good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. markets are our focus this morning because the dow is coming off its third biggest percentage drop of the year. all kinds of crazy things, jim cramer was pointing out this morning he was watching the charts and there is nothing good to see. the dow, nasdaq and s&p 500 all closing at one-month lows. this was a broad based sell-off yesterday. all ten of the s&p 500 sectors closed down. today, the dow is going to try and avoid its first three-day losing streak of 2013. right now, u.s. equity futures are indicated a little bit higher. they're up by about 40 points. but if you'll look through the numbers on this, the dow was below 15,000 for the first time since may 6th. this is its worst two-day drop since november. all of these guys, as we mentioned, ending at one-month lows. a lot of bad news here and a lot of concerns about this --

why didn't we save the "usa today" cover? >> the cover is what we're going to claim was the -- >> well, it was like the "sports illustrat illustrated" cover with kate upton. >> no, for -- >> oh, yeah, i don't know what i'm thinking of. now, that's all i'm thinking of. no. that was that day, andrew. welcome back. that was that day, wednesday. >> wednesday. >> the third derivative of the second derivative divided by -- >> i'm losing track already. was that wednesday two weeks ago? wednesday, may 22nd. the fomc notes came out and it started talking about tapering. thursday, we talked about it and that's when we were really wondering whether just the idea that it's definitely not going up. >> but that was two weeks ago today was the "usa today" cover. >> paul ryan was sitting here. >> by the way, if you think the economic numbers aren't that strong, we have seen that happening, right? >> and the futures move a little

like yesterday. it is a number. >> right. >> he is a number manufacturing was low. that's the day we went up 200. >> but it is a nonmanufacturing number yesterday. it was an employment component that indicated those jobs numbers on friday was 25,000. >> look at this. >> serendipity. >> this is you in line with the producers. great minds, we should say. you and the producers thinking together. as for the overseas markets, this has been really important. we've been watching japan closely. it was a choppy session in asia overnight. the nikkei closed below that key 13,000 mark. it's at a two-month low. >> we need to look at the chart. >> the benchmark index bounced between gains and losses all day long. if you've been looking at that chart, you will see a significant drop-off. >> that's that day, too. >> same situation. >> shanghai stocks also fell. they fell to three-week lows. and australia's key index lost more than 1%. it hit a 4 1/2 month low. across the board, look at these

indices. >> what we need to start doing is let's go and find either the intraday or closing high on the s&p. and let's just monitor exactly where we are in terms of corrections. >> you want to chart this, too. >> i want to what? >> you want a chart effect, too. >> oh, no, no, i don't want to do that. i just want to keep track of 4%, are we 4% or do we go down 5? do we get to ten? >> where are we now? >> that's what i want to know. i can do this. >> we can do a little math. >> you figure this out while we talk about what's happening in early european trading, as well. at this point, investors in europe are waiting to see what the central bank does, the bank of england and the european central bank both set to anoins policy decisions this morning. the bank of england is coming at 3w7 o'clock eastern time. the ecb is 45 minutes later. the bank of england is expected to keep policy steady. you take look at governor mervyn king's final meeting in charge of the central bank, this is it. he has been arguing phenomenon

an extra $38 billion of bond purchases. he is not expected to convince policymakers to okay that idea. the ecb is also expected to keep its main interest rate unchanged, but investors say that they'll be paying attention to any tweaks in the ecb's economic forecast as that could give an indication of the future direction of policy. >> can you use the close or the intra day high? >> the close. >> close. >> most people are dramatic. >> people have mutual funds, they're looking at the closer. >> but this is the media. >> all right. do both and then we'll figure out which one we like. >> that's going to take me more time. >> by the way, the legacy of mervyn king, this is his last meeting today? >> i didn't even realize it was. >> he was there at the same time bernanke was there. bernanke is going to walk out a living legend and i think he's going to walk out -- >> not? >> something else. >> let's talk about the u.s.

economy. we have one key government report to watch today. they were talking about the different isms we had earlier this week. this is not an ism. we are going to have weekly jobless claims at 8:30 a.m. eastern. first time filings likely fell by 9,000 in the latest week to 345,000. also of note today, and watch this, some of the nation's retailers are going to be reporting same-store sales. both of those numbers are going to impact as we head into friday where we're going to get big labor number coming down. >> it's a big number. by the way, people have been bringing down their expectations. the number has come down since we have got the adp report yesterday that shows what was it, 135 which was much less than expected. the markets had been looking for 165 to 170. that "usa today" cover was not the same time as the bernanke speak. it was last wednesday was the "usa today" cover. >> they even waited to where it really looked like -- we hammered them that day.

but we need to look at that, what that number was, too. i've got too many numbers here. i'm going to do this first. 1669 -- >> is that the closing high? >> no. yeah, that's the closing high. and 1687 is the -- >> intraday? >> right. minus 1608, where we are, right? we're at 1608. so it equals -- shoot, i said. let me do that in a second. i have to read this. becky mentioned the futures. let's check on the broader -- basically it's about 60 points, right? 60 divided by -- 1669. 60 divided by 1669. >> i'll do it while you do this. >> okay. let's look at the broader markets, including some of the other things like oil, 94. for an economy that's really slowing down, oil is doing pretty well. we talked about it every day. the ten-year has at least not

gotten worse. it's not become -- that's really what sort of people were wondering about is the trepidation as that moved up quickly, even though it moved to, you know, levels that didn't seem that bad, like 2.2 or so and it was stretching to go above that. it was how quickly it moved there and what happened in japan with their bonds, even though they're even lower than these are. but they're moving quickly, so 2.07. it hasn't gotten much worse. as the dollar has weakened against the euro and a little bit against the yen. you have your calculator? >> we've been looking for the calculator. >> oh, my god. you go to programs and then up to accessories. >> 3.6%. >> so we're at 3.6% from the close. all right, you see, people -- 3% to 5%. that's what jokers talk about all the time. 10% is when you say it was a correction. >> 3.35% we're going to hold -- >> well, i'm going to do the 1685. as a journalist, 1685 minus --

go ahead. >> dow that. we've got a little bit of news to get to in the meantime. we have some corporate news. that is, there's some fuel buzz this morning. a tel aviv financial based newspaper is reporting that pepsi is in talk toes buy israel's sodastream for about $2 million. my wife loves sodastream. pepsi could be willing to go even higher than $2 billion. perhaps paying as much as $95 a share. there you see it, the stock trading there at 91.75. up 32% we should note in the premarket. >> if we round up, i can get us to 5% on the intra day. >> or 4.6%. >> you can round up to 5%. 5% correction. we're in 5% correction territ y territory. come on. >> 4.6%. >> i'm looking for a rating -- >> can we stick with 3.5%?

>> you want to minimize it. >> it feels better. >> does it? >> a little bit. >> you always liked the emphasis in there. >> what was your book about? disaster. blood on the streets. >> crisis. >> how many people have we had who said if you get a sell offmore than 5%, it's definitely a buying opportunity? >> and we're not there yesterday. >> two more pieces of news this morning, at&t reportedly discussioning a possible joint bid for hulu with the charnin group. $1 billion is the lowest price that hulu owners are willing to accept. the site has received interest from yahoo! time warner tv, cable and the chernin group. comcast, our owner, is one of the owners of hulu still. >> and the question becomes what happens? if you're buying hulu, do you get all the content that comes with it? >> there was a great line about whether it was getting land

lease in london where you own the property, but you don't own the -- >> is it like a hong kong style? >> what do you really have? now to the latest on sac capital this morning. kate kelly is reporting the steve cohen firm has told employees it will survive what it characterizes as significant redempti redemptions. in a letter to employees date odd tuesday, sac says it has no plans to become a family office. a lot of people have been talking about that possibility. it added no significant layoff res in the works. sac has roughly $4 billion in outside capital after first quarter redemptions and, you know, despite all the money that investors are taking out, he still has i think it's about $8 billion or $9 billion of its own money. you can stay open for a very long time. and employ about 1 is,000 people to do it. >> the high on the day that the "usa today" cover came out was 1661. so basically, we can -- the s&p was as high as that. so we can equate the closing high on the s&p with the "usa

today." any numbers that we can do. and i'm sure they're happy that we're doing this. they need to serve some purpose. >> it's good for business. >> remember that little -- yeah. in other news, the -- i don't know about this. i was wondering if this disturbed you. >> i am disturbed. >> because the huffington post -- i don't know if arianna is painting herself to earn a bunch, but -- >> you're not a little bothered by this? >> you know, i -- i don't have anything to hide, andrew. i don't have anything to hide. if they want to monitor my -- >> they're not letting us know about it. and senators who have been raising concerns about this who know more than we do say if the american public knew what we were doing, they would be much more concerned. >> don't you think that i would want to make a big deal out of it because of this administration? and i -- like even yesterday, susan rice, i just think obama

has such big guts that he just -- i admire the power of just going like that to the whole gop basically with susan rice. not going to be state? okay. i'll give her an even bigger job. benghazi, take that. >> tell people what we're talking about. >> it's on the cover of every paper. >> but a lot of people are in bed and get their news from us. >> they're in trouble. so the u.s. national security agency is reportedly collecting telephone records from millions of verizon customers. a good reason to use at&t. >> except for that there's no -- we don't know if it's other agencies. in the past, it had been all the of the major papers. >> and it's "the guardian" saying the order was issued top secret and was issued by the intelligent surveillance course for verizon to hand over all calling records on an outgoing daily basis until the order

expires on july 19th. the order covers each phone number dialed by all customers, a location and routing data and the duration and frequency of the calls that the order doesn't include the contents of the -- >> so they're not wiretapping everything. >> they're not wiretapping everything. >> you know, we do all these stories about big data, about what companies are doing with big data and it gives you a little insight as to what you can do with big data. >> i want to know whether we have the records of the cincinnati irs office going to the washington phone number that apparently they use a lot. >> look, you know i've been with you on this the whole time. >> those records -- >> rosemary woods might be in charge of those. >> but they don't have the actual content of that. >> remember her? >> no, i remember rosemary. apparently she was going like this to have the -- erase 17 minutes of tape, she would have had to be sitting like this. oh, yeah sfp.

>> yeah. they did the position that she would have had to be sitting like this basically for 17 minutes. >> so she didn't erase it? >> tricky dicky might have done it himself. >> chuck rice. i just like tricky dicky. >> yeah, you do. in other washington news, the house gang of eight has reached a tentative immigration bipartisan agreement, but one republican, raoullabrador dropped out. no details yet, but the house is expected to be tougher on broad security than the senate version. the senate bill is seen as having a shorter pathway to citizenship, as well. back to the irs scandal, congress is going to be doing more investigating today. the house oversight and government reform county, they're going to be holding a hearing titled collected and wasted.

the irs spending culture and conference abuses. so we're not just talking about what was happening in the cincinnati office. this is broader and larger. among those testifying today, the agency's new acting commissioner and the treasury inspector general. this has been going back and forth as you have been gone. >> i saw. >> issa initially said i've got people that are saying it's expected to washington. then she pushed him and he goes, well, it certainly sounds like it. then the liberal -- you know, move on and huffington said he's mccarthy and they turned the tables on isa and it's not -- so i don't know where it's saying. >> it's funny, the different sides of the media -- >> look at the cover of the "wall street journal" this morning. and then the cover of every other newspaper. >> is it "the wall street journal" claiming it's a scoop? >> yeah, they are. two -- it says we've obtained about two tripts of the

interviews obtained wednesday by "the wall street journal." this will be in the huffington post today. charles cope is buying some newspapers. >> yeah. >> that's going to be -- >> he just confirmed it. we already knew. >> but we've known his name has been on the distributing company. >> but you can see it's not about advancing his politics. he just thinks it's a great business. >> great business. >> and we all know what a profitable business newspapers are. you have to laugh when you read that, right? >> he's there for the public service element. >> exactly, yeah. coming up, we're tracking tropical storm andrea. begins with an a. named, i think, from the recently deceased "walking dead" character. you've seen that part, right? >> i have. spoiler alert. >> when that guy dies and she's tied up, so she slowly watches

him die and start to turn. >> she almost got out. >> she waited forever. she was, like, arguing with him and talking to him instead of trying to get out. >> that's what i didn't get, either. >> we'll have a live report from the beaches of florida. still, squawk sports news, the boston bruins, this was pretty exciting. boston bruins hold a 3-30 game lead beating the penguins. in becky's words, the penguins -- >> no, i'm reading books to my kids last night and i'm trying to say the way you say it, penguins. >> penguins can close out the series at home tomorrow night.

welcome back, everybody. u.s. futures are indicated up about 44 points after a drop of 1.4% for the dow yesterday. but, again, a lot of these charts looked very concerning. people are start to go pay close attention. joe has done the math on this. it's the drop of the intra day high of 4.6%. if you're looking at the closing high for the s&p, it's a drop of 3.6%. but still, enough to get people to sit up and pay a little attention after the massive run. >> if you really want to pars it, we use the claims number today, even though it's only a weekly number. and it's about tomorrow. but it's -- what do we want,

good or bad? >> i don't know, because i -- i think you could be in a market cycle where good or bad is bad news. because if it's good news, the fed could be pulling back. if it's bad news -- >> it shows you that we're -- >> and if that doesn't have any ammunition left. >> it's almost how you feel. >> it's almost like things are turned where it used to be bad or good news. >> if there was a view among some people that i had, which may be wrong -- >> with this idea that actually the fed was not going to actually taper. i know steve and -- >> everybody says the euro. >> taper before the end of the year, maybe even worth going to. you throw that into the mix and that may change your view a bit. >> the best view for the market is something that's around consensus. then you don't know wa to do and you're almost stuck in limbo. >> we should be grownup and know that we can't have this forever. and mature enough november to have a sell-off and it finally becomes clear that we may not have set up.

but it won't be. it's at least worth 5%. >> the other question becomes, though, when you drop 5%, is that a buying opportunity? a lot of people have been saying that, too. we'll talk more about the markets in a moment. but in the meantime, meteorologists are tracking a tropical storm. this would be tropical storm andrea. this is the newly formed storm that has already had an effect on gulf coast beaches. the weather channel's mike seidel joins frus miami and he has the latest on this. good morning, mike. >> good morning, becky. actually i'm on the west coast in the tampa bay area. we've had some issues this morning with quick tornado spinnups. we often this with a tropical storm system. these are not the twitters like we see recently in oklahoma. they're quick, they're usually weak, but they have caused minor damage in the tampa bay area. the center is off the coast. now it's moving very quickly north-northeast at 20 miles per hour. it's going to make landfall in

apalachee bay. later this evening as the tide is going out. that's going to cut down on a surge impact. it's going the be heavy rain, but out here on the beach, winds running around 5 to 10 miles per hour. no major issues. last june, tropical storm, the whole beach was under water. this will have impacts up the east coast, at least into the carolinas, virginia beach into friday. this is a quick-moving system. this front is going to take it out to sea. so the entire east coast will be done with it by later on saturday. becky, a stormy morning here in florida. we'll keep an eye on minor twitter spinnups. otherwise, the worst in the tampa bay area likewise on miami is the heavy rain and the ponding on the roadways. back to you. >> mike, thank you very much and good luck with that. we will talk to you soon. >> what i'd like to see is eric or wolf reynolds, down there where you are but without -- in there without a jacket and a tie and just getting soaked.

not prepared for it. >> mike is a real man, out there in the rain. >> that's a weather man, not these guys that come on and look like gq. >> hey, after spending two days in the big blizzard back there in revere beach, your stomping grounds, joe, i know how to handle these things here in florida. this is, what, 75? >> right. it's a visual medium. >> it's a visual medium. our viewers, you know, not these guys in the studios just with the pocket squares. no. anyway -- >> mike, thank you. you are the man. >> joe, i want you to come out on here sometime. i'd like to see you out here dealing with this. come on. you know? >> you know, i never have. wrapped around a pole with the slicker on. it was supposed to be raining here today or tomorrow at some point. >> we can send you outside. >> i'll practice. i'll practice.

there's a bit of a storm that the markets are weathering right now, as well. >> oh, well done. well done. >> stocks tumbling in a broad sell-off yesterday that pushed the dow below the 15,000 level. storm clouds had been forming for a couple of weeks. now we're waiting for friday's jobs report. joining us is jonathan gallup who has more bounce in his step today. and jim o'sullivan. you've got like another 13% to get to your year-end target. >> it's getting smaller. what was your year-end target? your year-end target is down at what? >> it's 1425. >> 1425. >> right. so you never did change that? >> you know, i didn't. i think a lot of the strategists, every time the market moves adjust it and i put an anchor out there and let it go. >> do you think we're going to be at 1425 at the end of the year. >> i think the stocks will continue to come back. they've seen their best totals of the year? >> for right now, as you said,

the next two, three, four months, i think we're going to see some continued economic weakness. i think you're seeing this, the fed is intentionally confusing the market, perhaps setting up for a pullout later on and i think it's causing a bit of caution here. >> okay. is it intentional? >> yeah, i think it actually is. on the one hand, they're saying we could go up or down. i think it's a way for them to manage an exit later on. >> but is it their business to manage an exit or is it their business to create confidence in the market and some sense of at least stability. >> you would hope that the fed is not focused on the market, but it's focused on the economy. but it really appears as if the fed is incredibly focused on the market's response to this and the wealth effect, which i wish they wouldn't be, but i think they are. >> there's a time, a lot of people that argue the fed should be focused on the price stability of the u.s. dollar and that that second mandate of full

employment shouldn't be there, it should be all about price stability and that is so antiquated at this point, isn't it? is it easy to even think about that any more? >> their new mandate is full employment and inflation. basically, their target is 2% of inflation. >> they can control employment with all the other stuff happening in washington. >> right now, obviously, there's a big fiscal drag coming from washington. in the other direction, there's easing in financial conditions. the net of it is the economy is doing okay, it's not great. it's a battle between fiscal drag and monetary stimulus. ultimately if they win this battle, ur arguably when you look at the labor market and the downturn of the labor rate, that is winning. >> we had hoped we would be back to 75% right now. >> it's a long battle. >> it's the u.s. economy. for eight years we were under

bush and eight years under clinton, we averaged 5.3%. >> there's no question that fed policy influences the economy. >> we've got a poor european economy, then, because it used to be that we could do this for fun. >> there are a lot of pluses and minuses out there. europe is a big minus. and just the after effects of the crisis i think hold us back for a while. but in the other direction, we've had incredible monetary stim use husband and there's no question that that's having a positive effect on growth. >> what's your number for friday? >> it would still not be a bad number. so far this year, the trend has been 196 per month, six-month averages over 200. the numbers have been quite good, certainly more than enough to bring unemployment down.

>> is the worry that it's slowing down? >> yeah. obviously, the nebs bounce around from month to month. right now, the four-week average is 47. >> is that a normal participation rate? >> what's normal? there is no normal. that's the problem, there is a clear secular trend. and because of social security disability? >> that's probably another couple tenths. since the recession began, 2.7% points. so i estimate four points of that is demographics and three or four is disability. >> i thought we needed 250. >> no, that's not true. >> how many do we need to lower it? >> i think on a purely secular basis, i think it's as low as 60,000 or 70,000 per month. now, when you allow for the cycle ewe lar bunch, i think it's about a hundred. the working population is growing 0.9% a year. a neutral rate of growth would be -- i think the secular trend

is lower. and i think that's an underappreciated point. how much of this de-kline in up employment has been because of the participation rate? the pace of job growth has declined. and it's the aging of the population. >> it's not aging. i'm doing everything i can do -- 60 is the new 30. so you have to get with the program. what would you tell your clients to do? >> you know, it's interesting -- >> go in the different sectors? >> i think it's a secretarier thing. to jim's point, i think the employment trend hasn't been great, but it's a positive trend which has been going on. >> so what should we do with stocks? >> consumer sectors are going to do much better. business confidence is lousy and a consumer confidence is much better. >> buy them or wait? >> i would go into tapels and discretionary at the expense of tech and industrials. tech and industrials by and large need business confidence, business spending. if you look at the ism, if you look at corporate cash, m&a

activity, all of this says consumers are doing better. >> will you call us if you change your -- what was it again? 14 what? >> 1425. >> okay. okay. all right. >> call us if you change it. >> you said the important things. there are spots to make money. >> we're almost at 1700. >> no. we're closer to 16 than we are at 17. >> the high -- >> 1608, yeah. >> 1680 -- i'm still thinking -- i'm talking to you. i'm rounding up. thank you, jim. thanks. they're playing us out. coming up, president obama is going to be meeting with china's new president today in china from currencies to pork. we're going to talk about issues that might be on the table in that conversation right after the break. [ lorenzo ] i'm lorenzo. i work for 47 different companies. well, technically i work for one.

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welcome back, everybody. president obama is set to meet china's president in a summit. pe patrick joins us on set this morning. >> great to be with you. >> so the cyber spying, that's probably the top issue that we're concerned about, at least, correct? >> that's the top issue from the u.s. positive. and it's risen to the fore very quickly. in fact, i think it's thrown the chinese off because, you know, for the past year or so, they've brushed that aside, the talking points and said, you know, it's not us or we're victims, too. and i don't think they fully appreciate just how much it's risen to the fore in the united states, how many people in the united states are now seeing this as an existential threat,

the u.s. both on an economic and a military point of view. >> will president obama press them on this today? >> well, you know, his administration officials have been pressing. hagel in singapore gave a speech in which he made this a focus and named china by name with china in the room, which made the chinese furious. but that i think is really part of putting this on the table. i don't think that you'll see him go in and, you know, pound the issue on the table because i don't think that's necessarily going to be -- that will be counterproductive. but i do think what he is going to do is try to fix this firmly on the agenda going forward so that when she goes back, the word comes down throughout if chinese bureaucracy that this is something they need to engage in. >> is there u.s. propaganda that keeps us from knowing that? >> they just came out with a whole list yesterday of things that we've been hacking them. >> is it true? >> we're hacking our own people

with our telephone records. come on. >> but do you think the level of hacking -- are we as bad as they are? >> but here is the thing. so a lot of people bring up issues and they say the u.s. attacked iran. but the u.s. and iran are clearly in a hostile relationship, whereas the u.s. and china are major trading partners. so the cost is different. >> are we the ones that have been -- the u.s. has a strong capability in cyber -- >> but if they've harmed us more than -- >> we're much more vulnerable to the things they do. >> we have the moral high ground because we haven't been doing it to them. do we know? >> i don't know. >> really? then i'm more concerned about the pork. >> well, this is a situation where on cyber, that's where the conversation needs to take place. because if they have legitimate concerns, then we can engage them on that. >> smithfield ham, does this come up at all or is this an issue that we just think about around the table? >> no. for them, this is the issue on

the table which is the welcome mat or lack of one for chinese investment in the u.s. there's a perception because of largely the fact that huaway that it's not open. >> but it's not a twoway street. >> korea. we can't do it there. >> you're absolutely right. >> and i make this point all the time, the u.s. is much more open to chinese investment than china is about u.s. investment. but entire segments of the chinese economy are blocked off to foreign investment. >> are you worried about this bacon deal? >> you know, i think there are two ways of looking at it. obviously, there's a visceral reaction that takes place because of all the food scandals that have taken place in china and the idea of chinese having a place in the u.s. food chain. but, really, this is about opening the door to china for u.s. form exports. because if the chinese have -- >> and that's going to be great for the u.s. >> if the chinese haven't

invested in a company, it makes it much easier for them. their concerns have been security. they opened the door for soy bones. >> pork consumption in the u.s., down suspect. >> but if there was a real -- >> it's a great opportunity. >> theoretically, right? >> and this can help the chinese a lot because one of the big inflation issues in china is the fluctuation pork prices. >> i want to see june 4th, tiananmen, i want to see someone bring that up and have all those guys go, what? tiananmen? there's no square. tiana what? that was two days ago and it's nowhere on any website in china. >> i was going to say over 80s outline the place here. here, but not over there. >> in chiend na, the word "today" was banned.

>> on june 4th, you couldn't search "today" because it didn't happen. >> patrick, we enable them to do whatever they want. >> there is a lot of trade that goes back and forth. >> do you know how many people died under -- purge in -- >> i do. >> 38 million people starved to death. >> we are trying to open doors and trying to -- >> okay. you know what happens. anyway, coming up, is your cell phone carrier selling information about you? a major trend until the world of big data been then in the next hour, our newsmaker is younger.

we're talking big data this morning. your wireless carrier may be raising big data revenue by selling your smartphone data to advertisers. among those creating that opportunity for carriers is s.a.p. sanjay is s.a.p.'s president of technology solutions and mobile. good morning to you. thanks for joining pups. >> thank you, andrew. pleasure to be here. thank you. before we go to what you guys are doing, there's a piece of news out this morning and i wanted to get your thoughts on it. "the guardian" was reporting that verizon has been sharing some of its information with the government, hence, once of things that occurred to me as i was thinking about this interview and seeing you this morning, does s.a.p. and other providers like you not just work for telecom companies, but also for the government in terms of collecting what ultimately is a

big data project? >> big data is the new oil of the information economy. there are lots of uses of how it's going to create consumer insight, help cities become smarter and improve people's lives. we work with a large of range of companies. we're work with both tillcos and lots of projects. i can't comment on this particular story, but we have a wide use of range of big data. >> the screen on drudge with president obama says can you hear me now. do we have to worry as consumers from the consumer size and the data is being shared in ways that we don't know about and also on the government side that some of these data may be shared with people we don't know about? >> we take data privacy very, very seriously. in the case of all that we do, if the telco is collecting data and there is an understanding

between them and the consumer, we can mine that data and provide insights, then provide insight both of delco and the consumer using our big fast database. >> one of the things that i can't figure out is this. which is i see what looks like a great opportunity for the telcos to make an enormous amount of money by being able to mine this data and serve ads and do all that. but then i also see all of the different welcome back royers, whether it's google or anybody else who seems to be bypassing at some level the verizons and at&ts of the world and/or the facebooks in serving up their own ads. what does that mean to the business? >> i think it's the same we you thought about the internet. there were multiple ways to interact with the internet. the telcos are going to be one player and there's going to be others. the reason this is a big opportunity is that there's a huge amount of opportunity to get to a consumer's individual insight. and the more that you can

personally market so that the consumer has ways by which they know when they're walking by a retail store, you have a promotion that's specific to you or, for example, even a place where a telco could give you machine information. for example, your car air pressure is lower. those are services that could help. >> but who is the winner in that? is it google or an apple who has your credit card and has your gs coordinates and can provide that information to you or is it at&t verizon. from our perspective, we like it to be many. we collect data. many of those folks are our customer peps right now, there is a treasurer drove of information in all of those places. we're talking about libraries of congress created every few weeks. but it's clear there will be many other players who want to play with that information. >> a longer conversation, we hope to have you back and keep talking about this. thank you very much. >> thank you very much. when we return, call them the four pillars of the market,

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time for squawk ceo of bob evans. chairman and ceo steve davis. do you still advertise on tv, steven? i can sing that -- do you remember that ♪ bob evans down on the farm is that still a jingle for the the company? >> actually, yes, it is. it's an instrumental at the end of the commercial. >> i don't think they run back here on the east coast. i don't know whether bob evans is not as popular back here as in ohio and the heartland. heartland. it's the state. >> the majority of our restaurants are in the state of ohio and midwest 19 states. we have a lighter presence on the east coast. our food products business, you can find our food products in all 50 states and parts of canada and mexico as well.

>> thank god. >> you had good numbers. did mimi's not fit because bob evans, mimi's? where did you get it? how did you is decide it didn't fit in with the portfolio? >> we acquired mimi's cafe in 2004. i joined the company in 2006. we established brand owners to drive the business, went together as a team to consistently drive sales growth, operations, and return on invested capital. one of the things we found is we didn't quite get the return on vested capital the same with our farm fresh refresh models. and family dining is a less congested space than, say, the casual dining sector. so for a lot of reasons strategically it didn't fit for us. it didn't fit for the company it

did sell it to. it's been a great transition for them and it's a great transition for us. >> so your latest numbers above expectations for the bottom line. the top line, if you factor out some of the stores that you're closing, i think revenue was up a half percent. at least it was up. business was tough. it was tough, weather and the economy. >> yeah. you had a little bit of weather. you had the first couple weeks in february across all categories. we bounced back. so the good news is if you play value and convenience well, you'll attract consumers both in our food products business but also in our restaurants. >> do you think that was because of what happened with the payroll tax cut going away? did that affect your business? have we gotten through the headwinds just based on what you

see from the consumer? >> that's what it seems like. it wasn't just as. it was category wide. so the consumer seems to have shaken that off. they're focusing on getting great value and great convenience. >> steven, i don't think you -- the company doesn't have a farm. i think you have a farm that's like a museum, where it was started. >> we do. >> i'm sorry? >> yes, we do. it's in rio grande, ohio. we made a significant effort to reenergize the farm. it's our heritage, roots, and our equity. >> but you don't have a smithfield foods business model obviously, but you do know something about pork. i'm just wondering, do you have an opinion on -- i like oil. i know oil is important. but bacon is pretty important too. do you have an opinion -- we couldn't buy big producer of pork in china. should we let them buy

smithfield? >> i really don't have an opinion on that. we're not fully integrated. we don't raise animals. we bring the animals in and make our sausage products and precooked products. really don't have an opinion on that. >> all right. we'll leave it at that then. i just want to make sure you have what you need to keep doing what you're doing. and that would be a very strange situation i guess in the future where if there's a real pork -- it's possible, right? there have been meat shortages in the past, right? >> and for us, you know, sausage is an important part of our portfolio. >> steven davis, we appreciate your time this morning. thank you. >> thank you very much. it's my privilege. >> we talked about the consumer this morning. coming up, two more of the so-called pillars of the market.

the sectors that kept the market up and are now coming under a bit of pressure. housing with bare sternlicht and the ceo of raymond james. 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.

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the fed feels growth. sending the dow back below 15,000. we'll talk fed policy and the markets with the ceo of financial firm raymond james and guest host barry sternlet of starwood capital >> the ceo of zillow is here to tell us about real estate trends. worried about the chinese owning our bacon? mexico already owns our bread.

his first interview since losing the hostess bid as the second hour of "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick. the bank of england just out. it is leaving rates unchanged aspected at half a percent. we're continuing to await the ecb. that decision comes out in 44 minutes. if you take a look at the futures, you will see green arrows, coming after big declines yesterday. the dow down 1.4%. this morning dow futures are indicated higher by 46 points above fair value. s&p values up by 5.5 points. and the dow at this point isn't in danger of its first three-day losing streak of 2013. that follows its biggest two-day

drop since november. the dow has fallen 3.7% since achieving a record high on may 22. s&p hit its record the same day. down 4.6% since then. sodastream is in talk to be bought by pepsico. pepsi is willing to go as high as $95 a share, putting the total price at more than $2 billion. stock up 11%. >> do you have one? >> no. do you have one? >> no. but i know people who love them. hulu is currently owned by news corp., disney and our parent company, comcast. costco reporting same-store

sales rose 5%, but that was below estimates of 5.5%. costco is the largest club chain, with bj stores and walmart stores sam's club. procter & gamble reorganizing. p and g will split units into four sectors starting anything july. each will be led by a group president. the four individuals will then be in line possibly to eventually succeed laffley. you put four up against each other. >> this is deja vu. >> there were three there. but they all worked their butts off. >> you lose some goodies.

>> they all wanted to do big things. >> yes, they did. >> the maker of tide laundry detergent and gillette razors. we both made statements. you went over some of the things that you -- puffs plus. i shaved with a braun razor for my barmitzvah. >> ours was so much more detailed. and we don't even own the stock. >> he's so excited. he just didn't share all the details. >> we have some other news this morning. u.s. national security agency is collecting telephone records of millions of verizon customers. the uk guardian is citing a

secret court order. it was marked top secret, issued by the u.s. foreign intelligence court. it directs verizon to hand over electronic data on an ongoing daily basis until july 19th. each phone number, location, and routing data and the duration and frequency of the calls. but the order doesn't include the content of the communication. so if you're one of these verizon customers of a specific subsidiary, your call is being tracked. >> this is the first time i'm hearing about sodastream talks. that is according to bloomberg. they didn't actually speak to her. they were monitoring her computer. no. actually, it was -- that came

from the obama administration because she was using a verizon firm. >> i heard from the cincinnati office. >> it's a comment from an interview in myanmar. >> let's scratch from the guardian just said. it made no sense. >> wouldn't you know? >> not the guardian. it was an israeli paper. i have to admit when i saw the news this morning it didn't make that much sense to me. >> something even on that report from the globe's online, there are initial talks. it's unclear what is being considered. >> we looked at that stock. it was up 11.75%. >> it was up in the 90s when we first talked in the 6:00 hour. so that's come down. >> bloomberg is a competitor. whenever we mention a name to be able to throw that in there. probably not a good idea. >> the second largest real

estate manager and has invested $2 billion the last 12 to 15 minutes barry sternlicht. i read that so quickly i was going to start talking to you to emphasize the point. you are now what? your firm is now the second largest real estate manager in the world. who told you that? >> some magazine. >> they did all the math. >> are they right, or is that like this israeli newspaper? >> they're right actually. we just closed a $2.4 billion fund. we have an energy business. we're doing okay. >> the reason we want to know all this is because we haven't seen you in a while. you are in a unique position given what you see in your business to give us some insight into the world, the economy and what's happening right now.

has anything changed since the last time you were here? >> i think in internal the last 6, 9 months is the underwriting of europe by the ecb. europe will survive. save small islands with few people from russian tycoons. i think you have seen the oefpbd that stretend of that. but i think what you're seeing now. people are nervous. what you're doing by printing all this money. when japanese treasury essentially buys their debt, uses the the money they're print to go buy stocks they, go out on a global basis. if you step back, they shouldn't be able to do this. you shouldn't be able to create fake paper. it devalues paper currencies. i think people are generally

saying stuff is not working correctly. the yen was supposed to collapse. we saw interest rates bobbling. these markets are quite volatile in their ranges. it's very hard, if you're paying attention on a daily basis it's hard. the good news, i think the economy is definite. housing market is definitely getting better. we have a home builder in california. it's real. it's not fake at this point. it's a real recovery. i joined the border restoration hardware. michael is one of the p efunds that funded restoration. they're having a good day. they're having a good day because people are restocking their homes. . i think it's going bumpy until

august when we have another discussion in washington about the debt we have. there hasn't been any news out of washington. >> so we're washing paper globally, yet the dollar still seems to be the king. we're showing everyone else how to do it. why are we still -- why is gold breaking 1400? >> i think the flow of capital is interesting. 4.2 billion, we capped at that size. more than half of our investors are foreign. we are the best looking girl at an ugly girl dance. >> how many drinks? >> a lot of drinks. it's really a -- it's funny. real estate roundtable met with bernanke about a month ago i guess it was. the signaling that you're doing with keeping rates this low,

everyone loves the rates. especially in real estate. i said this was the goldilocks period. it really is. it's amazing. but the problems are it tells every ceo and every bank executive that this is an artificial environment. it's not real. you can't ask us to act normal when there's an emergency stimulus. >> i e-mailed pepsi. she said totally and completely untrue when it comes to sodastream. take a look at the sodastream stock, which was up in the 90s. this is just coming back from the head of pepsi. totally and completely untrue. >> hold on. usual lu usually when you ask a

ceo -- >> she said it's totally and completely untrue. so take a look at that stock. or if you bought this morning. news alert, we'll just put this up. noovi just told us completely untrue. >> got to watch the show. >> i can't wait to talk to you more about this. the emergency stimulus we're getting, we can't imagine living without it. >> it's amazing. >> i need 85 billion. not 84. >> not 50. >> what? do you remember when they did it. it was like, are you kidding me? it was like qe infinity. >> the economy is kind of weak and global rates are low.

so where are you going? the volatility in debt markets. >> do you remember when china was fixing their currency. and we wondered what would happen if they didn't fix it. you don't know. rates so much higher. but it's so slow. the fed could be out. who knows if they go up. do you say to yourself the market is off, round out at 5%, 3.5? name your number. do you say this is a great opportunity? >> i chase stocks. >> you do? >> yeah. >> you buy down 5%? >> well, i think it's -- you pick your stocks. some stocks have oversold. etfs are creating havoc in the stock market. the buy and sell of entire sectors without discrimination between stocks in a sector, all the pharmaceuticals, all the utilities, mortgage rates.

all the rates got killed when people thought the rates were going to rise. it is programmed selling. individual investors are so nervous. oh, my god there must be something going on. you see this gold. it creates wild gyrations and makes people really nervous and uncomfortable. just think long term. >> stick around. you like it here. it's fun. goes fast. >> i like you guys. >> off camera we talk about all kinds of stuff. questions about anything you see here on "squawk", shoot us an e-mail or follow us on twitter. coming up next, stocks tumbling with the jobs reports. worrying about potential monetary changes. ceo of raymond james giving his market outlook.

>> it's been coming down significantly. noovi e-mailed us, head of pepsi, is and told us this is completely untrue. this is totally and completely untrue. it's pretty unusual to see a ceo knock down rumors like this. she just e-mailed that to us in the last five minutes or so. as a result we have been watching that stock come back down. shares of sodastream, $74. a decrease in the monthly bond buying program. are the markets prepared for a qe taper? joining us is paul riley of raymond james financial. thank you very much for coming in today. >> great to be here. >> this has to be the biggest question, fixed indeed. >> the average investor can't take principal losses.

it's just not a good time in lower fixed income. as the rates go up, which they will some day, there's too much chance of principal loss. >> and people always think bonds, fixed income. this is the safe place to be. is it difficult that things have kind of turned at this point. >> it is. there's such a search for yield for retired people or the people at the end of their careers. >> so, what do you tell people when they come in? should you still have an 80/20, 60/40? should you have some of your portfolio in bonds? >> you should. if you're still young and earning, more in equities. move more towards fixed income in retirement. everybody is worried about what happens to the market this week. invest in the long term. we have had 101 consecutive quarters of profitability.

it's not by anything we're doing this quarter. it's taking a long-term portfolio view. >> we really get the sense the last couple of weeks things may change drastically. people are looking at what bernanke said on capitol hill and thinking, okay, the fed is really thinking about it. it could happen before the end of the year. >> well, the fed has to come out sometime. we have to address a deficit sometime. so it's going to impact the markets. again, i think if you look long term, look at long term moderate growth in the u.s. economy. if you're an investors, not a trader, look at long-term investment. >> someone sent to me my 401(k) program, i have a target retirement plan. they balance it for you. i was looking at the balance and thinking to myself, this makes absolutely no sense. we were talking about this with

joe with the 60/40. >> i said at most 80/20. it's not treasuries. >> i wonder whether all of these target funds, do they make any sense anymore? >> well, they're simple, right, so you don't have to worry about it. each individual is different. it's an individual investor. they're at a different place in their careers, have different risk tolerances. you have to say what's right for you and to look long term. if you're in a fund, you're in the average. if you're in a lifestyle fund, you're at the average of the goals of that lifestyle fund. you're not e you're. >> we both have 30 years, 40 years left. >> i'm 98% other. i'm not fixed income. it's not a smart place to be. you look at the reads and they

are off 10%. >> you're in things not correlated with the stock market. >> absolutely. and you have to think about that. it doesn't all in the same direction at once. technology investments are interesting. they kind of grow. >> we'll consult. >> i still have my bonds after all the guests who have come on again and again and again. >> st. petersburg. you're not as close to the trees. you beat all the other money center funds a lot of times in research and stock performance. we said that before. >> that's the advantage of being out sometimes. you're not chasing everybody else. >> be even russia. >> the thing you're hearing most, do you get the sense they are invested in this market or is there -- >> nervous.

you look at the cash on the sidelines and the portfolios, there's been a movement. a lot of cash. i wouldn't call them heavily invested. >> thank you, paul. coming up, worried about china buying our pigs? well, yeah. mexico already owns our bread. michelle caruso-cabrera joins us. which nhl player holds the record for the most stanley cup wins? oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, 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 duerapy.com.

now the answer to today's aflac trivia question. which nhl player holds the record for the most stanley cup wins? the answer, henry richard with 11 stanley cup wins. coming up next, another piece of the jobs puzzle. john challenger. he's going to join us with their latest read on who is hiring and who is firing. ecb is meeting now. they will have a rate decision at 7:45 a.m. eastern. central bank likely to keep rates unchanged. but of course you never know. squawk is returning right after

this. got what it takes to be an economist? logon to the "squawk box" facebook page and guess tomorrow's big jobs number. your predictions will be revealed just before the numbers hit the wire. test your economist skills and get ready for the number that could move markets. it's only on "squawk box" on cnbc and on facebook. ♪ 'cause you make me feel so right ♪ ♪ even if it's so wrong ♪ i wanna scream out loud ♪ boy, but i just bite my tongue ♪ ♪ this one's for the girls messin' with boys ♪ ♪ like he's the melody and she's background noise ♪

[ volume decreases ] thanks, mom! have fun! you too. ♪ ♪ 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. ♪

welcome back to "squawk box", everyone. in our headlines this morning, the the bank of england kept the benchmark rate unchanged. coming up at 7:45 we have the european central bank issuing its own policy statement. it, too, is expected to keep rates and policy unchanged. also, apple speculation running rampant this morning. apple is planning to sell advertisements on its not yet announced service. the company will announce the service which many are calling iradio. and nooyi says her company

is not in talks to buy sodastream. there was a story saying pepsi was in discussion to buy sodastream for $2 million. she responded by saying that report was completely and totally untrue. andrew? >> thank you, becky. >> what did i just miss? i hear laughing. >> nothing, nothing. nothing going on here. >> rumor of the day. >> i don't want to get sent away anymore. also this morning, challenger of gray and christmas on job cuts. steve liesman joins us at the table. >> right. just when you were ready to say it was going to be a weak jobs report, along comes challenger saying job cuts declined for the third consecutive month. u.s. employers by only 36,398. the may total, 41% lower than the same some a year ago.

cuts of 219 so far this year. it's historically low month. i want to see what was the number. i think it's 11% year to date below where it was last year. let's bring in john challenger, the guy who puts this report together. i had my mind made up. i don't know what to think anymore. this is a strong report. just one more thing i want to say. when i look at how challenger works with jobs, it's pretty coincidental. it has a good historical record here. >> it does seem, steve, to be pretty consistent with where the job market is at. it suggests layoff pressure is very light. companies aren't cutting a lot of jobs. interesting, we're seeing some of the cuts come from health care, affordable care kinds of considerations. that's one of the things that most stands out in this report. not only hospitals worried about cutbacks in medicare payments, but then companies beginning to say we're going to have to cut

back our workers to get below the line we need to not pay the penalty for affordable care. >> what you said is not particularly related to the health care sector. >> no. >> but that would be related more to business size. >> two different types of reasons. health care was the leading sector this month. that was mostly due to hospitals, health care organizations concerned about reimbursements. we are seeing a lot of job creation in health care. >> i was less concerned about that in part because of what you just said. there's tremendous job creation in that sector. i was obviously more concerned about cutbacks in media, which was one of the big ones. what's going on in finance right now. >> finance continues to move, i think, towards a much less risky

environment. when you see hearing there, it's for people to manage risk. to, you know, deal with companies, financial institutions apart growing. they aren't going to get the returns in the future as they become more like utilities. so they continue to lay off people or to cut back their structures. >> you're seeing big numbers number construction, hiring? >> we're not seeing much in the way of layoffs there. certainly the housing area continues to grow. another interesting area we've been looking at, how about federal cutbacks and sequestration. is that going to really pull the economy down? so far we're not seeing many cuts attributed to that other than the defense sector where we have seen some growing cuts. >> there's some talks that it has been related to the defense

sector. let me just ask about regional. what's going on in the 'empire state. >> new york hits it square on the head. >> one of the things we've heard, john, maybe some of the mortgage companies. they may be cutting back on staff? >> hard to tell. i haven't seen any cuts directly related to that. that would be spread out around the country. >> you can see foreign banks are challenging their employees to work at their banks. ecb capped comp. they're downsizing. >> the other thing you see is the federal reserve, similar to

the u.s. banks. one very quick word about the health of the job market from this report. how would you describe it? >> looks to be very positive actually. companies are holding on to people. we need to drive unemployment down. the pressure to cut people just isn't there. these are the two lowest job cut months of the year throughout the last 20 years we have seen. so it is a low time, low pressure time as well. >> john, thanks very much. you have to go back in. >> what's your number then for tomorrow? >> i was in the 1.25 range. i was going to see how economists reacted the next hour at 8:30, to the adp report. to see if they all lowered. you had sullivan on who lowered because of it. i want to see how many more guys got there. >> i have seen two or three already.

>> send it my way. >> john challenger. are you an actor? >> it's a good name. >> super hero. >> why play the porn music? >> when he talks about going into movies, that's where they assume -- >> oh. coming up, rising home prices helping zillow stock double. we'll speak to the ceo about business and the housing sector. futures up 44 points. soda stream --

welcome back, everybody. mortgage rates have spiked higher recently. but will it slow down the housing recovery? joining us is the ceo of online real estate site zillow. thanks for coming in today. >> thank you. >> i am a little bit addicted to zill zillow. spy and check on your neighbors. >> you are forgiven your

addiction. >> it's a little bit hard to follow. i want to know what you think is happening with housing. >> so what's happening in housing is recently interesting. it's big supply/demand. very limited supply. 44% of americans with a mortgage are effectively in a negative equity position. they're trapped in their home. there's very limited supply but significant demand. we have seen six months in a row of greater than 5% appreciation rates. that's the longest streak since the bubble. high rates of home value because of supply and demand. >> it's also because we dropped so significantly. 30% drop. >> we came down so far from the peak. we are seeing unsustained high rates. orange county, san jose, 20%.

far too high. we have come back too fast. so it's concerning. >> and it gets a little trickier of a pe proposition. >> they come from 3% up to 5% or 6%. it will create problems down the road. imagine yourself buying a $300,000 home today and trade up to $500,000. because mortgage rates are going to be higher, it's significantly more expensive. trade-up market will be troubling because we have these incredibly artificial low mortgage rates. >> that's nerve-racking. >> it means buy as big as you can right now. >> it means in the next 10 years we're going nowhere fast. >> it will come down to 3% to 5% range. it means this is definitely a great time to sell if you have

any equity in your home. probably best to sell now even though home values are continue to go rise. mortgage rates are going to go up. it's hard ton find inventory. >> you bought up a lot of stuff you're renting now? >> yeah. >> what's the rental buy/tradeoff. >> in markets like phoenix, nevada, which has come back fast lately. it started slow. >> there's been investor demand. mom and dad, kids in college buying houses. that is about a third in some markets. don't you think that it will have that much bigger impact on the market. >> they are there to buy up.

>> i guy says, he's 100,000, i will pay 101 and get the house of my dreams. it's like somebody showing up for everybody picasso. that's the baseline. >> i assume you have funds. >> in my question, is this going to be an institutional asset class. and i think they should be. i think there's all kinds of issues on managing these assets and things and economies of scale. but it should be like any other asset class in real estate. over long periods, there's always room for a house. >> would you bay more, or are these purchases you made from a year ago? >> we bought debt to get to the homes, and the homes. we're focused on specific

geographies. it is interesting phenomenon. it's fascinating. there's not a lot of down side. current yields are 5% to 7% on leverage. you will get closer to a double digit yield. and the appreciation is sort of a bonus. >> some indexes that have traded in chicago and elsewhere. we're now just starting to see that. you see private equity coming into it in a big way. >> in a very big way. the bank of england left its rates changed half a percent. so the news is no news.

>> very app poe. that continues to make housing very affordable today. >> selfish question, can you make sense of the new york city market? >> no, nobody can make sense of the new york city market. it's driven by finance and wall street. you continue to have favor economic climate on wall street. a small island with limited inventory. >> it's not just that. the foreign buyers here. >> la cart premium. >> as the world shakes and the middle east shakes and china, nobody is sure about china and invisible cities with nobody in them, europe. we have seen a lot of foreign interest in new york. >> spencer, thank you very much for coming in. >> thank you. when we come in, more market thoughts from our guest hosts. plus, more jobs numbers on the way. the numbers could move the

markets ahead of tomorrow's big number, which is the monthly number. also, a news flash. thomas's english muff ins really aren't english. they're mexican. michelle caruso-cabrera caught up the largest bakery in the u.s. and his first interview since losing out on the hostess auction, we'll hear from him. ♪ 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, everybody. if you are worried about your bacon being bought by the chinese, did you know that your bread is owned by mexico? cnbc's michelle caruso-cabrera caught up with the largest. >> entenmann's, owned by a mexican company. bimbo. the noises women make when they see babies, that's what's behind the name. it is the biggest baker in the entire world. in terms of revenue, 13 billion

revenu revenues. 6 billion larger. i got to meet ceo. very high profile. >> they're private? >> publicly traded in mexico. he graduated from stanford back in the '70s with an mba and immediately began dispatching trucks for their dad in the united states. 2011 they did a bunch of acquisitions. how do you make money on baking bread, right? seems like an old business. extract a lot of efficiencies out of better bakeries. american bakeries are really old.

is. >> they have been in existence 50 years. that's the baking industry. now that we have scale in city and town we can have the opportunity to leverage that scale with new, more efficient lines. >> 95% of walmart, kroger and costco. and the next step is to go into smaller markets. local stores, et cetera, to get even more growth. >> what happened, though? they lost out on the hostess bid. >> they had already done a big acquisition, sara lee in 2011. they had a hard time with the doj. they had already taken on leverage. mexican companies in general, unlike previous governments, did not like debt. so his board, he admits, said, you know, we're not going to look. and it would be probably really difficult. they were the only competitors against hostess.

so the ability to really get the deal done was extremely difficult. they do make twinkies in mexico. >> a look at all these products. and i heard of grupo bimbo before. >> it has a big national footprint. they plan to expand into china as well. we're going to mexico tonight. we're going to be there live on monday. >> at the factories in. >> no. live on monday in mexico city with the ceo of 3m. you are welcome to join in. >> they focus on the brands people are associated with. >> you asked about the stock. five years ago it was trading is just under $20. now it's closer to $40, maybe 38 or something. >> trades in mexico city, not in

the united states. i said will he list in the u.s.? no plans to. so see you from mexico monday, guys. >> thanks for breakfast. >> you got it. >> let's get back to our guest host this morning. joining us now on the set and making a little bit of noise, barry sternlicht. you can't eat any of those doughnuts in the shape that you're in. haven't talked a lot about deal making this morning in terms of buying and selling big businesses, private equity, that whole world. what's your sense of where things are? >> well, talk about the real estate world. it's been a very busy year and a half for us. it's been very active. increasingly more in europe and less in the u.s. because we're moving on the cycle here. europe is beginning to open up. we just bought a big hotel in the uk. we did a deal with the irish version of itc. shopping centers.

working on an office park in eastern europe. everybody wants yield. so new york city office buildings. 650 madison has traded at a price point nobody has seen before. you mentioned the residential market. prices are so high you are seeing 4,000 a foot. residential sales. every office building wants to become a residential property. it's going to be converted to a hotel. midtown manhattan office building. >> you're looking at more stuff? >> oh, yeah. but it's hard. new york city is attracting

global capital. >> we did the walker tower. great project. hotel on the water in brooklyn with toll brothers. one hotel on 58th and 6th. jobless numbers coming up. the numbers and the instant market reaction at 8:30. plus, how wall street is gearing up for obama care. chair of oxford health about venture investing and how his number company is finding solutions for patients. tite for. tite for. you can't say 'one size fits all'.

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. the taper tantrum continues. stock falling on concerns that the fed may wean off its monetary methadone too early.

cashing in on obama care. the new health care rules take effect. breaking employment data. the closely watched weekly jobless claims hits the tape at 8:30 eastern time. the third hour of "squawk box" begins right now. welcome to "squawk box" on cnbc. andrew ross sorkin is back here and has your morning headlines. >> do a little check on the markets first. >> the dow now in danger of its first three-day losing streak for 2013. that follows its biggest two day drop since november.

the dow has fallen 3.7% since achieving a record may 22nd. joe may differ with me on that. >> dow. >> s&p 500 hit its record high. take a look at u.s. equity futures. this is morning. see how things are setting themselves up. dow opens 60% higher. at least not down. a choppy session in asia overnight. nikkei closed below the 13,000 mark. two-month low. bouncing between gains and losses all day. shanghai stocks fell to a three-week low. verizon is now refuse to go comment on a story that says the

government is collecting data on phone calls made by its customers. this report came from the guardian newspaper. they publish what it said was a court order. senior administrator saying any orders are classified. but the current law only allows the collection of calls and their length that. does not allow the government to listen in. verizon not commenting. becky has a story where somebody is commenting. pepsico ceonooyi tells us her company is not in talks to by sodastream for $2 billion or more. she said that report was completely and totally untrue. it first appeared in an israeli financial newspaper. the stock had run up to above $90 a share. it's up $5.5 to 74.85 despite

nooyi herself saying these talks are not on. the dow closed below 15,000 on wednesday. that generated the first two-day losing streak. joining us on set is darren kronk at wells fargo bank. darryl, people have been pinning more and more on what happens tomorrow with the the big monthly jobs picture. what do you think the number is going to be. >> actually, i think the number will come in a little bit below consens consensus. you've got a lot of people with binary outcomes here, right? very low all the way to very high. when we come look at the number between a softness in construction, jobs, simply because of the cold weather, manufacturing surveys are still down. and the initial jobless claims have been inching up in the month of may. so you couple that with the adp

report. all of that looks to be a little softer number. >> did you bring down your numbers after you saw it yesterday? >> no. i don't think there was enough in ap. and there's enough vnc they are adp now that i thinkit's a tren enough to change us. >> what about the jobs component in ism. if you used that component it would get you to 25,000 jobs tomorrow. it would be a horrific number. >> i think anything less than probably 200,000 jobs the market responds favorably. it keeps the fed on the table, which is what the market is looking for. whether we agree or like it or not is the situation. it would be concerning of a stalling effect. >> you are a much longer term investor. you are not looking at the play-by-play and making your decisions based entirely on that. does the fed play a role in where you are thinking about

putting your money? >> i think our macro view of the economy plays a role. it is a weak global economy. there's no big engine. with china sputtering, europe slowing or whatever it's doing, there's no reason for this to be rocket ship. i don't think rates are moving very far. we said a couple years ago when i was on here that the housing market would recover. it's recovering. multifamily home starts are back to where they were before. there's a lot of job creation where americans can get jobs. this is a workforce that doesn't have a lot of skills. we needed those construction jobs to come back to put this labor base back to work. in certain markets there's labor shortages. labor costs in california. can't find skilled workers. can't find trades.

i think overall our rates -- i don't think it's a bad things if they go 2.5%. it's not a big deal. japanese rates of 83 basis points, we have gotten quick live very used to very low rates. very attractive for real estate. >> where do you think rates will be a year from now? if the five-year view -- >> we would all like a steady climb, 2%, 3% gdp. it's not terrible. a gradual increase in rates. what makes people nervous is the spikes. margin debt is at all time highs in the equity markets. we're seeing banks -- not your bank, stretching on lending and we're seeing a lot of mezzanine players come into the market. they are migrating in. it's a dangerous time to get

very degreesive on how you create your equity purchases. there's just too much tail risk in the world. >> that sounds like new bubbles. >> you are seeing that. in the debt markets there's a lot of -- the conduit markets are wide open for the property markets. and you're back to '06 and '07. capital stacks, meaning debt, if you look at the income of the assets, the debt, they don't cover anymore. nobody would take a piece of paper and say i'll take a current pay of this. >> people were complaining banks wouldn't give you a loan. >> now the only place they can lend are real estate. so the only place -- small businesses, which many have some issues with. real estate is the place to go. >> are you right fundamentally on that? at the grassroots level we're

seeing a lot of penalty pick up. >> that's picked up exponentially. it was at trough levels. >> right. >> but it's certainly a tell-tale good sign economically. the other thing that's a little bit -- i actually think the markets are a little incorrect about the tapering conversation. when you look at -- the fed sets the rules and has the yardstick. when you look at inflation data running 1% low. they have to market their gdp numbers for second half, which are too high. certainly the hawks have been, you know, alarming the world every chance they get around the minutes. and the key point here is i think the markets and the fed have a different definition between whether tapering is tightening or not. and i don't think that certainly the fed would argue tapering is not tightening. >> i understand that.

some investors say, hey, don't know get caught in the squeeze trying to get out the door. smart guys get out first. >> sixth derivative. we're not talking about tightening. we're just talking about the idea that they might cut. >> i think there's a lot of question who is going to step up and buy the debt. >> right. >> they are saying we have enough of your treasuries. and they are. they are looking at alternative asset classes. a lot of investors are thinking about the inevitable outcome as inflation. if that's the case you don't want a long-term treasury bond. they are beginning to straoeu to extend maturities in their issuan issuance. it's better than they're doing. >> just where they are. >> yeah. try to get a five-year -- moving it out. >> they're buying long-term debt. >> it's interesting. it's a great time to be in the bleachers with a bag of popcorn

just watching this. this is an experiment we have never seen before. you just have to be careful. >> you have to go back to the 60s to see a period of time where equities would rise and interest rates would rise simultaneously. it typically doesn't happen. as we look forward, especially as the fed maps out its exit strategy. >> i would love to see it go up. the economy might absorb that. you would take the air out of the market. savers would put money into their cds. it's hard to get the short end to move higher. >> the fed can do that. >> right now we're talking early 15. maybe late 14 for that. >> that is his base plan. that is bernanke's base plan. >> is he there to carry out the

base plan. >> do you care? >> i care a lot. >> if he's there? >> yeah. >> yellen is there. >> we care a lot. >> and then what? >> another uncertainty level. >> if you change your investments as a result? >> yeah. >> yellen, as everybody knows, is to the left. >> you don't know how she will react in certain circumstances. >> bernanke may start to lay out this plan. that disease meeting is key. >> we will know if he's staying by december north. i imagine we will know by fall. you say we're beth on this thing? >> he gives me a lot of comfort he will do what it takes to keep rates long.

he wants it at 6.5%. given the economy, i don't think he's going there. the lord giveth and the lord taketh. we're losing financial jobs. the midwest is -- big deal. a lot of jobs there. >> the other thing that the jobs report friday that nobody is talking about that i would watch is the private sector workweek. it came down 0.2%. as the workweek contracts, companies in the private sector have been squeezing out basically the hours and that type of thing. it can't contract a lot more without significant job cuts. that will play into the jabs data. we have to watch that along with everybody that pays attention to the labor force. >> is that what you're working? >> are you kidding me?

26-9. >> you might be french. are you french? >> darryl, thank you very much. >> my pleasure. >> we will continue this conversation. >> four hours. coming up, the implementation of obama care means opportunities for companies that adapt quickly. up next, venture investor. you know this guy. he's famous. proven track record of picking winners in the health care sector from oxhp. as they head to break, look at u.s. equity futures. jobless claims number is 830. tomorrow, the moment everyone has been waiting for, the markets, the fed, the economists, all looking for guidance from the may employment report. "squawk" is your home for the

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welcome back. obama care changing the game for health care providers and creating opportunities for investors.

joining us now, someone who knows a lot about the entire health care industry, that is steve wiggins, managing director of essex woodlands. and you might recall steve was the founder and chair of oxford health, one of the big hmos from long ago. it was sold to unitedhealth group. we're going to come to you for the lowdown. you're just going to assume that in some form, should i call it the aca? can i call it the affordable care act, aca? >> sure. >> it's the law of the land and will stay the law of the land? >> yeah. i think it's going to be easier to get gum out of your hair. >> peanut butter? >> obama care out of the system. it's already been implemented in large part. there's still really important thing that are to be

implemented. most significantly the big subsidies where people will go to get their insurance. >> there are certain things that are positive about it. that is we go from, which we could have gone without it. we could have gone from fee to service. we could have done that without obama care. at least it's in obama care. that's a positive. >> that's right. >> but the linchpin of change is usually when medicare, which spends most of the dollars in the health system. they're the biggest pair, which is the program for senior citizens. when they change their policies, that tends to be the tipping point in payment reform and just moving the system in general. so the good thing about what's happening is that medicare is doing really what hmos did long ago. they're realizing that you can't continue to a pay for health care on a fee-for-service basis.

because it encourages people -- it encourages providers to deliver health care -- more health care rather than better health care. and it's a focus on treatment rather than healing. >> your biggest worry is not going to be -- i think it's obviously to anyone if you add 30 million or 40 million people that you're probably not going to save a trillion dollars. my idea, just add china. cover everybody in china. >> trillion here, a trillion there. >> in your view, the subsidies that are going to be necessary are going to be 1.5 trillion minimum. is that including the trillion we save? >> no. that would be the gross. that's not the net. >> it's not? >> that's the gross additional cost of the subsidies. that's one estimate. >> are we double counting the

taxes again? >> it's garbage in, garbage out. what's the real number it's going to cost? >> that might be a low number. again, that's the subsidies. that's what we're going to spend to help these people that don't have insurance into the system. >> because old people are going to need expensive plans. >> that's not even old people. >> you're right, barely. it's generally people that don't have insurance now that are required to buy insurance under the program and so we're gathering taxes and we're gathering other fees and other charges in the system to pay for those people to buy insurance. >> and there are some older people. >> some are sick, some are young and healthy. a lot of people are coming in. the troubling thing about who is coming in, it's a well-known fact in health care that when you begin to have coverage after not having conference.

>> you use it a lot more. >> you have a big spike that year. in what it costs to take care of you. and we have 30 million of these people coming in. so i think the number is a little bit under. >> i thought the spike, though, thus far in a couple of the experimental players not h not been. oregon and other places hadn't been as big as spent expected. >> a couple of states, though, where they have -- >> massachusetts. what happened there? >> well, massachusetts, there are states that have mandated that people that have coverage. and states like new york that have always had markets that are going to operate the way that obama care effectively will operate. >> do you think this is going to be a big break on the economy? it won't impact the economy?

and do you think we have seen the impact, or it's going to be ahead of us. do you think this is like sequestration. do you think it will take money out of employers? is it going to change the balance sheet of corporate america? is it going to affect the economy? >> it's going to change the income statement of america. because the bigger share of gdp. >> i read that. we're at 17%. we're supposed on to go to 10%. it's going up? it's going up. >> i believe it's going to 20. and it can't go any other way, because we're moving more people into the insurance system. but it will be for a while. because i think there's an initial inflationary effect. it's an inflationary effect because we're insuring more people. so a bigger share will move away from everything else towards health care. >> at least we know what sector of the market. >> what was that article we read

recently. but also the flip side of being the gold plated insurance programs. big corporates offering -- they're going to be modified. >> i got e-mails and letters from doctors that want to be private care. >> is it going to be by fur indicated? it will be rationed like canada? >> having money is better in all health care systems in the world. but i think it's an initial increase. it's an initial inflationary bid. and after that, all of the changes that they're making will actually lead to deflationary forces. i think obama care has things that should scare us. it's the cost side. but a whole bunch of things that make a lot of sense. >> we have to run. mamas don't let your babies grow up to be doctors. >> you have a whole company that's doing this now. >> jobless report.

>> we can't buy those. >> that's health care. it's only a five-minute topic. coming up, weekly jobless claims numbers 8:30 eastern. expecting 345 new jobless claims. 354. that and a lot more coming up. [ lorenzo ] i'm lorenzo.

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economic numbers. the weekly jobless claims, which are more important than ever given some of the concerns we have and what we have seen over jobs the last two days. as we head to break right now, take a look at the u.s. equity futures. dow up 52 points. we'll be right back. (announcer) scottrade knows our clients trade

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welcome back. we are just seconds away literally, literally seconds away from the weekly jobless claims. five seconds away now. now four. rick santelli stopping by. >> initial claims moved from revised 357,000 down to 346,000. so we shaved 11,000 off the number last week. originally released at 354,000. continuing claims slightly different time grimes. 2.95 million versus a slightly upper revised last look over 3 million. the news of the day i think continues to be that the nikkei continues to lose ground. but if you look at the jgb,

seems to be that the proactive move up side, which came very close testing 1% several weeks ago, is backing away and spending more time in the 80s. that's the 10-year jgb. pay a lot of attention to that. on the other hand, if you're looking at the first avenue of defense on the carry trades are at least trying to handicap which way they will affect leverage. it is dabbling under 99. it has done it a little bit yesterday. a little bit today. as we speak. eer vacillating between 99.01 to 98, 99. what are you guys seeing up there? >> i think we oversold this number. >> the claims number? >> yeah. the claims number. we were hyping the heck out of

it. >> it's not even the survey, right? >> very quick thing on the jobs report. tomorrow, just thinking about what the lead up to it looks like, which is overall when i think about the data leading up to it. this is not one of the last pieces i was waiting for. overall, the indicators have been weak. that includes thinking about the challenge you have had the the ism manufacturing and services number. both suggest expansion. but they don't -- that has decelerated. that's one. two, i think people forget that economic growth is weaker this quarter than it was in the prior quarter. we're talking 1.5 versus 2.5%. it depends how you gauge the fed. the fed you could say is neutral to the extent that it's doing the same qe as it did last month. but they would argue every time it adds to the balance sheet

it's more stimulus. i'm still trying to calculate the number. some of the guys over 200 k have come down into 190, 200. nobody came up. >> when we were at the fomc minutes that we have all tried to divine something from. >> right. >> at that time they were having that conversation where do you think they thought these numbers would be? >> see, i think you're asking the wrong question, if i may. that's what's so wrong about what we're having here. what is so troubling to the market, i think, is that we're asking a discussion about tapering that seems to be divorced from a discussion about the economy. the way the fed laid it out to us originally is we would go up and go down based on the economic data. there was no proof that the economy was strengthening. >> they have taken a long-term

view. they're seeing a slow -- they expect the economy to do 1.5 this quarter and the next quarter and 2.5 the third quarter. it's hitting the economy. the stock market was going one way, up really fast. and people thought, oh, this is much better than we thought. housing is doing well. >> but some of these numbers are not as good as we thought. >> claims are okay. they're in the right zone. they're fine. claims are fine. >> we don't know wife we have had this come down in the manufacturing ism. but there is a suggestion it is related to the defense sector, defense manufacturing and some of the weakness from china and europe is coming back and hurting the u.s. it's hard to find, you know, exactly what the domestic sources of it may be. i don't know if you're hearing anything from ceos and what --

>> i think the weakness is manufacturing is surprising. i would have thought it would be better, especially with the auto markets. >> it is cheered by the fact that the two sectors, autos and homes, are interest rate sensitive sectors and one of the things we haven't had for a six-year period is any traction for monetary policy. >> it's just confidence isn't where it should be. >> steve? >> rick? >> i like that you brought up autos and housing. there's something that the fed could learn from the auto industry. when you buy a new car, how does your warranty get stated? >> 3 years, 36,000. >> right. >> chrysler did 100,000. >> the fed should do the same thing. a certain amount of growth or five years, six years, ten years. >> yeah. >> at some point the fits and

starts in the nonsustainability of the underlying economy highlights instructing surely issues. we need to learn something from the auto industry. believe me, you don't get to say that very often. >>. >> they found it to be too unconnected to anything. if they just say a date, why not that date? >> the discussion needs to be we need to find a congress to reign in the notion, the price, the oil not only the u.s. globally. i don't see why they should be able to experiment in such a wild way. i agree with the assessment they are in the gray. they have develop from the gray to the surreal to the rod

serlingville. >> from a guy who does cost of capital every minute of every day. >> inappropriately cheap. >> given the risk appetite out there. because if risk appetite is low, capital has to be cheap. given the risk appetite, how do you gauge the cheapness of capital? >> that's what the markets used on to do. >> there's so much money out there. there's so much capital on the sidelines everywhere. >> so we get to the nut of the question. why isn't there more investment, more hiring? >> because this is -- paul, we're talking about when are they stopping this financial alchemy. >> you're not on the bleachers. >> we're investing fairly heavily but with long-term debt. we think the debt may be more

important than the asset. >> fear of reversal. they are my friends. they are nervous about the revenue side. with global growth, they don't know how to write a projection. it creates all kinds of havoc in corporate earnings. currencies are flying. if the yen is going 50 what is toyota doing to ford? corporates are doing merger mergers. high stocks to high stocks. make it up. maybe pay it back. doesn't even matter. still, you don't see deals.

>> it is cutting its central 2013 forecast. not by a lot. inflation expectations remain firmly anchored. >> 1.2. >> unchanged. cei forecast, unchanged. >> that's what you want to follow to know what the ecb is going to do. >> i have been talking about the euro weakening over a year now. i have been wrong over a year. and i think rick joins me on that. we probably have to go. people think you ought to talk it down. all my current and central bank friends believe that. and he hasn't done it. >> unbelievable. >> the one thing they can do to help them. >> we have to leave it there. it's a longer conversation. thank you for all of that.

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footing. what are the best places to park your money. he is on the board of restoration hardware, among others. barry, you joined the board also of restoration hardware? >> at the ipo. >> here's the question. just before we went to break you mentioned private equity. you said they had a tough time making investments because nobody knows what the projections look like. >> of the larger companies, that's probably right. from our standpoint, our strategy is really -- we are number one, consumer focused. we have been doing it 24 years. we spend enormous amounts of money every year on research that we think is proprietary. our strategy really is to find the treasures below the surface and find compelling consumer

demand fundamentals. and you do that high growth through the recession. >> is that reflective of consumers that you target? >> that's the question. it is really a function of the sectors that we actually go after? on a broad basis, the consumers, like what you talk about every day, is uncertain. there's a reset going on. they're rethinking their priorities at a very broad level. again, our strategy is to identify those segments buried well below the surface. >> what kind of trend? >> we love businesses that play

on value and businesses that play on luxury. they may seem like is strange bedfellows. but you can identify them. it's a restaurant company. business is terrific, by the way. >> what about outback steak house. other chains have really struggled in the same area. people were competing for the same customers you have walking in the door. in that particular substance it starts with great leadership which we got and built that around the past couple of years. but, look, it's the winner in this category in terms of casual stake. it's terrific offering, terrific value. >> you talk about companies enduring and legacy brands.

brands that people know about. and jc penney. we always talk about jc penney when you are here. how often do you look at a business like jc penney, a brand that's been around a long time and say this can't be resuscitated. >> the vast majority of businesses we invest behind tend to be new businesses that are emerging. we just made an investment in fixtures living based out in california, who is the winner in our just of the high end of home fixtures, appliance category, which by the way, has been around. >> that's not washers and dryers. >> it includes washers, dryers, grills, showers, toilets, everything. but it's done in a completely different way. but done in an incredible theatrical entertaining way. the average customers sends two

and a half hours. >> how many stores? >> we only have a handful of stores. but guess what, in a couple years we'll have more. >> good question. they really haven't changed that much. because we don't really use a lot of leverage in our business. even though we're making investments in our businesses we're taking controlled positions we tend to over equityize them. it is very different in the private equity world. that is simply put we never want the balance sheet post investment to ever impede or conflict the business strategy. >> when you exit in this environment, i remember you were at the conference and i think leon black said anything that's not nailed down to the floor is a good time to sell. >> we've been selling businesses throughout the last number of years and we'll continue to do that at the right time. i think from our standpoint we want to make sure we have

raoeufright level of maturity. >> he's also in the dead markets. i think if you have an investment and you have a great management team and you can take a dollar and make it $2 you hold that business. it's funny, i was with a real estate guy and he said the only mistakes i ever made in my career is selling. warren buffett will show you, ride it out. take the longview, which is unfortunately not done enough. >> okay. we'll leave it there. appreciate it. >> coming up, we will head down to the new york stock exchange for two mad minutes with jim cramer. [ male announcer ] it's intuitive and customizable,

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let's get down to the new york stock exchange. jim cramer joins us this morning. you were tweeting at 5:00 a.m. you were running through the charts and didn't like anything you were seeing. you still think that after the jobless claims number? >> i think anything can bounce. we got to an oversold position

last night. i think that the market may be just kind of done going down for a little bit here, but, yeah. the real estate investment trust, utilities, they just got yesterday to the drug stocks, they're getting to the food stocks. they even got to the aircraft of boeing yesterday, biotech. when i say "got to these," they look like they're rolling over. anything can bounce, but it is just not a pretty picture. it is just not. >> if you look at the s&p and you take it from its intraday high at this point, at this point we've lost 4.6%. you're getting towards 5% if you want to stretch it by going to the intraday high. don't know if that concerns people at some point or if they think chaes great news, 5% would be a great time to buy back in. >> we heard a lot of people talking about, is this the beginning of the long awaited correction. the destruction that's already happened is just amazing. that makes no sense at all. the question is, are we at the beginning of a pause in the

correction or a real bounce. because some of the action is -- if you look at like a coned, if you look at a first energy, these are being annihilated. even coke's been aninihilateann. some stocks look like they are ready for a bounce. technology is amazingly strong. maybe that makes sense because the quarters aren't that bad there. >> barry has been nodding as you've been talking. >> you had a lot of tourists in the reits, there for the yield. as soon as there was any talk about the interest rates changing, they just exited in droefs. it w it's been fascinating to see how fast the reits corrected and how wickedly. most of them are not seeing

great income growth so it's just been a multiple expansion. asset buyers increase because cap rates, yields on properties are being suppressed. it's been very interesting to see the markets sort of creek around this. i think they'll find a level and again go back to fundamentals and they'll be fine. >> jim, you saw the ft, the guys that do things based on -- none of the quant guys are ready for interest rates to go up. which is unbelievable. if we slow down ably, the economy looks a little weak, maybe we avoid the next scary move in the bond market and maybe it doesn't happen. >> i think you're right, joe. there was a great piece in the "usa today" cover store, look, could be a blip up, but this may bring housing prices down a little bit. i've got to borrow what barry said for the lead of my show. whenever you see multiple expansion stocks can sell off, there is not a lot of income

growth. a lot of people are hiding. when i look at simon properties group, simon properties is a good company. these things are in free fall. maybe they shouldn't be. >> that's like the etf sales. the biggest reit in the world is simon. it just gets hit with everything else. it's the liquid. if you want to raise money, you sell simon. the mall sector is one of the highlights of the real estate industry right now. >> you're so right, barry. i look at simon and i think this is probably where i want to make my stand. or again just -- federal. these guys are running good businesses. their stocks got too hot. the stocks have corrected big. maybe this is where we should look to begin. they did go up next. maybe they bottom first. >> reits should be long-term investment. >> great stuff. thank you. >> jim, thank you.

see you in a few minutes. coming up, we'll give our guest host the last word after this quick break. tomorrow -- the moment everyone has been waiting for -- the markets. the fed. the economists. all looking for guidance from the may employment report. "squawk box" is your home for the numbers that move the markets. tomorrow starting at 6:00 a.m. eastern. hey kevin...still eating chalk for heartburn?

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let's get back to our guest host barry sternleicht. say something positive. >> i've been spending a lot of time with people in the valley about the pace of innovation today, i was with this guy that started web x. these companies start from nothing and the disruption -- silicon valley. i just think it is incredible. i think i'm really bullish on country if the government gets out of the way and i think we must address these structural issues just because the markets went up and tax receipts went you up because we all felt

capital gains increases. we must get back to the basics of fixing education spending, fixing entitlements. we won't feel good until they get to the basics. >> barry sternlicht, thank you for that happy ending. >> i'm not happy. >> join us tomorrow for jobs friday. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla, jim kram her, david faber, live at the new york stock exchange. we've just had two of the worst days of the year for stocks, though futures look to bounce a bit today. jobless claims were in line ahead of tomorrow's jobs number. in europe, ecb and bank of glaent le england left rates unchanged. nikkei down 1% overnight, down more than 3,000 points in the past couple of weeks. our road map