cnbc. i'm andrew ross sorkin with joe kernen. becky continues to have the day off. have to say she'll be missing a great lineup of newsmakers including black rock's peter fisher. we'll talk to him about the economy, yields and much, much more. and the man who runs all of city group's hedge funds eric siegel at 7:40 eastern time this morning. and then joining us for a full hour at 8:00, former time warner chairman and ceo, and former citigroup chairman dick parsens. and then media matters with aol chairman and ceo tim armstrong. and watch this, in the last half of the show, the man everybody is talking about this week, eliot spitzer, the disgraced former new york governor, trying to mount a political comeback, he'll make his pitch to us at 8:30 eastern time. we have a lot to talk about. >> there you go with the mounting again. do you -- do we -- i was thinking about that yesterday. we call him governor, don't we? >> i want to show you something.

i'm not wearing socks. i'm not wearing socks. >> can i ask you a question? what do i got to do to get you out of that jacket? >> nothing. it is hot in here. >> it is hot over here. ♪ you don't call him love gov, right? >> no. >> you do -- do you refer to him as governor when he left the office in that way? or mr. spitzer, ellioiot. >> you've seen him at conferences and meetings and on cnbc. >> i like spitzer. he was kind of a -- i didn't agree with him politically a lot, but i thought he was a dashing figure with a huge future. his wife is wonderful. >> we will see. >> we will. >> a lot of tough questions to ask. >> there are. a lot of them have been asked 100 times already. i don't want to ask questions that have been asked 100 times already. number one, he knows how to answer them.

number two -- >> very good at answering questions. very, very good. >> brilliant, obvious. >> i smart guy. >> he is. let's -- >> headlines this morning. >> just -- go back down. this is andrew's last part of his read. to give it to me, to give it to me, to give me what i deserve. >> but first, let's get up to speed on the morning's top headlines. >> for that -- >> we need to talk to joe. >> come to me. china. china is warning of a grim outlook for trade, the second largest economy reporting a drop in exports. and imports in june. and both have been expected to rise. the numbers are likely going to raise concerns about the extent of the slowdown in chinese economy. also overall, global demand. stocks, though, rallied on talk the central bank may have to ease policy to boost growth. it is important to note chinese trade data is volatile and the government has cracked down on the use of fake invoicing that in the past had exaggerated

exports. we'll have more from eunice eun in 20 minutes, around 20 past the hour. >> the other major global market story today, the federal -- the fed minutes from the june fmoc meeting will be released at 2:00 eastern time this afternoon. traders are looking for details on some of the behind the scenes discussion. we're going to remember, of course, fed chairman ben bernanke announced last month that the fed could cut back quantitative easing program before the end of the year. also worth watching today, bernanke scheduled to speak at 4:10 eastern time from the national bureau of economic research conference. also on the topic of the central bank, san francisco fed president john williams is arguing the moderation is the key when using unconventional tools in a paper that he's going to be presenting later this week. he says uncertainty about how well the fed's unconventional policy tools will work means using them more aggressively would not bring unemployment and

inflation levels back to normal -- >> we got to pick the most well known john williams composition. play it in the background. and i'm wondering whether i'm a little slow first thing in the morning is there any connection between why you didn't wear socks and the governor? >> i thought that i might get a laugh out of it from you. but -- >> is he going to know you're not wearing socks? >> no. i wear -- >> is that the way you welcome our guests by -- >> since we made a sock joke yesterday, i thought i could get a laugh from you, which is asking for a lot, i know. >> i don't know. i thought about this. i actually wrote down some ways of trying to phrase how to get around to how i'm -- i'm trying to explain in my own thinking how i might have a problem with it and what he would tell people to try to allay their fears.

there is not some fundamental character flaw that would -- i know urges, i have urges. i don't want to tell you about urges that i don't act on, right? and we all have those. but most of this, especially if you're in a position like that, you're able to hopefully control -- >> especially being on the air. think if we just didn't control urges on the air, we wouldn't be on the air for long. in other economic releases of note today, i want to take my shirt off right now. >> this moment has been brought to you by joe kernen. >> i know you have -- >> i was once with a guy who took his shirt off. he's still on tv. we'll leave him out of it. weekly mortgage applications at 7:00 eastern. at 10:00, in the commerce department, we'll report on wholesale trade inventories. that was a new york posting.

when former -- >> yeah. you basically gave it away. anyone who knows him knows he -- at 1:00 eastern, the markets are awaiting the auction. $21 billion in reopen ten-year notes. look at my guns. look at my guns. >> i think you should do that. >> my guns aren't -- my guns are nothing to look at. as for stocks, the major indexes rose for fourth straight session yesterday. biggest winners, riskier small cap stocks and sectors that do best when the economy is growing. we'll look this morning. it was a good session yesterday. diabe didn't close all the way on the highs. have to chalk it up to a little bit of surprise, four straight really strong days even as the te ten-year has both gone up and tested the highs and come back a little. there is what is happening today. not much. down about 8 points so far.

a lot can happen between now and -- exactly unchanged on the dow. broader markets, this morning, oil continues to confound people that don't think it should be 100. 104.81. the dollar is tapering. becomes more likely at some point in the near future. has done pretty well against the other currencies. gold has made a stand, a valiant stand, but metals do that or commodities do that a lot before either rebounding or heading back down to new lows. we don't know at this point, but an ugly charter if you're holding the precious metal. that is an investment that smart people have gotten totally burned on. i don't know why you think you can be really smart and no idea what is going to happen to gold, right? so many different -- >> you can be really smart and not know what is going to happen -- >> with stocks or companies, there is a way these guys, like

if you really -- like chinos or something, or einhorn usually, you look at all the inner workings, if you can believe the number, there is a way to figure out things. with gold, how to you ever -- it is all emotions. >> let's go across the pond. time for the global markets report. ross westgate standing by in london this morning. ross? >> good to see you. thanks for that. we are weighted to the downside h pretty good gains yesterday for the ftse up about 1%. you can see decliners outpacing advancers at the moment by about 8 points or 7-2. showing you where we stand now, not big losses really. ftse 100 down a third. the xetra dax down a quarter. s&p downgrading italy to just two notches above junk. there is one standout today, burberry, the fashion chain up

3.6%, 18% increase in sales, blew past expectations, particularly doing very well and then spring and summer collection in china. also maintained their full year. that's the standout today. because of that italy downgrade, we also have banks weaker. one thing to look at here is basic resources in the sectors down about a percent. this is on weaker chinese trade data. much weaker than expected. exports down 3%. expect to be up 4%. imports down .7. they're expected to be up 8%. the weaker external environment. plus attempts by china to crack down on false invoicing as well, which had inflated previous trade numbers. resources taking a hit on the back of the chinese trade data. look at italian banks, hit by the s&p downgrade for italy. down around 2%.

we saw short dated debt t-bills at auction for italy. yield at four-month high about an hour or so ago. italian yields are higher as a result of 4.46%. number of comments coming out from italy as well today. the one good news for the country, had an increase in vat receipts for a long while. so that maybe suggests there is some benefit coming through from the forms they had. that's where we stand in europe right now. >> ross, thank you for that. in other news this morning, natural gas well is leaking in the gulf off of the louisiana coast. the coast guard says the crew was working temporarily to plug the well on monday night and lost control of it. everyone on the platform was evacuated safely. the well did not blow out and there was no explosion or fire. that's the good news. the coast guard reports an aerial survey revealed a rainbow sheen four miles wide and three quarters of a mile long on the gulf surface. no indication the leak will take

on nearly the scale of the 2010 flow out of that bp well we talked about so many times. also, now let's get to the investigation into the asiana airlines crash in san francisco. the ntsb now saying the pilots aboard the 777 relied on automatic equipment to maintain air speed and they didn't realize the plane was flying too slowly until it was just 200 feet above the ground. investigators have completed their initial interviews with the flight crew, including the training captain instructing the pilot at the controls. unfortunately the first time the captain -- first trip as the instructor. first trip together. the ntsb says the evacuation procedures are also under scrutiny. but you think the planes are controlled by computers but you need to know how to control the computer and the instructor had never been -- >> instructing, first time. and the guy -- >> and the computer system at sfo out. it seems to me, if i'm the faa,

one of the rules i want to put in place is -- >> not have them all at the same time. >> if you shut down a computer system at a major airport -- >> don't have new guys doing it -- >> they put out a bulletin. >> that's the first time i thought, listening to that, we haven't even considered the possibility that there could be something wrong with the plane. some kind of mechanical, maybe. who knows. here we are, the guys are new, don't know that they're doing, but then you hear the equipment that was supposed to say you're going too slow, what if -- doesn't fail very often, fails with everyone else, just happened to -- >> just this time. >> i don't know. >> when it happens, one out of 50 -- >> then years and years of when if didn't happen. there has to be a lot of things that went into -- >> you're a very good flyer. i'm an anxious one. >> i'm a very good -- i'm much more nervous right now. >> that the lights will fall

down. >> you know how many lights are up there? you know what they weigh? if one hits you on your head, it will go right into your -- we are much -- sputnik hitting us through the roof is more likely than a plane crash. >> i hope you're right. i hope you're right. >> statistics for this. >> like the lottery. >> in washington news, house republicans are going to hold a special meeting to figure out what to do about immigration. >> we all believe that if we're going to go forward on immigration reform, the first big sfep tep is you have to hav serious border security. >> boehner says his party will start from scratch, not with the bill that passed the senate. also today, former president george w. bush will speak at a naturalization ceremony at his new library. bush said the system is broken and needs to be fixed in just a few minutes. the white house issued a report

on the economic benefits of fixing what it calls our broken immigration system. the report says that the senate passed reform bill would increase real gdp relative to current law projections na are at 3.3% and 2023 and 5.4% in 2033. if you say to a liberal, all you got to do is say that george w. bush library and they start laughing. why? they do. you do. watch this. george w. bush library -- what is it about your -- i can see it. it is underneath -- >> only because -- >> why? >> your funny delivery. >> why do you all snicker when you say george w. bush library in. >> because there is a view, which i don't need to espouse on this program. >> another headline, out of d.c., congressional republicans are pressing president obama to

delay requirements under his health care law that forces americans to obtain insurance. the individual mandate is what -- and it figures it is like when market participants, if someone shows a little weakness somewhere, they force it, right? they push it. they push it. and paulson used to say, i need a big bazooka. showing the slightest bit of weakness, they'll push me. this is what is happening already. the administration gave employers a one-year reprieve from having to provide it to staff, but and then a front page story in the wall street journal talks about the rules that haven't been written, the government is not ready to launch any of the exchanges either that people are going to use to shop for private insurance on october 1st. the decision to delay the employer mandate, it says, was partially due that it would be necessary -- that necessary rules had not been set out for

businesses to follow and it also prevented anyone from getting computers ready for the mandate. hard for me to read it because they had to fact that in there. the fact that i don't use -- it means nothing. >> want to talk about bacon this morning? >> i know that they made a big deal -- talking about the security risk, which i'm fully behind. >> the senate is going to hold a hearing today on china's plan to buy smithfield foods. senators will question smithfield ceo about food safety and foreign ownership. he has vigorously defended the deal. the ultimate approval is in the hands of the committee on foreign investment in the united states, better known as sifus. chinese trade data disappointing traders overnight. could bad news be good news for the markets?

the good news/bad news play. and u.s. and china as frenemies. >> little penicillin will clear that up. >> before we head to break, look at yesterday's winners and losers. we'll be right back.

all right. welcome back. u.s. equity futures down 14 points or so at this hour, making headlines regulators labeled aig and ge capital as potential threats to the financial system. the financial stability oversite council announcing the two companies will be designated systemically important. it brings stricter government ov oversight. they must submit to inspections by examiners. in the topic of too big to fail, our main focus, the keynote speaker, treasury secretary jack lew and it is too bad we couldn't get the author of too big to fail to lead one of those panels. >> i am leading one of those panels. >> you are?

good. because too big to fail will be a -- >> it will be -- >> it is good you're going to be there. >> we licensed the name to them. let's get to the national weather forecast with alex -- alex, good morning to you. >> good morning to you. the big story is we're tracking chantal in the caribbean. not looking very healthy open the satellite view. at this point, still from the national hurricane center, a tropical storm, sustained winds have come down since the last advisory to 45 miles per hour. still moving very quickly to the west/northwest at 20 miles per hour. puerto rico feeling the impacts with rain, gusty winds here and there. we anticipate to see that continue to work its way across the island ofe haiti feeling the impacts.

places like cube wa and by the of the week, we could be talking impacts for parts of the southeast, coming in the form of heavy rain and some of these spots. something to keep a track on, very closely here, tropical storm chantal and what it will be doing over the coming days. in the meantime, here in the u.s., generally going to be talking about stormy weather from the northeast to the ohio valley. some storms could pack a punch, damaging winds as well as hail. watch out for a few isolated tornadoes. back to you. >> alex, real quick. we were talking about it, who names these things? where did chantal come from? >> i believe it is the national hurricane center. they keep rotating the names every -- i believe every five years. >> to get to chantal, it seems like it would be like every 500 -- no, you would have to do every -- they ran out of cs? >> is next year chanel? >> i don't know. and the hurricanes take on sort

of the -- if they're bad, they take -- now we think of sandy in a way we never thought of that name before. we had a weather girl named katrina voss, poor thing. she had to quit the job. had to quit the business. >> had to change her name. >> had to change her name. hi, i'm katrina, here to talk about the weather. >> have this had an alex yet? >> they have. >> they have? you know who they had that was really bad, andrew in miami. terrible, terrible. >> could not be in the business. alex, thank you for that. we'll swing over to beijing now. china warning of a grim outlook for trade. the country reporting a trop in e exports and imports in june. both expected to rise. fifth meeting will be held in washington today. joining us now on all of this is eunice eun from beijing. >> good morning, guys.

basically for the strategic and economic dialogue, a lot of people have high expectations after president obama and president jinping of china met in california recently. a lot of people are hoping that we're going to see a new type of relationship between beijing and washington going forward. >> grand a handful. >> when the u.s. ambassador in beijing takes time off his diplomatic duties to market imported american cherries to hungry chinese at a sam's club, it is clear, china is important to america. >> more interaction between all of our peoples, at every stage, from academia, to students, to scientists and policymakers, business people, is critical. >> two largest economies depend on each other and are trying to reboot ties. nearly a fifth of china's exports go to the u.s., while american exports to china jumped sixfold. yet the two do as much bickering

as trading, arguing over market access, foreign policy and industrial espionage. >> when it comes to the theft of commercial intellectual property, that is a huge problem. and it is one where china is clearly culpable. >> many people here in china believe that the united states may like to -- may try to block the development of china. that's why we see this kind of mistrust, deep seeded mistrust. >> even though china is growing in strength, it relies on the u.s. for growth, jobs and investment. in chinese auto parts maker says three-quarters of exports to america. almost all of these car parts were made for american companies and are shipped out every single day. we want more americans to buy our products, this factory worker says. the more our company earns, the more money we make. and the more american goods chinese will be able to afford.

and there is so much china bashing over in washington, and the same way that there is america bashing here in beijing, but the political rhetoric misses the greater picture. and that is that these two economies have become so interdependent that they don't have any other choice but to get along. >> you're right. just testing out some names for hurricanes. eunice would be a good name. >> it would be. strong. >> a strong, solid name, yeah. and you would remember a hurricane. >> eunice would be out of the weather business. >> she doesn't do that now. she does much more substantive -- not that weather is -- >> weather is very substantive. >> i think about -- coming up, the fed in focus today. minutes set to be released at 2:00 eastern. chairman bernanke will speak after the bell. we're going to talk easing and

the implications of what that would mean with the ceo of a small regional bank next. and then late, our newsmaker of the morning, former governor eliot spitzer trying to build a political comeback and it starts -- it started yesterday on our sister network, among other places. we'll continue the morning joe conversation today at 8:30 eastern. ♪ norfolk southern what's your function? ♪

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governor, a composer and a fed governor? >> he has the same name. i think it is a different person. >> would be something if they're the same person. >> like michael jordan, the westinghouse guy, not the basketball player. >> what a great name to have. >> you can't go wrong with john williams' music. i feel heroic listening to this. don't you? >> a little bit. >> i'll put my cape on. good morning and welcome back to "squawk box" on cnbc. john williams, making some comments, fed governor and we said -- or fed something, president. i don't know. he's got the same name as the composer who has -- >> not even a variation. >> the exact same name as opposed to the exact opposite. i'm joe concern within andrew ross sorkin. becky quick is off today. today's fomc minutes will be scrutinized. the markets awaiting details on the tapering strategy. i should bring down i have a stuffed taper.

>> you do? >> john the intern gave me. jay seedoo joins us with his outlook. jay, good morning. i was having a conversation with someone yesterday and i don't think i ever understood it to the extent that i did yesterday. that is that, you know, the fed tried to take us all on the shoulders and to make up for all of the gridlock in washington. and the corporate managers that aren't spending anything. but there are so many baby boomers getting ready to retire that are getting zero on the cds. that was a huge flip side, a negative for this period of low interest rates, wasn't it? >> if you think about it, you're right. it was a negative. if you think about it, why are the interest rates low? we had a housing crisis. we had a loss of confidence throughout the global world. and then the fed had to act because the fiscal policy really wasn't able to progress anything

in the recession, so the fed had to act with a monetary policy stimulus. now you see what is happening in the last four weeks. the yield curve is steeper by 75 to 100 basis points. you see the dollar is stronger by 10% to 20% against the market currency and does that mean the u.s. economy is going to do much greater? i don't think so. at the same time this is not -- this is a temporary in my opinion, a temporary situation. the fundamentals like you were talking about that the u.s. economy needs to address in the united states government needs to address its fiscal mess, that has nothing done on that. it needs to address also to look at long-term structural changes needed, so that it is not just the rates for the cds, but how hard are you addressing the housing finance situation. what are you doing with fannie and freddie, what are you doing with the dollar, what are you doing to boost our economy and those are the main situations --

main issues which i don't think have been addressed at all. >> what about the capital, some stuff you're seeing that seems to be designed for bigger banks? will that make it harder to be a small bank? >> i don't believe so. i think the opportunities for small banks are fantastic. it is for those banks who just look at tomorrow the same as yesterday. they're going to be very tough. i think small banks, community banks, regional banks, capital, basel iii consuggecessions whic bankers wanted, they got it. the problem will be what is your business strategy. and if your strategy is just to lend money to commercial real estate projects like in the past, they'll be in trouble again. >> i remember so well just a couple of years ago, this is another shot for you. we got spitzer on later today. not spitzer, but you're the

sovereign bank guy, right? >> yeah, yeah. >> and here you are, back again, running as a successful enterprise at this point. >> i'll tell you what, you know, building a company is a fantastic high. we at customer bancorp have assembled top management team, not just from sovereign, but collect aed a team from all different successful banks. we think this is the best time and we are flourishing. you talk about long growth. we have been consistently in 30%, 40% loan growth when everybody is talking about there is a problem with loan growth. you got to stick to your fundamentals, stick to your short-term and long-term goals, and execute especially. that's what i think our nation needs. let's not have knee jerk reactions. let's look at our long-term and short-term strategy and the main thing is we need economic growth greater than 3%.

europe is still in a mess. arabia is going to be in more weaker economies because of -- because of flight to quality and what is happening to the economies based upon the fed's comments. but at the same time, i think interest rates will stay low, which is good for the banking sector, but at the same time, the steepness in the curb will take billions. hundreds of billions out of capital because they have been sitting on investments. long-term investments and that's going to hurt the capital ratios. >> i'm surprised you wouldn't make the point, though, for small banks that you should be allowed to fail. what is the big deal -- why should regulators care about your capital levels, the bigger banks pay for the fdic which will guarantee your depositors so that you should be able to -- you're the one group that should be able to self-regulate yourselves, and if you don't, you got to do something else. >> no question about it. i think whether you're a big bank or small bank or nonbank or

big small nonbank, if you don't produce, you don't do something good for the shareholders. >> they don't want us to do it that way anymore. we need the smart regulators and people in washington -- >> and people focused for the short-term and long-term and not knee jerk reactions like the flavor of the mop regulation. >> one of america's top cybersleuths, the man who uncovered china's cyberespionage is coming up after the break. a stock to watch this morning, blackberry. the wall street journal reporting more job cuts there under way. the cuts are said to be in the middle management, in the sales and support divisions. blackberry held its annual meeting yesterday. she's always been able to brighten your day.

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welcome back. futures were down eight, then 12, now eight. a record $6 billion asia fund. maybe that's the time you do something like this, andrew. >> he's one of america -- >> no, you were looking down. >> i was looking down. >> what were you looking at? looking at the -- >> looking at this wonderful article -- >> on? >> on kevin mandia who is coming

up. >> who named a company like -- >> sounds like his name. one of america's top cyber sleuths. he's on the cover of fortune magazine. if you haven't read this article, you must. kevin mandia joins us now this morning. thank you for being here. help us. it is a fascinating piece on what you did to expose so much of what we now know about some of the hacking techniques and other things that have taken place in china against u.s. corporations and others including by the way the new york times which you worked with. to the extent that we now appreciate the problem, is it even bigger than what you were able to uncover? what magnitude do you think you captured in total? >> that's a great question. the thing is we never know if we know 99% or 5%. and we responded -- we learned what people -- the folks who hire us, that's how we learn.

we don't have a top down view. that's one of the interesting things. we followed one group out of china, which we believe was military unit 61398 in the pla and we know they hacked a minimum, lowest bounds was 141 companies in the united states over the last seven years. we don't know if we know 5% or 90%. i guess more 5%. >> given the snowden news, now i guess probably three or four weeks in, let's flip it around. we talk about how far china has gone in terms of hacking u.s. corporations. what do you think we, the u.s. government, and maybe i shouldn't put we and the u.s. government together, but what do you think the u.s. government has done in terms of hacking both companies and countrys? >> i think it stretches creditlity to think our government would hack for economic gain, that our government would hack the private sector and other companies. i think our chart we are defeer

defending the nation, but they won't go to help out general interest or jpmorgan chase. what happens out of china, we see government entities hacking the private sector and that's a nonfair fight. >> when you think of specific industries you think are targeted more than others, i'm assuming finance has to be one of them. >> i think finance will always be targeted because whether it be out of china or whether it be in ideological difference in a group that has differences than the united states, what better industry to attack than the financial services. that hits us right in the sweet spot. >> and technology. >> absolutely. >> where do you put things like health care? >> you know, that's a hard one for me to say. if you compromise a health care organization, you get people's private data. if you use the private data to steel their identities that's useful. throughout my 18-year career -- >> do you see that happening or no? >> not frequently, actually.

i see more often -- i see technology companies compromised, blue chip american companies compromised, companies that are doing mergers and acquisitions in asia or china being compromised, and the law firms representing those agencies. >> in a world where we talk about the so-called cloud and talk about big data and constantly talk about putting all this information which used to exist on servers which people thought were secure because they were in their own offices but now -- is that, in your mind, making the situation worse, does it make it better? there is an argument to be made, if you use g-mail, google has hundreds of people who work on security every single day, where as your company may have two or three security experts. but the flip side is, if they get hacked, everybody gets hacked. >> excuse me, yeah. the bottom line is going to the cloud is better for some companies and worse for others. it depends on your starting point and how good you are at security in the first place. they'll keep their trade secrets and real intellectual properties

or weapons systems in their own virtual private cloud. the answer is it depends. >> do you do individually, meaning personally, just -- i want to know your own personal safety security online system. >> well, i'll tell you -- i do. and there are people that i know that have been compromised. it is a devastating thing. when your e-mails are stolen from you, they're private, posted online, that's not a pleasant experience. quite frankly, some very simple things. i use an ipad to check my e-mail. that's way more secure now than opening up your e-mail and opening up documents on a windows machine at this point. >> really? >> yeah. great start. >> so you -- you don't open your e-mail on a regular computer? >> i think it is more secure right now. i will, if i need to, but at the end of the day, i think it is a big step up in security right now to use a mobile platform because they are smaller operating systems. it is less of a target area for the attackers to gain a foot

hold. >> and then last but not least on the finance side, a lot of the banking community watching this program early in the morning. should we worry about money ultimately being stolen? you hear about, you know, atm stories and things like that, but that seems minh execu s min >> i think banking is a confidence game. nobody wants to run a major bank and say we have been compromised and we didn't see it coming. unfortunate reality for banks is they need to maintain cybersecurity at the same level that our defense does. and it is just because they're going to be targeted. >> and finally, i'm sorry to say finally, but if you're a ceo and watching this right now and you think you've been compromised, do you call up kevin or do you call up the fbi? and when do you get the government involved? and when do you announce it publicly? these are really big issues that people are grappling with right now. >> first and foremost, no matter who you call, i would recommend get your hands around the incident first. know what the totality --

>> before calling the police? >> i think so. you don't know if you've met a threshold. a lot of incidents are not incidents. you had a compromise, but it has been isolated to no impact or consequences. it is one person's machine that was compromised. but if you have a widespread compri compromise, you want to get reasonable amounts of information before you go out and start telling people. you might strike up a whole bunch of unneeded fear and doubt when really there was no impact or consequence to the breach. >> okay. kevin mandia, thank you for joining us. really appreciate it. fascinating article if you haven't read it. it is a good piece on the cover of fortune magazine this week. >> sounds good. what are you reading tloe ining now? >> about wood fellows, in the daily news. a donnie brasco guy. these mobsters -- i don't want to say who, because i don't want to get these guys mad at me. but they're big -- one of their big operations, dealing with viagra, illegal viagra. $5 to $20 a pill and cyalis.

they got the four guys -- >> is that why you're reading -- >> show what's really on the page. >> i'm not reading that. i don't care about -- i'm very patriotic but that's not what i'm reading. i'm reading wood fellows. i like the name. i like the name wood fellows. there is a larry david episode where he runs out and he's got an important date and he goes down to, like -- washington square park and sits next -- he sits next to, i can't remember who played the guy he sat next to, but there is a viagra transaction and then -- >> little blue pill. >> and then he's with the woman and she thinks he's a god and he leans forward and the blue pill falls out of his pocket and she sees it and she says you're juiced, like you're on steroids and she wouldn't date him anymore. these guys were dealing viagra. >> for $5 to $20. >> it is a pill you buy

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the annual allen and company media technology conference under way now in sun valley, idaho. media moguls and tech titans all gathering to listen to high profile panels and of course talk deals. jul julia is there thousand. >> guests started arriving yesterday afternoon and everyone is talking about what will happen with hulu. all the big players in the deal will be here. i reported yesterday that guggenheim digital media is no longer in the running. sources telling me the bid came in too low. so now it's up to news corp.

bob iger is in talks to sell hulu to direct tv as well as they're also talking to time warner cable ceo. he's interested in investing rather than buying. >> clearly we'll see something with hulu because they're in play. i'd like to see hugh lie getting a choired by somebody, so it creates another competitor to netflix and amazon. hulu is a great platform. very strong. the more people that want our kept, the better. >> liberty's john malone is expected to arrive today.pt, th. >> liberty's john malone is expected to arrive today. deals are expected to pick up this summer. robert johnson says he expects another deal. >> still plenty of cash out there circulating. the cash is what's the best deal you can find in the marketplace

like this. i think digital is a growth spot. >> one person who was expected to take the stage this morning is larry page. but google senior vp and chief business officer said last night that page is ill and won't be able to make it. also on the agenda this morning is a sports panel including nfl xhigtsn ne commissioner roger goodell and then in the afternoon it's activity time. many of the guests will go on a whitewater rafting trip. >> looks fun and dark. so you're up early. >> dark and early, but beautiful. >> you'll be bringing us a lot more news throughout the day. we look forward to that. coming up at the top of the hour, black rock's peter fisher, a man who knows a lot about fixed income. and then at 7:# # 40, manager bd citigroup. and at 8:00, dick parsons. and 8:30 a.m. eastern, right here on "squawk box," disgraced former new york governor eliot

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welcome to "squawk box". take a look at the futures this morning and see how things are setting themselves up for the day. we have red arrows across the board. dow would open off about 17. s&p 500 off about 3 1/2. and the nasdaq off about 7 points. let's take a look at what's moving global markets. china may ease monetary policy

in order to boost economic growth. that's giving a boost to the stock markets in hong kong and shanghai, though a different story for the japan benchmark index after hitting a new six week high briefly, the nikkei closing down 56 points following trade results from china. also fed minutes will be on the minds of investors this morning. minutes from the latest policy meeting out at 2:00 p.m. eastern. traders looking for any further clues on when the fed will begin to scale its bond buying program back. and we'll have more coming up on that with chief economist and managing director of global research. checking europe, right now red arrows across the board there, as well. cac off, ftse off, and the dax off. but not horrible. and brent pushing above $108 as china's imports of crude fell 7.4 7.4% from the previous month. the spread between brent and west texas intermediate

narrowing slightly making wti more attractive to investors. >> blackberry is reportedly going to cut more jobs. "wall street journal" says the new cuts will come at middle management levels in the sales and support divisions. that would be on top of 5,000 layoffs last year. yesterday's annual meeting, some investors express frustration in what they see as slow progress for sales of the company's new phone line based on the blackberry operating system. shares down about 19% this year. although they're still up 31% over the past 12 months. and in stocks to watch, we have earnings coming that we're anticipating. yum brands expected to report 54 cents a share. same store sales will be a focus for investors. that will be out after the bell. and family dollar is expected to report third quarter profit of $1.03. dow component chevron out with earnings after the bell today. and the estimate is $3.03 a

share. and neighbors says it expects quarterly results to fall short of expectations. wall street expecting 15 cents a share. and dzhokhar tsarnaev due in court today. he'll face charges in the worst mass casualty attack on u.s. soil since september 1 isiah thomas, 2001. the 19-year-old was charged with killing three by setting off homemade pressure cooker bombs in a crowd of marathon spectators and later shooting dead a university police officer. he could face the death penalty. now the latest on the investigation into the crash of asiana airlines jet over the weekend. the ntsb chief saying the pilot realized a problem with the jet's approach when it was 500 feet off the grounded a tried to make a correction. still unknown whether the automatic though throttle which maintains speed automatically us was engaged at the time of the crash. two passengers died. more than is 80 people were injured. though i think what's so remarkable about the story,1is

injured. though i think what's so remarkable about the story,s 80 injured. though i think what's so remarkable about the story, 80 injured. though i think what's so remarkable about the story,80 p injured. though i think what's so remarkable about the story, many walked away from the incident and the two who died, one of them it now appears at least some reports suggesting that she was run over by a fire truck who was going to the scene. which is really -- you actually survived an airplane crash and then in the midst of -- >> earlier we said 200. now we said 500. that's weird. because you never know. i've seen people kiddingly do it, but i've never actually -- >> a and then b or one and two. >> or a and two. >> it's a different subset. not that it mattered. i can't help myself. >> a-1 steak sauce. >> a serious story and unfortunately, you're right, the person gets out and then gets run over. but there is something else that recently happened. the poor hostage that when they try and kill the guy and then one of the bullets from the --

terrible things can happen. and it's a fog. i don't know whether it was 500 feet above or 200. we don't know whether the equipment told them they were going not fast enough. earlier when they said it would take years to figure it out, i thought it's really simple to me. the pilot was not prepared to land the plane. and crews are trying to get a leaking oil and gas well under control this morning. nonworking well is owned by talos energy located about 75 miles off the louisiana coast. workers have been in the process of putting a permanent plug in the well yesterday when a small amount of natural gas began to escape. the coast guard says however that the well did not blow out that other time when it happened. there was no explosion or fire on the platform. and the developer of a new jersey mega mall project is suing the new york jets and the new york giants. 555 says the nfl games are engaging in in his words a

campaign to delay, thwart and ultimately prevent the american dream project from being at the meadowland meadowlands. >> and that's the indoor -- what you're seeing there is an indoor ski slope. >> never knew what that was. >> it's mimicking -- they have a similar one in dubai. >> i did not know that and i always see that when i drive by. the company says the teams are preventing it from getting permits to build on the land. 555 wants the court it dismiss a lawsuit that the team's filed against it in may and the suit seeks to stop 555 from expanding the $3 million project which is obviously across the highway from met life stadium where the jets and the giants play. and where the great, great taylor swift will be performing this weekend. >> are you going to see taylor swift? >> if i can arrange it, i want

to go with my daughter and so that. they're huge fans. >> i believe that you and roger altman are both fans.ey're huge. >> i believe that you and roger altman are both fans. >> serious xm highway listeners. and she's like a child prodigy. she had songs written like when she was a child.ierious xm high listeners. and she's like a child prodigy. she had songs written like when she was a child.and she's like . she had songs written like when she was a child. a reason she makes $80 million a year. makes more than peter fisher. >> we have a bit of bacon news. larry pope has a date on capitol hill today, i imagine joe will actually be taking on a shuttle to d.c. right after this, because senators will be questioning pope on the $4.7 billion deal to sell the pork producer fto china. you should be on the panel asking questions. >> no, i will be a witness to try to --

>> an expert witness. >> exactly. almost like homer simpson to testify. pork chops, bacon, the stuff when you wrap it around a scallop or water chestnut, all that stuff. i am ready to go. >> the deal has drawn opposition from farmers and food safety groups among others including joe kernen and pope has maintained that the deal of the largest ever purchase of a u.s. company by chinese firm will not compromise food safety. >> i'm worried about food availability. >> i think we should get you to that hearing today. >> i can at least raise some of the questions that should be -- what are you laughing at? he's a free market -- you think you can buy a company in china? no. has black rock ever been able to do that? no. >> let's get to our guest host. one of our squawk market masters, peter fish, senior director at the black rock investment institute, and he previously ran the fixed income

group which is a huge job. >> 1.3 trillion. >> like the stars in the fir madement. also under secretary of treasury. thanks for being here. >> pleasure to be back. >> i have a lot to talk to you to try to figure out here. because i love this what you're talking about. you have a theme that you brought with us, right? the age of separatism? >> yeah. >> it covers a lot of things. there is a rivalry, and mohamed el-erian comes up with the new normal and he does all these -- comes up with all these terms which makes him sound -- i mean, very smart. and now you're coming up with the age of separatism before they do? >> well, it's not about the words. it means policies, economies are

diverging. we set this up when we did our outlook for the year at the end of last year. we refreshed it with our mid year outlook. and we think the risk is economies and policies and currencies diverging. >> multispeed universe. >> it's not just multispeed. it's all from different directions. >> is this new and different or is this more exaggerated? >> if you look china and the u.s. have been going down a different path with their monetary policies. china is trying to rein in the credit growth, u.s. trying to pull back on qe. japan and europe are all in. those are not just different speeds, different directions. we expect to see more -- >> hard to invest globally in anything. >> emerging markets look attractive valuation unless you step back and say, boy, those currencies are pretty volatile. they might overshoot. and you've really got to get a

handle on that before you look hard at the opportunities. >> we just said that the averages are just 1% from their highs. i'm talking about equity markets. you point out that we have fhav gotten a signal that shall dome the accommodation -- we've characterized it as the sixth derivative. but you know that since that speech in may, remember that day, markets have gone nowhere since that day. so the very first like just his eyebrow went like that, which indicated tapering six months from now like a billion dollars out of the 85, and yet the market has had trouble adjusting to that, right? >> well, a lot of what's happened on the markets last four years has been qe induced. >> has it? because the qe helped the economy or because the money flowed into the market? >> because the money flowed in.

and maybe it was just pavlovian. we rang the bell and the dog salivated. >> that's less satisfying than helping the underlying economy. >> that's one of the things the fed is struggling with, is qe working the way they were hoping it would. >> really? i thought we decided that it had at this point. i think most people think the fed has done a great job and qe worked. no? >> you think the employment market has turned around? >> no, i'm not one of them that necessarily thinks that. >> i think there is a serious issue. >> but the down side hbt -- worst case scenarios haven't happened yet. >> that's different than getting gdp going. >> the negative effects of the qe that everyone was forecasting, guys like krugman have taken a victory lap that that never happened, that they were wrong that there would be negative consequences to all of this. >> i think people should look a lot harder at whether or not we haven't had a substitution for capital for labor. fixed investments have been okay. >> what i'm trying to figure out

on all of this is whether we think that bernanke is actually succeeding. meaning going back to this issue -- >> he gave us a heads up and the markets -- >> and we'll go -- and the question is what really happens when the tapering actually begins. has he done -- do we say he's done a great job because he set this up and it will work better than we expect? >> in january 2010, the fed predicts by 2012, we'll have 6% nominal gdp growth. they kind of missed that one. and they have done much more qe than they predicted. they have done masses more than they thought they were going to do and the gdp and employment results are much worse than they expected. >> no one ever says that. what was the prediction? >> the point is it was like nominal gdp 6%.

it hasn't been that good. that was a terrible forecast. and they have done much more q evident than they thought they were going to do at the time they made that forecast. >> so everything they to wido we wrong? >> no, they thought they would get a bigger bang for the buck than they have gotten. >> and there were extenuating circumstances. i still think obamacare is an extenuating circumstances. but there was also global stuff that gave them cover by keeping the dollar strong because we were the best house in a bad neighborhood. >> i think that's one of the things -- i'm surprised that the fmoc is surprised that rates have backed up so far. beginning 2011, the ten year note yielded 3.5%. how did we get to is.5%. europe almost blew up. we face the risk of a fiscally induced recession. and massive fed forward guidance in qe. >> china. >> but now we were still just trading at 2% a few months ago?

no, of course we were going to get back here once we don't face the risk of a recession in the u.s. head on. and europe is not about to blow up and they threaten to taper off qe. yeah, of course we'll get back into the neighborhood. >> as a genius bond guy, will we miss -- will we think since it's over that it will be a secretul decline, will we miss opportunities if bonds get to a level that's attractive again? >> over the next ten years will rates drift higher, of course they will. next five years will they drift higher -- i think the market always makes the mrs. take of confusing the end of easing at the start of tightening. this first stage is usually a short term buy opportunity. it backs up a little bit. you still get a chance. >> how long could the end of the easing take versus the beginning of tightening? ten years? >> the beginning of real tightening has to wait for the fed to want to slow the economy

down. the only thing bernanke surprised me is he didn't emphasize the period of time he thought there would be between the end of he'ding and start of the fed if you said rate. i think that's the one thing i thought he'd remind that you he didn't. >> who was the geicuy company minu komins the ki -- are you skipping to work? literally skipping. which is a bad -- >> we're honored jimmy is at black rock. >> you did at any time actualon

work. >> i'm happy to be at blackrock. we've come through difficult times and created a great company. so we're pretty happy to show up at work. up next, lloyds of london releasing its lists of biggest risks to companies. the ceo will join us. and later eliot spitzer will speak to "squawk box" looking to make a comeback as new york city controller. you make a great team. it's been that way since the day you met. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach, delayed backache or muscle ache.

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welcome back. we have a bit of news that just crossed the wire. tribune company announcing its intent to pursue the separation of its broadcast and publishing businesses. this comes after they had put themselves up for sale. a number of bidders had been around the table at one point. this follows we should note what you're seeing at other immediate i don't compamedia companies. time warner making them separate entities. i don't know if it ultimately makes one piece more attractive. but that is the news of the morning. >> in the twitter universe, every one of the -- you know the people at the eco taliban that had been messaging me, if you

look into their twitter -- >> the flash mob. >> yeah. they also are mad about the kochs. they have a moveon.org petition. it's like carbon copy every single one of these people has the same -- it's unbelievable. but koch really got their pantsities in a huge knot. you have no comment? >> i have no comment. but actually our next guest might because he assesses risk for a living. the world's largest and oldest insurance market is releasing its biannual risk index which surveys more than 500 of the world's top business leaders to get a read on what they think the greatest risks to their businesses are going to be. i don't know if he wants to take on some of the risks that joe was just mentioning, but let's talk about the biggest risk that is suggested as part of the survey which is taxes.

>> yes, good morning. it's an interesting survey. we do this every two years. high taxation has moved right up the agenda from 13 in 201 is to the number one slot this year in 2013. i suppose it's not unsurprising given the focus on taxation by governments at the moment and the discussion in g-8 in ireland around taxation and how to come up with some global tax system. so not unsurprising companies are worried about it. >> last year loss of customers canceled orders was number one. >> yeah, it's moved down to number two. so number one in 2011, number two in 2013. i don't actually think that's a very significant shift to be honest. what it does say is that businesses are still concerned about the recession, about the slowing down of growth in markets such as china and brazil. and that could lead to loss of customers. >> the big stand out for me is number three which is cyber

risks. it's something that we talk about on the show virtually every day, every other day. it's something we didn't talk about a year or two ago with the same magnitude. >> that's been climbing up the risk ladder for some time. so back in '9, it was 20. 2011, 13. and now the number three slot. and again when you -- >> are you writing policy? >> absolutely we're writing policies on cyber security. the job of the lloyds market is to respond to new risks and provide innovative products to help people manage their risks. so cyber risks have been written in the lloyds market, they have been for quite the a few years now and i'm sure we will see an increase in interest. >> what kind of policy would you write for a cyber risk for example? >> well, it depends what sort of risk the business is concerned about, whether theft of data, whether it's malicious activity by a staff member. you have to consider what risks you are concerned about, what do you worry about. and then ensure that you get the right policy to match those

risks. different companies have different needs. >> i would think that's a particular difficult policy to write and also by the way a difficult policy to collect on because sometimes you get hacked and you don't know you get hacked for two or three years later and you're not sure what pieces were actually hacked to prove the damages that came as a result. >> yeah, that is difficult. so you have to make sure that you have real clarity around the policy. we've seen recently where there were passwords and high row file cases of personal data being stolen. and they put in a policy to protect the company whose data was stolen. >> i hope i'm not setting off a grenade here at the table. one of the issues not on this list but i imagine -- we hear from people in europe probably more than in the u.s. climate change is not on this list at all. >> yeah, climate change is not on the list. it's actually way down the list.

the impact of climate change on increase in flooding, frequency, severity of storms, i think when you look at those risks, there are well understood insurance products that can be used to help businesses manage against the consequences of those risks. is so that's why they are lower down the priority list. because you can deal with those risks through traditional insurance products. i think the risks we're seeing at the top of the list, ones that are slightly more difficult. >> and number five, excessive strict regulation. can you write a policy on that? >> no, we can't. but that's something we continue to talk to the government and regulators about. and i think that's just reflecting the ongoing concern about the recession particularly one we're facing here in europe and how policymakers respond to that. >> peter fisher here just to ask you whether -- i'm a little surprised not see political instability. you look at the events in the mideast and egypt, freshpressur

around the world. i wonder if business people are a little more nervous about that risk. >> clearly they're not. this is a survey of nearly 600 business leaders around the globe. we look at risks in individual regions. and that has not come up on people's agenda. you might have thought so given as you rightly say the increased political instability we're seeing there. but i think the businesses don't necessarily see that instability as a threat to their business. >> okay. richard, thank you for joining us this morning. >> thank you. coming up, stocks logging on four day rally, a positive start to the quarter. but global growth forecasts have come down slightly and there could be some headwinds coming from asia. we'll speak to jpmorgan head of global research about what he's seeing. time for today's aflac trivia question. what film used the tag line a story about love at second

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now the answer. what film used a tag line the story about love at second sight? the answer -- "while you were sleeping." >> aflac. >> welcome back to "squawk box". in the headline, mortgage applications falling 4% last week. average 30 year mortgage rates up ten basis points to 4.68%, a two year high. also the ninth straight week of higher rates. also family dollar stores is reporting fiscal third quarter profit two cents above estimates. retailer gave upbe beabeat earn guidance, but does say its customers continue to face financial headwinds. and imports fell by 0.7%. short of forecasts. and they're seeing it as a sign that china's economy play be slowing faster than economists had thought. >> let's get to peter fisher.

this will be more overarching question for you. given the structural makeup of our country, of the united states at this point, x out all fed accommodation, what can this economy given where tax policy is right now, given entitlement where we are with our future promises, what could we in a perfect world grow at? are we unable to get above 2% at this point? with all this we till can only do 2% and almost #% unemployment? >> i think the two things that hold us back, one is working off the debt overhang. we just won't be able to rely on household balance sheets expanding. >> so it's not anything we've done ourselves? >> it's part of it. and part of it is the fiscal drag. >> you wouldn't want more stimulus now, would you?

>> no. but i'd love to see us cut long term liability for long term entitlements and then we wouldn't have to be so tight here and now. we're promising people we'll pay for medical services for the next 100 years that the government can't afford to pay for. we have to cut back on those promises. and then we wouldn't have to be so tight here and now. not looking for a lot of stimulus. i'd just rather see no fiscal drag. then we could agree at 2.5%, 3%. >> is there anything that business needs besides a world that's growing faster? >> well, they would love a world that is grows faster. >> territorial tax stuff, that kind of stuff? >> frankly, i'm really worried about this perverse consequence of qe. low cost of capital means the businessman thinks to himself, gee, i'll just do a little substitution, i'll put in a little automation, i don't have to go out and hire folks. we need them to hire folks.

and so i think that it would be nice to get past qe and find out where we can go with a more natural into rate. >> so you're in the camp that there are people that see this exit, it's always out there until we get through it, it's something that makes people wonder how we're going to do it and makes you cautious until we're actually out from underneath it? >> that's the problem of the fed committing to keep rates for a low time. monetary policy works through expectations. once you lock in our expectations of low rates, everyone worries about rates backing up. we have to rip the band aid off and get past it. i thought twist was a mistake. the fed shouldn't have tried to hammer the long end as much as they did. let the ten year rate go where it will. tell us what you're going to do to short rates. throw your balance sheet if you must. >> easy for you to say. if you were bernanke and you had the dual than date and inflation is 1% and unemployment is 8%?

>> i'd still be growing my balance sheet. but i would not have tried to manipulate the long he said low because that's what gives people the fear of rates backing off. when you tear off the band aid, things will get worse. why do that. it's a subtle point because they gifford guidance. they can expand their balance sheet to avoid the risk of deflation. but why hammer the long he saie lower. people won't borrow if they're not getting hired. >> you're mad that -- is that what this is about? >> no. it's about -- >> hard to manage money in this universe. >> it's tough. >> you're mad. you're bitter. >> no, i'm not. >> that's not what it is? >> it's about trying to get the economy to grow and we have to get employment growing.

and the la liquidity trap -- >> should you have lunch with ben bernanke and see how that goes. >> ben would be -- he's gentle. >> i have respect for ben bernanke. he has a tough job. no one could have done this better. i disagree with him on one point, but he's done a great job. still to come, a lot more from our guest host peter fisher. i want to find out by the way who you'd like to see as the next fed chairman. plus hedge fund risks and whether or not they are right for your portfolio. the head of hedge fund research management at citi will join us with his perspective. but check out this lineup for our 8:00 a.m. hour. former citigroup chairman dick parsons will join us for the remainder of the show. plus we'll head to sun valley where media moguls are meeting this week. tim armstrong will join us. and then at 8:30, the interview we've been talking about all morning, former new york governor eliot spitzer is our guest. we'll ask him about his run for the new york city comptroller. a big hour still ahead on "squawk box". what do you drive?

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the international monetary fund scaling back global growth forecasts. joining us now, chief economist

and managing director of global research at j pmt morgan chase. jpmorgan chase. what new data -- >> something that we have a microcosm in the u.s. which is growth is not strong. in fact growth is you been psub most parts of the world. and also lower inflation but labor markets are holding unreasonably well. in the u.s. i think that's okay. labor costs are weak and companies have high margins. but we look at the rest of the world, we're worried right now that there is a shoe it fall in terms of the employment picture beginning to turn particularly in the emerging markets. >> how would that play out there and then how would it come back and play out here? >> i think it's a story which i think is basically going to hold back the lid we're expecting in theist and some of the developed world partly on the back of fiscal drag fading. so i think employment starts to

weaken, that holds growth down in the emerging market economies which is reinforced by the tightening and financial conditions. u.s. and developed world consumers are getting benefits from lower inflation. i think corporates are willing to look through some of the temporary weakness and it reinforces the divergence and holds back our external sector and limits to some degree the lifting we're hoping for. >> the great future that we have of selling all of our stuff to all these emerging markets, that doesn't happen as quickly and it's not as big a positive? >> that's already been the case. the last year one of the things holding us back has been our export sector slowing. but it just continues that in the backdrop where we're all hoping that the u.s. starts to see some real lift here. >> is that your separation thing? >> bruce, can i ask you about what you see the economy turning here in the u.s.. can you see the fiscal drag from

sequester coming out on the fourth quarter? i think that's something that was part of your forecast. and the consumer picking up speed, both things happening? that would be a pretty good outcome. >> right. i think the sequence is right now the consumer lifts in to mid year. i think we're seeing it in some of the data and low inflation is a big part. i think as we go through the rest of the year, what we're losing is the tax increases that hurt us. we're losing a big front loaded cut back in defense spending as the wars wound gown and the sdo. still a fiscal drag, but it's a drag than less than a percentage point in terms of its taking off of growth at the end of this year compared to where it was at the beginning of the year. that's a big sequential shift. but the global stuff is still a pain in the emerging market, but i think there is glimmer of hope in europe. >> what about the question of what could the u.s. economy get to if we didn't have a consumer reticent to buy and fiscal drag? what is potential gdp?

>> i think we have an interesting contrast right now. i think our capacity to grow this terms of a trend is probably no better than 2%. but i think there is a lot of slack in the picture. i'm a little bit more positive, peter, so how i see the household sector from a balance sheet point of view. i think the economy could grow 3%, 3.5%. we have it at 2.75%. the global stuff is a big part of why we don't get above 3%. >> but there is nothing we can do here. in the tax reform won't do it, entitlement reform, this isn't self-inflicted, just where we are? >> i think there is little we can do in terms of the next couple quarters. huge things we ccan do in term f affecting expectations. tax reform, trade. i'm not saying it's possible, but we're in a world where we're missing opportunities. >> we have to stop trise in

oceans first. we're just a week away from the alpha conference. here to deliver a preview, kate kelly. >> health care stocks have been one of the biggest winners since bom care oig passed. we'll take a look at a big winner in the hedge fund community who will give us his alpha generating ideas at the conference next week. for the strong and the elegant. for the authentic. for at home and on the go. for pessimists and optimists.

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the alpha conference is just a week away. well be at the pierre hotel and one of the topics lk the continuing impact of obamacare. how are the hedge funds playing that? >> there has been great opportunity especially larger cap names despite recent set backs, many health care names are up huge and some doubled in the last three years or even tripled since the afford able care act was passed. even with the cost savings expected, boobamacare is roughl to generate roughly a trillion dollars. it's an area where a lot of broad brush thinking has

occurred of late. health care is so country and sector specific that many macro and even long short hedge funds steer clear of it. when you layer on the fact that obama's new law is being phased in over time and that short term changes such as the division just last week to put off an employer health care requirement to 2015 at a good deal of volatility and enough to turn many investors off. but one person who has traded it phenomenally is larry robbins. he recommended four for profit hospital stocks and two of those are up by triple digits since then. it argues it needs a new board that can better manage it cash flow. i'm looking forward to hearing more from robbins where he'll be discussing obamacare and its impact along with two money managers that know a lot more than we do about the subject. from thank you, kate. we'll continue talking about this. the world of hedge funds with joining us now, the man of the

hour, eric seigal. thank you for being here. >> thanks for having me. >> i want to talk about what's going on in the hedge fund world and the kinds of returns we're getting. there is one piece of news that comes out today which is that the sec is about to vote on a rule that would allow hedge funds to market themselves to everybody. and how you think that's going to change the business. >> yeah, it's an interesting question. certainly we'll have some impact, i think some managers will take advantage of it, but i caution reading too much into it. many of the managers that we work with that we feel are top tier hedge fund managers quite frankly aren't looking for more capital. a lot of them are closed, they're not looking to take in more money. so i don't think they will be out there advertising their fund so much. >> when you just look at this as a good thing or bad thing, do you say to yourself it may not be such a good thing if the top tier guys are not making their

funds available to the moms and pop, it means the moms and pops may go to everybody else who may not be top tier. >> i think you want to be skeptical of the funds that are out there. >> as i understand it, it's the large cap hedge funds that have been attracting the new capital. so this is a ban that's being lifted we think that will probably benefit the small and mid cap hedge funds a little bit more more, right? and reach a wider audience of potential investors? >> i'm not sure to be honest because i think the mom and pops out there so to speak are going to be the ones who are more attracted to the larger names. >> although you're not dealing with mom and pops when it comes to hedge funds. even in this case you would have to have a million dollars in investable capital. is that the standard? >> yeah. >> so you're talk about folks that have a little spare change and hopefully a track record. in b >> probably won't be familiar with the names.

>> and for a firm like citi which acts as a funnel to a lot of these firms, if people are marketing, does that mean they get to then by papass you? >> it's possible. a lot of the funds that we prefer to work with don't want to have to deal with hundreds and thousands of individual investors. they like the idea that they can come to a citi, deal where one intermediary, if you will, that can then deal with all the underlying investors. >> let's talk about performance underlying investors. >> let's talk about performance can then deal with all the underlying investors. >> let's talk about performance. seems to be mixed. we hear things like bridgewater had their all weather fund because in all-weather was supposed to do so well and not doing so hot. and others doing terrifically. >> that's the funny thing about hedge funds. people talk about them as a sink fwu l sink fwu lar asset class, but they're not. there are many different strategies and even within those strategy, all hedge funds are looking to do different things. so it's not surprising that

there are winners and losers in the hedge fund space. >> this all-weather thing was very interesting. i got a lot of feedback from money managers saying this is really an important story because the risk parity notion is the one that's supposed to survive almost any environment. what's your thought on that? you've done some of that as of late. has it worked and will it work in a lot of environments? >> the concept is going to work this different environments. but there are applications of it which were leveraged on fixed income. you have to tease out that correlation and realize that won't always be a winner. so you have to go back to basics and think about it differently. which is a theme i want to ask eric about. everyone tells us we're moving in to an unprecedented era. stimulus, fed, qe, bank of japan. deep down it's about finding some arbitrage. how do you look through the universe of hedge funds to pick out the guys who really can do that? >> the million dollar question.

uncorrelated returns really come from dislocations in the market. so what we like to do is take very much a bottoms up approach. we are looking for those managers and again 8,000, 10,000 managers out there making only 5% or 10% are able to do that. >> real quick, would you put money with steve cohen right now? would you recommend a client do that? >> i can't comment on individual hedge fund names. >> but i tried. thank you for being here this morning. worth an effort. and if you don't know, the conference is a week from today skrul 17th. here are some of the lineup. nelson peltz will be joining us along with carl icahn and john paulson. plus the key note speech delivered by jack lew. that's all next wednesday on squawk. [ male announcer ] it's time. 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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will there are some people that you just look at them and you say i just want to listen to this guy. did you know you would being sage like and wise is th? gr no, i didn't know that. >> that's why you got picked for that big treasury post. so the words of wisdom that we can get from you. andrew wanted to know who would you like as the next fed chairman. >> i think don kohn, janet ye

yellen, different pluses and minuses. i think obama has a strong short list and i don't envy the task. >> larry simmyer summary su tim think? >> i don't know if he want it is. think he doesn't want to be in that spotlight. >> he's making more than you are per speech. >> i don't do per speech. >> you're make more overall. i like it better. >> anyway, gentlemen, it's been a pleasure. >> he wants to get out of here. god, all mighty, what did i sign up for. you got to sit in becky's seat. >> thanks for having me. >> and to your colleagues, get larry in here. when you're managing 40,000 trillion dollars. >> not quite that much. >> thank you.

when we return, dick parsons will join us for the remainder of the program. his views on financials, the economy, much more. he's making his way to the set right now. and then eliot spitzer live at 8:40, we'll find out what he thinks he needs to do to make to be the new york city comp controller and what it will mean for wall street if he's elected. weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. it's been that way since the day you met. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use

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welcome back to a special edition of "squawk box". one hour with richard parsons, former citigroup chairman and former chairman and ceo of time warner. and f. scott fitzgerald said there are no second acts in american lives. don't tell eliot spitzer. the former new york governor planning a comeback as new york city comptroller. he'll join us live. the third hour of "squawk box" starts right now. >> welcome back to "squawk box". i'm joe kernen along with andrew ross sorkin. becky quick is off today. we have a big lineup this hour.

our guest host richard parsons is here. but we won't start talking to him for a few minutes. former chairman and ceo of time warner. he looks splendid today. he has glow that only comes from spending time in really unbelievable places i think. right? >> the makeup room. >> there's a lot to talk about. >> absolutely. and you love talking about pap did i te pandit and citi -- if a. >> and the tribune news. >> and we'll talk to tim armstrong, too. and at the bottom of the hour, eliot spitzer will join us. he's running to new york city comptroller. we'll find out how the campaign is going in terms of just getting on the -- ability to do it.

and we'll revisit -- >> he has until tomorrow. >> let's first, though, get a check on the markets. equity futures are indicated now up. not gang bisers, they were down 8, 12, now up two. dismal trade data is spurring hopes that china may ease monetary policy in order to boost economic growth. japan's benchmark nikkei falling 66 points after briefly hitting a six week high. in europe, take a quick look, we have really nothing to tell you there except that there is nothing happening. >> a couple things on the agenda this morning. markets waiting for the minutes of the fed june policy setting meeting, that comes at 2:00 p.m.. traders looking for details on some of the behind the scenes discussions remembering of course that ben bernanke announced that the fed could begin to cut back quantitative easing before the end of the year. so we'll see what kind of hints

we can read from that. also worth watching, bernanke will be talking at 4:10 eastern time from the national bureau of economic research conference. and i imagine we'll try to take that live, as well. also this morning i want to talk to dick parsons about, tribune company announcing plans to separate its publishing business from its broadcast division. the move underscoring a shift in focus to frib bun's tv business in a bid to maximize profits. the announcement comes days after tribune agreed to buy 19 local tv stations in a $2.73 billion deal. and i should note at the very bottom of the press release, they still say other options are on the table. so we talked about that company being in play. the question is whether this keeps it in play or changes the dynamic. and we'll talk to dick about that. in other news, a natural gas well is leaking in the gulf of mexico off the louisiana coast. the coast guard says a crew has been work to go temporarily plug the well and lost control of it. everyone on the platform was evacuated safely. that's the good news. the well did not blow out and there was no explosion or fire.

the coast guard reports an ar l aerial survey revealed a sheen on the gulf surface, but no indication the leak will take on the scale of the 2010 blowout, the bp well that we talked about for so long. >> and stricter capital standards for the big u.s. banks to the health of the question, we have a lot of ground to cover with our guest host for the next hour. joining us now is richard parsons, senior adviser at providence equity partners, also former chairman of citigroup and time warnewarner. i wasn't kidding, you have some type of glow. how is life? >> life is good. i'm a man of ease now. >> you are. >> that's right. >> it's not that i need to live vicariously because i love my life, but can you just tell me quickly about tuscany?

how often are you there? >> i was in tuscany in may. and then i was at bach island visiting with my grandchildren. >> but you have an interest in the vineyard and you went to -- >> and i mentioned those two places because they have something in common. there isn't anybody from new york and manhattan, from the world that i occupy on a day to day basis, where i am in those two places. >> you're saying that like -- >> i like to get away to get away. right? i don't need to go and see the same people i see here in new york. >> all right. so now that you're back here and you came here voluntarily -- >> guest host. >> as a guest host. i figure that means you don't get paid. >> you don't get paid and if you don't want to answer question,

you say i ask the questions. i'm the guest host. but there are things happening in the financial world that you -- new capital requirements. we talked yesterday about in england if you take too much risk, you go to the tower of london now and they put you in the iron maiden. it's still kill the bankers. >> it is. it's a little less intense than it was. i can remember back when i became chairman at citi at the beginning of 09 ['09, every i w run into in washington would say you have to understand the people are very angry at the banks. well, that anger hasn't completely dissipated, but it's gotten down to a sort of a tolerable, manageable howl. so stronger capital requirements, increased regulation, i think you'll see that continue for another couple years. >> good thing, bad thing, punitive, is it being done for

the right reasons? >> you can never answer those questions yes or no. some of the reasons are right. probably the banks should have more capital. in my opinion. and there should be more thoughtfulness, insightful regulation. but some of the reasons are just because we don't want to be -- we the regulatory establishment, legislative, we don't want to be blamed the next time one of these things blow up, so let's just throw the kitchen sink at them. >> if you were still the chairman of citi and one of the complaints, i don't know if it's complaint, but cleary the banks have pushed back on more capital. they have pushed back on more regulation. as someone who was on the word of the big bank, is that what the banks should be doing? should the bank be thinking about this differently, is there a larger role that they're supposed to have, are they supposed to look out for the shareholders, u.s. citizens? how do you think about that dynamic in you're in the board room now? >> i think banks are more complicated than your normal

corporate enterprise where your fiduciary duty shareholder is the key. and really the only key. banks are almost, particularly the large banks, i said this before, banks are almost quasi public in terms of the role that they play in the maintenance and prosecution of the national economy. so you have a regulatory influence as well as a shareholder influence. so i think it's proper for the banks to push back where they feel that it is not in the interests of safe and sound banking as well as developing and generating effective returns. but -- and because it isn't black and white, there are two sides to every story. a former litigator. so the truth comes out of a healthy conflict. >> given the complicated role that you say a bank board plays, do you think that there should be a chairman and ceo role that

are separated? this was the jamie dimon issue obviously several months ago. all the british banks split that role and they got into trouble, too. >> first of all, it has to evolve. having been a chairman and not ceo, and having been a chairman and ceo, i can tell you that the world is changing. those are two separate jobs. they have always been two separate jobs. and they require two different skillsets. chairman has to be consensus builders, people who can bring a group together because that's the only way the board acts. ceos are more command oriented and team building oriented. the problem is that in a more complicated world and particularly for the banks, those jobs are both taking on more weight and it's harder and harder to find one individual who can do them both. >> sounds like you're splitting roles. >> i wouldn't make an arbitration rule that we split

the roles on january 1st 2014 all across the world. jamie dimon is a guy who has a huge and diverse skillset and who obviously in the view his board and my open personal view can handle both. but fwg forward, i thi going forward, i think you'll see more and more of a split role. you'll see a chairman whose focus is the board and external constituencies and ceo whose focus is the management and performance. >> this morning tribune announcing that it is planning to break itself up. this is slag to what time warner recently has done with its publishing business. the right decision, the wrong decision? >> similar to what news corp is doing and a bunch of them. we went through a period of time of sort of con xwlglomeration a now we'll go through a period of time where they unconglomerate.

>> and then we'll do it all over again. >> probably. things run in cycles. but the investor community is so focused on each individual business line that the way to maximize value frankly is to have more pure plays. and i think that's what you're seeing happen. and so you saw it in time warner and look what happened with time warner cable when it split off and went its own way. i don't think you would see that value. >> do you wish you would have split up time warner earlier? >> we quoocouldn't for various sundry tax reasons. we had a plan ultimately to separate time warner cable because it's totally different investor based and totally different characteristics of the balance sheets. and i think you've seen the market reward that. but i couldn't do it on my watch because of the irs code rules.

we had done some transactions you had to wait five years before you could unwind the spool. >> no wine today, you just show up empty handed? >> we wanted to see how this one went. if it goes well, we'll have a party. >> our trying to determine the outcome of the questions based on the promise of future wine basically, right? >> futures market. >> i'm not saying not to do that. okay. now that we know the ground rules, we'll be very nice. what is a good wine, is it read? >> a best extrapolation of an italian red wine. grape made where we have our place. and probably most people's favorite italian red. >> is it like a -- could i have it with human liver, would it go good with that? >> i don't know that i would suggest that pairing.

>> all right. much more to come from -- >> did he say human liver? >> he did. he's testing you. >> none of that rings a bell. >> >> yeah, but -- >> an nbc product, isn't it? >> yes. but coming up -- >> in this is "squawk box". >> aol's foray into live programming. tim armstrong will join us next from sun valley. and then we have eliot spitzer at 8:40 a.m.. planning his political comeback after the sex scandal that cut short his term as governor of new york. he'll talk about that and his bid for new york city comptroller. ♪ that's me... i made you something. ♪ i made you something, too. ♪ see you next summer. ♪

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this morning making headlines, carl icahn issuing a letter to dell shareholders, he wants investors to seek an appraisal of the current $13.65 merger price on that transaction. he argues it substantially undervalues dell shares. he's a featured speaker at the delivering alpha conference a week from today. for more information on that, you can go to delivering alpha.com and that will an day

befo be a day before the dell vote. so an opportune time. also aol expanding its strategic vision with live programming and brands like tech crunch. so what else does the global media company have up its sleeve? joining us now very early in the morning from sun valley is tim armstrong, aol chairman and ceo. you have some sun back there. not too early. how are you doing? >> doing well. it's early here and cold, but it will be hot and sunny later. so good to be on the show. >> when everybody thinks about sun valvalley, they think aboutl the deal making that happens there. comcast/universal deal was struck there. hulu being up for grabs. you can give us a sneak peek of what people are chattering

about? >> i just got out here yesterday and the conference really kicks off today. but the conference is always filled with great people so there will be lots of conversations. a highlight for everybody every year. so i think we'll know more later in the week. >> your name is not kicked around on hulu. you don't want to buy it? >> we have created one of the largest video platforms on the internet today and if you look at what we've done with aol live, we have huffington "post" live which has had 9,000 guests. we have people from 85 countries on that program just won another award this week. aol has a significant platform in video and i think we are always looking at partnerships. but as of this moment, we're one of the largest players of video on the web and we have a very specific strategy. >> tv programming is expensive. it is not a cheap thing to do. and there have not been a lot of terrific success stories yet totally online where people are producing a video.

how do you make the numbers ultimately work? >> i think we've done a very good job of making the numbers work. we started a couple years ago by making key acquisitions. if you look at the mega trends happening in video, one is the devices are getting better. second is the networks are getting faster. and third is consumers are becoming more digitally native where they want live video kept directly on those devices. so i think if you look back ten years ago, it was hard to make it work. we look at where we are right now, actually you can make it work when you look automatic probab out probably five year, it will be an opportunity. from and dick partissons has a question for you. >> you've got as far as i'm concerned one of toughest jobs out there because very, very few of the digital media have been able to reinvents themselves and that's what you're trying to do at aol and you're making good

progress. but i saw that you guys have upped your share buy back. are you not getting any love in the market so you're taking back the undervalued shares? what's behind that? >> there are two aspects to that. one is what we've told investors august along is we'll refurbish aol and bring it back it greatness by investing in very key areas, content advertising, commerce. for cash, we weren't going to use and you've seen us do this historically, we want to buy back equity in the country when we feel like it's reasonable. announcement around the share repurchase is just another step in that process. you will continue to see us invest in aol the business, but also invest alongside of ouren investors. and if you look at our historic buy back, think we've probably been one of the most successful companies in the buy back area. so that was another an opportune time for us. >> and do you have any idea in the online gaming business? i raise the issue because zynga

was talking about online gambling outside of the united states. >> one thing we're good at at aol is saying no. our core strategy is to hit the highest value human areas. we think the internet right now is a search and find medium. we think it will go to program medium. so we have focused on investing in key brands and people's lives, news with the huffington "post," technology with tech crunch, local with patch. video with aol on. and really the work that we've done in the advertising business which has been significant. so the investments you'll see us make are in those key brands. you'll see us do things like aol live both on the content side and then the investment we did along with google sys group. so i'd say online gaming i would put off as something we offer today and probably will continue to offer, but we're really focused on what we consider to be the mega human areas of the internet. >> so, tim, how many straight

allen company deals have you gone to? >> i think this is number five. >> are you -- i know you. are you kind of walking around out there with a little swag? people are now going that's tim armstrong. five years ago when you took over aol, i thought you were crazy. why would you leave google. and now are you like gene wilder, you say we're bad, are you walking through sun valley like that now? do they know who they're dealing with now out there hopefully? you get the a good table now? >> i'll tell you, joe, one thing i love about the sun valley conference is there is a number of people here who i consider to be really strong mentors. john donahue, jeff from ebay. it's an opportunity to learn. i come here with companies i want to talk to and also a blank

notebook. it's just a fantastic opportunity for me to see some of the best leaders in the world and spend time with them. in but you're >> but you were a believer. it's a different aol and that's the first thing people had to understand. still a great company and still do on a much smaller basis than at its height, but still something that you can really make a go of. and i watched it happen. and you put a lot of money into it, your own money, put your hone where your mouth was. and now you can buy some of that. >> joe, i'm a really big believer that as the ceo/chair is important ton an investor alongside our own investors. we serve 250 million people a month, we have 70 million people on our video product which we can't have two years ago and we're making huge strides. the huffington "post" is in seven countries. about to go into south core re,

a germany. so two years ago, people didn't understand what we were doing. i think they understand now.so understand what we were doing. i think they understand now.a g. so two years ago, people didn't understand what we were doing. i think they understand now.ger. so two years ago, people didn't understand what we were doing. i think they understand now. >> i was watching ao elemel liv it's almost like radio. the broadcaster announces the name of a sponsor, a guy talking about using sure deodorant and he actually takes it out. it was sort of old school/new school. do you think where this is all going? >> here's the deal. transparency is huge on the internet. and i think the ability for us to have real product people from real companies, we have a part they are with proctor aer & gam for secret deodorant. >> secret, not sure. >> to have a real opportunity around people understanding what products are. we're planning on having car designers come on and talk about the design of cars. a whole bunch of new things in

advertising. i believe advertising needs to go at the speed of the enter threat. you can't create one 30 second commercial anymore and have it run 100,000 times.you can't cre commercial anymore and have it run 100,000 times.threat. you can't create one 30 second commercial anymore and have it run 100,000 times.you can't cre commercial anymore and have it run 100,000 times. so you'll see us really at that time next step in advertising. and i've known dick parsons for years and we worked closely when i was at going well dick at time warner. and i think the process that you're seeing happening with the spinouts getting announced this morning, it's a great time to be in the media business. a great time to be in the content business. and you look at the infrastructure investments going in, that will change. advertising will change content. and it will be a bigger word on a go forward basis. i just got back, if i was japan, korea, china, israel, france.ld a go forward basis. i just got back, if i was japan, korea, china, israel, france.rd a go forward basis. i just got back, if i was japan, korea, china, israel, france.ldn a go forward basis. i just got back, if i was japan, korea, china, israel, france.

>> tim, we appreciate you coming on "squawk box". see you soon. coming up, former new york -- just say it former new york governor eliot spitzer will be on. he's trying to be new york city comptroller. he'll join us in a few minutes and talk about a lot of different things. as we head to break, here is scott stringer, one of his opponents, yesterday on closing bell. >> we have people who are really struggling. they want real leadership. they don't want the circus, they don't want the drama. the real issue is he's not participating in the campaign finance ram. so he's going to try to buy the office. this office is not for sale. (announcer) at scottrade, our clients trade and invest

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welcome back. let's take a look at stocks on the move. earlier we mentioned family dollar. and it was going to report and it did. it came in at $1.05. stocks moving nicely. it raised its full year forecast. it did say some of its customers are continuing to face headwinds. hewlett-packard was upgraded there buy to sell. they don't check in with you anymore, do they. increasing benefits from cost

savings in the second half of the year as well as improvements from hewlett-packards services segment. and nu skin makes skin care products, it is seeing better than expected sales in china, north asia and americas. and cliffs natural ceo is retiring. he'll continue to serve in the post until the mining company appoints a you csuccessor. a weird name. cliffs resources or -- alpha natural resources and cliffs got together and changed their name. >> should be in the news later this morning and maybe on the site. we have a big interview. former new york governor eliot spitzer is seeking political redemption in the city of morning. the sex scandal tainted politician is trying to get the

signatures to get on the ballot. the deadline is tomorrow. and eliot spitzer joins us now. thank you for joining us. >> it is a pleasure to be chatting with you. >> we've been thinking about what types of questions to be asking you. how to approach this interview. >> if you want me to suggest a few, i could. >> he's heard them all i'm sure. >> we're a business net work and one of the things we're asking taxpayers for did is to trust you to manage their money. and so the question i'd ask you this morning is would you trust someone who has a felony, and i know that you were not prosecuted, but would you trust a fell lon to manage your money a business context? >> i'll rephrase the question. will the public permit me to be the overseer as an independent voice of the new york city budget and the new york city pension funds given the record that i filled as attorney general and governor over the

last 10, 15 years, five year hiatus recently of course, where frankly with all due respects to the people who appears on cnbc with regularity, i think i was a voice that recognized not only the structure all issues on wall street, but also the coming debacle when i was attorney general in 2000 4rks i was criticized by the national review for having the temerity to suggest that we rein in subprime debt because i said it is not only a civil rights issue, but it is going to made takes take size into something that will be dangerous to our financial structure. the new paradigm turned out to be old paradigm. it led to loss of middle class value. >> but effectively this is about trust. >> sure it is. >> the conversation we're having about trust. the vote is about trust.

opportunity for redemption is about trust. you were the chief law enforcement officer of the state. and you did something that was ill legal. >> i won't quibble or get into that conversation. i've made it clear i'm asking for forgiveness, redetermine shop, i've acknowledged unlike many following beingfolks that erred. i took five years off during which time i taught, i had a spectacular time.i took five ye which time i taught, i had a spectacular time. i've run our family business. i have a book coming out about kap capitalism next week. i think people will be interested in what it says. so i think the public will look at that. whether they will be redetermine honest is something the public and voters will determine. and i throughout my career have deferred to the public's judgment on those issues. when i was a low level prosecute to have, the jury rendered a verdict. i respected it.

as attorney general, as governor, the public will render a verdict. i will make my case and i will be comfortable with whatever the result may be. >> one of the questions the public still has is whether a lesson has been learned. i'll ask what i think is a tough question. since you resigned, you can unequivocally say that you have not been with a prostitute? >> now, listen, first of all, yes. and here is the thing. the questions about my private life at a certain point will have to focus and shift to a conversation about the substance of this office which is what i think the public really does care about. trust is the issue. i agree with you. trust is the issue. and the question the public will answer i believe is will they trust. you framed the question this way at the top. will they trust me to be the over'ser of the pension funds and budget. there have been very few independent voices in the past number of years about public finance, about budgeting, about capital market. and i think when the public looks at what i have said and

compares the historical record, they will say this guy actually can continue not only you said stood it, but acted upon it in a way that was designed to remedy the loss before. >> now we're wondering comptroller is one thing. but you were already governor. so some people might ask you were governor of new york, which is obviously a great stepping stone to everyone higher office. and now do you just want to be comptroller or is there -- this is a comeback that khalid to much bigger things, everyone governor some day? so that's why -- it's not just overseeing hookers, we're not interested in it anymore. and i don't want to sit in judgment. but can you understand how someone that could see you in your position knowing what the possible consequences could be to your family and to your

political aspirations, and it's almost as if you wonder whether there's a screw loose. permanently. for you to be able to have dwun that and then from here on out, you worry that you could get in a position of power where something like this might happen again. where you say that you weren't able to control your urges or something. there is not a way that you can be fixed from that, is there? >> i'm glad you ended with a question. i was about to play lawyer and say where is the counselor in this. i understand all those questions and that's why i've been out in the street talking to voters. or trying to talk to voters. i don't know if you saw the picture at union square the other day, there seems to be more media than i knew existed. but trying to talk to voters. and let them ask that question. i think we will get an answer on september 10 and then if i win the primary back this november. i think the totality of my career is what people will look at. and to answer your question about a stepping stone, i don't view offices as higher, lower.

the opportunity to serve is the opportunity to serve whether as assistant district attorney, attorney general or governor or i hope controller of the city of new york, to you things in the public spirit of the office and try to could be contribute. >> i remember seeing you at conferences or meetings. i liked you. i might have disagreed with you on political things. you're so smart. and that's all part of the thing in a i don't understand. whether it was absolute power corrupts absolutely or narcissism. you note difference, right? from right and wrong. that's my only point. >> joe, i'll return the favor. even though we probably disagree on a bunch of things about capital markets and politics, we've always had a good time chatting. >> i know. and i'm not hurt like people that were close to you. but i felt like, god, i this guy was great and it's almost like a shakespearean thing. >> i appreciate those kind words and that's why i said yesterday on uberous is terminal.

it's sort of an analysis that applies across many companies, institutions and individuals. and i think the learning process is one of recognizing that, absorbing that lesson, altering behavior and hopefully moving forward. >> dick parsons is here as our guest host and he has a question for you. >> general, how are you. it's been a while. i always liked that appalachian and that's how i first met you. >> thank you, sir. >> i have sort of a different question as opposed to trust. it goes to motivation. why this officer. there can be one of two answers. because it's there and available or because there is something about this office that particularly you feel you're qualified for, you can make a difference. why this office? >> well, i would gather that the

latter answer is probably the better one and in fact is the truthful one. i've been speak building the role comptrollers play for years. this is not merely an issue of opportunity or happen stance. in the book there are several pages dedicated to articulating role controllers can play. we need to reinvigorate institutional investors. it's a difficult issue and joe and i might debate what that role should be. but i think we all understand the path of institutional investors has led to power flowing upwards to the ceo in a way that sometimes works, sometimes it doesn't. but this is an issue i've been talking about for years. oversight of the city budget, the audit function that is underutilized. it's not merely a question of saying are the paper clips being delivered. it's a question of the huge sums we're investing getting us the

results we desperately need and if not, how to we change them so we didn't continue to spend money in an ineffective way. these are the things that a controller can do. it's an exciting position. i want to do to that office what i think people will say what i did with the attorney general's office. >> this is a p dris andrew here. one of the things people wanted to know especially the business community, in your role as comptroll comptroller, whether you plan to be an activist investor, whether we should expect you to go after boards, be very aggressive about that, and how much you will use your power in this position to impact changes at firms not necessarily for returns, which will be the role -- which i imagine would be the role in terms of raising the returns for pension funds, but in terms of changing the process within corporations. >> each one of those is a slice of what investors should do.

let me explain this. this isn't political activism. this is about the appropriate role shareholders as owners of entities should play. ownership trumps regulation. i have long said for years neither regulation nor prosecution can generate good judgment within an organization. only ownership can generate that. that's why the great investors warren buffett and others do participate in their ways sometimes quietly, sometimes not quietly. if you look at the way we have run our family business and i'm not putting that out there, it's a private business and we always will keep it private, we are conservative, thoughtful, we get returns. the role that i see for investors is a brilliant book, exit voice and loyalty, shareholders have exited rather than used voice. and if you're a pension fund and you essentially own the market, exiting from one company each time will diminish your return long term. you have to participate in management to improve returns and improve the quality of the product and improve the quality

of the directors and improve the quality of the decision making within the company. each one of those is a legitimate role for an owner to play. and when institutional investors don't do that, they cede the power of the voice that is most essential in the long run. that is the role long term investors have to play. >> you are seeking redemption. can you comment on whether you will support anthony weiner in his effort to become the mayor? in i'm not supporting any mayoral candidate. as you may have seen, i have enough going on in the comp controller's race without diving in to the politics of another one. >> and i guess this is the last question. you were such a hard ass take no prisoners guy to your enemies and everything. and i'm just wondering after all this, will you be a little kinder, gentler, will you be less scorched earth with some of the people you're dealing with? >> joe, the answer is yes. you get a bit older, you temper yourself in some ways. but i actually wasn't so tough.

we settled cases. we we sasaid to people we want remedy that works. >> it seemed lining ke it got personal. >> i want to make something clear. it was never personal for me. never. never once. we were always seeking to establish certain principles without governance. that was it. it was merely a question of how much pay was appropriate for a nonprofit. i tried to negotiate a resolution of that case for months. in fact that case was brought to me by none other than john reed who was the chair of the new york stock exchange, he brought me the report which laid out the facts and said our board didn't want to deal with this. you should. i said it would be messier. this is state law, this was not

for profit compensation. there is a state law that says pay be commensurate with the value of the services. let's resolve it. i like these guys. they may not get it, i understand that. i never dislike people. >> eliot spitzer, thanks for joining us. we do appreciate you coming on and answer something tough questions. and answering them fort rightly. coming up, we have much more from our guest host dick parsons. he may want to comment on that interview when we return. money has to last longer. i don't want to pour over pie charts all day. i want to travel, and i want the income to do it. ishares incomes etfs. low cost and diversified. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

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welcome back. i'm still thinking about spitzer. >> yeah. >> why didn't he run for mayor, you know? the rest of the field is so weak. i'd rather have him as mayor i think. i don't know. making headlines, a federal judge has ruled against apple in the ebooks pricing case saying the u.s. government and various states have shown apple conspired to raise retail prices of ebooks. the judge announcing a trial and

damages will soon follow. >> we have much more from dick parsons. and we also have a programming note. one week from today on july 17, cnbc delivering alpha conference. check out the headliners. nelson peltz, kacarl icahn and john paulson. well be broadcasting that morning from the pierre live. ♪ load! we keep moving to deliver what you need. and that means growth, lots of cargo going all around the globe. cars and parts, fuel and steel, peas and rice, hey that's nice! ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪ ♪ norfolk southern how's that function? ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪

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eat it and i'm president of the united states and i'm not going to eat more broccoli. >> that was george bush in march of 1990. check this out, president obama went on record yesterday saying broccoli is his favorite food. the remark came at a white house antiobesity event for children calling the kids state dinner maybe the campaign is working, though. a u.n. study showing that the united states no longer has developing the world's highest adult obesity rate. that honor now going to mexico where 32.8% of adults are obese, i'm not sure, though, i i believe president obama on the broccoli thing. up next, scott cohen will join us with a closer look at the cost of doing business in america's best and worst state for business. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions

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in case you missed it yesterday, cnbc named south dakota the top state for business. among the determining factors, the cost of doing business played a key role in this year's ranking. and cnbc's scott cohen joins us now with more. there's one of the big mouths behind you.

and we also had belski on who got the well anchored part. and he said it and i realized he was right and i was going to start doing some fargo, real good, you betcha and i said i'm not going to ruin it because it was great. tell me, i didn't see all the other ones. go down the list for me real quick five to one before you tell us anything else, scott. >> reporter: the five top states? number five was virginia, utah, nebraska, north dakota, texas, and number one is south dakota. let me quick orient you to where we are here. this is the crazy horse memorial in custer, south dakota which was conceived in the late 1930s. started building it in the 40s. it's a response to mt. rushmore, a heritage site. you can see the head is done now. this is 1/600 scale model o where we're going here. i would be standing about here. as you can see, you'll see crazy horse on his horse in warrior

stance. let's talk about quickly cost of doing business. that was really where south dakota really shined here. with almost a perfect score and we'll go through the list, south dakota does best in that category, one of the lowest tax burdens in the country, low wage cost, utility costs and so on. and followed next is oklahoma. next, mississippi, arkansas, and montana. what about the most expensive states for business? we have a three-way tie for the fifth highest cost of doing business. illinois, pennsylvania, and washington. next massachusetts, which this state has the highest wages in the country followed by hawaii and new york and the most expensive state for business is california. california a land of extremes, great for access to capital, but really expensive. and that hurt the state this year. we're going to keep going inside. and the categories and also look at more crazy horse as the day goes on. >> coming up, our guest host this morning, dick parsons. we'll get the last word from him when we return. [ male announcer ] the mercedes-benz summer event is here.

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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 now more than ever, the future belongs to those who challenge the present. 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.

when you do what i do, iyou think about risk.. i don't like the ups and downs of the market, but i can't just sit on my cash. i want to be prepared for the long haul. ishares minimum volatility etfs. investments designed for a smoother ride. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. welcome back, let's get to our guest host for the last word. 20 seconds on the economy, what do you think is happening here? >> well, actually, i think, you

know, i think things are better. i think qe-2 has worked, the quantitative easing. it's helped the upper class, middle class, lower class, made things more affordable, made people feel rich and spend. i'm not surprised bernanke has said what they said, they're going to back off. i think the trend is going to continue. it's going to take a while, but at the end of the day -- >> thank you for being here. >> this guy doesn't give up. >> great having you. >> great having you. make sure you join us tomorrow, "squawk on the street's" next. >> all right. good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber, kelly evans, the new york stock exchange, cramer is off again today. the stocks are up four straight days. the best four-day run for the dow all day long.

pi