that. the dow down 6% in may. it's on track for its biggest monthly decline since september of 2011. the s&p, nasdaq and russell 2000 all are also down more than 6%. but if you're searching for some kind of a silver lining, get this, since 1897, the dow is slightly more positive in june when may is negative. so we have that going for us. as for a reading on fear, the vix is up more than 40% this month. yesterday there was a big spike. you get that reading of 24 there. u.s. stocks are not alone in their rough run. at least misery loves company. every world index we track was negative in may except for lithuania which was actually up by 2%. the ten year yield fall to go record lows again overnight, it fell even lower at one point, it was down at 1.59%. right now you see that tracking at 1.647%. bouncing around these historic levels. coming up at 8:15, the may adp

employment report. forecasters say the economy very likely added 150,000 private payrolls. at 8:30, we'll get that weekly jobless claims number. also a revision to the first quarter gdp. and later in the morning, we'll get chicago pmi and kansas city fed survey. and one more potentially market moves item, may same store sales, all throughout the morning from the retailers. and that can give us a little bit of an indication of how the consumer is feeling. costco comps up 4%. that was a little bit short of consensus. >> let's get you up to speed on the top corporate news. i'm standing right now on a little bit of a putting green. we'll get to that. jm morgan reportedly spitting out the special investments group from its troubled chief investment office. financial times saying executives are taking steps to clean up the division that

caused the losses. the unit will be moved to the corporate division and prevented thousand from seeking fresh investment opportunities. we'll have to keep our eyes on that. morgan stanley ceo james gorman thousand defending its bank's performance. he told employees the firm worked 100% within the rules, he said he quote wasn't aware of any dissent among underwriting firms regarding facebook's ipo price before don't miss gorman today at 4:00 p.m. and speaking of ipos, the more dw morgan stanley stigma continues. kayak's offering being delayed. creating a little bit of dissent with investor there is. the travel site's ipo still said to be a possibility though this quarter. again big questions all away the ipo market.

good and kayla is covering that kayak. i saw that, you moved through pretty well to see kay-a-y-a-kk. nice to see you. why are you, where is mac, where is the -- >> justin is with us today. >> strap yourselves in. let's take a look at early stock movers. shares of zumez getting a boost in after hours trading. apparently this teen retailer posted better than expected same store sales. the company sells clothing and equipment for skating, showboarding and other action sports. and a different story for lionsgate, the stock hit after the bell. the studio's quarterly results did fall short of analyst

estimates as it swallowed hefty costs linked to marketing its 2013 films. and network gear maker f 5 networks announcing it executive vice president of worldwide sales has resigned. the stock falling on the news. f 5's revenue has grown in double digits for more than two years in large part because the market for smart phones and tablets has sparked a huge increase in traffic. and biomarin is retaining funds. tivo reported bigger than expected losses also forecasting another loss for the current quarter. >> that's a sad one. >> rising legal costs related to its patents pushing the maker of digital tv recorders into the red. but good news with aol will and stuff laying around that it was

able to sell. i mentioned i saw on the show earlier, it's the worst may that had since what year? this is some. since 2010. so 2011 was not as bad. >> yeah, but 2010 stunk. >> i know, but if you -- if about you're going to put that down on a thing that where people at home are going to go, you're kidding, you you can't say that -- you know what this is like -- >> didn't i see an ap story about that, too? >> like on the simpsons, there will be like a bad storm or something and they'll have the death toll behind him, the rolling death toll and it will be on zero. the current death toll is zero and it stayed at zero through the entire thing. but as a news organization, you need to be prepared for a -- >> you are blowing my intro

because i have all these stats about what a terrible month it was. >> 2011 wasn't as bad. >> yesterday stunk. down 160 points. if you were looking back at the statistics, down 160 points and that means the dow has not strung together two winning days in a row since last month. >> we could go up 1,000 points a day. >> and then maybe we'll he saenk in the green. let me give you this statistic. world stock markets, because they've all been -- they lost a total of $4.6 trillion this honesty. how is that for you? >> that's a good number before. >> lithuania was up about. >> 2%. >> if you you had your money there, you were okay. but obviously big concerns that are still taking place today. all about europe. and i did see that india was

slower growth than expected, too. and that's the worst that they've seen in five year, i believe. take a look at the futures this morning. you did see they were positive. up by less than a quarter of a percentage point. yesterday by the way the selling was so bad that all ten of the s&p 500 sectorses finished lower. only one dow component that was higher. that was intel. we did see lower prices yesterday. this morning up about 40 crepts. ten year overnight continued to drop a little lower in some of the earlier trade. the yeed back up right near historic low level, but we did see it touch below 1.6% earlier. the dollar down this morning,

but that's after serious moves over the last week or so. gold prices up ever so slightly. >> ed is a great guy to talk to. ian shepard son will be on later who has been bullish good to look back. >> and suddenly the fear factor jumped yesterday. >> would you keep your money in a bank that's in spain, italy or -- >> i would have moved it a long time ago. >> do any have fdic insurance? >> i don't think they do.

if you were a spanish corporation, where would you put your money? >> everybody's running here. more and more people are -- even zoellick he seems like a radical guy. either you're a union or you're not. either support your weaker members or you don't. we support some states that don don't -- the more it's starting to look like this -- >> they kind up doing something to pull it. >> i saw spain may exit euro before greece, and then hch-everybody is talking about it. and personal apmek dote me anec

mean you have for me, but i'm in a saw in a, i swam yesterday -- >> with towels, i hope? >> yeah, out in the swimming pool where anyone can go in. it's a co-ed. any way, so he says hi, how are you. and i say you have an being a september, where are you from? germany. and i start talking about all this and i bring up the greeks. and he's like, you know what, i don't want to be prejudice, but he said they don't want to work, they don't pay their taxes. he was so mad about it, he goes i was in berlin when the wall came down and we brought in the east. the east now has billions of dollars in research facilities and incredible. he goes now we're dealing with this and they don't pay their taxes, they don't want to work and they're sick of it.

>> this is like an arranged marriage that you don't really want to be in at all. friends with benefits being forced to get married. >> from a club med country where they have a great life but they're living high off the hog on these serious germans on the back of these people that are working ten hour days or whatever and actually work five days a week. >> some arranged marriages do work out in the end. >> how do you know about that? >> i actually know a guy who was in an arranged marriage. india. and by the way, it's worked out. so -- >> because you are such the power couple. i know it wasn't arranged, but -- >> it was not arranged. >> i know that but it could have been because you both are like really prominent people from prominent families. >> oh, no, prominent nothing. >> i think so. >> now that i'm with you and becky on squawk, this is the prominence right here in front of me. time for the global markets

report. kelly evans of the r s of thee standing by. >> the u.s. might have a chance to drive market action today because despite a lot of talk, the price action has been pretty muted. you would hope we get a bit of a rebound here. advancers outpacing decliners by about 7:3 ratio. we're up about half a percent for the index broadly speaking. take a look across the region. in spain the ibex up 0.8%. cac 40 0.7%. of course the story as ever this year has been in bond markets. we've seen new lows in the french ten year and the touch ten year overnight, so even those smaparts that aren't germ are getting the flight to safety

bid. ten year in italy is below 6. spain we have 6.5. so again a little better tone there and the bund ten year at 1.28%. keep an eye on the euro-dollar. vee it's in the green today. rebounding up about 0.4%. but just on the point about germany and the extent to which it's on the hook to fund the rest of the you'eurozone, they' benefitting from a much lower currency and borrowing costs. so again there are benefits to be this germany's position or finland's, for example, along with the huge potential costs. >> thank you, kelly. appreciate it very much. today your dress doesn't match. it contrasts.

yes we had a problem. >> i learned to wear black because if i wear any other color, especially anything in the red family, it's trouble. so i'm sticking with the neutrals. hopefully the market will do the same. >> green is a harder color to pull off. >> and then it will end up being on a red day or a slightly different shade. i just do what mary duffy tells. i try. >> like christmas every day behind you. >> trying to sit up straight and everything to her. thanks, kelly. in other news, michael bloomberg is seeking a ban on the sale of big sugary drinks. >> warning, so da is why you're fat. >> vaurestaurants, mobile food carts, his administration says the proposal is aimed at fighting the obesity epidemic. it would impact drinks sold in containers larger than 16 ounces even might effect the venti at starbucks.

>> do you know what it does not affect in alcoholic drinks can be sold in larger containers. >> thank god for that. >> when is the last time you saw saw take rnlg later than 1it la ounces? >> it won't impact the sale of diet soda or dairy based drinks. >> slurpees are if trouble. >> what about the big -- speaking of a sugar firktsd the fda says high fructose corn syrup won't get a wholesome new name. regulators have rejected calling it corp sugar. the fda says it defines sugar as a solid, dried and crystallized food. it can't be a syrup. >> are we happy or unhappy about the sugar drink situation? i would think that --

>> i don't like a nanny state. >> where are you? is. >> i go back and forth. part of me doesn't like the nanny state idea, but the other part doesn't like -- >> have some personal responsibility for god's sake. >> but it you're going to independent would up having to pay -- if you have to foot the bills for the diabetes epidemic that has been so horrible. >> that is a slip have i slope. >> that's why i'm so uncomfortable with it. andrew, where are you? >> he was just asking the question. >> he doesn't want to give an answer. >> i think for the most part i think it's probably a good idea. >> really? after i give you an american flag? >> where is my american flag? >> obviously not. so you don't think people ought to be able to drink large sugary drinks if they want because you might have to pay for them? >> there is a way around, just buy two of them. >> exactly. >> god help us if someone smokes a cigarette around you two. >> that's a problem.

>> you give liesman so much grief when he shows up smelling like cigarette smoke. >> he has children. i respect his right to smoke, i just think he's a weak, you know, doesn't have any resolve, stupid person to smoke. >> do you want to pay for his health care? >> i don't really see it that way. i don't want anyone to pay for it except for him. more personal responsibility. >> we attacked through the amazon story i wanted to do. >> are they getting taxed? >> the state he sales tax in new jersey, they've agreed to start collecting it if they build these two distribution centers here. p. >> we should come back to that. >> i just think he's -- i don't think he can do anything wrong. whatever he says, whatever he does, just go ahead and do it.

>> we'll talk more about jeff in a bit. adp and jobless claims both due out this morning. we'll talk market expectations. but first, some sports new. the los angeles kings beating new jersey devils. sorry, becky. game two is saturday night. [ male announcer ] we imagined a vehicle that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer

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stress in europe rattling the markets. the major indexes closing lower yesterday. but portfolio manager ed keon still bullish. great to have you here today. >> great to be here. >> we have been bemoaning what's gone down in the month of hey. dow down 6%, the other major averages down by even more. a lot of concern about what's coming out of europe and whether the global economy is headed in a down turn. >> we can pull back. we were sitting fairly close to our benchmarks. so we've been cowardly, too. but the reason i'm still bullish for the long term is i still think you get much better value out of risky asset than do you out of safe assets and you you get some protection against inflation, which i don't think will be a problem now, but will

be down the road. so even though it's difficult and quite possible we'll have further down side as a result of what's happening in europe and elsewhere, i still think you get much better value for the long run. >> when you say risky assets, you're not talking about junk bonds. you're talking stocks versus treasuries? >> also within the bond market junk bonds or high yield bonds and even koornts rather than treasuries. so i think you'll get rewarded no bearing that risk eventually, but not necessarily the next couple -- >> how far down do we go? give me your low. >> i don't know. the reason i don't know is i don't know what and he going to happen in europe. >> you you think it gets worse before it gets better? >> you don't know what's going to happen day to day. none of us can predict events day to day. what we can do is look at what drives value over longer periods of time. what you're paying for stocks today, the ditch dividend yield

for a similar treasury, in europe, we're not putting new money in europe, i assure you you. if you look at the dividend yields of some of the high quality global companies, 4%, 5%. so i think you're getting good value there. and even though i'm fearful about the short run, i try to keep the long run in perspective. >> as we get close to 1.5% on the ten year and the yield on the stock market gets more and more attractive based on not getting it anywhere else and even the price to earnings multiple is back to 13 or so, people still saying it's cheap. and in may, it's especially come down there there. what do people know that we're not taking into account? but you it should be a no-brainer. so there is some really bad thing is possible or else -- because if you buy a 4% yielder

and the stock goes down 10%, the yield isn't so great. >> clearly we're all afraid. and i think that's the driving markets. >> i wouldn't call myself afraid. do you feel afraid? >> markets are certainly. >> are you fearful? >> not fearful. anxious. >> i'm glad i'm not in stocks. >> we're setting new record lows for the ten year bond. if you go back before last summer, what was the all-time record before then? set in 1941. right before pearl harbor. so it suggests that the -- if the bond market is a measure of fear, people are more fearful now than they were in 1941. so european banks may be under attack, but now we're speaking metaphorically, not physically as we were in 1941. so as a way of thinking about how bad are things now, they're dangerous, but not as dangerous as the beginnings of a world war. >> so if you were fearful and you had

pulled back a little bit, stocks are 6% cheaper now, do you go back in at this point? >> we're still not getting aggressive. we're slightly overweight in the united states. underweight europe. and roughly equal weight stocks in our portfolios overall. we also did pretty well in the first quarter. so trying to play a little bit of defense now. >> is the economy in a soft patch? >> i think it's slow. i don't think it's as bad. i feel more confident about the u.s. economy than europe. >> but that will affect us. >> definitely does. that's why we're growing at around 2%, 2.5%. >>. >> percentage about of gdp of debt right now. >> those are major along term problems. don't get me wrong. but it if you look at some of the dynamics from the economy, the big cyclical sectors are

clearly a bottom starting to recover. government will be a drag, but that's probably not a terrible thing. but starting to see traction in the economy. slower pace than wield like. i think we need a sense that policymakers will address the policies in europe. i think the euro will survive because it's in germany's best interests for to do so. germany has half it exports. germ any b germany benefits more than anybody else. >> ed, thank you very much. coming up, you'll want to hear from our next guest ian shepardson joins us with an optimistic perspective. 

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bad month. >> i'm hoping for 6% today. back to even. to get especialven for me. >> we can always hope. hope springs et s eternal. ireland beginning to cast ballots today in the only popular vote on europe's new fiscal treaty. opinion polls are pointing to a yes vote. we talked about this last week

or so. this could ease concerns about ireland's funding prospects. the result expected by tomorrow afternoon. and i think it was like 55 or 56. i wonder if i could get an intrade on that, on ireland. the intrade on scott walker -- >> make yourself at home. >> yeah, remember when -- didn't boone do that one time? >> yeah. >> we were on the air and he started hacking and coughing and walked to his assistant and came back and -- >> but now you're doing it yourself. >> that's where i learned it. this is the marlon brando school of broadcasting. >> i was dripping once and that was gloross. go . >> and you tried to play it off. >> that's trouble with your set. those aren't drop lets out of my

nose. >> i don't see anything on the irish vote. >> but scott walker winning 95 on intrade. mario draghi says market confidence is the key to persuading banks to boost lending activities. a spokesman for the european commission says spain must tell europe it plans for bankia. he adds a domestic solution would be better than a european rescue and by the way, that german guy yesterday started talking about holland wants to do this and holland wants to do that and i thought he was talking about the country. he's talking about hollande. >> that's why you have to differentiate. >> i was thinking of taking my iphone and doing a little man on the street interview and just asking. >> do they say hollande?

>> hollande. >> and luxury -- london luxury jeweler graff has pulled its plan its ipo, fourth major offering to be called off in asia this week. and are investors being too fearful when comes to europe's continuing debt crisis? joining us is ian shepardson chief u.s. economist. great to have you. i guess my first question is you're somewhat sanguine about the eventual outcome with greece. either way you're sanguine or do you believe greece will stay in or about they do leave, you won't think it would be a huge deal? >> would it be a huge deal for

greeks that's for sure, but whether it would be a huge deal for america is a very different question. u.s. export banking links with greece are microscopic. so the impact i think would be very small. of course the big question is the contagion. i'm much more concerned about what might be the potential impact of a major failure in spain or italy. but as far as greece is concerned, it's not really a big deal. most u.s. business is domestic anyway. >> would it be a dids orderly exit that could cause some, i don't know, banking issues, currency issues, apwhat is the likelihood that it happens now, is it 50/50 whether they stay or leave? >> it's way beyond an economic question at this point. it's essentially a political issue or an issue of the guy on the street because they have an election on june 17th and that's a referendum on the continued membership of the euro. i don't think there's any such

thing as an orderly exit from a currency regime. it will be messy no matter how it happens if it happens. the question is the fallout in the rest of europe and of course for u.s. investor, fallout on u.s. and i think that will be pretty small. on the day that something terrible happen, global stock markets will crater and we'll see a huge strength think of the dollar, but when the dust settles, i don't think it will make a difference on the u.s. >> do you think people will immediately assume that some ear countri others are going exit and the eu will have a chance of dissolving? >> i'm sure some people would think that, but i think they have to take a very considered true of this. i don't see the spanish case has being comparable to the greeks. if the banking problem can be fixed, it may well require external money to do that, but if fixed or stabilized, the

danger of spain coming out of the euro is much smaller. we won't escape from it in the foreseeable future, but investors need to focus on the domestic picture and to me that's pretty good. >> and one last question on europe. a union of banks to help spain is different than a european bond. do you think we eventually get that and do you think we eventually do end up with something that is akin to euro bonds? >> politicians tend to move in a reactive way. so they're suggesting things which maybe would have been a good idea five years ago. but right now, there's also the enormous political problem in germany which would effectively be the back stop of any sort of banking union because they won't be able to give open-ended deposit guarantee commitments and i can't say i blame them.

>> what percentage of money has left the spanish banks already, do you know? >> we don't know. it's pretty clear that the german bank it deposits are rising rapidly. so this process is ongoing. but banking in a reserve banking system, it's a question of confidence. just that most of the time we don't think about it in those terms. but it's essentially a confidence in the system and i don't think that the spanish bank system is beyond the restoration of confidence. it just needs to move quickly towards our confidence being put back in by money from somewhere. >> and we'll be in more of a hole. >> and that's why its see important that something is done quickly and sitting around talking and sort of abstract terms about a european banking union in the future doesn't really cut it with people trying to decide today do i want to leave my money in a spanish bank

or put it in germany or france are or somewhere else. so speed and action is the key thing and europeans aren't good at moving quickly. >> we think the longer it takes, the better off it is that the union survives because it gives everything more time to heal. but the way you've laid it out, it sounds like the longer it takes the less likely it it is that the eu survives. is that a fair read? >> when what we need is a degree of stabilization. once you have a stable environment and you can stop dealing with the fire, you can think about the longer term structures that might work. european policymakers are allowing the fires to blow up on a daily basis. so the markets aren't willing to give them the chance to think about the longer term structures. so we're in this sort of tension between doing something right in the short term and thinking about the long term, which they have to do, but is now really the time to be doing that when you have a fire to deal with today.

>> the per sepgception of what n do in this country, we seem to think 2% is like what we need to accept. is that true and is it because of continuing problems elsewhere in europe affecting us, europe and china, or is it because that's all we deserve with our problems over here with our debt overhang? have we already overspent here so that this is all we're going to get, it's a structural problem? >> no, i don't buy this for a minute. i think we have a typical problem of economies that have had major financial crashes and that's that the banking system is still very week. t weak. but it's strengthening. so we're on the way to healing the banking system. and i think that if that continues and there's no reason why it shouldn't, then the u.s. any is on an accelerated extra asking er trajectory and i certainly don't believe that the public debt position is making any difference.

the u.s. is not sluggish because people are fretting about public debt. it's sluggish because of a lack of bank credit, but we're headed very clearly in the right direction. >> so we could do 4% in 2013? >> 4% might be a struggle. i think there will be some fiscal tightening. i don't think there will be a fiscal cliff in the way that the headline number suggests. i think most of that is negotiated away. there's no reason why it can't push on and provide support to the mortgage market that we immediate. and we're getting will. >> would solve a lot of problems at 3 aboutme.5%. >> it would fix a lot of problems. drive rev new, bring down spending. arising tide would lift all the

boats. >> we want that then. let's bring that in. ian, thank you. probably not up to you, but at least we know that it's possible now. if you can, talk to someone. i love having him on. if you have any comments or questions about anything we've been talking about, e-mail us, squawk@cnbc.com. or you can tweet us @squawkcnbc. when we come back, we'll get the picture from the futures pits this morning on this very last trading day of the month. plus amazon's plans for the east coast and why new jersey residents could soon be paying sales tax on products as a result. ca refu

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chris christie says that amazon will build two distributi distribution centers in the state about they get incentives. amazon has agreed to collect state sales taxes on purchases by july of next year or earlier.

this has been a huge controversy, the idea that online retailers don't collect state sales taxes. you're still required to pay them. and did you know new jersey -- did you pay any taxes in your income tax to new jersey, did it you pay for whatever you bought? >> you're asking me? i haven't bought anything. i don't know how to do that. oh, did we declare? >> there's a new form. >> yeah, we declared them all and paid more. >> i actually paid in year. there's a new form that i filled out. amazon tracks all your purchases so you can figure out what you bought. >> now amazon wants -- >> amazon had not been fightin it before, but what he would like to see happen is they want a federal formula, not a state

by state because something like hfr- >> i thought originally it was no tax. >> originally, yes. but the's been over a year that they've had the position that, yes, they woulding on board if there was a federal way to go through it. >> i'm trying to work something right that i think is an overpayment. >> just write the check. make something up and do it. >> and it may happen after the show today, i have to ask to my accountant, we have an overpayment already on the books. >> double that. >> i just passed my audit. >> you did? >> i'm free and clear. >> you were audited a couple years ago. >> i know. >> did they get you confused with me? >> did you did the documentary

and then they audited you? >> yeah, but they aludited me before i did the taxes documentary. >> i don't know why she's such a target. >> you don't trash the current occupant of the white house, right? i hope that's not what it's dependent on. >> who is the head of the irs? i love help or her whoever it is. now ira harris joining us. ira, who pays all of his taxes i'm sure. we'll get the real number tomorrow. the adp number today. we'll find out -- i assume that's on your mind a little bit. >> it's europe, europe. numbers are irrelevant. give me a number above 250,000, i'd say we got something good.

otherwise our eyes are turned to europe. i would actually key up bob marley redemption song because i think that redemption plan that they're discussing that's coming out of germany is it actually very interesting. it would do a lot to provide a huge a liquidity into the system. >> could yyou could wait a longt this point. >> you're not going to wait that long. you'll hear about what they'll do and will they pledge gold if to a central redemption plan which would solve warren buffett's problem about gold not have i any problem. we could actually collateralize it and it becomes a very

interesting issue and then we'll go from the reseveral shon song to kelly's here rows and then have all the gold behind german lines and everybody will be happy and secure collateralize t and everything will be secure and we'll have the europeio bond we're looking for. it's quite fascinating but you have to wait to see a little more information on this. i think it would make the stock market rally across the world very strongly. >> from your lips to god's ears. thanks for paying your taxes. >> you don't look like a big bob marley -- >> you do know the song. we play it on the way out. >> and curtis arl ij coming up. ♪ ♪

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>> yes, we were here. >> we're here. >> we're on tv. >> this is bob marley. >> you still don't know this? >> no, not really. >> how did that miss you? >> i probably know more ziggy marley. you knew this was going to catch my attention. car battery startups fizzle. the obama administration as awarded $1.26 billion to advanced companies to produce batteries. we've produced barely 50,000 cars. the money funded nine battery plants scattered around the u.s. from michigan to pennsylvania and florida. they have few customers and most of them are either operating at very low capacity or idled. of the number of jobs that were promised by 2015 by obama, less

than a third have been -- have worked -- when it was announced the billion dollars, it was heralded as the birth of an entire new industry. the opening of a1 systems in 2010. the budget proposal asked for an increase in tax credits. not working. >> batteries have gotten better. remember we talked about tessla? >> you wanted to talk about the teacher story. >> we were talking about during the break but the kid had a $400 bet and he's 18 years old, 26-year-old teacher, things happen. it's very complicated.

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financials in focus. and tips on how to manage your money here and abroad. >> john challenger breaking down the numbers on who's hiring and who's firing 30 minutes from now. >> and mastering the art of the swing. >> nice athletic position. and we hit it. >> the legedge legendary golf ir

stops by to give me some tips. ♪ bully bully, bully bully >> you got to love that movie. welcome to "squawk box." let get you caught up on this morning's headlines. investors waiting for a slew of key employment data. we're a little over an hour from the may adp report, which is expected o to show the u.s. economy added 150 private sector jobs. we'll gets weekly report. and st. louis federal reserve president saying quantitative easing is unloikely for now. he said the fed could resort to more qe if the economy

deteriorated but sees that as unlikely. and health care costs seen rising by 7.5% in 2013. the premiums for employer sponsored plans will likely be less at 5.5%. >> let's look at futures. do you have them? it's up. >> up about 28 points about now. >> thank you, miss quick. >> my monitor went out. >> no problem at all. we do see some green arrows. the dow is down 6% for may. it's on track for its biggest monthly decline since december 2011. the s&p and nasdaq and russell 2000 are down more than 6% for each one of them.

curtis, it is great to have you here. we love talking to you because you saw a lot of the problems coming in 2008 way before other people did. you saw what had been building up and so when we have a situation like we do right now with what's happening in europe, we just want to know what you think about what's happening. >> i think it's getting to the point where it very destabilizing i think to how people are thinking about investing, not just in markets. really what people who run companies are thinking about doing in business investment, people thinking about should i sell my house and buy another one, what's really happening with the economy, companies, how am i going to finance trade? it not just europe. it's the fiscal cliff. it's a source of great uncertainty, more of a real tangible one here in the u.s. i don't think that we have measured well the negative impact of uncertainty. every single day interest accrues on debt if you borrow money and every day you have to delay investment because you're

uncertain is a day you weren't able to be as productive potentially with capital and offset that. i got to tell you, i go back to august. i'm amazed at how difficult it was for the republicans, democrats, to deal with the debt ceiling issue and how much the market really struggled with that. we saw significant flight to safety, people were wondering whether they could on treasuries, what you do if treasuries defaulted. think about a situation where you have a government that's pretty united relative to europe, an outcome that pretty much everybody thinks they know what's going to happen and the uncertainty was paralyzing. you saw it in the economic data and markets. you have a group of people you doesn't exactly know whether they're going to -- we don't know what the outcome is going to be, unlike the debt ceiling, we didn't know but we had a high degree of confidence. we have a group of policy makers who have centuries of history of not necessarily coming to

agreement on things. so eigit's a paralyzing situati for the market. a lot of investors who are fearful, retail investors who are nervous, there has been a lot of capital that has been on the sidelines and is waiting for investment opportunities. what makes markets is for people who need to reduce risk, there are people who are looking to add risk. >> do you think it would be better if we just put aside using the debt ceiling to try to effect a change in fiscal policy? would you recommend doubling the debt ceiling so we couldn't even hit it in ten years and say go wild? would the market like that more or do the markets like that we finally recognize we need to stop what we're doing? >> has there ever been any discipline at the debt ceiling? all it does is create a couple months of uncertainty. does it really exist?

>> would you get rid of it completely? >> i'd like to get rid of something that doesn't have any real meaning. >> would investors be happier knowing there was less uncertainty but less will to reduce -- >> i think investors would be happiest with fiscal discipline, knowing we run our country in a way -- >> i was leading it to kind of an ideological question and that was whether the tea party and what happened in 2010, whether that was a net positive or net negative. because what's widely vilified in certain circles for causing the debt ceiling problem and grover norquist but i've made the point in the past that at least it's now front and center, the whole issue. that was a net negative or a necessary positive that rick santelli made that rant? >> i think santelli's rant is a

good rant. he's saying people need to be responsible. a healthy economy depends on responsible operators all the way through the economy. >> there are people that would like to take the tea party and put all those people in jail. >> at the same time i think the tea party does get -- they miss the point around how fiscal and monetary policy exist sometimes. i get back to the point -- >> it nuance. >> investors want responsible actors in the economy, they want responsible consumers, responsible politicians, nobody is. >> we've got none of those. >> i think there are a lot of very responsible people in the economy. i think we lack leadership in a really big way. >> across all parts of government? >> i think across all part of government. i think we're in a situation where -- and we've been in some interesting conversations recently with some senior officials about this dynamic that uncertainty has a real negative economic impact. it has a cost. it like having a higher cost of

capital. if you don't appreciate the negative implications of uncertainty -- >> but there's things we bring on ourselves as far as uncertainty and then there's things like europe -- >> europe is driven by an uncertainty, right? >> who are you blaming for the uncertainty? obama's policy? the gridlock in congress? >> i think it's really bad scenario planning. why does it take a crisis for us to actually take action? >> that's a good question. >> it seems in major crisis periods the people who have great disagreement are able to get into a room and do the right thing but think of all the damage that was done. why can't we be better planners, scenario planners, without having to be in the crisis moment? >> especially when you see what's coming down the pike. >> nothing like that is going to happen, curtis -- >> i get the reality of it.

i'm just saying it has a real negative impact. >> curtis will be with us throughout the program. >> coming up next, crafting the future of business. the ceo of honey well teams up with tim scott to create jobs and at 7:30 a.m. eastern, john chalier of challenger, gray and christmas will tell us who is hiring ahead of tomorrow's jobs data.

tomorrow on

on the eve of the may jobs report, a meeting of the minds is taking place in washington on how to revitalize the economy. here with us is tim scott and honeywell chairman, david cody, one of the participating executives. great to see you both. what's on the docket? congressman, i'll let you start. >> thank you very much. this morning we'll have an tonight to bring the stake holders of the economy together with the decision makers of congress and hopefully start a realistic conversation about topics such as repatriation. here's an opportunity to bring overseas profits back to america and create almost a million jobs and you can almost do it

overnight. >> david, you're a free market guy, i even think you're a republican but you've dealt closely with the obama administration for years now. are you getting anywhere with free market-type stuff, pro-business type stuff? is that a yes? you're not going to answer that, all right. >> there's a real kind of gridlock right now. it involves both parties. this is one of my frustrations as a businessman is i've always viewed business as the source of productivity and standard of living in the u.s. and we need government to both enable and regulate and we need both parties working to the to make this happen. and right now there's gridlock. nobody is doing any of the work they should. >> but you think at this point all party, both congress and the white house understand that a lot of jobs, a lot of tax revenue, a lot of things that underpin an economy come from business, right, david? they know that now?

>> i believe that's true. i believe both sides are often times most comfortable as long as they can blame the other. it's almost like saying i'm happy as long as the hole is on your side of of the boat. and of course that doesn't work, we're all in this boat together. >> david, i don't know about at that. the latest thing is private equity is apparently the latest bo bogeyman in the economy. it was health insurers, bank, fat cats. it's always somebody, cote. if you said all these places pay taxes and hire people? >> well, i don't know what else to say. both sides need to work together. i'm calling on congressman scott to make it happen. >> congressman, are you going to be the liaison? >> today is a good day for to us find common ground between republicans and democrats in the business community. i've invited my good friends on

the left. we may have a panelist or two who are democrats. it's time for to us come to the same page and conclusion that we can put americans back to work by dealing with the inequities of our tax code and talk about the regulatory environment that created 79,000 new pages of regulation with a compliance cost of over $90 billion. it's time to put partisan politics on the side and create jobs in america the best is yet to come for this nation if we learn to work together. >> congressman, the government feeds to enact policy to create jobs and another side thinks government needs to get out of the way of business. when two sides are diametrically opposed like that, that's why we're not getting there. >> if you think the government creates jobs, you're living in

an alternate universe, it doesn't exist. the government can destroy jobs. >> david, can i ask you what you've been receiving in the economy lately? we've heard from some ceos who suggested they did see a little do downturn as we got into may. we have the jobs report out tomorrow. what you have been seeing? >> in my view we're going to keep seeing more of the same thing. we is everything set up to create a slow growth economy, europe is not addressing their debt and they're in recession, the su.s. is not addressing our debt. i don't see a way around that unless both of these big democracies start to really address the major issues they're dealing with. i agree with the congressman.

government doesn't create jobs, they create an environment where jobs can be created. >> cavedavid, i have a tax ques for you. what do you think the ultimate effective tax rate should be on corporations? >> zero. the problem is from a fairness perspective, nobody would be able to stand it. but at the end of the day, jobs come from companies and if we wanted to create the most effective foreign direct investment pipeline you've ever seen, we would have the lowest rate possible. >> i'm taking credit for -- now i'm hearing like a symphony. >> joe is going crazy. >> finally, you're coming out of your shell! we do need to compete with businesses around the world, right, david? isn't it in everybody's best interests for our businesses to be able to compete best or as much as possible with our competitors? >> correct. absolutely right.

that's why the territorial system that congressman scott mentioned earlier, absolutely a piece of that. >> david, i appreciate zero makes the most sense from a business perspective -- >> you're laughing at it. >> realistically there is a larger issue, that we have pay for roads and all of these things we all live in. i get the zero number but is there a more practical number you'd like to put on the table? >> it should be in the 20, 25% range. that's why the simpson-bowles tried to do. >> what's the effect of rate right now in. >> globally it's about 26.5%. >> let's say we were at zero unemployment because all the companies were hiring everybody, then the money they were playing to their employees, the employees taxes would go to

build your roads in that case. >> there's always a source for revenue. they're going to get it from somewhere. >> it just depends on where the most jobs come from. david, i feel like all of a sudden we're bonding and coming together here. you talk about what europe has to do and what the u.s. has to do and i imagine in europe you're talking about some of the structural problems they've built up over years and years and years with the labor issues and a lot of of tthe things the tack about every day. we're slowly building up structural problems here, where they're trying to get rid of them. >> we're in the same place. the congressman feels the same way. you can only promise so much to a society and you're not going to be able to deliver on things greater than that. both in europe and the u.s. we've put ourselves in a position where we can't do

everything people think we've promised. we're going to sink both places unless we address it. >> i didn't want to get you thrown off this jobs account but i'm worried with some of the stuff you just said, you may not be welcome. congressm congressman, can you add to that if. >> when you think about david's competitiveness agenda, there are basic principles that have to undergert our society beep have the highest corporate tax rate in the world at 35%. my second bill in congress was the rising tide act of 2011 which sought to lower the corporate tax rate down to 23% and allow for repatriation permanently. that puts americans to work. >> congressman, we don't have everyone paying that 35% rate because of all of the loopholes in there. would that rate of 23% get rid of all the other loopholes and

tax incentives? >> it would eliminate some of them, but not all of them. we would have people paying closer to the same percent. >> david, we don't know at this point still how to compare our tax rates to global rates, or congressman, to global rates. is it -- over there let's say it's a 15 or 20% rate, do they have write-offs as well that low are even their effective rate more? what is the apples-to-apples effective rate in the rest of the country, effect of rate in the rest of the world? >> it's tougher to get to that point but the congressman is right, our rate is the high nes

in the world. >> any chance of repatriot yaar? >> i think we're getting close to it. i think the president suggested he'd like to see a lower corporate tax rate. i think we find ourselves in a better position of having more common ground to work from if we start with repatriatation and go towards the corporate tax rate and closing loopholes. >> congressman, this is curtis arledge. we talk about measuring the rate impact of quantitative easing. i'm curious if you guys talk about what the tightening impact of regulation has been, especially for small businesses. think about just the credit system not working as well as a result of the regulatory changes and the strain that it's putting on lenders to small businesses. >> it's created an amazing

challenge in the small business community. i was an entrepreneur for the last 14 years. when i talk to my friends still doing it, they say legislation and regulations like dodd-frank is stopping them from being able to do anything called left-handing and/or borrowing. in my district we had one builder who wanted to go into business went to 27 banks to find a loan with a beacon score over 800. it's difficult. they want so much skin in the game to even get a loan. it's a horrible position to be in. and if the average small business makes about $5,000 in profits, this represents about a 40% reduction in profit per employee because of one piece of legislation. the regulatory environment has never been worse in this country for small business owners. >> it's a real tightening of credit. what bothers me the most is we haven't really measured it.

we hear about it anecdotally but we haven't measured it. it's interesting to hear your thoughts on it. >> we have to run. i wanted to get to david. >> i know you're director of jpmorgan. without speaking directly to the details of what's gone on there, this larger issue of too big to fail and perhaps too big to manage in light of this, do you have a view on u.s. banks and what needs to be done? >> i'm the ceo of honeywell. >> i knew that. david's giving me a hard time because i knew he want going to bible to answer the question. >> he is ceo of honeywell but he's on the board of jpmorgan. >> which question did you like more? >> he liked joe's questions much

more than andrew's questions. >> i always thought becky did a great job. >> good answer. good to see you. thank you. congressman, thank you for your time, too. good luck. you need it. tomorrow "squawk box" is heading to washington. i got to put cream on. i get a rash. dr. al and greenspan, former federal reserve chairman is our special guest right here on squawk. hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business.

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♪ i'm back in the new york groove ♪ >> welcome back to "squawk box." we are awaiting may sales reports for some of the major retailers this morning, including target. yes, we know the month is not over. it's a calendar quirk. that's why the may figures are coming out today. general motors is favoring the european football version over the american version. it's signed a five-year deal to become the automotive sponsor for manchester united, just a few weeks after it announced it would not advertise in the 2013

super bowl broadcast. >> and sales of bank-owned homes or those in some state of foreclosure accounted for 26% of all home sales in the first quarter. that's the highest percentage sense the third quarter of 2010. it's an indication that home prices could remain soft for a while. still have a lot of things to work out there, andrew. >> as we head into the summer, another theme park raising its prices. if you're headed to florida, universal orlando the most expensive ticket in town. it's going up to $8 $88. as we look ahead to jobs friday, career builder has a list of tn companies looking to hire 800 employees or more. among the companies on the hiring list in case you want to work there, wells fargo, first

transit, at&t, coin star and liberty mutual. and chrysler group will no longer make the chrysler town and country minivan. you're a minivan owner, right, becks? >> i am. toyota. >> it's part of the ceo's effort to eliminatie similar models an it will also stop making the focus. >> challenger may jobs data hitting the wires. the nation's employers announcing plans to cut 62,000 workers from their payrolls. john challenger jones us now. the details, sir. >> it was led by the computer industry and particularly led by

hewlett packard. we're seeing the lay off of 27,000 people, maybe the start of some of these big mega layoffs. we haven't seen those in some time. usually when you see mega layoffs that pop up here and there, you begin to wonder if they're signs of a deteriorating economy. >> we're seeing some of the layoffs in tech land. does it continue there or does it extend across into other industries? >> well, there's another big cut that's out there, hasn't been announced yet but hostess bakery that makes wonder bread and twinkies and all those great products we grew up with, that business is nearing chapter 11, may go out of business and that could man layoffs of another 18,000 people, another big layoff. you wonder whether or not some of these companies that have been hit by newer kinds of

competition, changes in the way we eat in terms of the hostess company, whether or not some of these big companies are starting to topple over because they look into the future, end of the year and they don't see enough demand to continue their operations. >> maybe private equity will come in, lay off a third of the workers and get vilified for laying off a third of the works are to save the companies. >> we are in the cross hairs. >> those products are outlawed on the island of manhattan anyway, aren't they? >> have you ever seen one? >> twinkies are not outlawed in new york but they will be. we're going to get the adp number shortly. the big number coming tomorrow. what's your expectation? >> i think 150,000, 130,000 is probably right. we've seen now two consecutive months where the job creation numbers have come in lower than

expected. it's like we're back into one of these springs where it seems that the economy starts to slow down, a fiscal cliff out there causing worry on the part of corporate america, if the economy is going to slow down as we get into 2013. job creation is not very strong right now. if we see unemployment go down, it seems to be a case more of people leaving the job market rather than robust job creation. >> any silver lining? any industry pointing upwards? we were talking about career builder showing companies that are hiring. >> sure. we saw hiring plans from the number one industry was automotive and second manufacturing. that area, people are buying cars, seems to be continuing to be an expansion mode. >> john challenger, thank you for joining us this morning. let's turn again to our guest host, curtis arledge.

what do you think of those numbers? >> it's interesting, hp being the big number there. progress is also occurring in the computer industry. i was out on the west coast last week meeting with a lot of these large companies and smaller companies. a lot of vietnam tur capital firms are investing in mid stage companies and there are a lot of new jobs getting created also. one, new technologies create new jobs and replace old companies and new technologies also cause the need for workers. i think it's -- this is where i think government can be important and i think that we ought to make sure that we are training -- job training and job education in this country has to be a big part of our strategy because we want to benefit from technology. we don't want to make the economy worse. there was an article about liberal arts colleges starting to focus on helping people think about what their career is going to be, what am i going to do

with degree? you don't want to turn them into vocational tr aal training scho but -- >> i don't want to switch gears but you were talking about mr. bernanke and the helicopter speech. >> we've heard a lot of talk about deflation and people prices in loper e e er -- lowe inflation and i was wondering if you had taken a look at the speech that then governor bernanke delivered. he really laid out the play book for what he would do in a deflationary environment and i think it's worth a read. i brought you a copy. but it really has been followed pretty closely so far. >> what will he do? >> qe3 coming? >> yeah. so i think that we're going to start to see a friendlier fed.

if the inflation environment does pick up -- so far the rally -- >> yesterday from the boston fed president. >> if we had a couple of lousy first fridays of the next couple of months, if they have a dual mandate and we're above 8%, they've got cart blanche basically. congress should change that. >> congress is never going to cha change that. >> this goes back to does congress understand. he does lay out what happens in the zero rate policy environment and he makes it clear the fed will run out of weapons. we have a printing press. you should read the piece. i would encourage google bernanke 2002 deflation -- >> what does an investor do?

>> the fed has a lot of tools to put a floor in -- >> fortunately or unfortunately? >> they have a lot of stability. what has been happening? we talk a lot about deleveraging but we have a system today where money is not getting multiplied, right? we talk about we don't have inflation. how do we know? where would prices be if the fed had none grown the balance sheet? they grew the balance sheet, offsetting the deflation impact. >> the article is from november 21, 2002, if you are trying to google it, this is it. comments, questions about anything you see here. >> go ahead and read it. is that you? go for it, becks. >> take it. i beg you.

>> go, go, go. >> we have to go to break. comments or questions when we come back. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550

welcome back, everybody. we have numbers coming at 8:15

from adp. for the month it's been pretty lousy. the dow is down 6%. the other major averages are down more. oil prices are bouncing back slightly after a big drop yesterday of 3%. a lot of concerns about the global economy that's playing out also in the bond market. yields on the ten-year at 1.627%, slightly higher yield than yesterday. we bounced off of 1.59% earlier this morning. these are still historically low levels. the dollar is a little weaker after strength for more than a week at this point. at this point the euro is at 1.24 and change and gold prices 1.566 and 70 cents. >> still to come, the number of the morning is just ahead. the data and reaction will be

right at 8:15. speaking of jobs, we are in washington for the release of the government jobs report. our special guest, alan greenspan joins us at 7:00 a.m. right here on "squawk box." >> coming up, we swing into summer will golf coach butch harmon. now he faces his toughest challenge, joe kernen. we talk about the golf business and get a quick lesson in just a bit. right when you see them, they're yours, it's like, ah, it's part of me. it's me again. now that i'm retiring they all have plans for me. i'm excited.

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our next guest is not ready to pounce on stress opportunities in europe but he is seeing emerging markets. he has $10 billion in assets under management. andrew, thanks for joining us today. >> thank you. >> you say when you look around, people who are investing in the emerging markets, they're not as nervous as investors here in the united states right now. why do you think that is in. >> things feel -- you're

starting to feel the slowdown in emerging markets. but if you look at the growth rates that are still underlying each of the economy, china going from 9 to 7.5 or 8 feels slower but they don't feel the calamity or nervousness as people going to europe. >> what about india? >> india is the darkest spot in the bricks. people talked about should the r drop out of the bricks and now people talk about should the i drop out of the bricks. of all the emerging markets,

china, brazil, russia, pushing for private equity, forming groups to promote it. india is going into the opposite direction. >> you would say avoid india? >> india is on hold for a lot of people, not just us. >> what opportunities do you see? >> china was about to announce their stimulus program. it's going to look a little different than last time around, in our opinion. it's going to be more focused on consumption, more focused on private investment. it was very easy to turn on and turn off last time. i think the question will be can it be turned on in an appropriate manner this time around but it's going to be focused on areas like it, telecom, health care, domestic services, those are where you get more jobs per unit of gdp than you do in regular manufacturing. so in china we may see the beginning of the rebalancing of the economy through the stimulus

package. at least that's the policy idea. and if there's some data, we might see a turn a different type of make-up over the next ten years. >> is that a broad play or will there be winners or loses? >> it will be domestic businesses, right down the power alley of private equity. they tend to be businesses providing basic goods and services. you've got huge internet population now, set of subscribers and users in china. the health care system has been revitalized, wages have been increased. they had a very large increase just a few months ago in minimum wage. so anything that's within the consumer spend pocketbook, those are the big beneficiaries. >> you still like distress debt but in europe you think it could be a little too soon or too late? >> everybody's been watching europe. there hasn't been disgorgement yet. all the regurgitation of bad

assets hasn't really come out of the system. so we've seen it start with some peripheral assets, geographically peripheral and also not core to domestic loans. and it's spotty. so buyers who have gone in, some have gotten licked and it's just not whole sale selling yet. the banks have been kept on a lifeline long enough where they've been able to push off the day of reckoning. that happens somewhat in the u.s. but smart investors in distress found a way to make money and it's going to be the same kind of unfolding events in europe. >> a lot of businesses are getting into public markets. >> the public markets, if you look at the broad indies of the

bricks, you get about 50% to 75% of the index is focused around utilities, extractive have is and the banks. it doesn't have big consumer area, retail, information technology, hospitals, health care in general, general services. when they are on those exchanges, they tend o be very expensive. so the private equity basket is usually the complement to what people are doing in the public markets. >> we want to thank you very much for joining us. by the way, curtis is staying with us. >> we've got a lot more to come, including the data point of the day, the may adp report. we'll get to that number. up next, joe speaks with a golf instructor and golf industry legend butch harmon. take a look. he's on our set but kind of looks like a course at the moment. we're back with that and a lot more in a sec.

our nest -- next guest, butch harmon, has extended his lead as the world's number one instructor, phil mickelson's swing coach, adam scott, i wish i were where you were for three

days. i do. would you teach me -- >> sure, no problem. >> everyone always talks tiger. you said it almost looks like now he's trying to do a golf swing instead of just golfing. he's so worried about the technicals of his swing. and he knows how to swing. you said go out and had the low draws and high slices and go out and swing because he knows how to hit those shots. i do not know how to hit those shots so i can't go out and swing. >> we'll see if we can help you with that. with tiger, you aren't convinced after bay hill he's totally back? >> we want him to be back. in reality i still think he's a little lost in his swing changes. if you look at tiger woods, in the ten years i was with him, he went through two swing situations and then he went with sean foley through another one. >> you think he should get rid of sean? >> no, i don't. i think tiger woods should go

back to playing golf and being tiger woods. the best way to find your swing is to go to the range and dig it out of the dirt. >> he's mentally tough, too. has he lost some of the nerve on the eight footers and six footers? >> i think what's happened off the course has taken a toll on tiger. he's still i think the greatest player i've ever seen. jack nicklaus is the greatest champion but tiger woods is the best player i've ever seen when he's on. >> who is going to live in the olympics? >> if i knew that, i'd live in vegas. i would have to say the way luke donald is playing, it's perfect for him. and tiger woods has f-- phil mickelson, he's finished second five times. >> the greatest thing is he

signs autographs and he doesn't feel like signing it. >> he's a good person. that's why he's so popular. >> you say bring your problem clubs. in my bag i have 16 problem clubs. on an 80-yard sand wedge shot, what should my swing be basically? >> let me see your l wedge. >> how big a back swing do i want? >> an 80-yard shot with your sand wedge would be probably about a full swing with a normal sand wedge. >> about -- is that enough? >> that's fine. >> do i keep the wrist cocked at impact or -- >> no. you try to mimic your address position. in other words, if you start like this, you want to return to that position with the back of your left hand facing your target. >> let's say i have a 30-yard wedge shot. do i use a sand wedge or l

wedge? >> it depends how much green you have. if the pin is in the back of of the green, use your sand wedge. >> because it's harder to use that? >> this is going to throw the ball higher in the air. >> should have i different swing shouts with an l wedge versus a sand wedge? >> an l wedge because of the loft is it's going to be harder to hit it than you're accustomed to. >> we've got -- believe me, i need days and weeks and weeks and weeks. you may have to give up the game after this. we got to go. coming up, another key jobs number, the adp private payroll data will be released. [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements.

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european fears sparking a selloff. >> an lek ye-- election year battle royale. we'll get head to head on the

campaign, the economy 2012. >> we have adp jobs numbers coming up at 8:30. "squawk box" returns right now. ♪ ballroom blitz >> that's a weird thing to say, have i tried bowling? what does he mean have i tried bowling? is he suggesting -- >> another sport. he watched me for five minutes and said pick something else. >> welcome back to "squawk box." i'm joe kernen along with becky quick and andrew ross sorkin. what's your handicap? you've played before. >> 14. don't play to it, though. >> can he help you? >> for about an hour. doesn't stick. >> he asked me. sometimes you need a shrink. >> checking u.s. futures, we're

up about 26 points. ugly, horrific, terrible session yesterday which got people a little bit nervous when you looked at where the vix ended. but what happens in europe has been influencing and affecting what happens here. >> take a look at target. right now that stock is indicated higher after it just came out with same-store sales better than the street had been expecting. it was high end of what the retailer was expecting. >> our story of the morning, it is may. it's shaping up to be a tough month for the bull. the dow now down 6% in may, on track for its biggest monthly decline since september of 2011. the s&p, nasdaq and russell 2000 all also down more than 6%. of courseinvestors are waiting

for a slew of economic data. the may adp report is expected to show the u.s. economy added 160,000 jobs in april. at 8:30 a.m. we'll get the jobs report and a second estimate of first quarter gdp, all of this a prelude to tomorrow morning's may employment report. we'll be in washington, d.c. for the jobs number with alan greenspan. and kayak, its initial public offering is being delayed. kayla tausche reports the issue is the morgan stanley stigma, one of the underwriters. it's still said to be a possibility later this quarter. >> would they stick with the same underwriter or is it a little late in the game to be switching? >> that's a good question. it is late to be switching --

>> but maybe hold off for a little bit? >> i think there's two issues, ipos, facebook, and morgan stanley. if you're morgan stanley pitching other clients now and now that this has to be delayed makes it that much tougher. let's look at global headlines. ireland beginning to cast ballots today in the only popular vote on europe's new fiscal treaty. opinions polls are pointing to a yes vote that could ease concerns about ireland's funding prospect. and european central bank president mario draghi saying marked confidence and not ecb support is the key to persuading banks to boost their lending activities. he was speaking to the european parliament today. can you see european equities at this hour slightly up. >> where do you get the confidence if you don't have the ecb support. it's a chicken-and-egg scenario.

>> it is. $1.24, makes me feel like havi e to get back to paris. joe, you're on your way later this year. >> in july. for more on a tough may, barry knapp is with us. oh, i see. he's the head of barclay's capital u.s. equity portfolio. i also talked about having you on to get your perspective on what we need to do. curtis talked a lot about uncertainty and you have talked a lot about that, too. i guess europe adds to that but also domestically what we have going here. does that make you at all bullish on the equity markets between now and the end of the year? >> well, i do think that there is a potential setup for a rally as you get closer to the elections. i would point to the 1980 scenario where we had some

horrific macro economic events. ism went to 29 in may after carter put credit controls causing a plunge on gdp in the second quarter. and when reaganinee and went from a 30-point trailing to land slide victory, the market rallied quite strongly through that. >> are you doing this deliberately? you know i'm the one talking to you. you're bringing up carter and then you're bringing up someone new came in named reagan and the market started rallying? did you do that to an effect or why did you bring that up? >> we've written a fair bit about this, joe. even if you go back to 2010 and you think about you had that discussion with becky a little het earlier about this being the worst may since 2010 but if you'll recall, what happened in 2010 was post labor day the policy impaired sectors, namely

energy and health care, started to rally and we had a had prett substantial rally all the way through that election as we curtailed the progressive policies of the 111th congress. so elections breed optimism and this one could trigger a rally. >> you had a job showing employment numbers rebounding right before -- as obamacare was being bickered about and argued about and that divisive year that we had, what were we averaging for job additions at that point? the minute it happened, could you see the job number come down, right? >> it was from the adp report, up in until obamacare got passed, small business confidence plunged, high are went to 80,000 a month. when the election came along and it looked like there might be a chance to roll some of that stuff back, we went to 200,000 a month. that waned in 2011 and even last

month that, part of adp softened again. it's not surprising why. we have a potential big tax hike at the end of the year, and uncertainty about what's going to happen with affordable health care. >> may of 2010 was a really lousy month in part because that was also the flash crash month. >> and the flash crash was triggered by europe but it was also triggered by a deterioration of the economic outlook in the u.s. if you look at the macro surprise indexes, they've done the same thing three years in a row. the difference is in the fall in 2010 we had a really nice rally going into -- through the elections. in 2011 the market recovered but it was a really ugly recovery, up one month, down the next. this year we have the potential to get a similar type of dynamic since 2010. >> yeah, but, barry, i know this is politics, i'm trying to frame it in an investment thesis here,

hopefully. we're at 57 on in trade now for obama. what if the president is re-elected? this scenario you're painting would not be very likely at that point, would it? >> well, the chart looks like the s&p chart. it's come off fairly substantially. the approval ratings are much more favorable for the ch challenger than they are the incumbent. but you're right. i think that the markets could be reasonably okay with president obama winning if -- if the republicans are going to take the senate under the guise that the last two times we did entitlement reform weeks had a divided government, reagan/o'neil, clinton/gingrich. now, i should be clear, between now and the end of july i'm decidedly negative on the markets and don't see any way to get much going on the up side. that's sort of a fall call we're

talking about here. >> real quick, end of july, is there a bottom in here now? what do you if you're an investors? >> you stay really defensive in my opinion. we need global growth to stabilize. >> what happens at the end of july for you? >> we will potentially have seen the worst of deleveraging impact, perhaps asian exports start to rebound but that's a big if. additionally we'll be through earnings season, we'll be through the two fed meetings. if financial conditions have tightened enough, we could get another round of fed stimulus at the end of july. >> we're playing for stimulus. that's what we're playing for now. not even a good economy, we're playing for stimulus. >> i don't see too much hope of the economy picking up any time soon and would note that cap-x has been decidedly weak, which speaks to that uncertainty

problem. >> thanks, barry. hope to see you soon. >> coming up, we are just a few minutes away from the adp employment report. we'll bring you the numbers and market reaction right after this. >> still to come on "squawk box," uncertainty in the markets, the looming fiscal cliff, unemployment above 8%. it's all coming to a head in the 2012 presidential election. ed rendell and james gillmore will face off in an election year free for all. keep watching "squawk box," first in business worldwide. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network --

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welcome back to "squawk box." look at the dow ahead of the adp numbers. steve liesman, what do you think? >> the survey says 150,000. >> you already know the number. >> i know what it is, i have to vamp -- >> move your eyebrow if it's above. >> i cannot do that.

we're the best at keeping an embargo. >> lately things have gotten worse. would it be safe to say it's disappointing? >> it would not be safe to say anything. it's fun to read the reports of the guys forecast after i have the numbers. total private sector growth under what the market expected, 133,000, april revised down from 119 to 113, nonfarm payroll, the estimate is 155,000, that includes the government. so my guess is we're looking at a number that would be if adp is correct below the 133 because in general government has been subtracting from employment. folks, i think the inescapable conclusion is we are now in a third summer/springtime in a row economic down draft after a decent first quarter, the jobs market is now reflecting the weaker economic data that we got all through march and april. >> so we can't call this the give back anymore? >> that's exactly the point i

was going to make. we're getting beyond -- >> but not as bad -- >> not as bad as it was. i will tell you, joe, i think the numbers that we see reflect whatever business was thinking about before europe got really bad. because i think these are decisions before. i think this next bit we're going to see is going to include europe. so i would expect maybe another -- >> what can we do for friday's number? what is, it 175? >> if you did strict number, 133, took off five or ten now -- >> friday's number is 133? >> no, no. >> what is the friday's number? >> 155 is the estimate. >> that's down right? >> it's in and around where trend was. >> so now we're happy with 155? >> 155 would be a huge victory. >> joel, i think what matter

here is less the details and maybe more the top line macro picture here. what are you are gleaning about the health of the job market and broader economy from these numbers you're putting out? >> i ask myself every month why interview me because you do such a good job covering the line here. i agree with what you said earlier. this number could have some weather payback in it but i think basically it confirms and reinforces the notion that there was a sharp deceleration of employment in the springtime months. it's not particularly surprising given the recent weakening of the macro economic data but it's disappointing and well short of what we need to see the national unemployment rate fall on a consistent base. i agree the euro's own situation has intensified and if it persists, the numbers are likely to be tepid like these for several months. >> at the current rate of hiring, unless more people are

leaving in the workforce, we're going to have an unchanged or higher unemployment rate? >> totally agree. the issue is two-fold. the modest growth of employment would be enough to stabilize the unemployment rate if the labor force was growing at the same rate as the population. the only way to get a decline in the unemployment rate with these employment gains is if the labor force continues its decline. >> there was one positive sign here. let's go to that, which is the service protector, which was up 132,000. we are getting the jobs there you would hope, at least to the extent the service sector is thein g-- the engine of growth and then we have the down shift in the economy. >> down shift in manufacturing and in construction, which fell for the second month of a row. in the case of the construction data, could you suspect this is a bit of a weather payback. let's face it, it looks like goods production has slowed and

employment in the good sector has slowed and this is a phenomenon we're seeing globally as lots of indices from parts of the world suggest a slowing in that part of the world's economy. >> this is going to be a weird question but there's nothing subjective when the labor department is looking at the participation rate. there's no way they can't just give the numbers as they are, right? in other words, there's no way they can massage a participation rate? >> i don't think so. it comes from census data as to what the total population is of that and that's something of an estimate -- >> i don't think they've been massaging it at all. >> but if you got 59, people would say that's not a real participation rate. you can't go back to that well every single -- >> the debate has been from the

beginning -- >> i know, i know, but that well is eventually empty. >> no, it keeps accelerating. alan greenspan and jackson gave one of the best economic jokes of all time, i'm going to give this joke right now. we don't know a lot that is certain about economics but we know one thing, the vast majority of people who are 35ite now in 30 years will be 65. so that's one thing. the aging of the population is s inexorable in the absence of a baby boom. but we have this other component of people who are leaving the workforce. >> joe, is it possible there's any subjective spin on the par 't -- participation rate? >> i don't think so. it is declining. part of that is demographic, as steve noted. part of that is related to the

state of the labor market, which has discouraged young people from entering and has hastened the departure of those on unemployment who decided to pull out all together, probably not to return. >> if you were to make a guess on the jobs report number we're going to get tomorrow from the government, 155 is the consensus, would you pick the over or under? >> i'd pick the under by a slight margin but given the errors in forecasting, anything between 100 and 175 wouldn't surprised me. >> you think it's possible you could see an uptick in the unemployment rate between now and november. you think that's something we could see a print go higher? >> certainly. given our forecast -- >> and what could happen with participation. >> i don't think so. >> i want to point out if you can put up that chart, it looks at small, medium and large. i want people to understand when

adp says small business, it is both businesses with small payrolls or it could be a component of a large company that reports a small payroll. joe, can we just make sure people understand this, what we're talking about here? >> adp data is by size of establishment, which is for small businesses usually means one establishment, one small business. a large business can have many smaller establishment. >> we do see growth in small business. joe, can the glean from this data that small business is in the the process of hiring right now? small business as we stand it. >> i think a subplot of today's number is the service economy is growing and small businesses are heavily -- you're seeing growth there whereas you don't see many small manufacturing companies. >> 2% gdp likely revision. what's your third quarter number and then bewee got to jump.

>> we're looking for a little more than 2% growth in the second quarter and somewhat better it and that in the third. but likely to downgrade projections. >> guys, fur want an upbeat way to look at this, it not 3%, it not 4% but it's not europe either. at least it is -- >> it is one silver lines. >> more data stale ahead. jobless claims data at 8:30 a.m. eastern. and wells fargo's chief economist john sylvia will break down the numbers. [ male announcer ] we imagined a vehicle

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among the stories we're watching, mayor bloomberg is seeking a ban on the sale of big, sugary drinks. it would impact drinks sold in containers larger than 16 ounces but would not impact the sale of diet soda or berry-based drinks or alcoholic drinks either. >> coming up, we're just minutes

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welcome back to "squawk box." we are seconds away from jobless claims and first quarter gdp data. wreck santelli standing by in chicago. we have john sylvia joining us from charlotte, north carolina and the professor, steve liesman in the studio. rick? >> survey says initial jobless claims moved up from 373 to 383. new math up 10,000. originally released at 370. now let's look at the first -- second look at first quarter gdp, 1.9, matches expectations. it just doesn't match the expectations that we all had a couple quarters ago. the number moving from 2.2 originally down to 1.9, the consumption figures 2.7. that's a 0.2 drop, a little surprise there. the price index moved up from 1.5 to 1.7. that's also a bit of a surprise.

personal expenditure consumption quarter over quarter up 2.1, matches expectations. challenger layoffs moved up rather dramatically. adp employment change, snooze, we need more more jobs. we're still holding on to a positive in equities on the last trading day of the month and we just broke under 160 in a ten-year note. 159-year-old and nothing expresses the lack luster performance both of the economic data of late and the nervousness in europe than a 1.59 ten-year, which begs the question would you lend your money to uncle sam for ten years for 1.59%? i can't find anybody who answer yes but there are trillions of dollars worth of stats, securities like books, bobbles,

shots and treasuries that beg it differ. back to you. >> for more on the datdata, let get to john sylvia. john, what do you make of this? i can't even believe the treasury number. that's not even the employment number but i'm just shocked by that. >> i think it's that jobless cla claims rose. and the overall gdp influenced by inventory. it looks like consumer spending contributes to growth but it's really mixed. you're looking at structures that were negative and government, federal, state, local, all negative as well. moderate economic growth at best but a really mixed picture. not a uniform strength of the economy. >> let's go through some of this. >> a couple of things, rick does a great job of giving us the highlights, just a few more details. real final sales was up a tick from 1.6 to 1.7.

in part we had a business investment, originally reported minus 2 hadn't.1, now it's up 1.9. the negative number was something to be much more concerned about. a little less concerned on the business investment side. inventories grew less than reported. but one of the the big changes here again is government spending. as john sylvia pointed ou, total government spending was reported done 3. now it done 3.9 with a big, big revision to state and local spending, originally reported down 2.5%. i think we thought we were need the end of of the process of government cutting back and i don't think we may be anywhere near that process. >> well, it was the states, right? >> it was state and federal government. i think the numbers came through the defense channel.

maybe that was an initial highlight or showing of what happened in winding the wars down in iraq and afghanistan. i wonder if tomorrow we see another substantial leg down in government hiring as well as. >> you're talking about a double whammy here, that the private payrolls weren't as strong as we expected and the government -- >> so let's just be clear that at least a portion -- or john, i just want to be clear here that when we talk about the underprmgs of the economy, some of that underperformance comes from what's happening or what the governor would normally be doing. >> i think you're right. where there isn't a federal reserve, these governments have to meet their budgets and is an ongoing restructuring if that data. your point is well taken. it may suggest that tomorrow morning that public sector employment may be another drag

on the jove all protective number. >> a bunch of viewers are writing in. the participation is determined by numerous assumptions that are aubtive and do you think everybo unemployment rate will -- >> i will tell you this, that i do believe that this is a long-term trend that's been established but it's accelerating. i think it's possible. i have no proof. i want to bring up one more point, though. corporate profits. somebody just -- >> i need a chance to respond

here. >> you're a very logical person but would you step back and think about i don't want to see the lunacy, i don't want too see the insanity, i want to see t the illogic of government numbers about government numbers. you're using the unemployment data to say the rates are a conspiracy. somebody help me. >> i believe all the numbers are manipulated? because i'm asking a question? >> why would you use a government number that you publish to create a conspiracy in the number you publish? >> i don't buy the conspiracy story. often times in economics the underlying trend of the data tends to move in a certain

direction and over time there may be some corrections in the data but we do get streaks of data and many economic series that go in the same direction that may be happening in -- >> if there is a conspiracy, gentlemen, it's the interpretation we get from most economists on the numbers -- >> we give all sides. >> i've been a participant in the market since the carter administration and trust me i've never in all those years where i don't give a rat's behind about politics but i've never seen so many go out of their way,go to a universe far, if a away to make interpretations of economic data that no logical, sane, objective person would. >> you were talking last month, rick, about the conspiracy about how the numbers would be reported, but in fact -- >> i don't believe i've ever used the conspiracy. >> whatever word you used, you

suggested there was a whole thing going on. >> suggesting and saying conspiracy -- >> you just walk away from your suggestions. >> i'm not saying there's a conspiracy there! >> the conversation you guys had a month ago -- i think business reporting is advancing rapidly. i watched the friday night news a month ago and thought they talked about the weakness in the non-farm number. >> it was all negative. >> i wasuspect of how it would be reported but it was reported as a weak number. >> maybe that's because cnbc is screaming about it so much! >> could be. >> could be. >> thank you, john and steve. appreciate it very, very much. i should note real briefly while we were doing those numbers, morgan stanley exercising an option to buy that group from --

the solomon group -- they're exercising the right to buy the next 14% in smith barney. i will try to do some of the numbers when we come back. >> after the worse than expected jobless claims and adp number, we did see the ten-year trade below 1.6% and just saw the do you futuring turning negative. if you were hoping we were going to make up for the 6% we already lo this case. right now it shows you positive value but fair value is 24. >> when we come back, ed rendell and james gilmore face off on jobs, the economy and campaign 2012. >> monday on "squawk box," our guest host will be harry wilson.

he'll sound off on markets, jobs and commit in his first interview since joining yahoo!. don't miss "squawk box" monday starting at 6:00 a.m. eastern.

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. welcome back to "squawk

box." a batch of disappointing jobs report could have a imagine impact on the election. tomorrow's data is another focal point. joining me to talk about this is former governor jim gilmore. he's now the head of the free congress foundation. also joining us cnbc contributor and former pennsylvania governor ed rendell, the author of a new book " a nation of wusses." governor rendell, i know what you may thinking of these numbers and how it may play for your candidate. governor rendell, i'd like your take on how the president takes the numbers and makes a bid for reelection. >> we've had increase in private sector jobs the last 26 straight months. when he took over as president, we were losing 750,000 jobs a

month. the economy has turned, hasn't turned as strongly as all of us would wish but it's a good trend line. it's the loss of government jobs at the state and local level that are creating a problem. i think that's going to turn around and i'm basing it on pennsylvania. my successor predicted in his budget address back in february that there would be at the end of the year a significant deficit in the 300, $400 million range. it looks like the figures are going to come out and pennsylvania is going to have run, $300 million, $400 million, $500 million surplus, which will a positive effect on the economy and employment. >> governor rendell, private sector job growth is below expectations and people are saying the numbers indicate this is not just a give back from the warm winter that, this is

another spring slump for the third year running and that's got to be a huge concern. >> it is a concern and i do think we want to take this for the moment out the election year politics but it's hard. i think we need strong and decisive action. we need to go on a significant ten-year program to rebuild this nation's infrastructure. it's the best producer of well paying jobs that we could do. we need to do simpson bowls and if i were the president, i'd say we're not leaving until we do this simpson-boals. i think we need some strong action and i think the only way we're going to get it is if we can put politics aside, which is awfully hard these next five months. >> i think it's about selecting new leadership in the united states is an a decline in our

opportunities, a decline of our commit. people are out there trying to find jobs, young people are trying to get their career started and this isn't working and it time for now leadership. the president has said in his budget he wants to increase taxes on investment. we have to do tax reform in order to get investment moving again and get this jobs going. what we're seeing right now is the growth of the united states economy below 2%. the historic average in this country is 3.. if you have a 3.2 groving economy, you begin to get exciting opportunities and people doing things and starting businesses. we're not seeing a kind of leadership out of the president in washington and that's what's necessary. let's take simpson-bowles. he could have done simpson bowles and even they have tax increases that will depress the economy. governor romney has put forward ideas about transreform. we're seeing a pos tilt towards

business community. you can't permit that. you have to have a change of attitude. >> no matter what happens in the election, there's still going to be two parties in washington and they're going to have to come up with some kind of compromise, correct? >> i've thought about it a lot. what we really need to do is go to the people of the united states and ask them to take charge of their own economy and say we've got to put new leadership in to get things going. we need to make the litmus test whether or not you get the economy growing. you have to have opportunities for people to put more money back into the economy. instead what are we seeing? we're seeing a tax constantly, class warfare type of rhetoric,

criticism of people being successful, criticism of governor romney because he was successful in the private sector. ed rendell said he was very disappointed of the attacks on bain because it sets an jove all tone of what we're going to do in this country moving forward. >> governor rendell, i heard you try to jump in there before. >> i loved his comments but governor romney is trying to rewrite business. you remember bill clinton raised taxes on the top 2% of americans and we created 23.5 million jobs in the next seven years. even though republicans at that time said this is going to kill the economy, it going to drive us back into recession. george push cut taxes. following that we had the worst five years of job growth in -- >> the jobless rate under both

administrations of the same. >> yeah, but the creation of jobs -- >> i know, i know. but it sounded -- the jobless rate was the same for the eight years of the bush and obama administration. >> you don't create jobs by cutting taxes. >> you don't need to create -- when you're at 5%, it nice to be 5%. you're not going to punt on the private equity remark from governor gilmore, are you, ed? >> i'll be happy to answer that but more importantly your viewers should know in the last 60 years our top five years of job growth occurred when the marginal tax rate was at 70%. our top ten when the marginal top rate was 50%, are the lowest five. there's no correlation that if you increase on the job creators it's going to hurt job growth, the facts down pan out.

let me talk about bain capital. i was disappointed in calling governor romney vampires. there's no place for that. that. like when rick perry said it was vulture capitalism. no place for that. yes, fair game, he said that's one of the main reasons he can take over the american economy. i think everyone should look at that experience and see what it did in terms of job creation. remember, governor romney didn't say he created wealth. he certainly did that, he said he created jobs. >> governors, i'm sorry, we are out of time. i love having both of you here. governor rendell. >> becky, just for the record, you and joe are non-wusss. >> are you suggesting i'm a wuss? >> no, andrew, i don't know you well enough. they are non-wusses. >> i'm dying to get your book. governor rendell, we want you to come back and talk about this.

"a nation of wusses." governor, thank you. we'll see you both soon. coming up, don't you love it when you get something for free that used to cost you money. we'll tell you how google he is saving you $25. head to the new york stock exchange for the latest buzz from wall street. first, news from nike, just a few moments ago the company announcing plans to divest it's col han and umbro brands. they want to focus on nike, jordan. >> i didn't know they did that.

. in the latino communityr retirement. the word that we use is jubilation. as you're getting older, you should be able to do the things that you love.

job created.

welcome back to "squawk box." free restaurant ratings from its previously acquired review service. they previously charged a $25 prescription review, now you get it for free. carl and melissa join us, numbers for adp, jobless claims, worse numbers than we had been anticipating. that's fog to set the tone for tomorrow. >> you guys have handled so much data today. i'm glad you left data for the rest of us. we're going to get chicago pmi later this morning. that could move markets. overall exactly what you said, q-1 gdp and adp. >> set up for job reports, you're talking about google, zag zagats. that will certainly be a topic of conversation there. >> we all sort of ask ourselves if we're in some kind of tech bubble, a person you would want to ask is someone who has been through one, the former ceo of pets.com will join us later. >> joe, gives us a chance to play the sock puppet ad one more time. >> i love those. i miss those. someone should have brought that back for something else, i think. maybe one of our promos. >> joe, how late were you out at michael's last night? >> no, it was lunch. it was at lunch. >> because the tweets go out in

the evening. i thought, wow, joe in the city after 8:00. >> no. no. no, no, no. you know -- i paid. thanked me and said what would an auction for lunch with welch go for? >> hundreds of thousands of dollars. >> i said don't thank me. i put it on cnbc. coming up -- thanks, guys. coming up final thoughts from our guests. and somebody asks me a question about the volt. what really blows them away is when i tell them i almost never go to the gas station, despite the fact that they see me driving to work every day. i fill the volt up once every -- maybe once every couple of months. and that feels absolutely wonderful. i'm hardly using gas, but it's there when i need it. anybody that thinks that this car

doesn't have solid performance, hasn't driven it. there's no other car like this on the road. ♪ of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter.

we're back on "squawk." our guest host, curtis, let's get some final thoughts from you. what are you thinking? >> may has been an unbelievably challenging month. not because the market is down. how will europe play out. the fiscal cliff, how are we going to resolve that. the economic data we'll see over the next few weeks will be in many ways old news. it will tell us how strong we were in the third quarter. i do think we'll start to see economic data reflect that people will hold back. we have investors, $1.3 trillion across three firms. >> are you telling them to get the money out of the market? what are you tell them to do? >> i think