sec is investigating whether activist investors teamed up to target companies. i'm shocked. it's june 5th 2015 and squawk box begins right now. good morning everyone. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew rosssor sorkin. it's national doughnut day. various chains have plans for your treat. before you think this is all a made up holiday think again. the day got it's start in 1938 when the salvation army used doughnuts to raise money during the great depression and it commemorates the women that served donuts to soldiers during world war i. the ceo will join us on set.

but a rough day for the markets. dow down by 170 points. this morning there's green arrows but modest advances at this point. 17 points above fair value. s&p futures up by two points and nasdaq up by 6.5. forecasters say the economy probably added 225,000 jobs last month. the unemployment rate is holding steady at 5.4%. we have that number coming up in 2.5 hours. we'll talk more about expectations and the fed in a few minutes. citi's chief u.s. equity strategy will join us on set. >> greece owed the imf a payment today but instead of making it athens says it will bundle four payments due this month into one lump sum of 1.5 billion euros due on june 30th. they agreed on some parts of a deal to unlock aid but there's still a lot of differences. the prime minister cancelled the meeting scheduled for today with

the european commission so we can head back to meet with his parliament and michelle is going to head over with with us in a couple of minutes for that story. opec ministers are meeting in vienna today. the cartel widely expected to keep it's current output ceiling unchanged. walmart holding it's annual shareholder meeting today. they'll vote on board members and proposals. there's always a surprise celebrity mc and musical guest and we'll get you live coverage if arkansas later this morning. >> there's stocks on the move. vodafone is one in talks with liberty global. not a merger. there had been long running speculation and media reports of a possible combination.

verifone is trading lower but the current quarter guidance from the maker of electronic payment devices looks light and zumiez getting hit hard. sales disappointing investors and revenue guidance was lower than expected. shares of diamond foods getting a boost. the packaged goods distributor beat earnings and estimates and raised it's full year profit view. >> diamonds are forever. >> the u.s. government is doing damage control for the biggest security breach in history. a cyberattack may have released personal information of up to 400 million employees and they think they know who is behind us. we have details this morning. >> the federal government is notifying 4 million current and former federal employees about this new hacking attack.

we have known for awhile now that various foreign intelligence services have been probing u.s. government suspects but now the government discovered a new attack in april against the opm, office of personnel management. it's the hr department for the federal government with lists of sensitive data about federal government employees and their salaries and et cetera. privately government officials are pointing their finger at china. however nbc news and beijing tracked down the foreign ministry spokesman and asked him if china is behind the attack. they're saying as we know cyberattack is very hard to trace back. it's anonymous and cross border. without the thorough investigation you jump to a conclusion so quickly the chinese pushing back and saying they are not responsible for this attack. but why would they want this

level of information? a massive data base of u.s. federal employees. one expert told me that what you can do is use it as a jumping off point for all kind of other hacking attacks including spearphishing. when you send a very targeted e-mail to somebody asking for specific information and the person clicks on the link and the hacker is in their system. the one e-mail that federal government employees will always open is an e-mail from opm about their salaries. that's something the chinese or whoever has this data could be able to send to federal employees. >> does this also give them access to who has what levels of security clearance. >> depending on what they got it could tell you a lot about security clearance or salary social security numbers all of that. you could use a data base to figure out who is working for the u.s. government and who is on the payroll and who is not. you could use it to find out who

is undercover. it could be damaging if u.s. intelligence. >> before you go. lead story today's new york times, in a secret step nsa expands internet spying. they're hooking at an eye on foreign hacking. has there been a lot of talk about this in washington overnight? to what degree are the steps the nsa are taking going to be impacting or potentially thwarting things we're taurking about this morning. >> it's directly at these things. these broke a couple of hours apart. that is based on what they're saying are are documents provided to them by edward snowden that say in 2012 the u.s. government made a national security decision to allow the nsa to go after cyberattacks. things that were hitting u.s.

companies. not necessarily u.s. intelligence and to allow the nsa to act in a law enforcement capacity however given this news you can see why the u.s. government is so anxious to use the tools in it's arsenal to respond to hacking attacks in bound. >> we appreciate it. >> you bet. >> let's get a look at the markets this morning. the futures are higher after a pretty rough day for the markets yesterday. the dow and s&p 500 at one month lowe's yesterday you see the bounce back this morning with the dow futures up. and nasdaq up by 6.5. these are muted bounce backs after yesterday's declines. in the early trading you'll see that the dax is down by 1.1%.

the cac is off by close to 1.5% it's down about 4.3%. we'll talk more about that in just a moment. >> in asia in the overnight markets you'll see that the nikkei was down barely. shanghai composite up by 1.5%. oil prices down by nearly 3%. fell to $58 and down this morning. another 36 cents. when it comes to the ten year the ten year treasury yield hitting a new high early in trading day yesterday. pushed above 2.42% before retreating. right now that yield is sitting at 2.343%. when it comes to the dollar let's check out what's been happening in the currency markets. the dollar is down against the euro at 11249 and finally gold

prices, quick check, shows us that at least right now gold has barely budged. $1,175 an ounce. >> michelle is here. michelle greece to with hold -- this i saw in the ft and i thought that looks threatening. that looks scary but the pu tours are up. i figured you'd be on a plane. why reason you afraid. >> are they really going to pay. >> if you don't pay the imf there's not a lot of media consequences. >> it doesn't matter. >> but show of defiance is a good headline i think. a bit of leverage to say you're not goating anyetting any money out

of us to repay you unless you give us more money to repay you. we're still a coup of weeks away what we should watch for today is pretty significant. they lead everybody to believe they were going to pay. you read all the analyst reports from yesterday greek is going to pay. then they say we're going to bundle them all and they are allowed to do this. then he had a call last night with the leaders of france and germany. he has requested a call with putin which should be happening right about now. supposedly to talk about energy issues issues. >> help us out or you'll have the russians in your back door. >> absolutely. what we're really watching for

today is 11:00 a.m. eastern time he's going to address the greek parliament and that's where we're going to hear what is he going to tell the voters here? he has a choice. he has put forward his reform plan. the european creditors put forward their reform plan and while there are close similarities on some aspects they're still wide apart on others others. what is he going to do sf what is he going to sell in he may call for new elections and snap elections that may lead to six weeks of more stoppage in the greek economy. does he suggest a toalnality. the traditional pattern would be defiance. >> at the same time he has to figure out what's going on in his own party and among his own electorate. they said we don want to make more concessions but we want to

remain in the eu. he has to figure out which do you want more. >> yeah. there are people more far to the left in greece than he is. >> yeah. >> the president and then elizabeth warren. >> it's amazing. >> a socialist running for office here. >> they're all dead guys left of him. >> i call it the party of the cemetery of dead ideas. anyway. we digress but yes how does he deal with what is this extreme left in his party. can he get the members of parliament to go along? he has to make a political decision. he still has a little more time. everybody talks about the dead lines all self-imposed. june 30th is when the program runs out and under the rules if they're not unthe program the ecb can get much tighter when it comes to the banks. so you have to work back from that date and say once they come

to an agreement you have to have parliamentary votes. you need about a week to do that so we're still probably another week away from a real hard deadline and then they could say we're going to extend the program again another month. >> we're going to extend it so the other european parliament. >> when it comes push to shove is when they have to make a choice do we pay the ecb or pensions? is that june 30th or july. >> that's probably june 30th. we'll know. so watch today. 11:00 a.m. if i did my time zone changes correctly. >> did you eat a doughnut. >> i did not. i eat eggs in the morning. >> who are they coming from. >> duncan. >> there's a new donught. it's a new chips ahoy doughnut.

>> sounds like diabetes on a plate. >> so 1938. >> they do a latte. some kind of coffee drink. >> 1938. they made that up to sell cards. there's so nuch thing as father's day but it goes back to when? >> chips ahoy day. >> that predates mother's day doesn't it? you missed the whole thing. >> how does that happen? >> i was focused on my doughnut. >> hall mark invented all of these dates. >> i thought mother's day was -- >> why don't we talk more about the market situation. tobias is citi's chief u.s.

equity strategist. you heard the case for why the deadlines are fake and yet it seemed to matter yesterday in the market. >> it did but i'm digressing with the chips ahoy. the greece issue has been here for a long time. investors are fatigued but there's been some plans put together in case they leave the euro. in case the great fear of disrumps in place four years ago. it's a 2011 problem that it will get resolved either through some negotiation or is there is this terrible break that it could im impoverish the nation. >> there could be some fall out?

>> some. but most of the deposits today -- our prior research group in europe has done a lot of the work and you can see who holds what. >> there's very little greek debt in the banks. mostly held by other governments. >> so if you look for the numbers that are coming today, the jobs numbers is that going to be the most important for today's trade? >> if we're looking at the bond market as having repercussions to the stock market yes and we don't want a doughnut. we're consensus as a firm as looking at the 227. we're officially 225. those are the kind of numbers we're going to see. but if you're going to scale a much weaker number you could have bond yields pulled back. everybody says the fed is on hold. they could generate a little

nervousness but that's good economic news. so the world isn't so bad. i'm fascinated by hearing people talk about the markets in some what of a panic. we're down less than 2% from the high. >> but you are seeing the fields in the bond market. >> is that because the economic news is good? >> there's technical baerks here. it's strange to me that they're below zero. i'll pay you for the privilege of lending you money for ten years. it's not i distrust the german government to pay me back it's more i want some premium for the risk. so we have gotten a technical rebound and it's almost too far one way and bounced back too far the other way. it will probably settle down and then it's globally because if

rates start to move up you're dealing with a differential between the yields then the currencies start to impact and markets start getting nervous but i think we got too far one way. it bounces back the other way too far and then everything settles down. >> we're at 179 again. nowhere still for 2015. >> that's fair. >> one down day an we're down for the year again. >> and if markets were open the conversation might be differ. >> what do you mean? still flat for the year. >> earnings have been plat. that's the key. a path of 1% in that range. we had a 2100 mid year target and we're here in june at that level. i'm okay with that. >> you pasadena a come men in one of your notes that multiples are not to change even if fed

begins rate increases. >> this is a little more complex than it needs to be but i have to define it this way. when you think about the present value of the earnings or cash employee, the determination years ago wanted to talk about how you discount back any future earnings to arrive at the value. there's the risk-free rate which is the ten year bond yield plus the risk premium. so what you have above that in case you're worried about something, if the reason the fed is raising rates initially it's a confirmation of economic growth. the risk premium comes down as you have more confidence and the discounty rate doesn't change. not the first coup of times. but it wouldn't be the first one. >> that would bring multiples

down. >> but you'd also have earnings and it would be a natural form of compression. >> don get blown up by that. >> thank you for that education. >> you point out that earnings haven't really done anything but we keep thinking these are one off factors. it's the strength of the dollar and weaken in oil and none of these things will last that long. is that a fair assessment of it? >> it's more than that. the drag from those things start to wayne but it's more than that. we have intentions from the nfib from the manpower surveys that show growth. we have lead indicators that tell us we'll get more wage growth and the oil price declines which have an 18 month lag on economic direction. they're not simultaneous events. so we should be getting the benefits in the second half and you'll see the international markets doing better because they had the oil benefits and free money. >> you're a buyer of stocks

here. >> but a moderate buyer. i don't think markets are going to blow away and take off. i think over the next 12 months we're up about 8.5%. these are healthy returns. not just blowout returns and everybody is greedy. >> you're assuming that the ten year yield does what from here? >> so our forecast is 2.45 by year end. we're pretty close to that. >> is it driven by u.s. or german bund? >> it's both. i'd love to say we only care about what happens do pesticly but what happens internationally has an effect. >> also a consumer of donuts. >> i eat way too much. that's the problem. >> we have two boxes. >> they're here. >> they're here. >> i saw him clearing his schedule. you're going to hang out. yeah my car service.

i don't know where this guy is. >> thank you for being here tobias. enjoy the donuts. >> 1908, officially 1914. the person that created it denounced the commercialization of it. american pharaoh getting ready for the belmont stakes but first here's a look back at this date in history. leave early go roam sleep in sleep out star gaze dream big wander more care less beat sunrise chase sunset do it all. on us.

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>> golden state warriors taking game one in the nba finals last night in overtime. outscoring them 10-2 in the extra session. cleveland losing even though lebron james scored 44 points. seth curry lead the warrior with 26. >> did you see what time it came on. >> that's a little late. >> i wanted to watch an nba game and i said i'm excited. it's 8:00. 9:00. >> what time did it end with the overtime? >> about midnight. >> you've been up? >> i didn't sleep much. >> you're working but i'm

thrilled to be here andrew and to bring you donuts. i wish i wouldn't have e-mailed you before i came because i thought cleveland would win the series and this game. >> i have a little bit of sports business news and then we'll get your word -- your view on the sports business news. the milwaukee bucks could be getting anew home. i don't know if you have views on this. wisconsin governor scott walker announcing a $500 million deal to pay for a new arena. 250 million from current former team owners including a squawk regular hedge fund billionaire and the new arena could replace to nearly 30-year-old harris center. it needs approval by state assembly. always issues around whether it's actually creates economic growth or not. >> not. >> traditionally not. >> let's be honest not.

>> people thought that was an explosion of economic growth around here. >> there have been very few cases if any across this country that show economic growth. but it's a great move for a team. it increases the value and no better investment in this country than investing in a sports team. that is exploding in value. >> he steps in. >> he has a few bucks to spend. >> but he stepped in it before the clippers. he bought milwaukee for nothing and then the clippers situation happened and every team got marked up. >> and they will continue to be marked up. >> is he writing a check for this arena? >> 250. >> no, there's a couple of other owners putting money in with him. >> great investment. the team will increase in value as will all of them. >> do you think the sale was so artificial because it was one individual. >> like the dodgers sale. >> no i put that in a different

category. >> why? it was a ridiculous amount of money paid to a guy. these teams are going to continue to explode in value. that was a stupid purchase. they're going to continue to make everybody money because live sports is what's driving the conversation. everyone watching post five which is better than post one for american pharaoh. the favorite to win and the potential triple crown winner. the kentucky derby, the belmont and the last horse to do it was affirmed in '77 and '78 and our friend from nbc sports is here. 3-5 right now. here's the problem.

people wonder can he run that far. >> that long. >> and can these other guys these other horses are they going to be fresher. >> you nailed it there. that's the big complaint if american pharaoh doesn't win this. it will be one of the two horses that sat out, notedly frosted. approximate they come in well rested and win this race you'll hear complains across the sport and across the country that you need the run the entire triple crown. >> that's like the sour grapes guy from last year. >> that's the rules. you're allowed to come back fully rested but american pharoah is the strong betting favorite. would like to have rain and muddy track. he says right now 50 50./50. it's going to be an outstanding

race. >> why? >> he likes the messed up track. looks like a beautiful weekend. >> i don't know whether we -- we're so excited to watch it. >> it's weird that we're so excited to wait around 6 hours for two minutes. >> this is the 14th time since 1978 but this jockey it's his third chance. >> remember i said you have to win the kentucky derby. i said it but i was talking about american pharoah so it's almost -- i don't know. i'm afraid to hope. but big brown finished last or something. >> you can't underestimate this being his third shot. he learn what had you need to do when you need to break that horse and when you need to push. this is also bob bafforts fourth

chance. it's going to happen tomorrow night. >> when does it start -- >> it's going to happen and then stanley cup game 2 lightning, blackhawks right after. >> i was going to bring that up to you because i unfortunately -- i was at one 2-0 shut up and stayed up to watch the others they are are good you don't get near the goal to score. >> a lot of people were bummed out that they lost. a fantastic team. very exciting. skilled, fast players. >> he's 8 feet tall that they can skate. >> their goalie that's 6'7". this is going to be outstanding hockey. tampa bay has to win. they condition go down 0-2 and then go to chicago and get back in the series. the back hawks will make it three stanley cups in six years.

>> he's more stout. the michael jordan of the future right. >> he is but i would contend that lebron james is better than michael jordan. >> did you see this comment he thinks he's better than he's ever been? he's at the top of his game. >> i can't disagree with him. >> mentally yes. physically do you think he's the same? >> no physically i don't think he can do as many things but he's big and strong and down on the host he can shoot the threes. he is the ceo of this team. he's the coach, he brings in players. he recruits. he helps the city and the franchise and the league. things jordan never did. he juans to be the coach. he wants to be the gm and i think he's the greatest of all time. i think he get ace win sunday night and i still think the

cleveland cavaliers have going to have to come all the way back. golden state hasn't won one since 1975. >> republicans picked cleveland for the convention. >> that was an early call. >> that was an early call. >> so who is going to be speaking there is the candidate. >> you got some tip for mark. >> well i did hear marco rubio speak last night. two simple tips. one is nap stick. that's very important. don't lick your lips 100 times a minute. he's come a long way since the water bottle but do a google search on your audience before you speak. >> would you plan your announcement for a place with 110 degrees. >> i would not. >> optics are very important.

that's what we call raw meat. >> do you have a shot? >> he has a shot. >> of your sox. >> oh you want my sox. i got abe lincoln on. do you have a camera. >> nice. >> abe lincoln. >> do you like those? that's not to make a political statement by the way. >> what is this about? >> just a fine american. >> you don't have a reason. you just reached in your sock drawer and stuck those on. >> for joe. i only have two presidential socks. i have washington and lincoln. they don make any others. >> that's the last republican the media liked. last one they gave an iq of over 70. >> might not be republican today though. >> they try to claim him. anyway thanks dave. coming up at 7:40 eastern

american pharoah owners on the show live from bell monl andmont and live race cover. >> yeah. that's on the big channel. >> is there a preconversation on the sports channel? >> a lot of it. serena williams going for 20 slams. >> that's worth. >> dominant. 9:00. >> thank you. >> thank you, buddy. enjoy the donuts. get after it. >> when we come back why the sec is investigating a couple of activist funds. plus making a mea culpa. but first a look at yesterday's s&p 500 winners and losers.

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40% of the streetlights in detroit, at one point, did not work. you had some blocks and you had major thoroughfares and corridors that were just totally pitch black. those things had to change. we wanted to restore our lighting system in the city. you can have the greatest dreams in the world, but unless you can finance those dreams, it doesn't happen. at the time that the bankruptcy filing was done, the public lighting authority had a hard time of finding a bank. citi did not run away from the table like some other bankers did. citi had the strength to help us go to the credit markets and raise the money. it's a brighter day in detroit. people can see better when they're out doing their tasks, young people are moving back in town the kids are feeling safer while they walk to school. and folks are making investments and the community is moving forward. 40% of the lights were out, but they're not out for long.they're coming back.

i was wearing my sweater today like mr. rogers. j. crew has a sweater problem. the ceo agrees about that problem once known for its classic preppy looks the retailer he says has gotten sloppy. they had a great narrative for quite sometime. things have turned the wrong way here.

drexler saying we didn't have the right cartdigan. more than that sales have fallen 31% this past year. things have turned the wrong way. >> different stores they have their own stores and they're sold in other stores. $62 million in revenue it's a small piece of it but it feels like they are trying to reboot and it could take another year to get back to where they were. a lot of the stuff has gotten very expensive. there's a collection's line. people said the price point is just too high. even the men's stuff.

>> do you have j. crew suits? >> absolutely. i have some sweaters. they don't fit me as well but the price point has really risen risen. >> they don't send you every month do you? >> the gift that keeps on giving. >> you haven't called the 800 number? there's a sweater of the month that you can buy from the sorkin brand. >> the gift that keeps on giving. >> tsa what is going on. of course what do we call him? not the prince of retail something he is a something prince? >> i know what you're talking about -- >> merchant prince. he is a merchant prince and of course created the gap and has done wonderful things. i think they'll come back. >> when we come back this morning we're going to be asking the question as to whether

activist funds are colluding. we will explain still ahead right here on squawk box. (vo) me? i don't just wait for a moment. i watch for the perfect moment. the one nobody else sees. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours.

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>> the wall street journal reports the sec is investigating whether activist funds work together without disclosing their partnerships. regulators want to know if they were violated in any industries. they sent requests for a number of hedge funds. no word at this point on the fund names of the companies they could have targeted. all of these things would have to be done in combination with another fund. if you were voting together or working together. >> this goes to the whole idea no pun intended of these idea

dinners and the idea that so many of these guys ended up hanging out together. >> is that normal or informal partnership. >> if i say to you i'm really liking apple today but if i say i'm buying x number and i'm going to be going on squawk box the next morning that may be a differ story and that's the distinction. >> plausible deniable. at least one way or another. >> no, they're talking to each other. the question is does it rise to the level of collusion. >> probably. >> by the way, i would actually suggest that in a way if you are icahn or bill ackman you go out on your own. >> it's probably less a problem because as long as you're public

with the information initially it's only when you have done it covertly when you told privately other people your vision and then gone out and even then it's unclear whether that constitutes inside information. >> it does get to the point of whether the average retail investor is left behind because of the average deals. >> coming up chips ahouy doe mutts. >> and the squawk runs on duncan whenever nigel is here and it's national doughnut day. perfect time to have the ceo of donut brands stop by the set. grab a cup of coffee and join us next. we have a cup of morning joe and shares of the chain about 24% so far this year. stay tuned. squawk box will be right back live from the heart of midtown manhattan.

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synchronize your watches, everyone. we're now on a one hour 38 minutes and 31 second countdown. that far away from the jobs report. ahead of that watching the futures. down day for the market. close to 1%. this morning, actually things have turned around.

this morning looking at modest advances and right now the dow futures down by another 20 points and the nasdaq down by 3 1/2. >> the all important. >> all important, all eyes are watching. >> i don't feel it. >> i don't necessarily feel it either. but, look, it's going to matter because we've been watching the bond market so closely. >> i think adp ruins it because we we wouldn't know what it could be. we could think after the, but after the negative growth in the first quarter, we could think it would be under 100,000. but we know it's 210 on adp. >> 208. we're looking for a number of 225. although, adp does not include the government payrolls. times when that has really thrown things off. >> let's pretend it's all important. we would never do that. >> i think you have chocolate on your face. >> no it's like a cindy crawford mole up here. little beauty mark right there. leave it. leave it. >> it's gone now, sorry.

we are talk doughnuts this morning because though every morning is a good one for doughnuts today actually is the official national doughnut day. if you can believe that. it's been celebrated on the first friday in june now for almost 80 years. chairman and ceo of duncin' brand. the history of this day, which seems totally and utterly made up. dare i say. >> i've researched it and it's 1938 the salvation army started. >> it's not totally made up. >> to celebrate what women did in the first world war. certainly ironic one year before the second world war. that's the background. it's been celebrated ever since and we're here to celebrate it again. the number one supplier. >> dunkin' donuts made it up to sell doughnuts. how is this made up? >> this is authentic, andrew.

>> so, let's just talk about the new, but you have a new doughnut. a chips ahoy doughnut. co-branded with chips ahoy. >> we have a very good partnership like with oreo. this has right in the middle of the cream and the crumble one and that's the new product. we have the oreo cheesecake de doughnut. you're seeing a trend to more indulgent indulgent, andrew. so, you can have one of these. >> he's probably done that since then, too. >> every time you send over the doughnuts, i usually wolf down about half a dozen. how many come in the box. a dozen? >> you could have a dozen. we may actually produce two dozen for you. >> thank you for the doughnuts. help us with this. just you're looking out at the summer. summer is good business for you, generally speaking. >> we're coming up to the peak time, june when kids come out.

july. and we're really excited about this year because we've got our new blended flatform which starts next month. we'll have real fruit smoothies and some new coolatta. you used to do the smoothies but didn't seem like real fruit in there. >> that was before my time. this is real fruit smoothies. what is spectacular is the coolatta light. >> what are you charging for this? >> i couldn't actually tell you. i think about two bucks. you're going to pay a licensing fee for this and charge much more. but you're going to charge more for this doughnut than for your own glazed right? >> there is two levels of doughnuts. there is the indulgent, slightly higher ones like the cheese cake doughnuts like that. slightly higher priced. so, one that people can enjoy. >> is this your same customer or like a new luxury customer you're going after?

>> i think this is the same customer who wants to spoil themselves on a special day. >> don't you sell more coffee than anything else? >> 60% beverages. >> i mean i have one every morning and you should you've got your -- >> we have k-cup pods now in the super markets and online and dunkin' donuts online and smuckers online. >> keurig is now playing along. did you have the special keurig ring. >> we always had the official arrangement with keurig and with smuckers. great partnership with them and very excited about the future of this and as joe has told me many times, the way to use your k-cup pods and in the evening you want a leisurely coffee you pull out your keurig machine. >> the single cup. the 8 ounce. you do it twice and it's the

same coffee. >> in the two machine you can varthy size. >> you can get two eight ounce cups. >> nice to see you, sir. coming up the countdown to the jobs report, the all-important jobs report of which all eyes are on. what's at stake for the fed and the market? we'll ask tom lee and jeff rosenberg.

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the countdown is on. the may jobs report is just 90 minutes away and with little consensus among forecasters, the market reaction could be wild. tom lee and black rock's jeff rosenberg tell us what to expect. new developments in a widespread data breach targeting millions of federal employees. the "uss china" is to blame. why officials say this could be just the tip of the iceberg.

men have viagra cialis and 23 other drugs to treat sexual dysfunction. soon, there may be one drug to improve sex drive for women, but some doctors say the side effects raise a red flag. the full story ahead as the second hour of "squawk box" begins right now. you are looking at a live shot of the belmont race track where tomorrow history could be made. will american pharaoh be the first triple crown winner in 37 years? the last horse to do it was affirmed back in 1978. he followed seattle slough. we are also counting down to the number of the morning. that is the jobs report. right now less than 90 minutes

away. forecasters polled expect payrolls to come in at 225,000. but individual estimates range pretty fairly here. all the way from 200,000 to 300,000. you are watching "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. andrew will start us off with today's stories. >> we have u.s. equity futures ahead of the jobs report. take a look and see what's going on. things not looking great. dow looks like it would open off about 18 points and nasdaq off a point and a half and the s&p 500 off a point, as well. of course, all that could change at 8:30 when we get the employment numbers. in the meantime, developments in greece overnight. the company not making a payment to the imf that was due today. they will bundle four payments due this month into one lump sum of 1.5 billion euros and that will come due on june 30th. canceled a meeting scheduled for today with the european commission. he is expected to address

parliament at 11:00 a.m. eastern time and that is a speech that could move markets and, of course, we'll bring you the news when that happens. we have been reporting all week the cartel is expected to keep current output ceiling unchanged. corporate news this morning. vodaphone in talks with liberty global on a swap of some assets. a lot of long-running speculation about a possible merger and media reports of a possible combination and that is not what is happening here. we'll bring you the news on that as it comes. in the meantime send it back to mr. kernen. joseph. on wednesday, the state legislature approved the budget that would increase some business taxes and ge ceo e-mailed employees based in connecticut telling them he put a team together to evaluate a move to another state with a more pro-business environment of which there are 49. connecticut governor daniel --

>> 48. >> 48. oh yeah jersey! >> illinois. >> daniel molloy said he would consider reversing some tax provisions. we are less than 90 minutes away from the number of the morning. looking for any clues to when the fed may begin to reign in its stickmulus. the imf says that wouldn't happen until 2015. joining us on set is jeff rosenberg. chief investment strategy at black rock and on the equity side, tom lee. the founder and head of research at fund global advisors. jeff, i want to start with you and try to figure out what is happening in the bond market. yields have started to pick up and a lot of people are wondering, is this for real this time? what do you think? >> i would say yield picking up is a bit of an understatement. what we've seen this week is tremendous volatility. been entirely about what's going on over in europe and less about what we're going to talk about today, which is what is going on for the u.s. economy.

most of the yield movements that have occurred have been longer maturity yields. when you think about what the market reacts to when it is worried about what the fed is going to do, it's short-term yields. this morning the focus is on the short end of the yield credit. little different than what we saw the first part of the week. >> let's talk about the first part of the week. moves sparked by europe are the moves there finally moving away from zero percent interest rates where you get the german bund back to 1%. is that for real or manipulation from some of the central banks or the bank players there? >> not only the move from zero, but move away from negative yields. answering the questions who buys negative yielding bonds? what does that mean? we've definitively seen the turning point. japanese yields are also part of the story. they met their lows way back in january. we saw a turn in inflation. we've seen a turn in the global economic picture. not a bright picture, but not

the dark picture of deflation. >> should we be grateful that the markets are finally doing this because the fed is you know, so conscious of stock price movement and every economic, they seem totally feckless in being able to maybe give us some of the medicine that we actually need to take. i'm almost gratified that maybe it finally happens because it's not them. fine, stay where you are. but the rest of the world is going to move without you. >> that's one of the issues that the fed faces. irrespective of what they do. if they don't do anything ever then eventually the market is going to move because the fear would be by not doing anything, they will risk. >> you know ewho will be back? >> who? >> you know. >> what am i missing? >> the vigilanities. maybe some day they would be. >> that is what movement in longer term interest rates is about. >> do you think that is what is happening here sph. >> i think what is happening here in the u.s. is that you have that narrative that

long-term interest rates in the u.s. can never go higher. global interest rates are going higher because europe doesn't need as much stimulus because they're doing a little bit better. >> why does the imf not want us to raise when it would make the euro cheaper and it would help europe. i don't understand why they seem so, they are begging us to keep you know keep the punch bowl flowing. >> you know the old statement on the left hand and on the right hand. you have lots of different economic viewpoints out there and the imf is representative of one part of the viewpoint. a view held by many in the fmoc that the risk of moving too early is greater than the risk of moving too late. imf is taking that position. >> they think we would destabilize the global arecovery. >> the risk is it's too early. the argument behind this there's no inflation. without inflation, you don't need to move. the counterargument, which is what i favor. if you wait until you see inflation, you might be waiting

until it's too late. we don't need emergency levels of accommodation. >> do you want to weigh in before we talk jobs? >> i mean if jeff's correct in the market's fixed income is reacting more to sort of the idea of reflation, that really should be bullish for stocks, of course. i don't know maybe equity markets misread this. >> i'm not making any money listening to you this year. >> you should just do the opposite of what i say then. if i say up -- >> didn't you think we would be doing a little better? >> i would have expected markets to be doing a lot better. >> you're holding firm. >> i think at the end of the day if we have housing showing signs of life no longer deflation, but reflation, right? it's not inflation. i mean 2% is not something to be scared about. that's great news really for the u.s. economy. i think we're going to have a big catch up trade. >> you do? >> yes. i think at a minimum the u.s.

versus the dax, right? >> does the correction come before it takes place, though? >> you know i don't think anyone can predict a correction but i've heard a lot of predictions for corrections. so maybe you know if i start calling for correction we're going to go straight up. >> right. >> i think, you know i think we should be confident. this is a great environment for stocks. people are underininvested. sentiments and earnings have been good and we see energy earning estimates go up. i think things that should be obstacles that you could have worried about aren't obstacles this year. >> you heard richard fisher with that stirring speech. >> talking about the american economy. >> how glatreat it is. don't you think we should have stood for that. >> hand over heart. >> i don't disagree. are we at the eighth inning. >> they don't die, doesn't die of old age. >> bull markets and economic expansion. >> yeah. you know if you were to look back at history in 1992 you

had, you know nearly ten-year bull market that got a new, like sort of shot of life once investment spending started to turn. which was more tech back then and rate double digit moved back to double digits. really 50-year lows and housing still in the basement. right? i mean the housing starts are still at recession levels. i don't see how anyone could say we're late cycle. >> we started this off as a jobs discussion. we never talked jobs. what do you think about the jobs number today and does it matter? >> i think monthly jobs is a very noisy. because the plus or minus 65 is one standard. i think the weekly claims are telling us some things. we just met with an employment company this week and they told us the job market is moving towards the seeker which is actually really bullish. so i think that under lying conditions are improving. i don't think they're talking run away inflation. it's a reflationary environment.

>> it's impossible to worry about isis and trying to buy all these hundred guys we're following in this country right now that are committed and if you think about that you'd never stay in the market right? >> those are sort of tail risks. >> geopolitical risks could increase based on what's happening around the world. >> yeah. yes. i think that's really been a story for the six years. it's been in the back of our minds. >> that woman that did the cartoons. the guy was going after her, he was going to behead her. >> the guy up in boston. >> right. >> right. >> okay. that's like you can't, there's no way to factor that in. you never know when a 9/11. god forbid but you can't possibly. >> yes. i would say that would be that's tougher to predict than a correction. >> yeah.

>> tom, jeff want to thank you guys for coming in today. >> if they don't die of old age. >> pricing and the next story a hack attack -- >> maybe that when they hack our grid and it goes down for six months. >> and then we have a real issue. new developments and widespread data breach targeting millions of federal employees. the u.s. saying that china is to blame on this one. our own amy jabbers joins s joins us from washington. >> the scale of this latest cyberattack just stunning. u.s. government officials saying that they are notifying 400 current and federal employees telling them that their personal information may have been accessed in this huge hacking attack against the office of personnel management. you can think of that agency inside the u.s. government as sort of the government's hr department. it has a lot of information on employee personal information and the like. they spotted this back in april and concluded in may that it was a significant threat and that they had to notify people.

privately, u.s. government officials are saying that this attack came from china. they're not saying the chinese government necessarily. but the attack originated in china. nbc news in beijing reached out to the chinese foreign ministry. here's a statement we got from the foreign ministry spokesman. the chinese are pushing back on this. as we know cyberattack is very hard to trace back. it's anonymous and across border without the thorough investigation, you jump to a conclusion so quickly. one of the questions here guys is what would the chinese or any other foreign intelligent service if that's who did that want with a massive data base of u.s. federal government employees. i've been talking to cybersecurity experts and they tell me what you can do with a data base of this size use it as a jumping off point including spear fishing attacks. very targeted e-mails going after individual people inside the federal government and they tell me that the one e-mail that every federal employee is guaranteed to open if it appears real is an e-mail from

the opm about their own pay scale, guys. >> okay. thank you for that report. we appreciate it. we'll keep coming back to this issue because it is a big one. in the meantime when we return the ceo of new corps has a plan to fix america's employment problem. the solution lies in manufacturing, smart trade and energy production. he's here to explain all of that. and then restructuring expert harry wilson. greece to delay its debt payments. i don't think he's bringing any diamonds along. and then the third leg of the triple crown is just a day away. we'll talk to the owners of american pharaoh live from belmont park. stick around for all that and more.

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in his new book former new corps ceo said the problem with america is the lack of manufacturing jobs. dan joins us now, he's the author of "american made why making things here will return us to greatness." he's also the chairman of new corps and, dan, we all want that. it's something that we almost

decided maybe we never get back to the age of manufacturing here like the united states used to be but we certainly appreciate it. but we deal with being more of a service economy from time to time. but things have gotten a little bit better at least in the past five or ten years. at least with the energy resurgence here, right? we aren't as bad in manufacturing as we were ten years ago. >> that is a fact. we have gotten a little bit better. like the pimple on the back of an elephant better. we have taken our economic model to an extreme. way too far to the services side and services side of the business is not what i would term the new wealth creation engine of this country or throughout our history. the real wealth engine is innovating, making and building things here. what creates our middle class. our model has failed us by taking us too far to the urves ises side. we thought we could have other

people make stuff for us and have good jobs. if i could illustrate that for you. . making things in america and not buying america. as we make more things here. why? why do i say our economic model is a failure for the american people and for our country and our national security. number one, since 1990 our manufacturing sector shrink from 20% of gdp to 10%. forget the revenue being at a record level for manufacturers. it's only 10% of our gdp today. so, why do i say that's an issue? what's been our growth rate since 2000? average gdp, 1.9%. what has taken place since 1990 on trade? we've accumulated an $11 trillion trade deficit net of all the positives exports and still have an $11 trillion trade deficit. and the last thing we're talking jobs today, if you take a look at this point in time in this recovery compare it to the

recoveries of the '74, '82 and 1990 recessions. same point of time afterwards we are 10 to 12 million jobs behind those recessions and jobs that they created at this point in their recovery. and the last point i'll make to you is the real unemployment rate is not even 10%. our unemployment rate today is real terms. what the american people feel is closer to 15%. >> yeah. >> dan, the, the way that we negotiate trade, obviously, has been thrust into the spotlight more than it ever has for the past three months or so with tpt and the president trying to do it and we're conservative republicans, far left democrats

being all on the same side. the one thing that we know through a cursory examination of economics is a comparative advantage over time makes a difference. so we want a way that we can sell all of this stuff. we need to open up markets around the world. we need to sell to 2 billion chinese. we need to sell you know that's going to be what brings our people our middle class. that elevates us, again. that's being merchants to the world. sometimes you can't have it both ways. if we get too, you know if we all of a sudden close our borders and all of a sudden make things here. they're going to on the other side, there is going to be tariffs and protectionism and it just seems like we have to approach it in a rational way. we have to give some things up to get something. trying to think president obama feels that way. >> well listen i'm a firm believer in any relationship needs to be a win/win. i'm a president, i'm a reagan type of trade realist and the

fact of the matter is that we have had failed trade policies. you can't just focus on exports. you have to look at what is happening on the import side. that is what the net gdp growth and the net and the balance is what's important. i'm sorry to tell you, but the facts loudly scream we have lost free trade as the real growth trading engine of the world. we've lost it to trade murktleism. free trade was designed to defeat but by the $11 trillion trade deficit that we accumulated, i'm afraid that it has trumped by trade and there is nothing wrong, as president reagan used to say. there nothing wrong to holding people accountable by the rules and making sure that we have an opportunity to compete overseas and in the united states. both places. we have to be able to compete in the world. both at home and overseas. but, you can't have a lot of cheating going on in the global

trade. and you can't have it dominating free trade, which is what happened. >> dan, i don't hear the issue of technology though in this conversation. which is to say when you really think, when i think about one of the main reasons that we haven't had the employment rebound that you suggested we should and need to have don't you put technology in one of the buckets as the reason why that hasn't happened yet and may never happened? we have moved sort of towards a winner take all society? >> in a very simple answer no. let me tell you why. and nucor is a good example. we are the most efficient steel producers in the world. now, granted as you innovate and use new technologies you use less man time to make a product. no doubt about it. the number of jobs that are needed to make a product is down. but here's the difference. in a world that is growing by leaps and bounds and economic demand and opportunity,

innovation while it will lose jobs for making the same amount of goods innovation should allow us to be much more cost competitive. which means we can get a bigger piece of the pie and that's what hasn't happened. not only got a big piece of the pie overseas but we lost a major piece of the pie, $11 trillion more piece of the pie here at home because of the fact that our trade policies have failed and the fact of the matter becky, joe, andrew we are in a trade war. we just haven't showed up to fight yet. >> and there's no way to make this ttp work for you? >> oh, yeah. no i'm good with trade agreements. but we have to be better negotiators, joe. and we haven't been. >> know what's in them. that may be a start. >> that would help wouldn't it? >> all right. with our experience in steel and with the dumping and the way, i hear you. i hear exactly what you're saying. it's a tough, it's hard.

>> it happens in all manufacturing, joe. >> dumping everywhere. we appreciate it. and we'll pick up that book and see that side of things. we appreciate it. thanks. >> thank you. when we come back this morning, a couple of stocks to watch. yahoo! cutting some services and walmart hosting its star-studded meetings. we have those stories here, next. time now for today's aflac trivia question. how many bills are there in one pound of u.s. paper currency? the answer when cnbc "squawk box" continues. ah! aflac? aflac! i thought you said this guy was the best? oh, he's a horrible stylist. gah? but he's the best at paying claims fast! really... mmhmm. paid mine in just one day. one day? yea. aaaflaaaac! in just one day, we approve and pay.

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now the answer to today's aflac trivia question. how many bills are there in one pound of u.s. paper currency? the answer, 454 bills. welcome back to "squawk box." yahoo! planning to shut down a few of its services including yahoo! maps. the company shifting its focus to search and digital content and also closing its music service in france and canada and halting yeahahoo! tv and interesting because the company's ceo used to run the

mapping service at google. and, by the way, the next story we're about to talk about, walmart, she's on the board of walmart. >> marissa has become madonna. >> i'm just telling you. >> walmart holding its annual shareholder meeting today. voting on board members including her and other proposeal proposals. i don't know if she's up for renewal. always a surprise celebrity emcee and musical guest. we'll bring you live cover nl from arkansas just a bit later this morning. joe? coming up greece kicking the can as we figured they would. delaying payments due today, but pledging to pay all their june debts by the end of the month. we'll talk to the restructuring expert harry wilson next. as we head to break, take a look at u.s. equity futures. to put in my 15-year notice. you're quitting!? technically retiring, sir. with a little help from my state farm agent, i plan to retire in 15 years. wow. you're totally blindsiding me here. whose going to manage your accounts?

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♪ welcome back to "squawk

box," everyone. we do have some breaking news out of vienna. opec is keeping output high. this is as expected, but this is the official word. oil prices this morning look like they are moving slightly higher. yesterday we saw wti falling back below $58 and right now at $58.48. also in the headlines this morning an hour away from the may jobs report. 225,000 new jobs last month with the unemployment rate to stay steady. southwest airlines was extending 572-hour fare sale it prevented numerous customers from booking flights. costco has been subpoenaed over its subscriptions for controlled substances. the four seasons restaurant is a manhattan hot spot for power lunches. normally the buzz is around its consumers. many of whom are our guests on this show. you've been there before as have many in the audience and

now, though the restauranter who is in charge of that restaurant is in the spotlight. co-owner is under fire for sexual assault. he was charged with first degree sex abuse and court papers say he forcibly kissed the woman and molested her. the accuser is a 28-year-old woman who is the daughter of one of his business associates. she teamed up with the nypd to secretly record a telephone call with him during he apparently said i'm sorry, it won't happen, again. we were both drinking. >> that's good enough for me. >> i hope you don't know if these things are taken out of context and you don't know where these things are. i am not trying to protect my table. no, i don't have a table. a lot of folks who hang out at the four seasons are fascinated by. by the way, four seasons restaurant, at the end of this year is not going to be there because they're in a big fight with the real estate developer who owns the building and they say they're going to move downtown. i don't know if they're going to

be bringing that whole sort of steve schwartzman crowd with them. >> the "post" story that talks about this today mention whood was was in the dining room. seems a little odd. >> i thought they were not on the best terms. but then i saw, i think henry crab was hanging out for lunch. barry diller. >> and former governor paterson. >> you're right. a.b. rosen. you know looking for last meal before gets kicked out. in the meantime greece delaying debt payments to the imf. bundle four payments to a lump sum comes due on june 30th. joining us to talk more about the latest turn in the greek drama. harry wilson, ceo of mava advisors, one of the great restructuring experts and this is restructuring on a grand scale. they missed the deadline.

let's call a spade a spade. do they even pay? do they even pay on this day? >> today, no. >> june 30th. >> they'll get to a deal that kicks the can down the road again. get to a deal some time over the next three or four months and maintain political support while pushing ever so slightly forward. >> why do you think they'll get there? why do you think this will not just go on. at some point, isn't somebody going to blink? why do you think the greek people are not going to blink? >> by blinking do you mean exit the eu? >> or make the payment. not just the payments that happen over the summer. mu ris once you hit the fall, you hit the big money. you're in $50 million territory and that's much harder to come by. >> i think they have the money that the four payments due in june. they'll be done by june 30th. i think those will be paid because they'll get to a deal. get to another deal. what you're seeing is a slight nudging towards reform where they make incremental progress

on the surplus targets et cetera and allows both side to move their respected parties forward. far more band width than it should. certainly a chance of a football, i would say 20% and therefore something major and bad happening. >> 20% is rather large odds. you're not talking about a 35er-- you have to sit around and make sure you don't have exposure. >> i say 20% because when you look at the enormity of the problem. the gdp is not sustainable. unsustainable economy and mismatched with the euro. never should have been in the euro. so, those generally when things are set to fail they generally fail. take a lot longer so the besht example and at some point i think they need to radically restructure their debt. >> if your biggest market is

tourism. if you could be out of the euro and be a much cheaper place for people to travel it seems like you would benefit. i don't know what benefit they get from being in the euro. >> great place for manufacturing, if they sell to europe just like poland and hungary and other parts. so, there are a lot of good things that could come from an exit. you would have to be carefully managed. great piece from ox ford economics talking about 70 currency dissolutions have happened over the years and most end up being positive within a short period of time. >> for the country. >> and how deep is the pain on the way to get to that place? >> in this study t was something like two-thirds had, i believe, modest to, you know basically flat to positive growth in the first 12 to 24 months. and then they had a small number that had -- >> the problem is those currencies were probably not tied to so many other countries, right? >> i think the baltic soviet union. this is probably the close example. most of them were check lu

czechoslovakia. >> may be the only way to do it. russia t could work. south america, it worked a couple times. this may never work. then i was thinking you said making slow progress. isn't it like three years? what are they talking about? what have they talked about yesterday that they haven't already talked about. ? it's maddening. >> i use reference political theater. a lot for the consumption of the crowds of both sides. spain and portugal and others and look like he's trying to win concessions for the greek people who are economically in dire straits. >> you mention manufacturing there in the greece and i want to talk about manufacturing in the united states. it is jobs friday. we just had a guest on and what real unemployment could look like in this country. you think germany is the right model, i'm told. >> elements that we should look at more closely. the reason i say that 15 20 years ago the u.s. and germany had about 20 in gdp in

manufacturing. germany still does and the u.s. is down 12%. germany has had a much more focused effort on maximizing activity. benefitted from the euro effectively subsidizing to the un and broadly. and a much more concerted focus on job creation. they have everything from you know, more focused research functions to develop jobs and more focused efforts to create jobs and manufacturing. >> what would it take for us to do that? >> i think it would take much more concerted effort from the government to have a domestic policy. >> it's a policy issue. >> policy issue and corporate wealth. >> by the way, one element of that, too, chinese manufacturing has gotten so much more expensive that the tradeoff of going to china, which was radically better is much less today. >> i heard you were watching

"squawk" yesterday and you saw what robert mcnamee had to say and this idea that all of us won't own cars and other assets we will share assets and i heard you took issue with that. >> well i think there are a couple things. one, it creates efficiencies right? somebody trades -- >> you're calling it the concierge economy. >> i got it from somewhere else. but i think it's a good example. people are trading and people have more time and traded for people who have more money. i think that's an efficiency. that being said i think there are limits to it. a couple examples of those. we think about one privacy. people, so you take the extreme to its ultimate. take the example to the ultimate extreme. communal housing. people aren't going to give up their homes to live with random familyies families. >> no communes? >> never partake. >> nobody knows whose kid it is. >> but i think cars are one step further down the food chain in

private living. so that's kind of one piece. >> auto sales are at the highest point they've been. >> even uber in san francisco. san francisco bay auto sales are up dramatically, even more so than the country in the last several years. so, i think and the reason that i believe is because when you lower the cost of accessing a good whether it's minutes for telephones books through kindles or phones or cars through zip car and uber you increase usage. that's why we have a lot more minutes being consumed. i think we'll have a lot more miles being driven in the future which will lead to more cars. maybe not owned by you and me, but you'll see more miles being driven. >> former board member of yahoo!. yahoo! japan piece. would you invest in this company now? >> i have to stay away from that one as a former board member. >> as a board member you can't

say anything. >> i have a lot of respect for marissa and the team. when we come back this morning, american pharaoh will make an attempt on history with the first triple crown since affirmed back in 1978. and the last 37 years, 13 horses have fallen short of the triple crown at belmar park. the owners will join us next. we are high hopes this time around.

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tomorrow history could be made. we said this before but maybe it's different this time. scary words. belmont race track as american pharaoh goes for the triple crown. let's get it to robert frank who is already at the track and he's joined by some special guests. robert, good morning. >> good morning, joe. well, all eyes on american pharaoh tomorrow and with us this morning, thank you so much for being here are the owners of american pharaoh. justin and ahmed zayat.

ceo and founder of zayat racing stables. guys, so many years we get to this point with a horse. won the first two, not this one. can he do it? >> i think he can. he will. he is ready. he's breathing fire. he looks very very healthy. the most important thing after a very long campaign after winning the derby and the preakness is how they are carrying their weight. their condition. is it wear and tear coming on. and he doesn't give us any sign. he's a very happy horse and that's what makes us very excited. >> he was training here yesterday. how is he running and how does he like this track which is so different from the preakness and the derby. >> either you'll like it or not like it. you can't train for it. but he's moving really beautifully on it. we were very very happy. the exercise rider came and thumbs up. so we're counting our blessings right now. >> horse racing for you guys is

not just a hobby. but you were in business. you have had a lot of success in a very short time in horse racing. >> one word. passion. >> and a lot of money. >> that too. that helps. >> you guys obviously, have already sponsored up here on american pharaoh and wheels up. what are you going to do if he wins? what is your plan to capitalize on this even if he loses? >> right now we want to enjoy it. i want to do it for the fan. we have had a drought for 37 years. this is our hometown. the big apple. i just want to do it for the sport. it's not a sport. think about it. lebron james or michael jordan. >> and you think if this horse wins, can he really change horse racing? can he attract more people and more sponsors? >> definitely. i think me being a 23-year-old

young guy hopefully i'll bring in younger generation and more fans and it's about the horse and the industry and what can become. i haven't seen a triple crown winner and i'm dieing to see a triple crown winner and what will happen? i'm waiting to see. it's hard to say what will happen to horse racing if we win the triple crown but i'm hoping it will be mayhem and everybody will be going crazy. >> we know following you for the last month, it will be mayhem in the zayat family. joy, you joe, you want to jump in? >> i got my fingers crossed and i've seen three to five odds and then i've seen people saying this is going to be the year but then there's always the scientific studies that put in a bunch of stuff and it comes out and it says, no. i don't know whether it's the lengths of the track or they think some of the other horses that didn't run the preakness would be fresher. but right from the, i hate to say it. i don't even want to jinx it. even before the derby, he seemed

very special even before it. and so far, you know, the first race was won by this much. the second race was run by eight lengths and we're all sort of dreaming of a, i know it's too much to ask, but a secretariat moment and i'm just hoping that it's possible. >> joe, what makes this i've been very lucky to have a lot of good horses. really good horses. what make this guy special, american pharaoh and the way he does things. everything is effortless. he is such a beautiful mover. he moves with such fluidity or easeness that is uncanny. i've never seen it in any horse before. so i'm hopeful that would define greatness because for you to win a triple crown. you have to be different from all others. there have only been 11 in the history of the game. so, hopefully it will come. >> that's what captures the

imagination. how many horses have there been in 34 years? >> 11. >> but how many total horses have people bred from great lines and just thousands of horses and to get one that captures the imagination. a horse so special that they end up making movies about it in the future. it's very special. >> absolutely. we're praying, hoping. it's fun to be part of that. it's really about the horse and the sports and the fan. i mean we are beyond tickled pink. >> love the hat. >> victor is everywhere isn't he? he's everywhere. going to be on victor's pants, too. wheels up will be on victor's pants. >> the only logo. >> and monster. >> thanks. programming note you can watch the belmont stakes. you must watch the belmont

stakes on innnbc. it switches over to nbc at 4:30. thank god. remember that guy i'll have another. no i'm not going to run him. he ruined it for all of us. we have a new drug to increase female libido. here to tell us more about it right after the break.

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an fda panel backing approval for women's libido drug nicknamed female viagra. not similar in any way. joining us with more on the drug, meg terrell. i think it is about almost as dissimilar in terms of the two sexes in how to approach something like this. >> no. it's really not like a female viagra only that it is supposed to aid. >> they tried viagra and that doesn't work. >> this drug works in the brain on actual neuro transmitters. the german drugmaker was testing this as an antidepressant and they found that it didn't really work so well for that but there was this other effect. they started testing it for female sexual dysfunction. it failed once with the fda and the small company bought it and reastemptuattempted and then got rejected, again. 18-6 voting yes, this drug had the risk benefit profile to

recommend for approval but it should have some post-marketing safety requirements. that's because some side effects here and that is what concerns the fda. on the whole, it's dizziness and sleepiness and things like that. but this is a chronically taken drug. you take it once -- >> once a day at bedtime. and if you drink while you're on it, they have seen in trials that there is a dangerous level of low blood pressure for some people. that's something people are really worried about. how can you control whether people are drinking when they're on a pill like this. then there are questions about how effective it is. we were talking during the break in clinical trials the way they measure these things is by satisfying sexual effects. they found that they increase them by one per month. >> the placebo effect was almost as effective. very closely if you were taking. >> the placebo posted increases. >> i almost feel like i have to say something funny, but i'm not

going to. satisfying sexual episodes per month. it can go so many places. >> then, coming up the countdown is on. may employment data a little over 30 minutes away. stick around, we'll be right back. leave early go roam sleep in sleep out star gaze dream big wander more care less beat sunrise chase sunset do it all. on us. get your first month's payment plus five years wear and tear coverage. make the most of summer... with volvo.

get to work. the may jobs report is almost here. could today's number force the fed's hand and instant reaction ahead. world's largest retailer looking to boost employee morale and opening consumer pocketbooks. plus, the biggest hack attack in the nation's history. china blasting the u.s. this morning calling data breach accusations irresponsible. still, the personal information of more than 4 million americans is at risk as the final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york. this is "squawk box." welcome back to "squawk box," everybody. this is cnbc. we are first in business

worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. on the clock right now. less than 30 minutes to go to the may jobs report. let's talk market expectation and the consensus is suggesting that the economy probably added 225,000 jobs last month. unemployment rate is seen holding steady at 5.4% and we've been watching the futures ahead of all this. yesterday the market sold off. dow was down by about 170 points and s&p was down and the nasdaq was down. you see this morning things have been bouncing around a bit. we started out this morning with stronger gains than this and we've seen declines. right now looks like things are relatively flat as we await the jobs report less than 30 minutes away. we have a great lineup ready to get us ready. we'll hear from ken rogoff and barbara reinhard. former texas governor rick perry who just announced his run for president. he will be joining us in just a few minutes. he's standing outside. >> he's right outside. hey, governor.

there he is. >> he is on his way in. andrew, why don't we get some of the top headlines. greece will not be making a payment owed to the imf that was owed today. bundle four payments due this month into one lump sum of 1.5 billion euros due on june 30th. ken gets kicked once again. the greek prime minister canceled a meeting scheduled for the european commission and now expected to address parliament at 11:00 a.m. eastern time. that is a speech that could move markets. here's what turn around expert harry wilson had to say on greece just in the last hour. >> what you're seeing is kind of a very slight nudging towards reform where it makes incremental progress on the primary surplus targets, et cetera, each step of the way and allows both sides to move their respected parties forward. it's a totally inefficient process and more band width than it shows and that's where things are more than likely to come up.

>> the cartel decided to keep out but high as expected oil prices. right now you can see on the board there, we'll flip it around there for you. you're looking, well we're waiting for it. it's not going to come. in the meantime u.s. officials reporting a massive breach of federal personnel data. wti crude at $58.32. so, you're looking at that up slightly. anyway, where we had started that conversation before we had millions of employees that were going to be notified that their info could be at risk. this is the big hack attack and all in the headlines this morning. u.s. officials reportingly investigating whether chinese hackers were involved and now china is firing back. saying the acquisitions are "irresponsible." joe? let's welcome our jobs panel ken rogoff professor at harvard university. referenced earlier in the show with the greek move the zambian. i called the zambian gambit which is not some of these i was

looking at. child master at chess at what age? 12 or something. >> i was an international grand master. >> international grand master. we always bring this up. the english opening is good. i don't know if -- how about the dutch defense? do you know what the dutch defense is? >> solid. >> the stone wall attack is my personal favorite. what about the zambian gambit? >> new opening ought to reach back to the '70s, evidently, to find it. >> barbara reinhard is here, as well. pp. one time i remember i asked ken if during his two-hour guest hosting appearance had you had any point wondered off and thought about chess and some moves and you say, yes. his answer was, yes. i just love that. and i haven't thought about it during the show. i did today. >> i played checkers. >> right. >> it's about as good as it can get. i'm still working on that castle thing. what is that castle thing you're doing in the corner?

you have to jump the castle. >> sounds right. >> kevin hastert, director of economic policy. we're making this into a big deal, again. i'm mad at adp now because we know it is going to be over 200. can we assume it's over 200, barbara? >> we think it will be 220,000. >> i think it will be a little higher than consensus, but who knows what it is going to be? this is a number that gets revised a lot. it's the difference between two large numbers. i don't think we know anything. >> and the margin of error. kevin hasset like 80,000 or something. >> so steve liesman and i have been having competing models and i just updated my model to include this atlanta fed gdp now thing and they got it down to about 70,000. so that model says we'll be at 240 this round. i guess that's not much different from consensus. >> the contraction in the first quarter was weather related and

it was the port strike and everything else. if we're going to do 220, 230, 240, again. we're back on track and it sounds like a 2.5% economy then kevin. >> it's a manic-depressive economy. right, every other month we decide we might be in a recession and negative first quarter and second quarter is still looking around 1% even according to the atlanta fed number. we're not really looking great. we're just very very close to treading water. >> six years, ken. you wrote the book on why it happened and you stick, you stick to that. it's not the fed. and making corporate managers do short-term things because of zero interest rates. not obama care and not regulations but just a hangover from the depth of the recession. >> one thing that is fading in the united states. the deleveraging and the hangover. not in europe it might just be starting in china. so we're certainly still experiencing some of that. obviously, other things going on demographics. >> barbara, a quick comment. >> i think a couple things going on. don't forget, the fourth quarter at the third and fourth quarter

of last year we're coming off at above trending growth. to come off of above trend growth to below trend growth isn't quite as bad as it was the year before when you were at trend growth and slip below it again. we do think there is enough that we'll see a reacceleration and it will be a very important one to be watching when the consumer comes back. >> we'll talk about this before 8:30. the latest candidate to enter the 2016 presidential race governor rick perry joining us on the set. i was watching yesterday on twitter. it was 110 degrees. even though you were sweating and the media would normally say, look at the sweat. your words got people's attention. and i almost saw universal claim from both sides of the aisle. you made some really powerful points. this is not an interview where we just tell you that. we've given you tough interviews in the past. it was a powerful speech and texas talked about all the jobs

we were talking about here. >> by the way, thank you for your comments. what we did in texas is we'll work anywhere. because texans are somehow special and nobody else is. this is because of tax policy regulatory policy a legal environment that doesn't allow for oversuing. and then accountable school policies. if you are hispanic in texas, you live in a state that has the highest graduation rate in america. if you are african-american, you live in a state that has the highest graduation rate in america. you want to send a message to people we care about you and we carrye about your family graduate them from high school. that puts them on a track. you are two and a half times more likely to own your own small business. you are nine times more likely to be employed. i'd like to see that all across this country. and it can happen across this country. we're just a few good policy

decisions and i think a leadership change at the top away from that happening and when i talk about the policy changes. tax policy is one of them and in the western world, you need to lower that. will tell you and agree that lowering the corporate tax rate by 10% will raise middle level wages by 5% to 10%. every blue collar worker in the country ought to be saying perry, i ought to vote for you if you're going to do that. based on that one thing. >> it was this network, cnbc that scuttled your plans. you should have said all of them. you want to close all of them down if you couldn't come up with that one. but that's i mean the type of attitude is probably going to be viewed positively this time. you're ready to go again. you don't care what happened last time. >> i hope what happened four years ago whether it's in our economy or whether world affairs or what have you. we learn from them but that's

not the vision. and from here forward is what we need to be talking about. who can take this country forward? obviously, look backwards that records. i think this is going to be a show me, don't tell me election. what have you done? >> longest serving governor in texas. >> i was tested whether it was the space shuttle disintegrating in east texas or multiple hurricanes or whether the crisis on our border whether it was ebola. those are events that build you, prepare you and the only way that you get that type of experience is by doing it. >> you're still down to 4% though. it's a scattered field. no clear frontrunner. nobody's got over 11% or 12%. >> people will start paying attention. people will start paying attention as we go and lay out our visions for the future. >> just the politics of all this. as joe just said sort of dispersed and the folks that were with you before had to move because we didn't know you were

coming necessarily. certain people that went with jeb and others ted cruz and others with rand paul. can you get those people back? does it matter? >> very talented field. i think we have when you look at carly you look at lindsey graham and the only other person who has worn the uniform of the country. there's just some really talented people. what i think is important is going to iowa. nobody has been to iowa more than i have over the course of the last two year. i'll be there in the morning on a motorcycle ride with a bunch of veterans and we'll be hooking up over at ames with senator urnst. but the point is plenty to ego around out there. but the infrastructure that we will put in place and that we've already put in place in iowa is multiple times more than what we had four years ago. you're going to see us in new hampshire and south carolina. all states which i will be in over the next 48 to 72 hours.

>> and you point out, look, it's a learning experience. what happened four years ago, you learned a lot. can you lay out what you learned and what you will do differently? >> obviously, being healthy. the back surgery six weeks before i started and neurological hyperfusion which was a result of that that nobody knew what was coming. when you don't sleep, you don't perform very well. and for six weeks on into three months after that, i was not on my game at all. and i slogged through. i worked as hard as i could. the fact is when you don't sleep, you don't perform very well. preparation is the other side of it. monetary policy, physical policy. domestic policy. foreign policy. all of those are incredibly intricate issues that i had not spent the time being prepared for. >> governor one of the assault on twitter, i think it was taken out of your speech about, you want to be a uniter and you think this has been an

incredibly divisive six years. >> it has been. >> i made that point again and again. the rich versus the poor. whatever. all of us on different -- >> all different people united. >> the last conversation we had, remember, it was about marriage eequality and gay marriage and i talked to you about that. how are you going to reunite everyone if you stick to the republicans sort of social contract. >> we talked -- >> how are you going to unite everyone? >> the idea that we're all going to agree on these social issues that is the single reason that these decisions need tabe made at at the state. that's my position on it. those decisions need to be made in the state. i know who i am i'm not going to change at that. those are the important issues that face this country. i'm telling when you go ask people what is the most important thing, it is who is going to get the economy going in this country so i can take care of my family. by the way, who is going to make sure that my family is safe and americans want to see that

border secure. you'll like me president with the united states. the border with mexico will be secure. >> you were talking about some of the economic issues that make sense to this audience in particular. but yesterday i felt like you were emphasizing some of your military service and you were one of the few with military service that is actually running. we haven't had a president that had military service, i think, since 1990 before 1992 in a country -- >> george bush was in the guard. >> okay. >> i'm counting it. but in a different way. >> you didn't count it. you said 1992. >> the question i had in a country where military service has diminished so much how can you make that relevant and resonate? >> i think when you take into account the families of these young men and women who serve and we'll see how ill served they have been by the veterans administration. this is a national tragedy what is going on at the va. even with the exposure that sat over the course of the last year it is still not being addressed and will not be addressed until there is an individual in the

oval office that gets up every day and calls the chief of staff and calls the veterans administration secretary and says, what are you doing today to get this taken care of and have the people who are responsible for it been fired or reassigned yet? that is not happening. i know for a fact that the president of the united states he had a tragedy on his hands. he put an individual in that he thought would take it off the flunt front burner and a year later, nothing's happened. we need a president. those families are being affected. this isn't just about those young men and women who served. this is about the families who have been impacted by this as well. and to make sure that they are taken care of i will suggest to you a very very powerful issue in the upcoming campaign. and i intend to make it one of the most important ones for my perspective. >> governor everybody knows that the state of affairs in the middle east is as deterrierated

to the extent that it almost boggles the mind. and that the threats, too, free people and free democracy with isis. you can't overstate that. where people disagree is whether the president should have been able to somehow prevent this from happening. i've seen criticism of republicans that they want you know, they criticize obama for this and that and everything else. do they say they want to go to war? do they want to bomb iraq? what do you want to do? do you want boots on the ground? do you want another situation? >> i think either or is not the proper question to be asked. i mean what would you do about it? coalition with our allies in that region. i'm talking about egypt and jordan. with the israelis. with the turks. obviously, the saudis are going to be a major part of that. a coalition, very heavily focused on intelligence and intelligence gathering and then using the special operations. >> so not boots on the ground.

>> i'm not going to say not without. and i think lindsey is correct on this. i might add lindsey is the only other person who has worn the uniform of the country that will be in the mix this time. but having that type of an approach where our allies really trust that we're going to be there and focused on this issue. bringing the northern iraq part of the world and giving them lethal weapons where they can fight the isis right there in their homes. all of that is a strategy that will work. this president has been i think he, i think he lacks being able to connect the dots in that part of the world as one of the challenges that this president has. he is very interested in getting a payment with iran that does paint his actions, as well from the standpoint of standing back. >> can we go back to the the economy? >> absolutely. >> yesterday we had richard fisher on set with us. the former federal reserve president of dallas and he pointed out that he thinks

america right now is at a very unique place when it comes to its economy. things are primed and we could be in a fantastic place. not knocking it the way we heard some others. >> i agree with richard. richard haas been one of my mentors. i had sitting at the table in austin texas, from james to richard fisher as i've talked about monetary policy. but i tend to agree. you must have a leader in this country that understands, here's how you empower the economy. and you lower the tax break. you use the energy resources we have in north america, canada, united states and mexico. more reserve in those three countries in saudi arabia and russia. develop these energy resources. you will drive down the cost of power, electricity. at that particular point in time coupled with corporate tax policy, you can bring manufacturing back onshore in this country like we've never

seen and a renaissance of manufacturing and good jobs created and an explosion of the american economy can happen. and i will suggest in very short order. >> question about jobs. it is jobs friday today. yesterday glen hubert who is the adviser to jeb bush made a comment about how he would be an advocate of stimulus which raised a question because president obama has pushed for, has pushed for more infra infrastructure and he talked about an infrastructure plan which some people thought was a stimulus plan. would you be an advocate for stimulus plan? >> i'm for stimulus in the sense of lowering taxes and using our energy, again. i'm a big believer and this is where, you know, some of the candidates and myself we we veer off a little bit in the sense of i think you leave a lot of this to the states. trying to make this one size fits all thing in washington, d.c., work and work well. hasn't had a very good track record. whether it's in health care whether it's in education. where 19 one of the reasons i'm

against common core is i do think that governors and legislatures and parents and school administrators in your home state is a lot better place to build curriculum than washington, d.c. and the same is true on infrastructure. i trust the texas department of legislation to come up with a program that is more efficient and they'll know where to put these projects. >> governor, thanks for coming in. >> yes, sir. thank you. >> good to see you. when we come back this morning, as we mentioned, the final payroll predictions we'll be getting them from our all-star jobs team. plus the number of the morning just about ten minutes away from that jobs report. stick around, "squawk box" will be right back.

e financial noise financial noise financial noise financial noise

just minutes to go until the big jobs report. predict the payrolls. let's get to our panel this morning. kevin hassett is standing by. you're the first to go. tell us what you are expecting in just 6 1/2 minutes. >> i won't speak for 6 1/2 minutes. 240,000 coming. i think there is going to be a big bounce back from last month and that the risk of recession seems to be completely gone given all the good data we've seen in the last couple weeks.

>> whoa. all right. >> i like that. >> 240. rick is predicting 235,000. why don't we start around the set here. ken rogoff. >> i'm at 242,000. i think a lot of deleveraging in the u.s. and the seasonal will be gone and on the other hand as kevin said earlier, the standard deviations much bigger. >> all over the place. we've give that exception. barbara, what is your number? >> credit suisse call for 220,000. pretty much in line with consensus which is 225,000. >> andrew 250,000. there it is right there. >> that would bring a smile. >> that would bring a smile right there. >> steve liesman is here. steve, you put work into this. >> 184,000. again, i have garcia's hand here. what is that? that is me on the beach. look at those abs right there. thatjure that's jerry garcia's hand right

there. >> well done. >> i'll give my number right here. i'm going high with 280,000. i don't know why. i'll go the high end. >> here's mine. i always have to come up. that's mine. and if it's 309, i'm going to use 309. if it's under 100,000, i'll use 86. >> you'd be the highest, right? >> would you have known what that was? >> no. not until you played it. >> i didn't want to play it. i wanted to wait until someone actually read -- >> are we going to be doing a song every month now. >> a music thing. he's done music. next month something a little bit different. >> the thing is he probably spends more time working on this than i do. i mean i got a model and this and that and i try to tweak it but you, you really put time into it. >> the official numbers we should point out what is it

225 is the official number. 5.4% is unemployment. we'll have the number of the morning and see if it is and find out how many jobs were added to the economy last month. the numbers, the analysis. market reaction. as we head to break, take a look at u.s. equities. >> did we really?

here we go folks. just seconds away from the may employment report. let's get you set up on how the markets are resting ahead of all of this. check out the futures. they bounce around a little bit, at one point we saw up by 25 to 30 points and then we saw down. relatively flat. this is what we've been watching for the last hour or so. dow future is down but by only 5.5 points. the nasdaq flat. if you check out the ten-year. this is pretty interesting. yields have been screaming higher over the last three or four sessions. the ten year at 3.25%. hit a high of 3.24% yesterday. we'll see how these bonds actually react to the jobs number that is coming out. check out the dollar at this point. right now looks like the dollar is up against the euro at

112.21. up against the yen, too, at 124.76. oil prices have rebounded a little bit after a pretty steep decline yesterday. a decline of 3%. right now 58.54. going to be watching all of this. hampton pearson is standing by outside the labor department. hampton? >> 280,000. may pay rolls increased by 280,000 jobs. the unemployment rate is 5.5%. average hourly earnings increased by 0.3%. above the consensus, 225. with the headline number. private nonphjobs. revisions march revised upwards from 34,000 to 85,000 to 119. april downward by 2,000, 223 to 221. a net gain of 32,000. more jobs than previously reported over the last two months. job gains across the major

sectors up 63,000 professional and business services. 57,000 leisure and hospitality. up by 47,000 in health care. on the downside mining losing 17,000 jobs. the fifth month in a row. that sector has lost jobs and so far this year mining losing about 68,000 jobs compared with a gain of 41,000 for all of last year. how did we get to that 5.5% unemployment rate. basically, 397,000 more persons entered the labor force last month. not all of them found jobs. the labor force participation rate 62.9%. same as the previous month. the so-called total or real unemployment rate 10.8%. also the same as last month. long-term unemployment six months or longer 2.5 million. 28.6% of those unemployed. back to you. >> as you can see, thanks the

futers are surging up oh, no they're not. they're down 75. >> just bad news. >> that's just you know it's just, anyway let's get to our panel for more reaction. ken rogoff kevin hassert, barbara reinhard, steve liesman. started to go down and then i saw down 75 and then we are down now 52. some turning around. but you would still, rick santelli, they still like they still like zero don't they? they still like at first blush because i don't see how 280, unless there's something in there that looks inflationary or something negative. what is bad about 280,000 jobs for the market? >> well, i mean i think the bond market speaks for itself. a couple of things. first of all, if we look at foreign exchange side which is really big, look at what happened with the euros the dollar. look at what happened with the dollar yen. dollar index is up a full penny.

a quarter of a percent before the curve. look at the two-year note really flying. i had around 66, 67. it is now trading 73. i think i saw 74. but the most important part of the curve to watch with deals moving up is the five-year note yield. it's been stubborn with the curve steepening most of the year. high yield close of the year was established on march 6th at 169. last year 167. it's now trading in the high 170s. that's the last instrument on the curve to really acknowledge the notion that the markets are operating from a, you know sell rally mode versus say buy/dip mode. that is real confirmation. we'll have to see how it settles, joe. initial volatility. all about the close. anything with a above 1.7 on a closing yield basis, you can put me down in the column saying more volatility to the upside in yields. >> let's have more volatility.

it's 170 on a five-year and we've been told all along if rates go up for a good reason it's okay. it's only 170. so i still don't see why people can't look past you know the exact time that they're in and look two, three, four months down the road. years down the road. whatever. >> that's the plan joe. yellen and company have us all deciding what day, what hour. somebody says you have to do it. we're too busy talking about the mechanics versus understanding that the engine still has problems. >> even if long-term rates don't normalize to what we thought was normal. you know five six, seven percent. even if they don't normalizing back to 2% 3% 4%. you would think that would have to be a good thing over time. aren't you ready for two, three, four percent? >> most certainly if the economy were to support it. i think these numbers, to me

the death of the job market was greatly exaggerated. you have this surge back and you have a surge back and really interesting places like retail coming back strong. leisure hospitality coming back strong. places that suggest that discretionary spending going on in the economy, which kind of tells you that this idea that the consumer wasn't spending. government came back in a pretty decent way, 18,000 jobs up after 15,000 two months in a row right there. what this does and you have to ask this question let me just bring in barbara on this. i don't want to say it, but does it put an earlier fed hike back on the table? >> unlikely. i think the markets have really been looking for -- >>io joe just collapsed. emotionally, physically and financially, he just collapsed. >> don't enable them. say yes. >> one good job's number -- >> it's not one. i'm going to cut you off there. you did 220 and then you did 280. we're back. this upward thing here.

>> we're revising the old numbers. >> go ahead. >> the weakness you saw in the first quarter of this year. the markets have been looking for an unambiguous way to break out of the data. that's why the s&p 500 has been churning so much over the course of this year. one good data point and you have to see if the u.s. consumer come comes back with u.s. retail sales. >> i'll do joe's job in a much less entertaining way. i'll turn to ken. ken, all things being equal. however you guys like to say that latin phrase. 5.5% unemployment rate and jobs growing at 280,000, a 1.2% stable inflation rate. give me the right fed funds rate for that environment i just described to you. >> yeah. inflation. inflation is the central piece of it. it's still very low global interest rates are very low. they're going to be cautious going up. >> forget what they're going to be. given the underlying economics as we know it. is zero the right rate right

now? >> you can't look at it in terms of the u.s. there's a global economy going through this as well. japan and europe just started reflating their economies over the course of the past six months. the u.s. is not in a vacuum and that's what yellen knows. >> negative rates would probably be the right rates in japan and europe right now. >> could the fed ever look ahead? could they ever look ahead and realize that the benefits of staying at zero are nil at this point and look ahead and some day we'll have inflation and actually anticipate it and just go up now? why does it have to be a printed number for them to respond to it? >> because we're coming out of an extraordinary period. >> that's rogoff coming out now. >> it's very -- >> they have a strong dialer. >> another bureaucracy pressure. >> joe, i will tell you this. when you listen to the fed talk. they say two criteria. a secret third member. >> you're going to forget it. >> one, confidence inflation is moving back to 2%.

two, the idea that the jobs market is improving. the third one is the ability of the economy to handle normalization. think about a plane inspector goes out and he certifies that the plane not going to fly at 5,000 feet but 30,000 feet. that's why the difference between zero and one rate hike is much bigger than the difference between one and two. they ain't going to start that they're sure the plane can fly at 30,000 feet. >> kevin, this is why you have to come in studio. i forgot about you. sorry. barbara, you can talk after this. sorry, kevin. where are you? why aren't you here? >> oh, ial be there. i see two really big stories right now. one is unless the data are truly awesome, then good news is going to be bad news for equities. and that's we're about to hit that fed hiking cycle where you need amazingly good news to make equities go up which means a

pretty treacherous time. i think the other thing is that the euro is going exactly on script. something we are talking about all year. a because of the oil shock and because consumers have all that extra money they're not spending at gas stations which they'll spend at retail stores and restaurants and you're starting to see that. that is going to put upward pressure and help push wages up as well which you see in the wage data today. all of that that is going on is exactly what we expected which will probably make it a little easier for the fed start to think to move in october as opposed to next year. >> i don't know why they have to torture us and wait until september, just do it in june. do it in june. 25 basis points. it's not the end of the world. just do it in june. >> it's what i would do. >> we won't go through this water torture any more. since, you know i don't even think i'm allowed to say. >> plus 3 million more americans with paychecks. that has to be significant in consumer spending. let me throw this to barbara.

that has been one of the cunmdrums. tabe fair, a surge in spepdnding in the first quarter and we talked a lot on this show about the problem with the first quarter data. does it look like to add to the litny litany, does it look like the consumer might be feeling and be ready to come back and spend. >> that's what ken and i were just talking about on the break. where has the u.s. consumer been? the first quarter decline you saw in gdp was affected by the collapse in capital expenditures from the energy sector and probably underestimated by most of wall street for the first quarter and also likely in the second quarter. but as you're coming into this summer driving season that's when you start to also see more people utilizing lower gasoline prices. but the consumer, by and large, you have to wait for them to come out. we think they have been resting, not dead. >> rick, muttering.

>> yeah you know first of all. gasoline. let's get with real-time news. when gasoline prices were really low in my neighborhood, they were toying $2 and now they're over $3. let's look forward to new fundamentals and i still say you can't have it both ways. this panel is enamored with many aspects of the economy. let's not go into detail. whether it's close to 18 million units on cars. steve's enamored with the jobs report and after all that we're still toying with the idea that negative rates seven years post the crisis is debatable. it's not debatable. in the end, you can't make corn grow forever by throwing tons of fertilizer every day. if you take care of the soil permanently or not. we have a landscape problem and maybe they'll learn to get around all this crappy regulation and they'll figure out a way. >> and you grow a lot of corn that's really been the secret of u.s. agricultural production.

>> steve knows a lot about fertilizer. >> they don't want their gmos. >> what is evident in the bond market which the ten-year is a huge selloff right now. >> i tell you what these are pretty awesome moves. just watch the five-year. that will keep you on the right rail. >> it was 245 the last i checked. 240. it came off a little bit. down to 240. >> forget infed. i'm sick of them. let the market readjust rates. >> bravo. >> where is my t-shirt? >> i'm wondering how well you know some of these people in the census bureau. when ewe come back jim paulson of capital management will join the conversation and we'll find out what he thinks of the jobs data and what it means for investors in the stock market and the futures after the jobs number. it is now down gotten a little bit better. looks like futures will open up about ten points. stay tuned.

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welcome back to "squawk box," everyone. let's look at the ten-year yield, that's what soared as bond prices plummeted. look coming back from the highs. at one point 244 and right now 2.4. this is where we have been over the last couple of sessions. building up very rapidly. as we saw the yields start climbing finally on some of those european bunds. well capital management

chief investment strategist. barbara reinhard and jeff rogoff are with us as well. what is this shaping up for? does this mean maybe things weren't as bad as we thought in the first quarter or we can rebound more quickly? >> i think, becky, for the financial markets i think it means good news is becoming bad news in the united states. i think that the concerns on wall street, we come into this year with the weak first quarter and we're concerned, again, about stall speed. i think we're getting closer and closer to the realization that that was a head fake. and that we are rapidly probably running towards 5% unemployment and wages are already starting to pick up. and i just think we're going to head towards getting more concerned about overheat than underheat. maybe for the first time in this recovery. and the real arbiter, i think, of this won't even be the fed. i think it will be the bond market and we'll see how it

closes out today and in the next few weeks. but if that, you know if that ten-year could break through 250 over the next few weeks, i think the stock market is going to continue to struggle. not with the lack of growth, but with too much growth relative to our supply which we have absolutely no supply growth. you know 0.5% labor force growth and working age population and no produck divty and any growth at all. even 2.5% demand growth will continue to use up resources and move us towards full employment. i'm with joe. i think the fed needs to get in the game to calm the markets down. >> maybe the markets will do it themselves. you say it with a straight face. you don't even notice it. don't look now but a lot of people are getting jobs. the unemployment rate is going down to 5 and now starting to get higher wages. people better sell stocks. this is awful. i mean you know people are getting jobs and getting higher wages. when you say that with a straight face don't you see why

people think wall street is just an awful place? these are good things. >> but, joe, it's just the opposite on the other side of the equation as well. when main street was terrible wall street was -- it all works out over time. >> we don't worry about inflation yet. you have been worried about inflation for at least a year right? >> well i'm really worried about not so much run away inflation. i don't really think we have that at all. but i am worried about, worried about inflation. in other words i think inflation anxieties are escalating and they are going to escalate. whether we have run away inflation is another issue. but all you need on wall street to have a big change in the pricing of financial assets is to have a change in the anxiety about inflation. i think we're in that zone. and that could be enough to create more turbulencen here over the balance of the year. >> i think it's clear that the number tells you more about what the fed might do next than

necessarily what the economy is going to do next as barbara said. certainly been a huge sigh of relief around the world that this wasn't 87,000 or whatever it was. >> 867 -- >> hume sighge sigh of relief. but it is more reorienting. >> will they do it in september? >> certainly raises the odds. >> but to jim's point. >> june at this point, you know without much more evidence just look to -- >> a quarter point. >> just too much of a random thing. >> but to jim's point, you say that inflation is not a huge issue. he's saying run away inflation is not a huge issue. when you have people in the markets who start to speculate and start to worry about inflation coming up that could throw things out of whack without the inflation actually showing up at your doorstep. >> becky, think about what we

were were were worried about in december. just literally five months ago we were staring into the, you know, very big jaws of a deflationary bust around the world. so seeing a littleworld. so seeing a little bit of inflation is not necessarily a bad thing. for what joe is worried about for the fed to just do something, remember the following. a tightening of financial conditions is not the same thing as tight financial conditions. >> see -- >> sorry? >> i was going to say that increases the risks of a financial market side right now is what you're talking about. we come into this year after a year worrying about the inflationary abyss in 2014. then you have to quickly adjust that expectation. people start pricing for securities for the deflationary abyss. in six nine months we find out no it's not a deflationary abyss. that alone results in a big change in the pricing of assets. i think it's not so much the

risk of actual inflation but a big mindset change on wall street that was prepared for deflation that all of a sudden that's changing in the world. that's what i'm worried about. >> well i think that there is concern that we might have inflation in the future but the risk is much more a thing. the whole world is still struggling. it isn't just the united states. the dollar is up. you have to worry that it's not rock solid. i think they'll be careful. >> thank you for joining us. it's been a pleasure. >> we'll head down to the new york stock exchange and hear from jim cramer. see what he thinks of everybody's take on this so far and what the job reports means and reaction going to be in the markets today.

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let's get down to new york stock exchange. jim cramer joins us now. we've got to get his take on the big jumps number better than expected. looks like the markets turned the opposite way. >> i think we have to think about what christine lagarde said yesterday. this number has to be put in the context of other things. i listened to everybody.

just based on this we should tighten. we have so much so many headwinds away from here we have to put this in context with the rest of the world. we do not have a good situation in europe. china is deceleration. latin america, not that good. if the dollar goes up more than today, earnings come down for many companies ideal with. i could see people freaking out demanding a rate increase. for the rest of the world, this is a long time. that's all we trade off any more. >> yeah. >> you think the opposite. >> if you look at the world. >> you want us to tighten. >> i do. i think they should in june. i don't think 25 basis points will hurt anything. i would like to get one under the belt so we don't think about it any more. just do it. benefits of zero aren't anything. >> i think if they surprised us

in june dollar goes to parity against euro. earnings come down dramatically. >> i arrive to paris june 19th. i can get to parity june 19th? >> it's not what we want for earnings. we want it because we are worried about inflation. if we care about the stock market, you don't want it. that's all right. i care about the stock market. that's my bali wick. >> we love you. we'll see new a minute. joe is planning for his upcoming vacation. when we return ripple effects from the hack attack on america. a look from the stocks moving on that news.

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get your first month's payment plus five years wear and tear coverage. make the most of summer... with volvo. welcome back to "squawk box." u.s. ofrgss say chinese hackers broke onto government computers and compromised the data of 4 million current and former employees. check things out and see fireeye, a lot of these companies involved fortinet involved with security issues are trading higher. biggest one is purefunds cyber. >> economy added 280,000 jobs last month. 10-year got up above 2.40%.

it's now 2.415%. we have little tantrums sometimes. join us on monday. "squawk on the street" is next. good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl quintanilla has date off. let's give you a look at futures. a lot going on. we are poised for what appears to be a lower open. a lot of focus going to be on the treasury market. we watched the ten-year note yield rise by 10