stocks falling into the close yesterday after fed chairman ben bernanke hinted that the fed bank could slow down bond purchases later this year. >> if the incoming data are broadly consistent with this forecast, the committee currently anticipates that it will be likely to moderate the purchases later this year. if they remain broadly aligned with our current expectations for the economy, we will continue to reduce the pace of purchases in measured steps through the first half of next year ending purchases around mid year. >> the bonds finished in the red as the blue chip index showed its seventh straight move. all the main s&p sectors closed lowers. the worst performers were defensive sectors. telecons. this is what people had been warning us, look out for those stocks that act more like bonds. that's exactly what happened yesterday. the yield on the ten year treasury, it hit a 15-month high if you take a look at that.

2.426%. this is a concerning move. this morning the dow futures are indicated down triple digits once again. this is on top of a 200 point plus drop yesterday. it doesn't look like there's going to be a quick bounce back, at least not this morning. >> we have a number of newsmakers to help us make our way through all of this, get through these questions raised by the fed bank. including alfred broaddus and former minneapolis fed. we have john stumpf. cisco is going to help us as well. >> i think stumpf is going to be exciting. >> finally if it looks like you could get to a point where the interest rates -- >> i think the yield could steepen. >> i asked for the commentary

sign. my commentary is so far i think this is working beautifully as far as the fed goes. may 22nd they give us the body language to get us starting to think about this. if it sells off below 15,000, but suddenly as of yesterday we're right back to the hunt. now we get back 200 points and we're at 1501. we'll be down a little bit today. we're assuming it will be this year when they taper, which they need to do. they've got to incompetent at thatter before he leaves. >> this is the short term knee jerk reaction. not the longer term. if it's happening because the economy is improving. >> it's 1501. here's where i get scared. i said it before i saw the 246. i get scared that what happens is that the fed loses control of the long end and this is what they were talking about. losing it in the long end. they said 2015 the fed funds and they want to do that. if we get like this with the fed funds. >> that spread. >> and they lose control of the long end, then it gets harder and harder to keel it down

there. that yield, john stumpf, it will be a huge bonus for shareholders. >> bankers have to be incredibly eager. >> the normalcy will return to us where we're not so -- anyone get a cd? you want to do that. >> we were talking about that yesterday. >> want to judge where interest rates are where they would be. it's factoring in everything instead of all of the accommodation. >> especially if it's happening for the right reasons. if it's happening because the economy is improving -- >> but it is. it was more about the underlying economy. >> bernanke said -- they asked him why he is so optimistic because the fed has been overly optimistic in the economic forecast for a while. he's misjudged these things. he says it's the strength in the housing market. the stock market was the other thing he was pointing to. what was the -- >> i don't think the fed has been overly optimistic. >> their economic forecasts. >> their actions.

do what they do, not what they say because what they've been doing, we've asked many times, why are you doing so much if things are getting better? do you know something we don't know? >> i'm trying to -- what was the other thing he said? the housing market is a really key part of the economy. >> there are a number of analysts out this morning, obviously by looking at this you think that he is going to start tapering. how about people who suggested actually -- >> the same guys who -- >> is that what i was looking at? >> i already thought they were going to do it by december. >> there was many people who have been on here who said it definitely won't be until next year and they're all going to be wrong. they'll stick to it for a little while longer. kbw's brian gardner. >> the one, the only. >> what? are you kidding me? >> you didn't know? where have you been? >> i didn't know. this i was watching the fed. when was this? >> died. >> holy cow.

>> 51. >> 51. >> heart attack. massive heart attack. >> wow. >> on vacation. on his way to -- i think they were going to a film festival. >> i'm really sorry to hear that. >> a lot of people. a lot of people. >> chris christie was out with a statement last night. hbo was out with a statement. >> rutgers graduate. >> that's a shocker. there's someone 24that you thin you know. >> so young. he was 51. >> i've seen those a few times. >> that's the other thing. state government has also been doing better. i'm back to bernanke. >> maybe we'll go back to that. in the meantime, we're going to talk a little china. we should note also having an affect on the global stocks. economic data coming out of china. bad news, it fell to a nine-month low. eunice is going to join us with more on that story from china.

eunice. >> hey, guys. we keep getting all these economic data points that miss consensus. hsbc slashed pmi for june came in below what people expected basically indicating we're seeing a contraction in the industry. we're seeing a slowdown in the chinese economy. that has raised questions as to whether or not they will have to change their stance. in the past several months we haven't seen the government come in to support the economy even though there has been a slowdown. because of the slowdown that we're seeing and this rapid negative economic data and the fact that we're seeing a lot of pressure right now in the financial sector where will's a lot of fears about a credit crunch that now people are starting to believe that the policy makers are going to at least have to rethink or possibly rebook their stance of

inaction. >> yeah. eunice, combined with what's happening here, this is, i don't know, perfect storm setting up. we'll see though. everything else -- we just need to go slow, don't you think? we can get through this, don't you think? >> well, i don't know. i mean, a lot of people are worried about the credit crunch. the fed policy has a lot of impact here as well. there's already been an outflow of money, not only from china but from emerging markets generally. china is closed off more than other emerging markets, but it really affects sentiment. we're starting to see a lot of outflow of capital from china. people were starting to think there might be a tapering of federal reserve stimulus. if that happens, we can look at finding better returns elsewhere. let's get out of the risky investments. we're starting to see an outpour of capital from here because of that. the government here has been cracking down on speculative money flows. we're already starting to see that happen. that's affecting the liquidity.

people are getting more and more concerned about the credit crunch. >> eunice, i guess that's the question too. does this change what chinese authorities have been doing? because they have been doing a lot to tighten up the money -- the monetary policy there. does this change that in any way? how does this impact their thinking on that? >> there are a lot of people -- i mean, there's a big range because there are a lot of people right now who are saying, you know, we really need to see the government step in. they have all the tools to pump in liquidity. there always have been. whenever there's a shortage of liquidity the chinese government has stepped in to help. this time they haven't. that's raised a lot of questions. why is that? is the government trying to perform some sort of stress test on the banks or are they trying to really push through reforms and create some sort of discipline to the banks? some people have said maybe they're trying to punish some of the smaller lenders who have been taking a lot of risk but the danger there is that if they allow this to happen for too

long then there are other consequences, other dangers where you can see potentially more bankruptcies not only with the smaller companies but maybe even some of the banks and then that moves to another big headache where you could see potentially people losing their jobs. right now there's a lot of fear in the credit markets here that this could potentially lead to something really ugly if the government doesn't step in. but then on the other hand people are thinking, maybe the government thinks that this is an orchestrated stress test and this is something that the financial sector needs because this financial sector has had very little discipline for years. it's been very much addicted to debt. it hasn't been able to perform like regular companies because they don't really see profits here. a lot of companies have gotten used to being so addicted to debt. what we're seeing is a lot of uncertainty as to where all of this is going to lead.

>> if anyone is really that far on the wrong side of this globally, you know, they just haven't been paying attention. i have no pity for them. anyway, eunice yoon, thank you. joining us is david blitzer and you're on the set of rikidonna. i named that. am i not right about that? is anyone totally blindsided by this? the bond side might not stay there? >> absolutely. there's the china story that eunice was discussing. if any global economy is not good at -- just spend. >> we're pretty good, too. >> we're definitely in second place. china through the global financial crisis put the pedal to the medal. yesterday from ben bernanke we

see that the era is coming to an end. >> is the market so big that people can be expecting it but they still have these oversized positions and the door to get out is so small that there will be dislocations with even these tiny moves? >> well, certainly the u.s. treasury market there's enough liquidity that i don't think the door is that small. >> right. as we've seen in the jec testimony, people get caught on the wrong side. i had no idea. then they've got leverage. there could be something that would blow up. >> there is the 30 year which cramer's tweeting about. massive correction there. >> when do you think you really pull the punch bowl? doesn't even matter at this point. >> here's the point, bernanke mentioned that maybe they've been too optimistic. my concern is maybe they're not optimistic as much. we've been stuck in this milk toast sluggish economy since the

end of the recession. if this looks like the typical economic cycle, we could be shifting to 4% growth. i think the time line will be more compressed than what bernanke told us yesterday. he suggested it could be mid next year. watch the economic data. look at a calendar. watch how the data evolve. i think the data could actually evolve in a stronger fashion and maybe the fed's going to be -- >> there are going to be a lot of doubters. paul krugman was blogging at 3:30. >> yeah, i read the -- he tweeted at 3:31 in the morning and i read through the entire thing. >> 24 hours a day you don't read what he blogs. >> it was interesting. i wanted to know what his argument was going to be, and he does make a good point that when you look at the number of people who are employed verse -- the percent of people who are employed versus the percentage of people unemployed, it's taking a huge downturn.

maybe some of that is because people are getting older but not a lot of it. >> these are the labor metrics that bernanke is pointing to. the one america understands is the unemployment rate. chairman bernanke talks about the employment ratio and people throw their hands in the heir and say, this is something we can't forecast. on a month-to-month basis you can't forecast it. over a longer period of time they pull the larger participants in and you see them all move in a direction. >> dragging. >> david, you've been listening, what are your comments after you saw that testimony yesterday? >> well, i think the first thing that happened was everybody was wishing for him to say, forget about may, i was just kidding, and calm the markets. obviously that's not what he did. so i think the immediate reaction was a huge amount of disappointment. i don't think the fed is at this point overly optimistic. we've been looking for the same gradual improvement we've been

trying to recognize for the last year or two. i think there is a chance it does a whole lot better than we currently anticipate. if anything, it reminds me if you go back to the 1993, 1994 when everybody was shocked at how fast the fed, greenspan, was raising rates. that time it was raising the fed's funds rate, and it did have disastrous activity in the mortgage market and the treasury market, of course, for the stock market, then you had probably the five best years in anybody's memory at that point. so, you know, i wouldn't really worry about it being too strong. in fact, i'd love to have that problem. and anybody who says inflation, i'd suggest they forget that. >> yeah. i want to get through this. when it happened in may i was hoping it would be june. i knew that was probably going to be too soon, but, you know, most people thought next year it

should be this year. we get lulled into this so quickly, david, that 85 billion is normal. when he first said it we had people in here just could not find the words to describe what 85 billion a month forever meant. it was such a huge tool. suddenly when we take about going to 60 billion a month people think that the world is ending and it made no sense. >> i think everybody always reacts to the fed that way. either they love it because they think -- >> the internet. >> -- or they hate it because they think it's going destroy the world. >> yeah. >> maybe we should have a moment to feel sorry for the fed chairman, whomever he is the next time around. >> or she. >> yeah. >> all right. but -- and i'm heartened by where the s&p is and where the dow is. 244 on the ten year and we're still above 15,000 so you knew there was going to be among these traders that are so short term and that all they care about is that the punch bowl stays full with lots of like

grain alcohol and the slightest thing happens, you just cut down the proof on the booze and they're already starting to sell. but, you know, now i think it's pretty clear what he meant, and i think he tried it, too, in may. >> it was a balloon. it was a balloon. >> right. and your argument yesterday, that it worked. >> yeah, it worked. it was a surprise from a lot of people. >> andrew, we talked about it may 22nd and a week later i said what was that date? because we need to write that date down for the date when this -- the beginning of the beginning. >> the beginning of the beginning. >> the fixed differential. i didn't believe it, i have to admit. i was not a believer. >> in the beginning, like they always say, when he comes on today, we'll ask him that. what is that tenant that traders, once they see the beginning they discount it to the end. >> yeah, it goes straight towards where it was. >> considering the reason that they do this is positive, we should look beyond some of this near-term stuff, right?

>> well, part of it -- >> you hope the sfed is right and take it from there. >> yeah. yeah. >> part of it is tapering on a healthy economy. the other part of the story is the treasury is likely going to be reducing issuance into the back half of the year or at the latest by q4 or q1 of next year. the sequester growth means that we're simply borrowing too much. if the fed is purchasing the same amount and the treasury is reducing issuance, that alone is actually becoming more accommodative, not less accommodative. >> we need the prospect of dancing. i'm looking at john stumpf. we should bring him up. housing market is getting better. he's over here like a prospector. >> he is here. >> yeah, he's right here. >> turn around the camera. >> right? he's right there. you don't want to -- why don't you come up. pull up a chair. we're flexible.

>> good morning. >> good morning. >> get a mic on. i'll give him my mic for now. here. go. >> in fact, housing is the difference. housing is the difference everywhere. housing has always played a leadership role in every recovery. it's been absent so far but it's not absent now. >> there's a woody allen movie where he's talking about what marshal mcclewen said. woody says that's absolutely wrong and marshal said he wouldn't say that. he said, yes, he would. and marshal walks up and says, woody's right. we were talking about what john stumpf said and he walks away. there you are. >> this was different? >> we saw this coming 18 months ago. we do 400 different nsas in 20. we knew it was happening at a very granular level. it continues to get better and in those markets one of the

biggest hits came by the biggest recovery. you look at arizona, the sand states, florida. >> miami. we talked to someone who is in the condo business. >> yeah. >> condos in miami. >> nevada. >> did you know may -- you deal in nevada. >> yeah, nevada doesn't have many houses. >> did you know on may 22nd this was the beginning of the beginning? >> no, i didn't. >> how come you didn't? we knew here. >> and one of us got it right. i got it wrong. >> i didn't believe this was the beginning. >> it looked like a flubbed response. >> it was very good testimony. >> am i in trouble? we got the ceo of wells fargo. he's standing over there. >> pull him in.

>> can we do that again? all right. at least we got a shot of it that we can eventually show. you have a beard and a little hat. there it is. it was there, right? whew! wow, i'm going to recapitalize. oh, my god. oh, my goodness. >> it's going to be great. >> credit loss. >> some of us paid a huge price in this recovery. we need to get back to normal. >> yeah. >> that is part of it. it's been four or five years. >> we're going to take a break, but i'm glad you're here. >> thank you, john. >> you came up early, you have a chair. >> after giving everyone on the set a heart attack. >> yes. carl, thank you very much. david, thank you. when we come back, shares of red hat rising. we'll talk about the outlook with the software company's ceo after this. later, gotham's great and we'll have words from john

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red hat releasing its results on wednesday. the big news also that revenue beat estimates as well. that was thanks to a rise in corporate subscriptions. joining us to talk about the results is red hat president and

ceo jim whitehurst. thanks for coming up and congratulations on the earnings. >> thanks, becky. great to be on. >> you talked about the earnings and it was better than expected revenues in subscriptions. what happened? what caught the street by surprise here? >> well, we continue to out deliver on the top line. yeah, i think a lot of companies are delivering well on the bottom line but there are expense reductions. we continue to be a double digit grower on the top line as well as the bottom line. i think we came in slightly higher than people thought. they were expecting to see special subscription revenue which is the bulk of our business. we deliver. >> the question, there have been a lot of people who were wondering what was going to happen because of cloud computing. if you could continue to make inroads. how has cloud computing affected you and what are you doing to make sure you bring in additional clients? >> well, for us cloud computing is a good thing. almost all clouds are built on

top of lennox and open source. we continue to grow. we're also providing infrastructure to run public and private clouds so cloud's actually a positive thing for us, which is rare for a larger tech company. most tech companies are actually quite threatened by a move to cloud wherefore us our software runs in cloud so it's quite a positive. >> bernanke was very positive on the economy and what he's saying. we have john stumpf here on set and he's talking about housing and how it's made a real turn. what are you seeing? >> it's different around the world. asia's been quite strong. i think we see a nice recovery in japan. europe is still a little bit dicey. our business does well in a down economy. we've been fine. europe is dicey. north america, we're seeing strength. last quarter was a little weaker. i think the concerns about

sequester and budget. what we're seeing from our customers going forward, we see a little bit of a pickup. >> jim, want to thank you very much for joining us today and, again, congratulations. >> thank you, becky. great to be here. >> john stumpf is here. he is here early with us. thank you for indulging us. >> wonderful to be here. >> you know we had that rush, he didn't need any makeup. i told him he looked so good. >> tan. california. >> i thought maybe -- he says that he walks in the sun. >> we talked about spf. he doesn't do that. not enough. >> you guys are too nice. >> no one ever says you can't possibly be a banker, you don't look like a banker today. >> i live in the sun. >> remember that. i'm looking at my family. >> john, what do you see when you look around? when you look across. is this the beginning of something really big, do you think? >> it could be. i mean, we have all of the elements in place. in fact, i think the economy -- the real economy where we spend

our time is actually many a little stronger than the numbers show and, again, we talk about a few minutes ago housing is really important. housing has led every recovery to participate in a big way. even bigger than the numbers. housing punches its way because it affects people's attitude. also, ag is doing relatively well. energy. who would have guessed that we would be potentially -- >> peak oil, the whole notion of it, the notion of peak oil, you have 1,000 year's worth now if you take china's reserve and everyone's reserve. >> we have not hit peak hydrocarbon. >> what we know today, we think we have 100 years or so in the u.s. what we might know 20 years from now could be 500. >> the way the information is going, i'm looking at all of this. when computers start designing themselves and everything else,

we're going to move on to something else. you didn't run out of stones. >> the key is, we have now figured how to extract it from different types of things. >> right. >> we know there's more energy in the things we can't get out. >> how about this, yesterday, how much money is sloshing around, no one wants that. we hear that from richard fisher. we've primed the pump, done this, so much money, now we need people to take it up and start using it. what's the problem? >> well, think what the economy's gone through. my parents are still living, thank goodness, and they're children of the great depression. we went through a tough five years. think of the psyche of consumers. n >> now that you're here i'm going to cut you off and say we have to go to break. >> hold that. >> hold that. >> stick around. >> you charge interest and fees, we do commercials. it's what we've got to do. i'm sorry. the silicon valley, investors

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welcome back to "squawk" not just "squawk" but "squawk box." it's too familiar. >> it could be on the street. >> "squawk box." >> we have another segment. this is branded as well. we call it big data.

we're going to talk about a topic quickly becoming one of our favorites among the guests these days. from ceos to business professors, everyone talking about the power of big data. we have a major investor in this space. put together a new hundred million dollar fund. >> second in two years. >> so what did you invest in the first fund? are you done with the first fund? >> done with the first fund. onto the second one. the first fund was a lot around the data technologies. so a lot of storage companies which has taken flash into the enterprise and also big data enterprises which has an adoption into the enterprise. >> your big scores over the years were consumer oriented companies. the big data revolution seems to be around the enterprise, dealing with guys like john. >> you know, it's an interesting observation because a lot of the inspiration for the big data fund came from observing what

was going on in the internet data centers. they were grappling with data at scales of pentabytes. a lot of them became open source and they are using that technology to process all the data they have to get consumer experiences. >> what is the coolest big data company out there right now even if it's tiny but doing something interesting with the data that we haven't seen yet? >> i think one of the companies is coddair. that is the open source technology, yahoo, facebooks of the world have pioneered and developed and now running the broader enterprises, companies like wells fargo and others use that to bring insight and value to others. >> how much is about the technology versus having people who understand what the data means? because, you know, you can get this flood of data but someone has to sort through it. it's not clear to me that the system unto itself could figure that out. >> that's a terrific question. i think the big data fund is

bridging that gap. we're calling it the data science gap. how do you get the last mile? how do you get from data to user? there's a whole new class of software i think that will be called data driven software applications. it will -- >> is there an apple or microsoft in there somewhere? >> i think so. i mean, this is -- this is very similar to the last internet boom. so there's main frame, client server, and now there's another market. >> thank you for coming in this morning. >> thank for having me. >> appreciate it. if you want more -- if you want to know more about big data, go to dataeconomy.cnbc.com. >> you never know who might show up on "squawk." wells fargo ceo john stumpf is here. >> here he is. >> we should have hit the ball a

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our next guest is literally a golf legend. now he's expanding his business empire. we see you more than we used to see you. >> now i make the cut every weekend. >> you make the cut. sir nick is the winner. you're going to play it. >> that's the attitude i have to take. my last competitive round was at andrews which was three years

ago now. about a month ago i thought, you know, why not? let's go and do the walk, enjoy the week. probably the last chance i get to walk. i won twice there. i've got great emotional memories of that spot. >> it doesn't help when watson comes and almost wins the thing when he's in his -- >> a lot of people said don't you wish you could do that? for that you have to practice. >> you have to practice every day. >> you practice in -- >> i practice 1%. >> you practice in billionairism right now. >> why not, you know? >> should be ready by next tuesday. >> be ready by next tuesday. i said i had nip and you brought out a bottle of scotch. >> that's one of the solutions. >> is that you? >> it's one of the brands. i'm a fan of that.

i'm a connoisseur. >> it can't help. >> convincing. >> the important thing in business now is i like to team up with people i enjoy doing business with, guys that are fun being around. you have a different relationship with brands now. you want to be more involved them. you you want to help them. we have some fun ideas for golf days and this afternoon we have a couple of their key customers. doing a bit of entertainment for them. >> what else is in the empire so far, the faldo empire? >> the one i'm really excited about, i have a faldo series which, you know, i developed 16, 17 seasons now. we've been in europe, asia. the exciting thing is i'm now going to bring it to america.

it's going to happen. we're going to announce in a couple of weeks where we're going to have an event in october. another exciting thing, the tour, pga tour, the commissioner, they're really interested. they're right behind me. we basically want to be involved. they can see the tie up between them and the first tee program. all those sort of things. so i'm really excited about that. got some great ideas and initiatives about how we can play some events with the course and i want to bring the series and expand it. a year ago it was very exciting. we got rory mcilroy came through my series and became world number one. the 14-year-old kid, he plays my series as well in china. developing. my big goal has been to bring it to america and now it's going to happen. >> explain how it works. can i go in this series? >> just a little -- >> a little --

>> yeah. >> i'm not -- i'm not -- >> you need to -- unfortunately you need to be under 21. >> oh. >> anything under 21 is your biceps. >> yeah, i thought it was body shape. >> no, you're not -- >> it's a junior program. we take kids from 13 to 21. they play events across europe, across asia. the cool thing is if you win in asia, you'll come and play in the grand finals. now they'll come to america to win in the grand finals. if you win, you go back to play in china. >> how much golf course design are you doing? how many courses do you have now? >> i have 26. >> i know one, shadow ridge. >> shadow ridge. >> in fact, huey, who's a mutual friend -- >> yeah. >> -- he calls that place the golf sanitarium because doesn't it look like you're sentenced there the way the buildings are? your course is --

>> yeah. fortunately business is still -- >> 27? >> i'm kind of a boutique designer. interesting project. cambodia is my next one. >> when are you doing it? >> in nampen. i have a 36 hole project there with a group. we pursued all sorts across the globe. china. a few projects in china. mediterranean, all sorts of areas. it's still bubbling under. >> did you sign a contract with cbs, right? i mean, you are the guy now? >> i am. i'm a golf analyst which is great. >> for how long? forever, right? >> for five years. i'm not sure if i plan to do 35 but as i said, if i keep my nose clean who knows. >> you get along? what do you think of johnny miller? do you get along?

>> i get along with johnny, yeah. johnny just likes to tell it the way it is. >> right? that's part of it. you didn't mimic -- copy him because you say some stuff now. >> well, i -- >> how honest can you really be though? >> these guys are sickeningly. other players play back what they say. >> try to say -- >> a lot of players don't talk to johnny. >> the hardest thing is if you describe a good shot, then you're praised. if you then describe a poor shot then everybody farley gets upcity set when you hang on them. at least i get out there and hit golf balls and i did this agreement and you do hit the bad shot, the dreadful shot at the wrong time. that's all part of it. at least i'm kind of still sensitive to that. >> have they given you grief about things you've said? >> oh, yeah. you don't get any christmas cards, which is sad. >> no. >> you get crossed off their list very quickly. >> i mean, i remember like it

was yesterday that shot that greg hit at auguwe gust stay. how far back were you? >> six. >> which year was that. >> '96. >> where was it that you hit that horrible -- i hit a shot better than that. the one that went right? >> you know what, colin montgomery did that, too. yeah. so, yeah, it happens. >> it can happen to anyone. steve stricker, can you still hit one of those. >> yeah. that's true. the dreaded s pipe. yeah. i try not to. i'm trying to avoid all of those. i mean, i'll see what my game is. >> since we're going to be watching. we'll go outside. you show me how to do this. are my arms thick enough to hold the putter? >> yes. yes. >> i have two 21 inch waist. >> yeah. >> that was very enticing.

>> thank you, faldo. thank you for coming in. >> i've enjoyed it. >> me, too. he is buff. i don't know if you can swing the club you're so muscle bound. time to sneak in a break. nick and sir john stumpf. if you're not -- >> announcer: this cnbc program is sponsored by land rover. above and beyond. everybody has different investment objectives, ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different.

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>> we are taking to the putting. we have the principal at elevation partners, who, you are 6'4," you weigh 230, you played for penn state. i'm not a total wuss. >> you look at us this morning. >> i know, people that saw faldo for years on the golf course, you can't tell, are you 6'3". >> 6'3.5". >> 210, all muscle. >> you have no idea how heavy i am. >> 230. all right. i recently lost weight. i was feeling good about myself until today. are you here all the time, right? so i don't know how i'm going to talk to you, can't you come next

week? i got nick faldo. before we get to this make it quick, the volatility that came from yesterday, is it going to be higher based on what bernanke said yesterday? >> there is no question, we will move to the next higher volume regime. we will certainly emphto a higher volatility level. across rate volatility, currency col tilt and equity volatility. with the ten-year backing up into that 2.44 area. >> unbelievable. >> we should start to see some real money back in here. >> i the cotate the super nation -- rotate the super nation with the volatility of the golf swing. >> you think the fed is going to be able to control an orderly move in the bond market based on what we're seeing today? is this the move? did the traders take it to where

it needs to go? it's 40 basis points a day. >> market sentiment is they will control ten years an pretty well. the question becomes what can they do with the 30-year. >> a truck. >> that's really the big question. ultimately, what does the 30-84 say about economics and the economy and what does it say about liquidity, can it be quote/unquote manipulated to an efficient level? >> i don't know, he already tied it to golf. you had a couple of vertebrae fused in your neck, i know that. >> sure. >> do you play golf anymore? >> a little bit. >> i wish i had that excuse. so, now. >> good, are you worried about -- >> this is a putter. >> there are really important things in life. >> you know, if the flag is in, i definitely will hit it. >> we got a big hoof present. >> this is a couple kuchar deal >> this is allowed. all this is going to be banned.

>> that, too? >> that one. anything and hinged. >> i told you, i can nip those, too. >> this one will be okay. all you have to do is lean it up. you lock it on to your arms. you have to have a putter made with lots of loft. then you do that. >> wow. >> so the most important thing is lient up. >> pull -- >> line up first to point in the right direction. take it off your arm first. line it up. >> line it up. put it on on. >> point it at the hole, that would help, wouldn't it? put your other hand on, push it forward. >> see, that at yip. can i do left hand low? sample lock it in there. switch hands, right hands you yip it in. take that finger off. put it on top. >> you said i can do it with the -- too. my bicep is not working. you know, i made one with a conventional putter.

>> you need a 120 putt. everything has to balance that, 1-2. >> this isn't going to work. i don't like the way this feels. are you using this? >> you don't like this way my putter feels? i'm terribly sorry. i'm working on it. >> so you will use one of these kuchar putters? >> the most important this eng is get it fitted. you are looking good. >> i'm talking. fi, let's say worry playing $5 and i need to hit it, then it's a problem. >> i have one more tip for you then. >> all right. >> so looking at the putter is always tough to control. look at your thumb. get it in position. line it up. >> it's lined up. >> put that like that. >> look at your thumbnail, swing your thumbnail backwards and forward, look at it. >> really? >> put your eye focus there that and through. >> sort of. >> to take the attention away from the putterhead. >> watch my thumb nail.

>> move it back two inches and through two inches. it would help if you are leaned up. >> tell me about the savend wedge. how am i going to stop from you the sand wedge? >> same thing. >> is it a shorter move? >> here you go, you got plenty of windows here. >> you hold it there that's one of my specially fitted putters. >> you are telling me if i put this here. >> go ahead, chip one out there. we only got doors and woipsd. there you go. this is fun. you were actually aiming at that. >> maybe i can crack something over there. all right, so. >> that wakes up your left arm, now? >> it does. >> you're a brave man. >> thank you. >> no, that was fun. >> i don't know, i bought the to work on that a little bit. >> i would. >> you better work on this you are going to muirfield, you will be on camera. thank you.

>> thank you as well. [ female announcer ] there's one thing dave's always wanted to do when he retires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies. even money he's invested elsewhere. we're building a retirement plan to help him launch a second career. dave's flight school. go dave. when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far. we went out and asked people a simple question:

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>> take a look at futures this morning because we do have some green arrows, rather, some red arrows in a big way continuing t. slide, the dow looks like it's off 88 points t. s&p off 12 points t. nasdaq off 25 points as we all try to figure out when ben bernanke officially takes the punch bowl away.

>> it is all about the fed. over the last few day, you are looking at where it opposite. ben bernanke says economic conditions are improving, though, unemployment remains too high, bernanke said the fed will likely slow it's bond buying program if conditions improve. that was the big co-that tipgs are data dependent here. stocks sold off late yesterday on those comments. at the end of the die the dow jones industrials down 206 points. all the questions are around when the tapering will begin. our cnbc senior economics reporter is here with more on yesterday's decision and on that news conference andings steve, we watched every minute of this. >> i like andrew's analogy about the punch bowl. remember he used to talk about the inning it is, what time is it in the bar? is it 9:00 and last call is at 11:00. is it 9:00 and last call? what time is last call on the punch bowl? >> we're at the after party already. >> i don't think so. >> he said next year. >> the great expression at the bar is i want one for the road.

i want to take a drink out into the car because i haven't -- then i'm going to drive, no, that is the problem. i had a question. >> in the 6:00 hour, it's the terminal rate. >> that's the thing. it's. >> it's the concern of the fed that any time the fed moves in one direction, the market prices in the end point, even though that end point may be further down the road you have taken the drink or. >> the ten-year, steve that, got your attention? >> it definitely did. >> i don't think that's the terminal point. >> i want to talk about this. ben bernanke shocked the market yesterday essentially laying out in detail in his press conference for the first time exactly what was already the consensus of said shocked market. take a listen to what he said. >> if the incoming data are broadly kin with the this forecast the committee currently anticipates it would moderate this year. if it remains broadly aligned

with our current expectations for the economy, with ewould continue to reduce the purchases in measured steps through the first half of next year, ending purchasing around mid-year. >> take a look at the cnbc fed survey, which we reported on tuesday the start of the taper average date december 2013 the top response september, 2013. end of qe july 2014, top response june, hugging the fed rate second quarter 2015. that was the consensus, obviously, it's new for the chairman to say ma to believe. likely what's happening is some of those not in the consensus believing forever and forever qe gets shaken out of the market by this. what is more interesting is the battle set up between the feds on the one handened the mark's fears on the others. the fed's forecast to continue into next year. means the balance sheet will continue to go to take duration off the market. bernanke stressed yesterday this still means the fed will be stimulating the economy over

that time period. >> these large and growing homings will continue to put downward pressure on interest rates. to use the analogy, are you driving an automobile. any slowing to the purchases will be akin to letting up on the gas pedal as the car lets up on speed, not to begin applying the brakes. >> the market believes that, it fear is tapering is john the baptist, bernanke said that's not the case. if market would be wrong to read in a newer term rate hike from yesterday's announcement. now it's a matter of see physical the fed cash can trump market fears. hmm. still looking at some stuff. yes, okay. i got it. so terminal -- faldo here. >> did you mission the whole report? i heard i. i heard most of i. like tim freeman, i was supposed to focus on him. six time major. have you not won a major at this

point? >> it depends what context. i get the first question the survey that had all the information that bernanke laid out. that's winning a major, man. >> do you feel it's not you, it's santelli because of the hillson wrath? >> what do you mean? >> the big brew-ha ha. it's not you? >> i'm happy not to be in that situation. i enjoy watching others take the brunt of that. >> you know my question earlier, it's a steeper yield curve, right? the bottom line. >> if they stay at zero, they can control zero. >> what did the banks do, they probably sold off, too. >>? >> a little bit. >> it's better for the for the banks. >> what's best for us is the economy does well. if rates rise because of an improving economy, even though some business might be disadvantaged in the short run, we really are the success of our customers. that's what we want. >> good news is food news. >> good news is not bad.

>> if the yield. >> al brought us. yeah. >> where is he? >> he's on the remote. >> you are gary stern, all right. i should know all you guys. now i recognize you, former minneapolis fed president gary stern here. and also al brottus. nick faldo? >> i'd like to be? >> 6'3.5." you are listening, should he be the senior economics reporter here in. >> i really think he is pretty capable. not yet there. >> the potential. >> is this the -- i was, this is sort of a bit of a nerm term nant point it goes to sort of where it should be six months from now, the 10 year and 30 year? >> i thought this was all surprising. the economy has been getting better. the outlook has been getting better. the fed acknowledged that. the fed acknowledged that that affects when they're going to begin tapering and the path of

tapering and all of that. and it all seemed to me to be mostly unsurprising. now, obviously, you got a big market reaction and i'm not sure that's all bad either, quite honestly. you know, everybody knew rates were going to go up at some point. >> do you think there is anyone sitting on a position that's problematic right now that it would be anything, obviously, it's not going to hopefully spread to other sectors. there could be some places that go under from this, do you think? are there dislocations? are there people on the wrong side of there? >> oh, without question. that's what makes markets, markets. people place their bets and sometimes they get it right, sometimes they don't, if you get it ride, you get rewarded, if you don't, you lose money. >> do you see people rushing for the door at the same time? could it get out of hand at this point or do you think this would be orderly? >> well, i think there is always a risk in a situation like this of some volatility. it's hard to believe that we're going to make the transition

that has to happen at some point in the not too distant future without some volatility. i guess, i would say, with respect, let me first say i agree that steve liesman is quite comp ten. >> oh, exactly. >> on courage point, he's right, it's not surprising, but i think for me the really q3 thing is the fact that the chairman laid out a situation, namely, their forecast and said, look, if we get something like this, this is what you can expect from us. it reduces uncertainty at least a little bit. the uncertainty is down a little bit. it doesn't change things a lot. there is still plenty of uncertainty out there. i think it's basically a constructive step and i was glad to see it. >> you didn't hear my weekend's argument in my report there, which was really your argument,

that we shake out yesterday the marginal buyer who didn't believe in the consensus, so you were making the point in the last hour, ultimately, worry not that far down, what did you say, a couple hundred stock marks here. will you have some blood in the bond market that everybody expected. you don't notice, by the way, by looking at the blood bath or what is happening there. the losses to the extent guys are hedged on the other side. >> before you came on set, you were talking about something i to the was fascinating which is this idea you had ben bernanke out there. it mubarak consensus or the view, but it seemed to go a little farther than what was seen in the actual policy state and, therefore, how does that work? >> it's really cool both gary and al are here, they can comment on this let me just say what happened the fed chairman this his statement talked about a consensus of the committee for how it would react where quantitative easing if the forecast comes out. now, that was not policy, so to speak. the first question i asked was

not the within i had hoped to ask. i had to ask it because it was new process. they've never done that before, gary. now, if you want to comment on this did you hear what he said? do you know what that was that he was talking about? is there a new way of kind of setting policy here? >> i really don't think, i think he was sighing it straight, steve, when he said there has been no change in policy. i think he really manet that. what he is trying to do is you know policy includes expectations of what will happen with quantitative easing and the certain circumstance. and you had a statement about that in the last statements. what he did was to make it more precise. he was trying to i think make it more ro biggs and ma more ro bust and informative. i think it's fair. i do think there is some specificity. >> i would say he was being more explicit about the

conditionality. that was the way i took it. and, you know, i think there has been sentiment in the market to try to get that step taken, that is for the fed to be more exexplicit how they aring willing at the world, what the timing might be. what the key variables. i think that was a step in that direction. >> do you think it was serendipitous that he can start tapering before, apparently, he's leaving, or was it something he is doing because he has to do it. you couldn't get it started before you left, would you? >> depending on conditions, joe, i really do think. >> they're luck years it's their serendipity they got better. >> that's right t. key element here, i think this has been going on a while the fed has now acknowledged it. if i think about the economic developments over the past 12 months or so. most of the surprises have been positive. they haven't been huge, but they've been positive. >> a done deal that he's leaveing? >> is it a done deal he's leaveing? >> i think there are lots and

lots of indicators. >> what did you think of the interview of charlie rose with the president? >> well, i think some of the reaction to that was exaggeration. >> not by the media, which we would never do. al, do you think that we jumped on that a little bit? >> i love that line, it sure has staled. it was supposed to. whoa, man, has he screwed things up. that's not what he said. you can read that into it if you are looking. >> the ned e media, you are overdock it. what do you think, i'm not the media? >> he exaggerates for a living. he gets paid for exaggeration. >> go ahead. >> the hype. >> you know, on the rose interview, i wasn't fair to listen to whatever private conversation the president bernanke had, but as i've watched it, i gentleman i think that probably ben bernanke said something to the president that made him comfortable that say whack he did. >> yes. >> would not not, was not

insensitive, so that's the sort of the way i read it. at the same time, it certainly seems to me that given all that ben bernanke has gone through the contributions he's made to the country and through the economy throughout the crisis, sure, i don't agree with everything he's done, i doubt everyone does, by and large, it's a good record. it would be good to have a formal sex where he gave it praise, reviewed his record and said, thank you, we're not going to move to find your saysors. >> he's been, we aren't allowed to talk about times he may have been around somewhere off the record and stuff. i can just tell you and there have been a few times i have been around. my impression, he was not doing this for the power and glory of the office at all. >> three or four years ago, one of his quotes was, i think i said what if this happens and this and you will get this. he said, welcome to my life. that's what it means to be me. he more or less -- >> the most humble least assuming guys that i've met.

i totally agree with that. i think he's been a very good fed chairman. >> can i ask very quickly, i don't think you can, they're coming back, right? >> we are coming back. >> my question is whether or not we will tease this to break the idea that greenspan said this is going to be ugly. i want to know if stern, if gary and al think this exit will be ugly. >> there is a limit to that. >> we may have hit the term nant end. >> okay. coming up next, we will continue that conversation. we will continue talking about banking with cfo later by the way. he tells the cfo what to do. then, later, keeping america's -- debbie stabenow is going to talk about the sfit mooeld. >> debbie who? >> for food safety. she will join us to discuss. then this afternoon on power lunch, five of wall street's top

strategists in one place one hour in the next six months. it's a huge lineup. take a look at 1:00 eastern, don't miss it. .

>> welcome back. ceo john chambers told world wide exchange this morning the

company is unlikely to repatriate that money back to the united states. >> the u.s. tax system is broken. we've waited for four years for this overall almost 50 billion overseas to come back. we're assuming that's not going to happen. we don'ty we are moving with the speed needed. that's why you see me traveling throughout asia, pacific, throughout europe. you have seen the majority of our acquisitions in this last year in terms of the big ones will be half over 60. >> he is saying the company is locking to make investments in different companies with the focus on the emerging markets. he said he was still proud to be a kun company in this country. it deals with cisco in the future. >> let's get back to our fed conversation, we have been talking about tapering. former fred al brottus here and minneapolis gar stern is here

and our guest host is wells fargo chairman ceo john stump. leave liesman asked about it, how devastating is it going to be to watch the fed make this transition? and, al, i know you already mentioned a little bit you think there is going to be volatility around this, do you think that is going to be devastating amount of volatility? >> i don't think it has to be devastating and i don't think it has to be ugly inevitably the first step which i think you can argue occurred yesterday was going to get a reaction. but to me, and you may have continued volatility to some extent. i think the key is for the fed to keep the public as fully informed of it can of what it's thinking, of what its own uncertainties are and where it will go under certain circumstances. i think what the chairman said in the chair conference is a step in the right direction. it's not going to eliminate all

volatility. it can help to moderate and keep it contained. >> i think al is exactly right on that. this has to happen. we want to get back to normal. it's not been normal t. fed has been very accommodative and, you know, think of it. we're four, five years into this. when is this going to start to happen? >> it sounds like you think we have began to little too long. >> well, you know, i'm not a big fan of this much accommodation this late in the game, because i think the benefits from it. >> the effectiveness is not there. >> it's not there, also it helps mask the things that should be happening on the fiscal side. so, but this is going to happen, one of the impacts of qe, it reduce volatility. you expect to see volatility. so people will overreact on the upside and the downside. >> we said we all know it's in the future. it's looming. knowing something is coming is like knowing you will get a show. we're all waiting for it.

it would be nice to get it out of the way, wouldn't it? >> you would think people would position for. you know. >> i think the fed has worked very hard to try to contain volatility. they won't succeed for one very obvious reason. the incoming information on the economy and global developments and so forth won't be entirely consistent with what the chairman said yesterday. so there will be positive and negative surprise along the way. market participants will react and guess how does that affect the fed, et cetera, et cetera. that's the environment we are in. that's the environment we have been in for quite some time, really. >> john, let me ask you one more question. yesterday, i was listening to bill gross. after the statement had come out but before the chairman had actually moved and started his xramps, he was talking about where he thinks rates will be at the end of the ten year, i think he hopes they will be lower than now, closer to 2%.

what do you think? >> i don't know i have a better crystal ball than he does. i do afree with this, this won't be the low outer mark today where we are at the ten year, whatever. i haven't looked at it. >> i think it's 2.4, or 2.43. >> we could visit the low 2z againment i think we will see again more volatility on the upside, gary is right, all the economic information between now and we are done is not going to be the same. >> you alluded to this idea the way the fed dealt with this is mass the hard decisions. the question has become a second or third-day story, what is the implication you think washington at large when it comes to actual fiscal policy? >> well, they have a lot of things to do. i think, working on immigration is an important thing. it's hopeful. >> does this change that equation at all in.

>> i think it could. i think it could. now, more of the focus will be on washington. we need a deal. you just heard john chambers talk about taxes. the tax policy in the u.s. at minimum should be neutral to job growth here at best it ought to be positive for job growth here. it is not today. >> you know, we've had a lot of changes, a lot of regulatory things going on. so we had a lot of things that we can, you know, maybe now focus on, work together, cross that and that will be important. >> who will be the next person at the fed, gary? >> next chair in. >> yeah. >> well, i think there are a number of capable candidates. i think one of the criteria besides who is up to the yob is who can get confirmed. among the people that can get confirmed in my opinion are janet yellen, john coen alan blinder. >> allen blinder? >> you asked me. >> let's ask al. >> i didn't hear tim nightner on larry somers.

>> i think larry somers, my own political analysis, that's not my strong suit, larry would have trouble getting confirmed. tim i'm sort of guessing would like to retire from public policy. >> allen blinder, who do you think, al? >> i think gary is right that who can be confirmed is going to be a big consideration. i think janet is one of those people, i think janet is generally at the moment seeing as of the front reasoner, she's, you know, i think the betting is in that direction. it's understandable. >> gentleman thanks, great hearing from both of you here. even though the release is marginally confident, it's good to have complete experts with us. thank you. you will be with us. >> i will be with you, too. >> coming out, i love, everybody. then call it a pork predicament, why some senators, i love this.

i will really add to this. let's throw gasoline on this fire. >> a smithfield's food deal can be a danger to our nation's intoed safety. >> bau, hum-bug. >> debbie stabenow is here, check out my new paper rinds. they're delicious. our guest in a minute, we will talk to the senator. reich. we'll be right back. we'll be right back. zblmpbls oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape.

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. >> if you have any comments or questions about what you have seen on "squawk box" this morning, it has been a heck of a morning.

e-mail us at squawk or on twitter t. market's looking lower this morning after yesterday's fed announcement. yeah, a lot lower this morning after a big drop yesterday, too. plus, we have senator debbie stabenow. she will be speak out against the smithfield deal, why americans shouldn't be selling companies to the chi'en ease, "squawk box" on cnbc will be right back. changing the world is exhausting business. with the innovating and the transforming and the revolutionizing. it's enough to make you forget that you're flying five hundred miles an hour on a chair that just became a bed. you see, we're doing some changing of our own. ah, we can talk about it later. we're putting the wonder back into air travel, one innovation at a time.

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>> welcome back to "squawk box," everyone, in our headlines this morning. france is threatening google with privacy funds. the country says the search giant has three months to abide by france's laws or be forced to pay. microsoft says users of its game one console will be able to play games without establishing an internet connection. is a change when it first unveiled the council in may it was because of a huge backlash including soldiers who were overseas. also, a loss for dpoldman sax in the mna department, they have been forced to relinquish its role as a lead adviser on a slate of the company due in its investment in shanghai.

am i saying that right? in there yep. >> the $4.7 billion deal would be the biggest ever acquisition by a chinese company. >> we have talked a lot about this. we have a graphic for this? >> not right now. i don't think, at the end, before i shamelessly, you know, promote my own business undertakings, my taper. smithfield foods taking a bit from chosen's shanghai late last month, will the dole fly with regulators? joining us now to bring food safety concerns to the table is senate agricultural committee debbie stabenow. good morning, senator. it's great to have. >> thank you. >> i say in all gest is truth. i have been out talking if there was a pork shortage and i couldn't get bacon or rib, i'd be very upset. oil is one thing.

we all understand how strategically important it is. i kidded around a little about pork, but we can't by companies over in china, should we just go ahead with this without looking at it i guess is my point? >> well, joe, that's exactly my point and the point of my committee is we need to take a look at this. there's serious implication, broad implication, because food security really is national security. so, as they move forward, department of treasury, as you know, as you talked about, has this process the aio name sifius. they look at security issues. today, 15 members of the senate on my committee joined a bipartisan letter asking at men mum we begin by reviewing this through the lens of usda and the fda on food safety because there are broad implications here. it's been reported. i talked directly to the company.

originally they wanted to basically come together and boy 20% of each other's companies to form a formal partnership. itself not allowed in chain. they can't do that. we can by tear companies, they can't buy ours. my question is, it's a huge market for us in china, a huge market, a growing market. why don't we sell to them? we are export dependent in the pork industry and long term one of my biggest concerns is our biggest export market is j pan. so if we take 20 years of american injen newty, public a research research d the private sector efficiencies they've developed, we're way ahead of coin. we let them boy that, who says that a few years from now, they also take our export markets? so there's a lot of concerns i have about the company and they need to step back. >> they could start. so it's a bit. we think, a lot of people just say, well, wait a minute. if are you against this, you are

against our pork producers, they can sell a lot more. you are saying if jo pan is a big exporter, that itself why we go, if all of a sudden they're selling to japan that, doesn't help our farmers it doesn't seem like. >> right, there is a short-term concern of why don't we artner or sell to them at exports? i'm all for exports, agriculture is the largest exports creates a trade surplus for us. we want to do more of that, what happens when they own that technology? p and then the next question is, what happens when it's the next company? when is it too much of our food supply? >> you don't think this is a back doorway of trying to sell chicken here, saying, well, we own smithfield now. we might as well be able to export some of that? i'm not sure i want any chinese meat of any kind come or plastic in ni my food or any of that stuff. they have demonstrated that they don't have, that the regulation or the safety that we have in

this country. we can't. it's not coming here, i don't want it. >> well, that's the other issue for us. we have high safety standard. i money, this company has high safety standards. so what happens? zhang way has -- shanghai has a safety around pork. we saw thousands of hogs floating down the river in china bus they were diseased. okayletlet say we even fix that. let's say they take our standards instead of we taking their standards, what happens long term? how much of china owning our food supply is enough is too much? that's what our committee is looking at. >> senator, how anxious are you, though, about the perception of that we are not going to be opened to business for china and perhaps other foreign investors? >> quid pro quo. >> we are totally opened. in my home state of mitch, we

have chinese investments that have bought companies, actually in a way it's been very positive. >> i go through a laundry list of high profile transactions if this one were, for example, to be blockment people think we are not opened for business. i want your understandings on the implications of that. >> i within argue that it's exactly the opposite. they're not opened for business with our companies. we have a complete opened process. we are the free traders. we are their largest customer. we're their consumers right now. they are telling to us more than we are able to sell to them. i spoke a couple years ago at the global auto leader's summit in beijing an meeting with our american businesses, great concern about the fact that they can't bid on chinese government contracts, because they can't get into that market. so i'm not worried about whether or not, you know, china can get into us. we're opened.

they're the ones that decide rather than letting us bid on contracts. their perspective. i appreciate the fact they've got a huge country. millions of people. they want to take our pat tents, buy up our strategic companies. they've got a lot of mouths to feed. you know, they're very focused on growing china. i appreciate that. but our job ought to be making sure that we keep our strategic interest, including food interests in mind as we do business with them. >> you foy foe, people are smirking in, in the media, senator, when they say if the politicians are going to try and make this some type of strategic issue an when you talk about it, it doesn't sound that ridiculous to me when you think about where the food safety is strategic. we all love our energy, we don't want our transportation sector shut down, but food is pretty important, too. she's a democrat. >> i know. >> foul is fair. now are you a free market republican. i like this. a free training republican. >> i am all for free trade.

we just want to, we want to export our products, not our job, you know, not our technology. we want to export. >> senator, this is john stumpf. thank you for all the work you do on behalf offing a culture. i'm a farm boy at heart. >> great. >> i think are you absolutely right. the key is to keep these markets opened and free and i just got back from china and as they segue from a supply side to a demand side economy, we have a huge opportunity to sell products in terms of especially ag products into china. we have as to make sure that remains opened. it's a quid pro quo. it goes both ways. >> absolutely. we have great opportunities. i mean, we are the world leaders in exports inning a culture and also in technology, food safety technology, efficiencies. >> right. >> china wants the efficiencies of this company in this industry and i don't blame them.

i appreciate that. >> sure. >> but is it in our interest and how do we put these deals together? i'm not saying we absolutely oppose. we haven yet taken that position as a committee. we have a lot of questions about what this means for the pork industry and more broadly for the food industry in america. >> senator, let me ask you one other question, which, we're talking about china in this example. but one of the other bidders for this particular company was jbs, a company based in south america. >> right. >> would you have a different view if they were the buy sther. >> you know, it's very interesting. we talked about. that they have facilities in michigan. i've visited them. it's a very, very good kane. they raise other issues as it relates to anti-trust. but it is, i think, a different situation where them than it is with china because it's not a level playing field. we want it to be. but in terms of respecting intellectual property rights, currency manipulation, opening their marks to our businesses to be able to bid on chinese

government contracts and let's face it, everything in some ways is state owned or a cousin of a state-owned company. it's not the same. china really wants to be a part of this public economy, that i need the play by international rules and we feel a lot more comfortable. >> so is it about the flood supply ultimately or these other sort of larger political issues around china? >> well, i think it's both, but i think for me, as chair of the agriculture committee, it's about the pact that food security is a part of national security. we done go to war over food in the country. we have the safest most affordable food supply a. lot of people work hard in risky conditions. we put a lot of public investment into research and development to help create those disease preventions and food safety and efficiencies. so, how do we treat that as an american asset? that's my question. >> we have the best fachlers in america. we really do. >> absolutely.

be i the way, nobody else has a business where you have to go out and depend on how much rain there is. nobody else has the controllable risks. >> i still pray for rain, i'm in the banking business. rain is always good. >> all right. senator, thank you. we are all in front on this from the very day it was announced. we have been talking about i. and bringing it back home to the fed and tapering, you've all seen what a taper, just in case the dell does go through and we never do see another pig in this country oer any pork, that is a taper and apparently, it's delicious. >> you can't. >> pigs are cute, too. he is backing me in a venture, my first product. right there. they are delicious, they're healthy. we're going to see what the market brings. >> kerrkerrne's tapir rievends.

>> you put hot sauce, cheddar keys, just in case we never see a pork product in this country again, apparently tapirs are plentiful in south america. a little export business setting up, an drou, i asked you, you don't want in, you don't have to be in. you said this is a slam dunk with china, this is a done deal. >> after this interview, it might not be a done deal. >> a tapir or stand in the rain with john? you know what they say about bankers, you only hand out umbrellas on sunday. >> that's right. they will give you a loan if you give them the money to back up the loan. >> listen, we have plenty of money to lend. in fact, loans are actually, they're not as strong as i would have hoped at this point in time. >> stay where you are. we will get a lot more coming up from you and others. we should say we are in the morning after, take a check on the markets and see how they're doing as we get ahead for the

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dow was down 206 points at the end of the die, the morning it looks like it will open down, it's about 95 points right now. also, we have been watching what is happening with the bond. the ten-year note at this point the yield is at 4.28%. et has a higher yield than yesterday. it was at its highest level since 2012 t. dollar index was up sharply yesterday. it had its biggest gain in 1.5 months. joe, you said gold is out there, too. >> we got to have it.

how long will it take to bring it up? there's the dollar. >> the dollar is up again today. 1.3205 is theure ro. very quickly on gold? >> i was hoping that we'd have a 12 handle. we got close. it was down 75 at 13 even almost a 12 handle. >> you think none of these things are getting dislocated? there's people that thought dpold was a big buy at 14.50, whatever, they're like, oh, the mar jen calls are coming in. so we'll see. >> when we come back, we have final thoughts from our guest host, in the next hour, cnbc cfo council member frank calderoni will visit us to talk about the tech world. "squawk box" is coming right back.

>> welcome back. donald stump? f wells fargo's ceo. we haven't talked about where you think the mortgage market will go as it relates to the treasury market and the economy. >> well, as rates increase, of course, refinances will renew us. the $64 question is there enough built-up momentum in the market is up that the purchase money will recapture or capture some of that reduction. i actually think housing is clearly healthier than it's been. there the a lot of talk of what happens with gse reform.

we saw with corker and warner across the aisle have a proposal out there. >> you like that proposal? >> i like parts of it. i'm nor interested in the journey than the destination. first of all, the government has been involved in housing since the '30s and americans are in love with the 30-year fixed rate mortgage. so if you take that as precursor, i'm not sure it should be. >> should it be? >> i don't know. i know this we can't kill the golden goose, housing is critically important. the optionality is with the customer to pay us off early. then you think i think have to help liquify or sell. >> when you look at other countries and banking systems. >> they don't have a po. >> correct. >> what does that do to the banking business? a lot keep them on portfolio. again, this is unique the largest mortgage market on the planet $12 billion. it dwarves our market. we need a secondary market. some say you can do that.

you may be, let's take incremental stems. so we test and learn. we don't want to do this in one fell swoop, 20% a year. i don't know what the destination is? >> that optionality is key, correct? it's a great loan for a consumer. i can pay you off army. >> if rates go to 6% next 84, i can't go to a customer and say, be i the way, i don't like this deal any more. >> right. >> if the rates go to 2% next 84, i don't like the deal. >> what do you think will happen to housing rates? >> i think housing prices will continue to drop. this is a bargain, there are three important this ipgs to boy a house, what do you make, what does the house cost? what is the financing costs? housing is black to 10 or 20 years ago levels, financing is at 50-year levels. it's a bargain. so if you were born after fine 80, you think 4 sponsors a normal rate. it's not, my first rate was 8%. my second one is 11%. >> my parents had like 16 or

17%. >> yes, so these are fabulous rates. >> real quick. on the famous or infamous issue of too big to fail, it's too big to ask. >> you are worried about a hit. >> a pretenders. diversifying. getting involved. >> there has been another bill proposed in washington around too big to fail banks. your bank would be included around capital pharmas and other things. where is that debate an where do you stand on what needs to happen still? >> first of all, my.is the i don't think any kane if any industry especially bafrging should be too big to fail? >> do you think banks today are too big to fail? it can be unwound in a situation where the economy is falling apart at the same time? >> i don't know if are you talking about ten at the same time, let's talk about the episodic where one company goes off the rails, if the way youing will at the legislation title one, title two paragone, frank, the enkrossed liquidity and

capital and debt holders should be at risk. you put it altogether in a pot, you got 30 or 35% coverage. so and that's the key here. everybody ought to take a haircut. >> i get it in a one off situation that would work. i wonder if it works in 2008. >> again, then i don't know working with 100 banks is better tan working with 10 or 4 or 5. so i'm not saying that, you know, i guess what i'm saying is that if you look at the one off or even two off, the key is, i think there is processes, you know, in place today, legislation and other things that have made that a very unlikely event and an event that i don't think would impact taxpayers. >> john stumpf thank you for coming in, a whole hour early. this is mac95 sent. >> this is like the easiest hour of my day. you guys get paid for this.

shocking? >> it is shocking. >> we are not having the ploy i don't see you have. >> team members. >> team members. >> i know, okay. whatever. >> john, thanks. >> my pleasure. >> when we come back, we will get more on market reaction of the central bank's plan to scale back asset purchases later the 84. jim paulsen will join us at the top of the hour. we look at the futures, once again, it is looking like a lot of red arrows, down 91 for dow. "squawk box" will be right back. .

>> the fed does matter, if you draw the conclusion our policies and purchases will end in the middle of next year, are you drawing the wrong conclusion. in morning, the markets are trying to make sense of the global market and what it will do. >> our news maker of the hour is the cfo of tech giant cisco. >> plus, breaking nick comuzzi, we got weekly jobless claims about 30 minutes away as the final hour of "squawk box" begins right now.

♪ welcome back to "squawk box" on cnbc, first in business worldwide, i'm joe kernen and becky quick. you are our 26th person. >> u.s. equity futures at this hour are coming back a little bit. you know, people have been writing in about taper house or house temper now taper what about the shovels and we're unch from where he came on, which was may 14th. we are unch. >> 15, one. >> 15, o '05 o. he said they must taper or we will have 1999 again. >> right. so this is proceeding like clockwork. it's not, we'll see, anyway, we

need to get through this, like everybody that's been on, sooner or later, we need to have the normal situation. that's what hapsd, i think. there is the dow down 77 points. ten 84, this will get your attention, but if this was the terminus 2.43. think about worst case scenario, you can see emergency 5 or 6% instead of 19% within i was a boy. >> for people who haven't moved yet are probably feeling nervous. >> these rates some day need to go back to historic am norms as well. overseas in asia,er that responding to that sell-off yesterday and also in europe i think you are going to see some trep takes but all is managable at this point. the equity markets, you will see, things can get out of hand. they're managable so far, bond market management so far, gold got your attention at 12.85

earlier. it's back above 1,300. makes perfect sense in terms of looking at the dollar. >> this is the beginning. this is where we're headed. you want to be the first one out the door, not the last one. >> if we lead the world, it could mean the entire world eventually, the bigger than thy neighbor presenting press, sooner or later, it's not that it goes like this, it goes like this, the rate of the differentials. did you take calculus? >> i took calculus. >> you can get through without calculus. >> unfortunately. it doesn't mean i was good at it. >> i want you to take that cup and tell me the actual volume of that cup, can you still do that? >> no. >> you can look at the side osteogurt thing. >> that's an 8-houns ounce cup, i can tell you. >> they say 5.3 ounces. >> this is 8 ounce, our top

story today, obviously, the federal reserve, the fed chairman ben bernanke hinting they could slow down bond purchases later this year. >> if the incoming data are broadly kin with the this forecast the committee currently anticipates it would be appropriate to mod right the monthly purchases later this year. if the 16t data remain broadly aligned with our current expectations for the economy, we would continue to reduce in measured steps through the first half of next year ending purchases around mid-84. >> here's a look at what cnbc is calling the taper twist. >> it seems every few years, a new dance sweeps the nation, from chubby checker's twist to the electric slide and who can forget as much as we'd like to the macharena? well, folks, dj benny b have clipped a new one. >> the taper and, yesterday,

everybody is doing it. >> taper. >> the taper is further off. >> taper obviously is the first thing. >> taper, temper, taper. >> taper in, taper off. >> timing of tapering. >> what in the held is tapering? websters sees it like this, taper, a gradual decrease. wall street, sees it like this. this, my friends is enough to give your investment portfolio a bad case of taperworm. it seems any time someone says or writes anything but when the taper will happen, stocks go for a ride. >> we always, a nice pace, we always try to we got the taper, the tapir, the pork rind and kind it with the -- >> now you are selling the stuff. >> i'm not saying when you plan something, it becomes lame, it's better when it's spontaneous, don't you think? >> spontaneity is always a good

thing. i think so, good. >> whatever. jim paulson, he is wells capital management cheap. who tracked that thing? chief investment strategist. all right, paulson, let me just, last time you were around, i think that you were taking a little bit of a victory lap. you got a lot of what you wanted. and you said you'd be happy if we just consolidated sort of by the end of the year and maintained all this great market action that we had. in light of the last, since pay 22nd and especially since yesterday, does that change how you feel or does it make you more bullish or less bullish that the fed, you know, might finally let marks do what mark markets do what markets do? >> i think it's a good thing. i think it's a sole event than a scary event. i think it really what it was is the mark of success of the recovery, you know, when the

federal reserve cramer has to stand up and tell the american public they think for the first time this economy can stand on its own, we can scale back our help. i think for an equity investor that's a good thing. it also starts to eliminate what i think is a bigger outside down the road risk is that the fed overdoes it. to the extent they start mav moving off the accelerant a little bit, i personally think it's going to be a good thing. it will probably elongate the recovery, so it's not unexpec d unexpected. i think watching the bond yield go up a quarter of a basis point in a single day difficult for stocks. >> they don't move in quarter basis point a. quarter of a point. 25 basis points. >> 25 basis points. yeah. it's difficult for store, but if the bond market can find, you know, some place to average in for a while here, then i think stocks will regain some footing. but i still think we're going to try to oscillate here the rest

of the year, joe, between maybe slightly below 1,600 slightly above 1,700. >> we will get back to this as i said, john stumpf just left. do you want to retroactively kiss up to him? you said in many times greatest in history? >> absolutely. i got to be recorded saying that over and over again. i thought it might be a job review. i was glad his tenure ended there on the show. >> you know what, if you were to try to find someone, you made him proud, paulton as ridiculous as he looked at certain points, which it has to everyone, everyone that tries to do this for a living, there is going to be times where you question and you have stuck to it. >> you know, joe, in my 30 years, i think the times where i have been comfortable and everyone agreed didn't work out so well. i often think the times you are doing terrible. it's not going to work out.

no one agrees with you. a lot of times it does work out. i think it happens again and again. i think it gets more difficult. you got people not nearly as scared, one-sided trade. there is more bulls and bears more evenly distributed. that prime means the risk is up. but i do think this bull market is probably not over, but i do think it's in a pause phase here. >> you can almost make the case that the prospect of the fed eventually exiting was holding down multiple expansion and also making people say, yeah, i'd like to buy dividend-year-olds. it's above the o10 year. when it finally happens, it's done, we know what the actual numbers are going to be, that may give you more confidence to actually buy stocks at that point if the worst case scenario doesn't play out? >> i think so, joe. i have argued for a while, they have been holding back confidence a bit. >> there is a good and bad side

to the fed. it makes people want to buy stocks. you are buying it thinking it's not real. >> that's right. i think by continuing to practice this, you know, over the top crisis policy in an economy which is no longer in crisis, they leave that doubt about what does the fed know that we don't. >> yeah. >> i think at least yesterday, they said, you know, we see the economy getting better, too, i think that's, that will probably raise sort of capitalistic instincts among the private sector economy as well as investors. you know, we got to adjust to a big surge in bond yields. when we, do i think we will come away with a feeling of straighter sustainability longer term. will get better economic behaviors. >> i don't need to ask you any targets t. s&p, it would be good where it stays at the end of the year, goes above 1,600 vent wally. >> that's basically closer to 1,700 bake amy. that's what you are thinking? >> yes. i think there is, i think you

thattic the tont the rest of this 84 on days like yesterday to buy and get yourself in the position of equities that you want, as you go into 2014. you know, if it trends sideways, end at 1650, joe, earnings will be close to $110 a share and i think that's a multiple 15 or less which is below long-terrell average norm. so there is still quite a bit of room upside for evaluation of this market. >> all right. tim, thanks. i'll pass that along to stumpf, too. i think you are good with him. >> all right. we have some other headlines this morning. china's factory activity weakened to a then-month low in june, bad news on slugish demand. today's data highlighting the risks a second quarter slowdown could be expected. yahoo is downplaying concerns it plans to recycle inactive user i.d.s. could expose security issues to hackers.

the company is saying only 7% of tho those i.d.s are checked to the accounts. aaa is slightth citing a sluggish economy and people taking less time off. we haven't talked about it at all on the front page of the wall street journal, microsoft having talked to nokia boying the entire company, not doing it. we can report a lot of things, it opens up nokia to say we are in play. >> that's an excellent point what it means for the company's futures. >> that stock by the way at least the last time i seenet up on that. nokia's stock. i don't know where microsoft stands on that. they may have done the right tipping to pass. >> that's a great point. we should pay more attention to that. when we come back, if you want a snapshot of the economy, you talk to the executives who hold

the purse strings of the company. we have rcnbc council member frank calderoni. he will join us after this. as we head to the break, check out the "squawk box" market indicator. a lot of red there. it looks leak the futures will open 90 points if they open anywhere near where they are right now. for over 125 years, we've been bringing people together. today, we'd like people to come together on something that concerns all of us. obesity. and as the nation's leading beverage company, we can play an important role. that includes continually providing more options. giving people easy ways to help make informed choices. and offering portion controlled versions of our most popular drinks. it also means working with our industry to voluntarily change what's offered in schools. but beating obesity will take continued action by all of us, based on one simple common sense fact... all calories count.

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"squawk box." the futures are weak. this is about their least weak level of the day, down 77 points, the comes after the dow was down 206 points yesterday, it's a reflection of one of many markets reacting pretty harshly to what they heard from the fed yesterday. if you look at gold, the bond market, you will see steeper reactions. rite aid reported earnings in revenue inline with expectations. they were helped by sales of higher market drugs. shares have tripled since hitting a 52-week low in december. our next guest is a member of the global cfo council cisco frank calderoni. your boss, we should say, was on world wide exchange.

we will talk about this listen to what he has to say. >> the u.s. tax system is broken. wove waited for your years for this to come back. we're assuming that's not going to happen. we don't think we are waiting for the speed needed. they are in many places around the world. that's why you see me traveling throughout asia pacific, throughout europe and you have seen the pa majority of our acquisitions in this last year in terms of the big ones be at least half overseas. >> so, frank, i played that so you can't trip the boss later. there is a couple things. i want to talk about what john has talked about, real briefly, given water going on in the markets, given what bernanke said yesterday, hoy is that affecting your business this morning? >> it doesn't really change how we think about our business today vs. yesterday. i think the comments yesterday were, good comments, fair comments. you got to look at it from a short term and long-term comments. long term, the fed chairman was

talking about he sees improvement in the economy. i think that's a great thing. we stated in our conference call as we look at it on a global basis, we're seeing a slow and steady recovery. >> on this tax issue. this is a real issue in terms of the decision to say, with regoing to be investing abroad, the taxes don't make sense, what would it take you to decide to invest here instead? >> so, first, i think the tax conversation is a major discussion item for business in general. for the business in general. i was talking to them. we spent a lot of time in the lost couple of years with different coalitions really talking about this. the key thing here is having global competitiveness, for us at cisco or other u.s.-based companies and really looking at a fair and equal playing field on a broader basis. >> how much is it about a demand issue here, meaning i want to invest here, there is demand.

are you deciding, i won't invest here the taxes don't work, compared to say, i will internationally. that's where the growth is coming from. >> we want to make investment where it's appropriate, where the right investments are around the world. we want to make sure we don't get penalized for high tax areas. the comment john brings up, we bring up on a regular basis, we want to make sure on a world wide basis again it's global, it's competitive and fair and equal. we have most of our cash, $48 billion in cash. is outside the united states. we would get taxed about a third of that bringing it back to the united states. so with that amount of cash outside, we're going to be banking investments outside the united states. we've done many acquisitions in the last couple years, two of which were big large one, 5 billion and 4 billion in tamburg and in europe. >> all things being equal, you could build it here and hire 20,000, if you could, and the

one thing that makes it not competitive is the tax structure where you would definitely build it here, otherwise you build it. it seems like a no-brainer. >> it's a disincentive. >> there are times you want to build over there, there are times when labor, there is different constraints, all things being equal. we would do it here, you can't because of this, that kills me. >> it kills me the question i'm trying to get at all things aren't equal, right? i was talking to another ceo. he said, i'm flying out of the country. i said, why? he said, it has nothing to do withing thes, my business over here is going 4%. >> that goes without saying. >> also, you want to make sure you have an equal playing field. the other thing i want to mention is the last two days i feel that congress is also recognizing that this is a major issue, something that we have to do you el with as a country and there has been good discussions on the way. so i was pleased in hearing that the last couple of days.

so we'll continue to work this over the next months and hopefully we'll see progress. >> it's just that there are people on the left that are outraged when a company doing business over there, somehow they avoid paying taxes to foreign governments. the whole world wide nice guy fairness thing, i don't get that at all. i don't care if we fund anything. we fund the development companies that compete with us here? you don't want to avoid paying taxes to france? they got their own prop. >> i'm just saying that's my point. they express outrage they're avoiding taxes to foreignentties, i don't get it. >> let's talk about cisco pacific, when you look at the business right now, you look at capex folks out in the world, clients buying what do you see? >> i see capex spending is improving i think globally and more so in the united states. there have been surveys that have been done that look at a 7% increase in capex spending with

i.t. being the primary aspect, which is great for cisco. i think that is a reasonable number, as i said before, i'm seeing a slow and steady improvement in the economy. for us, if you look at our results from an auto rate standpoint, we had 7% growth in the united states. we were flat in europe and slightly up in asia. so the u.s. right now has been leading some of the growth opportunities for cisco. >> i'm looking at stock right now. how much have you focused on that stock price? >> we have investors. investors are fully focused on that. it's one of the things, we focus on commerce, our ploy i don't see and shareholders. the stock price is an indication of how they're feeling about what we're doing. i think right now, they're feeling more positive than they were two years ago in the strategy that we have, the investments that we're making and the return we are delivering for them. both in the business results from our profitability standpoint as well as what we have been able to do with our stock buy back and our dividends. >> you know, i like deals, so when john talks about making

deals internationally, what kind of, in terms of magnitude, size of dole that we might seek across the tape one morning. >> so in the last 15 months, we've done 15 acquisitions. 13 of which have been in the software and services base. we just announced a few minutes ago another acquisition composite software, a small company, a very critical company, a software and services company in the big data cloud space. so that's -- >> that's number 16 for us in a short period of time. so we are making the investments on a global biefs. as i said before the two, one in that time was about a $5 billion investment we made in the u.k. >> frank, thank you. >> thank you, andrew. >> we appreciate seeing you. >> this is 71. we always think the cfo will talk boring footballs. >> we talk about everything. >> they are the greatest people in the world. >> they do. i'm saying, everything is completely interesting. they sponsor a segment here. >> cisco doesn't sponsor a

segment here. >> we have the cfo council. >> i know. i was trying to say. >> it didn't sound like that. anyway. >> wow, that was almost interesting. >> man. >> the point it was very interesting? knock me down with a feather. breaking economic data, precipitate at 8:30. oh. .

>> when we come back, we have breaking nick numbers. we are minutes away. stick around, "squawk box" will be right back. . ♪ [ engine revs ] ♪ [ male announcer ] just when you thought

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>> welcome back to "squawk box." we are seconds away from the continuing claim. but the excitement has been here all night. initial claims moved up to 354,000 from a slightly upwardly revised 336,000. so, we're up 18,000 and i think it's fairly interesting, of course, to note that that dynamic is going to continue to play into the biggest dynamic post-fed. now, we can debate as to what was the catalyst to this. that's not for me. for me, it's to look at a two-year, a five-84 note 131, the highest yield since august of 2011, same is true for the

comep on the 140, 2.40 ten-year. when it comes to the 30-year bond, we are comeping 15 months. comping 15 months. it has been a volatile move. if everyone doesn't believe technical aspects how many bought after the fed redirecting an selling, those tech physicalal issues are very important. maybe the key of the market is will it continue at this pace? i personallily the 2.49 to 2.40 is a super important level. we need to watch. many technicians think the close is the most important area to watch. i tend to agree. back to. >> you i have questions, number one, do you think we will see economic indicators that bring us back down to 2% at some point? i think that's possible, or do you think that this is up, up and away? >> no, i think that even though that is conventional wisdom

among many of the really good historic bond traders, i would tend to agree. in terms of levels, we'll have to wait a bit because in order to figure out the retrace him, we need to see where this peaks on an interim basis. yes, two reasons why. one is i think higher rates makes a difference to capital and capital makes a difference to stocks and companies, so you are going to see an ad judgment, even more important, i think is leverage. okay. as rates go up, leverage is going to really quake a bit and i think that in and of itself, the reverse am of some of the leverage is also going to do exactly what are you discussing. is we have governors so to speak for interest rates. >> the other wi was going to as you, are you gratified the end is in sight and these guys realize we can with the there forever? are you happy? >> yes, i'm happy.

totally happy. it isn't a question of happy. i think at some point now is good. yes, here's the one issue, though, i like what the market is doing, because even if that company aren't, if this is more open mouth operations than reality, once the market starts to take this dynamic on, i think that even if they are more observers than you would have to look at this and say, hey, it is happening, let's continue to go with it. >> all right, steve liesman is here. i don't know, rolls is on shakes his head. >> not at all. >> e-has been. >> not at oul all. >> nodding in agreement he said, i'm not going to argue, i was trying to start something. yeah, actually, he probably was. actually, liesman was saying more a moron hillson wrath is? >> not at all. ! >> one of these days, he's a good sport. i enjoy that conversation. >> one of these days i am going

to say what joe is saying during break, rather than him put -- >> you know me and rick. >> rick, i like your comment about the leverage if there is a market adjustment here, be you the adjustment to a leverage, rick, that is not a fundamental in the sense that it's a trade, people have to get out of the way. is that something that you feel, rick, is an ad judgment that takes place quickly. what happens on the other side of that leverage to rising rates? >> i think it's like an onion, so the different levels will happen quickly. you know, leverage, when you see your positions start to deteriorate in a lawn linear but in an exponential fashion, you make your adjustments. that's what's part of what is happening now. there is layers. stabilization, some would argue it took years to build up to this level. i think the markets are much faster. technology makes things faster. we don't like it.

it's very volatile, i think that is the key along with of course trying to handicap how all of that wacks the tail of the economy in terms of how some of these numbers may be impacted. >> so rick, i want to see if i can get joe to roll his eyes as we have this conversation. i think there is an interesting dynamic that's about to take, already taking place right now, which is this. the fed is telling you they're going to keep buying. the market here is taper and bake amy sees the end of buying and starts to price in rate hikes maybe sooner than expected. my question is this, which wins that battle? it's the market's fear over rate hikes vs. the fed's actual cash in the market. do your guys down there, are they ignoring bernanke saying, you know what, we're taking our foot off the accelerator the dar is going at the same speed or do they fuel the effect of the fed coming in, maybe not 85, maybe it's 65. which is still a substantial number? >> even when the captain of the

enterprise had the pork in his brain. he still was able to function and take control. i would say there is no doubt in anybody's mievendz that i deal with that the market is bigger than anybody that can try to management and for a while they may be able control it. but in the ends, positions built up in this kind faux vipir, are real positions the boost losses are real. >> my question, though, is what does it look like if they lose control of the long end and but keep rates at zero? what, how does that work out if, in fact, there is a disaster? what's the worst thing that can happen if they do that? >> is that banks make a lot of money on a short skew. >> that's what i shot. >> it should be good for the economy. i believe within the next five or ten years, some ph.d. literary student will go back and look at the metaphors of rick santelli. the comparison of the board. >> i like the bloord. >> and the enterprise with

interest rates, it's genius, in my opinion. >> was that patrick stewart? >> i don't think of these things, i do the literary analysis. >> you will do the analysis? >> i could. i have been sitting here listening to them. some offer me great insight of a man whose got, you know, wheels up there. >> i'm not a high roller, either. >> i do this down here. >> and you sigh, you go, ah. >> this is ticker safe. what i'm doing with my hand. you can't see that, can you? >> and i just sit here and i don't know -- >> did you go to high school? anyway, all right, thank you, rick. thanks, steve. >> hey, a great hockey game last night. wasn't that an exciting game? yeah 6-5 in ot. >> 6-5! >> the fifth out of seven? >> it's 2-2 on the games.

>> awesome. great. >> acre styles on cnbc. coming up, the conversation of the morning, what did fed chairman ben bernanke really tell the markets yesterday? we have two different opinions when we return. then this afternoon on power lunch, check this out. five of wall street's top strategists in one place during one hour, all about the next six months. the huge lineup at 1:00 eastern. you don't want to miss it. tomorrow, top executives come to "squawk box" t.ceo of darden restaurants and ceo of hiltonle world wide plus a health care summit with the ceos of aetna and the cleveland clinic. "squawk box" starts tomorrow at 6:00 a.m. eastern. tdd# 1-800-345-2550 [ trader ] when i'm trading, i'm so into it,

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>> if the reporting data shows a reporting speed, we will ease the accelerator by reducing purchases. however, any need to consider applying the brakes by raising short-term rates is still far in the future. in any case, no matter how conditions may evolve, the federal reserve remains committed to fogsorring substantial improve him in the outlook for the labor market in the context of price stability. >> fed cramer ben bernanke laying the ground for tapering. joinings now is the chairman robert shapiro and philly suego

a professor at the university of maryland. professor, let's start with you on this, you think this is really status quo for the fed the market seems pretty convinced this to the beginning of the end. >> it's fascinating the quip is the first one the word "if." look at the do you that, china is week, europe is getting worse at a slower pace. is not great. is not satisfying his ifs. i think the market is seeing too much here. >> robert, how about you? this is a situation where the market moves ahead than what the fed is doing. they are saying this is a bit of a bell ringing at the top. >> i actually agree. i think the market is overreacting. however, i think the chairman is correct in that the pieces for a much stronger recovery are in place. in fact, in the first quarter of this year, where we grew at a 2.5% rate but for the misguided

us a territory of the sequester and the end of the payroll tax reduction and the increase if high-end tax rates, but for that, we would be expanding at a 3.5% rate. >> so the economy is stronger, i mean, this is the same ting we heard from john stumpf earlier this morning the ceo of wells fargo, he said the real economy is better than the numbers suggest. you seem to be saying the same thing? >> well, i think the numbers suggest the economy is strong if you are in a position to operate in a much stronger way. we are seeing housing prices not only stabilize but rising. means that people are getting richer again instead of poorer. we've seen that households and businesses have successfully deleveraged so that the debt service and debt as a share of income or a share of revenues is virtually back to normal levels. we've seen sustained gains in

employment, not as great as we want, but almost twice the rate we saw in the first four years of the 2002-2007 expansion. the one piece that's not in place yet is business investment. >> phil, if a is robert wright and two if he's right, does that mean we're actually coming off the ped am quicker than some people are anticipateling today? >> i see a much more mixed picture in the data. i see lots of optimism going forward with energy and infovation and housing. in the near term the labor market is weak. that's what the chairman sees. what he feels on his shoulders. he did qe3 because of the fiscal rate and fiscal hasn't changed. fiscal is still there t. labor market is weak. the unemployment rate is high. i see a much more mixed picture on the economy. >> a much more mixed pick in the and then should make us think,

you can look, if it's a mixed picture. maybe the market is right to react this way. because if it's a god economy, then it should be going higher. >> well, it is mixed. but i think most of the negative side as phil suggested initially is coming from abroad. i think the fed and everyone else who follows this closely remain very, very concerned about europe. the state of the banking system in europe is very weak. age the same tipping can be said for china. chosen has additional problems. so i think there is real possibility of a shock from abroad and the chairman made that point that if conditions do not deteriorate, particularly from abroad, then the underlying strength of the economy would justify the tapering off by the end of the 84, beginning at the

end of the year of qe3. >> philip, how much weak inside can we deal with from overseas? if are you looking alt europe, a lot of people think there are years to come before europe is in a better position. is that, are we trying to ween ourselves away from that, see if we can stand on our own two feet? >> the fact is we have. >> those are chronic concerns, to a large extent as robert hinted at, the u.s. economy has had justed to europe. it's out there. you know, i really worry about getting to the virtuous cycle here at home, where the labor market has strength and more for consumers to be confident and for the business investment in hiring to kick in. we haven't quite reached that the takeoff stage. >> so, what do we watch from here? what are the number, philip? you will be watching those closely? >> you know the weekly job claims the weekly ui claims today the job numbers, business spending, business investment. i think those are the two drivers we're looking for. i think honestly the fed is --

>> the key level for those weekly jobless claims? >> 330, 325, keep it there. even there it's not a bonn time like the second half of 2003. but at least it's enough to give people confidence that they can find a job when they want one. >> rontd, how about you? what numbers do you think we should be watching closely? in there i am watching most closely business investment. i'm also watching consumer durable purchases. but, frankly, i'm watching europe and china more than the united states. and with respect to jobs, you know, we've got a face -- to face the fact that for now in two cycles, the response of u.s. business to growth in terms of job creation has eroded. it's stronger in this expansion than it was in the previous expansion, but it is still very substandard compared to the '90s or the ''80s.

and this is a matter of really serious policy concern. with eneed to physical out what we need to do to try to jumpstart job creation and get back to more historic levels. >> okay. robert, philip, gentleman, thank you. >> okay. thank you. >> ply pleasure. >> and coming up, it's been an exciting post-fed morning on "squawk box." we talked to wells fargo ceo john stumpf certain insiders, nick faldo. a recap ahead. check out the taper twist. but first as we head to break, check out the 30-year bond. 3.465%. tomorrow, top executives come to "squawk box." the ceo of darden restaurants, the ceo of continental an delta world wide and a health care summit with the ceos of aetna

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welcome back to "squawk box."

the s&p 500 futures are off by 11.5, but that is not the only place that you are seeing the damage or the correction or whatever you want to call it after the fed comments. you can see the 10-year is yielding 2.141%, and yesterday after the fed chair spoke, it is up more than 15 months. and in europe, you are seeing that they are swayed by the same sentiment and france is down by 2.5%, and in germany, the dax is off, and the ftse is off by 2.25% and in asia, if you are looking at the reaction, it was steep and the shanghai is off by 2.77 and the hang seng was off by 2.88%, and the nikkei was off by 1.75. >> if you put it in a time capsule and they are all 15,000 on the dow and 2.4 on the 10-year. >> but you know it is how quickly things move and go, and

the 10-year is at historically incredibly low levels and look at how quickly it is moving high eer. >> and gold -- >> and the weirdest thing is gold. >> but if you looked at that from years ago it would be up to 1,200, but it is down because we remember it at 1,800. >> you want to talk about this story? >> which one? >> making headline on the front page of the "wall street journal" report ing thing that microsoft was in advanced talks about purchasing nokia's device business, but the talks have faltered and reporting that the discussions are not likely to be revived but if you look at the nokia's stock, it is up a little bit and what you are saying is that 1% is not up? >> well, if microsoft is that hard up, i mean. >> well, they have an exclusive deal with nokia to beg win and the idea of combining makes sense if you are thinking that you are the next apple, but it is tough otherwise. >> well, you brought up the

interesting point of this company in play though. >> if nokia is willing to engage, clearly, they are on the ropes trying to fig yure out wh to do next, and the question is does nokia trade and who would buy them? is. >> well, do we ever talk about windows like we talk about a commodore computer? >> yeah, we might be. >> i mean, it seems like they are looking, and looking and xbox is okay. >> well, the sad thing is that the windows phone is a cool phone and actual software, but it does not picked up the steam, because it does not have the apps. >> they have the people on the table break dancing? >> yes, i played with it, too, because like the idea of a keyboard. >> guess who is playing for the promotionings of the tablets? all of those ads are paid for by microso microsoft, and so what is adamant is that nokia said they would get in bed with microsoft exclusively, and they can't do an android phone, but in turn, microsoft gives them the marketing money, but it is not working.

i don't know if nokia is the next blackberry or worse? >> well, i think that nokia is -- >> hey, hey. >> i have the blackberry. >> well, nokia was blackberry before blackberry was blackberry. >> but they are a $50 billion company. >> yes. >> i wonder if microsoft gets cool again. >> and if you are steve balmer, they passed on yahoo. >> did they pass on google? >> they passed on google? . >> and g.e. had a chance with google early on? >> well, there is a lot of mythology of the companies that had the chances to buy pieces and not the stakes. i could give you a laundry list of people who could have bought 5% or 3%. >> could have, should have. >> and i wish we had. >> and we will hear from ceo of wells fargo john stumpf.

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or participated in a big way. it is even bigger than the numbers. housing punches above its weight as we say, because it affects people's attitude. >> that is wells fargo ceo john stumpf who joined us earlier this morning, and interesting that he pointed out something that bernanke also pointed out yesterday which is that the housing market has seemed to turn. he saw it about 18 months ago, but it backs up what bernanke was saying. >> a long way to go. >> and they can still go up. >> a lot of room for a lot of people to get significantly better. >> and in new york city as the interest rate goes up, as the market is so different, things will stagnate. >> i might have a problem with tapir rinds. >> you cannot eat them to extincti

extinction. >> why are you opening up the current tapir farm. >> what about tapir tenders. >> there is a joint venture maybe with smithfields. >> idea. >> no, no, no, they have taken off the pork. >> and make sure you join us tomorrow. "squawk on the street" begins right now. good morning and welcome the "squawk on the street." i'm david faber with scott walker and kelly evans from the new york stock exchange, and carl quintanilla and jim cramer are off today. stocks are falling around the globe following the drop in the dow spark ed by if fed signalin it might scale back the bond buying program this year and into 2014. let's look at the futures to see how we can start the morning. we are worse in terms of moving down in the open, or