welcome. joe will be back on monday. today is the last trading day of the month of the quarter and the first half and stocks have been rallying into the end of the week. right now the dow is on its best three-day winning streak in 11 months, now recovered more than half of its recent steep losses, but with just one trading session to go, the major average's monthly winning streak is in jeopardy. the s&p has been up and the dow is down 0.6% for the month, the s&p is off by 1.1% and the nasdaq has lost 1.6%. don't let that bother you, though, when you start looking at the year to date at this point, the dow is up nearly 15% for the first half of the year. that makes the blue chip index poised for its best first half since 1999. yeah, nothing to sneeze at here if you can at least hold on to those gains you'd still look at a really good year.

the u.s. equity futures are indicated higher. dow futures up by 34 points. s&p up by over 5. early trading, european markets, thingses have barely budged. barely worth mentioning. cac is down by 18 points. otherwise sitting at the flat line. in asia you can see that the nikkei was up about another 3.5%. a lot of volatility including volatility in china where you saw the hang seng up by about 1.25% and shanghai composite up by 1.5%. brian, over to you. >> becky, thank you. stay with the china theme making headlines. china's central bank taking steps to try to calm market fma. they said that policymakers would adjust liquidity in the banking system to keep financial markets stable. these are his first public reports since a cash crunch last week. speaking of monetary policy. pay attention to another chorus

of fed speakers stateside. jeremy stein, richmond fed preside president, cleveland fed president sandra pianito all set to give speeches and bill dudley addressed the market and chairman ben bernanke's news conference. >> all we can do is be as clear as possible in terms of our xhien indications and i think that, you know, to be really fair to the chairman he was very clear about what we would -- how we would likely behave under a particular set of circumstances. it's perhaps possible that the market overweighted, you know, the likelihood of that particular set of circumstances because life is highly uncertain? and dudley not alone in his opinion that the market overreacted. here's goldman sachs ceo employed blank fine on closing bell yesterday. >> i think the market understood and overreacted. if you parse through the word,

chairman bernanke said we'll be very data dependent but if the data reflects growth and very much focused on unemployment specifically then we'll ease ourselves, taper ourselves off of quantity tiff easing, he said potentially by the end of the year, not necessarily if the data doesn't support it. the market, of course, took this as, oh, my god, it's the first moment and it was going to be an avalanche and, of course, that doesn't necessarily have to be the case. >> and we'll talk more about the fed and the markets throughout the morning with our newsmakers. they include colony capital's tom barrack and ron baron from baron capital. >> big show. we should note there are a number of stories out in the papers this morning looking at the future leadership of the fed. it's a topic we talk about often. the white house now reportedly assembled a short list of candidates to succeed chairman bernanke. treasury secretary jack lew is running that search. he said to have put together a short list with the help of several senior white house

officials, no word -- >> does this mean he's definitely leaving? we've never even heard the official he's out of here and the white house has a short list of successors? >> well, we have heard the president effectively as larry said last week -- >> the white house came back and said they weren't firing him but now we have a short list of successors? >> they need to do this. this is sort of the background work that needs to be done if you think that ben bernanke is going to be leaving. we should also note because people are fed watchers when steve liesman says certain things people take it seriously. when john writes in "the wall street journal's," his byline is on the story. take it for what it's worth. in that story they say no word has been exact yet on who is on the list but, of course, as many people have suggested recently fed vice chair janet yellen is probably the front-runner. we've heard about her a lot. larry summers has been named. some people say he's a bull in a china shop and could be

difficult and a consensus-driven board like the fed and, of course, there's time geithner who told people he doesn't want to be considered but others say if the president calls you, you take the call and say, yes, mr. president. >> that's what they said about ben bernanke too. i don't understand the white house backtracking from that statement. i don't think the president meant it as a slight -- i don't understand how you come up with a short list before bernanke decides he's leaving. >> i don't think the short list is official. this was all based on sources. two, if i'm making assumptions my working assumption is ben bernanke has had conversations with the president suggesting he might want to leave in which case you need to take some steps in advance if that were to come about. >> i don't defend the white house much in terms of their organizational ability. i think we know that they tend to communicate. >> want to do planning. >> exactly. if we're sitting here parsing the words of ben bernanke so

closely how closely might the market follow who then would become the next fed chairman? >> i think it's incredibly important. >> i think they need to throw it out there so the market has an idea -- it's a shame intrade doesn't exist anymore because we could bid, it's 2-1, yellen. she's a dove, therefore interest rate also remain low therefore the bond market doesn't have to shift so i would actually give them credit for maybe throwing this out there if, indeed, that's what they did or maybe he met somebody in a parking garage in a trench coat at 2:00 in the morning. >> see if there's any real campaigning going on. when the first stories about yellen started coming out there were scuttlebutt there were people inside the fed who wanted to put january fete yellen in that pentagon and actually you needed to start -- you needed to almost prepare the markets for her because she wasn't as well known to the markets and so now if everybody is used to her, that's something that people would feel comfortable with. people know larry summers and tim geithner. if you were to bring on somebody, sort of out of left field, people talk about alan

blinder, other professors, other economists and whether you bring them in, does it shock the market. >> i think the market will be a little uncomfortable no matter who it is. they're very comfortable with ben bernanke. he a student of the great depression, how he looks at these things and feels comfortable with him because he got them through a horrific period. i think any new person there is going to be some questions that are raised. a lot of the big investors we've talked to on the program said that. >> i think, listen, if he pulls this off, right -- >> the tapering -- >> if we have a soft landing and no epic collapse anticipate dpoeld doesn't go to 5 you thousand and people don't build bunkers in their backyard which many have done bernanke -- >> but it's not him pulling it off. >> he'll set the stage. >> that's the one reason i thought he would stick around is i didn't think he would want someone else to be in control of undoing what he had built. >> like "squawk on the street," big ratings rth i always say it's "squawk box" that gave them

those numbers. >> thank you. >> they set it up they had the easy job of taking the ball and running. >> you're kind. one thing, not to -- >> i think you would want to control the whole thing. >> not to comment on who is going to take the role but, you go know, people talk about janet yellen as the potential and talk about setting things up. in fairness to her, because people think she's sort of an out of the blue -- the most -- she's the least out of the blue because she was there the whole financial crisis. she was the deputy. >> just an unknown quantity. >> just an unknown quantity but in many respects a lot of people on the board would say that she is as close to ben bernanke -- >> a lot of people on the board would say that. there are a lot of investors who feel uncomfortable and have told me this off the air and told us this on the air. >> she's known as being more dovish. >> than even ben. >> which we're not referencing birds. we're talking about the propensity to keep interest rates lower for a longer period of time, which maybe they could be viewed as inflationary.

some would say yellen would be the most inflationary potential pick because of her dovish views. >> plus, she might take -- >> advantage of the situation. >> stagflation. >> you're right. >> she potentially would take longer to unravel all this. but having said that, i think that they're kind of on the same page, you rarely ever hear that they are in a different place so i think that she would probably go along with plan to the extent you like the plan, i'm not suggesting the plan is good or bad but if the plan -- she would probably go along with the plan more than anybody else. >> if i was ben bernanke and had a wicked sense of humor, next press conference, just get up and start speaking french. bonjour mon amie and watch everybody panic. what would happen? >> it happens to the dow. >> we'd have a lot to talk about. go -- [ speaking a foreign language ] >> i would say thanks. >> you would say merci.

the senate passed sweeping immigration legislation. that legislation would provide millions of undocumented immigrants a chance to become citizens. 14 of the senate's 46 republicans joined all 52 democrats and 2 independents in the support of this bill. but house speaker john boehner said that the measure was dead on arrival in the house. also, lawmakers are scrambling to introduce some last-minute bills to try to keep student loan interest rates from doubling on july 1st but even supporters say it is unlikely that any measure would pass in time. the u.s. executive who was held hostage by his employees in china is back now on u.s. soil. you got to remember he reached a deal to pay the dozens of workers who demanded generous severance packages even though they weren't being laid off. our cameras caught up with chip starnes when he landed yesterday. he shared his thoughts on the ordeal and his plans for doing business overseas in the future. >> i felt like i was, you know,

an animal in the zoo sort of like you throw the peanuts at the guy in the cage, say, hey, you're fine. you're getting food every single day, be happy. living here with everybody in the same cage and just work it out and having, you know, then having open access 0 me 24 hours a day, 7 days a week and the first 2 1/2 days being brutally tortuous and no one seeming to care. going back to china is a must, you know, i've been there for ten years. we've got millions of dollars of equipment there, we've got large investment there and so we've got to see it through and we've got to make some decisions and figure it out. at the end of the day, like i said several times, pretty optimistic guy, any bad situation you got to figure out how to make good out of it. the good out of this one is i'm out. now i have the ability to meet with my team and my partners and figure out the resolution of how to move things forward.

that's exactly what we'll do. >> we'll ask him if he's going to go back, guys. he is joining us live, 7:40 a.m. eastern time. going to be an interview you don't want to miss and ask him, hey, are you going to go back and risk this again? what's your take on china? now he can speak freely. >> i still think he's in a tough spot because as you said he's got a lot of money over there and got a lot of employees and equipment and i don't want to suggest he's being held hostage the way he was clearly when he was in beijing, but at the same time, his business is being held hostage at some level and so -- >> he's going to be like baseball in the steroid era. speak but with an asterisk, not quite freely. >> we'll see. we'll see. let's check the markets. >> no holes barred. >> it'll be fun, 7:40 each. the markets this morning, a wild week. a number of triple-digit moves in the last two weeks, the most we've had all year. guys we are as becky said at the top last day of the month and

last day of the quarter, 0.6% down on the dow. if we rise more than that on the dow it will be yet another higher month for the stock market. there's your benchmark. >> even without that if you look at the first half of the year it's incredible still looking at 15% gains which is hard to believe after what we saw happen over the last couple of weeks in the markets. 15% gains for the first half. >> best data team. gina francola. they don't get enough credit. their stat yesterday, if we finish up in the first half of the year, 80% of the time we make -- we don't just finish up, we make further gains. >> right. >> basically it portends of a fantastic second half of the year. doesn't mean it will happen but just a great pullout. oil here, a lot will be driving exceptionally long distances this weekend, west texas intermeet yacht up 56 cents to 97.61.

currencies, dollar/yen big trade, ten-year note. did you catch that? >> it was below -- it was below 2.5%. i didn't catch the move that was just here but it did move back belone 2.5%, the key level we've been watching? >> that was like subliminal. it went up and back so fast like i was just thinking of the treasury note. i couldn't know if i saw it. there we go, the ten-year treasury note, the yield, 2.45%. we hit that 2.6 this week. everybody, ha and we learned yesterday mortgage rates rose the most in one week in 26 years. >> i think that was bill dudley's point in his speech yesterday is that the market was reacting out of whack with what the fed had expected. it's very unusual for fed officials to say something like that but their point was over the longer term it's still going to be a while even if tapering does come sooner, a while before we move the fed funds. >> biggest mortgage rate in 26 years and that's a huge piece of

data. >> yeah. >> but rates are still low. >> still around 4.5%. >> i'm in the camp it won't hurt housing as much as people say because rates are still exceptionally low. some people say we're doomed. >> i think there could be a wobbling in the next -- yeah, i think there could be a wobbling in the next six months potentially but i don't think it hurts over the long term. >> east coast/west coast. it's like biggie/tupac. >> nothing is black and white, it's all gray. >> fifty shades of grey. >> where her head is, i don't know what's going on. let's check on that. the gold report. >> actually made you speechless? >> ah. "squawk box," 1, sullivan, 0. down ten bucks an ounce. not a key level media. we're simple folk. >> i tell you its think it's a psychological number even if it's not a real technical level. >> just another blow -- the people who bought it the last

couple of years, it's been a tough time. silver is even worse but people don't care about silver as much. >> it fell below $1200 for awhile yesterday, yeah, yesterday so we'll see where that hangs out. >> okay, it is now time for the gold market report. we have our friend ross westgate who is actually back in london and he's standing by ready to give us the news. we've missed you the past couple of days. >> andrew, good to see you. i had not a vacation but assignment in paris and doing slightly different -- >> oh shg, yeah. >> tough, tough. >> that's hard, i know. [ speaking a foreign language ] >> you're bleeding for me. yeah, here we are. look, last trading day of the half and of june and european equities down to the low point in the session, weighted to the downside. first time it's really happened to us so far in the session. around 6 to 3, 6 to 4, something like that. decliners outpacing advancers. the ftse yesterday was up 1.3%. still up around 2% for the week at the moment.

but unlike the states, it looks at the moment as though we'll have our first monthly fall in 30 months, 12 consecutive months of gains, that looks like that will come to an end because of the losses we've seen in europe a lot worse than the selloff we saw in the united states, foot -- ftse had wiped out most of its gains. cac 40 down 0.5 and xetra dax down also and a couple of greek stocks that are up. on the best -- in fact, at se is having the best performance. one stock, opap. the reason i mention it is because we've been looking for this company to kick-start privatization. the greek government will sell a 33% stake but there is still debate around a separate agreement which still hasn't been up there.

opap was one of these worst performers, not there at the moment but you need to watch that in terms of whether we'll get real developments as that story still rumbles on. the eu summit meanwhile, has sort of said we'll start agreeing a bank bailout resolution but most decisions being postponed until after the german election. spanish treasury yields just nudging up hit 5% a week ago, 4.82%. they're not going down today but really just a bit of caution and all these fed speakers today again what they're going to chime in with. for now, back to you, guys. >> all right, ross, thank you very much. we appreciate it. send a baguette our way. gold prices falling to 1200 bucks notably that's about what it costs now miners to produce an ounce of gold so basically we're at the price of production. miners expected to be severely impacted by the slump. >> how could it possibly cost 1200 to produce it. just a few years ago you were

talking about much fewer numbers. >> miners think alike. >> why would anybody be mining for gold when it was -- >> i have an answer. i said the same thing. i said people mine gold for a decade when it was at 500, 800 so there's no way it's 1200 bucks. that's a bs number. >> fill me in on that when we come back. >> i'll tell you why it's 1200. i w we'll talk to dennis gartman. the empire state building has received another unsolicited offer. $2.1 billion was offered for the skyscraper. the third company to make a bid. they valued the empire state building at $2.3 billion. everyone's retirement dream is different; how we get there is not. we're americans. we work. we plan. ameriprise advisors can help you like they've helped millions of others.

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welcome back to "squawk box." let's get the weekend forecast from jen carfagno. the numbers we're looking at, amazing, 93 million under the slight risk of severe weather. it's from the northeast, boston, new york, philly, d.c. all the way down into parts of the south. we bring in charlotte and raleigh, atlanta, memphis, all in that risk today. storms will bring damaging winds. that was the most prevalent type of severe weather we saw yesterday. it's a friday, got a lot of folks on the roads, vacation travel going on tomorrow as well and tomorrow while there's less of a chance of severe weather, see some storms firing into

parts of the south, especially south georgia and the florida panhandle including the beaches. pretty strong winds out here that will drive these thunderstorms and watching a lot of moisture still coming into the area so heavy rainfall will be a huge problem this morning. we've got flash flood concerns up here in parts of new york. talking about rainfall like they haven't seen since tropical storm lee. that's the kind of rain we're talking about and 3 to 5 inches of rain additional in the forecast over the next seven days there. then the other numbers are all in the west and this heat is crazy. we've got numbers that are going to be record-breaking. we take a look at this huge high pressure building up. 114 today in vegas. you go in a heat advisory at 11:00 and stay there until monday. phoenix, today we hit 119. today it's going to be your fourth warmest day, 118 tomorrow. death valley flirting with numbers like they have not even, 129 for you in death valley on sunday and the heat continues

into monday, as well and spreads, by the way, seattle gets in on the record heat, portland, all of the west getting in on the mix and los angeles they've got the cooling centers open, vegas, certainly feel the bankrupt of it, 117, your all-time record high tie it on saturday and death valley, you know, death valley flirting with all-time record high, 134, 100 years ago that was set. we're up there this weekend. we're close. guys, back to you. >> wow, jen, we were talking about that yesterday. brian tweeted something about the heat there and some guy, did you see that, someone from saudi arabia said we were 134.6. we win. >> but, nope, not verified. not verified. >> wow. wow, it's not verified. okay. >> death valley, world record holder. >> so we do win although that is such a dubious distinction. >> how long could you stand out there before -- >> me personally. not long.

>> not to bore the heck of the audience, i was 15 years old, my buddy and i went dirt bike riding. his sister took us, she was 18 and she had a car. we broke down. we sat there in 112-degree heat. >> how did you do? >> he rode the motorcycle back to vegas and found his parents who came and rescued us. i mean -- it was hot. >> whoo. >> but you lived to tell the sale. >> i was a tomato. >> our next guest is bearish on gold and turned bullish on stocks. dennis gartman is the publisher of "the gartman letter." you did tell us a few weeks ago you had been bearish on gold for some time. you think it has further to drop from here? >> honestly i don't. i think it's seen its worst. i've been fortunately short of gold long of stocks and long of crude oil, rather complicated trade that worked out reasonably well and i think it's time to go

to the surveillances. n i have been openly bearish of gold for some period of time. making the gold bugs quite angry every time i'm on television or every time i write and for the first time i'll stop drawing pain upon them. >> stop poking them in the eye at this point. you'd stay on the sidelines when it comes to gold. you say you like stocks. still like them here. >> i like them a lot. i think they want to go a good deal higher. impressed by the fact that the stock market found a low i think the other day. the gdp number was really a very frightening number yet the stock index futures took it nicely in stride and stock prices went higher again. markets that don't go down on bearish news want to go higher. i think the major trend is still upward. the economy has some problems, but i think the clarifications put forth by mr. dudley, by the other fed governors yesterday cleared the air and made it

abundantly clear the fed is going to be there for quite some period of time in the future adding reserves to the system as long as the economic data demands that they are and so i think we have to take them at their word. that probably means higher prices as far as shares are concerned. >> although the -- sorry. the fed was not -- never said the tapering was going to be pushed back. this is all about the fed funds interest rate. tapering at this point you would agree is not tightening? >> tapering has never been tightening. it was amusing to me one of the nice things about living in virginia away from the maddening crowd sometimes you can raise your hand and say, you know what, think you have wrong. notion that curtailing slowing down tapering, i hate that word but it's become incumbent. the tapering of the purchases of treasuries and agency securities was -- is some sort of tightening. no, until the fed actually stopped buying and that was going to be a very long distance in the future, they were going to be continuing to add to their

balance sheet so tapering is not tightening. tapering is simply tapering. >> my understanding was the markets were expecting the -- not the tapering but the fed funds rate to increase sometime in mid-2015 originally but based on the time line that was outlined by ben bernanke that moved forward towards the end of 2014 and that's, in fact, what had people perhaps more spooked than just about anything else. is that wrong? >> well, first of all, the fed funds rate, the overnight funding rate is 0%. if they took the fed funds rate to 1% sometime in the course of the next year, how dancing is that for the economy? i think it's not at all damaging. i think it's damaging not even the slightest bit. i will have to remind everybody i bring to the table the fact that i can remember trading fed funds at 21% so 1% doesn't frighten me and i think we've gotten a bit too used to zero

percent fed funds. we can take the whole yield curve higher over the course of the next two years. we could take funds to 1. >> do you care who the next treasury -- not the next treasury secretary but next fed chairman is. >> sure, i do and right now if you had to be a betting man you'd bet on janet yellen. that i would find a bit disconcert sghg dennis, quickly, solve the mystery. we were talking about the price of production of gold and said why would anybody mine gold the last decade if the price of production was 1200 bucks an ounce. that would be stupid. i got answers that suggested gold is now 1200 bucks. it didn't used to be because they got to go deeper, more into the jungle. inflation, labor costs are higher. it hasn't been but now it is. is that the answer to the mystery? >> no, i think that the production cost of gold is demonstrably less than $1200 an ounce. >> you do believe that. >> oh, i think it's much lower than that. i think it's probably 800 to 900. i think it's probably 1500 for some very poor miners, the

latest ones, the schlocky types that prey upon the public and bring stock out of vancouver to the public a lot. they're probably $1500 but for the good miners it's probably well below 12 and closer to 9 or 8. >> all right. dennis, thank you. great talking to you. have a wonderful weekend, my friend. >> thanks, becky. always nice to be on here. cheers. >> coming up, the last day of trading of the week, the month and the quarter and also the first half, but don't look, don't look back, we are spending the morning looking forward. we'll tell you what to think and well not what to think but have some experts what to expect in the quarter ahead. the outlook for consumers and the retail next but first a market stat of note, investors pulled $8.6 billion from u.s. bond funds in the last week that added to the worst four-week streak since the depths of the financial crisis. now as we head to a break take a look at yesterday's winners and losers. >> it was wonderful. >> bravo. >> i loved that.

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call us. we can show you how at&t solutions can help you do what you do... even better. ♪ here's what to watch for in the retail sector in the quarter ahead. it's retail's second biggest season back to school. every year kids outgrow clothing and need new pencils but the fight to win those shoppers is competitive. retailers have expressed worry about the lone consumer. look for big promotions and marketing tactics from walmart and target. jcpenney's you willman will

be under pressure. looking to sell laptops best buy will roll out its new windows stores in 500 locations by the end of summer just as students go back to class. that's your q3 retail sectornomics. i'm courtney reagan. ah, retail. many kids just getting out of school and we're already talking about the back to school shopping season but we have to, folks. that's how retail works. retail outlook. piper jaffray's peter keith joining us. the story of the first half of the year aside from jcpenney's and its problems, more of a "knot's landing.com type of thing. "falcon crest." best buy's recovery, up 134% year to date but yet when i look at the numbers, i understand why they've come back a bit but more than a doubling. is that justified for best buy? >> it absolutely is, in fact,

i'd say it's even today best buy is still my favorite stock out of the 19 stocks i cover. i think the appreciation that we've seen, excuse me, so far this year is mostly been because it's viewed as a cost cut story. there's bloated infrastructure. management new will take out a lot of costs but we've seen the numbers come up but not necessarily the multiple of the stock because people don't want to pay a lot for a cost cut story. the management team has a number of initiatives we know cuss on that we think will drive sales and gross margin before the end of the year. you'll see these layer in each quarter as we go forward. >> like what? so, peter, tell us specifically why people will go back into best buy and not just look at stuff and buy it elsewhere but actually look at it and buy it. >> sure. >> otherwise, it would just be best and that's not a good name for a store. >> yeah, i think there's probably seven or eight things. i'll give you one that we wrote about that has to deal with the number of conversions best buy

has. >> conversion is somebody walks in, looks and purchases. >> they have a conversion rate of 40% and for a big box hard line retailer -- >> is that good? >> that's pretty low. >> where does that -- >> it feels high to me. i'm worse than that on any store. >> you steal stuff. 40%. where does that stand? >> apparel retailer it will be low because people want to browse but big box retailer like a petsmart or home depot they walk in and expect to walk out with something. we view it as 80%. >> that stinks. >> i'm one of the worst consumers, i'm a big browser. i love to look but then, you know, cheap to buy but not steal. >> i can't even imagine. i want instant gratification. if i'm there, bothering to look -- >> you just want to walk out with something. >> i don't have the time to go shop around. >> is that number going up, peter? >> it's starting to go up. >> how do you change that? how do you get andrew to

actually put down the wallet and come out with something. >> this is where it's interesting. best buy studied their customer traffic and they identified there's about 19% of people that go to the store that want to buy something. they have money if their hand and they end up not buying anything. they walk out, 19%. that's right. so either they have a bad experience with an employee, or one of the big things is that the item they want to buy is out of stock. and so this is sort of basic retail 1 blocking and tackling if you get the right items to the right store, keep it in stock, you get the employees trained and you measure this which they're doing on an ongoing basis you can drive better customer satisfaction and without even driving increased traffic, without a product cycle you can drive some pretty meaningful results by taking your converse rate up. >> will they do well in the second half given where you think the consumer is? >> absolutely. we think the spending is going to get better in the second half. you had quirky headwinds in the first half, weather was kind of abnormal. you had the payroll tax increase

start settling in and then even had tax refund delays, have a lot of those behind us, consumer balance sheet is in good shape. consumer satisfaction confidence at a five-year high so we think the spending trends continue to get higher and like retailers who sell things into the home. case-shiller, spending will continue -- >> home deand loews? >> home depot is another favorite, as well. >> is there a loser we should walk away from. >> mentioned in the previous segment about the low income -- we think that is still a space that is challenged this year and so in my coverage that's the dollar stores, we think that will be an area of weakness through the rest of the year. >> peter, thank you. >> thank you very much. >> good morning. when we come back we will continue this theme of the second half outlook and be asking whether the urge to merge will return. expectations for m&a right after this. then in the next hour we will add a new member to the "squawk box" masters class.

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welcome back to "squawk box." m&a may be down 10% for the year. dealmaking sup a whopping 34% according to our next guest joining us is amanda levin, merger markets editor and matthew toole. i want to say o'toole and from thomson reuters, director of deal intelligence, one of my

favorite titles. i i'll start with you, matthew. trying to understand this, it's pretty lousy, way tonight say this stinks pretty bad. am i wrong? >> i don't think you're wrong at all. i think it's been a pretty frustrating year, probably three years for m&a watchers. >> lame. >> fits and starts. pig deals. is it merger monday and three weeks of nothing and so we're starting off the year down 9%. it's the slowest year for m&a since 2009. second quarter since 2009, as well. back to levels we haven't seen in quite some time after what everyone thought would be a great first quarter. >> i think you're disagreeing. >> i am definitely going to disagree. you know, while i do agree that globally m&a is done, mergers and acquisitions in the u.s. are up considerably. we're up 12% from last year. >> but isn't that lame in an environment -- >> it is not. >> when you talk about the confidence that's supposed to be in the market on a relative

basis for many, many years m&a, i don't know if it was a forward indicator or lagging indicator but at least it tracked at some level the s&p. if we would overlay a deal volume chart against it you would say things are completely out of whack. >> so i think what we have to do is look at the economy because the economy, the state of the economy and m&a, they go hand in hand. if the economy is good, m & a -- >> that's my point. >> it is good. we're up 12%. we've had huge deals for the year -- >> we're up 12%. >> if you look at 2007, we had the -- we had the blackstone worldwide deal. >> tipty-top deal. >> nice deal and this year we had silver lake and michael dell with the lbo of dell, $20 billion, that's the biggest lbo we've seen -- >> 12% versus the first half of last year. >> exactly in the u.s.

so the u.s. is the driver's seat. >> really a u.s. story. >> if you look at europe, asia, across the border, if you look at deals under $500 million, deals over 5 billion, it's all down. >> i'll cut one number for you because we have a lot of bankers and what i call deal professionals who watch this show in the morning and if you look at transactions over a billion dollars, it looks like to me that the numbers are down. >> they are. >> by about 25%. whether does that mean? the big fees for banks, for lawyers, for everybody involved in this whole other world of dealmaking is a billion plus which means to me this is, "a," a lousy business on this side of the aisle and other point of the week, all sorts of lawyers laid off, one of the preeminent dealmaking firms and -- >> patton boggs also. >> what does that say about their expectations about transactions because if they

thought transactions were coming back at this fast pace you say i'm not sure you'd lay off half their place. >> they may lower their fees. >> m&a fees were the only ones down so equity markets, driving the banks but m&a only asset class down 11%. >> let's talk about the banks. m&a and advisory work has always been a good, nice little high-margin business for these. not necessarily a huge piece of the bills but as it comes down do we think we'll see the wild gochal style things you'll see? what's the expectation for the rest of the year? you want to take that? >> i haven't seen a first hatch like this since 2007. these are very impressive numbers in the u.s., so my prediction is that, you know, by the end of the year, we're going to have a banner year in m&a, and typically we don't see -- the level of activity we saw in the first quarter, we don't usually see that until q4 when

people are finishing their deals, so we're going to have a great year. >> i have two friends m&a attorney, good friends and they are both dark they can work 24 straight hours right now -- >> all of my bankers are busy. >> constantly working. the deals aren't as big as they were. a lot of the deals these guys are doing a little smaller. they may not make the front page of "the journal" but they're big enough and happening, the ft, their headline in the company section is "bank fees up despite dip in deals." so are banks charging more? are they squeezing more money out of every deal they're doing? >> that story is very much related to the capital market side of things. the overall investment banking picture is up 9%, best year since 2009. but if you -- >> not straight dealmaking. >> capital markets, corporate high yield investment grade ip osby, m&a is down 11% so the dealaching piece on the m&a side

is seeing a lag but capital markets is really what's driving the overall picture. >> they're making money in the refis and corporate debt until now. >> if you look at the debt capital markets picture in june we've seen the lowest levels in almost two years on the high yield side, on the investment grade side. ipos are coming back. had a pretty good week but not performing as well as you would expect so that's -- >> matt, thank you for coming in, amanda, this was fun. appreciate it very much. i like that we had a little disagreement on this, as well. still to come on "quock box," stock ideas from market master ron baron. plus, we'll induct a new member into the class, andrew gave you a bit of a hint. he's a major investor in michael jackson's former neverland ranch. here's another hint, he counts prince ali bin talal among his investment partners. that name will be revealed -- i honestly have no clue -- we'll find out at the top of the hour. ♪

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. >> it's time to learn from the pros this morning. i hit the driving rain wall street journal chelsea pierce this week. we believe practice on a course or a driving range and performance in the market mean, you say you have not played a lot? >> i have not played a lot in 30 years. >> have you played better as an investor as a result of not

playing golf? >> well, if you play a lot of golf, it's hard to spend time thinking about investing. to be a good golfer, you have to practice. it takes time and it takes time to be a good investor. there is only so much time in this world. >> time put in doesn't always equal what you get out. it's the quality time put in. >> one of my biggest problems, we come to a place like this, you have a great lesson, fantastic. then i get to the course, it's not real turf, it's grass, it's a problem. i guess we can make the correlation to the market. >> you can do historical tests at how it would have worked it's not the same as actually having ream moiven and having to place real trades. >> how much time should you practice your long game, your short game, when you're on the green? meaning this guy has a balanced portfolio over here, if i was to balance my practice time, how would i do it? >> there you go, nipt% of golfers are out here beating the ball, hitting the ball, trying

to hit that over the fence. the reality is most shots, if you do play golf are around the short game. if you strategically look at your game, see what areas cost you the most strokes, 90% of the time you will see the chipping, the putting the chipping strokes are lost. >> are we all trying to hit too hard? this goes back to investing, whether you shoot for the moon or lay it up? >> so there are sometimes where you have done your homework, you feel confident in a certain investment. you might be able to put more of your portfolio in that than under ordinary circumstance, most of the time you are spreading your best, not putting too much on this thing going perfect, like hitting a long drive over the corner and over the trees. a lot of times you are doing that every once in a while when you have completely convinced in your mind. >> i relate it to a tachometer on your car, if you run the red

light, you blow the motor t. same thing with the golf swing, you want to use your swing and swing at a comfortable pace below the red line of the car. randomly you can turn it up a bit. if you stay, you can blow the motor of the car. >> investing in golf is mental. you have to make sure have you the concentration to follow up on the trade, good excuse, follow it every day, when things are not going well, it does make you mental. >> sometimes are better off cloaking up and staying near the benchmark. >> ain't that the truth. when we come back, we have been giving hints all morning about our newest squawk math master. nicholas sarkozy, we will unveil this investor right after this. [ female announcer ] there's one thing

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welcome back, everybody. good morning. this is "squawk box" on cnbcment

i'm becky quick. joe is you've today. he'll be back on monday. we have been watching the futures this morning and on this very last trading day of the half of the year in the quarter, the month, you can see right now the futures are indicated slightly higher. right now you see those dow futures up by 14 points. the s&p futures up by 2.5 points, even through all the turbulence we have been watching in the markets, you are looking at a dow on track to finish up 15% the first half of the year. we are keeping a close eye on gold this morning. take a look, gold this morning, bowlion is down 15% since last week. lower prices have failed to boost buyers in asia. at this point, gold is sitting just above $1,200 an ounce at 12:01. we did watch it drop below that yesterday in some of the late trading. also, the relief rally in europe after several speeches by fed policy-makers. meanwhile, european leaders

finding unemployment at a 7-84 long term for easing the eu bucket. european markets at this hour have been little changed at least. most of these markets, can you see, there are red arrows across the board him as we mentioned, it's the last trading day in june. right now it looks like it will be losing for 2013, pending today's trading session. the s&p and nasdaq have not had a negative month since october and the dow since november, here's where we stand the dow is down by 91 points. is a little more than half a percent. the s&p 500 down 17.5 points just over 1% t. nasdaq is down 54 points for the month. that's just over 1.5%. let's take a look at rim rim, the company out with everyoning, i should say blackberry. research in motion, i know you have been looking through only of this. >> i'm looking at the numbers. there's two numbers they've come out with on the headline, they were expecting a profit of 6 cents per share. on a gap basis the loss is 16%. >> adjusted.

>> still a loss of 13 cents unadjusted. you got a loss of 16 or loss of 13 to choose from the estimate is for a profit of 6 cents a share. >> revenue was light, too. their cash was up, into the quarter with more cash. they note note that release. revenue was up 15%. the ceo said the cell phone market says, we don't have visibility into the cell phone market or at least we don't have enough to give you a preview. it looks like a loss compared to a gain unless there is numbers deep, deep, buried in these things. >> it looks leak revenue is light. the estimate is $3.6 billion and ref few came in about 3.1 billion. light on both the top and bottom

line. there's shipments they came in with smart phone, 6.8 million up from the previous quarter. is something people dig through closely. what happened with the new -- >> it will be possible. they have the new phone. >> they didn't have the new phone in the previous quarter. apple is down, then you say the new phone sold zero. >> apple sold like 5 million in a matter of a week or two. have you 6.2 complete shipments. >> when did this z-10 officially roll out? do we give them all 90 days of credit, right? >> it did happen during that quarter. they say they continue to focus the efforts on the global rollout of the blackberry 10 platform. they say they're still in the early stages of the launch, already the blackberry 10 platform and blackberry enterprise are proving themselves to be flexible. it doesn't give number, people have been waiting for the exact numbers of those shipments as well. >> it looks like this z-10, the

new phone came out towards the end of the first quarter. so it's going to be very, very difficult to make the call. >> that stock is down sharply, if you want to take a look right now, where it's trading in the free market t. bid is 1166 after closing at 1448 yesterday. stock is down almost 20% on this news. we have an analyst we will be talking to later who was thinking maybe things would come in better. it looks like on every metric things are below expectations. they are not giving guidance in this release of what the exact shipments have been on the new z. the blackberry platform. >> they said they will give guidance in the future, right? >> he basically said. it's so competitive, we don't know how many units we will sell, how much we will make. >> we will try to avoid guidance on this. >> i think what becky said is incredibly important. i will give you the tip. bbry. 11.75. it closed at 14.50. yes, it will be a tough day, a tough way to end the quarter. >> by the way, this company is

now going to be under $7 billion buck, maybe, 6 billion bucks when you do it now. >> it closed yesterday at $7.5 billion market cap. it was a before it lost 20% this morning. >> 20% is 7.5 billion. it will be close to maybe a $6 billion company. >> the single trade. we have other news, it's another busy day for fed speaks speakers in several remove the markets. new york president dudley addressed remarks to last week's statement and ben ber naepg's fuse conference. >> i don't think they would send a signal to the market. i think they were trying to elucidate a little more with more clarify, how the federal reserve would behave in the economy involved a certain trajectory. it's a greater clarity. i think some market participants took that as a hint or a signal. i don't think that wasn't meant a at all. >> as for today's speakers, a lot of ears opened today,

governor jeremy stein, richmond fed jeff laquer and cleveland fed president, san francisco fed president john williams all set to give addresses today. people will beplay paying a lot of attention to those words. meantime the u.s. executive held hostage by employees in china is back in america. he reached a deal to pay the workers who demanded severance packages, our cool ras caught up with chris starnes when he landed yesterday, he shared his thoughts and ordeal and plans for doing business oversea seas in the future. >> i felt like i was, you know, an animal in the zoo, sort of like you throw the axe at the guy in the cable, saying, hey, you are getting food every single day. be happy living here with everybody in the same cage and work it out. having you know didn't have access 24 hours a day, seven days a week the first

two-and-a-half days in brutally tore churrous and no one seeming to care. >> chip starnes will join us to talk more about his ordeal, what his future plans, are what he talked about and we sort of went back and forth on this earlier how he may be more opened but not 100% opened because he still has money there. >> we'll see. >> if you bash it, the money may not be there. >> possibly. >> we'll see. >> a big interview, we will find out in the next 30 minutes. >> i'm looking forward to that. it is now time to introduce a new member of the squawk master's club, a private equity giant who has investments in everything from the world largest retailers too, michael jackson's famed neverland ranch, he's the founder, chairman and ceo of $27 billion fund colony capital. we are thrilled to have him as our guest host at the table. thank you for coming in. >> great to be here. . >> help us through, i just want to understand the way you have been thinking about the markets and the economy over the past

two weeks given what we have heard from the fed and given that you changed your positions in anything as a result. >> the good news is i'm not smart enough to understand the statisticians. so what we've done is launch an aircraft carrier. right. our businesses are all very slow moving. you start a theme, five years ago and with a little bit of luck, can you harvest it or re-visit it as time goes on. so trading the news has not been a great past time of ours. poor ben bernanke, i look at it, say you got the greatest neurosurgeon in the world who is now being valued as a very bad talk show host. right. i mean the fed does not make frivolous analytical comments. the communication now has become the tradeable mode. so we really haven't changed our view. i think the markets are

oversold. i think it's a great time to buy. interest rate sensitive stocks are the place to be. >> tom, i think we may have lost something with your microphone. >> did we? >> it sound leak it cut out a bill little bit. let me give you mean so you can talk through. stay there. it's okay? >> they actually are working now i think. sorriant that. >> i think everything dropped. it was one of those moments on tv. >> live tv. >> you don't dierp business is what we call it. what just happened? everything shut off. sorry to interrupt. go ahead, tom, it's working again now. >> but in the real world where normal people live. >> kicked. its not working. >> i think it's not working right now. but we're going to have more after the break. >> no, we will not have more. we have some. we haven't had any. >> we will have audio.

>> we will have more from tom. >> welcome to life. >> when we return. out there owning it. .

. >> welcome back to squawk. take a look at the future, we have green arrows. our s&p 500, nasdaq up close to 4 points. we should welcome you back after a little technical difficulties.

we're speaking to tom baric. he was saying so many interesting things, founder of colony capital. where we left off, i don't know where the mic stopped. you were saying things were a lot better or you were more bullish than some others? >> yeah, i think the focus on fed tapering or easing or hardening is misguided because businesses don't really operate that way. the financial industries live and die on every syllable. but somebody building a business brick by brick has to think a little more thematically than that. so i think what we're envisioning, what we're seeing is a reaction to the lack of trance parency everybody has kind of across the nation balance sheets are fixed, consumer balance sheets are fixed. 73 trillion in household net

worth. corporate balance sheets have never been better but the spinning side and net profit side are come income quite tight. nobody has visibility. >> but, we had a couple guys on in the 6:00 hour talking about mna which is sort of an interesting look at competence, when people are truly confident, they go out, make deals, that i do things. right now that confidence doesn't seem to be there in the same way, you haven't done nearly as many deals as you used to do on the buy side. you might be refinancing an selling right now. >> maybe the assets are too inflatable. >> that's where i was going with this. >> why are they so inflated? everything is cheap, auctions are so efficient. if you take private equity and have an auction and you look at mna, i thought they did a good job if bolstering the positive look at smaller deals, but everybody bids on the same deal. information is very efficient. the same banks provide financing on the same transactions. and it's who has the ability to

accept the most pain? right. the lowest cost of capital will survive. and amazing on the debt side, we got back to covenant life 2007 as quickly as we could, but the world of private equity moving towards mergers and acquisitions was running towards the exit door. right? so ipos redeploying the capital from the 2007-2008 vintage funds was priority number one. >> you look, leon black said i guess two months ago, he said i am selling everything that is not nailed down right now. i mean, given sort of the environment we are in, he thought this was sort of a great high point in the world. do you disagree with him? >> no, i would never disagree with him. he's much smarter than i am. he's done a great job. for his cost of capital, he is right. he is forming private equity capital looking for returns in the 20s. there's never been a better window where there has been no

rick premium. right. this run to yield, this run to harvest yield and lower costs of capital provides an exit higher cost of capital. does that last? >> so the guy, if i'm hearing you right, guys like you that are big that have great relationships that got good credit, your cost of capital will be low. >> right. >> you buy during the hard times because you can. when things get good, you sell to all the players. i don't want to call it marginal players. you get my point, who are then able to get back into the mark, they have access to credit and capital? >> exactly. and that, my friend, how warren buffet gets rich, how you have gotten rich. it's buying when nobody else can or will. >> absolutely. >> so it sounds like you are also now saying we might be at a top. >> i think so. >> which asset costs? . >> well, if you just look at what's happened in the last since may 22nd, right. we were in an environment where everybody said i want interest

rate sensitive stocks reits have been the favored child of every asset class for the last three years and they got crushed. did anything change? nothing changed. the change was inflation expectations. there is no inflation. you still have the dividend. you still have unbelievably well executed balance sheets. but if you are an etf and are you nervous, you need liquidity, can you sell the stallers, you don't short the laggers. so i look and say what's so about, where do you want to be starting at that time reits, i think the stalwart reits are the best buy on the market today. >> tom, real quick, neverland ranch, when are you going to sell it? >> we are just figuring it out. we're waiting for the estate and the kids, they want a special place. michael was a special and unique

person and there is a lot of combined thoughts that had to do with the estate and john -- >> do you spend a lot of time with the jackson kids and the family trying to physical this out? >> it's john brampgen who did an unbelievable job in mapping that estate. he took an unbelievable tormented personal balance sheet and has created an unbelievable opportunity for those kids and the mom. >> okay. we'll talk more about neverland the markets and a lot more with tom in a little bit. >> for now we got to get more on the company formerly known as research in motion. you know it as blackberry. joining us is dan ernst. they don't appear to be quarterly earning, what number do we come to the consensus forecast? >> well, there was a 10 cent currency charge, so, you know, i guess that would put it at a loss of 3 cents, but consensus

was north of a dime. i think we were 11 cents, so -- >> 11 cents a pop -- >> the earnings are less of the issue this particular quarter. it was more about how is blackberry 10 and how is the transition to being, you know, a new smart phone company. that transition did not look great. you know, units were down significantly year over year. they sold 6 million handsets vs. 7.8 last year. we were looking for about florida they did not give us the mix of the new blackberry 10 device, bub it's definitely below, the worst number that we saw is that service revenues fell about 20% year over year and the company had guided to only single digit declines, so the service revenues are relatively predictable and

they're a function of a new contract that they had with the carrier to get them to carry blackberry 10. the fact that that fell off so significantly quarter on quarter and year over year is relative guidance giving you recurring fees is a bit beguiling. it will be probably the number one question of the call. >> is that because of the members of phones that they sold are more geared towards the new ones? why would it be such a much bigger miss than the guidance street? >> yeah, i mean, that's what you would assume, but in order to get that big a number, we'd have to see subscribers fall off a lot harder. so the handsets could be all sold to people just replacing and then subscribers could keep falling. so, obviously, the subnumber, which they've given and the printed results was probably significantly negative. >> yeah, i wondered why they didn't give that number. does that give you cause for concern they won't release itself, they're obviously going to be questioned about that on the call. but does that show the number is

not something they're eager to share? >> yeah. i mean, historically, they've not ever given message. this is the first time in the company hardware mix is a pretty important thing. then the sub number is the number you used to give until the call. >> dan, at this point in terms of valuing this company, how much is it actually on the revenue and their profits and how much is it about a takeout price, a breakup of the company, a seam of the intellectual -- a sale of the intellectual property? let's get down to brass tax here. i'm not sure as an operating company people are valuing. >> a year ago they had a similar mess. we upgraded and had a buy on it on the ability for them to sell themselves. the service revenue alone was about $4 billion a year. we estimated it was due about 1.7 ebitat. enterprise at the

time the stock was $7 was 1.7 become a. very digestible physical for a glebl new yorker. however, in the december quarter when we learned the service revenues was going away under the new contracts that, takes away in my mind 100% of the value. 100% of the profits in the last year were generated off of service revenues. now the question for r.i.m. or bookberry now they are a hardware company. we know not only today over the course of the next two to five years, that i have to make money selling hardware. certainly it's hardware powered by software they krochl more to apple they should have better margins. now we know there are also a niche provider. there is not a whole lot of manufacturing when you outsource it, you get a great margin on low volume. >> so handicap the outcome? >> before that, can i give an update on the stocks? down 17% right now on free

market. 17%. it's going to wipe out a lot of the year's gains. not all, much of them. sorry to interrupt. >> yeah, well, i will be surprised if that doesn't exsell, unless they have some, you know, significantly different news on the call, but, you know, certainly one should never have expected the turn around with the new hardware to go quickly and, in fact, the rollout has been very slow. the phone that everyone, at least in this country, you know, chicago bankers an lawyers after they lost what i used to call the moms in new york. those guys wanted the he-board so that phone just hit in june and so, it wasn't even in this quarter. so the phone that everyone really cared about who were blackberry fans wasn't even out yet. so it may be a little bit early to call the turn around a failure, but at the moment i'm

optimistic. >> dan, thank you for your perspective this morning. it's fascinating, fascinating story and a fascinating stock. in the meantime, let's check on the futures at this hour. we still do have green arrows across the board. we can put that screen on the dow jones looks leak it opens 15 points hire the s&p up 13 points, coming up, gold's next move. we will speak to the chief strategist of the morgan gold, "squawk box" returns after a quick break. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses.

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. >> coming up, when we return, another billionaire joining the conversation, buy and hold ron bar ren of bar ren capital will talk about the market gyration, up next, the tools of the trade,

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. >> happy friday, everybody. welcome back to "squawk box." in your head lean, google reportedly spreading it's an droid operating system around well beyond mobile phones and tablets. the journal reports the company is developing android based video game consols and possibly wristwatches. google roeps hopes to release one of the new devices this year. the plan of a mortgager for u.s. air ways may will running into road blocks. reuters says they are taking sworn depositions. is seen as an indication it has some concerns. sources say the big area of concern is whether the carriers will sell slots and landing rights at reagan national airport just outside of d.c. two economic reports finish up a week of numbers. the purchasing index out 9:45 eastern followed by the latest

consumer sentiment index at 9:55 eastern. meantime, i want to check out shares of accenture. it is one penny above estimates, but revenues fell short and it lowered its forecast for the full year on the revenues side. so weaker ref now, weaker guidance. the stock is getting walloped in the pre-market, folks. in fact, it will wipe out not all of its gains here today, but much of its gains today, it's a consulting firm. so pay attention to any other names with large consulting arms. acm could be a harbinger for them. neither the kind of way they like. they're both in the red. stinks. >> let's talk about more red arrows to cheer you up on a friday, gold is hovering to a three-year low, oil is on its track for a third quarter le loss.

the managing director after the clearview energy partners, ed weiss chief strategist at morgan gold, ed, why don't we talk about gold, actually trading below $1200. where does this carnage end? >> well, it will be a wild ride for gold over the next couple month, when i was director, we did updating of forecasts on this. gold is definitely undervalued right now. i think there's two factors doing that. one is the emotional sentiment in the western hemisphere is against gold so every little bit of news begins to drive it down, just take a look at all the short interest on gold right now. i think the second one is gret of electronic and paper gold investments ets and shorting and futures. those have grown so big that they're distorting the market for physical gold, which is actually pretty strong. >> yeah, it's interesting, you say it's undervalued at this

point. how do you put a value on gold? because it seems to me like emotion is a mallsive part of the pricing that goes into that at any point. >> yes. it is a big part of it. when you take a look at the economic data and take a look at the trends, gold correlates best with the federal debt ceiling. the higher the debt ceiling goes the higher the price of gold goes and right now, based on that, you know, gold should be around $16 to $1,700. it's trading at 25/30% less than that. >> it's interesting. the debt number the deficit numbers have been lower than had been projected. they continue to drop over ten years, are you talking a massive bug deficit. it's nothing to write home about. it's not nearly as bad as we thought it would be a year ago, two years ago. we seen tax revenue coming in much better than expected? >> yeah, listen to you, not as bad doesn't mean bad is 1.2

trillion dollars. >> i'm not cheering the deficit or the debt. i give you that. i guess market trades on expectations, expectations used to be worse than where it is now. it doesn't make sense the market for dpold has come right back down. >> the other thing to take that look at the monetary policy isn't going to get to us the growth numbers that this country expects. fiscal policy has to get engaged. that's not happening any time soon. what that means if the economy doesn't grow as fast as it should the fed will have a difficult time unwinding this without inflation becoming a real problem. >> our guest yesterday is tom barrack. what are your thoughts within it comes to gold? >> i think what she is saying is absolutely right. inflation is in the future for sure, although, what we're dealing with every day is deflation t. average family trying to go forward isn't get knock wage growth. so that wage growth, houseing is a question.

the consumer is doing well but not so well. i think the end story is exactly right. while sentiment is out of gold, it's probably the time to boy gold. why? what's the true value? where does it go? it's a proxy, right? it's an inflation proxy. there is no way out of this box to me, the bad news is, the fed tightens. that's good news, because the fed then sees something we don't see, which is real growth, real wage growth, unemployment contracting. if it doesn't taper, that's also good news because you have 85 billion of bonds and treasuries bought in the marketplace. we can all drink out of the fire hose of the credit display, at the end of this, there's got to be inflation. >> you think the fed is still there. that's what made people question all this, the fed would pull out, maybe for the wrong reasons, because the economic growth isn't there? >> the reality is when you go to

moms and pops the fed is not going anywhere. in my opinion, it's a head fake. let's get the speculation out of the market. get back to basics and move forward. they're not going to taper. >> if you look at the tips mark, i wouldn't put filing tips i wouldn't put them at the bottom of a parakeet cage right now. would overstate tear value. there is no inapplication expectation seen anywhere, tom, at all. so are you buying gold? >> no. . >> do you own gold? >> no. . >> have you ever owned gold? >> no. . >> well, that, you are in buffet's camp. it's not a bad camp to be in. you have people who have the money to do what they want, which is you, even an asset that's come down $700 an ounce is not attractive to you? >> we have learned that -- >> you are waiting for this emto go up. >> which is probably gold production.

what we're waiting for is let the gold mining stocks bust, then we'll be a boyar. >> they've buflt busted a lot. they've come down more than gold, itself. >> let's wait the next few days. nobody know what is a unit production cost for gold is. we will find out in the next few days. >> we will watch. let's talk a little about oil prices, too. this has been the more sigh lnt creed going down, where do you expect the trends in the second haful? >> well, to the extent that gold is your inflation proxy, gold the a fundamentally industrial input the deep coupling between gold and oil, the compression from gold to oil to maybe 18 over the last sex or seven months, that has a lot to do with the fact that we have oil t. market is still tight. there is this other force in the market called opec. in the spirit of wimbledon, it wrapped up the racket and gripping it tight, there has been a million barrels a day pullback in the last calendar

year net at iraq. iraq is still growing, however, so is inconventional production in north america. so as a result, we actually see oil headed down from here, taking down their second half for outlook for 2013 at $92 a barrel. 105 brent. both are slightly above year-to-date average, implying we have downward motion to knoll low. loads out any prospect as your guests suggested. we are assuming the foot is on the accelerator. definitely not on the brake. >> that looks like from the supply picture. do you think demand picks up? down the consumer could be stronger than expected. we have a guest talking about potential quarters of 5% growth nooekt next year gdp. >> absolutely t. consumer is recovering with greater efficiency. not in terms of the behavior, but the infrastructure is changing, too. the infrastructure is changing everywhere fast. so what we're seeing is when you

add, crude prices fall five years ago, you unlock demand spontaneously getting transportation in europe and ocd. it's not happening as fast now. >> how big of a decline do you think we are in for? >> not a significant up with. we are probably talking wti do uninto the high '80s hanging out there until next 84. we are probably looking at bren at little more, maybe 98 at 2014 and staying there through 2015. >> kevin, ed, gentleman, thank you both for your time today. >> thanks for having me. coming up next, squawk market master tom barrack will tell us where reis putting his money to work. we have grown arrows for now. we will see if that holds up. we also have ron barren, a billion dollar investor. still to come, ron barren on why the market turbulence won't last. the chairman and ceo talk about the becomes of bernanke and his

plan on taking advantage of the recent market gyrations. it's a special interview coming up at the top of the hour right here on "squawk box." at honda,

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. >> well e welcome back, everybody, blackberry stocks are taking a huge stock in trieding. it's down 19%. that's a drop to 1173 after the handset maker reported a quarterly loss. came as a surprise. analysts had been expecting a gain of 6 cents a share, actually came in with an ad justed loss of 13 cents a share. revenue was below, its came in at 3.1 billion the street had been expecting and the hand shipments were below expectationings as well. they shift 6.8 million. smart phone the street had been expecting 7.4 million. this is a big dole. that came out with new shipments of the 10 version. that's been the big question, how many of those they sold. they didn't break that out in the release t. company is calling the handset market challenging saying it would be difficult to predict sales an profitability and, guys, at this point i think there are huge questions about the future of this company.

>> i have been asking questions about this company for a long time, however. >> i am a blackberry die hard. >> the analysts we had on made one point i have not paid attention to. there are people in the community like yourself who desperately want the key board and we don't know the new numbers are not reflective in these number, maybe the ship has already sailed. i don't know, you are looking at me like the ship sailed. >> i think the ship sailed. i am in the same camp in blackberry rehab. i have a blackberry and an iphone, as much as i want if blackberry to win, i am magnetically been drawn to the iphone. i carry both. i am frustrated with the blackberry, by default i'm with the iphone. >> i'm at the same point i wanted the new one with the keyboard, they don't support it here. in the meantime this one keeps breaking. >> so the z-10, the new

blackberry sort of looks like this iphone. >> with the a keyboard? >> no, it doesn't have the keyboard t.q-101 coming out. it has a keyboard, seema mody if you are out there listening, thank you very much this came out pre-earnings, but they note, we are hearing low levels of channel buzz for the q-10. so if people out there are waiting for. some want the physical keyboard. if you are waiting for that physical key is board new phone to save blackberry, you will be waiting a long time. >> okay. so then you got to play this company for runoff and for whatever i.p. value you think it has. they still, be i the way sell an enormous number of these phones in emerging markets, some older phone models where actually price points matter. apple talked about whether they will have an iphone at a lower price. by the way, if that happens, it will make it harder for those in those marks. >> they will come out with a touch screen before you came out

with the actual keyboard t. wait is too long. if you wanted a blackberry, you wanted the keyboard. there is a reason. if i wanted a touch screen, i would have gone to the iphone sometime ago. >> i got dragon dictation on here the keyboards will become insignificant. you literally will say, hey, andrew, what's going on? >> i do not want to ticket you. >> i wouldn't do it in public. i mash people's foerngs i have no problem telling people whatever. what dan ernst terrified the heck on me on blackberry ten minutes ago. enterprise behind the scenes stuff, they are basically a handset maker. i mean, tom, you notice, when you make consumer electronic, that is the graveyard of gross margin. >> it's over. >> we're calling it over. >> what over? >> i hate to say what's over? >> it may be over.

>> i like the guy that runs the company. now it's a tough battle. it's not a situation where you wait for new management or try to do something. there is not many opportunities. this was the big bet. >> i'm not asking tom to analyze blackberry the company, but when your model consists of increasingly higher volume lower margin items, that's a race to the bottom, is it not in. >> i think it's got to be. more importantly the momentum of the customer, you look at the customer, which is all of us. we're confused, that almost makes you lose the gym at the start. right? you want someone who is in front of you all the time. not someone who you are pulling along all the time. >> okay. we're going to continue i'm sure this conversation with blackberry throughout the show. still to come, billionaire investor mark barren. up next, u.s. executive chip starnes back from his ordeal in china.

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. >> welcome back to "squawk box." is subpoena 500 is up 5 points t. nasdaq is up about 8 points, brian. >> all right. american businessman kip starnes arriving -- chip starnes

arriving back on u.s. soil after being held captivity in his own warehouse for seven days. he joins us from florida. chip, welcome back. it's good to see you in the united states. when we interviewed you the last couple days. by the way, i want to say thank you. i know it was not the easiest situation for you. when we would interview you, we would think, he seems to be okay. he seems to be in good spirits. is he being overly optimistic or nice because he's in that bad situation. what was the real situation? did you have to put on a bit of a happier face because of it? i think that's a fair statement. absolutely. i think, one, just to show my strength in the whole entire situation because what i was having to deal with. two, i think probably mentally for myself, just trying to keep myself bubbly and up because i was in a no-win situation. >> right. >> chip, one of the questions i

asked you was whether you would do business in china when you were doing that interview behind what looked like behind that window. you said, yes, one of the things i thought was maybe asked to say that because you have a lot of employees there. you were trying to get out of a tough situation. now you are on the other side and recognizing you still have employees there. you have a business there, do you still want to do business there, yourself. also, for all the business executives and other people out there, would you recommend they do business in china given the experience you had? >> i probably took that as a two-part question t. first part is, yes, we have been there a long time. i got roots there, i got equipment there. there is a portion we need to work. if you are asking me if i was new investor coming into china? i'd have to really second guess that. i'd probably say no. i think i'm not saying anything that most of the investment community in the world knows. it's the fact that the currency,

you lost 25% over the last 48 to 60 months. you got shrinking labor population there. you got escalating salaries that are going on. and the business environment for more of commodity driven items like that, plastics, needing labor and forced to do it. it's not as inviting. there's other parts of the world. >> that are more attractive. you are talking more fundamental issues. i would imagine part of the answer would be about the experience you just had which is about the rule of law and the ability to have authorities get involved in a situation where you were being held hostage. >> yeah, it's funny, you go nine years without a hiccup. we had a short little strike back in 2008. that was simply fixed with no adjusting the pay. here in this particular situation, we have something that's completely ficticiously made up and then implemented and made to pay for something that's not real. lay 35 people off.

the rest of those people had jobs. all came about easing the workers there in the local area and i got no support from the local government, no support from beijing. you know, that's scary, especially in the beijing district. you think you'd have support to control that. it didn't happen. >> chip i know you have equipment there, you have investments there, are you planning on going back to china any time soon? >> me, personally, i don't know if this particular moment it would be wise for me to go back. i don't think they're too happy with me right now. i have partners, a cfo. there are some issues that need to be dealt with head-on. right after this, this morning, i'll be heading in the office to begin that task. >> does anyone else want to go given what you went lou, is anybody else seening up to boy a ticket right now? >> probably not. we will probably twist a few arms. at the end of the day, we're there, we have been there. we have to show back up, try to make something happen. >> real quick, we got to run. has this been good for business,

bad for business? i imagine people come out to probably support you in all this. >> it's been good and bad. we get a lot of questions right now on what certainty is, our certainty is. and we're going to need a little time to physical that out. >> chip, thank you for joining us over the past couple days. we are happy you are home. coming up, we got billionaire ron baron on why the mark turbulence won't last. we'll tell you about it when we return. i want to make things more secure.

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. >> a special half hour with two "squawk box" masters. tom barrack the founder and ceo of capital. >> plus investment ideas from ron baron chairman and ceo of barney capital. find out why he says the time to buy is now. how high will gas prices climb this summer? in there we do know that price is moving up on a daily basis, that gets their attention. >> we will ask the man who helps put gas alongside gas and hot docs in the convenience store. >> hey, guys, big gulps. all right.

b well, see you later. >> the third hour of "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc. along with becky quick, brian sullivan has been here all week. joe kernen is back in the saddle. come monday, tom barrack the founder of colony capital. much more ahead, first, brian has your morning headlines. >> andrew, thank you very much. today you will be watching shares of blackberry, stock getting hit hard in early trading. the company reporting a loss. analysts were expecting a profit. they report a shiplet of 6 million smart phones, that was also below consensus, the biggest problem is they didn't give a breakout of the new blackberry 10 prices like the z-120. earlier we spoke to dan ernst.

he covers blackberry for hudson research. >> earnings are sort of less of the issue this particular quarter. it was more about how is blackberry 10 and how is the transition to being, you know, a new smart phone company. and that tran six did not look great t. worst number that we saw is that service revenues fell about 20% year over year. >> and service is still a higher margin business. that is on the way the stock down about 20% right now in free market trading. meantime, it is the final day of the month t. final day of the quarter t. final of the first day of the year. we know stocks are rallying. they are rallying into the end of this week. in fact, if you based on monday, you wouldn't realize the dow is on its best three-day winning streak in 11 months. it covered half of its recent steep losses, with one trading session to go today the average monthly winning streak may be in

jeopardy, yes, s&p and nasdaq open 7 straight. here's the number t. dow is down .6 of a percent this month, s&p off 1.1% t. nasdaq off 1.6%. still the dow is up nearly 15% year-to-date, making the blue chip index poitszed for its best first half since 1999. that's the year that doves cried, people wore rasberry berets, leak your dress. >> pop culture. >> i thought we would draw out some prints. the album came out, that was '85. you get my.ment. meantime, u.s. equities futures down about 9% are higher .6 of a person is the what we need to gain to finish the month higher. put that in your pipe. >> let me tell you guys about some comments coming out from fed governor jeremy stein. if you look at things said by dudley and others yesterday, this is beginning to look more and more like a concerted effort

to try and rom back the market's impression of what bernanke said about a week and a half ago. stein is saying this morning the fed policy stance is broadly unchanged. he also says that the asset price movements are greater than warranted by fed policy statements. in other words, he's saying just what bill dudley said yesterday, the market is blowing us out of proportion t. fed is going to be here a long time to come. tom, you have been talking about. that that been your impression since the beginning. it looks like these fed governors and presidents are trying to roll back what bernanke said. >> bernanke said at the time he said this is not a policy change. that was the quote, but at the same time. >> the market didn't react that way. it may have caught the fed by surprise. >> tom you are an l.a. guy. are these other governors becoming the pr people to drunken loud mouth celebrities in a way, right? some guy gets up in l.a. he says, i hate california the next day his pr people are saying, he didn't say california. to your point earlier in the show, it's sad this is the state

we're in. >> i think you got to go back to bakes, right, california is the home of cowboys, right? so with the home builder, we got investment. he's a cowboy. he's on his horse. there is a whole band of cattle. so that drives up and a guy in a ferrari gets out of his car. can i make you a bet? i bet you i can tell you how many calves you have in that herd. if i'm successful, i'll take an animal, if not, i'll give you $100 t. guy says, absolutely. he looks at the herd and says 973. the cowboy says that's amazing, i said you can take an animal, he pecks up an animal, puts it in his car. the cowboy says, if i guess what your profession, can we do double or nothing? he said, yeah, it's impossible. >> he said i bet you are a government economist. >> he said you are absolutely right. how did you know that because of my brilliant arithmetic process? >> he says, no, you picked up my

dog. right. you got to go back to reality at some point. >> that's a great story. >> you have to find the athlete. right. i look at this and say, okay, the fed, there is nobody smarter. nobody better. their job is an litically to act not to speak. but if you when to the the beth athlete in the market. take jamie din. no better banker or no can complicated business. $2.3 assets, a couple hundred billion in balance sheets, operating across all marks, the guy we should be asking what's really happening in the world today is him. he's the athlete. he's on the field t. coach is the fed. we're all reacting to the coach. >> i think that's an excellent thing in december of 1974 the fed put out their blue book. they said the recession is worsening. bake amy, the economy is going in the tank. 1975 was the best eighth year ever and in 1981 in december,

they said the economy was doomed. 1982 started off the biggest bull run in the history of the stockmarket. so your point is well taken. use them as part of your story. but we can't put as much credence in them as we are. is that it? >> absolutely. we look at the history of finance, loose, mike mill kin revolutionized junk bonds. then solomon brothers credit default swaps. right. at every iteration of that, at every new embank him or embarkment the fed was on the wrong side of that trade, whatever it was. so entrepreneurialism in the market will continue it. >> let's bring if another voice, "squawk box" reason baron e-mailed us saying now is the time to buy. he jones us right now. ron baron is the chairman and ceo of capital.

thank you for being here this morning. >> thank you for inviting me. thank you for coming to east hampton. >> you told us last week when we were worried about what we were seeing in the market that you were still very confident. why is that? >> well, first of all, before i do that, i want to say hello to tom. he's an old friend of mine. not an old friend, a long-time friend, so one of my favorite investors and hi, andrew, hi, brian. so the reason i was confident is because the market was reacting to state of news, they're reacting to, you know, what they're watching on television the media, good news is good news himself, bad news is bad news, it's unbelievable about the tapers. all you have to do is turn on the tele56 or read the newspapers, you would be negative. people can remember it within that long ago before it felt like the end of the world. and if keeping with what you are saying now about the people from the federal reserve and the government offices trying to

calm market nerves, this past week, i was at a dinner, maybe 14 or 15 managers, investment managers, one of my friend's apartments the speaker was tim geithner the former secretary of the treasury. he was explaining how he thought that it wasn't likely that the interest rates were short term would rise any time soon and he meant a for years and years. then he also said that as far as the ending of quantitative easings, he thought that was going when it ultimately began was going to take five years to wind down the bond purchases. and so i always believed and people are telling me something, they're telling me something for a reason. he was telling me also presumably to try to calm the market. but the reason why i think the market was so erratic is that you can react to news t. computers enable you to do trading quickly. people think they can become

expert investors, whatever news is coming out, they think they have an advantage over everyone else. of course, they do, in fact, the reason they don't, you can see it in the number that, the average person who invest in mutual funds makes 3% compounded. the average mutual fund makes for a very long period of time 7% and the reason they make the funds make 7 and the individual investors make 3 is very simply because people try to trade the news. they try to anticipate. the reason companies like financial engines morningstar and schwab and fidelity and financial advisers and iras, the reason they're doing as well giving people advice. they should be staying and investing for the long term. we see these disruption over the short term or events that don't seem to me very much, gives you opportunity to boy. >> ron, you just said a lot of really important things. first of all, i want to go back in case people weren't paying

close enough attention. >> that's very kind of to you say that. >> say this again, you were at a dinner with tim geithner. he told you what about the markets? he looked at this and said the fed is going to be here very long time, essentially? >> he didn't tell me. he told the room. >> he told the room this, but this is pretty important. he was saying he anticipates that the rolldown, the tapering will take like five years? >> yes. >> and -- >> by the way the roll down, when he says five years the roll down of the $85 billion bond purchases or? >> that was my interpretation. the people in the room were much more sophisticated than the monetary proses than i am and budgetary process, that itself quote. that's what i took away. >> that is different than ben bernanke suggested. but as i said, that doesn't mean that's what's going to happen. that's his opinion of what's going to happen. he was giving the reasons why.

he was one of the people who was involved with saving the world with bernanke. he was saying to the other investors, he said, you know, what do you think, how close were we to the end of the financial system, you know, existing? how close, do you know in 2008? how close do you think that was to happening? and then everyone sort of made comments. i had read about it in andrew's book. it was really close. that's what he was going at. he said, why do you think we did all that stuff? carl icon was there also, he said, you know, he thinks they should have let it go. he thinks all the people and all these banks, they shouldn't be working there, anyway. they don't have the interest of customers of mind. so that's how some people get fined. >> i didn't get an invitation to this dinner. whose house was this at? >> one of my friends. >> but your message that you are trying to reiterate, ron, that long-term investing is the way to do it and people underperform

the mark when they try and jump in and out from all of these market blips along the way. >> yes. >> so i think, go ahead, i'm sorry. >> no, i'm sorry, go ahead, ron. >> so i think that people -- so that was what happened. and the only person who i think has ever been able to predict this really well that i have seen in my career is gorge thoros. everybody thinks there is a perception impression. the only person i've ever seen who sort of comes close, i read about him in an obituary wear last week is george's brother, he died at the age of 87. the story of george and palm, how they came to this country. it's an unbelievable story. it makes you believe in genetics. what i believe is that the stockmarket has been through a difficult 14 year period of time, from 1999 until now. and there has been very little change and is back from 2006 to

now the stockmarket is almost unchanged when companies earnings in general have gone up about 30% the stockmarket has changed very little about 1 or 2% a year since 1999 and company's earnings have almost doubled. the reason for that is that the stockmarket in 1999 was overpriced. it is now 15-and-a-half, if you go back 16 years ago you go back 100 years, the stockmarket normally trades between 10 and 20 tiles eastern e earnings. it's now 15 times. the market is now median valuations, at the same time, interest rates have never been this low in the history of our company. never. money is really cheap. money is plentiful. money is available. the government is saying, hey, guys, you can sit there with your treasury bonds, in fact, how the value of your assets diminish every single year because of inflation. we will make sure that happens. or can you invest that money an invest in stock.

monies is, in our opinion. it's a medium of purchase. a transfer, can you buy and sell things for money. you can't store value in money. >> ron, real estate, ron, i watched for a long time. i'm the head of the ron baron fan clubs, even though owe. >> i'm the head of tom baron. >> you rejected my application i have why your state manager or the keeper of the aquarium, each of which i would accept readily. nobody has been better in picking and themes and management teams and i think we're going to take a second and come right back to you. so don't leave right now. >> where am i going? >> right where you are. >> we will take short break that one day we, too, can go out to the east coast. i have lived here since 1974, i have never been to the hamptons. >> are you fishing for an invitation? >> no, i'm sake. it's a beautiful place.

>> there is a gate there. i got there. they said, get out of here. >> you don't have the pedigree. >> ron is going to stick around. tom is going to stick around. you guys stay right there. we'll be right back after this quick break. we will have more from our guest host and ron baron. actually the dow is just turning slightly negative. flatlining for the s&p 500 and the na,. >> watch ibm, accenture, in certain points, down 8% last time i checked. i don't know what ibm is doing. that's a name to watch. >> i'll tell you real quickly, ibm is down by about $3 too. >> down by $3 bucks? >>. >> 129.33 it's indicated to open. we will cont this conversation. "squawk box" will be right back. still ahead, your 2013 halftime report t. outlook for oil and gas for the rest of the year. plus the stocks and sectors that

could make you money between notice and new year's eve. keep watching "squawk box" on cnbc. first in business world wide.

. >> welcome back to "squawk box." let's get back to our special guest, ron baron, chairman and ceo of baron this morning. tom had a question, he was mid-way into the question when we decided to make some money with commercial breaks. i will go back to tom, ask the question. >> ron, i followed you with envy and greed forever and you have been the best at long-term picks of teams and themes. what you have done with hyatt with sands with starwood even in the hospitalities sector. wren you look at that sector, bricks and mortar an managers vs. what's happening in tech, expedia, orbits, is there an intersection in which it's going to start compromising those great companies? >> well, first of all, tom the way you do research, you live on your airplanement i never seen a

guy travel more than you do. you meet more people than anybody i know. the reason you ared a good it's because of. that you understand how it is to meet people, judge them, this past week we were in on tuesday, a travel week. so on tuesday, this is a travel week for me. you do this every single day. and this week we were in baltimore for a half a day on tuesday to visit under armour, since they have been a publicly owned company. i think we're the largest investors, we made four or five times our money since we invested. every years ago you visit us, we visit them a half a day every 84. in the afternoon, we went down to reston, virginia where i used to ride my motorcycle out there in law school and resue a sign to visit that company, verisign, one of our funds has been purchasing. what they do, they have dot-net

or dot-com, that's them. they get $7.95 whether you are ron baron or becky quick.com. that's a business that will grow from these whenever there is india or china, all those guys are coming on. they will benefit from that. more names will benefit. so farce figuring out in the intersection between technology and bricks and mortar, the businesses that we have invested in historically have been businesses, business models that can't be challenged, that they're going to exist. they're not going to change a high toelt hole for electron, new trorngs protons flying around in the air. you got to stay somewhere. veil mountain, you got to ski somewhere. you don't have to ski, if are you going to ski, they can't make more mountains, so the businesses in general we invest in, transmission towers. there is something physical

about them. a lot more than physical. there are poles, wires, you need them. the things we invested for the most part, they have big growth opportunities and technology, they're making the world, they're changing the world to all the, i watched these commercials on television, they say all the gods and service, 25% in the past ten years, technology is expanding in an exponential rate. there are all kind of things to change it. >> hi, ron, it's brian, verisign, highia. those are names i doubt you are mentioning them accidentally. what other industries or companies do you see this are truly irreplaceable and potentially under valued? >> wel, our firm has about 400 investments. so those just are a few. in the top ten, they represent 20 or 2% of asset the top 20 represent 30% of our assets. that's because those businesses

perform very well over time. our average holding period, i was talking before people trading the news the average holding period is seven years, seven years. tom's like that, most public investors, hedge funds are days, weeks, month, we're seven years ago five for a firm as a whole, so irreplaceable. electricity transmike, you got to have electricity transmission. energy, the ability to exploit all this shale oil and gas there. is as much shale oil and gas in the ground as all the oil that's been taken out of the ground for the past 100 years. we're starting to exploit that right now. that's irreplace about. have you short line railroads. you can't replace them. it costs a million dollars a mile if you can ever get zoning and can't get the zoning. so we think, what we're trying to do is whenever you have these long-term investments, then all of a sudden something will

happen in the market and stocks will fall because of that something. so scientists have heart valves. when you get older, it calsifies. you can't replace so it easily. these guys have 60% of the market for the hart valve. so what happens is, the doctor says, you know what, it's risky. you have to open heart surgery, open you up. when you do that, maybe you will survive. maybe you won't if are you 80 years old, we'll wacht. take medicine, rest a little bit. all of a sudden they come up with a new procedure where they can put the valve at the end of the kat their and not have open heart surgery and take months -- go ahead. >> my question, though in all of this, it's a question i water thinking about, doug sent in a similar question by e-mail as ump speaking. it said, why should stocks trade at the average price earnings multiple the last 50 years given the secular head winds to global growth and likelihood we are in

a slower growth environment than in professor cycles. even if you are a long-term investors, i assume the gamble given everything, we will not grow as fast as before, if that is true, why should multiples hold up? >> well, the growth rate for the economy in america had been 6.8% a year since 1960. and it's been about that rate since 1,900 as well. and for the past 14 years, it's been 4.4% a year. everyone tells you 2 performance. that's not the number. with inflation it's 4.4, that growth rate is accelerating, partly because money and credit is so cheap. so when you've had stocks at 15 or 15.5 times earnings for 100 years, money has never been as cheap as 1 or 2%, you compare the returns to. so if you ever dpard it to that, stocks would be 20 to 30 times

earnings. they wouldn't be 15. so i think when you are looking at businesses, the businesses we talked to, they're growing t. growth is accelerating. it's not slowing down. its not growing as fast as we want. they're growing. money is really cheap. businesses are attractively valued. >> hey, ron, when i spoke to you last week. we e-mailed back and forth. you said -- >> can i say one more thing? so when the economy is growing 6.8% a year, stocks have grown 6.1% a year. stock grow when you add dividends being, that's been about 8% a 84. that's been 120 years. that's the number. now, is it going to keep up with that rate? maybe it will be a little less. we are using 7% for the next ten years that, means will you double on the dow, if you go 7% more in the next ten years, that will be another double. i think if you invest in the stock market, we think you will double your money in ten years

after. that we are thinking about the dow being 30,000 in ten years and 60,000 in 20 years. that's just with the 7%. if you invefrs in that. can you do that for 12 basis points of cost with etfs or index funds. if you want to invest with an active manager, you better do better than that. those guys, including us, are charging 1%. you have to do a lot better. i think you should do 300 to 500 basis market over the long term if you pay someone to manage your money. i think the ton is the there to do that. >> that's great. that's what i was going to ask you to clarify on that, ron, thank you is very much for joining us this morning. >> thank you for inviting me. >> thanks, ron, have a nice weekend. >> fine. between ron and everybody else, is not just the stock pick, its his genetic selection. there is nobody that has a better understanding of management of the 400 companies he owns than him. i think that's the magic elixir.

>> tom barrack is our guest host. we will have more from him in a moment. when we come back, it is the last day of the second half of the quarter. we will look at the price of oil and the summer driving season rolls on. right now as we head to break, here is phil lebault for the second half of the airline industry of 2013. what happens with jet fuel prices? if they stay moderate, remember the airline index is up 28% year-to-date with some of the major carriers, including united up by an even greater percent annual. the other question, the summer travel season heats up, the trains are packed. how much will the airlines leverage those packed planes with greater ancillary revenue? i'm phil lebault. that's your sector for the airlines. [ female announcer ] what if the next big thing, isn't a thing at all?

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. >> welcome back. let's look at stocks on the move this morning. blackberry the big one reporting quarterly loss, revenues were below estimates in a big way as were handset shipments. the company says the handset market is challenging making it difficult to predict the future. you are seeing that stock off a

whopping 22% in pre-market action. development sirm firming a sen ist -- accenture, revenues were below estimates. that company also down in pre-market action over 9% and then finally, the round out a bad morning, nike shares moving lower this morning as the athletic footwe're and apparel maker reported a profit of 76 vents per share the revenues beating consensus, you'd think that would be the good news, nike did scale down its expectations for fiscal 2014 profits. stock off about a person in the pre-market action as well, this morning. brian. >> every time the price of gasoline ticks up, you hear the phrase, pain at the pump. how much pain will it truly impact on the economy going into the second half of the year. joining me is vice president of government relations and director of motor fuels at the

national association of convenience stores. they represent 75% of all gasoline sold in the u.s., so john knows from which he speaks, john, if i was going to bet, higher or lower for gas prices three months from now, which would i bet on? >> i can't make that prediction, because i represent the retailers. i'll tell you when we look at past trends, consumers like the fact that the last two weeks, retail prices are going down, when we asked them, what do you think the price will be in 30 days, if the prices are turning down, that i think they will go in that direction. momentum seems to continue in the consumer's mindset, consumers are expecting it's going to continue. >> so maybe you can answer this. we were having the conversation with tom barrack of colony, here's my question to you then. we know gas is a fairly interlastic demand. people on the margins can drive more or less. you still have to get to work. how are your constituents, your

retailers doing from a consumer spending perspective? can they provide us a window into how people are feel something. >> that's what we were looking at. how do you feel about the economy and to what extent are gas prices affecting your economy? we have been looking at an economic pessimism rate of 65%. that gets worse when prices go up. it gets less pessimistic when prices go down. our retilers look at the market, when prices are lower, consumers are much more happy about their transaction, they have much more disposable income. we seen prices increase, not to mention for retailers, we make a lot more money at the pump when prices are on the way down. we lose money when it's going up. >> so, john, what's your outlook for the economy when you guys plan? i seen gas prices torn down, literally route 1 is torn down as bigger stations mostly because they want the bicker retail space. can we get a read on the

economy, vis-a-vis that type of reaction retailers are optimistic the next few years? >> one of the challenges is we are seeing a decline in gasoline demand. that's stemming from the recession, the fuel economy standard for vehicles is projecting a reduction in gasoline demand. diesel demand is projected to go up. what you are seeing with the stories they are referencing, for the fact of the matter for years, we have not been making money, gasoline draws customers to our stores. those companies are trying to maximize their profitability. with understand the customer comes to the store to fill up, you can get them inside the store. that's where you make the problem. >> we will go, tom barrack and i were having that conversation. he was sake what did you say, tom the margin on gasoline was? >> 2.3%. >> every time gas prices go up, people scream at the gas station owner. it sounds like the margins are so minor you got to buy a snickers bar and a gator aid to

make money. >> we bresht that. when prices go up. 2.3% often turns negative for a period of time. >> john, you are talking to my dad on the mobile station of whittier boulevard and i think beach boulevard in fullerton, california from 1978 to 19 yuvenlt i used to work there as a kid, illegally, be i the way. dad still owes me back pay. we got put out of business by the gas crunch. i know how hard it is, thank you for joining us. >> thank you have a good weekend. coming up, a spirits maker, liquor i assume, not governments, announces a big bet on bourbon, more on that story. all next week the squawk bucs american made series is back. we will celebrate america's birthday with a week of companies that manufacture and sell products right here in the us of a. i want to you play kid rock one song a day. >> the best vitamix, best blender in the world t. bentley of blenders. more secure. [ whirring ]

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. >> welcome back, friday, spirits maker brown foreman is making a big bet on bourbon.

the company is planning a $36 million expansion of its woodward reserve in kentucky. once completed, it will house 165,000 barrels up from a current capacity of 8,000. they cite the consumer demand as the reason for this expansion. company previously announced its intention to expand its jack daniels distillery in lynchburg, tennessee, remember, it was years ago, they threatened to water down their whiskey so they were doing that. they scratched these plans because of the backlash, remember it saix takes six to agyears to make bourbon. they have been dec splat to come up with ways to get more out there for growing demand. when we come back, the seccors to watch in the sec half of 2013, why big bank stocks could be the key to making money in the next six months. a programming note for you, on monday, a chief economist from zillow will tell you what

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welcome back to skwaux "squawk box." number one you have the overr overall mark t. dow is it gained .6 of a percent, it doesn't look like it will now,

futures are implying the dow opened would have a higher month. anything less than a .6 of a gains, the gold mark has been a bit detached from equities, gold falling, every day gold falls. people come only the fine network i must say and say it's looks like gold is a washout. dennis was on earlier saying he's not buying, it short. it looks like a balancing out. doesn't look like a balancing out. this was a $1,900 commodity is that year-and-a-half ago many, very many mart people said was going to 3,000, 5,000, 8,000 bucks. >> where is david einhorn these days? . >> he is out playing poker. he lost back-to-back. >> 4-2. is he out completely? >> he's busted out. guy had poblth as and a pair of as apparently back to back.

cards, not a game of skills, a game of luck, despite what everybody says. >> it's weird the guys who are good investors are often more than luck. >> it's the brain and the eyes and the ability to flush out their opponent and not the card, i think. >> it makes sense. >> we are breaking out second play books to find out what stocks you should be placing. a manager at invesco. kevin, good morning. you still are looking at the dow up 15% for the first half, what do you think happens in the second half, what sectors do you think rise to the top? >> yeah. i think the key to the second half and kind of what we are looking for is really movement in employment growth. to this point, we've, you know the market has been on a nice move for the last years and

year-to-date it's been great, too. i think the one thing is to take this further. evaluations are still very attractive. we need more employment growth. so i think it's coming. it's coming very slowly some that would be, i'd say the key indicator to look for in the back half. as his moment growth improves, you will see slow, consistent earnings improvement in the market. stocks can go higher. i think they're relatively attractive. >> what about the large financials, you say zbrurngs j.p. morgan, those companies you expect to do better. why? >> yeah, i would say you look back at what happened in 2008. some people say the stocks are up year-to-date or over the last 12 months, they're very inexpensive relative to five years ago. so i think they are symptomatic of what our overall economy is doing and what they can do. so as businesses do improve at a slow pace. >> there is a lot of head winds

that weren't there five years ago. down they can overcome that? >> yeah, i think those are discounted in the stocks. the industry has been heavily regulated. we may get more regulation around the edges. i think we're in a much better position with our financial system and our banks than we were five, ten years ago. >> you like technology and energy in the second half. what is happening that's pushing you towards those seccors? >> yeah, i think within technology, you know the valuation, they are generating tremendous amounts of free cash as many stocks in the market are. gives them the ability to pay back stocks, they can pay shareholders as opposed to doing acquisitions, we like microsoft. we think the hardware catches up with the windows 8 technology,

there could be good things in store for microsoft. on the energy front, stocks very, very expensive four or five years ago, they underperform the market three or four years now, we think the stocks are beginning to discount attractive risk rewards, so we have been building energy positions, you go back to '06 and '07, we had very, very low positions with risk rewards. we think it's time to be adding to energy, with the understanding it may take 12 to 18 months to see the returns. >> very quickly, your favorite energy stock. . >> i'd say we like weatherford the investor stock is a contrarian fund, margins are down him we think energy service particularly weatherford as they reorganize the company and structure, the positions form well, hopefully in the next one to two twroers. >> kevin, thank you very much, great talking to you. >> coming up, you better believe that jim cramer is ready for the

trading day. he has a lot to talk about so we will fine out what is number one on his list coming up. greatest gift of all, the return of the "squawk box american made" series. one week of companies that make and sell goods right here in the usa, and that saul next week on "squawk box" starting at 6:00 a.m. eastern.

welcome back to "jacques sq" and we want to go down to the new york stock exchange to talk to jim cramer, a nnd talk about the stock on my mind blackberry. >> i said to buy it before $12. >> well, it is way beyond that, my friend. >> don't buy it at 12 and buy it at 11. >> giving it away, my friend. >> well, this week, they said that blackberry could drive a short squeeze, and this week, morgan stanley, blackberry to beat estimates, so you had guys bullish and incredibly wrong. that was a discouraging statement, because you realize that it is more palm-like than you thought. >> why would you buy it at $11

or $12? >> well, the subscriber list and the stock is shot on the downside every single time. i have to read the transcript of the conference call and it is usually more bullish than the statement, and there is a -- i don't like blackberry, but at this price, i have to look at what the subscriber list is worth and do a sum of the parts analysis, because obviously, if you look at what they have to say about it, you would think they are going away. >> do you think that ron baron is right long term? >> well, the notion of saying that if you buy the dow or if you buy certain stocks in generally the s&p 500, no sh, hs right that a lot of the gain could come from dividends, but when you look at the individual stocks, and if you go out and buy nike and accenture and blackberry, you won't double the money in ten years so you have to be more thoughtful than dow. he goes through to talk about the individual companies and verisign and under armour and those could double, but i don't

think that the dow is that easy. if it were that easy we wouldn't have to have shows and we could go the east hampton and have a drink of water while we are earning. >> and jim, on the top and the bot tom, they came out with a forecast that is less than some people expected -- >> look. only one line that you need to read through, and this is the best quarter of the quarter, and be like lebron and michael. in china, the revenues declined 1% in q4. see you later. >> is that a sell sign for you? >> bewell, the stock ran up jus like blackberry in anticipation that china is coming back, and china's stock market was up, and that is a shocker, and unless the communist party says that everybody needs a ni keknike. >> well, jim, it is ni nikkei with two ks, and i bought a tag

heuer. >> well, you will be fine with that stock, but ni xee is a show-me stock. and how many times in the conference call, china is a long term issue, and long-term! hey, i have to fix it tomorrow. >> there you go. >> what do they need? what do they need? like maybe the kevin garnett shoe and they know garnet who is like 37 and they traded him to the nets. >> to the nets now. >> don't you love it? >> the great cramer. >> jason kidd wants it now, yesteryear. >> and the great jim cramer. and coming up the great founder and ceo tom barrack, and we will give him the last word when "squawk box" continues. we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.

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we want to thank our guest host tom barrack from equity capital, and if there is a last message that you want to leave with us, what is that? >> housing is a playbook for how people feel about positive equity in their house, and how they consume and how they feel about life and where they send their kids to school. now is the time and the

dislocation of the housing market is a great opportunity that you don't have to look at the news or look at the keyboard and make your own investment. >> and the biggest run in mortgage rates in 20 years in home prices and mortgage rates rise. >> yes, and history has proven it. >> thank you, tom, for being e here, and brian for being here all week and have a wonderful week, and have a great weekend, everybody. "squawk on the street" begins right now. if you just invest in the stock market, we think that you will double your money in ten years and double it again ten years from now, and we are thinking of the dow being 30,000 in ten years and 60,000 in 20 years. >> ron baron, the market legend on squawk this morning speaking from the hamptons and david is copying the look as we wrap up the month of june in the second quarter and the first half of the year. good morning and welcome to "squawk on the street," and i'm carl quintanilla with david faber and