>> tons of golfing nearby. >> no beaches for gross, sticky sand. >> you can terrorize him at higher speeds out there. >> promote this man. 10:00 p.m. >> we want to thank david for eight reasons but i don't have time. thanks for joining us. >> and for the muffins. >> join us tomorrow. "squawk on the street" is next. ♪ good morning. welcome to "squawk on the street." i'm david faber with jim cramer live from are the new york stock exchange. carl quintanilla is on assignment. let's look at futures this morning. we are looking at what may be a down open. certainly after what's been, well, a good deal of volatility but we were up yesterday. >> yeah, fine. >> a little bit. after the cpi number we got, more on that in a moment. we climbed a little bit in yield. you can see we are above 2.6

after falling below that. france's yield on ten-year, 1.7. italy, 2.8. it's moved up as well to put perspective on that. as for europe and the equity markets in europe, relatively quiet session there. you can see -- let's call it more or less a mixed bag. some decent gains out of the gate but a lot of stocks came from in highs. tech, media, health care, outperforming. tele comes, real estate and energy lagging. our road map starts with investors weighing a deepening iraq crisis. new economic data as fed meetings begin. what would $110 oil mean for the economy? and can you hear me monow? amazon's phone only on at&t. details leak ahead of the big unveil tomorrow. and drama, intrigue, heartbreak in south america. not usa/ghana.

it's the supreme court versus argentina. president of argentina calls it extortion. there is a lot for the markets to digest including a key gauge of inflation. consumer prices rose in may by the largest amount in more than a year, uh .4%, excluding food and energy prices rose .3%. housing starts were down more than expected last month by 6.5%. building permits declined. all of this data coming out as the fed begins its two-days policy meeting. we continue to try to understand what, if anything, is going -- not anything -- what will unfold in iraq and whether it will will go the way of true, all out civil war which could mean higher prices for oil, embroiling more of the region. >> richard engel, refinery closing. i think the workers will run in the three million. that's my big worry, why i have been staying on the sidelines. no one wants me on the

sidelines. they want me to cheer the market. that's a bad sign. i'm not cheering this market with a cpi this high. housing permits are down when i'm looking for up. >> a lot of cross currents. there is an idea that inflation may be getting ahead. >> yeah. >> maybe the fed finds itself. can it really wait for the middle of 2015 or does it have to do something earlier? i think the headline game, at least the most since october 12. you've got to strip stuff out as we do. >> look, gasoline is a problem. we can sit here discussing darden, their report. it's a function of gasoline. at least the company said that. >> in terms of people's ability to spend whether it's at red lobster or oh live garden. >> a tax on people. i'm looking for the hunt for the

next inversion play. timer was on this morning. just a great guest from fidelity saying i have cash. nothing wrong with that. you don't have to go full pedal to the metal here. we have had a run of the aggressive high multiple to sales stocks that have come back dramatically. that's an opportunity to lighten up. i don't want to recommend those here. i don't think there is anything wrong with saying let's watch it. that's what i want to do. that's not "i'm a bear." let's watch it. >> to the extent you pull out the play book and i say it's back in 1995 and you're running a hedge fund, you're taking risk off. >> i'm raising cash. i don't think anybody -- we are teaming up with iran to be able to defeat rebels who out al qaeda can't control because they are too vicious. what a great opportunity to rush

in and buy walmart. >> that doesn't sound good. >> give me a reason to buy situations here. i like that. >> i wish housing were stronger. >> housing starts in may, about a million. $30,000 less than expected down from april. single family starts fell by 39,000. the three-month low. what's that about? >> you know, the rates have come down. i think there are just grave restrictions on this. it's hard to get a mortgage. it's important to recognize. i say to myself, all right, come on. give us a chance to find new stuff. give us a new piece of data. >> this is not weather anymore. this is april. >> that's what i'm saying. >> it's may, excuse me. >> i was hoping for 1.1. didn't get it. all right, fair enough. >> let's move on to other stories this morning. at&t reportedly will be the exclusive carrier for amazon's smart phone. dow jones citing sources familiar with the plan. the report comes amid

speculation amazon will unveil a smartphone with a 3-d retina display tomorrow at an event in seattle. we expect the company's ceo and founder jeff bezos to make the presentation. could be very exciting. we talked yesterday. at&t, perhaps one of randall steve steve steve stevens's better moves was signing up apple. in this case it's not clear it will have the same popularity as iphone. >> but i like this . i like at&t making a bold move. their stock has been stuck. they are doing an acquisition. real pulse at at&t. verizon back almost to 50. i think at&t is a company that makes sense on a yield basis to give you growth. >> i will come back to you and say what at&t is not a growth company at this point. they are doing a deal because that's what they know how to do. randall looks at the playbook. it's what he learned at the foot

of ed whitaker for those years -- do a deal. you come back to the ability to maintain the payout ratio and they had to do the deal. >> right. >> why is that good? by the way, it is still contingent on sunday ticket, one of the most bizarre conditions i have seen. >> sunday ticket is why you want it. you've got to keep moving in this business. sprint is calling a lot of the high debt today. calling their high debt. you're starting to see the soft bank money flow through. you've got the guys at t-mobile doing something aggressive. i think at&t, yes. are they feeling left out? look, i think this is a situation where if the amazon thing takes off, we'll say, how did he figure that out? >> that's true. >> i'm not going to bet against amazon, the company. the stock, that's not the kind of stock i want to recommend here. >> all right.

you would rather buy at&t with the dividend yield of 5.26%. >> with upside. >> almost an infinite multiple but incredible revenue growth. still, we haven't seen the prime increase come through yet on the numbers. that will start. >> right. >> i don't know whether that's eroded the base. i doubt it. >> job. >> throw in a lot of stuff against the wall. >> right. >> whether it's a phone or what was the last one? the cable tv device. >> right. >> look, i keep saying apple is at war with at&t which is war with google which is at war with facebook. everyone is going to war. it always seems there is not a finite number of people who want to play. an endless number of people want to get games, want youtube. they want to get directv. they want to communicate with each other.

people have a lot of time on their hands and these people are winners. we are obviously abberant. >> if you cut out the shopping you did you would find there was more time for you to do more things. >> do more hosting at bar san miguel. >> did you have a good crowd? >> i don't have a tv. i can't watch the world cup. >> you did spend a lot of time posting at san miguel. and shopping, you would have more time. >> i go to the rite-aid to pick up paper towels and toilet paper. you have to have a lot of toilet paper. >> absolutely true. >> something that -- >> this is an opportunity for me to promote the documentary on amazon as we count down the days -- >> it's the most exciting company in the world. >> amazon rising, a look at the company and its incredible success. areas of controversy starting to creep in not just at the edges any longer. >> do you mean public policy? >> yeah. whether it's the dispute,

warehouse work. >> you're not allowed to mention amazon when you are with a book publisher. it's darth vader. you're familiar with darth vader because you have been with the cable industry. how much do we love amazon? we love it! we love amazon prime, the product, the site. they know what i want right now. they are saying, jim, you need to talk about valiant. how do they know? other people who talked about valiant talked about al egan. >> we'll talk valiant later in the show. not much new there. quickly to argentina. the debt dilemma. christina fernandez is slamming the u.s. supreme court after it ruled out an appeal against creditors. the country faces default if it doesn't pay $1.3 million by june 30. argentina was urging holdouts to accept a debt restructuring deal. they have refused the

arrangement leading fernandez to call the hedge funds vultures n. an address last night fernandez said, quote, argentina has shown it is willing to negotiate but it doesn't have is to submit itself to such extortion. this is a big play in the hedge fund industry. it's not involving stock. it's a sovereign nation that pays 13% on debt. many would say, just settle it. your debt cost wills come down. >> are they that close to the edge? >> many believe they will not default. they can either make the payment and take this thing to the january 15th deadline at which some of -- their obligation to pay will change. >> okay. >> or they will settle. the big ax has been elliot management which, led by paul singer, which has brought this case. they seized a ship at one point. they say the debt should be paid

in full. it will be fascinating to watch. you can see it in terms of what argentina and the debt has done and the merval index. >> this is more of the disintegration of the case in latin america. emerging growth. what was interesting is venezuela could change the currency. argentina, when i think argentina, i think directv. that's where you are supposed to do your business. mike white is there doing great business in latin america. i don't want latin america. i don't want it. i want to watch world cup, not visit. >> you don't want at&t in latin america? back to at&t? >> listen. if they get the football package as far as i'm concerned they can go and talk to the shining path about getting a little nfl action. >> football in south america would be the world cup right now. by the way, that has a bit of an audience. multiples of the united states football. >> have you seen the twitter numberses? twitter posted they had a huge number of tweets. i said, what is that per share. they don't want to go there.

you watch world cup, you tweet. world cup is excited. >> it leads you to the power of the platform at twitter when you watch their numbers. >> how about the incredible games? >> whether it's "game of thrones" or whatever it is, a shared event. >> every year, football, soccer gains adherants and last night's game was incredible. breathtaking. some guy we never heard of. >> coming up, the crisis in iraq. we have a live report from the country after the break. and we'll talk with former white house national security adviser, san sandy berger later in the show. we are live from post 9 at the nyse. aflac! so this is who you brought to help us out? oh yeah, he's the best. he doesn't look like he's seen a tool in his life.

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now onto the crisis in iraq. cnbc's chief international correspondent michelle caruso cabrera is in iraq and brings us the latest. >> reporter: in the last hour the new york times is reporting that 44 sunni insurgents were killed near baghdad. we are getting details still. there is a lot of violence as

the iraqi government continues to fight islamic insurgents. there is a lot of discussion about what's been, what is, what will be the future role of iran in the crisis in iraq. some of the news coming from as far as vienna where there is the fifth round of talks between tehran and world powers aimed at finalizing an agreement about curbing iran's nuclear program. on the sideline of the meeting there was a discussion between the u.s. and iran about the situation here in iraq. this comes after john kerry said the u.s. would not rule out working with iran in some way though they did immediately say later on there would be no military coordination with iran. iran and the u.s. find themselves ton same side of the situation here in iraq. they both consider the sunni insurgents enemies of a sort. lieutenant jay garner was on "squawk box" this morn. he was an administrator in post war iraq.

>> i don't see how the iranians can allow a sunni terrorist organization to hold that part of iraq right are on their border. i certainly don't think we should put any american troops there to tie to defend al mallaki or his government. >> reporter: that put a circle around the situation about the difficulties of the geopolitics of the situation, what the united states should do when it comes to trying to help or not help the government of iraq. back to you. >> thank you, michelle. reporting live from northern iraq. not a lot of -- not getting a lot of confidence there. >> yeah. >> again, i think that we have a bigger issue of the 3.5 million barrels, 3.6 million. they were already talking about not getting to $6 million. a lot of companies that will be bidding in the next round pulled out. the workers have no real incentive to stay.

i don't think people understand that this is a labor intensive -- you can't pump oil without people. the to continue to expect to see oil go up. oil stocks go up. that's 10% of the market. 90% of the market doesn't -- >> people who have watched us for a time and watched you and are aware of the nrnl situation will ask what's going on here? i thought we were getting close to nrnl independence. we are producing more oil from the permian or the bakkan through fracking than ever. why is this a concern for us ten years ago, 20. why now? >> oil is priced off brent, not west texas intermediate and not off the price you can get from the permian which is low versus brent. sometimes a $40 discount. if we are -- we import a lot of the oil we refine. so the gas stations basically

price off the price that's deeply affected by what happened there. >> we are part of the global commodity in this case. >> right. we are not for natural gas. that's your heating bill. if we did keystone and several other things we could be north american energy independent. as long as we are priced off of brent, forget what's going on in this country. it doesn't happen. >> up next, we talk stocks as we count down toward the opening bell. here is a look at futures. more squoez squa more "squawk on the street" ahead. making new york state number two in the nation in new private sector job creation... with 10 regional development strategies to fit your business needs. and now it's even better because they've introduced startup new york... with the state creating dozens of tax-free zones where businesses pay no taxes for ten years. become the next business to discover the new new york. [ male announcer ] see if your business qualifies.

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want to talk netflix. >> one of the things that happened with netflix is you are seeing the stock come back. people are excited about it here as opposed to there. morgan stanley this morning built to scale, assume overweight. why $500 isn't as rich as it sounds. that price target. when you hear that people get excited. talking about how people dislike it. the adoption is very strong. pacific quest says the same thing. this is a stock that's a cold stock but can be valued on a takeover basis. you know i like earnings per share. this is not an earnings per share story. that said it's the animal spirited stock. a lot of people like the programming, the success all over the world. it will go higher on this. do you trade it, own it? i think this is one with of the stocks where you have to accept the faith that they will continue to deliver on sign-ups and it goes higher. >> sub growth are is the key

there. it continues to be. if they were to disappoint on that metric, the stock would go down. >> this is not something where we sit around and say, look at this, it's valuable. the p.e. is 47 times 2016. that's attractive. it's a hundred times 2014. that presumes you will have rapid acceleration and rapid profit. if that's the case then you do want to buy it. my problem is you want to buy it when it's down, not flying. >> all right. we'll keep an eye on netflix. got a lot more including valiant's conference call. fill you in on that. attacking the shorts there. we've got more of the opening bell a few minutes away. keep it here on "squawk on the street."

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five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. >> announcer: the opening bell is sponsored by td ameritrade. you are watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in two and a half minutes. down on capitol hill, a senate panel getting ready to hold a hearing on high frequency trading, conflicts of interest in the stock market. eamon javers has more.

>> hi, david. this is senator carl levin and senator john mccain. this is the senate subcommittee on investigations. they dive into various issues, a squadron of investigators on staff there. today they will hear from brad katzyama of iex. they are also going to hear from thomas farley, president of the nyse. also joseph ratterman from bats global markets. obviously katsuyama had a lively debate on our air. they will testify on different panels. representatives of the vanguard group and td ameritrade. what the panel is focused on is payment for order flow. whether or not it's a conflict of interest for exchanges to pay brokers to steer trade toward their exchange even though brokers have an obligation under

the rules to find best execution for clients. that will be one of the things they are looking at here. also the maker, taker rebate system will be another thing the committee will be examining closely. a lot to keep an kwie on here. we'll bring you updates as the hearing gets under way. >> thank you. we haven't talked about high frequency trading. we'll hear a lot about it. >> on "mad money" i talked about worrying about systemic risk. we don't have that because of the treasury. i worry about a possible flash crash. that did so much to a road investor confidence. when you talk about oil, that that's -- i listened to the hearing because people think the markets are are rigged. he's a writer. he called it are rigged. that was more powerful than any senator call. >> it was, on "60 minutes," yes.

>> "60 minutes" still has clout and michaelle lewis has credibility. >> he knows how to tell a good story. >> better than anyone. [ applause ] [ bell ringing ] >> there's the opening bell for this tuesday. a big crowd this morning. very young. making me feel old. the s&p 500 starting to get itself together. looks like a little bit more in red than in green. that was jp morgan fund celebrating the launch of the first u.s. etf, the jp morgan global diversified equity etf. >> that's funny. >> they have a number of words in there. >> we immediate more etfs -- not. the most important thing is the number of analysts who love med tronnics because of the inversion. >> let me give a shout out to starbucks who did the honors at the nasdaq. medtronic. we watched yesterday after the big deal to acquire qvidium.

you can site the focus on the inversion aspects of the deal. not as much on the strategic merits medtronic argued for. you have people looking at the contract and saying well, wait. if both houses agree on the same bill to block inversions or change the tax code, either side could opt out of the deal. what are the chances you would get the same deal from both chambers? viral kh virtually nil. any movement before it closes is probably unlike areally. chinese anti-trust will be needed on this. that has the tendency to delay deals. that can take at least six months. it's called mofcom. that's the chinese anti-trust authorities which figure into the deals and can delay them. so the time here, the wonder

about strategic rationale, the worry about the contract though perhaps not much of a worry. this morning, wall street comes out and says bye-bye, bye-bye, bye-bye. >> it's extraordinary to see this group thing. it says to me what are they doing? what analysis are they doing? >> here we go. jp morgan, 78-78. rbc. >> how does that help us? >> my producer at hq put this together. our estimates on credit suisse, $$750 million in cost synergies. assume 18% tax rate in fiscal year 16. we wrote them up, guys. why not put them up? let's roll through the next one. credit suisse, earnings accretion of .88.

you can see it there. wells fargo, 3%, 7%, we believe there is an opportunity for multiple expansion and deutsche bank, same thing. there you see it. raising the price target to 17 times 2015 estimates. >> write these down. this is the list. te connectivity. i thought it was pennsylvania. no. they are right there in switzerland. pen air, you thought they were in minneapolis. they are a swiss company. >> these are the addresses of u.s. companies. >> chicago bridge and iron is not in chicago. they don't make bridges or iron. they are in the hague. cbi plaza in houston, dead wrong are. here's one. jazz written up positively today. they are in a house which is on

one burlington road in dublin. >> don't the forget applied materials and. >> you would have thought it was in houston. it's in geneva. they will get bids. >> we can make fun all we want. these are u.s. companies that have are a tax regime different because the headquarters are now -- so to speak headquarters. not the operating headquarters. >> if you look at the s.e.c. filings. >> right. you know, i can make the argument you can't blame them. they are not in the business of satisfying patriotic duty. her in the business of making money for shareholders, ensuring their customers are cared for and the employee base is solid and stable. >> right. >> that doesn't are have

anything to do with the tax regime. >> i asked sandy cutler why eaton is in dublin? why is the annual meeting at a beautiful four seasons that i got a very big discount using travel zoo at one point. is answer is, we are not there is when you ask sandy. we're not there. they are as cleveland as the indians are. long-suffering. eaton's not. it doesn't matter. you get away with it because you can. it's congress's fault. you're supposed to try to avoid as much tax. it's your patriotic duty. the code is clear. you should not pay more than you need to. the code is clear. >> right. >> these guys are doing exactly what the code says to do. who is to fault them? not me. >> nope. >> they are bringing it out, making money for shareholders, doing the rieg thing. >> this will be one of many

engines behind the robust merger and acquisition market. i can tell you i'm expecting a lot more deals between now and call it the end of summer. typically a fairly quiet time. not quiet. >> did we spend time or not enough on this level three time warner tell? there are people talking about another bidder. >> level three was down yesterday. >> century tell coming in, that's why -- >> i don't know about that. >> right. >> level three is rebounding. it was down. we have talked about stock prices being up, being rewarded for doing deals. >> that was -- >> not in this case. level three is up this morning. we have a case here with a lot of deals. while there is a decent amount of capital in event driven funds so to speak. >> right. >> they are throwing money at things. comcast time warner takes up a lot of money. they are large market cap deals. you may not be attacking the

spread as much as in the past. that's leaving room. >> look. i am not trying -- when i gave my list, i'm saying if you are in dublin, why not buy it? it's a great company? i can raise numbers. >> also led to the speculation about shire. >> oh, my. >> by the way, that may have gotten well ahead of itself. so they hired -- you know. not that big of a deal. >> molus downgraded. >> they have research? >> they downgraded it. >> it was downgraded. >> just started for heaven's sake. i would upgrade it on the downgrade. >> does kenny threaten them? >> listen, i'm molus. you can't do this to me. >> don't downgrade me. coca-cola is up a p bit. >> yep.

>> the money manager david wintergarden saying interesting things about the company. i have this here. talking about i guess speculatively, this sounds crazy, but the idea that berkshire and 3-g. remember berkshire hathaway, of course. >> right. and warren buffett who controls berkshire who owns 9% of coca-cola. they got together and did the heinz deal. bringing up the idea that they could -- it sounds -- you know what, let's go to becky quick, our expert in all things buffett who join us on the phone rather than speculates. theorize raising the idea, i believe, of a leveraged buyout of coca-cola i find almost impossible. you would know better than i what the oracle of omaha is thinking. >> you said it already. this sounded crazy and you're right. as soon as i have heard it, i

thought the same thing. winters made the comments. speculating that buffett and 3-g would get together and do something like they did with heinz. i immediately called buffett and he said there is absolutely no chance of that. he was completely resolute. he asked me to repeat myself. i think he thought it sounded crazy. winters is in a position where he's fighting with coke's management. he was upset with the soft payout and the plan. he tried to wage the proxy battle. warren buffett didn't vote with winters but said he was opposed to the stock plan, too. he tried to separate himself from winters and say he was in a linement with coke management. winters, i think continues to talk and say things like this. it was completely out of left field.

warren buffett himself saying there is no chance of that happening. >> he's using this to punish the same thing this the past. that is, david winters in this letter in terms of equity awards and everything else. >> i think i have not seen this myself in reportses of the comments about what he's saying. that's my guess. winters hasn't. we haven't heard back from coke on what they will do or not on this. warren buffett said he thought the plan was rich. buffett has said he's in favor of coke management. loves them. loves what they are doing. i think people who think he's in league with winters for this. that's just crazy. >> yeah. listen, 9% obviously.

but $180 billion market cap. you have to throw a 25% premium on coke. $220 billion at a minimum. maybe more. i know the debt capital markets are good. the 3-g guys can raise money. warren buffett's got plenty. i don't get there. >> anyone who bought the stock, go to the numbers. it's an expensive stock. it's got a good yield. let's leave it. >> becky, thanks for checking in. of course becky did this amazing interview with warren when he abstained on the vote. >> breathtaking. >> that was a great moment. >> coca-cola has it done well. it's been disappointing that the industry has no growth. >> all right. let's get to bob pisani on the floor. i think he's available. he has more on what's moving. >> indeed. mixed market today. the cpi number did move the

markets earlier on. take a look at treasuries. ten-year did move up. yields moved up. cpi, may. the expectation is 0.2%. 0.4. is there a lot of inflation? it defends who you are talking to. people are concerned so the fed watchers will be listening carefully for subtle changes to the narrative now. anything about wage pressures, for example. i don't see a lot of wage pressures now. obviously the market is sensitive to inflation, trying to get ahead of that or discussions about words like complacency from the fed. you see the ten-year note. look at the s&p futures. you can see futures move to the down side. we are still negative in all of the major indices now. let's take a look at the interest rate sensitive sectors. put up the screen for interest rates. there is the futures. put the interest rate sensitive stocks. they are on the down side. telecom moved up.

they were weak on the open. stock gainers, if you look at big ones here. edwards life sciences, a new heart valve approved for them. they are on the upside. susquehanna talking about earnings provisions there. a day after the covidien deal, they are up. a positive article in the "wall street journal." netflix, estimates raised, assumed overweight. talk about high frequency trading. i have news. it's not one, it's three high frequency trading hearings going on in the next several days. today you heard from the u.s. senate permanent subcommittee on investigations. tomorrow, the senate banking committee, subcommittee on securities, insurance and assessments will chair another hearing on the impact on the u.s. economy and securities markets and high frequency trading. soon, representative scott

garrett, the chairman of the financial sers vises subcommittee on capital market wills hold his subcommittee has jurisdiction over the s.e.c. in a way that's more important. i understand s.e.c. people will be testifying at the hearing. the whole point is to get a response from michael lewis. i will tell you what's interesting about the hearing today. a lot of people saying that carl levin is the chair but the fireworks may come from the ranking minority member. of course that's john mccain. keep an eye out. those hearings start shortly. the ceo on power lunch at 1:00, we'll talk about his testimony. he's starting off the hearings. down industrial is down 35 points. back to you. >> let's go to the bond pits now. rick santelli. >> hi, david. there is a lot of issues in the marketplace. obviously we can tell which one is having an effect on rates.

doesn't seem to be geo little bitle call. put up an intraday. bob hit it when the cpi data came out. that's when the market moved. equities weren't open. i remember the dow futures were up 21. now basically they are down 30 to 35 after they were open. a 50 point swing in equities. mark inflation, call it higher prices. ignore commodities. the treasury market will do anything to push rates higher. this is important to pay attention to. if you open up the chart to may 1 you can see where the congestion is. if we get above 265 intraday. maybe a better chart. really, where rates will go, especially considering it's the first two-day fed meeting. the feds painted into a corner. the sharp maturities are flattening the curve. they are sensing higher rates. five-year above 175. look at the left side. that will run. if it runs in terms of higher

yields that would be lower prices. let's see what's happening with the spreads. if you look at five to ten, a new one going back. a new flak going back almost to five' year. september of 2009. boon yields responded. they popped even though the data was tame. we are all in it together. if we look at the euro versus the dollar it's hovering at the lowest levels since february. talk about a snail's move. it's moving lower but not aggressively. back to you. >> thank you very much, rick. coming up, stick around to see what chipotle and france have in common. later this morning on squawk alley at 11:00 eastern, 8:00 pacific, it's kevin o'leary of shark tank.

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♪ oh, domino ♪ i said, oh, domino >> chipotle a big winner in france. the company's ad agency c.a.a. won the p.r. grand prix in cannes with partner agency edelman for the scarecrow in which chipotle took on big food in order to highlight its own sustainability ethos. it became a video game, video coupon, newspaper ad. why? it was the story telling. >> i had on ray wise, the industrial food bureau they are against. >> very interesting. >> chipotle, this is soft advertising. it's not like go to chipotle. it's the opposite. what you want to do when you look at the commercials is question the food chain which

leads you to go to chipotle. they have been a hot stock of late. i continue to think long term things are good. domino's downgraded to sell by merrill-lynch. that's a good question. patty doyle comes on soon. >> ray wise was the actor of the series. i was conscious that there is a dilemma. i talked about this with ziwetis. the leading animal health company. if you get rid of all the things that make the cows not natural and organic they would say the price of food would go up so much you couldn't sustain it. so there is a debate. but there is also a sense that, listen, those who want natural, there is a place. it's chipotle. >> it is more expensive, orb can be. >> it is. stay with us. [ female announcer ] there's a gap out there.

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i typically don't mention these speculative stocks. i think this is a nonspeculative stock. why? they announced physician reports on a particular kind of treatment for epilepsy. people don't understand in this country that the importance of medical marijuana. this is called canibinoid which the fda will go about. it's about trying to stop seizures. this is for children's epilepsy. seizure frequency greater than 50% reduction in seizure and a portion of the patients were reported to be seizure-free after 12 weeks. this is the compassionate use beginning. when you hear about medical marijuana, forget it. think gw pharma. they make nonlaced marijuana. >> the pure -- >> a pill. you cannot make it here because it is a class one felony to do what they are doing. this is a british company. i can't stress enough how important it is for people with

untreatable diseases to get rid of the pain. now actual treatment for kids with epilepsy. >> it could be a conversion if people want to buy it. >> yes. there is nothing. imagine something that stops seizures for a lot of people for 12 weeks? gw pharma is a real company doing real things with a marijuana dri tif. >> what's on "mad money" tonight? >> we have korn ferry, recruiting. and cynvenio. they may have a blood test to tell you if you have cancer. isn't that the holy grail of what we need in this country and the world? >> wow. >> exciting show. a lot going on. "might be" being the key word there. >> it's not public. i appreciate your tweet about coca-cola. i didn't like the idea of someone issuing a statement that says nlbo.

i mean, lbo of apple -- >> there's plenty of money out there to finance it. even with war enat 9% with the premium, 200 billion. >> why not say, hey, listen, we want to restructure and management fired. that's the line that stuck out. >> simon hobbs has a look at the next hour. >> good morning. amongst the guest we have former white house national security adviser sandy berger. clearly the situation in iraq is a concern for people. we'll talk high frequency trading. is it fair? what should you do about it? bart chill ton of the ftc will join us. and former michigan republican gov nofrernor john engler about cantor's defeat. that and more in the second hour. 24/7 i'm sorry- i'm just really reluctant to try new things. really? what's wrong with trying new things? you feel that in your muscles? yeah...i do... drink water.

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helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review. our road map starts with the markets and iraq. the u.s. is seemingly moving closer to military action. but is that the right move? we'll talk to a former u.s. national security adviser. >> and high speed trading taking center stage today on capitol

hill. bart chilton will join us live with his take on hft and regulation. >> and u.s. c are eos are less hopeful about the future of the economy. we'll get details from the president of the business roundtable john engler. >> first we start with coca-cola. the stock is moving higher. been doing a lot of work on this. you have been talking about it as well. david winters gained popularity because he's a shareholder of coke. a small shareholder of coke. came up raising the compensation issue which warren buffett abstained from. sent a letter to the committee and chairs of board of directors saying he's concerned about speculation and media reports of a deal to take coke private by berkshire hathaway and 3g. that speculation, putting the ytd out there saying coke shares are higher. becky quick said to warren buffett, no chance of a deal. i got the letter here. i spoke to david winters about

that. he said he's not concerned. that would be a conflict of interest. warren buffett wants the best price for coca-cola. i want to step back and make the point. you can see the shares are coming back to reality on reports that it looks increasingly unlike areally. this would be a mega deal. talk about valuation. i know you have been crunching the numbers as well. the heinz deal was 20 billion. this would be ten times. >> any number of bankers would love to think the idea of doing this was possible. if you do the simple math, assuming a 20% premium on coke stock price. i don't know why we would go through this. you get to $230 billion if you say warren buffett owns 10%. he's at 9.1. talking a $210, $215 billion leveraged buyout. >> ginormous. >> the cash, ek the ti check,

capital markets. you could do $50 million. maybe it's possible. i talk to the bankers a lot and i haven't heard that. but the idea is beyond belief at this point. it's not going to happen in any shape or form. mr. winters does seem to be using this as a jumping off point to keep making points he tried to press in the past. does he not? >> he's concerned about a raw deal for shareholders with the compensation and equity plan with a potential deal here. the bottom line speaks to a broad issue which is worthy of talking about. that's under performance in massive food and beverage companies including coca-cola. >> i'm sorry to be dim. why take it private? >> the companies are struggling. they have under performed. >> why -- public? >> you look at dr. pepper snapple trading at all time highs -- >> listen, a leveraged buyout of

heinz by 3-g and berkshire hathaway which was, i believe, 16 times will be a good deal. for the guys in brazil, they are happy to get the return. they will add to that, grow the portfolio. >> do you see that return in coke? >> i don't know. it's not worth discussing it's not a possibility. >> let's get to the late nest iraq this morning. the u.s. seems closer to military action. clearly no official word yet. president obama woke with his national security team. the white house considering air strikes. the president has informed congress he's deployed nearly 300 soldiers to baghdad to protect the country's embassy there. this as the iraqi government shores up its own defenses in baghdad. just what should the u.s. response be? is the white house right to consider working with irans as part of the solution. who better to ask than the former u.s. national security adviser sandy berger who joins

us from washington. he's chair of the global strategy and business advisory firm all bright stone bridge group. good morning. >> good morning. >> sandy, before we go further do you want to respond to the widespread criticism from the gop that effectively obama has made this situation worse by not attending to the detail over recent years and perhaps not acting sooner? >> i'm certainly glad he's taking his time to decide what the right course of action is here. the stakes are high in a situation. it's very complicated. going back to where this origin is, you can go all the way back to the original invasion of iraq where it's in the aftermath of that that groups like isis grew up. there is a lot of origins of this. i think it doesn't do us a lot of good to go backward here. >> i think we probably will over the coming days. for the moment, let's leave it

there and stick to the present. how does president obama ensure that his legacy as president isn't the creation of a terrorist state that stretches from northern iraq into syria and threatens this country? >> i think the approach is extremely important to look at both the political and military dimension. a fundamental at the heart of this is the misrule of prime minister malaki who has governed as a sectarian leader. who is not treated the sunnis well. he's abused his power. to come to his assistance, we have to do so with a condition, insisting he create a unity government, that he bring in the sunnis sunnis, reform his military, and only in that context will military force be advisable as a course of action a here.

>> sandy, do you really think that's likely from malaki? he's under siege. the barbarians are at the gates. if he didn't do it in the past five years how could he turn to those enemies now and have an inclusive government and get them on board for that? if you were there in baghdad, that would seem a highly unlikely outcome. >> if he believes his survival is at stake, things will happen here. let's take the reverse, simon. if we go in as malaki's air force at this point, we drive the moderate sunnis in the hands of isis. we are part of a sectarian conflict. we should come to his aid but we have to insist as part of that that he form a unity government so we can support popular

support. otherwise in a sense we biel iran's air force here. we will cover from the air while iran is on the ground and taking advantage of the situation. they will probably be quite happy in tehran if we provided air cover for them to align themselves with malaki and create an alliance there. we have to create political change in baghdad or military action is not going to be the answer by itself. >> i was going to ask about that partnership. if that's what it ends up being between the u.s. and iran. we are set to have nuclear talks with iran this week. highw how complicated would it be if the u.s. and iran team up here? do we even want the same things? >> well, that's a very good question. there may be short time prommal ti. there may be tactical

cooperation here. we have to be very clear. our interests and iran's interest in iraq are very different. iran wants an iraq that's controlled and dominated by iran. as part of a shia crescent it dominates from iraq, iran, syria to lebanon. that's not what we want. we want a stable, multi sectarian iraq. we are not after the same things in iraq. there may be at this point a marriage of convenience with respect to some short-term goals. >> we have tried to get malaki in the past to be more inclusive. he's gone the other direction. there are no signs he's entertaining reaching out to the sunnis in any significant way. what do we do if he continues to go the route he seems to be going? >> he will only change if he feels he has to.

this is now a chi sis. i think it threatens his survival. we have to use the leverage to its full extent together with others miss the region. others that have a stake in this to put as much pressure on -- >> sandy, that's in practice a very dangerous game to play. are you suggesting the united states plays a game of chicken with him? that we wait and wait until he'll fall and fall and maybe at the last minute he'll return? if he doesn't turn it's overrun are by extremists? >> well, first of all, i don't believe isis will take over baghdad in the next several weeks. baghdad is a city of 9 million people. there are 8,000 members of isis. they didn't hold northern iraq. those were sunni areas. and the people were supporting

isis. you are now in southern iraq. it's a shia area. they aroused to defend baghdad. i don't think we should operate in a panicked situation and do something stupid. baghdad, i don't believe, is on the verge of falling. >> okay. >> we have time here to try to put the pressure on malaki, form unity government. we get into wars easily. >> oh, yes. we find it hard to get out of they will. let's see if we can do it in a way that has some prospect of a broader base here. >> the core is malaki. we can't be seen here. because it won't work. >> it's nice to see you again.

>> up next, stocks seeing gains this year. what's ahead for the second half. morgan stanley's gary cominski will join us to say what portfolio managers should be doing now. we'll be right back. lots of ad, but i needed information i could trust. unitedhealthcare's innovative, simple program helps moms stay on track with their doctors to get the right care and guidance. (anncr vo) that's health in numbers. unitedhealthcare. my motheit's delicious. toffee in the world. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.

welcome back. check out what's happening with edwards life sciences. the stock is moving higher on new that is the fda approved the

new heart valve design to be used in patients suffering from aortic stenosis. simon on today's trade. back to you. >> meanwhile inflation has come in firmer than expected today. senior economics reporter steve liesman is at hq with a look at market reaction. since we are this line of the fed's target, that's good news. >> it is. this is shaping up to be a more interesting fed meeting than originally thought. the inflation numbers stronger than expected. the markets are reacting. inflation rose in may compared to a wall street estimate of 02. the core up. that tax out food and energy. a tick higher than expected. for the first time since february 2013, the year over year core and inflation numbers are at or above 2%. close to the target. the market is starting to think, well, what if it keeps going up? does this change policy?

the problem with the numbers isn't that it was one thing driving it but a lot of things. it was the outsized rise in airline father fares. utilities, if gasoline, services up. diane swonk says the price increases will act as a direct tax on consumers and spending. the ten-day intraday reacted just like a cliff there headed up 264 on the news. it's maintained that level. still low by historical standards but the higher end of the recent range. let's talk about how it changes the meeting. employment falling since the last meeting. q-1 gdp coming in less than expected. continuing to be revised down. more like minus 1.5 now. two new members on the board. in england the head of the central bank there, carney's hinted at a quicker rate hike and inflation nearing the target. here's commentary. they are saying expect no knee

jerk fed reaction. make no mistake, if the emerging trends continue, markets and policy makers will be changing their tunes. john riding says we suspect the data make the meeting a more contentious one and the risks of rising inflation might be addressed. yellen will be quizzed on this tomorrow at the press conference. after wanting 2% inflation for so long it's not clear if they have thought about how to guide the market once the fed got what it wished for. sara? >> a surprise. should be interesting. steve, good to see you. here we are half athrough the year. what should investors think about for the rest of the year with the economy, the fed and more joining us. gary kaminsky, morgan stanley's vice chairman of wealth management. good morning. >> good morning, all. >> i'm looking through your notes. deflation more of a concern than inflation. that was surprising.

this could change the play book. >> we had a cpi number that may have given media and journalists something to write about in materials of inflation. the truth is deflation is a much bigger concern for central banks around the world and for those that make capital decisions. those that run businesses. last week i was with a number of oh ceos in the south. there is not one i have spoken with that's looking to spend more new initiative dollars, hire more people or spend more money. deflation is a bigger concern than inflation. >> how do you invest around that? the stock market keeps going higher. >> the stock market will continue to keep going higher. that's what central banks want investors and all of us to do with our money. in the intro you mentioned we are halfway through the year. i want to put on my former p.m. hat. david, i did raw money for

years. >> yes. >> they would typically call and say what are we doing this summer. i would think, what did we do with the portfolio that was good and what was wrong? we can sum up for everybody the three things this year that were set up in the beginning of the year. sara to answer the question of what you have to do now. interest rates are the first one. >> everyone got it wrong. >> the consensus of wall street, three and a half on the ten-year now. the reset on interest rates has to continue on portfolios the rest of the year. second thing, economic growth. 3% was the consensus. u.s. gdp nowhere near there. economic growth slower than anticipated. the one that has an impact on stocks -- >> can i stop you before you get there? those two are important. interest rates are lower and economic growth has not exploded to the upside which is what we were promised. >> right. >> what's the view about the stock market being at these levels? the stock market gains were

predicated on are interest rates going higher because we would get explosive growth in the second half. >> that's a question that i cannot answer. >> what did these people say to you? >> the stock market, nobody disputes the fact -- we have sat here and talked about it time and again. the stock market is influenced by all of the easy money. at what point does the stock market not like the fact that the easy money has not created economic growth? i wish i had the answer. i don't know. for the time being as you allocate portfolios you have to continue to think. i want to get to the third thing which is that for years we would sit there in the beginning of the year and say this is the year m & a will come back with the low interest rates and easy money. we are finally seeing companies for whatever reason look at deals. that's how you create value. that will be another stock. >> they said they are not willing to put out more capital. that would go in the opposite direction than being willing to take a risken on a deal. >> absolutely. >> you said many times a high

percentage of deals don't go well. >> nine out of ten deals don't go well. it doesn't hurt the idea of being the 1 in 10 that do. big difference between hiring people, building plans, property and equipment and looking at deals. deals are done when you want the the top line growth without spending new initiative dollars. the deals feed on themselves. i wouldn't say every but almost every executive running a business is looking at a deal now. a year ago, there was the uncertainty whether it was the washington uncertainty or the uncertainty of the economy. the economy is pretty certain that it will be slow and sluggish. thus you look for deals for top line growth. >> there is the prediction. we'll hold you to it. >> good to see you. >> as always. gary kaminsky of morgan stanley. >> rupert murdock lost his house in the divorce. don't shed a tear. he found a bigger bachelor pad

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we are up 20 points on the dow. look at the financials. one of the best performing sectors in a flat market. >> financials and tech are leading the way. financials are double the gain in tech, rebounding after a tough day yesterday. it was one of the leading laggards in the s&p 500. now the leading gainer. etrade is the big gainer followed by schwab, zions and lincoln national. metlife at a multi year high. a great start to the day for

those financial stocks. back to you. >> thank you very much for that. after losing his upper east side penthouse in his divorce rupert murdoch has an even bigger pad downtown. robert frank is live with an inside look at murdoch's new digs. i thought you might be inside. >> i'm not right now. but we are going to take you inside. the it is the most expensive deal in downtown real estate. murdoch bought the top four floors of one madison for $57 million. what does he get? over 16,000 square feet, great views and not much else. by toured it. let's look. the penthouse is nearly 7,000 square feet. five bedrooms, five and a half bathrooms, and it will have panoramic views of just about every landmark in new york city. >> now we are on the middle level, on the 59th floor. the view has already changed.

>> dolly and leslie have to take the stairs for now. but the super rich don't like schlepping between floors. >> be careful. you can see a very are subtle open shaft. danger. this will be the internal elevator. >> the color, it's a painting in the sky. so beautiful. >> the record in all of manhattan is believed to be the $88 million paid for central park west. murdoch is number one followed by the $51 million for a penthouse at walker tower on 18th. at number three was gramercy park. that was around $41 million. there is a big spread for downtown versus uptown. it's closing fast. back to you. >> you know what i say. downtown. all the way. >> it's the new uptown. >> way more valuable, yes.

thanks for the peek at the penthouse. straight ahead, senate hearing on high speed trading continuing. we'll be joined here by commissioner bart chilton. hear what he says about regulation and hft after the break. she keeps you on your toes. you wouldn't have it any other way. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right.

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take it away. >> we have a schism between members of the senate panel doing the questioning here. remember the exchanges don't testify until the second panel. we are seeing brad katsuy are ama here. an academic who's done analysis. we see carl levin opening the hearing. he's made up his mind about much of what's going on here. listen to senator levin earlier. >> financial markets cannot survive on technology alone. they require a much older concept -- trust. trust is eroding. conflicts of interest damage investors in markets. >> we have senator ron johnson engaging in questioning now. he's taking a more skeptical tone of this. questioning whether or not there is a conflict of interest built in with the question of payment

for order flow. johnson pressing witnesses earlier on this question of exactly how much does this cost the average retail investor like him? making the case, he said this could be about 30 cents per $2,000 trade. what's the big deal? more or less that's the argument he's making. a little bit wary of government regulation to come in and regulate this market. he's looking for a free market solution. brad katsuyama also looking for a free market solution and making the case that the emergence of iex is exactly that, guys. an ongoing debate. we'll hear from the exchanges latser. >> nothing like the debate sparked on cnbc. >> nothing like that. >> thank you very much for the headlines. we'll talk more about it now. our next guest pushed for tougher wall street regular are glachlgts bart chilton, the future commissioner of the trading commission advising a law firm now so you can be honest with your thoughts about

regulation. obviously there is a lot of moral outrage, complaints about high speed trading. does anything get accomplished out of the senate hearings? >> i think so. always when you have these, it brings more transparency to markets. that's a good thing in general. transparency cleans up dirty markets. not that markets are dirty now. to look at this from a perspective of those on the hill, i think it's helpful. look. high frequency traders are new. modern markets are new. the important thing is ensuring that they have a place in markets that has appropriate side boards. that is appropriate regulations, not overzealous. i think it will help. >> eric schneider man is looking into it. the s.e.c., all of the regulatory bodies are jumping on the bandwagon. when you say it will be accomplished does that look

another the current market structure? >> it might be. in dodd frank, the consumer protection act, 2300 pages. not one place is there a word about high frequency trading. they currently aren't registered. they are not required to be registered here at the new york stock exchange at the chicago america tile exchange. it's a pedestrian step. they need reg station. if you are a regulator and want to look at books and records you don't have the ability to do it. >> were you asleep at the wheel? >>in part regulators are asleep at the meal at times. the law would require they be registered and the low should require basic things like test the programs, kill switches. not special access but equal access. >> is this a side show? when you have mary jo white saying she'll take action, that's the game.

this is a spectator sport. >> tell me why. >> congress write it is laws of the land. this is what i have been telling them for years. i'm not sure. some of them get it but not all of them. if we have with another flash crash and the hfts didn't start it. but they were part of the fire. it went down nearly a thousand points here. >> it makes us vulnerable. >> if it happens again i'm wo y worried there will be overzealous regulations on modern markets which is harmful. they lower bid ask spreads. they used to do investigations with the s.e.c. here. they kwused to go with a snow shovel and pick up paper. what are the legitimate side boards? >> a lot of people say they want a free market solution. maybe it comes through the legal system as well. did you see the class action, civil action filed last week?

>> i did. against the nasdaq. the allegation is the high frequency traders are having access before it is passed to anyone else. the lawyer leading that said he feels it was a skirish in a large war against concentrated wealth and political power. sometimes we don't understand how it plays elsewhere. it is part of a bigger gain for those people. >> certainly the michael lewis book brought attention to it. my favorite was the blind side. i think he had a bit of a blind side with respect to hft. it is easy to criticize them. i have done it before. there are good parts of modern markets. we have to do it. whether it's today in the senate, tomorrow. before the s.e.c., that we look at all sides. >> there are good things for modern marks but they don't

necessarily come from high frequency traders. >> it used to cost $75 to make a transaction. now it's less than $. >> not due to them, surely. >> they are part of it. >> really? >> electronic marketses helped. >> that's different from high frequency. >> high frequency traders are 50% of it. >> on a good day. >> on average they are 50% on the new york stock exchange. on cme, 30 to 50% at any one time. when there is volatility like with oil now, at times they are up to 90%. i'm not crediting them for everything. you're correct. i'm saying it used to be 20 years ago. you make a transaction, it costs $75. now it's less than $10. there is good. >> it may drive the market to extremes. >> you're right. it can exacerbate what may have been slower. if you go to the flash crash, the markets went down in part because of hfts but they were

resilient and went back up. at the end of the day they were part and parcel to it. they hurt and helped at the end. we are not getting rid of technology. modern markets are a part of it. it's a question of how you control what's going on. you want free markets to be registered. testing, kill switches and equal access, but not special access. >> the conflict of are interest issue will be the toughest for the regulators to hammer out. the fact that the firms are pay ing to get edges, times, speeds, how can they kol it? >> there is the access to speed which is important. they pay to have access to be close to the server and have less fiber. the second thing is they are paid in market maker programs. the exchanges want to pay. tom farley, president of the new york stock exchange today in testimony is saying we should take a hiatus on that. we should get away from the market maker programs. i think that's probably not bad. hfts don't make it off the

programs. that's an ancillary benefit to them. they are smarter and they make smarter markets and they are fast. >> good to see you, bart. former commissioner from are the cftc on high frequency trading. >> coming up, the corner offices across the country aren't as optimistic about the future of the economy as you might think. the president of the business round table, john engler, joins us live to tell us why ceos across the country are not hopeful. we'll be right back. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family,

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so if your business deals with the unexpected, hp big data and cloud solutions make sure you always know what's coming - and are ready for it. make it matter. welcome back to "squawk on the street." solar city up 9%. the stock is soaring on news that the company, one of the largest installers of rooftop solar systems is buying a solar

panel maker for up to $350 million. again, that stock is up. they plan to build a solar manufacturing facility somewhere in new york. in a programming note, solar city chairman e will lon musk will be here on cnbc. he's a disrupter, a guy you don't want to miss. i will be paying attention to that interview later today. >> i thank you very much. rick santelli as the fed kicks off a two-day meeting. rick? >> thank you, sara. for the first day of the two-day fed meeting and potentially higher inflation and uncertainty over exits we have the perfect guest. we have exactly ander richter who helped co-author a paper by the dallas fed. the zero, lower bound and uncertainty. translation, with rates at zero there may be a risk and a link putting up certainty and slower

growth in the same sentence. welcome, alexander. tell us about the hypothesis that you have written about in the research paper. >> thanks, rick, for having men on. i appreciate it. what we find in the paper is since 2008 which is when the fed lowers the interest rate to zero are, we find there is a strong negative correlation between real gdp growth and uncertainty. prior to that, the correlation was weak. are interestingly enough, you might think this is just due to recession. when we condition on quarters where the economy was in recession since 1960 which is about 34 quarters we find the correlation is also fairly weak. there is something going on since 2008 driving the stronger relationship between uncertainty and real gdp growth. >> in layman's terms, what you are saying is that all the talk that many like myself and all the traders on the floor since

the crisis talking about whether it's regulation or obamacare, all this uncertainty creates a negative loop with regard to certain dynamics in the economy. is that about the size of it? >> yeah. the way you can think about this is that in normal times when interest rate isn't not zero, what happens is the fed will respond to demand changes in the economy. when demand falls you can think of it as a change in consumer confidence. they will reduce the federal funds rate. when the interest rate falls to zero, they can no longer respond in the way they usually respond. so output falls faster. in this sense there is greater uncertainty. >> after writing and helping co-author the paper, would you feel that it would be safe to say that a subtle increase in interest rates will nullify or remove some of the dynamic that you have researched?

>> first it's important to note that the problem is that interest rates cannot go below zero. that's the problem. when we are thinking should the fed raise rates, that's really a difficult question. of course when the fed raises rates that's going to reduce demand. on the other hand, it does make it so that maybe we'll get out of this wait and see approach many firms seem to have taken since 2008. >> well, i tell you what. we have to move on, alexander. so fascinating. i would summarize that if you're sitting on the fence from a business standpoint, this might be then reason that you're camping out on top of the fence. thanks for taking the time. simon hobbs, back to you. >> a flag up there. has that been there all the time? >> up next on the program, john engl engler, president of the business round table and former governor of michigan will join us to discuss the state of business in the country and wider effects of eric cantor's

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the ceos of the top u.s. companies aren't overly optimistic when it comes to the health of the u.s. economy. in the latest business ceo the predict 2.3% gdp growth representing below normal growth. here in the first on cnbc interview, the president of the business roundtable, also of course, the former republican governor of michigan. good morning to you, sir. the one thing i would pull out, still three quarters of them again believe their revenue will grow. >> i'd say mixed results. better on sales and hiring. not so good on capital spending and probably the top line news, a little more pessimistic where the gdp will be on an annual basis for 2014 dropped .1 of a point. >> when people go through surveys, it's interesting to find the real purpose of

answering the way they are is, obviously, other issues they're attempting to achieve. you've come out with a policy prescription they desperately need more tax breaks. >> that's right. clearly there's something going on. one thing a lot of commentators talk about, just the slow, slow pace of this recovery. six years after the depths of the recession. so we would argue that this uncertainty, i mean, at the beginning of the year we had a lot of tax provisions that expired. our tax code is a mish-mash of temporary provisions, and we're saying that while there's a need for comprehensive business tax reform, in the short term, let's at least give the stability to tell people our capital investments are going to be deductible. is there a bonus dedepreciation >> you're asking for tax breaks when they will see the after-tax profit in this country, 10% of gdp is already at a record high?

>> yeah. i think what we're saying is that these were, and have been tax provisions, bln een in the e a long time. they're now xpeered. will they could not be in the code or be farmed out. we could actually low are the rate and the simplify it by getting a lot of the provisions permanently out of the code. meantime, what's your transition? you're right. because people are managing tight today, because there's been a, really, re-invention some in cases almost of companies, the management and the performance companies, pretty good. we're not getting that top-lying growth that comes from investment, and the investment climate in the u.s. competes with the investment climate in every other nation, and -- we're seeing that we're not where we need to be. >> yeah. governor, was eric cantor a big loss for you? >> which one? >> eric cantor? losing his -- his seat as the house majority leader. pushed for immigration. he's pushed for tax reform,

considered a reform-minded republican, that business has backed. was that a big loss for you? >> well, i think even his -- sure, a surprise. you know, and there are a lot of issues where eric cantor, as majority leader, a terrific leader. without getting into his election, lindsey graham at the same time won and he was a positive vote on immigration reform. nobody said because he won that would have assured passage. i think these issues still are important in their own right. apart from the personalities of the congress, and what we need is sort of an american growth agent da and strategy saying we're not going to limp along sub 2.5% negative in the first quarter. ramp it up and what are the strategies in our growth agenda always says tax reform, trade issues, immigration, fiscal stability. key big items. >> governor, i've followed the business roundtable, used to cover it and go down to some of the meetings. i'm familiar with the survey and

would point out that ceos are notoriously bad at predicting the future. y may want to go the other way when they say things are going to slow, and/or vice versa. >> our record is pretty good. when you look at the ceo estimates on gdp, we don't look bad compared to the consensus out there of all of these economists. so we've done pretty well. >> who's worse? wall street economists or ceos? >> maybe we're using different metrics or data bases, but my memory is a bit different than that. >> i've been here three years, but they're pretty smart group and on the front line and know what they're own company looks like, and we're asking them to project the future. it's always hard, but i know we'd all like to project more growth, and more robust economy. >> to go back to the situation after eric cantor. jeb bush is doubling down on

common core educational standards which i think you also support in addition to immigration reform. you have one of the main candidates for potentially 2016 moving further and further away from the core conservative lobby, if you like, which obviously bid cantor so hard. is that wise for him? how does it resolve itself for the country? >> you know, my own background included a lot of elections once upon a time. but i think we ought to focus on what works and solves problems. the ish tarritation are america with washington, they don't think either side is working hard to solve problems. do more of what works. i look around the world and see people trying to do some of the things we were always very, very good at and maybe have taken our eye off the ball a little bit. we need the 700 billion dollars spent in k-12 education to give a better result. we need investment climate that has companies wanting to locate headquarter here, not elsewhere. we need a tax structure, trade laws competitive.

so it isn't ideology as much as effectiveness and we aren't very effective as a government, and with growth strategy, trailing miserably. >> i was really asking whether they can still get the nominations from the grass roots they need. we have to leave it there. john, thank you for your time. jang engler joining us, former republican governor of michigan. thank you. all right. now send it over to jon fortt with a look what's coming up next on "squawk alley," jon? >> the original iphone and original amazon phone might have something in common. the launch carrier. also swisher on twitter ads and maybe hopeful news there, and what do you get when you cross siri and a pepperoni pizza? we'll ask the ceo coming up on xwl. "squawk alley." if healthcare, if it becomes simpler... if frustration and paperwork decrease...

if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪ cut! [bell rings] this...is jane. her long day on set starts with shoulder pain... ...and a choice take 6 tylenol in a day which is 2 aleve for... ...all day relief. hmm. [bell ring] "roll sound!" "action!"

when folks think about wthey think salmon and energy. but the energy bp produces up here creates something else as well: jobs all over america. engineering and innovation jobs. advanced safety systems & technology.

shipping and manufacturing. across the united states, bp supports more than a quarter million jobs. when we set up operation in one part of the country, people in other parts go to work. that's not a coincidence. it's one more part of our commitment to america. good morning. it's 8:00 a.m. in tesla pa palo alto, and "squawk alley" is live.

good morning, everybody. i'm kelly evans in for carl who's off today. joining us this morning, kevin o'leary. investor, of course, on "shark tank." good to see you. way did us always, jon fortt and kayla tausche. amazon expected to unveil a new cell phone and now the "wall street journal report"ing the new phone will be exclusively carried by at&t when it launches extending the relationship with the company providing wireless service to kindl tax and ereaders. jon fortt, reminiscent of a deal with apple? >> when the iphone launched just on at&t and everyboas