"squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we have the june adp employment reports. forecasters say the economy probably added 208,000 private jobs last month. today's 8:00 p.m. eastern number comes up as a leadup to tomorrow's pregovernment holiday payrolls report. the dow coming in within two points of the 17,000 milestone for the first time earlier in the session. it ended up closing up still, but up at 16,956. this was its best day in more than a month. the s&p closing at a record high. check that out, 1,973. this is something like the 23rd record high close for the s&p this year. take a look at the futures this morning.

check out the stock market in the early going. right now, the dow futures are up by about 19 points above fair value. s&p futures are up by 1.5 and the nasdaq is up by 3.5. if you were watching oil prices, you'll see right now they're down by half a percent. 104.85 for the wti. the ten-year note at this point is yielding 2.556%. take a look at what the dollar is doing this morning. you'll see right now the dollar is up against the euro. euro is at 1.366. the dollar is down both against the pound and the yen. the yen is 101.44. gold prices look like they are up barely, $1,327.80 an ounce. among our market newsmakers, we have jim grant, jim paulson and andrew i'll send it over to you. >> thank you, becky. our top corporate story this morning, jpmorgan chairman and ceo jamie dimon announced late

yesterday has been diagnosed with what he's calling curable throat cancer. kayla tousche joins us now with more on the story. a lot of people on wall street and washington are talking about this situation. >> all up and down the quarter. it was a surprise to shareholders after they got this memo yesterday after the market close where jamie dimon disclosed the diagnosis which came earlier this week. the most important part we've been mentioning is that the cancer is curable and and it is localized in one area. dimon said he'll begin treatment shortly, roughly eight weeks of chemo and radiation here at new york's memorial sloan kettering hospital. in the meantime, he will continue to run jpmorgan. in the memo, he says the treatment will, quote, curtail his travel and during this period i have been advised that i will continue to be actively involved in our business and we will continue to run the company as normal. our board has been fully briefed and is totally supportive.

his prognosis is for a full recovery. that prognosis is good, but it brings the issue of a successor. given the fact that at this point we don't know how the treatment will affect him over the next couple of months. here you're looking at a graphic that i know joe will enjoy talking about as he has criticized our coverage of some of the -- >> thanks for sharing that. you've got the successors all ready to go. let's talk about them, go ahead. >> gordon smith is the chief of the consumer unit. he joined just a few years ago and he will be the principal candidate at least in the near term. there are others, including the head of the investment bank in mary erdes, as well for several years at this point, too. that is something that the board, andrew, will be thinking about. he is a galvanizing figure, but a unifying one. certainly there's a lot of support for him to make a full recovery and a lot of people. >> and we send our well wishes, as well been stay with us.

we want to continue this conversation. i want to bring in our cnbc contributor. we've seen a number of people with companies who have had health scares over the years who have gone through this and been fine on the other end. warren buffett -- looking -- becky is probably -- but at his own problems, prostate cancer just two years ago. this is curable. because it's curable, how does that change or not change the way you think a board is supposed to think about this? >> well, i think that's a very important question. even though we have worked over the succession issues, it is not exploitive to take a look and make sure that this board does have a deep entry .they do. for all kinds of reasons. jamie is 58. he tells us he wants to stay on for another five years. with this prognosis, i think there's a very good likelihood

that he will. but you still have to take the hat off and salute the board for disclosing this early. yeah, warren buffett was a good example, andrew. you mentioned bouchet, would is another good example. plenty of others, mike walsh at teneco, joe might remember that one. >> we never heard from steve jobs. >> apple is a terrible example. we were given misinformation that many reporters believed and swallowed. >> we were following apple jets around to see where he was. and found out he had a transplant in tennessee or something, right? >> we didn't find that out until late afterwards. he didn't officially step down until just before he sadly passed away. we had william black chock-full of -- flat on his bed for two years. you find less dramatic examples. we talk about pinnacle foods on that near deal that went through last month with tyson. as the ceo there had been the

ceo of kraft, he disappeared for weeks. nobody knew where he was. so they're a company that had a large stake in them, philip morris, altria, ceo stepped in in a custodial way. but the information wasn't out there. steven ross, time warnerer, we see a lot of bad examples that have come in where people haven't shared the information. and i think this board, being so quick, jamie surrendering health privacy, ceos have to surrender their privacy rights in this kind of matter, succession plans, they've offered some names. they're excellent names out there and i think that's quite encouraging. but strength is continually very strong. we had this discussion, i know you feel we have it a lot. i remember the -- did you

just -- i remember the three people. weren't they the same ones you did three months ago? >> they were. three months ago. >> when mike stepped down, there were different names. we see with these names, we learn more about them, that they have a tremendous strength, that, you know, matt zames, he stepped in as the cio to take over at a time of distress. people have been battle tested in a lot of different ways. and i think that that is pretty exciting. >> do you believe that -- >> and battle test sg a good word, too, because even though he will continue to run the company day-to-day, this will give an opportunity to some of these deputies to actually take on more responsibility should they need the to and prove their worth in some way. >> but there has been a view that this is a firm that can only be run by jamie dimon to some degree. when we had the debate about chairman and ceo, there is an argument to be made that there is a jamie dimon premium in terms of how investors think

about this firm. is the firm so battle test and had so bench ready that it is just a toll booth and can operate irrespective of who is running it? >> there are firms and, of course, in recent crazy headlines we've talked about all these grotesque founders who have been overplaying their hands in so many ways. we see the boards felt they were kind of wrapped around the charisma of a creative founder. that's not the case in this situation. there are a group of ceos that don't exit unless it's a feet first exit. they're call monarchs. jamie, we have lots of examples, has just done the opposite. and the people who have left, they are net producers of talent for other companies. there aren't a lot of banks that do that any more. you take a look at where mike cav noo gnaw has gone, the increase in salary to go to carlisle as president and jess

elliott at blue mountain. >> this board is not to be rifled with. you have the former ceo of kpmg on this. you have this -- a guy who lives, the head of the audit committee, he lives that job full time. he's belting around the country all the time. he's not flamboyant, he's not grandios. a lot of people don't know his name. jim crown i think that's done a very good job in the risk policy committee. there is significant depth on the board. >> even though we always think of these big institutions as institutions, i think of them to some degree as sxeem to the degree that clients are loyal to people and not institutions, you know, a lot of e-mails i got last night were from clients, people who are jamie dimon people. there are some people who are jamie lead people, some people

who are -- but people. and the question i would just ask to you is how many of those people do you think are institutionalized? >> jamie dimon has proven himself many times over. he's a come back superstar in his personal career and brought a 48% return to stock price in this company and despite the crazy pounding of some of those approximatelies he had, they still turned to record profits. so that's a hard act to follow. however, the loyalty is now to the constitutionalzation of who jamie is. you can find companies where it is the individual. here, jamie does a good job of bringing forth these other

names. they get a lot of prominence. they're well battle tested and experienced again elsewhere. the head of consumer banking there was a very big start at american express for a quarter of a century. steve jobs, people worried if there was a good team back there. >> kayla, thank you and john, thank you. i'm sure we're going to continue talking about the topic throughout the broadcast. when we come back, will the july 4th weekend be a washout? we get a forecast after this. i didn't even know this storm was coming until yesterday, but look out. it's going up the east coast, i think. there's also something smoldering at hookup and dataing app tinder and not in a good way. >> crazy, crazy story. >> more "squawk box" right after this. what if my abdominal pain and cramps come back? what if the plane gets delayed?

what if i can't hide my symptoms? what if? but what if the most important question is the one you're not asking? what if the underlying cause of your symptoms is damaging inflammation? for help getting the answers you need, talk to your doctor and visit crohnsandcolitisinfo.com to get your complimentary q&a book, with information from experts on your condition.

welcome back to "squawk box." if you don't know by now, the u.s. has been knocked out of the world cup after losing to belgium 2-1 in extra play. u.s. goalie tim howard was amazing. he set a world cup record with 16 saves. now the u.s. team will need to qualify again on the road to russia if you're watching in 2018. and -- >> such a heart-breaking game. they were so great. >> he was great. the ball seemed to be --

>> i'm not going with heartbreaking because it looked like they were not going to -- >> you have to be -- >> oh, i watched the whole thing. it was so close. it was a heartbreak because they came back. in the last memberships, the u.s. had a chance to put it away. >> to the far side, it looked like we needed to practice a lot more for the next four years. >> yeah, but tim howard was so amazing. i did see a graphic where it showed the shots on goal. >> did you see how crisp the passes were on belgium? with us, we got the ball and said we have the ball. >> to me, it locks like the way it's reflective of american personality. >> and i'm a fair weather fan. i don't know anything about the sport or anything, but we watched and it looks like maybe different -- >> look, even the announcers, the american announcers were admitting that they were getting completely dominated in terms of play time. but -- >> the parts that i saw -- >> but it's the way the americans play, right? they'll take a shot at it. they're like, no, entrepreneurs

are crazy and they'll shoot for anything, they go and they written. they're not as -- >> more shots than any goalie in u.s. -- in world cup history. >> and they had all these chances. it looked like it could have been 16-30. it isn't quite as much of a thriller. we all got caught up. that very first goal out of ghana that we scored right out of the box got us rolling. but then the portugal game when we were up, 2-1, that was the highlight for me. >> we came back in the last minute of regulation play. >> germany. it was -- >> there are conservative websites that point out that it's a really -- the people who are watching are all liberals. and that it's only -- >> you're not. >> but they're saying the argument for that is because it's the only place that america can ex either its dominance and crush everyone. >> right. that's for sure. because we essential did not do that. i thought you said you were into it. >> i saw it, but it wasn't a poll. it was a --

>> it said 30% of the country is watching. that's a poll, isn't it? >> 30% of the country watching anything, that was amazing. >> only 30% of the country wag following it. >> i can't believe you've changed your mind. >> i haven't changed my mind. i haven't changed my mind and we should be proud. >> i am proud. >> they went a long way. but they need -- they definitely need to practice a little bit compared to -- belgium looked like they were going to win the world world cup yesterday. >> you know eight of the guys on the belgium team play in the english premier league. it was basically -- we were playing manchester united. >> i know. i know. >> they did an amazing job. >> just watching it, i just didn't feel real confident through the whole game like we were really going to just kick their butts. >> but it had a lot of drama, kept me at the edge of my seat the whole time. for a game that was 0 will have 0 for the first 90 minutes, amazing. >> but the times that even we

did have a chance to score, it didn't look like -- i mean, they were setting up play after play. i told andy, it looked like on the first period -- >> it looked like we were playing with broken noses. >> and we were hurt. it looks like it was a half-court field in the first half and then a half-court field in the second half and not on -- >> that's what i mean. tim howard was amazing. >> because the ball was there the entire time. we would get it and we would be so happy to get it. >> it reminded me of lundqvist, only worse for the rangers. >> it was exciting, though. could the fourth of july weekend be a washout along the east coast? we're going to get the forecast from the weather channel's alex wallace. >> it's going to be a wait and see situation as we get to the fourth. clearly, the potential is there for some of you on the east coast to deal with an impact. all thanks to our first named

storm of the season. tropical storm arthur, here is the latest advisory. sustained winds at 60 miles per hour. right now, 90 miles east of cape canaveral. the bigger impacts here in florida will be felt well offshore. here is the radar showing you what some of the rain is. mostly to the south and east of the system down towards the bahamas. seeing some of the downpours and the gustier wind. as you look at the winds on the east coast, ranging about 5 to 10 miles per hour. you'll head offshore, 43-mile-per-hour winds being measured by a buoy. severe impacts will be felt offshore. we have tropical storm watches up from the melbourne area, up towards daytona beep. there will be spots we have to keen an eye on. that extends farther north now. myrtle beach up towards wilmington. now a hurricane watch includes the outer banks of north carolina. that will be an area that we watch the potential for hurricane conditions here within

the next 36 to 48 hours. arthur, here we are. where is it going to be heed? off to the north and curving to the north and the east. notice here those winds are increasing. we could be talking about a category one hurricane potentially impacting us here in the eastern parts of carolinas and noticing as we head towards the weekend, generally remaining offshore. we're still impacted, at least potentially could be impacted here along the southeast coast of massachusetts abdomen we get into the early part of the weekend. we'll be watching this very, very closely. a jog to the west could mean bigger impacts for parts of the east coast. we'll send it back to you guys. >> thank you for that. i'm hoping the weekend is going to be okay. in the meantime, we have a crazy story. did you guys see this? this is like pure wonderful business tabloidness. dating start up tinder -- do you know about tinder? >> i know what tinder is. i've never used it. it's a crazy hookup app, right? >> it's a hookup app. >> you say is there anybody around here who wants to hook

up? >> you're asking me -- >> you get pictures and pick the ones that -- >> this is a hot or not hot. >> and they choose you and you choose them, then -- >> we've talked about that other one that was like this. >> magic can happen. >> what was the other one? work with me. >> oh, the one we thought it was a fake one at first? >> yeah. where you had to put your name in if you were interested. >> and it worked through facebook, right? >> right. it was the same concept where you both had to say you're interested and you don't know whether the person is interested. >> until they tell you afterwards. >> tinder, though, is like -- that's something to start a fire. >> start a fire. >> not familiar with it. my kids are 14 and 12 and i'm 58 and totally, you know, married. so no, i don't know about it. >> let me tell but the other side of tinder. >> tell us what you know about it. >> this is -- >> do you know her? >> i don't know her. >> would you like to? >> we should have her on the

program. we should because i believe, if that's who i think it is, tinder is now the target of a sexual harassment lawsuit. a former executive whitney wolf, i believe that's the picture i just saw, i could be wrong, suing the company owner saying tinder's ceo dejected her to a barrage of horrendously sexist, racist and inappropriate e-mails and text messages. check out the new york post. paper saying now the tintder ceo sean rad has allegedly described boss barry diller using some colorful language, words not exactly appropriate for tv. we're not going to explain what that means, but you can go check it out probably in the new york post. but if you look at the text messages, i felt horrible for her. this guy, who -- they were dating, apparently. and then she must have broken up with him or something and he then -- she then saved all the text messages and this guy

treated her horrifically. how you could actually hang out or work in an office place with somebody saying the things that he seemed to be saying to her quite difficult. this is always -- >> break-ups are never good. >> the challenge with break-ups and break-ups inside the office are even more complicated. >> what were -- you can't give us any did he say details? >> do you want redetail? i think i can't, actually. >> really? a little too much? >> there's a lot of colorful language, a lot of descriptive language. >> like red, purple, green and -- >> things we probably shouldn't talk about. but, you know, our audience does have google and now a lot of people have multiple screens in their home while they're watching so they can go check it out. okay. microsoft, meanwhile, is teaming up with qualcomm and other tech companies. they want to establish standard ways for household devices, light bulbs and thermostat toes

talk with each other. >> remember wink? >> it was just yesterday, wasn't it? >> just yesterday. >> this is important because many smart home products being launched are incompatible with each other and analysts compare the current environment in silicone valley to the rivalry between beta mac and vhs. that video format was three decades, already. i guess it was. if there's anyone that still has a beta mac, those were big clunky looking things, weren't they? >> i like the vhs. >> i don't know if we have a vcr to play any of those any more. >> yeah. those big -- >> a special vhs rewinder. if you didn't want to cue the vhs machine to rewind it because it could break it. >> usually you're in trouble.

>> be kind rewind. >> remember when the first dvd came out? it was like, that can't work. >> do you remember -- before the dvd, there were big disks and very expensive. >> they were very modern. >> if you knew somebody who had one of those disks, that was something. let me tell you about another story. i want to get your view owes this one, as well. the uk data regulator is now reportedly probing facebook over the social network psychological experiment. you probably saw this news over the weekend. facebook wanted to alter the emotional state of its users and leave them to either look positive or negative content. now the uk agency wants to know whether the company broke data protection laws conducting that experiment. so when you go on, they would show you different types of things, guys, in your news feed. and it was an experiment to see how you would react. of course, the user on the other end didn't know that they were being a participant. they were an unknowing participant in the experiment. >> okay.

yeah, i know that that got -- like i said, i'm -- you know nothing about me. >> you're not hanging out on facebook? >> no, no. >> how would you feel if it happened on twitter? >> if they were watching what i tweet? people do watch what i tweet, like four of them. >> i don't follow anybody. how many people do you follow? you use it as a news feed. >> i use it as a news feed. and i need to learn how to do lists. do you guys now how to do lists? >> no. >> i don't know what that number sign indicates and why you would use it. >> #joe kernen is aawesome. >> is there one of those? i like joe kernen fan. she has tens of dozens of followers. she's like me. when we return, the possible catalyst that could move stocks to the next level after the dow just missed the 17,000 milestone. plus, at&t's chairman and ceo

randle stephenson will join us at 7:00 a.m. eastern. it will be his first interview since striking a nearly $50 billion deal to acquire directv. >> and as we head to break, a look at yesterday's winders and losers. ...for the year. hi. sorry. just want to say, i bundled home and auto with state farm, saved 760 bucks. love this guy. so sorry. okay, does it bother anybody else that the mime is talking? frrreeeeaky! [ male announcer ] savings worth talking about. state farm. in india we have 400 million people frrreeeeaky! who don't have electricity and i just figured that it's time i do something about it. what we're doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. i think we could create a far more efficient system

across the whole network where we could actually draw down different kinds of energy based on when it's needed by the consumer. a smarter energy system is made with the ibm cloud. the numbers are impressive.y to new york state. 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 where businesses pay no taxes for ten years. become the next business to discover the new new york. [ male announcer ] see if your business qualifies.

at every ford dealership, you'll find the works! it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

[ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪

good morning. and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. let the jobs countdown begin. the june adp report is set for 8:15 eastern. the dow jones consensus calls for a headline number of 208,000 private payrolls today. they're just guessing, though. and everybody saying for the thursday jobs number, which you don't hear that often. the release comes ahead of tomorrow's preholiday government reports payroll thursday. ahead of the data, u.s. equity futures this morning, after a great day yesterday, which was cool, because no one thought there was any reason for the market to go up. >> best day in a month. >> and nothing po positive. everyone that comes on here talks about it's too expensive.

>> even people who do do it for a living. >> most of those people are -- if you sell side, you don't really do it for a living. basically, everything you say is to try to cover your butt. because we constantly ask them for what it's going to do over the next week. how could they be right, anyway, with what we want them to do? >> set up for failure. >> that's right. >> guys, get ready. >> yeah, right. it was the first day of the half, right? >> yep. >> and the first day of the quarter. so people need to -- if it's going to keep going up, you need to have it on your books at the beginning. the ten-year note, did you see these irish treasuries? they go out to 2023. and it's at 2.095%. >> wow. that explains why the yield.

>> ireland. it's a great place and they've gotten their act together. >> but that's why the yield on the ten-year is still 275%. >> more on the markets from dominic who will be here -- who is actually already here. >> yes. we're not going to let you talk. >> you're here, but you're not really here. >> i'm not going to let you talk for another minute, please, please. >> i'm holding my tongue. >> we've got corporate news to tell but this morning. the big news this morning, jpmorgan boss jamie dimon told employees and investors that he's been diagnosed with throat cancer. he does say it is curable. in a letter released yesterday dimon writes while the treatment will curtail any travel during this period, i have been advised that i will be able to continue to be actively involved in our business and we will continue to run the company as normal. our board has been fully briefed and is totally supportive. i do know he's supposed to take a vacation this summer, as well. it's about an eight-week treatment. it's a day-to-day thing.

there are going to be some tough days in all that. >> absolutely, yeah.. >> the regimen is draining. but from what we can tell, if it's just confined to the lymph nodes in the immediate area, then the prognosis is did. and we wish him well and his feel. the dow at the doorstep of the s&p 500. the s&p 500 closing in on 2,000. the nasdaq is at a 14-year high. it still has not ever seen where it was when we built this $160 million headquarters. >> no. we're inching back. >> we are. we're getting there, finally. >> dominic now joins us with -- now you can -- now. >> now i can talk? now i'm here. >> you were 12 14 years ago. >> no. 14 years ago i was 23. >> oh, my god, really?

>> i was just getting out of college. >> just a baby. >> just a baby. >> were you a sell side guy? >> i was. and at one point i was a buy side guy. >> dom, where do -- >> the argument people are making for why markets are moving up to where they are, we got within like 1 much 7 points or we'll call it two points at 17,000. it was two big stocks yesterday that drove things and that was visa and ibm. what was interesting about those two stocks is they are still the lagger to date. these are two stocks that both have an extremely big weight. visa is a 215 billion company

right now. it's a price thing. goldman sachs, the visas, the ones with triple digit prices are going to move the most of the dow. it may be one of the reasons why we see the dow try to touch 15 those. it's been interesting to see where the leadership has come from. number one, it's caterpillared. disney, intel, merck, cisco, two tech companies, a consumer discretionary company in disney and in some of these stocks, caterpillar had a rough year last year. but it could be this row taking. if you look at the lagger during 16,000, you can see pfizer, walmart, boeing, horizon. the question becomes whether or not they will look avenue these leaders coming up. take the profits from the winners, reinvest in the losers. what it comes down to for a lot of investors is whether or not the dow can really get there. and the dow has been a laggered

among the major u.s. indices, right? >> it's only up 1% for this year. >> but since dow 16,000, it's up 6 of%. match that to the nasdaq, which is double that performance. even the s&p is up 10% and the russell is up 8%. so the if the dow had just gotten a 10% gain, like the s&p did, since dow 16,000, we would be far gone of having this conversation with 17. it would be 17-6 right now. that's where the dow should be if it matched the s&p. the question then becomes why is it lagging and whether or not those stocks that are holding it down, like the visas and ibm so far this year, then assume a leadership role. >> the catalyst next week, the financials vnl been participating, as well.

>> there is time again for that? >> i am off next week. >> wait, both of you guys are here. >> i'll be here for monday. >> seven, but five work days. >> you know, people watch the dow theory a lot, where the transports and whether everything confirms new highs. but when they keep changing what's in the -- i don't even believe in the dow any more. now it's just what you pointed out. they changed it. so the dow theory doesn't mean anything? >> there's so many components to it. >> he was in yesterday, so how about the guy from the s&p -- >> over at s&p, right. so if you look at the dow, the transports is one component of it. but transports are at an all-time high? they change and it put visa in and a couple other things, who

knows -- >> somebody made an editorial decision that these types of stock res now indicative of the u.s. economy. right now, let's look ahead to the adp employment report that comes ought at 8:15 eastern time. joining us now is michelle mierts from bank of america merrill lynch and guys, thanks for coming in today. >> thank you. >> so the jobs report, are you looking for what we've been talking about, just over 200,000? >> well, a little bit above consensus. we're at the da,000, but it's not coming in at 34. the six-month just below 2000. we're saying the continued gradual hearing in the market, it's not a shift in terms of real momentum building, though. and that i think is a critical question. when do you start to see an economy where we can be convinced that the recovery has built speed, that it will prove to be sustainable and that it

filters through to the average consumer, business investment picks up. and i think there's been some missing links in that. i don't think tomorrow's report is going to tell us very much different than what we've seen so far. >> serat, i know you've been very bearish. we haven't seen the breakout, but we haven't fallen back into a big recession, either. >> no, we haven't. we're looking for some indication that we're going to get some positive numbers out of the economy. you've got auto sales that were pretty good, manufacturing that is pretty good. we're still fully invested and we think going forward, you want to be invested over the next three to five years. whether the shoe drops drops -- >> it is a long-term call. >> it is. and we've been bullish for the last couple of years. been big. there's no other alternative right now, so you have to find your spots within the equity markets and what's going to do well. some of the old school companies might not be doing well, so you really have to see where you

want to be. >> how do you judge? how do you gauge that? what should we be looking at? >> i think you want to look at companies that grow. at this point, we've gone through the cycle of everybody taking their balance sheets, paying down their debt. who is going to have top line growth, who is going to do not financial engineering, but have real cost increases where they're going to pass through. maybe the autos are going to do some of that. we like those. but i think where you're going to get hurt are more of the companies that can't grow any more. >> michelle, just in terms of what we're measuring with the economy, is this the year where cap ex starts to pick up? it's waiting for -- over the last several years. >> it really has. and i think what we've seen so far from the economic data has been mildly discouraging relative to expectations. so we head into the year beyond the first quarter gdp? >> not beyond the first quarter, because the balance from q1 hasn't been that impressive yet.

we've seen other data. given how much we contracted in the first quarter in terms of gdp growth, we should be seeing a 4% or 5% economy in q2 andite not quite there. it's looking like maybe 3.5% growth. so i think it's built a healing in the economy. we're growing. we're not pulling back into recession. but i don't know that this is the year where we break through and we start to build much strong momentum when we can realize 3% plus growth for the full year. i think it's going to be challenging. >> and s is erat, if you were looking at the u.s. stocks is the one place, is there a second place that you would say for aetss? is it a foreign market? is it bonds? >> i think what you want to do is look at u.s. companies, maybe their domicile here but they're growing in emerging markets. that's a much better way to play it than play the volatility right now given the oil and new government there or even in china. focus on companies that can allocate capital and can grow not just here, but overseas and take advantage of growing middle

class that's over 3 billion now. >> okay. serat, michelle, thank you both for coming in today. we'll talk to you again soon. >> thank you. coming up, more americans looking for cheaper prescription drugs online. the medicine res shipped from overseas and now big pharma is taking action. that story and more coming up here on southbound spb southbound. "squawk box." "squawk box." "squawk box." we needed 30 new hires for our call center. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click;

then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 binesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2. and our luggage was immediately... taken to... stolen from... our room. the hotel manager was clearly behind it. he was such a... kind man. con man. my husband wanted to... hug him. strangle him. and to this day we're still in contact with... the manager. the police. i wish we could do that vacation all over again. don't just visit paris. visit tripadvisor paris. [ male announcer ] with millions of reviews, a visit to tripadvisor makes any destination better.

welcome back. u.s. equity futures have been higher. take a look and you'll see right now those futures for the dow are up by about 11 points above fair value. yesterday we saw the s&p setting

yet another record. nasdaq sitting at a 14-year high and the dow at one point during the trading day was within two points of 17,000. in our headlines today, the u.s. apartment vacancy rate was 4.1% in the second quarter. that was unchange from the first quarter, but it was down slightly from a year ago. new construction rebounded as weather improved. rents remain at record high nominal levels, but real estate research fi searcsearch reis sa limiting ability to raise rates at a faster pace. when we return, the battle over big pharma being waged over internet prescription sales. then at the top of the hour, we've got at&t chairman and ceo randall stephenson. squawk returns in just a moment with that. of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump.

get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

tdd#: 1-800-345-255050 tjust waiting to be found. ties tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 bring what inspires you tdd#: 1-800-345-2550 out there... in here. tdd#: 1-800-345-2550 out there, tdd#: 1-800-345-2550 there are stocks on the move. tdd#: 1-800-345-2550 in here, streetsmart edge has tdd#: 1-800-345-2550 chart pattern recognition tdd#: 1-800-345-2550 which shows you which ones are bullish or bearish. tdd#: 1-800-345-2550 now, earn 300 commission-free online trades. tdd#: 1-800-345-2550 call 1-888-648-6021 tdd#: 1-800-345-2550 or go to schwab.com/trading to learn how. tdd#: 1-800-345-2550 our trading specialists can tdd#: 1-800-345-2550 help you set up your platform. tdd#: 1-800-345-2550 because when your tools look the way you want tdd#: 1-800-345-2550 and work the way you think, you can trade at your best. tdd#: 1-800-345-2550 get it all with no trade minimum. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account and earn 300 commission-free online trades. tdd#: 1-800-345-2550 call 1-888-648-6021 to learn more. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.

thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. zblmpbls

. welcome back to "squawk box." americans spent twice the average for industrialized countries upon the prescription drugs, in part, because drugs in this country are so expensive. lots of people try to save money, of course, by buying drugs online. big pharma is fighting back. scott cohn is here. he has a look behind the scenes. >> they are fighting back hard, pfizer made $20 billion in u.s. revenues. the company says that's not what all this effort is about. we got a look pence this pfizer lab in connecticut. they're buying drugs online

here, too. then they test them and actually build criminal cases for the fed feds. >> the big motivation here is patient safety. when want to make sure when a patient gets a pfizer medication, they get a pfizer medication, not some knockoff. >> that is brian donnelly, he's a pharmacist and undercover agent. he says what is produced by the counterfeiters is downright scary. >> they will use things like brick dust to hold it together. they'll use wallboard, sheet rock, to hold these things together because they compress well. then, of course, they may use different things to color these things, printer ink, for example. to color it. >> now, storefronts like these are popping up, they will place an order for you. they say they are operating

legally and big pharma is trying to scare you. so we went under cover to put these places to the test t. result of that test surprised us. we will have it later for you today on power lunch. like everything else, this is not as simple as it may seem. >> surprised you in a bad way, though? >> it took an interesting twist, put it that way. basically, we went under cover to a number of these facilitators, got some product, had it tested and went with some assumptions that were not necessarily right. >> that's a good tease. i want to see this. can they put canadian, what was the name? >> they typically say things like canadian meds. >> they try to make it look like they are going across the border instead of ordering them online? >> people think the canadian drugs will be the same trucks for cheap, in fact, we found that canada has almost nothing

to do with this. there are drugs coming from overseas, it was water in the drugs. >> what are the top five states for importing drugs? do you know? >> it rests with the top states. >> you know, wherever there is a crime, we send you you, you are there. can you do the top five states for american greed perpetrators? >> wow. >> have you thought about that? >>ly do that on the top of my head. >> new york, connecticut, jersey, florida and. >> look at you. >> california. >> massachusetts, i'll bet. california, maybe. >> in california. >> dodge, chrysler. >> you didn't think about this? top five states for white collar criminals? >> that's a good one. we thought of all different kwiendz of spin-offs. >> you got to do illinois. >> that's for crooked politicians, as we now know. is there not a governor if jail from chicago, from illinois at

this point? >> current governor is not in jail. >> well -- >> arizona also has some shady things going on. >> how many, he stands for five. any other state. >> it's impressive. >> great hair there. coming up, the "squawk" news-maker, at&t chairman, ceo, randall stephenson so in the studio. >> great. >> this is his first tv interview since striking the deal and the competition, and the future of internet speechltd "squawk" returns in a moment. at humana, we believe if healthcare changes, if frustration and paperwork decrease... the gap begins to close. so let's simplify things. let's close the gap between people and care.

. good morning, everybody, welcome back to "squawk box" on cnbc. i'm becky quick. our top story this morning is the markets and jobs. we have been waiting for the adp employment report. it's set to be released at 8:15

eastern time. they are looking for private payrolls. we will see where we get. the futures have been higher this morning. this is coming off a big day of market gains yesterday, the dow futures are up. s&p futures are up by close to a point s&p closed at another record yesterday. nasdaq closed at a 14-year record. the dow at one point was within two points of 17,000 for the first time. take a look at the ten year note, it's at 2.556%. we will have more in the next half hour. jim grant of grant's interest rate observer will be joining us. >> j.p. morgan chairman and ceo jamey wright dunn has been announced he is diagnosed with what he is calling curable throat cancer. in a note yesterday, he said, in part, while the treatment will curtail my travel this period, i have been advised i will be able to actively be involved in our

business and we will continue to run the board as normal. he will begin roughly eight weeks of chemo and sloane kettering. we wish him our best. it is tough treatment. it is kurable within they catch it this early. >> we made great strides in different areas in recent years. now to our news-maker of the morning. about six weeks ago, at&t and directtv announce plans to merge their businesses under a deal they say will be more competitively and beneficial to consumers. both companies took to the hill to make the case for the proposed merger. here with us now with his first interview since announcing his deal with directtv is random stephenson, chairman and chief executive officer of at&t and it's great to have you in studio and -- >> our best to jamey wright, too. he's an executive committee at the business round table. all our thoughts and prayers are

with jamey wright. >> you definitely have your work cut out here with sorkin here on this deal. you know what the classic thing is. i think he's okay with your deal. he decided to be against the comcast deal. who do you work for? which is, you got to think about these things before, you are wrong. >> am i setting up another strong man? >> i am another strong man. >> the son of a lot of things. >> yes, that's true. >> these two deals i happen to actually like. >> okay. good. >> for lots of reasons. >> i didn't foe if you were for the at&t but against the comcast. >> i think with that, i think i probably ought to leave. >> you should leave. we'll talk about directtv in just a second. but we do, i told you my anecdote that we're in a temporary house because we had to move, selling my house, i have for the land line and i don't miss it. you need as a company to focus on mobile. >> it's a good idea. we will get back to dallas. >> have you talked to your other

employees? >> i would go invest in mobile. >> what is your consulting fee? >> i have a finder's fee. >> joe is always out front. >> even when i was in the house, i had these verizon land lines, they have the crappiest land lines, i don't know what's with that company, you won't say that. >> they're a formidable competitor. >> we talked a little about soccer. i don't know about soccer, you are from texas, i don't know, it's a big sport down there, but live sports as you know, probably had a lot to do with looking at direct tv. do you for sure will you get that package? is that a part of the deal for the nfl package in. >> i thought you were talking about the world cup. >> look, it's no secret the nfl sunday ticket was a big part of how we valued the directv business. so getting that deal signed is important. we feel very good they're on a path to getting that done, yeah,

we will get it done. >> you will get it done. the deal, itself, how were those guys up on the hill? did you find any that you could talk to where it wasn't a glaze over their eyes or? >> no, actually i thought the hearings were, they were reasonable. the questions were reasonable him some of the questions were less reasonable than others. but we left the hill and there wasn't anybody crying out, this is a deal that shouldn't be done, obviously, there were concerns about the consumer benefits. i guess what i would suggest. we believe the consumer benefits on this are palpable, they're significant. the idea of the transaction with what it does to the tv profitability for us changes, the economic equation for building broadband. so you do this deal, you expand your broadband footprint to 15 additional homes. that's a big deal, considering 13 million are rural. thely on share is one broad

bandz or no brondband alternative. i think people get it, they understand it. it's a much more strong competitor against our cable competitors. so all of that factors in. >> at the time people talk about latin america, too, with this deal, in terms of growth for at&t. >> it's significant. >> tell us about it. >> directv has built a very nice business down in latin america. they cover all but two countries in latin america. they've built up a customer base of 17 million tv viewers for latin america. it is the premium tv service throughout latin america. it's growing very nicely. we think it has a lot of runway, brazil. >> was that a big part of, was that 30% of the reason of the ration? how much of it do you think? >> the rationale for doing the deal, it was a u.s. centric deal. if you look at the u.s., you said it's all about video, right, it's not about video as we traditionally think about video. i think when i was on here in

january, i talked about how we are architecting and designing our networks to be video delivery networks. so when have you 100 million mobile customers, you are looking for the ability to deliver video content. so there is a lot of video contentt the directv brings to bear. >> you mentioned that was probably what i would call the premier golf event of the year, at&t pebble beach. i can remember i think two or three years ago where you, i thought something happened where you were going to be there and then you weren't, the congestion was directv it was three years ago it was going to be a directv deeshlg how long is this going to be in the works? >> i think that was your conjecture. >> but this is something that people have at least rumored. >> it's no secret. mike and i have talked about this on several occasions. they filed, they talked about when directv was sold the

predecessor, sbc was looking at it. >> i think there has been spec london attacks about the five year for many years. we talked on the phone right after the deal happened, you know, i think you can probably speak to it. they have been looking at this for at least a couple years. we talked about the airline deal, how that slowed things down in terms of the regulatory environment. how things shifted. i want to get your views on where it is right now. >> i think the regulatory situation looks good. we, obviously, did a lot of work on this from a regulatory standpoint before we entered into the transaction. the beauty of the transaction is it tends to be complimentary assets. all right. there is some overlap of video, but 75% of the u.s., we don't even compete. directv sales stand alone video product. what we sell is a broadband tv bundle. we're in the tv business only because our customers want tv to go with broadband. so we don't even make money on

tv. >> you said something very interesting. i hope you can explain to the viewers. i didn't fully appreciate it. now i'm starting to understand. i said to you something to the effect people think of satellite as an old technology, ten years from now, it's not clear to me if people will be using this type of technology, because they want to have the two-way broadband technology brought to the home. you said you will be able to use the satellites to actually put a lot more of the video over that and be able to utes the other stuff more efficiently. how does that work? >> there is no more elegant and efficient technology for distributeing video than satellite. now, it's one way in nature. right. it doesn't have the two-way characteristics, there is no more efficient way to deliver it than slight? you think where does it go next? you think of ultrahigh definition video. that's major band width consumtive. you need something that can deliver in big quantities,

satellite we think will be positioned for ultrahigh definition video distribution. so the satellite has a lot of room to run. i'm not really that concerned about it. as you pointed out, to the extent you are distributeing video over satellite, are you using less of your band width in the fiber. >> you don't have to parry both systems together? >> i really believe you go out two or three years from now, you integrate these capabilities, the customer isn't going to know, i don't think they will care how it gets on to their smartphone or laptop. our job is to make that seamless, how you officially get it to the customer is going to be the gearheads in the background, we'll worry about that, but the customer isn't going to care. >> oh, sorry. >> can we go back to the regulatory environment, when you looked at this, the timing on it, did it not arise, this is when comcast warner is happening, you have to look at those issues, if they approve that, they have to approve this, too. >> obviously, a lot of factors

come into the evaluation, when comcast and time warner announced they are coming together, just from a pure competitive standpoint, i made the comment at the time that this was a game changer of a deal. and it created a new competitive animal we were going to have to compete against. so we began to think we need, if we are going to do something, we ought to do it soon. we feed to compete at the broadband front, video scale, video programing costs. so that deal gave us a little more impetus to move ahead, purely from a competitive standpoint. >> that makes sense, joe, i'm sorry. >> that's rare. because when it was conjectured it was going to happen, you remember how many times we said, well, this will happen in response to the com -- and the chance that. >> right. >> what was our argument the chance of both going through was better with at&t? >> better together than you want to put both on the table at the same time as opposed to let one

go through and then potentially have the regulator say, ah, well, we let that go through, there will be too much consolidation afterwards that, forces the issue. >> we disagreed with the deal at the time. i think that was overreach if terms of our stated intention in the obama administration stated intention to get 99% covered, it would have helped with that. i don't know if you really ever understood the rationale for not allowing it. >> i know what the complaint said. it was a very mechanical complaint and the doj, the department of justice believed the right industry structure phosphor nationwide competitors. >> the idea of having a mav rec competitor. >> sprint, t-mobile makes more. also a couple rams get together, i'm sorry to those two companies. >> it makes it -- >> look, that's a deal that makes intense. i get why they would want to do that. but i think the problem that they're going to have is the doj has been abundantly clear.

i didn't walk away with any misconceptions of what their intent was for nationwide competitors. so i think they got an uphill battle. >> we interviewed mark weeks a couple weeks ago, he says he wished or hopes there are five traditional line, he thinks google fiber, u-verse, com karst, lots of leans, that way you'd have real competition. directv to some extent does that, that go over the top without having to use the line. one of the complaints or one of the worries from a regulatory perspective when you look at some of the cable deals and broadbands transactions is the effect they have on monopoly in each locality and as a result, i don't know, if you have been involved in this, but there have been situations where when a new entrant wants to come into the market, they try block them from coming to market saying we put these poles up, we don't you to

get an easement. do you think the regulators will look at any of these transactions and say, can you do this, but you will not be able to block the federal government guy that wants to walk into town. >> actually, i think your question is interesting, google has changed the game on this somewhat. because they went into kansas city. they built out under a very different business model. they went in, talked to the city, said, look, with yx, y, z concessions, we will build fibariened if irs to where there is demand. not everywhere, only where there is demand. they went in, they had impressive success. they came to austin. we were looking at a similar modem. goggle announced they had a deal in austin. what happened? he said, their city, we'll take the same deal. few give us the same deal, we will build fiber to the home as well wind chill that same platform, that mechanism, we are going to 100 other communities around the united states and

say, if you a gree to those arrangements, we will deal five -- >> what are the arrangementes? >> to your point, pole attachments, getting on pole, getting right of way permitting, you need permitting to go faster. most importantly, we will build first where there is demand for the services. so few have to go in and build a 1 million city foot print, it's hard to make a business model out of that. >> that's different than providing to every rural outpost along the way. >> that's exactly right. are you seeing more capital come into it. the capital is allowed to be focused where there is market demand first. >> i ask you a question, if consumers paid to get a premium server to get net flicks, why shouldn't net fleck versus to pay for premium services? >> net neutrality. >> if the consumer already pays for that, the high end service where they get it quickly, then you charge netanyahu flic-- net,

too. >> the chairman of the sec said we will look into this. i think what's important to understand is the word internet means interwork, networks, there are lot of networks out there interworked, okay. if are you a customer of verizon, at&t or comcast, you want content. >> that content is being held somewhere that's not on the at&t or verizon network. it has to traverse two, three, sometimes even more networks. your speed is only as good as that slowest link in that process. so if one of the content providers is choosing a network deliverer to get it to our backbone that is slower or not as good, will you have a slower experience. so i love the idea the chairman of the sec said let's look at this, bring transparency, where is this slowing down. >> does that help for you? >> it does help t. question i

have is by interlinking wage with you or wage with comcast, you are paying some kind of interchange fee, or there is an additional cost to connect wage as opposed to going through a middleman? >> the industry has grown up in a peculiar fashion. all these different networks are out there. we say, we will hand traffic off back and forth. we say we won't charge each other for that, water happening, though, traffic is getting asymmetric am. in some places, it's like 7-to-1 traffic from her tos to our, we say, if you want to driver that network on our, you have to pay. >> now flip it around. this enthe question becomes as the consumer, you sell different types of internet access? >> super fast. fast, basic. whatever. and if you are paying for super fast, ostensibly the reason --

>> i'm just asking. >> i know. now we got into this other place where he's explained on the other side he's charging the provider in order to get through. >> we're not chargeing the provider, whoever that new yorker operator is that's handling the traffic. >> because of the amount of the traffic. >> it's an asim pet trekkal level of traffic. >> i can't understand the whole argument. if i own the pipes. i've spent billions of dollars building the pipes and someone wants to use 90% of my pipes, they're going to pay more, in a free market. that not even makes sense to you, you came up with this other thing. >> the argument becomes one of the reasons i would argue to some degree that high speed internet has been as successful as it has is people want to get netflix at home. >> i pay for high speed internet access. i don't have netflix, i'm tired of subsidizing the rest of you guys. >> she's sick and tired of it. >> this really is an eso teric argument.

>> really? >> it's stuff that's happening in the guts of the networks, you exchange traffic. they get out of whack. >> it's funny idea logically the political divide here is you have the progressives on the far left saying you will kill the innovation of the internet if it's not totally free all the time. as if the economy works with like it's all charitable non-profit organizations that are running things. you have to for innovation, you into ed to make money and reward shareholders and build capital, don't you? >> the question i ask is exactly what's broken? because there is more capital flowing into this industry in the united states of america than any other industry. the number one investor in the united states in the last five years has been at&t, number two verizon. this industry is investing in an unbelievable pace t. ecosystem around the industry, silicon valley is attracting millions. >> there is jobs involved in all

this. >> whatever it is we want to change, define the problems carefully t. problems start out as fast lanes and slow lanes. we have said the chairman has spoken at sec. if he he's e says it's a investigation. >> you pay tacks. >> until you do a vote-a-phone, you will pay taxes. we should change the corporate tax. >> corporate tax, there are so many ways we are handicaping the u.s. in terms of its competitiveness internationally and our corporate tax is an abomination. i got to tell you the first quarter negative 3% growth t. same quarter whenever corporation in america, our taxes went up, especially capital intensive industries went up. january. it's not a coincidence economic growth went down. we need to fix -- >> the counterargument is these are companies that aren't paying 35% anyway. at&t pays a high tax rate, doesn't it? >> effective paid?

we did a lot of pension funding last year and we took advantage of bonus depreciation. it kept our taxes pay rate low last year. our statutory rate is 35%. >> i didn't think about the inversion on vote-a-phone. >> the list? >> do you accept bitcoin on your bill? >> no, we do not. >> i bet he couldn't do it. >> you couldn't. >> so for in the graduate of plastics, i have one word to lead with you. mobile. >> mobile. >> thank you. >> focus on mobile. >> all right. >> focus. >> what about leading here with something? >> do you want to talk about those new tablet things? >> you only had a smartphone for a year? >> we got our fee apps. >> our thanks to randall stephenson, chairman and ceo of at&t. great to have you in the studio. >> when we come back, we will check out gopro's performance, jim grant of grant's interest

rate observer, "squawk box" will be right back. at every ford dealership, you'll find the works! it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

welcome back to "squawk box," everybody, we have been watching shares of gopro, they are lower in the pre-market trading down about 3%. of course, that stock went public last thursday. it's been rising every trading day since then, trading at 4732

right now. when we come back, who is making the most money during this rally? the players seeing their personal wealth higher and higher along with the markets. more "squawk box" after this quick break.

welcome back. coming up next the count june to the adp employment result. dow's 17,000, plus, more details on j.p. morgan chief jamey wright diamond, "squawk" returns with that and more in just a moment. of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

welcome back to "squawk box," shares of rack space is getting a boost on a report that says the cloud based provider may take itself private. the company is in talks to fund that deal. rackspace says they hired morgan stanley to evaluate quote strategic options. mortgage average 30-year mortgage rates fell five basis points to 4.28% t. news of the

morning, j.p. morgan chairman and ceo telling employees and investors he has been diagnosed with throat cancer. he says it's curable. he will continue to run the company, an eight-week regimen. joining us paul miller, good morning to you, jeff sonenfeld is back with us from the yale school of manage. . paul, first of all, we send our best to jamey wright diamond and the diamond family, of course, you think about the if i recall and the conversation invarably turns to succession, what are your thoughts this morning in terms of how this could impact the bank? >> you know, he does say it's kurable. i don't think it's that big a point right now. at some point jamey wright will step down. i think that bench is very deep. they have lost people over the last year or two to different other entities. i think what they got right now

is more than ample to take care of that company him i'm not too concerned about it. you could maybe see the stock trade down. i don't think it will have much of an impact in the immediate future right now. >> is there a jamey wright diamond premium on this stock? >> you know, i definitely think there is a jamey wright diamond premium. a lot of people like to put the logo, superman logo on anybody. jamey wright did put it together. he did take it through the crisis, pretty much unscathed, probably stronger tan when it went into the crisis, if he ever does step down, does that premium go away? i think it steps down a little bit. people are people, the entity is the entity. i think j.p. morgan will be fine. >> jeff, you gave credit to the firm in the 6:00 hour for disclosing this, we were talking steve jobs and that situation,

which is the opposite. have you looked at a number of sixes historically, where there have been health scares and how firms tried to disclose them or not. >> definitely. the classic one, of course, steve jobs at apple, several misstarts, false starts at 2003 and then again, of course, around 2010, 2011, there are all these reasons why he is not going to mackerel. people said he didn't look well. then we heard he had a chemically hormone imbalance. we needed to know these things. there is an original ceo in a coma for months. people didn't know, it was only announced, he died. >> is there any argument that this is personal news and we don't have a right from a public perspective or shareholder perspective to know something

leak this at this early stage? >> apple's former cult of secrecy was a part of their issue as they took everything to be a secret, including the privacy of steve jobs' live. the late jerry york has said he felt he was disgusted with the board was his term for it. didn't reveal steve jobs' promptly. there was adverse information about the leadership of the firm and there was a steve jobs' premium out there as we saw. he said he wished he had quit over it. so i think it matters. you can find a number of them. andy grove stayed on for another five, six years, very successfully. of course, many people do beat cancer on this and that's why we're cheering jamey wright on. i think there were a lot of this ipgs to diminish lance armstrong about. one of the things we do support lance armstrong about still he

said the pain of the treatment is temporary, but to quit is permanent. it's forever. jamey wright, we know, is not a quitter. >> that fighting spirit reenforces the t-cells, there is search that there is t-cell production that matches the spirit people put behind their attitude towards recovery. i think this is a very promising story. >> paul, we hope there is no succession planning needed. but to the extent the firm is going to be thinking more about this if they weren't already, sort of take us through the line-up of how you think the firm should be thinking about this and what are the names that mean a lot to you? >> you can look in the press, i this i the board mentioned board smith and mary some of those teams that will step up. those guys are very capable t. street likes those individuals i

think given those two names alone. it will give comfort. jamey wright will have to step down. when does that come? who knows? these companies have to go on without them. they do go on. apple is stick around. i know a lot of people want to put the premiums on. others come along with as good as a job. >> look at mcdonald's, they did the horrible tragedy of four ceos. the institution is doing quite well, jim skinner took over after all that human sadness, took them to the heights they never achieved historically. >> we will leave the conversation there. jeff, thank you for helping us through this, of course, as we said before, we will say again, we issue the best. >> when we come back this morning, he says the fed is pouring fire on glowing embers of inflation. jim grant is the founder and

editor. he joins us next to talk to us about why we could be headed to financial tur turmoil. [ girl ] my mom, she makes underwater fans .

welcome back to "squawk box." you can see green arrows, the dow opening up 21 points higher the nasdaq up 3 points higher the s&p round it up to two points higher. a single bidder won the $17.7 million auction of bitcoins, that i did not disclose the name of the successful bidder. i'm not going to admit whether i won or not. i'm not getting a laugh out of that, anyway. let's talk about the markets hitting another all time high. joining us is jim grant the founder and editor of grant's business observers. i know you have been concerned about what the fed is doing, what the end effect ask on this, in the meantime, with see markets hitting new highs.

is that almost near fiddleing with burns? >> there are a couple kind of inflation, one is the ma lined kind at the supermarket counter. that's called inflation. the other is the bull market kind which on wall street we approve of and cheer on. >> acid inflation? >> acid inflation. it's, you know, the world collectively is very, very sang wi sanguine. so you are at least paid from the point of view of handicaping odds, you are paid to imagine an outcome different than that, especially with the near end visible yields. and you have to go to the republic of iraq to get something like 7% over 15 years. >> forget about ireland, forget about italy and greece. >> spain begins with a two number, so does the state of new

jersey. >> all right. are you suggesting new jersey should be much higher, too, because of its problem in. >> this is a program of interest rate suppression, interest rates are prices, price control is futile, therefore, the policy of suppressing and manipulating interest rates ought to be we think seen as a policy of few tilt. just because few tilt for definition is for not. >> that doesn't mean it's without consequences? by approaching the market, it's one ought to be mindful, especially with prices, one ought to be mindful of the consequences, certain consequences, the failure of these demonstrations is price control. >> certainly. >> we don't foe what it will be. you can't tell us how it will manifest itself in hurting all of us some day? >> we can observe now the credit spreads have collapsed. the interest rates have been crushed. the volatility is crushed.

>> that's true. it hurt, it's goldman sachs. >> for a time it's great. it was great in 2004. i think it was getting into the professional wall street, it's interesting the captions and the tutor jones and the match the global hedge fund people have been not making one.com over the several years the "wall street journal" wrote their collective obituary wears. >> all niece things seem positive. >> what the global macram need is the end of a financial repression, so it seems to me that their day is coming and for this they can thank the -- >> you just admitted to me there were some positive things. >> yes. >> my favorite thing tim says is that the fed can make things appear to be better, but they really can't make anything better, i think you are saying you can prop up asset price,

people feel richer, the wealth effect feels better. >> that does engender some investment in mortgages. >> it does, halfway around the world, something is happening in india. >> yeah, a structural thing. >> people went to the polls in massive numbers voted for enterprise. >> we might vote for that, we have another election coming up. >> we do. >> in india, you are look at the emergence of the next growth story. this could be a ten-year story. it's very exciting, indeed. >> it is exciting. >> in china, the opportunity is visible and the problems are more or less hidden. in india, the problems are visible. in india, you are appalled be i the sight of things, it's very exciting, to me as an investor, it's very appealing. >> the argument against what you are saying is that, sure the fed has some impact on what's been happening and they may have inflated assets somewhat, we

have a lot of people that come on and say, look, company stocks are fairly fresh, you have seen strong earnings growth over this period. >> you have. but profit par gins are at all time all time highs and no small component of these very high profit margins is the interest expense that is not born when rates are suppressed. so if rates were normalized, suddenly the profit margins would dwindle. >> the other point people will make is you don't have wage inflation, that generally kicks off concern. >> i don't think wage inflation, it seems it is not a monetary phenomenon, it is everywhere a psychological phenomenon. it has to do with people's confidence in the currency. so right now the world is enthralled to our ph.d. central bankers. it's amazing they can see in the future, improve the future before it comes to pass,

astonishingly, how do they do it? they won't do it. it seems to me inflation is out there lurking and it will come for us as it always does in the after math of these great monetary debaughs. it will come at or central bank. >> in terms of sentiment, we're ripe, too, there was a time when we were hyper-worried about inflation five years ago and now we think it's never coming. so sentiment-wise. >> it contributed to it five years ago. >> right. no one is worried about it now. >> you can see the price of debt securities, if you are around as i know you were not around for late '70s and early ''80s, people. >> i wasn't. >> you weren't. >> i was. >> so. >> my parents would tell me. >> you played soccer in oklahoma. >> i, what actually. >> if your 8th grades civics class, i'm sure they told you about it. >> i remember ronald reagan

become president when i was in the work force. i remember it in a fond way. >> so in reform school, i remember them telling us was that 15% was the yield. nobody wanted in 1981 because, because the great and the goods said interest rates were going to 20 on account of uncontrollable upontary growth in america. >> they did go. >> and the what they call it the structural, yes, the structural nature of inflation, that was then. you see the argument's exactly a mirror image shape. >> right. which means you definitely got to, when you least expect it, right? all of these things are a part of murphy's law. they are ancillary effects of the way things that happen. >> there is a grant. >> who is buried in grant's tomb? >> grant. >> still. >> jim is our guest host. we have a lot more to talk about with him.

>> coming up with the first half of the year in the books, we will look at which corporate executives and investors made out from the google guys and the warren buffets. j.p. morgan ceo jamey wright diamond says he is staying at the helm of the bank while undergoing treatment for throat cancer. we will have more on that story at the top of the hour. you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. (water dripping and don't juspipes clanging)ncisco. visit tripadvisor san francisco.

(soothing sound of a shower) with millions of reviews, tripadvisor makes any destination better.

. welcome back, everybody, we have

been talking about the market, their year-to-date performance, they have been up sharply, who has made the most? robert frank joins us with details. >> good morning. it turns out the secret is to hold a concentrated position, preferably energy and tech. some of the people had the biggest dollar gain, we start with john bill marriott up $460 million. now his fortune is 1.8 billion at no. 5 is kevin plank by under armour. his fortune now at $2.3. theing gole guys have done well up 1.1 billion. steve ballmer up $1.47. people talk about the money he has paid for the clippers. he has paid for it with his paper wealth gains close to now $14 billion. this was amazing to me,

haroldham is up by $5.68 billion in year in paper wealth. mark sumer berg in at in one, he is up by $5.8 become. this one is amazing. we looked at the past gains, nick woodman is up by a billion dollars in the past five, three trading days now worth $2.5 billion. that's $8 billion per hour since gopro. >> we all know what the market did. if we can take it away quickly, gopro is showing down. >> but, you know, again, these concentrated, particularly energy the leaders in what's done well, this year, energy and tech, tech, these are the spaces where you have the big founders that own a large percentage the

stockmarket is the biggest welest creator? >> continental resource, haroldham? >> he got divorced at a very precipitous time it turns out before the big run-up in the stock. >> they settled before? >> the judge ruled that basically his controlling interests, pro picous not precipitous. reed hastings has been disciplined about selling throughout that stock run up and down. i don't know about these other guys. >> i like those. i liked that you always just tell it like it is and you are not like a lot of others. >> judging? >> yes. >> you know, you foe who i'm talking about, which newspapers i'm talking about. >> i have no idea. i used to work at the "wall street journal," it was down the middle. >> they're not necessarily horrible terrible people because of this, are they, villains, all

of them? >> no. >> they actually agree, it's good to have capital right now invested in the market. >> i think the thing pickety wouldn't agree with, we should engineer a lot more capitalists that come up, only assets, you wouldn't, instead of bringing all the capitalists down to. >> he would not agree with the self-made element of today's wealth. >> they don't have any concept of that in france. >> they are all unified, this has been a good time for assets. >> not great for savers, that's for sure. >> it's never bad to have money. >> it beats the alternative. >> it doesn't buy happiness. >> more comfortable misery.

>> it doesn't buy happiness, it does buy you a yacht where you can poor right next to happiness. right. coming up, j.p. morgan chief jamey wright dime revealing he has kurable throat cancer. we break down what it means for the firm and its future and the adp private payroll data will be released. we have the number and the reaction at 8:15 eastern. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line anytime for 15 bucks a month. low dues... great terms... let's close. introducing at&t mobile share value plans... ...with our best-ever pricing for business. chocwhite chocolate loversal. don't like dark chocolate.

milk chocolate lovers don't necessarily like dark or white. before we couldn't really allow customers to customize their preferred chocolate. we needed a scalable cloud solution allowing them to select what they are looking for. now there is endless opportunity to indulge. customization is made with the ibm cloud.

at every ford dealership, you'll find the works! it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

. welcome back to "squawk box," i'm joe concerner along with becky quick and andrew ross sorkin. if studio, lots to discuss including jim's reaction, his prediction for the adp jobs numbers which comes out on jobs thursday him when we can say it. we have to say it. and we're really happy the government is doing it on a thursday. there are times they drag us in here.

the markets are closed. we come in and wait around for 8:30. >> usually on good friday. >> we come in, there is no stockmarket trading or anything going on, here we are, waiting for this number, the number, please. >> it came in just as expected, guys. >> okay. not that we celebrate july 4th. >> we are. with the fans. >> there will be fireworks, too. >> upload fireworks on the show. let's get to the headlines, rackspace is considering taking itself private t. company hired morgan stanley a upical months ago to evaluate strategic options and help them store and access data in the cloud. shaers you see it right there rising in the premarket almost 10% up. constellation in the quarterly results, beating the street on higher beer sales, constellation

raising the four-year outlook. randall stephenson says his company will get that directv deal done and commented on the timing of the tie-up. >> when comcast and time warner announced they were coming toke, just from a pure competitive standpoint, i made the comment at the time that was a game changer of a deal and it created a new competitive animal we were going to have to compete against. so we began to think, we need, if we're going to do something, we need to compete at the broad band front and with video, video scale, video programing costs. so that deal gave us a little more impe the us to push ahead. >> shares of at&t roughly flat so far this year up about 1%. in other news this morning, goggle is buying songza, it plans to use nit its streaming service, do you use songza?

>> this one i do not know. do you use snit. >> i do. >> what it is, it's basically a context-based music sharing service or music streaming systems. you lock into the app. it says it's wednesday morning, i am driving, i'm working out, i am relaxing. i'm cleaning the house, it basically has kur rated song lists to listen to. the other day it said i am, it's monday night, i am single, watching abc's "the bachelor ret." i am eating tostitos. >> if you don't foe by now the u.s. has been knocked out of the world cup after losing to belgium 2-to-1. u.s. goalie tim howard was great. he set a world cup record with 16 saves. no you they need to qualify on the road to russia if 2018 and attention gambleers, a business pencer story this morning,

reports that microsoft's score is 16-6. the predictions comes from bengals's prediction engine, every favorite has won, i don't know why we are talking about that. >> it's like they are series. >> if you pick the favorites, it's like picking the number one seed in the march madness tournament. it's not that hard. >> but for march madness can i use scorecana? >> belgium will win. >> watching yesterday in the history of soccer. >> tim howard was the greatest in the history of all goalies. >> there is a reason he had 16 saves. they had 16 good shots at goal. >> somebody said that last night. >> you were watching that. when the u.s. got a chance at the -- all they the most they could do is check it back. let kick it back there quebec.

they never really -- >> even so, they could have won in the last minute. there was a very close call. >> i didn't see the swim meet. >> the last 15 minutes. >> it was amazing within they scored and there was real momentum. there was another shot. there were a couple close calls, it was that close. all right, let's tell you about another story, jamey wright diamond telling staff he has kurable throat cancer. he will continue on his responsibilities as head of the firm, he will curtail his travel. kayla joins us rice now. >> becky, the answer is not that much will change in the near term for the company, in his memo to shareholders, he said he will be going through intensive treatment. he will continue to run the company, though, earnings expected to be business as usual. he said he will cut back on his travel. >> that includes a trip this

week he was supposed to take to europe to meet with heads of state to meet with j.p. morgan sentiment overthere. he told staff in that memo, i feel very good now and we'll let all of you foe if my health situation changes. importantly, there is no evidence of cancer elsewhere in my body. the cancer has not spread beyond his throat, beyond the lymph nodes, i am told diamond was not a smoker, he did start feeling somewhat sick, somewhat ill and decided to go have it checked out. this was all quickly the way it was identified, diagnosed. the board has full faith in diamond to run the company at this time. it will look to certain executives to step up to the plate, consumers coo matt zains the company has gone to great lengths this year to make sure the market knows how deep a bench they have and how much responsibility they are giving these executives, because, god

forbids, something like this happens, you need those people to be well-groomed and well trained to take over those responsibilities. andrew, you said this is a day-to-day treatment. you don't know how it will roll out. we certainly wish diamond and his family the best of luck. >> we want to bring jeff sonenfeld back into the conversation to make more sense of this. a year ago there was a debate whether to split the chairman and ceo role. not to say this will speed up a succession plan to play, it might speed up faults of succession. could you see a day where he becomes the chairman as they try to put a new coo into that spot or given the position the firm took a year ago, which was, we want to have the chairman coo be the same person, it becomes more difficult to do that. >> it's a great question. i think this could be a possible scenario. both jamey wright and j.p. morgan and most ceos who hold to

the combined chairman and ceo roles, doesn't say that's necessarily the only way to do it, for their company at that time. at a time when you go through transitions where there could be a mentor or protege situation, we saw it at dupont, intel, ups, many great companies go that in a quiet way they have a bit of an ambassadorial role. david rockefeller did that and that was regularly done that way. what you didn't used to see that's different here, kayla, i think it's great you mentioned those names that you bring out as sort of the bench squad is that they get along with each other. many times in banking, they are set up in warfare the succession, for example, the one in charge of the new age investment banking, john reed, of course, running the commercial bank and there is a guy theobold running the

consumer, commercial lending. they hated each other and vivs warfare. here you got layers and layers. if you ask recently departed people, they would rain about these people. >> let me ask you a related question. is there effectively irrespective of jamey wright's health? is there a bakeoff going on right now. >> is this the equipment of a public bakeoff, ultimately, these people get the rest of the job? >> you know, kathy graham, she was thrilled the washington post was seen as a net producer of talent and journalism. she didn't care that people left, as long as they landed well. j.p. morgan will be a great talent. ge produced talent elsewhere. probably some of the folks we talked about went to dprit new places. you know, it gets pretty narrow at the top.

at ge, they always would lease weirdly enough, strangely at ups no one would ever leave. it depends on the culture. the actualure of finance, i think they probably would look for. >> i think you lease you never come back or is there a shot? >> you look at john mack. he got fired and came back after being fired, so there are sometimes rebounds possible. i think it's unlikely that would happen here at coke, they had a guy who left, got passed over, came back. >> but these people have all come from different organizations. there are only a couple j.p. morgan died in the wool. they have all had different career paths. none was necessarily promised this job. i think everyone expected mike cavanaugh was the shoe-in up until several months ago. so i do think that sense he has left, there is some question

hanging over the fact that a lot of these people are so to speak back at mack for this job. i don't think that issing in the board is necessarily worried about. >> i think everybody has views on this, which is over the next several weeks and months, i imagine there will be lots of reporting about this. is that fair or unpair? >> i don't think so. i think we had the conversation. >> whether it's fair or not, i don't think there will be a lot of reporting on. you don't think there will be a focus? >> i think he deserves some privacy. it shouldn't be a ticking to moment by moment. >> you have to think about when larry page had larn joits and the company did not necessarily come forth with a lot of details about that, investors were left wondering. journalists were left speculating when he would miss conference tallahassee u calls and had no voice.

>> aside from that, they have been forth right. >> i think they have revealed, we don't need minute by minute update. i think when we had a ceo of kraft who is now the chairman of pinnacle foods disappeared for weeks, nobody knew what happened to him? >> did which monitor lachey's treatment? >> he was straight forward. >> i know he was. >> he stayed on four years later, longer than he intend, by the way, until they named his successor. >> we will very well leave the conversation there. thank you for helping us through this. we appreciate it. up next, private payroll's data the number the market reaction and our special guest standing by with reaction. as we head to a break, check out the "squawk box" indicator, this morning the gains from yesterday, we continue to see green arrows, s&p futures up by two points, dow futures up by 17. "squawk box" will be right back. , but we're not in the business of naming names. the fact is, it comes standard with an engine

. >> this is consolidating new highs in the s&p at least and the dow, not quite 17,000. we might get there, we might get there today if we were to open up 40 or 50 points higher. let's check out the tenure, we had jim graham here to talk about whether that's real or memorex. check out oil, quickly that can throw a wrench in all the works. it's 104. >> it's coming down. >> our gdp took a wrong turn. >> a 180. >> a little of a detour. check out the dollar, which i mean, who, the euro continues to be as easy over here as they are at the ecb. >> tim, are you surprised the you're is at 1 lix? >> you have to consider the

competition. >> you know what we do in this is like a jobs football, adp. we count down like it's breaking news. a lot of people already know what it is, probably. >> oh, no. from they know what it is. >> he knows. >> the public doesn't know. >> speaking of, let's tell you about this adp number. the number for adp private sector payrolls 281,000 in june. they were looking for just 208,000. may revised came in unchanged at 179. you looked at goed there, it was up 51,000, and, by the way the non-farm payroll estimates right now, before we got this stronger than expected adpt. non-farm payrolls number beginning tomorrow is 215,000. >> i'm sure futures are probably, i didn't see it. that's a great number. >> it is much stronger than expected.

joining us is mark zandy. did any of this catch you by a surprise or were you looking for a better number? >> last month was a disappointment, this was on the high side, reality is somewhere in between. i think it's pretty good, by the way, there is only six people on the planet that know that number. >> we had it written in the teleprommers, andy. >> oh, several people. >> eight people, nine people. >> so, mark again the construction u construction showed real strength for the month, where else did we see these gains? >> it was everywhere, the gains were broad-based. every single industry added payrolls, every company size added the payroll. it was uniformly strong and, you know, just looking at the underlying adp data, it looks

really good. so the economy is improving everywhere but in the gdp data. anywhere else you look at vehicle sales for the month of june. that's a really good number. housing seems to be coming back. the economy is improving. the only place you don't see it is in the gdp number. >> i'm sure. i would joke, we treat it like a government number. in other words, in the past adp, before you got there, it wasn't necessarily, it was fine, but it's obviously can be totally different tan the actual number that comes when the government releases the actual data. so it's valuable information, undoubtedly. we have the nifb guy. obviously, we don't treat that, john challenger. we get reports there. it's different than a release of government data. it's very good, mark. i was making the analogy we treat it like it's the official number coming on a jobs friday.

>> it's a great number. >> you are right. and i do appreciate it. it is a, it covers a large number of companies and a big chunk of the labor market. >> it's important. >> we see it move, mark. we see the markets react to it, but i'm sure that it's kept very close to invest. >> you are right. the average miss, the average miss month to month is about 40k. on average. >> before we get real pros in there, what was it, mark, you? >> it was closer to 60 to 65, basically we are got it down to 40. we will take another crack at it get it lower than that. there is a lot of moving parts here. >> one of the things we heard from a guest yesterday is that small businesses are probably where you are seeing some of the biggest improvement. your numbers showed small gains for businesses, too. from yeah, in the last 18 to 24 monthss, the small business sectors come on. i think a lot is reamed to the

fact that small businesses are tied into the real estate cycle, the construction activity. so we've seen housing come back. that's with lots of small businesses, so i think that's a big part of it. credit is more available. you go back, a couple, three years ago, credit was tight for small businesses, now it's flowing quite lice e nicely, commercial leaning is growing double digits. a lot of things aren't and we are seeing that part of the economy begin to lift. >> mark, thank you very much for joining us. by the way, you will be back for the government jobs number, too? >> i'll be there. >> and the real number. >> and are you guaranteeing it won't be off by more than 40,000 tomorrow? >> well, no germany tees, but this is a really good number. >> you say it's down to 20? >> well, we're talking about the bls. how can i guarantee the bls? >> did you use this number or

not? >> i think he has a line into the white house. >> you should count on -- look, this number suggests the job market is strong. >> it is strong. >> good. we like it. >> he's got another. he's got the line. >> i don't know. >> another trader reaction to the adp report. the big government number. rick santelli will join us and watch the buzz from the beltway and what matters moest to your money. we are back if just a moment.

. >> let's get to rick santelli. i'm sure you love gym i jim grant's stuff. >> reporter: jim grant is the best. when it comes to an entertaining piece of journalism and analytics regarding the credit markets, i don't think anybody can do it better. >> thank you, riblg. >> thank you, you are welcome. but guarn teed number, actually he didn't. we may have a better number tomorrow than what we were thinking. maybe it's a catch up from that horrible down 3% quarter. maybe there is a little pent-up demand for something somewhere.

>> reporter: i can't speak to that, there are people that want to create numbers and ultimately be the same numbers from bls. earlier, there is people in the purchasing manager business that want to recreate numbers. so, yeah, we're seeing rep plex /* /- replication. i can tell you it was worth 2.5 basis points the dow futures prompt up 18 to about 25. they're back down a bit. but, yes, are you right. whether it's the irs, the dog ate their homework or this number and everybody copies everybody else's homework, you are sure to see a significant run-up on what is expected for thursday's number. i don't know, it's obviously better fuse than creating less jobs, that's for sure. no doubt about. all right.

we'll see, rick. you probably are working, jim grant. was saying fascinating stuff along the same lines of what you say, that is in a world where you are not sure what the market prices of all debt would be, it's hard to make any determinations ability any markets based on footballs that, you know, are you not really sure what the supply and demand dynamics would dictate. they're totally my opinion mani. >> i would love where stocks are, where all the markets align, if central banks and most of their programs and their balance sheets were i dream of juneny, bing, they were gone. i would say the land scape looks excellent but that isn't the world we live in. even though most people on our show, smart people. they talk as though they've assimilate wad central banks do, that's not normal and it isn't. >> especially recently, yes, jim. >> i once had the opportunity,

rick, to ask a question in a public forum to a central bank governor, i said, governor so-and-so, purely on the basis of economic, not the law, please explain the dwimps between the manipulation of libor in the private sector on the one hand and the manipulation, suppression and jempbl mon kig around from the central bank. >> reporter: you can't refine it, that's the difference. >> that's an interesting point. >> all right, rick, in the control room, they're asking whether are you a soccer guy. did you watch world cup or? >> reporter: listen, not that there is anything wrong with soccer the rule in my house is if you have to use the head to hit the ball, its nothing the santellis are watching. >> thank you, rick. there is something to that report, andrew, about who is

watching. >> that explains a lot. it does. coming up when we return. >> god did give us arms, you no ewhat i mean, think how much easier that game would be. >> the goalie uses his arms. >> i know, there would be a lot more scoring. a heck of a lot easier. >> it wouldn't be such a great testament of your athletic abilities if you could use your arms. >> my kids three-and-a-half. that i know they are supposed to kick the ball. they still want to pick it up. it's a failure thing to do. >> such fair weather fans. coming up, market outlook, plus could the market rain on your 4th of july parade? the latest forecast in a couple minutes. as we head to break, take a look at futures. dow looks like it will open 26 points higher. we are back in just a moment. .

welcome back to "squawk box." let's take a look at stocks to watch in the news. online photo service shutterfly on the move, plume berg saying shutterfly has hired an investment bank with the deal's value estimated about about $2 billion. i use that service. >> shutterfly, we coup our

photos. >> oh, someone in my house knows how to do that. we have a supermarket giant kroger making an act acquisition. it is buying vitacost, an online buyer they are paying about $8 per share a. total after about $280 million and tyson foods finalized its deal to buy hillhire brands for about $63 per share t. two shiedz i sides agreed on that action. >> i'm going to go with vitacost. >> vita -- vitamins. >> sounds right. >> vita would be from the latin, i think. >> living la vida lo ka?

>> velveeta. we are headed into the 4th of july weekend. there are questions about arthur. is that going to be dampening the festivities on the east coast mike seidel joins us for the latest forecast. mike, are you if florida right now? >> reporter: ai am, becky. we have storm winds that passed us. we pay get tropical rain bands. you can see the surf is not extremely agitated. we are talking wave heights as high as two or three feet. we have folks doing surfing if we can go over that way and show the surfers, we'll talk about what's going on here, there is a surfer out there. there we go. we got a couple surfers out there t. waves off the coast, they're running six to seven feet. >> that i have backed off. we got a little sun schein, let me show you the current satellite radar, get an idea of what's going on, it's off the

coast about 100 miles east-northeast of cape canaveral. it's a 60-mile-an-hour tropical storm. it's only moving north at six miles an hour. tonight and tomorrow, we start to act sell rate. it will strengthen by thursday afternoon, the official forecast in the national hurricane center brings it up to a hurricane south, wilmington, wrightsville beach t. main impacts will be eastern north carolina. the outer banks, now under a hurricane watch. after that, it is expected to shoot out to sea. it will be close enough there could be showers, new york city, up in lieshlgd even cape cod late friday night early saturday morning t. main impacts were if beaches for the rest of the holiday weekend. saturday and sunday will be surf and rip current. if you go out to the beaches, obey what the lifeguards tell you to do. becky, andrew, joe, back to you in melbourne.

>> mike, it's clear to me, are you not actually in the atlantic. you are standing next to the atlantic, aren't you? >> oh, joe, joe, are you in the atlantic? what are your feet in the atlantic? >> no, it's in the atlantic beach, joe. this is what happens when you know about cellural biography. >> i have to come down and give you a big kiss, are you watching the show. if you have kids, mike, every time you say arthur is going to do this or that, i see this little aardvark with class ifs because of watch sock many times i've seen arthur, he has movies, arthur's big adventure. >> a long time ago. >> does it make you think this can be a scary storm? that's what you got to look out. >> exactly. >> mike, let many eask you real quickly before we let you go, i'm sorry to put you on the pot,

if water up here has been really warm him we have been able to swim. what's going on? is that a weird current thing? >> reporter: it's also a function of the winds off shore or on shore. when you get upwelling, if you have an an shore wind, that will keep the surface water, with i is warmer, right here on the coast. that's always something you look at. sometimes in july, i remember about four or five years ago, we had all this offshore wind and from the virginia beach area, all the way up to jersey, water temperatures in late july were in the upper 50s and low 60s. we shifted and the water temps jump out way out to the beach. back at home in maryland and delaware, why isn't anybody in the water? i had noticed it dropped from 75 to 58. be happy. >> exactly and be happy because after that winter we had been in the northeast in new england, i don't think anybody is complaining.

if anybody is complaining about the heat. >> no, no, 'we love it. >> no, no, no. >> mike, thank you. we'll talk to you again soon. >> okay. thanks, becky, bye-bye. >> i love him. >> i do, too. >> he's great t. dow and s&p 500 kicked off the record year, despite the potentials, they will be vulnerable in the 94 term. he joins us now, also with sus a guest host jim grant of grant's interest rate observer. jim on the first day of a lot of quarters in this case the sec half of the year, sometimes it's technical to see you guys that need things in their portfolio, they need them in at the beginning of quarters and stuff, there can be buying, radio right? >> i think that was a part of yesterday, a little reverse window dressing, if you will, putting things on the box, i

really think there is probably a growing sense of goldilocks here a little bit, which is maybe what you need to get a market top. i think there is a sense that we're growing 3%-plus. it looks like we might the rest of the year quote/unquote. that's not too cold anymore. it's also not overly hot. there is not a sense of run away inflation or imminent fed tightening. i think the combo package does give you a sense of goldilocks and a straight methodical upward move in the market. i think what's what's drawing more and more capital in slowly. i don't know. i still think we're probably pretty close to the highs for the year. i think today's adp reports is a signal of what's to come, where good news has been good for the market up until now. it might start to be interpreted as bad news if we embroil higher bond yield itself. maybe that's what we will deal with through the rest of this

year. >> you got more in your own thinking, double, triple, qued dominican republicle negatives, contrarian things going on. you want interest rates to go up. >> that would be good for the market. if we did get better jobs numbers and inflation fears, interest rates would go up. you don't know what ness, right? but anyone that looks at, if there is so many different things, ways of looking at it, you do the opposite of what you would expect half the time. >> yeah, you are right, joe, i think there is no doubt that better economic reports look good longer term. i think the market has a lot to go, some economic recovery of the next few years. but often you are right, when the market was going up, when there was nothing but bad news and now we finally start to get a set of good news, sometimes the market takes broert. that's all i'm really talking about. one way to approach this is to

ignore it, who will care if we have a 10% correction, if the market goes from 2,000 to 1,800 to 2800 over the next several years, it's not going to matter. i do think it's getting vulnerable here short-term. i can see where our mindset changes from looking for evidence of better crest to looking for evidence it's getting too good, there are inflationary outcomes. i think that's where we might head next. >> jim, good morning for jim grant. >> good morning, jim. >> what can you make of a two-and-a-half percent ten-year yield in improving the economy and slightly hotter than we have been seeing inflation data, does that fit? >> i think, i know i look back historically, jim. you certainly know this, as well, you look historically, the ten-year yield trades in

equilibrium 2-to-4% above inflation, a minimum 4% if we were checked to the economic recovery. i think what happened here, we totally disconnected the pricing of bonds from the economic cycle with fear and we are now starting to re-connect it to the economic cycle. we did part of that last 84, moving it from one-and-a-half to 3-ish. i think we have another piece to go. we pay see some this year where we get maybe north of 3.5% when the year is out. ultimately, i think we are up above 4%. in the longer term, as joe pointed out, that would be a healthy development, that would be a bond pashlth priced for the economic cycle making it, once again, a competitive asset class rather than something you know is grossly overpriced. >> all right. we will end it there, jim. did you ever watch that series

"fargo?" they talk leak you. >> oh, yeah, you bet. >> a good series, talking act t about the tv show. still to come the kraft brew craze stirring up pop prices leaving bore-makers scrambling for supplies and many ber makers not hoppy. that story is just a hit. "squawk box" will be right back. .

we wonder what this means for the jobs report tomorrow. joining us is tony frato the former white house press secretary and managing director and former vermont governor and cnbc contributor howard dean, guys, welcome to both of you. i wonder if you can tell us how you think things are going on at this point. why don't we start with you? >> a lot of people don't realize it comes as a surprise to most americans, this week we are starting the sixth year of an expansion, this hasn't felt much like an expansion. it's been a long, slow slog, we have been seeing growth at around 2%, though the first quarter numbers spooked a lot of people. i think we are seeing a lot more organic growth and outlook for the rest of the year. we see that reflected in some of the jobs numbers and other

indicators, some confidence numbers, so i think there is reason to be pretty optimistic ability where the rest of the year is going as we finally climb out of what has been a really difficult period for the u.s. economy. >> howard, how about you? how do you think things are coming along? >> i agree with that. i was listening to the previous section on the bond prices, i think bonds are not priced competitively t. reason they're priced the way they are, the rest of the world is in trouble. where do you go when you are in trouble? you buy the american bonds, it keeps the yields low. i think that's why the market is low, dividend stocks are great, most dow pay good dividends. people will buy the dow. i think the economy is getting better. this is a safe pla is to contrast, like russia. certainly what's going on in the middle east is not a place you want to run in emerging markets. i think foreign investment is good for the economy.

i think that's what's happening. >> i think you are right. this is a comparison game. we also have jim grant here. your point is central banks everywhere are manipulating things. >> they are. one must not look at safety in the absolute sense, safety and valuesh r, russia is not the world's destination for many things. it's not the world's favorite implement or a foreign policy, the russian market five times earnings was a screaming buy. >> that's true. >> it is one of the best performing markets in the year this half of the year. >> but is it on a risk adjusted basis, though, jim? >> i'm sorry. >> is it on a risk adjusted basis? >> the gains you get are unadjusted. that's 23% or that's a fact. >> hey, howard, where have you been? >> your buddy. >> i actually just got back from mass daevenia and kosovo.

>> no kidding. >> speaking of emerging, two of those three places are doing well, albania got a candidate status. >> i haven't seen you in a while. i was just thinking about this, because, you know, the president, it's a tough job and he's been able to get flack from the right and the left somehow, so, you know, he gets it coming and going, then i was thinking about you. you've criticized obamacare. it's not single payer. you've had other criticism formed, have you ever criticized him because he's too progressive on some issue? are you from vermont? i bet you've never criticized him from anywhere but from even left of where he is? can you think of any instance where you criticized him from being too liberal or too progressive? >> i cannot. i cannot. joe, you got me. >> think about what the average republican thinks of this president and then think about what you think and how far left

you really must be. i mean it's vermont. i get that, wow, tony, am i right? am i right. >> you indicator to the job creators and the rest of the country. you hit bed and breakfasts, other than that, you got maple syrup and cheese. >> however you get it, i'll take it. howard is the fiscal responsible government? he is. >> that is true. >> that's the -- but, in general, tony, really, i was thinking ability that, would there be any policy move where, i mean, you are huff post died in the wolf, howard? >> i'm guessing tone is right. within i was up here as the governor, i was very, very concerned about money and i still am. >> i think you might just be cheap. >> i suppose, i am just cheap. that's a part of the vermont genes, that's why the unemployment is 3.3%. with recareful about our money. i think some restriction on

spending wouldn't be a bad thing. i think the president is right about the infrastructure bill. i can't imagine these guys not getting out if roadville. it's going to put tons of people out of work. so i don't find myself in all that much disagreement with the president. >> howard, do you have a solution for this inversion phenomenon going on with all these u.s. companies? >> yeah, we talked about this on the show when larry kudlow had his show. i believe we should, in fact, that we should, in fact, change the taxes on the money abroad. i think we ought to lower the corporate tags rate and get rid of loopholes to pay for it and repatriate that money. >> do you agree with president obama trying to block them from leaving in the short term? >>. in the long look, it's popular, in the long run, exam goes where capital goes. they will figure out a way to do it. >> howard, there you go right there. >> there you go. >> you know i have a fis cam.

>> if you can do it, facts are facts. >> the reason you are long, you ignore a lot of the facts. i don't ignore facts t. facts are capital goes where capital goes. sowhy. >> protect capital and take care of capital, and it'll take care of you. >> i didn't say take care of capital, but i said be realistic about the facts. capital goes where it goes. if you want capital in the country, you have to make it tax advantageous to invest in the country. >> it's bad when people make up facts and tell me i'm wrong. >> that we can agree on. >> tony would never do that. >> no. i don't like to argue on facts. >> all right, gentlemen, thank you. >> that is somewhat true. which is why you're not in the right wing of your party. >> true. coming up, jim cramer live from the new york stock exchange and jane wells hopping it up in oregon. we'll explain. customizable charts, powerful screening tools,

and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today. at every ford dealership, you'll find the works! it's a complete checkup of the services your vehicle needs.

so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

let us now visit with jim cramer, and one thing about this job, back after a day, ready for another vacation. always great, aren't they?

never build up to needing time off. >> summer is a fabulous time. market's doing fine, can take a couple days off because we know a lot of people, unfortunately, watching world cup are going to the beach, but if you're going to take time off, this is the time. >> yeah, this is the time. the number was good -- jim paulson thinks it won't be long until good numbers start causing some trepidation, and the markets will be at a new high probably when that finally occurs. >> look, i thought we got amazing numbers yesterday. i don't know if you saw ms. thompson's number about the retail investor, and they are leaving. they left in may. i thought those were devastating showing you the retail investor just wants no part. look, i don't know who is going to panic. it's not going to be retail. they already did. >> yeah. all right, jim, i don't know where we go, phillies, maybe?

reds? we have to find something. world cup's over. i did my synopsis, the u.s. -- we need to practice after watching yesterday. we got to keep practicing to get better. >> every four year stuff means the greatest goalie in our history will be 39. i don't know if he could pull that off. >> i was hoping he could hang in there. >> thank you. coming up, jane wells is with us to talk about bitter beers in just a moment. you do a lot of things great. but parallel parking isn't one of them. you're either too far from the curb.

or too close to other cars... it's just a matter of time until you rip some guy's bumper off. so, here are your choices: take the bus. or get liberty mutual insurance. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. see car insurance in a whole new light. call liberty mutual insurance. take them on the way you always have. live healthy and take one a day men's 50+. a complete multivitamin with 7 antioxidants to support cell health. age? who cares. i take prilosec otc each morning for my frequent heartburn. because it gives me zero heartburn... annc: prilosec otc the number one doctor recommend frequent heartburn medicine for nine straight years. one pill each morning 24 hours zero heartburn.

but we're not in the business of naming names. the fact is, it comes standard with an engine that's been called the benchmark of its class. really, guys, i thought... it also has more rear legroom than other midsize sedans. and the volkswagen passat has a lower starting price than... much better. the... vo: hurry in and you can get a $1,000 turbocharged reward card when you lease a new 2014 passat s for $219 a month.

heading into the 4th of july weekend, hops prices are up to $7 to $10 a pound thanks to the ipa craze sweeping the nation, and jane wells, our vice reporter. she should be our vice reporter, bacon, pot, and hops. happy 4th of july, jane. >> the three basic food groups. these are centennial hops going into the hottest ipas in craft brewing. at hops farms, they used to farm 150 acres and sold hops for $4 a pound, and now twice as many acres selling for twice as much. >> but if you pick one like this and rub it together, you're going to get that -- something

that that's a grassy smell. >> reporter: wow. blake crosby, a fifth generation hops grower saying it's gone from traditional giants in american beer he services to 600 mostly craft brewers, quote, we're busting at the seems. could you sell more if you could plant more? >> yeah, and we are planting more, but we are consistently selling out of varieties, and we have more orders than supply right now. if i wanted to buy hops now, i'll pay $15 a pound for a hop i'm looking for whereas buying them on contact, i buy $7 for the same hop. >> reporter: a customer, brew master at bridgeport, the oldest brewery in oregon, using 20 varieties of hops, but there's so many new players, making h hoppy beers, and now every farmer wants to grow hops.

what if there's a craft beer bubble brewing and this market pops? it's done it before. >> we tend to somehow ruin our market, and i think farmers are pra really good at that. right now, we're in an expansion phase of the industry where there's enough profit around to justify expanding for the demands, which is great, but with that brings on all this new overhead and capacity, and that capacity, when it's there, tends to be used at break even or at a loss. farmers just want to keep things turning. >> reporter: all right, back to you. back later. >> thank you very much. that's all for us right now, right now, it's time for "squawk on the street." good wednesday morning, welcome to "squawk on the street, i'm carl quintanilla and futures suggest we'll make another run at dow 17,000