andrew ross sorkin and brian sullivan. joe is off this week so we're celebrating by playing all of the music that he hates this week. if you've got any music that we normally don't get to play around here, let's see, u2, the boss, jon bon jovi, all kind of things, we have them coming for you today. in the meantime, let's get you up to speed. microsoft losing a legal appeal in europe. the eu second highest court backing antitrust regulator to fine the company four years ago but the court did reduce that fine slightly today to 860 million euros to 899. spain's prime minister, this is the big story here, he is saying that he will ask other european union leaders to use existing eu instruments to stabilize financial markets. he is arguing that access to financial marks is madrid's top priority and warns spain will not be able to continue financing itself at current yeeltdz for a long time. this is all of course poging ahead of the eu leaders that meet tomorrow in brussels.

a lot of investors are now pointing to germany reiterating staunch opposition to common bonds after german chancellor angela merkel said issuance of bonds like this will not occur, quote, as long as i live. back here in the united states, a couple of economic reports of note today. at 8:30 eastern time we get may durable goods. then coming up at 10:00, pending home sales. right now let's get over to brian and some of the morning top corporate headlines. >> good morning. thank you very much. maybe a little willco, radio head, that would be fantastic. as you noted hedge fund manager wine steen has exited his bet against jpmorgan and booked a tidy profit. he was one of the first traders to call attention to a derivatives bet that cost jpm at least $2 billion. meantime, a judge ordering samsung to stop selling galaxy 10.1 tablet in the u.s. it's a significant win for apple in the global smartphone and

tablet patent warns. apple filed an injunction against samsung and samsung says it may take legal action in response to the judge's decision. watching at home, kids, be a lawyer, there's always a job for you. gentlemyahoo! is ditching r and teaming up with spotify. in the past users had to navigate away from the page. tough life. andrew? >> we got a couple of other stories on our radar this morning. the nation's biggest banks, yep, putting their finishing touches on the so-called living wills. government mandated contingency plans are due no later than july 1st under provisions of dodd/frank. it must show how to close a bank safely. the big question with the public goal of stopping too big to fail bailouts. jpmorgan, bank of america, citibank, goldman sachs are

among those submitting the first scene air ye scenarios. and the s.e.c. could file an enforcement action against hedge fund manager phillip falcon this week. they have been investigating a number of issues on falcone including a $100 million loan he took from the hedge fund to pay his own taxes. trading in hedge funds and bonds in max holdings. northern california city of stockton is set to become the largest u.s. city to declare bankruptcy. filing could come as early as today. they have $700 million in outstanding debt. last year they approved a new budget and guide city operations during bankruptcies and demand a $26 million budget shortfall. let's get a check on markets. yesterday the market did eke out some gains. slight ones but people were worried we were going to close down big after concerns in europe. you see green arrows once again. dow futures indicated about 17

points above fair value. s&p futures slightly higher as well. by the way, there are only three days left in this month. at this point, the major averages all have slight gains. they're clinging onto slight ones. dow up by 1.1% for the month. s&p up by 0.7% and nasdaq up by 1%. how this month goes down in the record books is going to be decided over the next few days. we also are taking a look at what's been happening with crude oil. down 34 cents. still below $80 at 79.02. let's take a look at the ten-year. check out where the ten-year note is yielding. you can see 1.626%. we're watching very closely the ten-year both in italy and in spain today. the dollar's been interesting because yesterday the euro closed back below 1.$1.25for th first time in two week. stands at 1.2497. dollar down against euro, up against the yen at 79.52.

gold prices this morning, if we take a look at the board, you'll see gold prices down $4.60. time now for the global markets report. kelly evans standing by in london. before we get to the markets report, i have a funny story for you quickly. my parents were eating at a cracker barrel in stanton, virginia. some reason they started talking about me. maybe they're proud. who knows why. the waiter went to high school with you in lexington, virginia. it's a small world. but i wouldn't want to paint it. >> who was the waiter? >> his name was byron -- played on the football team. byron jones or something like that. he was on twitter. he said i just waited on cnbc's friends at cracker barrel. i said, how did you know we went to cracker barrel? i said, it was on twitter. he said hello and congratulates you on your success. >> that's so nice. well, stanton, virginia, as long as you pronounce it the right way, you know, it's appreciated

all around. you'll have to tell him or if he's watching i say hello back. i need to get back to the crackle barrel. in any case, let me give you a sense of what's happening here in overnight trade as we hand off to you. we see outpacing decliners by 3 to 2 ratio. quiet morning for the most part. euro stock 600 up about 0.4%. italy did auction off debt short-term debt, had to pay higher yields than it did at the last auction but that didn't do too much to upset markets in the short term. ibex in spain, up 0.6%. ftse 100 up 0.4% as we just got retail sales volume figures for june showing that volumes were quite strong. maybe the jubilee did help sales. weep watch that as we get into july and august. take a look at yields across the

region. spain inching higher towards that 7% level, 6.857% italy at 6.128%. well over 6% mark. our guests this morning are warning if there's no kind much major action coming out this weekend, it may not be long before italy is in the 7%, 8% we saw last fall. better tone as we come back here to france and germany, lower again relative to the real periphery. still 2.61 in france and 1.55 in germany following jones egan downgrade. eurozone, as becky was saying, 1.494. not too much movement on the morning. oil prices as we look at housing and consumer confidence data in the u.s. this week. lower still on brent by 0.6%. crude below 80, nymex crude,

79.08 down about 03%. with that, back to you guys. >> kelly, one question. mario monti on some of the wires earlier had been talking about how he's prepared to go into this summit and keep it through the weekend, stay on sunday night if need be before the markets open on monday. that made me start thinking, what does he think is going to happen before the markets open on monday? has anybody been worried about that or pointed that out this morning? >> no, but going into every single one these meetings there's been a feeling among traders we have to get concrete steps out of the meeting or else markets will sell off. we've seen while sometimes that's true, while we've had as the cnbc specials kind of worried about what would happen in markets the following monday, also in this case, in particular, seems to have been a lot of selling prior to the meeting. expectations have come in significantly given some comments from, you know, various policymakers. certainly what we heard from angela merkel yesterday. now the question is actually, i think, whether that's created enough prospect for there to be a risk on move if there's anything to come out of it. but just to reiterate, this is

the 19th or 20th such meeting since the eu debt crisis began. you're hearing more and more people talk about december now as the time frame for seeing more detail on some of these proposals. so, if there's not more concern in markets now, becky, it's probably only because policymakers have tried to walk back expectations and that is accounted for some of the bad moves you've you've seen in markets in the last couple of weeks. the risk as always, still there. >> at this point you would say take monti's comments with a huge grain of salt and just realize there's a lot of jockeying and positioning taking place ahead of this? >> remember, monti is trying to use the leverage of markets to his advantage so monti, hollande and rajoy would love a huge selloff because it would give them some uimpetus to go into te meeting. absent that, the pressure is on them. it may be a little politicking,

although i don't want to be someone to say, we're not going to see a big negative move if we don't get a big outcome. i just think there has been tempering of expect takings in the past several days. let's get you through some of the other corporate buzz this morning. that's driving the conversation. best buy's founder is working with banks to explore potential private takeover of the world's largest consumer electronics retailer. he says the banks are still in the early stages of determining what steps to take but best buy's board has taken a defensive measure making it more difficult for him to take a shareholder vote for direct buyout. s.e.c. filing last week showing the company raised the ownership threshold for calling a special meeting to 25% from 10%. we'll talk to an analyst who covers best buy from oppenheimer at 6:30 a.m. eastern. this brian was saying that you called this -- this was your stock of the year? >> i didn't call it. we had the cnbc stock -- you ever watch "street signs"? >> yes. >> fine program, 2 p.m.

>> wonderful host. >> we had our stocks draft and i picked this. i was one of the last pickers -- >> can we get a best buy chart up? when did you pick? >> i think my cost basis was 25 bucks. the only reason i picked it was the expectation that there might be a buy out. listen, you're the banking guy, right? if you look at cash flow on this thing, if people are buying sears on a real estate play, right, if you hear them say it's the real estate play, best buy is similar real estate play because of square footage, and expensive -- >> i think you should come back in six months, maybe richard will have bought the company and you would be right. >> it was that or stocks.com. remember those days? i do. >> remember when we used to talk about that instead of the ten-year bond yield. >> now it's all about the ten-years not only here but every single one of those european countries and how it measures up --. >> "squawk box" has evolved into a global view. >> it is.

it's what's moving the market these days. fortunately, we have somebody joining us right now to talk more about it. christopher sheldon chief investment offer at byn mellon dreyfus. every time you come on, you end up getting asked about what's happening in europe. brian's right, we have turned our focus to what's happening in europe and how that is leading our markets. what do you think? >> it feels like it's the same discussion every time. you wait for something to change and nothing does. but to the point, at the top of the hour, andrew mentioned that italian yields are rising. in the last two months the markets have sent a strong response that it's time for action. this is the umpteenth summit and yet expectations are low. 23 nothing happens i think we have nervousness in the market. boy, there's room for some positive change -- >> how long do we wait? we keep -- we need the uncertainty in europe to clear up. we've been waiting for uncertainty to clear up in europe for three years. at some point, you've got to invest in something because i can't invest in summits. is there a derivative instrument where i can invest on long or

short the number of meetings they're having in europe? >> if not, they'll discover one shortly, i think. the reality is, it's not going away. these headlines are with us, unfortunately europe is not going to be solved overnight. but the difference is shifting from an acute phase of crisis to chronic. we can get through that, i think. the challenge is the good old days you're talking about, stock multiples, the valuations were much more expensive than they are today. long-term investors have opportunities. if you're out there looking with good discrimination, there are opportunities today -- >> but do you think the major averages at this point are reflecting the concern? you say we've moved on to acute -- >> talking about treasuries, sorry to bring it back, look at yields today after inflation they're negative. that means people are saying for ten years we have no growth -- >> you like stocks? >> i like stocks. i think they're headline and you have to be cautious. in items of other alternatives out there, you're getting paid to take a look at the risk. >> george sore rose said three or foreweeks ago he thought we

had three months in euro. you hear monti, watch the yields and a couple nations getting back up to 7%. that's not sustainable. how long of a time frame do you think we have? maybe not any answer this is weekend -- >> no. i think the risk is certainly the time frame is compressed every new relief rally. i call this the market riot, the relief, the recovery and response. you repeat that cycle. the time is getting shorter, no question. i think the good that comes out of that is that the policymakers maybe finally are getting this message that it's time for more pronounced action. the risk is they don't do it. but i do think that that is a better recognized view today. >> for every single strategist that cops on this network makes the valuation argument for the u.s. stock market. i can understand it. you look back at historical metric and a third grader could say, this a cheap market but have you to get buyers in. how do we get americans re-interested in the stock market when all they hear is

doom and gloom in europe, corporate scandals over here. how do we get people interested in equities again? >> good point. the focus of investors because the headlines are the end of this desk the next three minutes, what gets people to come into markets is a little confidence, a little bit of going in the right direction. >> what's going to stimulate that? what's going to be the catalyst of confidence? >> it's very hard to say. it's not going to be good news. we don't even need better news. we need less bad news. i can give you 12 10 or 12 -- lower energy prices, a very big plus. looking at some possibility of compromise post-election on our own fiscal cliff. there's a number of things that could do it, but in the near term it's really difficult. >> but are you of the opinion that if you're somebody who's a longer term investor, somebody in this for more than a year or two, you need to be in these stocks now in case the train leaves the sfags or are there still some really great buying opportunities when and if some of these crisises hit a breaking

point? >> a contrarian buys against the grain and your gut is telling you there's opportunities but emotion says there are fear. i think there are long-term opportunity in the short run. if you can't stick with another potential decline, that's maybe not the time to start. i mean, those values are there for investors willing to do their homework, willing to hold through this period because the downside certainly, at the -- the bad case is knowing. the surprise could be getting less bad. optimism in the short run, tough to come by but brighter spots than some people are paying attention to. >> thank you very much. it's great having you here. coming up, new nbc news/wall street journal poll showing president obama is picking up those in swing states but locked up in a tight race. a bit of sad news. oscar winner, screen writer nora

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welcome back to "squawk." lennar reporting second quarter results a few moments ago. earnings 21 cents, beating the street and revenues topping expectations. sony's new ceo saying the company's revival plan will work. he projects sales to increase by a third in two years with an operating margin of more than 5%. we're going to have to see whether that comes true. bristol-myers board authorizing an additional $3 billion for share buybacks,

adding to the current active $3 billion repurchase program. brian? now to today's national weather forecast. alex wallace joining us from the weather channel. good day, bad day, in between? >> depends on what you like. if you like heat, it's going to be a fantastic day for folks in the middle of the country. of course, we've been dealing with debby in florida and she'll continue to move further and further away. there's the position right now. it's about 35 miles or so just to the south and east of st. augustine in florida and moving to the east/northeast at 10 miles an hour and that general motion should continue as we work through the coming days. pulling further and further away from the country and we'll be saying good-bye to debby because it dumped quite a bit of rain on the sunshine state. here's the rest of the nation for the day. still wet weather with a system up into new england while we in the middle of the country will be very, very dry, but dealing with very, very warm numbers. we're talking excessive heat warnings in place for places

like kansas city and all these other areas in the brown dealing with heat advisories, temperatures in the 100 to 105 range with heat index values, what it feels like to your body, getting up into the 110 range. extreme heat in the middle of the country. that heat is going to expand east as we progress through the week. so, the areas in places like d.c., quiet today but by the time we get to friday and the weekend, get ready for the 100s. you'll reach that mark in dallas over the weekend. >> we never got to play robin williams video from "good morning, vietnam" where he says it's hot out. you don't know what i'm talking about. president obama maintaining a smashl national lead in the latest nbc news/wall street journal poll. 47% to 44%. note this difference is within the survey's margin of error. cnbc's chief washington correspondent john harwood

joining us. the other statistic worth pointing out, 8% of those polled think that president obama is a mormon, is that -- am i -- have i lost my mind? i thought that was remarkable. maybe they thought -- >> 8% think he's a muslim. >> see, it's early in the morning. this is what happens. >> it's damn hot in that race, andrew. look, we've got a stable presidential contest. president up three points nationally, he was up four in may. this thing's going to be ground out in the swing states. that's where the good news is for the president. because in the subsample of the 12 swing states that both sides are fighting most intensely about, the president's got an advantage of eight points. looks like he's hurt. mitt romney with some of the advertising and attacks on bain capital and business experience. romney's under water by 15 percentage points on the value of his business experience in those swing states. and in those places, they --

americans value president obama's economic policies more than they do nationally, so that's the good news. >> is says mr. romney's business background, a central element of his candidacy, is a draw for many but viewed negatively by even more people? >> yes. it's viewed negatively on a national basis by five percentage point but in the swing states by 15 percentage points. remember, americans are upset, andrew, not just with government, but also with major corporations and wall street. that's the flipside of mitt romney's experience. the positive is, he can go and say, i understand the economy, i understand the private sector, president obama says the private sector is doing fine. i know it's not and i know what to do about it. the other side, which the president's working as hard as he possibly can, is to say, private sector equals outsourcing, equals the guy who, you know, fired your neighbor and your dad and lots of people you know, that ships jobs

overseas. that's the yin and yang of the race -- and business part of the resume for romney. >> it seems like this election at this point is likely going to hinge on where the economy stands and who gets blamed for bad results. i thought an interesting question that you asked was, did obama inherit this or is it his fault for where we are? i was surprised by the numbers and how they came out. >> 60% of people in the survey say that obama inherited this situation. that's been pretty stable. it's down a little bit, of course, from when he took office when a higher proportion said he inherited it. he can't take that much comfort in that number. when you ask people the follow-up question, have the things obama has done helped or hurt the economy? almost the same 60%, a little more, actually, say he's either not made a difference or hurt the economy. almost two-thirds of the people say that. so, that's the raw material for romney to make some headway and say, hey, he may be a nice guy, you may like him and our poll

shows people do like him on a personal basis, favorables are good. he hasn't made a big difference. you also see him on issues. the democrats holding advantages on health care, we're waiting for that ruling from the supreme court on medicare, on social security, on helping the middle class. but romney on another issue that -- and republicans on the other issue that people care about, which is cutting the deficit and reducing spending. >> right. john, we're going to leave it there. thank you for joining us this morning. >> you bet. >> we'll keep our eyes on -- i don't know if it's going to change. >> who hasn't made up their mind? the poll numbers came up to 91%. who in america doesn't know who they're voting for -- i guess -- >> 91%. >> who are they? >> they're going to be the ones that decide the election, those that make up their mind in the last month. >> the nine percenters. coming up, the future of best buy get in the game! [ male announcer ] don't have the hops for hoops with your buddies? lost your appetite for romance?

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♪ beautiful sight i can't even get one thing right ♪ ♪ i know just what it's like to be right in the wrong ♪ welcome back to "squawk box" on a wednesday morning. it's 6:30 a.m. on the east coast. i'm andrew ross sorkin along with becky quick and brian sullivan, who joins us here on "squawk." joe continues his vacation today and the rest of the week. let's get you through some of the headlines this morning. microsoft's office in athens were fire bombed today. police say that someone drove a van through the front door of the building early this morning and set off an device that damaged the building's entry. no one was injured.

usually they target official buildings, banks or state power. not little technology companies like microsoft. other news, boeing naming a new head of commercial plane unit, ray conner is going to run that business, replacing another long-time boeing executive, jim albow. i hope i get pronunciation right. ratings on facebook, research is out about a month after the ipo, barclays capital and citi setting a hold or equivalent rating on the stock. morgan stanley and rbc capital markets are beginning coverage of the social network with their top ratings. brian, you were looking at some numbers. >> they're coming out. the rundown, america. citigroup neutral with $35 target. bank of america/merrill lynch, $30 target. oppenheimer, overweight, $31. most bullish --

>> who's at $45? >> wells fargo. $37 to $40. jpmorgan's thesis f i can summarize it, is they think mobile has an opportunity to take off. that's the real question. so, you know, the valuation range is $35 -- >> is that a 12-month target? >> no one has -- >> by the way, jpmorgan's underwriters on the banking side were the most bullish. goldman was slightly lower and jpmorgan was closer to $39, $40. >> we need someone to come out with $150 target on the stock, just to have them on. there's got to be somebody somewhere who want to be interviewed by becky quick and andrew sorkin and yelled at by joe, come on trading 100 times on a noncap edbi noncap basis. >> someone is watching and we get the call -- >> i bet you get that within the

next six months, a way out target. >> what's the most -- >> $75. >> depending where the stock goes over the next few months, but we see it every time. >> somebody on the fringe. >> i think facebook is going to be bumped by best buy. >> really? >> i don't think that, no. >> you're frying on get to a segue? >> right. there is word that best buy's founder is exploring the idea of taking the company private. brian nagle follows the retailer for oppenheimer and joining us. welcome to "squawk box." thank you for joining us. do you take any chance this company could be taken private, could be bought out? >> there's always a chance. as we've said a lot in the past, best buy trades at a discounted valuation here. i think that in itself could make it an attractive lbo. we saw the article last night published in "the wall street journal." my concern is just the size of any deal. this would be -- if this were to

happen it would be a very, very large deal. i think best buy could have trouble securing the financing for that. >> so schulze reportedly worth $7 billion. seven times ebda. you think someone would be interested but couldn't raise what schulze has himself? >> that's the challenge. i said any deal would be excess of $10 billion. the challenge would be raising the capital to essentially buy the piece schulze does not own at this point. >> would you be worried -- it won't be a public company if it goes private so we won't have to care, but would you be worried about the company's ability to actually continue servicing all that debt? >> well, that's -- and i think that's probably the biggest concern. if people -- if anyone is looking to take best buy private and load onto it, that would be the biggest concern.

as we've talked about, best buy remains the largest consumer electronics retailer in the united states. a dominant force. the company is solidly profitable. they generate a lot of cash. those are all positives. on the negative side we've seen for best buy for a while now is they really face a much more challenging competitive landscape, particularly with amazon and others. and a really weak product cycle. i don't think either of those problems will correct themselves soon. >> is there any chance that ultimately he is a stocking horse, by meaning showing up at the table, talking about this, that somebody else comes to the fore and tries to buy this? >> that's always possible. i go back to the note i wrote to our clients. we have no way of knowing what's going to happen. i think a scenario like that is possible. >> give me some -- who would be on that list? >> well, it's -- i think this would be a private equity type deal. you know, if anything were to happen, it would be a financial buyer. i don't see a strategic buyer coming in and purchasing best

buy. >> where is the floor on the stock? it's lost more than half its value in three years. at some point they have to stop going down. >> without a deal potential. >> yeah, without a deal, is the floor zero? >> well, that's a really challenging question to ask because you look, as you said, best buy, the stock is ra ratcheting lower and lower and there hasn't been a valuation bottom. if you look at the metrics, best buy is trading three times enterprise. a year ago people would think, no way it would trade that low. it's hard to say where there's a true valuation bottom because i like to say the wall of worry is so high for this stock -- you know, this stock and this company, given the secular -- or the pressures we're seeing on best buy right now. >> all right, brian, thanks for getting up early for us. appreciate it. >> appreciate it. if you have any comment or questions about anything we've been talking about here this morning, go ahead and e-mail us. our address again is squawk @cnbc.com or tweet us.

we'll talk about trying to conquer cancer. why scientists and a member of a political dynasty saying finding a cure is a private/public formation. patrick kennedy, a venture capitalist will join us to talk about this.

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welcome back. as many as 1 million new cancer patients are diagnosed each year in the united states and among those, 12,000 are diagnosed with brain cancer. federal funding, though, is drying up. doctors are now calling on private investors to try and join the battle against cancer. joining us from washington is former rhode island congressman patrick kennedy. also the co-founder of one mind for research. an initiative to try to accelerate understanding of the human brain. joining us on set we're joined by dr. john bookfar, the associate professor of neurosurgery and director of the brain tumor research lab at new york presbyterian cornell medical center. and franklin berger, sister adviser at pdl biopharma, leader in research funning. welcome to all of you. we appreciate your time here. congressman kennedy, why don't you start out talking about what's been happening with funding, why you think it's falling short and what needs to happen. >> well, we know funding is falling short not only on the federal government level but

also critically amongst the pharmaceutical company and biotech community, who look at brain research as not as an easy a win as, for example, other illnesses that are more promising in terms of the return on investment, so to speak. so, what we're interested in doing is trying to simplify through collaborative processes the research that is going on, to maximize it and leverage it. what i mean by that is, to the extent we can employ iframatics, modern techniques of images, genomics and assemble new science to leverage the old science, i hope we're able to get to answers for these diseases that take so many of our families from us. and i think that we need to make this obviously an economic case, because we want people to invest in these things. right now, the investment environment is not good when it comes to anything brain-related.

and brain cancer is just one of the many issues that, obviously if we research brain cancer, we understand other as is spepects brain that will yield advances in autism and most importantly for our soldiers, traumatic brain injury and the like. all of these things feed into each other and need to for us to accelerate the answers for these challenges. >> doctor, where do we stand right now with the state of brain cancer, what we know and how much hope is there? i know there are all different types of brain karns but what can you tell us broadly. >> i think we're at an inflexion point in all of cancer research. and i think that as representative kennedy said, the time is now to expa diedite ourening. there is a long delay where basic idea or knowledge is translated to our patients at the bedside. the idea now is to get the

investors in the same room as academic researchers who hold this basic knowledge and cut the time that it takes to get our patients these medicines. unless we do that soon, we're going to be in real trouble 15 years from now when our population is older than 65. >> we've thrown hundreds of billions of dollars at cancer in the last 30 to 40 years, not just brain cancer. death rates have come down but they haven't come down that much, maybe 1% a year. why not? why haven't cancer death rates gone down more considering all the money we've thrown at the problem? >> it started with president nixon but if you break this apart, you'll see dramatic improvements in survival in breast cancer, most inflammatory kind, dramatic improvement in prostate cancer. enormous improvements in colon cancer.

those are the four biggest cancers which comprise about 750,000 new -- >> other cancers continue to grow and pop up, not primarily, but in large part because we are larger, because of the obesity epidemic, correct? >> cancer is a disease of growing older. the longer we live, the more likely you are to have dna misrepair, and that's cancer. that's going to be a long-term trend. i'm very excited about what's happening in cancer because in the' 90s we've had a dramatic change with new agents, mostly targeted agents and now we have new small molecules, pills, that are doing the same thing. so, the idea of being -- the old cancer paradigm was cut, burn and poison. we all know about friend of ours that are gone through that. that's changed dramatically. much more efficient, much more elegant. also another big quantum leap is the idea of cancer being a short disease. it's going to be a chronic disease. much as what's happened in hiv

where you give somebody one pill, once a day and they can live for 20 years. cancer will move to a chronic disease. >> what about the quality of life during that chronic -- >> much improved. because of targeting agents, you'll be hitting cancer where it lives. rather than poisoning the whole body where you had this knife-edged approach where had you to poison as much as you were helping. that's changing dramatically. so, i think, though, cancer, where you look at the big number, the pesage, it appears small. you dig down a little below, it's been a massive change. also the quality of life you're giving patients now is vastly improved. >> congressman kennedy, you know firsthand about how difficult it is to have a family member diagnosed with cancer, particularly with brain cancer where they just don't seem to be as many options or as much hope. what do you think you can do to get venture capital and to get private investing that comes into this and how have your efforts been met so far? >> well, really what my father faced when he had cancer was a traumatic brain injury, among

other things. in order to surgeryicly remove the cancer, his brain was injured. now, understanding how to minimize the impact of the swelling on the brain and all of those things is really science that's going to help us advance how we're going to better treat our soldiers when they get a concussion because of the traumatic brain injury serving our country. with we need to do is not look at these things in silos. brain cancer over here, traumatic brain injury over here and so forth. what we need to do is marry the science that's relevant to each of these buckets, so to speak, because it's all research that can inform other areas of disease research. in that way, we have a multiplier effect when we combine the kind of science in one area to accrue to the advantage of another area. that's what we're trying to do, is create new systems to advance the understanding and treatment of these illnesses. >> that makes a huge amount of

sense. doctor, if you had one tool or one advantage or one thing you could change that would help you most in your research, what would it be? >> it always comes down to funding. in this day of fiscal austerity, we need to allow our researchers more money. the current nci budget is $5 billion. as you know, once london trade unwind, that could be $4 billion. it's not enough money for researchers across the country. if we're interested in investing in bioscience, which other countries like israel and singapore are doing, we need to get more money to our researchers. so, that is really the number one -- >> doctor, this is a hard discussion and a hard question for you. my wife's mother died from breast cancer. my best friend, closest to a brother, 37 years old died three years ago died of cancer, left three kids, no life insurance, health insurance. good people at duke took care of him. good people.

shout out to duke. hold on, mr. kennedy, i want to ask the doctor something. how much money is too much versus the amount that we have to invest in ourselves? my point about obesity was, americans largely are now forgetting about treating themselves, taking care of themselves, right, we're getting massively fat as a nation. i don't mean that insultingly to anybody but obesity is linked to cancer in a lot of ways. what point do we put the onus back on the individual? >> well, i think as franklin said, if we cut the death rate by 1%, we save about $500 billion. that money can go right back into the system of research. so, it's a question of investing small amounts of money and getting large return on our investment. so, as a nation, as we hit our fiscal cliff and as we walk the path toward a health care cliff, we need to decide where our money's going to be spent. we are at, like i said before, an inflexion point in that part of our economy. so, i think it's a very good investment.

to take a short -- a small amount of money and get a large return. >> congressman, i'm sorry, your last word on that? >> well, the fact that this is d again get a large return on that. >> this is the best deficit reduction plan that hasn't been considered. the burden of illness of anything from autism to alzheimer's to traumatic brain injury is going to cost our country untold. the fact of the matter is this is a win for our country, it produces jobs if we invest properly and america can once again be a leader as we are now but we're in jeopardy of losing it in the biosciences. i don't think that's an area this country wants to give up. >> gentlemen, we want to thank you all for your time today. important subject. we appreciate it. >> coming up, you know him as an award winning "financial times"

columnist by day but you probably don't know he's a novelist by night. ♪

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john john is now the author of "a fatal debt," his first novel.

i'm not sure it's really a novel. i think there are characters in this book that i think i know. so why don't you take us through real briefly what -- just give as you little bit of the story. this could be a movie this book. >> maybe it will be. as you said, it a psychological thriller. the hero is a psychiatrist as a new york hospital and he's working the emergency department and then one day the guy who walks through the door, is brought through the door, harry shapiro, the chief executive of a failed wall street bank, bank has failed, he's been humiliated on national television. >> is that dick fuld or is that jamie cain? >> there's a lot of examples. >> it's a tease, come on. >> you have to use your imagination a little bit. >> how did you decide to do this? you write about real people

every day. we read your column all the time. >> i thought about it, i hemmed and hawed about it for a long time. i thought maybe i should try it and then it got to the financial crash and i turned around and people like you had taken all the good subjects so i thought, okay, i'll do some fiction. >> would you send that book to some of the people who you know may see themselves in it. >> i have. >> and -- >> one of them is very pleased. >> what about the others? >> there's a mix up of people. >> it felt realistic to me. >> good, good, good. >> that was the scary part. >> i did do a journalist being approach. i did interview people. >> they're playing us out. the book is "a fatal debt." can i call it a beach read? >> you can. o you can kill bugs inside, and keep bugs out. guaranteed.

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slow slow down fears going global. what does it mean for america's economy? we'll get answers from roger altman and jared bernstein. >> when the dream is under threat. the american dream sort of morphed into the american entitlement dream. our fest guest compensation master and former white house ken feinberg with insight on who gets what in an ever changing business world. >> and experts on oil, the dollar and gold all here to help you make smart money. the second hour of "squawk box" starts right now.

♪ but it's all right now >> good morning. welcome to "squawk box." brian sullivan sitting in for joe along with becky quick. joe kernen has the week off. microsoft saying it's disappointed with an eu ruling that left an anti-trust ruling against it in place. microsoft has not said whether it will appeal. we've got bad news in california, morning. stockton, california, set to become the largest american city ever to declare bankruptcy. officials were unable to reach a deal to restructure debt. >> another day at european debt auctions. italy sold six-month debt at an average yield at just under 3%. it's the highest since december. let's take a quick look at

futures. i think we got some green arrows across the board this morning. dow looks like it would open up about 22 points higher, nasdaq up 5 points, s&p 500 also looking green this morning. becky. >> thank you. investors obviously looking ahead to that summit of eu leaders. expectations seem to have ratcheted down over the past few days. >> gentlemen, welcome to both of you. >> hey, becky. >> roger, is this the right way to start out the conversation, looking at what's happening to europe? is that going to dictate markets for who knows how long? >> it's a tug of war between the down beat data on the u.s. economy and overhang of eurozone risk. one moment it's the eurozone

problem which seems to be driving markets and another moment a piece of data will see what the durable goods report is today, which continues to indicate a rather dark u.s. situation. i think the two of them are in effect playing off against each other. >> i tend to think that there is something. you think the u.s. slowdown has to be driven in part by europe? i know it's not everything that's happening in the united states but confidence has to be playing a factor here. >> yes, there's no doubt about it. i spend a lot of my time talking to senior executives and you hear incessant talk about europe and the risk of imimplosion. you also hear a lot of talk about weakness on the u.s. side. this type of situation promotes reluctance to expand, to hire, to invest. there's no doubt that uncertainty is producing some of

the pause in the u.s. economy we're seeing. >> should the u.s. throw more money at the u.s.? >> i think the u.s., central bank, for and the ecb need to do some heavier lifting. i would agree with that. i don't think there's going to be or should be fiscal relief from the u.s. government to europe. that's way off the table. i think europe really needs to stop the kind of fumbling and bumbling we've seen temperature if summit meetings solved this thing, it would be solved a long time ago. as you kind of mentioned in the introduction, a couple days before the meeting, you have angela merkel saying whether it's deposit insurance or any sharing of the debt burden, i read a quote "not while i'm alive." >> another quote germany's economic power is not i fin it and it should be not tested.

>> imagine if the bailout was for mexico? the german political winds push very strongly against but the economic policy is actually quite clear in the other direction. >> roger, it's andrew here. i don't know if you got a chance to read this morning's op-ed in the "new york times," a firebomb by ken griffin of citadel saying to save the euro, leave it. he's recommending germany leave the euro completely on the assumption that the euro would therefore devalue everywhere else and that would actually create an opportunity. he says a weaker euro would encourage greater foreign investment. spain's dispressed real is state market would become more attractive a attractive. your thoughts? >> i know ken. he's a really smart guy but if

germany leaves the euro, that's it. the eurozone breaks up and i think the entire experiment is a failure. so i don't see a scenario myself where germany leaves the euro and the rest of the eurozone remains in tact. i think that's almost impossible. i made add i don't understand mrs. merkel's commences of the last 48 hours. i would have thought she'd be saying if you put in place authentic fiscal union and if you put in place real banking union, then germany will put its balance sheet behind the entire zone because she's been arguing most of the time that you can't -- germany is not going to get ahead of that. instead she's a little -- i don't know, i think a little confused -- >> jared made the point it's politics at home. if your constituent at this doesn't want to hear that and they vote you out as a result -- >> but she's consistently said

let's have more europe, not less europe, unquote. she's always said that. her line of argument most of the time has been we're to the going to expand our support unless there are central controls. now, this draft that draghi and others put forward about 36 hours ago in anticipation of the summit the next few days or the eu meeting the next few days, effectively called for those type of central controls and she rejected it out of hand before the meeting even starts. i don't understand quite why she's doing that. previously she's been saying, as i said, let's have more europe, not less. >> i want to get to a more fundamental question, right? we're a beautiful nation, the united states, and we're a diverse nation. the greatest diversity key wee have in in country to me doesn't compare to the diversity of the people of say athens or berlin or paris. can a united states of europe because that's what we're

talking about, can a u.s. of europe work? fundamentally given the differences. >> i actually think it can but that -- you're exactly right, that's the thing that we're really furthest from. and it funny because we talk so much about -- i thought roger's points were excellent and extremely rational and rationality has kind of left the scene is the problem. you've got cultural differences, which is kind of what you're highlighting here. i think to understand the problem, you have to understand that. from the perspective of ainge la merkel and many of the folks in her being -- it's analogous to having your broke burnt showing up on your doorstep saying i'm broke again, can you bail me out. i talked to a pretty high ranking german official who said

we know what woo have to do but we don't want to have any seeing us doing it. >> i saw headlines earlier today that irish leaders are now saying, wait a second, we want more help, too because even though we're doing everything right, we feel we're getting the short end of the stick. that's where you start to get fraying, undoing the deals that have been done. what do you think has to happen this weekend in order for this to continue? >> well, i'm not optimistic, becky, but i do think they just have to make progress on this very basic point about linking central controls over deficit and debt, which is what people mean when they say fiscal union and central banking supervision and a central mechanism for banking recapitalization, as well as maybe a backup deposit system, which people refer to as banking union, linking those and

making progress on those to what they already have, which is currency union. the real problem here is that they put -- they stretched the single currency over 17 very, very different question kris, financially, competitively, culturally different and they didn't put in place the accompanying mechanisms which i called for and were discussed widely in 1992 in the original treaty. this is the problem, it coming apart because you have such competitive differentiates within the eurozone, huge balance of payments building up and now it's really becoming a part. so unless the politics allow them to make progress on these two basic accompanying union, then i don't think this is going

to hang together but i wouldn't give up yet because everybody knows this. it's one of those situations you see a lot in poll tex. >> what did ben franklin say, we can hang together or we can all hang separately. >> the point we were making, brian was talking about the cultural differences and how here we're somehow more united. >> in it a way, if you ask the to the people of louisiana, to the people texas a a lot of them would say no thanks. it's because we have the political structures in place, it's not a question. >> guys we have to leave it there. thank you very much to joining. we appreciate it. >> sure. >> all right. do you have comments? do you have questions about anything here on squawk that you see? well, e-mail us at

squawk@cnbc.com. and follow us at twitter. what's do you say about the ampersand? i don't know what's next, telekiniesies? >> ken feinberg will join us for the remainder of the show. his thoughts on europe, tort reform, maybe even the race for the white house. that's when "squawk" returns. [ male announcer ] we imagined a vehicle

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our guest host this morning has won many high-profile hats. ken feinberg is the author of a new book "who gets what," fair compensation after tragedy and financial upheaval. thank you for being here this morning. >> good to be here. >> there's about a hundred ways we could go at this. so many issues on the table but i wanted to start with an issue. i was talking to a director, a board member of jpmorgan

yesterday, who said -- i told him you were going to be on the show and he said i would love some free advice from ken because over the summer they're going to have to figure out how to properly claw back money from this whole jpmorgan ina drew situation, should they take money back from jamie dimon. the question was asked so i figured we could start with it's in the news, what would ken feinberg tell them? >> jamie dimon obviously realizes this is a very public claw back. everybody's watching to see what are the implications of this debacle that confronts jpmorgan. so dimon, if i were advising him, he and the board ought to very publicly agree there should be a price to pay for this. >> he was paid $23 million last year. >> i don't know all the circumstances as to that $23 million, cash, stock, present, future, vesting, redeemability.

those are issues people have to work out. you'll see some end case that dimon is walking the plank. >> but you go sizable? should he volunteer? >> volunteer. i don't know sizable. i don't know enough about the culture at morgan, i don't know how they fix pay. it wasn't ever in the -- i'd have to know more about the circumstances. clearly the board and mr. dimon are aware everyone is watching. >> now you're out of the business of monitoring and also setting this way, a, do you look at what happened as a success meaning now people are talking about claw backs but, b, do you also look and say the numgs are still too high? do they make accepts to you? >> it was an success. it was an ongoing program.

there are still companies that have haven't repaid the taxpayers. if mr. geithner said anything, it get that money back to the taxpayers. >> but in a way what you were trying to do was create a model. >> that's right. >> the question is when you look around the industry, thodo you them doing things you want them to be doing, not doing things you want them to be doing? >> i see them doing things two, three years out, things that are tied it the company. you have to look at each company, what's their culture. how they set number. >> what about overall numbers? >> still too high. >> in a capitalistic system people would say if you're worth

the money, you got to pay the money. it's a market. >> i think the problem relates to with these high corporate officials and the rest of america and the rest of the people looking at that very company. >> i'm rolling my eyes a bit, too, because why does everything have to have a renum ra tiff value, mr. feinberg. we are becoming a nation of everything has a number. oh, i slipped and fell outside the grocery store, my knee is worth $150. a woman in new jersey just sued an 11-year-old because she got hit in the face with a thrown baseball. it was a little league game, made a bad throw and sued him.

slip and fall. here's $50. go away. >> the litigation system in this nation, that goes back over 200 years. that's always been the system in this country. yes, you're right, there are examples clearly of excessive litigation and excessive use of the courts and litigiousness. the idea of you give me an example of an 11-year-old with a babe, the iy dethat that is evidence the entire system should be reformed -- >> because i don't have 72 years too dp through every example i could have thrown at you. why not go to a europe system where if you file a lawsuit, you pay the legal bills. rather than just have lawyers who essentially work on commission and contingency because that's what it is. >> can you make that argument. >> could you make that argument?

i don't want to make the argument. who cares what i think. >> that -- >> because people at the bottom levels would never have a chance -- >> you can figure out ways. i'm agreeing with you that there are excesses. by the idea of chol sale, maybe or maybe not, though your job in particular was to take all of those cases out of the courts and try and find a quicker, more expedient way of getting these things resolved. >> we did it and it was successful. we gave out $6.5 billion in 18 months before the first trial was even scheduled to begin. but understand when you set up these programs bp 9/11, bad things happen to good people every day in this country.

you don't have a bp program or 9/11 program for everybody. it raises profound issues as to whether some people get the benefit, others don't get it. >> we're going to slip in a break. i want to talk about lawyer fees. it's a big issue, including how much irvin picard has been making. >> don't go crazy. i have a rolls-royce phantom to support. >> you've got to made. >> when it returns, we'll hit the beach and tell you which ones are the cleanest. >> the people at pimco are really, really happy. >> it's a tease, it's a tease. >> sorry, i'm a newby to tv. >> and how it might just be the next money making tonight for the social network. we'll get to that when "squawk" comes right back.

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which beaches are the clannest? >> you can get the entire list. >> everybody can't be a winner, andrew. your generation got a trophy for everything, right? you're a winner, too, bobby. you're slow and not that bright but here's a trophy. >> we'll take whatever we can get. >> employers across the country facing a talent crunch trying to found skilled workers. it is hurting employees they already have. there's a new survey from career builder finds 30% of employees

can't find kjds for open positions and a third report those vacancies mean overworked staffers. engineering and it and research and development are among the jobs hardest to fill. no surprise. we've heard it from people like michael dell right here. >> do you have comments, do you have questions, do you have something you just want to get off your chest? e-mail us at squawk@cnbc.com or follow us at twitter. >> and coming up, everything you need to know ahead of opening bell. business insider fat. he'll assess facebook's profits.

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welcome back. in just about an hour we'll get the data on durable goods. the mortgage bankers association says average 30-year mortgage rates were virtually unchanged this week. and the national association of realtors are expected to register an increase for the month of may. that number is out at 10:00 eastern. >> brian? >> cnc contributor -- cnbc contributors join us. i made a prediction the euro dollar would end the year about

parity, maybe a little bit higher. am i completely wrong? >> no, you're certainly right on direction. i don't know if we'll get right to parity but i would easily say 115. it's been relatively calm but it does feel like it's a pause before the plunge. china seems to be at an even el, though growing slower. europe, however, is the place where there are still -- there's still a lot of room for a lot of negative developments. >> joe, can you answer the question of why the euro dollar is even where it is? i'm scratching my head thinking major company kmi in recession, we look a lot better proportionally. why isn't the euro at $1, $1.10 already? >> i don't think the market grasps yet that the germans are

going to let this play out. they are not going to go in and rescue the euro zone. they're not going to mutualize or across the eu debt issuance or deposit insurance. they've been committed to the euro and the european project but this one they're going to let play out. spain is paying a high cost but it is able to. and the same with italy. there is still more than a lingering fear of another qe program in the united states by the fed. the latest move for the fed to professional long tore continue operation twist was nothing more it and a significant nat is going to if things get worse, the fed will come again. >> adam, what's the biggest

thing pushing concern right now? which of these is more important? >> certainly the market was all propped up before the fed meeting last week and everyone was looking for some indication for more stimulus. when that didn't come, the bottom really fell out of the oil market. we're being a little bit supported here just because we're a little bit oversold and we're consolidating, but certainly if what joe said is correct and the dollar moves -- or the euro moves down to 115 against the dollar, that is very bearish for oil and that would be something that could certainly have us looking for oil below $70 a barrel. >> scott, is this the pause that refreshes on the stock market? we continue to hear the story when things are settled in europe, equities will take off. who the hell know when is things will be settled in europe. >> rick santelli told us yesterday we're going to be talking europe in two or three years. is that how long this hangs? >> that's a great question. how long can we sit back and

wait to see what happens after saying forget you, forget europe and let's move on and buy equities and go on with our lives here in the united states. >> we can wait as long as we have to. we're going to have to wait a long, long time. there is no imagine bullet the parties are willing to use. given what mrs. merkel said yesterday about "over my dead body" debt ceiling, that was -- >> i disagree with joe a little bit in that some of these things will come to pass, some sort of

deposit insurance. that is completely unequivocal "over my dead body." i don't know how you walk that back. germany loves the economy because it helps germany. they hate debt sharing because that hurt germany. germany's is what's going on here. i also disagree that spain can continue to fund their own debt because they're playing chicken with 7%. >> guy, thank you. anybody that agrees with me is always welcome on this fine show, even though have i no control or say of what comes on this fine show. by the way, america, catch scott every friday on cnbc's options action and catch me at 2:00 p.m. eastern on street seens. >> you got three hours, three hours. >> do you take drugs, andrew?

>> every day. >> good boy. >> i don't even know where that's going. >> the caddy shack reference. up next, getting paid pore your data. can facebook create the first information market? in the next hours of squawk, u.s. deputy treasury secretary will be our guest host along with ken feinberg. they have a lot to talk about this morning. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade.

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>> i >> i always love that term with home builders, deliveries. >> how do you deliver a home? >> here's the keys. >> that's how you do it. >> and your home. i don't know how to segue properly here. can facebook profit by capitalizing on the quote "information market."

joining us is the director at the nyu stern center for economic research and head of information systems at the business school and henry blodget. you have an op-ed in "wired" magazine with the idea of trying to turn facebook into an information market. what's that about? >> it's been monetizing their asset, which is data. facebook knows more than anybody than anyone else. >> so facebook would pay me so an advertiser could reach me? >> potentially. an example, nike wants to reach people over 40 in south africa.

>> okay. >> facebook provides a really easy-to-use platform for doing that, people get compensated for providing information, facebook clears the transaction. >> but how does it work? i'm getting paid. how much am i getting paid? >> it depends on what nike wants to pay you. >> does thisnd t end the advertg market? >> it makes advertising more efficient. there's so much information out there. >> i'd be giving away a lot of information for this money. >> you'd be giving away information that you're willing to give. you're willing to tell people you're interested in mortgage refinancing or in gucci handbags or whatever. you're basically indicated what you're interested in or facebook can infer that interest. >> how crazy is this idea? >> it sounds like a big new business opportunity they could possibly go into and a lot of

the people who ont stock are betting they're going to settle into something like that. >> sounds like google. >> what i would say is google already has that. >> if i search for size 17 clown shoes, they know. it's magical. >> but they're not paying you for the -- this is actually -- >> they get it for free. >> but this is providing a market, you're actually making money on this. >> the difference is they're not paying you for it so the market remains inefficient. the problem is advertisers don't know enough about people they're trying to reach. >> you've called facebook muppet bait. >> it was muppet bait. >> we had a number of analysts couple out this morning. >> jpm overweighted 45. >> where's henry blodgeblodget?

>> i think it's very healthy everyone has different popinion here. usually everyone's in a herd. >> choose a side, my friend. >> it's a great company. it's still expensive at 33. >> if you were putting a target on it, this could be a nice grower. i think the stock is probably in a multi-year peer like google started in 2007 where we're having multiple compression, which is it just goes up and down -- did the iphone do to -- >> surprisingly it did hurt. >> gm -- i think you guys wrote about it on "business insider" -- i'm a big fan, by the way. good work there. when it came out, it came out during "street signs," boy, this is a big story.

>> two days before the ipo having a huge advertiser come out and say we're just stopping because they don't work, you couldn't have a worse outcome. >> what's their click rate? and they're probably half drunken mouse overs. >> they probably are. the early feedback on the mobile product is good. anecdotally. people like that. >> i have a question for the professor. what do you do with the people in south africa in your example who don't want anything to do with this? they don't want to be notified, they don't want nike to contact them and pretty soon we have a lawsuit with jim helping them. >> well, they can choose not to participate, right? this is for people who want to participate, who want to get paid for providing information. >> the question is what about the objective audience that nike's trying to reach? what do you do with all of those people who threaten and say i want nothing to do with this?

my chommitment to facebook is a a social tool. >> but once you sign up, you are sign away your rights. you don't read the 52-page disclaimer -- >> you're going to get hired for some big suit that's in all the privacy concern zplps i'm not even on facebook. >> before we go, cheryl sandberg joining the board of air force base. >> very good. >> does it mean she's not leaving? >> all the chatter and speculation, she couldnd up in washington, might be the treasury or commerce secretary. >> i think she could be president. >> oh, for the united states. >> absolutely. she's that impressive. >> should have happened long ago. >> should they buy pinterest? >> they could. >> i could go out and buy a candy bar.

doesn't mean i should. >> they'll know if users are defecting. >> so noncommittal. >> up next, we're going to ask the question is best buy going private? this is the one time daryl of -- >> and then the secret of sonic's success revealed. squawk will be right back. >> so many on "squawk box," squawk has you covered. and top health care analysts. plus mitt romney's top health care adviser. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. accolade overdrive.

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there's word that best buy's founder is taking the company private. anthony, any chance this goes anywhere? >> i think the probability of this happening is very, very slim.

i want to be the starting point guard of the knicks but i don't think that's going to happen. you're talking about a very large transaction, probably about $11 billion or so that would require 3d to $4 billion ek wirkts $7 billion or $8 billion of debt, and that's going to be very difficult to do given the current market conditions. >> so the stock is trading at 19.20. where do you think it will or should go? let's put this on the side, then. >> well, you know, i have a hold rating on the stock right now. i really want to see who the company hires to be the new ceo and what his or her turn around plan is. i'm not one of these, you know, doomsdayers saying the company will go out of business. i think that's highly unlikely given their strong cash flow but i need to see what the turn around plan is going to be and what they're going to do to

get -- >> you just described request they might be a great candidate that could be leveraged up, no? >> a big part of the reason the company is in the state they're in is because of schultz. if you're a private equity firm, you'd be very wary of getting into bed with him. in addition, you'd have to raise $7 billion to $8 billion of debt. >> anthony, we have to run. but real quick, does anybody else show up to the dance? >> i do not believe so. there's no likely strategic buyer. >> no circuit city bid coming? that was a joke. >> anthony, thanks for your perspective. >> no problem. >> andrew started off asking you about jamie die monday and jpmorgan and potential for claw backs. we've gotten e-mails saying if

there's a claw back for jamie dimon, shouldn't he get a bonus every time the company makes a $2 billion profit and what about claw backs for freddie, fannie, solyndra. obviously people are saying this tongue in cheek for some of these thing bugs it's a fair point. >> it is a fair point. the problem with claw backs is always going to be you're asking people to give money back. it's one thing to condition pay and condition pay on performance and the success of the company you work for. you start demanding that people who have received that check and give it back and you get into litigation problems, you get into problems of morale within the condition and you get into a whole set of political and expersonal problems. it's easy to talk about claw back but i found in my days of treasury actually implementing policy raises all sorts of obstacles and challenges. >> it's also just in terms of

trying to figure out where you set the limits, where you settle challenges. when you look at claw backs, how big was the loss, whose fault was it -- >> you're right. you start second guessing too often. if if you make this move, we want it back. if you make this move, you jump ahead. that chills corp prats exkifs also. they don't know what the leveling play field? do i want to actually add minute stefr my role. the claw back with can be a real chill on innovation. so it's got to be i think a sparingly used. everybody talks about it. >> it makes sense to me when a company goes out of business, when the bank is run into the ground and needs taxpayers to come in. but pore a business that is viable that is going to have swings where they have profits, losses, mistakes, great things that happen, i almost think that needs to be be left alone. >> that may be right.

the other thing is if you remember, if you try to claw back as a business executive who left the company, i i found this with an ig. why should no one who is no longer working at ai kb -- >> if you made a trade five years ago that turned awful and you got paid big time for it five years ago, you think you should hold on to that money? >> no. >> i think beck''s -- if it was five years ago, the money's trade and, we're going to go two years on this. >> it's a lot easier if the company that is still there. >> is there a company that does it well, that you've looked at and said i really like what they're doing? >> no, no. >> nothing? there's not anybody out there? >> no. hi a very limited role remember.

i'm only dealing with seven companies. >> forget about the seven companies. you get called by all sorts of people on all sorts of things -- >> no, no. the answer is no. and i deify a company around the table that is part of its pay culture -- comcast is a hell of a corporation. i'm just throwing it out there. has the whole issue of fairness gotten completely out of whack? i've got an kid and every's not fair. people lost values on their homes, they paid 12 times their income on a house in phoenix, now it's worth 12 times and they're getting income on people who didn't pay every month. >> has fair gone overboard? america was not based on the premise of fair. it was based on effort, winners,

losers. >> in every one of these programs that i've been involved in over the years, nobody who received compensation ever thought it was fair in light of the horror that they confronted, either death or injury. fear doesn't even enter into it. >> those are your special situations obviously. we got to go. >> we'll kin this conversation and have more with our guest host and sonic's success. we'll speak about what's next for the restaurant today. and dad, i think he's dead. probably just playin' possum. sfx: possum hisses there he is. there's an easier way to save.

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. living will. the nations biggest banks crafting what to do in the worst case scenario. we're crunching the numbers with the best minds in the business and asking where the sector is headed. >> plus breaking economic data. durable goods numbers out at 8:30 a.m. eastern. the third hour of "squawk box" starts right now. ♪ ♪

welcome back to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin. joe kernen is on vacation this week. >> let's take a quick look at u.s. equity futures, which are higher this morning. the dow futures are up 33 points above fair value, after modest gains yesterday, which a lot of people will take as a big win since there were all these questions about what was happening in europe. those headlines are continuing today. european leaders preparing for the highly anticipated summit today. this morning angela merkel warning there will be no quick or easy solutions to the crisis.

that is stating the obvious. she's out there trying to talk ahead of this and draw her lines in the sand. she's calling on leaders to avoid making rash promises. meantime, sprain's prime minister said he will ask leaders to use existing -- he warns spain will not be able to continue financing itself at current yields for a very long period of time. we know that's been a problem. he has been trying to step up pressure on other leaders. if you've been watching the european markets this morning, you'll see at this point at least there are modest gain there is as well. the ftse 100 is up by 37 points, in france the market up by 20 points, in germany the dax is up by 31 points. also microsoft losing a legal appeal in europe. the court did reduce fines

slightly today to 860 million euros from 899 million. >> and reasofinances applicatio slowed down in june. >> and the pole shows president obama ahead of mitt romney but note the difference in the margin of error. >> our next guest believes a number of firms are positioned for a significant return on capital over the next few quarters. it's a bit of a surprising turn. i said i was putting this idea of the mixed at best politely. there's a lot of people who

believe the banking sector is not coming back any time soon. why are you so convinced and which companies are you looking at? >> sure. when you look at the return the capital, a lot of banks go through the stress test. when they had the stress test in the spring, many of them raised difficult depends and increased buybacks. the industry will give back more capital in the next 12 to 24 months. comerica is an experience. >> when did you think the buyback is coming back and how much do you think it's going to be? >> i think they'll stick with the same numbers they were approved for. that's upwards of $10 billion for the buyback in the second of this year and it depend hon how successfully they ring fence this problem. >> what do you think about the stock price sfs. >> we think they're very

attractive. when you look at the outlook towards credit, it's very positive. secondly, the banking system is the best capitalized it's been in over 50 years. the industry is very healthy here in the united states. >> if this business is supposed to get boring and you a these companies are going to become ults, there's what would make you change your view? >> what would change or view is if we go into a recession. as you've seen in the past, credit problems rise in a recession and that destroys earnings. we have major head winds and europe, i agree with you there but when you look at the fund als of the industry, they're quite strong with the impression of the margin pressure, which will intensify over months. >> consumer credit key manned is seen as an indicator?

any sign the u.s. is either starting to grow faster or slipping back? >> on the consumer side it's decidedly mixed. home equity loans during the 2000 and 2009 time period grew like a rocket ship. they're still contracting. auto loans are squiet strong, student loans are also strong. t the. >> moody's. do you have good or bad news for them? >> i would say capital market activities this quarter are slower and therefore their comparisons to the first quarter will be challenging not just for morgan stanley but all the capital market players and it will be challenging to last year's second quarter. we expect slowdowns. >> and the big money bank cba?

>> okay. great to get your view this morning gerard cassidy. >> i'm a virginia tech hokie. the work you did is in my heart. the hokie nation came back stronger. how do you value a life? >> this is a big problem in trying to explain to people. >> impossible might be the word. >> well, in the programs i'm involved in, i'm really following the way courts in every city, village in this country have valued lives, economic loss, what would the victim have earned over a lifetime, pain and suffering, emotional distress. i try and implement exactly what judges and juries do every day in this country everywhere.

but the recipient of the compensation they see it as the moral integrity of the lost loved one. she was an angel or he was fabulous or he loved his children, he was a great member of the community. and when you try and explain to people, i can't, i'm not a priest or a rabbi, i can't -- i'm not solomon. i can't value moral integrity. all i can do -- >> would you if you could? >> no. >> should you? >> no, you should not. who can do that? i'd rather do what a judge and jury do. how old was the person? what was she making? over how long would she is worked? there's all sorts of statistics. you try and make it more of an objective calculation. but i must say you can't convince people in grief that that's what you're trying to do. and everybody also, you know this, everybody counts other

people's money. so if you give $1 to a or mrs. smith and mrs. smith knows that mrs. jones across the street got double that, mrs. smith is not happy and that fuels the very divisive -- >> it's the idea of fairness that i asked you earlier about, mr. feinberg. >> that's right. in bp of course, there were hundreds of thousands of people who didn't provide any documentation. we do things with a handsha handshakedohandshak handshake down here in the gulf and you ought to pay me on that handshake. >> we have a little bit of breaking news. the cftc and barclays, they are

settling this libor issue. >> it's not a day until you talk about the london interbank offered rate, is it? >> no but it's an interesting case. >> did i even get that correct? >> it's an interesting case. we should get to it. >> maybe the attorney and settler of all disputes -- >> have you ever probed libor? >> no. >> there's a probe into allegations that some of the bank employees manipulated the london interbank lending rate. it was what we used to dictate in 2008, 2009. now we look at what's happening with the ten-year note and spain and france and germany. this is what we used to look at every morning when you first

came in. the idea can you manipulate this and set unease into the market is a pretty huge issue. >> we're going to have people on at 8:30 to talk about it. >>ism should feel bad about my libor sarcasm. i just can't deal with it. if you say basis point, i might go crazy. >>. >> the chairman and ceo of sonic is here with first quench erz to help the. >> before he joined the treasury department, he was the chief operating officer at harvard financial services group.

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we've got breaking news out a few moments ago. the cftc is expected to settle

libel related probes with barclays. libor is a key measure of trading activity. there's something like $370 trillion in derivatives that are priced off of this and it was the number we were watching every single day. traders have been watching very closely. >> the penalty expected to levy a $200 million penalty. that's not nothing. >> the allegations relate back to some bank ploupies -- employees manipulating the banking rate. brian? >> the drive-in restaurant operator sonic is gearing up for a strong summer eating season. there's summer driving season, now there's summer eating season.

sonic's chairman and ceo joins us now. why should i go to sonic instead of one of your checkers, mcdodged's, and wendy's? >> there are a lot of choices out there and it get more complex all the time. it's fair to say we're a differentiated product, personalized service brought to you by a car hop. a very different experience and products vars much of our competition. i think you'd have a different and better experience coming to sonic. >> you maybe more money than your competitors off shakes than you do sales. is that a good thing? >> it's a good thing. this is the cherry limeaid. >> i love the cherry limeaid. >> we're in new jersey.

so your questions about our sales, we get almost 30% of our sales from drinks and 40% from drinks and ice cream. this is again from a -- there's more profit than this than in -- >> there's far more profit in drinks than there is in food. we like to say anything you mix with air or water is going to have better margins. >> what's the r&d budget. how do you decide what will be made to the consumer? >> all of our additives -- the customers drives that. since we have 338 possibilities for drunks but the question creates that decision and creates it every time they come online. so we really don't mack that decision. this again is a key point of differentiation.

>> i was joking about the 16 ounces before. you don't have any stores in manhattan, i assume. >> no. it's a drive-in concept. >> it could be. it's possible -- >> no, i sip it. it's pretty good. i haven't had soda in ten years that's not missed with something. >> are you worried mayor bloomberg's edict will go somewhere -- >> this should be a 20 ounce. the concern about the path this takes from our standpoint, it's the customer that drives this the customer decides that rather than -- >> have you been shrinking in size? in terms of drinks and things? >> well, the primary thing we've done along those lines is we

have offered a smaller ice cream size. we have a mini, as we call, it that's a 10 ounce. >> doesn't burger king do a bacon -- a sundae in the bacon? >> i had that. how much does it cost to open a franchise. >> all of our developers agreed to sign a franchise uniform. >> the reason i ask is this -- let's say i was rich and successful like mr. feinberg and andrew, what's a better investment? should i start a sonic franchise or buy your stock? >> that's an interesting question. >> ooh, i like that. >> if you don't have an operating partner or don't have the back operating background.

earned if you have an. >> is there a part of the country where you're more concentrated? >> yeah, we're in the south central united states primarily. >> but you're spreading. there's one here in new jersey, not far away. >> there's been 20 in new jersey. >> but one not far from here. >> and one in we do businesses in all three states -- about 12 states that count for 60, of 65% of our sales. we been rofding. >> is there a raycroft type person that thought this up

years ago? >> there's a fella named joe smith. he began our concept in the 50s. it was originally called top hat. in '59 they changed it so sonic. dry got a lot of people into our business very successfully and unfortunately passed away a year and a half ago. >> cliff, thank you very much. and thanks for the drinks. the cherry lime -- >> >> now iment become an adakt again. >> cliff, hank you. >> way the way, the. >> also still to come on

"squawk" this morning, more on the cft. and we have neal wolin weighing in on the u.s. economy and recovery. stick around. know, for whoevere that day. it's just another way you'll be traveling at the speed of hertz. this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com.

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news. the cftc to set al libel related probably with barclays. eamon joins us. >> we don't know about this but we'll be told at 8:30. we're told about a london involvement also involving the u.s. department of justice. sources saying this settlement to total in the hundreds of million dollar -- obviously the libel rate was a key one in bankers were manipulating it for their own profit. that is the question at the heart of this investigation. we'll get more information just about four minutes ago. we're told to expect an announcement of a settlement of

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welcome back to "squawk box," everyone. we're just about a minute away from the durable goods numbers for may. we've seen a bit of an economic downturn. every number that we go to at this point is something that's being watched very, very closely. let's look at where the futures stand ahead of this number. this morning there are green arrows and it comes actually if you're looking at where futures stand versus the fair value, you're looking at the market to open slightly higher at this point. right now up by about 24 points. that's where the dow is indicated to open if it were indicated to open now. the big questions weighing on everyone are what happens in europe over the nest few days, thursday, friday and into this weekend with the summit. the european leaders are meeting

there. also what's happening in the economy, questions with japan, china and europe and numbers he were in the united states. this is why this willin watched close closely? up 1.1 on may durable goods orders. let's go down and start subtracting. if you look at capital orders, these are orders, not shipments, nondefense x aircraft, it was up 1.6, way better than last quarter, down 1.4. but still a bit less than the 2% we were looking for. if we ship from orders to sh shipmen shipments, 0.4%.

we've seen the markets have rallied on futures. s&p has a couple of points but of course the big opening will really dictate at 9:30 and. in two straight not much different than yesterday, had ever-erringthe -- i think most people really know what to look for come monday. it seems like everybody is keeping pretty mum about that. back to you. >> thanks, rick. we got that breaking news. it is now official. the cftc announcing a settlement of the libel related probe with barclays. brian sullivan crunching quick

numbers. they're projected to make $4.3 net billion, what are we saying, 5% less? o i don't want barlt chilton on. >> the nation's biggest banks are putting limits on living wills. these are all part of dodd-frank requirements. neal wolin, thank you for coming in today. >> good to be here, becky. >> we look at everything that's happened with jpmorgan and use that as the lens to say what should we do differently, what does this teach us we need to know for dodd-frank? what lessons have you learned from this with what you'd like to do? >> it reminds us we had a financial system that wasn't

properly supervised and regulated. i think it underscores the need for to us go forward in implementing that statute and making sure we have appropriate capital levels to provide the right cushioning in these large financial institutions but also we get on with the business of making sure drif tips were well regulated, good orderly resolution mechanism, that consumer protection is did you that -- every day there's someone who comes on our show and says too big to fail is alive and well and it even bigger and it's worse than before. >> the statute says the taxpayers cannot longer bail out these big firms. >> but they're bigger now.

so if you didn't let them fail before, the top four banks hold more percentage of assets than they did prior to failing or being bailed out. so if they were too big to fail then, how could you possibly let them fail now? >> well, look, i think the whole point of these living wills and a number of other things the dodd-frank statute put in place to make sure there are processes to allow these firms to be unwound, to make sure the creditors is eye iish -- issue. if they fail, see they could fail and it wouldn't cost the taxpayers any money. it is less clear to me they will be failing in isolation so these

living wills which may make sense independently, how do you feel about that? >> dodd-frank calls for providing a buffer. we do have a system where things are much stronger. >> if we get to that point of failure, do you believe the living will means the fax put -- it is important when dhees firs first. >> when jamie dimon says in front of congress as he did twice in the past month that if we fail, we should go bankrupt weeshs should lose our job, put a stake in the ground, the name should go out of business and that somehow it would never touch the taxpayer. do you believe that?

>> i believe we're in a much better place when one fails, the other as you expects in. >> in that -- >> there are plenty of opportunities for firms to stub their toe. >> i'm asked all the time about executive pay. i point out in the chapter that what i did at your urging, it was all your idea, but what i did really was a thimble, there were only 1 5 people. when people say today, how are we at least monitoring the whole subject of second pay? i like to say "look to wolin," dad fraen, what's your response

to at least how the goff should be monitoring what they're doing. >> increase transparency so everyone can see, how pay and risk are meant to be disentangled from one another. the regulators have put out proposed rules of making sure the construction of comp and the way that compensation works is let and then thirdly at a global level, there a lot of of thes globally to make sure what's happening here in the suns consistent with how executive comp issues are treated the world over. >> andrew asked me a half hour ago claw backs. i said in my experience it's easy to talk about claw backs but clawing back money once it's already been transferred, in

theory, practice. we're going sto see -- there ar two aspects. they will be given different incentive structures if that's not the case and it will be important for shareholders and regulators to hold management accountable. >> i don't want to terrify everybody but the top four banks here, as i addressed before, their total assets are about 60% of us-gdp. in spaen the biggest three or four banks are more than double spain's gdp. i wrote this about a month and a half ago. if our banks are too big to fail, what does that make banks that are combined double the 14th largest economy in the world, how big of a threat is europe and spain in particular? >> well, let me just say first

of all our banks are not too big to fail. that's something not only that we believe but the law takes. they have important banking challenges they're working lieu right now. >> how much do you worry about it, though? when you go into your meetings every day, is it oh, my good, look as this. >> it is a substantial concern and we are very much engaged with saying a lot attention to. they need to make progress. >> do you think you know but about the counter parties compared to what we understand about counterparty and kaunter in 2008. it think the banks thech sefs are missing. >> what did you like various

difficult trifs markets. he -- i think saturday amount of interaction that we'd about european banks and so forth and our financial exmeasure and the europeans themselves have sucked into these cross borders in a very substantial way. >> we're connected to europe and the rest of the globe. this weekend is another point where everybody says, okay, what happens monday morning when we come out of this? we've heard a lot of talk back and forth both from germany, from italy and from spain, everybody is trying to set their negotiation points right now. what's best for the united states of america? what type of solution would you like to see talked about? does that have to happen

eventual? >> they need to make further progress on their broader sense of governance, the european union fiscally and make progress on the issues confronting them now with regard to bank stability and recapitalization. there are lots of ideas on the table, very heads of state and finance minister have been negotiating bothprivate and public. i think from our perspective, we're going to stay engaged with them weeks continue to give them advice, experience from our own circumstance. we can't want this more than they do. though it's very important for us and the global economy, they're going to have to work

this thing. >> i guess tough to have a lot of say in what they're doing when we're not putting money on the table for this, too. >> the fed has opened up swap lines, which has been an pore pace and its potential involvement in you're put on. >> but the administration has been critty clear they're not up for writing more checks, this is a problem that has to be solved in europe. >> the europeans have the capacity. the imf when it's appropriate to play their part is we well capitalized and will play a role, absolutely. >> was barclays and i lating the market? are you worried other banks are doing the same thing? >> i learned about it more or less when you learned about it. i think it's important to say

they should be appropriately funded. when they aren't funded appropriately, there aren't enough people the deputy treasury secretary. thirst, we thank you very much for joining us this morning. >> and our guest host, it's been a pleasure having you here. >> the book, it was one of my favorite books. >> interesting stuff. >> we appreciate your time. we hope to see you back here, both of you. >>. >> okay. >> coming up bart chilton will join us on that cnb 5, and a lot more coming up. and two pills. afternoon's overhaul starts with more pain. more pills. triple checking hydraulics. the evening brings more pain. so, back to more pills.

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eamon joins us now with more on this hour's breaking news story. >> this conference call at the cftc is still ongoing, officials briefing us on the barclays settlement. they are extracting a $200 million penalty.

they say that there were multiple traders on several desks involved in this misconduct. in new york, london and tokyo. the department of justice also it looks like he announcing a separate $160 million fine. we're working together all these details and will have them for you when we get them. >> joining us is bart chilton, one of the commissioners of the cftc. >> good to be with us guys. >> walk us through the settlement, some of the details and how we got here. >> sure. in total barclays is settling, andrew, for a cool $454 million total. >> that's much higher than the $200 million we've seen. >> that involves $160 from doj and the uk's financial service authority another $94 million. so 4 54 in total.

i say a cool 454 but they're settling it for some very uncool things that they did in trying to manipulate these libor rates. as you all know and a lot of people know, these libor rates impact the credit rates, the interest rates, that people pay for everything, individuals and businesses. whether or not it's mortgages or credit cards or car loans or even student loans. it's hugely important. >> lessons learned. how did it happen and can it happen again? >> well, how it happened is that these guys -- they're supposed to -- the libor rate is supposed to be fixed or set based upon what they call an olympic average. that's 16 banks all submit their different rates of what they believe borrowing should be, what the cost of borrowing is for them. instead of that the barclays

submitters submitted what the trading desk wanted them to do. when i start to see some of the e-mails that we've uncovered, it's pretty amazing. these guys were barking orders to the submitters like -- >> wait, a second. you said an olympic average. in the olympics, you throw out the high score and low score. >> sometimes they were thrown out. 16 are submitted, the four at the top of thrown out and the four at the bottom and they take the mean of those in the middle. what they were doing is say i need this and the submitters would say "i got you, big boy." >> so why wouldn't it get thrown out as the high or throw there? >> sometimes they were thrown

out. >> the question -- you want to get ahead of these differently? >> in adoidition to the civil monetary penalties, we are requiring additional supervision, third-party audits and then reports to us about what they're doing. i mean, we are going to be on these guys like white on rice. i think it raises a bigger issue and you have been talking about it this morning but you talked about it a bunch and that's the role of mega banks in general. are they doing things that need to be slowed down, volcker or other things. >> how comfortable and confident should i feel about what i'm paying for my interest rates now for whether it been a credit card, whether it be a mortgage? i mean, as a consumer, should you feel safe that the system can't be tampered with? >> our settlement for attempted

manipulation. we didn't say they did it. people can take comfort regulators are on the job here and our guys worked on this and done a super job and commend them for it. >> where does the money go? what happens to the $200 million? >> goes to the treasury. >> general purpose fund for the u.s. basically. >> right, right. >> we'll leave it there. thank you for coming on. >> sure. when we come back, carl quintanilla with an exclusive interview. fix it or find a new job, all right?

i got it, i'm sorry. these people, huh? you know i've found that anger is the enemy of instruction. you don't know the egos that i have to deal with. you're probably right. thank you! whoever you are. i'm pretty sure that was phil jackson. he's quite famous... million championships... triangle offense innovator... [ male announcer ] the audi a8. named best large luxury sedan. nice wheels zen master. thank you...todd. ♪ in here, every powerful collaboration is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t. with new ways to work together, business works better.

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excitingve an we have an exciting show coming up. carl is in chicago. he has outgoing mcdonald's ceo jim skimmer later this morning. this is something we cannot wait to hear more about. >> yeah. we love coming to chicago, becky. it is an amazingly beautiful morning. we are here at the rock & roll mcdonald's, one of the biggest and busiest in the world. the reason we're coming is because this weekend jim skip who are's whose amazing reign as ceo end comes this weekend.

over his ten you, the stock tripled. the best performing dow stock for a couple of years running and this year it's the worst performing dow stock. worries about europe and the u.s. consumers, the questions how do you feel about what you've built over your time here and what kind of condition is the company going in to in the years ahead? what kind of challenges business your successor get? we'll talk about that, commodity costs, olympics, facebook, a lot. we don't do it for everybody but jim's special to the show and hoping because it's the last interview, maybe we get more from him than we usually do leaving his office. >> i'm betting you are going to. mcdonald's or the numbers, carl, we watch them in the morning because it's a real sense of how consumers feel in the united states and the globe. very good indication over the last several years of tough times and come out of them

economically. mcdonald's has to be seen one of the key measures for getting a read on how people are feeling. >> yeah. it's interesting. you know, historically, beck, gdp in europe and same store sales in europe have not corelated well. now we are seeing germany was in decline last month, france was in decline. those are big questions, especially trying to revalue their menu, make things less expensive and drives traffic but it might cut back on overall spending. jim's always a good sport. we'll that you can to him in the 10:00 a.m. hour and build up to it with kramer and the guys. >> it's brian. do they feel the cinna-burger is a threat? is that a threat? will that put mcdonald's out of business? >> that is not -- i don't thi

think -- that came up on the call last quarter. burger king makes a push in china. so yeah, competitive pressures might be part of the story secretary of defense. >> we'll see you. n that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.

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