tv Squawk Box CNBC March 8, 2013 6:00am-9:00am EST
it is jobs friday, the bulls are betting that this morning's employment report will add fuel to the market's report run. but there's always that risk that the numbers could rerail the rally. we want to talk about this. plus, cash back. u.s. companies are showing investors are love with the windfall of dividendes and share buybacks. plus, stress tests. the major banks get a passing grade. i think 18 out of 19 from the federal reserve. still, critics say questions about the health of the financial system remain. it's friday, march 8th, 2013 and "squawk box" begins right now.
good morning, everybody. welcome to "squawk box" here on cnbc. i'm barack obama along with joe kernen and andrew ross sorkin. happy jobs friday, everybody. double whamny today, not only is it friday, it's also a jobs friday. the full forecast says 160,000 jobs were added last month. i can't believe the which is fer numbers aren't higher than that. i've looked at a lot of numbers that say it's above 200,000. the unemployment rate is expected to fall to 7.8%. average hourly earnings are expected to rise by 0.2%. that's always a good indicator of whether or not you're going to see highing down the road. as we look at all this, u.s. equity futures are higher this morning. indicated up by about 60 points, ahead of this after gaining yesterday, after gaining the day before that, after hit ago record high the day before that. so it has been a steady increase. stocks have been marching deeper into record territory. the major asian markets
overnight actually looked like at least the nikkei was up by about 2.6%. the hang seng was higher by 1 is.4%, as well. in europe in the early trade there, you can see that there are some green arrows, as well. the biggest gains come in france where the cac is up by 0.9%. we're assembled this morning for a great lineup of strat gives to get us ready for this morning's 8:30 eastern report. we're going to start that gain in just few minutes. citigroup's u.s. economist steven whiting is going to be joining us. >> let's get you through some of the corporate news this morning. the fed saying that the biggest u.s. banks have enough capital to with stand a severe economic downturn. get this, only allied financial didn't pass this round of stress tests. the lender didn't mean the minimum hurdle of a 5% capital buffer. next week, regulators are going to announce whether banks can start returning mope to shareholders in the form of dividends and buybacks.
kayla tausche will join us with more on the details of the stress tests in just a couple of minutes. ally criticized the fed. how do you criticize your regulator? you don't understand how that works. >> they feel like they have to tas say something. this is allied, which is the old gm. >> it's all the ads. >> you've seen the ads with the kids saying we're the brand new one. where they don't treat the kids fairly. one gets an ice cream and the other doesn't. >> cdw has reportedly hired banks for an ipo later this year. the company was taken private by equity partners for $7.3 billion in 2007 been we're going to see how that ipo is openly valid. and finally, texas instruments has good news this morning. it's raising its q1 target to the upper ranges of its sighting forecast. shares of at this have risen 5%
since january 22nd as investors have been betting on improvement in demand. >> i'm going to talk about google and motorola and all that. but today, do you think about things in the shower? you're in the dark in the shower, right? >> in the dark. >> do you have a place where you can go where the light doesn't bother you? oh, that's right. it's in that dish forgot. it's in that other wing. where you've knocked down the wall. >> usually i'm talking to the footman. >> exactly. do you let him -- i mean, you walk right out of the shower into a robe that he's -- are you comfortable with? >> that's a valet. >> here is what i'm thinking. here is what i was thinking this morning. big jobs number and all of a sudden it's like 240 or something and the market takes off again and all the people that said, would be, it just can't hitting new highs, that's the perfect scenario. but then i can argue from the
other side. the devil on my other shoulder says, what if the market doesn't know what it's doing and it -- usually the market i think we do think it has this mystical sense of looking ahead and discounting things into the future and it's the efficient market and it knows it takes all the stuff into account and it moves where it should. but sometimes it doesn't. but the claims numbers have been better and everything else -- >> but, you know, the thing i will say is that i think the expectations are for a better than expected 160 done census. >> so do i. if i was much better -- >> but i also think that the expectation is there's already a lot riding on this. >> there is. >> now that the adp reports have been updated with its methodology -- >> and that was better. >> the last four years, bls has been better than the adp indicator for this month. but i think because everything is setting up -- >> the new guy, januaridy is closer to the people making up the numbers.
so he's indicating the whisper number. >> i'm going to give him some credit. >> he is doing well. and i think it doesn't have to be way above 200, it just has to justify -- even 210 says, wow, it is. >> but it has to be above 200. >> but the momentum in the market is already there. and as long as it's not something awful -- but it could be something awful. >> but that gets back to the idea that this is an important number. >> but the market -- because i still think the market could recover from that because it's a lagging, it's the last month. but then again, we are worried about sequester and payroll taxes. he was one of the great 36 -- >> i think he was interviewing with ross westgate this morning. >> in that great insider piece, they call them buffoons and idiots -- >> they call the rally the idiotmaker. >> and i said why don't we do that and go back and get the archives of all the people that have been wrong here? and i said, because we would
have no more guests. it will be the three of us talking for three hours a day. did you see the names on that list? >> i did. >> but you one that you just mentioned, he was at 6.66. we're going much neither down on the s&p. it's 15,4 44. think about being negative. why would anyone listen to anything he says at this point? it's sad. and throw the other 35 in there, too. if you haven't seen it, business insider. it's a list of idiots. >> it's a list of people the rally has made look like idiots that have been wrong. >> what did i say? >> you said it's a list of idiots. >> and what did you say? >> i said a list of people who have been made to look like idiots -- >> so they may not be, but they're made to look like -- they look like idiots until next time. >> if you're going to say something on tv to try to get it out there, can't you say a list
of idiots? chk it out, though. you'll see some people, people that we know and love. >> in our news this morning, google says its motorola mobility unit will shed another 1200 jobs or 10% of its workforce. the move comes as the smartphonemaker tries to return the profitability. the company says the cuts are a continuation of cuts made last summer. and ubs quit the panel last month in the wake of a libor rate rigging scandal and a hefty libor fine. and fidelity investments is facing more accusations it improperly used so-called float income to pay its own operating expenses. who has experience with this? ef hutton. with the whole check cutting thing. we need so much money with checks. we had like 2,000 counts of fraud. that really messes up. hi, this is joe kernen from e.f.
hutton. >> you're the company with the 2,000 counts of fraud just for keeping it are a float, andrew. bob fullman lost his job. bob briterizer came back in. anyway, customer money earned an overnight account and three massachusetts companies accused the company using income generated from retirement asset toes offset fidelity's own operating expenses. they filed a lawsuit seeking class action expenses. think of the cash balances. a little bit of float overnight. what has fidelity got under management? it starts with a "t," probably. >> it's all money. >> starts with a "t." so a basis point of float if you keep it is a lot of money. >> in our headlines this morning, pandora peat ya ceo joseph kennedy is stepping down. this comes as a surprise to investors. a search for replacement has begun. the internet service reported
stronger than expected results before the close and stronger and upbeat forecast. july ya boorstin will be joining us with that conversation is in the next hour. jcpenney is going to hold off with its plan to sell certain martha stewart products in its stores at least until an april 8th court date. a new york state supreme court judge adjourned the trial until april because of attorney scheduling conflicts. he ordered the companies to try and resolve their differences in the meantime. jcpenney will hold off on some of those sales. take a look at the markets this morning because futures are indicated sharply higher, up about 6 4 points. yesterday was another record number for the dow. and the nasdaq was down. it was its first decline in four days. the dow, s&p and fass dak have had four-day winning streaks.
take a look at where things stand at least in items of the energy markets fairly budging. we did see gains yesterday in crude oil. back up at 91.57. it's up another penny this morning. the ten-year note ahead of the jobs report is yielding back 2.009%. and the dollar, which was stronger against the euro yesterday is a little lower at 1.3119, dollar is up gerns the yen. gold prices, if we take a quick look, they're up, but just barely. >> it's now time for the global markets report. kelly evans is standing by in london. good morning, kelly. >> andrew, good morning. i'm here in london, but once again, the story is happening in tokyo overnight. look at the nikkei adding 2.6%. the yen is now at a 3 1/2 year low against the dollar. we were talking to dennis gartman earlier who pointed out in gold terms -- in yen terms,
actually, gold is at a nominal high. well put on twitter practically everything is at a nominal high because of the weakness we've seen. the positive move is carrying over into the u.s. session and into the futures. the ftse 100 is rallying up almost 10% this year. we're up 0.3% building on that rally. the cac 40 in paris is up 0.9%. the strongest performers, frankly, have been utley and spain up is%. italy and spanish debt continues to rally. fascinating because of what we've seen in italy where there's still no sense of a government forming, where there's still questions about a new election being called in a kump months' time, maintaining that spread that we saw over there. we're going on 2 1/2 year lows
for the yield on spanish debts. despite the macro concerns there, not much of a response. i mentioned the dollar/yen, 3 1/2 lows for the yen against the u.s. dollar. 95.6 in trade this morning. elsewhere, the euro is firmer, back above the 1.231 level. staple with sterling, back above 1.50 level. it is the bank of japan today making the big waves on speculation about more moves coming ahead. we talked to richard koo this morning. he's among those that think kite work. gartman said he sees us going to 1.25 in the next couple of years. so on that note, back over to you. >> okay. kelly, thank you very much. now back to the latest rouvend of fed stress tests. kayla touchy joins us now with
more. we've got you in here early almost every day. >> and i thank you for that. >> you're young, you're eager. we thank you for that. what have you got? >> yesterday was the third annual dodd frank act stress tests. 17 out of 18 banks passed, which is a pretty good number. they were placed into hypothetical economic crisis. all bun one made it through and as well capitalized as the fed standard mandated. citigroup, the best position of the big six banks, which is interesting and quite a role reversal there. citigroup hosting 8.3% tier one common capital ratio. that's the highest of any of the big banks. wells fargo is the next closest with 7% and morgan stanley and goldman sachs towards the bottom with 5.7% and 5.8% respectively. remember, the fed has basically put up a bar of 5% here.
each bank has to clear that 5% bar and you can see citigroup is well above it there. the interesting thing about citigroup is that last year the bank was one of the only banks to protest the way that these tests were carried out because they were in one part. you had to pass the stress test with the capital levels, but you also had to submit a plan to return capital to shareholders. while citi was well enough capitalized, st citi wasn't comfortable enough with its plan. categorically, it failed citigroup this year with one of the banks that was basically asking the fed to do this in two parts. next week we're supposed to get the capital levels. last night, citigroup disclosed in one of the filings that it had requested a $1.2 billion share buyback. the only bank to make such a disclosure, we can imply that they will have that request accepted this year, but definitely stepping out ahead of the pack where that number is concerned. you guys mentioned allied financial a little earlier, which is interesting because,
obviously, the former financing arm of gmac came out with a harsh statement criticizing the way the fed kaert out these tests. they believed that ally would be sufficiently capitalized because of the way some of these auto financing securities and instruments would convert to actual equity in the kies of a crisis. i just want to show you quickly, if we have this graphic, what this hypothetical crisis would look like. a senior fed official told me this is worse than any two-year period in u.s. history except for the great depression. it would factor in a u.s. gdp drop of 5%. stock prices falling by 50% and home prices down by 20%. among other things, but that's the biggest situations that they place these banks under. and so pretty amazing giving given those conditions that at this point three years after these tests were introduced that all but one here is passing. >> kayla, thank you very much
welcome back, everybody. u.s. equity futures are indicated up higher this morning. dow futures up about 62 points above fair value. china's exports surging nearly 22% in february, that was more than expected. this could be a sign of stronger global demand. imports fell by 15% during the month. china's draid trade growth has been rebounding in recent months. right now, let's get the national forecast from the weather channel's jen carfagno. all that snow we expected yesterday, well, it's coming down this morning. >> it's such an interesting system. it's spinning around out here and snowing back all the moisture today. it's retrograding. it's moving from east to west, the opposite of what you would spec'd. today really happens to be the worst day now from what's happening in new england, anyway, from that perspective from this winter storm. now, we go into boston where we've had now 5 inches of snow. we've had more than a foot of snow in mansfield which is near
foxborough. you can see the brighter colors indicating more snow falling. juflt saw a report that the power is out on the tobin bridge up in boston. that's causing major issues for the commute this morning. i can't imagine that the commute is good, either, for new york city. you can see snow coming in from connecticut, long island and new jersey, all a light to moderate snowfall. not heavy snow. the temperatures right about 32, the 3 33 degrees. if the roads issed and clear, they're fine. but you could get accumulation on the roadways, which could cause havoc this morning. on top of what we have, we'll get 3 to 5 inches of snow in new haven, boston, northern jersey about 1 to 3, southeast new york about 1 to 3. so the wind will be a big factor all across the area. winds are going to be gusty today. i love this graphic to show how strong the winds are going to be this afternoon. power outages, becky, a real concern right through this
evening all across this region. back to you. >> jen, thank you very much. >> all right. we are -- welcome. we're counting down to the jobs report. joining us is dickcoy ask steven whiting, managing director and u.s. economist at citi investment research. steven, i want you to get a chance to say something, so i'm going to start with you. >> was that directed to anybody in particular? >> no, no, i'm not saying anything, but, steven, use your time well. pretend you're not going to get another chance. >> okay. >> even though we're going to 7:00 a.m. what do you -- >> you're one of our oldest guests. >> thank you. and i don't think i'm on that list you cited this morning. >> no, you're not. but you've been coming on for over 20 years and we love you. so do you expect this number to confirm what we've been seeing in most hoof the markets or cou
it throw us, do a ted head fake on us? >> employment data always can. you try to apply that to any other statistic, and you've had a hard time with employment data. >> people don't realize it's lost and -- >> just think of what happened in the fourth quarter. we had 11 151,000 jobs. those were just the annual revisions, not the monthly revisions or the multiple annual revisions that you accumulate over time. employment is strengthening and this is in a period where growth hasn't fully accelerated yet. so we think we'll see stronger employment over time. >> the claims number, that's got to go under your thinking, right? >> absolutely. >> 4, 5 or 6. >> absolutely. and adp and private payrolls and the bos data, the government data are a bit different. there's more weather impact in
the government ta data. so today, if we get 150,000 w, e other stronger expect ages, we still expect accelerating employment gains. >> do you think we'll have a spring swoon this year? >> that has been statistically the case in each of the last three years. there's potential for that, but i think it's diminishing what is. i think the seasonals are earn willing a bit from the pattern. you don't hire a million people to do construction in april. but i think we're going to fit into a more normal pattern than we have. >> do you think the improvement -- i mean, it's come with the payroll tax being gone and worries about -- i don't know if we still worry about what the government does, the sequester and everything else. but is housing recovering? is that overwhelming everything in terms of making these numbers better that we are seeing better numbers? >> not yet. not yet. >> why is it better, then? why are jobs being added all of a sudden when we can't tie it to anything in the economy? >> well, for one thing, consumer demand has been fine all through -- >> the consumer.
>> yeah. all through this. businesses held down inventories as much as they could. they held down investment in the second half of the year because of concerns that we were going to have a new recession by the fiscal cliff. >> sequester, $42 billion if it outlays cuts this year is nothing full to the fiscal cliff, the threat that we faced at the turn of the year. we've got 2% employment growth over 12 years. adult population growth has been close to 12%. so we're very, very lean, particularly on unemployment. >> pretty good, this young whippersnapper, don't you think? father time, you look at him, you were nodding. >> i read his material, i think it's very -- >> i try to get in as much as i can. >> but now you're going to get graded. anything that you disagree with? >> i think we may do 170,000. but i think my view is the actual payroll report today is of most interest to short-term traders. >> whoa, whoa -- >> it's really -- >> dick, dick, we want people to
be glued to their sets today. this report is huge. what are you saying? >> it's krurp crucial for poem like cnbc to get the answers. >> unbelievably important report. >> legitimate mtdly for the immediate action for the market, it is, right? it's after outliar. >> a series of new highs, dick. >> we'll probably be making a series of new highs because we're in a bull market no matter what the number is today. because the market is extending out its time horizon. when it was so afraid, it was looking at what's going to happen today, next week, one month from now. because it's got confidence, we're fought going to break into a recession, it's start to go think about what happens to profits in to 134, 2015 and trankly, i don't think the next recession is until after the next presidential election. we've had such a slow recovery, we're not building up inflationary overshoot which would make the fed be real tight. so we may not have another
recession for the next several years. so you can think about what will the profits be in 2013, '14, '15 and the market is stretching out its time horizon and kind of trading through the short-term information as it comes out. the reason the economy has been sustainable is the private sector that is sensitive to interest rates has been doing well. housing sensitive to interest rate, it's strong. autos sensitive to interest rates, it's strong. core capital spending orders are sensitive to interest rates, it's strong. and so you're hitting it with a tax cut hike and is you're hitting it with a sequester. but the good news about the sequester is it's of defined magnitude. and when the republicans change to fighting on the sequester, which is about 0.5% instead of the debt ceiling or shutting the government down, which are unimaginably big if they were to be a problem, that shift is
something that was definable meant that you could lower your estimate of a disaster because you're not going to have a debt ceiling mess. you're fought going to have a big government shutdown. you have a 0.5% drag from the sequester and that's about it and you know wa you're dealing with. >> what made me feel a little bit better about what you just said, so many people are saying this is a fed fueled stock market rally. and that is true to some extent. but you just talked about all of the underpinnings of the economy that are benefiting from the fed policy which justify the move in march. so it's not just like some -- something that only affects the wealth effect in stock markets. the underlying economy is reflecting the low rates, which is helping underpin the market. >> the fed easying policy is inefficient, but it's working. they're kind of, okay, it doesn't work that efficiently, so we're going to do a lot of it and is it's actually working to
help the interest sensitive sectors. the household net worth just came in for the end of december and the flow of funds. we almost got back to the old highs. as of this morning, i think we've just made new highs. this morning, today, in house hold net worth in the wealth of americans. now, they own more stocks. it's not as great for the median person because they own the house and that's gone up a little. not as much as -- but we've just made, as of today i think new highs in the net worth of the american household. >> we were at december 31st. today is march. >> quickly -- >> i'm marking it based on to what the stock market is -- what the housing is -- >> you know, we're driving 11-year-old cars and trucks in the united states. we were selling one new home to thousands of americans annually. >> but it's strong enough to keep us at a 2% growth rate with
the tax hike and with the sequest we shall so, therefore, we're not cracking into recession. so positive change even from a low level in housing and autos is helping us a lot. >> things excellent, gentlemen. thank you. coming up, what does the job reports mean for the fed? we're going to watch greg iff. but first, as we head to a break, take a look at yesterday's winners and losers. this is america.
welcome back, everyone. among the headlines that we're talking about, a front page story on the "wall street journal" says companies are driving higher by returning cash to shareholders. s&p 500 companies are expecting to drive more than 2012, $282 billion in dividends this year. during the last two years, funds that invest in high dividend paying stocks have been watching money flow into this. in the meantime, money has exited some of the broader funds. these are big, big dollars in terms of the dividends that they're paying and the stocks that they're buying back. >> the dow setting a record high for a third straight day, but plenty of skeptics say it's the fed's money easing policies and not fundamentals driving the
market rally. is there more to the story? joining us now is greg iff, one of our favorite fed warm watchers on the hill. >> good morning within joe. >> unfortunately i'm not joe, i'm and ru. >> i'll participate, greg, if that will help. >> sorry about that. >> you have no monitor, it's not your fault. >> he can't see. >> is ben bernanke ultimately happy with what he's done? does he look at what's going on in the markets and maybe the broader economy and think this is working? >> no. i think he sort of sees it like half full. this is part of what is supposed to happen. you ease money, you make people take on a little bit more risk, get money into the stock market, get a wealth effect. but the end part of that process is a sustainable recovery. that's the part we haven't got strong proof of. let's take a look at today's employment numbers. let's say it comes in around consensus.
150,000, 170,000. that's decent, but it's a deceleration from the fourth quarter of last year. in absolute terms, it does not reach the level of 175,000 to 200,000. that's what the fed has talked about as represent ago sustainable recovery. >> let me ask you a different question. joe, you may give me a hard time for this, but i'm going to try. >> all right. i want to hear it. >> is there an argument to be made that the conversation about inequality is going to come up all over again and be even worse? i look at the "wall street journal" and record cash back to investors. that's a great thing new mexico respects because hopefully that money trickles down. but i know the argument is going to be made by others on the other side of the aisle in some respects that this is clearly benefitting the top 1%. >> they're getting that all the time. in fact, you hear questions like that raised in some of the press conferences that bernanke holds. and i kind of sort of feel for them because i think they
actually agree with that, that this is not exactly the most democratic way of stimulating the economy. but i think the response to that is what else are we supposed to do? in fairness to them, it's not really just the stock market. there's great numbers on wealth that dick and steve were talking about a few minutes ago. it's not just stock market wealth, it's housing wealth. that's much more democratically distributed. that's much more important in house prices that we're seeing. that's good because maybe one day -- maybe not just yet, they'll start to be able to borrow against those thousands again. it will be easy to refinance those markets and just as important, it's going to make banks more enthusiastic about lending. >> i don't know what the statistics are, who benefits indirectly from holding stocks and corporate pension plans. it's above 50%, i think. 1%, it's not -- that's not a totally speechless number to use. who benefits from the stock market? >> 20%, 15%.
>> it's much higher, it's probably 50 in terms of pensions. and a rising stock market, you will not see the obama administration run from a rising stock market. i thought you might. >> no way. >> because it doesn't necessarily trickle down. but it's a barometer of how the economy is doing, how the country is doing. i think anyone that makes that argument is a total straw man that is so easily put down. don't you think? that is ludicrous. >> but i think that -- >> i'm embarrassed for people that ask that question. that's not what i'm saying. not for you, but the people you're talking about that are saying, the stock market doesn't measure what's happening to the average -- number one, most americans at some point are -- >> although admittedly have some of have small exposure to it. >> right puni. but whatever the market cap, the trillions and trillions of market cap -- >> it is the best barometer.
>> becky is exactly right. for all its down side, it's still the most impartial voting machine that we have on the state of the economy. that's why any president is going to look at that and look at how they're doing well. especially a president like this who is getting beat up by business saying you're making things so hard for us. look at the wealth effect for a move and look at the stock market. the transports made a new high before industrials did. its companies like united technologies and caterpillar that led the way up, those are cyclical. so the signal from the market, i think, is that they think the cycle is getting stronger, not weaker. i mean, are they right? i don't know. but to the extent that the stock market is still a decent forward looking profit of the economy, that has to give the fed a little bit of comfort. we'll see in the hard numbers whether the stock market is riding a sugar high. >> even those hardenne
anti-corporatists can eventually see that as corporate profits rise, eventually there's more hiring and is we bring down the unemployment rate. they can connect those dots. even if they try to resist that and stick to their guns on the anti-quark purchase, even the most anti- -- and is i've had a lot of my democrat friends around here or wherever leading up to the election, well, that stock market is doing pretty well. if he's doing such a bad job, what about the stock market? they always talk about the stock market. they're always selling that. just yesterday, chanos. so, you know, you like it or not? are you embracing it or not? >> oh, no, i'm embracing it, but i'm asking the question because he's a fed watcher. >> how else -- what else can he do? that's the only thing we have. >> no, wait, i have one more question for greg before he has to go. greg, very quickly, the expectations for today's job
number, i know the consensus is like 160,000. i've seen numbers that came in higher than that. doug cass brought numbers lower than that. barclay's at 150. goldman sachs at 150. what is the number that you're expecting that you think we should be looking for? >> the guys who are sort of saying it's going to come in below consensus i think are putting a lot of emphasis on the possibility of the weather effect, the snowstorm. but a couple of times in the last few months, people have looked for a big weather effect and we didn't get it. so if those folks are wrong, i would look for a bit of an upside surprise. the claims came in stronger. the employment indexes in the ism indexes stronger. so i've got my fingers crossed that maybe if we escape that storm-related damage, we'll have perhaps a mildly positive surprise. >> great. >> greg ip, thank you so much. >> do you guys know what day it is? i hope. >> jobs friday. >> no. yes, but that's not -- >> what?
>> international wednesday. and this is not some new thing that just happened. this has been since -- since the beginning of the 20th century, there has been a celebration of -- >> are you going to shower me with affection today? >> no, no, i'm going to showering with your leadership qualities. we're going the to lean in because we have cheryl sandberg. i thought it was only women who were supposed to do that, to lean in and -- >> we get a pass. we get to heaven quicker by going there. arianna was there. >> there you are. >> there are our two bffs, me and you. and that's penelope's beautiful hair from behind right there on the left. but that was good. and, you know what? i agree. 14% are in, you know, senior positions and it's been static for the past ten years. >> and it's 511% of the population. >> right. >> and, you know wab you're still called -- you do get bossy
at times. >> talking about -- >> no, i'm kidding. >> no, i do get bossy. >> but the next time you meet a 5-year-old girl and you want to say you're being bossy, you're supposed to say great executive. >> great executive mind. i almost brought my daughter to this. everything i look at in the prism of the world, it's getting better. and this is a good -- it's lean in. i don't like using lean. i don't know. that's already been done. but the idea of it. it's very cool. >> it was interesting. >> but i knew you'd be there. the whole new york -- senator schumer, mark bloomberg, caroline kennedy. >> and then you walked in. >> and i was sitting next to that -- >> and the music stopped? >> no. people went -- no. meredith whitney, sallie
krawcheck. i was standing next to roger altman and said, you know what snm people are going to think i've turned and he walked away. coming up, the 8:30 jobs report. the other other guy like me was steve forbes was there. stock market expectations next. [ woman ] if you have the audacity to believe your financial advisor should focus on your long-term goals, not their short-term agenda. [ woman ] if you have the nerve to believe that cookie cutters should be for cookies, not your investment strategy. if you believe in the sheer brilliance of a simple explanation. [ male announcer ] join the nearly 7 million investors who think like you do: face time and think time make a difference. join us. [ male announcer ] at edward jones, it's how we make sense of investing. [ male announcer ] at edward jones, try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards
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joining us the morning is bob iaccino. bob, we've got the big jobs number coming up and we've been trying to figure out how important it is, what the market is expecting. i know 160 is the consensus. what are you guys expecting down there, there? >> it's extremely important as always, becky. i think considering what the market has been doing over the
last few days, making higher highs, which is going the happen every single day that we make a higher high it's all-time highs. so it seems a bit repetitive. but i think that the upside surprise is going to be difficult. i think that's what the market is looking for. >> because you guys are looking for a higher number already? >> yeah. i think that's why. the higher lows are outpacing the higher highs right now. so you can see some caution in the long. so i think that that upside surprise is -- it's going to be a little bit difficult. i think with the consensus being around 165, you have to be above 175, 180 in order for that to power the rally with volume. and i'm not sure that that is going to happen. it's interesting because the adp survey is not showing that. the jobless claims is not showing that. but i think that number has been adjusted in the market, not necessarily in the expectations of the jobs number. >> so we know that it's going the be a little trickier. it's going to have to be a stronger number to get the market excited. but already you're looking at futures up this morning. this is after several days of
continuing to push to new highs for the dow. is this a market you go into short? >> you know, we talked about this last week. i have no position in the equity indices. not at all. i'm bullish for 2013. i'm bullish right now and i'm also flat. that's because, again, the higher lows are outpacing the higher highs and the volume is not there. so i need a correction. i need a 3% to 5% correction. the last down move didn't quite get there. got to about 15.5%, 2%. if i can get that 5% correction, i haven't missed any of the rally from about a week or two ago. it comes back down the that 1500, 1300 level where i'm going to be comfortable once we get that. i have a long lower trend that's upward sloping starting december 31st of last year. and i need to test that trend line and to bring volume in at that trend line. if that happens, then i'm going to be long and bullish as opposed to flat and bullish.
>> bob, thank you very much for joining us. good tie combination, by the way. >> i appreciate that. >> tie and shirt. i like it. coming up, want a morning pick me up? give the cup of joe, how a stick of gum could be the answer. i'm going to start chewing some of it. that story after the break. zap technology.
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welcome back to "squawk." we're in the chairs looking at some of the sometimes offbeat stories that are in the paper. this one caught my attention this morning. i don't know if you can see it here in "the wall street journal." wrigley's adds caffeine to wake up its gum in this crazy world of energy drinks and red bull and monster and all that -- >> caffeine -- >> now they're putting it in the gum. they're going to actually put it into a brand called alert energy. it's going to have 40 milligrams of caffeine. that is about half of a cup of coffee. but again, you might take two pieces pretty quick, right? >> right. >> so they said -- >> don't give it to your kids. >> they say it's not for kids. but are kids not going to try -- >> that's going to be -- >> viagra gum. >> what? i'm going to slip you some laxative gum. >> you know what? i appreciate that. >> i need some right now? >> no, you'll see. eventually. it doesn't hurt to do a little -- >> got to be $2.99 for only
eight pi does that seem like a great deal? >> i guess if you're looking at it like a cup of coffee. >> seems like a good deal to me. yeah, good deal. >> wow, we -- you see what we did yesterday, did you watch chairs? i was there. you were -- talking to all your friends down there at the wharton economic -- >> talking -- >> chanos was here. >> that's what we do when you're interviewing people. we're talking. >> listening very intently. >> check out this chanos. man, "the post" went wild on this. jim is a big, well-known short seller, and "the post" is basically saying that chanos had ackman's back on the whole herbalife, whatever, bill's best friend they called him. chanos yesterday said i'm not crazy for this multilevel marketing business. i said yesterday that i thought a lot of the products were just the best you could say about them is that they won't hurt you, probably. but that there's never been any effectiveness proven.
i said same with half of the gnc stuff. you can throw whole foods there there as far as i'm concerned. the big high market stuff that doesn't have preservatives to keep it fresh. anyway, herbalife got mad at me. but, fair enough. julian is the -- julian is the vice president of worldwide corporate communications, i think he's been like recently had a lot of stuff to do, you know, being head of corporate communications. >> he's a little stressed. >> he's mad. he said i was dismissive of the product in terms of science and effectiveness. but given my prominence -- i didn't realize this, my prominent role as an anchor of a major business program i was hackneyed and ill-informed comments. so they're going to send me some. i said great, fair enough. send me some. and also provide you with some of the science. i said send me some peer-reviewed science on your biggest selling product and i'm going to lose weight now and maybe people will ask me how. if it works -- i'll try it. julian, fair enough. send it to me. send me peer-reviewed science
because i want to look at that. and your best product whatever it is, and if it works then i will update our ow veers on that i was totally wrong about herbalife. >> are you going to come a marketer of the stock? >> depends -- think if it really works. you don't need to lose weight. >> i have to the mitt i don't know much about the product so i am interested to see what they send along. >> we'll send along. maybe we'll share it. have a -- >> medication. >> check that out. >> compare notes. >> i'm sure but that's what we for 4,000 years that's what we tried. tiger stuff, grinding stuff. you know. and then -- solved everything. >> when we come back we've got the countdown to the february jobs report. we will talk expectations and more. ahead of that report the u.s. equity futures have been indicated higher. they're up by about 67 points. dow futures.
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>> >> the market rally continues. but today is jobs friday, and everything could change when the numbers are released at 8:30 eastern. barclays had a research larry kantor and s&p equity strategist alec young join us with their market perspective. >> when they speak markets listen. which fomc member has the most clout? former fed head larry meyers tells us who deserves the most of your attention. >> an internet shocker. pandora's big quarter overshadowed by the sudden departure of ceo joe kennedy. julia boorstin's exclusive interview is just ahead as the second hour of "squawk box" begins right now.
good morning and welcome back to "squawk box" here on cnbc, i'm andrew ross sorkin along with joe kernen and becky quick. take a look at the futures this morning. of course this all may change. right now dow looks like it will open up 67 points higher. s&p 500 will open up higher, as well, up seven points. 17 of 18 banks have passed the federal reserve's stress test. meaning they're sufficiently capitalized under a worst case scenario. only banks not getting a passing grade, allied financial. also h&r block reporting fiscal third quarter loss of six cents per share. that's twice what the street was expecting. the largest tax preparation firm blaming a delayed start to the u.s. taxation filing season because of the fiscal cliff negotiations. and kkr has reportedly reached a deal to buy industrial pumps maker gardner denver for $76 a share. that would be $1 per share above the original offer made back in
february. "the wall street journal" saying that that deal could be announced as soon as today. >> it's jobs friday. love those. love these futures. up another 67 -- i love that. >> it's been there all morning. >> that's great. and then people say, what? another -- it can't hit a new high every day. really? all right the numbers will be out in less than 90 minutes. senior economics reporter steve liesman joins us now with the latest estimates, and we were talking earlier a lot about it, steve. i think you say we got to do 200. i think if we just did 200, that's just the markets -- >> i said 200 yesterday. maybe for the private sector. i think that may be a little hot. i'm more in the 180, 190. >> you're a little hot today. >> thanks. >> i like your tie. >> you saw that. you didn't -- >> no, i do. i dig it. it jumped right out at me. i said hot. anyway, you don't think -- what are you downplaying it now? >> just downplay it sometimes. >> come in at 7:00 in the morning with only a single cup of coffee and sit across from joe kernen.
>> i've had no coffee. >> you need that -- >> you need the new viagra gum. >> should i read this thing? >> what's your number? >> i'm in the 180, 190. here's the thing. i'm so sure of the futures being 67, 68. >> love it. >> really just a trim like report. we're looking for, you know, it's neither exceptionally strong nor weak. just right in that 150 to 175 zone where we've been. here are the numbers. adp was 198. nonfarm payrolls, that's private and government expected at 160. maybe that's a little steal. maybe there were some upgrades over the adp report. unemployment rate, which is absolutely unforecastable, right? there's two moving variables in that. there are the numbers, 157. two of the past four months were around -- expected today. not that hot. adp was 198, that was for the private sector. pretty broad stretch, factory
services all up. the ism services was good. claims have been good. the forward average not too bad. the nfib a slight rise. here are the negatives. some expectations the snowstorm could reduce by 50,000. the government expecting five to ten but over time that is going to be on the way. the ism manufacturing still well above 50 at 52 but down from where it had been. my big question mark is retail. payroll tax cut all the other things we heard we really don't know what's happening in the retail sector of the economy right now. we've had some decent stuff reports but there's some expectation that it's going to show off february and march. i don't know what's been happening to retail employment. those are things i'll be looking for today. obviously the wages number, going to tell us if you have the payroll cut on the one hand, do you have an offset in wages out there. something very important to watch. and then i know my good friend and colleague, from chicago, rick santelli is going to point us to the participate rate which figures heavily in the fed's favor. >> stay with us.
let's bring in our guest host, alec young is global equity strategist at s&p capital iq. larry kantor is managing director and head of research at barclays. and alec you were saying that you think the number could be a little higher than 162. maybe that's before the adp report? >> yeah, i think the consensus has been trending up to 170. and i think given the upbeat da data that we've been getting pretty much across the board especially on the housing, employment, i think people want to be, markets aacting well, they're expecting one. may be a little hard to impress the market. i think the overriding theme is even though guidance from corporate america is pretty lousy, in terms of earnings this year, i think people are saying, look, as long as the economic data keeps surprising, the earnings are going to take care of themselves and that's keeping a nice bid under this market. people that are aattributing ths entire rally to the fed, it's important. there's an improving fundamental story and i think people that
are too quick to dismiss the rally is fed induced may continue to be on the losing side. >> larry, we talk to traders who are down at the cme and several of them have pointed out again and again, look, it's been very light volume. is that something that gives you pause for any of this, or do you buy in, i think momentum is really here, it's hard to fight the rally? >> i think there's no question there's tremendous momentum here. the ma shrugs off bad news. i mean, you had a crazy election in italy, a comedian getting a huge percentage of the vote. anti-austerity, anti-establishment, and market just keeps going. the fundamentals, i question that. i mean fourth quarter growth was zero. first quarter running 1.5. we're just getting more cuts on the fiscal side. isn't a great growth environment. europe still in a recession. you know, i look at commodity prices, they're not doing very much. this tells me the fed has a lot to do with this rally. i think the employment reports, yeah, we're all going to look at this. i can't remember the last employment report that's really
shocked and moved markets. i think people are more worried about the fed reaction as long as the fed keeps pumping the money in there. >> really interesting, the market has shown an ability to separate what's going on in the private sector versus what's going on in the private sector plus the government. i don't know that it continues to be able to do. and i don't know that the private sector continues to be, you know, sort of immune from what's been happening in the government -- >> what sit that will happen where the market wakes up one day, they have to and says, if this doesn't -- the fundamentals don't equal what's happened. >> first of all, i think we have a ways to run here. i mean the best thing you can say about stocks is how good they look relative to bonds or cash. i mean, you know, i mean, you're almost guaranteed a negative after-inflation return if you're in cash or bonds -- >> but that's not nothing. that's a big -- >> i think that's huge. >> that's one of the things the fed has done, reasons why is push down interest rates. >> no question about it. i'm not fighting it. we've been super bullish. but the thing is that one reason
why we were bullish a few months ago is because we thought stocks were still climbing the so-called wall of worry. they're not anymore. that worry is gone. in other words -- >> expressing the worry right now. you're -- >> you're adding bricks to the wall. another brick to the wall. >> people out there, so i think the lower risk, you know, europe, and fiscal cliff and all this stuff, that's -- >> i got to tell you, when you were talking right now, just listening, it's like, wow, you got to, when you're saying it, i know you can hear yourself saying, ooh, god, i'm saying things for why the market shouldn't be going higher. going higher every day and here i am saying it doesn't make sense. in the past when people do that they finally just stop saying it. >> at one point -- >> i'm not fighting it. >> larry questions fundamentals and he mentions gep. we're not investing in the onomnvesting in stocks. the equity fundamentals are better than gdp. the low bar an gdp is bullish because it's easy to exceed and we continue to see that.
the other thing is the negative 0.1 on q4 is a misnomer it's going to be revised up, and -- >> but look, growth has been where -- >> 1.5 -- >> is anybody saying that's a great -- >> what's impressive is how well the economy's absorbing this fiscal tightening. we're now -- >> let's just be clear. it hasn't had the fiscal tightening that's coming yet. the sequester is coming -- >> latter months -- >> the payroll tax cut was big. i do think that -- >> we don't know that. it's the one thing that's kept me from being 100% bullish here is that i don't know what those retail sales are going to be in february. i don't know what they're going to be in march. there's a negative number in there. if that happens i think the market's going to say, wait a second -- >> who's gotten rich underestimating -- >> i actually -- >> i actually think february is going to be weak in the markets. >> is it negative? >> market's not going to care. >> here's why. the cpi is going to rise about
0.7% because of gasoline prices. they're already falling so people will just look through this. so you know, you consider that payroll tax hike, that was 120 billion that's a huge -- that's biggest than the sequester which is 85 -- >> but you had late tax returns so refunds that was another factor out there. that's something that ultimately -- >> i think there's a fair amount of pentup enterprise, too, so people look at the payroll tax increase in a vac umg and say it's going to kill the economy. there are a lot of other things that are happening that are doing better than people expect. so in the aggregate, i think the economy can continue to, you know, conservative economists are an investors best friend. the consensus every day and the bar just keeps getting beat. >> the theory the past three or four years has been that the economy would do okay if we could get rid of some of these crises that were out there. those are kind of gone. and the idea that the itallian election became almost like a day and a half story. we sent michelle over there, and i don't think after her great
reporting, i don't think people really were that concerned after that. it doesn't have any long -- >> they were. but they didn't. they didn't go back to 8%. so when you look around the world for fires, for smoke, i'm not sure there's fire. any particular place right now. the question is this, in that environment can the economy prosper and get back its legs and have a better than expected returns? that's the question i have, and i think there's some possibility there. >> we haven't even thought that we'd all talk about the $600 billion tax increase but it was on people of 400 and above. and the middle class, that the lion's share, the republicans said we just locked in the bush tax cuts for 98% -- >> i'm amazed they didn't say that. >> i know. >> how good is that for people that want to keep money in the private sector? >> and it's not temporary anymore. it's permanent. >> no, not temporary anymore. >> that was 2003, right? >> you know what else? you're not tying a big, ugly knot anymore. >> not with this tie. because this tie is --
>> so you can tie a good knot. the larry kantor knot. >> this is a windsor knot. >> you look so much more dapper. >> but the thing is, when your dad teaches you the knot when you're 12 -- >> i'm not saying larry's -- i'm saying liesman's coming along. that's a great -- >> and i complained about the affordable care act yesterday. that and the knot -- >> i did an imitation of you asking that question. mr. emmanuel, the facebook says that maybe some jobs -- >> he doesn't want to hear it. >> maybe some jobs have been lost because of that. i mean, raised the possibility obama care might be hurting jobs. i know what you think that -- >> that is not what he sounded like -- >> can you imagine asking whether it's possible the obama care -- >> that was yesterday! that wasn't what he sounded like. >> now would be a good time for me to exit stage right. >> now that you stirred it up -- >> big story coming up. larry myers coming up with his
annual who moved markets from the fed. >> all right. we'll -- that's actually -- >> very exciting story. >> you think it's only possible -- >> comments, questions about anything you see here on "squawk" e-mail us at email@example.com you can also follow us on twitter. >> still reading these things? @squawkcnbc. that's our handle. >> up next a fresh face to "squawk" after what we've been going through already this morning. we welcome -- really. larry and steve. . ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪
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all right, everybody, welcome back. you can see that there are some pretty significant green arrows. dow futures up by about 63 points. s&p futures up by just over six points as well. all comes as we await that jobs number that is less than an hour and 15 minutes away. >> the dow reaching another all-time high. but is buying in the equity market still the right strategy in this low interest rate environment? that might explain it. joining us now bruce richards, also part of -- good morning. >> good morning. >> so answer the question. still time to buy? >> equities were in a multiyear trend so i think will go higher. cash has been going to equities
but look at the etf numbers, the mutual fund numbers, the bond flows that's been relatively steady. >> why is that? >> because fed's buying $85 billion a month, a trillion a year, building the balance sheet from 3 trillion to 4 trillion -- >> why moving out of bonds? >> because the fed is buying keeping rates low. fed fund is zero and the government buying as much as they're buying a natural bid on the bonds. bonds aren't moving low end price so people are naturally comfortable investing in bonds. >> earlier this week he said if you're going to government bonds going into treasuries that's like walking in front of a steam roller to pick up a dime. >> 100% agreed. here's the difference. when money really starts to flow out of bonds and that will come a little later in the stage, then every market is going to be propelled even higher. >> so it's the next kind of -- >> how much are treasuries overvalued? take a look at the ten-year note. i thinks extent of the bubble, put a number on it, 22 points. that's how much it's overvalued.
if you woke me up from this long slumber and told me gdp is growing at 2%, inflation is growing at 2%, what should interest rates be? i'd say fed funds would be free, ten year notes 4.5. >> you're the first person who would put a number on this. >> ten year notes from 197 to 2.4.5% that's 253 basis point move 22 points. mortgages overvalued by 20 points, high rate corporate bonds overvalued by 20 points. that's the bubble. >> but give me through the '80s and '90s, a 4.5% ten year i'll stay in stocks all day long. i know the rate of change would be different and it would scare the heck out of people but we never thought we'd have a 4.5% ten year right? >> wait still rates start to creep and ratchet a bit higher. >> you think that hurts equities? >> i think when rates start to
gap higher equities will go down. interest rate stocks will be clobbered. especially financial reits. >> -- the recovery? >> no because it will be with faster growth. the initial knee jerk reaction is equities will go down. but then the equity market will scream after that. >> scream after that. >> our work shows that the move in ten year bnds of 2 to 4 is supportive of stocks because it indicates better growth you have to get rates up about 4% for it to -- >> -- it's going to depend why the rates go up. if it's an inflation shock it's going to be very bad for stocks. if it's growth, it's not going to hurt that much. and it's also going to depend on the speed. >> 4.5% ten year indicate on inflation. >> yeah, but -- >> what's the number in >> right now if rates start to rise it's probably because growth's picking up rather than inflation. >> wait till bonds fall 30 points ten years fall 20 points and ask that question. people are going to be shocked by that. retail investors, institutional
investors -- >> after waiting for it for four years and every weekend -- >> they're not prepared. yeah that's the point. no one wants to lose money but it's retail institutional hedge funds, leverage reits, they're going to get hurt. >> you know you were asking becky before why are investors sticking with corporate -- there's one other factor. there's a dearth of safe assets today. but you think about all of the assets people thought were safe five or six years ago. there's very few. investment grade corporate funds have actually become for investors a safe asset. and i think that's one reason you're seeing such a strong bid. >> another area that's hot is this floating rate stuff. so you're getting a competitive yield but people feel like they're protected from rising rates, and that seems to be the really hot thing now. your thoughts on that? >> buyers like leverage loans, big discount distressed. where we do have duration risk in our book we want that who's
shorting cash instruments. >> what's your number today? >> 185. >> okay. >> you look like you're -- you go with the unbuttoned top button which means you're working your ass off, right? your clients see that, they think this guy -- >> i just tightened this knot for you. >> but you don't sleep, you don't rest, you don't go to the bathroom. your clients are getting their money's worth. look at that. >> i'm so glad i don't have to wear a tie. appreciate it. when we come back we're going to talk about which fed heads move the markets the most. larry myers' annual list of news makers many of whom you can see on "squawk." we'll talk about who you need to listen to the most when it comes to making decisions. the patient, presented with
a hairline fracture to the mandible and contusions to the metacarpus. what do you see? um, i see a duck. be more specific. i see the aflac duck. i see the aflac duck out of work and not making any money. i see him moving in with his parents and selling bootleg dvds out of the back of a van. dude, that's your life. remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. i see lunch. [ monitor beeping ] let's move on. [ male announcer ] find out what a hospital stay could really cost you at aflac.com. [ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ]
welcome back to "squawk." a hopeful sign for the battered economy. new figures show that tourism in greece is bouncing back this year. bookings for greek vacations came from britain, germany, and the netherlands. the coming summer they are up 10% over a year ago. the biggest slice of tourists coming to greece these days from germany. those bookings were down about 20% last year but have now rebounded about 30% this year. >> currency floater. there's the -- up 50% if the drachma was half of what it used to be if you go there. they can't do it. >> take a nice vacation.
>> island of mikonos. they're all great. the worst greek island -- >> santorini. >> rhodes. doesn't get better. >> italy. there's always italy. >> or paris. >> you guys do talk a lot of paris together. >> we do. >> when we come back. play it again, sam. the mayor of newark, new jersey cory booker getting some high marks. but can he do it on the federal level, as well? we're going to ask him for his possible bid for senate and much more. and pandora's ceo stepping down from the internet music service marking the end of an era for the company. a closer look at why his exit comes as a surprise and what it means for investors who saw a nice pop in the stock yesterday. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right.
you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is,
we'll see whether that holds up. also macy's, martha stewart, and jcpenney are going to be taking their dispute to mediation. a court case involving the three parties has been adjourned until early next month to try to work this out and find a solution. the case centers on stewart's decision to sell housewares at jcpenney which macy's said reached a prior agreement to only sell stuff at macy's. cdw reportedly set to go public later this year. reuters reporting they've hired banks for potential offering. cdw was taken private for $7.3 billion back in 2007. joe? >> thanks, andrew. the private sector is teaming up with first lady michelle obama in a partnership for a healthier america. joining us with more on this special summit, newark new jersey mayor cory booker i begged to come on the show like two years ago and finally had to have a summit for him to be here. whatever it took, just really glad you're here, mr. mayor the vice chairman of the partnership for the healthier america and
you know, we're supposed to ask people hard questions -- there's no way i can challenge you on this whole initiative. it's just what we need to do for like i mentioned probably 100 reasons. >> yeah, well look, first and most important reason is the impact it's having on the lives of our children, undermining their potential. you know, four times the medical cost if you're an obese child. we've seen obesity in the united states for kids 6 to 11 increase three-fold in the last three years. growing epidemic problem. so much so that now if we had kids ages 17 to 24 at least 25%, maybe more than 25% wouldn't qualify to serve in the united states military right now. so it's undermining our society in so many different ways. most importantly, the children that we're going to be relying on to be the producers, to be the inventors, to be the poets, to be the teachers, those kids' lives are really being eroded by this problem. >> and i think about ways to do it. i've been a critic of mayor --
not of mayor bloomberg, the nanny state that 16.9 ounces, you can have it, if it's under 16 you can buy two of them. i can almost see the government getting involved in an alliance with the private sector at least for public schools and the like and diets in that case. i don't know about legislating behavior in adults. that i have a problem with that. do you have thoughts on that on where you draw the line? >> well, first of all, let me just say that the first lady, the partnership for healthy america, this really about pulling everybody together. this summit you can have a foundation, nonprofits, community activists, corporations, all coming together to say, hey, we can change this. we can solve this epidemic. so in that sense this is the right way to do it. i'm very excited about it. look, my brother mayor bloomberg who is really the obi-wan kenobi of american mayors and pulled us together to deal with climb ed change, illegal guns, infrastructure investments, he is being powerfully provocative.
and whatever you want to say, we do have a history in america of saying that the government can step up and do things, whether it's cigarette smoking, whether it's seat belts, there are things that right now society pays a tremendous cost because we do not do. so as mayor i didn't follow some of the things that he's done but i give him a lot of prize because at least you and i are talking about these issues that we should be talking about. he's chief provocateur, it's a good thing. here in d.c. we're talking about bringing people together in a collaborative sense, not a government telling people what to do, but challenging them and folks are stepping up. reebok today, big announcement, has said you know what? we're involving 200 schools. we're going to increase that to 1,000 schools across the country. we're going to put our money where our mouth is. put up $30 million over the next three years increasing youth activities. we see great hotels like hyatt saying when kids come in they get these fried chicken fingers and french fries. we're going to change our kid's meal. you have other folks pledging to
open up more supermarkets in food deserts. it's an incredible coalition of people saying if we don't deal with this problem now we're all going to suffer. >> exercise. i can imagine exercise -- with the food thing, in the '80s we were absolutely sure there's a cascade of science that said red meat was i don't know caused everything. and it was basically disproven. so there's just certain times where i wonder -- >> look it, kids -- >> you can look at the calories and things like that. for kids i certainly see it. for adults, we -- you had warren on the other day said look i do 2700 calories, and how i get to 2700 calories per day is my business and if 200 of them are going to be drinking a cherry coke then i'm going to drink a cherry coke. that's -- that's the only point. >> mr. mayor, i -- >> well look at the -- >> i'm sorry go ahead. >> at the end of the day that's the thing about america. we enjoy our freedom, we enjoy our options and i completely support that. i'm a vegetarian.
it's a personal choice. it's what works best for me. but the reality is we all have to get up and recognize we have a health care crisis. we as a country cannot continue 18% of our gdp, 70% of our gdp and climbing being spent on health care costs. we are a yes that's driving our economy, dragging it down with the cost of health care. and that's being driven by the fact that we're such an overweight population. so we have to do something. we've got to be -- >> exercise, too. i mean, so many sedentary. and then you throw it, you know, social networking. you don't even have to leave the house now, cory. you can sit at your house on facebook all day long and make friends, lose friends, whatever you're going to do. i mean there's a lot of things that go into it. exercise is just key. >> you're not going to get that far with a guy who started a social media company way wire who is tweeting and facebooking a lot. that does not mean that we shouldn't be out there being active. one does not necessarily connote the other. the truth is, as we're seeing with reebok's commitment, we've
got to get our kids back engaged, physical activity, going outside the house. as i've seen as a mayor, we have the largest parks extension in over a isn'try. policymakers like me have a responsibility to provide safe, good, parks and recreational facilities for our kids that's got to be a priority. new york city did it years back with a big effort the private sector joining the city government doing something called take the field. they opened up many fields in places in new york where they didn't have them. we've got to commit to it. i really believe in america after seven years of being mayor it is no longer of can we deal with problems, the issue is never a question of can, it's always a question of will. will we do it? do we have the collective will as a country to deal with the challenges that are undermining our potential, undermining gdp growth, undermining our hopes and dreams for our kids. >> mr. mayor this is an incredibly important effort i'm very glad to see you making such a big point of bringing it up today. a lot of people are wondering
what your next step will be. will you run for governor in new jersey? will you run for senate in new jersey? have you focused in on what your next plan may be? >> yeah, i have. i've got 478 days left as the mayor of the city of newark. we are booming in our city right now. we have the largest economic development growth period sinces 1950s and '60s. in fact, 30% in the end of 2012, 30% of all the development for commercial and multifamily going on in the entire state of new jersey was going on in newark. newark was responsible for that lion's share. but i'm going to really focus for these next 400 70 plus days to continue to drive newark's biggest growth period. we're out of our budget woes, extending tax base and job opportunities for my residents. that is the platform i'm going to stand on. after that i've made no formal announcements or decisions but i'm exploring and looking and running for the united states senate because job creation, balancing budgets, dealing with
violence in america, these are things i've been doing on the local level and i believe on the national level i can make a big contribution to tackle being some of these enduring problems in our country. >> cory i know you it's andrew sorkin here i know you want to potentially get to washington but given how screwed up washington seems to be do you think you can actually get anything, is there more to be done in washington than there is as being the mayor or being the governor? >> yeah. >> well, look, i love being the mayor. it's a job of my dreams. and back in the 1990s people said the same thing to me. why would you want to go to city government in newark, new jersey. it's so screwed up. it was. we had the federal government taking back grant money, threatening to take over our housing authority. we've turned all of these around, become more efficient, more effective, streamlined ourselves. newark city government we cut about 25% of the jobs, make it leaner and meaner, we did 58% in the housing authority. created more efficiencies, management systems. and so what people told me not to do or was impossible to do,
we've now done, creating more opportunity for our residents. for taxpayers. and so we keep saying things are impossible, they will always be that way. but we have people starting to step up and lead not just from washington but really democracy is not a spectator sport. all of us getting into the game. all of us doing a little bit more. having that same sense of urgency we as a nation had when we faced down totalitarian regimes, when we faced down jim crow by people in the northeast and all around the country getting into doing freedom rides this is the kind of urgency we need because our country is underperforming. we could be doing so much better but we just desperately need a good people to stand up and do something about it. and never accept the impossible. because the testimony of america is anything, the testimony of america is a perpetual achievement of the impossible. >> i don't know, govern ever. governor. might be an opening in new jersey coming up in a couple of years i think, cory, don't you think? i just think of the senate, the
last time the senate got anything done was i don't want to bring up corzine but he went there. he came back to be governor. such a better, you know, you actually get something done. >> well, let me give you an example. i've been fighting crime now for seven years from the streets. >> we'll talk. >> guns that are being used are not coming from my state they're coming from out of my state. >> maybe in that regard. yeah, it's just frustrating to watch the senate work, you know, compared to state governors. anyway, cory, we got to run. i know that you got stuff to do. it's been great having you on, mr. mayor. good luck. >> i look forward to coming back. thanks for having me. >> good, thanks. >> when we come back, when they speak the markets move. so which fed head has the most influence? larry meyers' scientific findings are next. and later the number of the morning surveys economists are expecting nonfarm payrolls to rise 160,000. we've got an expert panel ready to break down the numbers for what they mean for the markets. first a stock to watch this morning.
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welcome back to "squawk box." last night was a big one for the hedge fund industry. time to give back to the community. more than 1,000 people gathered for the 15th annual hedge fund cares new york event. cipriani was an evening of cocktails and entertainment but the gathering raised funds to help prevent child abuse and treat its victims. among the attendees, the founding partner who received a lifetime achievement award. we caught up with some of the people in attendance. >> give the industry a chance to come together as one group, to be with each other and do something great. >> we have now moved to 12 cities in five countries, where we raise money and we give it out in the city where we're
raising the money. >> and all the money we raise in the local community stays in the community. tonight we'll raise over $2 million. >> i think coming over there and seeing the art and the voice of the kids and the art and what they're going through, a lot of people were like, wow. >> lots of fed talk out there. but who should you really be listening to? steve liesman joins us right now with larry meyers annual fed power player awards. these are biggies because there is a lot of fed speak. >> that's right. you may think i'm into the fed minutia. larry meyer brings it to a whole new level looking at every speech on monetary policy given by one of the fomc members and chronicling how much it moves the ten year. used to be the two year but because it doesn't move anymore he had to move it to the ten year. richard fisher from dallas, 22 speeches. almost off the charts if we stopped it here relative to everybody else. bernanke at just 12. this does not include his press conferences in there.
williams from san francisco, dudley, 11 and leff lacquer who seems to make a lot of news but only giving ten speeches. let's look at the next award that larry meyer gives. the total absolute chance, bernanke moves it 18 basis points over the course of his 12 speeches. dennis lockhart from atlanta coming in second. doesn't strike me as one of the more influential guys but apparently the market is really listening. richard fisher next. dudley, bullard, lacker and williams. now this is the most important award i think. we call this the power player award. this is moves per speech. bernanke at the top, followed by our good friend from atlanta dennis lockhart. jeff lacker second, like i said, he's pretty impactful when he does speak. bill dudley and kocherlakota. one more thing. how do they move markets?
are they hawkish, do they move the yield up or down? bullard here tends to move it up. lockhart but there's bill dudley a known dove moving it up. williams, and plosser a known hawk moves it down. bernanke moves it down which is what you'd expect. joining me now larry meyer to explain this conundrum. how is it that hawks are dovish and doves are hawkish here? >> what matters, steve, is not whether they're a hawk or a dove but whether the speech is more hawkish or dovish than the markets expected. so it's not entirely surprising. >> let's talk about why would plosser, for example, have a negative six total impact on the market? >> i think that's the case because he was generally less hawkish than the markets expected. okay? and that meant that he was lower in interest rates over the course of the year. >> larry, statistically
significant, how much does the placebo move -- i bet we can get steve liesman. we can watch the ten-year and i bet you we can build the same chart for steve liesman when he talks -- have you run statistical analysis -- >> absolutely not. wait a second. i can't even move the markets like that. >> it's a two-hour window, right? >> this is, you know, quite significant. i think it's important that the chairman is the power player of the year, and moves the markets. he'ses messenger, indeed i call him the decider. it would be very disappointing if that weren't the case. >> larry, did you look at all the sustainability and remind you, look, you were a governor. i used to work at the fed. i think all of us know the chairman runs the show there. unless it's somebody sort of in the inner circle like a dudley, shouldn't you fade most of these moves from just about anybody else with maybe the exception of yellen these days?
>> well, you're absolutely right. and this is the disappointment in some sense, right? that there's so much influence by other members of the committee, other than the chairman, and other than yellen, and sometimes these speeches are interesting. but they're basically noise. and so, you know, i really hi that, as you know, i think that the markets overreact. there's not moves here -- >> let's be clear about something here, which is that the markets react to these speeches but they are not the most impactful of all the things the fed does. the statements are the most important. followed by the minutes and then if i'm not mistaken, larry, followed by the speeches. so the market is smart this way. they do react to the speeches but it's not the thing they react to the most. >> again, that's -- that's a very fortunate and desirable result. the official communications move the markets, then any -- any member of the committee. >> larry, does it matter whether they speak a lot?
and i know there's a percentage basis, but those that speak more, or more publicly, do they have more of a sway, less of a sway. >> well, you know, obviously that adds to their ability to move the markets overall. and we see that with president fisher. on the other hand, if you look at impact per speech president fisher is like 12th. okay? so you know, it's probably more important here where you are in terms of power player of the year. i sometimes think of that as the most important award and we have to adjust for the number of speeches. that's why we look at that award. >> larry, steve, guys, thank you very much. steve you're going to be back here in just a few minutes. >> yeah, the final countdown. >> here we come. when we come back the surprise exit of pandora ceo joe kennedy overshadowing the quarterly results leaving investors asking why now.
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welcome back to "squawk." pandora ceo joseph kennedy stepping down after the company reported upbeat results after the bell. the search for a replacement has begun. julia boorstin joins us now with her exclusive interview. zblulo julia? >> that's right. i sat down with joe kennedy right after the surprise announcement that he's leaving. kennedy told the board of his decision on tuesday night and stressed that he is committed to
stay until successor is found, which could take months. the announcement comes on the heels of better than expected results, and a couple of bold moves that will boost the bottom line. so i asked him why, after nine years leading pandora, he's leaving. >> my envision had always been to create an enduring, great company. and there's no perfect time for someone in my position to leave but i think this is a good time. we have tremendous forward momentum on all parts of the business. we turned the corner on mobile monetization. we have a great team. great plan for this year and i think it's the right time for a very orderly transition to someone who can take the company to the next level and beyond. >> so, guys, that was kind of a nonanswer. when i asked if i was fired he laughed and said no, that it's just time to recharge my batteries. now kennedy says the key to pandora's moving to the next level is mobile. saying its ability to make money from mobile streaming is the cornerstone of pandora's business, and the force behind
this past quarters's upsize. a new system will allow the service to compete directly with radio stations for the roughly $15 billion radio ad market. >> fundamentally what we're trying do is make buying pandora as easy as buying your local radio stations or a group of radio stations across the country. that's what these systems enable. they put a side by side with the traditional alternatives in radio so that people who buy advertising can see our audience size, and can move forward, and transact with us again, with all the ease that they've historically been accustomed to. >> now, while that may be true, pandora does face growing competition from a number of forces, not just radio but services expected to launch from apple and youtube. as far as replacing kennedy, andrew you said it best, the search is on. >> thank you, julia. interesting story. are you on pandora, by the way? >> i don't know how to do that.
>> julia, i bet is on pandora. >> you don't use it at all? the service is free up to 40 hours of mobile use a month. it's kind of a great free service. >> i was getting some surgery, the doctor asked me what do i want to hair, i told him, and he did something, and pandora and there you go. >> julia boorstin, thank you very much. larry, thank you for being with us. >> thank you. >> sorry you're over there. my brain is all over the place. coming up, the final countdown to the jobs report. our market pro panel is ready to rock. we have austan goolsbee, getting ready professor of chicago school of business former economic policy adviser to the vice president and cnbc contributor jared bernstein and oppenheimer funds brian leavitt. plus rick and steve getting into the mix. i remember the day my doctor said i had diabetes.
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for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. this hour on "squawk box," economic data that could move the markets. we're counting down to the february employment report. our panel of experts is ready with final predictions, and instant analysis. and we'll continue our what's working series with stock picks for your portfolio. the third hour of "squawk box" starts right now.
>> welcome back to "squawk box" here on cnbc, first in business worldwide. you can hear the music. you know what that means. jobs friday. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host is alec young, global equity strategist for s&p capital iq. he has to memorize all the stats on 500 -- you know every s&p stock, don't you? you better you're with the s&p. we are counting up to 8:30 a.m. or counting down or up? there you can see there's our clock. that's based on -- it's an atomic clock we're using at the u.s. labor department. that is the official one? that's how long it will be. forecasters looking for 160,000 jobs. the unemployment rate is seen falling to 7.8%. we'll have more on the jobs report in just a minute, but
there are other headlines today, as becky is poring over right now. >> we just got the same-store sales for mcdonald's. they look like they were a little better than the street was expecting. negative numbers but that in large part is because there was one less calendar day this year than there was a year earlier so you were expecting negative comps. overall they were looking -- the street was looking dunn 2.2% on a global basis. it was only down by 1.5%. if you exclude that negative calendar shift, global comps would have been up 1.7%. also, if you look at the u.s., it was down 3.3% versus the expectation of down 3.8%, then again that included that calendar shift. europe was down 0.5% versus drop of 1.7% that the street was expecting. acme is the one area, asia, pacific, middle east and africa down 1.6%. they were looking for slightly marrower loss but the ceo says they were looking through this. it was a difficult prior year
comparisons but they did pretty well with them and they think they have the operating experience to manage through the current challenging environment. he is throwing the wortds challenging environment in there and the right strategies for the long term. >> are we happy or sad? >> we're happy. >> after that conversation we had with mayor backer? >> except if you look at mcdonald's, they've done a lot of things to try to get healthier choices brought into the mix. if you have a happy meal you get apples instead of french fries. >> you know how i would argue that. >> don't worry about it. it's the exercise. >> it's the number of calories you put in and the amount of exercise -- >> if once a week you go to taco bell or have mcnuggets once a week, people live to be 100 years old. >> my biggest concern is the amount of exercise. >> you can't just go once a week. you've seen me when we have dunkin' donuts here. you can't just take one. >> have a little personal control. yes you can just go once a week. i don't eat a fillet of fish. i would eat a lot of those. of course i don't even know what
kind of fish that is. >> they said it's -- they've been -- >> is it the kind with two eyes looking up? >> you're thinking of flounder. >> they're supposed to have two eyes on the top of their head. >> i know! but doesn't mean you have to eat it. >> actually pretty good fish. among the other stories we're watching, 17 of the 18 banks have passed the federal reserve's stress test meaning that they are sufficiently capitalized even under worst case scenario. the only bank not getting a passing grade was allied financial. we'll have more on the story from kayla tausche in just a few minutes. in the meantime we have even the futures trading higher even ahead of this number. right now they're up about 56 points for the dow futures. s&p futures up just about five points above fair value again after several days of new record highs for the dow. overseas in asia, you did see a gain of 2.6% with the nikkei, and the hang seng, the index there was up by about 1.4%. in europe, green arrows there as well this morning the best performer right now among the ones we're looking at on the board is the cac in france which is up by 0.8%. >> and we're less than 30
minutes from the much-anticipated february employment report. we've had to wait a long time for this. second friday of the month. so we have our power panel. joining us jared bernstein, chief economic, and policy adviser to vice president biden and senior fellow over at the -- and a fine fellow senior and fine on the center from budget -- >> a jolly good fellow. >> he is a jolly good fellow and austan goolsbee, former chairman of president obama's council of economic advisers. and economic professor at the university of chicago's school of business. isn't wolf paying you, too? >> now i'm 32 advisers, i'm the economic intelligence officer. >> wow. that's the oxymoron of the morning, isn't it? sorry. brian levitt, senior economist at oppenheimer funds and our guest host alec young of s&p capital iq. go straight across the line. i -- you know, with the claims
numbers, aren't you thinking maybe we're moving maybe into third gear or something here from second? >> i'd like to think that. but, in fact, my forecast is right where the consensus is 160. although when i made 160, the consensus was 170. and that was just a day or two ago so it must have come down. so i was actually a little bit less optimistic than the consensus. 160 on total. 170 on friday. unemployment rate stays about where it is probably. 79. maybe ticks down a tenth. >> austan is the one with quite the record and you're a little bit more optimistic, aren't you? >> let me just say that. i love austan goolsbee, he's like a brother to me. >> uh-oh something bad is coming. >> last month when we were on this very show i said 160. he said 155. it came in at 157. he was off by 2,000. i was off by 3,000. and it was all austan, austan, austan. >> so we gave him a lot more -- >> yeah, you gave him a lot more
love based on 1,000. >> i was closer. >> true. on this one, joe, tell the truth, i had the same experience looking at the consensus, and comparing my number as jared had. i'm only looking optimistic because the consensus was coming down. even higher than where i was. i think i'm probably about, you know, if consensus has dropped to 160, i'm probably at or below the consensus. >> oh, you are? i thought you were above. i thought you were above. brian, where are you? >> there hasn't been a lot of intrigue into tease numbers. i think we're going to be in line with last year, which is around 180,000. so i'm a little bit higher. it's crazy to think we can get this down to within the 100s or 1,000s of an economy this size. but you know there's not a lot of intrigue. it's very consistent with post-financial crisis, slow growth, you know, probably a
little bit better than 1% job growth gets us around 180,000. >> where were you, did you already tell us? my mind is mush. >> i focus more on, you know, what's the reaction. i think the numbers have been better lately. so, unless this number is a total train wreck i don't really see it moving the market that much. if it's between 150 and 2300 i think it's kind of a nonevent. we've got a big miss given that people have gotten conditioned for better numbers. i think it could be ugly. but i think the odds of a big miss today are very low. >> you know, the way the market acts, we talked about it right at the top of the show. i mean, upside surprise in the market's going to go, see, there's a reason i was doing what i'm doing and i'm just headed higher today. we could really, i mean we could really get going. once you get above high because no one believes. everybody's ready, oh, it's got to pull back. got to pull back. a lot of times, you know, it doesn't. and then people see the train leaving -- but we'll see. if it was disappointing i guess it could happen. why haven't you guys gotten more optimistic given that jared,
housing, for example, the claims numbers, even consumer sentiment seems like it's head up pretty well. >> i know there are definitely reasons, if there's an upside surprise, come to me, i'll be able to explain why it is. >> see austan does it before the number. that's the thing. you know -- >> i've seen you -- >> that's -- >> in hindsight. >> i'm much better explaining things after they've happened. but, you know, i'm focused on the fourth quarter gdp, which was pretty flat. but also, just if you actually, i know anecdotes aren't data. but if you actually go out there and you look at employers hiring function, it just seems very tepid right now. i mean, again, a lot of this is just anecdote. but kind of the plural of anecdote is data. we have lots of employers saying i'm waiting and seeing. i'm waiting and seeing. so you know, i think when you factor in kind of the upside of the downside you're looking at numbers that aren't terrible, but, you know, are in the kind
of realm that we've been citing. >> i would also say, i think the thing driving the markets is the unprecedented rise of corporate profits. >> i do, too. >> and it has been the case the past couple of years, we've had episodes where the corporate profits were going up, at the expense of labor costs. they were figuring out how to do more were less, and so you could still see the market going up and taking off, even though the job market is just kind of either stumbling or stagnating or just not improving that much faster. >> i think the reason that you don't get this big upside, i mean, to those points, what businesses do to defend corporate profit margins, of course we have the higher payroll tax, rising gasoline prices the looming sequester which probably won't figure into the february numbers so the private economy looks good. or looks decent. but there are some headwinds to this number that could prevent us from breakout. and actually for markets that seems to be okay. this sort of couple of percent
gdp growth inflation has been quite good for markets. >> i've been very focussed on the consumer. and, real wages have been flat for most workers. that puts somionward pressure. on the other hand we've seen better consumption results than we -- we might have a right to expect. but austan's very much correct. the corporate profit 5b89 has been part been fueled by very low labor costs. those very wage results that i was just citing. so in an economy that's 70% consumption, it's ard to get a real boost. i mean that's why gdp has been so slogy and why we've been stuck in this kind of 1% year over year realm in terms of job creation. >> okay. all right. we're -- we're going to check back with you gentlemen. it's less than 20 minutes to go now. before the big jobs number. which is, you know, not a big deal. >> not a big deal. >> it is a big deal. >> huge deal. >> whether he's ever back on jobs friday. >> he changed his mind. >> after we slapped him around a
little. >> coming up, all but one big bang passing the latest round of stress tests but the fed still has to approve any plans for share buyback or dividend increase kayla tausche is going to join us with more on the capital plan in just a moment. we are approaching 8:30 a.m. and the release of the february employment report. we're going to get some final predictions from our panel of experts as we head to a break take a look at u.s. equity futures we do have green arrows across the board. we'll see if they hold up. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade.
welcome back to "squawk box." let's get back to the latest round of fed stress tests. the big issue, cnbc's kayla tausche joins us now with more. kayla? >> andrew, all but one bank clearing the federal reserve capital hurdle for those depression-like economic scenarios. the hurdle was a 5% tier one common capital ratio and the 18 banks tested average 7.7%. allied financial posting a 1.5% racial yo though its results perhaps skewed since its mortgage unit is in bankruptcy. performance overall is a slight positive. but it doesn't mean that banks are out of the woods. andrew markhart called the results a mixed bag noting that
the core capital fell from last year. the telltale sign will be the capital plans. he believes all plans will be approved and they'll favor buybacks. some banks could run into roadblocks in returning capital. the fed uses a more conservative calculation for a leverage ratio. the bar to clear here is 3%. several banks saw this metric worsen in the last year. goldman sachs coming in the lowest at 3.9%. one investors are watching because after all, a chain is only as strong as its weakest link. andrew? >> so here's my -- here's the question that i have. should we be worried about the other -- the other banks that are going to i mean even though they passed the test, is there any -- i mean i was reading some other pieces that would suggest that they passed the test but there's a little whitewater -- not whitewater, but whitewash -- >> also are they going to be allowed will the guys that came in at the low end, the morgan stanleys, the goldman sachs, will they be allowed to give more dividends back? will they be allowed to give share buybacks or are they going to be restrained in what they're
allowed to do? >> interesting this leverage ratio that i was just mentioning morgan stanley saw that level stay about the same, 4.5%. i think a lot of people are trying to read the tea leaves here and look at where the banks came in versus where the bar to clear is on that leverage ratio. it's not apples to apples, though. i think that a lot of people have been say being that maybe a lot of banks got an easy "a," to quote the dealbook headline on this but maybe that the requirements were a little bit too easy here. but in fact, senior fed official said yesterday when we spoke to them, that we haven't seen economic conditions like the ones in this test since the great depression. no other two-year period has there been such duress. so it's really hard to tell and the fed still isn't disclosing all that much about its model. so, you know, at this point we just have to go on what we know. >> what do we know in terms of how analysts have perceived this in terms of who's going to actually be able to come out with the -- bank of america. what's going to happen to bank of america? >> well, i think that bank of america, andrew, a lot of these companies have had some of these
plans telegraphed whether on the record or off the record about what may be the market is expecting here. because bank of america hasn't been able to post a quarter of solid earnings in the last couple of years. because of their litigation. i think a lot of people expect that maybe bank of america, for instance, won't actually be increasing its capital. returns here, citigroup of course last night disclosing that it plans to or it requested, at least, to buy back 1.2 billion in common equity. for the others we don't exactly know. wells fargo and jpmorgan both have said on their conference calls that they expect their capital return plans to be bigger than they requested last year, if neighbor a little bit different when you look at buybacks, versus dividends, and how that is actually going to shake out. >> and by the way, what do you think of this statement that ally puts out basically criticizing -- criticizing the model and criticizing the fed? >> well, it's interesting, because if you look at ally's performance across the board on the stress test you see that it
did come in very far below that tier 1 common capital ratio. it had 1.5% versus the fed bar or the dodd-frank bar which is 5%. but on all the other metrics including leverage ratio, including other capital ratios, it actually passed the test. it's better than some of the other banks. so you have to wonder what exact metrics are going into that one specific ratio, and of course, residential capital the subprime mortgage unit in bankruptcy so that's going to hurt its capital levels. >> it can't help your cause to criticize your regulators, right? >> right. >> that seems like a slightly crazy thing to be going if your goal is to somehow pass the test the next time. >> right. and i think that it's especially poignant, considering that ally is basically the only legacy asset that's still in t.a.r.p. the government still owns 74% of ally, it faded a little bit unclear whether it will be able to go public, whether it will end up getting sold. this is the one where it really matters. so it's obvious if they weren't
going to pass this, there were going to be some bones that got thrown. >> kayla thank you for giving us that update. we'll see what happens. >> still ahead. 8:19 now. and that means 11 minutes till the february employment report up next we're going to get some final predictions from our panel of experts before the number comes out. and then they're going to stick around for some instant reaction at 8:30. can't catch "squawk box" on television, we're just a few keystrokes away. find the show online and on mobile on twitter hand handle @squawkcnbc. like us on facebook. and visit our show page squawk.cnbc.com. your investments and the information you need, at your fingertips. "squawk box" on cnbc.
welcome back, everybody. let's get back to our panel for a quick round of final predictions. economist jared bernstein, austin gooltby and brian levitt. guest host is alec young. steve liesman is on set and rick santelli is standing by at the cme. jared, tell me because i need to write all this down so i know exactly who's right next time and i give proper credit to the
proper place. >> this is the tough part. 160 on payrolls. total. 170 on payrolls private. unemployment sticking at 7.9. i think we're looking at basically a race between household balance sheets, which are deleveraging, and the consumer who's just not as strong and he and she needs to be. >> okay, austan? >> ail say 165. i think we've had modest progress getting a little better, unfortunately as the sequester starts kicking in i think this is likely to slow down in the coming months. >> and what about your unemployment rate? >> unemployment i think stays the same. >> okay. brian, how about you? >> i'm slightly more optimistic. i'm in line with last year's average. private 180,000. unemployment rate ticks down 7.8%. >> okay, steve. your official ones. i know you tried to stay out of this before. >> kind of like 187 is where i am. >> precise. >> because i think i like the adp number which has been doing a little better. and i think you take off something for government and maybe a little bit more for the
snowstorm because there's a difference in how the weather is calculated. i don't know about the unemployment. i think it's an unforecastable number. >> you're at the high end. >> you're more optimistic based on everything -- >> i have. >> i just want it to be high. so that the market takes off and people that are going, can't keep going. they just feel even cirque. they just feel like it's leaving a training. that's all i want. >> rick, we haven't talked to you this morning. you want to wager a guess on this? >> i'll go 144,000 on the jobs. >> what does that mean unemployment or do you have a guess on that one? >> you know i'll lean towards 8%. but i know that none of us believe in conspiracies but change one number after the decimal on participation and make it anything you want. so, i'll go 8%. >> actually i heard that because of the sequestration, the bls is going to have to stop using decimal points, so we may have to be at 8 instead of 7.9. >> alec i know that you don't
officially have a number on this. will you go on the low end or the high end? >> high end. >> closer to steve's number? >> i think the street's at 165. so i wouldn't be surprised to see a good number, something better than that. but i think most importantly, you know, the market's expecting a good number. we've been getting better numbers for awhile. i just think it's unlikely that we'll get a big miss. and other than that, i think stocks are going to react mutual to positively. >> you guys have dick on earlier talking so the long-term investor shouldn't really care about this number. it's sort of the way i look at it in the sense that i don't -- i think this number's going to be in a range that we've been in sort of the 150, maybe 180. i'm always on alert to see if we've broken out of our range. >> it's been awhile since we've had an outlier. >> we had a couple 240s i guess back in december or november something like that. and then we ticked down to 190. we didn't -- 160 to 200 range. and really, 30,000, 40,000 jobs at 16 trillion dollar economy not going to sway my opinion. >> we had a bad number, we'd have to throw all the stuff we
said about zandi back there, that he doesn't have it. i mean adp had a really much better number right, and they had a better record recently. okay, ready -- >> very recently. all i did was calculate -- >> are they ready for a miss? >> it could happen any time. what i calculated was that adp had been in a 50,000 to 60,000 job difference, and then they ticked down to say a 20,000 to 30,000 difference. >> didn't adp -- >> for three months. >> adp revised january up to over 200,000 -- >> 215. that's right. >> austin very quickly. what's the your guess for average hours worked. i mean, i know that's a real important one to watch just in terms of hiring. >> i actually bet that ticked up a little bit. that that kind of absorbs what could have been job growth. but i'm not sure as we approach the deadline for instituting obama care you're going to see more movement to increasing the hours -- >> you're the only guy we ask
for that. we can only ask one person that we wanted to ask you. >> our panel is going to stick around. our panel is going to stick around for the february employment report which is just a couple of minutes away. right now as we head to a break take a look at the futures. [ female announcer ] it's time for the annual shareholders meeting. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz.
let's get right to hampton because it's only four seconds from the number. hampton, give it to us. >> up 236,000. >> old ya! >> february, nonfarm payrolls increased by 236,000 jobs. the unemployment rate 7.7%. the biggest monthly gain in jobs since november of last year. the last time the unemployment rate was 7.7% you got to go all the way back to december of 2008, when it was 7.3%. average hourly earnings up 0.2%. revisions were a mixed bag. in december, we had upwards revisions of 23,000 jobs beyond what had been previously reported. january it was a negative 38, so the net revisions for the last two months down 15,000. private sector job growth in february, a whopping plus 246,000 jobs.
job growth the big three. first of all we had professional and business services up. 000. construction 48,000. health care plus 32,000. retail trade 24,000. job losses government, mostly at the state level, down 10,000. how did the unemployment rate get to 7.7%. the number of employed increased by 170,000. the number of unemployed was down by 70,000. and about 130,000 people simply dropped out of the labor force. right now we've got 12 million total employed. a slight decrease. 4.8 million, 40.2% out of work six months or longer. that was a slight increase. okay, guys. have fun with all these numbers. >> wow. >> thank you, hampton. >> okay. so steve the revision was kind of -- that was just -- >> minus 15 on the revision. but that's all potatoes. >> yeah.
>> who is that -- >> what are you looking for the worst thing in the report? that's a great report. >> because look at it. and you were above -- you were five above jared as i recall. the weekly hours -- >> hours -- >> 35 -- >> yeah, but -- >> 34.5. >> steve was -- >> 187 -- >> i was not going to make a prediction. i just wanted it above, so it does show -- >> you said i told you. when >> i was hoping for above 200. i wanted above 200, but now -- >> rick santelli has some explaining to do. >> why, why do i have any explaining to could? >> because you said 144 and you're off by 100,000. >> so what? so what? >> actually 100,000 is the interval. >> so what? >> this is a strong report. i mean, yes you can find the decline in the labor force. okay, that's not so good. everything else looks very good. >> the markets -- >> the markets to really hug this one. >> it's at least -- the thing is, jared, it shows that the
market up to this point was like a thermos bottle, doing what it's supposed to do. keep cold things cold, warm things warm. how does its know? the market's been going up, now we see 230. hopefully, you know, i don't know whether it just justified the move that's already made or whether it keeps going. i almost think maybe a negative number of the market to shrug off a negative number sometimes it's better than getting what you want. we'll see. >> does this mean ben bernanke has to stop -- >> absolutely not. >> that's the other thing. if you want to wonder why, you know, the market's a little, you know, isn't surging, the first thing alec said was when does this mean we're -- >> give us a little -- >> let me give you some details here of what happened. the first most interesting thing is the increase in hours worked. and by the way, this goes both ways when it comes to the affordable care act. there is some discussion of increasing the hours worked rather than bringing on new people. i even talked about whether the affordable care act restrains hiring. we'll come back to that. i know jared probably has some
thoughts. bottom line is you did increased hours worked. manufacturing hours went up to 40.9, 40.7. decent rise in earnings per hour, 0.2%. not terrific. and then in the private nonfarm was 0.3. so that's okay. we like the increase in temporary help. fascinating that a big part of the revision the prior month was government workers on this theme that we've been on for a long time. why can't the government count the government? they went from minus nine to minus 21. but i think the big story here is the private sector. 246,000 jobs created. hampton told us that the big decline in government was if the state level we can start to brace for perhaps some declines at the federal level in months ahead. >> look if you take all the hours, you sum them up, they got a nice bump this month up half a percent versus down 0.2 last month. all the industries just looking at the broad measures. all the industries accept which
one is this. anyway, almost all the industries adding jobs except government, of course, and you know, manufacturing up 14. that's a little bit less than you might have expected. the ism kind of suggested that that might happen. this at least takes a little bit away from the people who say the market is just on bernanke steroids. >> construction is really interesting. it was up by 48,000 since september, construction employment has risen by 151,000. i mean, that tells you a little bit maybe about housing start. >> still like construction numbers have lagged the housing starts. kind of waiting for a little bit of catch-up. there's also in a little bit of sandy in the construction numbers. that kind of tailed off and maybe now it's coming back to more normal level. it's also these months it's very dependent upon whether the weather is above or below normal. can you put a construction worker out there to do that kind of work? >> the thing that's been bothering me, joe, is this gap between corporate profitability, which i agree with austan has
been helping to inflate the market, and job growth. and what i want is to see is some of those corporate profits actually leading to more hiring. >> you know, we've been looking for a good liberal to ask the question earlier, jared -- >> you don't have to look far. >> wow. >> no, but jared we were talking earlier, andrew brought up the point, does the left really like a rising stock market? or is it only benefit the 1%, so, you know, you'll -- >> but maybe top 20%. >> you put up with it but it's really not the way you'd like to see it. >> that's partially correct. but people from -- the way i view it is that you know, there's actually a lot of people in the stock market who aren't just in the top 1%. >> exactly. >> pension funds. >> and also it's a proxy for how well the economy's going. >> so that part, that part we disagree with. i do think that there's been a real disconnect between the stock market and the middle class. what i like about this job report, if it sticks. remember this could be an outlier, if it sticks is that that gap may be closing a bit between corporate profitability and hiring.
>> i don't know what affordable -- >> you mean obama care? >> the comments that have been in the beige book about the affordable care act. >> you won't even call it obama care. >> i rate it -- >> i brought it up the last two quarters of the beige book that specific comments for federal reserve districts, one where lacker is the president and one where evans is the president so there doesn't seem to be any bias there specifically saying that the affordable care act is restraining hiring. how do you respond to that? >> i'm a little nervous about that. austan made that point and i think there's something to it. >> what should obama be doing now in this regard? >> well i don't think you should be doing anything about the affordable care act. except trying to implement it -- >> why not, jared, if it's restraining jobs doesn't that call for an amendment to somehow go back and see -- >> i got a news flash for you. the affordable care act is not a jobs program. the affordable care act is not a jobs program. the affordable care act is -- >> it's a public benefit program
right, and it's a public benefit cost to -- in terms of not getting people jobs then there's a health aspect to not -- >> austin jump in here. at the margin. at the margin austan will tell you at the margin that's where you're going to see perhaps some of these effects you're worrying about. but broadly speaking we have to get labor demand up and that has nothing to do with the affordable care act. >> look i think when you come to the end of the year it will be interesting to see the dynamic, if they start shifting full-time people to part-time you'll actually start seeing employment rise with hours work fall and you know what they say about the difference between a liberal democrat and a centrist democrat, is adding one or two zeros to the 401(k). so we're going to see over the next couple of months how this plays out. >> okay. >> hey, joe, joe, joe. >> yeah. >> earlier, earlier, let's get back to the markets. earlier you said so this proves that ben bernanke, it's not just
juicing the economy. >> no, no, no -- >> it's not -- >> not just that he's juicing the market. maybe he's juicing the economy, too, which jeffs the market. >> this is the trickle down idea a little bit. >> if we monetize rates do you think everything stays where it is. if you start a business and i give you unlimited money to fund it are you going to hire more people or less people? >> why would you normalize rates? >> exactly. >> yeah, yeah. you see 3% of harmony, rick, do you see 6.5% unemployment? in that event you would normalize rates. there's no justification for normalizing rates. >> have we gotten that far down the hole that normalizing rates after this tremendous number the huge drop in the unemployment rate -- >> -- 7.7%. >> this is one piece of the road back. that's all it is. and i don't even believe the two ticks decline in unemployment
which came with a decline in the workforce. what is in our future, two things -- >> wow, all things change. >> no, i have been honest the whole time -- >> two things are in our future -- >> let me explain what's going to happen. you're going to have a decline in government employment. which means an increase in slack in the labor market. you are going to, if you have a positive job market have people come back in to the workforce, and that will tend to put downward or upward pressure on the unemployment rate. >> you don't believe your own numbers? >> rick, rick, rick, this is very simple -- >> you're making it too complicated. rick it's really simple. bernanke says -- bernanke said 6.5%. >> i don't care what bernanke said. i don't care what bernanke said. what i'm asking you is whether the number at the markets -- >> while we're arguing about this, take a look at the equities futures. dow futures up by triple digits now. so it is starting to pick up a little bit. >> this is a bolddy locks
number. strong enough, better than expe expected. good for corporate earnings but not enough to warrant taking away the -- >> jared. >> goldilocks but isn't goldilocks. >> jared one of these days the answer to your question about why corporate 3r069s are so strong and nobody else is participating you may need to look at obama care just at some point in the future you know just consider -- >> you're asking the question a lot. >> i agree that maybe there's a marginal effect, something at the edges, but -- >> well it's -- >> regulation, all this stuff that we talk about. all the stuff that you hear all the time. other than just a hangover from the financial crisis. there's other things going on. that's causing people to be, you know >> to look everything -- >> you always say that. >> it's not even -- >> it stays true every month. >> they're further down the path than we are. i mean -- >> new setup. i've never seen this before. >> i like that.
>> the outlook -- >> joe is on top of the pyramid! >> given what's happened in the hours worked numbers does the outlook for growth change at all compared to the first quarter level here? >> yeah, it probably kicks it up a bit. >> i think the hours are one of the most important indicators in this. i mention the aggregate hours before. that's a predictor of gdp growth. >> so let me ask you this, then, given if the private sector is doing 246. and the hours worked ticked up and gdp is a little higher are we in a better position than we thought we were to withstand the sequester? >> why, we are already in a better position but the sequester -- the answer to thatsy think the sequester sucks half a percent off gdp growth. if gdp growth is 2% and you send up with 1.5 that's below trend and unemployment goes up. if gdp is 2.5 or 3 and you go back to 2.5 or 2 you hold steady on the unemployment rate. >> it's critical that half a point and whether it ticks below 2 or keeps us above 2. >> it was only up by 0.1 hour
right? >> jared i think -- >> up 0.1. >> hours are up -- >> we're leaving -- >> i think reason people -- reasonable people see if we can cut 2.3% and republicans hold the line on revenue and that makes up for the half a percent that you think will do -- >> just because they're -- >> relieved. >> joe there's an economic study on that. >> that's what i -- >> in chicago, do that work. austan's colleague. >> jared bernstein, austan goolsbee, brian and steven our guest host will be with us for the rest of the -- >> when we come back we've got some portfolio picks that could make you some money. we'll continue with our what's working now with david steinberg. first a stock to watch today, it is finally a done deal, kkr is acquiring gardner denver for $76 a share. that's an increase from late october when the company said it was exploring a sale.
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welcome back to "squawk." take a look at futures right now after that pretty good jobs report. better than expected pretty much across the board. dow looks like it would open up 90 points higher. >> what happened? >> it's come down just slightly. but still that's -- >> 105 -- this is not so bad. >> some of this was probably -- i'm not surprised we're not surging. >> you don't know where we'll be by the end of the session. >> we'll have to see. >> even with the broad-based equity rally, it's still a stock pickers market. let's take a lock at some
long-term deep value plays that could make you some money this year. joining us now is david steinberg, he's the founder of dls capital management. whether the financial crisis back in 2008 and saw 12.7% annualized rate of return over the past ten years. good morning to you, david. >> good morning, guys. >> so, you saw the jobs number. i want to get some of your picks in a second. but you've also seen the run-up in the market. are you worried that we're, we're out too far here or no? >> not at all. there's no return in the bond markets. the de minimis returns, regardless of whether you think it's going down or not, you've got the best asset classes over long run are equities. because they're flexible and adaptable and changing economic conditions. whether it's inflation, you know, pricing, input costs, labor, what have you. >> you like tech in particular? >> well, tech is one of the big sectors. a lot would be old tech. you've had 14 years of apartment deprivation out of numerous semiconductor and technology areas of the market place. and i think you're getting a new cycle turn in here. >> let's go through some names
including what i think has to be the most controversial. you like hewlett-packard. >> yes i do. >> explain yourself, sir. >> real simple the stock was priced for death. i would say in the -- in the fall. you've had every, you know, major institution or a vast number basically liquidate the position. this company is not a dead company. it's got, you know, three major divisions. been mismanaged from the board of directors level. it had, you know, a revolving door of ceos. you've got a great one in there now, meg whitman. and i think you just need some basic blocking and tackling. you've got a new cycle with microsoft 8 come on chromebook coming out a better criesing differential between apple's products which are much higher in value than the microsoft products in related things. and you've got somebody in there that's going to take control. you've also got the opportunity -- >> even with disappointing numbers, virtually every single quarter, even with meg whitman in the position? >> last quarter wasn't really disappointing. saw the stock jump pretty well. that was telling you they're
making progress turning that business around. you've got a lot of alternatives here. you've got three major divisions whether it's the enterprise division, the personal division, or and software and so forth. in printing division, if you can't get those divisions turned around collectively which is what she wants to do you're either going to spin them off, you can sell them. there's a lot of alternatives. as the company trades at a four multiple enterprise. >> let's go through a couple other names. you like micron technology. >> if you really watch what's going on micron is primarily direct random access memory and that business has been an awful business. for years. you're down now to probably three or four major companies. samsung, and now micron. micron is going to be closing a transaction with the bankrupt company called elpida in asia. once that takes place you're going to begin to see pricing move up. in fact believe it or not since the beginning of the year, pricing has moved up about 25% to 30% in the last two, three months as that transaction has
come closer to closing. this company has the capacity now to have incredible earnings growth. probably over the next 18 months from here. that stock could really turn on fire here. >> okay. david, we're going to leave it there. i know you also like alpha natural resources. hopefully we'll talk to you again soon. >> thank you. appreciate it. jim cramer's stocks to watch. plus his take on the strong employment numbers. we'll head down to new york stock exchange next. monday on "squawk box," reaction to today's employment report. a new forecast for economic growth. plus a long-time bear on facebook is turning bullish. find out what changed his mind. revolutionizing an industry can be a tough act to follow, but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions
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welcome back, everyone. jim cramer joins us this morning from the new york stock exchange. jim, i know you were watching the jobs report like we were, much better than anticipated number. is this a goldilocks scenario or do you start to worry it's looking good and the fetd will take its foot off the gas? >> no, i think it's goldilocks. i think this is a post-cliff
number. the country was on hold because of the government. now the freeze is over. and you're going to start seeing numbers that are more normal, that are better. but i don't think so good, i listened to all your panel, your panel is fabulous. if there are problems still in the economy, this is better than expected but it is not the end. we're still not getting the job to 6.5%. >> we've got till september. all we've ever gotten is two months. the market's gone up when it only had two months. now we've got nothing happening till september. this should work. >> when we finished with the cliff, the government gets out of the picture. look what happens. isn't it terrific? >> it's fun to watch. >> we'll deal with the sequester, you know. you can't take a tour of the white house, i guess. >> the national parks, there will be some days and we'll have to take our shoes off at the lines or whatever. this is what happens when there
is not a civil war in washington. we hire, we start building things again. becky put it out, the construction number being really good. i think that's a longer term positive, not enough yet where we can raise rates, but certainly there's a sign there's a pulse without the government being involved. >> set new highs, and out of the blue, something comes out and you see why we've been setting new highs. >> exactly. >> you don't feel so stupid. >> right. >> hey, jim, i want to ask you a question. >> yes? >> do you think it's as bullish that i do that the economists have the bar so low? if they missed it by so much today? isn't that a good thing moving forward if they keep being rock-bottom conservative about the economy? >> i think they don't understand why retail spending goes up, and the answer is because jobs are better. they don't understand that the housing market is incredibly important to the u.s. economy. it's almost as if all they do is focus on the capital, and the white house. and because of that, they miss
what happens when the capital and white house get out of the picture. we have a real economy going on here, with household formation. when you get your house to stop going down in value, you feel terrific. >> all right. jim, we're going to see you in a few minutes. i know people will be watching to hear your other thoughts on it. thank you. alec young is our guest host. we'll give him the last word on the markets right after the break. [ man ] i've been out there most of my life. you name it...i've hooked it. but there's one...
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