edition of "squawk box." i'm andrew ross sorkin. our good friends joe and becky are on assignment today. they're going to be joining us tomorrow report iing live from e at&t pro-am in pebble beach. but joining me this morning we brought some friends together. we have a terrific cast of characte characters. steve liesman, the professor is in the house, mandy drewrey, also thank you for being with us -- >> what's my nickname? he's the professor. what am i? work on it by the end of the three hours. >> we have gary -- what are we calling you these days? >> he refuses to be on twitter. >> if you know the origin of the show, then you should know my name is spike. spike. >> one more introduction to make because we do have a full house, kayla tash is here, miss fake book, groupon, all of this herself. can i call that you? >> yes, yes. >> who knows what's going on. >> my tent is wide and large and we cover a lot of things there. >> and we brought you some things because i know this is

early since some of you do shows only in the afternoon. we brought some red bull. this is from australia, right? isn't it australian? >> i don't know. is it? >> i thought the guy who owned red bull -- >> says made in austria. maybe you misread it. >> no, no. >> andrew is saying we all do the afternoon hours, the later hours. who was the last one to show up on the set this morning? >> i was. i was on the telephone. i was on the telephone. >> clearly got out of bed so late he couldn't even get dressed properly. what's with this sweater going on? >> i wore this sweater for joe because joe gives me a hard time. i try to put blazers and sweaters on. since he's not here, get away with it. >> so excited they couldn't even sleep last night. >> some of us, this is just part of our evening, andrew. >> this is just the cocktail party that's continuing. >> exactly. let's continue with the news this morning. there's a lot to get to so we've decided to have a little bit of fun with it. it's a special "squawk" challenge. think jeopardy meets your

favorite '70s game show. six topics on the wall, take a look. global markets report, earnings central, ipo alert, your money your vote, markets now, and we have the wild card. we're going to give each person a chance to pick one and, mandy, you won the preshow toss. >> did i? >> you did. >> i wasn't even there. >> you didn't even know you won. >> you did the toss without me? i won. >> you go first. you can pick one. >> thank you. i'm going to take the global markets report, no surprises there, right? for 130 billion euros. the story this morning, guys, of course is greece. failing to finalize terms for a bailout. i don't think anyone is shocked or surprised. the finance minister is still head to go meet with officials in an attempt to rescue the agreement and to stave off bankruptcy. the three parties backing the coalition government received

sweeping measures but failed to agree to creditors' demands to make $398 million in pension cuts. greece is working on securing a 1300 billion euro bailout before the major march 20th bond redempti redemption. that is d-day, isn't it? >> steve, come on. now as part of the game, you get extra points if you have a good, insightful comment. >> on greece? >> on greece. i'm making it difficult this morning. >> i need some red bull to discuss greece. that's my story here. >> you're this luck. >> i have read every single word that's possible to read about this greek deal and i don't understand if they're close to a deal or not. i keep hearing stuff like the ecb has agreed -- >> they have a deal on march 19th at midnight. it's going to be like the debt ceiling. >> so you haven't even -- believing all those head lanes that say we're hours away from a deal, we're just 24 hours away from a deal? >> we have been reporting these

headlines for how long and they end up not being true. >> right. >> has the ecb agreed to a haircut or not? this whole financial shell game they're going to play, take their greek bonds they have on their balance sheet, they're going to give them to the efs and they will return those bonds to greece and give the ecb efss bonds. do you understand what i just said? >> i have no idea. >> i'm glad because i don't understand what i just said! and that's something -- and they're going to have a vote on sunday in parliament on the austerity measures or maybe they're not going to vote on sunday. so i don't know. >> i make a bet, they don't vote on sunday. >> and if they do vote, do they turn it down? that's the whole thing. it's like the market trades up a little bit. >> they won't vote because they don't want to turn it down. >> do you have an interday of yesterday? what's interesting is brian shactman had a slight disagreement over whether or not the market reacted to news of a better deal and that interday will slow a slight increase to

the upside but ultimately i think the market is are where i am. they are just not believing this is going to happen anytime soon. >> what do you think would be the best thing to happen here? it feels like any sort of bailout is throwing good money after bad time and time again. >> they have to resolve the greek problem and the alternative to not resolving it is greece leaving the eurozone. i think that's too painful for everyone involved. what they need to do is eat the moral hazard issue. they need to solve greece by throwing money at it, demanding us austerity. >> they're going to do it on march 19th. >> but what are they going to do, andrew? >> they'll take the haircuts, everything. >> without austerity measures? >> with austerity measures. >> i sent out a tweet where somebody had said if the equivalent government workers were fired, it's like 15,000 additional workers, that's like 450,000 american government workers if you were to scale it up. these are big numbers. an additional 3% of gdp is what

they're looking for and these are big numbers. not clear to me the greeks are going to agree to this. the real question is does europe agree to pape ear over. >> the only thing that will be relevant to the financial system, and correct me if i'm wrong, is it a default, technical default, hard default, soft default, and whatever it is determined it is, what does the -- >> i'm so complacent. you know what's going to happen. >> will credit protection, those that bought credit protection, will they be rewarded? >> absolutely not. >> no. >> i love this. sore ksorkin has all the answer. >> so you are willing to say right now that whatever the resolution is in greece, there will be no -- >> i am. i am. but we're going to go. steve got the second coin toss. >> what did he get? >> there's something else on the

wall for steve. we'll move to the second piece of this "jeopardy" game. what do you have? >> markets now for 50 billion pounds. >> 50 billion pounds? not dollars. i like that. >> decisions from the bank of england and the european central bank, neither expected to announce changes to key interest rates but both appearing to offer more emergency support to the financial sector. analysts expect the boe to inject another 50 billion pounds or $79 billion of new money into the economy, call it qe. meanwhile, the ecb is seen talking about the advantages of its second unlimited offering of cheap three-year loans to be allot ted to banks. the that's the ltro, the long-term refinance operation for those who are into the abbreviations there. president mario draghi, the ecb president, will hold a news conference at 8:30 eastern. we'll see what he has to say on greece, whether they will help lighten athens' debt load for growing profits on greek bonds

it owns. here are the currencies. what's happening to the euro? it is a little bit stronger against the dollar. i heard on the way in and touched the 1.33 mark. what else is going on? the ftse is up. the cac is up. the dax is up. italy down a bit and athens is higher. how about that? >> taking a flyer on equities in greece? you're all in, right? >> yeah, exactly. >> don't countries that default do spectacularly well after? >> yes. your friend brian sullivan has pointed out many a time that if you look at what has happened after a hard default in countries and a possible devaluation that the equity markets have historically had a spectacular run afterwards. >> right. >> let's talk about what's going on now, what i was saying if you take a step back from what you hear is they're in the process of another round of easing here, essentially another long -term refinance operation from the ecb

is an easing operation, qe from the bank of england is an easing operation and i will tell you there's a fabulous and robust and really interesting debate in the united states about whether the fed is on the cusp of another quantitative easing. john which wiilliams said yestee 8.3% unemployment rate still too high. the fed president. and suggests the fed needs to use all of its tools. >> but further qe, is that really going to bring down unemployment? >> stop that conversation for just a second. >> okay. because? >> because the conversation about whether it will work is a different conversation about whether or not they're going to do it. it's kind of like -- >> why do something that's not going to work? >> that's a great question, mandy, but i'm not sure the fed -- what i'm thinking and what i was just about to say is morgan stanley who has a really interesting fed team now with david dwrenlaw and now vince rinehart who is a former top staff guy at the fed, they're writing and pounding every day the fed is about to to qe and they're talking about it as a

preemptive strike. hopefully that's beginning to answer your question. >> yeah. an insurance policy. >> exactly. they're not going to wait for growth to weaken but i will tell you there's a bunch of other guys, joe this morning says the fed is nuts, that unit labor costs are beginning to rise, inflation is beginning to rise. some other folks who say the fed is misunderestimating the employment numbers. >> i will take the other side of the bet. they're going to do it in a way we would never think. >> still qe. >> they're telegraphing it, andrew. i have to tell you this. it's going to be mortgage backed securities. they're going to do it not necessarily for unemployment. >> mr. comiskey? >> yes? what did i get? >> as the game continues, there's a wall, you can pick from the wall -- >> i'll go with earnings central for $2.2 billion net income. the story this morning cisco. the world's largest maker of computer networking equipment reports earnings of 47 cents a share, 4 cents ahead of

estimates, revenues also beating the streets and it raised its dividend. restoring investor confidence in cisco and ceo john chambers was on cnbc yesterday and this is what he had to say. >> the growth is a record and the earnings per share were up dwap and nongap 48% and 24% so a very solid quarter. it goes way beyond routing and switching which is also good. it goes into collaboration. it goes into cloud. it goes into the data center and it goes into an architecture so we were pleased with the quarter. >> chambers expects revenue in the just started quarter to raise 5% to 7% that tops current consensus and, guys, with a lot of people thinking -- given facebook, the nasdaq at 11-year highs, we're on the verge of a mini tech bubble starting to grow and for those who remember cisco 11 years ago, it was

the -- one of the -- >> they were supposed to be a trillion dollar company. >> now people talk about apple being the triple -- cisco was supposed to be at that time the first trillion dollar. >> it has been a large tech that is have been lifting the market. in nine weeks you have microsoft up 27% i think since the 52-week low up 50%. so i guess the question here is whether or not the earnings are validating the price rises we've been seeing. >> it is always short-lived, right, in the last seven quarters, only five of those has the stock actually been up the next day, so i'm excited to see where it actually opens today whether the boost in after hours can stand. remember in august that was one of the last quarters that actually happened and it only took a couple weeks for the market to find a different storyline and say actually we don't have a plan for john chambers. now we need to worry about that. >> and free markets are slight ly lower. >> we've been talking about a lot of interesting topics but most of the mail this morning is about sorkin's sweater.

>> i saw that. not good. >> questioning your sexuality. >> it's not good. >> with the sweater. i just want you to know that. >> i saw that. >> i have a question for gary. >> thank you. >> really smart -- >> i love you. i know. >> watching your back, buddy. watching your back with the sweater on it. >> it's for joe. i'm taking it off at 7:00. >> hey, if you're comfortable with who you are, then you need -- is this not the joke joe would make? he'd be leaning back in his chair, hey, it's okay. it's okay if that's what you want to do. >> then he'd say something else during the commercial break. >> i have an important question for gary. >> look at me to the side and sort of chuckle. >> a really smart investor yesterday -- >> as opposed to a dumb investor, yes. >> possible. it's possible. he has about a gazillion dollars under management. they said 62%. we were talking about the broader story that profit margins in the economy are at all-time highs and his point was there is nowhere to go for these

profit margins but down. is it your expectation companies are going to become less profitable as this cycle continues? >> i don't think there is a ceo in any industry that would disagree with that thesis, that profit margins have essentially peaked because if you're going to continue to get -- if you're going to drive top line growth then you're going to have to have some margin compression here because as you have reported for the better part of several years, steve, companies have squeezed as much as they can. they have not invest ed in a lo of their own human capital and so that's pretty -- that's one of the -- and i'm sure when byron comes later he'll tell you that's one of the reasons why the p/e on the s&p is what it is. >> i want to follow up on that. >> and i have to pick a square. >> we are broadly at the end of a very strong run of productivity and what is interesting here is maybe the companies become less profitable

but it could also be that the economy gets a little stronger as they're forced to higher more workers, wage and salary income rises, spending were to go up, and/or leverage to come down. it's possible you have better economic growth with lower productivity and perhaps lower profit margins. >> i have to pick a square. you're hearing the bell go off. i'm going to take the wild card for $37 billion this morning, the story here, of course, the big mortgage settlement, new york and california, said to be ready to sign the proposed settlement between states and the biggest mortgage lenders over foreclosure abuses. those two states were holdouts. bank of america, jpmorgan, wells fargo, citibank have reportedly agreed to $37 million settlement. we will bring you that news. that is substantive, right? this is what we've been waiting for. does it clear the market or make things more complicated? >> i think it is one of the things that has over the heads, attitudes of banks. again, you get that out of the

way, concentrate on dodd frank. >> there's always something hanging over their heads, right? >> i think there are several clouds that are part of the fog and if you remove one cloud, maybe there's another cloud. >> but you can't say removing one is a bad thing. >> the great cloud clearer is going to be lending and we've seen a pickup in lending and if that can continue then again better economic growth and perhaps better returns for the banks. >> you have a card? pick one. >> i do. i'm going to do something unexpected and take ipos for $100 billion. >> ipo alert box. >> ipo alerts. >> this is a big alert. >> my back is to the wall. the story here, of course, facebook. the company offering new details on the compensation of key executives. facebook now saying the ceo mark zuckerberg is in line for target bonuses of 45% of their salary plus other base wages. for zuckerberg it could amount to roughly $225,000 this year. based on his salary of $500,000.

sandberg may be eligible for $135,000. based on her base of $300,000. it sounds like small change compared to other ceos. >> the other thing -- >> 132 pages in the amendment. >> you can find the new stuff and there's this line item that talks about how zuckerberg was able to get control of the company by buying each person's controlling share -- >> for 100 bucks. >> for $100 each. milner and all of these people, $100 as fair value for their value -- >> interesting in the first prospectus we saw and zuckerberg has 57% voting power in what will be the pro forma company, what we expect to be the pro forma company. he got most of that control by irrevocable proxy from other shareholders saying i don't care about voting. i'm okay with mark having my vote. and there was a tiny little

asterisk about how he came by that control. and in this document we're now seeing he came by that control by paying them about $100 apiece. >> nice going. i think that is the end of our "jeopar "jeopardy" round. >> is there a prize or some kind of winnings after this? >> another red bull. you get another red bull and we offer them out but you have not started one. drink up. >> i may keep from starting one if i can help it. >> we're mixing them. >> people had written in, this is from austria. >> this is from usaustria. >> not australia. >> there are two different things -- >> it's a common mistake. people confuse the two, andrew. >> at 6:00 a.m. in the morning things happen. that shouldn't. >> the subtext of the shower. >> what happens in the first hour of "squawk box" stays this the first hour of "squawk box." >> like a red kuala --

>> you don't want to shake that. watch yourself. joe and becky go and this is what happens. >> someone has to carry on the tradition. >> they're sending us notes. >> mandy, what's going on in the rest of the world? >> let's take a look at what's going on. ross westgate, what's the latest over there? well, mandy, stocks are where we were this time yesterday. it was a slight turn in the market and then we evaporated as we monitored what didn't happen in athens. i would suggest the euro group meeting tonight will not do anything. greece is wait to go decide on whether the pensions is now the sticking point to the greek bailout. it also means we're unlikely actually to get any questions answered from mario draghi on ecb participation because, again, there is no greek deal yet on the table for him to talk about. what he will be questioned about, what he may give more insight is ltro particularly collateral. collateral will stay the same for february's ltro than it did

in december. that will be very beneficial. and also whether he's going to pavin the way for an interest rate can cut in march or not. so that's where the focus is going to be. i don't expect him to say much about greece because there is no deal on the table. with no deal on the table the ftse 100 is up. xetra dax is up.6%. we've had a huge amount of corporate news out as well today. i will just pick out three of those key ones, credit suisse came out with a big $1 billion loss in the last quarter. that dragged the whole of the bank down to a loss. the shares today in switzerland off. ing stock down 4.7% this morning. a bigger than expected loss in its insurance 0 operations. the stock down there. rio tinto came out and also talked about a 6% fall but a bigger than expected dividend. the share is off a bit and we saw daimler, spoke to dieter

zetsche. they're going to focus in 2012 restructuring the business. investors like that, the stock up 3.7%. besides the ecb in greece we are focused on the bank of england. steve said we're expecting 50 billion pounds of more quantitative easing. if we get the risk of that is we might get more, $75 billion. that's the way investors are focusing at the moment. keep your eyes on the pound on that and we get more it may weaken. euro dollar 1.33. that was a fresh two-month high. currently at 1.3280. i'll leave you with this final point in terms of dates, the eu lawmakers say we need an agreement by february the 15th to get all the legal paperwork done. i don't necessarily believe that and the march 20th deadline there is a seven-day grace period, i understand. so actually the final deadline, the final, final, final deadline theoretically is march the 27th. back to you. >> ross, we really appreciate that information but we really want to know can you see andrew's sweater?

what do you think of his sweater, ross? >> i was going to say -- i was going to bring that up as well. i like that because i have about at the point of those in my drawer at home and it's more of a cardigan, isn't it? >> it is. it is. >> because of the zip. >> ross, would you wear it on tv, ross? would you wear one of your card dwans on television? >> it snowed yesterday here, ross. >> it's the ski look. >> do you have your slippers on, too. >> it has the collar that i like. i'm going to wear that next week. >> there is no greek debt deal, along with death and taxes, the new certainty in life is no greek debt deal. >> andrew's attitude is an investing attitude which is it looks through the noise and says no matter what happens, there's going to be a deal. >> that's the only way. >> comiskey's thought is maybe there will be no deal. >> as i said -- >> yes or no?

>> the bottom line on a deal, no deal, is what happens after a deal or no deal happens. follow me? >> i've got you. >> the actual announcement there's been some sort of deal is irrelevant. >> what happens afterwards. and all the insurance brought across europe -- >> excellent point. >> i think there's more to talk abo about. groupon unveiling its first results as a public company, shares dropping on the news in after hours trading. kayla talked to the cfo last night and will bring us the highlights next. first, the real talker of the morning, not andrew's sweater, one of the best rivalries, duke versus north carolina. erasing a ten-point deficit. duke stunning 85-84. austin rivers, son of boston celtics coach doc rivers, canned a three-pointer at the buzzer. and finished with a career high 29 points. now as we head to break, check

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welcome back. futures this hour, looks like the dow is set to open down about five points. s&p down one, essentially unchange unchanged and the nasdaq down almost two. making headlines, diamond foods is replacing its ceo and c if fo, the move follows an internal investigation that found the company improperly paid growers. it restates two years of results. the news sending shares plummeting down. kayla has news on groupon. kayla? gary, groupon reported earnings for its first first quarter yesterday after the bell and the market was less, as you

can see, down just about 15%. since then two issues that were mainly focused on. number one was marketing. of course remember before they went public the big issue was they couldn't turn a profit because they were spending so much on marketing. they finally made it into the black and now they're back into the red. the second was taxeses, disclosing a peculiar tax rate of 1,600%. that was one of the first things that was brought up on the conference call and obviously you can't really get a good view on what's going on. we caught up with jason child last night who interestingly enough drew a lot of parallels to a.m. ston. he spent about a decade at amazon and said this is the same thing that i saw while i was there. as far as the marketing -- the marketing is what's different but he pointed me to the quarterly marketing as a percentage of revenue like we're talking about wall street of compensation there. looking at it as a percentage. it was 117% of revenue. and that's come down to 30% of revenue in q-4.

but overall for 2011 it was half of their $1.6 billion. if you're an investor in that company and you're not seeing them actual ly turning a profit when they're spending half, $770 million in marketing, you want to see that come down. and he did tell me they're looking to keep marketing between $600 million and $700 million annually. as the revenues get bigger, that percentage will come down. >> do you feel its massive growth spurt has peaked? it has a $15 billion valuation. it will need a lot of growth. >> it's not quite $15 billion today after that big drop but, you know, that was a big issue when it went public. we can only do it at this valuation. it does look like the active customers -- andrew, you can tear apart what active means. >> what i was going to ask you, this odd tax story. >> right. >> that 1,600 percent they were paying in switzerland.

>> i didn't get a good sense of what that meant. his explanation was that because they're growing and embarking in a lot of these international territories and operating locally, unlike amazon they're fossed to pay international tax. >> they haven't gotten their act together. >> it's not a one-time thing. he says it will come down steadily but as they establish an international headquarters in switzerland, that's going to centralize their tax rate and make it come down but amazon had the same thing. of course i'm a little confused about that because now amazon doesn't really pay a whole lot of local tax. >> you made the point yesterday after these earnings that they're using this amazon, trying to say go back, look at amazon a decade ago. they made some comment or you made a reference to how many competitors there were and how many continue to fall away which is sort of what happened with amazon. they were last man standing. they controlled the space. are they saying we're going to continue to market, to push out any competitors out of the place? is that part of what they're saying, we'll be the last man

standing, it's going to cost us a lot of money but we'll be the last man standing here? >> that's of course the expectation. the first player in the game. in their prospectus they disclose thousands of companies that were operating in this space and 800 died in the groupis on graveyard so to speak. they go to pasture because there aren't people willing 0 to spend that money. if the reason why they didn't succeed was they could not get whatever customers they had to spend money. >> the retailers i know, i know one retailer that actually tried this out and said, you know what, i'm not doing it. i'm not doing it. at the end of the day you try it out, you bring in a couple of customers and they are not repeat customers. >> it's an unscientific way of looking at it but i feel that there is saturation and fatigue. >> and vendors can't even reach out to the customer and say, hey, i'll give you the same deal

if you do it directly with us and we don't lose the margin. >> we have to run and talk about the next segment but what's c e curious to me when you read the numbers yesterday there was a sense of the uptake. >> right. >> was actually higher than it had been. so i was struggling to see which way to go with this. >> but the taxes, if they can't right those in the next two quarters, even tax was more than operating profit and they're expecting it to be more than operating profit. that's going to be a problem. taxes would have been at a 5 cent profit. now 7 cent loss because of taxes only. >> thank you. appreciate it. cisco reporting better than expected results after the bell. now joining us on the set -- how many people do we have? simon, we have now six. we're up to six. we've done six before. >> we've done seven.

>> for the first time in i can't even remember a day like this. >> quite some time. >> kayla made an interesting point before you got on the set that historically when they beat, everyone gets excited a week or two and then decides there's a problem they haven't thought about yet. >> well, yeah, we're in a weird trading environment late ly whee terrible results and short covering stocks are rallying. i've become cynical about short term trading. today is kind of anybody's bet. >> long-term business, their forecast -- i'll give you one cloud that i noticed, margin. margin came down to 61 something. is that a cloud people will talk about? >> it was actually slightly better than our expectations. i think within expectations and what's interesting is, yes, margin was low, product margin was at the lowest point it's been. but six months ago all i heard about was, oh, it's going to be 50%.

it's going to be 50% and they're still over 60%. we expect it to stay over 60% which is clearly down but i think the worst fears have been set aside. >> is this an operation story or is this an economy story? >> it's both. cisco is so big they'll be holding to the economy. there's no avoiding it. they've done their cost restructuring, cut costs. >> the reason i ask that, historically when they've missed it's an operations story because we have watched them blow out numbers. >> there's no way they can hide from the economy. >> what did we learn yesterday from the call about the economy? >> well it sounds like things are getting better but there's uncertainty. it's premature to call improved but we're heading in the right direction and it feels like bouncing along the bottom. >> what is the sense at all from the call? are people buying their stuff to replace old stuff or is there

expansion going on in the economy? >> there's some of both so there's some upgrade cycles and they are benefiting. models that they released last year are gaining traction. but when we look at certain markets, large data centers, we're seeing tremendous spending growth there. the data point we were focusing on was the facebook s-1 filing talked about tripling data centers. these are big numbers. >> simon, going into the earnings you had an outperform with a price target of $19.80 which is below where it's sitting right now premarket. anything you saw that would make you change that recommendation? >> so our price target was $25. i think you may be looking at the closing price of the note. nonetheless we did take our price target up a tad to 2550. >> oh, yes, excuse me. >> which is not significant change but they did raise the dividend which we did not expect. >> on the dividend increase there was a thesis that the

growth in income would embrace a stock once the dividend allocation became part of the story. is that really when you think about the increase in the stock from here on the major thesis there? >> i would call that an element and we did see a new set. it has not happened. >> has not happened yet? >> has not happened. >> we have to leave it there. simon, thank you for coming in and making it a full house. >> it's an interesting point. i know we have to move on but is there a dividend level that brings those investors in? that changes the dynamic of the stock. >> i wish i knew what that was. i thought the idea of paying a dividend -- >> it's not high enough. >> a little bit higher. >> the big boys gary is talking about. >> it's always the thesis and they've been saying this about applefiniinitiates any, i think threshold given where interest rates are now is 2 1/2 percent, 3%. >> thank you very much, simon.

a very quick break now. the picture from the futures pits when we come back. but first as we head to the break a look at yesterday's winners and losers. [ male announcer ] the draw of the past is a powerful thing.

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still to come, the pictures from the futures pit and then later not one, not two but three "squawk" masters of the market. triple the information, triple the investment power, triple the fun. black stone's ryan bean. we have a very big two hours coming up. andrew is bidding top dollar. is he too powerful to fail? or is steve liesman the bob perfectian of the gate.

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welcome back to "squawk box." the ecb and bank of england set to announce decisions in the next hour. here at home we're waiting for jobless claims at 8:30 eastern. from the eme, a very nice run here for the first six weeks of the year. expect this to continue? >> it looks like it. we've consolidated now into almost like a 1330, 1345 range and what we see down here is this low volume, this steady trend upwards. i think everybody kind of likes that now especially coming off all the volatility that we had at the end of last year. so i really do see this. the economic news has been

pretty good. we'll see jobless claims later this morning but on that front everything looks pretty positive. earnings have been kind of so-so. guidance has been so-so. but that's almost been trumped from the good economic news so there's nothing out there right now even all the greek news with which you were talking about just a short while ago which probably nothing is going to get settled until the march 19th date, the day before. they have just kind of thrown that out and it's almost like the little boy that cried wolf at this point. and that's not even real significant news right now so it looks like we are going to continue this steady climb up. >> scott, i always found that there's the fear of being long and then there's the fear of not being long enough. what's your sense out there, are most of the traders fearful of not having enough exposure right now and, if so, that would probably be the one thing that we could continue to see this move higher. >> yes, absolutely, he especial with where volatility is right

now. coming off the highs that we had in the september/october where the volatility index is right now everybody can buy protection. that's the odd thing about the marketplace right now. you can be long, you can buy this protection, keim yourself in the game right now but, you're right, people are afraid of not being long enough, not the opposite end of getting caught long in a downward market. >> great point there on the volatility. thanks very much, scott. we'll see you again soon. kayla? it's a business driven by brain power. amy robach profiles a new pred driving the online dating industry like sam, the ceo of the popular dating site ok cupid. >> reporter: like digital a anthropologists they are charting data and refinding the formulas they use to generate compatible matches. >> imagine if you had a video

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today on "street signs" they're ready to build the first nuclear power plant in over 30 years. is now the time to say yes to nukes? can andrew fend off the

likes of steve, mandy, andrew and kayla on theet? of course. he's too big to fail. >> we're talking basketball this morning, big game last night, college basketball, take a look here, friends. north carolina/duke. >> is that hannibal lecter or your mask? >> my son is a sophomore at carolina, graduate at unc, devastating loss here. >> i bleed blue tried and true. >> look at kayla there. >> that's in a national championship year mind you, the deme zone, that's vintage. >> john harwood, graduate of duke, a victorious night for you. you must be feeling good there. >> you know, it was one of those games like all games for duke, we're always the underdog. as kayla knows the academic

standards are so much high at duke we don't have that much time to practice basketball, we kept fighting against this incredibly powerful carolina team and things worked out for us at the end. we were very happy. it's the same reason that the whole country roots for duke when we get to march madness because we're always the underdog. >> you must have been feeling good at least for the last fraction of a second in the ga im? >> i was not feeling good until the actual red light went on behind the backboard and i could see the ball went in. >> it was unclear it was good, i would have challenged it but it looked like it was good. >> you could not have challenged that. he released it with half a second left. >> hey john? >> sir. >> john i don't know if you read the editorial page about the "wall street journal," the other game, the republican presidential primary race -- >> can i ask you first of all when you got up and saw me get in front of the camera did you read my tie?

it says d-u-k-e all over the top. kayla might recognize the letters. >> we might be undereducated, john, but our vision is just fine. >> ooh! >> this editorial is very critical of romney, seems to be inviting santorum to apply for the newspaper's endorsement. if you do a bunch of things and lays it out and then it says the biggest problem with the gop presidential candidate each seems to be running to represent part of the republican coalition, to adopt ronald reagan's famous line, where is the rest of them? what's going on here? >> you've got a republican base which is incredibly fired up and hostile to what obama is doing, wanting to find a place to put their energy behind, and simply not being satisfied. romney is the consensus, the establishment front-runner, but nobody has enthusiasm for him because republican activists

don't think he's of him, don't think he shares the same things they feel most passionately about. newt gingrich is somebody who has a claim on the republican base because of the way he led republicans out from the minority in the house of representatives but they also know all the negatives that come with him, all of the baggage, all of the unpredictability and lack of discipline in. in rick santorum they have a guy who can claim authentically he is a full spectrum conservative, social, military, economic. however, rick santorum is not somebody who has the stature when you came into this race that people would say of course, rick santorum, that's somebody who is going to be our nominee. >> really hate to cut you off but if i don't cut you off the ad break there. thank you. coming up, soda and soda snacks. indra nooyi, the chairman and ceo, a live interview with her.

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the fizz on pepsi earnings. >> enough! no pepsi for you. >> will there be a pop in the bottom line? pepsico's indra nooyi joins us on cnbc. and a jedi plan master's for stocks. >> do or do not. there is no try. >> we'll get wisdom from byron wean, our guest host. >> news team, assemble! anchors becky and joe are off. this morning it takes a village to fill their shoes. >> let the games begin! hi-ho! hi h hi-ho!

>> the second hour of "squawk box" begins right now. ♪ carry on my wayward son ♪ there'll be peace when you are done ♪ ♪ lay your weary head to rest ♪ don't you cry no more >> good morning and welcome to "squawk box" here on cnbc, i'm andrew ross sorkin. we have a big house in order, mandy drury, kayla tausche, steve liesman and gary, filling in for becky quick and joe kernen, off to the west coast for a very big show tomorrow. becky and joe will be joining us from the at&t pro-am in pebble beach. take a look at futures now, looking lower, dow would open up about 14 points lower, s&p off about 3 points and nasdaq off 3 points right now and steve you have breaking news. >> the bank of england confirming expectations to inject another 50 billion pounds into the easing economy. some positive comments, business service more positive painting

of a picture. it will keep the bond size under review. it expects a gradual strengthening of output supported by a gentle recovery. >> is it nan in us? >> i'm looking to that. the inflation is expected to fall in 2012 and new bond purchases completed by the end of a. and it's worried about the euro debt problem, so again, that's one shoe. we have the other shoe we know is going to drop, the ecb. >> in 45 minutes' time. >> and what they're going to say we'll probably keep interest rates unchanged but this is a big financing operation. >> 50 billion, apples to apples in the uk economy, u.s. economy, what are we working on? >> cominutesky i'm working on the story. the u.s. qe as a percentage of gdp has been one of the smallest or one of the smaller ones of all the industrialized countries. i think the way to put it is the fed's balance sheet as a percentage of gdp is lower than

europe, lower than the europe and almost certainly lower than japan which bernanke said the other meeting we were working on the story before bernanke said it. >> i didn't know that. very interesting. >> we'll look at u.s. qe as a percentage of gdp. >> the next fed survey what they expect. the reason i asked about whether or not that decision was unanimous was because there was speculation that they might be split because the economic news might be getting better. >> let's talk pepsi just for a second. fourth quarter earnings just out, beating pretty much across the board, $1.15, beats $1.13 and looking at revenue $20.2 billion that beats the $19.9 billion and we're happy to have a good friend on the show this morning, joining us from new york on their investor day, indra nooyi, your timing couldn't be better, indra, chairman and ceo of pepsi.

it is a beat but to me the most interesting things are the plans going into 2012 and 2013, calling this a transition year, and your real plans to maybe swing the pendulum back to the core pepsi brands. i see you'll be spending $500 million to $600 million you're announcing on advertising and generating some productivity gains, $1.5 billion i think that's probably a euphemism for cutting some jobs and also going to be returning money to shareholders in the form of dividend and buyback. let's start with the larger issue if we could of the pendulum swing if you will, a lot of people had said that you had gone towards health foods and you're gone away from the core, this looks like you're coming back to the core. >> andrew, good morning. it's great to be on the show and thank you for giving me the opportunity to speak with you. first of all let me just put 2011 in perspective. yes, we did have a great year. revenues were up 15%.

our snacks business was up 8%, beverages were up 5%. we returned $5.6 billion back to shareholders and our core eps was up 7%. so we had a good 2011 in spite of an incredibly difficult macro environment. more importantly put this in context of a five-year journey, revenues were 13, core eps up 8% and we returned $30 billion back to shareholders. so we've had a good five-year run. now, to your question, i think on the health and wellness issue, it's not an either/or. it's an "and" issue. if you look at pepsico, we are in more aisles in the store, and we serve more consumers than anybody else in the marketplace, and what we really are going for is share of stomach. we want to make sure we serve the consumer not from 11:00 a.m. to 4:00 p.m., we want the consumer's stomach from

breakfast to dinner so it's critically important we offer a wide range of products. so in health and wellness all that we did was first, we took our core products and improved the permissibility of those products by reducing the salt levels, reducing the sugar levels. the second thing is offer zero calorie products and the third thing is offer good for you products. this is a strategy that started in 199 7, amplified in 2007 with the acquisition of quaker oats. >> indra i agree with everything you're saying and i eat my oatmeal every morning so i care about the health care but yet when you look at the market share and the business here in north america on pepsi proper, it's lost share, that's clear, the profits are down across the board. i mean, when you think about sort of directionally taking your focus, do you think you missed it here? i think that's one of the big questions investors do have.

>> north american beverage is clearly an area we need to work on. we still have the number one in retail in liquid refreshment beverages but over the last four or five years the north american beverage business needed work and it's still a work in process. gatorade went through interesting volatility. it's back on a solid track. next is to bring innovation on the market, not just on pricing, bring iconic marketing to the marketplace and drive the growth of the big 12 brands we have, the core carbonated soft drink brands, the core snack brands and tropicana. >> indra if i can pin you down and get you to quantify how much of coke's market share you think you can snatch with this increase spend on the soft drinks business, can you tell us what you're aiming for, what your targets are there? >> our goal is to hold our

increased value share in liquid refreshment value shares. the north american market is 20 billion 8-ounce cases, going 1% to 2% as a whole and in value growing 3% or 4%. so our goal is to maintain our leadership share of the liquid refreshment beverage business and make sure that we hold our increased value share. >> andrew you're going to let go indra, you're going to let go of 8,700 employees, how will that go? >> that represents about 3% of the overall workforce and i'll say something to andrew, layoffs are very, very difficult. ceos like to grow the business, like to hair a lot of people. when you have to think about layoffs it's a very, very difficult decision but in today's environment it's critically important we embark on productivity programs and create breathing room so that we can have monies for investments

in our brands and core business to keep the growth engine going. the 8,700 people come from 30 countries across the world and really going to be spread out and the most important thing to keep in mind, in any one year on a net basis, pepsico hires maybe 10,000, 15,000 people on a net basis and even though we're going to be laying off 8,700 people as a company overall, pepsico will be hiring people globally because we have many markets with growth in the mid teens and low 20s. >> indra, i think there's a misconception there was a shift of focus to health type of products when you became ceo, you mentioned 1997 and the acquisition of tropicana and quaker oats, a few executives before you. if this was a reinvestment in some of the traditional pepsi brands, if you go is have been doing this all along and not focusing specifically on health, how is this not more of the same? what's different this time? >> we're just increasing the level of advertising and

marketing spending behind a focus number of brands as opposed to a large number of brands. for example, we're talking about increasing our advertising and market spending by $500 million to $600 million but what the marketplace is going to see is a lot more than that, because we're going to focus the number of brands, we're going to focus the number of agencies we're working on. we're going to shift the non-working a&m that we have to working a&m. a lot more shifts into working a&m so the marketplace will see more advertising and marketing spending behind a core 12-brand portfolio. >> indra you mentioned the buy-back, return of dividend. why not just continue to increase the dividend at a healthy rate, given the type of shareholder base that you have? >> well, i think there are shareholders that like dividend growth, there are shareholders that like share repurchases. i think share repurchases are really indicating that we are

very confident in the prospects for the company and we believe our shares are incredibly undervalued today and buying back our shares represents an enormous value creating proposition for all our shareholders. it's actually a mark of confidence in our country. >> indra, i know you got to go but there's always a lot of noise whether pepsi would be better off as two companies rather than one. frito-lay is the fastest growing, biggest consumer business out there. you talk about pepsi being one but speak to that issue if you could. >> yeah, you know, over the last six months, management along with the board and external advisers, we've been conducting an operations review and addressed this question specifically, would we be better off as two companies and the overwhelming conclusion from that analysis is that shareholder values is maximized with pepsico as one company because especially in emerging and developing markets the two businesses depend on each other to grow. i tell thaw we cannot have a

successful snack business in many emerging markets aunless w have the beverage market scale. it's important that we leverage the scale, we leverage the incredible brand presence and size of the beverage business to grow the snack business. the concluding comment i'll make there, in today's world, where emerging and developing market growth is really the key driver of overall corporate growth, if you don't have geographic diversity, if you don't have product diversity, and scale to really have heft in these emerging markets, you really can succeed and pepsico with snacks and beverages actually gives thaw scale geographic diversity and heft, and our estimate is that the synergies from these two businesses being together is in the range of $800 million to $1 billion, and the cost of splitting them is enormous and will create untold disruption so i tell you together these

businesses create a lot more shareholder value than apart. >> indra nooyi, thank you very much. >> thank you, andrew, for having me. we're watching shares of cisco, the dow component earned 47 cents a share for fiscal second quarter, revenue beat consensus and the company raised its quarterly dividend to eight cents from six cents a year. yahoo! trading at aalibaba.com has been suspended. it's trying to secure a $3 billion loan to buy back yahoo!'s 40% stake and still no deal on fiscal reforms in greece. leaders agreed on all but one key issue but the eu says the lack of a complete agreement could derail the company's $172 billion bailout package, could put it in danger. >> do you have any comments or questions about anything you see

here on "squawk"? e mag -mail us at sidewalk@cnbc. please only nice comments. first a man worth all the hype is on the "squawk" cat canwalk, market master byron wien, for the next two hours. ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550

checking the futures right now they've been down all morning. the dow is set to open 12 points in the red, a little bit off its lows, nasdaq about two points in the red and the s&p down about two points as well. and check out shares of diamond foods, the company made improper payments to walnut growers. the ceo and cfo have been put on administrative leave. we should have asked indra nooyi about that. >> ron barrons got out of the stock in the last hour so we want to stay tuned to hear. from improper payments to walnut producer we go to a squawk master of the market. we started off with our next two hours, byron wien, chairman of blackstone advisory partners. byron i could read all of these

things under your 2012 predictions. >> they're not surprises. >> surprises, or i could tell you what i think the general sense is, you are more optimistic than your average bear or average forecaster out there and generally seems to be coming true. you have a 3% forecast, unemployment coming down below 8%. >> right. market at 1,400. >> are you doubling down on your predictions? >> feeling pretty good. usually i feel pretty bad, usually i come on the program early in the year and nothing is going right and you wonder why you invited me. >> what are you seeing that the fed isn't? >> hmm? it isn't the fed, it isn't i'm seeing anything different from what the fed is seeing. the fed is protecting itself in case things go south. i'm seeing things cast in a favorable way and that's reflected and i'm trying to get ahead of it and the fed is trying to provide the safety net. >> let's put these things together, byron.

>> okay. >> if these things come true, 3% -- >> real gdp at 3%, unemployment below 8.0. >> what happens to equities in this environment? >> they go up. >> the question we had on the table earlier today, looking at cisco's margins falling, the fact that margins in the economy generally are at peak levels. >> right. so they can only go downward. >> no, wait, wait. >> if margins are peaking that doesn't mean that profits will go down. >> it depends on volume. >> right. >> if volume goes up, more than margins squeeze, then you have favorable earnings. >> byron steve asked me and i wasn't certain of the answer and i said wait until you join us. >> because i have all of the right answers? >> you've had a longer time experiencing various market cycles. >> right. >> so the question is do equity markets do better when profits are rising or when -- top line

profi profits, margins are rising? we see a stronger economic recovery, we have top line growth and earnings growth. do equities do better in this environment? >> equities over time respond to earnings increases. they do pay attention to margin. but margin, you're talking about overall profit margin. they pay attention to individual corporate margin, not profit margin for the whole economy. >> so the tul imle s&p should expand if earnings are going up regardless of what happens at the company margin level. >> right, but the s&p multiple is more interest rate related than it is related to any of those two variables, but my view is you're going to see profits expand. i mean look, the s&p ordinarily sells at 15 times earnings, sometime during the year. the s&p is, operating earnings are over $100.

the s&p conceivably could sell at 1,500. >> byron from a cash standpoint is there a lot of money that wanted to be in the equities that has not right now? >> the wanted is a qualitative term. there's a lot of money that's been defensive, that's been ap. h apprehensive about the direction of the market. that money will be one of the driver this is year. >> we have 14 points to talk about, byron with us all morning. it's 14? >> oh, 14. >> there are only ten. >> there are four also ands. >> a lot more. coming up we're on top of the latest policy move from the european central bank, the ecb's decision comes down this hour and the squak master hour, three of wall street's ring leaders take the spotlight,

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[ "who can it be now" ] diana olick confirms that california and new york, two key states that had been holding out will join the settlement, the official announcement could come today. the settlement would resolve lawsuits over foreclosure misconduct. >> looking to connect with "squawk box" online follow us on twitter, our handle i is @squawkcnbc. coming up, their master plan for making money. we turn to byron wien, ron baron and blackrock, great line-up, peter fisher. but first your tools of the trade, we're scoping out the action in the oil, dollar and futures markets, that and more. the oil we change the filter... tire rotation, suspension, we make suspension checks... what we have here is the multi-point inspection. every time a vehicle comes into a ford dealership you'll be presented with one of these. we check the belts, hoses... brakes.

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♪ welcome back to "squawk box" on this thursday morning. among the stories that we're following, pepsico reporting fourth quarter profit of $1.15 per share, excluding certain items, two cents above estimates, revenue above forecasts.

the company cutting 8,700 jobs, about 3% of its global workforce. opec is cutting its forecast of global oil demand. expects it to grow by 940,000 barrels per day, that's 120,000 barrels lower than the prior estimate. the cartel cites u.s. economic worries and the european debt crisis and a little less than an hour away from the u.s. read on the labor department, expected to report 370,000 initial jobless claims about last week, about 3,000 more than the prior week. we have our oil man peter butell of cameron hanover and forest shlossberg and vin liechtenstein and our guest host squawk market master, byron wien. to all of you thank you for joining us. peter you're in the hot seat, listening to the headline from

andrew opec cutting its demand forecast for 2012, what impact are we likely to see on oil prices as a result? >> it's a funny thing, demand has been doing nothing but dropping. we've had some of the worst demand i've seen in watching this market for 30 years, and yet prices continue going higher. they're following -- >> they keep on hugging the $100 mark, what's going on, iran, the middle east? >> it is partially iran, partially the euro/dollar relationship. it's partially equities. people continue to picture people actually buying gasoline. they pictured them in there getting their coffee and danish every time we see a labor department report showing jobs created long before the jobs have ever been created. >> i'm glad you brought up the euro/dollar, sitting above 132, every single day the headlines say no greek deal yet there seems to be assumption there will be a deal even at the last

minute. how much, maybe i should even ask what exactly is built into the euro/dollar and the fact it's holding up so well? >> i think definitely the greek deal is built into the euro/dollar. there's greece on, greece off trade up to now. i think it will get done, they're close. they're not going to let the deal get away at this point. >> just say if there is no deal or to gary's earlier point if the deal is less than satisfactory, how much would the euro/dollar fall? >> 130 is the first test level if there is no deal it comes crashing through and 126 it could come crashing to. developing the euro/dollar is the balance sheet relationship. even if you do a deal the ecb will increase its balance sheet tremendously this year. if the fed does not the euro will weaken just on those bases because in a zero interest rate -- >> we were just talking about this. >> -- it will be a balance sheet

battle and the fed's to win. that will be the next theme as we go forward. >> i want to talk to peteber oil but simon hobbs and i have been e-mailing and doing calculations. >> you're such a geek. i love it. >> but this is significant. >> i know, but i like that you and simon are -- >> right, so additional qe in the united states is a percentage of nominal gdp, 13%, additional qe in england's nominal gdp, 23%. bernanke is right then the fed is one of the tighter of the industrialized central bank so that speaks to boris' idea a long-term positive for the u.s. dollar. peter, i want to ask you an environmentalist type question. is it possible the hybrids out there, the high price of gasoline, all of that is what's behind the lower consumption here in the states or do you think it's a gdp thing, where ultimately it's because of weak economic growth? >> i think it's probably a combination of both, because we have not seen gasoline demand,

you know, every year, you and i have spoken about this before. >> forever. >> gasoline demand up 1.5%, 2%. bank on it. we're down 7.3%. i have not seen a figure like this since -- >> hang on, we're still doing 2.8% gdp in the fourth quarter, still going to do 2%, the demand for gasoline divorced itself from the growth numbers in the united states. >> part of the reason we're higher is because we're shutting a lot of northeastern refineries. there's something crazy going on with the american investor. they love buying drilling and exploration because it's 20% on the dollar. they don't like refining because it's only 8% to 10% back on the dollar. we're going to kill this business. we're talking about somehow getting to the point where we'll have self-sufficiency in crude we have to send it abroad to refine it and right back where we started. >> i asked the ceo of exxon, and he said i've been in the

refining business for 31 years and every one has been a lousy one. steve, it feels like we have a good run 2012 already, is the market getting a little tired or do you feel maybe there are plenty of people still out there who don't want to muss out and willing to jump in and chase it higher? >> no, i'm not seeing any exhaustion at all for the most part at least, no mint of it yet. look at a stock like apple yesterday skyrocketing, new highs late in the afternoon session, we're seeing this and this is fairly kiptal of what we have been seeing in the slow grind type higher atmosphere, doesn't seem to be anything changing. i have to disagree with some of the comments made earl whier from peter about the crude price and about the euro currency price as well from the other guests there. i really see these markets that are basically just chopping sideways for the most part. you look at crude, 95 to 105, sideways chop trading. gold is trading sideways. another one of the major marks,

chop sideways, the japanese yen 130 handle, for months right now so while we are seeing strength in the stock market, the bonds have come off a little bit, but for the most part the dollar has yet to deteriorate, the euro currency and the 132 handle upper extreme, not really breached any levels of resistance yet. >> ben we had a trader join from us the cme as well who pointed out it's very cheap to get long equities and buy protection. >> sure and that's basically what the fed wants right now. i mean there are -- >> walk me through that correlation. why is it so cheap to buy protection and it sounds as though chicago is going to keep -- s&p future traders are going to keep going along the s&p as long as it's so cheap to buy that insurance. why is it so cheap? >> well because we're in a low interest rate environment right now. basically that's what the fed wants is for us to create this wealth effect right now and it has been for the past few years, that's clearly stated in the last fed announcement we had a couple of weeks ago.

basically since the state of the union address this market has been straight up, 1,300 in the s&ps and hasn't looked back. slow grind higher, light volume type atmosphere. anybody who has gotten in the way of this has had it handed to them for the most part. this market hasn't looked back so not a lot of energy or volume for the most part. i don't want to be fading at this point. this is only one of the major markets that's really been doing anything in terms of breaching any major levels of resistance or support. as i mentioned the other three major markets i look at the gold, the crude and the yen, even the euro currency a fourth market, just sideways, noise. >> byron you're negative the u.s. dollar as well. and bullish on gold. >> i'm bullish on the s&p. >> it's 800 for the s&p this year is what you're saying? >> the s&p started the year at 1250 and with earnings over $100. the s&p started the year at 12 times earnings. the s&p sells at 15 times,

that's a pretty good move. i don't know that we'll get all of that. >> where did you say you were on gold? >> 1800. and we're already in the 17s. >> can i just bring boris back in. boris, my comment before about the static measure of eq asqe o does not talk about the expectation for the fed to come in and do more. what is baked into the currency and how if the fed does more, baked in, second, how would it affect currencies? >> that's the point. euro's best friend has been two things, skun positioning because everything has been super short and uncle ben. ben bernanke has basically completely refuted the notion of they're not going to do any for the qe. he's left that possibility open and as long as the possibility stays open a dollar gets pressured. if the market becomes -- there's little chance of -- >> boris i need to push back a

little bit. you'll have the ecb do another what $1 trillion of injections of liquidity. >> do it this month, next month, the month after that, that will weigh on the euro. >> this is a global contest of who is the world's weakest central bank. >> it's an ugly contest. >> who is going to lose the contest? >> the least ugly. >> byron pointed about the s&p year-to-date, go back to january 1st, the biggest trade out there across the world would basically short the euro. >> right. >> i don't know if we can bring up a dollar/euro chart for the first six weeks of the year. >> exactly. >> have all of those short the euro, have they covered or still homing on, what is your sense? >> not yet. just a modest reduction in shorts which is why we have a little bit of potential to the upside. i think there's 34, 35 to the upside in the euro to the most, if the negative hits it's 130 at

the lowest. >> ben what's the trade for you at the moment, you don't see any signs of exhaustion, think we can go higher? how do we make money on the back of this? >> i think you have to wait and find these balances again. i'm a big fan of waiting for balances, areas of value to establish. right now we're in vertical development to the upside. what you have to be looking for is a balance to establish and looking to buy a lower extreme of that balance, that way your risk parameter is well defined, it's low risk versus the reward opportunity. the vertical activity to the upside creates a guessing game in terms of reward parameters because we haven't seen levels in you know these levels in years. so again this euro currency though, i hate to say it but 130 to 135 is basically just chop trade. it's just noise. 500 ticks right now in the euro currency is really nothing so to call that as the outer extreme, i think it's middle area that we've seen over the last couple

of years and the fact that the bottom has yet to bottom out. with the dollar sideways to lower and stocks continuing to be higher you have to give the benefit of the do you teubt to bulls. >> to the cast of thousands thank you for joining us today. >> thank you. >> byron you like that vertical movement. i saw you laughing. you chuckled there. >> ben's going to write his own dictionary one day that explains his -- >> yeah. >> you're in a situation here, you don't have to be a rocket scientist or a floor trader to figure it out. earnings are improving. [ laughter ] >> steve, when byron started in the business, that just meant the stock market's going higher, vertical move. i saw him laughing. up next, the european central bank decision on rates minutes away. we'll break it down, and stock market muscle, our master hour is coming up with byron wien who is already here, legendary investor ron baron, good friend of mine and blackrock's peter fisher. more "squawk box" is ahead.

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♪ we're back on a thursday morning with a full house, and this is, is this weezer? >> "the sweater song." >> the sweater song in my honor, sweater gate here on squawk. i'll be getting a phone call from joe later on i'm sure. let's take a quick look at the futures, we're looking at red arrows across the board, dow would open up a little bit lower, nasdaq off by 2 points. we are awaiting word of this ecb decision. i'm looking at you. >> out at 45, yes or no. does it really matter? >> they still have their

afternoon nap, go i have them a break. >> the ceremonial curtain pull after the tea? >> the expectation though is that they're not going to cut rates and the expectation is that they're not going to do, they're not really doing qe in -- >> will they cut further down the line? >> if in a minute from now your expectation is wrong. >> i think the market would be cheered by that. stocks, i'm informed by rick santorum's rick santelli's at futures about the stocks and central banks. rick doesn't have a long-term view of no change, 1%, there we go, thanks. >> as expected. >> that's it. we're going to have the press conference at 8:30 but just to finish the thought, rick doesn't think the markets have a long-term view about the ultimate impact of central bank easing or qe, that it laps it up now and -- >> badly later. >> and explaining in the metaphor would be in terms of a dog eat as much food as you put

in front of it and deals with the long-term consequences later. we disagree on the long-term consequences but i don't disagree the markets will take whatever you can give it now. >> byron with you buying that? >> no. the ecb made the decision they'll do everything possible to keep the european union together, and the way, the mechanism for doing that is to expand the money supply very aggressively. they've already put 1 trillion euros into the system. they're going to put another trillion euros into the system, and the european union will survive another year. >> another year and then what happens? what happens in a year from now. >> the lab rah doan, from now until the end of 2012. >> i'll look at the ten things you say are going to happen in 2012. one is is that it sticks around. what are you preparing for 2013? europe? >> 2013? give the guy a break, andrew. >> come on.

>> percentages, you know, bank of england it's interesting, peter bokvar broke down the numbers, with the additional qe out of the uk today it's basically 21% in terms of -- >> simon told me 23. >> it's 23% in the u.s. the federal reserve as it stands now. about 20% -- >> i said 13. he's giving -- the math is 2.1 trillion as a percentage of 15 trillion. >> the ecb is at 30% and byron is pointing out we expect that to expand so -- >> that's why i said we should report it first but you know. >> either way the ecb's balance sheet which will be expanding is clearly the most aggressive quantitative easing. >> but the point is you've got to look at the relative continuums, the u.s. began to expand money supply very aggressively in 2008 to deal with the sub prime crisis. the ecb has just started.

>> just starting. >> right. >> so don't compare it to where the fed is now. the ecb is clearly going to run the fed now because we were dealing with an historical problem four years ago. they're dealing with a contemporaneous problem right now. they're trying to save the euro, and it takes a lot of money to save the euro. >> but if we look at that 13% number as far as qe as a percentage of nom national gdp, if we're using 13, how much pressure is there? how much room, if comparably the u.s. does look a little bit better? >> it looks a little bit better, so maybe the dollar will be relatively strong, but i don't think that's the story. the story -- one of the big issues facing the market, the big issues facing the market is the european union going to survive? the answer to that, my answer is yes. is the u.s. economy going to grow at a reasonable rate between 2.5 and 3?

my answer to that is yes. >> did you say the european union will only survive for another year? >> well i'm sure it will survive or i'm pretty sure it will survive for another year but i'm thinking it will survive indefinitely. >> got it. >> there's another piece in the "journal" by ashwa persaad that talks about china and its currency and makes a great point about the united states. question "we ought careful not to be complacent that our rates are low because people are coming to us for safety." his point is that don't confuse safety with liquidity, and that the reason -- in a sense they're the same thing, byron, right? but they're coming here because they can get in and get out as opposed to coming here because they believe in the sanctity of our finances in this country, and they believe in the security of it. you know what i'm saying? >> i hope that byron is hearing and he'll back me up on this.

i hear people say all day long on the network, the ten-year is a safety trade. i disagree. what happened over the last decade, you have a seismic shift in this mentality of people that manage long-term assets to have a certain percentage in fixed income, no matter what the interest rate is, it's not sensitive to interest rates. you have people run endowments and pensions. they don't care what the interest rate is. they will keep a certain percentage -- >> diveerseifications. >> steve used the wrong word "safety" that's a sanitized word. the right word is "fear." the reason there's so much money flowing in the u.s. treasuries, the reason that they have a ten-year treasury yielding 2% is because of fear, fear in japan because of the fukushima -- >> that explains your gold bet. >> sure. >> and rates can, ten-year can go to 1%. it doesn't matter.

>> people don't know. >> it doesn't matter. >> all they know is -- they're not investing. they're parking their money. they're parking their money in u.s. treasuries because they know if they put a dollar in, they'll get a dollar back. may not buy as much but they'll get a dollar back. >> byron is the valet for your money. >> who was the best performing asset class next year, when you say it's fear driving, what is the biggest fear for you? >> fear around the world, fear in japan about, you know, the fukushima daiichi reactor, fear in china about real estate and the banking system, fear in the middle east about the arab spring, fear in europe of -- >> so all worrying. >> and having lived through 2008 you never want to ever have that again. >> we're going to continue this conversation in the next hour. z>> bookvar used gdp, you shoul use nominal gdp.

>> we'll continue this conversation in the next hour. up next we'll break down the early movers and shakers in our stocks to watch and still ahead weekly jobless claims, we'll get reaction from our squawk market masters in the next hour of "squawk box" will be right back. [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real bess. all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology for trading stocks, options, and futures. keep trading whether you're at home, in the office,

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my favorite clip. >> look at stocks to watch, the reason we showed thaw clip is we had the re-ipo yesterday of caesar's, and michaela, i said when i looked at the opening of this and the subsequent trading i said this is one of the dumbest things i've ever seen and what i meant by that was, in a sense, they tried to bring a deal, a much larger deal at a much higher price so they decided to bring a smaller deal, 12.4% of the total capitalization of this company and you saw what happened. tell me what happened yesterday. >> there was a tiny float, how many times have we said that? >> this was the tiniest of the tiniest. >> and so here is the issue. a lot of people talk about the ipo in 2010 when they tried to raise over $500 million, that didn't work because the market couldn't digest it. they tried to do an even, just marginally bigger one back in november of last year, that couldn't even make it to the 450

shareholder threshold for the nasdaq so they basically took the prospectus and edited to a level where people would buy and shrank the float, up 71%. i was calling it the jesse spano ipo for the "saved by the bell" lovers out there, i'm so excited, i'm so excited, i'm so scared. >> i loved "saved by the bell." we'll be saved by the bell right now, do some other stuff. >> what a segue. still ahead a new reading on the employment market, weakly jobless claims and we have three squawk masters, one full hour of blackstone's byron wien, ron baron and blackrock's peter fisher are standing up to the market risks. "squawk box" coming back with that and a lot more. ♪ [ kareem ] i was fascinated by balsa wood airplanes since i was a kid. [ mike ] i always wondered how did an airplane get in the air. at ge aviation, we build jet engines.

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i'm freaking out man. why? i thought jill was your soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl.

hey don't worry. e-trade's got a totally new investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the new 360 investing dashboard at e-trade. >> so you find yourself in the familiar situation, the setting "squawk box" the time 8:00 a.m. but something is missing, something is different. in times of uncertainty we turn to the experts, those recognized for extraordinary knowledge and great success. today that means three "squawk box" market masters, and they shed light on the economy,

investment opportunity and politics. so sit back, relax, and you just might learn something. the squawk master hour. ♪ [ "theme from twilight zone" ] welcome back to "squawk box" here on cnbc first in business worldwide. i'm andrew ross sorkin. we have a full house this morning, we have mandy drury, steve leesan, kayla tausche and gary kominsky on the set. byron wien our guest, vice chairman of blackstone. we have green arrows and good news from pepsi and transitional year, con how people are going to be taking that, we should look at that in a little bit. >> the futures improving a

little bit, marginally. let's continue what andrew was saying about the pepsi earnings, eps of 115 versus analyst expectations of 113. there is always a but, the can. is aannouncing it will cut 8,700 jobs, that's about 3% of its global workforce. pepsi chairman and, krerks o indra nooyi spoke to us in the last hour about those job cuts. >> these 8,700 people are going to come from 30 countries across the world and it's really going to be spread out, and the most important thing to keep in mind in any one year on a net basis, pepsico hires maybe 10,000, 15,000 people on a net basis, and even though we're going to be laying off 8,700 people as a company overall, pepsico will be hiring people globally, because we have many markets with growth in the mid teens and low 20s. >> nooyi also said the north american beverage business is a

work in progress. cisco reporting after the bell with the world's largest maker of computing networking equipment reporting earnings of 47 cents a share, that is four cents ahead of estimates. revenues also beat the street. it is raising its quarterly dividend as well. the benefits of cost-cutting starting to take hold in cisco's results. the ceo don chambers spoke to cnbc yesterday. >> the growth we're achieving with 11% growth is a record force of 11.5 billion and the earnings per pair were up gaap and non-gaap 38% and 24% so it's a solid quarter. goes way beyond routing and switching which is also good. it goes into collaboration, goes into cloud and the day center and into architecture. we were pleased with the quarter. >> chamber expects revenue in the just started quarter to rise by 5% to 7%, which is topping current consensus. steve? >> should i talk about sweaters or banks now? which is more -- because i'm reading "burn the sweater, lose

the sweater" but you got good comments? >> a couple good unz witones. >> but overwhelming. >> people are sending me notes who don't like the sweater. people who don't like the sweater wouldn't tell me. >> it's good publicity. >> the question is whether or not the comments on the sweat are are colored by their politics. right? >> if i wore a red sweater? >> if they dislike your politics dislike your sweater. those who like your politics are what they perceive them to be. i'll read news out of europe this morning. >> i got to do something here. >> an itational 15 billion pounds in quantitative easing as expected the bank left interest rates unchanged. the european central bank keeping its rate at 1%, ecb president mario draghi will hold a news conference at :30 eastern. whether the central bank will help lighten athens' debt load

by foregeg profits on greek l n loans. the cac 40 and the dax not too bad. the euro up at 133, as high as that but right now 2.5 right there. for the next hour we assembled a power hour of squawk masters, guest host byron wien, vice chairman of black stone advisory partners, we have peter fisher on the set, global head of fixed income at blackrock, not black stone, and ron baron, chairman and ceo of baron capital. great to have everybody here. i'll start with you, peter, because you're here on the set. you've been listening to this conversation. >> yes. >> the gentleman to your right, they call that stage left i think, believes we are on, i don't know if it's a straight line but you are more bullish than you've been in a very long time and i'm curious where you are.

>> i think there's pent up energy in the markets, the economy looks good relative to the rest of the world. there's a lot on the sidelines so it feels like there's a little lift going on. >> it says in the notes peter you think that people expect in the u.s. to grow 3% to 4% growth are actually smoking something. so you're saying byron wien is essentially smoking something >> i have to admit, i was trying to set up something -- >> i read that, too. >> it didn't really work out. >> you read that as well? >> i read that in the preparatory and burst into tears. >> market analysts are expecting that to happen. i think we'll get 2 to 3 on average. >> that's why you're with him. he's 2 to 3. >> i don't know if i'm closer to 3. i never said 4. >> two-thirds is consumption so the good news for the u.s. economy is people get up every day and have to buy a new pair of sneakers and have breakfast so the consumption can't grow that much. we're not going to grow household balance sheets so we got 2% is always there for us.

the big question for us is this year, can we see business fixed investment pick up. if it does this year could be a little better. if it doesn't we're going to have a big problem because then we get a recession in 2013. so talk to me about the horizon we're talking about. >> right. >> for those who said the 3% growth level is the ceiling that's all it takes to shatter through that? >> to shatter, sorry? >> the business investment. >> it will help keep us above the 2% sort of central tendency. if we get business fixed investment this year. >> you want to bring in ron right now? >> ron, my good friend ron baron, great to have you on the show. ron, where are you on the same issue, just handicap us, gdp for the year. >> first of all thank you for inviting me and thank you for coming to visit moo they florida for being inconvenienced, i really appreciate that. >> ron, you consider this an inconvenience? come on! [ laughter ] >> and andrew, i do like your sweater. >> thank you.

>> and i'm not crazy about your politics. >> oh! >> so my brother-in-law actually works with him and i heard at lunch over the weekend that you think that i'm moved, you think i moved to the left. i think actually i probably moved closer to joe these days, just so you know. >> joe would deinny that mark a if so he'd probably move further to the right. >> that's right. ron, where are you on this issue? >> well, in my career, when i started in 1970s, everyone was concerned about the money supply and then it became interest rates and now it's greece or europe or the economy or debt that's unsustainable, and growth rates for the economy, and the way i see it, because of all these concerns that everyone has, young people like you and like kayla and like mandy, everyone's afraid. they're afraid to invest and

because they're afraid to invest, stocks are at the lowest level, the most attractive level of my lifetime. >> i like the fact that you've called us young, thank you. >> hold on a second, this is gary. what was the call out to mandy and kayla, what was that all about? >> that we're young. as opposed to you, gary. >> from where i am, you would call her out, too. >> ron -- >> as opposed to you, gary. >> i won't take it personally. we go back a long way. >> yeah, ron, that makes me old, boy i'm really depressed by that. >> you need some glasses like gary's. >> yeah. >> ron, why did so many people who get paid to manage money miss the last six weeks of what's happened with the s&p? why was that? >> because everyone's looking and trying to be george soros. of course he's advised by byron but there's only one george soros and every now and then someone gets it right and predict a problem with mortgage

financing and sells something short and makes a great deal of money. very few people do that. because of the concerns, because of the well publicized media of all these problems that we have in the world, there's massive problems everywhere you look, concerns are great and everyone is trying to say they're going to protect their clients and what are they doing? they're investing in gold and gold has gone from $250 to $1,700 and now they think it's the most attractive investment or investing in bonds when interest rates when i began my career when i started grant capital in 1982 interest rates were 15 first, and interest rates are now 2%. now that interest rates are 2%, it's 50 times the earnings we're generating people are thinking the interest rates are safe, when if you invested in fixed income in the 1950s, you would have lost 90% of your buying power, 90%. $1 then is worth ten cents now. if you invest in the 1940s, you lost 95% so the way the

government is getting out of debt they'll make the debt worth less. they'll make inflation take place. they'll have 4% inflation and 2% interest. >> what are you investing in right now? you've made the bold call of saying we're on the verge of years like back in the 1980s when you doubled people's money and i don't know, four to five years so how are you investing to achieve that? >> well, the 1980s and 1990s we were doubling every four or five years and in the last ten years the market was up 20% or 30% and we outdoubled somewhere in that range to 7% instead of 14% or 15%. i think we're on the verge of returning to the opportunities we had in the 1980s and 1990s. >> we did not ask peter fisher about the fixed income markets here. >> absolutely. >> peter, first of all talk about missing something, most guys missed that huge leg down we had and then we had a bounce up a bit. >> right. >> how do you sleep at night putting money in ten-year treasuries at 2%? are you there just because

you're trying to preserve capital or is it an actual investment? >> i saw when you talked about it last hour, a lot of people are there for the fear factor, the liquidity of it, the preserved capital. a lot of clients have been through the last three or four years, preserve my capital, make sure it doesn't go away. it's a sleep at night party and portfolio and a lot of investors, both big institutions and retail investors are just putting that money aside and letting it sit. >> and would you say that come christmastime, the ten-year will be closer to 2.5% or 3% or closer to 1.5%? >> i think it will be about where it is now, maybe bouncing up to 2.5. i think the fed's been pretty powerful. what they've told success going to lock down the structure of rates for a while so there will be lots of noise following but it isn't going to change that much where the fed's at. >> historically the change of interest rates, what one was getting for that fixed income was a determinant of how much money. it sounds as though you would

agree given the last decade that doesn't, that's not going to change. the institutions that you speak about, the allocations of fixed income, they're not going to change based on where interest rates are. >> they could change a little with the margin but big insurance companies, big pension funds will have to buy a fair amount of fixed income. >> everybody stay right there. we'll go to a commercial break and continue our conversation with our trio of squawk masters in a few minutes' time. also still ahead the latest employment data, weekly jobless claims at 8:30 a.m. eastern. "squawk box" is all over it when we come back. polar shifts will reverse the earth's gravitational pull and hurtle us all into space, which would render retirement planning unnecessary. but say the sun rises ecem and you still need to retire, td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans?

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♪ welcome back to "squawk box," the futures right now we take a look, ooh we've turned around andrew, dow looking up 25 higher, s&p almost 3 points higher and the nasdaq 4.25. >> would you ascribe that to something? >> i call this the rye rbyron w train is leaving the station. >> on a long journey. >> right.

on a long trip. >> the siberian express. >> metro north. >> more in a second. oracle is buying taleo for $1.9 billion, an 18% premium to yesterday's close, making headlines, chinese ecommerce giant alibaba plans to buy back the 40% stake it held in yahoo! looking to raise a $3 billion loan it would use to buy part of that yahoo! held stake. alibaba shares are halted overseas. pretty interesting. >> this has been expected, going on for a very long time. >> oracle, interesting, a lot of people are saying you're going to see a lot of $2 billion to $3 billion deals. they'll do a couple to divert their attention while they're working on something giant. >> look at the premium on this, unbelievable. >> it was financing, the alibaba financing was that expected to be a -- >> they've been talking to banks for the past couple of weeks.

that's been out and about. the question is with it being halted is that a function of the financing or because we're going to get something across the table. >> people were expecting it before february to nominate the board of directors. we see the board movement at yahoo! that was the magic window. >> you want to handicap it? >> i've learned never to handicap anything with yahoo!. >> good answer. >> with yahoo!. >> just the past couple of minutes you had a spike in the euro back towards the 133 level, and i'm guessing what's when the futures turned around as well so the weaker dollar, stronger equities trade seems to be for the moment, i don't know what happened, maybe it's reaction to what the bank of england said or the ecb said or expected to say. i don't know, but that seems to be what's going on right thousand. if we could get to peter and talk about another central bank of some importance, the u.s. central bank, guys at morgan stanley think qe is already

baked in the cake. a bunch of other guys say you know what? it's crazy, insane, there's no reason for it. where do you stand on whether or not it's needed or be affected if they did it. >> the economy is doing okay but the banking system and overall financial fragility is still out there. look at the velocity numbers. if you're a card carrying central banker and you look at the velocity numbers falling it doesn't make you sleep all that well at night. it makes you worried that maybe somewhere out in the future is a deflation risk and central bankers are paid to worry. so the fed want bernanke put on the central stage. he wants to hold that option and see how the economy comes into the new year if it has some momentum it will be hard for him to justify it. if it doesn't have momentum, if momentum comes out and we're seeing the two minus growth thing happening, then he will want to do that because i think of the risk of what happens in 2013, what we were talking about during the break, fiscal drag next year, the risk that the economy slows down in the

future, it will make us put a foot on it. >> how is putting more money into the system which arguably is loaded up with lots of excess bank reserves right now going to increase floss nit any way, shape or form? >> he's going to try to get investors, what they did with qe2, hording duration. if the fed horards duration dollars you can't find them. >> you backed up the fragility of the banking system. the catch-up price action we've seen in a lot of the banking stock shares, banking shares, do you feel it's overdone? >> i think that's thinking qe3 is coming and the fed's going to be making sure the banking system is feeling this wonderful flow of funds circulating around the system. >> peter i have to ask you, we've heard what byron and ron said about the markets this morning. larry fink your chairman and ceo. >> 100% in equities. >> did larry say people should

be 100% in wequities? >> that's what i read on the wires. i agree with larry that a lot of our clients and a lot of investors are still underinvested in equities. they're still having the fear of trade. a lot want to be a diversified portfolio. maybe not everyone can take the risk. >> the money is still coming into bonds and it's important to look at where that's coming from, money market funds. >> money is flowing into bonds and stocks. we're getting in high yield, getting into high yield ishares product. >> high yield is giving you a good return. >> guys, i want to interrupt here. and this is good for air, ann? the ft is reporting that greek politicians have reached an austerity deal and that may explain the turnaround that we saw. i don't know when that hit the tape but we did talk about some news event at 8:00 we wondered about why the euro turned around and why stocks turned around.

greece deal talked it's an unintelligible headline, "greece deal talked shortly." bunds are tanking on short reports on the deal. >> just as they reach the austerity deal, that's all they're saying. >> an official statement expected shortly. >> steve the immediate reaction was a trade up in the euro. is there stronger euro against the dollar. i don't have it against all currencies. i just follow the dollar on my screen in front of me and you had a pop. i look at the s&ps again if they like this as much as they did. it was about a 30-point turnaround in the dow and what was it, about three or so on the s&p or two? >> shlossberg remember said earlier today the huge short to euro trade it was his contention it hasn't been covered yet so if

this is the movement today you want to keep your eye on the dollar/euro. >> we'll keep an eye on this. go back to epeter. >> peter, on the greek deal, is this something that they can put behind them? is there a deal to be had there? >> well we sure hope there's a deal. >> are there mirrors to be had? >> it is to get it behind everyone. this continues to be a sort of focus like a scan everyone wants to pick and you just get it past us and move on we could talk about something else. so i think that's the spirit of it. >> is the importance of it blown out, is it something that is not that important but we're making a big deal of it in the headlines? >> it's important because we want to make sure that greece doesn't tumble out of the euro, because then you have to price in that uncertainty premium and lots of assets. >> how is it going to get up off its knees under austerity? i know they have to have the austerity deal to get the next release of money but at the end of the day, youth unemployment at 40%, so many people going

bankrupt. >> an economy based on tour i fe feel tourism and olive oil. >> the economy will never -- >> the economy isn't going to recover by itself. it's going to be have to be part of a european recovery. you try to put that behind you and then they have to talk about growth in europe. i complete will i agree with you but greece won't be solved in that. >> we'll get to ron baron after the break. >> and hopefully have a statement shortly after the break. >> reuters reporting greece has reached a deal. >> we'll be back in a little bit. >> we'll follow that koesly and coming up more of today's top stories and still to come, the government's latest read on employment weekly jobless claims data due at 8:30 a.m. eastern. we'll have the number and the instant reaction. "squawk box" will be right back. when you miss "squawk box," you fall behind on global business news. when you fall behind on global

business news, you make bad investment decisions. when you make bad investment decisions, you lose all your money. when you lose all your money, you're tempted to hatch an illegal ponzi scheme. when you hatch an illegal ponzi scheme, you end up with this guy as your cell mate. >> nighty night, boys. don't do anything i wouldn't do. >> don't end up with this guy as your cell mate. watch "squawk box." [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business.

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breaking news we're following now, cnbc confirming greek political leaders have agreed on a bailout and the austerity measures just turn around. the dow turned around, the s&p, futures, fixed income has been selling off and the euro strengthened on the news, all of this around 8:00. we'll be back in a minute. what makes the sleep number store different? you walk into a conventional mattress store, it's really not about you.

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welcome back to "squawk box." initial jobless claims dropped from 373,000 to 358,000. it was originally reported last week at 367 and continuing claims moved from 3.45 million and 3.15 million, so we see that on continuing claims it moved a bit higher although that's been hovering around 3.5 for quite a while, and we continue to see that the number oscillates on initial, but the oscillations definitely seem to be kind of midpointing a little bit lower, that's not a bad thing. its relationship to employment is the big thing. oopah i guess is the word of the day. it looks like there is a deal

but once again not to throw any cold water on anybody's hot party regarding the greek news but in the end, from what i've read, these are still all promises on austerity and cutbackings, very little implementation. is it get a check and still fight the side of trying to cut spending and move toward austerity? i don't know the answer but the euro currency had a nice pop as well as all interest rates that reflected safety although the pops aren't as big as one would think. back to you. >> thanks, rick. let's get reaction to the job numbers, byron wien, peter fisher and ron baron are with us. ron if we get a greek deal and you are mr. we canities, what do y you are mr. equities, what do you buy today? >> the last ten years, the last decade has been the worst decade in the entire history of the

united states in the stock market. it's worse than the 1970s and worse than the 1930s. as a result of that, what's happened in the past ten years, stock earnings have gone up 2.5 times, stock prices have gone up 20% so stock prices are half of what they were then, valuations. that's the reason that larry fink and byron wien think stocks are attractive because they're unbelievably cheap. when i hear about the news and the negativeism that's everywhere, i say my god, you know, i like the ad that was on television on the super bowl with clint eastwood, halftime in america. that's what i think. >> gary we have to make note of the jobless claims numbers which are substantially lower than what was expected by the market. we were ready for a 370 and change number. >> this feeds into what byron was saying the economy is going to surprise to the upside. we're going to be pleasantly surprised here. and you say what? lower than 8% unemployment by the end of the year?

>> right. ron, i can't stand the success spenls. give me three stocks to buy today. >> so let me make one more concept. what we think, how you take advantage of this, it's not so bad but one of the things you can invest in stocks, invest in businesses that are growing, and everyone is afraid of doing that, and the opportunity here is investing in businesses that have these big growth passes because they're solving problems. companies that are appropriately capitalized, led by great people, solving problems that given the big growth opportunities so what are the problems? the problems in america right now are, number one, health care costs are 18% of gdp compared to 12% which is most other developed countries would spend. no one else spends anywhere near 18% and the worst part is we don't get any better results. we have to lower our costs so one opportunity for doing that is investing in managed care. managed care a company we have invested in for probably six or

seven or eight years is amerigroup is a $5 billion company, they had a $50 billion opportunity to take managed care into just poor people, and now they have a $300 billion opportunity on top of that to take care of people who are managed. this is a $5 billion company, $350 billion addressable opportunity. domestic energy so domestic energy the opportunity is that we're spending so much money to import energy, why can't we do it in america? so we have 200 years of natural gas, natural gas is one-fifth the price per btu of oil, and we have it here, why go else where? so there's all this opportunity to do that. you have horizontal drilling, you have fracing that's going on, so contro petroleum, gigantic reserves in the permian basin. the industry of consulting was founded in 1900 by ed booz and

james mckinsy, mckinsey and company and booz allen. he organized the united states government by fixing the navy. >> yes. >> they set up homeland security, now it's cyber security so half of their business everyone, is going by protecting our national networks from being attacked by others. >> ron i i'll put you off for a second because steve is savannah guthrie seeing something on the wires. >> 9:30 new york time. >> he's saying credit claims, where did it happen, adecisidit, will accept additional claims as collateral. peter is an expert. am i right? >> i don't know if he's expanding the collateral. >> expanding the collateral. you can bring more stuff with you to get collateral or get finance or get liquidity from the ecb's window.

>> yep, so the european banks will find it easier to finance themselves. >> does that tell you that the next operation they're going to do is potentially be bigger than what they've already done? >> if there's a greek deal they have to. >> it's helpful for banks, the size might be the same but they can put a broad eer array of assets. >> the important thing is they can put a lower quality. >> there you go. >> back to greece, our reporting out of europe, cnbc reporters out of europe are saying we are expecting a statement from greece eminently, shortly, in the next several minutes. what we have been able to confirm just to recap is that there has been a deal among greek political leaders to agree to the austerity deal. we don't know and simon hobbs has written me to ask, to say, is this what the troika is looking for or is this some other deal? >> i think it's also interesting to note when we first reported that there was likely an austerity deal on the plate, we

did see the futures here in the u.s. turn positive but they're hardly flying, right? >> mandy i need to interrupt you again one more time. i'm now told that what is coming out of greece will be the reforms requested by the troika. so this was just, i said it and then it was just our reporting out of cnbc's reporting out of europe says that it's going to be the ones requested -- >> steve as it relates to the euro can we safely say germany got what they wanted? >> i think germany has compromised. germany i don't think wanted to do anything here, and you know the bundus bank has been doctrineaire or dogmatic is the difference between the two. italy has had the means to help itself and i think it believes greece should have taken a bigger haircut than it's taken. i think germany would say it's compromised quite a bit. the greeks would say you haven't compromised enough which is

probably why they are where he they are. coming up, more from our trio of squawk market masters. is

well, now, yeah. . later. ♪

welcome back to "squawk box." julia chatterley joins us live from athens. julia we're seeing our futures here in the u.s. come off of the highs of the morning, perhaps nothing gold can stay but we don't have details of what will be announced yet, so what are you hearing? >> well it's a lot of

speculation here, too, but the prime minister's office has apparently confirmed to local reporters that we have a deal. the new democrat party leader is also going to hold a press conference. this is a guy that could end up leading this country after the elections if the polls are to be believed. the pension cuts that were holding up this deal as of this morning are apparently going to go ahead, but not as large as initially asked for by the troika. some protrgs of that $300 million euros aparentally going to be offset to defense cuts, but of course this is all speculation. also, 22% cuts to the minimum wage as we thought and equivalent or a cost cut to unemployment rates here and also the entire wage structure set to lower as per this minimum wage. of course the helenic government statistics office stated unemployment rate here of 21%, so you can imagine people are shocked that we're talking about

talking to this about in the last few minutes, and of course the two largest unions here have agreed to go on strike as of tomorrow. so it will be interesting what happens in the next 24 and the 48 hours that they're on strike to see how people here really react to this announcement. guys, it's back to you. >> julia, thank you. i want to recap the last 42 minutes that's happened. we saw a strengthening in the s&ps, and we saw a fixed income come off, and we saw the euro strengthen on the news that there was this deal. in just the past several minutes, mario draghi, the ecb president, has suggested that there's more downside risk in the economy, inflation will go up before -- and then it will start coming down, which has led markets to think that another rate cut is in the cards at the european central bank, which has caused all the things i just said to reverse themselves, and so now we're in a situation where the s&ps are off of their recent even with yesterday. >> right.

>> and the euro has come off. i'll turn to smarter people than myself, peter fisher and byron wien, make sense of this. byron put the two things together. the ecb will cut and we've had this joining at the hip of the euro and u.s. stocks, so which way are you going to lean on this trade this morning? >> i think the important thing that's happening is they're moving closer to a resolution of the european sovereign debt crisis. if you achieve that, you take europe as a key risk for the world markets off the table. that's what you need to do, so ultimately it doesn't get me off my bullish stance on u.s. >> i'm going to hazard a guess one of the other reasons why we're not seeing elation in the markets in response to this is that there's big concerns of implementation. you have agreement on reforms, who is actually going to implement them. would you agree with that? >> absolutely. it's very hard to impose austerity in greece. the work rule characteristics of that country are very

inflexible. so i'm apprehensive about how much austerity they can endure but i'm on the positive side of that. if they have too much austerity the chance of them growing their way out of it or not having a severe recession is very high. so therefore, i want to see minimum austerity, because greece is not that important in the overall scheme. >> peter, is that your sense of things you put together what the ecb is doing, probably cutting rates and a greek deal that might provide the financing, avoid default all of this together is a bullish move? >> i think so, if they cut rates, i certainly hope the ecb will be cutting rates over the coming months, they're tsunametg that now. they need to cut. >> excuse me peter u el interrupt you, draghi headline the greek prime minister informed me that an agreement was reached and endorsed by the party, so that is further confirmation that the president of the ecb confirming there's a deal.

>> steve let me ask byron a question, if i'm watching the program today, i listen to ron baron and listened to you, i haven't been investing in equities, i've been concerned, haven't listened to larry fink. the s&p is off 20% off of the recent lows, you're seeing people like long-term bears like rubini start to get more optimistic. >> what do you mean? he converted totally. >> i was trying to be politically correct here. so should one, and i think andrew was asking, you were asking this question off camera, what do you do if you've been frozen now? how do you try to think about you're listening to the news, maybe you think tonight, okay, there's been some resolution in greece, what do you do? >> you start to buy stocks. you don't put all your money to work, but you put money into the market. >> and you're not worried we're not going to have a hiccup in this train ride a little bit? ? i'm not worried about hiccups. i'm worried about digestion.

[ laughter ] >> people always jump on the train right at the worst time. >> then you don't put -- i'm not telling you all your money in it. >> byron, can you give us some historical perspective? does this remind you of any period where we've had, you know, the market is always cyclical. does this remind you of anything in terms of historical periods where we had investors not properly invest in terms of asset allocation? >> sure, it reminds me of every period like that, 1970, 1987, 1990. you know, whenever the market starts a major move, it always seems at the beginning that it moved too far, too fast, and maybe it will correct. probably it will correct, but that doesn't mean you should keep all your money on the sidelines, if you're out, you should get partially in. >> let's bring ron in. ron, if you were to put us in an inning on this very subject, what inning are we in, in terms of equities right now?

>> less than the first inning, no outs. >> we don't even have one out? where are you really? >> that's where i am. the stock market has been up 20%, 30%, as i said before, for ten years. it's the worst decade, the worst decade in the history of our country. it's unbelievable. only one other time turns worse in the 70s and the 30s, one other time in the history of the united states in 230 years interest rates are 2%. >> ron given that bullishness let me ask you how the growth fund is positioned right now. given that, your outlook, does the fund look any different than it did say a year ago, given the way you're think beiing about ts right now? >> last year the market was flat and companies increased on average earnings 15% so the baron growth fund is a $6.3 billion, $6.4 billion fund, which i manage, that fund last

year was up 1.2, 1.4, something like that, and the index against which i'm competing is down 2.7 or 2.8. >> right, but did you, has the port polio construction any different than three months ago? >> no, the turnover in my fund, the funds that we manage is about 14% or 15%, that means we own stocks for an average seven years. >> and do you stick with the u.s.? do you like the u.s.? >> seven years. >> ron, over some of the other markets, for example so far a lot of people are throwing money hand over fist into emerging markets as a catchup play from underperformance last year. do you stick with the u.s.? >> the emerging markets you were down 18%, 19% last year and the biggest rally so far this year, 10% or 12%. we have a fund that invests in emerging markets. it's hard to think that the united states will grow as fast as emerging markets, for example, we have 4% of the people in the world and we had 35% of the world's economy now

have about 27%, 26%, so that's going to continue to shrink other countries, other people will do better growth wise in the united states but the united states is a safer place, you know, they have freedoms here, you have rule of law. >> ron, when the show is over today and you call your office, you call new york, given the news that's coming out, you're going to ask them what? >> you think i'm going to wait until the end of the day to call my office? >> maybe you'll call during the show but what themes are you going to look at given the news out of greece today? >> no difference. i mean, greece is the size of delaware, the size of it el d delaware. greece is the size of delaware. do you think it's going to have an impact on the world? the government of the france and germany has been saying for years they've been so critical of us for letting lehman brothers fail, they say there's no way we're going to let greece take down the euro. sarkozy says it. why do you think greece would have an impact on the world?

>> it does. but the financial markets. >> there's another story. >> it's had an impact financial on stock markets but hasn't had an impact -- >> but there's a you tell us a bearish story out there, peter fisher, that the debt in the united states is unsustainable, there's going to be a reckoning here, it's going to come in higher taxes, lower growth, lower productivity. how do you respond to that? is that your long-term? >> you know what -- >> about the time horizon. three to ten years, we've got to -- >> do you know the average salary wage in the united states? >> go ahead, ron. >> do you know what the average salary wage in the united states in 1940? >> i don't. >> we're losing you there, ron. let's go to peter for half a second. >> i want to be clear on the time horizon. we're going to have a hard time getting consumption to drive this economy. households are still going to be constra constrained, savings rate, debt overhang is with us. right now if we start removing uncertainty, and greece isn't important of itself, but if

europe can get its act together and get it off center stage help get their act together, markets can have a good run here. i'm cautious on the u.s. economy. >> and already having a good run even without greece getting its act together. >> look, what's happening in greece is a negative is being taken out. what the united states is doing, there's not much prospect of the u.s. or europe growing faster than 3% in the next five years. the emerging markets are going to grow faster than five. if you're looking for growth in the world, you're going to find it in the emerging markets, and they're attractive. they had good economies last year, their markets were down. they're going to have less of favorable economies this year, but the markets are going to -- >> by the way, i -- this is incredibly important. andrew asked ron as a result of this, is anything going to change? and ron correctly answered, no, he does what he does. you speak to portfolio managers

everywhere, all day, that's what you do. do you think that there are others, do you really believe there are other portfolio managers that as a result of this news today will change their allocations to equities, buy stocks, the incremental buyer shows up as a result of this? do you think others really do? >> i think that if this is part of a resolution of the sovereign debt crisis in europe that more and more people will turn positive. >> we've got to leave it there, thanks to ron barron and peter fisher. coming up, a surprising job in jobless claims, "squawk box" is coming back with a lot more news after this. [ male announcer ] the draw of the past is a powerful thing.

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welcome back to "squawk box" this morning, our guest host has been vice chairman of blackstone partner strategies. you were working on an op-ed piece this morning. >> no, npr asked me to write a counter to roubini's comments. i was traveling last week, and so on plane rides i wrote a few paragraphs and submitted it and asked them when they were going to run it. they said they didn't think they were going to run it. and i said why not? and they said roubini has changed his position. roubini is now not thinking we're going to go into a recession. >> now he's bullish or a little less bearish? >> no, i thinke'