which we affectionately know and love as qe infinity. economists expect the fed to keep buying bonds at $85 billion a month. but pay attention to signs that policymakers may scale back the program later this year. that's the big question in the marketplace at this point. will the taper begin. the fmoc will announce its decision at 2:00 p.m. eastern time. with y ben bernanke will hold a news conference at 2:30 p.m.. we'll talk expectations with two economists in just a few minutes. but a lot of questions swirling, including ben bernanke's term which president obama brought into a huge focus yesterday with his interview with charlie rose. also later on we have marty feldstein and randy kroszner. and we will get the scoop from them, as well. the markets ahead of the fed decision, futures this morning, once again green arrows.

dow futures up by 26. yesterday the dow was up about 138 points. that means over the last two days dow up by about 250 points. >> so it's kroszner and hoenig. >> is that for me is this. >> no that's trying for anyone to -- >> i'm defensive this morning. >> is it hoenig or -- >> hoenig. >> see? and kroszner. >> kroszner. >> can i get you to agree. i think bernanke will be like i'm not going to say anything that begins with a t. nothing. nothing that could be close to taper. >> i want to talk a little bit

about the top of the morning. i would say -- >> no, what we need to listen to is what they say about the underlying economy. >> it's the economico outlook. >> you don't think he'll use the word? >> i don't think he'll use the letter. >> people will ask questions. >> but as long as -- as long as it doesn't start with a t. if there is a t in the world somewhere, he may use it. >> we could have a drinking game. first question has to be about tapering. will use the word taper. >> either tape ever or your ter. >> i was at a party with a drinking game, but it was with lemonade. makes no sense. they're practicing for the day when -- legmonade, you'll just get sick. >> that's okay. learn a lesson. >> i know. >> let's take a look at europe. again, futures are indicated higher and that may be because

the expectation is that the fed will in fact slightly lower their economic outlook. if that he another case, you would expect they would not be pulling qe anytime soon. but right now the market is barely bunching in europe. in asia, you can see the nikkei was up about 1.8%. so volatility continues there. hang seng down by just over 1%. oil prices right now are indicated up about 50 cents. wti is hovering right around $99 a barrel. concerns on what's happening in the middle east. and has hung right in that level. also the ten year note is yielding 2.189%, so the yield has pick up a bit. again the bond market is where people are watching for any reaction on to what bernanke says because that's really where you could see a swifter reaction. a lot of concerns about that. the dollar this morning at least at this point is up against the euro. euro at 1.3391.

down against the yen at 9yen at. and gold prices barely changed. >> corporate new, and we shouldd i know you don't think i was a sports person. but amazing. they had brought the trophy out to give to the spurs. it was done. >> really? >> there was three-pointer by lebron. and then there was a foul. and then ron allen came in and then they went to overtime. >> that's weird, because that could not have been -- i saw it this morning and i said fix. but that could not have been fixed. >> it was extraordinary. i know we'll talk about it probably later in the show. >> i almost -- i cared about the last series more. the heat/pacers. >> so now we go to game seven. we'll see what happens. >> i read stuff this morning, something about -- >> he'll be on today. >> lebron took off his --

>> his head band, but i thought he lost his head band. but i was in a bit of a phase because i couldn't sleep. anyway, let's talk corporate news. dish is an ban doabandoning its for sprint. jack was 100% right about this. he said dish didn't want it, didn't understand what was going on. >> charlie -- looney tunes. why couldn't you sleep last night? >> i don't know. >> excited about the fed? >> i knew this was a big show. i had butterflies about the program this morning and i was -- i wanted to study up so i could feel like when i talked to you, hoenig or -- >> he's not even on. just one of the people who

confuse me. kroszner is on. >> i was staying up also, another story that actually did -- sec, this whole issue about whether now they announced yesterday that they're going to no longer allow you to settle without admitting or denying guilt when they think there is a public trust issue. and i think that's actually -- >> i think that's a big deal because it's always been easier for companies to just settle. but if you have to settle and then admit you did something wrong, that opens up up to -- >> when you think about goldman sachs, they would have never settled if theyed h eed had to guilt. i think it will make it harder for the sec to bring certain cases knowing that they have to go all the way. >> that's because of a judge in new york who kept throwing out some of the settlements, correct? >> that's part of it, but mary

shapiro said they were changing policy. >> the pressure had come from the new york judge. >> were you out last night? >> i was not. i was home with the kids. watched mad men. adobe systems results driven by rising demand for the creative cloud which is the subscription base the version of their flagship software package. shares rising about 5% after hours trading. >> the national news was all over the possible classification of obesity as a medical condition, as an illness, and then also diabetes. and that's where i'm going now, astrazeneca failed to reduce heart risks.

it's called angliza. sales of $709 million. some analysts say positive results might have added a billion dollars in peak sales if it had worked. and facebook says it now has 1 million active advertisers globally who have used the flat form in the last 28 days. it's a key data point for the company that's trying to revive its revenue growth to some day get back to near its ipo. the vast majority of the advertisers are small business. >> i don't know if that really tells you anything about how much they're spending or anything else that goes along with it. how much the average is how much up or down. >> and google, did you see this. >> i saw this. >> i don't even know what it is, but let me read it.

google is challenging a u.s. surveillance court on first amendment grounds. the company wants the court to allow to publish aggregate newspapers of national security requests that it receives separately from criminal requests. >> that's interesting. >> and in its filing, google mentions the interest public interest generated in recent weeks. i had read that. >> not the only company that's -- >> can i throw the other -- >> i represent all the scripts in front of a mere are organization recorded them, played them back. >> and the other google storyar organization recorded them, played them back. >> and the other google story, they bought waze and closed the deal on day one. usually you have to wait and usually you have to get antitrust clearance. so he so th they just did the deal fast the deal was done using exceptions saying if you're a foreign company and you don't have more than $60 million worth of revenue in the u.s., you don't have to go through the channels. >> i would do that, too, if i

use qualify for that. >> so now the government has to figure out whether they want to undo the deal. usually there is no reason to undo the deal because they have to approve the deal. >> this is interesting because the map space is such a tightly contested space and google is already such a -- >> such a huge player. >> such as the apple mess. >> but the idea that he woulded you would try to close up the deal without -- knowing that this was going to happen. >> this was going to be a situation where the government would want to take a look because you are such a big player. >> but because these companies don't make any money, they come under the bizarre threshold which may make sense in most circumstances, but doesn't in this. >> you wonder does it tick the government off. >> i would assume it would. >> have we gone past -- are we out of correction mode? >> markets? >> you saw where the dow was. 15,340. >> up 250 points in two days. >> but intra day is 15,500

something. and then the closing -- we're right up against it again. 200 point move would put us at a new all-time high. the s&p is close but not there either. so we're back pushing up against -- that 5% intra day move in the s&p is holding. >> we're waiting for things to pull back a little more. >> i still don't know. but if you look at the chart, it's been cincinnati msince may. it's a band like that. it's straight up for a while. you can sort of see it there in the s&p. >> why do that put that 1651? >> they say the technicals is

all you need to look at. shid we're right at this important point as we're going to hear from the fed.we're righ point as we're going to hear from the fed. >> anyway, let's bring in ross westgate standing by this london with our global markets report. ross, obviously you guys have to be watching this today, too. >> everybody's watching it around the globe. a bit of caution ahead of that. at about the best levels of the day right now, but advances and decliners fairly evenly matched. advancers just about shading at the moment a little bit around more than nearly 5:4. you can see the best numbers of the day. we were up a little bit yesterday, cac 40 just up a smidgeon. best gainers we have now, take a look at the sector breakdown. see how that's weighted out. banks, oil and gas are weaker.

retail technology doing pretty well. household goods up a little firmer. more focus on the cable and telecom sector. we've been talking about this all week. liberty global now joining the battle for cable deutsche land with vodaphone. reports suggesting vodaphone upping its offer to around 85 euros a share. that would match liberty global. so a bid battle for the two for the german cable operator. we also had data out today in terms of minutes from the bank of england, all the focus on the fed. but we heard once again the outgoing governor mervyn king was outvoted in his last meeting. he voted for more qe with two other members. but they were outvoted by the six who didn't want any. interesting that he stuck to his guns up the last. seems to be a view of course the funding for lending is going to

do more. but now mark carney coming in, the former bank of canada governor. interesting to see how he puts his focus. gilt yields a little lower after that 2.12%. yields in spain just contained around 4.6%. currency markets, the caution we see ahead of the fed also shown here in these cross rates. basically pretty much at similar cross rates. sterling-dollar around 1.56. similar to where we were 24 hours ago. so actually for once haven't seen an awful lot of volatility, people not willing to take positions ahead of the fed. >> where is the open this year, 2013? do you know? >> muirfield. >> the original muirfield. wow. i look forward to that. >> i thinkpros view that as one of the fairest tests. >> how fair was that -- you must have loved watching merion, too. some of the greatest golf. isn't it fun to watch the

greatest golfers in the word like they're no good? like 16 over after four days. and you know they are good. and if we ever played it, i don't think we would break 200. i was thinking about that. >> there is no doubt that the 18th, i can't remember who said it, last week the 18th at merion probably was the hardest whole in world golf last week. like 75% of the field were making bogey or worse. >> not hitting the green. i guess you need to do that with the way these guys hit it now. ben hogan, that famous shot was a 1 iron from 200 yards. these guys have 7 irons half the time. but if you -- >> rose hit a 4 iron. >> he has -- people think he has the best -- we have to go. anyway, this is all your taught since you're british and the open is coming. anyway, thanks, ross. looking forward to that.

it's in july. >> yes, it is. >> and today is june 19th. so in 29 days. big day it says here for fed chairman ben bernanke. he probably is getting -- this happens all the tile. he has to be just, oh, they will ask me questions again. joining us now, katherine mann, finance professor, and north american chief economist. katherine, i said earlier i don't think -- he won't use any words that begin with t. he'll just talk about the underlying economics and that we need to do our own calculations about when it happens. do you think that's fair? >> i think that's accurate. and it's now time for the bland diet. so i don't think we'll hear about taper or tighten and i think that he's just going to have a statement that is exactly the same as previous statements. they will go back to a data

driven decision, the bond buying programs could go up or down depending on the incoming data. so that's where they want to stick, they want to say it's data driven. i think he'll get questions about what data do you care about. and that will give him an opportunity to talk about things like investment or consumption and of course unemployment. >> that would be good to know which data he cares about because of the crazy dual mandate. when you have both sides, about 20 different things you could look at, ten for each, ten for inflation and ten for employment. >> well, actually probably more than ten for each. it gives an opportunity for everybody to have their own favorite set of data that they look at. and the question for analysts of course is how did the data that i like to look at relate to the fed governors look at. but i look at equipment and software for example and there are some forecasters who project

a much more strong economy next year. and when i look at equipment and software, for example, i see it in very low rate, very soft spending. and that as an underpinning for gdp growth says it's not there. i see a lot more softness in the economy. if i go back and read the beige book, i didn't everybody see the word robust ever. so i don't think that we'll be looking at a change in fed stance for the rest of this year. >> cody, too, from honeywell when he was on here, he was like, no, i don't see anything. so that's not even high tech stuff necessarily. julia, where are you on this? >> i think that they will try to continue to socialize the idea of adjusting the pace of purchases. i think that it's something that the committee wants to do. the committee is getting nervous with never ending qe at the same pace and then ever expanding balance sheet. there are many on the committee that do see progress,

particularly in the labor market. and i think that's the key. we do need to get a better sense of what they're looking for in the labor market, number one. do we have to see hiring get even better than it's been. or just more of the same for a longer period good enough to take a step back. remember, to them, tapering is not a tightening in policy. they're still in their minds cutting rates. it's just a slower pace of easing. so within that prism, the economy i agree not robust at all. still very vulnerable. but can they take a step back. that's the word he used. they hate the word taper, but can they take a step back and what do they needed to see to do that. and then also importantly how big will that step be. we don't know what taper or a step back means. we need more clarity on how they're thinking about this adjustment process. so i think he is going to continue to socialize the idea

of adjusting the monthly pace of asset purchases and doing so as the economy improves. >> it's a homely animal, the taper. doesn't look like something you'd want to eat necessarily. what was i going to ask you? i already forgot. no, i did. because i'm just wondering at this point whether the market -- i know what i was going to ask you. do we now have a participation rate that's locked at these levels? because i worry between that starts normalizing, then -- like last time, we had pretty good jobs but it went up. the national media sees it go up to 7.6 and that's why the market -- but what if that starts going back up to -- or is this normal now at whatever it is, 60%?

>> i think their original plan was that it would rebound, that you'd bring some of these people back. that was bernanke's jackson hole speech before qe-2 was, no, we haven't permanently lost these people, this human capacity for growth and working and they want to bring these people back. some of the research out of the chicago fed, the san francisco fed is starting to say well maybe it will stabilize here. >> live by the sword, die by the sword. they bring that back, all these gains that we've scratched our head about with adding 100,000, 150,000 jobs and it falls from 10 10 10.5 to 7.5, if it starts going back up, you could see things staying at 7.6. >> participation rate does have a cyclical component to it. there is a greater understanding about that relationship between participation rate and the business cycle. so you're going to see i think

some return to the participation rate rising. on the other hand, the percentage of the labor force that's been unemployed for an extended period of time, those people may not come back. and so there is a balance between some of the things coming back and some of the things not ever coming back. >> my fault because i'm a baby boomer. >> it is your fault. >> i'm not retiring. >> but i think they have made a problem in targeting both inflation and having a threshold for both inflation and the unemployment rate. it's something that we as economists choose not to do usually. we choose not to pick p and q on the demand curve which is what they have done. at least they have taken out the t, which is the time component, as they moved from a particular time dimension into the when we get to the inflation and unemployment thresholds. then we'll reverse our stance.

>> all right. watertown, right? or waltham. >> waltham. right next there -- were you locked into your house? >> no, i was not locked in to my house, but many of my students were. >> i know the area. a little public golf course up there. leo j. martin. you know where that is, right? >> no. >> never mind. it's right there off of the turnpike. all right. thanks. julia, thank you, as well. i don't know where you were. >> 30 rock. >> oh, the comcast building. >> no longer the key building. >> comcastic. all right. see you later. when we come back this morning, the irs is about to pay $70 million in employee bonuses and at least one senator wants to stop it.

that story right after this. plus, a live report from the weather channel. check out this video. a tornado was seen over denver international airport yesterday. thousands took shelter in bathrooms and stairwells. a warning from the national service passed. flights were diverted, but no injuries or damage. incredible pictures.

welcome back. making headlines, senator grassley saying the irs is executing an agreement with an employees union today to pay $70 million in bonuses. obama administration had issued a directive to cancel what they call discretionary bonuses because of automatic spending cuts. so grassley now saying the icht rs bonuses should be canceled. always interesting because some people think bonuses are bonuses as in addition to your salary.b. always interesting because some people think bonuses are bonuses as in addition to your salary. and other people say a bonus is certain cases is really part of the compensation that's why people come for the job. >> but bonuses are never promised, otherwise they would be part of your salary. >> true sort of. >> people rely on them and expect them and you probably

remember christmas vacation with chevy chase when he took away his bonus and he had already spent it. >> jelly of the month keeps on giving all year-round according to cousin eddie. >> i watch movies. you think. >> the vacation was 20 years ago. >> i was a kid. i watched stuff like that. >> you shouldn't have been watching this when you were a kid. >> there wasn't anything -- >> yes, there was. >> the original one was worse. >> but the second one was good, too. yeah, there was some stuff in there. >> i had a baby sirte take me to see beverly hills cop 1 when i was like n. like second grade. or third grade. >> i remember the first breast i saw was in the night they raided minskys. >> tmi. >> made a big impress on me.

i was not breast fed, so that might have something to do with it. t tmi, what do you want from me? >> eric, the question of the day, what are you wearing. >> a brooks brothers shirt here. tie is -- not quite sure what the tie is from. shoes are i think a $30 dfw special. >> $30 a piece. >> i shell out the big bucks for the shoes for sure. you can actually wear sandals as a matter of fact in the northeast the next couple of days because finally we will kick out all the rain, the clouds are moving out, temperatures will warm up. you can actually go outside, mow the grass. you have temperatures and dew points that are dropping. dew points are a measure of humidity. so basically when you walk outside, it will feel crisp. all the way down to 32 degrees

saranac lake. period of sunny and dry and generally really nice weather to be outside. 76 in new york today. 71 burlington. upper southwest to low 80s tomorrow. friday, good day to call out of work. don't tell your boss i said that. upper 70s to around 80 and that should linger into the weekend. storms across the south. quite a few thunderstorms sparking this afternoon. most of the focus tomorrow and into friday will be across florida and southeast georgia. so not quite as rainy as it has been. that's caused all sorts of travel delays in the southeast. the tornado out of denver. big dip in the jet stream will keep the storms coming around the rockies an out across the northern plains. montana, dakotas that's where we'll see the storms. there is the red zone for today across montana and right down the middle of the country. what did you think of the video out of denver? everyone caught it on camera.

>> that was crazy. also made me think why is everybody standing there videoing this. run for safety. >> a real good question. >> it was a small one. >> but it's like get away from the windows address all the bringing equipment. >> 100-mile-per-hour winds. it could pick up a car, chuck it into a window. inside is where you you want to be. >> i never understand that. if you're standing on the beach and you see the waves recede, run. don't go to pick up the seashells. >> tsunamis. >> all right. thanks, eric. still to come on "squawk box," the countdown to the fed decision. up next, we'll talk expectations with top rated economist. and the next hour, we're going to bring guest host ken langone into the conversation. he's richer than ever. plus we'll talk real estate. >> he's so shy. >> we'll try to draw him out. we'll talk about the impact tapering might have on the housing market.

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expecting the fed to start talking about tapering until at least 2014 at some point? >> absolutely. and i think the point earlier make you about qe infinity now becoming qe six months. if you're an investor, you have to realize interest rates will start rising sometime sooner than qe infinity and that's why i think that you look at the five, seven and ten year treasury, total returns already negative this year. those higher future interest rates have already got to be priced in to the marketplace. so qe infinity becomes qe six months and that has a huge impact on pricing. >> a lot of people talk about how you should get out of stocks that act like bonds and dividends are where people are focusing. >> yes, i think any stocks that we're seeing as bond alternatives which really stock shoes not be because to pick up an extra 1% or 2% in your yield at the risk of an aez eeasy los

principal is not worth it. but of course we've been pushed out on that risk by the federal reserve. so you're looking -- i'm looking for companies that can grow in dividend. but really it's a total return that i'm looking for. i think it means they have good cash flow and are confident, but not companies simply because they have a good dividend. >> so are you shaking up where you've been invested to this point based on what the fed may or may not do or say today? >> it's always been a growth fund, so i've always been looking for companies that have good longer term process speblgtsprocess speblgtss to grow their top line. some have been good areas, but i don't really have to change a lot. >> so you never really got into any of those areas? >> not the high yielders, no. >> investor has been told go get the dividend.

>> so what would you tell people who have been listening to that advice to this point? >> to people who have been using stocks as bond alternative, i don't think that's a good idea. >> what do you use? you wouldn't go back to bonds? >> no. but i'm not sure that any stocks are a good alternative to bonds. i think to some people -- i think stock market has good longer term returns. i think it's sort of fairly valued here. there is immediate oerkle value, but there are good places that you can find things that have good yields that have a good total return. but if you're looking for yield, i think you have to wait. in a year or two you might be able to get 3%, 4%, 5% on a cd. and i don't think stocks are a bond alternative. >> so would you say keep it in cash? >> to the extent that certainly if you are older, you have money that really is intended for or should have a fixed return, i don't see stocks as an alternative to that. >> but you're not telling them

to stay this bonds necessarily. >> no, i'm not saying stay in bonds. i'm saying unfortunately i think for some people that really should have fixed portion to their investments, cash is really the place to be here and you have to wait it out a year or two. that being said, i think there are good opportunities in the stock market, but it's not an alternative to a fixed income. >> john, back to you, you're right that people will be looking at every single possible indication coming there bernanke today. we've watched the stock market dow gain about 250 in the last couple of days.we've watched th dow gain about 250 in the last couple of days.today. we've watched the stock market dow gain about 250 in the last couple of days. does the market expect that he will lower his economic outlook and push off the tapering for a little bit some? >> yeah, i think they probably will push off the tapering a little bit about that the challenge for tapering from my point of view is the fed is

already buying more than being issued. you put into concept that the treasury deficit is coming down, in 2014, the fed will be buying more than 50% of the treasury debt issuance. to me not only on the economic side, but i think on the market side, we look at market pricing, the fed will have to start tapering in 2014 severally because they're buying the market up. and i would say getting back to the point, yeah, i think the fed has a good possibility today of lowering their expectations in economic growth this year maybe to 2.5, 2.25. and inflation definitely. it's far below their target that's been coming in very well for them. >> a lot of people have been saying that that is the expectation for today. barbara, you think the best opportunities for the market right now? >> i still think apple is a very good buy here with a good yield. we've recently seen it still on target to deliver new products and services.

>> funny of thinking of that as a dividend stock. >> yes. and we all own the products. and i also think some of the pharmaceutical companies, pfizer, good investments longer term. trying to look at good businesses for the longer term and buy those. >> barbara, thank you very much. and john, always great talking to you. coming up, he's making -- are you going to make your way over to the table here? if you want to know what washington and wall street are buzzing about, he's wearing his google glasses, we'll hear from ben white. >> belt way ben. [ male announcer ] with free package pickup

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[whispers]everyone loves free samples. ♪ utsz's been a busy week for ben bernanke. the fmoc meeting and the questions about his future after president obama's comments in that interview with charlie rose. first we'll give you you the president and then larry meyer's reaction on cnbc last night. >> i think ben bernanke has done an outstanding job. he's a little bit like bob muller the head of the fbi, where he's already stayed a lot longer than he wanted or he was supposed to. >> this is really remarkable. i almost fell off my chair when i heard the president's remarks last night. he essentially fired ben bernanke on the spot.

and gives him a fairly tepid testimonial afterwards. so it's time to focus on whos next chairman might be. >> reacting to all this this morning, ben white, politico's chief economic correspondent. so who is right? >> larry meyer is not right. he didn't fire ben bernanke on the spot. what he was trying to say is the guy has done a great job, i appreciate what did he in the financial crisis, we've talked, he doesn't really want a third term. you know, and the white house basically the next morning were all over the place people saying, look, this was not meant to be a firing of ben bernanke, he doesn't want a third term. >> why isn't right in sn fed chief likely to be allowed to go. just the same thing.

he should have been saying please stay. >> the big point is during the height of the 2012 campaign, there were questions about whether bernanke would go ahead with qe-3, is it too sensitive. and he went ahead and did it. >> you remember hw's relationship with greenspan. >> exactly. >> he doesn't want it play into that whole conspiracy theory about whether this was some politicalization. my guess is if bernanke wanted to say, it would be his place to stay. >> do we know of any hand rigging inside the federal reserve, were people astonished by this? was anybody saying, oh, my goodness? >> i think they were maybe surprised at the way he said it. and the notion that there was no, you know, i would love for better bernanke to serve again if he were willing. >> no apologetic phone call from valerie or even the president to somebody over at ben's house?

>> i don't have nsa taps on valerie's phone, so i wouldn't know the answer to that necessarily. but there might have been communication to clarify what the president was really trying to say which is thank you for a great job. i know you want to get on to your next thing. >> but it would be nice if he said the position is his for as long and he is wants. >> exactly. and it led people to being he's eager to tap janet yellen. >> do you have any information on timing on that? >> it will have to be septemberish if it they want to set it up for confirmation hearings. bernanke is gone january 31. so you need probably three months or so to get the nomination out there. so i would say september/october is when you get a nominee to succeed ben bernanke. joe has some interesting thoughts he's sharing privately. >> what's going on over there? >> i'll tell you on break. >> it's childish. >> that's what we love about you. >> let me go to a different

topic. in morning money this morning is this topic that we were talking about earlier in the program, the sec changing their policy. this idea of no longer allowing people to settle without admitting or denying guilt at least in what i think will be big cases? what's the threshold? >> it's not all that clear yet, but it will be cases whereas you mentioned earlier there is some public interest in having folks admit that they did something wrong. >> is this done done? >> it's not done done. they are still reviewing it. i think eventually it will happen, but it gets you into a difficult situation where you might like to settle something you don't necessarily have the evidence to go through a proceeding in which you find them guilty of whatever that they're alleged to have done so you want on settle and admit wrong doing, it opens up companies to private litigation. it's a difficult thing to do. but the big criticism of the sec and regulatory community in

general is that throughout the financial crisis and afterwards they fined people but nobody ever admits they did anything wrong. and that drives people nuts. >> shouldn't the goal people to drive people nuts, is it that this is not a -- is this about deterrence and therefore because they're not admitting guilt, it doesn't have a deterring effect? >> both those things. >> i think about a goldman case. they would never have settle that had case in a million years if they had to admit wrongdoing. and by the way -- >> $150 million in the coffers of the u.s. treasury. >> i'm not sure the sec could have brought the case knowing it would have been a risky case. >> it will have to be a selective application where they know they have the goods on the company enough to get them to admit wrongdoing in addition to a fine and settlement. that's not the case everywhere. i don't think it would have been the case for goldman. i don't think they would have said, yes, we did something wrong. they were willing to pay the fine, but they did not want to open themselves up to further

lawsuits. >> basically saying sometimes we'll make this happen. they already had the ability to do that anyway. >> just a matter of trying harder to make it happen. find case where is they can make it happen and be less in-climbed to allow companies to pay a fine without admitting wrongdoing. how many times will it actually happen? it's unclear. it will be difficult as you said. but their goal is to get people to finally say, yes, we're paying this money not because we just want to make it go away, but because we actually did something wrong. >> statute of limitations is coming up. the day the lehman brothers filed for bankruptcy. any chance they bring cases officer the summer? >> i think if they were going to, we would have some sense for it now.

there would be rumblings about it. marked. >> if you are 11% instead of 10 from where it's supposed to be. >> there is argument over deutschy bank. >> you brought that up. >> if there were charges filed they would have been by now. not an 11th hour. >> the one and only ben white. >> thank you. >> when we come back a man never knows to mince words. ken langone. [ kitt ] you know what's impressive?

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opinions and the market ideas you need are here. >> as the second hour of "squawk box" begins right now. good morning. welcome back to squak box. i'm andrew ross sorkin. take a look at the futures. ahead of a big day we're going to hear a lot from the fed, the dow looking like it will open about 9 points higher. and the nasdaq up to 6 points. investors will be focusing this morning on the fed, the central bank's latest policy statement is going to be released at 2:00 p.m. eastern time. mark your calendar after a two-day meeting followed by chairman ben bernanke's news conference. we'll have much more on the fed. we'll be bringing ben bernanke's press conference to you live. dish network will not submit a revised take over bid for sprint

clearing the way. charlie urgen plaming the decision. sprint also competing to buy clear wire. that process will continue and jack gave us a heads up this might play out this way and it is. >> also in the news smithfield chief larry pope, joe, he is going to receive $46.6 million if the plan takeover have i china is spleted. the s.e.c. filing saying that pope would be eligible for $28 million in cash. the filing revealing that smithfield received offers from two other what they say are unidentified parties, the four agreeing to the deal i should say that is cp china is one of those bidders according to sources and jbs the unidentified

bidder. neither are saying that they are willing to top this bid. so we had jeff smith from starboard here suggesting the price is higher. >> a lot higher too. something like 25%. >> that's what it costs to bri out larry popes. >> 46 million bucks. >> sell sis -- sell out all of us bacon lovers to the chinese. not a question of what you are, just how much it costs i guess. >> ooh. >> former federal reserve governor larry meyer saying it's time to start focusing on the next fed chairman. >> this is really remarkable. i almost fell off my chair when i heard the president's remarks last night, he essentially fired ben bernanke on the spot and gave him a fairly testimonial afterward so it's time to really now focus on who the next chairman might be.

>> that's my job. so until i close guantanamo bay they're right i haven't closed guantanamo bay. when it comes to drones -- >> all right. why are we listening? all right. that comment came after an interview with the president, it aired on charlie rose monday night. the president compared bernanke to fbi head bob muller who said he stayed longer than he wanted to or was supposed to, follow-up question whether the president would want the chairman back as fed head, basically went unanswered. it's like the first thing i agreed ever with larry meyer on. he's far left about most things and it's weird that he said that. >> i thought larry -- you were closer to the financial times which was not suggesting he was fired, saying he is allowed to go. >> if you read between the lines if you don't say -- we need this -- remember when geithner was going to leave and the president said there is no way that things are too important for the country for you to leave. he felt that way. this guy, we now have a $5

trillion balance sheet. why do you need to talk now in mid sentence. >> continue on. >> go ahead. >> i was going to say if bernanke had come to you as the president, president kiernen and said over several years look, i really got to get out of this. i want to be with my family, i'm sure, if that's what's happening. >> why would he leave before his term was up? i would have been talking him into a second term. if you made this mess and you know all, where all of the bodies are buried and you need to unwind $5 trillion of balance sheet i would want you to do it. >> if the market is more comfortable which every market person we said. said they are more comfortable. >> if i was used to taking credit for everything myself and just sort of this is another pawn that i can move around when i want and you know. >> i don't think that's what he did. >> let's bring in allen and jeff. >> unbelievable this guy is

heroic. this is no way to treat a federal reserve chairman in the middle of still doing very important things. i think it was terrible. >> so you would have liked to have seen him say what? >> say nothing. >> nothing? >> there is much more gracious ways to arrange the exit of somebody who has done as much as ben bernanke. >> it would have been nice to say it was nis job as long as he would like. >> you see a lot of gracious moments? >> i haven't personally. lots of people probably have. i haven't. >> where you stand depends where you sit. >> it's also, obama threw in the white house credit for what happened. the research i do says where we are today and saving us from whatever would have happened is more the fed than fiscal policy. >> in spite of. >> sorry about that. >> jeff, what do you think? as an investor in the markets would you prefer to see bernanke stay? >> you got democrat clients?

you may not say as much. >> you know, i think the continuity is important at a time like this, sure. i agree, he's done a great job. the difficult work ahead of unwinding all of this raises a lot of uncertainty so i think having somebody on the job who engineered its introduction, its withdrawal makes sense. >> the inflection point, this is very likely when you're going to see the unwinding of everything that has been built up and joe you're right from the perspective of geithner. look, if it was too important for geithner to leave because we had the fiscal cliff coming up and all of the issues faced, this is equally if not more. >> i would think george h.w. bush never said that greenspan stayed too long. >> that's not the polite thing to do to say something like that at that point on that kind of interview.

it's kind of odd. it's not out of character, though, i might say. in terms if you watch the patterns of leaders of the country at different times. i wouldn't worry about the continuity. the federal reserve will go on without bernanke and carry it on pretty much the same way. what is interesting about bernanke's term he really has set the infrastructure for very different central bank running policy, a different way for many years, and whoever the successor is if president obama makes the right choice will be someone who will carry it out. from a market point of view it's going to go on as it's laid out. >> what is bernanke going to say today? >> you know, if he has a good day he can be articulate about laying out the exit plan. the statement last time had a lot of verbiage of how it goes in terms of winding down what we call tapering leaving a little caveat that we could dial up, not just taper down.

taper down is the most likely thing. and then the length of time that it will take in the eyes of the fed before they will raise interest rates. that's when you really fundamentally might begin to worry about whatever they do in the economy, right now what they are doing, what they are talking about the tapering down, the amount of less additions to the balance sheet is nothing in terms of what is going to do the economy, the economy will go on fine. >> yet jeff, it's the tapering itself that the stock market focused on, it's almost the ringing of the bell saying this is the change and the tide. >> you use the word inflection point i think that's right. these unconventional monetary policies include signaling and this is certainly, this conversation is a change in the signaling, so it is an inflection point and around the world there's a lot of market turbulence, whether it's japan or whether it's some of the peripheral european bond spreads or currencies like the

australian. there is a lot of turbulence and the quantitative easing has had an impact than a real economy impact. this inflection point is very important for the financial markets. >> you think this is where the market voluatility resolves around, not necessarily around the raising of the interest rates probably more likely to hurt the economy. >> i think the raising of interest rates is so far it's unlikely markets are reacting to that. i think it is the shift in mentality from qe forever to qe for a finite period of time. >> is the market going to over react to the shift because they are pulling forward. the markets are forward looking, if this is the signal that this is the inflection point is the damage done here versus 2015 or when interest rates are raised. >> it's not going to do much to the economy. it gyrates the markets. the markets will understand,

cutting 10 or $20 billion a month, how ever they decide to do that is just a market thing. it's not an economic thing. the interest rate equivalent of the hike in interest rate interest rates could go up on the cutting back on the pace of additions, is maybe 5 or 6 basis points so really nothing in terms of the fundamentals. it's the eyes of the beholder and the gyration of the market. the task of the chairman is to make that clear, that this is so different from the last time we had this kind of situation, which was 1994, if you remember the turbulence after the greenspan fed raised interest rates. the markets fell apart, we had a huge correction in the stock market. it's so different today. we have 2% inflation target. we're away from full employment. we have a put from the fed guaranteeing us that they are going to get us there. we'll get through this nervousness and if he is good, he as a good day and such an articulate guy he can lay out if

the committee is clear, he can lay it out and tone down the uncertainty. >> you keep suggesting being articulate. don't you think he was being articulate last time, just he couldn't say what he wanted to say? >> i don't think so because the committee was confused. remember he is representing the committee so if they are confused which they clearly looked like they were confused. >> how artic you lan can he be? is there any way he could stay? >> i don't think so. >> no way he could be talked into staying. that basically -- >> he is comfortable in academics. >> at this point after you say well, now he's gone. is it 99% sure? >> i think it is depending who you are. 99%. i think it's a slap in the face the way that was done. no matter what conversations they had. and i may be speaking out of school but i think it's -- you just can't come back and then say oh, yeah i really want to

stay and the president will say fine and then bye-bye we'll forget what i steed charlie rose. the world doesn't work that way. >> thank you both very much. >> we found our old taper stuff. here's what, if you want to try taper bacon, get used to it because when -- >> that one's cute, the baby. >> when the pigs are gone to china this is what we're going to eat. there are some in south america, some in central america, they are odd-toed ungulates. i don't know if there are taper chops. >> friendly? >> who cares. pigs are. but that's what we're going to be eating. i don't know if they are good cured or not. smithfield tapers. >> more like a baby elephant thing going on. >> appetizing? maybe they will be kosher instead of -- because pigs are not. i wonder if they are.

>> that's cute. >> duck is. no, duck's not either. turkey is. >> turkey is. >> you eat it all. you had quite a bit of flack from that. rightly so. comments, questions about anything you see on squawk e-mail us. you can follow us on twitter. up next, ken langone -- >> not kosher. >> no. chairman and president of invemed associates, we're going to cover washington to wall street. i'm going to try to get him going, a couple of epithets out of him as we head to break. here are the futures this morning. don't kiss me. you will, won't you. "squawk box" will be right back. . but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air.

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for the next two hours, we have one of -- we have one of the -- what does ruminate mean? we have one of america's legendary businessmen. ken langone. it happens as we get older. when it comes to the rally he characterizes the investing opportunities in this market as supper. >> superb. >> ken langone, chairman and president of invemed. where have you been?

>> i have been busy. spring of the year annual meetings, board meetings. a lot of charity events. >> thanks for coming in. >> i'm here for two hours and i'm happy to be here. >> in the common stock, public markets are superb? entrepreneurs >> >> public markets are good. investment opportunities in private sector are good. of course the money is cheap. which makes the deals that much more attractive. i think there is no reason for rates to go up, so no matter what the fed does banks are having trouble making loans. company are spitting cash out. little ones, big ones. buy-backs are almost never here. look. the tragedy of all this is this year is turning out so far, knock wood, to be one of the

best years i've had in investments. and i was curious so last weekend i spent some time looking at all of the companies and the remarkable thing is how they are all doing well and head count staying flat. so, we're creating wealth -- >> not jobs. >> and part of it is we're not educating these kids. there's a ton of jobs for qualified people. i mean, good paying jobs, 75, 80, $85,000 a year. how can you hire somebody who has trouble counting, comprehension and reading, lacking there. i mean, this pitch about education is critical. we're missing the mark. >> are we doing anything -- we've had a lot of guests who put a lot of time and energy and money into trying to fix the education system. is it working? >> i don't think so.

high school graduation rate this year in new york is lowest first time. i tell you, let me give you some hope. totally by chance on monday i met up with a friend of mine i went to college with. chuck wagner. he's a football coach now, he's been a football coach. he was a great athlete. he ran the 100 in 9.8 on cinders. this is a long time ago before breaking the 10-second was something. he took a football team that lost 40 consecutive games, largely a minority community. and he turned them into winners. this is what we need. we need heroes, school teachers that you remember 50 years ago that helped you get through an algebra course or biology. this is what we need. and i don't care what your

political persuasion is, we're not getting the job done. that together with generational theft, in other words, we aren't preparing the kids to go out there and compete, and worse, the burden on their backs financially is getting bigger. sam drucker and yef and a lesser extent myself are out there pleading with people, understand we're stealing from our young. we're going to deprive -- kids today in high school are going to be seniors in 50 years. and it goes quick. and it happens. >> how do we do two things. make education better but also cheaper. you talk about stealing, i mean, one of the problems is so many are coming out to the extent they are getting into school, then coming out and the burden of debt is greater than the credit card debt. >> i'm not talking about higher education, i'm talking high school. we're spending a lot of money in america to educate our kids. we aren't getting the results. you want to blame the teachers, blame the administrators, i

don't care who you blame. let's agree to one thing t results aren't good. and cost-to-benefit is negative. so you know, please, this noise all about the upcoming mayoralty election, at the end the only way we're going to fix this is two ways. we've got to mobilize the parents. think of this. we have a lot of charter school. we might pick 200 kids out of 800 that show up. we know one thing. everyone of the adults in the room does not want their child to go to public school. that's why they are there. they want to get them into our charter school. right there we have 800 parents who already agree with us that we got to fix public education. the only way it's -- look, our politicians respond to pressure. the most overriding factor in their life is not their wife,

children, it's getting re-elected. and a wonderful thing happens to these guys. once they left washington they are all buddies. all a big fraternity, we argued, we fought but we got along. guess what, they haven't gotten along in 30 or 40 years. look at the condition of the country. this is nonsense. we've got to mobilize the parents in the case of education, let them understand that it's their children that are being deprived of a future. we have to do the same with entitlements. we've got to motivate these kids in college today because right now all of the politicians hear from is aarp and this lobbyist and that lobbyist, more, more, more. we need to get these kids to say to the politicians hey, guys, there is a down side to what you're doing it's called us. if we get that done we're going to have balance. politicians will always have to do what protects them. right now there is no risk in

continuing to give the old geezers like me. >> we're going to continue this conversation. we have you here the rest of the morning. we're going to talk about much more including what signals investors need to look for when the chairman speaks. we're on earnings watch. fedex is expected to report. look at the 10-year note. >> the average 6-ounce cup of coffee contains about how much caffeine? the answer when cnbc "squawk box" continues. ng 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.

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welcome back to "squawk box" everyone. in our headlines this morning the big focus for the markets today is the feds' latest policy statement due out at 2:00 p.m. eastern time. will be followed by ben bernanke's news conference at 2:30 eastern. we'll have more on that in a moment. also, google wants permission to give more detail on government requests that it receives for customer information. google asked for permission to separate national security requests from those involving criminal cases. other releases of information like this aggragated the numbers so it's tough to figure out which is which. and the s.e.c. will now demand admission of wrong doing in certain large case settlements. up to this point the s.e.c. had allowed companies and individuals to settle charges without admitting or denying guilt. critics of the policy complained that it does not discourage

repeat offenses. >> before we do that we're going to talk about the fed a little more. there is a little fedex news. >> fedex is reporting $2.13 a share, that is versus $1.96. stocks up a little. that's better than expectation. revenue $11.4 billion. wef the company is making comments how it's going to give guidance. it's going to focus on fiscal year guidance and give quarterly updates. it's going to revise earnings guidance practices to focus on full year, full fiscal year projections and quarterly updates. i'm not shower how that differs. >> instead of numbers for the quarter. >> i don't think they have for the quarter. it was below expectations they would say we don't give expectations. it's where analysts maybe now -- they are going to give quarterly

guidance. our profit improvement program is progressing but we continue to see the effects of customers selecting lower rate international services. so that continues i guess out of pressure to some extent. fedex express will further decrease capacity between asia and the united states. so they will further reduce. i don't see -- >> there was a question about the u.s. postal service that they were selected as the sole award eee of that solicitation. this is the first time they had to go you in competition. there were a lot of analysts wondering if they would offer reduced rates, it says that it does provide reduced rates but that's a question on the conference call is what the margins are now now that they reduced the rates. >> i don't see -- i don't see an

estimate for the year. i see the estimate at 713 but i don't see what the forecast is. for next year. because this was the final quarter of the fiscal year. and the stock now is -- >> it was up. >> it's 99.50 bid. >> brett smith is a remarkable guy. an unusual combination of entrepreneur and operator. he had the vision to start the company. when he got -- by the way the same paper he wrote he got a c-minus. he had the idea and the execution has been spectacular. how he's embraced technology. great company and a great guy, by the way. a great american. >> 7 to 13% on the earnings per share. increase. also assumes the current market outlook for fuel prices, assumes

that u.s. gdp grows. what's the number for this year? 7 to 13%. >> if you add 213 on the 196, 17 cents on a 604, 621, so 7-13% above 621. >> 10% is right in the middle of that. >> it's hard to say. it's a wide range. >> what's the number? i don't have the number what if the estimate is for fiscal 2014. if you add 621 and 62. >> you mean and they -- that 7-13% was earnings per share. >> right. >> whether that is earnings per share. >> earnings per share is what it says. >> it's still -- a lot of times fedex is conservative and you never know. were you an operator and

entrepreneur or just an entrepreneur? >> you can't operate -- >> on the corner of madison and 54th street. >> whatever it is -- >> thinking about all of this stuff. >> i've been called worse things. all i can say is fred has this unique combination and it reflect itself in the company. >> when he started it was -- >> great american. don't forget that. great patriotic. >> how could you decide to take on the post office. now we know probably not that hard to take on something run by the government. >> what's the sense of beating a dead horse? >> i'm not following you. do you remember when he started, did you think it was going to become where you could send a package from -- >> no. i think i told the story, perrot sent me down. there were guys throwing envelopes around in the building

in memphis and i called perot i said this is going to collapse of its own weight. he said what do you mean? it's too successful. they have these little -- they were leaving bags behind, packages behind because there wasn't enough room. i said what are you going to do? that's why i'm talking to you. we need bigger planes. i called him and said fred, ross, i think you ought to reconsider this. okay, that was it. i'm happy to tell you every i time i see fred aremind him of my massive blunder. okay. >> good story. great story. we've got to talk about the fed. investors are going to be listening for the details on when the fed may scale back that monthly bond purchase. joining us is the president of macro risk advisers.

what's going to happen? >> bernanke has proven to be artful finessing the markets. >> i would argue the past couple weeks may be artful for the fed but not necessarily for the markets or the economy. >> i would say up until now, the last couple of weeks. this is why i think the market is so interested in what he said. he's sort of floated a trial balloon out. if i'm bernanke and it's thursday or friday and i feel like i had a good week, successfully put it out there that tapering is an eventual reality. and i've seen some of the reaction from the emerging market currencies, stuff that got ahead of itself. so i walked that back a little but given lip service to the fact that inflation is falling so we are actively watching that as well and that tapering -- >> the market's at an all-time high. why is that not articulate? >> the last couple of weeks --

>> but now we're looking at it so he let us know he's going to do it and we're at new highs. >> a great problem. >> exactly what he wanted. >> i think if it was last week and you were asking me what's the fed -- what's the market's reaction function going to be to the fed. the market is set up to rise. we've in some ways got that rally has occurred. i don't know that the market is set up to rally on the back of this pause it's done so. >> you thought the market was, when you sat down the market is going to over react. >> no, there is so much attention focused on what person says, what abai says in japan, it's an unhealthy interaction between policy and markets. when we're hanging on every word what if the policymakers say. >> isn't that the problem. >> of course i think there is a tremendous amount of analysis. >> all of your words, come on.

>> aren't wort it. >> there is analysis what if the fed says and should be because so much of the markets rally over the past several years has been a function of que. we ask where are we, how much of the markets rally is economic improvement and how much is que e. >> how explicit can he be, how many debate there probably sill is in the room, how articulate can he be about what's snex will you be satisfied or you think everybody we'll have to decide it all over again? >> i think he's going to pretty well hedge. so i think, i expect less reaction to the up side or the down side. appreciate it. coming up next we've got the leading builder of luxury condos in the miami area here to talk business, the markets and more. chairman of the related group of florida joining us after the break.

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the real estate market in south florida is as hot as the temperature there, but the buzz a few years ago is fresh in the

minds of real estate developers. condo king jorge perez, he joins us now with his outlook on what is happening in florida. thank you for being here this morning. >> thank you for having me. >> so things are really turning around, correct? >> yes, they are. >> so how would you describe the situation now versus maybe 2007? is it back to that same heightened frenzy? >> we're not there yet. you know, the building that we saw there is not there yet but it could get there. what we're seeing is a huge increase in international demand led by latin america and secondarily by europe. miami is seen as you know, the link between the south and the north. it's a very, very international city, perhaps our most international city. that has drawn tremendous amount of latin american investment and that's what we've seen fuel this

new boom. >> george, you've got an amazing story. during the bust your company probably lost $3 billion in projects but you say the experience was a learning one and you came back even stronger. i think you're involved in 40 projects now? >> yes, ma'am. yeah. i hope we learned our lesson. we're involved in a lot of projects but much more diversified, everything from low income rentals to middle income rentals to acquisition. no longer 45 condominium proj t projects. they are in different stages of development, six under construction. the difference now is that we're much more cautious in how we take deposits. for all of our condominiums people that want to buy from us, have to pay between 50% and 100% during the construction period of their purchase, so financing

really has been done by the purchaser, we're not taking the risk that we took in the previous boom. >> just to put down the down payment is something like 30% to 40%. what were initial down payments before the crash? >> they were 20% and they remain 20%. it waechbt just 20%. 15% had to be given back to the buyer should anything happen. in this one, we're not only getting 40% up front and then anywhere between another 20% to 60% during the construction period. if there was something happen and we do not have to give back that money to the purchaser, all we have is an obligation to resell their unit. we've greatly reduced the level of risk. there is always risk, you have to look at the market and see how much competition you have and how long the demand holds. right now the demand is

extremely strong, as i said from both latin america and europe. from northeastern united states as the economy in the u.s. rebounds. >> it's the international market that sustained demand even though the higher down payments and money put down and financing requirements are there. >> right. it's made possible to the what i would saul the younger professionals in miami to afford these condominiums. what is happening is that latin american buyers are buying in brick laven like our madison or park avenue, and senting those units to the local professional markets that don't have the cash to buy the unit on an all cash basis. so give at any low, low interest rates that these foreigners are receiving in cds, they are seeing investments for all wash and renting and getting toward 3% returns.

plus, the appreciation of the use knits as a good investment. >> is that your project down the street from prime 112? >> yes. >> my partner bought a place in there, steve houltsman. he said it's a fabulous building. >> it is. it's one of the best. we have two more going up in that location that's south of fifth street, already all built up. but again, even those luxury jobs are selling for $1500 a square foot, a similar product in new york would go for 5,000, $6,000. even in a place like rio on the water, 2,000 or $3,000 a square foot so miami is relatively inexpensive. particularly to the latin american market. >> thank you for joining us. george perez. what wall street is saying about

wall street earnings. as we head to a break, take a look at fed exover the past year. flying is old hat for business travelers. the act of soaring across an ocean in a three-hundred-ton rocket

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fedex out with earnings a few moments ago. john barnes, hopefully you can illuminate some of this. what did they do, give yearly

guidance and we had to fend for ourselves every quarter? >> yeah. they would provide a full year number and then you kind of had to build your model out, they might update the quarterly stuff one wart quarter at a time. no real difference this time. you know, we're still getting a good annual number. >> they made a point of saying think are going to revise the way they do it. >> yeah. i think you know, it used to be they gave a specific earnings number. they were doing it more based on growth rates and that type of thing. >> that almost seems like less. so that number, what was it, 7 to 13. did you try to figure out how that compares to where the street is right now? >> so that the guide, they finished fiscal 13 with a 6.23 cent number. 667 to 704. midpoint is about 686. the street is at 731. ours is 695. they are well below the sell

side consensus numbers. this is where i believe investors were expecting. i think that's why the stock is probably holding up okay this morning. even with a lower guide. >> call it up a little. it's a wide range and they a lot of times they are conservative and beat it anywye. >> i think that has been the issue in fiscal 13 they weren't. there was always kind of a big number out there and it was difficult for them to exceed expect aces on a consistent basis. i think now you've reached the bar lower, a lot of cost reductions in the company. with this type of guide it's easier to be more constructive 0 on the stock. given where we are with the current backdrop that's not a bad thing. they have internal issues so i think this is the appropriate way to set expectations. >> internationally what, they are getting undercut, are the

other places as good, as it positively has to there be? >> it's not says nairly they are as much as shippers are maybing the decision to use a lower cost alternative. not that you need it tomorrow morning, it's we might be willing to do with two day deliver and in pay are for a little less time, trying to use a lower cost alternative and they have had to adjust their network. i think one of the bright spots is that they intend to reduce asia to north america capacity. i think there is too much capacity in the trade lane. >> we appreciate it. we got a better understanding of what's happening now. it is fed day and we're going to talk about tapering.

>> i think the taper may be something that since it looks like a pig, acts like a pig, let's read a quote. from the natural, a man 1892 that has tried it. a taper of which the meat is most delicious and nourishing, sometimes killed by the fortunate hunter. i have a lively recollection of the pleasant effects i experienced from a diet of fresh tapir. >> no way. so cute. look at this. >> hold on. wait. there has been a question, is it kosher for andrew? you don't know, you haven't studied much. i told you things you didn't know in the past. okay. to be kosher it has to be cloven, hooved and has to ruminate. this is in chewing a cud. pigs don't ruminate. camels ruminate. >> where is the tapir? >> i don't know. that's a tapir. it's like a pig-like thing.

>> it's cute. i can't believe. >> you don't think pigs are cute? >> i can't believe you would eat. >> have you seen how cute -- did you see "babe"? you eat bacon? >> not often. i like turkey bacon. >> oh, god. >> not better for you, the regular bacon. >> look how cute. >> is that true? >> true too. >> there were brand new chicken breast hot dogs out. >> are those good? did you back those? >> i don't back them, i consume. okay. >> to excess? >> no. >> let me ask you all a question. i sit here. >> we got to go. when we come back we'll hang with you at 8:00. you'll be here until 9:00. take it easy. >> i'm fine. >> when we come back, we have more on today's big fed decision. president of the national bur of economic research will join us.

randy croszner will be here. futures turned down. now down by over 3 points. "squawk box" on cnbc will be right back. n: 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. ♪

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markets looking for hints

about the fed's plan to taper its asset purchases. >> squawk market master marty feldstein and randy kroszner tell us what they expect to hear. >> plus a video game disrupter taking on the big boys. the launch next week. the founder and ceo is going to join us here first. the third hour of "squawk box" starts right now. welcome back to "squawk box." i'm joe kernen along with becky quick and andrew ross sorkin. ken langone, co-founder of home depot, chairman of invemed associates, he's into really neat things. >> that's how you have to do it. say hello. >> hi.

>> exactly. you have a lot of neat things. >> we have a chochkey for everyone. >> before we get to ken let's have headlines of which there are a few. >> the man who oversees the $26 billion mortgage settlement says that servicing still isn't as good as it needs to be. the national mortgage settlement's monitor joseph smith releasing findings. the five largest mortgage servicers signed the $26 million settlement over blatant improper foreclosure procedures. diane will have more on this. but the central bank that is the key story, it's widely expected to keep its interest rates unchanged today. the real story is all about the bond buying program. economists expect the fed is going to keep buying at a pace of $85 billion. but the market watchers will pay attention to any signs the policymakers may scale back the program later this year. so called taper, when is that

starting? the announcement at 2:00 p.m. eastern and then bernanke 30 minutes later. right now let's look at the markets. as we mentioned, the equities market looks like it's relatively flat lining. we've got fedex out with earnings and concerns about the guidance there. maybe that's reflected in the pullback. overseas in asia a big gain in japan for the nikkei up 1.8%. in europe this morning there are modest advances. although at this point modest declines for london and france. germany still hanging in there but a gain of 3.5 points. >> dish abandoning the offer for sprint, that is a win for japan's bank which sweetened its bid last week. dish and sprint combining to buy clear wire. that process will continue. we talked about it be, fedex

reporting earnings that is pete beating expectations. revenue in line with estimates and fedex saying the profit improvement program is progressing but also saying that the economic broth is tepid and continuing to see the effects of a consumer preference for lower rate international services. >> more on perspective what to expect. joining us martin feldstein, harvard economics professor and former chairman of president reagan's counsels of economic advisers. good to see you. >> nice to be with you. >> would you have started tapering? would you start tapering now? where are you on that issue? >> i think the fed made a mistake of doing as much bond buying as it has done. i think it's driven long term rates down to artificial levels, it's created a bubble in the long term bond market and people

have been losing money as the market has come to adjust to that. so i wouldn't have gotten this car out on the limb. >> is there any way, professor, is there any way out of this without a lot of pain for the people that have long term bonds? >> i don't think so. i think faster they get out of those long term bonds and into money equivalents and very short the happier they are going to be. >> for every seller there has to be a buyer. who buys them? >> people who are making a mistake. and the prices -- >> from one investment to another. >> well, that's you know, i can only say what i would -- what i would do and what i would say to my friends to do. >> they obviously disagree with you. i don't think they use it that way, do you? >> who is the they? >> bernanke and some of his colleagues. >> no, i think they understand that rates are going to have to

rise. they don't agree that they have gotten too far out on a limb or if they do, the majority of the open market committee isn't saying it. >> do you think they tried to signal to us on may 22 that they were going to start doing something in the next quarter or so? >> whether it's the next quarter, it's hard to say. i think they continue to say it all depends on the numbers how strong the economy is and they want to take credit for having strengthened the economy. so they look at the numbers, i would say through rose colored glasses but i don't think they are going to rush to do anything now and they may not do anything until september or october. but i think before the end of this year we're going to see a slowdown in the buying program. they don't think of that as a real reduction in quantitative

easing. they would say that the total volume of their purchases is going to continue to expand. but at a slower pace. money is the ultimate commodity in my opinion. we had a chap on the show a while ago talking about huge down payments on condominiums. in years past that would have gone to banks and borrowed the money. instead they are saying to the people who buy these units you got to pay so much down and pay progress payments to the point where you take ownership. every place i look i don't see any robust demand for money. so with the exception of what's going on with the fed and this money, this buckets of money moving all around, at the end of the day how do you ultimately get true economic demand for money to reflect itself in

higher rates when there is no demand. look at the balance sheets. look at the dividend payouts, the stock buy-back plans. these to me are symptoms of a lot of cash in the system. >> you are absolutely right about all of that. but the big borrower out there is uncle sam. and the federal government is going to borrow some 600, $700 billion this year. and the fed has been offsetting that with its quantitative easing purchases. as the fed steps back and the government keeps borrowing, we're going to see upward pressure on interest rates. >> you think ber naeng is going to irt another term? >> the president told him he didn't have to, more or less said on television your time is up, mr. bernanke. i didn't think that was a nice gesture on the president's part. >> it wasn't gracious. >> certainly wasn't.

>> you think it's going to be yellen? >> hard to say at this point but i think the president has ideas that he's not sharing with us, but he has decided to get out there ahead of ben bernanke in terms of declaring he can go back to princeton. >> just to clarify your sense is that bernanke, you think he was being fired? >> i think the president was telling the world that bernanke isn't going to continue to serve after the end of this term which is going to be over in the beginning of next we're. exactly what conversation they had i don't know. >> bernanke is the ultimate lame duck. whatever he says is going to be temporary because if you're night professor, we're going to have a new seat in that chair. >> i think that's right and i

think one of the implications of the fact that ben is now very, very likely to be leaving in the beginning of the year, is that he's going to want to get the so-called exit strategy under way, that is he's going to want to start the tapering before he leaves so he can say i did all these good things and put us on an exit path. >> if you're right about rates going up by virtue of government demand assume long rates go up 200 basis points, that adds $350 billion a year to the interest rate bill. is that correct? >> eventually. >> eventually. the point is all it will do is exacerbate the deficit problem. >> but you can't keep interest rates, you know, the 10-year treasury as you know has crept up from a little less than two

percent to a little more. that means in real terms it's approximately zero. the yield is slightly positive. that isn't normal even if you zript these large debts. interest rates are going to rise 200 to 300 basis points. it's a question of when. >> your take is that maybe bernanke wanted to leave all along, the president was granting him his wish. >> i think he was granting his wish. >> allowed him, ben, to make that statement. >> and not say it, maybe say you shouldn't have said it on tv. >> i think it was inappropriate how it came out what i wonder is whether the meant what he said. i can't imagine that and i wonder whether it's what's happening. >> the air came out. no joke is required there.

>> whatever you think about bernanke's policies -- >> american hero. >> i think the guy is a loyal and faithful public servant. thank god for people like that. i just think to be treated this way is a horrible poor taste. >> throwing away the original playbook and doing new things that had not been done before to save the financial markets which were in such distress and disarray. i think and the president in his statement the other night insisted on sharing the credit for that with the white house. wasn't very nice. >> 800 billion stimulus. >> professor, thank you. we appreciate your sharing that with us today. >> nice chatting with you. >> good being with all of you. >> okay. coming up we're going to have much more from our shy guest

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welcome back. it's been a year and a half since the five largest lenders signed the $26 billion national mortgage settlement brought on by the revelations about robo signing and fraud. the first official report on how services changed or perhaps not changed their way is out and diane has the details and exclusive interview with the settlement's monitor. >> andrew, former north carolina banking commissioner joseph a. smith the monitor of the $26 billion settlement says servicing is better than it was but not as good as it should be. there were blatant failures in a testing of the lendering which included 29 different metrics. >> most consistent failure across the services was the prompt response to borrowers

telling them what documents are needed to complete their applications for relief. that's really important because it's the basis upon which the consideration of an application can be made and it's been the source of the so called dual tracking problem. >> bank of america and chase reported two failures each in the latest round of testing, they failed to send some borrowers accurate information before starting foreclosures and did not notify some of missing loan modification documents. chase did not reply to some applications fast enough and did not terminate some insurance. citi and wells fargo failed one each in notifying borrows of missing documents, only rescap passed all of the tests, now the lenders have a chance to correct these failures before punishment. >> in a wait-and-see attitude. let's see how these corrective action plans go, see how the results of the new tests are and then we'll go from there.

>> should the banks not fix the problems they can face millions of dollars in fines, the five have already distributed over $50 billion in relief to more than 620,000 homeowners according to the group in addition to the tests which the banks add minister and report themselves, smith's office received over 59,000 consumer complaints between october of last year and the end of march this year, the number one beef, lack of a single contact person at the bank or difficulty reaching that person. we have plenty more details on the report on line up now realty check.cnbc.com. >> we have a question for you. the report, he has been desperate to ask a question. >> my question is simple. whether the notification or the procedures were correct or not, is it fair to assume that most of those loans were in default for nonpayment? >> yeah, they were likely in default for nonpayment. >> where the focus here are the

nuances of the problem itself. what's the problem? go back ten years ago when people like barney frank were screaming and yelling that people should be able to get loans, everybody should own a home. forget whether they had the financial where with all, whether they had personal responsibility, or demonstrated, i don't disagree with banks sometimes -- i am not an advocate of the banks though i confess i am a significant investor because i think they are great. let's not lose sight of the fact that this problem surfaced not because of notification, not because of percentages but rather thaws people who had mortgages couldn't make the payments. that's where this all started. and the tragedy of this to me is we're losing focus on how we got here, which means we'll do it again if we forget how we got here. >> that's supposedly what gsc reform and lending reform is about and all of the new regulations. this report is basically trying

to fix what was broken before and they are saying it's still not fixed but i agree the problem we talked about a lot was should these borrowers had the loans. they are trying to get them in loans they can afford or through the foreclosure process without fraud. >> it almost sounds like a gotcha. the fact is, we have a serious problem. we encouraged banks and lenders to make loans to people who were not going to be able to meet the payments. lie yars loans and everything else. but this business now of tar and feathering the banks, let's not lose sight, you can go back, it's public record, listen to what barney frank said. he's gone now, up in -- he is going to be a lobbyist or other thing. everybody was saying every american has a right to own a home. it's an american birth right. we have to do, whether they can meet their obligation didn't matter.

>> there it is. >> it's a valid question. you look back what underwriting standards were you change them but you still have this group of people who were put in under incredibly bad underwriting standards and the question is what happens to those people. the question is also -- >> put snin. >> i'm not giving the services a pass. i'm not saying -- >> they bought the house. there were horrific underwriting standards and you have said that the mortgage companies wering paid to give out money. >> looking at the fine print and you know, we don't really hear about this. >> i understand ken's point entirely. >> that each person's only getting $800 out of the settlement from the banks. >> you know what that means? they defaulted on their loan. they aren't just -- if they had equity in the loan, probably not but they are getting a check now for defaulting on the loan. there's a disconnect here with common sense. >> i understand that. >> we're turning the people --

many of these people never made the first payment on their mortgage. >> but we're painting people with broad swaths. >> i understand. >> all i'm saying is if we are going to try and make sure god forbid this doesn't happen again -- >> you sor politically incorrect. >> totally valid conversation to be having. >> you never talk about this when you appear on nightly, that's for sure. >> no. >> it's going to be only $800. oh, man these poor people. >> if you talk to the people doing these monitoring and the settlement and talking about making these payments and who are talking to the borrowers they will tell that you a lot of borrowers they are getting checks and yeah, they may only be for $800 or some amount we think is way too small but they never made mortgage payments or defaulted on their payments and lived in the homes for free for two years and yes, the banks may have made a mistake in the documents, that's wrong. no question about that.

banks should get their act together. but by the same token, these people could not afford their loans. >> what percentage of those in homes that can't pay the mortgage do you think ultimately, talking about was it pushed down their throat or not, were liar's loans and encouraged. >> you can't say what percentage it is. you can say there was absolutely predatory lending especially when you look at some of the really low income people. >> 5%, 10% of the market? >> there is no way of knowing. people offered me loans i knew i could not afford and that i wanted to take and turned down, that was during the housing boom. >> you did the responsible thing. >> but there were a lot of people who not only took the loans but also took the house, took the loans and refied and pulled out incredible amount of home equity as the market was booming and paid for all kinds of things. >> you were describing that, the loans that you couldn't afford

to pay back you would describe any loan as a pled torry lone? >> why should all the people current. >> let's agree to one point. take a loan where the borrower has the payments and complying with the responsibilities and the bank does something to hurt him. give him whatever you have to give him to make him whole. but if all these loans, all of these that didn't exspis you would still have these multi, multi-billion-dollar buckets of loans that people who were obligated to pay. >> my problem with the initial program nas the government put out after the crash was that you had to have defaulted for at least six months before you could qualify. if you were saying i'm going to have problems, you didn't qualify. >> thank you very much for creating a stir on the table here. >> thank you. have a nice day, diane. >> up coming up counting down to the fed announcement due at

2:00. randy kroszner -- like crawfish -- is going to tell us, we need to make crawfish bacon, what to expect. >> still ahead, our disrupters series continues with a video game start-up taking on the big boys like play station and x box. ouya is a new console that runs on open source software and priced competitively at $99. the founder and ceo will join us at 8:40 a.m. eastern. [ male announcer ] i've seen incredible things.

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when we come back former fed governor randy kroszner will join us. take a look at the u.s. equity futures. they had been higher and lately have been around the flat line. everybody waiting to see what the fed does. we'll be right back.

welcome back to "squawk box." let's look at some of the stocks on the move. sprint the lower this morning after dish network said it would not submit a revised takeover offer that clears the way for soft bank to proceed with its deal to buy sprint. adob systems beat estimates with second quarter profit of 36 cents a share. it's making a successful transition to a subscription model. and lazy boy reported 30 cents a fair, 2 cents better than expected. lazy boy is did warn that the summer quarter is usually one of the slowest and the furniture

industry, this tends to be a slower quarter. poun 1.8%. >> insight from the fed from a former fed insider. joining us from chicago is randy kroszner, the former federal reserve board governor and professor at the university of chicago booth school of business. from washington our own senior economist, not former anything, steve liesman. randy, just lay it out. what do you think we're going to hear today? >> i think the fed has a large burden on to the try to clarify its communications. i don't think it was that unclear before but the markets clearly got confused when the chairman said no premature tightening, but there were a number of participants who talked about pulling the punch bowl back as soon as june. i think it's clear the fed is not going to pull back any time soon, they want a sustained and sustainable recovery in the labor market, we may be getting there but we certainly don't have enough evidence of that.

and inflation is not only low but falling. there is a lot of leeway through. >> randy, you want to weigh in on president obama's comments about mr. bernanke. >> well, i think the chairman has served long and during a very tough period. i could understand why the chairman would want to come to a close for his good service to the fed and to the country. and i think it is likely that there will be a new chairman going forward. >> what about the way it was announced? >> randy, you don't dabble in controversy typically. but we won't get anything out of randy. >> he said wonderful things about chairman bernanke and his service to the country. take that all as a given. i think he's worthy of better treatment than what he's getting right now. >> i think it was unfortunate. i think from looking at the press conference, the president seemed a bit -- not the press conference, the interview, he

seemed a bit tired and a bit off of his game. i don't think he meant to say the sort of thing that he said. i think he was -- said something like he's been there longer than he should have been. i don't think the president meant that. i think the president thought he's done a very good job. >> he is the president of the u.s. you mean we're supposed to try to depfeiffer what he means when he doesn't nene what he says? who can do that? >> i'm not going to -- i can get through the fed speak. i can't get through president speak. >> steve, we -- we ask the question of ben white in the 6:00 a.m. hour, do we know, we heard from you yesterday about what the white house tried to sort of come back on this. do we know how people inside the fed felt about the comments? >> my guess is they are thinking of it the same way i thought of it. the president and the chairman have good relationship. i think sometimes things come out, i think the president said a number of things in that

interview that i think he regretted the way that he characterized them. >> mr. liesman. >> i think the fed probably thought the president's remarks were unfortunate coming a day or two before the fed meeting. i think they would want a much more kor kes straighted discussion that is calming to markets and makes clear what's going to happen next. that's what i would think the fed would want. i want to go back to something randy said. randy, maybe i missed what you said at the beginning but you said it's clear the fed is not going to do anything any time soon. i don't think that's clear at all. there is expectation of a tapering of quantitative ease as soon as september. the average is march in our survey. the biggest response is september. i think the market is girded for a change here and i think there is some small chance it happens today. i don't think it happens today.

but i think that's where the fed is headed. the fed in a pickle out to get out of this that they are in all of the other programs were finite, this is infinite. i think that the fed has a major communications problem, i think bernanke got through qe by a political compromise which was not putting specific figures around when it would end, now he is leap reaping the cost of that which is uncertainty about the exit in a way we have never had previously. >> steve, is ben bernanke a lame duck now because of what the president says? >> i think that term lame duck is different when it applies to the federal reserve. when ben bernanke leaves 18 otter members of the committee will maintain their jobs. i believe the policy has the support of more than just ben bernanke. i think he's guided the policy

so yeah, he's on his way out and i think that's the expectation now. >> what's the chance he steps down today or announce as transition plan? >> i don't think it's anything at all. >> steve, that sounds your description of these 18 people sounds like making the call without a steering wheel. come on, the guy had enormous influence on the decisions that were made in many cases, the speculation was he forced thing through because he felt strongly about it. he's not just one of 18. he was the guy. >> but i think that was also true in the greenspan era and when greenspan's retirement was announced i don't think it caused disruptions in the market. >> pardon me. greenspan got a lot more respect in his retirement and bernanke now. that's an unfair comparison. >> i don't disagree the fed has a strong chairman. this chairman was not as

forceful in leading the committee as greenspan was for a reason. but i also think that when i think about who supports the quantitative easing policy and why. when i think about how broad based that support is in the broader economic community i don't think person is throughout as a rattingical dove pushing policy that the fed wouldn't be doing. >> that's what all of you guys in the media said for the last few years. he was having his way. >> i don't want to disagree with steve a little on this. and i do agree a bit on the sort of more radical approach the chach as taken. he as done a good job of building a low kaylition in the federal reserve and a lot of outsiders are doing something kifrnt. greenspan was remember operating at a face that was likely to be measured. i was the fed from 2006-2009 and

subsequently it has been anything but measured. very bold policies. >> the question i think ken is bringing up and becky asked, and i'm interested in rur response, does that coalition fall apart in the absence of paern. i don't think it does. >> obviously it depends on who the next leader is. >> janet yellen. >> if it's something who shares the battle scars and the philosophy of the chairman i think it would be easy to move forward with some similar. the president could who is anyone. >> is that zero? i wish it was. >> i don't think larry is. if you think about how people get to this job they always spend a good amount of time in the white house. >> i thought alex somers coveted

it. >> i think he has a shot. >> to look for the replacement ends up appointing himself. earlier we talked about a communications problem, i made an argument that the past weeks have been tough for the fed. joe told me i was wrong. you thought it was a success that -- the comments, call it as it is -- >> we got we know he's going to do it. we didn't think he was going to. the whorkt said wait, now it's a new high. or off a high and now anticipating -- >> we look at those as a success. >> success. >> i think it's important to get these out early than at the last minute so i think it's go to have the debate earlier and -- >> in january walking out the door? >> i think it's better to have the dugs and debate now.

back to steve's earlier question, the communications challenge is that they have been very clear about economic criteria for interest rates. what they need to do is be just as clear in the criteria for sales of securities. that is the key thing. >> they can do 5 billion, 10 billion, 20 million, they don't have to be clear because they have a white lang of what would constitute. >> 25 basis points they -- >> they could do $10. >> the consequence is volatility. that's the problem. >> let's talk about management of an event. you fire somebody you call him in say look, it's not working, the guy goes out and says i want a change of style, i want to do this, you allow the person to walk out at the same time you'll link it with the person coming

in so you eliminate the uncertainty. forget about being nice or plight. had they amounsed at the same time bernanke is leaving and i'm happy to introduce my successor, or the speculation of who is going to get it what are they go going to do. it's nonexistent. this is bad management. >> a lack of experience in management. >> gentlemen -- >> i want to bring up one more quick issue, the real communications challenge for bern today is convince the market that he can taper and have no thang for interest rates. that is a false conclusion and saying the fed probably cannot pull this off. >> my start-up, start serving tapir. tapirbacon. they are like pigs. >> taste like chicago snn. >> the chairman is not going to

use the word tapir. we have no more pigs. >> don't put my face on the tapir. >> what's it taste like? >> we had a coast some someone. >> randy, steve, thank you guys. >> you don't want in, i asked liesman. >> i'm good. >> up next we'll continue our disrupting series with ouya. we'll talk to the company's founder and ceo after this.

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our cnbc disrupter series continuing with a company that could literally be a game changer, the game console ouya. i feel like it's jim cramer should be here. only $99 it could give play station and x box a run for the money. the founder, julie uhrman. good morning. >> thanks for having me. >> explain to those not -- we probably have a lot of the people who are not gamers. start with what ouya is. >> i would challenge that now that we have mobile devices we are all gamers. ouya is a new game console, it's $99, where all of the games are free to try. we wanted to build something accessible and affordable for

all gamers and open to any creator that had the passion, vision and enthusiasm to build a game for the television. >> and most interestingly to me, you raised money for this, not from traditional investers but kick starter. >> we took this to market a different way. it's a hardware product, a game console, a software platform and a game ecosystem. we wanted to know early if people would want this. if there was room in the market with the others for something else for an alternative gaming experience. >> how does this compare to an x box, for example, a play station, an nintendo in terms of the computing power and sophistication of the games and the graphics and everything. >> it's a different experience. when you talk about the traditional consoles you are always talking about the processing power or the realism of the graphics or how many polygons are on the screen. what's important to gamers is how much fun they are to play.

by opening up the television, opening up the last closed digital platform that we have we're telling any creator with excitement and vision to build a game for the television they can do that. the consoles don't allow that today. >> what's the chance a big gaming company like ea who has licensing deals with the nba and others create games. >> absolutely. we're talking to all of the aaa publishers, we have games from square enix, sega, when you boot up you'll see familiar properties and characters that you know and love from other platforms but you're going to see games from small developers, independent game developers that are really pushing the envelope as far as story telling and game mechanics. the best part for the gamer they get to try all of this for 99 candidates and every game is free to try. >> what does this say about the makers, people on their mobile devices playing games, thing of

zynga and things for iphone. >> the console industry hasn't changed for over 30 years. it's a very expensive box. the games are $60 before you know if you like it. this is letly ris duptive. because we took it and heard from over 63 thousand dollars backers that they wanted it. best buy, target, game, amazon, we no that gamers want something new, different types of games, they want came from new developers. >> is there a day you won't need a console. there will be enough computing power in the tv or hand set and that will be that? >> absolutely. that's within our lifetimes. what's important is the experience, it's the community that gamers and developers establish. it's the how people leverage the controller. it's about getting that emotional experience with the game. so ultimately yeah, the hardware

is a commodity that gets embedded. what remains is that community of gamers and developers, those creative inventive games that you know, with comes from anybody. >> if anybody said we want to buy you? >> we have way too much to accomplish first. >> thank you for joining us. for more on our exclusive list and for web only content check it out at disrupty 50.cnbc.com. >> jim cramer's expectations. we'll check in after this. [ male announcer ] this store knows how to handle a saturday crowd.

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. welcome back to "squawk this morning. even though we had good news from the dow jones, the nasdaq is up almost two points, and down marginally on the s&p 500. mr. cramer, views on fedex this morning? >> well, it is not as bad as the stock trading down, but we have to remember that fedex came back dramatically from the last qu t quarter and in low 90s. this is a terrific company and i believe that in the end asia is not that good, and that is hurting them. but i would not be a seller of fedex by any means here. >> what do you to hear from bernanke today and what is the one thing that you want to know? >> i want bernanke to stick by the 6.5% plan, but i need him to acknowledge the 10-year. he has to acknowledge that the 10-year has done something since may 22nd and if he doesn't, he will lose credibility. you have to address the bond market, because bond market is

king. >> i agree with jim. we need clarification to take some of the speculation out. there is mispricing of the risk no doubt about it. >> and so you have to have clarification. >> yes. we must have clarification. >> i have a non-stock question for you, jim. we were talkbing about it earlier in the program, the s.e.c. changing the position to not allow people to admit or deny guilt? how does that change the game? >> well, it changes legal fees forever, because these guys will never do that and they will battle the s.e.c. forever and the shareholders are stuck with paying the legal fees. this is the paul weiss sullivan and cromwell worst bill. they will never give in. >> you are down on this idea or like it? how is that going to change the way that the government approaches the cases? it is not realistic, and the lawyers will fight until the end

rather than have anyone admit it. look the plaintiffs' lawyers will come all over them, and that is who i fear. i fear the plaintiffs lawyers coming in to tie up good business people to make money on the shareholder who make $5 billion. >> by the way, there is going to be a lot of cases going away, because they have a flimsy case to begin with. >> yes. >> and so i would think that you would say to yourself, therefore, the shakedown game is over. it is much harder? >> look, look, maybe i was a pioneer, but when they came after me, and merrill was paying all of the profit sharing stuff, and it was nonsense and i said to hell with you and i we went to court and we whipped them and whipped them bad and it cost a lot of money, but the thing is that it was more of my reputation than the wallet and some of the people are going to wake up and say, wait, maybe i should not settle, and it is

more than that. >> and if you have to admit guilt, you open up yourself to a whole slew of civil cases. >> look. that is what is going to happen. like the principle, and ken is a guy of principle, but for the most part these guys will not do it, and the s.e.c. may not have the horses to win. and you know what, they take away a weapon. i wish that the shareholders didn't bear all of this and i wish that the justice department would periodically get involved if they feel that somebody has looted a company. >> jim cramer, see you in a couple of minutes. >> and ken langone has been with us, and we will give him the last word. we will see if we can get out of this by 9:00. ♪

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we have the last word from the guest host today ken langone and the last word is on michigan as in detroit, michigan. why? >> because we don't have to be compared to greece or spain or italy, and it is right here. detroit is the first. the bondholders look like they will get ten cents on the dollar, but that is gone. they gave the city the money, and the money is gone. the pension people haven't gotten it yet, because that is where the cuts are coming.

we have gone from the city of 2.2 million people to 700,000 in the last 35, and detroit was one of the arsenals of democracy, and don't forget that. detroit. now, the al teternatives and lo at pittsburgh. i was in pittsburgh monday, and pittsburgh is booming. but anyway, let's take heed on what is going on in detroit. >> and nobody is going to roll in the money. >> right. >> and make sure you join us tomorrow. "squawk on the street" begins right now. >> thank you. for investors the wait is almost over and in hours from now, we are expecting to hear what fed chairman ben bernanke and the fellow policy makers have to say about the stimulus strategy and will wall street like the message? good morning and welcome the "squawk on the street." i'm jim faber with jim cramer, and carl quinll