session. china's central bank said it would provide cash to institutions that needed it. hong kong shares had their best day in nearly six months as investors hunted for bargains following the recent selloff but japan's nikkei dropped below the 13,000 mark. china's yuan slipping against the dollar. the central bank set a weaker official mid-point. traders say that this is signalling the central bank doesn't intend for the chinese currency to appreciate further. the major indexes are mostly higher in early trading. among the catalyst follow through from yesterday's session on wall street and news that german consumer sentiment rose to its highest level in six years. we'll have more from our colleagues overseas in just a couple of minutes. let's first get to michele. >> on the economic agenda today, 7:00 eastern time, getting weekly mortgage applications. key in the face of these rising

interest rates. 8:00 a.m., final revision to gdp. economists are not looking for any change. real event to watch, treasury auction of five year notes. the government borrows a lot of money at 1:00 eastern time. how much will they have to pay because traders are paying close attention. they have been rising since the beginning of may. speaking of bonds story suggests yields are threatening the recovery of the global bank sheets. giant firms built portfolios in liquid securities. also because they haven't been able to find better opportunities. under the new capital rules, unrealized losses in those portfolios, hit the bank's equity capital. in other market headlines, united states talked to confidence survey on foreign investment after 12 year hiatus. the u.s. jumping from fourth place to displace china at the top. 300 executives from 28 countries were surveyed by global consulting firm.

they said u.s. workers are become being more competitive. in corporate bonds anthony wednesday morning microsoft giving people a free update to windows 8. the preview version of 8.1 is meant for microsoft partners and other technology developers, but anyone will be able to download it for free beginning today. company has been trying to deal with complaints about its flagship operating system since windows 8 went live eight months ago. microsoft shares up 26% 28%. walmart naming an interim head for its indian business. the company has spent years trying to crack the flarkt. their previous head for india has left. a top vivus shareholder will be replacing the currents boss. they must first gain control over vivus board.

and eastman kodak restructuring has been approved by a bankruptcy judge. the company is one step closer from exiting from harry potter 11 bankruptcy protection. >> let's check on the markets. looks like the dow jones industrial average would open higher by 70 points, s&p by eight and nasdaq by 17. the price of oil, which considering what we've seen in the dollar has remained pretty high. wti is 94.82. brent is at 101.12. ten year note, yielding 2.56. off the levels we saw yesterday and today but still above 2.5%. euro is at a three and a half week low. euro will cost you 1.30. price of gold. three year low. getting hammered. larry has been wondering whether

this is a deflation engineer sign. 1227. michele talking about the ten year, we got a guy who has been hit by the ten year. bill gross being hit hard. kpo pimco has lost 4% in june. 12th worst performer in similar bond funds. pulled $1.3 billion out of the funding may. a lot of people suffered this. all similar bond funds posting average loss of nearly 3%. down by an average of 4% since the end of april. we had jeff on last week who said you got to go by treasuries immediately because this is a great deal. >> everybody will get hammered. when there's a major shift away

from a certain asset class. he was 12th. so out of a 177 people a lot of people did worse. >> ray who runs bridgewater they have their all weather fund which is supposed to be all weather conditions. he's getting killed too. >> i don't think we can make enough of gold this morning and silver as well. down 48 bucks an ounce. gold is headed for its worst quarterly decline in nearly a century. in nearly 100 years. that's how bad it is. silver is down 34% this quarter. every commodity is down this quarter except for one. you know what it is? >> oil. >> personal favorite of mine. bacon. >> bacon. i was thinking of bacon. >> this is a straw stat, it's up 7%. much harder to store than gold. gold and silver are down.

they eat their weight in. this is a monumental selloff. i called gold the other day the child star market. it was cute once, had a great ten year run, now it's a teenager, looking for work. >> tell that to daniel patrick harris. >> who is the better known cousin. >> i worry that gold is signalling deflation. >> you might be on to something. not to be some commodity weirdo as opposed to a normal weirdo, corn has been slaughterered which is good for consumers. >> is it possible that the pigs are a function of the chinese deal? there's a be market. new found market >> chinese market slowing would the price of hogs go down regardless because they will eat less? >> as corn drops, right, hog farmers profit margins tend to

go up. >> it costs us less to feed them. >> another opportunity to talk about bacon. 6:06 in the morning. our bacon graphic. >> bacon news graphic. thank very much. crack team you got. >> another story. u.s. officials are reportedly investigating whether sac steven cohen purposely avoided learning about alleged criminal activity at his firm. if so, probers plan to ask whether that could form an action against him. one of the arguments in defense of steve cohen has been it's a large firm, it's structured in siloed so there are lots of different portfolio managers that run their own portfolio, they do it on their own and he's the wizard at the top but because of that structure does he know everything that's going on below and, therefore, what

does that mean if he doesn't. >> but the crux of the story seems to me they set it up to ask well if he set up to never really know, we can still prosecute him. doesn't that seem bizarre? i mean, come on. >> to me, criminally that makes it very difficult. it makes it -- having said that, yesterday we got news of the corzine case. the corzine case is a civil ftc case. >> that's a slam dunk. >> that's not a criminal case, that's a civil case. the allegation in that case is he failed as a supervisor. >> de. >> is there a civil case related to be brought to steve cohen that says one way or another you have nine people that have either been convicted -- accused of insider trading. there's some kind of supervision problem at the firm. that's possible. >> poor supervision.

>> that's not a criminal case. >> ten years since i graduated from law school and i didn't take the bar. there's a term called willful negligence which is effectively disregarding something you think could happen because you don't want to believe that it could happen. but you are -- >> you don't want to know. >> but you're aware the likelihood of that event happening is there. now, again, i have no idea if this is in cahoots with sac. that's the legal term we're fish forge. >> willful negligence -- it's criminal not civil, right? >> yeah. depends on what the harm is. >> right. >> what's the harm? >> let's do a little legal research. >> i don't know about you zmish got a c minus in criminal law. >> you got somebody saying insider trading should be legal, right? >> no. >> ever since milton freeman.

there's a great case to be made if insider trading were legal people -- i don't want to say steven cohen but there's a case to be made that hedge fund managers couldn't make any money in insider trading because the price of the stock would arrive at the proper market point long before they could ever make any money. >> you could also argue the playing field would not be leveled broadly. >> far more level. >> somebody would be a winner. remember in that one case that they complained about some of these guys told six different people the same information. so that when the news hit they didn't make any money. if only six people know the information what happens when 1,000 people know the information or 10,000. >> the first six are the winners and the next six are the losers. >> there's more six who know. >> could i bring this back to

bacon. in a serious point. commodity market is effectively entirely composed of insider trading because if i'm a citizen, if brian sullivan decides to buy or sell corn or hog futures i'm buying or selling those contracts against a farmer or a hog ranker who knows the market, knows his market, right. a lot better than do i. >> he knows his market. >> i'm not backing up what you're saying. >> he doesn't own the whole market. >> no. but he might be big and powerful enough. >> if i'm an executive at name your company, microsoft and you knew microsoft was going take over the world tomorrow, you would have true inside information that the farmer who has his farm -- >> you would have a huge. a people. >> if i'm an executive at a global agricultural giant and i notice that corn seed sales are down, i presume planted acres

are down and corn prices will probably go up. now i can buy corn futures for my own account and i don't think the sec or ftc would say a thing about that. >> you can golf tomorrow with finance minute steve a certain country and key tell you what he'll do with thinks currency. you can trade the daylights out of that information and that's no problem. >> is that true? >> yes. >> if i had a nice meeting with ben bernanke and spilled the beans on his plans and then i went and made some trades on the currency world and elsewhere i would be okay? >> yeah. >> soy beans. >> i'm learning something. >> let's get down our global markets reports. louisa bojesen enthralled by this conversation. she's standing by. you're wearing green. is that because you predicted all the green on the screen behind you or is that accidental? >> it's even better.

i think i deserve a prize to be more sophisticated than that. let's take a look at the whole picture. >> you are a human heat map. >> that's something. >> woke up this morning and decided i wanted to look like a wall. >> join the crowd. >> we're seeing consolidation on our european markets, a little bit higher on the stoxx europe 600. heading in to afternoon trade. we saw the markets coming back yesterday, not in quite in full force but nevertheless by enough for to it be spurred on to be a little bit of a rally. ftse higher by 1%. cac 40 by a shy of 2%. ftse up by approximately 2%. looking at the bond markets we're seeing buying on the bond markets too. what goes up goes up. i was listening to what you said

earlier. many are saying it's not about look at what's taking place with the treasury yield but gold. gold is giving us some indications about what's to come in the rest of the asset classes and markets given we've seen this huge drop in gold ahead of some other drops we have in the other asset classes as well. currency markets are worth mentioning because mario draghi was speaking in france, in paris ahead of the european central bank. he did say is a lot of new stuff but he underlined the omt program was successful without spending a single euro. he said it's up to governments to get their acts together. we saw the euro weakening a tad off these comments which some say are more dovish. guys. >> thank you very much. coming up, a south florida businessman continues to be held captive by his employees in china today. we got another live report from the ground. we had a great one yesterday.

>> unbelievable. >> first the dress that elizabeth taylor wore for her first wedding going up for auction in london today. michele, i don't know if you want to get in on the auction. >> i already bought a first wedding dress. >> she was 18 years old in 1950 when she and conrad hilton got married. it was her fierce of eight marriages. does that mean -- >> eight marriages but four husbands. >> you get to wear it a couple of times -- >> no i'm sure she bought something new every time being a girl. >> we'll be back in just a moment. everyone's retirement dream is different;

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. welcome back. u.s. equity futures at this hour are suggesting we'll have a positive open. the dow would open higher by 72. the nasdaq 16. the s&p by event. mark rich has died. rich was indicted in the u.s. for alleged tax evasion in the 1980s. he was par don't by bill clinton. he was 78 years old. he will be buried in tel aviv. that was an era. >> it was. go for it. >> let's get the national forecast for alex wallace. >> reporter: good morning. another morning with storms in thor midwest, great lakes region, in and around chicago.

every morning this week we've seen storms ongoing north of town and more active storms across western sections of illinois. we work into the ohio valley. louisville you've been dealing with storms this morning. that's beginning to press off towards the south. pittsburgh a wet morning. commute to work will be slow. now as we head through the afternoon more storms developing anywhere in the red stretching from the midwest all the way to the east coast, 95 krird from boston to d.c. could be dealing with stweerms. damaging winds and hail, big risks. we can't rule out a few isolated tornadoes. on top of that remaining hot out there. new york down d.c. low 90s expected. we even have a heat advisory thants place to include philadelphia. it will feel like it's closer to 100 degrees. really want to take it slow and easy in those location. the extreme heat is in the southwest. check out friday high temperatures here for us. i mean one teens and 120s.

death valley feels like death. saturday 129 is expected there in death valley only happened four times since 1913 and we may be hitting that mark on saturday. so really want to be prepared for the heat here in the southwest. if you're not used to it stay inside. back to you. >> that's hot. u.s. businessman meantime being held captive by his employees in china and we've been there for the last couple of days. is there any sign he'll get out? >> reporter: all though it looks as though they are trying to negotiate i want a some sort of deal. i'm standing in front of the factory gates and he's hoping that he and some point he and his lawyers can negotiate the final details with the workers to get out of here and make it back home. basically he seems to be in pretty good spirits today. he was joking a lot saying that he's finally had a shave because

he got an electric shaver. he's thinking this blue shirt he's been wearing for the past six days is a good look for him. overall he's been joey gutierrezing a lot. behind that joke a man is very fatigued and stressed out and tired about all this negotiate i want aing that he's had to do and feeling he's being pressureed into trying to negotiate a deal which he doesn't think is right for his company. >> all right. thank you very much on that. appreciate it. the story don't really captivate the world. you're seeing this story not in the business media but all over the world that this guy -- the stories are so different. he says, okay, i'm going to move some jobs over to india and i'll pay severance. but the people that will continue to work cannot get severance. >> because they still have a job. you get severance when you lose your job. >> the people protesting, say

no, no. he hasn't paid us for months. we're not asking for severance, we're asking for our pay. >> eunice said they told him to strike a deal. >> deal is pay up. >> there's nobody there -- if he's really being held -- >> have you ever had -- >> this is the most bizarre -- >> think about it. the guy is responsible for his own ransom. he can buy his freedom right now. he has his own ransom. >> isn't there a rule of law? >> that's the issue. in china they have big hurdles. >> this is not good advertisement for the tourism trade or business or the country. >> funniest line yesterday was kidnappings are not unheard of. i don't say it's typical but not atypical either. >> page 8. >> because it happens so often.

it's bizarre. >> completely crazy. >> the other big story out of china fears credit crunch and attempt by the central bank to calm the markets. bill adams is here. good to see you. china puts out a statement it was early morning for us yesterday, late yesterday for china, shanghai this morning responds, thing are much calmer. central bank says don't worry things get crazy we'll provide liquidity. also made it clear that it's just going to be tougher to borrow in the future than the past. what do you think that means for the chinese economy earnings therefore, the global economy? >> well, i think the context here is we saw a big spike in this rate late last week. the central bank announced that they had provide liquidity on monday and that they had instructed banks with excess liquidity, commercial banks in chin with excess liquidity to lend that on to banks that were in need of short term cash.

and so i think, at the time it looked like it was a short term cash crunch, not a systemic event. it looked more like the central bank was demonstrating its credibility, we've seen a change of leadership in china this march at the top and the central bank is demonstrating under this new leadership china will be more focused on redirecting growth towards a more sustainable path. >> a more sustainable path. let's translate that. >> more consumption oriented growth, less oriented towards investment. >> they will remove credit from the system. this will be good. in the short term it's a drag on the economy >> china is a fast growing economy even if you see credit -- you don't see credit removed from the system as posed to growing more slowly. >> the pace slows down. what does that mean? >> it probably will mean slower growth in china.

we have seen passed through lower commodity prices over the last couple of days, part of that is in reaction the fed. part of it is in reaction to this china cash crunch. it's indicative to medium to long term trend which trending down to somewhere between 7% and 8%. right now around 7.5% is a good rule of thumb for 2013 and closer 207% in 2014. >> what does that mean for the commodities we've seen. decline in commodity price been justified? >> hard to say. there's been such a reaction to the fed. i mean this be interest rate spike in the u.s. seems excessive given us what the fed has told us. and so i think there's a chance that we would see a retracement there which would then might pass through the commodity prices as well. i think over the next year to 18 months i would expect growth in

advanced economies to continue to recover. i think the u.s. is on a solid track. >> what does that mean for the ten year yield, do you think? >> i think -- i would say the range through the end of the year, it would surprise me if we got too much above where we are now. i think a reasonable view is that we'll probably over are the next couple of months be where we are or a bit lower before gradually trending up over a long term normization of interest rates. >> bill good to see you. appreciate it. bill adams. coming up from china to europe we're going to talk to a man working to brink foreign investment to the continent. bill o'leary will make his pitch coming up next. first as we head to a break take a look at yesterday's winners and losers.

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offensive. >> it's offensive. have a little leprechaun dancing across the screen. we have van morrison, the chi chieftains. >> go back to futures. we have some green arrows. do you consider green an irish -- he's wearing a green tie, now, whole no,. anyway dow jones looks like it will open up 60, 70 points higher. s&p up eight points and nasdaq up 17 points. >> no secret ireland is a great country filled with terrific and attractive people especially county cork. but no secret it's one of the world's one of tax havens attracting investments from apple, intel and others. but after apple ceo tim cook testified on capitol hill last month of how much of its money floss tax-free through ireland

lawmakers have been calling on emerald isle's low tax rate. with us barry o'leary responsible for cultivating foreign investment in ireland. >> welcome. >> welcome, sir. >> thank you very much. >> defend your tax policies. >> sure. first thing to say is you're incorrect. ireland is not a tax haven by any definition of the eocd. what you have to realize that the substance that's in ireland, many of the multinationals and there's over 1,000 of them there have substantial operations servicing typically european, middle east. if you take somebody like emc, it has 3,000 people in ireland, pfizer has 4,000. that's not typically -- >> fair enough. does apple was called into question. apple international overseas or whatever the name of it is overseas has no employees but has what 50 to 75 billion

dollars in revenue. >> without getting into the specifics of one company. >> i'm not picking on apple. >> it could be starbucks in terms of the netherlands or amazon with luxemburg. companies will take advantage of whatever there is in the global system today. let's assume ireland didn't exist in the world. there are many, many other countries with the same type of facilities. >> i agree. but take the other side then. isn't that then a global race to the bottom? you need to be competitive and need to lure investment. i get that. but, it's not a good defense for any action to say well others are doing it so we should do it too. >> yes. so if you were only looking at taxes the decision-making factor in your investment, you would be going into places like switzerland or singapore where you can get zero.

the whole point is if you look at big economies that have big domestic markets, have high tax rates, peripheral markets have to have an advantage. some countries choose to play on the tax front as a competitive advantage others with our cost structure having natural materials, et cetera. so ireland has chosen like many countries to have -- it's not totally those it's after all 12.5%. >> you need to be braver. you need to say yes it's a race to bottom, it should be a race to the bottom instead of saying everybody needs may more tax. ask these other countries why don't you lower your taxes. be more competitive. stand up for ireland and say we like our 12.5% tax rate. >> which we constantly do. we have had an attractive tax rating for ever 40 years. i would stress again all you have to do is go around the island of ireland and see the

sheer substance behind that investment. >> let's go back to the substance issue. you're arguing there's something beyond the tax rate that people are coming to ireland for. i don't want to dissuade you or disagree with that view but clearly there are other things at play when it comes to at any rate. there are other companies where they are not coming simply because there's, you know, there's a great labor force, it is, in fact, because there's the ability to create these shell companies, no? >> look, if you didn't recognize what's most important in successfully infermenting a substance of scale you'll only do it if you can assemble the talent pool. if you look at an investment of 1,000 or 2,000 people -- there's no use whatsoever. >> let me ask you a different question. when you look at the structures that some of these companies have come up with, let's put aside the legality of them, do you think they are right, do you think they are wrong? >> there's a mismatch and

internationally they are wrong. >> it's a mismatch and you enthusiast it's wrong. what do you mean? >> what i mean by this is that there are loopholes that allow certain things to happen around the globe not just from an ireland perspective. now, as i said from before if ireland didn't exist you have luxemburg, switzerland, singapore, a whole variety of questions. any potential change has to be multilateral not unilateral move from ireland. >> if you got a call after the show from president obama that says come down to d.c. i need you for an hour, i want your advice, what you would do with our tax system what would you tell him? >> the tax rates in the united states are so high. you have a huge domestic market and therefore if you lower the tax rate for people who are focused on the domestic market what does that bring? >> what's the answer?

>> definitely to reduce the tax rate somewhat because it's not right that so much money can stay overseas and not flow back. >> quickly to turn it up, barry and get off the tax issue for just a second. your banks had debts as a percentage of gdp that made ours look like peanuts. you suffered greatly. is ireland back? is the economy of ireland back? >> so the economy is growing again. second year of growth albeit very modest around 1%. we have taken a lot of cost out of the economy. the budget deficit which we get toby 20 to by 2015. >> were you insulted by john mccain. did you see how he beat up ireland and apple? >> just because the senator says something doesn't mean it's factually correct. he has an opinion. we have opinions. and everybody is entitled to express them. >> why is he so focused on the

irish tax rate instead of focusing the american tax rate. >> that's the point. because we have a transparent system 12.5, you go into other countries and negotiate 3% rate four, 5% rate. it's the clarity. >> taxes are a complex topic and i propose a month long fact finding trip around ireland. >> what do you want more of, tax less, what do you want more, tax more. >> thank you michelle caruso-cabrera. irish defender. bill o'leary a pleasure. >> coming up a cereal entrepreneur make a big bet on big data. 8:00 a.m. eastern time, mississippi fed president, narayana kocherlakota. stay tuned. [ male announcer ] when gloria and her financial advisor

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welcome back to "squawk box". the dow will open higher by 64 points. making headlines state regulators are putting the heat on virtual currency exchanges and other companies that deal with bit coin. they could be closed down if their activities run afoul of state money transmission laws. "wall street journal" reports banking regulators have issued letters telling companies they need to follow state rules or prove the rules don't apply to them. >> we're talking about big

data. he's by anyone's definition is a cereal entrepreneur. help us if you could and i don't think any of the founders have thus far talked about what's happened since the nsa leaks that have happened. for those that don't know, some of the work that has been done has been done for the government involved in the cia and things like that. when you first heard about the leaks and you saw the documents about p.r.i.s.m. and things like that was that a surprise to you? did you know everything we heard? how much more do you know? >> so they are not work with p.r.i.s.m. program but we're involved with against. i can't say i was surprised by

what he revealed. the founding principle is it's possible to maintain civil liberties while strengthening intelligence and defense and depends on people are using the data. >> do you think that -- put it this way. is there a lot more going on behind-the-scenes in terms of the data being collected than we already know? >> i think a lot of people have good intuition. 1.4 million people with some type of secret or top secret yearance. >> do you have? >> did. i gave it up. basically a lot of people know what's going on and there's a lot of, especially silicon valley company, these engineers are there because they want to be there. these guys can work for anyone. they all have strong values. the 21st company engineers won't tolerate things that don't along with their values. >> a maysing of big data and your ability to maintain civil liberties in the face of it. "wall street journal" editorial

page made this point repeatedly saying the use of big data provides anonymity and keeps us safer kpp you agree with that >> yeah. >> how and why? >> you need to tuned network of action aloudoun it and expose the data of people to see what's going on. you need very strict rules. only allowed to see what you can see. within those strict rules you can understand bad things have happened. >> are you surprised that somebody like snowden was able to get access to all of this information? i mean having had the clearance you had and knowing other people inside your business and other contractors to the government who have been involved in this kind of thing? >> i'm not surprised at all he had access to that. at some.you have to trust people for these things to work. there are ways where these systems should work. not only to stop snowden from happening but stop abuses. there should be systems where

everyone is watched and what they do with this data. we don't that well enough. >> what do you think about the whole uproar which has brought together a lot of liberals and libra learning ibertarians together. >> how should snowden have gone it? you take issue with this whole revelation or no? >> i think the way he did it was criminal but i do think it's a very important dofrgs have, you know, to be complaining. if things are being done wrong. google and facebook and everyone should talk more about what they are doing in a way that doesn't compromise security. >> there's speculation about snowden he took the job to get the information. it's one thing to come across wrongdoing in need to expose this versus i'll get into that company -- >> i don't know if it's relevant to actual point. >> i want goes to intent. >> he seems more counter u.s.

interest. >> there's a big difference here. what is the american public not properly understanding about this story? >> well, i think, i think the truth tends to exist on both extremes. there's true there's bad people in the world and doing scary things to hurt us and we need to stop them. at the same time that want we need be doing more to watch how people are using the data. >> as somebody who is a government contractor and having worked with the government and we talked about booz allen and hamilton and others should the government hire contractors different way. should there be different policies, approaches to hiring individuals, contractors themselves? >> the biggest thing government needs to do better it has a service based economy and that doesn't work well for technology. when you build technology you pay for it for services you spend more. >> you're talking about sourcing

it, outsourcing? >> well the problem is that you end up having massive number of people working on it when it should be smaller number of people. rather than buying products you're paying a ton of people to do the work. >> you have strict government employees doing this? >> i would still use contractors but use it where it's product driven versus securities driven. you look for off the shelf products. >> is there such a thing as too much data? >> i don't think it's about how much data there is. it's more about how you're using the data and how you're giving people access to it. >> it's like too much money. >> people have suggested you get to a broint you can't come to any ration enamel conclusion to anything if you have too many data points. >> which data points makes sense and which ones are noise. i have a question related to money.

we've been talking about telephones, emails, you look at the data company that looks at financial information. can the government use that product? >> no. not for the government. for the big pension funds, family office. basically the same principles that we're fixing industries within government and health care. finance is very broken from a data perspective and there's always closed systems especially after 2008 nobody trust as one closed system. >> how do you break that down in a world where people are worried about privacy on emails and phones but when it comes to money people are more anxious. >> the bigger problem is getting people's minds into that data. this money should be going teacher's pensions instead of i.t. services. government doesn't know how to build technology. >> thank you very much for coming. this is a much longer

conversation. we'll do this -- joe is fantastic. for more information about big data check out dataeconomy.cnbc.com. hopefully we can have you back. coming up we'll head to what's known as the chairs and "squawk" on the more off beat headlines of the morning and then in the next hour we're going to speak with the american businessman being held hostage by workers in china. we just land ad live interview with chip starnes. don't miss that conversation. it's in a half hour's time. fascinating to hear what this guy says. by the way speaking from behind bars. a prisoner in his own company. then narayana kocherlakota will be your guest at 8:00. that's next when "squawk box" continues. [ kitt ] you know what's impressive? a talking car.

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we're in the chairs where we read our favorite fun stories. bureaucrats will go to great lengths to bring in more revenue. there are several drivers in brooklyn suing brooklyn because they say that they shortened the yellow lights so that way they can give out more tickets for running red lights.

>> that's the business they are in. >> they trimmed a half second. if you work in television it's a long time. >> is that -- >> i wouldn't put it past it. i got two easy pass tickets. my easy pass didn't work. i have no idea why. $2.45 tolls. 50-buck administrative fee on each ticket. thanks a lot, new jersey. you stink. >> they can't do tech lolg. >> you won't have an easy pass. they will take a picture of your license and charge you. >> i read that. >> it will be better. >> so my headlines are two-fold. one is not in the paper i could find. it's a survey for the first time in 12 years the u.s. tops executives preferred list. for 12 years we're off the number one spot. executive surveyed portray us as the number one country in the world to invest in. street signs a fine program. >> 2:00 p.m. eastern time. >> would call that hopeium.

my cover of the new york post. a clueless president, a traitor on the run and the evil russian who won't give him up. vladamir putin as himself. >> the post with headlines. >> because we all have problems with e-mail and i don't know if you read mossberg in the journal. a great new -- he loves it, mailstrom. how much e-mail do you zbhet >> too much. >> he says there is a program that eliminated 22,000 e-mails from his in box because it analyzed his in box, showed him what was there and what wasn't. you could choose the senders, made it easy. this is one of those. the show is over i'm going to buy mailstrom. >> john carney comes on the air, great writer, he had a great idea that i think he put out on twitter which was outlook or other mail box should have a feature that tracks the date sensitivity of the e-mail and blow them out if they are past

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good morning. welcome to "squawk box" on cnbc. i'm andrew ross sorkin. joe and becky have the day off. take a look at futures. we do have good news this morning. the dow looks like it would open up if we did it now around 60 points higher. s&p 500 up six points and the nasdaq up 14 points. let's get you through some of

the global market headlines. hong kong shares had their best day in nearly six months, china's financial markets they calmed down after the central bank pledge to a credit crunch. the hang seng closed up 2.4% in its biggest one-day percentage gain since january 2. better than expected data out of germany helping stocks in europe. in the uk, finance minister george osborne expected to announce $18 billion in spending cuts but trying to temper the cuts with promises of longer term capital equipment and infrastructure projects. gold, that might be the story of the morning, losing more of its luster as it hit as three-year low this morning. brian had more on that before. bouillon is down 7 out of 8 sessions. we'll have more on the gold fall in a couple of minutes. >> in the midst of a credit market sell-off the pimco fund

is down for june. data says that makes the fund the 12th worst performer among 177 similar funds this month. the class is down an average of 2.65% for june and 4.3% since the end of april. >> safe to say mckesson chairman and ceo john hammergrin will will have a comfortable retirement. he would have been entitled to a record $159 million lump sum pension payout. $159 million. >> pension plan. does that mean he earn it? >> you going to defend that, andrew? even as a capitalist i can't defend that. if he decided to retire this past march. according to pay tracker the next highest potential payout is less than half that amount. just $74 million possible payout for rupert murdoch.

the market cap has tripled since he took over in 1999. more on this sfrom jeff sonnenfeld coming up later today. >> and those paid ads you see in search results, they need to be better identified as such according to regulators. the ftc sent letters to internet firms including google, microsoft and yahoo! that paid search results are less distinguishable and the companies need to make it more clear when search results are paid for by advertisers. i usually know. i don't think i click on too much. >> the regulators assume everybody is stupid. time for a couple of stocks to watch. bed bath & beyond expected to report earnings of 93 cents a share. the retailer reports after the bell. monsanto expected to report $1.60 a share, that report out before the opening bell. general mills out with earnings,

matching estimates with profits at 53 cents a share. revenues above consensus. the year projection short of estimates. >> the cnbc all america economic survey finding more upbeat mood but a shift in the way americans think about financial lives. senior economic reporter the founder of the all america survey steve liesman. >> in its sixth year i might say with pride. here's the story. we've seen haeing of woontds of the financial crisis but they may have left permanent scars. what i want to show you first off are the more recent results and what you see is a more upbeat america on the key economic gauges. we did is compare this to the average since 2008 over this economic growth period. over this course of time 33% of americans expected wages to increase. now the june survey up to 41%. over the survey, 23% expected home values to increase.

now up to 38%. looking at those who judge the economy as poor, kind of like damming praise, it's down from 54% average down to 40%. i want to show you one other really key indicator because one of the things we found over the six years is views on home prices are the best indicator for views on the economy. you see this jump over the course of this time period, they averaged expectation for home price gains of minus 0.6% now up to 3.1% for a big jump. you can see the averages over here and that's part of that buoyant more optimism that's out there. hold on because that's the recent stuff. we went back and looked at a question we first asked when we started this back in 2007. has your standard of living exceeded, met or fallen short of expectations. you see a drop from 2007. 22%, 12% saying the standard of living exceeded it.

look here, fallen short of expectations that jumped a lot. this seems to be one of those more permanent scars that happened from the five years of lacklufrter growth in america. let's look at the individual groups that be out there and what's happened. if you have a high school degree or less now it's negative. some college, just barely. really zero. only bem post-graduate degrees are the only one who is haven't really changed their opinion of the world or standard of living since 2007. no investments, you've gone down from a positive to a negative. if you have investments of 50,000 plus you still dropped but on net this group is positive. and then look at how important income is in determining your view. what is interesting this is a big drop but this group is positive. and those on the lower end of the spectrum, less than -- they are also among those most pessimistic. recent numbers, better than they were but compared to 2007, before the recession, americans

views on standard of living a pretty big drop. we'll be back at 10:00 a.m. with americans where a college degree is really worth it. >> thank you. let us talk about the results with our guest host, roger altman, chairman and founder of evercore partners. steve liesman wandering over from the wall. strolling over as we say in the morning. steve, great stuff. roger, welcome. good morning. what do you make of the results of the survey? >> i don't think they are surprising but ihi in what bernanke said. i think it's gotten lost a little amid the market reaction. if you watched -- >> what do you think bernanke said? >> to me the most note worthy thing he said was the upward revision in the fed's economic forecast which was if you step back and think about it really impressive. the fed is now -- >> economy is getting better. >> well the numbers. the fed is now forecasting, the fed is not exactly known for going out on a limb. the fed is forecasting 3 to

3 1/2 percent real growth, stroong figure. and the unemployment rate coming down as low as 6.7 to 6.5 at the end of the year at 7.6 now. so really by objective standards a strong year. and in that context i don't personally think that what's happened in markets over recent days at least in terms of direction is surprising. maybe the sharpness of the sell-off in the bond market but not the direction. so many came on this show in recent weeks and even back from that, saying the same thing, which was, when markets see the end of qe coming or sense it, they will backtrack, maybe overreact. then they will settle and then will focus on improving economic fundamentals in the u.s. and the u.s. economic fundamentals are improving more than most people think. >> if that's what they said, roger, why do you need to be here to explain it? wasn't it a lousy job of communication?

>> well, that's a separate debate whether bernanke should have been as chatty as he was and so forth. that's a separate question. i do think coming from the federal reserve to talk about an economy that strong is impressive and the real point is, it's very encouraging. >> if you were picking that up in the survey which is a good thing, i think the comparison with 2007 is scary to me when i look at the idea that americans are downbeat on where they are in life relative to where they thought they would be. i think that's important. >> hold on a second. so many surveys show right now, deep pessimism about the economy. i saw a survey that said 59% of americans thought the economy was still in recession. i don't think that's surprising give at any headlines if you read the headlines and you have a little bit of a little blinders on you say wow, washington is such a mess, therefore the country is a mess, therefore the country is stuck, therefore the economic outlook is poor. actually while washington may well be a mess, the country is beginning to recover and it's

going to recover pretty strongly i think it's going to surprise on the up side. >> one stat on wage growth. expectations of wage growth. so tell me if i'm wrong, the expectations seem high there was going to be wage growth. in reality there has not been. >> there has not been but they believe, it's a forward indicator, we don't really know if they end up being correct but it's the expectation that we're interested in. >> which is telling in and of itself. >> can i quibble a little with roger in that my experience is that you cannot tell people something about their economic reality that they don't know in real life. in other words t idea that people are saying we're still in recession speaks to me that not that they don't know the data but they do know the data and what's happening in this economy has not filtered down to the people answering these surveys. >> again going to the fed's outlook why is the fed that optimistic. one of the things was the improvement in the health and the direction of the consumer. and if you just look at what's

actually happened with household balance sheets, the degree to which they have been fixed is surprising so for example, households are now spending as low a percentage of their after-tax income on debt service and other fixed obligations as in 30 years. now, the other point i'd make is housing of course is rebounding strongly and i think there is going to be a powerful cyclical upswing in housing. starting to going to get to 1-5, 1-6, 1-7. housing prices and activity is such a powerful multiplier and i think as americans feel home prices rising and they are and they see recovery in financial asset values, we all see household net worth reached $70 trillion, surpassing the previous peak i think the consumer is going to come back. >> that is one of the findings of this survey over six years, there is nothing that is more potent for determining your view on the economy than housing

prices. if you were a politician and you want to get re-elected find a way to pump up housing prices you'll be in office. >> it's because you feel free. if you know you can sell your home and move. mobility as you might call it. >> it's so debilitating if you can't move to a job. >> we got to take a break. >> still to come, a first on cnbc interview. captive u.s. executive chip starnes, we head to china for that interview after the break. a live interview with him behind bars. up next we add another voice as well. richard bernstein. the ceo of the company that bears his name. they are window bars. he's held hostage.

welcome back. gold this morning touch as three-year low. lower by last we checked about 48 bucks. 44. look at that one-year chart. see how it's plummeted in the wake of what ben bernanke said a few weeks ago. on the phone boris, what is going on here? why is gold selling off

dramatically? >> fundamentally everybody knows the reasons, we're basically having very little inflation, the dollar has strengthened substantially. everybody is starting to bet that serp is going away. it was a big bet. >> it's euro interest rates. >> exactly. as interest rates rise gold loses its luster. it doesn't yield anything so loses its appeal. the other thing i saw that caught my eye was this russell investment chart that shows a core cpi is at extreme lows right now. and i think all of that is fundamentally. the other reason is we broke some key levels, broke 1270. that basically continues to tumble as we go into the 1200s. but having said all this, i think that at this point both on a short-term and if you look at the longer term chart basis it is just grossly oversold.

we're down seven out of eight days, due for some reprieve and a bounce and from a long term perspective there is a lot of support between this 1,000 and 1200 level from a couple years back. i think you're going to start to see longer term bargain hunters nibble a little at this level. >> you make calls, larry kudlow is worried that desflags a possibility. >> i don't think it's signaling -- it could be fearful of deplags but i don't think we see deflation yet. >> let me ask you this. everybody's printing money, gold's going to 2,000. what happened? never worked. never happened. >> yeah, the problem with that analogy was that there's two components to printing money. you have to precipitate money. the velocity never caught up so the fed can print money forever and the japanese problem, as long as everybody stays in cash,

you don't have a huge hyper inflation problem. >> got it. good to see you this morning or chat with you. american executive chip starnes being held hostage by workers in a plant in a dispute over pay. he joins us live and we warn everybody there is about a 4-second delay so when we ask him the first question it's going to take a second to respond. mr. starnes, great to have you here on cnbc. what is your current status right now? >> yeah. the status right now is everything is a standstill is where we're at. >> we understand actually that you could leave if you wanted to. is that correct? what is physically preventing you from getting out of there? >> the people. the people themselves.

i can't leave. i'm on lockdown. we have a situation that has to be worked out with the workers here. it's considered a civil dispute, monetary between us and the workers. and the first couple days, three days, thoughts we could get it worked out, surreal, not real. but it's real now. i'm going on five or six days. luckily we're in some pretty good negotiations right now. i think we're going to get everything to an end soon. >> chip, it's brian sullivan. what do you think would happen if you decided to try to walk out? >> you know, i tried that the other day and they kind of locked arms and jump in front of me and keep me from leaving. they are under the impression if i leave, that i'm not going to come back, the factory is going to shut down and they're not going to get their severance packages so we're kind of stuck in an in between situation here so i'm kind of being forced to

pay severance packages to people who still have jobs. that's been my i'm sure would be anybody's issue. >> chip, obviously this is a bizarre situation and a strange way to negotiate severance if not salaries. may be hard for you to answer this question honestly but when this is all over would you want to do business in china again? wouldn't you want to go home and take your ball with you? >> you know, you say that but unfortunately i've got a lot of balls here. i have a lot of machinery, i've got about 100,000 square feet of facility. so i'm stuck here and you know, i think it's in the best interests of the local area here. definitely in the best interests of the people that i employ, for us to come to some sort of solution. they got kind of spooked. i was considering moving a portion of our business over to

mumbai, india because i've been experiencing labor shortages and as you all know on cnbc you know we lost probably 25% on the excha exchan exchange so it has more attractive things over there. especially. but labor related as well. so -- kind of you know, that took a life of its own. >> how do you feel about the way the authorities are handling this or in this case not handling this situation? >> yeah, that's the most i think disappointing part of the whole thing. i've been in the area a long time. at one point probably five or six years ago we topped over 600 employees. and they look at it as a civil dispute and you know, they don't get involved. china looks at things differently where they say the people run the country, not the government runs the country. if you're out and you get out in the rural areas i'm still in the beijing district, on the

outskirts like this, it becomes a little bit of the wild, wild, west. you play out here you got to play in their play box. >> you do, chip. effectively you are in charge of your own ransom if you want to call it that, as you noted there is a monetary difference between you and the workers. do you have the money to pay what they would want? >> it's extremely difficult. pull in that much cash outch your cash flow, that's an unexpected expense and quite a big one. to pay to someone and basically being -- to re-encourage them or get their believing that you're not going anywhere, it hurts a little in the pocketback. that's for sure. >> for those american investors, business people watching this program i know you said you have a lot of balls there, you started doing business there at least six years ago.

would you tell them to do business in china or is this -- you would say stay away at this point? given your experience. i mean, the image is horrible because it looks you're almost behind bars there. >> this is probably walk around front now. this is just a window to my office and the first two or three days i wouldn't get on the outside there so this was my only access. you know, i have been. i have been in beijing for ten years now doing business. i think beijing, obviously it's got a great workforce. i think you got to pick and choose the products that you want to bring to china now. the injection part of our business is laborious, requires a lot of people to do it. we started to feel the impact a year, 2 1/2 years ago when the labor shortage started so we had to start looking to make some changes there. now in other high growth side of our business, our stashl alcohol

prep pad business which is clean room type of manufacturing requires a lot less labor. one-to-one ratio person per machine. that type of manufacturing is good. so china you got to look at it more different. more educated, younger population so you have to pick and choose what you're going to do here for sure. i would say that it's still a good place to come. >> you talked about the foreign exchange that you're taking, talking about the shortage of labor. tell me about the rise in labor costs. what have you seen in terms of percentage rise and i assume that's one of the reasons why you wanted to move some jobs to india. >> yeah. absolutely. i usually, you picked up on that one. i mean, labor rates have obviously over the years have gone up threefold. social benefits, 40, 50% of salaries. so you're right. when you're dealing with a

commodity type item, it puts strains on things and forces you to consider other areas. >> this has been amazing to interview you, the technology, by the way, is another thing we should talk about that we can do this like this. it does look like you are behind bars. those are made of wood, right? or metal. >> yeah. these are metal. >> just to clarify, you're being fed, i'm sure thereth is stressful -- >> they are usually used to keep people out, not in. >> just to clarify, you're being fed and allowed to sleep. what are the conditions so we understand? given the imagery here. >> conditions are fine right now. could have probably gone outside over there and done that. right now, four or five days in probably gives the wrong impression. in terms of food, water, other

than the first day all that's okay. so really it's just about negotiations right now and coming to a happy medium. >> chip starnes, good luck to you. keep us informed of your condition. i know eunice is on sight so good luck to you and hope you get out soon. >> thanks for making that happen. >> when you come back to the states, chip, you'll be a guest host on "squawk box." >> you will. >> or street signs. >> i appreciate that. look forward to it. thank you. >> good luck. >> coming up, it's early and we like good news in the morning so up next why a meeting at yahoo! yesterday may have been the happiest in a decade. and to the top of the next hour, an interview you can't afford to miss with the man who heads up the minneapolis fed. happy 143rd birthday at the atlantic city boardwalk which opened up today in 1870. and back with more after this.

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now the answer to today's aflac trivia question. where and when was bacon first made? the answer -- china in 1500 b.c. all comes full circle. welcome back to "squawk box." mortgage rates are now at the highest level in almost two years. a weekly report from the mortgage bankers association, the 30-year rate at 4.46%. up 29 basis points in a week. mortgage applications fell 3% from the prior week. we're an hour away from the third and final reading of first quarter gdp. economists don't expect a change from the prior estimate which put first quarter economic growth at annual rate of 2.4%. microsoft making the latest update to windows available for free today. this version of windows 8.1 is what is called is a preview

version intended for developers though anyone can download it. the final version will be released to the public later this year. >> up next john riding on why he thinks unemployment will get to below 6.5% by the end of this year. a check on the markets this morning. futures suggest a positive up. i turned 65 last week.

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let's get more on the state of the economy with the fed needs to do to go forward. joining us is john ryding on the set with us as richard bernstein adviser, roger altman is here as well. john, make the case. you think employment's going to improve dramatically by the end of the year. >> no, by the end of next year. a little dramatic tease away. >> the tease was wrong? i'm shocked. >> will fall below 6.5% by the end of next year. that's the threshold for the fed's considering raising interest rates and throws into question whether the fed could wait as long as the middle of 2015 before hiking rates. we've seen two things going on.

one, continued steady job creation close to 200,000 a month. the second factor is continued decline in labor force participation as the population ages, some people have dropped out of the labor force and the longer this has gone on it seems to be less cyclical. i can't find a job, than structural for whatever reason people aren't going to seek jobs, they are getting old, approaching retirement and using disability as a substitute for unemployment insurance before drawing on social security. so those two trends together are driving the unemployment rate down faster than the fed thought and there's a number of federal reserve banks including chicago and new york which are relatively whose economists reach the same conclusion. >> it's interesting because a lot of people attributed the equity sell-off to the idea that maybe the economy isn't ready for the fed to do what it's doing and they may have to step back in. >> in fairness, the equity sell-off has been minute at

least in the united states compared to what we've seen in the bond market. we have an equity market on a tear, had not had anything approaching a correction and needed an excuse for correction and the adjustment with bond yields has provided that excuse but it's not a massive 10% drop in the markets and we've had days like yesterday and perhaps today where the market finds its legs after a relatively small correction. profits are high in the economy but the growth in the equity market prices over the last year reduced the cushion between p.e. ratios and bond yields. that diminished cushion tells us the market is probably overdone and needs to consolidate. >> john, hold on one second. so we've seen in the sell-off is both an equity sell-off and a bond sell-off. >> correct. >> so a lot of cash. that has to come back at some point. if what john is saying is right, when people make the choice between bonds or stocks they are

going to go to stocks. is that a good conclusion? >> i would agree. you take what roger was saying about the economy getting better and what john is saying i mean, naturally the play would be stocks. and i think, and i would add one more thing. what people are finally beginning to realize is some of the problems that are going on around the world, remember i told you to book your ticket to emerging markets. people are starting to understanding the gravity. i would say not just stocks but u.s. stocks. which i think people can't fathom that the place to invest in the world would be the united states but i think that's going to be realization. >> how do you explain the falling gold and where it goes? continue to fall? >> yes. i think so. to me, this is very straightforward. inflation expectations are plummeting. massive over capacity around the world and the dollar is appreciating. that's not the time to buy real assets period. >> i don't think the question with all due respect how do we

explain the fall in gold. how do we explain gold's rise for no particular reason than a bet on the fed is going to destroy the world through inflation. >> if you look at the trade dollar index that has expectations of the future embedded that troughed five years ago. five years ago. why would gold go up. there is obviously a period that was very speculative. >> john, weigh in on gold as well. some people are fearful that it's a deflationary signal. >> well, not north of $1200 an ounce. maybe if it were $300 an ounce it would be deflationary signal. we have argued that the world is shifting investors are shifting from the debasement of currency trade as the theme driving the markets to a stronger growth trade and the beginning of monetary tightening. it's absolutely right. it was first seen in the dollar. we didn't see gold make new highs when the fed started to do

quantitative easing. no one knows where the true value of gold is but it's gone up on a rise from $250 an ounce back in 2000-2001 up to $1800, $1900 an ounce before we run into the latest round of quantitative easing. there has been a lot of inflation price inned. if the future is a little bit of inflation priced in gold is overvalued. no one knows what its true price should be and there's a lot of more vus, the potential for liquidation. we are bullish to bearish on golderier on the shifting theme from debasing currency to stronger growth. >> john, good to see you. thank you for joining us. >> thank you. coming up, yahoo! ceo marissa mayer holding her first shareholder meeting and taking the job management, jeff son

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yeah hoor ceo marissa mayer leading the company's first annual shareholder meeting since she took the helm. jeff sonnenfeld is in irvine, california this morning. you weren't there, wrp you? >> no. i was down the road a little bit from it all. the reverberations down here were positive coming out of that and the rare good news headlines on the ceo front. >> when i think about her it's a remarkable sort of sea change in how people think about the company. but the company itself hasn't fundamentally changed yet. >> you know, that's a great question. great point. many times people talk about the symbolic nature of ceos as if they don't matter. the symbolic and substantive nature are intertwined. it really does matter.

she's had major moves, she of course the flicker and the tumbler moves are great addit n additions to the portfolio bringing them into a younger demographic. redesign of the website has been i think a substantive move. the 25 hits and the news feed has been successful and quieting taking out maybe 1,000 jobs without a lot of macho there. with that to have employee morale soaring. the last decade depending how you count them seven ceos in 10 years, three in the last three. >> but at the same time you talked about the cult of the ceo can be dangerous. i'm thinking of zimmer and men's warehouse and what you see happen there. is there -- do you have anxiety on the yahoo! front or the cult of the ceo in this environment? >> if you have a great board, branding the ceo is part of the company's brand is not

necessarily horrible. even some brands sort of the same name of the person like the martha stewart situations. you think of of course howard schultz of starbucks, michael dell, brought the company back five times. there is of course a difficult challenge now, some of the changing technology, steve jobs, we've seen it work. if the board is week you have a problem. in the zimmer case we don't really know what is going on behind the scenes because you seem to have a problem there where he didn't want to apparently surrender the control, it's no longer a private company. and if he was running it as a fifdom that's a problem. why do we have a brands on the internet or fashion brands that gives us accountability, gives us a personification of a complex enterprise. it's not all for gossip or analysts to simplify. it can help. >> talking about accountability.

mckesson's chairman and ceo is set to get a record $159 million pension fund. or pension. if he leaves. how does that strike you and to put this in context, mr. grasso i think, private back then when he got that, $140 million. >> part of the issue with grasso is at that time it was a nonprofit and that's how the new york attorney general got involved is that there were limits on what nonprofits can do. it was a much smaller interprize. i'm not in any way excusing the hammergrin situation. i think it's outrageous, borders on obscene, if they think he is worth this give it to him as straight salary. the pension issue, his salvi nothing to scoff at. >> he is the highest paid ceo in the s&p 500, i believe. >> yeah. $145 million. basically 50 million a year, year after year. they say look at the

performance. he took over a scandalized company. he stepped into a company where you have a very limited amount of competition, concentration in this business doesn't make it the toughest business. and so much of their business has been feeding off the government, especially the department of veterans affairs. this is not the toughest business to run. and low bench marks because of a scanned well the predecessor. >> hold on. jeff, you know i'm an avowed capitalist but even i have a problem squaring this. and i don't have a problem with the ceo taking the money, if somebody gave me $159 million, i would take it, i would take it all in ones and pile it on my solid gold yacht and sail to st. barts. i would take the money. my problem is with the board. are they tone deaf to america? are they dumb? do they not understand what's happened that everybody -- you got to understand my mother is a high school drop-out. i didn't come from silver spoons, that the rest of america hasn't had a pay raise in a

decade? >> it's unconscionable. on top of that it's in the health care field where we have some concern about some of the undeserved profits from some in this space. but in a space like this where we're bordering on basically a near monopoly situation, you have a few players in here, highly concentrated feeding off the government and with a super sized salaries, $145 million is not enough. on top of that they came in with this hbo scandal before him with an accounting fraud so cut the shares in half because of -- this is a company with a history of accounting fraud, 50 years ago they similarly had stock swindler. >> what is the answer, kick out the board? >> you know, i know some of the people on the board. i'm so disappointed in them. people like the former head of kaiser permanente. shame on this board for i agree with you completely. how could this board agree to this kind of a payout. >> i'll tell you why they agreed to it. you know why as well as i do,

jeff. >> they are getting paid. >> no. put the graphic back up with the ceo. what else does it say next to his title? chairman. he is also the chairman of the board. >> that's not why he's gotting the salary. that's a whole other segment. >> jeff, how about if you don't like what he gets paid don't buy the shares. >> well, people shouldn't be buying the shares. unfortunately, this is an industry where you have to really work at failing. the concentration there. perhaps some of these mergers shouldn't have gone through, this is an industry where we hope will face the global contest. it's unfortunately way too domestic a business right now and you know, i'm in favor of a lot of mergers but right now health care happens to be a throwback to a highly domestic limited u.s. borders business where companies feed off the u.s. government and that's the problem, michelle, is that this company -- >> you know how i hate that when people feed off the u.s.

government. >> i figured i'd get you back on that one. >> good to see you. >> this is a guy -- >> got to go. thanks, jeff. i know you got up early. appreciate it. >> we couldn't talk about mickey airson. >> another big one. >> about time. >> that was news. >> coming up, thank you, jeff. he got up so early. 4:50 in the morning. narayana kocherlakota joins steve liesman 8:30 and a final reading on gdp and the market reaction coming your way. john rogers is our guest. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer,

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let's get final thoughts from our guest host roger altman. the former deputy treasury secretary and chairman and founder of evercore partners. we were talking about gold. >> i agree with the commentary earlier. i think gold is down because the economic outlook is up, and the deflation fears really are over. and to the degree that gold was a safe haven, against potential deflation and you could argue that three years ago we might have faced deflation, that situation has changed. and with interest rates rising gold should be down. so i think it's just the

fundamentals. >> i have two other things to talk to you about. washington. i want to talk about snowden as a former washington man what do you think the government should be doing? what should -- you talk to these guys. what should they be doing? >> i haven't talked to them about this. no reason i would. there's a little keystone cops element to this. not clear why we took so long to revoke his passport, not clear why we didn't ask interpol's assistance earlier. >> get to the core. what he did. how do you feel about what he did? >> i don't think there is any getting around the guy broke the law. and he broke the law in a serious way. >> was it justified act of civil disobedience? >> not in my view. >> especially not if he took the job with his express intent lying on his resume about i'm going to get in and steal their secrets. >> i think there is another

issue how the nsa allow add 29-year-old guy who had been there a year and a half to have top secret clearance and access to all of this material. >> exactly. >> and they didn't have double-checks which keith alexander the head of the nsa says we're going to do. that speaks to questionable levels of competence at the nsa. whether he broke the law he did in a serious way. >> one other question. justices voting rights. disappointing to you? and the implications you think for the political process, for the elections for the next -- >> let's focus for a second on what actually happened. do we really need in this country to go backwards on the voting rights act. most think that the voting rights act is overdone and we need to undermine it i don't think so. so i think it's a disappointing decision because i think what did they basically say. it's time to support states rights. really. the sovryty of states is important today. >> would you argue that the maps

are accurate that they are 30, 40 years old. some of the maps. >> do states need to be punished for bad actions? are we not got tune the point where -- >> but the court struck down was the requirement that states when they change in a fundamental way election laws need prior approval of the justice department. under the decision yesterday as i understand it they no longer need that approval. i think that's going backwards in a country that should be proud of the progress we made in terms of inclusiveness and the last thing we need to do is reduce voting. one of the problems is -- >> you think there is going to be less voting because of this? >> yes. i really do. i don't think that in a country with a lot of challenges that this is a problem that we need to solve. in other words, you know, what problem are we solving? the answer is we're not solving any problem. we're looking back at 1960 or 1950 and saying it's time to defend states' rights. >> we're still living in a world

where we're in 1960 and maybe we moved on. i completely hear you. we got to run. thank you for coming in. >> thanks. >> see you back here. that's a good topic. in the next hour, a "squawk box" exclusive, steve liesman joins us with a preview. >> thank you. you heard of the person whose name shall not be spoken. we have an interview with the person whose name cannot be spoken. narayana kocherlakota. coming in an exclusive interview. tdd# 1-800-345-2550 [ trader ] when i'm trading, i'm so into it,

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our squawk news maker of the morning, minneapolis fed president narayana kocherlakota on the plan to scale back asset purchases. >> reaction from richard bernstein. >> and you're going to get portfolio pick from a master john rogers on a racetrack owner that could make you money in the second half of the year. >> i got a message for all of them. shake, and bake. >> what does that do, blow your mind? >> that just happened. >> third hour of "squawk box" starts right now.

♪ "squawk box" here on cnbc. first in business worldwide. i'm andrew ross sorkin. our guest host richard bernstein ceo of richard bernstein and a ceo contributor. we'll have more in a moment. first, your morning headlines. >> a check on markets and while equity futures are a story because they are higher we're going to get to the biggest market story in a moment, that's gold but meantime, stocks look to go up yet again. remember like a few days ago the world was ending, now the dow up 80 points. the major markets in asia closing mixed. a volatile session there. late yesterday china's central bang could provide cash to institutions that needed it but that was not enough to quell credit fears. meantime, in europe let's check the trade there if we can.

we can. as i go to the charts the ftse, the dax up 1.7%. the cac up almost 2%. your big story, all you gold bugs go back to bed because we're watching gold and not for the right reasons. comex gold down more than 3%. that's a 3-year low, one of the worst quarters for gold in nearly 100 years. in nearly 100 years one of the worst quarters for gold. can you believe that. the worst quarter in 100 years. that's also a century. thank you. >> that's a bad quarter. >> very bad quarter. >> drama, it's great, isn't it. great. >> you know what, let me change my tune. >> hold on. we're keeping you up to date.

we've been keeping you up to speed on the u.s. ceo reportedly held captive by his own workers in china. the dispute over worker pay. chip starnes spoke to us live in the past hour from captivity. >> they look at it as a civil dispute and you know, they don't get involved. china looks at things differently where the people run the country, not the government runs the country. you get in the rural areas, when you move on the outskirts like this it becomes a little bit of the wild, wild west if you will. you play out here you got to play in their play box. >> guys, i think it's important for viewers to note that chip starnes if you didn't see the interview, did say he could have walked outside. he's like i could have done the interview from outside. so there was -- there was definitely -- that's why i put reportedly. i threw that in there. >> he couldn't leave.

so let's show people the wires. if i'm in the field and i have the choice of him doing the interview from behind the bars or not in front of the bars, i'm going to put him behind the bars. i'm going to tell you that right now. that's the way tv works. >> specialize in what? >> i hope eunice told him to stand behind the bars. >> drama. >> not as good as you, though. >> nobody does. >> all right. among the other stories, microsoft is giving people a free update to windows 8. great. the preview version of windows 8.1 is meant for microsoft partners and developers. anyone will be able to download it for free. the company is trying to deal with complaints about its flagship operating system. microsoft shares still up 26% year to date. >> not so bad. >> steve liesman joins us with a

special guest. >> thanks very much. joining us is narayana kocherlakota, he is the president of the minneapolis federal reserve bank. thank you for joining us. i want to apologize at the outset for the way my colleagues mispronounced your name the past several days. let's begin with what's happened to the market since the fed statement may 22. the dow down 4%, the 10-year yield up over 50 basis points. the markets seem to take this as the fed saying its policy would be tighter or less acdaytive. is that accurate as far as you're concerned? >> thanks for having me on. a real pleasure. no, in my view it's not accurate. i think the real challenge for us here has been so much of the conversation is about the flow of purchases, how much it's reduced. i if i that conversation about the front end is a conversation about the back end. what i mean by that is i think there continues to be a great

deal uncertainty about what the fed is going to do with the fed funds rate, our main policy instrument, as the economy recovers more. we've said we're going to keep the fed funds rate low, at least until unemployment rate falls below 6 fo.5%. what's going to happen. how quickly will rates rise. we said some qualitative things about that. i think those are leave a lot of room for uncertainty so all of the conversation about tapering and how fast are the flow of purchases reduced i think is translated in markets into concerns about what's going to happen to the fed funds rate. i think the right approach for us to deal with that problem is to be clearer about what our intentions are about our main policy instrument once the recovery advances. >> that was my next question. did the fed mess up. what was the mistake do you think the federal reserve made in its communications?

>> well, you know, i think we take for granted that the things -- it's always a problem you have when there are things in your head you take for granted and might not be in other people's heads. we sort of take for granted that people understand we're in the business of accommodation for a long after the asset purchases end. this is accommodation as the economy, economic recovery strengthens. that's what we said in our statement. but i think we have to do more to make those qualitative points, bring them home in a specific way. if we do that i think we'll be more easily able to deal with what really is a minor tweak in policy in terms of talking about how long the flow of purchases will continue. >> did the federal reserve, is it possible what the market heard was correct in the sense that the fed has now said it's going to do less quantitative easing and the higher yields are a result of concern that there

will be less quantitative easing and specifically the idea that the federal reserve really has a more ambitious or optimistic growth forecast than is probably warranted right now? >> i think in terms of certainly some of the movements in yields are i think attributed to people's changes in people's expectations of purchases but the model we have in terms of how much the quantitative purchases that we do maps in the term premium are in terms of yields, the reaction we've seen is outsized compare to that. part of the movement to yields could be due to a good thing wye you hinted at now, steve, which is that as the economy improves, people should expect interest rates to go up because the fed should grow less as the economy improves. that's a good thing. a lot of the movement and this is where i think we have to do a better job of communicating our intention, a lot of the movement is in fact due to people

thinking that we're going to be having a higher path of the fed funds rate than they thought for a given set of economic conditions. that's where we have to do a bet are job. >> can we look at your forecast and what your forecast is for the path of the funds rate? how long till the unemployment rate gets to 7% and what do you see happening with growth this year and next? >> so my own outlook for -- obviously any of these decisions are based on continued discussions et cetera. but my own outlook is that i think we're going to see growth slowly rise. i'm expecting slightly under 2.5% for this year which means i'm seeing a second half which is better than the first half. i see ongoing acceleration into 2014. in terms of unemployment i mean, i expect the unemployment rate to be hitting 7%, i would say

some time in the second half of 2014. and not hitting 6.5 until 2015. but steve, the whole point of i think laying out these data base markers which we have for the fed funds rate is you don't have to listen to my forecast, it's really people are free then not to pay attention to the fed's forecast of conditions but make their own forecasts. and that will affect how to accommodate our policy. >> are you among those who think that the federal reserve should begin to taper its asset purchases later this year? >> you know, i think that earlier this week i issued a statement which i think is the right way to think about that decision is the way to think about all of our decisions. we should be not being talking about dates at all but rather conditioning on conditions. so i laid out a plan where we would have a threshold like we have for the feds fund rate, for

asset purchases. that would be we continue buying assets at least until the unemployment rate falls below 7%. we might reduce the flow of purchases running up to the 7%, that might make sense for a number of reasons. but i think the main thing is try to make that communication as data dependent as possible. >> if i heard what you said earlier correctly, which is we don't reach 7% until the second half of 2014 sounds like you would suggest the fed should continue buying assets and i don't know, that the level or some other level, until then? >> i think that -- if i'm saying 7% and ends up that the economy evolves according to my forecast that we don't hit 7% until the second half of 2014, that means we should be buying assets at least until that point. let me back up for a second. i think this conversation about the flow of asset purchases is really the wrong one in some

sense. whether we keep buying through mid 2014 or early 2015, that amount of impulse to the economy, the import of that is really very tiny. the reason you're seeing such an outsized reaction in markets to our conversation is because doubts about what we're going to do about the feds fund rate. if we start tapering early, compared to what markets expect they are translating that into oh, they are going to raise the fed funds rate earliment we have to be sharp and clear that's not true. >> let me ask you this question. jim bullerd dissented because of inflation. do you share his concerns about inflation? should it be a reason for the federal reserve to act? is at concern about deflation? >> the great thing about not being a voter in 2013 i don't have to confront those decisions so i'll wait to answer you in

2014 on that. in terms of inflation, absolutely. inflation should be something that we're keeping our eye on. we have a 2% target, we should defend our target from below as well as from above. my own inflation outlook has come down a little bit from the beginning of the year, but i do see the low levels now as being largely transatory. i think inflation will come back up. >> what was actually done at the meeting? i was really unclear about it. was there a vote taken to deputize the chairman to give this time table? i have never seen that process from the federal reserve. >> yeah, i think that the chairman was asked to convey the consensus to committee. it was felt there was a lot of moving parts in what was -- the committee had to convey. and was felt that the best way to have that go forward was to have that chairman do that in his opening remarks at the press

conference. >> when you sat around the table did you imagine the sharp market reaction that you zbhot. >> i can only speak for myself, steve. risk associated with any policy decision. certainly this was i think the immediate reaction of yields, still very early days, you don't want to be thinking about five days as being long term by any means. the early reaction has been more outsize than i would have anticipated. >> thank you for joining us from minneapolis. >> it was my pleasure. >> andrew, back to you. >> thank you, steve, for that interesting interview. coming up, we heard from the fed, up next we'll tell you how to position your portfolio. barclay's head of credit staj is going to join us. and then later we'll get portfolio picks from john rogers

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u.s. bond yields on the rise. when our next guest was on with us he disagreed with warren

buffe buffe buffett. joining us is the managing director at barclay's in new york. our guest host is here, richard bernstein as well. brad, do you still, look, it's been a tough couple of weeks in the bond market. really, really painful. is bufffete looking correct? >> it has been a tough few weeks. >> bonds have been worse as roger pointed out last hour. >> absolutely. it's tough few weeks in everything. i think it does depend on your time frame of investment right now. i think over the next 2, 3, 4 weeks if rates stabilize i do think it will be tough for the bond market because of the retail investor. we'll continue to see outflows from a lot of credit-based products we look at. however, over maybe a 3-6 month time frame i think you'll get a mid single digits type return

from a high yield investment. it's going to be tough with respect to investment grade because of the rate sensitivity that you have there. >> so i can get in high yields how much right now? and if you think the market's going to sell off more i could wait and get how much more? >> sure. i think in high yield right now it's about a 7% yield. >> wow. >> and that came from we talked before when i did say that there was more up side in equities because in high yields you get 5%. the other thing we mentioned last time i was on the way to protect yourself was potentially leveraged loans which are also probably about a 5% yielding type investment. that's been the best asset class to be in over the last month. it's down probably 3/4 to a point. no more than that. that's a floating rate asset. we've seen retail -- >> it will move with the interest rate and you capture some of that. >> it's a tricky thing. it's not necessarily moving with

the interest rates. it's moved about one basis point in this move so it's really an investment not to lose money which is becoming a little bit what the argument is in fixed income where i protect myself from losing money. >> brad, isn't the leverage loan market with the huge flood of money coming in there the last 12 months, aren't the terms changing dramatically in favor of theish you arer than the investor now and isn't it really a different game than what it has been historically? >> it's definitely different than what it's been historically and the same covenant protections you had you don't necessarily have today. but the one thing that hasn't changed is you still are in the most senior part of the capital structure. so you still have a first look at the assets. you may not be able to extract as much along the way. the worst case you still would have that. i agree some of the pricing you saw in the market earlier in the year made it difficult to think

that you would have much up side. i don't think you have a lot of up side. the product trades at par and it's not going much higher. it's more protection. >> am i going to wish i bought the 10-year at 2.6%? >> maybe. if you consider that inflation expectations are plummeting right now. i think it's early to give up on treasuries. the question is where do you want to be on the curve, i'm not sure you want to be out in 30 year but there is something to be said about a hedge despite what's gone on for the past three, four weeks. >> how about you, brad? where do you think rates go on government bonds? >> i heard the interview you were doing, you know i think we had most of the reaction that we would expect. and the data dependency stuff, we're focused on credit as well. that's what's so shocking if you look at the moves. i understand it's driven by retail money. spreads for our product are wider than at the beginning of

the year. at the beginning of the year we didn't really know what the growth picture was with what was going on in washington, taxes, et cetera. it looks a little better. i don't think we get to where the fed thinks at 3%, therefore i don't think that treasuries are going to 3% either. >> it's weird if you think about what roger altman said and what's gone on with the fed actually increasing their forecast for gdp, more optimistic on the economy, spreads are widening and stocks go down. that's very odd. you know, you would think if the economy is getting stronger and that's why the fed would end its purchase of treasuries, why would spreads widen? the credit quality should get better, not worse. >> that's exactly what we're thinking. that's why if you think you need to fight through the next few weeks. in the next few months that will come to light. >> thank you so much. >> thank you. and coming up we have breaking economic data on this wednesday.

first quarter gdp revisions. you're going to hear them here first. before that, find out why mexico is restricting imports of -- look. delicious hogs. from the united states. bacon news coming up next. the best performing commodity, those tasty little buggers right there. >> they love pork in mexico. >> i love pork in mexico also. take these bags to room 12 please. [ garth ] bjorn's small business earns double miles on every purchase every day. produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less? ahh, oh! [ garth ] great businesses deserve unlimited rewards. here's your wake up call. [ male announcer ] get the spark business card from capital one and earn unlimited rewards. choose double miles or 2% cash back on every purchase every day. what's in your wallet? [ crows ] now where's the snooze button? how old is the oldest person you've known? we gave people a sticker and had them show us.

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box." looking at a live picture of the capitol. we're seconds from the first quarter gdp numbers. u.s. equity futures, unless something goes awry in the next

30 seconds, nasdaq up with 19 and the s&p 500 up about 9 points. we have rick santelli. steve liesman is in the studio. rick, the numbers. >> we lost significant amount of ground on our last look third time around on first quarter gdp, now only 1.8. 1.8 consumption, dropped to 2.6 from 3.4. the price index moved up from 1.1 to 1.2, and core personal consumption expenditure quarter over quarter sits at an unchanged 1.3. wow. this is a pretty big revision. the silver lining is it will probably make the next quarter which is not very large look a little more in line with the current 1.8 read. remember, we're about ready to finish up the second quarter, so

one month from today will be handicapping our first look, the advance on second quarter gdp. everybody's pretty much excited about the notion we could put back-to-back positives in the equity markets but i do point out that yesterday continued the march of higher closing yields in treasuries and today it is easing back a bit and the reason, 1.8. back to you. >> thank you for that, rick. steve, what do you make of that? >> there are some significant revisions to important parts of this survey. consumer spending revised down from 2.6 from 3.4. some of that in durables, a big chunk in services which is something the government does not count all that well. business investment quite a bit lower from 2.2% to 0.4. a big chunk of that in

structures. imports down than had been originally reported. i'm trying to get the inventory numbers. it looks like the economy was overall in the detail quite a bit weaker. 0.6 weaker. with that weakness spread around different parts of the economy. a lot of times you get a big revision like this it's because the government didn't count one part but it looks like they didn't count a big part of a lot of the economy here. the one thing that remained negative and just as negative was government spending down 4.8% compared to 4.9. and i'll check that inventory number. there is the inventory change. pretty much the same. it wasn't a swing in inventories that resulted in this. it's another place where you get a lot of revision. consumers spent less, businesses spent less, and we imported less. those are some of the issues there. >> all of those issues, then you think about your all-america survey and the interview you had.

seems to be mixed messages. >> at least three mixed messages in that. one is all of the survey suggests that people are more optimistic than they were before. >> a lot of that is housing outlook and i think that is real. narayana kocherlakota came and can you say that for me? >> kocherlakota. >> it's phonetic. who was that the screwed it up? >> everybody. >> i don't do that. i'm a -- michelle but it was andrea yesterday. >> i'm the toughest one here. you know that. >> we all know i don't have to mince words with you. it's usually beat up by a girl. >> i want to say narayana kocherlakota saying the market had this wrong in the sense that it was not interest rates that are going up, we may or may not adjust quantitative easing relative to the forecast and the fed has been doing a lot of back

pedaling. >> i think i should have bought 2.7. >> this is what's going on in the market right now is that the mid cycle environment is always characterized by a tug of war between the negative effects and improving fundamentals. what the markets told you in the past few days is that if the fed, this is the word if, if the fed were to reverse policy and start tightening monetary policy the economy is not strong enough to offset that. this number reinforces that. so it means that the fed is probably not going to do anything. >> what are we prettying over. it's like going from a b-minus to a c-plus. >> in my house one is summer school, one is not. >> the economy -- you agree, rick? neither one is good. >> rick is tough with his kids too. >> we've gone from a c to a d,

okay, we've had nine quarters of gdp since the big minus 8 plus change in december of '08 that have been better than this. we continue to think that the answer is the fed although you look back in time and it doesn't add up. we put more faith in the hands of people like your interviewing though this number has been so largely revised they can't even get the quantities in order, none of it adds up to me, steve. not a bit of it. and we've lowered the bar so much that you are going to give a 2.4 a c p plus. that says it all. >> that was brian. >> a curve out there. >> what if this is the new normal. if this is the new normal it makes all of the fed comments look ridiculous. what are they going to do, spend $85 billion a month until i

retire? come on. >> the alternative looked ridiculous. >> try something new. >> i agree with rick in this perspective. you bring up a very important point. we can all comment which is this. if your kid is an a student and suddenly becomes a b or c you're angry. four years into a b or c language that's what you accept your child s. parents will do that. and i think rick's point is we have learned to now accept this is a normal level of growth, normal level of growth, 3% ain't going to happen for a long time. so let's accept the fact that we're driving a 1991 chrysler k-car. >> what you're saying -- >> you start looking at the teachers when the students do poorly. we have a president who goes in front of a crowd at georgetown and says debate's over, don't debate on climate change, because i said so.

we have a fed who says ignore the big revisions, and all of the weakness in the economy, because my plan's working, i said so. we have a market that does what it's supposed to do and interest rates go up and people come on and say ignore the aggregate population because i said so. you see a pattern here? we're turning into a banana republic. >> just because you said so, and said so like this doesn't make it so. >> the fed is all that separates -- >> the fed said in my opinion, i don't want to debate climate change, the fed said if the economy doesn't -- >> that's the problem. >> i need to know more about climate change. >> i don't like debating climate change. enough. >> i got to say so that we're going to thank everybody. that's what i said so. rick, thank you. steve, thank you. yes. we're going to -- >> we needed one more metaphor to complete the student and the

car. >> the student with the car. >> we had the climate change, the hand motions going on. >> i said so. >> we have ramped up "squawk box." >> this is news that is exciting and to get charged up about. >> sarcasm. >> i'm serious. >> we're going to china now. i'm not being sarcastic. an update on the american ceo being held captive by workers in china. he spoke to us live in the last half hour and right now we're going to get to eunice for an update. thank you for that, by the way. >> oh, no problem at all. i was happy we were able to do it. chip starnes is still behind me in that factory. you probably lie see his window. he and his lawyers still negotiating with the workers, they hope to have some sort of deal soon so that he won't have to be there anymore and can go home.

american ceo chip starnes remains closely monitored by his chinese captors wednesday forced to stay shut in his office, starnes' factory workers hold him here concerned his decision to move some of the plant to india means they will lose out on pay. >> can see other departments move. what you feeling. >> starnes says the dispute is from a misunderstanding that thinks lawyers are trying to clear. and on day six of the standoff the 42-year-old boss is trying to make light of his unexpected ordeal. >> i got to shave today. was given an electric razor so feeling pretty good. i decided i want to stick with the blue shirt all the way through, sort of like my little slogan thing. >> back home in florida his wife is anxiously awaiting his return. >> i just want him home. his kids want him home. every day we get to talk to him but it's very upsetting. >> local officials are here

though mainly to bring starnes food and water. >> he doesn't want to talk about it but this is a man who delivers mr. starnes' lunch every day. in the morning he gives him mcdonald's and kfc, for lunch rice and some chinese food. >> their philosophies are a little different than ours. it's not their right to step in and pull me out. >> what more would you want to see from the u.s. government? >> i think u.s. government believe it or not they have been in contact with me, greatly appreciate it. hfrp, we are in another country, we're in china. >> and in china workers have little legal protection and when pushed can resort to violence. until a deal is made, this american factory boss will stay hemmed in. and guys, starnes is not very happy in that he sounds like he is going to be pressured into a deal that he is not really happy

with, that he doesn't think is going to be good for his company but that overall he doesn't feel he has many options because otherwise he could lose the entire factory. >> before you go, there are some viewers and myself at some level included that seem a little skeptical of what's happening here in that some people think it's a publicity stunt. he doesn't seem that unhappy for a guy who is being held in quote unquote, captivity for five days. he's shaving, bringing mcdonald's food, says he can get out. how should we think about what's happening here? >> i don't think this is a publicity stunt. i think that you know, just been so many days where he's been held up in captivity, and i think that for a while in the beginning he was really fa field goaled. he sounded very tired and stressed out. i think that over time he started to feel a little more kind of finding entertainment

out of the situation. a lot of the journalists who come in have been pointing out that this seems like a ridiculous situation. you find some kind of comedy in this situation and that's one of the reasons why he started making a lot of jokes, i think trying to cope with this very odd situation he's finding himself in. >> thank you for bringing us that story. thank you. see you soon. >> coming up, portfolio picks from a "squawk box" master. ion rogers joins us next. he has two media stocks and close to my heart, a racetrack owner that could make you money in the second half of the year. stock futures are higher, gold is lower and happy 39th birthday to derek jeter. 39. at honda,

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welcome back. let's get some portfolio picks from the master in from chicago, john rogers, chairman and ceo of arien investments. first off before we get to three picks and we will, your take on the market, will the feds pull back on qe, destroy stocks, higher bond yields destroy stocks or move higher? >> i think we'll move higher from here. i believe this is a short-term phenomenon. the markets will get used to it and head higher. >> seem to indicate that today

with a higher open a couple days after the world was ending thanks to china. a couple of media stocks. >> i think there is a lot more optimism around local television stations. companies my meredith, 13 local tv stations to go along with their better hopes and gardens. magazine is a terrific value here. gannett announced their purchase of the bielow stations. and scale matters. they are going to be larger, able to negotiate better cost structure, better feeds from the cable stiations. >> and are you campbelling on a takeover for one of these? give at any bielow deal? >> i think it shows more value in these television stations and the retransmission fees are going higher. takeovers could happen. i think meredith and gannett have their traditional print properties that will be up for maybe auction. you never know because they are going to be able to bank on the

television. >> can you see gannett transitioning fromming be a print corporation to primarily media and actually getting rid of print? that would be -- >> time warner spinning off time. time was trying to spin off with meredith. >> still a big deal. >> it could happen. warren has been buying a lot more media and newspaper broadcast properties. >> billionaires with egos love to own newspapers. >> also nice thing that happens, environment starts to change, having television and print together in the same local communities, that could happen more often in the future and highly profitable for both sides. >> it's funny in the last month everybody is focused on the fed and the volatility. despite the market being down small banks, they are up for the month. they have a reasonable positive return. do you have a view on small

banks and small financials? >> i think the banks are going to do really well in a higher trade environment so the northern trust, they are a terrific bargain and a lot of value there. a great brand. some of the local papers, sorry, local banks we think will do well going forward. >> past couple of weeks, you buying on the dip? what are you doing? >> we have been buying on the dip a lot of financials like kkr, and lazard, blackstone has gotten cheaper. these alternative financial service companies are well positioned. >> in terps of the market more broadly. is it going to get worse before it gets better? >> we're long term investors but in the short run you never quite know. being well positioned for a bright future. >> we've got a racetrack stock. >> there was three stocks. i heard gannett. >> we love international speedway. >> a company of nascar. >> exactly.

they will be renegotiating their television contracts which we think will have a surprising up side. it's fun to visit the tracks. i have been on the track at daytona, watched the race at chicago speedway. it's a fun one. >> nascar and now you're talking my world so nascar, tv ratings have struggled a bit. fan attendance struggled. you have to bet nascar's bottomed out to think that international speedway is going higher. >> i think as the economy recovers women will find their way back. daytona has new spending to improve the quality of the tracks. kansas city has a kansas cass attached. all of those are positives going forward. >> you just every stock you mentioned has been kind of a domestically oriented stock. you're not -- do you believe that stock that a company you're looking at -- the big thing has been global, flew emerging markets. doesn't sound like rur a fan. >> we're more focused on the

local markets. the economy has strengthened here. we had an economist in to talk to us and talk about how the domestic economy is going to be stronger so that gives us a lot of optimism for the future in america. >> john, so great having you. >> great to be back. >> coming up your list of stocks to watch ahead of the opening bell. we'll check in with jim cramer at the new york stock exchange. will talk tech and investment with the ceo of lycos, and plus the weekly jobless claims. "squawk box" starts tomorrow at 6:00 a.m. eastern. 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.

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welcome back the to "squawk" and let's get back down to the new york stock exchange where jim cramer joins us. good morning, jim. >> how are you guys doing? >> good. there are a hundred of things to talk about, and views on the gdp nu number? >> well, it is past tense and doesn't seem to matter, because things are being traded instant to instant and drives the bonds up and the interest rates down and people are getting used to the idea that interest rates would go to 3.0 on the 10-year,

but people are leaning on the wrong way again and it is evidence of how incredible everybody is out of position. >> and are we going to look at the yield and say, 10-year at 2.7, and that was a buy? >> no. i read a lot of stuff that says that the fed wanted to do this or that, and it has nothing to do with the fed. this is multitrillion dollar market, and the fed has completely lost control, but i love that bernanke is trying to put the genie back in the bottle, but there is going to be a yield curve and maybe sub rosa he wanted the yield curve, but we have to accept that people were in the wrong markets at the wrong time, and still in the wrong place, but it seems like a real rally going on. >> and jim, how happy or not happy about the ceo pension fund position? >> that was unbelievable, wasn't it? >> that is what we think.

>> but, yeah. >> jim, be clear. what andrew is referring to is that i went ballistic today talking about, i'm not mad at hamburgren, but i'm mad at the board. how are they so deaf to america? >> well, there is -- who is on the compensation committee? i don't know who is on the compensation committee? aren't they embarrass and if their wives and husbands were in the supermarkets wouldn't you say, how do you pay that guy? there is a compensation plan, and board of directors and the guy from men's warehouse, hey, there is a board of drirectors, and hey, it was in the contract and i washed my hand of it, and that is how it works in the corporate america, it was in the contract and we did comps. >> comp? find me one. >> i can't find them, but the compensation committee must find one. >> w names here. altoner bb bby and edwin muelle

you can send them phone letters -- >> well, they have to be proud. they have set the new bar for ceo pay. and they have given you a green light to overpay anybody if you want to. >> and he is from quest communications. >> well, quest terrific. >> what is that from "animal house" when he is going through the gpas and belushi is 0.00, and a new bar. >> and jim cramer, thank you, sir. we will see you in a little bit. >> coming up, the guest host has been richard bernstein and we are going to give him the last word when "squawk box" returns. 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.

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today a high octane "squawk on the street," ticking oil prices and falling demand and will a key report spark demand? breaking down the numbers with the head of gulf oil on "squawk on the street" today at 11:00 on cnbc. your guest host richard bernstein is not only terrific, but remained sane over the last few hours. and anything on the markets? >> well, i say that you are to keep it in perspective and this is not an abnormal situation for the fed, but a normal mid-cycle environment where you have a tug of wa war war that i said about improving the fundamentals and the tightening of the monetary policy. it is normal and it does not mean that the bull market is over. the bull market is over when the fed wants -- i don't mean that they want it -- but they want it to be over.

>> richard, hopefully that is not going to happen. >> well, no, question are far away from that. is the fed tightening credit? >> you know what we are not far from? 9:00. thank you, guys. join us tomorrow. "squawk on the street" begins right now. a lot of the movement, and this is where i think that we have to do a better job of communicating the intentions, a lot of the movement is in fact due to the people thinking that we're going to be having a higher path of the fed fund rate than they had thought for a given set of economic conditions. >> fomc member narayana kocherlakota adding to the conversation. i'm