good morning. welcome to "squawk box" here on cnbc. i'm joe kernen. becky quick and andrew -- the guy with three names, andrew ross sorkin, they're off today. i'm joined by my colleagues from another squawk this one occurs on the street of manhattan. the streets of manhattan. david faber. are you familiar with the show? >> with the show "squawk box"? >> vaguely. vaguely. i have some vague memories of sitting across from you for a decade. >> are you repressing them or embracing them? >> embracing them. never able to take -- >> do i see -- your eyes are glistening a little bit. >> of course. i get teary -- the '90s were good to us. >> they were. kelly evans is also here.

she -- when you went to paris, did you see the beautiful mansion? there was a horrible -- there was a horrible fire at up with of t one of the oldest mansions in paris. since you finally saw some of the world, i wonder -- >> no. >> i wondered when i saw it this morning. in the spirit of the more the merrier, none of us can contribute enough that we -- we'll start with two guest hosts, we'll add a third. we'll bring in kate kelly in. we'll have some remote camera somewhere and set up a bunch of chairs and then have a studio audience. hopefully that will be enough so we can do this without andrew. all right. dan colaruso is here this morning. and david kelly, chief global strategist of jpmorgan funds. we'll speak to them. i already had a conversation with david kelly in makeup about

the bernanke and -- >> i think none of them have any -- now david -- are you supposed to read this next read? do you see what it says there? kelly. oh, oh, oh, no, no, no, no. i forgot about that. >> there are a lot of kellies going this morning. >> and then you leave at 8:00, kate kelly is coming in. >> that's that they think. they're, like, synergy. >> let's start with the fed. from last month's meeting showing a split in the timing of qe. many want to see the jobs recovery was on solid ground before any policy retreat took place. so that happened around 2:00 yesterday. after the bell yesterday afternoon, chairman bernanke spoke at a conference up in cambridge, reiterating the need for monetary policy accommodation for the foreseeable future casting doubt about the strength of a labor market.

>> the dual mandate is to pursue maximum employment and price stability. currently we have an unemployment rate of 7.6%, which i think if anything overstates the health of our labor markets. on price stability, inflation is now about 1%, which is below our 2% objective. so both sides of our mandate, the employment side and the inflation side are saying that we need to be more accommodating. >> well, you can imagine what happened after that. the comments about easy policy gave a boost immediately to global stocks. look at the boost we're getting in u.s. equity futures this morning. the dow pointed higher by 155 points, similar size of gains seen in the nasdaq, the s&p 500, the ten-year weakened. you should have seen the moves in the euro. the response, of course, still to those fed comments, giving a lift to the shanghai composite,

up better than 3%. 2% for the hang seng. nikkei adding a little as well. given the strengthening of the yen, a sign of progress, a welcome sign, you could say. the european market, ftse 100, up .7. better than 1% for the xetra dax. >> you can read either one there. when i read this, they walked in feeling strong. and then within two days, going, no, i don't know about -- we can't -- the 85 billion -- what if we do -- none of them had any -- do they? >> i think they need to let the economy react. the economy is like a 12-year-old on a bike with training wheels. we can just -- >> you got a keynesian on steroids here. you think there is not enough

ink and paper in the world. >> monetary policy has not stimulated the economies of europe or japan or the united states. >> she's glaring at you. >> i think it felt evident. it doesn't take much to look around the world and see who is being accommodative, in response to what conditions and what are the markets and economies doing in turn. >> will we ever get a great read? >> we will never know how fast the economy could have recovered if we trusted the private sector to grow and didn't keep it in -- >> but that ship sailed. can we ever -- will we ever know how much is too much? >> where is the ten-year what are stocks worth? we may never know. >> what we know is the economy is gradually improving. the unemployment rate is coming down steadily, and the cost of qe, if you keep attaining it here, it gets bigger and bigger and bigger. >> and no one believes there is a cost now. >> that's closer to you than you would think. you can tell from the tenor of

the comments that there is an eagerness on their part, the chairman's part as well. >> do you remember -- >> they refer to it as shock and awe. they said we'll do $85 billion a month, people say come again. did you say 80 and then -- >> remember how difficult it was to get out of shock and awe? that was the phrase used first in the iraq war. that's the problem. if you build this up, this big, $4 trillion by next summer, even if they keep it with the current schedule. and the problems, when they try and raise interest rates will be too expensive to maintain the balance sheet, too disruptive to dismantle. that's why they should stop growing the balance sheet. >> what's 4 trillion when you could do 4 quadrillion. we should bring -- >> i'm saying if you look at what happened when they tried to unwind, they're itching to unwind this, tried to end qe in the past. what happens every time. financial market slump.

they say we'll do this program. >> there is a different equilibrium now. >> that keeps resulting in policy errors. the question is if we are strong enough to handle -- >> there is a different equilibrium. there is a new fed head. bernanke is on the way out. do they want to take this plate and drop it on whoever the new fed chief is? you taper. >> right. >> that's -- welcome to the job. >> right. >> that will be ugly too. >> this is funny, because on gma, today, they're all talking about this. they're yelling. charlie rose talking about the -- we're the only place you can find this, aren't we? are we nerds? we just got really interested in all that stuff. >> nothing could be more relevant. i wish all of the -- >> i know. what about a chicken kiev, what about a recipe that you can do in eight minutes?

>> a little chick en kiev as a metaphor. >> do you producers have to do this? >> no, very structured on "squawk on the street." >> when do markets open? >> 8:30. >> there was a guy out there giving a tour. on wednesdays and fridays, they open at 10:00. on -- >> really? >> on mondays -- yeah, they open at 9:15. >> are we interviewing him? >> yeah. >> yeah. >> let's get to the central bank news. the bank of japan is keeping monetary policy steady today. voting to maintain the pledge of increasing base money unchanged at an annual pace of $600 billion to $700 billion. the boj saying japan's economy starting to, quote, recover moderately, this phrase has not been used by the bank since 2011. didn't really recover that year. look at the yen, though, versus

the dollar. in south korea, the central bank held the key rate unchanged as expected. the bok raised the 2013 economic growth forecast. the country's negative output gap will narrow in the coming quarters. not to forget china, lousy export numbers yesterday. stocks posted their best daily gain in seven months today. among the catalysts, local media reports raised hopes that beijing may launch targeted stimulus measures to boost growth. there has been a great deal of concern about china. down 3.1. expecting up 4 in exports. maybe they're starting to be real about what is actually leaving and coming into the country. >> and, i mean, i was in beijing for the first time a few weeks ago and people ask me where you come back, what do you see? i didn't see anything because the smog was so dense, i couldn't tell night from day. when you're there, you say, so why again do you want 7% real

gdp growth? everybody in the world is focused on chinese growth, except the chinese have a more balanced view about it. they want the right kind of growth. i think they do need to make sure growth stays there. but enough -- >> i was there a couple of months ago about how bad the smog was. i was, like, what are you talking about? you can see your shadow today. you can see the sun. >> we are at how many -- one out of how many with cars now? >> in beijing or china? >> china. one out of -- one out of 500. when they do start driving -- >> these are real problems. >> yeah. people foe there and have to be in hotel rooms that have air filters or move out of their apartments. >> the chinese government knows it. they have been in terms of macro controlling their economy, but not just about growth, about sustainable growth and trying to do something to -- and also about trying to get the consumer

to actually lead the economy, which is a big -- not to mention moving 300 million people from rural areas to the cities. >> it will be a job. >> nothing will be done like that in civilization's history, but, hey. >> apparently it is thursday, which i'm seeing. jobless claims. >> i just saw that. >> it is thursday. on the u.s. economic calendar, weekly jobless claims at 8:30 eastern. fa filings are seen falling. at 8:30, june import and export prices. and there is a 30-year bond auction this afternoon. we got that going for us. the treasury department is expected to report a june surplus of about $40 billion, that would be $100 billion change from last year's $60 billion deficit. the big reason, fannie and freddie and the dividends and timing of federal payments. i always loved fannie and freddie. don't you? they catch a lot of flack.

>> this is a big story. if you look at the numbers, take another three months, three months left in the fiscal year, the budget deficit could be 3.5% of gdp. you had two lawsuits. ted olson suing about the changes, what they call the third amendment when the treasury said we're not just taking dividends anymore, we're sweeping all the profit. fannie and freddie fascinating and what will happen is equally as interesting. haven't heard from treasury yet. >> who is supposed to read this? no one named vo here. a valerie, a victor? >> you know what vo is. >> i think it is some tape. >> meaningless, usually just wallpaper. talk about china, show the great wall. talk about paris, we show the

eiffel tower, right? >> we do. we also made many mistakes in the past. >> we have. great ones. >> goldman sachs, remember that one, back from the o.j. days. >> ron goldman came up. the taj mahal casino, showed the taj mahal. i had another one -- people's ire. iras, had a guy with a -- >> we have done -- >> oh, yeah. >> even pretty good with people's names too. michael jordan from westinghouse. we have done -- that guy, how did he have time to -- really. there is one more economic store to watch today. many of the nation's retailers report june sales. looking for a gain of 4.8%.

>> i'll pick it up. in corporate news, microsoft planning to announce a reorganization today. it is expected to be a dramatic one. the overhaul will include operating units and shipments of personal computers fell 11% in the second quarter. that was the fifth straight quarter of declines. lenovo took the title as the top pc maker, beating out hewlett-packard. and yum profits beating the street. the parent of kfc posting a smaller than expected decline in june sales at established restaurants in china. the company was hit hard by a food safety scare and bird flu outbreak. we'll talk to an analyst that covers yum in the next half hour. >> in energy news, international energy agency says the north american shale oil boom could spur the biggest rise in nonopec supply growth in the past decade. next year. the iea notes this should help meet strong global demand, the

strongest since 2010. >> instead of thinking about what you're reading -- doesn't help. >> if you put it in front of him, he will read it. the agency says the outlook should, quo, give oil bulls close for alarm. industry experts say gasoline isn't expected to jump by 10 to 20 cents per gal nlon in the ne few days. in corporate news, chevron says oil and gas production declined last quarter because of area shutdowns and maintenance work in kazakhstan, australia, and nigeria. finally, a report says texas is pumping more oil from opec countries. in march, the state's oil production reached its highest level since 1984. texas oil output doubled from less than three years. that's all, of course -- >> you don't know the -- do you know what the shard is? >> i know exactly what you're talking about.

>> not a shard. >> absolutely. this was a huge deal in london. >> you see what they're doing now. >> they're climbing it. >> to protect arctic oil. london is leading the way for drilling in the arctic or something. >> there is a lot -- london listed companies, the north sea, in the backyard, all of these issues come to the fore for a lot of people through the. >> did you meet ross westgate. >> ross westgate. let's see. >> whoa, whoa, whoa. did you run into him? >> i think we -- we crossed paths a little bit. he was a tough pill to swallow, let me tell you that. real nightmare. >> handsome. >> yeah. dashing. it is time for the global markets report. i think i'm about to see ross westgate again. so long. i love seeing "worldwide exchange" again this morning. great stuff. and it looks like pretty nice picture there behind you as well. >> yeah, i vaguely remember you.

you were here for a little bit, right? >> yeah, yeah. yeah, couple of months there. glory days, ross. >> i remember that. we miss you. still very lonely, by the way, on set. if you get too much josh from those guys, come back. come back. i know what they're like. 7 to 2, kelly, advancerso outpacing decliners. european equities down for the ftse. this morning, a percent lower. ftse down -- sorry, .2. had an auction today. i'll get into that in a second. sectorwise, we had resource stocks up at the best levels, 3.88%. all the markets being helped by the reinterpretation of what mr. bernanke thinks or doesn't think with regards to tapering when

and where. as that discussion you already had. one sector down, travel and leisure. we had an auction from italy, the first one since the s&p downgrade. they kept them on negative watch. we thought you might get a better one. at the moment, yields have been driven by fed policy rather than the ecb put. yields in italy are higher today. 4.49%. they did -- didn't quite raise the maximum $5 billion they were looking for. yields did drop slightly 2.33% from june's 2.38% for the three-year. they were up on the 31-year issue. there is some concern now that basically sovereign yields, certainly the peripheral in europe, driven much more by fed policy. they will lose control of yields if there is too much of a backup in u.s. yields which is why we got the attempts from the mpc to

draw down markets a little bit. may not be so much they can do in terms of actual action. a little firmer today. we saw the dollar, long dollar position, sell-off overnight in asia. and we saw the euro/dollar, big volatility in currency mash ets as well. things have calmed down a little bit. as we wait to see what happens across your side of the pond. back to you. >> joe mentioned this, the women climbing the shard today, has that become a thing since i left? people using that as a way to push their cause? is it possible to climb the shard? >> i hope i never get to find out whether it is possible to climb the shard. i'm not worried it will impede people's views for the restaurants in that building. as you know, my problem with the shard is it is in the wrong place. >> what do you mean? >> they shouldn't have put it where it is because it interrupts the view now.

if you're by buckingham palace, you look over the houses of parliament, you see the shard behind. it is in the wrong place. it destroyed the skyline. >> i was over there, when we were hanging out, i did something almost as dangerous and heroic as climbing the shard. remember what i did, right? i got on the i. oh, yeah. i didn't like that. >> i was in the very center like this, and my daughter was leaning against -- i was like -- i was right in the center and just praying for it to be over. very similar to what these people -- >> the london skyline is incredibly disjointed. >> i liked it when before we got on, they had the mirrors making sure that there were no plastic explosives on any of the individual cars. >> very reassuring. >> yeah. >> ross, thank you. thank you very much for that. so good to see him again. might have to go back over there. coming up, day two of talks

between china and u.s. leaders in washington. attention slurpee lover. it is july 11en. it is free slurpee day at 7-eleven. we understand they're bigger this year.

welcome back. u.s. equity futures are going to add to recent gains. we're getting close to new highs. t-mobile says customers can upgrade phones every six months. the company unveiling a family plan for prepaid customers. t-mobile hopes to change to lure customers away from its three bigger rivals and, i don't know, really guarantee that this company is around? i think -- i don't know. we never talk about whether at&t should have been able to -- >> t-mobile deal -- >> ridiculous to not let that go through. >> that was one of the few that has been really stopped in antitrust. we have four now. i think eventual it will be sprint or -- >> it doesn't have enough of anything to be a player anymore. >> you're smart. what is that old formula they use to trust antitrust.

it is antiquated and didn't apply in this one. like worrying about sirius xm when there is pandora, spotify and everything. we're trying to build out the spectrum. >> you want will capitalized players who can spend a great deal of money. we have come a long way. for a while, we were trailing europe in the '90s. now we're not. we spent an enormous amount of money to get to lt. four to three, probably. three to two, no way. >> can you do weather on "squawk on the street." this guy is eye candy for the opposite sex. let's see how he is dressed today, with jacket, without jacket. >> let's check the national forecast from the weather channel's reynolds wolf. >> nice to see you guys. no jacket. no jacket. >> turn around. >> exactly. >> turn around.

oh, dear. >> you guys are horrible, nuts, crazy. >> was i lying. >> okay, cool kids. let me show you what we have weatherwise. it has been kind of muggy here hence the lack of clothing. we have a chance of thunderstorms again today. very hot for you in parts of the central plains. you guys are knuckle heads. chance of storms across parts of the four corners. very warm for you. storms this weekend, yeah. again, back in parts of the southeast. the system chantal we were following in the caribbean is going to set up camp in parts of the south. with that, a chance of thunder boomers there. still warm in the desert southwest. shocker, i know. travel, could have backups in a couple of places. will atlanta be one of those places with delays? and i'm telling you, yes. so will raleigh and philadelphia. philadelphia's best chance of rain in the afternoon.

possibly also all your big three airports in new york, newark, jfk and laguardia. there you go. back to you guys. >> reynolds wolf with that. dealing with joe every morning, very, very impressive. >> sometimes it is eric, also -- he's no slouch in the looks department. and alex wallace, not the person you -- >> not that alex wallace. >> this is a different one. >> you want he had to be this token liberal. >> i didn't say she was liberal. are you implying that -- >> is there another alex wallace? >> yeah. >> let's move on. day two of talks between leaders in washington, eunice yoon joins us now. good to see you. >> great to see you too, kelly. i'm thinking about the fact that you are talarely see the camerat that this point even though it

nice day here. a lot of people were thinking the officials went in with some degree of hope they'll be able to help rebuild this very strained relationship. one of the big points that was pretty interesting is that both sides have been arguing that the playing field is not fair. they both think they are the hurt party. on the chinese side, they believe they're unfairly blocked from investing in the united states. and the u.s. feels that china cheats. >> reporter: this is what the chinese authorities don't want you to see, open selling of counterfeit goods. >> this is not an ape. so it says -- >> it is not an american made product. so where is your iphone? >> iq phone. >> reporter: designed by americane, assembled in china. this supermarket in beijing feed the perception in the us us that china games the economic system with counterfeits and currency

controls, subsidies and industrial espionage. in june, the u.s. pointed a finger at chinese wind power firm sinovel, accusing it of stealing trade secrets. they're not commenting. china said it plays by the rules. >> of course china would like to protect its own businesses and follow internaksal practical practices. >> reporter: not everyone agrees. one prominent case, the wto ruled against a chinese government monopoly, on processing credit card and bank transactions. but a year later, the industry is still waiting for action. mastercard started processing chinese currency or rmb card transactions in hong kong, but was told to stop by china central bank, which said the move was illegal. >> we are in the cross water space and r & d settlement in hong kong. i don't see how that breaks any

rules or laws. >> reporter: do you think it is a fair playing field? >> not yet. not yet. to be perfectly frank, there is this notion that the u.s. is a mature market, developed market and china's developing so that, you know, there needs to be time for the field to be totally level. i think we can go faster. >> and so while this discussion was going on about the strategic and economic dialogue, there was also a lot of attention on the congressional hearing of smithfield, the big pork deal. a tlot of people are watching i closely here. one question was raised by the agricultural committee chairwoman when she said do you think this deal would actually happen in china. and what was so interesting about that question was that the fact that people are not only concerned about food safety, but also the potential for market

access reciprocity and this could really color the tenor of the economic relationship going forward. there are a lot of people talking about that one as well, guys. >> eunice, thank you. appreciate it. that's live. never ceases to amaze me. >> you should see what they have to go through for that studio there. bring the camera out, set up the shot, crazy pollution, crazy hot, crazy cold. she is impressive. >> you've been everywhere now. you've been nowhere and now everywhere. >> i mean -- >> you went to china? >> yeah, got to see a little bit of that and hong kong. but still a big old world out there. >> coming up, nokia's plan to beat iphone and android competitors and we're calling it -- i already did on one of the tapings, throwback thursday,

faber, awe rey as we reunite. they play that music quite a bit. >> somebody sent these, not that long ago. isn't that awful? >> i got the worst end of -- i don't know. you look like a messed up christian bale there. start yelling at the camera -- the celebration won't be complete without the puppets, maybe a little austin powers, some shwing sounds. check out the mini version. we'll have flashbacks from our best moments throughout the show. that should take about four seconds. stay tuned. every day we're working to be an even better company - and to keep our commitments. and we've made a big commitment to america.

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i even look older than you. good morning. unlike in real life, where we basically look the same, good morning, welcome back to "squawk box." becky is off, andrew ross sorkin off. i'm joined by my colleagues from "squawk on the street." a throwback thursday, but david faber and kelly, but when they said we'll call this thing "squawk box," call it what? and now there is a "squawk on the street," six hours of

programming. squawk africa, squawk asia, squawk europe, squawk -- squawks everywhere. >> explain what a squawk box was. >> i didn't know. >> little things, little micro -- >> david kelly a guest host and dan colaruso of reuters, at putnam for years. you toiled at -- >> new york post. >> you know where all the bodies are buried in new york city. >> every one. i do. did you know about the banano dudes? >> let's not talk about them. >> did you see what they were dealing? >> no. >> viagra and cialis. larry david went up to a guy on in a park on a bench and there was a viagra transaction. i'm not asking you because you're italian.

you used to be at the post, making headlines. this morning, nokia, the headline in the dame daily newd fellows. >> still got it. still got it. see how quickly we can get kelly to turn red. >> she's like ready to do this. >> a wall street journalist -- i was just a wall street journalist. i was going to -- >> true. existential crisis. >> nokia doubles down on camera features as to the ways that it differentiates itself from the iphone and android. elsewhere, the latest air travel consumer report will be leased at 11:00 eastern and it comes after the sequester related delays that we saw on late april. analysts expect to see on time percentages rise and delays go down. ford cutting the price of its 2014 electric focus by 10%.

>> okay. coming up, stock to watch today will be yum. the parent of kfc bouncing back from troubles in china and analysts who cover the company will share the call when we come back. ♪ norfolk southern what's your function? ♪ hooking up the country helping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people, making lots and lots of things. let's get your business rolling now, everybody sing.

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yum brands releasing quarterly results after the bell. the name behind taco bell, kfc and pizza hut reported properties of 56 cents a share. about two cents ahead of estimates. jeff amahandro is senior vice president at davenport. china is where we're focused for yum because it stumbled there with various problems.

what do we know from this quarter in terms of what is going on for the company and that important country? >> really feels like pace of recovery in china is progressing nicely. feels like companies turn the corner, he very encouraged to s the decline of 10%, coming off of may of 19. feels like this key market is moving in the right direction, china is the largest component of yum sales and absolutely critical growth driver going forward for the company. not all good, though. certainly on the operating margin side. china profitability was below our expectations. that contributed to the company operating margin below target. they did make up some of that through lower tax rate in the period. >> jeff, dan. are you happy that you -- are you satisfied that yum has a plan to wall off the risks in china?

a country where dead pigs float down rivers and people die of bird flu. if you're a food company in china, don't you need a better contingency plan than riding this out. this is a ten-year problem. who do -- are you satisfied that yum got it off this risk if china is such an important component? >> if you look at the issues here, there is two that impacted the company. first was the chicken supply issue from december. company addressed that by culling about 1,000 small producers and then secondly was the evian flu situation, challenge to separate that. i give david novak, the ceo, a lot of credit. he was committed to staying the course in china development. continuing to target 700 plus units in china this year. the company is addressing what arguably is the greatest retail opportunity in the world, long-term in china, with

urbanization and growth of the consuming class. i think the company, the senior leadership is focused on longer term, managing the issues the best they can, contributed some of the volatility we have seen. i feel like i think the stock would suggest investors are looking at this and taking a longer term perspective, certainly that's our stand on it now. >> jeff, this is david kelly here. turning back to the u.s., i would think yum brands would be a good bellwether of how the u.s. average consumer is doing here. first half of the year, are sales being held down by things like the increase in the payroll tax and the sequester or are sales looking okay? >> when we look at domestic sales progress, first starting with yum, give company credit for what they have done at innovation, particularly taco bell, adding sales layers, the dorito's loco taco rolled out last year, a powerhouse sales layer for that brand. but when we look at the domestic

restaurant industry, sales are highly correlated with nonfarm payroll growth. as i'm sure you're aware, the pace of job recovery in this portion of the cycle has been slow. and that's the fact that the restaurant industry overall. we're not seeing the level of job growth that one would associate with higher restaurant industry traffic and so we are seeing down comps, down traffic and industry continuing. >> all right. we'll keep an eye on juyum shar. thank you for joining us. coming up, we find out why bill ackman may struggle to raise a billion dollars in less than ten days. a live report from sun valley where the biggest names, see who we see, in media and technology are gathering. does his room get comped? he hasn't been making as much. 60 million last year.

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. >> we have been watching this great rotation. you need to know what to do with your money in a changing environment. that's what i'm looking forward

to finding out. >> its day two of the allen and company media and technology conference in sun valley. cnbc's july orsten joins us early. >> that's right. one of the big moguls who we have been watching is john malone. he arrived yesterday and immediately started a string of back-to-back meetings with other ceos here. sources tell me he's on the hunt for more cable assets. he is still interesting in buying time warner cable despite being rebuffed. sources tell me, he's looking at other assets like cox or smaller cable plays. skeptics warn he may be driving up the value of charter of which

he owns 27%. now, when it comes to deal talk, hulu is the hot asset in play here. disney's bob eiger refusing to comment when he arrived. he along with at&t. he shrugged and told me to ask hulu's owners. many of the owners say they don't care who gets it but that the longer this process drives out, the worse it is for everyone. >> anybody who has been talked about or solid owners, there is obviously a lot of uncertainty through this process for the management of hulu. will be good when that gets resolved. >> the other big asset is sports agency img. it is drawing interest with a $2 billion price tag from casey wasserman of wasserman media. >> with respect to the business. if there was an opportunity to do something that made sense for

our be i think we'd look at it. >> on the agenda today is a panel on the economy and another panel on cyber insecurity. we will bring you more on squawk on the street and continue to report as well. >> julie, thanks a lot. i think a lot of people try to watch the footage to identify everybody in it. especially not in a suit. >> the white water rafting trip. >> it's great for those photos. you can use those to mock these moguls for years. it's candy. it's candy. >> i'm not sure. i don't know how much allen an company's business has helped. it's interesting. they have to focus on. >> deals that get going again. what is good, it's always like a wonder boy there. remember it was youtube with chad hurley one year. then it was the twitter guys. i wonder who is kicking it around this 84, i wonner who we are not hearing about. >> plenty of people try to rekorea it this in various

spots. this is as iconic as those go. let's move on, henl fund manager bill ackman trying to raise a billion dollars in less than ten days in a single stock fun. he won't identify the target. >> probably not target. >> no, probably not target. he lost by 90% on that. reuters says he may struggle to meet the goal. up with of his clients has said it will take a pass on the new special investment vehicle. public employees retirement association of new mexico says it is unwilling to hand over so much cash for a long time. of course, you have to lock it up. the with thele here is permanent capital. that's holy grail for any of these hedge funds, ackman has been after it for a while. why you go into it with him on an unidentified target is not clear to me. we talked about fedex up 6% on speculation it might be that. >> there were a couple in the hopper. >> permanent xap capital to anyone, why?

you have to have faith and almost not need that money. >> isn't that business? isn't that for the top tier guys? they don't do it because you value their spread sheets, you know, you do it right, you should be getting money and at least the part of the business you have a high water mark. you have the ability. money has the ability to flee should you not be performing. may happen. may nochlt permanent billion is what they all want. if you don't ask, you will never know. >> every year i'm coming in, putting my feet up on the desk, making more money than 90 million people combined. >> let's spend some time with our guest host, j.p. morgan funds, reuters, we have been talking about during the break what was happening with bernanke yesterday. you feel like that's still the most important this inc. to figure out what he said what he didn't say? >> i think investors shouldn't overreact to this. it seems like the fed is so worried about the way the bond market reacted. look, you can't move an elephant

from a room quietly, you cannot move a trillion dollars worth of qe from this bond market without interest rates going up. that's what's going to happen. you know, i personally think the economy can take it. i don't think these low interest rates are helping the economy. i don't know. look back on this year and be very surprised bety fact that this was the year we took the most fiscal stimulus out of the economy and guess what, it was fine. >> yeah, i think the hair trigger effect you see the fed have that investors react. makes the fed even more cautious to start taking the money out. it puts us in a weird, i'd love to put this on the couch. i'd love to be a shrink and sit there and kind of go after. >> we're going to take a break. anyway, i once told the shrink over the dog, he said, get down off the couch. futures arising sharply after minutes an comments from bernanke. we will talk to a central bank

watcher when we return. .

. >> good thursday morning. welcome to "squawk box" on cnbc. i'm kelly evans sitting in for becky. andrew is off as well. he'll be back not before too long. we have a nice rally shaping up. the dow is looking to add 142 points, largely off the comments of ben bernanke after the close yesterday. as for the rest of the world, we

saw largely the same thing. the bank of japan leaving its monetary policy unchanged. the april projections and the central bank issued a slightly more upbeat language assessment of the economy. the end was higher after the decision, following what happened with bernanke as well the nikkei reversing losses, the shanghai composite rising above the key 2,000 level for a second straight session. the hang seng raising 2.5% as well. fed chairman ben bernanke in case you missed it saying the economy needs stimulus and monetary policy will remain accommodative trying to distinguish between a tapering an tightening. checking shares in europe right now, you can see the footsy adding .2. more than 1%. though we are well off session highs. we will have much more on the chairman's speech last night and the fed minutes coming up. take a look at brent crude. this will be an important one to

watch, closing in on a three month high, a drop in u.s. invent otherwise, west texas, meanwhile, hitting its highest levels since march of 2012. you can take a look at levels. 105. we charge 107 on that wti index overnight. so the impact that's going to have at the gas pump is going to be a hostage head wind, at least a hurdle, guys, for the economy. we are talking based on what some sources indicate on a gas price between 30 and 60 cents a gallon i should say. >> with the taper, if the dollar is weak, you will see that. that will not happy very much. >> china is slowing. i don't want oil prices still going higher. >> yeah. there does seem to be a slightly speculative nature. we had this when egypt has a change inst go. egypt produces 1% of the world's oil. >> the worry was as soon as you close the suez canal. >> i don't think it lasts. what i think is interesting, you look at last friday's payroll

report. you see these gasoline prices, then you look at members of the federally worried about deflation. >> yes, you look at inflation expectations and the general measures of inflation are doing. >> first of all -- >> it's over 1% a. across the board, you had a massive drop in commodity prices. the stronger dollar, by the way, is helping keeping import prices down. >> qe 1 and qe 2, we had richard fisher come in here. he didn't directly say oil prices are up. he i want mated some commodity prices were up. now we had 85 billion a month. why are you surprised? >> i don't think that's, i don't thing that's it. but the point is, the most important commodity is oil. if oil prices are up this much, that will feed through to overall headliner inflation. more important, wages for all american employees or private sector employees are up since

before the last recession. now, but it's inflation. >> wage growth is picking up, then we don't have a deflation problem, in which case. >> oil is up. >> no i'm not sure about that. i think you might see the strength in the economy, what we see out of the jobs. what we see out of some of the data might have taken some of the inventories went down a little faster than the world expected. with inventories low, with the dollar weak, you will see prices pop. i think the speculative money is all in stocks. >> over all production, boom, renaissance story, people are saying it has not yet flowed through. >> or they haven't needed to. >> you got a lot more efficiency, so they're going a lot longer on a tank of gas. >> we can talk about earnings from a kfc owner, a taco bell owner. aren't you supposed to lead? >> the buffet. >> kfc.

>> they're within bach walking distance of the studio. >> kfc and taco bell comboind. the duncan donuts baskin robbins combined. >> who wants to go in for morning coffee and see ice cream sitting there? i don't get it. it seems weird. you want to get your coffee, have a bagel. not oreo ice cream. would you? >> the mark, greg, get this, we're going to add another voice, but this guy, he's a little tiny fly on the wall a lot of 250i8. oh, we have a sound boit t. markets are focusing this morning on comments from fed chairman ben bernanke, he says the u.s. economy still needs help from the fed's accommodative monetary policy. >> the dual mandate is to pursue maximum employment and price stability. currently, we have an unemployment rate of 7.6%, which i think if anything overstates the health on price stability.

inflation is now about 1%, which below our 2% objective. both sides, both the employment side and the inflation side are saying that we need to be more accommodating. >> the chairman defended his decision for asset purchases. joining us now the break down, how the feds speak, they switch that around like a pie. you would be so much cooler. u.s. economics editor. >> how do you get cooler than it? >> we're working on it. two letter names are cool. the editor and cnbc contributor. david kelly is still here as well. i'm not going to introduce you guys every time j.p. morgan no selling reuters. i'm not going to do it every time. >> anyway, greg i mean, this is our job to microanalyze every nuance and body language the way

they walk if and all, but was that news to you yesterday that the tapering is not the same as raising rates? >> no, in fact, i'm puzzling over why the market is so excited over it. if you go back to may when the they tanked the market saying they were going to dial back to purchases. they said almost the same thing. in testimony, they said we need policy for a while. in the g & a, he guess on to say, worry going to make the pace of increasement, excuse me, we're going to make the pace at which we incress that slower by buying a little less each month. then the markets just collapsed. yesterday, he said more or less the same thing in a slightly differentzy sequence and the markets rallied. if there was any news in the last few weeks, bernanke emphasized this yesterday is that he is putting more and more emphasis on the fact that the short-term interest rate, which was not supposed to rait rise until the unemployment rate is 6

po in5% or lower. we can stay at zero much longer than that. maybe that's what the market is excited over. >> greg did, should we believe that some of these guy lost their nerve when they saw the slight backup and i still call it slight. i know it's a lot. on a relative basis, on an absolute basis, 3% is not a lot. did they lose their nerve? they saw a little break in the stockmarket. they saw bonds ten year yields go up. did that, are they affected be i that? can they actually change what they do based on fearing what the market's doing? >> they can. in fact, bernanke yesterday explicitly raised that possibility. he said if the run-up in rates is serious enough it begins to impair the outlook, they would have to push back, his words, against that. that said. >> how do you ever get out then? i would say. >> i'd say they're doing a great job. the market is back to new highs. the bond, the yoelds have backed

off. this is going exactly according to plan. >> much more important than that, though, they would only start to worry about this back up in rates if it gaen to affect the economy. last month's employment numbers were good. you haven't seen anything in the market purchase data suggests the rise in mother-in-law rates is about to kill off the housing recovery. i think they're basically wiping their brow saying this is actually a kind of a relief. they've taken the froth the excess out of the bond market. the economy seems to be doing okay. so, no, i do not think they're having regrets or second thoughts given what's happened in the markets. >> greg, this is kelly, i guess, also the question is how will they ever know where the rising rates are affecting the economy. this doesn't work with this. rates back up and they say, well, that's going to impair economic growth. how do they know? the data will be out for a year. >> no, i don't fully agree with that. some of the data will come out quickly. for example the market purchase

application, more important, they can look at how other markets are responding. if you have a stockmarket and the bond market going down at the same, that would certainly give them pause saying, gosh, what's going on here? it has given investors a chance to rethink the outlook. >> greg, that could be just a "fast money" move. >> that's the point if you judge the effectiveness on what happens on june 19th, if you lock at it two days later, you would have said they way overdid it. the stockmarket was over 5%. within a week or two, the smoked a cloerd, the market was back up again, i see what you are saying. those market reaction, even mortgage application, you might pause a week or two, say, darn, i should have taken the rates out that low. i still want to by a house. so get back in. so i see what you are saying. i don't think you can get a true economic judgment or true economic wreaked of the effect of higher rates for some time. makes it always, you are always driving blind here. >> of course. but, of course, they're going to give themes more than five days

before that make a judgment as to whether they've gone too far t. sell-off of the stock market, did it ever get up more than 5%? '1994 when the bond market was crushed, the market never, the stockmarket never gave up. i think 10% even. so there was never a point through the sell-off here that you could really see a lot of signs of economic outlook coming apart at the seems. in japan you were wired bit. >> greg, can you explain as well? i'm really struggling with this one. if the fed launched quantitative easing because it got down to zero, they said, we will keep easing, that's what they told everyone the purchases were intended to do. now, bernanke keeps coming out here and saying, we're going to stop these purchases, but you shouldn't confuse that with monetary policy. i don't understand. >> i know, it remind me of back a decade ago tom ridge the homeland security secretary would say, there is going to be another terrorist attack, everybody go about your business.

it had that kind of feel it to, you know, the economy is really bad, it needs accommodation. we will dial back on quantitative fed easing. i think the issue here is the fedp it both ways. they want to reasure the monetary policy is going to be very, very easy, but they have two ways of delivering easy monetary policy, they are henceforth going to emphasize the low interest rate for years to come and dial back on the bond purchases for reasons that bernanke has yet to make clear, they seem to have lost their faith in the desire of expanding their balance sheet as the main impetus. >> for the amount of communication that the fed tries to do, we would love some communication on this point greg, from the "economist" thank you very much, sir,ly have more on this throughout the show. >> you go back down. does she do this on "squawk on the street?" go down, a little further. what did you -- why are you --

greg, thank you. >> we will hear more from dan. >> are you the same person who introduces banks. >> erica -- >> the up an comers. air time is oxygen. >> no, i'm nervous i won't pick it up in tim. so it's liable, i better make sure i get to it. >> you to do it quickly zblpt there are moments of silence. >> embrace, less is more, embrace less silence. >> listen. >> embrace the silence. all right, up next, we do have a groder view of the marks an an outlook for earnings. jim osullivan and ed keenan will join us next. still to come, can steve ballmerwin over investors with microsoft? what will his plan entail and how will it affect users? we will ask former apple ceo john scully about ballmer's

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. >> let's look to the futures. the dow would put us above record territory or in record territory. not above. it would be above. >> well, not above the record a two-day high.

suffice to say it's going to be a strong open. the interpretation of mr. bernanke's comments after the bell yesterday in there speaking of which, chairman bernanke said the fed's accommodative policy is needed. it looks like this morning, the chief u.s. economist at high frequency economics, our guest host jeff keon at quantitative management associates. welcome. i guess off the bat, jim, are marks wrong here to read through this as dovish as what we heard in the last couple weeks? >> i think the markets are starting to get their arms over what's happening. he is not taking back the tapering talk. tapering is not tightening. we are a long way from tightening. ultimately, this is not a bad environment. >> is that true? if what they are doing is ending the purchasing program. you hit the zero bond rates, so

if they end them, that is a monetary policy change, is it not? >> well, not if you think in terms of the stock effect versus the flow effect of qe, which is a debate, of course, they're adding to the balance sheet, that's easy. when they stop, it's like cutting the funds rate, they stop tightening. now to the extent the markets were priced more qe than is going to happen, they have to doyle back. bernanke made the analogy, if markets are expecting 50 basis points, you get 25, the market will sell off. it's easing. >> my head is spinning. ed, what do you think about what we have seen here in the last 24 hours. >> i think the way to put it in perspective, we are almost back to where we were before the fed chatter started. >> may 22nd, the joint economic committee. >> so basically, the fed influences the market, by the way, influences the economy. in my view the economy is getting stronger. it's not completely obvious

because of the drag from fiscal policy, but as that drag starts to lessen, as we get to the end of this year into next year, i think you will see the underlying economy is much stronger, the fed policy, they telegraphed in my view they think the economy will be strong enough a year from now they can end the extraordinary qe policy, they will start doing it sometime in the next few months. >> what they are doing is communicating. they are saying conditions have improved. we are dialing back on qe. i don't think markets are wrong to take that as a tighter stance than what we have seen in the past. >> i guess my point is is the chatter move directions by a small amount. that's what markets do. at the end of the day, we are back to where we were before this chatter started. it comes back to what to the fundamental also, what are our earnings going to be nextier. i think that's the change, is it basically the chairman managed to put the jeanie back in the bottle he unleashed. now we are back focusing on the fundamental also, with i is quite good. >> i think the fed wasn't very

worried about the overreaching bond market. i think this took some of the air out of it. if you had a strong hand, you met mark paris, he was a retail investor that went for the exits. if you were a strong hand and sat through the marks since may, since the initial taper chatter you are in fairly good shape. i think the reality is there is a lot of liquidity slashing around the markets. you got to do something with it. >> we all have known for a long time now eventually bond yields would go back up. >> it didn't necessarily happen in 30 days. >> if you look at your june statement. are you in a bond fund. >> what's interesting is looking at the outpost in the last few weeks, we lost about 66 billion in bond funds. june was the worst month for bond flows ever. money i think a lot of it is going to cash right now. it eventually will move back into the equity market. >> we get record flows into bond

funds for many years. >> it's a remarkable this inc.. >> bernanke yesterday in his speech emphasized financial stability. that was over and over, he was talking about different periods of the federal reserve's history, they were, they did lull investors to sleep during the great moderation. so to dan's point, if they were worried about corporate bond markets, for example, being frumpy, do you think that had something about the decision to do the taper now. you could certainly point parts of the economy that seem weak enough or the chairman says it needs to be put in place. >> they are put in the economic outlook. they clearly feel the bond market is in a reasonable place. if you look back at the beginning of may the feds futures contract was 0.4%. fed officials, themself, were showing a forecast. the bond market was ahead of the fed. now they're pretty much 'n sync again. right now the fed funds futures

contract for december, 2015 is right around 1%. it's in line with the fed. the adjustment is over. unless the market runs ahead of the fed, i think the big sell-off is over for now. >> think about how violently the bond market would have reacted if the fed didn't, if the fed all of a sudden turned, flipped a switch, said, okay. we're pulling back in. i mean. >> recognize the real interest rates instead of 1.5 percentage points below levels. to me, it's like a big bear on top of the pine tree. it falls a few branches. the bond market is in the wrong place. >> for what? >> for investors who are going to miss out on stockmarket gains and get hurt, but particularly in the long duration, bonds leverage products. >> we will be at record highs on the dow today. i can understand why investors are leery of getting into the market now. >> the equity market seems reasonably priced. this is not a great earnings season. i think it will grow as long as this expansion continues.

it continues for a long time. the silver lining is it can be a really long expansion. i think the equity mark looks okay. i think people need to adjust themselves 2.7% is not where this will stop. >> how do you want to get the bear out of the tree? do you want him to come down branch by branch? that's bernanke's formula right now. >> it's for a purpose. >> don't sunday the bear so high up into the tree. >> that's an important point instability serves a purpose. >> it makes market distance more cautious. so a period where you just, everything goes well for a long period of time, you get complacentcy and excessive rick taking. now because you have had a risk in the bond mark, it makes investors more cautious. creates a min ski point. in the long run, you want to have enough stability that people are fearful of taking risks. >> ed, stay with us. thanks very much. jim, appreciate your time this morning. coming up, the buzz from the beltway from immigration to obamacare. chris van holland will help us

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. >> all right, up next. congressman chris van lol holland on immigration reform. plus it's throwback thursday. we are having a throwback of our own. those are the upgrades and the downgrade, we're going to bring you out. >> that guy wrote, he composed the song. that's right. >> oh my good, look at your

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. >> welcome back to ""squawk box." "economists expect 335,000 new claims last week down from 334,000 the week bomplt costco reports a 6% increase tr same sales per store.

the results were helped by higher fuel prices. another sign of the housing market recovery this morning, a little over 57,000 homes entered the foreclosure process in june according to realty track. that would be the lowest monthly total in get this seven.5 years. programs not a surprise given what has been continuing in housing. >> the president has been pushing house republicans on immigration, while house speaker john boehner met with fellow republicans yesterday how to discuss the senate bill joining us chris van holland, a ranking member of the budget committee. congressman, you can have the floor. just go easy. go easy on us. >> hey, i'm mellow this morning. >> you are always -- >> i haven't had my coffee yet. >> you are a great combhun indicator of your party's ideas always and but there is a journal piece today congressman

that and i'm trying to type only wiggle room in it the editorial from tom cotton, the republican congressman from arkansas and you said what you think it's 50-50 that immigration passes. do you really think it's 50-50? it says it's the house bill this guy says. >> clearly, if it's the house bill. there is nothing. there is no house bill. i should be clear. the republicans don't have a plan in the house. >> but they're saying they won't do the senate plan because of enforce him, they say it's just not there. it doesn't solve illegal immigration. >> there was another editorial in the "wall street journal" yesterday. i thought they made a good case, a compelling case for why house republicans should get on board with comprehensive immigration. >> is that the first time you cited the journal as being right on something? >> not the very first. i will agree, it's not every

day. look, it's the case for comprehensive immigration reform has been made already by many people. i don't need to make it again today. now it's a question of the politics. we could in the house pass the bipartisan plan that came out today if the speaker were willing to put it up for vote. there is a majority to get that done. unfortunately, he has taken the position at least so far that he's only going to take up immigration reform in the house. if it gets not a majority of the full house the majority of the republicans in the house. at political decision not a policy decision and that will make it more difficult. so i have taken the odds of immigration reform from what i thought was something like 70%. now i would say it's 50-50. but it will depend on people focusing on the policies former problem urged people to do.

>> now. >> the president bush if not even hw, i don't think, yeah. you know, i look at all the politics swirling around this issue. i wonder and not to say which side is more principaled or which side is right, let's say you were a republican and you were to stand on principle. should you vote against what you believe is real just to help your demos with hispanics on this? i've seen people saying the republican party might as well write off the next, with the way the country's demographics are moving, write off the last five elections if they don't support this bill as is. should that be enough to get republicans just to make sure they can get votes from hispanics in the future, should they vote against their principle? >> no, i think people should look at the issue and make a principal decision. what i fear is actually that the politics in the house are working the other way, in other words, there are a fair number, a good number of house

republican members that think house immigration reform is a good idea but when they look at not the national politics of this issue but the politics in their congressional districts. they are more worried about being attacked by someone on the tea party right in their congressional district. so my concern is that people whose independent policy judgment says, hey, we really do ned to fix this problem in a comprehensive way, the politics in their districts are driving them to fear voting for it. >> but hasn't being attacked by the tea party right, that's the excuse for everything congress hasn't done for the past five years? have the democrats in the house gotten together and said we have to figure out a way around-? we have to strong arm this somehow. we ned to get something done. we are missing an historic opportunity in some cases and the legislature just hasn't caught up with the national

politics. how do you -- what's the plan? you can't keep doing this on every big issue that comes up. that's certainly what it seems like from outside the beltway is this. >> maybe i misunderstand. right now, the democrats and republicans in the senate were able get together for a bipartisan bill. so the democrats in the house would be very happy to vote on that bipartisan bill right now. if that doesn't happen, then we should look to something close to that. now, there is an ongoing and active effort in the house, the skwauld so-called group of seven in the house. it had been four democrats, four republicans. now it's three republicans and three democrats. they're still working very hard and i think that it's possible they could come um up with a proposal that would get what i hope would be broader support on the republican side. >> chris, real quick on health care, you know, you do see some people on the other side circling like sharks i think in the water because there is a

little bit of blood maybe in the water. when you wake up, maybe you wake up at 3:00 a.m. i know i do. let's say you do wake up. do you ever wonder, get worried, wow, this really is not going the way we had hoped, then there is going to be more problems? >> well, in all my conversations, i do wake up early sometimes. fortunately, i go back to sleep. fortunately, it's not too many days i worry about that issue. >> they are circling. they're acting like, this is just the first domino. >> yeah. as you know, this particular piece of the health care bill was always one of the more complicated pieces and always one that was subject to more question about its ultimate utility. and so i understand why if administration decided because of the complicated nature of this provision to delay it. they are, as you know, moving full steam ahead with the establishment of the health care

marketplaces. >> they got to write some more rules, though. you saw that piece. none of the rules are written. it's behind on everything. >> well, i would disagree. as you know, the states where the states are taking on the responsible, like my state of maryland, they're moving forward. the other states, the federal government, which has now taken on the responsibility, is also moving forward pretty quickly. so look, this is as you know, this is a major undertaking. they're always going to be some complications. it would be better if our republican colleagues would joan us in trying to fix and address problems as they arise rather than trying to sink the entire enterprise, but we are where we are. and we're going to move ahead and try and do it as best we can. >> were you reasonable today. it's like decaf. >> next time i'll make up for it. >> no, no, no. spitzer yesterday, kinder,

gentkinder,p gentler. >> i don't know what's in the water in new york on the politics. you will have to explain that to me. >> there is something, isn't there? >> that's right. all right. go physical. >> you want some? >> wane aye, thanks. >> coming up next, we are expecting a microsoft reorganization later today. we'll ask former apple ceo and tech pioneer john sculley about the future of the company when we return. r clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company." hooking up the country whelping business run ♪ ♪ trains! they haul everything, safely and on time. ♪ tracks! they connect the factories built along the lines.

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. >> we are looking at strong open, dow jones 167 to the upside. we moved 20 foints points since the last time we checkedch in the s&p looking to open higher by 20 points this morning, coming off the back of those dovish if you would comments, ben bernanke after his speech in cambridge is giving global markets a lift. >> it's gotten better as the show has been progressing, so somebody on this show said something. so it could be one out of 20 people that said something. >> my money is with zblit your money is? >> always. >> microsoft's steve ballmer

widely expected to launch a big restructuring plan at microsoft, of course. let's talk about what could be in the future with the company with john sculley, co-founder of misfit wearables and former ceo many years ago, apple computer, good morning, john. you know, it's funny, i'm hearing a lot more about enterprise when it comes to microsoft and less about pcs. a few months ago, a well known activist fund value act took a significant position. jeff ubben runs that fund, made a presentation about enterprise and the plumbing. do you think that's where the focus will be today as well? >> i think enterprise is a big part of the story. i think this is steve ballmer's big moment sense he took over ten years ago. because he finally has all the pieces in place strategically to begin a significant transformation of microsoft from a pc-serve licensing business to what he describes as device is

and enterprise service, which means enterprise services are about the cloud. microsoft has a zipthive strategy with that. if you look at their performance recently in the last 12 months, while the pc industry has been pretty much cratering in terms of sales, steve ballmer has been able increase microsoft by $55 billion. so there is a lot of anticipation big things are about to happen at microsoft. >> a lot has happened to be fair in the last few months. meanwhile, you mentioned pcs. we have never seen anything quite like this, have we, john? >> i haven't seen it in the 30 years i have been in the high-tech industry. what is happening is we believe tablets are making a major enroad into the pc market. the tablets are portable. they are performing a lot of the things that people want to do in a mobile world and that's probably going to continue. so i think that the strategy microsoft has is to say, how do

we knit these pieces together? they had windows 8, which is an important building block for them. they have their office 365, which means their office applications will be on everybody's operating system, not just their own. they have their on premise server business, which is shore, which is doing very, very well. they have their clouds, they're generating po billion of free cash flow. a lot of that money can be building out their data centers to compete with companies like amazon. >> john, you mentioned ballmer. we talk about him like he's the new ceo. you said this is his chance to transform the company. he had ten years. he presided over consumer debacle after debacle. what itself the confidence in him? i know the confidence is grit. thatry outdoing ebay, apple in the last six months, why the confidence in ballmer now? is he better suited towards

consumer enterprise than a visionary? >> i think that is probably accurate. the last five years in the high-tech industry, it's been largely driven by the innovation coming from the consumer focusing companies, apple, amazon, facebook, google. that's not microsoft's strong suit. they have never been particularly good at consumer products. on the other hand, now we are moving to an era where the cloud services are really being taken very seriously by the major corporations around the world. microsoft has 1.3 billion windows device users out there. they can start to integrate that back into enterprise cloud services in a big way and it looks like they're doing that with some questions so far. that's a major, major advantage for microsoft to play on a turf where they have more confidence in the enterprise than the consumer space. >> to dan's point, ballmer has been in there ten years. we should be talking a bit about succession. you never hear about that.

he's had a succession of cfos who worked for him, john. some say he's a pine tree, nothing can grow under him. what about that side of the story? >> well, there is a story there. i'm not really, you know, one who has the inside story on that. what we do know is that ballmer is a charging personality. he loves microsoft. i think he wants to lead microsoft. when he does, with success in place that can be a foundation to go forward. i don't think we know who his successor might be. he is pretty quiet about. that he has said he wants to stay around until his youngest child is in college which is 2017. so i think we will see steve ballmer for a few more years leading microsoft. >> they have a chairman over there. john sculley, as always, appreciate your time, thank you. >> thank you. >> you are leaving? >> i'm off. time flies. >> you have to go, through, you

are not -- your debut is phenomenal. >> debut? >> not debut. on this show. coming in for rebecca. >> thank you for having many e. >> we are going all over the place. >> we need a kelly. what about david kelly? >> what about kate kelly? >> she is coming in. >> you will still have a kelly. >> david kelly is leaving. we will replace him with one kelly, getting ready for squawk on the street a. horrible drive then. anyway, right. in the next hour, more on the big announcement from microsoft, the ceo of second market, jobless claims data at 8:30 along with import prices, wreak. .

. >>. >> you can put a brain on a cactus. >> beating a yoke to death, come on? >> you milk that brain thing, you still milk it to this day. people think you were named that because they think i'm just the good looking dumb sidekick. >> you were called the brain. >> i'm the good one. >> for the eye candy. >> the over 70 set. >> does that matter to me? i don't care what genius you are, much less gender. if you find me attractive. i say thank you. i do. i go below genius. i go below that. i require a spine and i'd say, there are invert bring as.

you are here for another hour? in there i am. >> we are really milking this. you want to do stocks to watch this morning? >> let's do it. >> i don't know. i got to look. i got it here. amt. wee should do k-tell. right? we should do iomega. >> we should do taser, old aol. oh, that i have a real one. >> no, i see it, greg. you just did an interview on microsoft. you want me to mention it again? that's how we do things here. microsoft expected to do a major restructuring today. >> if we could focus on the company run devices. young brands says 2 cents above estimates, revenues, slightly shy of consensus. the company sales in china fell

20%. i don't think you saw this. i'll show it to you. luxury watch imports. it goes down like that. i think it's down like 20%. >> can i show one interesting fact? we did a video on politicians photographed with expensive watches on social media and being destroyed. all the politicians stopped wearing expensive watches. it is, the buying amongst the top echelon of the communist party is not insignificant. they spend an enormous amount of money, us a territory, come on, guys. that's had an impact on luxury goods. >> they stopped wearing watches. >> even the communist elitists spend the money. in this country, the elitists that are so fair minded are still the ones spending. >> only those, the unspare minded ones are not spending the

mon money. >> walgreens is increasing its dividend. >> we have to worry about politics. >> we spent more time. i guess we do. we agree to disagree. >> a oly-group the government's higher learning commission reaffirmed the accreditation. costco increased same store sales for june limited brands reported june komps of 0% vs. 2% estimate. that was bad. >> let's get to upgrades and downgrades. advanced, micro, a bank of america, merrill lynch. the target went to 250. the firm believes the embedded opportunity in game consols could drive momentum in the therk. target increased to $5, 3, you see it right there. they mentioned cautiously at

ups, though, we're still a buy. the analyst cautions quarterly results and guidance are at risk. we had a big downgrade, given a weak macro, currency hit two points. channel checks suggest hardware, weakness, let's stop there. they used to out the analysts. >> it's cautiously. give us a pick. the analyst goes, give us one? he goes, no, maybe i'll talk about ibm. he didn't want to bring it up. he didn't want to bring up ibm. we have a global rally this morning. the futures at this hour call for much higher. we'll be right back i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550

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oh yeah! . >> the third hour of ""squawk box"" starts right now.

♪ . >> why has everyone else age but not us? do you have a picture in the attic that's all scarred? no. welcome. >> i don't have an attic. >> lionel richie. we heard about loving each other. it's uncomfortable for me. >> is it really? >> why? >> because there are unresolved feelings. >> we just can't act on our love. anyway, welcome back to ""squawk box." ". >> thank you, let me know. >> the banana guys are selling some. if you were here, first on business worldwide, i'm joe kerrthen. we lost david kelly, kelly evans. is there another kelly? bring in another kelly.

>> i'm here. >> you are not here because of your name? your brain. >> i would love to believe. thank you. it has nothing to do. is that your married name or real name? >> my maiden name. we had this discussion. >> you are run with of those. >> listen, your spouse gave up a great name. >> i know she dead. kerr interest then is not that bad. >> if you spell it right. >> bethy quick is off today. our guest host, did i mention dan colorusso from reuters. you were at the post for a while. it was a sexy place. >> it was a greatest job. >> you didn't come up with the stuff in the front. >> i did. >> id the it have to do with weiner? >> no, ken lay. >> that's a good one. >> you guys suggest. you can do, yeah. you can combine a ken lay. ed keon from quantitative management associates.

you used to have a lot of credibility before you came on this show. >> prudential for a long time. we're going to get to these guys. >> good. i understand first, you have our headlines. >> true. >> so no more delay. all right. let start with the markets. u.s. equities futures higher after chairman bernanke yesterday after the markets closed. more on the feds in a moment. you will see we will have quite a nice opening. stocks in hong kong and china sharply higher. japan's nikkei up one-third of a percent. not much there for an average typically these days seems to move in percentage increments. take a look all across the board. off the highs i believe, although, you can see germany's dax up nicely. in washington they are expecting a change from last year's $80 billion deficit a. big reason,

fannie and freddie profits. not their dividends anymore. it's all the sweep of the profits. remember they took in 66 billion at the end of june from fannie and freddie and that has helped in terms of pushing off the debt ceiling and those deficit numbers as well. in corporate news, let's move to microsoft, which is planning to announce a reorganization today. it is expected to be dramatic. that's at least what it says here t. overall will include eliminating operating units for the company's management structure. earlier this morning, we spoke to former apple ceo joe sculley about the challenges that microsoft faces. >> i think the strategy microsoft has to say how do we knit these pieces together? they had windows 8, which is an important building block for them. they have their office 365, which means their office applications are going to be on everybody's operating system, not just their own. they have their on premise server business, with i is called ashore.

it's doing very well. they have their cloud business. they are generating about $30 billion in free cash flow. a lot of money can be invested at building out cloud levels with companies like amazon to compete. >> a nice big cash flow yield. sculley says integrating units would be crucial for the company's future. fed chairman ben bernanke, speaking at the national bureau of the economic research conference late yesterday, he reiterated the ned for monetary aecom takes for the foreseeable future. he cast some doubt about the strength of the labor market. >> the dual mandate is to pursue maximum employment and price stability. currently, we have an unemployment rate of 7.6%, which i think if anything overstates the health of our labor markets on price stability. inflation is now about 1%, which is below our 2% objective. so both sides of our mandate,

both the employment side and the inflation side are saying that we need to be more accommodating. >> and this wasn't planned. but joining us now to discuss that policy and the economy, bob barberra. i have known longer than you, co-director at the johns hopkins center for economics. former chief economist at itg. we were bought by sheerson, so you must have been there for a while, right? your resume is like 6 pages long, isn't it? >> well, you were talking about this being throwback day. i guess i get thrown as far back as anything anybody on the screen. >> you do. i used to listen to you when you were in the private sector. are you an cam demmic now? do have you any value whatsoever? in there i still am very much involved with wall street and financial first, but i'm enjoying. i have been teaching at hopkins for about ten years.

now i'm teaching two classes instead of one. i'm actually having some fun with writing papers and things. >> the last time we spoke is a long time, bob. i remember you were right. you had made some predictions about, i can't remember what it was. it had to be at least five or six years ago. but where are you now? you just heard us talking about bernanke and tapering. to me, i see those guys. they are starting to try to do the right thing. they get so scared with the slightest bit t. crack addicts and the stock and bond marks that want the gimme, gimme, gimme. they throw a little hiscy fit. they're ready to back down. they're weak. >> first, i think the speech that bernanke gave on the 100 year history of the fed, i think if you look at that speech, it actually has a fair amount of justification for the qes. if you read the section on the great depression. you had the great depression. the fed, obviously, therefore failed. he points out that a lot of

people believe it's because they simply focused on the short term interest rates and they believed or some believe that a big unwind or destruction, you know, liquidation, liquidation was a good idea. implicitly was saying, you know, we didn't think that was right and that's why we had qe 1, 2, 3. and say what you will about this recovery, it's historical averages post-war. it bears no resell balance to the great depression. in that sense, that's his validation. we took these steps. we look a lot better than europe. we feel good about what we have done so far. your point, i think, is well taken t. game now is how do you unwind and get to the promise land of a reasonably good economy and a more normal level sfwor rates? >> are you nervous about the ability to do that? or not?

>> i think the game is, you know, how do you boil a frog? if we're saying that in 2016, nirvana is the unemployment rate is 5.5, inflation is 2. the economy is growing at 2.5%. where is the ten year? 4? 4.5? so how do you fine yourself in a ten year at 4.5 without a crisis. i guess you have to do it in modest steps. i think we took the first one. 1.5 became 2.5. the fact that stocks are still up. sentiment is strong, suggests you boil the frog a bit successfully. >> so far so good then? >> yes. >> they have a dual mandate. are we doing it right here? i think we give the fed cover. >> joe. in fairness, we ran a natural experiment. right. you had them saying we got a single mandate.

we focused on inflation. we have one needle in our compass. bernanke said says, no, no. >> look at the structural problems. >> we had other issues. he took aggressive steps on a number of occasions and it's four years later, our unemployment rate has been falk steadily. there's has been going back up. >> it's an sispation rate. you are not feeling good about the employment picture in this country, are you? >> well, good, it's a relative term as henny youngman would say, compared to whom? if you look at the employment data that came out immediately after sequester, we had 88,000 jobs, right? that was the perfect sequester hit, the economy is going down again, the bond rallies to 1.5, each of the next three were much better than expected. the average of the last three is about 200,000. so relative to that ao that

armageddon. >> if we don't hit those numbers, if there are structural problems, obama -- whatever, europe, china, if we don't hit those numbers, these guys are licensed to stay where they are forever and greenspan came on an basically said there are going to be consequences in the markets for doing 85 million a month. where the market thinks the slightest thing goes wrong, there can be no consequences. >> you got to smile t. man who created the 20-year bubble. >> this is not nice. >> come on. >> i would feel better if i were bernanke and greenspan. >> he kept rates low. god, he didn't put a trillion dollars if fairness, this was

the story that i told at least for ten years. he said the market knows best. we cannot lean against the market. when it was going up. >> when it was going down, it's like oh my god. he come to the rescue. that was an asymmetric policy that played a significant role in building up the bubble and so i certainly don't think he has a lot of credibility about how to conduct monetary policy. >> wow, you love the bernanke -- who do you want now that he's been unceremonyiously dismissed? who do you apt as his successor? >> that was quite a little gap. i thought, i've never before heard "the king is dead! the king is dead!" we'll get back to you. >> larry, is larry somers really going to be? i like larry, he comes on the show. we will have him guest host every other week when he is fed chairman. >> that will be great. they want transparency.

>> larry is obviously brilliant. >> very surprised. >> well, that's right. is it the woman or the guy who says women can't do it. >> we always, good, i use the same thing. you know that. these jokes have been,er that 20-years-old. >> you got a million of them. >> none of them are very good. >> when do you think you will be yelling, bob, seriously? >> that's everybody's guess, certainly, she's got all the credentials. the one thing, historically, it hasn't been the vice chair who gets the job, but i don't see that that's really a binding constraint. she's certainly done an incredible job. >> have we are not called you in a while? were you, you didn't want to come on? ? >> i had a facelift and hair implants, but it's all worked out now. >> i want to do that. you know, i don't want your doctor's name. anyway. >> wow! >> okay for you. >> thank you.

anyway, bob, it's good to see you. it won't be so long until next time. >> okay. >> it won't be a faber reunion to bring him back. >> we keep doing these little reunions. he looks goed. >> he was a god. when he was at hutton, those were in the days of gods at these place, remember? you could be, good, if you were bob ferrell and you. >> i know. >> we didn't have this minute by minute news cycle, right? you could have us go up in the "wall street journal" overnight and break on page a-1 or perhaps be the scoop. >> the guards. >> it's a shadow. i can make those guys who play gods. >> remember rounds. >> the guards. yeah. >> okay. enough of that looking back. we love right now. not very happy. >> that's a fast trade computer that's the good. >> it's the good that saves a trillionth of a second. it is a new front ear. takes you back advertising.

cc is lifting a ban on ads by hedge funds, private equity and venture capital firms. the second market on how companies will attract new investors as well given this rule change. clients are always learning more . barry sill better.

. >> welcome black to ""squawk box." "hedge funds and other companies, allowing those groups to reach new investors through internet an tv ads. joining us to august about this is barry silbert him welcome. how are you today? >> i'm fantastic. >> talk to me about the significance of this band being lifted yesterday. as you noted in a recent conversation with me, it's read as something for hedge fund, it will benefit them, actually, there is a much wider array of startups or future facebox in the mix here? >> 20ion how the narrative shifted from a way to raising capital and hedge funds the reality is a trillion dollars is raised by privatentties. hedge funds and private equities 25% of that. so this will open up any marketing chan toll a privatenty.

i think it's transformitive. i think it will change the way money is raised in this country the next five years. >> this jobs act has been slow to unfold. you think this general advertising ban being lifted could be the most significant step so far. at this conference where you and i met recently, people seem to feel this was going to revolutionize the way that non-public companies do business the way they attract investor, folks like yourself providing tools for the companies to be enjoaned with these investors. >> the way you raise money right now the through the closed new yorker of who you know. this band being lifted you can say, are you raising money? they can't say, rules prevent me from answering that question. you will be able use social media, to talk about historical performance. essentially, you can amplify the fact that you are raising money.

>> how do we feel about that? is that a good thing. we are torn through things like drug ads. noik like no one should touch this capital venture fund or is it like late night ads to buy gold futures or heating oil things? it's a dangerous thing. >> it's a dangerous question. no one knows how they will do it. being able to do it, they will say, we are raising money. they will be able to have to hasn't him that investor interest, which is what second bargain is looking to handle. you promote, you amplify the fact that you are raising money. we will raise the rest. >> what's the rest? especially what in terms of vetting them to make sure this is a reasonable investment that somebody might make with risks, nonetheless at least not fraud. >> the sec want as to make the

sure they're not badding aors or fraud, more importantly, they want to make sure they are fist sophisticated. if you solicit. have you as to make sure they have a million in assets. >> it's the same thing. >> does it go back to if they have the key shoes they are eligible? >> right now, it's a million bucks outside your primary residence or 200,000 in income for two years at least. should that threshold be raised under examination and as barry noted the verification is on the issuer to do. the issuer has to gather data about whether these people are eligible and how to do that and whether it will work is a part of the sec yesterday. >> there is actually a lot of folks, kaufman foundation in particular, advocating for a test so this opens it up to

broader than the rich, the wealthy. you can invest in these private opportunities. which again like i said, a trillion dollars is done each year. >> aren't a lot of private opportunities funneled through etfs? >> i own a gugenheim etf. there are mlps, all kind of investments. whole business is product advertised. hasn't it started already? >> i think it has started. they have control over their investments. i think that is true. >> a physical final question. you have interesting bitcoin. what have you done so far and what's the future of it? >> i think it las the value. the second market has recently opened up an education center on our site to open it up as an asset class to the masses. >> interesting. thanks so much for being here.

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. >> smithfield foods ceo larry pope defending the sale of this company during a senate agriculture hearing yesterday. he says selling it to a chinese firm would not hurt the safety of the food supply. he said the growth of the brands would include or increase exports of american pork to china and boost job creation in

america and i've tried to stir this up at every weigh that i could implying all the dead pigs will be served up. with you it is an entry you can get into the different meats. we can't boy their stuff over there. >> it's not a two-way street. >> not quick pro quo series. .

. >> welcome back to "squawk box." enflow prices down .2. this is definitely a little more than many were looking for. we'll have to think about a lot of areas areas including energy to see why. year over year, month over, it was up .2. it was expected. let's look at jobless claims. a big jump of 16,000 from a revised 344 up to 360,000. continuing claims also moved higher from 2.98 million.

interest rates moderated rather significantly from a 268, 267 area yesterday. with all the issues to taper. not to taper. we've broken about 10 basis points because my friend artie said, there is none to draw on the wall. they never want to take sim lus away. back to you. >> i know, wusses. >> oh my god, people are upset we do this. let's rethink it. >> let's go to chief economist at fao economics. you snow it sounds like fao swartz. >> it depends on where you spend most of your time, joe.

>> did you see anything different that came out yesterday? >> bernanke and the minutes? >> actually, no. i think there has been a teapot about the fed. it's like the market people. they want them to take them where it will go every bit of the time. >> i know. we had to figure it out. >> this idea of forward guidance, do you feel better i tell i i'm going to leave you? what is forward guidance? forward guidance is a conditional forecast. it could be wrong. if they do it with revisionism. you see the stuff they discuss. i'm not always sure that's an honest record of what they said at the time. teams what you see in the minutes is so preciously related to the problems that have occurred since the minutes came out. which is a case of the last minutes, they talk object about

all this concern about miscommunication, yet they miscommunicate. >> we will trade a new high. the bonds market or the yields have gone up sharply to start to move back to normal levels. why would you think, wow, they're geniuses? >> i don't know, this is what they have to do. >> it's working. there was a hiccup. now, here we are. >> once you are on the road to cut tapering down. you will cut it down some more. at some point, there will be no qe. then you will start raising rates. why did the fed think there wouldn't be a big jolt? there was a suspicion they had raised rates. he said we snugged up a bit. he was trying to raise it up.

he used the past tense. he didn't use a present progressive tense. >> doesn't it owe it that transparenc transparency? >> anything when they give a press conference, is it over interpreted? >> isn't that the markets? isn't that the game? >> an inherent part of the market. it seems to me we are transitioning to a more normal environment, higher interest rates. i would suggest you have to pay more. it probably helps with the mar jen of availability of credit. which has been the bigger thing. >> sure. >> you know that. that's exactly i think what's going on. they focus on the demand.

it caused banks to raise credit. they are forcing everybody to have a huge credit score in order to be able get at these things. the rates are low. most of us can't get them. if you have a lot of job, you can get really low interest rates. if you are a typically democrat kind of person. if you are struggling in this world. if your house is under water and your mortgage, there is nothing there for you. we have a democratic president. i find perplexing. >> you got to challenge. he's got great credit. >>

>>. >> is it or isn't it? >> that's really, right near britain tunnel. you know. hey, santelli. >> do you taser anyone that comes up to the door? >> nine months, it's easier than a library card. nine months. hey, santelli. what if we ended qe today? what do you think? where would we be three weeks from now? you think the markets would be okay or not? >> well, i think the markets will be closer to where they ought to be and whether we're okay or not would depend on how many unintended consequences the mlc programs have caused up to this poempbt.

mo, larry, curly. >> yeah. >> so we're already by doing it. >> slowly i taper, yeah, exactly. >> getting into as far as we are already. we may have built up enough locations, it could have been a problem. >> hey, joe, listen, i kweven went to a big box store. i don't smoke any more. we have a bond fight in the yard. they carded me. this store says you have to be 18 or older to buy a lighter, which in and of itself, you have to think about when they sell the morning after pill, no age required. when i go buy things for my pool to keep the water clear. i have to fill out a one-page form. you don't need any of this to vote, of course, it seems to me that things are getting stranger

by the minute. >> soon you have to show your driver's license to fill out a form. >> i had to find claratind. >> really? >> how do i do it? >> in your basement. >> now that i know. . >> don't you have to be old enough to have an allergy? >> we will go now. >> last thoughts from you. >> i think you can expect this craziness to continue and communication problems to exist. the fed has dualing mandates. therefore, it doesn't have a clear objective and it can't possibly express itself clearly. that's where we are. >> it seems to me if we don't get to those numbers, they can go forever.

>> it's always something. >> thanks to rick santelli and what do we have coming up, you ask in the economic outlook. yes, you ask. i will tell you, yes. >> what dw you do have coming up? >> executives of top u.s. companies, our global council weighs in on the growth of china and the help of the american business and then you ask, we're going to talk to jim cramer as squawk's throwback thursday continues. .

. >> welcome back to "squawk box" cnbc global cfo kounl. we finished that, captured the view of the some of the nation's top cfos on the economy and the markets. the latest results are in. overall, the cfo council sees the economy improving. they are less upbeat of china and europe, things look pretty good to the council along with positive sales momentum. in the second half of 2013, 76% report increasing revenue is

likely while more than half say margins are on the rise. the cfos over the last three surveys are res luchlt an overwhelming 84% recommend the fed maintain the current stimulus up through the next meeting of the fomc. who doesn't like this, right? based on recent comments by bernanke it's going to happen. a majority of the cfo kounl council expects tapering to take hold in the first quarter and next 84, they remain split as to whether it will continue past the 4th quarter of 2014. which means they start, and stop. for more results, check out cfo council.cnbc.com. yet another lawsuit over the failure of bear stearns. this time, liquidators assume all three of the rating agencies were putting unreliable aaa ratings on mortgage securities and helped push those funds

under. a little later the firm, itself. this is hardly the first time these rating firms have been in the president islight. is the justice department sued in february. still, it was notable to me, it brings one chapter of the mortgage saga full circle. questionable ratings helped kill bear stearns. the fund ratings managers were killed and acquitted. now the ratings actions that provided the research that led to the investments, et cetera, et cetera, are under fire. it's like the whole things are coming around again, what's interesting, they argue it's their constitutional right under their first amendment to express an opinion. does that make sense to you? >> it makes sense, if they thought aig was going to pay up, they weren't aaa, were they? you had to know they were going to pay up? >> there is nothing proeblt protecting us. not that we need an opinion. to others, they say their opinion is good.

i think they were lulled into it. >> the fee structure. if you don't let the issuers pay them, you get into the independent research nobody pays them. >> the catch '02 '02. the issuers that need the research. therefore, the best researchers have a vested interest in providing aaa ratings when they're soft. >> it's the point about complacency. we all were low to sleep when the housing mark was bombing. so having some shakeups like the one in the last month or so, is a healthy thing. it reminds people things don't go up. occasionally, they doan go down. you need to take intelligence risks. >> you should ask people, during the muni bond insurance days when anything would be aaa, ami or amback. now you got to know the financial solvency of nba and amback, not the individual municipal. you should have somebody that knows how to go in and look at the underlying.

>> they're always going to be backward looking. never going to give you any sense as to what's going to happen in the future with any corporation. >> the sec was more coroner than a cop? you know, the drive up. >> the tombstone agency. >> the ratings agency struck many as the same. look how long it took to twroun u downgrade the united states. >> you know who saw the spire financial meltdown coming and saw prime coming yesterday? >> eliot spitzer. >> get out of her? >> you know who is up 9 percentage points in the race for the controller? >> eliot spitzer. >> did you watch him yesterday? >> i watched a bit. i got hypnotized. he's still smart. >> i met his challenger at the farmer's market where the socialists hang out. >> scott strippinger? >> yeah, he came up to me, my mother-in-law the baby. >> he might do it. i didn't think there was anyway. >> did something about that

strike you as borderline delusional? >> i think in five years he's no longer delusional. >> i don't think he is delusional any more. i started thinking about it. >> kwhats the reason? >> i asked him if he had a screw loose, if he was a nars cyst or a sociopath. based on -- based on -- >> here's what i was -- if i would have been worried that being as high profile, you need really dumb hookers that aren't going to recognize you, or you will get caught. that's what gets me. >> at that higher level, you don't get a chance. >> that's the thing. >> the cnn show. >> if you see the tv show. >> dam. >> i can just influence who gets elected.

then who governs. >> spitzer, look, i thought as attorney general, a lot of things he did was really good. he was the only regulator on wall street at that time, flat out. >> you look at someone -- >> we were sitting there every day, throwback thursday. >> talking about the hypocrisy. that was nothing more than a show for banking. >> he's a good samaritan. >> the corporate library person, she had comments. look, he brought shareholder awareness to issues. information is important. >> eliot spitzer or anthony weiner, who wins? who gets? >> zero? >> i say both. >> no way, living in new york, i think you deserve both. >> have fun. >> all right, coming up, several stocks on the move ahead of the opening bell. we will check in with jim cramer, nyse, back from vacation. i'm sure, tan, ready and restedment ♪

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that's done. let's get down to the new york stock exchange. jim cramer joins us now. we've been reminiscing, jimbo, and we just had a shot of -- of getting a phone call from you when you were -- >> there was no "mad money," there was no -- i think you were still cramer berkowitz. >> i think i was just cramer, that's how long ago that was. >> this is the greatest show you are doing. i am not kidding because it's catching up to everything and i love to reminisce, because the show has been great for years. i love it it. >> you have a long -- and eliot spitzer were in college together. the siren song yesterday. he hasn't lost it, jim. did you watch that? >> yes. >> but it makes me think that -- you know, there are people that

say you need to -- think of the european, the dsk. they want dsk back. they don't care what the hell he does and they don't care there's animals involved and if they're really good, and i started thinking that yesterday. that, i don't know. the siren song. >> when ken langone comes back. >> he's up nine point, do you think it will be weiner, spitzer or both? >> i don't think that weiner wins. i think spitzer is going up against a guy that's never gotten the name recognition and there was no question at all that eliot was the best-known politician and people have a history of forgets and i don't know if women forget as easily as men. yesterday i was explaining to someone that it was shakespearean. macbeth was a king, and lear was

a king. that was big. governor of new york with a clear path some day to the white house. that's a tragic flaw that rivals what shakespeare wrote about, rooity? >> yeah. those days, before -- i was a huge supporter of eliot when i was at my hedge fund. these days, of course, i take no position on anything and i think yesterday was fabulous. the guy is great on tv. he's great on tv. >> we had a guy that was already president that had lapses. blue dress lapses and there was no -- well, maybe there was. >> you don't know. i see why they loved him and now i've got to remember exactly why they kicked him out and unless someone has some new information which i don't see. >> it is a business story and people say it's local to just new york. no, wall street could change again. he has subpoena power as a

controller, did you know that? >> there was a pay to play issue. there were people who were implicated in previous that kind of came back and maybe he reopens everything. he's not doing the job to sit back and do private equity. >> is he doing it to be governor again or more? >> why not? >> i don't think that's a stepping-stone to nowhere. >> it's a stepping-stone to jail because allen hennessy, remember him? he was in trouble. >> that was a different path. >> a good thing in the journal today that eliot reportedly said to bruno. i never had personal vendettas, did you read that? >> history can be re-written. it's fabulous, isn't it? >> it's you. it's me? sorry. i was very focused. >> nothing has changed. coming up our guest host this hour has been dan colaruso and we'll give him the the last word

when we come back on "squawk box." ♪ 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? ♪ ever ybody has different investment objectives,

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welcome back to "squawk box." let's get to our guest host for the last word. dan colaruso and ed keon.

>> -- the stock looks -- the stock has broken out, i think. the stock has broken out. >> i'm very skeptical of anything microsoft does. every time i hear ballmer speak i hear zune. zune, zune. >> is that the clear beer? >> that's zuma. what about you? >> i'm optimistic about the economy, and i think we'll accelerate quite a bit into the next year. >> how does the fed will balance this? >> i think it works out well. we have not had 1937 and we have had some volatility and that's not a bad thing and we have to go through that to have some normal environment. >> going to europe to not have any problems? >> i think it's getting better in europe. my colleague has a model that tries to look at europe six or nine months out and that's actually getting better. >> really? >> even though they're still probably in recession, i think by the time we get into the

early part of next year the economic environment especially around the world will look better than it does right now. >> we'll talk more -- today we really need to get out on time because you will just be so upset. >> you'll be taking more of my time. >> exactly. >> make sure you join us tomorrow. "squawk on the street" is next . >> the dow is set to open its all-time closing high as the chairman speaks real slow and soothes fears about monetary policy. welcome, welcome to "squawk on the street" and i'm carl quintanilla with jim cramer and nice to have jim back from vacation and the timing could not be better. as you know, on squawk, he'll join us from hq in a moment and take a look at futures. bernanke has managed to make stock bulls happy, gold bulls happy and the ten-year settling back to 2.57 earlier this morning and gold back to almost at 1300 and