee on stand in court being cross-examined about whether he committed fraud. you don't think the mainstream media won't go crazy. >> this guy is a joke artist and this guy is a liar.

>> presidential hopefuls go on the attack days before super tuesday. it's friday february 26, 2016 and "squawk box" begins right now. ♪ it's friday ♪ i'm in love >> announcer: live from the beating heart of business, new york city. this is "squawk box". o welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with michelle caruso-cabrera. we're playing this not because it's friday but michele is in love with that guy. >> that guy was a libertarian. >> former cia guy. if i could do my life all over again -- >> the explanation. >> for the record we interviewed a congressman about apple and he came down on apple's side.

>> very hard. larry legend is here. did you run honeywell? what's happening. we'll talk about that in a second. i digress. we had trouble. check out the futures. we'll tell you what's happening. big day again for the bulls after a good week last week and another positive week and we're up, we were triple digits earlier because europe was strong after shanghai came back. oil was up. that's why we're getting some strength. as simple as that. if oil goes up the market goes up. it was up more than that earlier. but oil is up above 33 right now and that's giving some strength to the equity markets. around the world. >> i think the head of the pboc head of china's bank said the yuan will stay stable. other headlines, we're wrapping up the trading week with a fair amount of economic data. fourth quarter of gdp will come out at 8: kpl8:30 a.m.

the fed hiked rates in december when the economy was still slowing down. we'll watch shares of jc penney at the open. strong holiday sales helped bolster their results. they posted earnings that provide an upbeat look out. weight watchers are shedding 20%. a big drop of sales as it lost more subscribers. take a look at that stock. it was back in october that oprah winfrey made a $43 million investment in the company for 10% stake and seat on the board. that stake has plunged by $24 million in one day but she still has seen a gain of $75 million since first buying those shares. >> okay. apple has formally laid out its legal defense against court order forcing the fbi to one like the iphone.

eamon javers joins us now. i wish you saw the interview with will hurd the texas congressman. he took apple's side. he was a cia agent for about ten years. tell us what you told us last hour. >> reporter: i think you're going to see a lot of members of congress siding with apple. a lot of people are very uncomfortable with overreaching government authority up on capitol hill. apple firing back yesterday in court. it was called a motion to vacate. remember there was a court order last week that ordered april told cooperate with fbi. now apple filing its response to that court order saying no court has ever authorized what the government now seeks, no law supports such unlimited and sweeping use of the judicial process and the constitution forbids it. we also had fbi director james comey up on capitol hill yesterday. he very careful yesterday not to go after apple in public, not to antagonize the company. he had a couple of words of

praise for the company. here's what he said. >> i want to be sure people under, there are no demons in this dispute or the larger dispute. apple has been very cooperative. we got a place they were not willing to offer relief that the government was asking for. >> reporter: behind-the-scenes u.s. officials were not happy with tim cook's interview the previous day on national television. one official described the reaction as frustrated with tim cook's aserge that this order could affect hundreds of millions of apple users around the world. u.s. government officials don't see it that way. their argument is that this is for one phone by serial number only. comey yesterday saying the technology itself is the limiting principle because the technology will change so fast that whatever the precedent is set here won't necessarily apply to the next generation of technology. so a big dispute. doesn't seem it will be resolved any time soon.

>> something we should be able to verify one way or the other. one phone to do it once or something they need to design -- is apple lying that this will create a back door, sort of a master key for all the different phones? are they lying about that? >> reporter: well i can tell you that u.s. government officials were frustrated with what they saw from tim cook in his public interview on this. apple's point is a little bit more nuanced. what apple is saying they would be forced to create new software here that doesn't exist right now. they argue that that's a violation of their first amendment rights, fifth amendment rights and they shouldn't have to do it. what the government says is they would be doing this by serial number just for syed rizwan farook's phone, the san bernardino at any time. it would be done with apple's encryption key. to create a new operating system for this phone they have to install it on phone. that can only to be done the government says by apple using their one time only encryption key.

that key would change the next time. it is to be done that way every single time. therefore whatever is created this time they say would not be usable on another phone in another situation. what apple is worried about is if they do this once the government will come to them again and again and again and ask them to do it in several other cases. not terrorism cases, drug dealers, petty criminals and other things. >> thank you. larry, we have a lot of people that work on this show and write a bunch of stuff. i already mentioned honeywell. that's the intro. i'll play a sound bite. can you just as long as we're on the subject with apple, we ask you about everything. where your on this? >> fine. you know, first of all i support what cook has done. he's told all his users that it's secure and he has to buttress that position and he has. i think on the other hand i

don't disagree with comey going after it, the fbi. i think this is a matter that's going to come up frequently now in term of the digital age. it ought to go to congress and not to courts and get resolved. but i don't find fault in either one of these parties on an issue that is going to be of ever greater importance and needs resolution. >> that's why we invented gray there's black and white and not many things are not that simple. society is getting more complicated. >> to take a black or white view on this i think is just the wrong place to be. >> it's nuance. >> your point earlier that technology moves so fast, this isn't going to matter in a couple of years. we'll be somewhere else and look back, oh, that looks easy. >> the issue will remain. it will be different technology, but the privacy issue will remain i think. so it does need resolution. whether congress can do it or not is a good question. that's where it belongs.

>> when you -- did you have any before favor did you have any insight into honeywell did you know any of this was going on? >> no. i think it's a good combination and an interesting story. utx made the first proposal and my guess is they looked at the antitrust issue and got comfortable with it or they wouldn't have made the proposal. at that time they were going to be the management. the most recent proposal as you know the ovals have changed honeywell stock has surged, utx has declined, so honeywell countered and they would be the manager in that instance as they were the buyer. and so i'm sure there are antitrust problems but i think that both parties at one time thought there was a path to get clearance and tissue in my mind is now about governance. >> who would get to be ceo, basically? >> in my view that's the hang up. not to say that antitrust isn't an issue but as i say i think they looked at that carefully and a lot of people think

there's a path. >> you think who should have been ceo of the combined companies. >> in the case of honeywell now as buyer they have the right to run the place. >> if they are the buyer. >> greg hayes is new. >> he's good. >> how old is cody. >> 62 or 63. on the other hand -- >> 53, larry. >> that's right. on the other hand, remember not many newly appointed ceos which i would put mr. hayes in that category are willing to relinquish their seat early on. so i don't know if that's an issue or not. i have no insider information. >> you don't think there's antitrust stuff. >> i do. i'm saying there's ways to resolve it. >> how? >> i think -- >> like an investment banker, utx and honeywell get-together and spin off honeywell. >> yeah. no. >> i'm an investment banker. put them together and spin off

utx. >> the interesting -- that's what they do but not a good idea in this case. there may have to be some div t divestiture. >> there's a disagreement on how many. utx and honeywell have different opinions on that as we heard yesterday from one of the attorneys advising honey whole thinks it's a small number to get the deal done. >> that's what i said at the outset. utx made the proposal. they must have had an antitrust theory behind their offer. maybe it was different than honeywell's. i don't know. i don't say this is not an issue. >> so if it comes down to who goes be the ceo, something like putting in a very large break up fee which is a tool you use when you worry about the doj and whether or not -- you waste all our efforts trying to get this deal done. that's not really relevant in this case. >> i think also there are aren't trust issues and either party would be reluctant to put up a big number in the event it

failed. there's a view we could win it and if the top parties were cooperative and we agreed on the parts that needed to go in order to get it approved. maybe it will happen. it's not over yet. a stumbling block -- >> you still share holding. >> big no. not in the scheme of things. >> would you be in favor of the deal if it was in its original form, if it was utx buying honeywell? tables have turn. it's a different story. would you be in favor of it? >> i would. it's a good combination. it's $94 billion company when you're done. enormous cash flow. it's a good combination. whoever runs it. my preference is to have honeywell run it. >> i'm shocked to hear you say that. >> i'm sure. >> done seem like an offensive merger. kind of -- i'm not saying it's defensive but the world has changed, zero interest rates and no revenue growth anywhere and profit recession, manufacturing

recession, strong dollar. are they being forced to do this? >> not forced. there's enormous synergy as they reported. >> that means people losing jobs. >> it does. doesn't necessarily mean in the united states but nonetheless job loss is serious all over the world. and airbus came out and said they would be oppose toitd. any customer is opposed to it because they like as many competitors in the game as they can find. >> our antitrust guys need to realize that it's more global the economy now than ever and we need nimble competitors based in the united states. we can consider our own domestic issues. that's what i think about corporate tax reforms. it's a global world now. for us to compete you don't -- this new inversion stuff. i watched francois hollande the other day.

and david tried. >> hammered the guy. >> it's already happened. the guy would not acknowledge that companies have already moved and buying us here already. >> you know it's easily fixed. all you got to do is correct -- they know how to fix it, of course. there's no agreement. >> there's no fix. we're seeing how hard that is. >> you still with -- >> no, no. my original candidate, both have left. >> the one you told me you liked he has to dropout. he's holding space. >> i'm admitting that. >> kasich. >> now i'm conflicted. >> all right. coming up tom lee joins us to talk about the week that was in the markets. later a verbal slugfest at last night's redebate. donald trump in the cross-hairs. we'll have highlights in a few moments. "squawk box" is coming right back.

all right. so goes oil apparently so does the market. oil prices surging midday. the index is now on pace for its second positive week in a row and joining us now to talk about nashts is tom lee founder and head of research for fund strapped global advisors. a bullish tom lee and i would think you're not wavering. >> it's been tough to be in the bullish camp.

investors confidence has been shattered. visibility hasn't been great. but if this proves to be a gross scare which is our view, i think markets have priced in a really bad economic outcome. >> the conversation is definitely getting louder towards the recession. you got notes yesterday from citi talking about things getting pretty bad. other notes are being passed around people are talking about the real likelihood of a global recession. what makes you certain that it won't be that? >> i don't think anyone can guarantee economic outcomes. so like in other words someone says hey we're going recession they have has much foreknowledge as somebody who says we don't. when you look at market internals it's not necessarily supporting recession view. industrials have been rallying. believe it or not it's been rallying since the middle of last year.

transports have turned up. small caps are out performing. if we were actually seeing worsening economic conditions these groups should be in a death spiral. >> you're not worried about the consumer. you could make a case for your side of the market ledger anyway you want, you can pick the stock that supports your view. i could say restoration hardware was bad and i could say target was pretty decent. >> yeah. >> that's right. if you look at the consumer, i'd say if you take a step back, i'd say ate pretty good environment for consumers. we have decent labor markets. we got a big savings from oil. there's not a leverage issue. as you know the big issue really from '06 to '08 was the build up in consumer leverage. so i do think that the consumer is in pretty good shape. we have a confidence issue that's obviously in the markets that could end up tightening financial conditions that could be bad for the economy. but, again, i think when we look

at how markets behaved people have been getting more bearish in terms of economics but the markets have actually been going up. so i think maybe people tilted too far into the negative camp. >> transports -- looks like it went down the first week of january -- >> that's right. >> it bottomed in january. >> that's right. >> it's been -- >> look at that. >> we had a guy on yesterday who was saying that he felt this was a very, very positive sign that the transports turned. >> right in the middle of everything else. >> exactly. >> led you down not rallying back. >> what do you think of corporate profits. fourth quarter was disappointing. margin compression same time as decline anyone come. >> larry, it's really challenging question. because you want corporates to make money so they feel confident about hiring. i've been spending a lot of time going through transcripts and cues.

companies haven't talked about currency in the third quarter results as explicitly as they have been talking about in the fourth quarter. i think finally fx is something where companies are you can't hide it because the volumes are offsetting the currency. apple was 15%. i think the biggest hit to earnings last year was strong dollar. look. dollar has been flattening. history says it should maybe even dip another 6% from here. huge boost to profits. oil has been flattening. we've seen levels in december '08 which was the low of oil. and high yield is crawling its way back. it's rallied. i think things that should be supportive of equities -- >> oil should be next. i can't imagine there's not going to be a buying opportunity of a lifetime in oil. >> yeah. >> or is it a five year bear. >> what's interesting with oil we're seeing bankruptcy which is

good. >> that's when you start buying stuff. >> yeah. if you look at who made a lot of money, you know, in the '08, '09 was people who really understood that capital structure trade and was able to buy an equity where they survived. so there will be some big opportunities in energy. i don't know if it's now. >> some day aren't you going to say larry oil and hydro carbons are here to stay. they put this other stuff out of business by being where they are. that's energy of choice for much longer than people thought now because nothing else is economic. >> little scary too to think that saudi arabia plays such an important role in what the price of oil is. in terms of dictating supply. that is a concern out there. >> but we're going to use oil. >> that's a given. >> because it's so cheap. all this other stuff -- i like

the idea of subsidizing that other stuff by taxing oil. you can get rid of so much capital that way if you tax it, right? tax that good stuff and then get the other stuff. >> great idea. >> i don't know if you read about it. >> tom lee thank you. >> announcer: 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 cnbc's "squawk box" continues. r medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses?

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a meaningful legacy. with the guidance and support of your dedicated pnc wealth management team. today's aflac trivia question. what is the only film to have won an oscar in every nominated category? the answer, "lord of the rings the return of the king." >> warren buffett will release his latest letter to berkshire hathaway tomorrow. the stock's performance lagged the s&p 500 by the most since 2009. berkshire is down 11% while the s&p 500 is flat over the same

time period. buff fest will talk about his company's investments and share his view on monday right here. he'll it is down with becky quick live for three hours starting at 6:00 a.m. eastern time. if you have questions now is your chance to ask. send cnbc your questions on twitter, facebook and inis agram. use the #askwarren and your questions just might make it on the show. coming up tenth gop debate and final one before super tuesday. senators cruz and rubio had donald trump in their cross-hairs. former governor and former presidential candidate we ask jim gilmore how super tuesday will play out. and equities are suggesting a positive open.

♪ among the stories front and center this morning gaps full year profit forecast fell short

of estimates. watch shares of herbalife company reporting better than fourth quarter results. the company says it's now in talks with the federal trade commission over the probe of its business practices related to accusations made by a hedge fund manager. the outcome of those talks remains uncertain. >> tweeting about that yesterday. weren't you? >> buried in the 10-k. >> you were tweeting it was up a lot. >> it was up after that became known. >> it was up and sort of like the understood thing is ackman is losing his butt again. that was your -- that was the tone. >> i did. >> my tone is that the stock was up. >> the point is -- >> that's what i read. it was up 40% in 2014. giving it all back and then some. >> exactly. >> he's come upon tougher times. >> past performance, don't they

put -- >> on every fund. calling recessions, calling market crashes, all of those things. nfl teams, past performance is no guarantee of future -- that's why they have to play the game, scott. sorry. that was not in your twitter -- >> pointing out -- >> that wasn't there? >> that's how i took it. sorry. >> do we cue the music, maestro. >> you watch "people's court." >> i know the show. >> of course he does. >> back where we were, walmart is being sudden by a customer over a parmesan product that's marketed as being 100% cheese. the plaintiff found the product actually contains 7% to 10% cellulose which comes from wood

chips. i seeks material misrepresentation of that product. >> a jury trial. okay. netflix announcing its upcoming animae series perfect bones. be the first original program from the streaming service to air in 190 countries simultaneously. the 12 part show will focus on a future in which scientists are experimenting on children to create super human beings when something inevitable goes awry. netflix ceo hinted the company's intention to invest more in divest shows. including animae. you don't have to do dubbing you can do dozens ever languages. animation but with a certain look. >> right. i've only seen it in context where you wouldn't -- it's not for public -- yeah. >> really? >> like animated. >> but there's a look. a softness to it. if you were to show at that

regular cartoon and animae cartoon you would know. >> it's a sub -- >> which producer? >> he shall remain nameless. are you in there? no one in there. >> it's friday can you tell? oh, my god. >> gop candidates came out swinging last night at the final debate before super tuesday and donald trump was in the cross-hairs. >> this is what we're going to have. >> this guy inherited $200 million. if he didn't inherit $200 million you know where donald trump would be he would be selling watches. >> how are you going to make them pay for the wall. >> i will and the wall just gotten feet taller believe me. our workers lose their jobs. you wouldn't know anything about it -- >> i don't know anything about bankruptcies. >> you don't have the endorsemen of one republican senator and you work with these people.

you should be ashamed of yourself. >> thank you for the vote. >> donald relax. >> i'm relaxed. you're a basket case. >> when i was leading the fight against the gang of eight amnesty bill where was donald? he was firing dennis rodman on "celebrity apprentice". >> the fruit salad of their life is what i'll look at. >> this guy is a joke artist and this guy is a liar. you have a combination of factors. he can't do it for the obvious reason and he can't do it because he can't tell the truth. other than that i rest my case. >> joining us now with his thoughts on who might capture the republican nomination, former virginia governor jim gilmore. he was also a former presidential candidate. it's great to have you here, governor. you were in the cursed governor group, didn't matter if you were the second coming as a governor, which is a commentary on the currents political environment. i wonder if you got it figured

out? i thought governors knew how to run things. >> they are not running the debates that's for sure. outsourced to it the networks what do you get? you get a food fight that likes like the jerry springer show. it didn't add a lot about the challenges facing the united states. >> it is what it is in term of the 2016 presidential race. it's a reflection of what's going on. it's a real-time reflection of what's going on in the race and the 40% that vote for donald trump and for the 22% that vote for cruz and rubio, authors real numbers. you can just say it's not real. it's not tv. not media. >> well it is media, and it is tv and it is silly and it's wrong to push the process that way. we're not there yet. we need to talk about the challenges that face the country and the real choice that american people will have when

they are confronted with the republican candidate and a socialist and that's really what we're talking about over here with hillary clinton or bernie sanders. they have an approach to business and an approach to commerce, an approach to jobs, an approach to wages that's just socialism. it never has worked anywhere. didn't work in russia. ain't going network in the united states. that's where the real debate has to be this coming november. >> governor, you make the point on the policy issues and it's true but in this particular go around that the american people are more interested in throwing out politicians than they are in understanding the issues. do you think that will change as the field narrows and we get into the general election? >> i do think that the candidates are expressing a legitimate anger that people feel because they are boxed in. we got a regulatory society, a society that's controlling people all the time. you got regs all over the place. you got the epa. you got all kinds of taxation.

people are out of work. people can't make money any more by wages. stagnant wages. and a president and a democratic administration that's doing absolutely nothing to grow the economy. i certainly believe the economy has got to grow. we got give more opportunities to people. we're not seeing any of that yet. the point is as we get into the november election we'll see, i hope a legitimate debate about the future of this nation. and i don't believe that the socialist direction is the direction we ought to be going as a country. >> yeah. the commentary on -- >> you asked me i told you. >> it's commentary on where the center of both parties is right now. i think some of that comes from, i guess it's congress as well but a lot of it is the president we've had for the past the seven -- a divider in chief i've heard him call, i didn't do that. >> instead of growing the economy he's been growing the government. >> look what the president said about the supreme court. he's just using that to divide the country too.

he's using to it leverage the republicans in the senate. that's no way to govern. okay the president is entitled to make his appointment and the senate is entitled to decide whether they will advise and consents. the president doesn't have to use this as a political ploy which he's trying to do. >> right. you haven't endorsed anyone have you. >> i have not endorsed anyone. >> no better time than the present. >> no better time than the present and i ain't going to endorse anybody. >> tell us how you really feel. >> would you be satisfied if it was donald trump the nominee? >> look, i ran for president because i wanted to address to the american people what i believe the critical issues are. the national security and safety of this country, the international terrorist war that we're in and experience that i have that the other candidates did not have. secondly and most importantly the growth of the american economy. we're stagnant. wages are stagnant. people air frayed they will lose their job.

people can't get opportunity. that's why i ran for president. >> you're not going endorse anybody here. that's not making an endorsement. you have a judge who is out in front by leaps and bounds who is certainly looks well on his way to winning the nomination at least as it stands right now. would you be satisfied with donald trump as the nominee of the republican party? >> i'm going to answer your question this way. i intend to endorse and support the republican candidate for president because the alternative is either hillary clinton or bernie sanders. now give me a minute here. what's hillary said? she said she doesn't even think a moderate appointment to the supreme court is appropriate. they both are talking about giving away everything and not doing anything to grow the economy. this is a wrong direction for america. i just hope that when we get a settle on our candidate, somebody that that can intelligently and appropriate address the challenges that face this country. >> why do you think it is --

we've been running the sound bite, donald trump when he's asked repeatedly how are you going to get the mexicans to pay for the wall. repeatedly i will, i will. people who support him doesn't care he has specifics. i'm not even sure they believe him mexico will pay for it. i don't think they care. i think there's something else about him that they really like. >> i just think it's highly inappropriate for you to give over to reason and 0 intelligent thinking in this campaign. all seriousness, look, the people, this group in the republican party of which i'm a member believe that the bureaucracy has tied us so down and the laws have tied us so down that we are not liberated to do anything any more in this country. we're not free to make a living and keep our own money. so they are frustrated and angry and looking for a radical solution and surely trump is offering them a radical solution. he's saying i can shoot somebody

and it won't make any difference. he also by the way said you don't have to spend any money because he gets free broadcasting. that's what we're doing right now. we're giving him free time right now. that's an issue that has to be addressed in the future as the fcc needs to address this problem of free advertising giving selected candidates like donald trump. >> so, governor, you stated a long time past when it seemed like anything was going to happen positively for you, what factored into your decision and why do you think that -- what do these other guys that are just sort of still up on the stage, what do you think is in their mind for why they decided to stay too long at the party. >> i have no idea why they are staying as long as they are. governor kasich believes he can bring a governor's experience to the table. i don't agree with governor kasich on common core education or on the expansion much medicare. i don't agree with that. as for ben carson, he's a nice guy but i don't know what he has

to say about the future of the country exactly as a physician. i certainly would want him operating on me but i don't know he's offering anything. he got ignored in the debate last night. i didn't let them do that to me in des moines but he got pushed off to the side last night. >> amazing first term senators instead of one and two term governors. bizarre. anyway, everything is tops y turvy. virginia is good too, larry. virginia. >> good defense. >> they do. >> i thought you were saying that because virginia is for lovers. >> that's why i was saying that. coming up, want to convert and old laptop to a cloem book? well a start up called never ware has a service to do just that. i'm going to buy that so i can

convert something. the company focus on schools looking to upgrade and save money. the ceo joins us next to explain their concept and how they make money from the service. as we head to break check out the futures. actions speak louder. something we'll show you. through small things. big things. and spur of the moment things. sheraton. ♪

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. welcome back to "squawk box". futures right now are indicated up about 65 points. bean little bit of, we'll see. they were triple digits earlier and slowly coming down. oil's gains have been muted and europe was up more earlier, i think, at the top of the next hour we'll be speaking with mario gabelli about the markets and his latest stock ideas. stick around for that. i would be worried wapner would try to steal him but he's on halftime constantly anyway. so it's already done. now he's coming back here. knock yourself south scott. >> got a date with larry. >> i'm holding here a v-very old laptop. it's probably so slow it's painful. that's what i'm thinking. must be time to dust off your old pc because one company is

bringing new life to the phrase everything old is new again. they give a second life to classroom computers, any computers across the country saving school districts millions it would cost them to replace the cloud based software. the cloud based software boost pcs transforming them into brand new chrome books. founder and ceo of never ware is here. a lot of people have these lying around. a very, very old laptop and because you got rid of it it's so slow. you do something now that i can take this old laptop and make it fast again? explain. >> that's right. these days you have so much executing power in the cloud companies like google and amazon just provide a huge amount of that but the 30-year-old operating systems that we still use are getting in the way of -- get in our own way. with cloud ready you actually

shift to an operating system that allows all that power to be put directly on the computer without slowing down at all. >> it doesn't matter how old the actual piece of hardware is you're jumping over or leapfrogging whatever was in here. >> exactly. connecting directly to the cloud. >> so you primarily focused on schools it seems. what's the revenue stream. how does that work? >> our company was founded with the idea that we can deliver great executing to schools in a cost effective manner. so schools can simply pay very low cost for the software and suddenly all their old computers will run as fast as new computer without having to buy any new ones. >> how much do you charge? >> we charge $59 per license. >> a license covers how many computers. >> one compute per. it will permanently transform

their computers. >> does the school -- they got to have some decent high-speed connection to get to the cloud. i would imagine that would be the slow down point if there was going to be one. >> well, just like your smartphone the software is being made more intelligently to run off line. i actually use that machine on airplanes all the time. >> this one, right here. >> that one right there. that's my computer. i think that one is about five, six years old and probably runs faster than most computers in this building. >> it's a dell. >> i read last week or so that tim cook said that why buy a pc, they are obsolete. that's going to put you out of business. how do you think about that. >> i think he would be very threatened by the concept that his computers from a few years ago can run as fast as modern ones today. >> you don't have a deal with apple. >> you don't buy into that? >> no. we have apples in our office and schools that are being used in

lieu of buying new computers. >> but you have no sort of deal licensing deal or anything with apple? >> no. >> but you turn them into chrome books. you working with google. you have an official relationship with google. chrome is their operating system. >> sure. chrome is its own brand. our operating system does share very similar dna to that so it doesn't turn into a chrome book but makes it function very similarly. google for education is a big advocate of ours, and actually samsung is now a partner because they figure that schools cannot only buy their chrome books but instead of having to replace their current computers with these new devices they can keep the old devices and add on all these old computers. >> if i bring in my commodore can you help me make it run faster. >> no. if you need computer help call

me. >> what about the old ibm xps. how old can the computer be. >> we get computers regularly in our schools seven, eight years old. anybody can get the free version just going our site anybody right now with any kind of old computer who is thinking of buy agnew one can go to our site and get it for free. >> what about my newton? have you heard of a commodore. do you know what i'm talking about? >> i don't, sir. >> good luck. >> thank you very much. >> thank you. >> you're 30. >> lionel richie. the train headacher. i'm kidding. coming up -- paradigm-shifting. its technology-filled cabin...jaw-dropping.

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coming up -- we will talk to larry about a lot of stuff but mario gabelli will be on. he'll be our special guest. his latest stock picks, overall feel for the stock markets and all's response to the government is no means no. "squawk box" will be right back.

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. a republican rumble. gop presidential hopefuls take the gloves off in the final pre-super tuesday showdown. >> a lot of fun up here tonight i have to tell you. thank you. >> donald, relax. >> i'm relaxed.

you're a basket case. >> that debate straight ahead. >> happening now apple holding its annual meeting in california but the tech giant's fight with the u.s. government is overshadowing the rest of the agenda. >> a mega mess at viacom. shares of the media giant down more than 40% in the past year. one of the company's largest shareholders joins us on set. mario gabelli is here as the final hour of "squawk box" begins right now. ♪ ♪ this is going be the best day of my life ♪ >> announcer: >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with michelle caruso-cabrera and scott wapner. becky and andrew are off today and we're -- not quite less than 90 minutes. close, scott. am i right about that.

we're somewhere around 90 minutes away from the opening bell on wall street. futures right now back up, up 76. triple digits earlier. oil was better today. lows for today a couple of days ago and reversed itself and the markets have done better. almost broke under 30. also rolled this week. a couple of dollars higher than it would have been. european markets were all strong. actually up a little bit more than that earlier. but better than 1% gains across the board. we don't have greece on there any more. >> do you miss it? we may need to put it back. >> we used to call a grexit and now we're talking a brexit. >> were you a pro brexit person? >> i have no thought one way or another. >> the whole idea she thought --

>> yeah. she would have believed in free trade. >> larry, you don't want them to leave. i want them to leave. >> i think first of all, there's a lot of damage dwhoen you leave, the transition. so i think at the end of the day they will vote narrowly to stay in. i think they should. >> unelected bureaucrats in belgium. >> makes me crazy. >> they exist the world over, joe. >> very unfortunate. >> we don't have any here. >> here are the stories investors will be talking about. revision to gdp due in 30 minutes. the number is expected to be revised lower saying the chi likely grew at a rate of .4%. oil prices, crude up this hour. is higher by 39 cents for wti deliver i in april. 33.46. brent over london for delivery in april higher by 57 cents,

35.86. natural gas at 1.78. g-20 finance ministers are gathering for a summit in shanghai this weekend. among the headlines the head of china's central bank promising his country will not stage another devalue jays of the currency. we catch up with the former u.s. treasury secretary hank paulson on the sidelines of the event and he has some pointed advice for china. >> china's leaders, as i said in my speech are always adapting, always learning. i'm someone that learned, you know, that messaging is a very difficult thing when it comes to the market because part of it -- part of it is substance and part of it is messaging. so as i said i think a big part of thing that it can do is they can show right now they are very serious about dealing with inefficient state-owned enterprises as they take capacity of the steel industry, coal industry and others by letting some companies fail. >> few stocks on the move.

>> got it in there. >> there was a tone there. >> for sure. >> hilton worldwide confirming it plans to spin off most of its hotels into a reit. hilton will split off its time share business into a separate company also. and rbs reporting its eighth straight annual loss as it continues to be weighed down by restructuring and legal costs. tuck backed bank is delaying the prospect of any dividend pay outs it previously said could start returning cash to shareholders next year. what does it mean for the time share business. why would anyone buy a time share. >> because you know what you're going to get. >> you can swap. mario is here. >> you can buy a place for $10,000, pay your annual fee if

it's rated x, y or z. >> do you own one? >> i did buy one about x number of years ago and worked extremely well. >> no kidding. really one of those -- >> expensive. >> hot climate. >> one place in particular. >> one place in particular. >> warm place? >> named after a saint, st. maarten. >> it's great down there. >> a little dutch, a little fun. they had a golf course at one time. >> is it still down there? >> i no longer have been to st. march ten. >> five best time share resorts in st. maarten. >> nothing wrong with part of financial engineering where your take your assets and monetize them and get the highest valuation and that's what they are doing. >> isn't that problematic for time sharing.

>> michele had a point is that you know where you're going and you have a certain understanding of the dynamics. you don't have to guess. >> consistency of quality hopefully. >> or whatever. >> with air b and b you don't know. >> you may not know. >> quality. bed bugs. two words. >> are you a bed bug donor or recipient? >> i don't want to be either. >> if you rent the place you wonder if people bring bed bugs and if you stay there -- >> from our point of view we look at companies that benefit from zika, bedbugs. >> you got an answer for this. >> what do you think i do for a living. get ready to answer your questions. >> we'll talk some apple. apple shareholders meeting today at the end of what's bean tumultuous week for that company. josh lipton joins us from the company's headquarters. josh? >> reporter: scott apple shareholder meeting kicking off here in just a few hours. at the top of much's mind

clearly this fight between apple and the u.s. government in a court filing yesterday you saw apple ask to throw out this order compelling the company to help the fbi access that locked encrypted iphone. in that court filing apple arguing no court has ever authorized what the government now seeks no, law supports such unlimited and sweeping use of the judicial process and the constitution forebids it. tim cook has been very vocal in his case and he has the support of many in the tech community including, microsoft, google and facebook. and today while this battle with the u.s. government isn't officially on the agenda, you can expect cook to address this issue with shareholders here in can you p cupertino. the new software apple would have to write could be stolen by hackers or criminals and put

millions of iphones at risk and two if the government can force apple to write new software then what's to stop the government from forcing apple or other tech companies from intercepting messages or tracking the locations of users. in other words, this is bad precedent. now the shareholder meeting kicks off in just about four hours. we'll be inside the briefing and bringing you guys headlines as they come. back to you. >> all right. josh lipton, there we go again with either it or isn't. just one phone or a lot of phones. i don't know who to believe on this. we can get that straight we can make a better determination. if they design it for this one it could be used for a bunch or not? >> reporter: well that's the point, joe. you have the fbi saying listen this is one phone, one time and you have tim cook responding listen that's not the risk. if you force my engineers to write this new software, to buy pass the security, there is the

risk that that software is stolen by hackers, by cyber criminals, by state actors all over the world and then you're putting millions of my customers at risk, their personal data, financial data and health data you can sure expect shareholders will ask more about that, that meeting starting bin four hours, guys. >> okay. thank you, josh. excited. because i don't know what you think about this mario. we've been talking about viacom. what about -- where are you on this? >> i don't own any apple. i'm a concerned citizen i don't want another paris, i don't want another san bernardino, anything to help somebody figure that out. the world will evolve. in 1700 or whenever we created the constitution the second amendment for certain reasons and we'll figure out what technology always leaps ahead of the rules and the rules will catch up with the technology. >> we need congress to get

involved. >> somebody has got to do it. you know what? i watched "24" as a media analyst and they always out how to triangulate somebody. >> andrew has gotten so far on the other side that to save like children from a terrorist attack he's ready to do even worse than water boarding which is weird. people that are normally consistent in their thinking are put in all kinds of weird positions on this new stuff. >> somebody has to be practical in this life. >> you're on the side of the fbi or -- >> i'm on the side of framework of protecting a citizen in the united states. i do not like december 7th or 9/11, i do not want another san bernardino and if i can at the margin out how to put twin safeguard of the legal system of

the united states which is extraordinarily capable find a way to do it. >> you're not convinced when tim cook says we'll be less safe in a world -- >> you do not like the big father watching everything you do and you want personal freedom and that's one of the great things about this country. so you have to balance it and we'll figure it out. >> that means resolution. it will keep coming up. >> absolutely. you'll have economic terrorism even more. like what happens -- >> that was his point. >> forget his point. what happens if the united states doesn't have a steel industry which is what's happening now with the dumping of steel. there's a lot of things that are more important than apple. you like to talk about it because it's in the headlines. >> we've been talking about privacy versus security. miranda. >> forever. miranda act. >> the thing is -- >> it's core of the american debate. >> mario, it is a slippery slope, right. and here you have all these

people that aren't terrorists that deserve privacy on their phone and because of these guys we change -- everybody becomes less free because of these guys threaten to -- >> joe, i'm sorry. you can buy a phone for x dollars and just toss it out. >> that's what they do in "sons of anarchy." soon nothing left for a book door. >> we'll have a solution. we always find them within the context of a free market. >> but a solution not lough us to track these. we have to stop terrorists another way. >> do it within the confine of the history of america rules of law. >> maybe we use words islamic extremism and we bomb trucks that take oil. we take these guys on instead of worrying about privacy. maybe that would help. let's go to viacom. second largest shareholder. >> let's give you the facts.

400 million shares when they spun off cvs. two blocks from here was where viacom known as viacom created in 1973. sumner bought cbs, milking the company to buy back stock. they lost some financial flexibility. and we have a company with 400 million shares selling at market cap of 16 billion with 12 billion of debt. this is a company that has financial resources, is extraordinarily cheap and can change fairly quickly. my observation was simple. if you go back to the 1950s there were seven movie companies. there's one right now called paramount that has a certain library, a certain critical mass. can you sell a piece of that? now i can figure out whether you sell it and bring cash up to the parent or whether you drop knit to a joint venture to unlock that.

i would need to understand the tax basis of paramount on the books. they bought paramount somewhere around 94. so there was a tug-of-war for that entity. then what i would do is go over the top and create tv series. whether i do that by accelerating by merging with lions gate or amc and find me a company that brings me digit technology. on march 14th there's an annual meeting and i know in today's trades there was a discussion of the upcoming litigation but they are going redact it. i'll show you what redacting means. i'm reading -- this is what redacting means. you can't read anything. >> that looks like hillary's emails. >> hold it up. >> this is called redacting. that is this is a legal document from a court, this was just to file a paper. so imagine what the testimony is going look like if it's redacted or kept one seal. what are we going to cho?

and what are they are doing. that's an element that could have a dramatic catalyst. on the other side of the coin summer redstone i created a company with a value of cbs and viacom of $66 billion. that's pretty good. he's created some good value. he's moving on. and how do we surface the value in viacom and how do you? -- how do you do it? it's a work in progress. >> has viacom missed the digit age. paramount selling a minority interest has merit for all reasons to you mentioned. a lot more to be done before they become significantly present in the industry in which they are participating. what do you think about that? >> that's a great question. you look at netflix and look what they've done and you look over top and hbo and i like time warner because they have hbo and hbo can become that equivalency. you can't have distribution without contend.

they do have the content sway magnet. secondly china is $7 billion of box office. it will be bigger than the united states in two or three years. and in addition to that at paramount while they've had some stumbles they have terminator -- transformers 2, 3 and 4. they have "star trek". they just need more scale. but they have a contents. i remember doing an analysis on cinderella. every seven years how much disney would make. now you can do the same thing. who would have thought -- >> you mentioned china. what about this guy who the likes overpay for everything in hollywood. >> i don't know who is knocking on a door. clearly when we put up a smoke signal about the notion this is an alternative and an option -- >> amc theaters. he wants to be big in hollywood this guy. he's made no bones about it.

>> don't ignore the fact somebody else came in and did a production deal with comcast and sony has a wonderful asset and a company that's only 25 billion market cap called columbia. paramount not only has content but global distribution. >> be interested in chinese buyers. >> if i were alibaba. if i'm sumner i want distribution. not sumner. but philip. i want both money and capability of doing what larry suggested which is going into the digit age at annated rate. can i do it internally or come up lean indicate headquarters in san francisco and move out of broadway or move broadway south to silicone valley. there's a problem with wanda, there's a consent decree that a company that owns one of the movies can't own theaters. that was back in the 1950s. i have to work that through. >> how supportive are you of

philippe. >> you asked me that before. i would allow the market to play out itself. kay. philippe is on the board of national amusements. a trusted ally. i suggested he has some time between now and year to end put certain elements in progress and the next thing he's got to do is figure out how to make love to ergen. >> god almighty. >> you don't like dish. >> the metaphor is a little strong. ate family show. >> i know both of those guys. >> are you saying he has six months, in your mind to turn something around? >> i would think there's an element behind that. you can't turn around six months. but to get you started on the path of saying what larry said. how do you get into over the top. how do you take a content

company and put it into distribution that's relevant today on a global basis. we have 330 million people. and smartphones, 3 billion of them. i don't have that number. may be 2.8. that's a number that's growing. they want to watch something. somebody is to be there. who is going to be -- not only in the united states, netflix is going to have 120 billion customers with an incremental subscriber acquisition and new york terminology, i would say butkus but not a lot. >> you talked to him since he got the chairman? >> no. >> do you intend to? >> no. >> will you try to? >> no. >> suppose he tells me something what i do want to do that. i want to do it a na nalyticall.

>> you can never be followed by the nsa. >> that's not true. >> i'm pretty sure that's true. all right. mario stake round for the hour. coming up stocks on the move including a big loss for weight watchers. not what they were hoping for. we'll be right back. to thrive in an ever-changing environment, companies must adapt.

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. welcome back to "squawk box". stocks to watch today, strong holiday sales helping bolster jc penney results. they posted earnings that beat. stock higher by more than 9%. gaps full year profit forecast falling short of estimates. way down bay strong $. week sales of banana republic lower by two-thirds of a percent. weight watchers reporting a big drop not in weight but sales as it lost more subscribers despite the recent oprah winfrey investment and endorsement that stock is off 28%. coming up the big debate among corporate leaders and investors. we'll talk shorm termit termism

box comes right back.

our guest host this morning, larry and mario gabelli. larry you want to talk about short termism and i thought you would talk about a larry summer speech or hillary clinton speech everybody has a plan for five years and not report earnings. >> i'm in a different place. this concentration on short

terms is way over played. i think that good companies manage for both the long term and short term. when they harvest they plant. and as a consequence we have the greatest companies in the world. so if we've been so concentrated in short termism that wouldn't occur. >> you think it's overdone. >> way overdone. i like quarterly earnings. i think it gives a competitive edge to companies. it's transparent. it provides accountability. a lot of that stuff i don't care whether they give guidance or not. i do think that when you look around the country they are criticizing stock buy backs but you can't build plants when there's no demands in the world. research spending is far more focused today than it was in my day and the avalanche of new products that come out and improved products never better. so, i think the idea that the u.s. companies are concentrated

and only short term. >> part of that is driven who owns the money and who is the gate keeper. when you have electronically traded etfs trying fiscato scal the second you create the short termism, and, you know, current earnings are an important element that have driven stocks like jc penney today. >> i agree with that. >> i'm talking about corporations. >> got to head to break.

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welcome back to "squawk box". breaking news, we have gdp and trade balance. the january trade balance on the advance look is not out yet. so we'll jump to gdp. last look up set point 7. looking for half. ended up getting more up 1%. now boy how do you make 1% look good? you have expectation for .4 that's how. now we all know this first quarter is humming along a little bit better than that but 1% is the seconds look at fourth quarter gdp numbers dipped down 2%. last look 2.2 which is what we were expecting again. didn't expect to see that.

on the gdp price index up .9. one tenth hotter than expectations and personal consumption expenditure on quarter over quarter basis 1.3, one tenth higher than expected. trade balance out for january, 62.2 and that of course is red ink, therefore it is a deficit. 62.2 isn't the worse number we've had. as a matter of fact you go back, we had 66 billion in august of last year. 1%, well just to give you some context fourth quarter of 2014 was 2.1, so we're going to continue to monitor this what have interest rates done. not a lot. we're still around 1.75, one basis point higher. pre-opening equities still pretty vibrant up triple figures and futures up 1.02. we're digesting g-20, but i think the comment of all comments is if we do more we

just end up with more zombies. i kind of like the tone of that. maybe that type of thinking might spread. back to the game. >> i'm tired of those guys lecturing us. let's underline the big news. gdp was expected to be revised downward to 0.4%. instead revised upward for the fourth quarter to a full 1%. is that the big headline? >> i'm still looking for the personal income and spending numbers that i expected. so we were going to get a good look at what sort of happening now in the rear view mirror. i got to put a triple l on what happened in the fourth quarter. the reason it's higher things were less lame. there was nothing to write home about in the data in terms of why it went to 07. expected to be revised lower. these things could bounce back the other way. but, for example, when i look at the issues here, consumer spend being revised down to 2% from

2.2. >> personal spending. >> you got it? >> no. >> that's right. in the fourth quarter. but like, for example, imports were minus .6 to 1.1. that's a bit of a help to gdp. equipment was minus 1.8 as opposed to minus 2.5. these are at the margin. it doesn't change the general sense you had a pretty weak quarter. and the idea has been out there in general that the first quarter of 2016, two things to note. first is that it should be a pretty decent bounce back from the fourth quarter. we're now running two three on the cnbc wrap it up date. and the idea that we're not expecting that weak first quarter effect that we've been talking about and maybe that's because we haven't had the kind of weather, you know, knock on wood we've had before or whatever reason. you can't get around the idea

that gdp has been incredibly volatile and i thought yesterday what jim bullard said when you're faced with a question about which data to follow, jobs or gdp, he says it's easy. you follow the jobs number. it's more stable. >> consumer spending comes out at 10:00 a.m. >> i'm supposed to know that. that's embarrassing, michele. i'm personally on air. >> bullard said the fed was not on a freight train towards moving on rates, raising rates. they are not on a freight train. >> right. >> but what does this do to the fed's thinking? are they on the track still towards -- >> i think they are. but i wondered yesterday after i left the set and talked to jim if we seal the deal on no march rate hike, in that i don't see how the fed move without a centrist like jim bullard on board. maybe people didn't realize it at the time. when jim sits here and says we can't hike rates i think it

doesn't happen with bullard. he's right in the middle. he's been an interesting litmus test for the federal reserve. and he was the one who turned hawkish and kind of got the fed on that freight train to hiking rates. they all want to hike rates. it's worthying about if you're a central banker. you don't want to be at sister. you're at zero because you feel you have to be. >> it's out of control train. careening after nine years. careening to a quarter point increase. oh, my god up a quarter after nine years. >> i was wondering when you were going to pounce on my metaphor. i know the absence of sorkin means you don't have anybody to beat up on today. >> got mario. >> thank you. >> thank you, steve. >> i just want to make a quick note, today monetary policy, important paper presented today.

it will say the fed should follow the data and not give us time guidance which is important. >> okay. looking forward to it. be a great read. >> yeah. >> this is what economists do. they take reality and make theory out of it. >> and change their mind. >> coming up the state of hollywood biggest stars in tinseltown will hit the red carpet for the annual academy awards. why studio giants are feeling the heat. that's next.

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the 85th academy award ceremony kicks off sunday night. julie boorstin is live on the red carpet already. she has a look at the state of tinseltown and studios cranking out all the virtually screen content. >> reporter: well hollywood is facing pressure from all sides. last year was the biggest box office year on record with disney's force awakens and universal "jurassic world" creating tough comparisons for this year as studios juggle various issues. ticket prices don't rise while consumers have more pgss than ever to stream content at home. second studios are under pressure to focus on franchises and superheroes. those do best in china which is on track to soon outpace the u.s. in terms of box office. third, for indy films that draw attention, studios face new

competition from netflix and. amazon which are snapping up films. plus for their media giant, studios are under more scrutiny. their performance is increasingly important as their cable division counterparts are under pressure from cord counting. viacom put paramount on the block in talks with investors to make a minority investment in the scuddo. but not all pressure is on the bottom line. as the folks here get ready for sunday night the academy as well as the studios are facing criticism for not being diverse enough. there's new studies showing movies with a diverse cast tend to out perform at the box office, it seems like it's in the studios best interests as well as the academies to bring a more diverse slate of voices to the table. back to you. >> julie boorstin live for us in hollywood. our guest host this morning, mario gabelli and larry bosity.

larry you look at the market. we got this nice come back. oil is higher again. what floats your boat in the market these days. what looks attractive. do you look at energy as a value guidance? >> the russians and saudis could blink at some point in time and do something because at the margin 25 billion of the 90 odd billion barrels a day. what i'm looking at is the foj. military spending. who benefits. we have companies that have programmable bomb fuses that makes sense. second part we under spent as a country and, you know, even australia, not even australia but australia is increasing their spending. we have hot spots. always had these. we stormed our military. infrastructure. a bill passed at the end of december. we had the -- yesterday at a conference we had the society of engineers point out that 40% of 620 odd thousand bridges, 40%

rate d minus. that means infrastructure. just doing the tappan zee bridge -- so those companies that supply products to that infrastructure will do it extremely well and those are examples -- you read the annual report of a company called gencore. $10 a share. stock sells for 12. they make the equipment for asphalt. chattanooga called aztec. in buffalo new york that makes the steel, for bridges. we had a conference yesterday. water infrastructure, water psychiatrist, flint, delhi. how long can we replace these pipes. who benefits from that. you have companies like that niche markets in industrial america even with energy down

wean mining down, even with manufacturing hit by the currency these companies are generating cash and what larry said before they are allocating it appropriately. do you want to spend on chasing a frog or do you want to spend on another steel mill or basically look at it and buy back your stock. which is the best alternative? these companies allocate. precision cast parts like warren buffett bought. there's a whole bunch of others that -- all common similarities. >> i want to ask you about the auto part suppliers. you have always light o'reilly. you like autozone. you like these other places. i wonder if you subscribe to peak auto. >> do you. peak auto is so visible. first of all sales can inch up, we over produce cars, under produce light trucks and as a result the inventory is out of balance and production will not grow even if sales grow because you got to get in balance. that's very short term and very narrow because we as a country

put 18 billion cars. 100 million in the world. 100 million produced. europe is improving. china is, you know, kind of stuck at a high level. japan is inching up. but the point is who needs parts. and why? you are driving more. get more fuel efficiency. more in your pocket to spend on parts. which companies benefit. that's why i like -- the users that benefitted from energy, auto riley, auto solicitor general. genuine parts is a laggard and it's extraordinarily successful. the currency has hurt them. they are getting more into the retail business. this is raising the dividend. not current return. >> margins aren't as good in january. compared with autozone. >> larry the autozone did something that was very clever. they went almost equivalent on pay on scale on scan.

their payables to inventory was like 102%. genuine parts is creeping up to that. they are basically having their vendors finance their inventory. these guys are extraordinarily good. when a professional mechanics goes into a location, i take my car there i want a part instantly. they won't wait for the next day. these guys figured out what cars in what zones in what neighborhoods need what parts. i'm trying to figure out what they will do in havana. >> havana. >> i was going to ask you what the knicks would do with carmelo anthony. you have your madison square garden hat. >> i happen to like as an analyst, i like to buy companies where i have a margin of safety and i can buy a business for free. there's 25 million shares of msg, that's the symbol. it sells at 154 plus or minus. that's 3.8 billion. up get 1.6 billion of cash. i'm paying 2.2 billion for the rangers, all of their venues, franchise, and they have air

rights. if you go down south of 34th street and look south on where the high line is you'll see enormous activity and the air rights have an extraordinarily interesting economic -- >> space above the building. you can sell the air above fwulding so somebody else can build something taller. >> can you trade it. >> it's worth a lot of money. >> under section 1032 potential tax benefits. bottom line, the knicks some people say it's worth 2 billion. i don't know. their record started off well. but they've continued to, i think they are 2-15 in the last 17 games. >> all i know is when you started talking you had the hat. when you said margin of safety you took it off. >> look, it's work in progress. you know in terms of tech. the rangers won last night. the washington capitals are way above everybody else in the hockey league. >> do you watch them because they are my team and you knew that.

>> no comment about what i know about you. but then we think about health and wellingt and wellness. you talked about weight watchers. >> still claiming that after last year. >> they were up 3-1. >> the bengals -- >> that's something. >> xavier is good. xavier beat villanova. >> i saw every minute of that. they were up enough towards tend where i didn't have to turn it off. >> one of the speakers was a villanova double. >> villanova is good. they are good. i took them last year. >> that yogurt. >> the big east tournament is msg 2 and that's coming up. i want to go. how many shares do you have. >> i will tell you -- never mind i won't tell you my seats. >> you have seats for the big east tournament. >> no i couldn't give them to you. you want to be >> you want me to buy them from you. >> jim cramer joins us. check out the futures.

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>> let's head down to the new york stock exchange. jim cramer joins us now. we have two guys, i'm sure you

would love to talk to either one of them. mario, super mario, and larry legend both here. >> it's been enjoyable, breath of fresh air. they talk about real companies. the companies are to the necessarily caught up in the s&p 500 future, not caught up in this weird dialogue. they are talking about numbers and businesses. i thought larry's analysis of honeywell/united technologies, this remains front and center for me. these are two great industrial companies. it flashes a light at why the industrials are undervalued. these are great industrials doing well. they don't get talked about enough. we spend too much time talking about various stocks that are yesteryear stocks, and not enough about industrials that are experiencing rebirth. a joy to listen to. >> jim, always a pleasure to listen to you. honeywell and united technologies are fantastic companies. both will do extremely well because of commercial aviation,

and great cash generators. >> 10 billion. >> that marriage may not be made in heaven. >> but great cash generators. i would like to see it happen. >> yeah. >> those are both cheap stocks. >> that's great to hear. people just have to understand that there's industrials that are worth a lot, if we break away from the gloom. the gloom says these things are selling at 14 times, 13 times earnings. these are great companies. as much as i like kellogg and general mills, those stocks should not be selling at a premium. it's refreshing to hear people talk about real stocks and know things are not that bad. >> thank you, jim. >> thanks, guys. >> honeywell was so set up for cote. all he had to do was stare straight ahead. >> it was a great race, where the first person who ran the race --

>> those relay races. >> yeah. >> fantastic. >> looking around, where is everybody. >> did he take over right after you? >> no, there was a guy named mike bonsignor. >> he had to spend more time with his family. >> wow. >> and in any event -- >> more in just a minute.

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our guest hosts this hour, mario and larry. off camera we were talking about neel kashkari. >> i was disappointing to hear kashkari call for the break up of banks, in the sense they're too big to fail. and then to suggest they ought to have a financial tax imposed upon them to have a 25% capital to treat them like utilities. that's way off base. as a minneapolis fed guy, frankly i think this is out of his realm. even if it isn't, i couldn't

disagree more. >> i think it's more in his realm than managing stocks at pimco. he might be much better at this minneapolis gig than that. >> i would suggest that he needs to concentrate on his focus, and what his job really is. he might be right about this, but i don't see it that way. >> he ran for governor of california. breaking up the banks is a popular thing to say these days. >> but he also lost in california. >> he can also try again in this country. >> i think the banks are consolidating, north carolina, south carolina and florida should be bought by the banks in the north and follow where the money is. the money managers are a surrogate for the stock market. one time i recommended legg mason, which doubled from 28 and now back at 28. i look at the beat up ones, dillon reid, 80 million shares,

stock is $20. that's 1.6 billion. the cash they have, buying a great business for a billion dollars. if i wasn't public, i would say let's merge, we can call it w.a.g. we would w.a.g. and have the w.a.g. effect. waddell & gabelli. >> denims for 1999 can last you for everything. you don't have to care which mind you're in. >> they're a value play. >> are these mom obama jeans or the cool '70s -- >> either or. you buy them for $300 at the same place i get them for $9. i buy the remnants. >> scott, i think you were checking me out. >> no. >> it's like that company in san francisco where instead of figuring out to become a minor and take a stake, they say what do the minors need and supply

them. >> you wear sevens? >> i do. >> did you pay for them? >> i did. >> i shopped for them. >> they weren't that expensive. >> 200 plus, right? >> they say they make anyone's you know what look good. you may be the exception. >> you clearly are not going to the rodeo with those. >> let me ask you quick, do you think we've heard the last of the honeywell/utx? >> yes. >> you do? >> really? >> i'm disappointed to say that, but i do. i think at this point in time utx doesn't want to do it. maybe antitrust is an issue. >> maybe the customers like airbus -- >> came out and said they didn't like it. >> they're fight being who will be ceo. >> independent of that, both stocks are cheap. both good companies. both will do well. you will have a tailwind of military, commercial aviation and the high propensity to travel if you're chinese or a millennium because you want to

experience. >> gentlemen, it's been a slice. >> it's been an experience. >> thank you for coming. >> good way to spend a friday morning. when you said you look pretty good in them jeans. i think you said, boy, you look pretty good in them. do you remember? join us on monday. >> that was eddie murphy. >> that was. >> read the annual tomorrow morning. >> from berkshire hathaway. >> and have yogurt. >> okay. good friday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. stocks on track for their second positive week, looking to build on it as the s&p is above the 50-day moving average for the first time this year. europe adding green arrows ahead of the g-20. back home gdp revised higher, 1% ve