day travel since right before the recession. squawk box begins right now. >> live from new york where business never sleeps, this is squawk box. >> good morning and welcome to squawk box on cnbc. joe is off today. we do have new numbers from the labor department. americans are putting in more hours on the job. that is probably not surprising but on average we're spending more time sleeping and watching television. >> productive. >> we are a productive society. we'll bring you the numbers including how they differ for men and wil later this hour and i have guesses about how they differ. check out the u.s. equity futures at this hour. it looks like things are rebounding from yesterday's declines. the dow was down by 1%.

a decline of 178 points. s&p off by 17 points. stocks closed at the lows of the day yesterday. you can see the dow futures are up by 84 points. s&p futures by 7.5. the nasdaq up by 16. >> here's three of your big markets story on this thursday morning. leaders are holding a summit to talk about greece. creditors gave athens until 5:00 a.m. eastern time about an hour ago to produce a new proposal. so far no new details. earlier today a senior official from greece's ruling party attacked the latest proposals from international lenders as blackmail. a live report from europe in a couple of minutes. the ceo of takata still doesn't know the problem of the air bag problem. he wants to stay on as chief to see the recall crisis through. >> meantime they said they

would expand a recall previously issued here in north america to the rest of the world. >> and in other corporate news jp morgan in talks with the sec to settle that probe. it is whether they had their own investment products as opposed to others. that settlement may come as early as this summer including jp morgan. one of the last big banks to have their own products as opposed to morgan stanley and others that just use other third party products where they advise you toward other products but not their own. also credit bureau transunion pricing it's ipo at $22.50 a share. that's at the midpoint of the expected range. the value of that company now $4 billion. shares expected to start trading on the new york stock exchange today under the symbol tru. in deal news a bidding war for silicon solutions. the semi-conductor sweetening

that offer to $22.60 a share. it's calling this it's best and final. but that's short of a $23 per share offer. so we're going to see where the board of that company ends up deciding which deal they really want. >> mcdonald's plans to sell all of it's stores to a franchise operator. this comes as the fast food chain tries to cut costs globally and turn around it's flagging business in china. in technology news former executive alex stamos is joining facebook as the chief security officer. he had been there aba year holding a similar position there. and a long trip from silicon valley. google is building it's next data center in alabama. it will convert an old coal burning power plant there. it will power the capacity to process internet search requests and show digital video and deliver e-mail. >> stocks to watch this morning include disney. it's raising it's dividend by 15

15% on an annual basis. marathon oil upgraded to buy from neutral over at ubs. offering that the upstream energy stock is a way to leverage a recovery in oil prices but chesapeake energy downgraded to sell from neutral. based on declining leverage and relative valuation and also downgrading from neutral. meantime miller getting results this morning. topped estimates. the company is raising the quarterly dividend as well and bed bath and beyond coming under pressure. earnings falling short and profit guidance is light. also the firm announcing restructuring of its led business and 500 million dollar stock buy back. >> let's get a check one more time on the markets this morning. the futures are bouncing back this morning but this comes after big declines yesterday.

in fact yesterday the dow had the worst day in a month and the s&p 50 saw the biggest drop in three weeks. a lot is because of con serns about the talks in greece and we'll have more on that in a moment. check out what happened in europe or at least what's happening right now in the early trading in europe things are looking slightly better. dax is up by .3%. the cac in france is up by .1% and up by 1% in greece as well. overnight in asia might want to take a look at this. shanghai composite was down by 3.5%. the nikkei was down by only about .5%. also been watching oil prices. you can see that wti is down by about 8 cents. hovering about $60 for quite awhile. this morning it's coming in at $60.19. check out the ten year moet. at this point yielding 2.385%. that's been a relatively steady number right around 2.4%. the euro yesterday rose against the dollar for the first time in

about four sessions. you can see this morning the dollar is bouncing back. and the dollar yen at 12345. gold at the lowest level since the beginning of june. $1,172. we should point out that the transports, the dow transports were weak yesterday. they were down by 2% and that puts the transports back in direction territory. they're now down 11% from their highs. let's get to steve in athens. he has the latest on the greek debt negotiations. what can you tell us today? >> well despite talk of all the hard deadline swres been speaking to julia and she said the latest is these things could go on until sunday. if it does and there's some resolution that puts the whole time scale back and it means that the imf payment which is due on june 30th is just not going to happen on time.

it gives no time for ratification in the parliament behind me or no time for other countries and the creditors to get ratification in their parliaments. but there's zero trust now between the creditors and greece as well. you love the language coming out of brussels as well. he said this among other things. those that think that a greek exit will be an easy solution and may be beneficial for the rest of europe they are misguided. it will unleash destructive powers that no one can tame. of course he was trying to pour cold water on the fact that they think they can limit the contagion if this greeks were to fall out of the euro zone as well and trying to tighten up the tension there. he's been a bit of a liability and hasn't meaningfully engaged with the creditors. the imf is the group many said is sticking out for a much better deal. they're saying there can be no short-term liquidity fix. we need growth. we don't want to be back here in

six or seven months. but here's the problem. the more he gives to the powers in brussels the more he'll find it difficult to sell it to the parliament here and i have been speaking to the left the right, the center and i spoke this morning to an mp which is the junior coalition and i said can your party support the deal as it stands now and he said no they couldn't as well. so they had grave concerns about getting this through. if the junior coalition partners don't like it that sends him to the right and that means political suicide. back to you. >> okay steve, thank you for that report. of course we are all watching that and it's actually impacting our markets over here. futures this morning might be called higher but listen to what carl icahn is warning. he's saying the good times could be coming to an end. he's saying quote, i think the market is overheated. especially the high yield market. i think the public is walking into a trap again as they did in

'07. it's almost the duty of well respected investors like myself, i hope to warn people to tell people that you are really making errors. so the question is he right? head of investment strategy and wealth management and dan is here, the head of equity solutions. carl has been on this now for two years. so the question -- you know he'll be right at some point. >> he will be and i think he is right. if you look at spreads absolute yields, they're below average and it's part in parcel in a world in which you have zero interest rates. you need a reference point for money for markets to work efficiently. the other thing is high yield market has been the beneficiary of no defaults for sometime. it's a rounding error right now

and the expectations continue for that so it has cover but there's not a lot of value. you're not getting the spread that he likes. >> does his comments extend to equity? >> i don't think so. we think there isn't a lot of excess today in u.s. equities. we look at three different measures today we're fair value. the 40 year average is 14 times. by no means are we excessive the way we were when the pu was trading at 30 times. the second place we don't see a lot of excess is corporate behavior. management teams aren't overspending so margins are likely to say high and the third place despite the comments about the public walking into a trap you're not seeing flows into the

equity markets. >> but let me just push back on that. do you know this company we work? this is a company that added $5 billion to its valuation. another unicorn style private company. not a public company i agree. you're looking at me like i'm crazy. >> yeah but i always do. >> that's fair. all i was going to say is it might not be out of control in the public market yet but the question is whether the private market -- all the money rushed into the private market and that market ultimately falls down and then takes everybody with it. >> it's safe to say there are pockets of exuberance in private markets when you look at different valuations and some of these business models. that being said i think they'll be fairly isolated. i don't think they have the impact you saw back in 2000 when the big cap tech companies made up such a big part of the index that you had a much bigger probably for wider impact in our opinion. >> the e though i get your argument but let's talk about

ratios. if it gets smaller the valuation goes up. i have a lot of concerns about the energy patch because oil is sitting around for a coup of months. we're likely to see earnings cut and more capital investment cuts. how big of a concern is that for you? >> for the energy market my concerns are different. i worry about a build in premium for events and if you look at saudi arabia from a geographic perspective it's ringed by conflict that bleeds into the country. i'm not sure markets are pricing that and that could be the relief that the american oil match would get. it happens. we don't seem to be covering it in the western media. so it wouldn't surprise me to see the earnings come down but when you look to the core

commodity itself i wouldn't be so sure it stays at this level. >> in which way? >> it goes higher. >> you're still like $20 above the lowest levels we saw from this current dip too. $60 sounds a lot better in you're an oil producer than 40 or 45. >> to becky's point, the problem with oil is we really don't know what the average marginal cost of production is because every time the price goes down companies are better at deploying technology to drop the average margin of cost production. >> this is the lead of usa today. in a sign of stock market nervousness mutual fund investors yanked more money than put in for 16 straight weeks. what does that mean? >> that is actually some what supportive of our view that equities continue to do well. that's the case recently would zoom out and think about since the crisis you've seen a tremendous amount of flows into fixed income. this has been going on for five

or six years now. you have about a trillion dollars go into bond funds so people are still scared off of '08 and '09. it's something that you mention this year as well. >> i sthau storyaw that story but i think it's bunk. people are pulling money out of the stock market for one reason. they're buying homes. people need down payments. home sales are way up. talk to anybody that buys a home. they don't have 20% sitting around the house. they sell stuff to raise money to purchase a home. so i don't think this pulling money out of the market thing is a bad thing necessarily for the economy or it's some sign of nervousness. on the opposite side i would say it's a sign of optimism. >> confidence. >> because you buy a big asset when you feel confident it's not going to ruin your life. >> i agree. you saw new home sales to the upside. you've seen housing formations start to spike higher.

folks that put off big ticket items in the last couple of years are starting to feel more confident. >> it's like retail sales. whenever you see the numbers come down people panic. i know people that run department stores. we've had them on these programs. we gnomeknow them personally. when people are buying houses and cars they're not buying jeans. expect the data points to look bad. >> before we let you go we just had an entire conversation about the stock market without mentioning athens. >> i was hope weging we could get through it. >> what if nobody panicked? when you look at cds spreads or yields. nothing there. here's the thing about this whole greek crisis. they're talking about that and they're talking about pensions. what they're not talking about is asset sales and the asset development fund was this fund

that was put together four or five years ago to privatize assets. of the -- something like 8,000 deals that they looked at they only completed 40 and they only received cash of about 3 billion pounds out of 330 billion euros worth of debt. so 1%. when we called yesterday just sort of what you're dealing with there was a term in their presentation that we wanted to get clarified so we called athens, we called the fund in order to get clarification. not only could we not get an answer but we were told we needed to fill out a form in order to ask the question. that's what we're dealing with. >> okay. we'll leave it there. appreciate it. thank you guys. >> all right. coming up, in washington the president getting a new win on trade. plus a new poll about what americans may really think about two supreme court cases based on same-sex marriage and health care. but first here's a look back on this day in history. ♪

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>> welcome back to squawk box everyone. in washington news president obama getting so-called fast track authority to negotiate trade agreements in asia and elsewhere. the senate voting late yesterday on a bill that already passed the house. the president will be able to seek final language on a trade agreement with japan and ten

other nations. congress will be either able to ratify or reject the agreements. but they will not be able to change this. this is good for the next six years. so it's not just president obama but also his successor. >> the supreme court said to issue decisions on big cases very soon including same-sex marriage and the president's health care plan that could come down actually as early as today will they make it a constitutional right or uphold restrictions that bar same sex couples from marrying? they could take health care coverage away from millions of americans. meantime a wall street journal poll looks at what americans think about these two big cases. what do they think? >> there's real suspense as we get ready for the last three decision days.

these could come down any day now and this sheds a little bit of light on what americans think about these key issues. tate a look at the stats here from the wall street journal poll on gay marriage and look at an overwhelming support here 57% support gay marriage. 37% oppose it. that crossed around 2010 and support has been growing since back in 1996 that trend is continuing. deeply unpopular in this country with those people saying it works well as it is. just 8%. minor modifications. 40%. a major overhaul. 25% totally eliminate 25% and not just sure 2% of the population there. 65% of the people think that obamacare needs to change if one

way or another. they will tell you they don't look at polls when they make these decisions but the supreme court gets ready to roll out the rulings they'll have dramatic consequences for the country guys. >> thank you, sir. >> you bet. >> i was going through it this morning. anyway, when we come back we've got a disturbing story in the new york times this morning, stomachs turn by 40-year-old meat pedalled by traders. but first take a look back at yesterday's s&p 500 winners and losers. ♪

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good morning everybody and welcome back. we're in the chairs this morning taking a look at the stories that caught our attention today. i don't know about you two but i am sort of the police monitor of our refrigerator. going through and checking for expiration dates because it really bothers me to have stuff in there. >> i can see you in that role. >> i have to bring you over to my kitchen. >> i go through and throw things

out and something escaped me recently in the pantry and i found something that expired in 2010. a can of soup and i thought my gosh how did this slip by me and that disgusted me. >> this is so disgusting. >> if you are worried about expiration dates it turns out all the nasty stories out of china about what they eat, the food that's been contaminated along the way, a lot of it meat this is about the worst thing i've ever read there. there's traders sneaking in expired meat. this was tons of beef pork and chicken wings and in some cases they had been soiled and frozen for 40 years. this was meat from the 1970s. >> 40-year-old meat. >> that was smuggled across from vietnam because they were trying to save money about how they were bringing it back. they were bringing it back in unrefrigerated trucks and they would unfreeze it and refreeze it along the way. this say quote from where they

found 800 tons of this frozen meat. he said it was too smelly. a truck full of it. i almost threw up when the truck opened. good morning happy breakfast everybody. >> i will give the person that stored it some credit for having the wherewithal to store meat for 40 years. >> no way. >> people find a rembrandt like grandpa's closet i understand why you're saving the painting but why are you storing the meat for 40 years. >> i can't imagine that it makes sense economically. >> that's my point. oh i forgot about this freezer. what's in there? >> another food story. are you whole food shoppers? >> occasionally. >> they always call it whole paycheck. now they really should because apparently at least in new york city -- i don't know if it's a scam but they have been accused of overcharging on their food regularly. >> just in new york city? >> in new york city in particular. there was a test of 80 different prepackaged products bought in

nine different versions of whole foods and across the board they said, you know that every time there was overcharging in terms of the price of what it is really supposed to be. >> in terms of how much weight. >> they were overcharged an average of $2.50 because they would claim the weight would be off across the board for everything and always on the disadvantage to the customer. >> disadvantage to the customer. >> so a little story to watch yourself next time. >> bring your scale with you the next time you go. >> byos. >> that's a weighty story. >> mine is a little more light hearted. the nba draft starts tonight. >> tonight. >> brooklyn is getting it. >> i know. >> both new york teams need some help by the way. >> we're in trouble. >> no anyway the return of the big man is the theory. the only reason i picked this story too is i don't know who is

going to be number one. they say it's going to be towns. i can confirm he was in minnesota on saturday because i was in minnesotaapolis on saturday. >> you saw him. >> he was right behind me. i was like hey, how are you doing? he was with his dad. it was a delta flight. minneapolis is not that close to new york. it's about a 2.5 or 3 hour flightment we were on this little -- >> he has to 6'8". >> they say he's 611". >> what are you? 6'4". >> barefoot. >> are you on the front of the bus on that plane. >> it's another $70. i'm paying $70. the front of the bus on this plane was what coach was ten years ago. it was like this. >> does he get the exit row? what do they do? >> so we're getting on the plane and he was with his dad and another guy. probably his agent in front of

me. >> how tall was his dad? >> he wasn't that tall. i'm like okay -- because there was rumors about if he was going to go to the timberwolves so i'm like he's been in minnesota and then it came out that he was there that day on like a 3:30 p.m. flight on a saturday. there's nothing better than being at an airport on a saturday afternoon. >> i wish you would do your legs again like this. >> i mean the front of the bus is not -- everyone is like you're in first class now and i'm like flying across country on a 737 is what coach was ten years ago. it's not ideal. i'm not wining. it's just what it is. >> you're kind of wining. >> this is me in coach. >> that's me in coach. >> now i can't move. >> what is that. >> chris cross applesauce. >> they changed it for a reason. >> it will make you jump jump. >> whatever you used to think that was caused as a kid.

>> oh because the other term for it is considered politically insensitive. >> the kids don't call it that anymore. we have young kids and they call it chris cross applesauce. that's the phrase. >> because it used to be something style. >> this awkward moment brought to you by -- >> sorry to raise the issue. when we come back. >> i know pork chops and applesauce. >> but the latest numbers might surprise you. think triple digits if you can believe that. we have the details when we come back. plus does the average american sleep more than he works? a break down of a normal day in the life that might actually make you jealous. it's going to make me very jealous. squawk box returns in just a moment.

you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.

>> welcome back. if you take a look you'll see that things are bouncing back. this is a big rebound after yesterday's steep declines. we're almost looking at triple digit gains for the dow. s&p is up by 9 points. nasdaq is up by 23. this comes a day after the dow's worst performance in a month. it was a decline of 178 points. new numbers from the labor department on the average day in the life of an american. last year people worked about ten more minutes a day than in 2013. women saw a bigger increase than men but people are also relaxing more and watching more television. sleep remains the single largest daily activity as it should. in 2014 the average amount of sleep was 8 hours, 48 minutes a

night. who is sleeping 8 hours 48 minutes a night who is above the age of 16. >> do you have a fitbit. >> i do. >> the coolest thing about it is that it logs your sleep. so you wake up and for me it was three hours 47 minutes last night. >> that's sick. >> that's not good for you. >> no it's not. >> very bad. >> i was watching the college world series. uva 1. i went to virginia tech so it's hard for me to say that. >> i lost the adapter. >> you misplaced it. >> to charge my jawbone. so i'm jawboneless at the moment. speaking of sleep, the cdc called lack of shut eye a public health epidemic and both experts say all of our digital devices were taking into the bedroom are now taking a toll on getting a good night's rest. here's hallie jackson on kicking

that habit. >> at 10:00 p.m. bedtime is just beginning for danny fulton. tonight like every night he turns to his tablet phone, tv and the phone again. >> you watch 1:00 a.m. go and then 2:00 a.m. go and 3:00 a.m. >> scrolling and squirming. >> i reach for the phone. it can start with a simple work e-mail or message and it may end with youtube video. >> after four hours of sleep he'll up again for good. >> ended up dozing off. >> i'm addicted to the device at some points. >> why not put it in a drawer or another room when you go to bed. >> i can't break free from it. >> 95% of us look at some kind of screen within an hour of bedtime and 85% have trouble falling asleep. >> with all of the devices that we carry around it is delaying what our brain interprets as

sunset. >> they send a signal it's still daylight triggering a surge of energy and blocking what makes us sleepy. no wonder with the device on nearly every night stand one in three people sleeps less than six hours a day raising the risk for diabetes heart disease, obesity and depression. danny knows the risk after a lifetime of struggling to sleep. >> i know that long-term has the potential for grave consequences. it's shortening my life. >> the solution seems obvious. get more sleep. but how? >> get the he lek tonics out of the bedroom. the bedroom should be reserved for sleep and sex. that's about it. >> doctors recommend shutting off all your screens an hour before bed but if that feels impossible at least use an app to flip the background so it's black with with white letters. that will have less of an effect on your system and start good habits early. like the stevensons. 11-year-old rafael can only use his phone and play video games

downstairs. >> this is a complete electronic free zone. >> the bedroom is for books only. it works for kids and adults. so don't just dream of disconnecting. better sleep for most of us is just a click away. hallie jackson, nbc news lexington, kentucky. >> does anybody want to play beer pong? it might actually make you more productive. the architectural designer for companies like alibaba, samsung says that having separate spaces for thinking working and taking a breather might be a vital part of work place design. having an entertainment hub in addition to color and natural light could be your keys to corporate happiness. >> another batch of college graduates are leaving school ready to enter the work force and they are at the head of the class in some sense. they're graduating as the most indebted class ever. the average 2015 graduate has 35,000 dollars of student loans to pay off. some say a single year could

have a six figure price tag by the year 2025. will students will priced out of higher earnings in the future? peter is ait's author of the book will college pay off? a guide to the most important financial decision you'll ever make. he's at the center of budge priorities. thank you both for being here. why don't we start off with you. what's happened at college come puss? because it does seem that college tuition has just taken off and far out paced inflation. >> well that's true and at state universities it's ghost gone up 50% faster than private schools and the reason is because they can. parents are willing to pay it and it's cut back on support. the only way to get it is because costs are up so much.

>> college is a much fancier mace than it used to be in terms of the perks students can expect when they're there. the gyms and dorms they're staying in. how much does that weigh in on this. >> by and far the driver state cuts to higher education. especially over the past 8 years as we've seen states seeing dramatic declines in the resources they have on hand. public college versus had to look at tuition increases or campus cuts to make up for the loss in state funding. all of the other things that you can think about are actually much of a less of a driver than rising costs after state cuts so at what point is it no longer worth it. we have to say tuition costs have got to come down steady in order for people to think of this as a realistic cost. >> no that's the right question

but whether you can make enough to pay off the cost of going is an important question. much bigger than the cost issue is will you actually graduate? only 40% of college students in the u. going to zool full time graduate in four years and over 30 or 35 million kids are people in the u.s. that bend to college and never graduated and some of them might eventually graduate but a lot of them won't. the pay off comes from the college degree. >> what's the hold up sth? >> some of it is money and some of it is what the colleges themselves do. if you're a parent that's what you want to pay attention to. how easy is it to complete a degree particularly in majors where you have all the requirements to complete. often people find they have to hang around longer just to complete the majors because they can't get the courses at the

time they want to get them and all of that stuff. it's not just graduation either. it's how many years lit take you to get out that's the issue. >> do you think the fault is on the part of the students that don't want to be taking 8:00 a.m. classes or friday classes or is it the fault on the problem of college that's not makesing enough classes available? >> well, i think the new thing -- i don't think there's any big increase in kids that don't want to get up for 8:00 classes having only had one in my life which was on a saturday by the way it was pretty unpleasant but when they get to get squeezed in terms of resources a lot of it is preventable. college majors are not designed around the kids. frankly they're designed around the faculty and you see these problems where we have a course you're supposed to take and that professor is on se bat dahl, we're sebatical. we're not thinking about making

them forward enough and simple enough for kids to get out on time. >> what do we need to do to address this problem? >> sure. when you talk about over the past few years state versus cut back on their funding dramatically and this is rising tuition costs but also reductions in some of the things that we were hearing about. when a college doesn't have them on hand to provide for the necessary courses or needs to shutdown a class, that has an impact on the students and that has an impact on the quality of education they're going to receive -- >> michael, you know sorry to interject but i want to get this point in and maybe you can address it. but you're spot on about the whole during the recession tax receipts went down so we had to fund schools less. in many states they're back to where they were precrisis and in some cases they're higher. a couple during this segment are up so if they're not putting the

money back into the schools do we know where it's going? >> there are a number of priorities that states are looking to reinvest in. states saw huge declines in their resources and mae large budge cuts. mostly to fill in the gaps. so there are dramatic needs not only at the higher education level but also the k through 12 level. we know that transportation and infrastructure investments are being made and they're also trying to cut taxes. as you pointed out not every state is back to its prerecession level so some states as they're growing more slowly are starting to put some dollars back in but it's still well below what it was prerecession and it will take a little bit of time for states to put those tlars back in but that will only happen if they make responsible budget and tax policy decisions. >> i want you to weigh in to a philosophical debate.

there was a criticism which i have to say i disagreed with. steve gave $150 million recently to yale. john paulson gave $400 million to harvard and there were folks out there, michael lewis included that said you know what, these top schools are getting too much money and this is not where the money should be going. there's so many other places it should be going. i'm never one to criticize philanthropy but i felt personally it was unfair but i want to get your view on it and debate it. >> it's another aspect of inequality and the rich schools have gotten richer and richer. if you're a student and you get into those schools that's a terrific thing. it's far cheaper if you need financial aid and a typical kid with financial aid families making about $100,000 a year which seems like a lot. it's cheaper to go to a rich school than a state school and actually overall now the

difference is only $9,000 a year. so that gap is narrowing as state tuition goes up and the private school versus more financial aid. so it is true and back to your earlier point about the fancy dorms and, you know the support system they're getting fancier and fancier and things get nicer and nicer and nicer and at the other places things are dropping off a cliff. >> thank you for weighting in on that debate. it's an interesting conversation and we hope to continue with you at some point. in the meantime, top states for business. it's an annual competition that has all 50 looking for the top position. minnesota, texas, utah colorado and georgia are the big winners this year. but what about the rest? we're going to look at the states that improved the most. we'll do that when we return. first as we head to a break

check out the price of oil. becky was right. wti crude 59.99. we'll be back in a moment. checking out the listing on zillow i sent you? yeah, i like it. this place has a great backyard. i can't believe we're finally doing this.

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if you're planning a trip for the july 4th weekend, be prepared for heavy congestion on the roads and airports. aaa reporting nearly 42 million are going to be traveling 50 miles or more from home this coming independence day. that's the most since 2007.

good news for the economy. also good news gas prices expected to be their lowest in at least five years. cnbc revealing minnesota is the top state for business in 2015. i was right. i was right. but there were some big movers in our ninth annual study. scott cohn is live in bloomington, minnesota breaking down all the winners and losers. scott, this was a little unexpected. i have to admit, i didn't expect it quite early either. >> but you got it after a little while. >> pretty good clues. >> my hints were diabolical enough apparently. there was one guy on twitter who got it actually on tuesday. but he had a little bit of an advantage because he's from the town where we were so he recognized the background. but he was the first one at least as far as i could see. interesting this year, you know we said this all along that we were looking more closely at workforce as opposed to cost of

doing business which drove the study in the past. the states were pushing workforce more as businesses look for qualifiedy edied workers. first let's recap the top phi as you heard and see. here i am at the mall of america. minnesota is the top state for business. it was sixth last year. texas and utah repeated number two and number three. colorado moved up from number eight to number four this year making its first appearance in the top five since 2007. and georgia which was last year's top state for business moves to number five. here are the biggest movers in our study. connecticut while it's only 33rd now, it was 46 last year. so that's a little bit better. and that's all about the workforce. connecticut workers are among the most educated in the country. they're also among the most productive in the country based on output per number of jobs. of course there are a lot of big money industries in connecticut in a relatively small population. so that helps on that front. new mexico moving up to 24th.

that's about the economy. new mexico with very strong job growth year over year. about a 1.8% increase in job growth. we are, by the way, at the end of runway 29 at minnesota minneapolis international airport. you can hear that as well. nevada was last year's most improved state. this year it moves down big time to 47th place from 29th a year ago. so it kind of did a 360 over the last couple of years. nevada's economy still has not come back particularly its housing market. that fuels a big drop for nevada. kansas, you've heard about the big budget issues in kansas. they finally close their budget cap with some increase in sales taxes. governor sam brownback says it's not paying off in terms of the rankings at least not yet. and arizona dropping big because of its economy. 13th place in 2014. 34th place last year.

of course you can get all of this information. find out where your state stacks up and also a lot more about the issues of workforce, quality of life, everything else. topstates.cnbc.com. guys? >> thank you, scott. great job as always. fantastic. but i'm going to give you a piece of advice. you need to do the worst states for business because looking at your list and hawaii is dead last. you need to do a week-long special on why it's dead last. >> yeah. right from there. i think that would be great. we'll do it maybe, like in january or something like that. that'd be great. >> hawaii did score number one in quality of life but pretty much dead last. i was a little surprised to see the drop of my beloved adopted home state of virginia. that was like one and two every year and now it's 12. >> yeah. the interesting thing about virginia, brian, is that it was doing really well. it was aur inaugural top state

for business in 2007. but it doesn't have as much government business to sustain it. that's what's going on. >> all right. scott cohn great job, buddy. coming up this morning's top stories including more on the eleventh hour of greek negotiations. "squawk box" will be right back. automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class. at the very touchpoint of performance and innovation.

stocks coming off their worst day in a month. billionaire investors carl icahn warning they could be overheated. and new data showing main street is pulling money out of stock funds. could that mean a summer swoon?

we'll debate. should you send your cash to the frontier? we're going to here from a five star fund manager who says vietnam, bangladesh even pakistan are worth your money. and ted's back. >> who did that? >> sir, i apologize for my 5-year-old child. you sit there and eat your fish nuggets. >> the foul mouthed, unfiltered teddy bear returns to the box office. >> do you believe you have a soul? ♪ what did you think i would do at this moment ♪ >> objection. >> overruled. >> movie magic that goes into creating a cgi hit even with an "r" rating. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with

andrew ross sorkin and brian sullivan. joe is off today. we've been watching the futures and there has been a big rebound after declines yesterday. dow close to triple digit gains this morning. 96 points. they had their weakest day in a month yesterday. let's take a look at s&p futures. the nasdaq up by about 21.5 points. >> haven't got any new pictures from joe on his european vacation. if you're watching send them in. >> i hope he's not in an uber. >> i was told by the producer we do have them. meantime here's what we're watching this hour. the takata ceo says the internal probe not progressing. the embattled ceo apologizing saying he wants to see the crisis through. this as millions of cars continue to be recalled. and the supreme court set to

issue decisions on some major cases as early as today on same-sex marriage. they will decide whether to make it a constitutional right or uphold state restrictions that bar same-sex couples from marrying. then on obamacare, the court could repeal part of the law that takes health insurance coverage away from millions of americans. then we've got disney boosting its dividend on an annual basis. the company also increasing the frequency of payouts to twice a year. among the stocks we are watching this morning, netflix. netflix downgraded by citi group which cut it from knewbuy to neutral. more in a moment. amazon downgraded from hold with the shares of 45% year to date getting to their price targets. they said we're going to cut it to neutral. and retailer bed bath and beyond missing earnings estimates by

one penny. also gave a muted forecast for the quarter. billionaire investor carl icahn is not known to beat around the bush. yesterday on "fast money" he talked about the markets. >> i'm very concerned about the market and i think the market is overheated. especially the high-yield market. and it's sort of a sad commentary. because i think the public is walking into a trap again as they did in '07. >> now, time will tell if he turns out to be correct. if he's the latest savant in a line of bull calls about the markets. but let's look back at the big ones that have been made over time. back in 1987 lane garzarelli said it was 30% overvalued. fast forward to 2000 frequent "squawk box" guest robert shiller had his book published. that called the dotcom bubble.

then in 2007 showing a forecast collapse of the real estate market and he was right on that. on the plus side for the markets here on "squawk box," david tepper sparked the tepper rally when he said the fed easing guarantees a rally. that was the fed put. you know what markets did after that. question becomes, should wall street and main street believe what carl icahn is saying right now? gentlemen, welcome to both of you. >> good morning. >> it's great to see you. what carl was talking about in that clip we just played was the high yield market. that's not necessarily a reflection on the stock market. but he has been concerned about the stock market for a couple of years and you have too, peter. >> no question. carl said this is a year ago as i said it a year ago. it's the timing of it. the markets can remain that way for awhile. valuations can be expensive for awhile. but it gets down to the timing.

in 1998 you could have said things are overheated. in 2006 the housing market started to roll over but it wasn't until 2007 that the stock market topped out. people should not ignore when smart investors like this give a warning. and whether they're early or late, it should be heated. >> yeah. so not necessarily knowing exactly the timing but again, if you look at irrational exuberance, that was a phrase uttered by chairman greenspan at the time 1996. that was an early call on some of this stuff. where do you think we stand right now? >> well first, think of the landscape for the next five years. pimco and many others expect interest rates to stay low. for the ecb, for example, and various futures you see the markets price for 1% policy rate. that's in place with a lot of cash. and still building cash. because europe has a current account surplus which means they take in more money than they send out. it has to go somewhere.

it can go into economies or financial assets. in japan, what do markets expect there? about a 1% rate in 2020 there. is a place with a lot of money. i was in tokyo a few months ago and my colleagues were telling me on this corner and that corner, about $4 trillion is managed. we know where a lot of that money is going. into credit. so the interest landscape will shape the way they behave the next five years. it's not that easy though. if one thinks you can simply buy risk assets and win, you won't. in the end it will be too bullish. but this is the backdrop the support net, the safety net that likely supports assets going forward. one final thing, on high yields and in any bond market of course, what investor cares about is getting his or her money back. cash flow is the name of the game. looks like the u.s. economy probably has a few years to run. >> 4% growth that's looking for -- >> that's nominal.

in high-yield market only about 6% of it matures cumulatively in the next three years because it's been massive refinancing of debts. if not much is maturing not much can fault. so since getting your money back is the name of the game that market is likely going to be safe on a cash flow basis and looking at it from default. should only be about a 2% default rate. half of normal in the next couple years or so. >> those are a lot of reasons to think that the bull market might continue. do you agree with what was just laid out by tony? >> i think it could. one thing carl pointed out is if there's a bubble this time which i think it is it's in fixed income. and from what i'm seeing over the past two months that began really in europe when the german 10-year yield went from seven basis points to 1% is that air is slowly coming out of the fixed income market. if you look at the moody's index, it's at a multi-year

high, the yield. there's something going on in the fixed income market that i think people should be paying attention to. i'm beginning to see a trend change. these things play out over time. but if i'm correct and that's where the bubble is that's what i think people should be paying taex to. >> number one focus is greece. but the stuff i'm reading every day, the insiders talk about lack of liktty. in other words fancy term for saying there may not be a buyer if you've got to sell something. is that a risk? >> it is. markets have continued to grow since the end of the crisis, yet the pipes where liquidity has to flow have clogged up. >> why? what does that mean? >> the treasury market -- this is the same or less than a few years ago. not a lot. but the treasury market is larger now. it was a large amount of securities that could be sold if investors wanted to sell them. so this is a known risk though

for managers. we simply have to manage around liquidity and take advantage of it. there are two ways. one to extract the constant premier in bonds. this is in subprime mortgages, for example. have you bought one lately on your own? >> i have never bought one to begin with. >> they're difficult to buy and understand. so we've got to have -- you can take advantage of that. then the second way -- and there are other types of bonds that people don't understand. so what i speak to is a complexity premier you can take advantage of. but there are points when the turbulence to use a phrase from bill dudley. he says there could be one when the fed raises rates. so yes, liquidity is something to manage around but actually something to take advantage of during periods of stress and turbulence. >> you know, peter, there is a story in usa today we talked about a little bit earlier. it mentions that mutual fund outflows have taken place over the last 16 weeks. people have been pulling more

money out of mutual funds than putting into it. that is a concerning sign that investors have lost confidence in the united states stock market. brian pointed out that he thinks there's something to spend on big ticket items like houses. where do you come down on that debate? >> you could. but they've missed this entire rally. now, of course they piled into fixed income that's where a lot of the flows have been. you know that very well could be right. but it could be doing that. fixed income is where they lie. and that's where the risk is is if the fixed income market -- >> one aspect in that is probably demographics. the u.s. population, us baby boomers, began turning 65 in 2011. and will be turning 65 until i the last baby boomer turns 65 in 2029. the aging of the population means we want to go higher in the capital structure. we want to have less and less risk. so money has flowed from stocks to bonds.

>> and retail's been burned by two bear markets in eight years. so they're not rushing to be going back into stocks when they see potentially another bubble. >> all right. thank you both for coming in. >> thanks for having us. >> and we just learned his friend is courtney love's drummer. and courtney love is being attacked in uber. they're beating on her car with a metal bat. >> not because it's her -- >> she's tweeting about it. when we come back mary barra hoping to get more behind the wheel of a chevy cruze unveiling the new generation last night. phil lebeau has the details. plus one of our best performers in the platinum portfolio will come east to give us a reality is check. then later ted's coming back to the silver screen. the man behind this bear here to talk movies and more. get the popcorn. "squawk box" returns in a moment.

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welcome back to "squawk box." we have a little bit of breaking news right now. sources telling us that the board of iac, barry diller's iac, planning to ipo spin off part of the match.com business. a little less than 20% of that business, the board approving that plan.

and we believe that's going to be announced a little bit later this morning. just to give a bit of context. the match.com group, for those who don't know it, this is tinder. we always talk about tinder and match. my understanding, the princeton review oddly part of that business. and then the ok cupid business is also within that group. what's going to happen though is it will become a smaller company. match.com has been one of the great engines of that business. the search and applications business will remain ask.com, dictionary. there'll be the media business. daily beast, things like that. and then the e-commerce business. but this is part and parcel with barry diller's strategy. he's split this company up before. if you remember 2008 very famous famously broke the company up into four pieces. this is consistent with that at the time an ipo markets are hot, hot, hot. and we will see how they value

that company. that is something we just don't know. >> what zach's research if they look at wall street analysts. they polled them all. if you're looking at five a strong sell they have given iac a rating of 1.82 which is closer to the buy side than sell side. we'll see what this means in terms of that stock today, too. if you take a look stock of iac is already trading higher. $79.50 to $85 is where it's indicated to open after closing at $78. it looks it will open higher and has been trading higher in the pre-market on what he's been saying. in me meantime we should tell you about other news as well. mary barra unveiling the new chevy cruze and speaking to

reporters. question is can this help rev up the engine? >> it is the top selling car for general motors. and last night they unveiled the newest edition of cruze which will go on sale next year. the focus was on mary barra. we don't hear from her often. given the fact that sergio marchionne has said they should merge. after the unveil of the cruze we asked her about it. here's what she had to say in a nutshell. >> we are here tonight to talk about the cruze. i think we already covered that. it's a beautiful vehicle.

>> what do you say to investors who are frustrated that gm stock prices have not moved? >> we are working very hard with vehicles like the chevrolet cruze. we're on plan. >> take a look at shares of gm versus fiatooeiatfiat-chrysler year to date. they have been moving higher saying there needs to be consolidation and there needs to be at some point. will it be with gm? they're sticking with their plan. they are not engaging with fiat-chrysler. but that's not stopping people like myself to try to get better perspective from her. >> valiant effort trying to get some sort of other answer than oh it's all about the cruze tonight. it's frustrating to not have some sort of way to address it.

>> i think it's frustrating for investors, becky. but keep in mind this is very much mary barra's style. she's a no drama ceo. she's not going to engage in public debate with sergio marchionne. he does that. you have two different styles here. >> okay. phil, thank you. >> you bet. all right. up next, a five star fund manager who is making money in all kinds of places like bangladesh and vietnam. the reason she is so bullish on these frontier markets coming up. and "ted" is back. the teddy bear with no filter crashing the box office this weekend. and the movie's executive producer telling us about the economics of using special effects, the digital revolution and why mark wahlberg's wife said "ted" would ruin his career. stick around. ah! aflac? aflac!

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focus on their less high-profile frontier markets. here now to tell us how to nov gate the frontier is laura garetts at wasatch funds. she joins us from the morning star conference. emerge you are investing in places like bangladesh and pakistan. how risky is this? how liquid are those markets? >> well you know they're rapidly evolving rapidly changing places in the world. i think for investors who want to take part in the growth and opportunities in these markets, they want to manage through these markets defensively. you want to mitigate the risk by being broadly diversified and focusing on high quality companies. that's a hallmark of the wasatch process as we focus on great companies with good cash flow statements, good balance sheets to take advantage of these great opportunities. >> and how do you find them? i mean do you literally just

travel all over the world and set foot in these companies and say, hey, this is a real business, a steady business. and i like the management? >> we screen screen and screen some more for quality. then we're boots on the ground firm. so we're constantly on the road. i spernlly spend about six no nine months on the road a year. and our team is traveling heavily to visit these companies. so it's a great deal of deep due diligence. >> looking on my screens, vietnam is up 11% over the last 12 months. but what about countries with a lot of geopolitical risk? botswana a safe place. not the case with pakistan. we just learned through "the new york times" that one of pakistan's biggest companies may have turned out to be a fraudulent sweat shop for fraudulent college degrees. how do you deal with the geopolitical risk? overnight the situation can change. >> again, these are fragile places with fragile consumers so

we really look for high quality companies. i think maybe some of the risks of pakistan are exaggerated. i was one of the first investors to set foot in the market and start exploring opportunities there. if you look at the market right now, it's actually being considered for upgrade status to emerging markets. they see something great about the country. they see great demographics and improving political situations. to me frontier is all about positive incremental change. you're seeing that in pakistan. and if you look at -- a lot of frontier companies are silkwood economies. people refer to them as the new bricks. but i think of them as silk road economies in places where japan are investing. korea, india, all investing in these places for the long-term because of the great opportunities here from demography and growth. >> beer companies in kenya. really interesting stuff there. stocks in countries we probably never talked about from an

investing standpoint. we appreciate it. thanks for coming on. >> thanks for letting me represent wasatch. up next one of cnbc's top platinum portfolio managers is making a move. oscar schaffer will tell us about the stocks heading into the year end half. as we head to a break, take a look at the futures. s&p 500 up by about 7.5 and the nasdaq up by 18. stick around. "squawk box" will be right back.

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welcome back to "squawk box," everybody. among the stories that are front and center this morning, sources say that barry diller's iac interactive is planning to announce an ipo of match.com. andrew broke that story in the last half hour. shares are up on the news. looks like that stock is going to open somewhere between $81.50 and $82. it closed yesterday at $77.26.

>> just another transformation of iac. match.com is the biggest part of the business. so you're going to be left -- you know whatever iac is left with, it's smaller business. you have to see whether they're going to start buying things use the match.com thing as currency or whatever. >> they do find ways to constantly change. been excellent at that. >> and the weirdest building in new york city. i love it. it's just bizarre. that's all. >> okay. back here. the company blackberry will be repurchasing 12 million common shares to offset the dilution. and mollycorp. will seek to restructure $1.7 billion of debt. and we promised you an update on joe's travel plans and traveling in europe. here he is at the iconic beer garden. he's at an iconic beer garden in germany.

making "seinfeld" references even overseas tweeting this photo out with the caption, these pretzels are making me thirsty. making me miss joe. >> they look like they're having fun. well deserved vacation. >> they look like they're having a lot of fun drinking beer and pretzels. the platinum portfolio continues to outpace the s&p 500. it is now up nearly 7%. joining us now to discuss his picks is oscar schafer. he's ranked third among the managers in this sort of little competition we've ginned up of more than -- he's now up more than 11%. he's also selling his top performing stock in the portfolio. so if you've been trying to piggyback on his trades, here is the moment of truth. what are you doing? >> number one, we're not selling it. i'm selling it from the platinum portfolio. >> tell them what it is. >> nice systems. but it's up 30% this year. so it's irr less than it was

when i recommended it. since i only have three stocks i thought i would replace it with something else. >> tell us what you plan to replace it with. we'll see if the stock moves based just off of the oscar shape for bump. >> ani pharmaceutical. it's come up a great deal in the last year and a half. it's at 65 and 11.5 million shares. it's something that will exit this year at $4 and earn over $5 next year. but it has $15 a share in cash. so you're really only paying ten times for next year's earnings. i think the company is going to grow 20%, 25% the next two years. then earnings could more than double. so could stock. >> zach's research says there has been a negative trend in revegs visions for this company. we've seen everything move down. why? >> the company is very conservative. they have a product which they bought at the beginning of the

year. and at the first quarter the sales were less than they expected. and i think the reason is that before they bought the product, people knew they would probably raise prices increase the inventories and the first quarter was a blip. i think if you follow the weekly and monthly scripts, it's coming back up. although i have no idea what the second quarter is going to be like once it's out, assessments will go up again. >> you have two other stocks in your portfolio you like. >> yep. >> and you're keeping them. cojent is one of them. >> and they were to go in with telecity. they broke it off because they were bought. but i think as the industry of data centers consolidate, interaction is one of the unique properties. i think in the next two or three years someone will want to buy it and people will be surprised at the price they'll get. >> and our third? >> cogent. they've had a recent short-term

problem with part of their businesses. they're fixing it. they have a new sales manager and sales force. >> you doubling down? would you put more money into that at this point? >> yes, we did buy more. we have a concentrated portfolio. in a general way, i think there are only three ways of making money in the market which is basically i think going to continue to be kind of flattish. you either leverage trade around positions, or concentrate. and we tend to do the latter. >> you said it will be flattish. we had carl icahn on the network yesterday. >> so i heard. >> he said not flattish he said downish. downish in a big way and the retail investors of the world are walking into a trap. >> two things i'll say, as far as the retail investors, peter lynch would talk about walking around doing research on stocks. i don't think anybody goes to cocktail parties these days when somebody talks about stocks. so i don't think they're plowing in. the numbers they're taking out putting into housing, et cetera.

but i don't think there are retail investors -- someone smart said that this morning. but i don't think they're walking into a trap. as far as carl's specific comment, i make the analogy to being a short seller. i think there's very little difference between being early and being wrong. and thing that's carl. >> and how -- but he would be right eventually. >> well -- >> what ending are we in? >> we're about the fifth, sixth inning. >> all right. we've got some room to run. thank you for coming in this morning. >> thanks for having me. >> appreciate it. love your pocket square. >> thank you. it's thanks to my wife. >> tomorrow on "squawk box," our portfolio discussion continues. you can always go onto cnbc.com/pro to track their progress. when we return today, we're going to talk swimming pools, movie stars, and oh yeah crazy cribs. of course we're talking about california and one of the top real estate agents in the game.

josh flagg of bravo's million dollar listing los angeles. he'll give us the word on the upscale housing market there. and at the top of the hour the race for the white house with ken langone and richard grasso. "squawk box" will be ragt back.

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welcome back to "squawk box," everybody. the futures right now indicating a higher open. in fact, fair value indicated about 83 points or so below where we are. so should have a nice pop on the dow at the open. we'll see though. meantime, check out shares of winnebago. company shipping more motor homes. becky? the national association of realtors says first-time home buyers helped spike housing in may. california also making a strong comeback. our next guest says the state's housing market is booming rite now. joining us to tell us why is josh flagg. he's a real estate agent in beverly hills and one of the stars of bravo's show "million dollar listing los angeles." thanks for coming in. >> thanks. >> we know real estate is all local. >> well, i looked at the report from last month. may over april we're up 3%. and then another 3% from

february. you know new york is kind of tapered off a bit. i know because i've been looking at property in new york recently and comparing it to l.a. i think they've come to the conclusion that we have 365 days of sunshine a year. you don't have to drain your pool because it's going to crack in the winter like in the hamptons. you're not paying $4,000 a square foot. >> but the weather is nothing new when you come to california and you've got drought issues. >> you know it's relatively cheap in los angeles if you compare it. you know? >> to new york? >> to new york to palm beach, to certain parts of florida. you have the weather, good looking people food, et cetera, et cetera. >> what's new? that's been the question. >> i think people -- >> there's no water. >> i know we have one little problem. aside from that local investors from china and overseas they

feel safe. when you put your money in a place like los angeles, your money is safe there. >> one thing we've seen is a slowdown because of the stronger dollar. >> i've been looking for property in new york for myself and i've noticed nothing has come down but nothing's gone up. it's stable right now. but they're still getting the high prices which is good. whereas in l.a., it's going up month by month. >> what did you see during the economic downturn? 2008, 2009 was it a difficult market at that point? >> you know it wasn't it was -- yes, it was a difficult market. but it rebounded. people think, like five six years ago prior to the crash was the height. we're at the height right now. we're higher in los angeles than we were back then. we haven't just returned. but we've returned. >> l.a. is red hot though. l.a. is the new new york. new york is kind of tired and old. everybody i know in the arts seems to be moving to los angeles. the downtown is so vibrant

again. l.a. is rocking right now. >> three biggest sales we had in los angeles were new yorker. >> jay z. >> no i don't think -- >> how much was that? $80 million home? >> how much is driven by the entertainment industry in hollywood versus other industries like tesla being there. >> your new york guys and your investment bankers are the ones making the high sales. last year it was $41 million and $85 million. guess who bought them. new yorkers. >> we had our real estate reporter looking at baby boomers saying a lot of them are going into rentals now. have you found that in l.a.? >> no. the interesting thing is rents are down now on the high market. i just leased a property on one of the best blocked in beverly hills which would have gone for $10,000 more four years ago. but interest rates are cheap. people are buying. >> what's the most you've had a client rent a home for? >> i rented a house for $100,000

a month once. >> jeez. >> and no names, but who was that renter? was it an actor? was it a saudi king? >> it was a famous singer who came into town. i figured for that price, they should have gone to the beverly hills hotel and get a bungalow. half the price. >> and somebody changes the bed in the morning. >> i know. and they have a good scrambled egg. >> josh are there any things you worry about or you think it's all system gos at this point? >> i think we're good. anything can happen. elections come things change. right now i'm very confident and happy. look, when a broker's buying property, you know that you're in good shape. >> what do you think with the water thing? no joke. >> it's terrible. >> i know. but is that impacting the way people are looking at different properties? grass? there was an article about kim kardashian has too much grass and they've got to water it and people are going to have to -- >> i was born and raised in los angeles. west 141st street. right near the mall. we moved a few times but one of

the homes we lived in had no yard. it had green lava rocks. and there was a penalty in our neighborhood for watering -- if you were caught washing a car, '76 was not as bad but it was close. >> zero scape is what they're calling it. i think it could be -- well the new thing they have is an infiltration system. it's going to be a couple hundred thousand dollars per house but they say it will save you money. you recycle water from the shower, it goes to the grass. i don't know how it works, i'm not in that business. but that's what we're going to have to come down to. >> i'm going to be vulger here but people said why do we flush pee with clean water. if we're short water. you know? california has a lot of issues but people continue to go there. and they will. they will always continue to go to california. >> but i don't think it's going to affect -- >> but if my back yard is made out of sand, right? [ overlapping speakers ]

>> mellow is yellow but brown goes down. >> sorry. >> josh thank you. it was a pleasure having you here. we appreciate it. >> there it is. when we come back "squawk" gets "r" rated. the foul mouthed eded teddy bear at the box office. "squawk" returns in just a moment. thank you again for being here.

welcome back everybody. let's talk about some stocks to watch this morning. accenture raising its full year forecast. that stock is up by 1.15%. eli lilly upgraded. the analysts citing increased estimates for several drugs that are still in lilly's pipeline. that stock up by about 1.8%. office depot upgraded to outperform. the firm points to the idea that its proposed merger with staples will be complete late this year or early next year. and the takeout price will be 20% higher than it is right now. "ted 2" the continuing story of a man and his life-long friendship with a walking, talking teddy bear opens up in theaters tomorrow. we must note that it is a universal film under the comcast

umbrella our parent company. josh clash is the executive producer of both films. it's great to have you here this morning. >> thank you for having me. >> you know cgi has been used in all sorts of ways. the bear is sort a of a different approach. because when you have a bear cursing, it's an extraordinary thing. >> we wanted to apply the technology to outside family films or do big action movies so we created a character for an r-rated comedy. >> the second time it was an easy sell. but the first time around? >> it was a little tougher. i mean i think we had to figure out a methodology to create a bear in a kind of a comedy setting so that it can be improvisational. but at the same time we also wanted to do it for a price. so it was a challenge. >> let's talk about the price. what is the cost of this type of technology? >> i mean depending on how many shots, you kind of buy it incrementally. by how many shots of the bear you have in the movie.

>> so what does a scene with the bear cost? >> well i mean it could cost a couple hundred thousand dollars to create a scene with the bear. >> is a sequence a two-minute sequence? >> yeah that would be in that range, yeah. >> what's the most expensive type of sequence? just the -- >> well, if you have a lot of interaction. if he goes underwater. if there's special -- >> if you make the fur move. >> or special kinds of costumes and things. he has very expensive costumes. >> and you were saying that the software is a company called mya which is owned adsk. i assume you're paying them a lot of money. >> that's one of our softwares. that's licensed by those who create it. it's an international standard for animation software. >> how many illustrators and people work on something like this? >> well we had several hundred that woorked in the cg

department. as far as animators, we probably had 60 animators working at two separate houses. and had 30 in each one. >> a film like this takes how long from beginning to end? >> well it takes quite a while. i mean for all of the cgi it takes close to a year to create the cgi. first we have to shoot the movie and the empty space where ted's going to go. then we have to create his performance after that. seth macfarlane did the voice and did all the movements. >> we had an executive producer from "san andreas" recently. they said they were trying to do some own stunts because it's so expensive for cgi. what do you think the prevailing move is? >> i think you always want realism. it's hard in the action effects movies to create real physics of water or explosions or something like that. we're getting good at it but it's still hard to get the real

physics. i think with ted's performance, i love "ted 1" but i think we exceeded that. >> it looks real. it doesn't look like cgi. >> the greatest compliment is nobody pays attention to that. they're just looking at a character in a movie. >> is it true mark wahlberg's wife said do not make "ted 1," it will ruin your career. >> yes. he didn't want him playing opposite a foul mouthed teddy bear. >> how do you pitch a movie about -- here's the thing. mark wahlberg and a talking teddy bear and the teddy bear is going to be vulgar and dirty. how does that get through? >> i mean seth macfarlane is truly a comic genius. >> he's twisted and i mean that in the best way. >> he is incredibly generous to work with. he's like -- he's an incredible artist. i think with his point of view and his voice creating this

teddy bear everybody knew they were in safe hands. >> the economics of a film like this, it's mostly domestic? how will it play foreign when you think of something like this relative to "jurassic park"? >> well that's a monster. "jurassic world" is a hit worldwide. but "ted" was also successful all around the world. the inherent comedy and this soft plush toy that talks dirty works around the world. >> one other thing on the cgi thing. we're seeing a lot of cgi in films and starting to see some on premium tv. is the economics of this technology ever really going to work so you can create the same type of stuff on air? >> absolutely. i believe 100% you'll be able to create even if television. it gets down to how available the technology is. we're reaching an economy scale worldwide where you can create around the world. >> in the book "abundance," you

have more computing power in the palm of your hand right now than the president of the united states had access to 20 years ago. same thing is going to happen -- >> it's happening now. we had artists working in nepal that were more skilled than the artists i had in the original "stuart little." so 15 years ago, people worldwide are skilled. >> we all have children. any plans for a "stuart little" to bring that back? it's been about 20 years. that's the right time for a refresh. a little refresh. >> there you go. jason clark, thank you. good luck with the film. >> thank you so much. stocks to watch this morning include disney. they know a thing or two about movies. they're raising their dividend by 15%. the entertainment giant also increasing the frequency of payouts from once a year to twice a year. that's a doubling. marathon oil upgraded to a buy from neutral. the analysts there arguing the stock is a great way to leverage the recovery and oil prices.

meantime chesapeake energy downgraded to sell at ubs. firm also cutting the target on chesapeake. it is based on leverage declining production and the relative valuation of the stock. ubs also downgrading shares of murphy oil. many of the same reasons. outside of the oil patch, furniture manufacturer herman miller getting a boost this morning. their results topped estimates. the company is raising the dividend as well. bed bath and beyond earnings falling a bit short and the profit guidance is light. and speaking of light, watch shares of cree. a $500 million stock buy. we just talked about every stock in america. >> there you have it. >> close to it. maybe not all, but a lot of them. when we come back today, we will introduce our guest host for the next hour. home depot founder ken langone and dick grasso. stick around.

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yeah...i...i used to be into bedazzling. i'll go get your phone. get the iphone 6 with rollover data to share. only from at&t. you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business. ♪ mamas, don't let your babies grow up to be cowboys ♪ ♪ don't let'em pick guitars and drive them old trucks ♪ boys? ♪ mamas, don't let your babies...♪ stop less. go more.

the passat tdi clean diesel with up to 814 hwy miles per tank. hurry in and you can get 0% apr plus a one-thousand dollar volkswagen credit bonus on 2015 passat tdi clean diesel models. the power hour starts now. ken langone and dick grasso are here.

a magical time for disney investors. the company upping its dividend and paying it out twice a year. we'll get wall street's reaction to the move. and he went from the bench to the nba finals mvp. andre iguodala is here to talk both business on and off the court as the final hour of "squawk box" tips off right now. live in the most powerful city the the world, new york, this is "squawk box." welcome back to "squawk box," everybody. this is cnbc first in business worldwide. i'm becky quick along with andrew ross sorkin and brian sullivan. joe is off today. we are less than 50e990 minutes from the opening bell on wall street. right now looks like the dow futures are up by 6474 points. yesterday it was off about 180

points. s&p futures also indicated high ir. they're up by 7 points. and the nasdaq up by 17.5 points. you want to check out what's been happening in europe in the early hours, this is where we've seen a lot of the action just starting out. because of what's been happening in greece. this morning looks like things are relatively flat as we await word of what's to happen with the greek negotiations. let's tell you about a couple stories investors are talking about right now. they're holding a summit in brussels. giving athens an ultimatum to come up with a credible plan. also jpmorgan to settle a probe. at issue was whether the bank advised clients towards its own investment products. then iac interactive this morning planning for an ipo for its match.com business. the company confirming a story we first reported here on "squawk box." you can look at the shares rising on that news. in washington news the supreme court set to issue decisions on some major cases

including same-sex marriage and health care. that could come down as early as today. a new nbc news/"wall street journal" poll finds that 57% of americans shows support nationwide. but americans remain split over the 2010 health care law. take a look. 8% thinks it works well as it is. but you take a look and 40% would like to see at least minor modifications with another 50% looking for a major overhaul or totally eliminating the plan. in other news from the nation's capitol, both houses have passed a bill to give president obama fast track authority for trade agreements. president obama will now be able to seek final language on a trade agreement deal with japan and ten other pacific rim nations. congress will be able to either ratify or reject those agreements. they can vote it up or down. a few stocks on the move this morning. netflix downgraded by citi

group. those shares have doubled so far this year. another hot stock getting downgrade sd amazon.com. it was cut from a buy to a hold. shares up 45% year to date. and check out shares of blackberry this morning. they will purchase up to 12 million shares to offset dilution from an employee purchase program. carl icahn warning investors the markets are extremely overheated especially when it comes to high yield bonds. >> i'm very concerned about the market. and i think the market is overheated especially the high yield market. it's a sad commentary because i think the public is walking into a trap again as they did in '07. >> joining us for the next hour to talk investing, shareholder activism, the economy, and much more, two special guest hosts. ken langone and dick grasso.

buckle your seat belts because they come ready to play every time. >> wonderful to be here. >> let's start this off with what carl was saying yesterday. i'd love to get your opinions on what you think he's been out there with. he was referring to high yield bonds and what he was talking about. he's been negative on the markets for i think over the last year. >> couple of years, actually. i think if you dissect what carl has said collectively, high yield certainly in the private market when you look at what's happened with things like uber okay? you can make a strong case that he's dead on. but in the public markets, the question becomes will there be spillover when you see down rounds in the private market. or will there be spillover from when the fed begins hiking rates. the only thing the fed hasn't done is rent a sky writer over

manhattan. and announce, if you will, their plan. you know the public has chased yield. i think the spread between -- the credit spread between high yield and safe assets treasuries and the like is artificially low. there's going to be a price to pay for that. >> why are we so afraid of the fed though? in 1994 the fed raised rates by 2.25%. in 1995 all the dow did was return 33%, its second best return in 40 years. >> you're dead right. i'm not afraid of the fed. i think the fed moving says -- the consumer says to the investor this economy has finally healed from the meltdown. and i think it's a positive. you're not going to see rates go back to 1981 levels when the long treasury was at 15.75. ken might like that but he's long treasuries. a very positive sign from the fed about the u.s. economy.

>> ken, what do you think? >> look if you think interest rates are going to go up and i think they have to go up at some point point, then you have to agree with carl. because rates go up prices go down. it's that simple. >> prices go down of what? >> bonds. >> what about housing? what about stocks? do all prices go down? >> look right now i think the worry about a rate increase is overstated to this extent. how much of a rate increase? i think the first rate increase is going tor more symbolic than a reflection of how it impacts investments. >> that is certainly what the fed has tried to telegraph too. >> impactexactly. >> some have come in and said if the fed waits too long and waits until it sees the whites of inflation's eyes or whatever happens with that situation, they could be in a tougher position. because inflation could be here

faster and they could be forced to raise more rapidly than they want to. >> i think janet has said clearly it's going to happen this year. and it's going to happen in a series of measured increments. not designed to create panic, but designed if you will to what brian was saying a moment ago, to reflect the strength in the u.s. economy. and that's a big positive. >> look there is a place that vulnerable. i have a wonderful investment with a very close friend of mine from philadelphia. refinancing right now switch wonderful because effectively we're able to get all of our capital out and not have any risk? i think real estate will certainly be impacted because it's that close. as you get your rent up you can accommodate more debt. conversely, the more you pay for the money, as part of the cost of running the business or the real estate, less. but look. we have got to raise interest rates. we've got to.

it's time. >> but you're talking about the commercial side on the resident residential side the fact they communicate there's going to be a series of moderate increases, i think all of those folk who is have sat on the sidelines waiting to buy a home they're going to jump in. absolutely. >> but whatever it is, if you do it -- if you amortize the mortgage over 30 years and raise half a percent to the homeowner, you barely notice it in the monthly payment. >> we all know people don't buy homes on the price of the home. they buy homes on the monthly payment. so if rate goses up it seems natural housing prices would come down. >> not appreciably. look. we've had the oil dividend right? you're not waving at me are you? >> there's a little girl standing outside the studio and she -- i read lips and she said mommy all i want to do is see ken langone and you didn't even

look at her. >> look i'm going to get back to rates and buying homes. we desperately need rates higher. and the longer we wait to do it the more painful it's going to be. we're going to -- look. carl talked about the high yield market being overheated. where i sit, the economy is not overheated. not at all. >> i'll tell you what worries me though, mr. langone. >> ken. >> sorry. first time. i appreciate it. i was at a conference recently and i asked everybody in the audience who's a financial adviser, how many of you got into this game became financial advisers after 2006? about 25% of the people raised their hands. and i looked at them and said none of you have ever been a financial adviser in a rising environment. one-fourth of that crowd had never been in an environment where rates are going up. i just wonder if we know how to handle it. >> we used to call them

stockbrokers years ago. now they're wealth managers. >> kinder and gentler moments in the history of this country. >> people like me and dick we figure how to adjust naturally. whatever the economy is whatever the situation is we all adjust. realistically we need interest rates. we're setting ourselves up for a real problem if we don't do it. >> brian's observation, that's not too different than if you go back 15 years and said to someone in the year 2000 how many of you were in the market advising clients when the dow was at 4490 in june of 1995? coincidentally, the birth of "squawk" and the beginning of a dark period. you ask the fa community or the stockbroker community how many

were in the market at that point, again two-thirds of them weren't. >> we're talking about the public markets. i want to ask you what you think of the private markets. the other thing we talk about is these billion-dollar unicorns constantly. i know some of these guys come to you asking you for money at some of these that might be considered crazy valuations these days but maybe not. >> look. cheap money makes people drop their guard regarding risk. hey, i can borrow all this money and pay 1% 2%. i'll take a chance because it's cheap. this is part of what's coming in the way of adjustment. some of these deals have to be refinanced three, four five years out when you're taking rates up. these are -- this is simple math mathematics mathematics. . this is not rocket science. this is not some abstract subject. >> but andrew take away the cost of money question. i think you're right.

it's about two-thirds of the multiple of the year 2000. but you go and look at some of these valuations and my favorite is uber. okay? i mean uber at 50 billion on its way to 75 some say, by the time this show ends. okay? you have to scratch your head and say, you know something's wrong here. i think you're going to see down rounds before a lot of these private companies become public. and that's good. because if you remember back not too many years ago when facebook came the last private transactions were a lot higher than the first problem. you know, the public investor -- and i think the public consumer -- is still scared to death over what happened in '08-'09. >> but you can't look at the united states as -- we're not by

ourself. if i look on my screen here i look at every major index around the world, ken. there's about four stock markets that are down. egypt, turkey greece of course and kenya. literally every other stock exchange in the world is up fairly meaningfully this year. is america still a great haven for money? if bad things happen we'll still receive capital. >> less there by any doubt, the next 25 years america owns. >> i love that optimism. >> where else? >> i'm anxious it's only 25 years. >> i'm saying 25. that makes me 105. so i would like to say 50 but i know i won't be around for that. look. we are the greatest nation on earth. we have the freest capital markets. we have liquidity. we have all the benefits. look at the technology that has come out of america and the

application of that technology of any business. and the efficiencies those technologies drive. let me say one thing about those high valuation. i plead guilty. i own facebook stock. look at the cash these guys are generating. >> congrats by the way. it's at an all-time high. >> i take no credit. my partner takes care of that one. but look at uber. okay? i didn't understand uber until elaine's niece came out last sunday and she called an uber and ten minutes the guy was there out in the suburbs out in sands point. this is good stuff. you know and i think maybe they're way ahead of themselves. there are stocks that are out there that i don't understand that i won't buy. but i think you got to look at these things each one. >> you're saying you would invest in uber. >> i won't invest in uber. i don't completely understand it and i'd like to see a longer

track record. i think i have a full service truck leasing business. the biggest challenge we have truck drivers. to get them to manage them to police them. you know you have an obligation when you put a guy in the cab of a truck, you have an obligation to make sure everything happens right in that truck for the benefit of the highway. it's a tricky business and an important business. but look at apple. i mean i remember apple when it was selling for $5 a share and everybody thought it was over. >> larry ellison tried to buy apple for $10 million. buy the whole company a number of years ago. we've got to go. >> we've got to go. we will continue this conversation. these gentlemen are staying with us. when we return andre iguodala is here. he's not only good at basketball. he's even better at business. we're going to talk life in silicon valley and his tech ventures next. plus we've been talking about carl icahn all this morning. don't miss him at delivering alpha next month. he's part of a mega lineup.

as we head to the break bb here are the futures right now. dow would open 80 points higher. we are back in a moment.

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we are squawking about everything from sports to silicon valley with your next guest taking his talents from the hard court to the tech world looking to disrupt the fashion business. nba champion and finals most valuable player andre iguodala. congratulations to the warriors to you, to your teammates. long deserved. >> thank you. >> i don't know where to start on this except how has your life changed now that you've won an mvp at an nba finals? >> i'm getting a lot of texts. there's about 360 texts from after the finals. >> how many of those people did you know? >> about 150 of them. sot about half. but it's been an amazing ride. airports have been pretty crazy. so i'm readjusting to how i enter and get in and out the airport. >> you're taking the vip -- all airports have the secret vip

entrances. becky and andrew take them. >> no. >> i'm not a vip guy, but i'm trying to get my fiance to learn how to deal with autograph seekers. >> what's the move? >> he needs it. >> you have to kind of act normal. if i stand straight up and tall and people can see me -- >> i mean this with respect. you can't act normal. what are you 6'10"? >> i'm 6'6." it's easier than it sounds. you just act like you're normal. half the people don't know who you are. but they follow the people who know who you are. >> so it multiplies. >> yes. >> do you slouch? >> a little bit. it's kind of -- it's weird. >> what was it like guarding lebron? it's one of the few finals mvps that came from your defensive performance. lebron not only is he -- again, with all due respect, the best basketball player in the world, but he's a physical -- he's a big, strong dude. what was he like guarding him?

>> i've been in the nba for 11 years. he's been in for 12 years. i was in the east when i played with the 76ers. we've had battles. take all the information and he remembered all the battles you had against a certain guy and try to get the best of them make it hard for them. >> i love what you say about having that knowledge of going up against them for time. do you think it helps to be a veteran and have that -- we hear all the time about how people have to retire early. in business we know that's an issue where we force people out at 65. personally i'm a fan of people sticking around and having the wisdom that comes with age. >> i'm sure as you have a panel full of financial knowledge and all the boards they're on they've seen it all. ups and downs of the market. they've seen the lows the highs. they see what occurs when interest rates goes up and goes down. same in basketball. you take all that information and the longer you play the smarter you get.

and the easier you can make the game. >> so can we talk business with you? i mean you're in the valley. like you're like right in it. and now you hang out with all these bcs we hear about all the time i'm told. >> i trooy. >> what have you learned? what are you doing? >> right now i'm in as good of a situation of being on a championship team and then being in environment like silicon valley where you can capitalize off the court with business. so i'm learning as much as possible. we've had some great relationships with bcs out there. mainly horowitz. they've taken me under their wing, showed me things in their portfolio and how to integrate my brand into theirs. >> so you met mark andreessen, because he's an interesting guy. he's not afraid to say what he thinks. he'll say this sucks, this is great. >> i follow mark on twitter. that's where i get a lot of his

information. but ben horowitz, he's the guy that -- he's really big into hip pop and he's a brainiac. so i had some conversations with them during the games. but he's the one. >> take us to the bedroom then.oardroom then. you were a rich guy before. but now you're richer. >> rich is not wealthy. rich is easy to become poor. it won't take as long. >> easy to become poor if you're wealthy too. >> yeah. poor wealthy is still rich. poor rich is poor. >> so what are you interested in? what are you investing in? >> it started with the business venture for myself. we got engaged with e-trade and invested in a few tech stocks. twitter, facebook, tesla.

a few other companies that we were looking into. apple was a big one for us. we rode that wave when it was probably around $200. before the split. >> you want to manage my money? >> i don't know if i could handle that pressure. but it started with that. and from there once i got the opportunity to be a free agent, i saw an opportunity to go out to silicon valley and then we started to get on the lines and make some calls and see who we can get some advice from. from there it's just kind of taken off. >> and oracle also a great company. >> yes. >> their arena is very nice as well. just a quick thing i've got to ask you because i know you're also big into fashion. when are the denver nuggets going to choose and stick with one color and one jersey? >> that is a -- >> i think you and i talked about this before. the denver nuggets they can't pick a color or the logo. >> philadelphia just changed

uniforms again. i was joking with their pr guy who's a good friend. i'm like you change uniforms like you change jeans. but it's all part of merchandising in the nba. continuing to expand being global and having a brand that people can identify with. so retro is in and out every other year. always playing with that as well. >> andre iguodala congratulations again. stop by any time. >> appreciate it. coming up jack ma making another acquisition but this time it's for himself. we'll explain what we mean when we come back. and later, railroads once a key economic indicator have been off track this year. we'll look at the players and factors behind sluggish returns for investors. "squawk" returns in just a moment. l. it really opens the passages. waiter. water. so why would you invest without checking brokercheck? check your broker with brokercheck. ♪ i built my business with passion.

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jack ma has quietly made a new acquisition of a 20,000 acre property in new york. ma paid $23 million for the sprawling new york property which he bought principally for conservation purposes but also plans to use as an occasional personal retreat. the estate includes more than nine miles of the river as well as lakes, streams, ponds, forests, and a log camp. behind the gated entrance there are two homes on the property as

well as a horse barn. yes i'm thinking of what that looks like. there you have it. >> they lean. >> they do. zblmplt we should also tell you in france today, stepping up protests against uber. angry cabbies blocked in paris and other cities. scuffles erupted between french police in riot gear and taxi drivers as they protested in paris. this has provoked anger from taxi drivers who see it as unfair competition and as brian was pointing out earlier, courtney love -- >> she's apparently in an uber and was attacked. this is just her twitter account, so take it for what it's worth. but she said basically people were beating on the car with metal bats. where are the police used choice words. >> this is disruptive technology. >> truly disruptive. >> yeah. >> and that's my point. if they weren't hurting them

there wouldn't be any protests. >> separate a good business model from a business valuation. >> i agree. look, i can't justify a lot of these numbers and i agree with you, but on the other hand i think you've got to look beyond cycles in the market. >> guys we'll come back to this in one moment but we've got breaking news right now. let's get down to rick santelli. >> breaking news. may personal income spending and data points out. exactly as expected. last month had a subtle .1% positive revision. on the spending side we're expecting up .7%. guess what. better than expected. up .9%. .1% revision on spending as well. moving from unchanged last month, april, to up .1%. look through the internals. personal expenditure deflator month over month. up .6%. if you look at it year over year, up .3%.

and continuing claims they move from 2.25% to 2.47%. that's a lateral move if we blur our eyes. the response in the marketplace? the headline is giving us a basis pointer. more in yield as it gets close to touching 240. keep in mind right around 348 and 248 and around 322 are the highest closes of the year on yield. we are getting very close as we speak. back to you. >> okay. rick thank you very much. that was the economic data that rick was just running through with us. when we come back today, we are going to talk more with our guest hosts for the morning. ken langone and dick grasso are both here and they have a lot to tell us about. >> we got to talk politics. >> we'll get there. we've still got a half hour. "squawk box" will be right back.

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. welcome back to "squawk box." let's turn our attention back to our guest hosts and talk about the presidential race and the very, very crowded gop field that is growing by the day. ken langone and dick lastgrasso are here. give us an update and where mr.

chris fee stands with you. >> i spoke to the governor the other day and i didn't learn what his final decision was. my expectation is he'll run. >> what's taking him so long? >> well look. he's got the budget he's dealing with in new jersey which is now a big issue. they're trying to raise taxes on the wealthy, the democrats are trying to do. he's got a fight on his hands there. but considering his experience considering his willingness to speak truth to everybody, i take it as a big plus. when they grab entitlements as an issue a month ago, that says a lot about his courage opposed to political wisdom. and i think we need more courage and less political wisdom. everybody's manipulating how do i position myself what do i do how do i do it. i think the american people are at a point in time where they're ready for the truth and they're ready for leadership. >> are they? >> yes, i believe so. >> because you get elected by promising to give people stuff. you don't get elected by

promising to take things away. >> here's where we differ. i think america's better than that. i truly believe there's a lot of people out there that say i'm ready to do my share. i just want leadership. troops do much better in battle when their leaders in battle demonstrate bravery, conviction and a willingness to take chances for the greater good. i think the american people are being sold short. and that's one of the reasons i'm so passionate about the next 25 years. >> okay, mr. grasso. donald trump. just lay it on the table for comments. >> he's going to shake things up. >> absolutely. >> remember we now have 13 announced candidates on the republican side. and more to come. i think what donald's entrance will do is shake up the perimeter candidates. frankly kenny is dead on. chris christie has grabbed the third rail in terms of pension reform in new jersey.

i think delivering something rather than promising everything and delivering nothing is where the american people are. they want to hear what the problems are. we've got $100 trillion hole in pensions in this country. when you add up the public private, and all of those promises. >> the problem with christie's situation with this, he signed i and isn't putting in what he said he would. it's a massive problem, but that's where there's the problem. >> by the way, in our earlier conversation, interest rates. you got to believe rates are going to -- >> rates go higher it's going to get much worse. >> going to get worse and alsoget better because the returns will get better. i've had a fabulous last eight years in the market. anybody who's owned anything has done very well. this is wrong. the biggest challenge to america

in my mind now is income inequality. it has a potential of destabilizing this country. that's the one thing i worry about and that's the one thing we all need to address. >> how do we tackle that problem? >> well you begin by hopefully having people who run businesses understand it's good for them. home depot has never paid minimum wage once. and look at the quality of the kids we have at the stores. look at their attitudes. look at the culture. we take good care of them. we pay them. we figure ways out to leverage what they're good at doing. but that said i don't think business on its own without incentives and that's what i worry about. this is where you begin to get corporate welfare. the other side of the barbell is education. you can pay somebody a lot more money on how capable they are. and we need to address public education. it's horrible. >> we've got to lay one other name on the table. bobby jindal. want to take it? >> i think he's --

>> got a chance? >> i don't think he has a chance. >> there you go. we'll leave it there. all right. we'll get more from these two gentlemen when we get back. also when we return for years railroad stocks have been doing great. several economic factors have investors maybe hitting the brakes this year. we'll take a look at the rail sector coming up. as we head to break, look at the share ishares transportation etf. did you follow that? down yesterday big 2%. has a lot of people worried. we'll talk about that and much more. you're watching "squawk box." stick around. what if there were only one kind of dog? then it would be easy to know everything about that one breed. but in fact, there are over three hundred breeds of dogs. because no one can be an expert in every one... an app powered by ibm watson will help vets tap specialized knowledge in the cloud for every breed... and whatever else walks, flies or slithers through the door. ibm watson is working to make medicine smarter every day.

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it's been a rough ride for railroad stocks so far this year with biggest names in the industry down double digits. morgan brennan joins us with a look at the sector and why investors are hitting the brakes after cruising for so long. >> good morning, becky. it's all about volume. we knew comps would be tough in the current quarter. but rail volumes have declined more than anyone expected. for the first 24 weeks of 2015 looking at commodity shipments, volumes down 3.6% versus last year. that's according to the association of american railroads. the biggest paying points? coal car loads. that's still a big business. those have plunged as cheap natural gas has undercut demand. also grains. so this is after two big harvests. we've seen export demand curbed

by the dollar. third, crude oil. prices have fallen. that's less crude by rail. but it's also in less frac sand and also less metals for drilling. couple all of that with really big spending. we've got a projected $29 billion this year expected to be spent by the major railroads. that's to improve service and in light of all of this you've seen csx has lost 6.5% this year. quite frankly that's the bright spot. look at the others. norfolk southern kansas city southern, and union pacific all down by double digit percentages. still, all of this has analysts continuing to cut estimates as we head into second quarter earnings season. but citi group's chris weatherby says this could be the worst of it. therefore rail stocks are likely to stabilize in the second half of the year. even if that's the case, we've got a rocky road to go here as the volumes continue to be

weaker than expected. disney raising its dividend to 66 cents per share. according to your next guest, the company is trying to play catch-up to time warner who pays every single quarter. anthony clemente joins us now. anthony, it's nice. it's a good move by disney. they're also going to pay out twice a year instead of once. is it a reason alone to buy the stock? or is it just gravy? >> i think it goes to the powerful point that disney has been committed to returning capital to shareholders over time. so if you look at the way disney has grown its dividend the growth rate of over 20% over the last four years. and then you put that together with the buyback policy which the companies return more than $8 billion in capital in terms of buybacks and dividends. and one thing i like about disney is they open just the way their content, their brands open their audiences to the mainstream.

so does investor relations in the sense that you have growth investors, income oriented investors, and you have strong managements. not a closely held company. single class of stock. so they've done a great job opening up the potential investor. >> a big part of the story has been espn. if you're on our side of the business, how much money espn makes is unbelievable. now you've bot nbc sports. cbs sports has expanded. is there any sign people are finally dhip lyly chipping away at the espn juggernaut? >> i've been watching espn four hours a night the last four nights because of virginia baseball. >> i stayed up last night. congrats. i'm a hokie, it's hard to say. >> but i think for regular season sports and some sports like major league baseball there's some pressure there in terms of fatigue. but i think for playoff sports,

of course nbc had that. you just had iguodala on. that was a huge property for them. and the advertising environment is choppy right now. >> there was a report yesterday john skipper who runs espn is trying to cut costs. they actually feel for the first time they have a bit of pressure on them. >> when you look at their nba deal for the '17-'18 deal is a step up for them they're probably trying to look for other places where they have room. but in the model kind of near term, their programming costs will remain flat the next couple quarters. it's a dual revenue stream. as long as the affiliate stream is growing, they can keep margins steady or expand. >> would you want them to buy draftkings or make that investment? >> i don't know. i need to look at that more. i think the fantasy sports space is very competitive. and the economics are still

national. >> i was told the franchise was going to be spectacular for the next ten years. not the next four years. brian cornell who runs target thinks this is iconic and it's going to have a profound effect across merchandising. obviously this is all good for disney with licensing fees. but it seems to me the breadth of what they offer, not just espn, but "star wars," marvel, he's equally happy he took stock. the stock has been doing well. >> well, the thing is for any piece of content disney is the company that can do the best job of monetizing that. maybe that's a cliche and people have heard that before but you'll see it in earnings. we've done some work at least 30 cents of earnings upside of "star wars" alone next year. >> wow. >> it reverberates. you've got a couple marvel films and the disney films itself.

six bucks of earnings next year why shouldn't it be 25 times earnings? why shouldn't it be $150 stock? people say that's way more expensive. but this is not really a media stock. it's really a global iconic consumer and retail products company that should trade like a nike. >> fabulous. >> great discussion. anthony, thank you. appreciate that. >> as always. all right. coming up after the break, we are going to head downtown to the new york stock -- are you familiar with the new york stock exchange, dick? >> i've been there once or twice. >> jim cramer is still there. we're going to see what's on his radar this morning of what you need to be watching at the open of trading on wall street. futures are indicating a higher open. "squawk box" returns right after this.

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we have a couple of special guests today. dick had a question he wanted to ask you. >> say, jimmy, you promised me years ago i would be able to fill in for you on "mad money," if you shave the balance of what grows on your head. is that still open?

>> yeah. that's not only open but open tonight. i'll go over to joe, our guy. we both love joe. we'll get it done. i will give you the mike and you take it over and it will be the best show we have ever had. >> jimmy, i love you. i don't warnt to see your ratings go in the tank so i will let you do it alone. >> i miss you guys. >> do you still like home depot? >> more than ever. are you kidding me? you are right. the people are great. i love the new ceo. it is a great company. i will dpetget some new tomato plants. >> you can't spend too much money at home depot. >> jimmy, you think you might own a few shares? >> whatever he owns is not enough. that's how good that company is. >> i agree with you.

we were talking earlier about what scott icon said. he was saying he was concerned about some areas of the market, particularly in the high-yield bond area. >> i haven't liked the high-yield bond area. i don't think there is a lot of value. somewhat contradictory in if he really thinks stocks are expensive, he owns the largest stock in the market. i think he took a victory lap. let's not make too much of what he said. let's hope that greece gets done and stocks go higher. >> thank you and we will see you in a few minutes. >> mcdonald's ceo speaking out on his plans to roll out and many american families are buying. we are going to hear from steve next.

telling nbc news this is part of a strategy not just to give customers more options but to try to boost sales. i know how difficult it can be to encourage your kids to eat well. whatever reaction we get from

parents is one of gralttitude. at our heart, we are a burger company. >> more about mcdonald's coming up on "squawk on the street." let's get back to ken langone and dick grasso. what have you not had a chance to say? should we talk about activist investors? >> sure. >> i have a real problem when a contest, recently the dupont contest, is won by virtue of passive voting. your index funds in this country are accidental owners of shares. in fact, you could make a case that the man at s&p or the gal at s&p who decides who is in and out is the most powerful investor in the country. the minute they say, ibm is out on the last sale the last day that ibm is in the index, all of those funds have to sell. i think that's wrong. you have to dissect each and every activist contest.

each contest is different based on a country's metrics and management performance. this whole idea that passive votes can swing the decision. >> you are never going to have an election where every investor knows enough about what's happening to be able to actually cast a vote. >> then, sterilize them. >> why do you buy a stock? you want it to go up. management i think, every board i have ever been on, when stockholders call me i listen to them. i don't necessarily agree. the next call may be the best idea you have ever heard of. i don't have any quarrel. i have owned dupont for six or seven years. it has done very well for me. when a guy gets 48% of the vote if i was that board, i would say, hey, wait a minute i want these people in this room. i want all my stock holders represented. 48% of the people i think

activists generally do a good job. i'm partial because i know carl and nelson nothing to do with business, it is about charities. they are fabulous wonderful ben factors and philanthropists. >> what do you make of larry fink's argument about activist? so much of it is short-term. too much is based on buybacks and pressing companies to do things. >> that's where the board of directors says we are not doing that. here is why we are not doing it. make your investors aware of the rational and the reason you are saying, we are not going to do that. we are going to sell short. i'm a long-term investor. i completely agree with larry. this is where you have to put up or shut up. >> my point about, no two situations are the same andrew. if you look at dupont, eemi'm a dupont shareholder. nelson's other nominee for that board was the former chairman of gm investments.

he is a very good man. >> gentlemen, it has been a pleasure having you both here today. i always love it. please, come back soon. dick, ken, we really appreciate it. >> always fun. >> it is always informative. >> love having you here. >> tune in to power lunch. in the afternoon. >> that does it for us. make sure you join us tomorrow. right now, time for "squawk on the street." good thursday morning. welcome to "squawk on the street." i'm carl qintanilla with jim cramer and. the dow's biggest drop in the month yesterday. no deal in greece. some of these headlines might make you think we won't see one tomorrow. personal spending at a six-year high as consumers take out the wallet. the ten-year and oil, we w