cnbc. i'm becky quick along with joe kernan and andrew ross-sorkin. ready to make a run on more records, the close in on 17,000 for the first time ever. now there's no major economic data on the docket today, but among the highlights for today we have the minutes from the last fed meeting that will be released on wednesday afternoon. then there's the start of earnings season. the biggest names on the week's calendar include alcoa tomorrow, wells fargo on friday. the latest poll shows analysts are looking for second quarter earningings growth of 6.2% and the return to double-digit growth in the third and fourth quarters. we have not seen that since 2011 when the rate was 18%, but earnings season sounds like a good time for us to take vacation. >> i think vacation is in order for everybody. we have other corporate and economic news to bring you and maybe fun news. thrill seekers are gathering in the spanish city of paplona

today for the annual running of the bulls. joe, any interest in doing this? >> no. >> never? >> never. >> thousands cram into the streets to watch. some participating and while bulls are seeing red, joe referred to this earlier, the nobel prize winning economist joseph stiglitz has a market message for the bulls there. he is uncomfortable with stock market levels and stiglitz argues that the high levels doesn't signal a high level in the u.s. >> a very strong stock market price is a symptom of the weak economy, not a symptom that we are about to have a strong recovery to our real economy. >> i don't think he is headed to pamplona any time soon. the fact that my multinationals are getting a large chunk of

profits from emerging markets. >> wait a second, you would run with the bulls? >> i clearly have an ambition to do that. >> you can't do that. >> it's a touch of bait interesting thing to do. you are looking at me like i'm crazy. joe said it was a counter -- what was your -- >> i didn't know you needed a nobel prize to say the same thing 90% of the guests are saying. what did dan used to say? everybody has an opinion and they all stink. no, that wasn't him. he just said just one man's opinion. okay, so we have a nobel prize. they give three or four out to economists every year. usually three or four. so 2014, in the last 20 years, there's 70 -- how many are alive for nobel peace recipients? this guy is one of the most far

left wacky -- staglitz is so far out there. >> that doesn't mean he's not right about this. >> but one thing he's saying is that the extraordinary moves by the central banks around the world can put a disconnect in of where the underlying economy is doesn't seem very profound, so he's allowed to weigh in. that's fine. >> if you think he's the right indicator, let me tell you about another -- >> i don't know if you think she's the contraindicator or not. >> she want ed dullish policies >> she in this case is imf, but christine lagarde says global economic activity should strengthen in the second half of the year and accelerate in 2015. that's good news, but here's where it gets more bearish. she's cautioning that momentum could be weaker than expected with the imf update of the

global economic outlook expected later this month. we'll hear more about the details then. in corporate news, some might say this offsets some of the other stuff that's not quite so bullish. adm is buying swiss-based food flavors and special ingredients company wild flavors for $3 billion in cash. wild flavors is the world's sixth biggest flavor provider. i don't know about a great flavor provider. for them to be called wild flavors is kind of weird. and damage in a train derailment in montana. >> do we have images? >> they were on their way to boeing factories in washington state and ended up in a river. that's kind of -- it looks worse than it is. because they were empty, i guess. boeing has september a team to assess the damage and no word on whether the accident might affect the production of planes. >> well, the question i have is, would you -- could you ever

imagine them certifying the fuselages then to be repaired and then put them in the air? and that's a huge issue. >> did robert say that? >> well, several billion dollars, hundreds of millions of dollars in damage. >> you have to figure they are insured for that, though. >> they are probably waterproof. who are the guys in the raft? were they just going by or out there investigating? >> i think they were -- >> they look like they are investigating. >> you are waiting for a white water rafting joke. >> i don't have any evidence they are not. they are probably -- >> it is kind of a -- mostly it would be a hard site to get to apparently or to access, right? >> i think that -- >> the helicopter doesn't get you off the ground. >> well, where is it? how long did it take in a white water raft to get there? inquiring minds want to know. i don't know.

were those really the guys going out to see what was -- they probably were. >> i'm going to say so. >> so you don't think it just happened to be -- >> it could have been tourists. i don't know. >> that's something you don't see every day anyway, the fda is moving to opening skies for small commercial donees. the air safety regulator is drafting rules to allow this and allow remote control planes and helicopters to be deployed for everything from tv news coverage to monitoring crops to checking out oil rigs. it doesn't come as a petition of the faa to be exempt from the ban on commercial growth including companies that want to use drops to shoot movie scenes. that would be a real help in helicopters to do it. >> and be exempt from them? >> right now you can't use them but subpoenas went out to real estate companies in new york last week that were using drones to come around people's homes

and apartment buildings to get the 360 views. so the question is whether those guys should be get out of here. >> i kind of think the rules should apply to everybody. why should some people get exemptions for some of these concerns? there are a lot of concerns about this. >> you need to have a license. >> but there's no license process. the exemption would apply to everybody else. >> i threw my hand out there, but that's my -- >> pre-fireworks where i went and had remote-controlled airplanes, they were lit up and neon. they were very cool and do barrel rolls and loop the loops. a couple times they did buzz, get pretty close to where -- and they also seemed like there were three of them flying and you can't tell from the ground. and i was thinking and said to my wife, you know, you can poke an eye out with that thing.

>> tomorrow so did you -- celebrating our country's birth in a way that did imply violence and lights and bombs and that thing, is that okay with you? >> i'm okay with it. >> i don't know, i just -- i wanted to tell you that -- where did you get a grill this weekend? >> were you a real help? >> i helped. we did hamburgers and hot dogs and -- >> where? >> up at my parents' house. >> what kind of grill? >> that's a good yes, i don't know. >> a gas grill. >> oh, gas gone, no charcoal. >> yeah, we did the real thing.

in the old days i would watch my father and mother argue, you know, it was hard to -- just spray it on and jules wants it and then would have no eyebrows. >> just take a little off the top in this case. >> so you have hamburgers and hot dogs. you didn't answer -- did you take the boy and actually sit somewhere to watch the fireworks display? >> we actually did not, we did not. because it just seemed very -- we are exceptional. it's a big village. >> did you go to watch the fireworks? >> yes, but i'm talking about you. tears were streaming down my face as lee greenwood sang "proud to be an american." all that stuff -- >> we are in new jersey. we are happy. we are not thinking -- look at

this. am i part of this administration? if i'm running in 2016, i have to start with "the post." >> did you see "the post" yesterday? the post reported yesterday exclusively obama would like elizabeth warren to run. the administration tried to hammer that down pretty quickly. >> the way he explained it in "the post" is different than his book, like copying sentences. he was plagiarizing himself in the article, but then he is characterizing himself. they think it is all what you would say -- i don't know what is happening. i like the dinner between

president obama and president clinton. i like that stuff with so much tension. there are seven or eight people that were at the dipper, supposedly. anyway, politics will be great. we'll see what hillary does as she -- why doesn't she distance herself from what is happening in the country? we'll get more on the markets after the dow's strong run last week. joining us is paul shatz onset to talk about the economy. michael hampton, senior u.s. economist at bank of america merrill lynch global research. michael, i'll start with you, is the market totally disconnected from the underlying economy? 280,000 sounds pretty good, that sounds like 17% on the dow, no? >> i think you are seeing signs that the economy is trying to get more healthy and the first quarter gdp was quite week, but a lot of other data. even payrolls weren't that week with auto sales strong, there's a lot of indicator that is show the economy was not contracting at 3%. and i think the markets are

showing that now. >> so you don't think that the fed orchestrated this -- it is having some impact, but the fact of the economy is working. >> does it pull out 17% for the next year or make it two or three years, or are we headed to 1 18,000 or 19,000. >> i don't think 17,000 is the end. we are a ways away from the bull market ending, and a lot of things will happen before the bull market ends. one of -- we haven't had a pull-back yet, so from a modest 4% to 8% pull-back, which should eventually lead to a correction of 10%, which eventually is to not have the pull-back yet. so the full market still has legs. people hatd it and disvalue it and cast it aside and rationalize like we did.

the problem is there's still no place to put your money. and people are talking about the bubble and the preponderance of the bull market having problems that can't last. that's going to fuel further gains, so we hit 17. it is only a number. 18 is next for your. >> all right. so, down 2.9. what will the third quarter be? >> we are looking for 3.4% in the second quarter. >> 3.4%? and then back below, will they come down? >> yeah, a touch to 3% for the second half of the year, but growing above trend for a change. >> that would be -- that would account for 3%. >> a year is a whole is going to look around. probably to below 2%, right? >> but the run rate, that will be enough if i find it. and when do we see it move up?

>> i think it will be late next year. >> not early 2015. >> i think it is unlikely at this point. the feds have a lot of tools they need to hike. they don't have a lot of tools to ease further but they are erring on the side of caution. >> for a while in both jobs and in inflation, they would say we need more accommodations. they can say inflation below target and pull him in. still not where he should be. they are working on unemployment and starting to say -- >> we have undershot for a number of years, two-and-a-half or something. >> two-and-a-half is on the high side, two and a quarter, that's quite possible. >> obviously pc is being targeted and i'm looking into how to get corporations to give us the next step up in profits.

are they going to build some plants or hire someone? or are they going to try to increase productivity. >> it will be more of the same, joe. this is your typical post financial crisis recovery. it never stays on the backpack. go back in history until you get to the other side of the net for the recession. nothing is really going to change in corporate market. we are stuck where we are and let's remember, all these tax increases over the past couple of years have come to roost. it is still dragging down the economy. a tenth of a point here or there, i think it's a little naive to believe all of a sudden we're going to have 3% fluff growth year over year after me. and i think we are in a later stage of the recovery. it is not a great stage but it has been a recovery.

>> yeah. and none of the signs that would indicate some type of loom iing. but isn't it always? >> there are slowing signs in each recession, there were signs before that. they have slowed, but in a normal economy they pick back up and there's always shock that comes. so of course when the bull market ends, there's going to be some kind of shock that people are going to say, oh, my gosh, the bull market end ed -- where else are you going to put your money? you have nowhere else to put it. you are not putting it in the mattre mattress. there is nowhere else to go. appreciate it. are you a djokovic guy or

federer guy? >> djokovic. he had a shot early on in the second. >> it was this set that mattered. and he had a chance to be up 15-30 with djokovic serving. it is weird in five set matches that you can see momentum building. >> i do remember watching federer, he was never at the u.s. open. he was on the -- >> a lot of the hands were not ignored. you have to hit a winner for him to screw up. >> and he's 33 only?

>> i thought he was older than that. >> no. >> senator still has 13, so i think djokovic has weird hair. it looks like fur to me. i was hoping for federer. >> roger federer, only 32. not even 33. >> he seems like he's been around for 25 years. >> i think he won the junior wimbledon when he was 16 year old. >> i like him but don't understand the other ana tour thing. they are like best buddies and i don't get that. >> i saw prince charles, man.

nevermind. and i saw william and kate. they were actually right behind my back. philip was there, too. coming up -- i think it was one of the more reputable -- >> like a british tabloid? >> no, it was a u.s. -- i have to look it up. >> coming up today, the markets waiting for monthly retail sales. we have a preview of the hotels that may not survive the summer. how can this one-time gambling of the mecca recover? that is next on "squawk." financial noise

financial noise financial noise

today's atlantic city is now looking to survive. morgan brennan is joining us from atlantic city. this is a stunning turn of events for a place that has been so hot for so long. >> that's so true, becky. take a look behind me because

over the left shoulder this is the showboat casino. over my right is the rebel. 2.4 billion mega resort owned by join asset management. and if the buyer doesn't materialize for rebel, that could close. between these and the already out of business atlantic club, a.c. could end the year with 25% less casinos than it started with. gaming is down 45% since 2006 creating what analysts say casino saturation. that prompted new jersey governor chris christie to file a plan for atlantic city. he started that in 2011 and why the mayor will be speaking to leaders later as they are undergoing a massive economic transition. the goal to turn this into an event destination for groups and

conventions and are using las vegas as a template. one example is harrahs and another casino located here. so much of the plan has revolved around rebel. it was expected to usher in a new era for atlantic city but now is facing bankruptcy. this is the second time in the two years since it opened. that coupled with 10% unemployment and what is still a very high rate of crime has many critics wondering if this city will be doom ed. >> the retail industry and rebel -- >> someone is going to buy it. >> somebody will do something. >> somebody is going to do something, it cannot just sit

there. >> although atlantic city is having a tougher and tougher time. sandy was in the midst of that when it was opening and that didn't help, but it has seen troubled times. >> maybe when the governor comes back he can talk more about what is happening with atlantic city. and a couple other things this morning, the tsa is tightening security on airports and ipad. the other electronic devices are not charged up or able to be turned on, then the new measure is part of the effort to boost safety measures. it sounds like they are going to check whether you can turn your device on. if you can't -- >> then that's the issue. >> that's a problem. i have walked down to planes with my phone out of battery with the plan of using the plane to charge it.

he's into -- solar, yeah. he's into space and cars. >> things like that. >> there's a new airline making its debut today. check this out with a shot of it. the a.r. headlines. >> i'm traveling today, so is this for me? >> we are going to be on. >> my children are no longer babies. >> too small to fly is the motto. there's a screaming rugrat on the right. no babies allowed anywhere on the plane. and you don't even fly to airports with babies, do you? >> we try to avoid them if we can. i'm flying to jfk today. >> he's flying with kids today. >> i'm flying with my children today. you are going to bother everybody else. >> i am going to bother everybody else in this economy. >> we are all going to be sitting in coach together because they are gregs and don't deserve your first-class

treatment. >> no. i think it is better for the kids to be -- we should all be in the back for all sorts of reasons. but then i'm making moral judgments that i don't want to deal with. >> get me out of this. >> let's get out of here. i think that's your commercial break coming up. >> that shows you how far -- we didn't put that together on friday. a viewer made that. a viewer made it. it was scottish. he came in the hallway with other funny videos and pictures. scott, thank you for doing that. look at that approach -- that's good. >> that's another good one as he's trying to lecture somebody -- dodd frank. i need one of those sometimes here. >> you don't need one, actually. >> i have a fog horn myself. >> is the washout for major

retailers. will back to school sales save the day? we'll talk about that coming up. and are you in need for a keyboard for your iphone? we found a problem from the shark tank. >> four letters. join us to talk to the ceo. and the winners and losers for the week. ♪ [ male announcer ] meet jill.

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good morning. welcome back to "squawk box" here on cnbc. i'm joe kernan along with becky quick and andrew ross-sorkin. many are finding fund managers optimistic. managers in north america and europe expect an increase. and ernst & young managers are

starting to feel the pinch from regulatory pressure over paying. and apple is posting another luxury executive as the rumored iwatch launch looms today. i would worry if i were a watch maker. the firm has been seven years and no word on what his new job would be at apple, which has several executives from the luxury region. he's saying -- he's saying that. >> are you going to get one of the watches? >> did you see who had a luxury watch? we spotted the isis guy who is in charge of isis and they somed in, he's wearing your watch.

>> which watch? >> that watch. >> no way. >> they said it is a rolex or omega. and the whole thing of not being material -- i don't know if i were the head of isis whether i want everybody -- >> they probably have $2,000 in money or something. >> as horrific as he was, he at least went in with his followers and not a bunch of rolexes. that was just quite rare. >> i was looking and it is close to a million dollars. isis is a well-funded terror operation. not only do they have massive funding but all these weapons that they have taken from -- i

sit across this -- >> now they are talking about the watches. why are all the sleeks out there toyota? >> have you ever noticed? >> all the vehicles tlofr that seem to be toyota pickups for some reason. >> well, they are reliable, small and can carry stuff. i'm more comfortable talking about the lots -- >> i don't know. there are very few brands. >> are you saying terror that is

less controversial? i don't know. expedia is buying a company for $650 million. this covers the asia pacific region. we'll sniff if i find that in a seco second. >> hotels.com and hotwire for me are very complicated. we'll tell you what is happening on in "squawk" sports news. the trial begins today to determine the fate of the record $2 billion sale of the los angeles clippers. the trial will focus on whether donald sterling's estranged wife has the authority to unilaterally formulate that deal for $2 billion. we'll see what the outcome is. i imagine the deal will go through, don't you think? >> i don't know. $2 billion, why doesn't she just take $500 million for the bucks. these guys take money to make

money, but the people know how to do distressed things and make wise moves. >> you are think iing that -- >> i know. >> i would argue and could be wrong on this, but steve bought it strictly for fun. >> right. >> but who would offer you 20% at the price? couldn't you wrather buy -- i will offer you 20%. he offers me 0000 --

>> i have a friend who took a stance in the early '80s. and he's no longer a lawyer. it worked out very well. >> the original steinbrunner it's plenty long before the regional networks and the e.-net works and all that works. and mobile's mobile turns out a way for the smartphone. see, google was a tv producer, right? this is fubu, was that after -- >> maybe it was cheers. sit, bubu, sit. >> did you not hear me say that,

rob? i said fubu. as we head to a break, here's a quick check on what's happening in the european markets right now. 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. ♪

welcome back to "squawk box." the sun is coming up there in times square. july 4th is a big holiday shopping week for retailers as they make the switch to back-to-school supplies. with more on the winners and

losers this morning, let's say good morning to dana. a big weekend, not so big? >> it was a big weekend. some of the promotions were greater this weekend than last year. and beginning on july 10, that's the school supplies that will hit the stores. it will be soft dressing in terms of softer jeans. and back to school is in full focus by the end of july. >> walk us through the winners and likely losers in all of this. >> some of the winners you'll see will be some of the foreign retailers and the fast fashion companies like h&m, like forever 21, like uniglow and old navy. i think those are some of the players where we definitely saw some of the winnings. and we are seeing improvement in companies like jcpenney and amber crosby and abercrombie &

fitch. >> they are promoting every week working to drive the traffic and sales are better this year than last year. >> can we get your views this morning on american apparel, is that company going to be here in a couple of weeks? >> i think it will be here, under what management team it will be here is a question, under ownership. it certainly created a niche in the market by itself. can it stand on its own two feet and the boardroom has to be impacting the overall -- >> should dove be back and running the company? >> hard thing to say.

i mean, it needs to see improved results and improved results are can it be left out of the equation. have you heard all the rumors? >> they have been going on for years and that's why not as many people are following it in terms of the brokerage community given the issues in the past. >> j. crew, this was a takeover target just a couple months ago as people talked about it being taken over. what is happening through? >> i think the world of getting potential with new concepts, there are some better sale through there. they are putting access to the growth strategy in place. >> dana getting up early for us.

thank you so much. >> thank you. when we come back, we'll be welcoming "shark tank" co-star damon johns. he now brings us mobile's mobile with cool things for your smartphone. more "squawk box" right after this. except that managing my symptoms was all i was doing. ♪ when i finally told my doctor, he said my crohn's was not under control. ♪ he said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. and that in clinical studies, the majority of patients on humira saw significant symptom relief. and many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening heart failure.

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mobile is launching today. a lifestyle brand clothing company few beau, also one of the hosts of shark tank. we love you on shark tank. we're thrilled to have you on set with us. >> feel like i'm home. >> great to have you here. i love fubu, amazing what you did with that. you started that in 1992. >> out of the house. >> fubu is for us, by us, right? >> there's been a lot of for us, who's the us? it's always been hip cop. people thought it was a certain color. but we were the first ones to dress 'n sync when no one would dress them. >> i love the entrepreneurial story behind the whole thing. let's toque about mogul's mobile and what you have with some of these products. because the iphone key board is what i like. >> mogul's mobile is our new brand we're launching and for the entrepreneur on the go seeing we're all entrepreneurs on the go. i'm playing right now with our

magnety and this is a bluetooth keyboard that basically snaps on. >> it's magnetic. >> it's magnetic and it pops on. has your keyboard right there. you can take it anywhere. we have about 12 products coming to market with. we have a device called the locator. you stick it on the back of your phone and we'll have a kour you're come and pick it up if the device gets lost. we deployed about 2 million of those privately and 80% of the devices were returned within 24 hours. >> you need this. >> i lose everything. i need this. >> we also have the keys and luggage, as well. >> i need this for everything. i put it -- i just lost my driver's license again. >> i don't think your driver's license. can you put it on your dog, maybe. >> he lost his driver's license and he's getting on a plane today. >> why do you have a driver's license? you don't drive. now when your driver loses his driver's license -- or your pilot. >> absolutely. >> how did you come up with this line? what was the innovation behind it? >> well, first of all, i meet

with thousands of entrepreneurs every single year and the hotbed of new inventions are mobile devices. and they say 90% -- 97% of the rest of our life we will be no further than three feet away from our mobile devices. so i partnered up with edison nation and we decided we want to source this and spend up to $5 million in partnering with entrepreneurs, mom entrepreneurs, students who have inventions and ideas and put it out there. >> how much does this thing cost? >> this one right here is $74.99. and we even have a -- we have mirrors for the ladies. >> what do you mean mirrors? >> put it on your device and then you can see yourself. >> you can use it as a lipstick mirror. >> perfect for anchors. >> i was going to say. >> vanity. >> because gender -- >> there you go. >> so now when your answer -- >> people wear makeup, it's not just for ladies. >> exactly. >> that's us. >> you know, we hear all the

time that the entrepreneurial spirit is dead in america. i would guess that you have a different story from what you see all the time. >> exact opposite. you know, 50% of the millennials said they will never work for anybody in their lifetime. and you know, how with the computer, and now with the fact of mobile devices, we can be anywhere and everywhere. and entrepreneurship is as hot as can be. >> did it suffer during the financial crisis? is it tougher to get funding? i think back to what you did where take out a mortgage on your home for $100,000 that you plowed into a business. is it tougher to get credit these days? >> it definitely is tougher to get credit. i just worked with an american express on something called spent, a movie called spent and it really showed the challenges we have in the credit area. but, entrepreneurship is still hot, and you know what? you can't stop entrepreneurs. they're going to take affordable next steps and they're going to work it out. and i'm just really excited to be part of a show that really helps foster that as well. >> we had asked you off camera before you came here what's the

best investment you ever made through shark tank? >> i think it's my bubba's boneless baby back ribs. i finally got that out in one sentence. it's a rib, it's a process and a product that you can actually -- the bones are actually taken out of the ribs. so it's no longer the mushed up, you know, pig's nose and squirrels fingernails, you know, then put in a bun. this is really a rib. >> who's your favorite person on the show? >> myself. >> good answer. >> who's your second favorite? >> you know what? i don't know. it all depends on the last shark that i actually did a deal with. >> really? >> that would be my favorite. >> has anyone really made you angry or -- >> every single one of them have made me very angry at certain times. very, very angry. >> who is the biggest -- you know -- >> who is the -- >> who's the hardest negotiator? >> the hardest negotiator would be -- it all depends on the

deal. i mean every single one. i'm sorry. they're just-they're all bozos at one time or another and i just have to deal with them. >> that's a good line. i think we can -- >> who is the most successful shark from the show on the show? >> would be lori. i think lori has this piece of crap sponge that she sold about $20 million worth of. lori would be the most successful one. >> you must like that sponge a lot. >> i don't want to make money off of selling crappy sponges. i like selling other things -- >> i think the devices here change -- >> a seinfeld sponge? what kind of sponge? >> it's a sponge in the form of a little face. and it's called sponge daddy. and she made a lot of money off of that. i want to change the world. because i want to bring people closer together with mobile. not a crappy little sponge. >> a little trash talk there. >> 6:55 in the morning. >> larry comes on and seems like a pretty good entrepreneur. he lectures us about the fed and

yellen, he has never -- he may know nothing but he's never in doubt about anything. >> that's been the ongoing joke that every single thing we talk about o'leary knows something about it. >> he's an expert on it. >> it's because he's been a vampire and he's been around 300 years so he's learned a lot. >> okay. you agree he's a blood sucker? >> blood sucker. and something else sucker. he's all kind of sucker. all day sucker. but -- >> you know what? i don't want to forget why i'm here because i can talk crap about those guys forever. >> come back. >> come back for two more hours. >> okay. we love shark tank. in my family -- my daughter turned me onto it. it's weird. >> you know what? it is really, really -- it's one of the top network shows from kids 5 to 15. what we love about it is the fact that these little kids out there today, they no longer want to be an athlete or a singer they want to be a shark. and i love that. so, -- and i also want to invest in some of them so you come on to mogul mobile dotcom and --

>> want to buy one of those things. >> next we're going to talk about the dow at 17,000. we'll 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.

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welcome back to "squawk box." another better month for jobs. the dow crossing over 17,000. more records for wall street. "squawk" master of island capital opens up the second half playbook. the boomer effect. they are 78 million strong, and control 70% of america's wealth. find out which sectors and industries will be booming over the next 15 years. the second hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" on cnbc i'm joe kernen along with becky quick and andrew ross sorkin. the futures at this hour after a great four-day week that we had last week after the big jobs number that was better than expected, are consolidating a little, pulling back a little, dow was able to close above 17,000 for the first time ever. and that did cause the ten-year to sell off a little. and i don't know whether that was a monthly high that we saw. i think it got there. got over 265 for awhile andrew, and the big news over the weekend is andrew, you grill now on the july fourth weekend. >> i did. >> you helped. did you flip the burgers? >> we rotated some hot dogs. >> you did it. and then you lost your driver's license. someone in the control room the director said maybe you dropped your license in the grill. could that have --

>> no, i don't know where the driver's license is. >> one of those stickers we just got -- >> i have the sticker right here. >> how are you going to get on -- >> escort. >> oh, you're going to use -- >> and it's your own airline. >> they don't ask. >> it's sorkin air. they say hello, sir. you play that same song from abercrombie & fitch or what was it? >> was it sting? fly like an eagle -- >> all your flight attendants are wearing the same aftershave like that guy, too? >> yeah, we play beaches. >> beaches, okay. >> let's talk about some head lines this morning. >> the wind beneath my wings. >> that's the song. >> brilliant. >> isn't it? >> yeah. >> apple has hired a senior executive from swiss watchmaker tag heuer ahead of an anticipated fall launch of an iwatch. tag's former vice president of sales is the latest in a series of executive hires from apple from the luxury good sectors. a lot of questions about what that watch will look like.

what it also means to swiss watches. the los angeles clippers, former microsoft ceo steve ballmer is now at stake again in a court case that begins today. a trial will determine whether shelly sterling, the estranged wife -- we don't know if he's estranged, wife, maybe estranged wife of clippers owner donald sterling had the authority or not to negotiate that sale. the deal was struck after the nba moved to oust donald sterling. and then former news of the world editor andy colson has gone an 18-month jail sentence that follows his conviction on phone hacking charges. british prime minister david cameron has apologized for having hired him as his media chief. >> probably sad to said the strange wife of sterling -- >> strange. >> if we don't know estranged. i think you can get by with strange. we can assume that there's a little strangeness there. >> there's a little strangeness in all of us. >> transformers age of extinction topped the holiday weekend box office with $36.4

million. north american ticket sales. >> on the kernen family list? >> no but i told you we saw robo cop on demand. had some big stars in it. samuel l. jackson plays like an owe riley type tv figure. like a very conservative and once you know the robots to be able to have guns. that is a question if you had a law enforcement official that was a robot, how do they decide whether someone used lethal force on a child or on a -- you know, it is a weird -- would you rather have a human making those decisions? which would take a lot longer, because you think about it a lot more or should you just -- is there a way to plug something in there that allows you at certain times to use deadly force? >> machines. >> well, yeah, that's coming. >> anyway the second straight weekend at the top for the film, and it topped debut films "tammy." "deliver us from evil," and "earth to echo."

>> "tammy" i know. >> what's tammy? >> that's the one -- the woman from bridesmaids, melissa mccarthy. >> i heard that was horrible. >> i didn't see it. >> i did. oh, i heard it was potentially great. >> i will tell you who makes tammy right now, and then -- it's a warner brothers film. bombed. >> bombed, terrible. disaster. >> not so hot. >> terrible. >> we don't have any alliance with them, right? >> thank god it's not mgm. >> and -- >> why? >> because we're big in that one. we got hot -- >> you with anchorage? >> we're the second largest holder. >> no kidding? >> on the board. >> all right. fargo. >> yeah. >> there you go. fargo, what's his face. >> tv's going to be great. >> who is the producer? warren.

warren is the one. >> yeah. >> fargo is great. anyway. this is like, do we need to say pork lovers? is there anyone who doesn't love bacon? i don't know. a deadly virus is plaguing the livestock industry. 100,000 pigs are dying each week. the question, i think they mean 100,000 pigs are dying from the virus each week. because i'll bet a held hell of a lot more than 100,000 die each week because we're going to eat them. the virus does not infect humans but the number of hogs slaughtered this year is down 4.2%. that means prices for bacon and other pork prices are rising. in addition the number of dead pigs has environmentalists worried about state laws requiring the burial of carcasses and what to do -- with the groundwater. the dead carcass of the pig may be seeping into it. >> thank you for that -- >> that's what we were basically-but how many, you know we said 100,000. how many pigs die every week from -- >> just being slaughtered for us to eat?

upton sinclair, the single images going through my head, thank you. >> maybe mark knows. i don't know. >> it's one of the worst bank deals i ever did. >> what was? >> financing a pig farm extension. >> you did one of those? >> back in the '80s. this was a long time ago and the same thing happened all the pigs died. >> no kidding. >> it was terrible. but anyway. >> we'll sell some pigs this week. >> do not finance pig farms. >> you can weigh in on every single one of the stories. >> oh, absolutely. i'm old. i've been around for a long time. >> you are not old. our guest host is one of our esteemed masters of the market. mark ocata. we're also joined by jason schwartz who is wilshire funds president. he advises $130 billion in client assets. >> thanks very much. >> let's start off talking about the markets. mark in reading through your notes i got the sense that you were a little nervous by how quickly and how far things have run, but you don't necessarily look at other investments as a

place you'd rather be than stocks? >> yeah, it -- what's not to like, right? we've got geopolitical uncertainty. we've got all sorts, the fed tapering. we've got -- >> china's going down. >> we've got argentina blowing up maybe. what's not to love about that. >> oil prices rising. >> but the fed is certainly got its foot on the pedal and they're that going to take it off for awhile. we've got -- >> and that trumps everything? >> well we've had a great run in rates. rates went the other direction. that's been a theme. utility stocks have been the biggest performing in the s&p. so that's run. i think that's probably ending per se, as far as a theme and something that we don't like anymore. but, i mean, it is a situation where financial assets really have been the only thing the fed has to work with this economy. there's no fiscal stimulus. congress can't do anything. the president isn't doing anything to lead from that way. so the dual man dates says the

fed's got to continue to push all the buttons it's got so we're going to continue to see this sort of pressure coming interest there. who knows when it ends. but while it's going on i think we have these melt-up markets. it's something that -- >> it's been a slow melt-up. this has almost been inching higher. >> oh, sure. actually was huge, right? huge. so this year we're melting up, do we feel great about it? no. we don't. we think spreads are compressing across the board. it's a situation that makes people that have been around, old people like me, awhile, fairly uncomfortable about what's going on. so you pick your spots, areas you feel great about like the airlines. have been great. great trades there. that industry has been packing a lot of people on their planes. and doing very well. >> american is your position. >> we're big on american. we've made a lot of money there. we still like it.

>> how long does that trade last? did you get into american when it was bankrupt? >> yeah. >> so that's worked for you and clearly worked for a lot of people. >> sure. >> at some point does it still work today? >> it's still getting going. they're putting the two airlines to the. my frequent flyer miles really don't work on both sides. there's a lot of work to do here and i think as they get it all together it will be even better. but we've got a little bit more runway as far as how they bankroll -- >> what about the rest of the airlines? >> delta is a great dividend stock. they're paying on a very small amount of their earnings. and their cash. so they can up their dividend and do well. >> we like jeff smizek around this table a lot. for some reason that company has not had the same success as everybody else at least in the market and the way they put those two companies together. >> well, look, it's one of the situations where everybody hates the airlines because their history has been negative, right? they get it all right and then they get it all wrong, something happens with oil prices et cetera, et cetera, and that's always out there.

we haven't had a situation now like this for a long time. where everything feels really good. and it looks really good. there's not a whole lot of competitors that are going to come in and upset the apple court. >> you said last week ms. uno side smizek should have done the deal. it was tough to get the two corporate cultures together and it's almost there at this point. i don't know if i'd say it hasn't -- what do you mean the stock hasn't? >> has the stock reformer united has not performed nearly as well as delta. >> but it never got down -- >> never got down to $2 either. >> you got to pick your spots, right. so there's a lot of ways to make money in this market. but they're really going to punish you if you're wrong. weight watchers is something that we've seen really get hit this year. >> sure. >> traded down 20 points on the bad news. but, you know we feel good about that. a lot of free cash flow. that's a nice yield for us. and it's good price freerks from

there. so there are ways to make money in a market like this as opposed to picking direction. >> jans, how about you? what do you think about where the markets stand right now? what do you think about specific areas you'd like to invest? >> sure, i'd echo many of mark's comments. there's no question that we're in the late stages of a bull market cycle. you know, the irony is that -- >> we've got some guests who said this could run another five to seven -- >> that's the thing. markets that are overvalued and continue to get more overvalued are called bull markets. we have no sense as to when this market, you know, cycle ends. we do think the case can be made for, you know, continued advancement, you know, the markets are awash, and in a sea of liquidity, clearly. and you know, when we look at you know the year before fed tightening, over the last five cycles, if you look at the wilshire 5,000, which mesh ires the total stock market, in each of those five years before fed tightening markets are up on average 20%. so you know, clearly case can be

made for continued expansion. we do like i would say this notion of continued diversification, this is what institutional investors do. one of the things that separates institutional investors from individual investors is they really think in terms of diversification not so much performance. we like on the credit side more off the beaten path strategies, some bank loans, clos, emerging market debt for example. we like some of the more unconstrained or nontraditional fixed income strategies that can more flexibly manage duration and quality and maturity. and we're big advocates of alternatives. we like and we think that investors should be thinking about sizing down from equities and fixed income and having a, meaningful allocation to alternatives in the retail space, increasing number of liquid alternative mutual funds. >> what do you mean the retail space? >> in mutual fund space. we serve both institutional investors that are big investors in separate accounts, in customized strategies but in the retail space, etfs and mutual

funds which are typical tools used by individual investors, we now see the same types of tools and techniques that are available to be used in the concept of a broader portfolio, which we think is important. >> okay. jason want to thank you very much for coming in today. great talking to you. >> thank you so much. >> mark is going to be with us for the rest of the hour. >> it's hard to find like, info about animals that we eat. i mean i hit it up to try to find the numbers and it's all peta stuff. i'm on a website now that's just scary. guys in masks and everything called the animal liberation front. it's -- but i understand -- >> want to know how many pigs we slaughter? >> apparently if we take all the ones we import, too it's 116 million. you know who really gets the raw end the deal here? >> the pigs? >> chickens. trillions. >> yeah. >> like 116 million pigs. because i guess you can get a lot of food out of one pig. but chickens, man.

9 trillion. >> guess it doesn't matter if you're one of the ones if it's 1 or a million. >> we went on an egg hunt this weekend up at our farm. stone barns. >> you know, if you truly don't want to leave a carbon footprint, you should be a vegan. i mean, if you're like al gore and these guys that are really out there. they think, you know, really should not be eating meat anymore, andrew. should be eating kale, which you love. >> i'll be doing that during the break. >> you do -- >> we got to go to that break though. and when we come back we're going to talk about whether deals are drying up for private equity. can investors still expect banner returns from these firms that are flush with lots and lots of cash? that's next. plus amazing video of a near collision of two passenger jets over the weekend. it is not something for the faint of heart. we're back in just a moment.

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partners which has $21.8 billion under management and our guest host for the hour mark okada is here. do you -- do you buy this "wall street journal" article that we have too many -- too much money chasing too few deals? and hasn't that always been the case? >> always the case but more pronounced now. data shows $1.1 trillion of capital. sitting on the sidelines. fund-raising has been at a record pace, actually. last year the most capital raised since the great financial crisis. if you look at acquisition multiples today, it's about 9.1 times enterprise value to ebitda which is operating cash flow. highest it's been since the great financial crisis. >> so what happens to the money? i remember articles for years that feel like i've written some of them that would always suggest there's too much cash chasing too few deals and invariably they're going to have to give the cash back to the investors and they never do. >> well they roll it over into the next fund.

but when you don't want to see is a private equity pros chasing after deals because in this environment, it's more of a growth environment. private equity does best in the value environment. and so when multiples rise like what they've done you have to really grow into the multiple of the acquisition multiple. you know, i would say a couple other things. the private equity pros are all praying to the money gods to make sure this bull run continues. our clients have seen about $1.90 of capital return versus $1 invested. so they're getting a lot more money back than their investing. >> that's because they're selling into this market. >> absolutely. >> not because they're buying into this market. >> occupy wall street is still out there. did you just say hedge fund managers pray to the money gods? >> private equity guys. >> that's not a good way of -- mark do you pry to the private equity gods? >> no, no. i pray to the real god. >> huh? >> do you want to give them this sshs so you pray to the private

equity gods. or to the money gods. >> absolutely. >> that's what they say you do. >> absolutely. you got to. >> we got to all pray to the money gods. >> oh, man. >> otherwise the economy shuts down. you know, if the money machine isn't working, we're all -- >> it's okay. it's a good thing? >> we do need a capital structure, don't we, to -- it does help down the road for prosperity? >> at some point. it takes time. we have delay. >> we've lost sight of all -- >> in this environment, though. >> it's coming. >> what you do see, you see a lot of strategic deals happening. >> absolutely. >> constantly. does that mean private equity is out for the next couple of years and therefore then what happens to that cash? >> private equity needs to be selective. you're right. corporate confidence is way up. when your currency is trading at a huge multiple like what it is for most companies, you're very confident, you're seeing ridiculous prices. we're also seeing inflation in venture capitalists. you have talked about uber a number of times. >> is that a bubble? is that real? >> i think it's more

bubble-like. it's sort of the froth on top of the cappuccino. we're somewhere in the froth. not at the very top. >> we would agree with that. >>ize got more -- >> you've got traditional investors that are reaching down to get a hold of it before the ipo and that's not -- that feels very bubbly. >> so all tech feels like a bubble to you right now? just tech? >> the mature tech isn't a bubble. >> internet? >> the internet, social media stuff. new tech is what they're calling it now. >> pension investors. should do what? what kind of return can they expect from private equity? >> pension investors need to continue with private equity, and other risky asset classes. they're no different. right now they're all looking for relative return. when you have a 2.5 treasury yield, which is essentially risk free, i think the market expectation for equity is maybe

6%, 7%, 8%. private equity would still get you a low to mid teens rate of return. when you're managing to actuarial target rate like 8% you have to invest in private equity. but you also have to look at other alternatives, private real estate, hedge funds, i think it's back to a relative risk pricing in the marketplace, in order to get to where you need to be. >> david thank you for coming in. >> thank you. >> happy july fourth. >> thanks, david. >> don't -- >> don't run off. man. >> weren't you enjoying it? >> i love it here. >> stick around. >> say good-bye. we're going to pray to the money gods before you leave. that's what they said about romney. he prays to the money gods. and look what happened to him. coming up a near miss at the -- did i say it the right way? barcelona airport. that's because one of the emperors said it that way. >> everybody has to say it that way?

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to 18,000 without a challenge? we have that discussion and much more when "squawk box" comes right back. financial noise financial noise financial noise

welcome back to "squawk box" this morning. airbus is lagging boeing in its first half sales when adjusted for cancellations the european planemaker posted 290 cords comparing to 499 for boeing. of course six months of 2014. we're also watching shares of dish network today. there was a big piece in barron's over the weekend suggesting shares could jump 20% over the next year if the s.e.c.'s wireless spectrum option prompts investors to revalue the company's wireless real estate. dish owns unvufed wireless spectrum. the s.e.c. expected to hold the largest auction of spectrum since 2008. there was a near miss in barcelona all caught on video. a russian airline boeing 767 from moscow making its final approach just as an airbus a340 prepared to take off. the pilots of the russian flight quickly aborted the landing. they cleared the plane --

clearing the plane on the ground. they needed to circle around for another landing which was successful. but, yeah, amazingly close call caught on video. >> saw the plane, pulled up. so -- there was one in this country, too, i think in houston, and it was within eight football fields horizontally. and it's supposed to be three miles away. >> that is -- >> i think it's supposed to be five miles away horizontally and it was within eight football fields. so that -- yeah. >> wish we didn't do this story on a day i'm getting on a plane. >> you fly sorkin air. oh, you can't. if you're bringing your child you cannot fly sorkin air. >> stop. >> anyway -- you see that? stocks soaring further in unchartered territory after thursday's robust jobs report. how much hotter can this market get and what key factors could actually hurt the rally? joining us now is david kelly, chief global strategist at jpmorgan funds. a lot of times, david, i don't

know, i think of you as an economist. are you ready to tell us where the stock market's going to go, whether it's expensive, whether it's cheap, where are you? >> well i think it's pretty central to this. right now the overall economic environment is getting better. the earnings numbers look good. the key point to recognize is we're probably too late here to achieve a soft landing for the u.s. economy. i hate to get back to the airline analogies given the stories we were just doing but the reality is we're within one percent of full employment. we're 3.5 percentage points away from a normal federal funds rate. i think the fed is moving too slowly which means we're going to end up with some inflation, some asset bubbles. so i think for stock investors yeah, i'd be cautiously positive, but just be very diversified. have alternatives in there. have european stocks in there. you need to do something to protect yourself against the fact that the fed's really got the wrong policy in place. >> i'm trying to understand your use of soft landing in this case. normally we think about an economy that's overheated, and

you're going to try to make sure there's no inflation so you slow it down a little but you don't want to go below stall speed. we don't think of being in that. what do you mean by soft landing? >> well, that's exactly what i think is going to happen. the problem is the unemployment rate's coming down pretty fast. it's like a plane coming down really fast. we're running out of -- we don't have enough room to land this thing smoothly so at some stage the fed's going to have to raise rates rather quickly or the bond market is going to raise long-term interest rates rather quickly. and i think it's important for investors to be positioned -- >> david, people that are worried about the unforeseen consequences to all this easing, that's what they think. that no one's going to be set up for a quick rise in rates. and suddenly all the stuff's going to get marked to market and even the stuff that the stuff the fed owns it could get ugly if the rates ran up really quickly if it did it really fast, right? people won't be prepared for that in terms of they could lose

a lot of money on what they're carrying on their books. >> the other more dangerous possibility is the fed is so worried about that they just don't raise rates you end up with these asset bubbles saying housing or equities before that. you just have too much liquidity at a time when the economy doesn't have the capacity to grow. we're so focused on increasing demand in this economy we're not realizing we don't have that much room in terms of supply to meet that demand. >> i can't believe we could have a housing bubble that we didn't recognize this time around. usually the next crisis doesn't involve what happened last time. are you telling me we could be lulled into that again? >> if we keep this policy in place for another few years, yes, we could. it could happen again. >> i agree with that. i really think that you're in a situation that you've never been in before. the technicals that we've seen across the treasury market have been astounding. it's been really interesting to see the disconnect between fundamentals, and the price of

bond bonds where you've got a lot of strength across the indicator, we've had a negative gdp number but everything else has been really strong. the ism has been up consistently this year. yet freshry rates are down. so they can do the other thing, just the opposite in the other direction on technicals. and then what do you do if you're the fed? what do you do if you're -- if you're one of these investors that took the hedge faith this year and dove straight in to high yield bonds or ig and you've got a lot of little spread and you've got a lot of duration risk. >> david you seem to think the labor market is not as slack as people characterize it, and on some websites that i follow i keep seeing this number. 92 million americans are not working at all. you know. they make it seem like, you know, that there are so many people that have left the workforce at this point that have given up can't we hire

these 92 million back? >> the problem is a large chunk of this is people hitting 65 and retiring. that just moved a level up in the last few years and that's dragged the labor force. you've got to think about the economy we have. yes, we've got that many people but you need relatively skilled people to do the jobs of today and the problem is we may not have run out of labor but we run out of a lot of skilled labor and that's going to push up skilled labor or skilled wages and that's fine. but you know, i just don't think we've got a lot of qualified intelligent, ready-to-work people who can be employed easily. >> you're talking about liberal arts majors. sounds like. >> don't knock liberal arts. my youngest son is liberal arts major. but he's got a job. >> i'm getting some flak from andrew and others. but it does help to do something in college that could be applied to something at some time. >> oh, yes, it does. >> french renaissance poetry.

hi. you want a job my skills, french renaissance poetry if you need an expert -- >> i'm not worried about -- >> even in the course of getting that. >> i know about that. all i care about any time soon. anyway, david, thank you. i think you're right. it's the jobs. skills, they'll pay up for those and that can cause the wage inflation we think is nonexistent right now. >> sneak up. when we come back the boomer effect. they are 78 million strong, they control 70% of america's wealth. find out which sectors and industries will be booming over the next 15 years. "squawk box" will be right back. ! 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.

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welcome back, everybody. we've been taking a look at the futures this morning. after the dow closed at 17,000 last week you can see there are some red arrows this morning. not major declines but the dow futures look like they would open down by about 33 points. s&p down by about 3.5. today we're kicking off a new series here on "squawk" that we're calling "baby boomer effect." a baby boomer is someone born in the years after world war ii between 1946 and 1964.

nearly one-third of the u.s. population qualifies as a baby boomer. they control 70% of america's wealth. 10,000 baby boomers turn 65 every day and that will continue every day for the next 15 years. with such a large portion of our population getting older we're taking a look at the explosion expected in different parts of the economy as a result. joining us right now to kick off our series is ken dykwal, president, founder and ceo of ageway. ken has been studying this topic for more than 35 years. he's the author of 16 books on this subject and more than half of the fortune 500 companies are his clients. ken, thanks so much for joining us today. >> great to be with you. good morning. >> so we hear those numbers about retirement and it starts to make you wonder a couple of things. what resources do the baby boomers need to retire, and then again, what companies can benefit by catering to this group that has 70% of america's wealth. >> right. let me set up a slightly different portrait than your viewers may be thinking about. first, as you said, this is a very unusual generation, came along during the very heavy

period after world war ii ended. 92% of all women who could have kids did. but had just under four kids each. that was a lot of children. so every day, every eight seconds, 10,000 a day, 4 million a year, babies became the lifeblood of america. but now, as you said, those same boomers are starting to turn 65. the point of it, at the same time, though, is that we're living longer and longer and longer. this generation came along at the same time as the longevity revolution. frankly, living to 60 or 65 or 70 did really not that much of a deal anymore. boomers are thinking they might live 80, 90 or even 100 years which leaves plenty of time for second chances and reinvention and new careers, and even entrepreneurialism at 65. i don't think anybody is going to tell bruce springsteen he ought to get off the stage because he's 64 or anna wintour should hand over the reins of the fashion industry to kelly osbourne because she turned 65. here's warren buffett at 83 and i don't see anybody forcing him

into the mah-jongg program. what's happening is the boomers are plentiful. they're living longer. and they're reinventing themselves again and again and again. but because of their sheer numbers, and their kind of lively attitude, they're going to explode the number of industries, as you've said. if you like i could tell you which ones i think are going to light up. >> sure. what's at the top of the plist? >> let we mention four. first of all, anything having to do with the body. there's the age we'd like to feel. and there's the age we're going to feel. there's the youthfulness we wish we had. but then there's the debility that's going to be setting in. anything causing the body to feel and function better. that could be everything from new stem cell technologies, that could be pharmaceuticals, that could be medical devices. frankly, at the end of life it could also be home-based care. it could also be, because the boomers like alternative things, it could be anti-aging spas. it could be vitamin supplements. it could be lacers to eliminate

wrinkles from the body. >> it's not just feeling. it's -- because you can feel young if you look a little younger. so this whole allergan. you wonder why valeant wants allergan so much. botox really put them on the map, didn't it? >> yeah, botox, many, many thousands percent growth over the last several years and it does not look like it's going to go away. because there's going to be miles and miles of wrinkles coming and people are going to try to figure out how to take them down -- >> my over-the-counter skin cream i found was valeant. it was a valeant product. >> i mean it used to be skin creams were about pimples and acne and boomers came along, clearasil did quite well. what's going to happen when all of us have thousands of different kinds of physical issues that we wish we could get rid of. the second big zone is going to be leisure time. that's because due to the dual liberations of empty nesting, and then either partial or full retirement, you're going to see the greatest amount of free time in the history of the world with people who are looking for an

adventure or a good time or a chance to learn something. so that's going to benefit the travel industry, leisure, hobbies, volunteerism, adult education, pornographic websites, going back to school, books, learning. anything that has to do with helping this highly educated, high spirited generation fill its free time is going to be another category of predictable growth. third yug going to see financial services. in a couple of ways. you're going to see first of all there are about 20 trillion dollars worth of inheritance wealth about to get set in motion. a lot of people are going to try to get their hands on that it won't be distributed evenly. about 90% of the boomers are going to get -- excuse me, about 10% of the boomers are going to get 90% of the wealth. so fortunately or unfortunately, those that have money will probably wind up with yet even more money. but there are tens of millions of boomers who have a lot of financial catching up to do. you're going to see all the

major financial firms, targeting 25-year-olds who are lovely and look good and use atms and all sorts of cool things. >> right. >> but they have no money. it's the 50 and 60 and 70-year-olds that the financial industry will be going after, helping them to shore up their finances, possibly pulling a little bit of equity out of their homes, managing their inheritance in their 401(k)s, can be very big business for the financial industry. >> right. >> and the fourth one is housing. do people need as much house when the kids are out of town? what about a second home? what about moving to a college town? what about relocating onto a cruise ship or moving to costa rica. boomers are going to have lots of choices around housing. far more than our moms and dads who simply were contemplating whether she or our parents were going to live in a retirement community. >> right. >> the world of housing is about to get quite interest iing as boomers think about who do i want to be next, and where would i like to live? >> ken, we have mark owe caught to here on our set.

mark i know that the boomers have a huge amount of wealth, but they also are paying for their families, paying for their kids to go through college, they're paying for their parents as they start aging, too. do you look at any of these themes for investing and follow up on it? >> sure. well there's the echo boom effect, too. my daughter's 24. she's i guess i read somewhere -- >> millennials? >> more 24-year-olds than anybody else now in this country. so there are all sorts of ways to play this. unfortunately there are probably a lot more 24-year-olds out of a job than any time in the history of the country, too. so yeah. he's right when he said that 70% of the wealth is in this boomers. they've got a lot of money. they can afford to take care of these kids a little bit. and indulge them. >> how worried are you the boomers, because they're going to live as long as we hope they do, aren't going to have the money to do all the things? >> a lot of them won't.

the key story here is what happens in china, what happens in asia with their aging. our old people, which i'm becoming one of them, i guess i'm a young boomer, but the chinese boomers, right, these people that are coming in to this age, they don't have education. they have a real issue over there with that. i don't think it's a big issue for us, as far as our entitlement -- >> in china you mean? >> yes. >> they weren't -- they didn't come about after world war ii. >> but they have a huge network -- >> boomers are specific. >> just age. >> but ken, wouldn't you buy boeing and marriott, wouldn't you buy anything travel related for because that's all boomers are going to want to do with leisure time and with the money they have, no? >> in the right category. they also say the market is right. unbeknownst to almost all of us, china actually has the largest baby boom in the world.

during mao's era there was this movement toward populating the country with hard workers and there was a 450 million person strong baby boom. unfortunately they were also excluded from education, and unfortunately, only 15% of them have pensions. in china they actually -- >> a lot more than us, isn't it? >> they refer to those baby boomers as the unfortunate generation. so china's about to have a serious challenge with the aging of their population. >> wow. >> we only got $ >> 310 million. >> we have 350 million total. they have 450 million boomers getting older now without an education, without a pension system under them, and also without large numbers of kids that echo boom that was just referred to, because china has that 4-2-1 policy. >> so after our baby boom -- >> only about two years after our baby boom. >> i thought you said after mao. oh, okay. >> the baby boom started and then mao sent them all out of the cities and told them not to

be educated. you have a highly educated big generation of people growing old without pensions. that's perhaps for another show. here in the united states the boomers are going to be spending time on planes and yes going to be spending time at the golf courses. but they're also going to be volunteering and guess what? the highest rate of entrepreneurial activity in america in the last 10 years was people 55 to 64 years old. so boomers are also going to be starting businesses. turns out that when we think entrepreneur we usually think 25-year-old. silicon valley kid. the 50 and 60 and soon to be 70-year-olds are actually showing the greatest amount of entrepreneurial success and drive that we've ever seen in the history of america. >> great crop. >> ken, thank you. great talking to you. >> thanks for having me on. enjoy the week. >> you, too. >> coming up when we come back, more market wisdom from mark okada. and then six years ago boone pickens rolled out a major economy policy proposal to get the country to reduce its dependence on foreign oil. >> that was six years ago?

>> and he did it right here on our set. the energy tycoon giving us an update on the pickens plan. at 8:15 a.m. eastern time. e do ? just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review. 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 businesses have already used zip recruiter and now you can use zip recruiter for free

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welcome back. our guest host today is mark owe kaud to. co-chief investment officer. we were just talking during the break before you go. you have a take on loans that may be a little bit contrarian to some of the things we talk about. in terms of how junky the market

has turned. >> i don't believe that. the market has vilified the bank loan market -- not the market, the media. and we've seen so many -- >> you're saying the media has vilified the bank loan market. >> absolutely. and we're in a place where i think the market's actually doing very well. bank loans are up 2.6% this year. that's about what we thought they would do. and to have something in your portfolio that is senior secured, floating rate. what's wrong with that? and especially at a time like this. now, you've got -- you've got certainly areas where risk taking has been way too high. and we're turning on a bunch of the calendar here and i think that will be interesting to see how that plays out -- >> so winners and losers? >> txu, they filed, it's up ten points since they filed. we love that. we love what's going on in erakat. we love what's going on in texas. toyota is moving the headquarters to plano. it's nice what's going on in texas. >> in terms of businesses coming

in. >> that means we need more power. we're short power already. >> how does anyone play txu? >> you can buy a bond. you can buy bank debt. we like both and they're very nice returns for us. there are other places within the space, but i think in general, bank loans are going to be a decent place to be. the vols have been low, the returns have been very nice. everyone's scared that the mutual fund investors has been big in this trade so they're going to get out and run and see this big drawdown. what they don't know is that institutional investors have been even bigger in this space. >> right. >> and those institutional investors are rotating out of their fixed income risk into something that's a floating right but still has a high current return. >> that is a significant change in strategy. >> yeah, absolutely. absolutely. >> so we don't -- >> what percentage of your portfolio is in -- >> our portfolio is about 70% bank loans across the 19 billion that we manage. so it's a big piece of what we do. >> before you go, give us one

other thing to buy. >> let's see, i think that in the bank loan space. >> sure. or broadly. >> well, we like clos. i think the clo space which has been vilified as structure product, the abc thing is still trading very, very cheap. and there's a great -- >> harder for the average guy to get into the sector. >> yeah, that's tough to get into. >> mark, thank you for being here for the hour. >> thanks for having me. >> have a great summer. >> i am. >> good. coming up -- first the market is having a great summer. dow 17,000. next up, s&p 2,000 maybe. the bulls on a stealth summer run. plus we're going to welcome former senator bob kerrey. his take on everything from fiscal reform to geopolitical fears when "squawk box" returns. the cadillac summer collection is here.

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now that's progressive. call or click today. welcome back to "squawk box." dow 17,000 is now a reality. and new highs are being set every day. is there still value out there? let the bargain hunting begin. six years ago legendary oil tycoon boone pickens rolled out his plan for energy independence.

so how close is the nation to achieving this lofty goal? the "squawk" iconic rebel has an update. and the boomer effect. every day for the next 15 years, 10,000 boomers will be turning 65 years old. working longer. investing more. how this massive group of americans is changing the retirement landscape. the third hour of "squawk box" begins right now. welcome back to "squawk box," everybody. we are here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. our guest host this hour, former senator and nebraska governor, bob kerrey, who is joining us and bob we've got a lot of things to talk about with you today. thank you very much for being here. >> my pleasure. nice to be with you. >> more from bob in just a moment. first today's top stories from

andrew. >> avm buying swiss based specialty ingredients company, wild flavors is the name. love that name. they're being bought for $3 billion in cash wild flavors is the world's sixth biggest flavor provider. if you didn't know there were flavor providers out there. a shipment of boeing 737 fuselages was damaged in a train derailment. take a look at this picture. this is in montana. the parts were on their way to boeing factories in washington state and ended up in a river. boeing has sent a team to assess the damage. there's no word yet though on whether the accident might affect production of those planes. joe was joking earlier that this looked like -- >> no, no. did they send them there or is that -- >> the whitewater rafting? >> too many people in the boat to fish. >> whitewater rifting -- >> they have a canoe behind them. i don't know. i just want to know if those fuselages are going to get out in a more efficient way than a raft. >> i want to know if you think those fuselages are ever going

to get into the air. >> no. >> boeing's going to look at those -- >> they're insured. they'll get -- >> oh, they could use it for scrap though. and build them again. yeah. okay. >> we should also tell you one of china's largest asset managers reportedly plans to launch a fund that will give chinese investors access to shares in alibaba's deal in the new york stock exchange. "the wall street journal" reporting that harvest fund management is expected to raise more than $100 million for that fund. alibaba's ipo expected next month. but the timing isn't firmly set just yet. >> all right let's turn to our guest host now former senator and governor of nebraska, bob kerrey. i guess what stays off camera stays -- it doesn't have to. >> yeah. >> i didn't say you were -- i did not you were the good kerrey. i didn't say that. but i did say what is a nebraska democrat, and i said that's a republican, isn't it? >> well, new york -- >> and you've gotten. you feel more republicanesque lately? >> economically i would say i'm a republican. i tend to be more conservative on economic issues. and more liberal on social

issues. >> there's -- is it always the silly season? i think it is. seems like it's getting a little bit sillier because we had in "the post" over the weekend say that the president's going to back elizabeth warren and then we had the lead story in the "journal" today saying that hillary is moving away from everything obama. and is not going to be the third term of a president obama. she wants to be very clear that that's not it. why do you think that's happening now? do you think the legacy is in trouble at this point? >> well we've got to say the first word that comes to my mind is duh. first of all, the story about elizabeth warren, she is categorically said she's not running for president. >> at this time. >> well, at this time. but she said she's going to serve out her term, and -- >> we've heard that before though. >> i know. but she's pretty firm on it. by the way it's unlikely -- >> the word is that he's trying to talk her into it. i don't know whether that's true or not. >> that could be. that's a good way of getting a story out there. >> why would someone want to do that when hillary is the clear

choice of most democrats right now? i don't -- >> oh, it's politics. you get competitive. you look, is she the best one? you know, it comes from probably somebody like you asking the question. and somebody says well maybe jim webb could run. maybe martin o'malley could run. and anybody can certainly. there have been elizabeth warren would be an attractive candidate, especially amongst liberal democrats. but i think it's unlikely. i think it's more likely that hillary is going to be the nominee of the party. >> did you actually finally run or you were just checking the waters? >> there's a great debate about that, actually. i did file, and i personally think i was a candidate. but there were lots of people who questioned that. >> what would your plank be right now if you were to run? the top five things you'd run on as a democrat? >> it's connected to this conversation. i think we are roping from the future to pay for the past. we have a tremendous claim right now on national resources going to people over the age of 65. >> you're still worried about entitlement issues? >> i'm a democrat. >> we solved our deficit

problem. >> the deficit perhaps. but the entitlement problem has gotten worse. >> don't want to hear about that now? >> it doesn't generate a standing ovation that's for certain. but it's a terrible problem. the numbers are $26 billion in 1970 -- >> and they're not going away. >> no. but we're transferring $2.7 trillion a year -- >> to rich people a lot of baby boomers can do a lot better than 25-year-olds that don't have jobs. >> well, not only that. but the average savings of the baby boom generation, just a little over $100,000. which is nowhere near enough to sustain them and what's going to happen is they're going to have a greater dependency on these transfer payments and it's less likely congress will muster the political muster to curtail them. >> this reminds me of how much obamacare is going to cost. a lot of democrats say get rid of the employer mandate now that it's not going to work and it's causing people with 50 employees right at that level not to hire more, it's more part-time people. some people said get rid of that. >> i would be one of them. >> get rid of the employer mandate. >> i think the employer mandate,

regulatoryly it's difficult. what's happening anywhere, before obamacare is a breakdown in the employment based system and moving away to an individual marketplace. and at the heart of what obamacare does is makes it more likely that you'll have that individual marketplace. which i think is the best way to go. i think it's very difficult -- >> how do you pay for it? >> the problem becomes how do you pay for it? if you forced everybody into it, that's one thing. >> well the problem is always how to pay for it. one of the great applause lines in health care debate is high quality affordable health care meaning i'm going to give you the best possible and you don't have to pay for any of it. what's happened to the employer based and you can see it with high deductible health care plans those numbers are going up. and the hsas, the health savings plans are embraced both by democrats and republicans and more and more, you knee, i think you're going to see individuals making health care decisions and they'll come to you if you're a employer and say, what's your price? that hasn't happened in the past. it's starting to happen now. >> well, in -- in your worry about entitlements, and promises that we're going to have trouble keeping, you think eventually

we're going to add obamacare and the future cost of that into the worries that we have with all the other entitlements >> >> well, we already have. it's certainly included in my concerns. because it's a health care entitlement. >> the biggest of all of them? >> no, no, medicare is ten times -- >> so sort of feels like. >> well it's big. it's certainly a big claim on national resources. and it's mandatory. it's not -- you don't vote on it. the congress only votes on about a trillion dollars -- >> medicare is it. >> medicare, social security, long-term -- medicaid and now a new entitle mn on medicaid for nonseniors. >> are you optimistic that we can do anything? >> yeah, i'm generally optimistic about everything. so i would say i'm optimistic, but i don't see a lot of evidence right now that people are doing. >> well get your other planks, too. that was a big one. much more from governor senator we didn't decide whether you're a candidate or not back then. >> i actually was. >> you did have -- >> there's people watching my campaign saying that wasn't much of a campaign. >> you did have an interesting dating history.

>> i did. that would be on my tombstone. i know it will say bob kerrey he dated debra winger. >> we talked about that, too? >> a whole hour. >> yeah. >> thank you. >> coming up when we return, the most unread best-seller of the summer. can you guess what that is? maybe you can. and the boomer effect and how washington could impact retirement plans by kicking around the political football of social security. first boone pickens and his crusade is to get the united states off of foreign oil. it's now six years later and the anniversary of the pickens plan is upon us. a progress report from the energy taken in just a moment when we return. financial noise financial noise

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i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. the whole country is like that. if you have a few books on your summer reading list, "the wall street journal" has a list of best-sellers that people can't get through or just don't want to get through. and an index created from amazon's popular highlights feature from kindle. shows which best-sellers are going unread, and the number one on the best-selling, most-unread list is piketty's "capital in the 21st century." people can only get through 2.4% of the book. that's about 26 pages out of

700. apparently not a single person has been interviewed that read past page 26. i think that the next 600 pages or 700 pages just say all work and no play makes thomas a dull boy and he just kept -- and no one has even discovered that the rest of the book actually said that. mine, because i got a free copy, is next to the commode and it's working -- it's a little bit rough but it's working very well for me. and i'm through 60 pages already. but -- >> i thought you used it to grill. >> no, no, i'm using it to wipe actually. no, that's not true. i take that back. how much did you read, bob? >> if you read the last of the churchill books -- i read -- >> -- didn't even understand. >> but the fact that we're talking, having a conversation about this is an indication that the book's had a big impact. >> everyone's talking about it in france. >> we had piketty on the show and talked about it. >> four economists in france shot down the entire theory

because he didn't include mostly housing capital is what is responsible for all of the disparities he's talking about. wrote that and no one else even bought the book over there. >> regardless of what the french are doing you and i are not having a conversation about the book neither of us has even read which i think is important. >> you think he cares if you read it as long as you bought it. >> churchill never read the bible but he knew what was in it. >> what do you think paved the way -- we've got a president that's all he's talked about for six years is income equality while he's done very little to help the people on the low end. >> he's talked about climate change. >> oh, great, that will help. >> all right. >> when we come back, it was six years ago that boone pickens rolled out the pickens plan right here on the "squawk" set now the united states is on the way to becoming the world's largest producer of oil so is the legendary energy tycoon satisfied? we're going to find out when we talk to him first on cnbc.

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welcome back, everybody. tomorrow marks the six-year anniversary of the pickens plan. that's the strategy for cutting u.s. oil imports by decreasing our dependence on opec oil to become energy independent in the united states. it was unveiled on "squawk" by boone pickens of bp capital. he joins us this morning to talk more about it. boon, it's great to see you today. >> thanks, becky. you have to say i knocked that one out of the park. >> it was -- it was a long

campaign, boone, and i know that you had some ups and downs along the way. >> well, i never got one bit of help from washington. and i've thought why, why, why didn't i get help? they don't understand it. they don't understand it. here you've got the president voted, they are determined by some poll or something, that he was the worst president in the last 60 years. well, you can see why. i mean, this is a decision that would be easy to make, and it's still he has not made the decision, and it's been what, six or seven years ago. >> it's been six years. >> yeah. it's incredible that this -- but we're winning anyway. we're winning because we got the best industry in the world. the oil and gas industry is what pulled us over the finish line. >> boone, it's been amazing what's happened with our own energy production over that period of time. not too many people saw this

coming. >> you think -- >> boone you didn't persuade a single member of congress, 535 members of congress you didn't get one person to -- >> he got a lot. >> how many bought into the pickens plan? >> oh, i got -- i had 188 co-sponsors in the house. and on the vote, in the senate, i got 54 votes. and i needed 60 to get it passed. so no, i had -- i had a lot of support. >> who blocked it in the senate? who was against you in the senate? >> oh, the koch brothers were against me, and so -- have i said enough? >> you have said enough. >> well, boone, let's talk about where we are today as a nation. what's happened with our own energy production. where do you think we're headed from here? and just the idea of reaching u.s. independence from opec. is it still a possibility? >> oh, it's in sight. it is in sight.

if we just, you know, if you go back six years ago, i said you're going to have all this gas, you remember that? >> i do. >> and now we're now number one in the world in gas. and then we were third. we were about sixth or seventh in oil, and now we're third in oil. so we're number one in gas. third in oil and moving on up. so, i'm not kidding you, the industry should hats off to the oil and gas industry in america because they provided jobs and oil. i'll get off that subject but they do need a -- they've done a good job no kidding. but here we are, sure, we can get off opec oil. we're down to 4 million barrels a day of opec oil -- >> from what? >> at one time we were over seven. so we have come down to four, and we can knock that out within the next three years.

all you have to do is switch natural gas over to the heavy duty trucks and that will take you out 3 million barrels. >> boone, the private sector is a beautiful thing the way it's done this because you said no one saw it, no one knew about it. somehow it happens, and the capital flows downhill where all this happens. do you think if let's say the obama administration had -- and there's not renewables. we all love renewables, i understand that. we want to do that. we want to do solar. we want to do everything we can to have a huge portfolio of energy. but what if they had been on board all along, where would we be? because this is where we are without any help, really. >> okay. if they'd gone with me six years ago you figure you could have probably had a job done in three or four years if you had washington on board with you. if that were the case, you would have cut out 75% of opec, because 8 million trucks

converted to natural gas off of diesel is 3 million barrels a day. so, you would have knocked out 75% of opec in the last six years. but when you do that it also gives you the option to pull a fleet out of the persian gulf in case you want to do that. because you're sitting there with the fifth fleet, how many billions, hundreds of billions of dollars are you spending on that and who do you protect? the cartel. you protect the opec cartel for their oil, 17 billion barrels a day, and how much of it comes to america? 1.7 million. 10% of it comes to the united states. now we get other opec oil from angola, nigeria, venezuela. but out of the persian gulf we get only 10% of the oil that we protect for china and europe. >> right. boone, since you designed this plan, there's been huge evolution in innovation in terms of what elon musk is doing.

i was at this ask institute thing toyota was showing off a hydrogen fuel cell in a car for 9 first time. what do you think of those technologies? what do you think of the subsidies being given to some of those technologies? >> oh, those technologies, battery won't move an 128-wheeler. a fuel cell doesn't even have a chance to move it. do they work? yes, they're great experiments and some day they'll be used. i'm 86 years old. i'll never see a fuel cell, a factor in transportation fuel. 70% of all of the oil produced, which is 92 million barrels a day in the world, 70% of it goes to transportation fuel. now you tell me, get you a battery. get you a lot of batteries. but they don't move an 18-wheeler. and so will they work? of course they will. am i for them? of course i am.

it's better than opec oil i can tell you that. that is the worst idea that we've ever had. >> boone, let me ask you, are you in favor of exporting this oil and natural gas if your first priority is to make us energy independent? >> you've got a problem here as far as oil is concerned. we -- all our refineries were designed to process light, sweet crude. then it was determined that we were going to have mideast crude which is heavier, lower gravity, and dirtier. so the refineries over the last ten years have really when they upgraded they went to that type processing, so now we have light swede crude in america and refineries are not designed for it. i would say, go ahead and export until your refineries will go back, encourage them whatever way you want to do it. that's another job for washington, but get the refineries back on light sweet then that's when you get independent. but a big factor in my plan to

bring together canada, mexico and the united states in a north american energy alliance. this is the one that drives the military crazy. because that is energy security. i spent the weekend with tom mcnerney the other night. he said you got to get the energy security and you can do it with a north american energy alliance. >> opec -- >> drives the military crazy. the fifth fleet's not in bahrain to protect the oil for god's sakes. there's a lot more reasons for that. we've had security problems for that in that region before they discovered oil. >> listen, that is bob kerrey, isn't it? >> it is. >> isn't that who's talking. >> it is, boone. >> listen. hats off to you, pal. you're my hero. i could sit down and listen to you and you could talk and i'll

listen. you know mcnerney and i know the fifth fleet does more there than protect the oil. but we don't -- but you agree that they do protect the oil for the cartel? >> i don't know if they check the oil for the cartel. they certainly were there to provide some kind of security in the region and oil was a big part of the commercial traffic but it's not the only commercial -- >> i understand. and i'm glad you drshs >> i like your plan. i wish that congress took -- had supported the plan. i mean i like what you're doing. you did a great project in omaha with oppd, and i'm -- i support what you're trying to get done. >> you know we have these fabulous resources in america. and washington doesn't focus on it, because it moves along fairly smoothly. but if you really wanted to help the economy, well, you know, go ahead and press for the use of our natural gas here. increase demand here for it, and

don't ship it out of the country. but i'm -- listen, our producers should get in to any market they want to get into. they went out and spent the money, found the gas, found the oil. they have a right to get in any market. but if you had leadership in washington, they'd say wait a minute, we've got the cheapest energy in the world in america. why are we going to share that when we can use it here. >> boone very quickly we have seen oil prices spike because of what's been happening in the middle east. despite all the discovery we've seen here with the trouble in the middle east that's pushed oil prices higher. where do you think the right price, or the price will be for wti over the next six months? >> well you said wti, it is affected by brent north sea. brent north sea is really a price set by opec. because they will reduce supply and keep the price above $100 a barrel. that does pull wti along with it. if you want to lower the price of gasoline, what you do -- you

introduce another fuel into it. you introduce natural gas as a competing fuel for gasoline and diesel. you see what germany did this weekend. they cut out not going to drill any frac any wells in germany. and my response to that is, hey, look you guys have resources in germany. you develop yours, why are we going to develop ours and send them over to you? so there's, you know, let germany work on their own deal. they're the smartest people in the world. so they can fix it. >> boone it's always great talking to you. we really appreciate you coming on today and we hope to see you back here in studio again soon, too. >> good. thank you. >> thank you. >> there's no way that a sorkin air wide body in your fleet is going to run on a battery, andrew. just certain >> in my lifetime it might.

you hate kids on flights. >> that's not true. i'm taking my own children on a plane today. >> first class? >> so he's launched an airline -- >> too small to fly. >> no kids -- >> i think it's not a great idea. for the parent or for the people in the >> you think they should fly in coach with all the other people that can't afford -- >> too big or too much -- >> from an airline perspective, they're selling sleep or work as a luxury to mothers are mad at you -- >> on the other side a moral argument against parents. that one doesn't work either. >> unbelievable. >> just a personal thing. you don't want legislation. >> no, no, no. >> malaysia air doesn't have kids in first class. >> people in malaysia -- >> i'm joking. >> malaysia air is your -- >> that's why -- >> the babies are in steerage.

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welcome back to "squawk box." stocks to watch ahead of today's opening bell. candy crush maker is jumping in premarket trading. it's been upgraded to overweight from neutral. the king has moved above 2250

which was the ipo price when it debuted back in march. it sunk as low as 1526 before beginning a comeback. also, guys, online travel site expedia is buying australia's wotif.com. it will help expand in the asia pacific region. now let's go over to dom, joe. >> being. >> who is doing some stuff over there. >> are you going to go to him? >> i'm just -- >> i'm just alerting you. >> markets may be at record highs but there's still value hiding out there. dominic chu is here. and he's bargain hunting. >> i mean guys it's interesting because i love talking about stocks in the summertime because apparently nobody really trades them. volumes are light and whatnot. but there are a lot of bargains to be found. so we went hunting around just on valuations to look for which stocks may be trading at a discount to where they historically have been.

let's start off with a few big names. kellogg's on the food side of things, because kellogg's currently trades right now, cerealmaker at about 13 times earnings. it normally trades much higher. it's about a discount of 25%. normally trades at about 17 times earnings, at least it has over the past five years. so right now, we're talking about a 25% discount in terms of valuation for kellogg's shares. that might be compelling to certain viewers or listeners if you're looking for a bargain pick. also dow chemical now we know that dan loeb and his third point activist hedge funds has taken a stake in this particular company. been reducing it. dow trades at about 13 times earnings. it normally trades at around 26 times earnings, sore has over the past five years. that means it's almost 50% off in terms of valuation. that might be a value type pick to a certain investor who wants to look for at least some kind of a play on the chemicals or

materials side of things that's trading at a discount. one more a lot of times people say stocks trade at a discount. coach has its problems. the stock has been down. its trading about at 11 times earnings. on average it trades at 17 times earnings and it has so over the past five years. so this thing is trading at 36% discount so as we look ahead toward the stocks that may trade well in the summertime, some have momentum. kellogg and dow have been at an uptrend in 2014 and carry a dividend yield. coach has some problems still but as we look towards stocks that some investors are looking for sometimes they look towards valuation let ricks and if traded at a discount may be attractive to some of those investors. >> dom the one question i have with this is you're looking at how they normally trade but you're looking at a period over the last five years. the last five years have been anything but normal and you could expect that maybe there's some sort of sector rotation that would be taking place at

some point. if you look at them over a longer period of time, 10 years or beyond, are they still trading at a discount? >> they can. now the markets overall aren't trading at as much of a discount as they have back to the financial crisis. if you go back, of course, just five years to 2009 they have everything on the rise. but these stocks have been on a rise and still trade at discount valuations. historically over the past ten years, the numbers get a little bit more evened out so they're not trading as much of a discount, but if you look over the past five years you look at a stock like kellogg which over the past ten years up some 60%, yes, it's had a great run but it's still trades at a reasonable valuation to the market, and even to some of its peers in the consumer staples side of thing. dow chemical is an interesting story because there's activism there. certain investors like dan loeb who think there could be more value unlocked. it's only up about 32% over the past ten years. that's lagged the rest of the market. coach is an interesting story

because it's only been recently that this stock has been hit and hit hard. remember, this was a stock that traded at some premium valuations in the past, because of that luxury market really booming. it's taken more of a back seat to some other big names. >> but the question, sure the question you could have with the coach is when you have teenagers who are wearing coach shoes around can it regain its luster, can it get back the pull that it had before? >> you could almost say the same thing about any consumer company, right? courtney reagan talks about this all the time. these are about thematic investments. with teen retail, that's a big thing. when i was growing up, abercrombie & fitch was huge for me to wear. now you can't get anybody who wants to buy abercrombie clothes. >> thanks, dom. >> up next the politics of retirement when it comes to social security plus the changing trends in growing and projecting your nestegg. then tomorrow on "squawk box," barry sternlicht.

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welcome back to "squawk box." we're getting back to our series that launched today called the baby boomer effect. we're taking a look at the politics involved in raising the retirement age, social security, medicare, medicaid spending. we're also going to look at some of the retirement investing trends we're seeing with this influential generation. we have our guest host here former nebraska senator bob kerrey who is with us on the politics side. and on the investing side andy

is here. he oversees all retirement investing there. what should the social security age be? >> you used the phrase that's in law. understandable you'd use the retirement age. it's the eligibility age for full benefits. right now i think it's 67. social security isn't that big of a problem by the way. takes relatively small adjustments although they're relatively big political adjustments. you've got to move the eligibility age back. you probably have to make it more generous for lower wage workers which we're getting more of. because -- >> so what is that age? what would you do? >> well i'd probably take it to 68 or 69 over a 30-year period or something like that. i haven't looked at the numbers that closely recently to know. as i said it's relatively small changes. but it's not retirement age. social security used to be a program that you had to retire in order to get the benefits. we eliminated the earnings tests from the 1990s. it's the rejiblt age for full

benefits that you can move back. you can keep the eligibility age for diminished benefit at 62. you can even keep the eligibility age for the enhanced benefits at 70. the normal eligibility age -- >> is this still -- in washington? >> oh, sure. anything that requires an american to take less or pay more is a third rail. you know. particularly in this particular category because 80% of people at the age of 65 vote. they don't have to be told that the government is important in their lives. >> can you see an environment in which this gets changed? we talk about how we need it to change. >> i don't know. i guess we could wait until it gets so terrible that i mean i think unfortunately i think it takes presidential leadership. i just don't think you're going to be able to get it done unless you got a president that's willing to say it. and you've got this paradox if he says it in the primary he may not get nominated. if he says it in the general he may not win. >> you've got to get a lame duck to do it. but this lame duck doesn't

seem -- >> i think that's right. no lame duck has been willing to take it on. and it keeps getting worse. i'm on this military pay and benefit modernization commission. my own view is you can't whack the military without all of us participating in it in some fashion. but you've got a problem there, as well. it now costs about $400,000 a year to recruit a new person to come in. mostly because of the retirement benefits after they leave. >> andy, we had a guest on in the 7:00 hour who talked about all of the things that the baby boomer generation is going to do. but the question that i asked, and i ask of you is, are the baby boomers going to have enough money to actually do all of those things? and if you believe they're living to 90, 95, 100, if not longer? >> well, i think the first thing we need to realize is retirement itself has become a misnomer. a lot of the doomsayer scenarios about the boomers running out of money are based on an assumption that the boomers are going to leave the workforce at age 62 and that's just not the case. today nearly 50% of those who are in the normal retirement age

are working. and when we asked preretirees what they intend to do nearly 75% say they believe work is part of an ideal retirement. i think we need to begin the discussion by kind of blowing up some of these age-old assumptions about what later life is going to look like. >> when you blow those assumptions up what are you telling them about how much money they're going to need and how much are they supposed to assume that job is still going to be there for them? what percentage of their income in whatever that next stage of nonretirement retirement they're living in will they actually have? >> i think what you're going to see is the resourcefulness of americans coming through. they're going to be piecing to the a retirement that looks very different than the retirement their parents had. they're certainly going to rely more on savings, more on their income from work. pensions do still exist. that's about 15% or 20% of retirement income. and you know, fortunately, given the health that americans are experiencing, some of these questions about retirement such as the entitlement programs that bob talked about, i think are

going to be back on the political agenda, with an opportunity to see you know, some way out of the boxes that have been created. >> if you don't know if your pension is going to exist, if your company is going to pay it or if the municipality will be able to afford to pay it, if you don't know if the retirement age is going to stay the same, if you don't know if the benefits are going to stay the same, how can you possibly plan actively without just throwing as much money as you possibly can at this? >> you know, i think you just landed on one important piece of advice which is you've got to save. and even if you are, you know, 50, 55, there is still time to increase your savings rate, take advantage of d.c. plans that you have at work, and increase saving. the other thing that is becoming increasingly important is staying sharp. and making sure that you are plugged in to technology. you're plugged in to things that are driving jobs that are available today. >> so you don't get pushed out of the job that you have because you better plan on working past 65. >> exactly. and we're beginning to see in the surveys that we're doing,

retirees are telling us they're not making a clean break from work. they're taking what they're calling kind of an intermission from work. it's about 2 1/2 years, generally in length, before they go back to the workplace for kind of a second career, which in many cases is very different than the career that they experienced earlier in they're life. >> andy we just showed on the screen an allocation chart, really a table that showed that today, 65-plus the age bracket, 62% are now in equities. back in 2008 that was 45%. is that the right allocation? >> you know, i think it's -- >> worked for the past five years. >> our recommended allocation for a moderate risk investor is about 64%. so it's a little bit below that. interestingly, when we look across the age cohorts of our clients they're all about 62%, 63% in equities right now. so i think this is another -- we're kind of blowing up another stereo tape which is out there which is that there's going to be a sort of an automatic dumping of stocks by the boomers as they move into retirement.

and i think along with the fact they're going to be working i think they're also going to be investing in stocks a lot longer than many had expected. >> becky had a list of sources of retirement income, produced anxiety. is the government going to be able to pay me? is my employer going to be able to pay me. there's no real way of answering that question. most of the time the answer is going to be question but there is uncertainty going to be attached to both those two questions. the only way you can really develop some comfort is if you acquire your own capacity to provide your own retirement income. >> basically you're on your own. >> $100,000 average savings, if you expect to live -- you will not cover that with that. and it really gets down, the big public policy question and it's been there since social security was enacted in '35 when it passed the senate it was voluntary. when it originally passed in '74 we made the contributions to 401(k)s voluntary. the big policy question is whether or not at a younger age are we going to have mandatory savings. my own strongly held view is unless we're willing to do that

it's going to be very difficult to solve this problem. >> we're not going to solve it here. would be nice if we could. bob, thank you. you're going to be sticking around andy. thank you for being here. >> making a case for the export import bank. our guest host former senator bob kerrey will tackle that and more issues when "squawk box" comes right back.

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business model. i'm going to put a buy on this. >> no new stories, new reporters, new analysts too. >> i need more than that to act on this, of which we're not allowed to do anyway. that's it? >> maybe. i haven't seen the report, i'll have to dig into it and look deeper. >> when we come back, former senator bob kerry will talk to us about the xm bank, something larry summers has a piece about today. [ both ] when we arrived at our hotel in new york,

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welcome back, bob kerrey, one of the things we were talking about off camera was the xm bank. congress may not renew or go ahead and authorize the xm bank. what would that mean? >> diminish our capacity to be competitive in the critical industries, boeing in particular. looks to me that the xm bank would benefit more than it cost us. i do think -- i had a quick look at former freshry secretary summers piece in the ft, what he sets up is correct, a great

debate between free market capitalism. we don't want to vacate that playing field. and leaving the impression and a group of people trying to organize themselves that perhaps it is better than free market democracy. >> you're looking at china? >> china is a leading example of authoritarian mercantilism. >> it's a game we played better during the cold world, capitalism versus communism. >> these type of debates are difficult because there can be negative consequences in the short term to whatever it is you're doing. but on the other hand, this particular one, i think the math is able to be compelling making the argument, when you get the national association of contractors supporting a democrati isic initiative. an they froblly have the facts

on their side. >> you don't think it creates crony capitalism? i'm taking the other side just -- >> yeah, certainly you can -- small companies and helps a lot of big companies. >> if you believe it's wrong, any time that the government of the united states of america aligns itself with the business, that therefore becomes crony capitalism. this is froprobably an example. we won the second world war and it's not exactly difficult to come up with an example where it's benefitting for the government to provide some type of partnership with the private sector. >> while you're here, we should also talk about education, former head of the new school. what are the two areas you're concerned about right now? >> regulation, six regional crediting agencies base he cica governored and not gone out agrgressively to find innovator.

not too much people understand the power of the regional acreditation and it puts innovation at risk as a consequence. >> we talked about this with last year. this is a huge issue with minerva, and why we've seen such a huge increase in credit prices that strips inflation over all. >> the net cost has not gone up that much, but when you take out financial aid over the last 20 years. >> it's $55,000 a year some private schools. >> that's not the net price, that looks like that on the sticker. i'm not sure you've got inflation in that way. what you don't have is innovation and looking for ways to lower costs and you don't have organizations, all of whom committed to try to commit to the highest quality at the lowest price. that doesn't go on because of a think called share governance.

it's embedded into this way that we ak credit through the regional crediting agencies which have accomplished something really good. i'm not entirely critical of what they've done. but my strongly held view, they've got to be more aggressive and identifying somebody who wants to innovate and high quality at the lower price. >> you can't lure students to come unless you're an accredited school. >> you did not get regional ac creditation unless you align itself, like minerva schools and provided regional accreditation for it. >> do you think this organization is starting to gain traction? >> i think there's more people aware of it. i think the wheels are still spinning pretty much.

>> where does the senate go? >> in what, existent shally? >> as a democrat, don't try to dodge the question, where do you think the senate goes in -- >> i didn't try to dodge. >> i didn't try. you only have a minute left and you're stalling. >> there's filibustering. >> do the republicans win back the senate? >> i don't know. it looks to me under any circumstance, what you're going to happen is a senate more closely held either by the democrats or republicans. it could go republican by one or democrat by one. it's going to be a relatively close election. >> in the off election cycle, the party in power that holds the president -- >> do you think the gop can ever win back -- we've been told the entire demographics of the nation is changing and doesn't favor the gop at this point, never be a gop republican

elected. do you think that's true? >> for president? >> in general. >> i don't think that's true. it always seems that way. >> "squawk on the street" begins right now. ♪ >> good monday morning, hope you had a great long weekend, welcome to "squawk on the street", i'm carl quintanilla. first full week of july begins today, earnings season kicks off tomorrow. futures are down after the market hit record highs on thursday after the jobs numbers. 10-year yield creeping up again, this time to 263. we will see fed minutes on wednesday. german industrial production slipping for the third