here on cnbc. i'm andrew ross sorkin along with joe kernen. becky is enjoying some well deserved time off today. let's bring you up to speed on the morning's top stories. our own david faber reporting the news of knight capital's lifeline yesterday, an official announcement is expected this morning. the $400 million financing teal will let the firm open its doors today. the capital lifeline coming from investors including blackstone, chicago market make r getgo. ceo of steeple said he was confident a deal for knight would get done. he knew something we didn't. >> what's happening today they need to shore up their capital which i believe they will do. they will get the capital. it's a great business model. so people are stepping away until they get some capital which i think they will have by this weekend. >> mary thompson joins us from knight's office in jersey city,

new jersey. good morning to you. she has a lot more on the terms of the deal. >> good morning. of course all of this comes after a weekend of none stop negotiations, knight securing that funding that it needed though at a very steep cost to shareholders. as you mentioned earlier a formal deal has yet to be announced. according to reporting by david faber as well as kate kelly this is what we expect. the company will sell $400 million worth of convertible securities. a 2% coupon and a conversion price ever $1.50 a share which is below the closing price on friday. most investors are don't university these convertible shares into stock. who is buying in? jeffries taking a $100 million stake for a share of the convertible securities. blackstone and general atlantic taking 87 million each.

td ameritrade and nicolaus will take the rest. they will own 70% of the firm. market cap dropped to $397 million from over a billion on wednesday. following a trading glitch that cause ad $440 million loss. the company's outstanding shares seen more than tripling to over 50 million to 98 million. while the deal is not finalized the ceo saying he was comfortable with cnbc reporting. as i mentioned this came after a wild weekend where you saw a number of interested parties filtering in and out of knight's headquarters throughout the weekend. citadel's ken griffin was among those coming in with a grouch bankers. citadel was more interested in just buying the trading

platform. we'll have more on this coming up later. knight ceo tom joyce will be sitting down with our own bob pisani. stay tuned for that. >> quick question before we go. by the way, thanks for talking over the cops there. but -- >> it was a fire engine, andrew. >> fire engine. hopefully not a fire there. anyway. the question for you this morning, is any of those investors and this is what i was on the phone this weekend didn't understand this, going become a majority shareholder in the company meaning they are taking 70% but they are all doing it -- there's many different investors in there. so who ultimately will be controlling this company? to the extent anybody has a majority at all. >> i don't have any insight into that at this point. but as you mention ad group of them so you wonder who is going to end up being the majority stake. maybe we'll get insight on that

later today. or mr. joyce may talk about that to mr. pisani. >> you see why it's better to be in studio. you talk about how you go out there and -- fire engines never go by. fire trucks never go by. it begins with f and end in tk. >> they pass quickly as opposed to sitting next to you -- >> which is like a grind, right? >> right. >> agonizingly slow. all right, fine. >> watch how quickly i can get rid of you. in other headlines -- she's gone. i can bring her back. >> you could try. >> she might be gone. >> the "journal" is reporting s.e.c. chairman refused the firm's request to cancel the errant trades that left knight holding $4.5 billion of

securities it needed to off load. the regulators decision stemmed in part to cancel hundreds of trades following that flash crash in 2012 and many had criticized that move back when it happened. global markets this morning, china's central bank is pledging to intensify it's monetary policy fine tuning. policymakers pledge to improve credit policy of the back to bolster the economy. yemen's aden's refinery. it has resumed production. operations were halted for nine months because of a tack on the country's main oil pipeline. we'll see what that does to crude. ecb, saving greek from bankruptcy. policymakers agreed to increase the upper limit for the amount of greek short term loans that the bank of greece can accept in exchange for emergency loans. wall street banks preparing for

potential euro exit. got contingency plans. the firms are telling counter parties and borrowers to restructure contracts or fine another bank. regulatory filings show several banks have reduced their expos our to the why are you. we do have kind of a romance. did you see some of people we have? >> is it kind of a bromance? >> threesome. >> herald ford jr. coming on. >> will be with us for two hours. >> a lot of people think he's very charismatic. we have mike, jim o'neal. not just us.

i want to ask you something. >> yes, sir. >> can we talk about the olympics? did you see anything? >> yes, i saw mr. phelps. >> you saw phelps with bob costas. good interview. >> i thought it was great. what's his final number? >> a lot. >> a lot. >> i just have a couple of other comes. misty may trainer, did you see those girls play volleyball. >> i saw the highlights. >> they have never lost a match and only lost one set and they were playing these girls yesterday, the italians. and they were kicking their ass so badly they started crying. i felt bad. they are so good and actually misty may trainer is the girls' idol. there's no crying. >> no crying in volleyball. >> no crying unless you win. you can't cry because you're getting sparnged. these women may be so good at what they do that they are just miles ahead. then you had the guy, the

jamaican guy, bolt. his name is bolt. he's cool running. then i got one last thing. one last comment. did you watch the diver from china? >> yes. what is it that's on their back? almost these stripes. different color. is it a tape? what is that. there's a viewer out there who knows what it is. send it in. >> sublime beauty of her diving. >> there's no wake when you enter the water. >> she won by like 80 points or something. do you remember -- you didn't see the cone. >> the cone heads. >> less splash from this chinese diver than even the -- >> cone head.

which was the funniest part. we're doing well. >> you have no comment on the badminton situation at all? >> that's old. that doesn't move me at all. this woman, the sublime beauty of her diving is worth whatever she went through. she seems -- she was crying at the end she was so good. but they don't like that if you do that, i don't think. so head anticipad shoulders abo anybody else. >> you were making calls about night trading. that's sad commentary. for me, on these normal nights it's hard to stay up late enough to watch the olympic. >> that's why i go for the highlights. >> this is going to be -- i have people telling me they never watched olympics. >> people are watching more than ever. >> that i don't understand. this aggregate eye ball.

i'm happy for nbc -- when brian went over there, they put up all this money. and it looked like -- it's great. awesome. >> should we go over to the land of the olympics right now. >> you can. i don't think we can talk about -- i mean i like talking about it but i don't think we would ever get yelled at about talking about the olympics on nbc. which i tried to get kelly to understand two weeks ago. >> she's over there right now. it is time for the global markets report in the land of the olympics. >> land of andy murray. >> kelly is standing by. >> land of andy murray. >> yes. >> i've been dying to break into this conversation for the last five minutes. you have to get over here. the tennis yesterday was incredible. watching andy murray defeat roger fed erer. he's one of the greatest if not

the greatest tennis players but be 34 for the next go around. andy murray -- i'm still in shock that he in straight sets defeated roger federer like that in a month after wimbledon people talking about whether he'll be another british player to be unable to crack it. in four weeks time how far he's come. another performance yesterday that i couldn't get over in the woman's marathon, the russian woman towards the end. race is kwauchg the kcatching u kenyans and ethiopians. >> they collapsed. kelly, you should not run that fast for 26 miles. i watched what happened at the end and i'm hoping they are able to get back up after that. >> joe, the real danger in some of these race physician they don't run fast enough that's when they run into trouble. if the marathon isn't going at a super quick pace their bodies start to shut down.

if only we all had that concern. in any case, speaking of marathons or something here's what's going on in europe overnight. it is largely a positive session across the board despite a lot of the headlines you were reading off and the risks around what's happening with regard to a bailout for spain and next round of funds for greece there's investors taking heart from what the central bank has done. jobs report is giving a lift. we're up .15% on european stoxx 600. shanghai composite was up better than 1% we're now at a two week high, first positive week in seven for the chinese index. ftse 100 is adding .1%. xetra dax is up .6%. the ibex 35 is up .25%. even as we talk on the program this morning about knight capital and algorithmic trading it suspended for technical

glitches. it was supposed to resume fwragd half an hour ago. i want hasn't happened. keep an eye on ibex 35. the ten year in italy still over 6%. 6.049%. still over 6%. ten year in spain is down to 6.8%. ten year in france is higher, fractionally up to 2.09%. the bund is actually lower, benefiting a little bit today 1.37. check it quickly on the euro/dollar before i hand it back. should have levels there indicating against a little bit of a risk appetite back, though down -- i'm sorry i misspoke. euro/dollar is down .25%. could be this new period of trading where we see a weaker your not risk off but supportive of a repricing of what that level should be.

the aussie/dollar, though, offering some caution to that picture. down almost .2% today. i'll go watch more of the olympics. >> thank you, kelly evans. lucky she got over there. >> perfect timing for kelly evans. let's get you caught up on corporate headlines. las vegas sands, reportedly the target of a federal investigation into possibility violations of u.s. money laundering laws. "wall street journal" says the investigation focus on two big money gamblers. one was a mexican businessman late near dicted in the u.s. for drug tracking. the other was a california businessman convicted of taking illegal kickbacks. the probe deals with the two gamblers and whether sands officials ignored warning signs and didn't alert federal authorities about millions of dollars that men had deposited. couple of analyst calls to tell you about. kraft foods upgraded to a buy from hold at jeffries.

target now increased to $48. from $41. walmart upgraded to buy from hold. price target is $83. >> kocoming up, if you've check out at the beach your portfolio could get burned. is there more room to run. first, touchdown, nasa says rover, curiosity lands on mars. the robotic explorer blazing through the pink skies of mars. gentle landing inside a gentle crater. curiosity beamed back the first black and white pictures from inside the crater. those guys are psyched. we'll be right back. oose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology.

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welcome back. making headlines, the darking

knight rises dominating the box office, batman racking up $36.4 million in ticket sales from theaters in the united states and canada. the movie has now hauled in $354.6 million at north american theaters since it's july 20th debut. when you add in international sales the global total is $733 million. total recall coming in a distant second place and family sequel which we almost didn't go, diary of a wimpy kid dog days taking the number three slot. >> did you see the bourne identity? >> dark knight rises. >> that was pretty good. >> i'll see it again, probably. >> saw ann hathaway. >> you said --

>> the sorry sorkin will be there, aaron not me. >> you had to leave the show early to go up there. i said you hunt do that. although people expect you to be there, you shouldn't be seen there. you shouldn't. because you got -- you have to pretend that you're not, you know, 100% behind the whole thing. just to dekeep people guessing. >> olbermann for sending off a couple of checks. i could get in trouble because someone sent money into the obama campaign for me the last time. yes. >> unique name. >> o -- under my name. >> joe biden. i get messages from him. john kerry. patty murray. michelle obama i showed blake my daughter. they go oh, my god first lady. i go i don't think it's really

her. inauguration night i got an e-mail from her. >> she wants your cash. >> they need it to. >> i saw the "new york times." >> sound the alarm. we're behind. send in some money. another fundraising plea from the front page of the "new york times." that was yesterday or the day before, right? >> they would write the story if it was. >> translator:. let's check out today's national forecast. jeff morrow joins us from the weather channel. crazy storm along the east coast. >> pretty big thunderstorms go blasting through northeast. that's pretty much over with for the new york city area. i can't rule out a shower. by this afternoon when you guys are going home or midday looks like it will be pretty nice. scattered showers and storms up and down the east coast. atlanta flying out of hartsfield jackson international airport, storms. florida wli florida, likewise. more heat. dallas at 104 degrees. starting to heat back up in st.

louis. and starting to heat back up in minneapolis. some of the best weather in the country out on the west coast, although portland is a little warm for them but still not bad. san francisco 69. and of course never cools down this time the year in phoenix at 110. back to you. >> great. thank you. july's job numbers restoring some confidence in the markets but the fed's next move is still in question. peter, i get your weekly thing and i always look forward to it where -- i mean you are paid to look at both sides of the coin. every week for viewers that don't know, we get some positives for the week and negatives for the week. we can do that right now. what do you see as positives for the u.s. economy, what do you see as negatives? >> for the economy, positives

are housing and the auto sector and you have also central banks trying to create the illusion of a positive. then of course the negatives being clear but slowing, retail sales sector, manufacturing that is now possibly contracting, and a delevering cycle that has more network to be done so we decided finally after all was said and done and you look what the market did, the market was already up based on i guess a re-evaluation what draghi said the day before. the ft said that was a bold move and that draghi, he sort of just referred to that, i think, peter by saying it was the illusion of action. so you didn't think it was that significant what we heard on thursday? >> well, it's important in getting bond yields down in spain and italy. >> that hasn't happened. >> there's two ways of doing it. when the ecb buy as bond, an

italian bond from an italian bank it's not extinguishing the debt. they are dealing with the symptoms. disease being too much debt rather than dealing with the disease and that is restructuring that debt. this is just another example of buying time and we have to see whether the italian and spanish governments take advantage of that time. >> isn't that monetizing the problem? print and devalue the euro and the whole continent that's the only thing that will save it? >> politically that's the route they will go down. there's to worry ways, writing it down and growing your way out and paying it off. but politicians and central bankers as the bank here and bank of england want to overinflate rather than the painful route is debt restrurg turing? >> how are you feeling?

you watch spread. you take the pulse. have you gotten more positive in the last month? >> don't think we were negative a month ago, joe. i feel okay. if you look at overall financial conditions in the u.s. they are supportive of modest growth. the eurozone is a mixed bag to say the least. mario draghi and the ecb have had a lot of trouble with their communication strategy. just one the last week we see them lathering the markets up. the markets then decide something meaningful is on the horizon. it looks like they are having some impact. spain and italy the two year yield notes have collapsed and that's where the ecb said they will focus the purchase. if they follow through it will help. unfortunately for the eurozone as a whole we're looking at a

recovery later this year early neck year that's modest, uneven, driven by the core with the periphery in varying states of depression for years to come. >> what will that do here? what did you think of the jobs numbers here and what does europe mean for news. >> i think it's essentiallybeen fac factorred in. we got the unemployment rate tick up a tenth. there was sort of something in there for everyone. it looks to me like growth is basically modest. >> what's the 12 month average for you? where are you >> around 150 or so. >> yeah. >> so if you look at claims, you look at temporary help those indicators we're not saying the labor market was falling off a cliff but not booming. >> peter and mike thank you. >> coming up what mitt romney thinks about the u.s. economy and the fed's next move after the break.

good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin. becky is off today. >> you're going 100 miles per hour. >> i want to get through the headlines so we can do something else. knight capital set to enter into a $400 million financing deal. david faber first reported the news yesterday. official announcement is expected this morning. the investment is expected to be made through convertible preferred stock. conversion price of $1.50 and a

coupon of 2%. mitt romney says fresh round of monetary stimulus from the fed would not help the fragile u.s. economy. >> should the fed intervene at some point? >> well i think the fed's first action in quantitative easing was effective to a certain degree. the qe2, second round of easing didn't have the impact. the fed is watching and trying to encourage the economy. i don't think a massive new qe3 will help this economy. >> joining us now, jared bernstein. a dr. fellow at the budget and tony fratto now managing director of hamilton place strategies both are here for a reason this early because they are kind of employees of cnbc. they are contributors. thanks guys. jared, we played that -- we're not looking for you to argue

with everything romney said. i'm not convinced you would argue. >> no. as a matter of fact i've often argued absent more fiscal policy it's actually hard for monetary policy to get the traction i would love to see it get. already we have low interest rates, lots of cash reserves on the sidelines. somehow i think tweaking down maybe the longer end of the yield curve i'm not saying it would hurt might help, but bernanke has stressed this. what we need is more on the fiscal side some job measures to get folks excited about those lower interest rates and come one and get in the game. >> are you ready to say all the bush tax cuts should be extended at least for a year before we can then tackle tax reform as a whole and when we have, you know, a new congress maybe. go on. >> if i were confident that woe actually tackle those problems

then i would agree. then i would do it. to me that sound like another super committee, another kick the can. i'm with patty murray and the president that says threat high end -- >> right now. with 8.3% unemployment. >> yeah. i think that's okay because the multiplier up there is tiny and you're talking about $860 billion of savings often years. you got to start where. that's the right place to start. >> i want to hear you once and for all, though, say it's 3% of small businesses that are impacted and it's like over 50% of the revenue comes from those 3%. you want to tax that 55% of small business income, you want to tax that higher right now? >> look, first of all, that's a very relevant statistic. my point is the following. those folks are not nearly -- a lot of those people, they are small businesses, but they are very high end small businesses.

they are financial firms, legal firms not just that sensitive to the tweak in the tax rates. they did great during the clinton years when these rates were in place. >> tony, you've been -- i think you're ready. >> i'm one of those small businesses, jared. i'm kind of sensitive to the tax rates. i created 20 jobs and keep being told somehow i haven't done my fair share. >> not by me, tony. you're all right with me. >> good. as long as we're all right with each other we can work it out. it's not just that the share of revenue from the top tax rates, by the way, it's the share of consumption also and jared was talking about the multiplier. overwhelming majority of consumption on the top tax rates is fairly significant in the economy and we do want those people out there consuming. the biggest problem is there's not an argument you can make about, you know, not taxing or

taxing the top tax rates from an economic standpoint that want you can't, you know, make about at every other, you know, any other quintile in the tax brackets. >> let me move it somewhere else, jared. i've seen a pretty effective campaign message from the president, but he ends that mitt romney, these are the same policies that got us into trouble in the first place. i can never really put my finger on those policies that he wants to return to that caused the financial crisis. which ones were they? just so i know. >> i think there are two. first of all, it's the kind of trickle down supply side which is at the heart of the romney economic plan. more so vis-a-vis the financial

crisis mitt romney has wrecks -- explicitly campaigned on getting rid of dodd-frank. the notion that financial markets can police themselves, can self-regulate is at the heart of the romney campaign, but trickle down -- snowboard that's not sure. >> trickle down had nothing to go financial crisis. trickle down is the perjorative people use. supply side economics to me trying to grow the pie and have a strong and vibrant private-sector generates more jobs that's all it is. i'm not sure -- >> you could argue that worked under reagan. >> not worked under bush. >> i don't know if you can say it didn't work under bush. >> that's the question. >> the unemployment rate. >> the unemployment rate was 5.3%. >> we've had this conversation

before but i'll just say it one more time. the unemployment rate was low under bush until it wasn't and when you look at the first six months or year under obama and this is not to dismiss what obama should or should not be doing in the past four years, obviously there was sort of an ali "alice in wonderland" quality under bush because it jumped materially because of some of the things that happened. >> not just recession. we could have that argument. >> guys, guys -- >> during the clinton years too because of the internet bubble and the valuation in blue chips were at 50 times earnings. >> agree. >> you had this argument with me and tony. >> we do. you guys were talking about how much you guys liked each other and agreed with each other. >> are you in the backyard? is that where you broadcast from >> i'm at an undisclosed

location on the delaware shore. here's the thing, not that supply side -- supply side doesn't just show up in the job growth. you make a fine point about the unemployment rate. income growth. poverty. >> wait. >> hard to grow from full employment. >> whatever happened with the recession, no question we had a recession, financial crisis. that happened. the proximate, you know, relationship to the economic policy tax cuts, especially in '03 was a number of years of fairly strong economic growth. i would say economic growth and job creation that this administration would envy. so no question what happened at the end of 2007 into 2008 but we did have a number of years of fairly strong job growth and economic growth, jared. >> look, i think it's pretty other wordily to be debating the bush years as if they were good for the economy.

if you just look at the record whether it's gdp employment, what was 0 employment about 6 million if you try to balance the end points favorably to bush versus 25 under clinton, and so we're talking eight years versus eight years. there's a lot of other moving parts i get that but i don't think anybody who has looked at the number serious lir especially from the budgetary standpoint beliefs you can have the bush taxes extended but double down them as romney wants to do and achieve anything like a fiscal achievable path. it doesn't work. >> let's go back to the full clinton tax rates. >> i think that would be smart. >> you take that? what would happen to the economy if we went back to the full clinton tax rates right now? that's the fiscal cliff. >> it would hurt the economy. you got to phase it in. >> jared, do you really want to

be making the case that in any way pining for the bush years is, you think that you're smoking something when we've had 41 months above 8%, that's the longest in history. if you had to run on that record, you go back to bush and rub bush all over you versus 41 -- 41 months before 8%. never happened before except in greece. >> you're going hate this joe. those 41 months you're complaining about are directly related to the bush years. >> 4 million jobs created under obama. right at that 28 month level. you guys have a tough sell. >> that's fair. i just say look, the clinton tax structure was a favorable one for growth and for budgets and let's not forget that.

>> yeah. we're pining for clinton years to. i'll give you bush or clinton. thanks tony and jared. okay. >> when we return we have an interesting debate politics of private equity, high stakes debate at the heart of the presidential election when "squawk box" returns. in its cla. [ chirps ] experience the summer of audi event and get exceptional values on the audi you've always wanted. experience the summer of audi event this is new york state. we built the first railway and the first trade route to the west. we built the tallest skyscrapers, the greatest empires. we pushed the country forward.

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you just saw two campaign ads with two visit difference messages about private equity. one from obama campaign and one

from the romney team. the author of "buy out america" also a reporter at "new york post." you got some interesting views on private equity. you're not a fan and i think that's probably understating the situation. >> that's true. >> what's your case here? >> i studied the industry for two years writing by book and i didn't go in necessarily thinking i would come out negative. >> remember you worked at the deal for a long time and i thought you liked private eating. i was surprised by the book. >> i dug into it. my main goal the office see how private equity firms impacted companies over the long term, of what they said about buying companies, unloading them with debt that they said they made companies better and stronger if that would up to scrutiny. >> what you found is no. i read the book. i looked through the numbers. i have a good book. i dome a different conclusion you referred to a lot of the

biggest transactions that happened during the '0es and how some of them ended up in bankruptcy or a majority of them of the big deals and you also criticized some of the bigger deals that happened more recently. what i wonder about is some of the smaller deals, mid-size deals, deals happening every day in private equity and whether those ultimately are good for the system in terms of creating efficiency, in terms of frankly even putting pressure on public companies and other companies to get their act together. >> i think the private equity firms from what i saw and you're right, i looked at it from big down. >> the big ones never do well. i wonder if it's a size issue. you think it's true across the board. >> i haven't been able to study all across the board to be fair. those soak up the most dollars. those companies employ the most workers, pe firms employing one of every ten americans, most of those are the biggest companies. they have the biggest influence. >> nothing to be said about the

creative destruction process. i accept there are jobs loss and world economic forum survey that you cited where you do lose more jobs at least initially under private equity but that's because they are trying to fix the companies traditionally from my understanding and then after in some cases they create more jobs. >> if we look at that world economic forum study, really thorough study, they found the private equity firms cut employment 7% over two years compared to other companies. these are american companies. and was 10% over five. then subset studies to try, i think, to come with more farvabfarv favorable conclusions. 7% job loss over two years and researchers say our sub studies are not apples to apples. >> i'll play devil's advocate on

this. joe can jump in with creative capitalism talk on this. >> you can quibble with what some specific instances but trying to run a business as effectively as you possibly can to maximize, you know, shareholder profit. >> here's my issue, joe. is if i found that with the job destruction they were building businesses i wouldn't really have an intellectual journalistic issue. 52% of the 25 biggest go bankrupt. in six cases clearly companies are worse off because of it. >> we argue counter fact the alls constantly here and hard to get it into the counter fact the all. a lot of these were pretty sick companies. >> no. private equities can only buy profitable businesses much banks would never lend money otherwise. >> there's a reason that they are attractive to either strategic buyers or buyers in the same industry, right?

>> i'm with him. i have a different question which is the evolution of deals. deals that happened in the '80s, people were out over their skis. '90s, but they have moved to a slightly better place, do you agree, disagree? >> i would agree for 2009, '10, '11 and now. that's a small minority of deals. what happens every time that debt is easy, and credit is easy is they seem to get over exuberant. when i wrote my book i interviewed gerald rice. at the end he said if the biggest deals of '05, '06, '07 turn out like the '80 deals we didn't learn a thing. >> that's not a good deal. we got to run. we should have you back and continue this conversation. still a big question in terms of the measure, are we trying to create jobs or should we be trying secret returns or pension funds and all these others.

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because of the foreign super rich. this isn't apartments, they're more like buying safe deposit boxes with views. >>' thul three happen to be parents buying for students, they're wealthy, buying for their 18 or 19-year-old child this fabulous dorm in the sky. >> cnbc's wealth editor robert frank joins us with more insight into "the secret lives of the super rich." super rich you love this beat. >> somebody's got to do it. what is amazing about this documentary, we take you really into some of the most expensive apartments in manhattan and uncover some of the macro forces changing money in manhattan. going back to the clip these are chinese buyers purchasing close to $4 million apartment in the time warner center, for their kids, who are in college. these are $4 million dorm rooms

for the chinese super rich. >> wow, nobody bought me a dorm room like that. >> who was it recently, there was some type of censorship over there, someone had done some work on the next premier of china and not his immediate family but extended family, the wealth accrual and they frown on that very deeply. >> bo xilai was living it up in cambridge, going to harvard. the chinese poured $9 billion into u.s. real estate over the past year, they really changed the new york market. russians also. i mean that russian fertilizer magnate, dying sandy weil's apartment for $88 million for his daughter who is going to school. >> that was linch. >> the high nest manhattan. >> what is the highest price? >> a lot of listings at the 157 new tower they're building over

central park that are over $100 million, but those are, whether those are real prices or not, there are a lot of properties at around the $60 million to $80 million. lot are foreign buyers. the united states has become a safe deposit box for rich people. they want to get money out of china and russia as quickly as possible and new york real estate is a safe bet. >> should we look at this, should we be sickened by the 8.3% unemployment and the prices for the super rich or do we need housing to recover across the entire spectrum and we should embrace all housing doing better. >> i think the message is better than either of those. the fact that the u.s. is seen by the wealthy chinese and russians as the high ground in this global economy, the place to preserve your wealth, this is a great sign. especially for new york and u.s. real estate.

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just three months to go now until election day. >> that's my baby to kiss. >> stop it! >> he just punched a baby. >> the business of politics is just heating up. former tennessee congressman harold ford jr. weighing in on job growth and the presidential race, and smart money with a top market mind, jim o'neill of g z goldman sachs on what to watch before trading begins. and in europe former u.s. ambassador to germany robert

gimmitt separates the tale of two economies. the second hour of "squawk" starts right now. good morning, i'm joe kernen with andrew ross sorkin. becky quick is on vacation. the gains on friday started in europe, accelerated after the jobs number. knight capital is still in business thanks to a financing deal with a group of investors. knight suffered a $440 million trading loss due to a software glitch. the deal involves convertible preferred shares, giving investors 70% of the firm. mary thompson will have more in a few minutes.

and berkshire hath away operating profits up 38% driven by the company's insurance operations answer berkshire results did beat wall street estimates and he's still bullish on housing. you can see it and detect it amongst the holdings. >> teva is under investigation over the compliance with u.s. anti-bribery laws. it says it's cooperating with the probe and doing its own internal investigation into its business practices. july's better than expected jobs report has done little to unify forecasts on where the u.s. economy goes from here. steve liesman is here. did the mud puppies play? >> we played twice but not last night. i got a little sleep after. >> did you confine it to a beer? >> that's all i do is one beer a set. >> i've seen you at the office parties we've thrown at the

past, remember? >> one time eight years ago i had two drinks and this is the essence of your personality, joe, you never let a learn live it down. it was like two vodkas. >> after being in russia so many years in. >> thought he was still there. >> i'm immune. >> you're spilling stuff on him. they never forgot that i don't think. you were so happy when comcast bought us. >> i was so i could start anew with a new chief executive and, yeah, one time, joe n eight years. i've been here ten. let's progress because they're yelling me in the background they want to go to another conversation. is that okay? >> yes. >> okay, thank you. joe had it right, the economic data last week modestly better than expected along with statements from the fed and ecb, made the street even more confused about the outlook for policy. first none of the data meaningfully changed forecast for growth. the june information adding a tick to the estimate for second quarter so we've now been reported at, woohoo, 1.6 versus

1.5. many see around 2% on average, the more optimistic up near 2.5. the most pessimistic as low as 1.2%. here is some of the commentary out there from jpmorgan, "absent an upside of surprise on august jobs." "our baseline remains an extension of the forward funds rate guidance from late 2014," and "this is a policy committee doubtful of the efficacy of its instruments or hamstrung in its ability to use them" we'll have vince reinhardt on later to explain. two gauges of the job market showing different pieces of, different takes on the job market. so the upper line is the, not part-time employment, it's a broader measure of labor slack,

the u6. it's up about a half a point from the bottom and there are other parts of the jobs market showing slack out there, for example, people are working hard time for economic reasons, maybe more people leaving the job force. one economist thinks there could be a meaningful increase in housing related employment in the next coming months if some of these housing data improved the way they've been going. >> let's bring in other voices to the conversation on the global economy and the jobs picture. joining success cliff korsa and john ryding, chief executive officer of req. jobs, a, surprising, b, does it matter and c, what is the fed going to do about it? >> well, i don't think it's that

big of a surprise as it was to the market and i think the market psychology is so downtrodden that anything even on the number expectations are positive in the market but 150,000 jobs that's kind of what we expect because we expected very low, many years of sloggy growth around 2%, that's the job number that you produce. >> ben bernanke watches the number and says what? >> unemployment is still 8.3% and not good, on our dual mandate we're missing the unemployment mandate far more than the inflation mandate, tend to lead him to want to do something. going back to the comment about the efficacy of the policy tools, what can he do that can do any good at this point? we already have $1.5 trillion in bank reserves, long-term interest rates are 1.5%, short term interest rates at zero.

it's clearly not a monetary problem and i think that if it should take a page from the ecb's playbook, go slowly and hold the heat to the politicians. >> can i make a point about all the commentary i've read. >> okay. >> it's different from the commentary back around qe1 and to a lesser extent qe2. nobody is saying the fed needs to do this because it will examine "x" terrific effect on the economy. we're trying to gauge an automatic response when they hit your knee with a hammer. it's not pavlovian, there's some involuntary reflex, okay, that's what people are trying to gauge. will the fed enact this. there is no passionate argument, almost any economist i've read we must have this fed action to create this effect on the economy. >> i want to go to europe f you'd indulge me. >> please.

>> sure, you got a plane ticket? >> we could do that. mario draghi over the weekend saying that this has to get taken care of immediately. actually i thought his comments were worse, meaning i was more negative on his comments over the weekend. >> the market didn't take too long on that. >> i understand that. >> i just wanted to ignite you two guys. >> it will live in infamy. >> when do you think we see something if we see something at all? ecb. >> i think pre-labor day? >> one year ago the ecb messed it up, didn't buy italian bonds. it was the day before the u.s. got downgraded and the markets went into a massive tailspin, volatility exploded, ended up down 20% on the s&p, peak to trough. this is totally different. the plans there, yes, the market got impatient, he didn't start

buying immediately but wants to address issue so the buying is more constructive and can be doen in greater size. >> there were some comments over the weekend from the spanish prime minister that he would consider a request for efsf funds once he sees what the ecb puts out. that is probably the next biggest, most important headline for all the financial markets, spain to request efsf. >> isn't that backwards? doesn't he have to go first? >> he has to know what the conditions are, because they're going to come out. >> he made that as a precondition. >> he's trying to make it as a precondition but draghi has another precondition. >> it's a giant game of chicken. debris. every time you've seen reaction from europe that's kind of like that charlie brown skit where lucy promises to hold the football and pulls it away at the end. the markets are tired of that. there was a lot of conversation and disappointment off the conversation from ten days ago. >>? this game of chicken, draghi

holds the cards because he's got the printing press. >> it's a giant game of chicken and he's requiring spain in essence to say come to the efsf and then we'll come in with secondary market purchases because it's a conditionality agreement they're looking for, not just willy-nilly spending. >> if you're right, you should be long like crazy just to play out the next month. >> we still have the fiscal cliff to deal with. >> i'm playing the short term here. >> that's far more important for the u.s. economy. it's going to be influenced about what people think in 2013, not what happens in europe, however, spain is not greece. it's a real economy. they've made a lot of progress, and the ecb wants that memorandum of understanding to give them cover to buy bonds. >> the fiscal cliff is who don't you know out in the world, even my son who is 10 years old knows about the fiscal cliff. one of the things we're think being, is that fiscal cliff embedded in the market?

i don't think anyone believes we'll fall off the fiscal cliff. probably have to wait until the election. >> your son knows about this stuff? >> i do talk about it. >> his daughter is probably blog being it. >> we have to wrap this up conversation and we have a little bit of breaking news before we get out of here which is that it looks like this knight deal which we've been talking about all morning has now been confirmed. >> right. >> so there it is, knight capital still in business, th that's the good news. we'll talk a lot more when when return. politics and businessman collide, harold ford is here, we'll speak to him at the break. at the bottom of the hour, jim o'neill. comments? questions? send them to @squawkcnbc on twitter. follow and look for comments from becky, joe, andrew and the

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breaking news, it's official this morning, knight capital announcing just moments ago investors have agreed to purchase an aggregate of $400 million of 2% convertible preferred stock. knight capital expects the transaction will be consummated later this morning. we will be getting a statement hopefully from the company and

this does keep the company in business. we talked about the negotiations over the weekend, investors including td ameritrade, blackstone, stifel, jeffries and others. that information by the way released in an 8k and we will be getting hopefully a statement from the company late we are more details. we have a friend of the show, a veteran of both k street and wall street, our guest host is harold ford jr., former u.s. congressman from tennessee, senior client relationship manager at morgan stanley, a distinguished practitioner in residents. distinguished. like a scholar. >> a lot of syllables. >> scholar at nyu, graduate school of public service. harold? >> good morning. >> good morning. >> good to see you. >> good to see you. >> i've never been on k street. >> no, did it say that? >> yae, congress and wall street, but never k street. enough i've had to deal with. >> you know how to, i wouldn't say lobby but you're very

persuasive. i don't know if you've been paid to do it but that must be part of your job responsibility. >> nothing wrong with lobbying but i don't do lobbying at morgan, at ms. >> what are you eyeing in terms of harold ford for what's coming up? >> i'm focused like you, like andrew is, on the next several months. >> political life? just right out of the bat i'm going to find out what you're planning to do. >> i don't think about it like i used to. i remain interested. my public life and public life identity allowed me to do the things i'm doing now. i thought about running for the u.s. senate in new york two and a half, almost three years ago now. i'm 42 years old and i got a wife i got to get things cleared by. >> we know that. >> hopefully she says yes if an opportunity presents itself. >> would you, is it a, an occupation that you find attractive, given the current state of things in.

>> i think it's been an awful business particularly in the minds of people across the country in light of some things that have been said this morning, the things you guys talk about regularly. i think there's a lot of disappointment and frustration around the presidential race where the serious big issues are not being discussed at length and with substance. i don't think there's anything wrong with asking for tax forms to be released and i don't think there's anything wrong with pointing out challenges. but i do think it's important to get to -- >> what difference does it make at this point, does a person's tax reform, i think that's -- >> don't get me wrong, i think the dwelling on this has been excessi excessive. there's a history of people releasing their tax forms. >> not 20 years' worth. >> joe, i don't disagree with you. i've got no point, if there was something wrong with his release. >> you're not saying there's any fraud. >> no, i don't believe there is. the question is just really a formality, in the history and the precedent has been set by the governor's father and others. i wouldn't dwell on that.

>> look at -- you brought it up, look at the ones he did release, say he paid, you add up his charitable contribution with the 15% he's paying, he gets the carried interest obviously, there are advantages. >> right. >> you know how private equity works but you're talking about someone that in taxes paid multimillion-dollar and then in charity gave away $7 million a year, people are looking at that aska ascance. you didn't bring up getting a budget done by the white house or -- >> that should be focused on. i wish romney would focus on that and i wish president obama and his team would focus on where they're going to take us the next four years. i think the challenge for president obama is that he hasn't fully laid that out. the challenge for mitt romney is that i think there's still questions about his background, which fair or not he has to

answer and at some level he needs a big distinction between him and the tea party. >> what does he need to clear up? >> bain capital and the amount of money made, the taxes that he paid. for whatever reason i think president obama and his team have done an effective job at raising issues. whether it was right or not is different. this is politics and how campaigns work. >> we don't trust, the 0.3%, we haven't talked about that. >> you asked me the question about the business of politics and whether i miss it. i don't inis that part of it. it is unfortunate with all that is going on, that's where the debate is right now. >> it depends on how far you want to go back, when there was bush fatigue there's no doubt about that, that sort offishered in the obama years but i don't know about underestimating the depth of the recession and focusing on obama care. that's what ushered in the tea party, the tea party at this point are the ones that the

democratic side would say is so intransigent. i would say i wish the president had been more willing to go in and get his hands dirty with the leadership of both parties and say we have to do something. because it's been two years that we've been watching this, and others would say he didn't have a chance because the tea party is so intransigent you can't talk to these guys, so far out there. the tea party was almost spawned by the first two years of the way obama care was rammed down the country's throat, this unpopular bill they spent all that time on is, we were going above 10% in unemployment. am i wrong on that? >> i think there are a number of voters who say you're right. the housing situation say and your colleague here at cnbc, rick santelli probably played a little role. >> he used the word tea party. >> to define some of that as well. i'd love to hear the president lay out simpson-bowles.

>> right. >> are you frustrated he didn't the first time around? >> i've been a supporter of simpson-bowles from the outset. >> so you had to be frustrated. >> i questioned whether or not -- >> he's going to be off the reservation. don't say nauseated, don't say frustrated. >> it was annoying to watch, now in fairness to them, they came very close to the president, the republicans came close to getting a grand bargain last summer. we saw the unfortunate way they went about addressing the debt ceiling issue but they got close and i fault both sides for not coming together to get this done. which is why to answer your question from the outset, watching politics on the last six years since i've been out has been depressing in some ways but also been uplifting because it allowed me to learn a different side of the world and understand why business needs more certainty from government. >> i know you watch what you eat and you're in great shape but you are a fat cat banker, just so you know, at morgan stanley

so don't try and run from that, a fat cat banker and here for the next two hours. >> great to have him here. we'll continue the conversation. coming up, knight's white knight, a consortium of private equity and brokeragers, the details of the deal are official, coming up after the break. time now for today's aflac trivia question. what is the world's richest country per capita? the answer, when cnbc's "squawk box" continues. aflac! ha! isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh! ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice

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now the answer to today's aflac trivia question. what is the world's richest country per capita? the answer? qatar. >> aflac! we're back and knight capital confirming a $400 million financing deal that allows it to remain in business. cnbc's mary thompson is outside of knight trading with some more of the details. ma mary? >> reporter: the $400 million in financing of convertible securities, they can be converted into 267 million additional shares so the final deal coming at a cost to shareholder. the deal is expected to be consummated later this morning according to knight and comes after a non-stop week of

negotiations for knight and let's give you a couple more details as reported by david faber and cnbc's kate kelly as well. these are the groups involved, providing the financing will be jeffries, about $100 million of the financing and two private equity firms, blackstone as well as general atlantic also expected to provide $87 million of the $400 million. keep in mind general electric backs an electronic trading firm that rivals knight, td ameritra ameritrade, stifel will provide the rest. the conversion will own 70% of knight's capital, which dropped from $397 million to $1 billion wednesday before a trading glitch caused massive losses for the firm. once the conversion is completed, shares outstanding will more than triple to $350 million plus from just over $98 million. now throughout the weekend,

management was meeting with a number of different interested parties. no one would speak to cnbc on camera as they were leaving knight's headquarters. knight scrambling for the financing after a software glitch triggered millions of bad trades. trades the sec refused to reverse despite appeals by knight. the cost of the mistake a $440 million loss and nearly knight's existence. we'll have more on the weekends of negotiations and the deal that was just announced again, knight announcing a $400 million in financing, which basically is the lifeline for this training firm. coming up later this morning, we'll have bob pisani speaking with the company's ceo, tom joyce, first on cnbc. joe, back to you. >> great, mary, thank you. if you have comments or questions about anything you see here on "squawk," e-mail's at squawk squawk@cnbc.com and on twitter @squawkcnbc is our hand handle. coming up, jim o'neill chairman of goldman sachs will talk

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welcome back to "squawk box" on this monday morning, joe. in the headlines, knight capital will be living to fight another day this morning as first reported by our own david faber, knight now saying it's received a $400 million financing package from a consortium that's going to give the group an approximate 70% stake, following the $400 million trading loss caused by a software glitch. moody's citing weaker consumer sentiment, a rising yen and higher debt levels for sony for a downgrade. and "the dark knight rises" topping the weekend box office for the third straight weekend, took in $36.4 million in north american resales, eeking out "total recall" a remake.

>> you need to be big to be in "total recall" do you need to be in arnold to be in "total recall"? >> did you see any of the movies? >> i've not seen the new batman. >> you haven't seen it. >> i can't wait to see the new bourne movie. >> i'm with you. >> that will be good. investors looking for clarity on the next steps in europe's ongoing debt crisis. joining from us london is jim o'nei o'neill, chairman of goldman sachs asset management. you have a great perch, jim. last week when we were reading all the commentary of the day after draghi, d.a.d., day after draghi, ft, i don't know if you saw this, their piece it was a "bold move." as you were listening, did it seem like he was dancing around the issue or did he deliver on his promise from the previous week? was there some real meat there? >> well, obviously they didn't announce any specific steps last

thursday so there wasn't real meat in that context, but he certainly followed it up with some further very strong indications of the sorts of things the ecb is considering, and what i find so fascinating about it all is the markets trying to sell off obviously that day, and friday we came roaring back, probably helped a lit by the u.s. payrolls but a bit of a shift in psychology for famous last words but from my experience, when you have markets managing to rally despite supposedly disappointments by policymakers, you know, that's usually a better sign, and i think it's because behind or below the surface, a lot of people are thinking hang on a minute here, there's something new going on and we have yet to find out the real details by i'm part of that camp. >> right. i think that behind what you're talking about, behind the

scenes, i think the perception might have been that germany is eventually going to sort of cave and give in on what needs to be done, even though draghi was very sensitive to the perception that he didn't want to overstep that relationship right away, but it seems like it's starting to go his way. is that sort of in a nutshell what you think happened? >> i mean i think that's part of it, by citing videman the only opponent to bond purchases that was quite clever in my judgment but i think there was an additional thing which really came out the week before, and you could garner it a little bit from his press interviews after the meeting last week, too, is that he's making it pretty clear that irrelevant of some of the more broader policy issues about letting governments off the

hook, he's kind of told us that if these peripheral spreads are preparing the military policy the ecb is bound to do something just for that reason, nevermind somewhat the more undiscernible and complex ones. i think it's sophisticated but also a policymakers that are trying to lead and not be so scared of the consensus he's having to deal with every day of the week. >> that's kind of a stretch i think. everybody knows we got europe's back over here. you guys don't really have to do anything most of the time in terms of the fence so that's a tough sell. no. >> actually let me jump in. what also intrigues me in that regard is that, of course, we had your treasury secretary tim geithner in europe much of the last week when i'm reminded by a couple of things i picked up on conferences and meetings i've

been in, in the states, the top u.s. policymakers feel something going badly with european bond spreads are one that should remain nameless said at an event of ours, italian bond yields would be the biggest re-election threat to obama. it's pretty clear to me going back to the mexico g-20 that behind the scenes, u.s. policymakers are getting more and more involved in trying to find some more lasting solution that perhaps they could even play a role in. >> right. we had someone earlier say that just getting some bond buying going doesn't address the problem that people need haircuts eventually. will that eventually happen over there for the debt of some of the peripherals, where the creditors will have to take a hit? >> well, i think greece is a real special case still and whether greece can survived staying in what appears to be increasingly some kind of path

of a more unified united states of europe, that remains to be seen, and they probably will have to take more. >> what do you think about spain? can spain ever have the economy that allows it to make good on the debts that it already has? >> well, you know, i've written a few things in quite a few big domestic papers about this here in the past couple of weeks. it's not entirely clear spain can do any more than it's been doing. in fact if you look at the pmi numbers we had last week spain is one of the few places that showed signs of improvement across the world. as draghi pointed out at his conference and not being picked up on much, doing whatever it can to save the euro. quite a few of the countries, particularly portugal, ireland, and also spain are showing noticeable improvements in the unit labor costs. this idea they can't change and they can't grow again in the future is sort of understandable, but it might not

be right. you saw a little, very little hint of it in that pmi last week for spain. >> jim, i want to you react to something. simon johnson has an op. ed out this morning, contrarian, he says a shift in ecb policies would make the european situation uglier, not prettier. for one, draghi would be conceding fiscal dominance, demonstrating from governments run budget deficits they can count on the central bank. more important "the political consequences could be dire if the ecb succeeded in stoking german inflation and weakening the euro. your reply? >> sounds like simon must have been writing under a pseudonym, one of the bonders bank guys who has written that piece. this is the exact thing the bundes people think all the time. it's narrow-minded judgment as draghi correctly said the scale of the widening going on in spanish and italian bond spreads was effectively impairing any

monetary policy role that the ecb was undertaking and they have no choice, and it's kind of grandiose for people to make those kind of comments that it sounds like simon's made but it's sort of missing the immediate points. at the end of the day, if there's no monetary union, the ecb ceases to exist so they have a central role in trying to ensure on fair and reasonable criteria that they're doing the job they've been put in place to do which in the past few weeks they've not been capable of doing. >> all right, you're irish, right? >> i have irish blood in me, that's for sure. >> not scottish. i'm looking for a -- >> i am british. british. >> now i hear andy murray is british all of a sudden, too. >> as you guys, i hope, are noticing, we're all british over here, particularly given by our standards, we are the spectacular successor of the few days of gold. >> he was scottish when he lost to federer in britain, now he's

british. thanks, jim. >> see you guys. up next the tale of two economies, a closer look at europe's ongoing political and financial progresses. we'll hear from former treasury official robert kimmitt, and then glenn hubbard joins us to talk jobs, taxes and much more. first we're gonna check our bags for free, thanks to our explorer card. then, the united club. my mother was so wrong about you. next, we get priority boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. this is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with special perks on united. get it and you're in. with special perks on united. last season was the gulf's best tourism season in years. in florida we had more suntans... in alabama we had more beautiful blooms... in mississippi we had more good times... in louisiana we had more fun on the water.

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we're back. it is a tale of two economies in europe and robert kimmitt is former deputy treasury secretary under president george w. bush and former ambassador to germany. good morning to you this morning. try to help us understand what's happening in europe and more importantly what draghi said last week, and the question in my mind is, has he kicked the can just a little farther down the road and nothing's really happening or there's something much more significant going on? >> good morning, andrew. thank you. i think europe is a textbook example of an issue that intersects the real economy and the political economy. i think jim o'neill made some very important market-based points from the real economy. i think your question is about the political economy. i think what mario draghi said last week was very significant, quite interesting that both

chancellor merkel and president hollande the following day strongly supported what he had said. the only place i would disagree a bit with jim o'neill is that i think there was much more talk on draghi's part about conditionality for this additional exceptional aid that the ecb might be prepared to give, and indeed the spanish and others have picked up on that in their response to what draghi said. >> so in this game of chicken, who is holding the cards? >> well, i think at the end of the day, the european council, that is the leaders of the countries in europe, hold the ultimate cards on the fiscal side, the ecb on the monetary side. i think that draghi, who, remember, came out of the fiscal side, he was a deputy finance minister in italy before becoming their central bank governor, wants the fiscal authorities to move first. i think that's also what the

bundest bundespar wants and with germany playing a significant leadership role. >> ambassador, we got a calendar out in front of us, timing wise, and if you could sort of look at the calendar and look at some of the elections that are going to happen in germany and some of the other issues, when do you think any of this is really going to happen, a meaningful fix to all of this, not just a sort of long bumbling down the road kind of situation? >> i think we're going to see significant action this fall, starting in september, most of europe is on holiday now, although there are some significant bond auctions this month. samaras of greece will meet with merkel, juncker and hollande, the leaders, the finance ministers, a number of meetings they set for september and the fall, so i think this fall is going to be a very critical time and you make a very important point, andrew, i think from the

german perspective, mrs. merkel would like to accelerate whatever action is required to be taken this year, so it is not as much a campaign issue next year, although clearly it will be a campaign issue. >> and in terms of just thinking this through, are you bullish that there's actually a fiscal consolidation, there's something meaningful that's going to happen or just bullish there's going to be a conversation about it? >> bullish might be a little bit too strong. i am pleased to see the actions that have been taken recently in spain, very tough budget cutting measures. christine lagarde said the imf, if spain run a program wouldn't have asked for much more. monti got a lot of measures passed before italy went on holiday so i think we're seeing significant forward movement. one point i would make, i think they can get through this crisis but problems still persist, competitiveness, declining

demographics and europe is going to be an issue with which we and they have to deal for quite some time but i think they're beginning to take the steps on the fiscal side that will lead to an ability for the ecb perhaps to do more on the monetary side. >> robert, real quick, tim geithner, and the obama administration more broadly, what do you think is really happening behind the scenes now? one of the things we talked about with jim o'neill, how important it's going to be ultimately to even the elections this year. >> i can't speak for the administration. you will have seen that tim geithner visited finance minister schauble. he was on vacation but never really on vacation. he and tim geithner are very frequently in touch. there have been differences between the administration and the europeans particularly the germans, the administration felt they were consolidating their finances too quickly, i think the germans believe they have led the way on fiscal

consolidation leading to growth and so there have been differences, but i think there is pretty frequent conteact between the administration and europe and the bam sambassador e united states. >> thank you very much. we'll talk track and field taking center stage in london, we'll check in with michelle caruso-cabrera for a preview of what's to come. plus more details on the way to save knight trading. david faber will be joining "squawk" when we return. "squawk box" wants to hang out with you. we're hosting a google plus hangout with author ben mezrick and andrew ross sorkin. here's how you can take part. first go to cnbc's google plus page and add us to your circles, each day we'll be soliciting your questions, ask him about his books or andrew about the show. if we pick your question, you'll get an invite to hang out on

august 15th 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 of the most interesting authors of our time so come, hang out with us. stay connected with "squawk box" on google plus and on twitter. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily.

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welcome back. investors agreed to buy $400 million of knight capital's preferred stock. the transaction will be consummated later this morning, the information has just been released in an 8k and david fabler join us at the top of the hour to talk more about it. later on cnbc, tom joyce, the ceo speaking to bb ob pisani at 8:30 a.m. track and field dominating the events at london and there are business stories at the olympics and that's why cnbc's chief international correspondent is there, oh, good, michelle caruso-cabrera joins us from olympic park. have you, number one, i'm wondering whether you met ryan lochte and whether he did twirl you around like you expressed your desire for him to do, but have you been to some of the -- >> you obviously don't follow facebook because i did meet ryan lochte and i posted several photos of us together, joe.

>> i thought you would track him down. >> yes! >> i did. i thought you might be able to do that. >> came to me. >> interesting. all right, we got to get to your package i'm told. tell me what you've actually seen and what it's like. it must be incredible. >> went to track and field, it of phenomenal. did you see usain bolt last night, just breath-taking, more phenomenal, seven of the eight men who ran that 100-meter last night, under ten seconds, never happened before. the williams sisters dominated on the tennis court over the weekend, we have an interview with is serena around 10:00 a.m. business stories right here, the arselar mittel orbit, a tall structure that dominates the landscape here and quite frankly there is a long histor i tradition of steel structures being built for big worldwide events, the eiffel tower for the world's fair in 1889, the ferris wheel for the chicago world's fair in 1893, and now you have

the arsular mittel orbit for london 2012. it's made from 2,000 tons of steel from arcelormittal continent that it dominates. it's meant to be a monument that stays around years and years later to remind people of the wonderful event. let's go up. the elevator takes you up more than 30 stories to the top where we'll have a view that's more than 20 miles. once you get to the top, the view is phenomenal, especially if you get lucky like we did with good weather, just below us the track and field stadium, and then beyond, the city of london. the top level of the orbit is outfitted with these cool

carnival-like mirrors that create dramatic special effects. say hello to cameraman christov and sound man magic. the cost of construction more than $30 million, the vast majority played by arcelormital and once the games are over the orbit will stand and remain as a gift to the city of london. all right, so a lot of people have criticized the orbit for being ugly, that was true of the eiffel tower as well, and just to prove this was a business story we'll show you the one-year chart of arcelormitttal company, ticker mt. we'll have more later on in the week and if he ever comes just like the needle in seattle, you can go to the top and see that wonderful view. >> you were there to see bolt? >> last night, no. i wasn't.

i was here on saturday night to see the brits win three gold medals. >> you did go to some of the event, which ones? >> yes, i withent enwent to tr field saturday night, the brits won three goldal, the triathlon, long jump and 10,000 meter events. >> the american got silver for the first time. >> that was unbelievable and all of the stuff i saw before, they trained together with salazar up in portland and to see that, i mean, they're buddies and what's the other guy's name, gavin rush -- >> rupp, i think his last name is rupp. >> that was pretty amazinamazin. how many guys under ten seconds, michelle? >> seven out of the eight and if the eighth guy hadn't come up injured, i think he would have -- i think he did it under 11 and injured, powell. >> michelle, thanks. you're quicker than ten seconds, aren't you, you've told me that in the past? >> oh, wow.

>> well under ten seconds. up next, mitt romney's economic adviser glenn hubbard -- i couldn't have done it to her. mac, you're quicker than ten seconds. >> and am buy text drus. whether it's showing competitors' rates or striving to be number one, we're always up for a little competition. zap! [ sparking ] now, that's progressive.

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wanting your vote. >> we've created 4.5 new jobs over the last 29 months. >> another hammer blow to the struggling middle class families of america. >> the election just three months away from today and both presidential campaigns are using the country's employment picture as a political football. economic adviser to the mitt romney campaign, glenn hubbard will tell us what it will take to get america back to work. and avoiding the fiscal cliff. >> they put up big signs like this one, ahh! >> vince reinhardt will lay out the major risks to the nation's growth. need extra help? >> i didn't know you wanted to get involved with the xhugs mr. helper. >> how about access to a tutor anywhere in the country in every subject, we'll introduce you to the co-founder of wyzandt. >> i like the way you think. i'm going to be watching you.

>> second hour of "squawk box" begins right now. ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with andrew ross sorkin. becky is off here. our guest is harold ford jr., director and senior manager at morgan stanley. >> with a smile like that. >> star of that -- >> stage and screen. >> the other show featuring a guy named charles but there's already a chuck scarborough so he changed his name to joe and then calls himself "morning joe" and it's history and now he's thought of as the person who is joe in the morning even though i've been on five times at long in the morning. >> six. >> maybe six times as long. checking u.s. equity future this is morning, up about 33, 34

points on the session, after what turned into a pretty good week last week. >> are you trying to -- >> no, but we're well above 13,000. i just wonder and i can't talk about what your column -- >> let's not talk about it. >> i'm not going to but it's been so long since there's been any traction in the equity markets, right, and now we're above 13,000, and who knows? right? >> by the way we didn't talk to jim o'neill about, he said we'd be at 15,000 by the end of this year. and joe kernen was there, too. >> yeah, you know, i need 30%. i already got it, based on the october lows. right? what? from the october lows we're up 30%. you want a calendar year. you're going to hold me to my calendar year. >> you brought it up. i was not going to -- >> we could still do it. it's still early. >> still possible. we have a couple months. >> we had the pullback and everyone was laughing at me, some of our own people were laughing at me and we're back to

13,000. we'll see. it would be good for everyone if it was up. >> fantastic. >> as long as you're not hoping for it to go down. >> by the way for your political views it might be bad. >> what political views are those? >> i know you're going to be at harvey weinstein's house later tonight. >> me and gwyneth. >> talk news this morning, knight capital securing $400 million in funding over the weekend, cnbc's david faber first reported the story yesterday and he joins us now more. mr. faber? >> yes, mr. sorkin, good morning. >> good morning. you're committing some m&a reports over there. >> i know, it was, you know, not wanted but i felt like i had to do it even though i was at the beach. it was interesting of course. they were in their last moments as you well know, knight, in terms of trying to raise the money to be able to open today, if they had not been able to raise that $400 million, the firm would have been at bankruptcy, unable and many had

thought they might be able to sell themselves over the weekend but it appears any oeshl suitors simply did not have enough time in this day and age to feel comfortable buying the company, and so this lifeline was the only real answer they had. >> in terms of who is going to own this company ultimately, who is going to have a majority stake in this thing? >> you know the $4 m00 million they confirmed in an 8k, $1.50 conversion price split essentially between four firms with some getting larger portions than others. we've had various reporting on this and i wasn't 100% so it didn't go with specific amounts, but it's blackstone, it's ameritrade, it's stifel nicklaus and general atlantic partners, they own a stake in that, a marketmaker, those four will primarily, jeffries very much

involved in placing the $400 million convertible preferred security will also own a portion and a lot of this will result in order flow agreements as well, andrew, where ameritrade specifically for one is going to get a good amount of order flow and things of that nature. there were other things that came along with the ability to buy stock at $1.50 a share. of course the stock price was well above that, massive dilution for the company. but that's what you got to do if you want to save your company. >> should we be surprised this deal came together as quickly as it did? i imagined it would be one or two maximum in terms of buyers. >> i think they needed to go far and wide. they put a plan in motion almost immediately at least. i know for example people close to jeffries indicate that firm, which by the way had its own kind of brush not with death but certainly with difficult times if you remember on that strange

downgrade it received quite some time ago from sean eagan, they were very much working on this, i think from wednesday on, right when the news sort of hit. they knew that they were in deep trouble. $440 million loss, even though after taxes only about $220 million, but you got to replenish your capital. they've been able to do that now. >> this seems so different and maybe our friend here has a view on this. it seemed different than bear stearns, which i know is a different situation. >> right. >> that people had an incentive or an interest in trying to keep them alive as opposed to trying to put them out of business in a different way this time around. >> they had an incentive to keep knight alive. they do a lot of volume. what is the percentage overall? 20 12%? >> i was going to say over 10. >> that would be a real blow conceivably to the markets. there were other firms that were happy to profit at their expense. we know who they are as well.

>> stifel who competes, harold, do you have views on this? >> the only one question i have for david and good reporting, the glitch, has there been any more talk about what caused it and what steps may be taken to address that? >> not really. on the ak this morning, we get what we already know in terms of the software and what happened there but i'm afraid not that much, really kind of shocking, harold, we'd be revisiting and we talked about it, i know you did towards the end of last week these kinds of problems over and over and over again, whether it be facebook and the nasdaq or the flash crash, anything else for that matter but it's not clear that there is any specific fix at this point or something they have identified they could have done differently that i'm aware of. >> david we are going to leave it there. congrats on the big scoop. >> thanks. let's get you caught up on other stories, las vegas sands

reportedly the target of a federal investigation to possible violations of u.s. money laundering laws. the "wall street journal" saying the investigation focuses on two big money gamblers in wales, one was a mexican businessman later indicted in the u.s. for drug trafficking, the other a california businessman later convicted of taking illegal kickbacks. the probe deals with the two gamblers and whether sands officials were ignoring signs and did not alert federal authorities about the millions of dollars the men deposited. teva pharmaceuticals under investigation with regard to anti-bribery laws. it says it's cooperating with a probe and doing its own internal investigation into its business practices. mr. kernen and i think the bribery allegations, i don't know what you think. you probably think it's okay. >> give me the details, a

blanket statement on bribery? >> because we had the walmart debate for so long. >> i never said it was all right, i just said that it's a gray area when you're trying to, you know, you're, when you're in rome, i was just there -- >> when in rome do as the romans do. we've been having this debate about bribery. >> i wasn't privy. >> let's decide on how we can get through this fiscal cliff here. you saw president clinton, he stepped back a little but i heard what he said. he said let's do a year on all of them basically and if you go off the reservation, you get slammed but would that be okay? >> it would be. the president and his team argued we should extend the bush

tax cuts for those making under a quarter of a million dollars for the year. both sides aren't there yet to address the ifisical cliff. if you're for that, you can be for extending, for everyone for a year while we try to work through these issues. >> he's not. patti murray said we'll send you over the fiscal cliff. it's worth it. >> i think politically it becomes complicated and difficult for democrats and tough, tough races in montana, missouri, in florida and other key races which democrats have to win to make that case. i'm hopeful they'll do that to remove that uncertainty. we've been through this before two years ago with health care and the bush tax cuts and democrats who didn't hold the house and barely held the senate. there's no need to put that in jeopardy, particularly if the white house is saying we're for extending tax cuts for everyone under a quarter of a million dollars. the flipside of it is this, if we go off the proverbial fiscal cliff that's almost $800 billion in savings we will have next

year, meaning in tax increases, sequestration, dock fixes and other fees. our federal deficit this year, $1.25 trillion, you're talking about $800 billion of new revenue so the default position is challenging for the country but in terms of the debt and those in the tea party, and conservative republicans who want to see it addressed, in a lot of ways it puts us closer to dealing with it. i hope we don't do it. my hope is they extend the bush tax cuts at the beginning of the year or between now and the election i'd love to see a broad tax reform package, and see us avoid the cuts in the defense industry. the layoffs that may come at some of these large federal contractors, defense agencies, could hurt not only the unemployment numbers, the employment picture we see today but to make it more complicated to deal with this at the beginning of the year. >> if we were to get rid of deductions and the marginal rate were to go down to 24, 25, 27, whatever it is they're talking about. >> change deductibilities.

simpson-bowles has the template. >> that would be okay with you? certain people in your party no matter what they want to go back to 40% on the top bracket. >> romney doesn't agree with simpson-bowles either. >> which is what i want to request glenn hubbard. he has his own thing. >> the problem with romney's numbers they don't fully add up. i know glenn will come on, it will be interesting to know why is it they don't embrace simpson-bowles. their plan reduce taxes at every level at 20%. i'd love not to pay any taxes but unfortunately we fight wars, unfortunately we have veterans. >> we have roads. >> we have a huge infrastructure challenge. i'd love to hear how they plan to address all of that. simpson-bowles deals with entitlement, taxes, probably could be stronger on health reform and some of the challenges there but it is a smart and frankly sound start for us to deal with. >> you think paul ryan would be

a good pick? >> that's not my choice. he's smart, an aggressive defender, a good speak per >> who should mitt romney pick? i didn't know you had a pick but -- >> they're not asking me. i like paul. paul would make a good choice for mitt romney. i think all the names i've heard, at the end of the day it's going to be their philosophy versus president obama's philosophy. if mitt romney does not lay out a smart forward-looking narrative and plan for the country, he doesn't deserve to win. if he does, voter also take a harder look at it and thus far i think he's proven to be a gap machine and he's got to lay out more clearly where he plans to take the country. >> a little bit of a gaffe machine, you mean from the trip to europe? >> i think the europe trip -- what disturbed me most about him, i'd love your thoughts on this. perhaps it was a primary moment but never corrected it, if you could enjoy 10:1 ratio between cuts at spending and tax

increases, could you accept that? he said no. >> right. >> i don't know how you get a better deal. 4:1 is a good deal. 10:1, i don't know how you can achieve that, but how do you say no? you've got to clean that up. >> probably you're sort of -- >> i'd love to hear glenn answer that. >> saying look, the first thing we have to do is cut and talk about tax increases later. when you're at 25%, we've got to figure out how to get revenue from 15 back to people think maybe 20 or so. but the first thing, you got to get that 25% >> you are weiith him? >> i'm not saying i'm with him. >> 10:1 is outside. >> would you give me 15:1? >> you have to ask him. >> okay, when we come back, our disruptor of the morning, the co-founder of online tutoring marketplace, this is cool, wyzan, the company has a network of tutors in every state covering every subject, we'll learn a lot and the uncertainty effect on the economy.

we're also going to be talking jobs, and the fiscal cliff with morgan stanley chief u.s. economist vincent reinhart. savi. it don't matter, day or night. use your computer, your smartphone, your tablet, whatever. the point is, you have options. oh, how convenient. hey. crab cakes, what are you looking at? geico. fifteen minutes could save you fifteen percent or more on car insurance. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason

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welcome back to "squawk box"

this morning. knight capital stock has been halted, we assume we will be hearing news directly from them shortly. we got their 8k earlier where they said a deal was eminent and we should be getting a statement and we have the ceo coming on "squawk" in just a bit. let's get to our disruptor series, wyzant links students to tutors by location and doubled in size every year for the past three years. the service has 60,000 certified tutors in every state in every subject and it's becoming a big deal in this new economy. joining us now on set is drew gant, co-founder and ceo of wyzant. >> thanks for having me. >> i tried to explain what it is. give us a quick briefing on what you're doing. >> we're the leading online marketplace for private tutoring, about 60,000 tutors, all in-person tutoring. >> how much do i play?

>> it's ranging, about $45 an hour the average. >> what is the most expensive tutor on the marketplace? >> probably $160 an hour. >> that's it in. >> that's it. >> i know of a tutor in manhattan who charges $700 an hour like a lawyer, i kid you not and there are people who are obviously paying these fees, not on your marketplace but maybe that will be coming. we're talking during the break, conn academy, i don't know if some viewers know about it, they're doing asynchronous, in person, but this , when will it get online? >> one on one tutoring. >> like over skype. >> sure we'll probably develop our own platform. we still believe one on one in-person tutoring is the best way to learn but online has its place as well. >> are you bringing more

teachers on board, i assume because you had the marketplace people who couldn't find students more, teachers wanting extra cash are doing this? >> half are teachers and the other a combination of professionals, engineers, professors and graduate students, some retired folks so it's an interesting mix but the one universal things, they're all looking for supplemental income and all love to teach. >> the big thing is the ratings, right? >> yeah. >> talk about this. >> since we've been around for seven years, we have over 250,000 ratings and a lot of written reviews as well, about 25,000 written reviews of the tutors so going on the site you can really get a good sense of what these tutors are all about and the reason we have so much data is because all the lessones are entered back into our system, we're the payment processor so we have a full look at what's going on and a great feedback loop. >> what are we going to say? >> do any of your tutors or does the company have relationships with school systems across the country trying to ensure they're in compliance with no child left

behind and some of the other state and federal regulations? >> right, so we -- >> is that a market you can tap? >> we're not a supplemental education provider so we're not involved in no child left behind and we're operating in a private space. >> would you be open to that, a way to format that in a way? that would be and increasing need in the next three, four, five years. >> absolutely, we'll continue to evolve. tutor something becoming more and more important to education as kids aren't getting the personal attention they need and kids are relying on no child left mind to help with the gaps. >> say i need s.a.t. prep, do you go to grad school, can you do, manage bio chem, send someone over for a ph.d. student? >> literally 250 subjects on the site. you can go online and find amazing people, even professional athletes in some cases that will teach sports. >> sports? >> musicians. >> i was wondering karate or something. >> 85% of our business is in academics. >> k through 12 all the way to grad school? >> go to the site, type in the

zip code and subject and review the tutor profiles, interact with the tutors. >> do you have a tutor for free market economics? do you have someone available? >> he's looking over at me. do you have someone who teaches capitalism? >> the american exceptionalism, what's made -- do you have anything like that? >> you can register with us. >> i try to do that all day long for three hours but i'm getting nowhere. >> we certainly have economics teachers. >> we got to run, but what'she finale for you, is this a company you ultimately sell to a kaplan. as a businessman how do you think about this? >> we're a bootstrap company, never raise money and we take a long-term approach to things. we're building a company here to stay. who know what the outcome is. we're not looking to have overnight windfall. we're looking to build a great business that affects education. >> given our viewers you may have to rethink that after this. >> thank you.

coming up if we fail to get a deal on the fiscal cliff before the end of the year, could mean a recession in the united states. we'll ask morgan stanley chief u.s. economist vince reinhart and we'll head to chicago for the opening bell.

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making headlines, talking movie this is morning, "the dark knight rises" dominating the box office over the weekend, batman wracking up an estimated $36.4 million in ticket sales in the u.s. and canada. the movie hauled in a total of $354.6 million since july 20th, that was the debut, when you add in international sales, the global total is $733 million. that's not a bad haul, "total recall" coming in a distant second place.

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breaking news best buy, stock indicated sharply higher. david faber joins us again, david. >> twice in one morning. richard schulz, former founder and chairman of best buy made an offer to acquire the company between $24 and $26 a share in cash. now it is an offer with a lot of, well, you can see what's going on there but he has a

highly confident letter from credit suisse to provide debt financing. he will roll about $1 billion of stock, he owns roughly 20% of this company into this potential offer. it's kind of a complicated offer that he needed to make and andrew may be more familiar with minnesota takeover law but four-year holding periods for significant owners and needs the permission of the board to both conduct diligence, but also to form a group, and so needed to come public with this offer in this timely manner, and then perhaps once he gets that permission if he does from the board will be able to tell us who those conceivable investors are. best buy a company in some distre distress, many would say and this is quite a large deal, regardless of whether he rolls in $1 billion of his equity stake in the company, it would be about $8.6 billion in terms of the overall purchase price at

between 24 and 26, require 3 billion in equity, as much as 7 billion of debt, not an insignificant amount on both those fronts and credit suisse given what appears to be a highly confident letter, making you back to the days of michael milken. >> schulz says now is the moment of truth for best buy and it needs to return to its market leading ways and he also has had discussions with brad anderson, former ceo and alan about their interest in rejoining the company. i wonder if those guys came back, do they have the answer for what has been a demographic change in the way people buy things? i don't know. >> joe, i don't know either. you have as good answering that as i do. we see the market is taking

quite a big move up. again there's a good deal of perhaps let's call it uncertainty around this to a he certain extent the found we are a billion dollars worth of stock, a highly confident letter from credit suisse saying they can raise the $7 billion in debt that would be required but the question is where the other $2 billion in equity coming from? he does say that they've had, i'm looking for the language here but they have had very significant conversations, although they haven't reached any agreements with any of the private equity firms or former economic i haves but they believe they can do so in short order with the best buy group. this goes back to minnesota takeover law, what he has to do to get their permission given he's been a four-year holder. >> to me when i read this letter all it's doing is saying to the board, basically this is a request to say we can form the former group and the rest of it i'm not sure how seriously you

take any of it because frankly, there is no group. >> you're right. we can take him at his word, credit suisse pretty big firm, they've had troubles but should be able to circle $7 billion in debt. this would be the biggest lpo, andrew, we've seen in a very long time of a company that is suffering, its ebitda and cash flows are not moving in the right direction. this would be a difficult lbo to pull off and you wonder private equity do they want to do a club deal, they're frowned on by lps in terms of more than one private equity firm cutting the check but while there are a lot of hurdles, he had to appear, appears he had to come public with this in order to try and move forward actually with the bid. >> now that i'm reading the letter, he says in the letter to the ceo "in your most recent communication to my advisers, you indicated the board would

need an additional three weeks before it could consider my requests. i'm submitting this letter in hope that with' concrete proposal the board will grant my request and avoid further delay." obviously the board of best buy at some point could have said yes, clearly is saying no for whatever reason they decided and now this is a bear hug if you will to force the issue. >> i was more getting to the point of where he couldn't tell who his investors were. to your point, andrew, you are correct in that it wasn't necessary to get that publicly from the board if he had received it and did not need to go with a public letter. so your point is a good one. >> reminds me of a dog chasing a bus, once he catches the bus. it used to be they compete with what circuit city and pc richards and sears. now it's amazon.

if apple designs a tv will they sell it through best buy? >> best buy sells apple. >> no one would invest in a mall place that sells records or cds anymore. >> if they've come up with a new way to figure out business everybody would be all ears. that seems that would be required, doesn't it, joe? >> once you got it at 21 or 24, can brad anderson run it in this day and age? >> do they have the answers i don't know. so far management has not had the answers and don't forget these guys were in place not that long ago. it's not as though these trends were not taking place under their watch also. let's keep an eye open for a statement from best buy itself. they've had plenty of pankers, i know they've also gotsiveson

thatcher on the law side and a number of people advisele them in terms what have they'll do. wait and see what they have to say as well. >> thank you, david. >> all right. >> at this rate we may see you in a couple more minutes with the next deal. let's get a check on the markets, joining us from the cme in chicago, cnbc's rick santelli and with us on set is steve liesman. rick, the sentiment, they've had the weekend to sort of pore through this jobs report and figure out what draghi is or is not going to do. what is the view at this moment? >> you have duelling marios. the marchie draghi and the mario monti. this is going to continue to play out and i can't tell if you eminent bailouts will grow. many yearsing go to go by as we discuss ultimately whatever solutions arise out of whatever

stabilization in the near term may arise and it's going to continue to play havoc with markets to some extent but one thing we did learn friday, even though we had a pretty much a dismal jobs report, but not nearly as dismal as it could have been. we've had dismal gdp reports, but not as dismal as they could have been. i continue to think very, very moderate growth in the face of policies to help growth that haven't given us traction, and the face of uncertainty, that doesn't see retraction. i see much more of the same, you know, up 3%, down 2%, every other day in the equities, kind of stuck in the sand with the foot on the accelerator. >> before we go to steve since you made it slightly political, harold, we didn't talk about the jobs numbers with you. your sense of it both politically and mr. market. >> it's a push. it's a push, a positive push for the president, the number was bigger than people thought, obviously, obviously the unemployment rate goes up. i don't think it changes what

the president and democrats in congress, republicans need to do. they need to continue to address the fiscal cliff issues and if i'm them i extend the tax cuts for a year if they're not going to deal with it seriously. it's a positive for the president. >> i think'romney campaign's point of view is, things could be much better than 163,000 jobs, rising unemployment rate, creates sort of fertile place for that idea to grow. i think what i'm hearing people tell me over the weekend, at places where i was, romney has to do much more to seal the deal rather than just say things could have been better under obama. here's what i would do is what people seem to be missing in terms of how his policies were turned around. >> i didn't say anything different. >> i think if we'll stay at the lackluster growth, rick is right we have this lackluster forecast here, nobody is saying 3% in terms of economic growth, nobody is saying 300,000 on job growth. if that's where we're going to be romney will continue to have

fertile ground to sell his goods. >> reporter: that's who are alleged fo harold ford. i wish we could clone the congressman. congressman, i know that the house has passed legislation until we get a certain level of unemployment, much lower than it is, maybe we should let certain businesses just kind of get around some of this red tape, let them get around some of the bureaucracy. do you have any thoughts on that concept? i'm sure it's not going to get into the senate taken won't go far, but i thought it was a very interesting idea i'm going to discuss with congressman houle's camp later today. >> i take it you're referring to the labor department decision not to force big federal contractors to send out those letters. i take that as a positive. i'm hoping that means we get a better answer around these defense cuts which i hope we can avoid before the end of the year. it's a precedent obviously but

i'm hopeful that the precedent is a positive one and means that action will take place. to steve's point i don't disagree but politically it's more of a help to the president, if the number had been 50,000 jobs we'd have a different conversation. >> i agree with that. >> your point is romney needs to lay out where to take us. up to this point he's not done an effective job. >> the way i've gauged the data, congressman, is who has got the sort of responsibility to talk about the economy here, when the economy's doing better, cuts out the romney argument. and we are very much i think as rick said in this middle ground right now where not enough for the fed or people to think the fed will act and not enough really for the president to say look, things are doing great. >> you sent that to me, right? >> which one? >> t drew mattis piece if you

used the current employment picture they have a model that indicates romney would win 51.7%. >> right, just the unemployment rate. >> above, it's never been above 8. >> no doubt about it. >> so you were going to run, if you ran, you were going to run in new york. >> absolutely. >> yes. >> i think you are too conservative to win in new york. i think you need to go back down to tennessee. >> that's not what this conversation is about this morning. >> i'm just telling you, i am advising you as your adviser and friend to go back to your home state where you were a congressman because you're too conservative to get elected in new york. >> we've done that. but again, steve, i don't disagree with you. the point until romney lays out how he's going to make it better, i think you have to view last week as a push for the president. >> i don't want to you lose another senate race. >> believe me i don't want to. >> we'll go to break and talk. >> joe will continue his advice during the break and when we come back, joe, we'll talk -- >> economic growth. >> we'll talk jobs, economic

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the fiscal cliff fears are mounting as we get closer to the bush tax cuts expiration. for more we're joined by morgan stanley chief u.s. economist vince reinhart. break down parts of the fiscal cliff because i've seen people say if we just let all the bush tax cuts expire, i know there would be some near-term pain but it goes a long way towards solving a lot of our long-term deficit problems. >> you have to get from here to there, though, and the problem is that at the beginning of next year, if we let everything expire, that is there's no agreement, no legislation, then we get on the order of a 4% to

5% consolidation in the fiscal account, and it's incoherent in the sense that politicians will be arguing, washington will be polarized, markets will be confused, and while we may get some immediate budget help, we don't get any reassurance that we have a fiscal plan in place. what we need is a plan for fiscal consolidation, not necessarily front-loaded but we need a plan and washington seems unwilling to deliver that. >> vince, let's take the 250 and above. what marginal tax rate would you need to make a real dent in our long-term problems just at 250 and above, if you're not willing to raise taxes on a broader base, even if you went to 100% marginal rate you're not going to make a dent in it, are you? >> wrong question to ask. you're starting from a really crummy tax system. we are so far inside the inefficient frontier delivering good fiscal policy, if we try to

start and make marginal changes from where we are -- >> that's all the president's talking about, vince, all he's talking about right now. >> right, two splat is separate how do we paper over the fiscal cliff and how do we provide our citizens some certain, more certainty and efficiency in the way we deliver recovering policy. >> i agree for the democrats to be just only talking about returning to the clinton tax structure without looking at overall tax reform, it's not helpful to anyone but that's all we're getting and all we're going to get. >> here is what we have to do. republicans have to recognize the average tax take has to go up as a share of gdp. democrats have to recognize you don't get there by raising marginal tax rates in a baroque tax system. we need tax reform, not marginal tax changes. >> the reasonable democrats know that, and will agree to that as harold ford, your colleague,

just absolutely did, right, harold? >> i'm happy that you guys are giving harold some good advice. can i make one point of your earlier conversation? >> please. >> our forecast has been for a while the u.s. economy is stuck in a channel centered on 2% growth. sometimes we're above it, sometimes we're below it. this quarter, last quarter and this quarter we're in the low end of the channel in part because politicians are pushing us down but market economies are resilient. no real danger right now that we fall out of the bottom of that channel, probably is we don't have the politicians that can help us do better than that. >> vince, good morning. is simpson-bowles the right start for congress as they think about tax reform or would you look at another model? >> you know, there is low-hanging fruit, as you always point out, that if you look at simpson-bowles, you look at the gang of six, you look at what the speaker and the president almost agreed to, even the ryan

plan, there's a lot of commonality. i think simpson-bowles is the place to start and if we could get agreement there, we can at least address a good portion of our longer run problem. >> does the romney plan not make any sense to you, vince? >> i need to know what the romney plan is. that's the problem. but we need more spervcifics an that goes to your earlier conversation, an economy that's just stuck in a growth channel is a problem for an incumbent, it's an opportunity for the challenger. challenger has to pick up that opportunity, take that opportunity, though. he's got to run through that hole. >> vincent, your colleague, adam parker, believes that who wins actually will change the equation in terms of which way the markets go. do you agree with that? >> elections matter. if we get some -- >> do you agree with his assessment that it's a win for the markets if romney wins and a

loss broadly even i think for the economy he's even arguing. >> so i think it's complicated. it depends on which president romney wins, does president the moderate from massachusetts get a coherent economic plan in place? that's a good thing. but does -- is president romney fete fettered by who else is elected. that's a tough call. >> thanks. thanks. good talking to you. >> great point he made there at the point the kind of congress that either president will have if this tea party is unwilling to negotiate. we focus on democrats. the tea party has been a great hindrance and obstacle. >> the tea party has taken over parts of the senate. >> even more so. >> when we return well get more thoughts from our guest host harold ford jr. and take a look

at some of the stops on the move ahead of the opening bell. okay, here's the plan.

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look at some stocks on the move in today's trading. we'll start with knight capital shares taking a hit, it officially announces a deal. it received $400 million financing package that will give a consortium of firms an proximate 70% stake. tyson food shares are under pressure this morning. did you see that? >> yes. >> i do. >> beef and pork producer -- you can't produce bees can you? >> if you're a beekeeper. >> earned 50 cents a share for fiscal third quarter. four cents below estimates. says it's being pressured by rising input costs although tysons says it expects to pass those costs along. cognizant technology shares are jumping in pre-market trading.

it earned 88 cents a share in the second quarter and that was eight cents above a wall street expectations. it also raised its full year outlook. coming up some final thoughts from our guest host harold ford jr. >> the one and only. >> tomorrow on "squawk box," pnc phil mickelson services chairman and ceo jim rohr talks financials. sander o'neal's lays out the m and a landscape. and james millstein talks europe and the survival of the euro. that's tomorrow on box starting at 6:00 a.m. eastern right here on cnbc. this man is about to be the millionth customer.

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make it matter. stock of the day is best buy, founder and former chairman richard schulze wants to take the retailer private, offering to buy the shares he doesn't already own for 24 out of $26. long slide in the shares of best buy. thought they would have done well after circuit city went r

kerplunk. >> skeptical. hopefully not cynical l. >> tinged with cynicism. >> at least this morning. final thoughts from our guest host herald ford jr. private equity question four. in the 6:00 hour we had josh on and talking about private equity. he said private equity is not a good thing for the world. that was his view. you are in a sort of conflicted place i imagine. working at morgan, supporting the president. where do you ultimately come down? >> private equity is not a bad thing. there are decisions made in any industry and it's good management at any industry and either politics or business it makes the difference. >> so fair or not to criticize or question romney on his record related to bain? >> fair. he's put it out there it's fair. >> it isn't a real question. >> it is fair. three dates to watch between now and the election. september 7th n