good morning, and welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen. becky is out today. we are still mulling over that tie last night between our little country and portugal. among our top story this morning, it is official, general electric is buying alstom's energy business. i think you called this right, joe. the french government backed that transaction after it secured the option. this is statism at its best. the option to buy 20% of alstom from a paris-based construction group. a lot of chatter about the back-an back-and-forth leading up to this deal. here's what jim cramer tweeted over the weekend. he said the ge saga caused ge to sit out the largest part of the rally. if you look at ge's stock, you will see exactly what he meant by that. but here's a deal where, you

know, immelt goes over there, and the only way to get the deal done is the french minister says give me a piece of the action. >> it was less cash, but i don't know, i read some other commentary over the weekend that it would be less profitable near term -- >> right. >> -- than it would have been for general electric, but they wanted it badly, and general electric and ge, jeff immelt, wanted to get the ge financial services part of the business below 30%, and this does that in a much more -- >> but now your partner is the government. >> right. >> officially. i mean it was sort of unofficial to begin with. >> you know what, andrew, if you look at, and remember jeff, a republican -- >> yep. >> -- signed on early to the obama administration because you have -- ge has to deal with governments everywhere. and people call it crony capitalism, but we certainly have -- this isn't the first government that ge has obviously dealt with. and you have to, especially when you are a big conglomerate getting a lot of government contracts and everything else. i mean, they get government

contracts in europe and -- >> when in rome, or in paris, in this case. >> right, but i guess cramer's point is that the ge has been mired in this -- >> don't know what's going to happen. >> right. now that it has happened, you don't necessarily get the catch-up, all of a sudden, and now it goes, okay, now we're done, it's out of the way, it was successful, now it goes up. who knows? it hasn't been a horrible performer. $27 is a far cry -- >> but on a relative basis to what happened -- >> it was 6 bucks in 2008-2009. got to $6, so. >> right. >> i don't know why i know it so well. maybe it's because, well, they gave us -- we had a few shares when, obviously, ge owns nbc. and stocks are coming off another record-setting week. the dow is now on its first six-day winning streak since december, but it's been small moves, and we were talking about it last week. all the new records we set were only up 6% and we've had like 22 new highs. so, it's been sort of

incremental. volatility is at historic lows. u.s. equity futures this morning, we will have jeremy siegel on later to talk about all this, but that's sort of par for the course, up about six points premarket. we'll see what else happened. i wasn't here friday, but i thought miller and morris's piece was spot on. >> we talked about the piece to great length. we'll have a nice segment with kevin on later this week as a guest host. >> he is so smart. >> and of course, you will have mr. druckenmiller coming up on the 16th, i believe. >> coming up on the 16th. but it was just set forth in such clear fashion how, i mean, when all you can do is manipulate the balance sheet and not the income statement, the people that have the stuff are the ones that are going to participate, but it doesn't build for the future in terms of capital investment and growth. and that's why we're mired -- >> he was not on to debate the point, but as you know, later in the broadcast, or maybe during commercial break, you came over

and we talked about it. there is an argument to be made on the other side. >> steve's not talking to me, because i sent him the piece on friday. and you know, the entire piece, the link to it. and i said, you should memorize every word in this piece, and then i said, in fact, you should put it under your pillow, so maybe it can slowly seep into your brain. >> osmosis. >> and he never answered. never -- >> he comes out on the other side of it. >> and you know what else i did? i cc'd santelli with what i sent liesman -- >> you're such an instigator. >> santelli didn't take the bait, either, but it was a great piece. we're hearing more about it, because we're still at $35 billion a month and we're going to stay at zero forever. i thought what was interesting about the piece is it's not just affecting the savers, it's affecting everyone who can't get a job now, because there's no income statement. >> it is income inequality.

>> well, we'll talk about, when we get to soccer -- >> okay. we'll talk about soccer in a little bit. >> a sport that you follow, that you will watch. >> i got into it. i mean, with -- >> it makes sense to me. it's egalitarian. every country has a team. it's like obama's sport, because you know, all countries think they're exceptional, but the united states with its football and its baseball, all countries are -- >> and you can tie. you don't have to win. >> you don't have to be so u.s.-centric to like soccer. like, pekingeekingese favorite has got to be by far soccer. and it ends in ties where no one has to feel bad, no one earn success. everyone feels like -- >> explain this to me, and file like i was watching zoo animals or something. what was -- >> it angered me that you were watching, and i tweeted because it was a jinx you were watching. you finally decided to watch the sport and look what happened. >> can you -- >> and i asked you, what happened? you couldn't find "beaches"? it wasn't on any tv sets anywhere? isn't it on netflix? what about "steel magnolias"?

you can rent that -- >> there was a coldplay concert to go to. i was mack maing my jean shorts. >> we rehearsed this in makeup, this whole bit. what about "fried green tomatoes"? how about that new -- b >> when this guy scores, he starts sucking his thumb. >> yeah. that's because he had a baby, andrew. >> then the other one puts the ball under his shirt, did you see this? as if they're having a baby and they're doing it for their baby? is that what's happening? what is that? >> i will tell you one thing -- >> the guy's sucking his thumb on the field. >> i think we were going to wait to talk about this, but after that first goal, which really hurt, and the guy, you know, it was a mistake with cameron, whatever his name is. >> right. >> he made that and that hurt a lot. swrrks so empathetic. >> no, that was very bad in the first five minutes. >> yes, it was awful. >> the u.s. took control of the game after that. they really did. they looked great. they had a lot of scoring opportunities. >> 15 seconds left at the end -- >> did you see the one bradley almost scored? >> yep.

>> and then, a lot of people were making fun of rinaldo. now, watch this. my take on that, rinaldo is so good, i don't even know if that guy saw the ball. he bounced the ball off that guy's head into the goal. >> it was so perfect. you think the guy that headed it in -- >> i'm exaggerating, but the pass was so perfect that all the guy had to do was -- and rinaldo, that's why he's that good. and he's hurt, probably. i think he's only at about 80%. something that you may not know, if you weren't watching that closely yesterday -- >> what's that? >> you know why his name is rinaldo? >> tell me. >> his father named him that as a middle name. that's his middle name. huge fan of ronald reagan. honest to god. >> really? >> yes, honest to god, even over in portugal. well, in europe, he would be a fan. >> what about the guy who looked like mr. t.? did you see him? >> i did. i saw people talking about that they stole his trademark or something. it's -- we're all bandwagoners, you know what i mean? >> we don't even know what we're

watching. >> my view is that if we had been down 2-1 and then tied it in the end, we'd be very happy. we'd be very happy to have four points. if they told you after the first two games, you'd have four points versus ghana and portugal, we'd be very happy. your point is that germany and the u.s. can just not even play. >> i'm only listening to the commentators who say they could literally go to sleep on the field, just take a nap. >> right. >> they could lie on the field and they would advance, which makes no sense. >> you know what the greatest thing about all this is, is that nbc sports network now has premier soccer league, and every guy -- have you seen the commercial? they say who they're playing for now and then who -- they're in the premier league playing for one of the teams, so at least we're building up -- >> so long as they allow ties in the premier league, i've got a problem. >> ties are fine. ties are okay. you can't keep playing and playing -- >> now there's no more ties. >> you of all people, where no one has to feel like a winner or a loser. it's egalitarian, everybody wins. there's no --

>> you know, i have two boys, twins, and they both want to beat each other. they'll be running somewhere and someone wants to win and we try to let -- >> but competition and capitalism and someone wink and someone losing, we don't need that in this day in age. it's much better to have ties, andrew. i figure if anyone would love a tie. >> right. let's tell you what's going on in the middle east because we can't have a tie there -- >> we were supposed to do it later, but the producers wanted us -- >> we were going to do something different. in geopolitical news this morning, markets continue to pay close attention of course to the situation in iraq. secretary of state john kerry is in baghdad today. he plans to press the prime minister, al maliki, to form a more inclusive government. during the weekend, sunni militants took strongholds along iraq's western border, strengthening supply routes from syria. i don't know if you saw richard engel tweeting about this this morning. take a look at oil prices this morning based on some of this news over the weekend. wti crude now stands at $107.04.

>> if you were maliki at this point, and you know, kerry shows up after -- i mean, maliki can read newspapers, right? he knows what we -- we basically pulled our support completely, not that he deserved support at this point, but i don't know. it's a mess. then your paper, which i'll talk about a little bit. i had a couple of things that irritated me over the weekend. you know, i always do have things to bring up -- >> monday's never a good day. >> but the front page sometimes is sort of okay. the unlikely to turn the -- there's no way they're taking back these cities. air strikes probably aren't going to help that much. and it's, you know, so i don't know what exactly -- >> but that's accurate, iraq's military unlikely to be seen as turning the tide. >> that's what i'm saying. >> you're giving "the new york times" credit, that's good. >> i'm saying it's a piece that's depressing and probably true. the part that got me over the weekend i was irritated about was krugman. he -- whenever he wants to just look at something that's factual and say that it's not true,

he'll just say it's a zombie idea. so, and he uses that with us. he's copyrighted zombie ideas, which, they're ideas that seem like they may -- like capitalism is good and profit incentive is good. those are zombie ideas. this was about the va. and this time, he was saying that the real disaster is the current health care system. the va is actually great, but now we're hearing the zombie idea brought back up. >> right. >> that the va is no good, where he says it provides great health care. but, so, he'll look you right in the face and say, you know, orange is black or two plus two is five. >> are you going to comment on your good friend, hank paulson's op ed piece? >> well, i told you in makeup, it looks like another crisis. he's totally overreacting to. this isn't the first -- >> this is the piece of hank paulson on the front page of "the sunday review" about climate change. >> look, he's an environmentalist, obviously. and he has little st. simons, a beautiful place, a bird

sanctuary. but if you read the piece, he said right there, i don't know anything about science. i'm a businessman, but the climatologists tell me this is true. >> right. >> it's the kind of group think that everybody has right now. so, i don't -- he's just a good citizen. if someone told you that the world was going to end -- >> but that's where i am. i don't know the science. we have talked a lot about the science. >> the reason we weren't going to talk about it, because it's faith-based now. and you have faith in what the climatologists are saying, but you haven't really looked at it yourself that closely. >> i'm assuming that there has to be some chance that the carbon is a problem. >> carbon dioxide. >> carbon dioxide. >> that's the whole thing. they don't even call it carbon dioxide, they call it carbon. and they don't call it global warming now, they call it climate change because it can go up or down. andrew, it's group think. look up orwellian group think, and anyone that -- >> i apologize because i'm stuck in part of it. >> you know what's going to happen, pitch forks and people are going to be outside cnbc.

i'm not arguing anymore. it's faith hshqu ba-based. i don't argue with faith. you can have your faith, but i don't want them protesting outside, you know, the mobs, because any dissent is not tolerating. how much lower can u.s. treasury yields go? our next guest sees the ten-year hitting 2%. you see the report that the u.s. has been cooling, that they fudged the numbers -- >> in "the independent," they had a piece over the weekend about fudging numbers. that's the piece you sent me. >> people have a lot of reason to want it to be true. anyway, with us now is mark grant, managing director of southwest securities. i'll bet you mark is with me on this, but i am not going to get involved because we've got to talk about other things. mark, did you like that druckenmiller piece last week? did you see that? >> well, i was in israel, so i didn't have an opportunity to see it. >> i'm going to send it to you. just basically that, you know, you keep rates this low and you, you know, keep the qe and you will engender a balance sheet

recovery, but a balance sheet recovery, you know, i think $26 trillion additional wealth to the asset holders, but it doesn't really create jobs, it doesn't really -- it's not earned success. it's government fiat that ends up, you know, it does raise animal spirits, i guess, and it does make people that own assets feel wealthier, but it really doesn't help in terms of investment, and we won't get it above 2% gdp using this method. >> i think that's probably right, joe. i mean, i've said all along since the beginning of the year that the quantitative easing and the tremendous addition of assets to the fed's balance sheet helps wall street, helps businesses, but does very little for main street and for the general economy. >> yeah, and small businesses. it helps big businesses, helps the people that own the assets, but i think only half the people in the country own stocks in any form, and only a third own houses. so, if you're not in either of those asset classes, it just

leaves you behind, which is what we've been seeing. >> that's right. i agree with that. >> all right, so now, everybody's come down. what are we going to do for the year? everybody's come down from 3% again, but the stock market doesn't care. so, now we're at 2%, 2.25%. we're back to that? is that good enough? >> well, it depends. in my opinion, honestly, given where the european rates are for the sovereign debt, like france is about 1.78% when i looked at it this morning, united states is 2.6% on the ten-year, i think we're going down to about 2%, and i think then that will have a significant effect on the main street economy. borrowing costs are less. mornings are less. it won't good-bye for the savers, but i think it will flow through to main street and to the general economy as a whole for the united states. so, i think it's a very good positive. >> hey, mark, front page of the "financial times" this morning, big story -- central banks to

cut debt holdings move to protect against likely fed action. they say central banks plan to cut their exposure to longer-term debt to protect themselves from losses when the fed ends its bond buying this autumn. it says a survey of managers who own $6.7 trillion worth of this stuff said they would likely adjust their portfolios in preparation of this tighter monetary supply. what does that ultimately mean? >> well, i read the article this morning myself. i think that your some ways out from that. you have to look at the timeline. the fed is going to have about $4.75 trillion. that equates to 39% of the u.s. treasury public market. and i think taper, not taper, nothing is going to happen in terms of higher interest rates until the fed starts to deleverage, and i don't see that happening any time soon. >> mm. it's like we just keep prodding along. i mean, it's not the worst scenario that we're in right now

in terms of the stock market and people like us. we're doing pretty well. and i guess that will continue, or we're talking about 17,000 on the dow right now. so, it's almost like i don't want to call it goldilocks for people that own assets, but it just doesn't seem like we're moving forward en masse as a country. and i think people feel that, and that's why they're so disconsulate. >> well, i think that's why the fed is going to push down interest rates. i mean, they're not going to come out and say it. you're not going to see hilsenrath make some announcement about it, but i think interest rates, the ten-year's going to -- well -- >> next time, can you just say liesman instead of hilsenrath? >> sure, liesman. sorry. sorry, steve. >> that's cold, man. that's cold. he knows what network we're on, right? >> yeah, 2% on the ten-year and that will be good for the country, and i think that will be a positive for the equity market, unless we have a big blowup in the middle east.

>> you know, if you're steve, you might actually like it that way, because he doesn't want to be -- you don't want to appear to be doing press releases for yellen. [ laughter ] >> oh. he might have a problem. >> i'm just saying. >> it's a little late for him to be worrying about that, i would say, andrew. >> i have utmost admiration for steve's reporting. >> all right, really? okay. that got a belly laugh out of me. all right, yeah, that would never happen. >> mark, thank you for joining us. coming up, from the drama on the field to the drama in the markets, the dow and s&p 500 on quite a run. records falling every day. will it be full steam ahead, though, for investors going into july? also, check this out, harley-davidson are going electric. the most iconic name in motorcycles rolling out project live wire, and it's made its way to wall street on this fine summer morning, but does it still have the wow factor? check it out when "squawk box" returns. e

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welcome back to "squawk box." today's "executive edge" goes electric with harley-davidson. we're going to get to morgan brennan, who's outside the new york stock exchange with livewire this morning. good morning to you. >> reporter: good morning, andrew. yeah, we're standing outside of the stock exchange. joining me is harley-davidson president and coo matt lev ditch. we're going to talk about the company and talk about this new electric motorcycle, but first, meet "project livewire."

the bike is right here in front of us. we are going to power this up. and this gentleman here is going to take it for a test drive. so, we're going to be showing you that as we talk about the company. take a look at that. >> awesome. i love it. >> reporter: all right, so, matt, thank you for joining us today. >> thank you. >> reporter: i think the first place we have to start is the sound of this bike. now, harley-davidson, you can hear a harley coming from a mile away. >> right. >> reporter: you guys have even tried to trademark that potato, potato, potato sound. this bike, as we just heard, doesn't sound like that. how will customers react? >> first of all, it's all about looks, sound and feel at harley-davidson. so, the sound of our traditional bikes is an outstanding part of it, and livewire by design has a really cool kind of turbine wind, kind of like a jet engine. so, when you're on it, you really feel like you're on a rocketship. it's awesome. >> reporter: who is your customer for this bike? >> the target is probably more like the young adult, urban rider, so someone that's living in the city, like new york city, that wants to zip around, have

the nimble responsiveness that this electric bike delivers. but in cities all over the world. and as we see urbanization being a growing trend, and obviously, appealing to millennials, livewire's in the sweet part of that. >> reporter: and talking about livewire and young adults and urbanization, and you targeting that, that's the bigger story for investors, that you have a new motorcycle, the prototype, but also, your two bikes coming out this year are street bikes geared towards the millennial audience. that's different from your core baby boomer, white male audience. what does that mean moving forward? >> we have an approached product development, we invested heavily in a touring platform last summer. the street models that you mentioned, the young, adult, urban customer, and now li livewire, which is a ways away. we're just doing demos, looking for feedback, but appealing to the next generation of riders looking for a great

harley-davidson ride. >> reporter: what does it cost to make this prototype? and given the fact that lithium ion batteries are still so expensive, they're still, as you talked about before, the charge anxiety. how do you make this cost-effective, especially for the millennial demographic? >> cost of the components is a big deal, as you mentioned. so, the cost of all these motorcycles is already in our financials. we've built the fleet. we're going out to get customer feedback. and as technology continues to evolve, which it is, we expect prices to come down, too. so, as we get that feedback, we watch technology, we improve the product, get the cost down, we'll have a product that people can afford and buy in big numbers. >> reporter: one more quick question for you. do you team up with a tesla in a gigger factory? >> well, tbd. we've got a lot of opportunity to get with key partners, and launching livewire is a part of telling the world that we're going electric. >> reporter: great. well, thank you for joining us today. >> thank you, morgan. >> matt levatich from harley-davidson. we're going to keep checking out this bike as the day goes on. back to you guys. >> all right, morgan. i saw that, 92 miles an hour on

a bike, just, that scares me. i don't know. it just scares me! doesn't it, andrew? 92 miles an hour on a bike? >> could we -- does it come with a side car? could we get one? >> it's a bike. >> i want to get a side car for a harley. >> on a harley, but this is just an electric bike. i don't want to go that fast on a bike. coming up -- >> you can only go 53 miles, right? that's the range? >> right, but it can get there quickly. coming up, glittering gold. the precious metal getting some of its shine back, but will it return to its former glory or are stocks just too attractive right now? that's next. and the race for world cup gold. the u.s. could have punched its ticket with a win over portugal. now the match versus the highly favored germans becomes even more critical for the u.s. the drama and the business with our friend that we have, our expert sports guy from nbc. more when "squawk" returns. ♪ did you know a ten-second test

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin. becky is off today. but making headlines, the board of alstom backing a tie-up now with general electric. the deal received the necessary nod from france after the french government secured the option to buy 20% of alstom from a paris-based construction group. crony capitalism is the way of the world. >> horrible. >> it's something we've got to

get rid of at some point, and it's not just france. you know, people think that all conservatives and republicans are pro-business. they're not pro crony capitalism. they're not pro -- it doesn't work right. you have to be able to fail. you have to be able to earn your success. >> so tell me what you think of the next story. bnp par dias -- >> another french company. >> reportedly close to a settlement of $9 billion with the u.s. over violations of u.s. sanctions. you don't want money laundering in a country that can sponsor terrorism in sudan, right? >> bad idea. >> bad idea. >> if i was the government, since i was negotiating with the u.s. government on this and on the alstom deal, i might have -- >> trying to put all the -- >> i might have put bnp and alstom -- not together, but i would try to make one big deal. >> did you see france play, how good they looked, too? i mean, how does all this relate to the world cup? it was a good game. >> i can't get over the fact that, apparently, for us to advance, we can just lie on the field. >> that's not going to happen.

>> we can. we can literally -- germany and the u.s. can take a nap on the field -- >> but that would mean both -- >> -- and they would advance. >> teams don't collude. they're not going to collude, both of them. >> talk about crony capitalism. u.s. authorities are investing -- and you know what, it's on a day where there are on some websites, they talk about soccer games being fixed. you shouldn't be talking about that. >> that's true, actually, right? >> it's on some websites. anyway, authorities are investigating whether the french bank evaded u.s. sanctions. i just said that. related to sudan. but i just said it again, did it for emphasis on the syllables. go ahead. >> i'm very excited about this next transaction. google's next labs is buying home monitoring camera start-up dropcam. we have one of these in our home. the companies didn't confirm a price tag, but recode, one of our partners, reporting it's about a $555 million deal in cash. joe, do you know about dropcam? >> no. >> they let users monitor homes and offices through cameras and hardware and software.

it goes over wi-fi. the deal comes as google expands new markets, including the so-called smart home. and i can literally from my iphone look at the kids. >> that's nice. that's good. >> and you can watch them from anywhere, which is kind of cool and also kind of scary. >> it's also not that expensive. >> 99 bucks and they have a monthly monitoring fee, which you can do. you can tivo it all, so you can go back and look and see what's going on. >> you can -- >> it's pretty amazing. >> you can monitor, i mean, the entire staff, right? >> we tried to exnay on the staff. >> you can put them all over, but you know -- >> right. >> what does your man do after you're gone? does he have other things to do -- >> he has other responsibilities. you know, pressing the shirts. >> yeah, he's got -- it's got to be right, whatever you're going to wear when you get home, your robe and everything else. your hef -- you have one of those hef and your pipe. >> yeah, let's talk about some other deals real quick. oracle reportedly nearing a deal for microsystems. by the way, that guy, who runs

oracle -- >> yeah. >> i think he's got one of these guys. >> oh, yeah. >> he's got a couple. >> he does. >> and that deal could be announced as early as this morning. >> god bless him, too. i love larry. >> mr. ellison should be wearing a robe at all times. the "journal" says a takeover values micros at about $5 billion. microsystems makes point of sale hardware and software for restaurants and hotels. >> how many jobs -- he's bought a lot of companies, obviously, but in his lifetime founded oracle. he's been a net positive for society, has he not? you wouldn't think so, based on your paper and when they out people, they out larry every time there's a -- right? i mean, he's on there every quarter, right? >> he is on there every quarter. >> along with morgan what's her name? anyway, lululemon's founder is looking -- different than walt mossberg and morgan stern? >> morgan stern does movie reviews for the "wall street journal." >> okay, this is morgan sin. >> yes. >> okay, just want to make sure. because i like the movie review

guy. did he like your movie that you saw? >> i don't recall -- >> the one that you cried? >> i don't recall if he -- >> you were balling like a baby. >> which one was that? i think he did like it. you have to like that movie. it's impossible not to. >> you were balling like a -- >> i was. >> more or less than "beaches"? >> i have a thing for bette midler, as you know. >> i was at dinner with her. she's nice, very funny. anyway, shaking up the yoga retailer, chip wilson -- >> you know why he's no longer there? he's the guy who said some -- had some comments about the sheerness and the body -- >> which didn't seem as bad -- >> around lululemon. >> right, which didn't seem as bad as the guy at abercrombie, who said we don't like things that aren't cool. >> except he made the fact that there are people who shouldn't be wearing lululemon. >> right. >> i think everybody should have

a chance to wear whatever they want. it's just, but that's just me. anyway, he's seeking -- don't you? is that the right answer here? >> that's the right answer. >> okay. he's working with goldman sachs as he seeks changes on -- >> given that you have views on other things where you don't care about the right answer -- >> but there are right answers that i care about. the "wall street journal" reports wilson may consider options, including a proxy fight or joining a private equity firm in a buyout. you're the one that wants to throw all the babies off the plane. >> i'm not one for that one. let's talk about the tensions in iraq, coupled with the fed's resistance against raising interest rates, is now pushing gold higher for a little bit of an outlook on the gold market right now, let's get to our next guest, marcus grubb, a world gold council managing director of investment strategy. good morning to you. thank you for being here. >> good morning. >> you don't have a target on gold. you don't have an actual number, do you? >> no. >> you're not allowed to? >> i represent the organization, we're not regulated so we're not allowed to have a price target.

>> higher. >> higher. >> but it's always higher. >> it's not always higher, but as i used to joke with friends of mine in the investment community, if i didn't believe the fundamentals for gold were good, i'd go and do something else. >> are there points where you've said it's too high? >> there are points where we thought the market might try to -- >> you've kept that to yourself, though. >> no, not necessarily. we can talk about our views on the balance of the market with investors. >> where is it? is it going to tread water now or it's heading -- >> well, no, i think as you're seeing now, you've got this jobless recovery, you've got a fed that is very dovish. you've got the issues with the fed balance sheet. you know, i think that the issue's now going to be how do you run those assets off? what do you do with the soma port folio, where is the federal funds rate going to end up in this tightening cycle? all of that isn't necessarily bad for gold, because when you look at this recovery, it's very different from past economic recoveries. on the other side, you've got a lot of risk, too. >> we were on one side of accommodation in qe. >> yes. >> that would have seemed like a good time for gold. now we're on the other side. why would you still -- i mean,

at this point, i'd say we're on the other side of what was a good time for gold, no? >> i would agree with that. >> okay, but you just said it's still good for gold. >> well, yes, only because if you look at what happened in previous economic recoveries with previous tightening cycles, this is much less negative than previous economic recoveries and tightening cycles, so the downward pressure on gold is likely to be less. >> and europe is just now entering. >> europe is entering it, yeah, and then the geopolitical risk rising again with iraq and the ukraine. so, all of that is adding up, i think, to a situation where gold should do quite well. >> that's the world-ending scenario, why people are buying gold. >> no. >> give me the supply side, demand side story. >> that's the wedding season around the world -- >> when you think of china and elsewhere. >> that's the other big untold story about gold is really, people know about the seasonality, they know about asian demand, but it's really the rise of china that's so important here and the way that is flayplaying with the geopolil balance as well. chinese consumers love gold, the central bank likes gold in

china. it's a very different culture. so, effectively, you have asian consumers and government organizations on the bid in this market. >> you made a comment that in india that you're looking to see if modi is an indian factor. what's that about and why is that so important to you? >> absolutely. because of course, with the major victory by the bjp, everybody is looking for the july budget and what mr. modi's going to do in terms of policy in india, and many are looking for him to roll back the previous policies of congress. so, he's potentially going to sell public assets. a lot of the economy, parts of it, anyway, are still owned by the indian government, so there's a lot of asset value that can be liberated there. and equally, they're looking for more economic reform to kick-start -- >> "barron's" calling him the reagan of india. saying thatcher and reagan are the same. >> therefore, everybody's going to buy gold? >> it's about the demographics, it's about wealth. if you get gdp back up to 8 from 4 -- >> buying stocks in india. >> people are already buying stocks, too, and that's a good

call, but i think gold will go up too. it is likely they will take off the import restrictions from last year. >> thank you for your time. i want to ask about the bitcoin. we'll do that next time you're here. thank you for being here. >> pleasure. >> i saw the wink go by. >> you did. >> certainly did. they're a striking pair. i mean, they are. anyway, weren't they? >> you were hanging with them? >> yeah, sort of, a little bit. >> that's what you do. >> the table next to me. >> i saw you eating with some cool, the picture of you with who? >> john legend. he also watches in the morning. vossen consulting group. penn. >> went to penn with my sister. >> got into harvard, but -- i think we should have him on tomorrow, don't you? >> absolutely. >> married to a model, too, did you know that? chrissy teigen or something? >> i didn't. >> check it out. or don't. next, big pharma versus big insurance. the battle is over prescription drug prices, something that can

impact everyone from main street to wall street. find out what's at stake next. "squawk" will return in just a moment.

well, now they mean nothing. welcome back. big pharma and big health insuresers about to go head to head over drug prices. meg is joining us now with more. >> that's right, the drug pricing issue has been weighing on the industry and it really goes across all therapeutic classes, diabetes, asthma, rheumatoid arthritis, but one of the areas of focus is hepatitis-c. a new drug that came out at the end offer, had the biggest first-quarter launch of all time, $2 billion brought in in

the first quarter. but of course, there is competition coming and the question is did it compete on price? there are drug combinations coming from abbvie, merck and bristol myers, another one coming later this year. the question is, can they undercut that price to get market share of $84,000 for a 12-month course of treatment. that's drawn a lot of consternation from health insurers and the government, but another issue is the macro degeneration. now, this is a kind of war between roche and regeneron. they have two drugs that almost drew $2 billion in annual sales, but there's an interesting twist. eye doctors are using another drug from roche, avastin, a cancer drug that works in a similar way to these two drugs. some analysts are saying this actually has 50% of the market in macular degeneration because it's a lot cheaper. it's $50 for a dose of avastin in this indication versus $2,000 for lucentis and eylea.

so, they're pressuring doctors to use avastin and there's a lot of concern on that and weigh on regeneron's stock price last week. >> avastin, that was amazing what happened. and it was all after -- it tries to prevent the vascularization of cancer -- >> right. >> so, it's hard for it to ma taste size, but that's similar to what happened with macular degeneration. >> because you have it growing behind the retina. >> so, how it should work, other companies should in in and compete to bring down the price, because the drug companies will argue how expensive it is to develop it, and it's also, if you treat hepatitis-c, it's a lot cheaper than a liver transplant down the road. >> exactly. >> so, if you can prevent things with taking a pill, theoretically, it should be better. we've got to get our patent stuff together, make sure we have all the incentives to keep developing the drugs, but not allow people -- because people don't understand how a pill, which costs 3 cents to make, can cost $84,000. >> that's true, and then the question there is who blinks first? you know, is it -- everybody

keeps prices high and keeps raising them, but if somebody wants to capture more market share, they can do that by lowering the price and getting in a better spot in the formularies and insurers will prefer them, use their drug first. >> and around the world, since they're global drugs, you've got totally different situations in every country in terms of caps on the pricing and everything else. so -- >> right. >> it's a mess. it's hard to figure out, and it's one of the reasons why health care in this country, costs continue to rise so quickly, but you don't necessarily want to blame the innovators that need that seed money. >> it's true. it's a really big, complicated issue but one that people say needs to be solved. >> what's your beat? i can see you think about this a lot. you need to. >> yeah. >> do you have answers? you don't? >> i'm not sure anybody really has -- >> you have questions, no answers. >> a lot of questions, as any reporter does, yeah. >> same as me. thank you. >> thank you. coming up, a bull for all seasons. squawk market, and andrew's pointed this out, squawk market master yeer jeremy siegel, the

professor. it's paid to be bullish! >> i am thrilled about this. >> okay, all right. he'll give us his forecast for 17,000, which is only 50 points away. that's pretty aggressive. but first, the drama builds in brazil. portugal's equalizer versus the u.s., it was even in the time that they added for stoppage. just seconds -- i think it was the last person to touch the ball, really, was that guy's head. anyway, it kicked up the intensity level a couple of notches. netherlands today at 11:30. will it kick up the ratings and soccer's popularity? obviously, yes, because we're talking about it nonstop. that's next. e moving our company to new york state. the numbers are impressive. over 400,000 new private sector jobs... 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

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just moments from advancing, the u.s. allowed a last-minute goal and was forced to settle for a 2-2 draw. very dramatic against portugal. joining us is dave briggs. i'm not always half full -- i'm always kind of full of it. i'm definitely half full on this. i'm really psyched that we're all talking about this. psyched that i looked forward to the game yesterday, watched every minute of it, and i need more content. i need more sports content, when things slow down. i'm just happy we're all watching. i'm happy i'm looking forward to

chile and the netherlands at 11:30 today. so i'm happy. it was gut wrenching, i admit. but we would have settled for a tie when we were down 1-0. and we would have settled for four points before the world cup started after the first two matches. right. >> we would have been thrilled, you're right. and gut wrenching is the best term to explain what happened yesterday. because going in, you would have thought we get a tie of that game, we are thrilled. and as it went, we outplayed argentina the fourth ranked team in the world. basically throughout that game. and then you see one of the best balls we've ever seen in the extra stoppage time. but yeah, you have to be thrilled if you're a u.s. soccer fan, if you're a supporter of the game that it's clearly growing. i think you're going to see no less than 15 million people watching a soccer game on espn and you've got tremendous social media numbers, it was trending throughout the day and night and even this morning. so look, it's a win no matter what. there's still an 86% chance that

they advance beyond the group stage. >> i mean, jones, that was awesome. and dempsey, who was right -- we totally kicked their butts for the whole -- after that real -- disaster in the first five minutes, that didn't go through his legs but almost looked like it. so that was great. and you know what else? i've said that at the end, and ronaldo did nothing for -- he obviously looks hurt. and people were tweeting about what a loser he was. and he was going to be doing low-key commercials in the u.s. and they should have shut their mouths. i said don't wake the sleeping giant. that was the most beautiful pass, i'd say that he bounced it off the guy's head. the guy didn't even have to head -- he hit the guy's head that went in the goal it was so beautiful. >> it was a thing of beauty. and he incites the masses more than any athlete maybe in the united states. the closest thing we have is lebron. you don't understand why it is people hate that guy so much because he goes out there and wins and looks pretty doing it. but that ball was absolute perfection.

again, we were -- we outplayed one of the best teams in the world. >> definitely. >> and it's a tremendous win. >> that is a good omen. and he's named off ronald reagan so you got to like that. >> yeah. >> i actually watched the game last night, as joe was saying earlier, beaches wasn't on so i needed to fill my time somehow. >> steel magnolias. >> i think that might have been on. so what happens now? all these commentators are saying literally that germany and the u.s. in this next round could literally just like lie down on the field for the entire time and take a nap and they would still advance? >> well you know what's funny about that? there's actually a growing chorus for just having an arrangement with germany, where, yeah, we literally just agree to tie, both teams go on advance beyond the group of death. and jurgen klinsmann said last night i'm absolutely not talking to them, there will be no arrangement. but this is soccer. this is one of the more corrupt games in the world, match fixing

goes on on a regular basis around the world. but i think it will clearly not happen. jurgen klinsmann not only played for germany, won a world cup, he managed that team in a world cup. he wants to go out there and show a hell of an effort. and who knows. try to make something happen. >> he had a good attitude. i kind of have his attitude. okay it happened. let's move on. the way it happened was painful. >> well, he's a little angry at fifa. he said that germany got a much easier path having to play a day earlier than the u.s. >> two other head lines i didn't even see michelle wie play but god bless her and pinehurst, she finally did it winning a major that's cool. and maybe the biggest sports story, the reds hit .500. i think for the first time this season. 37 -- it's been a long road. >> go reds. that is huge. well let's not forget tiger woods back on thursday. back a little early because of the tournament that benefits his foundation. so that should be interesting. >> hope he doesn't rush back. we need him healthy for golf.

anyway, dave briggs, thanks. >> congrats on your reds. >> thank you. >> he's always -- he's on point. coming up another guy who is on point, we're going to be talking about big issues buzzing in washington, and the world, but wall street doesn't seem to be overly concerned about the crisis in iraq. and shake-up in the gop. >> the notebook was not on. >> you guys are too good. our guest host always on point this morning, he's walking towards us right now former congressman and morgan stanley managing director, the one and only harold ford jr. he loves all these topics and more on "squawk" when we come back. tant when you're running a business. century link provides reliable it services like multi-layered security solution to keep your information safe & secure. century link. your link with what's next. means keeping seven billion ctransactions flowing.g,

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crisis in iraq. more cities fall to sunni militants, as secretary of state john kerry arrives in baghdad. michelle caruso-cabrera is back with her tale of the crisis. the dow pushing towards 17,000. are stocks in the danger zone, or is this just the rally with no respect? >> i don't get no respect from my wife or anyone else. >> the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" on cnbc. i'm joe kernen along with andrew ross sorkin. becky is off today. she'll be back tomorrow. guest host our buddy harold ford jr. former tennessee congressman who is managing director of morgan stanley. >> good morning. >> you were guest host -- you were -- i wouldn't mention that other organization. but you were a guest host on

"squawk box" 15 years ago. >> absolutely. because of you. >> right. one of the early guys. and you have done a lot of this on your own. but we we aren't responsible for your entire career. but you have done very well. you could be a senator from new york at this point. is that going to happen? >> i'm pleased with what i'm doing right now. politics remains important to me. but i ran in tennessee. i was unsuccessful. moved to new york. not long after that. and i got married and the most important thing in my life is my family. >> your little one is so sweet and cute. isn't it the best? >> it is. >> unbelievable. how old now? >> six months. >> every month better drns >> doesn't look that tired, either. >> he's a little grayer. >> thank you. >> but looks good on you. >> thank you. >> obviously. but have you noticed -- >> my wife has remarked about it, too. so -- >> that might help if you do want to run. because it adds a little

gravitas. >> or if you don't want to go, i've got a name -- i can set you up with my guy. and -- >> it can work with me? >> our top story this morning, the markets marged towards 17,000. the s&p -- >> no my guy's people say color, too. they think i color my rug. >> right, right. >> s&p 22 record closes this year. meantime the dow had 11. as for volatility, we're still looking at historical lows with the vix 10. 10.85. that's quiet. too quiet. the futures at this hour, also been quiet. we're now down about 15 points or so. but, 17,000 you would figure is something that we have a good chance of seeing maybe this week, on the dow. the ten-year has not been quite as much fun to watch. 2.6. we're going to talk more about the stealth summer rally with

"squawk" market master jeremy siegel who has stayed really sanguine and bullish about the prospects for equities. and why not considering there's not a whole lot else you can do with your money at this point. the best performing sectors this year, energy and utilities and our top corporate story this morning fits that trend. the board of france's alstom is backing the bid for general electric. ge's investment in the transaction worth about $10 billion, lower than i think the cash part went down, didn't it? as the ownership -- as the control that they would exert on the company sort of went down i think the cash went down. alstom's chief executive says he expects the deal to close in the first half of 2015, and ge is one of only seven dow components not to have hit at least a 52-week high since january. i think 28 and change in the high. the other names that haven't participated in just this year's

rally. nike, walmart, p&g, cisco, verizon, and ibm. >> and we forgot to talk about the most important corporate story of the weekend. you saw more on the american apparel story? >> i did. the ceo saying -- >> he wasn't sending the naked pictures. he knew another employee was sending pictures he might have been involved with? >> i saw plured pictures of a naked man. who was that? >> was that him? i don't know what that was. >> you know my quota for naked men per day. >> i know what you're talking about. >> yeah, that's a seinfeld line. so anyway. not that there's anything wrong with naked men. >> no, no, no. >> and we have the goo goo lemon story. >> just an economic report today. the first of several key snapshots of the housing industry this week. the national association of realtors is out with existing home sales for may at 10:00 eastern time. this is not nearly as exciting as the american apparel story. the pace of sales is expected to

register a slight increase from april to an annual rate of 4.75 million units. tomorrow, of course, we get the case shiller report on home prices, as well as the government's look at new home sales. also the price of gasoline edged higher over the past few weeks. the latest lundberg survey showing prices are up 1.9 cents to an average of $3.71 per gallon, and jeefs has been complaining about it for the past week. most of the recent surge in crude oil prices has not yet been passed on to gasoline buyers. >> the american apparel chart looks -- >> i don't want to say it's like a penny stock. it's like three bucks. >> it didn't look good. >> which would make you be less inclined to stick up for the ceo. >> there are lots of women who don't want to shop at american apparel because of him. the question is whether that company would sort of have a renaissance. >> oh, my god, 70 cents. >> it's -- they may have reason to fire him simply based on the

performance of the company. and then when you go in to all of the pictures it gets more complicated. >> it's a $1.19 company. it's all been naked stuff. in geopolitical news the markets continue to pay close attention to the situation in iraq. secretary of state john kerry is in baghdad today so we can all rest a little easier. michelle caruso-cabrera is back from iraq and joins us now on set. you there and back again was the name of the original -- did you have a kevlar? >> we brought kevlar and helmets, too. we were in kurdistan the northeast region where -- intense security there. almost bordering on a police state in some ways. but we never put on a flak jacket, even when we went to kirkuk. i didn't feel i needed it. neither did security. >> the kurds are probably our

strongest allies. >> for sure. >> should we hope it becomes a kurdish -- >> it's hard to say if kurdistan becomes independent then their navive will end. once they're independent then they'll have the imf looking at them. they'll have other places looking at them and then start to see, right, exactly and there are going to have to be a lot more transparents. i think we're going to see a crony capitalist kind of place. but certainly, they've got a lot more for them understanding the rule of law, making sure your contracts are with investors. or ones they can be profitable with. >> just was writing stuff last week, i don't know who we blame, there's so much blame to go around. >> oh, yeah. >> this is depressing. they're never going to take any of that land back. iraqi military unlikely to turn the tide. >> right. >> what is in a three-way split the best case scenario at this

point? >> federalism, right? >> governor kirkuk. what he talked about. you give a lot of power to the regions. their own court system, their own systems of law,ate set rap. do you want me to get to the video? do you want to see secretary of state john kerry in baghdad sitting with maliki. we can roll that. >> you've got it all ready. >> we've got about 20 seconds of video we're told that the message is that he needs to -- there has to be an inclusive government in iraq. we've been told that over and over again. some other data points to tell you about. getting news from nbc producers in the region that are now a checkpoint on the jordanian border has fallen to the militants, as well. jordan is to the west of iraq so they've gotten most of the border with syria. the iraqi military has released video of air strikes in most up. we can't verify the timing. this is the video they released showing they're bombing parts of

mosul. there's also video they've released of fighting in baqubah, which is towards the east. if you don't know where these places are don't worry about them. know if the rebels could take baqubah it's like a direct path to baghdad. when i talk about the pr war, take a look at this video that comes out of mosul. i believe this was shot by journalists. this is not handout video. members of the militant group islamic state of iraq are directing traffic on the streets of the city and distributie ini copies of the koran to passersby. we had a couple conversations with a gentleman in mosul who said that the reports of what was going on there were exaggerated. it spoke to this idea that the sunnis who lived in that city were very frustrated with the maliki government, and didn't necessarily see these rebels as the enemy. >> did he bring up climate change?

>> i'm sure he did. >> was that the first thing -- >> probably the second but pretty close. >> he's walking a real tough balancing act. we saw it with the iranians, to try to suppress these militants. you obviously antagonize other allies. did you get some sense on the ground as to where the kurds may stand? >> the kurds have had one relationship with iran. certain sectors of the kurdish government. so, behind the scenes, what's going on in discussions there? i couldn't give you a lot of details. but certainly you can be sure, look, they sent troops to defend certain areas, right? so, it's a real mish-mash and the alliances there behind the scenes can switch very, very rapidly. remember, talibani at one point. seen kissing saddam hussein years ago. alliances can shift dramatically over there. >> hold that thought. want to bring in another expert into the conversation.

director of the peace building and rights program, author of the forth coming book, a new map for the middle east. good morning to you. you say us, us meaning the u.s., trying to work with iran, is a mistake. why? >> iran is going to be a factor. it has long-standing ties in the region. but iran is only going to act in its own national interests. but if we think iran is going to do anything to help iraq or to advance what the u.s. seeks to accomplish, that's just wishful thinking. >> and -- don't we need iran to actually get involved, or i mean, if they succeed, can't -- i'm going to go backwards. why can't iran be successful in actually helping us? >> iran's already has members of its qods force on the ground. if things get worse they're likely to bring in hezbollah. these are the kinds of allies that we want? a kind of short-term expedient relationship with iran is going

to backfire over the long-term. >> david, this is michelle here. i assume when iran claims they want to help, or we think that iran's going to help, i assume their end game would be to take over, when we talk about iraq splitting up into three countries, they'd love the shia part of the country. and take that over. that would be, to me, their long game. >> so they already control baghdad. prime minister maliki is their man. the government acts as their proxy. there's a lot of energy and commercial contact between iran and iraq. so it's not about iran taking over iraq in the future. they already have what they want. >> but the alternative? >> the alternative is to recognize that iraq is a failed state. that the western parts where isis is present is already a terrorist state. the u.s. has only one friend in iraq and those are the iraqi kurds. we should just recognize that iraq is no longer going to exist within its current frontiers. instead of trying to create this

inclusive government which has been a myth for many years we should just be launching a salvage operation. thinking about the circumstances under which iraqi kurdistan becomes independent and then working with it to secure its energy assets, and to create a pro-western buffer between turkey and an increasingly chaotic and sectarian iraq. >> i can appreciate what you're saying but we're drawing a middle east map. what's the expense? what's the cost for us as a u.s. to do that? wouldn't we need a broad set of allies to help bring that about and reduce the amount of violence and instability that would probably flow from the redrawing i think you're talking about? >> the map is going to be redrawn by iraqis. not by the united states but the u.s. can't be flat footed and react to those events. it needs to get ahead of them and help shape them. of course this isn't going to happen without our ally turkey. right now turkey has huge construction investments in iraq. there are pipelines that connect

iraqi kurdistan to the eastern mediterranean port of jahan. if there is a new state called kurdistan it's going to emerge under turkey's stewardship and protection. >> before we let you go, can any of what you're talking about be accomplished without sending in troops? >> it was a mistake to withdraw our troops in 2011. to send troops in now is too little, too late. we don't need a security solution to the problem. we need a political fix, which recognizes that iraq is already lost and starts to salvage what we can from our friends who are the iraqi kurds. >> what do you make of the fact that ahmed alcohchalabi has sud reappeared on the scene? >> he's always promoting himself. he's being talked about as a prime minister. i suppose the person promoting ahmad chalabi for that job is ahmed chalabi. >> professor, thank you for joining us this morning. >> he's got a great book called

"losing iraq." you should read. >> that's the book? >> yep. >> "losing iraq." >> and he's got another forthcoming book, as well. >> i like the plan. >> i think you might need to have troops. he says you don't -- >> i think he's right. to accomplish it it's going to take some american treasure and perhaps committing american lives to achieving it. >> right. >> next, the gop shake-up, what it's going to mean for wall street, and it's time to spark up the corporate tax discussion with grover, super grover norquist at 7:30 a.m. eastern time. and then it's deals and the future of the internet superhighway with former s.e.c. chairman michael powell. 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. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently.

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welcome back to "squawk box" making head lines, today bank of america plans to announce it will be expanding its rewards program for existing customers, lowering the threshold for those who qualify for discounts on loans and other benefits. clients who have at least $25,000 in deposits and investments at the bank will be eligible. that's down from the previous threshold which used to be $50,000. those will be offered lower rates on marts and home equity loans, higher interest rates on savings accounts, and free stock trades. should also tell you that a multibillion dollar utility deal has just been announced. wisconsin energy is buying intergys energy.

>> i don't know. >> the way the letters are arranged. >> shareholders -- >> that's how they -- >> the new company will be called wec energy group which they did for me because -- it would be very easy to -- >> i try to use the way the words are actually arranged. the letters are actually arranged to decide how to -- >> that's just me. i have a problem with the alphabet. >> you watch it. >> the home state as well as michigan's upper peninsula integrys has customers illinois, michigan, minnesota and wisconsin. it's more fun this way. >> harold's here. it is. this is the way they want to intro this, harold. i'll read it. immigration, gop leadership, midterms, all these things are -- and you're at morgan stanley.

so you have to look at these things from the prism of someone who works on wall street. but i would say, just talking about cantor and you know this, ail politics are local. >> no doubt about it. >> that never changes. it's like the one thing we can count on. he left his -- for people that voted for him in his district, didn't see i don't think. >> that and a big trend whether you're democrat or republican if you're not focused on handling and tending to the blocking and tackling back in your districts you can run into problems. eric has given autopsy of what he thought happened. there's no doubt immigration probably played a role, which it was exacerbated because he didn't have that connectivity to the district. >> i think there were a number of conservative talk show hosts that came in and supported his opponent. but when you talk about where the business community i think looks at what's happening, i don't think a lot's going to change. kevin mccarthy, smart guy, came out with the same ideology but i think he and eric probably share

a similar approach -- >> kevin comes from a democratic family. he was' deli owner. >> paid his way through college. >> what do you mean he doesn't share -- >> what i'm saying -- >> you don't share his political -- >> that's what i'm saying. >> tile try to get immigration reform done. >> he's going to do that too. >> will but probably try to do it in a different way. i want to do budget reform. my only point is i don't think much is going to happen between now and the end of the year. there have been one or two other names that surfaced, had they been elected the majority leader perhaps there have been some different feelings. mainly wall street, but that being said, kevin will be fine. from a republican standpoint and i think that he'll work hard to try to get some issues moved on. but i don't think there's a desired appetite to do a whole lot. >> there may be less. >> i'd love to see tax reform first and foremost. i know grover is coming on shortly for a variety of reasons. i'm talking about the war. we talked about immigration.

i think tax reform in the eyes of the business community is probably more important in the immediate short-term than immigration. >> you go to the valley all they talk about is immigration reform, more so than taxes. >> there's no doubt -- i'm not saying anyone is opposed to it. but i think tax reform, in the eyes of -- >> easier or -- you think the democrats can do tax reform now? >> sure they can. but what you're saying do they have the political will to do it? >> on the democratic side to do immigration reform, frankly, than there is -- >> more of a willingness for republicans to do tax reform than it is immigration reform. and democrats obviously want to make immigration more so than taxes. but you look at the inversions and other things, an appetite is big enough some democrats are going to raise taxes in certain areas which i think would probably meet a lot of chagrin from republicans. all this is a great conversation. i agree with your original point. i don't think much is going to happen if anything and the shake-up in the gop leadership did not slow that down nor will

it accelerate anything. it's going to keep things the same. >> stuff like a blue dog. you always were a blue dog. >> yeah. >> and you think we ought to be taking advantage of the energy play, and that we shouldn't talk negatively about energy and that's still what we hear in this white house. i'm going to do keystone. for purely political reasons -- >> the president said as long as it does not aggravate our carbon foot print he's willing to go forward with keystone. >> report after report said it would not exacerbate -- >> you mean jobs -- >> i mean the keystone -- >> right. >> but the keystone pipeline would increase tax revenue, it would increase jobs, the multiplier -- we've all seen it, you've talked about it. it's a big renaissance happening and the fat that the president has not stopped it is a good thing but they certainly could do more to help it. >> very tactful. anyway. isn't he? he's going to be sticking around. >> we're going to get a lot more

tactfulness for the next two hours. coming up the march to dow 17,000. the s&p 500 inching to 2,000. why sell in may and go away was at least so far not a good strategy this year. see what happens by the end of the summer. also at 8:00 eastern time, "squawk" market master, jeremy siegel is going to join us. ess. century link provides reliable it services like multi-layered security solution to keep your information safe & secure. century link. your link with what's next.

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next sparking up the debate over corporate taxes with grover norquist. plus the changing landscape of cable and telecom with former s.e.c. chairman michael powell. and what it will mean for consumers and investors. "squawk box" will return in just a moment.

welcome back to "squawk" this morning. making head lines we've been talking a lot about ge getting the nod to buy alstom's energy base. spain's santander is buying ge's consumer finance business in europe for $950 million. santander has been looking to diversify away from the struggling domestic market. also lulu lemon's founder looking to shake up the retailer. working with goldman sachs. wilson may consider options including a proxy fight or

joining a private equity firm. chip is the same guy who made some of those comments that people weren't so happy about about certain people who shutting wearing lululemon and others who may not be -- >> it's not just yoga anymore. >> it's not just yoga but it's tight. >> you got a yoga thing, right? >> i'm not a yoga -- i don't -- i don't do yoga. >> we know where you're going with this. >> i don't do yoga. >> you don't? >> i'll tell you about a guy, joe, who does do yoga. >> we know. >> sting. sting does yoga and other things as well. sting has a message for his children. work hard because you can't expect to inherit my health is what he's saying. the rock star joining a list of super rich who have said passing on fortunes to offspring could do more harm than good. sting said he doesn't want to leave his three sons and three daughters, quote, trust funds that are albatrosses round their necks.

>> american enterprise. earn success. >> and bill gates has come out and said similar things. >> as has warren buffett. >> people, if you have a job you love and make $50,000, $500,000, whatever it is, it's the earn success that does it. i happen to agree with that completely. don't you? >> i do. i do. >> i bet he's going to leave a little. >> you would think. >> i mean, you're -- >> where do you stand on that? >> i'm more in the joe category. you take care of your kids, but you make them work. >> yeah. >> what does that mean? >> you protect them. >> i think you give away the majority. >> earn the success. they'll be happier. >> yes. i think it's one of the problems in society. that we are graditing a bunch of smart, smart people from schools, but i think the work ethic in the country -- i'm not blaming on the fact that people are wealthy and passing it onto their kids but there's a way in which you can instill and reinforce at every aspect of

society. we should do that. >> we always talk about staying with the tantric thing. he has six children? not that good at the tantric thing is he? i mean he slips. apparently. right? >> apparently. >> oracle is reportedly nearing a deal for microsystems that could be announced as early as this morning. the "journal" says the takeover would value micros at more than $50 billion. micros makes systems -- with e-mail and stuff? hardware and software for restaurants and hotels. and america's tax system not only driving corporations offshore but the country is seeing an increase in expats. expatriates renouncing their citizenship and cutting their ties because of taxes. grover norquist, rounder for americans for tax reform, joins us now with more. good morning, grover. >> good morning.

>> it's all -- all has to do with, you know, corporations trying to do inversions, and i've seen some of this expat stuff. someone was comparing, grover, expats to people that went to canada, right, during the war. and you know, i guess they're saying that one didn't want to fight for their country, conflating that. but if you're willing to give up u.s. citizenship you're the loser, right, in my view. if you give up citizenship in the greatest country in the world, if that's what you want to do, go ahead and do it. we don't want you here. >> well, two things. we have to look at why this is happening. we used to have lower marginal tax rates for individuals and companies than the rest of the world. during the reagan years we took it from 70% down to 28%. and the rest of the world noticed. that there were advantages to being an american or an american company, you paid lower taxes. we also have a worldwide tax system. and the problem is the rest of the world started cutting their

taxes. canada, which you mentioned, has a 15% corporate rate. we're at 35%, plus about 4.8%, almost 5%, at the state and local level. so about 40% of american corporate income is taxed away. it's 15 in canada. the european average is 25. that's also true, unfortunately, for individuals, as well. and our government, if you are french, and you live in the united states, for a couple of years, you pay american taxes. as an individual. you don't pay french taxes. because you earned it here. you pay american taxes. if you're an american and you live in france for 30 years, france taxes you, and we tax you. we make it very difficult to be an american, and to move around in a global world, either as a company, or an individual. i mean, these people decided for decades to keep paying american taxes, at some point it just got

to be too much for several thousand. >> you know, grover, i can just tell you that -- that the left, and their friends in the media, will immediately tell you that no corporations pay 35 prgs, and they'll say that, in fact, that a blended rate is 12%. now they fail to mention it's because feel are moving operations offshore. so that's why it's a blended rate. but that's the narrative that they'll give you and they'll be supported by "the new york times." and others, so that everyone comes up with that same conclusion. and, in this country, for whatever reason, in the last five years, people think that a punitive tax rate on corporations is not something that -- to really, you know, they deserve. to pay higher taxes, because they're corporations. so it's all part of the zeitgeist that we have right now in this country. >> but, while we're on that issue, and your viewers are watching, when somebody talks about the average tax, nobody makes a decision based on

averages. you can drown walking across a river with an average depth of two feet. what matters is the marginal tax rate, the additional last dollar that you earn or invest that's taxed at 35%, actually 40% if you're in a state that has state and local corporate income taxes. not all do. but on average, about 40%. and then you say, well if you're a canadian company, it would be 15%. do you not notice a difference here? you can't, you know, beat your dog and then decide -- wonder why he wants to live in somebody else's house. we're doing a lot of damage to our companies, and individuals. >> grover, one of the things that's happened as we talked about is number of inversions over the past couple of months, and there's a real sense, you can speak to this probably better than anyone, harold, since you're morgan stanley, a lot of companies want to over the next 12 months we're going to see even more of it. >> yeah. >> in the immediate term is there anything that can be done realistically about this

situation? because there are some people in washington, and even on wall street, who say you know what? we should try to put some kind of temporary halt on this, as we try at the same time, try to come up with some comprehensive tax reform, neither of which i think is probably realistic but nonetheless. >> no, there's not some short-term deal. the united states government has caused a problem by abusively taxing both individuals who live overseas, and companies that deal in international trade, and sell things and do business throughout the world. global companies. we want that kind of leadership, and yet, we do damage to american-owned companies that france doesn't do to french-owned companies. and stupider than france is not where you want to be on tax policy. cut the rate down to 20% on corporations, canada did 15. we can do 20, because we also have that 5% state local tax, as well. to be where europe is on average, 25, we have to be at 20 nationally, and then there's the

actual additional 5% that state and local governments impose. >> okay. >> harold, when you see people, a lot of people like to raise taxes on corporations. they just want to do it. a lot of them on your side of the aisle. they don't see the connection between corporations and jobs. does that ever get to you? do you ever see that, and wish you could change? >> i do. i have been an advocate when i was in congress, and i've been out for lowering the rate for the reasons, grover and i would agree on everything but the sentiment and instinct he has around this i happen to degree with them. if you want to renounce your citizenship in the u.s. because of this, you go right ahead. this is the greatest country in the world. >> andrew's idea is the leaven idea, now carl levin is the guy who put in all the loopholes for whatever reason that corporations use. they think, hey, let's just not allow them to move. let's say you need 50% shareholders. >> a temporary -- >> not just temporary.

but it's just saying, you're stuck here and you're paying us no matter what. it's almost addressing the symptoms of the disease rather than the disease. and grover, right, grover? i mean, to just not allow these companies to move doesn't address the issue. but that's what they want to do. >> okay. not to overexaggerate, but at some point east germany noticed people were leaving east germany. instead of deciding to treat people better in east germany they built a wall. building a wall is not what we want to do. let's find out what we're doing that is destructive to american interests and stop doing it. >> somewhat difficult question for harold because you're in politics and also in business. client comes to you says he wants to do an inversion, what do you tell him? >> i work for my client so we figure out ways to make it happen. from a broader reform point we're not east germany. and i see where you're going with it. but these policies should be changed. to your point, temporary looking -- >> grover -- >> before we let grover go, one thing for him.

he wants the redskins to be named off, do you know this? >> no. >> your favorite person. >> absolutely. ronald reagan. the washington reagans. >> that is a great idea. >> problem solved. >> that is a great idea. >> grover, stick to taxes. he said that -- >> he's got to change it. i grew up a redskins fan. >> you don't want to do reagan? >> he's pushing for reagan. >> grover, thank you. >> if i can take care of the social issues, when does a blue dog like you finally come over and just say look, i can't take all the anti-private sector stuff? when do the social issues -- >> i do the same thing when you come up with the social issues -- >> i'm with you on the social issues. but you're wrong with all the stuff on that side of the aisle. >> not the blue dogs. >> well, okay. when we come back, aereo could revolutionize the way we watch tv. the future is in the hands of the supreme court. former s.e.c. chairman michael powell will be here.

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welcome back to "squawk box." this week the supreme court expected to hand down its ruling in the aereo case. joining us with more on this case as well as the impact of net neutrality, michael powell

former fcc chairman and chairman of the national cable and television association. >> good morning, good to see you. >> so what do you think the supreme court is going to decide? >> well, that case could likely come out today. i think the current betting is that the broadcast industry is liking to prevail. but i think way more important than the actual outcome is really going to be the delicate way that the court writes the opinion. because the danger is that it could affect substantial amounts of critical innovation that's going on like cloud services, remote dvrs. content on ipads. anything that's distributed to anywhere devices. so i think the real meat is going to be in the particulars that the supreme court crafts in its opinion. >> so just to be clear, you are against aereo as a association, but for a lot of the other innovation. and so getting that sort of nuance is key for you? >> well, to be clear, the association doesn't have an opinion on the case. but i think some of our critical members, who have broadcasting

networks, do have exactly that position and i do think as a broader industry, we are very, very worried about those innovative components that you reference. >> net neutrality is a big issue. right now we're in the midst of two big transactions, comcast parent company of this network with time warner cable and of course at&t involved with the directv deal. i was going to say the dish deal. obviously now we have sprint and t-mobile at the same time. what is your sense of the larger issue around control and whether you actually need the scale to work? >> yeah, i think that the -- at least in the video and broadband industries, i think the problem that is increasingly driving these transactions is technology scale. more than anything else. consumers are increasingly very demanding of wanting their video services and other services to

have all the characteristics that are possible in a web-based infrastructure. you know they want better navigation systems. they want content on any device, anywhere. and i think the software talent, and capital required to produce that at scale is something that is not generally been available to the cable industry in particular, and i think that is a critical part of what's driving a lot of these transactions. >> should we be bothered as consumers, from a policy perspective, the idea that there may not be as much competition as far as pipes to the home and when you look in different cities, where folks like google fiber and other competitors have wanted to come in and have strug theed because there's been pushback by the industry and the incumbent that's already there, what should a policy perspective be the answer to that? >> i think at least to say at the outset i don't think the transaction changed the dynamic of the number of pipes available to the consumer's home. i do think that should always be a concern of policy to ensure that the market is robust, and

competitive. you know, ads for whether local municipalities ought to have their own broadband networks, my opinion on that is the freely elected citizens of the state and locality can make that decision but they ought to make it with their eyes identify open because there have been disastrous examples of putting the taxpayer on the look for very expensive networks that require massive capital investment over time, that the political process simply can't us is train. so i think they should be careful about the way they want to use their public dollars but if that's their choice i'm comfortable with that. >> harold ford good morning, chairman, there's some criticism the cable industry's come under for this notion of when to create fast lanes for traffic. can you answer that and give some sense? what interest and incentive if any would there be for an issue along those lines? >> i think the interest incentive and ability is dramatically exaggerated. 95% of a broadband customer's base, 95% of the time is doing things, surfing facebook, using

other applications, that really wouldn't benefit from any kind of prioritization or fast lane capability. i think we're a bit perplexed at the suggestion that we're dramatically interested in creating that kind of world. we have not had net neutrality rules for 16 years. and there isn't one isb that's even attempted to create that kind of business model. we just don't believe there is much of a market there. there aren't that many companies that would even be interested in such a service. and i certainly don't think any kind of service like that would come at the expense of the rest of the capacity. there would never be any dirt lane or slow lane in any case. >> michael explains this to me. a cable company advertises high speed broad band. sometimes even super high speed, and they charge a different price for the super high high speed, because you think you want to be able to get that high speed, and then, let's say you have netflix and it starts buffering and they say it's not our fault, it's the other guy. >> yeah. >> square that circle.

>> two ways to square that circle. first of all the s.e.c. concerned about this in 2008 started doing a measuring a broadband in america study they just released results last week and concluded quite clearly that americans are getting not only what they pay for, but in the cable industry, 102% of what they paid for. so it's quite clear that the isps are providing the broad band that the consumer is purchasing. congestion is a complicated issue because it can occur in many parts of the internet chain. in the case of netflix, i think it's becoming quite clear that most of the congestion was their responsibility. they elected to use congested routes, simply because they were dramatically cheaper than noncongested routes -- >> you do recognize customers who are paying the super, super high speed fee because they think that's going to help them with the buffering and then it's not helping them with the buffering, and who's the beneficiary? not netflix or somebody else, the beneficiary is the cable company. >> i don't think the beneficiary

is the cable company. that complaint will come in to all our call centers that dissatisfaction will result in attaining our relationship and what consumers need to understand is they could not -- they could not be getting that capacity because their broadband rueter is poor. they could not be getting that capacity because netflix isn't managing its congestion well. there are many sources for that buffering to occur. we have to make sure we identify correctly where that congestion is coming from, if we want to improve the consumer experience. and maybe it's as simple as he needs to buy a new router that can handle the capacity he's trying to put through it to his television set. so this is something we have to do a better job of educating consumers about. >> chairman powell, thank you for joining us this morning. >> thank you. >> good to see you. >> notebook. buffering. last night -- you ordered notebook on netflix and it was buffering. is that what happened so then you turned the hockey game on or the soccer game on? >> i tried beaches.

>> and that was -- >> netflix not fast enough? >> it was a -- >> not personal with you, isn't it? trying to download it and it's like a slow lane. >> i'm a time warner cable customer so i'm waiting desperately for comcast. >> go for it. >> because i can't wait. as a customer i think -- i feel like i'm living in the third world in relative basis to where i'm going to be when comcast takes over. >> looking up the most famous like movies like that, and i didn't get the list fast enough. but notebook. >> i haven't seen that. >> once the buffer was -- >> i just started macraming the jean shorts and just decided -- >> all right coming up. the march to dow 17,000 continues. will we get there this week? lots to watch including housing data, and gdp. and "squawk" market master jeremy siegel will join us along with jonathan gallup of rbc capital markets and talk about the stock markets. "squawk box" will be right back. >> up next on "squawk box," don't start your day without knowing the names that will make you money.

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probably not going to run either. look at some stocks to watch. you running for president? >> condetemplating it. >> i want tv news to run that. on the record i'm probably not running. >> only if you get an endorsement? >> i might. >> you're kind of a blue dog,

aren't you? >> i'll take that. >> the new york -- you're a business guy. all right, wisconsin energy is buying -- you say it. >> integrys. >> you say it. >> integrys. >> it's great. >> integrys. >> energy. interjies? anyway, for 5.7 billion in cash and stock the deal will unite the two -- utility companies. and it's worth about $71.47 per share, about 17% premium for integrys shareholders. phil falcone's harbinger capital is offering to buy central garden and pet for $10 a share. harbinger is also offering an alternative proposal in which it would acquire only the company's pet supplies business for $750 million in cash. and that the demo, you know --

>> if this was pets mario, people go crazy buying stuff. >> people go crazy for pets. pay whatever it is. >> coming up a little more spelling bees. joe will teach me. and what you need to watch when the opening bell rings on wall street. and sunni militants take another city. john kerry arrived in baghdad. oil at six-month highs. we're going to discuss the impact of higher oil prices on economic growth when "squawk box" returns. ♪ [ female announcer ] we love our smartphones. and now telcos using hp big data solutions are feeling the love, too. by offering things like on-the-spot data upgrades -- an idea that reduced overcharge complaints by 98%. no matter how fast your business needs to adapt, if hp big data solutions can keep wireless customers smiling,

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the march to 17,000. stock market master jeremy siegel and rbc's jonathan gallup will break down near mile stone for investors. >> the crisis in iraq. militants take another city as john kerry arrives in baghdad. the latest on the instability in the region and what it means for oil prices. >> plus cnbc's top states for business. will your state make the list as the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc first in business worldwide i'm joe kernen along with andrew ross sorkin. looking up something in "the

post"? >> in "the new york post." >> in studio morgan stanley managing director harold ford. former tennessee congressman. lots to talk about throughout the hour. at morgan stanley now making big decisions. like a chairman or vice chairman? >> yes. >> not like a vice chairman. >> i'm a managing director. >> managing director of morgan stanley. you -- >> greg kaminsky and greg fleming. >> my boss. >> making far reaching decisions at morgan stanley as gorman's done -- >> does a great job. >> anyway, first, talk about that, harold's comments on what's happening in washington and around the world. first andrew has -- >> i'm just reading about gisele on page six she was supposed to be at the cannes line on creativity but apparently she left to go back to the east coast. >> isn't she presenting the world cup trophy to the winner? >> i did not know that. >> very valuable things to know. let's tell you about some news. after months of negotiations ge

is buying alstom's energy business. the french government backed that transaction after securing the option to buy 20% of alstom from a paris-based construction group so now they are in business with the french government as well. in other deal news, shares of microsystems, that deal now official. keep an eye on those shares right now. $67.35. because oracle is now buying that company, let me tell you about the price of that deal. of course, with a point of sale technology company, that deal is about $5 billion and make oracle -- make oracle's largest acquisition since it bought sun microsystems for $5.6 billion back in 2009. we've also been talking about this other transaction all morning or at least potential transaction, lululemon shares on the rise in premarket trading. a lot of speculation around what's going to happen. founder chip wilson working with, i apologize to you about this, working with goldman sachs. not marken stanley in this case and others in a variety of

strategic options for the company. that's according to "the wall street journal." those options could include a buyout of the company by a private equity firm and mr. wilson, of course, sort of unceremoniously pushed out after making some insensitive comments. let's just call them. is that -- >> about pants. >> about pants. >> and who should wear them. >> and who should wear them. >> right. >> and shapes and sizes. drugmaker abbvie has raised their earnings guidance. from $3.06 to $3.16. that compares to the prior $3 to $3.10. the street had estimates of $3.13. it now says the positive trends it's seen so far this year should continue in the second half. and finally the government is increasing security or scrutiny, rather, of employee stock ownership plans. this is a look at the "wall street journal's" reporting. authorities say some owners are selling stakes in their companies to employee stock owners or plans at inflated prices. government says these trangz actions cheat more groups who rely on the plans as a source of

savings. joseph? >> it's weird. so they overcharge their employees? >> yeah. >> the market's stealth rally that we have seen with, in fact, 23 of the 30 dow components have hit a new 52-week high since january. so who hasn't? here are the names, ge, nike, walmart, procter & gamble, cisco, verizon and ibm. all of them have been unable to hit a 52-week high this year. also no telecom and consumer discretionary stocks are the worst performers so far since the dow hit 16,000. and if you follow the theory of sell in may this year, you're out of luck. dow s&p, nasdaq all seeing gains since the first of may. dominic chu joins us now. we measured from 1850, dominic, on the s&p and we were around 1850 at the beginning of may. most of the gains have come since may. >> yeah, absolutely. it was flat on that first quarter. uneventful, kind of up, kind of

down for some of the major indices. overall you have some big name companies within the dow. depends what's really contributing to the upside move. you talk about like with the dow industrials year. the best year-to-date performing stocks in the dow. first of all you wouldn't think of caterpillar? up 20% just so far year to date. merck is up 18%. then there's intel, johnson & johnson and microsoft. they are all mossively to the upside by 25% just this year alone. that far outstrips the 4% or 5% gains in the broader market. what's interesting is the biggest point impacts. the dow is one of those price weighted indices so if you look at the biggest point impacts, always going to be names like caterpillar. names like johnson & johnson, merck, cbx, disney. those are the ones doing the best right now. if you look at the sectors in the s&p 500 that are leading the way higher it really is, like you said, all about those utility stocks and energy stocks. remember utilities and energy have been jockeying at least for a bit now over the last couple of months about what's been doing better. when you see utilities, one of

the more defensive seconders leading the way higher you question whether or not the bulls are in charge right now because utilities you only buy them if you think things are going to go wrong. you want to collect a nice dividend check and don't want to expose yourself to the ups and downs of the overall economy. now the interesting part about what's going to happen right now is you mention some of those losers. among the biggest losers are stocks that have the biggest drag for the dow. because, names like visa, names like goldman sachs, names like those ones, they're the ones that tend to have the bigger stock prices in the dow and drag the most down here. but again, with telecom, financials, industrials not participating as much in this overall rally, you wonder whether or not the bulls are going to be in charge for that much longer. and that's one of the reasons why so many people have been saying that this is going to be a maybe near-term top for the stock market. and of course, when we talk about stock market volatility, with you know, near 7-year lows that also begs the question whether or not, whether or not things are about to turn. remember when things are that cheap, it almost behooves people

to buy insurance on the downside when things are that cheap. because we haven't seen these levels in stock market volatility in seven years. >> it's hard to draw any conclusions, caterpillar or nike. caterpillar was $1.15 in 2011. it dropped 75 or 80 in 2012 and their teen, got wushed for whatever reason. nike in 2012 was at $45 a share. it went to $90 or whatever. so now it's pulled back to 80 or so. it had doubled. caterpillar and nike. nike is not participating this year, but compared to what it's already done, you know, it's hard to draw any conclusions. ibm can't get out of its own way. >> they cannot. that's been one of the biggest drags. and of course walmart. you talk about the consumer. the walmart consumer is not the highly discretionary consumer. but walmart shares have been one of the biggest laggards so far this year. and that's a big drag on the dow. you're talking about a very, very rural part of this country,

and walmart might be a bellwether. >> we're very interested in ibm, aren't we? buffet because he took a big stage. not making any money, says he's going to keep it. it's a tough turnaround. >> i still think an active iist that stack. >> on ibm. >> they did on p&g. >> just seems like one of those companies sitting there and unless they can really hit it out of the park for a couple quarters in a row, i think someone says there's something going on here. >> it's interesting plp all right david faber, nice comments during that interview. i thought it was pretty good. >> some great comments. but i think they're, you know -- >> a positive piece. >> a lot of people have said some positive things about it. the question is how long they have to get there. >> more on the markets. joining us now is "squawk" market master jeremy siegel. finance professor at the university of pennsylvania wharton school of business, and chief investment strategist at rbc. jeremy just with what we've

seen, you heard the discussion, and you know that the gdp backdrop is just positive enough to allow for low interest rates, and some growth at companies but are you at this point looking at the stock market saying, it's not acting that well internally, and maybe we'll have a little bit of a respite? >> well, you know, jonathan mentioned about the defensive stocks. telecom, you know, is doing well. utilities are doing well. but i think that's a yield story. i mean, yellen gave us the green light last week if i ever saw one that, you know, she is in no hurry to raise the rates. and that's why the so-called defensive sectors have done well because hey, i've been a buy yield if there ain't going to be yield anywhere else. i don't see that as an internal sign of weakness in the market. >> jeremy, okay, we got low interest rates. but you look at the vix, the

volatility, you look at people saying that no one's trading because it's like a faux market. we don't know, really, we're not seeing price discovery, because the fed is involved so heavily. do you have -- and you look at volume in the stock market, you look at the internals, where fewer stocks are hitting highs. does it look like a time when maybe we're ahead as andrew likes to say over our skis? >> you know it's very hard to interpret the vix as a leading indicator. i think the vix bottomed out in the last end of 2006. now it was nine months later when we hit the peak in october of aseven. but the all-time low of the vix was actually, i think was 8.9 or something like that. and that was in 1997, and that bull market went for another 3 1/2 years. i think it's because there hasn't really been so much surprise in the markets. i mean either with the fed policy. most of the numbers are coming out pretty much as expected.

there have been risks. i think iraq is holding back what i think would be a faster gauge in the market right now. we're waiting to see whether there's any interruption in that 3 million barrels a day. in the oil. but, you know, outside of that there really hasn't been any surprises, i think, one of the reasons for the low vix. >> how about you, jonathan? 17,000 next? >> 17,000 next, and then it will be 18,000. i think the big story here is that this economic recovery is sluggish, and that's going to cause it to be a longer cycle than normal. and what that means is that instead of this being year five of the seven year cycle i think we're probably year five in a ten-year cycle which means this thing has far more to go, and your concern, you know, about the, some of these shorter-term things, i think is not going to be the important story here. it's going to be how far this thing could run. and as far as the vix is concerned, when central bankers get involved and they tell you they're going to smooth out the bumps, what do you expect

volatility to do? it should be lower, given their involvement. >> you listen to anyone at morgan stanley? >> i do. we have our forecasts on this. >> who do you listen to? >> vince reinhard, adam parker. >> adam? >> didn't he final think low in the towel and go bullish? >> i think he's going a little bullish. his analysis is as good as any. >> really? he missed about this much. >> i have a question for professor siegel. dominic just talked about walmart and the stock not rallying. how do you reconcile, we see some of these consumer confidence numbers, yet walmart's customer is an everyday hard working american who seems to think price points are very important to them. how do you reconcile that as the consumer and what walmart is doing with some of your bullish projections? >> well, i haven't had a walmart situation particularly, we know that earnings have lagged throughout the economy and even

at the low level. you know, minus -- we're going to get that gdp. i mean joe mentioned earl remember later this week it's going to show almost minus 2%. for the first quarter. and that certainly isn't good. i think the bright side of that is that earnings actually only went down a couple% in a real bad quarter. you know, we're going to have looks like 3.5% this quarter, hopefully that's going to cover in the second half, and that's one reason why i think the earnings projections are as high as they are going forward. and if those earnings projections going forward are reached, you know, this bull market, in my opinion, certainly has quite a way to run. i agree, i think cycles are longer now. they have been actually since 1990. and so i don't think we're near the end of, you know, this particular business expansion at all. >> and jonathan, we're not seeing the kind of exuberance or interest in the stock market that you would expect close to

the top, are we? >> no. but you are seeing really, since the beginning of 2013, that the public is coming back. that, you know, mutual fund flows are stronger into stocks and that's mostly money that was on the sidelines during the downturn. it is coming back in. but there's a lot more to go. so i think that we really can't see that supporting the next leg up. >> okay, all right gentlemen, thank you. slow but steady wins the race. and that's what we've been seeing with the market. okay. >> coming up next, when we return, oil prices at multimonth highs amid continued uncertainty in iraq. the outlook, we're going to talk about that when we return. first another look at the deal of the hour. oracle is buying micros systems for $68 per share in cash. about $5.3 billion total. shares of micros systems have been halted on that news. and that deal is still not happening -- another deal still

not happening, allergan rejected valiant's unslised bid just moment ago. they said that offer grocery inadequate. we will talk about that and more when we return.

the insurgency in iraq fuelling oil prices which remain close to nine-month highs. good morning to you, john. help me with this. we haven't had a real export problem. they're still exporting out of iraq. >> they're still exporting out of iraq. >> therefore tell us what the risk is. >> i'm sorry i interrupted there. you're right, in fact, they are exports out of the south have continued and, in fact, the july loading program that the iraqis have released showed normal exports out of iraq. however there is a little bit of a cutback in the north that already had been a cutback because of the loss of the big pipeline that goes to turkey and with the loss of the baiji refinery, they've lost also. so there is a little bit of a cutback in northern iraq. you know a couple hundred thousand barrels a day that doesn't sound like much. with a market that's been hit by so many outages, every last barrel lost matters. out of the south, exports continue as normal.

>> give us a history lesson. just walk us through a couple of situations that you think are similar to this, and what the result was, both the short-term and long-term? >> well, i'm -- i've been thinking a lot about whether there's been a similar situation where you had an oil country that sort of got partitioned. and the one that comes to mind, i think most recently and it's still going on would be nigeria, where various parts of the country have not been able to produce for quite some time because of rebel activity there. the difference here is that locally, for the consumer, the partitioning of the country still leaves most of the oil on the side of the more stable part, whereas the northern part, the unstable part, is -- it's resource rich but it's not been developed yet. so the other situation i would say would be south sudan. sudan and south sudan which was a legal partition, two separate countries and the greatest part of the oil was on the south sudan side and that has been shut in. iraq seems to be a different

situation because the oil production is on the side that's so far is safe. tough to find a specific analogy but they're out there. >> right now, more upside risk or downside risk? >> i still think there's more upside risk. you know, the rebels have made gains. you have the oil companies pull out of -- pull some nonessential personnel out of the areas. remember they've just got service contracts there. they don't have like gigantic reserves that they book for their balance sheets. so if things get unsafe they'll pull out. i think the biggest problem with all this is that iraq was expected to be a major supplier of oil for the world. really out to 2035 when you look at the iea projections iraq was going to be a big source of gains for a word that was going through more than 110 million barrels a day. it's hard to see with a country that's so split, and with a resource base that's now held by islamic fundamentalists, that you're going to make those numbers. so i think that's the biggest

concern. and that's certainly an upside risk long-term. >> what -- john you predict, you've said that before, you thought the next 15 to 20 years would produce low cost all production which would obviously have a positive effect. can we reverse what's happening now, and see that trend start back up? or are you based on your last company do you think that's not a reality? >> the oil is low cast down there. some of the new barrels they're projecting were going to be less than double digit in cost per barrel, compare that to say the balkans up to $70 or $80 a barrel. as far as whether it can be reversed, i don't know that there's enough in the south, in the southern part of the country to offset losses that might be shut away in the northern part of the country. let's remember that if you look at the history of the middle east countries, when all of them have had these huge political upheavals, whether it's the shah in 1979, the country's almost never get back to where they were preupheaval. iraq earlier this year finally

produced the same amount of oil it did before the iraqi invasion of kuwait in 1990. so you see how long it takes. so the idea we're going to turn things on if there's some instability, that's very tough to swallow. that would be flying in the face of many, many years of history. >> john we're going to leave it there. >> i feel like i have a better context. thank you, john. >> thank you. still to come, senator ron johnson, a member of the foreign relations and homeland security committees will join us to discuss iraq, and secretary of state john kerry's trip to baghdad. ♪ time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim,

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welcome back to "squawk box." a so-called private internet app is growing in popularity in iraq of all places. it's called fire chat. the "financial times" is supporting the app is being embraced in iraq where users can message either other without fire of the government shutting down access to the web. fire chat was started by a start-up. it is the second largest market behind the united states. number three, iran. coming up when we come back, john kerry's message to iraq and senator ron johnson on what america should do about the situation there. plus we're going to talk corporate tax reform and much, much more with the senator right after the break and before we do that, though, take a look the u.s. equity futures. we have red arrows with the dow looking like it will open off about 13 points.

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welcome back to "squawk box" this morning. let's take a look at some stocks to watch. ahead of trading on this monday's session, oracle is

buying micros systems, $68 per share all in cash worth $5.3 billion total. micros stock had risen last week on reports the two sides were in talks. oracle says it expects that deal to immediately add to its earnings. and shares of, joe? >> i'm not helping here. >> integrys energy. >> yeah, yeah. >> on the rise this morning. >> excellent. >> it's being acquired by fellow utility wisconsin energy at $5.7 billion cash and stock. we should have harold do it, too. >> anybody but you. >> integrys at $71. how about dollars like that? >> drugmaker abbvie has raised its earnings forecast. there's been expectations that strong trends during the first half will continue in the second half. abbvie now sees full-year profit up $3.06 to $3.16 that's up from the prior $3 to $3.10 estimates that had been -- >> i don't know -- i mean we've

been talking about it a lot. but it must have been something else before. >> it was a spinoff. abbvie is a spinoff from -- was it not from -- >> maybe it was from abbott. >> that would make sense. >> will you look that up? we're going to talk more about iraq as it affects what happens in the markets and the crisis there. also the fallout for majority leader cantor's surprise primary defeat. republican senator ron johnson is a member -- >> abbvie is abbott by the way. >> member of the foreign relations committee. i think ron john -- right? they use that senator or senators really don't like nicknames, probably, right? >> well, good morning, guys. >> it's already taken? where do you want to start, senator? i mean we don't want to just hear your side of the aisle's analysis of all the things that obama's done wrong in iraq. what -- i mean obviously, it was kind of broken before he got even in to office. so what do we do to try and fix

it do you think? >> well, it was stable when he came into office. now our job needs to be to maintain any stability in the region that exists. right now i think that's in kurdistan. so i think we need to do whatever we can for the kurds up in the north, to make sure that that doesn't get overrun by isis. help those folks actually take their oil to market over time. just what i'm afraid is going to happen here and i think what we're seeing right now is as "the wall street journal" termed it the establishment in the state of al qaedastan very dangerous for the world situation. but we really lost what influence we had in iraq he we bugged out in 2011. so you know, we got to recognize our role in the world is to provide stability where we can. right now, in terms of what remains of iraq, providing stability up in the northern region. >> good morning, harold ford. does that call for america to help provide stability for the sending of u.s. troops.

different from the stability and back to the instability, one thing that was present when you talk about stability in iraq was that we had a big troop presence. should we recommit more troops and be willing to risk american lives to create the stability you want in iraq? >> i don't think we can go on the offensive. right now it's about being on the defense. we need to protect the 5,000 americans that are basically in baghdad, which is going to help hopefully stabilize the baghdad region as well. we certainly don't want to see baghdad fall. if we have to send military advisers into kurdistan, the northern region there, i wouldn't be opposed to that. i want to do whatever i can to help president obama and when secretary gets -- when secretary of state kerry gets back, see what his report is, and try and be as supportive as possible to do what we can. but again, we lost our influence. this is a disaster. i don't believe it was a disaster that could have happened. this really is snatching defeat from the jaws of victory. right now, what's the reality of the situation? it's not good.

this is a pretty grim situation. we need to do whatever we can to contain the al qaeda forces that are establishing a pretty strong base, setting up -- basically setting up governance in these regions now. this is a tragedy. >> so let's switch gears quickly. because you were a business owner, and i think we've spoken about this and gotten to know each other, and the tea party or some representatives, came to you with the idea of running and you won and now you're almost a seasoned vet at this point. but the way you got elected, versus what's going to happen in november of this year, and then in 2016, do you have a formula for what the republican party needs to do? because you can have all these great ideas but if you don't get elected you can't do any of them. how do you win back seats in 2014, and how do you win back the white house in 2016? i think we need to tell the american people what we're for. from my standpoint we really do

share the same goal in america. we want a prosperous america. we want every american to have the opportunity to build a good life for themselves or their family. i think the overall conception usually what we need to do is make america an attractive place for risk taking, business investment, business expansion and job creation. how do you do that? well you have to bench mark your competitive factors with those of the rest of the world. we have to have competitive tax environment. we don't have one. right now our tax system is driving american companies overseas. here's what i know all the private sector. i agree with all that stuff. i understand. during the debates. when the party's going to be fighting with itself about who the real republican party, what are the social issues. what do we do with immigration if the republicans want to get the hispanic vote at this point where do you come down with that? what do you do with gay marriage what do you do with these social issues that one part of the party sees as so important but makes it to other people thinks it makes it less likely to be

able to have the entire nation vote for a republican. >> what do you do? >> i think we're at a moment of triage in this country. we have to understand that we're really mortgaging our kids' future. it's really the fiscal issues. the economic issues that overweigh all the other ones. >> you need to respect -- >> people that might be a republican that might vote republican are going to want to know about those social issues before they're going to vote for you purely on economic terms. so i mean i hear the far right say there was no senator or there was no president dole, there was no president mccain and there was no president romney because you ran moderates. but then you look at what happened to why harry reid is still a senator, because they ran, you know, someone unelectable there. you look at what happened in delaware. what's the right mix for the republican party to garner the most sort of votes that it can? >> i think we first have to recognize that the social issues are going to primarily be

decided in the states through democratic process and that's the why it should happen. then i'll certainly go with the judgment of the american people on terms of where they want to fall on, whether it's abortion issues or gay merge or wherever. let the voters decide that. generally these things aren't really decided on national basis. but you know from standpoint of immigration we've got a lot of migrant workers in wisconsin. i've never had a migrant worker ask me for citizenship. they just don't want us to deport their moms and dads or husbands and wives. i don't think we're going to do that. we need to actually solve the this this problem, we need a functional legal immigration system way to secure the borders is you eliminate or reduce all the ibsenives for illegal immigration. you have to have a functioning guest worker program and things like e-verify. we have to be concerned about the southern border in mexico because that's right now where most of these young people are coming from because of all the violence in places bake

guatemala. these are huge challenges. this is a point in time where we've really got to concentrate on the big issues. try not to let the other issues that really aren't going to be decided by the federal government -- >> i know you want to avoid talking about the social issues but on gay marriage joe had a tough conversation with governor perry last week on that very issue, and it is a defining issue for so many people. i understand that. again that would be -- and it already is working its way through the states. you're having state government after state government you know, vote for gay marriage and in the end we're going to let the voters decide that. i think that's the best way of doing it. on all these social issues these are arguments that should be taking place between individuals and you know, let people win the hearts and minds of americans and let the voters decide. >> where are you on gay marriage by the way? >> i'm pretty traditional guy. almost 60 years old. i think marriage is between a man and a woman. but again if the voters decide that they want gay marriage i'm not going to oppose it.

all right. >> i think that is part of the challenge that republicans are going to have. you said it best, joe, from the outset, they get in the middle of these presidential debatess and they have these huge fights about who can be the most from the 1940s and the 1950s. the country's progressing. not to disparage senator johnson at all, but the country is in a different place than a lot of the issues. women's issues, or marriage issues, or immigration. civil rights across the board. so until they can get comfortable there, and appeal to the mainstream, i think they're going to -- this prosperity targ up the, most americans will tune it out. >> blisten, what -- >> what america's looking for is security. and i think we need to point out that, you know, our ideas are going to provide them greater security, and let's face it, president obama, you take a look at his record, he's reduced our job security, our income security, our retirement security, our health care security. now we're seeing his policies are reducing our national security. so i don't want to totally run a negative campaign. we have to show the reality of

the situation, how those policies haven't worked. we've got to show the american people we're for it and how our policies will created opportunity, the types of jobs, the strong middle class that americans are craving. >> last time, harold, it was not republicans, it was gingrich, trashing private equity, which gave, you know, the left a perfect inroad into how to defeat romney, basically, remember. and even, you know, senator booker now, having said it made him sick the way it was done last time. and a lot of people did not like the way business was sort of taking out to the wood shed just to win another election. >> i don't disagree with any of that. probably some things ron johnson and i agree on when it comes to ways to pass policy to promote and encourage investment, innovation and growth. when you talk about security, senator, if you are a gay american and you believe the republican party doesn't want to protect you in your home that's a fundamental security for you. if you're a woman -- >> senator i know -- >> you've got to get to that issue. >> i'm all about one we agree on. let's figure out what it is we

agree on and i think again we agree on trying to get a prosperous america, let's concentrate on that. >> okay, senator, we'll -- interesting time to be an american in the political scene, isn't it? so we'll see. >> it's interesting no doubt about it. >> because we've tried it this way for six years or so so we'll see, and the pendulums do seem to swing at times. senator, thanks. we appreciate it. ron johnson -- >> that's a surf shop. we're just going to have to go with senator. senator johnson. >> we'll go with senator now. >> thank you, senator. coming up next, the top states for business is back and this year it's better than ever. after the break, a preview of this year's list and break down who is in the running for that top spot. we're going to be right back. also nelson peltz's daughter is starring in the new transformer's movie. ise financial noise

financial noise financial noise

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oh, yes. welcome back to "squawk box." talking about -- the dow marches toward 17,000. we're letting the dogs out this morning. only seven dow components that have not hit a 52-week high since january, ge, nike, walmart, p&g, cisco, verizon and ibm. >> you're going to talk to scott cohn now. >> i am. who faber did that tweet about speeches. >> when i said why were you

watching soccer was beaches not available? >> scott cohn. >> it is now time, again -- i don't want to faber anything. it's time again for our annual rankings of america's top states for businesses. senior correspondent scott cohn made his way to this year's top state where he joins us now live to tell us how it all works. >> made it all worthwhile, scott. >> good morning to you, scott. >> thank you for your favoriting of that. >> hey, good morning, guys. here we are. we're in the top state for business. we're not going to tell you where i am just yet. but i can tell you that this is a very exhaustive process. as much fun as we had with it in the promos that you showed before the break and everything else that we do over the next couple of days, we've really -- we think that we've developed the most comprehensive study around there about state competitiveness. here's how we decide where we are.

the competition is growing. >> this is texas governor rick perry. >> growing nasty. >> when you grow tired of maryland taxes, squeezing every dime out of your business, think texas. >> which states back up the tough talk? >> why is our arizona-based company relocating manufacturing to upstate new york? >> we put all 50 to the test in our exclusive study. we measure the cost of doing business, including taxes, wages, utilities, and rent. the economy, where are the jobs going? which states have the healthiest housing markets, and the healthiest balance sheets? infrastructure, road, rails, ports and airports. which state has the best workforce, and the best quality of life? we look at technology and innovation. including scientific, medical and agricultural research, patents, and more. business friendliness, including the legal and regulatory climates. education from kindergarten through college. which states have the resources,

and the smarts? we measure the cost of living, and access to capital. so a couple of things that we've done differently this year as you've heard. we're looking at job growth as part of our economy category because we wanted to be a little more forward looking and there are a lot of states that are adding jobs so that's going to make things interesting, and in our technology and innovation category looking at, along with everything else that we've looked at for the past eight years we're also looking at agriculture because there are billions of dollars going toward that and we've heard from a lot of states about taking that into account. so here's the plan. we will be live all day tomorrow, counting down the top five. and then on the closing bell tomorrow afternoon, we'll reveal where i am. america's top state for business. and coming up later today, your first of many diabolical hints about where i am. so you can guess that. talk to us on twitter using the #topstates. and our special website, topstates.cnbc.com already has a lot on the issues of state

competitiveness, and of course when we unveil the top state you'll be able to see where your state stacks up. guys? >> all right, scott. >> we got -- >> he can't hear us. >> so let's talk. i think, it's just fun every year to try and figure it out. >> but -- >> if you did this same parameters every year you come up with the same like texas. texas every year or north dakota or south dakota. last year, i think it was virginia wasn't it? i think there were some things that made it virginia and there's a lot of positive things. virginia is for lovers. but you heard the things that he said we've looked at a little bit differently. farmland, agriculture. and he said job creation. so we should be able to get a clue why it wouldn't be virginia this year because they changed it enough around so that it's that going to be virginia. but who -- i don't know. >> i want to say east coast. >> but that lake looked like -- >> looked like out west. >> that looked west to you? >> looked a little west to me. looked a little westy, too. >> maybe he was in vermont. >> vermont is never going to be the top state for business.

it could be last state every year. for business with that -- >> they ee lerkt a socialist senator for good sakes. it's not going to be -- >> we will continue to watch and we will see scott and we will get the answer very, very shortly. coming up a lot more -- >> i wasn't using that as a pejorative. he is a socialist. >> former congressman turned morgan stanley managing director harold ford who is not' socialist, he is a capitalist, tomorrow on "squawk box" we're going to talk jobs, the economy and tech with two business experts on different sides of the spectrum. former honeywell chairman, one of our favorites larry bossty and former sun microsystems chairman. that's at 6:00 a.m. eastern time. [ male announcer ] the mercedes-benz summer event is here. now get the unmistakable thrill... and the incredible rush... of the mercedes-benz you've always wanted.

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terms and they get $500 million loan in all of that. >> coming up more from our guest host, harold ford. check the futures at this hour. they're down. but not as much as they were. "squawk box" coming right back. huh...fifteen minutes could save you fifteen percent or more on car insurance. mmmhmmm...everybody knows that. well, did you know that old macdonald was a really bad speller? your word is...cow. cow. cow. c...o...w... ...e...i...e...i...o. [buzzer] dangnabbit. geico. fifteen minutes could save you fifteen percent or more. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments.

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welcome back. today's guest host, former senator harold ford. he'll spend more time with us. since inside the morgan stanley world, we haven't talked about m&a and the animal spirits of deal making. what is going on? >> we've got the best in the business, kindler and his team -- >> the softball, i lobbed it right up there. >> going to attack him about allergan and valeant? >> we could, we could. did you read those e-mails. >> i had my boys on, we'll talk about. we're the firmest position, what james has been able to do, what they have written about him, the firm, how he's repositioned the firm, and as a result, we hope to keep doing what we're doing. >> in terms of the deal making activity and what you think that means to the overall market? is it a lagging -- people say, deals are a lagging indicator, some people say, some people say, the a leading indicator. where is it for you?

>> i think it says there's a lot of cash, activity, things companies want to do. my concern, something dominique and jeremy were talking about earlier, everyday hard working consumer finds himself or herself. we didn't talk about the minimum wage increase, other things to increase wages. where i agree with ron johnson, i hope democrat and republican candidates for higher office talk about ways to increase wages, ensure as you're talking about the number one state for business, how we ensure education system from k through 12, adopt the common core, which republicans seem to be uncertain about, but republican governors are in support of. >> where are you on common core? we don't talk about that a lot. >> i'm trying to figure out what's -- i see the teachers unions and the far right -- >> aligned. >> -- are aligned. >> something's amiss? there this does not compute. i'm not just knee-jerk opposed to. i don't know what the big deal is. if it holds, if it's a way of

increasing teacher accountability, i'm for it. i don't know, what does the far right say? >> they don't like -- they believe that it's some federal intrusion. >> i'm torn. president obama is a big fan, right? >> so are republican governors. >> that's -- that's off-puttingen bush is for it, so that -- >> you have a number of republican -- >> enemy of my enemy. >> anything that increases -- produces better outcomes, kids being smarter, able to find jobs, attract jobs. >> but you don't want people to take tests that can't think either, right? is that some of the criticism? >> there's no doubt about it. if you are able to perform basic science and math challenges, work through them at a level, we ought to measure that. >> you get 1 million people get an extra two bucks and 500,000 people go to zero on -- does that -- >> you and i have talked about

this before, they ought to reduce taxes, particularly restaurateurs. >> the other -- >> no reason we shouldn't expand that. that encourages, promotes, rewards work on both sides. >> and generate jobs. >> the other point about tax reform, no doubt, immigration is high on the list, but tax reform would help in a big, big way, small, medium, large ways. >> help me for 2016, hillary, what's go on? we had a book come out, this press tour. some people said it's a failure. you've seen that. there's a new -- another -- >> top ten. >> a new book raises all sorts of questions about her health and this and that. >> it's par for the course. they invite a lot of praise and invite a lot of contempt. reality is, ron johnson's point about ideas and solutions, she's got to off air lot. the more she does that, not only secure the nomination but puts herself in a great position.

>> how are you that she squeezes out some other potential candidate and doesn't run? >> not much. i think it's an open marketplace. in 2008 barack obama ran. 2016 it's likely she'll face some opposition. >> from. >> intensity i doesn't know. >> but isn't that the issue? if she doesn't run. >> someone from the left may run, we've heard typical names, biden runs, elizabeth warrens and others. >> were you at correspondents dinner? >> i was not. >> biden, he was hilarious. >> we know he's right on iraq. >> look. >> what happens wrong with biden? >> the more out there, a positive thing. mrs. clinton, she would have to be expecting -- i'm not worried about the book. what i'm most concerned about anybody, including her, what are your ideas? what are the plans? what is the vision? what are the answers? you do that, you can win. >> i'm backing biden. joe endorsing biden. you think he wants that endorsement?

>> you think jeb? >> i think he does. >> maybe i should back hillary, that will mess it up. maybe i should back her. >> you'll be back? >> i hope so. >> promise not to do any other tv until you come back? >> montgomery ribs and report back. >> no other tv, no other shows, especially in the morning. join us tomorrow. "squawk on the street" is next. good monday morning. welcome to "squawk on the street." i'm carl quintanilla with simon hobbs, cramer, faber are off today. we kick off the last full week of the quarter. futures not too far from friday's close. a lot of housing data this week. of course, we'll keep our eye on dow, 17,000. ten years, a shade under 2.6. europe mixed as manufacturering pmis slipped for a second consecutive month. china's did show