26th 2015. squawk box begins right now. >> live from new york where business never sleeps, this is squawk box. >> good morning and welcome to squawk box here on cnbc. joe will be back on monday. mike is spending the morning with us. he is senior columnist at yahoo! finance. good morning. >> good morning. >> great to see you. we have a lot to talk about including china, greece and the dow transports hitting correction territory. we'll be getting ready for the big government employee report. 89% of american workers think they deserve a raise but fewer will ask for one because 7% of people say they'd rather get a root canal than ask for a pay bump. we have highlights from that report coming up later in this

hour. the markets are on track for a declining weak. you can see that the dow futures are indicated slightly higher. that's a gain of 15 points above fair value. s&p and the nasdaq are looking slightly lower but we have some time to go before the opening bell about 3.5 hours away. check out the overnight action in china. this was something to see. the shanghai composite dropping more than 7%. that is something that will get your attention. if we're looking at the dow you'd be looking at a drop of 1400 points. so this is a big deal when you see stuff like this happen. people were talking about concern that china's bull run was running out of team. this market is still up over 107% over the last 12 months. what goes up must come down. it points to a lot of volatility that has taken place. overnight the shanghai composite dropping by over 7%. we'll have a live report coming up from asia in two minutes.

>> it's year over year 107% year to date. >> i'm not sure what the year to date number is. but over the last 12 months. >> about 30%. thank you. >> it was up about 140% into it's high. so basically -- >> mid june. >> yeah. it was up more and faster than the nasdaq was in 99 or 2000. just to give you an idea of the magnitude. >> we have seen reports ourselves coming out about town where is the local people have been piling money in and hoping this would be something that worked but a lot of volatility. >> it's been operating in an unstable way. the government there is engineering stocks and if they're cutting back on margin lending and things they can take that away. >> let's tell you about a couple of the stories we're watching today. the greek prime minister will meet with germany's merkel today. there's no deal between athens and it's creditors ahead of a key weekend deadline. we have a live report coming from greece in a couple of

minutes. also people pulled $1 billion from u.s. based stock funds in the latest week. this marks the first outflows in five weeks. they poured $3.4 billion into taxable funds. we talked about people taking money out of mutual funds. ryan sullivan said they're doing it to go buy homes. other people say it's because there's a problem. >> mutual fund outflows. >> especially domestic. if you look at the etf flows and everything bells but we had a big bond flow last week so that's partly a reversal of that. >> trains planes and automobiles signaling trouble this morning. the dow jones transportational average down 10% from its december 29th closing. >> we should tell you about a developing story out of france this morning. local media there reporting a man has been decapitated at an air products factory in southeastern france in a possible terror attack.

the attacker was reportedly caring an islamic black flag. explosions were heard at the scene and this is a factory that is owned by the u.s. based air products according to reuters. we are continuing to follow the story and we'll bring you the latest as we know more. >> back to the markets. here's stocks to watch. nike posting better than expected earnings for the 8th quarter in a row. selling more high margin shoes and it's raising it's sales growth forecast. we'll talk to an analyst about that at 6:20 eastern time and they're missing the mark on the top and bottom line and current forecast coming in a bit light. further decline in prices of chips used in personal computers and other corporate news today. airbnb now closing in on $1.5 billion in fund-raising. value the company at a unicorn

like $24 billion. >> it's a big unicorn. >> let's get a check on the markets this morning. the futures as we showed you look mixed this morning. this is coming a day after the dow was down by 75 points. nasdaq was lower yesterday and as we said you are looking at the s&p 500 and the dow both tracking their first negative week out of the last three. the nasdaq is the least negative. it's barely down at this point but we'll see where things shape up as we get further into this trading day. here's a look at what's happening in europe. the cac is france is down. the ftse is london is down by .9% and the big questions swirl about what will happen. if a deal is going to be reached it will need to be reached by this weekend because there's all kinds of things about what will happen before the markets open on monday. this is a story we have been talking about for quite awhile. >> you know we had five straight fridays where the

market here is down. i don't know if that's because it seems to kick over into the weekend or not. it's hard to see how you get much more than a relief bounce if you get a deal at this point. the market hasn't suffered that much going into it but we're conditioned to think that deadlines aren't really deadlines. so i don't know when that is. >> right. so we'll see. let's take another quick look at what happened in asia overnight. you can see that the market in shanghai down 7.4% in the hang seng index only down by one and three quarters percent. oil prices at this point looks like wti is just below $60. 59.44. that's a decline of 26 cents. we have been watching the ten year note and at this point the ten year note is yielding 2.40%. the dollar is up against the euro at 1.1196. dollar yen is at 12345 and gold

prices look to be slightly higher. $1,173.30 an ounce. now back to china, sri joins us from singapore with the big sell off overnight. sri we mentioned there's a lot of reasons you can point to but the biggest one being how far the market has run over the last 12 months. >> exactly. welcome to casino royal china style. this is a market dominated by retail investors. 80% participation. the average holding rate for a stock is one week. think about the margin debt. we're talking about 2.2 trillion. that's over 350 billion u.s. dollars or about. 2 or 3% of overall chinese gdp and that really was fuelled. this blistering bull run. the market remember has doubled over the past year.

so when it gets further sell off it will sell steeply. it's the leverage that remains in the system and creates the high volatility. the big question for chinese authorities is whether they're going to prop up the market. remember the wealth effect this has created. it's underpinned the housing market. that has been considerably eroded now. some people are telling me there could be a 50/50 chance of some kind of intervention in the market. either directly or through policy support to sure up confidence. one thing is for sure a lot of people are telling me don't buy it. it has further to run. remember morgan stanley's call. they're talking about a further 20% correction in chinese equities. back to you now. >> that's an astounding number. the average holding period for a stock on that market is one week? >> that's right and that's really what it comes down to here becky. there's ultra leverage.

it's an ultra crowded trade and it's one that really feeds off itself. so it's a very jittery market and some believe that yes, perhaps it might create a bit of a buying opportunity come monday. that is a big question. does this slide have further to go or is it going to entice some bargain hundredors?ters? the valuations are looking less stretched now but that's why you're seeing very little professional interest in a shares. it's really gravitated toward the shares market and toward hong kong because of the valuation gap which is more compelling than mainland china equities. in the medium term it's going to favor the hong kong market and favor 8 shares. >> thank you very much. >> let's get to the other big market story of the morning. that's greece. it's the market story of the morning every morning. still no debt deal and steve

joins us now from athens with the latest. steve, good morning to you. >> we might need to take attention of this one. it's like we need to get something done by the time the marks open on monday. that's the first time she mentioned the markets as the factor in these painful negotiations so now we'll find out why the greeks think they were elected. is it a, to keep the country in the euro zone as an overwhelming number of greeks want them to do or b fight down austerity? because they may well have to make that decision and if they decide of course that it's austerity over grexit who knows what's going to happen in terms of the government finances the bank finances it could be absolute upheaval. that's no overstatement of the fact as well. i want to make one more point if i may as well that i was

speaking to a very very big investor. i said are you here to invest in the country? is that why you're here. he said there's tax problems and judiciary problems. and we can't invest in a country that has that as a backdrop and that is the longer term problem of this country. there's a lack of investment because people just don't trust the strength of the institutions. back to you. >> steve thank you so much. we'll check back in with you later this morning. in the meantime joining us on set this morning is managing director at t.d.ameritrade and mike is with us for the hour as well. great to see you in person. >> always a pleasure to be here. >> we have been buffeted around by a lot of the differ stories. you have the greek story and markets pulling back and now several foreign markets in correction territory. not to mention the transports here in the united states. i just wonder what that feels

like to you. are we in a more volatile situation or lightly traded session? >> we're in a range bound trade which if you look since may 7th on the s&p 500 we traded between 2075 on the down side. 2130 on the upside. to me we're in the middle of the range currently. i don't think there's a reason to panic. until the fed comes out and the top story of the day is always fwrees greece and the fed for you guys. >> this is true. >> until they put a date on when they're going to raise rates we'll continue to see it. one of the most interesting thing is a lot of money managers are rotating out of bonds and into high yielding equities. the safe investment of bonds has been the most volatile market there is right now where stocks have been range bound and providing a little less strenuous opportunity. >> everything else is moving

around. the s&p 500 doesn't do anything. 8 straight weeks without a 1% up or down move. below the surface it's raggedened a lot of the industrial stocks are starting to sag. >> utilities are in correction. >> exactly. it's health care financial, consumer but a lot of the other stuff is falling apart. >> the one thing that i'm a hill bit nervous about going forward is the financials because a lot of people bought them in anticipation of the interest rate raise because let's face it they have done very well without the traditional banking functions and now that they may actually get a spread should be exciting times for them. there's been a lot of buying of many of them -- it might be a little bit of buy the rumor, sell the news. and the other thing that's been great is there have been a lot of good individual stories and for retail investors, that's been great. you've had ipos and facebook and twitter. the darlings of the retail trader moving around quite a bit. so there's been great tun for

people. >> was it usa today with the mutual fund outflows? does that mean anything to you. >> let's face it. all people are hearing right now is bad news. i hate to say it. even though the market is performing well with greece overhanging and the fed overhanging i think that everyone is stressing how bad things are right now so i'm not completely surprised and i believe you mentioned it earlier, every friday we all get nervous because greece happens to come on saturday and also i think andrew it could be -- we'll see what happens in july. at the end of one quarter going into the other quarter does a lot of the money come back? and that's what you'll see. >> part of what mike was pointing out is we have gotten used to the idea that there's no real deadline. they either have to reach a deal or this is a real deadline. we're talking about that this weekend. some people saying it has to happen before the markets open again. is there a moment where there's

actually a panic if there's not a deal reached? and you feel this is the time they're starting to get pressure that something has to be done and germany is probably the most on the line because they have been the greatest beneficiary of the euro zone so that could mess up a lot of things for them. >> the other problem is you have so many different flavors of what no deal can look like. it can be technical default or some kind of extension and maybe they're just trying to engineer a new coalition in domestic greek politics right now. it's very very difficult to game it out and that's why the markets are just mostly set back and said we're going to assume this doesn't result in contagion and disaster but we'll wait and see. >> we were talking with sri a

moment ago talking about what's happened in shanghai and he mentioned this idea that the average holding period for a stock there is a week. which just sounds stunning to me. i asked how long it is in the united states. your answer is -- >> about 8 months. >> i can't even imagine a market that is basically day traders running the entire thing. >> working for a broker would be a dream. but that's amazing to me also. in their day in and day out i don't think that would be healthy for most people because it would put them at risk they're not ready for and one of the big mistakes many retail traders use and we're seeing it in this range bound trade there's no reason to put on huge positions at any one level. a little bit at a time. and it seems basic but unfortunately too many people think of themselves as being all in or all out rather than a little bit of a time.

>> j.j. thank you for coming in today. >> always a pleasure guys. have a great weekend. >> mike is sticking around for the rest of the hour. >> nike shares getting a nice pop this morning. the big drivers behind the winning quarterly report. but first here's a look back at this date in history. ♪ ice: to file a claim, please state your name. carnie wilson. thank you. can you hold on? ♪ hold on for one more day ♪ really? hey, i know there's pain. why do you lock yourself up in these chains? ♪ ♪ this would be so easy if you had progressive. our mobile app would let you file a claim and help you find one of our service centers where we manage the entire repair process. things will go your way if you hold on. [ sighs ] someday somebody's gonna make you wanna turn around and say goodbye. ♪ say goodbye ♪ no, you just made it weird. ♪ mamas, don't let your babies grow up to be cowboys ♪ ♪ don't let'em

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welcome back. we're following breaking news out of southeastern france right now. local media reporting a man has been decapitated in what is being called a possible terror attack. he was reportedly carrying an islamist black flag. exploexs were heard at the scene. this is still earlier information. we'll bring you updates as we get them. >> switching gears, nike shares following fourth quarter results but the big story is the passage of the trade bill in congress. the analysis of how ttp could be a huge tail wind has to do with vietnam and michael joins us now to discuss that as well as nike's quarterly results. good morning to you michael. >> good morning. >> so let's just walk through the earnings first of all.

any challenges for you? >> it was a good quarter. top line drich. sell driven. there was a little noise in the bottom line number but it was very high quality beat in the quarter. the big geographys you want to see working it's very very strongly. if they're working on at emerging markets like brazil and mexico. it was a very good report. >> do you have any anxiety about the lower tooer partier part of the margin? the running sneakers aren't selling nearly as well as the tough above. >> that was a big concern last quarter. they seemed to show some signs of putting better innovation.

it's not as issue as we thought it would be. >> did we hear anything on the fifa scandal? i know they westernren't named in that scandal. it was company a referenced for giving 130 murder in the second degree into the swiss accounts. >> we didn't hear anything about that. that's still being speculated in the media at this point. we do have substantial evidence. >> is there a legal liability issue there or no? >> none that we see. we have seen reputational issues in the past that have come from companies where these things have gotten you know a little bit sideways but i don't really -- we're talking about the media seems to be focused on things that happened over 20 years ago at this point. >> so many of their shoes have produced in vietnam. you think there's a big bump to come here? >> yeah we don't have 2015 numbers yet. but 43% was manufactured in

vietnam. the majority is still done in china. they moved a lot to vietnam. the transpacific partnership being discussed, if passed would create a free trade zone between 12 member nations. the united states and vietnam would be two of those. it would be hugely beneficial for nike. it would eliminate duties on shoes and what we found is that the duties on shoes coming in from vietnam are higher than china. so the duties eliminated would be higher from vietnam and more beneficial to a company like nike. it would add about 50 basis points of gross margin upside over time. the government would ask them to move jobs to the u.s. if they did invest in u.s. jobs or push for passage but overall a good thing i think. >> a question about how to view the stock here. what's the proper valuation to put on a very high quality 15% or more grower. 32 times earnings at this point. where can it go?

that valuation? >> they reported 13% global future orders growth if you exclude the impact of currency last night. that's a huge number for currency this side. i don't see any reason that the market is going to look at the results and say it's time to compress valuations. we think the market is going to continue to put a mid 20s multiple on this stock going forward and as you get later into the consumer cycle you look at names like nike accelerating global stories. they have a lot of pricing power. this is a very good place to be late in the consumer cycle. >> before we go just in terms of stuff that's coming up that matters, the new nba contract how much of that is going to help in terms of the battle going on with underarmor. and if you were going to buy under armour or nike which would you do? >> nike has a slight edge. under armour has a high

valuation. we would be opportunistic on either. as far as the near and long-term drivers like you mentioned, brazil is one of the areas nike was struggling in. i don't think that's going to be going on very long. nike is focused on building out that market and bringing excitement around athletics in that market. the nba is looking to globalize it's business. they're the best partner to do that with. they take them over to china several times a year. there's a lot of excitements around players in the nba. it's a partnership that's frankly long overdue. >> thank you michael. appreciate it. >> when we return this morning we'll have many of today's top stories including a huge sell off in china overnight. plus a supreme court obamacare ruling. we'll get the long-term diagnosis for the sector next. take a look at yesterday's s&p

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>> joe will be back on monday. if you're just waking up this morning we do have a number of

big stories that happened overnight. check out what happened in china. the shanghai composite dropping more than 7%. decline of 7.4%. a lot of reasons cited here. part of it is the greek fears about what happens with the deal if there's one cut this weekend or not it's up over 100% so it's a volatile market. the dow futures up 25 points. s&p 500 and nasdaq are flat at this point. right now the s&p 500 and dow are on track for the first losing week in the last three. as we mentioned still no teal for greece and european stocks have been lower across the board. the dax is down by one third of a percent. >> we should also tell you we're following a developing story

just going on out of southeastern france. right now local media there reporting a man has been decapitated at an air products factory is what is being called a possible terror attack. the attacker was carrying an islamist black flag. explosions were heard at the scene and we'll bring you the latest as we get that and that's the products so many of us know based there in france. the supreme court ruling in favor of obamacare's subsidies giving him the second victory on the hill in five years. it effects 6 million people across 34 states and hospitals and insurance giants are enjoying healthy returns as a result. joining us on set with his top picks and what he make of the news is the health care analyst.

it confuses you. how are you? >> very well. thank you for having me. >> this decision didn't surprise you? >> not at all. >> we expected it to go this direction and expected the supreme court to interpret the law the way they did and it's the second time both have gone in favor of it and one of the rationals to it is just -- it would have created all kinds of disruption across the market where this law is already entrenched and will be so down the line. >> you don see any going on in washington up ending any of this any time soon. >> not really. the republicans are going to have mounted a nice push back going forward. that would be interesting to watch as the individuals chat about this in the coming weeks and months but for the 2016 election, i honestly don't see it being a major topic. big health care legislation

tends to skip an administration once it's talked about and there's political science behind that above my pay grade but maybe 2020. toward the end of the decade. i think we perhaps look at health reform version 2.0 coming back. >> okay. so one of the effects of this at least for some period is all of this consolidation going on. >> right. >> in the health insurance space. does all of this actually take place? does it happen? regulators allow it to happen. there's new reports now. >> it does. the affordable care act lays out a world where scale matters on one hand but also i think you're going to see companies making a lot of strategic moves in terms of where there's continued growth. privatization of medicaid is a big revenue driver for the

managed care drivers and prior to that you'll see the managed care companies in particular looking for more scale. >> what i don't understand is why regulators would allow this to go through at some point and there's going to be no alternatives for consumers and if you're worried about how you're getting your internet i don't understand how health care isn't an even higher bar. >> it's an excellent question. when we've seen merger in the health care space it's delivered locally and the folks looking to do the mergers are able to laser out areas across different geographs and show it's not anticompetitive. there will be enough out there still. >> if you go from five major health insurance companies to 3 that sounds like massive consolidation. >> on a national basis we have a number of blue cross plans out there. we have a number of smaller regional health care plans. there's a company called riverside health care that is a

small medicaid carve out. very innovative that's going to be partnering with a big hospital center in the state. there's more pieces to the puzzle than carving it down to three. >> if i told you that they weren't allowed to merge would they still be biased? >> absolutely without question. if we take all the merger mania out of it which has been hard to do that's all anybody wants to talk about but, you know compare the next three to five years with the last three to five years as a major player in the u.s. health system there's regulation and affordable care act components each and every year. going forward, we have got, you know two years in the exchanges. the affordable care act doesn't increase, the tax doesn't increase into next year. we're going to have two years of claims data to be able to better

price with. >> and with the court ruling on this it's much more cemented. this isn't going away any time soon but this is not getting planned out. >> i think a number of the large care companies and hospitals as well were not looking at this decision as being a make or break like we did a few years ago with the supreme court look at it. today there was a lot of work arounds for it. the media obviously likes to chat about it a good bit but at the end of the day, we saw these big mergers and speculation come out two weeks ago. ahead of the decision. they have been talking about moving together over a period of time. if it was that big of a deal we wouldn't have heard anything until this decision came out and we had move from there. >> thank you for having me. talk to you soon. >> when we come back this morning if you've been to a movie lately you've heard from

this company. shares of dts are up about 75% over the last year. dts sounds for digital theater systems. now the company that brought the dinosaurs of jurassic world -- they were involved with jurassic park the first time around they want to sound off with your home sound as well. the ceo will join us here on set when squawk box returns. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images

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welcome back to squawk box everyone. we have been watching the u.s. equity futures and it looks like things turned positive. the dow futures were up by 35 points. s&p futures and the dow futures are marge untilly higher.

the government's report will come ahead of the july 4th holiday weekend. while 89% of u.s. workers believe they deserve a raise just over half plan to ask for a pay bump this year. instead workers surveys said they would rather clean the house than look for a new job. 70% would rather get a root aal. 6% said they would rather be audited by the irs. >> so we're now going to turn our attention to our regular -- is this the last day of the possible feature that would be where in the world is joe kernen and there's a huge audience desperate to know. we'll give you a hint. you can hear the sound of music in the distance. joe testing out his selfie skills. he is wrapping up his vacation and keeping us updated via twitter. joe will be back on home turf next week. safe travels on their way home. we'll see them on monday

morning. and there's a little bit more to talk about. speaking of vacations, those visiting universal studio hollywood this weekend will be able to enjoy a new attraction. fast and furious super charged. it's now open to the public. so if that was on your list this weekend you can check it out. what are we looking at there. >> looks like the rock right? >> i think so. >> that's part of the fast and furious when they were making it, it looks like. >> we're going to stick in this theme of theater technology. it's music to the ears of consumer. they can blur the line between entertainment and experience. surround sound pioneer dts started in the first jurassic park movie 20 years ago. it provides audio technology for more than 2 billion devices around the world at this point. they're going back to its roots in the world's fastest growing movie audience. john is chairman and ceo. thank you for joining us. >> pleasure to be with you. >> it stands for digital theater systems and we've seen it when

we go into the movie theaters and the big boom comes down and dts goes up on the screen. how does it work? >> emersion for the experience. we license technology that provides film makers a creative tool that enables to deliver a more impactful experience. >> you started with jurassic park the first one. steven spielberg was blown away by what you did? >> correct. in fact changed the course of movie listening. surround sound has been the standard. >> he was an early investor in the company. is he still? >> not any longer. his sponsorship was a tremendous boost but today we are a global player across every aspect of the sound piz. >> one of the stories about movie going as a general pursuit is you have to make it that much

more special. the reclining seats, the imax experience, all of those things. can it be adapted to all kinds of movies? we are pushing the limit to how much people are willing to pay to go to have at a type of experience. >> theaters just like every other form of entertainment are trying to drive a differentiated experience and what is important today is we're on the verge of another wave of technology. both in the cinema as well as right down to your mobile phone where dts is driving the ability to provide more immersive entertainment experiences and what we know about emersion is its in part about driving emotion and engagement and the greater that you can drive that experience, you know the greater impact you can have in terms of monetizing your media-related assets. >> what's happened to things like 3-d. it goes in waves. everyone says 3-d is coming and everyone wears the glasses. what's the movie. >> the blue people. >> avatar.

>> everyone wore the glasses and then everybody thought that every movie was going to be in 3-d from then on and people talked about smells. i just went to a thing for kids at legoland where they blow wind at you while the car is going and they spray water at you -- >> and they have bugs that run under your rear in the seats. >> but that seems gimmicky. how far are we away from doing that without it feeling gimmicky or are we going to try to do that. >> i'm not sure about the sense of smell but from a senses perspective some things are remained true forever. film and games are about a combination of a visual experience and an audio experience and 3-d had a big run but it's a huge percentage. audiences embraced it largely.

>> but what's different than 20 years ago. >> today much more advanced systems. >> from the consumer's perspective. >> the difference is fundamentally you have height elements in the delivery of sound. in the real world you're surrounded by sound all the time. there's a lot of sound industry above your head. historically the industry hasn't been able to deliver that and now you can. so like with dtsx that we're releasing into the theaters and bringing to your phone we can emerge you in a way you couldn't be before. >> can i ask one little question? a sound question. we wear head phones where ever we go. is this bad for us? >> depends on what volume you're listening. >> seriously you see everyone with ear buds in. some people have it very loud. we have these little ones in our ears. is this good or bad?

i'm asking as someone that spends their whole career and life thinking about audio stuff. >> like everything in life you want to have balance in how you use your technology. i'm not a doctor or audiologist. what i would tell you is nobody really knows. this generation and today life is about a head phone based listening experience. we're trying to make it better but encourage you to use it with proper balance. >> fair enough. when we return. we'll talk about the hack attack at sony. inside the hack of the century. fortune magazine reporting six months of reporting. wide open for a cyberattack. the details are remarkable and we've got them. when we come back. ♪

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welcome back to "squawk box." fortune is now out with a big story on the sony hacking attack. it hits newsstands today. this has been a six-month-long investigation into how the sony hack went down and multiple warnings ahead of time. this is the message that popped up on sony employees' computers the day of the hacking. that's what you would have looked at if you walked in that day. fortune editor allen murray is here with this huge project. thank you for coming in. >> thank you for having me. >> it's an amazing story. before we get into some of the details, just some of the nuance is spectacular. i don't know how we got some of this stuff. but the overall lesson is what?

>> oh, that this is one of the great issues of our time. and it's only getting worse, it's not getting better and we don't have any idea what the answer is. you think about sony. sony had ten years of warnings that this was coming. they've been a favorite target of hackers from way back. you remember 2011 there was the big playstation hack. and the ceo had to do the deep bow of apology before the public. so they knew it was coming. but still didn't have -- didn't begin to have defenses in place to protect it. >> is sony any worse than the average corporate -- >> i talked to a lot of people and asked that question. i think sony was in the lower tier, but there's certainly other corporations that are equally unprepared. i'll give you one example about sony. i think we all know what two factor authentication is now. you have to get codes through a key to be or something. they didn't have that in place.

>> wow. that's been around in over a decade. >> kind of basic cyber security hygiene they didn't have in place. so we found a number of cases like that where just pretty simple things weren't in place. >> alan do you think they brought this on themselves? the reason i ask is what i didn't realize before reading this story was it was actually a sony executive, it wasn't the writers of the film who suggested going after north korea specifically and killing kim jong-un in this case. >> yeah. i don't quite know why you -- have you seen the movie? >> i have not. >> okay. it's -- this is not a serious movie. it's seth rogan and james franco. it's a fart movie. you didn't have to put a real world leader in there as the subject. i mean it's sort of unnecessary to do it. in some sense i think that's true. but there's a flip side of this

which is how is it we now find ourselves in a world where not just north korea but china -- look at the opm scandal. 18 million people's records hacked. >> frankly i didn't know how we stop any of this either at the corporate level or government level. it seems to me that there are ways of trying to slow it down but i haven't heard any way that you can continue to use the internet and not be at some sort of risk. >> you can't prevent it 100%. but at the corporate level you can do a much better job of the basic hygiene of keeping people out. and also detected it once they get in. one of the problems is they were in months before this happened. and so i think the state of the art thinking now is you can't keep them from getting in, but vuk systems in place that when they do get in and funny things happen, you detect it quickly. >> aside from the embarrassment and whatever outright cost they

had to spend to fix this what is the broader cost? is there a way to quantify -- >> that's one of the things the companies say. jeez you're asking me to spend hundreds of millions of dollars to protect this. it doesn't show up on the balance sheet. what's the cost here? but in some ways this is a basic risk. their systems are shut down for a month or so. think about when this happens to a bank or -- >> tom siebel was here. he said he's convinced this will happen to an electric utility. it's not a matter of if but when. >> and power shut down for that period of time. so the potential consequences and the potential costs are just enormously huge. >> once this happens and you look at sony as a case study, if you will was there something they could have done not to prevent everything from getting out there. let's say you lost that war. was there anything else they could have done on the public relations front, dealing with employees, dealing with

customers and clients that they didn't do? >> you mean after it happened? >> yeah. in terms of what you -- there are going to be times where you're not going to win the original fight and then the question is how do you win the next battle. >> clearly the public relations over whether or not to release the film was botched. you know we're going to then we're not going to. they got in a fight with the president which is not a particularly good thing to do. you don't really want to get in a fight with the president. looked like they were bullied by the north koreans. so i don't think the -- they weren't prepared for the hack and i don't think the way the aftermath was handled was particularly compelling either. >> okay. thank you for coming in this morning. >> sure. always happy to do it. >> and mike thank you for spending the hour with us. we'll see you soon. >> sure. when we return this morning, we will have more of today's top stories including a 7% drop in chinese stocks overnight. plus the supreme court upholding nationwide obamacare subsidies. plus the cleveland clinic's toby cosgrove with what this means of

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down to the wire. investors on edge ahead of a weekend of intense negotiations as greece and the eu try to hammer out a deal. china also in focus. stocks in shanghai plunging overnight. what impact will this have on wall street? we'll break it down straight ahead. health care survives but more legal challenges remind. the cleveland clinic's dr. toby cosgrove and scott gottlieb give us their prognosis for obamacare. the apple watch now telling time monitoring your health and e-mails in seven more countries. back home taylor swift

shaking off her beef with the tech giant confirming that last year's best selling album "1989" will be available on apple music when the streaming service launches next week. live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box," everyone. this is cnbc first in business worldwide. i'm becky quick along with andrew ross sorkin. joe a off today. he will be back on monday. let's look at the futures. the s&p and dow both on track for their first declining week in the last three. however, you're looking at green arrows this morning with the dow futures up about 46 points above fair value. s&p up by 3 and nasdaq up by 6.5. take a look at what's been happening with europe and after our obsession of whether there will or won't be a greek deal. you can see this morning that things have actually gotten a little bit better. they've improved a little over

the last hour or so. the dax is relatively flat as is the ca krc. here to help us navigate through the markets and more this hour is our special guest steven ratner. thanks for being here today. >> thanks for having me. >> what do you think about greece, first of all? >> i think it's a game of chicken coming down to the wire. this is a situation that could either be a win/win or a lose/lose. it's a case where both sides are better off if there's a deal. but neither side wants to budge first. it's going to be a nail biter. right now i think the markets feel like there's going to be a deal. they don't seem to be in panic mode. >> have you done anything with the money you manage as a result of this? >> we agonize over it. we think the fundamentals in europe are getting a bit better. but a greek event would be destabilizing. so we kind of wimp out and sort of weave our way through without taking a strong stand on it. >> we'll dig more into this in a

moment. there's a developing story out of france. a man has been decapitated at an air products factory in what now is being called a possible terror attack. the suspected attacker was reportedly carrying what is an islamic flag. we will keep monitoring that story and bring you news as we get it. switching gears this morning, the dow jones transportation average now in correction territory. we should also say nike posted better than expected earnings for the eighth quarter in a row. the company's selling more high margin shoes and apparel at higher prices and raising its sales growth forecast. health care stocks in the news this morning in a big way. humana saying etna trying for the buyout. and there's a possibility that cigna could jump into this.

it's not clear it's etna just yet. then the hospital stocks in general have soared following this supreme court decision yesterday that upheld the obamacare subsidies. this morning wells fargo citing that decision. they're upgrading systems. wall street and main street digesting the latest ruling on obamacare. the u.s. supreme court upholding. this ruling gives president obama his second major court victory in his fight to keep obamacare alive. joining us right now to tell us what this means for the health care system and the years down the road is dr. toby cosgrove. he is president and ceo of the cleveland clinic. toby thanks for being here today. >> good morning, becky. >> so what does this mean for the hospitals? >> i think for the hospitals it means there's going to be fewer uninsured people and that more and more people are going to be covered by medicaid. if you look at the state of

ohio essentially 20% of the people are eligible for medicaid and about 85% of those are eligible to get subsidies. >> this was important for the hospitals. they gave up front as part of a negotiation to say okay we will be taking less in our payments we receive from medicare or medicaid and other places in order to make sure we have more people coming in the door who is are actual insured. was it worth it? was it the right call from a bottom line perspective? >> it's helped a lot. we cut the number of uninsured about in half and increased substantially the percentage of our payment that comes from medicaid. medicaid doesn't cover the cost of actually providing care but it's better than not getting anything. >> what do you think beyond the hospitals? how has this worked out? it seems the health insurers have done well. >> i think you're going to see consolidation in the insurers. you're seeing consolidation all the way across the entire health care industry. and the reason for that is

everybody's looking for efficiencies to try and take the cost out by looking for size and official si as they consolidate. >> we know that consolidation has been an issue. it's already been happening for the health insurers. but there have been questions raised recently about whether it starts to cut off competition and put that sort of stranglehold on. what do you think as somebody inside and seeing this play out? are we at that point? should these deals be allowed to go through? >> the consolidation is not going to raise the price of anybody who gets medicare and medicaid. those are fixed price. that takes that portion out. we're seeing a decreasing number of people who are covered by private insurance. and that's really the only place that you have any sort of leverage in terms of size. so i think by and large it's not going to raise the prices very much. >> that seems so surprising to me.

i would have thought that you -- so you think long-term we could have only two or three of these companies and that's just fine? if i made you king for the day, you'd allow this? >> to or three hospitals or insurance companies? >> insurance companies. >> well the insurance companies i think are going to have tremendous leverage over the hospitals. they will drive down the cost of health care because of their leverage with us. i think the consolidation on the other side is going to be -- not going to be able to have hospitals raise their prices very much because so much of it is determined by what the federal government does. >> does that mean more consolidation in the health care industry? >> we're seeing systems talk to each other with about 25% of the hospitals in the united states now running in the red. you're going to find that they're going to be looking for shelter some place and trying to join some sort of a system. >> all right. dr. cosgrove thank you very

much for joining us today. >> pleasure. nice to talk to you. >> all right. let's bring scott gottlieb and steve ratner to the conversation. i know we'll have more in the hospital arena and insurance arena, but i can't tell if that's a good thing or bad thing even though i know it's kind of like the plan in terms of what obamacare was trying to do. >> look. the hospitals have effectively been given a chance to monopolize markets. if you look at health care inflation, health care costs to consumers have not gone up. health insurance costs have not gone up because of the chances of being hollowed out. eventually the prices -- >> when you say that you're paying for insurance that doesn't cover as much as it used to. so out of pocket is still going up at a faster rate than the inflationary rates we're seeing. >> the cost of employers to provide insurance has been flat. that's what it is when health inflation is down.

the actual charges are going up. the only reason the cost of coverage hasn't gone up is because more cost is shifted to you the consumer and the plans of being hollowed out. eventually rising costs because of the monopolizization is going to catch up. >> you're saying it's good news for big business. bad news for consumers? you have a lot of people who didn't have insurance before who now have it. >> most of them are on medicaid and that's not providing an adequate benefit. i think it's bad for employers as well because they're going to see the cadillac tax kick in. they'll have to hollow out at a faster clip to stay under that tax. especially those with the lower wage employees will move. the subsidy they get on the exchange is much greater than the subsidy from the tax. >> but what's wrong with that? what the affordable care act is doing is putting 12 million more americans into the health care

system that weren't insured before. many of them with subsidies and it is providing more transparency on the insurance plans. i'm not sure what's wrong with all that. >> but if you liked your health insurance, you probably have an issue with it. if you didn't have insurance, then this is great. >> i get it. if you liked it you can keep it. but many of those plans were substandard. it's a yin and yang. everybody needs to have it. >> it came at a cost. >> there's no free lunch. >> but that's not the message that was told before. >> it was not well communicated. nobody can argue about that. >> do you think the consequences are what president obama and the administration wanted to happen? meaning, do you think they expect ed expected the valuations of health insurance to go up the way they have? >> i think you have to separate two things. i don't think they're completely interrelated. the affordable care act is driving a variety of changes that we just talked about.

but consolidation was probably coming anyway. take new york. new york has five hospital systems and tens of dozens of small hospitals that aren't part of the system. you don't need that kind of level of dispersion. when you go to buy a cell phone plan, you have a choice of two major carriers, couple smaller carriers and that's it. you get a pretty good deal. >> you think they allowed the deal to go through -- >> i think it needs consolidation, rationalization, more efficiency. it was run like a mom and pop kind of operation with a few big grocery stores around. >> i think the administration anticipated that the co-ops would step in and create more competition and the consolidated hospitals would be able to take risk and start offering insurance directly to consumers. i think both of those were incredibly naive. so i think they expected more competition, just not from the for-profit insurers. the other thing i'd say about

the affordable care act, most of the newly insured are actually on medicaid. most of the people on obamacare are people who had private coverage who were transitioned into the affordable care act. >> when you say the competition isn't out there. it's crazy to think the hospitals would -- >> we tried this in the '90s and failed. i think the hospitals are bad at pricing -- >> it's a different skill. >> exactly. the reason we have health insurance companies, i don't think this is going to end up well. but the conception still in the administration is they think these systems will be able to offer efficient plans. >> all right. scott, thank you for coming in. steve, you're sticking with us for the rest of the hour. when we come back this morning, in search of goldilocks. wells capital management joining us with what the bulls need to do to feel just right. and the hot piece of hardware now available in seven more countries. and the apple ecosystem just got a swift decision.

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welcome back to "squawk box" this morning. take a look at the futures right now. setting themselves up on this friday morning. dow jones looks like it would open up 55 points higher. s&p 500 up about 4 points and the nasdaq higher about 8 points. among the top stories we're watching this morning, "the wall

street journal" reporting that valeant has come up to buy zoetis. shares have soared up nearly 30% this year. so m&a dealing machine continues. we have three trading days left in the first half and we are getting a warning signal now from the transports. now in correction territory. down 10% from the december 9th closing high. jim paulsen is from wells capital management. our guest today is steve rattner. jim, we know the markets have continued to climb. we haven't seen much of a wobble on these thing, but when you look at those underlying issues it can make people nervous. does it make you nervous? >> i think it's a bit of a challenging environment here becky. we may be en route here to correction before we can sustain another major run.

my feeling is the market finds itself a bit between a rock and a hard place here. we've got two conditions that make it difficult, i think. we've got corporate profit margins which are close to post-war record highs. and we're also nearing full employment. so it's difficult to find a growth rate that is good for the stock market. if the economy doesn't pick up because profit margins are already maximized, corporations won't be able to continue to add or juice earnings through rising margins. so earnings will kind of be tied to sales. if sales go so will earnings. and that's a problem when the market is selling 18 to 19 times earnings. on the other hand, if the economy does pick up we're going to very quickly aggravate cost pressures because we're at full employment or very close leading to rising wage and price pressures, bigger jumps in interest rates, concerns about margin erosion and peak

attraction. it's hard to find a goldilocks growth rate right now that is good for the stock market. and i think that puts a very narrow window for a sustained advance. maybe we'll have to correct before we can go higher. >> you just described a lose/lose scenario. what would have to happen in that narrow window you talked about? >> well the way we could find i think, a growth rate at full employment is if we resurrect productivity becky. that's the missing ingredient here. we haven't needed it when we had a lot of unemployment we could soak up. but now at full employment you need productivity to stretch the cycle. productivity is the elixir of the capitalist system. it takes a fully employed labor market and stretches that resource to allow you to grow without interest rate inflation consequence. it takes maximum profit. and that's what we need. we could get that and i kind of

think over the next several years we may get a productivity rise and another run in this market. but it doesn't look like productivity is going to show here in the next 12 months or so because of the lack of investment. and thereby, i think we might have to have a correction before we can go higher. >> we talked with you about greece at the top of the hour. you said you're not sure which way to play that yet. jim just laid out concerning situations. what do you think about the future of the u.s. stock market? >> greece is a political issue. the u.s. is an economic issue. i think jim laid it out exactly. it's hard to see what propels the stock market up further at this moment with slow growth, with earnings peaking and so on. productivity is the real issue as -- i agree with jim completely. the only place i'm not as sure is productivity doesn't just sort of start happening suddenly. we don't understand productivity very well. we dent know what it takes to get it going. but without it growing again,

it's worrisome. >> jim, i'd like to argue with you, but i'd like to point out you have been very right over the last many years. you were right when it was time to be bullish and pull things in. it was the same when we saw things slow down with the markets here. i guess my thought is you still have that scenario out there where there is no alternative. where there aren't that many places to get a decent yield. that's probably the thing that could help drive u.s. stock prices higher. >> you know, becky, i agree. i still -- even though -- i kind of think we might get a full bore correction here. but i wouldn't exit the stock market. i'm struggling with it myself because where are you going to go? i don't like bonds. i think they're going to get killed just as much or more and cash pays me nothing. in fact, with inflation, it gives me a negative return. so my response has been to diversify differently and ride through this correction. i'm doing it mainly by

diversifying away from the united states. the interesting thing about the problem the market faces is it's kind of a problem unique to the united states. we are the ones that are at full employment at maximum profit margins. muff much of the world doesn't have that issue. so if the u.s. fully corrects other markets will too. but i think they'll hold up better. and i think it's a way to ride this out. if we correct here in the united states, refresh values refresh sentiment, reset rates a little bit, then i think we could have another run in the united states. but maybe it starts from a little lower level. >> jim, thanks for joining us and have a great weekend. >> real quick, where do you -- >> in terms of the stock market? >> yeah. >> i think the stock market bounces around in this narrow range it's in. as jim said you don't see the earnings growth or fundamentals propelling it upwards. it's hard to see what makes it suddenly go south. i think it sort of dribbles

along. >> not that encouraging, but thank you. coming up there's no crying in baseball, but basketball a bit of a different story. after the break why one knicks fan had this reaction to the team's first pick of the nba 2015 draft. we are back in a moment. ah! aflac? aflac! i thought you said this guy was the best? oh, he's a horrible stylist. gah? but he's the best at paying claims fast! really... mmhmm. paid mine in just one day. one day? yea. aaaflaaaac! in just one day, we approve and pay. one day pay, only from aflac.

♪ more than a penny to make a penny. right. i think it costs a lot. anyway, let's tell you about some squawk sports news. karl-anthony towns was taken first overall in the nba draft

by the timberwolves. he spent one year at kentucky before declaring for the pros. >> and new york knicks had the fourth pick in last night's draft following a horrible season as everybody in new york knows. the team went with a 7'2" forward names kristaps porzingis. many were not happy. including this boy. he was overcome with shock and dismay and gives it two thumbs down. if you're the nba as a league you have to be depressed about the knicks situation. you know you need major markets like new york and l.a. to help carry the whole thing. >> but there's a warm bronx welcome for you, right? >> and as long as you know as long as they're lousy which they're going to be i think for the next couple years, it's not a good situation. >> it's not good for america. >> bingo. >> knicks fans probably would

have loved to have had last night's tenth pick justice winslow on the team. we want to give him a huge congratulations. he was on our set about a month ago. now the former blue devil is off to the miami heat. >> going to have fun down there. coming up sounding off on one of the biggest challenges facing the nation today. how do you tackle this problem? we'll talk about this next. and you're hearing her now. taylor swift getting back with apple as her album is going to be part of the apple ecosystem. as we head to a break, take a look at equity futures on this friday morning. we're in a green. we're back in a moment. little blue thingy. you see it? that's a sensor. using ge software, the light can react to its environment- getting brighter only when it's needed. in a night it saves a little energy. but, in a year it saves a lot. and the other street? it's been burning energy all night. for frank.

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♪ welcome back to "squawk box" this morning. among the stories front and center reuters reporting details now on the eurozone that can help greece repay debt in an extension. also corporate news this

morning. airbnb closing in now on a $1.5 billion fund raising effort. that would value the company at a cool $24 billion. apple removing games from its online app store that feature the confederate flag in offensive or mean spirited ways. the company, the latest to distance itself from the symbol after that deadly shooting in south carolina. i don't know how they decide if it's in a mean spirited way or something else. does that mean they're leaving certain games and other apps that have it that aren't indicated in a mean -- >> it's unclear. >> theically implication is they're leaving something. we should tell you about hillary clinton facing new questions over missing e-mails. 15 work-related e-mails were missing from the documents clinton originally turned over.

our eamon javers joins us with the story. >> more controversy this morning over the hillary clinton e-mails. there's a committee on capitol hill investigating the benghazi incident. that committee saying last night that it's now gotten 15 e-mails from sydney blumenthal. the state department remember was working with clinton to get e-mails from her personal server where she stored a lot of work-related correspondence. now the committee's calling into question whether hillary clinton fully complied with their requests for e-mails regarding benghazi. here's what the committee is saying in their statement. they say this confirms doubt about the completeness of clinton's self-selected public record and raises serious questions about her decision to erase here personal server. we also have a word from the campaign. we have confirmed the e-mails

secretary clinton provided the department include almost all of the material in mr. blumenthal's production. the clinton campaign going on to say that they've produced tens of thousands of e-mails. this is just a discrepancy over who had copies of what e-mail. what we're learning here is more about hillary clinton's relationship with sydney blumenthal. he was that adviser that the obama administration didn't trust and did not want hired inside the administration. nonetheless, hillary clinton put him on the payroll or somebody put him on the payroll at the clinton foundation and he was sending mrs. clinton e-mails about libya at the same time he was engaged in business transactions in libya giving her unsolicited, she says advice and intelligence on what was going on in libya. so a very complicated situation and a new wrinkle this morning. >> steve rattner, you're a hillary guy. come on. does this not upset you a little bit? >> it upsets me a little bit, i have to say.

it's a little troubling. >> but not troubling enough for you to say enough. >> i'd like to understand more of the facts. the campaign put out a statement saying these 15 e-mails that weren't turned over were fragmented or couldn't be recovered or they have an answer. but it -- >> the bigger problem, look. there may not have been anything anything -- in those. >> sure. i get it. it raises questions about -- remember she turned over maybe half of they are e-mails. the other half were deemed to be personal. and this was a self-policing kind of decision. and so the questions will continue. and i get that. i'm sure she does too. >> okay. eamon, thank you for the report. in the meantime we're going to talk about another issue that hillary clinton often talks about and others. the widening gap in income inequality has many saying the country can't afford to ignore the issue. >> right now the situation we

have is people are getting killed in american and western advanced economies. 76% of all americans today live paycheck to paycheck. that is not a recipe for growth if had the economy. >> the biggest challenge to america in my mind now is income inequality. it has the potential of destabilizing this country. that's the one thing we 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. >> joining us now to talk about this douglas holtz-eakin and our guest host steve rattner of course. you had a democrat and a republican on the show in the past week talking about this issue. at the same time, douglas, you could argue the president who used to talk about this issue a lot has basically stopped. >> right. yeah. he once called it the seminole issue of our time. but if he went one month after

that announcement, he found americans weren't motivated by this. the polling was weak and the white house simply stopped talking about it. i think the important thing to recognize in the comments we heard is this is a global phenomenon. you shouldn't confuse its roots with things that go on in the united states. it can't be traced to a single policy. we need to recognize the global scope of this that it's a powerful economic force. and the best thing to do is get ahead of it. we know the answer to that. beginning it with kindergarten or pre-k. and we know it means people need to save more and get some of the financial rewards to global commerce. we've not been successful in improving our education system. we haven't improved it much. and saving -- personal saving in particular is always a weak point in the u.s. economy. so it's a big challenge for us. >> i think both parties come at this from two different places which is to say ken, i think, he's worried effectively about an uprising that creates like a

mini civil war in this country prp whereas democrat it is may be approaching this on sort of an emotional level. >> i think there's some truth to that. but however you get there, i think it's interesting that people like ken langone see it as a huge problem. business should recognize and i'm not sure how that works in practice i would respectfully disagree with doug on one point. while income inequality is getting worse around the world, it's much worse here and gotten worse here than anywhere else in the world. that does have something to do with our tax policies and social policies where we do less for people at the bottom than serl other countries. >> you don't think this is a globalization issue, technology issue? >> i think it's a globalization issue. i'm just saying it's happened here more than in other countries. i saw this very visibly when i was working on the auto thing where there were so many auto jobs that had gone to mexico and other places because they have

low labor and prices. technology, less so. >> the technology argument you think is not there yet. >> i think it's weaker. we just talked about how weak productivity is weak. you can't say workers are being replaced by robots and productivity is weak in the same sentence. those things are in opposition to each other. the technology thing affects people with wages. and that gets back to what doug was saying about training. >> doug what -- i mean the solutions that you're talking about are what i call 10 20 years. they're generational solutions meaning you're not going to see the benefits of whatever investment you're making in education. today you're not going to see that for 20 more years. >> right. >> what can be done now? >> well i think the key is that regardless of where you start with this you want to have a very effective anti-poverty program. the issues at the bottom are very important. the dividing line between being poor and not being poor in

america is work. if you look at someone working, their chances of being in poverty are in single digits. if you look at people not working, it's 20% or more. we need to think about all our social safe net policies with a pro-work emphasis. making sure they're not doing things like the affordable care act. saying the affordable care act may be whatever it is on health policy, but it has labor supply incentive. we need to think about all of those things again and again because the poverty issue, you can get at most quickly. >> steve, the other issue on how to approach this do you topple the 1% or try to raise the bottom? and that's the other sort of philosophical distinction between how i think both parties are approaching this issue. >> and that's an important point. i think we say income inequality, we toss that around. what we're really worrying about is the 99% and how to get them up. some of it is because all the

income gains virtually have gone to the top 1%. so you do have to have policies that try to address the balance. but we are trying to talk about how -- if the 99% were doing better than they are now, i think you'll hear less talk about income inequality. >> but the rhetoric about toppling the 1% is that -- do you think that's from an emotional and political perspective the right approach as opposed to approaching it from the we want to lift the boats of the 99%? >> i think from a political perspective, the party is having a debate about this. there's part of the democratic party who think the way of solving it is toppling the 1%. and in the practical world we live in hillary clinton has to realize that her constituents believe that. and i do think if she were president, she would not engage in class warfare. she would focus on lifting the 99%. but we're in a political season. >> so we have to pretend what she's saying isn't what she

means. >> which isn't fair. >> that's ludicrous. >> she's not running around with the revolutionary flag saying topple the 1%. she says it's unfortunate that hedge fund operators make more than all the bus drivers put together. and you can interpret that as we need to pay bus drivers more and teepers more. >> doug you get the last word. >> the fundamental problem here the no one can tell us the right amount of inequality. there's no real policy here. this is just sentiment and rhetoric. there's no north star here. so there's no real policy. there's just rhetoric. and toppling the 1% is bad rhetoric but talking about inequality without a goal is also bad policy. >> okay. gentlemen, thank you. when we come back this morning, are you ready for the second half? dom chu opens up the playbook to see if the large cap leaders will stay hot. and coming up at the top of the hour, the ceo of the largest private health insurance

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welcome back to "squawk box" this morning. the futures now are in the green. you're looking at a good open this morning. dow looks it would open about 60 points higher. nasdaq up about 8 -- actually 9 points now. let's tell you about some other headlines. lululemon are now recalling draw cords on some women's tops due to an injury risk. hard elastic can snap back and cause face or eye injuries. these jackets were sold between january 2008 and december of last year. seven injuries apparently so far have been -- >> i couldn't believe it when i read this story. >> -- reported. so they had their issues with the see-through pants. this is draw strings flicking in your face. >> seven injuries you've got to take it seriously. >> i guess.

but i've had all kinds of shirts that have heavy things like that. that's a buyer beware operator error. let's look at stocks to watch this morning. a couple for you. finishline posting better than expected earnings of revenues. shares rising on that. and target downgraded at bmo. created by the move of the chief merchandises officer into an advisory role. three more trading days in june to close out the quarter. here to look ahead, dom chu joins us. he's got your second half playbook. good morning. >> morning. here's what we got today. what we have right now is a situation where we have the large cap stock market trying to find its way. so if you look at the three major indices, the white line is the s&p 500, the orange line is the dow jones, and then green line is the outstanding move for the nasdaq composite. it's sitting near record highs. the question is who's been leading the rally and could it

continue? let's look at the indices and see which stocks have been paving the way forward. for the blue chip index, disney shares topping that list. they've been up about 22%. and we just heard that they have a record amount of time for that company to reach a billion dollars in gross movie sales. an interesting move for disney. of course they also announced a big boost to their dividend and they're going to pay it twice a year. walmart shares on the retail side down 16%. the s&p 500, the story's been netflix. the stock has pretty much doubles so far year to date. up 94%. chesapeake energy down 43% for the s&p. so those are some of the big movers there. with the nasdaq 100, i put electronic arts up here because part of the larger stocks. it's up about 44%. netflix is the leader for the nasdaq as well but i wanted to show you something different

here. keurig green mountain less optimism here. that stock down about 41%. as for where things may go in the future we polled here at cnbc and came up with interesting results. the median forecast of all the analysts and strategies we targeted and surveyed comes up to a 2 the,224 for the s&p. that's 6% higher than where we are right now. as for the low estimates here. they think it's going to be about 2,100. so pretty much flat to slightly down from here. the high valuations rbc capital and fund fundstrat. again, even if we get to the median target it's only about 6% upside from our current level, guys. back over to you. >> dom, thank you. when we come back this morning, time waits for no man and the apple watch is

conquering seven more nations today. but is everyone rushing out to slap this gadget on their wrist? we'll talk about that in a moment. plus taylor swift's big shift taking shots at apple to start the week. now at the end of the week they are getting together. we'll have more on the drama next right here on "squawk box."

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we are digging into the apple ecosystem this morning. the apple watch hitting shelves in stores in seven more countries today including mexico and south korea. if that isn't enough apple and taylor swift are officially back together again. announcing that her best selling album "1989" be will be available on apple's new streaming service. joanna stern is joining us from "the wall street journal." of course still with us is our guest host steve rattner. thanks for joining us. >> great to be here. >> let's talk taylor swift first. >> i love to talk taylor swift. >> this was huge. at the beginning of the week this was the smackdown of the century in terms of corporate news. one artist speaks out and the company does a quick about face. >> i think this is the best thing that could have happened to apple. how much buzz did this taylor swift thing generate? twitter was crazy with it. people were talking about this that didn't even know what apple

music was a week ago or last month when they launched it. >> i think apple was smart about it. the idea of saying you're right this doesn't make sense. the companies make mistakes all the time. but swift apologizing -- >> swift. >> i'm done with the swift puns. you're safe now. >> here's my question. do you believe when eddie put out the release that they're going to change the policy that he had backed down to swift saying if you do this will you join us? >> right. >> do you think there was an agreement or no? >> i think there was that gap. so obviously all the beats people are so well connected. i think there was probably lots of phone calls that went back and forth between dre and all these people and sort of god knows what happened to the music industry during that time. certainly they felt like there was promise and what would this do. when they saw how viral that tweet went that tumblr post. >> she was nice about i. she was firm but nice. she signed it love taylor.

and they did the quick about face. so taylor swift came out looking perfect. >> the news yesterday, again, nicely timed. the launch is on tuesday. >> let's talk about the watch that you are wearing on your wrist. we pointed out before that's the smaller watch. what do you think? you've been wearing it for how long now? >> let's see. came out about two months ago, right? so when i first started wearing it, i started wearing it about three weeks before the launch. i was hesitant about it. i just felt really complicated to use. i wasn't sure what i would use the features for. now i have an idea how this fits into my life. i think that's the big thing with this. it takes some time we've heard things about returns, people sling them on craigslist. >> it's your job an you have to. what about for the average consumer? >> that's true. for me it's been great as an

actual watch. it might sound crazy. but getting some notifications. it's a great workout device. but the promise of the apps and other things i have not found any value for that. >> is that a surprise for a brand new product that it's the first version on? we were talking off camera before just saying maybe we'll wait for the second or third version. >> i stand by that. i think many normal consumers that are not into the tech space should wait. and apple's only giving us more reasons to wait. first they announced the two. lots of big changes that should have been in the original one. the ability to change the background screen get your e-mails, reply to e-mails on here, more siri note anyifyicationsnotifications. now we're hearing about apple watch 2. >> thanks so much for coming in. >> i think i'm going to get number two. now i'm looking at this --

>> you're tempted by it. >> i am. >> i am. >> i'm a cheapskate. can i get it on krais list? >> yeah. they sell them outside. >> for a big discount? >> not really. like 50 bucks off. coming up platinum portfolio update with paul meeks who happens to own apple. but he's getting out of a few names and adding cash. we'll tell you about it. also ehealth inc. ceo gary lauer. "squawk box" returns in just a moment.

protests in athens, indecision in brussels and fresh signs that main street is getting out of the market. are the bulls about to take a back seat? the ceo jim mccoggen joins us for the hour. health care gets a booster shot after the supreme court says yes. we're going to talk about the decision and what it means for americans.

is there a bubble in the sharing economy from uber to airbnb and beyond, valuations are sky high. now companies like ford are jumping into the game. a look at the names in the space and who can survive as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" this morning. first on cnbc -- first in business right here on cnbc. we're not first on cnbc. i'm andrew ross sorkin with becky quick. joe will be back on monday. in studio for the hour jim mccoggen. he's the ceo of principle global investors. we are now less than 90 minutes away from the opening bell on wall street. look at what's gone on. asia overnight. we've had some red arrows. it's been -- there's a story to this and we'll talk about it in a bit. most importantly the shanghai

the index there down over 7%. quite remarkable turn. then europe now, bit of a mixed. icture as we await what's going to happen in greece over the weekend. here in the united states they were looking up earlier. dow up 62 points higher. s&p up about 5 points and the nasdaq looks it would open 8 points higher. >> we do have a developing story. one person was beheaded in an attack at an explosion at a factory in france. banners with arabic writing were found near the body. one suspect has been arrested. police were searching for anyone else who may have been involved. we will continue to monitor the story and bring you any updates we have. let's get to other stories investors will be talking about today. a possibly optimistic sign today regarding the ongoing greek debt talks. reuters is reporting a note is being circulated along the

finance ministers that suggests a five-month bailout extension could be in place. an extension like that would keep bailout money available to the cash strapped country. in fact, we've watched the futures improve through the morning as the story leaked out. we also have seen the early trade improve on this news too. one economic report out today. the latest reading on consumer sentiment. that comes at 10:00 eastern time. it's expected to show a slight increase from the prior reading. and humana etna may announce a deal to buy the operator as soon as this weekend. it's very much an undone situation at this point. andrew, you said cigna could be in play. >> yes. there's a lot of talking on all sides. and i imagine we will hear more perhaps even on monday. or sunday night at the rate we're going. couple of the stocks on the move this morning. nike also posting better than expected earnings for the eighth quarter in a row.

and it's raising its sales growth forecast. also animal health company has now been approached by valeant pharmaceuticals. china stocks tumbling in a big way. we've got the debt drama continuing. joining us now with his thoughts jim mccoggen here. good morning to you. >> good to be here. >> should we talk about greece first? we talk about greece every day but we're sort of at the precipice here. >> i guess we should. >> again. >> the problem that's emerged in greece is that the cure for the fiscal deficit or fiscal imbalance that the government is proposing is basically tax increases. and what's that going to do looking forward? it's going to further choke off the economy. so in other words, it won't work as a fiscal cure. so if they punt it if they

decide that they're going to pretend and extend -- >> but there's no other option but to pretend and extend. >> there isn't right now because of the politics. the politics has been so dug in since mr. tsipras' victory late last year. he basically was elected on a contradictory platform. it was stay in the euro but no more austerity. well the euro has rose the rules are designed to make the euro the new deutsch mark. in other words no deficit and a business friendly value type of currency. that's not what mr. tsipras wants. >> given that, what do you do with your money? steve leisman said we're supposed to all see past the greece thing. we're not supposed to pay attention. just avert your eyes. >> and i don't think you can short-term, but long-term what does the greece problem mean? it means that the euro is not as hard wired as people would like it to be. it means that come the next

crisis whatever that is the referral may be weak and may get left behind. if someone falls off the boat the boat doesn't necessarily turn back for them. that's i think the signal that this could give. so politically what are they going to try to do? they will make it with capital controls. that will be miserable for the greeks but save face on all sides. so far as the market is concerned, i think this is one impediment to europe doing well. the eurozone is a value trap right now. it looks cheap compared with u.s. equities but beware. because the pros peblgtpects for growth are not great. the weakness of the euro makes it great for european exporters. but it is not something to be bought. for equity exposure stay here in the u.s. >> and how do you factor the fed into all that? >> the fed is likely going to

raise rates in the fourth quarter. maybe september. maybe october. i don't really care. but it's going to start raising rates. however, it will not be steep rise. there are many people around the market who think, yeah the first one will be a half point. then a half point every meeting from then until it's five. structurally it wouldn't take it. we don't have that degree of growth going on. in a year's time what will the fed's fund race be? 1% 1.5%. who cares? with the bond yield at 2.40%, it doesn't matter. the market may take a tum l. it'll be a technical trading thing. it'll be just another trading opportunity. >> jim will be with us throughout the hour. we'll continue this in just a little bit. all right. the supreme court has upheld the payment of subsidies to the 6.5 million people in 34 states

buying insurance on healthcare.gov. but the ceo of the nation's first and largest private exchange says by combining public and private options, people can be held. gary thanks for joining us this morning. >> good morning. thanks for having me. >> the last time i think you were with us wasfebruary of this year. you satd you didn't think it could work. now you sound more optimistic about it. >> my views haven't changed on the implementation. we are supporters of the legislation, but the implementation has been far from effective when you think about the exchanges. building these exchanges or e-commerce businesses in as many states have proven it's not an easy thing to do. so healthcare.gov is now stabilized and working. a company like mine can work with them to get subsidy eligible individuals enrolled. that's good. but we've got 14 states running their own exchanges that are in

various points of effectiveness. they've given up in hawaii for example. maryland and oregon never worked. vermont and colorado are trying to figure it out right now. and my home state of california the largest populated state in the country. we're headquartered in the silicon valley. we're precluded from helping people online. people who want yo to use us has to use an oogtagent with paper essentially. it's like having to take a package in california and you have to deliver it to the post office yourself, but they'll take it some place for you. you're not allowed to use fedex who has jet airplanes. so in my sect for we could marry it with the prick sector we could get more people enrolled which will help with premium pricing and make this thing a bit more successful. now the supreme court's ruled, we know it ain't going away any time soon. >> gary obviously it makes

sense to think a company that's been doing this for 15 years would have a huge head start, would be able to get people signed up more quickly online. but it's very self-serving. why do you think the government has not allowed that to happen to this point? >> well it's really the most important question. the federal government has been working with us and we find now working effectively. so the states that have healthcare.gov where you can go to get your health insurance, you can also use us. so you've got multiple points of entry. you would assume you're going to get more people enrolled and we do. some of the other states, quite frankly, we think they've wanted to do it on their own. they want to monopolize or nationalize the marketplace within their state and it's not an effective way to do this. it's summertime. if you're trying to get a lot of kids into the swimming pool it makes sense if you've got more than one ladder into the pool. you're going to get more kids into the pool. the same thing -- >> i'm sorry.

go ahead. >> same thing exists here. you've got multiple points of interest in these states and some others you're likely to have more people enrolled. when you have more people enrolled, it's going to help with premium pricing. the more people you've got in insurance pools, it's likely prices won't inflate the way we've seen them inflate recently. >> along with those trying to prevent any competition coming in i would also guess just the difficulty of trying to figure out who you work with how you choose those additional partners and how you do two things at once. trying to get their own exchanges up. they may not want to complicate things. but do you think you get to the point where you are working in tandem with other states as well? >> well, we're not with a lot of the states. the 14 states on exchanges. we are with the federal government. we think the ruling will help with that because many of these states may in fact capitulate and have the federal government come in and run healthcare.gov.

we run effectively with healthcare.gov. there's another issue here which is an interesting which is the federal government has been supporting these states up to this point. now the states have got to be self-supporting with these exchanges. they'll have to run these like businesses. that's going to be a whole different approach. we've taken a look at what it costs these state exchanges to enroll someone, what it costs to advertise and market. it's very very expensive. none of these would stand on their own as businesses in the private sector. every time a company like mine or another enrolls someone in the state of california the state of california actually collects a revenue every month just like the individual had enrolled through the state exchange. saves taxpayer money, increases revenue in the state. why you wouldn't want to do that is a mystery to us. >> gary thank you for joining us today. >> thank you. when we come back a top ten platinum portfolio member turning bearish on the market.

why paul meeks is includesing his cash position. then look at these companies valued at $10 billion or more. is there a bubble brewing? find out at 8:30 eastern time when we talk start-ups. >> you're shared out. >> not true. i do shared houses. anyway. "squawk box" will be right back. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line.

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welcome back everyone. making headlines, google's self-driving cars are officially cruising silicon valley roads. this is the first time they've been allowed on public streets. during this test period they are driving up to 25 miles an hour so they're still going relatively slowly. >> hold on. before you -- do you know what happened, though yesterday? >> no. what happened? >> so two of these cars -- a google car and a delphi car were in california and one of the self-driving cars cut off the other car and they -- no. this is the first time apparently this has happened where there were two self-driving cars on the road. and one of them because their computers are programmed differently how they approach it. it was not an accident -- >> you've got to be kidding. >> there was apparently a cutoff moment. there was a delphi spokesman. i don't know if google commented

or not. >> they're only allowed to drive 25 miles an hour and almost got in an accident? >> apparently. >> i wonder if the car that was cut off was programmed to honk its horn. >> i don't know how it knew but one was to go in the other lane and the other had to stop. >> wow. all right. so they're not perfect. we kind of knew that. they are driving on public roads at this point. also in this morning's keep squawking segment, we want your opinion. would you ever buy a self-driving car? how would you feel about other people on the road riding in them? tweet to us. i'm just getting some more words from our producers about this. apparently it was an audi q-5 crossover vehicle going at a lexus and they already had this collision. but they didn't -- >> so it's not a google -- >> well, no. it's a lexus car and an audi. but they're controlled by -- one was controlled by google software. it's owned by google. and the other was delphi.

they're prototype cars. that happened earlier this week. this was told by a delphi executive who told reuters on thursday. >> these are the cars you ride in the front seat in the driving seat but you don't have your hands on the wheel? >> i suspect that's the case. no, i think this was one of the car that really drives itself. like legitimately drives -- i don't know if the driver -- >> sitting in the back seat? lexus doesn't make a car like that, do they? >> well we'll dig into it and find out later. nonetheless, we should say in all cases the self-driving car prototype was apparently not at fault. >> this is ensuring. it actually worked. maybe it can save a lot of road casualties in the next decade or two. >> the only time they have had real accidents, they claimed it was the human being's fault. >> in the other car. >> right. in the meantime, let's talk about the markets. the markets getting ready to enter the second half.

and the platinum portfolio is outperforming the s&p 500. the managers are up 6% versus the s&p which is up just over 2%. paul meeks is director of institutional investing at seterna capital. he's one of the top ten among our group. he has a new stock going into the portfolio this morning. but he also is increasing his cash positions which is a little nerve-racking for the rest of us. so tell us about -- tell us about the cash part first. what are you thinking? >> we've had some money into the fund. so when that comes in you have to invest it or not. i'm just a little bit worried. i heard some of jim's comments earlier. i'm not necessarily worried about what happens in greece for the long-term but in the very short-term particularly when you have cash coming in every day, i am a little nervous. and also my seconder expertise is technology so you would expect me to go with what i know best. so the portfolio is heavy technology. frankly, i like the fundamentals of some of these names.

particularly the new themes in tech like internet of things big data analytics, cyber security. but i don't like the valuations. >> if you're in a position of having money come in every day, that can only last so long. otherwise people will say why am i giving you money? >> that's correct. so i do want to buy on a dip. we're going to have an opportunity before too long. we've had some choppy days the last couple weeks. >> you're talking a 5% dip? a 10%? or more? >> i would be surprised if we have even a 10% dip. >> we had a 10% dip in october of last year i think it was. that's probably in the rem of possibility. even for a bullish commentator like me. >> let's talk about some of the stocks here. who are you adding to the group and who are you taking out? >> so last time i had both apple and delta air lines in the portfolio. i'm sticking with them.

apple's worked out well. i'm bullish. my interest in apple is the fact i think the iphone 6 ramp continues to surprise to the upside. i see as icing on the cake what they're doing with streaming music and the apple watch. i hope it works. i'm not as bullish as others on that. >> do you have one of those watches? >> i don't. i've had a fitbit for a couple years. i might get a watch. >> and you're replacing a stock. >> borg warner which has worked out well. however, i'm replacing it with power solutions. based near chicago. and it's one of the leaders in the industrial space in alternative fuels particularly natural gas engines. >> that stock trading at $54.41 now. >> i like to buy it with a tight limit. it is volatile. i'd like to buy it at $50. but i think over the next couple years the stock will double. >> and are you just lightening the load on borgwarner or are

you getting out completely? >> i'm still borgwarner on the fund but the stock is up year to date and within 10% of my $66 price target. it's just an opportunity cost. >> on delta air lines, does the idea that these good times may dissipate when competition comes in? there's going to be -- airlines always start discounting some relatively disruptive carriers like southwest and jetblue and virgin. reliable to be price cutting against the majors. does that worry you? >> jim, that's an excellent question. because the reason despite the cash flow generation and high earnings power of these companies with low multiples. people saying these are the airlines of my father and grandfather of the 1970s. when time is good they rush too much. i think delta and the other majors are going to be careful about capacity additions. and they gave their forward

looking long-term plan and they're raising the return on invested capital from 20% to 25%. this is a return on vested capital not even in great times just because there's some headwinds, no pun intended. but those are numbers that are rivaling some software companies. so i actually think, maybe i'm wrong, that they'll be more disciplined going forward. >> some are supportive of your thesis. i would be concerned it needs watching. >> yeah. it sure does. and southwest, for example, announced a capacity addition the other day using love field and dallas. of course there's interesting things going on between lovefield and dallas-ft. worth. however, when the stocks tanked some of the other majors said we're going to reduce capacity. >> okay. paul meeks, thank you. >> good to see you. >> you can go online to cnbc.com to track all of the portfolio managers. you can do it in realtime and

read exclusive analysis. when we come back apple removing certain apps from the game store with confederate flags. and later is there a bubble brewing in the sharing economy? we're going to discuss in a couple of minutes. we return in a moment.

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apple is removing apps with the confederate flag in mean spirited ways. this move comes days after apple's ceo tim cook called on people to honor the victims of the charleston south carolina shooting. when we return today, uber snapchat airbnb and now ford and bmw. is the sharing community getting crowded? are valuations out of control? and are we living through another dotcom-like bubble? we'll talk about that next. take a look at equity futures. you can see the dow futures are up 36 points. s&p up by 2, nasdaq down 1.5. auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪

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welcome back to "squawk box" this morning. let's look at stocks on the move. one of them is retailer finish line which beat estimates on both the top and bottom lines. the ceo is going to be a guest

on "mad money" tonight. and then micron gave a down beat forecast thanks to falling chip prices. and vertex pharmaceuticals one of the early winners on the cystic fibrosis medication given approval. it's already received a positive recommendation. and check out this video. thousands of children coming together in italy to try and beat the world record for the tallest structure of legos. organizers offered 600,000 plastic bricks for the individuals. the tower entered the record books at nearly 115 feet high. >> it is a good summer project. keeping kids busy for a long time. >> no little brothers though. they would have knocked that down fast. >> the safety of that might be an issue.

forget unicorns. those private companies that receive valuations of a billion dollars. there are now ten companies valued at over $10 billion. airbnb closing in on a $1.5 billion in funding which if that happens would value the company at a whopping $24 billion. the home sharing start-up joining the likes of names like snapchat, pinterest, and uber. is there a bubble brewing in the sharing economy? and are we overhadshared? dean baker is here. and our jon fortt is here to talk about all of this. dean let's start with you because you have been an outspoken critic saying we shouldn't buy into the idea of the sharing economy. why? >> well, i think it's a little misleading, the basic term sharing. obviously the companies aren't about sharing. they're about making profits. but the story there's something new and different, take airbnb as a great example. bed and breakfasts date back how

many centuries? it's a new platform although we did already have a web base service. so even that isn't all together new. i think a lot of this is largely hype. which isn't to say the companies don't offer benefits. they do. but i think the idea that somehow these are all together novel, unique and a whole new way of treating the economy, that's very misleading and basically wrong. >> although i would say, look. i understand where you're coming from on this, but i would say that convincing tens of thousands or hundreds of thousands of people to either share their car by picking up other people or put their house online, that changes things even though you had bed and breakfasts before. this is doing it at a rapid pace and bringing all of that unused inventory in a way that wasn't there before. >> certainly you brought on more of this. these are things that were happening before on smaller scales. it's happening more rapidly

through the internet. again, i'm not knocking that. that's a good thing for the most part. but there are major issues here again. part of the story of the companies is they're about evading regulations. some are antiquated but many we want our hotels to be safe. we want handicap accessible hotels. we don't want discrimination based on race other factors. i mean these are things that are important. they're there for a reason. and we have to make sure that these regulations are adjusted for the sharing economy. >> dean when you think about the economy and employment and the sort of grand shift that's taking place in what's otherwise known as the gig economy that's related to this. there's a piece in the financial times this morning, the silent anxiety. really about what being self-employed means and it can be liberating. but on the other side it's changed the dynamic. >> i think it's very much a cause for concern. again, obviously people get

options. they don't have previously. part of this story, of course is we still have a weak labor market. still weaker than it was before the downturn. that means the opportunity to make money through uber through other sharing economy platforms. certainly looks good to people as we get a better economy that may be less true. the point i've made about this is we want to try to make sure these people have protections. we have long established labor laws giving employees certain protections. the view of uber, the other platforms is you're independent contractors. perhaps we need somewhat different structure. i'm open to that. but the idea you could say we're over the web. none of this applies to us. that doesn't make sense. >> not all of this sharing is sharing. uber's not sharing. somebody gets a car and they go out and drive it in a more flexible way you could than if it were a tax see. for me one of the key factors here is the nasty factor.

suppose i have a startup called leftovers and i go to a restaurant and you can decide whose plate do you want to finish if they only eat half their food. a lot of people would say i'll pay a little bit more and just get my own. because that's nasty. it gets that way with cars i think. >> i gra e with you with cars. i rent cars all the time but i'm not letting somebody else rent my car. >> if you get a rental car, that's a little bit nasty. that's a bad experience. but homes. homes get cleaned. you're used to that type of experience. with uber cabs were kind of nasty to begin with. ooub uber is an upgrade. >> can i go back to dean? what do you think of the ruling in california in terms of uber drivers as contractors? and what does that mean more broadly across the country and what is the answer? >> to be clear, that ruling was just for one person. but i do think that's going in the right direction. and the point here is being are being treated -- it's similar to

being an employee. for uber to wash their hands saying we don't bear the responsibilities responsibilities. i think we're going to move in that direction. whether they're exactly the same as traditional employee relationships, i think that's open to debate. but the idea they're covered by workers' comp and minimum wage regulation, that to me seems it should be there. it could take a different form than traditional labor law. one of the interesting things mentioned to me labor law is set at the national level. i got a kick out of this. uber wants to say their employees aren't workers. you can say a state like california where you have powerful labor union progressive state. they could have special rules for independent contractors. let them organize. i'd love to see uber deal with that. >> but isn't there a big economic point here which is if i own a car, maybe it's used for

2% or 3% of the time. if i use an uber car, i'm using a similar car that's used 60% or 70% of the time. isn't that a big jump in economic efficiency utilization. isn't that potentially worth the big valuations that these companies are getting? >> well a couple points. again, first if the uber car is replacing a cab, it's the same story. if it's your car you had sitting around muffch of the time now you're using it more. that's on the efficiency. but for uber and other companies, there is going to be competition. so it's not clear to me that you know, as you go down the road that they're going to have the same sort of profit margins. it's not even clear they have great profit margins now. but you will see a lot of competition. there'll be entry. i don't know they'll have great advantages. so i would bet uber i think the latest valuation is put around $50 billion.

i think it's a risky proposition at those prices. >> dean you're contrasting uber with using a cab. that isn't necessarily the choice people in the big cities are making. the choice would be either i own a car and pay all that money or i use uber. and i think that is a genuine transition you can see happening already in some of the metropolitan areas. >> but uber has lots of competition with cars like that that someone can pick up a car down the block from them go to the grocery store with it. so uber's not unique in this respect. it's one of many. there's a range of options. either you own your car, take public transit, take cabs or do one of the short-term rent a cars that have been there for 15, 20 years now. >> that's true. and of course zip car i have heard the claim that each zip car replaces 14 driver-owned cars on the oodroad. so there's the efficiency point. >> again i don't know if that

number's right. >> i don't either. >> but i'm sure the basic point is clearly true. >> dean thank you very joining us. and jon, i love your nasty factor. you need to write that up for us so we can completely go ahead with it. >> thanks guys. thank you, dean. >> thanks for having me on. when we come back farmers in california are blowing off water restrictions. dean wells is going to take a look at why farmers have ignored the orders. and you still have time to submit the story that has you buzzing this morning. go to our facebook page or tweet it to us. tweet the story @squawkcnbc. we'll be squawking about those stories in a couple of minutes. stay tuned. why pause to take a pill? and why stop what you're doing to find a bathroom? with cialis for daily use, you don't have to plan around either. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms

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a major battle over water in drought stricken california. jane welles joins us now with more. hey, jane. >> hey, becky. it is getting ugly out here. now, the state told a lot of people here with senior water rights they'll have to cut back. and the response? crickets. nearly 70% of those given curtailment orders have blown off the deadline despite the threat of thousands of dollars in fines. and in fact some are now suing the arnado farm may join a lawsuit. was one of those with senior rights forced to cut. bbid turned off the water this week to farms.

unless farmers would pay $650 an acre foot. that's more than 30 times normal. but bbid may also sue. listen to this. it's not sure it has to cut anything because according to another lawsuit, the state claims the curtailment order given out june 12th was only informational and is not enforceable. >> the 12th letter had more of a threatening tone to it. now we're finding out they're advisory notices. it's like looking at a stop sign and telling you what the speed limit is. >> it's not right for them to shut it off completely. >> it gets better. near here is a town called mountain house. that's a billion-dollar development financed by calpers which has already taken a massive write down on it. the town came this close for having all the water shut down. >> we went and stocked up on water. so we would have some water if

something were to happen. and worse comes to worse, we'll have to go back to oakland. where we do have water. >> all right. the state is now warning that it is beginning spot checks of people sent curtailment orders to see if they're cheating and violators could face thousands of dollars in fines. basically expect to see this all end up in court. back to you. >> jane it sounds like it's getting to like end of days points. i mean that's crazy. this is chaos if this continues if there's not more rain soon. >> well the nice thing is they say el nino's coming. my prediction is i'm getting ready to tear out all the grass i love. as soon as the grass is out, it's going to rain for seven years straight. >> in that case rip it out quickly. the rest of california will thank you. we've been watching the futures back here this morning and most of the morning we've been in positive territory. you see the dow is still up by

about 40 points. s&p futures up by 2. nasdaq is down by about 2 points. this is the first time in the last three weeks the markets are on track. the dow and the s&p to end down after the last couple of weeks of gains. let's get back to our guest host today jim mccaughan is principle global ceo. and we talked about greece this morning. we know you're looking at the market and have some concerns about thing. again, when you start looking at where to put your money, what do you like? >> i still like u.s. equities. i still like a small cap not because of the mid and small cap point but because they're domestically focused. >> because of the strong dollar. >> because of the strong dollar. they don't suffer from the headwind. and they benefit from the basically still quite strong u.s. economy. 2% to 3% growth for the rest of the year. that won't come through and to large companies that are global. but to the small and mid-size

companies, you're going to see the improving housing market the continued innovation, the effect of cheap energy. it's all going to help the domestic economy. the first quarter was a disappointment. but i think we're on course for some pretty good stuff from the u.s. and that's why in the previous weeks it was really quite strong. >> what do you think about the health of the u.s. consumer right now? because consumers make up two-thirds of the economy. consumer spending does. and there are some consumers who just aren't going to spend the way they did before the great recession. there's still that fear factor there. >> yeah. and consumers are still rebuilding their balance sheets. they're paying down debt. that's healthy longer term. i think that the fact that the consumer has taken so long to start spending the savings that they had from cheaper gasoline has somewhat surprised me. i expected it to happen by now. the other thing i'd say for the consumer is some of it has been based on disappointing pay numbers for the middle class. we're seeing as we've been

looking quite intensively at our participant data to the benefit plans we administer we are seeing the signs and have been for about a year now that pay rises are picking up for middle america. if that is sustained, then you're going to see quite a good next year or two. >> okay. sounds good. again our guest host today is jim mccaughan. more in a bit. we've got an update on the greek negotiations. a source close to the talks now telling cnbc there is no new proposal today. there is now a discussion, though, of the review of the second program. an extension could be necessary which won't take more than six months, they say. 7 billion euros from the imf is still available in the current program and also reserve banking financing. now, the source says there is no discussion or decision making about the third program at this stage. so we're going to have to keep watching our eyes on the futures

and see how people take that. in the meantime when we return, jim cramer one that will be watching that news at the opening bell. check out the futures right now before we go to that break. "squawk box" returns in just a moment. dow looks like it would open up 43 points off. nasdaq now in the red. we're back in a moment. you have moderate to severe rheumatoid arthritis like me... and you're talking to a rheumatologist about a biologic this is humira. this is humira helping to relieve my pain and protect my joints from further damage. this is humira helping me reach for more. doctors have been prescribing humira for more than 10 years. humira works for many adults. it targets and helps to block a specific source of inflammation that contrubutes to ra symptoms. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers including lymphoma have happened, as have blood liver and nervous system problems, serious allergic reactions and new or worsening heart failure. before treatment get tested for tb. tell your doctor if you've been to areas

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let's get down to the new york stock exchange. jim cramer joins us right now and yesterday first we had the supreme court decision on obama care. now we have this talk that you may see aetna buying humana and cigna is still in there. what do you do with these health care stocks? >> i think they've all had a big run. five companies started two weeks ago. they're going to be three. they're not worried about anti-trust. they all seem very confident and fully valued at this point. cigna might have the most to jump from here. i think the trade has been played out and well known. i think the hospitals have another data run because there was so much money bet short them thinking that the chief justice roberts would swing it the other way. >> we talked with the man who

heads up the cleveland clinic this morning and he expects a lot more consolidation in the hospital space as well. >> yeah. and that's why that group keeps coming up. some will be goners. this group saved the market yesterday. the market would have been down really badly if it weren't for the supreme court review. >> because of brooes? >> greece? >> yeah. i think we're getting the wrong wrap on greece. you can have my offer now, germany, nothing. you cut our debt by two-thirds or we'll cut it. i don't think there is real talking going on. i think the greeks feel they have nothing to do. i love jim stuart but i think the article is off base this morning. >> it sounds from the latest news things we're saying it sounds like maybe the creditors will come with another proposal. we'll see. >> true. and i know there are still some kick the can down the road people but there are others who

say see you later, greece. and greece is saying we don't want anything. we just want to give you something else. we're going to russia and over to china. venz failed states go to russia and china now. >> is r you feeling okay or is your throat giving out. >> laryngitis. >> deal better. >> when we return the stories we're talking about when we get back. keep squawking is up right after the break. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand

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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. the conference call. the ultimate arena for business. hour after hour of diving deep, touching base, and putting ducks in rows. the only problem

with conference calls: eventually they have to end. unless you have the comcast business voiceedge mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions. i've never felt so alive. get the future of phone and the phones are free. comcast business. built for business. this morning we asked you to send us the stories that have you buzzing. no now it's time for us to share some responses. let's start with self-driving cars. google's cars are being tested on silicone valley roads. these are not without problems. two prototype cars had pretty

close calls. one was a lexus and one was a delphi crossover. this was the first of two vehicles that were specially equipped for automated driving. no collision took place, though. >> i guess it dudsid what it was supposed to do. >> maybe if it was two humans there would have been an accident. >> i think there's a big potential here. if these self-driving cars really work 1 million people a year worldwide die in traffic accidents. if over the next two or three decades that could be eliminated by self-driving cars that would be huge. >> we should tell you real quick we asked if you would ever buy one of these cars or ride in one, here's what some of the loyal squawk fans had to say. billy responds, people texting, talking on phones eating putting on makeup and reading

while driving. that's risky. >> it's a babe boomer play. >> it's a me lean yal play. i'm feeble. >> we should tell you about another story on social media as well. in california moving the state closer to requiring vaccinations for all school children. this legislation passed the california assembly yesterday. it now heads to the state senate for a final vote. it allows some medical exemptions but it does not allow the personal belief exemption and this is because of the measles outbreak that took place earlier this year. if you're in a situation where the child is below one or two and can't get the vaccinations or if you're in a situation where you're an individual who can't get them because you have a weakened immune system you're putting all these people at risk. the whole thought of immunizing

the herd is so the weaker ones are protected too. >> putting the weaker ones at risk because you don't want to do it isn't cool. >> we have a huge cob grats. justice winslow was on our set a month ago and now he's off to the miami heat. he was drafted last night. it would have been better -- >> we would have liked him in the new york area. he was here knocking around golf balls but congratulations. we think it's fantastic. >> wasn't he here for the last month just hanging out? >> just when he was onset that day. >> but then he said he was going to hang in the new york area. >> he was staying here for a while. >> now he's going to have to hang out in the humidity. >> new york guy playing for miami. that's difficult. >> thank you for being here.

>> thanks for having me. >> we'll probably be talking about greece on monday if case you want a preview of what we're doing. >> have a great weekend, everybody. great to see you both and have a great weekend. >> "squawk on the street" begins right now. ♪ >> good friday morning. welcome to "squawk on the street." we're at the new york stock exchange. three sessions left in q 2 and stocks looking to tiptoe into the weekend as these greek negotiations come down to a critical meeting tomorrow. china down another 8%. the ten-year is around 2.44. that's a few basis points from the high of the year and oil continues in that range around 59. the read map begins with futures in the u.s. shanghai plunges almost