the benchmark index plummeted more than 7%. trading has been volatile ever since that. the nikkei is now down a total of 14% since last thursday's plunge. among the reasons that were cited for the sell-off this time around, a strengthening yen and the volatile japanese bond yields. we'll have more from kaori enjoji in just a moment. but this is key because this is what shook things up yesterday. there were concerns over the close in tokyo yesterday. as for the early trading in europe this morning, you're going to see right now at least there are some moderate advances. and i mean very moderate. you're talking up only about 5 points in london. a gain of 16 points in france and a gain of 15 points in germany. here at home, the dow industrials right now coming off their worst day in four weeks. it was the climb of triple digits yesterday for the dow and it was all sparked by concerns of what was going to happen today in tokyo because there were aftermarket concerns there. we do have a number of key

economic releases coming out today. at 8:30 eastern time, we get weekly jobless claims plus we get a second read on first quarter gdp. and then at 10:00 a.m., pending home sales. weekly jobless claims are expected to rise by 1,000 to 341,000. jgp is expected to be revised lower to 2.4%. and pending home sales are forecast to krez by 1.5%. andrew. >> tlanks, becky. we have a number of corporate stories to talk about this morning including dish topping rival's sprint bid for clearwire. berkshire hathway is buying nv energy for $5.6 billion. we've got developments in the global battle for smithfield. just crossing the tape before, general petraeus is joining kkr. before we do that, let's head over to tokyo and check in with kaori enjoji.

>> good morning, ross. we saw another very steep sell-off in tokyo equities today, very similar pattern to what we saw a week ago. the market here in tokyo now trading at its lowest level in about four weeks. there hasn't been anything fundamental that drove the market lower. a lot of it is technically different. futures linked to selling, coinciding in the drop with the dollar/yen that accelerated towards the close in the afternoon session here. the bank of japan governor, mr. kuroda, seemed to be saying the right things in the morning. he was saying that he was going to do everything he can to calm the jitteriness in the bond markets. but that really wasn't enough. so in the afternoon, the bank of japan stepped up to the plate and they said they're going to buy more bonds more frequently. topping up the program that they announced in early april, which is eight times a month of pure chase of jgbs, they're going to up that to ten times a month right now. what's happening right now is this big quantitiry that the bank of japan is in. on the one hand, they're trying to push up inflation to 2%, yet

at the same time they want to keep the yields on the jgb market from rising further. although i'm hearing that most of it is technical today, there is a lot of talk among retail investors, of course, about how much deeper this down turn is going to be. so i think there's going to be a lot of pressure, even more pressure on shinzo abe who is the prime minister who is set to announce next week, finally, the third part of his regrowth strategy, which is the structure reforms, the deregulation that all investors have been hoping to hear about. >> okay. kaori, thank you for that report. i don't know, what do you think is going to happen here? >> honestly? >> 14%. >> honestly, i think -- i looked at what today's date was because i wanted to go back a week. i think the 23rd, which was the day after we got those minutes and japan, you saw what happened. if you looked at the ten-year

since then, yesterday we got up to 2.3%. you look at the way the market is acting, it's the second derivative of the derivative. just the idea that we went from not adding the 85 billion but went to maybe eventually tapering, i think that might be -- >> do you think this is the move? >> i think it might be the 5% to 10%. >> moment? >> who cares what i think. but the way the stocks are acting in japan, the way the ten-year is acting, even just in the media, the -- >> the attention yesterday. >> to taper. even if it's not until september, but it's just -- we're thinking about it, which is amazing to me because when we did the 85 billion, i couldn't believe they were doing that. >> but it doesn't surprise me. you don't want to be the last one out the door. they're looking at thinking about potentially moving at some point. you have to start looking for the -- >> the japanese market represented the kind of -- when you're looking for a bubble that we're worried about maybe coming here with equities, we never got

that here. but the japanese, they doubled, basically, in eight months or whatever. or close to it. and that represented maybe some of the -- some of the -- where all that money went, some of the excess, some of the risk trade. >> i didn't like the way it looked yesterday much. did you? i don't know. we'll see. and then you get up to 2-3. if we touch 2-5, maybe are going to say maybe i'll just stand on the side. i think it's a good thing that we've tapered. i think it's a good thing that bonds go back up you saw what jim paulson said. he thinks this looks an awful lot like the 80s. and when you finally -- what did he is -- throw off the ghost of recession and kind of get back in, investors come back in. >> i thought the last time he was on, he tapered a little. >> i was tapering himself. >> not really too much, though.

>> he seemed more bullish. >> he said 1700 on the s&p was what he thought we could do and we were only 40 or 50 points from there, but he thought that's where we would end. and i said just holding on to these gains is something and going up another 40 or so. you can't assume that the s&p doesn't go back to 1550 or something. if you stay at 1700, then -- -- so we'll see. may 23rd. that's right. >> yep. >> okay. let's talk about. >> corporate stories that we were talking about before. some u.s. policies in addition to the set here. the hearing we had at the set yesterday -- >> politicians, we're going to pauk talk about that. >> raising concerns about china's shuanghui buying smithfield foods. the deal will face scrutiny by the committee on foreign investment in the united states and joe kernen. the government panel assessing -- >> big eyebrow raising. >> one congresswoman from

connecticut says the deal raises alarms by food safety. >> did you h. 16,000 deg the piad pigs in a r. >> there are issues. one is -- >> exporting. >> they're taking all -- you know what? pork. chris rock says i would eat a pig's butt if they cook it right, and i do, too. i eat anything from -- >> you probably have. >> i have eaten and no, you can't have -- can we go buy something over there outright in china? >> not outright. >> no. and what do they have not? >> look at you, you protectionist. >> what do they always want? they want to know how we do what we do with pork. >> i'm okay if they want to do their own thing with pork. >> they've done their own thing with pork. don't eat it.

but we know wa to do with pork. and i don't want them having that pork technology. >> you don't want them making ribs the way we make ribs? >> montgomery inn, exactly. honestly, i don't know how i feel. i have to think about this. i was just kidding. but they're hacking us, too. they're mean. they're not going to beat us militarily. they're going to beat us with pork. >> they're saying that we hacked them. they're saying that we -- >> but that's not true. they're lying. they hack us. they hack us, they're mean to us. >> what about pirates? >> piracy. >> what about all the money? >> oh, they're doing that for us? they're not doing that for us. they have huge reserves. we give them the money first to invest back with us by buying all these cheap stuff. but i'm not buying cheap pork. i was right about -- they went after natural resources,

australia, all these places. >> you gave me grief about my no exporting. >> you're right. but not pigs. not pork. pork is when you start speaking to me. do not take any bacon. >> those arbitrage out there hoping for a second bidder, there may be one, but this one won't be it. thailand's cp foods says it had considered bidding, but failed to and declining to put moore information. >> did you see the comment some smithfield? lots of on people love it. >> but what did they mean, they appreciate what we have or they will save us. >> oh, no, i thought it was love us as in -- >> somebody else will want us for a higher price. >> there is a 0-day go shop so somebody else can come in and buy it if they want to. >> it's going to be interesting

is and watch the demagoging. i thought it was something else, i read another congressman saying it needed to be looked at carefully. >> there's been a couple. has cantor come out with -- >> no, i haven't seen the other guys. your paper immediately -- >> got on the band wagon. >> a little protectionism. the journal totally. >> apparently it's not on cantor's -- >> thank you. >> the colored paper, they're worse than your paper. with the seeping euro influence of the ft. but it will face scrutiny because it may be difficult for opponents to argue the deal should be blocked on anti-trust grounds. it could be blocked on pork grounds. we are not exporting tax or guns or cyber security. these are pork chops. yeah, exactly. that's the point. we're exporting all of our pork chops.

>> we've got a couple of other -- >> we need to move on. this better be good to move on from this. crazy charlie ergen. >> you called him crazy. yea call him crazy. >> dish network is trying to get an interview or something? >> i like charlie. >> he is crazy. >> in a good way. dish network raised its buyout offer for clearwire by $4.40 a share. take a look at this doc. sprint increased its offer to see 3.40 per share last week under pressure from activist shareholders. remember, of course, that dish is locked in a big, an even bigger battle with japan's softbank to acquire sprint. >> motorola. do you remember those guys? >> i do. >> do you know who opens them? >> i forgot. >> google. >> i forgot that because

otherwise i don't know if i would think we need to mention this, but now we do. >> motorola. >> i keep asking for a new one that they're not respond to go my e-mails. >> it's going to be made in the u.s. google bought the company last week. the cell phone phio near is going to open a texas manufacturing plan. this is good. it will create 2,000 new jobs. it will produce the first smartphone ever assembled in the united states and it's going to be called the moto x. >> >> rock on with your bad self-. >> 2,000 jobs in texas for the ones we lose in pork. berk share hathaway is

buying nevada gas. about 5.6 billion. i hope you're et geting excited this weekend, andrew. there's lots of deals. 23% premium to nvs's closing price. both companies' boards have approved the deal. >> buffett said in the release, this is something that is betting on a housing situation in las vegas. and tesla is tripling the size of its elon musk formation. he says by year en, tesla owners will be able to drive from las vegas los angeles to new york. every once in a while, i see one of these pads and you immediately notice it. the shape is that different and it's really -- they're beautiful cars. they sneak up on you, too. >> we've talked about the futures, how we are looking at

things that are weaker today. the energy complex has been weak. crude had its worst day and settled at the lowest level since may 1st. the volatility index jumped to a five-week high. louisa bojesen is standing by in london. louisa, good morning. >> but, becky, how could i possibly compete with pork? i don't know how. i've already given up. we need to talk, though, about these market moves that we've seen. and it's so interesting to note that even with the nikkei correction of more than 5% in the overniept market trade, following on from that 757% correction that we saw just a week ago, we still are willing to come in a day after and buy up here in europe, despite the fact that the european data remains so weak and a time of the european growth process spepths are looking very, very weak, as well. our main european markets, though, hanging on to slight gains. we started off in negative

territory following on from those big asian corrects. but we've managed to see a little bit of buying here across the board. and it was worth noting, as, that the flows coming from the u.s. as well as from asia for the first time in many months is pointing to buying into european equities. so despite all of this uncertainty, there still is a willingness to buy into european equities on the dip. not to say that everything is good, but that's what we're seeing. in terms of the sectors, we're still banks trading higher. insurance is trading higher. yesterday was a very negative close for us when we spoke on the close last night. so a bit of flip-flopping from wa we've seen then. when it comes to the bond markets, we had a bond market earlier on worth mentioning italy sold 277 billion worth of euros. they sold 3 billion worth of 2023 btps also in that planned

range. so they're managing to get their debt off the table despite the fact, again, that beer looking at this weakness. but buying in europe this morning, oink, oink. >> wow. wow. >> all right, louisa. >> i prefer a nice sea bass with some olive oil on. doesn't beat it. salt and pepper and the french mediterranean. >> you're painting a pretty picture, but there are those of us here who do hold dear to the pork. i see the pictures they're running on a bacon sandwich. that looks really good. >> i had one saturday. i do the low carb bread with a bagel. >> pork, it's what's for dirp. >> but this new story, i'm sorry, andrew, but some mergers, clear wire, i don't disht doesn't speak to me. but when you're talking pork -- >> it is a big deal.

>> this is something we can talk been with right? >> i have to admit, i was literally planning my dinner around the video that we've been running. >> have you ever had pork tenderloin? >> yeah. i made a great pork tinder loin. >> people buy pigs and have them as pets. they're clean, you know? >> i'm not so worried about them changing things. but -- >> they have 3 billion people. the billion people that love pork. what's going to be left? >> the snout. >> poshgs sales are up just as we're talking about it. >> knuckle. >> you can keep that park. washington news, president obama is preparing to nominate former bush administration official jim comey to head the fbi. comey was general council at bridge water associates from 2010 until earlier this year. >> this guy is awesome. kudos to the president for

picking comey. he used to -- he was a friend of cnbc ten years ago whether he was in the justice department and spoke at some of our conferences. he's like a giant. he's like 6'7" or something like that. really great, smart, friendly. i mean, i'm ecstatic for him. maybe we'll get him on. i'm trying. fbi director, that's a pretty important job. you know what i mean? i know we don't have to worry about terrorists any more now that we did the war on terror. but i would like someone watching closely. there's something called wmds that maybe iraq didn't have them, but if that network were to ever -- do we still nood to do that? >> i think we do. >> they will use that on -- >> but it's like you -- >> i don't know. you represent the notion.

i need someone to argue with. >> today the obama administration is expected to announce its mortgage release plan will be extended for two more years. the home affordable modification program was due to expire at the end of the year. sales of bank-owned homes fell sharply in the first quarter. shaels of homes already in the foreclosure process dropped by 20%. and the 20th consecutive -- was followed by a ragged wednesday, but the dow managed to close off the lows a little bit. it got back to single digits examine closed down. let's talk more about the markets and the economy with steven rushudo, chief economist at myself hue securities and ryan detrich, from technical investment research. all right. i want to start with you, steven, and just -- we were talking about tapering again. when does tapering happen in your view? >> i think it's going to happen later than the market is

currently anticipating. i think the problem is that basically you've got to be careful about declaring accomplish. the fed has been looking for the exit doors every time they step forward. the market is still fundamentally not strong enough to deal with substantially higher ex rts po. but actually going out and beginning the process of tapering, i think it's one of the things that's going to happen well after the market has moved forward. >> do you think interest rates would go up immediately if they said weerp going to 50 billion or 40 billion? >> no. i think we will be at those higher level of interest rates. >> the markets have already moved. >> yes. >> and they haven't yet, but they're starting to. >> the problem is if you go above 2.25 above tresh rivers, mortgage extension starts to

take place in people's portfolios. that will be something along the lines of 2 billion worth of treasuries hindering the market sale. that's going to be a problem for the marketplace. that's why we're having such difficulties pushing up to higher levels. we have attempted to do this several times and failed. if we go back up to 3%, i think this economy stumbles again. >> hey, ryan, in terms of the stock market, you saw what happened yesterday. i still maintain that, you know, a stronger economy and less fed would be positive long-term for equities, but do you think we're starting -- the market is starting to sense that maybe the fed won't be quite as accommodative? are you worried about this being the long awaited pause that refreshes for stocks? >> i'm not so sure i'm so worried about the fed tapering as much as a lot of other people. what worried me is you look at the russell 2,000, up at the nice big round 1,000 level here. historically speaking, the dow hit 1,000 in 1966.

it took 16 years to go over that. so it's a big psychological level. when you see that with small caps, had been leadership, june, i'm not a big buyer of sell in may and go away. may has been higher on average. june t month you want to be avoiding. 20 years, it's one of the worst. historically, pullback maybe potentially in june. the 1,000 level in the russell 2,000. that's the key area for me and maybe a little june swoon. nothing major. could be actually positive. >> that's interesting. so those are two things that i don't think anyone has ever mentioned. >> good. >> and june can be a bad month and it's -- we're close to june. may 30th, right? >> that's right. >> we're very close. >> so we've got one more, 31 days in may. okay. worst case, do you think we get

go to correction territory or 5% or something like that? >> we do a lot of studies in what we've seen this year with the strength and the pullback from 1995 to 1954. 1995, the biggest pullback we saw was 3%. >> how much? >> 3%. that happened in december. if you're waiting for a pullback, you had to bait a wile. '5344 was the biggest pullback, around december or so. yes, we could see a 5% to 6% pullback. i just think there's so much strength out there still that historically speaking, yeah, we'll see pullbacks, of course, but nothing major in my opinion. >> you do a lot of technical stuff. we've had your guys on forever. do you have a feeling for the bond market or the ten-year? any significant things happening there? what are the numbers we need to watch? >> well, you know, when you talk about the bond market, we've all seen this before when you look at bond inflows. we talk about what is a crowded

trade versus uncrowded trade. we still think equity res tun crowded trade that's out there and bonds are a very, very crowded trade. that doesn't mean they have to crash, we don't think, but from that sentiment point of view, it will be in things everyone isn't in and bonds feel heavy to us in our opinion. and the whole great rotation thing, i'm not really into that. eventually it probably will and that could be a major positive going forward. bonds is our opinion here. >> steven, one thing you said that i was thinking about, and that is that the jury is still out on the economy. it seems like we've paid out dues. are you sure we aren't in a position with -- and with the sequest sequester, we're still going 2.5%. >> again, the question is has the sequester hit in the 1.5% versus 2% environment?

the answer is no. you had a tax increase on individuals who had an opportunity to flex out their spending. i don't think that's part of the problem that's taking place. i think the problem for the fed is they're looking at this and saying, we've done exactly what you think. the economy can't handle higher treasury rates. you get rates up to 3%, have morning rates up about 4.5%. that's enough to create enough environment to get the housing market to continue to move forward. you have to be careful about getting to the edge of the doors too quickly before things have gotten into gear. >> man, i would think that the fed went to zero how long ago? >> we're at this for five years. >> and then we went to qe1 is. and then we went to qe2. then we went to qe3. and we're still worried about them getting out too early? >> you have to be. look at japan. how many times has japan gone through qe? how many times have they backed away? this is a credit cycle. this is not a normal business

cycle. and this is the worst credit cycle we have seen since the great depression. so looking at and it saying, gee, we're out of it, that's a tough thing to do. if you make a mistake in here, you can create an even bigger problem for them. if you damage expectations at this point, you pull away too quickly, people pull back into their shells, you wind up with a situation that could drag on. >> the market has doubled since the lows of the crisis. sgliets back up to writ should be. the economy is back up to where it was on the recession level, prerecession level. earnings are well above where they were at the prerecession level. getting the equity market back up to its prerecession level is not surprising. >> but that's not a lead indicator of the economy? >> that's a lag to the economy. the economy was well back to its precrisis level well before the equity market, about six to nine months before. the equity market is lagging. >> just to will you go, ryan, what's the ultimate high that you see on the s&p for the next two years, say?

>> next two years, up 1800, 1850. historically speaking, 10% from here makes a lot of sense. the first five months like we have been this year, historically speaking it's happened sineven times since 19. it's possible we can keep going here. where is your office there? we have to go, but where is your office? >> blue ash, ohio. >> and you know what one of the nicknames for cincinnati is, right? >> i've probably heard it. what's that? >> pork-opolis. that's right. john mr orell just bought out that deal. >> i know my pork. think about montana gomry inn. think about what happens if the chinese don't let us have any -- >> you have a connoisseur, a man of fine tastes. >> you have to mobilize the people of cincinnati to -- i don't know. just remember that. beef ribs aren't nearly as good, are they?

>> in no. porkopolis. queen city, a lot of different nicknames. >> why porkopolis? >> i don't know. a lot of pork, a lot of germans. it's kosher. coming up, what do former army general david petraeus and private equity have in common? we have the answer when we return. if you were paying attention, you might already know that one. first, as we head to break, take a look at yesterday's winners and losers. we're back in just a second. hey, what's going on here? do you want the long or the short answer? long i guess. chevy is having a great-deal- on-the-2013-silverado- but-you-better-hurry- because-we-don't-want-to-see- a-grown-man-cry-spectacular!

what's the short answer? nice. [ male announcer ] the chevy memorial day sale. during the chevy memorial day sale, current chevy owners trade up to this 2013 chevy silverado all-star edition with a total value of $9,250. plus get america's best pickup coverage including 2 years of scheduled maintenance.

joo good movrng. welcome back to "squawk box." i'm andrew ross sorkin along with becky quick and joe kernen. take a look at the futures. dow looks like it would open up about six points. nasdaq and s&p marginally up.

making headlines this morning, former u.s. army general david petraeus is joining kkr. he resigned last year at chief. he's going to be called the chairman of global senate, them them with political issues and help their clients and investors. anyway, he landed on his feet. >> should be interesting. let's get the national weather channel forecast from weather channel's jen carfagno. >> hey, guys, good morning. we're in the middle of a severe weather outbreak. yesterday in the northeast, nasty storms with wind damage. no doubts, some folks may be waking up without power this morning. today, the focus is back here in the middle of the country from minnesota down through portions of kansas and oklahoma, too, in it again. this storm system is the same one that will stay with us throughout the weekend. but it pass all weekend to make it through eastern seaboard. sundays and it's still not in new york city. monday of next week were here we

go. we're looking at a tornado risk again today in oklahoma, kansas and missouri. actually with all the way up into iowa. tomorrow, as well. the risk extends right up here through central portions of the country into missouri. into illinois. four out of ten on the tore conout up into western illinois. and then a threat for severe weather on saturday now gets into the ohio valley, into the portions of the northeast including western new york and northwestern pennsylvania. the other issue to track is this major temperature change here in the northeast. temperatures well above average. 15 to nearly 20 degrees above average in the northeast. so this heat wave, a couple of days above 90. it's going to last. start, we're right up there in the mid to supper 80s. d.c., we're going to hang on to those '90s throughout the

weekend. and then we've got the rain in florida that has golfers stuck inside all week long. this pattern is also going to continue through the next couple of days. we've got high pressure risks off the coast. low pressure, all of it combining to give us rain in florida. so a couple more days of showers and storms here in central and southern florida. we'll send it back over to you the. >> okay, jen, appreciate it. thank you very much. looking at a you know, business factor is pretty good. 80% of meat consumption in china is pork. andrew, we have an spr -- >> strategic pa toll yumm reserve? >> strategic pork reserve in china that has existed since 20307. >> there was a "new york times"

story from 2011. >> they they horde pork. >> they're trying to corner the pork market. >> do you like pork? >> only when it's crispy. every american needs to know those facts. it has live hogs. >> how many? how many do they have? >> back in 2011, it had 200,000 of metric tons of pooshg that is was released on to the market because of pork inflation. >> half of the world's pigs, about 476 million, recognize in chi china. >> i bet you they are breeding more.

>> you're starting to get to me, joe. i wasn't worried until i heard about this national pork reserve. >> do you like to wrap your shrink with bacon? >> i do. >> isn't there kosher bacon? >> i don't know. i don't think there's kosher bacon. >> turkey bacon. >> no, no, no. >> there's turkey chili. >> that would be way off the -- >> not good. >> okay. and while the rest of the world pork prices have gone down over the past ten years, pork prices have doubled in the past decade, even despite the recent decline in pork prices. so, you know, just letting you know a few of these things if you're ready to just sign on the dotted line, which you appear to be on this whole thing. >> in one month, pork prices increased by 17% in china single handedly. coming up, big opportunities, how numbers would help conserve energy.

and then later, the conversation about pork is continuing. chief international correspondent michelle caruso cabrera will join us with the global perspective on this story. stay tuned. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪

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. another one? traders love our trading patterns, now with options patterns. what's not to love? they see what others are trading -- like the day's top 10 options trades by volume -- and get ideas! yea i have an idea: how about trading that in for a salad? [ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card

when you call 1-888-280-0154 now. optionsxpress by charles schwab.

next up, the data economy from big oil to the power grid. how the energy sector is getting a profit power boost from big data. we'll be right back. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. ♪

becoming part of the global phenomenon we call the internet of everything. ♪ trees will talk to networks will talk to scientists about climate change. cars will talk to road sensors will talk to stoplights about traffic efficiency. the ambulance will talk to patient records will talk to doctors about saving lives. it's going to be amazing. and exciting. and maybe, most remarkably, not that far away. the next big thing? we're going to wake the world up. ♪ and watch, with eyes wide, as it gets to work. ♪ cisco. tomorrow starts here. that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low. it's guidance on your terms, not ours.

e-trade. less for us. more for you.

welcome back, everybody. our next two guests are using big data to reduce the risks and try and build the bottom lines across the energy sector. peter duncan is the founder and ceo of micro-seismic. also from houston, andrew tang, vice president of palo alto based grid is one of a handful applying data to the power grid. gentlemen, thank you both for joining us. why don't we start out talking about micro-semic. you're trying to help with the eyes and the ears. my dad is a geologist who was looking for exploration a long time. you're doing things to help make their jobs easier? >> out of their reservoir using a technology called microcease mick. if your dad is a geologist, he probably heard him talk about conventional seismic. >> i used to color those maps. >> microseismic is to

conventional seismic as to a stethoscope is to an ultrasound. very sensitive. we gather data, listen to all the squishy sounds coming out of the reservoir. from those squishy sounds, we can tell tension nears exactly what they're doing in the subsurface, particularly with hydro frack monitoring. we hear the snap crackle pop as it breaks, we can tell them where they're going to drain the hydro carbons and more importantly where they're not going to get the hydro carbons. >> you've got days from the wildcat where people are drilling willy-nilly. how much more accurate can you make it? and how much more likely are you to strike oil or natural gas or some sort of natural resource using this technology than you would have been before? >> well, we're not so much in the business of finding the oil and gas as we are in once they've found it helping them get more out of it.

the technology we bring to bear can have a huge impact on what you're going to get out of each and every well and how much you're going to spend to get that, those hydro carbons. for instance, one of our clients told us by using microseismic watering, they were able to get an extra billion cubic feet of gas out of each and every well. at $4, that's $4 million per well extra as a result of using this technology. >> wow. that's pretty incredible. tell us about auto grid and how you're using things to help the utilities? >> perfect. thank you. at auto grid, we collect, organize and analyze all the data that's coming out of this smart grid and then we use big data techniques and cloud computing to turn that data into the cheapest, cleanest source of electricity. we like to think of ourselves as a second generation smart group company. the patch first year, the electric utility industry has been spent deploying smart

meters and other grid technology toes be able to degrade and develop better information of how power is being distributed along the entire grid. the first generation was all about the metering and other sensor technologies. the second generation, which is where we are placed, is really good taking the data that's coming out of all this instrumentation along the grid and turning it into actionable intelligence. and that means what? telling the utility when they need to be producing more energy, when they need to be producing less? how does it help make them more efficient? >> it's a combination of both telling them when they need to produce more or lessty, when they need to produce less. more importantly, energy is adjusting time industry. when we turn on the light switch in a particular room, the electric utility has to actually be able to power up the grid and put on that incremental amount of energy on to the grid. that is the way the industry has

operated since its existence. it has been driven completely by customers and what their demand is. but as we move forward into this brave, new world, we have an ability to actually more accurately or more carefully balance supply with demand. and by doing little things along the way and having better data to understand where your power is actually flowing, you can optimize the overall grid and produce less energy to supply the same demand. >> andrew, i remember about -- oh, i guess seven or eight years ago when a lot of the morning shows started going earlier, part of what they were citing wab people getting up earlier in the morning, using water earlier in the morning, using electricity earlier in the morning. does that trend still stand? >> that's exactly right. it is -- in our industry, we have something that we call the low curve and it basically peaks in the early afternoon because tease when most people are at work and air-conditioners in the summertime are typically at full load. the challenge for us is that that difference between offpeak and peak is -- can be as much as

or greater than two times. in other words, two times more energy is required in the peak period than in the off peak. the challenge in this industry is that you have to build a power plant or have a stand by power plant on demand and ready to go to supply that peak energy. results in a very inefficient use of the energy system. so, for example, in california, about 10% of the power plants that are in existence in california only operate 51 hours a year. >> okay. >> so if you think about it, that would be the equivalent of having -- let's say you had a 100 person company and you took your workers and asked them to work for two days and gave them 360 days of vacation a year. >> not a bad trade. thank you for joining us. >> bacon is never kosher. >> what about turkey bacon? >> i'll tell you about it in a second. coming up, two entrepreneurs, how they're selling high-end dress shirts

for a fraction of the normal cost. ♪ [ 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 ] it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors. see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t.

that's it. it was a number. [ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breast-feeding, should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up.

androgel 1.62%.

netflix is about being able to watch when you want. >> concerned about the entitlement explosion, the bankruptcy of these programs. and i'm worried if we keep putting our head in the sapped, then it will be austerity. we're trying to preempt and prevent austerity. >> we're going to have to start thinking about ways of creating a mandatory savings policy. i'm sounding the alarm today because i don't think anyone else is. >> welcome back to "squawk box". let's now turn to the business of luxury brands somehow laughed at adding a luxury men's wear line in the recession.

we're joined by the cofounders, paul watson and paul tribble. you never thought about calling your company paul and paul? >> there was a discussion at one point. our first three employees were paul. so that was a thought. >> i keep running into people on wall street and they're wearing your shirt. tell us, what is different, besides the way -- they look like very high end. but they're cheaper. >> absolutely. probably a couple things. quality, fit, innovation. we made small choices that are revolutionary. we lowered this button, by the way. >> i'm wearing one. this was a gift last year. if you take your tie off, it about the ton -- the second button is just a little lower. you don't have to do the two

buttons. perfect. >> that's actually really smart. i will say that is a challenge. >> it's a minor detail. that's been great. the quality. italian fabrics. made europe. >> where is the shirt made? >> in europe. >> i saw poland on one of my shirts. >> it's true. that is in europe. >> is that how you keep costs down? >> we started in an italian factory. it's italian fabric. we do most of our production in poland. it's great. the cost is still fairly high. it's a great factory started by i tan yanns. run by germans. and six generations polish seam stresses. >> we went to business school in 2007. most people were getting into finance. graduated a european program the

day before lehman brothers went down. we lined up job. quickly we were unemployed with 25,000 other people saying, what's next? if jobs aren't there, what would you love to do? for us it was shirts. >> joe has a collar -- what is that collar called? >> that's a point collar. >> i don't wear a jacket. >> what's popular? >> the spread is getting more and more popular. >> i'm seeing smaller collars. >> it used to be you wouldn't want it over your jacket. >> you can wear it a little more casual. >> and the button, you even have that going for you. >> we saw -- once obama started wearing the spread collars we saw a lot more people picking them up.

>> ledberry, did you make that up? >> no. it's a road. >> i thought you were a model. you didn't talk. >> we have to go. >> we're getting kicked off the air. i want to talk about shirts more. >> stick around. >> another soft in the nikkei. i want to make things more secure.

[ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ tdd#: 1-800-345-2550

tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-800-836-8799.

fed fears and global growth prospects. what happens when the qe music stops.

>> optimism. despite a soggy where spring. ceo of real estate developer kim cois here. this little piggy went to market. >> weee! >> china's largest meat process on her may be a risk. >> license and registration, please. >> as the second hour of "squawk box" begins right now. good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick, along with andrew ross sorkin and joe kernen. things have turned around. dow futures up 26 points above fair value. s&p up by four points. in our headlines, more signs of

improvement this morning. realtytrac is reporting sales of bank-owned homes fell 23% to the lowest in five quarters. sales of homes in that process fell by 20%. also, dish network raised its bid for clearwire to $4.40 a share. the takeover battle is happening as dish tries to buy sprint >> dow component alcoa to junk levels. a competitive market. he says, look, if anybody has a crystal ball, if anybody could tell us what the market is going to do, they must have a crystal ball. they're trying to control what

they can control. >> okay. . nikkei slide to go a five-week low. that happened overnight. pulling the nikkei around 15% below the five and a half year high last week. the rally driven by bets on weakening yen after the bank of japan's efforts to stimulate the economy. tesla is preparing to fast charge its stations to make a more viable alternative to regular cars. elam musk announcing at the d-11 conference. i don't know where i was the last 10 but there have been 10. a formal announcement is expected this afternoon. with the addition of the new stations, musk says owners will now be able to go from l.a. to new york by the end of the year. and new york/l.a. you would

figure. it's a long drive. i've done it. >> it's also a long charge. >> yeah. >> you have to sit there. >> hello. >> you remember that? >> tesla's stock has -- >> what are you doing? >> tesla stock has tripled. >> i was faking. i wasn't really mad. >> you normally drive like that. >> yeah. >> what did you tell me? never mind. warren buffett is looking to power sin city. berkshire hathaway is buying nv energy. 23.75 a share. $5.6 billion. 23% premium to end the closing price of yesterday. both company's forwards have

raised the sale. >> what are you laughing about? >> you missed the animation. >> keep an eye on your monitor. >> bacon news. >> and, look, a strip of bacon. >> crispy bacon. i love crispy bacon. the $4.7 billion bill was announced yesterday. the deal will face scrutiny by the committee on foreign investment in the united states as well as have a hearing here on the squawk set every morning. until joe has his way. >> my way is either someone comes in and beats that bid or we come to our senses and say, no, this is a national treasure. it's not going to where there is 3 billion people. we won't even see a snout. we won't even see a chitlin. do you know what that is? >> yes. >> you know, it's never kosher.

>> i know. >> i'm glad santoli is here. he laughs. you can't stop this guy. once he gets going, he thinks everything is funny. turkey bacon. it's not good. >> it's closer. >> it is closer. but it's not good. duck bacon you can get at dean and deluca. have you been there? or lamb bacon. >> howard stern show. >> a little context, the government panel assesses national security risks. one congressman from connecticut says the deal raises alarms about safety. thailand foods said today it had considered bidding for smithfield. it declined to give more details due to nondisclosure. >> come on. >> futures right now -- we

should just have a regular screen. we're going to be showing this every day. >> when michelle comes out, do we want a plate full of bacon. >> sure. >> turkey? bring it on. have you ever had a blt without the "b"? >> yes. >> i have had it when i ran out. one side of the fan. i finish it, but -- >> it's not right. >> you're not kosher? >> i'm not. >> there are a lot of people jonesing -- kosher people jonesing for bacon big time. >> how do you know? >> i was reading it. these people go to great lengths to find something very similar because they can't have it. >> if you're kosher you probably don't know what it tastes like to begin with. >> you can smell it. and you can probably get close

with lamb or duck. chief economic correspondent -- you don't cover meat at all? >> occasionally a sidelight of pork coverage. >> d.c. wait a second. pork! we haven't even gone there yet. and mike santoli not related to rick santelli. >> maybe way back. >> you, i'm glad you're here. not just what i said earlier. any way we remember last thursday? this is in my own mind that we started to really wonder what life would be like without the fed at some point. look at japan. and that's not here. it's not our market. but i look at the way it acted. i just wonder if it's related. >> it's possible. i think people here started to look forward to that moment months ago.

and i think it became a little more real on thursday. to me the big concern is how these massive markets are in this arrythmia. 1% yields in japan, no big deal. 1%. you don't like to see the huge markets trade like a stock with a binary outcome. that got me a little bit nervous not because the rate level was a problem. it's how you got there. whether it's disorderly. whether there's some financial accident. we have kind of positioned the financial world toward basically low, low, low rates forever. and you leverage on top of that. >> i think we saw 2.23 or 2.3 briefly yesterday on the 10-year. which is historically low. >> particularly if you're in the market for a mortgage and you see something like that and you wonder where we're going in a year. my question for michael is what could the fed be doing differently in terms of its

communication strategy. oh, everybody is so confused. they don't know when this is going to happen. it's pretty clear at some point if the data continues to be as positive as it is they dial down qe just a little bit. this is not a cataclysmic event. >> the fed is going to be, as promised you, it's going to be late with that, not early. i think what the market doesn't like, if the fed decides the data isn't good enough but we don't think it's good. therefore i think it's a mention of -- >> i think it's already good enough. and i don't think that you could ever use the word "early" for the fed's exit. we're already past using early. it was five years ago. >> maybe sudden is better than early. >> it's been so long and

extraordinary. i remember the the shock and awe of kevin doing 85 billion a month. >> or going to 60. like that would be some horrible shock to the system. >> 80? >> 84.5. >> it was interesting, larry finq -- we never got to this on camera with him. but he did say that when the government was selling aig they were helping accommodate that for them. they were in there on the days that it made sense to be selling and pulled back on the days they didn't. but when you are the market it's a lot harder. >> and i think that has people concerned about japan. the bank of japan controls such a tremendous percentage. if they can't keep the rate increase orderly. >> is duck not kosher?

am i recommending the wrong -- i don't know any of this stuff. what was the other stuff you didn't know about? you are lousy. my rabbi watches the show. he needs to do something. >> no animal is inherently kosher. >> aren't you italian. >> i'm on the upper west side of the new york. >> as long as it's slaughtered and prepared following the laws. but that's not the same with pigs, though, right? they can never be -- >> no. >> didn't you ever see pulp fiction? they're a filthy animal. >> they're clean. they roll themselves in the mud to clean themselves off. they get a bad rap. >> we want santoli, a world without -- i mean, a world without the fed on its own i

always liken it to riding a bike without training wheels. it's fast. with training wheels you can't even turn. >> but once you let go and the training wheels are off, you fall a couple times. if you want to stepped the analogy, i do agree, you want to get to that point. i honestly do think, though, it changed the investing equation not just because we think we need the support, but look where the stock market has gotten to this year. monday was the day that the 10-year treasury yield went above the s&p dividend yield. and that was kind of your backstop for a while. and i think you have to do something different now. >> do you know comby? >> tough guy. u.s. attorney. >> he's a man of principal. he didn't go the along with

everything back when he was in the justice department. ashcroft going to the hospital. >> he got direction from a very ill -- >> right. this was a big deal for obama. >> tough guy in a partisan way. i don't know if he was first choice or not. >> do you think a republican at the fbi is a good idea. >> so they can wiretap all of us, your home phone, run amok. fed worries in the u.s. and the nikkei falling. china's appetite for pork sparking a big deal yesterday. it comes with controversy. >> i haven't seen those in years. the takeover for smithfield foods. details coming up as we get -- >> see you later.

never see you again.

welcome back, everybody. concerns over possible fed tapering weighing on u.s. markets. joining us right now is the portfolio manager and director at fidelity investments.

we were just having this conversation whether things changed. do you think that's the case? >> well, thank you for having me, by the way. i think what we're seeing in japan is that the unintended consequence has come up in the form of volatility in the bond market. so 33 basis points. they went to 100 basis points. now they're 88 or so. but that's still very low. it's still the tripling as well. now it looks like speculators in the bond market, the bond vigilantes have finally come out of the woodwork because nobody wanted to fight the fed. 10-year treasuries yields have gone from 1.6 to 2.2. so maybe the speculators have feeling a little more comfortable selling treasuries trying to anticipate a scenario where the the fed has to exit in a meaningful way. i'm sure the fed is trying to prevent a '94 debacle. that, if you remember, was the

worst bear market in the bond market ever. >> right. >> i think the fed has to be watching this and trying to figure out how to exit when the time comes. >> you see four factors have been driving things. the most important by far has been the fed. >> yeah. >> if we are questioning the fed's ability or will to continue to stay in and the way they've been, does that mean all bets or off or this is a real pause? >> i looked the last four years. i had corrections each spring. what they all had economy was they were weakening. the fed was printing. this year we have the first three, the economy. at least the global economy is rolling over. technicals are shaky. i saw you guys yesterday holding up the "usa today" cover. economists had a cover a few weeks ago. the difference is the fed is not only printing but by printing by the bucket load. the bank of japan going over

doubling the monetary base that we have never seen before. so i think this is why the stock market has held up so well. it's almost become an extension of the bond market. if you look at economically sensitive markets you have to look at the commodities or the price of energy stocks, for instance, to find the weakness. but it's all under the surface and behind the scenes. it's a stealth correction as opposed to a weak correction we saw the last three years. >> do we question the the fed's ability to continue this? does that mean really all bets are off. >> the market has become unpredictable. it could fall 100 points starting today. very unpredictable. the fed knows eventually it's going to have to taper. we have the taper tantrum. >> i like that. >> so what the question is, if

it becomes unstable here, it can keep running. we're up now. it becomes unstable. so what i'm doing is keeping a low profile here. we have a 60/40 benchmark. some kind of balanced approach still works. >> 60/40 meaning? 60 in stocks, 40 in bonds? >> yeah. >> that's a big bond exposure. >> that strategy has worked quite well. we just published a study on 401(k)s. >> would you be more likely, if you're going to be switching things around, to pull money out of equities or bonds at this point? >> at this point, given that yields have already run to 2.25, my sense is if they run to 2.5 or so, at some point it will

undermine the equity department. our main focus is where geographically to be under rated, overweight. we are under em. also em currencies. we're along the u.s. but it's really a question of underneath the surface where are your exposures? and the secondary is how much in equities and bonds. we have a cash cushion. so we have other asset classes. >> you bought gold when? >> we have had a core holding for some time. and then with when gold had the big plunge to 1300, we bought some more. we figured at 1300 it looked like a lot of natural buyers came out and started buying points. so that seems like a pretty natural floor to us. and based on some of my

analysis, gold should be 2,000. should it has pretty good risk/reward. >> it seems a little early to be invoking the bond market vigilantes. >> coming up, new twist on the bacon cheeseburger. and more on the smithfield foods deal and pigs going to china. time for today's aflac trivia question. which nba player holds the record for most free throw attempts in a playoff game? the answer when cnbc's "squawk box" continues. he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪

[ male announcer ] see what's happening behind the scenes at ducktherapy.com. ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the c-class is no exception. it's a mercedes-benz, through and through. see your authorized mercedes-benz dealer

for exceptional offers through mercedes-benz financial services. the healthcare law gives us powerful tools to fight it... to investigate it... ...prosecute it... and stop criminals. our senior medicare patrol volunteers... are teaching seniors across the country... ...to stop, spot, and report fraud. you can help. guard your medicare card. don't give out your card number over the phone. call to report any suspected fraud. we're cracking down on medicare fraud. let's make medicare stronger for all of us.

now the answer to today's aflac trivia question. which nba player holds the record for most free-throw attempts in a playoff game? the answer, shaquille o'neal with 39 free-throw attempts. he made 18 of them. >> all right. listen to this. wendy's is getting ready to launch one of the more innovative fast food things.

a pretzel bacon cheeseburger. it is not in stores yet as we know. sit anticipated it may be offered as a limited time item and then move to permanent menu if, if, if sales take off. >> if there's no bacon. >> is the bun a pretzel. >> i'm sure it would normally cost $3 or $4. about bacon gets hijacked. >> speaking of, is it a risk to our national security? >> duh. >> joe thinks so. we'll talk about that right after this. do you want the long or short answer? long i guess. chevy is having a big -- huge, in fact -- event. the-great-deals-on-our-most- fuel-efficient-line-up-ever- for-just-a-very-short-time-so- you-better-hurry-extravaganza! so what's the short answer?

awesome. [ male announcer ] the chevy memorial day sale. now, get $500 memorial day cash for a total cash allowance of $2,500 on a 2013 chevy malibu. hurry. offer ends june 3rd! i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t

have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪

welcome back to "squawk box", everybody. in our headlines this morning, we are about an hour away from economic reports. the second estimate of first quarter gdp with consensus calling for an annual growth rate of 2.4%.

slightly lower than the last week. and weekly jobs report from the labor department. forecasting for claims of 341,000 for last week, an increase of 1,000 from the week before. also on the economic agenda, the national association of realtors looking at pending home sales for april. economists expect that number will increase 1.5%, equally the marin increase. joe? >> here we go. michelle is here. who bet? smithfield foods. the the deal already generated some controversy. you have a hit. michelle caruso-cabrera joins us. you have a hit. didn't you come on the set last week. >> right here. >> awesome. >> is this turkey bacon?

>> that's what's not kosher. >> this is the real bacon. isn't pork wonderful? it's a definer of america, the chinese. >> pork chops. they told me not to distract you. >> one week ago i tautd about it being at an all time high. and a vitamin company that wa. this motivation behind this deal is exactly the same, right? china needs very desperately to modernize its agriculture sector. to some degree it's about stability. when people are poisoned it leads to unrest and unhappy people and problems in society, right? so this deal is not about buying pigs but technology and know-how. >> that's what i said. our pork know-how. >> exactly. >> what's wrong with that?

>> it's a national security tkpwrb. >> so i smoke with the ceo of smithfield. first, head of the international division of shang we. they said it's about chinese people eating american pork. >> i'm still learning to speak english. but i want to say three things about smithfield. chinese consumers like american pork. you as consumers want foreign markets for their park. this will be a win-win for both countries. >> growing u.s. market will be a win-win for both nations. then larry pope came on and got many, many questions about

whether there would be security kerpbts, deposit things. here's a couple things he put together. >> they all to be thrilled this is not an attempt to import chinese pork into the united states but out of the united states. >> open your refrigerator door. nothing is made in china. american agriculture is the most competitive and efficient in the world. >> when you look at the big chinese plants what they want to do in the future. what they didn't manager the last 30 years. remember, they have 800 million poor people, possession ants living out on farms that have to be urbanized. >> and they have to find a way to feed all those people. >> and not poison them. >> their biggest concerned is we keep the market open and

exporting. if you don't export it, you've got some issues. >> is there any other deal? >> they think there's absolutely no issues. it is more if you get political pull back. so what we wait to see is what members of congress say. so far they have been neutral to cautious. >> right. >> they are waiting to see how this plays in peoria. >> right. >> the labor unions have come out in support. >> i think the farmers will be behind this. i was reading that exports were down 14% because china and russia had been closing their doors. if that's the case -- the cry from the american public would have to be so huge to offset the labor union and the farmers. >> right. >> it is renewable.

>> i don't understand the problem with over teaching them to do how to this. i don't see a problem with that. >> strategy ig pig resort. >> the chinese government wants people to have safer tpd. >> if they have a strategic big reserve, shouldn't we have a strategic pig reserve? >> but there's replacement things. >> we're all eating bacon. >> this is delicious. this is delicious. >> it's the best thing that ever happened on the show. >> you should be here when we had the 1,000 dollars ham. >> joe kernen is very worried. >> extremely concerned. >> spain has great pigs. much more expensive but

delicious. >> we have to give all our national gas away. >> no. i don't worry about that either. >> bacon to me is like natural bacon. isn't it sad large parts of the world don't eat bacon. think what this is. i'm just eating this bacon. it's so good. >> nobody touched the turkey bacon. >> cubans, by the way, could rival the chinese in the pork per capita consumption. >> you have gone to a luau. go to a lieu wow without a buried pig. >> you won't eat the fat off the bone? some did. i'm sure. i hope.

>> this is to think of all the different ramifications. i'm not saying don't do it necessarily. weariness. "new york times". weariness over a deal. >> that's a word. >> the chinese thought until all through. >> oh, i think they were politically savvy. >> they were! >> they're not going to -- of course there's no way -- >> comings in here. >> let beat us through bacon. >> i do not think there's any -- >> did you want bacon? enjoy. coming on, bringing on the bay on. that's if you. the squawk audience apparently has crashed the ledbury website. >> can we still do polls?

can we ask our viewers to okay this deal? >> oh, yeah. the website, comments have been very negative. >> could we go there and die a company outright? >> they let you buy when you want so thbg steal our technology. look at our barbecue technology. how do we stay away from bacon to that? an outlook from the ceo of kim crow. a tough day on the nikkei. dow looks like it will open 47 points higher. [ 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 ]

[ engine revs ] ♪ [ male announcer ] just when you thought you had experienced performance, a new ride comes along and changes everything. ♪ the 2013 lexus gs, with a dynamically tuned suspension and adjustable drive modes. because the ultimate expression of power is control. this is the pursuit of perfection.

welcome back to "squawk box" this morning. we have seen and noted the recent recovery in the housing market, but are other sectors of the real estate market being left behind. vice president and ceo of kim co. we have seen the housing market take off.

that's the good news. where are we on commercial? >> commercial real estate has been doing well for the last couple years after a very tough great recession. it's coming back. both values and what we call the metrics. occupancy, effectsive rents. and virtually no new supply except apartment buildings. shopping centers, we're at a 35-year low in terms of new supply of retail. >> when you think about the big box retailers out there attached to some of the properties you had, best buy has come back now. they also shrunk a little bit in the process. >> even though the store prototypes shrunk a little bit, growth has resumed. you will have 41,000 new stores opening up. it's a huge expansion. when you couple that with no new supply, 3 million people a year

and positive gdp, you have good things happening in commercial real estate. >> how do you worry about the topple? we talked about this over and over again. we're not seeing huge top line growth. >> consumer confidence and consumer spending is holding up, which is the lance of the spear in the shopping industry. we have had recovery. you can see it in our statistics. we're doing much better today. >> are you developing right now. >> we're redeveloping. ground up development has ground to a halt because the economics just aren't there. rents are still not to where they were before the great recession. >> are there folks in the old rents you would still like to get out or do you want to keep them because if you want to open them again they would come to lower rents. >> we have the benefit of being a 50-year-old company. we have 1,000 leases with a start date more than 20 years

ago. we would love for them to roll up to market rents. our older leases have way below market rents. >> and the read sector. people in hot areas. this is sort of a fad in my opinion about converting nonreal estate to reads. a lot of equity offerings right now. does it change the way you run the business. >> with the average paying twice the dividend of a c corp., that's attractive. where you can't get yield anywhere else. we have hard assets. our balance sheets are strong. leverage is generally less than 50%. so the basic business model of reads very well. only one major read went into bankruptcy during the great recession. >> we have talked on this about the office depot merger.

you own properties where there are a number of these. >> you have two weaker competitors. the leases they have will be honored. they are giving back bigger boxes. 15,000, 20,000 feet. there's huge demand for that space by the big box retailers. >> i thought everybody doesn't want to be a big box now. >> you have the petco, marshall's, t.j. maxx. they are growing 50 to 100 stores a year. there's no new supply. big boxes over 20,000 square feet are 97%, 98% occupied today. the little stores, the mom and pops are still hurting. >> what do you get per square foot big box versus mall?

>> we're not mall people. but generally big boxes $15 to $20 a foot. and su you will get that much more for smaller stores. >> i imagine a lot more? >> not necessarily. it against on -- again, the demand right now is for bigger spaces. >> are you seeing any distinction right now geographically in terms of where you are seeing things pick up and where things might be slower? >> florida is fascinating. start anything south florida there's a huge recovery. miami, you have seen what's happening on the residential side. we see it on the commercial side. our shopping centers in miami, fort lauderdale and south florida are full. it's marching up yards in florida. phoenix and vegas are still soft. new york metro has been strong all the way through. we have 40 shopping centers on long island, they have never

been hurt. >> you said there's no economic incentives for new construction. what needs to happen for that to start happening? >> the old days of buying 100 achers and fighting through five years of entitlement, zoning, the retailers don't have the patience for that anymore. they got caught up in bankruptcies and foreclosures. they would rather pay a little more for something today. secondly, rents have to increase substantially to justify. most of us are a little leery of building local space, spaul space. even if an anchor has demand, if you don't have the small shop, you're still a ways up. so people are buying raw land and getting it zone. >> thank you for coming in. >> thank you for having me. >> when we come back, the number on jobless claim.

it was named app of the year in 2010 by apple. we're talking to the founder ceo. bruce willis listing his beverly hills estate for $22 million. the main house has 5 bedrooms, 2 staff rooms, gourmet kitchen. michael jackson former owner, lieu sill ball and dezi arnez. >> don't start your day without knowing the names that will make your money. joe has the stocks to watch right after the break. or good decisions? ones i've made. ones we've all made. about marriage. children. money. about tomorrow.

here's to good decisions. who matters most to you says the most about you. at massmutual we're owned by our policyowners, and they matter most to us. ready to plan for your family's future? we'll help you get there. [ male announcer ] a car that can actually see like a human using stereoscopic cameras ♪ and even stop itself if it has to. ♪ the technology may be hard to imagine... but why you would want it is not. the 2014 e-class, see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

♪ stocks to watch. smithfield foods. bmo. cutting smithfield foods. market performed from outperform and raising its price to 34 from 28. facebook upgraded to outperform

from market perform. also at bmo capital. the firm saying markets on facebook growing overly negative. jeffrey has upgraded the stock to buy from costco. 1.04, a penny above estimates. revenue slightly below estimates. big lots, 61 cents on second quarter same store sales falling 2% to 4% compared to a year ago. stock is down. nv energy bought by berkshire hathaway. emc is increasing its share buyback to 3 million. six cents a share. dish network 4.40 from 3.30 for clearwire, topping an offer by sprint. an attempt to outbid soft bank, trying to buy sprint.

alcoa now to junk level by moody's. ba1 compared to baa3. the journal -- what are you looking at? did you read the editorial today? flying right in the face of everything i've been saying. >> protectionism. >> we're totally off. >> you guys are usually -- >> so right on. >> i feel like this is a situation where they've got a billion people who need to eat well. i get it. try to figure out how to feed them. >> they need to learn how to make it so people don't get sick from it. >> right. >> larry pope is saying that you -- there won't be any problem with you being getting a lot of pork products here. see, that's where i -- if you can guarantee -- if there's some way you can write it in that we won't pay three times as much here or we won't run out of bacon or something, i would

consider it. >> you know what i'm read something. >> what? >> i bring this up -- i've been on politico. they have eight times wiener lied about the pictures. eight times. he tried to say that somebody hacked his account and they were making fun of him because of his name. he went to every extent you can. they have eight different dates, places that he lied and said this is ridiculous. maybe if my name was hamburger it would have been a picture of something else. >> people like to make fun of him for that. obviously he lied at him for a number of times. you look at the poll numbers and he is right there neck and neck. >> i forgot until you put this up. >> it took him a long time to come out and say it. >> how he tried to blame it on everything. >> looks like people from for given him for that. if you send a picture of yourself to people on twitter like that, you're going to lie

about it. picture of his junk. >> anatomical. >> this is about the pig deal. it's the usual -- collins, you can imagine what she's writing about. one more time for michele bachmann. i'm sorry, gail. without the romney dog and without michele bachmann, gail collins may have been to retire. i don't know if there's anything else to write about. >> are you sorry to see michele bachmann go? >> for gail. i'm sad to see her go. you assume everyone hates her. >> everyone in the country. >> inside the beltway. >> yeah. generally speakng. >> 99.99 for you guys. >> i don't take an opinion one way or the other. >> she said some very strange things. coming up, jobless flames,

gdp revisions. tomorrow the return of jack grubman. he will be joining us in the 57 a.m. hour tomorrow. we will talk telecom deals, wall street, and much, much more. a rare interview you can't afford to miss right here only on "squawk box". hey, what's going on here? do you want the long or the short answer? long i guess. chevy is having a great-deal- on-the-2013-silverado- but-you-better-hurry- because-we-don't-want-to-see- a-grown-man-cry-spectacular! what's the short answer? nice. [ male announcer ] the chevy memorial day sale. during the chevy memorial day sale, current chevy owners trade up to this 2013 chevy silverado all-star edition with a total value of $9,250. plus get america's best pickup coverage including 2 years of scheduled maintenance.

we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ to enjoy all of these years. lets you talk face-to-face and share whatever's on your screen. blackberry z10 with bbm video. built to keep you moving. see it in action at blackberry.com/z10

the market is giving back tuesday's gains. could this be the end of a love affair with high dividend paying stocks? disruptor series continues. the app brings you the stories you want to read from your favorite news sources and social media feeds. breaking economic data. weekly jobless claims. the government's latest reads on first quarter gdp. 8:30 eastern. the third hour of "squawk box" begins right now. ♪ i'm reading -- i realized -- welcome back to "squawk box" here on cnbc, first in business

worldwide. i can't just check the editorial section of the "new york times" for editorials. i need to read the actual articles. >> news flash. >> yeah. there may be some editorial comment in the rest of the paper. i'm reading about they have a lot of problems with this deal. a lot of problems. >> finding new friends, are we? >> yeah. "new york times". thank god they're here. >> a lot of comment between our news coverage here. >> you're reading so many papers you have news paper print on your face. >> you said i had a booger earlier. >> you did. i said it on the other line so nobody else would know. >> our guest host this morning is still here. ben white. he's getting ready to leave for a second. >> you have bacon here. i can't leave bacon. >> bacon and google glasses. he's at politico.

and mike santoli. >> do you want me to do commentary between the news? >> if it strikes you. >> a look on the markets. u.s. equity factors after a tough overnight on the nikkei. looks like we will have a good morning at least. dow from 45 points. nasdaq eight points. s&p up six points from now. nikkei dropped overnight in a steep average selloff. last thursday benchmarking plummeted. trading has been volatile since then. nikkei is down a total of 13% since last thursday's plunge. a strengthening yen. government bond yields. we will flip the ball over and see with what's going on in europe. ftse up marginally. formers u.s. army general david petraeus is joining kkr. he resigned last year as cia

chief. he will focus on macro economic forecasts, public policy examine advice on investments in emerging networks. sprint already owns just more than 50% of clearwire shares. print increased to 3.40. remember, of course, dish is also locked in the battle with japan's soft bank to acquire a much bigger deal. don't miss "squawk box" tomorrow. that deal and a lot more in the telecommunication space with the return of jack grubman. interesting conversation at the 7:00 hour. >> a decade ago he was running away from mike huckman. we had trouble -- there was a famous mike huckman shot. of course it was mike.

he had a trench coat, hat. he was running after the guy. >> so, tell me. >> mr. grugman. >> if a guy in a hat and trench coat came up to me, i would run too. >> you have a booger hanging out of your nose and i'm the one that gets embarrassed? how do you turn that on me? >> did you get embarrassed? >> yes, i did. >> i don't believe there was one. >> there was. >> back to the markets. this wild ride in the last few trading sessions is it indicative of a major change in sentiment. michael tyler at eastern bank wealth management in boston. and chief u.s. equity strategist at deutsche bank. unck this is indicative of a major sentiment change. >> good morning. the reason is if you simply look at what's been driving the market it's been the dividend place. as the economy continues to pick

up steam we're thinking the growth stocks and the mid cycle are likely to take charge. it doesn't mean that the market overall will be much stronger. it does mean, i think, that the dividend story has pretty much played out. >> david, you're of the opinion, though, we could be do for a fullback. you point out only one year have you seen straight, upward moment. >> 5% plus dip at some point during the calendar year. i do think we see something in the 1500s during the summer. 5% to 10% pull back. but the sectors that are most at risk to that are bond substitute sectors. utilities. even staples. i think interest rates continue to grind under way upward, long-term yields. not as fast as may. but they work their way to the mid-twos over the course of the

year. oil prices, causes it to soften. i like tech and financials. >> you don't think it will drop 10%. does that mean it's a buying opportunity, or do you think we could bounce along? >> stay the course. keep buying. keep working on your portfolio. but for investors who are tactical, a lot of my clients are, i think 5% to 10% dip is coming. the biggest dangers are most sensitive to commodity. global growth out of asia in particular. >> i do think we got used to this idea that rotations from sector to sector are flawless handoffs. it isn't often that way. when we have to rely on more cyclical sectors potentially to hold the market up, you're

inherently saying it's a higher risk market. that would be a bigger surprise is a real summer, sort of growth scare as opposed to, you know, fed interest rate related. >> in spite of threats from washington to further regular implementation, do you think that's actually -- there's not going to be further regulation of banks or an attempt to break up the banks, therefore they're trading way too low. >> it is very much in spite of washington. >> yeah. >> i do worry about those things you mentioned. but our view on banks is they are dividend growth play. while high yield stocks are at rates to go higher, they will look for companies to strong dividend growth, including financials and technology. i do think it will be up to the fed to allow the dividend hikes. each year for the next few years, payout ratios, housing gets better, jobs get better. and this is the reason we think

earnings will be slow at banks, however, there's going to be slow loan growth and deposit base growth that. should help keep interest rates low. >> you don't think there's any housing bubble as the prices continue throughout the year? >> short answer is no. but when it comes to all these things that are interest rate sensitive, bonds, dividend paying stocks we have to watch rates. it will slowly go higher. beneath the historical norms. let's watch fiscal policy on this. it's important that we stay the course. the deficit be in line with nominal gdp growth. we stop that expansion. >> you were very concerned about beginning to take shape in the bond mark. you think this is just the beginning of the selloff we have seen? >> i do. i think interest rates will continue to work their way higher particularly at the long

end. i don't think that's a bad thing. the reason that might happen is as the fed continues to send out market signals that perhaps they're getting close to the end of tapering -- or the beginning of tapering and the end of ultra easy money, that's a signal they think the economy is going stronger. the market will keep resisting that and say, no, no, no. we're not ready yet. but sooner or later the training wheels come off. that is positive for equities and negative for long-term interest rates. >> people underestimate how badly bonds can fall. we had a guy who was talking to us earlier today who was saying that he still thinks 40% in bonds, 60% in stocks works because it is certainly what has worked, that sort of strategy worked on 2009 on the lows. what do you tell people about bonds at this point? >> shoe never be all or nothing. certainly some diversification is a good idea. but if you think about it, long-term bonds really are at risk to rising rates.

if interest rates were to poup two percentage points, a 30-year would lose some of its value. that's huge. people don't always recognize that. >> municipals, though, do you think they're in better shape? >> people are scared that state and local budgets have been weak. as a result, yields have been trading higher than treasury yields. that's unusual. usually uni are lower because of the tax benefits. we're looking at state and local budgets being slightly better than people are concerned about because of rising tax revenues. we think unis as a result are very good. >> thank you very much. it's been a pleasure having you here. >> thank you. coming up, ben white and mike santoli. plus, bacon on the brain. it's on joe's brain. they were tasting it. >> really good reporting in the

"new york times". it's not slanted. it's really good reporting. >> we're going to have more on chinese acquisition of smithfield. controversy on the squawk set. later, we have the founder and ceo of flipboard. the mobile app that brings you news and social media in one user-friendly interface. right now as we head to break, check out the "squawk box" market indicator. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience."

otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪

welcome back to "squawk box". take a look at futures. green arrows across the board. dow looks like it would open 41 points higher. nasdaq about 8.5 points. that comes after a tough night overnight. nikkei off 5%. i would have thought today we might have had a bit of a pullback. we said 14%? the nikkei off 14% in the last week. back to our best host. a little bit comorning money columnist and guru, right? >> guru?

>> morning guru. and mike santoli. general petraeus going to kkr. in the newsletter this morning. what do you make of it? is that a full-time job, do we know? >> i don't think any of these are ever full-time jobs for guys like petraeus after their careers in public sector they go into private equity. it will open deals, help him on deals abroad. he mentioned he made his takes in the last. a guy like him will help make some deals. i don't know the extent to which he will be involved. >> it has this broad portfolio. kkr decided it will way outlive. it's not just going to be a deal

shop. they realize they touch governments and private tech tore all over the world. >> the new goldman sachs? >> blackstone. they're a peer of blackstone. i wouldn't go that far. >> ben, you led morning money with a piece in business week. >> right. >> about dan mud. >> at fannie mae. formerly of fannie mae. he said he sleeps fine at night. he doesn't think he was responsible for the housing market crash. and he thinks the sec lawsuit is political retribution, which is interesting. >> what's the conventional wisdom on that? >> he will settle at some point.

he is one guy that feels unjustly targeted. he probably has some responsibility for that. clearly he doesn't feel like it. you give an interview where you say i didn't do anything wrong, people who are coming after you do not like to read that. they like admissions of some wrongdoing. so i think this necessarily helps him in making a deal with the sec. >> guys doing similar things, you cover him almost every day. steve cohen. where do you think this is going? >> sac capital. >> he bought that house after the -- >> he bought the house, the art. yeah. i think that has not endeared him to the people.

i was thinking of the guy from citigroup. yeah, i think if you are a prosecutor and you are going after sac and consider going after steve and cohen, you see him buying incredibly or nate houses, all this artwork, putting his wealth to work in certain places, i don't think you would like that. i think it endears him to you. you're more in cented to go tougher on him. do they go after sac? it's a possibility. >> in your newsletter and the "new york times" and elsewhere is this idea they don't go after him personally but they decide to indict the firm. holder talked earlier about how they thought financial firms were too big.

>> it would help to get rid of the image of federal prors as completely limp in going after financial services companies. if you take on sac, granted, it's not a publicly traded big bank but a high profile hedge fund involved in all insider trading. that would be a big step. the government's record like arthur andersen is not all that great. >> we're seeing a lot of redemption. if you see more and more of this, my question is if you indict the firm, doesn't the next day they just start sac 2? >> if he wants to. this is a way to declare victory on something that might happen very well anyway. in other words, he gives outside money back. decides it's just going to be

his fortune or family office. >> family office still has 500 or 1,000 employees. >> who knows what the terms would be, what he's loud to do. it's a way to declare victory without specifics. >> speaking of holder just quickly, did he say i knew nothing about fox and do we know now that he has? >> i don't think we have the final answer on what he knew, when he knew it about fox. >> but he testified under oath he didn't. >> yeah. there's very specific about what he knew and authorized. i think we will hear more about that in the coming days. he's obviously under a lot of pressure right now. >> i should say, by the way, we had paul ryan on yesterday. we were talking about roland not the fox situation but the irs

situation. i went back after -- >> the conversation we had was that ryan himself suggested that neil knew what it was an inquiry and he knew the status of it. >> but i reread the transcript. the question is how much roland knew. and i think the answer is he may have known there was an audit, but i don't think he knew the extent of it. >> clearly he said he was briefed that this investigation was going on. as were other people in the treasury. they were not told any of the details. they did not know the targets. they don't tell. >> you they could have put two and two together. >> they could have. but arguing that he misled congress is a big step to take, you know, for someone to allege that. when it's clear he said we knew about this. we were briefed on it. we didn't know the irs was allegedly targeting conservative

groups. that's been consistent with what he said. >> when we return, i have a special recipe for mutton that involves fox, rat meat. >> you're not joking? >> no. this is one of the ways they make mutton. and they can make honey with no pollen in it whatsoever. breaking economic data at 8:00 a.m. 340,000 this week. first quarter gdp expected to be revised down to 2.4% from earlier estimates at 2.5. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place.

i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. [ ice freezing ] [ wind howling ] [ engine revving ] ♪

welcome back. some u.s. politicians are raising concerns about this buy of smithfield foods by the chinese company. it will be the biggest takeover ever of the u.s. company. when the congresswoman from connecticut said it raises alarms about food safety, cp foods said it considered bidding for smithfield but declined after -- to give more details

due to nondisclosure agreement. most of its will be exported. and it would be good, obviously, for pork producers. so the worries are about exporting whether in a foot shortage crisis. what i think is most concerning is if china owns smithfield who knows if the pork will stay in the country. they could take it all to china instead of feeding u.s. mouths. the other thing, this could be a back doorway, according to some, for china to start exporting meats here. they're not allowed to do that now. they're not allowed to export fresh pork or beef at all. they're a huge agriculture exporter to us. because of hoof and mouth, they're not allowed. apparently one guy says they're already trying to sell chicken products over here. we're worried if they get in a foot in the door by owning an american-based company they could then try to do that.

then you start worrying about melomine, which was deliberately put into food over there. that's basically a plastic material. honey is not real. cadmium in price. they are a great resource for counterfeited goods and should get a ward for creativity, says one person. and i already told you about mutton, fox, rat and mink. they are worried the meat they send over here may not be. ♪ bonjour

♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ 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.

welcome back to "squawk box". coming to you from the floor of the cme in chicago. a slew of breaking data. jobless numbers at 354. a little worse than expected. vision also worse than expected. claims at 2986. gdp 2.4. tiny bit worse than expected but not enough to talk about. labor data is what's really important. just as early as yesterday the fed reminded us that if any talk of tapering is really going to happen it has to be centered around good news out of the market. lost about a tick or so in the

s&p. bonds probably rallied a couple ticks as well too. all in all it's a big deal. the question becomes we're at an interesting spot down here. the fed gave us a clue. maybe they will taper. maybe not. the stock market rejected highs when the whole story came out. we're looking for information to knock us out of it, and this is not going to do it. >> jim, thanks. chief exist and strategist. this is disappointing in your view? >> i don't think it's that terrible, actually. anything in the 3.50 ran50 is cd improvement in the labor market. somewhere in the 170 range, which isn't bad, consistent with

last month at 165. no, i don't think it's the end of the world. i do think that the economy is going to be a little bit softer in the second quarter, though. >> steve? >> just on the gdp numbers, joe, here's what i'm seeing. the the big change between the first read housing invest went from 12.6 to 12.1. government purchases went from negative 4.1 to negative 4.9. some of the other stuff, the consumer up 3.4 from 3.2. so a little bit better. remains strong. business investment was sort of on the weak side but remained positive. just a little bit positive. not as strong as we expected but still decent housing number. more government spending than were originally forecast. some are adding that back in and say with the private sector, not too bad depending what metric you use. >> when can we do our next ta r

taper? what's the the next number? >> jobs. >> a week from friday? >> a week from friday. >> again? >> it happens every week. >> what i'm picking up from the fed, tom, everybody's opinion on this, it's not a june thing. but it is potentially a september thing. >> any time they can say something that lets us think it's potentially september or by the end of the year, they are more a tune to the commentary. >> absolutely. >> and the signals. >> and i think the significance is the cnbc fed survey put it in january. we're dialing it back four or five months. it moved ahead with that weak -- >> you think it's this year? >> i think it's definitely this year. i am for sure it's this year. now here's the thing. there's three things that are out there. first is, when do they taper? the second one is how do they

taper. but the more important question is how much does it matter? the fed is falling over itself to say when we do this we are still growing the balance sheet. the balance sheet still remains large. i'm mazed at everybody. i don't mean everybody on this table. tepper's point -- he was on this show for three hours or however long it was. it doesn't matter. >> said it's good. >> we're not arguing with that. we're just saying the second -- the fourth derivative is maybe something changed. >> the market completely rejects the fed's view of its own policy. the fed is saying it's a stock. the market says, show me the flow. where is the next methadone hit coming from? >> opium. >> opium. if i'm not getting that every week, i'm out of the business. tom, is the fed losing this battle trying to convince the market about how its policy

works? >> well, steve, i think you're actually exactly right in terms of the timing when the fed may begin tapering as long as the improvement in the market continues into the fall, it will be tapering as of that september meeting, that two-day meeting. in terms of the success of quantitative easing, we recently wrote a piece on this. we actually don't see the success of qe3. the first round of qe back in 2008, in october of that year, did you have some success at restoring market function which led to a recovery in the economy. but since then you haven't seen an improvement in growth. so i'm not sure there's big benefit here. and the market is already starting to price itself. >> wait a second. i want to try to understand what steve is saying. you're saying that the were fed is saying it's the level. it's the almost that's out there. it's the direction. >> it's the amount of duration they have taken off the market.

they have taken long-term duration off the market. >> not only that -- >> steve -- >> go ahead, jim. >> i think we're missing the point here. we're talking about whether or not the fed can convince the market of one thing or not. the point is that the fed isn't really clear itself. they're taking this one number at a time as well. so how can they be completely transparent when the subject matter underneath is not at all clear? the fed is telling us what it can. the fed is just a a decent prognosticator. the market realizes if the labor data comes out a little bit worse than expected, that's probably still right in the sweet spot where the fed can't do anything and has to just go ahead on the course. >> i think the fed is clear about its view in the stock versus the fed. >> it's clear about its view. >> i would actually agree with you that -- i mean, i actually think in the short-term the

market is focused on the flow and possible tapering. but i think actually in the longer term you're going to see that the stock matters more. what the fed does, whether it shrinks it or it continues to expand it. >> i can tell you it's going to drop inside the fed the huge debate is how do they adjust the level of qe without getting the market to price end zero? can they go from 85 to 65 without the market pricing in zero or negative? that's the obsession -- that's the communications obsession right now. >> sure, they can. because they have to accompany it with very strong rhetoric, saying that, yes, we're tapering off a little bit now. but if volatility or price gets out of hand we will be quick to come back in and make sure it is very uncomfortable. there's a way to do it. >> i think that's a fair point. because you have had -- in terms of bond market volatility, you

have had that spark sharply. we have gone from the move index, it's gone from about 50 to 75. it tends to be correlated with the vix, equity market volatility. but we haven't seen a spike in the vix as we have with the move. i'm concerned about that, especially given the run in equity market valuations. >> okay. i think they go to 84.9 in june. just to be on -- >> i actually asked people if they would do an incremental. >> some things i say are really, really, really, really. i would start in june. >> i thought they could do 85 to 80 just to show they could do it. but what i hear -- >> like that. >> what i'm hearing, joe, it would more likely be a substantial move either way. >> 60. >> i have one more. >> until when, september?

>> i have one more thing from a tweeter. north korea atlantas, china intervenes, and the u.s. government allows china to buy our pork company. think about it. every should be against it. >> you just blew my mind. >> this is payoff. >> cold bacon doesn't count. korea threatens, china intervenes. >> i shouldn't have done that right before. >> no. >> coming up next, we will continue our disruptor series with the founder and ceo of flipboard.

welcome back to "squawk box", everyone. futures indicated higher. dow futures up 32 points above fair value. s&p up by more than 4.5. by the way, this is coming after a big drop of 5% for the nikkei and japan overnight. you might have thought that would create a little more chaos. not the case. we are well on our way of being in the green when it opens. flipboard recently launched its 2.0 version. joining us is the co-founder and ceo of flipboard. i use flipboard regularly. do you use it, anybody here? >> you're a flipboard guy.

>> i have not tried it. >> you might after this. >> good to see you, mike. thanks for joining us. >> good morning. great to be here, guys. >> for those, like joe, who doesn't know about flipboard. i don't know where becky is. just a brief to let everybody know what we're talking about first. >> imagine if you had a whole team of people who built your own personal magazine for you all the time. every morning, every hour of the day and updated it with all the things you cared most about. photos from your friend, news that you cared about. industry articles for the industry you're in. everything that you cared most about in one personal magazine that you could flip through on your phone, on your tablet. that's what flipboard is. >> so here's the question i'm trying to figure out as a use i for what feels like multiple years, how do you make money off this thing? >> we partner with the world's best publishers.

from conde nast, "vanity fair", "new york times", financial times. we enable them to sell beautiful print style ads, full-page ads. we do a revenue share with them. it's a great win-win model. >> is this profitable yet? >> we're not profitable yet, but we are generating revenue both for our partners and ourselves. we're very happy with the way the business is growing. >> and you have 56 approximately users, is that right? >> closer to 61 now. >> a number of new partnerships. you partnered with the financial times recently. when you do a partnership like that, it is all ad revenue? or they maisel subscriptions through your service? >> he just enabled them to be able to have all their content from behind the pay well available on your flipboard. you can authenticate as a user.

very soon we will enable them to sell subscriptions on flipboard. >> what is the end game? does it have to be part of a larger company? can it stand on its own independently? how do you think about the future of flipboard? >> well, you know, i've been an entrepreneur for a long time. this is a company that is working in an amazing opportunity. it's really -- you can almost think of it as the mobile social web. this is a new kind of a browsing experience for the mobile social web. this is a huge opportunity. very clearly an independent opportunity here. of course we would never say never to an acquisition. that's not our focus. we believe we can build a long-term independent business here. >> who is the competition? is it twitter in that i can read a twitter feed and get all sorts of different news from people that i trust? or is it a facebook? who is it?

>> we actually partner very closely with facebook and twitter. you can look at your facebook and twitter timelines right on your flipboard. there isn't a good, you know, analogy or sort of analog competitor for what we're doing with flipboard. it is in a unique position. we pulled from all the major publishers into one single app. and it works across, you know, ios and android. so there isn't really anything else like it. >> what's going on with conde nast? they have pulled back on some of the advertising but still have a relationship with you? >> we are working closely with a number of their publications. and you will see them work with us more and more. right now we have "vanity fair", details magazine, a number of others. you will see us do more and more over the coming months. but they're very happy with the partnership. the advertising has worked out extremely well. it's a great, fast-growing

source of revenue for conde. >> what's the one publication you wish you had but don't right now? >> that would have to be the "the wall street journal". they're our version of the beatles for itunes. >> and the receipt sense has been on their part? >> all of their consent is very strictly behind a pay wall. they have an incredible, you know, array of content, obviously. and that's something, that, you know, we have to build and make sure our platform fully supports the pay wall they need and make sure it works beautifully inside on a tablet and phone. and we're in the process of making sure that that is the case. and we've been talking to news corp. we partnered with them in a number of other places like all things digital. news corp. property is on fl flipboard. it's just a matter of time for

sure. >> as more content gets behind the wall, though, how much harder does that make your business because you are an aggregator? >> you know, actually, we think there is a need for a platform that can support free content and paid for content. you know, people actually are perfectly fine paying for content. the problem is online it's just too hard to pay. i don't know if you have tried to sign up for a subscription online. it takes -- it's very painful to do. and, you know, it's not just like picking up a copy of a magazine or newspaper at the train station. we need to make it very convenient for these publications to do that. we ultimately believe it would be a great a place for free content and pay content in one single experience. >> mike, thank you for joining us. i'm going to have everybody download the app if you haven't done so already. >> fantastic. >> appreciate stpwhreut greit. >> great to see you guys.

>> how would it find out what i want? i don't have facebook. >> it taps into your feeds. >> twitter feeds. >> i don't tweet. >> or web surfing. >> oh, i don't want that. i mean, that scares me. >> you'll get in trouble. oh, my gosh! >> does it go into privacy mode automatically? what's that thing? you know what i'm talking about, obviously. >> as a student of the internet i know. >> stealth mode magazine? >> i was just reading pinterest is going to show nudity but facebook is not. did you read this? >> i did not. >> a look at stocks on the move ahead of the opening bell with jim cramer. >> tomorrow on "squawk box", guest host brad anderson, former ceo of best buy, and a member of the job creators alliance. plus, the business of garbage. we'll talk to the ceo of waste management. it all starts tomorrow at 6:00

a.m. eastern. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.

and there are the futures right now. that's what happened last week.

we had a better jobless number and the market -- i was wondering, it was better when the market kind of sold off. it almost seems like it reacts more toward the fed than the good economic news. let's go down to the new york stock exchange. jim cramer joins us now. he has the judge, scott wapner. normally to learn how i feel about things i read "the journal" editorial page. i went to the "new york times," my next source to try to find out how i feel. they point out if there is ever a food shortage or something were to happen we might not get any bacon in this country. or it may and trojan pig allowing china to start exporting gross, disgusting food products that they make there here. how should i think about this? as far as protections, we should let this happen. right? >> i'm with the "times." i know this is going to sound

ridiculous but -- these are natural resources. this is a commodity that's a natural resource of our country and i don't trust the chinese when it comes to the food chain. they're going to come back and say, listen, you guys genetically modify things in this country, but why do we need them who have, clearly, wreck their food chain, coming in and taking our food chain over? i think they're the most irresponsible people when it comes to food in the world. >> hang on. does that translate into natural gas as well? would you export natural gas? >> i would limit natural gas exports. why should we give away that natural resource? nafta, hey, great, we export every job to mexico. fabulous. how did that work? >> what happened to globalization. >> we've been talking about that all morning. a bacon shortage, that gets your attention pretty quickly. i just tried some turkey bacon, it doesn't cut it. duck bacon, i hear they make. lamb bacon and tofu bacon.

>> oh, great. >> then i started doing a little more research, i hadn't looked into some of the stuff they had had done. mechanic melamine. that's added to plastic. that's disgusting. >> how about polyethylene? a little strengthener? what else do you want to add? how about fracking sand? >> they did something with fox, rat and mink and they mixed it together with collagen or something and they sold it as mutton. i don't know. >> people are eating breakfast right now. >> whatever happened to hillshire farms. look. we have a problem here and our problem is that our own food chain is being corrupted. the biggest move that's happening in this country right now is the vegetarian move

because people don't trust the food chain. ask chipotle, ask domino's pizza. suddenly they're coming in, buying all of the world's biggest resources? >> for the chinese to think that we really got the beautiful pristine facilities here. if to them that's pristine and beautiful, that gives you an idea of what they're dealing with. that's why 16,000 end up in a river. carcasses. >> no-shoe pork, my frnd. >> you can count on cramer. >> colonel chow? i does not overrule -- general chow does not overrule colonel sanders. >> i'm going to watch you at 9:00. you, too, scott. when we come back, our guest hosts this morning have been politico's ben white and mike

santolli from yahoo! finance. we'll give them the last word. at honda,

we know some people are never happy with the way things are. and are always dreaming of how they could be. smarter, simpler, how-on-earth-does-it-do-that... er. and they make it that way. because things can always be better. we like those people. they think like us. introducing the best civic sedan yet. made possible by honda.

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ let's get back to ben for the last word. >> i think the economic data

coming in better than expected. we get jobs next week. the question is, is 2014 going to look a lot different from 2010. michele bachmann is leaving, tea party is in decline. might not take back the house if we get a lot of good economic data, it makes our case better. >> ben just took your last two words. >> we'll have you both back soon. right now it is time for "squawk on the street." good morning and welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange. carl quintanilla is on assignment. we'll hear from david faber shortly. markets looking to bounce back today from yesterday's 106-point drop in the dow. futures holding on to gains despite a slight downward revision to first quarter gdp. european markets also repounding after having tuesd g