and we'll get to them in paa minute. a chinese central bank official saying the pboc will be guiding interest rates to a "reasonable range," suggesting a potential end to the country's cash crunch. at a news briefing after the markets in china closed today, the official also argued that recent interest rate volatility in the nation's money market there temporary. that's what they're saying. stocks in china as a result of some of those comments pairing their losses into the end of that session, actually, rather on rumors of that expected news conference, and the shanghai composite closed down 0.2% after plunging as much as 5% earlier in the session. the index still, though, of course, in bear market territory. back here in the u.s., prepare for a packed economic agenda today. at 8:30 eastern, we'll bring you may durable goods. then we have the s&p case-shiller index, the fhfa house pricing index. may new home sales, june consumer confidence and the richmond fed survey.

and that's all hitting the tape just by 10:00 eastern. so, we have got a lot to get to. i'm going to send it over to scott in the meantime. scott? >> andrew, thanks so much. in other market headlines, a number of prospective borrowers shelved deals to raise new capital or refinance debt yesterday. suddenly, an uncertain interest rate environment is hitting demand. they are collectively aimed at raising money were postponed. and a number of companies pulled plans to refinance syndicated bank loons. corporate bonds passed a fourth deal with no deals brought to market. the emerging major market nations are teaming up to limit the fallout of u.s. fed withdraw withdrawal. it's a little early for that. >> it's a little nearly the morning. we're all there. >> it's not working too well. >> don't worry about it. >> specifically, the brics say they will work together to limit the effects a strong dollar could have on their economies. the presidents of china and brazil talking via telephone on the subject yesterday. a $70 billion portfolio managed

by bridgewater associates has been hit hard in the recent global market sell-off, but bridgewater all-weather fund is said to be down roughly 6% through this month, down 8% for the year. the portfolio is widely held by many pension funds. the bridgewater fund supposed to make money if bonds or stocks sell off, but not simultaneously. >> get the gavel out. we do. i think if you have a gavel, you feel confident. >> well, luckily, we have one grizzled vet here to hold down the fort for us. >> we're trying. we're trying. i'm out-numbered -- >> can you amply chaperone us today? >> chaperone? my brain is like a chop roan. i need a chaperone. >> my brain's in a spasm when the alarm goes off in the morning. like where the hell am i? what's going on some. >> welcome back to "squawk box." >> but tip your waiters. you have the water, coffee, breakfast, the whole nine yards. rivals microsoft and oracle are teaming up on a to push into the cloud.

microsoft announcing it will support oracle software on its cloud-based platforms. the tokyo court upheld samsung and another says apple did not infringe on samsung's patent. this is one of many legal battles between the two rivals. an eu court says google is subject to eu privacy law, but an adviser to the eu highest court says this doesn't mean the company must delete sensitive information from its search index. the case tests whether people can erase harmful content from the web. certainly the latest in that development. all right, let's get to the big story we're following every minute of every single day, and that is the markets. take a look at how the futures look. hey, green arrows for a change! looks like we're going to open -- >> haven't had that happen in about a week. >> implied open 89 points on the down, s&p and nasdaq also looking like it will abe higher open. believe it or not, we've had 12 of the 17 trading days in this month triple-digit moves.

so, it's been quite volatile. yesterday down about 250, we rebounded only to sell off further into the close, finishing off more than 100 points. take a look at what happened in europe overnight, as we follow those markets here and we continue to follow them as they trade. there's green arrows across the board in europe as well. in london, france and germany, the ftse, the cac and the dax. and over in asia, another wild session overnight, and that doesn't really tell the whole story, because the shanghai composite did plunge early on only to finish down about 0.2%. the hang seng finished actually positive, and the nikkei was negative. commodities, oil, take a quick look here. oil is higher, 95 bucks, almost pushing 96 bucks a barrel. and of course, the big story remains what the ten-year -- >> that's the thing that people care about. >> and what the yield is doing. and there it is, 2.50%. >> you had jeff on the show last week. >> right. >> he said to buy treasuries. >> right. >> ten-year? >> he said that the ten-year was

not going to hit 2.5% this year. >> have him call into the show this morning. >> two days later, it did. now, i don't think anybody, in fairness -- >> and it's stayed there for the last four days. >> i don't think anybody expected that you were going to have such a violent move in such a short period of time like we did. but yes, he was looking for treasuries to actually rebound in a short period of time. >> there were a couple people out there that made that prognostication. >> yeah, which shows you why the market has reacted probably the way that it has. the equity market, for certain, over the last several sessions, a lot of people were spooked by that move in rates. >> well, no, this is what this is all about. >> just absolutely how violent it was, how quick. >> and in the last two months, the price declines have been near or just above 10% for some of these government etfs. so, a lot of investors are really hurting if they had been holding those funds. perhaps gunlocke is saying get in now because maybe the worst is behind us, but it definitely

doesn't seem like -- >> i have a feeling he and others are setting themselves up the wrong way. to begin with. but anyway, what's going on with gold? >> yeah, we'll talk dollar and gold. the stronger dollar's been an interesting story as well. there is dollar/yen at 97, euro/dollar 1.city, t31, the po well. looking at gold, keeping an eye on it as the markets have been wild and volatility. there's gold under 1,300 bucks an ounce, up about 0.5%. >> we have washington news. we'll have john mccain on the show to talk about this later. an immigration bill passed a key vote in the senate yesterday. the senate backed new border security steps, seen essential to the legislation's fate and 15 republicans voted with democrats on the border security amendment. as i said, we're going to talk more about this issue of immigration in the next hour, 7:00 hour, with senator john mccain, who was a big supporter of this amendment. so, we will look forward to that. meantime, the new irs chief

acknowledging the agency's screening of groups seeking tax-exempt status was broader than had previously disclosed. an internal irs document shows it wasn't just tea party and conservative groups being targeted. irs screeners were also told to be on the lookout for groups using terms including "israel," "progressive" and "occupy." >> does this change the story for everybody or no? >> oh, i don't know. >> i think it's on everybody's house anyway, but does it change because there are people who thought it was one side of the aisle opposed to the other? >> it seems like the screening was more heavily favored towards some of those tea party groups who were at the time applying for tax-exempt status. that's what they were on the lookout for. >> i don't disagree with that. i think it's horrible across the board, but i just wonder, because people obviously tried to make it political either way. >> right. fair point. >> trying. okay. >> we'll see. a u.s. trade panel is taking action aimed at needless patent lawsuits. the trade panel deals with patent infringement cases, and

yesterday is announced it will soon require some complaining companies to prove up front that they have a significant presence in the united states. the goal is to rein in companies known as patent trolls, accused of embarking on frivolous litigation. one of the most heavily lit juice sectors is the intellectual property sector, so at least they're starting to crack down on it. >> kind of sad. we have another story i need your view on. federal regulators are reportedly set to sue jon corzine over the collapse of mf global and the firm's misuse of customer money. "the new york times" reporting on the front page that the cftc plans to approve the lawsuit as soon as this week. the agency said to have informed corzine's lawyer that it aims to file the civil case without offering him the opportunity to settle like so many other cases, which, of course, is an unusual move. a spokesman for corzine saying such a suit would be unprecedented and without merit. and i just wonder a couple of things, "a," about the timing. gary gentzler, who runs the cftc, on his way out, or at

least that's what the report suggests. is he trying to put a flag stake in the ground? >> i don't think so, because he has recused himself from this entire process because he and mr. corzine formerly used to be very close -- >> goldman sachs. >> business associates. and i think what's interesting is jill summers was the commissioner who was heading up the mf global inquiry, and that just in the past couple months, she has handed that over to bart chilton, who is a friend of this program and who, as we know, is very -- >> we have to have him on to talk about it. >> -- very heavily involved in anything that the cftc decides to regulate or get its hands in. i want to read another line from the spokesman's statement, which says "there's no legal or factual basis for the cftc's attempt to blame mr. corzine for alleged mishandling of customer funds." >> they apparently are going to go directly at the issue that he was a control person, not necessarily that he directed the misuse of the funds but that as a supervisor, he didn't supervisor properly, and that in a civil case, unlike a criminal

case, that maybe you can make that claim. is that -- do you go for it? >> well, couldn't you -- well, i mean, you could make that claim. i mean, if you wanted to, go back to the financial crisis, right? >> you could. >> and if you look at the heads of the bank who were in the most trouble -- >> lousy job supervising. >> they were supervisors, too, and did they do a great job as their banks were almost failing or failing? >> i am not suggesting they were. the question is, in this environment, political or otherwise, does jon corzine go down because of this? >> it depends on how much they're trying to get from him. >> but if there is a jury -- >> go down from civil charges? >> if there is a jury -- do you believe that a jury could possibly find him not guilty? is that even on -- is that even in the cards in this world? >> who knows, but maybe they should test it and find out. i don't know. >> what is your evidence in a case like this? if you're a jury, you know, it's not like there's really anything hands on that you can touch or feel or look at to decide how you feel about it. this is all, you know, secondhand recounting of how

these situations played out. we've heard them over and over again in senate reports and cftc reports and in all of these various documentation. at this point it just seems -- >> i think in this day in age, fortunately or unfortunately, depending on where you come down on the sides of these things, that in this world, you take a big financial institution, you say it went bankrupt, you say look at all these people over here who lost a fortune, and you say who ran it? that guy. you say, okay, he's going down. and that's sort of how this occurs. >> if the person at the top isn't held accountable, who the hell is? who should be held accountable at the end of the day? >> but that's my point. my point is, even if you don't believe that he's guilty, he will be. that's all i'm suggesting. i'm saying, it's stacked either way. it's hard to believe in this day in age he could mount a defense that, at least from my standpoint -- >> by the way -- >> but also, i think the difference between this case and a financial crisis legacy case is that these were customer funds, these were, you know,

supposed to be insured funds that were being traded and being used and being held custody by mf global. you know, $1.1 billion of those funds went missing. forget your shareholder equity, forget any of your capital provided by debt holders. this was customer liquidity that was not available when the fund went belly-up. and a lot of people who were farmers or who had their money invested with mf global didn't have that liquidity to keep their businesses running, even though they may have it now. i think it's important to note that nearly 100% of those customer funds have been returned, but it's been about two years since the company went bankrupt. >> and what do you think of the idea that they are not going to offer him a settlement? now, you've seen mary jo white at the fcc recently -- >> that's fascinating. >> similar idea, neither admit nor deny. we're not going to allow that anymore for big cases, or specific cases where they think there's a public issue that they don't want to allow that to happen. good idea? bad idea? >> no, i mean, i think it's a

bad idea that they were able to neither admit nor deny, you know, the circumstances -- >> really? >> yeah. they should have to admit it. if you did something wrong and you settle, that's not an admission of guilt? >> here's a question for you. there is an argument to be made that the fcc was able to bring cases that they otherwise would not be able to bring. some argue that the cases were shakedown cases, but you could not bring certain cases because you didn't have the evidence, but because of simply the structure of this, if the s.e.c. charges you were something, you settle, they get the money, they move on. the question is, does that have a deterrents effect? i don't know, maybe not, but -- >> i think they become paper cases about you read something -- so and so settled for $50 million, but they neither admit nor deny. that's bs, isn't it? i mean, come on. >> i think the general public are just sick of thooe seeing settlements for cases that have been so public and high-profile and in a situation that inspired

as much populist rage as the mf global debacle, i think that regulators really just would like to see him on the stand. >> by the way, where is jon corzine? >> good question. >> this is a person who has not, as best i can recall, has not made one single public comment since this entire thing has happened, and i don't know anybody -- look, you guys have your sources, maybe you've seen him or talked to him. i don't know anybody that has seen this guy in public. >> i know a couple of people who have seen him. >> but do you know anyone who has been in a situation like this, facing such mounthing legal charges that would dare go out in public? >> no, but i mean, you're talking about a guy who was governor of -- forget this, i mean, the guy was governor. he was used to being in the public eye. and he has been out of it completely since this has happened. >> you would have liked to see him say something? >> well, i'm just curious as a journalist, sure. >> just a curious person. by the way, i think he has a place in the hamptons and i believe in hoboken. >> no, he sold the place in hoboken. he does have a place in the south of france, for what it's

worth. >> but i do know a couple of people who have seen him. time to go across the pond and the "global markets report" with louisa bojesen standing by in london. good morning. >> good morning, everybody. quite a bit going on here. we've seen a real stabilization of europe's markets, given the huge volatility that we've seen here over the past couple sessions. right now we're flat to just a little higher. stoxx europe 600 up around 1.25%, so stabilizing there. a couple things i want to mention. mediabanc saying italy could need an eu bailout soon, next in line. there's a report they put out saying they would require a bailout in the next few months, citing the deepening economic crisis and the credit crunch as well being among the reasons they mentioned that, but our main markets higher to the tune of 0.5% to 1.5%. just moving on and also just looking at the bond markets, we have an italian bond auction a little earlier on as well. the two-year, zero-coupon yield at its highest level since september of 2012. bid-to-cover was just shy of

1.5% and we're also looking at them selling the very top end of the targeted range of 2.5 to 3.5 billion euros worth of paper. a lot of people saying we need to look closely at what's taking place with the yields. they continue to spike higher. we spoke earlier to mark farber. he didn't think the worst was over. jim o'neill from goldman sachs, though, indicating to us that he thinks tchinese credit crunch talks are not genuine, and when you look at historically what china does, they tend to be very, very strong savers. guys? >> thank you, louisa, for that. coming up on "squawk box," microsoft's plans to launch one of its most popular games for the iphone and other smartphones. first, in sports news, if you went to bed early, you missed a crazy finish to the stanley cup. the blackhawks eked out a 3-2 win over the boston bruins to claim their fifth cup and second in four seasons. chicago scored two goals 17 seconds apart over the final 1:16 of the game. ♪

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

welcome back to "squawk box" on this tuesday morning. you're taking a look at u.s. equity futures. if we to open now, the dow would be up about 76 points, the s&p up by 8 points and the nasdaq up about 19. we're off of the highs earlier this morning, but still nice to see some rare green arrows. making headlines this morning, microsoft will offer

its popular "age of empires" game for the iphone and other smartphones. the company is teaming up with japan's k-lab. homebuilder lennar just out with second-quarter earnings, the company reporting a profit of 43 cents per share excluding certain items, beating estimates by 10 cents. revenue also beating estimates. shares up about 0.25%. new in other words the quarter were up 27% over the year ago. home deliveries up 39%. scott? all right, taye kayla, our guest believes the market sell-off is being driven by anxiety and sell-off from 2008. rich steinberg is president and ceo of steinberg global asset management. good to see you this morning. >> good to see you. >> come on, we're not trying to remember fwa2008, really, are w? we're just spooked by what the fed said or didn't say or their inability to say what they wanted to say. >> i think professional investors feel that way, but we

deal with a lot of high network people, so we're getting calls, you know, which you would be doing. and one of the big problems is people always have their asset allocation partly in bonds, and over the last couple years, basically, the wind was at their back. now all of a sudden, they're seeing their whole asset class kind of moving in sync, and i think it's stirring memories. and one way that i would describe it is people mark their portfolios to market differently than in the past, so, as the markets were up now, as the markets were pulling back, you would typically say oh, it's a pullback, it's part of the cycle. people are starting to associate that more as i've lost versus giving up part of their gains. >> where are all the people who said any pullback is a buying opportunity? where are they? >> i think you're going to start to see it at this 1,550 level. i think people are just keeping their powder dry right now, letting things settle in, especially in the dividend-paying stocks, the utility names have been hammered, some of the telecom names have been hammered and

yields are starting to get to the point where they're much more interesting. >> but rich, are the retail investors going to come back? i could see professional investors coming into this market saying buying opportunity, but i'm actually with you, where it feels like one of those things. i remember 2008. i talked to people over the weekend. they feel like it's 2008, or at least they have memories of that, and they say to themselves, okay, i know i'm supposed to think it's a buying opportunity, but actually, now i'm thinking maybe i'm supposed to run because it's actually worse than that, and -- >> you can't have a regular correction anymore? >> that's the question. >> i think the speed of the corrections are happening faster. don't forget, a lot of people now have online access, even older people have online access to their accounts, so you're getting this kind of mentality, when they see the news and they're like, oh, maybe i need to check. so the cycles i think are getting compressed. and to some extent, i think you're right, andrew, in that the retail investor has sat out a lot of this move. we manage money for one of the

large online brokerage firms that send their large clients to us, and i speak to them often. and we did a large speech recently, and in the q&a, people were like, well, i've been sitting on the sidelines, i just started putting my money back to work -- >> and here we are. >> -- hedged japan etfs and you know, all of the esoteric kind of things because people were looking for yield and to make money and i think the fast money that moved in is quick to move out. >> what do you tell them when the stocks and bonds are falling at the same time, because that's so out of whack to what the retail investor would normally think, probably any investors would think. >> i think people need to realize, especially in the bond market, it's okay to have small losses in your bonds because the all in-all out mentality is much most emotionally difficult for the retail investor because of 2008, and getting back in and not kind of staying in the game, if you will, is a very, very hard thing to do. people get anchored, you know,

psychologically anchored to where their account was and when they start to see it come off. it's frozen. >> when you look at some of the flows out of the bond funds, that is not going into equities, because you've also seen some slight, but you've still seen out-flows from equity funds, too, and i think there is a fear that that money is coming out of bonds and sitting on the sidelines, and it's just going to stay parked there for who knows how long. >> people are greedy, though. so, that cash is sitting there and it's really a spring, a coiled spring that's getting heavier and heavier. and you're going to get a pop when people see the markets start to turn and things kind of normalize again. you'll see money flowing back into the equity market. the problem that you've had in the bond market is you've had such a tremendous amount of money flowing into bonds and bond etfs over the last couple of years, people haven't realized that it's very hard to unwind some of those positions as large amounts come out, especially like in the junk bonds base, emerging markets bonds base.

liquidity just isn't there. so, i think people will use the cash, but i think they'll let things settle in. >> okay, good to see you. >> take care, everyone. fears of a credit crunch in china weighing on all of us. yesterday a guest compared the situation to 2008 and lehman brothers and the u.s. financial crisis. today the pboc making comments to calm the markets. the latest headlines out of china and some of the market reaction, that's coming up after the break. but first, take a look at yesterday's winners and losers. we're back in a second. it's alive! it's alive! ♪ >> get me out. get me out of here. get me the hell out of here. tdd#: 1-800-345-2550 opportunities are waiting to be found in faraway places.

tdd#: 1-800-345-2550 markets on the rise. tdd#: 1-800-345-2550 companies breaking through. tdd#: 1-800-345-2550 endless possibilities. tdd#: 1-800-345-2550 with schwab, i search the globe for the big movers. tdd#: 1-800-345-2550 i can trade in 30 different markets tdd#: 1-800-345-2550 to help me seize opportunities, tdd#: 1-800-345-2550 potentially better returns and new ways to diversify. tdd#: 1-800-345-2550 to get an edge, i use schwab's global research. tdd#: 1-800-345-2550 they give me equity ratings on foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, tdd#: 1-800-345-2550 momentum and risk. tdd#: 1-800-345-2550 i also have access to independent firms tdd#: 1-800-345-2550 like ned davis research and economist intelligence unit. tdd#: 1-800-345-2550 and with my schwab global account, tdd#: 1-800-345-2550 i can trade directly online in top markets tdd#: 1-800-345-2550 in their local currencies-- when the markets are open. tdd#: 1-800-345-2550 plus, their global specialists are on call around the clock. tdd#: 1-800-345-2550 there's a world of winners out there. tdd#: 1-800-345-2550 and now i have a better shot at finding them. tdd#: 1-800-345-2550 now get our best global offer! tdd#: 1-800-345-2550 trade commission-free online through september 2013 tdd#: 1-800-345-2550 when you open a schwab global account. tdd#: 1-800-345-2550 call 1-800-264-3010.

[ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ but i see a world bursting do... with opportunity,ople nervous.

with ideas, with ambition. i'm thinking about china, brazil, india. the world's a big place. i want to be a part of it. ishares international etfs. emerging markets and single countries. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

♪ take a walk, take a walk, take a walk ♪ ♪ take a walk, oh good morning and welcome back to "squawk box" here on cnbc. a little feel-good music for some green arrows this morning. i'm andrew ross sorkin. joe and becky are enjoying some time away. joined today by kayla tausche and scott wapner in their places. you don't have your gavel yet, but we've got to get you that before the day's out. >> next commercial break i'll run over and get it, all right? make you happy. >> let's take a quick look at futures this morning. i like gavel. it's just more fun. dow looks to open 82, 83 points higher, nasdaq up 18 points and the s&p up 9 points. the founder of men's wearhouse reportedly considering a comeback. reuters say george zimmer is thinking about options and talking to investors. that could include teaming up

with equity firms for a buyout bid. zimmer abruptly left the company last week, said to have clashed with his hand-picked ceo over the clothing retailer's strategy. you'll like the way you look. he guarantees it. he'll be back? >> or does he no longer guarantee it? >> that's a tough one, when the ceo is the lead guy on the commercials, it's tough. >> martha stewart of men's clothing, like the founder? >> but nobody knew his name. >> come on. >> did you know his name? >> yeah. >> i knew what he looked like and that he says "you'll like the way you look." >> it wasn't zimmer's wearhouse. so, perhaps he should have rethought that. >> the z-man? i dens know that was his name, but i obviously followed the commercials and i -- i'm giving you a hard time. meanwhile, an american executive is being held in his beijing medical supply plant by angry workers. he says he's waiting for his lawyers to arrive to resolve a compensation dispute. chip sarnz is in his fifth day of captivity at the factory.

the tense dispute and standoff highlights tensions in china's labor market. our colleague, eunice yoon, will have more from beijing on that next hour. of course, still in china, the issue of credit crunch fears there. cnbc's michelle caruso-cabrera is joining us on set with the latest. it's a story that keeps unraveling. >> so, you should have two key takeaways when i finish this report. it is quite possible that we are experiencing and watching a watershed moment in chinese economic history if the narrative bears out like they hope it will. second of all, the second takeaway is it could get really scary because of that. let me just give you now, let's drill down and show you what happened overnight. the shanghai market fell again, not by very much. it recovered well off the bottom, but it had dropped precipitously as it sets in that interest rates are going to stay at higher levels in china and credit is going to be tougher. shiner, the overnight rate, the intrabank rate we had been so

focused on, it fell slightly, not as fast as it had the day before, but still at elevated levels, down from the nose-bleed levels that you can see way to the right but still maintaining at a level higher than just a month ago. and it's becoming clear from statements once again out of the central bank of china today that you should get used to this. this is the way it's going to be. "peoples daily," and wince agon again, we refer to the papers in china because they are often the way the government speaks to the people. "peoples daily" has an editorial today saying "neither csrc or pboc should be the nanny of the market." headlines coming out of the various chinese papers. and remember, some of these are government-owned, some are government-backed, some are not, but take a look at this. money market fund suspends redemptio redemptions. why? because if they had allowed it, the return would have been negative. two trusts are said to be forced to liquidate. 89 different publicly listed companies have been using extra cash and depositing them in what are called wmps, wealth

management products. these are products that were in the shadow banking market that were unregulated. think to the time when we had technology companies here investing in subprime, because they had extra cash and they thought they could make an extra buck. that's what you're seeing here. kayla, you were asking me during the bank, several banks have decided not to do any bond issuances. they have been canceled because of a lack of liquidity in the market. >> which is interesting, because just about a month ago, there were reports that the corporate debt market in china was set to overtake the u.s. corporate debt market. >> sure. >> which is the largest and deepest debt market in the world. and that china was on pace to exceed that. and now we're seeing bond yields getting pulled left and right because they don't want any more debt in the system or there's no demand for it. >> right. so, i think that ultimately we will arrive at a point that china's debt markets, corporate debt markets will be bigger than ours. they have 4 billion people, but certainly the pace slowed down as a result of this, that

clearly there will be less liquidity in the system. so, what's happening here? people who have traveled to china, people i've spoken to in china and the central bank itself delivers the following narrative, a lot of which some people do not believe. you had a guest on yesterday that didn't believe the narrative at all, but it is that we are doing this on purpose, we want to shut down the sneaky, snarky lending that's been happening, the stuff that's been off balance sheet that we think is problematic that has grown to unknown proportions, no one really knows. we think it's a problem and we want that to end. they've gone as far to deliver messages that say we will tolerate a slowdown in the economy. dan rosen of rhodium group just came back from china and is telling clients the following. listen to the change. he thinks "leadership may shift from a growth target" of gdp, say we're going to try to hit 7.5%, hit 8%, and instead shift to a floor they can tolerate. it's a different way to look at it, and supposedly, it's backed

by xi jinping, the new leaders. >> here we are, michelle. we have somebody else here who has a view on this, too. bringing him into the conversation, leland miller is president of china's beige book international. you've heard what michelle has said. you heard, we had a guest on yesterday who said our lehman moment is a coming. you agree? >> no, it's not a lehman moment. people's bank is instilling discipline in the system and they're making pain be felt, but the interesting thing here is that everyone thinks this tightening thing happened overnight. it hasn't. it's been there for three months. we've actually been tracking it for six months. one of the things that china beige book does is tracks what bankers are saying and what firms are saying on the ground. and it's been very interesting to watch firms, despite this talk of abundant liquidity in the marketplace, talk about higher interest rates paid. there's been declines of lending each and every quarter for three quarters, so, we've been seeing tightening since the end of last year. this is not a spur of the moment decision by the central bank.

>> jim goldman -- >> exacerbated because of what's happened here because of bernanke, do you think that added to it? >> sure, qe tapering, tax payment holiday, public holiday, things like that. >> you made a comment that you don't believe any of the numbers coming out of china. >> look, we get this all the time, you know? if you want to follow official data, that's fine, but you have to realize that it's not timely, it's certainly not transparent, and you know, who knows whether it's subject to manipulation any given time or not. so, it's better to have more data sources. the reason that investors were so flummoxed by what just happened is that they're relying on headline numbers from the very top up, not looking at what's happening to firms on the ground. >> how far do we think the numbers are from reality? >> we don't put out our own headline gdp number, so we're not going to say, look, it's actually 7% instead of 7.7%, but we talk about the credit environment, we have the nonbank lending rates, not just nationally and by region, but for every sector in every region. we track them over time. so, we really know what's going

on in the credit environment. and what we've been talking about, this tightening. what we tell clients is, are you sure, because these aggregate numbers of shadow finance sound like they're going to take over the economy. and it's been a big story in 2013. aggregate numbers of total social finance are overtaking the economy -- >> total social finance is the proxy word for shadow banking. you'll see this a lot, tfs. >> but if there is any real number, perhaps it is shibor, because that is something you can measure, even though it is self-reported to some extent. >> could be manipulated. >> do you believe a 230% jump in the last year is accurate or do you think it's possibly higher than that? >> people are talking about 38% shibor rates and these are one-off trades. they're indicators of a tension in the system. i wouldn't put a number together and say look, things are four times tighter yesterday than they were today. it indicates systemic stress, but i'm not sure how much of this actually trickles out into the real economy on a short-term basis. >> do you believe them when they say this is on purpose? because there are people who

have been on who say, no, no, no, no, this totally caught them by surprise and now they're back-tracking and saying all this so they look like they're in control, but they're absolutely not. >> well, both are true. i mean, were they caught flat-footed by the national holiday and liquidities in the system at a given day? maybe. but tightening is something the chinese government has been pushing all year long. back in march, they started issuing three-month bills again. last month they didn't do reverse repos. they pulled money from the market. so, they are trying to tighten. all indications are they are tightening. whether they overreacted in one day or not is not clear. >> can it get scary? can there be unintended consequences and can they be poorly handled or executed? >> sure, things can go wrong, but they have a lot of tools. they have targeted liquidity mechanisms. if they think a bank is in trouble, they can either clandestinely or very openly -- >> but that's the easy part, right? one single bank, that's easy. it's what happens throughout the rest of the economy, right, as

it spills through? >> correct, and the credit transition mechanism is broken and until that's fixed, there will be no happy endings in china. >> thank you for that. michelle, before you go, one question about china and snowden, front page of "wall street journal." >> yes. >> what do you think the real implications are in terms of our relationship with china, given that he left hong kong? >> i don't know. i don't know. i mean, ultimately, i think these are two nations that want to move forward economically. they understand that they have to. i think this is an incredible embarrassment for the united states. i don't know. it's hard to say. does it really get in the way of economic issues? i don't think so. >> but now russia's foreign minister is saying that he never crossed the border to come into russia -- >> so, he might still be there. >> he might still thereby. this is a great, great mystery. >> leland, thank you. michelle, thank you. coming up, we have a packed u.s. economic agenda today. housing report is the major theme. a comeback looked like it was in the cards, but then rates started to rise. we're going to raise the roof on

the real estate industry. but first, i'd like to address something i said about snowden yesterday in relation to that snowden story and glenn greenwald, "the guardian" journalist who broke the snowden story. i put my foot in my mouth and i apologize when i veered into hi be pie person lee. i'm sorry i said it that way. i didn't realize the way i said it until later when i saw the clip. just a little context, because i know there was some media around this. i was trying as we did in another segment to raise a question not about the legality of publishing the leaked information about the nsa but about the implications if a journalist aided someone like snowden in trying to evade authorities on the run and what that would all mean, and i overstepped with my language. let me be clear on just a couple things here. i believe, of course, in the first amendment, in transpare y transparenciy, and of course, investigative journalism like the reports on the nsa program and i think there are fair questions to be asked about the government and our privacy on this ongoing story, but i also think there are fair questions to be asked about snowden himself and the rolfe of the

media. but on my comment on greenwald, i regret it. we do live tv for three hours every single day and sometimes we make a mistake, say things we don't mean, but we hope when we do, we acknowledge it and correct it and i wanted to do that here on this program. we're back in just a moment. s h. now get the unmistakable thrill and the incredible rush of the mercedes-benz you've always wanted. ♪ [ tires screech ] but you better get here fast. [ girl ] hey, daddy's here. here you go, honey. thank you. [ male announcer ] because a good thing like this won't last forever. mmm. [ male announcer ] see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. but hurry. offers end soon.

how we get there is not. we're americans. we work. we plan. ameriprise advisors can help you like they've helped millions of others. to help you retire your way, with confidence.

♪ that's what ameriprise financial does. that's what they can do with you. let's get to work. ameriprise financial. more within reach.

welcome back to "squawk box." in conjunction with overall yields spiking, mortgage rates have been spiking as well. the average 30-year fixed loan at levels not seen in 15 months. so, will this put the housing recovery at risk? jed colko is chief economist at trulia. jed, thank you for being with us in studio. i know this is a number that nearly everyone is watching, investors and consumers alike. it's one of the only

consumer-facing products that will actually get more expensive in the near term as we see these yields start rising. what are you hearing from consumers who are thinking about buying a home and what are some of their concerns? >> so, mortgage rates are higher than they've been in a while. they are at or approaching 4%, depending on which measure we're looking at, but it's not going to derail the housing recovery. mortgage rates are still incredibly low by historical standards. the big effect it has right away is discouraging people from refinancing, because refinancing is the financial decision that people can make very quickly. it's very easy to move money around, decide what to do with your money. you can't make a decision on moving to another house very quickly. so, the decision to buy a home or rent a home, that's a much longer-term decision, and mortgage rates are actually only one factor. >> and some people would say, well, we've had record low interest rates not for a day or a week but for over a year at this point. if you haven't refinanced in this period, then perhaps you're not interested in refinancing your home. you know, you don't need to see a 20 basis point move to think, oh, shoot, now i need to refinance. but what is happening is your

monthly payment is getting more expensive if you do decide to buy a house. on an average mortgage, $200,000, it would be raised by about 700 bucks a year, $60 a month, roughly. that's expensive. that's real money. do you think that's going to deter some people from buying a home in this market? >> your mortgage payment does get more expensive as rates go up, but when we compare what renting costs relative to buying right now, even with the higher rates, when we look nationally, buying is still more than 40% cheaper than renting nationally. if you stay put for seven years and get current rates. rates would have to rise to more than 10% before renting gets cheaper than buying nationally. that depends on the local market. the tipping point is closer to about 6% rates in california and new york. >> well, that's probably sad for the state of the rental market. that probably means the rental market's overheated if rates would need to rise over 10% to be able to out-pace that. >> the hitch is that people say they still can't get mortgage

credit. so, even though right now so much focus is on rates, the big issue is still credit. and if we see credit loosen, you know, a 5% mortgage that you can get is a lot better for the housing market than a 3.5% rate that you can't get. >> some people have said that because of the fact that mortgage rates were so low, someone who is in the market could probably afford a more expensive house than they could otherwise because they were guaranteed a lower monthly payment. and you know, if you put 20% down, then you know, whatever that rate is on that loan that you're taking out, it still probably evens out to a higher rate on a smaller purchase. do you think that the size of home purchases is going to go down because of this issue? >> mortgage rates rising are one good reason why we'll probably see home prices start to taper off a bit, not right away. i expect this morning's case-shiller report will show another record year-over-year price gain that we've seen for the past six years. but mortgage rates rising's one

of the reasons why pricing should begin to slow down. other reasons? more inventory should be coming on to the market. and with prices higher than they were a year ago, we're starting to see somewhat less investor interest. all these things should bring the price gains lower now than they have been for the past few months. >> we've got a real problem. if we can't sell homes for anything but a bargain basement mortgage rate, these historic lows, we've got problems, right? i mean, is that the only scenario in which we can actually sell homes, with rates the lowest they've been in god knows how long? >> or have only a handful of homes for sale? >> but we're already seeing demand rising. even though rates now are higher than a year ago, home purchase mortgage applications are up. so, rising rates, all else equal, would make housing more expensive for consumers, make it less affordable, but all else isn't equal. rates are rising hand in hand with the economy strengthening. so, even though housing gets more expensive as rates rise,

people are in a better position to afford that, and that's what we're seeing right now. >> it's not easier to get credit? it's still -- i mean, how would you put it now relative to 12 months ago? >> so, people with great credit probably can get a mortgage a bit more easily than 12 months ago -- >> is t still takes the best fi score to get -- >> for everyone else, it's still tight. there's not been much loosening according to the survey for most people in the credit market. and again, that really matters as much as rates do. we might actually see credit start to loosen as rates rise because there's less refinancing demand. if banks get less refinancing business with lower rates, they're going to have to make their money somehow, and they're going to epp up more home purchase credits. >> at 8:15 this morning we have mark warner and senator bob corker coming on the program to talk about gse reform, set to announce a plan about what to do in terms of fannie and freddie. how worried are you about any shift in whatever you think the mandate is and the structure of something like fannie and freddie right now in terms of

the housing market? >> so, the gse reform process is going to take a very long time. when we talk about the housing recovery, what happens immediately with mortgage rates and mortgage credit will have a lot more to do with what we see in the next months and even in the next year than what happens with gse reform. long-term, getting the government out of guaranteeing or insuring almost all mortgages is very important. but this is going to be messy and a lot of views on what the best thing to do is. >> our thanks to you knorr joining us this morning. hope to have you back soon. >> good to see you in person, not 3:30 in the morning from california the way you're normally piped in here. >> much more civilized 6:30 here. >> it may not be civilized for some, but yes. coming up at the top of the hour, highland capital's mark okada, fixed income is his speciality, so it's a perfect idea. to ask him about the stampede from the bond market. stay tuned. we'll be right back. otherworldly things. but there are some things i've never seen before.

this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ the act of soaring across an ocean in a three-hundred-ton rocket doesn't raise as much as an eyebrow for these veterans of the sky. however, seeing this little beauty over international waters is enough to bring a traveler to tears. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving.

hooking up the country whelping business run ♪

♪ build! we're investing big to keep our country in the lead. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all l around the globe. cars and parts, fuel and steel, peas and rice, hey that's nice! ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪ 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.

>> let's get a check on the market this morning. it sets up for what's likely to be another busy trading day. there's a look at the futures. dow with an implied open of plus 58. the s&p and nasdaq also positive. yesterday was another wild session on wall street. the dow was down 250. it cut that by about 200. then closed down by more than 100, you had 12 of 17 trading days in this month.

both triple digits in either direction. it's been quite wild wild, quite volatile. we will be watching it closely as the ten-year yield on it. it remains front and center in this market story. >> i believe there has been more volatile days in this month than any other month since november, 2011. our data team. >> does that mean mr. bernanke has failed or succeeded? maybe a question we will ask in the next hour. >> steve liesman asked that question on this show whether people were mistaking optimism for being hawkish and that the market was getting it wrong, that the fed never intended to come off as more hawkish. they said portrayed more optimism about the economy, it's the markets that are getting it wrong. >> even last thursday, john stumf the ceo of wells fargo forget a move to the up or

downside, it will be volatile. look for the spieblg. he later explained that by saying have you the animals in the barn all spring, you open the barn yard door, they will go crazy before they settle down is there i think the plan is out. it's complicated. we will talk more about it. >> it is. we will talk about the border security bill. senior mccain talks immigration bill. they talk about the fed to chinese credit fears. that's all coming up after the break. so stay tuned. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t

have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ tdd# 1-800-345-2550 hours can go by before i realize tdd# 1-800-345-2550 that i haven't even looked away from my screen. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 that kind of focus... tdd# 1-800-345-2550 that's what i have when i trade. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 and the streetsmart edge trading platform tdd# 1-800-345-2550 from charles schwab helps me keep an eye tdd# 1-800-345-2550 on what's really important to me. tdd# 1-800-345-2550 it's packed with tools that help me work my strategies, tdd# 1-800-345-2550 spot patterns and find opportunities more easily. tdd# 1-800-345-2550 then, when i'm ready... act decisively. tdd# 1-800-345-2550 i can even access it from the cloud tdd# 1-800-345-2550 and trade on any computer. tdd# 1-800-345-2550 with the exact same tools, the exact same way. tdd# 1-800-345-2550 and the reality is, with schwab mobile, tdd# 1-800-345-2550 i can focus on trading anyplace, anytime... tdd# 1-800-345-2550 until i choose to focus on something else. tdd# 1-800-345-2550 [ male announcer ] all this with no trade minimums.

tdd# 1-800-345-2550 and only $8.95 a trade. tdd# 1-800-345-2550 open an account with a $50,000 deposit tdd# 1-800-345-2550 and get 6 months commission-free trades. tdd# 1-800-345-2550 call 1-800-578-4439 tdd# 1-800-345-2550 and a trading specialist will tdd# 1-800-345-2550 help you get started today.

. >> good morning, welcome back to

"squawk box" here on cnbc. today we're in for becky and joe this morning. take a look at the futures. we have green arrows across the board. things looking up after it's been a wild ride the past couple of days, if not weeks t. dow looks like it will open up 65 points. the s&p up 6-and-a-half points t. nasdaq up 17 points. plus we have other news to tell you about this morning. european stocks rebounded today from a 2013 low. they are awaiting the wrath on the consumer confidence in the housing market. we will bring that news to you on "squawk" as it happens. the dollar and the yen is vom tile. we have commodity news. credit suisse became the latest bank, citing a deal on china growth too optimistic. people will be paying attention to that. the average gold price for 2013 is now seen as $1,400 an houns

down from a prior 1,5 y. silver was cut from 28 to 50. talk about triple digit madness the dow is posting triple digit moves in 12 of 16 june trading sessions, the most since november, 2011, which had 13. the latter part was a stretch. september 2011 saw 16 triple digit moves. october, 2011, yep, that had 15 t. percentage moves at that time were slightly larger than they are now. with the dow having traded in a range of roughly 11,500 to 12,000 during that time. >> all right. in china again, it will be a beg focus today. a chinese central bank official says they will guide interest rates to a reasonable range. the comments suggest a potential and the country's cash crunch after the markets in china closed today. the official argued that recent

interest rate volatility is just temporary. of course, that is something that has been rattling global markets and shaved off a lot of value from both the bond and the stockmarkets globally. let's talk corporate news as well. we will start with lennard earnings. they owned 43 cents per share, excluding one-time items. it reported a 53% jump in quarterly revenue as it sold more homes at higher prices with prices up 27%. check out shares right now with so much focus on the housing market and the home building stocks len. lennard is up 1%. >> yahoo is on the docket. marissa meijer's eemayer's meeting t. stock jumped roughly 67% as meijer has refocused that

strategy.ayer has refocused tha strategy. a couple other acquisition targets, it could be a part of the conversation. >> they have been busy. no doubt. a story we talked about earlier, federal regulators reportedly set to sue jon corzine over the collapse of mf global and the use of money. they report the cftc plans to approve the lawsuit. they have said to informed corzine's lawyers they won't offer him an opportunity to settle. a spokesman says such a suit would be unprecedented and without merit. an immigration -- do you want to comment? >> i already commented. >> you looked ready to. >> i was. >> he was pitched forward. >> my body language go for it, more news. an immigration bill passed a

key vote t. senate backed new border security steps. this was seen as essential to the legislation's fate. 15 republicans voted with democrats on the border security amendment. we will talk more about the issue of immigration in just a few moments with that gentleman right there, arizona senator, john mccain. we look forward to. let's get to the story of the morning, the markets. when you manage $19 million, your strategy has to be defense, defense, defense, that's what you are telling people. that's the mantra of today's guest host, highland capital, co-founder and chief investment officer. joining us at the table, lee part trij. let's talk about defence. you wake up this morning, and you think to yourself, this whole past couple weeks, you think fwroith, lehman worsts, then sometimes we've had a couple guests who say actually opportunity, opportunity, opportunity. . >> sure. and i think there is this mindsaid that's pervasive right

in the investing world that really has to change as the markets change. so you can have this offeringsive mindset, which is let's buy the dip here. the bulls are looking here saying, ben's got it wrong, ben has been driving in the rear view mirror, what he doesn't know the car is driving uphill. china is slowing. they're ripping the wheels off the rickshaw, they're doing some smings things that are very, i think, negative in a big way and so maybe it's all wrong and so qe continues, all right. we're going to get more -- he has to put the foot back on the pedal. buy the dip. >> scott was asking for someone last hour who said buy the dip. when we have a pullback, who are saying buy the dip. the producers pulled you. >> he is not necessarily saying buy the dip. >> don't you think qe will continue until 2014?

>> your defensive mindset. i went and the bruins won last night t. other bruins won. they would have been wit defense. so the defensive mindset looks at this and says, well, maybe something is not working. maybe when we look at this, if we don't have a problem with a car going back uphill, maybe we have a fuel problem. maybe what they're putting in the car isn't really working. maybe qe is not a stimulus. maybe it's a stimulant. all right. you look at an inflation expectations. every time we get inflation expectations at 2%, they add more still lavenlt they change the stimulant little bit. we get a little different flavor of the drug. then it wears off. so if qe isn't working, right, maybe you have something very different now. if qe doesn't work, what's next? so confidence really gets hit. that's a bearish outcome. so either way you got this big difference between where how the bulls are seeing it and the bears are seeing it. >> how are you seeing it?

what are you doing? >> for us the reason we are thinking of defense is this volatility you were talking about at the beginning of the show, it's something that's very, very hard for investors to deal with. play defense, have a little more cash if your portfolio. put things in your portfolio you think are going to be less correlated but give you positive returns. high yield bond draw 3.5%. it's off 50 basis points. >> when you say get a little cash going, does that mean sell some stuff now because you think things are worse? >> why not? you were up 16% last year in the s&p. you think double digit. >> win and get out? >> if inflation is is 1 or 2%, why do you need to make double digit? if you took the gain, 10%, sat on cash for the rest of the year up 10%, that's pretty good year. so take that, rotate it into something that you are going to feel very good about in the market like this.

>> do you think the market is getting it right so to speak? do you think the market has red the fed correctly, that it understands what the message really is? >> you know the fed came out with a couple of key elements of their statement on the one hand, they said that the low prints of inflation. we saw the personal consumption expenditures at the lowest print in history. the low -- this is the number one tool that the fed uses to read inflation levels. it was the lowest print in history. they tried to take that off the table by saying that was influenced by transitory factors. the second thing that they said is they saw significant improvements to economic conditions and overall levels of unemployment. when we're looking at the circumstances facing china, industrial metals are down 20% since their highs. so we're getting a lot of readings we're not intering into

inflation, we're entering into further deflation and demand construction. so that's what concerns us. i completely agree with mark, you know, whether or not quantitative easing is really good for the markets long term doesn't matter. the question is, is now the time the pull back from it and are you seeing inflationary pressures and bottlenecks that would warrant quantitative easing. >> one thing, are you suggesting bernanke is wrong with the estimates or the market is wrong with what we think bernanke is thinking? >> i think the market is right about what bernanke is thinking. we debated this at our office quite a bit. i read it as a fairly hawkish statement. i think they're trying to they groundwork. because they said, if unemployment and inflation warrants it, we will withdraw some of the sinners we put on the table. >> why aren't you reektd it as optimistic, why hawkish? >> the data doesn't show it. look at the copper, and the news

out of china the ability to finance their boonk banking system. i think it's great they are wanting to smooth out the peaks and valleys, but the reality is, there are signs of destruction coming out of coin and you see it in copper prices. i mean the copper market is in deep contango right now, we tells you there is a lot of copner warehouses wyeth waiting to be delivered and nobody wants it. we're hearing reports of producers shedding inventory out of china. so that's a big problem if that's going to be the baseline of growth line for us. >> at one time copper as well as high yield were proxies or leaked indicators in 2011 and beginning of 2012. since september when copper entered this bear market territory, it's been just completely demerged from the way the equity markets have been trading. i mean, should we have seen this coming? >> no, i think that's exactly

right. i think there is a lot of forward indicators that say there is a lack of demand, you are entering into a lower growth phase, mark was talking about, the equities. i think the s&p 500 held up extremely well. people disappointed are usually not the investors. we traced back to where we were in april. it's not a big deal. if you look at europe and asia, you got a much different picture with a lot of double digit losses. >> are you taking money off the table? is there we r. i'm with mark. defense, first of all, when we talk about playing defense, is it gold? well, gold is down 6%. is it pressurery treasuries? >> you can't find good place to find cover. >> cash is the defensive move. >> you can. we look at hedge funds, right? you look at long-term hedge funds the story has been correlations do high, they way underperform. this environment is really nice for hedge funds.

i think in an environment where correlation comes down from 7 to 30 and we get this kind of vol, you take vong of it in that portfolio. >> would you buy vol right now? >> sure. >> in a big way? how long does that last? >> that's the $64,000 question. right? the thing that he is talking about is important. at highland, we have been watching what is going on in the emerging markets. you sit there and you see how much capital has flowed into this area, really seeking yield. you can pick up 50 basis points by buying a chinese bank bond vs. j.p. morgan. is something that always ends badly. it's $140 billion in. maybe $140 billion out. there is a lot more to go. this was going on well before the fomc meeting. so we had a situation that was pretty tenable. i think when you go into a situation like this, you will get a lot more volatility. it feels to me like it's just

starting. >> let me follow up. i'm confused about something here. you sound like you have a much more defensive tone and stance on where the mark currently is. >> yes. >> however, within i lohen i lo of the notes, it says this is what you are preparing nor. howe does this mesh in. >> we are credit guys, credit is getting it back. the price really matters. the price that you are buying something at. you talked about high yield, kayla the only thing high yield is only 5% of the investors are buying it. when we get into a situation like this and people are selling risk har, we get bank -- hard, we get bank trading at a discount. why not add some to the portfolio? you are building in a 5, 6% sort of yield it won't be based too much on the liquidity and the volatility.

it's more about the underlying companies in the portfolio. so if you look at the big picture, right, the u.s. economy is recovering, i think it's slower. we look at emerging markets, there is certainly a lot of problems. we will be correlating that to a certain degree. but if you want to put that sort of risk into the portfolio, i think it's defensive. i think it adds to the defensive --. >> does the feel like a 6% correction and no more? does it feel like a 10% correction? i mean, you have been a market player for enough time that you must have some sense in your gut as to what this feels like? >> again, i think that the issue with that, right, 20-something years in the business, but we are in the part of this whole cycle where we've done some very big experimentation with monetary policy and it's of the scale and the size globally that it's hard to make predictions like that. i think it's very difficult. that's why i think defensive strategies make a lot of sense

in here, because you are up so much again and if you can just hold on to those returns, live through the volatility, which we think continues. and that volatility can go either direction, i think that's a good place to be. >> final question for lee, oil wondering, we have a spate of a couple weeks fairly soon, we will have the health of the earnings season. where dungs u.s. companies are going in earnings? it seems like margins were as high as they can get. >> they absolutely were. >> we are only going down from here. >> i think second quarter prints will look healthy with one exception. you have to start looking at the financial sector and the timing of the rate move. with mortgage rates having going up to 4, 12, mortgage commitment rates. i think that whether or not that chokes off the recovery and, you know, the amount of discretionary spending that consumers will have available to

them, at the very least it will hit bank balance sheets. there will be losses on bank balance shets. they will realize the timing of the fed move will have a big impact onfuls. on financials. with quantitative easing in place, if you take that off the table and find a failure clearing level, it is probably significantly lower than that. >> lee, thank you for coming in this morning. mark will be sticking around. a great conversation. coming up next the inflation reform bill. senator john mckane joins us next 7:30 eastern. is market bulger my seigel changing his tune? also a rare first on cnbc interview with minneapolis fed president narayana as many as

kocherlakota. he will be appearing at 8:00 a.m. eastern time. "squawk" will be right back.

. welcome back, the immigration reform bill that could lead to passage later this week. joining us to talk more about immigration is arizona senator union mccain. senator, it's nice to see you on "squawk." . >> it's nice to be back.

>> can you characterize how big this hurdle was? >> i think it was an important hurdle. i think the final vote will be important. of course, we move to the house of representatives and that's going to be, obviously, a tough slot as well. but i remain guardedly optimistic that eventually we will have this done, the status quo is at least one thing everybody agrees on. i think is the status quo is unacceptable. we have 11 million people living in the shadows. they're not going to self deport. >> tough slog impossible in the house? >> i think it's tough. we got to call on our friends in the business community to help us out here t. total in its entirety i know of high-tech to agricultural conglomerates and people in my state, all over the church, labor, everybody, but

the business community is very important with a lot of these members of the house of representatives. i hope they'll fulfill the commitment they made to us that they will weigh in heavily. so that's going to be important. >> will a comprehensive bill include a pathway to citizenship? >> you know, i hope so. it may not. but if it doesn't, then we have ignored the lessons of some european countries who you know have had mass immigration from other countries and they live in their own enclaves and they don't assimilate. the greatness of america is the assimilation of wave of wave of immigrants which has come to this country which has made us the greatest nation in the world. >> can you get that done without that? >> i don't see what you achieve, to tell you the truth, obviously, you give them legal status. but i don't think you can have a society that's divided up between citizens and noncitizens

without experiencing enormous tensions and enormous difficulties. we've seen examples of that before. >> senator, you mentioned that you need the help of the business commune to the actually get this passed. what sort of support and how much of it do you actually think that you into ed to drum up between now and when this guess to the house? >> well, i have been very appreciative of tom donahue and the u.s. chamber. i have heard of a lot of commitments on the business community, whether the high-tech or others, that, frankly, i haven't seen the results of their commitments yet. so i hope that they will understand how important it is for them to be involved. look, the people who are against the legislation have been very, very active. i can tell you that from the phone calls to my office. so we're going to have to get the traditional base of the republican party, which business

small and large, particularly small, are a very big part of to get engaged. >> senator, i want to switch topic, if we could, to the snowden case, i want to get your thoughts on what you make of our relationship as a country with china in that they let snowden leave hong kong and what this also means to our relationship with russia right now. >> well, what it means for nearly five years now, we have sent a signal to the world that we are quote leading from behind, that we are impotent. that we don't act when we say we're going. the best example i can tell you is the president said if bashar assad used chemical weapons it would be a quote game changer. well, supplying like weapons to people fighting against scud missiles and armed helicopters and tanks isn't really a game changer. in fact, it's outrageous. what do you think the iranians

obviously have treated our threats about their nuclear weapons with contempt? it's all got to do with respect and, therefore, belief in impotence and this is, these are the wages that you pay for this kind of leadership. >> and what should happen to snowden and what should the government be trying to do right now? >> well, obviously, getting back. but for the russians to say he's not in the moscow airport, that's reminiscent of the good old days of the cold war where any lie was sufficient for them. this is also about vladmir puente, an old kgb colonel that has dreams of the old russian empire. that's what their behavior is all about. frankly, he feels no constraints. >> what does the u.s. effort look like from here senator, obviously, eric holder has called his counterpart in hong kong to try and seek an arrest warrant there and that

leadership, to use your word, was impotent. but what sort of authority can we use or do we have at this point to actually track him down? >> well the way that both china and russia have been treating us, i'm not sure exactly what immediate pressures we can put on them besides diplomatic, but this should have cause -- remember the old reset button, we push the reset button. this should cause us to reset our relations with these consistent. not a return to the cold war but to a realistic assessment of the ambitions and the actions of both of these countries and, meanwhile, the message we're sending is due to sequestration, we are cutting our defenses to the point where the common in the marine corps says half of his units will not be deployable in a very short period of time. >> senator, i want to steer back to the immigration discussion for a moment if i could. >> sure.

>> to the critics out from who say it's not a stiff enough paemd amendment, that it doesn't do enough on the issue of border security for what this really is mane to the do. it doesn't require adding these 20,000 new border agents until 2021, among other things. can you respond to the critics who say this just doesn't have the teeth that senator mccain and other members of the gang of eight claim it may? >> all i can say if anyone believes that these border enforcement measures are not tough enough, then border security is not their concern. their concern goes deeper than that and their opposition. there is a verify that has to be done in five years. we have exit entry for port at air and sea ports. we have requirements that these systems be up and in operation. look. it's very hard to make this any tougher.

in fact, there are many people that say we are militarizing the boardner a way we haven't seen since the berlin wall. so it's ludicrous. it's an insult to my intelligence who i have been down on the border for more than 30 years to say that this isn't tough enough. your problem i say to you someone who is says this isn't tough enough. you haven't been to the border or you're just not telling the truth. >> gotcha, senator, thank you for coming on "squawk box" to discuss this and other things. when we come back, a new growth strategy from legg mason. joseph sullivan will join us when we return. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage,

groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at aflac.com. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ we're headed the same way, right? yeah. ♪ [ panting ]

uh... after you. ♪ [ sighs ] [ male announcer ] it's all in how you get there. the srx, from cadillac. awarded best interior design of any luxury brand. lease this 2013 cadillac srx for around $399 per month, with premium care maintenance included. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is,

what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪

. >> welcome back to "squawk box." in the headlines at this hour. a slew of economic data out, starting with durable goods. later this morning, the case schiller report on home prices, consumer confidence and new home sales. new irs documents show the agency targeted more than conservative groups when examining tax exempt status. terms like progressive were on the same targeting lists. the inspector general didn't make that clear. microsoft will offer the video game for apple's iphone and android phones as well. microsoft made a handful of the xbox games available for other venues in the past this game the among the most popular. china again will be a big focus, officials say to the pvoc

will be guiding interest rates to a reasonable range. they suggest an end to the cash crunch. at a news briefing in coin today, the officials also argued that the recent interest rate volatility in the nation's money market is only temporary. all right. in corporate news this morning, we start with lennar earning, reporting a 53% jump in quarterly revenue as it sold more homes with prices up 27%. let'sthetic out shares of lennar, they are up better than 3%. >> the headlines, federal regulators set to sue jon corzine over the collapse of m.f. global, the concern's misuse of the money t.cftc planning to approve the lawsuit. they have said to inform

corzine's lawyer, without off him the opportunity to settle in advance, which is an unusual move t. spokesman for corzine saying such a suit will be unprecedented and without merit. we will see what happens there. >> certainly will. the chicago blackhawks are the nhl stanley cup champions once again, their second cup in four years. it was a thrilling 3-2 win in boston t. blackhawks scoring two goals in the last minute. 16 seconds apart to win the cup as we said for the second time stunning the bruins on their home ice. >> did you stay up to watch it? >> i wish i did. >> no, are you not from there. who said they were from will? >> no, i went to ucla. we're the other bruins. we're in the world series. baseball world series. we won last night. so, it's good. east mississippi state. >> they must have enough basketball championships. enough is enough.

>> the bruins were the first university of 100 national championships. >> you are, obviously, not still talking about it? >> no. . >> all right. we'll have more and coming up a squawk excliefs. we whether talk growth and fixed income. as we head to break, a look at the ten-year note this morning. let's take a look at that yield, it's been bouncing around the 2.51% mark right now. "squawk box" will be right back. ] the mercedes-benz summer event is here. now get the unmistakable thrill and the incredible rush ment

. >> the bulls have been running for cover since last week. they said investors got spoiled with the market rising almost every day. let's find out if our next guest makes the bulls more spoiled over the last six months. we'll see. squawk master, jeremy seigel, a finance master at the warton school of pennsylvania. good morning to you, jeremy. >> good morning. so help us understand what's happening here and whether you remain bullish. i should tell you we have mark locata on the set. are you in defense, defense,

defense? >> that's right. defense whens championships. >> but he's not back in a cave somewhere. >> jeremy could be on offense, let's see, are you on offense or defense right now? >> i'm still on offense. we knew it was going to happen. we knew qe was not going to go on forever. although, i know joe thought it was going to go on forever. there was no way to cushion the announcement, how many, it's been seven, eight years, before there has been any tightening moves by the federal reserves. yeah, the reaction was strong. i'm hoping the spike in the ten year, yesterday, if we can hold that for the high the next month, i'm very optimistic. we had robert fisher. saying we're not going to raise the fed rate until 2015. we had the people bank of coin s

bank of china, saying there has been no bad earnings news, it is a re-adjustment to thinking about qe finally going to end if the economy improves. >> jeremy, i hear you there, but tell me what the real effects are going to be on the economy then. >> certainly, people talk about. we had lennar's announcementes in earnings. we saw the home builders really get hit. think about it. later in your program, you will have the case schiller indices. it will be an insurmountable problem. for any long-term stand point, it is still so low for individuals, so my feeling is that, you know, the interest rate situation is still very

accommodative for the markets and corporate earnings. >> professor siegel, you reference the housing information coming out today, but all of that is historical. the case will show us what happened with housing prices in april or march. it's not current information, so how do you feel so bullish about looking in the rear view mirror as i said earlier, not looking forward, there are a lot of things that happen around the world to me look fairly scary. >> well, again, you might be thinking of going into china, which the i think, my interpretation is that after the people's bank, china could have controlled that. they just want to put a fear into the lending institutions in china. they're worried about a property bubble, which is really out of control there in china. they don't want the same thing happening there as what happened in the united states four years ago. so that was a bump. you know, they can normalize that situation. but again, i look at, and the historic am. i'm old enough to remember the 16, 18% mortgages and, you know,

everyone would have died to get a 4% mortgage at current levels. >> but, professor. you got a football coach in town there chip kelly, right? his high octane offense meant a work under certain conditions, your view of the market may work under certain circumstances. if the game is changed, don't you have to change the game plan? >> well, are you referring to the fed changing the game? >> the fed, china, emerging market, everything. >> well, a lot of people are comparing this to '94, which was kind of a rough year in the stockmarket when greenspan finally started. but it isn't, because he raised the short rate. he raised fed funds. we have the feds saying 2015 if everything goes all right. then we're going to start raising the fund rate from one-quarter to one-half. you know, i don't think that's a game changer for 2013 on an outlook for the market. >> okay.

jeremy, with the bullish view this morning, thank you. mark with his bearish view. >> it makes the mark, as they say, there it is. >> thank you very much, appreciate it. >> up next, the squawk exclusive with the ceo of legg mason joe sullivan and what can you buy in the real estate market? we will talk about housing and senators corker and werner are set to introduce a bill today. first, they will speak to us on "squawk" at 8:15 a.m. eastern time. ♪ [ engine revs ] ♪ [ male announcer ] just when you thought you had experienced performance, a new ride comes along and changes everything.

♪ the 2013 lexus gs, with a dynamically tuned suspension and adjustable drive modes. because the ultimate expression of power is control. this is the pursuit of perfection. ... you thought wrong. seize the summer with up to 50% off hotels at travelocity.

it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors. 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. the new american is arriving.

>> welcome back. an eye on deals and a renewed commitment to the company's model, the asset managers appointed to put the firm on good footing. joe sullivan is legg's president and ceo. thanks so much for being with us. we will start, you have been in the job four months. you got $664 billion under management. most is fixed income. how are you steering a ship like that in this volatility. we had two-thirds of our assets in fixed income.

we are more balanced in terms of revenue. 55% of our revenues come from fixed income t. remainder from equities and alternatives. so we're more balanced than i think people realize. >> but where do you put that to work right now? >> put what to work? >> some of your fixed incomes to work. >> obviously, with the volatility in the markets, what we would consider to be exaggerated moves in the marketplace, there has been a bit of a decoupling i think between the fundamental also and where the market is. and given some ill liquidity in the market, we feel that provides opportunities for the markets. >> when you look at your expanding oem, what does the strategy look like for legg. >> we are focused at legg on products, we need products in relevant categories, where high

investor demand categories. we have a pretty good product set right now. >> what would those be? what is missing? >> we are strong in fixed income. strong in u.s. equities and alternatives as it relates to the hedge fund business. where we have gaps particularly is in nonu.s. equity. we need to add there. >> so you would be looking to buy? >> we would be, in that case, we would be looking to add or do an acquisition in the nonu.s. equities. >> is there a geographic region where you are particularly interested? >> i wouldn't limit it to. that i think we need international equity exposure, emerging market equity exposure. it is a gap for us. >> buying is an interesting strategy. a lot of investors an analyst have said it's basically a cobbling towing of different investment managers. there is a lot of costs that could be cut in a model like that. how do you defend that? >> we think we have a unique model, a compelling model.

our challenges over the last few years haven't been the model. it's been how we executed the model. i do think our model is very compelling. we are active managers. i think in a market like this, active management has an opportunity to really show what it can contribute. so we start with that. we're a scale player. we're over 650 billion. we provide what i think is the best of both worlds in terms of the best of an integrative model and multi-affiliative model. >> can you speak the way the retail customer is thinking about the markets. we talk about having shades of 2008. people are not going to come back into the market. they will see what's happening with the fed and what not. >> there has been a lot of talk with the great rotation. i think most people would say they haven't seen the great rotation over the last six months to a year. i think that reflects the lack of confidence in the market. i think what you are seeing now is only going to contribute to that lack of confidence. what the markets or what

investors need to realize is that this enhanced level of volatility in the markets is a port of new normal. we go through these epped so ec events, whether it be the downgrading or potential downgrading of the u.s. government. whether it be what's going on in europe, china, whatever. it all creates this enhanced volatility and investors are just not comfortable with that yet. >> joe, we got to leave it here. i want to quick word from you. you are looking at doing acquisitions. a lot of people look at acquisition targets for private equity or steered there by nelson peltz who sits on your board s. that in the wings? >> i think we are an acquirer. i think we are one of the most attractive acquirers in the marketplace. we expect to be active again. >> hour thanks. thanks for being with us. >> coming umm, we got a million bucks to spare. we will show you what kind of a summer home your home can provide you when "squawk" comes back in just a moment. i want to make things more secure.

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

. >> all day today on cnbc, we are showing you what a million bucks can buy across the country. we sent six reporters to six real estate markets to check out real estate summer homes. we have cnbc dolly lentz to crown if top house. we look forward to this throughout the day.

>> thank you. >> all right. it is more fun, though, to see these places side-by-side. in round one, two $1 million summer homes go head to hechltd only one will move forward to round two. to make it more interesting, we've asked the reporters not to reveal where the home is located. right now, dolly knows that information. she is going to reveal it after we get a look first up, diana olick and jane wells taking us lou million dollar homes. take a look. >> reporter: a lush landscape greets you on arrival to this summer home that sits on about a quarter of an acre. it's not really the house you are paying for. it's straight down the garden path about 100 yard. the beach. this 20-year-old timber frame home on nearly 4 achers is one of the least expensive in the zip code, wide opened spaces, 10 miles from a famous resort town an some of the most spectacular scenery in the world in a state with no personal income taxes.

the house boasts 2,000 square feet of living space, a roomy kitchen and a gorgeous wrap-around porch to watch sunburn rise before you set out t. house or should i say cabin is 3,900 square feet, cathedral ceilings. wood fireplace, views out of every room, western accents throughout, and the kitchen the size of new york city apartments. you will have no trouble finding room for your guests, you will want to stay here in the owner's suite, when you open the doors to the private terrace the sound of the ocean comes rolling in. the house has four bedrooms, three baths, plus a basement currently used as a gameroom, no matter what the bedroom, off the master suite is a deck where you can watch eagles fly and moose walk by from your own jetted jacuzzi. you also get a private pool and a querky bit of history. due to a failed development the 16 acres surrounding this home are designated park land that can never be developed.

it's island living at its best for 950,000. are you less than a mile for the national forest t. someplace remote without being too far removed from paradiechlts are you a stone's throw away from the best wild trout in america. all yours for $975 grand. >> all right. interesting. the oaks duplex and the rustic retreat are very different homes. we are supposed to guess now. >> we are allowed to guess? >> i think we are. >> you go. >> i'm saying jane wells was if washington state. i can tell the other one. i don't want to guess. >> i think she's? jackson hole, wyoming. i think dianne is somewhere --. >> where they have no income tax, is that what she said? >> washington state has no income tax. >> the national park. >> the national park one of the cheapest in the zip code, i'm thinking sullivan's island the foliage is a little like it.

>> it was west coast or south. oleg is in d.c. she gets on a plane from time to time. >> i know. >> we can get the reveal here? sure, dolly. >> which do you like better? >> the beach one is hard not to like. >> i'm with the rustic retreat by a mile. >> a square mile. >> does the rustic retreat have a pool? if they had a pool, i think i'd go for that. >> i like the ocean, too, easily. >> the rustic retreat is a nicer home. >> disdefinitely a niers hom. it's cheaper, the more thousand square feet. we are talking $250 dollars a square foot, really great value. >> tell us where it is. >> okay t. hilton head island on is water. >> so close. i said south carolina, sullivan's island. >> exactly. think of that great location e location t. only negatives, the

finishings aren't high end, i think people will go in there, do some week. it's the only one on the mark, though. >> what's the other one? >> the other is in jackson home. >> oh. >> now, wait a minute. >> so you guessed jackson hole and south carolina and both are correct? and you didn't see the results ahead of time? >> no, i did not. >> dolly. >> thank you. we're going to. >> pick some more. >> we will pick this right now. we're picking hilton head. >> exactly. >> hilton head is the winner. next round, here we go to bring up something else. >> thank you, dolly. >> "squawk" is coming back right after this. a big hour coming up right after this. not really. aaah! jessica! whoa! your friend's a rate sucker. her bad driving makes car insurance more expensive for the rest of us. try snapshot from progressive. snap it in and get a discount based on your good driving.

[pop!] stop paying for rate suckers! try snapshot free at progressive.com. ♪

[ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines

while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] a new plan to fix american home finance. >> your money is next to yours and the kennedy's house and 100 others. >> senators bob corker and mark warner will joan us to talk about the push to reform and protect the housing industry. a squawk master joins us to spread gloom and doom. >> you are doomed, doomed, doomed. are you doomed, doomed. >> mark faber on the market, and

the fed's exit strategy. >> plus, breaking nick data. a durable goods from may hits the tape at 8:30 a.m. eastern t. third hour of "squawk box" starts right now. [ music playing ] welcome back to "squawk box" here on cnbc. first in business world wide, joe and becky are off today. our guest host is helping us out. mark oconnor, you will hear more from mark ahead. he had errorish views i hate to say. >> andrew, thanks so much. let's get a check on the marks, see how we look to open this morning. earlier, it looked like we would have an implied open. nearly a triple digit opened. markets having plenty of economic data to chew on today

at 8:30 a.m. eastern, may durable goods, then the s&p case schiller index the price index, may new home sales, june consumer confidence, that's it, that's hitting the tape 10:00 eastern. in asia, a chinese bank official says they will guide interest rates to a quote reasonable range. at a news briefing after the markets in china closed today, the official argued that recent interest rate volatility in the nation's money market is temporary. take a look at the europe pine markets today as well, gains better than 1%, 1.5% in france and germany. there is a lock at the footsy as well. >> we have a big legal story actually to talk about this morning. probably our top talker. people will be talking about this all day. federal regulators set to sue jon corzine now over the co lapts of m.f. global. the new york times reporting the

cftc plans to approve that lawsuit as soon as this week t. agency said to informed corzine's lawyer without off him the opportunity to settle. which is quite an unusual move a. spokesman says such a suit would be unprecedented and without merit. we are told that bart chilt on is -- chilton is leading this effort. also, the new irs chief is saying the group seeking tax exempt status is broader than exposed. it wasn't just tea party and conservative groups targeted. irs skreerns were told to be on the lookout for groups using terms including israeli, progressive and occupy. so we will see if that changes the political debate on that issue. kayla. >> a little late for that reveal. >> a little late at this point. >> nonetheless, still an important detail. the u.s. pension crisis continues on a downward spiral

with a staggering 94% of pension plans underfunded. joining us is the president of woolshire consulting. we still have our guest host mark lo ka that to join in with us here. julia, we'll start with you. pensions are long-term investors. yet, we wake up every single day and look at the day in the markets, it's been a little skids friend schizophrenic. you look at the grown, how are you advising your clients when we are in a market like this? >> well, as you said, we are long-term investors in the institution with pension arena. and, you know, there is really two issues facing corporate plans that you led off with. 94% are underfunned. but a majority of corporate funds out there have been waiting to see some movement in interest rates so they can begin

derisking. most plans are locking to fully fund their mandated by the pension protection act. as of the last month, you saw 50 basis points change in interest rates and that helped funding by about 6%. so plans are grand jury to be gliekd. they're going to be taking equity risks off the table as they start to move towards their full funding objective. >> it's interesting that you have the ferm "derisking" as it relates to what is normally expected to be an asset class in pension funds. i know most people with their pension and 401k, they want it cloofkally invested. they don't want any risk. they want it to be there on a rainy day, is there a potential for look of a better word risks that are still will? >> well, there is always risks in investing. you can't make risk go away. you can manage it. that's exactly what they're

dock. it's called liability driven investing. what they're trying to do. they have a liability or the benefit commitments so they promise to pay employees and they're trying to make sure that the market volatility that's inherent in the portfolio 's is taken away. as they contribute to tear funds, they don't put those contributions at risk. so they look at more liquid locker duration fixed income to help them do. i need you just to help decipher some of this for me. i'm having a hard time following, the goal here right now, given water happening in the market, is the suggestion it's a good thing to go? >> it is. think how liabilities are discounted, right? they're discounted on the corporate side with a fixed income rate. the higher that rate is the lower the liability is. >> okay.

that i'm catching. mark is making a face. >> i think the flipside, julie, you say they will be ricking, that means they will be selling equities. how big of a move could that be? the corporate pension is massf. we haven't touched on state funds, public funds yet. it's a big move, right, financially? >> well, it is, if you think apt the funding status, most funds are average are 78% fund. if you look at the subpoena 500, they want to be around 85% to start blighting or derisking. sui want to get to an over 100% funding level for their long-term objectives. and the move last week, if it moved up 6%, you are getting that much closer to gliding. in fact, we v

. >> the first couple days were tough, nothing physical. more mental type of stuff going on. staying around you, anywhere you walk, 14, 16, 18 people following you. >> his lawyers are negotiation. so far, no deal. >> the president is going to take a shower and a shave. i'm only 42. i'm looking a lot older than i am. >> reporter:hold up in his chinese factory. >> and the president of the american chamber of commerce said that these types of hostage takings do actually take place from time to time, but that it is rare and it's not a major

problem for the international business community. guys. >> thank you so much, eunice for that, certainly a fascinating story. especially the fact that you when to the where they said he was being held. when you went there, they said he was not there? no, no, we went in there. he definitely was being held. it was obvious from standing outside the factory. once you went in obviously, we saw him. but one of the things that he was talking about, which we was most disappointed with is the reaction of the local officials. he was saying the local officials weren't helping him at all. he said he felt that the local officials, instead, were putting a lot of pressure on him to try to negotiate some sort of deal. so that's something that was, you know, not something he was very happy about, something he is hoping he is going to be able to turn around, especially after he has more of these discussions with the lawyers on his end and

also the lawyers on the union representative as well as the worker's end. >> eunice, were you pushed off the ground? is that what happened will? >> no. i did get a little roughed up. but it was okay. i mean, it just, i think people were getting a little bit anxious that we were there for so long and that we did want to talk to him further. i really did want to get his side of the story much more. it was hard to talk to him from outside of the factory and, you know, you probably couldn't hear him too well. but we did want to kind of press in and get his side of the story. you saw the tape, they weren't so happy to have us. >> we did. >> to have us there. >> eunice eun in china this morning. thank you for that report. coming up, we got a new plan to fix home finance in america. senators bob corker and mark warner will join us next with their bipartisan proposal to

overhaul finance. tomorrow, a rare interview with minneapolis fed president, you know him, his comments got some reaction in the markets on monday. he will be appearing at 8:00 a.m. eastern time. out there owning it. the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives. has a lot going on in her life.

wife, mother, marathoner. but one day it's just gonna be james and her. so as their financial advisor, i'm helping them look at their complete financial picture -- even the money they've invested elsewhere -- to create a plan that can help weather all kinds of markets. because that's how they're getting ready, for all the things they want to do. [ female announcer ] 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.

anna robbie.

gianna. . >> a bipartisan senators are reforming the finance system t. leading senators are here with us. now senators mark warner and bob corker from the banking committee join us with more. good morning. >> good morning. >> walk us through what the plan is and how it works. >> well, it wind down franny and freddie over a five-84 period. it puts in place a new system that requires 10% capital in front of any government re-insurance program. i think what it does is bring discipline back into the housing finance sector, where you don't have private gains and public losses, it's something the two of us have worked on a long time. we have six other co-sponsors. we look forward to introducing this bill today, mark has been a great partner in this. >> andrew, this was the one piece of financial reform that

hasn't been completed. now the housing market has come back, what we say is before we just kind of allow the status quo to continue. let go ahead and fix this. we think we've done, we've got a great framework here that kind of hits the right marks. i think we will see generally a positive response from industry. i think this is at least a beginning point for this discussion. >> senators, let me ask you this, james millstein, he served in obama's treasury department. he says that franny and freddie should be fixed. john paulsen the hedge fund manager, bruce berk wits, others embrace this idea that we can fix franny and freddie. >> i think they have the status quo. they got economic interest in that residual part of franny and freddie. they want to say, let's go out, recap, keep the status quo. they bought a lottery ticket. i'm not sure they will be successful. i got a separate lawsuit going

with treasury at this point. we think we got a newark texture that candidly puts more private capital at risk. it protects the taxpayer better. it maintains the ability to have a 30-84 fixed product. takes out the social function portion and segregates it out, says, if we will support low income houz housing, let's charge a small fee for those mortgages that get this government wrapped. we think we got a better architecture than the status quo. >> senator, you say it protects the taxpayer from the risk inherent in franny during the crisis. in effect, a lot of this risk would be then introduced to the banking system. they would be holding these mortgages, how do you structure that risk from being in the banking system then? >> i think we have created mechanisms where you have an a, a b, a subb. private bond interests. i think there will be another all kind of ways to guarantee and put up this 10% equity, so,

look, i think it willb good, if these loans were held by institutions like banks. but i think what we have done is created something, for instance, today with 5 trillion dollars of franny and freddie, there would have to be $500 billion in private capital in advance of. that i think that's exactly the kind of system we need to have. the people you talked about, who want to re-ipo, franny, freddie, many of them are friends. they have been in to see us. they see us more and more as they buy these junior preferred shares. i no ethey have economic interest. i don't think they will do well with that. but, look, i think everyone knows that franny and freddie the way they were set up with private gains and public losses was not a good fair deal for taxpayers. this is a change that keeps liquidity in the market. hopefully, we will be successful. i do think there is energy here in congress to take this on and hopefully we'll do something that certainly moves us away

from the status quo. >> do you think some beyond those who have what you call economic interests may be apprehensive to do anything at this point considering the fact and i'll ask this to senator warner because of the growing profits that the gses are now making? some may be just turned off altogether by doing anything? >> i actually think that those growing profits, i think some of those profits were extraordinary last quarter when they remarked their book. but i think some of those growing profits may be an incentive to move. there may be fears congress may gak i take the fees and use it for something else. in a strange way that, profitability may move some off the sidelines. i think those who have economic interest may not have great things to say. those who want to have a private only system, but i think the vast majority of folks, the vast majority of folks who know we need a newark texture.

we need to put more capital at risk, have that government backstop, set it up as an fdic type model where there is a re-insurance fund. i think we hit a good market. >> senator corker, you guys keep referring to these in quotes, those people who have economic interests. i'm curious, what do you make of the fact that you have investors buying the common stock, you are buying, they're boying the preferred? regardless of how you want to characterize them, what do you think of that? >> oh, gosh. i think people, you know, this free enterprise, trying to figure out ways of making money, when you combine for pennies on the dollar. >> is there something wrong with it? >> no. i have no problem with it whatsoever. that's an issue, by the way, that many of them would settle with their suit with treasury over the things that happened in the past. but that's not what this bill attempts to do. this bill attempts to move away from the status quo as we've

mentioned and to put private capital in advance of taxpayers. suit will be settled by others. we're the legislative branch, not the just didiciary. this has nothing to do with personalities or people. we are trying to put together a system that will stand the test of time. if franny or freddie had 5% capital in advance of the government guarantees that were there, it would have been no taxpayer losses. we designed a system that has 10% capital in advance with all kind of other belts and suspenders. so we think we have done a good thing. it's a beginning place. any bill can be ill proved. we hope it will have a markup in committee and go to the senate floor. hopefully, we can move ahead with a system that meets the test of time. >> senator, one other critique, this doesn't really look at the banking industry at all t. critique from jessie eisinger,

he says controlling the mortgage markets lead to higher rates. do you believe that? and do you believe your bill or any other bill should deal with that? >> one of the components of the bill, i'm not sure he has read the bill since it hasn't been introduced yet. we make sure in effect with providing a co-op with pieces of franny and freddie, for credit unions and others to still have that kind of convenience of bringing, you know, individual loans or small package loans to the issuer, that there will be an issuer that will maintain that open window. so we think we have hit the right mark to make sure all portions of the banking industry will be able to participate. the small banks will be gobbled up which the issue functions by the larger institutions. >> one of the things we have done in this bill made it so the small institutions have access at the same rates, the large institutions do. i know that you know in the previous model, franny and

freddie would give big volumes to bank of america and others. this bill seeks and will do away with that. look, i know we will get input from the viewing audience. we will launch it today. i think america knows we need a different system than the one we have. we will build on the strengths that are there and try to overcome the weaknesses. we hope you will help us along the way. >> one thing i'd add, thank you that starts on the banking system, eight co-sponsors in a place like this, that is a good sign. >> that is a good sign. gentleman, thank you for joining us. thank you. >> coming up the durable goods report from pay hits the tape in just a few minutes. 8:30 a.m. eastern. market master mark faber will joan us to spread a little cheer. he is, of course the publisher of "the gloom, boom & doom report."

we are back in a moment [ whir] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪

summer event is here. now get the unmistakable thrill and the incredible rush of the mercedes-benz you've always wanted. ♪ [ tires screech ] but you better get here fast. [ girl ] hey, daddy's here. here you go, honey. thank you. [ male announcer ] because a good thing like this won't last forever. mmm. [ male announcer ] see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. but hurry. offers end soon. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

a o. >> welcome back to "squawk box." among the stories we are following this morning. the race to host the olympics is locked in a dead heat. they say there is no clear favorite among the bids. according to reports, spain's economic woes aren't hurting

madrid's bids. weak public support in tokyo was offset by financial strength. the winning city will be announced in september. coming up on the other side of this break, we are minutes away from the durable reports in may. let's take a look at u.s. equity futures. they would still open in the grown near the highs this morning. we are back in two. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars...

plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪

>> welcome back to "squawk box." we're just minutes away from the numbers. rick. >> may durable goods up 3.6%. extransportation up better than expected. if you look at non-defense orders, the proxy for capital spending, business spending, business investment, it was up 1.1. that's a full double what we were looking at. now, if you switch from the orders to the shipmentes and the same category, that was also double expectations up 1.7.

it's very difficult for me on the surface of this to find anything that isn't fairly likable inside this report. and it doesn't seem very much reflect -- well, you got a couple basis points. we're back to a 254 yield unchanged after a dip in the followers under 2.5% as the rest of the world, whether it's pvoc which has been off to the sidelines or people like mervin king, a lame duck as well, all coming to the defense of managed markets with a bit of nervousness about a dose of reality. we'll let the markets figure that out. but for the moment, it seems though we're riding on a cushion this morning of better than expected data. back to you. >> for more on the debt, let's go to steve liesman, you are saying, good news, good news, one place you said not good news? >> rick said it is in line, it's not that strong. it's not that strong, 0.7% t.

story here is boeing aircraft coming in. the headline number is typically a boeing aircraft headline number depending on did the government count, did the timing work with the number of aircraft boeing reports being sold or shipped versus the number that the government counts in a given month. so what we have here, where is the civil yap aircraft number? non-defense aircraft and parts up 51% in the month. so we get rid of. that we look at the underlying. the one point rick did point out is the non-defense capital goods, i think we have a chart of that which does not include the current data, but you can get a fee. it's volatile data. we looked at this year over year, you see we have a strong 2011 and somewhat of '12, then it dips back down. there it is, business investment. you see it just coming up from the lows. there are substantial questions right now about the health of the manufacturing sector. we have had some weak data on manufacturing and there is really a lot of uncertainty about how weak the underlying

data is and whether or not we are in for some sort of a swoon. we saw that on the isms. whereas if you get away from industry the numbers seem better. we will get to those numbers. the housing numbers will be very critical. a very important question, how the market reacts. we have been in a data volume the last couple weeks, right? it's been all about what the feds said, the expectation, layering some of that china uncertainty i don't think anybody really understands what is going on over there. then you say, how does the market react when we get oriented towards data? is good news bad news or? >> i was going to ask you, can we finally get to a point now where good news is good news, because the fed has spoken. we know the taper is coming. now we know what the game is going to be. so why can wet embrace good news? >> you know my feeling on this. i believe good news is good news. i will take economic growth

instead of fed stimulus any day. i think economic growth. >> you will. >> well, i think the market is going to come around to this point of view. >> interest rates are going up for the right reason. >> right. >> if the zloor going up for the right reason. >> right. >> if the stockmarket can acknowledge the fact all of this is happening for the right reason. again, it goes back to the seduction you put on the table yesterday on this very program as to how the market is getting it right or wrong and in your case, you say it's getting it wrong because it's reading fed optimism as fed. >> hawkishness. >> i think in the absence of a policy mistake, i think there is a legitimate fear out there the fed gets this wrong. it reacts too early. i think good news is good news in the absence of fed policy. >> it is good news. what about the confidence level, you think all this volatility has to translate. you can't sit here and look at all of this happening and say we're just going to continue on that rise and we saw on the greve of people containing to

spend their capexdollars in the durable space. even in the housing place, i think you do have to factor if some of this financial volatility adding into the fundamental volatility because the confidence level. >> it's the market as linus metaphor. we have this thing swirling around, it creates its own reality the volatility veiates volatility. >> you need the blanket, the security blanket? >> the main point i was trying to make, scott, that the fed in my opinion has not become more hawkish. the reaction function has not tightened. it's simply they have laid out the policy and, look the part of the problem is qe works by fooling some of, most of the people most of the time. you know, you've got to have this idea that interest rates are lower than they otherwise should be. now the market, the bond market is the key, looking for the right level. >> okay. rick, thank you for. that mark is sticking around. also, we have a programming

note. tomorrow a rare first on cnbc interview with fed president narayana kocherlakota. >> that is actually what qualifies me to the fed reporter, my ability to pronounce his name. >> comments, reaction on monday. he's appearing at 8:00 a.m. eastern time right here on "squawk box". >> all right. will the comeback of the ten-year yield spell doom for the housing recovery and the health of the u.s. economy? joining us now on the "squawk" news line mark faber. he ist publisher of "the gloom, boom & doom report." it's good to have you back. >> it's my pleasure. thank you. >> what do you see oversold at this point in time, the ten-year treasury note or the stockmarket? >> the stockmarket isn't oversold in anyway except for the next ten days on a very short-term basis. but longer term, we're still

overbought, not just in the u.s. but in many other countries as well. the ten years is very oversold and near term and into immediate term and gold is even more oversold. >> so are you a buyer of bonds? i think as an investor, you need discipline and patience. and i think the best course of action is actually not to buy anything but rather to reduce positions on a rebound. >> lots of, so, reduced positions on a rebound. so you are selling into any kind of strength that we see even if it's momentary, you are selling right into it. that's what you are saying? >> no, i think the s&p could rebound to around 1630, 1640. >> what's the downside on the other side of that, assuming you are trying to get out? you think it will go as far down as?

>> well, i think the high was 1687 on may 22nd and will go down when the to the 30%. >> when the to the 30%. mark. what do you think of the other mark here at the table? mark. >> mark, what i want to ask you is you're there in asia. my view or highland's view on this is that things in the emerging marks were not right before the fomc meeting, that there were things going on in that space, a pretty big liquidization across the bond market and we've seen it reflected in some very massive moves in certainly in stocks and em bonds. can you give me your perspective on what's going on there with that market? >> well, basically, for the last six months or so, emerging market growth has been slowing down and have maintained repeatedly that growth in china is not as strong as the

government statistics would suggest and it becomes more and more obvious that china has a credit bobble and not just a small one, but a massive one and that is the chinese economy slows down as much as i think it will or even goes into no growth, then its e.s the whole emerging market complex because china is a very large buyer of resources from the emerging world. if they boy less, then prices of resources go down. if commodities go down and if countries have less money to buy foreign goods so you have a vicious circle on the downside. >> you know, we agree with you, i think. >> and i would listen to the market. i mean, look, some emerging markets have tumbled by 20 to 30%. things that highs earlier this year, some have dropped 20% in three weeks.

the emerging markets bond fund is down 20% in a couple of weeks. i would listen to that and not sit there and say everything is fine. >> you had a lot of investors searching for yield across emerging marks. you can buy single a chinese bank bond for 50 extra basis points versus j.p. morgan. that's probably something they don't want to own. >> we also have to ask, why do people case yield? because of the brilliant central banker's monetary policies that have kept interest rates artificially low and many people depend on yield as well as pension funds and insurance companies, so basically, the idea of the stabilizing the economy and have less economic and financial volatility, what the fed has created already with the nasdaq bubble the housing

bubble and the latest bubble is more volatility than less. >> mark, you say that you believe that central banks will continue to be buyers of physical gold, therefore, you will continue buying physical gold. what level are you looking for and what is making up your thesis here? >> well, i don't think all the central bankers will buy gold, but say the asian central bankers that have very little exposure to physical gold maybe just 2% of tear reserves, i think they or the southern sums and well to do individuals will continue to buy it. now as you know, the gold price performed among, was among the best performing assets between 1999 and 2011 and things then since have performed miserably in this town more than 30%. i think we can still go lower, but i wouldn't bet on going lower, the commercials have a

very low short exposure, which would suggest they think the market will go up an these are professionals. number two, if you look at commodities in general, whether it's oil, copper or gold or silver, the cost of production has gone up dramatically. you can't produce oil any more at 20 or $30. the new production will cost you at least $80. similar for copper, you can't produce copper at 60 cents a pound any more and for gold, i guess for new gold, their all inclusive cost is around $11, $1,200 an ounce. >> do you own u.s. stocks any or no? >> i own, i just bought about ten days ago some gold mining shares, but other than that, i don't really own u.s. shares. >> interesting. mark faber, thanks so much. >> all right.

coming up, we'll continue our squawkbox series. we have shipping jienlt ups joining us next to talk about the pulse of the global economy. [ male announcer ] we've been conditioned to accept less and less in the name of style and sophistication. but to us, less isn't more. more is more. abundant space, available leading-edge technology, impeccable design, and more than you've come to expect from a luxury vehicle.

the lexus es350 and epa-estimated 40 mpg es hybrid. this is the pursuit of perfection. out there owning it. the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people.

people who want to take ownership of their investments, like they do in every other aspect of their lives. . >> all right. welcome back to "squawk box." let's take a look at the futures now. we are about 45 minutes away from the bell. the implied open on the dow is still in the grown, shy of 90 points the subpoena 500 and the nasdaq, nicely positive as well.

a quick check of walgreen shares as we have earnings to talk about t. drug store operator earning 85 cents a share, excluding certain items, 6 cents below estimates. the company says pharmacy sales are strengthening but front end sales are not up to its own expectations. cruise line operator corn val earned 9 cents per share, that was 3 cents above estimates. however, its revenues are shy of consensus with bookings for the remandier of last year or the year behind last year's pace. meantime, men's wearhouse is giving details on the dismissal of george zimmer as executive chairman. it says he hadity accepting they have an independent board of directors and he has not been ceo for two years. check out shares of bearance and noble. >> that is nasty. >> it's nasty behind the scenes.

>> you are the spokesman. i think we need more detail on how he believes he was acting as ceo. >> all right. and they're under pressure after the company posted a bigger than expected loss revenues also missed the mark. >> that one was barnes and noble you were referencing. stock is down 5%. nook sales underperformbling. >> it's an important stock to watch. a lot of people were betting on the nook, the microsoft's investment, et cetera. they had an inventory charge, because they weren't selling. >> you have the gav em. order in the court. >> i was trying to bring some order to the court. >> i don't know about that. the next cutting edge of converting an environmentally corporate strategy to real dollars for share holders. her tune is the chief financial marks. sustainability leadership. he is a member of the nnbc cfo

council. good morning. >> good morning you. >> i want to get into the sustainability conversation in a second. i want you to help me as a cfo of one of the major companies in this country. when you see what bernanke said last week, when you see what's happened to the ten year, when you think about the type of investments you were planning and the way you see the economy, does it match up with what you have been hearing? . >> i think the marks have overreacted a little bhit to bernanke's words. i think the economy is not that different than it was a month or two ago. the u.s. is in a slow but steady recovery. and it's natural that overtime the fed will pull back a bit on the quantitative easing. so the markets may be overreacting a bit. but i think we'll find a middle ground on this and as long as the economy continues to iprove, it would be a good thing if the government has to be less involved. >> if interest rates continue apace, does that change anything for you? >> it really doesn't. interest rates have been at

historically low levels, you know, there is certainly a rush to do refinancing by a number of corporation, but we're still in an era of very low interest rates and, you know, investment opportunities, i don't think, will be hampered at all by the 30-year and the ten-year numbers up where they are today. >> is that because are you sitting on a lot of cash. how much cash do you have on your blown sheet today? >> we have several billion, that's for sure. >> let's move briefly to this conversation of the climate change, an article in the new york times today says president obama will laying out a multi-prong plan to tackle climate change. he stresses it is a moral obligation. u.p.s. has been at the forefront of this. is it a moral obligation for the company or does it make sense from a dollars and cents perspective? >> certainly, we think it is a part of managing a prudent operation. i mean, corporation existed in

context of society and one of the things that we want to make sure is that u.p.s. looks at all of the issues and the risks that may present themselves and is able to adapt to the way the world is changing. so, clearly, climate change is a big u.p.s. is investing research dollars and has what we like to call a rolling laboratory of seven or eight different types of fuel vehicles, and so we test many different versions, and then as we see something that is more viable than we do the hard analytic and can invest more deeply to increase the fleet. >> is it costing you or saving money? >> well, in most cases the most of the alternative fuels do not meet the full hurdle rates that we have within the company, and that is why some of this is still r&d, and one of the areas that is more and more viable is the use of liquefied natural gas for the over the road tractor-trailer fleet. this is an exciting area. if you had talked to me a year ago, we would have said that really, there is no al teternat

to diesel for the tractor-trailer fleets over the country, and what we are seeing with the low price of natural gas and with some of the the technology innovation, it is becoming more viable. although the capital expense is very large. the cost of a tractor is almost double that of a conventional right now. >> and kurt, a quick comment if i could. the fedex has said now they plan to cut the capacity costs reported by the "financial times" and do you plan to do the same? >> well, we have made adjustments most notably out of asia in the last six months, and watching that closely, and have been really adjusting the fleet downward to make sure that it matches the demand. we are in pretty good shape as far as the fleet right now. >> all right. kurt, thank you for joining us, and congratulations the award last evening and we look forward to talking to you real soon. >> thank you. and stocks on the move. we will check in with jim cramer at the new york stock exchange and see what he says about the market and the day ahead. that is coming up next. flying is old hat for business travelers.

the act of soaring across an ocean in a three-hundred-ton rocket doesn't raise as much as an eyebrow for these veterans of the sky. however, seeing this little beauty over international waters is enough to bring a traveler to tears. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving.

welcome back to "squawk box" on this tuesday morning.

let's go down to the new york stock exchange and talk to jim cramer. what did you think of the durable numbers? were they stronger than you thought? >> yes. i like it when they are not fighting, and i thought that jeremy seigel said this is not going to disrupt the housing market, and sure enough lenora with good numbers, and this is because china did not go down big last night, and no catastrophe, and somebody came in late yesterday with the short deck of the market, and clearly wrong, and this is living day to day and one moment at a time, and this moment, today looks good. >> today looks good, but what do you think that the market is going to show when we open? sometimes you have something different in the futures market when 9:30 rolls around? >> well, clearly people have to clear out and be sellers, and remember, this is the beginning of the mark-up day and when the institutions are feeling comfortable, and moving the stocks up and the federal government does not investigate

until the end of the week, so this is a time to manipulate it higher, and that is a time ho r honored thing for the corporations to do. >> and word association, jon corzine? >> civil and not criminal. >> what do you sthi the name of the minnesota fed president? >> the minnesota what? >> fed president. >> you know him. >> you know him. >> coe cte lecota. his name is so hard to pronounce. >> and i love judge wapner bringing in the chip kelly and jeremy seigel totally passed on that. i am a baseball fan and i give him papelbon. >> i knew you would get it. >> okay. papel bonn. they were right in boston. they were right. >> we will see you in a couple of minutes. coming up the guest host all

morning has been mark ocano, and we will give him the last word. ishares incomes etfs. low cost and diversified. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. [ whirring ] [ dog barks ]

i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] a lot can happen in a second. with fidelity's guaranteed one-second trade execution,

we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. >> let's get back to the guest host this morning from highland capital for the last word. i want to set you up two things. short jcp and long america, and

why? >> jcp cutting prices and they figured it out and it is a long process to structure it, but we like the debt, baud it is great. 5%. >> and amr? >> this is a consolidation play, and we would like for the u.s. air management team, and we think that they will come in and a good situation. you call me a bear, but i'm not a bear per se, but defensive and a lot of good things the do out here. >> and kayla, the judge, thank you for joining us. "squawk on the street" begins right now. good tuesday morning and we welcome to "squawk on the street." i'm carl quintanilla here with jim cramer and david faber. and the case sh-shiller is the t number on the index, and we will talk to the co-founder robert hi