nation's manufacturing and construction sectors helped get wall street's second half off to a positive start. take a look at the futures now. and you will see that there are green arrows. dow futures up by 14 points. these are modest gains at this point. as for the major european averages, very similar situation there. actually, wow, the -- in germany, the dax is down by over 1%. weakness in the cac and the ftse 100 in london as well. overnight in japan, the nikkei gaining nearly 2% to close above 14,000 for the first time in five weeks. today, the markets will the question to the latest report on factory orders and monthly sales report on autos. and fed speak, new york fed president william dudley will deliver a speech on regional and national economic conditions coming up at 12:30 p.m. eastern time. jerome powell will be speaking on international financial regulatory reform tonight at 5:45 p.m. eastern time. andrew, other fed news as well

today, and, welcome back. >> thank you, becky. you're absolutely right. the fed's board of governors will be holding an open meeting of basel iii. this would avoid another financial crisis. the question, will the rules end too big to fail and if they hurt profits and the economy? we'll give you complete coverage of all of that in today's fed event. i'll send it back to you, joe. good to see you. >> andrew, good to see you. is that on -- that's on the record. that's definitely on the record. >> what's on the record in. >> your little -- >> i was just in aspen at the festival, all on the record. i think you can go online. maria was there thursday and friday as well. all out and about. >> did you -- >> unlike some of the other things we talked about over the

years. >> you solved -- did every societal issue and problem get solved? solved by the elite? >> yes. >> the ideas can be put through government and executed by the elite government officials that we have elected and the bureaucracy and we can solve just about anything, can't we, if we put our minds to it? >> solve anything as long as the government is in charge. >> was that a liberal love fest? did you just rub it all over? >> we just rubbed. i can feel it still. though i have to say, i spent some time with eric cantor who says hello. >> eric was there? >> eric was there. >> some representatives of reason there. >> he enjoyed himself, there with his wife. had a lot of fun. hank paulson was there on the other side of the aisle. >> you were able to bring up two people that the exceptions to the rule, right? because they stood out. and look at -- you know who you look like? you remind me of today? >> who? >> i'm worried that, like, a bird is going to come down and

maybe go like that. >> the birds? >> you look like tippy -- >> like the hair today. >> thank you. >> she had her hair just like that. >> you need to put it up so the birds can really -- >> i did have a bird -- >> shad upon you? >> yes. >> when you get up and you think, you know what, i'm going to do that some day, i'll come in, you know what, i'm sick of my hair and i'll put it -- >> you're jealous because you can't change it. >> in this business, it is all about this, as you know. >> i thought it was a little summer look. >> it is the summer. july 4th. >> were you hot? >> no, honestly, i clipped my hair up this morning, i thought it looked cute with the dress, so i asked -- >> the dress. wondering about the -- men are from venus and women are from mars. >> i can just stick it up in there. >> that's pretty good, actually.

>> that's nice, yeah. >> that's actually pretty good. >> there is corporate news today. disney's bob iger got a contract extension, the entertainment giant board taking on -- tacking on 15 more months. he can stay on as ceo until june 30th, 2016. gretchen morganson is just screaming. no! i hate this man! iger planned to step down on april 1st of 2015 and assume the role of executive chairman. iger took over as ceo in 2005, overseeing the acquisitions of pixar and marvel. not to mention -- >> the stock over that period of time. >> does it matter? you know what the average person makes at disney and what he makes? it is just not fair. not fair what journalists get paid. mentioning print journalists as we do. andrew, do they know that over there now? huh? the wretches over at the -- do

they have any idea? >> i heard zynga has some news this morning. >> zynga gets their man in the online gaming company bringing in don mattrick. this guy knows as much as jerome powell. he headed up microsoft's xbox business and mark pincus who personally recruited the executive -- >> i know this guy, i do. good guy. smart guy. >> which guy do you know? >> you know -- >> don. >> that's amazing. >> the one on the screen now. >> that's amazing. >> good guy. smart guy. by the way, built the xbox business. >> huge. >> as much a -- >> run into him at conference? >> as much a big thing for zynga as it is a big thing and bad thing for microsoft. >> interesting. they were getting out of all of the things that microsoft has done, they seem to do a little better than some of the stuff they tried, other than, you know -- pincus holds 61% of the

voting rights. he'll remain chief. shares moved higher on the announcement as well. and departure of mattrick comes as microsoft gears up for the launch of a third version of the console. steve balmer expected to announce a broader rate. do old games play on the new one? >> i believe the sony device. i could be getting this back wards. i'll check. sony device plays them. sony plays them backwards. >> i don't think it does either. some blowback from that. >> we were trading in games orbit dthe other day. like 30 of them. i saw we were going through and deciding what we still played. >> the new way to get it though -- >> is that you or -- >> all of us. i played some golf yesterday, shot a 32, 4 under on one of my -- yeah. never done that. >> it was raining yesterday. thinking about playing wii

bowling yesterday. >> did a little bowling, baseball, tennis. i've never -- i'm not going to play regular golf anymore. why should i? >> it is beautiful. that's the only -- that's the reason to go outside. >> it is beautiful -- >> i play a little wii golf with you. >> that would be fun. >> i don't overswing. i take into account the wind, i move the ball left or right, i putt better. >> we also have some news. what do you think about the twins? the winklevoss twins. >> would we care if they weren't in the movie? >> the bitcoin this is a big deal. >> let's explain what is going on. the winklevoss twins are taking bitcoin public, or trying to. the famous social networking pair revealing plans for an ipo that would give investors a chance to track the value of the digital currency. that is them there. the winklevoss bitcoin trust is

what it is called. it will act like an exchange traded fund or that's the plan. they say they want to sell $20 million worth of shares. bitcoins, if you don't know, are a form of electric money not managed by a single company. they have been volatile since the start of the year, rising from $13 in january, $250 in april. now valued at about $100. my understanding is that it will be one bitcoin -- or one five bitcoins -- i'm sorry. one share of bitcoin for five bitcoins. >> no idea. >> is this ever going to be allowed? >> i don't know. >> we don't even know who started the bitcoins. >> after everything that happened with facebook and the ipo and investors feel like they got burned, would be a little strange. >> you know who should get on the case? martin chilten. >> martin, gary before he takes

off. >> those guys are tall, handsome, and rich. bitcoins. >> and bitcoins. all very cool. >> getting messages on your -- look at you with your telegraph machine. >> blackberry. >> little tiny little screen that doesn't do anything but give you words. >> it works. it works. just checking on some of the things for the markets this morning. let's look at the futures. you'll see them now. they are indicated up by about 33 points. big question is what happens with the jobs picture on friday. the ism manufacturing yesterday, that number had the employment component that was a little weaker and that has people raising questions about what that means for friday's jobs number. look now at oil prices. you'll see at least at this point that oil prices barely budged, up 14 cents to 98.13.

the ten-year note, the note pulled down, rose up yesterday, and back down again today. the dollar now, again, dollar has been what we have been watching with all of these central bank moves happening. the dollar is up against the euro, which is at 130.25, up against the yen too. 99.75. and gold prices this morning are up just $4.90. 120.60. did see a little gain yesterday. 120.60 is the closing price. time for the global markets report. ross westgate standing by in london. >> two to one decliners currently outpacing advancers on the dow jones 600, the heat map, the wall behind me. not quite at the session lows. in the middle of the pack from where we have been up between the highs and lows today. not a bad move yesterday for the european markets.

ftse market up 1.5%. today, down half a percent, little less than that, 24 points lower. cac up half percent. down nearly a percent for the xetra dax. the only sector today that is higher is basic resources which has been a -- has been flat. basic resources firm. we did see it rebound in copper prices and material prices yesterday. despite the china pmi being weak, we have better than expected pmis in europe and the uk and the ism back above 150. seems to be a little follow through today from that. financial services are weaker today. and we keep our eyes on autos. u.s. auto sales coming out. saw a decline today in germany, but u.s. numbers will be more important and the chinese numbers as well. one stock worth keeping your eye

on today, medical care, off 10%. this is because of proposed cuts in -- rate cuts of around 9% in medicare funding for dialysis. that will affect fresenius, stock being hit on the back of that as well. you mentioned u.s. yields, show you where we stand with spanish yields, hit 5%. spanish yields today, lower, 4.6%. little contained. and gilt yields back. a little data today out of the uk better than expected, this time on construction. mr. carney, the incoming governor, had three sets of data in the first two days as governor, all pretty good. so he's already got the midas touch, and hasn't done anything. back to you guys. >> ross westgate, thank you. edward snowden remains in russia but dropped plans to try to remain there. the former nsa contractor has withdrawn a request for political asylum there. the kremlin says snowden is in

the transit area of the moscow airport after arriving more than a week ago from hong kong. russia maintains it will not send snowden back to the u.s. to face espionage charges, though president putin did say yesterday that snowden should, quote, stop harming our american partners and, of course, that from that respect, also the issues about what is going on in europe and all the leaks. you talked about that yesterday on the show. but saw some of the quotes coming out of germany and the uk and france and elsewhere. it is something. it is something. wi >> we had a guy on said, just like casablanca. >> gambling going on here? >> we wanted to be -- you weren't here for this, but we wanted to be flies on the wall when they were talking about cyprus. someone said, i know, let's take the depositors and just take 10%. we're, like, what? no. it was a one way -- we heard but

couldn't say back to them, don't you think they need a little supervision with how they mucked this up over in europe? don't you think we should be listening? >> spying on the imf? that's who you should be spying on. >> i would like to spy on dominique strauss-kahn, not the imf. that guy, who does that? hey, little lady, going to come to clean up the room, are you? check this out. >> you could sell those videotapes. >> exactly. this is your read. no, this is becky. no, we're going out. >> we are. >> to break. >> we are going to take a break. >> a couple of bucks. >> when we come back, we'll have an update on the extreme heat gripping the southwest. plus, what's next for microsoft after losing a key executive and planning a major restructuring. as we head to break, check out the futures. we can show you right now, dow futures up by 39 points now above fair value. gaining a little ground as we have been talking. "squawk box" will be right back. in a world that's changing faster than ever,

we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

egyptian president mo haham morsi says he will not give into the ultimate to force a resolution. an update on the situation now from yousef gamal el-din. he joins us now from cairo.

and as i now know, it is afternoon. i found out from yousef yesterday. good afternoon. >> reporter: yeah, we just passed into the afternoon. good to see you, joe. as always, it might seem quiet behind me. what a night and perhaps we can show some of those images yesterday, millions across the country hitting the streets. a lot of them celebrating this army statement that came out late afternoon around 3:00 or 4:00 p.m., basically finally the military taking a stance. we talked about this, though, yesterday, they're looking at the situation and saying we're seeing a divided country. you have 48 hours to figure it out. if you don't, we'll put forward a road map. there is a few drawbacks with this. number one, didn't clarify what that means. all they said is they would bring everybody together, and install this road map, just oversee it. they did not say that they will be involved in any formal governance as they were in the

tran significa transition period. that's number one. it took nine hours for the presidency to respond. here's the kick, joe. they were not consulted about the statement. they were caught off guard, according to them, and they insist they will move forward with their own plans. and will not necessarily listen to what the military is saying. they're saying it is not very advisable to make the statements in this difficult time the country is going through. and we'll have to see how it all plays out in the next 24 hours, whether the president can really rally people behind him, especially opposition, and get this sorted out. the problem is that the cabinet is falling apart. the foreign minister resigned this morning. we understand more ministers tendered their resignation. it appears the president is being driven more and more into a corner. the market is trading to the upside of about 5% just to give you an idea how investors were reacting to the protests and to the army statement and finally the response from the presidency. >> we'll see.

now, no millions in the streets at this point. that's been something to watch. y yousef, appreciate it, thank you. when will the southwest see relief from triple digit temperatures? let's get the national forecast from the weather channel's alex wallace. another couple of days at least, right? >> you know what, yeah. it is going to be a bit of a hot time for many areas in the west. but slight cooling towards the weekend. let's talk about the east, which will be pretty wet out there over the next few days. jet stream in the middle of the country. out ahead of it, big area of moisture, tropical moisture feeding up and down the east coast. that means thunderstorms from new england back to the mid-atlantic for today. and into the southeast as well. atlanta, through the carolinas, good chunk of florida expecting wet conditions for the day. in the middle of the country, a bit of a cool start to our july. we got the general flow coming in from the north and that's going to be driving it over the lake waters.

so places like chicago, look at your high for the day, only 66 degrees. that's a good almost 20 degrees below your average and a lot of 70s for the rest of the midwest. look pretty good here. the west as you mentioned, very hot. our big ridge of high pressure is in place, talking all the way up into canada, hot conditions, that's in place for today with triple digit numbers. boise, 108 degrees. vegas, of course, extreme, it stays extreme for you. 114 for today. by the time we head to tomorrow, no cooldown there. reno 102. toward the end of the week, temperatures should slide back down closer to average. guys? >> alex, thank you very much. it is hot out there. we are glad we're on this side of the coast. microsoft's entertainment head don mattrick announcing his departure to replace mark pincus. joining us is ed mcguire, clsa managing direct and senior analyst.

ed, thanks for coming in this morning. we have been looking at microsoft. this news, a lot of people were caught off guard by it because they were expect something sort of restructuring from microsoft, something that makes it a devices and services company instead of software company. was this something that microsoft wanted or does this kind of thwart their plans with the departure of mattrick? >> at this point there is the expectation that the restructuring is going to be pretty comprehensive. it looks like a pretty good opportunity for mattrick. microsoft does have a deep bench. i don't think this throws plans off course, but the restructuring, what we're hearing, it is a comprehensive restructuring, it is really designed to much better align microsoft to be a products and services company than just a products company. >> how do they do that? what do you expect in the restructuring? >> that's subject of a lot of speculation. you can have a -- you can divide it into consumer enterprise, plat forforms has a big role.

it is unclear how extensive this is going to be. it is likely we could see this result in the change in the way microsoft actually reports their financials. their financial segments. i would expect we could see a lot of the entertainment and consumer products and services lumped up into a single division and possibly separate the enterprise business as well. because that's where a lot of the economic strength has come from. >> is that enough? the street pushed for things like the sale of bing, xbox, all kinds of different moves. what in your opinion needs to be done? >> it is an organization that has grown extremely unwieldy over time. a lot of inefficiencies, a lot of duplicated efforts across the organization. if you better align marketing sales and development to reflect the realities of the market, there is a lot of margin improvement you can get financially. i don't think selling bing would

be the answer to -- who would be the buyer? but the strategic value of bing was on display at the build conference last week. microsoft is using bing as a platform that can be incorporated into a role range of different types of services. >> a couple of weeks ago on the front page of the wall street journal there was a story that microsoft looked briefly at buying nokia completely. that seems to be off the table. but do you think qwe could see them buy another hardware company or spin off some of their mobile stuff and try to do something with somebody else? >> it is possible. microsoft has gone into hardware directly by using service as a test case. i don't know that microsoft's past playbook would lead them to want to take on all the problems of a hardware company. look at the trouble that oracle has taken on by buying sun. that's enterprise. different. but there is no need to buy

blackberry, no need to buy nokia, a lot more efficiencies if you want to create your own supply chain. there are a number of assets they could hive off, but i think the real unlocked value here is in the integration of all of the pieces. integrating them a lot smarter without having a lot of cross purposes, so much ip within the organization that has not been, you know, fully capitalized on and fully integrated. that's the opportunity that presents here. >> you wouldn't buy the stock if they are able to come up with some sort of streamlining plan? >> absolutely. there is a lot of opportunity from our expansion and more efficiencies. >> ed, thank you very much for coming in. >> thanks a lot. >> coming up, the markets earning central and the latest headlines and we'll do our american made segment, the ceo of vit vitamix, the rolls-royce blenders. i'm going to give one of these guys a test drive. you can come over and check it

out as we head to a break. a look at yesterday's winners and losers. ♪

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welcome back to "squawk box" here on cnbc. i'm joe kernen with becky quick and andrew ross sorkin. here are some of your morning headlines. u.s. automakers set to release june sales figures. that will be this morning. edmunds.com is who we look to for that. estimates that ford will lead the way with an 11.7% increase over last year. toyota is seen posting a 7% increase. and chrysler is seen up 10%. general motors up 1.3%. in the world's largest bond fund did not have a good month in june. the pimco total return fund lost 2.64% last month, the biggest one-month drop since september of 2008. ratings company nielsen hoel holdings will be the newest member of the s&p 500 replacing sprint nextel after the close on july 8th. majority of sprint's shares are being bought, as you know, by japan's softbank. check ahead for what the

markets will look like with the jobs report fast approaching. joining us now is tim holland, portfolio manager and partner at cameral funds. can you explain the last couple of weeks and what we have seen? last week, yesterday described some of these people, i guess richard fisher called them, i don't know, pigs. wild pigs. i think he meant -- >> feral. >> spoiled brats. did the traders try to get out ahead of short-term moves and don't want to be long or maybe want to try to benefit as it goes down a little? but, geez, just the idea that some day we don't do 85 billion, we go down a couple hundred points and the fed comes back, it says, we're sorry, guys, we didn't mean to spoil your parade, what did you make of all of that? >> it was a pretty sharp move to your point, joe. i think people are just spooked about what happens when the fed, to your point, isn't as accommodative. saw the big backup in rates that

killed the home builders, killed anything tied to the consumer, tied to big ticket purchases and people all ran to the other side of the ship and realized maybe they ran a bit too far. that's the big question. can the market handle some sort of resetting of rates and the yield curve. if it can, we'll be fine. if not, my guess is we'll have a lot more sort of junes before we figure this out. >> that's the key question, whether we can unwind and whether there is some comeuppance or some dues to pay for all this accommodation. and there are people on both sides, people think are going to do this relatively smoothly and you can bring the balance sheet back down a little bit. and orchestrate a soft landing. is it possible to do that or are some of these people with the dire forecast, are they going to be right. you must have a opinion one way or another? >> i'm in the former camp rather than the latter. i think the world can handle

marginally higher interest rates. i think the big key is how it does tieback to housing and the consumer. what finally got the market going and got sentiment going in the right direction was housing, turning up late 2011, 2013, so you look at the toll brothers, that's corrected 30%. business is still good, affordability is still good. i think it won't be maybe an uneventful muddle. but i think we can muddle through this sort of resetting and if we can, then i think what is working will continue to work in the big part of that is consumer and doe midwee domesti companies. >> what you're saying is it is going to be a problem, but long-term it is something that we can deal with. do you expect there to be more 5%, 6%, 10% corrections in the meantime? >> you know, there will be pullback and people are spooked. i think question handle it.

again, i think a big part of it comes back to what do marginally higher borrowing costs mean? so far, they're manageable. if a ten year runs away, that's a different conversation, but this sort of steepening of the yield curve is on balance, a good thing for the banks long-term and hopefully speaks to you not just the fed pulling back but maybe some decent underlying economic fundamentals. >> okay. all right, tim. thanks. we'll be watching. we'll check back. >> good to see you. >> still to come, how economics can save energy as much as all the solar power generated in the country. that's coming up in the next hour. don't look now, there is something lurking out there. ready to strike the markets. it's cnbc's version of shark week. that's right. earnings season is coming. time to get out of the water or jump for ideas.

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welcome back to "squawk box." look at futures. good news. we have green air rose rrows ony morning. s&p 500 up 3.5 points. the nasdaq up close to nine points. shares of onyx fapharmaceutical jumping. now a bidding war may be brewing. reportes say pfi es sas say pfi may join amgen. >> also earnings season just around the corner. let's get the latest quarterly

projections. joining us, ashwani cole at cal advisory group. we hear it once again, this is what we have been hearing time and time again that the earnings expectations have gotten ahead of themselves and maybe the street needs to bring things down. >> they have. if you look at the last three or four weeks, earnings have come down for the industrial sector, the financial sector and some other sectors. not financials. industrial, technology. so, you know, i think analysts are -- have gotten their numbers to what companies are expected to report. right now we're looking for record earnings for the first quarter. if you look at it subsequentially, we'll look at the record, 0.8%, almost 1%. if you look at it from a dollar per share perspective, $26.5 per share in earnings in the second quarter. >> if you start breaking down into the sectors, looking now,

financials are where the biggest growth is expected, that and telecom, 17%. >> these numbers are always subject to change. but i think going into the earnings season there is a lot of expectations for financial earnings. i think also what the language is regarding, you know, the -- what the fed recently said about their asset purchases, i think that's going to be the number one thing that people focus on. no patience for, you know, bad earnings now because you're talking about loftier expectations. the pe on the s&p 500 over the last year has gone up 1.5. it has gone from 12.4 to 13.9. the multiples have run up. now, our earnings are going to keep up with those sort of lofty expectations. >> multiples have run up because the expectation is the economy is improving. that's what the fed signaling with everything they have been talking about. is it true? >> you got to also think, like, you know, qe has a lot to do with it. once we lose that crutch, it is

going to really tell, like, how are corporate earnings going to fare post qe. it is a big question. i think also good to keep an eye on is global markets in terms of what companies are saying about europe, what companies are saying about asia. that's been the number one theme that we have seen that companies, whenever they're warning, they're warning on what is going on here in europe, what is going on here in asia, more than the u.s. i think that's something that bears watching. >> if they're looking to asia, things probably aren't getting better. similar situation in europe. jim cramer pointed out yesterday, the numbers in spain started to improve. >> i think europe is well ahead of asia. i think if the u.s. is where it started, went to europe, it went to asia from a recovery standpoint, going the same direction. >> so what do you think we'll be hearing from the companies themselves? that's the million dollar question. i think companies are still going to be very conservative in this environment.

i think for a company to jump out and start raising guidance, i don't think you'll see it. if you look at the negative deposit of preannouncement trends now, 2.5 negative to 1 positive. people are, like, there is a disconnect. why are 70% of companies beating estimates. that's a good question. i think generally they want to get the bad news out. good news they want to keep to themselves and hopefully when the time comes, they'll come out with that good news. >> china's bank rate, did you read this story? >> i did not. >> governments may have made a horrible misstep in all of this and that ultimately was the one that took the cash out of the system which was the reason why we had sort of the amount of disruption that we did. i was just trying to understand sort of how much of an -- how horrible that's going to be in terms of when we see earnings the next two quarters. >> i think just the language is so important these next two quarters. i think people are looking for

any sort of guidance post qe and all that stuff. >> we might want less guidance. >> bernanke -- >> had a bm last night apparently. >> what? >> along with your friend, gwyneth paltrow. >> oh. >> we're hearing too much. >> too much information. tmi. >> every single guy, and then when someone -- >> jerome powell, you said you hadn't heard of him before. we heard of him last week. >> they come out, they twitch, and we write -- we try to analyze the twitch of a nonvoting guy and what it means from cutting 5 billion from qe. >> i would like to hear more from the ceos, though. when you have the ceos coming on -- >> that's what i'm talking about. i think if -- to joe's point a little bit with the fed and, you know, they make a statement, then the next guy -- the next day some guy is hedging that

statement and the next day somebody else is hedging that statement. i agree with joe a little bit. from an investment perspective, getting into the mind of the ceos and what they're going to say is going to be very interesting. >> we heard recently from jim mcnerney, he sounded very positive, but we also spoke with dave cody. he did not sound positive, particularly when he looks at asia and some things happening there. >> earnings have been resilient. we hate to say the quality of earnings, the quality of earnings. the quality of earnings are better, okay. we're projected to earn $110 in the fiscal year 2013. joe likes that number. and still a strong number. if you look at it with all the back drops and everything, i think earnings are going to surprise a little bit. i will say this, i think investors will have a lot less patience this time around. >> i don't want to pine for the days of greenspan, but i remember watching him and trying to figure out, we need a brief case. >> he was talking circles on purpose. >> but profound in what he said

and there was always truth to what he was saying. you had -- when it finally happened, the day of the decision, you could be surprised by what they did. now it made sense initially, and talked about it nonstop, about the transparent fed they wanted to do because they thought it would help markets. and now it seems like it -- >> on the way down for the rate, will not help on the way back up. >> before you left on vacation, you made an argument to me which i thought was on the money, which was you said what you said, the market went down, volatility and it hasn't fallen too much, they said it again, it has come down. >> totally women imped out. >> where will the market be when it starts to taper? >> will start before that. it will start when -- >> i thought they wimped out last week. >> then you say this is a win. >> take the dislocation. rip the band-aid off. >> the dislocation would actually be much worse.

>> didn't you see the damage control last week? weren't you surprised the market comes down a couple hundred points and then they're like, we didn't necessarily mean it would be right away, just -- they immediately came back in and -- >> depends on labor markets and all those -- >> that's a good cop/bad cop situation. you have that much transparency, you have 16 guys, eight of them good cops, eight of them are bad, you don't know who's -- okay. >> thanks, guys. >> thank you. >> i think i want larry summers to be the next guy. >> larry. >> i like to talk about that. that has people fired up. >> he comes on the show, we just won't need him to talk to anyone else. can tell us right here. plus, my daughter might want to go to harvard, has a connection. >> coming up -- >> she can't do math or science. >> oh. is there anything -- >> i went both ways there. >> -- we're going to introduce you to a disrupter making that a reality. and in the next hour, home builder ara hovnanian on the

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. >> welcome back to "squawk box."

uber is offering chopper flights. you can do that $3,000 per lift. they will get you the car, the helicopter. you can do it on iber. >> $3,000? >> not a bad deal. from false listings to i-broker fees, it's almost impossible to find a department in new york city these days, our next guest is using tools to help renters find their way home. the founder and ceo of urban compass. to give you a little backgrounds, gary cohen, he works with max many years. how long have you worked with them? >> a year-and-a-half. >> every friend of mine who knows you thinks one day you will be the mayor of new york city. you've heard that before, but it's someone like now! >> we need someone now. >> you get in the race. >> no, i'm focused on urban compass. >> even before this bloomberg term. anthony is on.

he's big time. have you seen him today? >> anthony weiner. >> he is somewhere waving. he is so back. he is. >> he is back. >> while we have robert here, let's talk real estate a second. you were working with the guy, ori alam. he is a bad guy, can i say that? he sold businesss to google, facebook. now you are trying to upend the real estate market it's cool. explain what it is. >> urban compass, we believe finding a home should be fun and fair. so we've created an end to end online apartment rental service, online search, online scheduling, online payments and online application. we have our agents, which we call neighborhood specialists. they specialize in neighborhoods. they are paid on examiner satisfaction not commission. >> when you say all the billing is done through the site. you pay your monthly bill? in there we don't do online rent

parnlths but online application payments. >> to the agent. >> exactly. when you say they don't get paid on commission, they get paid on satisfaction, how does that work? >> brokers are independent contractors, which mean they only eat what they kill. there is no salary, no health care, no benefits of any kind. all of our neighborhood specialists are paid salary with an incentive compensation tied to customer satisfaction, scores. and they get health care, they have metro cards, going to boy them all city biotic passes. >> they're not going to be quite as ruthless, list better for people to deal with them. if you never lived in new york city, you don't know what it's like to pay a 15% commission to find an apartment for a year. >> we have technology to bring down the fees in new york city. >> i assume the douglas elements of the world hate you? >> they're our partners. almost half of the rent ams are co-brokes.

there is a broker on many sides, in many cases they're our partners. >> are brokers from the big agents leaving, coming to you? are they trying to partner with you? how does it work? >> about half our agents come from traditional brokerage industry. we take a lot of principles from danny meyer and hospitality in our customer service model. >> explain the fema revenue model to a douglas element, for example. >> absolutely t. traditional broker charges 15%. we charge 7.5%. we want to bring the fees down further ooug using the technology. >> tell us a little of the product. i played with this a little bit. you have mobile apps. it's how you do it? >> so we've created an end to end online ecosystem, where have you an agent app, for a specialist that ties to a consumer mobile app. you have a desktop interface, all the way from the search to the payment. it allows poo emto connect not

just when they're at their desktops, when they're in the fields, so they can find apartments. >> right now, this is in new york city. when do you see this expanding to other places and also do you see yourself expanding into not just a rental market but buying places? >> we definitely have ambitions to go into other cities an sales, right now, with refocused on doing well in new york and serving customers as well. >> are there other markets in new york? do you think this product works great in this specific area? does it only work in cities? >> i think it works more in cities. they're more densely populated areas. but the customer service problem is in every metropolitan area. >> thank you for coming in. >> thank you, very much. good luck. what's that? >> well, this loda character is saying that he's appealing to women to come forward and say what it was like to be on a date with weiner. >> you got to get humor on this.

>> he's gone. that's what i said. that's the latest. then they got something on quinn here. you probably will start backing her i think, an drou. because she wants all meals like applebees, mcdonald's, all have to be federally a certain amount of calories, like the elementary schools. >> they don't have to say it? >> they have to serve it. >> when we come back, we will talk about the jobs report and what it will mean for the markets and the tapering plan. our guest host has that covered. squawk comes right back. .

>> good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick and the futures are higher. the dow futures are up by about 26 points this morning. if you take a look at the fwloebl markets, asia and stocks were mixed overnight. sentiment improved over a series of youp beat manufacturing reports the hang seng finished flat. the nikkei rose 1.75%. it's easing biassed stay saying the australian dollar is still at high level. statement drove it down overnight. gold is stretching its gains for a third straight day. fires in china taking advantage of lower prices after its plunge to a three-year low, gold prices are at 1,288 an ounce.

>> corporate headlines, onxy pharmaceuticals rejected amgen's bid. would be for all the shares and options. now there are reports several large firm pharmaceutical companies, yesterday pfizer and novartis expressed interest in offers for onyx, a promising cancer drug for myeloma. >> it's a big deal. we have bad news for microsoft. zynga replacing its top ceo. x-box chief will become the new executive officer. he controls voting with 61% of the stock rising during yesterday's trading on reports of that move first surfaced. you can see that up this morning

they will follow the alternative victim. the trust will operate leak an exchange traded fund. it will initially sell $20 million in shares for the chairman of winklevoss. he sued mark zucker berg seeming leak he stole their idea for facebook. >> people don't know where bit coins came from, how they are developed. they're going to store these bit coins, which are virtual, anyway, what does it mean to store a virtual bit coin, will they have a virtual vault? >> sometimes virtual and real will eenergy 2045. >> it's not that far from now. >> disney wants chairman and ceo

bob i can to bob eiger to stick around, it gives him more time for the "star wars" creator lucasfilm, which disney acquired for a little more than $4 million. eiger has been ceo since september of 2005, leading disney through a major expansion. the stocks are up more than 40% this year. i don't know what their expression is what is more certain than something. i don't know. it's almost incredible. they are for the blockbuster. >> how many are there? are there 11? is it like 11 or 11? >> they are close. >> monster's university, they're close. >> all these big budget, "white house down." "world war zee." nothing. i want to see "monsters

university. "i haven't seen it yet. >> i haven't seen it either. >> i saw "super man.". >> i want to see the zombie movie still. >> okay. also, apple today, here comes the i-sung. do you have views on this? apple is planning to build a solar farm in georgia. it will supply power to the local electric grid powering a data center if reno, apple is hoping to have it run on renewable energy, it is current will i the largest solar power data center in the united states. >> our guest host the next two hours is david darce, morgan stanley wealth management, mark puccini. david, we asked earlier, just the question, we got a snapshot of what the eventual exit will look like with the fed. it was a little scary for some people.

it seemed like it was scary for the fed. is it going to be a clean or a kind of a nasty exit? >> it will be bumpy, joe. you have laquer. you had contra lakota. you had jeffrey, the guy from richmond lockhart. you had all these people coming a. laquer an lockhart two of the 12. all of them trying to dial back a little bit. >> because of 300 points. >> let's tase it. the marks basically been driven so far this year by the quantitative easing and the monetary stimulus. second is reduced perception of tail risk. a chance of italy or cyprus or greece destabilizing things. our perception has been reduced. thirdly, a little better check flow. what we need to see from here is profits, revenues, reneed to see people revising upward their gdp forecasts. so it's going to be bumpy.

our folks just raised their june 21st, which is two days after the june 19th second bernanke speech the first may 22nd. then june 19th. june 21st, morgan stanley's economists said by year en, they think the 10-year treasury will be at 270. our earlier forecast was 229. we raised it by 31 basis points. >> when will we be at 0? >> 0 interest rate policy is something different. >> when will we be at zero for how many bonds they buy? rates can stay where they are. >> prices are next june. >> they'll be out of the market? >> they'll be out of the market. it's good, it's done p done a few things. it hasn't been the be all and send all. it's structural reform. >> the ten year will be at 270? >> at year end. >> this year? >> yes. litteren, in 1994, the fed raised interest rates from 310

to 460 t. market was up 15% through june of that year. >> if that works, yeah. >> 15% through june. it sold off 5% like it's just done. then it came roaring back as the economy did better. it was up 36%. >> i know, three straight years over 30, mark, where are you on this? do you think they can orchestrate a soft landing more or less? >> very similar views to david, joe. while we think it will be a little turbulent as they announced officially when it will begin, september or october is our likely suspicion. it probably put pressure on bond yields. once again, i think they will drift lower from here to then. will probably undermine equity prices until then. at the end of the day, if it is a bipartisan that the economy is asserting enough, not accelerating warranting them to remove the intervention they have underwritten for five years, i think that ought to be

good news for the stockmarket as it is obviously instilling the suspicion that will is a fertile climate ahead for corporate profits. that's the mother's milk for higher share prices. we think that ultimately will be the outcome if between here and then it gets murky in terms of what, in fact, it will mean for equity prices. >> the people that sell the mark when they think the fed is going to get out, are they people that just think that the $85 billion somehow makes its way into the stockmarket or are they people that think that interest rates go up and the housing rebound suddenly is cut short? is it, you know what i mean? is it just that the money goes there or are they worried about an ad verse economic effect from cutting short some of the recovery we see in the consumer or housing? >> we are of the belief that those who would sell off the equity market are of the belief the only reason the economy is where it is and the stock prices are where they are is solely due

to the fed's intervention, we haven't had 100% rise in corporate profits since 2009, there is no actual underpinks to the economy. we know at least in our opinion that is not true. in fact, we have suspects here of a capital spending revival, three spending months increasing. we have a housing recovery. we are showing double digit increases in housing prices across the united states the consumer deleveraging process is advanced. we thinked is sturdier and warrants where stock prices are at this junkture. >> we are consuming. we are producing. we are housing and we are reducing. we are consuming, which is your consumer confidence, which is your personal income, your retail sales. those numbers have been good. they're producing durable goods orders, joe, philly, fed, the new york empire state, yesterday's ism manufacturing numbers back up over 50. then you got the reducing the

budget deficit and reducing the us a territory in germany. germany is not going to be as parsimonious with the money. they will help portugal, spain, gros greece. that's happening. pending home sales, nahb confidence, 52, an 8-year high now. so confidence is coming back there. >> you pointed to the ism, though, as one of those things. yesterday's ism jobs component was weak. i guess question becomes, when does jobs follow? you would think with housing picking up, housing whob there. why haven't they come back? >> corporations need to see the goal line an playing field level. no moving of the lines. to me, the comfort's board sent a 58-point letter to president obama of things that need to be done and just don't keep moving things around. itself the part of the damper and the ceiling on hiring.

175,000 jobs, becky is nothing. 1983, two years into the reagan restructuring, 1983, september of 1983, we added 1.1 million jobs in one month. 17 million jobs from '83 to '90 seven years. we are -- the minute we get some sort of clarity, regulatory. >> but jobs is both a leading and a lagging indicator. if you don't get the jobs, the virtuous cycle can't continue if you don't have the jobs created. >> no question about it. 175,000 was last month. we're looking friday, morgan stanley people are looking for it to be 165,000. this is nothing. those jobs are not the phenomenal jobs. they're the eat, drink, getting sick jobs. they're a waiter, a mater d, martin luther king said those jobs are noble jovenlts they are jobs. >> they can lead to better jobs.

itself the important part. >> we need ed kaition in this country, overstructure. so these things, all you got to do is start. i get that. >> i want to know with the volatility that's out there, what you are supposed to do right now? if you think there is more volatility. do you sit and wait because you think there will be a moment over the summer or the fall or do you say, you know what, we are pretty good where we are? this is on opportune moment? >> andrew up until march 9th, we 45d 42% in cash. we have half of which is two-year bonds, which your grand. >> you have begun the great rotation. >> we have begun the great rotation out of cash, out of bonds, into cash and into stocks. we would see 1,500. it's at scene 09 now. 1,500, you want to start putting money to work.

we built up these cash reserves on the expectation there will be chopniness, joechlt as you mentioned, it will not go up in a straight line. >> what you said, an drou said don't count on the regulatory environment to get better any time soon. >> how can you? >> that's what i mean. >> you got obowl care. i don't see why you think we are going above 175,000 jobs. i'm sorry, andrew, i'm waiting off these eight years the five we have, the next three. what scares me is i think the fed is going to be there until we get to 6%, which we're never going to get to. >> jimmy carter basically produced reagan. okay. obama is going to produce some new -- produce some new -- >> carter only had four years. >> he did enough damage the hostages. >> i know. when will we get to 250,000? >> when the market starts to sense there is going to be change coming. bake amy the dollar is very strong. we've talked about this the

dollar is up 4% this year. it's up a lot more against many other currencies, against brrksz against canada, australia, it's up 14% this 84. canada is up 7% this year. bake amy the dollar is on an energy driven manufacturing driven rise. >> do you see the gdp in the next three years? >> 4% nominal or real gdp? it's unlikely. it will move along, two-and-a-half, 3, very mumbling, fumbling, haltering gdp. that's right. it's not going to take off to the races just yet. it's tactic am. it's got to be opportunistic. >> okay. all right. dave is staying with us the rest of the show. mark. we'll have you on again, see you again, thank you. >> thanks, joe. >> coming up next, are you an electricity hog? a good question, meet the company using behavioral

economics to save as much energy as the entire solar industry produce that, story is coming up after the break. later, if are you a gold buyer, slightly higher gold is this morning. we will get an outlook. type out where prices are headed right after the break. "squawk box" returns in a moment. our 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? yes you do. you gotta take care of your baby? oh yeah!

. >> welcome back t. dow futures

is up by about 15 points. also, check out shares of american realty capital propertyings. the real estate investment trust is buying other reit for $3.1 billion cash and stocks. american realty struck several bills over the last months. >> a special look at how behavioral economics is creating electricity by saving it. steve, it seems a little backwards. >> this is an interesting story. how powerful is behavioral economics? that is understanding the psychology of statements people make. it can be creating the power itself. >> reporter: dave has an unusual morning routine outside of chicago. >> on the morning when i get up, i make my coffee. when i'm done with the coffee pot, it comes out, it's unplucked. i walk around the house, i make

sure that everything is unplugged and it's just a very simple routine, i'm out the door. >> but it wasn't always that way. >> well, really, i was not aware of my energy use at all. i got the bill, i paid the bill. >> what changes is that chapman received bills by opower. a software company in arlington, virginia, that has charged up the president of the united states. >> this is a model of what we want to be seeing across the country. >> reporter: the utility bills shows users not how much power they suck from the grid every day, more importantly the power their neighbors are using. it was found by daniel yates and darryl lazly. >> it comes down to basic evolution and ecology. we are essentially herd animals, with edo what other people are doing. it's not peer pressure. it's peer proof. i live in the neighborhood. my neighbors seem comfortable in their houses. yet, i'm using 35% more

electricity than they are. there must be something i'm doing wrong. there must be something they are doing. >> energy usage data from half the homes in america comes pouring into opower's headquarters. it is analyzed down to the kilowatt. how does this all play out in the real world? this graph shows what typically happens when opower's bills are introduced to a neighborhood. >> as soon as we launch the program the savings start to creep up. this is a typical curve. typically we get to between 2 and 3% steady savings. >> to date we've generated 2 terrawatthours is half the u.s. grid we iced last year. two terrawatt hours is enough electricity to power st. louis and salt lake city combined. >> certainly enough for dave chapman, he was the neighborhood's energy hock. >> this was me in 2010. and i was the highest user in my

neighborhood and i was the energy hog of the neighborhood. i was the highest user and that really bothered me. this was just a year later. it shows that i am the lower user and that's me here on the grey line. this is my energy efficient neighbors. this is all of my neighbors. and that's power in my hands that i can see. >> so a single kilowatt hour is 15 cents for solar 7 cents for natural gas, 10 cents for comb. the cost to save a kilowatt 5 cent. it costs less to save a kilowatt than it does to produce one. you think about what you would go to a cocktail party and brag oabout. you wouldn't brag about how big your electricity bill is. it's behavioral economics. >> i want to know more than my neighbors. i want to know how much i save if i turn off the computer or the coffee maker. can you show me by appliance by appliance basis? >> they give you plans, if you

end up being one of these people that need help. they will give you specific plans and send you remainers, it's using technology, behavioral finance to get down about 3% which matters. >> you want to do it without having to unpluck every appliance? >> no, no, that itself the kind of thing where convenience runs into the savings. people won't do that, but if it matters, you just turn the light off before you go to bed. on your way out, you take care of some of those things. are you conscious, you get the sabings, a big country, a little savings goes a long way t. people who prefer it are the utilities. they are the ones hiring opower. they can go through the environmental stuff or they can save electricity. >> air-conditioning in the summer, that's the killer. >> and that and your refrigerator. >> there are ways to bring that down. i will give you the power to call you. you seem as skinny as you are,

an energy hog. >> you should not unplug it, your cable box. never. >> or your blender. >> we got blenders coming up. >>enterprise says we are in the early innings of a true housing recovery, plus, with le mix things up with another american-made company that's looking to stir up your diet and that gentleman right there is not making a jous thing. he's making a big fattening milkshake as you can tell. loves malted, one of our producers. remember, the camera does add 50 pound. he doesn't look like. smoothies. love it. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. st

st. >> still co come, gold extending its gynes. the sheeny stuff can head to $850 an ounce. we will head to the break. a look at the futures at this hour. we have grown arrows. "squawk box" is coming right back. coming up, there's nothing like mixing up a few cocktails for the fourm. today's american-made series features the cadillac of blenders. we hear from the ceo of vitamix and find out their plans to stir

up the world of drapes. "squawk box" on cnbc is coming right back. i would say my car. probably the car. .

. >> welcome back to "squawk box," everyone, in our headlines, the federal reserve is set to bolster capital requirement for banks as well as layout other steps designed to prevennat repeat of the 2008 financial crisis. san francisco's bart system is shut down a second day. transit officials have not been able to reach a contract with the rails system union. so far, no progress reported in those labor negotiations. in fact, i believe they said the two side are living on two different sides of the planet at this point. one economic report on the calendar today, may factory orders, investors look ahead to june adp and weekly jobless claims out tomorrow. the june unemployment report is due on friday. >> our next guest says gold can sink as low as $850 an ounce. we had this guy on yesterday, i

wish we could get him on the phone. with us on set ceo director of tactic am investments at waverly advisers. it was classic. back to $2,000, he said, i said, well, how long have you been long on gold to find out how long he's written it down? he said since 300. i go, okay, so you ran it up? if you have been bullish all the way down? >> he says, i bought it. >> i said, it was a good time at 1,900 to say something has changed, would it not? what changed. why won't it go any further? >> i think what we see is a few things have changed from gold. gold is no longer the safe haven store value that we think of traditionally. >> what is? the dollar? you know, cash is probably the safest place to be sometimes. gold is trading as a risk asset. it's trading much more like stock, crude oil, it is trading emotionally. we can sit around and talk about why it's created a raise in the

products. who knows? >> why do you run up to 1,900? >> i think a lot of what has been driving price dynamics over the past three, four years in gold seems to be mostly psychological factors. if you look at the way gold traded up around 1,900, it was the kind of classic like climactic blow off. we actually were able initiate a short the day of the hike. that was just based on structures we saw on the price. >> when the people that get very nasty with me and tell me that i don't understand what's going on are people that say it has nothing, it's not a commodity, it is an actual currency. it is the actual only store of value in a fiat world, in a paper world. you are not really understanding economics if you don't understand that it isn't just, it's almost different than any other asset. it's the point that they make. >> it's the argument. but i think what is different in

gold is the emotionality, is that a world of the market par sis pants, how vehement are gold bonds? >> i have seen other people like that in certain stocks. >> at certain times. >> right. >> they're blackberry-ians right now. >> i think what we see is that this makes a market mix, a, you know, whether gold is a shining rock commodity the ultimate store value. you know, it may be in 20 years or 50 years, we may be having a different discussion. >> doesn't it make you uncomfortable to be short something if it's all traded on a psychological basis, anyway that, can turn you away, too, if there is not fundamentals you are basing this on. >> right. the issue is, we're talking about prices like 850 is the price target. it's not a case, we manage actsively. if we saw something change in the dynamic, we could very well be long. it's not like we will short and

close our eyes and say, we're right. we know it will make 850. >> is this a speculative mark? people need to realize there. >> it's not. >> this one feels like it's so emotionally. >> i agree. is where i think you know when you see a market that makes things so emotional. that's a time to step back and say perhaps fundamental apples are not. >> it's always been that way. i wonder what, people that got in a year ago, einhorn, what were they, were they still thinking it was because of the printing presses globally? >> that was what he said at the time. remember he wrote that whole thing. >> i would have thought what ran us up from 300 to 1,900 was we knew that a lot of the private debt was going to be taken on. the financial crisis, it was going to be taken on by, you know, public entities, therefore, you had to prin to the pay for all of that?

that would make sense, but we didn't see what the worst case scenarios were saying. would be a collapse of all currencies, we didn't see. that argument would have paid sense to me perhaps if 2008, 2009, 2010, 2011, 2012. >> that's why it ran it? >> certainly, that was a motivating factor. but i think the real acceleration came in 2011 when a lot of those fear, at least in some corners, subsided. >> what about different cull cures that valued gold and jewelry. there is not enough without making more of it. do you have to think about that, wedding season in india, something like that? >> well, basically, no. you don't see, there was a time, maybe in the '70s and ''80s when you saw more cyclical fundamental drivers of price in gold and you could tease out some cyclical components in prices. you don't see that so much anymore. my market goes back, this is an america that is almost completely divorced from fundamental also. >> do you ever play in dpold?

>> yes, i do. i think gold is a currency. eighth long-term store value. i would say adam's comments are brilliant. i would say gold is like religion. you either believe or you don't believe. that's one of the things, gold is down because of three things that are up. interest rates are up. stock is up. the dollar is up, okay. also, gold basically rises. taught for 27 years at harvard and yale. other professors said there is no formula for gold. the t, the t is trust in central banksers. it has risen, because they say they will withdraw us from this overhyped monetary stimulus. finally, the inflation has basically is below their target. so you don't have that going for you. and their perceived tail risk. gold is like a store of value asset. it is not a capital asset whose

price is driven by interest rate changes or a consumable of tradeable asset like oil or grain whose value is determined by supply and demand. gold is purely a function of what someone else is willing to pay you for it. you have written a wonderful book, adam, called the art and science of technical analysis, am i right? >> yes. >> what is something, owe eoi wrote a book once, i took it to my boss at morgan stanley, it took me eight years ago he said, can you make a one page summary? he's on two phones, he says can you give me one sentence summary of this page? i give him a sun one sentence, he says point to the key word the key words in your book about technical analysis? >> we run over on the commercial. >> what is the point we need to know about technical analysis of gold right now? >> more often than not, markets are driven by emotion, markets are driven by the fear and greed

of market participants. if you can understand and stand apart from that crowd and approach markets as unepotential toly objective as possible, then you have a chance of success. >> we have a juicing expert in place right now. go ahead, beck. >> coming up, we'll be joined by the ceo, he'll be talking about housing prices and where we stand in the home price rebound, be you the moment you all have been waiting for. let head over to andrew. >> okay, guys. i'm making an all green smooth think. this is the cadillac of blenders. it's like a $800 blender. this is, we have an avocado in here. spinach, pineapple juice. some coarsely chopped broccoli. i'm going to do a little demo. we will drink and talk to the kre eo when we return. with o ur " name your price" tool, people pick a price and we help them find a policy that works for them. huh? also... we've been working on something very special.

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. >> welcome back to "squawk box." it's the american-made company. i have been personally talking about this company quite wild, it's called vitamix. it's food retailers like starbucks and it's made here in the united states with juicing being the craze still going strong, the blender is seeing a growth in sales. the ceo joins us now. good morning to you. >> good morning, andrew, how are you? >> i'm good, i'm drinking, this is your all green smooth think, we blended it in the 750 model, which is about a 6, 700 model. this is what goes on with jamba

juice. this is a $1,200 model. on this other side, i think it does relatively the same things. your business is growing like crazy. we talk about this as the cadillac of blenders. right now, is it more of the consumer business going strong, how relative is the consumer going on with janba juice that you are telling these commercial versions to? >> andrew, are you right. it's actually both. because people are finally understanding that they need to take control of their health and the best way is through that whole food juicing. so however people can do it. whether they want to make whole food smooth thinks at home, go to jamba juice or the smooth think places, they're finally getting the fact they will go after those green smooth thinks. >> how do uconn vince people to buy a blender? i think we have kitchen aids

that cost $120 bucks to shell out 500, 600, 750. this is sold at williams sonoma, for example. >> there are a lot of things we have in common. every one of us has to eat. if you can put good, healthy food in your body, you will feel better. if you can make that taste fan taft ec like velvet on your tongue, it's something you will craze, the smooth thinks, your body will want them. will you crave them. >> this blender does a couple tool things the first is, have you ever had a margarita? you know what i'm talking about. you put ice into it. your blender does what they do at a restaurant. it seems to all stay up. you do it in a lesser blender. i don't know if it's because this has one horse power in it. what's going on the ice always sort of comes down to the bottom. what guess on with that? >> what's happening is the vitamix is designed with the

precision engineering the powerful efficient used motor. the material we use. the shape of the container. it's breaking things down to the molecular level and homogenizing them. you are refreezing them. there is a bit of a science behind it. it makes not only a fantastic flavor. it releases the nutrients and homogenizes it. it stays in that state a longer time. >> this blender in front of us, apparently, it gets hot by spinning? >> simply through friction. if you rubbed your hand towing, they'd get hot, too. it's literally rubbing those molecules together t. beauty is if are you a raw foodist, you can still make fantastic soup. simply don't run it as long, you want to make ice cream, it will break them down, homogenize together.

you have a frozen street. you run it longer, you have hot soup. >> you guys have a private company. what's the future? is it something ultimately you think about selling, you want to keep to yourself? is it something you expand to other areas in the kitchen, what happens? >> we have a 92-year-old family of owned company trying to change the way people think about food. right now, that itself the vision. we want to improve vitality in people's lives and liberate the world from preparation bound ris. we don't want anyone that will change that laser focus. so right now, it's all about taking care of our customers, it's all about transforming them and allowing them to liberate themselves from into becoming healthier individuals. we will stay the way we are. we like being family owned. >> jody, thank you very much for joining us. by the way, do you have a favorite smooth think? >> i love the must go smoothie. means everything in my fridge that must go, it comes into my

vitamix blevender and comes out fantastic. >> thank you for joining us. >> enjoy, topping. >> thanks. >> if matt ever decides to grow, to do something else, is your hat officially in the ripping now? >> is my, yes? >> for the. >> can you do one thing? drink some of that, spit it out. >> when you talk about that, matt. >> yeah. >> spit it out. make your head turn all the way around. make it go all the way around. >> i said we love them. make your head go all the way around, spit it out and say, barry. >> i want you to come over here? >> no. >> this is great stuff. >> no, that looks like the exorcist puke. >> a lot of grapes if here. there is natural sugar. >> it looks delicious. >> we can turn it into soup during the break, too. [ music playing ] . >> speak in tongue.

. >> up next, recovery in the second half of the year, what the home builder is expecting in the months ahead. take a look at futures. they have been indicating higher up by 21 points. "squawk box" will be right back. ♪ ♪ unh ♪ .

.an

>> the housing market is making a comeback.

although, there are some concerns about rising mortgage rates. joining us is the chairman and president and arrow enterprises. thank you for joining us this morning. >> i'm glad to be here. >> it certainly seems like home building is on the upswing. where do things stand from what you see? >> i think we have obviously made a huge recovery in the industry. i think we're in the early innings of the total recovery. >> meaning what? >> meaning we're at roughly a pace of 900,000 starts, up from 500,000 just two years ago. so we're up dramatically from where we have been, but 1.5 to 1.6 million is about where they're expecting it to average this decade. so we're still quite a ways underneath that. >> how much do you feel like you are held hostage by the federal reserve and what it's been doing with rates? >> just the opposite. i think they have really created

the freedom for buyers to buy homes that wanted to buy that were restating. it gave them the sat a list. >> how much do you feel held hostage if the fed actually gets rid of some of its easing? does that change the picture? >> i don't think so. if we go back, our company has been around through a lot of these housing downturns and recoveries. in 1983 the first year after a very bad '81 and '82 housing downturn, mortgage rates, we're at half of that right now. our mortgage rates are 4.4%. i think they could go up as long as it doesn't go up in a shocking way. it goes up steadily and in small inkrernlths which i think is a likely scenario, i'm not very concerned. >> is that because you feel the economy is so much stronger and people feel so much better about

things or you think there is a lot of pent-up demand? >> both of the above, pure demographics. in the end, demand for our product is driven by population and household growth and they're going to need shelter at a 4.4% rate. you can boy a 4,000 square house in a 5.5 it will shtroimpg a 3.5 square foot house. you still need shelter. that's what's driving the market. >> if you expect rates to climb, as you pointed out, you can buy less house if you have higher rates. does that mean you are changing your plans in terms of your square footage down the road? >> you know, it's interesting. every community we offer has a gambit and a range from smaller size to larger size homes. what's been happening is customers have been picking the largest of our offs, i suspect as rates go up, they'll start moving back to the middle and as rates go high, they'll still

need shelter, maybe a townhouse or a small single family home. they'll slowly move down the range. it's something we have to be wary of. we literally started building larger homes because of demand there. is there what's the average square footage for the home you saw right now? >> it varies dramatically from market to market. in houston, you can buy a 4,000 square foot house for $250,000. it's amazing the house you can get for your money in some markets. >> warren buffet said i think to becky one time, one of the biggest investments can you make would be to buy a home. where would you, if you were buying a home, what are some marks that you see as particularly attractive right now? >> well, the markets where we seen the greatest price appreciation and will likely continue to is northern california, southern california,

the phoenix market and many of the land constrained florida markets. we've seen some very good price appreciation likely still will. i think d.c. and also the new jersey markets and the suburban new york markets will also be great markets for appreciation. >> any perspective on the private equity fund buying into these home, buying large amounts of homes to sell them or rent them out? what is your perspective on that as a long-time contributor to the home building business? >> you know, i think it's been interesting. they've soaked up the excess inventory by buying foreclose years. actually has been help. . i think the main game plan there is to actually rent for quite a few years before they slowly sell. and that serves a very good purpose. i don't think they're in there to flip it and make a quick gain. i think they want the current income. i think it's a management challenge, but there are some

companies that are set up to manage. >> all right. thank you very much for joining us today. we do hope to talk to you again soon. >> okay. great. >> coming umm, will investors be seeing fireworks ahead of this week's jobs reports? we will talk about market moves and later we will continue and look at the housing arena with the cheap economist of zillow.com. find out what he is expecting the second half of the year to lock like. "squawk box" returns with a big hour. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] [ telephone ringing ] now a waiting room is just a room. wi drive a ford fusion.

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. >> tensions rising in egypt. we will get a live report from cairo. microsoft plans to restructure as its x-box chief leaves to run zynga. we will talk about a leadership expert about the next step for microsoft. >> our second half continues the tech names that could to make you money. plus your outlook for home prices. the third hour of "squawk box" begins right now.

♪ . >> welcome back to your "squawk box" here on cnbc. i'm joe kernen along with becky quick, our guest host is david darce, morgan stanley, more from david still to come, though, becky has your morning headlines delivered with a lot of class. >> panache. >> tippy headridden, an aura. i'm worried. >> about the birds going into it? i have been ducking all morning long. we want to talk about the markets, first up, u.s. equity futures are indicated higher. right now, they're up by 11 or 12 points. they had been considerably higher earlier this morning. also, this is coming from a gain from asia. overseas, they traded mixed. sentiment did improve over a series of upbet manufacturing

reports the hang seng finished lower. the nikkei was up by one .75%. if you take a look at what's happening this morning in europe, there are some red arrows, right now the dax is off over 1% t.kak in france is down by about .6 of a percent. >> we have a number of corporate headlines the first a bidding war that may be on for onyx pharmaceuticals. it had a takeover bid from amgen. now, pfizer and novartis expressed interests. we will see where all that goes. also, zynga replacing its current founder and veo, x-box chief done matrick will become the new chairman. hincuss has voting control.

stock rising when reports of that move first surfaced. take a look at zynga shares. up almost 6% after they were up yesterday. the question is whether this is bad news for microsoft. also, disney wants chairman and ceo steve eiger. they are extending his tenure a little over a year bydown 30th, 2016. the move to lay a succession plan gives more time for him to oversee the intgration of "star wars" creator lucas films, which disney acquired last 84. eiger has been ceo since september of 2005, leading disney through a major business expansion. you can see it there. the stock up more than 28% this year. and way more than that if you, look at that chart. if you are a ceo, you got to be proud of that. als, egyptian president mohamed morsi says he will not

give him in to the army's ultimatum in the ongoing political crisis. let's get an update from cairo right now. good morning. >> good morning, andrew, protesters are gearing up, calmer for prlt prth president mohamed morsi to step down. the building and an army chopper was disband harboring over tahrir square. all of this is happening in the context of the army statement that came out late last afternoon and basically making it clear that politician had 48 hours to sort out their differences. doesn't happen, they would implement a road map. at this point it is not clear what that would look like. early elections, is president mohamed morsi going to stay on? what role will the army play in all of this after this moves out from the tran six period when former president hosni but

barrack was asked questions at this point. we have 24 hours to go until the deadline. we have to see if all the politicians can sit at the same table. if anything, president mohamed morsi has made it clear he will continue with his policies and will finish out his term. of course, u.s. president barak barak is watching the situation very, very closely. yesterday, he actually called the egyptian president and said that democracy is more than just election and that he would like the president to be more responsive to the needs of egyptian protesters and again we haven't seen the egyptian government bunl, if anything, they are being pushed into a corner. we've had several resignations from ministers, including this morning, but an interesting thing to point out here, andrew, that the stockmarket is up almost 5% with about 40 minutes to go until it closes for the trading day. shows that investors are upbeat about this transition, even though it's far from over. a lot of questions we main and answer and there is still

considerable risks within it comes to the potential response of president mohamed morsi. >> yousef, thank you very much. yes, we will continue. thank you for keeping us up to date. we will check back in and see what happens, getting back to the markets here, strategies for success and shopping markets, johning us right now the president and ceo at westfield capital management. we are joend by thomas atleberry at fda in los angeles, of course, our guest host david darst remains with us the remainder of the program. what will we see? you said you felt like this market was due for a correction. is the 7% that we got at the worsed levels of what we have seen recently, that enough for you? >> you know, i think the down seven is almost more likely to

be oversold than we are getting the bounce right now. a retest through the summer would not surprise me at all. if you think about it. most of the rally was earnings. last 84, the rally has been driven by multiple expansions. so 10% corrections are healthy in bull markets. i think we can see another retest through the summer. asia is slowing. we may see a more substantial correction through the summer into october. >> tom, you agree with that? >> from the fixed income perspective, i would say your interest rates have probably taken most of the increase you will see for the short term t. biggest thing i think you have to look ought is quarterly statements come out. people realize tear bond investments are down. do they make adjustment, does that cause continued problems? probably more in the fixed income market. less so in the treasury areas. >> you do think for the bond funds, investors will be surprised within they open their statements from the first half?

>> yes, we do. keep in mind, you know, owning a bond fund, you are trying to find something that works counter to equities. it's an anchor for your portfolio, to see the kind of volatility increase of the last 60 days and negative returns i think will put into question the role of fixed income has been play income someone's overall portfolio. >> david, you pointed out in the last hour, though, when it comes to bond, you have been looking at a little more, making that huge move out. >> short duration. half of the bond is 50% in two-year bond, which are much less volatile. investors want to look at floating rate notes. stay away from tips. they're very expensive. we when to the a 0 alloindication t. fed tightening a little bit, is the economy in recession? no. is investor euphoria present? no. are valuations stretched? no. the are the banks transportation stocks and small caps basically

underperforming? they're outperforming. so four out of the six is no in terms of a bear market. we'll have choppiness. i agree with these folks. you basically get three corrections of 5% per year over the last 80 years on average. you get one correction per year up 10%. one every three years up 20%. >> but you'd think we are do you for a couple more 50%ers and a 10% ver at least? sample no question about it as people digest what's the fed tapering strategy going to be, most important, becky, is the second quarter earnings season which begins next week. you want to see these earnings surpassed and the revenue outlooks by the ceos being more sanguin and positive. so far it has not. we talked about people go aheading the profits and the revenue numbers lower. right now about 3% is the profit campaign that's expected. request they bet that lower bar?

remember 12 months ago, it was 8% it was supposed to be for this quarter. so lowering the bar, can people jump over it? >> do you think people purposely sandbag? >> i think so, andrew, my son, when he would come back from harvard, he would tell my wife, my report card, i'm expecting a c. he would get a b. she'd say, are you a good. she was looking for an a. he lowered the expectations. he got a b rather than a c. >> you think they will come in closer to the original expect acition as than the if you -- >> i think the ref nows will be on the lowish side. we aring willing for them to be flat to down 1%. up 1%. a small change. the profits is where the rubber meets the road. there, apple used to be such a big contributor to profits. that's within one of the slow, so stay with your oil service, your health care and your consumer products, global

gorillas. that's where you want to be. >> how about you? which sectors and stocks do you like? >> listen to everything we are talking about. everyone concerned about earnings, what we love are growth stocks that also have return of capital. youing the about dividends, bond funds potentially having negative turns u returns. i do think there will be a massive exodus. if you find growth stocks that have dividend growth and stock boy back. big return to capital stories. to me, this is the best risk adjusted lace in the market. someone on the show talked about disney, you don't have a great dividend yield at just over 1.5%. they raised it 40% in 2011. 30% in '12. they'll raise it 30% going forward. go where the breathe is. the growth is in the housing market. it's in autos. you can find back end housing plays like home depot get a 2% current i don't mind. they announced a 17 billion stock boy back in february. will carry them through 2015. on a risk adjusted basis, if you

can find dividend growers, plus buying back stock, i think you will be set up to outperform in a difficult environment. >> tom, what do you do with fixed income strategies at this point if you have to stay in bond and you are looking at ways to really make the most of it? what do you do? >> well the first thing you do is limit your interest rate risk, if the economy does grow in a faster rate then it has, then there will be pressure in gem for interest rates to rise. so that's our view is to stay inside a five years as far as maturity. if you get away from it looking at areas that we find of interest, we have been a secured kind of loans we have locked at, whether they're bonds backed by airplanes. we recently did a lot of new issue that came from british airways backed by new 787s, new 77s. we find that as an interesting area. it's a critical asset to the business and you've got an asset that you can value. we have done shipping containers as a way to look at global growth and the factions and said, okay, if we get that

moderate global growth to some degree, having bonds backed by shipping containers should do well again within the five-84 area. we focused on the shortened and security and looked at preservation of capital, trying to keep yourself for the a positive return on a 12-month period. can we earn inflation plus 100 basis points? we look at the bond market today. we have for the last several years as a place where you really, that's not where you need to be taking your risks. you tend not to be compensated, taking credit risk or interest rate risk. >> tom, will, gentleman, thank you for joining us. of course, dave will be staying with us the rest of the program. >> i want to get a shot at me in your hair. i said is that, we did that an hour ago. they already made it. there. they already made one. >> oh, look at you. so pretty you are. >> see, we can't, do i couldn't do that with my own hair. and then. >> very attractive.

>> and then, you shared with us, are you willing to share with everyone? >> oh, no. >> what is that? >> are you feeling okay? i mean, you said -- >> oh. >> you said tmi. >> you said stuff. >> tmi. gren stuff was moving right through you, you said? right? >> nothing is happening. i can foley eight little bit. >> honest to good. >> it starts here, right, in your stomach. then you feel it sort of percolating through your -- it's grown. i don't know if it has fiber or what. >> it just goes through, you can feel it. that's all i said. >> you haven't left the set. >> do you need to leave the set? >> at least the remavender of the program. >> you got another 47 minutes. >> he brought some over for you, too. >> this is before or after? >> coming up. >> how could you tell? >> can you try some?

>> no, i'm not. makes me feel like i have to just the looking at it. someone sent an exorcist stuff, too. anyway. i beta blender company is pretty good. >> hold on, you could have done banana and strawberry. it was the grown, trying to go all green. >> you look leak you are turning a little green. >> coming up, a shakeup at microsoft the executives in charge of zynga. we will talk to management next. check out the x-box market indicator. that's green, too. >> i will put my face in the hair. out there owning it. .

. >> welcome back to "squawk box." the executives in charge of turning around microsoft x-box business is now taking charge of zyngat. restructuring plan, michael, i'm sorry, you, she is the howard hawk's chair and business ethics and leadership, she halls has consulted and part in other words in research with for choun 100 companies, including bank of america, disney and lockheed martin. the the question this morning is

whether steve ballmer is doing the right thing. when you see somebody like don leaving to go to a place like zynga, did you say to yourself this is a good thing, this is a bad thing? if you are microsoft, how are you doing this morning? >> it's goed to lose somebody, but the fact of the matter is microsoft is in need of a restructuring. restructuring has to happen now. it's a critical junkture for microsoft. i think he knows that. if you look at what he said in his annual report letter, ballmer, he has been talking act if need to go to a devices an services business. strefing away from software. so they, microsoft has not been that, it's going to be an interesting situation to see if they can pull this off. if you look at the stock price the investors are responding well to what ballmer is saying. the question is whether he can

deliver on what he's talking about. >> so far this restructuring seals to be done in secret. not a lot of people seem to understand what the plan is. is that a good thing? >> i actually think it is a good thing. think the fact that people are nervous inside the company is a good thing. is because microsoft needs a radical restructuring. if you know anything about them, you know they are a bmf and so if ballmer is working with a small group of people, working with a couple of the board members, which are some of the things i have been hearing, then it might be good for him to develop a plan without involving some of the people who might be resisters. it's real easy in these tuned of situations to get resistance or to have situations slow down when you are trying to drive a change such as this. >> mary, this structure was put in place or has been in place in large part under the obama regime a very long time, does it make sense for the guy to try to

change it, mean, it even plausible that an inside guy can do the types of things you are talking about? >> it's a great question. you know, the jury is out. we don't know how this is going to play out. if anything, i would say this is the moment for ballmer at microsoft, because he's got to pull off a pretty big change here. this is what he's had in place. you know, i've heard some things that ballmer recognizes we need to go to mobile and devices, but the fact of the matter is, he was never one that was very keen on going to those things in the first place. they have been very much in office and a windows company. so it's a question of whether he can do it. the plus side is that he knows the business. he does have, seem to have right now a hand picked group of people around him, because they've had pretty much turnover in the executive ranks in the last couple of years. >> is there a great sample of an

inside guys, an executive with the company a very long time who has run the company, pulling off a real massive restructuring like this? >> probably the classic one is jack welsh at ge, right? it's a similar kind of situation where welch looked at ge and said, the numbers are good, just like we're seeing with microsoft right now the numbers are good. welch looked at ge and said, i see what's coming down the path, it's not good, we need to change. up with of the things that welch said is he wished he had changed the executive team earlier. so the in fact that ballmer is working on changing the executive team and we got this turnover could be a potentially good thing. >> what are some of the things you would like to see come out of steve ballmer's actions going forward? alex gorsky, the chairman of johnson & johnson said that culture trumps strategy every time. could you chemical weapont on

the cultural aspect of this? >> yeah, so glad you asked that question. i think that clearly he talked about the importance of culture and it was a culture change. leadership, we talk about the fact that change is driven top down by visionary leaders who get everybody aligned around their vision and they change cultures, but the fact of the matter is, if we look at it, it doesn't work that way. it's not that easy. we like to say we can change the culture. just imagine trying to change the american culture. so a president comes in, says i'm going to change the american culture, it's not easy the same kind of dynamics are operating in organizations. so my feeling is that what needs to happen is they really node to if cuss on their restructuring. it's much more difficult to change the way people feel the way the norms of the business and they've developed those since they have been founded. they have been bureaucratic for quite a long time. so what they really need to do is a serious restructuring, where not only do they restructure in terms of stream

leaning and getting away the silo. put some adraptive structures in place that will help them drive the behaviors they want. >> thank you for joining us, helping us sort through this we will see how it all sorts out. >> thank you. >> coming up, investment ideas in the tech sector, analyst paul meeks will join us, the cloud social media, big data, plus your outlook on the second half of the year t. chief economist of zillow will joan us. up next, we will tell you about a casino heist. stick around. (announcer) scottrade knows our clients trade and invest their own way. .

a

a. >> welcome back to "squawk box," everyone, in heist news, about half a million worth of jewelry stolen from a store in atlantic city's borgata hotel. they say it occurred in the 10th anniversary celebration. three men reportedly fled the store on foot and took off in a dark colored vehicle. no arrests have been made. >> i know it's mix impossible. i think of mixing metaphors. >> because of the casino heist. >> then the fed, you were out last week, but the fed had their money stolen at the airport. you hear about that? >> no. >> yeah, on a flight $1.2 million. >> it wasn't a move? >> no, it was real. at jfk.

>> i didn't sit through. that i couldn't. it was great. "oceans 11". >> "oceans 13" a bunch of short people trying to steal things. great movies. >> when we come back, home prices on the rise, how long will that trend continue? we will ask the chief economist at zillow. take a look at the u.s. equities futures, turning negative. s&p futures off by about a point. nasdaq still holding on just over a point and a quarter. we'll be right back. de executio, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal o

o. >> well dock back, everybody. consternation brands reporting profits of 38 cents per share. that was 2 cents shy of what the street was expecting. they raised the interest expenses. also, the fda put a clinical hold on the oral hepatitis c treatment for achillion with hiv treatment. we are watching shares of duncan brands. la czar gaven with a buy rating

saying the consistent cash flow justify a premium multiple for the stock. right now that stock looks like it's up about 1%. >> we are opening up our second half playbook this morning. turning the page to real estate. stan humphries from zillow.com. good morning, stan, earlier, i don't know if you had a chance to watch, but everything is viewed in the prism of tapering in the fed and a lot of that consternation about what the fed does has to do with this in acent housing rebound we are seeing. do you have a feeling whether there is a certain level on the tenure on mortgage rates where it would start to hurt all the progress we've made? >> the reality is nationally home values are affordable. rate would have to get up above 7% to afford the affordability nationally. parts of california when rates get back up to 5, 6%, they will

look expensive. nationally, we're affordable. >> so you are talking mortgage rates? >> that's right. mortgage rates nationally, in order to get back to affordability levels that prevailed be every the housing boom, we'd have to get above 7 to get less affordable nationally. but you'd have, that mortgage rate that gets you back to expensive homes in some parts of california and other hot markets is much lower, so, for example, san jose, san francisco, homes are going to start to look expensive once you get between 5 and 6%. they will start to look more expensive than they have historically. >> so there is something to it then? we are at 446, so if the fed did actually taper and if that caused the ten year to go let's say to 3% or something, that could push us above 5 on emergency, that itself something to the idea that that actually could hurt the economy level? >> well, i think that certainly

the implications will be different market by market. i feel comfortable the rate is much higher, as i said over 7%. yes, i think you will start to see real variations in how different markets perform as we return to a more mrmg regime, which we are clearly returning to. >> does zillow tell the politicians not to do anything with the mother-in-law reduction? >> no, zillow has no lobbying. >> we were all ready to sign this into law yesterday we have no power. >> water your number? >> yesterday what was that 8%? >> 8% for the people making up to $70,000. it was 14 was the top rate. >> 26 on corporate get rid of all the writeoffs and be done with it. >> 12% for people making up to 270 or something. >> the mortgage industry will lever e never let that happen. >> you don't have to be a part of that. the rest would make sure nothing happened there, right? >> well, i mean, in general, i

guess our perspective is that i think the housing market is healthy enough to stand on its own without continuing qe 3. we feel pretty comfortable the housing market has organic legs. we should start to return rates to a normal levels. >> what about without the mortgage deduction? >> oh, without mid, you know, yes, mid definitely is, you know, it really impacts only a small number of areas, but it is a big impact in those areas, if you look at santa monica, new york city, manhattan, it's important for those areas. >> what about fannie and freddie and whether we have a 30-year fixed, whether that goes away on all this discussion about the future of both of those institutions we can call them? >> well, i mean the reality is, i mean, it looked as though there was no appetite at all to hand him gse reform in d.c. until recently, it looks like

there is more traction about people putting lanes in motion in ord to resolve the disposition with fannie and freddie, but the rally is we're not getting rid of a 30-year fixed any time soon. it appears the americans love it, it is a unique institution, few other nations have that. i think we can survive without it. americans want it. i think the legislators will find a way to keep it? >> stan, in what markets would zillow be pervasively positive. how has that manifested itself? >> i think zillow is about empowering consumers an creating transparency in the marketplace. it's our view that, you know, there is enormous amount of data floating aroundment went to make sure all participants, consumers and professionals alike have access to that information. we think they make better decisions having access to that information. we feel as though we see that

impact in all markets, really. >> okay. all right. guys, stan humphries, thanks, thanks for your time today. david, see you later. >> we always like check income with zillow. i like looking through the neighborhood seeing what's for sale. do you have a feeling on mortgage interest deduction? >> anything i think it could be revolutionary. the united states is basically watching japan reform itself and mexico reform itself and just like somebody with multiple kids sees one, gets one child to change its behavior by working on the other child, we're going to follow japan and mexico. you get tax reform the market could go up 10, 20% easily, slij down, making things simpler,error skin bowels, yes, i did. >> what are the chances we make headway there? >> it's a politically difficult things to do. if you get that thing happening,

the markets would skyrocket. this is basically a mere change in structural reform. that would be a tremendous big positive for the market. it will change the p.e. that people are willing to pay. you already got the strong dollar. you see, you hear that sound? that's another one of those milkshakes. >> it is. >> i heard the gurgling. >> it made may stomach melt. >> would you stop? >> anyway. you are going to see great structural reform in the united states, but things have to get worse first for the political dynamic to force it to happen, for us to scream at the politicians to do the right thing. it's been occupy wall street and tea party on the fringes. the middle has got to revolt for me to get bullish long term. >> do you see the markets tank while the revolt is happening to get will you? >> i love watching a guy 6'7" do that again. what you got? >> rob.

he's 6'7," did you see him frying to sneak? now he's trying to hide. smile for the camera. . >> okay. coming up, more names that could make you some money between now and january 1st. we will continue our second half playbook series fakes from analyst maul meeks when we return on "squawk box." of back pain...egins we and a choice. take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] that's handy. ♪ otherworldly things. but there are some things i've never seen before. this ge jet engine can understand

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. >> coal bam back to "squawk box." we did see things take a change for the negative. the dow futures are down 10 or 11 points. s&p futures off by 1. we seen the dow up 40 points earlier this morning. we were talking about the news this morning. chrysler is the first of the us auto makers to report remembers it's out with june sales. it says they were up 8.2% from a year ago. is below believe it or not what the street was looking for, they were looking for an increase of 8.1%. theed the best june since 2007. andrew. >> this morning, we are taking a look at what the second half of the year would bring. paul meeks joins us. he joins us now. good morning to you. >> good morning. how are you? >> i'm good, thank you. >> let's walk through a couple

of your picks how you are thinking of the rest of this 84. i can let you start or i can start with a pick right here. i was going to start with ebay which i know you like. >> yeah. i think in ecnology you have to laser beam focus on a couple of themes. my favorite pick, franksly, going forward in the mobile space, mobile industry within the tech sector is ebay. going forward, andrew, it's very, very important that all of these old school internet companies begin to monetize traffic. i think e-by a is showing the best ramp to do so. of course the pay pal as asset sa a huge asset. it deserves to be. very very important. >> given the argument on facebook. this is a stock that obviously has a broad ownership, nobody has been particularly thrilled about this stock for a long time now. >> yeah. i wasn't thrilled about it a year ago when it came ipo at $38 a share. i would have loved to buy it at

17, which was the low. we are back in the low 20s. the way i look at this stock is i do think over time, that they will begin to successfully monetize mobile traffic as well. in the meantime, as you know, they continue to have huge unit volume in their user base. i think they will get it right over time. right now i think the valuation is okay. it's not extremely cheap. it's well worth the investment? >> if you live in $24 a share right now. when you say long term what does that mean? where does the price go? >> i think over the next cup years, you get back to the ipo price and eclipse that. >> let's talk about adobe, you think this is a cloud play? >> the cloud is another industry sector you have to be focused on. adobe is expensive. with their creative cloud, they're doing wonderful things. i also think microsoft should be considered both office 365 and

windows dujour. i think there is actually a smaller cap interesting play called 21 bnet. a chinese company that trades here in the states. they're helping microsoft get on the cloud. >> help me come back to microsoft a second. we have been talking a lot about the eare structuring going on there. what do you see taking place, also the fact that don went over to zynga this morning. >> the way i look at it. i'm here in seattle. i visit the company quite a bit. the company is very deal. i don't worry about those types of announcements. i don't look at microsoft any more as a pc play. too many analyst. investors look at that as a consumer pc play. they have a huge enterprise be i think with windows dujour and the cloud 365 will be a big deal. >> do you think the bomber will pull off a gurstner-welch

restructuring? >> well, the problem with that it's a lot of talk. you still have the same guy running the place for an awfully long period of time. i'd rather see those kind of changes under fresh blood. >> is there somebody waiting in the wings you like? it's very rare where you hear about. you said they have a deep bench. it's rare where you hear publicly about names that could pop up for next to be the ceo next. >> well, of course, steve ballmer is an oversides personality. that's a part of obscuring everybody else. but each of the business units has a pretty good routine including cfos. i love when they go up the ranks and become ceos. >> let's throw ut one more stock name. what's the story behind terra data? >> terra data, if you believe the dock croach 30, if you see one, you will see more. terra data is a pretty important

play in big data. when you take a look at all of the important concepts within technology, big data, social, cloud, mobile. that's where you want to be. terra data is my pick in the big data analytic space. >> thank you for helping us figure it out. we will see how it goes. >> coming up, we got several stocks that you want to watch this morning. we want to check in with jim cramer at the new york stock exchange next.

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♪ . >> welcome back to "squawk box," everybody. we have been watching the futures. at least at this point things are mixed. the dow futures and s&p futures are weaker. dow futures down 18 or 19 points. nasdaq is barely holding on.

i mean barely. they're up by a half point right now. let's go down to the new york stock exchange. jim cramer joins us this morning. jim, i want to know what you think about where things stand in the housing industry. i know things have been improving. if the fed starts that the fed s to move, it will throw off the entire return? >> well, i think that we have to change this per spspective that hear over and over fa from the executives that we are in the early innings. you are not in the early innings when the fed starts to make mention of tightening or starts to tighten. i believe there is pent-up demand and we did not build enough houses, but these are momentum stocks, and with a momentum stock, you need a clear path that prices are going to go higher and higher, and what david talked about in terms of the earnings in qe3, the stocks are saying that the qe3 will not have the level momentum, and therefore in the early innings, the mid-but certainly not the

beginning anymore. >> and that is interesting, because that is what we heard earlier this morning from our guest, and the stocks are doing incredibly well off of the bot tornlgs and over a longer term, it is interesting scenario, but the year and after half, it is very, very well and it is whether or not they can convince people to stick around. >> well, becky, we have seen the pattern and then people pause, and the mortgages are going upwards and it is overheated and then they come back again and that can happen, but the idea that te we are not going to see any change despite the big mortgage rates is a little, it's too glib. i think that it is just not right to be able to expect that things will be seamless here, because the rates just jumped too much. it is jarring to the the system. >> what about microsoft? we have been talking about a potential restructuring there this morning, and andrew asked a question earlier this morning that hit exactly on the point that everybody is dancing around

on this. can ballmer pull off a restructuring after he is the guy who has been there for a long time? >> yes. i believe he is worried about the leg city aacy there, and th is creeping up, and there is an activist making noise, but then you get something like this and i say, geez, why would you leave if you are at the cusp of making a major move. the zynga job is one that would want with a lot of cash, but the longer steve waits the more i am convinced nothing is going to happen. it is in the air, but if it does not happen, becky, maybe it is hey, we are fine, but they are not fine. they need to do something bold. >> jim, where is microsoft in the market cap now? are they three? they are close -- i mean, apple is up there. >> well, it is exxon, google -- >> let me look at the google, because microsoft is -- yeah, microsoft is just under google, and it has suddenly almost to

300 billion at 34. >> well, people misinterpreted the last move, because they have become more of a entertainment company and that is what disturbed me for the zynga switch, because i am looking for the third leg of the xbox and that is what steve can be known for is turning the company into more than a play on the personal computer, but something drastic has to happen to make it clear. >> the winklevoss twins, what do you think? >> well, if they are out on their own, the s.e.c. should have a idea for a stock called "books to read" and if they bless it, we are in good shape. >> i got the allusion there. >> and can of thieves is still my favorite. >> mine, too. >> and coming up is david darnst

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stock of the day is zynga, and up 29 cents which equates to 10%, and that comes out when word first leaked when the microsoft executive would be named chief executive and that news was official after the bell, and the stock is up a little in premarket trading this morning. let's get back to our guest host david garst for the last word, and you would say that all systems are in go for the right places? >> you want to own the japan, because they have had a 20% correction. and the stock market is up -- >> and 20% correction? >> it is more than that, andrew, and 28%, but the stock market is up 33%, and you will have the election on july 21st, and you will have monetary stimulus, and

fiscal stimulus, and the earnings are going to be up 30% according to the fax set, and they sell 22 times the book, and the production and the confidence is increasing and the wages are increasing. >> you don't think that the move has already happened? >> well sflshgs a n, there is a coming. this was a healthy mid-course correction and we believe that the market could go up, 30% from here. >> what are the specific names? >> you want to basically own the index, especially exporters, and you can get that through the hedged japan equity product as well. so you want to own the exporters in particular that benefit from the weak yen. >> all right. and here, the sectors that are going to do the best? >> buy some apple. apple sells for ten times earnings and they are going to have $39 in earnings and $390 and $400 and apple will have the

ipho iphone-s, and the low price iphone and iwatch, and they will have contact with china mobile, and that stock is going to move. it, andrew, has had a 42% correction and a double bear market already from 700 down to 398. >> is apple the new microsoft? meaning, is this stock going to come back, but it may take a while? >> apple is not the new microsoft. microsoft is the new microsoft, and they need to change their stripes. i said earlier, get somebody like cheryl sandberg to come in there if she is not the ceo to stir it up and revitalize the culture. >> i don't know. >> you want to have sort of a marisa meyer turn around? >> well, steve ballmer is phenomenal, but microsoft has gone from 500 billion market cap to 300 billion market cap like google, and syn ga.

>> -- well, you could say it about a lot of stocks. >> well, it is time, becky, to use the assets, and they are maybe becoming an ibm, which is basically an enterprise and a razor blade company that is a tremendous cash flow generators, and that is where you will get it. apple will have a 60 billion buyback and that is the largest buyback in history. >> thank you, sir. join us tomorrow for. "squawk on the street" begins right now. good tuesday morning and welcome to "squawk on the street," i'm carl quintanilla and james cramer and david faber on the new york stock exchange, and futures are keeping the cards close to the vest after the 65-point gain on the dow. we are awaiting new york fed president dudley speaking at 12:30, and the nikkei with a pop overnight, and the yen hitting 100 to the dollar for the first time since june 5t