good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. we have several key economic numbers that are going to be released during "squawk box" today ahead of the independence day holiday. everything crammed in on wednesday because of the holiday tomorrow. at 7:30 eastern time, we'll get the challenger report. that measures job cuts. at 8:15 a.m., the adp unemployment report. economists are looking for an increase of 160,000. then the initial jobless claims. it is wednesday, but we get the claims today. they are expected to rise to 350,000. the markets will be looking at today's numbers for clues on what to expect from the friday's june employment report. a lot of this is what has been

happening overseas. in europe, the major markets are sliding today. major worries about what to expect in portugal, a lot of unrest there with everything that has been happening with their government. portuguese stocks down by 5.4%. and that has been rippling through the rest of the european markets. spain is down by 2.75%. france off by 1.50. you have similar declines for the ftse and the dax in germany. much more with ross westgate in a few minutes. we're watching the bond markets, back at almost 8%. egyptian president morsi vows to stay in office. there was a late night speech that showed a defiant leader not going to back down from the military's ultimatum. now the showdown in egypt has the oil patch on edge as well. all the middle east going to watch this very closely. crude oil prices breached $100 a barrel for first time in nine months. they're now trading at a 14-month high. you can see now 101.06. over to andrew, with some of

today's top corporate stories as well. >> the soap opera that is the dow takeover saga taking another turn today. the company's special committee asking michael dell to sweeten his terms after carl icahn announcing he received more than $3 billion in finance commitment for an alternative offer. michael dell yet to respond to the request. we'll see where he ends up. also, apple announcing a new hire, this raising a couple of questions this morning, hiring former yves st. laurent ceo paul danive. will work as bp of special projects, reporting directly to apple ceo tim cook. people say what does this guy there to do? some say it may have to do with an apple watch, maybe the design. we'll see. shares of apple now, you can see it there, down in premarket action, marginally, still 415 bucks. over to joe who is ready to rip in today's big health care story of the day. >> i don't think they're

ready -- already in the top of the show, i realized, if you needed a commentary button from me, it would be like -- people in the control room would be -- i said that -- i talked about jobs and said the outlook for jobs improved considerably already. the obama administration delaying a key part of the affordable care act. some people may or may not think it is nearly as key as the individual mandate, but they're already asking questions. we'll be kicking this back and forth all morning. it will not require companies with 50 pork woworkers or more provide insurance until 2015. with us john harwood. going through the different papers, john, and, you know, we'll have zeek emanuel on, who said it is not a big deal. you saw douglas holtz-aiken say it is a great ploy by the obama administration. the new york times called it a crucial mandate.

and said it was a significant setback. what do you hear or where do you come down on this, john? >> it is a setback. in a number of levels. first of all, the inability to get this done doesn't necessarily reflect well about the implementation process from the white house point of view. it does provide some coverage and some money that is to say the companies over 50 employees who do not provide coverage would have been required to do so, so that would have been some of the coverage expanse they wanted. if they didn't, they would have to pay $200 a worker. the reason why it is not something that cuts the entire law is some companies already provide with no mandate health insurance. and as you pointed out a moment ago, the critical element to the law is the individual mandate, and trying to get people, especially young healthy people who don't have coverage, into the system, either with their

own money, or with the assistance of government subsidies to try to spread the risk and make it possible to ensure people who aren't so healthy. >> people immediately -- that was the question they asked. is there going to be another shoe to drop. give than it is so hard toexcha already way behind and because the employer mandate was to take some of the stress off the individuals having to get covered, they're saying that it may be the beginning of a delay in the individual mandate. there is a lot of people, i like what some republicans said, john that was that they understand the delay and the entire law should be delayed forever. >> that's the political ramification of this, right? it does give momentum for critics to say, wait, this is a big rube goldberg contribution, you're trying to compel large numbers of people, individuals and companies to do things.

government isn't so good at doing that. and there is a lot of resistance. and what is the outcome of this going to be. it will also, if, in fact, you have employers who either for the next year or never provide insurance as the law contemplated -- hold on a second what that means is the taxpayer subsidies have to be greater because more people would be going on to the exchange. it also increases the cost of the law. >> i also think it improves the democrats chances in congress in 2014. >> two sides of the political argument, one is, yes, they're picking their battles. if you've got -- you've got to deal with insurance companies, you've got to deal with state bureaucracies and state legislatures, and individuals you're trying to enroll in the system and businesses you're trying to get along, you got a lot of battles you're fighting at the same time. this limits the number of those. they go to the 2014 election and one particular source of squawking is muted. on the other hand, it does give

momentum to critics to make the argument as i said, john boehner said last night, this thing is a train wreck and the obama administration just admitted it. >> that's where i come out. i don't think this is devious. i think it makes it much worse for democrats. >> before we knew what it was a train wreck it was already, now to put it off and not make it front and center -- >> this is like a bumper sticker. >> this is too difficult. the left is complaining that business is getting a free pass and you're still making the individuals play. >> let's remember, though, i agree with a lot of the points that have been made and we have been talk about those. but the key thing again is getting more and more people into the system and look at the one macro trend which is -- there are a couple of macro trends which work in the administration's favor offset the negative of this. the economy is improving, the job market is improving, period. and over the last several years, health care costs have been

coming down. that also -- >> costs will go up. >> yeah, yeah, but, becky -- >> they're looking at 15 and 20% increases. >> but, becky, that's precisely what the law is trying to remedy that is to say the individual market is a terrible market right now. very small. and, yes, there are some individuals, it is a small number of people -- >> not just individuals, people who are small businesses. we had small businesses -- >> not a lot of people. not a lot of people. most people get their insurance from large employers, and if they're -- it is true that there are premium increases for young healthy people, but those premium increases are combined with cuts for people who haven't been able to get insurance, for women who have been -- who have been on the wrong side of some of the differentials. >> john, real quick, cost to the government beyond the additional subsidies that may -- we don't know what the estimates there are going to be.

>> they don't get the money. >> no, my understanding was right, they won't get the $5 billion of penalty money that was supposed to go to pay down the deficit, that disappears for 2014. >> yes, but when you look at the big picture, $4 million, $5 million is not a lot to the failure -- >> not with an m, with a b, anything with a b. >> fannie mae will make that up. >> with hospitals, i've been wondering how hospitals will trade today on this. i used to be on the board of the hospital.y years are the lean years. do you have fewer insured people and does that make it difficult for hospitals who were dealing up front with the regulations and were hoping to have more insured people and less uninsured people coming in. >> don't talk to me about baseball. we got hammered last night. if becky was on the board of a hospital, is she even allowed to talk about this? >> yeah. >> i think she is --

>> i'm not anymore. i resigned when i had the baby. it was the robert johnson university hospital. >> watch our ethics ps and qs here. >> no, cnbc knew i was on the board of the robert johnson university hospital. >> i was railing about how -- i don't like qe infinity, i like qe perpetual. i worry one of the reasons was obama care. i worry about getting employment ever back to where it used to be and if you don't, they basically have a license to do this perpetually if we don't. i initially thought the market might go up today based on this would help employment prospects and job prospects, but then -- now it is down and i think that's because it increases the democrats' chances in 20 -- >> it also increases -- it also increases just the level of uncertain uncertainty. >> it does. i know companies still don't know. >> now we don't know another year. now we don't know if it will get repealed, what is going to happen. i'm just telling you.

>> the economy is getting better. >> that's got news. >> it could be getting -- >> yeah. >> fair enough. i'm feeling like a bug today. my whole life i've turned into an insect. check out google. franz kafka, most famous -- >> i hate that book. >> have you played -- >> you know, john, i'm glad you brought that up -- >> i don't think that's appropriate. >> i don't think would be that bad. i thought that maybe we could play it and then we decided it would be a really bad move. so i'm glad you brought it up, not me. >> two things. you could also play the rascals. >> are you really going here? >> yes. you could also play the rascals. people all over just got to be free. play the rascals. if you're going to do bangles, i prefer eternal flame. >> all right. i'm rarely afraid to go

somewhere. but i'm kind of afraid. i'm a little bit worried. i thought we could almost get away with it, but maybe not. thanks, john. i guess. we're only getting started on this story and we have a great lineup coming including former vermont governor howard dean. for those of you that always look forward to his appearances, i think he's going to be on -- is on right at 8:00? want to act accordingly with your dvrs. paycheck ceo max mucci. and former -- but for him, andrew, i would think not implementing it is going to hurt job creation. as you know, raft tilast time h on, he said obama care is a huge job creator. this might be a negative. >> and pete er orszag. >> and peter orszag. >> how about give peace a

chance. >> let me think about that. there is 300 songs i can come up with. all right. we got to go. >> why don't we take a look at the global markets now. time for our global markets report. ross westgate standing by in london. you got a lot to talk about this morning. >> a huge amount going on. first of all, show you where we stand now. a lot of red on the dow jones stock 600. only 40 stocks at the moment out of 600 are in green. that is double the 20 stocks that we had down at the session lows two hours ago that were in green. still 40 out of 600, not a lot at the moment. and we have not been helped by portugal. we'll get to portugal with the european bosses. ftse 100 down, 1.6%. what's been going on in portugal, economics minister who originally designed and was trying to implement the austerity program necessary for their bailout program they're in

supposed to come out of it in 2014 resigned. the foreign minister then also said i'm going to resign as well. the prime minister said you can't do that. right now the portuguese government is struggling to hold together. a meeting today and there is talk going on that the entire portion of that coalition government will resign there. if that happens there are two options facing the president. c he could possibly ask to do an italian version, trying to cobble together government without elections, but so far he's pretty much taken a fairly strict interpretation of the constitution, a view coming out of portugal. we may well be in a situation where we may be facing fresh elections. local elections go on in september f that was going to happen it would, of course, be at that point that maybe you could focus. a lot of ifs and buts between that. that's a scenario the people are absolutely discussing this morning. as a result, the psi in portugal down 5%.

ten-year government bond yield back up the 7% level, which is where we ended the bailout program. 7.6%, banks down heavily as well. 10%. 10.75%. because if the government falls, and there are elections, there will be a renegotiation of the package. that means there will be more public sector involvement in the bailout. we'll extend the maturities, delay the timelines. it is a form of default in all but name. we're likely to get a restructuring of portugal and that is going to have implications. the banking sector in europe is hard hit. people worried about the cyprus template. back to you. >> ross, thank you very much. we'll continue to watch this very closely. ross westgate joining us from london. when we come back, we have a live report on the showdown in egypt. plus, he ran cbs caremark. matt crawford will tell us if the decision to delay the employer mandate is making him more cautious about the sector. as we head to the break, check

out the price of crude oil, crude oil above $100 for the first time in nine months. you can see right now 101.06, up 1.5%. a lot of the unrest in egypt seen as the reason for this. "squawk box" back right after this. 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. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse...

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welcome back. u.s. equity futures are indicated down 70 oipoints or s.

not a great session yesterday. closed well off its lows. i think below 15,000 again. >> what do you want to ascribe the red arrows to? >> i already told you. gains being made by the democrats in -- >> doesn't make sense to me. >> about portugal and what is happening there. a lot of concerns. >> that's in europe, right? >> it is. >> part of spain, isn't it? >> no. >> you're putting this in portugal? what about egypt? >> i think egypt too. i think portugal is -- >> you don't want to put it on obama care uncertainty? >> that is -- this should have brightened the prospects for job creation. it should have. and also anything that may be -- >> i don't think so. i don't think so. people -- every business leader we asked said they want clarity. they said we don't know what it is going to mean. >> increase the likelihood this mess, this behemoth that is too complex to ever work, does it increase the possibility of collapsing under its own weight.

>> 100%. >> you would think the market would be up. >> but it would take two or t e three years to get there. >> it is happening. >> do components of it get changed. >> a lot of uncertainty. >> the individual mandate is so much harder to do than -- can't even pull of the employer mandate. >> the question raised is what happens to the individual mandate and what happens to the exchanges which in a number of states -- >> well behind. let's bring in another voice, someone that nose a lot about this and spent some time talking about this. joining us on the squawk news line is matt crawford, former ceo of cbs care mark a. this has changed the landscape. what do you make of the whole thing? >> good morning. definitely is another piece of confusion into the entire

equation of this. delays the company mandate and yet leaves in place the individual mandate. the individual mandate is the toughest part of the entire transaction. and as you said, it does throw in one more piece of uncertainty into it. someone looking at it from the investor standpoint, you know, we look for clarity and for certainty and if you're running a health care company, one thing that you always have to do is deal with the regulatory environment. now it's gotten changed again one more time. but is it a surprise? somewhat. but, again what do you do with the individual mandate sitting out there? just got off one of the potential marketplaces for those people. individual side is very difficult to underwrite and deal with. insurance standpoint, becky raised the question about hospitals. how are they going to deal with

exchanges. are exchanges going to work? we have seen a number of states pull out of this process. again, just one more time we have got something that is very -- >> do you think this means eventual lit individual mandate will have to be postponed as well. >> who knows? would certainly seem more difficult to implement the individual mandate with what they have announced today. >> let me ask you this, mac. as up some who is not only an active investor now, but a former ceo, would you rather that they postpone this as they're doing and put off and add to the uncertainty or would you rather it just be enacted? what is better? enacting a law that is not ready to go or continuing in this uncertainty? >> well, the last thing that any company needs is the uncertainty

and reality of when the law is supposed to be enacted, that it doesn't work. you can't even register your employees and register as being someone that is successful or doing what is required under the law. so if it is going to be there, you would rather have it and go ahead and get it done, i think. and -- but, this law is so massive and has so many different pieces to it, and so many questions about it. it just makes it very hard if i was running a company today to know what i'm supposed to do. but i will tell you, even most of america knows how to deal with health care coverage. most of corporate america from a large company standpoint, i should say, knows how to deal with it. the small companies and will this be a job creator, i don't quite understand how it will be. again, one thing you don't like

is uncertainty. another thing from an investor standpoint, you look at it, you do want to have certainty about reimbursement. we all know that companies that have had larger percentages in the past of government pay, whether state or federal, typically traded at a discount to the companies that have larger pieces privately. this seems to me just to, again, throw something out that we got to figure out, what discount will be afforded to those companies, if any. and where the employees, particularly the small employers, where the people are going to get their coverage as they go forward. >> okay. >> mac, thank you very much for joining us today. we appreciate your time. this is a question we're going to be pondering for much of the morning. this is a major development. we have a great lineup of guests who are joining us including former vermont governor howard dean. payche chex ceo max mucci and pr

orszag. morsi define with the deadline approaching. let's get an update from cairo on the situation. yousef gamal el-din is on the ground and has an update for us. good morning. >> reporter: good morning, andrew. a very tense last few hours and the countdown is ongoing. we have less than five hours to go until the army imposed deadline for politicians to figure it out. we had a speech late last night by the incumbent president mohamed morsi and it was a defiant speech, effectively rejecting calls by the army and from his point of view and from his view basically asking the army to withdraw that statement. that, of course, raises the stakes because when you reject the invitation by the army that puts you on collision course that is the key source of anxiety. the military remains on high alert and tensions have been

high. clashes have killed at least 20 people in the vicinity of cairo and across egypt. that shows you there is a lot at stake here. if this doesn't work out and the deadline does expire, a power map will be implemented. we don't really know what that road map will look like. the details are still vague. possibly suspending the constitution, dissolution of parliament, all of that is on the table, early elections. at this point, no clarity. what we do have is a response from some investors, local stock exchange opening just slightly to the downside. investors taking this largely in stride, but that doesn't necessarily serve as the best indicator because the cost of ensuring egypt's sovereign debt still trading at record highs. pressure on the currency trading at record lows against the u.s. dollar. and that is a telling sign that the next few hours are going to be critical. >> okay. yousef, thank you for that report. we'll keep an eye on the markets and the reaction to it. also a keep an eye on oil

prices. coming up, we also have some economic fireworks, a parade of data leading up to friday's finale. the adp employment record and jobless claims on the way. we'll talk about the market impact when we return. and look at yesterday's winners and losers as kelly perry takes us out. ♪ ♪ [ male announcer ] some things are designed to draw crowds. ♪ ♪ others are designed to leave them behind.

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good morning. welcome back to "squawk box" on cnbc. i'm joe kernen with becky quick and andrew ross sorkin. adp job stuff today on top of all this other stuff. >> and jobless headlines. >> a requirement for companies with 50 or more workers to provide health care has been delayed until 2015. much more on this throughout the show. i realized andrew, we have come down on the same side on this in that we think that it spells trouble for the entire law. but i realize we're different. i'm giddy. with you, there is a certain sadness in your voice, almost a twinge of sort of remorse of deep despair. >> i've always -- no, i've always had sort of --

>> there is a difference between us. for me, this poison well and the entire first two years of the administration, the way it was done to take this big a part of the economy and not do it in a way where you could get two sides -- >> i think this will -- >> an entitlement program that large to do it in a heavy handed way like that, it poisoned the water. >> do you see how this is like a bumper sticker if you're a gop -- this is the talking point for the midterms. the idea this is somehow helpful to the democrats i have a hard time -- >> which is where the giddiness comes in and the sadness comes in. right? we'll talk about what kind of bug we want to be later. everybody check out google. >> i don't want to be a roach. >> i want to be a cicada. three weeks of just -- >> did you hear them? did you know what that sound was? steady -- >> that's what that was.

if i come back, it's quick, you're in, you're out, you're dead, but the entire -- your entire existence devoted to one thing, which is kind of like you know. now to egypt's banks -- >> good luck with that. >> in shock. what do you want to be? a cockroach? what do you want to be? a tick? >> i'm already treated that way. so i -- >> check out google. franz kafka's 130th birthday. he had some buggy stuff. >> i believe it is you. >> egypt's banks have been told to close banks early today. the central bank issued that order as a precautionary measure in case that dispute between the president of that country and the military escalates. the military set an 11:00 a.m. eastern, already done the math for us, deadline for morsi to reach agreement with his opposition. and asia saw its largest initial public offering in 2013 overnight with suntory posting a modest rise after a $4 billion

ipo. >> all right. all of this news what is happening with the markets this morning? as you might guess, we are seeing red arrows this morning. investors were waiting some key employment numbers today. and keeping an eye on everything happening in egypt, and in europe this morning, look at the futures. you'll see right now futures are down by about 77 points. that deadline in europe that is less than five hours away, four and a half hours away. we'll be watching that closely. europe is having its own problems base d on what has bee happening in portugal. the dissolution of the government there put everything into chaos. you can see right now portuguese stocks are down by 5%. the bonds in portugal have been very concerning as the ten-year bond in portugal reaches back towards 8%. had a move of about 120 basis points earlier today. that's a massive move for one day. spain is down by 3.25%. the ftse is down by 1.6%. the cac off by 1.8%. the german -- germany, the dax

off by 1.25%. in asia, you saw weakness. the nikkei closed down by .3%. in egypt, and the thought that something is building there. wti up by 1.4%. back above $100 for the first time in nine months. the ten-year note here in the united states, yielding 2.447%. the jobs report on friday is going to be the key. we do have some indications today. we'll have the adp report coming out at 8:15 eastern time. dollar has been stronger across the board, not the normal currencies we look at. up against the euro, trading at $129.69. yen moving right at around parody, 99.75. the dollar was up earlier this morning by more than 1% against many of the other currencies including the australian dollar.

if you check out gold prices this morning, you'll see right now gold prices are up just $2. $1,245. 40 cents an ounce. >> the way the ten-year is acting, don't want it to be disorderly. ran up to 27, now 24. you call it orderly now. >> yesterday you were saying this wasn't orderly. >> it is orderly. >> it stayed below 25. >> maybe this will be a big win. >> i think it is the chaos in the other markets keeping -- >> maybe we'll look at bernanke in november and say he's a genius. >> now so he's back down to where it -- take 20 billion out or 50 billion. i don't know. a growing list of concerns putting pressure on the markets this morning. joining us, paul schatz, president of heritage capital. and jay bryson, economist at wells fargo. 2.44. that feels good, doesn't it? >> it certainly does. whenever you get below 250, it feels like perhaps maybe things

are stabilizing here. and certainly don't expect this to go back to 2% anytime soon, unless the economy stalls out. if we remain in this 2.25, 2.50 trading range, that feels pretty good. >> does it say anything about friday's number, though? >> there is a lot of uncertainty in the world right now. the expectation for friday is, you know, somewhere around 160,000, that's okay. not real, real decent. ironically if we get a really strong prescriint, bond yields on that. >> we are globally interconnected now. there is problems everywhere else. that gives the fed cover too. it strengthens the dollar. that helps with our -- there is a flight to our bonds, our notes. >> yeah. certainly as long as there is uncertainty in the world, that keeps the fed, i guess, wanting to stay where they are right now. one thing they mentioned in the minutes of the last meeting was

some of the downside risk have dissipated. some of those risks start to come back right now, that's another reason maybe why they want to continue to purchase some bonds. >> paul what does it mean for stocks? >> well, as i think you talk about the ten-year has been more volatile than it has been in a while. i think we, for so many years now, the ten-year has gone down in yield and stocks have struggled and now kind of back to what we had pre-2,000 where stocks and bonds move in the same direction with a little bit of a time lag. for me with stocks, i think we're still in this rough period. we have a 10% to 20% correction ahead of us. for two months now i've been a seller of anything above dow 15,000 and i'll stay that way. >> would you do anything different because of what happened in health care yesterday, paul? >> listen, personal views aside and i'm somewhat relieved that

news came down, but i don't think so. i think it is going to take such a long time to sort this out. we have all talked about this. we spoke about this many times in the mornings, whether this obama care will come forth the way it was planned. the midterm elections are now 14 -- i find it hard to believe this is going to become the topic for the 2014 election. the law was already passed and hard to repeal it. if they can't get it forth, it is a mild tailwind down the road, but i don't give it much in the markets. >> for jobs? i thought it improved the prospect for jobs, doesn't it? companies don't have to worry tomorrow about going over 30 hours or 50 employees. >> maybe on the margin. i think it is an uncertainty, though, for -- you kicked the uncertainty further down the road here. if you thought that -- it is hard to quantify this, if you thought that some uncertainty about the affordable care act was holding businesses back from investing, then this kind of

kicks it down the road further. >> guys, paul, jay, thanks. keep it quick. >> up next, the showdown in egypt. we'll talk about it. p.j. crowley will give us his assessment of the crisis in cairo and how worried the oil markets should be when we return. ♪

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welcome back. the u.s. equity futures are indicated weaker on this

wednesday morning. dow futures down by 71 points. s&p 500 off by close to ten points, off by ten points now. egyptian president morsi remaining defiant with hours to go in the military's ultimatum to settle the country's political crisis. joining us now to talk about it, p p.j. crowley, former u.s. assistant secretary of state. try to help us through this, handicap where we are. does morsi stay in the position? what happens next? >> think it is very doubtful that morsi survives. i think there had been hopes of a negotiation that would expand political space in egypt for opponents. it hasn't happened in the last year. but the military ultimatum of 48 hours, rapidly approaching, plus missed opportunity by morsi last night in terms of a speech offered no concessions to the

protesters in tahrir square that were heading for confrontation and something will have to give and that will probably be morsi. >> if morsi goes, walk us through the permeatations of what happens next. >> well, a lot depends on the reaction by the muslim brotherhood, and the one hand they have pointed to the election it was free and fair, morsi won. and said he's the president of egypt. on the other hand, clearly he has lost legitimacy with a significant percentage of his population. the military has some sort of a road map that perhaps includes a technocratic government, a rewriting of the constitution, and early elections. how quickly that process goes will have significance. what is the reaction of the muslim brotherhood, morsi himself said he's prepared to sacrifice his life for democracy

in egypt. so this could get ugly and that has implications particularly in terms of the egyptian economy. any kind of turmoil that forestalls the kind of stability that everyone wants precludes international assistance. united states is a no-win if this takes on the trappings of the military coup that has implications in terms of military assistance. >> the u.s. government provides about a billion and a half dollars of aid annually to egypt. what should we be doing? >> well, the united states is a no-win. a lot of egyptians are disappointed because they see the united states as propping up morsi. morsi will point the united states and say that, you know, the united states condoned a military coup. the united states trying to say, hey, we're remaining neutral in all of this. i think the smart policy outcome is to try to retain flexibility.

it is the result of this transition, you know, points to a path to democracy, you know, perhaps the united states will find a way to not pull the trigger on -- or not stop the kinds of assistance that egypt vitally needs to get its economy in shape and to get its political system back on track. >> okay. p.j., thank you for this analysis this morning. we appreciate it. i'm sure as the story develops we'll continue to come back and talk to you about it. >> i look forward to it. >> thank you. >> all right. now we're going to talk about google. >> would you continue to pay a billion and a half dollars? >> you know, the middle east and how we -- it is hard to second guess what we're doing. >> john kerry, what do you do? you sn you know? >> you wanted them on the path to democracy. >> this is democracy, but -- >> john kerry just -- >> you have to have the infrastructure for democracy. there is two steps. most of the country in the

middle east have gone one step, but you got to get to the next. >> it is about china and about -- not even about the middle east. coming up -- >> forget about the middle east. it is all asia. >> he like the entourage and the g-500, windsurfing here and there, take a break. google taking out big ads in major papers. what does this major salvo in the smartphone wars mean for apple, sam seusung and the rest. we have a great lineup including howard dean, pay chex, might get a little bit of an even keeled analysis there. then back to just total spin from the last -- >> oh, stop. >> we have zeek emanuel. >> the cincinnati reds pitcher homer bailey threw a second no

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a pre-july 4th family. >> i haven't looked up the plot but -- >> i don't want to know. i like being surprised. >> the villain turned into a good guy so he is still a good guy, right, so they have to have a new villain. should be good. have you seen the first one? >> i have not. >> you have not seen despicable me? >> let's talk about google's motorola unit. i think it's in the major newspapers. this is a big effort to try to google stamp on the motorola name and john joins us with that story. >> good morning. yeah, on its face this ad doesn't tell aus ton that's new. it's teasing motox a phone assembled in the u.s. the ad teedss that the physical design of the device is going to be customizable. but we get our first look at google putting its stamp on the new motorola. they had a stab that the last year when they released a line

of phones in the u.s. pretty good but did next to nothing for the market share wise. back then motorola ceo took the stage, showed a motto ro la and google together video. this is a reboot of them saying look, our first product under google's control. this is different. check out the logo. it's a google-like font. a ring of color, reminds you of colorful letters and the ad copy spells it out. we're not just any company. under the logo, a google company. the ad begs to be compared against apple's image ad with the tag line designed by apple in california. a lot of people don't care much for the ad because it sort of unclear what you're supposed to feel. i talked to oscar at millwood brown what google needs to accomplish after this ad. >> no one likes to play with a new device or technology they

never used and see it doesn't work well or quite as well as they expected so i'd say out the door the first product that google motorola comes out with has to be bar none head and shoulders above anything and have that wow factor. >> motorola has a gigantic mountain to climb. its u.s. market share is a fraction of apple and samsung according to the latest data. now that they talked a big game in the ad a lot of people are going to look for the product to deliver. >> all right. john, thank you. i guess this is the big question andrew was making the point all of these phone companies are trying to point out the parts made in the united states. >> is that for the government? are they trying to appeal to regulators or do they believe that's going to change the consumer behaviors? >> consumers? >> i don't know. >> i think the argument is that something about the way this device is put together for consumers is going to make it appealing.

they haven't said what that is. maybe it has to do with the design by you thing. we'll hear more about it the next four to six weeks once they unveil this device. >> john, thank you. when we come back two squak market masters get us ready for the jobs report, all the turmoil in europe t political unrest in egypt. we have ralph schlostein. ♪ ♪ unh ♪ ♪ hey! ♪ ♪ let's go! ♪ [ male announcer ] you can choose to blend in. ♪ ♪ yeah! yeah! yeah! or you can choose to blend out. ♪ oh, yeah-eah! ♪ the all-new 2014 lexus is. it's your move.

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welcome back to "squawk box" on cnbc. i'm becky quick. the futures this morning are under pressure. in fact the dow futures down 76 points, s&p by 10 points, there are a lot of things weighing on the market this is morning. european shares are lower as well hurt by political unrest in portugal and uncertainty whether greece will get aid from its lenders. spain's ibeck slipping, portuguese stocks down over 6%. the port yu the port yguese stocks down. the index are lower down more than 1.5% in about every case of the major indexes. the only place you see green arrows are in the oil market. crude oil rising above $100 to high the highest in 14 months, coming as all of the political unrest in egypt seems to be boiling over. that's what is pushing the prices there.

investors are going to watch for inventory numbers they get later this morning from the department of energy. along with the runup recently in crude oil prices. traders will watch a batch of jobs-related data as we get ready for the government jobs number friday. we'll hear from john challenger on the job cuts at the bottom of this hour. later it's the private payroll data and jobless claims, adp, the jobless claims, we have a half day of trading today and the markets will be closed tomorrow for the fourth of july holiday so a lot to cram in. >> corporate headlines then this morning, dell special committee is asking michael dell to sweeten terms of his $24.4 billion offer. see how a pro handles that. >> i see that. >> this comes -- yeah. exactly. i put my own konsnant in. this comes as carl icahn announced he received more than $3 billion in financing

commitment for an alternative offer. dell has to respond to the request. look at this. yahoo! is buying qwiki. that's my nickname for you. >> a high price. >> yes. >> a mobile app for creating videos on the iphone, the company reportedly paid about $50 million, this is yahoo!'s third acquisition since may. when it bought a blogging service tumbler. and toyota, qwiki. >> it had a w. that works. >> and then who is this, toyota? recalling around 185,000 vehicles globally including the yaris compact. a glitch in the electric power steering would make the steering heavier and the recall affects models of the yari made between november 2010 and march 2012.

>> egypt's president and the army commander saying they are ready to die as fears of a civil war escalate. a deadline approaching for morsi to neat demand calling for his ouster. egypt's central bank is asking the banks to shut early ahead of that deadline. we have the latest. >> reporter: andrew, the bank is taking precautionary measures, no surprise. they did the same thing in january of 2011. give you a bit of a sense what's happening on the ground. you see the traffic in the background. this happens in the early part of the day where people try to get some work done and stock up before protests heat up. a very long line for everybody not just in egypt but around the world. incoming president mohammed morsi making a speech making it clear he has the legitimacy to run this country. also calling on the military to withdraw its threat which was basically the deadline which

runs out or expires in about four hours time. he also said that the price of preserving legitimacy and that is a quote, is worth my life. so very strong words there, the military responded on its facebook page saying that we swear to god we will sacrifice even our blood for ezwript protect the country and its people from radicals, terrorists and fools so as you said the rhetoric is sharpening up. we're not sure what to expect because the president made it clear that he's not going to budge even though there's massive pressure on him to make a move and come up with a power sharing deal. and what comes after that road map, the military has been talking about, some details have been trickling through, nothing confirmed at this point. we could see the parliament dissolve, the constitution suspended, perhaps early elections. everything is on the table at this point. but the night was also violent and there is fear those clashes escalate as the president

continues to entrench himself and maintain his position. we did see some market reaction down over 1% in early trade. we still have a little bit to go until the end of trade. keep a close eye on this because the protests are building and tonight is when we will see what happens. will the army come out with a new statement, what will they stay and most importantly, what will happen to the head of state of egypt. >> thank you for that report. we'll be watching. >> there are a lot of questions circling around this. the idea that the market is down 1.7 percent when you have all of these things lining up. i don't know what that indicates. richard engle saying they are not seeing signs of a potential coo but things are moving. >> and pj crowley suggesting morsi will be out. the amount of uncertainty and that country is going to be tremendous. >> in this country, the obama administration talking about uncertainty, deciding to delay

the implementation after key piece of its health care legislation. the mandate for employers, not the individual but the one requiring companies with 30 workers or more to provide health care to employers. joining us to talk about this howard dean former vermont governor and also a medical doctor. and martin is the paychex ceo. and governor hody. >> there we go. nice to be more respectful. >> let me see. governor dean. >> there we go. >> doctor governor dean. when you saw this you said what? >> i think this is a good thing. you know, i think the less mandates you have the better in this and i actually what i think will happen sort of unintended consequences for everybody, i think more people will migrate out of employer-based insurance into the exchanges. in the long run that's good. i've always believed you've got to divorce employment from

health insurance in this country for a large number of reasons. i think this is a positive thing and will help the obama administration get their house in order in implementing something that is very big and not easy. >> what you're talking about is a little scary. the entire time this was being promoted and pushed through, the word was if you have your -- if you like your health care you can keep it. what you're talking about is the end of the employer mandated stuff which is what a lot of american who is work for big corporations or used to, that's a lot of unknown for those people and probably a scary transition. >> it is a lot of unknown and in this way, this is not going to happen in the big employer market for a while because most big employers have health insurance because it gives them the advantage in getting the kind of employees they want. this will happen in the marginal companies. yes, we are i believe going to my great away from an

employer-based health care system and i think this is a good thing. >> howard, completically, does this open up the democrats and expose them to the -- in the midterms or does this help them that we heard both sides of the argument. >> of course, this is all speculation and conjecture, the answer is nobody knows. my guess is that it helps a little because this is going to be a very complicated thing to impleme implement, it's going to start in october and there are fewer things that caught pretty complications the better. i think this is probably a political plus. who knows. >> howard, listening to you i know you have sort of been jonesing for single payer. it sounds to me, not everyone, that's like a horse show to some. that's the scariest thing that a lot of people -- that warned about obama care that was the warning to scare people away. not everyone thinks of it as a

positive as you do. but you were just making the case as we migrate away from what we always had, the employer health care, you're happy it's heading to single payer and they told us they are not trying to do that. >> single payer is a word that nobody understands. >> opportunity government to handle everyone's health care. >> that doesn't even happen in canada where they do have a single payer. if we have a single pair it's not going to be a canadian, it will be an american single payer. right now i mean i would argue, don't forget that john mccain proposed scrapping the employer-based health care in the 208 campaign. >> it feels like they lost their pensions that got replaced, like the employer is going to be further away from taking care of them and the burdens are placed back on -- zw i think that's happening anyway. because health care has gotten so expensive over so long.

three times the rate of inflation, employers are either cutting back or reducing benefits or not giving health insurance at all. everybody agrees we have to do something about cost. and it gets the monkey off the back of small business. >> how will business respond? howard. >> i think overall, less regulation is always good so in the short-term i think this is positive in that it's res leg rags. it gives another year for these businesses to figure out how do do this the right way to less disrupti disruption. the individual mandate is throughout so ma may pressure some of these employers to be able to do something and you gothave some products to help them out with it. >> you don't need to get

political, you are here because you run paychex, does this put any cracks in the foundation of whether that is finally enacted, martin? >> i don't know. this was a pretty big surprise to see this amount of change happen in the delay happen. right now that's still out there and i think that wul put some pressure on some businesses. employees will be saying what are the options. how can their employers help them. it's less regulation. >> 40 you know about your county base was the employer mandate or the overall law holding back hiring? anything to do with how stubborn the unemployment rate has been? >> i think it hurt. you heard a lot of concern what's gotting to cost them and how are they going to do it. i think that might have slowed some hiring, you saw temporary

go up versus fuel time and see fewer businesses starting up. do you think that's goingchange, i could see the argument that we add add new 12 mots of uncertainty rather than certainty. >> i think in the short-term that might move a few misses forward. they might start their base at least with a little more time and concern. this was more the 50-plus who most of them have insurance. so i think it will be positive in the short-term. but i think the individual mandate causes some concern out there. >> governor, do you think that these exchanges are going to be done by october? >> i think it's going to abtight squeeze. some will, some won't. if figurest concern, california is almost ready to go now. some of the other states that have one early.

the federal exchange. about 30 states refused to participate in having their own exchange. there is going to be a big exchange for p 30 of the states and ha has to be up and running an that's a tall order. there will be a couple states late but i think the focus was on the federal exchange. >> if you were dunning the dnc who would you back for 2016? >> i'm not running the dnc and i'm too part to answer that question. >> you're mart but you can still answer. >> i could but i'm not going to. >> who will you be backing? >> we'll have to see. >> all right, gentlemen. all right. howard -- martin, who you backing -- no. i wouldn't ask you that. >> i'm too smart to answer too. >> we only get really smart guests.

that's why both of you were here. zeke emmanuel will be on. up next we're going to welcome our market voices and guest host, john taylor and evercore ceo schlosstein. the challenger report on who is hiring and then the app reported. "squawk box" is going out with a bang. ♪ honey, is he too into this car thing? [ mumbling ] definitely the quattro. ♪ honey? huh? a5. what? [ sighs ] did you say something? ♪

the ones getting involved and staying engaged. they're not afraid to question the path they're on. because the one question they never want to ask is "how did i end up here?" i started schwab for those people. people who want to take ownership of their investments, like they do in every other aspect of their lives.

checking futures now. we have red arrows this morning. i don't know if we want to blame the health care news. i don't know if we blame portugal, egypt, but dow would open off 66 points nasdaq off 15 and the s&p 500 if we opened up now off about 9 points, joe. >> and political unrest in portugal and egypt re-ignite fears in the market. here to talk about that in the second half of the year john taylor, founder of effects concept. in the past you made some what were controversial calls that were half true sort of >> they weren't totally true, totally wrong. you were forecasting a recession. we had a huge swoon.

what are you seeing now? >> actually i'm pretty optimistic on the u.s. economy. i think it's going to be up, the only problem is tapering. scaring people. >> would tapering, why does tapering scare people? less money finds its way into financial assets or hurts housing? >> well, it actually does both of those but having less money got into financial assets i think is very bad for the mood of the country. >> animal spirit. >> the housing situation is a bad thing in the long run, if you raise the mortgage rates by 20% the value of your house goes down. >> even though they are still low historically. >> yes. >> it's the change and rate of change, not absolute change. >> absolutely. >> what does evercore think? you guys are getting a lot of big deals, you must smart, must do a good job. >> the pandering is beautiful. >> you've seen some of the big deals, right? >> they do a number.

>> even some of the good ones. >> look at the hair. >> i know. >> i've been down here for several times. never had pandering from joe. never. >> trying to be -- >> balanced. >> off your guard. >> i think my own personal view is that the market's reaction to the tapering discussion is an overreaction. and the reason i believe that is first of all, what the fed did is through their various statements, not necessarily through bernanke's initial statement alone was they said here is the earliest we will taper. and they made it very clear that they were going to taper only in response to a stronger economic recovery and economic growth. so i think what they said was essentially you have two futures. one future is a future with continued quantitative easing,

qe-3, and a somewhat but growing economy, somewhat slowly that we've had the last year. and the second is one where the private economy is picking up to a greater degree and then they might be able to pull back -- >> the fed put. >> a win-win. >> i'm past this point, but all of us taught our children to ride a bicycle. the way i look at it is the last year or two our children have been riding on training wheels, the economy, they look like they might be ready to ride without the training wheels. like any parent -- >> it is more fun. >> you go many more places. like any parent the fed has said okay, we're going to take the training wheels off at some point, but we're not going to just take them off and push the kid on the bike. we're going to run behind -- >> i got scraped knees. >> the win-win only works if the

one scenario where we continue f there is no adverse consequences. this is where greenspan comes in and says you know what, the market will not let you wait as long as you need to. what scares me is it seems the only way we think we can promote jobs is with fiscal stimulus. i don't think they look at tax reform or pro growth initiatives. we could be stuck above 7% unemployment with qe perpetual. >> i don't think that happens because i think what you're overlooking is the drag over the last few years on the economy from a significant de-leveraging. >> that's where people argue, whether it's just a hangover or whether there is something we're doing currently holding us back. >> i do buy the part of -- >> you dismiss the other part. like andrew. you pick and choose.

you like the part about "the hangover" but they are wrong about the 90%. >> i don't think -- i have a view on that too. >> discredited economists now. totally discredited like poor howard kurtz. >> people can make mistakes. good smart talented thoughtful people -- >> is anyone arguing around 90% is probably not great for growth. if every dime you make goes to paying interest is that good for the growth? >> it's a bad thing. >> you don't need a study for that. >> but joe, the point at which it's a drag on the economy is different for different countries. you think that insig spite of w people say are head winds. >> you look at what's happened in the consumer sector. 2008 consumer debt as a percentage of personal income was 140%, all-time high. it's down to 105%.

that's an enormous amount of reduction. because of low interest rates the amount that the consumer is spending on interest, debt service, is the lowest it has been in 20 years. that paydown of debt was a drag on the economy. qe-3 supported asset prices, housing and stocks which made, allowed the consumer to spend a higher proportion of their personal income than they would have and now we're getting to the end of that period of debt paydown. that that should provide lift. >> when was evercore founded? >> 18 years ago. >> a lot of the other big bangs had the issues. there was a vacuum. i'm not pandering. >> the boutiques, it's no longer a boutique. >> they hate business and they go to ralph and legislator to do it. >> and the cracks. love business.

coming up a win for business. coming up it says i didn't write this. a win for business. a major concession to delay a key part of obama care. who said that? >> the stock market has gone up, not down. since bernanke won. >> and he fired him on national tv. at 8:15, mark zandy joins us to talk about the june -- he does believe it was him. "squawk box" will be right back. ♪ ♪ ♪ [ male announcer ] the all-new 2014 lexus is.

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♪ coming up next the challenger jobs report and then obama administration is delaying a major mandate for businesses under the affordable care act. dr. zeke emmanuel is going to be our guest. tell us all about it when squawk returns. ♪ [ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by.

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we are just about 45 minutes away from a lock at private sector jobs for june. the congress looking for 160,000 new private sector jobs. that follows an increase of 135,000 in may. and an hour from now we will be

getting the labor department's weekly report on initial jobless claims, out a day early because tomorrow is the fourth of july holiday. consensus there is calling for 350,000 new claims for last week, that is up slightly from the week before. by the way, mortgage applications, they fell by 11.7% last week. that's according to the mortgage banker's corporation, as average 30 year mortgage rate rises to the highest level in two years, up 12 basis points to 4.85%. >> the latest read on jobs and ceo john challenger joins us now with the numbers. john, give us the headline. >> well, we saw 39,372 jobs cut in the month of june, that was up nearly 5% from what we saw year ago. and almost 8% higher than we saw in the month of may. >> and in terms of areas where

we're seeing the biggest job cuts? >> we saw heavy cuts in areas like computer sector over 10,000, education saw its heaviest month of the year with over 5600. we're starting to see more and more cuts coming in all kinds of interesting areas. >> what do you describe? >> we're starting to see a lot of cuts in due to the sequestrati sequestration. we saw cuts for example, not only in schools, big public school system cuts but from the uranium enrichment plant, closings of a prison, we saw a defense sector cut from bradley fighting vehicles where the government was cutting back on its expenditures. >> so john, help us, we're going to get the adp numbers in about an hour. we'll get the labor department's numbers on friday. based on this, where do you think things are going to come out? >> layoffs are very light right now. we've seen for the first six

months the lowest number of layoffs other than 2011 since the year 2000. there is not a lot of pressure that companies are facing in having to lay off people. they are coming from more benign needs like mergers and acquisitions. looks to me like the continued pace that we've been seeing of consistent job creation, not heavy job creation. should be what we can expect in this month's report. >> real quick on the sequester because you mentioned it. 10,253 job cuts related. is that higher or lower only because i'm thinking what we might see on friday. >> you know, i don't really know what to expect. i don't think we have yet seen how the sequester's going to roll in the economy and for how long. we knew the effects when they announced it. going to take place over the

year. we saw the gdp revised downward. there is not pressure. not strong growth and certainly the lack of government spending is one of the key issues. >> john, thank you for this. we'll see how those numbers portend. we should say moody's chief economist mark zanldy is going to join us with the latest adp report as we hit a little bit of numbers before the big friday number. >> political unrest raising fears in the oil market. that might explain why we're at triple digits again. carl joins us on the phone. how far could this 1, carl? >> how are you. good morning. >> how far could this 1? we're above 100. it's egypt based. is there legs to this or is there something more than just egypt? >> well, i mean, obviously egypt comes if there is disruption

with the suez canal. if they go around, the cape of good hope it's probably another two to three weeks of oil delivery. you'll see prices reflect that. it has some legs. we're well over $100, it has a possibility to get to 110 or 1 dwell if it escalates. if this affects our presence in syria or issues in syria and where it goes from there, you get higher and higher, your long term risk on middle east problems goes up to 24 or $250. a lot ahead that we have to decide upon. >> how much is just based on policy and you know, the weakening, if dollar were to weaken or if the economy were to strengthen? all of these things could -- i'm

amazed that soil above 100 at this point. >> you're absolutely right there are other factors. does the economy stay strong, do we see the dollar stay strong. we're really reflecting the type of our oil as compared to the world because we've always been price add good 5, $10 under brent crude a lot use in the world bench wark. we're not bringing in a lot of -- we're trying to balance that price out. it's $100 because the rest of the world is paying $100. the rest of the world starts to fail our oil would come back. >> what happens when we develop all of this natural gas we have. i don't think long term i'd like to be along oil. we're going to need it. there are cheaper alternatives that we can still move people around with, aren't there? >> there is. natural gas is a great source of

energy and the issue is that will we look to move forward and make more vehicles and manufacturing dependent on natural gas. it's serving it at mcdonald's, we order a quarter pounder with cheese. it's a great source but not developing to make at good source. >> don't order that wrist thing. that's put into a hold. it's like cork. it's unbelievable. >> the chicken nuths we think pop out. >> you get stalled a lot then there is no wind. >> it's difficult. on a winless day. >> carl thank you. coming up zeke emanuel. >> i'm on a city bike. >> do you have the -- don't have the city bike yet. i do own the book.

>> it was written by zeke. former adviser to the white house on health care reform. he gets bad if you want to talk all health care. to check the futures down most of the session. we're waiting for the adp result. ♪ honey, is he too into this car thing? [ mumbling ] definitely the quattro. ♪ honey? huh? a5. what? [ sighs ] did you say something? ♪ to appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price.

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welcome back. our next guest says postponement of the mandated employer health care coverage is not a big deal. joining us is ezekiel emmanuel, the chair of medical he thicks at the university of pennsylvania also contributor to our sister network msnbc. thanks for joining us. >> thank you for having me. >> i know you say this is no big deal but the front page of "the new york times" says this is a significant setback, throws into disarray the administration's efforts to put this into play by january 1. the other provisions of the law. and professor at george washington university says this boggles the mind. this could reduce the number of uninsured people who gain coverage in 2014. how do you respond?

>> first of all lets be bleer are clear this applies to a small number. those under 50 never had a penalty and that's the vast majority of employers. about 95, 96% of all employers. it really applies to the 200,000 employers who are -- have more than 50 workers and 94% of those employers already offer health n. they are giving their employees health insurance without a mandate, without a penalty. and they are going to continue. almost all of them have locked in the 2014 benefits, so this applies to about 6% of the largest companies in the country, mostly holds retailers and restaurant companies, for them it is a good breather. i always say to my students and to people i talk to you got to look at 2020. day-to-day differences. for 2020 what is important is do we get the exchanges up and

running, are they efficient, do people like the website, like the choices they have to make. and you know, then get people in and begin using the subsidies to buy insurance. >> howard dean was on and he supports everything about this, he's very excited about it yet he has serious questions whether the individual, the state health insurance issues will be up and running, exchanges, will be up and running by october 1 or ready to insure people by january 1. that is a much more complicated piece of the entire legislation and the law. that is something that if it's not ready to go is going to create bigger problems, correct? >> i absolutely agree. i think this does degree the federal government to concentrate on that issue. states like california and colorado are working hard to be sure they are ready. i think and i've been saying for a long time they are going to be bumps along the road, by 2015 and 2016 most of those will be ironed out and i think we'll be

well on our way to having a system that works really well for most people to buy insurance. would i wish that the employer mandate had been written differently in the legislation and second of all had been owy hadn't been postponed, yes. is postponement going to be a major blow to getting 32, 34 million more health coverage, i think the answer is no. >> let's talk about the political calculus and whether this opens -- >> asking the wrong brother. i'm not the politician. policy guy. >> how much do you worry that this is going to expose the program to more questions in the midterms and beyond and becomes a bumper sticker for the fact that the program wasn't up and ready to go. >> first of all i think much more important than this provision is going to be the exchanges and getting them up and running because that's going to affect millions of people.

and this probably at most affects one million people, by the way if their employer doesn't give them insurance can go in the exchanges and buy insurance. i think if the exchanges roll out reasonably well people are happy with their choices, they realize they have subsidies, i think that is going to be the best news for the midterm elections for the democratic side f. they really don't work, the computer software is clunky, people can't buy a lot of coverage easily, then i think it is going to be a problem. and that's the more important issue and the bigger issue. this is a nod for business. >> does this increase -- there has been some debate and argument made this ultimately for the next year will increase the cost to the government both in terms of subsidies and also penalties that would have been paid to the government to the tune of like $5 billion. does that make sense? >> 5 billion sounds way too high

because there's at most a million workers at risk here just if you calculate how many companies are over 50 and don't offer health insurance. so i don't think that's probably the big issue. the bigger issue do the workers go in the exchange and get subsidies and it may be a one-year cost that this will definitely cost the federal government some money. i don't think it's going to be that high. and the more important issue is, do the exchanges work? and i think that's where we need to focus our attention and i know that there are lots of people all across the country focusing attention to make sure october 1st goes as smoothly as possible. >> zeke, i'm messaging your other brother about the calculus. ari's not responded to me yet. i don't know. i don't know if he's up. >> he is certainly up. >> right. not a big sleeper. >> right. >> in the past, we have talked to you about the claim that the

jobless rate was staying stubbornly high because of businesses being hesitant to hire, whether it's the -- putting more under 30 hours or not hiring that 50th employee. and a lot of places today that you're reading are saying that this was in response to that, that the obama administration realized it was holding back hiring and they decided to make it easier on companies. is there any -- you buy that? >> i think there's probably some truth to that but probably not a lot. most businesses make their decisions on hiring on do they anticipate going forward that there's going to be enough business to justify the next worker and they have calculated in what the benefit structure is, a total compensation package including health care coverage. i do think there is some confusion in this bill about what's a full-time worker, when you have seasonal workers or you have people who come in and come

out like we do at the university of pennsylvania in terms of people who teach for a semester and don't teach. are you responsible for covering them and not. again, the way the provision was written was not the best, it wasn't the cleanest. there was lots of talk in the -- as we were working on the bill we'll fix it in conference and conference never happened because of the scott brown election victory in massachusetts so a lot of things we would prefer to be different just didn't get fixed at that point and now there is a stalemate about trying to improve the bill because democrats are fearful that if you put it on the floor something good will be undone and republicans aren't willing to play ball because they want to attack it for electoral reasons. >> go ahead. finish your thought. >> i think if we were all, this bill is going to be the law of the land, let's try to get the best health care system we can, we could go a lot further. >> i question just the basic premise you look at the nuts and

bolts. i understand the way you have to make this work is get the younger healthier employees and individuals into this so you bring down the cost for the older people or people who have previous conditions that are there. when you start looking at the reality for this, there was an article this week that pointed out for some of the younger healthier workers their costs are going up sometimes 300%. and trying to convince those people even though they pay tax penalties could be a different thing to get the younger people in to make it more affordable. >> make a few points, first the coverage in the exchange is much better than the coverage they were getting for $100 a month. the second thing is that in the exchange they will get subsidies which they weren't today. so that price which is the sticker price won't reflect the actual price they pay. that's an torrent thing for people to realize. and yes, health insurance is a

long term investment. >> i don't understand how that attacks the cost curve if people are not paying are for it. the government picks up the tab on those. >> the real cost curve is how doctors and hospitals deliver care and how they do it more efficiently. when you travel the country and you talk to doctors and hospitals, many of them have already taken out 5 and 7% from their operating cost and they are going to take more out or are capable of taking more out. on the cost side what we really need is much more congressional action on payment reform, changing how we incentivize people and doctors to get healthy. they get incentivized to take care of sick people. >> before we let you go, we never use you for what you are trained to do. can we make cancer a chronic disease by 2030? are we on track to do that? >> 20 sthirt a very long place to look for a crystal ball. we are certainly making advances on cancer, i would say it's

frustrating because a lot of the new drugs postponed or increase survival months rather than being home runs but recently we had a lot of important home runs. perseptin for breast cancer. >> we got to make the similarity in 2045. to make that we need 2030 to cure the rest of this stuff. get on board. >> he believes in zombies too. >> i was about to say. >> we have a lot of zombie policies enacted now that we know are dead and buried but we think they work. >> zeke, thank you. >> see the walking dead. >> you are so lame. >> actually you're early i'm told. >> wow. coming up, final thoughts from this guest host team. we're going to get a call on.

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welcome back to squawk box. let's get final thoughts from our guest host for the hour.

founder of -- that's not -- >> you should be able to pronounce it correctly. >> we've known each other that long. >> i'm not offended. >> very kind. help us with this. look at the front page of the financial times. fed bankrolls to be tougher than basil. >> essentially what our regulators, the fed t treasury, are saying is that for the largest institutions, those that are above a big size and also have diverse businesses, that they are going to have super high levels of capital, higher than basde 3 requires and probably higher than other banks globally. >> two issues then. ultimately do the biggest banks in this country, do they stay at the size they are or do you think they shrink because this makes it prohibitive to be that

size? >> i think they will be looking much more intensely at the size of their balance sheets, both the visible balance sheet and the contingent balance sheets because the capital costs of that will be higher and the return on equity lower. >> does it undo the liz warren argument that the big banks are getting a subsidy, by the guarantee of the government and the taxpayer. >> i think we're going to go to a world where big may very well mean lower returns on equity than a little less than big. >> ralph, thank you for this. we appreciate it. john taylor is going to stick with us. >> you were talking about -- that's okay. that's minor, isn't it. when i said early. you don't get thrown off the air for saying that. >> you have tolerant people. >> i don't know what you mean but early for work. >> i'll discuss this with brian. >> you are both from philly.

>> he is from philly. >> still to come private pay roll jobs and much more including the latest on egypt as the deadline approaches for president morsi to step down. here is a look at the 10-year note. and this will be your premium right here. sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. love this guy. okay, does it bother anybody else that the mime is talking? frrreeeeaky! [ male announcer ] bundle home and auto and you could save 760 bucks. alright, mama, let's get going. [ yawns ] naptime is calling my name. [ male announcer ] get to a better state. state farm. ♪ [ male announcer ] some things are designed to draw crowds. ♪

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tensions rising in egypt. we'll get a live report. >> microsoft planning to restructure. we'll talk to a leadership expert about the next step. >> and our second half play book continues. the tech names that could make you money. your outlook for home prices. welcome back to "squawk box." forget all of about that. we have a different show lined up. i'm becky quick along with joe kernen and andrew ross sorkin. we're talking about the white house decision to delay the employer mandate provision of obama care. we have peter orzach joining us. plus, it's a big morning, some key data ahead of friday's employment report. we'll be getting an adp pay roll

number and jobless claims hit the tape a day early. we'll be getting international trade data. our guest host john taylor, chairman of fx concepts and "squawk box" market master. we have more from john. first your morning headlines. the dow takeover saga taking a turn. the company special committee is asking michael dell to sweeten terms of his buy-out offer. this comes as carl icahn announces he has received more than $3 billion in financing commitments for an alternative offer. michael dell has yet to respond. yahoo! is buying a mobile app. the company paid $50 million. this is the yahoo!'s third acquisition since may when it bought tumbler. >> a quick check on the markets. we do have red arrows in the united states. you're going to see that as we

flip the screen. dow would open up 60 points lower. s&p 500 off 8 and the nasdaq off about 14 points. over to asia, we had red arrows as well. the hang seng off 2.5%. the nikkei off as well slightly marginally. in europe red across the board. you see about 1.5%, the ftse off over 1.5%. the big number there, portugal off over 5%. as we were saying the market turmoil in portugal is affecting things. stocks falling more than 6% on concerns about the country's coalition government and ability to pursue austerity measures. two ministers stepping down. the prime minister, calls for his resignation. the yield on the 10-year bond spiking. 7.855%. we're also going to -- that is

yikes. absolutely. we're also going to watch oil today, crude prices have breached the $100 a barrel level for the first time since september. they are trading at a 14-month high. $101.60 on wti crude right now. and that is also function of what's happening in egypt. egyptian president morsi remaining defiant with the deadline whether he is going to stay in that role. let's get an update. good morning to you. >> reporter: good morning, andrew. the protests are building up and various parts of the city. we only have 2 1/2 hours to go until the deadline set by the army for politicians to come up with some form of power sharing. if that doesn't happen, well, then you're looking at a road map that's going to be implemented by the army. a little detail about what that might include, whether parliament will be dissolved or early elections, everything is on the table.

but i don't know if you had a chance to watch the speech of the president last night. he came out for 45 minutes in a televised address to the nation, visibly aggravated, distressed, and clearly at times even shouting. it's a very different president than the president we've seen in previous speeches. that shows you the anxiety and the tension which is also visible in the streets overnight, clashes killed some 23 people at least according to official sources, government sources in egypt. what happens now? how will this be dealt with give at any fact the two parties are so far apafrmt supporters of president morsi are going to call this a creeping coup. then if the military does make a move to oust the president and meet the demands of the egyptian people, how would the international community respond to a military coup. it's not an easy deal. they may respond to the needs of the people but in terms of yitcy a key point the president made

during his speech over and over again in the 45 minutes he was voted into power in a free and fair election. the legal aspects are complicated. a lot of wildcards that remain. a quick note on the market which is gaining some strength, trading to the down side less than 1% at the moment. quick note on insuring egypt's sovereign debt, the cost at record highs, pressure on the egyptian pound against the u.s. dollar trading at record lows, you have to keep an eye out for the etfs as they go into trading and continue their trading day. we'll see how it plays out. back to you. >> thank you. can you just do us a favor. and we had a number of guests try to do this. it's hard to ask a reporter to handicap where things are going to go. just help us in terms of over the next 24 hours from your vantage point what do you think is going to happen?

yousef? i think we might have lost him. >> what's going to happen in the next -- let me answer that question. i'm going to jump in here. what's going to happen in the next 24 hours nobody can tell. there are several scenarios that could play out in different ways. experts seem to agrees, the ones i've spoken to that the military is going to tread carefully. the calculus has changed they burned their hands last time and women try to bring everybody to the table to work on that road map. that is all we know at this point, that they want people to participate to plan out the future. how successful they will be at doing that and whether they can contain the violence and possibly violent response from the incumbent government and their supporters who are on the streets as well and again, we've seen scenes of them coming out with sticks and improvised armor ready for battle. they are not going to go down but a fight. so a lot of variables that you have to wait and see how they

play out. >> okay. yousef, thank you. we'll continue to check in with you throughout the day. >> harwood's back. and the obama administration delaying a key part of the affordable care act will not require companies with 50 or more to provide health care insurance for employees until 2015. john harwood joins us. i don't know if you saw zeke emanuel. >> what did he say? >> by 2020 it's going to be this whole thing is going to be working beautifully. when we pinned him down well, 215, 2016. there really is sort of a longer sort of a viewpoint being put forth by people that like the law. and that might be the way to look at it. and anything this big and complex, especially and zeke pointed something out that i had not factored in, because of scott brown, and because of reconciliation, they had planned on going back and refining a lot

of the stuff and they weren't able to. it had to go in as is, now they can't fix it because you know, the republicans won't let them, they want to make them live with what they have got. there's a lot of nuances to these discussions. >> yes. look, everybody is taking a long view. democrats and republicans alike, democrats because you know, it's big, it's complicated, huge number of actors at the governmental, business, individual level. but republicans are taking the long view, too, because they know the evidence of social policy changes like this are that they tend to get entrenched over time. and you know, some people thought social security was unworkable or medicare was unworkable now it's impossible or has been impossible for a good long while to make significant changes. that's why the stakes are pretty high in the back and forth and why republicans are trying to take this argument and pivot and make the case that this is evidence that it can't work and therefore we should repeal it. not going to happen while

obama's president but you know, if republicans manage to win the white house in 2016, which is they certainly could, you're goto what the next few months are going to bring. but the individual mandate, the one thing that i think this does is, suddenly it makes us at least consider the possibility that not everything is going to run smoothly and that the administration won't be hesitant if it looks at something and sees there's no way that it's going to happen, they will take action to try and save it for the long term. i think now, i would never say all eyes because i think it's just a journalist sort of a tool but all eyes are going to be on that individual mandate in october. >> why did you just say it? you said you weren't going to. >> that's what cicero used to say. i'm not going to say that mark anthony is a scum bag. i'm not going to say. that's what you do. that's how you say it without saying it.

>> you're right that the individual mandate is the most important single element of the law, that combined with the changes -- >> don't you think suddenly it becomes less certain that it's going to be smooth sailing and i mean, i just think the stakes have been raised. >> you can take to the bank that not everything is going to be smooth sailing. it's not smooth sailing dow. >> the stakes have been raised. >> look. i didn't expect this to be delayed so i'm certainly open to the idea that there's going to be a surprise in the individual mandate gets delayed but i would say that, that's a much more fateful step for the administration. if they were forced to do that, to delay the individual mandate and therefore delay the successful implementation or the potentially successful implementation of the exchanges that's tantamount to delaying the sort of core element of the law, and i think they would be very slow to do that, but you know, we're going to see how well they can implement it. i will say some allies of the

administration outside are expressing concern that the team within the white house has not, having had three years to try to ramp up and get this done, that they have not functioned at the highest level of efficiency. see what they do from here. >> speaking for yourself, allies -- >> no. >> okay. >> speaking of people involved in health care who were supporting the passage of the law. >> he doesn't even -- you laugh about duke or homer bailey but i can't get you you know, that was a little nudge. john, oh, we got to go. i could talk to you forever. thank you to john. we'll talk more about, we'll have -- >> i want to hear what orszag has to say. >> 8:40. coming up we're minutes away from adp private pay roll numbers. right now as we head to a break take a look at u.s. equity futures and the red arrows.

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welcome back everybody. take a look at the futures. the dow futures down 72 points. we are a few seconds away from the adp employment report for

june. of course we use this to try to figure out what to make of the big jobs report from the government on friday. but this is the first number we get a glimpse of and steve liesman joins us with that. >> up 188,000, a bit more than expected. we are seeing congratulations, what, you were all there on the up side? revision to may, down 1,000 to 134,000 from the original 135. i think the big news here is you had job growth across all industry sizes, small business up 84,000, the medium size business, by the way, it was here on "squawk box," did you guys mention this? zandi brought up the idea maybe there was a problem in the data of hiring the 50 plus. this is where that started. >> i was going to say that i thought you were going to where zandi admitted that obama care -- i was going to say 28,000 people were hired since

the news broke last night. >> it just happened. >> but i want to point out that zandi and then i followed up with a couple stories, it was here we started and i asked jack lew about this issue. >> was it true there was a problem there? >> well, we're going to talk to mark 18 second. there was an indication. one other thing, guys, which is a big showing for construction employment. which we haven't seen. 21,000 on the up side. goods producing 27, 21 was construction, service up 161. pretty robust report. don't take my word for it. talk to the guy who does the report and only here on cnbc, mark zanldy at moody's. mark, let's before we go into health care and i know everybody's going to have questions for you on what the administration did yesterday. let's talk about the jobs report and what this says about the health of the job market right now. >> well, not bad, 188 so you

strip out let's say 10k for government, laying off about 10k per month. the payroll number friday should be around 175k. 175, that's what we've been getting on average for the past two years, what we got last month. this would suggest that nothing's changed. the job market is still remarkably stable, producing 175k per month. >> the only stable thing out there. let's talk about the number that is needed here to bring down the unemployment rate. 175 strikes me as robust enough to shave a couple or one or two tenths off the unemployment rate. >> 175 k, which we have been getting over the past two months, the unemployment rate has come down more than a percentage point. if nothing else changed, that would suggest that this pace of growth a year from now the unemployment rate will be about 7%.

and then two years from now roughly 6.5%. of course those are pretty key thresholds for monetary policy and kibt with the federal reserve estimate when they are going to raise interest rates. the job numbers line up with that. >> everything down a half point. where we would be. i want to show folks the graph we made which tracks your accuracy and you had been doing better, than you have been doing worse, now better again. we have the absolute average at around 40,000 -- so you remain a little light of the bls report s. there a reason for that, is there a bias built in that people should watch? >> i'm digging over that. we have been on the light side and my sense is that it may be related to seasonal adjustment issues which affect the timing month-to-month. if you abstract the data the adp numbers are tracking equal to the bls numbers.

over the past nine months. so my sense is and i don't know this for sure, still digging but i think it's just timing month to month. and once we get that nailed down down this should be much better. >> a little adjustment to come. economists are saying basically that unless it's a difference of 50,000 with their forecast, they won't make a change because 40,000 right now is within the tolerance. mark, you are the one who picked up for us first this notion maybe there was not hiring happening in that northwest plus range of firm size. are you still seeing that in the data? >> no. we were talking about this a couple three months ago, it seemed to suggest. it doesn't appear like that's getting more significant. as you pointed out in this month's data it's harder to see at all. if you look in the industries

that would be most affected by health care, professional services, leisure and hospital ta. in the grand keep these are small effects. they are nothing close to what you would listening to the trade groups screaming saying this is going to be a real problem. i don't see it in the data to the degree that they would suggest. >> to the degree but you're saying there is something there you look at what, the restaurants and the retail trade? is that where you are seeing less hiring than you might see relative to other industries? >> yeah. just a bit, though. and at this point i would have expected to see more of it. three months ago was the process was just starting it these small businesses starting to prepare for 2014. now this is the month of june and the effects aren't larger so it's probably having some effect but very modest. with the change in how they

implement health care, you would expect -- >> i think hired overnight. what time did the news sfwlaek >> at 4 check or 4:30. >> you don't know how to take -- i was going to give you kudos. it was a concession over the concerns you've been raising. >> we processed over the weekend. >> this is something you've been bringing up for the past three months that you were concerned about. they said you know, zandi's concerned. >> i have influence. >> let's delay the employer mandate. >> is it better that they delay it or stretch that uncertainty over a longer time frame? >> well, they could implement it makes sense to delay it. if they had the things together and could, i'd say go for it. now you've got uncertainly and

businesses are going to try to figure it out. it's a cloud and the cloud is going to stay until we nail this down. >> what's your growth forecast now. are you seeing effects of the sequester in the unemployment data >> >> you don't see it in the jobs data, you see it in the gdp data. so gdp, yesterday we got the vehicle sales, they were fantastic for june. even if you throw that into the mix, gdp in q-2, the quarter that ended will be 1.6%. there is a lit more data to come in. it's a weak quarter. you can see the effects of the sequester of the tax increases and you don't see it in the jobs data. businesses seem to be looking through this. so far they have not responded. >> none of the dire consequences turned out. thanks for joining us. we'll see you on friday.

>> i'll be here. >> with your twin. >> that's right. >> thank you, mark. >> coming up more data, the weekly jobless claims and international trade numbers. first, though, new york's attorney general investigating some of the biggest employers. ♪

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welcome back to "squawk box." new york's attorney general is investigating the payment practices of some of the state's largest employers. this probe centers on companies that pay hourly employees with an atm style karcard. letters were sent seeking more information about the practice. mcdonald's, walgreens and walmart are some that do this. the atm cards can generate costly fees, 2.25 for using an out of network atm. of course if you don't have a checking account that can be difficult too. so there are probably two sides to this story. when we come up we're minutes away from jobless claims and international trade data. look at the u.s. equity futures. we're under pressure t futures down 32 points, maybe that is the adp balance. 188,000 for the month of june,

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welcome back to "squawk box." we're seconds away from weekly

jobless claims an international trade numbers for may. rick is at the scene in chicago. and we have steve liesman in the studio. rick, the numbers. >> we are seconds away from the last set of data points of course before the innence day off. it's minus 45 billion which means the trade balance is a trade deficit. and initial jobless claims moved down 5,000 from an upwardly revised 348,000 down to 343,000. let's dig down a bit in the trade deficit. the last time we had a level of 45 billion, ciphering, looks like november of 2012 when it stood at 46.4. and in the interim period between that data point and today we reached a minus 37 billion and that was in march to give you context, in terms of initial jobless, blur your eyes a bit, it's close to

expectations, never bad news to see these under 4 or 350. it's always good. but it really is about what occurred at 8:15 eastern, and hopefully we'll see that type of strength even with all of the asterisks joe is bringing up which many agree with for friday's number from bls. we saw yields get down to 241, before our time zone which has been a pattern the last several sessions. we see buying in treasuries before we open. that makes sense, i think, as you look around the globe whether it's portugal, greece or more dramatic more harmful way what's going on in egypt potentially. we're currently at 246, virtually unchanged. of course we are still negative on the futures but less so on the dow and the s&p, so at least at this point before traders may be think about those issues with the fed, strong jobs is good news for stocks and good news because interest rates moved a

bit higher on that with regard to treasuries. back to you. >> thank you, rick. you're seeing there the stock market still down but better than where we were 20 minutes ago. for more on the data let's get to steve who has been crunching numbers. what do you think? >> trying to figure out why exports fell quite so much. they were down 0.3% and i'm trying to figure it out. i -- a category that's standing out for me where that came from. imports were up 1.9% compared to 2.4% in the month of april. may down 0.3, compared to up 1.3 for exports in april. so, i'm not seeing right away where the miss was. looks like goods, exports down a bit, and goods service exports up a bit. that was probably where economists were most surprised. the 45 billion what's going to happen is it's going to cause the gdp forecast to be revised down again.

because higher trade deficit. and i'm not seeing it on the demand side. we get a surge of imports sometimes a good thing, it shows there is a lot of demand in the economy and we're going to -- what we would lose on the impart side we would gain on the domestic activity side. we're not seeing that. where we are now is we have a split decision. one number better than expected. one worse than expected and two other pieces of data i know joe would insist they don't exist because they happen on other shows. >> it's the dsi index. the dirty shirt index. we're the cleanest dirty shirt in the projection. ek supports weak we have variables around the globe economically. >> that's an important point, rick. and the extent to which global weakness is hurting exports had come with a great -- i had an answer to your question where is

all the oil that america is producing. one of the places it's showing up is in a better petroleum balance in trade. we had imports come down like this, there's compared to 2005 the peak year for imports. 295 billion there. 13 you can see how much that's fallen. how much exports are up. almost triple. we have a very long way to grow to bring that into balance. >> a lot of this is the weakness in europe and even china. >> but these numbers were taylor made for what you were talking about earlier. they were. because you said things are continuing to -- but which -- what position would you put on today, john? given your outlook and some of these? >> you have to own the dollar. it's partly because of shale oil, because of the fact that we're just growing. we have cleaned our shop from 2008 and the other guys haven't.

>> short other currencies, would you do anything -- >> sure, i'd be short the commodity currencies whether south africa, australia, anything out there selling to china, china is in a slowdown face. >> you're making money on these. >> no, they are excellent. >> the biggest positions right now? >> i don't think of it that quickly. they probably are the biggest. short australia, short -- >> you're a wealthy dude that made a lot of money putting your money where your mouth is. as an aside he sold a billion dollar company of his that he was dabbling around with in biotech. that's one of the things. what else. >> it was a lot of work. it wasn't a dabble. >> a billion dollars that you sold it for. it was almost -- mostly you are trading currencies and things. >> right. the point here is that the united states looks very strong.

>> would you short gold here or buy it here? >> i'm close to buying it. i'm neutral but i do think it's going to hit very close to 1,000. >> you do. >> i think there is some pressure going on because of this tapering stuff. >> this is not the stanford. >> i know. >> i can still talk. >> he's sitting here. >> multisyllabic words. you had said earlier that you think good news is bad news, so you want to see numbers that are what, economically weak because it keeps the fed in play. that's what the market wants. >> certainly that's what the international market wants. they don't want to see paper income long. and the emerging markets are the worst. they need the money, they need money being pumped out of the united states into their pockets. and now if we're tapering there's not going to be that much money. it's amazing how sensitive they

are, scary how sensitive they are. >> so the normal rejoinder to that i'm only going to have less qe if i have more growth so why isn't that good for stocks? >> well, domestically i would argue that the equity market is going to end up higher, 17-50 or 18-50 by the end of the year. right now we're wobbling because we don't know what's going to happen. >> in that 18-50 where does the 10-year go? is that a 3% or 2.75? >> i would argue probably an unchanged 10-year or maybe 220. i don't think the 10-year rate is going up a lot. it's too dam high. >> why have it up when you have inflation at 1% going lower. >> stock market higher. >> yes. >> in the yield.

>> i don't think it's going up. i don't see any reason for it to go up. the biggest amount of tightening has been done and that's in the -- >> the economy is pretty good. >> the economy is strong. >> so you want the fed in and the economy. strong at the same time. >> the fort tune 1,000 has -- >> that's really the play, right, as you're saying the ems take it much harder than the united states does. >> i'm trying to keep it you know. >> your help is always warranted. >> my mother's watching. that was sarcastic. >> no, it wasn't. >> rick, happy fourth of july. steve. >> happy fourth of july. >> happy independence day. >> joe, don't you find a remarkable count the words in the declaration of independence, in the constitution, count the words in many important documents then count the words in most of the recent legislation. what conclusions do you draw?

>> i wonder what -- like the words in obama care, it's on a loth 0 rythmic scale. i almost made the comment it was zeke. we found out this, we found that out after someone read it after it had been into law for six months. coming up more reaction to the obama administration step back on health care. peter orszag, he didn't care when that happened. he is also at citigroup. one of the bad guys now. >> he's a good guy. we'll hear from him. key role throughout our lives. one a day men's 50+ is a complete multivitamin designed for men's health concerns as we age. it has 7 antioxidants to support cell health. one a day men's 50+. it has 7 antioxidants to support cell health. could save you fifteen percent or more on car insurance. mmmhmmm...everybody knows that. well, did you know that old macdonald

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>> welcome back to "squawk box." futures looking in the red for the moment. dow would open off 32 points, the s&p 5 points. the nasdaq 6 1/2 points. better than expected numbers from the pay roll report. it was worse than that before. let's talk about health care. the obama administration deciding tuesday to decide a key requirement that would force businesses with 50 or more workers to provide health care n to their employees. joining us on the squawk news line is the person i wanted to talk to all morning peter orszag, banking vice chairman at citigroup and former omb director. thank you for calling in and trying to help us make something of all of this. >> my pleasure. good morning. >> peter, we talked to zeke emanuel earlier and he said this is not a big deal.

we should not get too excited. the front page of the new york times has a different story. they say this is a major setback. where do you stand? >> i think symbolically it's a bigger deal than it is substantively. you look at the actual impact and i'm sure zeke said this, the impact on coverage is likely to be small. the impact on the deficit in 2014 is a few billion dollars. so it really does come down to the symbolism of delaying things a bit. and frankly, i think one of the things this is underscoring is when the legislation was passed all of the conventional wisdom was it was much stronger on coverage and on cost, but since then the news on cost has been much better than developments on the along the coverage dimension. >> so if you are the ceo of a darden or a major employer that deals with these, what do you think happens, meaning over the next year, do they hire more people, was this holding back hiring to begin with? how do you think this impacts

the economy? >> well, i don't think it is going to have a major effect on employment. maybe at the margin one of the effects it does buy us a little bit against low and moderate income worker because the penalty applies if you get support payment in the exchange. but i don't think those effects are large. and so i think the bigger effect again is that just symbolically the administration has said we'll take our time to make sure everyone fully understands how this is going to work, and by the way, don't forget the administration hasn't actually laid out all of the details how even the delay will work. they said we're going to delay things but full details of exactly how this is going to now fit together are expected next week. >> here's the political question. there are people who said this will help the democrats because whatever problems might have emerged as a result of implementing this won't be on the table for the midterms, on the other side there is the

argument that this opens up a can of worms, puts the issue back on the table and a bumper sticker for the gop. >> let me put it this way by definition the administration thought it was beneficial staub stantively and i imagine politically to delay or they wouldn't have done it. >> peter, from the economics point of view s this thing going to be able to drag in those young healthy workers and healthy citizens and make them pay more money so that it offsets costs for the others? there was an article earlier that raised questions about that. what do you think? >> well, look, time will tell. i think again, the coverage aspect of this is complicated. i am hopeful that most of the anticipated effects in terms of bringing in young workers will happen but a lot of that's going to depend, if you look at places like massachusetts for example, what happens to enrollment depends not only on the

incentives, are you charging me for this, but also how the social norm develops. if most young people are getting insurance and that becomes the social norm then you have a different effect if it's very controversial and people are not as -- don't feel the need to get it as much. and that remains to be seen. i come back again to what i find fascinating is the developments on the cost dimension have been so encouraging and on coverage it's a little more sketchy, and we'll just have to see how it plays out on coverage. don't forget on costs, really positive developments. medicare up 3.3% last year which is historically low and not all due to the economic difficulties. and there are 4 million medicare beneficiaries now enrolled in accountable care organization where the hospitals and doctors aren't paid on a fee for service bases. that's really great. >> peter, just revisiting andrew's question.

i understand what you're saying that the administration wouldn't have done it if it didn't think it would be beneficial but that doesn't mean it's a net positive. it could have been it would have been much worse if they had not done it and they picked the lesser, they tried to maybe cut their losses. >> of course. with the administration, i agree with you. and with administration prefer that everything happened on time and without flaws and perfectly of course. >> you're there and you hear everything going on i'm sure, still about the individual mandate and whether there is any carping or how that's going to go. october, as you get older, that's the expression you have breakfast seems like every hour. every day goes by so quickly. october is going to be on us in no time and it doesn't seem like we're close. >> well, i think just to be frank progress from state to state, and we should all recognize that when there's something this significant that's being done there are going to be hiccups.

no one should anticipate this is going to be a completely smooth landing. there's going to be a couple of bumps. >> zeke emanuel pointed out this is a long term game looking to 2020. who it means things to. how does this impact the hospitals? i was looking at some of the hospital stocks, they are all indicated lower this morning. >> yes. so that really comes back to what the impact from this delay is on coverage. by itself i don't think it's big. the only question is whether it again raises the concern about whether the whole thing implementation just in general as opposed to this one piece is delayed. because within its four corners it doesn't have a massive effect on coverage. >> since you are a former o and b man cost to the taxpayer, there are some estimates that this change is worth $5 billion between additional subsidies that have to be made over the next year and penalties that won't be coming in to the government.

do those numbers make sense to you? >> the cbo number is 4 billion in 2014 but that's about right. >> okay. we're going to leave it there. thank you for calling in early this morning. have fun in aspen. >> thank you. >> appreciate it. >> coming up, hedge funds allocating money for the second half of the year up next a preview of cnbc's conference. a chance to get investment ideas from the top investors when we return. >> tomorrow u.s. markets are closed for independence day. don't start your weekend just yet. the june jobs report hits the tape on friday. and that's a big one for the markets and the fed. "squawk box" has you covered. starting friday, at 6:00 a.m. eastern. i'm here at my house on thanksgiving day,

and i have a massive heart attack right in my driveway. the doctor put me on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. go talk to your doctor. you're not indestructible anymore.

welcome back to "squawk b . box." the e expected great rotation from stocks to bonds has slowly materialize and topic that we will be discussing on the july 17th alpha conference, and kate joins us with more. >> andrew, one of the big themes from last year was decidely a move into stocks where a number of participants thought it was a stock picker's market and some

of them made great calls this year, but with the investors worried about the skittish investments, stocks are just materializing in a big way, but for some bond managers like pimco, it is having a big effect. the bond market saw broader outcomes and in the market, they fell to a four-year low. and high yield markets and abroad funds were caused a lot of pain. some say that the easy money is over, and to make money in the volatile markets in the coming year, they will have to act like macro traders and for example be in the market much more frequently than they want and trimming positions they like in order to save more to buy on the lows and in general the sustained volatility and the lesson from the last couple of years, they say, may mean lower

long term returns. bonds are now trending higher which may be an argument to stay put. leon cooperman said he could think of lots of stocks more attractive than the 10-year at the 2.2% yield, but the 10-year is trending higher, guys, and if that continues as the year goes on, maybe it is going to mean that the people miss their moment to get into the equities. >> we were watching it earlier to watch it bounce well above 2.5, and then come back down and consolidate around 2.4. >> yes. it has been a choppy few months and right before cooperman spoke, you saw the higher yields because it was last july, and we have had a sustained period of eight or nine months of the lower yields, be thaw is obviously going to go up and we are seeing the effects in the mortgages and other fixed income markets of course. >> thank you, kelly. coming up the guest host is john taylor chairman of fxs concepts. we will give him the final word when "squawk box" returns.

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something that you will see alcoa. yeah. stock downgraded to neutral from overweight at jpmorgan chase and citing lower forecast for aluminum prices, prices, prices. you heard the echo and i don't know if it is going out, but we are hearing it, hearing it, hearing it. >> and the other stories the search for the leak er edward snowden has diverted a bolivian plane after it was said that he was on board. officials from france, spain and portugal are deny iing that cla, and that plane left earlier this morning, and the australian and bolivian and australian officials said he was not on board. >> it is a nice plane. >> yes. and now back to our guest host john taylor, chairman and ceo of

fsx consents and the last word and that has to get your attention in portugal and we worry about 2.4, but they are almost back to 8.0, right? >> yes, it is the highest in a year. it makes a big difference to them, because they have a high level of debt, right. and this is just the sign that europe is not well. right. it is not over. we have greece that has a three-day payment window that they have to come up with the money, and it doesn't look like they are going to. so all of these things are out there. >> we still think dominos, too, in europe, because portugal and then you think spain and other countries, it will matter. >> yes, and portugal is a place that is buried and you think that nothing is going on, but, hell, it is doing lousy, doing badly. >> yes. >> and other than that europe looks great. europe looks great as long as the politics hold together.

right? they have tight, you know, money supply, and they have growth coming at second half of the year. they have trade balance. got to like europe, but politically, you can't. >> john, thank you so much for joining us. we appreciate it and happy independence day, everybody, and we will see you friday for the jobs report, but right now, it is time for "squawk on the street." >> thank you. good wednesday morning. i'm carl quintanilla and david faber and kelly evans at the new york stock exchange. cramer has the day off. the stock market a day ahead of the holiday, but the futures are trying to come out of the lows. and they beat the estimates with the second best of the year up 1.88 and the claims are not bad, but there is turmoil around