welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and steve liesman. andrew ross sorkin is out today. as joe mentioned, the second half is upon us, and the first week of trading will be dominated by the jobs report due out later this week. by the way, it is an abbreviated week for the u.s. markets and for the rest of us. we have a half day of trading on wednesday and a full day off on thursday for independence day. yeah, that's the way we like to start the week. why don't we look at the futures now. here's another way the bulls will like to start the week. dow futures up by almost triple digits now. dow futures up by about 97 points. s&p futures up by about 9 points. and there has been some wobbling around this morning. they were up 90, then up only 50, and now back up about 97. you can see the major market averages across europe right now are also well into positive territory. the cac is up by about 0.3%, as is the ftse 100 in london. in germany, the dax is up. more from ross westgate in london in just a moment. more dramatic pictures out

of egypt this weekend. hundreds of thousands of egyptians flooding the streets on the first anniversary of islamist president mohamed morsi's inauguration. they are demanding his resignation in what is being called the biggest challenge to his muslim brotherhood party to date. more from cairo on this developing story. but steve, right now i'll send it back over to you. >> thanks, becky. you mentioned the jobs report due out this friday. at 10:00 a.m. eastern, the ism manufacturing report along with the spending figures, tomorrow factory orders and june auto sales. wednesday the big preview to friday's main event, the abp employment report comes out at 8:15 eastern time. plus, jobless claims report and the trade data pushed back to wednesday with the markets closed on thursday for independence day. but friday, the real economic fireworks with the june employment report released at 8:30 a.m. eastern time. joe, i'm going to be here. >> if you were not here today, i would have requested you to be here. >> you've got a lot on your mind.

>> i watched in horror as with what happened last week. i was glad to see the market come back. i can't believe a 5% correction can cause the fed to almost backtrack on everything it said. >> never mind, right? >> it's like a spoiled child that you finally are going to discipline a little bit, and he throws one little temper tantrum, and you go oh, i'm sorry, june. >> i like this because i'm going through this at home right now. >> are you really? >> that was a very apt analogy. >> what scares me -- and then i see krugman who -- you know, i will never apologize for calling him a unicorn because i don't believe creatures like him still exist that haven't learned anything in hundreds of years of watching economics. >> i told you about a week and a half ago. >> they made a big mistake and how could they be so stupid to imply that someday the $85 billion might be pared back. as long as we're above 6% unemployment and as long as we're not at 4% gdp growth, this is what they should be doing.

what if we never get there? and he also said -- >> the fed has set up some of that itself, with setting expectations in terms of unemployment. now, that's not supposed to be tied to the $85 billion. >> what if obamacare hurts, what if china doesn't come back? what if we don't do tax reform? where are we? we're on immigration. he's in africa now. >> he plans to continue to try and fight deflation. and they're looking at two decades where they've been battling this. >> but the other point that krugman made was that john taylor and hasset had warned about the adverse effects of qe. and maybe we haven't seen them yet, but look what happens when we try and stop. that's what scares me. we seem like we can't stop. i mean, policymakers are so afraid of a small selloff when these traders act like spoiled children. i don't know. >> see? >> i even thought fisher? >> i feel like i have to do

review the bidding. one heart, two spades. so i think i have to redirect on the redirect, okay? bernanke comes out and says we are going to do the following taper. in his view and the view of the fed, the market took that as a rise in interest rates, okay? >> which we knew they would. >> right. >> we knew the market was going to look at this differently than the fed. >> right. so the fed comes out and says no, committee didn't mewe didn' interest rates, but we did mean the tapering of qe. what i hear what you're concerned about, that you're misreading the redirect. the redirect was not about -- >> no, i was just looking at -- i don't think -- i think we can handle 2.6. i know it moved quickly, but i don't think we -- i think what really scared people, they thought that the bond market was getting unstable even though it

only moved it. and i saw 2.65 or whatever it was. i watched as that happened. >> it was down. >> i still think you need to look at the absolute levels. if we had a real economy i believed in, then i -- i have stuff to read here. the first half, because june ended -- >> right. the first half is over. >> this. >> that's the kind of valuable information. >> it's in the books. it's in the books. and it was great, if you were long. big numbers for the dow and the s&p. here are some of the numbers. the dow finished the first half with a gain of 14%. but some of that came last week as we -- you know, as the fed went running back into qe mode, scared that the spoiled brats in the stock market might sell us off. >> june was actually down. it was a 1.5% decline for june. >> maybe people will be right that we've logged some of the best levels. it's been the best first half since we were partying like it

was 1999. the index was up 2% for the second quarter. despite june which snapped six straight months of gains. the s&p 500 added 13% for the first half. the best first half since 1998. it was also up 2% in the second quarter. and the nasdaq was up 13%, up more than 4% for the second quarter. but i always thought that, you know, that the people that said this was all fed induced that it doesn't matter what it is. if the market's going up, it's telling you something good. but if it can't -- if you're going to cut $5 billion from 85 and it goes down -- >> this is a temporary blip, though. if the economy actually picks up and if that's why the fed ends up changing its policy, tapering or eventually lowering interest rates, then you think that things would balance themselves out. >> i look at what we're doing, like i said, we'll have erskine bowles on. i mean, really, we're going to do some power deficit stuff?

immigration, we all want to do it, but climate change? where are the things that erskine bowles -- >> no, erskine wants to talk about a proposal out there that will zero-sum all of the tax deductions you can get. >> it's the abenomics linked-in thing. >> abe's speech is about the right thing. i'm sorry, his article. >> the prison where nelson -- okay, i like nelson mandela. >> structural reform. you just don't hear that in the united states. and those are the sorts of things that economists want to hear from abe. they want to hear that they're going to do the qe stuff. they want to hear the fiscal stuff. but really ultimately they want to hear the structural reforms to open up the japanese economy. >> he thinks women need to be promoted in the workplace and integrate them more into the work mace. he brought up the idea of opening their markets. >> fti. >> dan loeb is listening to

closely and hearing things like that. i thought it was really kind of a pitch to try and convince investors. i thought it was interesting that he wrote this in english on an american website because he wants to convince investors that they want to come back to the japanese stock market. things went very well when he first came into office. the japanese stock market was up something like 75%. you've seen the collapse recently. >> 4.1% growth. >> for the upper house. and so i think this was a pitch to investors to say come back. we're going to continue to make these moves. >> i don't know if we can count on an economy that gets us to the point where the fed can unequivocally say we're pulling back. >> and the question you raise is fascinating. what if we don't? what if the reason we don't get there is because of fiscal side or policy side? the insurance costs. >> what rates are going to rise. and we do have some fiscal headwinds here. >> health insurance rates. >> health insurance rates are going to rise. you know, europe still -- i don't know. can we count on 3% or 4% or 6%

unemployment? and if we can't, $85 billion forever? because they've got people that are the enablers are out there, and they're loud, and they get plenty of media -- like krugman, they're out there saying that this is fine. he's like a keynesian on steroids. we didn't learn anything that this stuff doesn't work. >> all bernanke said was, if the data supports it, they will eventually start to taper back on qe. >> right, right. >> and a lot of people welcome that. but they backtracked, even their hawks backtracked. >> that's a good question. to me the fed is still saying the taper plan remains in place. >> really? >> but the emphasis was that if you took that to mean that we are going to raise rates earlier than you had expected, which the fed picked up in the fed funds futures market, then you're out of sync with the fomc. >> see, everybody thinks 2015 at

the earliest or '16 for raising rates. >> the futures market suggested that people had pulled forward. >> let's get an update on the situation in egypt. joining us now from cairo is yusef gamal el-din as he joins us from time to time. our intrepid young correspondent over there. yusef. it's joseph. i figured that out. we share that name. good morning. good afternoon. good evening. wherever we are. >> reporter: well, it would be a good afternoon, joe. it's 2 1/2 years on, and we're back in tahrir square. we took out a position close by, and don't be misled by the tranquility in the background or the sense of normalcy. that's how egyptian protests roll. they hit the streets at night and then go to work the next day, and usually the numbers swell again at night, and we expect that to happen. but overnight, what a turnout. hundreds of thousands, possibly millions, going to the streets across the country, asking president mohamed morsi to step down. there were some clashes as well.

a muslim brotherhood office was torched, and at least six people according to officials have been killed in those confrontations. now, remember, this is now a politically divided country. that's what's exacerbating these conditions significantly. on the one hand, you have supporters of the president who say he was voted into power in a free and fair election. then you have opponents who say he's lost his legitimacy after a series of controversial decisions over the course of the past year. to give you a bit of a sense of what's happening on the ground, the army remains deployed in various parts of the city. we saw helicopter gunships hovering over the skyline of the capital earlier. the army is taking no chances in this, joe. they made it clear that they would intervene if the violence escalates. if that does happen, they are a b bit of a wild card. nobody's sure how they would stand in all of this. of course, the united states is watching this very, very carefully. and we will be providing you updates throughout the day. >> yusef, thank you. if you had to guess at this

point, i mean, i know this is the way things work there. they heat up in the evening, calm back down for normal work days, but is this the type of thing that goes away, or does this feel like the arab spring all over to you? >> reporter: well, it's, i guess, the million-dollar question. probably more than that. the people i've spoken to say that the numbers will swell again. you have to be here on the ground to really get a sense of how different this is from any other protest we've seen since january of 2011. i have not seen this many people since. it might have even been more. and that gives you a bit of an impression of what to expect over the next few days. and also underscores the fact that the opposition needs to sit down with the government, and they need to come to a consensus. otherwise the violence might escalate further and may draw the wider region into it as well. >> yusef, thank you very much. we will check back in with you, but thank you for joining us this morning. we really appreciate it. right now it's time for the

"global markets report." ross westgate is standing by in london. ross, we see green arrows as well there this morning. >> we do. good morning to you, becky. 8-1 at the moment on the dow jones stocks 600. behind me, pretty much near the session high as well. the ftse 100 has started the week on the front foot. and we've had good data. the ftse up 62 points higher. pretty good data as well this morning. mark carney has just taken over as bank of england governor. uk pmis for manufacturing, 52.5, much strong eer than expected. we also saw mortgage approvals coming in at highest levels since 2009. continuing strength in the uk economy. now, we have known that mervin king has been voting for more qe. well, i doubt mr. carney's going to vote for that this week because he would be outvoted if indeed that was the case. xetra dax up half a point with

the ibex up about a percent. we also saw manufacturing pmis for the eurozone tick higher, 48.8 in june. the flash was 48.7, a bit better than expected. spain stabilized. italy still contracting with 23 months in a row but still the highest level since july 2011. just to show you where we've been on the performance over the half year, not quite as good as what we've seen in the united states. the ftse up 6% for the year. so far the dax up 5%. the ibex down 4%. the cac up 3.5% for the first half. break that down to sectors today. and this is how we're weighted. you see certainly weighted to the upside. the better performance insurance financial services and retail all up about 1.5%. we have also seen because of that dat in the eurozone, yields on spanish debt continue to move a little further away. remember last week we hit 5%. 4.65%. that's treasury yields.

ten-year gilt yields as that better data continues to come in for the british economy. that's where we stand right now. back to you guys. >> thank you, ross. more controversy in morning over the national security agency's surveillance program. britain's "guardian" newspaper says documents leaked by edward snowden show that the u.s. is spying on embassies of 38 allies including the european union and japan. germany's "der spiegel" also says the nsa breached an eu computer network to get access to internal e-mails and documents. >> we haven't heard of last of this. germany and france, last i read, were incredibly upset by this and threatening some sort of retaliation in terms of what they would and wouldn't cooperate on. >> some french official today offered -- said they should give snowden asylum. >> really? i did not hear that. >> it was something i heard on the radio on the way in. >> i didn't follow any of that that closely. >> what were you doing, joe? where were you? on vacation? >> no, i'm just glad i can -- i'm just glad that -- i'm tired.

>> golfing? >> but i'm glad i get "the washington post" once in a while. this must have killed them to write this. did you read this today? before sequestration took effect, the obama administration issued -- >> oh, the dire warnings, yeah. >> but none of those things happened. they're just choking on these words. "the beltway post." out of the 48 things that the obama administration, the dire predictions, 11 have kind of come true. 37 didn't happen at all as far as sequestration. they will -- some newspapers do finally come clean, right? they have to, right? because as much as it hurts a lot of times. >> how does andrew react when you criticize the entire media establishment? >> i was gone a week. remind me. >> sorkin. andrew ross sorkin. >> sorkin, sorkin. yeah, where is he? >> probably with his family. a nice time. >> i know where he is. he's on his way back. >> you completely ignored me

when i asked you where you were. is it because it was a secret? >> secret undisclosed location. >> i was where cheney's udl was. >> you were? >> in waders. >> in waders. why do you need waders? >> because it was a streeam. a fishing stream. did you get that, becky? somebody said to me -- >> we've got to go. >> the udl of cheney. >> you were thinking so deep, you had to wade through it? coming up, a surge in the shares of one pharmaceutical company after rejecting -- it's kind of a biotech company. very exciting top story. a $10 billion takeover offer. is there any relief ahead for residents of the southwest dealing with this extreme heat wave? so it's really hot in death valley. that's got to be proof. of climate change. the national forecast is next. "squawk" returns in just a moment. ♪

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welcome back. u.s. equity futures at this hour are solid, up about 82 points. check out the shares of onyx pharmaceuticals. the company rejected a $10 billion takeover offer from amgen, calling it too low. must be some debt there because "the journal" calls it $8.7 billion. amgen said to have offered $120 a share, that's a w40% premium.

it's exploring the possibility of combining with another company, and it hired financial advisers center view partners to contact potential buyers. sounds like a bear hug that didn't at this point they're not going to -- i guess they're saying we want a little bit more. we'll see what finally happens. it was an unsolicited offer that they're making public now, and we'll see whether -- how this proceeds. more triple-digit temperatures expected today in the southwest. let's get the national weather forecast from the weather channel's reynolds wolf who i saw earlier on -- i guess it was this network, was it not, reynolds? i already saw you today. >> that's right. >> jacketless. that's hot. >> when we have this kind of heat and you have this kind of heat radiating from the map behind you, of course you're going to lose some of the clothing. it happens. >> i hear you. >> it's been extreme heat. normally we cover the national forecast. we're going to hone in on the

desert southwest, mainly the fire. disastrous situation. 19 firefighters that lost their lives there just last night. take a look at the forecast today. really not conducive to battling the blaze. they've really had 0% containment. 2,000 acres burning and still tinders burning as we speak. there's a reason for this heat. the reason why, an area of high pressure has been settling over parts of the southwest. look where those temperatures are going. up, up, up. death valley, 127. and from today to tomorrow, we see very little change, joe, in the forecast over the next couple of days. and that heat is going to extend not just for the desert southwest, but even into parts of the san joaquin valley. up in sacramento, got the heat advisories. back over towards nevada, same story. all along the sierra, you're heading out to any of the national parks like yosemite, it's going to be the excessive heat warning that's going to bother you. even parts of the central coast of california, it is going to be just unreal. and again, you blame it on this high pressure which has pushed the jet stream well to the north. it's kept that cold air well to the north and also some of it

out towards the east where you in new york will be dealing with the showers, cooler temperatures. no such luck towards the east. i don't expect we'll see any major change any time in the short term. to tell you the truth, probably not the long term as we make our way into thursday and friday of this week. back for you. >> okay, reynolds. none of this has to do with the cool spring, does it? some of the tornado activity, when it finally came, it came because it had been so cool for so long. and when the systems finally hit, you get some violent stuff. but why is the pressure -- you call it high pressure, why is it so high? >> i just blame it on the jet stream, seriously. what you have -- the jet stream is like an atmospheric barrier. it's almost like -- think of like a fullback in a football game. this high pressure is being basically i guess your defender that's pushing it out of the way, pushing that jet stream well to the north. and that jet stream's like a fence, if you will. on the other side of the fence, you've got the cold air. when it's way to the north, you've got a void. what comes in right from the south is going to be the warm air. so it's almost like a convection

oven. it's just going to keep those temperatures nice and muggy and warm and certainly not good for those battling the fires. >> the highest in recorded history i always hear. what is that, 130 years or something? >> it was 100 years ago, and it was 134 degrees. >> how far do we go back? we only go back 130 years, don't we? >> i know exactly where you're going with this. >> no, i'm not. i'm not. i'm not going anywhere. i don't want to draw any big conclusions. and obviously, if we're breaking some records that were set in 1913, i mean, how do you compare the 1913 highs with much less co2. no, i'm not going anywhere, reynolds. >> i hear you. >> the dogma now, you can be ex-communicated. your children can be seized if you even twitch to look like you might be skeptical. you've just got to be very, very careful if you're not on board. it's almost a fatwa can be

issued. it can be issued against you. can be issued against you like s salman rushdie if you do not follow the dogma. anyway, thanks, reynolds. see you a little bit later. >> you bet. all right. let's turn our attention to another story we've been watching very closely. hundreds of thousands, if not millions, of egyptians flooding the streets on the first anniversary of islamist president mohamed morsi's inauguration. they are demanding his resignation in what's being called the biggest challenge to his muslim brotherhood party to date. let's find out what this means for business in the region. mac mcclelland is the ceo of the center house limited. he joins us on the news line this morning. mac, thank you very much for talking to us this morning. >> glad to be here. >> you know, a lot of the reason for this protest has to be the economy, what's been happening in egypt. i know part of the complaint has been rising poverty, rising inflation at the same time.

so how was business before these protests? >> well, i think it's two things. it's the commercial side that you referenced and the fact that, you know, mohamed morsi came in suggesting that the islamic party would be able to jump start the economy and get people into jobs. and of course, that hasn't really happened. the other thing i think that's important is that as you look around the region, the royal families who are in charge of these companies have legitimacy going back -- some of them several hundred years -- that's somebody like mohamed morsi doesn't have. if you look across the arab spring, it's the dictators and the strong men, the mafia types, who have fallen, not the royal family members. and so it's that legitimacy that mohamed morsi thought the islamic party would give him that hasn't really happened. and so i think the protests are in response to that. >> what has business been like for the last 2 1/2 years?

there's been so much unrest and turmoil in the region. have businesses kind of gone back and stabilized since the original arab spring, or has there ever been a point where things really kind of shook out? >> the fact is that, you know, a lot of the things for the staples friends which are subsidized by the egyptian government. so in that regard things have kind of remained normal. but businesses that were there, foreign businesses, you know, american companies, have pulled a lot of their people back, and they haven't really returned. the security situation has just not been stable enough in egypt and some of the other places as a result of the arab spring. and so they're still waiting to go back. and of course, that means that employment isn't where it was pre-arab spring. >> and the biggest question with these latest round of protests, what do you think happens next?

>> well, i would hope that it would be like, you know, what happened in turkey recently, becky, that, you know, things kind of settled down, and everybody, you know, goes back to their business. but because the jobs have not been created, there are people in egypt that are not able to feed their families, and that's going to continue the disruption indefinitely. so i think as often happens here at some point, morsi is going to have to crack down on the protesters even though they're the same ones that helped bring him into power just a year ago. and that crackdown is going to be violent, unfortunately. >> mac, thank you very much. mac mcclelland. coming up, waiting for the fireworks not on the fourth of july by the 5th of july. that's right, the jobs report will provide this week's entertainment for the markets. we'll discuss the jobs in

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and steve liesman. andrew ross sorkin is off today. in the headlines this morning, a workers strike has idled the nation's fifth largest rail system this morning. two unions representing the 2400 employees are on strike against san francisco's b.a.r.t. system. the walkout will affect more than 400,000 riders after the two sides failed to reach a new contract.

and ford has agreed to fix sticky throttles. eww. you don't even want to -- you don't even want to touch them, really. you know, it's just oh, god! you know, you get it on your hands. no, that's not what it was. the throttles stick, which you definitely don't want, on about 468,000 older taurus and sable models. the automaker and federal regulators had received 100 complaints about the throttles and five crashes have been attributed to the problem. luckily no injuries because i've already made a sticky joke about it. luckily there were no injuries. >> no injuries or deaths. no, we had that happened once because of squirrels stuck an acorn in the gas something. >> what? >> the throttle didn't stop. you have to put it in neutral. if it happens to you, put it in neutral. >> did you see the squirrel do that? >> no, but the mechanic afterwards found the acorn and said that must have been what happened. >> the squirrel -- >> no, it's like some complicated place.

our squirrels tried to kill us. >> i've heard of cats getting up in the engine. that's pretty funny what happens. that is it. it's just fur. >> the frog in the blender joke. >> i like the frog -- like in the boiling water. >> the boiling water? >> i like that one for economic metaphors. what is that? because you can put it in cold and heat it up. just it finally -- yeah, frog's legs. nokia shares are rising this morning. the company is buying out its partner, siemen's, in their networking equipment joint venture. nokia is paying $2.2 billion, a lower price than analysts had been expected. can we talk about blackberry? becky, do you have the new phone? >> i have one upstairs that the company sent me to try out. but we don't support it yet. so i haven't tried it. >> did you hear the blackrock news last week? >> yes, it was a little bit of a

shock. >> what's that symbol? >> bbry. >> bbry? >> yeah. >> it was off big. we can't talk about them. i don't know if that's true elsewhere. they didn't ship as many as they thought. >> what nasty shareholders -- >> it's not their fault. it was our fault. our company doesn't support it. >> the loud people that write in when you say anything. they don't understand that that makes you take satisfaction when things like this happen. i don't have any pity for these people. at all. because they write in. they're so nasty if you say anything about them. the blackberrians. how's that feel? >> i was a big supporter. >> you should see what i do with my phone. >> you're all over. >> yesterday trying to get back here with all the weather in newark. down where i was, i can look -- i see the weather maps everywhere. i get push notifications that things are happening with my flights. >> did it change anything? did you go to a flight early?

did you do anything? >> you've got an iphone now? >> i don't. i have an ipad. i have a 1939 blackberry which is interesting because the blackberry wasn't even interested in 1939. >> honestly looking back -- >> i'm doing this so they'll send me one. that's the only reason. i want one of the new ones. >> i'll give you one. >> steve -- this is what it's analogous to. that's what a blackberry is equivalent to. >> i tried one this davos, and it was really cool. this new thing of doing the letters i thought was great. i've been waiting six months for it. >> what? the blackberry? >> blackberry touch screen. >> why not just get an iphone? >> are you driving an edsel? you still like that? where do you get it fixed? where do you get the parts? >> i have the edsel. i haven't figured out how to use it. i use the horse and buggy still. >> come into the 21st century. in a few days we'll get the june jobs numbers. joining us, jim paulsen, chief

investment strategist, and scott anderson is bank of the west chief economist. jim, let me start with you. are you blackberry or iphone? that's the most important i think to start with. >> i'm blackberry. i'm one step above the buggy. >> the buggy. i'm with you. i looked at some of your commentary over the weekend. with the stock market, a lot of volatility coming up, but ultimately you think the s&p heads higher and it's because of better economic news. >> i think so. i think you've got to look at what is the catalyst for this rate rise, steve. at the end of the day, the catalyst is that the economy is turning out better than expected. that's true throughout the private economy, but it's even true at the federal reserve. and what i found historically when you look back, if it's -- if confidence rises with rates, then typically the stock market's done pretty well, and the economy has done well as well. and i think that as rates fly higher here in the last few

weeks, it's very difficult for the stock market to deal with that. we're struggling with it. but if the rates calm down, they find a sideways trend here for a little while, i think the stock market will regain footing. ultimately, it will depend on the reports that now come out on main street here in the next few weeks, if the economy holds together, i think we'll find a bid back in the stock market. >> so scott, we had a discussion this morning. and if you want tovy have a goo interview with me, but if you ever want to come back on the show, you'll be with joe. right now i would think long term if i were you. what did you hear last week in the redirect of the fed? did they back off their tapering, or did they back off rising interest rates? what did you hear when these guys came out yesterday? was it tail between the legs? what was your take? >> i do think they were a little surprised that the bond market's overreaction and the spike in interest rates we've seen. i don't think they expected that from the taper announcement. so i really think they were

trying to divide and separate the taper discussion from the rate hike discussion. i mean, i think they're concerned with what's happening in the fed fund's futures markets with traders moving forward. the first rate hike i think into the first -- or the end of 2014, i think they really want to say that, you know, beginning the taper doesn't necessarily mean anything about when we're going to start to hike interest rates. >> so you're agreeing with me. so i'll give you a little more air time because there won't be any in the next days or weeks. scott, follow that through. joe, i think, had a really interesting concern, which is this. what happens if we don't get the growth the fed is forecasting? does it mean qe forever? is it $85 billion a month forever? >> i think they should be very cautious here. i'm worried about premature monetary exit. you know, i think we've had two quarters of below 2% gdp growth in the united states. it looks like we're going to

have a third quarter, the second quarter i'm projecting 1.3% gdp growth with consumer spending below 2%. we've got pce deflator, core inflation at the low end of the fed's targets. so i'm a little surprised at the hawkishness and the sort of discussion we're hearing around taper given where the economy's at right now. there's a lot of confidence in their forecast that growth is going to accelerate. and i do think it will exc accelera accelerate, but there's got to be some cautious, i think, here. >> jim, talk about the exchange that investors need to weigh, which is on the one hand, i'll have $85 billion a month of fed quantitative easing. or if i get growth, i'm going to trade in the qe for growth. what is ultimately better for investors and for the economy? >> well, there's no doubt growth is, steve. i personally believe that much of this qe has entirely been outside the economy and never come in to touch it anyway. it's just adding excess reserves

that are held on reserve at the federal reserve building and never enters the economy. that's why the money supply growth rate really hasn't changed in the last few years. so to me, if you add 85 billion a month that never went into the economy, and now you're only adding $45 billion, i don't think it makes much difference. a little bit like the -- >> what about higher rates, jim? what about higher rates? >> higher rates are real, but again, i just put out a study, when i look back historically at all the rate hikes since 1967, if the rate hike was associated with rising confidence, stocks do 12% per annum. if the rate hikes are associated with falling confidence, they fall at 6% per annum. and so i think if you really, again, come back to what is the catalyst? it's not that people are worried about inflation and they're raising rates against rising inflation expectations. it's not like a run on greece where we think there's going to be a failure in the united states. this is a confidence-driven rate increase.

this is less a rate increase to me, steve, than it is an attitude adjustment that's going on. confidence is running through all the financial markets. 3-point increase in the multiple in stocks. gold -- the gold armageddon premium's coming out, and now the bond yields are readjusting because the world's not going to end. and to me, confidence has gone so far, it's even running through the federal reserve. >> we've got to leave it there, jim. thanks for joining us. jim and scott. enjoy your crumbling -- >> yeah, i wish i hadn't loaded up on gold and blackberry a year ago. i just put all my money in. >> while you were on vacation? >> no. >> a year ago. >> but i was thinking listening to that -- and thanks to those guys. >> we're going to have scott back, right? >> see, with you, you separate out qe and rate hikes. see, with me, i don't separate it. the reason i don't is because it's like when the fed just, like, has a little bit of a movement that shows any type

of -- any type of not tightening but any type of change in accommodation, the market -- if the fed fund futures go up, does that mean that it indicates the fed is likely to raise fed funds, or do people just do that knee-jerk? yeah, they just do it as a response. >> when you tighten the spigot -- >> it's not, though. i realize last week how out of sync i am with the way the traders think because when i hear them talk, i hear them say something. and when the traders hear them talk, they hear them say something else. and we could talk about that later. when we come back, for most americans, a trip to the movies isn't complete without a container of buttered popcorn, but why is the salted treat so expensive? the answer might surprise you, but we have it right after this. stay tuned.

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welcome back, everyone. happy monday morning. the u.s. equity futures have been indicated higher. you see tell dow futures up by about 77 points, bouncing up by about 50 and up all the way as much as 100 points. we'll continue to see where this goes as we head towards opening bell. of course, this is the first day of the second quarter. you can see gold prices this morning up about $17, but that only gets you back to 1241. it's been a long, rough ride for gold prices over the last few months. also, "monsters university" was the winner at the weekend box office. the prequel to the franchise took in $46.1 million, that gives it the top spot for the second straight weekend. meantime, a disappointment for sony whose movie "white house down" took in just $25.7 million.

industry analysts had thought that movie would sell more than $30 million in tickets. all week long, we'll have a special series "economic sense," looking at some of the questions in economics. and one we're going to start with is a fun one. why is movie theater popcorn so expensive? the feature you may be paying more than 10 bucks to see, but the cost doesn't stop at the ticket counter. a bag of popcorn costs another arm and a leg, but why? it's a surprisingly complicated problem, and the answer may not be what moviegoers think. >> reporter: i'm here at cinema village theater in new york city to talk about an issue that's vexed economists for decades. not how to grow the economy or put americans back to work, but why do you pay 11 bucks for a movie, the price of popcorn is so darn expensive? a lot of people say the answer is simple. once you're inside, they own you. they can charge you anything they want for the popcorn. but economists say the easy answer might not be the right answer. if theater owners have monopoly pricing power, why wouldn't they

use it to charge you for a drink of water or to go to the bathroom? economists say theater owners are engaged in a process called price discrimination. not between men and women or blacks and whites, but between moviegoers who want to pay more to go to the movies and those who want to pay less. to understand why this works, let's rewind and go back to the beginning. let's say the theater decided to charge you $20 to go to the movies. that would turn a whole lot of people away. by keeping the price low at the ticket window, they get everyone's 11 bucks who wants to see the movie and create an opportunity to get the other $10 at the concession stand. people who go to the movies are the same people who love to eat popcorn at the movies. what's happening is a process called price discovery. the theater owner and the moviegoer are in a silent conversation over how much he or she will pay to go to the movies. and that's the best possible way to charge people money by choice. remember, though it's hard to imagine you don't have to buy popcorn at the movie theater. by charging a lot at the

concession stand, the theater owner maximizes profits and the number of people who come to the movies. bottom line, the popcorn probably isn't too expensive. if it was, you wouldn't buy it, or you wouldn't go to the movies, but you probably do both. no, the popcorn's probably priced just about right. . >> 1,200 calories, 980 milligrams of sodium.

60 grams of search rated fat. >> with or without butter in. >> no, without. a tablespoon of butter adds 130 calories per table spoovenlt you tell them halfway up, fill it again, you are talking 2,000 calories. >> i came for the bottled water. i won't pay for popcorn, a bought him of water $4.50. >> you can buy thing this big, contact water. >> it's clean water. >> wow, that's worth $8. >> the economics of the calorie. >> still to come, stock picks for the second havlgs our news maker of the morning, chairman erskine bowls. that's our weather people when "squawk box" comes back. seen b. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air.

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. >> welcome back. everybody. 2012 was a big year for companies, those ceos had medium pay packagesor of more than 2011. they measured executives at public companies with at least a billion in revenue. it is monday morning. we have a new week, a new month, a new quarter. this morning the futures are up higher, about 70 points for the dow. we have people from gamco.

they will be joining us. later, solving the nation's fiscal crisis. spending, rates,er skin bowls makes -- erskine bowels makes his pitch at 8:00p eempblt

. >> good morning, everybody, i'm

becky quick. andrew will be back tomorrow. already, you do see some action to the upside, right now the dow futures are up 65 points, s&p futures up by 6ment here's what's going on around the world this morning, activity numbers in china confirming fears of a slowdown there. the sentiment in japan is more upbeat. stocks in japan were up more than 1.3%. the survey showed a sharp positive reversal in optimism. op-ed in limpgd in may have helped out, too. the shanghai markets are all ending higher. the nikkei actually closing at its highest level in a month. you see it up 1 and a quarter percent. european shares are higher as investors digest a slew of numbers coming in, the including the latest figures on manufacturing and employment, investors are focusing on the manufactured pmi.

again, if you take a look at the european markets, you will see the dax is up .3 of a percent. and the kak is up by .7 of a percent after closing at its worst quarterly drop, gold is bouncing back this morning. it's helped in parts by the san francisco fed president john williams. on friday, he said he is backing off his view the fed should start cutting stimulus this summer. you are right, backtracking on all of this stuff. gold is up by about $15.16. back to $1,042 an ounce, gold is taking a toll on investors in david einhorn's green light capitals. that fund was down nearly 12% in june. it's down about 20% for the year. >> here in the united states, despite shortened week, on once, adp is out with its monthly look

at private sector employment. we will get the labor department's weekly jobless claims on wednesday, thursday they have been moved up a day because of july 4th. my dogs are anticipating july 4th with care and trepidation. it's such a scene. the bicker they are, the harder they fall the german shepherd is normally gone. it's incredible. then on friday, if there's construction outside, dave, they're petrified. they think it might be fireworks. on friday the government will release its report for june. seems too soon for me. is it already, do we know june? i guess they had a week off. it's time for another employment report. >> it feels like they had a week off. >> i'm not taking off july 4th. >> but we definitely are working friday. wouldn't that be a good day to have off? >> it would be a great day. >> i accidentally had the day off. i didn't think they did. they had me on the schedules

off. >> they didn't give it to me? >> remember, i had the campaign the day after thanksgiving. >> did i not back you on this? >> i said it was called national productivity day. >> is it too late? we just started again. >> we got to go. a bidding war could be in the offing in the biotech sector. they have rejected a $10 million $120 per share takeover bid from amgen. >> they say their bid 81 values the company and there have been no other quote expressions of interest about a possible sale job. and a top democrat and republican on the senate's tax writing committee are looking to start with a blank slate when it comes to tax reform. senator max baucus and senator orrin hatch say any tax breaks should be restored only if they grow the economy and make the tax code fair. >> i don't know if lobbyists have enough money. >> fair is such a loaded term. we will be speaking to erskin

bowles and former co-care of the national commission of fiscal responsibility and reform at the top of the next hour right here on "squawk box". >> energying is ernest money says iran is not a dominant player in the market and inkreegsd production elsewhere can more than make up for any shortfall. they expect a further because of the tightening of economic sanctions against that company. >> egyptians taking the streets and demanding the resignation of islamist president, joining us on the squawk news line, a talk about the unrest in egypt, ian bremer, we probably look at this as a whole and we can't. because it's not monolithic what goes on over there. in turkey, i fixed everybody was sort of pushing back against a less secular state. where are we in egypt?

they want more secularism or less? >> well, a big difference in turkey the military is very secularist and actually has a problem with prime minister erdowan. they have been side lined. in egypt, the military is more balanced willingness to support as long as they're effective. more see has been in place a year now. he's been incredibly effective. all morissey supporters said we want you to step down. >> is it as simple as not having a job and feeding the family or is there something ideological here? >> i would say it's both directly economic and political ineffectiveness the judiciary is directly in combat with the presidency t. legislature is not working. this is just the first year of morris see's rule and he's just seen in the mum brotherhood as

not being able to govern the country. i wouldn't say it's ideological per se. >> does anyone? no one misses mubarak, do they? the next guy was just as bad or even worse, but they need something totally different from both? >> oh, i'm sure some american defense contractors knew mu bar ec. no one on the ground in egypt does t.is the there has been a lot of kency in what provides the underlying ability of the country. whatever happens on the ground in egypt over the coming month, the military will be there it will be the strongest political force in the country, this is, what we saw over the weekend, it was very intense, there were millions on the streets. it's also over 100 degrees in egypt right now. and it's ramadan, people are fasting. it will be hard to maintain that level of momentum going poerd. >> hot, hungry, those don't add up to anything. what leaks out from here to the

rest of the world, anything that affects us some way? >> well, one of the big things in egypt is historically, it's been one of the powers that has tried to create leadership and stability in the broader middle east. there clearly, not absent tleetly in that sort of a role. so you have a war in syria, historically the egyptians would have been engaged with the u.s. and others in trying to bring to both sides to a more harmonious outcome. the united states showing how little we want to do. the egyptians are completely on the sidelines, so, instead, you got the sunni players, they are playing a significant role. it's a much more sectarian row. it has an impact on other countries in the region. >> seeing secretary kerry shuttling all over the place, is anything happening? anything at all happening? >> you know, kerry has a bit of a nero quality right now t.

extraordinary amount of plen focus while the middle east around it is exploding. it's certainly degrading. we show palestine, most observers are still pretty pessimistic, which is an easy price to be on that one. but while egypt is so explosive, lobbyist syrian war is me tast sizing across into jordan, lebanon and iraq, to be back and forth does seem other worldly and a little nostalgic. >> it's a good job for him. the big entourage. a lot of secret service, a lot of private jets. it is a good, it's perfect. i don't know if anything is happening. anyway, ian, we appreciate it. thank you. >> see you later. >> more controversy this morning over the national security agency's under surveillance program. bren's "guardian" newspaper show the u.s. is spying on embassies of 38 allies, including the

europe pine union and japan. speegle magazine say they breached a network to e-mails and documents. eamon javers is on this story. we will be joining us in a a bit. joining us for the next two showers howard ward, chief investment officer for growth equities of gamco investment and charles tanner machiner of the tanner group. i want to reference back to some of the stuff you said if previous appearances here. i wonder if you just see the last month as a lot of sound and f furry sort of a backdrop, doesn't change anything on long-term investing? >> long term for us is the market. at these levels the market incredibly good value. there is a lot of noise in the

fixed income markets. i would say in general folks should prepare for volatility because the marketable dewitt or asset prices are real without the fed. >> who are the people that move so quickly with the slightest, with a basis point move in the bond market and self stocks who are they? >> i believe they're folks that believe they can predict the future that i cannot. >> you don't do that, do you, howard? >> no, sir. >> when you saw 260 on the 10 year, did you say i got to sell some stocks? >> no, joe, for the 35 years, the 10-year treasury affected a 6% yield. >> do you look at these people as spoiled little brats, every time the fed might start to take some of the alcohol out of the punch? i don't even understand how they can be so. >> they're speculators, joe, 0% interest rates breeds speculation. so when the fed is so transparent that it says we will do this for the next umpteenth

months, quarters or years, everyone goes to the vote. >> therefore the fed is inflating another bubble somewhere? >> more or less. yes. how do we check out of this? >> slowly. >> it's a roach hotel. we check out. we can't do anything. we can't get out. we're stuck. 85 billion a month. >> i don't think that's right. i think you check out when you have greater growth. you reduce your qe. if the tiej works right. >> what should we accept as a sell-off? a 10% sell-off? >> i think if you go back, look at the time. every year we have a draw down, some years 10%, last 84 there were two double digit pullbacks in the market. was the market just possibly looking for a reason to take a pause? maybe. i think, ultimately, my read on the fed commentary from the markets sample look at that chart. from november on up and what just happened in the last two

weeks san hill of beans. >> did you bernanke take it on his shoulders if the market goes down 300 points, is he affect. ed by that, oh my good, i've done this? >> yes. i don't think it changes policy. >> he did 3,000 point on the way up. he can't handle -- >> last week, he was sake, guys, relax. this is what we said, listen it to again. >> they backtrack. they wanted to make sure the market understood. >> i like the summary. >> i'm sorry. >> maybe he doesn't think -- >> what's a ferrell pig? >> it's a pig that escapes for example from in the wild. ferrell means in the wild. >> what did richard fisher say? >> richard fetcher is harder for me to understand than other fed people. >> one way to look at this is that for some period of time, bernanke was telling us to ignore the calendar, ignore the

calendar, it's all about the data. he re-introduced the calin daer into the conversation. >> he did. he did. >> that blew everything. >> by the way, you were not here for the interview, he came back and said, i don't understand why we talk about that calendar stuff, williams backed off his call for summer rates. he said his forecast is not coming out the way he had planned. >> i think bernanke's bet was he would talk about growth more so on tapering. the market being the market said i have complete certainty on tapering. i have no belief in growth. therefore in the intermediary term, there was a pullback. >> what do you do now with stocks and bonds? do you buy here? do you wait? what do you think? >> first of all, i agree, we had a 10% correction in the spring. we had an 8% correction in the fall. we had a 16% return on the s&p for the year. this was the first correction of any magnitude since september.

it was 7% at its limit. it is now reduced to 4% t. stocks could still correct somewhat further. we'd still be in a nice uptrnd. there is nothing to say that can't happen. maybe the correction is over. stocks i think are the only game plan. >> no one down 7. i was thinking that. no one when it was down 7 of the up withes saying it was a correction, said, let's boy. they will be back to the highs, none of them have the right move. >> what charles said, the market really feared the policy mistake. that's what you are getting out there. may still be out there. we will talk more about this. up next, the monday morning buzz, we talk business, market, "squawk box" coming right back. ♪

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. >> let's get a check on the markets. our next guest, river twice research president and columnist for reuters in the atlantic,

what's twice, what is that? where is that? in pittsburgh there's three. >> the century growing philosopher, you can't step in the same river twice. life is changed. >> really? effe exlevenlt history repeats itself. >> history doesn't repeat itself. historians repeat each other. >> is that the way it works? with all this knowledge. >> he would have provided more information and insight than all the other guests combined. >> is it the sound of one hand clapping? give me an update. >> give me something. >> well, i mean, ban on that, i do think wall street has become so convinced that you can't say this time it's different. you can't appreciate the fact that it is frequently different. we have not been in a chronically low environment with

lots of no inflation, which has left people believing that either we are in this low of all lows that will lead to this massive explosion inflation or something going on with global money supply that we can't measure, maybe there is not enough of it. i do think, in fact, it's always somewhat different. you have to adjust to that reality. paradimes re-invent themselves. >> where are we? >> we are in this low inflation environment. there is a lot of self fulfilling activities. a lot of people believe asset prices are doing well, because of easy money, the reason there isn't a hint. >> it proved them right, didn't it? >> it proves that traders and a market mentality self fulfilling can, in fact. >> those are the guys, that's what i was looking for earlier. there are some people moving on every basis point in the ten year? they're just noise? >> really. >> unless it's more than two or three weeks of activity.

particularly two or three weeks of activity in the middle of june. the only thing that wasn't noise is bond investors. we have been saying for how long there is a bond bubble or too much money looking for safe hamps or too much yield in the higher end of junk that that's got to shift. in fact, there probably is too much money there. doesn't make it a bubble. it makes it crowded and accessible. >> sometimes we can compare what goes on with how many viewers we had. we had an incredible move back for viewers. >> the noise of volatility. >> what does that mean the last year has been? it's been so quiet that people figure, does that measure policency. they don't have to see -- >> i don't think quiet kur tails complacency. i think you can invest with some differenciation between company x doing well and company y doing

less well. that was the first time in two to three years, looking at companies, looking at fundamental also yielded some better returns relative to other companies. this is not the environment. >> how many days in a row, six, seven? six or seven? is that going to continue? are we in this period now? >> look. i refuse to go into the game of what will continue or not. >> i have $100,000. i will give it to you. will you buy or what will you do? >> look, the fact that emerging market bonds went down 15 or 20%, essentially saying the only reason to be in the emerging market is on china or really attractive yields. the reality is there are a lot merging exchina or because of china, we talked about it weeks ago, china hasn't ceased to be a force. it ceased to be this force on steroids. so you get a 15 to 20% move in something that has strong

fundamental also behind it. it's an interesting time to look at it. >> the averages are higher. we seen the best levels of the year or can we repeat the first half? >> you know the knock on man is i ten to be glass half full. i tend to be somewhat optimistic about the forward trajectory of the gloenl economic system. which means i have a bullish buyout. i can admit saying there are good reasons to invest in this system. if you will not invest, i'm not sure where you should be, gold and things opposite of that don't particularly yield results. so i would certainly see the trajectory of this global system leading up. i can't tell you whether the markets will reflect that. >> the fed will not ruin anything for us? >> i don't think the fed will be the ruin of anything. it's a positive aspect. i don't think it's a core. >> that's something i got to thank you. >> interesting. coming up, gold bouncing back after a record quarterly drop.

our trading block will tell us is now the time to get in or is there more downside? live here on "squawk box" 8:00 a.m. eastern. the fed tax reform the fed and much more. [ kitt ] you know what's impressive?

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♪ . >> still to come, your monday morning tirade, your monday morning trade. plus there wasn't an i there, either? it looked like it. plus business at the beach. we kick off our american made

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. >> welcome back to "squawk box." two key economic reports are out today. both at 10:00 even. the ism will be out with the entex expected to come. it's hard to read what i'm

reading. they're testing me in the back. so if it's exactly at 50 the dividing line between growth and distraction, check out shares of onyx pharmaceuticals, they exacted a $1020 per share on amgen. onyx is actively purchase zee suing a sale. nokia shaers, i'm going to do this. nokia paid 2.2 billion for the shares, a lower price than analysts expected. they've kept on reading. mccartney did that. is it that important to the get a little? >> there are some things. >> oh, you know.

>> when did i not lern learn? when in doubt, keep your mouth shu shut. >> there we go. >> yoko, must have been great. >> there must have been something there with. i don't know. >> richard thompson must have been a good one. >> isn'tny and cher. >> that was another example of joe's camp there. >> all right, let's talk about gold prices, coming off the worst quarterly loss on record. joining us right now is nick benenbrooke. on gold, we have david mcilvany:why don't we start, david, talking about gold. that's where people are wondering if the punishing is through, what do you think? is gold stabilized at this point? >> i think it is beginning to

stabilize. we don't foe what the ploor is as of yelt vp i think we have pretty good indicators if you are looking at commercials and speculative shorts. we are looking at really the bifur indication between the physical market and your futures market. really, that's where the chaos has been in the futures biz. we see strength in the gold market. right now you have record shorts, that's speculative shorts in the gold market. not unlike 25 and 2008, we think following this record short, you should see a 60 to 80% bounce. lows of 1,200 or lows of 850? i don't know if we know what the floor is. we will pick ourselves up nicely. >> could the floor be a thousand dollars or lower? >> it's going to be tough to get there. are you looking at a percentage below the cost of production that wouldaler the mining

complex. south africa runs 14 humidity ounces as a break even number. the rest of the world if you wanted to average between 12 and 1,300, are you talking game over with the entire industry. with that in mind, supply/demand 2013/2014 would be a major thing. you would be erasing physical supply. >> david, tell me, last september, gold medal was $1,700. it's fallen 35%. why has gold fallen 35% since last september? >> again, a lot of the futures complexment, we have seen no weakness in the federal governments market. as we seen a cascade in futures contracts, we have, of course, seen liquidations from etfs. you look at the demand dynamics in asia, the middle east, russia, bank buying, the imports into hong kong, mumbai, dubai, have been off the charts. so it really is a two sided

story. >> why hasn't the financial investor exited? >> well, i think if you look at statistics in terms of inflation, there is no reason to own gold. everyone on the street would tell you there is actually inflation. if you look at the cancellingesque, that is essentially asset price inflation and that asset price inflation reseeds consumer price inflation, that's what we have today, so really the disconnect between the beings community, if you will, who already knows if there is some degree of asset price inflation and the man on the street who would say we don't know if there will be inflation. we would argue, yes, there will be consumer inflation in 2014 so that noex of a real rate of return, a positive real rate of return will be stymied thursday u further with inflation rearing its ugly head. >> nick, let's talk a bit about currency, for the first half, it was all about the yen.

what do you think is the currency for is second half? >> let's sayo cussed on the majors. i think the euro can go down, so i'd probably stay on the majors, the dollar will be very well. >> why do you think the yen will continue to decline because japan is pushing forward with its moves to try and boost the economy there? >> yeah, very much so. this week will be interesting. there is so much news, even in this shortened week. we tend to favor the dollar against the yen. with the business confidence over the weekend, for example, there is no chance they will move away from the policy this aggressive policy sheet expansion, mr. draggy told us the ecb will remain accommodative. we see those plays least sensitive to the news flow as opposed to the major currency, we think the news flows will be more important to the how those currencies actually perform. >> this month there is an election in the upper house in

japan. people are looking at that as some sort of polling on what they've done to this point will he back off? >> no, i don't think so. i think we will push through and as you rightly suggest, there has been some disappointments he's outlined. more than anything, it's very important in the japan. that won't change regardless with those upper house solutions. >> charles howard, do have you thoughts on currencies or gold? >> my question was on gold and how it's behaved the last couple of weeks, it is often suggested to us that it's really a safe haven, that's where you go when are you nervous. how would you read gold's reaction to the noise in the markets. it felt like treasuries gold all soldoff. this sa risky asset good obvious

common stock. really, really deep question. >> i think what we're seeing is just the reverse of the fed, if hooj rise if yields. >> when you said game over, were you talking about gold? >> well, know, i don't think it's been over by any means. >> game over, man. have you seen "aliens" that's a famous expression, man. >> game over. >> quite to the contrary, i think we are just beginning in wherewithal see the gold market heading. we will reflect the unhealthy state of affairs on the fiscal. >> you are recommending gold her here? >> absolutely, between 1,100 and 1,200. >> where did you start

recommending it? >> about 300. so we have a 400% gains. >> have you ever stopped recommending it? >> well, in our mind the fundamentals haven't changed at all. a make of -- 900. >> that would have been a good time. >> as a cyclical peak. we are looking at a structural market in place 12 years. so of course have you sick liggal moves slower. >> still, it looks like it's the japanese stockmarket. it looks look it could go down to 300 and stay there the next millennium. >> what happened in 1974 to 1976, you had a 47% decline of the price of gold, followed by a rise, you see countercyclical moves. >> let me interject for the last -- >> sure, after the major move

higher, then it went into a bull market. >> in 2,000, we had a period of falk interest rates and a weaker dollar. that's coincided with rising gold prices as it did in the 1980 market for gold. so if we're now in a period of rising rates and stronger dollar, within that be a negative for gold? >> you have to look at a real rate of return, which factors in inflation and taxes. taxes are on the rise. we acknowledge the cpi is a manipulated statistic. as often as you want, there's components ripped out of it so you don't have a real reflection of real inflation f. you look at the modems used in 1990s or 1980s model, are you looking at 4% inflation. >> we didn't have inflation in the last ten years, gold went crazy. >> i think we dealt with a number of things in the gold complex. but it has been certainly supply/demands driven. at the end of the day, there has

been far more demand that's driven the price higher. today the manipulation of the market has put you at 11.5 million ounces short, every instance in which we've seen the category grow that much. you got a 60 to 80% bounce off those lows. 2008, 25, even going back to the 1970s the specs don't get it right. look at where the commercials are at. i are not short in the market. there is no margins to hedge. you don't want to be on the wrong side of the commercials. they always get it right. >> the commercials are important. we will go to one, right now. thank you. still to come, more on the situation in egypt. protesters taking to the streets again. we will get an update in a bit. then, did the nsa place listening devices in eu diplomatic offices? are we upset about that? >> it's causing friction with our partners on a lot of he was, yeah. not a good theveng. >> wow, i don't know.

a few document provided by edward snowden suggests more in just a bit. we'll be right back. .

. >> a great husband and wife duo, some say she dragged sonny along. yoko should not. there we go. who is that? >> linda. >> husband and wife sitting on

the bench. >> lynn mccourtney learned how to play just so she could be in there. don't to. we were talking earlier, richard and linda thompson, let's check the futures. >> there you go. yoko. john is flying guitar. >> stampbdzing behind her going, why am i here? >> what is your point, though, joe? i don't get it. is it about what men will do, kind of? it's about the things that men will do, kind of. >> right. >> i do think. not this. things like that. >> yes. >> i can't say i'm amused. >> have we everyone checked the boards? >> we did. >> we will have more. there we go.

we will go r do another segment. so i will shut up. >> this is our american made series, schschrivers. the owner of schrivers joins us from her should be on ocean city boardwalk. thank you for joining us here. >> good morning. thank you for having me. >> we know a lot of people on the jersey shore had a good time since sandy you have you all fared? >> we did very well the boardwalk and the businesses on the board walk, we really got spared compared to up north and the dunes that are on the beaches did a wonderful job of protecting the boardwalk, so we did really well. >> a beautiful shop. we can see it behind you right now. >> thank you, thank you. >> how has business been? even though a lot of the

businesses have come back. i know it's difficult trying to get baem people back to the beaches as well. >> well, actually, i believe that we have seen a lot more people than we normally would this time of year. of course, it's 4th of july coming up, but we really feel that the town is crowded and, of course, governor christie has been doing a great job at letting people know the shore points are opened and we are here for business and there is really no problem. >> how long has schrivers been around. it's saying 1898 is when it was founded. >> 1898, yeah. >> is it, has it always been in your family? >> it has. my grandfather and his brother started it. then my mother and my uncle ran it and just recently in 2010, my husband and i purchased it from the family. >> so you think overall that consumers at least from your perspective are doing pretty

well right now? >> i do. i do. i feel as though ocean city because it wasn't hit very hard by the storm is back and running. it has been back and running. the people who had second homes came down and checked on their holes. maybe they're struggling a little bit to get themselves back. all of the businesses that were hit, particularly the runs that were on lower ground and they were flooded, they're back in business, so everything is really norm ale. thank goodness. >> that is great to hear, as a business other than what are the things you think about the most that concern you, that worry you? >> well, of course, initially, when you hear the storm is coming and you don't know what's going to happen, you prepare as much as you can. when you live in a town like ocean city, which is on the ocean and prone to flooding, you are not ig more thant to the fact that this can happen. so umaic the proper precautions.

we boarded up our store. we put sandbags up. and then, of course, you just have to wait and hope for the best. >> well, merrill, we want to wish you the best as we head into this 4th of july weekend. thank you for joining us. we are thrilled to have you kicking off our made in the usa experience. >> how many calories? i had some from georgia. i was eating a lot last night. >> some are behind you, too. each piece 30 calories, you think? >> no. not quite. there's actually very little and. >> carbs, though? >> you just have to keep things in balance. >> no, believe me. i can go to mcdonald, everything in mod rakes. i will keep eating it. i need to know what i need to do. >> right. >> merrill, thank you. >> you just need to run a little extra. not much. >> not too much. i had some key lime flavor. they have amazing.

>> good stuff. >> coming up, mmm. a lot of new flavors. the eu bugging out over more spying accusations by edward snowden. we find out that they bug all of our places? eamon javers, do you have a preview? everybody is doing it to everybody, aren't a? >> yeah, there is a lot of spying in the world. now we got this massive new revelation from edward snowden, when we come back, i'll tell you what the revelation is, what it means for u.s. and europe relations all in a minute. . still to come, fixing america's tax code t. co-chair of the national commission on fiscal responsibility and tax reformer sin bowls is our special guest, starting at 8:00 a.m. eastern time. stick around, "squawk box" is coming back right after the break. .

. >> welcome back, everyone, the documents leased by edward snowden show the u.s. is spying on 38 allies, including the european union and japan, our eamon javers joins us with more, first of all, is the story right, second of all, do they do it back to us? >> throws a key questions. the revelations in their german newspaper saying edward snowden had turned over documents which

revealed the united states had been bugging eu offices and hacking into european union computer systems in order to get some access to what eu trade minsters might have been saying among themselves. we don't have anyway of independently verifying that information, but i point you to this statement who responded to the reports saying as a matter of policy, we have made clear the united states gather information from all nation, not really denying the reporting here meanwhile, nancy pelosi was on meet the press talking about edward snowden. he is no, he ro in your mind? >> no, there's thing. i have been involved in the intelligence side of the federal government for a long time. we all know that we have to have a balance between security to protect the american people and liberty. >> so american officials not

necessarily denying these latest revelations and meanwhile, policy makers sort of defending the principle of spying in general even if it's on your own allies and the director of national intelligence saying look, we gather all this information as all or our allies do. over in europe, this is causing a huge firestorm controversy. saying partners shouldn't be spying on partners. there is some question whether this will cause complications in europe-u.s. trade negotiations ongoing as we speak. so another new wrinkle here for the obamaed a men strax, guys. >> eamon, thank you. >> coming up, we have a special interview with erskin bowles. we'll talk tax reform, fed policy the economy and much more. it all starts when we return right here on "squawk box."

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the take. the deal would force politicians to make their plan for tax breaks. we'll ask the master of debt reduction erskin bowles. plus, unrest in egypt. we'll bring you a live report as the third hour of "squawk box" begins right now. welcome back to "squawk box" on cnbc, i'm jer kernen along with becky quick and steve liesman, the chief executive officer for growth equity at dan cohen investors, more in just amen minute. first, becky has your morning headlines. >> all of a sudden you are looking at the second quarter, can you see those dow futures are up by about 64 points. they were up somewhere between 50 and 100 points throughout the

morning. oversea, factory activity, the numbers in china confirming fears of a slowdown, but the sentiment in japan is more upbeat t. nikkei closing at its highest level in a month. this gaung gain showed a strong gain in optimism by big manufacturers. you can see the hang seng was up about 1.7%. also driving stock, an economic message from the prime minister, he wrote in a post that laid out the situation in japan and how he believes it can work. he calls prolonged deflation a major challenge. may be the understatement of at least the last two decades. if you take a look at the markets in europe, you will see green arrow there is as well, the footsy up . .9 of 1%. gold regaining ground this morning. right now it's up close to $12 at $12.35.

that's good news to david einhorn, you are talking about a steep drop. it took a huge toll on that fund. it was down nearly 12% in june. it's down 20% for the year. >> it was a miserable call. pathetic so far. >> is it worse than others, you know? i have to think the average fund is down a bit. >> guiding them through, i don't like alliance capital. i know, einhorn says little details. how did you know? i didn't know. >> a bidding war could be in the offing. onyx pharmaceuticals rejected a takeover bid from larger rival amgen. onyx says the bid undervalues the company and there have been other quote expressions of interest end quote about the possible seam. do you have any thoughts on

this? >> the $10 million is fully diluted. they have all the stock position, everything else, it's exciting for cancer drug, that's what the front of the tier is. it's taken a while. it's spring loaded. you heard some projection, we should be able to do some damage to that disease over the next twevent years, hopefully. >> it may be a busy day for da that. the ism manufacturing report the first report we get of the month. it will have the latest hispanic figures. tomorrow factory sales wednesday, adp a private payroll 8:15 eastern. plus the jobless report and trade data wednesday with the markets closed thursday. friday the main event the june

employment released 8:30 a.m. eastern time and protests in egypt. hundreds of thousand, i actually read millions, we're going with hundreds of thousand, rallying in opposition to president morissey yesterday on the 100 year of his presidency. josef, the millions number, is that right? is it hundreds of thousands sore there no way to tell? >> reporter: it's difficult to tell protesters in cairo calling on president mohammed morissey to step down after one year in power now. the sources again seem to be indicating that it might have been in the millions. just a brief update on the fact that it hasn't been all peaceful. clashes have claimed the lives of at least 16 people and injured more than 780. that's according to latest number we have from sources.

the opposition is putting a deadline for the president to step down tuesday and is planning to organize sit-ins and labor strikes t. scale unprecedented. we haven't seen these images since january 2011. the army bridge point is remaining newt tram. they are deployed against different parts of the capital, passing an army checkpoint, four times they were looking for weapons, checking i'deds. they have taken precautions when it comes to the suez canal. we have to waited to see mr. they will break the political deadlock between supporters and opponents of president morissey in the coming hours. >> okay. yousef, thank you very much. becky. senators max baucus and/or rin hatch are preparing to launch a reform plan to wipe the slate clean. er quinn superbowls co-chair of the debt commission and the

chief of staff and on the boards of facebook, morgan stanley,er skin, good morning, thank you for joining us. >> good morning, becky, good morning, joe, howard, it's nice to be with you. >> it's great to see you. we have talked to you an awful lot over the last couple years about a massive problem facing the nation. is the debt a vend the deficit. you had a great plan to try and address this. plan has kind of fallen by the wayside, last week, you sent me an e-mail, said this is something we definitely need to watch. can you explain to our yu u viewers what is happening with this proposal? >> this is a big deal, becky. i'm so enthusiastic that we finally had some leaders in the senate and in the house of representatives come forward with a plan to reform our tax code. our tax code hasn't been reformed since 1986. that's 27 years. i mean, just think about how the world has changed economically over the last 27 years and how

the u.s.'s competitive position has changed during that time period. think about the fact that money flows freely now and we have a tox code that is not only inefficient and ineffective. it's also globally anti-competitive. and what these two great leaders, one republican, one democrat, chairman max baucus, who chairs the tax writing finance committee the ranking member, senator orrin hatch of utah, they have come together and proposed a plan that's very similar, if you remember, to what al simpson and i proposed on our national commission on fiscal responsibility to wipe out this $1.3 trillion of annual back door spending in the tax code. that's more than last year's deficit, but wipe it off, start with a blank slate and force

people to come forward the ideas how they'd add back. joe said earlier, they'd have to be fair. tad have to be produce economic growth and they'd have to be helping other public policy areas, but the key thing is you could use that 1.3 trillion to both reduce income tax rates on the corporate and individual level, making us much more globally competitive. you can use a small portion of it to reduce the deficit. would make a huge difference. >>er skin, that sounds great, just start over, start from scratch. when you start talking about zeroing everything out. you are talking zeroing out popular programs, mortgage deductions, charitable deduction, where do you think we end up at the end of the day with all those things? are they just gone? >> no, i think that's good thing about starting with a blank slate, you do start out by

eliminating everything. you justify, why are you going to add something back? the only reason is does it increase economic growth or help in fairness or do something to help other public policy? and it's much 45rd irto eliminate one tax expenditure nan to force somebody to add it back in. when they add it back in, somebody's income taxes whether corporate or individual has to be raised. let's take the mortgage reduction. i think that's a fair one people talk about all the time. my best guess is you can end up going from a reduction to maybe credit. if you look at the tax code only 73% almost three-quarters of the

american people don't use the mortgage interest deduction or the charitable deduction. forever more, there is a study out by the i think the tax policy center. it came out that says that if you were so some way limit the mortgage deduction interest, that it might have some marginal effect on home prices, but if you were to change it to a credit from a deduction, then you'd have a chance to increase prices of homes. i think there are lots of ways we can do this smarter, quicker, better, if we are smart about it. >> everybody that he wants the housing industry, when we bring up this idea basically says it will be the end of the housing industry if you were to change the rules right now. obviously, the fed has been watching the housing industry closely, they say if you got rid of charitable deduction, dwould

it would drastically affect what they could do. down that's the case, do you think they're exaggerating? >> take housing. one of the things we proposed in our alternative solution is to change it from a deduction to a credit. i quoted the urban institute that says that might lead to an increase if prices. only 27% of the people itemize. so most people don't even take advantage of the mortgage interest deduction or charitable deduction. if you changed the mortgage interest deduction to a 12% credit, what you could do is sets say you capped it at $500,000, you co have you held a $500,000 loan at 6%, that's $30,000 worth of annual interest payment, 12% credit gives you a $3,600 credit. that actually would help a lot more people than the current mortgage interest deduction helps and, you know, it would

save, you know, lots and lots of monies for the taxpayers who now have to subsidize this because they're pay accounts higher income tax rates. >> it's a way to break it down. er skin, if you stick with us, we will slip in a quick commercial break. thank you, still ahead this morning, it may be a holiday week, but the labor department isn't taking friday off. we will get you ready for friday's employment report. as we head to a break, check out the "squawk box" market indicator. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason

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. >> welcome back to "squawk box." let's get back to our conversation with erskin bowles. i always like having you on, i feel there can be a meeting of the minds, i view you as an old democrat, not a new one so much. >> i am at all difficult. >> i will tell you what i mean by that, in light of what happened with the fed and what we're doing, where we are with

the fed. it becomes more important. because we seem to be locked in this notion until we get to 6% unemployment, we continue get the fed of 3 or 4%. i see these things in the future that are head winds to that. the things we seem to be focusing on the obama administration, immigration, we want to that, climate change, i don't know, i think that will be a negative for joshs. when we try to do obamacare in 2014, we are seeing effects there. it's almost like they punted on the job creation side of things because they believe they can't get anything through congress, they can't do infrastructure. they can't do another stimulus package. it's almost like they think, since we can't do it, we will focus on these other things. don't you think tax reform, it is, that's a bipartisan thing

that you as an old democrat and that the other side could get together on that would stimulate job creation? >> we're not. i don't see it. >> i do. i think it's absolutely possible. don't forgive, now we finally got two really senior leaders in the u.s. senate that are backing this kind of plan. we also have dave camp, who is coming out with his plan, which will be very similar to this plan that broadens the base, simplifies the code and wipes out. >> the obama administration, are you from, just be honest, are you frustrated when you look at, is it nero, the unemployment rate went up last month, didn't it? i know we have the fed, he's in africa now. i love nelson mandela, he's a great historical figure. but we have a real jobs problem, don't we? >> i think reforming the tax code, making us more globally

competitive. not just the individual code, also the corporate tax code in going into something like a territorial system. so that 1 po in5 overseas can be brought back to create jobs over here. >> if i was in prison, that's what i'm asking you, he should be back here talking to people the structural reforms that are necessary, i mean, guns, i understand, i understand a lot of these things. they seem to be, you know, sort of the holy fwral for the far left. if you really want to help the people you purportedly want to help, i don't see own motivation at all from what you are talking ab. deal? >> i believe you will see it. next week, i'm going to washington when to meet with senator baucus and cramer camp. to talk about this. i'm going to go over to the white house and talk to the leaders over there, this is

something we have to do. america has to have a globally competitive tax code. be i the way, if you think about it, joe, that's $15 trillion over a ten-year period we could have to reduce interest rates. >> are you at a climate change speech instead of a jobs or a tax reform speech? >> look, climate change is very important. climate change makes a big difference i think we have to focus obvious long term fiscal reform and improving. >> entimes? >> so we can improve jobs. >> will you recommend to president support a neutral tax form? >> i will recommend we take this 1.3 trillion over ten years and use about 96% of that money to reduce income tax rates and about 4% of the money to reduce

the deficit. reducing the deficit is really, really important. i think that's a darn good trade to me. i think that's one that we can convince people. by the way, if we take 4% of the money to reduce the deficit, that puts less pressure on things like investing in education, infrastructure and research, which we need to do. this is a knowledged based global economy we are competing in. i'm trying to do things that are good common sense to get this economy going. i'm for a territorial system to bring that $1.45 trillion captured overseas back here, to create jobs in this country. not somewhere else. >> there was a poll that showed 34% of the public opposes a reduction in the corporation tax rayes rate. 34% is in favor of i. 46% oppose it. talk about the domestic politics of supporting a decline in the corporate tax rate.

>> if we can bring down the competent tax rate, corporations will have more money available to invest and invest in this country to create jobs over here, it will make us more competitive. it will keep us head quartered in the u.s. we need to create jobs here. we need to take every step we possibly can to make america sxettive price. that's what reducing the corporate tax rate does. >> 73% thinks they've paid too little tax according to this poll which is circulating on capital by the coalition. >> you know, i think it was last year or the year before, i can't remember the total income tax that came into the country was $1.2 trillion. one trillion came from individuals and subchapter s corporations and 200 billion

came in from corporations meanwhile, we had $1.3 trillion of back door spending in the tax code. if we can take that 1.3 trillion and start with a blank slate that senators hatch and senators baucus want us to do and ice that money to reduce physical tax rates, both for subchapter s corporations and for c corporations, and we'll create a lot of jobs in this country. >> do you think, steve, i just don't see the business really getting a fair shake in just sort of the coverage that we have. i don't think people tie, disconnect the dots between lower corporate rates. the people that actually hire the people to lower the jobless rate to pay the taxes that go to the federal government to do the thing that we want to do.

the latest lego movie, over the weekend, the new york times again with the, it was every ceo and exactly how much money the ceo is paid, businesses not getting a fair shake in the way it's covered here. the sad thing is that's where the government. >> how about law and order? >> i know it is. the government, where does it collect the taxes to pay government workers? it can't gen rate it's own paycheck, can it? >> oh, yeah. joe people like you and my, people tooik like the leaders of the congress. people like the president are going to have to educate the american people that corporations play in creating jobs. >> watch any of the main stream outlets, it's almost like people are conditioned to assume that

nothing good when, namg, that's where the jobs come from. >>er skin the points you make are all wonderful points i agree with you 100%. i guess i question how uconn vince the american public. how you bring them along. >> it will be tough. >> i think when you take income tax rates up 14% to 210, 14% of the $210,000 and have a maximum marginal income tax rate, if you wipe out all of these tax expenditures, you talk to the american people about what it costs to add one back and for every $2 trademark of tax expenditures you add back, you have to raise all of the seven income tax braekts each. you know, and what senator baucus and senator hatch are talking about is something that it's distributionally neutral.

that's as progressive as the current code we have now. i believe it will create jobs throughout this country. i think it's great. >> that is an incredible idea. if you can get those tax rates out there. i guess my question is, who benefits from the corporate tax code and the individual tax code being so incredibly complicated? >> 80% of the tax expenditures in the code today go to the top 20%. 25% to the top 1%. only 27% of the american people actually itemize so 73%, almost three-quarters use the tactics. >> the problem, joe, is that corporations have come to congress and said, we need this tax break because we create jobs. >> chronism is the other side of the problem. >> i watched the politics of that side. it's just as bad as the other side. >> steve, that itself beauty of what he is talking about here. he's talking about wiping them all out, a blank slate.

you try to go back, add one back, it will cause somebody else's taxes to have to go up. >> we seen the senators be able to get together. the problem becomes over in the house, is the blank slate idea something that can play in the house? >> i believe that's exactly what you are going to see chairman camp come out with next week? it's the same thing we had in our national commission responsibility reform. we came out what we called the zero plan. it's exactly the same as these people are coming out with. >> let's run through the numbers one more time. this is the selling point you can have a tax grab 8%, 14% for anybody making up to $210,000 and a maximum rate of $23%. >> and you can take the corporate rate to 26% and pay

for a territorial system so 1.5 trillion captured wroefr seas can be brought to america. >> you have mortgage interest deduction. you have to give up the oil interest and a whole lun bunch of things. >> the top 1% now. >> that's correct. what you would have to do is, if you add it back, somebody's income tax has to be raised. >> you sold us. thank you. please keep us up to date on where this debate stands. >> great to talk to all of you. >> becky quick, ready to march on walk. coming up, the latest on the protest in egypt. we will talk to a local state department official. is that we get to create our future. .

. >> look at some stocks to watch today in early trade, dow component 3m from equal rate to the positives largely priced into the stock after a notable outperformance. viva says its q simeone form suit cals is released now. it's available if wal green,

costco locks around the country. sounds like commercial. credit swus reinstated retailer best buy, grading the stock outperformed calling it as best near term idea that it has in its coverage. best buy will benefit from management changes and infrastructure overall. yesterday's unrest in the ejichgs state. here to gives his take is pj crowley and a spokesman for the state department mitch crowley, a lot talked about this morning, there is apparently spying on the eu and unrest in egypt. let's start there. how does the unrest look to you right now? >> it's a crisis. two years ago the last time we saw that volume if tahir square, they hope for the emergence of mandela, they act in some terms

e terms, a newly empowered. they got a morissey political operative for the muslim brotherhood who spent the last two years solidifying their tent. not necessarily making it easier. >> what little i know about egypt, what matters is the army, is it in a place where it can tell morissey to go. is it looking at unrest in the street? >> that's what the mill dear did two years ago by telling mu bar ec it was time to go. then in the tran six over the next year, it did itself damage by mismanaging the transition to elements of a democracy, which is what egypt has now. i suspect strongly that's the last thing the military will be inclined to do, at least until there is very serious, you know, outbreak of violence, for

example. >> let's move on to this morning story, we have not confirmed here, that we are trooi spying on our eu allies. how bag problem is this for the obama administration? do you think it's true? >> it's awkward. it remind me, shot, shot, there is gambling going on. intellijen is the word i use, you have an intelligence operation to make sense of the world. means trying to asser tain the nature of a threat from your adversaries as well as try and make sure that your friends, what the they think about a variety of issues? . >> p.j. given the eu, performance, over the past five years in managing that vices, don't you think it would be good for us to know what they're saying behind closed doors, to give an idea how thigh will screw it up next over there? >> sure, as of right now, we

have 28 members of the eu with the exception of croatia, that's 28 points of view that feed into a common eu position. i would hesitate to say, not only does the united states try to make sense of those 28 position, now they feed into something larger, i strongly suspect the europeans are looking at each other saying, okay, if we have an issue on the table. >> of course the europeans don't have to spy on us. we have people leaking all of our secrets, but, p.j., let's talk about how the obama administration handled snowden. the president saying he wouldn't scramble jets over a 29-year-old. it's created problems with russia, it's created problems with china. what your take with the obama administration, how they have done and what they need to do. >> let's dissect that, interestingly enough the chinese moved snowden out of hong kong, expressly because they did not want him to be him the poster child of the u.s.-china relationship.

now, putin is stuck with him. has become another face in a political and flexion complex relationship. it's an unfortunate situation. at the end of the day, you don't want to make the fate of one individual the be all and end all of strategical importance like coin and russia. po ter, thank you very much. >> my pleasure. >> congress says don't send it back. >> the airport in russia. >> make that that movie the guy stuck in airport limbo forever. >> right. >> terminal. >> when we come back, we have more of our top stories, including the heat wave in the southwest. jane wells is up early with a special report and even though it's early, it is already hot there. plus, we are counting down the jobs friday, charles campbell will join us to break down the trading week ahead. right now, take a look at the u.s. equity futures, up 72

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. >> welcome back to "squawk box,"

everyone, a worker's strike idled the fifth largest rail station this morning. two unions are on strike against san francisco's bart system. walkout will affect more than 400,000 riders after the two sides failed to reach a new contract. also, a heat wave of punishing states in the southwest. death valley temperatures of 128 degrees yesterday tied the record for the hottest june day anywhere. our jane wells joins us right now with more. jane. >> reporter: hey, becky. i'm in sin city where our totally accurate home depot thermometer sets it's almost 5:40. there is an excessive heat warning in vegas through 11:00 p.m. thursday night. the southwest sweltering back to phoenix thiech afraid the air wasn't dense enough for 50 lift

volontsov. they believe a dry lightning play have caused a fire that killed 19 firefighters near prescott, arizona, it is the deadliest wildfire ever in 30 years from the u.s. and ever in arizona, here in las vegas, yesterday, 117 degrees tied a record for the hottest day in june ever. one elderly resident died t. heat reportedly sending 58 people to the hospital. i was surprised how many were out and about and how many street performers are working. >> it's hot, i'm about 1 po in the streets. >> i have an app on my phone, when i looked at it, oh my gosh, i had never been in 117 degrees heat. >> it's smoking out here. i got to do what i got to do. i can't stop the weather. >> thinking about the time when

i get off? >> i can have a cold one. >> is it bad for business? does it send them to san diego? we are nearly sold out this evening. the heat hits and the quarterly official homes. go from 449 million. statewide gaming collection down nearly 3%. of course the big news on the strip isn't the heat. a cirque du soleil pompler died during a performance last night at the mgm grampbd. the show is closed until further notice, guys. it is the first on stage death in their 29-year history. back to you. >> i was there at 6:00 last night, it was 106. i could not believe people go

there this time of year. >> the air-conditioning. i guess it's fine there. man, na is a tough, tough place. >> i tell you, i was walking through. 3:30 a.m., packed. i have never seen it like. i saw the same thing a few weeks ago. >> i was the one waking up. everybody else on their way to bed. >> anyway, jane, thank you, staying cool. >> we are counting down to the friday employment report. charles campbell will join us about the report and the markets next. i drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself?

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the second half starts off with a holiday shortened trading week t. nation's labor market are due. let's talk about our markets with rjm campbell. howard moore of gamco, charles, are we at 7.6 headed lower or at 7.6 stuck or headed back up you think? >> most likely, we are at 7.6 stuck lower. the fed wants a wide range of physical indicate rors.

>> there were no 175 a month on average? >> sort of. >> 300-some. >> if you go back, you average everything out. there is nothing on the mrz that will cause that to go down or to actually get better, 200, 250? >> well, if nick indicators improve among executive, business, consumers, they spend more, businesses spend more. >> so we could be on track? you don't worry about obamacare? china is the seconds largest economy. >> europe? obamacare? >> i worry big time. as i think you know. obamacare, we won't think of the effects until next year. it could crumble under its own weight. >> do you know howard? >> no, i don't. >> it's like a boa consixthor, it wraps itself around the

economy and slowly chokes it. >> will we be will? >> i think there is a chance. i can't be that precise. >> i think there is a chance. what i don't quite get and what i'm thinking is going to happen is i see the unemployment rate going up from here with the participation rate coming back. some people have left the work force who want to be back and will be back in the work force. whether or not. i think that takes time. we have to adjust. on the participation rate take it back to 8%. >> if you take us back to 7, 8, 7 portion 9. on the other side, you'd have strong growth if that's what happens. i think it would be a real puzzle for the federal reserve. >> they'd keep the spigots opened. >> they would keep them open? i thought it was the interest. >> we're at qe 3 now.

>> chashlsz charlrles, do you t could be? >> we had interest rates move up the beginning of may. they didn't begin on the rest of, you know, may 22. they began early may. so the ten year went up about 85 basis points in two months. would we expect 85 basis points by the vendz of august? i doubt it. >> do you think we can get to an annualized rate by g 4? >> i think we are fairly constructive. generally, more on target. >> that's good. mike has done a great job. >> we had an earnings surprise in q 1. do you think we'll have more surprises the balance of the year? >> i think we might. the real kwik trick with the earnings reporting period will be top line growth. can you get that? >> right. can we get that better growth.

youiaed can 3% the fedex pects to the 170 it expects for inflation. you get a 470 top line growth rate. for the economy. >> that's right. it's still way substandard. >> so you got to think about the idea of an extra 1% nominal growth times the operating leverage embedded if a corporate america as lean as it's ever been and 1% is worth x-plus for the bottom line. >> like it or not, bernanke is dealing with zrurl structural issue, not just cyclical. >> i was talking to howard. howard said that or charges, then i put the two together. if there are people at home, they cannot tell the twimps between these two. austen golsby and sandy. you two, are you different people? >> they look more like on

camera. >> i think they're insulting you. >> no the class is high here t. care. just the, okay, are you different. i can see that, i'm sorry. >> anyway. >> is your hair real, by the way? >> yeah. >> luxurious, isn't it? bitter, party of one. >> stocks to watch ahead of the u.s. trading day. jim cramer will join us at the new york stock exchange.

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>> welcome back. let's get back to the morning stock exchange. jim cramer joins us this morning, and, jim, i have so many questions for you. it's the second half of the first trading day. there are so many weird things that have been happening. something like $80 billion that got pulled out of bond funds just in the last month. i wonder if that continues, i wonder what happens to gold. help us here and make us feel a little better this morning. >> sure. i think gold can actually make a trading bounce. i think that the money coming out of bonds will only find its way to stocks, but different

stocks, i see the cyclicals starting to tick up. no one is focused on this, but when the worst starts getting better, it does happen. spain increasing to 50. japan doing better. i think we have a better tone through the start of the quarter than anyone expected. >> that makes me feel so much better. talking to you i think about friday and talking about things today. maybe calmed down a little bit. look ahead, and don't get so worried. >> i think so. i think that things are pretty good. we've got some of the metals ticking up to indicate that things aren't falling falling apart. 8 cents already this morning. i think there's a lot of things to pick at. let's not forget, i know it turns out there was a company that was at 90, and it turns out it was worth 50% more, and that's the kind of thing that gets people excited. >> on a drug that is at $64 million. one-quarter of it's gone to $2 billion or so, and amgen has been living off theirs for a long time. makes a lot of sense. it's attractive to a company

like amgen that could take it globally. whatever they sell immediately, right? i don't know if onyx has the capabilities for that. >> no, amgen does. amgen has to start playing catch-up to gillead and biogen. they've been left behind. they were one of the big four. they need this growth. who knows how much they have to pay to fwet it or maybe pfizer comes in. this is a terrific piece of property because it's got multiple myaloma and it has amazing drugs for anti- -- for kidney cancer. there's a one in a million property. somebody is going to pay up for it. >> that's exciting. that's what we need. >> i agree. >> someone else to come in here. >> and welcome back, joe. >> oh, thank you. good to see you. been watching you -- huh? >> a couple minutes more. we'll catch you at the top of the hour. thanks, jim. >> thanks. coming up, our guest host this morning is howard ward. we'll give him the last word when ""squawk box"" returns. i want to make things more secure.

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>> get back to our guest he host. you're done? >> oh, man. >> you're -- >> howard. >> i'll take the glasses off. how is that? >> you have the same glasses.

>> howard, when your bottom is up versus top is down, you -- it makes it a little easier, doesn'ts it? don't you have less to worried about? don't you sleep better finding companies that do well regardless of the veemt? >> well, i think it's two things. the extra question is yes. there are lots of companies that we like, and also, we really don't believe in the whole notion that you can time the market successfully. very few people can do that. people spent way too much time trying to figure out should i be in or out and jumping -- >> if i wanted to buy, can you give us good names? >> sure. well, we've been beating up on obama care, but if you want to take advantage of that, how about a name like cvs. if you have 30 million additional people getting prescriptions, cvs is going to write a lot of additional prescriptions. >> who else? >> eeaero space. ee makes the interiors for 45% of the aircraft. wide-body aircraft are in vogue. there's an even bigger interior, more seats, more lavtories, more

gallies. 20% growth. eav, absolutely. how about priceline? priceline is the floebl leader in on-line travel. they've been posting 20% plus growth in a pretty lousy global economic environment. rising consumer confidence. go priceline. >> howard, thank you. steve liesman, thank you. we'll see you back here tomorrow. right now it's time for "squawk on the street." >> welcome to stock on the street and the sejd half of 2013. at the new york stock exchange. dow does start the morning with some green after the best first half since 1999. oklahoma was 14% so far. that ten-year yield has become our touch stone, of course, and the two and a half line sitting just above that this morning. europe has some buyers after the pmi's over