i'm becky quick along with andrew ross sore kksorkin. joe is off this week. maybe that's why joe is on vacation this week, we have six dow components coming. among the interesting names, go pro will mark its public debut as a public company. and the fed begins a two-day meeting tomorrow getting a first reading on the gdp on wednesday. and it is jobs friday this week. the july employment report will be released. also on the docket on the week ahead, we have reports on home prices, consumer confidence and sentiment as monthly auto sales and the ism manufacturing. the market backdrop for all the reports, the s&p is up 7% year to date. stocks continue to make new highs. this is all coming despite calls from many strategists who have been expecting a correction in a pull-back of 5% to 10%.

bri >> a little bit too much of a literary analogy there. good morning. it's a huge week as becky said, especially for the summer. we'll look at the markets. the s&p, dow and nasdaq indicating a slight drop, but folks, it's early. the beginning of a big week. we'll check oil. oil prices this morning not doing a whole lot as well. we are seeing wti crude come down to 57 cents to 101.52. all the hard commodities, brent, crude, heating all, they are all slightly lower this morning. the ten-year treasury yield is favorable if you are a borrower. if you're looking to buy a house, the ten-year yield is down but the ten-year note is down 2.5%. the mortgage rates should remain low. we're seeing a slight move higher in euro/dollar, 1.3435.

and we are seeing the price of and ounce of gold up $1 to 1304 this week. >> it will be a big month in geopolitical. >> i think it stands to note that you guys know with all the stuff going on geo politically, it's a good time for companies to come out with something you don't want to see. just slip it under the cover of night. the united states and united nations calling for a cease-fire in gaza today. the israeli army says it will only fire in response to attacks. martin fetcher is joining us this morning with the latest. martin, good morning. >> reporter: hi, good morning, guys. so far it looks good here. the cease-fire of a kind is holding. nobody said this is a cease-fire, but after a sharp phone call yesterday between the

american president obama and the israeli prime minister benjamin netanyahu calling for a humanitarian cease-fire, since then israel said we will not fire at hamas and gaza. there was one rocket from gaza today to hit israel. otherwise this is what they call quiet for quiet. israel says we won't fire if they don't, and hamas said the same thing. but neither has come out to say we accept the long-term cease-fire. it is better that shooting and for the time being this is holding. although there's been a lot of bad press, very negative reaction to john kerry's trip among the israeli pundits and advisers and some officials high up in in political service, nevertheless, he's back in washington.

that cool from president obama and a dress from the security council as we wait to see if the markets resume, but the hope is high that this is the end of the fighting and the beginning of serious negotiating. although there's a cease-fire, the gap between israel and hamas still remains. it's very deep, it's very wide. and it's very important to both sides. israel insists that gaza become the de-militarized area, which is very hard for us to see how hamas would ever agree. and whhamas is not going to pul out of israel as well. thank you for that report, martin. we appreciate it. we have breaking business news back here at the table. >> merger monday starting already. dollar tree to buy family dollar. this has been something that has been in the works for some time

as people talk if it comes with a bit or not. the stock is at 74.50 per share. the 28% premium over family dollar's closing price as of july 25th. that was friday, i believe. that was friday or thursday. in total we're talking about consideration or rather and yule sales exceeding $18 billion in total. we have a conversation if you remember this. karl icahn is in the midst of all of this pushing for something like this. the company's ceo is calling this a transformational retail

general ray or the. >> he on the board of family dollar or dollar tree? >> i believe he's on the board of family dollar. >> there were some investors suggesting that maybe walmart should look at a family dollar. if they are interested in pushing into smaller stores popping up, but again, it's been a very difficult area over the last several years because the consumers go to walmart are being pip ched out of the recession. walmart just said last month even though the jobs picture is turning around, improvement in the jobs market hasn't helped shoppers. >> i just pulled up on capital iq as you talked about the big owners. this is a big win for karl icahn owning 9.4% of the shares. so you have triumph management opening 7.3%. and john paulson and company

5.7% onnership steak in family doctor as well. so the van guard there obviously doesn't have their funds here. john paulson looks to be whipping big. dollar general is twice the size of family dollar. the market cap is $12 billion. family dollar's cap is $6 billion. dollar tree is twice as big obviously using family dollar as 11% decline over the past few years. so. >> management is saying, from dollar tree, that this acquisition will extend their reach to lower income customers. and they say strengthen and diversify the store up front. >> you know who this puts pressure on as well. >> walmart is trying to expand into smaller stores, not the super sized stores, and with the head of walmart's u.s. stores

just stepping down last week, there's been a lot of questions about the strategy or if she'll continue to be smaller with these stores. >> jim tweeted out both compa companies here, now you've got this national footprint. family dollar is a north carolina based company, so they have a slight geographic difference. now you truly have a national deep discount retailer. >> the question is whether you think the family dollar can find the clip or we'll talk about it later in the program. he said he was happy with where his son was.

just a quick note, i said earlier each are a stock portion. we can go through the map, but if you're playing at home, i'll show you where to go figure that out. >> it's like you said. >> it's going to be -- >> that would not be a merger story. cap the price. both are on the east coast but the dollar tree footprint goes a little more -- let me give you the big holders on dollar tree store, if we can. you talk and i'll look this up. >> we can talk. you want to talk? how are you doing? >> more about this, good.

why don't we take a look at the things happening. we'll continue to watch the shares. again, this is just being announced. we'll keep an eye on it with other news coming up. the middle east is not the only geographical hot spot. eastern ukraine between this and malaysian airliner. keir is joining us live from there. keir? >> reporter: we just traveled with officials trying to get to the crash site. pro-russian separatists and the ukrainian military are fighting now on a road between where they are based and the crash site where we are itself. as we travel up the road, the whole convoy, a large convoy including dutch and israeli investigators, were pulled over with a tense standoff negotiated

to try to come up with a cease-fire. we did see mortars come into an agreement in the direction of the crash site. so i'm not sure where they reached it. so just make sure nothing is lying around. and it is getting more and more difficult, not easier, for the independent investigators to get together and do a thorough job. >> garrett, thank you very much. that's keir simmons joining us from nbc news in ukraine. in the meantime, we are feeling a pressure on the markets. kathy lee is a managing director there over the weekend when we hear them say, the world is a

mess. i am surprised by this. what do you make of it? >> in terms of the geopolitical risks, russia, ukraine and israel, these are not expected to cause volatility. most of the impact on oil applies to a global risk attitu attitude. we do have a lot of the risks including the gdp and nsp,uh the same story holds which is we don't really have much in the way of u.s. policy or u.s. data drama that is expected. for the most part, that is keeping volatility lower than you would expect in this type of market environment. i think if you look back to history to take a look at what causes these historically small increases of volatility. and they are big events such as fed tasting or global financial crisis. and it is not the situation

where we are in right now. so while we have a busy week ahead of us, the relative stability we are seeing in markets today indicate that is investors don't expect entirely invisible funds. >> i just wonder if there's a tipping point there, if there is a moment gets up and says, hang on, things are getting more cay yacht snick. >> i think this is an extremely valid point. in general in terms of the chaos as well as the general complacency in the marketers that's really on the radar and should be for us as well. but i think it will be a couple more weeks of lower volatility. and that's important to remember because we are moving in to the month of august that tronds be quieter for the financial markets. so for the most part, the relative value, earn and carry,

waiting for the breakouts to occur in the fourth quarter or trading major surgeries to get the best bet. i'm almost 50 and half of the s&p 500 companies are yielding the porch gees portuguese. >> that's a challenge for a lot of money managers. so i think aside from this, there's a lot of gapes we have seen in equities, but take a look at the emerging markets. also staying with short volatility as well as just looking at various carry bott

bottles. there's general consensus that low volatility will be sustained for a couple more weeks, maybe a couple more months. so there's an opportunity there. >> all right, kathy, thank you for joining us today. >> i just added it up. 17 of the s&p 500 trade over 4%. there are two that yield over 5%. hdp and century link, 5.5% one of the highest in the summer. in other news, an arbitration panel in the hague is ordering russia to pay more than $50 billion in damage to the now defunct giant in ukos. you remember the founder, just went to jail. i think he just got out of eight

years in prison. and leading up to the financial crisis, goldman mortgage cut a deal with the federal agency that could reach $1.25 billion. we should also tell you about the latest in the fox news quest for time warner. a number of reports over the weekend saying part of fox's offer, they are ready to offer time warner board representation as part of its bid. time warner rejected fox's $80 billion cash and stock offer earlier this month. 20th century fox privately, and i heard this, too, but 21st century fox is willing to offer time warner four --

>> one guy? >> no. he offered this in that there are two classes of shares. >> right. >> so you can offer them the entire board, frankly, and it doesn't matter because if he doesn't like what the board is doing, she can say, thank you so much, good luck to you. >> it's always been there. >> listen, the snarks out there argue that every board -- >> no, no. this board, in particular. any company dare i say with this -- >> ford. >> absolutely. look, our parent company is comcast. you know, i always say my other parent at "the new york times,"

all of those boards by default, berkshire and hathaway are run by whatever family controls the stock. you have the people with the most integrity in the entire world on a board, but ultimately the final decision is down to the people who own the shares. that's the way it is. my only point in this is a georgia is in the cop text of 21st century fox, tell time warner we'll put you on the board. they did that in the cop tentex dow jones. then they kicked some of them out later. >> jim stewart wrote about it, too, in terms of the anti-trust implications. >> i like my papers pink. >> got you. >> just like your -- nevermind. coming up, i don't know

where that was going, but an update on the mcdonald's in china after yanking more items off the men you. and "the new york times" says to light it up. the paper weighing into the national debate over legalizes miles per hour. >> this is up fathinfuriating. and family dollar and dollar tree. we have a lot more to talk about coming up on "squawk box."

welcome back to "squawk box." we have a deal of the morning, dollar tree and family dollar, the stocks on the move. and you're looking at the stocks moving. by the way, the total consideration for family dollar which is the stock being acquired in this case, you're looking at the stock up 21% in the pre-market. the total consideration, $74.50 in cash and stock. that represents a little over 22% premium as of friday, and we should tell you that trion partners has taken a board seat back in 2011, just putting out a statement right now coming from the company's spokesman to say they have been working to create a value for shareholders and they strongly believe the combination with dollar tree is the best forward and a great outcome for all company shareholders by joining family dollar, it will become a stronger organization to drive significant value for shareholders. both companies trying to fully

support this combination and has entered into voting agreements in support of the merger. just in our conference a few weeks ago dismayed management and how successful the company had been, but clearly this takeover bid, he was open to it and they have gone with it. >> becky found that walmart has, what, 11 -- >> just over 11,000. we are the premier leading discount retailer. they are pointing out they have 13,000 stores under this combination. that's more stores than walmart that has just over 11,000 stores, but if you look at annual sales for this combined new company between dollar tree and fdo would be $18 billion in sales versus $476 billion last rear for walmart. >> yes, the walmart store is -- >> those are massive footprints. still, have more stores than walmart. and because if you look at what terry -- my wife works in

retail. you look what terry lundren has done with retailers. they bullied the retailers. as macy's has gotten bigger and t then i hear this from my wife in her work that macy's has now the ability to really negotiate pricing on a scale that they never had before. >> this is the only department store left. jcpenney and the others who have gone along, they have fallen by the waistside. macy's controls the other department stores. >> this one has more stores, and i get it, a lot less in terms of stormg footage basis, but family dollar, you know what? you can make the jokes about the dollar stores and low margins, but this has been a huge moneymaker for investors. this was a $4 stock in 1995.

this deal is being done, 74.50. if you just bought family dollar 20 years ago and put it away, all it has done is bank coin. >> i have to say one other thing, and jim cramer made this appointment on his program two to three weeks ago, the piggy-back trade is one of the best in all time. if you buy in the day after he announces he's in, you don't win the game. virtually every time something has happened with a nelson peltz project, if you will. >> so you're saying piggy-backing on peltz is not a bad strategy. >> it's been a success. jim cramer did the map on his show prior to this transaction and shows that he went to arby's. i don't know how that worked out. maybe arby's is a great win. >> but the roast beef sandwiches are something else. speaking of fast food, the

golden arch, mcdonald's, is struggling to get food out in beijing. eunice yoon has the latest for us. >> reporter: the u.s. meat supplier osi is still having problems. in fact, it's top brass has arrived in shanghai where they announced the initial findings of the internal ongoing investigation. they said they did in fact find their china operations were sub-par. they are going to be making sweeping changes at the operation addinging ins to increase oversight and will put in place a food safety education program that will cost the company $1.6 million ch and finally, they are putting in a full review of all their factories in china. this situation in uncertainty created lot of problems for the suppliers' customers including

mcdonald and young brands that owns kfc, burger king as well as tar bucks. all the companies have either a distance from themselves, severed ties completely or just a suspended meat of osi at their restaurant here in china. mcdonald's, in particular, said that this meat su jegs created problem for them with the shortage of meat. if you go to mcdonald's today, you would be able to order a filet of fish, french fries, a mcflurry or a coke. but you could not get a big mac or chicken nugget. if you don't like fish, you're out of luck. and the company will continue like this for the next week into early august. guys? >> i know here in the united states, the big sellers are the big mac and chicken nuggets. is that the same normally in a regular period that is the same sort of eating and habits there

that come in to look for meat or no? >> no, people do look for me but generally look for chicken. almost the entire menu is chicken. people normally would be going into mcdonald's for meat. not necessarily the filet of fish. so that's going to potentially be a problem for them if they don don't. and tomorrow, earnings report, a fed meeting, new gdp figures and the job report marked into one week. we'll see what it means for the bulls. zblen last week's winners and losers. collection is here.

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good morning. welcome back to "squawk box" here. i'm andrew ross-sorkin. joe is off today and the one and only becky quick is here. your name wasn't written in the prompter, so i had to quick ad lib that. >> the fact she's hosted the show for a decade. >> i don't want know why it was

missing. the top corporate story of the morning is discount store chain dollar tree buying rival family dollar for $74.50 a share in cash and stocks. that represents a 23% premium to family dollar's close on friday. you're watching that stock in the pre-market up 20% right now. trian owns approximately 16% of the outstanding stock of family dollar and they decided to vote in favor of the deal. in a statement this morning, trian strongly believes the combination with dollar tree represents the best path outcome for all the company's shareholders. joining us to talk about it is joe feldman. good morning to you. the question, joe, is the price right? is it enough? >> well, you know, i think the price of family dollar's stock isn't taking in some kind of deal or transaction when it was still private or with another

retailer, so a 23% premium is a nice premium. i'm sure investors will want more and will argue for that. >> so this is not over. >> it may not be over yet, although it seems like both parties have agreed and are comfortable with the price. i would think this could stick at this price. >> explain this to me. over the next three years, by the end of the third year, they will find 300 million in and yule savings, i'm assuming that means they are closing stores. >> you would think they will close stores. there's a pretty large overlap with the two store basis. not quite as family as dollar general, but there's a large overlap. if you think about the operating of the two companies, dollar tree is a much more efficient operator and one thinks there's room for cost savings at family dollar. >> and where is dollar general in all of this? >> well, i think dollar general,

you know, it had a position where i'm not sure that they would be able to get through. there was more direct overlap with dollar general. and family dollar. and it wasn't clear that one needed the other. where family dollar, everything in the store is literally one dollar versus a multi-price point. and i think the two can merge. >> can you say this will be the biggest company in terms of revenue like walmart, do they care about something like this? >> well, it will certainly raise their eyebrows. you're talking about a combined company of $18 billion versus walmart doing almost $300 billion in the u.s. i mean, you know, it's still -- it does pick off some of that low-end customer. and walmart is trying to go smaller. but not only the dollar concept

but smaller grocery. >> we are going to leave the conversation there unless brian has something. >> just a quick question, dollar tree pays no dividend and family dollar pays 2%, do you think the dollar tree will start to pay the dividend or does that go away? >> i think that goes away in the near term. let the two companies merge to figure out where they are at. dollar tree does like to buy back stock. >> joe, thank you for calling in this morning to help us sort all this out. appreciate it. and the market is getting ready for a huge week this week with another wave of earnings, fed meetings, the job number on friday, how do we play it out? joining me is steven russell, chief market strategist. this is a huge week. people in the summer tend to sort of tune out but don't. if we don't, what specifically are you watching for the most important standpoint this week? >> i think probably from the macro perspective, we have the jobs data coming out and the gdp data. this is a mismatch of the negative 3% first quarter, but with a stronger employment jobs

market number. so one of the two is wrong. we are inclined to think the jobs data are more indicative of where the economy is going, a better signal than the contaminated data in the first quarter. >> the jobs data is taking its lumps. we do tend to qualify the monthly jobs number as the all-important job -- we almost put that all-important job number is now the official name in the report, but i feel like it has been so noisezy and more people criticizing the structure and how it could be off. why didn't you say earnings rather than job numbers? >> there's two questions there, the first one, the margin of error for nerdy guys like that is about 200,000, so you want to look at longer term. the numbers get a smooth average. and it is important because janet yellen and company look at it. if it's important to her, it becomes by definition important to me. we need to watch this as well.

now earnings is going to be critic lip important as well. and this becomes more of a revenue game in 2014. >> earnings are good. 77% of companies have beaten the street, but nobody cares about estimates. top line is something you can't manipulate. 70% of companies have beat up on the sales side. >> correct. that's going to be far more important. so when we see what's happening in the markets right now, there's a melt up and a good portion of this is that the revenue line is creating pleasant surprises. >> gdp would matter as we get an idea as to whether the first quarter was a complete one-off because of the weather. >> the consensus is like plus 2.8. i think we are a little lower than that but not a lot lower than that. from our perspective, the first quarter was probably non-illuminating because of the winter. looking at the annual number of april to april may be helpful

for the annualized number. but when we look at relative gdp growth, we have what's happening in europe. they are growing, even at the low rate in the united states, up 2%. europe is growing at a third of the rate as well so investors see that growth and revenue are coming relatively out of the u.s. in the developing market. >> i imagine you get a lot of calls to hear the markets are doing well at record highs, i've made my money back after the financial crisis, maybe plus a little bit, if i stayed in stocks, why should i stay in stocks anymore? >> well, depends on your timelines. we do long-term, strategic asset allocation for five years plus. the one to three-year period and then 12 months and shorter. so we have to get a good feel of what you're trying to accomplish as an individual. >> if i'm 35 years old, you say to stay in stocks because my timeline is 20-plus years. >> if i'm 2 years old, what do i

do? >> what are you trying to accomplish there? tactically, we think there's going to be a melt up in the rates near 2.7% in the ten-year by the end of this year. equities will be flatter from this point to the end of the year, but security reflects in bonds and stock securities is important. so globally security selection, active management is going to account for a lot more going from a beta to alpha in 2014. >> thank you for the greek letter there. >> thank you. when "squawk box" comes back, we'll look at driverless technology. plus, brains versus brawn at the box office. find out more right after this break. and startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure.

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welcome back. we have been watching the u.s. equity futures. stocks were down on friday, but for the week it looked to be a mixed market. there are some red arrows but these are barely climbing at this point. the dow futures down by 5.5 points. the s&p 500 futures down by 1 point. the nasdaq down by a half point. and in the battle of brains versus brawn at the box office, the title goes to "lucy." the action movie starring scarlett johansson to beat out "hercules." this is the universal film part of the comcast family as is cnbc. >> there you go. you haven't seen the movie yet. >> i went to the first movie in

five years. i just don't go to movies, but i final lip went and saw the movie "shepp." it was spectacular. i would have seen it the next night. it was funny. robert downing jr. is in it, scarlett johansson, sofia vergara. i actually watched it to sound off. and when we come back, german maker audi is showing off pretty cool technology. and governor rick scott is going to join us right after the break here on "squawk box."

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welcome back to "squawk box." audi is taking its new automated car on the road. we have rick scott joining us right now with more on this. governor, great the see you. tell me this, when audi came to you to say we want to do this, what was your threshhold in terms of safety for your decision to say, okay, let's put these vehicles on the road? >> well, andrew, first off, you know we'll have 100 million tourist this is year. we want more people to come to our state with technology jobs. so in 2012 we passed legislation for one of the first three

states to say you can do the testing on our roads. my focus is to add more technology jobs. so when audi was talking to us, we said, we want you to bring your research here. so jobs here. it's exciting day. going to be exciting to be on the highway today in the audi, and see how it works. >> now this is the beginning of sort of an autonomous vehicles in your state. phil, tell us about how this is going to work. are you going to -- you don't have to hold the wheel? >> you don't have to hold the wheel. that's right. so the car essentially uses about 20 or so sensors, and it's able to get on the road, and essentially process all the information around it. and it's able to make some decisions within that driving environment, up to about 40 miles per hour. >> now, one of the things i was reading, inside the car, i think this is a great new technology that could be added to any car right now, it actually looks at you. the camera looks at you, and your eyes to see if your eyes are closed, if you've fallen asleep and after five or ten seconds it starts beeping and going crazy at you. is that a technology which we

could see in vehicles before we ever get to a true autonomous vehicle? >> yeah, i believe so. the first portion of autonomous driving that we see as about five years out, and a lot of the technology that we need for this is already there today. which includes all the sensors that you mentioned. which is why it's so important now to get on the road and start testing this in real world environment. >> one more technology question. what happens if you're wearing sunglasses or even regular glasses. can it still see if your eyes are closed? >> we are working on things that will essentially get to that level. today, it's mostly focused on the eyes. we will obviously be evolving that even further. >> brian sullivan here. question, the technology is amazing. the promise is amazing. but are the insurance companies going to allow this? they seem to be longer-term the big stumbling block. if there's a wreck they need to

know who is liable. that's the way the industry works. where do they stand? >> well on the insurance companies what we're doing is we're going to make sure we're the state where you can do the research. and when then companies like audi will work with the insurance industry, and in our office for insurance regulations we'll work with them. but what we want to do is we want to be the leader on research. we've been the leader on tourism. leader on ports we want to be the leader in technology now. that's why i signed that legislation in 2012 to get these jobs here. >> governor, i want to go back to ask you the first question i asked, goes back to sort of the threshold on safety and as a state what you've done to research what audi and others are doing. i know because i've heard folks from audi say it before, folks from google say it before. the one thing they worry about most, god forbid that there is an accident and what that does to the entire moment of autonomous vehicles. so what has the state done before allowing this, given that there's going to be research effectively being done by humans

on the road. >> well, we'll be doing,s through our florida department of transportation, companies like audi will work with them to make sure it's safe. they're not taking -- they're not taking a lot of risk here. right now they have a driver behind the wheel. so they can take control of something. but they'll be doing this incrementally. it's something that, as phillip was saying it's going to take time, over time. now i have grandsons, and i can't imagine that they would probably get to do this where there's no driver. but my big focus is get more of these technology jobs here. we've added over 600,000 jobs. i want more jobs in florida. >> and in terms of the jobs, and audi in particular, how many jobs are being -- are going to come to the state, and to the extent that there is an ecosystem around autonomous vehicles over the next two, three years, do you see a pull to florida? >> here's my experience.

we, we're the leader in simulation in the orlando area. we got everybody to come down and do business in that area and eventually added a lot of jobs. i look at this the same way. start with the research and technology here, and then they'll add more and more, companies will say this is the place to find the talent and my goal is hopefully we'll have the advanced manufacturing here, also. >> governor i want to throw a completely different question out at you but it really goes to the issue of companies going and competing at the different state level for business, that you've done very well competing for that business. we now have a lot of companies that decided to leave the country, forget about competing on the state level, they're competing on the country level, and i'm talking specifically about inversions. the president last week says while these inversions are legal, he says they are wrong. where do you stand? >> here's where i look at it, i'm competing with texas and other states and i've got to make my structure for companies to be successful better here.

lower taxes, less regulation. that's what i've done. our country has to do the same thing. we can't have higher corporate stacks rates than the rest of the world or more regulation and expect companies to prosper here. they're that going to. as a country we've got to compete globally. we've got to reduce our corporate taxes. we've got to reduce our regulation. we've got to be the best place for a company to build businesses just like i'm doing here and that's why we've added 600,000 jobs in 3 1/2 years. >> right. governor we want to thank you. filip we want to thank you. governor are you going to hold onto the wheel? are you a little nervous at all? >> i'm not nervous at all. it's going to be a lot of fun. >> how long a drive are you going on exactly? like a 15 minute thing? half hour thing? a 10 minute thing? >> i think it's about -- >> about 15 minutes. >> okay. >> it's going to be fun. you guys, you guys should come down and do this with us. >> governor i want you to test it. close your eyes or five to ten seconds, see what happens.

>> see if it works. >> appreciate it. >> thanks. when we come back this morning, we will have more on the deal of the day. family dollar and dollar tree. plus inversions. the corporate tax debate and global risk. all in a day's work for politico's chief economic correspondent ben white. he joins us for this conversation. he's our guest host this morning. "squawk box" will be right back.

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comcast business. built for business. the heat is on. no summer slowdown this week as the markets prepare for earnings. a fed meeting. and second quarter gdp figures. all leads up to the jobs report on friday. turning up the heat on russia. the violence in ukraine raising the tension levels in washington and across the eurozone.

what kind of economic weapons does vladimir putin have to fight back against sanctions? >> treasury secretary lew lashing out against inversions even as another deal to save on taxes emerges. the second hour of "squawk box" begins right now. good morning, welcome to "squawk box" right here on cnbc, i'm andrew ross sorkin, along with becky quick and brian, joe is off this week. politico's chief economic correspondent ben white is with us. he's our guest host for the morning. thank you for being here. >> good morning. >> take a look at futures. you're seeing some red arrows, marginal red arrows. a little over a point in the nasdaq, call it close to unch.

2.47, if you're looking for a mortgage, not a bad deal. a big deal across the wires this morning already on merger monday. discount store chain dollar tree buying rival family dollar stores for $74.50 a share. that's in cash and stock. it represents about a 23% premium to family dollar's closing price on friday. >> take a look at dollar tree. it's interesting that stock is up 7%, too. we've seen a lot of that with the m&a activity even the acquirer stock tends to rise on the announcement of many of these deals. family dollar, obviously up 22% just what the premium was. >> in part i imagine the release talking about saving annually as a result of that transaction which means store closures and the possibility of layoffs. we will find out. i imagine more about that. in other deal news, we should just have like a bug that says inversion news. hospira is in talks to die

danone's med tal nutrition arm at close to $5 billion. it could be another inversion deal as the tie-up would allow hospira to move its tax base to europe. and speaking of inversions and the big trend, treasury secretary jack lew is calling once again for an overhaul of the business tax code. he's got an op-ed you should check out in "the washington post." lew calls on congress to pass what he's calling retro active anti-inversion legislation as soon as possible. he writes in part, quote reform will make the united statesen even more attractive place to do business and make sure capital and talent are allocated more efficiently in pursuit of high economic returns rather than low tax bills. and of course you guys have that great conversation after i went off to jury duty last week with mark cuban on this topic. which seemed to get a lot of buzz. >> he had some interesting thoughts. he called in, i should report out from his hospital bed, he just had hip surgery. hip replacement. and his thoughts were that this

was not the most important issue we should be focusing on. that he thinks, really streamlining things, getting rid of a lot of the red tape, that to him is more important as someone who is an entrepreneur and someone who deals with many entrepreneurs. he thinks this is slowing down things. in fact, our own steve liesman addressed the inversion concern with president obama himself last week. >> we reached out repeatedly to both democrats and republicans, and our argument is simple. if we lower corporate tax rates, and close loopholes, there's going to be more certainty in terms of what corporations pay. so there's a whole bunch of good reasons why we should do it. >> joining us right now to share his insights is jim gillmore the former governor of virginia, also the president and ceo of free congress which is a research institute and policy education organization. also with us our guest host this morning, ben white. governor gilmore, thank you for joining us this morning. >> thank you, becky. >> so inversions have been a hot topic at least here for the last

several weeks, if not the last several months. what do you fwhi the entire issue. >> you can't really put a berlin wall around the american economy. that's just not real. and it's not the best way to do things. the real challenge here is the fact that the united states has the second highest tax rate for corporations in the world. so what do you expect? i've seen this myself. companies are in a position where they no longer compete up the street, they now compete globally. that means if a global competitor pays a global tax rate in ireland or the middle east or some place of that nature, naturally, they're going to be noncompetitive, you know, with these companies. they've got to move off and get a lower tax rate. >> it's kind of crazy to think of companies moving to france to get a better tax bill. >> well, france is one of the higher ones, becky. but the point is you've got to lower the corporate tax rate in america to make us competitive with the rest of the world. >> president obama has said that that won't make its way through congress right now. that they cannot find some sort

of agreement between the left and the right to come up with a new corporate tax bill. what do you say? >> i say congress should not compromise to make bad legislation. what we need to do is have a genuine growth policy in the united states. and becky, we do not have one. your guest larry kudlow is on here all the time talking about the importance of growth. i agree with him. we have to have a growth strategy here in the united states. and we do not have one. >> i don't disagree with you. we need corporate tax reform and you want to make this as attractive a place to do business as humanly possible. back in 2004, president bush passed legislation that prevented companies from doing effectively what we're talking about, inversions. people who back then were doing mergers. they were saying i'm going to pretend i don't live here anymore. going to set up a p.o. box in the cayman islands and that ended up happening. and we stopped that. because people decided unto itself was wrong. >> the president is talking about corporations being unpatriotic.

they're trying to do business in a competitive way around the world. that is trying to change the culture in a bad way. that is a wrong way to be thinking about this. we need to reduce the corporate tax rate. corporations are patriotic. if they're succeeding, if they're hiring people, if their enterprises are successful, they add to the strength of the american economy, andrew. and that's the direction we have to -- >> but you're not bothered by the idea that the ceo of a company -- that basically a company is going to pretend they are based in another country, even though the ceo is going to stay here, the board's going to stay here. the headquarters are going to stay here, which is oddly good for america, and yet we have pharmaceutical companies, by the way, who are going to accept our medicare part-d payments -- >> andrew, every company in america is based in wilmington, delaware. every single company. >> and they're not actually -- >> and nobody's in wilmington delaware except for one guy collecting the mail. >> can i make one point about bush taxing the thing in 2004 to stop that. what we didn't do is create inversions. if we stop inversions we're going to create a situation where foreign companies are just

going to acquire u.s. companies. every time we band cade fixes it gets course. >> maybe the foreign companies will buy us. if they're actually buying us for real that's different than us buying these tiny little itty-bitty companies that -- >> it is the bad american law which is causing this kind of effect. companies have got to be competitive internationally. they've got to be competitive with people on a global marketplace. we've got to have a growth policy in this country. and -- >> i'm not disagreeing with anything you're saying. i'm wondering is there anything to be said -- >> of course there's something to be said -- >> is there anything to be said about companies in america that are effectively producing these deals just to lower their tax rate? >> i say stop that kind of thing from happening by creating an appropriate tax code in this country that creates growth just the way -- >> the problem is you have many companies that have already done this. if you're competing against those companies and you're not doing the same thing, you're at a distinct disadvantage. >> the fault is not cwith the companies. the fact that president obama comes on and says regularly that i put forward these proposals on

tax reform. max bachus in the senate, senate finance committee detailed proposals that had bipartisan support, the white house did nothing to support them, the reason they didn't support them is they want more revenue. they want to raise taxes and republicans aren't going to do that. and they're not going to do corporate tax lowering proposal -- >> i don't understand why there's not a way to do a revenue neutral to improve corporate tax policy. >> well, i don't think we need revenue neutral right now. what we need is a tax policy, and a growth policy in this country that actually builds up economic activity, and builds up employment, and gets people working again. and you do that by reducing the corporate tax rate, by reforming the tax code, and stopping all the bad things -- >> governor, what's wrong with revenue neutral? because the democrats at this point want to raise taxes under it. if you can do revenue neutral you have companies right now that are not paying anywhere near 35%. you have other companies that would be paying less going under it. but to me it's a fairness issue, too. if you're a small business you can't get around all of these tax loopholes -- >> that's absolutely right.

and free congress our growth code proposal says that you unify all business activity under one umbrella and charge a flat 15%. if you do that, you're giving -- >> 15% -- >> in 25%. >> it doesn't have to be 25%. it can be 15% if we do a really aggressive program. >> if it -- >> governor, is it impossible politically? here's the problem with taxes is that taxes are so complicated, people have trouble understanding the effective rate versus the actual rate. i asked a friend of mine and his wife what they paid in taxes. and she kind of went like this, we pay 25% in federal income tax every year. i said no you don't. that's impossible. she goes oh, it's 25%. her husband said it's about 2%. he had just done the taxes and after deductions. we look at the head line rate versus the after sort of deduction rate. how hard of a sell is it politically, for even the president or anybody, forget about what party you're in, to say to the american people, we're going to lower the corporate tax rate, which of course then people pounce on you and say -- they're not doing

their quote fair share already because people do the effective analysis, they say you're only paying 7%. the head line may be 28%. it's a hard sell. >> we need presidential leadership to change. presidential leadership would make the point to the american people that if we build up the american economy, we get the corporations going, we get small corporations going. we get small businesses going. you can employ people. and what people need in this country is an opportunity, a career, a future, a job, a career path, we're not doing that right now for young people. >> all midterm politics anyway. this is never passing. there's no way congress is going to do inversions. it's the president trying to get populous going into the midterms because his numbers are bad and he needs to get support. >> ben i absolutely agree with that. but the bully pulpit could make a big difference in the future of this nation. we're not getting it out of the president right now. >> a quick feel-good note. governor, congratulations, richmond, virginia, named the happiest metropolitan area in the united states. >> that's true. >> on a variety of indexes. charlottesville, the happiest small town.

and virginia, 2-2. >> and home of the university of virginia. >> which, by the way, stinks. >> and the president -- >> go hokies. >> go hokies. >> all dirt roads lead to, i guess -- >> governor gilmore thank you very much for joining us today. >> thank you. >> when we return the weapons of economic war. what is russian president vladimir putin have in his arsenal to combat sanctions? we're going to talk about that when we return. and "the new york times" says it should what we should all spark it up, that's what they're saying sparking a debate too. the latest call for legalizing marijuana next on "squawk box." we started zya with the thought

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welcome back to "squawk box," everyone. in our head lines this morning, virgin america has filed for it's u.s. ipo. it's partly owned by sir richard branson. barclays and deutsche bank securities are the lead undermiters. >> that's amazing, by the way. that a new airline is having an ipo at a time only because a couple years ago people thought it was impossible to start an airline. >> that tells you how different things are in the airline business. it's become profitable with the fees they can rack up, with being more tightly operated. with getting control costs. >> changing fortunes. >> that airline -- >> it's pretty fantastic. >> i don't know if they're making any money. >> don't they have bars? >> that's virgin atlantic.

on virgin america no bar. in geopolitical news, satellite images show russian forces are firing rockets and heavy artillery into ukraine and pro-russian rebels. meantime sanctions imposed by the west are continuing to stir up tensions in russia. joining us will sparks director of global macro group. good morning to you. >> good morning. >> play out the permutations here for the rest of the summer. the next month, august. what happens here? what are we -- what do we, the u.s., do, what are we going to do? what are the europeans going to do? and what's going to happen in ukraine? >> first thing is this week we're going to see an intensification of sanctions. on russia. finance, defense, and energy. this -- these reports that you're seeing, the u.s. saying the russians are doing this at the border, they're firing that across the border, this is laying the groundwork for the next round of sanctions. it's happening in germany. and across europe, as well. the groundwork is being laid for tighter sanctions, one step closer to sectoral sanctions which we may see by the end of fall. >> and the sanctions are having

what impact? because it feels like none at the moment. >> they're not having -- they're having an effect probably on the russian economy but it's going to be a slow burn effect. it's designed to be a slow burn effect. in terms of russia's approach to the conflict itself it's not having any effect. it may be having the opposite effect of making putin more determined to push his whatever is left of his advantage in eastern ukraine, and so, for the beyond this week, and for the rest of this summer, you're going to see an intenzification of the fighting, because mr. poroshenko, the new president of ukraine, has to demonstrate to his people, in western and central ukraine, that he's not going to back down, either. so, you're going to see both sides intensifying the fight. and donetsk, and all along the border. >> you were advising the united states, the president, what would you be telling him he's supposed to do? is there something we are supposed to be doing that we're not? >> over the medium term, you know, you do have to, if you're from the american point of view, you do have the raise the cost

to russia of everything that they do. but really the game is what you can do for the new ukrainian government? can you keep ukrainian economy on track. can you keep them on schedule with the fife? can you slowly continue the progress that ukraine wants to make forward europe? that's what frightens the russians most, and that's ultimately what the u.s. and eu would like to see. >> look over the weekend there was even talks about whether america would be more involved, not just giving specific intelligence, but even providing things to fight back, trying to shut down some of the russian supplies that have been coming in. is that something that's possible, you think? >> no, not really. not if we're talking about the actual flow of artillery across the border because that would require boots on the ground. you're just not going to see that from the u.s. or the eu. again they're going to try and raise the costs to russia of everything that putin is doing, across that border. but you also have to do what can you to bolster the new government in kiev.

>> sanctions on gas, is any of this really effective? >> well, over time. first of all, you know, just looking at the energy picture. no, they're not going to go directly for gas. the europeans obviously want to avoid that at least for the moment. but if the -- if the russians are going to continue to profit from the sale of oil and gas in years to come, they're going to have to move to tide oil, to deep sea exploration, and into the arctic. they need western technology to do that. cutting off the flow of western technology again has that slow burn effect on the russian economy. that the u.s. and the eu can threaten -- >> we were just having a conversation about tax inversions. one of the reasons that other countries can offer more favorable tax rates is that they don't have giant militaries that police the world. but they probably should. where is europe in all of this? why is the u.s. still being called on in this situation? we keep talking about the impact on europe. well where are they in trying to solve the problem, and police the problem?

america can't go being the police force for the world. >> sure, absolutely. >> we'll go broke. >> and there's really not even a role for nato in this at this point. where the eu is, is in upping sanctions in areas that will hurt individual economies. the brits have vulnerabilities on finance. the french on arms. the german and italians on energy. so, they're trying to do this by limiting it to sanctions. the reality is, the europeans don't want to do any of this. the europeans don't want any confrontation with russia. but because the russians are not backing off, and i would argue the russians have overplayed their hand on a consistent basis, they're essentially forcing the europeans to do things that they really don't want to do. >> but isn't it true basically that no impact is going to be seriously felt in the near term on russia unless, as becky suggested, there is, you know, you hit gas coming out of russia to the european economies that buy them and there's no way europe's going to do that so what we're going to see are pr moves by europe to see like they're doing more in terms of sanctions but in reality they're

not doing anything that's going to have any near-term impact on vladimir putin. >> instead of pr moves, it's a little stronger than that. it's credible long-term threat. and that does perhaps create pressure underneath putin in russia to change course. will putin change course? i really don't believe that he will. but i do think that you're seeing growing pressure in russia, former finance minister alexi kudrow made a strong statement last week saying we have to be careful in russia not to completely isolate our economy. so to the extent that they can create some division of opinion within the russian government, that might help over time, putin is completely in charge, and he's not backing off for the moment. >> i almost wonder if a more effective strategy would be doing more concrete measures to try and make sure that we could export natural gas to europe. as a backup method. >> there have been some steps to make it possible once the u.s. is exporting, to be able to integrate the russian gas network so that you can reverse the flow, for example, from west

to east. so that you can shore up vulnerabilities in eastern europe that will help with that over time. but that's a long-term project that's not going to be something we'll see this year. >> well, at least sounds like mr. putin is the winner at least in the short term. i suspect you argue he's going to be the loser in the long-term. we'll see. thank you for coming in this morning. >> pleasure. >> coming up on "squawk box," gray lady says fire it up. "the new york times" gets into the national debate over legalizing pot. we're going to bring that marijuana debate to "squawk box." next. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.

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"the new york times" grabs some attention this weekend calling for the federal government to repeal its ban on marijuana. in an editorial the paper compares the outlawing of the drug to prohibition of alcohol in the 1920s and 1930s. i don't know guys. around the table, what do you think? i think this is a step too far. >> i completely agree with you. you can drink socially. you can have one cocktail and be fine. you can't take one toke on a joint and be fine and you're going to be stoned. i say weed is whack man, don't legalize it. >> i agree.

brian i know you have a different opinion. >> first off i think it should be left up to the states. >> which is what the editorials suggest. >> we are a federal society i think, but that said, yeah -- >> legalize it -- >> no, no, no. >> i do not want -- >> listen i'm not supporting -- there's a difference between saying legalize something, and supporting the usage of that product. >> here's the other -- >> you can't even measure if somebody is under the influence. there's not a dwi test so you could say here's how much, you're above 0.8 or whatever it is. >> you know that in -- >> listen i agree with all that. i agree with all that. i'm not saying use it. in 1970, 16% of people in federal prisons were in for drug usage. >> okay. >> now it's 50-plus percent. >> so let them all go? >> costing taxpayers billions and billions and billions of dollars a year because somebody is out selling -- >> -- guidelines and other

measures to deal with the incarceration problem that are short of legalizing marijuana so anybody can smoke it. >> because andrew is -- >> because of the fact that pot is illegal -- >> i'm going to weasel out of this one. all i will say is when i was in aspen, as it were -- >> oh, my god. >> -- buying lollipops, pot lollipops and walking down the street with a lollipop. >> i'm just going to say this. to assume that it was illegal has deterred usage is completely wrong. i mean, okay. >> but it's deterred -- >> what percentage -- >> the fat that it is illegal -- >> can anybody not drink beer before they're 21? >> no, but i didn't smoke pot. i mean that seemed like a step too far. >> maybe you're the one person. >> she's better than the rest of us. but the fact of the matter is it's going to be a lot more attractive to people if you can

just get a lollipop on the corner and every 14-year-old is getting baked every day. >> oh, no. up next, kurdish oil has made its way to texas. one tanker with about $100 million in crude usually isn't a big deal but this shipment could have broad implications for the future of iraq and stability in the middle east. we're going to find out why, right 56 this. so we're all set?

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welcome back to "squawk box." we've got a bit of a merger monday. this is not an inversion deal. discount store chain dollar tree buying rival family dollar stores for $74.50 a share in cash and stock. that deal represents just 23% premium to family dollars close on friday. also microsoft says chinese government officials made sudden visits to its china offices but a company spokesman declined to give any reason for the inspections. also "the wall street journal" reporting that regulators are now questioning jpmorgan executives in recent months over conflicts of interest. the questions focused on whether the company steers private banking clients to its own investment products paper says the inquiries helped lead the

bank to give more details to clients about the differences between its own products and outside offers. >> i thought it was interesting jpmorgan was targeted here. i just assume every bank pushes people towards its own -- >> i'm shocked that a company would try to sell its own products. welcome to mcdonald's, have you tried a whopper today? >> most of the other banks have actually stopped producing their own products. and so if you are morgan stanley client, for example, you will basically the only offerings are everybody else's stuff. jpmorgan is one of the few institutions that still has its own mutual funds, its own different various investment funds, et cetera. >> but i just assume any time anyone is pushing me towards one or another i figure they get a cut on it. >> you figure that but it's still not proper practice. you have to let people know that they have options and that the internal fund might not be as good for them as an external fund. >> so it's a line of small print that they add to the bottom of things. >> i think it's supposed to be a little more explicit exposure.

jpmorgan will tell its clients we'd sure like to buy you this jpmorgan mutual fund but this one might have lower fees and get better returns. >> i would assume that anybody selling you anything has a vested interest in what they're selling. >> they've got to make some money. >> right. >> anyway a tanker carrying crude oil from iraq's kurdistan region cleared by the u.s. coast guard to unload as a state department official signals that washington would not intervene to block delivery of the controversial crude. michelle caruso-cabrera joins us with more. you were telling us about this when you were in the kurdistan region. >> there's an international mystery brewing off the coast of texas. there is a tanker sitting there, with 100 million barrels worth of crude oil. the coast guard took photos, did an inspection yesterday and provided us with two of them. they applied for the ability to unload. the right to unload. we are told it could very well happen today. this is a very big deal, because this is something that could ultimately lead to the breakup of iraq. even though we are so focused on

the sunni insurgency, when you really look at the situation in iraq, whether or not kurds can sell oil is a big deal. let's remind everybody where kurdistan is. we have a map on the wall. kurdistan is the northeast region of iraq, a semiautonomous region. the kurds have long wanted to be an independent country. there are kurds in turkey, in iran, et cetera. they have not been allowed to sell their own crude oil. >> by baghdad. >> by baghdad, exactly. and baghdad is furious about the fact that now they have loaded up four different tankers, and built their own independent pipeline and started selling their own crude oil. the fact that they might sell this in the united states is incredible, because the state department is absolutely against kurdistan selling oil. they say they are still against kurdistan selling oil. we approached the state department and they say the policy has not changed. iraq's energy resources belong to all of the iraqi people, as in many cases involving legal disputes the u.s. informs the parties of the dispute and recommends they make their own decision with advice of counsel.

they also say this is a private commercial matter. so there's some behind-the-scenes talk, are they winking and nodding to the buyers saying, actually it's all right. even though probably -- >> trying to put pressure on baghdad to come ahead with some of the changes? >> that would be one of the theories that is put forth because they are so upset with nuri al maliki the leader of iraq at this point. is this a way to pressure him to do something differently and being more inclusive instead of pushing the kurds -- >> we're not inclined to take direction from baghdad and from maliki and the government there. i mean obviously we don't encourage the breakup of iraq necessarily. >> right. that's the point. >> keeping a unified iraq. but is it true that i mean ultimately, this is likely to be a fairly autonomous region that will be selling its own products? is this just one step to the ultimate finale of what a modern iraq looks like? >> a lot of people think that. i think if you talk to most analysts they would say exactly that. the kurds would say exactly that. at what time frame will that happen? who knows.

but certainly this is, you know, a key step that they have their own money. >> michelle a lot of people you've talked to suggested iraq is already -- in all but name the country is dissolved. >> yes, but what still hasn't changed is for example when we interviewed the governor of kirkuk if he wants to hire a fire or policeman he still needs permission from baghdad. right. so the way the structure of the laws and the society still is from the time of saddam hussein. we haven't seen, in areas that are still governorable, not the west for the sunni insurgency is we see issues. >> let's get more on the latest moves in energy prices and currencies, joining us now on oil and gas, carl o'leary president of oil outlooks and opinions and on currencies mark chandler global head of currency strategy at brown mothers. carl, you heard the story that michelle just did. it's an interesting head line.

significant to oil prices long-term? >> not significant to oil prices long-term. you know the u.s. is very oil independent. and michelle got a point here. this oil sale, this purchase by the u.s., we come through this kirkuk crude, it's definitely political statement. it's not anything about oil. we don't really take that much oil from iraq. we take maybe a tanker a week. so, buying this tanker, this one tanker this week, means that that's our purchase from iraq. so it's more a political statement. i don't think it makes a difference to oil prices here in the u.s. so much. but if it could and would globally make more of a difference if there's a separation of state there. >> okay without getting too wonky the spread between brent crude in europe and wti has narrowed to the point of almost being gone after being much wider a few months ago. what's happened and what is it saying about the global oil market? >> well, it's kind of a weird thing. what's going on is that we're starting -- everybody's starting to figure out that u.s. is a police state. we're the people who are trying to put handcuffs on russia. you know, kind of watch iraq,

kind of watch israel, kind of watch libya. everybody's turning to us and saying you're going to do this you're going to have to provide us with a lot of products. not so much crude, but gasoline, diesel, all coming here, all production here, and that's why our prices are going up. >> all right, mark. let's go ahead and look at the currency markets. they've been relatively stable. are you expecting the second half of the year to be much more volatile when it comes to the major currencies or continue the trend that we have had? >> i think volatility stays low. but i do think the dollar is at a turning point. last week the dollar finished at its best level against the euro for the year. dollar is also flirting with its upper trading against the japanese yen. this is ahead of this week which is remarkable when you think about the three big events, the fomc meeting the u.s. jobs data and q2 gdp. >> so what is going to be then the most because our viewers and listeners do have so many things to think about, what is the most important one or two things to watch not only this week but the next couple of weeks and months?

>> well i think the key really to the dollar is not so much what happens in europe. they're going to likely ease policy again in september. but, the key is whether u.s. rates request get any traction. you know we're sitting here today with a ten-year yield still below 2.5%. we also don't think the federal reserve raises rates until the second half of next year. these things have to change for the dollar to really get more traction. as the dollar gets traction it worsens the returns of overseas investments for u.s. investors. >> final question, carl. because we had a lousy q1 gdp number. many people expect to bounce back this quarter. should 100 plus dollar barrel of oil indicate to our viewers that the economy is doing well? or is it oil now, because of saudi arabia, its own market, that is really not economically manipulated whatsoever? >> well, i think our crude oil is definitely based on the economics here so we're going to watch the fomc and the unemployment number. demand is really good. it's better than it has been in the past and it's been a hard thing to measure because we

don't import as much as we used to. we're importing about 4 million barrels a day less than we were in 2007 and we had unemployment back at 4.5% back then. so you can tell, demand is a lot better now. but it's definitely going to watch that price, and it will probably keep going higher the more the economy recovers. >> all right. carl, and mark, gentlemen both thank you for getting up early for us this morning. happy monday. we'll see you soon. >> thank you. >> all right coming up on "squawk box," a long-term value investor, bullish on the oil sector. why names like chevron and bp are attractive right now. his thoughts are next. plus, congress looking into a law that would make cell phone unlocking legal. that and pot, i guess, andrew. details coming up. >> what is cell phone unlocking? >> when you buy a phone that doesn't have a contract but you buy it with a contract and then unlock it. that's the problem.

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welcome back to "squawk box." congress has passed a bill that makes it legal to unlock cell phones. yay. so the devices can be used on other carriers. the law undoes a move by the library of congress back in 2012, which made it a copyright violation. became a federal violation, guys, to unlock a phone without the carrier's permission.

change goes into effect next year. that was something -- >> you're saying the library of congress did that? >> yes. >> when did the library of congress get legislative power? >> based on a copyright claim that everything inside the phone was copyrightable and if at&t or verizon had locked the phone, it was illegal, federal violation to unlocked phone. >> did copyright expire? >> the law changed. congress changed the law. did the president sign yet? >> i assume that he would. i don't think he's going to stand in the way of people unlocking their phones. >> however, by the way -- >> any idea that you can't control the inside of a phone you buy? >> so here's the thing. >> i'm sorry you can't change the white to wheat bread we own that white bread until it turns to mold. >> it was a federal violation to unlock your phone. it still would be -- could be a violation of the terms of service with at&t, or verizon or -- >> if you're under the contract. >> if you're under the two-year contract if you unlock your phone and try to switch out they could still decide not to

service you or whatever the fees would be. this is -- >> -- a legal issue? >> it's not only a legal issue it's how on earth would you actually do it? someone like me who is completely -- >> hackers can do it. >> it's not hackers. >> you can do it in about ten seconds. if you were to google unlock my iphone you have your wire, you could probably -- >> we're going to get busted. >> dear government i am a scofflaw. this is an unlocked phone. >> you're going to be carted off the set. >> what did they say, major league -- >> bring that to me, man. >> it's too high. >> he's been smoking the weed again. >> unlocked phone right here. >> unlocked phone and legalized marijuana. >> what's next? i'll drive 56 on the way home. >> this is like a rand paul special edition of "squawk box." all libertarian, all the time. >> but i purchased this legally. >> okay, that's fair. >> all right this morning we are continuing our what's working series with stock picks with long-term potential. kevin holt is senior portfolio manager of the four star invescocom stock fund. he joins us right now. that fund is up 19% on the year and 23% over the last five

years. kevin it's great to have you here today. >> good morning. >> you like the integrated oil companies. that stocks have underperformed the last five years. is that why you like them? >> i'm a value investor. the first thing we lead with is valuation. when you look at price-to-book value on relative basis, it's interesting, relative to the market, the stocks on price to book are cheaper than they were in '82. in '82 you're thinking there was a lot more capital so we go back and study the industry and the amount of capital that was put in kind of '80, 81 because of oil prices. it's quite a bit more than it was today. we think these things represent pretty good value and you say, okay what are the negatives out there structurally and what's good is some of the integrated ceos are starting to get this. so they're starting to sell off some assets. they've been a little irresponsible with capital. >> what do you mean? haven't put enough back in? >> they've put too much. they kind of put too much in. what happened in ''07 and '08 when oil prices went up they started going after every

project in the moon and what they're seeing now is the returns on a lot of those projects aren't what they thought they were going to be. so they're selling off assets, royal dutch is a perfect example. new ceo came in, joined the chemical division, did a great job of kind of making that more efficient. they're getting out. they have a lot of excess capacity. european refining, and they have a lot of dry gas in the u.s., just not profitable. >> so they're selling some of those projects and being much more focused on what they are putting their capital into? >> yeah, so it's fascinating. i'm not a growth investor, but you know, royal dutch does a 4% return on invested capital. if you're a finance guy that's not an acceptable return. the stock discounts two. if they can run rate this profitability level we get 40% upside. if they can get the industry average, about 70% upside. >> who do you like besides royal dutch? >> we like bp too. they were probably the first ones that had to rationalize their asset base because of liabilities. but they're real inexpensive

also. you know 1.2 times book value. discount similar type thing as royal dutch. not quite as much upside. >> when you look at the turmoil around the globe, particularly in the middle east, how does that factor in to your thesis for these stocks? >> what could be a positive short-term yet we have 3.2 million barrels a day that come out of iraq. most of it is in the south. but you know, if you do get disruption, oil prices are going to spike which would be great short-term for the stocks but horrible for the stocks long-term and horrible for the world economy because it's going to drive us into probably a recession. so you know structurally i think we're okay but political instability is always something we have to keep an eye on. >> we mentioned chevron in the tease. do you like chevron? >> i do. i think of u.s. companies and they're a little more expensive. chevron is a little bit different stock in that they've been investing in a lot of projects over in australia. so they have, you know, wheatstone coming out in the next couple years. they have a little bit better

growth than some of the other stocks. it is pretty inexpensive stocks. we own it. we like it. not quite as inexpensive as the foreign guys but we think it has pretty good prospects. >> how much does the global macro economic picture play in here the u.s. recovery, global economy, growth rates, how does that impact your thesis? >> typical holding is four to five years so not really trying to predict where the economy is going to go. with that said, i think the economy -- i thought q2 would pop back a little bit stronger than what it has. it appears to be weaker when you look at retail sales, really all the way from nordstrom to a kohl's to a target something you have to keep an eye on. obviously energy is going to be susceptible to that. the good thing is it appears china and emerging markets are picking up a little bit. >> what is the biggest risk? >> i think the biggest risk is going to be, you know, these guys pull back on, you know, selling these assets. i don't think they will. from a macro standpoint obviously, political instability

would be detrimental to the sector, long-term even though we do a short-term spike i'm not looking for 10%. i want 40%, 50%. >> kevin, thank you very much for joining us today. >> appreciate it. >> thank you. coming up, jack lew, pressing congress on tax reform and a "washington post" op-ed. we got those head lines and much, much more in the monday edition of politico's morning money, we're going to discuss some of those stories making head lines next with guest host ben white. check out the futures right now. see what's happening right there. we do have some red arrows.

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welcome back. let's get to our guest host, mr. morning money him self ben white of politico, hear what's on his radar for the week. i've been going through the morning newsletter which everybody should get a copy of. you picked up a story, actually "the new york times" upshot that the gop has a 60% shot at the senate right now. >> yeah. the "journal" actually had a piece. >> similar. >> on the gop prospects looking up in the senate. i think the upshot for senate is only a slight increase from before like 54%. republicans have done a good job of nominating fairly main stream candidates. they don't have a todd akin this time around. somebody's going to scare off a lot of voters in these key senate races they have some pickups that are going to be relatively easy for them in montana looks like they might gain a seat. democrats are defending vulnerable territory, louisiana, states republicans have made

inroads in. i think the odds are on a republican takeover of the senate unless the economy picks up a lot the second half of the year. democrats might benefit from that. we'll find out about that this ex. >> exim bank. where does this whole debate stand? >> you missed the great aei debate last week where we hashed these things out. >> in d.c. >> it's one of these deals where there are very good arguments on both sides. i didn't come out feeling very strongly, in terms of the politics of it, what's going to happen, i believe it will get reauthorized probably in a continuing resolution to fund the government after september 30th but it may be close and republicans are getting nearer their goal of wiping this thing out as crony capitalism. >> i want to go back to the senate race. trying to get the stat, i couldn't find it. something like of the 14 major races, senate races, gop needs eight, nine of the races of the 14 were in states won by romney. >> right. that's what i'm saying. >> does that play well toward -- >> yes it plays well towards the

republican goal. >> so andrew dropped the 60% number from -- >> the upshot. >> based on survey of polling. >> do you believe that's conservative? >> no i think it's a little conservative. i've been pretty consistent in saying odds are pretty strong republicans get the seats they need given the playing field. the thing is it could very well flip two years later in 2016 you've got republicans all of the tea party republicans elected in 2010 are up in 2016. they could get the senate for two years and lose it again in 2016. that's why you don't see democrats totally freaking out about this idea of losing the senate because they think they'll get it back if they do. >> how would that change the calculus in washington? >> it would put more pressure on obama, i think, to make some deals with republicans. because they're going to be getting stuff to him now. the senate will be less of a block of anything that comes out of the house. it will still be harder because they won't have a supermajority but there's going to be more stuff coming to his desk. >> we actually get tax reform? >> possibility of a tax reform

proposal. he might be more inclined to take something that's revenue neutral. right now he wants more revenue somehow through any kind of tax deal. he's not going to get that with a republican senate. >> would he get would he get would the republican senate pass a revenue neutral bill too that -- >> i think it would. >> -- surprised to hear him saying no way. >> i think he wanted to dial that back after he said it the first time. i don't want to get into his head but i think he was thinking of something that increased revenue. i think republicans would be happy with a revenue neutral bill. >> revenue neutral as scored by the cbo. there has been argument you'd raise revenue depending on how you -- >> there were debates over that. but certainly scoring questions, and the revenue impact. but if there was one issue i think that's impacted by gop takeover of the senate, still control the house, obama in the white house is pressure on him to sign a tax reform -- >> i'll tell you what, six years ago we were talking about the destruction of the u.s. economy. millions losing their homes. millions unemployed. now we're talking about the reauthorization, the

export-import bank. >> it's an odd thing to be caught up in. >> it's got to be bad for democrats because the big sort of social issues >> right. >> seem to be easing themselves out. jobs are up. >> right. >> we still got a lot of problems and we will always have problems. some of the big things that they could hammer on are easing back a bit. does that play to the gop's favor? or can they say things are better because we made them better? >> trying to make that argument. the interesting thing on all of those indications, stock market, jobs, down to the benefit of the president, his economic approval rating is still very, very low so he doesn't get credit for any of these improvements. >> i think it's because of wages, because wages aren't up. people don't feel that great about their situation. they don't think their situation is going to improve. nobody votes or decides whether they like the president based on a number, a 6.1 or 5.9, they say am i making more money? >> net household wealth still i think 30 -- plus percent below where it was a decade ago. >> exactly. >> mr. money, thank you. >> the 8:00 hour. >> all right. when we return it is a huge week

ahead for the markets, including a two-day fed meeting about 140 earnings, you got the jobs number on friday. and coming up we're going to talk all that and interest rates with goldman's bond guru who says investors should steer clear of the shorter-term bonds. we're going to find out where he thinks you need to go coming up. from 2000 to 2011, on average 17 manufacturers a day shut down in america. there's no reason we can't manufacture in the united states. here at timbuk2, we make more than 70,000 custom bags a year, right here in san francisco. we knew we needed to grow internationally, we also knew that it was much more complicated to deal with.

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good morning, again, everybody. welcome back to "squawk box" on cnbc. first in business worldwide. i'm becky quick along with andrew ross sorkin and brian sullivan. joe is off this weekend. or this week, let's make that. in studio sharing his thoughts this morning is ben white, politico's chief economic correspondent. it's great to have you here today. >> always a american your. >> we've been watching the futures this morning, and they had been a little bit lighter this morning. you see the dow futures down by about 17 points below fair value. s&p by 2.5 points. watching all of this last week we did have a mixed week for the markets. >> you do air on the weekends, 7:30 eastern time on sunday evenings "on the money."

dollar tree is buying rival family dollar stores for $74.50 a share in cash and stocks. big deal this morning, represents about a 23% premium to family dollar's close friday. nelson peltz trying a major holder in family dollar. that firm also had a board seat to us this morning they sent us a statement, the firm saying they're going to be voting in favor of it, believes the combination with dollar tree represents the best path toward. family dollar is a great outcome for all the companies' shareholders. they do also say that they're going to be saving $300 million annually after the third year once this deal is complete. >> we also pointed out a big win for carl icahn. the single biggest holder -- >> john paulson smaller about 2%, icahn and this is as of the last filing date about 9% so another big win. >> piggyback on to mr. nelson or carl. but i think jim cramer said you do much better pig bybacking on peltz necessarily than carl.

>> i think the other angle, what we talked about with becky earlier this is now, i know, not on a square footage basis but from a store basis this combined company has more stores now than walmart. >> all right. but we need to put that into context. it's 11,000 stores is walmart and that's, in 27 different countries. this is 13,000 stores in the united states, and in canada. but if you look at sales, it's really much more telling picture. this is $18 billion. versus $476 billion last year. >> they're right. there are more stores but they are smaller. >> just saying, it may alter the deep discount landscape of it. >> could be. you're right it does give them a national foot print, too. >> i'm glad to see carl icahn is making a little money. the guy never made any. so he's doing well here. >> let's tell you about some other deals. international ash tags panel in the hague ordering russia to pay more than $50 billion damages in

the defunct giant yukos. saying vladimir putin manipulated the legal system to bankrupt the country. shares in rosneft falling on that news. acquired most of the assets of yukos in auction. tyson's quarterly profit falling short of estimates as margins tight and revenue beat the street meantime the company announcing a deal to sell chicken operations in mexico and brazil. tyson reached an agreement to buy hillshire earlier this month. the united states and united nations calling for a durable cease-fire in gaza today. the israeli army says it will only fire in response to attacks. nbc's martin fletcher joins us from tel aviv to help us sort out the latest. martin, good morning. >> good morning. israel and hamas on knife edge at the moment. there's a cease-fire in place, kind of, but not recognized officially, or stated officially by either side. there was a talk -- there was a call last night. a phone call from president

obama with israel's prime minister netanyahu, rather sharp call demanding that israel institute a humanitarian cease-fire right away. hamas also put pressure on hamas, too. now what happened is that there's no cease-fire officially, but, both sides are ceasing fire to an extent but there have been five palestinian rockets fired from gaza into israel. israel's responded a few times through those rockets. but essentially each side is standing back. what they call here quiet for quite he. israel says they will only respond to rocket attacks from gaza. they won't initiate any fire. we're waiting to see if the cease-fire really will slowly take full effect which of course would be a major relieve for citizens on both sides of the border in particular on gaza where they've had over 1,000 dead. 6,000 wounded. and in israel people living under great tension or stress because of the bombardment of rockets from gaza.

2500 rockets. although secretary of state went back to the united states pretty much empty handed in terms of the proposals he had made for a cease-fire. nevertheless that call from president obama which was backed up by a call from the united nations security council for an immediate humanitarian cease-fire is having an effect and it is possible, we're all hoping of course that the rocket fire will peter out as it, in fact is, and a cease-fire will take hold. hopefully permanently. as you mentioned from the very beginning we're on a knife edge waiting to see what happens. >> martin thank you. martin fletcher joining us from nbc. let's get more on the global markets and the fixed income space write now. joining us is john byner, cio of goldman sachs asset management. still with us ben white from politico. john, thanks for joining us. good to see you here today. >> thanks for having me. >> i want to talk about what you think about what's been happening with bonds, with the treasuries, in particular. you look at the ten-year and you're still looking at yields

of less than 2.5%. i know that things are getting better in the economy. the fed has to see all of this. but how quickly do you think they'll be raising interest rates. and i ask you because i think you disagree a little bit with what pimco's been doing. >> well, look, the way we think about this is, the economy is healing. yes, we were calling for 3% in the first quarter. we got 3%, of course it was negative 3% but we'll -- the data that we're looking at now in terms of current activity is actually consistent with 3% plus and we think we'll get that for the remainder of the year. when you think about what the fed is saying in their projections. they are saying that if things go along the path that they've been on, they are going to start to raise interest rates next year then they say they're going to raise them gradually in future years. we think they will start to raise interest rates next year but when we're in the midst of an environment that looks like close to full employment, and the economy actually going along at a pretty good pace, not boom

pace but something that looks like 3% they're going to raise rates faster and so the market is essentially pricing in less hiking than the fed is saying and we think they're going to do more. ten-year rates at 2.5% we think is not so appealing. we would look at bonds significantly below 3% because we think we're going to see a fed funds rate sometime in the next couple of years. >> couple of years? >> and so, but the fed is saying, they're saying we're probably going to get to two-ish percent we think they're going to move a bit faster. >> you're saying don't listen to what the fed's saying right now. you have to look at the realities. do you think inflation forces them to go faster? what is it that you think makes them move more quickly than they're letting on right now? >> the fed does forecast the future just like the rest of us. so historically the fed actually is tries to be preemptive as it relates to choking off inflation. if you look at what's happening in the last few years they've

consistently, and many of us have consistently forecast an unemployment rate that's higher than what we've got and fallen faster. growth and inflation have actually surprised to the downside, as well. but more recently, inflation has actually started to pick up. the fed is in the last projection, actually increased their inflation forecast. not the scary levels, but to the point where they're closing in now on what their targets are. so our view is, a year from now, they're going to be looking at an economy that looks close to meeting their dual mandate, and then, in fact, yes, they're going to raise rates, faster than and historically when you look at forecasts, even from the fed, prior to tightening sickles when they actually get into it they do, in fact, do more and they do it faster. >> so you think they move first mav of the year by march, start raising rates? >> we would say march is a possibility depending on the data, probably more conviction by june or july of next year. so that's not so different than what they're forecasting. not so much the start but where they get to. if you're living on a bond that

matures in five years, significantly below that 3% threshold the five-year treasury yields around 1.7% today 73 so if you own a two-year that doesn't yield much but matures in two years you're probably okay. but a five-year maturity that yields 1.7 when we think the fed funds rate in two years is going to be that or higher you're talking about potential losses there. so we suggest to investors, don't just look at today's yields, look at where yields are heading, and the fed is telling you, they are going to move off zero. >> with all due respect i don't know why buy any bond is going to yield less than inflation targets. negative real rate. >> i'm making negative money. this is one reason the stock market has done so well. 17 of the s&p 500 are yielding over 4%. right? at&t is yielding whatever it is. 5%, 4.5%. whatever the number might be. at&t is not going out of business. why should i buy any fixed income instrument over equity if i'm not worried about the equity going away in the next, you know, 30 years?

>> well we managed fixed income. >> i know. big resale -- >> i know. because goldman, your firm, just downgraded its overall view of the stock market. by the way, shortly after upgrading it but i know that's a different division. >> no comment on that. but all i would say is it didn't go up, so the stock market did go up, so but i would say this, you're totally right, negative real interest rates are unattractive. and so that is our view. the question is, or the reality is, high quality bonds, they all yield less than inflation. so you can go shorter and shorter, cash right now actually gives even lower yield after inflation. so the story you're saying about relative to equity, i don't have an argument against that. but i'd say within the bond market, because investors don't want don't want 1% of their investments -- >> if you need or want to be in fixed income, these are the best -- >> so what i say you should be very short, even cash at zero is that's not appealing, but at

least that's going to avoid losses, and you're actually going to get that interest rate when they start to hike. or take on a little bit of credit risk, investors have been investing in, you know, credit oriented assets, high yield bonds which only yield around 5.5% but that's more than inflation, yes there's some credit risk associated with it but in a positive economic back drop you should do okay there. >> we're not getting any surprises from the fed this week? >> this week's probably going to be pretty uneventful. you don't have new forecasts. you don't have press conference. i think the surprise if there is one, they're going to focus on the fact that yes, inflation has pushed up a little bit above their forecasts and the unemployment rate has ticked down by 0.2%. >> john, thank you very much. >> thanks. >> coming up, read all about it. we're going to scour through the morning's papers and give you the stories you need to be reading about when we return. as we head to a break check out the "squawk box" market indicator. with all the opinions

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nasdaq futures down less than a point. s&p futures off by just over a point. gasoline prices are tumbling. the average price of a gallon of unleaded regular falling by nine cents just in the last two weeks to $3.58. the lundberg survey says that this is the first big drop of the year. among the reasons being cited an abundance of gasoline and refiners cutting wholesale prices. >> is this when joe tried to kill me? >> you screamed like a girl. >> thank you very, very little. let's get to the buzzing business stories of the morning. we've got reporter for "the new york times." we hang out together. >> sit next to each other. >> at the "new york times" and still with us politico's ben white. we want to go through some of the morning head lines. talk inversions. want to talk family dollar. dollar general. you interested -- you had enough of that? >> i can't get enough of that. dollar general. >> we also want to get to the time warner stuff because of the fox deal and what it means or

doesn't. there was news over the weekend we can talk about. let's go inversions first. which is do we think that the government's going to clamp down on it? how many more deals do you actually think we're going to see. you literally talk to bankers every day. i overhear these conversations. >> i think the government very much wants to track down on it. i think the likelihood of that happening certainly this calendar year is almost nil. how many more deals are we going to see. dozens perhaps? i mean it's really moving that fast and just over the weekend we saw the latest with hospira in talks with danone, to do another spin version. >> this is even worse. because if the politicians are mad about the normal inversions i'm going to buy a company in ireland and i'm going to move over there, this is actually danone, of france, known more for its yogurt by the way, selling to hospira which is a former part of abbott labs, and then hospira going back overseas. it's literally like a double dance. not only that, this is the third

spin version, and so no longer do we have to just pick up a full company we can buy an asset. >> that's what the mylan deal? >> why does it seem to be so much a pharma space right now? why is that the industry, it appears to be the big one? >> it seems to just be momentum. if you're camped with all your peers on a quarterly basis and your peers start to have a tax rate in the teens you better do that really quickly. >> isn't it also to do with intellectual property because a lot of their value is in intellectual property on the patents are, you know, they're drugs and the taxation of that is somehow more beneficial to them to go overseas than it would be for another, you know, manufacturer or something? >> go ahead. >> not only that but these companies are all multinationals. they have a lot of sales overseas already. they have a lot of foreign cash. easy to access. >> so pharmaceutical companies seem to have not been changed into not doing this. walgreens is still hanging out there. that's a little bit of a different company, has more of an americana feel.

you saw dick durbin come out, home state. do you think that deal ends up happening with the lion's foods? >> of course to the point of alliance they're suddenly going to be a multinational. they're going to own what i think is one of, if not the biggest pharmacy chains in europe. are they still an american company or a big american multinational that has its roots in the midwest but suddenly operating all over europe as well? >> can i ask a question of what the bankers say when you talk to them about the political implications of all of this? do they tell their clients you better move now, if not this year, then next year or you're going to get embarrassed if you do it now because there's more focus on that. what is the combination between a potential inverter and a banker? >> machine issue is gone. enough big companies i think pfizer was the tipping point when pfizer said we're ready to do it i think anyone could do it. >> all right. >> all three, abbott did the deal with my lon, abbvie is doing with shire, and hospira is looking to do it with danone's division. so all three of the abbott labs companies --

>> abbott itself i don't think has inverted yet. >> sold the division to mylan which is then doing it -- >> and it's amazing to read a sentence that we'll now incorporate in the netherlands where the tax rate is lower. >> talk about the idea that even if you do it right now, it could be retro actively undone. >> this is the amazing thing. it's already emerged as kind of a central sticking point between republican and democratic proposals for what inversion legislation might look like. is whether or not, any bill would be retro active. so the administration wants to make it retro active to may of 2014. that's for deals that have closed. that would affect just about every big inversion we've talked about for the last year and a half. chiquita, applied materials, medtronic, abbvie, all -- >> would you have to undo those deals? >> you wouldn't have to undo them but they wouldn't get the tax inversion -- >> the tax benefits would go away. >> and some of these deals have pauses in the merger agreements that say if the laws change we have the right to pull back. >> anyway, hypothetical discussion because "a" it's not

going to happen. "b" it's not going to happen with a retrospective -- >> let me switch gears to two other topics. family dollar this morning. on that transaction, we had an analyst come on about 6:30 right after the deal was announced and say is the price fair? we do know that the nelson peltz and everybody's voting or says they're voting in favor of it. the analysts suggested the bryce may still be too low. can you imagine shareholders coming out? >> hard to see given the way things have played out -- >> and you have both stocks up. >> certainly. and listen, activist investing, this is another win on their store card. it's just extraordinary the track record they've had over the last several years. dollar general was the other likely buyer. >> what happens to them. >> a month ago their ceo said he was leaving. and so as a result a lot of the merger speculation between family dollar and dollar general fizzled. so i think a lot of shareholders might think the white knight maybe in there this time. >> the market better get used to it. right now family dollar shares up 24%. dollar tree, the buyer, and

often the buyer shares fall, is up more than 8%. >> right. >> so the market loves this deal from the buyer's side, as well. dollar general, $16 billion market cap. they're actually bigger than both companies by far the combined company cap about the same, maybe slightly larger. suddenly dollar general -- >> did you say up 24%? that's more than the premium. >> that's part of the reason -- >> yeah, 24.79 according to -- >> give -- >> the premium was like 22.8%. >> sorry to interrupt, andrew, does dollar general come in and make a play for family dollar? does dollar general come in and make a delay for dollar tree? >> can anyone keep all these things straight? >> pointed out what the combined company needs, family tree? >> i consistently -- >> nelson peltz at the -- called it family circle. he told me that was a magazine. >> i think -- >> final question, over the weekend, there were some reports around rupert murdoch, 21st century fox in this saga that continues with time warner,

offering board seats or potentially being willing to offer board seats. i made the argument in the 6:00 hour that this was a specious sort of offer because this two classes of shares so -- >> doesn't matter if there are board seats. >> where does this all go? >> listen, this is very early of what i think is proving to be one of the most intriguing deal sagas not only of the year but maybe the decade. if murdoch can really engineer this and pull this off we would see a totally transformed media landscape, we would see his whole legacy rewritten. it's early days. >> very, very quickly, becky great catch by the way. family dollar is at 75.58. the deal was at 74.50. stock's more than a buck over the price. and jan rogers nippon who is a tributer at cnbc 30 year retail executive just sent me an e-mail if dollar tree the buyer is up by 8% by definition the price must be too low. >> hmm. >> so fpo officially maybe doubly in play. >> thank you for that. david, thank you for coming in. >> thank you for having me.

>> you were a "squawk" virgin this morning? >> first time. >> thank you. >> enough of that. >> great job, thank you. >> when we return, can the popularity of the world cup be carried over to major league soccer? new york is hoping that an expansion team will bring fans to yankee stadium in 2015. the chief business officer will join us in just a little bit. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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welcome back to "squawk box" everybody. in our head lines, amazon is launching a new 3-d printed product store today. a new personalization option will let customers customize and build items from third party sellers. as an example of that, a user could customize a bobble head figure by changing its skin and eye color, it's hair style and its outfit so we all get our own bobble head dolls. also, sarah palin is launching their own internet channel. she made the announcement on her facebook page yesterday. a subscription based network variety is reporting that the channel will be costing $9.95 a month. or $99.95 for a year. palin says the network will allow her to share ideas with viewers. and brian, somebody take a camera shot of him right now. >> yeah, he's doing the bobble head. >> own bobble head version. >> go back. what were you doing. do it again? >> i always get a bobble head. it's monday morning. >> we might have that on tape somewhere. >> no, we will not by the way

and i was calculating the premium. and so when i moved my head when i think. >> you were so confused. >> looking to see how quickly he could sign up for sarah palin's -- >> my ears are slightly imbalanced. >> when we return, more of brian bobble heading. also, mls soccer coming to the big apple. new york city football club, the chief business officer, he's going to join us to discuss the new sponsorships. >> i have to jump in here i apologize. zillow is halted. >> why? >> speculation -- ♪

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now, go to xfinity on demand and select the people's hotlist to see this summer's top 100 shows and movies. i voted! welcome back to "squawk box," everyone. in our head lines this morning. discount store chain dollar tree is buying rival family dollar for $74.50 a share. in cash. you can see family dollar is already trading above that at $75.68. that offer represents a 23% premium to family dollar's closing price on friday. also dollar tree higher up by 10%. goldman sachs is reportedly in talks to settle a lawsuit with the fhfa over mortgage backed securities sold to fannie and freddie leading up to the financial crisis. reports say that the bank could pay between $800 million and nearly $1.3 billion. the fhfa has recovered about $16 billion in agreements with other

banks. also shares of zillow as brian mentioned just before the break, they are halted at this point. >> it's done. >> buying that company for $3.5 billion in stock. >> yeah, the deal is out. zillow is buying trulia, $3.5 billion in a stock for stock transaction. both boards have approved it. the deal expected to close the early part of next year. what they're looking for here is a per share price, i do not see it right now. i'm sort of scrolling down. okay so as part of the deal, trulia, who has a calculator he? trulia is going to receive 0.44 shares of class-a common stock of zillow. so where is zillow trading at right now? i've got to go back and do the math. take zillow's price. times it by 0.44. >> what's zillow's symbol at? >> "z." >> we'll get the per share price. >> 1.5886. >> times 0.44? >> yep. >> this is called a pregnant pause on the air in tv. >> live tv. >> this is what we do. some people hit baseballs live on tv.

we add stuff up on television. using the help of a cool cow later on the iphone. 0.44 shares. by the way, benchmark last week which is a small research firm came out with a note and suggested that a combination zeal here would be extremely good. in fact they've got a price target on zillow of $210 a share, if there is a -- if there is a deal. so that was done over the weekend before they knew of a deal. >> $69.89. >> $69.89. or 90. >> so $69.90 on trulia shares. whew. >> trulia. >> trulia is at $56.35. >> that is up 15%. getting closer. $69.90. >> the company is claiming the value of the deal represents a 125% premium. they're saying trulia's closing price on july 25th which was on friday they say that each -- that zillow will own 33% of the combined company at closing. i'm sorry trulia shareholders will receive and will own 33% of

the share shares on closing 67% owned by zeile low. i wonder what the antitrust issues are involved in this. because there aren't many -- >> i can't imagine -- >> again you know, i'm not an attorney. so this is not some legal opinion. look at the battles that the mls, that the multiple listing service that is owned by the national association of realtors and all the realtors members have won, they've won every major legal challenge that has been put out there, despite the fact that you cannot get on this major listing board unless you are a member of the nar. i can't imagine there's going to be any regulatory issue given that their competition is this massive sort of, i don't recall -- >> i'm still stunned that real estate agents can get 6% on any deal -- >> most will tell you they don't. most they'll tell you really the number is going to be about 3%. >> still not seeing the erosion of margins there like you have in almost every other industry. >> no you haven't. and you remember during the peak of the real estate market there were some big-time challenges

that came out. we had it in new jersey. foxwoods was the name. and they came out and said -- because in europe it's a flat 2%. that's it. they came out and had this big marketing thing and gave some of their agents minis to drive around and they failed. they went away. this is a big battle there. $69.90 is the price you had. stock's at $56.35. 24% premium to that deal. >> last time i bought a house i didn't use a real estate agent. we did it ourselves. the other people had an agent. -- we found it ourselves. >> -- had to use a real estate agent. >> no. >> we had some more breaking news that's just come across. the cftc charging lloyd's banking group and lloyd's bank with manipulating attempted manipulation and false reporting on libor this morning. as part of that there is an agreement. a settlement agreement for $105 million. we're just getting news of this as we speak. the settlement to and agreed to changes in systems and controls.

we will bring you more about that as that crosses the tape. not a huge number on that particular -- >> maybe started many libor -- well i mean that was -- >> we were expecting more libor. yeah that's not a huge number. >> $105 million is not. there could be bigger banks set to settle for larger numbers. but not a very big number. >> by the way this trulia deal, now sammy inkenen is not a household name, he's the finnish guy that started trulia. he's going to be a big winner here in this deal. you know who else is going to be a big winner? stevie a. cohen. 0.75 asset management is listed as the biggest shareholder of trulia, 6%. 0.72 is the private office of s.a.c. capital. s.a.c. capital is gone. 0.72 is now stevie a. cohen's family office investment vehicle. big winner. carlson capital, citadel big

hedge fund owners in trla. >> joining us right now on the "squawk" news line is an internet and interactive media analyst at crt capital group, and neil what do you think of the deal? >> -- positive on this deal. at the end of the day, provides scale, and scale ultimately leads to more advertising on the overall network. it to be a positive for trulia, and also for zillow as well. >> do you think regular laters would get involved to try to stop a deal like this or not? >> i think they'll definitely take a close look at it. i think realty will also oppose this deal. but at the end of the day this is a very large market, and it's a highly fragmented market. probably aboutdy a $10 billion market in terms of total marketing that happens by real estate agent and if we look at

the revenue of both combined zillow and trulia, it's -- you know, less than about 12%, 10%, 11%. definitely not at 50% markup. >> what do you mean realty might oppose the deal? what could they do? s for our viewers is the parent company of coldwell banker, century 21 and others. >> you know, my guess is that they will probably, you know, vice their opinion, you know with the regulators, you know, they'll probably claim that there's too much power between a zillow/trulia network and that it's going to be bad in pricing for agents because now, you know, a lot of online viewing will happen on basically one site. so, a zillow/trulia could potentially charge more to agents. if we look at the fact, you know, zillow charges roughly around $300 per month or trulia

still about $150, $160 per month, so my guess is zillow will probably leave trulia alone and let agents pick and choose between the two, and then ultimately will probably fill out a platform where agents can advertise on both networks. >> okay. thank you very much for joining us, neil. >> great, thanks for having me. >> we've got a deal in the dollar space we've been talking about it all morning you've got dollar tree buying rival family dollar for $74.50 a share. they put out a press release. we didn't have to do live math on the air. joining us on the phone is jan rogers nippon, ceo of rogers nippon worldwide enterprises. multidecade long department store executive but young at heart. thank you very much for the e-mail. you said something interesting saying if dollar tree the buyer is up about 8%, you think the price tag is too low. why? >> well, you're aware that in a bunch of these, normally the seller's trying to, tract all of the synergies, as well as

anything they can get in the deal. so when you're done you're supposed to be at the point that your stock doesn't do much and the guy getting bought goes up by a lot. in this case they're both going up and if that continues you have to say, wow, maybe they could have extracted a little more in this deal. >> does that mean that they try to extract more? >> well, we don't know. somebody else could also try to extract more. i was actually surprised when i saw the announcement, because when i read it, i assumed it was dollar general and family dollar. and it turned out to be dollar tree and family dollar. we've all been waiting for the dollar general, family dollar deal and assumed that was the very best match because those two companies are much more alike. the stores are much more alike. except that one is run substantially better than the other, and therefore there should be great synergies there. >> okay, so not only is dollar tree up but the buyer or the buyee the purchase being purchased family dollar is at $75.60 a share about a buck and change before the purchase

price. so jan, professionally, in just your opinion, do you think dollar general or somebody else will come in with a higher bid for family dollar? >> it sure looks like people believe that. and i would think that there might be more money to be extracted. >> although look if you're already looking at dollar tree being up and part of that deal is in stock you are talking about a higher offer than what we originally said. >> right and you've also got the issue that there's probably a breakup fee involved in this thing so makes it harder for somebody coming in to pay as much. >> that's true. we haven't looked at that. trying to figure out what that fee is. thank you so much for your insight this morning, sir. great to have you on. >> thank you. >> okay. coming up next, major league soccer trying to plant a seed in the big apple. new york city football club, their chief business officer, he's going to join us right after the break to discuss the league expansion. and then it is merger monday. we got dollar tree buying family dollar. jim cramer is going to join us with this thoughts on that deal, on zillow and on so much more when we return.

welcome back, everybody. the new york city football club announcing official partnership this morning with recruiting firm hayes. the team is set to have their first game in march of 2015. joining us is tim pernetti, the chief business officer for the new york city football club. and tim, it's great to see you. thanks so much for being here this morning. >> great to see you, my friend. thanks for having me. >> let's talk about soccer. because i think the whole world at least here in america,

everybody went soccer crazy after the world cup. how do you take that and use that to push mls? and what you guys are doing with this expansion team? >> i think the popularity of soccer has never been higher in the united states. i think the success of the world cup did great things for everybody. and you know, world cup is in a lot of ways like the olympics. everybody roots for their country against the world. seeing the quality of play. seeing a lot of the players being more identifiable. the fact that eight of the starting 11 on the u.s. team are mls players, it's a tremendous platform, and we got quite a bit done during the world cup as a club to build our brand and certainly build the visibility in new york city. >> were you surprised by how into the world cup america seemed to be? just people watching it everywhere. >> it was tremendous. i think v expected big different ratings, big numbers. a lot of excitement. so much more media being consumed in different forms during an event like the world cup. but i think the numbers even blew tv experts away to see just the increased level of popularity, and it was just at a

fever pitch. for us as a new club coming into mls at new york city fc the timing couldn't be any better. i think building on that platform going forward is something that gives us a great opportunity to develop a good emotional connection with fans in new york, and really capture the hearts and minds. >> so we have the new club, you're going to be playing in yankee stadium, i think, for the first three years. is the plan eventually to build your own stadium? >> yeah the plan is to do that. as you can imagine in new york city, anything that's facility oriented is a challenge. there's a lot of people involved in it. we're really only going to get one opportunity to build our own stadium. while it's taking a little bit more time than we might have expected we want to take the time necessary to do it right. >> where are you going to build? >> we haven't figured that out yet. we're looking at options in all of the five boroughs. we file like it's important to stay within the five boroughs to be a true new york city professional sports franchise but in the meantime yankee stadium. the yankees are a partner in this in part of our ownership will be a tremendous first home. >> are you going to have to alternate on certain days?

>> no i think what we'll do is the scheduling will be a challenge but it's certainly something we already dove into and figured out as the yankees take their extended road trips and we have opportunities to be there when they're away. we'll figure out a way. mls season will have 17 home games so over a six, seven month period we feel like we can get it accomplished. >> how does this succeed where something like the cosmos failed. it's not the first time new york's tried to have a major league soccer team. how do you avoid the failures of the past? >> i think what we need to do is we need to develop a different kind of relationship with fans in new york city. new york city sports, while their high visibility and popular and successful the one thing that's critical is that the personal touch has gone away a little bit. i think developing a pro-sports franchise week we will will be accessible to fans, and all the constituents, where now we can go to a game but reach out and touch it, meet players and be on the field and do all those things. we're going to create access and experience at a different level than has been seen in new york city. >> a little bit of a controversy with frank lamb pardon.

frank lampard is a chelsea star, coming over here. he made some stupid comments about 9/11 years ago. he says he was just a kid, naive, begging for new yorkers apologies. do you feel like the new york audience will embrace him? >> i think frank did a really good job being transparent at that at his press conference last week and handling the question. anybody that needed to be satisfied can just look at his comments and while he did, a lot of us have said things about things we've done in the past, he made very clear that he did not say anything about americans, and certainly never would. but, you know, it was something that certainly, you know, is a sensitive topic and new york city being a resident new yorker myself, i feel it more than anybody. but, frank, i thought, was very clear about what actually happened and as you can imagine with events like that there's a lot of misreporting around them. he set the record straight and we'll move forward and i think when people in new york city watch this guy play and see how he represents himself as a person, and represents the club, they'll be proud to have him on the team. >> tim, i'm so glad to see you

here today. i should tell everybody that you and i have been friends for a long time, graduated from rutgers together. you're the former athletic director there. and we are just now into the big ten. i think you, more than anybody else, were responsible for rutgers getting into the big ten. i just wonder what you think as we're a few weeks away from the first game in the new league? >> well, becky, first and foremost i appreciate, you know, not only what you said but have always appreciated your friendship, you and matt and the guys. i think it's great. you know, it's something that was deserved. it's something that was a great opportunity. and everybody had a vision of what it could be at the beginning, and now it's actually happening and now that i've moved away from a professional role and i'm just an alum it's awesome to see, because it's the next frontier of something that could be incredibly successful for a great school. >> all right. well i just want to say it's great seeing you today. we want to hear a lot more about the mls. and thanks for joining us. >> thanks, becky. >> here's the -- here's the amazing thing about the mls just quickly that more than half of the mls teams are outdrawing half of the nhl teams.

>> you're kidding? >> no. on attendance basis per game the mls is surpassing the nhl. >> what's the ticket price at mls? >> it just depends. >> is it -- >> i went to the very first mls game, it was 1995 i think the new york metro stars. >> i remember that. >> tony fiola in goal. i can't remember who they played. we had a great time. >> i remember seeing pele play. >> remember kicking a soccer ball in the parking lot. it was claudia raina's dad, he was a star on the team at the time. i had to apologize for denting his car with a soccer ball. >> on that note. when we come back, jim cramer kicking off a busy week on wall street. we'll talk about all the big deals with jim when we return. what would happen... if energy could come from anything? or if power could go anywhere? or if light could seek out the dark?

what would happen if that happens? anything. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. the cadillac summer collection is here. ♪ ♪

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you merge it with the best operator in the dollar business, again, three, goes down to two, less competition. these are both breakthrough deals. the acquirering such a winner in both. zillow ran up big ahead of the deal, like an open secret deal. i don't they if zillow can keep flying. take out competition, watch margins go much higher. >> trulia at $30 in april. the deal's done for 70, more than double the price a couple months ago. >> look, i am not going -- these are relative things. on the absolute basis, i mean, what is this? how can this be worth that much? they are changing the industry dramatically. they are sucking out the margins that were going to brokers but brokers have gone with them. they have no choice. this is how people, when they went to mobile, how people are looking at real estate. it's not just what we used to think, real estate porn, so to

speak. the way people start to find what house to -- to really move to, and the fact is, is that both sites were really good. when you get rid of one, then what's going to happen all of the money flows to the other and it's just a big win. spencer told me recently as this spring that he was not going to have do this because he was going to wipe out trulia. he did not succeed. if you can't beat them, join them. the combination is powerful but the stock is expensive. >> i can't remember the name of the an lift but the guy from benchmark and company put $210 combined price target on zillow over the weekend. >> well reasoned piece. yes, they are a powerhouse. is the whole company worth too much? not for me to decide. good move. >> thank you. when we come back, get to steve liesman, a preview of the fed. jackie's heart attack didn't come with a warning. today her doctor has her on a bayer aspirin regimen

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because the future belongs to those who challenge the present. ♪ [music] jackie's heart attack didn't come with a warning. today her doctor has her on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack be sure to talk to your doctor before you begin an aspirin regimen. challenge of janet young's ten year on the horizon, arguing about the president, arguing about college football. let's all hold hands. >> i'm going to -- >> let's argue what's everybody's arguing the economy and federal reserve.

the question this week, whether the gap between the fed's extremely easy monetary policy and the improving economy widens and gathering just below the surface. the first potential real challenge of fed chair janet yellen's term. pending homes soupposed to be u a point. moving on, the big numbers, start to come on wednesday, day the fed decision comes, adp up 233. gdp, reversing the first decline. watch the price number, jobs, unemployment number at 6%, wages. the fed tweaking its language to take note of the improving job scenario, and likely to be serious behind the scenes discussion about accelerating the pace of tapering and moving up the timetable for hiking interest rates. dallas fed president richard fisher in an op-ed, i have grown

concerned about the risk posed by monetary policy. saying the fed is at risk of overstaying its welcome, risking inflation and asset bubbles. he's at odds with his colleague. he's telegraphing a dissent, first one from the hawkish side, that would come maybe with a second dissenter, potentially plasser. we're running out of time. the question for yellen is this, she has her own views an economist, federal reserve member, she has to keep the committee together. so there's going to be, it's not this meeting behind the scenes, there's going to be a conflict that's growing up inside here. >> it's not a bad thing. >> no, it's part of the process. >> as you get close to inflection point. >> there's a honeymoon here. >> so, neither one full -- >> he doesn't -- she doesn't need. but a couple from the hawkish side might be okay.

>> what time does that come down? the meeting? >> 2:00, here we come. >> three hour promo street signs. >> i don't get paid extra. >> your on "squawk box." >> thank you. see everybody tomorrow. buh-bye. ♪ >> good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at new york stock exchange, a couple of megadeals. zillow buying trulia, dollar tree buying family dollar. earnings, a fed meeting, q2 gdp. ten year yield up, and europe's leaning negative as the spanish ten-year, get this, slips below 2.5 to a new low. dollar tree fiing famdo