welcome to box. i'm becky quick along with andrew ross sorkin. joe will be back tomorrow. let's get you up to sweet. u.s. stocks rallying last week lifting the dow back above 13,000, global equities extending their gains this morning only slightly. we do see positive notes. first of all, your got baines of about half a percent. all of these stock operations rising to their highest levels in more than three weeks. expectations fed and ecb will provide stimulus to provide struggling economies all over the place. both central bank are holding policy meeting this next week. flat lining for the dow, s&p futures down by 1.5 points and the nasdaq superby just a half a point. in other global market headlines euro group chief said europe is

at a decisive point. he's promising leaders will decide in the coming days what measures to take. these comments follow mario draghi's comments saying they will do whatever it takes to save turo. international debt inspectors will not be leaving. they will help athens prepare a package of spending reforms. it's necessary. treasury secretary tim geithner is heading to europe. he's meeting with draghi and wolfgang schaeuble. wolfgang schaeuble has dismissed talk about spanish request for a eurozone support and buying its bond on the eve of talk with geithner. that view is at odds with the united states. andrew? >> we got some corporate headlines for you this morning. apple and samsung facing off in court today. apple filed a lawsuit against its rival alleging samsung smart

phones and computer tablets are an illegal knockoff of iphone ampb pad bruise. apple was $2.5 billion in damages. samsung counters that apple is the one doing stealing. before we continue one other quick note. samsung provides many of the screens and other pieces of apple's own devices. they are suing one of their competitors supply partners. kind of complicated. apple grabbing headlines on another big story, published reports, kayla tausche saying apple and twitter not in discussions. "new york times" had reported apple held negotiations with twitter in recent months. jack dorsey and tim cook meeting at allen and company, that was in sun valley earlier this month.

the companies are remaining friendly and will continue to talk about working together. canada's enbridge planning to replace part of a leaky wisconsin pipeline today following a spill on friday. it has leaked more than 1,000 barrels of oil in a wisconsin field. the accident shut down a key pipeline from canada. becky? >> a lot of concerns about that. let's check the markets. as we showed you before it looks like the futures are essentially flat lining right now in the united states. everybody is waiting to see what both the ecb and our own fed plan to do this week. big policy meetings from both of them and that's going to be driving the markets. at the end of the week we get that huge jobs report number. this time around people are looking, economists are expecting a gain of 100,000, slightly ber than what we've been seeing. let's take a look what oil prices are doing this hurricane warning. you'll see right now oil is -- essentially flat lining too. every market may be waiting to hear more news what these policy

leaders will come out with. at this point, $90.12. down by one penny. ten year note we've been watching the yield very closely as it bounced around and wow at this point 1.5%. 1.55%. we've been watching that very closely. we did see a bounce in yields last week after the comments coming from draghi given the idea they would step back in. for a while we saw that ten year trading below 1.4%. euro is trading a 1.2274. gold prices at this point are indicated, they are flat lining too. $1,618 an ounce. >> i want to talk about michael phelps. kelly evans is standing by in london. before we get to the markets can we talk about mr. phelps for

half a second? >> absolutely. >> he got a medal yesterday. a silver one as part of the relay team. >> watched that. i don't even know. >> i was disappointed. >> were you there? were you in the room to see all of this? >> you know, i was not. i will actually be at some of the diving on tuesday. i went to the beach volleyball on saturday morning but the michael phelps event i watched on screen. pretty remarkable. >> pretty crazy. how is it out there? is olympic fever taking over? >> what's fascinating the olympic spirit seems to be taking over like between the torch relay last week and a lot of events this week. there's a general lack of cynicism which is reefficienting. what's also really interesting is that it's very quiet in the city. there's a real sense that it's emptied out and perhaps it may be the number of people aren't showing up that were expected. so while it's nice for those of

us who live here and trying to get around you do wonder about the retallers and we popped into a store over the weekend and one said he never sees anything like the boost around wimbledon because so many regular tourists have stayed away. maybe that will change. >> let's talk markets. you got green arrows behind you. some other expectations, i don't know if we'll get a gold medal later from mr. draghi or something. >> don't know if there's many gold medals going to policymakers. it's not of end the ecb is the one to watch instead of the federal reserve but that's what's shaping up this week. as we head into that, some of the commentary from the ecb will come in to the market. over the weekend we've seen advancers out pacing decliners by a 7-3 ratio. stoxx 600 is up about 1%. we guilt baines throughout the

tra -- we're building gains throughout the market. >> over here shares are now up about .2, almost a quarter of a percent. vying all morning for direction. hsbc report ad slightly better profit than expected but provisioning for better issues. there's also a question of whether it can meet its long term equity target. the ceo made some comments on that on the call. the bank said it's being investigated for libor issues. take a look at the rest of the indexes across the major european indexes. 2.6% for italy. 2% for ibex in spain.

people expect we'll get more supportive action from policymakers. we're trying to push for a new record of 25. focus on the yield curve for a second if we can take a look was happening there, italy did come out and issue debt more cheaply than it did a month ago. what's curious the yield on the ten year which is a touch under 6% hasn't shown that much relief. it's better but we were at these levels before. this is not a huge move to the down side if you were expecting some point of end point. ten year in spain 6.6%. ten year in france is just under 2%. ten year bund 1.4. euro/dollar, it's down almost half a percent this morning and the real question has been to what degree that is reflecting risk on in the market and

whether the euro is now the new funding currency, of course that being a bit of a nasty title there as far as sorry concerned. in any case i'll focus on the olympics. i'll be back with carl quintanilla for "squawk on the street." in the meantime i'll hand it back to you guys. >> could be a big week for troubled countries in europe. joining us now from london is the chief european economist at barclays. good morning to you, sir. i think the only way to think about this is this. given what mr. draghi said last week, if he doesn't show up with the fire power this week, what happens? meaning is the expectation so high at this point or can he drag his feet at all on this? >> no. i think you're absolutely right. of course mr. draghi and others who have spoken would be aware of this. they have set in trade now a very significant level of market

expectation and there does need to be follow through. you'll see that happening but we should bear in mind there are still a few rather crucial political issues that do need to be addressed because really for temp cb to be intervening with confidence here and going back and buying government debt again -- remember it's not all government debt since february of this year, it would need to get some preconditions in place, in particular it would want to see that a country like spain and perhaps italy would be actually requesting support from the esff in order to buy government debt itself from these countries in the primary markets and the ecb could come in alongside and engaging its own intervention that would have a more significant impact. all in all we always got to be in europe there's a political process that is very tricky to coordinate and the financial market expectations, of course, run around this. but it's very important at this

point that the politics work. >> let's talk about what you think those expectations are and what needs to happen for them to be met. you just discussed doing something in tandem with italy and spain. is that what you expect to see? what is it you anticipate? >> i think we have to pay a lot of attention to the fact that the spanish and italian prers will meet on thursday and we have to see what will come out of that meeting. if that results in a call by spain to actually have some access to the esff in addition to the bank lending program, then that, i think, would set in trade the opportunity for the ecb to be intervening as well under the smp, the security markets program. there's a lot of other expectations out there. the ecb could make some amendments to its collateral policy and there by make it a little bit easier for banks to be submitting government debt in

order to be able to act as ecb financing. it might announce another one of the ltro, long term refinancing operations the way in which provides credit particularly into southern europe. there's another issue out there which is whether the ecb might grant the european stability mechanism which doesn't come in to force sill september a banking license but that's trickier to see especially since the ecb doesn't come in to force until september, german constitutional court on september 12th needs to deliver a verdict on that. it's one of these important dates. three key events really that i can see happening in september. german institutional court decision the very same day you have the dutch general election which could also be an important country within all this protein vigd support and finally something has to be done on greece because the greek lending program has gone significantly off track and i think the only

way that can be resolved is that there has to be some form of official sector write down. again, politically that's very tough. >> answer this question for me. every time the market wants to move in a positive direction the bulls say draghi came out and said he'll do whatever he takes. the bears say you still have wolfgang schaeuble saying no way and german leaders saying we're not going along with this. does ecb have the mandate and do they need germany's permission? >> they need to go ahead and do it in some degree without germany's agreement. if they do so, they really do risk driving a big wedge here. between themselves and berlin if germany isn't supporting it. that of course itself can be very difficult. let's face at it central bank, it's issuing a paper currency. i want need to hatch good

correct -- it needs to have good credibility. particularly with the german government and the european central bank that's not healthy for tehe ecb's own credibility. what mr. draghi is trying to do is get all sides in a similar line. >> okay. julian, thank you for joining us. we'll have to see where all of this lands later in the week and hope to have you back very soon. >> pleasure. >> when we come back, today marks 100 days until the u.s. presidential election. believe it or not we're on the countdown in that final few days. we'll check in with john harwood right after this. but first did you know that today is national cheesecake day? a slice is twice as nice when it's that feel price. the folks at the cheesecake factory are offering half price

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welcome back to "squawk." u.s. equity futures at this hour looking pretty flat across the board. dow looks like it would open up marginally down. s&p as well. making headlines, consumers are facing higher gasoline prices at

the pump. the average price of a gallon of regular now at $3.51. up 10 cents in two weeks. now let's take some time to check out today's national forecast, alex wallace joins us from the weather channel. alex. >> good morning to you. looks like we'll be track being some storms across parts of the south today. dealing with that across the deep south of mississippi into alabama and as we head into the overnight hours, darker shade of red dealing with the risk. damaging winds and hail will be the main risk in any of the storms certainly capable of producing heavy downpours and quite a bit of lightning. also the risk for stronger storms into the upper midwest and around the great lakes. good chunk of wisconsin dealing with that including green bay. main threats is damaging winds as well as hail. thanks to this storm system that's going to move its way on through the area. tuesday, quickly working on off towards the south and east now the upper ohio valley working on to the interior northeast for the risk of some storms.

mid-part of the week working its way towards the east coast. wednesday wet weather from new york, philly towards d.c. where temperatures will be in the 80s. while all that's going on, heat that continues to be the story of the summer, 100s out there. big ridge of high pressure in the middle of the country keeping things extremely hot. oklahoma city, 100. monday 108. you'll climb, tuesday 1209. we're not cooling off in these areas. if anything we're getting hotter even in the mid-part of the week up around 111. dallas feeling it at 108 degrees. as we work our way through the rest of the week, dealing with at least 20 states and over 65 million people that may have to deal with 100 degree heat. certainly a week to take it easy in the middle of the country. guys, back to you. >> alex thank you very much. today is 100 days until the election. president obama shading to new york. mitt romney continues his

overseas tour. john harwood joins us from washington this morning. and john, 100 days and counting approximately feels like we've been talking about this forever already. this is the real countdown, right? >> reporter: it is. we're talking about the same things that we've been talking about for several months. very close race, focused on eight to ten states. millions and millions of dollars are being spent on a very small number of undecided numbers. polls haven't moved. despite all the things that have happened, policy changes by the candidates, mitt romney emerging as the republican front-runner, speculating about a vice president, none of that has changed the fact we have a race where president obama is up two, three, four points over romney both nationally and in the swing seats and even a little bit better in the swing states. slight favorite for re-election but only a slight favorite either guy has a chance to yuan. >> it means those independent voters are more important than ever. those are the ones that those people who haven't made up their

mind what are they doing weighing in. you have a jobs number that comes out this tri-. markets we're watching very closely. ecb and fed both coming up with policy making meetings. is that what plays into this? >> yes. but it's not only the independent voters who matter. in a contest like this, where let's say you've got 6% to 8% of the electorate that truly doesn't know what they are going to do at this point and still waiting for information, do you have both party machineries working very hard to increase the number of known supporters. the mobilization, the turn out effort will be very key. as for the undecided what we saw in our nbc/wall street journal poll last week they don't like either one of these candidates. both obama and romney are viewed overwhelmingly negatively or mostly negatively by these voters and so it's sort of a least of two evils kind of thing for them and i think they are going to be watching economic

trend, they will be watching things they hear from their neighbors and what sort of contacts they get from the campaigns and what's in the television advertisement, all that is difficult to predict how they are going to come down but they tend to decide -- they tend to be the least interested in the campaign, they decide very, very late. >> john front page of actually, virtually all the papers this morning, romney here in israel. we have romney here supporting israel on the front page of the "new york times" as well. how is that going to play when you look at some of the earlier polls, is this going to move the needle in terms of an argument to try to drive what some people say is sort of this republican/jewish vote? >> republicans have been working to expand their appeal to less liberal jews for some time. they haven't done all that well so far. but they got a shot given some of the discontent with president obama or israel and middle east policy. so, yes, they got a shot to move

that forward. they are working it very hard. that's the point of romney's trip which got off to kind of a weak start in london and hoping it got better. he's head fog land now. we'll see if key make that work. it hasn't been all that successful for republicans in a large way but in certain targeted states, florida, for example, which is very close, obama has a lead, it's a very, very important constituency and important constituency financially. >> okay. i can't figure -- he got what he wanted, right? these pictures, i'm assume, if you're romney you want pictures like this to give the sense you're a traveling statesman. >> he's walking a fine line opinion he don't say he's not there to disagree with the president or change any foreign policy but then some of the things he's saying are in direct opposition to what the u.s. policy is at this point. that's a pretty tricky line. >> it is. there's this sort of quaint custom that was once observed and talked about, you know,

politics stops at the water's edge and when you're on foreign soil you don't criticize the president. it's kind of silly because both of these campaigns in permanent warfare mode. each party violates that election after election. romney is cueing to the form of the past which says i'm not going to outline any differences but you may notice he gave an interview in nevada to an israeli newspaper before he left, and in that interview he spelled out some of his differences. >> i guess it's a little different today where everybody has the internet access. >> distinction is kind of lost. >> john, thank you very much. great talking to you. we'll see you again this week several times. >> coming up, we have veteran money manager bob doll. and a story becky and i were

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here you go. nice shot of the happy monday morning. welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin along with becky quick. joe is out today but will be back tomorrow. let's get you through some other headlines this morning. british bank rbs is bracing to be punished over its role over the libor scandal. libor sounds like a disease. >> you know if you were watching libor all the time you know this is -- >> to our audience he'll call it libor. says the investigation by british regulators are in process. among the market events to watch, expectations fed and ecb will provide stimulus to support struggling economies. both central banks are holding policy setting meetings this week and u.s. equity futures right now looking slightly down at the moment, dow looks like it

opens six points lower. s&p off. nasdaq up marginally. but if these guys don't come through with something, right -- >> there's going to be disappointment in the market. if they come through with something and it's not as much as the market is expecting it could still be dealing with that. there's more pressure on draghi to come up with something than the fed to come up with something but there are a lot of sp people speculating there's a concerted effort to work together. i don't know if they would get that. draghi needs to put his money where his mouth is. you said you were doing these threats and you scared the bears out of the market and now you got to show them. >> mr. liesman coming up to talk a little bit about what the fed may do. >> the other thing we've been talking about is the continuance of the nanny state. you heard about this with mayor

bloomberg. first with smoking. the latest conversation has been to ban soft drinks and all of this, you know, has raised the ire of people saying this is the unanimousy state. none of it caught my attention until i heard about this latest move. now the bloomberg administration is going to start requiring hospitals to lock up baby formula in the hospitals so that only certain nurses can give this out so that it's not too readily available. they are blaming the lack of breastfeeding on why children are obese, a lot of problems that lead to that. there are plenty ever studies that say breast milk is better for babies, there's not any argument about that. look, i breast fed, i'll say that. i got into this. this is something you believe in too. but the idea that you're going to force this down mother's throat which i think is a very personal choice and very difficult thing for people to believe in. locking it up in the hospital to treat this as this is a drug, and by the way, any man who

thinks they can make a decision on this you're an idiot. you cannot make a decision on this because you have no idea how complicated and how difficult it is. so the idea that you are judging mothers for those choices they are making you guys should stay out of it. >> as a guy i won't comment except when we had our twins we breast fed, or my wife -- >> we? >> we should never say we're pregnant. my wife breast fed. however early on because we had two guys we needed extra formula to supplement what was going on. >> by the way, you've gone through an incredibly difficult process no matter how you gave birth. it's incredibly difficult and at the beginning you don't know what's happening. sure, look, it's a better path that's what doctors will tell you. that isscience changes that eve

five years. it's not easy for everybody and it's a stupid judgment to make on people. mothers face so many difficult horrible decisions that they have to make all the time and they feel guilty no matter what. you don't need to pile on. >> hopefully mr. bloomberg was watching. >> probably doesn't care what i think. sfee mig >> he might. >> we've been watching stocks rallying over the last week. joining us right now is bob doll, senior advisor of blackrock. bob, it's great time to have you here because the markets right now seem convinced that things are looking a little bit better. back above 13,000 for the dow. do you think this is a temporary reprieve or what's happening in terms of volatility?

>> the news is the economy continues in a very boring way to muddle through. we get policy, as you both just talked about, two important meetings this week. and that's helping things along. look, corporations are, unfortunately, behaving very rationally. they are hoarding their cash. not hiring a lot of workers. not making a lot of capital expenditures because there's so many uncertainties out there. the market don't grind higher as the economy muddles through and that's the order of the day, becky. >> i read the statistic this morning that shocked me. it was a morning money he pick up an analyst note who was saying that traditionally companies reinvest 110% of their profits but that number has been closer to 77%. he said that's really where you can find the economic weaknesses, companies are so unsure about what's coming in the future and the analyst's point is this is not unusual or something -- this is exactly

what you should expect from companies since we don't know where consumer tax policy is headed. >> tax policy, regulatory policy. a lot of uncertainty. corporations sitting on their hands. they raised their dividends. slowed their buy backs to some degree and hiring workers in cap x is not a favorite thing. >> there's a story on the front page of the "journal," the bad news is they think u.s. corporate profits may be slowing at least for the third quarter. they think we've seen a string of gains but there's things conspiring that next quarter may not be so good and concern about weakness in europe. on the corporate profits front do you think the strength can continue? >> i think kit. as the article suggests at a slower pace. you can't keep growing the top line, that is revenues faster than nominal gdp for a long

period of time. we saw a slow down. we're seeing a slow down in the second quarter reports. of course the releases and forward guidance are kind of mediocre as well. i don't think it spells gloom and doom. part of this whole muddle grind through hire environment. equities up 9% from their low of just less than two months ago. up 11% year-to-date. up 28% since last october's loss. so, you know, what's wrong with this picture? you talk to most people and it sounds like equities are down a bunch but grinding higher as the economy muddles through and corporate earnings work their way slightly higher. >> bob what do you expect to hear from the fed this week? >> more of we're there if we need to be there. i don't think we'll see any big changes, maybe they extend the zero interest rate policy in time but i think the action is overseas the ecb as you both pointed out a few minutes ago

that's where the pressure is to come through, are they going to get out there and buy some more sovereign debt. my guess is the fed sits on their hands, underscores what we're saying, slow growth, we're here if necessary. i don't think we've seen enough weakness. >> the key is the ecb, what do you think the ecb does? >> they go out there and buy more sovereign bonds. they've given so many threats or promises almost that they will do that for spain for italy and obviously what they are trying to do is underscore the euro and my guess is they will put their money where their mouth is. if they don't there will be some disappointments out there. >> though, thank you very much for joining us. have a great week. >> if you've got questions, comments anything you see here on quack including becky's comments on breastfeeding -- >> that was bob saying good-bye. i wondered what that was too.

>> good-bye bob. >> wonder what other people think about this too. this one goes a little -- >> you'll get more people riled up. shoot us an e-mail. it could be the corporate trial of the century, apple versus samsung. the stakes we'll talk about it. the news maker of the morning, a legend, david rubenstein will be our guest host starting at 7:00 a.m. eastern time. to com e into a gym and train by myself,

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welcome back. it could be the battle of the century end it begins today. samsung's android surpassed apple's iphone in global market share.

samsung's phone bigger than the iphone. but apple claims its rival is cheating its way to the top. joining us now, the patent attorney and brian marshall an analyst with isi group. i hope i got that right. thank you both. brian, let's start with you. i was looking through this suit, and the question i have is once you get a slab of glass, how can these things look that different? meaning the argument is that apple is saying samsung device look too similar. aren't all these phones going to look similar? >> andrew at the end. day it comes down to the look and feel. but the late great steve jobs once said software is the soul of the product and that's the key battleground here at the end. day, what's the functionality of the hand set or tablet, but you're right. most of them look fairly similar, rounded edges that type of stuff. >> brad, same idea? are you there?

the other question is why is google not being sued in all of this. if that's what's so similar. you have the software plus the physical device. >> this case is mostly about the physical device and the appearance of the physical device. apple has chosen an interesting strategy. they are trying to protect what they would call telearrogance of the appearance of their iphones and their i pans. it's an unusual strategy bath it require them to prove a lot that may be very difficult for them prove. >> brad, handicap the suit. >> i can't quantify it. it's a very interesting suit. apple on the one hand is arguing for protection of the appearance of its devices. and samsung on the other side said it owns some patents that are critical to making a smartphone and without that technology one can't compete in the market for smart phones.

so they've squared off taking very different approaches and i think it will be a fascinating trial. >> brian, which side of this would you want to be on? >> the apple side. >> you think samsung is losing this, then in >> i'm not an ip attorney so i'm not sure. but i rather be on the apple side. they have been doing this for decades. mobile devices, obviously, tremendous amount of ip. buying billions of dollars worth of ip. i prefer the apple side. >> how much money do you think is at stake not in terms of what they are seeking but what a judge could leveralleaguuld ru. >> total market cash on the balance sheet. at the end of the day ip is very

important but the big thing from a stock perspective is how the fundamentals are turning out. >> brad, has the whole patent litigation area just gotten out of control? i don't even know what to think any more. it seems at some point people are going to -- if we have to pay for everybody's patent and everybody is buying up everybody else's patent we'll be in a war that will be a race to the bottom. >> i hope it's not a race to the bottom. >> this is your business. >> my business. but you're absolutely right that people are starting to ask questions about whether the high value that we're placing on intellectual property these days is serving the economy well. and there's been some movement as you probably are aware to reform the patent laws and soften some of the laws and maybe to get a little bit more rigorous about damages so folks are not claiming damages that really go beyond the true value of the patents that they own. and when we hear numbers like $2.5 billion which apple

announces it will seek in this trial one can question whether that number is a real number. >> brad, we got to run. but which side of this lawsuit would you want to be the lawyer for? ni >> i would be happy to represent either one of these parties. >> good answer, counselor. we appreciate your time. thanks for joining us. >> when we come back, a former fbi agent turned art hunter. we'll talk about how he recovered $300 million in stolen art. a cnbc special called "ripping off the rich." let's pop in on the squawk green room and see who is hanging out this morning. it's david reububensteirubenste. it's all coming up at the top of the hour. >> tomorrow on "squawk box," guest host jim grant will join us for two hours to talk europe, the u.s. economy and the

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. . ... welcome back to "squawk box," everybody. in 2011 the super rich spent more than $11 billion on art and more than $5 billion on wine,

the collectibles market is growing. where there is big money there's big opportunity for criminals to rob the rich. rah! i'm having trouble talking this morning. scott wapner joins us with more. this is a huge industry. >> big shock where there's a lot of people, a lot of people who want to take some of the money. they go where the money is. you meet interesting characters when you investigate this stuff. former fbi agent turned private detective robert whitman travels the world to recovers some of the world's most famous stolen pieces. wittman posed as an art dealer, meeting with criminals to recover more than $300 million worth of stolen history. >> these are three norman rockwell painters recovered in december 2001, found in rio de

janei janeiro, brazil, this is a pointing by gowa called the swing, stolen in 2002, we recovered it in 2003, it's worth about $15 million. individuals go to the department of the richest woman in spain, stole 17 paintings. >> where do you typically find these pieces? >> over time when a piece is stolen it might take 10, 15 years but many times u recover them because what happens is the person who stole them sold them to an unknowing buyer. that person dies or decides to put it back on the market. >> we'll have more on the special tonight, "ripping off the rich," 8:00 eastern. of course only on cnbc. here is an interesting fact for you guys, probably surprise you, department of justice ranks art crime the third highest grossing criminal trade behind only drugs and arms. right? would you think that right off the top of your head, art crime is the third most prolific -- >> probably a safer way to do

that. >> where are cars in that? >> somewhere. >> drugs would be high. >> drugs, arms, and then art. right? >> he said that a lot of times you find it because an unsuspecting person buys it, either pass away or try and put it back on the market. so whose fault is it? if you're uh-unsuspecting perso are you the loser in the whole deal? >> you're out for the money you paid for something you thought was legitimate. one of the most interesting thing is it's difficult to move this stuff. if i steal a picasso, who am i going to sell it to? someone is going to ask a question, aren't they? so one of the twists in all of this, and wittman himself will say that right there. it's hey you can steal anything you want. trying to sell this stuff is so difficult but it doesn't deter the criminals from trying to do it. we have many stories in the doum

te documentary who have had art ripped off from under their nose. >> does it get found later? >> sometimes yes, sometimes no. there have been major heists. the biggest heist in u.s. history from a museum, the crime still hasn't been solved. >> what is the great movie with pierce brosnan? >> i know the movie. it's too early. >> "the thomas crowne affair." >> they literally take it off the wall of the museum. this stuff happens. >> i've asked witman and others about that, who is the typical thief, are they swooping in with a tux on going into the art museum n most cases no. >> that's how i'd do it. >> you'd be surprised how brazen they are, they walk in with the tuxedo and walk out with the painting, others classic casing the joint and slipping in when security is not painting atension. >> you look like you're all ready to go, suave, deeper than normal voice. >> a former wall street guy,

knew andy warhol well, commissioned several sets of a sports related series from andy warhol and one of the sets taken right off the wall from his home in los angeles, still hasn't been found. >> that's coming up tonight, 8:00. sounds like an excellent documentary. >> should be interesting. get into the wine world as well selling counterfeit labels, too. >> scott, thank you. when we come back, he's a legend in the tech world and now sits on president obama's jobs council, we'll ask steve case why the group hasn't met in six months and what he thinks needs to be done to get americans back to work. we're welcoming carlyle cofinder david rubenstein, our guest host, when "squawk" returns. [ male announcer ] drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event,

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krumplg time for the global economy. september is shaping up to a make or break month for policymakers. we'll preview this week's big fed meeting. time to play -- >> "let's make a deal." >> carl rubenstein joins to us talk private equity, the global economy and making money in a sideways market. and the latest breaking market news as the second hour of "squawk box" begins right now. ♪ good morning, everybody, welcome back to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin. joe will be back with us tomorrow. we've been keeping on eye on the

futures, right now relatively flat, not a lot happening, we're waiting to hear what happens from the ecb and the fed this week. euro group chief jean claude juncker is promising leaders will decide in the coming days what measures to take. his comments fom mario draghi last week the central bank will do whatever it takes to save the euro. tim geithner will meet with draghi and german finance minister wolf shang scha wolfgang schavel later this week. and the trial begins with apple versus samsung, with a patent dispute over the iphone and ipad. samsung is countering apple is doing the stealing and some of the technology at issue has been

in industry standards for years. investors want to watch this week's economic calendar, including the two-day federal reserve meeting that starts tomorrow. on friday we have a labor department releasing the closely watched monthly jobs report and that is a huge one for the market as well. >> absolutely becky, thank you so much. we have a special treat this morning, private equity powerhouse carlyle inking three deals in the last week and david rubenstein is the co-founder and managing director of the carlyle group and i think this is your first time being on tv since being a publicly traded private equity company. am i right? >> you're correct. >> we'll talk about what it's like to be a public company that does private equity. >> i can't say anything, my lawyers won't let me say anything so we have to go to some other subject. >> now you're out of that quiet period. >> we're still in a quiet period for earnings. >> we'll be careful on earnings but we can talk about broader issues. >> okay. >> i want to start with a topic

we introduced henry kravis and a number of other people, talked about politics, given the moment, given romney in the news, the image issues around bain and the industry more broadly and i'm curious whether you are frustrated not by what it feels to me like a lack of defense of the industry by romney himself, meaning he spent his whole career doing this, and very infrequently does he come out decisively and really push the virtues, if you will, of private equity. how do you feel about that right now? >> anybody who works in any industry takes some pride in it so we take pride in what we've done and the private equity industry is designed to make companies better and economies more efficient and create jobs if we can, not necessarily the most important thing. >> is that a false choice, evening meaning part of the whole political debate, are you

creating jobs versus making money for investors. >> private equity was invented to make companies more fusht and t efficient and the result is to get more to invest in return. many of the times we buy companies, they're not in good shape, just preventing jobs from being lost is an important thing. recently we helped prevent the sunoco refinery from being closed. had that been closed 800 jobs would have been lost immediately. now we'll keep those jobs from being lost if we're successful in what we do. i don't want to say whether mr mr h mitt romney has done a good or bad job. i think we should let people know what we do. i don't think people know how many jobs we preserve or good returns we get for our investors, most of whom are public pension funds.

>> going back to this false choice issue, when you watch the debates and you watch romney out there, are you surprised that he's not more defensive of the business? do you think he's done a good job of defending the business? >> if i were running for president i'd talk more about what i had done in my private equity career. i'm not mitt romney and i've been involved in presidential candidates and it's difficult to say what you want and get the message through. i think he concluded based on his work it's better to talk about other things i guess. >> you did work in the white house. >> i did. >> so you do have a perspective on this. is there a political upside to talking about the industry you spent your career in? >> when i worked in the white house the private equity industry was just getting started, hadn't come off the ground yet. anybody who runs for president should talk about what they did to run to qualify for president. when barack obama ran he didn't spend an enormous amount of time talking about his prior career. most presidential candidates talk about what they'll do when

they're elected, and that's appropriate. >> i looked at your tax return over the past ten years, i'm not saying i wouldn't be happy but do you think the american public would find that acceptable in this day and age? >> i've paid enormous amount of taxes, so i never thought when i was working in the white house that i'd be paying as much taxes as i have paid. i'm proud to pay them. i'm glad i can afford to pay them and i pay an enormous amount of taxes to federal, state and local governments and that's appropriate thing for a citizen to do. >> enormous terms, dollar terms or percentage terms. mitt romney has paid an enormous amount of taxes but the percent has been lower and that's where the rub has come in. i'm not asking for your taxes returns. >> i would say i paid enormous amount of the quantitative dollars. >> turn this back to mitt romney's taxes, he's paid an enormous amount of quantitative

dollars. the argument is he's paying less than 15% in the taxes we've seen. >> right. >> where do you come down on that statement? is it fair for somebody to be paying that percent of taxes? >> my view is that people, like me, don't write the tax laws, so to blame me for paying what is legal is unfair. change the tax laws and people like me will pay whatever the law requires so i'm not responsible for mitt romney's taxes, i don't know how he computed them but i'm presuming he hasn't done anything illegal. >> let's turn this to a conversation where we should be headed with tax policy. >> when i worked in the white house we found tax reform is difficult to do. finally there was comprehensive tax reform in 1986, probably overdue for another tax reform in our country but let's have everything looked at carefully and have congress do it deliberately. i don't think you should single one person or one industry out. i think everybody probably should pay their fair share, less than 50% of the american people pay any federal income

tax now. i think everybody should pay something to the federal government and some will have to pay more. >> if we don't get that reform but we get a new debate on carried interest, let's make is not just private equity but partnership accounting, real estate, oil, gas, what have you, would you be willing to give it up if it was terminated every which way? >> it's not my willingness is the issue, congress decides the law. my real issue is this. i think that you should look at carried interest in the context of comprehensive tax reform. i don't think you can single out one industry. carried interest gets a lot of attent under the president's own numbers it would pick up maybe over ten years about $8 billion if you changed it. we have a $1.3 trillion annual deficit, and picking up 8 billion when you have to pick up 10 trillion is a problem. under bowles-simpson we have 4 trillion. we have $16 trillion of debt, picking up $8 billion isn't

going to solve any problems. the real issue is tax reform and i say picking up enough revenue to solve our debt problems, that's the country's greatest economic problem is our debt and also our unemployment problem. our unemployment is very, very high, much too high and that isn't going to be solved by carried interest one way or the other. >> looking at that you bring up simpson-bowles, a plan you think is a good one. we heard a lot of people say broaden the base, bring down the rates, people who make more money have a higher percentage, getting rid of a lot of the loanholes that exist in. >> everybody believes we should lower the rates and widen the base. i think a concerted effort by whoever is president of the united states to get this done would be a good thing. the business community would welcome tax reform and even if some taxes would be higher for some people in the business world i think people would like it. with he want certainty and want to make sure we can make the

country as efficient and effective as possible in creating jobs. that's an important thing i want to emphasize. the unemployment rate is very high, not to be blamed on one person but until we get the unemployment rate down to where it was before the last recession i don't think we'll create enough tax revenue to get our deficits down. >> there was a stunning statistic we talked about earlier, businesses tend to take about 110% of profits and plow it back into spending to make sure that's one way we get job creation. lately that number is 77% because of the uncertainty factor. we talked about it around the table but i hadn't heard a number on it before this morning. >> i think right now the reason the economy is slowing down, many reasons, one of them is people are waiting to see where the election is going to go. because the election seems to be close some are saying let me see who the next president is going to be, whoever it might be i'll know the policies and act accordingly. i think once the election is over you'll see people spending money and investing more. >> no matter who wins?

>> absolutely. >> switching gears, you're now a publicly traded company. >> yes. >> you have the public investors and then you have the private investors in your lp. >> correct. >> who do you feel more beholden to? >> the investors made our company possible. we are indebted to them. we prefer to do things that are good for the unit holders, the shareholders and the investors but sometimes if you have a choice we always favor our fund investors. when people buy our stock they need to realize we'll do what's best for the investors, if they don't like that, they shouldn't buy the stock. >> would i prefer to be a public shareholder or limited partner? >> you should prefer to be both. >> good answer. we're going to continue to talk to david throughout the broadcast. thank you for being here. >> my pleasure. >> it's a lot of fun. >> going to roll up your sleeves in a little bit? >> i don't know how to do that

but i'll try. >> we were talking about sleeve rolling up earlier. coming up, a manufacturer of plane and car parts he'll talk business and what he's hearing from customers right now, after this. later the next huge tech alliance, is apple ready to team one twitter? we have that and more coming up. stick around. "squawk" will be right back. comments? questions? send them to @squawkcnbc oner, look for updates on becky, joe and the "squawk" staff. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start.

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welcome back to "squawk" on monday morning. apple and twitter currently not in discussions on the tech giant taking a stake in the social networking site. this weekend the "new york times" reported apple had held negotiations with twitter about investing hundreds of millions in that company. they had met in sun valley where becky quick was earlier this month. the companies are said to remain friendly and will continue to talk about working together in the social space. tech analyst paul meeks will join us and a lot more at 8:00 a.m. eastern time. a lot of questions about what happens after private equity firm acquires a new asset. armand lauzon is carlyle's go-to

guy, helping to turn around businesses that carr loyal purchased that were down and out. armand, thank you for joining us this morning. >> it's my pleasure, thank you. >> there are a lot of questions about what private equity does, the politics has played into that and has people asking questions about it. when you come into a company what do you first look at and what do you do? >> i've been involved with three businesses over the last ten years and in every case, every one of the businesses were broken when we bought them. the first thing we have the ability to do is bring capital into the picture and all three of the businesses that i've been involved with were capital short. the second thing we do is bring leadership. these businesses get in trouble more often than not because the leadership has been ineffective for one reason or another and so we bring a team in that allows us to focus the business. i think the third thing and most important thing, in many respects, is aligning management, the employees, and the owners, and getting the

employees to behave like owners. that is a liberating experience, when you have an employee that starts to think like an owner and that's probably one of the most important things we do. >> you're talking compensation? >> compensation but also visibility and what's going on in the business. when we walk into a facility, more often than not people are in a cloud, they don't know what's going on. they're concerned because they haven't gotten visibility. we provide them with visibility and give them a good perspective of what the business is doing, what went wrong and what we'll do to fix it. >> give us an example of one of those three companies, walk us through what happened when you came in and where things stand now. >> sequa is a diversified manufacturing company that has three entities underneath it. the biggest of the three is a company called chromalloyd. it had 6ocations around the world, interesting enough they were competing with each other with different customers.

we go in and quickly align the businesses, we focus the businesses and we make sure they're not competing against each other and make sure the employees understand how the game is played going forward and what the mission is. >> chromaloyd is metal that is covered in -- >> it is an aircraft engine parts manufacturer that concentrates in the hot section of a jet engine. >> i would say that many private equity firms have ceos like armand, though we think armand's is one of the best in the country, where they run a company for a private equity firm, do a good job and get another company. armand is on his third for us. while the ceos are not as well-known as ceos of publicly traded companies they're doing enormous work for our country in terms of turning the companies around. the companies we bought we knew they had problems or we wouldn't have bought them.

it's trying to find somebody to turn them around. >> one of the critiques in this whole presidential campaign, some of the articles the interest ultimately in certain cases aren't aligned in that everything starts out aligned and then at some point the private equity firm decides to recap the company and then there is no alignment and then you find out later the company doesn't do as well as perhaps the investors did. have you had that experience? what do you think of it? what do you think of it when you read it? >> i disagree with it. in my particular cases, again i have three, two of which we've exited from, in both those cases, those first two companies that i was involved with, though we exited, they're doing better than when we left them. they've grown, invested. the first one i was involved with ten years ago just made a major capital expansion down in savannah, georgia, so when we leave a business we leave infrastructure, leave a succession plan, we leave

capability in terms of people that are going to continue to run that business as well as, if not better than when we left them. >> armand, do you think american workers can manufacture products like the kind that your company does as well as workers from other countries? >> oh, absolutely. all three of the businesses have had a big footprint in the united states, in north america, but we'll speak to the united states. and in every case, we've expanded and invested capital. the sequa deal, i'm on my fourth year we've investored over $400 million in capital, about 80% of it in the united states. >> when you see manufacturing jobs going else where, does that make sense in terms of not only can they do the job but can you do it economically? >> outsourcing is a tool. it's one of many tools that ceos use in order to make a business competitive. i haven't personally had to use that tool with any of the deals that i've done with carlyle. there are a number of other

tools available to us. one of the things i've learned over the years is that when you go into a manufacturing company, because that's where i spend my time, and you have an opportunity to work with employees and liberate employees when they haven't had an opportunity to win, we give them a chance to win, and when employees are focused and have knowledge and education, and regular communication from the top, people want to go out and do a great job. >> what's the biggest challenge you face when you turn around and take over a company in. >> it varies. it varies depending on the sector i'm involved with. in the first company the biggest challenge was metal, getting metal and we were going through a difficult period back then, and the second company consolidating three different unions and three different actually it ended up being four different businesses and in this company, consolidating the businesses. >> the second you turned around

was a steel company. do you think americans can make steel competitive with countries around the world? >> absolutely, as long as the playing field is levelled. >> that's got to be a big change. >> yes. >> what do you get a sense of the overall economy and the overall health of american manufacturing, from everything you've seen? >>. >> from my perspective there's two big challenges in front of our business today and the first is, we just came out of the second quarter, where the european market for us tanked. we saw no activity out of europe whatsoever in the second quarter, which forced us to take a step back. the second issue that i spent a whole day in washington last wednesday on, is sequestration, you know, parading through capitol hill because we don't have a defense budget come our way right now and the uncertainty we see in the air force and the navy and within the department of defense is unlike anything i've seen in my 30 plus years. >> what does that mean just in terms of budgets and how you plan and prepare? >> you've seen a drop off in

military spending just in the last quarter, in the second quarter and we see that tailing down because of the uncertainty of what's coming for next year. >> so because you're the ceo of sequa you don't like sequestration necessarily? >> that's correct. >> armand, thank you for joining us today. >> my pleasure. >> armand lauzon. we have more questions for you, david n a moment. >> okay. coming up, how well can you whistle? we'll make you whistle, too. we often try hard to whistle during the breaks but we've got a special whistling treat for you after the break so you don't want to miss that. and we'll talk fed policy, gdp revisions and you want to whistle us out, becky? [ whistling ] >> we have a better whistling when we return. >> time for today's aflac trivia question, what american warship is the oldest commissioned warship currently afloat? the answer when cnbc's "squawk box" continues.

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now the answer to today's aflac trivia question, what american warship is the oldest commissioned warship currently afloat?

the answer? the "uss constitution." >> aflac! welcome back to "squawk" on this monday morning. we like to whistle during commercial breaks but we've got a very special surprise guest here today. i want to introduce you to somebody, watching the show with us, four-time international whistling champion, this is chris alman, head of global communitions at carlyle, an amazing talent and he's going to be hanging out throughout the show and whistling along and there he is. [ whistling ] >> there you go, chris. do a little be-bop. it's amazing. >> chris, joe says that i suck, that i can't whistle, but i'm going to get a few tips from him and see if i can play along. [ whistling ] you can whistle, right, andrew? >> i don't know, maybe we can all do -- we're ruining his whistling. chris, we'll do this throughout the show, but -- a lot of fun.

maybe you can give us some instructions later on how to whistle. >> we can show joe up when he comes back. we'll show him tomorrow. if you've got comments or questions about anything you see here on "squawk" e-mail us at squawk@cnbc.com. when we come back the fed is worried the economy is not producing jobs fast enough. what steps can the fomc take to change that? we'll discuss. and a look at where the futures are right now, flatlining because there are so many big things the markets are waiting for, the two-day fed meeting, the ecb and the jobs report friday. stick around. "squawk" will be right back.

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welcome back to "squawk box" this morning. making headlines we got good news, italy's ten-year funding costs fallen below 6%, the first time since april at an auction that happened today. analysts say the hopes for a stronger crisis response from policymakers spurred demand for the debt and we'll see the policy response or not later this week.

the uk government setting out terms for a revamp of libor, a top regulator looking at how the key rate is constructed, the feasibility of using actual trades governs rate setting processes and how to move to a new regime. "the dark knight rises" earned $16.1 million topping an overall sluggish weekend at the box office. i saw the movie so i might be worth 14 bucks to them. a big week for the markets and the economy, so joining us now is steve liesman, our senior economics reporter, joins us with a preview of what this week could hold for the world. >> i mean, this is what the word huge was invented for. >> a big deal. >> no fewer than three milestone monitoring and economic this week, investors need to pay close attention. the fed policy announcement on wednesday, ecb announcement thursday. friday u.s. jobs report. the entire sequence of events is backwards, if you could create

the right order, you first know what the u.s. jobs report is and what the ecb and the fed will do because that's the better order of things, nothing more important and this uncertain than what the ecb will do. markets rallied last week after the ecb president mario draghi said, "to the extent the size of these sovereign premia hamper the functioning of the monetary policy transmission channels, they come within our mandate." the words came across the wire and ignited a two-day rally thursday and friday. look at what economists, monetary policy observers are saying on the possibilities, additional sovereign bond purchases, negative deposit rate or long-term repo operations, the three most cited potential actions by the european central bank. jpmorgan saying "these actions along with the reactivation of the smp" bond purchases "are expected at the upcoming

meetings." whether or not everything is done on thursday unclear. "we fear that this plan" as in the actions by the ecb "will fall short of expectations. the ecb does not have the freedom of the u.s. has to expand its balance sheet without limit." it's pointed out "in europe the fundamental question remains why should a german, finnish, dutch or austrian worker take on credit risk to fund the retirement of a greek who is able to retire ten years earlier than the german? until the politicians level with their constituencies, the economies of europe cannot grow." similar uncertainty surrounding the fed, wall street split over ben bernanke will engineer another round of quantitative easing or wait to see more data and fomc forecast next month. there's considerable skepticism any fed action will do any good. we'll see what the market really thinks from our cnbc fed survey

tomorrow and markets looking just what better with pay rolls rising 90,000 to 100,000. >> steve, stay with us. we bring dave rubenstein in with us as well, our guest host today. as a business leader and someone watching all of these events, how would you time these three things this week? you've got the jobs report, we care about that. we know the fed is going to be talking and issuing some sort of a statement, but when it comes down to it, is the ecb the biggest event of the week for the markets? >> well, if the fed were to do something in terms of quantitative easing that would be the biggest news for sure. i think europe and the european leaders continuously keep making changes, and add additional fire power to what they need to do, and i think at some point the markets don't pay that much attention to it because they see more and more of this coming. if the fed were to do something before the election, that would be significant. i originally thought the fed would not take major action because it didn't want to get

criticized in terms of being in the mid of the election but now the fed is given some signals that maybe it will take some action so we'll wait and see. that will be the biggest news. the jobs report is unlikely to carry surprises. at this point it's not likely to go up much or down by much. >> are you investing in europe? >> we do invest in europe. >> has all of this cloud, has that changed how you're doing it in. >> remember, the investment business and the economy are two different things in some respects. the economy is going down, there may be things you could buy cheaply and when we buy things, we buy them for three, four, five-year hold period so we don't just worry about one month or two-month economic data. europe is a place where there obviously is a recession in many countries in europe but there are things you can buy cheaply and we are doing that. >> steve, what do you think is the most likely scenario from the fed this week? >> first i just want to maybe redirect what david said. the reason why i said it's backwards, if there is a good jobs report that changes what the fed does, if the ecb does more, the fed has to do less. i want to get something more

from a federal reserve perspective. you're right. if the fed acts it will be huge but you could argue that the fed needs to do less, if the ecb does more and you could also argue the ecb should be doing more. >> you'd hope the federal reserve with the data it has is not going to wait until friday to know what the employment numbers are. they probably have a pretty good clue based on the data and where the economy is going in terms of employment, i hope. >> i think that's right, they get a piece of the data earlier in the month but not the whole thing i think until thursday night. >> that's correct, but they have their own data collection and their own data collection is pretty good i would say but nobody believes that i'm aware of that the u.s. unemployment situation is going to get dramatically better or dramatically worse over the next few months. >> i'm looking for the fed to wait until september. i think they'll want more data. bernanke would like to move around the forecast by the fed members rather than in between, but look, it's at least 50/50 out there in terms of market expectations, could you make a compelling argument either way, after as david points out kom z

comments by fed officials. >> you expect nothing before jackson. >> i think he'll lay groundwork. david, i'm interested in your opinion, a lot of skepticism whether what the fed will do, will do any good. >> historically it was to lower or increase interest rates. when interest rates are as low as they can get, what tool do they have? quantitative ease something about it. i don't think the federal reserve has as many tools in its tool chest as it used to be. >> if you're an fomc member and you're thinking there's a cost and benefit to anything i do, let's say i could do a big quantitative easing, a big mortgage boost and lower the rate on the 30-year mortgage by a quarter point. does that benefit to the economy outweigh the risk? >> it's unclear but i think the federal reserve wants to do something that actually has an impact. the worse thing a federal reserve can do something that it thinks is significant and

nothing happens because then the fed's ability to do things in the future is diminished. so i think the fed if they're going to do something, want to do something significant, not modest. >> so let me get your reaction to what i think is probably a medium forecast in the market, the fed does a $500 billion qe, and let's say it's evenly divided between treasuries and mortgages. would you say that's something that would have a substantial effect on the market? >> if it was not, it was unanticipated. the greatest impact the fed has is when it does something that doesn't leak out in advance, so if they do something tomorrow or the next day that nobody anticipates and it has a bigger impact, than if it's leaked out three days in advance and everybody's anticipated it. if they do something and they surprise people and that type of level of surprise, i think it would have some impact, yes. >> is that baked in the market, though? >> i don't think it is yet but it could be if people keep talking about it for a while. >> i figure by the end of this week it's going to be baked into the market if we keep talking about it. >> it's interesting. that's what you do as a reporter

all the time, and then andrew knows this, too. you don't know what's news because you're not sure where the market is. after the rally last week following draghi's comments something from the ecb is baked into the market. there were some negative comments or squishy comments from the bundes bank that made it unclear whether or not -- >> it's like earnings. if you're a ceo of a publicly traded company but they're good earnings and they're anticipated, you don't get the benefit. if you do better than anticipated even lower than you thought you should do you get a better effect. if the fed doesn't do something significant even if it's not leaked it will have more impact. >> isn't it instant gratificati gratification? we're looking for long-term, i don't know about a fix -- >> no. >> -- something semi longer than a day or two? >> what i want to get to is this notion, even say you get the quarter point reduction in the 30-year mortgage rate. what kind of benefit does it have to the economy relative to

the risk the fed takes on its balance sheet? >> what it really is, saying the fed believes it needs to take action to stimulate the economy and so the anticipation will be that the fed will do additional things beyond this, if it's necessary, and therefore i think that's what the most significant thing would be. the fed is saying we're not happy where the economy is, and we'll do this and other things which is different than what the fed said a couple of weeks ago. >> boom we're done. >> and so i don't think the fed is going to say here it is and we're not going to do anything else for quite a while. none of us speak for the fed. the fed is probably watching us and laughing because they know they're doing something different than what we're talking about. if the fed were to do something significant and say this is not the end of it, i think it would have a real impact. >> this could be the best part of the game on wall street. >> it's incredible figuring out how to position yourself ahead of this. >> thank you very much. david will be with us for the rest of the program. when we come back there has been chatter our next guest is on mr itt romney's short list,

richard haass talks elections, the global economy and much more. "squawk" will be right back. "squawk box" wants to hang out with you. we're hosting a google plus hangout with author ben mezrick and andrew ross sorkin. first go to cnbc's google plus page and add to us your circles. each day we'll be soliciting your questions. if we pick your question, you'll get an invite to hang out on august 15th with ben and andrew, starting right after "squawk box." you can also submit your questions via twitter t to @squawkcnbc, #squawkhangout. it's your chance to talk live to "squawk" and one of the most interests authors of our time. come, hang out with us. stay connected with "squawk box" on google plus, and on twitter. and this is what inspires us to create new technology.

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welcome back to "squawk" this morning. tim geithner is in europe to discuss the crisis. joining success richard haass, president of the council on foreign relations. great to have you here this morning, also we have david

rubenstein on the set. let's talk europe for a second, talk the euro. when you think about the meetings that are going to happen this week between both with geithner and also going to be having meetings over the ecb and separately here in the u.s., the fed, what do you expect to happen? not what you want to happen. >> whatever is going to happen, andrew, is going to be modest and not enough to get ahead of things. that's been the pattern for the last year or two, where the politics have lagged behind the finances. so the idea that any day we're going to wake up and europe will have done things that will somehow resolve the crisis is just not on so i think we have to assume this kind of churning, be it greece, spain, italy or france is to backdrop, i don't know if we're talking about months or years to come and even if i'm wrong and let's argue for a second that i am, i still think that even if europe gets through the financial crisis, the economic condition of europe persists. and by that i mean prolonged period of very low economic growth, which has all sorts of

not just economic, but strategic consequences for the united states and the world. >> richard, you understand the politics over there better than many. is there an easy opportunity, even if it's a small win in terms of fixing this, at all? >> fix is a big word. there are all sorts of opportunities particularly from the top down, for european and financial institutions to do a little bit more. where i don't see things happening is from the ground up, within places like greece. i simply don't think you have the politics that will allow the kind of structural economic reform that would satisfy any serious observer. >> let's turn our attention to iran, on the front pages of virtually all the paper this is morning, including romney being in israel and talking about his support, if israel were to strike. what do you think the chances are that that actually happens right now? >> i think the idea of an israeli pre-ememptive strike against iran, the odds are something like 3:10 over the next few months before the american election, possible but

not likely. there's a bigger chance potentially of an american military strike against iran sometime in 2013. i think that's the real issue, because right now at least the negotiations are going nowhere. since the show has begun this morning, iran has enriched more uranium and it's not clear the sanctions even though they'll have an economic impact will have a strategic impact on iranian decision-making. the day will come israel or the united states whether they're prepared to continue to live with riran parking its nuclear capability 90% of the way there. >> richard, you've been in these meetings before. what would have been said between netanyahu and romney. romney is not president and can't speak for the country but what type of discussion would they have had? >> the real question is to get a feel if you're mr. netanyahu what a romney president would

do. israel has to make the calculation whether it can essentially trust the united states to do what israel believes is necessary to potentially attack israe iran. do they have confidence president obama or romney would, if president. if not it increases the odds israel might feel compelled to act sooner rather than later. the real thing is to get the measure of romney. >> richard, politically, is there a calculus change here in terms of the romney campaign going after what some people call the jewish republican vote? do you think this visit is going to help that? >> it will help at the margins. if history is any guide american jews will overwhelmingly vote democratic. it could be the evangelical vote, there's tremendous support for israel. i think what mr. romney does will help a little bit on the jewish side and also the evangelical christian side. >> as we circle the globe, let's talk about asia. your sense on a slowdown, how

real? >> very real, not just chai whe china, where the numbers are slower and will probably stay that way for a while because china will have to pivot a lot of their economic policy instead of export-led, domestic consumption led. even brazil, you add all this up and emerging markets will be the great engine of global economic growth, i don't see it quite happening. >> if there's a light at the end of the tunnel it's the u.s. maybe? >> absolutely, if we can get out of our own way, somehow deal not just with the fiscal cliff later this year but essentially do something on a budget deal once again embrace free trade, do something on immigration reform, do something above all on tax reform, if the united states can do these things, getting money off of corporate balance sheets, $1.5, $2 trillion, we're potentially the economic engine of the world again. >> richard, what do you see is the end game in syria now?

>> actually i think the end game will go on for some time. i think mr. assad will ultimately go but i think it could be a long time before he goes and after he goes, things continue, he could create some enclave in the aloite areas of the country and you could have a prolonged sectarian struggle. some of the neighbors could get heavily involved and so the idea we'll have a neat, clean, quick outcome in which syria will make a transition to a stable democracy, you'd have to be an extraordinary optimist to see that coming. >> richard with some mixed views on the world, i don't want to say optimistic. come on back and we'll have you on the set next time. >> look forward to it. becking has breaking news. >> shaw group is being acquired by cbni, a stock and cash transaction valued about $3 billion and the terms of the deal, cbni will be acquiring shaw for $46 a share, that's $41

in cash and $5 in cbni stock. it's 0.12883 shares based on a recent stock price of $38.81. shaw group shares are skyrocketing at this, up at 45.42. >> 70% premium? >> a big, big premium that closed at $26.69 on friday. they talk about how this is going to create the world's largest engineering and construction companies focused on the global energy industry as a result of this. shaw will still continue, that name will continue to exist as a sector within cbni, it will be shaw, cbni will be the name of the group but this is a quick jump in the shares today. we'll talk more about this with our guest host today david rubenstein coming up in a little bit. also coming up at the top of the hour, millions of dollars is a drop in the bucket for apple but for twitter it could mean much more. we'll talk about the possibility of the tech companies teaming

up. speaking of twitter, follow the show on twitter, @squawkcnbc is our handle. "squawk box" on cnbc and twitter. we'll be right back. from london the first week of olympic events continues and it's all about the pool, from phelps/lochte's due knell the pool, to team usa men's water polo. complete coverage continues all day today on cnbc. of hybrid technology...idea it's already ingrained in our dna. o during the golden opportunity sales event, get great values on some of our newest models. this is the pursui of perfection. [ female announcer ] e-trade was founded on the simple belief that bringing you better technology helps make you a better investor.

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. coming up, founder and chairman of the case foundation, steve case will join us to talk jobs, the economy, and tech, plus more of your music picks, send us a request @squawkcnbc, use #playmymusic and try to get your requests on the air. "squawk box" and cnbc on twitter, we're back after a very quick break. 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.

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is this rally for real? the only olympic event on wall street is bull running. the dow climbing above 13,000. but will investors make it over some of this week's big hurdles? >> one of those hurdles the jobs report. member of the president's jobs council steve case talks to us about the pace of job creation. ♪ and the other long jump, the two-day fed meeting, will it be the thrill of victory? ♪ or the agony of defeat? ♪ on your march, gk, get set, go. "squawk box" begins right now.

welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with andrew ross sorkin. joe kernen is off today. he will be back tomorrow. our guest host today is carlyle group co-founder david rubenstein. we'll have more with david in a moment. first let's get to your morning headlines. aen drew h andrew has more. the dow is lifted back over 13,000. the fed and ekrob will be providing stimulus to support struggling economies, at least that's the thought, both central banks are holding policy setting meetings this week and we'll be awaiting what they say. treasury secretary tim geithner is headed to europe meeting with ecb president mario draghi and german finance minuister wolfgag

schauble. the ft reporting he dismissed talk about a talk about supplying bonds on the avenueev talks with geithner. we have green arrows across the board in part because an auction in spain -- not in spain but in italy went off and did pretty well. apple and samsung facing off in court. apple followed a lawsuit against its rival alleges samsung smartphones and computer tablets are illegal knockoffs of its iphone and ipad products. samsung counters that apple is doing the stealing, says some of the technologies at issue have been industry standards for many years and finally a little bit of speculation around apple and twitter today, joining us now to talk about that and a lot more, paul meeks, senior analyst and director of institutional

investing at saterna capital. thank you for joining us this morning. speculation over an apple and twitter tie-up or perhaps a small investment that apple could make in twitter. do you think it's going to happen? >> i think it very well could happen. i think it makes a lot of sense, because despite what's happening with facebook and zynga and all their well-publicized problem, social media has a lot of momentum and a place that apple must be and they must be there in a big way. >> if you're a hardware and software maker like apple, how important ultimately is it or can you build in your facebook app and your twitter app and all of these apps on the devices anyway so why do you need to own it? >> i think the important thing is not only do you have access to an app, you really want to have that capability very tightly integrated into your operating system and so far, because twitter and apple have had a relationship, it has worked out very, very well, and frankly, the integration, which is current and hopes to be more

improved in the next generation of apple's operating system with facebook, hasn't been so great, so this is a really big deal in my view. >> and if you do it, it does what to the game, meaning i can't imagine twitter taking itself out, for example, of android phones. if you owned twitter, or you even had a stake in it, you wouldn't say to yourself now i want it to only be on one platform. >> i agree but you want to make sure that ye at least in both of the major camps, and if you have a chance, if you're twitter, private company, you're looking to go public in a few years, you want to see a lot of momentum in your product line, you definitely want to be a partner with apple. >> there's a flipside to all of this. i'm not sure twitter has made that much money thus far, right? >> i agree. and also the social media valuations for private companies have come down quite a bit but on the other hand if you're apple from their perspective, you probably have a great opportunity to buy it at a relatively inexpensive price but one of the things you have to be

cognizant of is the number they're batting around is a couple hundred million dollars. remember that apple generates $1 billion of free cash flow per week, and so this is really a pimple on the face of their balance sheet. >> david, by the way, you're on twitter, not on twitter? >> i am not. i am the last adopter usually. >> last adopter. becky is on twitter. what i'm unclear about, paul, whether this would ultimately change the game, given that you have so many of these other guys running around out there and none of them seem to be making any money, that if you can already tightly integrate this stuff and i see that twitter is already tightly integrated into the iphone, i don't necessarily get the benefit, except, frankly, to keep them in business by making an investment like this. >> well, i think that's part of it, but you want to be, again, as i said, in all the different platforms. apple is obviously the king and this is a very good idea in my view for apple and really not without really much risk. >> but i will say, tim cook at

the moment these negotiations are not ongoing, so clearly for some reason, apple has at least decided to press the pause button. >> is this something happening before or after steve jobs was the ceo? once he left, once tim cook stepped in, that changes the equation in. paul you may not have more insight than we do. >> no and of course it's very difficult to comment on speculation and rumor. >> right. >> when i take a look as an analyst, i know apple pretty well, our firm owns the stock, know it pretty well. i think you cannot avoid regardless of the near term news flow the social media momentum. you have to be there and i think it's probably a savvy thing for apple to do. >> i don't know whether this is going to happen or not but when you have $100 billion of cash to do something with, you can afford to make a lot of investments and try a lot of different things so nothing that apple might do is going to really affect its stock price, because if you put it out, $1

billion, even $5 billion, $10 billion not going to dramatically affect the stock price and expand their presence so it makes sense but i don't know if it's going to happen. >> paul we have to run. one quick thing, apple made an investment last week in a company that does fingers, fingerprints. it's not an investment in fingers. >> authenticating. >> how important is that? >> i think it's intriguing acquisition. what they want to get after with this technology is a way to do better job with security for mobile payments, and that obviously, not in the near term, not in the intermediate term but long-term it will be a big market. again they paid $364 million, which isn't much for apple, and i think this could be another very good strategic move. >> paul meeks we'll leave it there. thanks so much. thank you. we've been talking about economic growth, it continues to slow, but will it be enough for the fed to take action? joining with us a preview is nathan sheetz, former director

of the fed's international finance division, and you know very well the calculus that goes into this. what do you think the fed's going to do this week? >> i think that, beginning of that the fed moved in june with the extension of 2s, there is a somewhat higher bar than many in the markets are expecting. i think so far they've seen one weak payroll report but i really think it's going to require another one. so at this meeting, my expectation is that the fedex tends the commitment language, and includes some dovish indications in the statement, but i think the fed is going to want to see a little bit more before it jumps in with the qe3 kind of operation. >> you think the market's getting ahead of itself at this point? >> just a little bit, just a little bit, and moreover, my expectation is for this employment report that we're going to see something above 100,000. >> that's better than consensus. you're looki ining for a better

number. >> indeed i am. my feeling is the second quarter was very much depressed, the adjustment issues and payback for the warm weather during the first quarter, and now we're going to see something a little stronger than 100,000. >> if that's the case do you think that the fed then stands pat and waits to see what happens with the economy? >> i very much believe that the key number for the fed on the payrolls is 100,000. we're seeing numbers above 100,000, then we're deducing that employment should or unemployment should gradually decline. when we're seeing numbers below 100,000, then the fed's in the position in seeing unemployment rise so that is really the break point. >> does the fed when they have these kind of meetings do they say well the election's coming up, we don't want to get in the middle of the election or do they not pay attention to the fact there's an election in the couple of months? >> i would be surprised if the election was explicitly discussed to a large degree at the meeting, but that said, the

election's got to be in the back of their minds and bernanke and others do not want to see the federal reserve in a position of being politicized, and if there is some way to be able to extend policy as it's currently geared without any new major announcements until after the election, i think the fed would very much consider that first best. >> one of the things we were talking about earlier, who is the fed's ability to discern what the employment numbers will be before they're announced? does the fed have its own numbers and know what the numbers are going to be? >> the fed has the best macro labor team in the world but even so those employment numbers that come on, on friday, often come as a surprise. the fed has a reasonable idea of where the economy is headed, and what's going on in the labor market but when the number is announced on friday morning they're often surprised. >> the fed gets the numbers maybe the night before. does the chairman of the fed get

the numbers the night before? >> my understanding is at least on occasion that bernanke would get it the night before but not earlier than that, so this meeting on tuesday and wednesday, i don't think they're going to have the employment number in their hand. they're going to have a guess and a pretty good guess but i don't think that those expectations will be a strong enough basis for them to incorporate that in the process. >> david, when you were in the white house working for carter, when did he get the numbers? >> the president always the good numbers a night before, it's a consistent practice. the numbers are given to the head of the cea the night before and the head of the cea can usually give it to the president or not, but i think the cea head usually does. >> how many inside the white house get it? does anybody else get to know? >> i can speak for my time there that the cea had, charlie schulz got them and gave them to the president but i didn't know them the night before. >> nathan, you talk about the political scene being not necessarily discussed but certainly on their minds when you think about the election, what about ron paul and the idea

of the fed being audited and that bill getting passed handily through the house? >> i think it's a very similar line of reasoning that the fed is going to do, in the first order, what's necessary to achieve its dual mandate of full employment and price stability, but if there's some way to achieve that policy in a way that's less politically controversial that raises the hackles of some in congress to a lesser degree, the fed will very much take that option and i think we've seen that. why is the fed pursuit operation twist rather than additional qes? the bottom line is it's been less politically controversial, hasn't entailed balance sheet growth, hasn't entailed growth of the monetary base. >> is the fed ever influenced by what the markets think it's going to do or never pays attention to that? >> that is an exquisitely difficult issue. on the one hand, the fed does not like being pushed into a corner in the sense that we have to act or the markets are going to be disappointed but frankly, the flipside of it is the fed

very much dislikes disappointing the market and so how you balance those considerations is really one of the, i think most difficult aspects of formulating monetary policy. >> nathan, in terms of if they did come up with something else, let's say they eventually got back into qe or talk about extending the term that they're going to have these incredibly low rates, how effective is it? >> i think on the margin, we're in a world now where the fed can be helpful. if they announced a $500 billion qe program, i think that would be worth a half to three-quarters percentage point on the level of gdp over a year or two, so it's stimulative, but is it the answer? no, it's not the answer. >> why do you come up with 500 billion? because steve liesman used the same number about half an hour ago. is this the number tossed around in circles? >> very much so. qe2 was 600 billion, twist was 400 billion in the first instance, and it's been extended

by another 267. the fed has just decided to move in bites. and the bites have been roughly, 500 billion, 600 billion a pop. at this stage if they were to do a qe3, it could be 500 billion of mbs. >> do you think they should? >> i think that if they see another month or two of sub 100s on the payrolls, that they should move, and i think that's both from the perspective of the stimulus that's provided mechanically by removing duration and pushing investors into other instruments, but i think even more importantly, the fed is playing on confidence. >> but the more they allow this to happen the more that they continue to step in and give these bites of confidence. doesn't that remove the pressure from the policymakers who should be making the decisions? bernanke tried to push it back to washington. if you just stopped doing things, doesn't that force their hand even more? >> i think the answer to that is

yes, but bernanke and others at the fed feel very much constrained by the dual mandate and the dual mandate tells them categorically and specifically their role is to pursue full employment and price stability, regardless of where the politicians are. >> greenspan's interpretation of that, and he said this on this program, greenspan's interpretation of that was to follow the first mandate and the second comes from there. therefore, if you worry about inflation and you focus on price stability, employment comes from that. this fed sees it a little differently it sounds like. >> if we were to reconcile the two perspectives, the fed is think being price stability over the medium term. if you get to a point where we're missing on the employment lag in a significant way, that suggests they're in deflationary pressures down the road. the fed is more targeting and think being medium term than immediate inflation. >> do you have any doubt the chairman of the fed is watching you, as you talk right now? >> i really don't know, but i'm

very confident that between all the expertise at the federal reserve and the excellent staff he's getting superb, superb advice and they're well plugged in on all of these issues. >> nathan, thank you very much for joining us today. >> thank you. >> nathan sheets of citigroup. >> very politic with that answer. coming up just a few days into the olympic games and already we have a strong showing from u.s. athletes. china leading the total medal count with 12, but the u.s. only trails behind by one medal. we'll get an update from london coming up next. and in the next half hour we'll talk to steve case, the ceo of revolution ventures and member of the president's jobs council. take a look at the "squawk box" market indicator as we head to break. [ male announcer ] when mariel zagunis first took up fencing,

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welcome back to "squawk box," everyone. the futures right now are indicated slightly lower. whoa. down 6.66 for the dow futures, you never like to see numbers down that, that's better, down 7.66. we've been watching the futures stay in a tight line. we are waiting major moves later

this week, potentially from the fed, potentially from the ecb and the big jobs report in the market, after rallying big last week, looks like it will be holding on and standing pat now. walmart adding timothy flynn to its board. it has 17 directors. flynn will serve on walmart's audit committee. we're just a few days into the london olympic games, already great storylines emerging. for more, carl quintanilla, what events have you gotten to get in to see? >> okay we did go to swimming last night and saw michael phelps run that relay. everybody is jealous. very tough to get in. i'll talk about in a minute. becky you mentioned this is day three, the first full weekday we've got people in olympic park. take a look, i don't know if you have this live shot of the way the energy changes when there are crowds in the park. friday was opening ceremonies but that is some serious action,

the food court's not far from there, things really feel like they have really begun as we get into the first full week of events. of course as you know, guys, over the weekend it was all about swimming and the duel in the pool between michael phelps and ryan lochte saturday night. phelps failed to medal. last night the event me and my producer todd bonin, phelps and lochte in the 400 meter relay, france in the last leg beat lochte out for the gold. the u.s. takes silver. good swim by the way for phelps, although as some have mentioned his first silver in his olympic career, very interesting. we'll see how he competes. some have said that the way that saturday night race turned out may have been the best thing for him, getting him fired up for some future events. look at the medal board. you showed it before the break but china is killing it with 12. the u.s. with 11, italy with 8. south carolimethin

south korea and japan with five. interestingly speaking of china, there was a 16-year-old female swimmer who had a split time faster than that of ryan lochte. she's a girl. ryan lochte, girl, first time in olympic history that's happened. >> oh, man! >> yeah. later on we'll talk to a member of team usa's water polo men's team, 6'5", 230 pounds, looks like a hollywood hero, is going to work for goldman in august, he's already been hired, has a stanford mba, very interesting guy, he's actually been an entrepreneur, he's going to try to go work for their wealth management division. we asked him what's tougher, being in water polo, which is also called hockey in the water, incredibly physical or working for lloyd blankfein and we'll tell you what he said later on this morning, guys. >> carl, did you get to see phelps when he was there, get to talk to him at all? >> no. we've not talked to him. interesting, we went to an event this morning at omega, he's one

of the big ambassadors of the omega brand, he'll be at a party tonight, maybe we see him, maybe we don't. the way these athletes, depends on the athlete, but when they're here, some of them i think have to do some press because you have to keep your career going. >> my guess is he's got to be focused. >> some get internalized and focused. >> even more so given everything that's happened he's probably really kind of trying to focus very much on what he's doing. andrew? >> go ahead, david. >> i grew up in baltimore where michael phelps grew up and swam at the same pool he did but it didn't turn out the same for me. >> david, you've gotten gold of a different kind i think i might argue. >> yes. >> i try to swim one mile every ten years. so i'm very slow but i'm almost on my mile for this decade. >> right, but i think carl's right, we'll give you gold for at least the ipo. carl quick, there seems to be controversy about empty seats. >> yes.

>> in a lot of the stadiums that might be hoarded by corporations? >> well it's interesting, the way tickets are distributed by l locog, the london organizing committee. it's not all sold by the host country but yes there have been events where olympic officials or some corporate sponsors had seats, didn't show up, because a lot of the early events are preliminary finals, there's not a medal at stake, which is grating on the british public who were told there's nothing available for even the early games. as you might have heard already this morning, london officials are beginning to give some of those empty seats to military personnel, to teachers in the uk, and there's even talk down the road of saying look, if you're not here in the first say 30 minutes of an event, you lose. your seat is open for anybody else who might be in line, so it's definitely a controversy that i'm surprised, i thought it would be mostly a british press kind of story, but it's obviously gone all the way

around the world today. interesting. >> carl, thanks for that. appreciate it very much. >> david, i remember we saw you in beijing last time, london misses you. >> are you going over? >> i'm not scheduled to go over, no, unless they need somebody to help with the swimming efforts, no. >> okay. we're going to leave it there. carl, have fun today. coming up, stocks coming off two strong days of trading but the question, of course, is the rally real? we'll head to chicago for the view from the futures pits and what might move markets in the week ahead. and steve case, ceo of revolution ven turs, what's new in startups and as we head to break check out the price of crude. [ male announcer ] drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite,

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♪ things are going great and only getting better ♪ ♪ i'm doing all right, getting good grades ♪ ♪ my future's so bright i gotta wear shades ♪ welcome back to "squawk box." banks are urging congress to extend crisis era deposit insurance. the t.a.g. program ensures all bank deposits and checking accounts above the $250,000 coverage provided by the fdic. without an extension it will expire at the end of the year. small banks say billions of dollars will jump to big rivals if the program ends. let's get a check on the

markets. joining us from chicago cnbc's rick santelli and cnbc's steve liesman is with us on set. mr. santelli ahead of what i imagine is a busy week all around the ecb and the fed what are you looking for? >> well, i'm not really looking for as much as probably everybody else on the set is. you're handicapping all the various issues that may be brought up by two very large central banks and i would probably most likely be debating what those outcomes are. i don't know that it makes a huge difference to the rket, but it certainly makes huge difference to the outlook of equity prices. >> rick, on the floor, what are they expecting right now? what are they thinking they're going to see? >> well, they're pretty much thinking the fed would like to find ways to bring more accommodation to the marketplace, so people on this trading floor probably looking at called spreads for the equity markets. that's what they think. what they believe is a different story for another day.

>> i just want to tell you guys, we had a little commentary about geithner's move over in germany right now. he is begin a meeting with the german finance minister, mr. schauble, and very shortly we understand. treasury downplaying, saying no major announcements are planned for the geithner meeting with schauble and he'll meet later in the day with mario draghi, telling me he planned this meeting, looking for an opportunity to do this for several weeks. >> right. >> and that he wanted to get it done before the august holiday, the europeans as you know will take off for a goodly amount of time in august. >> steve i have the same question for you i just asked rick. what is baked into the cake? what do they think is absolutely going to happen. >> because i have the same question you have, that's why we do the cnbc fed survey. in the old days rick and i debated this, which is interesting we debated it but it was a factual expectation which was in the fed funds futures market. we have the interesting debates

whether or not what it was telling us, was an optionality aspect to this, rick's point of view and i came to share that over time but right now because as david rubenstein was saying earlier, because the actions by the fed are not interest rates, their balance sheet, there is no place to really gauge what is the medium market expectation. that's why we do the cnbc fed survey. we'll give it tomorrow at 7:00. i think you heard earlier from was it nathan out here before and i think there's a $500 billion median market expectation. what i do not know and cannot tell you, andrew, is that expectation for this meeting, this week, or is it for the meeting in september? there are also expectations the fed could bring down the interest rate on excess reserves to zero, potentially prompting banks to lend more, potentially also creating counterproductive lending. finally there are expectations in the market the fed could lengthen the guidance or the forecast for when it remains low

in 2014-2015. i don't know, andrew, what the median market expectation is. i think there's an expectation, in fact two stories, one in the "new york times" one in the "wall street journal"," both were, created market expectations but neither side the fed was going to act in august or september. >> david, i got a question for you. >> sure. >> if the rate comes down any more, does it change your decision-making in terms of what you either want to invest in, either buying companies for the portfolio for more importantly perhaps investing in companies you already own? >> at this point when we borrow money it's so low relative in the past it's not a major factor. if the fed does something that stimulates the economy and producing more growth that would be important. >> they're hoping to create growth by people like you spending the money. >> i don't think the fed is going to do something that tomorrow will change our investment approach. we look at things over multiyear

periods of time. >> there's two points of view, the fed forecasts remaining low through 2014. it gives you a certain security over which you can rely on low rates. the other is it delays decisions. why do i need to make the decision now because rates will be low later. what effect does it have on your business? >> everybody likes lower interest rates but there is a consequence to it. people like lower interest rates. when we look at making investments we're not worried about the interest rate necessarily at that moment. we're worried about long-term macro economic factors. to the extent there is greater business confidence and therefore more economic activity that's good and so if the fed does something that produces a lot of economic confidence, it would be helpful to the country and to the economy. now i don't know that the fed is going to take something dramatic and going to do it quickly. they tend to move more incrementally. i don't think they'll do anything that's dramatically going to change the way we look at things over the next one, two or three months. >> i should point out there's one other thought on the table, the idea of an open-ended qe,

speaks to what david was talking about, rather than what they've done typically so far which is a lump sum thing, they'll do 500 billion over an amount of time. it's perhaps tied to economic targets, we won't stop until. i think there's some fear at the fed of a balance sheet that gets too big but that's one of the other options out there. >> i think the fed if they do something that isn't anticipated, it's going to have a bigger impact than something that's anticipated. >> sure. >> i also think the people that cover the fed seem to know more about what the fed is going to do than people covering any other government agency. what the fed does is often baked into the market. >> i'll say thank you to rick and switch gears and ask one quick question that relates to this, has to do with what interest rates are. you raise money for pension funds traveling around the world. what kind of return should they try to expect in this day and age? what do you tell them? >> pension funds mostly are investing money in liquid

securities or fixed income, so we're just dealing in the private equities sector with a modest amount of their overall amount of money, but in the area that we are talking about, we try to produce so-called to be quartile returns anywhere from 700 to 2,000 basis points over the s&p 500. it's a large amount over the s&p 500 or the ftse 100. in general pension funds in the united states are looking to get 7%, 8% rates of return if they can. >> is it too high? >> is that reasonable? >> that's what they're looking to get. when they try to get that rate of return and they don't it's a problem. when they lower the rate of return they say they're going to have, you have to have more contributions from the taxpayers. >> it's an unrealistic setup the way they expect 7% to 8% returns and putting so much of what they have into it. >> it's worth to it understand where that number comes from. they're think being 5% payouts and 3% inflation expectation. they need to do that.

>> just because you need it doesn't mean it's going to happen. >> that's absolutely right, but their need for that return is unchanged, and that's where you have this incredible conflict. >> remember we have a roughly 2 trillion to 3 trillion of unfunded state pension funds. that's significant. we have 60 trillion of unfunded federal lights, a far greater problem and the state pension funds at least they have some money. our system is more pay as you go which means we don't have any money there, a far greater economic problem in the grand scheme of things. >> we'll continue this conversation with david as the broadcast continues. thank you. >> thanks, steve. when we come back, we'll talk to aol co-founder steve case, a member of obama's council on jobs and competitiveness. [ chirping ] ♪ [ chirping ] ♪

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welcome bax to "squawk box." the countdown to friday's job report is on. job creation a key issue in the election. both campaigns will be watching this report closely. joining us is steve case, founder and former ceo of aol, he's the chairman and co-founder of the startup america partnership and member of president obama's jobs and competitiveness council and are are steve you've talked about how you're apolitical and trying to get both sides to work together. there's a lot about president obama not meeting with the member in the last six months.

>> i'm not sure that's entirely accurate. we've had monthly calls with the jobs council in the last few months, the effort i focused around high growth entrepreneurship we've been active spending time on it every week. the president signed a jobs act about three months ago in the rose garden which allowed on-ramp for ipos. the credit created a bipartisan task force and championing the efforts around entrepreneurship. it wouldn't have happened without the work of majority leader eric cantor, playing an instrumental role in getting the jobs act passed and there's bipartisan support for the startup 2.0, dealing with high skilled immigration so i think we're making good progress. >> in terms of what the council has brought to the table, some of the suggestions that they've made, how much of a reception, how much of a warm reception do you think you've gotten in washington from both sides of the aisle? >> obviously the ones i've been focusing on, entrepreneurship are very encouraged, the

discussion around jobs didn't focus enough on the role entrepreneurs play in creating the jobs, the kaufmann foundation is telling. all of the job creation have come from the young high-growth companies. if you want to focus on the economy and boost growth, you want to focus on unemployment and create more jobs the place to focus is entrepreneurship and there's now for attention, we want to build on the bipartisan support and getting the startup 2.0 act passed. we want to win the battle on global talent. we want to make sure they don't just come here for the best education but they stay here and in a sense we're kicking them out of the country so they go to other countries and compete with us. the jobs act was an important step in the direction but there's more work to be done, has to happen in a bipartisan way and hopefully even though we're in this election cycle and sometimes called here in washington the silly season, hopefully both candidates can focus on entrepreneurship, the

key to creating jobs and driving our economy and ensuring we're more competitive globally. >> silly season is probably the nice way of putting it. >> exactly. >> when you look at 8.2% unemployment there are some massive problems still, admit d admittedly there's progress being made but why do you think we're stuck at these incredibly high levels? what is keeping businesses from investing given the strong corporate profits? what is keeping them from hiring for people right now? >> we have to look at the economy in a nuanced segmented way. the big companies, the fortune 500 companies are typically playing the role of defender, trying to protect the status quo and maximize short term profitability and make sure they have strong balance sheets, they're risk averse right now, a little unsure what to do and waiting for some clarity on some things, particularly coming from washington, but their action really in our economy and has been for 200 years is not on the

defenders but rather on the attackers which are these entrepreneurs trying to disrupt the status quo and there is a lot of interest and investment there, the things we got passed with the jobs act including things around crowd funding will provide more access to capital and allow more companies to get started which then can challenge those incumbents and ultimately that's where the innovation comes, where the economic growth comes and where the job creation comes. >> david rubenstein is at the table today, too. david you hear what steve is saying. where do you agree with him and where do you disagree? >> i agree with steve, he's very knowledgeable about entrepreneurial activity and i applaud what he's doing to try to bring more entrepreneurs into the marketplace. one question i have for you, steve, you're a venture investor now as well, and you are funding entrepreneurs. do you see the venture investing world being much tougher now, because some of the i'd say air might be coming out of some of the tech stocks and do you think there's a tech bubble burst on the horizon?

>> always some sectors at any particular time might be a little more value than they should be but those things tend to correct and we are seeing particularly in the later stage growth side, two sides of revolution in my investment firm, one is revolution ventures early stage investment and the other is revolution of growth, late venture early growth investments and the valuations on that growth side were a little high last year, coming back to a little more reasonable level which is great for investors like ourselves, we raised about a half billion-dollar fund about six months ago. we've already made about three investments and poised to make some additional ones, but the focus for us, how do you make sure you invest in the people and ideas that can change the world and some of that is early stage investing, some is later stage investing, but that is what's made america great so in addition to doing what i'm trying to do with startup america and the role i'm trying to play with the jobs council being in the trenches with the entrepreneurs and not just providing the capital but trying to employ some expertise to help them build these companies has

been a lot of fun. >> steve, you've lived through the boom and bust, so when you watch what's happening with facebook or zynga, which in many cases their fates are intertwined or groupon, if you were to talk to their ceos, to a zuckerberg, what would you tell them? >> well, i have talked to them. i've told them basically he should keep focusing on the product and the audience. it's amazing the company that started out of a dorm eight years ago now has 900 million users, created a significant global presence and as we sit here today has a market value somewhere in the $60 billion range and over $10 billion of cash. this is a great american success story and it's tremendous what they've done so continue to focus on the product, particularly focusing on mobile, which is a priority for them, is the key, as you well know the markets there's cycles to it. ultimately the success comes over executing over 10, 20, 30-year time frame by focusing on making sure you do a better

job of providing the products and services your customers want, that really has to be the main event. >> steve, when you started aol a number of years ago, it was thought to be not as attractive an environment for entrepreneurs but do you think it was easier to get a company started then or easier to get it started now? >> well, it depends on the sector. for us we started at a aol 27 years ago, 1985. the internet didn't exist. it was six or seven years away from the commercialization of the internet, we had to create e-mail, all of these different things ourselves so it was hard to get capital because it wasn't a market that existed, didn't believe it would ever exist. now it's easier to get capital for internet companies because there is a large global audience, so for internet companies i think it's gotten easier to get capital, but there are many other sectors of the economy where it's gotten tougher and many other regions outside of the hubs like silicon valley, where it's gotten tougher and that was the focus on the jobs council and the jobs

act, things like job crowding will be helpful to companies in sectors and regions that are kind of off the beaten path. there are many great entrepreneurs that don't have in their cities the venture capital infrastructure that we see in san francisco or new york or here in washington, d.c., so providing access to capital for them to make it easier for them to take their idea and get it started or if they're after the startup phase and the speedup phase, get the capital they need to expand we think is cratically important. >> steve thank you for joining us. always appreciate talking to you. >> thank you. >> talk to you again soon. when we come back, we'll go down to the new york stock exchange and continue our conversation with david, after the break. d#: 1-800-345-2550 when the spx crossed above its 50 day moving average, tdd#: 1-800-345-2550 i saw the trend. tdd#: 1-800-345-2550 it looked really strong. tdd#: 1-800-345-2550 and i jumped right on it. tdd#: 1-800-345-2550 since i've switched to charles schwab... tdd#: 1-800-345-2550 ...i've been finding opportunities like this tdd#: 1-800-345-2550 a lot more easily. tdd#: 1-800-345-2550 like today, tdd#: 1-800-345-2550 i was using their streetsmart edge trading platform tdd#: 1-800-345-2550 and i saw a double bottom form.

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>> apple should do it. apple needs social. and they don't have social. it makes a lot of sense.

why not just say it? i would like to attribute to it facts. but i'm old school. >> i'm talking about journalism. the world i used to live in. >> step up to the plate, david. you're like a triceratops. >> i used to like those. what about your son, beck si? >> he likes, lion, tigers and bears. >> we're doing elmo right about now. >> good question, guys. >> thank you for putting me on the spot. appreciate that. when we come back, we have some final thoughts from our guest host, david rubinstein, co-founder of the carlyle group. tomorrow, joe is back from vacation. he's going to be ready to go at 6:00 a.m. >> he's been drinking for the past week.

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our stock of the day is shaw group, engineering company, chicago bridge and iron is buying shaw for $46 a share in cash and stock. it's about a $3 billion deal. it's taken off through the morning since the deal cake out. >> it's talk to david rubinstein. sandy weill was on last week, talked about breaking up the big banks. you own a bank. you've been in the business. do you think he's wrong? do you think he's right? >> on glass/steagall, it actually did more than just separate commercial and industrial banks.

when it was set up in 1933, this constraint was one that dealt with u.s. banks that were relatively small in times. now we have to worry about our global competitive position. we should make sure we don't hurt our global competitive position. >> therefore, he's wrong? >> well, he didn't say what he actually would do if he was a legislator. but lehman brothers wasn't a bank, bear stearns wasn't a bank, aig wasn't a bank. it needs some study. but i wouldn't rush into making this change. >> you're not ready to make a change just yet. we talk about flans philanthropy. you guys gave some money to the washington monument to save the washington monument. people talk about the selling of

america, that we're selling lots of pieces of infrastructure, big monuments and relying on private money to do it. >> in terms of infrastructure, it's a good area to invest. but i don't think we're selling these things necessarily to foreigners. i think a lot of these things are being bought by u.s. public pension funds and they are very good investments. >> are you worried that we're giving away the store? these roads, this land -- >> the roads aren't that great right now. we could use some of the work to repair the infrastructure. we need foreign capital, perhaps, to do that. the roads are still going to be here. >> we asked you about romney. you were in the carter administration. are you a obama man? >> i'm apolitical. i try to stay out of politics