good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. let's start things off with the markets this morning. check out silver. the medal hit by heavy selling. at one point tonight, silver hit a low of $20.30. that's down nearly 4% from the start of today's trading. what they talk about as the liquidation trade. that's where traders are forced to close position to meet margin calls elsewhere. this has been a trend that's been developing for quite a while. gold trading lower today. on friday, the trade data showed that hedge funds and other big speculators in the commodity have started selling the metal. this morning, you can see gold down by $15 to $1349.

money managers billed 1.4 billion from u.s. futures for the week that ended may 14th. currency is a big part of this story. the yen is at 102.63 and the euro is at 1.2862. >> and our top corporate story this morning, yahoo!'s board have now agreed to buy tumblr for about $1.1 billion in cash. the blogging service was featured just like week on cnbc as a member of our distrubter 50 list. i don't know if we now need to get a new member of that list, but at least it's working. the deal is expected to be announced as early as today, probably while squawk is on. we had a top tumblr go on "squawk box" almost a year ago to the day and listed on the nasdaq. we asked him what he thought as he watched the social network go public and as it bought companies like instagram and

what the events meant to his views of tumblr's future. >> i feel very warm and fuzzy inside. the answer is it makes us, like, incredibly nervous. like we feel like we have to work harder and do better, become a freestanding independent company because you can't count on those tooils deals to last forever. we're not counting on some grand exit through acquisition. we have to sell stuff, grow the platform and otherwise -- >> what is the exit for you? do you think about that? does all of this craziness make you think, i have to get out? >> the best exit is to be the master of your own domain. make money, be profitable standing on your own two feet. >> he's the master of his own today. but just one note, this company only has $13 million of revenue. so $11.11 billion --

really young users. >> a hundred million users. >> blake is included. >> i don't know how you monetize some of these users. get your porno music on. there's -- yeah, there you go. there's some -- >> master of your own domain. >> there is. the porn stars supposedly have blogs. >> so it's not clear that all of them are going to be so -- >> mainstream. the mainstream media is fascinated with the kid. he's 26, you know, small apartment in manhattan, dropped out of high school. >> $250 million richer this morning. >> that taught himself how to write code, i think when he was 11, taught himself how to do code and dropped out of high school. mainstream media, it's like the object session with the powerball winner, which i watched all the major networks. >> this is like the same thing. >> right. like catching so much -- it's like watching vicariously.

we love to watch someone all of a sudden become a multi millionaire. but last night, all the major news, network news, they don't even know who won the stupid powerball. all they know is it was bought in some backwoods area of florida. and they got cameras, the shot for the stupid public that the ticket was bought here. i mean, it's weird. >> it's like visual media, you have to show something. >>.i know. but it's about people getting wealthy and it's the same thing with this kid. i think the kid is a little bit more interesting because he's a high school dropout and he must be really smart. >> html is different, though. html, i know how to do that coding. >> do you have $250 million? >> no, i don't. it's not real code. it's -- >> are you off by 249? >> more than that. >> do you remember geocitys, though?

yahoo! bought geocitys for.. wa did you do there? you make web pages. wa do you do in tumblr? you make web pages. >> $13 million. >> but when yahoo! was invented, most of these kids who are on tumblr weren't even born yet when yahoo! was first brought about. >> yahoo! tried to buy facebook for $1 billion. that might have made sense. this is going to be an exclusion challenge. >> i saw a lot of pictures of this kid with his girlfriend. get rid of her. jetson her today. >> whoa. >> come on, dan. come on. is his name dan? >> no. that was the guy -- the code. what is this guy's name? what's the kid's name? >> now you've -- >> oh, david carp. david carp. he did not run. but everywhere he's with this girl, but she's so history. >> oh, stop.

>> she's got to be happy. >> sander ambrosio, in. that girl, out. >> no, no, she's going to be the one person who loved him before. that's who you have to hold on to. in corporate news, today, the boeing 787.is going to return to flight in the united states. >> how horrible. sglts terrible. >> trying to save them the premunp, trying to save them the divorce. the dreamliner has been grounded for four months because of smoldering batteries. the first united 787 flight is scheduled for this morning. we've seen strong demand for that flight among the passengers on the plane, cnbc's phil lebeau. and he will bring us reports on that trip all day long. we want a tells sa tested. if we want someone to ride though plane, we send phil

lebeau. >> i don't think he's riding on it. i think he's at the airport in houston. i'm sorry. >> i was off four days last week. >> i know when i said where you guys were and i got almost shot, like laser eyes like nobody knows. the bank's board argues that jamie dimon should hold both jobs, as you currently does. it's been interesting because he says, make my day. i'm going home if you do that and i'm taking my ball with me and all my risk management with me, too. if you don't want me, just tell me. >> fine. >> he's kind of saying that. >> if he doesn't -- if, for example, the voed is over 50% -- >> it won't be, though.

>> i don't think it will be, but if it were, i think the stock would drop 10%. it's like a bizarre self-inflicted wound. long-term, maybe you need to split the roles, but this doesn't seem to make too much sense. >> there you go again, long-term, maybe you need to -- why? >> long-term -- >> you say you don't really feel that, but then you come back and say you do. >> he nis you should split it and he thinks the board can't report to the same guy that's supposed to be reporting to him. >> i like the new director. i think you have to look at each situation separately. i think in certain situations -- look, i could see in two years from now there would be a transition at jpmorgan where you decide there would be a new ceo

and you want jamie dimon to be the -- >> if i'm chairman and ceo, i want them all in my pocket and i want to be deciding who is on my board, who make the 400 grand a year. who goes out to arizona every year for the meeting to play golf and, you know, maybe talk about business or five minutes? i want them all in my pocket where they say yes, mr. chairman, no mr. chairman. a lot of them do have that. >> that's been the criticism, the thought that it's a clubby environment. >> that's the way i like it. >> yes, sir. >> most chairman do like that, if they can get it. >> sure, sure. especially if you think you know what's going on at the company the best. why would you want somebody not knowing what's going on? >> you're courtrooming the guy that signs off on your pay package, it helps, too, doesn't

it? >> i don't think that's the case with most of these guys. do you think it is? >> i think that's one of the problems. >> corporate governsance has been a big issue. >> there are plenty of boards that are afraid to say no to the ceo and as a result there have been -- >> there are some boards, but i'm not sure this one is that. >> no. in economic news this week, wednesday is going to be a big day. the fed is releasing minutes from its april policy meeting. ben bernanke will testify before the joint economic committee. his comments to congress come as the market debates whether the central bank should start trimming back on its bond buying program. hedge fund manager david tepper fueling the conversation on squawk last week. >> if there is a true taper, there better be a true taper. >> and that is a conversation i'm very sorry i missed.

dallas fed president richard fisher is here starting at 7:00 eastern time. >> even better looking now because he's got even more. >> power? >> no. he has more power, but in this case i was talking about grayer hair. >> guys look distinguished when they say silver. >> they do. maybe i will get rid of the hair club for men, yeah. >> you've got it coming in. you've got it coming in. >> which i don't use. we settled that last week. mark grant, yeah. >> i'm not just the president, i'm also a client. >> on my scalp, visual. but on the coloring, too. >> well, he saw you blow drying it. >> yeah. but he copped to coloring his. he said, oh, it gets a little help. mine does not. anyway -- >> let's get a check on the markets this morning. the futures, this morning at this point they're slightly lower, down about 16 points for the dow. at the present is indicated down by about 2.3 points. oil prices this morning, this is

interesting because you have seen gasoline price come up by 11 cents over the past few weeks. crude oil down by 50 cents to 95.46. the yield right now is yielding 1.965%. let's talk about what's going on in washington. u.s. lawmakers there getting ready for a second week of skrooud scrutinizing the irs targeting of conservative groups. joining us now to talk all about it, washington, d.c. chief correspondent john harwood. anyway, john, so here is the question. i saw starting on friday, we saw all sorts of different news reports. and depending on what newspaper you read, you get a different sense of what was really happening. do we believe the obama administration knew about what was happening? not that they directed it, but they knew about it early on. >> look, there was stories about the allegations that were made by conservative groups that this was happening.

then you had testimony by doug shulman who we're going to hear from this week who was the irs commissioner appointed five years, his term ended in december and he left, he wasn't fired, he just left. but he said it wasn't happening. there's nothing on the record to indicate that the administration knew otherwise while that was going on. now, you did have the white house council informed in april that the ig had completed an investigation and we learned that the treasury department had heard that the ig's report was under way while it was going on. nobody knew of the clugdzs about the report in advance of when it came out. >> do you believe the folks in cincinnati were operating as rogue traders, if you will, or

do you think there was a directive from management? >> i can't know independently. i'm not sure that -- let's assume that this is something that came up, which is what the ig concluded. this is something that arose out of that particular office and wasn't directed from outside the irs. i'm not sure it was even rogue as what you might consider bureaucratic kind of meandering and incompeteexcescompetence an around trying to handle this situation. but what the ig concluded was they had all these things coming in, they developed some way of sorting them out. the way they sorted them out was wrong and there was a continued back and forth over a period of weeks and months and they didn't get it right until very late. >> i get if tthe argument that you're a traffic cop and you have to get tickets out you set

your car where people are speeding. i understand the official argument that has been made. but what i don't understand is why there was a political targeting, meaning at the time this was taking place, there were, of course, tea party and republicans, conservatives creating these groups but also folks on the other side of the aisle. >> well, this is what's in dispute. first of all, on the otherside of the aisle, some liberal groups were delayed and some media groups were delayed. it wasn't only the tea party groups. what was unique to the tea party groups, in other words, what exits on the record hasn't been shown otherwise. i can't know whether this is all there was. and we've got more inquiries that were going to tell us. they had a flood of applications. they saw one commonality of the applications that they were getting was particular names or words or -- and think did word association or word checks.

tea party, patriot, 9-12, those sorts of things and that's how they said these are common features of these applications. we put those in that pile and look at them in a similar way. that's what we know about it so far. >> is this going to become a tempest in a teapot or is this a long process that we're going to find out in drips and drabs that people knew more than they've less on thus far? >> i can't sit here and answer that question. but based on what we know so far, if nothing else comes out beyond what we know, it will have been fought a tempest in the teapot, but when the irs is screwing up in this way, given the power of the irs and the significance of the irs in our system, it would be a bad management failure, a bad screw up on the part of those employees and something that has caused some people to get fired. but it would not be, based on what we know, a huge political

scandal for which anybody could look fairly at the administration and say, oh, they went out and started hunting down conservative groups. that is not on the record so far. >> john, we have to run, but this person who is now running obama care for the irs, the white house seems to be standing behind her. how long does that hold up? >> that's a good question. because there's some on the left who are saying she shouldn't be in that job. and so if you combine what conservatives saying, what republicans are saying with some of the criticism that, hey, wait a minute, somebody who has been associated with that office shouldn't be there, given the interest that the obama administration has in implementing obama care, it's so important to the president, you could certainly see her being shifted to another assignment. but, again, in her case, nobody has implicated her in terms of partisan motives or aggressively going out and making bad stuff

happen at the irs. she was in a chain of command and it happened under her. so don't know yet. >> john harwood, thanks for joining us this morning. i'm sure we'll be talking about this a lot more in the coming days and weeks. >> you were talking about it over the weekend. >> i was talking about it over the weekend. >> they had the conservative person, was her name? s.e.cupp. >> she was the handy and then they needed someone on the liberal side and they got andrew -- >> no, no, you know who was on the other side of her. michael moore. >> we don't know what he is. he's just hungry. >> by the way, what a sweetheart of a guy. >> oh -- >> after the show, we all went out for drinks and he was great. >> i'm not surprised. that's who i want to have drinks with. i do. i do. >> he's been in studio before. anyway, when we come back,

we're going to introduce you to a man that some are calling the steve jobs of china and he's ready to take on apple. first, if you are commuting on a train in connecticut, officials are warning that you should brace for chaos. metro workers are preparine repairing damage on the line. the ntsb is still investigating. "squawk box" will be right back. [ male announcer ] here at optionsxpress, our clients really seem to appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. hey ray, my uncle wanted to say thanks for idea hub. o well tell him i said you're welcome. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. yea, and these ideas are across the board -- bullish, bearish and neutral. i think you need a bigger desk, pal.

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welcome back, everybody. you can see the u.s. equity futures are indicated weaker this morning. dow futures down by about 16.5 points. s&p futures look like they would open down by just over 2 points. in our headlines, steven cohen sac capital has told investors that it would no longer cooperate unconditionally with the government's trading insider investigation. it believes the next few months will be critical in that investigation. the letter cautions that while it wants to be as transparent as possible, it may not be able to give frequent updates to investors. >> this is bad news if you're sac. >> they're worried about what the government is going to do. >> my understanding is they're worried less that steve cohen is going to be indicted, but actually the firm could be indi indicted. but that is one of the concerns right now. the one date you need to

remember is july 17th or july 18th. around there. that's when the five-year statute of limitations runs out on that specific trade. the other question is are there other trades that could be looked at that would take that five years and push it longer? the last piece is, if you didn't find it within that five years, could you find a conspiracy that continued past those dates? so you can actually continue that conspiracy a month or two later. and if you could prove that, it makes it much harder. >> let's get to the national weather forecast. the weather channel's alex wallace, it wasn't a pretty active weekend, but prior to the weekend, it was the quietest tornado season. there were 197 rated ef-1 or stronger. that was the lowest number since 1954. just so we know that, alex, before we decide, wow, this crazy weather we're getting with all of this -- it's just amazing we get these tornadoes and stuff. i don't ever remember them happening when i was a kid. i do remember them, being

facetious. but anyway, finally happened this weekend, a lot of them. >> exactly. and that goes to show you, as you said, a quiet start to the season. but it only takes a couple and we start thinking, wow, we have to be prepared for these storms. and he could with be looking at more of those tornadic storms this afternoon. right now, you've got a few showers and storms, nothing severe at this point moving across the midwest particularly in the state of missouri. but another day where a widespread area is going to to be impacted by these storms. stretching from the plains states up through the western great lakes. that includes chicagoland towards kansas city as well as oklahoma city. threat topper will be damageling winds as well as hail and we can't rule out tornados, as well. as we get into tomorrow, still another day with storms. it's a multi day event here dealing with severe storms. shifting farther to the east now, so we get into places like detroit, indianapolis, and as we progress on into our wednesday, moving into the eastern portions

of the great lakes, interior northeast, not quite on the east coast just yet, but thursday will be the better day dealing with some storms. by then, the severe threat should have died down. ahead of the storms, it's going to be pretty warm today. temperatures anywhere from so 10 to 15 degrees above average with the widespread 80s. guys. >> thank you for that. how about a little tech news this morning. we have a story of a company ready to take on apple in china in cnbc's eunice yoon joins us with more. eunice. >>ly, guys. apple has a major following here in china, but xh competitors are building up their brands. >> xiaomi is gabing a following in china. one reason the local media has dubbed the ceo the steve jobs of china.

our influence in the chinese market is very similar to apple's, he says. china is a crucial market for apple. last quarter it was the only region where apple's revenue grew up 20%. they started shao mi three years ago. his company has created an aura of exclusivity around his phone, releasing limited quantities that sell within minutes. our goals are simple, he says. allow our customers who are interested in smartphones to make suggestions. work with us and let them enjoy the process. xiaomi's phones are a third of the price of an iphone here and they're a decent substitute for many chinese. apple's products are popular here. yet with 300 million chinese using high-end handsets, most analysts say their next growth

will be in low cost smartphones. xiaomi keeps prices down by selling only online and markets by word-of-mouth. most chinese customers don't believe ads, he says. they trust their friends. xiaomi plans to double sales this year. xiaomi is start to go look beyond its boarders. i believe americans and europeans would like our products, he says. a hint that maybe one day xiaomi will take on apple on its home turf. xiaomi has just started selling phones outside its mainland as well as hong kong. >> are we going to see this anytime in the u.s. anytime soon? >> not anytime soon, but definitely the ceo was telling me he was interested. he does believe his phones would

be able to, you know, kind of cross the borders and resinate with a lot of people outside of china. in terms of the phones, i wanted to just show you one here. this is the phone. this is the iphone. you can see they kind of look similar, but the xiaom iphone is a little bigger and it has all those basic functions that you'd want in a smartphone, like making calls or video calls and taking pictures. but at the same time, the cost is much more manage knowledge. people says it's a very cheap phone, something that they really like. but there is a bit of a knock in terms of zault as some have said the picture quality isn't as crisp, the battery life isn't very long. but what's interesting about this phone is it has been able to take a page from apple's playbook and really been able to build a loyal following for its phones. eunice yoon in beijing.

thank you. we might have these phones here in the united states at some point. as we've been discussing this morning, yahoo! buying tunblr for backside 1 billion. chris cunningham is the co-founder and ceo of appssavvy. good morning to you, credit. >> good morning. how are you? >> i'm good. $1.1 billion. $13 million of revenue. does it make sense? >> you know, it is kind of a short-term and long-term answer here. the pros are obviously tumblr investors are thrilled. as you mentioned, $13 million revenue. reportedly 50 this year. not a lot of revenue, but lots of potential. they have the mobile business. yahoo! and any large media company has proven that they can effectively monetize pages. i think there is a greater opportunity to monetize ad pages. tumblr has a lot. i believe it's a smart acquisition. you can imagine the investors,

the board, they're overjoyed, especially in this market. and i think from a yahoo! perspective, lots of nay sayers, it's easy to call out that yahoo! can't do this, they're not cool, they're desperate. i disagree. there's a lot of attention garnered here. but the biggest factor that will have to be proven is with yahoo!'s earnings, how do they take that revenue and takes it to a point where over the next five years it makes a lot of sense? >> and, chris, my understanding is the tumblr has been receipt sent about putting too much ads on the page. do you see a monetization strategy both on the web and perhaps more importantly on mobile where clearly tumblr hasn't succeeded at the same rate just yet? >> yeah. i mean, i've spent some time with david carp and their officer with david has been very

bold about not looking the advertising. but in today's world where tumblr sits, there's a major advertising opportunity which is more conducive to the user experience, understanding timing and context. so if they evolve their ad products, which they will, and they redefine and think how it should be delivered, there's a bright future because the brands are paying attention. mobile hasn't really actually begun until this year. there was no mobile business in 2012. well into the early second quarter 2013. but the biggest reason i think marissa and yahoo! executive team looked at this business was a growing future around mobile. i don't believe that jeff necessari necessarily a large property is enough. but you can't ignore -- this is a top ten site. there's only about ten or 12 of them left.

so from a unique perspective and from a emotional perspective, there's a lot of upside. i think it's a great win from both sides of the equation. >> chris, thank you for joining us for your perspective this morning. >> have a great day. thank you. >> thank you. coming up, we're going to talk about stocks, the key to watch in the trading week ahead. as we head to break, the major averages are now on a four-week winning streak. major averages up nearly 50% since the financial crisis and is it's march 2009 lows. stay tuned. we'll be right back. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]

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>> we worked on it together, so -- i was -- >> i'm not 22 any more. my waist is approaching 22. >> it's swimming. >> good morning. welcome back to "squawk box" here on cnbc. in some other worldly metrics number, it's 22 manage spp i don't know. i'm joe kernen along with becky quick and andrew ross sorkin. more importantly than fat and body mass is height in inches or heights, as morons say. inches divided by two is wa your waist should be. let's say you're 72 inches tall, waist should be 36. >> oh, that's good. like your fingertips. >> yeah. making headlines, a troubling

story on global corruption this morning. a new survey of corporate leaders and employees in 36 countries find that there's plenty of trouble that needs investigating. so i would call it a troubling, i guess. 20% of the respondents say they knew of incidents at their own companies within recent years. a more to understate expenses and overstate revenue and when you pull just senior management, that figure was 42%. but when markets continue to sort new highs with averages logging their fourth week of gains, joining us on set is one of the people that has a, i think, like an attractive choice to make right now, a difficult one, you either unlike a lot of people that come on, they have to sometimes decide whether they finally get involved instead of

just says it again. you need to decide, sense you've hit the targets that you had, you're at least in a position to say do i protect my gains that i've made or do i just up my target? why don't you just up your target? >> we're going higher. the first is two issues involved. the first is that there's more internal rotation going on in the market that we've been seeing. so most of the move has been a rally in the defensives that investors are yield starved and we're pricing in what we thought were going to be economics moves. so the move to utilities, telecoms, health care staples, etcetera. once we got to about a year ago, defensives gotten expensive in terms of valuation and we were going to start pricing what we thought was economic activity in the second half of the year. so in the course of the weekend,

that's created an internal rotation. it's about 17 or 18 over the next couple of years. given modest 2% gdp growth, corporate governs will come somewhere in the 5% to 6% neighborhood. if we look out, we can absolutely see the market in the 1500, 1600 rev mu. at what point does the market begin to price that in this year? could we get up to 1700 or 1750 through the course of this year? absolutely. better gains in the second half of the year. >> so if you were nimble, you might sell half of some positions? >> well, and what we did, in our

portfolio, asset allegation global allocation fund, we've taken some profits in some of the more defensive mofts. but we added that money into the cyclical. so we're sitting with about a 24% position over neutral and equities. we think the cyclicals are going to run here. >> you do. yeah. >> so i guess you'd include technology there, too, right? >> technologies, financials, industrials, consumer discretionary, those are the areas that -- >> is there a third inning? >> well, in looking at the broader mod move here from 666 at the bottom, maybe we're halfway through and we're measuring that in terms of multip multiples. we've gone from 11 to somewhere in the 14 to 15 neighborhood here, but on our way to 17 to 18 in the next couple of years. >> and it's implied with you with a 3% to r5% reflection. >> exactly.

there's so much catch on the sidelines with money markets at zero and treasuries at sup 2%, you see a better yield in stocks right now and we've got some funds in our program that can give you a 5% growth and clients love that. so anytime you get a 5% pullback, money is coming in off the sidelines and are trying to get invested. >> you said 84% invested. where is the other 16%? cash or bonds? >> it's in bonds, but not in treasuries. fort most part, it's got an emerging market focus. >> phil, thank you. >> thank you for having me on. >> optimistic take on a monday. >> it's a nice little summary and it's good. sort of a transition to the ts. kind of an interesting tough going of thing. an optimistic take. >> are you ready?

are you drank some water and everything? have you got the real -- >> you know how we do the ad, you how you read the ad for -- >> she says he never said that, but i don't know. >> coming, our newsmaker of the morning, dallas fed president richard fisher is going to join us for a special hour-long conversation starting at 7:00 eastern. but first, if we say noonny bombs, you will probably think of our next guest. come would be get in in here. >> her take on the state of local government, interest rates and much, much more. ♪

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welcome back to squawk this morning. ge says its ge capital unit has approved plan toes pay it $6.5 billion in dividend these year. and 4.5 billion in special dividends. ge says it plan toes return $18 billion to cash in shareholders this yoor year including share purchases of $10 billion. >> there's been a lot of talk about the fed and pending qe3. joining us now on set is alexander labenthal. you're the president. i'm sorry. i slipped that around. you're the president of labenthal company. >> i'm the president for life. >> yes. and when you look at bonds, people have been awfully nervous about what the end of qe3 is going to mean. you just said he's got 16% in bonds and other places, but of that, none of it is in treasuries. would you say that is a smart move for people on you or how

would you advice people to be in treasuries? >> well, we're obviously investing in municipals for people and what they're doing is investing in very short-term. we're investing in under three years. i think as we look to the point when sw rates do go up, the important thing i look at is for investors so be involved in mutual funds. that's why we're going to see the everybody of rates hit people really hard. it turns into a snowball that gets out of control. >> there have been questions about whether some municipalities would eventually declare bankruptcy. you think this looks like a much better scenario. >> it does. it's rallied over the last year. it's been a great performer of the state. there was a study that just came out that said there really isn't a fear of m massive defaults in all of the various cities. obviously, there have been some problems. the commonwealth, an area that's a problem right now is puerto

rico. and that's the third rail. i would not go near puerto rico right now. >> what's happening in freak? >> it has everything wrong with it from a huge structural deficit to high unemployment to -- massive amounts of debt. i mean, if we wanted to look at u.s. -- any debt in the u.s. as equalling europe-like levels, it's in puerto rico. and they do what you're not supposed to do which is issue debt for operating expenses. and then they do what is the mind boggling, which is in some cases it's issue debt for their debt service. so they're so far deep, individual investors would not go near their -- would they default? i don't know. there's different issues. i don't think that's going to

happen, but the volatility is so extreme, i wouldn't invest it right now. >> i know over this last weekend, we hit the debt ceiling again and that changes thing for the treasury secretary. jack lew can move things around and said this isn't going to be a problem until at least after the december break. but some of the things he can do moves around some of the issues for municipal bonds in some way, shape or form. do you understand that? i have to admit i don't. >> it does. there were a whole series of taxable municipal bonds that kiem out under the stimulus in 2009. a lot of issuers are calling those bonds now because there was a federal subsidy that sequestration might go, in fact, anyway. so they're saying we might as well issue bonds at low rates right now and get rid of that. then the other thing is shrugs,

which is the security was issued when an issuer comes to market and has their bond proceeds, but they haven't used them to start building things. >> does it mean anything for people who would be investing in municipal bonds?slugs. i just came back from the pacific northwest. a lot of technical talk at this point. >> yes. >> if you had any concerns, what would it be? >> they're still on the table what happens to tax exemption. we have had potential tax reform. tax exemption was sliced and diced pretty severely. >> do you think anything would go through at this point? it seems like there's chaos in washington. >> i have been on this show and others on cnbc. at this point i feel like it's really up to the mayors and the governors to say, are you crazy?

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a special hour of "squawk box". dallas fed president and ceo richard fisher joins us. from fed policies on to the markets, one of the most hawkish. a big deal. ya high buying tumblr. when it brings to yahoo! plus, morning headlines and what you need to know as we get ready to kick off another week of trading. the second hour of "squawk box" begins right now. >> good morning, everybody. welcome back to "squawk box" on cnbc. and the futures this morning are indicated a little bit weaker. dow opens by 17 points. s&p would open just over two points. if you have been looking the last four weeks, s&p 500 has

risen 6.6%. dow up over 5% over that period of time. by the way, check out the action in gold and silver this morning. gold is down for an eighth straight session touching a one month low. the fed will begin exiting its monetary policy sooner rather a than later. silver is taking a big hit. it's fallen to its lowest level since september 2010. also in our headlines, yahoo! has approved a deal to buy tumblr. it is hoping to gain popularity with younger users. if you're looking for the cheapest gas in the country, head to tucson, arizona. >> time for a "squawk box" exclusive for the next hour. we'll be talking with the dallas

fed president, richard fisher. i always pine how long we have known each other. it was always great. the silver fox, richard fisher. silver is getting marked down. >> that's barbara bush. >> that's right. and i think about how to start with you to get right to it. you've been against a lot of the kaopld tkaeugz for a long time. so instead of asking you when you think she should taper do you think the fed is closer to thinking they should taper. >> the chairman is good about listen to go everybody else. there's 19 of us. we are having a debate. that's pretty clear. >> yeah.

>> we'll see his principal concern is the efficacy of what we do. is it working. and does it continue to work. we keep evaluating the cost benefit analysis. but even i, joe, i'm not saying cut it off. i lost that argument a long time ago. as i said many times, the biggest consumer of wild turkey bourbon in america, we don't want to go from wild turkey to cold turkey overnight. do we dial it up, dial it back? that's the nature of the discussion. he's effective and good listener. >> we think it works now. >> he doesn't dictate. he license to the committee. >> the current thinking, which has changed a little is now that it's been wildly successful in some people's eyes. >> has it worked with the economy? we don't know. >> do you look back and think

you were more negative than you should have been on the efficacy of the program? >> no. i will tell you why. we have flooded the market with liquidity. but they are still tied to the dock. if you're still tied to the dock you don't leave. we have not seen the job creation we would like to see, i would like to see. just to set the record straight, i haven't talked inflation for years. that's not the issue here. that stopped in august 2008. the real issue is are we pumping up the economy from an employment standpoint? we have a mandate from congress to do that. my point is you don't do it with one hand. you can just do it with liquidity. we have to have a rational fiscal policy. you can tell me how close we are to having that. >> i don't know. as a texas democrat, you are an inspect. and i hear a lot of your viewpoints now. don't sound like you have an

active deposit. i don't know what you want for fiscal policy. >> i want a government that will tell us what they're going to do. you can only maneuver around such certainty. what are the specs going to be? until we get that, people aren't going to be eager to use the cheap money we provided and a bun adapt money. >> you're not a person when they said the fed is the only game in town because fiscal policy is handcuffed. some say they want a trillion dollar stimulus program. you're not saying you want congress to get its act together. >> we have decided maybe unemployment isn't where you want it. it looks like there some improvements. what is your forecast for gdp for the next year?

>> i think it's -- >> i think it's worth a lot. >> the blue chip economists are always wrong. if you want a sense of direction i think we will see things picking up as they go throughout the year. i wouldn't be surprised to see it growing at a rate above 2.5%. it's not what i want. i would like a little bit more. >> that's much better. some people think, you know, with inflation where it is and with multiples fairly low, if we get above 2.5%, that valid 80s where the stock market is. >> i used to be in that game. i don't know if it valid 80s or not. all i know is the very low discount factors because we have driven it down to zero. you have very high multiples when you do that. >> let me try to -- okay. what about next year, 2014? too foggy? >> way, way.

>> too foggy like this morning. the next thing -- not talking about raising rates. but what number on unemployment would get you to think we, instead of ramping up the 85 billion we ramp up? would it be seven? would it be this summer? >> it's a question of direction and sign. i was in favor of the 6.5% mark. majority rules. the main thing is just to see forward motion. seeing people coming out of that group that is no longer looking for jobs. >> so the participation rate -- did we get the participation rate from 60-year lows? >> we are moving forward but it's just very slow. it works with a lag. but you have to take that into account as well. we have done a massive amount. and the real question, is it working at this level?

and with each extra mortgage backed security we buy, is it having the same impact? it did a good job. it helped turn the market. just for clarity, i would start by dialing back, ree f-ing in, in sailor's terms. >> i understand the effect becomes less and less pronounced. if there's no inflation. >> what's the other thing that can happen besides inflation? >> first of all, i'm a texan, right? we learned something from the hunt brothers. you can buy all you want. when you sell it, it's a lot a different story. in a couple months we could buy

100%, that volume. we're going to be at a point where we buy a significant portion, as these deficits come down slightly over the short time, of treasury issuance. it's wonderful when you're on the buy side. i have been in the business. when you go to sell something, you have enormous concentration. it's a lot more difficult. we have to think about our fiduciary long term. it is also how do we exit with when we decide to exit and control the volume. >> right now it's above 50%. >> a little bit more than that, yes. >> you're concerned as it die ts off it becomes bigger and bigger in the market. >> at the pace we're going, we will be reaching 90%. >> that is a huge number. if you're talking about dialing back, stopping by or starting to sell some of this? >> no, no. i think in my opinion this is me speaking at the beginning. you just slow the pace. and the question is, and we have

to hammer this out at the table, by how much do you slow the pace when you decide to dial back? not stopping. i think that would be too violent for the marketplace. that's my opinion. >> you made a comment about the participation rate. i'm just curious. when you're having that conversation in the room and seeing the unemployment rate come down, do you say to yourself, well, it's coming down but even if it got to 6.5%, we're not happy with the participation issue, therefore, we're not happy. >> i'll tell you what i do feel. we have made rich people richer. this is great for the buffetts and others who have taken advantage of it. the question is, what have we done for the working men and women of america? government is not the future. private sector is the future. right now they are using cheap

money to buyback stocks, pay extra dividends. we all know what's going on. what will really determine for me at the right point what point do we see people getting back to work in america. right now we don't have to worry about inflation because it's running less than 2%. 1.4%. so what i'm focused in on is the movement towards putting people back to work. and the efficacy of monetary policy and getting that done. i think we have done a lot. i think we have done too much. it's just not being used. why? uncertainty. who can eliminate? fiscal authorities. >> but we have gotten some certainty in terms of the long-term entitlement issues. i think even europe looks

better. some of it is a little better. the spread is over there. here the deficit is coming down a little bit. >> what uncertainty? are you talking about obama care? regulations. obama care is scary for corporations. >> setting outside the president himself, i have yet to find a business leader, whether it's the biggest of the big, exxon. they can afford anybody they want, to my local dry-cleaner. you can understand what the cost impact will be of this health care program and how it works. >> in large part i agree with you. that's what it is. >> that's not the only thing. we're being inundated with regulation. it's this thick now. here's the thing, joe. we live in a global econnected world. we have a tax spend regulatory system that has built one layer

after another, lobby after lobby after lobby. we have to rebuild the system, make it efficient. make it so people want to put their money here. unleash it. we at the fed, i believe, have done a great deal to assist that process by driving down the cost of money and making it readily abundant. it has sent peep to use the cheap gasoline we have made available. we're not there yet. do it in a modern world, globalized contest. we have that capacity. >> unfortunately, we're not doing that. >> well, if the fiscal authorities were to start doing some things, i think they -- you know, if this administration had its way, we would have more. we're ramping up. >> i'm not going to argue. in the end who patrols the purse

strings? the congress of the united states. they have done a bad job. they need to change the way they incent people to put people back to work in america. i'm an equal opportunity basher. >> more from the dallas fed president richard fisher as this conversation continues right after the break. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price.

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welcome back to "squawk box". see how the futures are setting itself up. dow off 20 points. nasdaq off 7.5. s&p off over 3 points. also making headlines, dell special committee just sent another letter to carl eye can and southeastern asset management. they are asking for more information about the proposed deal with the pc maker. unless it gets the information it requested it won't grant the investor access to some of the things he's been asking for. >> let's get back to our exclusive conversation with richard fisher. you pointed out your biggest concern and a concern ben bernanke shares as well, is it work something is it working getting people back to work? >> well, we also, in addition to data, we have 12 bank presidents

and six other governors who have their own contracts. so you're assessing information. you're doing it analytically from data history. so we have to update that and bring ourselves current stream. in the end, becky, this is a judgmental business. particularly when you have unorthodox monetary policy like we do right now. so it's a constant self-examination. we do it in a cheerful, civil manner. we still like each other after we have had our hammering out sessions every six weeks. >> do you get the sense that more people, more fed presidents are kind of coming around to your line of thinking just in terms of what they're hearing back from the people they talk to on the ground every day? >> well, i can't speak for my leagues. they are speaking for themselves. they made a comment really which i think surprise said people. let me just put it this way, i'm not alone. which is kind of nice.

no one wants to be alone. >> it's kind of nice. that makes it sound like this is a new thing. more people coming your way. >> there's some predictable people like me. my colleague from philadelphia. my colleague from richmond, virginia. but we will see. we're all trying to achieve the same goal, do our jobs. and we have to live under dual mandate given to us by congress. on the one front we are doing well. price stability front. on the other we haven't succeeded. >> but the fed has also added parameters itself. the 6.5% unemployment. i was also concerned that would box you into position and make you stay at something than you would otherwise. >> there's one other factor that's important, financial stability. and i don't believe ben bernanke gets enough credit for this. it took its hand off the wheel from the standpoint of regulatory supervision, those

sort of issues. ben put it squarely in the middle, meaning ben bernanke. this is part of a mainstream plot of what we do. we have to assess what we do and its impact on stability and very importantly what we might do and what that might do to financial stability as well. >> nice what happened in japan and europe. if you're going to have a fire sale on your currency, it's nice to do it first. everyone follows along. suddenly we're at 1.28 again. we got all kinds of covering from those guys now. we were smart. we were first. we were early. right? >> the original approach was crafted by ben bernanke working with the bank of europe. what is interesting about it.

karodo is an old friend. here's the key point about japan. the so-called third arrow, which is what the prime minister has talked about, they know that even this amount of monetary accommodatation will not do the job. we need a third arrow. >> we don't know that but we know that. >> we used to sing my karoda. remember the song my sharona. >> yeah. >> fiscal restructuring that you're talking about, they know they need to do it. >> we worked four years under both prime ministers. i led the u.s. effort. financial structure. electricity distribution, retail

store allows. they have an economy that hasn't adjusted to the world. they know that. and the prime minister has said, unless we get the third, then this won't work. i think it's a great point. same point others have been making here. >> it's less about of government and more about taking the steps it needs -- >> tax policy. >> they have other issues. everything is unique to our own societies. but we all need to become more efficient so we can put people back to work and propel our economy forward. >> thanks for coming. we have another half hour, which is just great. we will take a break real quickly. coming up, merger monday. mini merger monday.

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now the answer to today's aflac question. the answer, vijay singh. it is monday morning. we have news for you. actavis is buying warner chillcott. that's $8.5 billion. when we come back, more from our special guest for the hour dallas federal reserve president and ceo, richard fisher. any comments or questions, e-mail us or follow us on

twitter. still to come, jpmorgan chase annual meeting. a way to separate jamie dimon's ceo role. flying is old hat for business travelers.

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welcome back to "squawk box" right here on cnbc. and our special hour with richard fisher. more from president fisher in a moment. first, let's look at this morning's other headlines. yahoo! striking a deal to buy tumblr for $1 billion. yahoo! hasn't officially announced the deal but it could come as early as today. also, steven cohen has been subpoenaed to testify as the government alleges insider trading according to the "new york times" other executives have also been subpoenaed. nine current employees have been charged or was implicated in this case.

by now you have probably heard one winning ticket was sold over the weekend. you may not have heard of the california woman who thought she won. her numbers matched the winning numbers for the the later lottery. it turns out she bought the ticket an hour after the numbers had already been announced. you think you won. >> you don't think they picked those numbers? >> no. maybe it was an accident. >> maybe. she thought she was in a different time zone. didn't think they would notice. consumer spending is likely to pick up this year. while government spending declines at a faster rate -- anyway, steve liesman joins us. >> i'm impressed.

>> are you happy? >> i'm not happy about it. i'm like this woman. i always have the right numbers an hour after they come out. >> you should have seen me pick odds in the preakness. >> you never bet enough on the winning horse. i'm kind of excited about it. u.s. economic growth 2.4%. take a look at the details. the consumer is picking up 2.3%. that's better than the prior forecast, which was 1.9 in 2013. 5.3 or 6.8. but the government numbers reflect a worse decline than

originally had been anticipated. the number for government spending was originally minus 1%. for 2014 it was minus two. you can see they're counting on more government drag in gdp in the numbers. i believe this is what richard fisher is talking about. let's go to the unemployment forecast. the fourth quarter average, 7.4%. payroll is 185, picking up to 210. prices rising 4% this year. i'm happy about that and next year. residential investment, that's key for housing starts. 15% in both years. up from 15.4. i don't know if i would say useless. maybe they will end up being

right. 1625. for 2013. that's like knowing what it was is picking the wrong number. >> i can't believe we even asked that. >> we do. i know you don't agree with the policy, but what is your expectation of the policy? do you see a tapering by this summer? you know how it works better than anybody. you watched them. >> i did watch them. >> if there's evidence we're moving in a forward direction, the issue is how much you dial back or if you're moving in the wrong direction, do you dial it up? we're doing $85 billion a month. you know all the numbers. it's a question of degree,

adjusting the amount you purchase. >> but my -- >> and we are making progress. >> what's your expectation? >> we have been over this. i'm not going to speak for the chairman. i would have started last meeting. >> but you know how they cooperate. >> i'm one of 19 inputs. >> my question is what is your expectation for policy? >> i would say john, as he articulated, i read, if things continue to improve, he would dial back. not cutting it off. and i'm of the same persuasion. >> there was a line add thad we may go up or we may go down. >> and you focused on the up.

>> well, some people focused on the up. what was the important of adding that line? >> to show we could go either way and adjust the dial. this wasn't a one directional, one dimensional policy. another line that was very firm in there and we're held by fiscal policy. the most outright blunt statement. it's key as well. >> bernanke has repeatedly said that to congress. it doesn't seem to make any difference. >> okay. but the point is if we don't get that, here's the translation. big letters under the screen. we don't have that other cooperative hand. >> but i think the question is, you want congress to get its act together. they all have different ideas

what that would actually entail. if you had your druthers, what's the most important two things the government could do. >> incent business. >> change the tax policy? >> incent business to be competitive in a localized etrade world and to take advantage of the cheap money we have made available and abundant and put the american people to work. >> so stop cutting? >> i'm not a legislator. we haven't had a budget in four and a half years. >> you thought what, short-term impact? >> look, you just gave some numbers. state and locals are doing much better. >> yeah. it seemed to flatten out. >> simple high school economics. c plus i plus g, plus minus or

plus x. g is weak. net because fiscal government has become so intrusive in our society. we have all this uncertainty about it. and the number is going to be negative. cheaper energy. perhaps exports, export natural gas from the gulf area. that hasn't turned out either because the economy is weak. we're running on less legs than before. >> you said dallas mean is 1.4. pce is running 0.97. any concern inflation could run too low? >> there's always concern. that's our nature. but if you look at the numbers here, gasoline price are a vital

component. as those come down, it liberates consumer spending. as long as it's not broad based i'm not going to worry about it. the surprise declined we have seen are helping consumers to spend more elsewhere. >> steve, thank you. >> thanks, steve. >> when we come back, yahoo! buying tumblr for about a billion dollars pending an initial announcement. . right now it looks like things would open weaker. dow down 19 points. s&p off by just over 2.5. are you still sleeping? just wanted to check and make sure that we were on schedule.

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richard fisher, bank of dallas president. continuing the conversation. we haven't talked my favorite topic. and yours too, which is too big to fail. >> great topic. >> have your views evolved? i know you still think they are too big to fail. if they are, how do you break up the banks if that's what you want to do? >> let's get away from the term

break up the banks. i think the the term is leveling the playing field. if you ask harvey it's the rose and fisher program. particularly the process of enter mediating short-term deposits and long-term loans. what i mean by government guarantee is deposit guarantees and access to the federal reserve discount. >> every other part can still exist. but every counterparty would have a specific contract that made it clear that every transaction was at risk. and they would never, ever be bailed out by the united states government. >> dodd/frank is to complicated. i'm advocating simplifying a horribly complex law and

regulation, set of regulations put into place understandable complex because it was in the crews bell of the crisis. we want to simplify it. on top of that you have of course several others suggesting different capital ratios. and not have the assumption which is very implicit. >> you're a fan or not a stphapb. >> they have graduated capital levels. 8% to 15%. i think it will be negotiated. what they are trying to do is eliminate the cost of funding advantage that these larger

institutions have. it's a very complex thing. there are other approaches to do so. we'll just see how that works. what is the ultimate outcome? do the big investment banks ultimately break themselves up because it makes more sense? >> they might. i think some of those wish would sell off portions of their companies. i don't know. they're probably great in the marketplace. i don't want to go into specific names. but one has an extraordinary business merger and acquisition activity. it has enormous value. probably one of the very best in the business. i want to make sure the taxpayer doesn't get stuck with the bill again. it will create worse damage. >> therefore, you think dodd/frank is broken. >> yeah. >> tim geithner comes out and says, or we're wrong. ben bernanke said the same thing. >> bernanke said we still have to deal with too big to fail. dodd/frank doesn't solve the problem. it's what i said.

it's what he said. it's what we all said. again, i think it's well intentioned. >> there's an argument to be made that banks are too big to manage. a big vote whether jamie dimon will be chair and ceo. the fed regulates these organizations. you don't have to speak to it. >> i won't. >> do you think broadly the way they manage and oversight broadly makes sense? >> i think there is a problem with scale and scope. wells is a different structure than jpmorgan. jamie dimon is a personal friend. i don't think that's the issue. the issue is size, scope, and

complexity. a lot are much more complicated than say lehman brothers when they got in serious trouble. even if you had bet regulators in the institutions i don't know if you could understand every single thing that's going on. so i want to simplify it. access to the discount window, the federal reserve only for its originally intended purpose. every other transaction will be ultra clear. the force of law will be they will not be bailed out by the taxpayer. and then the market will sort out who is good and who is not. that's the gut of the proposal. >> we have a lot of stuff to do. there's an excuse for not watching squawk every morning. >> other than the fact that i subconsciously walk. >> you're here in spirit.

when tepper was on i think a lot of people see a balance sheet go from 800 billion to whatever it is now. and they assume it's really going to be impossible to get out of this mess. we can talk about the exit. maybe it will be manageable. maybe it's not. 4 he said once it starts tapering it will be fine. the markets responded positively. when he says, yea, he'll be able to do it, it made me less worried about what the fed has done. you're still worried, though, right? >> first of all, i'm happy you're less worried. >> because you want me to be not worried. >> i hope we have dispelled. there is no qe infinity. instead of forever, what we have done whether we disagree or

agree, the effort has been to help lift the economy and get pack to work without creating inflation. we do theoretically know how we get out of this. the question is can we do that practically? at what point do you reach a go beyond what can easily be done? i think we're there personally or close to there. you were not worried about it. now you're worried again. >> it will be a different team. you might have a different chairman. i'm not going to be there. charlie foster is not going to be there, dennis is not going to be there. i can go through the list. you can have an entirely different team. we have done something. we did it in the best interest we felt for our economy and the

world. we're going to leave it with somebody else. >> let's continue this after a break. >> if that didn't worry you enough. >> we are going to continue this conversation. richard fisher when we come back. plus, in the next hour, jamie dimon's fight to hold on as chairman and ceo at jpmorgan chase. and dan arbess will join us for the remainder of the show. [ penélope ] i found the best cafe in the world.

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federal reserve bank of dallas president. i don't know how optimistic you are that the fiscal guys interact together. let's say they don't. let's say we plod along. what's the lowest number? >> i don't know that. >> you see where i'm going? is it about 6.5%, the new basil level? >> let me just correct one point. i think they will interact together. you have -- let me correct that.

you have to have revenues that offset what you spend. so this forcing stoppage of a continued pattern behavior is a good thing. now the were question is how do they address it? it will enable people and incent people we're the best horse and glue factory. we're on the verge of becoming a thoroughbred. >> say the participation rate doesn't improve. we have the structural thing. let's say 7% is the low. there will be qe infinity. >> no. monetary policy is not working. >> then it's a fake 6.5%.

>> what we have done had very little efficacy. we have to have the fiscal side. my personal feeling and my sense of the drift is it's good and helpful but just didn't do the job. >> do you think we will go to 100 billion? >> it depends on what happened to the economy but i think it is dialing it back or keeping it at its current pace. i'm in favor of dialing it back. i can easily make the argument. i'm sure others at the table will as well. why are we doing this? >> i love these guys but i can't

speak for them. >> you incident made the many may not be there on the other side to ultimately see what happens. we had a big conversation whether bernanke would remain. >> i personally would like to see ben stay. he was given pile of x. i admire him immensely. given what has been learned as practitioner, something that has never been done before. it's a presidential decision. we'll see if it is driven by other generations. i can tell you one thing for certain, it won't be me.

>> are you going into politics? >> hell no. i'm going back to private sector. >> we would love to have you back. thank you so much for joining us. appreciate it. >> thanks a lot. when we come back, we welcome dan arbess for the remainder of the show. the ocean gets warmer.

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>> david tepper said the fed will have to start tapering asset purchases. our guest host says bring the helicopter money. >> get to the chopper. >> daniel arbess will join us for the hour. shareholders split the chairman and ceo roles? what the future holds for jamie dimon. >> and yahoo! signing off on $1.1 billion in tumblr. the third hour of "squawk box" starts right now. ♪ welcome back to "squawk box" here on cnbc.

futures down 16% or so. >> we're playing i'll tumble for you because the tumblr deal is moving forwardment the worst kept secret in several months. being bought for just over $1 billion. hit by heavy selling. at one point down by 2.7%. down 9% from the start of today's trading. a lot of pressure here. today is not the first reason. among some of the big reasons, you have the strength of the dollar. investors gotten more cautious on precious metals because what they have seen the fed doing as well. and people who are having to sell because larger requirements making you sell to get it paid

off. friday, trade data showed commodities started selling gold pretty aggressively. down $8 today to 13.56. jpmorgan will hold its annual shareholder meeting in florida tomorrow. a group of investors proposed splitting the role of chairman and ceo. jamie dimon should hold both jobs. chris whalen thinks they should split the roles. and boeing 787 is returning to service in the united states today. . dreamliner has been grounded because of smoldering batteries. united airlines first 787 flight is scheduled for later this morning from houston to chicago. united says it saw strong tkphapd for the flight.

among the passengers on the flight is phil lebeau. and yahoo! will buy tumblr for $1.1 billion in cash. john, i was just reading the press release with the subheadline to acquire tumblr. promise not to screw it up. per the tpraeplt and our promise not to screw it up they will remain independently operated as a separate business. tell us more. it's been a crazy weekend. this will definitely go down as a defining move. sin vestor reads seems optimistic. stock up 2% premarket. nice vote of confidence considering this will cost a third of yahoo!'s cash. now that this deal has been

done, what is she getting? a fast growing site in the mobile era which yahoo! has not. 23.5 million visitors in april 2012. in march, number 41 with 29.3 million. few have managed that. netflix, 41 to 37. tumblr is in the center of the pack. they provided crucial data on the inside of the web when it was strategically essential. google paid $1.65 billion for youtube. three years later, people will still say google overpaid. no one would say that today.

sometimes the bets take a while to play out. >> before you go, i can see the success of youtube and say that was hard to replicate. when i think of tumblr i think of geo cities. that's something yahoo! bought. allowed you to make web pages. similar in scope. a little bit different but similar. is it fair to compare those two? i think for folks like you and me who aren't deep users, users deeply log in and follow a number of blogs. it's providing a different kind of social data, social read for brands for different concepts. if yahoo! can tap in, they might

be able to get ahead and what products they should be building. >> do we consider this to myspace? i'm a little skeptical. >> no. i think it's definitely a tough road to capitalize on this growth. figure out what's going to make tumblr grow in this era. apply it to other yahoo! products. figure out,000 monday taoeuz tumblr which is the coo's job but do it in a way that doesn't screw it up. a number of things will have to go right. this is a multibet for them. they will have to really take advantage of the tumblr talent to fuel growth not just in that unit but across yahoo! >> john, thank you for that. we will continue the conversation and talk about the fed bond buying program now.

here's what richard fisher told us in the last hour. >> just for clarity, i would start by cutting back, reefing back, in sailor's terms. that market is on its way. >> this hour the fed could do a little more. maybe a lot more. he said bring on the helicopter money. dan arbess. good morning. thank you for being here. >> good morning, andrew. >> i'm very confused. a document things happened that people didn't get to see on the set. i took your op ed talking about helicopter money and handed it to richard fisher. and he sort of did that to me back. so he didn't sort of seem to be agreeing with you. you said you agree with everything he just said. it suggested you wanted to dump more money. >> richard read the headline.

the headline was called the unfinished recovery. this op ed was meant to be a parable of what could happen if congress doesn't step up with fiscal policy. i'm not advocating bring on the helicopter money. what happened if we reach the end of efficacy? what more might be available to the fed to bypass the blog in washington. it is about we don't want to cut taxes and we don't want to make investments in the economy. because doing that will worsen the deficit and debt problem. how do you get more money into

the economy without increasing the debt? this is a mechanism that allows you to do that. >> explain mechanism. >> congress has a qe policy where they print money. they use it to buy bonds from banksment the only way it can get into the economy if banks lend it. borrowers are not able to borrow because of stricter lending standards. so it has a link. we all agree on that. so how do you get money into the economy directly? bypass the credit channel. you have to get the money directly into the economy. the most direct way of doing that is basically to fund it and allow the treasury to disburse it. you would say that's ridiculous.

you're giving congress free money? the idea is they would come up with good initiatives, tax cuts or productive investments. >> but i think that's a big either/or. fisher's point was he would like to see congress do things. not necessarily spend more, though. what he would like to see, if you can change the tax policy, great. >> we agree 100%. congress isn't going to cut taxes because it will worsen the deficit. >> i'm not advocating it. what if it becomes clearer and clearer over time, which it is now that there's a limit to how

much qe can do to impact employment. it has had a good impact on those of us in the financial market. why? because the money that the fed has been printing ends up staying in the banks and trading in the financial sector driving market valuations up. you end up with not only a weak recovery but a skewed recovery that has disproportionate skewed those in the market. equity evaluations are such that you covered all or more of the losses in 2008. $10 trillion, $12 trillion right now. people who own homes, which is their deepest asset, are still under water. the way this looks now, you have se

seen the top seven net worth increase. 93%. net worth still down 4%. >> where are you broadly on the economy? the last time here you were not. the markets have gone higher. >> when i was here we were talking about a fiscal cliff. i said let's just get washington out of the way. there's some very good things happening in the economy, particularly in housing and the energy sector. so we have been very positive both on the economy and markets this year. markets in part because of the aid we're getting from qe and the fed. and the economy because we do think that despite the drag coming from washington.

historically it has helped in recoveries. thanks for the skefteration and other things they are failing to do, for corporate tax policy that unleashes 2 trillion on corporate balance sheets we are seeing it be a drag in this recovery not with standing the drag we are seeing from washington. there's pretty good things going on in the economy. it's possible we get out of this without the need for any more either fiscal policy or fed policy. certainly not helicopter money. >> okay. we will snip in a quick break. you will be here to continue. when we come back, jpmorgan shareholders who are voting tomorrow whether to split the chairman and ceo roles. up next, chris whalen will join us to talk about it.

>> still ahead this morning, we'll be talking markets with tom lee. jpmorgan chief u.s. expect strategist. take a look at shares of campbell soup. fiscal third quarter profit of 62 cents a share. six cents better than the street was expecting. the company raising its yearly forecast. [ male announcer ] here at optionsxpress, our clients really seem to appreciate our powerful, easy-to-use platform.

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welcome back to "squawk box" this morning. take a look at futures. s&p 500 opened off 4 points. dow off 25 points. nasdaq off 10 points. also in the news, chesapeake energy named a new ceo. doug lawler will take over. tomorrow shareholders will vote whether to split the chairman and ceo roles. chris, thanks for being here. >> good morning. >> you think they should be split? tell us why? >> widely held public companies

always have a separate chairman and ceo. it's not protecting small shareholders. it's the worst argument you could make. look at citi. and i think, too, imagine if jamie dimon had a chair monday to go talk to after bloomberg and the wall street journal first started reporting on the whale trade. he would have said let the ir people take care of this. >> does it make a difference in the lead director? >> the difference is whether the board is functional. it has nothing to do with it.

i want them to have someone to report to. i want them to understand their employees and ultimately the board is the governing body. remember, if the shareholders all vote today for a separate chairman the board doesn't have to do anything. it has a duty of care to a corporation, not to the shareholders. >> are you suggesting they vote against or vote to split the roles but then the board decides not to split the roles? >> there's the perception and the reality. they are essentially fiduciaries. the law protects them if they act in a prudent fashion. they can't be sued. there's a balance. much like our republican system politically, right, you didn't

want to have short-term ebbs and flows and sentiment affecting how the answer is. >> there's the practical view. which is argue odd this program, the stack would fall 4% at the end of the day. >> this is about accountability. >> back to the lead directors. if you have a system where you have a lead director and you like it, why is that not better or equal to a chairman. >> i think as a general manner when you have a wildly held public company, they are not significant shareholders, then i would rather have balance so you have another pair of eyes, ears and hands, which is always good. i worked with a team that we're

constantly interacting all day. we are checks and balances on one another. that's what risk management is about. citi is a good example. they help manage the process now. jp, think about where we would be a year and a half ago. >> if you get some jerk chairman who wants to do the wrong thing, the ceo -- >> we have plenty of stories about type a chairman. >>. >> say he had a chairman the entire time. >> he has an excellent lead director. you have to have a great

chairman. if you have a great ceo, he can be both. >> i would like to see more people who could act on an interim basis. >> it's harder to do it the way i'm suggesting. remember, these are bank holding comes. where it does it come from -- >> do you think a chairman would have discovered the london whale project faster than jamie dimon? >> i wish they had gotten the story right. the incomes would have come out in the 10k or 10q. we would have south side, oh, dear, they lost money and kept going. >> you mean he should not have come out publicly? >> no. it was wrong.

they had to come out and correct it. >> you're suggesting they should have waited? >> i think jamie has said as much. >> i often agree with this man. he's a great operator. but he's human. to have another person there to help, i don't see as a negative. >> it's much like what you have at citi right now. the chairman is very actively involved. but you don't have to have that. >> get practical for one second. the current lead director -- >> he's independent. very experienced. >> what's the difference? >> we have a feeding frenzy going on. it's a shame we have to talk about it. angst about big banks.

it's a circus. i hope he stays. he should embrace the separate chairman, get on it and run the company. >> chris, thanks for coming in. >> my pleasure. we'll ask tom lee how far equities are going to climb. and former senator judd gregg getting ready to take on a new gig on capitol hill. he will unveil his next line of work on an impressive resume. he's been a governor, senator, "squawk box" guest host. ♪

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still to come this morning on "squawk", equities continuing their winning streak. the dow climbing 1.6% last week. s&p up 2%. if you think that's good, look at the last four weeks. up next, tom lee, jpmorgan chief u.s. equity strategist. [ penélope ] i found the best cafe in the world.

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woeub back to "squawk box". it is official. yahoo! is buying tumblr for $1.1 billion in cash. per the agreement and our promise not to screw it up, tumblr will remain independently operated. check this out. this is even more different. you can see now panic and freak out. no. keep calm and carry on. >> she tweeted it and it cut her

off at an important place. >> we promise not to screw. >> s&p 500 hit an all-time high. is it possible it could run before a pull back? what sectors will lead the way? if you want to say tom, if you want to say right now, i don't know if i would be adding any more money because we don't have 3% to 5%, you're allowed to say it. people 20% ago are still saying it. phil had a target. are we there? does that mean if we hit the target we start selling or hit the target? >> thanks, joe.

you know, believe it or not i think investors should really seriously consider putting money to work at current levels. our target earlier in late december we salvaged 13. i think people should be considering what they are buying. several that are undervalued are technology, health care, financials. >> 1508. so you were not nearly bullish enough. >> we raised it to 1715. >> say we got to 1715. we need to get there before you know what you're doing? >> i think it depends on how the

underlying is doing. i think consumer spending has been very encouraging. housing and other long-term spending is starting to revive. that's very, very important. >> does the underlying economy right now justify 1715, or is that assuming it continues to improve? >> well, you know, the market is discounting. the market is supporting market prices. without question, i think we're going to look at a much stronger economy. >> we have had rolling corrections along the way. people pointed out some of the early leaders got maybe a little bit rich. now you have gone to some of the ones that maybe haven't moved as

much. are you buying tech stocks now? sick cals rather than utilities or defensive issues? >> that's right. i think between now it's easier to make a case that technology from 13 pe? every one-point increase in the tech pe is almost 27 points in the s&p. so you could actually gets towards 1700 just from tech alone. it includes health care and financials as well. >> is the fed part of the equation if it became clear they were getting close to pulling back a little, would that change your target, or is it just based on the economy now? >> well, what has been very supportive of markets has been the correct of the fed. the idea that they have been providing liquidity. and their qe obviously has been

helping markets. i think one of the things we have to remember is the fed is only going to dial back its asset purchases when there's, you know, very meaningful evidence that the economy is sustaining a much higher level of growth. which, you know if you think bit from an equities perspective, that means the fed's actions aren't going to be necessary. so i think when asset purchases ends, i know there's anxiety. but we have to remember that, you know, the pretext is we don't need asset purchases that time. >> so, tom, this is dan arbess. equities are trading right now 16.2 times this year's earnings. to have it be reasonable next year, we're trading three times, 122.50. where are we going to get earnings growth? we have seen revenues sort of

flattening. i don't see a lot of room for margin improvement. >> well, that's a good question. that's the question investors really keep asking. when they look at the last few quarters it's not exciting to say there's this big earnings story. companies have done a great job allocating capital. it is nearly a 50-year low. it's going to have a huge effect on sick cal profit growth. it will look a lot more like the 90s. so i think what we should start to see -- again, this is going to be a test of the thesis -- is that sick cal profits towards the end of this year should start accelerating. that's really going to power us

towards that -- well, we think 117 next year. closer to 120 next year. >> that makes a lot of sense. consumption has been strong. gdp components have been falling behind have been private investment and government investment, government spending. so if we see a pickup in private investment that will certainly bring i think the recovery to new level. what's going to inspire that? we have $2 trillion plus on corporate balance sheets waiting for certainty from congress. if we don't get that certainty, are people going to say, okay, we give up. we're tired of getting money back to our investors and buybacks and difficult sends. let's just invest it instead? >> what we have to think about is two dynamics that will be pretty powerful forces. the first is, as you mentioned, the balance sheet. household net worth is back to '06 electricals. corporate cash is the highest

almost since industrial american history. it's off the charts. meaning there is massive liquidity on the household sector and corporates. a lot are seriously depreciated. it's a broader theme. >> if your view, they should be splitting the dimon position, chairman and ceo, tom? >> i have no comment. >> you're kidding? i was wondering about that. we didn't have to ask that, did we? >> he works for him. he does. jamie is the boss man.

the right answer would be ridiculous idea to split the chairman and ceo, tom. >> yes. i'm stand anything a glass house, though. coming up, new role for a familiar "squawk" guest. senator judd gregg is here to talk about his new gig on capitol hill as he makes his way to the table. tomorrow, jamie dimon's future will be decided. will the troops rally behind dimon? we'll talk to backe analysts and cfos of major companies about the impact of tomorrow's vote. it all starts tomorrow at 6:00 a.m. eastern. suffers.rvest it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these

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welcome back to "squawk box", everyone. he has been governor of new hampshire. a leading crusader in the campaign to fix the nation's debt. now he is taking on a new role. president and ceo of sifma. judd gregg is here to tell us his new role on capitol hill. thanks for coming in. congratulatio congratulations. >> thanks for having me on. >> you have dodd/frank. all kinds of issues with inve investors confidence. what do you think is the most important issue that you will be

tackling? >> it's pretty simple. we have to reconnect with the american people, the people on main street about the importance of securities and capital markets industry to their jobs and everyday lifestyle. america has a unique advantage. if you're an entrepreneur and you want to create a job or start a business, in the united states you have a pretty good chance of getting reasonably priced capital and credit. it's a very integrated system. that capital and credit is available to you to create the jobs of america because we have this huge industry which basically is integrated which makes it available. and we've got to get back to making it clear to people in america how important it is and how much mesh's prosperity depends on strong capital markets. >> you pointed out inherit on all your statement is there is a distrust of wall street that's prevalent on main street. a lot of that coming from 2008 and what happened in the aftermath. how big a problem do you think it is?

>> i think we're past most of it. most americans i think are getting back to the lifestyle they hope they can have by having a decent job and a prosperous main street. we went through a hard time. we can't succeed unless we have a system that works well. what we have to do is basic live explain to people why it is so important that you have this system of capitalism, of markets, of entrepreneurship. and unfortunately there's been this populist strain that's always run through our society. it always rises when there's hard times. i think we have to talk about why it doesn't work, why you end up cutting your nose to spite your face. basically enforce the fact that prosperity in america is tied to jobs, jobs are tied to getting capital produced. >> richard -- i was about to say, richard, who was just on, and dan both made a point that part of the problem is you have the fed flooding the economy

with money. the markets have risen. the world of finance has done quite well. yet the real economy nos. netly has done the same. so how do you fight that? >> well, i think you lay the groundwork that makes it possible for the economy to recovery effectively when fiscal policy gets the house in order. i think america is on the cusp of a huge economist expansion. it will give us a massive advantage in all sorts of areas we can't even anticipate. but in order for that to be successful, you have to have people to produce the sources of investment to make the expansion you need. that's where capital comes from. that's why the capital markets are so important. you have to have strong security. >> senator, it's an incredibly important undertaking that you will be engaged in. how do you get the word out to

people so they change their understanding and perception of the role in the economy here? >> everywhere. it's going to be like a campaign. maybe that's why they asked me to do this. basically you have to push out in all directions. use media, social media, education. you have to use just the logic of the situation. shows like this are extremely important. >> you have to occupy main street. >> basically you have to go out and educate folks with this style of main street and a strong capital market system. and i think it's an easy sell to be very honest. i think most americans intuitively understand it. they have seen all this push back from this pop list strain. >> judd, part of it is getting the word out and understanding the connection between the two. the other part is what you do

with your position and what kind of things you get involved in. what will you do on dodd/frank? >> well, my view, as you know, is i have deep reservations about a lot of it. the purposes were appropriate. too big to fail is inexcusable. tax dollars should not be at risk. it is attracting credit on main street. you can't have an economic expansion. we are getting regulatory excess is the term i use. what we hope to do is basically work with the regulators who have been given a pretty big charge of a pretty tough charge to try get it right. >> i was just going to ask you, are you getting behind fisher's plan around too big to fail? most have been pushing back on that? >> well, i don't think that's the words to be honest with you. i think the better approach is the approach which people like

the senator has been talking about which is where you basically create on the too big to fail a bankruptcy option rather than have some sort of arbitrary capital requirements which may attract credit significantly in this country. right now i think you're seeing that many of our banks -- most of our banks, and big ones, are very well capitalized especially compared to the european banks. and i think this jpmorgan exercise showed that. everybody is talking the down side. the good side is it didn't effect jpmorgan or the markets. there are no counterparties. and the company continued to make money and the stock went up. it shows that is very well capitalized. >> so you think that role does not need to be split? >> i'm speaking personally as a stockholder. small, small stockholder. absolutely. why take one of the most

talented people in the country who runs one of the best banks in the country, one of the banks a that's doing the most to make our country productive and just stick a stick in his eye for no on parent reason other than business political correctness. next you suggest we split the president's job between, you know, the presidency and the commander in chief? there are certain companies where the ceo is such a dominant figure that the jobs should be mixed, should be together. >> seems like just pushing it back. if the chairman is going to be the boss, then split his job. it's just one step removed. do you have an answer? >> what do you mean do i have an answer? >> you posed the question. give him your answer for why we need to do this? >> i'm with him. >> all right. okay. all right. >> you can't do it ad hoc.

you either believe this is good principle of governance or you don't. if it's not part of the corporate governance chiller, why impose it here? >> i don't think it's the issue. the issue issue is there are ce times when it works and certain times when it doesn't work. >> think it's up to the board and remember, the purpose here is to make the stockholders better off, right? >> i buy that. >> and the mortgage is well for a stockholder. >> if there is a strong director, fine. if there is no strong direct o a chairman. >> ythank you for coming in. >> coming up, cramer is in gym. we'll get you ready for the trading day ahead. we'll get you down to the new york stock exchange next. ♪

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welcome back. jim cramer joins us now from the new york stock exchange. jim, it's great to see you this morning. give us your taker, if you could, on yahoo! , tumbler, 1.1 million and $13 million in revenue. this is basically one of those situations when you're trying to get the demo and you need 18 to

34. if you will succeed with advertisers so you'll pay anything to get those because right now yahoo is not that relevant with that age group and suddenly you're relevant. the fact that it doesn't generate revenue now means nothing because if they can pull this off and integrate it it, they can get ford motor to come in and that's what they have to do. >> you think this is a good idea? >> yeah. i actually do because i think yahoo is a company that's desperate to try to make an imprint and be part of the firmament now, and it makes it so that we talk about them, makes it so that they have a pulse is a positive right now. mr. cramer, he has a question for you. >> it's not a question. i want to basically agree with what the issue is saying. the issue is not what the valuation is on the arc session. i remember when facebook did instagram mark zuckerberg was crazy, but it's turned out to be

perfect. >> mobile. they have 180 million users and suddenly we'll talk about this as if it is a company that's tv of the future and that means 18 to 34 and that means mcdonald's, and budweiser. i get that. >> jim, you're very smart, but in terms of raw looks, quintanilla, you don't do well in a two-shot with him. don't you have kelly evans coming now, too? many you can just do audio or radio or something? i have the face made for radio, but she has the distinct tv advantage and we can go head to head without people being completely turned off by it. >> anyway, that starts at 9, right? post 9? >> kelly is here and it's very, very exciting and a lot of new merge and also she may be a little antagonistic to some of my view which is is absolutely

fantastic. >> jim cramer, we will see you and kelly evans and carl and david in just a couple of minutes. >> now there is a tease for you. when we come back, our guest host has been dan arvis from pirel on partners, we'll give him the last word. ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves.

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let's get back to daniel arvis for the last word. if you were king for a day, what's the first thing that we should do to get the companies onboard here do you think? >> i would love to be king for a day. to get the companies onboard and start spending money, we need to have congress make a few simple decisions on the tax and investment regulatory regime. congress has been paralyzed, really. after a great start in 2009 which really the government as a whole deserves all of the credit for rescuing the economy from the abyss. congress has been basically gridlocked trying to figure out whether to -- >> we need someone to lead. >> we need political leadership on both sides, but we need some clarity on what we can do because the problem is you can't blow support into the economy and suck austerity out of it,

that's what the gridlock is all about. >> i don't think you actually blow. >> good things are going on in the economy --? i don't think that helps anyway. >> washington needs to get out of the way and if they don't, there's one more tool that the fed has beyond regular qe and after that we're kind of done, but i don't think we'll need it. >> thank you very much, that does it for us today, right now it's time for "squawk on the street." ♪ ♪ there's some tumbling going on today. good morning, welcome to "squawk on the street." i'm carl quintanilla and david faber live at the new york stock exchange. interesting monday setting up and we'll have an interesting co-host with kelly evans. we look at the s&p up 17 in the past 21 sessions, of course, almost half of the s&p hit new all-time highs or new