thursday, july 10th, 2014. "squawk box" begins right now. >> there are only two things i can't stand in this world, people who are intolerant of other people's tolerance and the dutch. >> what? >> the argentinians are probably feeling like in this morning. i'm michelle caruso cabrera along with joe kernen and steve liesman. becky and andrew are off today. u.s. investors are waking up to a lot of red arrows this morning. european stocks are down sharply in early trading. among the reasons being cited, weaker than expected trade data out of china. disappointing trade numbers out of italy and now there are requests for help. portugal is now down more than 4 had%. u.s. equity futures are responding in time the. take a look. right now, the dow would open

lower by 126 points, the s&p lower by 14 and the nasdaq lower by 29. yesterday, though, stocks did get a boost from last month's federal reserve meeting. the notes are suggesting quantitative easing will likely end in october. the central bank will move slowly to raise rates after that. today, the focus turns to the other side of the pond. we're waiting for a position decision from the bank of england. that's going to happen around 7:00 a.m. eastern time. bank of england expected to leave its key rate on hold at a record low 0.5%. as for the u.s. economic calendar, here is what we're watching. jobless claims expected to increase by 4,000 to 319,000. then wholesale trade is out at 10:00 a.m. corporate news, bank of america is reportedly seeking fed approval again for a 5 cent quarterly dividend. in march, the firm revised an okay to boost its way out, but it had to withdraw the plan after discovering it

miscalculated capital levels. in other news on the bank, attorney general eric holder has reportedly refused to meet with bofa ceo brian moynihan to resolve a mortgage settlement deal. moynahan received a last last month saying the bank and the government remained too far apart. jamie dimon's bank negotiated a $13 billion settlement. israel's aerial assault on gas is now in his third day. martin joins us now with the latest. >> when you were talking earlier about the world cup. last night in gaza, there was a group of gazans watching the game and they were hit by an israeli rocket, five palestinians killed. it was the worst night of

israeisrae israeli rockets. 320 rockets were fired at palestinian targets in gaza. the five killed in that cafe. a family of eight were killed in one building in gaza city. the israelians didn't say what they were target, but they have been targeting secret tunnels in gaza, rocket systems where they're -- and krael says this will continue to launch rockets into gaza until the palestinians tom your town. there's every sign things will get worse in the next few days. >> those rockets, you can't really aim them. it's all collateral damage, right? it's a bad situation, martin, and, you know, you could go back in time and in other instances, this would be the same news.

you could have read almost the same script and you couldn't tell what year it is, which is a sad commentary. >> yeah. unfortunately, that's true. that's the last was two years ago and three years ago before that. the israeli military has a term for it, they call it mowing the grass. what they say is that the palestinians are building up their rocket capability in gaza to attack israel, getting stronger all the time. and, therefore, israel needs every so often to go in and to do what they say their phrase mowing the grass. they know the palestinian capability will grow up again. that they need to reduce it. because israel lives in permanent fear, certainly the israeli towns in the south of these rocket campaigns from gaza. so israel needs to do what it feels it's doing. but, of course, ultimately, peace negotiations will of course be a better way of going. >> yeah. >> amazing that, you know, life goes on as we've seen with

israeli corporations. but it's hard to imagine for us. >> an incredibly telling phrase, mowing the grass, this is essentially like maintenance, basically. >> martin fletcher, we appreciate it. and you be safe. he's hearing things exploding as he's doing the report. boeing is forecasting demand for nearly 37,000 new airplanes. that would have to be looking far out into the future. just think of that number. that's how many trillion? $5.2 trillion, but this is over the next 20 years. it's an increase of more than 4% from last year's forecast. this is the most bullish the company has been about its 20 year prospects for demand since 2011. among the catalysts, and you can probably figure it out, demand for the continued emergence of low cost carriers and simple as the world slowly moved up into the middle class.

think of how many air mraeps china is going to need. >> we're going to have a guest later on talking about baby boomers. 2012 was the first year, where there were more than 1 billion international travelers. >> 1 billion international travelers. think about that. and it's hard to travel by ground and get anywhere. >> right. internationally, particularly. >> particularly internationally. you've got to go -- i even think if you take the longest route, you still need a couple of boats. right? >> right. >> am i right about that? >> you're good. >> and ibm plans to invest $3 billion over the next several years in chip research and development. the company hopes a break through in that business could revive its struggling hardware unit. ibm is set to report quarterly results next week. and many of the nation's retailers r going to report monthly reports today. costco reporting same-store

sales. results were helped by higher fuel prices. very quickly, we're living in a rental, sort of. so the people that live there, obviously, they must go to costco. and i said why? and she opened the door, the pantry, and there was a jar of pickles that was this big. i've never seen anything -- and the pickles were big and they were all in there. and i looked at it. i don't know, i was scared, kind of. i mean, they're weird looking. they look like they're in for mall dehide or something. they're huge and it was from costco. you could buy pickle that's you would never buy pickles again i think. why are you looking at me like that >> i have this dilemma all the time. what if you don't like the pickles. what if you bought the big jar and -- >> there was not one pickle missing.

>> if it was the apocalypse -- this is why i'm here. to ask the probing questions. >> you can use these things with a lot of use. >> do your vegetable. >> it looks like a club. how about the markets? >> pickles is agency much of appear interesting conversation as the markets this morning. all right. the futures, if you want to take a look, it's messy this morning. right now, the dow would open lower by 130 points. the s&p 500 lower by nearly 16 points and the nasdaq lower by 32.5 points. this is the big fall out from europe where a number of catalysts saw the european markets lower. look down at the bottom. portugal is lower by 4%. one of the catalysts stemming from there, their largest listed

bank issues that have been bublging for a while, but coming to a head today. >> overall. >> yeah. >> does anybody know more about banks and investing in foreign countries after -- >> it's perfect. >> what was that one he bought in england, the one that -- it was a huge run. i read that and i go, you're kidding. >> you already started this, but -- >> no, i didn't. >> what was it? >> northern something. >> yeah. northern rock. >> again, one of these guys -- >> and it quadrupled. >> i mean one of those main ties and he's swimming. michelle, you started mentioning it earlier. i want to add to it. i think a big theme of the day is the weakness overseas. >> yep. >> japan factory orders, china, as well. they're talking about a contraction now in france and italy, too. >> and italy, as well. there's this theme emerging

which is a big reason why u.s. gdp was so weak. in the first quarter, weather that was a reflection of what was happening, but we're not seeing any help from abroad in terms of the global economies. >> oil i bet su lower if you're worried about the global economy and the fears about iraq have subsided a little bit. brent is up now 108. we were talking about 115. wti is at 101.78. they are down, but not by too much. the ten-year yield, this will be at 2.52%. wow. >> we were at 2.61% before the fed. and it's 2.6233 or whatever it is. and rick gave the ten-year note a bad grade because it tailed. and then all of those guys, the dealers took down 45%, they all made money after the fed because the yield declined and the price rose. >> right. okay. let's show you what's going on with the dollar. here is the ten-year. look at that. you can see the move yesterday. then this morning as it

continues to fall in safe haven buying. the dollar is stronger against the pound and the euro weaker against the yen. the euro will cost you 1.36. the pound will cost you 1.711. president obama is in texas today to deliver a speech about the economy. but looming large in the background will be the immigration crisis at the mexican border. joining us now to talk about that and the strange relationship with the gop, and corporate america it says here is cnbc's chief washington correspondent john harwood. you've been looking, john, at the political calculus and how the white house is handling the immigration thing and you visit texas at the same time. and i'm just trying to be as objective as i can to figure out what the thinking is. because, i don't know, it seems to be a big problem, especially if you ask for $4 billion to try and figure out what to do with all these kids and things. and then you would think it would be a natural time to go to

where it's actually happening and get firsthand knowledge like you do when you have a fly over and a helicopter -- anything going on, usually the -- and i realize there would be a lot of pictures taken so that that would put him -- do they correlate that with cause and effect, that it's his fault that it's happening? if you've seen at the scene of where it's happening. why not go there and get a look at what's happening? politically, it makes for a bad photo opportunity is all i can figure. and raising money in austin and other places for the dnc? can we use any of that money for the $4 billion that it's going to cost or that goes right to campaign couffers. >> am i on to anything here? >> no, you're not. but look, this is the case where i think actually the two sides are likely to come together and do something. it's a little bit different than other partisan fights where

everybody sort of lines up in their corners. >> does that just fester and die? >> i just answered the last part of your question. >> and the answer to that was no. what's the political calculus of why he is in the states but won't go to where the actual site of all this stuff happening is? what's the real reason? >> well, i think first of all it was principally a campaign trip. he's raising money. people in both parties raise money all the time. second of all, i think he has decided -- he's at a point in his presidency where he is not going to give in to the theatrical requirements of the job. and he made a reference to that yesterday. this isn't a photo open. by the way, he's not the only one. chris christie the other day, when he said he was not going to meet with the parents of the

people who wanted to appeal to him about gun legislation said, look, that was an emotional hook, it wasn't going to change my opinion. >> that seems to me a totally different situation. this is affecting the entire country right now and the other is a purely symbolic gesture. i don't even see how that's even in the same -- that's not even in the same story, much less ballpark. >> of course it is, joe. joe, you're wrong about that. if the president went to the border, that still is an ongoing thing that we're going to deal with here. i don't know. i -- >> well, do you think he's unaware identity? do you think he's unacquire of it? do you think he doesn't get it? >> while you're down there, i figure you can take a break from -- even if it was planned to be a political trip, i can you think take three hours and go down there. >> i'm not arguing the case 1 way or the other. you asked me to explain why he

didn't -- and i think he's sticking with his schedule. >> he doesn't want to associate with what is there happening because it would look like it's his fault for -- >> no, no, anything that happens when you're the president, especially on this subject, is going to be blamed on him, anyway. it doesn't make any difference. >> i thought you were going to say it's blamed on bush. >> no, no, no. >> what? did you see his approval ratings? >> that's people thinking on their own, not thinking from what the mainstream media gave them. >> you're whole world view revolves around what other people in something called the mainstream media do as opposed to the actual substance of the situation. >> well, they're usually completely far apart in terms of -- they're not -- you wouldn't even know you were talking about the same story. >> okay.

>> like i was saying earlier, joe, i think this is a case where we seem to be moving closer to some sort of republican/democrat action in concert. you know, i think it was interesting that governor perry, putting pressure on the white house, actually got a result, which is he got a meeting with the president. the president then tried to use that meeting to leverage pressure on republicans to act and when you hear the back and forth between republicans and democrats, the republicans in congress are not flat refusing to spend that money. they're putting some conditions on it. and there is some level of agreement between the white house and congress, republicans, about adjusting that 2008 law which has contributed as the president's policy has also contributed. >> okay. i'm trying to think. i guess you've seen the reds,

right? i don't know what it means for the national webs but wow, they're on a roll, are they not? i didn't watch the whole game, but they've beaten chicago and it's like six straight. i think they're only two or three balk from milwaukee now, which that spells doom for the nationals, as you probably -- >> well, the nats are ahead by a game. they won again last night. we're playing pretty good ball. as soon as broois harper gets his act together and starts producing, we're going to be rolling. >> do you watch any of the world cup yesterday, john? >> i did. what did you think? >> i thought that i did not see any of the 7-1 brazil game. so i didn't see it the.but i did see every minute of yesterday's. i will tell you that it is an acquired taste. having seen some other games, like i remember belgium against the u.s., remember how many shots on goal there were? you watch the way those guys played defense yesterday where every time you even get anywhere

near it a guy comes in and kicks it. if you can appreciate defense, and i guess we all should understand soccer because of the low skoring, so if you appreciate defense -- >> oh, yeah. >> they sit around, where are they? >> so if you can appreciate it, then it's -- you know, i still wish it -- and then i will say that those penalty kicks, that was pretty exciting. and you know what? you know i don't like -- i'm like that, i don't like pollen because of that coach, that skating coach. >> i was going to say, if the dutch won this, we were going to invite him back on. >> he brags and all this. and i hope -- >> hey, michelle? >> yes? >> i sent word out to him, how does that feel? >> joe, i watched that game. just for the record, the crowd was booing how the dutch played. they were playing such a defensive game that i just thought it was boring. >> it was so --

>> michelle? >> yes? >> go ahead, john. are you really into soccer? did you grow up with soccer? >> no, no, i'm not. >> no, i'm asking michelle. >> my husband is really, really into soccer, so i end up watching a lot of soccer. >> what i want to know is how people -- i'm not a real genuine soccer fan. it's kind of an acquired taste. most of my friends who played soccer or are really into it don't like this penalty kick thing because it's very fan friendly. >> it's like deciding the master wes a windmill hole at a miniature golf. but you know, you've got to do it. and you know what? after they play for an hour and 25 minutes or whatever and they totally come up, you know, like that, and they're -- remember that very first kick yesterday? you knew right then that guy needed to kick that in the goal. when you're starting awe, you need to put that first one in there.

nine out of ten go in and you can't put the first one in -- that was pretty good. >> think about the extra pain in brazil that their archrival. >> year up first in south america. you have to be careful about saying anything about germany, right? why? >> i guess because it's -- >> they've beat france and holland again. >> right. >> supposedly messi is so machine like and military. any references to that, you're uncomfortable. >> yeah. >> so naturally you're rooting for them, then, right? >> my adopted -- before i was adopted, my name wag gunther, so yes. >> gunther. when we return, folks, allergan defending itself against a hostile takeover. the ceo of the botoxmaker say

down with jim cramer. that's, in. as we head to break, we are following the futures which are down sharper this morning. more squawk in just a moment.

woish to "squawk box." the futures are suggesting a negative open. the dow would open lower by 130 points, the s&p lower by 15 and the nasdaq down by 30. a lot of that follow on from europe where we see those markets sharply lower, especially portugal by more than

4% off. poor industrial production data out of two different countries and some weak chinese data overnight. joe. >> allergan's ce on o comes out swinging against unwanted advances. activist investor bill ackman and valeant pharmaceuticals. more on what he said to jim on mad money as a resisting and -- >> oh, yeah. >> he says a lot of the things that you read about in the press say we like to do a lot of research. we're not going to be part of a roll up where we generate more cash flow. we want to stay where we are. you said more of that last night? >> absolutely. it was his first tv interview since this whole thing started. this is about a $50 billion deal, just to review a few facts about it. valeant has taken it directly to allergan shareholders now. they're partnered with bill ackman which opens about 10% of

stock. they've suggested a slate of about six board members they would like to nominate to allergan's board. they're seeking enough votes to call a special meeting to allergan. last night, david payette on mad money saying he's out there talking to shareholders and we should expect big restructuring to be announced. >> we heard from our investors, we need to do some more .now we're going to take a dooeep lo and see where we can do our trimming ourselves and raise the value we offer to stockholders even further. >> so the company is saying they're talking to shareholders. some analysts suggesting a recapitalization, eventually a stock buyback. david payette saying they are looking at acquisitions. >> our vision of looking at suitable partners, suitable acquisition assets is companies that are specialized and in some

way have differentiated technology, great connectivity with a physician and customer base and growth profile. because clearly we're a company that is an outlook of double digit revenue growth every year for the next five years. to go and buy a company, say, that was growing 1% would make no sense. >> now, of course, jim asks the question will they look for tax benefits in pursuing acquisitions? there's been some speculation that allergan will be out there looking at shire which has a 12.5% tax base in ireland. david pyott saying tax considerations certainly are on the table, but it's not something they're looking for sclus ofly, but they're keeping their options open. now the next thing we're looking at, next earnings coming up in the next few weeks and we should get a lot more info then. >> we've heard from

shareholders, we have to do something. >> that's going to impact the entire industry. this is researching a whole use of money. >> that is the ultimate question, right? and i don't know enough about the subject to come up with the answer, but that seems to be the core debate. >> i think they think it's a dangerous thing to have happen when you come in and cut r&d. but when a company then comes in response and cuts costs, what analysts are saying is that he thinks they will come out and say told you so when they announce these cost cuts. >> if you don't do research, what do you do? >> you sell drugs that are already there. the whole argument is instead of the 100 that fail and one that makes it, you let universities or start ups or vc coming up with that and do all that legwork. then you see one that finally is going to be commercially successful and then you go in there and it's cheaper to buy it that way than it is to do it all

in house. >> it's basic research. governments do the basic research. companies are supposed to do that middle area of developing the drugs and getting them, testing them with enough patience to get them out of the lab. >> they want to shut that further up the pipeline is what they want to do. >> valeant wants to come in as phase three. >> if you look at the big ones, merck, all of those bigger drugs came from a biotech company. >> absolutely. they're kind of morphing themselves into biotech companies. >> thank you. when squawk returns, the easy money era of the fed expected to wrap up this fall. how much longer can the central bank remain dovish? and is it behind the curve? that discussion, next. plus, billionaire investor wilbur ross will tell us why he's seeing asset bubbles everywhere. as we head to break, a look at

yesterday's winners and losers. 4

good morning and welcome back to "squawk box" here on cnbc. liesman took off his jacket finally. i wasn't going to say anything. when you wear a jacket, you look

like a guest. if you want to be accepted as -- >> far out, right. >> if you want to be accepted as an integral part of the actually anchor team, you take your -- ourselves -- >> i come ready for that, you know. >> come on. >> the skills or the desire -- >> that we -- to be at the desk. >> that's what we produced with management before this happened. i agree with you. >> that goes by 12 years. >> you're being funny? >> everybody is -- >> he tries to be. >> everybody -- it depends. >> don't get on this bandwagon. i have enough over here with kernen. >> i'm a pile onner. it starts. >> funny how? >> funny how? exactly. >> like the clown? >> the record for f words on -- >> that show, really?

>> that was funny how? that was goodfellas. >> i didn't know he set the record. >> joe peschi. >> makes sense. >> do you ever feel like your life is the last scene of that movie? you know what i'm saying? you've got to stir the sauce. get the hat. >> secretly somewhere. >> and the helicopters are overhead. i feel a lot of times like my life is -- >> can you read this? >> sorry. >> please move on. >> to global markets. they're under pressure. european stocks are sharply lower, among the regions being cited, trade data out of china overnight. industrial product number lower. i produce things. >> the north does, absolutely. but the gdp the -- ever.

>> mounting fears about the health of portugal's largest listed bank. actually, both of these are great countries, but i would think tourism is what keeps them both afloat at this point. anyway, u.s. equity futures down 129 points. that makes people so mad. i don't mean only tour im, but they're great places, that's all i'm saying, grape places to visit. but lately it's been tough to be a entrepreneur in italy or portugal. >> yeah. but it's a great safety net in almost all of europe. >> for now. >> there are arguments about the way -- >> but not winning one. >> that happened to a lot of the

guys in the second term. >> go ahead. >> joining us now is julian emanuel, u.s. equity strategist. and we have the bank of tokyo mitsubishi ufj on the phone. you see what we're opening with. economic data of europe, is that a excuse leading up to the li lineup? >> it's news to me. just waking up, i hadn't been looking at dow stock futures early morning for quite some time. i think it's one of those things that will come and go. certainly europe is part of the picture of world economic growth. sometimes i always wonder like why is inflation not going again? why is commodity demand not there? maybe it's simply the fact that europe is growing less than 1% where it was growing in the early 2000s like over 2%. maybe that's -- maybe europe is

part of the thing behind why we're not seeing inflation. >> what do you make of the sell-off this morning, is this an excuse or is it justified, considering -- >> well, when you look at what's happened to risk premiums over the last several months, whether it's the s&p, vix, oil volatility, whether it's peripheral bond spreads, there's clearly overconfidence about, you happen, it seems like earnings in the u.s. and an underestimation of geopolitical risks and what the fed may or may not do. but it's just the rubber band is a bit too stretched. old markets climb the wall of worry. there isn't much of the wall left right now. >> so the s&p can get to 2050 by the end of the your, but you're worried short-term? >> yeah. that's our best case scenario. what we see coming into earnings season is people are just overconfident here thinking that you can grow 6% in the second quarter, which is doable.

but when you look at the full year, you need to growth in the third and fourth quarters, which is potential lay stretch. >> what are the impacts for qe and to do more purchases after october? big impact? >> that was ridiculous, wasn't it? they sat down and discussed whether we should cut the final by 15 billion or 10 billion. i kind of like that they said it's going to be -- they're cutting in $10 billion increments. it's either 15 or cut -- >> who says yellen is dovish? wow, instead of going if five, five, five, she does the big 15 in one month. >> that's a hawk.

qe, they were insane. they've done it in permanent now. she finally says, i have to hand it to her, wow. >> it could well be that the markets -- >> we have been molded into the idea that this is so normal. >> it's a technical matter. >> i know it's technical. >> it sounds great. you didn't do ten and then five. wow. >> that's maybe the battle over something larger, which is raising interest rates. >> it is. >> there was going to be a considerable period. >> if they went and -- of course it's when the clock starts ticking, whether it's a--ix month employment. >> i really saw it. they should have done 35.

they went 15 instead of 10% and th then 5%. >> no one knows how -- >> no one does know, you're right. >> so the history could be one where it says, if the fed waited another year or two, it must have gotten -- >> well, one more thing, this is just no longer buying. right? what about the unwind of everything else? >> there's a big part of that in the minutes. >> it's just going to sit and -- >> critters control -- >> that would cause a lot of market volatility. i don't think they want that. they're errored on the side "predictability. if you look at the price of gold in the last couple of days and you look at how gold reacted at the last press conference, maybe there is a little bit of concern about that issue.

>> when you look at most markets that would be sensitive to information or higher rates, december fed fund futures 2015. i see very little reaction. remember the two-year note? it was 41 now it's 51 now it's back down. it's hard to see a market where when we discuss at this table here the notion that people think the fed is behind the curve, i don't see that market because people are expecting to cover. >> joe, me? >> no. europe has given the fed cover because -- >> oh, europe. >> yeah. europe has given the fed cover. >> that if not for the a.r.m. -- what about if it's inn market, it's very hard to get a market where the market is sxrensing concern about inflation. >> i don't know we know how things get messed up when the fed makes a mistake. if you look at the last time and

say that's not happening this time, you don't even know where -- it's like this -- it's got to get out somehow. if you're totally -- you know, if there's way too much of something and there's dislocations all over the place, i don't even know where it's going to be. i'm not smart enough to know. >> is that a forecast or is that a way to run your life? >> no. you don't do once in a central emergency accommodation based on numbers we have. >> here is the go back in. the fed is going to err on the side of doing more rather than less. end of story. when it comes down do it, that's what they're going to do 37. >> they can claim they're doing both things, right? >> they're going to buy more in october than they would have otherwise. they're leaving it off the --

they're not buying. >> they've done ten and then five. okay. thank you, guys. coming up, troubled bank in portugal sparking a sell-off in europe. we're going to talk to a dealmaker that knows a thing about betting. as we hoed to break, here is quick of what's happening in the european markets.

welcome back to "squawk box." u.s. equity futures are lower because of problems in europe and china is what is being

cited. we look at the european markets and see that is where it started base odd some trouble wes a bank in portugal. reports out of china that maybe exports weren't as good as people thought. i can't believe china can still disappoint on the numbers. >> everybody has assumed that, you know, they have to be pretty bad to be worse than people thought. coming up, we're going to have a live report from europe. also, is jcpenney about to turn the retailer around? ron johnson is revealing he even tried to quit several times. the details, next on "squawk box." don't just visit rome. [ thud ] visit tripadvisor rome. with millions of reviews,

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some candid and surprising comments from former jcpenney ceo ron johnson. their retail magazine racked reports that johnson spoke to a classroom full of stanford business school students about how not to do it -- no, about how he left jcpenney, and he said, in his words, i resigned three times. in february i offered to resign. in march, i offered to resign. and finally in april, the board chair said, ron, finally, we will accept your resignation. joining us now is a retail industry veteran, former chairman and ceo of toys "r" us. he's now the ceo of storch advisers and worked with johnson at target when johnson was vice president of merchandising for the company.

what are your thoughts, gerald on whether he was ever the right guy. i said i could have been a retailing genius at the apple stores. i do. i could have figured out a way to display those items and i would have sold a lot of apple items. that doesn't mean i'm going to know how to stack apparel and what people are going to buy at jcpenney. >> i can't speak for ron. i know ron. he's a brilliant guy. i know what he's trying 20 do. department stores, particularly middle market department stores, are a diseased, you know, troubled entity. >> right not specific just to jcpenney. >> no, it's not. look at sears. look at a lot of them. the customer's been aging out. they're getting older and older and older. the segment as a whole is squeezed. people are going to fast retail, you know, uniqlo, or target. he needed to recite massive change to try to save what would have been perhaps a slow spiral down. so that's what he's trying to do. by his own admission he moved too fast. he had to change the

merchandise. that's good. i think that's right. that's exactly what was needed. but he moved too fast, overshot the customer. for some other reason, though, you know, they went to change the promotional strategy of the business. and that was the -- the unnecessary activity that sank the ship. >> promotional strategy we should tell people, sales. >> coupons, or run ads telling people aren't you good you're not getting coupons anymore in the mail. customers thought they liked getting deals, liked getting coupons. so sales crashed far more than anyone had expected. i think he's a smart guy. he figured this out, wanted to change direction. you know, guessing he probably talked to people, said look, it's going to take longer than i thought. do you have confidence in me or not? oldman is a good guy, savvy and sophisticated retailer, bring him back. he knows all of this -- >> he said he tried to quit three times and why didn't the board listen to him the first time? >> i have no idea what he did or didn't do. i certainly believe he had serious conversations saying this is going to take longer, i now know what to do.

i moved too fast. that's what he said in the speech, i moved too fast. i know how to fix this. the merchandising direction is generally correct. we got to address the pricing strategy of the company. it's going to take awhile. are you going to wait with me or not? >> who wins in all of this? any of these guys left, jcpenney, sears, what you call the middle market department stores? is it just nordstrom's and target, walmart down there? >> i wouldn't -- i think the people provide great value to the customer are going to win. i've said that consistently. costco reported great numbers today. 6% same-store sales. gas up, it was 5% without the gasoline. that is a retailer's retail. they provide tremendous value to the customer every day. people who are internet savvy, you know, nordstrom for example is very internet savvy. they're not growing because they're high-end department stores. >> their service is awesome. >> they're growing on the internet at nordstrom. they have a great internet model. they're also growing at nordstrom rack which is an offsurprise strategy that competes to high end t.j. maxx. people like dollar general are

winning. for all this talk about how bad the economy, how bad retail is, there are people winning big time. >> walmart the other day, gentleman said the consumer is like, you know, in a funk, and then we weren't making a big deal -- >> container store. >> you have? >> all right. i don't know. but -- >> you've never been? >> no. >> oh, geez. >> they -- don't start this again. no doubt the economy is soft. no doubt about it whatsoever. >> employment, though, as you point out, and liesman will not like that you're saying this, but we see these numbers, many workers below their talent level. a lot of part-time people. a lot of -- >> i agree. it's not flush. >> there's no doubt the economy is soft. i've been saying this consistently. the other thing was a silly, silly waste of time. the weather discussion during the first quarter, go back, the weather is ridiculous as an argument. that hid the fact that it was weak in the first quarter, too. it's been weak the whole time. it never got strong. it was weak over christmas. weak in the first quarter. >> employment picture.

taxes, concern over health care. it's not a robust time. having said that, right, some of these numbers people are posting aren't just because of the economy. it's because of them. they're not addressing fundamental trends like value and the internet. we talk about jcpenney. jcpenney last i looked $12 billion, $13 billion in annual sales. amazon's going to hit 90. that's seven jc pens. $90 billion. >> the economy is shifting very rapidly. >> and they're not. >> toward value and internet. they're not. they're going to lose. >> we're out of here. thank you for coming in. we appreciate it. you have 15 seconds michelle. >> when we return an update on the early market sell-off hitting the futures and europe. plus the decision from the bank of england, and the market buzz word of the week has been bubble. our guest host makes his living buying assets on the cheap but now he says -- your rheumatologist about a biologic... this is humira. this is humira helping to relieve my pain. this is humira helping me lay the groundwork. this is humira helping to protect my joints

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bubbles. bubbles, and more bubbles. wilbur ross is seeing asset bubbles everywhere. and the billionaire investor known for swooping in for bargain deals is now in sell mode. what is making wilbur a seller right now. the nation's immigration crisis, a big problem for washington, but when will it turn into a problem for big business? and, the baby boomer effect, working longer, playing harder, spending more. the luxury vacations that have boomers laying down big bucks. the second hour of "squawk box" begins right now. good morning. and welcome to "squawk box" on cnbc. i'm joe kernen along with michelle caruso-cabrera and steve liesman.

becky and andrew are off today. if you're just waking up this morning we're seeing a global sell-off in the markets. the equity markets this morning. u.s. equity futures are getting worse as the day goes on. down 144 points. we, don't forget, though, have been above 17,000 on the dow recently, which was where we've never been before. so we're still in the single digits in terms of a pullback even after today. but this is about european fears. a big part of the story today. among the reasons for the red arrows, disappointing industrial production numbers out of italy. and mounting fears about the health of portugal's largest listed bank. and also not helping things weaker than expected trade data out of china overnight. we'll have more from our colleagues in london in just a minute. but first, michelle has some of the local -- at least this country, mostly this country's top corporate stories. >> we have been telling people if you look at the bottom of the screen, the bank of england leaving the key interest rate unchanged at 0.5%. also bank of america reportedly

submitting its capital plan to the federal reserve for a third time. dow jones reports the bank has again asked for permission to pay dividend of 5 cents per share. its first request was rejected back in 2011. a second capital plan was submitted in march and approved but later withdrawn because the bank had miscalculated its capital. we're going to be watching shares of costco today, as well. the warehouse retailer reported that comparable store sales rose better than expected 6% in june. they're much bigger than the container store, joe. you need really big containers for stuff you buy at costco. >> i was told that the container store is really kind of a new york, manhattan sort of store. because people have no room. >> exactly. >> and they need things -- >> storage. >> yeah. >> higher fuel prices have helped costco's results. online video company aereo is trying to base its future on the high profile case its recently lost in the supreme court. the high court ruled aereo was selling the programming of tv broadcasters without permission, describing aereo's highly similar to a cable system.

aereo now arguing that if it is a cable company the law requires that it be sold a license to access content. >> i thought barry diller said it's over? >> maybe -- >> among other stocks to watch this morning, shares of lumber liquidators falling sharply this morning. the company cutting its guidance. no pun intending on the cutting. earnings and revenues falling short of estimates. results were hurt by a decline in its america segment. sandwich chain pot belly, something i know nothing about, warning of weaker than expected -- >> you might not know -- >> know nothing about a sandwich chain. >> you might not know about the sandwich chain but -- >> you doth protest too much. >> you're familiar with the term. >> weaker than expected. but potbelly results. the company hit by disappointing comp sales and higher expenses primarily for advertising. >> potbelly is a small market cap named specialty retailer. >> what is the market --

>> how do you say this zumiez -- >> zumiez-raising its quarterly -- i don't do stocks. better than expected june comps. shares rising on the news and zynga getting a boost following an announcement it has appointed google executive regina dugan to its board. she leads the search giant's advanced technology and projects group which works on new inventions that are like a tablet that uses 3-d motion and depth sensing capabilities. >> what's the last word in the dictionary? because we were trying to think of it yesterday and i came up with zynga. but zy is pretty good, isn't it? can you do better than zy? >> the question is whether -- >> zz top. >> if zzzz as in sleeping would be acceptable in scrabble. >> as in viewers during your fed report? >> ooh. >> or perhaps viewers during your repeated -- >> oh, no don't go there. >> what about -- >> you know, joe, you can -- no, no, no. >> what if the answer's zynga?

>> you can make fun of it. but guess what moves the market, the fed. you can talk about all the stuff you talk about -- >> that will end some day. >> the stuff i report on, up 100 -- >> i'm sorry. i apologized to wapner yesterday. >> maybe it's boring, joe. but it moves the market. >> he told wapner yesterday that he was wrong. joe kernen admitted he was wrong. >> about the container store. >> are there two full moons this month? >> pigs are flying. >> pigs are marrying people. don sterling says he's married to a pig. he says -- did you see this on "the post"? >> is it a male pig or a female pig? >> why would that matter? >> just looking -- >> you're not a marriage equality person? it doesn't matter whether it's a male pig or a female pig. what's wrong with you? we got to get -- this is a serious story. is martin with us again? >> day three of the israeli assault in the gaza strip. at least 75 palestinians have been killed. israel says it continues to intercept rockets fired by gaza

militants and the israeli military has mobilized 25,000 reservists for possible ground operation. nbc's martin fletcher is back with us from tel aviv in the next half an hour. treasury secretary jack lew continues his meeting in beijing today. among the head lines, he says china is committed to reducing its intervention in the foreign exchange market and is preparing to increase the transparency of its currency policy. meantime secretary of state john kerry says china and the united states had a frank exchange about cybersecurity issues, and have agreed to continue those discussions. and speaking of china and cybersecurity, "the new york times" reports chinese hackers broke into the computer networks of the u.s. government's agency that keeps the personal information of all federal employees. this happened in march. the story suggests the hackers appear to be targeting files on tens of thousands of employees who have applied for top secret security clearances. some access was gained before federal authorities detected the threat and blocked the hackers from the network. >> that's pretty amazing. so they know who our spies are. we did not say that treasury

secretary jack lew will be one of our keynote speakers on wednesday, and he can debrief us on everything he just found out while he was in china. >> yeah. perfect. wednesday. where you are going to be interviewing -- >> stan druckenmiller. and nelson peltz, john paulson, governor christie. i'm actually going to be listening to -- i'm going to stay this year. going to stay. i'm staying. i'm not going to leave. see we do the show there at 6:00 in the morning until 9:00, and then -- >> last year you left? a little earlier than maybe you would otherwise this year? >> i guess i did. although it's a phenomenal conference, i had something to do. really. that's -- let's get back to europe and the sell-off. there it is! full day. it's awesome. it's going to be great. and don't -- i think there's going to be some programming. that day that we're going to be able to show viewers. but it would really be better --

>> if you were there in person and signed up. >> cue the crickets because it's the second day of janet yellen's testimony, i believe, in front of congress next week. >> it will be a good day to be talking about what happened on -- >> what do you do when rob -- do you just ignore him? >> watch this. >> the producer is yelling at us right now. >> see that? is he yelling? >> i don't know -- >> get started. >> is he still yelling? >> he's not yelling anymore. i don't know. karen cho joins us now from london. this better be good, karen. >> there are a lot of fears around the portuguese banking sector today. so let me just flesh that out for you. yes a lot of news to focus on here. big bubble digit declines again and banker desanto this is where a lot of fears are emanating from. the background is there's a proposed structure by the holding company of the founding family of the largest lender in portugal which is this bank. there are reports that the

energy in question at es pir ito santo is considering filing for debt solvency. currently there are talks about extending maturity on the debt repayment or you may see a debt to equity swap. the concerns are enough to push the stock lower because there may be a funding gap in that particular bank but it's also hurt some of the other banks around portugal, as well. it's almost infectious across this market. 8% down you can see for the other names. also caught up in some of the whitewash has been portugal telecom which has bought some of the debt in their exposure. you can see right across the portuguese stock market which has been one of the better performers on the periphery so far this year it is currently down another four-plus percent today. the fears also impacting the bond markets. and this is where it is key, because you're talking about the largest lender in portugal, and how that impacts the sovereign. so there's been impacts at the short end, the two end, two-year government bond market but also the ten-year because one of the feelings is that if banker

espirito santo needs to capitalize it may not be buying as many portuguese bonds as it has in the past. you're saying how big a story could this be for a sell-off across european markets? there is a feeling that's been mainly some of the local fund managers that have been buying the portuguese debt so far. not hedge funds so you shouldn't see a quick slice away from some of these exposures. just also quickly i can show you the other european banks when you can see just how much downside pressure there is across even the french name, some of the german names. it is a move to the downside today. well and truly all those portuguese names. i hope you're happy with that one. >> it was awesome. worth the wait. i see why the producer wanted to get to you so quickly. thank you. our guest host today, and wilbur you expressed an interest here the last word in the injury is zyxt, z-y-x-t. the second indicative of the

word zy. there's also zyzzyva which is a tropical american weevil. >> how do you think immigration policy will affect -- >> that's a good question. our host, our guest host today is wilbur ross and you're chairman and ceo of w.l. ross. how did you come up with that name, w.l. ross -- >> i couldn't think of anything else. >> that's good. so we were just talking, and i tried to figure out, you haven't calculated whether you doubled your billions in the last three years. but you -- what's cool is liesman, he was in here while you were buying northern rock, and we thought he was, you know, we didn't know at the time that was going to work out. that was remember the institution in the uk. big trouble and bank united here in the united states with fdic assistance. both of those investments return at least double your money, triple? what was it? >> well, northern rock is now

part of virgin money it isn't public. it's doing very, very well. it made earnings in the very first year that we had it, which was pretty unusual. >> do you have to do anything or just buy it? >> well, there's a whole new management. >> right. so you got management and you delegate them to make sure you turn this thing around, basically? >> well, and also it was putting the virgin brand. virgin is a very, very powerful brand, especially in the uk. and between that and j.n. grardia who is the person running the bank they've done a good job. >> made him an equity guy too, right? >> john made quite a bit of money. >> and you did, too. >> yes. >> and all your partners did. >> indeed. >> what did you have to do there? >> well, first of all, you had to have the courage to buy it. >> right. >> that was when everybody thought florida was going to be the lost continent of "atlantis" and sink into the ocean.

>> they still think that. >> second, you had to have the team that could deal with the problem loans. and we not only saved fdic a billion dollars in terms of our bid versus the underbid, we never needed to use all the guarantees that they gave us. because john was able to run things better, and further minimize. so we probably saved fdic a couple of billion dollars. >> monday sternlicht was on, talking about chorus. you remember -- >> we were part of that. >> and everybody said that they'd pay $500 million over the nearest bid and they were going to -- they were greenhorns. i think it was 20% compounded return. >> that's right. turned out green was dollars. >> the green was dollars. so this bank in portugal now. you did -- you looked at it? >> yeah, we took a look at it but we couldn't get our arms around it. >> what does that mean? >> well, we didn't feel we really understood the balance sheet. >> they were trying to do what?

>> well, we were talking about whether they needed capital. because we've kind of run out of big countries to invest in. so now we're going to the smaller ones. so we went in to greece with euro bank, which is off to a very, very good start -- >> which you did invest in. >> oh, yeah we invested there about a month ago. we're also looking at spain and we decided to look at portugal, and look at cyprus, because those are where the real problems in banking are right now. >> and with espirito santo, when you said you couldn't get your arms around the balance sheet, what do you mean? >> we didn't feel we understood quite what was going on. now we understand a little bit of the reason for that. >> are all the numbers there for you to see? do you need someone to do the legwork to go see where the assets are? what do you mean? >> oh, sure. we normally bring in local people, because we don't speak portuguese. so you need people who speak the language, the loans are obviously all in the local language. and so we'll bring in the -- >> can you imagine?

that sounds difficult. >> steve, to go in and do the due diligence to see whether you invest there. you got to hand it to people that go do things like that. >> it's part of the job. it's what you do. you might expect to see portuguese -- >> you don't want to lose your shirt. >> oh, no -- >> i'd be taking the risk, and jumping the water is always risky. >> you haven't said one thing that you're doing here. >> no. we haven't been doing as much here. we did a few investments down in the basin in texas. we bought -- >> what was different? >> we bought building materials. >> here we are, steve. europe is where we were two years ago, three years ago in terms of their central banks. >> it's a great question. it's a great question as to whether or not the value is really in europe, and the value here is in the value here. >> on balance we've been a seller. we've sold six times as much as we bought so far this year. >> here in the united states or just in general. >> everywhere. >> everywhere? >> but when you see -- >> why? >> well, with markets at

all-time highs it shouldn't be surprising that there are more things that are attracted to sell than to buy. >> does that mean that valuations are high? >> i think so. for example, in the last report -- >> sounds like. >> the average multiple of earnings before interest, taxes, depreciation and amortization that the lbo funds paid was 11.2 times. >> michelle's explaining to our viewers what a promotional activity is and you're explaining that he's selling everything so you're saying our valuation is high. >> our viewers are pretty smart -- >> our viewers are pretty smart. our viewers are pretty smart. >> i want to know relative -- 11 times relative to what is a more normal -- >> that's a new all-time record -- >> what would you be looking for? >> that's a peak in 2007 that got to about 9.2. so it's a couple of notches higher multiples now, in lbos, than it was at the peak -- >> that's what i was trying to say. >> the thing with these guys --

the thing with -- now he's got this -- i guarantee you're not just going to wait around for everything to go back down again. you're constantly going to be doing things. so even though you're selling more i know you're looking for stuff. not like there's nothing to buy. >> in fact deutsche bank and bank america raised for us a couple weeks ago, a special purpose acquisition. they gave us $500 million in what amounts to a blind pool to find an individual company to buy. >> a spec? >> yes. >> a return of the sfooek? >> yes, so with leverage that would be a billion or a billion and a quarter companies. so that's a big project now. >> -- to get in on this. >> i've got $17 in my pocket. >> sure, trades around $10. >> steve, i got -- >> please. >> okay rob's yelling at me. when "squawk box" returns, millionaires, media moguls and big bankers making their annual pilgrimage to idaho. the buzz from sun valley next. and as we head to break check out the futures, getting worse

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the annual conference taking place in sun valley this week. it's not just about who is there but who is hanging out with whom. kayla tausche, she's hanging out. she joins us now. >> i am hanging out, steve. you know it's funny, this conference has always been one with very heightened security.

so much of it happens behind closed doors. behind velvet ropes. so what piques curiosity the most is who these moguls are taking meetings with, and just what they are talking about. they're very rarely passive conversations. yesterday, during lunch, we saw israeli content king taking a stroll with jeff buchananous who whom warner has been the subject of much speculation. when asked if they were making a deal, bewkes said we're buying coffee. tim cook and eddie cue spent much of the afternoon together. apple has several product launches rumored to be hitting shelves this fall. so interesting that they probably had a lot of work to get done to the. they didn't make much time for reps from other companies yesterday. comcast cfo taking meetings, spending some quality times with nhl commissioner gary bettman. of course the nhl does much business with nbc universal. but they looked like they were having a good time.

air b and b ceo was talking with reid hoffman. he was one of the early investors in air bnb. they are now growing past a $10 billion valuation. this is the most interesting one to me. i don't know if you can see chase kerry's mustache. but chase kerry of 21st century fox sought out netflix's reed hastings and said, can we take a meeting tomorrow? i have some things i'd like to ask your advice about. i would kill to be in that meeting. curiosity may just kill me on that one. the rumor mill, of course, always spins during this week and current eventswise there are three topics that have risen to the top of the conversation. the first is that speculation about time warner. several executives i spoke to said that they thought the deal of the week was going to be a sale of univision or perhaps descripti scripps network. now say they time warner is the buzz. second aereo's plan "b" or plan

"c" and trying to rebrand itself as a cable company. aereo is not here. the broadcasters are. we'll hope to get their take a little later today. finally, dish network's coming out and quashing not one, but both of those mega cable deals on the table right now. hopefully we'll get a little bit of color on whether people think that actually means anything for the future of those deals that have spurred some other industry talk, too. so we'll have more for you later from sun valley. but it's been a busy couple of days for the people who are on the ground here. guys, back to you. >> certainly. >> no baked potato yet. >> not yet. i did have a nice steak. our team had some elk burgers last night. >> okay. >> we eat well out here, joe. >> all right. keep me updated on your visit. >> i will. >> coming up, getting away in style. we know baby boomers like to spend their money and one area benefiting from their spending power is luxury travel. the trends in the top vacation plans coming up in the next half hour. and as we head to break, check out the european stock markets

this morning. pretty sharply lower across the board including portugal. talk more about that. "squawk" is back in a moment.

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welcome back to "squawk box." our top story this morning a global market sell-off. european stocks are sharply in the red. we've got a lot of reasons being cited. weaker than expected trade data out of china overnight. japanese industrial data also extremely disappointing. industrial production numbers out of italy, also france and mounting fears about the health of portugal's largest listed bank, hence why we are showing you portugal at the top of the list this morning. normally we don't. that average is off by more than 4%. italy is right behind. >> now wilbur is that cheap enough? >> too early. >> too early still. u.s. equities selling off, as well, as you can see. >> can we go back to that? >> go back to the european boards. >> you can see that italy is now down 2.0973. last time we showed you it was down 2.0972. and then the first time we showed you, it was actually down

2.0964. >> we're not sure why it is up for the italian -- >> it's now -- >> four decimal points. >> but it's now -- if we were going to show you pie it would be all we'd show you today. they trade from 6:00 a.m. -- >> like the old euro. >> it's historical. >> oh, my god. oh, my god. >> now it's 2.11537942 in italy. more now on the -- on this morning's market sell-off. let's turn to jim iuorio. now in that -- in that 10,000th place in italy what caused that latest move? 0.0001. what's happening? what's most important? is it china, portugal, italy? >> portugal. it's europe. it's european peripheral bonds. if you listen to mark bond and

peter schiff they say they see bubbles everywhere except in assets and gold. one thing most of us agree on is there probably is some sort of bubble in the european peripherals. that could have a destabilizing effect. this is relatively serious to me. the reason i think it's only mildly serious at this point in time is because they're not selling french bonds yet. to me that will be the indication that things are really crumbling in europe. but are portuguese and greek bonds mispriced? of course they are. it's just a function of every central bank throwing tons of money into the system. there could easily be a bubble there. we watch china all the time, too. what really could be the indication of destabilization so when those european bonds start to go. i'm not saying today is. if the stock market went about 15 handles lower than here and felt comfortable there i think the race could be on. right now i'm just i think it's worth watching. >> one of the discussions we always have here, jim, is how much the fed's action is sort of masking, or somehow not showing the true state of affairs in this country.

but then -- >> amen to that. >> but then you think about -- then you think about how bad off europe was, and some of those individual countries, and you think, wow, what if we take huge central bank action there, i mean, the difference between reality and where the central bank has the markets could be, you know, here in the united states we could be here. maybe it's not that big a deal. over there, i mean, i thought of spain and portugal and italy as one step away from, you know, from real trouble. now all of a sudden they got lower yields than us. m that makes you think. it's the craziest thing i've ever seen. it's absolutely ridiculous. spain has a 22% unemployment or whatever it is and they're trading at lower yields than us. it is absolutely an enormous deal, a distortion of markets, however you want to call it. and everything that we've ever studied of economic history, if you distort markets long enough, eventually it comes to an abrupt end, or -- >> so jim -- >> that's what i thought was that the banks in portugal, the banks they've had time, the

banks in spain, i thought things had gotten better, so it was surprising to me why this one particular bank in portugal suddenly was in trouble. but if it's really, if all these things, if yields have really just come down because of the central bank then maybe the underlying problems haven't been fixed to the extent that we think they have. >> maybe -- not at all. i don't think there's a maybe about it. and i think things did get better but they got better in the form of germany kind of being the wallet for everything. and that's -- so for us as traders and investors, we got to look for what the trigger is. and you look at all of them and you zero in on france. because france is the hybrid. france certainly isn't germany. but it probably isn't portugal either. when the worm begins to turn there to me that's when the foundation crumbles. i don't think there's any maybe about it. i think they papered over their problems for more than we did. >> that's a good term to use, papered over. >> don't you think the real reason that these peripheral country bond yields have gone below ours is simply that so much money has gone in to emerging market funds that

simply a supply/demand thing. it's not an editorial khernt. >> wilbur, there's no doubt about it. once the different investment opportunities are taken away around the world then there's pension funds that need yield today. they don't -- they don't care about tomorrow because they lose their job if they don't find yields today. and then they start chasing those high yields there and they become low yields there. so i absolutely agree with you. >> okay. all right. thanks, jim. i679 u-r-i-o -- you got one consonant. >> i-u-o-u-r-i-o. >> how many letters and one consonant? >> it's 82% vowels. >> that's messed up. >> no it's not. >> it's messed up. thank you. >> thank you. >> you got a few. >> good scrabble word. >> i-o-u -- >> they're yelling at me. israel's aerial assault on gaza now in the third day. martin fletcher joins us from tel aviv with the latest. good morning, martin.

>> good morning, steve. well, last night was the worst attack by the israelis on the palestinians, at least 320 separate attacks okay specific targets in gaza. the israelis say they're targeting mostly secret tunnels and rocket launching sites. they've also been attacking the homes of hamas military leaders, sometimes giving warnings and unfortunately that led last night to tragedy. one rocket hit a palestinian home. eight members from one family were killed. including five children. and in another incident, just a few hours earlier, at a beach cafe on the gaza beach, palestinians were watching the world cup soccer game, where they were also hit by an israeli rocket. five palestinians were hit watching holland lose to argentina. that was the worst night of israeli attacks on gaza but also there were at least 200 rocket attacks in the last 24 hours by

the palestinians against israeli cities. so today there have been sirens all over israel. here in tel aviv, at least three separate occasions israeli citizens were running for their lives, racing for the bomb shelters when the sirens went off. the israeli anti-rocket system intercepted those rockets so so far there's been no casualties among israelis from all those palestinian rockets. a remarkable achievement for this anti-rocket system. no israeli casualties and almost no israeli houses even damaged. but nevertheless, the next step israel if those rockets don't stop coming from gaza, israel is threatening a ground invasion of gaza. joe? >> okay, great, martin. we appreciate it. thank you again. saw you a couple of times today and we appreciate the work you're doing over there. president obama is going to be speaking in austin, texas, today about the economy. but the immigration crisis is looming large in the background, literally. joining us now is senator john hoeven, he co-authored an amendment with senator bob corker on border security. it was passed in the senate's

immigration bill, and senator welcome. it's good to see you. and before we get on to the substance of the bill and how to perhaps deal with this, can you just can you weigh in on the notion that the president, okay i understand was planned to go down there as a political trip and a fund-raising trip, but his critics that say you're in the area, why not go down and see what's happening, it's -- can you figure out the reason why that doesn't make sense for the president, for the commander in chief to be down there? >> no, he really does need to go to the border. he's right there. he could go down to mcallen, see what's going on. and even more importantly, he needs to enforce the border and return these young people who are coming here illegally to their home country. >> why do you think he's not going down there? i guess that's just a rhetorical question. is it not to be seen as associated with what's happening? because that would mean a cause and an effect? but the buck stops with the president on all these issues,

doesn't it? i mean de facto it is something that, you know, that's going to be on his desk. why doesn't he go? >> i believe that's it. he just doesn't want to have a photograph with him standing there. but the reality is he needs to address this situation and everybody knows it. so i think he's not doing what he should be doing, which is going down there, looking at the situation, and then dealing with it. and that means specifically border enforcement, return these people who are coming here illegally, these young people, to their home countries. >> so, we've discussed here really what did happen. what changed in the last few years to where all of a sudden we have this problem, this specific problem with these young people. there was a "new york times" piece that said it was a -- a law passed during the bush administration making it easier for them to stay. other people want to say that the president hasn't deported anyone, so they know that they're going to be able to stay. what caused this most recent increase in the influx? >> well, we do need to repeal

that 2008 law so we can return people who -- young people who come here illegally without a lengthy judicial proceeding. but, the reason -- what's changed is a recognition in central america that the president is not enforcing the border, and so, young people are coming up here, and being allowed to stay, and that word has gotten around, and so, more and more are coming. and that's why the president needs to address this situation, and he needs to address it now. >> why would he think that creating orphans out of these little children by sending them -- or letting them come in here helps anybody? >> it doesn't. it makes no sense. and that's why, look, he's advanced a supplemental request for funding. but the reality is, he again has a request for a lot of money to take care of young people here, meaning keeping the illegals here in this country, rather than sending them home. congress is not going to support that, because that's not the way to deal with this problem.

>> okay. i'm looking at your immigration bill with senator corker. and then i'm thinking what, you know, maybe democrats would put in a bill. that these bills seem far apart. what does your bill want to do? >> first thing we have to do is enforce the border. and that's what's not happening. and you're not going to get congress moving on any kind of further immigration reform until you first enforce the border. that's what the american people want. that's what needs to be done. and that's why we've got this humanitarian crisis on the border right now. is because the administration is not enforcing the border. >> and what else -- what else is in -- then what? what do we do with the people that are here, i mean -- this doesn't seem like a comprehensive bill. is it comprehensive? >> well, look, you're not going to get the other steps that go in to immigration reform until you first secure the border. that's got to be done first. and that's why congress isn't able to advance the bill,

because nobody trusts the president to enforce the border. and that's the first order of business. so that's why this needs to be done first. >> senator, yesterday, and i don't know whether i haven't looked at the cbo report but our guest host that used to work in the white house alan krueger said that one of the biggest benefits of an immigration bill is to allow many, many more people to immigrate here and then they can become consumers, and that will help businesses, and that will help gdp. and i can think of the flip side, though, there's a lot of services needed that we give people, as well. i mean would it be a net positive in terms of spurring consumer demand? >> the concern is not legal immigration. it's all this illegal immigration. and you've got to do things in the right order. you first have to secure the border, deal with the humanitarian crisis, return these young people who are streaming over the border to their home country.

create some confidence that we have control of our borders, before you are able to then go on to things like making sure that we enforce workplace law. we have entry/exit at all of our international airports and seaports. >> but the spirit of the question is, is immigration good or bad for the united states? should we welcome more people or not? >> legal immigration is good for the country. illegal immigration is not. >> but right now legally immigration is capped, right? should there be more? >> it needs to be updated, and reformed. so we have it in the right mix in the right way to meet the needs of this country. but we've got to get a handle on the illegal immigration. and that's what the administration's got to do. >> okay, senator, thank you for your opinions and your thoughts today. we appreciate it. >> thanks, joe. >> up next, baby boomers have the time, the money, to spend on luxury vacations. that's why the sector has been doing so well. we're going to talk to the ceo

of virtuoso, a luxury travel advisory company. it's seen a boost in business thanks to the boomer generation. i really do wish andrew was here for this if it's really high end because i'm going to take notes for him. and then as we head to a break check out the futures of the day, which are sharply lower but they're not as bad as they were last night. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000

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now getting to the final installment in our baby boomer effect series this week. one business is expecting a huge jump, travel and leisure. baby boomers have the time and the money to spend to travel the world and they're doing it in style. cnbc's robert frank has the story. >> thanks, guys. with more time on their hands, baby boomers are taking to the road. and the skies and the seas. boomers spend over $150 billion a year on travel, which they rank as their top leisure activity. they take an average of 3.7 trips a year. but they're not just looking for a lounge on the beach. we spoke with luxury travel firm virtuoso about their three most popular trips for boomers.

topping the list is a world cruise. most are more than 100 days. crystal cruises has a 108 day trip around the world, including the caribbean, french polynesia, easter island, south africa and argentina. prices range from $41,000, to $212,000 per person. now upscale safaris are really big right now, with a 15-day grand safari focusing on kenya and tanzania starting at $17,855 per person. and the land down under has become a top choice for roving boomers. retirees have time to make the long flight and there's a ten-day tour of sydney, the reef and rain forest starting at $3,390 per person. with adults over 50 accounting for 80% of travel spending this is the one generation you want to keep up with. >> i'll bet. let's bring in matthew upchurch, the chairman and ceo of virtuoso. this is a luxury travel advisers network that targets 50, 60, and

70-year-olds. good to have you here. >> great to be here. >> one of the stats that you brought us is that 2012 was the first year that more than 1 billion people in the world traveled internationally. and i said oh, it's the chinese. it's the new emerging class. new middle class in brazil and indiana. but it's also the retirement generation, right? >> it's both. what's happened is both the aging boomers and the industrialized world are really driving that with basically the number one desire of boomers to do in the retirement is travel, by far. and then of course the rise of the rest of the world. >> here's what i don't understand. we have all these stats. people aren't saving enough for retirement. most people haven't saved enough for retirement. yet they're retiring early and spending money like crazy on these trips. >> there's this huge transference of wealth. but what we've seen over the last 20 years is this huge shift in priorities. from the accumulation of stuff, to life experiences. and so it's quite frankly a lot of people are focusing on life

experiences, and travel as being one of the key, if not the key conduit for that. so it's also a prioritization of their discretionary spending. >> i need to ask you a quick question. 50, 60 and 70-year-olds. >> you can be 51. is that your question? >> no, not at all. >> confining it to just being 50, 60 or 70 seems limiting. >> what if you're 51. >> no, no, no. >> what about 62. >> i want to ask about 80-year-olds. my dad is traveling. >> 82. >> there's also -- >> 80s -- the actual intro to the package is we serve all generations, and actually you're right, the fastest growing segment is 80-year-olds. i mean the health -- >> that's what i want to bring up. >> they're healthy. >> their health and wellness -- >> and they're doing crazy stuff. >> you don't have to be 80. >> in their 80s. >> they're going on safaris. >> they're healthy. they're active. >> that's what's amazing. >> wilbur's got a question.

>> slas skwun who is approachin 80, i'm glad to hear this. >> they'll take you on a trip. >> of the billion people crossing borders, how many are actually americans? >> well, right now i don't know that exact statistic so i won't make it up but i do know that the boomers right now in the developed world are driving that. the emerging markets are starting to contribute a lot to that. but they're still not the preponderance of this. >> steve this is for you. this stat point which is the one area where the u.s. still has a trade surplus is -- >> is travel and tourism. >> people coming in. you can't even walk on fifth avenue anymore. >> that's been one of my biggest frustrations when you talk about the reporting of travel and tourism. because we report on airlines and hotels individually. we don't talk about the entire sector. >> i have -- >> as a whole. >> i have a macro business question for you. you're targeting 50, 60 and 70-year-olds. what's interesting to us is that's outside what we call the demo. everybody wants to target young people. are businesses in general

missing a huge opportunity to target this group, because they have a lot of money to spend and the general idea being they don't change their spending patterns? but you're saying you know what? i can make them change their spending patterns. >> no, absolutely. this is absolutely where the money is. and you know, ken dike wald who was on earlier, he said it best. they have not only the money, and the time. and they're reinventing the way they retire. they're not just, you know, they're not just doing something, and then finishing up. they're going back. they're doing volunteerism. they're starting entrepreneurial businesses. but they're very, very active. and travel is a key. the other thing that's important about the boomers is that they are also the parents of the millennials. and the millennials, you know, the intro said that 50, 60 and 70. the millennials are spending more per diem than the boomers did. so the reality is when the echo boomers, another name for them. the boomers were the first generation, after the war, two generation, that did not see travel as a luxury. they saw it as a part of their life.

they saw it as a right. >> just incredible. >> and they also took the millennials with them, right? so the millennials have grown up -- >> as travelers. >> skewed that crazy demo. used to be 25 to 54. then it went 18 to 49. they actually are worried about 15 to 30 and i think it's because young people are controlling this. and thiey think that -- >> there's data that business does not follow demographics. >> stanford professor john keller coming up. ete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation, brake inspection and more for $29.95 or less. get a complete vehicle checkup only at your ford dealer.

coming up, markets around the globe in the red. weaker than expected trade data out of china overnight. disappointing industrial production numbers out of italy. bad number froms from japan mounting fears about portugal's largest listed bank. we get an update next. and later a disruptor that helps make smarter investment decisions. the ceo and co-founder of databox will be here to explain what they do and how their clants are taking advantage of their service. once there was a girl who never settled for ordinary.

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welcome back to "squawk box" here on cnbc. percentages or total numbers? first in business worldwide. i'm joe kernen along with michelle caruso-cabrera. so there's ten times as many. what does that mean? steve liesman -- percentages not numbers. steve liesman is here. becky and andrew are off today. in studio this morning, wilbur ross, chairman and ceo of w.l. ross and company is with us. and we are seeing a big sell-off in the global markets this morning. >> let's show you what's going on. u.s. equity futures right now are negative. they suggest the dow would open lower by about 140 points. the s&p lower by 16. the nasdaq by about 34. the ten-year yield is at a five-week low? falling to the lowest level in over five weeks. two-year treasuries the lowest level in three weeks. because of the sell-off that we're seeing as people seek safety in the u.s. treasury market. lots of red arrows in europe is where this all started. investors troubled by a whole bunch of stuff. disaminuting industrial production numbers out of france

and italy. japanese numbers overnight when it comes to machine orders were horrendous. chinese data was also bad. and then you also have mounting fears about the health of portugal's largest listed bank. also not helping, repeating myself here, weaker than expected trade data out of china overnight. >> one point, the japanese machinery orders numbers do raise questions about u.s. capital spending because we import a lot of our machinery from over there. cap-ex turning around is a big part of the outlook for later this year as women as the federal reserve. and data could be volatile. it's one month -- >> but it's a big decline. >> and i remember when we hit the low. in the yield. because remember that day, it was the day the gdp number was released down 2.9. i said 2.43 will be the low on the ten year, then it went back up to 270. now it's back down -- >> let's show you more about what's going on in europe. karen cho is standing by in london with a lot more on the sell-off there. particularly with what's happening with the banks. >> thanks very much. you're right to highlight the

data because we have had a run of it this week. we had italy today but it started with germany. and the uk added into that picture this week. but we have concerns about the portuguese banking system. it stems around banco es spirito santo. this is the largest lender in portugal. this is concerns about the holding structure of the founding family of this bank. we had the stock selling off double digits again today. the stock has been halted recently as the market offer waits for more information from the company. it's impacted other banks around portugal as well. we had portugal telecom because it owns espirito santo. it doesn't end on the equity picture. we have had a sell-off in recent days to a cross on the bond markets. there's been some very low yields right across the border here. there are concerns that if banco espirito santo has some

difficulties it may stop buying portuguese debt. don't forget there has been a lot of purchases by the local banks into the sovereign of late so there is a lot of chatter out there that the government might be forced to delay any further issuance of portuguese debt. so we've had movement at the short end. the two-year, but also on the ten-year. we've actually pushed through the 4% mark on the yield today. you can see we've come back a little bit since then but that rubicon has been breached today. is this a catalyst for a broader sell-off? one of the big concerns is who's been holding the debt. i mention the local banks. it's not hedge funds. that's the good news. some of the french banks have been doing a lot of work on this exposure. they say there's no deep fear in the market that hedge funds are going to be a catalyst for exiting this market. so that is a notion of confidence, i guess, in the overall banking system. but you can see right across the charts today, we've got a sell-off in the banking space, the names under pressure after the weak industrial production

figure came out today. that's impacted the sector which was showing some strength yesterday into the european market close. sharply on the back foot today but it's taking with it the other peripheral names, spanish names going south. and also the french names, bnp paribas stock under water. the german bank struggling. separately there's been other issues around fines against commerzbank and any further settlements with u.s. authorities. there's a lot of different issues investors are grappling with and it's all negative on this side of the world. let me toss it back to you. >> thank you so much, karen cho. >> i looked at the euro 1.36. >> that's way too high. >> it's ridiculous. it should be a dollar. >> this is not a good year to go to europe. >> were you going to go? >> no, i got other things going on. >> it makes no sense whatsoever. really doesn't. >> the only way they can get out of this -- >> germany. >> they need to because otherwise you're just going to have internal wage deflation,

which is really what's been going on. much better to devalue the currency. >> we were joking during the break when karen shows that whole board of banks selling off. does that make you drool, finally we're getting to some place where i might actually go in? >> i think many of these need more than a few points down. >> so it's too early still? >> for us. >> mm-hmm. >> he doesn't drool. >> i'm not old enough to drool. you have to be over 80 to drool. >> young people, wilbur, they're going to be young forever, that's what they think, don't they? >> i hope so. because the alternative. -- >> they can talk to us like that. the house financial services committee set for a hearing on new proposals for increased fed scrutiny. joining us is john taylor a hoover institution senior fellow and stanford economics professor. he's going to testify at that hearing. can you give us -- great to have you. always good to see you. will you -- what are you going to say, what are your thoughts on those -- on that issue?

>> well, i think they got some good proposals. good legislative proposals submitted on which would have the fed announce a strategy and stick to it. it would be the fed's decision, of course. this is not micromanaging. but i think it's providing a good degree of clarity to how monetary policy works. we have a lot of experience over time but when monetary policy works better and when it doesn't and i think this legislation takes account of that research in history. and comes up with a pretty good strategy for giving the fed some particular things to do. >> i mean it's like two kinds of people in the world. dog and cat people i think. and then there's people that think the fed should be right where they are right now. and even err on the side of even more accommodation. and then there are people that will just so sure that the economy at this point is strong enough to not need all of this. and that, i mean, these -- they point out that these measures that we're seeing right now are

really once in a generation, once in a century measures. emergency measures, and yet you look at a lot of different metrics, and the economy's pretty good. and that's got to come out in the wash somehow that they're way too easy right now. where are you on this? >> well, i think the rate's too low. but this is really more about a longer-term strategy type of thing. you know, you could say this is a once in a century thing, but geez, how many once in a century things are we going to be doing? what we do know in the past century is when the fed had a pretty good strategy, like in the '80s and '90s, things worked pretty well. it's really just in the last decade or so of course it has not been a good economy. we hope it's going to get better. but i think the debate is not so much hawks versus doves, it's whether you're going to have some rules and strategies per policy or just be dominated by these -- >> you don't think there's a day of reckoning coming from what's been done so far? and certainly you look at you know it makes it hard to raise rates when you look at what europe's doing anyway at this

point. so we'd be almost in a, i know it's a multispeed world, but it would just, you know, it's almost like everybody's doing it so why should we stop? >> well, that's the whole problem, quite frankly. you know, central banks tend to follow each other. they start on one route and follows. i think you can see that recently. you know, i just spent some time in singapore. they have a zero rate because the fed has a zero rate. and it spreads. you can't say let's do it because everybody else is doing it especially if you're the fed because you're the major central bank and make a big difference. so i think legislation like this is really important. i think if it passes it will be a landmark. and it will make things a lot better. >> is there legislation for getting rid of the dual mandate? >> this legislation doesn't focus on that per se but it just says here's a way for you to tell the markets what you're doing. it's your job to do that in a way that's transparent and they report. so no, there's a focus here on keeping policy less interventionist, put it that

way. less all these special programs which people question. i agree with you, there's debate about their impacts. but there's uncertainty about their impacts. and it may be a day of reckoning. i tend to think it is. but the main thing is to get to a better strategy. >> so, john, do you really think that having congress have more of a voice in federal reserve policy is going to be helpful? look at what they did to fannie and freddie, the things that they had the most influence over. i'm very worried about anything that impinges the independence of the fed, then turns more power over to the congress. >> this doesn't impinge on the independence of the fed at all. in fact, it's very explicit. it's the fed's job to choose its strategy. but what the fed should do is make the strategy clear to the american people, and report to the congress. and moreover, if it goes off its strategy, explain why. so i think what we've seen independence is important but you know it's not been enough to prevent these bouts of high

intervention discretion. you need something else and that's what this is about. >> john, maybe some context would be helpful in the sense that you had a fantastic conference out in stanford, what about a month ago. >> right. >> which was all designed around this concept of rules-based versus discretionary monetary policymaking. and what this bill in congress is about is the issue of should congress force the fed, essentially, to adopt a rule that it follows instead of this kind of human discretion around monetary policy. so, john, can you tell us, in a way that's not as wonky as perhaps you presented, in stanford, what would the rule be? how would the fed follow a rule, and what would the fed do in a situation like the financial crisis, where there appear to be a need for the fed to step outside of rules-based monetary policymaking? >> i think in the heat of the crisis, in september, october, november 2008, that lender of last resort responsibility would work exactly the same.

the real improvements would be going in to the crisis where we had those rates so low we really got off the policy rules that worked well then. and more recently. so the idea here, and you're quite right, steve, how do you explain this? and that's what the fed should be doing. we raise interest rates under certain circumstances. and a policy rule tells that. basically -- and it's not really rocket science. the fed has been talking about this internally for more than 20 years. so in many respects this is just taking the things that they have been doing internally and making it more public. and i think therefore more useful to the markets, and will result in better policy. >> john, well renowned economist, worked at the federal reserve, he got up and gave a critique of what you're talking about here and he said you know what? all of these rules sound really good except for in europe, we had these rules. and we didn't follow them. so what good are the rules in that sense? >> you know, i don't think -- that's right. he's basically a proponent of policy rules and has a

particular one. >> right. >> i think that's not really the way to describe it. both the fed and the ecb before the crisis, that's why i think this is a part of the reason for the crisis, they got off of the policy rules and the strategies that were working quite well for '80s and nine'90s until recentl. there's debate about what the best policy rule is and that's why this legislation is wise to give the fed that responsibility. it's the independent central bank that -- >> what bothers me is every time there's a crisis it's a little bit different. every time we're at an inflection point it's a little different. i'm not so sure there's a real benefit in having the fed's hands be tied in any way by having to go back to congress and say, well, we've changed our mind, and here's why. i just don't see the value added. how many people in the congress could pass a test on what the federal reserve's actions have actually been. i think very few. >> your point is exactly right. this is a responsibility of the fed. but, the u.s. congress has a

responsibility for monetary policy. it actually passed the federal reserve. it has amended it. it took parts of the federal reserve act out in the year 2000. which had some specifics about what the fed should be reporting. in many respects, this puts back in place things that were taken out of the federal reserve act in the year 2000. and the congress certainly has responsibility for that kind of action. >> john, we'd be wrong if we let you go and didn't draw on your international expertise. you were a top international official at the treasury. we're getting a wave of looks like economic weak economic reports from abroad this morning. give us your general sense of what's happening abroad and whether or not that's something the u.s. should now be concerned about. >> well, i think basically the u.s. should stick to what's helping the u.s. economy. and that's a wide range of policies on regulatory and fiscal and monetary like we're talking about. i've been concerned about the world recovery. i think emerging markets have been doing quite well. they've kind of been distracted by the tempered paper, whatever

you want to call it, the struggle last year of may and june. but i think we're basically fine longer-term but this is going to be a little struggle. i think for the fed, for u.s. policy, try to make the u.s. economy as strong as it can. try to get a real recovery going again, and that would be the key. >> okay. all right. john we thank you. and that was the less -- that was the less wonky discussion that we had there. than the u.s. was -- >> joe, every day i struggle with it. every day i struggle with it. it's something that's important to investors, it's important to markets. if the fed's going to adopt a rule you've got to explain what the rule is. are you kidding me? >> okay. but thank you john taylor thank you -- >> you didn't have to. >> just clearing that up for anyone with that question whether that was the less wonky -- >> i think the best rule -- >> every morning. >> -- we got to go. we'll talk about that in a second. coming up a company that helps

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welcome back to "squawk box." among the biggest stock movers today, lumber liquidator shares falling sharply after that company but its guidance. machinists finally working. okay, that's a $2 billion company. that's fair game for lumber liquidators, ll. >> we are continuing our disruptor series now with a start-up backed by google ventures that is shaking up the world of big data. joining us now on set is co-founder and ceo of datafox. datafox uses big data for in-depth company and investor research and makes its algorithm generated data affordable to everyone from the individual investor to big time hedge funds. this goes up against the heavy price tag of traditional big data priors. basti bastion, you're also dutch -- >> no black arm band. >> any tears at all? >> no tears. only internally.

>> would big data have saved the soccer match? >> big data would not have saved the soccer match. >> you saw the first penalty kick? >> i saw the first penalty kick. i was pretty pessimistic after that first kick. >> that was a killer though. yeah. >> so let's talk about what datafox is. what is the problem it's trying to solve? >> the problem is that for a lot of people investing in private companies or advising private companies information is still gathered in a very manual way. i did this for four years working for a big baun and my research process was highly manual. i'd have to try and look at a company's website, and the management pro-fells for their leaders and try to garner some insight into how does this company compare against its competitors and how can i make some inference into how they will fare within their sector. >> so how can you use big data to make this into an automated process? >> the reality is technology companies in particular have growing online footprints. their employees are on linkedin. the press releases on online.

the companies are nicely structured. we can write algorithms that collect information from all these types of data sources in a more automated way enabling analysts to track many more companies -- >> what kind of data can you gather? >> what's interesting is anything that we would -- we think would impact private company's valuation, right? so we put them into three buckets broadly speaking. financing, human resources, and momentum. so financing, who are they backed by, how much capital have they raised? human resources, what is the pedigree of management. how quickly are they hiring? do people want to work there? and momentum, you mentioned in the press. >> give us an example of something big data found leading to an investment choice that was perhaps unavailable by a guy picking up the phone or doing the manual work? >> sure. so you know, we profile the sharing economy recently so that includes any companies that you would label as being in the collaborative consumption space. so, companies pooling to the resources. anything from airbnb to uber for

example. the problem is that if you look at companies like that today, you view them in a very siloed manner, right? whereas the reality is if these companies become very successful, they could broaden into many other product categories. the same way that a google, for example is much more than a search company today. so what big data allows us to do, it allows us to see that in uber although it starts out as really a taxi app to many people, it can become the logistics company of the future. and we find that out by seeing the way that the company describes itself, and the companies that others view as its competitors. >> do you turn big data in to big ideas by making recommendations? or just providing the raw data and then receiver of the data makes the big ideas? >> that's a great question. people say if you put dots on a chart it's data. if you draw a line between them it's insight. so we absolutely give -- we absolutely provide those insights. you can logon to datafox and

create a list of ten companies you're tracking and then we can infer automatically which other companies that you may not have seen yet have most in common with those companies that you're already tracking. >> do you come with a conclusion you like this one better than that one? >> yeah, absolutely. so in those three, almost three -- in those three categories, financing, h.r. and momentum, we actually quantify those signals that we gather so we can tell you, look, of these ten companies with consumption, we think this company is best positioned at the moment absolutely. >> so you end up allocating a grade to each one? >> that's right. >> which company in your whole base has the highest grade right now? >> so of the sharing economy companies, uber currently has the highest score. >> tell us something we don't know. uber is a great big success. show something you found that is not obvious to people. >> well, so you know,atesy and airbnb are up there with uber. >> what are they up there with uber? what about your metrics puts

them up there with them? >> hiring great people at a high rate, they've got backers who are -- have historically consistently been followed on in future rounds. so what that means, if you have a backer, so why do we feel great about having google venture as an investor because they have a track record of in other companies that they -- where they invest they are then followed on by other great investors. >> we have to follow what you're doing. we've got to go. >> what grade did you give yourself? >> you'll have to look that up. >> he should be playing for the team. all right more on this morning's market sell-off and a key data point that investors will be focused on. jobless claims are just ahead. "squawk" will be right back.

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coming up, weekly jobless claims data that could move markets and the ceo of corda on the urge to merge in biotech. a number of deals, and they've been mentioned quite a bit about possibly doing a deal. we're going to find out if the company is shopping. as we head to break, u.s. equity futures continue to be negative. dow would open lower by about 136 points.

welcome back to "squawk box." just seconds away from job also claims data, market looking for 319,000. a big number today, considering that all the foreign date that has been negative. see if the u.s. can withstand that. rick santelli's at the cme in chicago. i don't think i got to talk to rick after the fed minutes. do you think part of what's happening is rethinking the fed? we liked what we heard yesterday

from the fed. today we don't like it so much. >> you could hold onto that notion, but i don't think so. no, i think, actually the big trade yesterday was the nervousness in front of the meeting. thinking that there would be a lot more objective reasoning with regard to crisis style policies, and maybe things ending sooner. the fact that it was just more of the same i think is what made the market -- all right here we go. 304. 304,000 uninitial jobless claims. that is down 11,000. as steve pointed out this is going to change everything going on in europe. okay. 2.58 million on continuing claims in portugal. still has a bank that's probably insolvent. i don't know, i think what's going on in europe and what's going on with rates i congratulate joe. i know we have to move quickly. he did call 240 for closing bottom. but as i came back and told him, europe is going to continue to be a two-day. and even though the markets always has ranges weekly, quarterly, annual ranges in the big picture, in the big chart,

it looks to me like we're going to be challenging that yield again at some point. >> you said it was a short-term or intermediate term low which is going to be a much better call than saying it was a stupid low. >> you know, joe, nowadays around here two weeks is considered like a long-term trade. and that will continue. what's going on in europe is huge. because what it does is, it tells us that the ownership of all that sovereign paper by the banking system is each economy is not the answer. it was a stabilization that what have they done for the year and a half interim period after the stabilization? nothing except >> i want to come back to you, rick, and i want to talk about something else, too. >> we got breaking news in the pharma industry. meg terrell joins us on set. >> just krousing now, long-term data on the drug for muscular dystrophy. reporting data out to 144 weeks

now showing that the drug seems to help stem the declines in walking ability you see in these boys. this has been incredibly volatile stock in an incredibly volatile therapeutic industry. they're trying to apply for approval by the end of this year. this keeps them on track for that. haven seeing a lot of big moves in this stock. further good news with sarepta. >> it went from when was that it had a recent spike? >> in april it had a big spike. >> you talked about it since then, though, right? >> we talked about it back in april actually. and we had ptc therapeutics and they got a fast forward in europe. another company prosensea has gotten a pass -- >> this is the one that skips -- >> exon skipping. >> and it lets the -- a more

complete molecule be made that it's messed up in this really tough cases. >> it really is a tough disease. so it's really important that this seems to be working. good news. >> okay, all right. thank you. >> thank you, meg. >> let's get back to rick just for a second. i'll tell you something i said earlier, rick, i think i was needling liesman a little bit but who knew this wacky janet yellen was just a dyed in the wool hawk. who takes 15 billion away at one time in one month? i mean that's insane! that's crazy! i mean we got to keep buying. i mean -- did that not shock you that she didn't go 10 and then end with another 5 one month later? i mean she's crazy. she's liable to do anything at any time. >> ear going to pull the reins so tight that horse's eyes are going to bulge out like golf balls in a tight water cleaner. >> don't just take 35 billion out. just keep doing it and doing it and doing it every month. >> actually what is 5, 10, 15 billion nowadays.

>> exactly. so that was shocking to me that that was like, whoa, wow, what a decision maker. >> did some people call her a hawk? >> are you kidding me? instead of doing just 10, doing 15. >> it's 50% more. >> joe, yesterday i talked about the notable and quotable from the day before yesterday about the princetonian interview with paul volcker. >> incredible. >> i'm telling you what, every time i read it i laugh so hard i cry. boy, how far we have come. >> did you see this? steve was very, very funny- >> no paul volcker did an interview with the daily princetonian and volcker literally yelled to the reporter, why are you asking me that? do they teach you that here? that is so wrong, we discredited that 20 years ago. it was cute. >> didn't see that. >> just think, probably a lot of future economic advisers, the future presidents, are in those classes that paul volcker was screaming about with regard to what they're teaching. let me tell you something, whether it's debt and deficit,

or debt income being synonymous, there's no way around the notion that the globe is definitely mortgaging lots of future growth for the price of stabilization. i hope they're getting their money worth. >> there have been so many people negative about southern europe. earlier, you heard rick talking, but you just invested in greece. >> i think the big fiction is the idea of europe being one place. it's not. nobody has ever introduced themselves to me as a european. they introduce themselves as portuguese, or greek or italian. >> but is greece turning? >> i think greece is clearly turning. they had a positive primary budget surplus for the first time probably since the ottoman empi empire. if you don't think that's a turning point it really is. the only worry i have about greece is whether samaris can stay in power because he just has a very slim --

>> the communist, sexy alexi they call him. >> mr. ross one quick question. >> sure. >> as a global investor of the highest order i understand that making money on economies that were worse and they're not as bad is an investor's mon tra. but, forgetting being an investor for a minute, do you think that southern europe over the next five years issing about to generate the type of growth to get to a stable 1.5% outside of what germany and france contribute, maybe even france hasn't an asterisk there? >> i think it's a work in progress. and i think the one that's lagging the most in terms of reform is italy. and unfortunately, that's the biggest of the seven european countries. so if you're going to talk about them as a group, you really have to focus italy, and i think italy is starting to change some of the new things they did about lending yesterday are potentially constructive. but they've got to change the concept of the economy,

particularly in southern italy -- >> it's a political question. i even want to know michelle's answer to that in a sense that from an economics point of view the only question is will prices adjust, will wages adjust to make those countries competitive. those are essentially political economy questions. >> now you're talking about deflation, steve. you should give lagarde a call. you just nailed what we debate on this floor. the solutions and the processes and the structures they're trying to change are causing things to happen to make them more competitive. lagarde says oh, that's deflation or disinflation. it's nothing like the '30s and it actually needs to happen. >> i don't think italy has to do anything. keep the ponty vecchio open. >> pick up the later. >> for everybody -- >> pick up make the beaches -- italy's got everything. it doesn't need -- it doesn't need an economy. >> that's sort of what they think. >> 24 hours ago- >> hours at a time. >> to the imf.

>> keep the museums open in florence. seriously. i don't think italy needs to change -- >> the queen is excellent. >> and in the next bull market the mafia will go public. >> see that sore story by the way, according to european law they're counting the underground economy they have to count the revenue generated in brothels and illegal gambling. >> the gdp got much bigger. >> they get better terms than most of the european banks. >> if you can count it why can't you stop it? >> when you're over there though and you're walking around, you look around and it's like, why am i -- we live -- why do i care about anything? >> do they want to live like us? >> no. >> that's the question. at 2:00 the espresso places are packed. >> i can't understand. >> you want them to live -- no i want to live like them. >> they have no worries. i wouldn't think about fed funds or anything. ceo is going to give us an outlook for biotech and talk

about whether or not the company's shopping for a possible deal. later an organization known as safe, securing america's future energy putting a focus on saudi arabia in its latest oil security index. we'll have the founder. has gott, but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time.

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soul mate from acorda therapeutics. you have a twitter account? >> i do. >> acorda therapeutics suing acti activeis over its generic improvement of empira. currently developing six clinical stage therapies that address a range of disorders from strokes to spinal cord injuries. with us on set dr. ron cohen, president and ceo of acorda therapeutics. and cnbc pharmaceutical reporter meg terrell is also here. and in the notes they had a bunch -- i didn't make that up. i guess you got a twitter account that says it's your hair and everything else. >> there's a twitter account called ron cohen's hair. we actually tweet lighthearted comments about hair -- >> i have -- >> you guys created? it's not somebody else. >> no, we created it on april fools' day because there's a very notable analyst in the biotech industry, he's got 90,000 followers, and he constantly talks about my hair

in his notes about the company, and the industry. >> unfortunately, many people on tv know we can't escape -- there are things that are all about the hair. and steve to this day, you still go to baldaholics anonymous. >> it's not a disease. it's not a handicap. >> it's like an affliction. >> it's not -- it's okay. ask wilbur. wilbur is smart, and he's -- he has no hair. >> listen to you, you're yelling. >> is big hair therapeutically sound? >> i'm glad we're getting down to a serious biotechnology talk. i think that's going to take more time than we have this morning. but i will talk to you about that offline -- >> why are we talking about whether you're going to make an acquisition? why would it make sense for you to make an acquisition? are you a target yourself? >> any company in the industry has to consider that theoretically it's a target. just the nature of our industry certainly m&a is very big. there are certain discontinuities that are

inherent in our industry. so for example when we're developing these drugs of tomorrow, these terrific new therapies, the average time that it takes is 12 to 15 years. and the average cost is about $1.4 billion now. that is not consistent with the public market environment in which fund managers, shareholders, are being marked to market every day. >> our earlier discussion about allergan and activeis had to do with the two different models, because it takes time and money and there's two ways of doing it. which are you? >> we're very firmly on the side of research. and investing in research. you know, if you take the model to its absurd extreme of just acquiring all of the assets that exist. all of the approved drugs skimming off the cream and not investing in the farm that makes the cows that makes the film that makes the cream eventually there's nothing left to give you cream. so you have to keep investing, and you have to have companies that are willing to take those

risks that are smart -- >> but to use your metaphor you could buy milk over and over again from a supplier somewhere, right? >> theoretically you could. but, you know, smart people, smart scientists, and would-be scientists, they can see what's going on. and if they see that they're living in an environment where their work is going to be taken away from them just as soon as they have their first success, it's a disincentive to bring -- >> they'll get paid. >> hmm? >> they'll get paid. it's a great incentive. >> you know the motivations for people who take these kind of risks and are creative and developing these drugs is not all about the money. it's important. it's important in any industry but the motivation is to be at the forefront. to be contributing. to be developing something incredible that's going to help a lot of people. and if you -- >> ron, is the answer you should do it where you have the comparative advantage of doing it? in other words milk producers are really good at making milk and egg producers are really

good at making eggs. does your company have a comparative advantage -- >> i think it's a great point, steve, and i think the answer is absolutely yes. so in our case, we have developed over 17 years now a group of scientists, business people, finance people all of whom are united around this mission. >> give me your top five and where delay in the process. >> in our case we have ampyra. we're taking the same ingredient. we found evidence that it may help people who have had strokes. it's starting phase three this year. >> what else? >> we are working on epilepsy, a product that breaks a cycle of break through seizures. working on severe nerve pain. which is poorly treated by available medications. but that works for very few people. we have a topical agent that appears to be very effective. >> really? >> in helping people.

yep. >> we're working on heart failure. we have a novel biologic that appears to repair heart muscle tissue, something absolutely novel. we have initial proof of concept data already. we're working on repairing the nervous system in multiple scleros sclerosis. repairing the insulation around the nerves with an antibody that we've already shown in animal studies is effective in at least for animals. >> that would, instead of halting the progress of the disease you'd- >> that would be the aim. it would be to repair the damage that's already been done. >> essentially a huge thing but one last question i know we're running low on time but you've got this patent for ampyra that's just come up. people expect you to buy something. if you have this challenge what are you going to buy? are you going to buy something? >> first of all with regard to the challenge, we have five patents that are listed in the orange book which the official recognized book of patents by the fda. we're going to defend those patents. they go out up to 2027.

irrespective of that, we believe that the best way to balance out risk, balance out value creation for shareholders is to develop our pipeline, but also to acquire other products where we can use our comparative advantage, in neurology development, expertise in developing and commercializing drugs in this space, where we can add value to it because of our comparative advantage. and that's what wore out looking for now. >> all right. >> but that's investment in research. and in development. that's not just taking products, although we would like to find in-market products as well. >> is baldness a disease? >> that's what i was going to ask. >> because if you develop one of these drugs does it happen to grow hair. is that how you -- >> do you feel handicapped, wilbur? >> i only deal with sick things. >> i feel like my baldness -- >> why do you think he's worth like $8 billion. he's overcompensated a little bit for the hair. >> do you know where -- >> it's not working for me.

>> baldness is a sign of testosterone, which from an evolutionary standpoint implies more masculinity and more -- >> you come right back -- >> we're both girly men. >> we have a real problem. >> i don't care. i'm proud to be who i am. >> wilbur? >> you seen that bar in japan that gives a discount to bald men? >> no. >> why? >> because they feel bad for them or because they like them? >> we got to go. >> thank you for joining us. >> mercifully. >> all right. coming up the latest oil security index from s.a.f.e. we'll be right back. tomorrow on "squawk box," steve miller. nonexecutive chairman of aig is our guest host. plus, earnings from wells fargo. and, the best two days for a boat owner? the day they buy it. and the day they sell it. dusty mccoy, ceo of brunswick, owner of brands like boston whaler and searay talking about what consumers are looking for on the water.

bring your lifevest, "squawk box" sets sail at 6:00 a.m. eastern time. when you run a business, you can't settle for slow.

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energy, known as safe for short, ranking the oil security of a dozen countries from around the world. the founder, president, and ceo of safe joining us now. good to have you here. >> thank you. >> so japan is at the very top? >> right. >> help me understand the index. at the top the least or most safe? >> most. >> why is japan the most safe? >> counterintuitive. they produce no oil for itself, but they are first time. what we wanted to do in the index was take seven metrics, bundle them together and look at the risk of the economy from oil prices, the structural risks from oil, and them oil security itself, the production side. when you look at a country like japan, it's so secure because it's so less oil and it requires less oil per dollar of gdp, and it has a lot of stocks that it holds above ground storing over time in case of emergency. >> all right. we just showed everybody, and we have it back on the screen -- take the steady cam shot again.

united states comes in fifth, actually improved. why? >> it's actually improved, not -- it's not such good news. it improved because everyone else went down. from a competitive basis, we went up. it's down in the methrics. we use more oil, oil intensity is up, vehicle miles travelled crept up again. we saw a decline in 2008, and second, because of the high oil prices, we're actually spending more on oil now than we have in the past. last year was $900 billion spent on oil, the most in history. >> we're less than half dependent on imports, and japan is more than half. how is that more secure? >> exactly. >> there's a global oil market. there's one global oil price. doesn't matter where the oil comes from. on whole, it's better to produce the oil yourself because the money's staying in your country. >> sure. >> in consumer based economies like our own, if they pay more

for global instability, iraq, saudi arabia, iran, venezuela, russia-ukraine situation, we pay more. as aaa says -- >> i'm lost. does -- i don't understand why -- >> it gets more economic output on less oil. >> why? >> because it's an efficient economy. cars are more efficient, produces goods much more efficient using less energy. >> does it matter how many miles a gallon it goes if there's no gallons in the tank. >> that's true. we're saying you have to look at a broader perspective. it's not just about -- it's not just about where you produce the oil, but what's its impact on the broader economy. >> shouldn't you look at natural gas as well if you are talking about energy dependence? japan has become extremely dependent on imported natural gas. >> right. from our perspective, it's the dependence that the united states has, it's totally -- and the world has -- totally dependent on oil for its

transportation sector. we have a global mobile economy. the price of oil is absolutely determined into economic growth. every recession is perceived by oil. >> we should switch. >> we need choice. >> can't do airports or jets, obviously, but other thing we can. zb there's advanced biofuels for that. >> yeah, but no natural gas. >> produce as much as we can domestically, but have alternatives. >> i'm sick of germany on top, world cup, no debt. they are doing well. sick of them being up there all the time. >> over rated. >> coming up, dabbling in the art market. we discuss that next. the futures right here, "squawk back" will be right back. during the two weeks at wimbledon. true tennis fans want to know what's happening. they don't want to just see what's happening, they want to know and understand why it's happening. anybody can just put data up, but we want to get a reaction, make it far more interactive.

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including a proprietary momentum indicator that makes researching sectors and industries even easier. because at scottrade, our passion is to power yours. yeah, let's talk art with will burr ross. i don't mirren a person named art. are you a collector? >> paintings. >> time to sell? >> no. if you deal with depressed company, collect surrealism. we collect those. >> market's hot? >> market for all art is hot,

and a lot of it is the young hedge fund people, but also people from troubled countries. >> is sutene a surreal? >> yes. >> my favorite. >> on that note -- >> that could be sur realist. >> join us tomorrow, "squawk on tomorrow" not surreal, totally real, is next. good thursday morning, "squawk on the street," i'm carl quintanilla with david faber, cramer back tomorrow. you wanted volatility, we will get some. futures well below fair value on a number of head winds, portu l portugal, china exports, mic microdata, could be the first shot at a 1% move in the s&p after 58 sessions without one. the real story in