♪ good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and scott wapner. joe will be back from vacation on monday. we have a lot happening on this tri-morning. let's bring you up to speed. there's a global market rally taking place because of all what's happening in europe. eurozone leaders set to take emergency action to bring down borrowing costs for spain and italy. they agreed rescue finds can be used to stabilize bond markets without forcing countries to adopt extra austerity measures or economic reform. this is not something that was anticipated given all the tough talk out of germany. negotiations in brussels resulted in that agreement to create a single supervisory body. this is the first step. we'll have more from london in just a moment. let's take a look at the market

response so far. the major european markets are in the green. euro has been bouncing back after trading below 1.25 for five days. bouncing back up to 1.2574. all of this coming as a surprise again because of what we've been hearing out of germany to this point. you can see the dow futures are up about 120 points above fair value. s&p futures up by 16 points. looks like we're going to have a strong last day of the quarter at least if things last like this through the trading day. let's get more on this morning's top corporate story. >> uk banks facing a new scandal. britain's financial services authority announcing it's found evidence that banks missold products to protect small business in a rise gints rates. bar clarks h-- barclays, hbsc,

lloyd's and rbs. the uk's "times" newspaper reports rbs is set to be find $233 million for participating in market manipulation offenses. u.s. judge is ordering barclays and the department of justice to explain if the bank's $453 libor settlement deal affects a separate 2010 settlement. that want case involved alleged illegal dealings with banks in countries like iran and cuba and $290 million settlement by barclays over claims i want violated u.s. trade sanctions. >> how difficult was to it read through that? >> by the way, he's talking about the judge, having to make decisions about libor. >> the irony was not loss. >> we'll get scott's views. maybe you can make a ruling on

the bench on this wholly bore situation. let's get you some of the news this morning. it's official. we talked about it earlier this week. anheuser busch is buying inbev. it's valued at $20.1 billion. also in the news today perfume maker coty is trying to raise $1 billion valuing the company at more than $7 billion. they dropped their attempt to acquire avon. nasdaq may be required to upgrade its trading systems after the now infamous facebook glitches. the sec is deciding whether to demand that they change completely and revamp process in that ipo and other ipos. yet to decide whether to take

any enforcement action against the company. >> we have a few early stocks. shares of research in motion hit very hard in the after hours trading. the company post ad much bigger than expected loss. we knew things were bad. this caught the street by surprise. >> we knew this was the end. >> down 15% was the market reaction. rimm delaying the make-or-break launch ever its next generation blackberry phones until next year. we'll take to an analyst who covers the company at 6:20 eastern time. "journal" laid that out. >> the whole thing is so sad to me. we all love our blackberries. we do. i have an affair with my blackberry. >> i sleep with mine. >> die before we broke up. >> yeah? how was the split? >> split has been great.

yeah. just deal. look, i tried, i tried, i really did. i loved my blackberry, i tried to get a new one and i had a new one but it had some glitches. i got rid of it. i got a new one that one had glitches too. >> i'll be the last person in america holding on the thing. >> the sad part is that they can't somehow translate all that love into some kind of revenue and some kind of new technology. but anyway -- >> let's take a look at nike shares. falling too. this is the first time in two years that nike missed the quarterly profit estimates. higher spending and increase cost in materials that were used in shoes and t-shirts compressed the margins. you also had demand that eased international markets and i want kicks off a question about what's happening in europe. we'll start hearing earnings from a lot of companies and the question is how bad things have

got enthere. ford is saying its second quarter losses from operations outside of north america could triple the $190 million it posted in the first quarter. the auditorium is expect took profitable in the second quarter driven by strong profits. questions about what's happening in europe and this is going to be something that we see in just about every company. phil lebeau will be joining us later with more. >> coty, their filing has crossed, they are looking for $700 million. that's what this ipo is valued at today. you never know. the symbol coty. >> where are they going to list? >> good question. give me a minute. >> nasdaq board. >> nasdaq or nyse. >> there you go. >> i ask that question. >> post-facebook what do you do? >> that's why i ask it in the same day you're reading the sec

made some demands to the changes of nasdaq's trading system given the glitches we saw over the facebook ipo. the ceo will claim that as a victory and that battle with the nyse goes on. >> coty is not so cool. >> would you have thought thkra would have left the new york stock exchange for the nasdaq? i should check the markets is that what you're saying? >> the markets are going crazy? >> yes. as becky mentioned the futures at the top of the show take a look here. looks like we'll have a big open today off of that news coming out of the eu summit. there's sorkin's fair value board. it looks pretty good. we're looking at a gain of 122 points off the pop. crude oil as well, both gold and crude oil shooting higher today.

there's a look at the commodity space, heating oil is higher, gasoline moving higher as well. ten year treasuries you would bet yields would be rising across the board. in fact that's the case now as treasuries are falling. take a look what the dollar is doing. euro made the biggest jump on the optimism coming out. euro/dollar 1.257. and you'll see a similar pattern in the commodity space as commodities are doing quite well. gold among them one and one-third percent. >> let's go across the pond. kelly evans is standing by. becky just walked us through south good news that's coming across. you have a lot of green arrows behind you. are we there? is this the moment? is there going another moment late center >> andrew the question really

seems to be not so much is this end of europe's debt crisis but is at any time beginning of the end. markets while broadly positive are still trying network through that question and figure out what it means. we have a 9-1 advancers out pacing decliners. there's only a dozen stocks that are negative. up 1.5% across the board. as we take a closer look at the european index we pulled off from the highs. that's true in spain. ibex 35 is up 2.5%. up nearly 4%, in the range of 3.8%. it's been lower now so we moved off this and lows. the ftse up 2.85%. dax in germany better than 2%. ftse 100 up 1. i 3%. we're seeing anywhere from sort

of a 3% to 6% move. some of the stronger performers are in the hard hit sectors. bbva here in spain up better than 4%. let's look at bonds. this is a reason to temper your optimism, curb your enthusiasm. italy is back below 6%. we were back above 6% early they are morning. why? because people are starting to question whether we really have significant progress towards solving some of europe's longer term problems not beaten expectations for tractor-trailer 19th summit heading in to this weekend. spain here 6.624%. that's not sustainable in the long term. france at 2.7%. ten year german bund at 1.617%. if we can give another quick look at the euro/dollar. we saw a strong move there.

but we pulled back a little bit again. we're more than 1%, 1.2575. and the lift that the euro is gets on the back of this news comes against the move at the same time people are pricing in for the european central bank to cut rates by a quarter of a percent at its meeting next week. those two things are fight each other for the time being. we got comments from angela merkel, further comments today trying to, to toughen up perhaps some of the requirements moving forward. there's some people calling this back door euro bond but people just like with the supreme court ruling if you want to liken it, think about it that way, as we go through what we have and haven't heard out of europe, and we'll hear at about noon it will affect trading of markets. too soon to declare an to end this one just yet. >> kelly, thank you for bringing us up to speed. kelly just mentioned the supreme court ruling. president obama claiming victory with the health care mandate

being up held by the court's highest court. joining us is the senator from delaware. senator this morning we're trying to figure out what this all means. businesses or some business lobbying groups immediately responded yesterday that this is bad news for its members, the national retail federation, the national federation of independent businesses are particularly concerned about what it may mean for smaller businesses too and i guess my question to you is what can be done relief some of those concerns? >> well, becky, that really is good news that you opened this segment with from europe. it's encouraging to hear the eurozone crisis may be lessening a little bit. similarly the affordable care act decision upholding its constitutionality by the supreme court yesterday ought to show a path forward fours. republicans and democrats and the house and senate i think, our challenge is to come together and find ways to responsibly implement the

affordable care act more fully taking into account of small businesses who don't understand the costs for them. as someone who worked in the private-sector before going into public service i understand the difficulties that annual double digit year-over-year increases in health care care costs impose on small businesses and i'm hopeful and confident that the affordable care act will reduce costs for health care and make sure millions of americans have access to better health care. i think the decision yesterday is a win for americans and working families and businesses. >> senator, let me start on a couple of points. the difficulties for small business you're right some of them don't understand what this will mean but others do understand what it will mean. npr had a report this morning where they spoke with a printing company that has 48 employees down in morristown, new jersey and the owner there said he's very concerned because if he crosses that tlesh hold of 50 people that it's going mean he's

man dated to offer full health care for all of his employees so he says going forward he'll be very cautious and going to make sure he's not hiring above that. obviously there's a lot of different situations for businesses. some of the smaller businesses will be getting health offering, their employees health care but some businesses say forget it we won't hire any more people because we can't afford to go over that 50 person threshold. >> i don't think a company should be making a decision about their long term future whether they will end up paying an additional fine or fee if they don't offer health care to their employees. what we need to be doing in washington in my view is solving the longer term problems that are causing a real restraint on growth and on opportunity. if our economy were growing strongly then i think that small business owner with 48 employees would have the confidence in hiring 50 or 60. >> senator, this report this morning from this one particular business and obviously this is

one business but there are going to be some companies that fall into this exact trap they are very concerned because it makes a difference. if you have 50 employees versus 48 it suddenly means they face higher costs than otherwise. your telling me that's not at that problem? >> no. leapt me try again. >> explain to it me because i'm a little slow. >> what we ought to be doing in the senate which we'll be doing later today is passing legislation that strengthens growth in our economy. we'll pass a highway bill that will put money in our economy and create 3 million jobs. this is an important step forward. it should give some lift to our economy and confidence to those small bus owners who have legitimate concerns about how crossing a threshold like 50 employees might add costs. what i was trying to imply, becky, if we do the right thing in dealing with our deficits and debt and making investments that can grow our economy and implement the affordable care

act over the next two years responsibly that's mindful of the additional costs and burdens that need to be balanced against opportunities of providing health care to employees we can provide some encouragement, some hope to those small business owners who so far have been listening to the negative kbomts the affordable care act, teen scare tactics of those who are determined about repealing it. it's time for to us pull together. >> republicans have said they are going don't fight on this front. so that means this is a battle that still rests out there until we see what happens in election. >> that's true. one of the things i'll commend chief justice roberts about yesterday was finding a narrow and legally appropriate grounds on which to uphold the individual mandate and the affordable care act pushing it into an issue for fall. i don't think the justices of the supreme court should have overturned a broad and important decision like. speaking personally i think what i'm trying do as a senator and

at all of us should do is focus on growing economy, getting people back to work and dealing with the fiscal cliff issues that face us jayne. that's a real drag on the economy. >> those are huge issues, and i do think all of them need to be adressed. senator, thank you very much for your time >> coming up, is research in motion all but ruined. another rough quarterly report. but first the sports buzz of the morning. a major upset at wimbledon. second ranked rafael nadal loses. out offed by lucas russell. russell is the lowest ranked player to ever beat nadal in a major. what a huge, huge upset there.

good good friday. welcome back to squawk. we have a rally on our hands. take a look at u.s. be equities futures. dow looks like it will open up 117 points higher. s&p 500 up about 16 points. all of that a function of what's going on in europe this morning. take a look at what we see there. again we got green arrows and this is because we think we're on the verge of something.

ahead of this summit where we might actually have some, some real oversight, some -- >> euro bonds. >> expectations have been ridiculously low coming in. >> if they could come up with any relief that's great news. people are hashing back the details trying to figure out what it means. kelly pointed out the gains have pared back some since the original note. the bank of england is talking about how they've not succeeded in persuading banks to raise external capital which is getting back to this idea that the problem still stands out there. at least there's a path that may stretch that little further down the road. >> i find it comical, the market is desperate for any kind of news out of europe. you can see the reaction with a little trickle of news. yields are starting to rise as everybody sits back and says wait a minute long term this may not be good? it happened with every headline that comes out of the eurozone.

pop in the market, sit back, take a look. >> that cycle has been compressed. used to be period of weeks people would think things over. than period of days. than period of hours. hours or minutes. >> talking about -- i didn't know where i was going to go with that. i was going talk about the national weather forecast. alex wallace is standing by at the weather channel. a little bit of thunder and lightning about an hour and a half ago that woke up henry and max sorkin and they were not happy campers. what can you tell me about that? >> you're right. we had storms roll on through the new york city area but moving through pretty quickly and now pressing east along long island at this point. that's the good news. still south of you there are some storms at this point moving across jersey along the atlantic city area dealing with downpours

and lightning. moving out of the picture are the heavy downpours there in the big apple. but as we look into the middle of the country for our friday, we're focusing on threat for storms. very isolated in nature. risk is there. up across sections ever new england watching the skies. the other story no doubt about it this big time heat wave we're dealing with, 100 degree heat with us for today all the way into the weekend here. take i sorks take it easy, stay i had decorated and drink that water. guys? >> thank you, sir. >> one other question. i'm traveling later today. new york, are planes getting out of new york with this weather? >> what time are you talking? afternoon? >> midday, yeah. >> you should be fine. >> i'm glad. >> storms should be out of here this morning. >> when you need a personalized weather forecast. >> blackberry maker research in

months posting a loss. we're watching rimm this morning. mike, it just seems as though, it's hard not to pile on here but it certainly seems as research in motion can't get out of its own way. looking at blackberry ten, supposed to come out by the hoil holidays, it won't, but the iphone 5 will. >> reporter: increasingly death spiral is being used. that's an apt characterization. from the language on the call last night which i listened, to rimm's management doesn't appear to really fully yet grasp the fact that they can't win at this game. they are determined to stick to their plan. so their consideration of options that really need to be fully put on the table now in terms of breaking up the company, you know, may be

subordinated to kind of continuing down the path that they are continuing and that want puts them in a more dangerous position. >> you have to believe, though, that the ceo, the relatively new ceo knows the challenges that he and the business are up against. what makes the most sense going forward? is it an alliance of some sort with microsoft? is it selling the net worth business? is it selling the entire company. what are the patents worth if they sell the i.p.. tell me. >> reporter: to start with the first part of your question what i think makes the most sense is for rimm to break itself up and to sell or leverage the network side of the business. that business is actually the only thing that's profitable. still interconnected to worldwide and a back end there that's of enormous value for cross platform messaging which is a huge market opportunity particularly if rimm opens up

their operation up to other platforms which they have yet to do. hardware business is worth pretty much nothing. patents two to three baux share. cash $3 to $4 in cash. some will be discounted by the market today. but in my opinion it's the net worth that's the only remaining valuable piece. >> let me ask you quickly and we have to run. apple, the loss of mansfield, how serious is that? >> there's a risk and nervousness around executives at apple. it's a small team leading at the top. mansfield is not at the forest level in terms of, you know, i think perceived critical nature to the product road map going forward. apple will be able to move beyond that pretty easily. >> thanks so much. >> when we come back more on what's happening in europe. stick around. 

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♪ ♪ good morning. welcome back to "squawk box" here on cnbc. it is 6:30 on the east coast on a friday morning. i'm andrew ross sorkin say long with becky quick and the judge, scott wapner is in. joe will be back. hopefully he had a good restful week of vacation. let's bring you up to speed on what's going on with the bloblg morning rally. european leaders are set to take emergency action to bring down borrowing costs for spain and italy. they agreed to that and saying they agreed the rescue funds can be used to stabilize bond

markets without forcing downs adopt extra austerity measures or economic reforms. negotiations at the summit in brussels resulting in an agreement create a single supervisory body for banks by the end of this year paipt first step towards a european banking union. it's a baby step. but it's an important step. let's take a quick look at the market response so far. major european markets across the board you can see we got green arrows. let's take a look at what's going on in greece. call this a -- take be a look at what's happening with the euro. almost 1.26. joe's trip to paris later this summer. >> we haven't mentioned spain and italy, right will play each other on sunday in the euro final. right.

so there may be issues with the budgets and how they manage their finances in those countries but they can damn well play soccer and play it well. >> the two of them will fight it out. >> first greece against germany. >> thought maybe germany would make to it finals. did they hear they booed her when they put her face up, the greek were booing her as they showed her face. >> that doesn't surprise me, i guess. but in spain they will face off on sunday. >> we're watching italian and spanish bonds today because they are below levels they had been before we heard this news but they have risen again after the news came out. joining us now to talk more about the situation is our next guest, guy wolf. and guy, what do you think has happened here? is this good news? at least better than we had expected coming in to this. doesn't offer any real solution? >> think it's better than some

of the rhetoric coming out leading into the summit. but traditionally the devil is in the detail. european statements are full of platitudes and then you find out there's conditions attached to this aid. it requires -- merkel has said there has to be a unanimous vote. germany will maintain a perpetual veto. we go from crisis to crisis and doesn't resolve any structural issues in europe. capital no longer flows freely throughout the eurozone. until that happens it can't grow. >> again you said germany has the veto card on anything and everything going forward. what's to try and convince germany that they need to come along. >> well, do they need to come along. >> should they be footing the bill for all of it >> germany has no good options.

they pay an incredibly large bill or sign themselves up to perpetual series. it's not surprising that they are stalling that decision for as long as possible because no politician wants to be saddled with that answer. >> they are not going to have a choice those, at the end? they will be pushed to the brink and merkel will have to break despite the fact she says never in her life time. >> because then she will lose her job. >> never in her political lifetime. who knows. germany will be pushed to the brirng at some point. >> unfortunately markets move quickly and politics move slowly and this is the problem. i think the real issue in euro is that, you know, it doesn't have the democratic legitamacy to do what needs be done. they are voting for anti-bailout. at the moment time is working against the euro, pulling the

euro apart. let's just see what happens over the next six months, local elections, you know. >> but you think this is something -- you think this is something they buy themselves time. people like george soros said there were three months before they had to come with an absolute solution. you think they have kicked the can down the road? >> well this was the time that they buy themselves. every time they come out with something it seems to lasts an increasingly smaller amount of time. i don't see anything in this current statement that makes me think someone will go and build a factory in spain and than the what we're talking about, is that what makes bmw to build their new production facilities in spain. so wouldn't do it now. does this statement make them do it? >> you look at the market rally you say what? nothing? >> i think it will fade. >> it will fade? >> the right thing to do throughout the time crisis being played every rally in europe.

which is sustainable in a credible. >> in the meantime what do you with the markets very quickly? >> we're cautious in the short term. growth is a key issue. and the europe could largely be ignored while the u.s. economy was recovering reasonably well in the first quarter of this year when china was okay. now we're in an environment where china is slowing quite aggressively, the u.s. recovery has stalled, and europe now is a major issue. you see some of the data coming out of japan. yesterday when coming out of europe now we have probably seen the worse economic environment since the crisis. >> guy, i want to thank you very much for joining us today. in corporate headlines goldman sachs trimming u.s. staff in a slow down in capital markets activity. the investment bank cutting several dozen jobs at its offices in new york, new jersey and salt lake city. if you have any comments or

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welcome back. u.s. equity futures looking pretty good this morning. news coming out of eurozone is deemed to be positive thus far. the esm will be used to directly inject into the banks and that's being greeted on wall street in the pre-market right there.

124-point gain right off the bat is what the dow would open right now. we have a few hours to go before the bell rings. so far so good. european equities as you might expect green arrows across the board. making headlines china's industrial profits falling for the second straight month in may. the world's number two economy slowing on slackening domestic and external demand. japanese manufacturing activity shrinking in june, tires contraction in some seven months and analysts say this could be a sign that a boost to the economy from rebuilding areas damaged by last year's earthquake and tsunami is starting to wane. >> we can welcome back scott but we got now two scotts on the set. scott bower joins us. we usually see you -- were you thinking of bringing that with you today? >> i did. it's back at the hotel. >> so you've seen the news out of europe. >> you're blanking?

>> have to. >> got the ruling yesterday. we got a week of what has to be considered lightu volume coming up, with the holiday coming up. >> the guys on the floor that i'm standing with and people i know are sitting there looking at this rally saying okay here we go again. we got, you know, we're up to the 1340 level, 1345 where we've had this range from the low 1300s up there, they will tread very lightly, going to probably sell into this rally. i would be very surprised if we see a further advance today. >> why? just because -- >> fool me once, fool me twice and then it's my fault. what we've seen over the last month, look at the s&ps, look at this range. until we break out of that range these guys aren't going to be fooled by a move. >> is there anything that could happen over the weekend at this

summit that could create an additional rip your face off rally or down side on the other side? >> probably not so much a down side. there may be a surprise to the upside if merkel just concedes that, okay, we got to just support absolutely everything. that's the only thing i see that could really in the short run take this market past 1340, 1345. down side again, there's probably not much there. i think the news that came out was better than anybody expected because most people at least traders on the floor thought another summit, maybe we'll get some sort of relief and they will plan on meeting in six weeks, eight weeks. what we saw was pretty good. we got this pop in the market back to a major, major resistance level where we've been over the last month sore. guys will sell into pinpoint >> is there an inflection point we should look at? >> i don't think so. the focus shifts back here, back

home to jobs and consumer confidence, to everything back home here. europe probably goes on the back burner now for just a little bit. >> jim cramer say it's earnings season. he talked about this last night on "mad money". what do you see on that. his concern is watch out for technology names and oil, the oil companies had $100. now they are dealing with lower numbers. >> what's interesting is coming off last earnings season we saw expectations being lowered greater this time in this earnings season than we've seen in about the last three years. expectations are very light for corporate profits coming in. >> up think we'll blow through them. sflul. barring any other catastrophe coming out of europe, i think that come earnings season maybe end of july, early august we are going to break through that 1340 level. we'll be very steady for the short run coming july, august. i wouldn't be surprised if we get through that 1370, 1380

corporate profits. >> jobs report next week is critical. >> it is. we focus back now here at home. but that jobs report is any hint, any glimmer of hope will catapult this market. >> what happens if it's disappointing and people will start trying to gain whether qe3 will be introduced. >> if it's not a good number we back off another 5% or so back to that 1310 level and people will get back to the market. >> we got run. how about the news of the ecb rate cut or not on july 5th. >> we do have that coming up. that's baked into the market. just as the news that came out over the weekend barring anything that was just over the top, there's so much that's baked into the market right now. i don't know that will be a big factor. >> scott, thank you for coming all the way from the windy city

to see us. >> european capital concerns, unknown trading losses at jpmorgan. more questions than answer in the world of banking so we're turning to an industry insider for some guidance. bb and t chairman anne ceo kelly king will be our guest host at the top of the hour. r. and kept turning the page, this is the next chapter for the rx and lexus. this is the pursuit of perfection. this is the next chapter for the rx and lexus. 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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we're >> we're back on a friday morning sitting in the chairs and a couple of interesting stories that are making news today. one actually is a story that you should check out out actually nn today's paper. it's actually online and it was from wednesday but worth reading today. robert reich had an op-ed on salon.com where he predicted almost to a "t" what was going to happen in washington in the supreme court decision, said it was going to be upheld but because it was going to be upheld because chief justice roberts was going to be the swing vote to preserve what he said, the standing, the reputation of the court, given all of the, you know, we've seen polls that say it was at its lowest level. and it's a fascinating piece to read sort of retrospectively if you will. >> there are a lot of people who are writing about this now. the idea that he wrote about it wednesday which was interesting, but if you were following what roberts had been saying all

along, when he was sworn in, he said, look, i'm here to be an umpire, i'm not here to be hitting or pitching, i'm here to call balls and strikes. if there was a way for him to leave this to the congress and to the presidency -- >> he would have. >> -- he would do that, and it made a lot of sense to see how he came down on all of this stuff and the interstate commerce clause had much more tighter regulation, too. >> he was thinking bigger picture of the legacy and integrity of the court after bush versus gore, citizens united, some of the decisions that the court has made over the last few years. >> he didn't call it a tax. he didn't know that part, but he said for the other reasons that he thought that roberts would be the swing vote. i thought it was actually -- it's only interesting reading it today after seeing everything that happened. >> don't you think the most interesting part of this entire story is the fact that the word tax does come out of it? so, you know, in one sense roberts gives the obama administration the victory.

only by applying the word "tax" to it so it's something that they're going to have to deal with right now. >> and becomes a politicat football. >> it absolutely does. >> people look at this and saying he was brilliant and playing politics. i don't think it was playing politics. i think it was here is the job of the supreme court and my job as the supreme court justice, if at all possible we want the other two branches of government to make the decisis on this and we step in only when we have to. >> and it raises the questions of whether anybody will really do it, because ultimately if there's no penalty. >> marco rubio said the irs will come after you, they're the ones that are now responsible for it, if it's a tax, the irs are the ones that are responsible for following up. >> he said the only reason he's willing to accept it is there is no penalty. >> taxes are mandatory. you don't get to decide if you

pay a tax or not. >> i thought it was fairly telling yesterday as the talking points started to circulate in both parties and people like rubio is one of the first to come on, he came on in the morning here on cnbc and called it, right, a tax, mentioned the irs. when romney came on and made his statement in the early afternoon, he didn't use the word tax and he has to tread very lightly because of what he did while he was governor in massachusetts. >> can't go back against the mandate. >> that raises another issue that will play out from here to november. >> do we agree there will be more certainty or less certainty now? >> it cleared one area of uncertainty which is the law that stands as it is, it's either going to be all in or all out and it depends what happens on the november election, but in some ways it offers a lot more certainty and gets people to look at the details in it. you better figure out what's in the law so you can figure out how it applies to you. >> what is the e-reader story? >> well, there's a story in the

friday "journal," the whole front is how your e-book is reading you, because reading to this point has been an ebb krebly solitary experience, you get to do it without anybody watching, following along like they do on the internet, on television, any of the other things, movies, they have focus groups for. books at this point will be a much more interactive activity because barnes & noble which makes up 35% of the e-book reading, they want to know how quickly you can read through the pages, what page you put the books down. if this are things that turn you off and through that way they can give the information back to authors to say, what you did in chapter seven, stunk. >> you can go back and fix it for the new versions. >> i don't know what you did on page 937, but for whatever reason, that is the page where everybody puts your book down. so it just shows how we thought this was a steady and stable

medium and it's not. it's changing just like the rest of the world. >> right. you don't want to talk about your news story? >> no, i don't really have a news story that jumps out to me -- >> what's going on on "usa today" there? >> i liked the one that we talked already briefly and that was the fact you have spain and italy going head to head. i just think that that has so much irony given what's going on that one of those countries will be declared the king of europe because of what they do on the pitch but yet -- >> are you a soccer fan? >> i am, a big one. >> is that what this is all about? i just want to make sure i understand what's going on. >> but the problems in those countries will not go away any time soon, but if you look at what is happening in the squares in italy or spain and you see the citizens united, if you will, for a moment and cheering if you will, it's interesting that that is going on jucks pxtd against the markets. we'll have a lot more on

what's happening in the markets because we did see markets rise a bit this morning, the question is how long will the relief rally last. >> they look thus far, we'll see in a couple hours. he's run the democratic party and a confidante of the cli clintons, we'll ask terry mcauliffe what he thinks. let's welcome the guest hose, kelly king, financials are in focus when "squawk box" returns. next week we're celebrating america's birthday. companies built from the ground up right here in the u.s. they're helping millions build the american dream, creating jobs, and the products we use day in and day out. guests include -- chicos, gibson guitar, hershey entertainment and more. "american made" starts monday 6:00 a.m. eastern time. god bless america, and god bless

"squawk box." his is what inspires us to create new technology. ♪ technology that connects us to everything the world has to offer and vice versa. ♪ technology that makes lightweight stronger, safer, and faster than ever before. ♪ technology that makes electric electrifying and efficiency exhilarating. ♪ technology that doesn't just drive us, but drives progress. ♪ and driving progress is what we do every day. ♪ ♪

turbulence in the banking sector, what you need to know now to safeguard your money and stay in sound financial footing. tangent capital's chris whalen and bb&t ceo kelly king join us. a high stakes ruling. >> the u.s. supreme court said it upheld the individual mandate. >> the national implications for business in america. former dnc chairman terry mcauliffe and texas congressman jeb hensarling to weigh in. what google has up its sleeves that could be a serious

threat to apple, find out as the second hour of "squawk box" starts right now. ♪ good morning, everybody, welcome back to "squawk box" on cnbc. i'm becky quick along with andrew ross sorkin and scott walker. look at your morning headlines. first off, though, take a look at the futures because there's a market rally under way. right now the dow futures up by 137 points and the s&p up more than 18. a lot of this coming from better-than-expected results coming out of europe, and by better than expected, i mean some results coming out of europe, a new agreement among eu leaders, but the remaining points remain. michelle-cabrera joins us. >> we can give you the broad brush headlines. first of all, germany caves.

we'll give you the details on what they agreed to, but it's really important germany caved. you heard angela merkel over my dead body, and we've heard that when she says no, she means maybe. the path of austerity stopped or changed, the details we don't know. what are the key specific things they suppose dly agreed for? the rescue funds they've been accumulating do two things, recapitalize banks directly. it doesn't have to go to the spanish government and then to the banks, it will go directly to the banks instead and the rescue funds can buy countries' debt, this is what angela merkel said will not happen in her lifetime, and now supposedly it will happen. the other key thing on both of these things, remember the vernacular we've been teaching these countries, the countries that get the assistance wont have to be in the programs, the troikas won't be in their

business. that's why i say the path to prosperity appears to have changed. we don't have the details yet, but this appears to be the beginning of a visit conversation. >> although we had one guest that joined us before that said, look, the votes still have to be unanimous, which means germany has a veto card no matter what. we can say all these things and the markets say fantastic, but it doesn't mean that the italian or spanish banks will be getting a direct line. >> absolutely. the devil's in the details to use an awful cliche. we still have to see the process go forward but, again, the conversation has changed fundamentally, spain and italy last night drew a line in the sand and said we're not doing anything until we talk about direct bond buying and direct recapitalization of banks, and merkel appears to have budged. >> what does it mean for merkel back in germany? because she's been doing all this tough talk because her voters are saying this is what they want. >> she'll have to get something

big in return. what they've been reporting is there will be something like an eu-wide to oversee the european banks -- >> how long will that take to ever happen? >> supposedly it will be done by january 1st. >> many bridges to cross between now and then. >> we've been waiting this for 20 years. >> can we show you what's going on with bonds real quick? what am i looking at here? they're all lower now. this is very interesting. in the middle of the night while we're all sleeping italy and spain rallied. are we looking at prices on the right or yields? >> you are looking at prices on the right. yields have come back up. >> five hours ago italy and spanel we spain were in the green. that's changed. germany and france were in the negative, because germanys had to pick up more risk, et cetera, and there's more doubt about germany. i think it's a very bad sign that italy and spain have turned for the worse. italy's yield is 9.53%, and

spain the yield is 6.599%. >> we've definitely seen an improvement in yields but this is not the great positive reaction. >> the money from the esm can be used here. is there enough money in the esm to do all of this? >> that's the next battle, right? the next thing you'll hear is the esm should be allowed to be a bank, right? the esm only has half a trillion dollars, that's all they've got, but if they can become a bank, they can buy sovereign debt and go to the ecb and the ecb will give them more cash, okay? and they can go out and buy some more and that gives them 950, right? and they get a lot more power if they're allowed to leverage. germany has thus far said nein. >> we have a guest that wants to comment. >> he has been commenting. we haven't even introduced him. >> chris whalen is on the show. >> we don't know how this will end up. was there any doubt the

europeans would bail everything out? they haven't had a bank failure in a century. to me as a u.s. investor, this is almost irrelevant, we should be focused on as you said earnings, focused on value in the markets and every time the markets trade off because of the silliness in europe, we should buy. that's it. that's all i ever think about this. people ask me to write about europe and i say don't care. >> cramer said on "mad money" said the same thing. >> yoeuropeans, thank you. >> we're getting to a point where if you believe this is going to be a good thing for the euro zone and the banking system, you buy the u.s. banks right here, no more worries about exposure to european banks? >> they're all sovereign. if you look at european banks right now, you can only reach the conclusion they are all sovereign banks. >> you would go out and buy every spanish bank? >> the thing that got me agitated was the number on the table for spain for recapping the banks is too small. we shoulded ed ed a add a zero.

>> kelly king? >> i think this is one more case of europe muddling through which is what they do and it could be a positive step in my view if what i think is happening is going to happening, which is that they're moving slowly to make the ecb effectively the fed of europe and the first step towards fiscal union is to effectively control the banks. this is a positive move. if it's just a show, it means nothing. >> and you also need them to actually grow, right? ultimately they needed to do things to make their economy grow. >> that's right. >> they very much believe in keynesian spending, they are talking about another 120 billion euros of spending, 1% of gdp, but the other things is the liberalization of the labor markets, the economic reforms that make it easier to hire and to fire, et cetera -- >> we're still not there. >> no. >> the bang from the buck from incremental spending is just about zero in the public sector. you have to restructure and

create private sector opportunity and get private sector credit to expand. that's the key. >> maybe austerity isn't the answer there, then. is that ultimately the biggest question that comes out of that because if you need the economies to grow you can't have austerity at the expense of growth? >> the phrase austerity encompasses all of these many things, you can raise taxes and cut spending. that's a very typical kind of austerity, but the other kind is to saying to closed professions nearly all these countries there's a limit on the number of lawyers. there's a limit on the number of doctors. there's a limit on the number of journalists,s there a limit on the number of notaries and pharmacists, there's no competition anywhere. those are the kind of austerity measures actually that get fought on the most. right? because the guy that spend 100 grand getting his taxi license is furious. and even though once they did that, taxis would be much

cheaper, right? the consumer in europe would be much better off and things could be better, but you have to fight the vested interests. >> this is why we've come full circle as i said in my book, in the '20s we had the same problem, overcapacity, pushing down raises and realized exports, and it became a beggar thy neighbor environment. and look at new york, look at the taxi drivers in new york, are they ahead in real terms say five years ago versus today what they're taking in? no. most small businesses in this country are in the same place, rising costs and flat revenue. >> what is the resolution short of a war? >> this is the question, isn't it? if we were more willing to restructure and less willing to bail out, we'd be much better off. that's the problem in europe, we just embraced the existing structures from the cold war. in poland and eastern europe, if you go further east, you have a lot of growth because the economies were completely disturbed. >> can we talk to you about

banks for just a second? jpmorgan? >> sure. >> he's here for two hours. jpmorgan we're going to get some news probably, right? i think we know on july 13th. >> uh-huh. >> what do you think we're going to hear? >> i don't know. it's interesting i don't think jamie dimon is necessarily at risk, but we'll hear more bad news about the rogue hedge fund in london. we talked about it first here. they were cheerily taking principle risk and we don't have the story 100% straight. by the way, i've been invited to ask questions on the call, i got questions from jpir, chris, you can ask questions now. >> i got to get you on libor. if the number comes in $4 billion to $6 billion and there's a box around it, do you say hallelujah, this is great, what is acceptable, what is not acceptable? >> none of it's acceptable, but, see, the whole point was jamie got entangled in the media. if this was a reported loss among the other numbers, we

wouldn't be talking about it. it's a trivial number in the grand scheme of things. >> what may be less trivial is the scandal involving libor. >> banking industry, come on, you know -- >> but you hear about these things, you think that these were conspiracy theories, right? you hear this about the people are manipulating libor and manipulating the silver markets -- >> and they are! >> and they are. >> because the markets have become so concentrated, people can do it. if you had 20 or 30 banks -- >> do you think they are conspiring together or internally? >> we were talking about gilds in europe or the taxi industry, it's the same thing. they want to limit competition and increase their own spreads. that's what it's about. >> do you think there are hani more shoes to drop? >> none this surprises me. it's the same old stuff. >> so blase about it. >> it's been going on for centuries. >> it's a serious issue, right?

does bob dimon survive it? >> if jamie dimon survives it, bob dimon will probably survive it. >> we have a bank ceo at the table. >> this is a really big fundamental issue, because, you know, the whole efforts of the financial system is based on faith and confidence. and so when you have actions like this which were apparently intentional for their own gain, it substantially destroys credibility and integrity in the industry. i think the really big, bad thing and people ought to -- >> the question i'm trying to understand is whether, you know, they said there was an attempted effort, that they were not successful, so my question ultimately is are we just being told that, were they successful -- >> if there was more than one bank involved. >> i think they were definitely successful. this is a group of 14 or 15 people that have a phone call every morning at 10:00, what do

you think, what do you think. i don't think the system's very good frankly. >> what would you do? >> the bank of england is out with comments say this cannot be based on what people say they are doing, it should be based on actual trade. >> what they're doing. >> we don't have any kind of thread. there's no reporting. they had tea in the old days and they would talk and they would set the libor rate. >> let's go forward one step. you're an analyst and you cover the banks. you're the ceo of a bank. morgan stanley with the facebook ipo. jpmorgan, barclays and other banks now alleged in this libor scandal. should anybody have any confidence in the banks? america doesn't look at you as a ceo of a regional bank. they see you as the ceo of a bank. >> and banks like this, yes, but, look, we're at the end of the period of excess. nobody's been following the rules. the facebook rules is hideous. you don't stuff retail. you have to have a tight deal before you bring it out on institutional demand. nobody's following the rules and

the agencies aren't enforcing it. >> you said you were positive on the u.s. banks. >> as far as the ability to pay the securities i hold, positive. >> but not on the rest. >> you have to differentiate, those who play on wall street live by one set of rules. the big servicer banks if we went through the cheating that they commit in those structures, it would make the foreign exchange and everything else pale by comparison, let's have some perspective here. >> chris, we can continue the conversation for a very long time and we'll have you back to do it. our thanks to chris whalen this morning, apprec it very much. more from kelly king in a few moments. the bad news gets worse for research in motion, it reportedly a quarterly loss of 37 cents per share much wider than the three cent loss analysts were expecting and delaying theologist of its new operating system early next year. two deadline beating votes expected on capitol hill, congress is likely to approve a transportation bill as well as a

continuation of subsidized student loan rates. kodi has filed for an initial public offering of up to $700 million, they haven't made a decision whether to list on the nyse or the nasdaq. the filing comes a month or so after it withdrew a $10.7 billion bid to buy rival avo nochavon. former dnc chair terry mcauliffe now ceo of green tech auto joins us next to talk about the high court's ruling. "squawk" will be right back. in every way, shape, and form. it's my dream vehicle. on a day to day basis, i am not using gas. my round trip is approximately 40 miles to work. head on home, stop at the grocery store, whatever else that i need to do -- still don't have to use gas. i'm never at the gas station unless i want some coffee. it's the best thing ever.

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we're back on friday morning. check the futures right now. we've got some green arrows across the board. dow up about 146 points. nasdaq up about almost 36 points and the s&p 500 up about 20 points on this news out of europe that we might finally be taking a baby step, a big step, i don't know how you want to describe it but a step nonetheless ahead of the summit to create some form of a rescue that actually could have some teeth this time. the supreme court has made its ruling on the health care reform but the political fight is far from over. joining us is terry mcauliffe,

the former chairman of the democratic national committee. thank you for joining us this morning. >> good to be with you this morning. >> we know the supreme court said it's constitutional to move ahead and this law stands. what is a little more confusing at this point is how the details are going to work out. there are a lot of questions and small businesses in particular lobbying organizations that represent some of them have made their concerns known, that they are worried that a lot of the burden's going to be put on their backs for this. how do we move forward in terms of trying to figure out how those details actually do work out? >> well, you make a good point. it is over. all three branches of our government have now ruled, it is constitutional. the opinion was written by the chief justice of the united states who happens to be a george bush appointee, so i think that helps moved it forward. now as president obama said yesterday as we move forward with this law if this are things we need to tweak in it for business now, let's come together as democrats and republicans and move it forward so that benefits, so it's helpful to small business and most importantly to the millions

and millions of people who did not have health care will now be covered and will take care of all those folks who couldn't afford it and weren't in the system which meant it was a tax for you and me because we had to pay for their health care, now you all have to be in the system. but the president said yesterday, let's get together, if are things we need to do to the legislation to swetweak it, let's move forward. let's not make it a big rhetoric fight. the republicans don't control the senate. let's figure and working on job growth and something that will move the country forward instead of the divisive political tactics that the american public has had it up to here with. >> there's nothing that can be done in this congress and there won't be. but the republicans said they're moving this to the election and they think this should go to the voters to decide what they think needs to happen. the latest most recent polls had shown that americans still, the majority of americans, still don't want this. what do you think happens with the election? >> well, and i know they say

that, let's ask the voters. these are the folks who passed this legislation. they are elected by the voters. do your job. that's what you were elected to do. you know, all these members of congress today, they're foaming, they're excited, you know, let's get back to what really matters in this country and helping people and creating jobs. i think we ought to have a rule in congress, if you haven't met a payroll with at least ten people, you shouldn't be able to be in congress. all this talk going out today is not doing anything to help us compete against china and the others. it's been a big debate. it's been a big piece of legislation. it's a big deal yesterday. it's passed and the supreme court has ruled it constitutional, let's pick it up from there to make sure the country moves forward but all the divisive talk is not helpful to biusiness or anybody. the uncertainty is over, it's the law of the land, so let's make sure the law of the land is in everybody's best interests, we ought to be focused on that now and the president said he's willing to sit down and have the discussion and make sure it's

implemented correctly and fairly. >> speaking of the president in 2009 he said the responsibility to get health care is not a tax increase. yesterday the supreme court clearly ruled otherwise. are you comfortable with the party that you used to represent at one of the highest levels being saddled with having now been known as a party that will put a tax increase on middle-income americans in an election year?ar? >> i'm willing to have the debate right now as i said earlier is if, you know, you could afford insurance, but you didn't buy health insurance and you get sick or you get in a car accident and you went into the hospital or you got treatment, that got paid for by me and you, the 84% of americans today that as you know that have health insurance. that's a tax on me and that's not fair. if you have the ability, you ought to be in the system. we're all in business, we understand, the more people in it to spread it out, it makes it better, makes it more cost effective. but the other point to be made is this relates to presidential

election coming up. let there be no illusions about what romney did when he was governor of massachusetts. >> right. >> he had identical, in fact, if you want to know, he used the tax code in massachusetts to use it as a tax and his penalties were higher in massachusetts than what the president has in obama care, so let's be clear on this. i don't know what mitt romney's going to be able to do. two days ago he said, oh, president obama's going to have a bad night's sleep, but he had a bad night last night because the supreme court moved forward. mitt romney has to explain this is the model in massachusetts. as it relates to who is the next president, mitt romney is in a tough position. >> i want to ask you quickly, the gentleman who currently runs the dnc, patrick gaspard, i'm not sure if you're on twitter, but he certainly is, and i assume you've heard about his response immediately after the supreme court ruling, we'll put it on the screen right now, and i'm assuming based on a fairly other recent supreme court

ruling, he tweeted out it's constitutional, bitches. do you think he should step down representing the democratic party after tweeting that out? >> there's no place for that for the american discourse. i don't speak for the democrats. i'm no longer chairman. something has to be done. i would not tolerate that behavior from anyone that worked for me from the national committee. >> are you saying he should be fired? >> it's up to the party. i'm not the chairman. i don't tell anybody outside of green tech, outside who should be hired or fired, those people have to make the decisions. >> there's no place in the public discourse for this, you are saying if you were running the dnc, he would not have a job. >> it would be a tough meeting today, i'd have a good apology and decision today. president obama doesn't want this. we have to move together jointly in how we fix all the issues. we've got a tough economy. we've got to deal with health care. the company i'm on the board

with dick gephardt and mel martinez, what we're doing with real estate the first time ever, we're bringing wellness working with the cleveland clinic to bring and the columbia medical school 80 different things you can do in your homes, homes that we're building, clean air, clean water, lowering what you need to do on the walls, we need wellness in your home, in your office, the hottest company in the united states of america. >> sir, we got to run. >> in green tech. >> as we do run, are you running for governor of virginia? >> i'm chairman of green tech, and last week, we bought a company, and go green next week. go america. coming up, congressman jeb hensarling and the developments in europe. unless you ask, "wha" introducing the all-new rx f sport. this is the pursuit of perfection.

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welcome back to "squawk box" on this friday morning. let's take a look at the headlines. the week will end with a handful of economic stats this morning. we'll get the latest numbers on personal income and spending coming at 8:30 a.m. eastern time. we're also going to see the university of michigan's consumer sentiment index at 9:55 eastern. big deal this morning, anheuser-busch, inbev, have

bought half of grupo modell for $20.1 billion, they own, of course, corona and all the related beers. it's a 30% premium, by the way, what the stock was trading up before the report originally. and i should say in a related deal, they are looking to sell model to partner constellation brands for $1.8 billion. we'll get you the details later in a show. in a month largely devoid of initial public offerings we'll see one today, called service now, a provider of cloud-based services for businesses. pricing its initial public offering at $18 a share late yesterday, it will begin trading today on the new york stock exchange under the ticker n.o.w. and nujust in, peter madoffs expected to plead guilty to conspiracy and falsifying records in correction with his

brother's ponzi scheme, of course, bernie madoff serving a long sentence in butner, north carolina. house republicans are vowing to vote on a full repeal of health care reform following yesterday's supreme court ruling, here now is representative jeb hensarling, chairman of the house republican conference. good morning, congressman, welcome to "squawk," good to see you again. the majority leader eric cantor yesterday already said there's going to be a vote in the house july 11th. the date that is set. why hold a vote that you know has no chance that you know of repealing health care reform now? >> i think frankly we'd be negligent if we didn't hold one. this is what's on the consciousness of the american people. it's clearly an issue that the american people care about. the supreme court was heard yesterday, and the people's house will be heard the second week in july. and frankly the people themselves who are sovereign will be heard in the first tuesday after the first monday in november. i mean, the supreme court at

least five justices, they may have the last word on constitutionality, but, again, this now goes back into the legislative realm. people still care deeply about how their health care is going to be delivered. and frankly a majority of the american people do not want a system that they believe is unaffordable, that will hurt job growth and is going to interfere with the patient/doctor relationship. we'd be negligent if we didn't hold a vote. >> congressman, there's been a view that there's uncertainty around the health care issue, and ceo after ceo has said the issue has created a huge cloud over the markets and the economy and everything. and my question to you is by going back and trying to relegislate this in your own way, are you ultimately creating a new round of uncertainty? >> well, you know, the proponents of this frankly has been working on it for two decades. did they create uncertainty by trying to put forth a government-run health care plan? listen, this is hurting jobs and the economy, you know, the

chamber of commerce recently did a survey of small business people, three-quarters of them said that the president's health care program is preventing them from hiring people. the congressional budget office it says run by a democrat i might add, they estimate this will cost close to a million jobs. private economists, 1 to 2 million jobs. you know, i talk to small business people in the fifth congressional district, texas that i represent every day, they think this is a huge impediment to jobs. quite the opposite, removing the president's health care plan, it would be good for the economy and jobs. that's what the american people care about. >> members of your party are calling this already and it certainly seems to have circulated, that being a talking point yesterday, that this is a tax increase. what would you call what mitt romney did in massachusetts? he, of course, running for president as a member of your party. >> well, i'll let him run for

president. do i -- i mean, the supreme court has called this a tax -- >> no, i understand that, but my question to you, respectfully, sir, is what would you call what governor romney's plan was in massachusetts? was that a tax as well? was it a tax? >> well, i don't know the answer to the question because i haven't studied what he did in massachusetts. i mean, right now i'm concerned as a member of the united states congress in trying to deal with a law that, number one, we can't afford, number two, is harming job growth, and number three, is getting in the way of the patient/doctor relationship. what i do know is that president obama said he'd never raise taxes on anybody making less than $250,000. and now the supreme court says what he's done is a tax, which is clearly going to fall on people who are making less than $250,000. >> so, there are many issues obviously on the table facing the country right now, right? the economy is slowing. we've got the debt ceiling issue, the fiscal cliff heading

towards that now. yet do you -- do you worry that your party is at risk of taking your game -- your eye off of the ball on more substantive issues while at the same time you guys are holding the contempt of congress vote with the attorney general? you're going to revisit the health care vote, even though you know that the outcome is going to have no bearing on what ultimately happens with this law. shouldn't you guys be trying to get into a room and figure out how to solve the fiscal cliff instead? >> well, part of the so-called fiscal cliff has a lot to do with what this economy is going to do. again, you talk to any small businessperson, whenever i'm talking to small business people, fortune 50 ceos, they cite the number one impediment to job growth frankly to be government red tape and at the top of the list is the president's health care program. again, part of the so-called fiscal cliff has everything to do with economic growth, bringing in more tax revenues to

a better business environment. and so the health care vote is part and parcel to that. so, with respect to the attorney general, you know, we all upheld -- we held up our hands to uphold the constitution the best way we know how, an american citizen who wanted to serve his country is dead because of a program gone awry at the justice department. >> sir -- >> his family deserves not part of the truth, he deserves the whole truth. >> kelly king, the ceo of bb&t bank is our guest host and he has a question for you. >> talking to small business people, i would have to agree with you, the number one concern is taxes and health care is an issue. i wonder if you are focusing on this, the supreme court has said it's constitutional because it's a tax and we're not trying to mandate behavior. this is a big slippery slope in

my mind because we could say it's a tax versus a mandate, but the next step is to say, okay, you have to have life insurance or we'll tax you. you can't have but one child or we'll tax you. this is a terribly deep, slippery slope. >> well, i don't disagree. i've read a fair amount of the opinion and my guess is it may take weeks for legal scholars to sort this out. but i kind of feel like, you know, i'm an 8-year-old handed in his test to his teacher, he got four problems wrong, but the teacher said, do you know what, you got them wrong, but i changed them for you, here's your 100. so, the supreme court seemingly said that, yes, it is a slippery slope under the interstate commerce clause. you can't fine a person but you can, quote-unquote, tax them, so we'll take your unconstitutional law and make it constitutional. so, now i suppose if we don't eat broccoli on tuesdays we can be taxed. if we don't join a health club, we can be taxed. it strikes me on the surface to be a rather frightening

decision. again, i have to respect what the supreme court said, but i respectfully and vehemently disagree with their conclusion and i think it's fraught with peril. >> but -- but congressman, i'm sorry, you do respect the court's decision, but you question the -- >> they are the supreme court, they have the final word, at least five of them, for constitutionality. but ultimately the people are sovereign, and the people will have their voice heard. i mean, just because it's constitutional -- >> the supreme court sends it back to congress, they say if you want to do anything, you step in and doing it. >> well, thank you, we're stepping in and doing it. and another important point just because something is constitutional doesn't mean it's wise, the national debt is constitutional,le trillions of dollars in national debt is not wise. >> congressman hensarling, thanks so much for spending some time with us this morning. >> thank you. up next, the world according to google, the company makes waves this week with its new tablets. and yesterday announced it's taking the browser battle to mobile devices. so, will all of this translate

to more profits for the company and share holders? we find out next. next week, we're celebrating america's birthday. companies built from the ground up right here in the u.s. they're helping millions build the american dream, creating jobs, and the products we use day in and day out. guests include chico's, gibson guitars, hershey entertainment, and more. american made, starts monday at 6:00 a.m. eastern time. god bless america, and god bless "squawk box."

we're back on a friday morning and google is making a number of announcements at its annual developers conference this week turning up the heat on amazon and the kindle fire, and apple, the big question is what do the experts think about all of this? joining us from new york is david garrity, gba research principal and thank you for joining us this morning. i'm curious, to me the most curious thing actually about some of the announcements that came out of google this week specifically around their next tablet is the fact that they're not motorola, which they just bought is not making it. what do you make of that?

>> ask a very significant question as you spend $12.5 billion to buy a company which was historically an innovator in technology around communications and handheld devices and why aren't we seeing something coming out under the motorola name as you say? clearly google had plans around this for some time, they have other partners to work with. why they decided to pick a time when zeus is doing this, leaves people scratching their heads, you and me both. >> what do you think motorola will do? >> the patent treasure trove is significant, and certainly they can use it in relationships with other technology providers to strike better deals for themselves and enhance the royalty stream. but at the same time you have technology there that arguably is going to be coming out with devices that are most likely have a google, perhaps motorola name on them. the biggest one that people would be looking for would probably be a ten-inch tablet where we see google going basically head to head with

apple. >> who wins in the competition between google and kindle fire? let's do that first because we're talking about a seven-inch tablet that is at a price point where they'd be pretty competitive? >> i would say on google's side what they're doing around content with youtube and what they're doing in terms of striking deals with other suppliers of content around books and others will probably say at least in terms of digital content google will have a competitive offering not only in terms of device with software but also in terms of what the offering is actually going to be. so, i would say google while they won't necessarily displace amazon, i would argue that they wouldn't be very much of a distant number two probably in the next two to three years. >> here's the part i don't get. amazon using the google operating system android on its tablets, so can it do everything that the google tablet would do, too? >> it may. although one can say to the extent that google is putting both hardware and software arguably in-house or can do so with motorola, they can lean more towards an integrated

experience such that consumers are accustomed to seeing from the likes of apple which amazon is obviously not in a position to do. >> how far away from google creating a competitive product to the ipad? >> google is keeping that very much under wraps. a state secret, if you will. but my own personal inclination would say within the next 12 to 18 months we see something out of google within the ten-inch pad category. >> different question. when does this actually profitable for google? >> ah, always a good question. what you really have to do is step back and look at the developer conference overall, because google over the course of the last two days has not only rolled out hardware which we talked, they've come out with software updates to the chrome browser which has 300 million deployments around the world, arguably it's the integration wear seeing with google through the chrome browser iteration, they are doing a better job of integrating across devices. this type of seamless experience arguably will work better for google to the extent that people will want to use google software

products, to the eck temxtent t, it drives profitability to google in terms of the search engine because they pay less for the costs. but net, net, this integrated experience works out and goes to the bottom line for google. >> and all a nail in the coffin for our good friends at r.i.m., david, thank you for joining us this morning. appreciate it very much. >> i love my blackberry. >> i know you do. i know you do. >> our guest host bb&t ceo kelly king will talk to us about the financials and much more. and in the next hour "squawk" market master and ceo of the nation's largest bond fund mohamed el erian will join us with his thoughts about the latest out of europe. 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.

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welcome back, everybody, let's turn to our guest host kelly king, guest host and ceo of bb&t. we've been talking about the banks lately, they're in the headlines, and there's bad headlines that have come out of this. your point is the big banks are much different than the small banks. what's your point about the small banks now? >> you have a lot of issues happening with the banks today that are really getting in the way of them being able to do their primary job which in my view is help create jobs. if you think about it the very essence of what we do is pretty simple. we take in excess deposits from people that have it, and then we entertain hundreds of thousands -- we, the industry -- hundreds of thousands of requests from people to use that money to do what? to create businesses, grow their

businesses, create jobs. and, by the way, banks get it right about 99.5% of the time over the long period of time. so, the whole system is set up so the banks are kind of the core of the economic growth engine. but when you -- when you -- what i call gum up the banking system, it really makes it difficult for the banks to do their jobs. >> what's gumming it up right now? >> so, what's happened over the last several years is the banks, quote-unquote, havee genericall been blamed for the crisis, and that's really unfair and inaccurate and not very smart. and so that's impugned our reputation. and we've had huge increases in regulation -- >> although, kelly, in all fairness the financial system was brought to its knees by banks that took on too much and it was not just ones doing fancy derivati derivatives, it was not just the aeg issues, it was small banks, too, that bought into the fact that home prices would go up

forever. >> that's true. we all made mistakes, we all got caught up. we all have culpability in where we are. we kept funding loans based on house prices going up forever, that was a big mistake, no question about that. but that doesn't mean the fundamental system is wrong. so, what we have to think about now is how do we get the economy going. how do we grow jobs. so, you -- and there's nothing wrong with some increased regulation. i think regulation. we just need universal regulation over the basic banking system and the shutter system. that's the key point. dodd/frank by the way does do that, it's a good point of dodd/frank. but when you simultaneously dramatically increase capital and liquidity, dramatically increase the amount of time and effort and money that is spent on complying with all these regulations, it just makes the system hard to work. that's my only point. let us do our jobs and try to

grow the economy. >> we'll separate you out from the big banks for a second. having said that, what is wrong with your colleagues? and i say it -- see what happened to barclays, every day there's some scandal, something, some -- it feels pervasive. and, look, historically bankers were never a loved bunch to begin with, i get that. but what is happening right now? this credibility problem, and i know you may be blanketed with this as well, and i -- and maybe you should be separated from it. but what is happening? these are your friends, these are your colleagues, these are your peers. >> what i really think, andrew, is that many companies -- >> i like -- you know, i like a lot of these people and i recognize people make mistakes, but this seems to be more than that. >> this is a bigger issue. i think that many companies have not placed sufficient focus on building a deep, deep culture based on solid values. frankly, it's pervasive throughout the whole country,

and it has invaded our industry as well. you know, at our company, i'm not trying to say we're perfect or anything, but the most important thing i do as ceo is i preach all the time about our values, starting with honesty and integrity, because our system is built on faith. and if we don't as an industry build deep, deep, deep cultures of honesty and integrity and deep morals. >> what the heck has happened? >> i think what happened really during the '90s and most of the last decade, i think things were roaring so fast, everybody could win at everything, and so people in really good booming times, they just start stretching the parameters, you know. individuals borrow more because -- >> but here we are four years after the crisis and people say lesson learned, that's -- >> i agree with that. i can't defend that. i think some of the -- some of the actions i've seen recently make me very disappointed, make me frankly ashamed for our industry. but i don't think you should blanket the whole industry. and i think you need to be a little careful to draw a broad

brush that because something happened in one company. look, we have 33,000 associates. on any given day, as hard as i try, somebody's going to do something wrong. but that doesn't take away my responsibility for being responsible for it. i am the ceo. and for dealing with the issue of the culture, and so what we can do is to constantly focus on values. and when you see an error that takes place and you see something like this that develops, you have to take really quick, decisive action, make it clear that we will not tolerate this, that people involved should be fired, and the ceo should reinforce top to bottom the fact that we are going to be rocks of gibraltar with regard to the values that are supportive of this country. >> at what point should the ceo be the ones to leave? because they never do. they never are forced to leave. >> my view is if the ceo has

allowed a culture to develop and the ceo does set the tone. the croeo does drive the cultur if the ceo has allowed a culture to develop, they should be gone. >> kelly will be with us for the next hour. and the next hour, mohamed el erian, one more hour of "squawk" to go and the weekend begins. ng formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

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europe, the global slowdown and economic concerns in america. "squawk" master mohamed el erian is here before the trading day begins. >> the decision's in -- >> it was 5-4 by the way with the chief justice roberts joining the court liberals. where to play your investment now, we've got smart money minds here to help spread the wealth. and we've got breaking economic data coming your way, the latest update on what's been driving gas prices all across america as the third hour of "squawk box" starts right now. ♪ the heat is on on the streets ♪ ♪ clap your hands for the beat ♪ welcome back to "squawk box" here on cnbc, first in business worldwide, i'm becky quick along with andrew ross sorkin and

scott wapner, joe will be back on monday. our guest host is ceo from bb&t, kelly king. we've got key developments out of the euro summit, and the euro zone permanent rescue, the rescue funds and the bond support for italy and spain. u.s. equity ft. futures are up at this hour, the dow looks like it would open 133 points higher and the s&p would be higher and the nasdaq as well. take a look at european markets off of this news this morning and you can see the green arrows across the board. the euro is also moving this morning, but -- and i don't know if we can get these charts going. some of the ten-year yields both in italy and spain you would have thought would have come down off this, but they have not. they've reversed course. >> they reversed course, and when you looked at it again

they're still below, italy below 6% and spain below 7% but not by a whole heck of a lot and that's a concern. you can see the italian yield, 5.41% and in spain it was markedly lower, 6.5%, or markedly below 7% i should say. >> the move in the euro versus the dollar is the largest we've seen in eight months, so, i mean, it's significant enough if you look at the decline in the dollar versus the euro, you have a huge move today in both oil and crude oil, so commodities at least at the outset will help the market when in week after week commodities have absolutely just killed stocks because they have gotten trashed, i mean, really. energy stocks have gotten hammered, materials have gotten hammered, we know what happened in crude oil as well. let's walk you through the other headlines this morning. a big merger deal this morning,

anheuser-busch inbev buying the other half of modelo it doesn't own. it's a 30% premium over when the news first broke about that deal, so there's going to be a lot of happy investors this morning. and beauty company cody filing to raise as much as 700 million, after coty dropped the attempt to acquire its larger rival avon. and finally peter madoff is in custody this morning. he was arrested earlier in new york, he's expected to plead guilty to conspiracy and falsifying records in connection with his brother's ponzi scheme. joining us right now with the full story on europe and what all the headlines mean for the globalel erian, does it work and how does it work? >> we've been spending a lot of time as you can imagine especially in europe by addressing all this. here's where we stand based on

what we know and details are still coming out. the leaders took important decisions that went well beyond market expectations. and you're talking here about the sequences of policies, the coverage of policies and the content of policies. so, it is correct for markets to get excited. the question now is it enough. is it the breakthrough. our assessment is this is not yet the breakthrough. more is required. and, therefore, there's a risk that once again, this rally may run out of steam. >> what's missing in this? we've heard some complaints about things that germany still has a veto vote and it has to be an overwhelming vote and so eel fe effectively germany can say no when it wants. >> first on the list, what they've done is try to break the adverse feedback loop between bad banks and weak sovereign

creditworthiness, but the implementation is very tricky. second, the roadmap to fiscal union, political union and banking union lacks details and lacks precommitment. third, the growth-enhancing measures fall short, and finally, and importantly, there isn't yet a get-together. already the narratives are different, the political narratives are different. look at the comments coming out of finallaland and germany and y and spain on the other. so, it's an important step, becky, but there's a risk that it's not enough. and we worry that investors will use this to exit rather than crowd in more private capital. >> meaning they've been looking for a relief rally to say, okay, unload our stuff because we don't think there's a real answer here? >> yeah, i spend as you know nine days in europe. >> right. >> and three things really hit

me. one is people are really nervous, they're really nervous, because they've lost trust in the political process, so they're looking to exit, and that's why you're seeing massive flows within europe from the periphery to the core and from europe to the rest of the world. second, economic activity is slowing really rapidly, much faster than what i think people realized. and finally, there's good reasons why national politicians find it very hard to translate national priorities into regional agreements. so, the conditions on the ground do not facilitate the breakthrough and unless you get very visionary leadership, we going to have another summit with even a longer to-do list. >> so,mohammed, it's scott, nice to speak with you, it sounds to me as you don't think that this is enough to break the move that we've seen in treasuries enough to break what some have called a bubble in the treasury market. you haven't seen enough that's going to cause that yet?

>> yeah, scott. haven't seen enough in two ways. one is we're not seeing enough growth, and therefore, the central banks are not going to move rates, and therefore, the front end of the curve is going to be anchored for a long time. second, we haven't seen enough to break the flight to quality and the flight to safety, if you like. so, yeah, it's not, you know, beyond the initial excitement and the repositioning at the end of the quarter, i don't think this is it. we need more out of europe. and i think they realize they need more. just look at the comments that are coming out from national leaders this morning. >> does that mean that you gives will up your exposure? you increased it in may for the first time for 2012. another move on the horizon for pimco? >> as bill said yesterday, for us treasuries are the cleanest dirty shirt. what you want as an investor, be high in quality across the board, whether it's equities or bonds. and second, you want the

optionality to pick up cheap investments because you going to have that opportunity going forward. >> all right, mohamed, it's andrew. we were talking earlier about the politics going on in germany. get inside the head of merkel for a second and walk through both the calendar and the elections there and the way you think ultimately she has to play this. >> yeah, mrs. merkel has two issues and i think we need to understand that. one is holding her coalition together ahead an election next year is really difficult. secondly, the people on the street don't feel the euro crisis as yet. germany is doing well. now, it's starting to slow, but it's doing really well, so the average german doesn't feel there's a crisis going on. so, it's very hard for mrs. rkel to get way ahead of her coalition and way ahead of her citizens. >> do you think she's willing to ultimately bite the bullet for the euro zone as opposed to her job? >> you know, the head of our

german portfolio management has a very simple way of putting it and i think it's incredibly effective. europe needs to simultaneously solve three things, mutualization, which means your debt is my debt, your debt is my debt, conditionality, which means you are going to do what you say you're going to do and i'm going to do what i say i'm going to do and national democracy which means we can sell it to our people. and mrs. merkel are having tremendous difficulty solving these three issues. >> mohamed, this is kelly king, i wonder if you think it would be a positive sell, given that there are multiple steps required because of what you just described, but if they could go ahead and move to effectively a banking union by somehow taking the ecb and effectively making it a fed. if you could get reasonable control and management over the banks, that's a pretty good baby step toward real economic union, or do you agree with it? >> it's one of the four pillars, monetary union, banking uge yorn, fiscal union and greater

political integration. so, it would be a huge step, but the problem is that is, "a," who pays for it, and, "b," what assurances do you have that national jurisdictions will implement foreclosure rules and everything else. so, it would be a huge step, but it's unfortunately -- >> ah. >> it looks like we just lost mohamed as he was saying it was a huge step. we'll try to get him back at another point, but we appreciate mohamed el erian's team for coming on. the key points are you can watch the rally right now, while it's certainly a stem for europe, he has concerns on how the details work out. >> he was about to really spill the full beans on what the pimco plan was, you asked the question and he pulled the plug. >> maybe your credit card that was paying for the satellite time, hit its limit. i don't know. but somebody didn't put enough in there for the shoatellite ti. >> not a credit card issue, but

anyway. coming up, why shares of kb homes are jumping up, and what the health care decision means, two analysts share their concerns. are you suggesting for a second that i'm having credit limit problems? >> well, i mean your black card is probably unlimited, right? >> the centurion card you're talking about? i thought they can't stop it. >> i can handle this, i'll give you a credit line right now. >> can you get the satellite feedback up? >> i can't do that, but i can give you a credit line. check out the "squawk" market indicator. we'll be back in just a moment.

welcome back to "squawk box," everybody, take a look at the futures this morning. there is a market rally that is taking place. dow futures are up, and s&p futures are up 19 1/2 of fair value. we may not know a lot details. there's a concern the rally could fade because we need to see the details and you need to see some progress but, again, this is much better than the market had been expected as we head into the last trading day

of the quarter. we have quarterly numbers out from kb homes, reporting a smaller-than-expected loss of 31 cents a share. revenues beating consensus and a few days after better-than-expected numbers from lenar. in lenar's case the orders are up 40%. kb home is up nearly 10% in the trade. as you were reading the story quickly about what is taking place in europe, now i'm reading a headline which goes to exactly, becky, what you with talking about earlier. german opposition said the esm vote may be delayed, right? it goes exactly to the point of the market has the euphoric reaction to what is taking place and another headline comes out, a headline risk that exists in the market and i wonder what the reaction would be from the futures given a headline like this, which means they'll evaluate all this and they may delay it. >> which is why jim cramer is exactly right, he's talking about looking at the earnings and what is happening on the

gran granular basis. the $190 million it posted in q-1, cnbc's phil lebeau joins us from chicago with more, europe remains a huge, huge problem. >> i talked to somebody yesterday and they said it's deteriorating rapidly not just for ford but all of the automakers there, the reflection of the european economy, and after ford warned late yesterday after an interview that losses would be crippling international operate, we're down more than 3% after-hours and we expect them to be under pressure this morning when they start trading. here's what's going on overseas from ford's perspective, it's morning that it's q-2 menks will be lower overall because of the international weakness. losses will triple in the second quarters versus the first quarter. in the first quarter they lost $190 million, they are expecting it to be $570 million overseas. we are not going to provide any specifics about our plan for

europe in terms of what they're going to do to address these losses including capacity. it is too soon to say what we're going to do. when you think about what it takes to sustain the business, our philosophy is to align capacity and demand. ford has five plants in europe and they've not made decisions about perhaps shutting down one of the plants and take a look at shares of ford over the last year. under pressure. and we have to take a look at gm. the losses for gm have been far greater than they've been for ford. in fact, gm has lost $14 billion in europe over the last 12 years. yesterday the opal supervisor supervisory board reached a broad consensus of how to address the problems with the european operations. but we should point out gm's plan for europe is a long ways from being finalized, that's why a lot of people are saying until you give me a plan and things will turn around in europe, we'll not go near you. >> phil, you know ford and the automakers better than anybody. it is inevitable, isn't it?

that they'll idle a plant? how can they keep all of the plants open? >> i think so. but the problem is as opposed to when you restructured the autos in the u.s., the government and the market came in and you only have one country that you're dealing with. you have all the countries in europe and you don't want to be the first one to shut down my plant so you can keep the one in germany alive. that's the problem. nobody wants to blink and somebody at some point will have to lose a plant. >> okay, phil, thank you. coming up, we'll talk the sector of the week. it is health care, why some of the stocks are winners and some are losers. that's coming up next. but first as we head to a break, check out the price of crude. i'm sure this matters a lot actually to phil and all those automakers. 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.

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welcome back, everybody. our guest host today is kelly king, the chairman and ceo of bb&t. and, kelly, you had asked a question of mohamed el erian, we lost the satellite feed unfortunately when he was trying to answer it. he e-mailed and said the banking union will be a big step but it won't happen quickly, because there's disagreements about who pays and national jurisdictions he says differ on foreclosure rules and creditor rights, so a lot of things that have to be dealt with at that point. >> i'm sure he's right. it would take years to eventually work it out so it would be a smooth system, but i do think that's the most

practical step they can take that will be really meaningful that would instill confidence. >> the biggest thing is you've got to stop the idea of runs from banks in one country to another, right? >> and the only way you can do that is effectively through a banking union, but i think miss merkel will say no, no, no, right until the last second and until she proves that and will be a major step forward. >> the question is politically will she be able to stay, or will they send someone else and changes the rules like what happened with france? >> i think she'll sell it on, look, there are ten other things they want us to do, this is minor compared to that. we took a baby step. it's an important baby step. it won't affect our german economy at all. she can sell that, i think. >> kelly king is our guest host and he'll be with us for the rest of the show. joining us now is mike weinstein, managing director at

jpmorgan. mike, welcome to "squawk box." >> good morning. >> it's pretty clear the reaction in the market, the group that seemed to be hit the hardest, medical devices, given the fact that they'll be susceptible now to new taxes. is that the group that you most worry about in the new environment? >> well, i think obviously there's a bun. of factors within health care that will feel the impact negatively. the medical device factor will be hit starting in 2013 with a 2.3% tax on all u.s. sales. and unfortunately that really disproportionately hits smaller companies, so the emerging growth companies that are, you know, the lifeblood of the industry are going to be hit with this tax and they're so low on the profit curve at this point that it's disproportionate to them and that's why you saw some of the companies sell off yesterday. >> you saw the large ones, too. which ones do we especially need to be concerned about if you're investing in these companies? the biggest of the group that have the most exposure to this

tax. >> well, for the large cap companies are hit on average by about 3.5% hit to earnings next year. the good news, which there is good news here, the street's largely reflected it in 2013 estimates, and so 2013 will see without other offsets will see a growth deceleration to the bottom line of the sector but it's a onetime adjustment to earnings and after that the industry willpower through it. the positive side in 2014 there should be some pick-up in volume particularly in the patients that are not covered today and that's largely not reflected in street estimates. as we fast-forward beyond the impact of the tax, there should be an upside scenario to the industry which isn't reflected in the street numbers today. >> mike, good to talk to you. >> thanks. >> michael weinstein from jpm. breaking economic news on the consumer and personal income and spending, just minutes away. [ gargling ] [ gargling ] he drinks green stuff.

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all right, welcome back to "squawk box." personal income and spending about two minutes away, of course, we have kelly king the ceo of bb&t bank who is still with us. let's talk politics for a second. i read something yesterday that you were described a self-described eastern north

carolina democrat, that's true? >> that's true. >> you're obviously vocal against the health care ruling. you're somewhat vocal against the regulation against the banks as well. are you going to be supporting president obama? >> you know, my position as ceo of the company i'm not supposed to take a public position on -- on those types of things, but -- >> well, have those caused you to waver at all in your support for calling yourself a north carolina democrat? >> listen, several years ago i came within a hair to changing to a republican, and then i realized the republicans were doing about as many stupid things as the democrats, so i'm just still hanging on to being a democratic only because of heritage of being a north carolinian. the truth is i tend to vote republicans more than i do democrat. >> is that right? >> mostly i vote for things that are good for this country and today, you know, the truth is there are a lot on both sides that are not doing the right thing for this country, so i don't care if it's a democrat or

a republican. i care about people in washington who have a positive inspirational leadership style who are committed to the basics on which this country was founded and who are trying to do the most important thing we need to do today to create jobs. >> did you vote for president obama? >> i did not. >> you've said, and this was i guess a speech you made recently, we have a lot of people in washington trying to ruin our country, you said, recently. >> i did recently, and i stand by that, because they are. and the reason is because they are moving down a path of big government, big government spending, big government programs, which is absolutely contrary to the basis on which our country was founded. remember, several hundred years ago brave men and women came across the big pond over here for what? they came over here for freedom, freedom of religion, freedom of economic pursuit of happiness and opportunity and for several hundred years it worked really well. and now we're moving with blinding speed to right where greece and portugal and those places are, and it's a shame.

they are ruining our country. we need people in washington who will get back to the basics on which this country was founded and give people an opportunity to grow and prosper. >> i got to get to chicago, i apologize. we'll get back to it in two seconds. rick santelli has the numbers on personal income and spending. >> may income and spending numbers. very close to expectations, up 0.2 on income, goose egg, unchanged, on spending. no revisions to last month, actually, there is a revision to spending, from up 0.3 to up 0.1. if there's a consistency to these two months' worth of numbers in my eyes it's that the spending seems to be slipping back a bit, maybe people are saving. doesn't really help the fed's programs, though, if people save. deflator, down 0.2 month over month. and it's lower than unchanged and unchanged is unrevised, year over year it was 1.5.

and yet to go we have chicago purchasing managers survey, university of michigan confidence survey, a big, big rally under way! markets thinking that europe's fixed. we'll have to see how it looks on monday. back to the gang in englewood cliffs. >> if you were to look at a single data point of why the spending slowdown, you'd say what? >> well, i think the spending slowdown's easy. the world economy, lack of leadership, strange phenomenons going on in almost every branch of government. the biggest city in terms of a chapter 9 bankruptcy, of course, occurred, and i think stockton's a big story. >> yeah, out in california. >> i'll tell you what, i'll give you an easy answer, read the newspapers. especially read the ones today that have quoted many politicians on just something like the health care, where they were, where they are, how do we know what these leaders are going to do? every year their story changes and this isn't unique to the

left or the right, it's kind of unique to the entire d.c. area. i would say that that's, what, a handful of reasons right there, buddy. >> okay. we'll take it, rick, thank you for that. kelly, views on the number and are we headed for another recession? >> you know, i'm an eternal optimist, but i do think we are slowly rapidly, you know, when i talk to business people and i talk to a lot just traveling around, you know, they tell me a very consistent message, and that message is that, you know, my business is kind of okay, but it's because i'm controlling my costs, which means they're not adding people, they're not buying equipment, and i'm not willing to spend a dime on the future until i see more certainty and more positive leadership out of washington. >> so, you're having trouble finding loans to make at this point? >> well, we're actually as of the last reporting period, i think we're in a quiet%, we're actually having pretty good loan growth, but it's moving market share. the agrigate loan growth in this country is very slow, and it's

because small, medium-size businesses are not investing, they're not growing, and so until we see people -- business leaders have confidence in the future, they're not going to invest. it's all about confidence. now, the good news is, there's pent-up demand. when you talk to these folks, they say, i need to replace my trucks, i need to expand and add associates. so if we can get the right type of changes in washington, i really believe we're in for a positive economic spurt. however, until then, i don't think much is going to happen. we're going to muddle along right through november, right into january, and then the business leaders are going to read the tea leaves and see what they see, and if it's positive, we'll move forward. i wouldn't be a bit surprised, andrew, specifically to your question, if you at numbers were in by the end of the year if we're either flat to slightly negative in terms of a technical recession. >> okay. kelly king, you're going to be sticking around, appreciate that. the u.s. interior department

unveiling its five-year drilling plans. joining us right now with his reaction to this is jeff gerard, the president and the ceo of the american petroleum institute and he represents the oil and natural gas industry. what do you think of the lease offerings? >> well, i think it was a missed opportunity, and the reason i say that is, what the president's proposal does is really just holds us constant with where we've been for many years in the past. he hasn't opened up any new lands on the atlantic, any new lands on the pacific. and as a factual matter, he hasn't really opened anything new in the gulf of mexico where we've been for, you know, 65 years. so, we think in this current game-changing opportunity, the need for job creation, we could have been bold. we could have had an energy policy for the united states to make us more energy self-sufficient. unfortunately, the administration missed that yesterday. >> although, jack, you could come back and argue that the price of oil has come down pretty drastically, down by $20 over the last few months and

maybe there's not as urgent a need as there had been. >> well, i think the your jedgesy of the need is always there. we shouldn't look at the short-term price of oil to influence if you will our long-term thinking. as you know in the oil and gas business our horizons are 10, 20, 30, 40 years. >> of course. >> and the bottom line is we'll need more oil and gas into the future, now's the time to plan. when the administration issues a lease, it normally takes us four to seven years to bring that lease to production. so, now's the time to think big, think long term, create jobs as we're doing it. >> a lot of the talk around independence, energy independence, has really centered on what's been happening with the gas business lately. and the gas drilling is taking place at a lot of places on land. is that something that can get us and move us down the road, and how heavily should we be relying on that? >> well, we should look to the united states more and more to produce our own energy. there's a recent economic

analysis shows that if we take the potential of the united states, coupled with canada, and add to that the growth in renewables, we could be energy self-sufficient right here in north america in the next 12 years. so, this is a great opportunity with modern technologies to rely less on those volatile parts of the world that have great concern for all of us, but to do it at a time when we need the jobs, the creation, the opportunity to generate revenue to federal and state governments. so, now's the time to be bold, conspiracy so exercise some leadership. yesterday appeased key constituencies for the president, but it's not a vision for energy self-sufficiency, we believe now's the time to do it. the gas and oil potential is huge in the united states. we're the most energy rich in the world. >> if you're in favor of energy

independence, are you in favor of stopping exporting what we're drilling in terms of natural gas? >> no at all. after we've flood the united states and the price has gone down to $2 to $3. >> you've got to the pick one or the other, are you more for energy independence or being able to export and create jobs? >> you can have both. you can create a lot of domestic jobs by producing not only the energy that we consume but nergy that can be exported around the world and we have the volume to be able to do that now, do the modern technologies. >> all right. i mean, i still think you got to put one before the other. if you had to pick one of those, which comes first? maybe you can say we'll be in favor of all it, we can do all things eventually, but if one has to come at a higher priority, what will it be? >> clearly at this point we produce all the natural gas we can consume, that's why you see the price coming down dramatically. but what we shouldn't do is stop drilling in the united states

because the price has gotten well below our cost. we should keep the drilling operation going and allow that relief valve of exports to allow us to create american jobs and produce all the energy we consume -- >> but the people that are setting up the plans to export things, those are major capital initiatives as well. >> absolutely. >> so, you're not talking about something they plan on doing until the next couple of years until prices come back either. >> well, these are long-term visions as you just commented. >> right. >> these are multibillion dollar investments, so what is there, we need to prepare for that future. but, look, here in the united states we've created -- the state of pennsylvania, for example, last year we created 83,000 new jobs in pennsylvania. producing natural gas. it's a game-changing opportun y opportunity. we're saturating this market. the price is coming down. if we had the relief to export and had the capability to export, we could keep creating those jobs right here in the good old usa.

what an opportunity at a time we need it most. >> jack, thank you so much for joining us today. we do appreciate your time. >> thank you. good to talk to you. >> jack gerard is the ceo of the api. dennis gartman pointed this out, up better than 43 bucks right now. big move, it's heading right back towards $1,600, i don't know what is happening. >> anything that is related to the weaker dollar this morning is rocketing higher, right? crude oil, gold, certainly has a lot to do with it. wow, it's almost a 3% move. okay. when we come back, health care reform exists on paper but how's it going to be implemented? that's a big question and a large part of the process will fall to the states we'll talk to the governor of connecticut about the process and, of course, the challenges. that's coming up next.

welcome back to "squawk box" on this friday morning. forest lab shares on the rise. investor carl ichan is suing that company for failing to produce requested information. andrew? okay. the supreme court's decision on health care has huge imications for the states, that's where a lot of this will get done. connecticut governor dannel malloy joins us this morning. you guys have been one of the leaders on this. and this obviously allows you to move forward in a much quicker way. but i'm curious, give. all of the rhetoric we've heard this morning already, the second

the decision came out that there's going to still be a real push to repeal this, how does that change or even impact your thinking? >> i think you got to start talking to other people. the reality is, the package had gone down yesterday at the supreme court, 500,000 people who would otherwise be covered in connecticut would have lost that opportunity. this is good for business. it's good for job creation. and quite frankly, it's the right thing to do. we -- the alternative is to not get involved in keeping people healthy, have them get their treatment at the emergency room, at the most expensive point -- >> right. >> -- and well into their disease where you're only confronted with in many cases end-of-life, high end-of-life costs. >> governor, kelly king, the ceo of bb&t is here. you have a different view. >> governor, certainly we're all trying to have good health care in our country, and certainly we are all trying to create jobs. but i would respectfully disagree with your view that

this health care program's going to increase jobs. it's a massive tax increase across the board. the lower income folks are taxed, small businesses are taxed, larger businesses are taxed. middle-income people are taxed. how's that going to help grow the economy? >> and, you know, i've been listening to you all morning, and i certainly understand that you have a point of view. but the reality is, you create jobs when you extend coverage to millions and millions of additional people who are otherwise not accessing health care. the reality will be in the united states that this will, in fact, create jobs. there's no they are way not to have that happen. and quite frankly, here i sit in connecticut, we have some of the biggest health care players. you can argue that the margins of profit will change, but you can't argue that there's going to be more work to do. there simply is going to be more work to do because more people are covered by insurance. >> go ahead. >> not to be argumentative, but you're right. certainly there will be some

jobs created in health care delivery. my point, though, is from a global perspective, this broad-based tax increase will cause a reduction in jobs across the entire country, and so while you will get some independent growth maybe in health care, you'll lose a lot more on the other side. >> you've chosen to ignore in the fact that there's a lot in this package to hold costs down and you're choosing to ignore the fact that in the united states we're paying a higher percentage of our gross national product to support the current medical system with little cost control and little being done particularly to cut the cost of providing services to people who don't otherwise have good health care. i think you've made a decision that there's no way that this works, quite frankly i think the american people when you ask them about the individual provisions absolutely understand that this will work for their families, whether they're in the middle-class, lower class, or the upper class, we need to have an america where people have health care. >> but, sir, respectfully, there

are people who have looked at this plan, analysts on wall street cover the very companies that are directly involved in the implementation of it and say that it's very likely that premiums will rise over the long term making the affordable care act not as affordable as you and other members of your party believe. >> can we be serious for a moment? >> it was a serious question. >> what period in the last 20 years have health care premiums ever gone down? >> they never have. >> okay, in this package, you don't have to simply listen to me, a lot of other analysts have looked at this thing and say that prices will, in fact, rise less rapidly than they would otherwise -- >> but they will rise. >> but one second. one second. since the passage of this act, prices of coverage have actually increased at a lower percentage rate than at any time in the last 15 years. that's a reality. >> governor, just walk us through the practical permutations of what happens next on a state perspective. >> well, you know, we've been

actively engaging in working at setting up our marketing tool, and most -- many states have not done that, but we've done all of the hard work and we'll continue to do the hard work so that by 2014 we're up with our system. to make sure that people have access and can compare costs. that's what we're doing. that's a hard piece of work to do, but we didn't, you know, sit on the side like a bunch of folks did predicting one thing would happen and have the other thing, we've done the hard work. >> but, governor, the flip side is had this decision gone the other way, you would have spent a lot of money that you probably would have been upset spending. >> well, in point of fact, a lot of the money that we have spent was money that flowed to the state under the act. >> but you're saying this morning -- >> and, by the way, created jobs. >> will connecticut opt out of the medicaid provision? >> no. >> governor, can i ask you real quickly, i mean, i realize that there are an awful lot of problems with the health care system the way it was set up

before. there's millions of people that need coverage. there's a real need to bring down costs, but there are still some serious questions about how it gets implemented. there are small businesses that raised concerns about the burden they'll face once they have 50 people or more and are forced to require -- are forced to provide health care. i guess my question is, we don't want to assume that there are no problems with this and that there aren't going to be some real glitches that go along. other industries like the medical device makers are going to be paying a tax that will hold back on some ends. and i guess my question is, clearly, there were problems with what was out there before. clearly we need some fixes, but there are many people who don't think this is the perfect solution and there still needs to be some work. would you agree with that? >> well, listen, i don't think it's a perfect system. i think the president has said that. the president has said there are things we'll have to do just as we have to make changes on an ongoing basis to reflect market conditions. but listen, this has been up and running in massachusetts thanks to the good work of governor

romney, we actually have a test case. i mean, he proved that -- >> everybody's got political talking points. nobody's answering actual questions. >> i am answering the question. wait a minute, i am answering the question. do things have to be changed as we go along and learn more about the package, absolutely. >> governor, real quickly, politically the idea that it will now be described as a tax going forward, how difficult does that make the upcoming election? does it change the dynamic? a different way? >> well, you know, this is a wonderful thing about republicans, they get to have their cake and eat it, too. they were ready to spike the ball yesterday if it went down and they want to spike the ball today because it's a tax increase. the american people understand that we're spending too much on health care, that it was rising too rapidly, and too few people had access to health care which was also costing actually shifting costs very significantly because we were causing people to get late -- latent disease treatment at the most expensive point, so the reality is, you're going to call

it a tax. everybody you have on now, let me say it -- >> the supreme court called it a tax. >> 80% of the people you have on your show are going to decide t supreme court. that's why they allowed it to stand. >> 19 million american families until the middle class will actually get a tax cut. >> all right, sir. >> we're going to leave it there, governor. we appreciate your time and we wish you a happy fourth of july next week. >> you, too. when we come back, europe ruling the day on wall street. every headline seems to move the market one way and then the other if you wait long enough. we'll head to the big board right after this. [ male announcer ] it would be easy for u.s. olympian meb keflezighi

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carl and carl and melissa getting ready for "squawk on the street." a lot to talk about this morning. obviously that big development out of europe. >> yeah. i've seen so many headlines today that say merkel blinks although a lot of people do not believe this risk-on rally is going to last the whole day. >> you know this very well, scott. every rally we've seen has been an opportunity to fade it. that's what has happened. you have to wonder when you have the ford news and the nike news, calling into question global growth, the growth in china as well as the prospects in europe, you have to wonder how long the markets are going to hold on to

this little glimmer of hope coming out of this eu summit. >> certainly looks good for now. guys, see you in a bit. final word from our basketbaguest host when we come back. next week, we're celebrating america's birthday. companies built from the ground up right here in the u.s. they're helping millions build the american dream, creating jobs and the products we use day in and day out. guests include cheek koe's, gibson guitars, hershey entertainment and more. starts monday at 6:00 a.m. eastern time. god bless america and god bless "squawk box." fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments.

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i get a bunch of kids waving at me... giving me the thumbs up. it's always a gratifying experience. it makes me feel good about my car. i absolutely love my chevy volt. ♪ welcome back, everybody. welcome back, everybody. let's get final thoughts from our guest host, kelly king, the chairman and ceo of bb&t. as a banker who is sitting and watching, we have a lot of questions about what's been happening with the economy. several guests have told us even today that the situation in europe is deteriorating more quickly than expected. by that, they mean the economy there. we have heard concerns from other companies that do business there that things have slowed down. i'm wondering if that slowdown

in the economy f you're seeing it at the bank. >> yes, clearly, the slowdown in europe has a twofold effect on us. one is a psychological effect. many other factors are causing our country to slow down. as we talked about earlier, we're clearly in a slowing mode. you saw that from where the federal reserve said last week. it's interesting that -- there are lots of negatives and issues that we've talked about today. but a point that i would like to stress is that fundamentally there's nothing wrong with the united states of america. in fact, there's everything right. we have a great land. we have oceans, we have rivers, we have lakes, we have mountains, we have great natural resources that we choose not to use. but we have all the resources necessary to be a great and vibrant country again, once again and lead the world. what we lack is positive

inspirational leadership out of washington. if we had really good positive leadership today out of washington, there's so much pent-up demand in the business community, you would see businesses invest, create jobs. people would be able to take care of their own health care because they could make enough money to do what they want to do. >> and people who are just joining us, they would think you're a republican. but you're a democrat. >> i'm an american. i believe in this country deeply. it's sad to me to see the future for our kids and grandchildren may not the past that we've all had. i'm pulling for america. i'm pulling for creating jobs. it's the most important economically. i'm hoping we get the right kind of leadership, democrat or republican, i don't care, in washington to help set a vision, an inspirational vision for this country. >> would you ever go to washington yourself? >> i might just do it. >> if you do, you have to let us