good morning. welcome to box here on cnbc. i'm andrew ross sorkin. along with kerr kerr and michelle caruso-cabrera, becky is off today. let's bring you up to speed on what's been going on overnight in the news. china's annual consumer inflation cooling to 2.2% from last month. economists say the data gives beijing more room to ease monetary policy to support growth without stoking upward price pressures. china's premier is warning of a further economic slowdown. wen promised to fine tune the country's economic policies but provided no new details or initiatives. ecb president mario draghi testifying before the european parliament today after a rate cut last week the markets will watch to see, of course, if he signals more dramatic measures such as buying government bonds

or flooding banks with appreciate liquidity. back here in the u.s., today president obama, he's calling for a one year extension of bush era tax cuts for families earning less than $250,000 a year without congressional action those cuts expire on january 1st. now to michelle who has both the morning's top corporate news. >> dow alcoa reports. estimated to be up 5.8%. if you remove apple and bank of america, even if you just remove bank of america growth is seen dropping by .4%. if you're wondering why boa, they had a bad quarter compared to a year ago. farnborough air show is under way in europe. meantime boeing is said to be considering a new competing verge of its 787 dreamliner.

boeing ceo jim mcnerney will join phil lebeau live at 7:00 a.m. eastern time. thompson reuters is buying fx alliance. heineken will delay investments in brazil after the government raised taxes on beer. starting in october beer taxes will be 28.8% up from 17%. brewers are already suffering from costs. joe, say it ain't so. >> it is so. also on our radar this morning lawmakers returning to capitol hill from their summer break. among the items they will be dealing with in the coming days, tax break proposals and plans to hold votes on repealing the health care overhaul bill after that supreme court decision. it will pass in the house won't pass in the senate. should be fun to watch though. thousands of internet users may not be able to get online today

because their computers are infected with a rogue virus tied an online advertising scam that took control of half a million pcs. it's happening, it should have happened prior to this. the original terminator, it all started in about 2012 or 2013. we're right on track. >> who is behind this? >> cyber systems. the machines. >> i thought you have been to code academy. >> write code just to have fun. you go to bed, bath and beyond. but if i do something i'll write some code. whether i use a four tran -- of a you ever written a line of code? >> yes. >> in high school or college.

>> pascal. >> high performance pascal? >> rubion on rails. >> governor of or senator from florida. >> no. basic. do you remember basic? >> cobalt. >> cobalt on my commodore. >> the federal government had been working for no, sir repair the damage at midnight the fbi began shutting down the internet servers that were set up as a temporary safety note keep infected computers online for the past eight months. a court ordered the agency to keep the servers running was not renewed. >> if you give executers too many ainntibiotics. >> do you know how to set the font so old people can see?

>> i can't get to my computer. >> you can't get in? >> no. >> they lock you out. >> they lock you out. >> that might be intentional. when you were talking earlier, did you the 250, so obama will come and say extend the bush tax cuts. have you not seen this movie before? >> yeah. >> and the republicans will say no. we dwoint if it's not for across the board. so here we are again. but we're in an election year where they will both posture on the two sides. >> is there even a bracket for 250, would have to have a whole new bracket? >> i don't know. the "journal's" piece there's a lot of red state democrats that are feeling the pressure and waffling a little. we'll do it again. anyone thought that we were going get beyond --

>> when you start to add it up, they put that chart comparing tax rates under obama's plan versus tax rates under romney's plan, the difference is dramatic when you start adding the whole medicare tax, health care reform. >> we'll talk to simpson and bowles at some point this week or becky is. with buffet and simpson-bowles. i don't know. >> we'll get it solved. give those two guys a chance they might come up with something. >> they take it down and get rid of the deductions. >> what's amazing everybody in washington says they are very comfortable with take it down and getting rid of the deductions but nobody in washington manages to bring it down. >> the effective tax rate is so low so there's no incentive. >> it's completely different. >> you talking corporate the reason there's no incentive the effective tax elevate lower than the rate than simpson-bowles or

anybody has come up with. >> that's a false narrative. in other countries you have deductions. you start with a loefr overall rate and add the deductions. we're up here at 35. you think it's more like 22 or something. other places they are at 15 and more like 11. >> to me the issue is you look at apple, you look at some of these other companies that are paying a global tax rate of 9% or 10%. how can you capture more revenue out of a company like apple even if you drop the rate to whatever number it is. >> corporate tax rate, it's not corporations. >> they are composed of people. right? i mean they are not -- buildings can't run a corporation. >> he's speaking of mitt romney. >> the supreme court ruled that actually corporations. >> we haven't seen each other, so much news. >> what do you think of the libor sex scandal?

>> there was a libor sex scandal. by the way, duke energy deal. which is a whole other drama on friday. i watched you guys on friday morning with the jobs numbers. >> i was already not a big fan of rogers. >> jim rogers? >> commodities. he's long. he's short. he's constantly on tv on financial channel. how will he run utility this jimmy rogers. he should not be running the utility. >> and make believe every week as well. >> exactly. i can't see anything. >> my computer is a mess this morning. >> i got this rogue virus. it's better, would you not rather have your computer get a rogue virus than yourself? personal wise. if you had to pick? >> if i had to pick i would go with the computer. >> we've gotten some economic data out this morning.

china, there's talk of -- some people saying deflation for china believe it or not. inflation numbers came out. spanish yields are above 7%. dow jones industrials average open lower by 43 points. nasdaq open lower by five. s&p open lower by four. let's show you what's going on with chods. price of energy is hire. wti is up seen is brent. wti is at 84.87 a barrel. brent is at 98.64. heating oil at 2.72. gasoline at 2.73. ten year yield is up 1.517%. a gain of a third of a point on friday. we saw it climb by more than a point. incredible move. look at that yield. 1.51%. show you what's going on with the dollar. dollar is weaker across the board less than 80 yen per euro over dollar. we're below a buck 23, 1.2284.

three session's ago we were talking about 1.25, 1.26. >> a week from friday. >> where you going? >> italy. >> nice. >> france. >> nice. >> and it's going a little cheaper. >> a lot cheaper. >> cheaper to go over there. >> because it's so deceiving. oh, that's roughly $10. no, it's $15. the price of gold. >> did you watch any talk shows yesterday? >> gold 1582. >> die not. i was on an airplane for most of the day. >> i was hearing on one of the shows steve rattner was talking about how his firm had -- i don't know, i haven't confirmed it -- his firm was more ethical than bain. >> the firm that took an hour and 15 minutes away from my life because i had to watch a movie

that i spent a penny for. >> this was the movie -- >> have you ever seen "chooyh"? >> no. >> don't bother. >> he implied romney was less ethical. >> barclays. >> i don't remember bain ever settling for, how much was that settlement? >> over a movie named "chooch." one of the pays he was going to fund this really crappie italian mob movie. >> i was about to tell you during the break we'll pull the tape. >> we sometimes play other networks sunday programs. >> not a good time to do that. >> it's time to go across the fond get the global markets report. kelly evans is standing by in

london. and kelly, tell joe how well he'll do on that vacation? he's using pounds. >> yes. yes. your dollars will go further in europe than britain. if you're on this side of the atlantic pop by the studio, say hi, hang out here a little bit. >> i'll wave as the jet goes by. have you been on the i yet? so scary. how far done that thing? >> let me just get to the global markets. i'm about to trip over. i can barely hear you guys. decliners outpacing advancers, 8-2, that's where we are, 4-1. stoxx 600 down by 1%. you wouldn't expect 2.2% year on year inflation to be a figure to hear out of china but that's where we stand. even though that could open the

way for the central bank toez more it's not helping markets and get a bid. in spain this is the one to watch. ibex down 1.68. dax down by a quarter of a% and ftse 100 down by half a percent. the euro group is meeting today. this is the group of europe's finance ministers. we don't expect anything. we have some headlines that they might give spain an extra year to meet their targets. spain's ten year is at 7.08%. cbs spread are moving closer to that base level. italy showing strain. 6.126. france and the german bund getting a bid. germany just want to mention this, joe listen up, they just auctioned off six month bills with a negative yields. i believe it was negative .043%.

if you're wondering what's going on with oil prices. brent, keep in mind we could be hours away from shutdown of norwegian production over a standoff on pensions. 62 is too late to retire. euro dollar down by .1% of back to you. all right. kelly, i was worried about you for a second. you almost bought it there, didn't you, walking along there? that i've not seen. >> amazing i haven't done it yet. >> we haven't lost anyone yet. we're off practice prancing around. it's hard to constantly be walking all over, pointing at a wall. >> i don't know how you do it. >> my heels. we're going to give you, tell you what's coming up. meanwhile are you able to --

whoa. >> my hair is big today. we'll take it down during break. >> somebody is going whoa -- you're going like this. so it's heavy. you noticed it first. >> yeah. the volume -- i amazing. that's how you get your volume. >> i have to work on volume right here and here. coming up fortunes list of the world's biggest companies. which names make to it the top? find out next. first, those a hollywood passing, ernest borgnine died. he's a guy i thought he was guesting up there 10, 15 years ago and he was. he was born like in what 1917 or something because he was 95 years old. best known as the screaming naval officer in "mchale's navy" and beating up frank sinatra in "from here to eternity."

he played a love sick butcher in "marty." sounds like a horror film. that's what happens when a butcher gets love sick. today he would cut somebody up. ea ernest borgnine of 95 years old. t ends july 31st.

we take it on ours. this summer put your family in an exceptionally engineered mercedes-benz now for an exceptional price during the summer event. but hurry, this offer ends july 31st.

welcome back. time for today's national forecast. alex wallace joins us from the weather channel. i'm sorry. it's habit, you know.

alex, go ahead. >> good morning to you. as we head through this morning we're finding ourselves a little wet in the mid-atlantic. d.c., baltimore could be a little bit of a slow go for that morning rush with all this activity moving its way on through. we'll eventually see a lot of these showers and storms slowly sag towards the south and the east and that's going to be our threat zone for at least potential for severe storms. spotty in nature out there with damaging wind and hail and locally heavy rain. from richmond to raleigh, charlotte back to central sections of tennessee that risk will exist. good side of seeing that rain a bit of a cool down for many. remember last week massive ridge of high pressure in the eastern half of the country. keeping things hot. we have a trough developing in the east and allow cooler air up in canada to lied southbound. so for us in the middle of the week we'll enjoy temperatures in the 80s as opposed to the

hundred. d.c. by wednesday 87 degrees. back toward the west still july hot at 90 at indianapolis but it has been hotter and even into parts of the south finding mostly 80s in play from nashville towards montgomery up to 90. cooling down in the east but in the wednesday we're heating up. sort of flipping things here fours. in the west the ridge is building. temperatures here in the hundreds. no stranger in vegas. boise getting up to 104. tuesday widespread hundreds to deal across the west. one area gets a bit of heat relief. another area not the case. back to you. >> thanks for that, alex. we have a first on cnbc. "fortune" magazine is unveiling the list of the world's largest corporations. top ranked company royal dutch shell. the executive editor is here with a closer look at the list. let's go through it. take us through the top five and

you can do it like letterman from five to one. >> let's go one to five. because it's the story of big oil as usual with the list. number one, royal dutch shell. number two, our friends at exxonmobil. number three walmart. number four bp. number five sinopec. with the exception of walmart all energy companies. >> who is off the list. who has fallen? who has gained? >> not surprisingly we saw apple jump 56 spots on the list to number 55 this year. that comes so expense of the historical stalwarts in the mobile phone business. alcatel lucent off the list this year. meanwhile you see companies like assar off the list. >> if i were to invest in the top ten companies i would be

down in a big way, right? >> right. but this is a list of -- it's a snap shot world. >> and revenue. not a market capitalist. >> what i'm suggesting if this is the snapshot of the world we have problems? >> yes. financial services represent the number two category on the list, all the big banks are down in the rankings. >> how much did revenue grew? >> to $29 trillion. up 13% over 2010. and profits grew 7%. >> i noticed volkswagen number 13 on the list? where was it last year? that seems high on the list. am i crazy to think that. >> they have been always in the top 50. toyota is in our top ten. always been a top ten. >> historically, one of the things that's interesting with this list is that you show the revenue compared to the profit. >> yes. >> where is the profit on this?

how would profit break down on this list? if we turn the whole list around what would it took like? >> as a profits list you would have different companies on the list. i think, you know, the companies that are the world's largest companies by revenue are not necessarily the world's largest companies by profit. >> what were you going to say? >> you know, depending on how you want to rank tight as a percentage of revenue. >> exclusive. >> come on, it's early. >> profits don't necessarily -- >> profit margin. >> okay. >> i'm just thinking. >> of course a company like exxonmobil has huge profits. that company would rank at the top of the list along with bp. the oil companies do have huge revenue and huge profits. >> that's trust technology.

apple, for example? >> right. for example you have these enormous technology companies like the ones i mentioned that have been struggling like rimm, like nokia that have big revenues but the profit picture has been -- >> different question. we saw the jobs report on tri-. one of the pieces you point out in the report relative to all of this why hasn't hiring picked up? >> if you look at the cumulative global 500 it ememploys 16 million people worldwide which sup is up 5%. the growth in employment is not matching the growth in profits or the growth -- >> historically, did it? >> historically, again this is a worldwide list. you have lots and lots of companies, particularly in european countries but also in latin america that continue to

see employment gains and they weren't necessarily matching -- it was not necessarily dependent on revenue or profit. now around the world everybody is looking to maximize their, maximize what their employees are doing. so what you're seeing is huge efficiencies across the board. in other words, squeezing out more. >> this list, do you do anything differently about this list than if i were to run this myself in terms of looking straight up on revenues? is there some weighting going on that i don't know about? >> we don't do any weighting but we look at revenue dimply than sometimes the ways the companies report them. particularly the thing that we do that's an added value we insist on audited information from the chinese state-owned enterprises and other companies that don't provide that. >> how accurate do you think the numbers. >> are >> numbers are pretty accurate sfwheem take that to the bank. thank you for joining thus morning. >> coming up earnings, europe

what else can the bulls be worried about this week. we'll find out. first sports news i watched this yesterday. i got to say, andy, what a great speech. roger federer back on top in the tennis world. imwill third seed beating andy murray. listening to the brits still talking about the world cup the last big thing that happened in 1966 when they beat germany. he tried hard. he, unfortunately s-in an era that includes federer and nadal. he hoisted the winner's trophy for the seventh time and 17 grand slams. number one again. there's his twin. 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.

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♪ good morning. welcome back to "squawk box" here on cnbc. i'm kerr kerr along with andrew ross sorkin and michelle caruso-cabrera. becky is off today. i'm going to go with joseph richard kernen today. >> jrk. three namers. >> we got michelle caruso-cabrera, why not. you get to talk about yourself one extra word. >> we get more space. >> do you do rich? >> joe rich. >> you leading to dick? >> i was not. i was not going to. i was not headed. >> i thought you were talking about his tax bracket. >> another way you can go.

>> i have a friend his name is rich and his whole life is dick. >> what's the big deal? >> i don't want to out him making headlines, europe's regulatory commission looking for criminal sanctions against libor abuse. clamping down on insider trading and other wrongdoing. political fight in uk over the fixing of interbanking lending rates is deepening this weekend. confidential advice from the ubs to the previous labor government was published with the suggestion showing,000 reduce the key libor rate at the height of the financial crisis in 2008. like a good idea. the conservative led coalition has tried to pin part of the rate fixing on the government of former labor prime minister gordon brown and questioning

whether the party directly or indirectly sanctioned the manipulation. we talked about it, andrew, when you weren't here. >> read some things on twitter about things said on "squawk". >> when private banks do it, when central bankers do it it's a totally different thing and central bankers because of their heft and size can dislocate markets much more than a private banker ever could and probably build up, you know, asset bubbles and things that need to finally come home -- >> if all the things that you could push out, the ceo of a bank for during the financial crisis, it was about trying to keep libor lower during the crisis at the behest of government. >> there was a wink and a nod that it would be good to look safe. >> i am confident regulators understood what was going on.

>> explain bob diamond to me. >> they hated him all along. >> politics of london. politics of uk -- >> american in london. they never liked him over there. >> fat cats write stories with the headline. they do like the fat cat list on sundays. it's a whole different -- >> they use word scandal. no sleazy woman. no abuse of corporate jet. this is not a scandal. >> no, no. >> they are not scandal. >> there's lying involved. there's lying involved. the idea that people are -- they were attempting to manipulate the stuff, you saw -- >> you heard, one of the central bankers over there saying oh, yes libor the rate that banks are paying not to lend to each other. there was a moment when libor didn't exist. you could have posted mid-zero. is that a lie? come on.

>> clearly they were bidding, if you will, at prices that were not their own prices, making up prices. okay. is that truthful if you're making up the price? >> andrew doesn't like the walmart -- >> i'm not a walmart prodigy. >> retailer sears cut its estimate of how much saerks 15 years ago would have bribe ad couple of people. how much would be required to contribute to its u.s. pension plan. its minimum required fiscal 2013 contribution is about 380 to 340 million. the january estimate was way up. >> let's check on the markets. futures are indicating a lower open. we got concerns about europe, spain's ten year and then some inflation data coming out of china. we've heard people use the word deflation pap dow would open lower by 30 pits. s&p lower by three. nasdaq lower by two.

earnings season kicking off this week with alcoa. it will be a big week, important for the united states. wti is higher by 61 accidents, brent is higher by 66. below $100. ten year yield is lower. we saw big moves on friday. ten we're is higher, 1.52 is the yield for the benchmark. dollar was lower across the board. 1.23 for the euro, left week i think we were talking about 1.26. it was a two cent move in under 24 hours. the price of gold -- >> thursday it moved two cents? >> it was a day -- it started to unravel all the stuff, the euro, those three things. we don't know whether the senior debt is not, you know, if we thought that was going to happen. >> subordination. >> merkel, what did you agree to? >> what did you expect in >> i don't know.

that time i want looked better. >> always looks better for a day. >> looked like the germans were finally thinking. >> there was a little bit -- there was some movement. >> the countries are still on the hook for the bank but they didn't want that. the way the sovereign debt, the bank that would supposedly be senior to the sovereign debt. how do you solve more sovereign debt. >> it's a mess. growth fears also spooking the bulls. major index sold off on friday. let's get a head start on the trading week the chief economist at moody's economy market. good to see you. your assessment of that number on friday looked awful. what do you think? what is it telling us about the economy especially in the wake of the other economic data? >> all stagnation and malaise. that report tells us to brace ourselves for a further slow down by business sales and profits. >> how much of a slow down?

i heard a few people not many start to raise the question of the r word. is that possible? >> we need to be concerned about a recession if we begin to see companies report more and more year to year declines. we're getting dangerously close. it wouldn't surprise me where in contrast to a consensus call the profits from current production grow by 5.5%. that aggregate comes in by only 2.5%. >> you're talking about the quarter we'll hear reporting starting this week. >> i'm talking about the entire year. but we could see nonbank company profits growing by a range of 2.5 to 5% which very weak. >> for the current quarter? that would be good? if you take out bank of america from the s&p 500 for this reporting season you see a negative, you see a decline in earnings for the s&p 500.

we could be there concerning what you're talk about. >> again, i'm taking out, limiting this to a nonbank companies. the fact of the matter is in 2011 this particular measure of profits from continuing operations grew by 17%, 2000 attendance up by 30%. trend line is definitely lower. as long as it's moving lower companies will be in no mood to add to production capacity and not going to be on the verge of stepping up hiring activity. >> all about the u.s. or do you care this morning that the spanish ten year is above 7% or chinese inflation numbers came in so low? >> yeah. i think what's going on in spain and the rest of europe is quite worrisome. there's a recession under way in europe. the last thing in the world you need in a recession is a decline by benchmark government bond yields and that's going on in

spain and italy. spain 7% government bond yield, when in reality what spain requires is a government bond yield perhaps no higher than 3%. >> yeah. they are not getting it any time soon. thank you for joining us. we appreciate it. >> you got comments, questions about figure you see here on "squawk," shoot us an e-mail. and representative buck mckeown is on the "squawk" set and that's coming up after the break. s finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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welcome back. u.s. equity futures at this hour are suggesting a slightly lower opening. making headlines, wireless carers are raising concerns about campaign donation by text message. last month the federal election commission approved letting cell phone users make instant contributions via texting. the plan has been backed by both political parties. however, the wireless carers are worried about liability and regulatory issues they could face in handling contributions sponsorship the companies are asking the ftc for more guidance on how they should implement donation by text program. >> military spending cuts are said to be enacted in january. our next guest warns the uncertainty about future defense contracts is already taking its toll on the economy. joining us on the set, congressman bud mckeon. even in recent jobs reports you can see this being reflected, right? >> we did a series of hearings

last september. we did five of them that would show, that showed what these cuts, the impact they would have on our defense. and the last one showed the economic impact. a professor from george mason university has studied, showed if this sequestration kicks in which is the law, we would lose that plus the 487 billion cuts that's in this budget now we'll lose about a million and a half jobs. >> this is a hard question to ask. should we ever be considering in talking about defense spending, do we ever need to consider not the security of the united states and the world? do we have to consider the business implication for private corporations on what we do? >> the first five hearings were the impact on the defense. >> on the nation, on our national security. >> on our national security.

that's what's important. i mean we do not have a defense to provide jobs. that's a side benefit. it's a great side benefit but that's not the purpose. constitution says we have the responsibility to provide for the common defense. i was in a meeting a couple of months ago in the pentagon when they were first laying out some of this budget stuff, and one of our top military leaders was sitting across from me, towards the end of the meeting and he looked at me, he said you know in my 37 years doing this i've he in veer seen a time more dangerous than right now. we look at iran, we look at china, we look at the arab spring. >> europe has been able to depend on us and go wild with entitlements. we fund everything. we until grow faster than they do. but that can't be forever. should we be the, should we be providing security for the entire globe? >> you know, since --

>> it's a world war. >> wait. we have an ocean on both sides. they don't. if they are going nobody vad by somebody it's a lot easier for them nobody accommodated than us. why have we subsidized them for so long? >> 95% of our commerce travels on the seas. since world war ii our navy has kept those sea lanes open. there's several choke points if those get shut off our economy would be impacted immediately. gasoline prices would double. if they shut off the strait s hormus it's not all sense altruistic. >> when you look at an annual basis on what we spend, when you add the defense budget, when you add homeland security, you add veterans affairs we spend more than a trillion dollars a year. we spend more than the rest.

we are the biggest military in the world. we should be. is there no room for cuts. >> if we can't find room for cuts -- >> in the defense department? >> you're arguing the number is too high. >> we are. we're at war. in my lifetime i've seen this cutback after every war. that's in our don. we do that so we won't be prepared for the next one. >> when you hear politicians use the economic argument, last week we were just talking about it and this is the chicken and egg issue, now you're starting to hear other politicians, there's another reason why we can't cut the defense budget, the drag on the economy. do you literally tell them absolutely you got to stop that argument that's not a winning argument? >> what i'm saying is that -- you know just before the last election we said we're not going to cut homeland security or defense. that election was a huge election and we picked up 87

freshmen. they came to town saying, you know, with all the spending problems and the debt problems everything has got to be on the table. we have cut since that election going into the 487 billion that we've already cut in this budget and then the sequestration on top of that, another 500, 600 billion, that's a trillion dollars over the next ten years out of defense. i'm just saying that it's excessive. the 487, the chiefs have had a year to work on that. they say they can live with that. it's going to be tough. we'll have big cutbacks. take the navy back to the size it was in world war i. the air force smaller than it's been since interests creation. >> but this is symptomatic. we're going do this. sequestration, it's going be so bad this will force somebody to

make a deal. >> see, so defense, the president gave a speech, cut 400 billion more out of defense and the chief saluted and planned and have studied it and said they can live with that. but the 500 to 600 billion in sequestration that was never supposed to happen because the super committee was supposed to do their work and we were supposed to work this out is weeks go by, months go by and it looks like nothing is being done to stop it. i've been talking about it now for about a year. people are starting now to say wait a minute, this is, this could happen. >> like the fiscal cliff. >> where is your district? imperial empire? you're in california. >> yeah. >> where are your. >> have the largest district in california. >> where, in size not population. >> size, it's -- >> where is it? what's your main city? >> north l.a. county. i have a little part of l.a.

city. and then a large part of north l.a. county. have of san bernardino eastern >> i'm wondering where you get elected in that place. are you -- any of your cities on the new high speed rail that -- i mean, you need an indio to san bernardino high rail don't you? >> talk about a bridge to nowhere. >> you got all the other green stuff working for you so well out there, too. >> yeah. >> your days are numbered. anyway, congressman, thank you. no. hopefully you'll be able to represent that side of things. it is tough out where you are and i saw numbers. it is like i think obama's up by 86 points in california right now. right? >> well, we could split california in to ten states. >> you could. >> that's true. >> and might not be a bad idea. >> yeah. different result. thank you for being here this morning. coming up, we have wisconsin governor scott walker on the set this morning as our guest host.

plus, boeing ceo and we have got a big squawk special coming up later this week. searching for solutions, the two men prosupposed a solution. alan simpson ander skin bowles warn warren buffett and becky this thursday. stay tuned for that. and a lot more. re. and so too is the summer event. now get an incredible offer on the powerful, efficient c250 sport sedan with an agility control sport-tuned suspension. but hurry before this opportunity...disappears. ♪ the mercedes-benz summer event ends july 31st. ♪

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we're back this morning. we have got a deal crossing the wirl this is morning just right now. wellpoint is announcing that it's acquired amerigroup $4.9 million, $92 a share. 43% premium. >> cash. >> the deal's all cash, worth noting. saying it will close in early 2013. also, that the deal will be a creative, almost immediately. earnings per share 2013 and costs and then they're expecting it to increase 2014 and exceed $1 per share by 2015. this comes obviously after the big health care ruling. >> we have seen an intense amount of consolidation in the sector in the bawake of obama care. >> we talked about hmo mergers. wellpoint, in fact, was a blue cross at one point.

>> now 19 different states. it's a big medicare medicaid play if you will. so we'll keep an eye on that. >> a lot of new customers. >> shares not moving yet but you are already seeing -- >> see whether they -- >> amerigroup. what did i say? a lot of different ones there. already up at 90 bucks so we'll watch as they jump -- >> except it's not stock and won't be quite as ugly. >> but there will be questions. >> you know you could sell wellpoint but not like the stocks are going to -- >> there could be a -- typically even with cash. coming up, taking off of boeing ceo mcnerney joining us. kelly got tips of how to pronounce it in the other language they speak in the uk. they see a big future in jet sales.

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surviving and moving ahead. >> they know we're going to go forward. that means we are going to see people i think add unbelievable amounts of new jobs. >> wisconsin governor walker elected twice now on giving small businesses in his state a fighting chance. we'll get his thoughts on jobs, the economy and the future of health care in america. >> and the problems holding back job growth. former economic adviser to vice president biden joins us in our conversation. plus, taking flight on boeing. >> flight 209. you are cleared to take off. >> roger. >> huh? >> the latest breaking news in the aerospace industry with boeing ceo. we'll have him here first. the second hour of "squawk box"

starts right now. ♪ i'm looking to the sky to save me ♪ ♪ looking for a sign of life good morning. welcome back. here on cnbc on a monday morning, i'm andrew ross sorkin. here are your morning headlines. euro zone finance ministers are meeting today in brussels to talk about how to implement the recent eu summit deal. among the topics on the agenda, how to move towards europe-wide banking supervision. also this morning, activision blizzard could be the stock to watch today. reuters reporting that vivendi wants to gauge interest in that stake of the company it owns and could be sold for as much as $10 billion. time warner and microsoft mentioned as possible bidders. president obama's going to call for a one-year extension of the bush era tax cuts today.

republicans have argued that those tax cuts should be extended for everyone. we've got a deal this morning. wellpoint buying amergroup for $92 a share. that's a 43% premium. let's take a look at futures right now. looks like we are going to be down across the board. dow opening about 30 points lower. s&p off by about 3. joe? >> thanks, andrew. we have the first governor in u.s. history to survive a recall election. scott walker of wisconsin is here for two hours. governor, great to see you. you're elected twice. congratulations. like deja vu all over again? >> bobby jindal asked me if i would get a new four-year term. no. >> wisconsin has always been a liberal state. i think of it as a pretty blue state. and in winning the recall, we

were told and i'm just checking with you to make sure that that is fact. a lot of people that came to your aid and voted for you did it because they didn't like the process but still are planning to vote for president obama. that was what was in the exit polls. was this more of a -- was it a vote on the way things were done or was it a vote on what you've done in the state? >> i think more of the latter. >> you do? >> people didn't like the recall. we heard increasingly at the tail end particularly last four to six weeks where people come up and self identify as a democrat or someone that voted for the opponent. i ran against the same person in a row and what we found is people who'd say, you know, i'm a democrat. i voted historically democrat but i want someone to take on the tough issues and want people to take on tough issues and say because you took on the tough issues, we'll vote for you. it was a little bit of the larger issue of taking on the state's budget deficit, taking on the economic woes we faced

and the whit polls, some showed voting for me inclined to vote for president obama. those exit polls showed me 50-50 and then in the end i won by a larger margin than two years ago and the polls skewed a lit billion it yoch. i don't know that i read too much in to them. we had a poll about two weeks ago in wisconsin showing mitt romney up by three points. i think it is a roller coaster. >> right. but if you were to just -- it's not good to stereotype parties although we do once in a while but what you did or at least the way that the left and the unions, the way that you were portrayed -- >> yeah. >> -- to still prevail in a blue state after the things they said about you, i'm just wondering whether that you can take that and say, okay, the people in ohio might be more amenable to doing things -- >> look at the front of "usa today." >> swing states.

>> where the ads are. two americas in the presidential election. it's wisconsin, ohio, pennsylvania, nevada, virginia, new hampshire, places like that. so we saw, you know, momentary break in political ads and now back at it with the presidential race and open u.s. senate seat that could be the -- >> i'm trying to get at whether the people -- >> transfer. >> in wisconsin really were voting to sort of back you on what you did with public unions and collective bargaining and whether to expect people in ohio to come to the same conclusion or whether it was the recall that they didn't like what was being done to you. >> i think less the last point. i think, though, what i, for example, i told mitt romney after all this is, if you come to wisconsin and you think you can win because i'm a republican, you're a republican, the "r" next to the name is republican, you're not going to win. coming in wisconsin, viewing as a republican and reformer. and if he's the guy that those

independent, swing voters that voted for me say, you know what? he's got the guts to take on the tough issues which i believe he does and laid out a plan and got the background as an executive, someone who turned the olympics as a governor to do that. if people view him not just as a republican, as a reformer, he can win. >> we have to go and andrew will lead the next hang with you. >> so get ready. >> i want you to sit -- >> the armor on? >> the whole -- he is -- they're a withering examination of the things you have tried to do. >> he loved public sector unions. >> no pressure. but you have a certain constituency to honor here. >> it's completely -- >> what if the editorial board -- you're not part of it, "the new york times" sitting right in front of him. they would go crazy. >> light me up probably. >> you would not leave here -- >> you have to channel them. >> yeah. just -- incumbent. >> incumbent after the incumbent.

>> exactly. >> the biggest players in the aerospace industry landed this week. phil lebeau joins us with a special guest and, of course, that guest is first on cnbc. hi, phil. >> reporter: hi, michelle. we'll talk with jim mcnerney a little bit. breaking news of boeing, just announced a few minutes ago. the company sold 75 of its new 737 max airplanes to air lease corp., a huge order of $7.2 billion. let's talk with the ceo jim mcnerney about this order. people say this is a big show with the 737 max. >> i think we are going to feel very good about the show when we're all done this week. discuss merles will decide what to announce when and we're gratified with the air lease order this morning. it really -- it's really part of a tremendously positive

introduction and customer acceptance with the 737 max. >> reporter: you have 549 firm orders. it is expected to hit over a thousand by the end of the year. it brings up the question that a lot on wall street worried about right now. are we in a production bubble because of all the orders this year and last yearhat you guys and airbus raked in, are we worried about a production bubble in the airline industry? >> i think we always worry about supply and demand matching up. in this case, i'm less worried. these planes are so much more productive than the planes that they're replacing that they pay back very quickly. so this isn't just matching gdp growth. this is replacing older technology and that tends to lead people to conclusions about its moving faster than the economy but the fact is people buy them and pays back very quickly. >> that said, adam polarski is quoetding saying i think there's a bubble and important to think

about what happens when it burst and what happens with aircraft retirements and values. and the concern is track record for you guys and others in the industry is not good with ramping up production. >> i think we have been accused over the last decade of lagging demand. okay? of not producing enough airplanes and so, i'm a little bit mystified now that we get accused of over producing airplanes and obviously, phil, where we try to be is right in the middle and as soon as we see data that says there's a bubble, we're going to react because we want to supply the customers with the technology when they need it. not before or after. >> reporter: do you increase production rates soon? i know you don't want to say anything. you have earnings coming up. you won't say whether you change production rates but others say you have to boost the schedule. >> yeah. i think you have seen us stea steadily increase production rates over the last couple of years. we have added the 787 which is an entirely new airplane that

represents about a $400 billion business in and of itself. and so, it's -- and you've seen the order traffic. i think when you add that all up, steadily increasing production rates makes sense. seeing data that's different, we'll slow it down. >> reporter: jim, joe has a question for you. >> i do. jim, and this is a -- not specifically a near-term question. i love it when a boeing or an airbus tells me how many planes they need 20 years from now and we get that info and we think about the way companies try to forecast next quarter and how well they do. do you have a high degree of confidence in what you forecast 20 years out on airplane or airliner demand? >> well, i think it's -- we have an airplane landing. >> yeah. >> i think -- and i know we

forecasted another 33,000 beyond that one in 20 years, but i think the -- listen. it's been pretty consistent. our forecasts over 20 years have stayed at a multiple of gdp growth and it waxes and waynes a little bit. that's why we refresh it every year. but if you look at historical validity, it's been pretty good and it tends to be half driven by gdp growth and half driven by technology replacement. particularly, in this era of high fuel prices. half the airplane that is are bought are to take out old ones, put in new ones to pay back in a couple of years at these kind of oil prices. so it's -- the underpinning is pretty strong. gdp growth and technology replacement. >> hey, jim. would you given what happened within lrb and i'm going to rehash it one more time. would you change your plans on where to build based on the

experience that you had? and would you expect, you know, we have heard that other companies may look at your experience and decide to do something differently. is that a fact or is that been blown out of proportion? >> i think it adds a degree of uncertainty to any major long-term decision that had -- has the elements that we had in the decision that we made. but no. it would not change the fundamental decision in my case and i think in the case of some but there is some uncertainty there that doesn't need to be there. and we worked through it. and in my judgment, as i think yours, joe, we shouldn't have had to work through it but we did and it's -- it wasn't helpful. hopefully, the regulatory climate will loosen up a little bit. >> have anything? >> yeah, this is scott walker of

wisconsin. looks as exciting as the event in oshkosh in a few weeks but what do you think -- what indicators are out there to help you improve more from where you're at right now? what things in the economy would you look to see pick up to make you more productive? >> well, i think just the general economic environment overall. i mean, obviously, europe is a trouble spot. the sovereign debt situation can easily bleed over in to gdp, kinds of pullbacks that would not be good for the traveling public or the businesses that depend on our technology so i think resolution in europe is a big deal. i am not worried about china longer term despite recent slowdown. i think the united states is recovering better in my judgment than is often portrayed by

people observing the u.s. but i also think that the u.s. can create a more -- an environment that is more conducive to business and capital formation. i think dealing with a lot of the issues that you have brought forward in wisconsin need to be done at the national stage and that's resolution of the debt issues, the entitlement issues and the other issues, the tax issues that are plaguing our economy. these are all things that need to be addressed and if done properly can make a difference for a company like boeing. >> thanks, jim. >> >> reporter: jim, one last question back to here and has to revolve around the question of defense spending. heading toward the fiscal cliff and hoping to work something

out, but the defense budget environment not only in the united states but here in europe and in other major companies, contracting the budgets. how worried are you about growing profits in the defense division given the profit? >> i know that defense spending will slow down dramatically. sequestration which is what you're talking about which is this faceoff going on in d.c. right now, it would have cut that is are much more difficult than that. neither side of the political equation, i think, want this to happen. but they're both paralyzed. both sides of the political equation in washington paralyzed as they stare each other down. hopefully common sense will prevail as we get to the end of the year. no matter who wins the election and i'm convinced. i'm an optimist and convinced no matter who wins the election, this thing will get solved. >> reporter: jim, thank you very much. >> yeah. >> reporter: it's getting tougher to hear you back there. jim mcnerney when they announce

a big order for the 737 max. that's to air lease corp. ringing the bell this morning is the ceo of air lease corp. back to you. >> thanks. appreciate it very much. if you have comments shoot us an e-mail. you can also follow us on twitter. still to come this morning, cnbc's rankings of the top states to do business in. scott cohn reports from an undisclosed location. the list, let the guessing games begin. we'll tell you what it is.

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welcome back. the futures right now negative. they show the dow to open lower by 38 points. maybe hangover of friday's awful jobs report. chinese data this morning, there should be some news out of the euro zone that maybe make things better. we'll bring you up to speed on

that in a second. heat wave may be breaking but dry skies threaten the corn crop. the key phase of pollination. a period of hot and dry conditions can cause damage. corn prices as we have been telling you over the last couple of weeks skyrocketing. right-hand side of the chart, dramatic move in just a month-long period of time. andrew? okay. let's turn to wisconsin governor scott walker. i know you think it's a grilling. i'll start with a softball. let's talk. given the unemployment situation in the country and 8.2% number, the role in your mind of public and private unions going forward? >> well, i think you see a clear difference. private sector unions are partners in economic development. we talked about before. in fact, a lot of guys that helped us build the infastructure, they're folks we

work with in wisconsin and around the country. the difference is in the public sector you look at the sheer numbers out there and you look at the ben filths. i think one of the things not just republican governors but some discerning democratic governors and mayors looking at from the election last month is realize to sustain about a year and a half worth of attacks and still go out and get elected again. i think for a lot of them they realize to balance the budgets they have to rein in the benefit costs. >> rambo, rombo in chicago. privatizing everything. >> he gets it. when you're an executive, the mayor, the governor, the buck stops with you. you have the state treasurer in rhode island. >> he understands a difference of a private sector and public sector union. if they demand too much and they destroy the company that feeds them, they go away. right? a public sector union can

extract promises from a future populace. >> what is the answer? >> should public sector -- >> should be some changes because i think -- >> reform or not exist at all? >> i think you can reform it. think about it earlier. you mentioned the exit polls which i said were skewed against me. the margin much larger than originally projected and yet almost 40% of the self identi identified union households voted for me. i think as a private sector union, you're 25%, 30%, 40% of the pension if you have one. excuse me, match of the health insurance. you're matching the pension if you have one out there and looking at this. my bro're not in a union but a good example. middle class guy. works as an event manager. his wife sells alliances. he said are you kidding me? i pay for the health insurance and a little bit to set aside, i

think most private sector employees particularly union employees say i don't get anywhere near the benefits of the public sector. >> liberals in the past weighed in and couldn't believe the notion of a public union. laguardia. >> fdr. >> kennedy, jfk. >> wasn't until 1959 in wisconsin that public unions -- there are civil service laws and thing that is prevent discrimination and to be able to -- >> at the federal level -- >> to be negotiating -- no one takes the taxpayer side. >> see, that's the -- >> there's a circle out there. >> i'm not -- no, look. i won't dispute that. i'm curious. do you have -- is there anything nice you'd like to say about public unions at all? meaning, do you think they played any role in terms of the living standards in your state or others in the country? >> private sectors, public sector -- what's the reason of y unions? the government is supposed to stand up and defend people.

there's great things of public employees. about 300,000 outstanding public servants. there's a difference. >> shocking how many didn't want to pay the dues once they didn't have to. whoa. >> we'll come back to the conversation and talk about what you said about rahm. an idea of selling off america in some respects to private business. what does that mean? >> coming up, a mud slinging super hero wins the weekend box office. imercedes-benznally engd now for an exceptional price during the summer event. but hurry, this offer ends july 31st.

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welcome back to "squawk box" on this monday morning. through the headlines. check out shares of amerigroup. stock soaring on news it's being bought by wellpoint at $4.9 billion in cash. and amazon.com to release a new version of the kindle ereader and aiming to debut it at the end of the quarter. the report saying that the efforts have been more urgent due to strong indications that apple may be about to unveil a mini ipad. more worries of spanish debt yield this morning.

10-year above 7%, the level to what analysts are considering, of course, dangerous territory. michelle? looming fiscal cliff, europe's debt crisis, political gridlock in washington wrecking havoc on the jobs and economic outlook. joining us is jared bernstein, a senior fellow and also a cnbc contributor and governor scott walker on set this morning, the guest host this morning. gentlemen, jared, good to see you. what do you make of the unemployment number and the employment report we saw on friday with the -- what many would say not strong enough job growth in the united states? >> i would agree with that. many of us were looking to see if the number of june confirm what is looks like a down shift in the growth rate of jobs for the prior two months. i think that two most important numbers are following. 225,000, that's average job growth per month in the first quarter of last year. 75,000, that's average job growth in the second quarter. so, you know, you just gave a very compelling if not

depressing list of the factors, the headwinds pushing back against the economy right now. >> that to the problem is europe? why aren't we seeing job creation at this point? >> you it's obvious and almost unmentionable, the fact that you can't forget this is a 70% consumption economy. if consumers are hard pressed because of a persistently weak job market, you mentioned unemployment rate stuck at 8% and we have long-term unemployment over 5 million people stuck in unemployment for over 6 months, lots of states by the way, wisconsin's one of them, hello, governor. i'm a huge -- we may disagree on politics but i'm a huge fan of wisconsin. the cutting -- cutting the unemployment, extended unemployment rolls is hurting, too. >> jared, i hesitate to try because you make mincemeat of me. >> no, no, i don't. >> so easily. you are a professional arguer. >> oh no. >> he is very smart. >> this is a set-up, everybody,

set-up. >> get ready to duck. >> alan krueger was on last week and pointed out that because of what -- i think he said the policies, bad policies of decades, over the last couple of decades, it's going to take a lot longer to get ton employment rate down and i'm wondering, do we go back to -- decades takes us back to clinton -- >> yeah. >> w whi policies in the clinton administration really put us in this soup that we are in right now? >> maybe he meant back to reagan, i guess. >> oh, there you go. i don't know how many decades. might have been five decades. which ones? >> under clinton, as far as i could see, we really looked like we achieved full employment. if you remember back to the second half of the 1990s, there was a time back there in 2000 the unemployment rate below 4% and all of the economists said inflation is going to start to accelerate and decelerated and -- >> you know that in -- i know

you know this like i just said. but you know the average unemployment rate for the eight clinton years busine s was 5.2. eight bush years, 5.27. >> right. that's a good point. by the way, we're getting in to the weeds here. i actually thought the unemployment rate was surprisingly low in the bush -- the problem of the -- >> compared to the terrible policies. >> exactly. what's worse? >> the problem of the bush years comes down to job creation and clinton about 26 million jobs. in bush, about 5 million or 6 million. >> harder to create at full employment, right? you are a -- >> no, no, no. everyone agrees that job growth was exceptionally weak in the bush years and the employment to population ratio actually fell in the bush years. it went up a lot in the clinton years. >> interesting point, jared. scott walker here from wisconsin. but you think back 30 years ago, the fall of 1982 and what was it november and december, you know,

10.8% unemployment. you look at the policies enacted after the reagan tax cut and other items later in the 80s and we saw going in to the first president bush and then to clinton, strong economy and the things that happened there. a lot of it parallels what we're seeing right now. >> asking him to say because of reagan with the growth? >> look at that. i mean, '82. >> good luck. >> 10.8%. strong indicator. >> jared will not always take the -- remember, with keystone, jared, you told me that was the wrong move. >> see, i'm nonpartisan. that's the point. >> you are? >> let me ask you this. >> what i care -- >> would you -- will you say that we're never going to do just 250 and below, you're not going to get that agreed upon. to make this work and get past the fiscal cliff, will you say we should extend them all? >> i don't say that. >> see, see? >> maybe -- >> i can't go there. >> bill clinton said that. >> singing the praises of his economy. come on.

jared, this is your chance. this is your chance. >> no one said that before -- >> before he didn't say. he said it before he didn't say it. >> that's right. look, look. here's the thing and i'd bet governor walker will agree about this. look. i don't think anybody sitting here in this studio or in that studio believes that we are collecting ample revenue to meet the fiscal needs. >> michelle does. >> collecting plenty of revenue. >> 15% of gdp? that's -- >> 8% unemployment. that's a vicious circle. >> have you seen america is already europe today in "wall street journal" a spending as a percentage of gdp. we are europe. >> you believe we can achieve fiscal sustainability without any new tax revenues? >> absolutely, absolutely. >> that's what you are saying? >> absolutely. >> you're wrong. >> here's the bargain. we will do -- >> signed the nor exist pledge. >> for journalists. >> real medicare reform and have

200 keynesian bridges to anywhere. okay? >> that's a fair point. i bet you -- i thought you were one of the one that signed on the to simpson-bowles. that's a very good reputation. >> no! no! >> she is not signing that. >> no! >> she is not signing on. >> that would raise $2 trillion over 10 years. >> no. >> most people then, you're a bit of an outlier there. >> i don't think so quite frankly. >> the congressional budget office, nonpartisan analysts looking at this say -- we can talk about how you do it. simpson-bowles is closing loopholes but people believe we have to add new avenue and spending cuts and you're absolutely right. entitlements have to be in the mix. that's the balance. that's the only way to solve -- >> we should let them expire on everyone then because you don't want to -- raise nothing over 250. a big part of the deficit problem goes away if you let all

the bush tax cuts expire. >> you raise about $850 billion over 10 years on the above 250. so i wouldn't call that nothing. >> no, no. >> by a long shot. >> okay. last time it was 40 billion for like 1 year or something like that. >> no, no, no. by the way, even that's low. >> how much if you let them expire on everybody it's 3 trillion. >> you're absolutely right about it. look. if the way to deal with this, may be that the only way to deal with this given where positions are is that we actually have to start down the fiscal slope and then we'll have -- we'll have some serious revenue in the mix with which to come back and offer substantial tax cuts which the economy's going to need next year. >> all right. >> if we go over the cliff. if we go over the cliff. >> are you getting it through higher taxes? more growth? i think more growth. >> i think it has to be through some growth. >> we would love growth. >> taking more -- he wants both. >> i want both. >> we don't want an 8%

unemployment economy and a 1.5% gdp economy, jared. >> remember, we were just talking about the clinton years, guys? remember back then the tax structure. that's all i'm saying. go back to that tax structure. we had not only a very strong growth. let me finish, michelle. >> you want to go -- >> not only strong growth but balanced growth. okay. sorry. go ahead. >> president obama, his plan, would have higher taxes than we saw under clinton, especially with the results of obama care. right? >> that's a fair point. if you add the surtax. >> it's impossible at this point. >> you're talking about the difference between 39.6 and 43 or something. i don't think that's cataclysmic at all. i'm sure the tax code could ab sush that structure for more revenue and more balanced growth. >> all right. >> thank you, jared. >> thank you. >> do you see how all of a sudden we're like jared knows. he is right. >> no. no. >> no?

>> you feel like that of rollins, too, of pennsylvania. no. >> jared is correct. >> no. remember, we have a spending problem. >> no. >> that's all you have to remember. >> he's very -- >> more revenue and more prosperity. >> thank you. >> more prosperity. less government. >> i want to talk about that and what that actually means. >> cnbc's top states to do business, you know, scott, i know the ones that aren't on the list. better than the one that is are. but you are -- you're not in illinois. i know that. you are at an undisclosed location. >> reporter: that's right. >> music a hint? >> where is it? >> that's napa. look at the -- >> i was going to say that. >> outside one time and people figured it out from the overpass behind you. >> we got nothing with that. >> looks like beer in there maybe. maybe you're in wisconsin. all right. we'll be back.

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we are back this morning and that time again for the sixth year in a row, cnbc is ranking america's top states for business and kicking off the coverage of the annual study right now. scott cohn is live in the top state but not going to tell us where you are yet, are you,

scott? i don't think that's fair. >> reporter: no, andrew. i'm not going to tell you. i can tell you that the barrels behind me, not what's in them but it does contribute in the quality of life category that helps the state. maybe that's one of the reasons it's top state for business. good morning. or is it afternoon? we are somewhere in the country. and we are going to continue with our countdown which will actually start tomorrow right here on "squawk box." it's serious business especially now when jobs are at a premium and states fighting each other for business. we rank all 50 states in more than 50 metrics in 10 categories of competitiveness and cost of doing business, workforce, quality of life, infrastructure and transportation, economy, education, business friendliness, access to capital and cost of living and we weight them based on how often the states site them in their

economic development marketing materials and grading the states basically on their own report card. one thing we did this year, doesn't figure to the rankings but it's fun. we reached out to all 50 governors to make a pitch why their state is the top in america. among those that complied is governor of the state of wisconsin. listen. >> i'm scott walker. let me take a moment to tell you what we're doing to help businesses grow in our state. recent survey of the employers shows that 94% believe that wisconsin is heading in the right direction. and the unemployment rate, well, it's below 7% for the first time since 2008. >> reporter: so, take a look, though, wisconsin does not have a great track record with america's top states for business starting in 2007. finishing as low as 37th in 2008. and governor walker's first year last year in office, got up to the middle of the pack, 25th.

govern governor, there's room for improvement, isn't there? >> yeah, there is, indeed. that's why we're here talking about it. i like your idea. your hash tag with the top states. for example, people go to hash tags top states wi for wisconsin. >> there you go. >> i want to say this is not a good clue. behind you with the barrels, thinking it could be wine, people make wine these days. beer. >> beer, quality of life. >> i thought of duff beer. >> you also said something about morning or afternoon. the only place it's afternoon is a -- >> european country. >> not going to be good for business. >> reporter: you are so sharp. >> yeah, yeah! why would you say it could be afternoon? you have to go around and then come back to be -- i'm totally confused on what you meant by that, scott. >> reporter: i was just trying to mess with you. >> see if i was listening. unless the state is georgia. but the georgia in the soviet --

you know? >> i love the fact we do this here in cnbc. state competition is so fantastic. tell us how it benefits you. i don't think people understand what an important principle it is to have states fighting for business. >> you love illinois, right? >> absolutely. i look at illinois, look raising the top income tax rate last year, up 47% on -- 46% of businesses, 67% on individual income taxes. mitch daniels and i both -- >> hallelujah. >> literally came the same day in to chicago. >> aren't they below the corporate tax rate? >> no. they like to make that point. they have a personal property tax, 9.5% versus ours at 7.9% and gives you a goal on a lot of factors. not just taxes but the things, quality of life, business interaction, supplier based and getting better. not only on this one, we went from chief executive magazine, for example, we were in the bottom ten historically.

this year the top 20. >> on what? >> what is this. >> that was a function of doing what? >> i think serious of things. a combination of lower tax burden overall, easing the regulatory climate, major tort reform. >> go ahead, scott. >> reporter: governor, i want to ask you about education and that's on the spending side and full disclosure, i'm a proud graduate of the university of wisconsin-madison. >> go, badgers. >> reporter: go badgers. you have ranked generally well in education. >> yeah. >> reporter: despite the low rankings of the past and cut education spending quite a bit and always called the wisconsin idea as you know setting the university up as sort of an economic engine for the state. how concerned are you that you're eating in to one of the state's biggest resources? >> well, for example, with education, i've got two kids going to -- one graduated from a public school and the other will be a senior there. our cuts made up for with the

changes of collective bargaining sow the cuts of local education, local government were more than offset unlike other states that actually just cut and left them up to their own devices to either make up through higher property taxes or cut in services. actually our reductions were offset by changes in the collective bargaining process. i think in the end with the final product, that's why it's interesting. >> if you look at the numbers for the university of wisconsin, for example, no different? >> university of wisconsin same thing. they made changes. they had a reduction but they were of the offset that in terms of flexibilities they were given, changes to make in terms of collecting more money and contributions, changes in collective bargaining. for sure in the schools. my kids' schools, they hired more teachers and purely on a ranking, the dollars were down even though the impact in many cases was better and you look in the schools. they're no longer have a seniority or tenure and hire based on merit and pay based on

performance. what we were talking about before, guys like arnie duncan saying pay great teachers more and have fewer than mediocre ones. >> scott, can a state win two years in a row? you wouldn't that every year there's a different state number one but i don't think -- it's not virginia probably this year. was it virginia last year? >> reporter: it was virginia last year. >> and then texas was the year before -- yeah. but you don't want to do that. texas was the year before, right? >> reporter: texas was the year before, so yeah. >> i think you could figure that the state that's best would be the same state every year unless you subjectively look at different things each year. >> reporter: no. it doesn't change. >> it does? >> reporter: it does change. we try to keep the methodology at constant as we can from year to year. as i said, grading the states on criteria and so that changes a bit year to year and we have added some more metrics this

year because there's more things available but the same basic categories and it does switch from year to year. some of it reflects the economy, some changes in the states and we'll see what -- who came out number one but i'll tell you there's interesting changes. >> when i went to school at colorado, we got beat by one school as the biggest party school and it was university of wisconsin. >> reporter: university of wisconsin. >> i know how you spent your four years up in madison. do you remember anything? >> reporter: may have had something to do with -- >> the barrels. >> exactly. >> you went there? >> no. i was going to go there. >> the bong and everything. >> lots of friends that went there. >> colorado or madison? >> madison. >> oh my god, right. >> with the governor in my head. you have been talking to. anyway. coming up, more from our guest host. >> thanks, scott. >> scott walker talking about maybe some of those -- well, okay. and in the next half hour -- >> not in our area.

>> the governor will face off on jobs, health care with howard dean. "squawk's" coming back if two minutes. don't start your day of knowing the names to make you money. joe has your list of stocks to watch right after the break. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550

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take a look at stocks to watch this morning.

big deal in hmo and managed care. wellpoint buying amerigroup. it is a creative -- in 2013 by -- at least a little creative buy of 2013. 40% premium over friday's closing price. that's a big winner and we'll see what wellpoint actually does based on this. >> it's up marginally. >> yeah. and sirius fm raised the full year subscriber and year guidance. revenue approaching $3.4 billion and some day you need to -- >> mel pulling through. >> explain to me how the other things work. like -- >> radios? >> lot spotify. >> we shouldn't be explaining

that. >> call me maybe. all right. coming up, your guide to the trading week. david zervos and joe trevisani will join us. if you're just tuning in, you're two hours too late. >> wellpoint announcing that it's acquired amerigroup for $4.9 billion. $92 a share. 43% premium. >> cash. >> all cash. worth noting. >> so i think resolution in europe is a big deal. i am not worried about china longer term despite recent slowdown. i think the united states is recovering better in my judgment than is often portrayed. >> is there anything nice you'd

like to say about public unions at all? meaning, do you think they played any role in terms of the living standards in your state or others in this country? >> well, the private sector's doing historically -- what's the reason of unions? stand up and defend people. the government's supposed to be there to do that. >> the third hour of "squawk box" starts right after the break. est, 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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our guest host this morning, wisconsin governor scott walker. checking u.s. equity futures. this morning, down about 37 points. still a little bit of a hangover you would think of another dismal jobs report we had on friday and extending some of the losses. we did come back a little on friday, down almost 200 and then i think closed down 125. among the stories today, president obama will call for a one-year extension of bush era tax cuts for families learning less than $250,000 a year. republicans have argued that the tax cuts should be extended for everyone. without congressional action, the cuts expire on january 1st for everyone. in the headlines, euro finance chiefs meeting in brussels to flush out plans for the sing the currency. pleading for rapid moves to help states and banks. for an owe draghi is testifying today. after a rate cut, the markets

watch to see if he signals more dramatic matters like buying government bonds or flooding banks with fresh liquidity. european equities at this hour slightly lower across the board. the euro is at 122.94 and moved higher trying to reapproach 133. let's get a check on the markets, joining us on the set, david zervos and joseph trevesani. here's the front page. new jolt looms for investors. quote earnings. there we have it. if you want to read it. we have the jobs report on friday. much worse than people were expecting. we have debated around this table whether actually all of these companies have taken down their earnings ahead of the report, whether they were sandbagging so that we might get

an upside surprise. this article suggests a different direction. joseph? >> wherever the u.s. corporate profits go, but especially if it goes down and whether they're going to recalculate because they think that the economy is worse and more optimistic, the effect in the markets ends up divergin diverging, the euro and the dollar, especially the dollar. anything weakening for the u.s. economy, right now, the trade is it tends to straighten the dollar and won't change. wherever you look, in europe, the united states, you look in china, all of these countries all of these areas and economic blocks look as if their growth is going to slow. if their growth is going to slow then any optimistic report it seems to me from corporates would be something that i would question and i would wonder about the strength. >> david? >> i think corporate profits have been a surprisingly robust set of numbers as the recovery's, you know, as we have come out of this 2008 crisis

period and i don't -- i mean, there's bumps and wiggles along the way and i expect this week 100% on jpmorgan given the craziness in the credit markets. wells and google probably interesting, as well. i don't think we're setting ourselves up for some significant change in corporate profitability. >> real quick on jpm and then europe. the final number, if they can put a box around this trade, this bad trade, if the number is higher than $5 billion, where are we? what do you think is baked in 0 the cake right now is? >> i think the market is right around that number. >> okay there's there's ways to on if i skate whatever needs to be obviscated and in the whole 360 to $380 billion portfolio, a $2 billion to $5 billion loss here or there, not 1%. it is like a 401(k) with $360,000 and you got upset because you lost $2,000 or

$3,000 or 5,000 bucks. it's not a big deal and moving parts make it go away relatively easy. this is going to come and go in all honesty but had a big impact on the future regulatory outlook for the u.s. banks. >> which one has the harder job? you're the stocks guy here pretty much. >> but mostly currencies. >> mostly currencies. you're the fixed income guy. 1.5% on the 10-year? >> makes it hard. >> what do you do? >> we have a -- we focus people on high yield. 6%, 7%. there's distressed credit opportunities around post the 2008 crisis. >> bare more risk? >> we have on on here, i'm on here a number of timings trying to think we think the governments artificially keeping treasury rates where they are. >> you win. that's an understatement. >> last time we had this conversation we were debating, i was calling them the miami condos of 2006 and 2007.

so there's a government set of regulations that's keeping the prices at levels that the private sector would never keep them. >> and telling people to do in theory what bernanke wants people to do. you're delling them high yields and the equivalent of junk. what do you do as a result? >> the difference of currencies and stocks, fixed income, currencies are interest in trading. and it's the trading attitude of the markets, whatever the narcot markets are likely to move a particular currency is looking at to put your trading interest and that doesn't necessarily corerelate. >> explain the move of the last three days. extremely sharp? >> that was easy. >> where to? >> it's a return to 115. very easily. >> how soon? >> probably 110 by the end of the year and maybe sooner. >> ouch. >> joe leaves next month for vacation.

>> we'll help. i'll do what i can. what we are seeing is a cyclical return to the u.s. dollar as a safe haven. as a safe haven primarily against the euro because if you look at the u.s. dollar and the euro against the smaller currencies against the swiss francs, the canadian and australian dollar, almost all-time lows and both against the three even though there's questions out of china for the australian dollar so it's the two main currency that is are sort of competing in disabilities. nevertheless, the dollar wins out when you have that competition. so we have been saying since the beginning of the yearlong dollar is the way to go especially against the euro and played out. >> combing through the headlines like we're stuck doing every year. does the esm force the -- blah blah blah. anonymous report here and there. horrendous, right? >> reminds me of the phrase of vietnam era we had to destroy the village to save it.

it sort of seems that's what the europeans are stuck with when they try to build this structure after the fact. that's what they're trying to do. they're trying to complete a political structure that should have been completed to a much greater degree before they started it. didn't appear so at the time. i understand the political pressures that were on then to get this done, to keep the project, the european unification project going forward. you're stuck with that level plus you have the time frame problem. one timeframe, the market timeframe is short and unforgiving and the political one is long and there's conflicts there. >> okay. gentlemen, thank you. >> thank you. >> appreciate it very, very much. coming up, an election year showdown on jobs, health care and economy. our guest host republican governor scott walker, well, howard dean is going to be with us, former democratic governor of vermont and dnc and presidential candidate. they're going to square off in the next half hour. cyber espionage.

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welcome back to "squawk box." we are less than four months away now from election day with jobs, health care and the economy taking center stage. joining us now, howard dean is the former governor of vermont and a former democratic presidential candidate. our guest host this morning is a current governor of wisconsin, governor scott walker. i want to -- i want you two guys to meet and greet and go back and forth, howard. but let me start out because i'm figuring out where you would draw the line. i heard one of the president's men, all the president's men, say that the reason that we can't get this jobless rate down

is because of the bad policies that go back decades and i think that would bring us to bill clinton and his decade, i think, if my math is correct. where do you draw the line for where the bad policies began and i guess they ended 3 1/2 years ago, right? >> bill clinton left office with a surplus. >> what's he talking about then? if he's saying decades, maybe he's saying you go back to the end of clinton and then skip him and go back to the first bush and reagan. maybe you -- >> now you're talking, joe. my lord, you sound like a democrat. >> i know i do. when you come on, just like with jared bernstein, you start talking and i get mesmerized, too. i need a break. what specific policies in the bush administration do you think we're still using to explain the 8% unemployment? >> i think the biggest ones are the deficits run up. i think actually there's some

bipartisan agreement on this. >> you're right. but you like medicare part d, i think, didn't you? you like some of the that spending. >> i wasn't crazy about medicare part d enacted but it's worked very well and i think the republicans ought to get some credit for that but the deficits were enormous and we'll disagree on this but the fact is congressional budget office says 60% of the budget going forward is tax cuts never paid for. to cut taxes, be my guest, but don't cut taxes and don't cut spending. that's what they did. you know, there's a balance sheet to be met here and every governor knows that. both republicans and democrats and you got to do that when you're the president. >> as a former governor and you look at scott walker, are there things you admire about governor walker and what he's been able to do in wisconsin, howard? >> i strongly dais gree with the collective bargaining rights. i never believed in running over

working people to benefits folk that is don't need the benefits. >> ay yi yi. you did that? governor walker? >> we protected them and why a massive number dropped out of the union when given the chance. you're right about the paying for the tax cuts and making some real reductions in spending at the federal level. governors, democrat, republican, have to do that. it's why i think four years ago when candidate barack obama was running, he was going to cut the deficit but he's not got close to that. you have to rein the deficits in and what governors have to do because we have balance budget requirements. >> i think there are some things the president's done. we have 4 million new private sector jobs. that's pretty good. >> come on. >> the big difference between him and governor romney is

governor romney said was to let the automobile industry go bankrupt. that would have been a complete disaster. i think the president will win in the american states because the auto industry is a huge difference in wisconsin, michigan and ohio and that's where a lot of swing states are. >> governor -- >> actually, you know, joe, one quick thing on that. i'd respectfully disagree the folks when gm and chrysler left aren't working today anymore than years ago when the unemployment started. it's because that deal didn't affect places like janesville and rock county where the unemployment is at. it's one of those where a better economy puts people to work would have had an impact. it didn't put people to work in our states but didn't have a -- >> governor, are you using -- governor deeb, you're using that 28-month figure for 4 million jobs added? why are you able to forget the first year of the obama presidency? why can you use the 4 million

jobs added in 28 months? hasn't even been president for 48 months? 42 months? >> there's no job of any ceo to come in and -- >> you can't date it where the job growth started and forget the first millions of jobs lost. >> that was on bush. >> oh, okay. all right. even though he was -- okay. >> 800,000 jobs a month when president obama took the oath of office. that's a fact and takes time to turn that around and done a decent job. this is the worst recession since the depression. i think the president gets credit for doing the things he did and i think this election is decided on the economy and i think people trust barack obama to handle the economy more than mitt romney. >> actually, the governor makes a good point of the jobs. you get a kick out of this. where is most of that growth coming? states where we have elected republican governors in two years and we lost before i was governor in a couple of years when barack obama was the president. the unemployment rate over 9.2%

and dropped to 7%. about 6.8% right now in wisconsin. look at wisconsin, ohio, pennsylvania, michigan. when's changed in the last two years? republican governor s in those states. >> manufacturing jobs because of barack obama. >> i look at the policies. we enacted ones to help manufacturers in the state of wisconsin. rick snyder's done the same in michigan. and pennsylvania and ohio. each of those states had shifts in the last two years and brought the change and why the change of the national level would make a similar difference for the country. >> i this changes of the automobile industry which is now going gang busters. sales up dramatically. much better financial condition and president obama had the courage to do that despite the fact that the tea party and right wingers hated it. >> governor, the other governor on the set in the last commercial break talking about campaign finance reform.

romney in the hamptons raising 3w million bucks and i was arguing with him that unions actually should not be allowed to participate in campaigns an make donations but i want them to be out of it to take everybody else out of it. >> i'm fine with that. i'm fine with that. i think we're heading for a total disaster. when you have government by checkbook and what we have got here i think the average person doesn't believe in the system anymore. no matter what party you are in, you have to have a country where the people believe that the system works and i don't think most americans don't believe the system works right now. this is a disaster of citizens united. i remember debating karl rev and he said i'm for disclosure. there's no disclosure of what he is doing and this is ridiculous. it's a disastrous system. people with the biggest checkbooks write -- >> why do i know everybody who's writing checks? i know about froster freeze and

joe rick its. i know everybody who's writing checks. what's the disclosure issue. >> i bet you didn't know about prudential and chevron. >> i'm shocked that they're writing checks. amazing to me. wow. i can't believe chevron is writing checks. >> becky, they're corporate checks. why the hell should i putt up the tax money for causes that i don't believe in? that's what they're doing. you can get tax deductions for those checks? >> governor walker, some people argue you won in part because you were able to mobilize a lot of money from outside of the state including corporations. your take? >> well, the money i got you can't get corporate money. >> inside the state. >> inside or out for the campaign. 77% -- >> you can get a tax and that's what won it. >> 77% of the money we got came from people gave us 50 bucks or less. last report showed that the other day. 25, $50. >> that's not super-pacs.

>> that's the national left leaning groups. >> would you -- >> interesting point is look at the presidential election. years ago, the only truly publicly financed election out there was the presidential election. barack obama was the first one to blow the limits off of that. >> no, he wasn't. i was. >> well, first successful candidate to go -- >> that was a classic moment. >> true. >> i was. >> but it's one of those where we had a system before and it changes over time. >> i just don't think -- look. the interesting thing is i think if governor romney doesn't win this race it's because of citizened united. he is a good candidate but he was exposed himself to his right flank for two months because there was newt gingrich with a check and kept the campaign going for two months and made the statements that got him in so much trouble with the latino community and women and so forth. i think it's ironic that citizens united may be the

undoing of the candidate but no way to run an election. selling america to the highest bidder is not the right way to run this country. >> do you think the president should have stuck to not using super pacs? >> not with super pacs on the other side raising hundreds of millions of dollars you can't. >> no. >> no. i think we ought to have a constitutional amendment to have same campaign finance system in this country. >> what's it look like for you? >> for me? the arizona system where the public tax money is used and the system is limited to $3 million for the whole state of arizona. that was a great system and both republicans and democrats won. and the chamber of commerce and the union teamed up to try to beat the system and the average person in arizona vote twice to keep the system. then the supreme court threw it out. that's a way of limiting the influence of big money and campaigns and benefits both

sides and i think that's the right way to do it. >> all right. governor dean, thank you. good to see you. >> always a pleasure, joe. >> i know. always a pleasure with you, too. now you get to -- you still contributor or not anymore? >> i'm still a contributor. >> you are. all right. lunch is on us. >> gets paid for this? >> yeah. get yourself a steak. whatever you want. >> you promise to wear your harley jacket if i take you out or the porsche jacket. >> you saw that. yeah, geez. >> good wisconsin product right there. i ride a harley. i love that. nice plug for me. thank you. >> we can agree on that one. >> absolutely agree. >> even get an appetizer. just on us. governor. thank you. >> see ya joe, aaron. >> will be with us for the rest of the show. coming up, a familiar food company making an acquisition. that story is next. and then still to come, the bulls are running in spain over the weekend. but will the market bulls find room to run this week? we'll head to chicago for a look at the trading week ahead.

welcome back to "squawk box." making headlines, campbell's soup is buying bolthouse farms. the purchase adds high end juices and baby carrots to campbell's portfolio of soups, juices and cookies and with food, pepsi is teaming up with

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welcome back to "squawk box." in the headlines, earnings season set for this afternoon. alcoa reporting. investors looking to friday when jpmorgan chase releases earnings and presumably more details on the $2 billion trading loss and the london whale. amerigroup is being bought by wellpoint. 43% premium. congratulations to you shareholders this morning. thomas reuters is buying fx alliance. it will pay $22 a share in cash, 40% premium over friday's close. congratulations to you guys, as well. let's check the markets so far this morning. rick santelli and scott nations joins us from chicago.

good morning, guys. scott, what do you make of what's happening? is this morning a hangover from friday's bad jobs number or is it china's da that this morning, spanish yields above 10%? what is it? >> 7%. >> freudian, sorry. >> i was wondering if i missed something in the last five minutes. that would be news. >> i said 10%. >> it's a little bit of all of it. i think that 80,000 was disappointing as we said because it was bad but not bad enough. but you know, we are entering earnings season and if you can't have fun in earnings season you're not trying. i think earnings for the s&p probably come in a fair amount lower than the 105 even most people are expecting and i think that's problematic. you mentioned jpmorgan. something else going on friday. wells fargo going to announce friday and i think the juxtaposition is interesting. one thing of jpmorgan, most

important thing is not the number but the quality of the earnings. if they make their number because they're clawing bunch of loan loss reserves then that doesn't get it done. >> rick santelli, are you worried? >> i'm surprised they're not above 8% to be frank with you. it's a matter of time. michelle, it is a matter of time before, you know, the imf runs out of, you know, excuses, before the leadership runs out of excuses. at least i thought it was somewhat interesting to see the greek government trying to move in the right direction. you know, implement programs they have talked about for years. >> we have the news over the year. we have governor walker here on the set, rick. i think you see two ricks. >> good to see you again. >> yeah, no. governor walker in my opinion along with several other conservative governors that have turned the battleship around, i know howard dean was talking about that today.

you know, governor, i guess the best way to go about this, we'll never hear in my opinion the real issue at the epicenter of saving gm and what's at the ep center is two fold. first of all, you know, the rule of law is torn up in the times of crisis and politicians that brag about it but second do you think in bankruptcy court nothing is worked out for worst-case scenario, gm is gone. so what? you think the partners manufacturers and the fact of going to sell so many units of cars throughout the country that wouldn't have been shifted to ford? you need so many windshields and armrests no matter whose brand is on the trunk. what do you think? >> there's no doubt about it. the states have been successful like ours and tackled the big issues they prolonged pushing off the tough issues with pension and health care contributions, whether the

private sector or the public sector. it is a big deal out there. >> rick, if you don't -- you know, if you're not going to run on obama care and not running on stimulus, you're gong to hear about the -- that's what you hear between now and november is detroit. hear that over and over and over. what else? >> osama bin laden. >> if you can't run on the record, they have defer it and people won't pay attention to what's not happening. >> running on health care? >> no. >> i think when you see advertisements health care's going to be in there, absolutely. >> i think pieces of it out. may take out a little tiny piece here or there of something that's particularly favorable to most people and i think most people have a bad opinion and afrm it's a massive tax increase. how do you contend to the massive tax increase is good for the economy right now? i don't see that. >> governor, one other question.

you know, i think robert deniro could be the greatest actor of our time and the big apple is wonderful but watching this commercial, you know, obviously the person that wrote it didn't pick up a newspaper in 20 years. you are seeing a migration of taxes are too high in a lot of neighboring states, same could be said for new york. how are the states so heavily indebted and underfunded raising taxes think they'll get away with it? i think it's a joke. takes more than a commercial! >> yeah. hey, you're right. you know it just down there in chicago. i said it's a beautiful city. we love being near chicago but in the state that raised taxes 67% on individuals and 46% on businesses, makes it awfully tough to keep people, wealth and opportunity in a state like that. other states like wisconsin and others around it are trying to do just the opposite to bring more jobs and business and prosperity in there. it takes more than an ad. >> good to see you this morning, thank you. >> thank you, michelle. >> you can catch scott on

fridays on "options action." earnings season kicks off today with alcoa after the bell. we have a preview of what to expect. good to see you. >> nice to be here. >> what do we expect? >> the numbers down year over year. probably going to either match or slightly beat expectations. but like we said how many times i've been here now, it doesn't matter. it's not the true indication of the market. i think jpmorgan's earnings is a lot more impactful this week and i think going forward next week seeing a lot more multi-national companies reporting and see more -- >> what's the risk of jpmorgan, upside, downside risk? >> i think if you're reading the reports, i think it's going to be -- i think people are going to look at that trading number but more beyond that. i think the last guest on had a good point about the whole loan loss provision and the quality of the earnings. i think financials are now at the point where people are

really going to focus on the quality of earnings. it's been now about two or three years since we have come out of this little, you know, not little. >> big. >> massive -- >> he said 105 is going to be hard to get. what is your anymore ber? tell us your s&p number. what is it? >> for growth? >> for the earnings. >> what is the earnings? >> you heard scott nation say hard to do 105. do you have a number? >> current number for the s&p is 104. >> you're at 104. >> we are at 104. and that's coming down. you're looking at when we started the year that number was about 110. so we have come down to 104. we did 96 last year. okay? >> so if you're looking at 0% growth for the s&p on earnings which we're not there yet. we are at 8% for 2012. we're probably getting to 100, in between. it's been really negative. i mean, if companies know what they're doing, it's negative.

>> that's unusual. >> what should we read in to the fact taking out bank of america you get negative earnings for the s&p 500? and that's not because it's making money hand over fist. last year was terrible. >> negative growth. >> the financial numbers are misleading. the financial numb're very misleading. taking out bank of america like you said you're looking at negative growth. what to read in to the market is two or three things. there's negative headwinds. global slowdown. talking about euro. the negative impact of the euro, not just seeing a slowdown in europe but seeing currency translation issues. so you're seeing companies like starbucks, mcdonald's, procter and gamble. rely heavily on the euro. >> does this earnings season help or hurt the stock market? >> it's a very good question. it's a chance to really help the stock market if we can see some really good numbers. i actually think that the number

haves come down so much i think there's a little bit of upside. >> upside risk. >> i do think so. i think analysts brought down numbers, we started the quarter at about 9%. now we're down to 3% so -- >> jpm, you said -- previous guest said it's irrelevant. >> i think more relevant. >> what do you specifically look for? because what i imagine is people try to look through the numbers and quality's going to be part of it. >> right. >> but i think a worry claiming that it's boxed and maybe it's not. >> i want the look at the consumer industry. i want to see -- >> the credit loss not there -- >> that is always going to be the case. i think we have do get back to earnings. i think, you know, like i think kramer made a good point. we deal with the issues every day. spain. everything, going to come down to earnings. if companies can really navigate through this -- these are

probably the most difficult headwinds since 2008. if companies ek cute and deliver now, i think it's a really good sign for the markets for the second half of year. i don't say short-term pop but the second half of the year sets up nicely for a strong earnings season. >> looking for signs of consumer confidence? >> i am. corporate confidence, consumer confidence. you're very well -- i mean, corporations in the end drive us going forward. i really honestly believe that. they're sitting on a record amount of cash. okay? people are saying why aren't they putting that cash towards hiring? the simple question is -- >> demand problem. >> there's a lot of systemic risk. >> sure. >> if we're able to get over that this quarter i think it sets up nicely for the second half of the year. >> thank you for coming in. >> thank you. nice to be here. coming up, more from wisconsin governor scott walker and the threat of corporate espionage of china increased in recent years as hackers try to steal trade secrets to give

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welcome back to "squawk box." cyber espionage is a growing problem for american corporations as hackers steal trade secrets in an attempt to gain and maintain economic superiority. david faber joins us now with more. is this a dock, david? can i watch this? when's it on?

>> yeah. it's on 9:00 tonight. it is a documentary. something we've been working on for a while and started because i would have so many conversations, there it is, with whether it's senior executives, board members over the last year or so where they would tell me off the record, hey, you know what? we have a problem. our cyber wall was breached and the fbi told us the chinese are behind the firewall. why does this keep happening? and so, in talking to experts at a lot of highest levels of government and corporate america, what we have learned is that these attacks have become more sophisticated and more relentless in terms of the attempt to compromise corporate networks. the target, of course, is intellectual property, blueprints, trade secrets. you name it, they want it. and it's not just rogue hackers we are talking about here. gangs that go for a smash and grab to grab your credit card data. it's nation states and their strategy is to steal what's most value to believe the u.s., economic secrets and what we use

in terms of our intellectual property to help fuel future discoveries. most aggressive of the states is clearly china. it's known in intelligence jargon of an advanced persistent threat and begins in a way you might be surprised with. they have social engineering. not only on the ceo of corporations but employees within the corporation to gain unlimited access to the most secure documents and sit there in the network for potentially years. so the google searches, linkedin, twitter. that's how they get to know you, your hobbies, connected to and then a convincing e-mail of somebody you think is clean, in fact, it contains a malicious link but convincing enough so that you click on it and successful in breaching some of the largest and what you would think of most secure of companies. >> instant messages sent

impersonating somebody they know. >> they click on a link. that's it. the page doesn't open us bay there are no actual tos to and they move on and decide that something wasn't working right. in reality, their machine is taken over. completely and silent manner, malicious software. you see nothing on the desktop. you do your job as you normally would and someone is browsing the file system, downloading key documents. >> corporations are loathe to tell us when they've been breached and it happens every day countless times a day. for many corporations. they don't know what they lost in terms of the secrets because very often it's not their own security that comes and tells them they've been breached. it's the fbi. >> not even defense stuff. they would like to steal -- >> everything it sounds like. >> commercial. >> high-tech stuff or even consumer stuff? yeah? >> you know, i have -- we have encountered and described, yeah,

they go after let's call it technology of any kind where they could then recreate the technology back in china and manufacture it at a cheaper price. not paying for the r&d and extends to things as well like correspondence between the ceo and cfo and i know it for fact. if there's a resource deal going on in the world, the chinese want to know about it and likelihood is they know about it spying on the companies involved. >> david, have you seen what they have done with it? meaning, is there proof on the other end we have seen them take that information and use it meaningfully? >> that's where it's more circumstantial. we can draw a logical conclusion, perhaps beyond a reasonable doubt but nonetheless the chinese deny they're involved whatsoever and the linkages between the chinese government and ma of the state-sponsored enterprises while we know are there may be harder to prove and many corporations claim they know it, that a certain product modeled after another product of which

they stole the blue prints for so that's where it becomes -- >> china have now in the hyatt in beijing haven't been able to watch because it's cut to black. you laugh. i'm not joking. >> well, you may be right. by the way, we focus on cyber espionage, a huge issue, again, because corporations don't come forward and google did. we didn't learn a great deal and also physical espionage, michelle. going to china, believe me, we have talked to experts. they'll take anything not nailed down and then some. corporations that like to -- >> andrew was interviewing hank paulson and said do you change your cell phone? she didn't answer the question very clearly. >> i remember that. >> yeah. no. i mean, a nightmare is all the company that is want to have board meetings in shanghai feeling like it's important for the board to be over there. the security people we have spoken say there's no way to secure when a board comes over to china. so it's not just cyber.

it's phase call. we are focused on cyber and hope everybody watches tonight. >> i'm ready to cut off all relations with china right now. if i were running for president i might run on that. this is an outrage, faber. we need to watch at 9:00. thank you. make sure to watch david tonight 9:00 p.m. eastern. chinese threat, "cyber espionage" premiers tonight. >> we are done. you can start up cnbc all over again. >> start it up. coming up, this is free from censors. more with wisconsin governor walker and checking in with the rest of the crew of the latest buzz of wall street ahead of the trading week. that's coming up in a second. ready or not, request tt stock of the day" is coming up. you're watching "squawk box" on cnbc. first in business worldwide.

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welcome back to "squawk" on this monday morning. it's get down to the new york stock exchange. jim and david join us. >> don't you have a documentary coming up, david?

>> there it is. >> in case you missed it. >> clinton is now urging good relations with china after we went military with china. i have to tell you. this may people reiterate the military side. >> it's a big issue, one that probably -- i don't know how often it comes up, but it should. many of the people we spoke to say it should be up there with everything else we have to deal with in china. >> these are prominent companies. they would rather use a tin cup and a string than go on their cell phones. >> all these companies have charitable trusts in their own -- >> we have a big deal in this wellpoint. >> wellpoint's up three. >> yeah, up three because it's cash. did they wait until the supreme court ruling. >> no doubt. >> it's a green light to start doing accusations.

i think it's an important deal. >> duke energy, what do you say? >> david duke? >> is he on your show today? >> i brought that up last week. andrew, i know your guys the "the times" have done some writing on it. i'm not sure i have much to add beyond what's reported at this point. what do you know, andrew? >> i actually don't know anything new except to say that in any merger scenario, we've ever seen something like this before -- >> no, it doesn't. and we talk about m&a in social -- who's going to be ceo, you or me? we're not doing the deal. >> i don't think congress has any recourse except shareholders may say -- >> that was part of the small premium, too. >> guys, there are two mister

rodgers. there's the mister rodgers with the sweater vest. he was kind. and then we have this james rogers, got to be maybe the sharpest-elbowed ceo in history, made a big bet on coal that didn't seem to hurt him at all. obviously was willing to be executive chairman to talk up a lot of -- wanted to do more charitable work. >> jim, when you were here, it was amazing, totally different thing. >> i've always liked rogers. >> thank you, guys. >> there's lots more jim and david coming up. coming up, parts thoughts from scott walker.

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for an exceptional price. 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. stock of the day is amerigroup, it's a $5 billion deal, wellpoint acquiring its

rival. look at the other medicare hmos like wellcare, up about 16%, 7. even wellpoint itself is trading up. watch hmo. hmo is -- if you hit that up today, the entire group is going to be sharply higher. final thoughts now from our guest host, wisconsin governor scott walker. going to be about jobs in november. i just wonder how people frame that. we're seeing early indication how it's going to be framed. there's going to be a lot of politics -- >> well, remember, you heard the president say the private sector was fine. then he said, we're doing -- >> been trying very hard. >> i think most people are -- >> after health care he's tried -- >> where do we go from here. they're trying hard but they're not there yet, maybe they go with them. >> nev b