2015 and squawk box begins right now. ♪ good morning, everyone. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross s is orkin. welcome to the second half of 2015. the story this morning all about greece. the big headline appears to be moving the markets at this point. a report that says that the greek prime minister was prepared to accept creditor's demand for bailout with only a few minor changes. now of course the devil is in the details but this is a big about face. we'll talk more about it with michelle in just a moment. but take a look at the stock reaction to this. huge rally on this news. at this point it looks like the u.s. futures are up by 150 points at this point.

the nasdaq up by about 43. in europe similar story. we've been watching big runs there. you can see now that the dax is up by 1.8%. the cac is up by 2.25%. the ftse 100 up by that and in portugal 3%. june was the worst month for all three major u.s. stock indices since january. the s&p 500 posting it's tirs quarterly drop in over two years and the dow turning it's first back to back quarterly loss since early 2009. let's take a look at the numbers and how they stack up. in the second quarter the dow dropped about a percent. s&p down .2% but the nasdaq was up by about 1.8%. year to date the dow is down more than a percent but the s&p and nasdaq are both in positive territory. the s&p clinging on to that positive territory at this

point. >> any given trading day can put the dow up or down for a year and turning around and a lot of difficulty making any head way at this point. it's always something, now? now we have it's puerto rico and greece and well it's russia and china. for whatever reason i think it's because you add apple to the dow. you're asking for it. anyway, let's check on the broader markets right now and that's a pretty nice snap back and it's weird because who knows whether this guy -- he keeps moving the goal posts around. >> the tsipras guy. >> this is incredibly interesting. >> but the wild conditions when you come to him you could say we want more time to pay you back but we're going to pay you back in lyra. >> we'll talk with michelle about this in a minute but some of the conditions are to put off pension reforms. lower the value added tax or

some of the other taxes insanely high but you have to make the structural changes in order to get this economy in a position where it does match up. >> prior to this i don't know if you saw the result of this new poll out where they polled the people there who unless he changes his mind were prepared to actually say no. >> what was the poll? >> 54 or more -- i think it was 54 or 58%. you never know about polls but for the first time it looked like they were prepared to follow his lead. so what it says actually matters a lot. >> but after a month of no groceries or pharmaceuticals do you think they'd say i'm glad we did that? >> no but that's not how people make at the situations. >> you can vote one way and you're not really sure. >> people make irrational decisions all the time. >> but i just love the way this

is being characterized. i love the writers at the huffington post. but it's austerity, these horrible germans and europeans, greece didn't do anything wrong and they're in this mess because of austerity. this is from spending too little money. >> the loan they missed with $1.7 billion they owe the imf. >> this is the austerity economy. and they're inhumane and for these other europeans to inflict this upon greece is just -- and it's just like it is here. it's weird. the left is the same where ever you are. and i think if you could just collect all the money in the world or seize it and then divide by the number of people on the planet and divy it up and do that that is what the even actual idea for solving is would be. >> we'll have to get them on to talk about it. it's socialism or whatever. and it doesn't work. >> 54% saying no.

33% saying yes. >> then why would he back off? >> because he'd get to keep his job. he'd get to keep his job in a country in total chaos. >> if the vote goes against him the thought was that he would have to step down. >> so he gets to keep his job in a country that's in absolute chaos. >> it isn't a country anymore. >> it's what? >> yeah i mean it has no economy left. that would be frightening. he turned on the light and there was something there. >> let's two to our chief international correspondent live on the ground. she is looking on the ground potentially at what the abyss might look like. >> i have been enjoying your conversation for the last few minutes. let's give everybody a run down of what's happened and what's been moving the markets this morning. peter spiegel is the brussels

correspondent for the new york times and he tweeted out he has a letter that shows the greek government caving in to nearly everything. he did tweet out a section of it and the crucial part is the republic is prepared to accept the staff level agreement subject to the following amendments additions and clarifications. what i'm holding in my hand here is what's called the staff level agreement. you can go to the website of the european commission and it's all the demands they want. the bailout demands they want to impose on geese in exchange for the bailout money and if you read peter's quickly written article they're going to give into most things with variations of only a few months. it would be a pretty big come down for this dpovrnment if he sticks to what he says and all of this is true. why would this be happening right now?

two things today. the european central bank meeting today with the governing council where they were going to have to make a decision about the greek banks because remember today officially now their program has expired. the greek program has expired and they did not pay the imf. . so they would say forget about capping he quiddity we're with drawingly liquidity. i want to show you what's happening today. the pensioner ins were allowed to go to roughly 1,000 banks and with draw 120 euros of their pension which could be anywhere from 400 to 1,000, maybe 1200 per month they're supposed to get and the lines are are heartbreaking, very, very elderly people. some of them waiting in line to get their money. you can see these in all the banks across athens.

they were originally told they would get all their pension and then they were told that they would get 240 euros of their pension and then last night we found out 120 euros of their pension so it's very clear that the country is running out of cash because remember they're supposed to be able to with draw 60 euros per day but yesterday what started happening is atms were giving out only single 50 euro pills because they're running out of 10s and 20s. that's what happens when your central bank cuts you off. you literally can't get money out of the atm. so the other issue is they think the polls are going against them. when you look at the overall number of the one official poll coming out, yes is only 33% but then further numbers and they said okay. we polled on saturday and sunday right after the announcement. before the capitol controls the

noes were 57 the yeses were 30%. if you look at what happened after the capital controls the yes's go up to 37% and yeses to 46%. it was moving to a yes vote to support the bailout agreement and when you talked to people last night, the no vote i can tell you, was one of resignation. the yes vote we spoke with yes voters last night was one of fear. >> even if it means more austerity measures i have a job so i can still pay. i understand that some people cannot pay anymore but i think the other solution is basically having no job whatsoever and i think people will go hungry, literal literally. >> when you look at the lines of the elderly in place yesterday wondering about people going hungry really came to mind. back to you. >> they have diabetics.

take your pick of what medicine that these poor people won't be able to get their hands on and won't have the cash to pay for. even just basic things. so you heard the stuff about -- this is the lead story, you know michelle this is an austerity experiment gone wrong. greece has been with -- there's just been too many the eu has been too stingy. not that you can't live beyond your means year after year after year but actually we just needed to be nicer all along and merkel is the grinch. pictures of her in a black hat. i mean. >> joe, if it worked they would be the largest economy in the world. >> austerity is the worst word you can use. >> joe, look when you start

talking about austerity and these measures there are different things and some of them would be effective measures things like changing their pension system. structural reforms that need to happen versus high taxes that just make people evade taxes because there's no way you're going to pay 40, 50 60% in taxes. >> this is music to my ears. you don't want them to raise taxes now. you're coming around. >> no you get to the point. >> i want them to collect taxes. >> however they do need to take the structural reforms. this things he's asking for is the most infuriating part. you have to change the pensions. let them lower these ridiculous taxes because that's crushing the economy. but you can't say that you put your finger on it. >> we shouldn't go back to 90% here either then. >> it's ridiculous. >> that's the idea.

>> but you highlight something that's really heartbreaking is they have been at this for five years and they could have done so many things to make the economy work better and every single time every government, time after time what choices did they make? they cut spending and raised taxing but never did things to get rid of bureaucracy. make it easier for businesses to function. when you just drill down into different sectors of the economy there are so many rules. this kind of business can only sell this that kind of business can only sell that but things we would find unbelievable. when the government decides what time this particular pharmacy can be open at what hour. imagine if the u.s. congress decided where they could be located and what their times would be. >> it's not that unbelievable at this point, michelle. not that unbelievable. maybe it will never actually happen here but there's a lot of suggestions that we go that

route, right? >> yeah. no. i know. >> but it's worse here. >> one question. we heard some sort of mega phone or chanting or something in the background. are those the protests still taking place all around you. >> there's centrally a communist out here with a megaphone and big speaker chanting but there's not a massive protest today. not one scheduled at least. let's see as the day goes on but there's always somebody out here with a megaphone and speaker system. >> we have a couple here with megaphones every day too. >> we all have our own megaphones here. >> exactly. but a couple of communist megaphones. michelle knows that. >> thank you. we'll check in with you later this morning. in the meantime we have been watching the futures soaring on

this news. right now it looks like the dow futures are up 16 points. and the nasdaq is up by about 45. notwithstanding what's been happening with greece he is still expecting a 7-9% drop in the market this summer. david is the head of u.s. equity strategy and doug is the chief investment strategist. he says that all hope is not yet lost for greece. let's start with that thought first. this looks like the begin ofg something to keep kicking the can down the road here right? >> here we are in six plus years of a bull market. the global economy is finally coming book even europe is coming back and the greeks economy he doesn't know what to do at this point. we think we have been calling if for it like it has been an 11th hour agreement with greece. it gets done. looks like it's going to get done because tsipras has no choice. he has no leg to stand on and i

agree with you, why don't you start reforming your economy when everyone else has been and it's starting to work and globally, you know the u.s. economy, we have manufacturing coming out today. it's going to be a big number. unemployment is strong. so everything is starting to shift toward fundamentals globally as it should. the market is starting to pay attention to that in looking past greece. >> you're still looking for a pretty significant drop. that has nothing to do with greece though? >> greece is one of our concerns. but we think the s&p is likely to dip below 2,000 this summer even if it weren't for greece and even if tsipras is sincere here and fwrees is scared straight the banks will be closed all this week. a lot of damage has been done not just to the greek economy but fear in all of europe.

i suspect there's some intervention has been involved. defending the sovereign bond market in europe as is the intensity of this crisis hit but a weaker euro is the prescription that euro needs not just for dprees but the overall economy to continue to gain momentum. >> but would you sell into this minirally. >> i would. >> and you're shaking your heads like that's crazy. >> it is crazy. the fundamentals are positive across the board. you look at housing, the consumer energy prices are 30% lower. every 10% drop adds .2% in global gdp. that's starting to work it's way through and i'm seeing the consumer not just in the u.s.

but globally is in a virtuous cycle from here. >> why do you disagree with that? >> we agree things the relevant for the economy like housing and jobs and consumption of services are on the bend and that's why we expect a good jobs report and tightening labor market and for the fed to begin hiking in september but when we look at the drivers of profits we see a lot of weakness. it's a long road ahead. the situation in industrials, industrial manufacturing is very weak. we had an industrial recession for the past six months. >> because of if dollar. >> it's because of the collapse in oil and strength in the dollar and slow down in the economy and investment spending that lead virgin economy growth. manufacturing has been extremely weak and i think the manufacturing continued today comes out somewhere between 50

and 54 and it's above 50 just because of good growth in auto but if you look at most industrial companies their top line is not growing. >> and if you're right it's going to get worse. >> exactly. >> people made the point the original euro experiment should have never been done but now you can't put it back together again. for awhile i wanted greece to leave the euro. >> it would strengthen the euro in. >> no but just because i thought the whole experiment wasn't going to work. you can't have all of these different economies with different governments doing different things. you can't expect to have the same interest rates. >> but you changed your mind. >> now i'm on the side that once you're in it it would be too disruptive to end it. but now what does this say that they're going to keep trying for this failed experiment? they have to keep it going in

europe and isn't trying to do this jury rigged system of all having the same currency with different economies and governments? these things are going to keep happening, thank god it's just greece. they can absorb this little economy but what happens with the overall experiment when italy and spain aren't the same. >> it will work. we're seeing a lot of strength out of germany in terms of the leadership here but also conceptual leadership. they're doing the right thing in terms of tying the economy more into the global demand. >> near term you don want anything to happen with the greek exit but long-term should they just end this experiment right now with greece? >> i think they were scared

straight. >> you think it's a viable system? >> i think it's a different process. the euro is here to stay an greece realized what will they be without that. >> they're more different from germany than mississippi is from new york. >> that's why it's a work in progress. >> what i'll also say very quickly is where you may be wrong in terms of whether or not we see this dip this summer but the one thing driving the market is the fed and this whole greece problem has people suspecting that a rate hike in september is less likely now. that may create the environment where if you see a strong jobs report tomorrow the market doesn't worry about it because they feel like low rates are here. >> i don't think it's a failed experiment. greece is .2% of the euro. it's a global he serve currency and right now it pulled back and

is helping europe going from 140 to 110, 112. i think there is no alternative to that and i've seen progress in europe because of low energy prices because the currency is coming down. >> look what happens when companies that shouldn't be borrowing it -- like when ireland borrowed it or whatever. >> ireland came back. >> i know look what happens. >> should greece have been able to borrow money at %. >> no but they're still a strategic country. >> even italy and spain and others, should they have the same interest rates of germany? >> absolutely not. but the benefits far away the cost of having the euro the euro benefits really help the global economy. >> we'll see but long-term they

have a lot to do to make it work. >> thank you for coming in today. >> he's coming up in a minute. also still to come this morning the u.s. and cuba set to announce openings today plus the kbrks gop field gets bigger. we'll be right back.

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the u.s. and cuba are expected to announce to open embassies in each others capitals. it will be the first time since 1961. >> backed by popular demand john harwood has another edition of his speak easy series this morning. he scat down with nancy pelosi asking if she thought they've been too soft on wall street. >> the president is starting to get more criticism from democrats. elizabeth warren went after mary yo white y jo white? do you think that's piling on and scoring points at the president's expense? or agreeing with her on that? >> no but i'm not into what her case is there. people will express themselves the way they do. that doesn't mean they're speaking for the party. >> some for the left think this

administration has been too soft on wall street. the administration has been too close with the financial industry. do you agree with that? >> the financial industry doesn't agree to that. there's a couple of people who say that and that's not the consensus in our party. we're here to protect working families in our country but we don't want exploitation of workers and international agreements. the low wages in mexico have brought down wages in the united states. and we just can't do that. we are one country and whether it's our commercial interest our value system and the rest always has to keep coming back to what is the strength of our country and the middleclass is the backbone of our democracy. >> john harwood joins us from washington this morning. not being very polite it seemed like about elizabeth warren? what did she say off camera? >> i suspect she would say something very similar. she is establishing that -- it's

not like she was trying to do a major smack down of elizabeth warren but nancy pelosi is responsible for trying to win back the house. she pushed through the financial regulation bill that elizabeth warren thinks was too soft and also has to raise money for democratic campaigns and she was trying to send the message, yes, elizabeth warren may be getting headlines as the crusader against wall street but not everybody is marching behind her. that's significant. >> let's talk about jeb bush releasing his income from last year and some of the tax reports earlier than that. is this going to is anyone making? >> we have known since leaving the governship of florida jeb

bush was out to make money and make themselves more financially secure as a prelude to running for president that's exactly what happened and he has a high income and also paid relatively high for people with that kind of money. >> 40% tax rate. >> that's right. >> it's not mostly capital income. it's a lot of speech making income. not surprising. not something that hillary clinton will be able to use against him given what her husband and she had been able to make. he's likely to get points for transparency. >> it diffuses the possibility of a harry reid lying and saying he doesn't pay any taxes and then saying it worked. >> that's why you do it.

you're trying to get credit. >> it's a positive because there it is a little bit daunting to realize that 40% of everything i earn goes back to the federal government and they have the nerve to say that. i applaud them. >> yes but he was also boasting about the high effective tax rate that he was paying as compared to hillary clinton or other people. >> right. >> but a lot of people think 40 is low. >> of course he wants to cut taxes. >> let's go back to 90. we were doing swimmingly and we got this inequality problem. >> john before you go. >> that would be a great debate between him and bernie sanders. he wants to take that up pretty high. >> would it be a great debate? i think it would be -- i don't know i can watch saturday night live if i want to see that

right? >> in terms of disclosures, the other was a new series of e-mails from hillary clinton. anything in there? >> yeah they're not too swift with the fax machines over there at the clinton state department. we had a lot of back and forth over snafus of communicating speeches and vary memos. these were not benghazi. these were not high content stuff so i don't think this batch is going to make a tremendous amount of news. >> how much should we make of chris christie joining the race yesterday? too late? >> it's too late in the fact that he's been so politically damaged in the last couple of years but he did display in that

speech yesterday the gift he has of charisma and personality and directness that make him appealing. so his team looks at the fact that you've got 55% of republicans in our nbc wall street journal poll that can't see themselves voting for him. he's tied with ted cruz for 8th. that's a huge come down from a couple of years ago when people were assuming he was the front runner in the race. however his people were counting on the force of his personality. his ability to say i'm straight talking guy i can get stuff done. problem is people point to hey what about all of those credit rating downgrades in new jersey and indictments of your close aids aids. >> the right is saying it's not bridgegate. it's hug gate. >> he's such a force of a personality. >> he has a lot of baggage right now. >> he's a very talented brand.

>> do you remember how many times we went back and forth? mccain and then this other guy and then kerry and dean. >> and joe -- >> do you know where he headed last night after he announced? straight to new hampshire. that must be his plan. if you're big in new hampshire maybe that gets you back. >> new hampshire is where he's got to make his break through and our point is the right one. right now if you look at our nbc wall street journal poll he's not top ten. if he gets on that debate stage he'll be pretty effective. we have to see if he get ace moment where people reconsider who he is and what he can offer the party but he's taking on a lot of water. >> thank you. we didn't talk about donald trump but that's -- i put my money on chisris christie before the other one. >> your bets already. >> you're taking the opposite

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see why 92% of our members plan to stay for life. we have a global rally on our hands. the greek prime minister appears prepared to accept the terms for the bailout. the two sides still remain far apart. you can see it there. up four points higher. to the european markets you're seeing a very good situation. things have spiked there. the cac and the dax up over 2%.

the ftse 100 up a little over a percent. joe has a little bit of facebook news for the millennials. >> still far apart but are they? as you get closer to closer to -- i don't know. seems like there comes a time even in our lives at different times where you finally just throw in and say look i'd like to keep trying but we just need to do this but i can't imagine all of a sudden they make a stand to where they would exit. mark zuckerberg held an online q and a yesterday on book the session got everyone talking. the term in a tore asked the facebook ceo about his workout

regimen and whether he sees machines winning to which suk zuckerberg responded machines can't win. all you have to do is cut a cord. >> they have arms. they can keep you from getting to the cord. or lock you out and push you out. >> steven hawking if he had one question answered he wants to know about the unified theory of gravity and other forces. the answer to that would be an equation so long it woen appeal to it. >> zuckerberg much more down to earth. it's a singulairty. how do we eventually live forever, cure all diseases because it's all -- in the physical world you can see how it works and it's theoretically within -- maybe not 50 years but

within 1,000 years you should be able to exactly replicate. >> my question charlie has the best question ever. i don't want to know when i'm going to die. i want to know where. >> but what if you don't have to die? you can go anywhere. >> why are the chips down? a live report from china next but first as we head to break, take a look at the dollar. the other currencies of trades and there you can see where it is today. 111 on the euro. stay tuned. we'll be right back. ♪

welcome back to squawk box everyone. macau's gambling revenue dropping to a near five year low. eunice joins us from beijing. >> thank you so much. well, macau is the las vegas of the east but the gaming revenues are down. june figures lower than exelected. that is a five year low. >> since the chinese gambling center opened to international investors in 2002 the former colony has been on a hot streak. generating more revenues than the las vegas strip but now the chips are down due largely to the anticorruption drive. >> they tend to intimidate everybody so it curtailed all the upper end spending and businesses in that area of the economy like better automobiles and clothing and fashion and macau falls in that category.

>> that stopped people like him. once a frequent visitor to macau. an officer for the chinese state bank he says he hasn't done anything illegal but he's cared to go back. >> i think these restrictions on enters macau may last forever. >> even though wealthy chinese consumers still has the casino operators betting big. >> and there's construction sites all over today. most people said it's all going to depend on beijing's policy at just how successful macau is in the future. >> meantime when we come back global stocks on the fact that greece seems ready to blink. we have a live report from athens right after the break.

>> reports say greece is prepared to accept bailout conditions one day after they failed to make a payment to the imf. what impact is this having on greece. michelle joins us again and she has a special guest. >> hey there. thanks so much. we joined by the founder of i group and he's a greek business man but has oldings all over the world and we have come to know

him think the young president's organization. you're the regional president for europe is that right? >> that's correct. >> how bad are the capital controls starting to effect greece right now? >> you're seeing the iceberg. people in the street. and difficulty with restaurants and with purchasing goods. a lot of businesses are starting not to accept credit cards so on my way today to refuel my card no credit card accepted but that's still the beginning. >> this country relies on imports. what does that mean if the capital controls stay in place. >> you nailed it. end of the day machinery, pharmaceuticals, fuel. they're all important. the guy that needs to make the payment abroad and can will start facing shortages. >> it's interesting.

you think of these big ticket items. our cab driver this morning told us he went out and bought as much baby formula as he could. that's the little guy thinking about what could happen could happen right? >> if you just multiply that by every little guy doing the same. today i had to refuel and get as much fuel as possible on cash. if everybody does that, it becomes a whole economywide issue. yes, that is happening. yes, the little guy is thinking that way and this doesn't help the economy. one way or another is the economy is being hurt constantly. you need a resolution and you need it yesterday. >> there's hopes that somehow the government has caved in going to do a deal. but we heard from the german finance minister who has put water on that claim completely and just said no. no discussions until after this referendum on sunday. how do you think the referendum goes? >> to me i think how the referendum goes is really irrelevant and by that i'll explain what i mean and qualify

that. baseically one way or another, it's yes or no we still want a solution. so the idea there is yes or no the no should get us more negotiating power. europe doesn't see it that way. and i think it's very important that people understand that and make that distinction. i think it is absolutely paramount that there is a resolution as soon as possible. and by the way, no matter what the outcome of the referendum is on sunday it will take further time once the economy is still being hit until there is any fine tuning of a solution or a move away from europe. >> thank you so much for joining us this morning on cnbc to talk about what has been an incredibly difficult situation so far this week and could get tougher. we'll have an update for you on what's going on with this negotiation at the top of the hour and what's coming out of germany. >> that guy should be negotiating everything. that was exactly what we've been saying, right, michelle?

diabetics, you know the most basic things you need to live are going to be unavailable. >> by the way, that cab driver hoarding all of that baby formula and then he's going to sell it at a profit? >> no. he needs it for his baby. >> for the most basic needs. exactly. with the referendum either way something's got to -- that's why i was saying they might try to change the conditions. look, it's got to get done. any of these changes, you can sort of see the end in sight, can't you, as we get closer and closer? anyway, great. thank you, michelle. meanwhile, we're going to talk about greek yields. they're still climbing. in the rest of europe the fears are diminishing. italian, spanish, portuguese yields are all down this morning. what should investors be doing this week with pricing in? really tough place to be right now. and chief fixed income

strategist. i immediately thought there was one camp that thinks this is the biggest market bubble in history that is a great trade on the short side sovereign, and even here. and there's a fight to quality because of what's happening in greece which makes you want to buy bonds. someone's going to be wrong. which is long-term going to be the better trade? >> well i think long-term we're clearly neutral in u.s. rates. in european rates i think we see a bit of reflation in the long-term. that's decent short play even here with the time frame as good mr. gross' trade earlier this year indicated is a big problem. >> all right. so in the u.s. you're neutral. so let's say three years from now the 10-year is below 3% or above 3%?

>> i would argue below 3% and here's why. it's fairly straightforward argument. three years in now it will have been roughly ten years since the prior recession. you know the crystal ball in economic terms is cloudier today than it's ever been for a myriad of reasons. what's going on in greece just the smallest of those reasons. and so there's good odds just by the passage of time and the random happenstance that we enter into another economic slow patch. what's the yield curve going to do? flatten expectations in the long end. hopefully we're a few higher. they're going to have fed rate cuts at that point. i think that's one of the things that timing is going to cap. >> that just makes me very sad and pessimistic about our growth prospects prospects. if over the next three years we never get above 3% or can we have a stronger economy and we're just in a new period where

rates are just lower than we're used to? >> well i and my team, we're believers in what -- that's not a very satisfying thesis. and, you know the truth is even if we were to get economic acceleration from whatever the base level is we're going at right now, that base level because of population growth because of productivity growth it's 1.5% 2% lower than it was 20 years ago. there's no fix to that. what are you going to do? institute a policy? even that fix would take 30 years to be realized. >> you better stay long, then, in in the stock market. savers are going to keep getting the short end of the stick and the people that have money to buy stocks are going to keep doing better than everybody else. so that's a scary scenario too. >> it is a scary scenario. it's deeply unsatisfying to fixed income investors who are in it for the long haul for the income of those assets produced.

>> right. but, you know you don't need to revalue stocks then if rates are going to stay this low. they'll continue to be attractive just based on discounted -- all right. thank you. in france i was just there. i'm very international. i know a lot about france if you have any questions or anything. >> beautiful part of the world. >> very beautiful. i was right -- you see, clinton was right -- we stayed right next to hermai. >> did you buy any ties? >> i didn't buy there. clinton did. i wonder if he has to pay for that. shopping bags full. >> maybe he doesn't pay. i don't know. coming up this morning's top stories including a possible greek deal. plus what the situation there means for here at home. jim grant will join us. before we head to break, check

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market alert. futures sharply higher and european stocks soaring on reports the greek prime minister may accept creditors' demands in exchange for a bailout. a report straight ahead. market watcher jim grant is here to break down the crises in greece and puerto rico. and rebecca patterson is with us for the hour. get ready for a wild morning in the markets. the second hour of "squawk box" begins right now. ♪ live from the beating heart

of business, new york city, this is "squawk box." >> welcome back to "squawk box." it's 7:00 here in new york city and this is cnbc. "squawk box" first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. and the guy behind me is gone. >> he waved. blew us a kiss. >> blew you a kiss. >> no, i think it was you too. >> really? i'm fine with that. i have no problem. >> we love our fans. >> better than -- anyway. equity futures just -- >> did you just flip off the camera? >> no, i just went like -- >> that's the same thing. >> then i did. after reports of greek prime minister alexis tsipras had accepted the creditors' terms for a bailout, markets in europe rose sharply on that news. and the same thing is happening here. we lost 350. getting 150 back.

a little bit yesterday but not where we were. and still below 18,000. 17,610. >> down for the year. >> yeah. down for the year but one day could put us up for the year. that shows how flat we are. for more on greece let's get to michelle caruso-cabrera in athens. i'm telling you, michelle that last guy was, like why isn't that clear to everyone? which makes me think it's all a big kabuki dance anyway. and everybody the slightest edge they can get from pretending to take these positions, they're willing to do that. but in the end got to get done. >> yeah. a resolution needs to occur at some point because the economy is suffering from the inability to move money in and out of the country, a country where you import nearly everything. it's incredibly difficult. i want to give you an update on the breaking news we told you about an hour ago. the greek government and they've released it now as well

sent a letter -- a new letter and it reads like they're willing to concede on nearly everything except when it comes to pensions et cetera. it isn't completely what the creditors have wanted from greece but it's a lot closer than it's ever been before. the color out of the greek government is you misinterpreted us, we haven't backed down that much. okay. then that's almost not relevant. what is probably most relevant in the last half an hour is we've heard from the german finance minister. remember germany is the bigger provider to greece. and he said does this letter make a difference? no, there is no point in talking until after this controversial referendum on sunday. then he goes on further to say i have always kept to what we agreed. and if everyone had done the same, greece would not be in a

desperate situation. so schaeuble taking a hard stance with greece. some of the banks finally opening up that pensioners and only pensioners could go get their monthly stipend. many of them are supposed to get between 600 to 1,000 euros per month. they're told they could only get 120 euros this week. then they have to come back next week to get another 120 euros. and the lines were very long especially in the residential areas. very difficult to see elderly people, very elderly people some of them waiting in line. and we talked to a lot of them as they came out. and very frustrated about how difficult the situation is. it's very tough to see. this is a result of course of the ecb, the european central bank saying they're going to keep a cap on the liquidity. it's why you can get cash out of your atm and why you can withdraw money. we're waiting to see what the

ecb does today in their meeting to see where they keep the cap where it is. do they start to withdraw the cap? that would be lower it or do other things that would make it tougher for the greek banking system and squeeze this economy even more. that's a big event we're watching for as well as this thing goes on and on. >> michelle i've been in like a poker game where i think i know how to bluff, which i don't. someone else with the good hand i'm watching. for awhile. but then you see a certain amount it can get to where you just get -- you know, you have nothing. you're so scared you throw it in. the bluff is over. this is a developed country. they can't go back to a third world country where there's no food and no medicine and no -- you can't -- right? and they've already taken it further than any developed country has taken it. they defaulted on an imf loan which has never been done. the bluff is done. it's not going to work.

they've got to throw in the hand. >> let's see if they do it. this letter today would suggest that they're awfully close to that point and yet at the same time when they come out and say, no no you misinterpreted us. we're not backing down that much, i don't know what to make of it. >> let them say it. >> if the referendum happens on sunday, you told us about the changing momentum about how more people were voting no at first. how that has shifted. and momentum certainly seems to be in favor. however, the numbers probably at this point, it's hard to say. if there is a yes vote does that definitively mean that tsipras has to step down? >> it would suggest that but he has tried to say -- he originally said i will do whatever the greek people want. and if they vote yes, i will implement the program. but it's not clear that he would have the ability to do so or if he would be forced if he's got enough of a coalition or if his

party will even stay with him in order to do that. greek politics is incredibly complicated. i will say this. we know there is incredible strife within his party right now. we see it on television, the leaks that are happening. it's got to be incredibly difficult on him internally what's going on behind closed doors with all of his previous supporters. you know, who knows. >> okay. michelle, thank you for that. we're going to continue some of this conversation on the possible paths for greece right here. we are joined by rebecca patterson. she's the chief investment officer. she is with us for the next hour. i know we don't want to talk short-term, but how would you contemplate playing this? when you leave at 8:00 what are you going to do this morning? >> get ready for a conference call with all my clients to try to explain it to them. we're not changing our portfolios around on this. we've been short position

bearish on the euro since 1.32. so hanging on with that and with euro area equities we've been neutral on them for some time. we knew there were issues like greece and maybe to a degree russia out there. that tempered our enthusiasm somewhat. at the same time you have a big qe policy from the european central bank and you have some improved -- real improvements in the economy. bank lending is improving. consumer and business confidence is at multi-year highs. >> you give them your 30-second sort of view of the world, it is what? >> it is that greece shouldn't be ignored, but you also don't want to overreact to it. it's dramatic. it's fun to talk on tv and it's not irrelevant but bigger picture. you know when china cut interest rates this past weekend, to me that is so much more material than what's happening in greece. >> we had two did analysts on this morning. david bianco said he would sell. he said he would sell into what he thinks is going to be a rally this morning.

he said he thinks this summer is going to be tough. >> i don't know if i agree with that. i think there is so much anxiety amongst investors right now, cash balances. whether you're looking at balance funds. i don't think the market is crowded. i don't think valuations are excessive. and very curious to see what non-farm payrolls do on thursday. i suspect we're going to have a decent number. and so you've got stronger signs from the consumer in the u.s. much better housing, much better car purchases. interest rates are still incredibly low around the world. >> and by the way, with greece, the expectation is that it may push the fed back even from september. that they wouldn't raise rates necessarily then. so maybe you see good numbers and you don't see any concern about the fed steps in because of a better economy. >> and the earnings season which is a week or two away you're not going to have the same head winds from oil and the dollar that you had the previous quarter. earnings season is what it is. people bring down their expectations and will magically beat it.

i do think we're looking at a better second half of the year. after the first half was zero but i still think we're going to get decent equity returns this year overall. single digits but -- >> but high single digits? or -- no but right now it's basically -- >> greece does matter. >> you know don't you? >> my crystal ball. >> three or six? >> so greece first of all isn't going to get resolved. period. >> no matter what, really. >> we'll continue to talk about greece for years one way or another. but if we don't have a grexit in the short-term then i think europeans economy has some momentum in part thanks to qe. if we have a grexit that will lower european growth for a few years at least. that changes the outcome. >> you know, we'll talk about this a little bit later, but what china did you thought was actually more relevant to the market. >> look. second biggest economy in the world. aggressively stimulating or an

economy the size of miami that -- i mean it's kind of like puerto rico. i think puerto rico is more important than greece. >> $72 billion. >> i haven't been able to confirm this but i read yesterday about 50% of u.s. mutual funds hold puerto rican debt. it probably won't go to zero but if you get a lot of panic out of municipal bond pension funds -- excuse me mutual funds, that does matter. so we're spending all this time on greece and at the end of the day it's like more puerto rico. >> rates three years from now at 10% on the 10-year. i think that's good for stocks probably because we don't need to revalue stocks. but it also implies the euro. but this whole system over there, it makes me think it's

gerry rigged. it's hard to do with different fiscal -- >> absolutely. >> all this different fiscal authorities and not even -- you got no concerted action on the fiscal side. >> i think if we have a negative outcome for greece and i hope we don't, but if we have a negative outcome for greece the one bright spot that could come from it is that europe might realize, okay with the members we have left we need more integration. we need to pull this closer together. let's do it right. right. that would be my hope. >> i was thinking, you know long-term it might be bad. the euro just doesn't end right now. >> euro's not going to end. >> then they shouldn't have done it in the first place. >> well germany, they didn't want greece in in the first place. if you look back at news clips from 2001 the germans were so against this. >> they're the ones -- they're doing well and cracking the whip on them. they've got the low currency. >> yep. >> they're laughing all the way to the bank. >> rebecca is with us for the rest of the hour. we've got a lot to talk about. still to come we have a

live report from san juan on puerto rico's debt crisis. also jim grant will be joining us on set to talk global crises and the market reaction. and at the bottom of the hour big week for ceo changers. a look at he c-suite shakeups. and record high prices for new york state real estate. stick around. we'll be right back. when you get up to 50% off thousands of hotels with travelocity it means you can also afford to get up to 50% swedish-er swedish massages. making it the place to find a place for summer escapes. go and smell the roses.

a big deal in pnc here. a.c.e. limited chubb $28.3 billion in cash and stock. chubb holders will get $263 in cash and .0619 shares of ace. the total price for chubb is $124. $124. $124.13 a share. >> the combined company will remain a swiss company. headquarters in new jersey will have a substantial portion of the function. if you're looking where it's going to be based, it's a swiss. based company. >> and this is hank greenberg's. >> at ace. >> yeah. that's who it is. he was at aig for a very long

time. >> big deal. >> huge deal. >> after closing the company expects to realize annual expense savings of about $650 million pretax. companies will overlap. the company plans to have meaningful growth in substantial revenue. >> no conversation with the tax issues yet. >> were well thought out company. >> i am a -- i believe the sorkin family is a chubb customer. >> you have a big umbrella thing? >> an umbrella policy? i believe we do. >> you better. because if everyone ever trips on your size 13s they're going to sue you for every dollar you have. >> we need an umbrella. >> you need one. chubb is well known. actually, i don't -- i don't think they wanted to do it

because of my -- >> because of your celebrity. >> not because of that. honestly. i'm not kidding. anyway, we've been talking about greece -- >> as a rule they'll price, right? >> not necessarily. we've been talking about greece all morning, but the other possible default on our radar, puerto rico and kate kelly joins us now. that's a pretty good deal. >> referee: pretty lovely. this is the view outside of our hotel. you can see the ocean behind me and some buildings over here. but today is the day. it's deadline day for some $2 billion in debt service payments from various borrowers around the island to make good with investors. they have probably until close of business although the details vary according to the loan literature. but the issue here is that you got $72 billion in overall debt for the island. their governor has called not payable. although overnight it appeared

some of the individual borrowers were going to make good on their payments and reporting they've done. it's not clear all of them will be. here's a partial breakdown of the borrowers in focus today. one is a set of general obligation bonds. this is about $645 million in outstanding debt. and apparently that -- i'm sorry. $645 million are the debt payments due today. the other is prepa which is the power authority. cofina and the highway and transportation authority. among others. there are apparently 15 we need to keep an eye on. what are the ramifications if these aren't paid? it seems some may not be able to make interest payments today although we don't know yet. the ramifications can be widespread. you can have everything from protracted litigation. they really are not allowed to default without going through certain processes. there can also be discord here

in puerto rico. it's developing if you think about the discord that's happened between the governor and other lawmakers including the representative we spoke to yesterday who was opposed to the governor's current stance. and of course there could be a loss to correct markets which is the hugest issue because you need financing going forward. the mood here is one of gloom. concern of lack of job growth among other things. we spoke to a lady last night who works at a bank locally. she said she was one of the lucky ones who was able to stay here and find full-time employment. take a listen. >> most of my colleagues had to get out to the united states to find a job. >> and guys, that really echoes the sentiment we've heard from others in the community here as well as, again, you know the lawmakers speaking for the population or trying to and saying that economic growth lack of labor force

participation, debt to -- debt per capita is really striking and a problem that needs to be addressed. >> add it to the list. i'm writing it down. things to worry about. but you don't look that concerned down there. nice day. nice pool. enjoy. thank you, kate kelly. we know you're working. we do. we believe you. >> we'll do our best. >> joining us now to talk all these things is jim grant, founder and editor. and to talk so much more about things. i got a couple of issues i want to talk to you about. one was that we just had a gentleman say we won't be at 3% years from now on the 10-year. >> how does he know that? i know i don't know that. >> do you think there will be upward pressure eventually? >> eventually yes. >> is the trade now to stay and think that it's going to be quiet in the bond market?

or is it the biggest short possibility in history? >> there's probably something in between. i think we ought to focus less on greece and more on new jersey. and i think that because new jersey is a wonderful window into the world and of the republican party. now, chris christie just announced for president. he makes the last middle aged male in america to announce for presidency. so we're all in. >> i wouldn't be last because i'm a young middle aged male. >> correct. but the thing about chris christie is not the traffic cones. it's about the fiscal situation in new jersey. it's about how the municipal bond market is perceiving this and reacting to it. one of the very notable but unnoted developments in the bond market has been the upward trend in yield some of the more obscure new jersey revenue or authorization bonds.

in which are well bid because new jersey is so heavily taxed. but there is a maturity that now consult the notes that he's mature in 2029. 7.25. they'd gone from yield of 4.5 to 5.90 just this year. so the market is properly worried about state of credit in new jersey. which has a massively underfunded benefits beyond pension. mainly health care which resorts to the most blatant gimmick to balance the budget. it stands for what exactly? not stand for fiscal solvency? does it stand for fiscal probity? yes, it's supposed to. and chris christie announces for

president in a state that is the second lowest rated state behind illinois. you read the voeckler alliance -- >> how is this issue than in the other 48 states? >> well underfunded pensions are unfortunately a rampant issue in the american states american municipalities. but new jersey is vanguard underfundedness. >> well could this be the subprime start to something? is that what you're saying? >> well to me it is one aspect of the world's credit. we see the world in total -- >> of which there are many which we saw the other day. >> i think the important remote cause of all this is the manipulation of that important, indeed critical price we call the interest rate. we are under price control -- >> i keep saying i don't know how you do the euro when you've got all these different speed

economies and fiscal actions over there. does it ever work when you're setting almost a fake interest rate? >> fake interest rates are not the way forward. >> that's what i mean. so let's say greece stays, the euro stays, is that the good long-term outcome? or should we have ended this experiment now? >> there's nothing wrong with fixedness in money for hundreds and hundreds of years we had fixed exchanges. we had currencies defined as a weight of something, a pound was -- >> this will work eventually in europe? >> it won't work unless there's flexibility in labor markets. unless there's honest forms -- >> they're not honest are they? >> no. the interest rates are the hot house tomato things that are fabricated and natural. >> so you you're glad if they fix this -- >> joe we're talking about new jersey. >> that's all you want to talk

about is new jersey? >> i want to go to new jersey a bit. you're talking about rising yields. with fed funds zero people reaching for yield doing more and more silly things to try to capture yield and we've had a lot of investors buy puerto ri can debt knowing they've been in a recession for five years and running. knowing that unemployment rate is multiples higher than the rest of the country. so are we going to see other instances like this where people are going to be paying for their reach for yield? i don't want to say greediness, desperation in some cases, i guess. >> yes. emphatically yes. the fed is rather preening about its apparent success in steering us all to a world of higher asset prices thanks to certain interest rats. but the cost of it has been comprehensiveness pricing of risk. municipal bond market is something special in that it is

the -- a market principally of retail investment. it is sometimes really, really slow on the uptake. puerto rico's debt did not happen all by itself. it had its enabler in the bond market. $72 billion didn't happen overnight. other times the municipal bond market will fly out the door in full flight of panic because of something it read on the worldwide web. but the -- i think new jersey is worth watching because these yields are creeping up. the yields are telling us -- >> you're saying that's a canary in the coal mine. six months from now -- >> i got to wait six months? >> three months. you're going to mention new jersey three months from now? >> yeah. >> we're going to have hundreds of billions of dollars of default? >> the thing is the municipal bond market is -- it's like snow flakes. each one is unique. >> right. >> these credits are -- >> a lot of them are insured

too. those guys you wonder if they had the claims. >> but the credits are different. and one should not make a cosmic fall. >> i like that you said the geeos are fine. thauz they'll find a way to pay those. >> therefore there's a bid for these bonds. but the state of credit new jersey is not the state you would run on if you were choosing to run as republican. >> well we'll see. you're saying there's a bigger issue. especially with puerto rico too. a lot of regular people on because they're double tax exempt. . >> yes. as rebecca said, we're hoping for yield. maybe we should. >> no more groping. >> i don't like gropers. when we come back we've been watching the market response to greece all morning. up next we're going to get you ought up on this morning's other big stories including news from nike and arkst&t.

also i have more news about the ace transaction and chubb. we will talk about the tax implications when we return. >> oh, good.

♪ every 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. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life. welcome back to "squawk box," everyone. we've been watching the u.s. equity futures this morning.

they have been sharply higher through the course of the morning on the idea there might be something happening with the greece bargaining back and forth. there are reports that greece is ready to accept the bailout agreement. however, there are conditions that go along with that. at this point it seems the german finance minister at least is saying they don't think anything should happen until after the referendum that the greeks have called for sunday. we will keep you updated as we get more of the developments. the dow is up 150 points. s&p futures up 15 and nasdaq up close to 40. other top stories this morning, at&t's proposed acquisition of directv is expected to get regulatory approval as early as next week. the deal would combine the country's number two wireless carrier with the largest satellite television provider. reuters says the justice department has completed its review and is waiting on the fcc to complete its own. that agency is said to be ready to approve the deal with conditions. >> and nike saying their

chairman will step down next year. he recommended that ceo mark parker succeed him as chairman. he's going to be transferring to a new company called swoosh which is now a limited liability company. a number of board members at nike will now become board members in addition of swoosh as part of a -- what they're calling a good governance practice with how that gets sold down or what's happening since it is a large piece of the puzzle. we should also tell you some deal news this morning. ace acquiring chubb in a stock transaction. joe had asked the question whether this would be considered a tax inversion. it's not an inversion because ace is of course a company that's already abroad and they are buying chubb. and they are the buyer. >> they're able to buy it because of a -- >> there might be some -- there might be some marginal tax benefits, but when you really think about the two different companies and the business itself chubb is so u.s. oriented and so much a large

portion based in the u.s., by default they will continue to pay the same tax rate on that part of the business. when you look at ace's business it's a little bit more of a mix. there is a huge u.s. north american component. but a global reassurance business and a number of businesses run out of london and elsewhere doing business around the world. they probably do have a slightly lower tax rate. >> 10% or 20% of chubb outside the u.s. at a lower rate. theoretically a u.s. company. >> that is true. >> okay. i don't know if it's bad then. i like switzerland. and zurich there's at lot of insurance companies in switzerland. nice place. davos. we go there. we shouldn't feel like when the chinese bought the -- >> maybe you'd like it more if it was in bermuda.

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welcome back to "squawk box." number of big name companies are set to start the second half of the year with big changes in the c-suite. dominic chu joins us with more. good morning. >> good morning. let's look at three of the changes. we're talking about fox. we're also talking about boeing and we're talking about twitter as well. all getting ceo changes. first of all, let's go to fox. all right? we had to take a chart all the way back to 1986. it existed beyond that but that's when the fox broadcast network came out. since then you're talking about like a thousand-plus percent run-up at the helm of fox. here we've seen you can see

overall a thousand percent change equals about a 9% annual rate of return in fox stock. so interesting move here. also let's look at boeing. jim mcnerney stepping down there will be a move out. he was at the helm for ten years. the stock was up about 120%. during that time if you annualize it for 10 years, it's about 12%. decent move there. and in the last one here twitter. we're not going to annualize this. he's been on the job as a public ceo for less than two years. look at this. during this time we've seen stock rise about 40%. an interesting move here for three of these different companies all with different degrees of ceo shareholder returns, joe. it'll be interesting to see what happens when they take the helm at the companies. back over to you. >> all right. thank you. there has to be a change in c-suite occasionally right? things happen. >> time marches on. >> that's right.

for some people. >> and for us too. >> okay. >> even though you deny it. turning now to china. the shanghai market has been on a wild ride tumbling almost 25% just over the last two weeks. joining us to talk about what's been happening in china is john rutledge. he is the chief investment strategist of safinad. and john with china we talked about this this morning. rebecca patterson is here this morning and she's been talking about how this is a big deal what happened over the weekend with the chinese lowering interest rates. does that mean from your perspective? >> well bwell, the peoples bank in china has a lot more room to do things. when you start near 5% you can lower them again and again and again and again. they've also lowered reserve requirements which makes it easier for the banks. but in china it's also very important the thing we call guidance which basically means the government calling up the heads of the banks saying i'd like you to lend more money

please. that happens a lot more in china than here. china is not ready to allow a stock market crash to disrupt political stability. so i think you will see very aggressive moves by the government and especially the central bank the more the stock market falls. shanghai's down 5%. this decline is still happening. >> rebecca? >> yeah no john this is rebecca patterson. >> hi rebecca. >> i've been going back and forth on chinese mainland stocks. on one hand you know the government wants to support this market and there is real stimulus going on that hopefully is going to help stabilize or support growth but on the other hand you know much is retail investors purchasing on margin. so it smells of a speculative bubble. and how do you square that circle? do you bet on the stimulus and the government? or do you stay cautious because it's so retail and speculative driven? >> i think we interpret the stimulus story as saying that the chinese economy is not going

to fall apart. with that story to the side as investors i think most americans shouldn't invest there at all. as you pointed out, besides the reserve decrease, there was also a decrease in the -- last week the biggest brokerage firm in china went public and did an ipo and was up 44% the first day. the money they raised in the ipo was going to be used to increase margin lending. so you're right. this is a speculative market. we don't understand it. we don't understand -- we meaning most westerners don't understand an awful lot of what's underneath the stock market in the sense of audits courts laws rule of law, et cetera. there's just a lot easier ways to make money in the world than taking chances, owning something you don't understand. >> but the good news from the economic perspective is not only that this should help support china's economy, but that in turn should help things globally as well, john?

>> yeah. especially in asia, of course. china is -- we talk about these -- china's growth declining, but it's declining from 10 to 7 or 6.5. china is so big now that china growing 6% is a lot more growth than the u.s. growing 3%. so although it's declining, it means an awful lot for the group of countries now being called the silk road where china is doing very large infrastructure projects. building highways in pakistan to the sea and so forth. so their influence is not declining. of course that means we'll see a lot more of them in the east china sea. more of conflict stories that happen too. i think basically the economy is soft but not crashing. the stock market decline -- or crash or whatever you want to call it, it is a bubble. it has popped. it's going to continue to do so.

i would stand aside and not try to catch that one. and it's easier to make money today especially betting on the greek solution than it is betting on the chinese stimulus. >> i take it that's not an endorsement of betting on greek stocks either though. >> personally i have some bets on greece at the moment. no no. i don't mean greek stocks. basically the most interesting bets right now to me are the one where people have decided europe is going to go away. europe actually starting to grow again and some of the periphery is where that growth is going to focus. so that's the way to capture this greek solution that's going to be likely come up is to catch the bounce on those stocks. but otherwise i think stay away from the chinese stock market. >> john, did i pronounce your

firm right is it safanad? >> it's actually the name of the first arabian horse stallion a long time ago. >> i like it. >> didn't have parents? i mean, how could there have been a first? what does that even mean? did you think that through? >> joe you have to be -- >> cloned or something? what are you talking about? >> you have to be a religious man to understand that question. >> okay. >> got ya. >> all right. so really didn't happen that way. maybe it did. or maybe it did. you see, you know it's hard to get one past me. >> thinking man. >> john, great to see you. when we come back we'll talk about why buying an apartment in new york will cost you more than ever. new real estate numbers. look at u.s. equity futures. they are trading higher. dow up about 148 points. we're right back in a moment. (singing) you wouldn't haul a load without

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never settle for verizon's overpriced gimmicks. try the un-carrier risk-free for 14 days you'll love it, or we'll pay for you to go back. welcome back to "squawk box." manhattan real estate prices hitting a new record. but the high prices may finally be taking a bite out of demand. robert frank has some of the numbers. >> amazing numbers. crazy numbers. the average sale price for a

manhattan apartment hit $1,872,000 in the second quarter. that is a record. the median sale price was the highest of all time at $980,000. the average co-op price hit $1.5 million. condo towers have driven a lot of these price gains in recent years. now the co-ops which are the bulk of the market are catching up in price. now, if you look at the co-ops they have a long way to go. new development average price hit $4.2 million or $2,011 per square foot. the problem is the skyrocketing prices may be getting too rich even for the rich. the number of sales fell by 20% year over year. that is the fourth straight quarter of declines in sales volume and inventory. well, that's not budging either. there are about six months of inventory. what do you get for your money? sheer a $1.87 million one bedroom, two bath in the financial district.

it's 1400 square foot. it's got hardwood floors but it doesn't have the luxury a washer and dryer. >> you don't get a washer and dryer? >> for $1.87 million. >> hardwood floors. >> that's nice. >> and it all sort of signals this age of asset wealth. central bank policy from china to the u.s. plus everyone now is looking for safety. and manhattan is the highest ground when you look at global investment. >> but return in sales dropping off? who blinks first? are the prices going to come down or sales pick snup. >> that is the big question. there is a standoff right now between buyers and sellers. >> how much is about foreign buyer relative to domestic? >> i think the foreign buyer slowdown is one reason why sales have slowed down. >> i'd keep an eye on the china capital account. chinese take money out, it's going in real estate. >> that would be huge.

yeah. that would be enormous. that would be a flood of money into this market. right now there's this standoff. >> but if that's what happens, the capital controls are more important. >> pardon me? >> the stronger dollar don't worry about it. >> no. if chinese -- average chinese person can diversify their holdings outside of china in a real way for the first time in modern history they feel good about owning property and they'll want it here. >> what about developers? will they hold on and wait for the prices to either continue to go up or stay flat if they go down? or will they try to sell anyway? there's a lot of new development. >> they're not waiting at all. i mean there is a lot of new development. that's what was spreezed to me with all these new towers going up and $250 million penthouses being sold the inventory numbers are not going up. so they're selling out. especially in these luxury towers which are the foreign buyers. >> okay. the one and only robert frank. >> thank you. when we come back this morning, greek headlines moving markets today. we have the latest headlines and

what's been happening with the markets, too, after a quick break. right now dow futures up 143 points. s&p futures up close to 15.

soccer. top chef. soccer. top chef. [whistles] soccer! top chef! [shouting] disco! [singing] say it and see it. the x1 voice remote, only from xfinity. let's get back to our guest host rebecca patterson, chief investment officer for bessimer trust. would you do that for your clients if capital accounts open? >> you know i think the chinese money if and when it comes to

the u.s. when capital accounts opens more is going to go into big international cities trophy property. this isn't going to be something that lift this entire country. >> what about u.s. stocks? wouldn't hurt right? >> i would suspect some money goes into u.s. stocks too. but i think the chinese feel safer with property. think about what you can buy in china. what are they used to? what's their comfort zone? right? it's local stocks to a degree and property. but probably property more than anything else. so i think china is going to be the story that we underestimate all year. what's going on there structurally. waiting increases that's going to be small and slow. but this is an inflection year for that happen. the capital account opening up. the fact the government is getting comfortable with a new normal level of growth. i think this is a big turning point for china this year. >> tomorrow is the jobs report here in the u.s. are you looking for a strongish number? what do you expect? >> i have the luxury of not having to forecast that anymore. so i'm very grateful for that. you guys do it very well.

>> do you think it matters from a perspective of what happens with stocks? if it's a strong number, some people say -- >> i think everyone's focusing on the inflation angle more than anything else right now. if we get average hourly earnings in a work week that is improving but not too quickly so kind of goldilocks then the fed can continue to raise rates over the coming years. >> you have a scariest black swan or scariest -- >> yeah. >> we don't necessarily need a dirty nuclear bomb. i mean we still got the lone isis wolf lurking somewhere. that would be bad. >> the islamic state is something we should all be watching. i think the refugee crisis is big. at some point it could become a economic issue. what's the scariest thing i can think of it would be a cyber attack taking down payment systems so you can't have global payment ifs for a couple days. >> but july 4th we're hearing all this stuff now.

you can't worry about it though. >> the islamic state i think is more regional risk than a u.s. risk for now. not to say i wouldn't pay attention to it at all. but i think their focus is expanding their territory in the middle east. >> okay. all right, rebecca. >> that's a dour note to end on. >> yeah. >> i'm overweight u.s. stocks. happy 4th that's good. when we come back this morning, we'll have the latest headlines from greece. plus data at home. we've got mark zandi joins us with the numbers. "squawk box" will be right back. ♪ every 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. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to

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what's in your wallet? saved from the runes? stocks jumping right now on hopes that greece could be ready to blink. conceding demands from its creditor. breaking economic news. a key read on the labor market minutes away. jobs an important data point for the fed as policy makers decide whether to hike rates sooner or later. plus the great wall no more? why chinese state run media is warning around one-third of the landmark has been destroyed. the final hour of "squawk box" begins right now. ♪

>> welcome back to "squawk box," everyone. this is cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. pointing to a higher open here at home. gains of 2.5% 2.6%. and now check it out the dow futures up by about 150 points with the s&p futures up about 15. greece is the big catalyst once again. here's what we know right now. greek prime minister alexis tsipras sent a letter to lenders later yesterday. tsipras is expected to speak in the next half hour. this does not mean a deal is done. reports say the two sides still don't agree on all the terms. and we are also hearing from germany's chancellor merkel. she says the door for talks remains open but she also adds -- this is very important -- that just as greeks have a right to hold a referendum, the other 18 euro

countries have a right to react. in her words, a good european is not one that does a deal at any price. also important to watch, the ecb is expected to review the liquidity assistance later today. then the group gro up is due to meet in london. andrew over to you. we've got much more on greece ahead. but first a couple stories front and center this morning. the big one, ace now buying chubb for $124.13 a share in cash and stock. that's more than $28 billion transaction. we're going to talk to an analyst in just a minute about what it all means. also nike announcing the chairman and cofounder is going to be stepping down next year. he's recommended that ceo mark parker succeed him as chairman. knight will transfer most of his shares to a company called swoosh which is a limited liability company. many members from nike will be on that board as well.

and today u.s. and cuba to announce an agreement to open embassies in each other's capitals. now back to the markets. here with us on set is larry cantor. larry, when you said all this stuff, it was like 24 hours ago. it's so old. what a yes would mean, what a no would mean. this morning as it can happen did you change your prediction there is? >> not really. >> more positive about -- >> no. no i actually don't think a deal is going to happen beforehand. >> before the referendum. >> before the referendum. >> they said a deal would happen in which he would recommend it to the citizens of greece. >> anything's possible here. as you say joe, it's a very fluid situation. i mean i think after the referendum -- i still think a

referendum is likely to happen. a deal is possible but this is like somebody who's drowning that says save me but only save me if this -- i don't sense the europeans are ready for that. it seems like -- it was interesting they took a poll recently. more greeks favor staying in the euro than ever. it's like 70% or something. as you know, things are tanking there. i think maybe the government's getting a little worried. it's going to be a yes. a yes would be the best thing finish markets better than a deal. what does a deal do? it keeps kicking things down the road. greece really can't change -- >> a yes means performance though. >> i think a yes means a new government. >> they weren't going to do reforms and say, wait we take it back. >> exactly. i think a yes you get a new government or unity government. and then they do a deal and

greece stays in the euro. the other thing -- i think if it's a no i think greek exit is most likely scenario under no. they support the government. they're rejecting the austerity. greece goes out. i think that's a horrible result for greece. things are probably worse than argentina. even in argentina, they have a lot of things they can export and after the currency collapse they were able to do that. greece doesn't really have that. but in the long run, maybe for markets in europe, this could be a good thing. i do think there are enough firewalls in place now that there wouldn't be major con today gent to other markets. that's who's going to fight the ecb buying the peripheral bonds. we're throwing money into the banks. that's why markets have reacted pretty calmly to this. because they know those firewalls are there. so i don't see this as a big con

contaigent thing. >> is the market reaction to some of these things? what's more concerning have been the conclusions with putin getting pulled into this. >> you hit it on the head. i'm not a political expert but i think the united states is more worried about that. greece is in nato for example. i think that's a bigger issue. and what does greece do if they you know, if they leave? >> market's flat for the year. >> yeah. i mean i think the u.s. markets are going to be roughly flat. that's the forecast though end of the year. the fed has stopped qe as you know last year. they're going -- >> what are you telling people to do then? stay long? >> believe it or not, we like

stocks in europe. actually we see this as a buying opportunity. and the main reason is we're looking at -- you know things -- behind all this the european economy is getting better. you've got qe which just started really from the ecb. you've got a much weaker currency, lower energy prices. now, we all know 2% in europe is a boom. so we're not talking about -- >> that here is a boom. >> well but anyway so we see earnings actually growing double digits in europe and we like stocks there. i think this is a time where the currency hedges because i think the euro is going to go down further. but i think there's better opportunity there is. japan's interesting because companies there are finally returning profits to investors more. you know, with dividends and buybacks. that's a new thing there. so we're positive there. >> okay. all right. larry, thank you. >> thank you. we got a bit of deal news this morning. we've been talking about ace limited acquiring chubb in cash and stock.

the deal worth $28.3 billion. mark zandi is on the squawk newsline to break it down. help us try to understand both two things. first, what does this do for ace? and we've been talking about the tax implications. is there a tax piece to this? >> yeah good morning. definitely a transformative deal for ace. chubb is a leading commercial insurer. they're known as one of the very best companies for high net worth businesses. ace is a key player in north america in both of those deals. but brings together a company that is now a global power. they're up bigger than aig now from a commercial insurance standpoint in the realm with some of the large japanese insurers and the large european insurers. there's probably some degree of tax savings to this. ace is domiciled in switzerland.

that's where the combined companies will be domiciled. i don't think that's the primary motivators here. i think this is the opportunity to pull together two strong franchises each in their respective markets and then make one franchise that is truly a global player almost unrivalled. >> do you wake up this morning and see a transaction like this and say there are now five others waiting in the wings? >> it's always hard to say. we've seen a lot of transaction volume already in the reinsurance space. those companies have tended to be a lot smaller. there's a fairly thin air in terms of companies this size. i suppose it's always possible particularly with the debt market the way it is but there's nobody that really immediately comes to mind as saying here's a company that needs to sell itself or another company that says we'd want to do a deal along this size. >> fair price for chubb? >> 1.75 times value is high as the stock's traded since the

peak in the mid-2000s. so we use book value as the primary metric. there's really no other comps that are trading near that. so pretty attractive valuation and one chubb hasn't seen in a long time. >> mark joe's been trying to get an umbrella policy but because of his celebrity they won't give him one. under this new transaction, do you think he'll have a shot? >> i think he'll have a better shot than ever before. certainly he should have called chubb in the first place. >> honestly. it's not the celebrity. it's that if there could be bad press somehow. someone that would be able to speak -- that was what the agent said to me believe it or not. i don't know. they do normally would be a person you'd go to for an umbrella policy. and apparently not if you're in the public eye. to any extent. >> they'll be a little bit larger now. so maybe your profile will fit into them. >> i went elsewhere. >> you can go to lloyd's. they will take the policy on you.

they've got to figure out how to write the policy. >> that was all on the hair. oh, the hairs. because i've got different -- >> thanks for joining us and putting up with us. >> my pleasure. when we come back this morning, breaking news on the jobs front. adp private payrolls set to be released. right after the break. plus don't forget we are on the clock for tomorrow's special jobs report. on thursday this time around tune in for complete coverage leading up to the numbers at 8:30 eastern time. "squawk box" will be right back.

check on the markets this morning. wow. 168, that's the highest we've seen so far this morning. 168 points still doesn't get us back to 350 that we lost in the first place. but market's not open yet. it's only 8:14. so we will see. it's obviously going to depend on every comment that comes. i'm a little bit, i guess, heartened by -- looks like the germans are totally in the driver's seat. you've got tsipras folding saying, yeah we'll do it but

we've got a few conditions. and they're saying oh really? i don't think there's going to be any conditions. the market is still looking like -- >> but a big part of this was the referendum. when i heard about it last week i thought holy cow. takes it to a whole new stratosphere. we don't know what's going to happen with this. right now looks like european leaders are pushing back. >> got adp numbers? >> got 'em. >> go ahead. >> thanks. 237. a bit above the expectation of 220. >> 237,000. >> yeah. >> you said 237. >> everybody knows it. >> that would be a disappointing number. >> yes. >> i was just trying to help you communicate. >> i appreciate that. because i am in television and communicating is important. 12 years, haven't quite mastered it. may revised up by 2,000 to 203,000. compare to the estimate for

friday it's about up. services up 225,000. that's up for government and nonsector. that would be a comedown from the 280,000. still enough to absorb the interest into the workforce by a factor of about two maybe. construction up 19,000. manufacturing up to 7,000. trade, all good across the lines there. just want to talk about by business size if you have that chart there. one thing we are seeing small business really surging ahead there. 120. same as last month. it's the large business that has really lagged there. 32,000. when i look at it year over year i don't know if you have that chart next. oh you guys are so good in the back there. you can see there small business really putting to shame large business hiring. we're going to talk to mark zandi. let's see if he's there. we'll get to other issues.

mark, how are you this morning? >> i'm good. good to be with you. >> let's talk about this large business. any idea as to why -- it's good small business hiring is done so well but why is large business hiring lagging behind? >> i think the most important thing is they're more globally oriented. that serves them well early in the economy. now with the weaker global economy, that's starting to bite into their growth. small companies, they're more tied into the construction cycle. housing, commercial real estate. a lot of small sub subcontractors and. that's helping the small businesses out. >> you know it's interesting you say that. i did look on the data and where the large businesses are, it's interesting. i think you're picking up the surge in housing data.

it couldn't come at a better time. >> yeah. that's key. i think we've got a ways to run there. even with the pickup in construction single multifamily constructions say running around 1.1 million units. just a typical one, we need something closer to 1.7 million. so i think we're going to get more housing construction over the next several years. as we can see, that running really deep into the labor market. you know, construction jobs manufacturing, transportation, distribution. it goes on and on. the housing will be the key next year. >> let's talk about growth on the rapid update which is calculated there. a decent stap back but when you average out the two quarters

we're going to do two which is below the track. >> we're in a 3% gdp growth economy -- >> wait, wait. joe, did you hear that. he thinks we're in 3%. >> okay. this is zandi. >> so wait. wait. let me -- it's in the numbers. >> go ahead. >> fair enough. i have been wrong. year over year in e the first quarter -- actually i've been down but you would never know it. i would never let you know. 3% growth with q1 that's even with the weak number. 3% year over year. in q2 as you pointed out, it's tracking 3%. so i think tracking from the data, the ups and downs of data we are in a 3% growth economy. that would be consistent with

250,000 jobs. >> the jobs data has been strong. and that seems to be better data than we've had before than the gdp data for sure. we know the dea is going to restate the first quarter and change how it calculates it. >> you know steve, and this is all happening with energy shedding each month. even with that we're still getting 250 a month. >> we have to go mark. thank you. >> have you seen what santelli does sometimes? and he never takes a shot back. he's very comfortable in his own. he has no ego. either that or how much did you sell your company to -- for? i think that's what -- really. seriously. you had a company and sold it to moody's analytics, right? >> i did. >> for how much? >> steve knows. that's none of your business but steve does know.

i got a jaguar. so it felt good. >> he did. but i do want to say something. you mentioned rick. positive and negative electrons will collide in chicago tomorrow. i will be at chicago tomorrow together for the jobs report. well, i'm going to chicago for the fare thee well show for the grateful dead. and cover reports on the business impact. >> right. >> quite extensive. going to be one of the biggest concerts ever. >> you're going to all three, right? >> i have to. it's part of my job. >> he's working. >> is there any way you won't end up totally stoned? >> absolutely i won't be. >> he's working. >> i won't be i'm working. >> just from being there. >> the contact high. it's possible. >> possible? second hand smoke. >> joe, i'm trying to save my

career reputation right now. would you mind? because you said it right? anyway. >> a lot of the things you say on the show makes me think you're -- >> all right. when we come back -- steve, thank you. we'll see you from there. >> i'm excited. when we come back we'll talk about additional comments. and also go behind the wheel. are the big three still selling at a record breaking pace? stick around to find out.

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we got some breaking news out of puerto rico right now. kate kelly joins us now. she is in san juan. good morning to you. >> good morning, andrew. some interesting news here that looks like at least a partial resolution to puerto rico's debt impasse. one big borrower in the mix prepa which is the electric power authority has reached a deal i understand to pay some $416 million that it owes to creditors. this will be made with the assistance of some bond insurers that are partially on the hook if the payment were to be made. the deal is expected to be announced very soon. don't have an exact time. but we expect it this morning. one other key element here is a forbearance agreement that may allow prepa to reach more terms

has been extended from today to now september 15th. with a few contingencies from what i understand. some progress here. for the big picture, remember puerto rican issuers owe -- this is $400 million. another $600 million in general obligation bonds is expected to be paid as well per local press and agency statements. so about half of that $2 billion seems to be on track to being paid. the other half not yet clear. >> well we had the market already up. i didn't believe it but some people said puerto rico is as important as greece. i didn't believe it but this is starting to look better this could just add to the good feelings, kate. thank you. >> before we feel too great about things -- >> it's closer to home but it risks -- it's closer to home and i think that's why it feels important. >> definitely does. and a lot of mutual fund holders here also potentially exposed to this. very quickly a couple of

comments out of europe. schaeuble saying a monetary union in which a partner says i will not do anything and there's not trust, it cannot work. he's making comments again right now. also pointed out that for the historical record he wanted to make sure they knew that they went and head and said pompendrao can have his too. >> he talks tough. and he gives enough room to then have something -- >> he's got them on the run too. coming up june auto sales on the agenda. the numbers to watch next. plus the second half playbook for financials. is a rebound in the cards? we'll go inside the numbers. plus squawk laureate joins us to talk markets and the jobs report.

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♪ i don't know how clearly

we're going to see right now, but welcome back to "squawk box." here's a look at some stocks to watch. here's what's happening. chubb shares they are surging this morning on news the insurance company is being acquired by ace limited. this is hank greenberg's son in the $28.3 billion cash and stock deal worth just a little over $124 per share for that deal. also constellation brands beat estimates in the split spirits maker also raising its full-year forecast for its beer business. also a mixed quarter for general mills. revenue fell short as a stronger dollar impacted sales. cereal maker did see stronger profit margins and higher prices. over to you. >> thank you very much. the nation's auto makers posting monthly sales today. phil lebeau joins us with a look from behind the wheel. what'd you see? >> we just got the numbers in from chrysler. the expectation was an increase of 9.2% in the month of june. coming in a little shy of that with an increase of 8%.

cars up 17% for chrysler last month. trucks up 6%. but here's the one that a lot of people are focused on. jeep up 25% last month. this is the hottest brand going in the u.s. right now. again, jeep sales up 25%. let's quickly take a look at what the estimate is according to edmonds.com for the rest of the major automakers. and don't focus as much on whether or not they're up a couple of percent or down a couple of percent. what you want to focus on is at the end of the day the sales pace for the entire industry and it's expected to be strong. in fact, last month we saw a continuation of people coming into the showroom as they have been in may and also in the spring months with the exception of april where it dipped a little bit. overall the expectation is for a sales pace between $17.2 million and $17.4 million. it's the drivers here strong economy, low unemployment. it continues to bring people in saying i want to buy a new car or truck.

the overall sales pace right now is well above where we were last year. we continue to see this industry rebound from when it bottomed out in 2009. that's $16.5 million all the way on the right for last year. forget about that. the industry is going to blow well past that this year. it's somewhere in the range of $17.1 million to $17.3 million. that's the expectation. and as you look at shares of chrysler and gm, we're going to get to gm and ford numbers in the next hour or so. but again, chrysler up 8% last month. a little below expectations. back to you. >> all right, thank you. phil lebeau. kayla's here. and i have to take it back. i am excited. excited about talking about the financials. >> you always like talking about the financials. but you seem especially excited today. >> i'm not kidding. i'm not being sarcastic or facetious. if you can figure out what the financials are going to be you

can figure out rates, europe. it depends on all these things. are they going to do well? >> that is what history tells us. we crunched a few numbers to that effect that will hopefully help you be able to play them. interestingly the two major catalysts for the financials come from washington. and the first is the fate of a banking reform bill put forth last month by richard shelby. it lost steam after about a month because they wanted sweeping changes. senator sherrod brown even called it a one sided industry wish list. what could survive from the bill is this ask to raise the threshold for systemic banks. it's at $50 billion in assets. the bill seeks $500 billion. if the bill survives in any form, that gets moved and it could remove costly regulations for small and mid sized banks. with higher rates, of course, banks with charge more for loans. that's the most basic way they'll be affected.

and regionals could benefit most because they get a portion from these traditional loans. a lot of investors are playing that angle. many do it through an etf. so you don't b end up overexposed to certain issues. but rising rates, too, is what analysts recommend buying. their top picks are citigroup and we show that wells fargo historically performances the best in the six months before and the six months after a first fed rate hike. >> at this point we're figuring it's really coming this fed rate rise. >> banks have been hoping for it. people who have been buying a basket of these stocks will benefit because they have risen a little bit alongside the overall market. one of the best performs so far. they have this expectation it will come in the near term.

>> even before bank of america bought merrill lynch? or is it not -- >> i think wells has had the most traditional model for the longest time. >> kayla, thank you. >> thanks. >> so even without -- you know been waiting awhile for a steeper yield curve. even without that? >> well, the fear, though is what if the fed raises rates and the yield curve doesn't steepen? people get freaked out. they end up buying treasuries in this trade you can't really predict. and what if the yield curve ends up flattening? i guess that's the worst case scenario. >> usually you don't hear that economic expansions die of old age, but he said that earlier. he said do they? do they die of old age? they don't. there has to be a reason why. right? it's not like 24 hours you're in a boom and then 24 hours you're in a -- it's not like night fall. >> we have guests that talk about just that. kayla, thank you.

>> thank you. >> i thought you meant kayla. >> she can too. but we will ask bob shiller. stay here. we have asked squawk laureate robert shiller. he says there could be a bubble that is brewing on wall street. he's also a little concerned about the housing and income front. bob shiller is a professor of economics at yale university. he is cofounder of the k. shiller index. he's also the author of "irrational exuberance." thanks for being here today. >> my pleasure. >> what sit you see happening in stocks that concerns you at this point? >> well, the valuation is high. my index which is price divided by ten-year average earnings is higher than it's been except 1929, 2000 and 2007. so the other thing is the public. i do expectation survey. the public worries that the

stock is overpriced. so there's confidence in the level of the market is at its lowest since 2000. >> people think that now had is the time to jump in. it's a time everyone is thinking that it's the precursor of a real crash. >> that's a bubble. when people think it's time to jump in even though it's overpriced. ch that's what we saw in the late 1990s leading up to the enormous dotcom or i call it thelythe ly millennium bubble. >> i can understand why valuations may run higher because people again point to there is no alternative. if not stocks where do you go? and i wonder how long that can last. >> i don't know. i suspect it's not over. you know that's the classic story of bubbles.

people keep pointing out the bubble and years go by and then they're totally discredited. that's when the bubble finally bursts. >> so in terms of what you would be doing with your money right now, you would not be buying stocks? >> no, i am in the stock market. i think you ought to be careful, though not to overexpose to that. also i think the u.s. is one of the highest stock markets in the world. so i think this is a good time. some people are not very diversified internationally. this is a good time to rethink that. >> in terms of what you see with housing, there have been numbers that concerned you recently, too, correct? >> well i think that yeah the housing market has had diminishing momentum. it matters many for for the housing market than for other markets. we saw a bottoming out of the housing market in most u.s. cities around 2012.

then we saw really rapid includes in home prices. and now that's starting to fade. it's weakening. now it's down to just kind of average performance. we saw with our s&p k. shiller indices -- well for our 20-city index at 4.9% increase over the last year. that's not exciting. it doesn't excite most people. i don't think this is a flaming bubble. >> and you think there's risk for further decline there? >> there's always risk of decline. i think the problem is that home prices have mean reverting for the last over a hundred years. and we're on a relevantly high level. and so it seems that construction has been very low ever since the financial crisis. i heard someone say earlier that bubbles -- that booms don't die

of old age. well, there is some factor that does -- what happens in a boom is a lot of adding to inventories or construction. then there's too much. alternatively when there's a bust there isn't enough construction or new cars produced and things like that. so there's a lower inventory of those things. that's where we are now. where we have been. it's been starting to drive things up. but now, you know construction is still not very high. so i think this can -- could possibly still go for years still where we'll see moderate increases in real home prices. >> professor shiller, i want to thank you for joining us today. >> my pleasure becky. when we return will investors continue to like facebook? is twitter ready to start trending again? the stocks to watch in the second half. maybe we'll talk about taking a

bite out of apple or any other overused puns. but we'll be right back. never settle for verizon's overpriced gimmicks. try the un-carrier risk-free for 14 days you'll love it, or we'll pay for you to go back.

it's been a rough first half for twitter and linkedin but there could be bright spots ahead for social stocks. josh lipton has more on the social story. josh? >> andrew there's no better place to start than twitter. today marks dick costolo's last day as ceo. jack dorsey now steps in as

interim chief and he has his work cut out for him. twitter stock down some 12% over the last year. and one big concern for the street and investors, user growth. >> you need to expand the base outside that core 300 million users behind the news junkies, get to more of the general mass populous. something to get your mom, quote unquote, to join the platform. >> peck says new products could give the stock a lift. but he's on the sidelines now with a neutral rating. think twitter has problems? then take a look at linkedin. that stock is down 20% from its high and offered weak guidance on its last earnings call due in part to the acquisition. some do say linkedin's value proposition remains intact for users and customers and the stock does typically perform well in the second half. but it's facebook that is flying

up now 10% this year. and expected to move higher especially due to the ramp of advertising and instagram. facebook remains one of the top five tech holdings among funds. andrew, back to you. >> thank you, josh. appreciate it. see you soon. when we come back this morning, jim cramer's take on the news out of greece puerto rico, and ace buying chubb in the insurance space. plus we want to hear from you. what story is grabbing your attention this morning? tweet it to us @squawkcnbc. you can use the #keepsquawking. we'll share the best in four minutes. hurry up.

welcome back to "squawk box" this morning. starbucks removed from the conviction buy list at goldman sachs. the firm maintaining its buy recommendation. shares have been on a run. you want to make a list about the conviction list? >> goldman sachs is so powerful they don't even care they have something called a conviction list. >> i knew you had a conviction joke to be made. >> they don't care they're so powerful. >> goldman added restaurant operator to its conviction buy

list. convicting them too. convicting people, unconvicting people. they have a lot of power. >> uh-oh. this guy used to be there. he might be mad. let's get down to the new york stock exchange. just kidding, jim you wouldn't have a conviction buy list if you were a wall street firm after -- >> no. it says you don't have a lot of conviction about the rest the stuff. it's like here don't have conviction about these but these we do. >> do you expect this rally to fade? what would you do today, jim? >> i think that it's the beginning of a month that you often see some money coming in but we have a big number tomorrow. we don't know what's going to happen with the referendum. i don't think it's a great time to pile into the market. it looks like people want to. i think if you have some stocks that are up big, maybe take some profits. it's not a bad moment. the greeks want to come to the table but they don't have the money. >> no, they don't.

my big picture question today, and i really did used to hope that they would leave the euro. i'm not sure why because i guess i didn't think the euro experiment was possible with all the different economies and one currency and without a central fiscal authority and stuff but now i think they have to stay but i wonder whether that -- is that good long term for the euro that the really weak players get to stay in this hodgepodge of economies. >> i think euro would be stronger without greece. i think you would be left with countries with discipline. it would. the euro would go up big against the dollar. >> once again, we're sort of trading in long term stability to make sure nothing happens near term. >> they need to cut this debt by half to two-thirds because greece can't pay. if greece had a couple billion, it would be their problem. it's 300 billion it's the eu. i think they have to start going -- there was a great piece

today about who's really at fault here and where did the money go? it didn't go to greece. it went to the private banks. they've seen little. >> but greece got the money originally from the private banks. it is a lot of shuffling taking place. i don't know how they fake it. >> someone has to take a hit. right now, there are no tax receipts coming in at all at greece because there's nothing coming in at all. there's no work getting done. i thought the german reaction let's wait until the referendum is not what you wanted. if this came out and the markets went nuts, i think it was another piece in this game. >> i would agree with that. we don't know the ending. we know there's going to be a lot more theater to come. >> exactly right. no conviction buy. >> no conviction buy on anything else impemtexcept for socks. >> blueman, that's the only thing i feel good about.

>> we have a bunch of recommendations but we're just saying them. >> it's time to drink beer. >> always a good time for those. >> when we come back this morning, we've been asking you to send us the stories that you're buzzing about thing and apparently our viewers are hungry because we're getting tweets about food. we're going to talk possible new burger king menu items right after this.

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future of phone and the phones are free. comcast business. built for business. all right. welcome back everybody. this morning we asked you to send us the stories that have you buzzing. now it's time for us to share some of the responses. we've been getting some tweets about burger king potentially launching veggie burgers. one tweet says as a vegetarian, i'm reluctant to follow. is it high quality in i don't trust it. here's what we do know. the fast food chain already sells six meatless burgers in india. in india they say they're considering them in other markets. a spicy bean royal and a

vegetarian veggie cheese melt. there is an option in the u.s. but it's made by another company. >> nice. eat about six of those and then sit on the set with us. that's a great idea. she doesn't trust burger king. have you seen the creepy king? you trust someone with a logo like that? >> the whopper is awesome. >> we are not on sync on anything. >> french fries from mcdonald's, best in the world. >> it's horrible. it's got that faux burnt taste, and i got -- they spray that on. and remember. >> i'm a sucker. it tastes good. >> they spray that maybe they don't. i'm going to get sued but that's not a real flame broiled -- >> i think it is. >> no. i think -- >> carcinogens right there.

we have another buzz story this morning. chinese state run made media out with a warning reporting about one-third of the great wall has now been destroyed by vandalism. some of the stones are even being sold on the black market. the government is working on conservation elements. i'm very happy to walk that wall. >> me too but you can see it from space it's so big. >> think about the space even to fix it. i mean, given how long it is to police it to make sure they're not stealing the blocks. >> a third of it is. a big win for u.s. women's soccer. the team defeating germany 2-0. the u.s. women are now headed to their second straight world up final. i remember watching the last one closely and it was so close, and weren't they ahead and they came back and lost? it was heart breaking.

they will play the winner of today's japan england semi final and it will be on sunday. >> tonight is the japan, england semi final. sunday is the big bottles of electric nicotine. the first action agency is proposing changes.

the fda cited concern over e cigarettes that related to nicotine poisonings in young children. i'm glad they're doing this but i think long term there's going to be a lot more going on with electronic cigarettes. >> addicts. some people say stop the nicotine addiction. what does it do for you? >> have a wonderful weekend, everybody. that does it for us. right now it's time for "squawk on the street." good morning. we are live from the new york stock exchange. let's give you a look at futures, and they are looking up. looking up. why? well, you know why. something on greece and who knows. hope springs eternal. all right. take a look at the ten-year note yield. it gives us a sense as to where things are moving. we are up. off the low