bill gross, founder and co-investment officer at pimco. >>> and the american recovery we examine where the economy is growing and where headwinds remain. in tonight's final installment on this day of positive news about jobs we shift to the bigger picture and explore what the long-term obstacles are to america's economic primacy and prosp prosperity. "in focus on this friday, american recovery and the challenges we face. challenge number one, health care. we will spend 2.8 trillion on it this year, that's about one out of every $6 the u.s. economy will generate. we pay more for health care than the next ten biggest spenders combined, and we don't get better results. we have higher rates of disease and injury up to 75 and shorter life spans than any of 17 other wealthy nations. we rank 50th in the world in infant mortality, according to "time" magazine, cuba is number 41. >> we have to do something about health care costs, that is the main driver of stuff but that doesn't really mean cutting benefits, that means cutting costs. >> bottom line, even though health care creates jobs an expe

yesterday, pimco's bill grows tweeted sell euro, as well. people were listening and the market was already ahead of him at that point. the euro right now is trading at 1.2961. but the biggest drop we've seen since january 2012 came in the euro and this is after a sell-off that we've seen since february, where the euro has been under pressure. again, the euro was down by 1.3% in trade. right now, the european markets, you're right, aren't reacting terribly to this. france, the cac is the worst performer, down 1.1%. overnight in asia, there was a market sell-off. the nikkei was down 2.7%. markets quaking. that's just the idea that you'll be seeing depositors taken away from -- >> everywhere. >> right. >> this is -- >> a run, say the "r" word. >> a bank run. if it happens in sigh before us -- >> this is not -- >> at the beheft of the european union, this is coming because of what they're saying that they want this shored up. it means bank depositors everybody where should be concerned. >> seems like a nice play. it's not the golf course. but it

bill gross i pimco founder along with austan goolsby from the school of business and former chairman of the board of economic advisors for barack obama. austin great way to because to you, let's talk about the job numbers released on monday. turn employment rate now the lowest four years. was this what you expected? >> it was better than what i expected, this is one of the reports, we have been waiting for reports like this, we never want to make too much out of one month, as we always say, if you could put several months like this together, i think people would be feeling a lot better on what the implication is for growth. i think the sequester kicking in is going to slow growths a bit. so in the future months, might not be as strong as this one. >> bill the stock market keeps on hitting record highs but the freeze you're using is rational temperance. >>> it's obvious in the bond market when a five-year treasury only yields 90 basis points, it's on that like five years from now, that's what you're going to get. it's harder in the stock market because you have expectations and p.e. r

we turn to the ceo of pimco the world's largest bond fund. i asked if the situation in cypress is unique or is it a serious issue for the u.s.? >> it is mainly unique to europe and cyprus in the sense that cyprus has a very large bank system and there's no other way they can raise money. the reason why it's relevant to us, susie, is because it's disrupting a certain conventional wisdom which deposits are sacred. ensure deposits are sacred. and that's no longer the case. >> absolutely. that's what i a lot of people here were thinking about as agents question whether your bank deposits, can you trust bank insurance? even though this problem was all of the way in cyprus? what can you tell people at home tonight? >> i would say no fear kays, there's no fear that the fdic insurance is not going to apply. i think what's happening in cyprus is very special. however, we may feel the spillover in different waste. what's going to happen now, is because unless they fix the blunder that they call them, the mistakes, these are the words that are being use

company pimco, reduced its euro investment, but its warnings have been ignored. the dax was on the upside thanks to gains in the banking sector. >> we stay in frankfurt for a closer look at wednesday's market numbers. the dax finished the session up by nearly 0.7%. good to see that. the euro stoxx finishing up. the dow up by nearly 0.5%, following statements from ben bernanke at the fed. the euro trading higher against the greenback at a value of $ 1.2948. >> investigators in france have raided the home of the imf chief, christine lagarde, in connection with criticism stemming from her time as finance minister under nicholas sarkozy. >> they are probing a decision she made in 2007, which resulted in a 400 million euro payout by the french government to a disgraced tycoon, who was locked in a dispute with a bank. she says the move was the best solution at the time, but investigators allege the affair is riddled with anomalies and say the decision was questionable. she is cooperating fully with the investigation. >> well, just how happy are you, really? and what is

jo joining me right now is bill gross, pimco founder and former chief and former chairman of the council of economic advisers for president obama. gentlemen, great to have you on the program. thanks for joining us. >> thank you, maria. >> austan, great day to talk to you. let's start with the jobs number released on friday. a very strong number. 236,000 new jobs create for the month. the unemployment right now, the lowest in four years. was this what you expected and what do you think it says about where we are in the economy? >> well, it was better than i expected. this is one of the reports -- we've been waiting for reports like this. you never want to make too much out of any one month as, you know, we always say. if you could put several months like this together, i think people would be feeling a lot better on what the implication is for gdp growth. i wouldn't get hopes up too much for that, though, because i think the sequester kicking in is going to slow growth a bit, so in the future, months might not be as strong as this one. >> certainly optimistic though, none the less. bill,

into the mind set behind it what that was really disturbing was a model aryan you know it was that of pimco very well connected in these areas sad presumably based on personal contacts that the thinking was that since this deposit or money and cyprus was used to do the gambling that was so harmful to the cyprus economy that it was only reasonable to take some of it to repair the damage which is a truly horrifying thought because of course our money is depositors' was used since we don't have glass steagall or a vocal or volcker rule to do the very same thing here in the united states and it's punishing the victims and forcing the victims to pay restitution to the criminals instead of the other way around so if that really is the thinking and it's a horrifying turn of events in the psychology of the people that run the global economy how much control does germany and france have over i.m.f. an e.u. decisions and they have eastern. oh individually yes. well i think people generally agree that germany is the dominant player here right now the biggest lender of the biggest. media the biggest. p

we'll find out where pimco is investing trillions of dollars.evin warsh. >> what are you doing? >> and "squawk" gets behind the wheel. luxury car sales outperforming other segments of the auto industry. phil lebeau is here and he brought some high performance toys, as the third hour of "squawk box" begins right now. ♪ up and down the freeway >> welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen, along with becky quick. andrew ross sorkin is on assignment. our guest host this morning is kevin warsh, former fed governor. he's currently a visiting fellow at stanford's hoover institution. and kevin has learned quickly that's what i do with the ifb. these people, they talk, they try and say things, they're constantly saying -- just take it. take it out. leave it out. it's easier to do the show. they're constantly meddling. blah, blah, blah, we got to get to commercial. all this stuff. it's just a lot easier. >> works much smoother when we just ignore -- >> let's move on and continue. >> yeah. >> i'm the good girl.

for more, phillipe, managing director at pimco, joins us now. it doesn't sound like it will know a pretty picture in the fourth quarter. is there any sign that this is the bottom? >> i don't think this is the level. they will candidate that, you happen, they're all. i don't think you'll continue to see that, especially in light of the recession. you know, they trade at a significant discount. i think partially it is quite savings. but really, again, the pressure on the levels of structure on the provision in italy is something that's been a bit under the radar. but i think it's coming through, as well. >> there's a negative feedback here and is a lot of the italian banks have been buying italy's debt. have they not? >> right. but i think that's the least poorly performing port follow he yos. the concern here is the level of s&p around 15% and the level of provision in the nfls is very low and it can be adjusted. so i think the pressure is coming from the real economy in italy, not from the sovereign side of things any more. >> we've seen a rise

liz: breaking news on pimco's bill gross. industrials saying that the bond king cut back on his holdings of treasuries and mortgage this backed securities last month. when dow jones news wires is saying this, what is important to point out is that anytime bill gross makes a move, it's rather important here. so he is cutting back on, as we said, treasury and bond holdings. that was in february. so this is according to, i'm assuming, to an sec filing of some sort. but he has cut his mortgage-backed securities and treasury bond holdings in february. the bond king moving it back. tlt is just slightly higher. okay, let's get to nicole petallides. you kn a different strikeout for a retailer here. shares of dick's sporting goods, what is happening here? they came out with some less than expected exciting news on sales? >> reporter: very clever, right? when you talk about dick's, we're talking about dick's sporting goods, obviously, a retailer that sells sporting goods and the like, and it turns out the profit missed analysts' effort

and later, pimco's mohammed el-erian. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. [ female announcer ] it's time for the annual shareholders meeting. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ >>> a squawk market master on the rally in stocks. the employment recovery and the fed's exist strategy. >> paul ryan set to unveil the gop budget plan. >> i'm going to go to the store. >> we'll talk fiscal responsibility with the republican vice chair and the democratic ranking member of the house democratic committee. >> where is the booze? >> i got robbed by a swee

. >> and we know that's where bill gross of pimco is patching. talk today but it doesn't mean he wasn't available to comment. he did tweet. he said central bankers a century apart. lend freely at a penalty rate. bernanke, lend freely at a subsidized rate. even the fed is pumping up the action today with this tweet. watch live today, a fed tweet! 2:30 p.m. press conference with fomc chairman bernanke. let's welcome back our panel as we count down to the fed decision. ben white, josh boak, kneel nein and michael santoli. does bernanke have any real dissenters on this fed board and who is it if he does is it. >> he has esther george, the president of the kansas city fed who is dissenting this year. i suspect she will again today and then some of the people not voting are very much in the hawkish camp. that's richard fisher, charlie plosser. the thing is bernanke for now has control over this federal open market committee. the governors are on his side. all seven of them, they vote every meeting. he has enough of critical mass of the regional preside

joining me to discuss this and more is mohammed arian, the ceo pimco, one of the world's largest investors in bonds. chrystia freeland is the editor at thomson reuters digital and christine romans the host of "your bottom line." welcome. it's good to have you here. you warned that those forced government spending cuts, which we called the sequester were going to do great damage to the economy. strangely, the stock market doesn't seem to buy into any of this. does that mean the sequester wasn't the big deal we thought it was going to be or does it mean there's more to come? that the market is ignoring. >> unfortunately, there's more to come. the issues are really important. the economy is stuck here. the stock market is there. that's why we have a mix of excitement and anxiety. how do you reconcile? it's the wedge. it's the wedge of monetary policy. it's the wedge of an aggressive fed. what's critical is for the assisted growth to come up to genuine growth to validate the stock market. that's why it's important to remove these head winds from washington. >> that's interesting. that could ha

gross at pimco said. all this borrowing and spending just creates a sugar high and you have the hangover later. this is so simple. you can't create something from nothing. you know, julie andrews had that great, great song in "sound of music" nothing comes from nothing, nothing ever could. how true that is. i had a man in alabama, evergreen, alabama, a town hall, said my daddy always said you can't borrow your way out of debt. we need to be listening to that kind of logic. i don't know who these people are that keep saying paul krugman, that we can just borrow, borrow, borrow. he said the other day he didn't care even if the defense department had a wasteful program, we shouldn't be cutting those programs. how ridiculous is that? i think that's the modus, that's the drive behind this budget, that kind of idea that we have got to keep spending even if we keep running up the debt, and that's going to make america better and create economic growth. i tell you, i'm worried about our working people. they are n

i will tell you, this is breaking news, pimco, black rock, they are all preparing for when interest rates massive debt spending going on. they are saying rates will have to rise in a big way to pay for spending. stuart: that is a huge negative. that's a major negative for the stock market. liz: you can see the buyer's remorse at the federal reserve in buying all the u.s. debt. stuart: all right. the dow is down 29 points now, backing away from the all-time high that we reached yesterday at the close. the obama administration was required by law to submit a budget. february the 4th, got to do it. nine weeks later, the president still has not handed out even an outline of a budget. in fact, the president has only met a deadline once. so has a law been broken? the judge will join us at 10:35 on that one. then we've got facebook and privacy. according to a new study, your likes on facebook could reveal your tendency to use illegal drugs even your political party, even though you haven't explicitly said all of this. by the way, facebook owns that information. dr. keith ablow is not happy about

reason, but regardless, the truth is we're having to adjust ourselves through what bill gross at the pimco largest bond group in the world would call is a new normal. and the new normal is we are not likely to see 5%, 6% growth even in really great times in the next ten or 15 years, maybe the next 20 or 30 years. we're just not likely to for a lot of reasons. of course, nobody knows. mr. greenspan thought we were going to have surpluses and we didn't and we were going to have growth. nobody knows. we just have to take the best judgment we've got, and the best judgment we've got is that we're not on a sound path. so we're responsible leaders, and we have to ask ourselves is the budget here going to do the right thing. and we must remember and can never forget that who will suffer the most if we have a fiscal crisis, won't it be the poor? won't it be the people in the most fragile work environments? won't it be the people with less skills? won't they be the ones that would suffer the most? don't we have an obligation as a united states senate to reach out to the house and say we get it, this