and spreading those pests all around. it's tuesday, may 24th, 2016, and "squawk box" begins right now. ♪ hot town summer if the city back of knew neck getting dirt and gritty doesn't seem to be a shadow in the city ♪ >> announcer: live from new york where business never sleeps this is "squawk box." good morning, welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernin and andrew ross sorkin. we did see a selloff and things ended relatively flat. this is slight declines for averages. the futures are indicated higher with dow futures up by 58 points. s&p up by 7, nasdaq up by 14. overnight in asia, you'll see that the nikkei was down by almost 1%. that was a decline of 155 points. hang seng was slightly positive. the shanghai was down by 0.75%.

check out early trade, you'll see green arrows. major gainers looks like france up 1.3%. italy is also up by 1.5%. take a look at crude oil prices this morning, things down by 14 cents 47. 94. >> fed speak holding attention. patrick harker joined the chorus. he argued that a june data rate height. who? that's who he is, patrick harker. the fed meets june 14th and 15th. harker not a voting fmoc member this year. so whether what he says matters, it's a bit of debate. >> do they care about the consensus around the taken. >> whoa, that is that's

marine-like. >> yeah. tight. >> i got sheared. >> whoo! >> summer thing. >> acceexcept it rains every da. >> no, it doesn't. >> saturday and sunday. >> depending on which forecast you're looking at. >> last week? >> yeah. >> it's a little title. >> did dealing with these things, we'll deal with it. things could be worse. hair loss is not the end of the world. >> you go short -- >> no, i'm just trying to figure out the right system. >> that is the only issue i'm not dealing with at this point. >> yeah. this is like you know what, we should focus -- who's the guy with the hair system now? >> guy sperling. >> we're like this. there's a guy that --

>> i'm not only the president, i'm also a client. >> this has been a while. not as front and center. the ads on tv are still -- totally bald guys on the before. and they totally have hair afterwards. >> and they're swimming. >> it's real hair. >> i don't think it is, it's systems, it's anchoring part of the stuff, there's one hair left, they average tenchor it d. >> they glue it down. >> i'm not sure. toyota recalling 1.6 million u.s. vehicles for takata air bags that could rupture that would bring this to 4.7 million vehicles. recalls from other automakers are expected. there's a website. if you do own an automobile, you should check it out. also.

we continue to follow the redstone drama at viacom. he may be targeting the board now. paper says that redstone is looks for voyeurs who could figure out if the board has been mislead. this is all after a board member removed from the trust to figure out the media empire in view of his death. shares of viacom they're trading marginally well. toll brothers earned 51 cents a share. five cents better than expected. $1 million in line with forecasts. sony out with the profit margin coming in short of estimates. that is partly because they had to halt production at some of its image plants last month

because of earthquake damage. iphone, a large part of that business. "wall street journal" is reporting farrington capital is planning to launch a fight for board seats at chico's. they're going to do that by nominating two directors. also, facebook is making changes in response to allegations of political bias. the social network will be revamping its trending topics featured to minimize the potential effects of individual influence. the company said the probe did not find any evidence of favoritism in favor of stories. this comes after ceo mark zuckerberg met last week with conservatives in order to smooth things over. >> they compared this to stories running in "the new york times" and "the washington post," they found they were running the same stories with absolutely no bias. >> i think that's why they're saying the individual impact is going to be -- >> they found they're are youing the same stories as mainstream

media. in no way did it ever favor one side or the other. >> did you catch other sites like drudge reports and others were excluded in strange ways? >> yeah. but did you actually see the physical documents? >> no. >> there's a drudge -- facebook has this whole thing, to actually go through which publications and how they did it. >> i have no doubt. >> just on the algorithm itself, not on the individual? >> right. i are no doubt -- it wouldn't be a lot for me to -- >> this might explain why you don't spend too much time on facebook? >> exactly right. i saw something the other day about facebook, it was a president bush that people were having because of it. i'm like, you know -- i have other problems. >> the time spent on facebooks i never notice the trending topics. >> you're not a big facebook -- >> i'm not huge. when i do, i check out to see

friends and what they've been up to pipe don't care what the news is. snapchat reportedly valid at $22 billion. they're looking to raise $200 million. the last funding valued snapchat at $16 billion. speaking of snapchat, we have an update on the two climbers that we spoke with last week. these are the two gentlemen snapchating their attempt to reach the summit of mt. everest. the one reached overnight. the other had to turn back because of extreme cold. both are now on their way down the mountain. it's been a deadly season on the world's highest peak, nearly 400 people have reached the summit. six died just last week. three of them because of altitude sickness. >> i've been snapping, by the way. >> you've been snapchating? >> yeah. >> i just started getting into the last week and a half.

>> you don't snapchat to a specific person, you just nebulously -- >> no, you can do it two ways. i can snap you to send you a little thing. >> don't. >> i could do that. >> but don't. >> you want to storifstorify, t it part of a story. >> like a time line. >> anybody that follows you -- >> if they were for follow me on snapchat, i'm so new to it. >> how many followers do you have? >> dozens. >> do you? >> yes. let's talk markets this morning, we've got a lot going on. >> it's political season, we have a very loyal -- the best viewers. >> the best viewers. >> most well heal eed smartest viewers. as far as business needs go.

so, splitting up a small problem, we've got by far the largest percentage of that. >> i would not dissuade you. and make a lot of money, too. >> absolutely. a lost money. and dow jones up by 48 points. nasdaq up 13.5 points. and s&p looking higherer 6 points higher. let's tell you mats going on with the ten-year right now. 1.839. i've got to tell you guys, i looked at an apartment the other day. do you know you can get a jumbo mortgage these days for 3%? do you believe -- >> 3% down? >> not 3% down. >> oh, 3% interest great. >> yeah, 3% interest rate which is kind of crazy. >> okay. >> i just happened to see something. oh, this is really interesting maybe we should do this. we're not going to get it

because i think it's going to go for way over the asked -- little poor me can't do it. >> okay. what is the ask? what is the ask? >> i tried looking into how much the mortgage would be. >> i want to know what the ask is? because i wouldn't -- unless i was thinking about it, i wouldn't even go look. so you must some thought about it. >> no, no, i was told about the place. we happened to be near this. we looked. the wheels are in your head, how much is the mortgage cost. >> will you answer one question? >> probably not. what is the question? >> is it eight figures or below eight figures? >> oh, come on. >> below eight figures. >> sorkin. he's mr. new york. barely 9.9. >> problem is under eight figures all you do is get a closet. >> i look at places in new york. i see pictures, and i look at

them and i go, you know, it's a nice looking room. like $11 million. or something like. seems okay. it's soho. it's like got, you know, a dining room table. >> this is the problem. this is the problem. this is the problem. >> well, you weren't doing this for an investment? >> no i thought this could be interesting. what was interesting to me that you could get a mortgage that low. 3.25% is what most of them are going for. >> i just refi'ed at 3%. 2.99. >> 30 years? >> 15 years. >> to go one other way, would robert frank be interested in doing a report on this place you're looking at? >> if you did a renovation toilet. >> -- to it. >> if you did a renovation to it. >> would you be buying it from

one guy who is the real estate guy? >> for dolly. >> no, this was not -- we got to talk real estate markets. >> adele is coming on. >> we can ask him -- i think residential real estate in new york might be going down this might not be the best time. jeffrey salinger is with us. he said many investors think investment is in a bubble. and senior market analyst at voyage analysts. jeff, i'm going to start with you, this is a note with the title patience young grasshopper. what are you trying to say, this is a series of e-mails that were sent to you? >> well, we've been exercising the rarest commodity on wall street which is patience. we shoved a lot of chips out on the table. actually, i was on your show

friday before the market bottomed. becky asked me what the market was saying, and the said we're going to bottom the next week. we've had a pretty good run but when the s&p failed to trade out 00 to an all-time high like its brethren five or six weeks our mold had a polarity flip. times was about right but the projection on the model was 1990 to 2000. we've done it in terms of time but not price. >> so we're exercising patience here. >> patience means sitting on your mans versus what? what are you doing? >> exactly right. sitting on our hands. >> karen, are you sitting on your hands? >> no, i think there's opportunities in the market. that could be second quarter when we get the earnings reports. it could be third quarter but it

will happen. in the meantime, you don't know when the market is going to run. never sit on my hands. always have money to work. and i think the market is definitely areas where there's opportunities. >> how much are you guys thinking about the fed? how much is that a cloud or overhang for everything? or are you trying to see past that at this point, or can you see past that? >> i think people are thinking too much about the felds and trying to read tea leaves. the fed is not the wizard of oz. they're not going to change everything. i think the fed wants to raise interest rates. i don't think they probably will in june. we've seen this game before. we saw that last september. the market was ready, and then they didn't raise rates. so, i think we could see a rate raise this year, but i don't think it's june. >> i want to ask you guys both about this. if you saw this in "the wall street journal," oil trips hedge fund star. this is a particular about carl

bass who has been a guest on our show. but oil for the investment community, where are you guys on oil, both of you? jeff? >> our energy team out in houston made the negative call with crude oil above 100. two months ago i talked to marshal adkins, the head of that business unit, he said his model, pricing model was more bullish than it had been in four years and that was with oil under $30 a barrel. he called the top. he call the bottom. we think the oil trade is higher. >> we're going to leave the conversation there. we'll thank both of you, jeff and karyn, thanks again. coming up, zika, the threat is rising. the presence of the virus has been detected in lap tests for more than 250 women pregnant in the u.s. and mosquito season will make things even worse.

we're going to cut that heavy product from the american health policy institute and tell you which bug sprays are most effective in repelling mosquitos. show me movies with romance.

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reported cases of zika span more than 60 countries now and cases in the u.s. in both the states and characters have capped 1300. the last line of defense for most people is bug spray. "consumer reports" has an update on which repellents perform well and which ones don't. i never thought of you, meg, as a "consumer reports"-type reporter. but it matters now. >> yes, it does. >> people worry about zika agenas the months get warmer. you can see the distribution fairly far north. right now, it's important to note we do have not mosquito borne transmission of mosquitos in the united states. "consumer reports" updated its list of the best bug sprays to protect you from specifically the 80s mosquito.

they also look at the mosquito that carries west nile and we have that here in new york as well. they all right put out a report on bug sprays. what they really looked at are natural bug sprays. a lot of people are interested particularly pregnant women have a lot more to be concerned about when it comes to zika. there is one mosquito natural repellent that gave seven or eight hours. it's this one, lemon and eucalyptus. i went to rei yesterday and got it for myself. it actually smelling pretty good. they had people put their arms in mosquitos and count the number of mosquitos. this is not for kids 3 years old. apparently it can cause skin rash. >> is that an issue for pregnant women, though? >> it's not supposed to. you should probe test it out on a small area of skin.

that's one thing they do say. in terms. best performers in the test, sawyer, a chemical. is this not deet either. this is deet. this is the second best performing. >> that's amazing deet performs less well than pacaretin. deet has been around since the mid-'50s. precaretin performed well. sawyer, and ben's and repel with eucalyptus. if you want to make this investable, the third one. >> can i ask a question, you showed a map, there are certain states most of which are red a

handful are green. what does the green represent? >> those are travel assisted cases in the u.s. the red states are states that travelers have gone having zika. >> this is the only state in america where there has not been a case of a traveling zika? >> that's right. it's more that travelers are returning less frequently from states with zika. >> it could look like the election map. >> which side? >> which side? >> red states versus -- >> which would be yours of all time. >> red is one of my favorite colors. >> thank you. >> thank you. health officials are counting on government funding to help contain the spread of zika. joining us right now is american health policy and former hhs secretary tubby troy. thank you for being here.

obviously, meg laid out a lot of concerns. this is manage that's starting to pop up in america particularly for someone who is pregnant for the likelihood of having mosquito borne illnesses. >> 3% of the population might be in area where is you could have this eides type mosquito. >> what does that mean should i not be going out of the house? >> well, actually, the reason the information is different is because we don't really know. this is somewhat uncharted waters. we don't know exactly where it's going to land. there are certainly indications in the u.s., and we already have

trial-related cases in the u.s. as we discussed. but if you are in an area and you do find that there are zika bearing mosquitos in that area, you should definitely wear repellant. i was recently in the dominican republic can with my kids and we all wore zika repealing bracelets. it's not that hard to do. it's something that people should undertake. >> i guess the question becomes are we going to know if it's a dangerous area or not? how set up are we, across the united states, to snow instantaneously that are there are mosquitos transmitting zika? are we going to hear about it or just find out that there are babies born with microcephaly? >> we certainly want to know before. in case, obviously, if somebody is pregnant, then also a disease that is sexually transmiss only for males for up to six months.

these are some issues we're looking at cdc is looking into this, making sure they have the information available to get out to people and they do haven aactive website where they share this information. >> how confident are you if there were mosquitos transmitting zika, how quickly would we find out about it? i'm assuming i'm living in a safe place, how quickly would we find out if there were mosquitos transmitting it? >> i would know better if i was ainside government. but generally, my confidence level in the officials at the cdc is pretty high. >> i want to ask you about the funding battle. the senate passed a bill, president obama asked for $1.9 billion. and when we have these emergency outbreak type situations do you think that's ma we need to do

here, should we give more money to barta or other existing agencies? how do you avoid this happening to get congress agree on something every time you have to fund an emergency situation? >> i think there's two things going on. first of all when there is an emergency situation, we do need some congressional funding. i agree we have concerns that have prefunding. things like project bio shield that is supposed to create counter measures in advance. i think one of the things that ron claman is getting at is this coordination where it's at. we need better coordination with somebody who is in charge that the government can look to. at one point, we were talking about flu, we can asked if this happens who should be in charge, i looked at the chairman of homeland security and the other and said which is in charge, and there was a lack of clarity at that point.

obviously there's funding that happens in advance for preparation things but when there is a crisis there needs to be a better mechanism. the house and the senate and white house really aren't that far apart. there are a couple issues there. obviously, the white house wants the larger amount. the senate is looking at a bipartisan compromise which sounds good to me. the other issues related in addition to the funding is the issue of how open ended the funding. and do you take money from somewhere else to pay for this. >> obviously, still an ongoing issue. we appreciate your time today. thank you for joining us. >> thanks for having me. >> fascinating. i don't know about getting the bracelet. >> i saw those at rei yesterday. >> are those effective. >> "consumer reports" can't look at the bracelet. i think it would be more of an augmented thing rather than the only thing.

coming up, safety concerns for america's muscle cars. phil lebeau has the details on the crash results. we're doing "consumer reports" across the board. as you head to the break, take a look at the s&p's winners and losers.

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welcome back to "squawk box" here on cnbc. first in business worldwide. take a look at the futures this morning. they're looking like we could have some upside potential if things stay where they are. the dow future up by close to 50 points. s&p by 6. nasdaq up by 14. the market slightly down from yesterday. almost flat. time for "executive edge" we will start with the big three. american muscle cars. and we've done a lot of muscle car -- not "we," that's a royal we. lebeau, i think we're similar on this. if you do have your choice, lebeau, go back in time, i'm wondering what muscle -- you love muscle cars. i do, too. >> yeah. i was probably partial to the pontiac grand am, the barracuda. you can't go wrong with any of the classics. >> remember the 442.

the muscle car. >> we were just talking about, you probably put a case of coors beer in the back sb. >> we couldn't get coors in ohio. >> by the time i got to boulder, i wanted a prius, you know what i mean? >> joe i used to live in boulder, go easy now. >> crash tests aren't something you really -- i mean, if it's really loud -- >> right. that's why this is interesting because the insurance institute has not done a series of crash tests on muscle cars. most people sit there and say how many are out there. there are not a lot out there but they've become more popular. that's why, when you look at the series of crash tests done by the insurance institute for highway safety. it's relevant box of the growing popularity. the fact that they've never put these through the most recent crash tests. one of them is the small front overlap. that's basically the front corner of the car hitting another car or say pole at 40

miles an hour. it's one of the most common and deadly accidents. the dmcamaro got a good rating. mustang came in lower than acceptable. and there you see the dodge at a marginal rating. here's the held of the institute talking about the test. >> we are concerned about the marginal performance of the challenger, which in the small overlap frontal crash test which is coupled with only an acceptable rating for roof strength. and our concern there is, these kinds of vehicles tend to be involved in single vehicle crashes. and single vehicle crashes with rollover. >> and that's because of the horsepower involved with the vehicles. all of them are well over 500 horsepower. i should point out. we reached out to dodge and a statement from its parent corporate said no single test determines overall vehicle safety.

fca u.s. vehicles meet or exceed all applicable government safety requirements. you had the big three, all bringing these back during the recession saying we're going to start rolling these out in '08 and '09. they didn't have one like the challenger. look at the sales since 2009. these have become very popular especially with older buyers who are saying i've got a little extra income. i'm going to spend some of that money, therefore, i'm going to spend more to get that horsepower and to get the performance. that's why this test is relevant. remember, the number one determining factor in terms of people not surviving a crash in addition to how the vehicle is built is speed. we node that speed kills. you've got greater horsepower with the vehicles. take a look at shares of the big three. same story we've been talking about. despite the popularity of these vehicles you're not seeing any love for these. >> i was thinking about the old ones, anyway. i remember when -- it was like what is this thing, what's it called a seat belt?

i remember some of these cars didn't have seat belts. >> right. >> would a 1964 pontiac gto, i mean, you're dead on a fender bender i guess? >> not just the g ito. there aren't many vehicles from 1964 that would hold up in crash tests. by the way, all of these vehicles do meet federal safety standards with the insurance institute saying given the speed, the prospencety if we have 500 horsepower to open it up on the highway, you want to be aarwa of what these cars doo some it comes to crash tests. >> chevelle. remember the chevy chevelle. like a blue one. >> oh, yeah. you liked the barracuda? >> yeah, i liked all of those. that's when dodge really had -- and chrysler had some great muscle cars. remember? >> uh-huh. >> all right, phil. i had a formula 400 that was my

one -- firebird. i told this story many times. i sold it to get a four-cylinder orange mustang with one of those crappy hatches. one of the worst years for a mustang, a hatchback. it was 1978, and i told my dad -- >> those are some dark years for mustang fans. >> did he laugh at you? >> he goes -- 1978. it was after the oil crisis. and i was sure. i can't believe i did that. anyway, thank you, thanks, phil. let's give you an update on the world of investment banking. it's been a tough year for investment banks. falling 25%, that's just in the first quarter. what's the worst q1 performance since the financial crisis. the steep deline in oil prices, near zero interest ratings and concerns about china's economy kept investors out of the

financial crisis. when we come back, brazil, suspended during an impeachment hear. and a live report from a former brazilian diplomat as we head there. and a quick check at what's happening on the markets right now with green degrees the board. back in a moment. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.

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welcome back to "squawk box" this morning. it's time for "squawk planner." a couple things on the agenda pip april home sales coming out at 10:00 a.m. earnings central coming up, auto zone, best buy reporting. best buy doesn't live up to name lately. we'll see if they do. we'll hear from hp enterprise. and then a key meeting on debt release. on broader discussion of the european economy. that is today's "squawk

planner." brazil scandal plagued the imposed president. faces charges the country is racked by political turmoil and ahead of the olympic games. fears growing about the zika virus. let's take a look at what latin america's largest economic power can do. let's bring in the brazilian economist marcus trajilo. thank you for joining us. >> thank you for having me. good morning. >> a lot of stuff i learned preparing for this interview. the miracle that we thought was brazil is also i guess the economic system that produced some of that, is also the one bringing the current turbulence. i didn't realize how much of a state-owned economy brazil was. and attribute a lot of these

problems to that model? >> that is troy, brazil up to 2010 when the economy grew by 7.5%. a china-like growth. very impressive, percentages mostly driven forward by the performance of state-led corporations like petrobras. the appetite that china has more commodities which brazil presents competitive advantages helped a lot to fuel what we call the brazil mania at the end of the first decade. many of the residence why this miracle is being operated simply vanished from the radar screen. there was a lost fiscal irresponsibility. a lot of overspending. of course, brazil did not enact those urgent labor fiscal and social security reforms that would help it harmonize its conditions to compete internationally.

and now, when you add to that a picture of corruption and of incompetence that i think has been the mark of the first mark of dilma rousseff and all of way to mere being impeached at senate only a few weeks ago, this, of course, has driven a lot of interest away from brazil. sill central country when you talk about emerging markets in spite of all of the problems brazil is still the largest economy. it has to get back on track as soon as, get rid of its problems and resume growth because the whole region needs it. >> and you're optimistic. part of the current is what's happening with rousseff. i guess in your view, he's out one way or another, resigns or impeached. and then the party that comes in will have -- you know, they're

going to have to get more pro market, more free market and business friendly. and they have an opportunity to do this. this could be a silver lining to what's happening. >> it definitely could be, many of the reasons why brazil expanded from 2003 to 2010 were given the macro economic conditions that were implemented in the second half of the '90s. a period in which brazil said good-bye to hyper inflation and to foreign debt. but the reasons why brazil grew these past ten years, its focus on the domestic market, the fact that many of the state-owned companies were experiencing the supercycle of commodities. brazil had major discoveries in deep water, like we call in brazil, pre-sold oil. all of those reasons are not enough to lift brazil to a new let me. it has to be battery engagement

of the global economy. it has to expend the percentage of imports and exports and gdp. brazil has to enact those reforms that will allow it to compete more broadly in global markets. so there's a homework that brazilians have to do, unfortunately under dilma rousseff, that homework was not being done. the problem is the government that's now in power in brazil, many of the investigations that led into corruption in petrobras, the so-called operations, are still hating some of the members of the new government. yes, for example, there was a leak of a recording of a conversation involving the new government's minister of planning here. and he had to resign by the end of the day. so apparently, the political drama is still driving brazil's political cycles of 24 hours. and while brazil is a prisoner of that drama, it will be very

difficult to resume growth. >> glad yo reto read this, you the olympics are a great success that brazil will know how to do this. and the risk of zika at that time of year and that part of brazil is probably low. and chances for the olympics not being a good successor is zero. you put them at zero. we all want -- i think the world wants the olympics to be a big success. >> yes. no, absolutely. i think we have the recent example of the world of the fifa world cup that took place in brazil in 2014. and it was a major success. people felt welcome. brazilians are very warm and welcoming. foreigners. this is not going to take place in the entire country of brazil, the olympics, of course, takes place in the area of rio de janeiro. and it takes place in august. so it's a low-risk time. year as far as the zika virus is

concerned. rio is a low risk area. there's a drain controlling waters all across the facilities. i don't think this is a major issue. on the other hand if there's one thing brazilians do very well is to throw a party. and the olympics will be a time of great joy here. those who come to brazil will have a very good time. >> excellent. the time difference works for our viewership. you know, i'm selfishly thinking about most of these things are going to be live. and the platform of all the different stations and networks at nbc. this is going to be the best olympics in terms of coverage. marcos, thank you. i hope you're right about a lot of these things. when we come back, a new list of the world's largest hedge funds out this morning. we'll reveal the top names and tell you how they're performing and a tough year for hedge

funds. and later seli lilly holdin an analyst day in new york. and john lech spltletter is here. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

welcome back to "squawk box." the result of alpha's annual hedge fund 100 rankings, the worldest largest hedge funds are

out. kate kelly joins us with the details. >> reporter: the washout that may be hitting the hedge fund industry is not apparent in the alpha rankings yet. the worst that can be said about the biggest hitters is that the asset growth is slowing. like the gdp in china it can send a chill through the markets. bridgewater associates is the biggest company for the sixth year running saw assets raise to $104 billion, jpmorgan asset management, number 2 with $50 billion, that's a sharp dropoff lost $9 billion in assets year over year between 2014 and 2015. aqr capital management saw a modest gain whereas och-ziff saw a modest loss. overall there was a cumulative $1.66 trillion loss.

a better showing than funds tracked by hfr that reported while 7500 funds added capital year over year the industry lost assets during the first quarter of this year. that's a more recent set of numbers. $15 billion in losses, marking the biggest outflows since the depths of the financial crisis in 2009. we are seeing evidence of losses in the market and/or redempti s redemptions. there could be more to come. late yesterday we reported on paul tudor jones cutting fees in response perhaps to redemptions. >> the fees from 25% for performance. i was like, you are kidding. you were getting away with that before? >> the model was 2.5% for expenses. it moves to like 2.25 and 25. which is still higher. >> than the industry average. >> how do you think the year will end? >> obviously it depends a lot on

the markets. the crowded trades have become a huge problem. we saw evidence of that, i think, in the first-quarter outflows and in the results we've seen so far. flat is essentially what the industry is doing. they're up by a fraction of a percent through april. a lot of big firms have experienced losses. >> is it the model is broken or it's a cyclical issue? >> i think there are structural and idiosyncratic issues, not just cyclic ones. there are a prfroliferation of hohow thousands of hedge funds. the bigger ones perhaps do better but they have so much capital to deploy that they have a lack of nimbleness. they have so much money to put at work they have no choice at times to get into some of the more crowded names. when there is a big move to the downside it can be exacerbated

because of all the pressure to sell. based on sheer, you know, presence of other capital. so i think -- i think there are a couple different issues in addition to market volatility and unpredictability on central banks and so on. >> thank you. electronics retailer best buy set to report. plus, our guest host for the morning will be real estate tycoon sam zell. his take on politics and the economy straight ahead. ♪ the first stock index was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing.

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the race for the white house. the health of the housing market. and the pulse of the markets and your money. they're all front and center this morning with our special

guest host, real estate mogul sam zell. eli lilly sharing sitting near a 50 otherlow. the ceo john lechleiter meeting with analysts today. he'll talk to us about the pharma pipeline and. best buy reporting quarterly results. the numbers and the instant analysis straight ahead. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city. this is "squawk box." welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with rebecca quick and andrew ross sorkin. the futures at this hour are out firm. up 53 points for the dow, up almost 7 for the s&p and nearly 15 for the nasdaq. oil has been not going much for the session. $47.87. it's down less than a half a

percent. what's going on this morning making headlines. the head of security for tsa officially removed amid criticism of long lines at checkpoints. he has been replaced by his deputy. harker not a voting member. >> he is the alternate member, so if someone calls in sick he votes. >> he matters. janet is the only one who really matters. policy makers will be looking closely at the employment and inflation numbers that come out before the june 14th meeting. earnings out from electronics retailer best buy. earning 44 cents per share compared to estimates of 35 cents. revenue also beating estimates. you're looking at that stock up, looking to up higher by 3%

higher this morning. >> the sumner redstone drama. the they're looking for lawyers to figure out if the board has been misled by the ceo. after he and a board member were removed from a trust that will determine the fate of the redstone's media empire in event of his death and shares of viacom on a slow, sickening decline. up today 3%. facebook is making changes in response to allegations of political bias. the social network will revamp its trending topics feature to minimize effects of individual influence. the company said an internal probe did not find evidence of political favoritism. it all comes after ceo mark zuckerberg met last week with prominent conservatives to try to smooth things over.

>> shocking. in other tech news, snapchat reportedly valued at more than $22 billion. its latest financing round. tech crunch says the company is looking to raise about $200 million. last mar last. it's been a tough year for n. banks. new survey falling 25% in the first quarter. the worst q 1 performance since the financial crisis. the steep decline in oil prices and concerns about china's economy have kept investors out of financial markets. >> i did not know this. he was a big jeb bush guy and a huge romney guy. now donald trump has picked up this gentleman's support. new york jets owner woody johnson reportedly backing the

presumptive nominee. johnson, who was big with jeb bush's campaign and raised money in the past for john mccain, mitt romney and george w. bush, trump and johnson had a contentious relationship in the past, in january when the jets missed the nfl playoffs trump mocked the team. wasn't totally alone there, i don't think. and johnson on twitter. >> i think he personally called johnson a loser on twitter. >> saying if jeb bush's finance chairman had been with him he would have at least made the playoffs. >> the playoffs? >> i don't know. maybe. >> maybe. our guest host this morning is legendary real estate atitan sam zell. he has earned the nickname the grave dancer for making money when all others were losing. he has also been making calls on the stock market. first predicting stocks could be in a bubble in 2013. now he's back sounding the alarm that a correction in the markets

could be on the horizon. sam, thank you for being here today. great to see you. >> my pleasure. >> you have concerned about stock market prices for a while. a lot of people think the fed has been artificially inflating things. you think we're in the ninth inning of our economic situation right now in terms of anything going on, you think a recession could be coming in the next year and a downturn in the market. what do you see happening? >> first of all, i am not a market guy, okay. the stock market, everybody has all these different formulas and technology and technical elements. i just look at it and say, okay, what's happening on the ground? what is the profit margins? how are we doing? how are we doing compared to the past, and what are the prospects for the future? then i look at that and then i look at whatever it is, 18,000 or whatever the -- the latest number is, and we're talking about tomorrow is another

all-time high. that just doesn't -- that doesn't sync with me. either stuff going on on the ground is positive and growing and we have a positive outlook, and then the stock market should reflect that. but should the stock market reflect the perfect world? >> we haven't gone anywhere in a year for stocks. >> when the market doesn't go anywhere for a year, that's not a win. ask all the hedge fund guys. >> right. >> so i guess all i am saying is that -- and by the way, being joe bifflestick, the guy on the dick tracy comics who walked around with the black cloud on his head is hardly who i am. but nobody has accused me of not being a realist. i just look at the numbers. to me one of the most significant issues is world

trade. 2015 in terms of dollar value, world trade was down 15%. from the beginning of time, you know, the methodology for creating growth has always been world trade. that's what we focused on in bretton woods right after the great war of world war ii. and i think that in many respects we are seeing it coming apart. and i think the bigger thy neighbor currency policies is a direct factor in a reduction in world trade. >> even in this country, just movement across our domestic movement is -- was down year over year like 4% or something. >> sure. sure. >> that's not supposed to happen. >> then at the same time, we have all this political stuff going on. >> yeah. >> about trade agreements and job losses and stuff like that. and it's like everybody has just put their head in the sand and

pretended that it ain't -- that ain't what the world is. >> sam, you have been on many times. we talked a lot about the seven and a half years. there will be a different administration next year. >> yes. let us pray. >> i'm just saying that that may, right there, turn you -- you won't be bifflestick anymore. >> i -- >> do you think it could be any worse in terms of private-sector treatment or -- >> no. >> -- rhetoric or -- >> i think the private sector has been on the receiving end of an extraordinarily difficult seven years. >> did you see the number of regulations? >> yes. >> over 21,000 in regulations. >> people ask me all the time when i have conversations and they say, well, if you were president tomorrow morning what would you do to change things? >> right. >> and i answer them kind of, you know, in a funny fashion by

saying, i would start tomorrow morning by cutting all regulation by 50%. not that i am saying this one is better than that one. >> just all of them. >> if you just started and said 50% off the top. >> then start considering them one by one and go down another 50%. >> then how about sunset. people have talked about sunset regulation, you know, since the -- how many -- how many ideas that have been created have ever sunseted? very few. in the same manner, we are having this big argument about trade. and i think it's a valid argument. but if you look at what really happened, we passed nafta. there was no question that certain parts of the country were going to be more affected than others. >> and set back. >> set back by nafta and

colombia's free trade or what are whatever. instead of directing focus to those areas, we had to spread the benefit across the country. so we had parts of the country that got been fits from nafta got additional subsidies and the parts that got hurt were short-changed. look what they have done to west virginia. it's criminal. and yet, i think if if in fact this administration decided to eliminate coal eight years ago, they should have had a major program in the coal-mining parts of this country to reflect the fact that we have made a policy decision. excuse me. somebody had made a policy decision to eliminate coal but didn't follow through with what's required. >> jobs creation. sort of innovation. but ways -- >> do you have any idea how much the federal government spends a year on training?

>> how much? >> staggering amounts. there's only about 480 different training programs. that's what -- every time you do something, you pass a new trade bill. let's pass another trading bill. nobody assesses them. there is no cost benefit, no unles analysis. we keep stepping in it and there is no reason for it. >> back to the point you made earlier about the way you feel about the market and potentially a little overheated. people come to you every day with different deals. you want to buy this building, this business? >> yep. >> when they come to you now, do you sit there for the most part and say, call me in a year and a half when the price is going to be lower? or are you buying? i'm trying to understand in a real way -- >> yeah, i understand your question. and i guess i would answer you by saying everything depends on what the deal is. >> right. >> so, you know, we've been investing in the oil patch.

and buying natural gas and some other, you know, energy-related assets. why? because we think they're very cheap. and in many respects they're purchasable at huge discounts to any kind of replacement cost or future competition. so that's with the left hand. then we see people come to us with deals, and the sole justification for the price is that, oh, it trades on the market for this. the fact that a whole bunch of idiots has priced it on the market has very little impact on what i am going to decide to do. this is called relative comparison to justify almost anything. and so i guess what i would say to you is that, for sure we are investing less today than we have in the past because we see less opportunities. we're selling more than we sold in the past because we don't

understand the other side of some of -- of other people's optimism. and so -- but that's what life is all about. that's what business is all about. you could have two other guys here right now saying, how do i get in and get more? >> sam, when did the turn really come? when did it become apparent to you that you would rather be a seller than a buyer? >> when i saw a very slow, you know, recovery and i saw prices go up much faster than reality. and obviously that relates to interest rates and qe 2 and the extent to which those -- the steps that the fed has taken have distorted the markets. >> is that a real estate story for you? what industries are you thinking about that you feel are particularly overheated, where you say you are a seller? >> we have sold a lot of real

estate in the last couple of years. basically you wake up every morning and you ask the same question. do you want to own this? if you want to own it, you just bought it. if you don't want to own it, you ought to be selling it. i think that's the standard that we have consistently used in attempting to decide what we think is the right decision. i would make one comment. this whole, quote, calling tops is really, you know, ridiculous. i mean, the answer is every single decision is driven by a whole bunch of factors. and i -- i don't know anybody who has yet received a check for calling a top. >> okay. we're going to continue this conversation. hope you're sticking around. in the meantime, eli lilly's ceo john lechleiter joins us. meeting with analysts in new york to discuss the company's product pipeline. before that he'll speak to the street -- before he speaks to

the street, rather, he'll speak with us. one stock to watch today. best buy beating estimates on the top and bottom lines. current-quarter outlook is below street estimates, however. that stock, which was briefly up in the pre-market has come down materially. looks to open off 5%. we'll talk more about that when "squawk" returns. ♪ you're not gonna watch it! ♪

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ted bundy. you don't hear that very often. eli lilly holding a major analyst meeting where the drug giant is expected to make key announcements about products in the pipeline. john lechleiter joins us with a business update. chairman and ceo of eli lilly. john, good to see you. i look at your pipeline. you're talking about it. the greatest in eli lilly's history. trying to figu your stock has not performed as well. you had the patent expiration stuff. we talked about that for the last how many years? when did that start? three or four years ago? >> we started to talk about it in 2009. the bulk of the tsunami hit us '11 to '14. >> you managed through that. then you got just the -- the political environment, the rhetoric coming from maybe

hillary clinton and others on the left about it. is that why the stock has had trouble? then there are adversion advers other things. >> lily had a good runup in recent shares. great share performance in 2015. things have come down a little bit. you know, joe, when -- there are always cycles in our industry. not just for big pharma but biotech as well. i look at the fundamentals. i don't think the fundamentals of the business have ever been stronger. we're finally able to take the science and turn it into ide products. two-thirds of the medicine that you take in your lifetime you take after the age of 65. people will need the products coming out of our labs. that's a great lineup to have 20 years into the future. >> if you were not john

lechleiter, just an investor, and you looked at lily's stock and you heard the ceo say we believe we're in the midst of the most new launches in our history, does that mean it's probably not, in your view, a figure that you think you should be buying the stock with both hands, right? >> we're very optimistic about our future. we celebrated our 140th anniversary on may 10. not many companies have been around that long. we think we have introduced 100 different products in the 140 years. in the modern era since the early '20s, we have a chance to introduce 20 new products in the next ten years. six are out already. two of those are under regulatory review. so we are off to a good running start. >> you still sell 50% outside this country. you still have to worry about the dollar. that's part of the problem. >> yep. >> you have to worry about not selling stuff for what it's worth in other markets? >> the dollar goes up and down.

we took -- currency hurt us in the first quarter and last year. we tend to judge our performance on a currency-neutral basis. >> are you happy with the provisions, if we do do tpp are you happy with what you'll earn on proprietary technology? >> we have one issue and that's data protection for our biologic products. they say 5-plus three. some people say eight. some say five. we are saying, wait a minute. this is our one opportunity to set a 21st century standard for traders in china and india. we are saying we need 12 years and we have a lot of folks on capitol hill who support that? >> have you passed peak revenue from the last ten years? what was the peak revenue? >> our peak revenue was in 2010.

25 billion. the patent losses took a lot of our revenue out. it happens overnight. we're looking at good growth driven by the launch of the new products. >> to go back to tpp, would you rather see it not passed rather than passed with provisions for five to eight years? >> we have not come out and said we're opposed to tpp. we think the trade agreement in general is a good thing for the country. there is a problem. the problem is with intellectual property. we don't want to make the problem, you know, agriculture, autos or whatever. all those things figure in. but this is intellectual property. this is the currency that we're going to do business in in the 21st century. we have to get it right. >> what happens with china and

india? >> they have their own national interests. they're going to forge bilateral agreements with these countries. they may want into this agreement at some point. again, this is our chance to really get it right. >> alzheimer's. important stuff coming out of lilly later this year. is it -- is it palliative, is it real? it's based on getting rid of some of the plaques, right? is that the cause? do we know that? >> in fact, we don't know it. that is what makes this so risky. i was asked the other day how much have we invested in alzheimer's in 26 years. $3 billion. $3 billion in 27 years without anything to show for it yet. we're hopeful that the expedition 3 trial will show we can prove or slow down the decline in cognition and memory

in patients with mild disease. those two studies that read out 2012 had so-called mild patients and moderate patients. the moderate patients being a little sicker. based on a signal we saw from that study, we're hopeful. we have to wait to see the data. huge opportunity but still a huge risk because we are not sure we completely understand what's causing the disease. >> john lechleiter, thank you. >> thanks. good to see you all. when we come back, our guest host sam zell talks housing, real estate. renting versus buying and much more. and at 8:00 eastern time former transportation secretary ray la hood. we'll be right back. and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business.

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. > among the stories that are front and center this morning. best buy shares moving lower despite a better than sxkd expected quarter. it's current-quarter outlook is below street estimates, that is what is driving the trading. stock is down 5.5%. coca cola production halted in venezuela because of a lack of sugar. venezuela is in recession and food shortages have been worsening in the country. interbank messaging service swift unveils security measures this week. the swift system is the one used to send payment instructions b central bank. back east from boston to d.c. yearly highlighted toll's rental apartment business saying it continues to exceed expectations at 96% occupancy. in about two and a half hours we get the april read on sales of newly built homes. this is single-family only and it's a measure of contracts signed in april, not closings. the expectation is for a monthly gain of 2.5% to 524,000 units.

this is always a dicey number, guys. >> thank you. for more on real estate, as we try to figure out such a -- you know, we have geography. single family. multi-family and commercial. can you quickly give us a synopsis of where you think it is following the -- eight years after the crisis? >> yeah. i think you start by talking about single-family detached. >> okay. >> for 20-some-odd years we have produced give or take about a million single-family detached houses a year. since the great recession, we've just gotten back to about 500,000. i think the big issue here is the fact that the -- a big portion of single-family homes were starter homes. just look at the total number,

you know, the average price is $850,000. and that includes both condos and single-family detached. i think the issue of the millennials or people of that age and deferral of marriage and waiting to buy and then, when they buy, they're much older and therefore are not a starter home buyer anymore. we're also in the reverse of leavittown. the demand for -- if you look at the pricing, cbd has recovered the most. >> central business district. when you go from single-family detached to condos, i mean every paper for the last six weeks has been talking about how the high end seems to be over supplied. miami, new york, san francisco. certainly that seems to be the

case. on the multi-family side, things are somewhat softer, but softer in the context of one of the greatest runs that multi-family has ever had, the supply/demand numbers in multi-family continue to be very positive, and although maybe we're seeing 3% increase instead of 5% increase, but overall the multi-family scenario and particularly in the cbds is very healthy. the rest of the commercial real estate market is benign. the supply/demand situation is currently kind of okay, though there is a lot of particularly office construction around the country at a time where i'm not sure the demand will necessarily be there. i mean, in places like chicago, they're building three new office buildings and they're emptying three old office

buildings. that's not growth, and that usually is not a good sign for a commercial office market. overall, you know, we have come off this extraordinary period of liquidity and this extraordinary period of low interest rates. i think we are unlikely to see a repeat of that going forward. and i think we're going to see more supply, particularly in what have been pretty tight markets. >> we keep moving in the reverse direction of the rest of the world in terms of interest? we don't keep moving, but we're thinking about it someday, moving, tightening with the rest of the world at zero. does the rest of the world ever get off zero? if we move? >> how about back to zero. >> back to zero. if we move, do they eventually follow us? that's why people -- that's what is giving the fed cover is that they can say, hey, what do you want from us? i'm wondering whether we -- we

had this discussion off-camera. is it that the world would have been like this and therefore we're just responding to it? or is it because we are weaker and we aren't dragging the rest of the world higher with us? higher in gdp. >> i guess, in the most simplistic terminology, i would ask you the question, if something is free is it valued? is the -- is it appropriately risked? and i think, when you talk about interest rates being close to zero now for a long period of time, i am very concerned about the fact that we have desensitized our business community and people generally to the cost of capital. and we know that the cost of capital ain't free. so every time you defer facing up to the cost of capital, it's going to catch up to you. that i think is the biggest

concern. i mean, i think we have distorted markets. maybe we have bubbles. you know, i don't even know what a bubble is. so i wouldn't want to be the definer of it. but i think that we have too much intervention and not enough market movement in interest rates and other assets. >> i just wonder, if you just raise without the underlying economic strength that doesn't make sense. we need to fix the underlying strength. >> yeah. >> that's why we get back to why are we growing below plan? >> you are saying when you look at the economy you see lousy numbers across the board. does it make a case for the feds to raise interest rates right now? >> the problem is i think the fed should have raised interest rates two years ago, and therefore today would be able to make a much more rational decision as to what to do.

the problem is that they have so deferred reality for so long that i think they have a serious credibility problem if they don't raise interest rates. so now we're talking about raising interest rates because of credibility? >> if you think the economy is on its way to being lousy -- >> i think it is on its way to being lousy. what was the interest rate in the last recession and the recession before that and the recession before that? in 1981 we had 21.5% interest rates and we had a recession. i don't know that you can just, you know, grab something and say let's -- you know, let's keep interest rates at this artificial rate because growth is artificially low. growth is average 3% for 50 years. and now it's averaging 2%. >> so word did. >> if we're lucky. >> we're worried a stronger

dollar would make the recession worse, so we are afraid to raise. when the recession comes without us raising and we've got nothing in the tank, that's when it all gets driven home. >> that becomes a very serious dilemma. in the same manner, when i look at negative interest rates -- i would be the first one to tell you that i don't understand negative interest rates. i -- i don't -- you know, i mean, i don't understand them. i don't understand how we -- how they get out of them. i don't understand all the ram ramifications other than that level of uncertainty is disturbing. >> donald trump pointed out that he's concerned about issues. he likes low interest rates but is eager for the fed to raise interest rates. are you in a similar position? >> do you like mother and apple pie? sure. do i like low interest rates? sure. >> as a real estate developer in

particular. >> consumer capital. low interest rates are terrific. the problem is, if i am a saver, okay. the real issue is, what's the distortive impact on the overall economy? and that's an -- and i don't think we know. and to some extent what -- it makes you even more disconcerting is that we have pundits who seem to know, at least that's what they tell us. but their track record is not very good. so i just think that, you know, i am -- i have always been a market guy. i have always been disturbed by the degree of interference or manipulation in any markets, whether it be currencies or interest rates. and i understand there are times when it's required. ten years? that's a very long time to declare an emergency. >> so are you looking anywhere for anything to put money into at this point? anything in real estate? are you selling instead of

buying? >> i think, as i said before, where we think that there was a significant opportunity or an opportunity to execute a plan like we sold $5 billion worth of apartments to sterling. that was a very good deal for us because it completed our strategy. it was frankly a good deal for him. >> i want your answer to how we should do the infrastructure situation here, because, i mean, it just -- there is probably a 50%, 60% of people think it's a slam-dunk. that the federal government -- if it's a trillion dollars, if that is what it takes at zero interest rates, we need to do it. it will create jobs and there won't be negative consequences. if you say, wait a second. are you sure? they look at you like you want bridges to collapse if you don't just nod that that's what we

want to do. do you have an answer on that? >> no. but while we're on break i'll call the tooth fairy and find out. sam will be with us for the rest of the hour. we have to talk politics a little bit. >> for sure. when we come back, though, new analysts rankings. find out who was on the mark this earnings season. look at the futures. higher all morning long. dow futures indicated up 68 points. s&p up 8 points and nasdaq up by close to 20. incredible bladder protection from always discreet

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data analytics firm tip ranks is giving us a bit of a score card. not all the companies reporting but of the analysts rating them. joining us to talk about it is the co-founder and ceo of tip ranks. good morning. >> good morning. >> you're not here to talk about the earnings themselves but who is actually calling it right. >> exactly. >> let's talk about who is calling it right and who is calling it wrong. by the way, some of our guests happen to be on his list both for the best and potentially worst. so we can try to figure out what's going on here.

who do you put at the top of your list right now? >> for 2015, the top -- we prepared a list of the top five analysts. the number one is rina kaufler covering health care. her average was 25% in the quarter which is remarkable. colin sebastian from robert baird. brian schwartz from oppenheimer billion dollar by benjamin swingen by morgan stanley. and kevin reynolds with a 9% average return on his ratings. >> was that a one-year basis? >> yes. >> if someone does health care and all health care stocks go up because health care stocks are doing well you need to do health care analysts versus each other. >> exactly. >> some people are covering horrible sectors that the stocks will be down either way. >> the beautiful thing is we allow you to adjust how you want

to rank experts. you can see who are the best ones in different sectors. >> do you have apple analysts? >> yes. >> did anyone make money. >> there was one who was fired for being bearish and he opened his own firm. he was the only one. he was the only one that actually said sell -- >> do you have the names? >> specific analysts that cover apple? >> yes. >> our best analyst of all time is someone called gene munster from piper jeffrey. >> we've had him on. >> he has been right most of the time but was wrong last year. >> historically if you add them up in terms of experts. has anybody clearly beaten the market every year? >> 10% to 15% of the analysts have been beating the market

every year. >> just ready to go into a cold streak? >> you know, even more importantly, there are financial bloggers that no one is aware of and these guys are beating the markets year over year. they perform better than the sell-side analysts. >> give us some of those. >> christian muth that performs well and david alten clark. there are about 6,000. area all of their names. the privilege that i have as a tip ranks user, i have 40,000 financial experts workeriing fo me. i cherry pick the best ones. >> do you ever really know if they're going to stay hot? aren't you always ready for them to go on -- >> past performance is no indicator of -- >> if i am concerned from that on a personal level? i am not. >> i just think it's so difficult to be right all the -- you look at the best hedge fund guys. paulson. the next year he's in gold. einhorn, ackman.

they go up and -- >> the way to do is it -- you can go many ways. you can follow one specific financial expert. but we look at consensuses. where are the averages and the trends. >> how often is consensus right, though? how often is it a counter-indicator? >> it's difficult to measure because a consensus could be a moderate buy, a strong buy, et cetera. obviously we have -- we did our research, and we have most of the big hedge funds in the world that are licensing our api following this consensus of bloggers. >> people are buying your -- so they can tap into your system. >> yes. and create their own strategies. we have hedge funds using us. in the last two years we have been integrating our service into category leaders among financial brokers. so we started in israel with the biggest bank. then we moved to europe and started to work with the biggest bank. this year we opened our service

inside e-trade. now it's available to etrade users. >> i have a business idea. we could be co-branded squawk/tip ranks. how about a mutual fund that changes -- you take the top ten analysts of a given year and follow the trades? >> we're actually doing something like that, the top 10% of the analysts. the recent sea and the sentiment of them and working with a big investment house on creating what's called an active fund based on that data. we'll talk about that probably next year. >> sorry if we just -- a little front running on that news. appreciate you coming in this morning. >> thank you very much. former transportation secretary ray lahood on the tsa's move to replace its head of security as airport lines keep growing. layer, the world health organization saying the world is not prepared to cope with the re-emergence of infectious diseases like zika. how bad could things get as the weather warms up across the

united states? a live report straight ahead. "squawk box" will be right back.

take a look at some stocks to watch this morning. microsoft upgraded to outperform. they say the market overreacted to the company's most recent earnings report and that key areas like office suite revenue and cloud based sales increase. >> deere and company was

upgraded to perform. saying the call might be early but the heavy equipment shares are under-owned and the long-term prospects are attractive. the tsa head of security forced out over long lines. we'll speak to ray lahood about the tsa's latest move and the future of infrastructure spending in america. check out the futures again. indicated higher. dow up 67. s&p futures up by 8. nasdaq up by 18. "squawk box" will be right back. it really opens the passages. waiter. water. so why would you invest without checking brokercheck? check your broker with brokercheck. choose blades that cbend from end to end, that understand legs. choose beauty and brains. choose venus swirl. our most advanced blades, with six times the flexibility. for flawless skin, choose to smooth. venus swirl.

bubbles, bubbles, everywhere. market warning from sam zell. >> when the market doesn't anywhere for a year, that's not a win. planes, trains and automobiles. crumbling american infrastructure could cost nearly $4 trillion of gdp over the next decade. but are politics preventing safer roads and bridges? we'll ask former transportation secretary ray lahood. and the sound of success. ♪ hello from the outside >> adele in talks to sign one of the music's industry's biggest deals ever. details straight ahead. the final hour of "squawk box"

begins right now. ♪ i'll set fire to the rain, watched it burn as i touched your face ♪ >> live from the most powerful city in the world, new york. this is "squawk box." welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with rebecca quick and andrew ross sorkin. less than 90 minutes away from the opening bell. futures up 66 points on the dow jones. 8 on the s&p and 18.5 on the nasdaq. oil prices have not been the story recently. we are now up, though, up seven cents at $48.15 on wti crude. new figures on the hedge fund industry out. as a whole the funds eked out a 1% gain in april. up .3% for the year. investors pulled the collective $15.1 billion from funds in the first-quarter. facebook making changes in response to allegations of political bias.

the social network saying that it will revamp its trending topics feature to minimize the potential effects of individual influence. the company said an internal probe did not find any evidence of political favoritism in the selection of stories. snapchat valued at more than $22 billion. up from $16 billion that it was valued at back in march. a couple of stocks to watch this morning. french investigators reportedly raiding google's paris headquarters. reuters saying it's part of a probe over tax payments. france wants $1.8 billion in back taxes from the tech giant. you want to watch alphabet stock. we always talk about google. best buy posting better than expected earnings and revenues and same store sales. looks to open down a little over 5%. microsoft upgraded to outperform from market perform. firm saying the market has

overreacted to the most recent quarterly earnings and key metrics are poised to increase. auto zone falling short this morning. the company blaming weather-related factors. we talked about it earlier with sam zell. toll brothers beating the street on top and bottom line. improvements in sales, profit margins and backlog over a year earlier. home depot recorded $2 million in pre-tax expenses related to the 2014 data breach during the first-quarter. saying also it's not set aside an accrual for costs related to the breach since it is not able to estimate a range related to pending matters. in washington news, a tsa assistant administrator has been reassigned from his job as the head of security operations. kelly hoggan was the subject of testimony in a house hearing for questionable staffing and bonus decisions. his ouster comes amid massive

lines at airport security this summer. i don't know whether this is the one head that rolls. there is always -- the guy in charge -- the guy in charge is still in charge. >> right. >> he is going to stay. we'll see who gets, you know -- it's always this way, isn't it? >> yes. this is how it starts. >> we'll see. anyway, that's what it sounds like. america's roads, bridges and tunnels are in danger. estimates suggesting maintaining crumbling infrastructure could shave nearly $4 trillion from the u.s. gdp in the next decade. joining us now ray lahood, former secretary of transportation. co-chair of the building america educational fund. mr. secretary, good to see you. we foreshadowed the segment earlier with our guest host sam zell. there is no one that doesn't want great roads, i think. and there is no one that doesn't understand that it costs money. i guess when we run into how washington works and i'm using the "p" word, pork. a hundred different senators,

450-plus guys in the house. it seems like we don't always get the best use of our dollars when we do it that way. >> well, the truth is, there is no money. the highway trust fund is broke. if we really want to rebuild america, rebuild our roads, rebuild the 57,000 structurally deficient bridges in america, we need to raise the gas tax. we need to get back to a big pot of money that build america. the highway trust fund. the bill that congress passed a year ago was a five-year bill, funded in three years. it keeps everything at status quo. you can't really do much. there really isn't any money. if you want to really fix up the roads and the bridges and the transit systems in america, it takes money. and there is no money because congress hasn't passed any kind of opportunity to raise the kind of money that's necessary. while the states -- let me say one more thing.

18 states in the last two years have raised their own gas tax in their states to fill potholes and to fix roads because congress hasn't done it. so they're doing it on their own. >> right. well, most members of congress aren't -- you know, ladies and men and women that just want to destroy the country. they obviously disagree with certain problems that have been highlighted in the past with infrastructure spending, whether it's the size of the deficit, whether it's how the money gets spent. >> or the highway trust fund -- >> not just bad people that aren't going to do it because they just want to destroy the country. there are concerns on the other side. we spent a trillion dollars after 2008 on shovel-ready projects, and i don't -- was there a single shovel-ready project that found money from that trillion dollars, mr. secretary? >> of course there was. absolutely. we got $48 billion during the first two years that we were in

office, $48 billion from the economic stimulus. we funded hundreds of projects, thousands of jobs were created. you haven't seen one bad story, one i.g. report written about any of that money that was spent. it was all done correctly because we have great partnerships with the governors and mayors. they had projects that were ready to go and we funded them. >> what do you think holds back congress from just writing a blank check to do this, then? >> look it, i served in congress for 14 years. congressmen don't want to raise taxes. politicians don't want to raise taxes. the gas tax is a user fee. if you -- if you increase the gas tax, build up a pot of money, and use the money to fix up roads and bridges, most people get that. they understand it. that's why 18 states, including some very conservative states, wyoming, all republican, utah, all republican. they raised their own gas tax. not one politician was thrown

out of office. but look it, people here in washington, they don't want to raise the gas tax. they don't want to build up a big pot of money. so what happens? america is one big pothole. >> mr. secretary, there have been concerns about the highway trust fund in the past being raided and the funds used for other purposes. you would advocate some safety that those funds are only used for highway rebuilding and restructuring? >> absolutely. and look it, i understand the distrust. the public sees politicians taking money from these user fees and using them for other purposes and there is a distrust. i say, raise the gas tax ten cents a gallon, index it to the cost of living, get a pot of money and use the money for what it's intended. build roads, bridges and help 50 to 60--year-old transit systems in america and we'll get back to being number one in infrastructure again. this is a jobs bill. this money creates opportunities for our friends and neighbors to go to work building roads and

bridges? mr. secretary, it's related. we have headlines every day about the lines at airports these days. is there a way to solve that problem? how much of that do you think is ultimately due to infrastructure and what's needed? >> of course there is a way to fix it. if we're going to have a tsa, it needs to be strong. if we're going to screen people, if ridership and enemployments on planes is at an all-time high you need more people screening. apparently that's what's going to happen. secretary johnson is -- the secretary of home -- or of dhs is apparently going to get some more money from congress. but you -- if you have a system in place, it has to be a well-staffed system, particularly when you have people now being able to fly almost as much as they want and enplanements are way up. people are flying a lot more. the system is lagging and there are long wait lines because

there are not enough people to screen. >> that may be true. and the more people who travel the better for the economy. ultimately, do you think the way tsa is approaching this is the right way to do it? the most efficient and accurate way to do it given the reports we've heard over the last couple of years saying it may not be working? >> since 9/11 -- i was in congress during 9/11. i was one of the those who voted to put all these agencies together under dhs. the proof is our country has not been attacked. no airplanes have been brought down. no bombs have been on any american planes since 9/11, since tsa. something is working. screening is working. and i think the system does work, and i think the proof of it is that we haven't had any american planes brought down. >> how do you respond to the reports suggesting that there -- when we've done these sort of mock situations where they've actually gotten guns and other

things through? how do you react to that? explain it. >> obviously there was human error. obviously there were flaws. but this system has been in place since 9/11. and the proof is that people do feel safe flying. you wouldn't have all these people flying today if they didn't think it was safe. they believe it's safe because it is safe because tsa almost always does what's rate in the screening that they do. are there flaws? of course. when there are flaws, they are fixed. >> okay. thank you, mr. secretary. we'll -- infrastructure. all the candidates the "i" word is ubiquitous. >> the roads are bad. we need to fix it. >> cloour guest host, sam zell.

sam, zjoe asked you how you woud fix infrastructure. twitter comments, big corruption that people aree concerned abou. the other thing is the states should be doing this. your thoughts? >> well, i think that, you know, i am a big supporter of local for local. and certainly i think the states are more capable. i couldn't agree more with secretary hood that it's crazy that the price of gas has gone from $5 to $2 and we haven't taken advantage of that to put 10 or 15 cents onto a -- the gas tax. but in the end, you know, the fact that congress has basically not lived up to their promises in the past to make the money solely for this purpose has, you know, basically turned america

and congress cynical. >> where did the term "bridge to nowhere" come from? >> it came from pork. it was a bridge in alaska. >> yeah. how do you know -- what's the best-case scenario for the federal government doing anything? >> let me take the other side -- >> the money that actually gets to where it's going. >> how about the success of the tsa. >> we just heard how great that is. out of a dollar how much makes it into pothole fixing? >> a lot of the infrastructure politicians are talking about today is public-private partnerships where you have public funds teaming up with private partnerships. from the infrastructure spending we did post-2008, if you look at the garden state parkway in new jersey, the new jersey tupike, they have incredibly expanded those roads and done some good jobs with it. i don't know the efficiencies of it or exactly how it went through. sam, we always hear, look at the

national highway system. it wouldn't have happened without a federal bill to fund it. >> i think that there is no question we've gotten a long way from the kind of consensus that was behind that program. but, as -- by definition, it was a federal interstate system. by definition, federal. but a bridge in chicago or a bridge in boston or a road in savannah shouldn't require the federal government's involvement. >> so you agree with the states raising their gas taxes and keeping the funds within the state? >> that would be my first choice. not necessarily precluding the federal government from doing what i would call interstate events. airports, toll roads, interstate highway systems, et cetera. the real indictment is it was a

$1 trillion stimulus bill. and -- and 48 billion -- >> that's what he just said. 48 was well spent. >> you and i know that, if i were to take that $48 billion and decipher it, half of it went to unemployment benefits of construction workers or something and that was called shovel-ready. the reality is that -- >> different kind of shovel. shovel in something. >> "something" is exactly right. i just think that -- why don't we privatize the tsa. every time the government takes on -- there are certain things that government must do. foreign policy, military. but does the government really have to be in charge of airport, you know, screening? >> the argument with that is this is a situation of national defense. do you want to outsource that and have someone who is trying to look for a profit coming out of that all the time of

potentially cutting back. playing devil's advocate. >> i know. history says, becky, that that's the argument against private property and private activity on all fronts. and yet, you know, you know, we -- we bought a hospital chain a year ago that was a non-profit. and we just couldn't believe the amount of stuff that was done that made no economic sense. >> not only no economic sense but a lot of times better outcomes -- >> you could get better outcomes from having a private tsa. you also could make it worse. >> more important, you would have accountability. look what happened this morning. they fired the 28th guy in charge because of what has been going on. there is no accountability to that. >> right. >> and knowing this administration, they've already got another job for him at the clinton foundation. >> i don't think anyone would

disagree that any city with more than 50,000 people needs a mono rail. the simpsons. the mono rail system comes in. who doesn't like a monorail? >> it's awesome at disney world. >> the producers. coming up, tech on tesla. betting on three out of the four fang stocks. we'll tell you which ones and which is not on his list when we come back. and multi-layered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business.

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welcome back, everybody. technology names topping the watch list for today's platinum portfolio. the f.a.n.g. stocks seeing mixed performance today. i guess that's better than we were doing a month or so ago. joining us top tech investor paul meeks. thank you for being here. >> always cool to be here. >> before talking specifics on your stocks. give us an update on how you are viewing the sector right now after we have heard from earnings from most of these companies. >> like most of the market, i am cautiously optimistic on the

technology sector. one of the things about technology stocks, and i know this from the lashes on my back after doing this for a couple of decades, is most people feel that they can grow through any scenario and that's not true. they're actually fairly cyclical if you think about it. if i am the cfo, i tell my chief technology officer to hold back on upgrading the pcs when i don't feel good about my overall business. so, because the economy is growing so slackly, i also think that you'll continue to see pressure on enterprise, i.t. spending. overall i am not so bullish on the group. >> let's talk about the f.a.n.g. stocks in particular. you're bullish on facebook saying it could be the most important company of our time? >> i am a big fan of facebook. a lot of people don't realize that, as they continue to get more aggressive with messaging and video ads, that this company, even though it's been growing quite quickly, has a

long growth runway ahead of it. in the meantime, the company is trading at a peg ratio of less than 1, and i think that the growth estimates for the next couple years are probably too koov conservative. i think this is a reasonable valued stock for a company with a great growth outlook. >> you basing that on earnings expectations. money coming in and expectations based on that? >> it trades at 25 times earnings. i think next year it probably grows 30% in its earnings per share. what i did recently is i had a nice gain in facebook and i actually, out of the four stocks in the portfolio, bought more of it, and i think it's a great buy with moving average supported about 114 per share. i took it up to a 15% position of my portfolio. >> amazon came out of earnings season with a stellar view from the street. a lot of it because of amazon web serviced. you have a hold on the stock

right now. why is that? >> the reason i have a hold on it is my cost basis on the stock is $520 and now the stock is trading at about $700. that's the only reason. they did show a very nice growth last quarter. everybody is focused on aws, the cloud-computing business, amazon web services. what surprised me last quarter is even the e-commerce business at long last is starting to show some nice operating leverage. >> when it comes to facebook you say buy. when it comes to amazon you say hold. when it comes to google you're selling. why? >> i trimmed my google position. i was a little bit disappointed, frankly, even though i like it long-term after the last quarterly report. the company has done some good things over the last year or so under their in you cfo. much more conscious about controlling costs. some of the key metrics did worry me, so what i did is took some money out of google, aka

alp alphabet and bumped up facebook. i still keep google as a small position for long term. >> thanks for joining us today. >> sure. coming up, reports of a new contract between adele and sony. if signed, it could be one of the biggest record deals ever. details next. ♪ recently, a 1954 mercedes-benz grand prix race car made history when it sold for a record price of just under $30 million. and now, another mercedes-benz makes history selling at just over $30,000. ♪ and to think this one actually has a surround-sound stereo. the 2016 cla. lease the cla250 for $299 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

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forget rolling in the deep. adele -- she may soon be rolling in even more dough. the singer may have scored one of the biggest record deals ever. i think she's only got three. >> three numbers. like 17, 21, 25. >> she is reportedly in talks to sign a $130 million deal with sony music. giving the company rights to release her future music exclusively around the world. she is like 27, isn't she? >> i think so. her last album was 25. that was when she started the album? >> what a future. pretty amazing. when we come back, we have more of today's stop stories because more from our guest host, sam zell. wait until you hear who is joining the london school of economics. stay tuned. "squawk box" will be right back. ♪ ♪

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welcome back to "squawk box," everybody. that is in honor of our guest host today, sam zell. joining us from chicago this morning. the headlines today. the latest snapchat of the housing market is 90 minutes away. the government out with april new homes sales at 10:00 earn time. philadelphia fed president patrick harker says he sees a june rate hike as appropriate. he says it should be the fed's approach unless incoming data indicate a notable weakening of the u.s. economy. he is not a voting member for 2016 but the consensus around the table matters. toyota recalls 1.6 million more vehicles due to air bag inflaters. not all vehicles built in the time frame are affected. i love that, if someone is sick -- >> he gets to vote. >> someone calls in sick for raising rates that day, fed day, he is not here, this guy puts it

over the top and causes a global financial crisis because a guy had a sore throat? >> i don't know if anybody has ever called in sick. >> janet yellen calls him in advance -- >> the whole idea that he comes in to vote if the other guy is sick. is that how we're making monetary policy? coming soon, out of the london school of economics. >> lsc! >> they thought it was great when sorkin went there. >> part of my junior year. >> he didn't learn -- >> anyway. >> i was in the legal program, by the way. the law. >> maybe more appropriate now, brangelina. angelina jolie. the oscar-winning actress will teach a master's course on

women, peace and security as a visiting professor at the university. she is one of the four visiting professors announced by the school. >> okay. guest host all morning has been sam zell, of course, chairman of equity group investments. we were talking during the break that we have made it an hour and a half with sam and the "t" word has not come up. trump. >> not on camera. >> we want to get sam's view. the last time he was here, you told the audience it would be a very big mistake to underestimate trump. however, when you guys were talking about a list of potential candidates, he was not on the group that you were necessarily going to support, and you said at the time, "i doubt that trump has the temperament and personality to be the president of the united states." what is your view today? >> well, first of all, i still stand by anybody who underestimates donald is making a huge mistake. second of all, i think the

definition of temperament required has changed. in the last 12 weeks. and i think that both sides have actually hardened up, and i think it's going to be just an enormous battle. but as those polls showed yesterday, i think anybody would underestimates donald is making a huge mistake. >> okay. out of the two candidates, is there one that you couldn't vote for under any circumstances? one or both? >> i don't think that there is -- i'm -- i don't know that i am ready to answer that question at this point. i have certainly given a lot of thought to it. >> okay. help us with this. you did an interview about a year ago with a competitor news channel which will go unnamed here -- >> oh. me bad. i'm sorry. really sorry. >> -- where you talked about a moment at which donald trump approached you to be his partner. in business. >> that's correct.

>> you turned him down. >> that's correct. >> why? >> i just didn't -- i didn't feel like his approach to partnerships and my approach to partnerships were the same. >> how does that influence your thinking about him, therefore, as president? or does it? >> not a significant amount. i mean, i think that there is a huge difference between somebody being your partner on a day-to-day basis and someone who is a political leader. and surrounded by a whole bunch of people. >> and it's possible that, in any type of deal, that you might not want to go into a deal that -- with someone that maybe you don't get, you know -- if you're worried about getting the best of them -- >> everybody has a different style, okay. >> right. >> my style and don's style are not the same. >> he is not willing -- you got him to a point where it's -- since he's not willing to say one way or another who he's

going to vote for, you've got him around the edges of things he said a year ago. so the actual real story is not going to come out. >> no, no. the reason i'm asking the question is the following. there are clearly people who distrust -- >> you heard off-camera. >> hillary clinton. >> right? >> yes. >> a lot of distrust out there about hillary clinton. her trust numbers are not very high. okay? that's putting it probably politely. on the other side there are articles today in the "wall street journal" and "new york times" in particular about people on wall street who have distrusted over the years and haven't wanted to work with donald trump. and so to the extent that that is true, if you believe it to be true, what does that say about whether those people would then vote to support him? that's the question. >> wait a minute. i think you have taken this conversation and made it into some kind of a moral thing. it comes down to -- >> it's because we know off camera where he is yet he's not going to say it. >> but the bottom line is, you

have to look at everybody has a different style. as an example, i did my best for many, many years to stay as best under a rock as i possibly could. that was -- that was the way i approached doing business. donald's approach is obviously very different. putting two people who have this kind of completely contrary approach -- you don't see my name on any buildings, do you? >> no. >> that's just not who i am. for be it from me to criticize anybody else for whatever they want to do. >> so as far as our viewers know, you have no preference between hillary clinton and donald trump? >> you know that that's not the case. >> okay. >> the bottom line is i have never publicly endorsed anybody and i am not about to start now. >> okay. is there something called a

dis-endorsement? >> nah. you got your own agenda here. go ahead. be my guest. >> no, no. >> a different question. do you believe that the president, unto themselves, can influence the economy in a meaningful way? >> are you kidding? >> are you kidding? i called you a communist a little while ago. that's why. by virtue of you asking me that question. >> yesterday we had several guests on who said, if you don't own the house and the senate, then it doesn't matter. >> i have a pen and i'll make it happen, okay? what are you talking about? there have been epa rules passed in the last 24 months that in effect went into force before they were allowed to be challenged. so are you telling me that the president can't influence economic policy? absolutely. in many different ways. including tone. >> what do you think is a realistic gdp number? >> i think that, if the united states were not obsessed with

regulation and victim-hood, 3% to 3.5% gdp growth number is imminently achievable. >> sam, you've said that you think a recession -- that we are in the ninth inning of a good economic recovery. >> i didn't say good recovery. >> that we're in the ninth inning. >> yes. >> could that be changed based on what happens with the election? if you are looking for an economic crash in the next year, would you change your opinion based on -- >> hold on. a recession and economic crash are two completely different things. >> put it in your words. >> i think that we are in a -- we live in a cyclical world. i think the cycle is changing. i think things all over the world are telling us that we are near the end of that cycle. >> and banks are -- central banks are running out of maneuvers to try to keep it at bay? >> if there is a recession and

interest rates are .25%, how do you fix anything? i think all those things together -- i am not predicting the end of the world or anything like that. >> could one administration over another maybe change our direction? >> from my perspective the greategrea greatest risk of the 2016 election is the fact that one party has been responsible for the executive branch for eight years. if -- and that has changed and embedded philosophies in the executive branch that didn't exist there before. if we have the same party in control of the executive branch in the next four years, we will have had 12 years of executive control -- >> and that stuff gets cemented. >> and that begins to change the basic patterns and framework of how our country works. i sat there and watched hillary and bernie sanders debating

fracking. i had a dedeja vu moment becaus was sitting there eight years ago listening to obama and hillary talking about that. now we want to reverse it? help! but that's what having any one absolute power corrupts absolutely. having one party in control of the executive branch -- that's very -- look at all the irs stuff right now. congress has relatively speaking a much lesser control of the executive branch than we all like to think. >> i guess i asked that because we have had people write in trying to figure out, if you are a seller right now, is there a place you're putting your money? are you holding on for future potential deals? do you store up the cash? >> i don't know the answer generally but, despite interest rates, the idea of holding a lot of cash right now doesn't seem like a terrible idea. >> for opportunities. >> yes.

>> sam zell, he'll stick around. my comrades resemble that remark. >> at least we got that in. still ahead. surf is up. surfing icon kelly slater developing a man-made wave company making it easier for riders across the globe to hang ten. no matter the conditions. how he's putting the technology to use straight ahead. oh watson, your japanese is very good. thank you. (speaking japanese) exactly. i can understand nuance, context and idiom in seven languages to help companies all over the world with everything from retail solutions, to banking, to cyber security. (speaking japanese)

♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ welcome back to "squawk

box." look at the futures. dow to open up much higher, close to 100 points higher. nasdaq looking up 27 points higher and the s&p 500 looking to open about 12 points higher. let's look quickly at oil. we have had a couple of discussions about wti. right now $48.36. two months ago i would have loved to make that trade when it was in the 30s. joseph. the world surf league announced this morning the acquisition of the kelly slater wave company. a man-made wave technology designed by champion surfer kelly slater. and paul speaker is the ceo of the world surf league. those of us that -- i lost a pair of sunglasses just trying to just stand still on a board on water that wasn't moving. >> yes. >> i fell this way and that way. do you surf? >> a little bit. i am a terrible surfer. we have good partners. >> some guys who are a lot better at it. >> kelly slater is a lot better. >> 11-time world champion.

unbelie unbelievable. >> he does stuff in hawaii that's 20, 30 feet. >> he is arguably one of the best athletes in the world. 44 years old. the youngest and oldest world champion. he is an amazing guy who has d dedicated the last ten years to figure out if he could offer this incredible sport to people in-ground. >> we're doing incredible things. the president is going to cure bad weather with carbon. this wave machine. can you make a great wave in the ocean or is it somewhere else? >> somewhere else. >> sooner or later we may be able to do it in the ocean itself. >> we'd like to protect the oceans as much as possible. >> what is this thing? it would be an indoor -- >> it's outside. it's a huge, huge system. so it's -- the one we have as a prototype is 700 yards. >> where is it? >> 20 minutes from fresco.

in the middle -- >> almost like -- is it a water park. >> it was a man-made lake that used to be used for water skiing. they found it. it was inexpensive real estate. >> what does it do? is it a big machine that goes into the lake that churns the water? >> it's a foil that pushes against a wave and causes a perfect wave. there is a bunch of math involved that's way past my pay grade and intellect. they've figured out how to create a graewave. it's the recreation of the wave. in a barrelling way. 7, 7 and a half feet. >> can you make it bigger? >> sure. they're working on it now. >> you do move forwards 700 yards? >> it takes a while for the wave to start, just like the ocean, a little bit for it to dissipate. but it's a really long like 45 second ride. >> wow! >> 30-some seconds in a barrel. >> you're going forward? >> yes.

this is a drone. so you're looking at something that's -- the camera is moving with the surfer. but it's a pretty incredible event. >> i've seen -- there is a park in munich where there is a lot of motion in the water and these guys jump on it. they're stationary but it's like surfing. this you're actually moving forward. >> many of the technologies don't have the fin or the power of a wave and it certainly doesn't barrel. this is without a doubt the best technology. >> how do you commercialize it? >> it's not dissimilar to golf courses. people saying we want to build real estate around it. >> you're going to build out the machine -- >> we have a technology that will be working with people to develop it. the biggest advance will be the opportunity to have wsl training centers where we can have young people in emerging markets. it's a cool opportunity. we'll get your kids out. >> you want me to write you a check? >> what does it look like? >> you've seen the wave.

>> the machine. >> it's a foil that rides along the side of the pool. it's a lot of technology inside the math of how you recreate the wave. >> a long pool. >> you spend a lot of time working on the bottom of the flooring of the system as well. >> is it like an ocean? >> feels exactly like an ocean. >> you can't curve but you have the lingo down. >> a little bit, yeah. >> you're in good shape like a surfer. surfers are ripped. >> yeah. >> you've got the hair. >> what are you going to do? we we'll get you and the kids out. now everybody can get the same feeling you get in the ocean. you can practice, get better and then get on a surf trip to fiji or somewhere. >> turns out -- you do surf in pretty nice places. >> yes. if you don't like cold weather, tick the boxes by joining us on the tour for the year. >> thank you very much. when we return jim cramer joins us and we'll get his take on the day's top stories

including best buy's results. that stock down this morning. oil prices this morning, wti crude at $48.42. you're watching "squawk box" here on cnbc, first in business worldwide. back in a moment. (charge music) you wouldn't hire an organist without hearing them first. charge! so why would you invest without checking brokercheck? check your broker with brokercheck. ...of fixodent plus adhesives. they help your denture hold strong more like natural teeth. and you can eat even tough food. fixodent. strong more like natural teeth. fixodent and forget it.

welcome back everybody.

let's get down to the new york stock exchange. jim cramer is standing by. and, jim, it's great to see you this morning. >> thank you, same. >> you know, i'd love to ask you about a bunch of things, but we've got sam zell here on set and i know you said recently you thought the malls were in trouble, i thought maybe you could talk about what you thought was happening? >> yeah, sam, are we overretailed to the point even though few doing well that there are some other second tier outfits that just can't make it because there's just not enough customers? >> well, jim, i don't think there's any question you're right. by coincidence you mentioned simon, which is the largest and most effective mall operator in the country. and kimco, is the strip guy. the issue in retail are not those guys too big, it's the entire level of obsolescence in between. you've got all these second tier enclosed malls that can't afford

to be enclosed. and obviously online is taking a lot of traffic. so i think that the less than aaa retail assets are obviously going to be affected. >> well, look, i think that that's the underlying theme behind this market. a lot of -- you don't need a lot of construction, so, sam, i mean, to me the idea that there's going to be some construction wave because interest rates are low and this not -- when you get nonresidentials going to take off, i just don't see it other than perhaps apartments. >> i thought interest rates had been low for some time. maybe i missed it. i mean, when we haven't had any explosion of construction, and i don't see us having any massive explosion of construction going forward. probably today the one area where we have a lot of new construction is multifamily where in effect multifamily is replacing a big chunk of single family that has gone away. >> yeah, i think so. anyway, just a joy to listen to you.

you're not afraid to speak your mind. thank heavens. everybody is so callus. great to have a guy on who says it like it is. >> thank you very much. my pleasure. >> absolutely. >> jim, thank you. see you in just a few minutes. >> absolutely. when we come back a final call from sam zell. and later this morning, don't miss gopro coming up this afternoon. t-mobile is going big for small business. you'll never get charged data overages, ever. get your own 24 / 7 dedicated business account team. and with double the lte coverage in the last year you can get more done in more places. right now get 2 lines with 10 gigs each for just a $100 bucks. and for a limited time get a hot spot free, yeah free.

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welcome back everybody. our guest host this morning is sam zell, the chairman of equity group investments. sam, we've covered a lot of territory. some of the things we haven't gotten to, we haven't talked much about immigration. what are your views on this? we've seen a lot of talk in the campaigns to this point. >> i think that first of all i think that the campaigns haven't emphasized the word illegal versus legal. immigration is such a critical part of the history of our country and the evolution of our country. and i think, you know, we talk about let's make america great. i promise you, america could never have been great without attracting the enormously successful immigrants from all

over the world, from andy grove to kissinger, to on and on and on, we were able to suck in the greatest minds in the world, albert einstein, et cetera, and we benefitted from it. so the idea that we're all of a sudden going to become some kind of isolationist country is a whole different thing. but i think there is a huge difference between illegal and legal. and to the extent that we have encouraged illegal immigration, the fact that we haven't enforced our own laws is not a good story. the history of countries that don't respect their borders is not a good story. >> what about the cross border express? >> that's a very different scenario. >> san diego. >> in partnership with two other mexican -- great mexican partners, i might add, we built a bridge at the border between california and mexico.

the bridge basically gives you access to the tijuana airport. so you can now drive, park your car in the equivalent of chul vista, which is on the american side, walk across the bridge, get on a plane, go to asia, anywhere in mexico. at the moment we're right on target, we're running 3,000 people a day. and it's growing. and it's really a terrific, terrific thing for both sides. and it's an example of a private infrastructure effort. and where i think there could be a lot of other private infrastructure efforts that didn't require the government support. >> accountability on a public private infrastructure would be fine. >> that's right. >> when there's no accountability we know what happens. >> we built this bridge, it cost $140 million. we built it on time, on budget. and it's going to be a significant positive inforvestm

for us going forward as well as contribution to cross border communities. >> and world trade as a result. >> of course. >> hey, sam, always a pleasure having you. >> fun as always. >> thank you. >> thanks for being here. >> my pleasure. >> love that, even with the commenta commentary. great to see you. >> what fun, thank you. >> join us tomorrow. "squawk on the street" begins right now. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures solid after yet another single digit move for the dow to start the week. we're watching a stronger dollar, some retail earnings, upgrades for microsoft, deere and square, europe's in the green. some of these brexit polls showing continued strength for the campaign to remain in the eu. and we got more hawkish fed speak from heart attacker th e- harker this time. ro